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Facts
The assessee appealed against orders passed by the CIT(A) concerning assessment years 2015-16 to 2018-19. The appeals primarily concern the denial of exemption under sections 11 and 12 of the Income-tax Act and the correct computation of income, including the utilization of accumulated funds.
Held
The Tribunal directed the Assessing Officer to verify the claim of Rs. 7,01,65,527/- as an application of income from earlier accumulated funds. The Tribunal also found that certain additions made by the Assessing Officer were duplicative and directed their deletion. The assessed income should not exceed the net income as per the income and expenditure account.
Key Issues
Whether the expenditure incurred can be allowed as a deduction against current year income by utilizing prior year's accumulation, and whether certain additions made by the AO were duplicative.
Sections Cited
154, 250, 143(3), 2(15), 11, 12, 13, 11(1)(a), 11(2), 11(1B)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & SHRI TR SENTHIL KUMAR
These appeals have been filed by the Assessee against the separate orders passed by the Ld. Commissioner of Income Tax(Appeals), National Faceless Appeal Centre, Delhi, vide order dated 15.02.2024 passed u/s 250 of the Income-tax Act, 1961, for the Assessment Years 2015-16 to 2018-19.
2. The assessee has raised the following grounds of appeal in for AY 2015-16:
1. In law and in the facts and circumstances of Appellant’s case, the Learned CIT(A) has erred in to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 2– holding that AO has no jurisdiction under Section 154 of the Act for mistake apparent on record, which was pointed out by Appellant vide letter dated 4th April, 2018.
2. In law and in the facts and circumstances of Appellant’s case, the Ld. CIT(A) has erred in by not directing the AO for rectifying the assessed income by reducing expenditure for Rs.7,01,65,527 incurred during the year without appreciating the fact that though such expenditure was considered as utilization of accumulation made under Section 11(2) of the Act for A.Y. 2012-13 and 2013-14 but such accumulation was already denied in earlier year by treating income of the Trust as business income, hence it is entitled for deduction in current year.
3. In law and in the facts and circumstances of Appellant’s case, the Ld. CIT(A) ought to have allowed deduction of Rs.7,01,65,527 being revenue expenditure incurred during the year against income assessed as business income in Return of Income.
3. Further, one more appeal preferred by assessee for AY 2015-16 against order of the Ld. CIT(A) dated 15/02/2024 passed u/s 250 of the Income-tax Act, 1961 against assessment order passed u/s 143(3) dated 23.11.2017 for the Assessment Year 2015-16.
The assessee has raised the following grounds of appeal in for AY 2015-16: to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 3–
1. In law and in the facts and circumstances of the case, the Order passed by the Ld. CIT(A) is bad in law and deserves to be quashed. 1.1. In law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding observations of Ld. AO, that appellant is not carrying out any charitable activities. He has held that the appellant is squarely covered by the first proviso to section 2(15) of the Act and consequently denied exemption u/s 11 and 12 of the Act solely relying upon the finding of Ld. CIT(A) in appellant’s own case for AY 2012-13 even though he was aware of the fact that such decision is set aside by Hon’ble Ahmedabad ITAT in No.1322/Ahd/2017 vide order dated 12.01.2018 and the matter is pending with Ld. CIT(A) only. The Ld. CIT(A) ought to have adjudicated the issue on merits of the case. 1.2. In law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding disallowance of deduction u/s 11 claimed in return of income without dealing with arguments of appellant as elaborately discussed in various submission, filed during the course of appellate proceedings.
2. In law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in passing appellate order without providing “video conferencing” as provided in Faceless Appeal Scheme. to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 4–
3. In law and in the facts and circumstances of the case, the Assessing Officer has erred in considering the activities undertaken by the Appellant, as in the nature of general public utility by charging cess or fee and not in the nature of preservation of environment and, therefore, it is hit by the mischief of First Proviso to Section 2(15) of the Act when no such proviso is attracted to the case of Appellant. The Assessing Officer may be directed to allow the exemption u/s 11 of the Act.
4. In law and in the facts and circumstances of the case, the Ld. Assessing Officer has erred in not appreciating the fact that the appellant is also carrying out the education activity by way of providing education to workers by imparting training. Therefore, appellant is specifically covered by Second Limb of Section 2(15) i.e. Education and hence, first proviso to Section 2(15) does not applicable in the case of the appellant. The Assessing Officer may be directed to consider the same.
