2015 (3) TMI 227 - AT - Income Tax

Exemption u/s 10(23C)(iiiae) - Deduction u/ 11(2) - set off unabsorbed deduction - Delay in filing declaration in Form 10 - Held that - time limit for giving notice for accumulation is extended upto the completion of assessment order. This legal fact is found supported by the judgement of the Hon'ble Apex Court rendered in the case of CIT Vs. Nagpur Hotel Owners Association 2000 (12) TMI 99 - SUPREME Court . Further, the Hon'ble Jurisdictional High Court in the case of CIT Vs. Anjuman Moina Fakharia 1993 (10) TMI 51 - RAJASTHAN High Court . In the given case, obviously the assessment was completed on 20.12.2011. The Form No. 10 was admittedly filed before the A.O. on 7.10.2011 which is much before the completion of the assessment order u/s 143(3) of the Act. Thus, in view of the above stated dictum of the Hon'ble Jurisdictional High Court and that of the Hon'ble Apex Court the A.O. cannot deny deduction u/s 11(2) of the Act to this assessee. Therefore, we confirm this finding of the ld. CIT(A). Further, the assessee-society has claimed exemption u/s 10(23C)(iiiac) of the Act and not u/s 10(23C)(iiiae) of the Act as the receipts of the assessee-society are from treatment given to the persons suffering from illness on charitable considerations. The assessee society is substantially found financed by the State Government, which fact has been verified by the A.O. and has not been rejected by him. The State Government employees are executive office bearers of the society and its doctors, nurses and other staff are paid by the State Government itself. Further, set off of unabsorbed depreciation carried forward from earlier years could be allowed from income from other sources even if the assessee had no income falling u/s 28 of the Act. Accordingly, the entire addition made by the A.O. have been correctly deleted by the ld. CIT(A) - Decided against Revenue.

Summary

Issues:
1. Exemption u/s 11(2) for setting apart funds.
2. Set off unabsorbed deduction of A.Y. 2008-09.
3. Claim of exemption u/s 10(23C)(iiiac).

Analysis:
1. The case involved an appeal by the revenue and a cross objection by the assessee against the CIT(A)'s order for A.Y. 2009-2010. The assessee, a society running a hospital, declared NIL income in its ROI. The AO disallowed exemption under section 11(2) for funds not spent within the year due to a late notice filing. The AO also rejected exemption u/s 10(23C)(iiiae) due to total receipts exceeding Rs. 1 crore, assessing income at Rs. 43,28,820. The CIT(A) provided partial relief to the assessee.

2. The revenue appealed against the relief granted, challenging the allowance of deduction u/s 11(2), set off unabsorbed deduction of A.Y. 2008-09, and exemption u/s 10(23C)(iiiac). The assessee's cross objection supported the CIT(A)'s decision, citing timely filing of Form No. 10 and legal precedents. The ITAT dismissed the cross objection as supportive of the existing finding.

3. The ITAT noted that Form No. 10 can be filed until the completion of the assessment order, citing legal precedents. As the form was filed before the assessment completion, deduction u/s 11(2) was confirmed. The assessee's exemption claim u/s 10(23C)(iiiac) was upheld due to substantial government financing and charitable activities. The set off of unabsorbed depreciation was allowed even without business income under section 28, leading to the dismissal of the revenue's appeal grounds. Consequently, both the revenue's appeal and the assessee's cross objection were dismissed.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal interpretations, and the final decision rendered by the ITAT Jodhpur.