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TMI Blog2020 (10) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... n the hands of the assessee the benefit of Section 11 of the Act cannot be given. The case law relied on by the ld.DR in the case of U.P.Forest Corporation [ 2007 (11) TMI 303 - SUPREME COURT] supports the view rendered by us. Therefore, the CIT(A) as well as the AO has rightly denied giving exemption u/s.11 of the Act invested in the capital assets - Accordingly, ground No.1 of the appeal of the assessee is dismissed. Addition of excess depreciation - HELD THAT:- We do not agree with the submissions of the assessee that for the purpose of income tax the assessee must calculate/follow the income tax rules and regulations. We find from the order of the authorities below that the assessee had calculated depreciation on the normal accounting practice which is not sustainable because as per the income tax act while calculating the profit for the taxation purpose, the assessee must follow the income tax provisions and the depreciation has been provided in Section 32 - assessee himself calculated the depreciation as per his precedence. Res judicata does not apply in the income tax Act. Therefore, the lower authorities have rightly dismissed the excess depreciation claimed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As decided in MILIND GUPTA, [ 2019 (10) TMI 128 - ITAT CUTTACK] Tribunal has restored the issue to the file of AO to examine the contributions made with reference to dates when they were actually made and grant relief to such of claim which qualified for such relief in terms of prevailing provisions of the Act. Accordingly, the issue in the present appeal, being similar we also restore this issue to the file of AO to decide the same in the terms as observed by the Tribunal cited above - Decided in favour of assessee for statistical purposes. - ITA No. 337/CTK/2016 - - - Dated:- 25-9-2020 - SHRI C.M. GARG, JM And SHRI L.P. SAHU, AM Assessee by : Shri S.K.Agarwalla, CA Revenue by : Shri S.M.Keshkamat, CITDR ORDER Per L. P. Sahu , AM This is an appeal filed by the assessee against the order of CIT(A)-3, Bhubaneswar, dated 03.05.2016 for the assessment year 2011-2012 on the following grounds of appeal :- 1. That, the Ld. Authorities below are not correct in disallowing the capital expenditure of ₹ 7,94,06,622 as application of income within the meaning of section 11 of the Act in view of the fact as per the amended provisions of section 12A of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not fulfilled the conditions stipulated u/s.12A of the Income Tax Act because it was not registered u/s.12AA of the Act for relevant assessment year. Accordingly, the AO treated it as an AOP. On further scrutiny of audited accounts the assessee had shown gross receipts to the tune of ₹ 17,64,53,608/- in its income and expenditure account and he has claimed to have been spent a sum of ₹ 19,12,96,053/-, thereby there was a shortage of ₹ 1,45,42,445/-. Accordingly, the assessee has claimed exemption of income chargeable u/s.11 of the Act of ₹ 7,94,06,622/- resulting into total loss of ₹ 9,39,49,067/-. The assessee was issued show cause notice stating that whey the capital expenditure claimed as application of income should not be disallowed. In response to the same, the assessee submitted reply on 15.01.2014. After considering the written submissions of the assessee, the AO did not convince with the submission of the assessee because the society was got registered u/s.12AA of the Act w.e.f. 01.04.2011, therefore, the capital expenditure claimed by the assessee as application of income to the tune of ₹ 7,94,06,622/- was added to the total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 25,22,694/-. In this regard, the AO asked for verification of bills and vouchers and the assessee submitted that the gardening expenses has been incurred for maintenance of the garden adjacent to the school building and in respect of cultural expenses, the AR of the assessee produced bills and vouchers which was examined by the AO and he found that there was self-made cash vouchers produced by the ld. AR of the assessee. Accordingly, he was not satisfied and disallowed 10% of the total expenditure. Thereafter he disallowed a sum of ₹ 3.67.309/-. On further scrutiny of accounts it was noticed that the assessee has made contribution to provident fund of ₹ 17,46,576/-, which was not within the stipulated time as per Section 36(1)(va) of the Act. In this regard, the assessee submitted that the assessee has paid the entire liability before filing of the return of income. Accordingly, the assessee is eligible for deduction u/s.43B of the Act. The AO after referring to Section 36(1)(va) 2(24) of the Act, he disallowed the employees contribution which was not paid within the due date resulting into disallowance of ₹ 17,46,576/-. 4. Feeling aggrieved from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e should have specifically pointed out in respect of vouchers which has been entered into the ledger books. Further in respect of addition of₹ 17,46,576/-, ld. AR submitted that the assessee had discharged his liability before filing the income tax return, therefore, he is eligible for deduction u/s.43B of the Act. 8. On the other hand, ld.DR relied on the order of lower authorities and in respect of ground No.1 he submitted that the assessee society got registered on 19.07.2011 by the CIT, w.e.f.01.04.2011, therefore, the ld. CIT has granted registration only for the assessment year 2012- 2013 but not for the assessment year 2011-2012. Therefore, the assessee cannot claim the benefit of Section 11 of the Income Tax Act. The assessee is also not eligible for the amended provision in Section 12AA of the Act because there is subsequently mentioned in the Act that it will come into effect from 01.10.2014 and on the date of amendment, there was no assessment pending before the AO. In support of his arguments, he relied on the following case laws, which are placed in the paper book :- i) U.P.Forest Corporation, [2017] 165 TAXMAN 533 (SC) ii) Langar Committee Hanuman Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption u/s.11 of the Act for application of income on investments on fixed assets to the tune of ₹ 7,94,06,622/-. 25.02.2014 9. Amendment in the Act w.e.f. 01.10.2014 10. Date of institution of appeal before CIT(A) 24.03.2014 11. Order passed by CIT(A) 03.05.2016 We also noticed from the assessment order that the first notice was issued to the assessee u/s.143(2) of the Act on 11.09.2012 and the registration was granted on 14.09.2011. We also refer to Section 12A of the Act which reads as under :- [Conditions for applicability of sections 11 and 12.] 