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Income Tax Appellate Tribunal, “A” Bench, Mumbai
O R D E R Per Shamim Yahya (AM) :- This is an appeal by the Revenue directed against the order of learned CIT(A) dated 1.3.2019 pertaining to assessment year 2011-12.
Grounds of appeal read as under : 1. "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in allowing the assessee's claim of exemption of Rs.3,96,94,1 79/- being the interest income accrued but not received during the previous year as the assessee followed the mixed system of accounting i.e. cash system for receipts and mercantile system for expenses without appreciating the fact that the assessee is a company registered u/s 25 of the Companies Act, 1956 and was statutorily required to follow mercantile system". 2. "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in allowing the assessee's claim without appreciating that the auditor in its report in accounting policies and notes to accounts has specifically mentioned that "the foundation follows mercantile system of accounting and recognizes income and expenditure on accrued basis except leave encashment liability which is accounted on payment basis". 3. "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting addition made by the AO u/s 13(3) of the IT. Act on account of receiving lower rent from the related party without appreciating that the DVO has determined the market value of the said
2 Aditya Birla Foundation property to Rs.2,61,17,501/- being value of lease rentals of Hospital building at the rate of Rs.4.45/- per month per sq. ft and for staff quarters at Rs.3.94/- per months per sq. ft. which is still higher than the rate charged by the assessee trust i.e. 4.10/- per month per sq. ft. for hospital building and Rs. 3/ - per month per sq. ft. for staff quarters. The As the DVO has determined the rental value higher than the rent actually received, so there is no doubt about the fact that the assessee trust is not receiving adequate rent". 4. "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in allowing the assessee's claim of accumulation of income without appreciating the fact that in the return of income & form 10B, deficit has been claimed leaving no scope of accumulation u/s 11(2) of the IT. Act which is permitted for specific purposes". 5. "The appellant prays that the order of the Commissioner of Income Tax (Appeals)-3, Mumbai be set aside and that of the Assessing Officer be restored".
Brief facts of the case the assessee is registered as a Charitable Organization with DIT (Exemption), Mumbai u/s. 12A under vide Registration No. T R-30884 dated 28/12/1994. The Appellant has accordingly claimed exemption u/s. 11 of the Act. The object of the Appellant is to do charitable activities in the field of medical as per the objects in the Trust Deed. The assessee filed its return of income on 30/09/2011 declaring total income at deficit of Rs. 1,65,32,977/-. The case was selected for scrutiny under the Scrutiny selection norms and notices u/s. 143(2) & 142(1) along with questionnaire were issued and duly served on the Appellant. Finally, the Assessing Officer has passed order u/s 143(3) on 24/03/2014 determining total income at Rs. 12,29,88,240/-. Subsequently, the said order was rectified by Assessing Officer u/s. 154 vide order dated 19.06.2014 determining total income at Rs.5,03,19,020/-.
Upon assessee’s appeal learned CIT(A) granted substantial relief. On some of the relief granted Revenue is in appeal before us.
Apropos ground No. 1&2
Brief facts are that during the year under consideration, the assessee received interest income amounting to Rs. 1,89,71,240/- which was classified
3 Aditya Birla Foundation under the head "Income from Other Sources" and accounted using the cash system of accounting. This method of accounting was claimed to have been followed consistently by the Assessee since its inception. The Ld. AO held that section 145 of the Act prescribes the method of accounting which states that income shall be computed in accordance with cash or mercantile system of accounting regularly followed by the assessee. The system of hybrid accounting or mixed accounting has been done away with. He also stated that consistently adopting Hybrid method would not validate an incorrect method. Consistency does not override correctness. The Assessing Officer held that where the assessee was following mercantile system of accounting, the same method should also be followed for accounting of interest income as well. The Ld. AO, by invoking provisions of section 144, re-worked the amount of interest and added back the amount of Rs. 3,96,94,179/- to the computation of income.
Further, the Assessing Officer held that assessee's proposition that only income that is received can be applied is not correct. Section 11 also provides for a situation where the income is accrued but not received by the trust. Explanation 2 to section 11(1) clearly states that if the income expended fall short of 85% of the income for the reason that the income has not been received during the year or for any other reason then an option is given to the assessee to intimate the Assessing Officer that the same would be spent in the year of receipt or in the immediately following year as the case may be. That the legislature has foreseen a situation where the income was accrued but could not be spent as it was not received. That therefore, the mixed method of accounting followed by the assessee is not in accordance with the provisions of section 145 r.w.s. 11(1) of the Act and is rejected. Accordingly, the assessee's interest income is re-worked by invoking section 144 in accordance with the provisions of section 145 of the Act.
