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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
आदेश/O R D E R
PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the Assessee against the order of the CIT(A)-9, Ahmedabad (‘CIT(A)’ in short), dated 10.01.2017 arising in the assessment order dated 23.03.2015 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2012-13.
The grounds of appeal raised by the assessee read as under:
ITA No. 939/Ahd/17 [Shri Kalika Mataji Temple Public Trust vs. DC IT] A.Y. 2012-13 - 2 - “1. The Ld. CIT (Appeals) has erred & confirming the provisions of section 11(3)(c) and has incorrectly and illegally erred in confirming the addition of Rs. 1,91,45,052/-. It is submitted that on the facts and circumstances of the case, the addition is not justified and addition be deleted. 2. Without prejudice to the above the Ld CIT (Appeals), Baroda has erred in not appreciating the fact that it was impossibility of the situation that the trust could not have spent the money accumulated in A.Y. 2006-07 and complied with the provisions of Income Tax Act. It is submitted that the acts and deeds of the trust, resolutions passed and the orders passed by the state government / District collector clearly show that it was just not possible for the trust to spend the amount of Rs. 1,91,45,052/- accumulated. It is submitted that in view of this, the trust should be allowed to spend the money, as per the resolution, as and when the orders, which are challenged in the courts are cancelled and the trust in a position to buy the land and spend the amount as per the resolutions. It is submitted that it be held so now. 3. Without prejudice to the above it is submitted that the trust be allowed to spend the amount accumulated as soon as it is legally possible for it to spend the same. It is submitted that direction be given accordingly. Alternatively, the trust be allowed to spend the money for other objects of the trust not withstanding the resolution passed and the trust be allowed to do variations accordingly and the addition of Rs.1,91,450,52/- made be deleted.”
The assessee is in appeal before the Tribunal against the order of the CIT(A).
When the matter was called for hearing, the learned AR for the assessee pointed out at the outset that the assessee is a charitable trust and it has accumulated an amount of Rs.1,91,45,052/- in FY 2005-06 by passing appropriate resolution. It was submitted that the amounts so accumulated could not be utilized for the purposes for which it was so accumulated or set apart for application thereto owing to circumstances beyond the control of the Trust as clarified to the Commissioner of Income Tax (Appeals)-9, Ahmedabad. The Trust could not spent the accumulation of surplus in time due to the fact that the permissions were not granted by the competent
ITA No. 939/Ahd/17 [Shri Kalika Mataji Temple Public Trust vs. DC IT] A.Y. 2012-13 - 3 - authorities/receiver. The trustees of the assessee trust were restrained from managing the properties and affairs of the public trust. The receivers were in charge of the trust from 01.10.1994 till 30th August, 2007. It was thus contended that the Revenue authorities ought to have excluded the period during which the restrained order remained in force i.e. 30.08.2007 in the light of first proviso to Section 11(2) of the Act. The learned AR referred to the decision of the co-ordinate bench in assessee’s own case for the AY 2011-12 to submit that the appeal of the assessee in the similar circumstances have been upheld in the preceding assessment year.
The learned DR, on the other hand, relied upon the order of the CIT(A).
We have carefully considered the rival submissions. The assessee in the instant case has disputed the action of the AO in making additions of Rs.1,91,45,052/- under s.11(3) of the Act on the ground that the assessee trust has failed to spend the amount accumulated under s.11(2) of the Act within the stipulated period. We find that the identical issue arose in the AY 2011-12 in assessee’s own case for consideration of the Tribunal in ITA No. 201/Ahd/2015 order dated 21.03.2016. The relevant text of the order is reproduced hereunder for ready reference:
“3. We have heard both the parties and perused the material placed before us. We find that similar issue arose in assessee's own case for Assessment Year 2009-10 vide ITA No.200/Ahd/2015, wherein the ITAT has set aside the orders of the authorities below and restored the issue to the file of the Assessing Officer for decision afresh, by observing as under:- "4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The reasons for issuing notice u/s.148 of the Act are recorded in the assessment order at para-2, which are in the following terms:-
ITA No. 939/Ahd/17 [Shri Kalika Mataji Temple Public Trust vs. DC IT] A.Y. 2012-13 - 4 - "2. The following reasons were recorded for issue notice u/s.148 of the Act and the same are reproduced hereinbelow for the sake of reference.
