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The Dy. C.i.T., Range I Vs. J and K Small Scale Ind. Dev. Corp. - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Amritsar
Decided On
Judge
Reported in(2008)117TTJ(Asr.)706
AppellantThe Dy. C.i.T., Range I
RespondentJ and K Small Scale Ind. Dev. Corp.
Excerpt:
1. these are eight department's appeals for the assessment years 1980-81 to 1986-87 and 1990-91. the facts being common in all these appeals, they are being disposed of by this composite order.2. the department has raised the following ground of appeal no. 1 in all these eases: the learned cit(a) has erred in allowing the assessee exemption under section 11 of the income tax act, 1961. 1. that on the facts and circumstances of the case and in law the ld. cit(a) has erred in passing the appellate order dated 14-3-2007 without giving an opportunity of being heard to the assessing officer, which is mandatory as per provisions of section 250(1) and 250(2) of the income tax act, 1961, thus violating the principles of natural justice and therefore the order of cit(a) deserves to be declared as.....
Judgment:
1. These are eight department's appeals for the assessment years 1980-81 to 1986-87 and 1990-91. The facts being common in all these appeals, they are being disposed of by this composite order.

2. The department has raised the following ground of appeal No. 1 in all these eases: The learned CIT(A) has erred in allowing the assessee exemption under Section 11 of the Income tax Act, 1961.

1. That on the facts and circumstances of the case and in law the ld. CIT(A) has erred in passing the appellate order dated 14-3-2007 without giving an opportunity of being heard to the Assessing Officer, which is mandatory as per provisions of Section 250(1) and 250(2) of the Income tax Act, 1961, thus violating the Principles of natural justice and therefore the order of CIT(A) deserves to be declared as null and void.

2. That the ld. CIT(A) has erred on facts and case of Delhi Stock Exchange Association Ltd. v. CIT (1995) 225 ITR 235 (SC) in right perspective in accordance with law and thereby has erroneously held that the ratio of the said judgment is not applicable to the case of the assessee with regard to prospective operation of the amendment to the Articles of Association of the assessee.

3. That the ld. CIT(A) has erred on facts and circumstances of the case and in law by not appreciating the ratio of judgment of Hon'ble Supreme Court in the case of CIT v. Kamala Town Trust 217 ITR 699 (SC) in right perspective in accordance with law and thereby has erroneously held that the ratio of the said judgment is not applicable to the case of the assessee with regard to prospective operation of the amendment to the Articles of Association of the assessee.

4. The learned D.R. has stated at the bar that he does not seek to press the additional ground of appeal No. l. The additional ground of appeal No. l in all these appeals is thus rejected as not pressed. The additional grounds of appeal Nos. 2 and 3 are, in fact elaboration of the original ground of appeal No. 1.

5. The first issue raised by the department in all these appeals is that the learned CIT(A) has erred in allowing the assessee exemption under Section 11 of the Income tax Act. The facts arc that the assessment order dated 15-3-2002 assessed Rs. 8,56,650/- as the income of the assessee, in the status of company. The learned CIT(A) allowed the status of trust to the assessee. Vide order dated 3-2-2006, this Bench of the Tribunal, in I.T.A. Nos. 255 to 262(ASR)/2003, for the assessment years 1980-81 to 1986-87 and 1990-91 in the assessee's case, in the appeals filed by the department, set-aside the orders of the CIT(A) and restored the assessments to the file of the A.O. for decision afresh. The A.O. was directed to confine himself to the issue relating to exemption under Section 11 of the Act and was further directed not to again make additions on issues which had already become final. The Tribunal also directed the A.O. to see as to whether the assessee fulfilled the conditions of Section 11 of the Act.

6. In the set-aside proceedings, the A.O. enquired from the assessee regarding the declaration of dividend and distribution of profit as per the clauses contained in the Articles of Association of the assessee.

The A.O. observed that these clauses were in clear violation of the requirement of Section 11 that the property be held for charitable or religious purposes which enure for the benefit of the public and no part of income should enure or be applied directly or indirectly for the benefit of the settler or other specified persons and that the property should be held wholly and not in part only, for charitable purposes. The A.O. asked the assessee to clarify the position in this regard. The relevant portion of the questionnaire dated 27-6-2006 issued by the A.O. to the assessee, reads as follows: (b) Clauses 106 to 114 of the articles of association in your case enumerate the procedure for declaring the dividend. They are: (vi) Deduction of amount payable to the company from dividend (cl.

