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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’, NEW DELHI
Before: SH. N. K. BILLAIYA & SH. C. N. PRASAD
This appeal by the Revenue is preferred against the order of the Commissioner of Income Tax [Appeals], Faridabad dated 24.01.2018 for Assessment Year 2016-17.
The grievance of the Revenue read as under:-
i. “Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in holding that the amount of Rs.2,07,69,430/- set apart as per Form 10 is for the Charitable purposes whereas the assessee failed to file any evidence in this regard. ii. Whether on the facts and in the circumstances of the case the Ld. CIT(A) is right in law as the findings recorded are perverse and contrary to the evidence/ material available on record and duly considered by the AO. iii. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) is right in law in allowing the accumulation under section 11(2) in form No. 10 when the assessee company has not initiated its work towards the attainment of the objects of the assessee company i.e. educational activities since Assessment Year 2011-12 to 2015-16 i.e. year under consideration's evident from the statement filed by the assessee company before Ld. CIT(A)).The Assessing Officer has clearly mentioned that the only Income shown in the Income & Expenditure Account is from Interest earned from FDRs and not from the basic functions of the educational activities for which the company has established i.e. from fee received from students. iv. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) is right in law in allowing the accumulation under section 11(2) in form No. 10 and in ignoring the fact that only expenses amounting to Rs.43,183 debited in the Income and Expenditure account against income are on account of Audit fee, donation filing fee and travelling & conveyance and no expenses incurred towards the attainment of the objects of the assessee company i.e. educational activities.”
Briefly stated the facts of the case are that the assessee is a non-profit Section 25 Company established with the sole object of imparting education. The assessee is also registered u/s 12AA of the Act. The return for the year under consideration was filed on 26/8/2015 declaring ‘NIL’ income after claiming exemption u/s 11/12 and after claiming accumulation of Rs.1,55,18,168 u/s 11(2) of the Act.
During the year under consideration, the assessee credited income of Rs. 2,08,08,770/- in the income and expenditure account and claimed expenditure of Rs. 43,183 resulting in surplus of Rs. 2,07,65,587/-. Out of this surplus, the assessee accumulated Rs. 1,55,18,168/- u/s 11(2) of the Act.
During the course of the scrutiny assessment proceedings and on going through Form 10, the A.O formed a belief that the assessee has not given the purpose of accumulation of income. The A.O was of the firm belief that the purpose of utilization of funds has not been clearly set apart by the assessee and denied the claim of exemption by making addition of Rs. 20,76,587/-.
The assessee strongly agitated the matter before the CIT(A) and reiterated its claim of exemption. After considering the facts and the submissions and going through the assessment records the CIT(A) was convinced with the claim and allowed the appeal.
Before us, the Ld. DR reiterated the findings of the A.O. It is the say of the Ld. DR that From 10 is none specific and, therefore, the purpose of the utilization of funds is not known. Therefore, the findings of the A.O should be upheld.
Per contra, the Counsel reiterated what has been stated before the Lower Authorities.
We have given a thoughtful consideration to the rival contentions. There is no dispute that the assessee is a charitable entity and carrying out the educational activities and is eligible for exemption u/s 11/12 of the Act. We find that the only dispute raised by the A.O is that the assessee has not specified the purposes for which the surplus accumulated would be utilized.
A perusal of the Resolution exhibited at Page 33 of the paper book clearly shows that the assessee has set apart Rs. 1,55,18,168/- to be utilized on or before 31/3/2020 for the education purpose towards purchase of land construction of building/other fixed assets. A perusal of the statement of accounts as on 31/3/2017 which are exhibited at Pages 57 to 59 of the paper book, we find that under the statement of utilization of income for the Financial Year 2016-17 at Item E, the assessee has specifically mentioned the total amount has been spent during the previous year at Rs. 17,95,14,023/- from which it has deducted brought forward balances of previous years and for Assessment Year 2015-
The assessee has shown the utilization of Rs. 1,55,18,168/-.
The above evidences clearly demonstrates the utilization of fund set apart in the year under consideration. Considering the totality of the facts, we do not find any reason to interfere with the findings of the CIT(A) filed by the Revenue is dismissed.
Order pronounced in the open court on 19 .01.2022.