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TMI Blog2014 (10) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... e could not claim exemption u/s 10(23C(vi) of the Act, as mentioned hereinabove. Such rectification is bound to be there in view of Circular No.725 dated 16.10.1995 issued by the CBDT – as per the Circular No.725 dated 16.10.1995 of CBDT, the AO was under obligation to allow exemption u/s 10(23C)(vi) of the Act and there is nothing on record that the assessee has contravened any of the conditions as required u/s 10(23C)(vi) of the Act - assessee's income is exempt u/s 10(23C)(vi) of the Act and there was no infirmity in the order of the CIT(A) – Decided against revenue. - ITA No. 397(Asr)/2012, ITA No. 557(Asr)/2013, ITA No. 537(Asr)/2013 - - - Dated:- 25-8-2014 - A. D. Jain, JM And B. P. Jain, AM,JJ. For the Appellant : Shri P N Arora, Adv. For the Respondent : Shri Tarsem Lal, DR ORDER Per: B P Jain,AM. These two appeals filed by the Revenue for the assessment years 2009-10 2010-11 and one cross appeal by the assessee for the assessment year 2010-11 arise from the order of the CIT(A), Jammu dated 23.08.21012 10.06.2013. The Revenue has raised following grounds of appeal in ITA No.397(Asr)/2012 for the A.Y.2009-10 : 1. On the facts and circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grossly erred in law and on facts of the case in confirming the orders of AO in not allowing exemption u/s 10(23C)(vi) of the Act. Exemption u/s 10(23C)(vi) granted by the Ld. CCIT after the filing of return and as from the assessment year 2005-06. The AO was therefore duty bound to allow the exemption. That in the immediately preceding years the exemption has been allowed. It is prayed that exemption u/s 10(23C)(vi) of the Act as granted by the CCIT be allowed. 3. That the Ld. CIT(A) has grossly erred in not considering the claim of the assessee with regard to application of ₹ 1,41,08,968/- in the right perspective. That in the AY 2009-10 a sum of ₹ 1,41,08,968/- was claimed as deemed application in terms of explanation 2 to section 11(1) of the Act at the time of assessment it was not allowed. It was prayed that as the said amount has not been considered as deemed application in the year 2009-10, the said amount should not be reduced out of application for the year 2010-11. 4. First of all, we shall deal with appeal of the Revenue in ITA No.397(Asr)2012, for the A.Y. 2009-10. The brief facts of the case are that the assessee is a Trust registered under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h regard to the notice in view of Explanation to section 11(1) of the Act available in para 2.5.1 to 2.5.5 at page 8 of the order. The AO not being satisfied with the explanation of the assessee observed vide para 2.5.14 as under: 2.5.14 In view of the above discussion, since no option was exercised by the assessee in writing in terms of the Explanation to sec. 11(1) of the I.T. Act, 1961 within the time allowed u/s 139(1) of the I.T. Act, 1961, the exemption claimed by the assessee on an amount of ₹ 1,41,08,968/- is not allowed and the amount is brought to tax. During the course of assessment proceedings the assessee filed an affidavit through his accountant, which was an unsuccessful attempt to create evidence. 4.3. As regards the claim of exemption u/s 10(23C)(vi) of the Act, which exemption was available to the assessee vide order dated 12.07.2010 was not accepted by the AO for the reasons being reproduced for the sake of convenience as under: i. Request in change in claim of exemption can only be made through a validly filed revised returned as per the provisions of section 139(5) of the I.T. Act, 1961. Return of income cannot be revised by merely filing an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of I.T.Act dated 09.07.2010 which is on records the approval u/s 10(23C)(vi) already granted on 13.08.2007 for assessment year 2005-06 only by the Chief CIT was rectified to have effect from assessment year 2005-06 onwards as one time exemption holding as under: I have considered the contentions made by the assessee in its application received in this office on 10.12.2008 and 17.06.2010. Sub clause (3) of Rule 2CA of the I.T. Rules, after its amendment w.e.f. 24.11.2006 provides that the approval of the Chief Commission u/s 10(23C)(vi) of the I.T.Act granted before the Ist first day of Dec., 2006 shall at any time have effect for a period not exceeding three assessment years. Thus, the approval granted on or after 01.12.2006 would be one time. The request of the assessee also find support from the notification No.SO 2016(E) dated 24.11.2006 of the CBDT New Delhi vide which it is clarified that any approval granted after 01.12.2006 under clause (vi) and (via) of section 10(23C) will be one time with no requirement of renewal. In view of the above, the request made by the assessee in its application received on 10.12.2008 and 17.06.2010 is accepted and the order dated 13.07. