IT: In order to claim benefit of section 11, it is mandatory to give intimation to assessing authority in Form 10 at any time before finalization of assessment proceedings
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[2013] 39 taxmann.com 161 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Haryana Labour Welfare Board
v.
Commissioner of Income-tax, Sector-2 Income-tax Office, Panchkula*
AJAY KUMAR MITTAL AND GURMEET SINGH SANDHAWALIA, JJ.
IT Appeal No. 870 of 2010 (O&m)†
NOVEMBER 7, 2012
Section 11 of the Income-tax Act, 1961, read with rule 17 of the Income-tax Rules, 1962 - Charitable or religious trust - Exemption of income from property held under [Accumulation of income] - Assessment year 2004-05 - Assessee was a charitable institution registered under section 12A and, thus, its income was eligible for exemption in terms of sections 11 and 12 - In course of assessment, Assessing Officer denied exemption on ground of non filing of Form No. 10 for accumulation of unspent sums under section 11(2) - Tribunal upheld order of Assessing Officer - Whether in order to claim benefit of section 11, it is mandatory to give intimation to assessing authority in Form 10 at any time before finalisation of assessment proceedings - Held, yes - Whether since assessee failed to furnish Form No. 10 before completion of assessment, benefit under provisions of section 11 for accumulation of profits was rightly denied by authorities below - Held, yes [Para 9] [In favour of revenue]
CASES REFERRED TO
CIT v. Nagpur Hotel Owners' Association [2001] 247 ITR 201/114 Taxman 255 (SC) (para 5) and CIT v. Simla Chandigarh Diocese Society [2009] 318 ITR 96 (Punj. & Har.) (para 5).
H.N. Mehtani for the Appellant. Tejinder K. Joshi for the Respondent.
ORDER
Ajay Kumar Mittal, J. - This order shall dispose of ITA Nos.870 and 871 of 2010 as learned counsel for the parties are agreed that identical questions of law and facts are involved in both the appeals. However, the facts are being extracted from ITA No.870 of 2010, which may be briefly noticed.
2. ITA No.870 of 2010 has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short, "the Act") against the order dated 29.1.2010, Annexure A.3 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A', Chandigarh (for brevity, "the Tribunal") in ITA No.914/Chd/2009 for the assessment year 2004-05, claiming following substantial questions of law:—
| "(i) | Whether in the facts and the circumstances of the case, the learned Income Tax Appellate Tribunal has not committed an error of law in not adjudicating upon the ground in respect of action of Assessing Officer in extending the scope of the order of learned Income Tax Appellate Tribunal dated 18.12.2007? | |
| (ii) | Whether in the facts and the circumstances of the case, learned Income Tax Appellate Tribunal was correct in holding that assessee was not entitled for exemption under section 11(2) of the Income Tax Act, 1961, when Form No.10 was duly filed before Assessing Officer during the course of the assessment proceedings and the requirements of provisions of section 11(2) stood complied? | |
| (iii) | Whether in the facts and the circumstances of the case, learned Income Tax Appellate Tribunal was correct in holding that assessee was not entitled for exemption under Section 11(2) of the Income Tax Act, 1961, when Form No.10 was duly filed before Commissioner of Income Tax (Appeals) Panchkula and the compliance with provisions of section 11(2) stood made?" |
3. The appellant is a charitable institution registered under Section 12A of the Act and hence is eligible for exemption of its income as per provision of Sections 11 and 12 of the Act. During the course of assessment proceedings under section 143(3) of the Act, it was submitted before the Assessing officer that the scope of proceedings before the Assessing officer was limited to the extent of examining whether 85% of the amount of interest was utilized for the purpose of Institution or not. Vide order dated 26.12.2008, Annexure A.1, the Assessing officer extended the scope of reassessment proceedings and assessed the income at Rs.1,22,22,280/- by making certain additions and by denying the exemption claimed for accumulation of unspent amount on the ground of non filing of Form No.10 under the provisions of Section 11(2) of the Act. Aggrieved by the order, the assessee went in appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 8.6.2009, Annexure A.2, the CIT(A) while allowing the appeal partly upheld the order of Assessing Officer and denied the exemption claimed on the ground of non filing of Form No.10 for accumulation of unspent sums under Section 11(2) of the Act. Still not satisfied with the order, the assessee went in appeal before the Tribunal. The Tribunal vide order dated 20.1.2010, Annexure A.3 upheld the order of CIT(A). Hence the present appeals by the assessee.