"In this case return of income is filed on 25.09.2009 declaring total income of Rs.Nil/-. Return of income was processed on 06.07.2010 accepting the return income. During the course of assessment proceedings for A.Y. 2010-11, while analyzing various form No.10 submitted by the trust for relevant assessment years, it is observed that the trust has not applied 75% of its income as required u/s.11(2) of the I.T. Act till financial 2008-09 of F.Y. 2002-03. During the course of assessment proceedings the AR of the assessee and the undersigned have depth discussion regarding accumulations. Based on the assessment record available in this office, and the assessee's submission dated 26.12.2012 regarding accumulation the undersigned come to know that the trust did not spend accumulated fund in the concern financial year as required u/s.11(2) of the I.T.Act.
In the light of the above discussion and, it is not iced that the trust has violated the condition prescribed u/s.11(3) (c) of the I.T.Act. As per section 11(3) (c) of the I.T. Act, 1961.
"Any income referred to in subsection 11(2) which-
(c) is not utilized for the purpose for which it is so accumulation or set apart, during the period referred to in a clause (a) of that sub-section or in the year immediately following the expiry thereof- Shall be deemed to be the income of such person of the previous year in which it is so applied or ceases to be so accumulated or set apart."
The facts as brought out in A.Y. 2010-11 and as mentioned above are applicable to the case of the assessee for A.Y. 2009-10 and the point pertinent to note that the AR agreed vide order sheet entry dated 26.12.2012 that he does not have any objection about the addition made on the same ground during assessment proceeding for A.Y. 2010-11. Accordingly I have reason to believe that the assessee has failed to disclose truly and fairly all the facts relevant to its assessment for A.Y. 2009-10.
Thus, I have, therefore reason to believe that income exceeding Rs.One lacs chargeable to tax has been escaped the assessment for 2009-10 within the meaning
ITA No. 939/Ahd/17 [Shri Kalika Mataji Temple Public Trust vs. DC IT] A.Y. 2012-13 - 5 - of Section 147 of the Income Tax Act. Therefore, it is a fit case to issue notice u/s.148 for A.Y. 2009-10."
4.1. The AO in the assessment order followed the order of the ld.CIT(A) passed in AYs 2010-11 & 2011-12, wherein similar additions were confirmed by the ld.CIT(A).
4.2. The only question which arises for our consideration is whether the period in which the order of the Jt.Dist.Judge was in operation to be excluded for reckoning the period of 10 years as mentioned in section 11(2)(a) of the Act under the facts of the present case. For the sake of clarity, section 11(2) and 11 (3) are reproduced hereinbelow:-
Section 11 [(2) [Where [eighty-five per cent] of the income referred to in clause (a) or clause (b) of sub-section (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 :--]
(a) 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 apart, which shall in no case exceed ten years ;
[(b) the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5) :]
[Provided that in computing the period of ten years referred to in clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any Court, shall be excluded:]
[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 for the words "ten years" at both the places where they occur, the words "five years" had been substituted.]
[Explanation. : Any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub-section (1), read with the Explanation to that sub-section, which is not applied, but is accumulated or set apart, to any trust or institution registered under section 12AA or to any fund or institution or
ITA No. 939/Ahd/17 [Shri Kalika Mataji Temple Public Trust vs. DC IT] A.Y. 2012-13 - 6 - trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, shall not be treated as application of income for charitable or religious purposes, either during the period of accumulation or thereafter.]
Section 11 [(3) Any income referred to in sub-section (2) which--
(a) is applied to purposes other than charitable or religious purposes as aforesaid or ceases to be accumulated or set apart for application thereto, or
[(b) ceases to remain invested or deposited in any of the forms or modes specified in sub-section (5), or]
(c) is not utilised for the purpose for which it is so accumulated or set apart during the period referred to in clause (a) of that sub-section or in the year immediately following the expiry thereof,
[(d) is credited or paid to any trust or institution registered under section 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub- clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10,]
shall be deemed to be the income of such person of the previous year in which it is so applied or ceases to be so accumulated or [set apart or ceases to remain so invested or deposited or credited or paid or], as the case may be, of the previous year immediately following the expiry of the period aforesaid.]