5. In law and in the facts and circumstances of the case, the Assessing Officer has grossly erred in denying the exemption under Section 11 and under Section 12 of Rs. 7,66,16,175/- by invoking the provision of sub-section (8) of Section 13 of the Act where no such disallowance is called for. The Assessing Officer may be directed to delete the same. to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 5–
6. In law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in not adjudicating additional ground of appeal raised during the course of appellate proceedings whereby it was claimed that the amount of Rs. 7,66,16,175/- towards ISDS project under the head “Salary/Overheads recovered from Sponsored Projects & Services” recognized as income in Income and Expenditure account in current year is not liable to be taxed as income in the absence of actual realization of the same till date. The Ld. CIT(A) ought to have appreciated that only real income can be taxed.
The assessee has also taken following Additional grounds of appeal in for AY 2015-16:
1. In law and in the facts and circumstances of the appellant’s case, Hon’ble Bench may kindly direct the Ld. AO to allow the expenses of Rs 7,01,65,527/- incurred during the year under consideration which has been shown as utilization of Accumulation u/s 11(2) made in AY 2012-13 and AY 2013-14 and thereby not claimed the same in the year under consideration, however since the Ld. AO has already disallowed the claim for accumulation u/s 11(2) amounting to Rs. 5,23,11,545 for AY 2012-13 and Rs. 4,58,53,644/- for AY 2013-14, there would not be any requirement of showing utilization of accumulation of earlier year income against the current year expenses and hence such expenses to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 6– should be allowed as deduction in current year only.
2. The Ld. AO may kindly be directed to reduce the duplication of Income added while computing the assessed income.
During the course of hearing, Ld. AR of the assessee proceeded directly to the additional grounds of appeal and categorically submitted that it had opted for DTVSV for AY 2012-13 to AY 2014-15. The Ld. AR has also subsequently filed Form-1 for the above years. He also pointed out that by preferring DTVSV it had offered for taxation the amount set aside as accumulation u/s 11(1)(a) and u/s 11(2) of the Act. Therefore, to support the above additional grounds and at the specific instruction of the Bench a chart computing the actual/ real taxable income for all the years was submitted: Extract of the said chart submitted during the course of hearing is as under : to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 7– 5.1 Ld. AR of the assessee has, in connection with additional ground and explaining the above chart, pointed out that it has agreed to accept assessed income as per assessment order for AYs 2012-13 to AY 2014- 15, wherein Assessing Officer has disallowed the accumulation u/s 11(1)(a) and 11(2) of the Act, and added to the total income of the assessee. Further, it was pointed out that since the assessee had already paid taxes on the amount set aside as accumulation u/s 11(1)(a) and 11(2) of the Act for the said years, it would not be required to make application out of the said amounts during the year under consideration or subsequent years. Thus, in computation of income for the current year, the amount of expenses incurred by the assessee and shown as application against the amount of income accumulated in earlier years in the ITRs filed should be allowed against income of the year under consideration. To substantiate the same the assessee has submitted audited income and expenditure account at paper book page no. 9 to 12, wherein, Ld. AR of the assessee has pointed out at PB page no. 11 where total amount of revenue expenditure incurred during the current assessment year is Rs. 15,36,29,244/-, which was arrived by reducing surplus for the year of Rs. 53,57,000/- from total amount of expenditure column which is Rs. 15,89,86,244/-.
Thereafter, Ld. AR of the assessee drew our attention to the PB page no. 7 to show that out of current year revenue expenditure of to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 8– Rs.15,36,29,244/- amount of Rs. 7,01,65,527/- has been shown as applied against accumulation of AY 2012-13 and AY 2013-14. Therefore, the Ld. AR of the assessee has submitted that against income of the current year, the assessee has claimed only net expense and that the amount utilized from the accumulated funds had not been claimed while arriving at the correct income. Therefore, in nutshell, the argument of the assessee is to allow Rs.7,01,65,527/- expense against current year income.
5.2 Alternatively, ld. AR of the assessee has also submitted that net income i.e. current year’s accrued income as reduced by expenditure incurred during the current year should be assessed to tax.
5.3 The Ld. DR on the other hand, has not disputed the fact that the assessee has opted for DTVSV for the AYs 2012-13 to 2014-15 and argued that the accumulation u/s 11 which has been settled cannot be revisited in the subsequent years. Rebutting the arguments of the Ld. AR, the Ld. DR argued that the matters have attained finality and the assessee cannot claim the benefit of DTVSV for the subsequent years. Ld. DR argued that it is not in dispute that the assessee has earned income from business activities against the tenets laid down u/s 2(15) of the Income-tax Act.
