TMI Blog2022 (7) TMI 1135X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the expenditure incurred and shown in Income and expenditure account of trust from the gross receipts. CIT Central has found no fault with allowability of same expenditure in the case of Shri Vasantrao Ghonge where income has been determined on substantive basis even though case of Shri Vasantrao Ghonge was under his charge. It is also noted that the income determined on substantive basis in the case of Shri Vasantrao Ghonge has been settled under Vivad se Vishwas Scheme by Shri Vasantrao Ghonge for Asstt. Years 2009-10 and 2010-11 and form No. 5 has been issued in the case of Shri Vasantrao Ghonge for Asstt. Years 2009-10 and 2010-11 on 25/11/2020 which is placed on record. The CBDT Circular No. 7 dated 04/03/2020 issued clarification on provisions of Direct Tax Vivad se Vishwas Bill 2020, Answer to Question No. 35 it has been clarified that on settlement of dispute relate to substantive addition A.O. shall pass rectification order deleting protective addition. In view of discussion made hereinabove the order passed by A.O. in no manner of consideration can be considered as erroneous or prejudicial to the interest of revenue. The order passed by A.O. not being erroneous or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case are that assessee trust is registered u/s. 12A of IT. Act 1961. It is thus eligible for claim of exemption u/s. 11 of IT. Act 1961. Assessee has submitted regular return of income for Asstt. Year 2011-12 u/s. 139(1) on 20/03/2013 declaring total income at Rs. NIL. In assessment framed u/s. 143(3) A.O. has not accepted the claim of exemption u/s. 11 of IT. Act 1961. A.O. in the assessment framed has computed the income on the basis of financial statement without making any addition except for denying exemption u/s. 11 of IT. Act 1961 observing that assessee does not deserve to claim tax exemption in the name of trust. A.O. has further concluded that the income is determined on protective basis as same is being assessed on substantive basis at the hands of Shri Vansantrao Gopalrao Ghonge. 3. In respect to order passed by A.O. assessee has filed appeal before Learned CIT(A). The Learned CIT(A) vide order dated 24/11/2016 for the assessment year has deleted protective assessment made at the hands of trust by observing that substantive addition made by A.O. at the hands of Shri Vasantrao Ghonge has been confirmed in the appellate proceedings by CIT(A) in appellate order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pts and expenditure in financial statement is as per objectives of Charitable Trust. G) Shri Vasant Ghonge has expired on 13/12/2017. H) In the case of Trust Exemption u/s. 11 of IT. Act 1961 is granted by Department in regular returns submitted for Asstt. Year 2018-19, 2019-20 2020-21. Copies of return and intimation u/s. 143(1) submitted. I) Nothing adverse is on record to deny benefit of exemption u/s. 11 of IT. Act 1961. J) Fresh Registration u/s. 12A granted for Asstt. Year 2022-23 to 2026-27 in Form 10AC vide order of registration dated 23/09/2021. (P. 11 to 13) K) Form 10B submitted in terms of which assessee has applied income in excess of 85% during the year on objects of trust and thus income as shown in the return at NIL deserves to be accepted. (P. 4) 7. The learned DR referred to various facts observed in assessment order. The learned DR placed strong reliance on the order of lower authorities. 8. We have considered the submission made by both the parties and perused the evidence on record. In the course of appellant proceedings concise grounds of appeal have been submitted and same are as under. A) Income of assessee Charitable T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration u/s. 12A of IT. Act 1961 since 01/04/2006 and same is subsisting till date. Even after search conducted at the premises of Shri Vasantrao Ghonge on 28/01/2011 no adverse action is taken in respect to registration held by trust for seeking benefits u/s. 11 of IT. Act 1961. It is noted that trust is continuing its activities till date. In the case of appellant it is seen that the trust has submitted the returns of income upto Asstt. Year 2021-22 and income shown after claim of exemption u/s. 11 of IT. Act 1961 has been accepted in case of appellant. Trust has been granted fresh registration for Asstt. Year 2022-23 to 2026-27 based on the appellant trust