ITO, Haveri v. The Secretary, Haveri

ITA 589/BANG/2009 | 2004-2005
Pronouncement Date: 12-04-2010 | Result: Allowed

Appeal Details

RSA Number 58921114 RSA 2009
Bench Bangalore
Appeal Number ITA 589/BANG/2009
Duration Of Justice 10 month(s) 3 day(s)
Appellant ITO, Haveri
Respondent The Secretary, Haveri
Appeal Type Income Tax Appeal
Pronouncement Date 12-04-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 12-04-2010
Date Of Final Hearing 25-03-2010
Next Hearing Date 25-03-2010
Assessment Year 2004-2005
Appeal Filed On 09-06-2009
Judgment Text
PAGE 1 OF 12 ITA NO.589/BANG/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI GEORGE GEORGE K. J.M. AND SHRI A MOHAN ALANKAMONY A.M. ITA NO.589/BANG/2009 (ASST. YEAR 2004-05) THE INCOME TAX OFFICER WARD-1 HAVERI. - APPELLANT VS THE SECRETARY AGRICULTURE PRODUCE MARKETING COMMITTEE APMC YARD HAVERI. - RESPONDENT APPELLANT BY : SMT. V S SREELEKHA RESPONDENT BY : SHRI S RAMASUBRAMANYAM O R D E R PER GEORGE GEORGE K : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE CIT(A)'S ORDER DATED 25.3.2009. THE ASSESSMENT YE AR CONCERNED IS 2004-05. 2. THE EFFECTIVE GROUNDS RAISED READS AS FOLLOWS:- I) THE LEARNED CIT(A) HUBLI ERRED IN LAW AND ON FACTS OF THE CASE IN ALLOWING ACCUMULATION @ 15% ON GROSS RECEIPTS AS AGAINST 15% OF INCOME AS LAID DOWN IN SECTION 11(1)(A). II) THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT FORM NO.10 AS REQUIRED UNDER RULE 17 HAS NOT BEEN FILED BY THE ASSESSEE TRUST WITHIN THE STIPULATED TIME FOR WHICH DISALLOWANCE OF DEDUCTION U/S 11(2) WAS MADE. PAGE 2 OF 12 ITA NO.589/BANG/2009 2 III) THE LEARNED CIT(A) OUGHT TO HAVE FOLLOWED THE CASE LAWS RELIED UPON BY THE AO WHICH WERE SQUARELY APPLICABLE TO THE CASE. IV) THE CASE LAW OF HON'BLE SUPREME COURT REPORTED IN 248 ITR 1 ON THE BASIS OF WHICH THE APPEAL HAS BEEN ALLOWED BY THE CIT(A) IS CLEARLY NOT APPLICABLE IN THIS CASE. 3. THE FACTS IN BRIEF ARE AS FOLLOWS:- THE ASSESSEE IS AN AGRICULTURAL MARKETING COMMITT EE ESTABLISHED UNDER KARNATAKA AGRICULTURAL PRODUCE MA RKETING (REGULATION) ACT. IT IS A LOCAL AUTHORITY IN STATU S REGISTERED U/S 12A OF THE I T ACT. IT FILED THE RETURN OF INCOME ON 2 2.9.2004 DECLARING NIL INCOME. RETURN WAS PROCESSED U/S 143(1). LATE R THE ASSESSMENT WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT U/S 143(3) WAS COMPLETED ON 27.10.2008. 4. IN THE ASSESSMENT SO COMPLETED THE ASSESSING O FFICER WAS OF THE VIEW THAT ASSESSEE'S CLAIM OF EXEMPTION U/S 11(1)(A) OF RS.14 22 876/- ON GROSS RECEIPTS IS WRONG FOR THE R EASON ACCUMULATION ENVISAGED UNDER THE SECTION IS WITH RE FERENCE TO INCOME COMPUTED IN COMMERCIAL SENSE AND NOT WITH RE FERENCE TO GROSS RECEIPTS. THE ASSESSING OFFICER THEREFORE CONCLUDED THAT THE CLAIM OF ASSESSEE TO ALLOW DEDUCTION AT 15% ON RS.9 4 85 843/- IS NOT TENABLE AND ALLOWED DEDUCTION AT 15% ON RS.88 2 9 648/- WHICH WORKED OUT TO RS.13 24 447/- AS AGAINST THE ASSESSE E'S CLAIM OF RS.14 22 876/-. 