ASSISTANT COMMISSIONER OF INCOME TAX(EXEMPTION), RAIPUR V. MESERS ALL INDIA SOCIETY FOR ELECTRONICS AND COMPUTER TECHNOLOGY, RAIPUR

ITA 176/RPR/2018

AI Insights

The case involves the Assistant Commissioner of Income Tax (Exemption), Raipur, as the appellant, against M/s. All India Society for Electronics & Computer Tech, the respondent. The primary legal contention revolved around the exemptions claimed under sections 10(23C)(vi), 11, and 12AA of the Income Tax Act, 1961, for the Assessment Year 2014-15. The A.O had made several additions and disallowances based on alleged excessive salaries, unsubstantiated expenses, and non-qualification for exemptions. The CIT(Appeals) reversed many of these decisions, leading to the present appeals by the revenue and cross-objections by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 35736 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Other Referred Cases: CIT vs. Lagan Kala Upvan, ITO v Virendra Singh Memorial Shiksha Samiti, Kunhitharuvai Memorial Charitable Trust vs. CIT, Director of Income-tax (Exemption) v. Keshav Social & Charitable Foundation, B.J.N. Hotels Ltd. vs. CIT, Shanti lal Godawat vs ACIT, Deputy Commissioner of Income-tax, Central Circle v. Kunhitharuvai Memorial Charitable Trust
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S.L ANURAGI
• Assessee Lawyers: R.B DOSHI
• Keywords: Set aside; Capital asset; Revised return; Revenue expenditure; Depreciation; Cost of acquisition; Bogus purchase; Capital receipt; Period of limitation; Capital expenditure; Competent authority; Charitable institution; Time period of passing order; Benefit of exemption; Bogus
• Section: 144; 143(3); 263; 271(1)(c); 11; 12AA; 132; 139(1); 68; 12A; 13; 274; 12; 28; 133A; 10(23C); 80G; 43D; 20; 101

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ रायपुर मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.176/RPR/2018 CO No.15/RPR/2018 Ǔनधा[रण वष[/Assessment Year : 2014-15 The Assistant Commissioner of Income Tax (Exemption) Raipur (C.G.) .......अपीलाथȸ / Appellant बनाम / V/s. M/s. All India Society for Electronics & Computer Tech. C-18, Sector-1, Avanti Bihar, Raipur (C.G.) PAN: AABAA7258C ……Ĥ×यथȸ / Respondent Assessee by : Shri R.B Doshi, CA Revenue by : Shri S.L Anuragi, CIT-DR सुनवाई कȧ तारȣख / Date of Hearing : 31.01.2025 घोषणा कȧ तारȣख / Date of Pronouncement : 28.02.2025 2 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 आदेश / ORDER PER BENCH: The captioned appeal filed by the revenue is directed against the order passed by the Commissioner of Income Tax (Appeals)-1, Raipur, [in short “Ld.CIT(A)”], dated 08.06.2018 for the Assessment Year 2014-15, which in turn arises from the order passed by the Assistant Commissioner of Income Tax (Exemption), Circle-Raipur u/s. 143(3) of the Act dated 31.12.2016, wherein the impugned order has been assailed on the following grounds of appeal: Grounds of appeal in ITA No.176/RPR/2018 1. \"Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in allowing the exemption u/s10(23C)(vi) to the assessee when the same was not claimed in return of income filed. 2. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in allowing the exemption u/s 11/12AA when the assessee failed to substantiate the genuineness of the expense and payment on account of these inflated expenses diverted to related concerns.” 3. \"Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in allowing claim u/s 11 & 10(23C)(iv) of the addition of Rs.54,16,704/- made on account of excessive salary, which was disallowed on contravening the provisions of sections of 13(1)(c), 13(2)(c) and 13(2)(g) of the I.T. Act, 1961 read with section 13(3) by the assessee resulting into forfeiture of the exemptions u/s11 and 12 of the I. T. Act.\" 4. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.1,71,64,553/- made on account of surplus income of the assessee when the trust fund were diverted to related 3 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 concerns by inflating expenses under various heads which resulted into withdrawal of exemption u/s.11.” 5. \"Whether on points of Jaw and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.2,94,41,280/- made on account of students data processing expenses, giving a finding which is contrary to the evidence on record and which was found not true on verification by the AO?” 6. \"Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.1,37,458/- made on account of V. C. House expenses as being personal in nature? 7. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.3,20,74,537/- made on account of advertisement expenses, giving a finding which is contrary to the evidence on record and which was found not true on verification by the AO?\". 8. \"Whether the Ld. CIT(A) was correct in law and facts in allowing the addition of Rs. 14,56,75,819/- ignoring the findings by the A.O. that such fund collected by the assessee is not qualified for exemption u/s 11(1)(d) of the Act”. 9. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.41,95,800/- made on account of computer & software expenses, giving a finding which is contrary to the evidence on record and which was found not true on verification by the AO?”. 10. \"Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.7,30,37,176/- made on account of books & course material purchases, giving a finding which is contrary to the evidence on record and which was found not true on verification by the AO?\". 11. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.23,15,744/- made on account of printing & stationery expenses, giving a finding which is contrary to the evidence on record and which was found not true on verification by the AO and same was not discussed in appellate order?”. 4 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 12. \"Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.6,71,71,741/- made on account of other expenses, giving a finding which is contrary to the evidence on record and which was found not true on verification by the AO same was not discussed in appellate order?\". 13. \"Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) has erred by giving a finding which is contrary to the evidence on record, as the Ld. CIT(A) has accepted the submission of the assessee which is factually incorrect, thereby rendering the decision, which is perverse?\". 14. \"The order of Ld. CIT(A) is erroneous both in law and on facts\". 15. That the appellant reserve the right to add, alter or amend the grounds of appeal before the appeal is decided.” 2. On the other hand, the assessee society is before us as a cross- objector on the following grounds:- Grounds of cross objection in CO No. 15/RPR/2018 “1. In the facts of the case, Ld. CIT(A) erred in holding that the assessment order passed by AO is not barred by limitation. The assessment order was passed beyond the limitation date and is liable to be quashed. 2. In the facts and circumstances of the case and in law, Ld. CIT(A), erred in confirming the disallowance of Rs.2,18,48,453/- made by the AO on account of depreciation. The order of Ld. CIT(A) on this issue is contrary to provisions of law and is against the decision of Hon'ble Supreme Court. The cross objector is eligible to deduction of depreciation. 3. The cross objector reserves the right to add, amend or modify and of the ground/s of cross objection.” 5 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 3. Succinctly stated, the assessee is a Society registered u/s 12A of the Act rendering educational services to the students. The assessee society had filed its return of income for AY 2014-15 on 25.09.2015, in form no. ITR-7 in the status of AOP (Trust). Subsequently, the case of assessee society was selected for scrutiny assessment under “CASS” and notice u/s 143(2) of the Act was issued by ITO-3(1), Raipur on 01.09.2015. Thereafter, on account of restructuring in the Income Tax Department the Exemption Wing under Madhya Pradesh & Chhattisgarh state was created, and, thus, as per notification issued by the competent authority the case of the assessee society was transferred by the ITO-3(1), Raipur to the Office of ACIT(Exemption), Raipur. 4. In compliance, the assessee society had put up an appearance before the A.O from time to time and filed written submissions. 5. Thereafter, the A.O after deliberating upon the facts of the case in the backdrop of the replies filed by the assessee society framed the assessment after making the following additions/ disallowances: 6 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 6. The assessee society being aggrieved with the aforesaid disallowances/additions carried the matter by way of an appeal before the CIT(A). The CIT(Appeals) finding favour with the contentions advanced by the assessee society decided the appeal in its favour on major grounds, except for the issues, viz. (i) allowability of depreciation and (ii) the controversy regarding passing of the order beyond the prescribed time limit provided under the statute. Accordingly, the appeal of the assessee society was partly allowed by the First Appellate Authority. 7 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 7. The revenue being aggrieved with the order of CIT(Appeals) has carried the matter in appeal before us. On the other hand, the assessee society has assailed the CIT(Appeals)’s order by filing cross-objection. As the issues involved in the revenue’s appeal and the cross-objection filed by the assessee society are inextricably interwoven and interlinked, therefore, the same are being taken up and disposed off together. 8. We shall first advert to the grounds of appeal raised by the revenue in ITA No.176/RPR/2018. 9. Ground No.1, 2 and 4: Challenging the justification in the decision of CIT(A) in allowing the exemption u/s.10(23C)(vi) and exemption u/ss. 11/12AA of the Act to the assessee. 9.1 The observations of A.O, while declining the claim of exemption of the assessee society u/ss.11/12AA is culled out as under (relevant extract): “6. Surplus Income of the assessee: As the assessee society is not entitled for exemption u/s 11& 12 of the IT. Act, its income during the assessment year becomes taxable and therefore is determined like any other business organization. In the I & E account, there is surplus of Rs.1,71,64,553/-. This amount is to be included in the taxable income of the assessee. 17. Denial of Exemptions: The discussions in the forgoing paras have clearly established that all the payments made under aforesaid heads to the associate concerns are not genuine and reasonable and considerable amounts have been diverted to the sister 8 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 concerns or individual members of the society in the garb of salary or expenses in violation of the provisions of sections of 13(1)(c), 13(2)(c) and 13(2)(g) of the Income Tax Act,1961 read with section 13(3) of the Act. Clearly, huge amount has not been applied for the purposes for which the society is registered. It may be mentioned here that the society has been established for the charitable purposes and 'Charity' denotes a sacrifice and a service to the society. There should be some amount of personal sacrifice and service of the poor. High unreasonable salary granted to office bearers of the society or excessive payments to the associate concerns without commensurating to the services provided to the society proves profit motive of the society. Thus, the assessee contravened the provisions of sections of 13(1)(c), 13(2)(c ) and 13(2)(g) of the Income Tax Act,1961 read with section 13(3) entailing forfeiture of the exemptions u/s 11 and 12 of the IT Act and thus, the exemptions claimed by the assessee society are denied and total income of assessee is computed as normal assessee.” 9.2 Shri R. B. Doshi, the Ld. Authorized Representative (in short “AR”) for the assessee, submitted that the assessee society is duly registered u/s. 12A and 10(23C)(vi) of the Act, copy of certificates issued by department are placed before us at Page no. 99 to 100 and 102 of the APB. For the sake of clarity, the same are culled out as under: 9 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 10 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 11 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 12 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 13 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 9.3 The Ld. AR submitted that though the AO had observed that the assessee society is not entitled for benefit of exemption under section(s) 11 & 12 of the Act, but he had not made any adverse observations with respect to its entitlement for claim for exemption u/s.10(23C)(vi) of the Act. Elaborating further on his contention, the Ld. AR submitted that the assessee society had in its return of income claimed both the benefit of exemption u/ss.11/12 as well as exemption u/s.10(23C)(vi). The Ld. AR to fortify his contention had drawn our attention to the copy of Income tax return which reads as under: 14 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 15 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 16 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 17 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 9.4 Referring to the details furnished in the aforesaid return of income, the Ld. AR submitted that at Page 2, the assessee society in the space available for furnishing the ‘audit details’ had furnished the complete details of the audit conducted under the provisions of section 10(23C)(vi) dated 02.08.2014 that was signed by Shri Sudeep Moitra (M. No. 400340) of M/s. Anup Shrivastava and Associates. The Ld. AR had further drawn our attention to the copy of the “audit report” dated 02.08.2014 (placed at Page 71 to 98 of the APB), and submitted that the same was uploaded in time as per law. Elaborating further, the Ld. AR submitted that the assessee society during the assessment proceedings, vide letter on 12.09.2016 had explained to the A.O that it was eligible for exemption u/s.10(23C)(vi) of the Act (Page 226-227 of the APB). The Ld. AR further submitted that the assessee society had raised the issue before CIT(A) vide ground no.3 in the appeal memo (Form 35) and necessary submissions supporting the claim of assessee were furnished before the CIT(A). The Ld. AR to fortify his contention had drawn our attention to the observations of the CIT(Appeals), which reads as under: “2.3.2 Exemption u/s.10(23)(c): In ground no. 3 the appellant has agitated the issue that AO has not allowed exemption u/s.10(23)(c)(iv). Appellant is registered u/s 10(23)(c)(iv) by the CCIT, Raipur vide registration dated 14/12/2007 and further corrigendum dated 18/12/2007. Assessee has claimed exemption u/s. 10(23) as per letter dated 12.09.2016 as under- 18 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 The assessee society is running a University in the name of Dr. CV Raman University at Kargi Road Kota, Bilaspur, Chhattisgarh, your assessee is involved in education activity and it is entitled for exemption u/s. 10(23C) and 12AA of the Act. As your assessee is providing education to public at large at very nominal fees, by reading section 2(15) of the act, it is clear that the activities of our client is for charitable purpose. Copies of certificates u/s 12A and 80G are enclosed with pointNo-9 of this reply. (page no 151 to 154). AO has not considered granting or not granting the exemption to the assessee trust. In final computation, the exemption has not been allowed. The Assessee is a society rendering educational services and is not carrying on any activity other than education. The object of the society is to pursue activities of education. AO has accepted this facts and has mentioned that the assessee is rendering educational services to students. The provisions of section I 0(23C) are independent of the provisions of section 11/12AA. The provision of section 10(23C) are related to the income received whereas the provision of section l 1/12A are applicable with reference to application of the income. Both the sections operate in entirely different fields. Section 11 and section 10(23C) operate with different yardstick. The CBDT through circular bearing No. 712, dated. 