Heard both the parties and the material available on record. We find that once accumulation claimed u/s 11(1)(a) and 11(2) is not to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 9– accepted by the Assessing Officer in Assessment of earlier year and the same has been subjected to tax in those earlier years, there was no requirement to make application in current year out of such accumulation made in earlier year against the amount of expenditure incurred during the current year. Once the amount of Rs.7,01,65,527/- is shown as application of income out of Rs. 5,23,11,545/- and Rs.4,58,53,644/-, which was accumulated in AY 2012-13 and AY 2013-14 respectively shall be allowed as expenditure against the income of the year under consideration. As per the arguments and supporting documents submitted by the Ld. AR, amount of accumulation made u/s 11(2) and application of such accumulation is tabulated below: Details of accumulation u/s 11(2) and application of such accumulation AY of Amount of Accumulatio Accumulatio Accumulatio accumulatio accumulation n applied in n applied in n applied in Total n u/s 11(2) AY 2015-16 AY 2016-17 AY 2017-18 2012-13 5,23,11,545 5,23,11,545 5,23,11,545 2013-14 4,58,53,644 1,78,53,982 1,50,85,373 1,18,20,641 4,47,59,996 Total 9,81,65,189 7,01,65,527 1,50,85,373 1,18,20,641 9,70,71,541 To substantiate the claim of the assessee, Ld. AR has submitted paper book from page no. 1 to 14 and drawn our attention at relevant pages of the paper book. Considering the above factual aspects. The working given above with regard to accumulation u/s 11(2) for the year 2012-13 and 2013-14 and subsequent application of accumulated funds in AY 2015-16 to 2017-18 is not in dispute and found to be acceptable. However, the fact remains that this being an to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 10– additional ground is raised by the assessee first time before the bench, we therefore direct Assessing Officer to verify whether Rs.7,01,65,527/- has been shown as application out of income accumulated in AY 2012-13 and AY 2013-14 out of current year expenditure and if it is found correct then allow the same against current year income. To summarize the total amount of funds set aside under ‘accumulation u/s 11’ of the Act in the earlier years for which the assessee has opted for DTVSV and/or which has been subjected to tax should be allowed as deduction while arriving at the real income in the impugned assessment year. Even otherwise also the net income of the current year should be assessed to tax for the year under consideration by recomputing the net income as per Income and Expenditure account of the assessee, without considering application of income shown out of accumulation u/s. 11(2) of the Act, of earlier years. In either case, the assessed income shall not exceed the net income as per the income & expenditure account.
1. In law and in the facts and circumstances of the case, the Order passed by the Ld. CIT(A) is bad in law and deserves to be quashed.
1.1. In law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding observations of Ld. AO, that appellant is not to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 11– carrying out any charitable activities. He has held that the appellant is squarely covered by the first proviso to section 2(15) of the Act and consequently denied exemption u/s 11 and 12 of the Act solely relying upon the finding of Ld. CIT(A) in appellant’s own case for AY 2012-13 even though he was aware of the fact that such decision is set aside by Hon’ble Ahmedabad ITAT in No.1322/Ahd/2017 vide order dated 12.01.2018 and the matter is pending with Ld. CIT(A) only. The Ld. CIT(A) ought to have adjudicated the issue on merits of the case.
1.2. In law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding disallowance of deduction u/s 11 claimed in return of income without dealing with arguments of appellant as elaborately discussed in various submission, filed during the course of appellate proceedings.
2. In law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in passing appellate order without providing “video conferencing” as provided in Faceless Appeal Scheme.
3. In law and in the facts and circumstances of the case, the Assessing Officer has erred in considering the activities undertaken by the Appellant, as in the nature of general public utility by charging cess or fee and not in the nature of to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 12– preservation of environment and, therefore, it is hit by the mischief of First Proviso to Section 2(15) of the Act when no such proviso is attracted to the case of Appellant. The Assessing Officer may be directed to allow the exemption u/s 11 of the Act.
4. In law and in the facts and circumstances of the case, the Ld. Assessing Officer has erred in not appreciating the fact that the appellant is also carrying out the education activity by way of providing education to workers by imparting training. Therefore, appellant is specifically covered by Second Limb of Section 2(15) i.e. Education and hence, first proviso to Section 2(15) does not applicable in the case of the appellant. The Assessing Officer may be directed to consider the same.