5. THE ASSESSING OFFICER ALSO NOTICED THAT ASSESSE E HAVE ACCUMULATED/SET APART RS.8 37 974/- OUT OF INCOME F ROM PROPERTY PAGE 3 OF 12 ITA NO.589/BANG/2009 3 HELD UNDER TRUST FOR CHARITABLE PURPOSES U/S 11(2) OF THE ACT WITHOUT FURNISHING FORM NO.10 AS REQUIRED UNDER RUL E 17 OF I T RULES. THE ASSESSING OFFICER CONCLUDED THAT FORM N O.10 IS TO BE FILED ON OR BEFORE FILING OF THE RETURN AS CONTEMPL ATED U/S 139(1) OF THE ACT AND IN ABSENCE OF INTIMATION U/S FORM NO.10 NO DEDUCTION IS ALLOWED IN RESPECT OF INCOME STATED TO BE SET AP ART/ACCUMULATED FOR CHARITABLE PURPOSE. 6. BEFORE THE FIRST APPELLATE AUTHORITY IT WAS CO NTENDED THAT THE ASSESSING OFFICER ERRED IN INTERPRETING TH E MEANING 'INCOME' U/S 11(1) OF THE I T ACT AS TO 'GROSS' OR 'NET OF THE RECEIPTS'. IT WAS SUBMITTED THAT THE CLAIM OF THE ASSESSEE TO ALLOW DEDUCTION OF 15% ON RS.95 85 843/- IS WRONGLY REJECTED. THE DE DUCTION OF 15% ON RS.88 29 648/- ALLOWED BY ASSESSING OFFICER IS W ITHOUT PROVIDING THE BASIS FOR SUCH COMPUTATION. THEREFOR E IT WAS PRAYED THAT THE CLAIM OF RS.14 22 876/- IS TO BE ALLOWED I N FULL INSTEAD OF RS.13 24 447/- ALLOWED BY THE ASSESSING OFFICER. I T WAS FURTHER SUBMITTED FORM NO.10 WAS NOT SUBMITTED DUE TO IGNO RANCE OF THE MANAGEMENT AND THEREFORE ASSESSING OFFICER HAS ERR ED IN REJECTING THE DECLARATION REQUIRED TO BE MADE U/S 11(2) OF TH E ACT. 7. THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE O N BOTH THE ISSUES MENTIONED ABOVE. THE RELEVANT PART OF T HE CIT(A)'S ORDER READS AS FOLLOWS:- '5. I HAVE GONE THROUGH ARGUMENT MADE BY AR AND SEEN THAT IN CASE OF CARRYING FORWARD 15% OF TRUST INCOME FOR YEAR UNDER CONSIDERATION. RULING OF SUPREME COURT PAGE 4 OF 12 ITA NO.589/BANG/2009 4 REFERRED ABOVE HAS FINALLY DECIDED ISSUE ALLOWING TRUST TO CARRY FORWARD REMAINING BALANCE OF 15% AFTER SPENDING INCOME UP TO 85% FOR OBJECTS OF TRUST AND F.NO.10 IS FOR CARRYING FORWARD IN RESPECT OF CAPITAL INVESTMENT. THEREFORE AO IS DIRECTED TO ALLOW ASSESSEE TO CARRY FORWARD 15% OF CURRENT YEAR'S INCOME TO NEXT YEAR IN RESPECT OF GROSS INCOME OF RS.97 30 950/-. 5.1 EXPENSES HELD BY AO OF RS.9 01 302/- ARE INCIDENTAL FOR OBJECTS OF TRUST WITHOUT WHICH MAIN OBJECTS CANNOT BE CARRIED OUT AS DISCUSSED ABOVE THEREFORE AO IS DIRECTED TO ALLOW TO THE SAME. THERE IS NO CONCEPT OF EXEMPTION OF CAPITAL ASSETS BUT IT IS EXEMPTION OF INCOME OF PROPERTY BY TRUST'. 8. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 9. THE LEARNED DR STRONGLY RELIED ON THE FINDING/CONCLUSION OF THE ASSESSING OFFICER. SHE A LSO RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF GEM AND JEW ELLERY EXPORT PROMOTION COUNCIL V ITO 68 ITD 95 (BOM.) FOR THE PR OPOSITION THAT INCOME AVAILABLE FOR ACCUMULATION U/S 11(1)(A) IS THE INCOME AS COMPUTED IN COMMERCIAL PRINCIPLES AND NOT ON THE GR OSS RECEIPTS. 10. THE LEARNED AR SUPPORTED THE FINDING OF THE CI T(A) IN REGARD TO THE CLAIM OF EXEMPTION U/S 11(1)(A) OF TH E ACT. AS REGARDS TO ACCUMULATION/SET APART OF RS.8 37 974/- U/S 11(2) WITHOUT FURNISHING FORM NO.10 ASSESSEE SUBMITTED THAT FORM NO.10 WAS FURNISHED ON 14.11.2008. IT WAS SUBMITTED THAT THE ASSESSING OFFICER WAS NOT CORRECT IN COMPLETING ASSESSMENT WI THOUT PROVIDING AN OPPORTUNITY TO ASSESSEE TO FURNISH FORM NO.10. IT WAS POINTED PAGE 5 OF 12 ITA NO.589/BANG/2009 5 OUT THAT PRIOR TO THE ASSESSMENT BEING COMPLETED T HE ASSESSEE INTIMATED THE ASSESSING OFFICER THAT FORM NO.10 WAS NOT FILED BY OVERSIGHT AND REQUESTED PERMISSION TO FILE THE SAM E. COPY OF THE ASSESSEE'S LETTER ADDRESSED TO ASSESSING OFFICER WA S PLACED ON RECORD AND THE RELEVANT PORTION OF THE LETTER IS RE PRODUCED BELOW:- 'SUBMISSION OF FORM NO.10: WE ALSO REQUEST YOUR GOODSELF TO KINDLY PERMIT US TO SUBMIT FORM NO.10 AS THE SAME WAS NOT FILED THROUGH OVERSIGHT. THE EXEMPTION U/S 11(2) MAY KINDLY BE GRANTED AS CLAIMED BY THE ASSESSEE'. 10.1 THE LEARNED AR ALSO FURNISHED A COPY OF THE BOARD'S INSTRUCTION NO.81/27/65-IT(B) DT.18.5.1995 NAMELY ADMINISTRATIVE INSTRUCTIONS FOR GUIDANCE OF INCOME TAX OFFICERS ON MATTERS PERTAINING TO ASSESSMENT AND SUBMITTED THAT THE ASSESSING OFFICER OUGHT NOT TO HAVE TAKEN ADVANTAGE OF ASSESS EE'S IGNORANCE AND OUGHT TO HAVE PROVIDED AN OPPORTUNITY TO ASSESS EE TO FURNISH FORM NO.10 PRIOR TO COMPLETION OF ASSESSMENT. HE A LSO RELIED ON THE DECISION OF THE KARNATAKA HIGH COURT IN THE CAS E OF CIT V ACE MULTITAXES SYSTEMS PVT. LTD. 317 ITR 207 THE DECIS ION OF THE GUJARAT HIGH COURT IN THE CASE OF CIT V MAYUR FOUND ATION 274 ITR 562 AND THE ORDER OF THE BANGALORE TRIBUNAL IN THE CASE OF M/S FERRO FOUNDRIES PVT. LTD. IN ITA NO.328/BANG/2009 D ATED 18.7.2009 FOR BUTTRESSING HIS PROPOSITION THAT FILI NG OF FORM NO.10 IS ONLY DIRECTORY AND THE SAME CAN BE FURNISHED EVE N BEFORE THE APPELLATE AUTHORITY. PAGE 6 OF 12 ITA NO.589/BANG/2009 6 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS ON RECORD. THE ASSESSING OFFICER'S COMPU TATION OF INCOME AVAILABLE FOR ACCUMULATION U/S 11(1)(A) IS C ORRECT AND IS IN ACCORDANCE WITH LAW. AS RIGHTLY POINTED