1. This is an appeal preferred by the assessee against the order of CIT(A) on various grounds which ara as under: "1. That on the facts and circumstances of the case, the learned CIT(A) has erred in law and on facts in confirming the order of the AO determining an income of Rs. 68,14,564 comprising the following amounts : Surplus of project advance received over expenditure (29,61,412-17,86,321) 2. That on the facts and circumstances of the case, the CIT(A) erred in confirming the AO's finding that the appellant was not entitled to exemption under Section 10(22) of the Act.
3. That on the facts and circumstances of the case, the IT authorities levied tax on what could not be termed as income or was otherwise exempt under provisions of the IT Act, viz., Section 10(22) or alternatively under Section 11 of the said Act.
4. That on the facts and circumstances of the case, the AO as well as CIT(A) failed to consider the grant of exemption under Section 11 of the Act, alternatively and in doing so they also failed to follow the Board's circulars : (a) Circular No. 194/16-17-IT(AI) extracted from (1982) 132 ITR 445, 453-54(Cal) see p. 315 of the Pithisaria's Reprinted Circular Vol. I 1998 Edition.
(b) Circular No. 14 (XI-35) of 1955 dt. 11th April, 1955, p. 1434-35 of Pithisaria's & Chaturvedi, 1998 Edition, Vol. I; 5. That on the facts and circumstances of the case, the order of the CIT(A) is also vitiated for reason that he failed to adjudicate upon the alternative ground regarding claim of exemption under Section 11 of the Act raised before him as per written submissions.
6. That, on the facts and circumstances of the case, the AO as well as CIT(A) failed to give the opportunity to the appellant to support its case for exemption under Section 11 of the Act." 2. Though the assessee has raised various grounds of appeal but the entire controversy in this appeal revolves around three main issues : (i) Whether the assessee is entitled to exemption under Section 10(22) of the IT Act.
(ii) Whether the capital based grant receipt during the year was taxable income of the assessee.
(iii) If the assessee is not entitled to exemption under Section 10(22) of the IT Act, whether the income derived by the assessee is exempt under Section 11 of the IT Act.
3. Before dwelling on the main issues, we examined the brief facts of the case available from the record according to which assessee has filed the return of income declaring total income at nil along with audited income and expenditure account balance sheet etc. On perusal of memorandum of association of the assessee, it was noted by the AO that the main aims and objects are to help in the promotion, development and dissemination of knowledge regarding evaluation of women's role in society and trends in social and economic organisation which impinge on women's lives and status with a view to (a) increasing public consciousness on such matters; (b) assisting in the framing and implementation of adequate measures for revising women's equality; and (c) working for enhancing women's effective participation in the development process. For achieving these objectives the assessee shall : (i) Undertake, aid, promote and co-ordinate both fundamental and applied study and research on women in development.
(ii) Organize and assist trading programmes for scholars, development agents, communicators, members of women's organizations/co-operatives, etc. and to promote and extend their activities in the direction of expanding women's participatory opportunities and status; (iii) To provide on request advisory and consultancy services to Government, educational institutions, development agencies, co-operatives, etc. on issues relating to women's development.
4. In view of these foregoing objectives, the AO asked the assessee that since the assessee is engaged in multifarious activities, not connected with only education why exemption claimed under Section 10(22) be not denied In response to show-cause notice, the assessee furnished a detailed reply and stated therein that at different point of time a refresher course was being conducted jointly offered by School of Women's Studies, Jadavpur University, Calcutta, and the assessee. A certificate for participation was issued at the end of the course. On the basis of these activities, assessee has emphasized that it is existing solely for educational purpose and not for purpose of profit within the meaning of Section 10(22) of the IT Act.
