TaxTMI 
TaxTMI 
2023 (3) TMI 419
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....mber, 1977 under section 12A of the Income Tax Act ('the Act' for short). The Petitioner addressed a letter dated 29th February, 2008 to the Assistant Director of Income-tax (Exemptions) I-(2) informing him that they would not be able to utilise 85% of the accumulated income for the year towards the expenditure on the objects of the trust and therefore, may be allowed to exercise the option under section 11(1) of the Act to spend the unspent surplus in the next twelve months. On 30th September, 2008 the Petitioner filed its return of income for A.Y. 2008-09 declaring 'Nil income'. Rs. 89,17,868/- was claimed by the Petitioner being 15% of the gross income as deduction allowable under section 11 of the Act. A sum of Rs. 13,21,686/- was also claimed as depreciation. Since the amount expended on the object of the Petitioner Trust was more than the income, the Petitioner claimed deficit of Rs. 13,92,05,087/- as carry forward to be set off in the subsequent year. On 3rd November, 2010 the Petitioner received notice under section 142(1) of the Act asking the Petitioner to submit the following : (a) Detailed note on the objects of the Trust, and activities carried on during the year; ....
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....11(1)(a) of Rs. 89,17,868/-. 2.1 Exemption u/s. 11(1)(a) of Rs. 89,17,868/- (15% of gross income) which was not in order. As the assessee has shown deficit of Rs. 13,92,05,087/- after claiming exemption u/s. 11(1)(a) of Rs. 89,17,868/- during the year. Therefore, the exemption u/s. 11(1)(a) has not been allowed as there was a deficit in the assessment year. Therefore, the exemption u/s. 11(11)(a) was required to be restricted to nil (being 15% of total income or to the extent of income available for accumulation) instead of Rs. 89,17,868/- as per the above quoted provision. This has resulted in excess allowance of accumulation of Rs. 89,17,868/- involving total potential tax effect of Rs. 30,31,183/-. 3. The deficit claimed by the assessee of Rs. 13,92,05,087/- should not be allowed to carry forward and set-off in the subsequent assessment years as the Act does not contain any provision as to carry forward and set-off to expenditure/application made during the year in subsequent years. 4. There is a failure on the part of the assessee to make full and true disclosure of the relevant material facts in the relevant assessment year, as far as the above issue is concerned. ....
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....ndent No. 1 that has been recorded in the reasons recorded. In fact, the reasons recorded clearly averred "on perusal of records" and consequently it can be concluded that there was no fresh and tangible material to justify the reopening of the assessment. He further submits that it is evident that the respondent No. 1 has referred to assessment order for A.Y. 2012- 13 for reopening of the assessment. He consequently submits that a different view in the subsequent year cannot justify the reopening of the assessment for the earlier assessment years. He submits that there is no failure to fully and truly disclose any material fact as alleged in the reasons recorded. He lastly submitted that the Petitioner have not been provided a copy of the approval from the appropriate authority under section 151 of the Act. In view of the above, he prays that the Petition be made absolute with costs. 6. Mr. Suresh Kumar, learned Counsel for the Respondents submits that the notice under section 148 of the Act was issued after following due procedure by A.O. having recorded reasons. He submits that certain facts were discovered during the assessment proceedings for A.Y. 2012-13 where the Petitione....
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....her submitted that reassessment is permissible even if the information is obtained after proper investigation from the materials on record or from any enquiry or research into facts or law. He lastly submitted that an alternative remedy in the form of submissions before the A.O. during the reassessment proceedings would be available to the Petitioner. Moreover, if the Petitioner was aggrieved by the reassessment order, the Petitioner had a remedy of an appeal before CIT(a), ITAT etc. In view of the aforesaid, he submitted that the Petition deserves to be dismissed. Conclusion: 8. We heard both the learned Counsel at length. We find merit in the Petition. 9. It would be appropriate to mention about the case of CIT v/s. Institute of Banking Personnel Selection (IBPS) (cited supra) which held that income derived from the trust property has also got to be computed on commercial principles and if the commercial principles are applied then the adjustment of expenses incurred by the Trust for charitable and religious purposes in the earlier years against income earned by the Trust in the subsequent year will have to be regarded as application of income of the Trust for charitable and r....