The DCIT, 1(1), Indore v. M/s Krishi Upaj Mandi Samiti, Indore

ITA 179/IND/2011 | 2008-2009
Pronouncement Date: 23-09-2011 | Result: Allowed

Appeal Details

RSA Number 17922714 RSA 2011
Assessee PAN AAALK0257D
Bench Indore
Appeal Number ITA 179/IND/2011
Duration Of Justice 1 month(s) 20 day(s)
Appellant The DCIT, 1(1), Indore
Respondent M/s Krishi Upaj Mandi Samiti, Indore
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 23-09-2011
Assessment Year 2008-2009
Appeal Filed On 02-08-2011
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO.175/IND/2011 AY: 2008-09 INCOME TAX OFFICER DHAR ..APPELLANT V/S. KRISHI UPAJ MANDI SAMITI DHAMNOD PAN AAALK 0257D ..RESPONDENT ITA NO.182/IND/2011 AY: 2007-08 DY. CIT 1(1) INDORE .... APPELLANT VS KRISHI UPAJ MANDI SAMITI MANAVAR PAN AAALK 0527E .... RESPONDENT 2 ITA NO.177/IND/2011 AY: 2008-09 ITO DHAR .... APPELLANT VS KRISHI UPAJ MANDI SAMITI MANAVAR PAN AAALK 0527E .... RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ASSESSEES BY : SHRI C.P. RAWKA FCA ITA NO.192/IND/2011 AY: 2005-06 ACIT-2(1) UJJAIN .... APPELLANT VS KRISHI UPAJ MANDI SAMITI MACHALPUR RAJGARH PAN AAALK 0349 L .... RESPONDENT ITA NO.193/IND/2011 AY: 2007-08 ITO-2(1) UJJAIN .... APPELLANT VS KRISHI UPAJ MANDI SAMITI DEWAS PAN AAALK 0247 M .... RESPONDENT 3 ITA NO.194/IND/2011 AY: 2007-08 ITO-2(1) UJJAIN .... APPELLANT VS KRISHI UPAJ MANDI SAMITI MAHIDPUR PAN AAALK 0258 N .... RESPONDENT ITA NO.195/IND/2011 AY: 2005-06 ITO-2(1) UJJAIN .... APPELLANT VS KRISHI UPAJ MANDI SAMITI TARANA PAN AAGFR 5734 R .... RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ASSESSEES BY : SHRI AJAY TULSIYAN & SHRI MANISH VAIDYA CAS ITA NO.185/IND/2011 AY: 2006-07 DCIT-1(1) INDORE .... APPELLANT VS KRISHI UPAJ MANDI SAMITI LAXMIBAI NAGAR INDORE PAN AAALK 0190 K .... RESPONDENT 4 ITA NO.186/IND/2011 AY: 2007-08 DCIT-1(1) INDORE .... APPELLANT VS KRISHI UPAJ MANDI SAMITI LAXMIBAI NAGAR INDORE PAN AAALK 0190 K .... RESPONDENT ITA NO.187/IND/2011 AY: 2008-09 DCIT-1(1) INDORE .... APPELLANT VS KRISHI UPAJ MANDI SAMITI LAXMIBAI NAGAR INDORE PAN AAALK 0190 K .... RESPONDENT ITA NO.180/IND/2011 AY: 2007-08 DCIT-1(1) INDORE .... APPELLANT VS KRISHI UPAJ MANDI SAMITI RAJGARH PAN AAATK 7797 A .... RESPONDENT 5 ITA NO.178/IND/2011 AY: 2007-08 DCIT-1(1) INDORE .... APPELLANT VS KRISHI UPAJ MANDI SAMITI DASHAHRA ROAD SANWER PAN AAALK 0492 L .... RESPONDENT ITA NO.179/IND/2011 AY: 2008-09 DCIT-1(1) INDORE .... APPELLANT VS KRISHI UPAJ MANDI SAMITI DASHAHRA ROAD SANWER PAN AAALK 0492 L .... RESPONDENT ITA NO.181/IND/2011 AY: 2007-08 DCIT-1(1) INDORE .... APPELLANT VS KRISHI UPAJ MANDI SAMITI KUKSHI DHAR PAN AAALK 0259 P .... RESPONDENT 6 ITA NO.176/IND/2011 AY: 2008-09 ITO-DHAR .... APPELLANT VS KRISHI UPAJ MANDI SAMITI KUKSHI DHAR PAN AAALK 0259 P .... RESPONDENT ITA NO.183/IND/2011 AY: 2007-08 DCIT-1(1) INDORE .... APPELLANT VS KRISHI UPAJ MANDI SAMITI DHARESHWAR ROAD DHAR PAN AAALK 7997 A .... RESPONDENT ITA NO.173/IND/2011 AY: 2008-09 DCIT-1(1) INDORE .... APPELLANT VS KRISHI UPAJ MANDI SAMITI DHARESHWAR ROAD DHAR PAN AAALK 7997 A .... RESPONDENT 7 ITA NO.184/IND/2011 AY: 2007-08 DCIT-1(1) INDORE .... APPELLANT VS KRISHI UPAJ MANDI SAMITI BADNAWAR PAN AAALS 0497 H .... RESPONDENT ITA NO.174/IND/2011 AY: 2008-09 ITO-DHAR .... APPELLANT VS KRISHI UPAJ MANDI SAMITI BADNAWAR PAN AAALS 0497 H .... RESPONDENT DATE OF HEARING : 23.9.2011 DATE OF PRONOUNCEMENT : 23.9.2011 DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ASSESSEES BY : NONE ORDER PER BENCH THIS BUNCH OF 19 APPEALS BY THE REVENUE PERTAINING TO DIFFERENT ASSESSEES IS FILED AGAINST DIFFERENT O RDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IN 8 THESE APPEALS THE REVENUE HAS CHALLENGED THE DELET ION OF ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ARAKSHIT NIDHI KRISHI ANUSANDHAN NIDHI KISAN SADA K NIDHI AND MANDI BOARD SHULK GAU SANVARDHAN NIDHI BOARD FEE (SHULK) DONATION MADE TO KRISHAK SUCHANA KENDRA KISAN ADHOSARRACHANA NIDHI PENSION FUND MANDO BOARD DEVELOPMENT FUND RESERVE NIDHI STHAI NIDHI (AS IN APPLICABLE IN RESPECTIVE APPEAL) IN SP ITE OF THE FACT THAT THE IMPUGNED RESPECTIVE AMOUNTS PAID ARE A CONTRIBUTION AND NOT BE TREATED AS EXPENDITURE U/S 36(1)(XII) OR U/S 37(1) OF THE ACT AS REVENUE EXPEN DITURE OR CHARITABLE EXPENDITURE. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON THE FILE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS T HAT THE LD. FIRST APPELLATE AUTHORITY HAS MERELY DELETE D THE ADDITION WITHOUT APPLICATION OF MIND AS REGISTRATIO N U/S 12A WAS NOT AVAILABLE WITH THE RESPECTIVE MANDI SAM ITIES 9 AT THE TIME OF FINALISATION OF ASSESSMENT AND IN TH E ABSENCE OF SUCH REGISTRATION SUCH EXPENSES CANNOT BE ALLOWED AS CHARITABLE EXPENSES. ON A QUERY FROM THE BENCH THE LD. COUNSELS FOR ASSESSEE FAIRLY AGREED THAT WHILE FRAMING THE ASSESSMENTS THE REGISTRATION U/S 12A OF THE ACT WAS NOT AVAILABLE WITH THE ASSESSEE AND WAS GRANTED LATER ON. IN VIEW OF THIS FACT IT WAS SUB MITTED BY THE LEARNED SR. DR THAT THESE APPEALS MAY BE REMAND ED BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. WE FIND THAT ON THE SIMILAR FA CTS AND CIRCUMSTANCES THE SIMILAR ISSUES INVOLVED IN THE P RESENT APPEALS HAVE ALREADY BEEN DECIDED BY THE TRIBUNAL I N CASE OF KRISHI UPAJ MANDI SAMITI BARWAH (ITA NOS.2 79 & 308/IND/2010 FOR THE ASSESSMENT YEAR 2006-07) VIDE ORDER DATED 4 TH JULY 2011. THE RELEVANT PORTION OF THE SAME IS REPRODUCED HEREUNDER: 10 THE REVENUE AS WELL AS THE ASSESSEE ARE IN CROSS APPEALS AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 4.2.2010. THE REVENUE HAS CHALLENGED THE DELETION O F ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F ARAKSHIT NIDHI (RS. 2 65 330/-) KRISHI ANUSANDHAN NIDHI (RS. 5 32 895/-) KISAN SADAK NIDHI (RS. 43 89 598/-) AND MANDI BOARD SHULK (RS. 3 99 391/-) WHEREAS THE ASSESSEE IS IN APPEAL AGAINST THE SAME ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN NOT ALLOWING DEPRECIATION AS CLAIMED BY THE ASSESSEE ON WDV AS ON 1.4.2005 BY HOLDING THAT THE ASSESSEE SAMITI IS NOT ENTITLED TO EXEMPTION U/ S 11(A) TO (D) WITHOUT CONSIDERING THE REVISED RETURN FILED BY THE ASSESSEE AND ALSO IN OPINING THAT NO PROPER AND VALID CLAIM U/S 11 WAS LODGED BEFORE THE ASSESSING OFFICER. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABL E ON THE FILE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS THAT THE LD. FIRST APPELLATE AUTHORITY H AS MERELY RELIED UPON THE DECISION OF THE TRIBUNAL AND DECIDED ON THE BASIS THAT THE ISSUES ARE COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF KUMS SANAWAD. ON THE OTHER HAND THE LD. COUNSEL FOR TH E ASSESSEE CONTENDED THAT THE ASSESSEE WAS GRANTED REGISTRATION U/S 12AA OF THE ACT FOR WHICH OUR ATTENTION WAS INVITED TO PAGE 10 OF THE PAPER BOOK. