TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 475
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....FAC erred in confirming action of Ld. AO in denying all expenses other then expenses categorized as Expense incurred on Objects of the trust and such denial of application is bad in facts and in law and liable to be allowed as application. 3 Without prejudice to the above, On the given facts, circumstances and judicial pronouncements Ld. NFAC erred in confirming action of Ld. AO in denying entire expenses other then expenses categorized as Expense incurred on Objects of the trust and such denial of application is excessive in facts and in law and liable to be reduced. 4 The appellant craves leave to add, amend, alter or delete all or any of the previously mentioned grounds of appeal." 3. Briefly stated fact of the case are that the assessee trust was engaged in carrying out educational activities by way of running schools and colleges. The assessee trust was registered under Bombay Public Trust Act, as well as u/s 12A of the Income-Tax Act, 1961 (in short the 'Act'). For year under consideration, the assessee filed its return of income on 07.03.2018 declaring taxable income at Rs. NIL. The return of income was filed after the due date prescribed under the 'Act' therefor....
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.... 2. Sample rent agreement. 3. Sample invoices of expenses incurred. The appellant has not filed any cogent reason why these documents were not furnished before the assessing officer. However in light of principle of natural justice the additional evidence of the appellant are admitted and being evaluated for the purpose of adjudication of impugned appeal. During the year under consideration the income and expenditure of the appellant stood as under: Particular Note Amount Total Revenue During the Year 4,68,70,198.00 Total Expenditure claimed during the year Admin. Expenses & Expenditure relating to property 1 62,14,269.00 Expenses on the object of the Trust 2 1,78,97,163.00 Excess Expenditure of current year carried forward 2 1,78,82,696.00 Investment in Capital Assets 3 7,87,551.00 During the assessment proceedings, the Ld. AO had allowed only expenses pertaining to current year i.e. Rs. 1,78,97,163/- but the Ld. AO disallowed rest of expenses for want of supporting documentation. During the year under consideration, the appellant filed sample invoices and claimed that the expenses are allowable. The appellant also contest....
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....bunal) by way of raising grounds as reproduced above. 4. The Ld. counsel for the assessee submitted that the Ld. CIT(A) admitted the additional evidences without following due procedure of law laid down in Rule 46A of Income-tax Rules, 1962(In short the 'Rules'). He further submitted that before pointing out defects in additional evidences the Ld. CIT(A) did not provide any opportunity to the assessee to explain the anomalies observed by him. He explained that bills received from 'M/s Allied marketing link' was initially marked as 'bills not paid' but later on in the relevant financial year said bill was paid. Further, regarding bill in the name of 'Bombay Cambridge School', he submitted that said school was also one of the school operated by the assessee. Regarding the telephone bill in the name of 'Bombay institute for deaf and mutes' is considered, the Ld. counsel submitted that bill was reimbursed by the assessee and therefore, it was claimed for application of income. Regarding the 'salary register' also, the Ld. Counsel submitted that out of the many school operated only in the one of the school the administrator had signed in the salary register against employees. The Ld. C....
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....noted that only sample invoices and rent agreements had been placed on record in additional evidences, and comprehensive supporting material, including vouchers and books of account substantiating the claim under Section 11 of the Act, had not been filed. 6.2 In view of the foregoing and having regard to the facts and circumstances of the case, as also in the interest of substantial justice, we deem it appropriate to set aside the impugned order passed by the Ld. CIT(A) on this issue. The matter is accordingly remanded to the file of the Ld. CIT(A) for adjudication afresh in accordance with law after following due procedure laid down in Rule 46A of Rules. The assessee is directed to produce all relevant documentary evidence, including vouchers and books of account, in support of its claim before the ld CIT(A) as additional evidences. The Ld. CIT(A) shall ensure that both parties are granted a reasonable opportunity of being heard before the matter is finally adjudicated. 6.3 In the result, Ground Nos. 1 to 3 raised by the assessee in the present appeal are allowed for statistical purposes. Appeal for AY 2010-11 7. The grounds raised for the assessment year 2010-11 are reproduc....
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....id issue of notice u/s 143(2). Such assessment order without valid issue of notice u/s 143(2) is bad in law and liable to be quashed." 8.1 The additional ground being purely legal in nature and goes to the root of the matter, same was admitted for adjudication after hearing both the parties. 8.2 Before us the Ld. counsel for the assessee submitted that no notice u/s 143(2) of the Act was issued in the case of the assessee and therefore the assessment completed u/s 143(3) is liable to be quashed. On the other hand, the Ld. DR submitted that Ld.AO in the impugned assessment order has duly mentioned that return of income filed by the assessee was selected for compulsory scrutiny and notice u/s 143(2) of the Act was issued on 27.09.2011 which was duly served. In view of this clear finding there was no reason for suspicion notice that u/s 143(2) of the Act was not issued. He submitted that onus was on the Ld. counsel for the assessee to explain how the notice u/s143(2) of the Act was not issued. In response, the ld. counsel for the assessee referred to the reply dated 10.03.2025 received from the Income-tax Department under 'Right to Information Act, 2005. 8.3 We have heard rival sub....
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....of the Act was issued and accordingly, we reject the contention of the ld. counsel for the assessee. The additional ground raised by the assessee is accordingly dismissed. 9. The facts in brief qua the regular grounds raised are that the assessee filed its return of income on 03.01.2011 declaring total income at Rs. NIL. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the 'Act' were issued and complied with. During the course of scrutiny proceeding, the Assessing Officer observed that assessee trust gave advance/deposit to two trustees, namely Shri. Sukesh S. Shetty and Rakesh S. Shetty amounting to Rs. 2,09,427/- and 2,40,276/- respectively. According to the Assessing officer, those two persons being in the category of specified persons as provided in section 13(3) of the Act, part of income has been applied for the benefit of specified persons, therefore, the assessee a violated provisions of Sec. 13(1)(c) of the Act. The Assessing officer referred to the Sec. 13(1)(c) of the Act and withdrawn the entire exemption claim u/s 11 of the Act. The relevant findings of the assessing officer are reproduced as under: "10. In ....
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....he trust or the rules governing the institution, any part of such income enures, or (ii) if any part of such income or any property of the trust or the institution (whenever created or established) is during the previous year used or applied, directly or Indirectly for the benefit of any person referred to in sub-section (3) 6.8 On perusal of provision of section 13 it is very clear that provision of section 11 and 12 shall not operate if the conditions of section 13 are encountered. 6.9 In view of the above I am of the considerate opinion that the addition carried out by Ld.AO is appropriate and the alternative contentions raised by the appellant that the portion of income which is not utilized towards the objective of the trust shall be disallowed, is also not found to be acceptable. The said treatment is from 01.04.2023 and there not applicable to the assessment year under consideration. 6.10 Accordingly ground 3 and 5 of the appeal are disposed on merits and based on information/documents available on records." 9.2. Before us the Ld. counsel for the assessee submitted that during the year under consideration the assessee used certain premises of the trustees for ed....
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........... (b) ....... (bb) ....... (c) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof- (i)if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or (ii)if any part of such income or any property of the trust or the institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in sub-section (3): [such part of income as referred to in sub-clauses (i) and (ii)]" 9.5 Further, the section 13(2) has deemed that in certain circumstances prescribed, income is applied or used for the benefit of the specified person. 9.6 In section 13(1)(c) of the Act reproduced above the last part of sentence reads as "such part of income as referred to in sub clause(i) and (ii)", has been inserted w.e.f. 1/4/2023. So, undisputedly from AY 2023-24, the disallowance with reference to section 13(1)(c) or 13(2) has to be restricted to the amount of income applied or used toward benefit....