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TMI Blog2017 (5) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... relatable to the said amendments / alteration of the objects and no new projects of that nature were initiated by the trust in this year for earning such ineligible income for AO to deny the benefits of the provisions of section 11 of the Act. It is very important to note that the AO/DIT(E) have not disturbed the existing Registration granted u/s 12A of the Act. Therefore, while the registration u/s 12A is in force and while the objects and the activities of the trust are genuine, denying the benefits of the provisions of section 11 of the Act constitutes premature and unsustainable. In our view, the CIT(A) as discussed in his order vide para 4.9 extracted above is very categorical that the amendments are inapplicable to the year under consideration. Revenue has not given any contrary arguments or decisions that necessitate the reversal of the finding of the CIT(A) by us. Thus, we confirm the CIT (A)’s findings and order for restoring the claim of deduction in favour of the assessee. - Decided against revenue - ITA No.5109/M/2014 - - - Dated:- 26-4-2017 - SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER For The Appellant : Shri K. Krish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in law, the Ld CIT (A) failed to appreciate the fact that the capital expenditure of ₹ 3.81 Crs spent by the assessee during the year on the objects of the trust was not brought to the notice of the Assessing Officer during the assessment proceedings nor during the appellate proceedings thereby violating the provisions of Rule 46A of IT Rules 1962. 8. Whether on the facts and circumstances of the case and in law, the Ld CIT (A) failed to appreciate the fact that the assessee should have spent 85% of the total income on the objects of the trust during the year. 9. Whether on the facts and circumstances of the case and in law, the Ld CIT (A) failed to appreciate the fact that the accumulation made u/s 11(2) for the AY 2005-06 by assessee should have been utilized till the year under consideration. 2. The main issue raised in the above grounds relates to the denial of exemption u/s 11 of the Act in respect of excess income over the expenditure. There is also an allegation in the grounds regarding the violation of Rule 46A of the Act. During the assessment proceedings, AO noticed that the change in the objects of the Trust and the assessee is engaged in the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption u/s 11 of the Act. Ld DR relied on the judgment of the Allahabad High Court in the case of Allahabad Agriculture Institute vs. Union of India (291 ITR 116, 119) (All). 5. Per contra, Ld Counsel for the assessee submitted that the facts of the said judgment of the Allahabad High Court (supra) are entirely different and the same was delivered in the context of stay proceedings . Referring to the amendment made to the objects of the Trust, one by one (chart filed), Ld AR demonstrated that objects never crossed the boundaries of object of education . Earlier, it was geographically restricted to Maharashtra and after the amendment, it has PAN-India scope to promote the educational activities though out India for charity. Regarding application of 85% of income for objects in the current year, it was demonstrated that the assessee has met this condition, of course, by including the amount expanded on capital account too. Ld AR also argued that the said judgment of the Ho ble Allahabad High Court is relevant for issues relating to registration u/s 12A of the Act. Ld AR reiterated that in the instant case, the registration u/s 12A was not disturbed. Regarding the intimation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceedings u/s 10(23)(vi) of the Act and the CCIT granted, vide the order dated 30.9.2015, necessary approval in this regard. Referring to the multiple provisions relating to non taxation of the excess profits of this kind, assessee submitted that there is no bar for the assessee to claim exemption of the profits u/s 11 of the Act which there are other provisions in the form of section 10(22) or 10(23)(vi) of the Act. Further, referring to allegation of non utilization of funds as per the provisions, assessee submitted that the applied funds as per the set provisions in this regard. Referring to various decisions, assessee justified the above stating that the utilisation of total receipts for capital expenditure should also be considered as application of total receipts. From the above, we find the assessee has filed exhaustive replies and written submissions meeting each and every objection raised by the AO in the assessment order. On consideration of the above submissions, we find, the allegations of the AO are not well founded. On considering the above, the CIT(A) has reversed the order of the AO and granted relief to the assessee. 8. In this regard the operational parag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable to the current AY. Further, on the AO s allegation relating to non application of receipts to the extent of 85%, CIT(A) has rightly invoked the provisions of the CBDT Circular and various judgments and they permits for inclusion of capital expenditure also for the purpose of the calculation of 85%. 10. Therefore, to sum up, the alteration /amendments made to the objects of the trust are not substantial in nature that effects the charitable nature of the existing objects of the trust. They merely expand the operational scope geographically to various states in India only. Therefore, so long as the amendments in objects is restricted to the such scope expansion in India and large number Indians are roped in to reap the benefits of the charitable objects of the Trust, in our opinion, such amendments, if any, ought not work detrimental to the trust in any way. As such, it is on records that the CCIT approved the charitable nature of the Object of the Trust during the proceedings u/s 10(23)(vi) of the Act. Further, we find that the allegations of the AO ie change in name of the trust, and non-utilisation of the 85% of the total receipts, are ill-conceived. As stated earl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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