25th July, 1995 has clarified that in cases where the educational institutions are entitled to exemption under s. 10(22) of the Act and consequently, the benefit conferred under s. 10(22) cannot be denied on the ground of violation of s. 11(5) of the Act. Similar view has been taken by the Hon'ble Delhi High Court in the case of CIT vs. Lagan Kala Upvan (2003) 179 CTR (Del) 243 wherein it was held by the court that conditions laid down in ss. 11 and 13 are not relevant for the purposes of applying the provisions of s. 10(22). The Hon'ble Court, referring to the decision of Apex Court in the case of Aditanar Educational Institution vs. Addi. CIT (supra) held that exemption under s. 10(22) has to be determined with reference to the objects of the society and exemption cannot be denied merely because during the course of working of the society, there was some 19 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 surplus. In this context, the conditions contained in s. 11 or 13 were considered irrelevant. On similar facts ITAT Lucknow has, in the case of ITO v Virendra Singh Memorial Shiksha Samiti reported at (2009) 121 TTJ 829 held that…......... for granting exemption to an educational institution under s.10(22) it is not necessary to look at the profit of each year but to consider the activities of the trust and once approval under s. 10(22) is granted, the provisions of ss. 11 to 13 did not apply. It is undisputed fact that assessee is an educational institution imparting education from Class KG to Class VIII No other activities have been alleged. The argument of learned Departmental Representative that some benefit is imparted to the founder of the trust resulting from inflated expenditure would also disable the trust from getting exemption under s. I 0(22) is out rightly rejected because firstly, there is no evidence that such benefit has been imparted to the founder member of the trust and secondly, even if it is so then such instances would only hit the case of the assessee within the meaning of ss. 11 to 13 and cannot be imported to deny exemption under s. 10(22)/10(23C)(iiiad) provided a clear finding on the basis of material on record is given that assessee trust is not existing solely for educational purposes. Here purpose is what described in the memorandum of objects of the trust. Some items of disallowances out of expenses claimed cannot be held to be a separate object for which trust is existing thereby holding that trust is not existing solely for educational purposes. We agree with the learned Authorized Representative that exemption provisions must be strictly construed but if the case of the assessee falls within the ambit of exemption then they should be applied liberally. From above facts, the assessee is undoubtedly an education institution having receipt of above rupees one crore and having registered u/s.10(23)(c)(iv). Since the assessee fulfills conditions laid down u/s 10(23C) therefore it is entitled for exemption under this section. Appellant has total income of Rs.63,79,68,858/- and it has applied an amount of Rs.69,21,26,401/- on its activities of education. The application includes Rs.7,13,22,097/- on fixed assets and balance on revenue expenditure and on running of the institute. Application of income is more than 85 percent of receipt and less than 15 percent of the receipt being 20 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 Rs.1,71,64,553/- only has accumulated. It is also not borne out of facts and from records that the activities of the assessee are not genuine and are not being carried out in accordance with all or any other condition subject to which it was notified and the prescribed authority rescinded registration of the society. Therefore, the AO is eligible for exemption u/s 10(23)(c)(iv). Therefore, ground of the appellant are allowed and its eligibility is established.” 9.5 Carrying his contention further, the Ld. AR submitted that irrespective of denial of exemption u/ss.11/12 for which the assessee society was duly entitled, the latters income was otherwise also exempt u/s. 10(23C)(vi). The Ld. AR submitted that the alleged excess payment issues are relevant only for section(s) 11/12 and there were no such pre- requisite conditions in section 10(23C)(vi). The Ld. AR further placed his reliance on CBDT Circular No.14/1955 dated 11.04.1955 and, submitted that, even if the assessee society did not claim the benefit of section 10(23C)(vi), since the facts of approval granted to the assessee society under the said statutory provision were in the knowledge of A.O, therefore, he was obligated to have allowed the exemption under the said statutory provision. 9.6 The Ld. AR further submitted that once the figure of eligible exemption was fed in the return of income, under one of the permissible section (i.e., sections 11/12), then it was not open for the assessee society to feed the figures in column for other section (i.e., section 10(23C)(vi)). The Ld. AR submitted that the assessee society could not have been declined 21 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 exemption u/s. 10(23C)(vi) for failing to do something which was impossible and beyond its control. 9.7 Per contra, Shri S. L. Anuragi, Ld. CIT-DR submitted that the assessee society had not raised a claim of exemption in the return form in the relevant column provided for exemption u/s.10(23C)(vi). Elaborating further on his contention, the Ld. DR submitted that as the A.O was not vested with any jurisdiction to allow any claim for exemption that was not raised by the assessee society in its return of income, therefore, the only remedy available with the assessee society for raising such claim of exemption was by filing a revised return which it had failed to do. The Ld. DR placed reliance on the judgment of the Hon’ble Apex Court in the case of Goetze (India) Ltd. Vs CIT, (2006) 284 ITR 323 (SC) dated 24.06.2006. Carrying his contention further, the Ld. DR submitted that as the CIT(Appeals) had wrongly allowed the assessee’s claim for exemption u/s. 10(23C)(vi) of the Act, therefore, his order to the said extent was liable to be reversed and the order of the A.O be restored. 9.8 The Ld. AR in rebuttal to the aforesaid contention raised by the CIT- DR, submitted that even if it is assumed that the A.O had restricted powers to allow the exemption on account of feeding of claim amount by the assessee in column for sections 11/12, but we cannot remain oblivion of the fact that the assessee’s claim for exemption u/s 10(23C)(vi) was 22 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 there in the form of Audit details. The Ld. AR submitted that the assessee society was unable to fill the figures of exemption u/s 10(23C)(vi) in its return of income as the same were already claimed under section 11/12. The Ld. AR submitted that the CIT(Appeals) had rightly allowed the assessee’s claim for exemption u/s. 10(23C)(vi) of the Act. The Ld. AR submitted that going by the judgment of the Hon’ble Apex Court in Goetze (India) Ltd. (supra), as there was no impinge on the power of Income Tax Appellate Tribunal to allow such eligible exemption to the assessee society, therefore, despite the fact that if the return of income was not revised the latter’s claim for exemption u/s. 10(23C)(vi) of the Act which was well in order deserved to be and has rightly been allowed by the CIT(Appeals). 9.9 We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 9.10 We find substance in the observations of the CIT(A) that the assessee society had fulfilled all the pre-conditions laid down u/s 10(23C)(vi), which entitled it for exemption under the said section. It was neither the case of A.O that the activities carried out by the assessee society were not genuine; nor had he observed that there was any violation of the statutory 23 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 provisions which disqualified it to claim exemption u/s 10(23C)(vi). At the same time, we find substance in the contention raised by the Ld. CIT-DR that the A.O is not empowered to allow any exemption/deduction which in fact was not claimed by the assessee society. On perusal of the return of income filed by the assessee society (supra), in the relevant column i.e., Column no. 14 in part B-TI regarding “amount eligible for exemption u/s. 10(21), 10(22B), 10(23A), 10(23B), 10(23C)(iv), 10(23C)(v), 10(23C)(vi), 10(23C)(via)” was filled with “0”(zero), whereas the amount of exemption was claimed u/ss. 11/12 in Column 9(i) regarding “amount applied to charitable purposes in India during the previous year”. At the same time, the assessee society had filled the details of audit report u/s 10(23C)(vi) in its return of income i.e. in the specified columns for that purpose. 9.11 Before proceeding any further, we deem it fit to cull out the provisions of Section 10(23C)(vi) of the Act as were available on the statute during the subject year, i.e. A.Y.2014-15, which reads as under: “10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included— xxx xxx xxx xxx xxx xxx (23C) any income received by any person on behalf of— xxx xxx xxx xxx xxx xxx (vi) any university or other educational institution existing solely for educational purposes and not for purposes of profit, 24 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 other than those mentioned in sub-clause (iiiab) or sub- clause (iiiad) and which may be approved by the [Principal Commissioner or Commissioner]; or….” Provided that the fund or trust or institution 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) shall make an application in the prescribed form and manner to the prescribed authority for the purpose of grant of the exemption, or continuance thereof, under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via); Provided further that the prescribed authority, before approving any fund or trust or institution or any university or other educational institution or any hospital or other medical institution, under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), may call for such documents (including audited annual accounts) or information from the fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case maybe, as it thinks necessary in order to satisfy itself about the genuineness of the activities of such fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, and the compliance of such requirements under any other law for the time being in force by such fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, as are material for the purpose of achieving its objects and the prescribed authority may also make such inquiries as it deems necessary in this behalf:\" Provided also that the fund or trust or institution 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)— (a) applies its income, or accumulates it for application, wholly and exclusively to the objects for which it is established and in a case where more than fifteen per cent of its income is accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount exceeding fifteen per cent of its income shall in no case exceed five years; and (b) does not invest or deposit its funds, other than— 25 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 (i) any assets held by the fund, trust or institution or any university or other educational institution or any hospital or other medical institution where such assets form part of the corpus of the fund, trust or institution or any university or other educational institution or any hospital or other medical institution as on the 1st day of June, 1973; (ia) any asset, being equity shares of a public company, held by any university or other educational institution or any hospital or other medical institution where such assets form part of the corpus of any university or other educational institution or any hospital or other medical institution as on the 1st day of June, 1998; (ii) any assets (being debentures issued by, or on behalf of, any company or corporation), acquired by the fund, trust or institution or any university or other educational institution or any hospital or other medical institution before the 1st day of March, 1983; (iii) any accretion to the shares, forming part of the corpus mentioned in sub-clause (i) and sub-clause (ia), by way of bonus shares allotted to the fund, trust or institution or any university or other educational institution or any hospital or other medical institution ; (iv) voluntary contributions received and maintained in the form of jewellery, furniture or any other article as the Board may, by notification in the Official Gazette, specify, for any period during the previous year otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11. Provided also that the exemption under sub-clause (iv) or sub-clause (v) shall not be denied in relation to any funds invested or deposited before the 1st day of April, 1989, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 if such funds do not continue to remain so invested or deposited after the 30th day of March, 1993: Provided also that the exemption under sub-clause (vi) or sub-clause (via) shall not be denied in relation to any funds invested or deposited before the 1st day of June, 1998, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 if such funds do not continue to remain so