Case Law Details

Case Name : The Institute of Chartered Accountants of India Vs ACIT (ITAT Delhi)
Appeal Number : I.T.A. No. 2156/Del/2018
Date of Judgement/Order : 13/04/2018
Related Assessment Year : 2014-15

ICAI Vs ACIT (ITAT Delhi)

The grievance of the assessee in this appeal relates to the confirmation of disallowance of Rs. 10,21,26,000/- made by the AO under Section 11(2) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) on account of amount accumulated and the disallowance of Rs. 98,57,10,000/-on account of amount accumulated set apart for application to charitable or other purposes to the extent the said income did not exceed 15% of the income under Section 11(1)(a) of the Act.

Facts of the case, in brief, are that the assessee is a trust and sole regulatory of the profession of Chartered Accountancy set up under an Act of Parliament in 1949. The assessee has e-filed the return of income on 29.9.2014 declaring nil income after claiming exemption under section 11 of the Act. The assessee is registered under Section 12A of the Act and also notified under section 10 (23 C)(114) of the Act. The return of income was processed under section 143(1) of the Act on 19.3.2016 by the CPC Bangalore, however, the amount accumulated or set apart for application to charitable purposes to the extent it does not exceed 15 per cent of the income, claimed at Rs. 98,57,1000/- under section 11 (1)(a) (11)(b) of the Act and accumulation of Rs. 10,21,26,000/- under section 11(2) of the Act were not allowed and the total claim was restricted to Rs. 548,35,67,000/- instead of Rs. 657,14,03,000/-. Accordingly, the income was computed at Rs. 108,78,36,000/-.

Being aggrieved, the assessee carried the matter to the learned CIT(A) and submitted that the assessee’s professional while filing the ITR failed to punch the amount of Rs. 98,57,10,000/- under point no. 9 (v) of the ITR 7 (represented by equivalent amount on account of the amount of income of the previous year accumulated / set apart for application to charitable / other purposes to the extent the said income did not exceed 15% of the income for the assessee for the captioned assessment year) but the relevant forms, reports and resolutions etc., such being Form No. 10, 10 B and 10 BB were already furnished electronically wherein the said amount of Rs. 98,57,10,000/-was duly reflected and claimed as such. It was further submitted that even in respect of the amount of Rs. 10,21,26,000/- which was sought to be accumulated under Section 11(2) of the Act and whose details were also filed in the ITR was considered as an income and no benefit with respect to the same was provided in the intimation under section 143(1) of the Act. It was also stated that the said accumulation was appearing in Form No. 10 B and also in Form No. 10 BB both of which were electronically filed on 26.9.2014.

We have considered the submissions of both the parties and perused the material available on the record. In the present case, it appears that due to oversight the professionals of the assessee while filing the ITR could not punch the amount under point no. 1(v) of the ITR. However, all the details pertaining to the said claim of Rs. 98,57,10,000/- u/s 11(1)(a) and Rs. 10,21,26,000/- u/s 11(2) were duly mentioned in Form No. 10 B and Form No. 10 BB which is apparent from page no. 129 and 132 of the assessee’s paper book.

In the present case, it is noticed the learned CIT(A) had not considered the contention raised by the assessee in right perspective and dismissed the appeal. We, therefore, considering the totality of the facts deem it appropriate to remand this issue back to the file of the AO for adjudication in accordance with law, after proper verification from the material available on the record.

FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-

The appeal by the assessee is directed against the order dated 09.03.2017 of the learned CIT(A)-40, Delhi. Following grounds have been raised in this appeal:-

i. On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad, both in the eye of law and on the facts.

ii. (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming disallowance of Rs. 10,21,26,000/-made by the AO (CPC) under section 11(2) of the Act on account of amount accumulated or set apart for specified investments/deposits.

(ii) That the said disallowance has been confirmed despite the same has been accumulated in the manner as provided in section 11(5) of the Act read with Rule 17 of the Income Tax Rules.

