ASSISTANT COMMISSIONER OF INCOME TAX EXEMPTION CIRCLE PATNA, PATNA vs. CHANAKYA NATIONAL LAW UNIVERSITY, NAYAY NAGAR

Assessment Year: 2016-17 ACIT(Exemption), Patna..........................................................……….……Appellant vs. Chanakya National Law University, Nayay Nagar.............……...…..…..Respondent Mithapur, Patna, Bihar – 800001. [PAN: AAAJC0528M] Appearances by: Shri Ashwani Kumar, Sr. DR, appeared on behalf of the appellant. Shri A. K. Rastogi, AR, appeared on behalf of the Respondent. Date of concluding the hearing : November 18, 2024 Date of pronouncing the order : November 21, 2024 ORDER

Per Sanjay Awasthi, Accountant Member:

The ld. CIT(A) erred in excluding the sum of Rs.3,58,00,000/- from income of the relevant assessment year on the ground that it was on account of internal transfer without appreciating mandate of AS-12 followed by the assessee.

3. Before us, the ld. DR has averred that since the accounts are maintained on mercantile system and any receivable amount was required to be shown as a receipt by the assessee. It has been further averred that this was actually not done. The ld. DR also pointed out a relevant portion of the Assessing Officer’s order in which it has been recorded that the impugned amount has been shown as a receipt and has been included in computing excess of income over expenditure. It has been pointed out that though the impugned amount has been included as a receipt but the same has not been shown as an item of receipt in the return of income.

4. Per contra, the ld. AR has emphasised the point that no amount was received during the year and to meet expenses, this amount was transferred from one head to another in order to ensure smooth running of the institution.

it is specifically mentioned that the mandate provided in Accounting Standard

12. (‘AS-12’) has not been kept in mind while ensuring an appropriate treatment of the impugned amount in the 2 Assessment Year: 2016-17 Chanakya National Law University accounts. This Accounting Standard deals with treatment of Govt. grants in the books of account. At this stage, it is noticed that the AS-12, in question, as an individual issue was neither before the Assessing Officer nor was it before the ld. CIT(A). However, it needs to be mentioned that for recognition of an amount as a receipt under this Accounting Standard two conditions are required to be present viz. (a) if the Govt. grant is expected to be realised or its collection is reasonably certain, (b) conditions pertaining to the said Govt. grant have been complied with. As has been mentioned earlier, this issue of the specific Accounting Standard was not dealt with either by Assessing Officer or ld. CIT(A), hence, we deem it fit to remand the matter back to the file of the Assessing Officer for verifying whether the said amount was actually receivable, whether the assessee has been accounting for such grants on receipt or mercantile basis in the past and finally whether there are any terms and conditions pertaining to the said arrangement between the assessee and the Govt. regarding the receipt of such amounts. The Assessing Officer would do well to analyse these issues and thereafter come to a conclusion as to whether the impugned amount would be treated as income for the year under consideration or alternatively treated as income in the year of actual receipt. We direct accordingly. 5.1 Before parting with this issue, it deserves to be mentioned that the ld. DR had pointed out that the issue of the Form 10 not being filed within the time prescribed in the Act/Rules would fatally affect the assessee’s chance of any accumulation as envisaged u/s 11(2) r.w.s. 13(9) of the Act. Though this has not been specifically raised in the grounds of appeal but it is noticed that in the last but one paragraph (Para 8) of the impugned order, the ld. CIT(A) has mentioned as under:

I have carefully considered the above grounds and appellant's arguments relating to the condonation of delay in furnishing the Form No.10 as required under section 11(2) r/w section 13(9) and the consequential eligibility to carry forward the amount accumulated or set apart for 3 Assessment Year: 2016-17 Chanakya National Law University charitable purposes in India. Having regard to powers of Central Board of Direct Taxes under section, 119(2)(b) and delegated powers in the of condonation of delay vested with Jurisdictional Commissioners of Income Tax as per the CBDT Circulars mentioned above, I refrain from proceeding to deal with the condonation pleaded in the appeal by the appellant and direct the appellant to file an application before the concerned Jurisdictional Commissioner of Income Tax seeking condonation in its case. Accordingly, the appellant's grounds are dismissed and the denial of benefit of section 11(2) by the Assessing Officer is hereby confirmed.

5.2 We support this action in as much as that the CBDT has its powers u/s 119(2)(b) of the Act to condone the delay and in case, the said action is done then the assessee would get consequential benefits u/s 11(2) r.w.s. 13(9) of the Act.