Upon assessee’s appeal learned CIT(A) deleted the addition by holding as under :
4 Aditya Birla Foundation
“I have considered the facts of the case and the discussions made by the AO as also the submissions made by the Appellant. The Appellant has submitted that right from its inception, it is regularly following cash system of accounting qua the interest income and which has not been disputed by the Department for earlier assessment years. However, it is not disputed by the AO that the interest income is regularly offered to tax on cash basis and therefore, it is a tax neutral exercise. I also agree with the submissions made by the appellant that u/s. 145 of the Act, income from other sources can be computed in accordance with the cash or mercantile system regularly followed by the Appellant. It is also observed that on similar issue in the case of G.D. Birla Medical Research Education Foundation, CIT (A)-3 has deleted the addition made by the AO.”
Against the above order the Revenue is in appeal before us.
We have heard both the parties and perused the records. Learned Departmental Representative submitted that the assessee trust is following mercantile system of accounting hence, it was required to account for the interest on accrual basis and not receipt basis. He submitted that the said system followed by the assessee is contrary to the provisions of section 145(1) of the Act. In this connection in support of his argument he placed reliance upon the following case laws :-
• Dhondiram Dalichand Vs. CIT (81 ITR 609) • Daman Metallic Oxides Vs. CIT (ITA no. 7573/Mum/2011 dt. 23.5.2013) • CIT Vs. Thobhandas Jivanlal Gajjar (109 ITR 296) • M.M. Ipoh Vs. CIT (67 ITR 106) • CIT Vs. Seshasayee Industries Ltd. (242 ITR 691) • Dashmesh Transport Co.(P) Ltd. Vs. CIT (125 ITR 681) • Shriram Transport Finance Co. Ltd. Vs. ACIT (70 ITD 406) 10. Per contra, learned Counsel of the assessee submitted that this system has been followed for almost fifteen years and the Revenue has not objected. Learned Counsel further submitted that section 145(1) of the Act does not provide any hindrance to the system of accounting in this regard being followed by the assessee. In this regard he placed reliance upon the following case laws :- • PCIT Vs. Quest Investment Advisors (P) Ltd. (409 ITR 545) • CIT Vs. Nagri Mills Co. Ltd. (33 ITR 681)
5 Aditya Birla Foundation
• CIT Vs. Ganga Charity Trust Fund (162 ITR 612) • DCIT Vs. M/s. G.D. Birla Medical Research & Education Foundation (ITA No. 4348/Mum/2018) 11. We have carefully considered the submission and perused the record. We note that the assessee is a trust. It is undisputed that the assessee is following mercantile system of accounting as per its audit report and accounts. However, it is also undisputed that the assessee is accounting for interest income on receipt basis. As a result of this finding, the Assessing Officer has found that Rs. 3,96,94,179/-being interest accrued have not been accounted by the assessee on the ground that it is accounting for the same on the basis of cash system i.e. receipt basis. We note that section 145(1) of the Act provides that income chargeable under the head ‘profits and gains of business or profession’ or ‘income from other sources’ shall subject to the provisions of sub-section (2) be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Thus it is amply clear that the method of accounting provided in the Act is either cash or mercantile and hence it cannot be mixed of hybrid system any more. Thus it is also clear that as per assessee’s accounting system duly followed certified by the auditor is mercantile system of accounting. Hence, by only accounting for interest on receipt basis and other aspect of income and expenditure on mercantile basis assessee is following hybrid system which is not permissible. Now assessee’s contention is that learned CIT(A) has accepted that the assessee is following this system for long time and Revenue has not disputed the same. Here we note that there is no doubt that this system is not permissible in the present assessment year as per the sanguine provisions of the Act as enshrined of section 145 of the Act. Just because wrong system has been followed for quite some time, it has been claimed that the same should be allowed to continue. In this regard we refer to Hon'ble Supreme Court decisions that there is no heroism in perpetuating an error. It was held that to perpetuate an error is no heroism. “To rectify it is the compulsion of judicial conscience. In this we derive comport and strength from wise and inspiring
6 Aditya Birla Foundation words of justice Bronsm in Pierce Vs. Delameter. A judge ought to be wise enough to know that he is fallible and therefore ever ready to learn, great and honest enough to discard all mere pride of opinion and follow the truth wherever it may lead and courageous enough to knowledge his error”. [Hon'ble Supreme Court in Distributors Baroda (47 CTR 349)]. Further it has been held that once the court comes to a conclusion that a wrong order has been passed it become the solemn duty of the court to rectify the mistake rather than perpetuate the same. [Hotel Balaji & Ors. Vs. State of Andhra Pradesh & Ors. (AIR 1993 SCI 048)].
