1. This is the Department's appeal for the assessment year 2003-04, taking the following grounds:
| "1. |
That, on the facts and in the circumstances of the case, the ld. CIT(A) has erred in law in condoning the delay in furnishing the appeal without appreciating that the assessee's persuasion of alternative remedies was not a sufficient and bonafide cause of delay in furnishing the appeal. |
2. |
That, on the facts and in the circumstances of the case, the ld. CIT(A) has erred in not appreciating the addition of Rs.12,40,475/- had been made by the AO on good ground but on erroneous invocation of the provisions of section 11(3)(d) of the Income Tax Act, 1961. The power of the ld. CIT(A) being coterminous with those of AO., the ld. CIT(A) ought to have held that the expenditure of Rs.12,40,475 was not incurred for charitable purposes." |
2. The assessee is a Trust registered u/s 12A of the Income Tax Act, 1961 (in short, 'the Act'), as a charitable Trust. It is governed by its Memorandum and Rules and Regulations and is also registered under the Societies Registration Act. The assessee is having religious, educational and charitable nature of activities. For the year under consideration, it declared an income of Rs. 20,76,010/-, which was claimed as exempt u/s 11 of the Act.
3. The AO noticed that the assessee had incurred expenses of Rs.17,31,291/-, debited as 'Maintenance Expenses' of religious nature. Out of these expenses, the assessee was found to have incurred expenses of Rs.12,40,475/- on Community Centres which were not run by the assessee Trust. These expenses were held to be expenses incurred on Centers out of the working area of the assessee Trust, since these Centers were under the control of other charitable Trusts. The AO opined that by incurring these expenses, the assessee had infringed the provisions of section 11(3)(d) of the Act. It was observed that the assessee had given its no objection to the disallowance of expenses to the extent of Rs.12,40,475/-. As such, the AO treated the amount of Rs.12,40,475/- as deemed income of the assessee, as per the provisions of section 11(3)(d) of the Act. The assessment was thus completed vide order dated 08.06.2005, passed u/s 143(3) of the Act.
4. The assessee filed a rectification application dated 18.07.2005 before the AO. Therein, it was submitted that while calculating income and exemption u/s 11 of the Act, the AO had considered only the amount spent/applied on account of revenue expenditure, but had not considered amounts spent on account of capital expenditure during the year; and that the assessee Trust had spent an amount of Rs.1,86,74,223.05 on account of capital expenditure, as per its Schedule of Fixed Assets.
5. Vide order dated 28.11.2005, passed u/s 154 of the Act, the AO rejected the assessee's application, holding that there was no mistake apparent from record in the assessment order.
6. The ld. CIT(A), vide order dated 29.11.2006, dismissed the assessee's appeal against the aforesaid order dated 28.11.2005 passed u/s 154 of the Act.
7. Meanwhile, the assessee had moved another rectification application dated 04.05.2006 before the AO, contending therein, that for the assessment year 2003-04, an addition of Rs.12,40,475/- had been made for violation of the provisions of section 11(3)(d) of the Act; that the said section had wrongly been interpreted during the assessment proceedings; and that the AO and the assessee's counsel had simply taken that no donation to other Trusts or Institutions could be given and hence, the addition had been made by the AO, whereas the exact legal position was that donations and contributions to other Trusts and Institutions could not be given out of accumulated income.
8. The above rectification application was also rejected by the AO vide order dated 23.05.2006, observing that the issue raised by the assessee was a debatable one and it could not be rectified u/s 154 of the Act. It was also held that there was no mistake apparent from the record.
9. Vide order dated 29.11.2006, the ld. CIT(A) dismissed the assessee's appeal against the aforesaid order dated 23.05.2006.
10. The assessee filed an appeal before the ld. CIT(A) on 03.01.2007. This appeal was against the original assessment order dated 08.06.2005. It was belated by about seventeen months.
11. By virtue of order dated 30.01.2009, the ld. CIT(A) condoned the aforesaid delay in the filing of the appeal. The addition made by the AO u/s 11(3)(d) of the Act was deleted.
12. The Department preferred an appeal before the ITAT against the aforesaid order dated 30.01.2009 passed by the ld. CIT(A).
