9911796707
TMI Blog2024 (7) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... et includes property of any kind held by an assessee. 'Deposits or investments' are a kind of property and do not fall in the exclusionary limb of the said section. By reason of the option exercised under the Explanation to section 11(1) the assessee was entitled to the benefit under section 11(1A) inasmuch as the definition of income as contained in section 2(24) includes capital gains as one of the species of income. As in view of the factual and legal position the assessee qualify of exemption u/s 11(1A). However, we find that the assessee for the first time before Tribunal disclosed that entire amount of capital again was utilized for purchasing other immovable property in FY 2022-23 and 2023-24, therefore, the jurisdictional AO is directed to verify said facts and allow relief to the assessee. With these directions the ground No. 1 of the appeal is allowed. Disallowance of application of interest income - deduction-exemption on account of deemed application of income under clause (2) of Explanation 1 to sub-section (1) of Section 11 in respect of accrued bank interest on FD while computing taxable income of the appellant trust - HELD THAT:- We find that no separate dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NIL. The case was selected for scrutiny. The Assessing Officer recorded that the detailed questionnaire and notice under Section 142(1) of the Act was served upon the assessee for furnishing various details in connection with assessment. The Assessing Officer recorded that no details were furnished. The Assessing Officer recorded the fact that the assessee failed to comply with the notices, therefore, he proceeded to pass the best judgment assessment as per Section 144 of the Act. The Assessing Officer nowhere mentioned the date of notice and the manner of service thereof on the assessee. Yet, the Assessing Officer passed assessment order under Section 143(3) of the Act dated 16/12/2018. While passing the assessment order, the Assessing Officer last para/ para 3 of his order recorded that the total receipt as per income and expenditure is Rs. 1.54 crore. The Assessing Officer added the entire income and expenditure of Rs. 1.54 Crore to the total income of assessee. 3. Aggrieved by the additions in the assessment order, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee filed their detailed written submissions. Submissions of assessee are recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, Valsad having registration under Section 12A as well as 80(G5) of the Act. The assessee stated that they were allowed benefit of Section 11, 12 and 13 in all preceeding and subsequent assessment years. On the basis of such submission, the assessee prayed to direct the Assessing Officer to compute their income. 4. The ld. CIT(A) on considering the submission of assessee noted that the assessee is a public charitable trust and hence eligible for exemption under Section 11 of the Act if the receipts are applied towards object of the trust to the extent of 85% and remaining 15% is accumulated in the manner prescribed under Section 11 of the Act by filing Form-10, the entire income is exempt as per Section 11 of the Act. In the return of income, the assessee shown NIL income. The ld. CIT(A) prepared his own summary of computation of income on page No. 9 and 10 of his order wherein he recorded the sale consideration received by assessee of Rs. 75.00 lacs on sale of immovable asset. Indexation cost of acquisition of such asset is Rs. 26,42,482/-, thus long term capital gain is Rs. 48,52,518/-. Investment in capital gain account scheme is Rs. 50.00 lacs. Income claimed under head capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order of ld. CIT(A) dated 22/12/2023 was served through ITBA Portal. Since, there is complexity of the issue, he studied the matter and took final decision on the instruction of Secretary for filing appeal before the Tribunal. Though, the appeal fee was paid on 11/03/2024 but the appeal could be filed only on 15/03/2024. In the meantime, the time period for filing appeal was lapsed. The ld. AR of the assessee submits that the delay in filing appeal is not intentional or deliberate. The assessee is not going to be benefitted by filing appeal belatedly. The case of assessee trust never came in scrutiny. The minor delay is occurred only in taking decision by present Secretary in absence of trustee who is recently expired. The ld. AR of the assessee submits that the assessee has good case on merit and is likely to succeed if the matter is hearing on merit. 7. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue submits that the assessee has not shown good cause for condoning the delay. The cause shown by the assessee is not reasonable one. 8. We have considered the submissions of both the parties on the issue of limitation and perused the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such details is filed on page No. 42 and 43 of paper book. Entire sale consideration received was kept in savings bank account with UCO bank and was converted into fixed deposit as expenditure. The fixed deposits were matured on 29/04/2008 which was further renewed up to 29/04/2021 which was later on converted into capital account scheme. Both the fixed deposits were converted into capital gain account with UCO bank. Copy of passbook is filed on page No. 47 to 49 of paper book. Investment in fixed deposits were held by the trust for the use of benefit of trust as well as in order to keep its corpus intact. Ultimately the entire fund was utilized for purchase of another immovable property in F.Y. 2022-23 and 2023-24. The ld. AR of the assessee submits that the investment made in schedule/cooperative bank are qualifying mode of investment under Section 11(5) of the Act. There is no time limit for investment specified under Section 11(1A), however, the assessee s investment in UCO bank is within time period specified under Section 11(1B) of the Act. The ld. AR of the assessee submits that once the assessee fulfilled all such condition, the assessee is eligible for exemption. To supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1.54 Crore by taking view that the assessee has such receipt during the year. We find that before ld CIT(A) the assessee strongly objected to the additions by filing detailed written submissions, which we have recorded earlier. We further find that ld CIT(A held that the assessee is trust and is governed by section 11, 12 13 of Income tax Act. The ld CIT(A) prepared his summery of computation of total income of assessee, which we have extracted in para-4 (supra). Before us, the ld AR of the assessee vehemently argued that his case is covered by the CBDT Circular No. 883/1975. The assessee deposited the entire sale consideration as per section 11(5) and ultimately purchased another immovable property for charitable purpose in AY 2022-23 2023-24. 