4. Learned counsel for the assessee submitted that the assessee had filed Form No.10 for accumulation of profits in terms of Rule 17 of the Income Tax Rules, 1962 (in short, "the Rules") and the Tribunal had erred in declining the benefit under Section 11 of the Act.
5. Learned counsel for the revenue on the other hand besides supporting the findings recorded by the Tribunal submitted that no such form had ever been filed by the assessee. He relied upon judgments of the Apex Court in CIT v. Nagpur Hotel Owners' Association,[2001] 247 ITR 201/114 Taxman 255 and this Court in CIT v. Simla Chandigarh Diocese Society[2009] 318 ITR 96 (Punj. & Har.) to contend that Form No. 10 under the rules was required to be filed before completion of the assessment.
6. We find that the Apex Court in Nagpur Hotel Owners's Association's case (surpa) in para 5 had laid down as under:—
"5. It is abundantly clear from the wordings of sub-section (2) of Section 11 that it is mandatory for the person claiming the benefit of Section 11 to intimate to the assessing authority the particulars required, under Rule 17 in Form No.10 of the Act. If during the assessment proceedings the Assessing Officer does not have the necessary information, question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from Section 11 and is subjected to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time he completes the assessment. In the absence of any such information, it will not be possible for the assessing authority to give the assessee the benefit of such exclusion and once the assessment is so completed, in our opinion, it would be futile to find fault with the assessing authority for having included such income in the assessable income of the assessee. Therefore, even assuming that there is no valid limitation prescribed under the Act and the Rules even then, in our opinion, it is reasonable to presume that the intimation required under Section 11 has to be furnished before the assessing authority completes the concerned assessment because such requirement is mandatory and without the particulars of this income the assessing authority cannot entertain the claim of the assessee under Section 11 of the Act, therefore, compliance of the requirement of the Act will have to be any time before the assessment proceedings. Further, any claim for giving the benefit of Section 11 on the basis of information supplied subsequent to the completion of assessment would mean that the assessment order will have to be reopened. In our opinion, the Act does not contemplate such reopening of the assessment. In the case in hand it is evident from the records of the case the respondent did not furnish the required information till after the assessments for the relevant years were completed. In the light of the above, we are of the opinion that the stand of the Revenue that the High Court erred in answering the first question in favour of the assessee is correct, and we reverse that finding and answer the said question in the negative and against the assessee. In view of our answer to the first question, we agree with Mr. Verma that it is not necessary to answer the second question on the facts of this case."
7. Following the aforesaid judgment, this Court in Simla Chandigarh Diocese Society's case (supra) recorded as under:—
| "(i) | that the Commissioner (Appeals) had observed that the assessee modified Form No.10 in the course of assessment proceedings. The modified Form No.10 had been rejected by the Assessing Officer on the ground that there was no provision in the Act for revising Form No.10. It was held that there was no specific bar prohibiting the assessee from modifying the figure of accumulation. Form No.10 could be furnished before the assessing authority completes the concerned assessment." |
8. According to the aforesaid pronouncements, it is mandatory under the provisions of the Act and the Rules to give intimation to the assessing authority in Form 10 as required under Rule 17 of the Rules to claim benefit of Section 11 of the Act. This information in Form 10 is required to be furnished at any time before the finalisation of the assessment proceedings.
9. The assessee having failed to furnish Form No.10 before the completion of the assessment, the benefit under the provisions of Section 11 of the Act for accumulation of profits had been rightly denied by the authorities below. Moreover,it has been recorded that no such form had ever been filed. Learned counsel for the appellant sought to draw support from certain observations made in the orders passed by the Assessing officer and the CIT(A) to canvass that Form No.10 had infact been filed. However, he was unable to demonstrate with regard to any concrete evidence or material that it was so done. In such circumstances, the contention of the assessee to draw an inference that Form No.10 had been filed was not tenable and the findings recorded by the Tribunal cannot be faulted.
10. Accordingly, the substantial questions of law are answered against the assessee and in favour of the revenue. Consequently, both the appeals are dismissed.
SUNIL †Arising out of order of Tribunal in IT Appeal No. 914 (Chd.) of 2009, dated 29-1-2013.
Regards
Prarthana Jalan
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