13. The ITAT, vide order dated 21.07.2009, restored the appeal to the file of the ld. CIT(A), observing as follows:
"This appeal filed by the Revenue for the assessment year 2003-04 is directed against the order dated 30-1-2009 passed by the learned CIT(A), Jalandhar on the following grounds of appeal:—
| '1. |
That, on the facts and in the circumstances of the case, the ld. CIT(A) has erred in law in condoning the delay in furnishing the appeal without appreciating the assessee's persuasion of alternative remedies was not a sufficient and bonafide cause of delay in furnishing the appeal. |
2. |
That, on the facts and in the circumstances of the case, the ld. CIT(A) has erred in not appreciating the addition of Rs.12,40,375/- had been made by the AO on good ground but on erroneous invocation of the provisions of section 11(3)(d) of the Income tax Act, 1961. The power of the ld. CIT(A) being coterminous with those of AO, the ld. CIT(A) ought to have held that the expenditure of Rs.12,40,735/- was not incurred for charitable purposes. |
3. |
That, it is prayed that the order of the ld. CIT(A) be set-aside and that of the Assessing Officer restored. |
4. |
That the appellant requests for leave to add or amend or alter the grounds of appeal before the appeal is heard and disposed of." |
2. |
The present appeal filed by the Revenue agitating that the learned first appellate authority has wrongly condoned the delay of 17 months in filing the appeal before the learned first appellate authority. Accordingly, the learned D.R. stated that the assessee has not explained the delay in detail and has also not filed any documentary evidence supporting the same but the CIT(A) has wrongly condoned the delay of 17 months. Secondly, the learned CIT(A) has also wrongly deleted the addition in dispute without taking into consideration that the assessee did not object to the addition of Rs.12,40,275/- under section 11(3)(d) of the Income tax Act in respect of the donation made by the assessee trust to another trust on a wrong interpretation of the section. The learned D.R. stated that when there is a consented addition made by the A.O., the assessee is debarred from filing the appeal further to the appellate authority. He requested that the impugned order may be cancelled and order of the A.O. may be upheld. |
3. |
On the contrary, the learned counsel for the assessee has controverted the arguments advanced by the learned D.R. and relied upon the order passed by the learned first appellate authority and stated that the learned first appellate authority has rightly condoned the delay in dispute because the assessee remained busy in the assessment proceedings by filing an application under section 154 of the Income tax Act, 1961 before the A.O. He further submitted that the addition of Rs.12,40,475/- has rightly been deleted by the learned CIT(A). He requested that the appeal filed by the Revenue be dismissed. |
4. |
We have heard both the parties and have perused the relevant records available with us. We are of the considered opinion that the learned first appellate authority has condoned the delay of 17 months without mentioning any sufficient reasons for condoning the same. Even otherwise the learned first appellate authority has not discussed any evidence filed by the assessee, if any, in support of the delay of 17 months. We are not upholding the impugned order but in the interest of justice we are of the view that the matter requires thorough re-examination at the level of the CIT(A). We direct him to pass a detailed order on the delay of 17 months in filing the appeal before him and then pass the order under the law on the issue in dispute." |
14. The ld. CIT(A), vide order dated 13.12.2013 once again condoned the delay in the filing of the appeal. On merits, the addition of Rs.12,40,475/-, made by the AO u/s 11(3)(d) of the Act, was deleted.
15. It is the aforesaid order dated 13.12.2013 passed by the ld. CIT(A), which brings the department in appeal again before this Bench in this second round.
16. The first issue raised by the Department by way of Ground no.1 is that the ld. CIT(A) has erred in condoning the delay in the filing of the assessee's appeal without appreciating that pursuing alternative remedies was not a sufficient and bona fide cause for condoning such delay in the filing of the appeal.
17. Challenging the impugned order, the ld. DR has contended that the law favours the diligent and in the present case, if the assessee was not diligent and was lackadaisical in filing the appeal before the ld. CIT(A), unsuccessfully filing frivolous application before the AO for rectification of the perfectly justified assessment order, this definitely was not a good and sufficient cause for the ld. CIT(A) to have condoned the inordinate delay of almost seventeen months in the filing of the appeal. It has been submitted that the ld. CIT(A) has gone wrong in observing that the time taken by the assessee in pursuing unsuccessful proceedings before the AO was a sufficient cause for not filing the appeal in time.