5. Aggrieved, the assessee preferred an appeal before the CIT(A) challenging the assessment order on various grounds. The CIT(A) examined the various grounds raised before it but while giving a finding thereon, the CIT(A) did not give a specific finding on ground No. 3 which relates to the taxability of capital based grant received during the year at Rs. 6,43,175 for purchase of capital asset. With regard to alternative claim for exemption under Section 11 of the IT Act, the CIT(A) turned it down for the reasons that it was not made before the AO either in the return of income or during the course of assessment proceedings. The CIT(A) finally confirmed the AO's action of adding back alleged capital based grant, receipts of Rs. 6,43,175 and also an addition of Rs. 11,75,091 and Rs. 49,96,298 on account of surplus of project advance receipt over expenditure and surplus from HIVOS, respectively. Now, the assessee has preferred an appeal before the Tribunal and reiterated his contentions earlier raised before the lower authorities.
6. During the course of hearing, the learned counsel for the assessee has submitted that the tied up grants neither constitute corpus nor income of the assessee because they were received for specific purpose for being spent in accordance with the object of the trust on specific projects within a specified time. Separate accounts were maintained for each donor and the grant received from the donors and utilization fund was also debited in their respective accounts. Balance, if any, left at the end of specified period, was either refunded or it was carried over to be realized in accordance with the instruction of the donors. In support of this contention, the learned counsel for the assessee has invited our attention to the details given in chart filed during the course of hearing. He has also placed reliance upon certain sanction letters specifying the project and purpose for which grants were received from the donors and these documents are available at page No.36, 44, 45, 56, 58, 64, 69 and 71 to 78. Learned counsel for the assessee Mr. O.S. Vajpayee further submits that the assessee has no right or interest in the grant. He acted only as a trustee and the grants were utilized on specific projects conducted by the assessee in fulfilment of its object and such grants were received for specific projects for specified period. The assessee could not appropriate the main grant or the surplus in its corpus or income, The grants were purely by way of donations, gifts or bounty and were meant for specific purposes. Since these grants were made for specific purposes and the assessee held them in trust, it cannot form part of either corpus or income as it could not be treated as revenue receipt in the hands of the assessee. In support of this contention, the learned counsel for the assessee has relied on following judgments ; (i) Siddhartha Publications Ltd. v. CIT (1981) 129 ITR 603 (Del); and (ii) Nirmal Agriculture Society v. ITO (2000) 67 TTJ (Hyd) 127: (1999) 71 ITD 152 (Hyd).
7. The learned counsel for the assessee further contended that once it is held that these grants could not be treated as income there was no question of exemption under Section 10(22) and 11 of the IT Act. Though the assessee has raised specific plea before the CIT(A) in this regard through its letter dt. 4th December appearing at page Nos. 233 to 266 the CIT(A) did not consider this aspect of the matter and approved the action of the AO.8. With regard to exemption under Section 10(22), Mr. Vajpayee has invited our attention to the objects of the assessee society with the submission that the key words in the primary object are promotion, development and dissemination of knowledge (pertaining to the women's welfare), the economic and social status, etc. Various methods were listed out for achieving their fulfilment. The primary activity of the assessee was to educate and train the women with the aid of knowledge acquired through different method. For this purpose, the beneficiaries at the grassroot were involved in the process of education in training in the various fields. He has also placed heavy reliance upon the written submissions filed before the lower authorities and contended that the assessee existed solely for educational purpose and in this connection, learned counsel for the assessee invited our attention to the meaning of words 'education1 and 'knowledge' as given in Black's Law Dictionary and Law Lexicon by P. Ramanatha Aiyer. He further submitted that in the light of these definitions, the education and training programmes conducted by the assessee are fully covered within the meaning of term 'education'. Education is imparted by way of in house training of the trainers as well as the beneficiary and it is also done on the spot and in the field directly involving the beneficiaries. Seminars and workshops are organized at different places with the help of members of the faculty as well as others who include eminent educationists, scholars, and experts in their respective fields relating to the welfare of women. He has also tried to distinguish the judgment of the Lok Shikshana Trust v. CIT (1975) 101 ITR 234 (SC). He placed reliance on the judgment of Education Institute of American Hotel and Association, In re (1996) 219 ITR 183 (AAR) according to which course and certification programmes in hospitality management, educational training, conducting workshops and seminars, providing training course material and institutional resources was held as liable for exemption under Section 10(22) of the IT Act.
