TaxTMI 
TaxTMI 
2013 (10) TMI 745
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....IT(A) has erred in deleting the disallowance of Rs. 20,78,020 debited to income and expenditure account by the AO, since the employees' PF were kept in the shape of Bank FDRs/Saving accounts and as such the assessee have not fulfilled the conditions laid down for the entitlement of deduction. 3. On the facts and in the circumstances of the case whether the learned CIT(A) undertaking by the Improvement Trust, Amritsar qualify for exemption under s. 11 of the Act when the facilities provided by the trust is beneficial only to a handful of people who purchased properties from trust. 4. On the facts and in the circumstances of the case, whether the learned CIT(A) was correct in deleting the addition of Rs. 5,39,12,792 as the objects of the assessee though claimed to be charitable but actually are of purely commercial nature where profit motive is involved. 5. The appellant craves leave to amend or add any or more grounds of appeal at the time of hearing of appeal." 3. The brief facts of the case are that the assessee filed its return declaring Nil income on 31st March, 2008 which is accompanied by au....
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....laws in the case of CIT v. Improvement Trust [2009] 308 ITR 361 wherein the Hon'ble Punjab & Haryana High Court has upheld the registration of the Improvement Trust, Moga. 4. The AO considered all the replies of the assessee and stated that the assessee is simply harping on one issue that though registration under s. 12AA of the Act was refused to the assessee by the CIT-II, Amritsar, the order of the CIT-II, Amritsar was reversed by the Tribunal, Amritsar Bench, vide order dt. 22nd Feb., 2008 and the miscellaneous application filed by the Department has also been rejected vide order dt. 21st May, 2009 and the assessee relied upon the case law of Improvement Trust, Moga, in which the Hon'ble Punjab & Haryana High Court vide its order dt. 31st Oct., 2008 has upheld the registration of the Improvement Trust, Moga. 5. After considering the reply as well as the decision relied upon by the assessee, the AO stated that allowing of registration to the assessee does not mean that he got impunity (sic-immunity) from fulfilling the requirement of s. 11 or 12 as the case may be. It is the duty of the AO that during assessment proceedings, he can obtain details of various receipts and ex....
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....of the Tribunal, Chandigarh Bench in the case of PUDA vs. CIT reported in (2006) 103 TTJ(Chd,) 988 and stated that the facts of the assessee's case are not better than PUDX, rather facilities provided by the f assessee are no match to the facilities provided by PUDA. The benefit of a few development scheme launched by the Improvement Trust, Amritsar, benefited only a handful of people who purchased properties from trust and the assessee-trust did little for the benefit of the public at large of Amritsar City. Therefore, income of the assessee arising from various activities does not qualify for exemption under s. 11 of the Act and the same is brought to tax as income from business as per provisions of the Act and added to the returned income of the assessee (the sum) of Rs. 5,39,12,792. 7. Secondly, the AO also asked the assessee to file explanation regarding Provident Fund showed payable in the balance-sheet. In reply, the assessee stated it is holding Provident Fund money in the shape of FDRs and savings accounts, as per provisions of s. 36(1 )(iv) of the Act. But the AO held that the assessee has deposited Employees Provident Fund in banks FDRs/Saving accounts and the assesse....
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....e income applied towards its one of the main objects of acquisition of assets and depositing its employees' provident fund and enforceable by the employees under the Provident Fund Act, instead of yielding any surplus, it results into huge deficit and there remains no part of taxable surplus and the question of creating any demand does not arise and he deleted the addition in dispute by passing the impugned order. 10. Now, the Revenue has filed the present appeal against the impugned orders passed by the learned CIT(A). 11. The learned Departmental Representative relied upon the orders passed by the AO and stated that in spite of various opportunities given to the assessee by the AO to furnish complete details of various activities/work undertaken by the assessee-trust to achieve the objects of the trust. But the assessee trust failed to supply the details to the AO. Therefore, the AO has rightly made the addition in dispute by disallowing exemption under s. 11 of the Act. He further stated that the case of the assessee is fully covered by the decision of the Tribunal, Chandigarh Bench-B, Chandigarh, in the case of Punjab Urban Planning & Development Authority (supra). He req....
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....assessee was referred for special audit with the prior approval of the CIT-II and M/s Padam Bahl & Co. Amritsar appointed as auditors and M/s Padam Bahl & Co. submitted the audit report on 23rd June, 2009 which was supplied to the assessee vide letter dt. 13th July, 2009 along with notice under s. 142(1) of the Act, asking the assessee to give its comments on the audit report, if any on the date of hearing. The AO asked the assessee to file complete details of activity undertaken by it to achieve the objectives of the trust along with details of amount spent on each activity and the case was fixed for 20th July, 2009. On 20th July, 2009, nobody attended the proceedings and the case was fixed vide notice under s. 142(1) of the Act on 21st July, 2009 or 28th July, 2009. On the date of hearing Shri Sanjay Kapoor, CA sought time to file the reply and the case was adjourned to 12th Aug., 2009 vide letter dt. 3rd Aug., 2009 and hearing was preponed to 11th Aug., 2009 and the assessee was specifically told that no further adjournment will be allowed. On 11th Aug., 2009, assessee filed its reply in which the assessee has stated that registration to Amritsar Improvement Trust was refused by....
