2021 (12) TMI 368 - HC - Income Tax

Revision u/s 263 by CIT - notice u/s 148 issued to the assessee on the ground that the assessee violated the provisions of Section 11(5) of the Act and in substance, the nature of activity undertaken by the assessee is in the nature of business - Tribunal deleted the addition - this Court examines the order of the Tribunal and whether a ground is made out warranting interference under Sec. 260A - HELD THAT - Tribunal found that the order in Annexure-B is barred by limitation, secondly, the nature of receipt is found as building donation fund/corpus fund received by the assessee for the purpose of building fund. The findings recorded by the Tribunal firstly are findings of fact, the Tribunal being final authority on an issue of fact, a few grounds are available to challenge even the findings of fact recorded by the Tribunal. The question that falls thereafter for our consideration is whether any of the exceptional grounds available in this behalf are put forward to assail the findings of the Tribunal. For convenience, we have excerpted the findings recorded by the Tribunal. This Court since is in agreement with the findings recorded both in law and fact of the Tribunal, is also not pursuaded to restate the same conclusion in a different way. We accept the findings recorded by the Tribunal and further hold that the no substantial question of law arises for consideration. The questions are answered against the Revenue and in favour of the assessee.

Summary

Issues Involved:
1. Interpretation of provisions of Section 263 of the Income Tax Act, 1961 regarding revision of assessment orders.
2. Determination of whether contributions to the building fund constitute corpus donations under Section 11(1)(d) of the IT Act.

Analysis:

Issue 1: Interpretation of provisions of Section 263 of the Income Tax Act, 1961
The case involved an appeal by the Income Tax Department challenging the order of the Commissioner of Income Tax (Exemptions) directing the reopening and reassessment of the assessee's income for the assessment year 2010-11 under Section 263 of the Income Tax Act. The Commissioner held that the income assessed for the year was short by a specific amount, leading to the initiation of revisionary proceedings. The Tribunal, however, allowed the appeal filed by the assessee, emphasizing that the revisional jurisdiction was exercised beyond the period of limitation specified under Section 263(2) of the IT Act. The Tribunal highlighted that the issue of limitation was a fundamental legal matter, not requiring fresh examination of facts, and therefore, it was within its purview to consider it. The Tribunal's decision was supported by legal precedents, including the National Thermal Power Company Ltd. case. The Tribunal's findings on the issue of limitation were upheld, and the appeal on this ground was dismissed.

Issue 2: Determination of whether contributions to the building fund constitute corpus donations
The Tribunal further analyzed whether the contributions made by the assessee to the building fund should be considered as corpus donations under Section 11(1)(d) of the IT Act. The Tribunal examined the nature of the contributions, emphasizing that they were voluntary and specifically intended for infrastructure development. Documentary evidence, such as letters from donors and receipts issued by the assessee, supported the voluntary and capital nature of the contributions. The Tribunal referred to precedents, such as the Chandraprabhu Jain case, to establish that building fund contributions could be considered part of the corpus fund eligible for deduction under Section 11(1)(d) of the IT Act. The Tribunal concluded that the initiation of proceedings under Section 263 to disallow the claim of corpus donation was not in accordance with the law and hence void. Therefore, the Tribunal's decision on this issue was in favor of the assessee, and the appeal challenging this determination was dismissed.

In conclusion, the High Court upheld the Tribunal's findings on both issues, ruling against the Revenue and in favor of the assessee. The appeal was dismissed, and no costs were awarded.