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TMI Blog2019 (3) TMI 1667X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing the society benefits of the exemption u/s 10(23C)(vi) of Income Tax Act especially when it was found by the assessing officer that the income of the society was used or applied for the benefit of the interested persons which is contravention as per the 13th proviso of section 20(23C) of the Act and hence society cannot be said to be existing solely for educational purposes and nor for the purposes of profit." 2. The facts giving rise to present appeal are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter called as 'the Act') was framed vide order dated 18.03.2014. The assessing officer granted exemption/benefit of provisions of section 11 of the Act on the basis that the benefit was given to the related parties. 3. Aggrieved by this the assessee preferred an appeal before the Ld. CIT(A) allowed the appeal. Thereby, ld. CIT(A) given benefit of u/s 10(23C)(vi) of the Act. 4. Against this the Revenue is in appeal before this Tribunal the only effective ground in the appeal is against the granting benefit u/s 10(23C) of the Act. 5. Ld. Departmental Representative (DR) supported the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion of the Honourable Bench that in absence of any claim made for such exemption either in the return of income or before the A.O. such exemption was allowed by honorable CIT -A in the appeal so filed by the assessee before him in the light of the decision of Honourable Supreme Court in Goetze (India) Ltd V CIT reported in 284 ITR 323. Thus the Department has the objections of allowing the exemption to the assessee which was neither claimed in the return of income nor claimed the same in the assessment proceedings before the Ld. A.O. as findings given by the Apex Court of India in the cited as above. The assessee wish to bring the following facts of the case before the Honourable Bench, the circumstances which restrain the assessee to claim the exemption as above. (i) IN THE RETURN OF INCOME FILED BY HIM The assessee is duly registered as a Trust u/s 12AA of the Act. As such the provisions of section 11 of the Act applied to the assessee trust. At the time of filing the return of income the assessee has computed the income chargeable to tax before applying the provisions of section 10(23C)(via) of the Act. As per that computation of income there was no income earned by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the same was claimed by the assessee or not. The Honourable CIT-A after em placing the contents of Para 3 of the above said circular which were in nature of instruction to all the authorities engaged in collecting the revenue about the approach of their working in favour of the assessee. And dealing the Duties and Responsibilities of the Assessing Authorities under the Income Tax Act has issued the directions to allow the benefits of section 10(23c)(via) of the Act to the assessee. The instructions as mentioned in Para 3 of the above mentioned circular No 14 dated 11.04.1955 as issued to all the authorities engaged in collecting the revenue is reproduced as under for the your honors' kind consideration. 3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collectable as per the provisions of Law only. The Department in the grounds of appeal has strongly relied upon the ratio of case law as verdict by Honourable Supreme Court of India in the case of Goetze (India) Ltd 284 ITR 323. In this regard it is submitted that the decision of the Apex Court has not laid down as matter of Law that there is a bar for the assessing authority to entertain the claim for deduction otherwise than by filing a revised return. The above views have been taken by Honourable Allahabad High court in the case of Universal subscription Agency (P) Ltd V JCIT reported in 159 Taxman 64. The purpose and intention of Law is to make the correct assessment and to collect correct and legitimate tax from the assessee. If the rightful deduction or relief is not allowed to the assessee, the purpose and intention of the law will be defeated. Reliance is placed on the following case Laws. (i) CIT V Jai Parabolic Springs Ltd 172 Taxman 258 (Delhi) (ii) CIT V Dharampur Sugar Ltd 90 ITR 236 (All) (iii) Bharat starch Industries Ltd V CIT (ITA No 1611/k12003 (iv) Thomas Kurian V ACIT 108 TT J 439 (Cochin) (v) Xerox India Ltd V DC IT New Delhi (ITA No 1580/De1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation but even since the inception of the assessee as such there is no force in the ground as raised by the Department contra vending the Proviso 13 of Section 10(23C) of the Act. In support of the same the comparative chart of income and application since 2009 is enclosed for the kind perusal of the Honourable Bench. In the light of the above submissions and the Circular of the Board, it can be safely said that the Department is not permitted to ignore the due claim of the assessee and further is not expected to take advantage of the ignorance of the assessee and if any benefit is available to the assessee in accordance with law, that is expected to be extended to the assessee by the Assessing Officer as directed by honorable CIT -A in his order dated 03.10.2016 as such the same has to be upheld. 