TaxTMI 
TaxTMI 
1987 (5) TMI 73
X X X X Extracts X X X X
X X X X Extracts X X X X
....ircumstances 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 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 edu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....University Grants Commission and hence, the donation of Rs. 3,20,000 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 Shr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m of Rs. 2,00,000 for the college building Shri Bhagwan Charitable Trust transferred to the assessee Rs. 3,20,000 as noted above. This included Rs. 79,600 out of the income of Shri Bhagwan Charitable Trust for the year ending31-3-1971plus Rs. 2,40,000 being the amount accumulated up to the year ending31-3-1970by Shri Bhagwan Charitable Trust under section 11(2) of the Act. According to the Income-tax Officer, assessing Shri Bhagwan Charitable Trust, since the proposed college had not come into existence on31-3-1971the assessee-society was not an educational institution ; but this finding was considered erroneous by the Appellate Assistant Commissioner, Special Range-IV as seen from his order dated26-3-1973. (vi) In the order dated 26-3-1973 passed on the appeal filed by Shri Bhagwan Charitable Trust the Appellate Assistant Commissioner, Range-IV had observed as under :- Even if the new society had not been established, Shri, Bhagwan Charitable Trust had necessarily to constitute a governing body for the new college and transfer funds thereto as laid down by the University. The fact that the new society was not able to spend its income received by way of donations, for reasons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not available to the assessee under section 10(22) of the Act. In this view, he brought to tax the interest income of Rs. 45,110 shown by the assessee in its income and expenditure account. 11. The assessee contested this assessment in appeal. It is not clear what were the grounds of appeal raised before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner's order is very brief and is not very helpful. All that it says is as under:- "The present appeal is directed against the order of the ITO in holding that the appellant trust was not entitled to be covered under section 10(22) of the Income-tax Act. He had based his finding on the strength of order passed by him for the assessment year 1971-72. The Authorised Representative of the appellant has however drawn my attention to the fact that the Income Tax Appellate Tribunal Jabalpur Bench Camp-Delhi vide their order contained in ITA No. 15/Del/76-77 assessment year 1971-72 dated 30th November '79 have accepted the contention of the appellant. Even in the assessment order 72-73 theAACARangevide order No. 1565/79-80 dated7-2-80has followed the decision of the ITAT. In view of the above, the ITO is directed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earing the assessee in the matter." 14. On the above facts and circumstances and after hearing the parties before us, we do not see that question No. 1 raised by the Commissioner arises for reference. This is because the issue sought to be raised by the Commissioner's question does not arise out of the order of the Tribunal. Though the Tribunal has used the expression "educational institution" in para 6 of its order of19-3-1986, its finding was that the assessee was entitled to exemption u/s 11. Hence this question is not referred. 15. Question No. 2 of the Commissioner is based on a misconception. As we have noted above the Tribunal did not hold that the income of the assessee was exempt u/s 10(22). As regards restoration of the enquiry to the Income-tax Officer recorded in paragraph 14 of the Tribunal's order of19-3-1986, that was in the exercise of the discretionary power of the Tribunal. Such exercise is not seen to be arbitrary or capricious and hence no question of law can arise in the matter. We, therefore, do not refer question No. 2 also. 16. The reference application is rejected. Per Shri S.S. Mehra, Judicial Member - I have the privilege of going through the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d finding was subsequently contested by the assessee and the learned AAC allowed relief in the matter noticing the Tribunal's order for the asst. year 1971-72 and the first appellate order for the asst. year 1972-73. 7. On appeal by the revenue what the Bench did has been mentioned earlier. Vide order dated19-3-1986the Bench examined each aspect of the matter and came to the conclusion that the assessee was entitled to exemption u/s 10(22) of the Act and also observed that the issue pertaining accumulation required examination. From the above facts, I am of the view, that the following question of law does definitely arise for making reference:- "Whether, on the facts and in the circumstances of the case, the ITAT was justified in exempting income of the assessee u/s 10(22) of the Act?" 8. I am, therefore, of the view that the above question of law is referable one and does arise from the Tribunal's order. The said question should, therefore, be referred for the esteemed opinion of the Hon'ble Delhi High Court.Order under section 255(4) of the Income-tax Act, 1961 - We have been able to differ with respect to the above reference application. The matter is, therefore,....