TaxTMI 
TaxTMI 
2011 (11) TMI 486
X X X X Extracts X X X X
X X X X Extracts X X X X
....ure. In brief, the grievance of assessee also revolves around a single issue which is interconnected with the grounds of appeal taken by the revenue. The grievance of the assessee is that Ld. CIT(A) has erred in not approving the accumulation of surplus fund above 15% for the purpose of future utilisation as provided in section 11(2) of the Income Tax Act. 3. We take both these appeals together. The brief facts are that assessee has filed its return of income on 31st October, 2005 declaring NIL income. It has filed audit report dated 28.10.2005 in form No. 10B alongwith the return. The case of the assessee was selected for scrutiny assessment and notice u/s 143 (2) was issued and served. In response to the notice, Shri Ashwani Sharma, Chartered Accountant appeared before the AO from time to time and filed requisite details. The assessee i.e. National Council for Teachers Education (NCTE) has been established as a statutory body under the Ministry of Human Resource Development and under an act of Parliament with the assent of the President of India on 29th December, 1993 called the National Council for Teachers Education Act 1993 (No. 73 of 1993). It has claimed exemption u/s 11 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 15% of the limit. In other words, the total receipts cannot be treated as income of the assessee. 5. In the grounds of appeal, assessee has pleaded that Ld. Commissioner has failed to appreciate the facts that the assessee is a charitable organisation, which is governed by the applicable laws of the Government. It has been assessed to income as a charitable organisation at Nil taxable income for many years before and after the present asstt. year. The status of the assessee should remain the same for the purpose of the income tax assessment. It should have been assessed at NIL Income. It further pleaded that Ld. Commissioner has ignored the fact that assessee has charitable objects to impart teacher education to prepare teachers in the country with an object that these teachers will build a dedicated nation in future. The accumulation of surplus as carried by the assessee was utilised with the next 5 years for construction of building of the Council. The process of filing of form No. 10 was delayed because of certain reasons and as per the law the delay is generally condoned by the Ld. CIT(A) if the charitable object of the council is kept in tact. Ld. Counsel for the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted or deposited in the forms or modes specified in sub-section (5)." 7. A bare perusal of this clause would reveal that where 85% of the income referred to in clause (a) or Clause (b) of sub section 1 read with the explanation to that sub section is not applied or is not to have been deemed to apply to charitable or religious purpose in India during the previous year but assessee wants to accumulate or set apart either in whole or in part for the application of such income to such charitable objects in India in future years then such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of income, provided the assessee would fulfil the conditions available in clause (a) & (b) of this section. In other words if an assessee whose income is to be assessed u/s 11, 12 it failed to apply 85% of its income on charitable purpose but wants to accumulate or set apart that income for future years application then such income would not be taxable in the year of receipt. The assessee has to fulfil certain conditions. As per clause (a) of 11 (2), the assessee has to give specifically in writing to the AO in the prescribed f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gpur Hotel Owners Association (supra). It is worth to refer the observation of Hon'ble Court in paragraph No. 6 which read as under :- 6. It is abundantly clear from the wordings of sub-section (2) of section 11 that it is mandatory for the person claiming the benefit of section 11 to intimate to the assessing authority the particulars required under rule 17 in Form No. 10 of the Act. If during the assessment proceedings the Assessing Officer does not have the necessary information, question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from section 11 and is subjected to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time it completes the assessment. In the absence of any such information, it will not be possible for the assessing authority to give the assessee the benefit of such exclusion and once the assessment is so completed, in our opinion, it would be futile to find fault with the assessing authority for having included such income in the assessable income of the as....