invested or deposited after the 30th day of March, 2001: Provided also that the exemption under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall not 26 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 be denied in relation to voluntary contribution, other than voluntary contribution in cash or voluntary contribution of the nature referred to in clause (b) of the third proviso to this sub-clause, subject to the condition that such voluntary contribution is not held by the trust or institution or any university or other educational institution or any hospital or other medical institution, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11, after the expiry of one year from the end of the previous year in which such asset is acquired or the 31st day of March, 1992, whichever is later: Provided also that nothing contained in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall apply in relation to any income of the fund or trust or institution or any university or other educational institution or any hospital or other medical institution, being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of account are maintained by it in respect of such business: Provided also that where the total income, of the fund or trust or institution 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), without giving effect to the provisions of the said sub-clauses, exceeds the maximum amount which is not chargeable to tax in any previous year, such trust or institution or any university or other educational institution or any hospital or other medical institution shall get its accounts audited in respect of that year by an accountant as defined in the Explanation below sub-section (2) of [section 288 and furnish along with the return of income for the relevant assessment year], the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed: Provided also that any amount of donation received by the fund or institution in terms of clause (d) of sub-section (2) of section 80G in respect of which accounts of income and expenditure have not been rendered to the authority prescribed under clause (v) of sub-section (5C) of that section, in the manner specified in that clause, or which has been utilised for purposes other than providing relief to the victims of earthquake in Gujarat or which remains unutilised in terms of sub-section (5C) of section 80G and not transferred to the Prime Minister's National Relief Fund on or before the 31st day of March, 2004 shall be deemed to 27 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 be the income of the previous year and shall accordingly be charged to tax: Provided also that any amount credited or paid out of income of any fund or trust or institution 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), to any trust or institution registered under Section 12AA,] shall not be treated as application of income to the objects for which such fund or trust or institution or university or educational institution or hospital or other medical institution, as the case may be, is established: Provided also that for the purposes of determining the amount of application under item (a) of the third proviso, the provisions of sub-clause (ia) of clause (a) of section 40 and sub-sections (3) and (3A) of section 40A, shall, mutatis mutandis, apply as they apply in computing the income chargeable under the head \"Profits and gains of business or profession\": Provided also that where the fund or trust or institution 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) does not apply its income during the year of receipt and accumulates it, any payment or credit out of such accumulation to any trust or institution registered under section 12AA or to any fund or trust or institution 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) shall not be treated as application of income to the objects for which such fund or trust or institution or university or educational institution or hospital or other medical institution, as the case may be, is established : Provided also that where the fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub- clause (v) is notified by the Central Government or is approved by the prescribed authority, as the case may be, or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via), is approved by the prescribed authority and subsequently that Government or the prescribed authority is satisfied that— 28 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 (i) such fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not— (A) applied its income in accordance with the provisions contained in clause (a) of the third proviso; or (B) invested or deposited its funds in accordance with the provisions contained in clause (b) of the third proviso; or [(ii) the activities of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution— (A) are not genuine; or (B) are not being carried out in accordance with all or any of the conditions subject to which it was notified or approved; or it may, at any time after giving a reasonable opportunity of showing cause against the proposed action to the concerned fund or institution or trust or any university or other educational institution or any hospital or other medical institution, rescind the notification or, by order, withdraw the approval, as the case may be, and forward a copy of the order rescinding the notification or withdrawing the approval to such fund or institution or trust or any university or other educational institution or any hospital or other medical institution and to the Assessing Officer: Provided also that any anonymous donation referred to in section 115BBC on which tax is payable in accordance with the provisions of the said section shall be included in the total income: Provided also that the income of a trust or institution referred to in sub-clause (iv) or sub-clause (v) shall be included in its total income of the previous year if the provisions of the first proviso to clause (15) of section 2 become applicable to such trust or institution in the said previous year, whether or not any approval granted or notification issued in respect of such trust or institution has been withdrawn or rescinded : 9.12 Admittedly, it is a matter of fact borne from record that the assessee society as required per the mandate of Section 10(23C)(vi) of the Act r.w. Rule 2CA of the Income-tax Rules, 1962 was during the subject 29 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 year approved/registered under the aforesaid statutory provision with the Chief Commissioner of Income-tax, Raipur vide his approval dated 14.12.2007 r.w. Corrigendum, dated 18.12.2007 for Financial Year (F.Y.) 2006-07 and onwards, Page 99-101 of APB. 9.13 On a perusal of Section 10(23C)(vi) of the Act, it transpires that as per the “eighth proviso” the aforesaid section (as was available during the subject year), in a case where the total income of the fund or trust or institution or any university or other educational institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), without giving effect to the provisions of the said sub-clauses, exceeds the maximum amount which is not chargeable to tax in any previous year, such trust or institution or any university or other educational institution or any hospital or other medical institution shall get its accounts audited in respect of that year by an accountant as defined in the Explanation below sub-section (2) of section 288 and furnish along with the return of income for the relevant assessment year, the report of such audit in the prescribed form duly signed and verified by such accountant setting forth such particulars as may be prescribed. For the sake of clarity, the “eighth proviso” to Section 10(23C)(vi) of the Act (as was available on the statute for the subject year, i.e. A.Y.2014-15) is culled out as under: “Provided also that where the total income, of the fund or trust or institution or any university or other educational 30 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 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), without giving effect to the provisions of the said sub-clauses, exceeds the maximum amount which is not chargeable to tax in any previous year, such trust or institution or any university or other educational institution or any hospital or other medical institution shall get its accounts audited in respect of that year by an accountant as defined in the Explanation below sub-section (2) of [section 288 and furnish along with the return of income for the relevant assessment year], the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed:” 9.14 Ostensibly, the assessee society had got its accounts audited as required by the aforesaid mandate of law vide its “audit report” (supra), dated 02.08.2014 in “Form 10BB” duly signed and verified by its chartered accountant for the year under consideration, i.e. A.Y.2014-15, Page-71-98 of APB. Thereafter, the assessee society had filed its return of income for the subject year, i.e. A.Y.2014-15 on 25.09.2014 (“due date” for filing the return of income u/s. 139(1) of the Act being 30.09.2014), Page 68-70 of APB. The aforesaid factual position not only remains uncontroverted but also the department had not rebutted the same by placing on record any document which proves to the contrary. Also, there is no denying the fact that the assessee society had in its return of income specifically raised a claim for exemption u/s. 10(23C)(vi) of the Act. Although, it is a fact that the claim for exemption u/s. 10(23C)(vi) of the Act was mentioned as Rs. Nil, but the same was for the reason that as the assessee society had sought for exemption of its income u/s. 11 of the Act, therefore, based on 31 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 the said bonafide claim there remained no income of the assessee society against which exemption u/s. 10(23C)(vi) could be quantified. 9.15 We are of a firm conviction that the assessee society which is approved u/s.10(23C)(vi) of the Act satisfied the set of pre-conditions prescribed u/s.10(23C)(vi) of the Act (as were applicable to the year under consideration), therefore, there could have been no justification for the A.O in not considering the entitlement of the assessee society for claim of exemption u/s.10(23C)(vi) of the Act. 9.16 At this stage, we may herein observe, that the “thirteenth proviso” to Section 10(23)(vi) of the Act (as was available on the statute during the subject year) laid down the set of circumstances in which the registration/approval, inter alia, granted to the assessee society by the prescribed authority could be withdrawn, viz. (i) the society had not applied its income in accordance with the provisions contained in clause (a) of the “third proviso”; or (ii) the society had not invested or deposited its funds in accordance with the provisions contained in clause (b) of the “third proviso” to Section 10(23C)(vi) of the Act; or (iii) the activities of the society are not genuine; or (iv) the activities of the society are not being carried out in accordance with all or any of the conditions subject to which it was notified or approved, then it may, at any time after giving a reasonable opportunity of showing cause against the proposed action to 32 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 the concerned society, by an order withdraw the approval, and forward a copy of the order withdrawing the approval to such society and to the A.O. For the sake of clarity, the “thirteenth proviso” to Section 10(23C)(vi) of the Act is culled out as under: “Provided also that where the fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) is notified by the Central Government or is approved by the prescribed authority, as the case may be, or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub- clause (via), is approved by the prescribed authority and subsequently that Government or the prescribed authority is satisfied that— (i) such fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not— (A) applied its income in accordance with the provisions contained in clause (a) of the third proviso; or (B) invested or deposited its funds in accordance with the provisions contained in clause (b) of the third proviso; or (ii) the activities of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution— (A) are not genuine; or (B) are not being carried out in accordance with all or any of the conditions subject to which it was notified or approved; or (iii) such fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not complied with the requirement of any other law for the time being in force, and the order, direction or decree, by whatever name called, holding that such non- compliance has occurred, has either not been disputed or has attained finality, it may, at any time after giving a reasonable opportunity of showing cause against the proposed action to the concerned fund or institution or trust or any university or other 33 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 educational institution or any hospital or other medical institution, rescind the notification or, by order, withdraw the approval, as the case may be, and forward a copy of the order rescinding the notification or withdrawing the approval to such fund or institution or trust or any university or other educational institution or any hospital or other medical institution and to the Assessing Officer:\" 9.17 Admittedly, it is a matter of fact that the approval granted to the assessee society u/s.10(23C)(vi) of the Act had not been withdrawn by the prescribed authority by invoking the “thirteenth proviso” of the said statutory provision. As the approval of the assessee society u/s.10(23C)(vi) of the Act was very much available with it during the subject year, and it had satisfied the set of pre-conditions for claiming exemption under the said statutory provision, therefore, we are unable to comprehend that on what basis its said claim for exemption had not been considered by the A.O. Accordingly, we find no infirmity in the view taken by the CIT(Appeals) who had rightly allowed the assessee’s claim for exemption u/s. 10(23C)(vi) of the Act and, thus, uphold the same. 9.18 Before parting qua the aforesaid issue, it would be relevant to observe that as per the settled position of law it is not permissible for an Assessing Officer to entertain a claim for deduction otherwise than based on a revised return of income filed by the assessee. Our aforesaid view is fortified by the judgment of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 323 (SC). At the same time, we also cannot remain oblivion of the fact, that as observed by the Hon’ble 34 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 Apex Court in its aforesaid order in the case of Goetze (India) Ltd. (supra), the restriction in entertaining a claim for deduction otherwise than by filing a revised return of income is limited to the power of the assessing authority and does not impinge on the powers of the Income-tax Appellate Tribunal. For the sake of clarity, the observations of the Hon’ble Apex Court are culled out as under: “The decision in question is that the power of the Tribunal under section 254 of the Income-tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income-tax Appellate Tribunal under section 254 of the Income-tax Act, 1961. There shall be no order as to costs.” Accordingly, we are of a firm conviction that though the A.O’s power to quantify the assessee’s claim for exemption u/s. 10(23C)(vi) of the Act as per the judgment of the Hon’ble Supreme Court in Goetze (India) Ltd. v. CIT (supra) was circumscribed by the claim raised by the latter in its return of income for the subject year, but remaining conscious of the observation of the Hon’ble Apex Court that the said restriction would not impinge on the power of the Income-tax Appellate Tribunal, we are of a firm conviction that in the backdrop of the fact that the assessee society was declined its claim for exemption u/s.11 of the Act, therefore, its 35 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 income having resurfaced required quantification of its claim for exemption u/s.10(23C)(vi) of the Act. 9.19 To sum up, even if the observation of the A.O that the assessee society was disentitled from claiming exemption u/s.11 of the Act is to be accepted, then the latter’s claim for exemption u/s.10(23C)(vi) of the Act, as was specifically raised by it in its return of income after having satisfied the pre-conditions set out in the said statutory provision has to be allowed. 