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TMI Blog2022 (12) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the assessee Trust. There is clear cut finding that payments were made through account payee cheques. No defect has been found in any item of receipts and expenditure. Explanation as to why income from all centers showed vast difference in comparison to expenditure was given by the assessee which explanation has not been considered nor adversely commented by the Ld. CIT(A). We, therefore, delete the ad hoc 50% disallowances out of the expenses in both the years. There is nothing in the order of the Ld. AO to show that the conditions for claiming exemption under section 11 have not been satisfied in the AYs under consideration. Moreover in CIT vs. Indian Institute of Engineering Society [ 2012 (11) TMI 1243 - ALLAHABAD HIGH COURT] and Indian Institute of Banking and Finance [ 2018 (4) TMI 197 - BOMBAY HIGH COURT] have held that benefit under section 11 cannot be denied on the ground that the assessee has not obtained exemption from prescribed authorities under section 10(23C) of the Act. Denial of exemption under section 11 of the Act to the assessee Trust in these two AYs is not justified. Exemption under section 11 of the Act deserves to be allowed to the assessse i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Assessing Officer hastily, i.e. in a short time on the same date on which assessment order being passed without due application of mind, deserved to be set aside. 6. Without prejudice to the aforesaid, that the CIT(A) erred on facts and in law in upholding the action of the Assessing Officer in disallowing 50% of the deficit for establishment and maintenance charges while computing the income of the appellant. 7. Without prejudice to the aforesaid, that the CIT(A) erred on facts and in law in upholding the action of the Assessing Officer in disallowing 50% of the expenses on the ground that paper books of accounts had not been maintained. 8. That the CIT(A) erred on facts and in law in confirming levy of interest under section 234B, 234D and withdrawal of interest under section 244A of the Act. 3. In AY 2008-09,the assessee has taken the following grounds of appeal: 1. That the Commissioner of Income-Tax(Appeals) [ CIT(A) ] erred on facts and in law in upholding the action of the Assessing Officer in denying exemption under section 11 of the Income-Tax Act, 1961 ( the Act ), assessing the income of the appellant at Rs.1,06,14,500 as against Ni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 244A of the Act. 4. Vide applications both dated 07.07.2022 the assessee requested for admission of the following additional ground of appeal in terms of Rule 11 of the Income-Tax (Appellate Tribunal) Rules,1963, common to both the AYs 2006-07 and 2008-09: Without prejudice to the claim for exemption under Section 11 of the Income-Tax Act, 1961, ( the Act ), dividend income of Rs.90,40,050 and Rs.1,44,64,080 received in assessment years 2006-07 and 2008-09 respectively from investments made in equity shares ought, in any case, to have been reduced from the taxable income in view of section 10(34) of the Act. 4.1 In these applications, the assessee narrated the brief facts giving rise to the additional ground of appeal in both the AYs. It is stated that the assessee earned dividend income of Rs.90,40,050 and Rs.1,44,64,080 from equity shares held as investment which is exempt under Section 10(34) of the Act. The Ld. Assessing Officer ( AO ) rejected the claim of exemption under section 11 of the Act vide order dated 31.12.2010 which was set aside in appeal by the Tribunal vide order dated 05.08.2011 in ITA No. 2792/Del/2011 for AY 2006-07 and in ITA No. 2793/Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings although not raised earlier. According to the Hon'ble Supreme Court, the view that the Tribunal is confined only to issues arising out of the appeal before CIT(A) is too narrow a view to take of the powers of the Tribunal. The Hon'ble Supreme Court further observed that where the Tribunal is only required to consider the question of law arising from facts which are on the record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. In deference to the decision (supra) of the Hon ble Apex Court, we admit the additional ground for adjudication by us. 7. Let us now take up the main grounds of appeals in both the AYs. The grievance of the assessee in nut shell is that the Ld. AO traversed beyond the direction of the Tribunal to verify whether expenses incurred by the assessee were utilized for the purpose of the Trust, and all other conditions relating to allowability of deduction under section 11 were satisfied or not which has been upheld by the Ld. CIT(A). Another grievance of the assessee relates to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reful thought to the rival submissions of