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) HAS DECIDED THE ISSUES BROADLY ON THE BASIS OF THE ORDER OF THE TRIBUNAL AS CLAIMED BEFORE US. HOWEVER WE FIND TH AT SINCE THE ASSESSEE WAS GRANTED REGISTRATION U/S 12A VIDE ORDER DATED 19.7.2007 BY THE LEARNED COMMISSIONER OF INCOME TAX INDORE PURSUANT TO THE DIRECTION OF THE TRIBUNAL DATED 6.6.2007 WITH EFFE CT FROM THE CREATION OF THE ASSESSEE SAMITI THEREFORE THE WHOLE ISSUE NEEDS RE-EXAMINATION AT THE LEVEL OF TH E ASSESSING OFFICER. THE ASSESSING OFFICER IS SUPPOSE D TO EXAMINE WHETHER THE INCOME HAS BEEN APPLIED FOR CHARITABLE PURPOSES AS PRESCRIBED UNDER THE ACT. A S FAR AS THE BENEFIT U/S 11 OF THE ACT IS CONCERNED A CONJOINT READING OF SECTIONS 11 12 AND 12A MAKES I T CLEAR THAT REGISTRATION U/S 12A IS A CONDITION PRECEDENT FOR AVAILING BENEFIT U/S 11 AND 12 OF THE ACT. THE ACCUMULATED OR SET APART INCOME SHOULD NOT 11 BE IN EXCESS OF 15% OF THE TOTAL INCOME AND 85% OF THE INCOME SHOULD BE APPLIED FOR CHARITABLE PURPOSES. LIKEWISE IN THE APPEAL OF THE ASSESSEE THE ASSESSE E IS AGGRIEVED BY THE DECISION OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BY HOLDING THA T THE INCOME OF THE SAMITI IS NOT ENTITLED TO EXEMPTI ON U/S 11(A) TO (D) OF THE ACT. THE IMPUGNED ORDER IS DATED 4.2.2010 WHEREAS THE ASSESSEE WAS GRANTED REGISTRATION U/S 12A VIDE ORDER DATED 19.7.2007. IT SEEMS THAT THIS FACT WAS NOT BROUGHT TO THE NOTICE OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONSEQUENTLY THROUGH CX E IMPUGNED ORDER IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO RE- EXAMINE THE ISSUES INVOLVED IN THESE APPEALS IN THE LIGHT OF THE REGISTRATION GRANTED TO THE ASSESSEE U /S 12A/12AA OF THE ACT AND DECIDE THE ISSUES IN ACCORDANCE WITH LAW FOR WHICH DUE OPPORTUNITY OF BEING HEARD BE PROVIDED TO THE ASSESSEE. FINALLY THE APPEAL OF THE REVENUE AS WELL AS OF T HE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF HEARING ON 4 TH JULY 2011. 4. BEFORE COMING TO ANY CONCLUSION WE ARE REPRODUC ING HEREUNDER SECTION 11 OF THE ACT WHICH DEALS WITH IN COME FROM PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURP OSES :- 35 11. (1) SUBJECT TO THE PROVISIONS OF SECTIONS 60 TO 63 THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOME 36 [( A ) INCOME DERIVED FROM PROPERTY 34 HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT TO WHICH SUCH INC OME 34 IS APPLIED 34 TO SUCH PURPOSES IN INDIA; AND WHERE ANY SUCH INCOME 34 IS ACCUMULATED 34 OR SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA TO THE EXTENT TO WHICH THE INCOME SO ACCUMULATED OR SET APART 37 IS NOT IN EXCESS OF 38 [FIFTEEN] PER CENT OF THE INCOME FROM SUCH PROPERTY; ( B ) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST IN PART 37 ONLY FOR SUCH PURPOSES THE TRUST HAVING BEEN CREATED BEFORE THE COMMENCEMENT OF THIS 12 ACT TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA; AND WHERE ANY SUCH INCOME IS FINALLY SET AP ART FOR APPLICATION TO SUCH PURPOSES IN INDIA TO THE EXTENT TO WHICH THE INCOME SO SET APART IS NOT IN EXCESS OF 38 [FIFTEEN] PER CENT OF THE INCOME FROM SUCH PROPERTY ; ( C ) INCOME 39 [DERIVED] FROM PROPERTY HELD UNDER TRUST ( I ) CREATED ON OR AFTER THE 1ST DAY OF APRIL 1952 F OR A CHARITABLE PURPOSE WHICH TENDS TO PROMOTE INTERNATIONAL WELFARE IN WHI CH INDIA IS INTERESTED TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SU CH PURPOSES OUTSIDE INDIA AND ( II ) FOR CHARITABLE OR RELIGIOUS PURPOSES CREATED BEF ORE THE 1ST DAY OF APRIL 1952 TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES OUTSIDE INDIA: PROVIDED THAT THE BOARD BY GENERAL OR SPECIAL ORDER HAS D IRECTED IN EITHER CASE THAT IT SHALL NOT BE INCLUDED IN THE TOTAL INC OME OF THE PERSON IN RECEIPT OF SUCH INCOME; 40 [( D ) INCOME IN THE FORM OF VOLUNTARY CONTRIBUTIONS MAD E WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS O F THE TRUST OR INSTITUTION.] 