9.20 Apropos the declining of the assessee’s claim for exemption u/s.11 of the Act by the A.O on the multi-facet issues, which we find is primarily based on the fact that the payments made to the related parties contemplated in sub-section (3) of Section 13 of the Act were found to be excessive, we are unable to persuade ourselves to concur with the view based on which he had declined the assessee’s entire claim of exemption u/s.11 of the Act. Before proceeding any further, we deem it fit to cull out Section 13(2)(c) of the Act, which reads as under: “13. (2) Without prejudice to the generality of the provisions of clause (c) and clause (d) of sub-section (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in sub-section (3),— xxx xxx xxx xxx xxx (c) if any amount is paid by way of salary, allowance or otherwise during the previous year to any person referred to in sub-section (3) out of the resources of the trust or institution for services rendered by that person to such trust or 36 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 institution and the amount so paid is in excess of what may be reasonably paid for such services; xxx xxx xxx xxx xxx” (emphasis supplied by us) 9.21 On a conjoint reading of Section 13(2)(c) read with Section 13(3) of the Act, it transpires beyond doubt that it is only the amount paid by way of salary, allowance or otherwise by the assessee society to a person referred to in sub-section (3) of Section 13 of the Act, out of the resources of the society for the services rendered by that person to such society, which is in excess of what may be reasonably paid for such services, shall be deemed to have been used or applied for the benefit of the person referred to in sub-section (3) of Section 13 of the Act and, thus, to the said extent would not be eligible for claim of exemption u/s.11 of the Act. We are unable to comprehend that as to on what basis the A.O had declined the assessee’s entire claim for exemption u/s.11 of the Act, allegedly for the reason that the amount paid to the related parties was in excess of the amount that otherwise would have been reasonably paid by the assessee society. 10. Although, we have observed and decided that the assessee herein is entitled to the claim of exemption u/s. 10(23C)(vi) of the Act, therefore, the other contentions raised by the revenue qua the disallowance/additions 37 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 made by the AO become infructuous and academic only, however, in brief our observations on the merits of the issues herein are for the sake of completeness as under: 10.1 Ground No. 3: Regarding allowing claim of exemption u/s 11 & 10(23C)(vi) qua the disallowance/addition of Rs.54,16,704/- made on account of excessive salary on contravening the provisions of section of 13(1)(c), 13(2)(c) and 13(2)(g) of the Act r.w.s. 13(3). 10.2 The facts qua the disallowance on account of excessive salary are culled out from the order of A.O, as under: “4. Excessive salary of Shri S. K. Choubey : Shri S .K. Choubey is the founder member of the society and he is also holding the post of Chancellor of the university run by the society. Shri S. K. Choubey is deriving salary of Rs.6,00,000/- p.m. from university, which is very high amount. During F.Y. 2012-13, the salary was Rs.5,00,000/- p.m. This salary of Rs.5,00,000/- p.m. was itself very high. On this issue it was submitted by assessee that “Shri S.K. Choubey: Brief profile of Mr. S.K. Choubey is enclosed. It will be observed that the is a qualified person who had been selected for Indian Engineering Services (1977) and Indian Civil Services (1982) and has been rendering services to the Society since its inception. He has been working in. the Capacity of Chancellor as per the norms fixed by the Government of Chhattisgorh vide notification Doted 31.12.2009. His remuneration hos been fixed by the Board of Management & approved by the Government body, which includes the two members nominated by the visitor (the Governor of the state) & one member nominated by the Higher Education Department of the state.” It may also be mentioned that salary/honorarium payable to person at a similar post in private universities ranges from Rs.50 lacs to Rs.100 lacs p.a. in the country. The assessee enclosing herewith a 38 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 copy of the news published in the economics Times, the relevant extracts of which are reported herein below \"The ever-increasing demand for faculty in private, new-age universities has pushed the salary packages of senior faculty like Vice-Chancellor and deans past the Rs.1 crore mark. Private universities are paying crore plus salaries to senior most faculty members. At least five head hunters told ET. The assessee is also enclosing a public advertisement for appointment of Vice Chancellor in a private university at Neemrana Dist- Alwar, Rajsthan wherein the salary offered for a similar post in 3-5 Lacs per month that is Rs. 36 to 60 lacs per annum. (Page No. 29-30) In would be appreciated that the salary paid to the Chancellor in commensurate with his qualification, experience & dignity of the post held by him. It may also be mentioned that no perquisites/allowances/reimbursement of expenses of any kind has been made to him & all such amount spent by him are part of the salary.” The above contention of the assessee is not acceptable. It Is possible that other university Chancellor may be getting higher salary than him, but in that case, the university may not be run by a Charitable society, more so by family members and the chancellor may not have held the post of President of the Society having charitable purposes. Further, in the present case, Shri S. K. Choubey, being the president of the society decides the salary and remuneration of Chancellor himself. A comparison to the salary of contemporary posts in the other universities in this region was drown during the F. year 2012-13, which is as under:- Post C. V. Raman Universit y Mats University Pt. Sunder lal sharma University Barkatullah University Bhopal Remar k Chancel lor 5,00,000 /- - - - - Vice Chancel - 147890/- +DA 84000/-+DA 75000/-+ DA 39 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 lor On the basis of this comparison, it was held that the salary drown by Shri S.K. Choubey was very high. Now, the salary is increased by 20 %, which is again very much higher than the contemporary posts in the other universities. The salary of the chancellor of the MATS University in Raipur was Rs.16,00,000/- per annum during F. Yr. 2013- 14. Looking to the fact that Shri S.K. Choubey was working simultaneously In various other Institutions, his salary Is restricted to be Rs.2,00,000/- p.m. It may be mentioned here that 'Charity' denotes a sacrifice and a service to the society. There should be some amount of personal sacrifice and service of the poor. High unreasonable salary granted to office bearers of the society proves profit motive of the society. Shri S. K. Choubey Is the founder of the assessee society having charitable purposes and drawing unreasonably excessive salary, as discussed above, out of the resources of the society, which are meant for charitable activities. Thus, the assessee contravened the provisions of sections of 13(1)(c), 13(2)(c) and 13(2)(g) of the Income Tax Act,1961 read with section 13(3) resulting Into forfeiture of the exemptions u/s 11 and 12 of the IT Act. Penalty proceeding u/s. 271(1)(c) of the Income tax Act are initiated for furnishing of inaccurate particulars of income as discussed in this para. 5. Excessive salary of Shri Anurag Seetha: Similarly salary of Shri Anurag Seetha is on higher side Rs.1233408/-. Shri Anurag Seetha is also one of the founder members of the Society. He resides manly in Bhopal. He visits and lives in University campus at Bilaspur for approximately fifteen days a month, as stated by shri Vineet Shukla , Chief finance and accounts officer of the University. It was submitted that he was deriving equal amount of salary in his previous occupation as well. Looking to the fact that he was working simultaneously in various institutions and devoted only fifteen days p.m. to this university the salary paid to Shri Anurag Seetha is restricted to 50% of the salary paid to him i.e., Rs.616704/-. Shri Anurag Seetha is the founder member of the assessee society having charitable purposes and drawing unreasonably excessive salary, 40 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 as discussed above, out of the resources of the society, which are meant for charitable activities. Thus, the assessee contravened the provisions of section of 13(1)(c), 13(2)(c) and 13(2)(g) of the Income Tax Act, 1961 read with section 13(3).” 10.3 On the aforesaid issue, the Ld. AR has furnished a written synopsis, which for the sake of clarity, is culled out as under: Ground no. 3 Submission of assessee 1. Salary of S. K. Choubey i) Salary paid @ Rs. 6,00,000/- pm, AO restricted to Rs. 2,00,000/- pm. No basis given whatsoever. ii) Allowed fully in scrutiny assessment of AY 2015/16 -Comparative chart of expenses at PN 1 of compilation of 12 pages. -Assessment order of AY 2015/16 at PN 2 to 7 of compilation of 12 pages. - Directions u/s 144A at PN 8 to 12 of compilation of 12 pages, relevant finding at PN 11 thereof. iii) His resume at PN 105 to 115 of PB. His remuneration fixed by governing body which includes two members nominated by Governor and one by Higher Education department of state government. iv) Minutes of the meeting at PN 274 to 279 of PB. During discussion on Mr. Choubey's remuneration, he excluded himself from the meeting (PN 278 of PB). Decision thus was taken by independent members. v) Remuneration paid is at par with remuneration paid by similar private university, which ranges around Rs.1 crore a year. News in Economic Times dt. 04.09.2015 at PN 116 of PB. Filed before AO also. vi) Advertisement for the post of Vice-Chancellor on 18.11.2015 at PN 117 of PB. Salary matching with this also. Filed before AO also. 41 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 vii) No basis given by the AO for restricting the salary to Rs.2 lakh per month. viii) Instance of salary of Rs. 16 lakh to VC of MATS University, source of this information never provided to the assessee. Source not even disclosed in the assessment order. Basis of observations not substantiated. ix) For the post like that of Chancellor/ Vice-Chancellor, it is the experience and qualification that matters. 2. Salary of Dr. Anurag Seetha i) He was paid salary of Rs.12,33,408/-. AO disallowed 50%. ii) Allowed fully in scrutiny assessment of AY 2015/16 -Comparative chart of expenses at PN 1 of compilation of 12 pages. - Assessment order of AY 2015/16 at PN 2 to 7 of compilation of 12 pages. - AO allowed himself even without directions u/s 144A. iii) He was employed by Makhanlal Chaturvedi National University, his service taken on lien, PN 118 to 120 of PB. iv) He was involved in research and preparation of course material. v) His physical presence not required all the time. vi) Disallowance is baseless, arbitrary. Nothing brought on record.” 10.4 The CIT(Appeals) while vacating the disallowance made by A.O had observed as under: “In the present case the AO's objection is regarding quantum of salary to be paid. While the finding has been given that the salary is excessive, but there is no basis for ascertaining that salary paid to the two persons is excessive. Comparison with salary paid by MATs University is illogical. Just like in private businesses the salary of executives is a matter of contract between the 42 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 employer and employee, same will hold good in a private university. It will be decided by the level of accountability, size of the operation in terms of total turnover/ receipt by way of fee and other charges and by market forces. Therefore salary paid by one institute will not be standard barometer to judge excessiveness of payment. Services of a person is not like a commodity which may have standard rates or comparable. In the structure of the hierarchy of an institution, an official may have been entrusted/assigned certain role which is not the same as assigned to an official with similar nomenclature/ designation in another institution. The AO has in effect held the part of the salary expenses to be in violation of Sc.13(1)(c), 13(2)(c) and 13(2)(g) and has denied exemption, without establishing that any part of income, in this case is the whole or part of the salary, has been applied directly or indirectly to the benefit of any persons referred to in sub-section (3) of Sec. 13, the exemption cannot be withdrawn. Moreover, even if it is proved that certain part of income of the trust has been used for the benefit of specified person only that part of me is to be taxed and the blanket exemption cannot be withheld. Mere of an expenditure and payment thereof to trustees, without there being any element of such payments being excessive or unreasonable, would not disentitle assessee exemption under section 13(1)(c). This finding has been given by HC Gujrat. In the case of 74 taxmann.com 253 (Gujarat) Shree Kamdar Education Trust v. Income-tax Officer Tax Appeal No.1334 of 2008 AUGUST 23, 2016 honorable Gujrat HC has held that mere payment of lease rent or interest on borrowed funds to trustees, without there being any element of such payments being excessive or unreasonable, would not disentitle assessee exemption under section 13(l)(c). Thus for holding a payment- salary or rent or any other expense- the pre-requisite is to compare with the comparable cases where for similar services, lesser expenditure has been incurred and to work out the excess.” 