9911796707
TMI Blog2019 (7) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds have been raised:- I. "On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax {CIT (A)} is bad, both in the eye of law and on facts. II. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in confirming the order under Section 147 read with Section 148, ignoring the fact that the same was bad in the eye of law as the conditions and procedure prescribed under the statute have not been satisfied and complied with. III. On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the reassessment proceedings initiated by the learned AO are bad in the eye of law as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are contrary to the facts. IV. On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law in confirming the addition made on the basis of the material collected at the back of the assessee without providing copy of the same & providing opportunity to rebut the same. V. On the facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowance of an amount of Rs. 19,965/- on account of car insurance expenses. XIII. On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law in confirming addition of an amount of Rs. 56,700/- made by A.O. holding the same to be undisclosed work in progress. XIV. On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law in confirming the disallowance of an amount of Rs. 17,91,779/- made by A.O. Invoking the provision of Section 40(a)(ia) of the Act. XV. (i) On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law in confirming the disallowance of an amount of Rs. 4,91,171/- made by A.O. on account of penalty. (ii) That the AO had disallowed the above amount ignoring the fact that the said amount does not pertain to penalty related to infraction of nay statutory law. XVI. On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law in confirming the addition of an amount of Rs. 1,82,92,536/- made by A.O. on account of investigation in FDR under Section 68 of the Act. XVII. On the facts and circumstances of the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were addressed by the Ld. Counsel for the assessee and therefore, same are considered dismissed as not pressed. 6. The brief facts and background are that the assessee is an educational society registered with the Registrar of Firms, Societies and Chits, Uttar Pradesh, vide registration dated 08.09.1994. Looking to the fact that assessee society was carrying out educational activities which fell within charitable activities u/s 2(15) of the Act, it was granted registration under section 12A vide certificate dated 01.10.1999 issued by the Commissioner of Income Tax, Meerut. It has been running various educational institutions. The assessing officer had received information alongwith Balance Sheet & Income and Expenditure Account from the Bank, whereby it transpired that the society has filed these statement affairs as collateral securities before Syndicate Bank, Shastri Nagar, Ghaziabad for obtaining loan facilities. On perusal of this Balance Sheet, the assessing officer noticed that the society has made huge investment in Land & Building and has not filed any return of income. Accordingly, the assessing officer issued notices under section 148 asking the assessee to file the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their audit report. After taking into consideration above facts and the observation made in the special audit report, the assessing officer computed the income of the society as Rs. 10,47,71,546. The assessing officer further disallowed the benefit of the exemption under section 11 on the reasoning that assessee society has not filed the return as required under section 139(4A) reads with section 12A(b) of the Income Tax Act in time. Accordingly, the income was assessed as income from business/profession in the status of AOP. 8. Aggrieved by the order of the AO, assesse filed appeal before the CIT (A). In the first appeal, the assessee raised various grounds of appeal challenging the order of the AO. The assessee objected to the reopening of the assessment and also denial of exemption under section 11 in respect of the Income applied towards charitable purposes during the year besides the various additions and disallowances made while computing income. Before the CIT (A), the assessee had also filed additional evidences along with application for admission of such additional evidences under Rule 46(A). The CIT (A) admitted the additional evidences and called for a remand report f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not to be included in the total income of the previous year including such income which is accumulated or set apart for application to such purposes to the extent the income so accumulated or set apart is not in excess of 15% of the income. 10. The Ld. Counsel submitted that there is no condition in section 11 to the effect that income will not be computed under this section if return is not filed in time. He further submitted that it does not make any difference whether such income is being computed in regular assessment or an assessment being made consequent to reopening of assessment under section 148. In this regard he invited our attention to the provisions of section 148, whereby the return filed in response to notice issued under section 148, is considered as if such return was a return required to be furnished under section 139 and all the provisions of this Act are to applied which will include section 11 also. On this basis, it was contended that the Act does not make any distinction in the return filed in response to notice under section 148 or a return furnished under section 139. In fact section 148 specifically provides that the provision of this Act shall apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y. 2018-19 that such condition has been clearly spelt for claiming exemption under this section 11, by inserting clause (ba) in section 12A. The amendment made by the Finance Act is an extension of the objects sought to be achieved of getting the return filed in time. This clause having been inserted by the Finance Act, 2017, effective from A.Y- 2018-19 making it pre-requisite of filing return in time for claiming exemption under section 11 or 12 of the Act, the same cannot be applied to the assessment years under consideration. In support of the above contention, Ld. Counsel placed reliance on the judgment of ITAT Chandigarh in the case of Genius Education Society v. ACIT -ITA No. 238/Chd/2018 dated 20.08.2018, wherein similar issue has come up. 13. In counter, the Ld. CIT DR supported the order passed by the Authorities below and further submitted that the deduction under section 11 is conditional upon filing of return along with the audited account before the due date of filing return prescribed under section 139(4A)of the Act. The assessee having not filed the return, the benefit of exemption cannot be allowed in the assessment proceeding under section 148 of the Act which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment for the assessment year commencing on or before the 1st day of April, 1992]; (h) an order cancelling the registration of a firm under sub-section (1) or under sub-section (2) of section 186 22{***] 23[in respect of any assessment for the assessment year commencing on or before the 1st day of April, 1992]; (i) an order under section 201; (j) an order under section 216 in respect of any assessment for the assessment year commencing on the 1st day of April, 1988 or any earlier assessment year; (k) an order under section 237; (l) an order imposing a penalty under- (i) section 221, or (ii) section 271, section 271A, section 271B, 24[***]25 section 272A, section 272AA or section 272BB]; (iii) 26[***] section 272, section 272B or section 273, as they stood immediately before the 1st day of April, 1989, in respect of any assessment for the assessment year commencing on the 1st day of April, 1988 or any earlier assessment years. * For limitation period sec. 153 Expl. 1 clause (iii) clearly stipulates that the period of special audit will be excluded from the limitation enumerated u/s 153. The only requirement is that there should be an order for special audit. Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rily been saddled with a heavy expenditure. An appeal against the order of assessment, as noticed hereinbefore, would not serve any real purpose as the appellate authority would not go into such a question since the direction issued under section 142(2A) of the Act is not an appellate order." The order of Hon'ble Supreme Court in the case of Rajesh Kumar (Supra) is also followed by Hon'ble ITAT Jodhpur Bench in the case of ACIT v. Badri Ram Choudhary 355 ITR 223 (Jodhpur) order dated 25.10.2007 (copy enclosed). In this order Hon'ble ITAT has discussed in a great length the jurisdiction of Tribunal to examine the validity of section 142(2A) which is as under :- "Jurisdiction of the Tribunal to examine validity of s. 142(2A) order 3.5.1 The learned Authorised Representative has forcefully contended that the appointment of the special auditor be declared null and void as the due process of law has not taken place. We are not inclined to go into this question for the reason that the Tribunal is not competent to examine the validity of the order appointing special auditor under s. 142(2A). The scope of the appeals to the Tribunal has been set out in s. 253 from w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A close reading of the decision shows that the observations in this regard appear to have been made in the context of the assessments in terms of s. 158BC (block assessment) of the Act. Such assessments are relatable to a case when raid has been conducted at the premises of an assessee. Had that been so, limited to the facts involved in that case, we would have negative the contentions of the learned counsel for the petitioner. But certain observations of general nature have been made. The effect of these observations appears to be that in every case where the AO issues a direction in terms of s. 142(2A) of the Act, the assessee has to be heard before such order is passed. This does not appear to us to be the correct position of law. Therefore, we refer the matter to a larger Bench. The records be placed before the Hon'ble Chief Justice of India for constituting an appropriate Bench." 3.5. iii On a careful reading of this judgment, it is clearly deducible that the observation of the Hon'ble Supreme Court in the case of Rajesh Kumar (supra) qua the opportunity of predecisional hearing for appointment of special auditor has to be granted to the assessee before issuing direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal. There are various sections, the orders under which are not appealable. To cite a few, the order passed by the CIT under s. 264 is not appealable before the Tribunal. Similarly, the order passed for transfer of case under s. 127 is also precluded from examination by the Tribunal. All such orders are outside the ambit of the Tribunal's jurisdiction. Our view is fortified by the recent decision in the case of Smt. Jaswinder Kaur Kooner v. CIT [2007] 211 CTR (P&H) 200 : [2007] 291 ITR 80 (P&H). In this case the assessee raised a plea that the order of transfer of It is further observed "If no such challenge is made at the initial stage, the issue cannot be raised in appeal against the assessment order" jurisdiction under s. 127 being void, the entire assessment proceedings should be annulled on that ground. The Tribunal came to the conclusion that since the assessee had not challenged such order at the relevant forum the assessment could not be set aside. When the matter finally travelled to the Hon'ble High Court, it was held that the scope of assessment proceedings under the Act is confined to determining the income of the assessee liable to tax. If the assessee is aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that any income chargeable to tax has escaped assessment for any assessment year, he may apply the provisions of sections 148 to 153. He may assess or reassess the income which has escaped assessment. it is to be noted that section 147 as it stands with effect from 1-4-1989 not only merges clauses (a) and (b) of the pre-amended section 147 but also brings about a significant change in the preliminary requirement of certain conditions mandatory in character before reassessment proceedings should be initiated in the pre-amended section. Conditions precedent for initiation of action under section 147(a) or 147(b) of the pre-amended section are highlighted above. The amended provisions are contextually different and the cumulative conditions spelt out in clause (a) or (b) of section 147 prior to its amendment, are not present in the amended provision. The only condition for action is that Assessing Officer should have reason to believe that income has escaped assessment, which belief can be reached in any manner and is not qualified by a pre-condition of faith and true disclosure of material fact by an assessee as contemplated in the pre-amended section 147(a) and the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Section 12A(b) requires the trust which claims the benefit of sections 17 and 12, when it files a return of income, to file along with that return the report of the audit for that year in the Form prescribed under rule 17B of the Income-tax Rules, 1962. To the extent the return is not accompanied by that audit report in Form No. 10B, the assessee will not be eligible to claim the benefit of sections 11 and 12". (Copy enclosed) D. In the case of Coimbatore Spinning & Weaving Co. Ltd. v. CIT 95 ITR 375 order of High Court of Madras has held that "The Tribunal was not inclined to accept the assessee's stand that the overall stock position should alone be considered. According to the Tribunal the assessee was in a fiduciary capacity in respect of the stock declared to the banks, that the assessee would not have resorted to exaggerate the stock position as there was the possibility of the bank Officials checking the stocks and any manipulation discovered by the banks would be against its interests and, therefore, the assessee should be taken to have given the correct stock particulars to the banks in respect of each variety. The Tribunal also took the view that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. This written submission is with regard to this clarification which is as under:- The taxation of charitable trusts is governed by Chapter III of the Income-tax Act which contains sections 11, 12, 12A, 12AA and 13. Section 12A/12AA contains the provisions concerning the Registration and the Registration Procedure under the Income-tax Act. Sections 11 and 12 contains the provisions concerning the condition to be fulfilled by the charitable trusts in order to claim exemption from income tax. Section 13 stipulates the provisions concerning the trusts which are not eligible for exemption u/s. 11 & 12. Conditions for applicability of section 11 and section 12- The provision of section 12A of the Act is reproduced as under:- 12A. [(1)] The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:- (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the [Principal Commissioner or] Commissioner before the 1st day of July, 1973, or before the expiry of a period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the pres-cribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed;] [(ba) the person in receipt of the income has furnished the return of income for the previous year in accordance with the provisions of sub-section (4A) of section 139, within the time allowed under that section.] The provision of section 139(4A) which is Substituted by Finance Act, 1972, w.e.f. 1-4-1973 reads as under:- [(4A) Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2, shall, if the total income in respect of which he is assessable as a representative assessee (the total income for this purpose being computed under this Act without giving effect to the provisions of sections 11 & 12) exceeds the maximum amount whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the ground of non-filing of return by the trust as