9. Learned counsel for the assessee has further placed reliance upon the judgment of the apex Court in the case of Dr. Ravi Singh and Anr.
v. Union of India and Ors. (1997) 225 ITR 302 (Del) wherein their lordships have held that one should not take an unreal and hypertechnical view. None of the lower authorities have raised the issue that the object of the society is to make profit. On the contrary, they have applauded the activities of the society. There was no finding of the AO or the CIT(A) that the assessee does exist for making profit. The magnitude and importance of role of the assessee in the field of imparting education in this regard can be judged by the act that the assessee has been assigned the job of formulating the education policy of women in India. In this background, there was no justification to deny exemption under Section 10(22) of the Act.
10. With regard to exemption under Section 11 of the IT Act, the learned counsel for the assessee has submitted that Section 11 applies only to what constitutes as income of the assessee and such income comprises only following two items : (1) contribution received from ICSSR without any stipulation as to their use which forms part of assessee's income; (2) miscellaneous income including interest. These two items are taken into the income and expenditure account. There is an excess of expenditure over income to the tune of Rs. 24,122.48 and the assessee is entitled to exemption under Section 11 with regard to the aforesaid items of income as it is duly registered under Section 12A of the Act and the requisite conditions were also fulfilled. In support of his contention, the learned counsel for the assessee has relied upon the following judgments : (i) Educational Institute of American Hotel & Motel Assciation v. CIT (supra); (ii) Aditanar Educational Institution v. Addl. CIT (1997) 224 ITR 310 (SC); (ix) Dy. CIT v. Prajapita Brahmakumaris Ishwariya Vishwa Vidhyalaya (1999) 65 TTJ (Jp) 654 : (1999) 71 ITD 169 (Jp); and (x) Gujarat State Co-operative Union v. CIT (1992) 195 ITR 279 (Guj).
11. Learned counsel for the assessee further states that in denying the claim under Section 11 of the Act, the AO has failed to follow the Board's Circular No. 194/16-17 IT. It has been repeatedly held by the apex Court and various High Courts that it is the duty of the AO to allow the claim to the assessee if he is entitled for it though it was not specifically raised before the AO. Since the AO himself has observed while framing the assessment that the activities may qualify for exemption under Section 11 of the IT Act, he should have examined the claim of exemption of the assessee under Section 11 of the Act though it was not specifically raised by the assessee before the AO and the CIT(A) has also erred in confirming the order of the AO on this count instead of remanding the matter back to AO for reconsideration of claim of exemption under Section 11 of the Act, 12. Learned Departmental Representative, on the other hand, has submitted that exemption under Section 10(22) can only be given to a university or other educational institutions which are existing solely for educational purpose and not for the purpose of profit. While granting an exemption under this section, a heavy responsibility is cast upon the AO to examine whether the assessee is existing solely for educational purpose or it is involved in other activities besides educational activity. If the assessee exists for multifarious activities though one of the activities is educational activity, it is not entitled to have exemption under Section 10(22) of the IT Act.
Before granting an exemption under Section 10(22) the AO is required to ascertain from the surrounding circumstances that the assessee must exist solely for educational purpose and not for the purpose of profit.
In the instant case, the learned Departmental Representative has invited our attention to the objects of the assessee and other correspondence with the submission that the assessee does not exist solely for education purpose, but on the other hand, it was engaged in multifarious activities. He further submitted that the maximum energy of the assessee was utilized in research activity. He has also invited our attention to various documents to establish that these activities do not relate at all with educational purpose. He further contended that the voluntary contribution received by a trust created wholly or partly for charitable or religious purpose or by an institution established wholly or partly for such purpose is an income of the trust or institution as per provisions of Section 2(24) of the IT Act. The word 'charitable purpose' was defined under Section 2(15) of the Act.
At the most, assessee's case may fall within the definition of charitable trust because the charitable purpose includes relief of the poor, education, medical relief and advancement of any other job of general public utility. He has also invited our attention that the assessee is registered under Section 12A of the IT Act.
