TaxTMI 
TaxTMI 
1987 (5) TMI 73
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....the AAC erred in directing the ITO to compute the income of the assessee-trust in accordance with order dated 20-11-79 of the ITAT for the asst. year 1971-72 in ITA No. 15 (Del.)/76-77; and to treat the income as exempt in spite of delay in filing the Audit Report u/s 12-A(b)." 3. In spite of having taken such an objection the Department was not in a position to file a copy of the order of the Tribunal for the assessment year 1971-72. The assessee also was unable to do so. The records of the Tribunal were, therefore, looked into by the Registry. The appeal folder for the A.Y. 1971-72 was then located. The order for that year was seen to have been passed by the Tribunal on 30-11-1979 (and not on 20-11-1979 as stated in the department's ground of appeal and the appeal was numbered as I.T.A. No. 15 (Dec/76-77. This order disclosed the following position. 4. The assessee is a society registered under the Societies Registration Act, 1860 vide certificate issued on9-6-1970. Assessment for the year 1971-72 was made on a total income of Rs. 79,600. The assessee apparently claimed before the Income-tax Officer for that year that it was an educational institution and hence its income was e....
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....20,000 had not been spent up to the relevant accounting year, i.e., up to 31-3-1971. (iii) The accounts of the assessee were audited for the period ending on31-3-1973. On18-8-1973the assessee gave to the Income-tax Officer a notice under section 11(2) for accumulation of its income for six years. The Income-tax Officer, however, while completing the assessment for the year 1971-72 rejected the assessee's claim to be an educational institution and taxed the sum of Rs. 79,600, as noticed above. See para 4 above. Details of the donations received were as under:-- Rs. (a) Cash 1,000 (b) Cheque dated 9-3-1971 2,93,000 (c) Amount received from Shri Bhagwan Charitable Trust on 31-3-1971 26,000 -------- 3,20,000 The sum of Rs. 26,000 was received after31-3-1971. Till31-3-1971what was received was only Rs. 2,94,000, i.e., this was entirely from Shri Bhagwan Charitable Trust. The total receipt consisted of (i) Rs. 2,40,000 and (ii) Rs. 79,600. (iv) The Income-tax Officer had taxed the amount of Rs. 79,600 on the basis of a reference about the assessee in the assessment order of Shri Bhagwan Charitable Trust for the assessment year 1971-72. The Income-tax Officer assessing Shri ....
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....e new society was not able to spend its income received by way of donations, for reasons beyond its control, will not make it a case of circumvention of section 11(2) by Shri Bhagwan Charitable Trust. (vii) The above factual position showed clearly that the assessee society was an educational institution. It only received voluntary contributions from another charitable trust. Such donations formed a part of its corpus. The Income-tax Officer wrongly treated the receipt of Rs. 79,600 as a voluntary donation received which was not applied for charitable purposes. Any contribution with the specific direction that it shall form a part of the corpus of the donee-trust cannot be deemed to be income derived from property held under trust. Under the circumstances, the Income tax Officer was not justified in bringing to tax Rs. 79,600. The Tribunal as already noted, confirmed the above findings of the Appellate Assistant Commissioner for the A.Y. 1971-72. 8. Coming to the A.Y. 1976-77 the Tribunal noted that the Income tax Officer had not given any reason except to remark that the Department did not accept the order of the Appellate Asstt. Commissioner for the A.Y. 1971-72 and had filed a....
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.... followed the decision of the ITAT. In view of the above, the ITO is directed to compute the income of the trust in accordance with the decisions referred to above. He is further directed to allow accumulation of income to the extent of Rs. 43,793 under section 11(2) of the Act." The Revenue contested the above order in appeal raising the objection reproduced in para 2 supra. 12. The Tribunal found no substance in the above objection for the revenue. It recorded the following findings in this regard :-- (i) The Tribunal had confirmed on30-11-1979the findings recorded by the Appellate Asstt. Commissioner for the assessment year 1971-72. By its order for 1971-72 it specifically rejected the revenue's objection to the effect that the assessee was not an educational institution whose income was derived from property held under trust in terms of section 11. Hence following the said order of30-11-1979, the first part of the objection taken for the revenue had to be rejected. (ii) As regards the audit report being filed on23-3-1979, that could not be a ground for denying the assessee the benefit of section 11. This was because of the interpretation of the term 'along with' occurring i....
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....icial Member - I have the privilege of going through the order prepared by Dr. S. Narayanan, the learned Accountant Member rejecting the reference application. I, however, regret my inability to be able to disagree with the conclusion arrived at. The facts by and large appear to have fully been incorporated in the draft order of the learned Accountant Member. Nonotheless for the sake of continuity and clarification brief facts are being stated. 2. In ITA No. 2059 (Del.) 84 for the asst. year 1976-77 the revenue took the following two grounds before the Tribunal:-- "1. On facts and in circumstances of the case as well as in law the AAC erred in directing the ITO to compute the income of the assessee-trust in accordance with order dated 20-11-79 of the ITAT for the asst. year 1971-72 in ITAT No. 15 (Del.) 76-77 and to treat the income as exempt in spite of delay in filing the audit report, u/s 12A(b). 2. On the facts and in circumstances of the case, the AAC erred in directing to allow accumulation of Rs. 43,307 u/s 11(2) without verifying as to whether the prescribed conditions for accumulation are fulfilled in this case." 3. The said appeal was allowed for statistical purposes ....
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....ion. The matter is, therefore, to be placed before the President for proceeding u/s 255(4) of the Act. The difference of Opinion is as under :-- "Whether, on the facts and in the circumstances of the case, the question formulated by the Judicial Member emanates from the Tribunal's order and warrants reference thereof ?" THIRD MEMBER ORDER Per Shri K.C. Srivastava, Accountant Member - The above reference application had come up before the Members constituting the "B" Bench ofDelhi Benches. But while hearing the reference application there was a difference of opinion between the two Members. Whereas the learned Accountant Member was inclined to reject the Commissioner's reference application, the learned Judicial Member was inclined to refer the following question as a question of law to the Hon'ble High Court:-- "Whether, an the facts and in the circumstances of the cage, the Income-tax Appellate Tribunal was justified in exempting income of the assessee under section 10(22) of the Income-tax Act, 1961 ?" 2. On this difference of opinion the following point of difference had been referred to me by the President, Income-tax Appellate Tribunal under section 255(4) of the Income-t....