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accountant 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 prescribed 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.] (c) [***] [(2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made:] [Provided that where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the powers and functions conferred on, or assigned to, an Assessing Officer under this Act;] It is clear from the above Section that appellate authority has not been included in the definition of the Income Tax Officer. 10. The ld.AR has cited a decision of the ITAT Cochin Bench of the Tribunal in the case of SNDP Yogam Vs. ADIT(Exemption), (2016) 161 ITD 0001 (Cochin) and drew our attention to para 7.2, which read as under :- 7.2 When section 12A of the Act was amended by introducing new provisos to sub-section (2) of s. 12A by Finance Act, 2014 with effect from 01.10.2014, the assessment orders passed by the assessing officer in respect of the present assessee were pending in appeal before the first appellate authority. During such pendency, the assessee was granted registration u/s 12AA of the Act on 29.07.2013 w.e.f. the assessment year 2013-14. Those appeals were the continuation of the original proceedings and that the power of the Commissioner of Income-tax was co-terminus with that of the assessing officer [ADIT (Exemption) in the present case] were two well established principles of law. In view of the above and going by the principle of purposive interpretati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s.11 of the Act invested in the capital assets of ₹ 7,94,06,622/-. Accordingly, ground No.1 of the appeal of the assessee is dismissed. 12. Further in respect of ground No.2, regarding addition of depreciation of ₹ 14,99,740/-, we do not agree with the submissions of the assessee that for the purpose of income tax the assessee must calculate/follow the income tax rules and regulations. We find from the order of the authorities below that the assessee had calculated depreciation on the normal accounting practice which is not sustainable because as per the income tax act while calculating the profit for the taxation purpose, the assessee must follow the income tax provisions and the depreciation has been provided in Section32 of the Act. Therefore, the assessee himself calculated the depreciation as per his precedence. Res judicata does not apply in the income tax Act. Therefore, the lower authorities have rightly dismissed the excess depreciation claimed by the assessee. This ground No.2 is also dismissed. 13. In ground No.3, the assessee submitted that the CIT(A) is not correct in confirming the disallowance made u/s.40A(3) of the Act. Ld. AR before us subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in respect of the sum received by the assessee from any of his employees to which the provisions of sub- section 2(24)(x) of the Act applies, provided such sum is credited by the assessee to the employee s account in relevant fund on or before the due date. The due date is defined under the Explanation to section 36(1)(va) of the Act by stating that the due date referred under the relevant Act and certainly not the due date for filing the return. We also found that this very similar issue has also been decided by this bench of the Tribunal in the case of Milind Gupta, ITA Nos.382 383/CTK/2017, order dated 27.09.2019, wherein the Tribunal has observed as under :- 4. We have heard the rival submissions and perused the relevant material on record of the Tribunal. we find that the assessee has deposited the EPF amount of ₹ 44,097/- before due date of filing of the return u/s.139(1) of the Act. The addition was made on the ground that the employees contribution to PF was not deposited within the time prescribed under the P.F.Act. Ld D.R. relied on the Circular No.22/2015 dated 17.12.2015. 5. The CBDT issued Circular No. 22/2015 dated 17th December 2015 clarifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P against said impugned order was to be dismissed Held, yes [Para 2] [In favour of assessee] 9. In the instant case, it is not in dispute that the contribution to EPF was deposited by the assessee before due date of filing the return of income u/s.139(1) of the Act. Although the CBDT Circular No.22/2015 dated 17.12.2015 provides that the deduction relating to employee s contribution to welfare fund are governed by section 36(1)(va) of the Act as relied by the ld D.R. In the case of CIT vs. Bharat Hotels Ltd., (2019) 103 Taxmann.com 295 (Del), the Hon ble Delhi High Court held thus: 7. The issue here concerns the interplay of Section 2(24)(x) of the Act read with Section 36(1)(va) of the Act alongside provisions of the Employees‟ Provident Funds and Miscellaneous Provisions Act, 1952 (especially Regulation 38 of the Employees‟ Provident Funds Scheme, 1952) and the provisions of the Employees‟ State Insurance Act, 1948. The AO had brought to tax amounts which were deducted by the employer/assessee from the salaries and wages payable to its employees, as part of their contributions. It is not in dispute that the employer s right to claim deductions unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f above findings of Hon ble Delhi High Court in its recent judgment (supra), the issue is restored to the file of the Assessing Officer to examine the contributions made with reference to the dates when they were actually made and grant relief to such of claim which qualified for such relief in terms of prevailing provisions of the Act. We clearly obverse that the assessee would be entitled to deductions in terms of section 36(1)(va) of the Act. Accordingly, this ground is allowed for statistical purposes. 16. From the above observations of the Tribunal, we found that the Tribunal has restored the issue to the file of AO to examine the contributions made with reference to dates when they were actually made and grant relief to such of claim which qualified for such relief in terms of prevailing provisions of the Act. Accordingly, the issue in the present appeal, being similar to the issue decided by the Tribunal in the case cited supra, we also restore this issue to the file of AO to decide the same in the terms as observed by the Tribunal cited above. Thus, the ground of appeal of assessee is allowed for statistical purposes. 17. In the result, appeal of the assessee is part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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