9911796707
TMI Blog2022 (12) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... to be disregarded. 2.2 The authorities below have erred in not appreciating the fact that the application filed for approval u/s 10(23c)(vi) of the Act having not been disposed off within the prescribed due date amounts to deemed approval u/s 10(23C)(vi) of the Act. 2.3 In any case. the learned AO had erred in holding that the Appellant is not entitled to make a fresh claim of deduction otherwise than by way of filing a revised return of income. On proper appreciation of facts and law applicable. fresh claim of deduction could be considered by the Appellate authorities during appellate proceedings. 2.4 In any case, the Appellant is eligible for deduction u/s 10(23C)(vi) of the Act and the same is to be granted to the appellant. 3. The learned AO had erred in holding that the application filed by the appellant u/s 154 of the Act stands disposed as the proceedings are subjudice in view of interim stay granted by the Honourable High Court of Karnataka with respect to notice u/s 143(2) of the Act. The conclusion of AO being erroneous both on facts and law applicable, is to be disregarded. 4. In view of the above and on the grounds to be adduced at the time of hearing, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 with Nil income along with Form 10 claiming the refund of Rs.4,71,96,140/-. 2.2 The CPC, Bangalore issued intimation dated 21/02/2018 u/s. 143(1) according to which the gross total income of the assessee was determined at Rs.172,29,61,589/- by disallowing the sum of Rs.74,91,09,587/- that was claimed as accumulation u/s. 11(1)(a) and disallowing sum of Rs.70,83,56,256/- u/s. 11(2) being the amount accumulated and set apart for specific purposes. TDS credit of Rs.4,71,96,140/- claimed by the assessee was also not denied. The said intimation was challenged by the assessee by filing rectification application on 21/03/2018, and on 09/07/2018, order u/s. 154 was passed by the CPC enhancing the taxable income from Rs.172,29,61,598/- to Rs.176,99,71,700/- by withdrawing the deduction of Rs.4,70,10,101/- that was originally allowed in the intimation passed on 21/02/2018. 2.3 Against the order passed by the Ld.AO dated 09/07/2018, the assessee filed appeal before the Ld.CIT(A). The Ld.CIT(A) observed as under: "4. Discussion before the CIT(Appeal) The grounds raised by the taxpayer are that no revenue expenditure was allowed towards application of funds, no capital expenditure was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 85% of the income is not applied for charitable purposes, the organisation is required to accumulate or set apart such income for future application. The income so accumulated will not be included in the total income of the organisation if the following conditions are applied. * Such trust or institution furnishes Form No 10 - notice of accumulation of income by charitable trust or institution electronically to assessing officer, on or before the due date for filing the R/I. * Mention the purpose for which income is being accumulated or set aside. * Income shall not be accumulated for more than 5 years and years in which income accumulated or set aside due to order or injunction of any court to be excluded in computing 5 years. * Money so accumulated or set aside is invested or deposited in specified mode as mentioned under sec 11(5). Above such option is to be exercised in Form 10 to be furnished electronically to the assessing officer with or without digital signature by the trust on or before due date of filing the return. Filing of Form 10 under rule 17 The organisation desiring to accumulate funds under sec 11(2) has to give a notice in writin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c 11[(2) [Where [eighty-five] per cent of the income_ referred to in clause (a) or clause (b) of subsection (1) read with the Explanation to that sub-section is not applied, or is not deemed to have been applied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to such purposes in India, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely:-] 1. such person specifies, by notice in writing given to the [Assessing] Officer in the prescribed manner, the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set agar' which shall in no case exceed ten years; 2. the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5)]: Provi..... [Provided further that in respect of any income accumulated or set apart on or after the 1st day of April, .2001, the provisions of this sub-section shall have effect as if f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bank of India Act, 1934 (2 of 1934); (iv) investment in units of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963); (v) investment in any security for money created and issued by the Central Government or a State Government; (vi) investment in debentures issued by, or on behalf of, any company or corporation both the principal whereof and the interest whereon are fully and unconditionally guaranteed by the Central Government or by a State Government; Unless the taxpayer makes deposits it these instruments specified in sec 11(5) the conditions for accumulation of income will not be satisfied and hence accumulation of income @ Rs 70,83,56,256 stands disallowed, since the taxpayer fails both the conditions for accumulation of income or setting apart for specified purposes u/s 11(20 and 11(5)." 2.4 The assessee then received a communication from CPC on 04/12/2018 intimating the assessee that, the return filed by the assessee, dated 31/03/2017 was rectified by the Ld.AO. The assessee again filed rectification application vide letter dated 25/01/2019 submitting as under: "The University e filed NIL return of income on 17.10.2016 AC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee filed appeal before the Ld.CIT(A). The Ld.CIT(A) vide order dated 04/02/2022 dismissed the appeal of the assessee by observing that as there is no order granting approval u/s. 10(23c)(vi) i.e. produced by the assessee from the competent authority, the appeal filed by assessee against the CPC intimation dated 04/02/2019 was rejected. 2.7 Against these orders of Ld.CIT(A), the assessee is in appeal before this Tribunal. ITA No. 563/Bang/2022: 3. The primary contention of the Ld.AR in this appeal is that disallowance has been made by the CPC in an intimation issued u/s. 143(1) dated 09/07/2018 denying the exemption claimed u/s. 11. She submitted that no disallowance could be made u/s. 11 by the CPC in an intimation issued u/s. 143(1) of the Act. She submitted that such disallowance cannot be made without granting opportunity of being heard to the assessee. She submitted that the Ld.CIT(A) in the impugned order upheld the disallowance by observing that no details were filed in the audit report in order to substantiate the exemption claimed in Form 10. She submitted that no opportunity was granted by the CPC/AO before making such disallowance. 3.1 On the contrary, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made. Explanation.:-For the purposes of this sub-section,- (a) "an incorrect claim apparent from any information in the return" shall mean a claim, on the basis of an entry, in the return,- (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction; (b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a). 4.2 In the mechanism of application of Section 143(1) for the relevant assessment year, we find that, the first proviso to Section 143 (1) mandates that "no adjustments" except for arithmetical mistakes and/or an incorrect cla ..... 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