OUT FOR A CCUMULATION OF INCOME U/S 11(1)(A) IT IS TO BE COMPUTED ON COMMER CIAL PRINCIPLES AND NOT ON GROSS RECEIPTS. THE LEARNED DR HAS RIGH TLY RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF GEM & JEWELLER Y EXPORT PROMOTION COUNCIL SUPRA WHICH IN TURN FOLLOWED TH E DECISION OF THE HON'BLE HIGH COURT OF MADRAS IN THE CASE OF CIT V RAO BAHADUR CALAVALA CUNNAN CHETTY CHARITIES 135 ITR 48 5. THE WORDS USED IN SECTION 11(1)(A) IS 'INCOME' AND NOT 'GROSS RECEIPTS'. THE DECISION OF THE HON'BLE SUPREME COURT RELIED ON BY THE ASSESSEE IN THE CASE OF CIT V PROGRAMME FOR COMMUNI TY ORGANISATION 248 ITR 1 IS MISPLACED. THE HON'BLE S UPREME COURT HAS ONLY HELD THAT EXEMPTION U/S 11(1)(A) IS TO BE COMPUTED NOT WITH REFERENCE TO THE INCOME LEFT AFTER APPLICATION BUT ON INCOME BEFORE APPLICATION AND NOWHERE IT WAS HELD THAT EXE MPTION IS TO BE COMPUTED WITH REFERENCE TO GROSS RECEIPT. THEREFOR E WE HOLD THAT THE ASSESSING OFFICER IS JUSTIFIED IN ALLOWING 15% ON RS.88 29 648/- WHICH WORKS OUT TO RS.13 24 447/- AS AGAINST ASSESSEE'S CLAIM OF RS.14 22 876/- (15% ON 94 85 84 3/). 12. IN THE RESULT GROUND NOS.1 3 AND 4 REFERRED ABOVE ARE ALLOWED AND WE REVERSE THE ORDER OF THE CIT(A). 13. AS REGARDS THE ISSUE OF ACCUMULATION OR SET AP ART RS.8 37 974/- U/S 11(2) THE BASIS ON WHICH THE CIT (A) ALLOWED THE PAGE 7 OF 12 ITA NO.589/BANG/2009 7 APPEAL OF THE ASSESSEE IS NOT CLEAR. THE ASSESSEE CLAIMED IT HAS FILED FORM NO.10 BELATEDLY AFTER COMPLETION OF THE ASSESSMENT ORDER. THE BOARD VIDE CIRCULAR NO.273 DATED 3.6.19 80 HAD AUTHORIZED THE CIT TO CONDONE THE DELAY IN FILING F ORM NO.10 WHEN CERTAIN CONDITIONS ARE SATISFIED. THE CIRCULAR REA DS AS FOLLOWS:- 'CHARITABLE AND RELIGIOUS TRUSTS- APPLICATIONS FOR ACCUMULATION OF INCOME UNDER SECTION 11(2) OF THE I T ACT 1961 CONDONATION OF DELAY REGARDING CHARITABLE AND RELIGIOUS TRUSTS ARE ENTITLED TO EXEMPTION FROM INCOME-TAX UNDER SECTION 11 TO 13. THESE TRUSTS ARE ALLOWED TO ACCUMULATE OR SET APART INCOME DERIVED BY THEM FROM PROPERTY HELD UNDER TRUST PROVIDED THEY FULFILL THE CONDITIONS SPELT OUT IN SECTION 11(2) READ WITH RULE 17 OF THE IT RULES 1962 AND FORM NO.10. VERY OFTEN TRUSTS ARE NOT ABLE TO FILE THE APPLICATION IN FORM NO.10 WITHIN THE TIME ALLOWED U/S 139(1)/139(2) AS EXTENDED BY THE ITO. THE CENTRAL BOARD OF DIRECT TAXES IS THEN APPROACHED BY THESE TRUSTS FOR CONDONING THE DELAY FOR FILING APPLICATIONS. THE BOARD BY VIRTUE OF THE POWERS VESTED IN IT U/S 119(2)(B) HAS BEEN CONDONING THE DELAY IN INDIVIDUAL CASES AFTER SATISFYING ITSELF THAT CERTAIN CONDITIONS ARE SATISFIED. WITH A VIEW TO EXPEDITING THE DISPOSAL OF APPLICATIONS FILED BY TRUSTS