TaxTMI 
TaxTMI 
2022 (2) TMI 33
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....re taken up together and disposed of by this common order for the sake of convenience. ITA No.1299/Mum/2018(A.Y.2008-09) Assessee Appeal 2. The ground Nos.1-3 raised by the assessee in its appeal are challenging the validity of re-assessment proceedings and assumption of jurisdiction by the ld. AO u/s.147 of the Act. 3. We have heard rival submissions and perused the materials available on record. We find that assessee is a public charitable trust registered under Bombay Public Trust Act, 1950 and also registered under Income Tax Act. The return of income for the A.Y.2008-09 was filed by the assessee on 29/09/2008 alongwith income and expenditure account, balance sheet and audit report in form No.10B declaring total income at Rs. 'Nil' and also declaring a deficit of Rs. 4,51,54,962/-. The assessee claimed exemption u/s.11 of the Act in its return. The assessee also received dividend income which was claimed as exempt u/s.10(34) of the Act in the said return of income. The original assessment was completed u/s.143(3) of the Act on 26/11/2010 accepting the claim of the assessee. Later, the assessment was sought to be reopened by issuance of notice u/s.148 of the Act on 20/0....
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....Rs. 1034 Crores has escaped from being taxed. The profit on sale of shares of quoted shares was a capital gain on sale of capital assets u/s.11(1A) of the Act. Therefore, the assessee ought to have reflected this capital gain in the computation of income for applying towards the object of the trust. However, the assessee has credited it directly to the year marked fund in the balance sheet and has not reflected it in the income and expenditure statement. For this reason, the capital gains on sale of shares could not have been examined. This is solely on account of the assessee not reflecting the profit on sale of shares in the income statement. Therefore, it can be safely inferred that the assessee has not disclosed fully and truly all the material facts necessary for the assessment Explanation 1 to Section 147 states that mere production of books of accounts from which discrepancy could have been discovered by the Assessing Officer will not amount to full and true disclosure within the meaning of the first proviso to section 147. In this case, by not showing the capital gains in the income statement, the assessee has failed to disclose the income. In view of the ....
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....ore the ld. AO in the course of original assessment proceedings. It was specifically pointed out by the assessee that with regard to reasons recorded in para- B and para-C above in respect of claim of exemption u/s.10(34) of the Act of Rs. 11,98,37,200/- in respect of dividend and claim of deduction us/11(1)(a) of the Act of Rs. 6,49,31,667/- (15% of gross income of Rs. 43,28,77,779/-), the ld. AO had not brought out any failure on the part of the assessee in making a full and true disclosure of particulars of income during the course of original assessment proceedings. Accordingly, it was pleaded that re-assessment should be dropped in respect of these two issues. 3.2. In re-assessment proceedings, the ld. AO determined the income of the assessee as under:- Rs. Rs. Profit on Sale of Shares (as discussed above) 578,63,38,554 Interest income 43,25,86,354 Dividend from Shares / Units (as discussed above 11,98,37,200 Other Income 2.91,425 633,90,53,533 Add: Depreciation (as discussed above) 17.559 &n....
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....e facts and in the circumstances of the case and in law, the Hon'ble Tribunal was justified in granting exemption u/s. 10(33} and 10(38) to the tune of Rs. 25.96 lakhs and Rs. 3.21 lakhs respectively, when this income forms a part of the income from property held under trust and therefore can only be claimed to be exempt u/s. 11, if applied for charity and not u/s. 10 the Act ? 3.7. The Hon'ble High Court held as under:- 8. Upon a perusal of the order of the Assessing Officer and that of the Commissioner upholding it, we are of the view that the Tribunal was correct in setting aside these concurrent orders. The language of the two sections is plain and clear. The provisions, namely, sections 10 and 11 fall under a Chapter which is titled "Incomes Which Do Not Form Part of Total Expenditure" (Chapter III). Section 10 deals with incomes not included in total income whereas section 11 deals with income from property held for charitable or religious purposes. We have not found anything in the language of the two provisions nor was Mr. Malhotra able to point out as to how when certain income is not to be included in computing total income of a previous year of any person....
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....ding the reasons, the ld. AO indeed had the benefit of the Tribunal order passed in the case of Jasubhai Foundation dated 14/11/2012. Despite this, the ld. AO sought to take a divergent stand in respect of claim of exemption u/s. 10(34) of the Act for the dividend income and sought to reopen the assessment. Since, this issue is squarely covered by the decision of the Hon'ble Jurisdictional High Court on merits also, the reopening made by the ld. AO for the purpose of consideration of the taxability of the dividend income of Rs. 11,98,37,200/- is bad in law and is hereby quashed. Hence, we hold that the ld. AO could not have had a reason to believe that income of the assessee had escaped assessment in respect of this issue. Hence, reopening made in this regard is quashed. 4. Similarly, with regard to claim of deduction of the assessee trust u/s.11(1)(a) of the Act of Rs. 641,31,667/- being 15% of gross income of Rs. 43,28,77,779/-, we find from the reasons recorded by the ld. AO that absolutely no finding has been given by the ld. AO as to on what basis and on what tangible material, he had arrived at the conclusion that assessee had claimed excess allowance of accumulation of Rs....
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.... AO could not have examined the capital gains on sale of shares in the original assessment proceedings. Based on these, the ld. AO in the reasons recorded says that there is a failure on the part of the assessee in making full and true disclosure of facts. Finally, the ld. AO in the reasons recorded observed that re-investment in unquoted shares made by the assessee is in violation of provisions of Section 11(5) of the Act to the tune of Rs. 1034 Crores and hence, exemption u/s.11 of the Act should have been denied on the entire value of such re-investment of Rs. 1034 Crores. Accordingly, the ld. AO concludes that income to the extent of Rs. 1034 Crores had escaped assessment. 5.1. We find at the outset that assessee had sold 54,99,400 equity shares of Tata Consultancy Services Ltd., having book value of Rs. 21,99,760/- and earned long term capital gain of Rs. 578,63,38,544/-. The assessee had stated that it was holding the shares of Tata Consultancy Services Ltd., which was received by it as corpus donation. During the year under consideration, the assessee trust had sold these shares and re-invested the amount in preference shares of Tata Sons Ltd. During the year, the assesse....
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....ins on sale of such investment which would be exempt u/s.10(38) of the Act. In any case, the value of investment even if it is to be considered as violation of Section 11(5) of the Act would not result in the value of such investment getting taxed in the hands of the assessee. On the contrary, the only income arising from such investment would become taxable subject to the provisions of the Act. As clearly pointed out by us above, the income if any, arising out of such investment would only be in the form of dividend or capital gains on sale thereon and both these streams of income would be exempt from tax u/s.10(34) or 10(38) of the Act respectively, as the case may be. Hence, there cannot be any income that had escaped assessment within the meaning of Section 147 of the Act. Hence, there cannot be any valid reopening thereon. Infact, the Hon'ble Jurisdictional High Court in the case of DIT vs. Sheth Mafatlal Gagalbhai Foundation Trust reported in 249 ITR 533(Bom) had categorically held that any violation of provisions of Section 13 of the Act will at the most lead only to forfeiture of exemption u/s.11 of the Act of the corresponding income arising from such violation and not the....