this provision was inserted u/s 12A w.e.f. 01.04.2018 and the case of the appellant has been completed much before this date. The plea of Ld. AR is not acceptable as section 12A(1)(b) and section 139(4a) was there in the statute and the appellant has violated these provisions. The background of amendment made by the Finance Act 2017 is clarified by the following letter of CBDT which is self-explanatory- F.No, 173/193/2019-ITA-I Government of India- Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, Dated: 23 April, 2019 To, The Pr. DGIT (Systems), New Delhi. Subject: Clarification with regard to the time allowed for filing of return of income subsequent to the insertion of Clause (ba) in sub-section 1 of section 12A of the income -tax Act, 1961. Sir, Undersigned is directed to refer to the representation (s) received on above mentioned subject stating that while processing of ITR-7 for the A.Y. 2018- 19, in respect of the belated returns filed u/s 139(4) of the Income Tax Act, 1961 (Act), the following is being communicated u/s 143(1)(a) of the Act:- "As per section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its return of income within the time allowed u/s 139 of the Act. Accordingly, orders u/s 143(1)(a) in those cases in which demand has been raised on this issue may please be rectified. This issues with the approval of Chairman(CBDT). (Vinay SheelGautam) JCIT (OSD) (ITA-I) Telefax: 011-23093070 E-mail: [email protected] Copy to:- The Pr. CCIT(Exemptions), New Delhi. Tags: Income Tax Notifications, Section 12A, Section 12AA Obtained from https://taxguru.in/income-tax/time-allowed-filing-return-income-trust-claiming-exemption.html This makes it clear that the said clarification by way of amendment was issued to clarify that the trusts who have filed belated return u/s 139(4) of the Act cannot be refused grant of registration on the ground that the return of income was not filed within due date of filing of return whereas the fact of the case of the appellant is that the appellant has not filed its Return of Income u/s 139(1) or u/s 139(4) i.e. within due date or belated. Infact the appellant never filed Return of Income as per the stipulated legal provisions given u/s 139(4A) of the Act read with section 12A(1)(b) and it is only after the proceedings u/s 147/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucational Foundation, (2002) 257 ITR 46, 47, 48 (Mad.) in which the Hon'ble Madras High Court has held in para 6 of the order which is reproduced as under:- Section 12A(b) of the Act requires the trust which claims the benefit of sections 11 and 12 of the Act, when it files a return of income, to file along with that return the report of the audit for that year in the form prescribed under rule 17B of the Income-tax Rules, 1962. To the extent the return is not accompanied by that audit report in Form No. 10B the assessee will not be eligible to claim the benefit of sections 11 and 12 of the Act. The return so filed by such an assessee would therefore be defective, as the return filed by the trust is filed, inter alia, with the object of claiming a benefit under sections 11 and 12 of the Act. Such a defect when noticed by the Assessing Officer is a defect which the Assessing Officer may bring to the notice of the assessee so that the assessee can rectify that defect within the time allowed by the Assessing Officer. Hence, it is apparent that the provisions of section 139(4A) read with section 12A(1)(b) lays down conditions for applicability of section 11 and 12 wherein it has sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case, firstly there is no original assessment and hence, there is no question of re-agitating or reviewing of any earlier order. Further, the issue of deduction under section 11 cannot be said to be unconnected with the issue of escapement of income on the basis of which income has been computed by the assessing officer. Deduction under section 11 is part of the computation of income which has escaped assessment. Section 11 itself states that the income to the extent to which it has been applied for charitable purposes is not to be included in the total income of the previous year. 18. As regards the applicability of amendment made by the Finance Act, 2017, the Ld. Counsel submitted that this amendment cannot have retrospective operation in view of the specific mention in the Finance Act, 2017 itself that this amendment shall be applicable from 1st April, 2018, i.e. A.Y. 2018-19. He submitted that Legislature has specifically mentioned the date from which this amendment will be effective. Had the intention would have been to make it retrospective; the legislature could have stated so. It was further pointed out by him that though this amendment was made by the Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequently the computation of income has to be in accordance with sections 11 to 13 of the Act. The assessee society had not filed its return of income and it was only in response to notice issued by the Assessing Officer under section 148, the assessee has filed its return of income alongwith the audited Balance Sheet and Profit & Loss Account. Now, whether the income of the assessee society is to be computed in accordance with the provisions of section 11 of the Act, as it has not filed the return as required under section 139(4A) of the Act, but has filed return in response to notice under section 148. 20. Section 139 falls under Chapter XIV-'Procedure for assessment' which provides procedures and conditions for filing of return of income. Section 139(1) mandates every person having income exceeding the maximum amount not chargeable to tax to file return of income. Similarly, section 139(1) (4A) mandates that every person in receipt of income derived from property held under trust, i.e., charitable trust, etc., to file its return of income in case its total income exceeds the maximum amount not chargeable to tax without giving effect to the provisions of section 11 & 12 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder that sub-section". What this implies is, in our view, clear. Even after a notice is issued under s. 148, if the ITO proposes to make a variation in the income returned pursuant to such notice which is prejudicial to the assessee and the amount of such variation exceeds the amount fixed by the Board, the ITO must forward a draft of the proposed order of the assessment to the assessee. The assessee is entitled to forward objections to such variation. If he does not do so, the ITO may complete the assessment or reassessment on the basis of the draft order. If, however, the assessee does raise objections, the ITO must forward the draft order together with the objections to the IAC and the IAC must, after considering the draft order, the objections and the record, issue such directions as he thinks fit for the guidance of ITO to enable him to complete the assessment or reassessment, but no directions which are prejudicial to the assessee may be issued before an opportunity is given to the assessee to be heard. The directions issued by the IAC are binding on the ITO. 14. If, therefore, the procedure that is prescribed by s. 144B is to be applied even to assessments and reassessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt with the contention of the Ld. DR that in the re-assessment proceedings under section 148, no deduction can be allowed in respect of the income which has escaped assessment. In reassessment proceedings even the income which has escaped assessment has to be computed in accordance with the provisions of the Act which will include section 11 as is in the present case. It will not be correct to say that while computing income under section 148 the entire gross receipts are to be taxed. Further, it is not the case of the assessee that it is re-agitating or seeking review of the issue or the deduction for which determination has already taken place. The case of the assessee is that while computing income which has escaped assessment, the computation has to be done in accordance with the provision of the Act which include