13. In support of his contention that the assessee does not exist solely for educational purpose but is involved in multifarious activity which may be called charitable, learned Departmental Representative invited our attention to a letter dt. 27th April, 1992, appearing at p.
No. 48 though which a grant was sought for the project advocacy and action for recogntion of early childhood care and education as basic service. In this matter, one of the objects was stated to create a data bank of individuals and agencies involved in child welfare and development activities. He also invited our attention to the details of project advance receipt and expenditure incurred during the assessment year in question with the submission that most of the grants were received for other than educational purpose like wasteland development through women's organization, creches for working and ailing women's children etc. Besides, learned Departmental Representative invited our attention to a letter of grants appearing at p. Nos. 56 and 58 in which grant was sanctioned for activities other than educational purpose. He further invited our. attention to the budget summary appearing at page No. 74 in which out of total grant receipts of Rs. 85,66,000, the assessee has spent a sum of Rs. 6,65,000 on educational purpose.
Likewise, out of the total grant received from ICSSR at Rs. 14,73,168,21 during the year the assessee had incurred an expenditure of Rs. 14,73,168 under different heads and none of the heads is relatable to educational purpose. He also invited our attention to the letter of grant given at Midnapur Zila Parishad appearing at page No.69 of the compilation and from this letter, it is evident that it was given for wasteland development. The learned Departmental Representative further submitted that there is enormous evidence on record to establish that the assessee was engaged in multifarious activities other than the educational. It means that the assessee cannot be said to have existed solely for the educational purpose and as such, it is not entitled for exemption under Section 10(22) of the IT Act.
14. With regard to tied up grant received, the learned Departmental Representative has submitted that once it is received by the assessee and was not fully spent, whatever amount is left out, it would be revenue receipt and exigible to tax. With regard to applicability of Section 11 of the IT Act, learned Departmental Representative has submitted that in the original return of income, the assessee did not raise any claim of exemption under Section 11 of the IT Act. As such, the Revenue authorities are justified in declining to entertain the same. In support of his contentions, learned Departmental Representative has relied upon the following judgments : (iv) CIT v. Maharaja Sawai Mansingh Museum Trust (1988) 169 ITR 379 (Raj); (vi) Bihar Institute of Mining and Mine Surveying v. CIT (1994) 208 ITR 608 (Pat); (viii) CIT v. Nagpur Hotel Owners Association (2001) 247 ITR 201 (SO;CIT v. U.P. Forest Corporation (x) Mahila Sidh Nirman Yojna v. IAC (1994) 50 TTJ (Del) 494 : (1994) 50 ITD 472 (Del); (xii) CIT v. Gwalior Rayon Silk Manufacturing Co. (1992) 196 ITR 149 (SC); 15. We have heard the rival submissions and carefully perused the orders of the authorities below and judgments referred to by the parties and material available on record. The moot question before us is to examine whether the assessee exists solely for educational purpose and not for the purpose of profit. If not, whether the tied up grants constitute corpus or income of the assessee. For deciding an issue whether the assessee exists solely for educational purpose, we have to look into the objects of the assessee and the activities undertaken by it during the year under account. According to memorandum of association, the main objects of the assessee were to help in the promotion, development, dissemination of knowledge regarding evolution of women's role in society and trends in social and economic organization which impinge on women's lives and status with a view to increasing public consciousness on such matters, assisting in the framing and implementation of adequate measures for realizing women's equality and working for enhancing women's effective participation in the development process. From a bare reading of the aims and objects of the assessee society, it appears that assjessee existed not only for educational purpose but for doing other multifarious activities. No doubt, educational purpose has been defined in the case of Institution of American Hotel & Motel Association v. CIT (supra) in which their lordships have held that under the provisions of Section 10(22) of the IT Act, the condition precedent to the availability of exemption to an educational institution can be stated thus : (a) educational institution must actually exist for the application of the said section and mere taking of steps would not be sufficient to attract the exemption; (b) educational institution need not be affiliated to any university or Board. In fact, society may not itself be imparting education and it is enough if it runs some school or college; (c) the educational institution must run solely for educational purpose not for purpose of profit; but merely because there is a surplus of receipts over expenditure, it cannot be said that the educational institution exists for profit; (d) an entity may have income from different sources but if the income is from educational institution which exists solely for educational purpose and not for purpose of profit, then that income would be entitled to exemption and further, the income should be directly relatable to the educational activity, In the case of Aggarwal Shiksha Samiti Trust v. CIT (supra) their lordships of the Rajasthan High Court have held that what is required for exemption is that the educational institution should exist solely for the purpose of education and not for the purpose of any profit. Merely because the assessee did not run directly any educational institution and it was run and managed by the other society or trust to which assessee has given donation, it could not be said that the assessee did not fulfil the requirement of Section 10(22).
