TaxTMI 
TaxTMI 
TaxTMI 
2018 (11) TMI 439
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....of this consolidated order:- ITA no.1443/Mum./2005 Revenue's Appeal - A.Y. 1999-2000 3. The only issue arising out of the aforesaid apepal by the Revenue is in relation to the decision of the learned Commissioner (Appeals) in allowing assessee's claim of exemption under section 11 of the Income Tax Act, 1961 (for short "the Act"). 4. Brief facts are, the assessee a registered charitable institution has been granted registration under section 12A of the Act. For the assessment year under dispute, the assessee filed its return of income on 26th November 1999, declaring nil income after claiming exemption under section 10(23) of the Act. Without prejudice, the assessee also claimed exemption under section 11 of the Act. In course of assessment proceedings, the Assessing Officer rejected assessee's claim of exemption under section 10(23) of the Act. Further, as regards assessee's claim of exemption under section 11 of the Act, on verifying the accounts and other details filed by the assessee he found that the assessee has claimed various expenditures. After calling for necessary details and verifying them, the Assessing Officer found that the travelling expenses of office beare....
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....d for the object of the trust. Further, the Assessing Officer disallowed entertainment expenditure of Rs. 98,473, alleging that they were not spent for carrying out the object of the trust. In addition to the above, the Assessing Officer also disallowed Rs. 5,18,884, being 30% of the total telephone expenses of Rs. 17,29,617, stating that these expenditures were incurred towards cellular phone charges of many officials of the BCCI a part of which may be for personal use of the concerned officials. Having disallowed a part of the expenditure claimed by the assessee, the Assessing Officer also proceeded to deny assessee's claim of exemption under section 11 of the Act alleging that income / fund were not applied towards the object of the Trust. Challenging the disallowances made as well as denial of exemption under section 11 of the Act, the assessee preferred appeal before the learned Commissioner (Appeals). In the course of appellate proceedings, the assessee advanced detailed argument not only in support of expenditure claimed but also contesting the denial of claim of exemption under section 11 of the Act. 5. The learned Commissioner (Appeals) on the basis of submissions made by....
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.... rejected in entirety. However, he observed that the assessee could not establish that the entire period of travel of the concerned persons was devoted to the conduct of assessee's business. Accordingly, he disallowed an amount of Rs. 2 lakh out of the total foreign travel expenses of Rs. 4.77 lakh. As regards the claim regarding entertainment expenses, the learned Commissioner (Appeals) confirmed the disallowance with the observation that the assessee could not establish that it was for carrying out the charitable objects. As regards telephone expenses, the learned Commissioner (Appeals) following his earlier orders on the issue, deleted the disallowance made by the Assessing Officer. Having held so, the next issue which came up for consideration of learned Commissioner (Appeals) was whether by virtue of the disallowance of expenditure sustained by him, assessee's claim of expenditure of section 11 of the Act can be rejected. The learned Commissioner (Appeals) after referring to the provisions of section 11 of the Act, as well as certain judicial precedents held that only the income which is not applied to charitable purposes in India is not covered by section 11 of the Act. Accor....
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....rs two kinds of expenditure i.e., administrative expenditure and expenditure for charitable purpose. He submitted, the object of the assessee is promotion of cricket in India which has been recognised as charitable purpose. Extensively referring to the statement of fact forming part of appeal memo filed before the first appellate authority, the learned Sr. Counsel submitted that each of the expenditure incurred by the assessee is for the purpose of promoting its objects. Explaining the expenditure incurred under each of the head, the learned Sr. Counsel submitted that Shri P.M. Rungta has gone to Delhi to meet Revenue officials in connection with the renewal application filed under section 10(23) of the Act. He submitted that Shri Rungta was a former treasurer and was not an office bearer of the assessee at the time of his visit to Delhi. He submitted that these are normal expenditures which have to be incurred for the purpose of the trust. He submitted that as per the provisions of section 11(1)(a) of the Act, income of the assessee has to be applied and not the receipts. He submitted, even assuming that a part of the income was not applied towards charitable purpose, still exempt....