section 11 of the Act. It is a case of a determination of correct escaped income as per the provision of the Act. 23. The next issue is, whether there is any such bar or limitation in the Act for claiming exemption under section 11 in the case of an assessment proceeding consequent to issue of notice under section 148 of the Act. To answer this question it may be rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of CIT v. Shahzadanand Charity Trust [1997] 228 ITR 292 (Punj. &Har.), has categorically held so in para 10-14 of its order as under: "10. Calcutta High Court in Rai Bahadur Bissesswarlal's case (supra) while interpreting s. 12A(b) held that the provision was directory in nature and the AO could allow the assessee to file the audit report, at any time before the completion of the assessment. In this case the assessee, a charitable trust registered with the CIT filed its return on 17th Sept., 1984, declaring a deficit of Rs. 1,61,452. The return so filed was not accompanied by audited accounts and audit report in Form No. 10B as required under s. 12A of the Act. The audit report dt. 12th Nov., 1984 was, however, filed by the assessee in the prescribed form on 6th March, 19897, before the completion of the assessment. The ITO while completing the assessment refused to allow the benefit of exemption under s. 11 of the Act to the assessee on the ground that audit report in Form No. 10B was not filed along with the return. Income of the assessee was put to tax. Order of the ITO was upheld by the CIT(A) against which assessee filed further appeal before the Tribunal which was accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l appearing for the Revenue then argued that as per this circular, the auditor's report could only be furnished upto the stage of framing of assessment as the power to condone the delay for accepting the auditor's report at a later date has only been given to the ITO and not thereafter, i.e., at the appellate stage. We find no merit in this submission. The CBDT by issuing the Circular dt. 9th Feb., 1978 has treated the provision regarding furnishing of auditor's report along with the return to be procedural and, therefore, directory in nature. By showing sufficient cause, the auditor's report could be produced at any later stage either before the ITO or before the appellate authority. 14. In view of the Board's Circular dt. 9th Feb., 1978, the requirement of filing auditor's report in Form 10B as provided in s. 12A(b) r/w r. 17B of the Rules, the ratio of the law laid down by this Court in Jaideep Industries' case (supra) would not apply to the present case." 11. In view of the above therefore we find no merit in the argument of the Revenue that the assessee was not eligible for exemption u/s 11 &12 on account of not having complied with the requirements of section 12A(1)(b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en specifically stated in the Finance Act, 2017 and not for the A.Y. under consideration. We are also not in agreement with the contention of the Ld. DR that this amendment is clarificatory in nature. As rightly pointed out by the Ld. Counsel that this amendment has been made by the Finance Act, 2017 effective from A.Y. 2018-19, meaning thereby that this clause has not been made applicable even for the A.Y. 2017-18, the return of which were still to be filed. Thus, the Legislature has thought fit to make this amendment applicable from next assessment years onwards and not even to the current A.Y. 2017-18. 26. Our above interpretation gets supported by the judgment of the Supreme Court - Commissioner of Income Tax (Central) - I, New Delhi v. Vatika Township Private Limited 367 ITR 466 (SC). wherein, their Lordships have observed and held as under: "30. A legislation, be it a statutory Act or a statutory Rule or a statutory Notification, may physically consists of words printed on papers. However, conceptually it is a great deal more than an ordinary prose. There is a special peculiarity in the mode of verbal communication by a legislation. A legislation is not just a series of st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later. 33. We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India & Ors. v. Indian Tobacco Association (2005) 7 SCC 396, the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee society as collateral security to Syndicate Bank for obtaining loan facility. Thereafter, statement of Mr. K.P. Singh, Chairman of the society was also recorded. The statement of the Bank Manager was also recorded in order to establish the authenticity of the Balance Sheet and Income & Expenditure account having been submitted by the society itself. On the basis of these facts and information the assessment was reopened. In response thereto the assessee had filed the return of income along with the audited Balance Sheet & Income & Expenditure account. Since the assessing officer found it difficult to reconcile the figures stated in the Balance Sheet which he has got from the Syndicate Bank and the Balance Sheet which the assessee has submitted and its correctness, he referred the matter to the Special Auditor appointed under section 142(2A) of the Act. The Special Auditor after carrying out the audit submitted its report with certain observations about the various expenses debited in the books of accounts. These observations were with reference to the balance sheet and income and expenditure which were audited by the special auditor as is evident from the special audit report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude the application of the income towards the expenditure stated in the such financial. On this basis it was argued that the stand of the AO is contradictory. 31. In reply the Ld. CIT DR placed reliance on the order passed by the AO and the CIT (A) and in her in her written submissions, she has relied upon the judgment of the Madras High Court in the case of Coimbatore Spinning and Weaving Company Ltd. v. CIT 95 ITR 375. 32. In rejoinder the Ld. Counsel submitted that in the present case the AO has carried out the verification to find out the correct financials and that's why special auditor was appointed. The special auditor has referred to the balance sheet and income and expenditure account submitted by the assessee along with return as giving a true and fair view with subject to the observation as per Annexure- A attached with the special auditors report. Thus, the financials submitted by the assessee along with the return having been verified by the AO himself through the Special Auditor, that financial itself should be the basis of computation of income. It was submitted that the judgment in the case of Coimbatore Spinning and Weaving Company Ltd. v. CIT 95 ITR 375 is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain observations thereon, the AO cannot ignore such balance sheet and the profit and loss account audited by the special auditor. Further, on perusal of the assessment order we note that AO has not brought any material to support that the facts and figures stated in the balance sheet and profit and loss account submitted to the Syndicate Bank are the actual facts and figures. The AO being an adjudicating officer is supposed to assess the correct income. He cannot assess the income arbitrarily. On going through the assessment order we note that he has made various additions and disallowances on the basis of the Special Auditor's observations coming out of the balance sheet and profit and loss account submitted by the assessee. The AO has also relied upon the special auditor's report as is evident from the assessment order and he has also issued show cause notices for making various addition and disallowances on the basis of observation made in the special audit report. But without giving any reason or justification in his order, Assessing Officer has just picked up the figure of the excess of income over expenditure from the financials with the Syndicate Bank rather than taking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em have held that assessee society is not eligible for computation of income