41 [ EXPLANATION. FOR THE PURPOSES OF CLAUSES ( A ) AND ( B ) ( 1 ) IN COMPUTING THE 42 [FIFTEEN] PER CENT OF THE INCOME WHICH MAY BE ACCUMULATED OR SET APART ANY SUCH VOLUNTARY CONTRI BUTIONS AS ARE REFERRED TO IN SECTION 12 SHALL BE DEEMED TO BE PART OF THE INCOME; ( 2 ) IF IN THE PREVIOUS YEAR THE INCOME APPLIED TO C HARITABLE OR RELIGIOUS PURPOSES IN INDIA FALLS SHORT OF 43 [EIGHTY-FIVE] PER CENT OF THE INCOME DERIVED DURING THAT YEAR FROM PROPERTY HELD UNDER T RUST OR AS THE CASE MAY BE HELD UNDER TRUST IN PART BY ANY AMOUNT ( I ) FOR THE REASON THAT THE WHOLE OR ANY PART OF THE INCOME HAS NOT BEEN RECEIVED DURING THAT YEAR OR ( II ) FOR ANY OTHER REASON THEN ( A ) IN THE CASE REFERRED TO IN SUB-CLAUSE ( I ) SO MUCH OF THE INCOME APPLIED TO SUCH PURPOSES IN INDIA DURING THE PREVIOUS YEAR IN WHICH THE INCOME IS RECEIVED OR DURING THE PREVIOUS YEAR IMMEDIATELY FO LLOWING AS DOES NOT EXCEED THE SAID AMOUNT AND ( B ) IN THE CASE REFERRED TO IN SUB-CLAUSE ( II ) SO MUCH OF THE INCOME APPLIED TO SUCH PURPOSES IN INDIA DURING THE PREVIOUS YEAR IMMEDIATELY FOLLOWING THE PREVIOUS YEAR IN WHICH THE INCOME WAS DERIVED A S DOES NOT EXCEED THE SAID AMOUNT MAY AT THE OPTION OF THE PERSON IN RECEIPT OF TH E INCOME (SUCH OPTION TO BE EXERCISED IN WRITING BEFORE THE EXPIRY OF THE TIME ALLOWED UNDER SUB- SECTION (1) 44 [* * *] OF SECTION 139 45 [* * *] FOR FURNISHING THE RETURN OF INCOME) BE DEEMED TO BE INCOME APPLIED TO SUCH PURP OSES DURING THE PREVIOUS YEAR IN WHICH THE INCOME WAS DERIVED; AND THE INCOME SO DEEMED TO HAVE BEEN APPLIED SHALL NOT BE TAKEN INTO ACCOUN T IN CALCULATING THE AMOUNT OF INCOME APPLIED TO SUCH PURPOSES IN THE C ASE REFERRED TO IN SUB- CLAUSE ( I ) DURING THE PREVIOUS YEAR IN WHICH THE INCOME IS RECEIVED OR DURING THE PREVIOUS YEAR IMMEDIATELY FOLLOWING AS THE CASE MAY BE AND 13 IN THE CASE REFERRED TO IN SUB-CLAUSE ( II ) DURING THE PREVIOUS YEAR IMMEDIATELY FOLLOWING THE PREVIOUS YEAR IN WHICH TH E INCOME WAS DERIVED.] 46 [(1A) FOR THE PURPOSES OF SUB-SECTION (1) ( A ) WHERE A CAPITAL ASSET BEING PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES IS TRANSFERRED AND THE WHOLE OR ANY PART OF THE NET CONSIDERATION IS UTILISED FOR ACQUIRING ANOTHER CAP ITAL ASSET TO BE SO HELD THEN THE CAPITAL GAIN ARISING FROM THE TRANSFER SH ALL BE DEEMED TO HAVE BEEN APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT SPECIFIED HEREUNDER NAMELY: ( I ) WHERE THE WHOLE OF THE NET CONSIDERATION IS UTILI SED IN ACQUIRING THE NEW CAPITAL ASSET THE WHOLE OF SUCH CAPITAL GAIN ; ( II ) WHERE ONLY A PART OF THE NET CONSIDERATION IS UTI LISED FOR ACQUIRING THE NEW CAPITAL ASSET SO MUCH OF SUCH CAPITAL GAIN AS IS EQUAL TO THE AMOUNT IF ANY BY WHICH THE AMOUNT SO UTILISED EXCEEDS THE CO ST OF THE TRANSFERRED ASSET; ( B ) WHERE A CAPITAL ASSET BEING PROPERTY HELD UNDER TRUST IN PART ONLY FOR SUCH PURPOSES IS TRANSFERRED AND THE WHOLE OR ANY PART OF THE NET CONSIDERATION IS UTILISED FOR ACQUIRING ANOTHER CAPITAL ASSET TO BE SO HELD THEN THE APPROPRIATE FRACTION OF THE CAPITAL GAIN ARISING FR OM THE TRANSFER SHALL BE DEEMED TO HAVE