This aspect is further accentuated on the specific facts of this trust where as noted by the Assessing Officer the assessee trust is required to apply its income as per the mandate of the Act. Furthermore, section 11 also provides for a situation where the income is accrued but not received by the trust. Explanation (2) to section 11(1) clearly states that if the income expended fall short of 85% of the income for the reason that the income has not been received during the year or for any other reason then an option is given to the assessee to intimate the Assessing Officer that the same would be spent in the year of receipt or in the immediately following year as the case may be. This further makes this case of the assessee distinguishable and the assessee cannot be allowed to circumvent the provisions of applying income by reducing income at source itself. The case laws referred by learned Counsel of the assessee where accounting on receipt basis followed in earlier year was allowed to be continued, were on the facts of each case. Accordingly, we are of the considered opinion that the system followed by the assessee of only accounting interest income on receipt basis is not sustainable.
In this view of the matter the Assessing Officer is correct principally in holding that the assessee is required to account for the interest on accrual basis. However, we note that the assessee is accounting for the interest on receipt basis. Hence, assessee must have accounted for the interest of earlier year which has been received during the year on receipt basis. Hence, by this 7 Aditya Birla Foundation change of method of accounting the assessee’s income would include interest income of earlier year received during this year as well as interest income accrued for the year. This will amount to taxing more interest income than that what is legitimately taxable for this year. Hence we are of the opinion that from the interest accrued for the year the interest income of earlier year which had accrued in earlier year but were accounted for on receipt basis during this year should be reduced. The resultant figure should be added to the income of the assessee.
Apropos ground No. 3
Brief facts the assessee has leased out hospital building standing at survey No. 31 of village Theragaon to ABHSL for 29 years at the rent of Rs. 4.10 per Sq. Ft. per month. The Assessee has also leased out staff quarters which is a part of the hospital complex to the same ABHSL at a rent of Rs. 3 per Sq. Ft. per month. The said rent is revisable at the rate of 5% after every 5 years. The lease rent income was disclosed under 'Income from House Property for the purpose of Return of Income. The Ld. AO held that the transaction of lease is a transaction among related concern of Aditya Birla Group. Further, Aditya Birla Health Service Ltd. is a profit making concern. Therefore, Aditya Birla Health Service Ltd. has an incentive to increase its profits by paying lower lease rental value to the assessee. That through this, assessee foundation will have lower income at its disposal for charitable activities and the Lessee would increase its profit thereby increase its net worth. That the return on investment for ABHSL will be much quicker with lower lease rentals. That further, by donating to the assessee, the donors would get deduction U/S.80G and the assessee has also claimed depreciation on the same. That the lessee (ABHSL) also claims depreciation on the assets invested and it has the facility of utilizing the hospital building and the residential building at a lower than market value.
8 Aditya Birla Foundation
Further, on basis of analysis of the shareholding pattern of ABHSL and trustees of the Assessee as on March 31, 2011, the Ld. AO concluded that ABHSL is a related concern of the Assessee and held that the lease rent charged by the Assessee was not at arm's length.
