Income Tax Appellate Tribunal - Hyderabad
Cmsn Charitable Trust, Hyd, Hyderabad vs Ddit (Exemptions)-Ii, Hyd, Hyderabad on 11 November, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "A" (SMC), HYDERABAD
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
I.T.A. No. 555/HYD/2016
Assessment Year: 2010-11
CMSN Charitable Trust, DDIT (Exemption)-II,
HYDERABAD Vs HYDERABAD
[PAN: AABTC2150Q]
(Appellant) (Respondent)
For Assessee : Shri P. Murali Mohan Rao, AR
For Revenue : Shri A. Sitarama Rao, DR
Date of Hearing : 09-11-2016
Date of Pronouncement : 11-11-2016
ORDER
This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-9, Hyderabad dated 29-02-2016. Assessee has raised many grounds on the issue of assessment completed, rejecting the benefit u/s. 11 & 12 of the Income Tax Act [Act]. In the course of present appeal proceedings, assessee has filed additional grounds on the issue of completing assessment under the head 'income from business and profession' when provisions of Section 11 are not applied.
2. Briefly stated, assessee is a trust and filed its return of income declaring income of Rs. 5,688/- and claiming exemption u/s. 11 of the Act. Assessing Officer (AO) however, determined the :- 2 -: I.T.A. No. 555/Hyd/2016 CMSN Charitable Trust total income at Rs. 20,948/- and denied the benefit u/s. 11 as assessee is not registered u/s. 12AA of the Act.
3. Before the Ld.CIT(A), assessee contended that it is eligible for benefit of Section 11. However, Ld.CIT(A) dismissed assessee's appeal, upholding the action of the AO as there is no registration u/s. 12AA of the Act.
4. Ld. Counsel while conceding that so far registration u/s. 12AA has not been granted and the matter was restored to the file of DIT by the ITAT in ITA No. 1010/Hyd/2012 dt. 22-02-2013, submitted that AO has to compute the income on commercial principles, when assessee's registration was not granted. It was submitted that there is an amount of Rs. 14 Laks which was contributed by the trustees which cannot be treated as 'income'. Referring to the Income and Expenditure Statement, the Counsel submitted that the total voluntary contributions including the contributions by the trustees which is capital amount was about Rs. 1,05,25,000/- and excess of income over expenditure was arrived at Rs. 20,948/-. With the above amount of capital receipt being excluded assessee would not have any income. It was submitted that following the principles laid down by the Co- ordinate Bench in the case of Nirmal Agricultural Society Vs. ITO [71 ITD 152], when assessee has been deprived of benefits u/s. 11, the AO could only assess net income of assessee as per other provisions of the IT Act, other than the provisions of Section 11, 12 & 13 of the Act.
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CMSN Charitable Trust
5. Ld. DR however, has no objection if the matter is restored to the file of AO for fresh consideration.
6. I have considered the rival contentions. As seen from the orders of the ITAT, the issue of granting registration u/s. 12AA seems to be pending with Ld.DIT( Exemptions). In case registration was granted, then, the income gets exempted u/s. 11. In the event of assessee not getting the registration, the income can only be assessed under the other provisions of the Act and not under the Section 11 to 13 applicable to a registered Trust. Since AO has not examined the receipts and expenditure and has not considered assessing the total income as per the other provisions of the Act, I am of the opinion that AO has to re-do the assessment keeping in mind the issue of registration as well. In order to do so, I set aside the order of AO and CIT(A) on this issue and restore the assessment proceedings to the file of AO for fresh consideration. AO is also directed to keep the principles as laid down by the Co- ordinate Bench referred supra. Assessee should be given due opportunity in the assessment proceedings. With these directions, assessee's grounds are considered allowed for statistical purposes.
7. In the result, appeal of assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 11th November, 2016 Sd/-
(B. RAMAKOTAIAH)
ACCOUNTANT MEMBER
Hyderabad, Dated 11th November, 2016
TNMM
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CMSN Charitable Trust
Copy to :
1. CMSN Charitable Trust, Hyderabad. C/o. P. Murali & Co., Chartered Accountants, 6-3-655/2/3, 1st Floor, Somajiguda, Hyderabad.
2. DDIT(Exemptions)-II, Hyderabad.
3. Commissioner of Income Tax(Appeals)-9, Hyderabad
4. Commissioner of Income Tax (Exemptions), Hyderabad.
5. D.R. ITAT, Hyderabad.
6. Guard File.