7. We have heard the rival contentions and perused material on record. The ld. CIT(A) has granted the relief by observing as under: 4.2 Thus, the appellant has argued that the Provisions of section 10(23C)(vi) applies to its and therefore there cannot be any income of the appellant trust which can be charged to tax. The appel1ant further stated that in view of exempts already granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t take advantage of ignorance of on assessee as to his rights. It is one of their duties to assist a taxpayer in event reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a tax payer where proceedings or other particulars before them indicate in some refund or relief is due to him. This attitude would in the long run, benefit the Department for it would inspire confidence in him (hat he may be sure of getting 0 square deal from the Department. Although, therefore, responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed Ly law, officer's should:- ((I) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other;" Thus the intention of Law is that to allow all the benefits to the assessee irrespective of the fact whether the assessee claims it or not but it is the duty of every officer to pass on the benefits to the assessee which is available to assessee under tile provision of law. As such it is most humbly submitted that necessary directions be issued to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except by outnoniu of law" Thus, under the constitution, the Government car: levy and collect only those taxes and only that much taxes that are provided In the law. The assessing authority should collect the due taxes and In determining the tax, it is duty bound to allow legitimate deductions and reliefs as provided in the Act, even though they are not claimed by the assessee. Collection of any tax not provided under law would be in violation of the provisions of the Constitution of India. 4..7 Duties and Responsibilities of Assessing Authorities under the Income Tax Act,1961 The Board of Revenue (now CBDT) issued Circular (No. 14 (XL - 35 dated 11th April 1955 detailing duty on the assessing authorities to make correct assessments and collect correct taxes. Let us examine the legal validity and legal status of the Circular issued by the Board. 4.8 Circular No. 14 (XL - 35) dated IV" April 1955 The text of the Circular is as follows: "Officers of the department must not take advantage, of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way pttrticularu] in tile matter of claiming and securing reliefs and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ah. Municinalitu AIl? 1972 SC 749 and Babuimal Raichand Oswal vs. Laxmibai R. Tarte AIR 1975 Hon'ble Supreme Court 1297, that state authorities should not ra a lawful right and the lawful right is being denied to them merely on technical ground:,. The Stale authorities cannot adopt the attitude which private 4.11 The Hon'ble Allahabad High Court in CIT vs. Lucknow Public Education Society 183 Taxman 62 held that assessee authorities should follows Circular No.14. 4.12 Legal Validity of the Circular No. 14 (XL - 35) of 1955, dated 11"' Apri11955 Hon'ble Apex Court examined this Circular in CIT vs. Makendm iHs (243ITR 56) and held that the Circular was in force even though issued prior to the 1961 Act as the Circular has not been withdrawn 4.13 Legal Validity of Circulars Section 119(1) of the Income-tax Act, 1961 requires every officer to follow orders, instructions and directions of CBDT. Circular No. 1-i is issued by CBDT and thus, is binding till date. 4.14 The Supreme Court has a1so on numerous occasions examined the issue and has held that the Circulars issued by CBDT are binding in nature on the tax authorities, even if the direction S given by C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V the CI'J'{A)and also by the Tribunal in favour of the assessee holdinq that tile not have a concept of deferred revenue expenditure: The Department filed an appeal before the High Court. lt was held that the assessee had only corrected the claim allowable by virtue of section 37(1) of the Act on aCCOLL11t of the expenditure which was incurred wholly and exclu.siuelijfor the purpose of business hence) is allowable. in effect, the court upheld that the legitimate claim of the assessee is to be allowed even if claimed subsequently without revising the return of income." 2. CIT vs. Jai Parabolic Springs Lid. 172 Taxman 258 (Delhi) "The assessee claimed 1/ Sill of deferred revenue expenditure as was debited to profit and loss account. Also, it did not claim the expense as revellue before the AO. The assessee sought relief through additional ground before the CIT (A). en (A) and fTAT allowed the claim of the assessee, On appeal, the Hiqli Court held that revenue expenditure incurred wholly and exclusivelu for the purpose oj the business ITwst be allowed in entirety in the year in which it is incurred. It further held that there! was no infirmity in the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circular may be at variance with I he la Li', ,IS pronounced by the Hon'ble Apex Court, but same should be build following subordinate IT authorities. In our opinion, therefore, circulars of the same nature which have been already issued would not become irrelevant or can be ignored. Admittedly, the circular issued in 1955 has not been withdrawn hence it has got binding force Oil subordinate IT authorities even as OIL date. accordingly, we hole]: tower bound to assessee the correct income and for this purpose, the relief! refunds suo moto or can pointed out-by the assessee ill the course or assessment proceedings for which the assesses has not filed revised although as per law, the assessee is required to file the refusal return. stated so, in our view, the learned CIT (A) having co-terminus powers will tile powers of AO and the fact that tile appellate proceedings arc the original proceedings, should have entertained the claim of the assessee and the provisions of law are satisfied. 5. Bharai Starch Industries Ltd. vs.CIT(URO) (ITA No. 1611jK/2003) "The assessee had not claimed deduction for interest paid allowaable 36(1){iii) of the Act in its return oh income. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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