BEEN APPLIED TO CHARITABLE OR RELIGI OUS PURPOSES TO THE EXTENT SPECIFIED HEREUNDER NAMELY: ( I ) WHERE THE WHOLE OF THE NET CONSIDERATION IS UTILI SED IN ACQUIRING THE NEW CAPITAL ASSET THE WHOLE OF THE APPROPRIATE FRACTIO N OF SUCH CAPITAL GAIN; ( II ) IN ANY OTHER CASE SO MUCH OF THE APPROPRIATE FRA CTION OF THE CAPITAL GAIN AS IS EQUAL TO THE AMOUNT IF ANY BY WHICH TH E APPROPRIATE FRACTION OF THE AMOUNT UTILISED FOR ACQUIRING THE NEW ASSET EXC EEDS THE APPROPRIATE FRACTION OF THE COST OF THE TRANSFERRED ASSET. EXPLANATION. IN THIS SUB-SECTION ( I ) APPROPRIATE FRACTION MEANS THE FRACTION WHICH R EPRESENTS THE EXTENT TO WHICH THE INCOME DERIVED FROM THE CAPITAL ASSET TRA NSFERRED WAS IMMEDIATELY BEFORE SUCH TRANSFER APPLICABLE TO CHAR ITABLE OR RELIGIOUS PURPOSES; ( II ) COST OF THE TRANSFERRED ASSET MEANS THE AGGREGA TE OF THE COST OF ACQUISITION (AS ASCERTAINED FOR THE PURPOSES OF SECTIONS 48 AND 49 ) OF THE CAPITAL ASSET WHICH IS THE SUBJECT OF THE TRANSFER AND THE COST O F ANY IMPROVEMENT THERETO WITHIN THE MEANING ASSIGNED TO THAT EXPRESS ION IN SUB-CLAUSE ( B ) OF CLAUSE ( 1 ) OF SECTION 55 ; ( III ) NET CONSIDERATION MEANS THE FULL VALUE OF THE C ONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AS REDUCED BY ANY EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH SUCH TRANSFER.] 47 [(1B) WHERE ANY INCOME IN RESPECT OF WHICH AN OPTIO N IS EXERCISED UNDER CLAUSE ( 2 ) OF THE EXPLANATION TO SUB-SECTION (1) IS NOT APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES IN INDIA DURING THE PERIOD RE FERRED TO IN SUB-CLAUSE ( A ) OR AS THE CASE MAY BE SUB-CLAUSE ( B ) OF THE SAID CLAUSE THEN SUCH 14 INCOME SHALL BE DEEMED TO BE THE INCOME OF THE PERS ON IN RECEIPT THEREOF ( A ) IN THE CASE REFERRED TO IN SUB-CLAUSE ( I ) OF THE SAID CLAUSE OF THE PREVIOUS YEAR IMMEDIATELY FOLLOWING THE PREVIOUS YEAR IN WHI CH THE INCOME WAS RECEIVED; OR ( B ) IN THE CASE REFERRED TO IN SUB-CLAUSE ( II ) OF THE SAID CLAUSE OF THE PREVIOUS YEAR IMMEDIATELY FOLLOWING THE PREVIOUS YEAR IN WHI CH THE INCOME WAS DERIVED.] 48 [(2) 49 [WHERE 50 [EIGHTY-FIVE] PER CENT OF THE INCOME REFERRED TO IN CLAUSE ( A ) OR CLAUSE ( B ) OF SUB-SECTION (1) READ WITH THE EXPLANATION TO THAT SUB- SECTION IS NOT APPLIED OR IS NOT DEEMED TO HAVE BE EN APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES IN INDIA DURING THE PREVIOUS YEAR BUT IS ACCUMULATED OR SET APART EITHER IN WHOLE OR IN PART FOR APPLI CATION TO SUCH PURPOSES IN INDIA SUCH INCOME SO ACCUMULATED OR SET APART SHAL L NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOME PROVIDED THE FOLLOWING CONDITIONS ARE COMPLIED WITH NAMELY:] ( A ) SUCH PERSON SPECIFIES BY NOTICE IN WRITING GIVEN TO THE 51 [ASSESSING] OFFICER IN THE PRESCRIBED 52 MANNER 53 THE PURPOSE FOR WHICH THE INCOME IS BEING ACCUMULATED OR SET APART AND THE PERIOD FOR W HICH THE INCOME IS TO BE ACCUMULATED OR SET APART WHICH SHALL IN NO CASE EXCEED TEN YEARS; 54 [( B ) THE MONEY SO ACCUMULATED 55 OR SET APART IS INVESTED OR DEPOSITED IN THE FORMS OR MODES SPECIFIED IN SUB-SECTION (5)]:] 56 [ PROVIDED THAT IN COMPUTING THE PERIOD OF TEN YEARS REFERRED TO IN CLAUSE ( A ) THE PERIOD DURING WHICH THE INCOME COULD NOT BE APPLIED FOR THE PURPOSE FOR WHICH IT IS SO ACCUMULATED OR SET APART DUE TO AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED:] 57 [ PROVIDED FURTHER THAT IN RESPECT OF ANY INCOME ACCUMULATED OR SET APART ON OR AFTER THE 1ST DAY OF APRIL 2001 THE P ROVISIONS OF THIS SUB- SECTION SHALL HAVE EFFECT AS IF FOR THE WORDS TEN YEARS AT BOTH THE PLACES WHERE THEY OCCUR THE WORDS FIVE YEARS HAD BEEN S UBSTITUTED.] 