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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA, JM, & SHRI AMARJIT SINGH, AM
O R D E R
Per Amit Shukla, Judicial Member:
The aforesaid appeal has been filed by the revenue against the impugned order dated 24.12.2021, passed by Ld. CIT(A)-53, Mumbai for the quantum of assessment passed u/s 143(3) for AY 2017-18. The revenue has taken the following grounds of appeal:-
Board of Examination for Seafarers Trust (1) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is right in deleting the addition made by the AO by disallowing the claim of exemption u/s 11(2) of the Act. as the assesses has failed to fulfill the conditions of the provisions of Sec. 11(2) of the Act. ?" (2) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is right in deleting the addition made by the AO on the ground that the income is accumulated for general purposes of the trust and not for specific purposes. ?" (3) The Applicant craves to leave, to add, to amend and /or to alter any of the ground of appeal
, if need be.
2. It is brought on record that the appeal of revenue is barred by limitation. However, Ld. AO has filed an application for condonation of delay, which are as under:-
2. It has been communicated to this office vide above referred Form dated 08.07.2022 received in this office on 12.07.2022 that the above appeal is time -barred by 74 days.
3. In this connection, it submitted that the above order of the Ld. CIT(A) was received on 05.01.2022 in the office of Pr.CIT Central-3, Mumbai. Hence, the last date of filing appeal in this case was 06.03.2022. However, due to the outbreak of COVID-19 pandemic, the Hon'ble Supreme Court took Suo Motu cognizance of the difficulties that might be faced by the litigants in filing petitions/ Board of Examination for Seafarers Trust applications/ suits/ appeals/ all other proceedings within the period of limitation prescribed under the general law of limitation or under any special laws (both Central and/or State) and passed its order dated 10.01.2022 in the Miscellaneous Application No.21/2022 to Suo Moto Writ Petition (Civil) No.3/2020 has extended the limitation of filing appeal in respect of all judicial or quasi-judicial proceedings. In its order dated 10.01.2022, the Hon'ble Supreme Court has directed to exclude the period from 15.03.2020 to 28.02.2022 to compute the limitation period for filing of appeal and further stated that in cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining with effect from 01.03.2022 is greater than 90 days, that longer period shall apply. 4. In view of the said order, time limit to file the appeal in this case was available upto 29.05.2022. However, the appeal in the present case was filed on 19.05.2022 which is within the time-limits. A copy of the said order is enclosed herewith for your ready reference. 3. In view of the above reasons given in the application and as per the order of Hon’ble Supreme Court (supra), the appeal cannot Board of Examination for Seafarers Trust be held to be barred by limitation, accordingly the delay is condoned and the appeal is admitted for adjudication.
The facts in brief are that, assessee is charitable organization registered u/s 12A and is engaged in conducting examination, assessment, certification for personnel entering into shipping and transport industry. During the course of assessment proceedings, AO noted that assessee has claimed accumulation u/s 11(2) of the Act at Rs. 1,85,25,000/- for the purposes mentioned as ‘For seafarers enhancement programmed scheme’ and ‘Professional and Hard skill enhancement’ each purpose for an amount of Rs. 92,75,000/-.
Ld. AO after analyzing the evidences u/s 11(1), 11(2) and 11(3) held that for claiming exemption u/s 11(2); (i) the Trustees should have a specific purpose in mind which will require accumulation of income to be spent over a long period; (ii) such specific purpose for which the accumulation is done is to be decided by the trustees in their meeting by adopting a resolution because such important decision can only be taken by trustees formally; (iii) on the basis of such resolution, the claim u/s. 11(2) can be granted if form No. 10 Board of Examination for Seafarers Trust is also filed and submitted within the prescribed time. The amount should be invested in the prescribed mode u/s. 11(5) of the IT. Act, 1961; and (iv) On the basis of such resolution the auditors will also specify the sum accumulated u/s. 11(2) of the IT. Act in audit report in Form No. 10B.
The AO observed that in the case of the assessee, in Form No. 10, the assessee has not fulfilled the prescribed conditions. The purpose to be specified could not be mere repetition of the objects for which accumulation upto 15% was allowed u/s. 11(1)(a) of the Act. Accordingly, AO denied the accumulation of Rs. 1,85,25,000/- u/s 11(2) of the Act.
Ld. CIT(A) has accepted the accumulation and reversed the findings of AO after observing and holding as under:-
4.3. The findings of the AO in the assessment order and the submissions made by the assessee have been considered. The appellant has submitted that there is no repetition of any object of the Trust in Form NO. 10B. The funds of Rs. 92,75,000/- and Rs. 92,50,000/- was accumulated "For seafarers enhancement programme scheme" and "Professional and Hard Skill enhancement" respectively. These purposes are specific purposes.
