ACIT, MANGALORE vs. M/S ISLAMIC ACADEMY OF EDUCATION,

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ITA 69/BANG/2014Status: DisposedITAT Bangalore03 May 2017AY 2004-054 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that additions made under Section 69B for unexplained investments do not automatically qualify for exemption under Section 11. The ratio of the cited High Court case was deemed not applicable.

What were the facts?

The assessee, an educational institution claiming exemption under Section 11, had additions made under Section 69B for unexplained investments. The CIT(A) allowed these additions to be eligible for exemption under Section 11, following a High Court decision.

What were the issues?

Whether unexplained investments added under Section 69B are eligible for exemption under Section 11 for an institution claiming charitable status.

Which sections of the Income-tax Act were involved?

Section 69B,Section 11

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, CIRCUIT BENCH AT MANGALURU

Before: SHRI INTURI RAMA RAO & SHRI SUDHANSHU SRIVASTAVA

For Appellant: Shri R.N.Siddappaji, Addl.CIT &, Shri S.Sreenivasan, DCIT (DRs), Shri P.Dinesh, Advocate
Hearing: 03/02/2017Pronounced: 03/05/2017

O R D E R & Per INTURI RAMA RAO, AM :

These are appeals filed by the revenue directed against the orders of the CIT(A), Mysore, dated 15/10/2013 for the assessment years 2004-05, 2006-07 and 2007-08 wherein the CIT(A) held that in respect of addition made under the provisions of section 69B, the same is eligible for exemption u/s 11 of the Income-tax Act,1961 ['the Act' for short] following the decision of the jurisdictional High Court in the case of CIT vs. Janmabhoomi

ITA Nos.69 to 71/Bang/2014 to 71/Bang/2014 Page 2 of 4 Page 2 of 4 Press Trust (242 ITR 703). The relevant finding of the CIT(A) is as under:

2.

Being aggrieved by the above direction, the revenue is in appeal before us in the present appeals raising the following common grounds of appeal:

3. The provisions of section 69B enable the AO in a case where the assessee is unable to offer any satisfactory explanation to 71/Bang/2014 Page 3 of 4 in support of source of investment made in the previous year under consideration. Thus the provisions enable the AO to make addition based on presumptive basis. The burden always lies on the assessee to rebut this presumption. In case assessee is unable to discharge his burden, the addition is made. It does not mean that this amount is available as application of income for charitable purpose. Therefore, the addition u/s 69 in the hands of the institution which is exempt u/s 11 does not result in automatic exemption u/s 11. The provisions of section 69B are deeming provisions and therefore, the provisions cannot be extended beyond the frame for which they were created. The ratio of the decision in the case of Hon'ble High Court of Karnataka in the case of CIT vs. Janmabhoomi Press Trust (242 ITR 703) is not applicable to the facts of the case. It is a case where capital expenditure was allowed as application of income for charitable purpose. Thus, we are of the considered opinion that the CIT(A) has totally fell in error in applying the decision of the Hon'ble High Court of Karnataka in the case of Janmabhoomi Press Trust (supra).

4.

In the result, the appeals filed by the revenue are allowed.

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