The Ld. AO invoked section 13(2)(b) r.w.s 13(2) and made an addition of Rs. 8,78,94,440/- on the ground that the lease rental charged by the Assessee from ABHSL is not at fair value. The Ld. AO observed from the Balance Sheet of the ABHSL that it is earning a good amount of profit and therefore, the Assessee ought to have charged a higher rent. The Ld. AO further contended that approval of lease rent by Hon'ble Charity Commissioner u/s 36(1)(b) of the Trust Act does not validate that the lease is rent is charged appropriately as per the provisions of the Act. The Ld. AO further rejected that the government valuation report submitted by the Assessee on the view that it suffered from sampling biases. The Ld. AO relied on third party websites namely magicbricks.com and indiaproperty.com for obtaining lease rents quoted by third party in the area where the hospital is located. The quotes were obtained on 23/3/2014 and were discounted at rate of 10% to arrive at the value as on 31/3/2011. The fair rental value of the property was computed as below: Sr. Description Area Rate per sq.ft. Rental value per No. per month annum
1 Hospital building 4,48,454 19 10,22,47,512
2 Staff housing 45,898 17 93,63,192 building TOTAL 11,16,10,704 Subsequent to receiving DVO's report:
The Ld. DVO determined the fair market value of the said property to Rs. 2,61,17,501/- only being value of lease rentals of Hospital building at Rs. 4.45/- per month per sq ft and for staff quarters at Rs. 3.94A per month per sq ft. which are marginally higher than the rate charged by the Assessee Trust i.e. 4.10/- per month per sq ft. for hospital building and Rs. 3/- per month per sq
9 Aditya Birla Foundation ft. for staff quarters. Thereafter, the Ld. AO passed an order u/s 154 of the Act dated June 19, 2014 restricting the same to Rs. 2,61,17,501/- as against earlier determined by the Ld. AO at Rs. 11,16,10,704/-.
Upon assessee’s appeal learned CIT(A) granted relief to the assessee holding as under :
“The facts of the case are that the Appellant had acquired a land at Pune and constructed hospital building and staff quarters. In furtherance of this, the Appellant had leased the same to ABHSL for a period of 29 years at the rent of Rs.4.10 per sq. ft. per month and at Rs. 3/- per sq. ft. per month. The lease deed was executed on 15/01/2007, which was valid for a period of 29 years.
On perusal of the said lease deed, it is observed that the rent was revisable at the rate of 5% after every 5 years. The Appellant Trust had included the rent in its return of income. The AO has however, held that the entire arrangement of entering into the lease with ABHSL was to increase the profit of the said entity and thereby reduce the lease rental income of the Appellant.
At the same point of time, according to the AO, the donors of the Appellant trust would enjoy exemption u/s. 80G of the Act. The AO has further held that based on the shareholding pattern of ABHSL the said lessee is a related concern of the Appellant and accordingly invoking section13(2)(b) read with section 13(3) the AO has made an addition of Rs.8.78 crores on the ground that the rent charged by the Appellant Trust is not a fair rent. The AO has also noted that approval of the lease rent by Charity Commissioner under the Bombay Public Trust Act is not relevant for the purpose of income tax Act. Therefore, to summarise, the AO after referring to certain websites computed the rent of Rs. 19/- per sq. ft. and Rs.17/- per sq. ft. for hospital building and staff quarters respectively and made the above addition. It is noted that subsequent to the assessment order passed by the AO, on receipt of the report of DVO, the AO has passed the rectification order u/s.154 dated June 19, 2014 and restricted the addition to Rs. 0.24 crores as against the earlier determination of addition of Rs.8.78 cores.
During the course of the appellate hearing detailed submissions on these points were made by the authorized representative of the Appellant as reproduced above. The contention raised by the Appellant is that the AO has merely based on certain data assumed that ABHSL is a related party u/s. 13(3). The Appellant has in the course of the submission demonstrated that how clause (a) to (d) of section 13(3) are not applicable to the present facts. Insofar as clause 13(3)(e) is concerned, the said clause applies in respect of a 10 Aditya Birla Foundation concern in which any of the Trustees/Manager etc. have a substantial interest. Further, substantial interest has been defined under Explanation 3 to section 13 to have atleast 20% of the voting power or 20% of the profits.
I have examined the shareholding pattern of ABHSL and also compared the same with the list of Trustees of the Appellant Trust. I find that Mrs. Rajshree Birla, Mr. B.L. Shah and Mr. Ashwin Kothari are the three people who are the Trustees of the Appellant Trust and shareholders of ABHSL. However, the total shares held by these three persons collectively is 30 shares as compared to the total share capital of 50,000 shares of ABHSL. Thus, even collectively, the shareholding of the Trustees in ABHSL is far below the threshold of 20%.
