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TMI Blog2019 (1) TMI 1260X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. the re-opening u/s 148 is bad in law since the reasons recorded clearly indicate that the re-opening is made without any tangible material and hence, the re-assessment order passed u/s 147 be declared null and void. 3. The learned C.l.T. (A) has erred in, law and facts in confirming the Assessing Officer's view in denying the exemption U/s.10 (23C) (vi) to the assessee trust and not appreciating the fact that the income of the assessee trust was exempt from tax under the said section. 4. The learned C.l.T. Appeals has erred in law and facts in holding that the decision in the case of Deccan Education Society in Appeal No.PN/ CIT (A)- 10/ DCIT.CIR 1 (2)/ 858/ 14-15 for A.Y. 2010-11 dtd. 15.01.2016 is not applicable to the Appellant's case and have wrongly relied upon the decision in the case of Children Education Society (264 ITR 389). The income exemption claim of the assessee U/s. 10 (23C) (vi) should have been allowed on the basis of the decision in Deccan Education Society's case cited above. 4. The Revenue in ITA No.1715/PUN/2016 has raised the following grounds of appeal:- 1. Whether on the facts and in the circumstances of the case and in law, a cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order. The assessee made various alternate pleas before the Assessing Officer. The first issue which was addressed by the Assessing Officer was whether 15% was to be deducted from gross receipts before deducting any expenses incurred during the year. The view of the Assessing Officer in this regard was that sections 11 and 12 of the Act provided the same. The Assessing Officer re-computed the benefit of accumulation of 15% by observing that the surplus was Rs. 40,58,789/- as per Income & Expenditure Account, to which sum of Rs. 11,00,15,480/- being the amount transferred to reserve was to be added and thereafter, benefit of accumulation of 15% to the extent of Rs. 9,69,63,129/- was to be allowed. The Assessing Officer also denied the exemption claimed by the assessee under section 10(23C)(vi) of the Act rejecting the plea of assessee that the said exemption was available to the entire trust and not to the individual institute/s. 7. The CIT(A) decided the first issue of claim of exemption under section 10(23C)(vi) of the Act against assessee. It may be pointed out herein itself that the assessee is in appeal against the said denial of exemption under section 10(23C)(vi) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on commercial line, there was merit in the plea of assessee and the reliance placed upon by Assessing Officer on another decision was not correct. The assessee for the past several years was showing losses i.e. it had incurred more expenditure in comparison to the income every year which supported the view that it was not commercial venture but a genuine charitable trust established for educational purposes. The next plea of assessee that it had made excess application of its income and hence, there was no merit in making any addition was also accepted by the CIT(A), wherein total receipts declared were to the tune of Rs. 45.91 crores (approx.) and deduction of 15% comes to Rs. 6.88 crores. Hence, balance amount which was required to be utilized on the objects of trust was Rs. 39.03 crores (approx.), against which expenditure incurred on the objects of trust amounted to Rs. 47.59 crores and hence, there was excess application of income of Rs. 8.56 crores. The Assessing Officer had not accepted the said manner of computing income as according to him, the assessee was eligible to accumulate 15% of income only if it generated surplus and not when there was deficit. The CIT(A) held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome to the extent of expenses incurred on the objects of trust. 12. The learned Authorized Representative for the assessee strongly pointed out that the issues raised were squarely covered by the orders of Apex Court and hence, there is no merit in the said grounds of appeal. 13. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the order of Assessing Officer. 14. We have heard the rival contentions and perused the record. The CIT(A) after discussing all the issues in the case has concluded the appeal vide para 13(ii) of appellate order which reads as under:- "13(i)... (ii) I have considered the submission carefully. The contention of the A.O. is not correct. As per Section 11(1)(a), it is entitled to accumulate 15% of its gross receipts and the balance 85% of the receipts are to be applied on the objects of the trust. Reliance may be placed on the decision of Hon'ble Supreme Court in the case of CIT v. Rao Charitable Trust (ALN) [216 ITR 697]. In this case, it has been held that the exemption u/s 11(1)(a) i.e. of 15% is an absolute exemption and the application of Section 11(2) does not extend to nullify the absolute exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 11(1)(a) of the Act. 17. Now, coming to the second aspect of the issue raised before us i.e. whether in the instant assessment year the application of income was more than the receipts of the year, can the excess application of income i.e. expenditure in the hands of assessee, be carried forward to the succeeding year. 18. The Hon'ble Bombay High Court in CIT Vs. Institute of Banking Personnel Selection (supra) had held that the income derived from trust property has to be computed on commercial principles and the adjustment of expenses incurred for the trust for charitable purposes in earlier years is allowable against the income earned by the trust in the subsequent years and the same has to be regarded as application of income for charitable purposes in the subsequent year in which the aforesaid adjustment was made. The CIT(A) has allowed the claim of assessee in turn, relying on the aforesaid decision and also had relied on the decision of the Hon'ble High Court of Delhi in DIT Vs. Raghuvanshi Charitable Trust and Ors. (supra). In view of the settled position of jurisdictional High Court, which has been applied by the CIT(A), we find no merit in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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