5. In law and in the facts and circumstances of the case, the Assessing Officer has grossly erred in denying the exemption under Section 11(1)(a) of Rs. 1,44,80,221/- and under Section 11(2) of Rs. 6,94,23,143/- and under Section 11(1B) of Rs. 7,66,16,175/- and an amount of Rs. 92,14,413/- as Amount deemed to have been applied to charitable or religious purposes by invoking the provision of sub-section (8) of Section 13 of the Act where no such disallowance is called for. The Assessing Officer may be directed to delete the same. to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 13–
In law and in the facts and circumstances of the appellant’s case, Hon’ble Bench may kindly direct the Ld. AO to allow the expenses of Rs 1,50,85,373/-/- incurred during the year under consideration which has been shown as utilization of Accumulation u/s 11(2) made in AY 2013-14 and thereby not claimed the same in the year under consideration, however since the Ld. AO has already disallowed the claim for accumulation u/s 11(2) amounting to Rs. 4,58,53,644 for AY 2013- 14, there would not be any requirement of showing utilization of accumulation of earlier year income against the current year expenses and hence such expenses should be allowed as deduction in current year only.
2. The Ld. AO may be directed to reduce an addition of Rs. 15,32,32,350 (7,66,16,175 + 7,66,16,175), which represents the duplication of addition of the same amount during the year under consideration and which has also been added and taxed in AY 2015-16.
3. The appellant craves to leave, to add, to amend or to raise any further grounds of appeal as case may arise.
We note that the additional ground no. 1 of appeal of AY 2016- 17 is identical to additional ground no. 1 at para. 4 of AY 2015-16. In to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 14– light of the detailed discussions made at para 6 supra this additional ground of appeal of the assessee is allowed with the limited direction to the Assessing Officer to verify the correct amount allowable.
In response to additional ground no. 2 of the assessee, the Ld. AR of the assessee has submitted that assessed income of the assessee includes Rs. 15,32,32,350/- comprising of two components, being addition of Rs. 7,66,16,175 made by the Assessing Officer, and the amount of Rs. 7,66,16,175/- which had already been offered by the assessee in its return of Income. To support the above facts, the Ld. AR drew our attention to the ITR (refer page no. 5 at clause 10 of Part B – IT to ITR -7 of the paper book) wherein it had offered Rs. 7,66,16,175 since this amount was deemed income u/s 11(1B) of the Act. However, the Assessing Officer while computing assessed income, again added the said amount on the ground that the appellant was not entitled to exemption u/s 11 of the Act. Therefore, Ld. AR of the assessee has submitted before us to direct Assessing Officer to reduce the assessed income of the assessee by Rs. 7,66,16,175/- which is also duplicate in nature as explained above. Further the assessee also contests vide ground number 2 of the additional grounds of appeal that the amount already added by it in the return of income in the current Assessment year had already suffered taxation in the earlier year i.e. AY 2015-16. To substantiate the same, Ld. AR of the assessee has submitted that, Rs 7,66,16,175/- has already been added in AY 2015-16 by Assessing Officer while passing the assessment order, to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 15– against which no argument was raised in AY 2015-16 and therefore the same is accepted by the assessee, therefore, Assessing Officer ought to had granted relief to the assessee while computing assessed income of AY 2016-17 of Rs 7,66,16,175/- also, which has already been added by assessee in return of income as explained above. Therefore the Ld. AR explained the facts substantiating duplication of addition of Rs. 15.32 crores in the impugned assessment year.
11 Per contra, the Ld. DR relied upon the orders of the AO/CIT(A) and taken us through the orders of the authorities below.
Having heard both the parties extensively and also understanding the peculiar nature of the facts of the case, it is noted that the assessee had already offered amount of Rs. 7.66 crores while filing return of income. The said return was filed claiming that the activities of testing / calibration / sponsored fees received would qualify as charitable activity. It is also noted that in the foregoing paragraphs (para 6 to 6.3 supra) it is now an admitted position that net income arising from these activities can be taxed. Going further, it is also an admitted position that the computation of taxable income from the activities of testing/ calibration and sponsored fees has been made on actual basis. Therefore, as the amount of Rs 7.66 crores has already been taxed in the earlier year i.e. AY 2015-16, the said amount shall not be required to be considered for taxation in its return of income, which has been so offered by the assessee. Accordingly, we to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 16– direct the Assessing Officer to reduce the amount to this extent. We find that the Assessing Officer has also added the said amount again in the assessment order, the addition made by the Assessing Officer u/s 11(1B) of the Act is also not sustainable, as assessee has already considered the same in its computation. The Assessing Officer is therefore directed to delete this addition made to the total income of the assessee. Accordingly, the entire amount is required to be deleted from computation of current year’s income after due verification.