111), It is thus clear that there is specific provision for division of profit provided in your articles of association of the company.

Hon'ble Supreme Court in an important judgement in the case of CIT v. Indian Sugar Mills Associated reported in 97-ITR-486 on this point has observed that "where the relevant Rules and regulations of an association or an institution permit distribution of profit of the association or institution amongst its members, an element of private gain is introduced which is inconsistent with the object of general public utility". While perusing clauses 106 to 114 of your article of association in the light of Hon'ble Supreme Court decision, discussed supra, it is totally clear that there is a clear motive of private gain in formation of SICOP and as such you are not engaged in advancement of any other object of general public utility. When an institution is not created for charitable purpose, it cannot claim exemption Under Section 11 of the Income tax Act, 1961. In the case reported at 225 ITR 235 it has clearly been held that so long as there is provision of distribution of profit by way of dividend the trust is not entitled to exemption Under Section 11.

7. The assessee, vide letter dated 11 -7-2006, replied that the contention of the A.O. had already been examined by the CIT, Amritsar in the light of the judgment of the I TAT, Hyderabad Bench in the case of A.P. Industrial Infrastructure Corporation Ltd., (35 ITD (Hyd.) 381; that the Articles of Association or Bye laws of the institution did not govern the objects of the Institute as set out in the Memorandum of Association; that the articles 106 to 114 were only enabling clauses which did not affect the objects of the Institute; that the Institute was wholly owned by the Government and on this account also, provisions and non provisions of the dividend clause did not have any effect; that no dividend had been declared since the claim of exemption i.e. from assessment year 1980-81 onwards; that the copy of the order of IT AT as well as a copy of the written submissions made before the CIT, Amritsar, were being enclosed; that the Revenue was not in appeal before the High Court against the order of the ITAT in the case of A.P.Industrial Infrastructure Corporation Ltd.; that the ITAT in this case had held that merely because the Articles of Association of the Company made a provision for declaration of dividend, such provision did not detract from the predominant objective of the State Government in forming the Corporation, financed fully subscribed by the Slate, for the rapid and orderly Industrial Development of the State; that the assessee was a charitable institution within the meaning of Section 2(15) and, therefore, was entitled to exemption of its income under Section 11; that the case law pointed out by the A.O. i.e., Delhi Stock Exchange Association Ltd. v. Commissioner of Income Tax (1977) 225 ITR 235 (SC) could not be said to be applicable to the Assessee Trust because the shareholders of the Company (H.E. The Governor, Principal Secretary to Government Industries and Commerce Department, Commission-Secretary to Government Finance Department), in an Extraordinary General Meeting, had already deleted all the clauses relating to declaration of dividend retrospectively from its Articles of Association by recording the reason that it was an inherent inadvertent technical shortcoming and accordingly, amendments were being made in the Articles of Association; that a copy of the Minutes alongwith the amended copy of Memorandum and Articles of Association were being enclosed; that moreover, there could be said to be private gain when private persons were involved as shareholders of the company, whereas when the Govt. was involved as shareholder, no element of private gain could be said to be present; that the judgment in the case of 'CIT v. Indian Sugar Mills Association', 97-ITR-486 was also not applicable because in the case of the Assessee Trust, it was the Government of Jammu & Kashmir which was holding the entire share capital; and that the ITAT Hydrabad Bench, in the case of 'A.P.Industrial Infrastructure Corporation Ltd.' had not followed this judgment.

8. The assessee, in fact, contended that it had deleted from its Articles of Association, the clauses relating to declaration of dividend, retrospectively.