FOR CONDONING THE DELAY THE BOARD HAS PASSED A GENERAL ORDER U/S 119(2)(B) BY WHICH THE CS.IT HAVE BEEN AUTHORIZED TO ADMIT BELATED APPLICATIONS U/S 11(2) READ WITH RULE 17 OF THE I T RULES 1962. A COPY OF THIS ORDER IS ENCLOSED. ALL PAGE 8 OF 12 ITA NO.589/BANG/2009 8 APPLICATIONS FOR CONDONING THE DELAY U/S 11(2) WILL HENCEFORTH BE DISPOSED OF BY CS.IT IN TERMS OF THE ENCLOSED ORDER'. THE FOLLOWING IS THE TEXT OF THE ORDER U/S 119(2) (B) DATED 3.6.1980 AS REFERRED TO IN CIRCULAR NO.273:- IN EXERCISE OF THE POWERS CONFERRED U/S 119(2)(B) OF THE INCOME TAX ACT 1961 (43 OF 1961) THE CENTRAL BOARD OF DIRECT TAXES HEREBY AUTHORIZES THE COMMISSIONERS OF INCOME TAX TO ADMIT APPLICATIONS U/S 11(2) READ WITH RULE 17 OF THE I T RULES 1962 FROM PERSONS DERIVING INCOME FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES FOR ACCUMULATION OF SUCH INCOME TO BE APPLIED FOR SUCH PURPOSES IN INDIA WHEN THE AFOREMENTIONED APPLICATIONS ARE FILED BEYOND THE TIME STIPULATED. COMMISSIONERS OF INCOME TAX WILL WHILE ENTERTAINING SUCH APPLICATIONS SATISFY THEMSELVES THAT THE FOLLOWING CONDITIONS ARE FULFILLED:- A) THAT THE GENUINENESS OF THE TRUST IS NOT IN DOUBT; B) THAT THE FAILURE TO GIVE NOTICE TO THE INCOME TAX OFFICER U/S 11(2) OF THE ACT AND INVESTMENT OF THE MONEY IN THE PRESCRIBED SECURITIES WAS DUE ONLY TO OVERSIGHT; C) THAT THE TRUSTEES OR THE SETTLER HAVE NOT BEEN BENEFITED BY SUCH FAILURE DIRECTLY OR INDIRECTLY; D) THAT THE TRUST AGREES TO DEPOSIT ITS FUNDS IN THE PRESCRIBED SECURITIES PRIOR TO THE ISSUE OF THE GOVERNMENT SANCTION EXTENDING THE TIME U/S 11(2); PAGE 9 OF 12 ITA NO.589/BANG/2009 9 E) THAT THE ACCUMULATION OR SETTING APART OF INCOME WAS NECESSARY FOR CARRYING OUT THE OBJECTS OF THE TRUST'. 13.1 THE LEARNED AR HAD STRONGLY RELIED ON THE DEC ISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V MAYUR FOUNDATION 274 ITR 562 SUPRA. THE FACTS CONSIDERED BY THE GUJARAT HIGH COURT ARE AS FOLLOWS:- THE ASSESSEE WAS A CHARITABLE TRUST REGISTERED UNDER THE PROVISIONS OF THE BOMBAY PUBLIC TRUSTS ACT 195 0. DURING ACCOUNTING YEAR RELEVANT TO THE ASST. YEAR 1980-81 THE ASSESSEE RECEIVED VOLUNTARY CONTRIBUTIONS AMOUNTING TO RS.2 04 468/-. THE DONATIONS WERE TREATED AS 'INCOME' WITHIN THE MEANI NG OF SECTION 2(24) OF THE INCOME-TAX ACT 1961 BY THE ASSESSING OFFICER. THE ASSESSEE CONTENDED THAT THE DONATIONS OF RS.1 74 43 2/- AND RS.9 036 INCLUDED IN THE TOTAL AMOUNT OF DONATIONS WERE TOWARDS THE CORPUS OF THE TRUST AND IN SUPPORT OF THE CONTE NTION SUBMITTED CONFIRMATION LETTERS FROM TWO DONORS. THE ASSESSIN G OFFICER DID NOT ACCEPT THIS SUBMISSION AND AFTER GRANTING PERMI SSIBLE ACCUMULATION OF 