58 [ EXPLANATION. ANY AMOUNT CREDITED OR PAID OUT OF INCOME REFERRED TO IN CLAUSE ( A ) OR CLAUSE ( B ) OF SUB-SECTION (1) READ WITH THE EXPLANATION TO THAT SUB-SECTION WHICH IS NOT APPLIED BUT IS ACCU MULATED OR SET APART TO ANY TRUST OR INSTITUTION REGISTERED UNDER SECTION 12AA OR TO ANY FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDU CATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION REFERRED TO I N SUB-CLAUSE ( IV ) OR SUB- CLAUSE ( V ) OR SUB-CLAUSE ( VI ) OR SUB-CLAUSE ( VIA ) OF CLAUSE ( 23C ) OF SECTION 10 SHALL NOT BE TREATED AS APPLICATION OF INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES EITHER DURING THE PERIOD OF ACCUMULATION OR THEREAFTER.] 59 [(3) ANY INCOME REFERRED TO IN SUB-SECTION (2) WHIC H ( A ) IS APPLIED TO PURPOSES OTHER THAN CHARITABLE OR R ELIGIOUS PURPOSES AS AFORESAID OR CEASES TO BE ACCUMULATED OR SET APART FOR APPLICATION THERETO OR 60 [( B ) CEASES TO REMAIN INVESTED OR DEPOSITED IN ANY OF THE FORMS OR MODES SPECIFIED IN SUB-SECTION (5) OR] 15 ( C ) IS NOT UTILISED 61 FOR THE PURPOSE FOR WHICH IT IS SO ACCUMULATED OR SET APART DURING THE PERIOD REFERRED TO IN CLAUSE ( A ) OF THAT SUB-SECTION OR IN THE YEAR IMMEDIATELY FOLLOWING THE EXPIRY THEREOF 62 [( D ) IS CREDITED OR PAID TO ANY TRUST OR INSTITUTION REG ISTERED UNDER SECTION 12AA OR TO ANY FUND OR INSTITUTION OR TRUST OR ANY UNIVE RSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTIT UTION REFERRED TO IN SUB- CLAUSE ( IV ) OR SUB-CLAUSE ( V ) OR SUB-CLAUSE ( VI ) OR SUB-CLAUSE ( VIA ) OF CLAUSE ( 23C ) OF SECTION 10 ] SHALL BE DEEMED TO BE THE INCOME OF SUCH PERSON OF THE PREVIOUS YEAR IN WHICH IT IS SO APPLIED OR CEASES TO BE SO ACCUMULAT ED OR SET APART OR CEASES TO REMAIN SO INVESTED OR DEPOSITED OR 62 [CREDITED OR PAID OR] AS THE CASE MAY BE OF THE PREVIOUS YEAR IMMEDIATELY FOLLOWING THE EXPIRY OF THE PERIOD AFORESAID.] 63 [(3A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SEC TION (3) WHERE DUE TO CIRCUMSTANCES BEYOND THE CONTROL OF THE PERSON I N RECEIPT OF THE INCOME ANY INCOME INVESTED OR DEPOSITED IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE ( B ) OF SUB-SECTION (2) CANNOT BE APPLIED FOR THE PURP OSE FOR WHICH IT WAS ACCUMULATED OR SET APART THE 64 [ASSESSING] OFFICER MAY ON AN APPLICATION MADE TO HIM IN THIS BEHALF ALLOW SUCH PERSON TO APPLY SUCH INCOME FOR SUCH OTHER CHARITABLE OR RELIGIOUS PURPO SE IN INDIA AS IS SPECIFIED IN THE APPLICATION BY SUCH PERSON AND AS IS IN CONFORMITY WITH THE OBJECTS OF THE TRUST; AND THEREUPON THE PROVISIONS OF SUB-SECTION (3) SHALL APPLY AS IF THE PURPOSE SPECIFIED BY SUCH PERSON IN THE APPLICATION UNDER THIS SUB-SECTION WERE A PURPOSE SPECIFIED IN THE NO TICE GIVEN TO THE 64 [ASSESSING] OFFICER UNDER CLAUSE ( A ) OF SUB-SECTION (2):] 65 [ PROVIDED THAT THE ASSESSING OFFICER SHALL NOT ALLOW APPLICAT ION OF SUCH INCOME BY WAY OF PAYMENT OR CREDIT MADE FOR THE PUR POSES REFERRED TO IN CLAUSE ( D ) OF SUB-SECTION (3) OF SECTION 11 :] 66 [ PROVIDED FURTHER THAT IN CASE THE TRUST OR INSTITUTION WHICH HAS INVESTED OR DEPOSITED ITS INCOME IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE ( B ) OF SUB-SECTION (2) IS DISSOLVED THE ASSESSING O FFICER MAY ALLOW APPLICATION OF SUCH INCOME FOR THE PURPOSES