12.2 Further, as stated above in respect of AY 2015-16, as the alternative relief has been granted to the assessee, other grounds become academic and do not require to be adjudicated.
Now, coming to AY 2017-18 appeal against the assessee has raised following grounds of appeal:
1. In law and in the facts and circumstances of the case, the Order passed by the Ld. CIT(A) is bad in law and deserves to be quashed.
1.1. In law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding observations of Ld. AO, that appellant is not carrying out any charitable activities. He has held that the appellant is squarely covered by the first proviso to section 2(15) of the Act and consequently denied exemption u/s 11 and 12 of the Act solely relying upon the finding of Ld. CIT(A) in appellant’s own case for AY 2012-13 to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 17– even though he was aware of the fact that such decision is set aside by Hon’ble Ahmedabad ITAT in No.1322/Ahd/2017 vide order dated 12.01.2018 and the matter is pending with Ld. CIT(A) only. The Ld. CIT(A) ought to have adjudicated the issue on merits of the case.
1.2. In law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding disallowance of deduction u/s 11 claimed in return of income without dealing with arguments of appellant as elaborately discussed in various submission, filed during the course of appellate proceedings.
2. In law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in passing appellate order without providing “video conferencing” as provided in Faceless Appeal Scheme.
3. In law and in the facts and circumstances of the case, the Assessing Officer has erred in considering the activities undertaken by the Appellant, as in the nature of general public utility by charging cess or fee and not in the nature of preservation of environment and, therefore, it is hit by the mischief of First Proviso to Section 2(15) of the Act when no such proviso is attracted to the case of Appellant. The Assessing Officer may be directed to allow the exemption u/s 11 of the Act. to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 18–
4. In law and in the facts and circumstances of the case, the Ld. Assessing Officer has erred in not appreciating the fact that the appellant is also carrying out the education activity by way of providing education to workers by imparting training. Therefore, appellant is specifically covered by Second Limb of Section 2(15) i.e. Education and hence, first proviso to Section 2(15) does not applicable in the case of the appellant. The Assessing Officer may be directed to consider the same.
5. In law and in the facts and circumstances of the case, the Assessing Officer has grossly erred in denying the exemption under Section 11(1B) of Rs. 10,15,818/- by invoking the provision of sub- section (8) of Section 13 of the Act where no such disallowance is called for. The Assessing Officer may be directed to delete the same.
The assessee has also raised following additional grounds of appeal for AY 2017-18.
1. In law and in the facts and circumstances of the appellant’s case, Hon’ble Bench may kindly direct the Ld. AO to allow the expenses of Rs 1,70,06,684/- incurred during the year under consideration which has been shown as utilization of Accumulation u/s 11(2) made in AY 2013-14 and AY 2016-17 thereby not claimed the same in the year under consideration, however since the Ld. AO has already disallowed the claim for to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 19– accumulation u/s 11(2) amounting to Rs. 4,58,53,644/- for AY 2013-14 and Rs. 6,94,23,143/- u/s 11(2) of AY 2016-17, there would not be any requirement of showing utilization of accumulation of earlier year income against the current year expenses and hence such expenses should be allowed as deduction in current year only.
2. The Ld. AO may kindly be directed to reduce addition of Rs. 10,15,818 being the same is duplication of income and already added in AY 2016-17
3. The appellant craves to leave, to add, to amend or to raise any further grounds of appeal as case may arise.
We note that the additional ground no. 1 of appeal of AY 2017- 18 is identical to additional ground no. 1 at para. 4 of AY 2015-16. In light of the detailed discussions made at para 6 supra this additional ground of appeal of the assessee is allowed with the limited direction to the Assessing Officer to verify the correct amount allowable.
16. As the additional ground no. 2 of appeal of AY 2017-18 is identical to additional ground no. 2 of AY 2016-17. Ld. AR of the assessee invited our attention at paper book page no. 8 wherein assessee has added 10,15,818/- under income chargeable u/s 11(1B) and the very same amount is again been added by Assessing Officer, while calculating the assessed income at page no. 14 of the order. to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 20– Therefore, the same is duplication in nature. Hence, Assessing Officer is directed to reduce the same from assessed income. In light of detailed reasoning given vide para 12 supra, before concluding we will also like to reiterate that the Assessing Officer should ensure that the assessed income of the assessee shall not exceed the net income as per income and expenditure account.