under section 11 of the Act, income has been computed applying provision of section 28 to section 44D of the Act in respect of the profit and gains of business or profession. As we have held that assessee society is eligible for computation of its income under section 11 of the Act, the issue for consideration is whether such expenditure is to be taken into consideration while considering application of income towards charitable purposes. In case it is held that assessee society has not produced the evidence in support of its claim, such amount has to be excluded while considering application of income under section 11 of the Act. On going through the facts we note that the AO made a total disallowance of Rs. 26,548/- out of which the CIT(A) has deleted the addition of Rs. 15,832/- after calling for remand report on the additional evidences submitted by the assessee in support of its contention. It has been stated by the CIT (A) that assessee has submitted proof of payment with respect to amount of Rs. 15,832/- and the payment is also through banking channel. However, assessee has not produced any cogent e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made and confirmed by the CIT (A) as income was computed under the head business or profession. As we have held that assessee society is eligible for computation of its income under section 11 of the Act, the only issue to be examined is whether such expenditure can be disallowed by invoking provision of section 40(a)(ia) of the Act on the reasoning that assessee has failed to deduct tax at source while making such payments. Chapter-III of the Income Tax Act is regarding incomes which do not found part of the total income. Section 11 which falls in this Chapter is regarding computation of income from property held for charitable/religious purposes and its mode of computation as per the condition prescribed in these sections itself. As against this section 40(a)(ia), 40A(3) and section 43B falls in Chapter IV-D which are applicable for computing profits and gains of business or profession. Thus, the provisions of these sections are applicable in respect of profit and gains of business or profession. This Chapter IV-D is not applicable in respect of charitable trust or institution whose income is to be computed under Chapter-III. Accordingly, no disallowance or adjustment can be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82,92,536/- made by AO on account of investment in fixed deposit. On going through the assessment order, we note that the AO has made this addition on the basis of observation made by the special auditor in its report. The special auditor has observed that 'investment of Rs. 1,43,41,000/- was made during the year and maturity value of Rs. 1,08,66,853/- was credited in the FDR account of which Rs. 6,13,853/- was transferred to interest on FDR account. It is not ascertainable as to whether interest on matured FDRs have been correctly accounted for or not and further accrued interest on the balance FDRs as on 31.03.2006 amounting to Rs. 40,88,000/- has not been credited in the books of account.' On the basis of these observations of the Special Auditor, the AO has held that the assessee has not been able to provide any document to auditor and to the AO in support of source of fund for investment in FDR. Therefore, he added the entire amount of investment in FDR of Rs. 1,43,41,000/- .The AO further added Rs. 39,51,536/- assuming that assessee has earned interest of Rs. 47,01,853/- (i.e. Rs. 6,13,853/- + Rs. 40,88,000/-). Thus, a total addition of Rs. 1,82,92,536/- was made. The content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the above facts and analysis, we direct the AO to delete the addition of Rs. 1,82,92,536/. This ground of appeal is thus allowed. 43. Ground no.17 is regarding addition of Rs. 20,938/- on account of job work. The AO has made addition of this amount and the CIT (A) has confirmed the same. In the absence of supporting evidence, we also confirm the disallowance made by the CIT (A). However, as we have held in ground no.11 while considering disallowances in the absence of supporting evidence that the income of the society is to be computed in terms of section 11 of the Act and accordingly such amount need to be excluded while computing total application of income. Following the same reasoning we direct the AO that this amount instead of making addition as income needs to be excluded while considering application of income in terms of section 11 of the Act. This ground of appeal is disposed of accordingly. 44. Ground no.18 is regarding disallowance of depreciation of Rs. 1,72,781/-. The AO has made addition of this amount and the CIT (A) has confirmed the same. In the absence of supporting evidence, the disallowance made by the CIT (A) is thus upheld. However, as held abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on the basis of the additional evidences submitted by the assessee and the remand report thereon received from the AO. The CIT (A) held that assessee has submitted evidences in support of the expenses incurred. Before us the Ld. DR could not controvert the above facts. 49. On perusal of the impugned order, we find that the disallowance has been deleted by the CIT (A) after considering the additional evidences and the remand report submitted by the AO. Accordingly, we uphold the order of the CIT (A) and this ground of the Revenue is dismissed. 50. Ground No.2 in Revenue's appeal is regarding deletion of addition of Rs. 15,832/- on account of electricity expenses. This ground is the same as ground no.11 in assessee's appeal where the AO has disallowed a sum of Rs. 26,548/- on account of electricity expenses and the CIT (A) has given partial relief of Rs. 15,832/- on the basis of additional evidences in the form of payment proof after calling from the remand report from the AO. We note that the disallowance has been deleted by the CIT (A), as the assessee has submitted the necessary evidence in support thereof. Accordingly, we uphold the order of the CIT (A) and this ground of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing given by the CIT (A), we see no reason to interfere with the order of the CIT (A) and accordingly, this ground of the Revenue is dismissed. 54. Ground No.6 in Revenue's appeal is regarding deletion of addition of Rs. 1,21,06,000/- in respect of the cash deposited in the bank. The AO made this addition on the basis of the cash deposited of sums amounting to Rs. 54,00,000/-, Rs. 49,46,000/-, Rs. 60,000/- and Rs. 17,00,000/- in the bank account of the assessee society. The CIT (A) has deleted the first two amounts i.e. Rs. 54,00,000/- and Rs. 49,46,000/- as these deposits in the bank account do not pertain to the year under consideration. As regards the balance the CIT (A) noted cash deposits reported by the AO have been duly recorded by the assessee in its books accounts as tuition fees and hence addition made by the AO is double addition. The CIT (A) also noted that the Special auditor appointed by the AO has also not made any adverse observation about the cash deposited in the bank. The Ld. DR could not controvert the above finding of the CIT (A). We are of the view that the CIT (A) has examined the issue. The deposit in the bank account having been made out of the books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case, the ld. CIT (A) has erred, both on facts and law in confirming the action of AO in taking Rs. 6,39,13,382/- as returned income of the Assessee. 8. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law, in confirming the action of the AO in taking the financials with Syndicate Bank, Shastri Nagar, Ghaziabad as correct financials and determining the income on the basis of such figures without ascertaining the correctness of such finding. 