TaxTMI 
TaxTMI 
2018 (6) TMI 92
X X X X Extracts X X X X
X X X X Extracts X X X X
....hout giving the opportunity of being heard to the AO under Rule 46A to give comments/counter the same. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred by holding that the assessee be allowed exemption u/s 10(21) ignoring the f that in the Revised Notification dated 27.10.1987, CBDT has accorded its approval and Notified the assessee as 'Other Institution'. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in relying on Tribunal's order and granting allowability of 'Loan Repayment' in contradiction of the fact that the issue is subjudice before the Hon'ble High Court. 2. Briefly stated facts of the case are that in the year under consideration i.e. assessment year 2011-12, the assessee filed return of income on 29/07/2011 declaring Nil income. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short the 'Act') was issued and complied with. In the scrutiny proceedings, the Assessing Officer observed that the assessee society was registered under section 12A of the of the Act vide order of even number dated 02/02/2005 issued by the Director of Income T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....section 10(21) of the Act, and the exemption under said section becomes inadmissible during the period under assessment. Alternatively, he also observed that the receipts arising out of activity of the assessee, are in the nature of business or commerce and falls under the limb 'advancement of any other object of general public utility' and accordingly, both the provisos to section 2(15) are applicable in the case as the aggregate value of receipts are more than Rs. 10 Lacs. 2.5 The Assessing Officer also disallowed repayment of loan amounting to Rs. 2,50,00,000/- to the World Bank as an application of income for the objects of the trust. 2.6 In addition to the above disallowance, he also made other disallowances; however, the same are not in dispute before the Tribunal. 2.7 On further appeal, the Ld. CIT(A) allowed the exemption under section 11(1) of the Act relying on the decision of the Hon'ble Delhi High Court in the case of India Trade Promotion Organization vs. DGIT(E), 53 taxmann.com 404 (Delhi). The finding of the Ld. CIT(A) is reproduced as under: "3.3 I have considered the order of the AO and the submissions of the assessee and I find considerable merit in the submi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....On the contrary, the Ld. counsel submitted that the appellate authority can admit a legal ground raised at any stage of appeal as held by the Hon'ble Supreme Court in the case of NTPC Ltd. Vs CIT 229 ITR 383. 3.2 In relation to ground No. 1, the Ld. DR submitted that in the return of income filed, the assessee claimed only exemption under section 10(21) of the Act and therefore, the Assessing Officer has not examined the question of exemption u/s 11(1) of the Act in that perspective and did not make enquiries for deciding allowability of exemption under section 11(1) of the Act. He further submitted that the Ld. CIT(A) has not compared the facts of the case of the assessee with the case of India Trade Promotion Organization (supra) relied upon by him. According to him, in absence of factual analysis of the case in hand, the reliance placed by the Ld. CIT(A) on the decision of the Hon'ble High Court is not justified and the issue need to be restored to the file of the Ld. CIT(A) for deciding a fresh. 3.3 The Ld. counsel, on the other hand, submitted that the finding that proviso to section 2(15) of the Act is not attracted in the case of the assessee, is a matter of fact finding a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er section 10(21) of the Act, which has been allowed by the Ld. CIT(A) following the order of the Tribunal dated 16/11/2004. 4.1 Before us, the Ld. DR submitted that whether the assessee has been notified under section 35(1)(ii) of the Act by the CBDT as Scientific Research Association, is not clear in view of the pendency of the Review Petition of the CBDT stated by the Assessing Officer in the assessment order. According to him, the Ld. CIT(A) has not verified this factual matrix and, therefore, matter might be restored to him for deciding after verifying the factual position of the Review Petition and any subsequent order passed by the CBDT. 4.2 On the contrary, the Ld. counsel of the assessee, relied on the order of the Tribunal dated 07/03/2018 for assessment years 2009-10 and 2010-11, wherein the assessee has been allowed exemption under section 10(21) of the Act, following the earlier order of the Tribunal dated 16/11/2004 for assessment year 1996-97 to 1998-99. 4.3 We have heard the rival submission and perused the relevant material on record. We note that the Tribunal, in order dated 07/03/2018 in ITA No. 2681 and 2682/del/2015, has relied mainly on the order dated 16/1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ime to go through those evidences, however, she did not raise any objections in respect of reliability of those evidences. 14. From the facts of the case, we find that loan under reference was sanctioned in the year 1990 and final amount of disbursement of the loan was received by the assessee company in March, 1996. On perusal of the statement of income filed for the assessment years 1992-93 to 1999-2000 during which the loan was received by the assessee, we find that apparently the loan under reference received from World Bank has not been shown as income in any of the year concerned. Further, we find from the statement of total income that the cost of fixed assets acquired during the relevant years has been claimed as application of income. In the note appended to depreciation chart for the assessment year 1992- 93 enclosed along with the balance sheet and profit and loss account, it is mentioned that additions include assets amounting to Rs. 91,31,124/- (previous year Rs. 75,50,597/-) purchased under the Industrial Credit and Investment Corporation of India Ltd. (Technology Service Revolving Fund) Scheme. Similar notes have been provided in case of other assessment years invo....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 11(1)(a). An assessee may borrow money and spend it for charitable object. The circular merely recognises that in such a case, application of income for repayment of a loan taken for charitable purpose will amount to application of income for charitable purpose. The circular, however, does not permit an assessee to accumulate more than 25 per cent of its income or Rs. 10,000, whichever is higher (for the purpose of charity). The wording of s. 11 is clear and unambiguous. The relief is limited to the amount of income of a charitable trust actually applied for charitable purpose. Accumulation of income is permitted only to the extent and subject to the conditions laid down in that section. An assessee can accumulate or set apart only 25 per cent of the income of the trust or Rs. 10,000, whichever is higher, in a given year. The circular does not seek to and cannot enlarge the scope of the section." (Emphasis supplied by us) 18. In view of discussion above, in compliance to the directions of the Hon'ble High Court, we hold that the assessee has already been allowed cost of addition to asset acquired out of the loans as application of income in relevant years and therefore assess....