18. On the other hand, the ld. counsel for the assessee has placed strong reliance on the impugned order.
19. Further, relying on Nicco Corporation Ltd. v. CIT [2001] 251 ITR 791/[2003] 129 Taxman 875 (Cal.), it has been contended that therein also, initiation of unsuccessful proceedings was held to constitute sufficient cause preventing the filing of an application for revision in time. Reliance is also placed onSaurashtra Cement & Chemical Industries Ltd. v. CIT [1978] 115 ITR 27 (Guj.), Saurashtra Cement & Chemical Industries Ltd. v. CIT [1987] 168 ITR 231/[1988] 36 Taxman 178 (Guj.) and Delhi Cloth & General Mills Co. Ltd. v. CIT [1987] 165 ITR 599 (Delhi).
20. I have heard the parties and have perused the material on record with regard to this issue. The issue is as to whether the ld. CIT(A) was justified in condoning the delay of almost seventeen months in filing the appeal where the assessee was pursing applications filed u/s 154 of the Act, by way of unsuccessful alternate remedy. In "Nicco Corporation Ltd." (supra), as rightly considered by the ld. CIT(A), it was held that the delay should be condoned in a case where the litigant has proceeded with a proceeding, bona fide unsuccessfully and the time taken for the unsuccessful completion of this proceeding should be excluded. The ld. CIT(A) followed Saurashtra Cement & Chemical Industries Ltd. (supra). The decisions in Saurashtra Cement & Chemical Industries Ltd. (supra) and "Delhi Cloth & General Mills Co. Ltd." (supra), are to the same effect.
21. In line with these decisions, it is seen that in the present case, the assessee, in pursuing the two miscellaneous applications filed before the AO, was advised by its counsel and as such, the ld. CIT(A) is correct in holding that there was reasonable cause for the delay incurred in filing the appeal against the original assessment order. Otherwise too, in the case of Collector, Land Acquisition v. MST Katiji[1987] 167 ITR 471 (SC), it has been held that an appeal should be disposed of on merits for meeting the ends of justice. Moreover, the assessee cannot be said to stand to gain anything by filing the appeal after a long delay. Rather, by intentionally filing the belated appeal, the assessee has invited the consequences arising therefrom, i.e., protracted litigation which, at the present stage is in the form of this second appeal in its second round. Now, obviously, the assessee cannot be attributed any malafide intention or ulterior motive in intentionally delaying in the filing of the appeal, in the circumstances. Moreover, even lack of due diligence cannot be ascribed to the assessee, as the assessee, in filing and pursuing the two rectification applications before the AO, acted in good faith on legal advise, which fact has not been disputed. Since the addition in the assessment order was based on the misplaced admission of the assessee, the assessee cannot be said to have erred in filing the rectification applications before the AO rather the filing an appeal before the ld. CIT(A), on legal advice.
22. In view of the above, finding no merit therein, the grievance raised by the department by way of Ground no.1 is rejected, upholding the ld. CIT(A)'s order on this score.
23. So far as regards Ground no.2, the department contends that the ld. CIT(A) has erred in not appreciating that the AO had made the addition of Rs.12,40,475/- on good ground, but on erroneous invocation of the provisions of section 11(3)(d) of the Act. It is contended that since the powers of the ld. CIT(A) were co-terminus with those of the AO, the ld. CIT(A) ought to have held that the expenditure of Rs.12,40,475/- has not been incurred for charitable purposes.
24. The facts are that while checking the expenses debited under the head 'Maintenance Expense' of religious nature, the AO noticed that the assessee had incurred expenses of Rs.17,31,291/- and out of these expenses, expenses to the extent of Rs.12,40,475/- stood incurred on Community Centers which were run by the assessee itself, but were under the control of other charitable trusts. The AO observed that while incurring these expenses, the assessee had violated the provisions of section 11(3)(d) of the Act. It was observed that the assessee had itself given its no objection to the disallowance of these expenses of Rs.12,40,475/-. The AO treated these expenses of Rs.12,40,475/- as deemed income of the assessee as per the provisions of section 11(3)(d) of the Act. The ld. CIT(A) deleted this addition.
25. The ld. DR has contended that the ld. CIT(A) has erred in deleting the addition rightly made by the AO and for doing so, the ld. CIT(A) has gone wrong in following the order dated 30.01.2009 of his predecessor. It has been submitted that the ld. CIT(A) has also erred in holding that section 11(3)(d) of the Act has no application; that the ld. CIT(A) has further gone wrong in placing reliance on the fact that similar expenditure, as the one under consideration, was allowed by the AO in many subsequent years while completing the scrutiny assessments; that each year is an independent year; that besides, the facts of the year under consideration are entirely different from all those years, which has not been taken into consideration by the ld. CIT(A); that the ld. CIT(A) has failed to consider that the expenditure of Rs.12,40,475/- is religious expenditure, the detail whereof has been tabulated in the earlier first appellate order dated 30.01.2009 and reproduced at pages 14-15 of the impugned order; that once the expenditure is religious in nature, it cannot, obviously, be said to be charitable expenditure and the ld. CIT(A) has failed to take this aspect of the matter into account; and that, therefore, the order under appeal on this score is not sustainable in the eye of law and the same be set aside and the addition be restored.