[(3A) Notwithstanding anything contained in sub-section (3), where due to circumstances beyond the control of the person in receipt of the income, any income invested or deposited in accordance with the provisions of clause (b) of sub-section (2) cannot be applied for the purpose for which it was accumulated or set apart, the [Assessing Officer] may, on an application made to him in this behalf, allow such person to apply such income for such other charitable or religious purpose in India as is specified in the application by such person and as is in conformity with the objects of the trust; and thereupon the provisions of sub-section (3) shall apply as if the purpose specified by such person in the application under this sub-section were a purpose specified in the notice given to the [Assessing Officer] under clause (a) of sub- section (2) :]
ITA No. 939/Ahd/17 [Shri Kalika Mataji Temple Public Trust vs. DC IT] A.Y. 2012-13 - 7 -
[Provided that the Assessing Officer shall not allow application of such income by way of payment or credit made for the purposes referred to in clause (d) of sub-section (3) of section 11 :]
[Provided further that in case the trust or institution, which has invested or deposited its income in accordance with the provisions of clause (b) of sub-section (2), is dissolved, the Assessing Officer may allow application of such income for the purposes referred to in clause (d) of sub-section (3) in the year in which such trust or institution was dissolved.]
4.3. From the material available on record, the undisputed facts are:
(i) That, the order dated 01/10/1994 was passed by the Ld.Jt.District Judge, Panchmahal, Godra in the following terms:-
"ORDER 1. The applications are allowed. 2. Ad-interim injunction as prayed for in para-6-A be issued against the defendant. 3. Shri N.B.Patel, Sr.Advocate & Notary, Godhra Bar, is hereby appointed as Receiver to manage the properties of the public trust known as Kalika Motali Temple, at Pavagadh during the pendency of this suit. 4. The Receiver shall manage the property in the best of the interest of the trust and shall produce accounts of the trust every three months before the Assistant Charity Commissioner, Nadiad and shall also produce a copy thereof to this Court. He shall take all steps to realize the dues of the trust. He will be entitled to a monthly remuneration of Rs.1,500/- (Rupees one thousand five hundred only) tentatively from the date of issue of Receiver Patra in addition to reasonable expenses incurred by him for the management of the trust. He shall commence the work of Receiver forthwith. 5. Shri M.M.Parmar, C.O.C., District Court Panchmahals, at Godhra is also appointed as Co-Receiver to assist Shri N.B.Patel, the Receiver, appointed above. He shall also be entitled to a monthly remuneration of Rs.750/- tentatively in addition to ] reasonable expenses incurred by him for management of the trust properties. 6. The remuneration of the Receiver and his assistant are to be drawn from the trust property income. 7. All the defts are directed to hand over the possession of the trust, if any, with them including moveable and immoveable properties of the trust. 8. The defendants, their agents, office bearers and servants are hereby restrained from managing the properties and affairs of the public trust known as Kalika Mataji Temple, at Pavagadh,
ITA No. 939/Ahd/17 [Shri Kalika Mataji Temple Public Trust vs. DC IT] A.Y. 2012-13 - 8 - registered under Bombay Public Trust Act No.421/Panchmahals, during the pendency of this appeal. 9. The Receiver is also directed to make an inventory of the trust properties and affairs belonging to the public trust, known as Kalika Mataji Temple. The pltff is directed to pay additional remuneration for the said work of inventory of the trust properties at Rs.1,000/- (Rupees one thousand only at first instance.
Pronounced in the Open Court today this 01st day of October, 1994."
(ii) Further, the ld.Jt.District Judge confirmed the Ad-interim injunction granted vide order dated 01/10/1994 by order dated 29/10/1994 in the following terms:-
"ORDER 1. The ad-interim injunction and the order for the appointment of receiver passed by this court below exh.3 dated 1/10/1994 is hereby confirmed and made absolute till the final decision of the Civil Suit No.2 of 1994. 2. The objections filed by the defendants vide exh.23 are hereby rejected. 3. It is hereby ordered and declared that the defendants are not entitled to get the relief as claimed for in the WS exh.23. 4. The defendants shall pay the costs of this application to the plaintiff and bear their own.