25% HELD THE BALANCE AMOUNT OF RS.1 53 351/- LIABLE TO TAX IN THE HANDS OF THE ASSESSEE. THE CO MMISSIONER (APPEALS) CONFIRMED THE ORDER. THE ASSESSEE PREFER RED AN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL AND DURIN G THE PENDENCY OF THE APPEAL MOVED AN APPLICATION BEFORE THE COMMISSIONER ON OCTOBER 5 1989 ACCOMPANIED BY FO RM NO.10 AND A COPY OF THE RESOLUTION PASSED BY THE TRUSTEES ON AUGUST 22 1988 TO THE EFFECT THAT THE DONATION MAY BE TREATE D AS GENERAL PAGE 10 OF 12 ITA NO.589/BANG/2009 10 DONATIONS AND THE ASSESSEE BE PERMITTED TO ACCUMULA TE THE TRUST INCOME U/S 11(2) BY CONDONING THE DELAY IN FILING F ORM NO.10. THE RESOLUTION PASSED BY THE TRUSTEES ON AUGUST 22 1988 STATED THAT A TOTAL SUM OF RS.5 09 000 HAD BEEN SET APART BY THE ASSESSEE- TRUST FOR PURCHASING LAND AND CONSTRUCTING AN ORPHA NAGE ON THE SAID LAND. A SUM OF RS.1 54 000 WAS REQUIRED TO BE UTIL IZED FOR THE PURPOSE ON OR BEFORE MARCH 31 1990. THE COMMISSIO NER REJECTED THE ASSESSEE'S APPLICATION. THE ASSESSEE CHALLENGE D THE ORDER OF THE COMMISSIONER BY A WRIT PETITION. THE HIGH COURT DI RECTED THE COMMISSIONER TO RECONSIDER THE MATTER. THE COMMISS IONER AGAIN REJECTED THE ASSESSEE'S PETITION. THE ASSESSEE THE REUPON FILED AN ADDITIONAL GROUND OF APPEAL BEFORE THE TRIBUNAL TO THE EFFECT THAT THE TRUST WAS NOT TAXABLE IN VIEW OF THE RESOLUTION OF ACCUMULATION AND THE NOTICE THEREOF TO THE INCOME TAX OFFICER U/ S 11(2). THE TRIBUNAL ADMITTED THE ADDITIONAL GROUND. ON THE FA CTS THE TRIBUNAL FOUND THAT THE GENUINENESS OF THE TRUST WAS NOT IN DOUBT; THAT THE TRUST HAD SET APART THE AMOUNT OF DONATION FOR THE PURPOSE OF PURCHASING LAND AND CONSTRUCTING AN ORPHANAGE THERE UPON; THAT THE FUNDS RECEIVED BY WAY OF DONATIONS HAD BEEN KEPT AP ART IN FIXED DEPOSITS OF NATIONALIZED BANKS; AND THAT THE TRUSTE ES OR THE SETTLERS HAD NOT BENEFITED BY THE FAILURE OR DELAY ON THE PA RT OF THE TRUST TO GIVE NOTICE OF SUCH ACCUMULATION. ACCORDINGLY THE TRIBUNAL HELD THAT THE ASSESSEE-TRUST HAD COMPLIED WITH ALL THE R EQUIREMENTS STIPULATED BY THE PROVISIONS OF SECTION 11(2). 13.2 ON REFERENCE THE HON'BLE HIGH COURT HELD ( I) THAT THE TRIBUNAL WAS WELL WITHIN ITS JURISDICTION TO ENTERT AIN THE NEW PAGE 11 OF 12 ITA NO.589/BANG/2009 11 GROUND BY WHICH THE ASSESSEE CLAIMED THE BENEFIT U/ S 11(2) OF THE ACT AND ADJUDICATE THE TAX LIABILITY OF THE ASSESSE E. (II) THAT THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE ASSESSEE W AS ENTITLED TO THE BENEFITS ALLOWABLE U/S 11(2). 