Judgment:
Adarsh Kumar Goel, J.
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 Under Section 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 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 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 v. 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 the case of CIT v. 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.