9. The A.O., however, rejected this contention of the assessee, holding that such contention was totally misleading and illegal; that the trustees of a trust have no power to amend the Articles of Association of the trust; that rather, even the founder of the trust has no power to alter the terms of the trust deed; that it is only the court which can alter the terms of a trust under Section 92 of the CPC; that so, the act of the trustees in deleting the clauses relating to declaration of dividend and distribution of profit, was void and illegal. The A.O.relied on the decision of the Hon'ble Madras High Court in the case of "Sakthi Charities v. CIT, Madras" 149 ITR 624. It was held by the A.O.that further, even if the deletion of such clauses from the Articles of Association of the assessee trust were to be taken as accepted, such rectification could not be made retrospectively. The A.O. also relied on the decision of the Hon'ble Supreme Court in the case of "CIT v.Kamla Town Trust" 217 ITR 699 (SC). The A.O. observed that the clauses in the Articles of Association of the assessee trust provided for declaration of dividend and distribution of profits in favour of the share holders of the trust and this being the case, the trust was not entitled to exemption under Section 11 of the Income tax Act. For this, the A.O. relied on the decision of the Hon'ble Supreme Court in the case of "Delhi Stock Exchange Association Ltd. v. CIT" 225 ITR 235 (SC). The assessee had contended before the A.O. that no dividend had been declared from the assessment year 1980-81. The A.O. observed that this contention was also not acceptable in view of "Delhi Stock Exchange Association Ltd. v. CIT" (supra). Apropos the assessee's reliance on the decision of the Hyderabad Bench of the Tribunal in the case of "A.P. Industrial Infrastructure Corporation Ltd.", 35 ITD (Hyd.) 381 for the proposition that the enabling clause for declaration of dividend would make no difference, as no dividend has ever been declared by the assessee, the A.O. observed that this decision was not good law in view of "Delhi Stock Exchange Association Ltd." (supra).

The A.O. thus held that the assessee had provided for direct or indirect application of its income for the benefit of the settler and other specified persons by providing for distribution of profit and declaration of dividend in the Articles of Association; and that thus, there was clear violation of Section 13(1)(c), (2) and (3) of the Income tax Act, besides the violation of the conditions contained in Section 11 of the Act. The income of the assessee was thus held taxable and not exempt under Section 11 of the Act, as claimed by the assessee.

10. Before the learned CIT(A), the assessee contended that "Sakthi Charities" (supra) and "Delhi Stock Exchange Association Ltd. (supra) did not apply to the case of the assessee; that "Kamla Town Trust" (supra) had been misread by the A.O.; that in "Sakthi Charities" (supra), the amendment was supposed to be made by the court, whereas in the case of the assessee, since it was incorporated under the Companies Act, 1956, its Memorandum of Association and Articles of Association were required to be registered before the Registrar of Companies, which was the authority designated under the Company Law, for such matters; that the assessee trust had not altered or rectified its Memorandum of Association, and had, in effect not altered/rectified its objects; that rather, it had altered its Articles of Association, thereby altering or rectifying its rules to fulfill its objects; that in "Kamla 'Town Trust" (supra), the trust deed had not been amended by the Court retrospectively; that however, the assessee trust had deleted from its Articles of Association the enabling clauses regarding the declaration of dividends, retrospectively; that as per "Kamla Town Trust" (supra), when such rectified Trust Deed is pressed into service before the Income tax Authorities in the assessment proceedings, the A.O. would have to interpret such rectified instrument for finding out its legal effect for framing the assessment; and that since as per the amended Articles of Association, no dividend and/or bonus was to be paid to any member/partner of the trust, "Delhi Slock Exchange Association Ltd." (supra) no longer remains applicable.