9. (i) On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law, in ignoring the balance sheet and income and expenditure account prepared by the assessee and relying on the balance sheet submitted to the bank. (ii) In the absence of any supporting evidence, it was not justified in relying upon the balance sheet and Income and expenditure account filed before the bank. 10. On the facts and circumstances of the case, the learned CIT (A) has erred, both on facts and in law, in ignoring the fact that having got the accounts audited from the special auditor there was no justification to take into consideration the figure sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of appeal. 58. Ground Nos. 1 & 20 are general in nature and hence need no adjudication; and with regard to ground nos. 2 to 5, no arguments were addressed by the Ld. Counsel for the assessee and the same are dismissed as not pressed. 59. Ground No.6 is regarding denial of exemption under section 11 of the Act while computing income of the society. At the time of hearing before us, both the parties fairly agreed that this ground raised and the facts in this appeal are identical to the facts and ground no.6 raised in appeal for assessment year 2006-07 vide ITA No.3674/Del/2017. Therefore, both the parties fairly stated that the outcome of the appeal in ITA No.3674/Del/2017 for assessment year 2006-07 would be squarely applicable to ground no.6 of this appeal. We have already decided the appeal for assessment year 2006-07 vide ITA No.3674/Del/2017 and, for the detailed discussion in that appeal we have held that AO was not justified in denying the benefit of the exemption under section 11 and 12 of the Act and we have directed the AO to allow the benefit of section 11 & 12 of the Act and compute the income accordingly. Following the same reasoning we hold that AO was not justified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g confirmation of disallowance of an amount of Rs. 22,812/-. This ground is identical to the ground no.11 in assessee's appeal for the A.Y. 2006-07 whereby we have upheld the disallowance of expenditure in respect of which assessee has not been able to submit evidences. In the absence of supporting evidence, the disallowance made by the CIT (A) is upheld. However, we have held that while considering disallowances in the absence of supporting evidence, the income of the society is to be computed in terms of section 11 of the Act and accordingly such amount need to be excluded while computing total application of income. Following the same reasoning we direct the AO that this amount instead of making addition as income needs to be excluded while considering application of income in terms of section 11 of the Act. This ground of appeal is disposed of accordingly. 63. Ground Nos. 12 and 13 are regarding disallowances by invoking the provision of section 40A(3) and section 40(a)(ia). These grounds are identical to the ground no.14 in assessee's appeal for the A.Y. 2006-07. In the said appeal we have held that income of the charitable institution is to be computed under section 11 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciation of Rs. 6,35,842/-. This ground is identical to ground no.18 of assessee's appeal for the A.Y. 2006-07. In the said appeal we have in the absence of supporting evidence, upheld the disallowance made by the CIT (A). However, we have held in ground no.11 while considering disallowances in the absence of supporting evidence that the income of the society is to be computed in terms of section 11 of the Act and accordingly such amount need to be excluded while computing total application of income. Following the same reasoning we direct the AO that this amount instead of making addition as income needs to be excluded while considering application of income in terms of section 11 of the Act. This ground of appeal is disposed of accordingly. 68. Ground no.17 and 18 are regarding computation of income in accordance with the provision of section 11 and 12 of the Act and not in accordance with the provisions of section 28 to 44 D of the Act. These grounds are identical to ground no.19 and 20 of assessee's appeal for A.Y. 2006-07. There we have held that income of the assessee society is to be computed in accordance with the provision of section 11 of the Act. Following the order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- made by the AO on account of the depreciation. The AO has made the disallowance of depreciation on the reasoning that the building was under construction as on 31.03.2007 and hence no depreciation can be allowed. The CIT (A) has taken note of the fact that existence of the building was not in doubt as the valuation officer appointed by the AO itself has confirmed the same and the said report has also been relied upon by the AO subsequently. On this basis the CIT (A) has restricted the disallowance in respect of the addition at year end. We are of the view that the fact building was in existence and was in use is not in dispute and hence the CIT (A) was correct in allowing depreciation on the building. The finding given by the CIT (A) is correct and we see no reason to interfere with the order of the CIT (A) and accordingly, this ground is dismissed. 72. Ground No. 2 in Revenue appeal is regarding deletion of addition of Rs. 11,16,725/- out of the total addition of Rs. 14,57,064/- made by the AO on account of the unexplained investment in FDRs. This addition has been made on the basis of interpretation of observation of the special auditors report and is common with ground no.15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d report we do not find any reason to interfere with the order passed by the CIT (A). Accordingly the order of the CIT (A) on this issue is upheld and this ground of Revenue's appeal is dismissed. 76. Ground No. 6 in Revenue's appeal is regarding deletion of addition of Rs. 8,49,930/- in respect of the cash deposited in the bank. The CIT (A) noted that cash deposits added by the AO have been duly recorded by the assessee in its books accounts. The CIT (A) also noted that the Special auditor appointed by the AO has also not made any adverse observation about the cash deposited in the bank. We are of the view that in the absence of any mismatch being pointed out by the special auditor about the amount shown in the books of account and the amount credited in the bank account, the AO was not justified in making this addition. From the assessment order it is evident that the AO has made the addition merely on the ground that cash has been deposited in the bank ignoring the fact that assessee receives tuition fees etc. from the students and mere deposit in the bank account cannot be a ground for making addition. The deposit in the bank account having been made out of the books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not denying exemption under section 11 of the Act. 8. On the facts and circumstances of the case, the Ld. CIT (A) has erred, both facts and law in confirming the action of AO in taking Rs. 7,02,85,035/- as returned income of the Assessee. 9. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law, in confirming the action of the AO in taking the financials with Syndicate Bank, Shastri Nagar, Ghaziabad as correct financials and determining the income on the basis of such figures without ascertaining the correctness of such finding. 10. (i) On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law, in ignoring the balance sheet and income and expenditure account prepared by the assessee and relying on the balance sheet submitted to the bank. (ii) In the absence of any supporting evidence, it was not justified in relying upon the balance sheet and Income and expenditure account filed before the bank. 11. On the facts and circumstances of the case, the learned CIT (A) has erred, both on facts and in law, in ignoring the fact that having got the accounts audited from the special audito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computing income of the assessee. 21. The appellant craves leave to add, amend or alter any of the grounds of appeal. 80. Ground Nos. 1 & 21 are general in nature and hence need no adjudication; and on ground No. 2 to 5, no arguments were addressed by the Ld. Counsel for the assessee and the same are considered as not pressed and hence, dismissed. 