As the alternative relief has been granted to the assessee, other grounds become academic and do not require to be adjudicated. the assessee has raised following grounds of appeal:
1. In law and in the facts and circumstances of the case, the Order passed by the Ld. CIT(A) is bad in law and deserves to be quashed.
1.1 In law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding observations of Ld. AO, that appellant is not carrying out any charitable activities. He has held that the appellant is squarely covered by the first proviso to section 2(15) of the Act and consequently denied exemption u/s 11 and 12 of the Act solely relying upon the finding of Ld. CIT(A) in appellant’s own case for AY 2012-13 even though he was aware of the fact that such decision is set aside by Hon’ble Ahmedabad ITAT in No.1322/Ahd/2017 vide order to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 21– dated 12.01.2018 and the matter is pending with Ld. CIT(A) only. The Ld. CIT(A) ought to have adjudicated the issue on merits of the case. 1.2 In law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding disallowance of deduction u/s 11 claimed in return of income without dealing with arguments of appellant as elaborately discussed in various submission, filed during the course of appellate proceedings.
2 In law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in passing appellate order without providing “video conferencing” as provided in Faceless Appeal Scheme.
In law and in the facts and circumstances of the case, the Assessing Officer has erred in considering the activities undertaken by the Appellant, as in the nature of general public utility by charging cess or fee and not in the nature of preservation of environment and, therefore, it is hit by the mischief of First Proviso to Section 2(15) of the Act when no such proviso is attracted to the case of Appellant. The Assessing Officer may be directed to allow the exemption u/s 11 of the Act.
4. In law and in the facts and circumstances of the case, the Ld. Assessing Officer has erred in not appreciating the fact that the appellant is also carrying out the education activity by way of providing education to workers by imparting to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 22– training. Therefore, appellant is specifically covered by Second Limb of Section 2(15) i.e. Education and hence, first proviso to Section 2(15) does not applicable in the case of the appellant. The Assessing Officer may be directed to consider the same.
5. In law and in the facts and circumstances of the case, the Assessing Officer has grossly erred in denying the exemption under Section 11(1B) of Rs. 10,15,818/- by invoking the provision of sub- section (8) of Section 13 of the Act where no such disallowance is called for. The Assessing Officer may be directed to delete the same.
The assessee has also raised following additional grounds of appeal for AY 2018-19,
1. In law and in the facts and circumstances of the appellant’s case, Hon’ble Bench may kindly direct the Ld. AO to process the rectification application filed by the assessee dated 23.12.2024.
Alternatively, the Hon’ble Bench may kindly direct the Ld. AO to allow the correct amount of expenses of Rs. 8,69,46,455 as against incorrectly allowed by the AO of Rs. 6,31,49,697/-.
3. The appellant craves to leave, to add, to amend or to raise any further grounds of appeal as case may arise. to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 23–
20. Ld. AR of the assessee has submitted in response to ground no. 1 and 2 of additional ground raised, that Assessing Officer has allowed expense of only Rs. 6,31,49,697/- instead of actual expenditure of Rs. 8,69,46,455/- and therefore, requested before us to direct Assessing Officer to allow correct amount of expenditure of Rs. 8,69,46,455/-. To justify the current year actual expenditure of Rs.8,69,46,455/-, the AR of the assessee has invited our attention to paper book page no. 6 which shows audited income and expenditure account for AY 2018- 19 where it was submitted that by reducing surplus of Rs. 44,18,935/- from total side of expenditure which is Rs. 9,13,65,390/-, net expenditure incurred and claimed for the year under consideration comes to Rs. 8,69,46,455/- and the same should be allowed.
21. Having gone through the documents before us, we found that as per income and expenditure account total expenditure of current year is Rs.8,69,46,455/-. However, the Assessing Officer has allowed only Rs.6,31,49,697/- and Ld. DR could not controvert the facts. On the contrary he relied on the orders of the lower authorities. Hence, we direct the Assessing Officer to allow the correct amount of expenditure incurred during the year under consideration while dealing with the rectification application filed by the appellant. Anyway, the assessed income of the assessee shall not exceed the net income as per income and expenditure account. to 689/Ahd/2024 ATIRA Vs. DCIT Asst.Year –2015-16 to 2018-19 - 24– 21.1 Since the relief has been granted to the assessee, other grounds raised by the assessee become academic and do not require to be adjudicated.
In the result, the appeals of the assessee are partly allowed for statistical purposes.
This Order pronounced in Open Court on 07.03.2025