REFERRE D TO IN CLAUSE ( D ) OF SUB-SECTION (3) IN THE YEAR IN WHICH SUCH TRUST OR INSTITUTION WAS DISSOLVED.] (4) FOR THE PURPOSES OF THIS SECTION PROPERTY HELD UNDER TRUST INCLUDES A BUSINESS UNDERTAKING SO HELD AND WHERE A CLAIM IS MADE THAT THE INCOME OF ANY SUCH UNDERTAKING SHALL NOT BE INCLUDED IN TH E TOTAL INCOME OF THE PERSONS IN RECEIPT THEREOF THE 67 [ASSESSING] OFFICER SHALL HAVE POWER TO DETERMINE THE INCOME OF SUCH UNDERTAKING IN ACCORDA NCE WITH THE PROVISIONS OF THIS ACT RELATING TO ASSESSMENT; AND WHERE ANY INCOME SO DETERMINED IS IN EXCESS OF THE INCOME AS SHOWN IN T HE ACCOUNTS OF THE UNDERTAKING SUCH EXCESS SHALL BE DEEMED TO BE APPL IED TO PURPOSES OTHER THAN CHARITABLE OR RELIGIOUS PURPOSES 68 [* * *]. 69 [(4A) SUB-SECTION (1) OR SUB-SECTION (2) OR SUB-SEC TION (3) OR SUB-SECTION (3A) SHALL NOT APPLY IN RELATION TO ANY INCOME OF A TRUST OR AN INSTITUTION BEING PROFITS AND GAINS OF BUSINESS UNLESS THE BUS INESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST OR AS TH E CASE MAY BE INSTITUTION 16 AND SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED BY SUC H TRUST OR INSTITUTION IN RESPECT OF SUCH BUSINESS.] 70 [ 71 (5) THE FORMS AND MODES OF INVESTING OR DEPOSITING THE MONEY REFERRED TO IN CLAUSE ( B ) OF SUB-SECTION (2) SHALL BE THE FOLLOWING NAMELY : ( I ) INVESTMENT IN SAVINGS CERTIFICATES AS DEFINED IN CLAUSE ( C ) OF SECTION 2 72 OF THE GOVERNMENT SAVINGS CERTIFICATES ACT 1959 (46 O F 1959) AND ANY OTHER SECURITIES OR CERTIFICATES ISSUED BY THE CENT RAL GOVERNMENT UNDER THE SMALL SAVINGS SCHEMES OF THAT GOVERNMENT; ( II ) DEPOSIT IN ANY ACCOUNT WITH THE POST OFFICE SAVIN GS BANK; ( III ) DEPOSIT IN ANY ACCOUNT WITH A SCHEDULED BANK OR A CO-OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING (INC LUDING A CO-OPERATIVE LAND MORTGAGE BANK OR A CO-OPERATIVE LAND DEVELOPME NT BANK). EXPLANATION. IN THIS CLAUSE SCHEDULED BANK MEANS THE STATE B ANK OF INDIA CONSTITUTED UNDER THE STATE BANK OF INDIA ACT 1955 (23 OF 1955) A SUBSIDIARY BANK AS DEFINED IN THE STATE BANK OF IND IA (SUBSIDIARY BANKS) ACT 1959 (38 OF 1959) A CORRESPONDING NEW BANK CO NSTITUTED UNDER SECTION 3 OF THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT 1970 (5 OF 1970) OR UNDER SECTI ON 3 OF THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS ) ACT 1980 (40 OF 1980) OR ANY OTHER BANK BEING A BANK INCLUDED IN T HE SECOND SCHEDULE TO THE RESERVE BANK OF INDIA ACT 1934 (2 OF 1934); ( IV ) INVESTMENT IN UNITS OF THE UNIT TRUST OF INDIA ES TABLISHED UNDER THE UNIT TRUST OF INDIA ACT 1963 (52 OF 1963); ( V ) INVESTMENT IN ANY SECURITY FOR MONEY CREATED AND ISSUED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT; ( VI ) INVESTMENT IN DEBENTURES ISSUED BY OR ON BEHALF OF ANY COMPANY OR CORPORATION BOTH THE PRINCIPAL WHEREOF AND THE INTE REST WHEREON ARE FULLY AND UNCONDITIONALLY GUARANTEED BY THE CENTRAL GOVER NMENT OR BY A STATE GOVERNMENT; ( VII ) INVESTMENT OR DEPOSIT IN ANY 73 [PUBLIC SECTOR COMPANY]: 74 [ PROVIDED THAT WHERE AN INVESTMENT OR DEPOSIT IN ANY PUBLIC S ECTOR COMPANY HAS BEEN MADE AND SUCH PUBLIC SECTOR COMPAN Y CEASES TO BE A PUBLIC SECTOR COMPANY ( A ) SUCH INVESTMENT MADE IN THE SHARES OF SUCH COMPAN Y SHALL BE DEEMED TO BE AN INVESTMENT MADE UNDER THIS CLAUSE FOR A PE RIOD OF THREE YEARS FROM THE DATE ON WHICH SUCH PUBLIC SECTOR COMPANY CEASES TO BE A PUBLIC SECTOR COMPANY; ( B ) SUCH OTHER INVESTMENT OR DEPOSIT SHALL BE DEEMED