11. By virtue of the impugned consolidated order 14-3-2007, the learned CIT(A) cancelled the order passed by the A.O. It was observed, inter alia, that "Sakthi Charities" (supra) was not applicable; that in that case, the amendment deleting the clauses relating to the declaration of dividend of profits, was made by the Court, whereas in the case of the assessee trust, this was required to be done by the Registrar of Companies, since the assessee was registered with the said authority; that the objects of the assessee trust was laid down in its Memorandum of Association, whereas its rules were contained in its Articles of Association; that the assessee had not amended its Memorandum of Association, but had amended its Articles of Association; that thus, the assessee had not amended its objects, but its rules fulfilled the objects; that "Kamla Town Trust" (supra) was also not applicable; that in that case, the trust deed was amended by the Court in 1955 and it was not amended retrospectively; that therefore, the trust had itself agreed that 1955 rectification of the Trust deed substituted a new trust for the old one and that therefore, the trust would not trace that such rectification had any retrospective effect; that accordingly, it had been held in "Kamla Town Trust" (supra); that the said rectification was not retrospective; that on the other hand, the facts of the case was altogether different; that in this case, the share holders of the Institution had deleted, vide Extra Ordinary Meeting held on 17-4-2006, the enabling clauses regarding the declaration of dividend from the Articles of Association retrospectively; that this deletion/amendment had been made since there had been an inherent inadvertent technical shortcoming in the Articles of Association; that in "Kamla Town Trust" (supra), it had been held that on such rectified trust deed is pressed into service before the Income tax Authorities, the Income tax Officer will have to interpret such rectified instruction for finding out its legal effect, taking the instruction as it is in its actual amended form; that in the present case, the notice under Section 143(3) of the Income tax Act for all the assessment years under consideration, were issued after the Articles of Association to the assessee were amended; that the A.O. had erred in not considering the instruction as it existed in its actual amended form, when it was pressed into service by the assessee that "Delhi Slock Exchange Association Ltd." (supra) was not applicable to the case of the assessee; and that in that case, the clause prohibiting the declaration of dividend had been inserted w.e.f. 1973 and not retrospectively whereas in the case of the assessee, such amendment was retrospective.

12. Aggrieved, the department is in appeal before us. Before us, the department has filed detailed written submissions, which had been duly supported by the oral arguments made by the learned DR. These contentions are to the effect that the learned CIT(A) has erred in observing that the decision in "Delhi Stock Exchange Association Ltd." (supra) was distinguishable and thus not applicable to the case of the assessee; that in observing so, the learned CIT(A) has erred in stating that in "Delhi Stock Exchange Association Ltd." (supra), the clauses prohibiting declaration of dividends were inserted w.e.f. 1973 and not retrospectively, whereas in the assessee's case, such clauses had been inserted retrospectively. The learned DR. has submitted that the ratio of the "Delhi Stock Exchange Association Ltd." (supra) has not been correctly appreciated by the learned CIT(A); that the date of amendment of the Articles of Association is the relevant date and not purported retrospectively of the amendment; that prior to 17-4-2006, the date on which the amendment was brought about, clauses 106 to 114 of the Articles of the Association of the assessee were existing; that thus, before 17-4-2006, the assessee in obligation prohibiting it from declaring and distributing the income derived by it by way of dividends amongst its share holders; that such prohibition came to be imposed only on 17-4-2006; that thus, in view of "Delhi Stock Exchange Association Ltd." (supra), Section 13(1)(c)(ii) of the Act would be attracted in the case of the assessee only w.e.f. the assessment year 2007-08 and that for all the earlier years, the assessee would not be eligible for exemption under Section 11 of the Act; that the learned CIT(A) has not considered that clauses 106 to 114 of the Articles of Association could not be amended retrospectively, as it was not possible to go back in time and to bring about the amendment as on the date of the incorporation of the Company or any date thereof, till the dale on which it was actually attained; that the learned CIT(A) further failed to notice that in "Delhi Stock Exchange Association Ltd." (supra), the relevant assessment years 1966-67 to 1969-70 of the Hon'ble Supreme Court specifically held that exemption of Section 11 of the Act would not be available for these assessment years since the relevant Article of Association was amended, only in December, 1973.