43 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 10.5 Apropos, the disallowance qua the excessive salary paid to persons covered under section 13(3) of the Act, the Ld. AR submitted that the salary of Shri S. K. Chaubey, Chancellor of the University that was run by the assessee society was without any basis restricted by the A.O to Rs.2.00/- lac per month instead of payment of Rs.6.00/- lac per month. The Ld. AR further submitted that the salary of Shri Anurag Seetha, who happened to be the founder member of the assessee society and was paid a sum of Rs.12,33,408/- was without any basis restricted by the A.O to 50% of the salary paid i.e., at Rs.6,16,704/- stating that the same is unreasonable and excessive. The Ld. AR submitted that similar amounts paid by the assessee society in the succeeding year, even with further enhancement, have been allowed by the revenue without any embargo. The Ld. AR to substantiate his contentions had furnished before us a “chart” showing the expenses claimed under various heads in the relevant AY 2014-15 as compared to AY 2015-16, which for the sake of clarity is culled out as under: 44 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 45 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 10.6 The Ld. AR had also drawn our attention to the copy of the assessment order passed in the case of the assessee society for A.Y.2015- 16, Page no. 2-7 of the paper book dated 10.01.2023. Further, directions u/s 144A issued by the JCIT (E) dated 29.12.2017, is furnished at Page no. 8-12 of the Assessee’s Paper Book, wherein it is categorically observed by him that the salary paid to Shri S. K. Chaubey (supra) by the assessee society is commensurate with his experience and contribution made to the society, hence it appears that there is no apparent violation of section 13(3) of the Act. 10.7 The Ld. AR submitted that regarding salary of Shri Anurag Seetha (supra) in the subsequent year i.e. AY 2015-16, the AO himself allowed the payments towards salary made to him for Rs.16,29,912/- as compared to salary paid during the subject year, i.e., 2014-15 of Rs.12,33,408/-, therefore, the disallowance made in the year under consideration i.e. A.Y 2014-15 was without any logical basis, arbitrary and uncalled for and, thus, has been rightly vacated by the CIT(A). 10.8 Per contra, Ld. CIT-DR supported the order of A.O. 10.9 We have considered the rival contentions, perused the material available on record and the submissions advanced by the parties. On perusal of the observations of the lower authorities and the material placed before us, it transpires that the department itself had deliberated upon the 46 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 facts of various issues which are the subject matter in the instant case, viz. excessive salary paid to Shri S. K. Chaubey (supra) on which directions were issued by the Ld. JCIT(E), Bhopal vide his order u/s 144A dated 29.12.2017 for the succeeding AY 2015-16, wherein he had recorded a categorical finding that the salary paid to Mr. S.K. Chaubey, Chairman of the society was commensurate with his experience and contribution made to the assessee society. Also, salary of Shri Anurag Seetha (supra) paid in the AY 2015-16 was found reasonable and accepted by the revenue. Accordingly, we are of a firm conviction that an inconsistent view for the year under consideration adopted by the revenue does not stand good in the eyes of law unless there is some distinguishing feature brought on record. Accordingly, the disallowance made by Ld. AO qua the impugned excessive salary paid to Shri S. K. Chaubey (supra) and Shri Anurag Seetha (supra) cannot survive. We, therefore, are of the considered view that CIT(Appeals) had appropriately appreciated the facts of the case and had vacated the disallowance made by the A.O. We, thus, finding no infirmity in the order of the CIT(A) uphold the same. In result, Ground of appeal No. 3 of the revenue’s appeal being devoid and bereft of any merit is dismissed. 11. Ground No. 5, 10, 11 & 12: Regarding deleting the addition of Rs.2,94,41,280/- made on account of student’s data processing expenses, Rs.7,30,37,176/- on account of Books and course material 47 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 purchased, Rs.23,15,744/- on account of printing & stationary expenses and Rs.6,71,71,741/- on account of other expenses. 11.1 All the aforesaid additions/disallowances made by the A.O, which were challenged by the assessee before the CIT(A) were after necessary deliberations deleted by the latter. It is pertinent to mention that these disallowances are also subject matter of directions issued by the JCIT (Exemption) u/s 144A in the next year i.e., AY 2015-16, wherein such claims of the assessee were found to be reasonable and in accordance with the mandate of law. Accordingly, the JCIT(Exemption) had directed the A.O that there was no violation of the provisions of section 13(3) of the Act. The observations of the JCIT(Exemption) in his order u/s.144A dated 29.12.2017, qua the aforesaid respective issues following which no disallowances were made by the revenue in A.Y 2015-16, are extracted as under: 48 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 49 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 50 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 51 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 52 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 53 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 11.2 As we have already held in our decision on Ground No. 3 of the present appeal that once the revenue after appreciating the facts of expenses claimed by the assessee in light of mandate of law have decided that there is no excessive payment to the related parties covered u/s. 13(3) and there is no apparent violation of law, therefore, an inconsistent view qua the same expenditure incurred by the assessee during the year under consideration cannot be adopted unless there are certain factual differences in the expenditure incurred during the subject year as compared to the year for which directions u/s. 144A were issued. As no such facts or material to dislodge the direction of JCIT(Exemption) could be brought on record by the revenue before us, therefore, the addition/ disallowance made by the A.O qua the Student’s Data Processing Expenses, Books and Course Material Purchased, Printing & Stationary Expenses and Other Expenses cannot be sustained. We, thus, concur with decision of CIT(A) on subject issues wherein after deliberations the additions/disallowances were rightly vacated by him. Consequently Grounds of appeal No. 5, 10, 11 & 12 of the revenue’s appeal are rejected, being devoid and bereft of any merit. 12. Ground No. 6, 7 & 9: Regarding deleting the addition of Rs. 1,37,458/- VC House Expenses, Rs.3,20,74,537/- Advertisement Expenses, 41,95,800/- Computer Software expenses. 54 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 12.1 Apropos the VC House expenses, the Ld. AR submitted that the Vice Chancellor Dr. Surekha Thakkar is an unrelated party, thus provisions of section 13(3) do not apply. It is further explained that the expenses allowed are in terms of employment, therefore, there can be no personal expenditure and, thus, the same had rightly been allowed by the CIT(A). The Ld. AR also submitted that as similar quantum and nature of expense for Rs.1,20,441/- incurred by the assessee society have not been disputed by the revenue in AY 2015-16, therefore, such addition on an arbitrary basis for the year under consideration cannot be sustained. 12.2 Apropos the Advertisement Expenses, the Ld. AR, submitted that all these expenses were incurred for the purpose of imparting education and for educational activities of the society. It was submitted by him that there is no specific provision in the Act to disallow such expenses. It was further submitted that even in enquiries conducted by the A.O no adverse material had surfaced. Apart from that, the Ld. AR submitted that the parties from whom the assessee society had availed the services were not covered u/s. 13(3) of the Act. 12.3 The Ld. AR further submitted that the allegation of the A.O that the advertisement expenses are commercial in nature was incorrect, for the reason, that even the government departments carry out such publicity activities. The Ld. AR submitted that CIT(A) had rightly allowed the 55 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 assessee’s claim. The Ld. AR also submitted that as similar quantum and nature of expense of Rs.4,21,39,737/- incurred by the assessee society have not been disputed by the revenue in A.Y.2015-16, therefore, such addition/disallowance on an arbitrary basis without any cogent reasons i.e. only on the basis of a presumption that advertisement expenses incurred for admission/examinations will only qualify to be allowed is a proposition against the mandate of law, specifically when the revenue itself had not found any infirmity in the claim of assessee in the following year. The Ld. AR submitted that in the backdrop of the aforesaid facts the disallowance of expenditure incurred on advertisement for the subject year cannot be sustained. 12.4 Regarding Computer Software expenses, the Ld. AR submitted that as these expenses were not charged by the assessee society to its “Profit & Loss account” for the subject year, therefore in absence of any claim of expenditure no disallowance was called for. The Ld. AR further submitted that 148 computers were purchased by the assessee society from AISECT Ltd @ Rs.27000/- plus VAT per computer, which in turn AISECT purchased from HCL Info System Ltd. @ Rs.26100/- per computer. The Ld. AR submitted that the complete installation of the machines, connecting it to LAN, up-dation of software, salary and travelling expenditure of staff members was taken care of by AISECT Ltd. The Ld. AR submitted that as AISECT Ltd was in better business relations with the hardware and 56 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 software supplying companies, therefore, for better deal the subject purchase transactions were done through them. The Ld. AR further submitted that as similar expenses were allowed by the A.O in immediately succeeding year i.e. A.Y 2015-16 for Rs.10,84,500/-, therefore, no adverse inferences for the subject year were liable to be drawn. 12.5 Rebutting the aforesaid contentions of the Ld. AR, Ld.CIT-DR supported the order of A.O and submitted that the disallowance made by him be sustained. 12.6 We have considered the rival contentions, perused the material available on record in the backdrop of the settled position of law regarding the subject issues. All these issues are dealt with and discussed by the CIT(A), wherein the contentions of the assessee were considered along with the findings of the A.O. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: “AO has given the finding in the assessment order that payment under-the head salary, payment of AISECT Limited, VC house expenses, advertisement expenses, computer software expenses, book purchases, printing and stationary expenses and other expenses have been made in violation of 13(1)(c), .13(2)(c) and 13(2)(g).AO has objected to full or part expenditure incurred by the assessee under these heads and held in para-17 that the payments are not genuine due to which there is violation of the above sections. As per sec. 13(l)(c) if any income of the trust is applied directly or indirectly to the benefit of specified persons mentioned in Sec. 13 then the amount will not be allowable for exemption. As per Sec. 13(2)(g) if any income or property of the trust or 57 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 institution is diverted in favour of any persons mentioned in said sub-sec (3) then the amount in question will be excluded from the exempted income which is to say that of that part of the expenditure tax will have to be paid. Regarding the advertisement expenses assessee has made expenditure on advertisement to solicit students for admission. Total expenditure is Rs.34,72,16,792/- . In some of the advertisements greeting to State Education Minister was displayed: AO has held that it shows that assessee works as commercial establishment and main purpose of the assessee is to earn profit. This allegation is not borne out of the facts. There is nothing on record that by putting name of a state functionary in a customary advertisement, any benefit has been bestowed on any person and this has resulted any loss to the assessee trust. Thus no diversion of any income to the personal benefit of a third person has been established. AO has objection to payment made to M/s AISECT Ltd, a company for the services obtained from it. The assessee has paid Rs.2,94,41,280/- to the associate concerns major amounts have been paid to AISECT Ltd., Bhopal. The assessee has produced, in this respect, some of the bills raised by AISECT Ltd. As per AO, these bills have been raised on ad-hoc basis having no rationale and entire amount has been paid to AISECT Ltd. There is no reasonable basis to work out of these bills amounts. The amounts of bills raised are not connected to the quantum of work done. It was alleged that assessee has large staff of computer operators therefore Rs.2,22,99,703 spent by the AISECT Ltd is not justified. AO was of the opinion that the payments made under this head to the associate concerns are not genuine and thus these amounts have not been applied for the purposes for which the society is registered and this is diversion of funds to the sister concerns in violation of sections of 13(1)(c), 13(2)(c) and 13(2)(g) of the Income Tax Act, 1961. In arriving at this conclusion the AO has ignored the fact that these bills have been raised for student registration, data processing student data updation on website, website maintenance. Further the income of the assessee is exempt whereas AISECT Ltd. is a company not enjoying any exemption. Therefore there 58 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 cannot be any intention of the management of the group to divert funds from exempt entity to tax paying entity. Further AO has alleged that since bills have been raised by AISE T on adhoc basis the payment made to AISECT Ltd was excessive. On going through the submission and detailed working of basis of payment which was produced during the assessment, it is seen that payment has been computed per student wise. For IODE Exam Expense Rs.93.90, for IODE Teaching & Leaning Expense Rs.8.01, for IODE Books and course material Rs.66.51 and for IODE Student Data Processing Rs.172.18 per student has been paid. Working of these rates have been done by details charts by considering Total no. of papers, papers hours, Online training and learning hours, course material (no. of books), total papers in which student appeared. Such working cannot be termed as adhoc. Further regarding payments made to AISECT Ltd for Rs.41,95,800/ shown to be incurred towards purchase of new computers and software'1s-the AO has alleged that in reply it is nowhere mentioned that which machine is installed at witch place. Therefore, these expenses should be disallowed. Assessee has submitted the bills in respect of the expenses which contain complete details of the compute supplied. The assessee has also submitted the copies of invoice of the computer purchased by AISECT Ltd. to justify the reasonableness of the rates charged.