Thus, in my view under specific provisions of section 13 which are relevant for charitable trust, I hold that ABHSL is not a related-party u/s. 43(3) of the Act and thus the addition made by the AO is deleted.
The Appellant has also submitted that assuming without admitting that ABHSL was a related party, even then the word being used u/s.13(2)(b) is "adequate rent" and not "fair rent".
Thus the Appellant has submitted-that whenever the legislature has used the word adequate and not fair, it has been specifically used and accordingly the act of the AO in comparing the rates from the website is not tenable.
Therefore, in my view, the Appellant is right in its above contention that adequate connotes something minimum but definitely does not connote the fair market rate. Further, the Charity Commissioner has also approved the lease deed and even the DVO has subsequently determined the value which was nearer to the value originally fixed by the Appellant.
I also find during the course of the argument that since lease deed has been executed for period of 29 years and it considered clause for increment after a stipulated period and the same has been approved by the Charity Commissioner, the Department cannot determine the fair rate every year. In fact the Bombay High Court in the case of Virendra vs. Appropriate Authority (327 ITR 185) has categorically held that the Income Tax Authority cannot disregard the orders of the competent authority under the Trust Act unless there is any contrary material.
In view of the above discussion, I delete the above addition made by the AO and accordingly Ground No. IV is allowed.”
Against the above order the Revenue is in appeal before us.
We have heard both the parties and perused the records. Learned Departmental Representative submitted that the Assessing Officer’s order needs to be upheld. He submitted that the Assessing Officer’s finding of the 11 Aditya Birla Foundation person specified being beneficial owner is correct. In this regard he placed reliance upon the decision of Hon'ble Supreme Court in the case of National Travel Services Vs. CIT (300 CTR 582). He further submitted that the Assessing Officer has correctly computed the income from house property. In this regard he placed reliance upon the decision of following case laws :- • ACIT Vs. CyRUS Investments (P) Ltd. (93 taxmann.com 493)(Mum Trib) • CIT Vs. Tip Top Typography (48 taxmann.com 191) (Bom High Court) • New Jehangir Vakil Mills Co. Ltd. Vs. CIT (49 ITR 137)
Per contra learned Counsel of the assessee supported the order of learned CIT(A). Learned Counsel of the assessee submitted that learned CIT(A) has given correct finding that the persons specified are not having beneficial interest as per the provisions of the Act. He further reiterated that the rental value approved by Charity Commissioner has correctly been accepted by learned CIT(A). In this regard he placed reliance upon the following case laws : • CIT Vs. Shriram Pistons & Rings Ltd (181 ITR 230) • Virendra Vs. Appropriate Authority (327 ITR 185) • Sargam Cinema Vs. CIT (328 ITR 513) • Amol Chand Varshney Sewa Sansthan Vs. ACIT (142 ITD 658) • HDFC Bank Ltd. Vs. ACIT (WP No. 462 of 2017) • JRD Tata Trust Vs. DCIT (122 taxmann.com 275) • Commissioner of Gift Tax Vs. Nelson & Co.(245 ITR 347) • DIT Vs. Span Foundation (178 Taxman 436)
Upon careful consideration we note that after examining shareholding pattern of the person specified, learned CIT(A) has given a finding that clause (a) to (d) of section 13(3) of the Act are not applicable. Further learned CIT(A) has given a finding with respect to section 13(3)(e) of the Act the said clause is not applicable here. Learned CIT(A) has given a finding that he has examined the shareholding pattern of ABHSL and also compared the same with the list of the trustees of the appellant trust. He has found that Mrs. Rajshree Birla, Mr. B.L. Shah and Mr. Ashwin Kothari are the three people who are the Trustees of the Appellant Trust and shareholders of ABHSL. That however, the total shares held by these three persons collectively are 30 shares as compared to the total share capital of 50,000 shares of ABHSL.
12 Aditya Birla Foundation That thus, even collectively, the shareholding of the Trustees in ABHSL is far below the threshold of 20%. Hence learned CIT(A) held that in view of specific provisions of section 13 of the Act he held that ABHSL is not a related party under section 13(3) of the Act and thus addition made by the Assessing Officer is deleted.
