TaxTMI 
TaxTMI 
2024 (7) TMI 339
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....me under clause (2) of Explanation 1 to sub-section (1) of Section 11 of the Act in respect of accrued bank interest on FD of Rs. 4,41,961/- while computing taxable income of the appellant trust." 2. Brief facts of the case are that the assessee is a charitable trust having registration under Section 12A/12AA and approval of funds under section 80G(5) of the Income Tax Act, 1961 (in short, the Act). The assessee filed its return of income for A.Y. 2016-17 on 29/10/2016 declaring income at Rs. NIL. The case was selected for scrutiny. The Assessing Officer recorded that the detailed questionnaire and notice under Section 142(1) of the Act was served upon the assessee for furnishing various details in connection with assessment. The Assessing Officer recorded that no details were furnished. The Assessing Officer recorded the fact that the assessee failed to comply with the notices, therefore, he proceeded to pass the best judgment assessment as per Section 144 of the Act. The Assessing Officer nowhere mentioned the date of notice and the manner of service thereof on the assessee. Yet, the Assessing Officer passed assessment order under Section 143(3) of the Act dated 16/12/2018. Wh....
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.... explained that they have earned interest on savings bank account of Rs. 2,45,037/-, interest on FDR of Rs. 1,95,972/-, interest on other FDR of Rs. 35,000/- and annual membership of Rs. 2200/-, total aggregating of Rs. 4,78,209/-. Out of which Rs. 36,248/- is applied for charitable purpose. The remaining accumulated amount of Rs. 4,41,961/- (Rs. 4,78,209 - Rs. 36,248) was invested in specified securities. The assessee reiterated that the assessee is a charitable trust registered with Charity Commissioner, Valsad having registration under Section 12A as well as 80(G5) of the Act. The assessee stated that they were allowed benefit of Section 11, 12 and 13 in all preceeding and subsequent assessment years. On the basis of such submission, the assessee prayed to direct the Assessing Officer to compute their income. 4. The ld. CIT(A) on considering the submission of assessee noted that the assessee is a public charitable trust and hence eligible for exemption under Section 11 of the Act if the receipts are applied towards object of the trust to the extent of 85% and remaining 15% is accumulated in the manner prescribed under Section 11 of the Act by filing Form-10, the entire income....
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....that there is delay of 24 days in filing appeal before the Tribunal. Impugned order was passed by the ld. CIT(A) on 22/12/2023, however, the present appeal is filed on 15/03/2024, thus, the registry of the ITAT has calculated 24 days' delay in filing appeal. The assessee has filed application of condonation of delay in the form of affidavit of Acharya Giribala Niravbhai, Secretary of assessee-trust. The learned Authorised Representative (ld. AR) of the assessee submits that affairs of the trust used to be looked after by Dr. Dinesh d. Vaidya and Shri Mangubhai T. Vaidya, who had expired. Tax matter of trust is handled by him. Order of ld. CIT(A) dated 22/12/2023 was served through ITBA Portal. Since, there is complexity of the issue, he studied the matter and took final decision on the instruction of Secretary for filing appeal before the Tribunal. Though, the appeal fee was paid on 11/03/2024 but the appeal could be filed only on 15/03/2024. In the meantime, the time period for filing appeal was lapsed. The ld. AR of the assessee submits that the delay in filing appeal is not intentional or deliberate. The assessee is not going to be benefitted by filing appeal belatedly. The case....
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....re account for financial year as per the details available at page No. 8 and 9 of paper book is only Rs. 67,50,134/- only. The ld. CIT(A) is also misunderstood the facts and erred in denying deduction under Section 11(1A) of the Act which is lawfully allowable to the assessee-trust. The assessee in the computation of capital gain has shown sale consideration of the asset as per the sale deed dated 28/04/2015 at Rs. 75.00 lacs, copy of sale deed is filed as per page No. 19 to 40 of paper book. The assessee made investment in UCO bank in fixed deposits of Rs. 50.00 lacs on 29/04/2015 and Rs. 25.00 lacs on 09/06/2016 respectively. Copy of such details is filed on page No. 42 and 43 of paper book. Entire sale consideration received was kept in savings bank account with UCO bank and was converted into fixed deposit as expenditure. The fixed deposits were matured on 29/04/2008 which was further renewed up to 29/04/2021 which was later on converted into capital account scheme. Both the fixed deposits were converted into capital gain account with UCO bank. Copy of passbook is filed on page No. 47 to 49 of paper book. Investment in fixed deposits were held by the trust for the use of benefi....
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.... the order of ld. CIT(A) on both the issues. We may note here that this matter was heard at length on 20/05/2024, however, on the request of ld. CIT-DR to verify the fact that CBDT Circular No. 883 dated 24/09/1975 is still in existence or not. The ld. CIT-DR for the revenue on 31/05/2024 submits that he has verified the fact that CBDT circular mentioned above is still in existence. 13. We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities carefully. First ground of appeal relates to the deduction of capital gain of Rs. 75 Lacs. We find that the Assessing Officer made addition of Rs. 1.54 Crore by taking view that the assessee has such receipt during the year. We find that before ld CIT(A) the assessee strongly objected to the additions by filing detailed written submissions, which we have recorded earlier. We further find that ld CIT(A held that the assessee is trust and is governed by section 11, 12 & 13 of Income tax Act. The ld CIT(A) prepared his summery of computation of total income of assessee, which we have extracted in para-4 (supra). Before us, the ld AR of the assessee vehemently argued that his case is....
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....company is first an asset and, secondly, a capital asset and thirdly a permitted capital asset under the special law relating to the assessment of charitable or public religious trust. Therefore, the contention of the revenue that the investment by way of deposit in the public sector company could not be treated as a new asset acquired with the net consideration in terms of section 11(1A) was not tenable. The investment or deposit in any public sector undertaking appears as one of the permitted forms or modes of investment or deposit. According to section 2(14), capital asset includes property of any kind held by an assessee. 'Deposits or investments' are a kind of property and do not fall in the exclusionary limb of the said section. By reason of the option exercised under the Explanation to section 11(1) the assessee was entitled to the benefit under section 11(1A) inasmuch as the definition of income as contained in section 2(24) includes capital gains as one of the species of income. That being so, the option as exercisable with regard to income should also avail to the capital gains, provided such option was exercised in writing before the expiry of time allowed under ....
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.... "If any doubt is left about the real nature of the transaction between the parties, it is set at rest by Expln. (iii) to section 11(1A), which has been extracted earlier. Net consideration as per the said Explanation would mean full value for the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection will such transfer. Now, in the present case, even if 90 per cent can be said not to have been received in cash by the seller, it cannot be gainsaid that it had really accrued to the seller, on account of the sale transaction in question. It is because this Explanation was not noticed by the ITO, that he was promoted to take the view to the effect that share in accounts was not covered by the sweep of section 11(1A). His view was rightly upset by the higher authorities. As a result of the aforesaid discussion, it must be held, agreeing with the Tribunal, that the capital assets belonging to the assessee-trust which were held wholly for charitable purposes were transferred and the whole on the net consideration thereof was utilised by the assessee-trust for acquiring another c....
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.... has held that income from the properties held under trust would have to be arrived at in the normal commercial manner without reference to the provisions which are attracted by section 14. This shows that receipt from the sale transaction of the property to the appellant is to the tune of Rs. 50 lacs out of this appellant has spent Rs. 22 lacs. Rs. 2 lacs and odd for revenue expenditure and Rs. 20 lacs for acquiring new assets. In Accordance with the decision and interpretation of the Hon'ble Madras High Court, the income of the appellant does not become taxable in a commercial sense because all the provisions of section 11(1A) have been fulfilled. We have not appreciated the relevance regarding reliance on the decision of Bombay High Court in the case of Trustees of Shri Kot Hindu Stree Mandal v. CIT (supra) which has been referred in the order. The ratio is not relevant on the facts and circumstances of the case, even remotedly. The learned CIT(A) has relied on the decision of Addl. CIT v. A.L.N. Rao Charitable Trust (1995) 129 CTR (SC) 205 [1995] 216 ITR 697 (SC). The ratio decided in A.L.N. Rao Charitable Trust was dealing with section 11(2) r./w. section 11(1)(a) of the Act. ....
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....is no income left over which requires to be applied under section 11(2) of the IT Act. The Hon'ble Supreme Court has observed that section 11(1)(a) is a separate operative statute of the Act. The trust has to apply income earned during the year from the properties which includes business and has to actually spend for the charitable and religious purpose. It is only out of unspent accumulated income, the section 11(1)(a) is attracted whereby 25 per cent of such property income is to be accumulated and invested in listed investments. 22. We are, therefore, of the opinion that the appellant has satisfied the condition laid under section 11(1)(a) of the IT Act and therefore, he is entitled for exemption of the income received from the property under consideration from both commercial sense as well as from the interpretation of income in accordance with the IT Act. We have also given our finding that the appellant has also fulfilled the conditions envisaged under section 11(1A) of the IT Act. We have given our finding regarding the original cost of the property as on 1st April, 1974 which we have estimated at Rs. 38,62,500 and the capital gain is to be calculated in accordance ....