13.3 FROM THE ABOVE IT IS CLEAR; THE ASSESSEE IN THE CASE OF THE HON'BLE GUJARAT HIGH COURT HAD APPLIED FOR COND ONATION OF DELAY IN FILING FORM NO.10. THE ADMINISTRATIVE CIT REJECTED THE APPLICATION OF CONDONATION AND ASSESSEE MOVED TO TH E HIGH COURT AND THE HON'BLE HIGH COURT DIRECTED THE CIT TO RECO NSIDER AFRESH THE CONDONATION APPLICATION. THEREAFTER ON REJECT ION OF THE CONDONATION APPLICATION BY THE CIT THE ASSESSEE FI LED AN ADDITIONAL GROUND BEFORE THE TRIBUNAL AND THE TRIBUNAL IN THAT CASE FOUND THE FUNDS ACCUMULATED ARE FOR CHARITABLE PURPOSE AND TH E AMOUNTS ARE SET APART/ACCUMULATED IN FD IN NATIONALIZED BANK. 13.4 IT IS FOR THE ADMINISTRATIVE CIT TO CONSIDER WHETHER THE CONDITIONS MENTIONED IN CIRCULAR NO.273 DATED 3 /6/1980 IS FULFILLED OR NOT. WE ARE NOT EMPOWERED TO CONSIDER THE CONDONATION PETITION. MOREOVER WHETHER ACCUMULATED INCOME (RS .8 37 974/-) IS INVESTED AS SPECIFIED U/S 11(5) ARE MATTERS TO BE E XAMINED. THEREFORE THE ASSESSEE SHALL BE AT LIBERTY TO MOVE THE CONDONATION APPLICATION BEFORE THE CIT FOR CONDONING THE DELAY IN FILING FORM NO.10. WITH THESE OBSERVATIONS WE REVERSE THE ORD ER OF CIT(A). HOWEVER WE CLARIFY IF THE DELAY IN FILING FORM NO .10 IS CONDONED BY THE ADMINISTRATIVE CIT THIS ORDER OF OURS SHOUL D NOT BE AN IMPEDIMENT FOR CLAIMING EXCLUSION FROM THE TOTAL IN COME AS PAGE 12 OF 12 ITA NO.589/BANG/2009 12 CONTEMPLATED U/S 11(2) OF THE ACT. THE OTHER DECIS IONS RELIED ON BY THE AUTHORIZED REPRESENTATIVE ARE NOT APPLICABLE TO THE FACTS OF THE CASE SINCE IN THOSE CASES THE ISSUE WAS CONSIDER ATION OF THE CLAIM OF DEDUCTION U/S 80IA AND WHETHER FILING OF AUDIT R EPORT BEFORE THE STATUTORY TIME PRESCRIBED FOR FILING OF THE RETURN U/S 139(1) OF THE ACT IS DIRECTORY OR MANDATORY. THE HON'BLE HIGH CO URTS HAVE HELD FILING OF AUDIT REPORT WITHIN THE DUE DATE MENTIONE D IS ONLY DIRECTORY AND SAME CAN BE FILED EVEN BEFORE THE APP ELLATE AUTHORITY. IN THE CASE OF CIT V ACE MULTITAXES SYSTEMS PVT. LT D. 317 ITR 207 WHICH WAS CONSIDERED BY THE HON'BLE JURISDICTIONAL HIGH COURT THERE WAS A CATEGORICAL FINDING BY THE TRIBUNAL THA T AUDIT REPORT WAS FILED BEFORE THE ASSESSING OFFICER PRIOR TO THE COM PLETION OF ASSESSMENT. HOWEVER SINCE THESE DECISIONS DO NOT PERTAIN FACTUALLY TO THE INSTANT CASE WE FEEL THEY DO NOT HAVE ANY A PPLICATION. FOR THE ABOVE SAID REASONS WE REVERSE THE ORDER OF CIT (A) AND ALLOW GROUND NO.2 RAISED IN THIS APPEAL. 14. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS ALLOWED. THE ORDER IS PRONOUNCED ON 12TH A PRIL 2010. SD/- SD/- (A MOHAN ALANKAMONY) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO : 1) THE ASSESSEE (2) THE REVENUE (3) TH E CIT(A) CONCERNED. (4) THE CIT CONCERNED. (5) THE DR (6) GUARD FILE. (7) GUARD FILE NEW DELHI. MSP/1.4 BY ORDER ASST. REGISTRAR ITAT BANGALORE.