Board of Examination for Seafarers Trust Further, it is submitted that BES Trust had an understanding with Maritime Training Trust (MTT), which is jointly run by the Central Government and the local shipping industry (D.G. Shipping is the Chairman of MTT) for conducting a 2 day Educational Programme for Indian Seafarers titled "Seafarers Enhancement Programme". MTT pays BES Trust money in advance for conducting 100 such programmes. The expenses for the programme are audited by our auditor and submitted to MTT twice in a year. There is no time limit fixed by MTT to expend this amount. BES Trust/ conducts the programme at various places i.e. Mumbai, Chennai, Kolkata, Kochi depending upon availability of candidates. The participants attend the programme free of charge which includes hand-out materials, lunch and tea. BES Trust had been doing these programmes successfully for several years in the past as well, which have been accepted by the Department during scrutiny assessments. Further, the amounts accumulated by the appellant for A.Y. 2017-18 is indeed spent for the very purpose for which it was stated to be. It is also explained that National Maritime Board Rehabilitation Trust" donates money to BES Trust for conduct of Training programme titled "Professional and Hard Skills Enhancement" for Fitters and Cooks. BES Trust engages Don Bosco Maritime Institute, Vidyavihar, Mumbai and NUSI Offshore Training Institute, Panvel, Mumbai inter-alia for conducting the training programmes, apart from its own resources. BES Trust pays these two institutes as per their invoices. Indian Fitters and Cooks Board of Examination for Seafarers Trust serving on ships can attend these educational programmes free of cost. There is no time limit fixed for expending the amount of donation, however, efforts are made to conduct as many as possible courses. Accordingly, it is submitted that the purpose specified in Form No. 10B are specific and aimed at giving benefit to seafarers by providing free education to this class of the socity. 4.3.1 The appellant Trust is a charitable trust registered under the Bombay Public Trust, 1950. The Trust is engaged in conducting examination, assessment, certification for personnel entering into shipping and transport industry. BES Trust has been authorized by the Directorate General of Shipping to conduct "All India Exit Examination" for trainees passing out of pre-sea training institutes for ratings (GP and CCMC) and is a certified ISO 9001:2015 organization. For A.Y. 2017-18, the appellant has set apart accumulated funds amounting to Rs. 1,85,25,000/-. The funds were accumulated u/s. 11(2) of the Act and it was set apart for specific purposes of "Seafarers Enhancement programme scheme" and "Professional and Hard Skill enhancement". The appellant has also mentioned the above mentioned 2 specific purposes in Form 10B submitted to the competent authority. The appellant has also spent the accumulated fund for such specific purposes for A.Y. 2017-18 in no. of judgments, the Court has held that the purposes to be specified u/s. 11(2) of the Act cannot be beyond the objects of the Board of Examination for Seafarers Trust Trust. In the case of the appellant also the purposes specified for accumulation of the fund is as per the objects of the Trust. In view of the above discussion, the appellant is eligible to set apart accumulated funds of Rs. 1,85,25,000/- u/s. 11 (2) of the Act. Accordingly, the accumulation u/s. 11(2) denied by the AO in respect of the amount of Rs. 1,85,25,000/- is set aside and allowed to the appellant. The AO is directed accordingly.
After considering the submission made by both the parties and on perusal of the impugned order and material available on record, we find that assessee had filed Form No. 10B for accumulation u/s 11(2) and the purpose which was stated was "For seafarers enhancement programme scheme" and "Professional and Hard Skill enhancement" which was part of the ‘objects’ of the assessee and was to applied for the specific purposes of the ‘objects’ only.
It has been brought on record that BES Trust had an understanding with Maritime Training Trust ('MTT'), which is jointly run by the Central Government and the local shipping industry (D.G. Shipping is the Chairman of MTT) for conducting a 2-day Educational Programme for Indian Seafarers titled "Seafarers Enhancement Programme". MTT pays BES Trust money in advance Board of Examination for Seafarers Trust for conducting 100 such programmes. The expenses for the programme are audited by our auditor and submitted to MTT twice in a year. There is no time limit fixed by MTT to expend this amount. BES Trust conducts the programme at various places i.e., Mumbai, Chennai, Kolkata, Kochi depending upon availability of candidates. The participants attend the programme free of charge which includes hand-out materials, lunch and tea. BES Trust had been doing these Programmes successfully for several years in the past as well, which have been accepted by the Department during scrutiny assessments. It has also brought on record that National Maritime Board Rehabilitation Trust donates money to BES Trust for conduct of Training programme titled "Professional and Hard Skills Enhancement" for Fitters and Cooks. BES Trust engages Don Bosco Maritime Institute, Vidyavihar, Mumbai and NUSI Offshore Training Institute, Panvel, Mumbai inter-alia for conducting the training programmes, apart from its own resources. BES Trust pays these two institutes as per their invoices. Indian Fitters and Cooks serving on ships can attend these educational programmes free of cost.
Board of Examination for Seafarers Trust 10. Thus, it cannot be said that there was no specific purpose mentioned in the Form No. 10B for the purpose of accumulation, because it was purely towards object which the assessee has granted u/s 12A. We do not find any infirmity in the order of Ld. CIT (A), therefore the grounds of appeal raised by revenue are dismissed.