holding registration from 01/04/2006. It is noted that Shri Vasantro Ghonge has expired on 13/12/2017. Trust is continuing its activities as per objectives of trust after death of late Shri Vasantrao Ghonge. Returns of income for Asstt. Year 2018-19 to 2020-21 along with intimation u/s. 143(1) of IT. act 1961 were brought on record to demonstrate genuineness and bona fides of trust. Fixed assets of trust shown in balance sheet are not found be used for benefit of Shri Vasantrao Ghonge. Appellant is holding Registration u/s. 12A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not made in contravention of the provisions of section 13(1)(d) of the Act. v) Audit reports of the trust for A.Y. 2006-07 to 2009-10 were duly obtained and were available. vi) The appellant may be allowed to raise any ground/additional ground during the course of appeal proceedings. 13. The appellant trust is registered u/s. 12A of IT. Act 1961. It is thus eligible for claim of exemption u/s. 11 of IT. Act 1961. Appellant has not submitted regular return of income for Asstt. Year 2007-08 and in respect to Asstt. Year 2008-09 had submitted regular return of income u/s. 139(1) on 07/01/2009. In the case of appellant notice u/s. 153C of IT. Act 1961 for Asstt. Year 2007-08 2008-09 has been issued on 31/01/2013 pursuance to search action at the premises of Shri Vasantrao Gopalrao Ghonge trustee of trust on 28/01/2011. Pursuance to notice issued u/s. 153C appellant had submitted return of income for Asstt. Year 2007-08 2008-09 on 05/03/2013 claiming income to be exempt u/s. 11 of IT. Act 1961. In assessment framed u/s. 153C r.w.s. 143(3). A.O. has not accepted the claim of exemption u/s. 11 of IT. Act 1961. A.O. in the assessment framed has computed the income on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011-12 to submit that trust is valid trust and its income is exempt u/s. 11 in view of appellant having registration u/s. 12A of IT. Act 1961. C) Trust has submitted regular return u/s. 139(1) for Asstt. Year 2008-09 on 07/01/2009. It is not case of any abated assessment. No incriminating evidence found to deny benefit u/s. 11 of IT. Act 1961. In u/s. 53C assessment benefit of exemption u/s. 11 cannot be denied. D) CBDT Circular No. 7/2020 dated 04/03/2020 clarification on provisions of the Direct Tax Vivad Se Vishwas Bill 2020 at Q. No. 35 it has been clarified that on settlement of dispute related to substantive addition A.O. shall pass rectification order deleting the protective addition. 18. We have considered the submission made by both the parties. It is seen that A.O. in assessment framed u/s. 143 r.w.s. 153C has denied the exemption claimed u/s. 11 by appellant trust and determined the income of appellant trust at Rs. 17,44,572/- in Asstt. Year 2007-08 and Rs. 9,12,290/- in Asstt. Year 2008-09 on protective basis whereas same amount was added by A.O. in hands of Shri Vasantrao Ghonge on substantive basis. CIT(A) in his appellate order has deleted the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant being of academic nature except for holding that appellant is a valid charitable institution as held in appeal for Asstt. Year 2011-12. 22. The addition made by A.O. on protective basis is already deleted and substantive addition is already settled under Vivad-se-Vishwas Scheme. In view of above appeal of appellant is disposed-off as per discussion made hereinabove and is partly allowed. ITA No.: 151/152/Nag/2015: 23. The appeal filed by appellant for A.Y. 2009-10 and 2010-11 is in respect to common order passed u/s. 263 of IT. Act 1961 by Commissioner of Income Tax Central on 17/03/2015. The grounds of appeal of appellant for A.Y. 2009-10 2010-11 are similar. Grounds of appeal for Asstt. Year 2009-10 are as under: i) The order passed under section 263 of IT. Act, 1961 is illegal, invalid and bad in law. ii) The order passed by A.O. u/s. 143(3) r.w.s. 153C of IT. Act 1961 was after due enquiries and after obtaining complete required details in respect to expenditure incurred for achieving the objects of trust and thus learned CIT erred in holding that order passed by A.O. is erroneous and prejudicial to the interest of revenue. iii) The Ld. CIT erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed at the hands of assessee trust is liable to be assessed at the hands of Late Shri Vasantrao Ghonge on substantive basis and same income is assessable at the hands of assessee trust