(iii) That the said disallowed has been confirmed despite the amount has been shown in the Form ITR-7.

(iii) (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming disallowance of Rs. 98,57,10,000/- made by the AO (CPC) on account of amount accumulated or set apart for application/ set apart for application to charitable /other purpose to the extent the said income does not exceed 15% of the income of the assessee in accordance with the provision of Section 11(1 )(a) of the Act.

(ii) That the said amount has been disallowed despite the same has been claimed by complying with all the statutory conditions specified there in.

v. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the above disallowance merely on account of error in punching of certain information in the Form ITR-7.

vi. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the disallowance ignoring the Statutory Auditor’s Reports and other evidences filed by the assessee to justify its claim.

vi. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the above disallowances despite the fact that no such disallowances have been made in the preceding assessment years and the assessee is consistently claiming the above deduction in all the years.

2. The grievance of the assessee in this appeal relates to the confirmation of disallowance of Rs. 10,21,26,000/- made by the AO under Section 11(2) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) on account of amount accumulated and the disallowance of Rs. 98,57,10,000/-on account of amount accumulated set apart for application to charitable or other purposes to the extent the said income did not exceed 15% of the income under Section 11(1)(a) of the Act.

3. Facts of the case, in brief, are that the assessee is a trust and sole regulatory of the profession of Chartered Accountancy set up under an Act of Parliament in 1949. The assessee has e-filed the return of income on 29.9.2014 declaring nil income after claiming exemption under section 11 of the Act. The assessee is registered under Section 12A of the Act and also notified under section 10 (23 C)(114) of the Act. The return of income was processed under section 143(1) of the Act on 19.3.2016 by the CPC Bangalore, however, the amount accumulated or set apart for application to charitable purposes to the extent it does not exceed 15 per cent of the income, claimed at Rs. 98,57,1000/- under section 11 (1)(a) (11)(b) of the Act and accumulation of Rs. 10,21,26,000/- under section 11(2) of the Act were not allowed and the total claim was restricted to Rs. 548,35,67,000/- instead of Rs. 657,14,03,000/-. Accordingly, the income was computed at Rs. 108,78,36,000/-.

4. Being aggrieved, the assessee carried the matter to the learned CIT(A) and submitted that the assessee’s professional while filing the ITR failed to punch the amount of Rs. 98,57,10,000/- under point no. 9 (v) of the ITR 7 (represented by equivalent amount on account of the amount of income of the previous year accumulated / set apart for application to charitable / other purposes to the extent the said income did not exceed 15% of the income for the assessee for the captioned assessment year) but the relevant forms, reports and resolutions etc., such being Form No. 10, 10 B and 10 BB were already furnished electronically wherein the said amount of Rs. 98,57,10,000/-was duly reflected and claimed as such. It was further submitted that even in respect of the amount of Rs. 10,21,26,000/- which was sought to be accumulated under Section 11(2) of the Act and whose details were also filed in the ITR was considered as an income and no benefit with respect to the same was provided in the intimation under section 143(1) of the Act. It was also stated that the said accumulation was appearing in Form No. 10 B and also in Form No. 10 BB both of which were electronically filed on 26.9.2014. It was stated that in the intimation u/s 143(1) of the Act the total tax liability of Rs. 45,94,12,561/- was determined, against which the TDS deduction of Rs. 4,51,95,563/- instead of Rs. 4,52,54,823/- claimed in the ITR was allowed. The assessee also furnished the written submissions which has been incorporated by the learned CIT(A) in para 3 at page no. 4 to 19 of the assessee’s paper book (for the cost of repetition, the same are not reproduced herein).

