TMI Blog2022 (10) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... while framing the assessment U/s. 143(3) of the Act. It is also noted from the submissions made by the Ld. AR that the assessee has filed a petition under Right to Information Act (RTI Act)requesting for the details, notices issued U/s. 143(2) and 142(1) of the Act by the AO to the assessee. The application was rejected by the ACIT, Circle-3(1), Vijayawada stating that the information sought by the assessee was already available with the assessee and there is no necessity of furnishing the same to the assessee under the RTI Act. In the absence of any material evidence with regard to the enquiry by the Ld. AO and the submissions or required information by the assessee with respect to Sinking Fund account, we are of the considered view that the reopening of the assessment U/s. 147 is valid in law and accordingly, ground raised by the assessee is dismissed. Debiting of 85% of the development charges received by the assessee to the Sinking Fund account - It is normal accounting practice under the Accrual System of Accounting any future expenditure needs to be provided in the books of accounts in the relevant assessment year. It is not necessary that deduction shall be permissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: Whether on the facts and in the circumstances of the case, the income of the appellant is eligible for exemption u/s. 11 12 of the Income Tax Act, 1961 since the appellant was granted registration U/s. 12AB of the Act vide order dated 21/3/2022 and as per the provisions of section 12A of the Act the benefit shall extend to all pending assessment proceedings? 3. The assessee has filed the above additional ground for all the assessment years under consideration. 4. The assessee has raised the original grounds of appeal which are identical for all the AYs under consideration ie 2009- 10 to 2011-12. Therefore for the sake of reference and adjudication purpose, the grounds raised by the assessee its appeal for the AY 2009-10 are extracted herein below: 1. The order of the Ld. CIT (A) is erroneous both on facts and in law. 2. The Ld. CIT(A) erred in confirming the action of the Assessing Officer in initiating the proceedings U/s. 147 of the Act when: a) all the material facts were before the AO at the time of completion of regular assessment and were duly considered by the AO; b) the initiation of proceedings u/s. 147 is purely because of differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of use of land or building or development of any land or building for which permission is required. The assessee collected Development Charges, Compounding Fees, Application Fees, Open Space Charges, Recommendation Fee, Conversion Charges, Impact Fee and STP charges in accordance with the Master Plan. The Ld. AR also submitted before the Ld. AO that the assessee has debited the income and expenditure account for Rs. 11,01,93,491/- which is considered as a Sinking Fund and shown as other liabilities in the liabilities side of the balance sheet. Considering the submissions made by the Ld. AR, the AO observed that the amount was debited to Sinking Fund and disallowed the same in the respective assessment years. Aggrieved by the action of the Assessing Officer, the assessee filed an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the Ld. AR questioned the validity of the reopening of the assessment U/s. 148 of the Act as the Assessing Officer has completed the assessment U/s. 143(3) of the Act after a detailed scrutiny. The Ld. AR also contested the disallowances made by the Ld. AO in the respective assessment years for the amounts debited towards Sinking Fund. Considering the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration has been granted to an Institution U/s. 12AA or 12AB of the Act, the provisions of section 11 and 12 shall apply to the year preceding the assessment year in which the registration was granted if the assessment proceedings are pending before the Assessing Officer as on the date of registration the objects and activities of the said Institution remains the same for the preceding assessment years. Section 2(8) of the Act states that assessment includes reassessment In the instant case, the assessment has been completed in the year 2017 while the registration was granted in the year 2022. Prima facie, there is no assessment pending before the Revenue Authorities as envisaged in the Fourth Proviso to section 12A of the Act. It will also be relevant to get into the Explanatory Notes to the Provisions of theFinance (No. 2), 2014 as given in CBDT Circular No. 01 / 2015 dated 21.1.2015 inreference F.No. 142 / 13 /2014-TPL which is reproduced hereinbelow for the sake ofconvenience:- Para 8 Applicability of the registration granted to a trust or institution to earlier years Para 8.2 Non-application of registration for the period prior to the year of registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure by the assessee. Reliance placed by the Ld. AR on various case laws regarding the validity of the reopening are distinguishable on the fact that in the cases cited by the assessee, the assessee has filed the required details which were considered by the Ld. AO while framing the respective assessments. In the instant case, the Ld. AR could not provide the notice U/s. 142(1) issued by the Ld. AO while framing the assessment U/s. 143(3) of the Act. It is also noted from the submissions made by the Ld. AR that the assessee has filed a petition under Right to Information Act (RTI Act)requesting for the details, notices issued U/s. 143(2) and 142(1) of the Act by the Assessing Officer to the assessee. The application was rejected by the ACIT, Circle-3(1), Vijayawada stating that the information sought by the assessee was already available with the assessee and there is no necessity of furnishing the same to the assessee under the RTI Act. In the absence of any material evidence with regard to the enquiry by the Ld. AO and the submissions or required information by the assessee with respect to Sinking Fund account, we are of the considered view that the reopening of the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for developmental activities in subsequent years. The Ld. AR submitted that this fact is clearly mentioned in the income and expenditure account submitted in the paper book. The Ld. AR submitted that since the assessee could not expend the amount during the respective assessment years it has been carried forward and transferred to Sinking Fund Account for spending in future years as per the directions of the Government of Andhra Pradesh, in accordance with the Master Plan approved by the Government. The Ld. AR therefore pleaded that since the assessee being a Non-Profit Organization which is taking care of the execution of developmental activities as approved by the Government of Andhra Pradesh pleaded that the addition made by the Ld. AO be deleted. Per contra, the Ld. DR submitted that the assessee has not spent any amount during the relevant assessment year and hence the provision created by the assessee cannot be allowed as an expenditure U/s. 37 of the Act. The Ld. DR relied on the orders of the Ld. Revenue Authorities. 19. We have heard both the parties and perused the material available on record and the orders of the Ld. Revenue Authorities. Admittedly, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expend 85% of the development charges during the relevant assessment year it does not warrant disallowance of the same as the expenditure shall be incurred in future years for the purpose of general public utilities. Accordingly, we allow the ground raised by the assessee and hereby set aside the order of the Ld. Revenue Authorities. 20. With respect to Ground No.6 on the levy of interest U/s. 234A, B and D of the Act is consequential in nature and since the grounds raised by the assessee are allowed no separate adjudication is needed on this ground. 21. In the result, three appeals filed by the assessee for the AYs 2009-10, 2010-11 and 2011-12 are partly allowed. 22. In ITA Nos. 398 399/Viz/2017 (AY: 2012-13 and 2013- 14) the assessee has raised identical grounds which read as under: 1. The order of the Ld. CIT(A) is erroneous both on facts and in law. 2. The Ld. CIT(A) erred in confirming the action of the Assessing Officer in treating Rs. 17,789,10,301/- representing 85% of the Development Charges / Fee as the income of the appellant. 3. The Ld. CIT(A) ought to have considered the fact that 85% of the fee collected does not represent the income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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