on protective basis. He therefore framed assessment at the hands Late Shri Vasantrao Ghonge on substantive basis and at the hands of assessee trust on protective basis. D) Hon'ble CIT (Central), Nagpur held that order passed by A.O. in the case of assessee trust is erroneous and prejudicial to the interest of revenue. Substantive addition has not been faulted or held to be erroneous and prejudicial to interest of revenue. On above factual position, protective addition/order cannot be termed as erroneous and prejudicial to the interest of revenue to exercise power u/s. 263 of IT. Act 1961. E) Substantive addition at the hands of Late Shri Vasantrao Ghonge for Asstt. Years 2009-10 2010-11 has been settled under Vivad Se Vishwas Scheme. ITAT order in the case of Late Shri Vasantrao Ghonge in ITA Nos. 35 36 for Asstt. Years 2009-10 2010-11 where in appeals are withdrawn pursuance to matter having been settled under Vivad Se Vishwas Scheme 2020. (P-64-101) F) CBDT Circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles could not have concluded that for Asstt. Years 2009-10 and 2010-11 income is not determined on commercial principles. On above factual position, order passed u/s. 263 by Hon'ble CIT (Central), Nagpur is unjustified and unsustainable. Reliance on i) Hon'ble High Court of Judicature at Bombay, Nagpur Bench, Nagpur in ITA No. 37 of 2019 in the case of M/s. Eureka Medicare Pvt. Ltd. dated 15/01/2021 J) Assessment of Late Shri Vasantrao Ghonge- Asstt. Year Income of Trust Total Income assessed 2007-08 17,44,572 (P- 27) 36,88,980 2008-09 9,12,289 (P- 40) 39,42,950 2009-10 3,64,342 (P- 50) 19,68,590 (P-66) [V V form] 2010-11 11,21,508 (P- 62) 41,75,610 (P-84) [V V form] K) Order u/s. 263 of IT. Act 1961 came to be passed on account of audit objection which was not accepted by A.O. No order u/s. 263 of IT. Act 1961 can be passed. Relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is seen from the appeals for the above mentioned assessment years that A.O. has framed assessment in the case of appellant trust for all the five assessment years on the same date i.e. on 18/03/2013. The assessment orders passed in the case of appellant for Asstt. Years 2007-08 to 2011-12 are similarly worded except variation in quantum of receipts and expenditures as per income and expenditure account as shown in the financial statement of the respective assessment years. The learned CIT, Central has passed order u/s. 263 in respect to Asstt. Years 2009-10 and 2010-11 even though assessment orders for other assessment years were available with him in which no fault has been found in the assessment framed. Similar claim of expenditure in preceding and subsequent year has achieved finality being allowable deduction for determining income of trust. Expenses in these two years cannot be disputed for reasons given in order u/s. 263 of IT. Act 1961. 29. It is noted from the financial statement that expenditure incurred by appellant trust is normal expenditure incurred on the objects of trust and no incriminating material was found in the search carried out at the premises of Shri Va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest of revenue. The order passed by A.O. not being erroneous or prejudicial to the interest of revenue Learned CIT Central ought not to have set aside the assessment framed u/s. 143 r.w.s. 153C in case of appellant by his order u/s. 263 dated 17/03/2015. 31. Considering the facts and circumstances in the case of appellant and considering the evidence on record and discussion made hereinabove we hold that order passed by CIT u/s. 263 of IT. Act 1961 for A.Y. 2009-10 2010-11 is not in accordance with law. We are in agreement with various submissions of appellant noted in this order at para 25. Respectfully following judicial precedents discussed in submission of appellant. We are of the view that order passed u/s. 263 is bad in law. In view of above the order passed by CIT u/s. 263 of IT. Act 1961 for A.Y. 2009-10 and 2010-11 is quashed and appeal of appellant is allowed. ITA 38 39/Nag/2017: 32. The appeals filed by appellant are originating from order passed by A.O. giving effect to order passed u/s. 263 by CIT (Central) on 17/03/2015. A.O. has passed order u/s. 143(3) r.w.s. 263 of IT. Act 1961 on 29/01/2016. The present appeals are in respect to assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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