13. The learned D.R. has next contended that the learned CIT(A) has erred in not correctly appreciating the ratio of the Supreme Court decision in the case of "CIT v. Kamla Town Trust" (supra) and held that the said decision is not applicable to the present case and that if interpreted correctly, which rather supports the case of the assessee that the A.O. will have to take the instruction as it exists in its actually amended form when these pressed into service for framing the assessment, even for the assessment year prior to the year in which the Articles of Association have been amended; that such interpretation of "Kamla Town Trust" (supra) was erroneous; that the Hon'ble Supreme Court had rather held that by virtue of the rectification of 1955, the new clause was substituted for the old one and (hat such rectification was operative only prospectively w.e.f. the date on which it was brought about; that the case of the assessee was not different; that there was no reason why the rectification/amendment in the Articles of Association of the present assessee to be taken retrospectively; that the Hon'ble Supreme Court had held that it was in the way of casual mistake had occurred in the original Trust Deed, that amendment therein was permissible, (hat in that case, the assessee trust did acquire the status of a trust wholly for charitable and religious purpose only after the amendment to the Trust Deed in May, 1988 and that whether such rectified Trust Deed was pressed into service before the Income lax Authorities in the assessment proceedings, concerning the relevant assessment year, (he Income lax Officer would have to intrepret such rectified instruction for finding out its correct legal effect; (hat this would not be applicable for assessment years previous to the year relevant to the year in which the amendment was made. It was further contended that the learned CIT(A) had erroneously mis placed the emphasis on the dale of issue of notice under Section 143(2) of the Act to the assessee; that even if for the sake of argument, such dale is taken to be factor relevant to decide the applicability of the amended Articles of Association of the assessee to the years under consideration, the correct date of issuance of notification under Section 143(2) would be the date of issuance of original notice under Section 143(2), that the cases were originally taken up for scrutiny under Section 143(3) of the Act, within the time permissible under Section 143(2) of the Act.

14. The learned D.R. has further contended that the learned CIT(A) has erred in holding that "Shakthi Charities" (supra) worked in favour of rather than against the assessee to the effect that in that case, the amendment was supposed to be made by the Court, whereas in the case of the assessee, since the assessee was incorporated under Companies Act, it's Memorandum of Association and Articles of Association were required to be registered before the Registrar of Companies and that the assessee had not attained its objects, but had only altered its rules to fulfill its objects. It has been urged that the issue of amendment of Articles of Association of Trust has been put at rest by the Honble Supreme Court in the case of "Sri Agastyar Trust v. C.I.T." 236 ITR 23 (SC), holding, inter alia, that when a chanty had been founded and trusts have been declared, the founder had no power to revoke or vary or add to the trusts; that if a valid and complete dedication had taken place, there would be no power left in the founder to revoke. The learned DM. has thus contended that the order of the learned CIT(A) in this regard is liable to be set-aside and that of the A.O. is entitled to be revived.

14. The assessee, on its part, has also filed written submissions. The learned Counsel for the assessee has made oral arguments as well. It has been submitted, supporting the impugned order, that since the assessee did not amend its objects, "Shakthi Charities" (supra) is not applicable; that since the trust was incorporated under the Companies Act, the jurisdiction for any alteration in the Articles of Association lies solely with the Registrar of Companies and not by any Court; that the assessee is eligible to make alteration in its Articles of Association. By virtue of Section 31 of the Companies Act; that the amendment in the Articles of Association of the assessee trust has to be considered with retrospective effect, since such amendment has been made specifically retrospectively applicable; that in "Jagdamba Charity Trust v. CIT" 128 ITR 377 (Delhi), in similar circumstances, the retrospectivity of the amendment was upheld; that the objectionable clause of the Articles of Association was not deleted by virtue of the amendment in question were never implemented and no dividend was ever declared; that, therefore, the years under consideration were in accordance with the amended Articles of Association; that (he amendments being fully retrospective, the A.O. could not hold (hat in the years under consideration, the assessee trust was down by the terms of old Articles of Association. The learned Counsel for the assessee has thus requested that the appeals of the department in this regard be dismissed.

15. We have heard the parties and have perused the material on record with regard to this issue. The learned CIT(A) has, first of all, held (hat "Shakthi Charities" (supra) is not applicable to the present case.

In this regards, it has been held that in that ease, (he amendment was supposed to be made by the Court, whereas in the present case, the assessee being incorporated under the Companies Act, the amendment was required to be registered with the Registrar of Companies. This distinction tried to be made by the learned CIT(A) is not relevant for our present purposes. Whatsoever considered herein is the eligible or otherwise of the assessee to exemption under Section 11 of the Income tax Act. The A.O.'s case has been that since in clauses 106 to 114 of the Articles of Association of the assessee, there was a specific provision for profit and declaration of dividend amongst the share holders of the Companies, it was not entitled to exemption under Section 11 of the Act. The ratio of "Shakthi Chanties" (supra) is very clear in this regard, when it holds that once a trust had been founded that certain objects, thus original objects cannot be deleted even by the founder of the trust, though it is possible to add some other charitable objects to the original objects. The ease of the assessee has been that by way of the amendment to its Articles of Association, it is not brought about any deletion in its original objects and so, "Shakthi Charities" (supra) is not applicable. However what we are concerned with here is the entitlement of the assessee to exemption under Section 11. Since the original Articles of Association did not contain any clause prohibiting the distribution of dividend amongst the share holders of the assessee, it was not entitled to exemption under Section 11 of the Act. Rather, there was express provision, by virtue of clauses 106 to 114 of the Articles of Association, distribution of dividend amongst the share holders of the assessee. ft was by way of amendment of the Articles of Association such clauses were deleted.