5. The learned CIT(A) after considering the submissions of the assessee observed that the return of income revealed that the amount of Rs. 10,21,26,000/- had been mentioned in the relevant column pertaining to accumulation under section 11(2) of the Act, however, in column no. 5 of Schedule 1 of the ITR which pertained to amount invested or deposited in the modes specified in Section 11(5) for the entry pertaining to the year 2013, the said amount had been mentioned as “zero” which showed that the accumulated amount under section 11(2) had not been invested or deposited in modes specified under section 11(5). She, therefore, did not find infirmity in the intimation of the CPC Bangalore for not allowing the amount claimed. As regards to the non granting of permissible deduction / allowance @ 15% of the income of the assessee in accordance with section 11(1)(a) of the Act, the learned CIT(A) observed that the said section provides that income from property held under trust will be exempted provided the income is applied for charitable purposes to the extent of 85 per cent or more. The learned CIT(A) further observed that the total of the amounts mentioned in column 9 of the ITR in part T-1 pertaining to the application of the income came to Rs. 558,56,93,000/- instead of Rs. 657,14,03,000/- therefore what had been corrected by the CPC Bangalore was an arithmetical error which was apparent from the return of income as per the claim made by the assessee. Accordingly the another ground raised by the assessee was also dismissed.

6. Now the assessee is in appeal.

7. The learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee’s books of accounts were duly audited by the independent auditor whose report in Form No. 10 BB was filed electronically. It was contended that the assessee’s professional while filing the ITR failed to punch the amount of Rs. 98,57,10,000/- under point no. 1(v) of the ITR 7 but the relevant forms, reports and resolutions etc., such being form no. 10 B, 10 BB wherein the said amount of Rs. 98,57,10,000/- was duly reflected and claimed as such were furnished electronically. It was further submitted that even the amount of Rs. 10,21,26,000/- which was sought to be accumulated under section 11(2) of the Act and whose details were also filed in the ITR was considered as income and no benefit with respect to the same was provided in the intimation under section 143(1) of the Act. It was contended that the said accumulation was appearing in Form no. 10 B and also in Form no. 10 BB both of which were electronically filed on 26.9.2014 and the copy of Form no. 10 for accumulation of amount in excess of 15 per cent of the income was also filed as an attachment to Form no. 10 BB, a reference was made to page no. 127 to 130 of the assessee’s paper book. It was also contended that in the intimation under section 143(1) of the Act neither the benefit of Rs. 98,57,10,000/- as amount being upto 15% of the income was provided to the assessee and nor the claim of accumulation 10,21,26,000/- was permitted despite of the fact that the claim was duly made in the ITR. It was also pointed out that the benefit of TDS deducted at Rs. 4,52,54,823/- as claimed in the ITR was wrongly given at Rs. 4,51,95,563/-.

8. In his rival submissions, the learned Sr. DR strongly supported the impugned order passed by the learned CIT(A).

9. We have considered the submissions of both the parties and perused the material available on the record. In the present case, it appears that due to oversight the professionals of the assessee while filing the ITR could not punch the amount under point no. 1(v) of the ITR. However, all the details pertaining to the said claim of Rs. 98,57,10,000/- u/s 11(1)(a) and Rs. 10,21,26,000/- u/s 11(2) were duly mentioned in Form No. 10 B and Form No. 10 BB which is apparent from page no. 129 and 132 of the assessee’s paper book.

10. In the present case, it is noticed the learned CIT(A) had not considered the contention raised by the assessee in right perspective and dismissed the appeal. We, therefore, considering the totality of the facts deem it appropriate to remand this issue back to the file of the AO for adjudication in accordance with law, after proper verification from the material available on the record. We also direct to verify the amount of TDS which was claimed to be at Rs. 4,52,54,823/- while the amount considered was at Rs. 4,51,95,563/-. The AO shall provide a due and reasonable opportunity of being heard to the assessee.

11. Since, we have disposed off the appeal of the assessee on merit in the former part of this order. Therefore, the stay application becomes infructuous.

12. In the result, the appeal of the assessee is allowed for statistical purposes and the stay application is dismissed.

(Pronounced in the open court on 13.04.2018.)

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