the parties and perused the material available in the records. This is the second round of appeals by the assessee before the Tribunal. The order dated 05.08.2011 of the Tribunal in ITA Nos. 2792 2793/Del/2011 for both the years is at pages 1-5 of the Paper Book. Perusal thereof would reveal that the assessee had challenged, inter alia the order of the Ld. CIT(A) in upholding the action of the Ld. AO in denying the benefit of exemption under section 11 of the Act merely on the ground that the assessee could not produce its books of account during the assessment proceedings without appreciating that the books of account could not be produced before the Ld. AO as the same were impounded by the DGIT(Exemption) under section 131(3) of the Act. The assessee had also challenged the order of the Ld. CIT(A) in upholding the action of the Ld. AO in disallowing 50% of various administrative and other expenses on ad hoc basis for want of verification in absence of books of account. 11.1. The findings of the Tribunal are recorded in para 4. The Tribunal observed that it is a fact that the books of account were impounded by the DGIT(Exemption) unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of account and comments/opinion of FSL, the Ld. AO came to the conclusion that books have not been written on day to day basis but in a few sittings. 11.6 In our considered opinion, the above allegation alone is not sufficient to make ad hoc disallowances of 50% of expenses in the absence of any adverse finding even after examining the books duly supported by the bills and vouchers. Not even single instance has been brought on record to suggest that expenses were incurred for purposes other than the purposes to fulfill the objects of the assessee Trust. There is clear cut finding that payments were made through account payee cheques. No defect has been found in any item of receipts and expenditure. Explanation as to why income from all centers showed vast difference in comparison to expenditure was given by the assessee which explanation has not been considered nor adversely commented by the Ld. CIT(A). We, therefore, delete the ad hoc 50% disallowances out of the expenses in both the years. 11.7 It is an admitted position that the assessee Trust is engaged in educational activities and it is registered under section 12AA of the Act vide order DIT(E)/T-889 dated 02.01.1982 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40,050 in AY 2006-07 and Rs.1,44,64,080 in AY 2008-09 under section 10(34) of the Act. The said dividend income has been credited to the Income Expenditure Account of the relevant years. 15. In support the Ld. AR relied upon the decision of Hon'ble Bombay High Court in the case of DIT(E) Vs. Jasubhai Foundation 374 ITR 315 (Bom) and following decisions of Mumbai Benches of the Tribunal: - Sir Ratan Tata Trust vs. DCIT:[2021] 188 ITD 151 (Mum-Trib) - Sir Dorabji Tata Trust vs. DCIT: [2021] 188 ITD 38 (Mum-Trib) - JRD Tata Trust vs. DCIT: [2021] 22 taxmann.com 275 (Mum-Trib) - ITO vs. M.K. Tata Trust: ITA No.6440/Mum/2017 (Mum-Trib) - DCIT vs. Pirojsha Godrej Foundation: ITA No.822/Mum/2017 (Mum Trib.,SMC). 16. We have perused the decision (supra) of the Hon'ble Bombay High Court. In that case the AY involved was 2007-08. The Hon'ble Bombay High Court held that in computing income of charitable institutions exempt under Section 11, income exempt under section 10 has to be excluded. The Hon'ble Bombay High Court further held that the requirement in section 11 with regard to application of income for charitable purposes does not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tra and the Revenue, the same would amount to reading into the provisions something which is expressly not there. In such circumstances, the Tribunal was right in its conclusion that the income which is this case the assessee trust has not included by virtue of section 10, then, that cannot be considered under Section 11. 17. We are conscious that decision of Hon'ble High Court of a different jurisdiction is not binding on Appellate Tribunal. Nonetheless, the decision of other Hon'ble High Courts relied upon by the assessee does have persuasive value. Hon ble Gauhati High Court in CIT vs. Sarabhai Sons Pvt. Ltd. (1993) 204 ITR 728 (Gau) has held that the Income-Tax Act is an All India Statute and it is desirable in the interest of uniformity that one High Court should follow the decision of another High Court. In Asstt. CCE Vs. Dunlop India Ltd. (1985) 154 ITR 172 (SC), the Hon'ble Supreme Court observed that the better wisdom of the Court below must yield to the higher wisdom of the Court above. 18. Since, no contrary decision has been brought to our notice, we, respectfully follow the decision (supra) of the Hon'ble Bombay High Court relied upon by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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