26. On the other hand, while placing strong reliance on the impugned order in this regard, the ld. counsel for the assessee has contended that there is no error in the action of the ld. CIT(A) in taking into account the earlier order dated 30.01.2009 and adopting the reasoning taken therein by his predecessor CIT(A). It has been contended that it remains undisputed that as per the income and expenditure statement furnished by the assessee alongwith the return of income, the total income of the assessee for the year under consideration, from all sources of income, amounted to Rs.1,66,11,541/-. However, the expenditure of Rs.12,40,475/- was not incurred out of any accumulate income. It has been submitted that as noted by the AO himself, the amount of Rs.12,40,475/- was included as amount spent at Community Centre and Varanasi Ashram for the purpose of education of the Fathers who serve the Society in various Schools run by it, as the Teachers, Supervisors, Principals, etc. It has been contended that the acceptance of the addition by the assessee during the assessment proceedings was of no consequence, since the addition was not at all called for, in view of the above legal position. It has been contended that the AO did not record any finding that the payments made by the assessee were out of the accumulation made by the assessee u/s 11(2) of the Act and that the provisions of section 11(3)(d) of the Act were wrongly applied, there being no violation of the said provisions at the hands of the assessee.
27. The ld. counsel for the assessee has further contended that since similar expenditure was allowed by the AO in many subsequent years under scrutiny assessment, under similar facts and circumstances, which facts have not been demonstrated to be dis-similar from those present for the assessment year under consideration, the ld. CIT(A) cannot be said to have committed any error in taking those scrutiny assessment orders for subsequent years into consideration.
28. Besides, it has also been urged that the argument of the department that the expenditure was of a religious nature and that therefore, it cannot be said that it was charitable, does not arise from the impugned order; that the AO has himself stated in the assessment order that the amount was given to another charitable trust; that therefore, there is no dispute regarding the expenditure being religious in nature; that the AO accepted the assessee's application of income; that the only dispute is regarding the applicability or otherwise of the provisions of section 11(3)(d) of the Act; and that under section 11(3)(d), which was introduced w.e.f. assessment year 2003-04, the accumulation is not allowed for being given to any other charitable institution, which is not the case here, as in the present case, the donation was given out of the current income of the assessee, there being no accumulated income of the assessee.
29. I have heard the parties on this issue in the light of the material available on record. The AO held the amount of Rs.12,40,475/-, expanded by the assessee on Community Centres, which were not run by the assessee Trust, to be the deemed income of the assessee. The addition was made by invoking the provisions of section 11(3)(d) of the Act. Now, section 11(3)(d) of the Act is applicable in respect of any income referred to in section 11(2) of the Act, which deals with the application of accumulated income of the assessee. Section 11(2) reads as follows:
'(2) Where eighty-five per cent, of the income referred to in clause (a) or clause (b) of sub-section (1) read with the Explanation to that sub-section is not applied, or is not deemed to have been applied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to such purposes in India such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely:—
| (a) |
such person specifies, by notice in writing given to the Assessing Officer in the prescribed manner, the purpose for which the income is being accumulated or set apart, which shall in no case exceed ten years; |
(b) |
the money so accumulated or set apart is invested or deposited in the forms of mode' specified in sub-section (5): Provided that in computing the period of ten years referred to in clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded. Provided further that in respect of any income accumulated or set apart on after the Ist day of April, 2001, the provisions of this sub- section shall have effect as if for the words-"ten years" at both the places where they occur, the words "five years" had been substituted. |
Explanation - Any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub-section (1), read with the Explanation to that sub-section, which is not applied, but is accumulated or set apart, to any trust or institution registered u/s 12AA or to any fund or Institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, shall not be treated as application of income for charitable or religious purposes, either during the period of accumulation or thereafter.'