16. In the case of Aditanar Educational Institution v. Addl. CIT (supra), their lordships of the apex Court have held that the language of Section 10(22) of the Act is plain and clear and the availability of the exemption should be evaluated each year to find out whether institutions existed during the relevant year solely for educational purpose and not for purpose of profit. After making the expenditure, if any surplus results incidentally from the activity lawfully carried on by the educational institution, it will not cease to be one, existing solely for educational purpose since the object is not one to make profit. The object of the society should be to establish, run, manage or assist college or schools or other educational institutions solely for educational purposes and in that regard, to raise or collect funds, donations, gifts, etc. and college and schools were the media through which the assessee imparted education and effectuated its object. In substance and reality, the sole purpose for which the assessee had come into existence was to impart education at the level of college and schools and so, such an educational society should be recorded as an educational institution coming within Section 10(22) of the IT Act. In the case of Gujarat State Co-operative Union v. CIT (supra) their lordships have held that though in the context of the provisions of Section 10(22), the concept of education need not be given any wide or extended meaning; it surely would encompass systematic dissemination of knowledge and training in specialized subjects. The question whether an educational institution is existing solely for educational purpose can be decided with reference to the activity actually carried on by it.
Advancement of knowledge brings within its fold suitable methods of its dissemination and though the primary method of sitting ia.a class room may remain ideal for most of initial education, it may become necessary to have a different look for further education. It is not necessary to nail down the concept of education to a particular formula. Its progress lies in acceptance of new ideas and development of appropriate means to reach them to the recipients. Their lordships have further held that mere existence of profit will not disqualify the institution; the sole purpose of its existence is not profit-making but educational activity. In the case of Sole Trustee, Loka Shikshana Trust v. CIT (supra), the word 'education1 was examined by their lordships and it was held that the word 'education' connotes the process of training, developing the knowledge, skilled mind and character of students by normal schooling and has not been used in the wide and extensive sense according to which every acquisition of further knowledge constitutes education. The word 'education' was again defined by Rajasthan High Court in the light of aforesaid judgment of the apex Court in the case of CIT v. Maharaja Sawai Mansingh Museum Trust (supra) that education connotes the process of training and developing knowledge of students by normal schooling. The museum cannot be taken to be an educational institution existing solely for the educational purpose. As such, it cannot be entitled to exemption under Section 10(22) of the IT Act, 17. The scope of Section 10(22) of the IT Act was again examined by the Gujarat High Court in the case of CIT v. Sorabjee Parikh (supra) in which their lordships have held that in order to earn total exemption under Section 10(22) of the IT Act, the assessee should be an educational institution or an establishment which primarily engages itself in educational activity. Though the words 'educational activity' are words of very wide amplitude, the element of imparting education to students or the element of normal schooling where there are teachers and taught must be present so as to fall within the sweep of Section 10(22). Institution may incidentally take other activities for the benefit of students or in furtherance of their education. It may invest its funds in any manner it likes or it may provide scholarship or other financial assistance which may be helpful to students in pursuing their studies. However, such incidental activities alone in the absence of actual activity of imparting education by normal schooling or normal conducting of class, would not be sufficient for the purpose of qualifying the institution to earn the benefit of Section 10(22).