We find that apparently there is no error in the finding of learned CIT(A). Learned CIT(A)-DR could not cogently rebut the learned CIT(A)’s finding but tried to make out of the case that the shareholder list of ABHSL may be obtained and thereafter further examination can be done. In this regard we are of the opinion that there is no such case made out by the Assessing Officer in the assessment order. He has simply made a presumption without actually analyzing the facts. It is settled law that mere presumption is not sustainable. Whatever material the Assessing Officer has referred in the assessment order does not prove that this transaction is transaction between the related concerns. In absence of any cogent material brought on record by learned Departmental Representative, we are not inclined to direct any further roving inquiry. In this view of the matter we are of the considered opinion that there is no infirmity in the order of learned CIT(A) in this regard.
As regards the other aspects in this regard i.e. quantification of rent we find that once the assessee is not falling the ambit of section 13(1) of the Act this issue does not arise. In any case, the act of the Assessing Officer of notional addition or through DVO is not sustainable on the touchstone of Hon'ble Bombay High Court decision in the case of Virendra Vs. Appropriate Authority & Ors. (327 ITR 185). In as much as in the said case it was held that approval by the competent authority is fair estimate. Moreover, the decision of Hon'ble Bombay High Court in the case of Tip Top Typography (supra) does not mandate this type of computation of rental income done by the Assessing Officer. Accordingly, in the background of the aforesaid discussion and precedent, we uphold the order of learned CIT(A). Since the two decisions of Hon'ble Bombay High Court are in favour of the assessee, other decisions of 13 Aditya Birla Foundation the Tribunal in this regard are not being dealt with. As we are not upholding the order of learned CIT(A) on the principal of res judicata, the decision of Hon'ble Apex Court in New Jehangir Vakil Mills Co. Ltd. (supra) is not applicable.
Apropos ground No. 4
Brief facts are that the assessee had filed application for accumulation of income in Form 10 for the previous year on September 30, 2011 along with return of income. However, Assessing Officer has failed to give effect to Form 10. The assessee made following submission before learned CIT(A) :-
“The Appellant humbly submits that without prejudice to its main contention that set off of the deficit of earlier years is allowable against the income of the current year, the assessed income should be considered as deemed application in the year under consideration, since Section 11(2) of the Act provides that if the application or deemed application of the income falls short of 85% of the income, the short-fall shall not be included in the total income of the previous year of the person in receipt of the income, provided certain conditions are fulfilled. The relevant extract of the section as relevant to the year under consideration is reproduced below for ready reference:
"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 subsection 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 furnishes a statement in the prescribed form and in the prescribed3 manner to the Assessing Officer, stating 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 five years;
(b) the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5);
(c) the statement referred to in clause (a) is furnished on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previous year:"
14 Aditya Birla Foundation
The section provides that where 85% of the income is not applied or is hot deemed to have been applied but the same is accumulated or set apart by furnishing a statement in the prescribed form wherein the purpose and the period of accumulation is specified, the same will not be included in the total income provided the statement of accumulation has been furnished before the date of filing the return of income as per section 139(1) and the amount so accumulated or set apart has been invested in the modes specified in section 11 (5) of the Act.
The Appellant submits that it had submitted Form 10 on September 30, 2011 which is well within the time specified for filing the return of income as per section 39(1) of the Act. Further, the purpose as well as the period of accumulation was specified in Form 10. Furthermore, the Appellant even invested the accumulated amount in the modes specified in section 11(5) of the Act. Thus, the Appellant humbly submits that all the conditions of section 11 (2) of the Act are satisfied.
The Appellant, therefore, submits that the Form 10 filed by the Appellant be given effect to and thus, the income computed by the AO be treated as accumulated or set apart under section 11(2) of the Act.”
Considering the above learned CIT(A) granted relief as under :-
“I have considered the facts of the case and the submissions made by the Appellant. It is not disputed that the Appellant had filed Form No. 10 along with its return of income. Thus, after giving effect to the appellate order if there is any surplus income for the current year for set off of past deficit, if any, then the AO is directed to consider Form No. 10 filed by the Appellant and compute the income as per law.”
Against the above order Revenue is in appeal.
Both the counsel fairly agreed that this is consequential issue and learned CIT(A) has passed a correct order. Hence, we uphold the order of learned CIT(A).
In the result, Revenue’s appeal is partly allowed.
Pronounced in the open court on 16.6.2021.