This was done so as to make the assessee eligible for exemption under Section 11. This read with the decision in "Shakthi Charities" (supra) makes it amply clear that the learned CIT(A)'s order in holding in favour of the assessee.

16. Then, the learned CIT(A) has sought to uphold the alleged retrospectivity of the amendment of the Articles of Association of the assessee, holding that in keeping with "Kamla Town Trust" (supra), it was not open for the A.O to refuse to consider the rectified Articles of Association and to insist that the assessee should strict to the original Articles of Association. In this regard, first of all, in "Kamla Town Trust" (supra), it has been, inter alia, held that the A.O.will have to lake instrument as it exists in its actually amended form when it is pressed into service for framing the assessment concerning the relevant assessment year in the said rectified instrument holds the fields. It nowhere holds that an amendment which cannot be carried out retrospectively is also to be taken into consideration by the A.O. In the present case, the assessee has remained unable to make out a case with regard to the retrospectivity of the amendment in question.

Therefore, the learned CIT(A) has clearly mis-read "Kamla Town Trust" (supra).

17. Apropos agreement of the learned CIT(A) with the assessee's contention that the notice under Section 143(2) of the Act for the years under consideration was issued after the Articles of Association were amended, this evidently is a wrong observation. First of all, the direction of the Tribunal was for the A.O. to confine himself to the issue relating to the exemption under Section 11 of the Act and not to make addition on issues which had attained finality in the set aside assessments. This difference shows that the notices under Section 143(2) which need to he considered are the original notices, is issued for all the years under consideration and not those issued while dealing with the case.

18. The observations of the learned CIT(A) that "Delhi Stock Exchange Association Ltd." (supra) does not apply to the case of the present assessee, since in that case, the clauses prohibiting declaration of dividends were inserted w.e.f. 1973 and not retrospectively; whereas in the case of the assessee, such amendment was retrospective, is not correct. Firstly, as observed hereinabove, the amendment in question does not stand proved to have been made retrospectively. Moreover, as also admitted by the learned Counsel for the assessee before us, had the amendment in question not been carried out, "Delhi Stock Exchange Association Ltd." (supra) would have been squarely applicable.

19. The assessee has also contended that it is eligible to make alteration in its Articles of Association by virtue of Section 31 of the Companies Act,. There is no denial to this. However, the activities sought to be drawn by the assessee to the amendment in its Articles of Association is no where provided in Section 31 of the Companies Act. It is only that by virtue of Section 31(2), any amendment to the Articles of Association is to be treated as valid, as if it was originally contained in the Articles. Section 17, for that matter, any other provisions of the Companies Act does not provide that the requirement of Section 11 can be over-ruled to claim exemption under the said later section, by amending the Articles of the Association and making such amendment applicable retrospectively from the very inception of the Articles of Association.

20. In view of the above, finding force in the grievance raised by the department, in this regard, the same is accepted.

21. I.T.A. Nos. 249 to 254(ASR)/2007 contain the following ground No. 2 also: That the ld. CIT(A) has erred in deleting the additions which were confirmed by the predecessor CIT(A) vide order dated 13 11-2003 and against which, the belated appeals filed by the assessee before the ITAT on 30-11-2006 was pending adjudication. Thus, the CIT(A) did not have jurisdiction to order deleting of such additions.