Simply by giving a scholarship or grant to the institution to enable them to pursue their educational activity without any control whatsoever of such students, an institution cannot be said to be an educational institution.
18. Turning to the case in hand, in the light of definition of educational institution and the scope of Section 10(22), given by the apex Court and the various High Courts in the aforesaid judgment, we find from a plain reading of the aims and objects of the assessee that most of its activities are related to promotion, development and dissemination of knowledge which may be termed as imparting education to the womenfolk. But for bringing the assessee within the ambit of provisions of Section 10(22) of the IT Act, it has to be positively established that assessee did exist solely for the educational purpose and none else. During the course of hearing, learned Departmental Representative has invited our attention to various letters and grant and other details appearing at page Nos. 48, 56, 58, 69, 71, 74, 103 and 112 and from a careful perusal of these letters, we are of the view that besides educational activities, assessee was also engaged in other activities such as wasteland development," creches for working and ailing women's children, bibliography of violence against girl child, gender dimension of labor migration etc. The details of project advance receipt and expenditure incurred are given at page Nos. 111, 112 of the compilation of the assessee wherefrom it is quite evident that major portion of the grant was spent on different activities other than the educational activity. Learned Departmental Representative has also invited our attention from the budget summary appearing at page No, 74 wherefrom it is evident that total contribution given by ICSSR and HIVOS was of Rs. 85,66,000 out of which Rs. 6,65,000 was spent on courses on women studies. Similar is the position with regard to the grants given by ICSSR as from its details given at page No. 160 of the compilation, it is evident that the entire grant of Rs. 14 lakh was spent under different heads. We have also carefully perused the various judgments referred to by the parties out of which some of them are quoted above and we find that in all these cases, in which the assessee was held to be entitled to exemption under Section 10(22), assessee was solely engaged in educational activities and if there are any ancillary activities, that activity is also directly related to the main activity of imparting education.
Keeping in view the totality of the facts and circumstances of the case in the light of various judicial pronouncements, we are of the considered opinion that the assessee did not exist solely for educational purposes but was involved in multifarious activities though some of the activities are relatable to educational purpose. As such the assessee's case does not fall within the ambit of Section 10(22) and hence not entitled for exemption under the said section.
19. Now, the next question comes whether tied up grants are taxable in the hands of the assessee. In support of his claim learned counsel for the assessee has invited our attention to the judgments in the cases of Siddharth Publication Ltd. v. CIT (supra), Nirmal Agricultural Society v. ITO (supra) and unreported judgment of the Tribunal of Delhi Benches in the case of Professional Assistance for Development Action v. JTO in ITA No. 6207/Del/87, dt. 25th Aug., 1989 with the submission that the tied up grants can only be used as per the specific directions of the donor. In support of this contention, our attention was invited to various letters of grants appearing at page Nos. 36, 39, 44 and 45, 56, 58, 64, 71 to 88 and their respective accounts appearing at the compilation of the assessee. The learned counsel for the assessee has emphatically argued that whenever tied up grants were received, these were used as per the specific terms and directions of the donors and whatever amount was left unused, most of the time it was returned back to the donor or it was kept separately in the account of the respective donor. Since the assessee has maintained individual accounts of all the donors unused tied up grants cannot be called to be taxable income.
20. We have carefully perused the aforesaid judgment referred to by the assessee on this subject and we find some force in the contention of the assessee. But on perusal of orders of the lower authorities, we notice that though assessee has raised specific plea in this regard but none of the authorities has examined the claim of the assessee in the light of relevant provisions of law and various judicial pronouncements. Since the issue requires a proper verification and a determination of the net unused grant, we refrain ourselves from expressing our views on this claim of the assessee. To meet the ends of justice, we are of the considered opinion that this issue should go back to the file of the AO for proper examination after affording an opportunity of being heard to the assessee.