\" The assessee also submitted copy of installation report of 148 computer system with full setup. All machines were installed successfully in our Regional Offices at Raipur, Bhilai, Jagdalpur, Ambikapur and Korba. If AO has any objection if details regarding which machine were installed at which place, no further query was made. The bills evidence the purchase of computers. No inquiry has been made from supplier as the bills if there was any doubt regarding actual supply of machines. There is further suspicion that these expenses are debited in the books of AISECT Ltd. Bhopal. There is no information in the assessment order as to on what basis such a conclusion has been derived. Any disallowance on the basis of surmises cannot be encouraged. Further Rs.10,85,43,846/- was claimed towards Books & Course Material expenses. Out of 59 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 this amount, Rs.8,59,21,358 paid to AISECT Ltd, against supply of books and course material. The assessee was asked to produce the evidences in respect of expenses made on Books & Course Material Purchases. AO was not satisfied by assessee's compliance and has mentioned that the assessee furnished only postal bills which didn't prove that the claimed hooks & course material have actually been sent to the students of AISECT, Raipur. There is further allegation that the assessing Officer of AISEC.T Ltd. also noted in its assessment order, while making scrutiny of books of accounts of AISECT Ltd. for the same A.Y. that AISECT Ltd. failed to provide any quantitative details of the books/course material purchased and or printed and its subsequent sale. It was also noted that sales proceeds from associate concerns are far in excess of purchase prices. The Assessing Officer of AISECT Ltd made a huge disallowance of Rs.75,00,000/- due to unverifiable/inflated purchase/printing of the books and course material. Moreover, during the survey proceeding u/s 133A of the IT act in the case of AISECT Ltd. Bhopal on 09.10.2015, it was found that bogus purchases of books were being shown in the accounts of AISECT Ltd. Bhopal from Itarsi & Raipur based Printers. None of such suppliers of books were found at the addresses mentioned in the bills produced by AISECT Ltd. Bhopal, Thus, the genuineness of the supplying the books/course material by AISECT Ltd, Bhopal to the assessee society is not credible. Regarding the printing and stationary expenses paid to AISECT Ltd the AO has stated that the contention of the assessee is not acceptable. Certainly, it gives on opportunity of double billing. The assessee failed to produce the credible evidences to show that the material purchased in the name of AISECT Ltd, Bhopal from the printers of Bhopal and others have actually been delivered to AISECT, Raipur. The correctness of the claim made by the society is not established. So, this amount of Rs.23,15,744/- pertaining to improper bill are disallowed & Included in the total Income of the assessee. Assessee had a total of 1125 centres spread over Madhya Pradesh, West Bengal, Maharastra, Tamil Nadu, Orissa, Gujarat, Punjab AP, J&K, Jharkhand, Delhi, UP, Bihar, Kerala, Kamataka, Rajasthan, Haryana, Himachal Pradesh etc. For such a large spread, some set up of computer is 60 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 imperative and that doesnot mean that there was no necessary of outsourcing for certain works as decided by management of the institute. On going through the assessment order dated 20.12.2016 of M/s AISECT Ltd. for AY 2014-15, it is seen that the disallowance of Rs.75 lakh has been made on adhoc basis without bringing any material on record. M/s.AISECT Ltd had incurred an expense of Rs.34.45 crore on purchase/printing of course material out of which lump sum disallowance of Rs.75 lac was made by the AO of that company holding that \"....the assessee has also not been able to substantiate that the purchase/sale with the associate concerns including exempted concerns were at arms length and no income has been diverted to these concerns.....disallowance of Rs.75,00,000/- is made towards expense incurred on unverifiable/inflated purchase/printing of books and course material and undisclosed closing stock\". Such a routine disallowance of2% of expenses in the case of AISECT Ltd cannot be basis for taking adverse view in the case of the appellant. There is no independent inquiry and the allegations in case of AISECT Ltd are adhoc allegation. Appellant has stated that vide questionnaire dated 28.12.2016, emailed to assessee on 29.12.2016 after 5 PM the evidence of installation of computer was asked for. I find that at para number 6 of the said letter the AO queried that \" The bills produced in respect of these expenses are. in the name of AISECT Ltd and no more evidences produced to show that such computer and software installed in CV Raman University. Therefore these expenses are proposed to be disallowed.\" Regarding the installation of computers, vide reply dated 31.12.2016 the appellant furnished the installation report. \"6. Installation report of computers installed in Dr. CV Raman University.\" However the AO has not considered the installation report and has drawn inference that there is no evidence of installation of computers. If AISECT Ltd is getting job done for the assessee, it is AISECT Ltd which contacts the printers and other job workers and it is natural that bills may be raised on AISECT Ltd which then charges the amount from assessee. No adverse inference can be drawn on this fact. 61 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 During survey operation u/s 133A the assessee was informed by the survey team that some suppliers on field inquiry were not found at the given addresses and have accordingly raised doubt about the genuineness of certain expenses recorded by the M/s AISECT Ltd. On such input a disclosure in respect of expenses attributed to those suppliers. Subsequently on verification of the facts and records it was found that all the purchase invoices were duly recorded in the books of account and the payments of the same have also been made through banking channel. The books purchased were duly provide to users and these facts were also recorded and payments were also received through banking channels. Accordingly the invoices did not reflect any inflated purchases. Thereafter vide affidavit dated 7.11.2015 Shri SK Choubey the Director of M/s AISECT Ltd has retracted the said disclosure on behalf of the company. The mention of above disclosure has not been confirmed and no reverse view can be taken against the assessee. Thus in view of the above facts regarding the various payment made by the assessee to company M/s. AISECT Ltd Bhopal for obtaining -various services. Any allegation regarding diversion of fund cannot be sustained. In the case of Kunhitharuvai Memorial Charitable Trust on similar facts, it was held that where assessee trust had entered into an agreement with a company, in which trustees were substantially interested_. for providing nursing training to its students and paid an advance which was adjusted towards fee payable, there was no diversion of funds-so as to get benefit to trustees as per section 13(3) [2017] 86 taxmann.com 232 (Cochin - Trib.) Deputy Commissioner of Income-tax, Central Circle v. Kunhitharuvai Memorial Charitable Trust. Therefore unless the AO establishes that payments were diverted and points out that diverted funds were used for benefit of specified person(s) the diversion of funds is not established.” 12.7 We have thoughtfully perused the issue in hand in the backdrop of the contentions of the Ld. Authorized Representatives of both the parties. We find substance in the contentions of Ld. AR and the reasonings of the 62 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 CIT(Appeals) that the diversion of funds for the benefit of specified person(s) contemplated in Section 13(3) of the Act, as alleged by the A.O, could not be proved/established. In view of such facts and circumstances, in absence of any further explanation, clarification or material to dislodge the decision/findings of CIT(A), we do not find any infirmity in the impugned order and, thus, approve the same. Resultantly, Ground(s) of appeal Nos.6, 7 & 9 of the revenue stands dismissed. 13. Ground No. 8: Challenging the decision of CIT(A) in law and facts in allowing the addition of Rs.14,56,75,819/- ignoring the findings by the AO. 13.1 Before adverting on the issue, we deem it fit to cull out the brief facts which had formed the basis for subject addition made by the A.O. The assessee society had during the year under consideration collected an amount of Rs.14,56,75,819/- from the students as “Development Charges”, and had taken the same directly to its “balance sheet” under the head “University Development Fund”. It was observed by the AO that these amounts have not been treated as income and not credited in the “Income & Expenditure A/c” by the assessee society. The AO also observed that the “Development Fund”, so collected was compulsory and mostly in cash that was received along with fee at the time of admission of students. It was alleged by the AO that the “Development Fund” collected from the students 63 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 has a direct nexus between the admission and the fee receipts revealed that such collection was not voluntary in nature but was paid as a “quid- pro-quo” to get the admissions. It was observed by him that as the subject amounts were neither in the nature of voluntary contributions nor are given with the directions by the payers to form part of the corpus of the assessee society, therefore, the same did not qualify for exemption u/s 11(1)(d) of the Act. Accordingly, the A.O backed by his aforesaid observations made an addition of Rs.14,56,75,819/-. For the sake of clarity, the observations of the A.O on this issue are culled out as under: “7. Development Fund:- It has been found that the assessee society had collected amount of Rs.14,56,75,819/-from the students as Development charges during the relevant F. Yr. and had taken the same directly to the Balance Sheet under the head \"University Development Fund\" . These amounts have not been treated as Income and not credited in I & E account. It was found that the development fund has been collected compulsorily and mostly in cash at the time of admission of students towards fee. Direct nexus between the admission and the fee received indicating that these development fee ere not voluntary in nature but were paid as a \"quid-pro-quo\" to get the admissions. Thus, the said sum is neither in nature of voluntary contribution nor given with the direction to form part of the corpus of the assessee society. Therefore, the Development fund collected by the assessee Is not qualified for the exemption u/s ll(1)(d) of the Income Tax Act, 1961. Accordingly, the Development fund of Rs.14,56,75,819 Is added to the total Income of the assessee. Further, the assessee has no basis of how the development charges were worked out. Also, the huge accumulation of Development charges year after year in the Balance Sheet 64 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 proves that the assessee society has been formed with the motive of profit. The assessee has claimed the investment of Rs.7,13,22,097 out of development fund. However, the assessee failed to produce credible evidences in respect of construction expenses, as only copy of advance payments were submitted. Also, It was considered that these investments have been made out of balance fund available from previous F.Yrs. The benefit of deduction of investment is also not given as claim of assessee of exemption u/s 11 &12 have denied in view of the reasons discussed above and as these claimed investments are in capital in nature. In view of the above, the entire amount of Rs.14,56,75,819/- collected as development charges is brought to tax under the head “Income from the other sources”. 