Section 11(3)(d) read as under:
"(3) Any income referred to in sub-section (2) which—
(a) to (c)
(d) is credited or paid to any trust or institution registered u/s 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) { or sub-clause (via) of clause (23C) of section 10, shall be deemed to be the income of such person of the previous year in which it is so applied or ceases to be so accumulated or set apart or ceases to remain so invested or deposited or credited or paid or, as the case may be, of the previous year immediately following the expirty of the period aforesaid."
30. Thus, the very opening words of section 11(2) are relevant, in as much as they make mention of eighty five percent of the income referred to in section 11(1) (a) (b), as per which, the income derived from the property held under Trust, as provided therein, shall not be included in the total income of the previous year of the person in receipt thereof. Both sections 11(1)(a) and 11(1)(b) talk of application of income accumulated or set apart for application for charitable or religious purposes.
31. In the present case, it has nowhere been the case of the department that there was any accumulation or setting apart of income by the assessee. It remains undisputed that the expenditure was incurred out of the current income of the assessee, since it had not accumulated any income. It was duly taken into consideration by the ld. CIT(A) in para 3.2 of the order dated 30.01.2009, which was followed in the impugned order, that the income and expenditure account of the assessee showed current year's income on account of interest, school fees and miscellaneous income. The expenditure on account of payment to other religious institutions or trusts stood debited against the current year's income only. This remained and remains undisputed. Hence, the ld. CIT(A) cannot be said to have committed any error whatsoever in adopting the line of reasoning taken by the ld. CIT(A) in passing the order dated 30.01.2009, in framing the impugned order. Rather, it would not be inappropriate to reproduce here the aforesaid para 3.2 of the order dated 30.01.2009:
"3.2 The income and expenditure account of the appellant shows current year's income on account of interest, school fees and misc. income. The expenditure on account of payment to other religious institutions or trust is debited against the current year's income only. Thus, it is apparent that the payment to other trust is out of current income and not from any income accumulated u/s 11(2), noted above, deals with the cases where 85% (75% till AY 2002-03) of the income of the eligible trust was not applied or was not deemed to have applied to charitable or religious purposes during the previous year but was accumulated or set apart. It states that the same would not be included in the total income on satisfaction of certain conditions. Section 11(3)(d), which deems payments made to other trusts etc. as deemed income of the assessee, applies to income accumulated u/s 11(2), and would, therefore, not be applicable in respect of the current year's payment to another religious institution.
In para 21 of the Circular no. 8 dated 27.08.2002, the CBDT has explained the implication of insertion of section 11(3)(d) and the Explanation inserted below section 11(2) of the Act. This is extracted as under:
1. Restriction on the application of accumulated income of the charitable or religious trusts 2.1. Through Finance Act, 2002, an Explanation has been inserted below sub-section (2) of section 11 so as to provide that any amount paid or credited out of income from property held under trust referred to in clause(a) or clause (b) of sub- section (1), read with the Explanation to that sub-section, which is not applied, but is accumulated or set apart, to any trust or institution registered u/s 12AA or to any fund or institution referred to in sub-clause (iv) or sub-clause (for sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, either during the period of accumulation or thereafter, shall not be treated as application of income for charitable or religious purposes. Thus, payment to other trusts and institutions out of income from property held under trust in the year of receipt will continue to be treated as application of income. However, any such payment out of the accumulated income shall not be treated as application of income and will be taxed accordingly.
21.2 Through Finance Act, 2002, a new clause (d) has also been inserted in sub-section (3) of section 11 so as to provide that if any income referred to sub-section (2) of the said section, is paid or credited to any trust or institution registered u/s 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or (v) or (vi) or (via) of clause (23C) of section 10, such payment or credit shall be deemed to be the income of the person making such payment or credit, of the previous year in which such payment or credit is made.
It has been clarified above that only payments out of accumulated income would not be treated as application of income of the charitable institution and that such payments out of accumulated income would alone be deemed to be income of the trust. In para 21.1 of this Circular, it has been clarified that payments to other trusts and institutions out of income of the current income of the trust would continue to be treated as application of income. The facts in the case of the appellant show that the payment to other trusts/institutions was out of the current income of the trust. Expenditure head of the expenses of the Income and Expenditure account. Thus, as per the provisions of the Act and as per Circular No.8 discussed above, the addition made by the AO was uncalled for."
32. It would also be appropriate to reiterate the contents of para 21 of the CBDT Circular No.8 dated 27.08.2002, explaining the implication of section 11(3)(d) and the Explanation to section 11(2) of the Act. As per this para, inter-alia, payment to other Trusts and Institutions out of income from property held under Trust in the year of receipt will be continued to be treated as application of income, but any such payment out of accumulated income shall not be treated as application of income and will be taxed accordingly. The stress here is on 'payment out of accumulated income'. However, as discussed, it remains unchallenged that the present assessee did not have any accumulated income and the payment was made out of the income of the current year.