14. We find that before us the assessee has shown filed sufficient evidence to prove that deposit of sale consideration in Nationalized Bank. The assessee made investment in UCO bank in fixed deposits of Rs. 50.00 lacs on 29/04/2015 and Rs. 25.00 lacs on 09/06/2016, copy of such details is available at page No. 42 and 43 of paper book. We find that entire sale consideration received was kept in savings bank account with UCO bank and was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a kind of property and do not fall in the exclusionary limb of the said section. By reason of the option exercised under the Explanation to section 11(1) the assessee was entitled to the benefit under section 11(1A) inasmuch as the definition of income as contained in section 2(24) includes capital gains as one of the species of income. That being so, the option as exercisable with regard to income should also avail to the capital gains, provided such option was exercised in writing before the expiry of time allowed under section 139(1) for furnishing the return. Hence, the Tribunal was right in holding that the entire sale proceeds from shares were invested in the acquisition of other capital assets within the meaning of section 11(1A). As for the investment in Unit Trust, the assessee utilised the sale proceeds of the shares held by it as property wholly for charitable purposes in purchasing UTI units. So long as the investments were actually made during the accounting period, the issue of the units after the expiry of the accounting year was immaterial. 17. The coordinate bench of Amritsar Tribunal in Akhara Ghamanda Dass Vs ACIT (114 TAXMAN 27 [Amritsar]) on similar issue pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticed by the ITO, that he was promoted to take the view to the effect that share in accounts was not covered by the sweep of section 11(1A). His view was rightly upset by the higher authorities. As a result of the aforesaid discussion, it must be held, agreeing with the Tribunal, that the capital assets belonging to the assessee-trust which were held wholly for charitable purposes were transferred and the whole on the net consideration thereof was utilised by the assessee-trust for acquiring another capital asset, viz., 10 per cent being invested in Bank of India and balance in fixed deposits with the erstwhile purchasers of the capital asset. The provisions of section 11(1A), were, therefore, fully satisfied on the facts of the present case. As a result of this discussion, therefore, the questions referred for our opinion are answered. The facts and circumstances of the case are squarely applicable in the case of the appellant. 18. The amount receipts are existing in the balance sheet of the appellant and in subsequent year balance sheet clearly shows that the receipts are in the form of asset which are definitely for the charitable and religious purpose of the trust. It is also w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of Bombay High Court in the case of Trustees of Shri Kot Hindu Stree Mandal v. CIT (supra) which has been referred in the order. The ratio is not relevant on the facts and circumstances of the case, even remotedly. The learned CIT(A) has relied on the decision of Addl. CIT v. A.L.N. Rao Charitable Trust (1995) 129 CTR (SC) 205 [1995] 216 ITR 697 (SC). The ratio decided in A.L.N. Rao Charitable Trust was dealing with section 11(2) r./w. section 11(1)(a) of the Act. The learned CIT(A) has not applied ratio correctly because what was to be decided before applying section 11(1)(a) was the income earned from the property. During the year under consideration, the income earned from the property is to be taken from the commercial sense. The income earned from the property can never be gross receipt in case of sale of the property but can only be net profit whatever one may call the net receipt. For the tax purpose, we can the same as capital gain. The cost can never be income but cost is to be reduced from the receipts. The gross sale proceeds of the appellant during the year under consideration are only to the tune of Rs. 50,66,300. The cost of the property is much more both fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty under consideration from both commercial sense as well as from the interpretation of income in accordance with the IT Act. We have also given our finding that the appellant has also fulfilled the conditions envisaged under section 11(1A) of the IT Act. We have given our finding regarding the original cost of the property as on 1st April, 1974 which we have estimated at Rs. 38,62,500 and the capital gain is to be calculated in accordance with the law relatable to capital gains including relief under section 80T. We, therefore, are of the opinion that the appellant has fulfilled all the conditions envisaged under section 11(1)(a) of the IT Act. Therefore, income of the appellant is exempted from the IT Act. 18. Thus, in view of the above factual and legal position discussed above the assessee qualify of exemption under section 11(1A). However, we find that the assessee for the first time before Tribunal disclosed that entire amount of capital again was utilized for purchasing other immovable property in FY 2022-23 and 2023-24, therefore, the jurisdictional Assessing Officer is directed to verify said facts and allow relief to the assessee. With these directions the ground No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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