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....ry condition for availing exemption under section 11 of the Act was fulfilled. The next issue is, whether by disallowance of a part of expenditure, claim of exemption under section 11 of the Act can be disallowed on its entirety. In this context, it is necessary to examine the provisions of section 11 of the Act. A reading of section 11(1)(a) of the Act makes it clear that exemption under section 11 of the Act is allowable to the extent of income derived from property held for charitable or religious purposes is applied for charitable for religious purposes. Thus, as per the ordinary and plain meaning of the aforesaid provision, the assessee is entitled to claim exemption of income to the extent it is applied for charitable purpose. Of-course, the provisions of section 11 is subject to the conditions / exceptions provided under section 13 of the Act. However, in the present case, there is no allegation by the Assessing Officer that the assessee has violated any of the conditions of section 13 of the Act. That being the case, the contention of learned Departmental Representative that assessee's claim of exemption under section 11 of the Act has to be disallowed entirely is not accep....
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....applied such income for charitable purposes. In that view of the matter, we uphold the decision of the learned Commissioner (Appeals) on the issue by dismissing the grounds raised. 9. In the result, Revenue's appeal is dismissed. ITA no.9272/Mum./2004 Assessee's Appeal - A.Y. 1999-2000 10. In ground no.1, the assessee has raised the issue of claim of exemption under section 10(23) of the Act. 11. Brief facts are, as discussed earlier, the assessee was allowed exemption under section 10(23) of the Act till assessment year 1998-99. For the impugned assessment year also, though, the assessee had filed an application for issuance of notification under section 10(23) of the Act, however, assessee's application remained un-disposed. During the assessment proceedings, the Assessing Officer while examining assessee's claim of exemption under section 10(23) of the Act, observed that the assessee has not fulfilled any of the conditions of the said provision. Accordingly, he rejected assessee's claim of exemption under section 10(23) of the Act. The assessee challenged the aforesaid decision before the first appellate authority. 12. The learned Commissioner (Appeals) noticing that a....
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.... since was not satisfied, he disallowed the expenditure claimed by the assessee. During the proceedings before the first appellate authority, on the basis of submissions made and evidences produced, a remand report was called for from the Assessing Officer. After perusing the remand report of the Assessing Officer, the learned Commissioner (Appeals) was of the view that all the details along with corresponding invoices and vouchers in respect of visit of Shri P.M. Rungta, to Delhi, could not be furnished by the assessee even at the stage of remand. Accordingly, he disallowed an amount of Rs. 1,44,690, representing travel expenses of Shri P.M. Rungta. 17. The learned Sr. Counsel for the assessee refuting the allegations of the Departmental Authorities submitted that all the details / evidences relating to Shri P.M. Rungta's visit to Delhi were submitted before the Assessing Officer. He submitted, Shri Rungta, was an office bearer earlier and not in the impugned assessment year. He submitted, Shri Rungta was sent to Delhi for the specific purpose of pursuing assessee's application made under section 10(23) of the Act before the CBDT. In this context, he drew our attention to the fac....
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....ious persons including office bearers of Cricket Associations, VIPs, etc. He submitted, sinceinternational matches are conducted by the respective state cricket associations, the assessee had to purchase tickets from the said cricket associations for distribution purpose. Thus, he submitted, the expenditure claimed is allowable. 24. The learned Departmental Representative relied upon the observations of the learned Commissioner (Appeals). 25. We have considered rival submissions and perused materials on record. As seen from the remand report, the Assessing Officer has observed that the assessee had furnished a statement showing the denomination of tickets purchased with supporting evidence. However, the Assessing Officer had observed that the name of persons of officials whom the tickets were given were not furnished. The learned Commissioner (Appeals), though, was of the view that looking at the wide range of assessee's operation, a very small amount had been spent for purchase of tickets, however, he has disallowed 50% out of the expenditure claimed. Thus, when in the course of remand proceedings, the assessee furnished the details of tickets purchased with supporting evidence ....
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....see has sought a direction to the Assessing Officer to extend the benefit of section 11(2) of the Act with regard to the additions / disallowances confirmed by the appellate authority. 34. We have considered rival submissions and perused materials on record. On a perusal of the facts on record, it is seen that the Assessing Officer did not consider assessee's claim under section 11(2) of the Act since he rejected assessee's claim of exemption under section 11 of the Act. However, the learned Commissioner (Appeals) has directed the Assessing Officer to allow the benefit of accumulation under section 11(2) of the Act if the assessee has claimed such benefit in the prescribed manner. In view of the aforesaid direction, we do not find the need for any further direction to the Assessing Officer. Suffice to say, the Assessing Officer must consider assessee's claim of benefit of section 11(2) of the Act subject to fulfillment of all the conditions of the said provisions. With the aforesaid observations, this ground is allowed for statistical purposes. 35. In the result, assessee's appeal is allowed for statistical purposes. ITA no.7066/Mum./2005 Assessee's Appeal - A.Y. 1999-2000 ....