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.... for which the trust is created. The AO has completed assessment by refusing exemption, claimed by the assessee under s. 11 of the Act, by passing assessment order stating that some details furnished by the assessee pertaining to the expenditure incurred in respect of various residential/commercial schemes floated by the assessec-trust from time to time and perusal of the activities undertaken by the Improvement Trust Amritsar reveals that except for acquiring land and developing the same into residential/commercial projects like any other private builder have done little for achieving the aims and objectives for which it is created. The AO with the help of the decision of the Tribunal, Chandigarh "B' Bench in the case of Punjab Urban Planning & Development Authority (supra) has denied the exemption as claimed by the assessee and lastly held that the income of the assessee arising from the various activities does not qualify for exemption under s. 11 of the Act and the same is brought to tax as income from business, as per provision of IT Act, 1961. 13.1 The learned first appellate authority, on appeal filed by the assessee-trust has allowed the exemption as claimed by the asses....
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....ons of the Punjab Town Improvement Trust Act, 1922 and the principal object of the trust is to bring out improvement in the two by providing streets, housing facilities or making provision for drinking water etc. for the benefit of general public within its local limits. The learned Authorised Representative of the appellant has by placing heavy reliance on the jurisdictional Hon'ble Punjab & Haryana High Court's decisions in the case of Improvement Trust, Moga and Improvement Trust, Faridkot vide its order dt. 31st Oct., 2008 and 20th July, 2009 respectively that activities of Improvement Trusts are of charitable nature and are covered by the expression any other object of general public utility as mentioned in s. 2(15) of the IT Act, 1961 and the same was entitled to registration under s. 12AA of the IT Act, 1961 reported in CIT v. Improvement Trust Moga (2008) 15 DTR (P&H) 217 : (2009) 308 ITR 361 (P&H) and by impliedly deriving support for the above cited identical judgments of the jurisdictional Hon'ble Punjab & Haryana High Court, it is strongly pleaded that the appellant, Improvement Trust, Amritsar, being involved in the objects of the general public utility envisaged under....
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....; Rs. 5,39,12,792 Less: (i) Income applied towards acquisition of fixed assets Rs. 26,81,01,075 (ii) Difference in value of stock Rs. 2,16,10,131 Total : &n....
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....um of PF paid by the assessee to its employees, on the ground that instead of paying PF to its employees, it I has set apart the PF in the shape of FDRs/SB accounts which means that it remained unpaid to its employees and the appellant did not fulfil the conditions laid down therefor but raised the claim by debiting it to its income & expenditure account and added back the unpaid PF to the appellant's income. As discussed in the immediately preceding para of this order, the appellant's status is required to be taken/adopted as that of a trust as it stands granted registration under s. 12AA by virtue of the findings of the final fact finding authority and jurisdictional Hon'ble Tribunal, Amritsar vide their orders dt. 22nd Feb., 2008/21st May, 2009 which is binding upon the Department and by respectfully following the same, the appellant-trust is deemed to have been granted registration under s. 12AA and thereafter provisions of ss. 11 to 13 comes into play. Now the only point on anvil is that whereas the AO is treating its entire income as taxable as not having been utilized towards its aims and objects, but on the other hand, the appellant's learned counsel has pleaded that after ....
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.... to achieve the objects of the trust or not. In spite of various opportunities given by the AO, the assessee, nor his Authorized Representative filed details as required by the AO. Even before us, the learned counsel for the assessee has not filed any details specifically asked by us. He has only filed copy of order dt. 20th July, 2009 passed by the jurisdictional High Court in the case of Improvement Trust (supra). We have perused the order passed by the Hon'ble jurisdictional High Court and found that the Hon'ble High Court has passed this order on the issue whether the assessee is entitled for registration under s. 12AA of the Act or not and not on the issue in dispute i.e. granting the exemption under s. 1 I of the Act. The Tribunal, Delhi C Bench, in the case of Jyoti Prabha Society (supra) has held as under : "At the time of processing the application seeking registration the CIT was not expected to go in detail and prima facie the assessee was able to make out a case for registration. Even if registration is granted that will not be precluding the AO to examine in detail the very object of the assessee and to give the finding in assessment proceed....
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....e created/developed the assessee is charging the cost of it from the public at large the money is coming from coffer of the Government. It can be said that objects/activities of the assessee are more of commercialized nature and no charity is involved in it. At the same time, if these facilities are not provided, then nobody will purchase a plot. It can be said that it is a means of attracting the people so that maximum people may apply for the same and the hidden cost is already added, so no charity is involved. At best, the assessee can be said to be an authority created to help to achieve certain objects. It can be said that is the duty of the Government to create/develop all these facilities to public at large, which is being done through his agency in a particular area. At the same, the funds which are provided to the assessee by the Government is again a public money or generated from public itself. The objects of the assessee though claimed to be charitable, but actually are of purely commercial nature where profit motive is involved. It is a known fact that the assessee is acquiring a land at very low prices and selling the same land on very higher rates and is earning a pr....