Pronounced in the Open Court today this 29th day of October, 1994"
4.4. As per Ad-interim order dated 01/10/1994 Shri N.B.Patel, Sr.Advocate & Notary Godhra Bar was appointed as Receiver to manage properties of the assessee-trust. The Receiver was further authorized to manage the property in the best of the interest of the trust and produce accounts of the trust every three months before the Assistant Charity Commissioner, Nadiad. The Court also appointed Shri M.M.Parmar, C.O.C., District Court, Panchmahals, Godhra as Co-Receiver to assist Shri N.B.Patel, the Receiver. The defendants were further restrained from managing the properties and affairs of the trust during the pendency of the appeal The Receiver was directed to make an inventory of the trust properties and affairs belonging to the public trust known as Kalika Mataji Temple.
4.5. From the above order, it is clear that the affairs of the assessee-trust were taken over by the Court appointed Receiver and, therefore, it can be inferred from the material available on record that the trustees of the assessee-trust were restrained from managing the affairs. It is the contention of
ITA No. 939/Ahd/17 [Shri Kalika Mataji Temple Public Trust vs. DC IT] A.Y. 2012-13 - 9 - the assessee-trust that the above order remained in force till 30/08/2007. The ld.CIT(A) did not accept the explanation of the assessee on the ground that there was no prohibition or restraining order by the Court that the Receiver would not comply with the provisions of the Act. So far as the assessee- trust is concerned, its affairs were taken over by the Court appointed Receiver, therefore it cannot be inferred that the assessee-trust was in anyway responsible for not making an application for accumulation of income u/s.11(1) of the Act. The contention of the assessee is that the delay in making application by the assessee-trust was due to sufficient cause and the authorities below ought to have condoned the delay and excluded the period during which the affairs of the trust was taken over by the Court Receiver trust. However, no such situation is contemplated under the Act where the affairs of the trust are taken over by the Court appointed Receiver and compliance of the provision by the Receiver. Sub-section(3A) of section 11 contemplates a situation where due to circumstances beyond the control of the person in receipt of the income, any income invested or deposited in accordance with the provisions of clause(b) of sub-section (2) could not be applied for the purpose for which it was accumulated or set apart. In that situation, the Assessing Officer may, on an application made to him in this behalf, allow such person to apply such income for such other charitable or religious purpose in India as is specified in the application by such person and as is in conformity with the objects of the trust; and thereupon the provisions of sub-section(3) shall apply as if the purpose specified by such person in the application under this sub-section for a purpose specified in the notice given to the Assessing Officer under clause (a) of sub-section (2).
4.6. In the present case, no such application was made by the assessee- trust or the Court appointed Receiver. However, there is no dispute with regard to the fact that the trustees were retrained from managing the affairs. For the omission on the part of the Court appointed Receiver would not, in our considered, view disentitle the assessee-trust for seeking condonation of delay, if any, in notifying the AO in the terms of provision of section 11(2) of the Act. Therefore, we hereby set aside the orders of the authorities below and restore the issue to the file of AO for decision afresh. The AO would verify the period during which the affairs of the assessee-trust were managed by the Court appointed receiver. He would exclude such period in the light of first proviso to section 11(2) of the Act and would verify whether the money so accumulated or set apart was invested or deposited in the forms or modes specified in Section 11(5) of the Act."
ITA No. 939/Ahd/17 [Shri Kalika Mataji Temple Public Trust vs. DC IT] A.Y. 2012-13 - 10 - 4. Admittedly, the facts of the years under consideration are identical. We, therefore, respectfully following the above decision of ITAT in assessee's own case for Assessment Year 2009-10, we hereby set aside the orders of the authorities below and restore the issue to the file of the Assessing Officer for decision afresh in this year as well. Thus, the appeal of the assessee is allowed for statistical purposes.”
In parity, the orders of the authorities below are set aside and the issue is restored to the file of the AO for decision afresh in the light of the decision of the co-ordinate bench in AY 2011-12 and in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.
This Order pronounced in Open Court on 15/02/2019
Sd/- Sd/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 15/02/2019
S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।