I.T.A. No. 566 of 2008 (1)
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
I.T.A. No. 566 of 2008 (O&M)
DATE OF DECISION: 19.8.2009
Commissioner of Income Tax-I, Chandigarh ..........Appellant
Versus
M/s Simla Chandigarh Diocese Society, ..........Respondent
Catholic Church, Sector 19-A, Chandigarh.
CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL
HON'BLE MRS. JUSTICE DAYA CHAUDHARY
Present:- Mr. Urvashi Dhugga, Advocate
for the appellant.
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ADARSH KUMAR GOEL, J. (Oral)
1. The revenue has preferred this appeal under Section 260-A of
the Income Tax Act, 1961 (for short, “the Act”) against the order of Income
Tax Appellate Tribunal, Chandigarh Bench ‘B’ dated 29.1.2008 passed in
ITA No. 888/Chandi/2006 for the assessment year 2003-04, proposing to
raise following substantial questions of law:-
“(i) Whether in the facts and circumstances of the
case, the Hon’ble ITAT is right in law in holding that the
assessee is entitled for exemption u/s 11(1)(a) of the
Income Tax Act, 1961?
(ii) Whether in view of the above observations, the
Hon’ble ITAT is justified in deleting the following
additions and disallowances”-
(a) Addition of Rs.50,39,288/- made on account of
interest earned from deposits/investments out of
unutilized foreign contributions relating to the current
I.T.A. No. 566 of 2008 (2)
assessment year as well as earlier assessment year(s).
(b) Addition of Rs.23,76,417/- made on account of
interest earned from funds earmarked for specific
projects, interest earned on saving bank accounts and
interest earned from FDRs.
(c) Addition of Rs.27,30,000/- made on account of
rental income under the head “Income from House
Property”
(d) Addition of Rs. 25,12,438/- made on account of
foreign contributions received.
(e) Addition of Rs.18,99,300/- made on account of
registration charges and buildings funds.
(f) Disallowance of Rs. 67,42,583/- being expenditure
out of earmarked funds/current liabilities.
(iii) Whether in the facts and in the circumstances of
the case, the Hon’ble ITAT is right in holding that trust
means faith and not status in the context of the
assessee.
(iv) Whether in the facts and circumstances of the
case the Hon’ble ITAT order is perverse in accepting the
decision of Ld. CIT (A) on the issue of considering
‘Revised Form No.10′ furnished by the assessee when
there is no provision for filing a revised Form No. 10
under the Income Tax Act, 1961.’
(v) Whether the Hon’ble ITAT was correct in law in
coming to the conclusion that ‘interest income’ is not
‘Income from other Sources’ and therefore part & parcel
of accumulated funds, especially when the ‘interest
income’ is Income from Other Sources’ and the same is
I.T.A. No. 566 of 2008 (3)
not applied for fund purpose but for profit on funds till the
same are utilized.”
2. The assessee is a charitable society and is engaged in various
activities including running of Church and Schools. It claimed exemption
under Section 11(1)(a) and Section 12 (1) of the Act. The same was
declined by the Assessing Officer on the ground that the assessee was a
Society and not a Trust. The Assessing Officer also made additions in
respect of rental income, foreign contributions, registration charges,
building funds and expenditure out of earmarked funds. The Assessing
Officer also raised objection that revised Form No.10 was not furnished
with the return. The CIT(A) upheld the claim of the assessee, which view
has been affirmed by the Tribunal.
3. We have heard learned counsel for the appellant.
4. As regards, question of assessee being eligible for exemption
under Section 11(1)(a), irrespective of its constitution, we have dealt with
the matter in our separate order passed today in ITA No. 939 of 2008
(Commissioner of Income Tax-II, Chandigarh Versus M/s Sarvhitkari
Education Society). The question raised, thus, cannot be held to be
substantial question of law.
5. As regards filing of Form No.10 after the return but before the
assessment, the CIT(A) observed as under:-
“It was pointed out that the appellant has accordingly
modified Form No. 10 in the course of assessment
proceedings. The modified Form No.10 has also been
rejected by the AO on the ground that there is no
provision in the Act for revising Form No.10. It was
submitted that there is no specific bar prohibiting the
appellant from modifying the figure of accumulation. In
the light of the ration laid down by the Supreme Court in
I.T.A. No. 566 of 2008 (4)the case of CIT Vs. Nagpur Hotel Owners’ Association,
247 ITR 201, 205, Form 10 may be furnished before the
assessing authority completes the concerned
assessment.”
6. The matter being fully covered by the judgment of the Hon’ble
Supreme Court in Nagpur Hotel Owners’ Association (supra), the
question cannot be held to be substantial question of law.
7. As regards question of additions made on account of interest
earned on deposit out of unutilized foreign contributions, Form No.10
having been held to be valid, the additions were not called for. The claim
for exemption falls under Section 11 (1) (a), as income has been derived
from property. This reason also applies to other additions rightly, as held
by the CIT(A) as well as the Tribunal.
9. In view of above, we are of the view that no substantial
question of law arises.
10. The appeal is dismissed.
(ADARSH KUMAR GOEL)
JUDGE
August 19, 2009 (DAYA CHAUDHARY)
pooja JUDGE
Note:-Whether this case is to be referred to the Reporter …….Yes/No