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or accumulates it for application, wholly and exclusively to the objects for which it is established and in a case where more than fifteen per cent of its income is accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount exceeding fifteen per cent of its income shall in no case exceed five years; and] 4.5. This view taken by AO that application of income in capital assets would come into the way of exemption is based on the decision of Hon'ble High Court of Uttarakhand in case of M/s. Queens Educational Society, 223 CTR 395 which is discussed by Hon'ble Punjab Haryana High Court in the case of M/s. Pinegrove International Charitable Trust, 327 ITR 73 (P H) and was distinguished wherein it was held as under: 8.8 We have not been able to persuade urselves to accept the view expressed by the Division Bench of the Uttrakhand High Court in the case of Queens Educational Society. There are variety of reasons to support our opinion. Firstly, the scope of the third proviso was not under consideration, inasmuch as, the case before the Uttrakhand High Court pertained to section 10(23C)(iiiad) of the Act. The third proviso to section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Punjab Haryana High Court, in the case of CIT vs. Manav Mangal Society (supra), support our view. 4.8. In the present case also there is no case of AO that the activities of the trust are not genuine or the application of income is for purpose other than those of the objects of the institution. It is also to be seen that the conditions set in explanation to section 11(1) of I.T.Act. The factor of consistency as discussed above also comes to support the case of assessee. 4.9. In view of the above, the action of AO cannot be upheld and the additions made by him as contested in grounds nos. 1 to 3 are deleted. 5. Ground No.5 is regarding claim of exemption u/s 10(23C)(vi) of I.T.Act, which as per above discussion, is held to be available to assessee. 6. The Ld. DR, Mr. Tarsem Lal, at the outset, relied upon the order of the A.O. with regard to grounds No. 1, 2 3 of the Revenue. He argued that no notice with regard to explanation to section 11(1) has been filed with the return of income as is required under statute to be filed under section 139(1) of the Act. The claim of the assessee is that the same has been filed alongwith return of income and affidavit sworn by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 10(23C)(vi) of the Act, vide order dated 13.08.2007, in fact, which was mistake apparent from record by the CCIT which was rectified vide order dated 12.07.2010 sunder section 154 of the Act. He relied upon the decision of the ITAT, Pune Bench in the case of Bharati Vidyapeeth Medical Foundation vs. ACIT reported in (2013) 155 TTJ 152 and the relevant decision of the Pune Bench is placed at case laws (PB 30 to 52) where it has been held that when the activities of the assessee are covered under section 2(15), the assessee could have claimed exemption u/s 10(23C) if it desires, and it cannot be said that the assessee was not entitled to benefit of deduction u/s 11 and the assessee trust had both options available before it, either it can apply for exemption u/s 10(23C) or claim deduction u/s 11 and choice was left to assessee and the department cannot force assessee to adopt only particular provision. 8. As regards exemption under section 11, the ld. counsel for the assessee invited our attention to PB-2 where it is evident that the assessee has already spent more than 85% and the assessee was not required to file any notice under explanation to section 11(1) of the Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d much after the completion of assessments of relevant persons for the relevant assessment years. The Assessing Officers have rejected applications under section 154 on the ground that the notification was issued subsequent to the passing of the assessment order and thus there was no mistake apparent from record. 4. The matter has been examined. The Board are of the view that in view of the notification issued at a subsequent date but which is applicable to the assessment year/s involved in the application, there is a mistake apparent from record which can be rectified under section 154 of the Income-tax Act. However, while disposing of the rectification applications, the Assessing Officer must ensure that the conditions subject to which the approval was granted are satisfied. 10. In view of Circular No.725 dated 16.10.1995 of CBDT, mentioned hereinabove, the AO was under obligation to allow exemption u/s 10(23C)(vi) of the Act and there is nothing on record that the assessee has contravened any of the conditions as required under section 10(23C)(vi) of the Act. Therefore, the AO during assessment proceedings, in view of the said circular, should have allowed exemption u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Y. 2009-10 on the issue shall be identically applicable in the present appeal. Accordingly, we find no infirmity in the order of the ld. CIT(A). Thus, the sole ground of the Revenue in ITA No.557(Asr)/2013 is dismissed. 15. Now, we take up appeal of the assessee in ITA No.537(Asr)/2013 for the A.Y. 2010-11. Ground No.1 of the assessee has not been pressed by the ld. counsel for the assessee and the same is dismissed as not pressed. 16. With regard to grounds No. 2 3, the addition on account of accumulation claimed in the return of income as per Explanation to section 11(1) was made and the assessee had claimed the exemption u/s 10(23C)(vi) of the Act during the assessment proceedings. The said action of the AO was confirmed by the ld. CIT(A). Since the facts in the present grounds are identical to the facts in revenue's appeal in grounds No. 1, 2 3 (ITA No.397(Asr)/2012) for the assessment year 2009-10 hereinabove and being identical facts, our order in grounds No. 1, 2 3 for the A.Y. 2009-10 hereinabove shall be identically applicable and claim of the assessee u/s 10(23C)(vi) of the Act is allowed. Accordingly grounds No. 2 3 of the assessee are allowed. Thus, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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