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TMI Blog2022 (12) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeded jurisdiction in denying exemption under section 11 of the Act, traversing beyond the direction of the Tribunal to verify whether (i) expenses incurred by the appellant were utilized for the purpose of the Trust, and (ii) all other conditions relating to allowability of deduction under the said section were satisfied or not. 3. That the CIT(A) erred on facts and in law in not holding that assessment order was void ab initio, having been passed in violation of principles of natural justice, without affording adequate opportunity of being heard and without confronting the appellant with the material inspected/collected by the assessing officer ex-parte. 4. That the CIT(A) erred on facts and in law in holding that the action of the Assessing Officer in denying the benefit of exemption under Section 11 of the Act merely on the ground that books of accounts of the appellant were not genuine and were to be rejected. 5. That the CIT(A) erred on facts and in law in not appreciating that books of accounts were verified by the Assessing Officer hastily, i.e. in a short time on the same date on which assessment order being passed without due application of mind, deserved to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside. 6. Without prejudice to the aforesaid, that the CIT(A) erred on facts and in law in upholding the action of the Assessing Officer in disallowing 50% of the deficit for establishment and maintenance charges while computing the income of the appellant. 7. Without prejudice to the aforesaid, that the CIT(A) erred on facts and in law in upholding the action of the assessing officer in disallowing 50% of expenses incurred on support of other education institutions/college alleging that the same could not be verified during the assessment proceedings in the absence of correct and reliable books of accounts. 8. Without prejudice to the aforesaid, that the CIT(A) erred on facts and in law in upholding the action of the assessing officer in disallowing 50% of the expenses on the ground that proper books of accounts had not been maintained. 9. That the CIT(A) erred on facts and in law in confirming levy of interest under Section 234B, 234D and withdrawal of interest under Section 244A of the Act." 4. Vide applications both dated 07.07.2022 the assessee requested for admission of the following additional ground of appeal in terms of Rule 11 of the Income-Tax (Appellate Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We have heard the Ld. Representative of the parties. The Ld. AR submitted that the additional ground may be admitted for adjudication as it raises an issue of purely legal nature but the Ld. DR objected to it as, according to him, claim of exemption under section 10(34) of the Act has been made for the first time before the Tribunal which was controverted by the Ld. AR who drew our attention to the statement of computation of total income filed along with the return for AY 2006-07 and AY 2008-09 appearing at pages 19 and 52 of the Paper Book respectively wherein the assessee claimed exemption of dividend income under section 10(34) of the Act. 6. On careful consideration of the rival submissions, we are inclined to admit the additional ground raised in both the AYs. Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT 229 ITR 383 (SC) held that the Tribunal should not be prevented from considering questions of law arising in assessment proceedings although not raised earlier. According to the Hon'ble Supreme Court, the view that the Tribunal is confined only to issues arising out of the appeal before CIT(A) is too narrow a view to take of the powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting. However, this is irrelevant as there is evidence by way of bills, vouchers etc. which were duly presented before the Ld. AO/Ld. CIT(A) and were also examined. 9. The Ld. DR relied on the orders of the Ld. AO and Ld. CIT(A) and submitted that there is adverse finding by the authorities i.e. FSL / DGIT(Exemption) and the Ld. AO. These discrepancies are not only pertaining to timing of writing of books but also it is noticed that there is overwriting at certain places in the books of account and thus authenticity of books of account is questionable. 10. In rebuttal, the Ld. AR submitted that these are audited books of account. Bills, vouchers etc. were duly produced and verified. Expenses are in sync with expenses in earlier years and there is no abnormal variation shown thereof. The Ld. AR also submitted that ITRs filed by the assessee show specific claim before the Ld. AO in respect of exemption under section 10(34) of the Act. 11. We have given careful thought to the rival submissions of the parties and perused the material available in the records. This is the second round of appeals by the assessee before the Tribunal. The order dated 05.08.2011 of the Tribunal in ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease the books of the assessee or transfer to the ward for verification was not accepted by the Ld. DGIT(Exemption) who asked the Ld. AO to examine the books of account of the assessee in his office. The Ld. AO complied and examined the impounded books of account. According to the Ld. AO, the assessee also produced bills and vouchers. The Ld. AO observed that expenses incurred as per Income & Expenditure Accounts are almost through account payee cheque. The Ld. AO referred to the observations of FSL and the submissions of the assessee before him, namely that the receipts are only for educational activities such as admission fee, courses and training fee; substantial receipts were through cheques only which were entered in cash book; cash receipts were deposited in the bank; minor lapses be ignored as aim of the Trust is to impart education and not making profit and that the assessee is not doing any trade/business. 11.5 On examination of the books of account and comments/opinion of FSL, the Ld. AO came to the conclusion that books have not been written on day to day basis but in a few sittings. 11.6 In our considered opinion, the above allegation alone is not sufficient to make a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58 (Bom) have held that benefit under section 11 cannot be denied on the ground that the assessee has not obtained exemption from prescribed authorities under section 10(23C) of the Act. 11.8 We, therefore, hold that denial of exemption under section 11 of the Act to the assessee Trust in these two AYs is not justified. Exemption under section 11 of the Act deserves to be allowed to the assessse in both the years. 11.9 Accordingly, the assessee succeeds in all its effective grounds of appeals in both the AYs involved i.e. AYs 2006-07 and 2008-09 relating to denial of exemption under section 11 and disallowances out of expenses claimed. 12. The ground relating to levy of interest in both the AYs is consequential. 13. Let us now take up the additional ground raised by the assessee in both the AYs which we have admitted for consideration. 14. In the additional ground, the assessee has claimed exemption of dividend income of Rs.90,40,050 in AY 2006-07 and Rs.1,44,64,080 in AY 2008-09 under section 10(34) of the Act. The said dividend income has been credited to the Income & Expenditure Account of the relevant years. 15. In support the Ld. AR relied upon the decision of Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that any such income is accumulated or set apart for application for such purposes in India to the extent of which the income so accumulated or set apart in computing 15% of the income of such property, is dealt with. Therefore, it is a particular assessee and who is in receipt of such income as is falling under clause (a) of subsection (1) of section 11 who would be claiming the exemption or benefit. That is a income derived by a person from property. It is that which is dealt with and if the property is held in trust for the specified purpose, the income derived there from is exempt and to the extent and to the extent indicated in section 11(1)(a) of the Income-Tax Act, 1961. There is nothing in the language of sections 10 or 11 which says that what is provided by section 10 or dealt with is not to be taken into consideration or omitted from the purview of section 11. If we accept the argument of Mr. Malhotra and the Revenue, the same would amount to reading into the provisions something which is expressly not there. In such circumstances, the Tribunal was right in its conclusion that the income which is this case the assessee trust has not included by virtue of section 10, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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