13.2 On appeal, the CIT(A) observed that on the issue of corpus donations the courts are more liberal and have ruled in favour of the assessee. Further, it was observed by him that during the assessment proceedings the assessee had proved that the application of funds was in terms of investment in fixed capital assets i.e., construction of building amounting to Rs.28,81,85,238/-, which was more than the surplus of Rs.4,78,07,852/- as per the “Income & Expenditure A/c” of the assessee society. For the sake of clarity, the observations of the CIT(Appeals) on the aforesaid issue are culled out as under: “2.3.2 One issue is regarding the development fund, agitated in last ground. The AO is of the opinion that development fund of Rs.14,56,76,819/- has been received not as voluntary collection and there is quid pro quo to get admissions. Since it is not voluntary, exemption u/s 65 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 11(1)(d) cannot be allowed. Assessee has contended that development funds are balance sheet items and not in the nature of corpus donation. As per AO since it is -quid pro quo to admission of student, it is income of the assessee. On the issue of corpus donation the courts are more liberal and have ruled in favour of assessee. In a case before Delhi HC the issue was whether, where donations were not proved genuine, can the amount was disallowed u/s 115BBC. The decision of the honorable HC is as under- Director of Income-tax (Exemption) v. Keshav Social & Charitable Foundation (2006) 9 (I) ITCL 7 (Del-HC): (2005) 278 ITR 152 (Del):- For the proposition that the assessee is a charitable trust has disclosed donations received by it as its income and spent 75% of the amount for charitable purposes and on failure of assessee to furnish details of donations, Assessing Officer treated that amount as cash credit under section 68 and benefit under section 11 was denied In these facts, when the complete list of donors was not filed or that donors were not produced, did not necessarily lead to inference that assessee was trying to introduce unaccounted money by way of donation receipts. During the course of assessment proceedings the learned AO had examined the books of accounts and has found that the entire amount received under these heads and some others heads of Rs.9,44,82,861/- was invested in fixed capital assets i.e., construction of the building. Moreover, being the application of amount is of Rs.28,81,85,238/- is more than 15% of the total surplus fund where the actual surplus as per income and expenditure statement of Rs.4,78,07,852/- the return of income was filed by the assessee as NIL. For the aforesaid facts & circumstances and legal judicial pronouncement as discussed above, the appellant society had fulfilled all the requirements as laid down under section l15BBC & 11(1)(d) of the IT Act and thus the donations cannot be referred to as anonymous as well as corpus within the definition of section 11(1)(d) of the I T Act. Thus, the aforesaid disallowances under section I 15BBC and section 11(1)(d) of the IT Act as stated in the grounds appeal point no 2,3,4 &5 is said to be arbitrary, baseless, unwarranted and unjustified needs to be deleted. 66 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 In effect it was held in above decision that even if a donation is not established as corpus donation, it cannot be disallowed. In the present case, there is no doubt about the genuineness of donation. The ground of the AO is that it is not voluntary. Granting exemption to the income of the educational institutions is to enable such institutions to utilize the monies available with them for the purpose of running the educational institutions. The source from which the monies are received is of no consequence, what is relevant is the application of income. So long as the income of the institution, which solely exists for of the educational purpose and not for earning profit, is applied for the educational purpose, such income of the institution is entitled to exemption from tax Trustees of VanitaVishram v. CIT (2006) 9 (I) ITCL 101 (Bom-HC) : (2006) 280 ITR 345 (Bom). Even if it is presumed that the donation is not voluntary, and it is not held part of corpus donation then the same will be revenue item. In that case it will have to comply with the provision of section 11. Together with the receipt of Rs.63,79,68,858/- total income in that case will be Rs.78,36,44,677/-and 85 percent of the amount being Rs.66,60,97,975/- is required to be applied during the year. Against this the total application by the assessee is Rs.69,08,04,304/- as seen in above para. Therefore, even if the corpus donation is treated as revenue item still the condition of Sec. 11 will not be violated.” 13.3 On the aforesaid issue, Ld. AR submitted that the subject amount received was used for development of infrastructure of the assessee society. It was submitted by him that during the year under consideration the assessee society had spent an amount of Rs.7,31,22,097/-. The collection of development fund was in accordance with Clause 24 of the bye-laws dated 29.09.2007 of the assessee society. It was further submitted by him that the collection of fund was approved by “Niji Vishwa Vidyalaya Ayog”, i.e. the regulatory body of State Government. The Ld. AR 67 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 further submitted that the assessee had applied 85% of the income including the receipts on account of “Development Fund” received during the year. The Ld. AR to support his contention had drawn our attention to the submissions, dated 18.09.2024 explaining the fact that 85% of the total receipts (including development fund) of the assessee society were utilized during the year under consideration itself, therefore, even if the receipts of the “development fund” were to be considered as “revenue receipt” for the purpose of calculations, the assessee society had utilized more than the stipulated amount i.e. 85% of its receipts, Page-4-Para-9. It was, thus, the Ld. AR’s claim that the addition of “development fund” made by the A.O was unwarranted. A working showing receipts of the assessee society and utilization thereof as was submitted by the Ld. AR vide his submissions, dated 18.09.2024 (supra) is culled out as under: Particulars Amounts (Rs.) Remarks Total receipt of the society 63,79,68,858/- PN 95 of PB Development Fund received during the year 14,56,75,819/- PN 96 of PB Gross Receipts 78,36,44,677/- Amounts utilized for the objects:- Towards revenue expense Towards capital expenses 62,08,04,305/- 7,13,22,097/- PN 95 of PB (Rs. 63,79,69,858/0 (-) Rs.1,71,64,554/-) PN 91 of PB Total Utilization 69,21,96,402/- Percentage of utilization 88.32% 68 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 13.4 The Ld. AR in backdrop of the aforesaid submissions, submitted that as in the case of present assessee society, the assessment u/s. 143(3) was completed for the succeeding AY.s 2018-19 and A.Y.2022-23, wherein no additions on account of “development fund” received by the assessee society were made, therefore, for the year under consideration also such addition was uncalled for and is liable to be deleted. 13.5 Per contra, the Ld. CIT-DR strongly supported the order of A.O and sought for sustaining the impugned addition. 13.6 We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 13.7 On perusal of the facts about the “development fund” receipts, it transpires that the funds so received were accounted for directly in the balance sheet of the assessee society. Also, it is undisputed that as the funds so received are not voluntary in nature and cannot form part of the corpus, therefore, the same holds the character of revenue receipts. We, thus, find substance in the observation of the AO that as the same cannot be treated as a corpus fund or a capital receipt, therefore, there was a violation of the provisions of section 11(1)(d) and the exemption claimed by 69 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 assessee society treating the “development fund” as a capital receipt cannot be allowed. Accordingly, the first contention raised by the assessee society fails. 13.8 We shall now deal with the second limb of the contention raised by the assessee society, i.e. if the “development funds” collected by it are considered as revenue receipts, then, considering the fact that the funds so received are utilized for more than 85% of the total receipts (including development fund) for the subject year, therefore, the pre-condition to claim exemption u/ss.11/12 stands fulfilled and, thus, the subject addition so made cannot be sustained. We are of a firm conviction that as the said aspect was duly considered by the CIT(A), which in our considered opinion has been appropriately adjudicated, therefore, finding no perversity, we approve the same. In result, Ground of appeal No. 8 of the revenue’s appeal is partly allowed. 14. Ground: 13, 14 & 15: This ground is general and academic in nature, which having been rendered as infructuous is dismissed. 15. In result, the appeal of revenue in ITA No. 176/RPR/2018 is partly allowed, in terms of our aforesaid observation. CO No.15/RPR/2018 (by Assessee) 70 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 16. Ground No. 1: Regarding error in the order of CIT(Appeals) in holding that the assessment order passed by AO is not barred by limitation. 16.1 The Ld. AR submitted that though the impugned assessment order was dated 31.12.2016 but the same was handed over to postal department on 04.01.2017, thus, the same was barred by limitation The Ld. AR to substantiate his claim had placed before us a copy of the consignment tracking downloaded from “India Post”, which revealed that the dispatch of order was booked with the postal department on 04.01.2017. For factual completeness, the copy of the consignment tracking certificate placed before us at Page no. 103, is culled out as under: 71 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 72 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 16.2 Based on the aforesaid submission, the Ld. AR submitted that in terms of judgments passed by various Hon’ble High Courts the issue stands decided in favour of the assessee, i.e. the communication of the order has to be prior to the end of the limitation period. On this issue, the Ld. AR placed his reliance on the following judgments:  Pr. CIT vs M/s Nidan (2022) 329 CTR 919 (Orissa).  CIT vs B. J. N. Hotels Ltd. (2016) 382 ITR 110 (Karn.)  Commissioner of Agricultural Income Tax vs Kappumalai Estate (1998( 234 ITR 187 (Ker.).  K. Joseph Jacob vs Agricultural ITO (1991) 190 ITR 464 (Ker.)  Shanti lal Godawat vs ACIT (2009) 126 ttj 135 (Jodhpur),.  Bibhudatta Panda vs ACIT, ITA No. 76 to 81/Ctk/2022 dated 01.02.2023, Para 36. 16.3 The Ld. AR had further drawn our attention to the observations of the Hon’ble High Court of Orissa in the case of Pr. CIT Vs. M/s Nidan (2022) 329 CTR 919 (Orissa), wherein the aforesaid issue regarding passing of assessment order or dispatch of the same should be considered for deciding the limitation available under the law has been discussed and it was held as under: “4. Relevant to the first question sought to be urged, the facts are that the assessment order dated 30th December 2016, was according to the Assessee. dispatched by the Assessing Officer (AO) by post only on 7th January. 2017 and was received by the Assessee on 9th January 2017. Contending that in terms of Section 153-B of the Act the assessment order has to in fact be communicated to the Assessee on or before 31st December, 2016 and therefore, was time barred, the Assessee assailed the said order 73 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 before the Commissioner Income Tax (Appeals)[CIT(A)] apart from other grounds. However, the CIT(A) observed that the assessment order was dated 30th December, 2016 and there was no material to show that the AO had revisited the order thereafter. Accordingly, the CIT(A) upheld the order relying on the decision of the Calcutta High Court in Commissioner of Income Tax, Central-1 v. M/s. Binani Industries Ltd. (2015) 59 Taxmann.Com 389 (Cal). 7. As rightly noted by the ITAT the requirement under Section 153B (1) is for the AO t9 make the assessment order within a period of twenty-one months from the end of the financial year in which the last of the authorization for the search under Section 132 of the Act was executed. In the present case, there is no doubt that the last date by which the assessment had to be made was 31st December, 2016. As further rightly noticed Section 153B (1) uses the expression “order of assessment” and not merely ‘assessment’. Therefore, the assessment order becomes an order only when in fact it is communicated and therefore, the communication of the order had to be prior to the end of the limitation period. In BJN Hotels Ltd. (supra) the Karnataka High Court, held as under: \"That the revenue is neither able to point out from the records that the assessment orders were dispatched on 27.4.2007 nor produced the dispatched register to establish that the orders were complete and effective i.e. it was issued, so as to be beyond the control of the authority concerned within the period of limitation i.e. 29.4.2007. Admittedly, the assessment orders were served on the assessee on 30.4.2007, hence, the assessment orders passed were barred by limitation.\" 10. The above facts in M/s.Binani Industries Ltd. (supra) are therefore clearly distinguishable from the case at hand were the postal records clearly show that the dispatch of the assessment was made by speed post only on 7th January, 20·12 and was delivered to the Assessee only on 9th January, 2017, Therefore, notwithstanding that the Supreme Court may have the dismissed the SLP filed by the Assessee against the decision of the Calcutta High Court in M/s.Binani Industries Ltd. (supra) in limine, the said decision is not of assistance to the Revenue as far as the present case is concerned. 74 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 11. Consequently, the Court is satisfied that no error has been committed by the ITAT in, allowing the Assessee's appeal, This Court is, therefore, not persuaded to frame the questions of law as urged by the Revenue.” 16.4 Based on aforesaid submissions, the Ld. AR submitted that as almost identical findings are given in all the aforesaid cases as was there in the case of Pr. CIT vs M/s Nidan (supra), therefore, in present case the order dated 31.12.2016, which was dispatched on 04.01.2017, having been passed belatedly, i.e. beyond the limitation prescribed under the provisions of Act was liable to be quashed. 