TO BE AN INVESTMENT OR DEPOSIT MADE UNDER THIS CLAUSE FOR THE PERIOD UP TO THE DATE ON WHICH SUCH INVESTMENT OR DEPOSIT BECOMES REPAYABLE BY SUC H COMPANY;] ( VIII ) DEPOSITS WITH OR INVESTMENT IN ANY BONDS ISSUED B Y A FINANCIAL CORPORATION WHICH IS ENGAGED IN PROVIDING LONG-TERM FINANCE FOR INDUSTRIAL DEVELOPMENT IN INDIA AND 75 [WHICH IS ELIGIBLE FOR DEDUCTION UNDER CLAUSE ( VIII ) OF SUB-SECTION (1) OF SECTION 36 ]; 17 ( IX ) DEPOSITS WITH OR INVESTMENT IN ANY BONDS ISSUED B Y A PUBLIC COMPANY FORMED AND REGISTERED IN INDIA WITH THE MAIN OBJECT OF CARRYING ON THE BUSINESS OF PROVIDING LONG-TERM FINANCE FOR CONSTRU CTION OR PURCHASE OF HOUSES IN INDIA FOR RESIDENTIAL PURPOSES AND 75 [WHICH IS ELIGIBLE FOR DEDUCTION UNDER CLAUSE ( VIII ) OF SUB-SECTION (1) OF SECTION 36 ]; 76 [( IXA ) DEPOSITS WITH OR INVESTMENT IN ANY BONDS ISSUED B Y A PUBLIC COMPANY FORMED AND REGISTERED IN INDIA WITH THE MAIN OBJECT OF CARRYING ON THE BUSINESS OF PROVIDING LONG-TERM FINANCE FOR URBAN I NFRASTRUCTURE IN INDIA. EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE ( A ) LONG-TERM FINANCE MEANS ANY LOAN OR ADVANCE WHE RE THE TERMS UNDER WHICH MONEYS ARE LOANED OR ADVANCED PROVIDE FOR REP AYMENT ALONG WITH INTEREST THEREOF DURING A PERIOD OF NOT LESS THAN F IVE YEARS; ( B ) PUBLIC COMPANY 77 SHALL HAVE THE MEANING ASSIGNED TO IT IN SECTION 3 OF THE COMPANIES ACT 1956 (1 OF 1956); ( C ) URBAN INFRASTRUCTURE MEANS A PROJECT FOR PROVID ING POTABLE WATER SUPPLY SANITATION AND SEWERAGE DRAINAGE SOLID WA STE MANAGEMENT ROADS BRIDGES AND FLYOVERS OR URBAN TRANSPORT;] ( X ) INVESTMENT IN IMMOVABLE PROPERTY. EXPLANATION. IMMOVABLE PROPERTY DOES NOT INCLUDE ANY MACHI-NE RY OR PLANT (OTHER THAN MACHINERY OR PLANT INSTALLED IN A BUILDING FOR THE CONVENIENT OCCUPATION OF THE BUILDING) EVEN THOUGH ATTACHED TO OR PERMANENTLY FASTENED TO ANYTHING ATTACHED TO THE E ARTH;] 78 [( XI ) DEPOSITS WITH THE INDUSTRIAL DEVELOPMENT BANK OF INDIA ESTABLISHED UNDER THE INDUSTRIAL DEVELOPMENT BANK OF INDIA ACT 1964 (18 OF 1964);] 79 [( XII ) ANY OTHER FORM OR MODE OF INVESTMENT OR DEPOSIT A S MAY BE PRESCRIBED. 80 ] AS PER SUB-SECTION (2) WHICH WAS SUBSTITUTED BY THE FINANCE ACT 1970 WITH EFFECT FROM 1.4.1971 THE ASS ESSEE IS SUPPOSED TO APPLY 85% OF THE INCOME REFERRED TO IN CLAUSE (A) OR CLAUSE (B) OF SUB-SECTION(1) READ WIT H EXPLANATION TO THAT SECTION TO CHARITABLE OR RELIGI OUS PURPOSES DURING THE PREVIOUS YEAR. THERE IS NO FIN DING IN THE IMPUGNED ORDERS WHETHER THE ASSESSEE HAS APP LIED THE INCOME FOR CHARITABLE PURPOSES OR NOT. THEREFOR E IN 18 VIEW OF THE ABOVE AND THE AFORESAID ORDER OF THE TR IBUNAL THE IMPUGNED ORDERS ARE SET ASIDE AND THE ASSESSING OFF ICERS ARE DIRECTED TO RE-EXAMINE THE ISSUES INVOLVED IN THESE APPEALS IN THE LIGHT OF THE REGISTRATION GRANTED TO THE ASSESSEES U/S 12A/12AA OF THE ACT. THE ASSESSING OFFICER IS FURTHER DIRECT ED TO EXAMINE THE EXTENT OF APPLICATION OF INCOME BY THE ASSESSEE AS REQUIRED U/S 11(2) OF THE ACT AND THEN TO DECIDE THE ISSUES IN ACCORDANCE WITH LAW FOR WHICH DUE OPPORTUNITY OF BEING HEARD B E PROVIDED TO THE ASSESSEE. FINALLY THE APPEALS OF THE REVENUE ARE ALLOWED FO R STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES OF BOTH THE SID ES AT THE CONCLUSION OF HEARING ON 23 RD SEPTEMBER 2011. SD SD (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 23 RD SEPTEMBER 2011 COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE DN/- 19