In the present case, the assessees being the builders, had the option to recognize their income either on percentage completion method or on project completion method. Therefore, it was not certain to hold that the assessees were liable at all to file returns under section 139(1). Whether the assessees had recognized their income for the impugned assessment years is also not clear. The returns were filed after search made under section 132 but before the issue of notice under section 153A.
Assessee eligible for S. 54EC benefit of Rs. 50 Lakh each made in two different financial years but within six months from transfer of capital asset. Only question that arises is whether proviso to Section 54EC(1) would limit the claim of exemption to Rs. 50 lakhs. Said proviso mentions that investment on which an assessee could claim exemption under Section 54EC(1) shall not exceed Rs. 50 lakhs during a financial year.
On going through the order of the Commissioner of Income Tax (Appeals), it can be seen that the Commissioner of Income Tax (Appeals) came to the conclusion that the assessee is entitled to deduction under sec.80IB of the Act since the assessee unit is located in an industrially back-ward State specified in VIII Schedule and is governed by the provisions of sub-sec. (iv) of Sec.80IB of the I.T. Act. Further, the Commissioner of Income Tax (Appeals), by analyzing the provisions of the Act held that the assessees,
The assessee had declared exempt income and on asking of the Assessing Officer, it had itself computed the disallowance amount of Rs. 4,83,414/- under Rule 8D of the Income Tax Rules and exactly the same very amount has been disallowed. In our opinion, once the assessee itself computed the disallowance, instead of challenging the very applicability of the provisions, we do not find any force in the cross objections preferred by the assessee. Consequently, we do not find any merit either in the appeal filed by the Revenue or Cross Objections at the behest of the assessee.
In the instant case, a perusal of the object clause of the company shows that it has been incorporated with the aim of providing education, facilitate social and economic empowerment, economic development programs, literacy programs, training programs for villagers and downtrodden people. How these objects are to be achieved should be left to the assessee. The fact that the assessee has been incorporated under section 25 of the Companies Act, 1956 show that it has been formed for promoting charity or any other useful object and intends to apply its profits, if any or other income in promoting its objects. In other words, it’s a non-profit earning organization.
It would be relevant to mention here that the trust was formed on 11-1-2012, the application for registration under section 12AA was submitted by the appellant on 27-3-2012, i.e., within a period of three months of its creation. The school activities started in June, 2012. The appellant submitted its books of account up to September, 2012 before the Commissioner. The Commissioner, after examining the statement of accounts, for such a short period formed its opinion that the activities of trust were not charitable in nature. The Commissioner did not raise any objection on the objects of the trust. It was premature for the Commissioner to judge the activities of the trust by just glancing through the statement of accounts of the trust of such a short period.
A perusal of the statutory provisions makes it clear that it does not provide a blanket deduction i.e. in order to succeed in a claim of deduction; the concerned assessee has to derive profits and gains from any business referred to in sub-section (4). Further, sub-section (4) prescribes applicability of clause i.e. the case in which the deduction provision would apply. It is in this sub-section that the legislature has enumerated the nature of the undertakings, their activities in contributing raising of infrastructure.
Intention of the Legislature is to regulate the manner of investment of the money left with an assessee-Trust after utilization for charitable purpose. Subscription to chit funds itself will be utilization of the funds of the assessee since right of the assessee is only to prize a chit or participate in a draw of lots. It is not an investment or deposit of a money which is available as surplus with assessee.
It is essential that the expenditure incurred on the construction of any structure on the leased premises should result in saving of the revenue expenditure at the subsequent stage. In the present case, from the pleadings of both the sides, it cannot be ascertained whether the assessee is getting enduring benefit of revenue nature from the additional structure or renovation/repairs undertaken by the assessee on the leased out premises. In our considered opinion, the case of the assessee very much falls within the ambit of Explanation 1 of section 32(1) of the Act. Therefore, both the appeals of the assessee are dismissed being devoid of merit.
In view of Explanation 2 to section 9(1)(vi), the consideration for transfer of all or any rights in respect of any copyright, including copyright for films and videotapes, used in connection with television or tapes, would fall within the definition of ‘royalty’. What is excluded are consideration for sale, distribution and exhibition of cinematographic films.