21. So far as exemption under Section 11 of the IT Act is concerned, we find from the record that in the original return of income, assessee did not even raise an alternative claim for exemption under Section 11 of the IT Act. IT has simply claimed for exemption under Section 10(22) of the IT Act. During the course of assessment proceedings, AO has observed that assessee's case may fall within the purview of Section 11 of the IT Act but since the assessee did not raise a claim under that section, he declined to grant an exemption under Section 11 of the IT Act. While filing of appeal' before the CIT(A), the assessee has raised a specific plea that if his case is not considered under Section 10(22) of the IT Act, it may be considered for exemption under Section 11 of the IT Act but the learned CIT(A) turned down his request on the ground that the assessee did not raise a claim of exemption under Section 11 of the IT Act in its original return of income. Now, during the course of hearing, the learned counsel for the assessee has put an emphasis that the legislature has also cast upon a duty upon the AO to allow relief to the assessee if he is entitled for it though it was not claimed by it. In support of this contention, the learned counsel for the assessee has relied upon the following judgments : (i) Jayamal Jayanti Lal Thakate v. Chief CIT (1998) 2301TR 142 (Guj); 22. On careful perusal of all these judgments, we find that as early as 1967, the apex Court in the case of CIT v. Mahalaxmi Textile Mills has held that there is nothing in the IT Act which restricts the Tribunal to determination of questions raised before the Departmental authorities. All questions whether of law or of facts which relate to the assessment of the assessee may be raised before the Tribunal, if for reasons recorded by the Departmental authorities, in respect of contentions raised by the assessee, grant of relief to him on another ground is justified, it would be open to the Departmental authorities and Tribunal and indeed they would be under duty to grant that relief.
The right of the assessee's relief is not restricted to the plea raised by him.
23. In the case of Choksi Metal Refinery v. CIT (supra) following the judgment of the apex Court in the case of Navnit Lal C. Jaweri v. K.K.Sen, AAC (1965) 56 ITR 198 (SC), their lordships have held that in view of the circular of the Central Board of Revenue issued in 1955, although at the time of original assessment, the assessee-firm itself did not claim relief under Section 84/80J and though responsibility for claiming refund and relief rested with the assessee, the ITO should have drawn the attention of the assessee to this relief under Section 84/80J to which the assessee appeared to be clearly entitled but which the assessee had omitted to claim. Again, in the case of Jayamal Jayanti Thakare v. Chief CIT (supra) their lordships of Gujarat High Court have held that it is implicit in the nature of power and its entrustment to the authority invested with such functions of assessment under the Act to exercise the power when the conditions for its exercise are shown to exist and refusal to exercise the power when required to be exercised under the law, would amount to failure to duty. If there is a failure of duty on the part of IT authorities in discharging its statutory function, then the High Court will have jurisdiction under Article 226 of the Constitution for issuing writ of mandamus.
24. Having examined the orders of the lower authorities in the light of aforesaid judicial pronouncements, we are of the view that although the assessee has not raised either specific or alternative claim under Section 11 of the IT Act but when the AO himself has observed that assessee's case may fall under Section 11 of the IT Act, he was under an obligation to ask the assessee to explain why his case should not be examined for the purpose of Section 11 of the IT Act.
25. After the assessment order, the assessee had been repeatedly requesting before the first appellate authority to consider the case under Section 11 of the IT Act but the CIT(A) turned down the request on the ground that the assessee did not raise a claim under Section 11 of the IT Act in its original return of income. In the light of aforesaid judgment and also to our mind, the action of the lower authorities is not in accordance with law. They should have given an opportunity to the assessee to explain whether he is entitled under Section 11 of the IT Act or not. Now, when the assessee has again raised an alternative plea for the exemption under Section 11 of the IT Act, his claim may be considered for the purpose of exemption under Section 11 of the IT Act in the interest of justice. Since the lower authorities have not expressed their views on this aspect, we do not feel it proper to express our views at this stage. We, therefore, set aside the finding of the CIT(A) on this aspect and restore the matter to the file of the AO with the direction to re-examine the claim of assessee under Section 11 of the IT Act afresh after affording an opportunity of being heard to the assessee.
26. In the result, the appeal of the assessee is partly allowed for statistical purposes.