33. Further, the ld. CIT(A) also took note of the fact that neither in the show cause notice, nor in the assessment order was any mention made of the provisions of section 11(2) of the Act, before invoking the provisions of section 11(3)(d). Therefore, obviously, the AO wrongly invoked the provisions of section 11(3)(d) without bringing on record anything with regard to the provisions of section 11(2) of the Act. In this regard, the Ground taken by the department states that the powers of the ld. CIT(A) being co-terminus with those of the AO, the erroneous invocation of the provisions of section 11(3)(d) of the AO ought to have been rectified by the ld. CIT(A), holding that the expenditure was not incurred for charitable purposes.
34. Now, firstly, if at all, this question ought to have been raised by the AO before the ld. CIT(A) in the first place itself. However, as available from Item no.10 at page 1 of the impugned order, none was present for the department in the proceedings before the ld. CIT(A). Moreover, it remains undisputed that the expenditure was incurred for the purpose of donation of the Fathers who served in various schools run by the assessee, as teachers, supervisors and principals, etc. The assessee runs several educational schools in Punjab under the name of Mount Carmel School. The assessee is registered under section 12A(a) of the Act, besides being registered with the Registrar of Societies, Punjab. The registration continues hitherto. The fact that the objects of the society are charitable stands accepted by the department in all the subsequent years. The assessee has not been shown to have carried out any activity which is not in consonance with its charitable objects. As such, there is no force in the argument that the expenditure was not incurred for charitable purposes. This issue was never raised before the ld. CIT(A) by the AO, though the AO has a dual capacity, i.e., not only of adjudicator, but also of investigator, and he is a party before the ld. CIT(A). Be that as it may, as discussed, no case stands made out of the expenditure having not been incurred by the assessee for charitable purposes. It has not been shown that the purpose of education of the Fathers, who serve in the various schools of the assessee as teachers, supervisors and principals, etc., is not a purpose towards education. The ld. DR has referred to the chart/table at pages 14-15 of the impugned order, giving details of the expenses. The third column therein narrates the recipient in each case. The ld. DR contends that this narration shows the recipient to be religious Community Centre, religious Ashram and monastery. Thus, as per the ld. DR, expenditure has been incurred towards religious purpose and not a charitable one.
35. Per-contra, the ld. counsel for the assessee has contended that this argument does not arise either from the impugned order, or from the AO's order, which stands merged in the impugned order. Now, obviously, this argument does not arise form the impugned order, since the Ground itself, i.e., Ground no.2, challenges that though the powers of the ld. CIT(A) are co-terminus with those of the AO, the ld. CIT(A) has erred in not holding that the expenditure was not incurred for charitable purposes, in the instance of the provisions of section 11(3)(d) of the Act having been wrongly applied by the AO. That being so, this argument is available to the department at this stage.
36. Now, coming to the issue per se, i.e., as to whether the payment is towards religious purposes and not charitable purposes, it is to reiterate that it has not been disputed that the payment was for the purpose of the education of the Fathers, who serve in various schools run by the assessee, as teachers, supervisors and principals, etc. Before the AO, it was because of the wrong admission of the assessee that the addition was made. The two rectification applications filed by the assessee before the AO met with a negative fate qua the assessee, i.e., they were rejected. However, the fact remains that it has not been shown that the payment in question was not towards the education of the Fathers serving in the schools of the assessee. As such, the narration in the table contained at pages 14-15 of the impugned order does not make the payment to be for a religious purpose and not for a charitable one. This narration, by itself, is not determinative of the nature of the expense, particularly when education of the Fathers has not been shown not to be towards education, which is a charitable purpose of the assessee.
37. Therefore, the grievance of the department that the ld. CIT(A), holding powers co-terminus with those of the AO, ought to have held the expenditure not to have been incurred for charitable purposes, is found to be devoid of force, particularly in the absence of any material on record to prove the expenditure to be towards any religious purpose. Hence, Ground no.2 is rejected.
38. To sum up, I hold that the ld. CIT(A) was correct in (i) condoning the delay incurred by the assessee in filing its appeal and (ii) deleting the addition wrongly made by the AO.
39 In the result, the appeal is dismissed.