The appellant trust is correct in staling that CIT(A), Bhatinda has allowed the appeals of the appellant trust for all these six years and deleted the additions/disallowances by staling that most of the issues are already covered by his order or by the order of ITAT and for the later year the entire additions/disallowances had been deleted covering each ground one by one. The appellate trust is also correct in stating that CIT(A), Bhatinda further held that he find no utility of similar exercise in most/all points of the later assessment years for which the combined appellate order is framed.

The ld. Assessing Officer while giving effect to the order of CIT(A), Bhatinda was not correct in giving full effect since he has not deleted from the income of the appellant trust the additions/disallowances otherwise deleted by the CIT(A), Bhatinda.

The then CIT(A), Amritsar in his appellate order passed against the order of Assessing Officer giving effect to the order of CIT(A), Bhatinda has also held that when whole of the income of appellant trust is exempt Under Section 11 the purposes of object of the appellant is served and there is no need of for specific disallowances to be mentioned in the order giving effect to the order of CIT(A). This aspect has been ignored by the Assessing Officer while passing the assessment orders which are in appeal before me. I am in agreement with the contention of the appellant trust that if to the mind of the then Assessing Officer there was any ambiguity in the order of CIT(A), Bhatinda then the right course before him was to agitate the matter before Hon'ble ITAT whereas the appeal before the Hon'ble ITAT was only on the issue relating to exemption Under Section 11 of the Income tax Act, 1961. I observe-that the Assessing Officer has not followed the directions of Hon'ble ITAT. The Hon'ble Bench has held that "further while deciding the appeals the ld. CIT(A) has deleted certain additions on merits and revenue has not filed appeals on the points of deletion of additions. Therefore, the order CIT(A) in respect of additions deleted on merits have become final. The Assessing Officer is directed to confine himself only to the issue relating to exemption of income Under Section 11 of the Act and shall not make again additions on issues which have already become final while completing these set aside assessments." Since from the perusal of the orders of CIT(A), Bhatinda the additions/disallowances for these assessment years which were before him in appeals have been deleted and also confirmed to be deleted by the Hon'ble ITAT, Amritsar Bench, Amritsar as such it was required from the Assessing Officer to compute that income of the appellant trust which was after deleting all these additions/disallowances.

In view of these facts the ground No. 1 of the appellate trust pertaining to assessment years 1982-83 to 1986-87 and 1990-91 is allowed and the Assessing Officer is directed to recompute that income of the appellate trust which is after the deletion of all those additions/disallowances which were in appeal before the CIT(A), Bhatinda.

23. The learned D.R. has contended that the learned CIT(A) has exceeded his jurisdiction by reversing the findings of his predecessor CIT(A) on the same issue for the same years; that this could have been done only by the next appellate authority, i.e., the Tribunal; that the CIT(A) has erred in holding that the A.O. while giving effect to the order of the CIT(A), Bhatinda, was not correct in deleting the income of the assessee trust, the additions/disallowances otherwise deleted by the CIT(A), Bhatinda; that the A.O.'s orders giving effect to the CIT(A)'s orders, were confirmed by the learned CIT(A), Amritsar, vide order dated 13-11-2003; that the appeal before the Tribunal was only on the issue regarding exemption under Section 11 of the Act and the A.O.'s order giving effect to the order of the CIT(A), Bhatinda, were confirmed by the learned CIT(A), Amritsar vide order dated 13-11-2003, there was no occasion for the department to file appeal against the order of the learned CIT(A); and that this matter was agitated by the assessee before the Tribunal.

24. The learned Counsel for the assessee, on the other hand, has placed heavy reliance on the CIT(A)'s order in this regard. Here, we find the Tribunal had, inter alia, held that while deciding the appeals, the CIT(A) had deleted certain additions on merit and the department had not filed appeals on the points of deletion of the additions and that, therefore, the order of the CIT(A) with regard to the additions deleted on merits, had become final.

25. Obviously, the aforesaid directions of the Tribunal were with regard to the CIT(A) in order which were appealed against before the Tribunal, and not with regard to any subsequent order. Therefore, no further relief in this regard could have been granted to the assessee.

The learned CIT(A), evidently, has erred in going beyond the directions issued by the Tribunal. The grievance of the department in this regard is, therefore, justified and is entitled to be accepted. Ordered accordingly. In the result, all the eight appeals filed by the department are allowed


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