ITO (E), WARD- 1(2), NEW DELHI vs. INDIAN OIL FOUNDATION, NEW DELHI

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ITA 206/DEL/2018Status: DisposedITAT Delhi25 August 2021AY 2014-154 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The tribunal held that the CIT(A)'s reliance on High Court decisions was sound, and the AO's contention that accumulated funds could only be used for specific purposes was not valid. No contrary binding decisions were presented by the Revenue.

What were the facts?

The assessee, a charitable trust, had unspent accumulated surplus from AY 2008-09. The Assessing Officer (AO) added this amount to the assessee's income for AY 2014-15, arguing it was not spent for its original specific purpose. The CIT(A) deleted the addition, relying on High Court decisions.

What were the issues?

Whether unspent accumulated surplus from a prior year, originally accumulated for a specific purpose, can be utilized for general administrative expenses in a subsequent year without attracting tax.

Which sections of the Income-tax Act were involved?

Section 11(2),Section 11(3)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH

For Appellant: Ms. Apoorva Bhardwaj, C.A
For Respondent: Ms. Anima Baranwal, Sr. D.R
Hearing: 18.08.2021Pronounced: 25.08.2021

ORDER

PER ANIL CHATURVEDI, AM :

1.

This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (A)-40, Delhi dated 31.10.2017 relating to Assessment Year 2014-15.

2.

The relevant facts as culled from the material on records are as under :

3.

Assessee is a Charitable Trust registered u/s 12A of the Act and is also allowed benefit of exemption u/s 80G(5)(vi) of the Act. Assessee filed its return of income for A.Y. 2014-15 on 2 25.09.2014 showing NIL income. The case was taken up for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 05.12.2016 and the total income was determined at Rs.2,04,45,515/-. Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who vide order dated 31.10.2017 (Appeal No.382/2016-17) allowed the appeal of the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before us and has raised the following grounds of appeal: i. “On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in allowing the amount of Rs.2,04,45,515/- accumulated and carried forwarded by the assessee from A.Y. 2008-09 which was not spent for the purpose it was accumulated for, as per Form 10 for A.Y.2008-09, instead it was spent on administrative expenses. ii. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing.”

4. During the course of assessment proceedings, AO noticed that assessee had unspent amount of accumulated surplus amounting to Rs.2,04,45,515/- related to the A.Y. 2008-09 and which was required to be spent during A.Y. 2014-15. Assessee had spent Rs.2,64,49,458/- which included the unspent accumulated surplus that was carried forward from A.Y. 2008-09. AO was of the view that as per the provision of Section 11(2) of the Act, the accumulation has to be for specific purpose which may be allowed to change u/s 11(3) of the Act considering the circumstances of the case. He was of the view that claim of the assessee to utilize unutilized accumulation for general purpose was not in accordance with provision of the Act. He accordingly

3 added the unspent accumulated surplus to the total income of the assessee. Aggrieved by the order of AO, assessee carried the matter before the CIT(A). CIT(A) by relying on the decision rendered by Hon’ble Delhi High Court in the case of DIT vs. Daulat Ram Education Society (2005) 278 ITR 260 (Delhi), Bharat Krishak Samaj vs DDIT (E) (2008) 166 Taxman 147 (Delhi) and various other decisions, held that the contention of the AO that the amount could have been accumulated only for the some specific purpose and not for the general purpose does not hold good. CIT(A) thus deleted the addition made by the AO. Aggrieved by the order of CIT(A), Revenue is now in appeal before us.

5.

Before us, Learned DR supported the order of CIT(A).

6.

Learned AR on the other hand reiterated the submissions made before the CIT(A) and supported the order of CIT(A).

7.

We have heard the rival submissions and perused the materials available on record. We find that CIT(A) while relying on the various decisions cited in the order has held that the contention of the AO that the amount could have been accumulated only for some specific purpose and not for the general purposes does not hold good. Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue nor has the Revenue placed on record any contrary binding decision in its support. In view of the aforesaid facts, we find no reason to 4 interfere to the order of CIT(A) and thus the appeal of the Revenue is dismissed.

8.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on 25.08.2021

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