81. Ground Nos .6 & 7 are regarding denial of exemption under section 11 of the Act while computing income of the society. At the time of hearing before us, both the parties fairly agreed that this ground raised and the facts in this appeal is identical to the facts and ground no.6 raised in appeal for assessment year 2006-07 vide ITA No.3674/Del/2017. Therefore, both the parties fairly stated that the outcome of the appeal in ITA No.3674/Del/2017 for assessment year 2006-07 would be squarely applicable to grounds no.6 & 7 of this appeal. 82. We have already decided the appeal for assessment year 2006-07 vide ITA No.3674/Del/2017 and, for the detailed discussion in that appeal we have held that AO was not justified in denying the benefit of the exemption under section 11 of the Act and we have directed the AO to allow the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... become academic in nature. Ground Nos. 8 to 11 are accordingly allowed. 86. Ground Nos. 12 & 14 are in assessee's appeal is regarding confirmation of disallowance of an amount of Rs. 2,28,318/- and Rs. 3,61,855/- respectively. These grounds are identical to the ground no.11 in assessee's appeal for the A.Y. 2006-07 whereby we have upheld the disallowance of expenditure in respect of which assessee has not been able to submit evidences. However, as the assessee's income is to be computed in accordance with the provisions of section 11 of the Act, we have directed the same be excluded while computing income in terms of section 11 of the Act. Following the same reasoning as the assessee has not produced cogent evidence about these expenses of Rs. 2,28,318/-and Rs. 3,61,855/- respectively, we direct the AO that this amount instead of making addition as income need to be excluded while considering application of income in terms of section 11 of the Act. This ground of appeal is disposed of accordingly 87. Ground Nos. 13 and 15 are regarding disallowance of Rs. 23,500/- by invoking the provision of section 40A(3) and disallowance of Rs. 56,45,698/- by invoking the provision of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y. 2006-07 we direct the AO to compute the income in accordance with the provision of section 11 of the Act and not in accordance with provision of section 28 to 44 D of the Act. Ground no.18 and 19 are disposed of accordingly. 91. Ground no.20 in assessee's appeal is regarding not considering capital expenditure incurred during the year while computing income of the assessee society. This ground is identical to ground no.21 in assessee's appeal for A.Y. 2006-07. In the said appeal we have held that as per section 11 income of a eligible institution to the extent of which such income is applied to charitable purposes in India is not be included in the total income and the application of the income towards charitable purposes include application towards acquisition of assets i.e. capital expenditure. Following the same reasoning we direct the AO to consider capital expenditure incurred during the year as application of income towards charitable purposes while computing income under section 11 of the Act. Ground no.20 is accordingly allowed. Revenue's Appeal A.Y. 2008-09 92. Now we take up the appeal filed by the Revenue being ITA No.4563/Del/2018. In the appeal filed with the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... analysis of the above along with the supporting bills and vouchers. We note that the CIT (A) after examining the remand report noticed that a sum of Rs. 10,12,427/- is the double addition. Accordingly, the CIT(A) deleted this amount. Since, the disallowance has been deleted by the CIT (A) on the reasoning that this amount have been considered twice and after considering the details submitted by the assessee and examined in the remand report we uphold the order of the CIT(A) and this ground is accordingly dismissed. 94. Ground no.2 in Revenue appeal is regarding deletion of addition of Rs. ,6,31,330/- out of the total disallowance of Rs. 2,15,91,772/- made by the AO on account of unsupported expenditure. The assessee in the remand proceedings has submitted the details and has pointed out that this amount of Rs. 6,31,330/- is on account of capital expenditure and has not been debited in the income and expenditure account. The CIT(A) after considering the remand report and the details submitted by the assessee has deleted this amount on the reasoning that disallowance cannot be made when the same has not been debited in the income and expenditure account. The Ld. DR has not controver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving no income element. The CIT (A) has also recorded a finding of the fact that the assessee has deposit with AICTE and it is required to maintain certain amount as security. The CIT (A) has also taken note of the fact that this payment is appearing on the asset side of the balance sheet and hence cannot be considered as a claim of Revenue expenditure. The CIT (A) has deleted the addition also after taking into account that the AO has not commented adversely with regard to AICTE in the remand report. Thus, we are of the view that CIT (A) was correct in deleting these two additions. The CIT (A) has further deleted an amount of Rs. 5,48,732/- appearing as freight and cartage expenses whereas the same was on account of catering expenses. This addition has been deleted by the CIT (A) after considering the remand report and examination of the explanation and evidences submitted by the assessee. Nothing contrary has been pointed out by the Ld. DR and hence the deletion by the CIT (A) is upheld. As regards the deletion of balance expenditure, from the CIT(A) order we note that the CIT(A) has examined each and every expenditure which was subject matter of disallowance by the AO and has de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment has to be the balance sheet and income and expenditure account which were subjected to special audit and not the balance sheet and income and expenditure account filed with the Syndicate Bank for collateral security for obtaining the loan. Accordingly, we uphold the order of the CIT (A) and this ground of appeal is dismissed. 98. Ground no.7 in Revenue appeal is regarding deletion of addition of Rs. 2,30,68,487/- out of the total disallowance of Rs. 2,33,71,821/- made by the AO on account of the depreciation. The AO has made the disallowance of depreciation on the reasoning that the building was under construction as on 31.03.2008 and hence no depreciation can be allowed. The CIT(A) has taken note of the fact that existence of the building was not in doubt as the valuation officer appointed by the AO itself has confirmed the same and the said report has also been relied upon by the AO subsequently. On this basis the CIT (A) has restricted the disallowance in respect of the addition during the year. We are of the view that the fact building was in existence and was in use is not in dispute and hence the CIT (A) was correct in allowing depreciation on the building. The findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated by the learned AO are bad in the eye of law as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are contrary to the facts. 4. On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law in confirming the addition made on the basis of the material collected at the back of the assessee without providing copy of the same & providing opportunity to rebut the same. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in referring the case for the special audit under Section 142(2A) of the Act without there being any basis for the same. 6. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in denying exemption under Section 11 of the Act . 7. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in ignoring the fact that failure to file return under section 139(4A) can be a cause for levy of penalty under section 272(2)(e) and not denying exemption under section 11 of the Act. 8. On the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the said amount does not pertain to penalty related to infraction of any statutory law. 17. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of an amount of Rs. 7,33,09,230/- on account of investment in FDR's under section 68 of the Income tax Act. 18. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 26,09,866/- on account of depreciation on building. 19. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 10,70,000/- on account of cash deposits in bank accounts. 20. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the A.O. in computing the income by applying provisions of section 28 to 44 D for computing profits and gains from business and profession, ignoring the fact that the assessee is a charitable institution and its income is to be computed on the basis of the provision of sections 11 and 12 of the Act. 21. On the facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airly stated that the outcome of the appeal in ITA No.3674/Del/2017 for assessment year 2006-07 would be squarely applicable to these ground nos.8 to 11 of this appeal. 108. We have already decided the appeal for assessment year 2006-07 vide ITA No.3674/Del/2017 and, for the detailed discussion in that appeal we have held that the income and expenditure account submitted by the assessee with the return of income which has been audited by the special auditor should be the basis for computing income as per provision of section 11 of the Act. Following the same reasoning we hold that the income and expenditure account submitted by the assessee with the return of income which has been audited by the special auditor shall be the basis for computing the income of the society in accordance with the provisions of section 11 of the Act. We direct the AO accordingly. Further, as regards the alternative contention of the Ld. AR that in case balance sheet and income and expenditure account submitted with the Syndicate Bank as collateral security for obtaining bank loan is to be considered as the correct financial of the assessee society, we are of the view then the same has to be considered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Explanation to section 37 is not applicable while computing income of charitable institution under section 11 of the Act and further amount paid to bank will not fall within the meaning of expenditure for any purpose which is an offence or which is prohibited by law. The facts in this year being identical to facts of the A.Y. 2006-07, accordingly, we direct the AO delete this addition while computing income of the assessee society in terms of section 11 of the Act. This ground of appeal is allowed. 112. Ground no.17 is regarding addition of Rs. 7,33,09,230/- on account of investment in FDRs. The AO has made an addition of Rs. 20,85,06,326/- on account of unexplained investment in FDRs and interest thereon. The CIT (A) has restricted addition to Rs. 7,33,09,230/-This addition has been made by the AO by making a reference to the report of the special auditor. However, while making the addition the AO picked up the figure from the balance sheet with the Syndicate Bank rather than the balance sheet as per the books of accounts. During the appellate proceeding the assessee brought to the notice that the observation of the special auditor which nowhere points out that assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irect the AO to delete this addition. In the result this ground no.17 of appeal is allowed. 113. Ground no.18 is regarding disallowance of depreciation of Rs. 26,09,866/-./-. This ground is identical to ground no.18 of assessee's appeal for the A.Y. 2006-07. In the said appeal we have held that this amount need to be excluded while computing income in terms of section 11 of the Act as assessee society has not been able to substantiate its contention before the AO and the CIT(A). Following the same reasoning we direct the AO that this amount instead of making addition as income needs to be excluded while considering application of income in terms of section 11 of the Act. This ground of appeal is disposed of accordingly. 114. Ground no.19 is regarding confirmation of addition of Rs. 10,70,000/- in respect of the cash deposited in the bank. The AO made this addition on the basis of the cash deposited in the bank account. The CIT (A) has confirmed the addition despite deleting similar addition in the preceding assessment year. In the preceding year the CIT (A) has held that the Special auditor appointed by the AO has not made any adverse observation about the cash deposited in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng we direct the AO to consider capital expenditure incurred during the year as application of income towards charitable purposes while computing income under section 11 of the Act. Ground no.19 is accordingly allowed. Ground no.22 is accordingly allowed. Revenue's Appeal A.Y. 2009-10 Now we take up the appeal filed by the Revenue being ITA No.4564/Del/2018. 117. In the appeal filed with the Revenue it has raised following grounds of appeal:- 1. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 63,88,462/- on account of unsupported expenditure as assessee did not file any supporting document in support of its claim and Ld. CIT has wrongly considered as twice addition. 2. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 67,22,420/- on account of unsupported expenditure as assessee did not file any supporting document in support of its claim. These expense is a part of expenses debited in book of account amounting to Rs. 2,30,48,689/-. Ld. CIT(A) has wrongly treated the expenditure as capital in nature. 3. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of unsupported expenses amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrovert the findings recorded by the CIT (A). The disallowance has been deleted by the CIT (A) on the reasoning that this amount has been considered twice and after considering the details submitted by the assessee and examined in the remand report. Accordingly, we uphold the order of the CIT(A) and dismissed this ground of the Revenue's appeal. 119. Ground no.2 in Revenue appeal is regarding deletion of addition of Rs. ,67,22,420/- out of the total disallowance of Rs. 2,30,48,689/- made by the AO on account of unsupported expenditure. The assessee in the remand proceedings has submitted the details and has pointed out that this amount of Rs. 67,22,420/- is on account of capital expenditure and has not been debited in the income and expenditure account. The CIT(A) after considering the remand report and the details submitted by the assessee has deleted this amount on the reasoning that disallowance cannot be made when the same has not been debited in the income and expenditure account. In the ground raised before us it has been stated that CIT(A) has wrongly treated the expenditure as capital in nature. We have gone through the details quoted in the CIT(A) order and also the subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. During the remand proceedings the assessee submitted copy of the supporting evidences which were examined by the AO and no adverse remark was given in the remand report. The CIT (A) has deleted addition holding that firstly the assessee has submitted the evidences and moreover such expenditure being capital and having not been claimed in the income and expenditure account the same cannot be subject matter of disallowance. Before us nothing has been brought to controvert the finding of the CIT (A). The assessee having submitted the evidence in support of the amount incurred and that too on capital account there was no reason for making disallowance. Accordingly, we uphold the order of the CIT (A) and dismiss this ground of appeal. 122. Ground no.6 is regarding deletion of addition of Rs. 9,59,321/-. The AO made this addition on the reasoning that such expenditure pertains to campus school which is different than the assessee. The CIT(A) has deleted the addition holding that the expenses pertains to Campus school which is part of the assessee itself. Further the bills are also in its own name and nothing adverse has been commented by the AO in the remand report. Before us al ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