16.5 In rebuttal, Ld. CIT-DR submitted that the contentions of the Ld. AR that the limitation for passing an assessment order is to be reckoned from the of date of dispatch of order is not tenable in the eyes of law as this issue is covered by the judgment of the Hon’ble Apex Court in the case of CIT vs Mohammed Meeran Shahul Hameed (2021) 438 ITR 0288 (SC) dated 07.10.2021, wherein it was held as under: “4.3 On a fair reading of sub-section (2) of Section 263 it can be seen that as mandated by sub- section (2) of Section 263 no order under Section 263 of the Act shall be \"made\" after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. Therefore the word used is \"made\" and not the order \"received\" by the assessee. Even the word \"dispatch\" is not mentioned in Section 263 (2). Therefore, once it is established that the order under Section 263 was made/passed within the period of two years from the end of the financial year in which the order sought to be revised was passed, such an order cannot be said to be beyond the period of limitation 75 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 prescribed under Section 263 (2) of the Act. Receipt of the order passed. Under Section 263 by the assessee has no relevance for the purpose of counting the period of limitation provided under Section 263 of the Income Tax Act. In the present case, the order was made/passed by the learned Commissioner on 26.03.2012 and according to the department it was dispatched on 28.03.2012. The relevant last date for the purpose of passing the order under Section 263 considering the fact that the assessment was for the financial year 2008-09 would be 31.03.2012 and the order might have been received as per the case of the assessee - respondent herein on 29.11.2012. However as observed hereinabove, the date on which the order under Section 263 has been received by the assessee is not relevant for the purpose of calculating/considering the period of limitation provided under Section 263 (2) of the Act. Therefore the High Court as such has misconstrued and has misinterpreted the provision of sub-section (2) of Section 263 of the Act. If the interpretation made by the High Court and the learned ITAT is accepted in that case it will be violating the provision of Section 263 (2) of the Act and to add something which is not there in the section. As observed hereinabove, the word used is \"made\" and not the \"receipt of the order\". As per the cardinal principle of law the provision of the statue/act is to be read as it is and nothing is to be added or taken away from the provision of the statue. Therefore, the High Court has erred in holding that the order under Section 263 of the Act passed by the learned Commissioner was barred by period of limitation, as provided under sub-section (2) of Section 263 of the Act.” 16.6 The Ld. CIT-DR further submitted that as the issue in present case raised by the assessee is no more res-integra pursuant to by the judgment of the Hon’ble Apex Court in the case of CIT vs Mohammed Meeran Shahul Hameed (supra), therefore, the contention raised by the assessee based on the judgments of the Hon’ble High Courts cannot survive and is liable to be rejected. 76 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 16.7 After hearing the parties, in the backdrop of the facts available on record and judgments relied upon, we find substance in the submission of Ld. CIT-DR, which is supported by the judgment of Hon’ble Apex Court in the case of CIT vs Mohammed Meeran Shahul Hameed(supra). Although, the principle laid down by the Hon’ble Apex Court in the aforementioned case was qua an order passed under sub-section (2) of section 263, but provisions for limitation within which the passing of order u/s 143(3) has been defined u/s 153(1) are also worded identically, that, “no order of assessment shall be made under section 143 or 144 at any time after the expiry of twenty-one months from the end of the assessment year in which the income was first assessable.” Following the analogy flowing from the judgment relied by the revenue, that “the word used in the relevant section is “made” and not “dispatch” or “received” by the assessee, therefore, date of passing of the order within the prescribed time of limitation is relevant, dispatch of order or receipt by the assessee has no relevance for the purpose of counting the period of limitation provided under the relevant section of the Income Tax Act”, there is no scope for us to decide the aspect of limitation on a different benchmark which is not arising from the mandate in the statute. Since the impugned assessment order u/s.143(3) was made on 31.12.2016, a fact which could not be disproved by the assessee, therefore, the dispatch thereof on 04.01.2017 or receipt by the assessee after 31.12.2016, cannot be a basis to treat the same as barred by limitation or 77 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 passed beyond the prescribed date of limitation. Consequently, Ground No. 1 of cross-objection in the present case filed by the assessee stands dismissed. 17. Ground No. 2: Regarding confirming the disallowance of Rs. 2,18,48,453/- on account of Depreciation. 17.1 Observation of the A.O on the issue of disallowance of depreciation are as under: “10. Depreciation:- While examining the accounts of the society and computation of the Income, it was noticed that the assessee has claimed depreciation of Rs.2,18,48,453/- even though the assessee had already claimed the cost of additions to fixed assets as application of income for charitable purposes in the previous years. The claim of depredation in the current year would therefore amount to double deduction. Also the claim of depreciation by the assessee is not in accordance with the decision of the Supreme Court .in Escorts Ltd vs. Union of India[1993) 199 ITR 43. The fundamental axiom is that double deduction is not intended unless there is a clear statutory indication to the contrary. It may also be relied upon the decision of the ITAT, Delhi Bench in the case of Prakash Education Society in ITA No. 4730 & 4731/D/2007 in which the Tribunal upheld the principle that where the capital\" expenditure has allowance of depreciation on the same assets would amount to double deduction. Accordingly, the depreciation claimed of Rs.2,18,48,453/- is disallowed and included in taxable income.” 17.2 The CIT(A) had confirmed the aforesaid addition by observing as under: “I have given consideration to the contention of the assessee. I find that U/s 11 of the Income Tax Act, 1961 exemption to the income is allowed on the basis of its application. The taxation of charitable trust u/s. 11, 12 .and 13 are on different footing 78 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 than taxation of a business entity u/s. 28 to 44. Strictly speaking in respect of charitable trust instead of income expenditure account, receipt payment account must be prepared which will take into account only actual expenditure and income on cash basis and will not have any notional debits. Depreciation is a notional debit allowed to a business concern to compensate for annual wear and tear of assets. For example depreciation is allowed @ 10 percent for civil works and @.15 percent for plant and machinery. Various rates of depreciation have been prescribed for various other assets. In respect of certain assets us d for pollution control etc. even 100 percent of rate has been prescribed. This means that full cost of asset is debited for such assets in the first year of its use. In case of a charitable trust, full cost of asset is debited as application of income u/s.1l(1)(a) of the Act. Therefore, in addition to the allowance of 100 percent cost of asset, again allowing depreciation will lead to additional debit or double deduction. For example if the asset in question is a building then in addition to l00 percent deduction 011 application basis. if depreci.at on is allowed at 10 percent on the basis of assessee's claim then the addition l0 percent will be giving double benefit to the assessee. In other words, by spending Rs.100 the charitable trust will get debit of Rs.110/-. This is an absurd position. This was not the intention of the legislature in allowing deprecation to the assessee. The decision of Karna aka High Court in the case of Lissie Medical institution (Supra) is exactly on the same line. The Hon'ble High Court has said that depreciation cannot be allowed when the full cost has been treated as application in any one year. This is one of the recent decision the tenor which has been accepted by the Government by explicitly bringing it as amendment by inserting Sec. 11(6). An entity with 12A registration is allowed 100 percent deduction of cost of asset by way of application whereas any business entity without the benefit of section 11 does not get 100 percent deduction and gets: only the debit of depreciation u/s.32 which is much less then 100 percent. Another reason for disallowance of depreciation to charitable trust is that income of the business concern is computed u/s. 30 to 43D of the IT Act, 1961 whereas income of a charitable trust is competed u/s.11, 12 & 13 of the Act. Therefore, any deduction/ debit not allowed u/s.11 to 13 cannot be permitted. Depreciation is allowed to a business concern u/s. 32. That is why the legislature has specifically inserted subsection (6) to section. 11 with express provision that in computing the application of income depreciation Claim will not be taken into account. 79 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 Thus in view of above discussion, I find benefit of depreciation has been rightly disallowed. The disallowance is hereby sustained and appellant' grounds are rejected.” 17.3 The Ld. AR submitted that the issue regarding allowing of depreciation is covered by the following decisions: (i) Modern Medical Institute in ITA No.268/RPR/2017 dated 28.04.2022 8. Considering the entire facts of the case, ex facie it appears that, both the tax authorities carried away by the judicial precedents without first verifying the facts of the case placed before them. Under the normal provisions of law, the claim for depreciation is a mandatory entitlement irrespective whether it is claimed or not while computing the total income, whereas the entitlement of depreciation on any assets where the cost of acquisition of such assets on a previous occasion claimed as application of income is all together separate subject matter. Having said so, in the present however, in the absence of evidential material it is not born out records that, the appellant in question did not claim the entire cost of asset acquisition as application of income in any of the previous year/s, consequently the adjudication is restricted to the allowability of depreciation on assets where the entire cost of acquisition was on a previous occasion claimed as application in terms of section 11 of the Act. 9. In our considered view, the issues is settled down in favour of assessee after the categorical and authoritative pronouncement by the Hon'ble Supreme Court in the case of “CIT Vs Rajasthan, and. Gujarati Charitable Foundation Poona” reported at 402 ITR 441(SC), wherein the Hon'ble Supreme Court while answering the question has held as; \"4. Question No. 2 herein is identical to the question which was raised before the Bombay High Court in the case of Director of Director of Income-Tax (Exemption) v. Framjee Cawasjee Institute [1993] 109 CTR 463. In that case, the facts were as follows: The assessee was the Trust. It derived its income from depreciable assets. The assessee took into account depreciation on those assets in computing the income of the Trust. The ITO held that depreciation could not be taken into account because, full capital expenditure had been allowed in the year of acquisition of the assets. The assessee went in appeal before the Assistant Appellate Commissioner. The Appellant was rejected. The Tribunal, however, took the view that when the ITO stated that full expenditure had been allowed in the year of acquisition of the assets, what he really meant was that the amount spent on acquiring those assets had been treated as ‘application of income' of the Trust in the year in which the income was spent in acquiring those assets. This did not mean that in computing income from those assets in subsequent years, 80 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 depreciation in respect of those assets cannot be taken into account. This view of the Tribunal has been confirmed by the Bombay High Court in the above judgment Hence, Question No. 2 is covered by the decision of the Bombay High Court in the above Judgment. Consequently, Question No. 2 is answered in the Affirmative i.e., in favor of the assessee and against the Department\" 10. Before we depart, insofar as the allowability of depreciation on assets where the full value of assets was on the previous occasion claimed as ‘application of income', we are mindful to elucidate that, even in the present case, if the assessee had claimed the cost of asset as application of income u/s 11 of the Act in any of the previous year or years up to AY 2014-15 and is allowed in the light of judicial precedents, the claim of depreciation there against for the year under consideration is not hit by the amended provision of section 11(6) of the Act, as the amended provision of section 11(6) de future prospective in nature effective from AY 2015-2016 as held by Hon'ble Karnataka High Court in the case of \"DIT V/s Al-Ameen Charitable Fund Trust\" reported at 383 ITR 517 (Kar). Ergo, we in the light of judicial precedents stated herein above hold that, the appellant trust is eligible for depreciation for the AY 2014-2015, consequently we direct the Ld. AO to delete the disallowance of depreciation.” (ii) CIT Vs. Rajasthan & Gujarati Charitable Foundation (2018) 402 ITR 441 (SC): (iii) DIT V/s Al-Ameen Charitable Fund Trust\" reported at 383 ITR 517 (Kar): Held that the amendment in section 11(6) is prospective. 17.4 The Ld. CIT-DR, on the other hand vehemently supported the orders of the revenue authorities. 17.5 We have considered the rival submissions, perused the material available on record and the case laws relied upon by the Ld. AR. The issue regarding allowability of depreciation in the present case for AY 2014-15 is squarely covered by the decision of Hon’ble Apex Court in the case of CIT vs Rajasthan and Gujarati Charitable Foundation (supra) along with the decision of Hon'ble Karnataka High Court in the case of \"DIT V/s Al- 81 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 Ameen Charitable Fund Trust\" reported at 383 ITR 517 (Kar), which have been followed by the ITAT, Raipur in the case of Modern Medical Institute (supra), Accordingly, we find substance in the submission of Ld. AR to allow the claim of depreciation raised by the assessee society in the instant case. We, thus, direct the A.O. to vacate the disallowance made on this account and set aside the order of revenue authorities. In result, Ground no. 2 of the cross-objection of the assessee stands allowed. 17.6 In result, the cross-objection of assessee society in CO No.15/RPR/2018 is partly allowed, in terms of our aforesaid observations. 17.7 In combined result, the appeal of the revenue in ITA No. 176/RPR/2018 and CO No.15/RPR/2018 of the assessee, both are partly allowed in terms of our aforesaid observations. Order pronounced in open court on 28th day of February, 2025. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; Ǒदनांक / Dated : 28th February, 2025. **##Vaishav/SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The Pr. CIT, Raipur-1 (C.G) 82 ACIT (Exemption), Raipur Vs. M/s. All India Society for Electronics & Computer Tech ITA No. 176/RPR/2018 CO No.15/RPR/2018 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 5. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "