Hay-hay Kshatriya Eduction Socity, V. The C I T 2 (1),

CO 11/IND/2009

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 3134 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 4 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-03-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 05-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Assessee Lawyers: M C MEHTA; HITESH CHIMNANI CAS
• Keywords: Reopening of assessment; Depreciation; Charitable institution; Period of limitation; Benefit of exemption; Time period of passing order; Capital expenditure
• Section: 133A; 12A; 12AA; 147; 148; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH,J.M.AND SHRI R.C.SHARMA, A.M. PAN NO. : AAATL1635N I.T.A.NOS. 51 TO 56 & 510/IND/2007 A.YS. : 1998-99 TO 2004-05 DY. CIT, /ACIT, M/S.HAI HAY KSHETRIYA EDUCATION SOCIETY, 2(1), 31, SHYAMLA HILLS, BHOPAL BHOPAL. APPELLANT RESPONDENT PAN NO. : AAATL1635N C.O.NOS. 9 TO 14/IND/2007 (ARISING OUT OF I.T.A.NOS. 51 TO 56/IND/2007) A.YS. : 1998-99 TO 2003-04 DY. CIT /ACIT, M/S.HAI HAY KSHETRIYA EDUCATION SOCIETY, 2(1), 31, SHYAMLA HILLS, BHOPAL BHOPAL. APPELLANT RESPONDENT -: 2: - 2 DEPARTMENT BY : SHRI KESHAVE SAXENA, CIT DR ASSESSEE BY : SHRI M. C. MEHTA AND SHRI HITESH CHIMNANI, CAS O R D E R PER BENCH THESE ARE APPEALS FILED BY THE REVENUE FOR THE ASSESSMENT YEARS 1998-99 TO 2004-05 AND CROSS OBJE CTIONS FOR THE ASSESSMENT YEARS 1998-99 TO 2003-04 ARE FIL ED BY THE ASSESSEE AGAINST THE ORDERS OF CIT(A). 2. AS COMMON GROUNDS ARE INVOLVED IN ALL THE YEARS, W E HAVE HEARD ALL THESE APPEALS TOGETHER AND ARE NOW D ISPOSING OF THE SAME BY THIS CONSOLIDATED ORDER. 3. FOLLOWING GROUNDS HAVE BEEN TAKEN IN I.T.A.NO. 51/IND/2007 FOR THE ASSESSMENT YEAR 1998-99 IN REVE NUES APPEAL. HOWEVER, IN OTHER YEARS ALSO MOST OF THE GR OUNDS ARE COMMON. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN :- 1. HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DENYING THE EXEMPTION U/S 11 OF THE -: 3: - 3 INCOME-TAX ACT, 1961. 2. HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ATTEMPTING COLOLLARY BETWEEN THE APPELLANT SOCIETY AND H.K. KALCHURI EDUCATION TRUST. 3. HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN CONCLUDING THAT THE EDUCATIONAL INSTITUTION RUN BY THE APPELLANT SOCIETY WAS SIMILAR TO A BUSINESS ENTITY AND NOT ENTITLED TO EXEMPTION OF ITS INCOME. 4. DELETING THE ADDITION OF RS. 1,43,217/- MADE BY THE ASSESSING OFFICER, ON ACCOUNT OF EXPENSES TOWARDS THE PERSONAL ACCOUNT. 5. DELETING THE ADDITION OF RS. 2,01,987/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LAB EQUIPMENT/CONSUMABLE ON ESTIMATE BASIS. 6. DIRECTING THE ASSESSING OFFICER TO INCLUDE THE FEES FOR DEVELOPMENT FUND OF RS. 54,75,000/- AS REVENUE INCOME AND TO ALLOW EXEMPTION U/S 10(22) OF THE I.T. ACT. THE CIT (APPEAL)'S ORDER IS CONTRADICTORY WITH REGARD TO EXEMPTION CLAIMED BY THE ASSESSEE U/S 10(22)/10(23)(C)11 OF THE IT ACT AS IN A.Y. -: 4: - 4 1998-99 THE ASSESSEE WAS ALLOWED EXEMPTION U/S 10 (22) AS CLAIMED BY ASSESSEE, WHEREAS IN SUBSEQUENT YEAR THE SAME WAS ALLOWED U/S 11 THOUGH THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION AS HELD BY THE ASSESSING OFFICER EITHER U/S 10(22)/ 10(23 )(C) OR U/S 11 OF IT ACT. 4. IN THE CROSS OBJECTIONS FILED BY THE ASSESSEE, FOLL OWING GROUNDS HAVE BEEN TAKEN IN THE ASSESSMENT YEAR 1998 -99 :- 1.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE , AS DISCUSSED BY THE LD. CIT(A) THE CASE AS REOPENED WITHOUT INTIMATING THE REASONS FOR REOPENING OF THE CASE IS ILLEGAL OUT OF DATE AND BAD IN LAW. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSMENT ORDER ALLEGED TO HAVE BEEN PASSED ON 27.3.2006 IS PRE-DATED SINCE THE SAME WAS SERVED ON THE ASSESSEE ON 19.5.2006. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND AS PER THE DIRECTIONS OF A.I.C.T.E., THE LD. CIT(A) ERRED IN HOLDING THAT THE CONTRIBUTION -: 5: - 5 COLLECTED FROM STUDENTS TOWARDS DEVELOPMENT FUND ARE REVENUE IN NATURE AND INCOME OF THE SOCIETY. 5. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. 6. THE FACTS, IN BRIEF, ARE (I) THAT THE ASSESSEE SOCIETY IS REGISTERED UNDER THE MADHYA PRADESH SOCIETIES REGISTRATION ACT, 1973, ON 5-1-1982 VIDE REGISTRATION NO. 10848 . (II) THE ASSESSEE SOCIETY HAS BEEN GRANTED REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961,AS PER ORDER DATED 11.3.1997 BY THE CIT, BHOPAL, VIDE REGISTRATION NO. 26/97-98, W.E.F. 1.4.96. (III) DURING THE CURRENT ASSESSMENT YEAR, THE ASSESSEE SOCIETY WAS RUNNING LAXMI NARAYAN COLLEGE OF TECHNOLOGY, BHOPAL. THIS EDUCATIONAL INSTITUTION WAS SET UP -: 6: - 6 BY THE ASSESSEE SOCIETY UNDER RECOGNITION FROM AICTE, NEW DELHI TO IMPART TECHNICAL EDUCATION TO STUDENTS. LATER ON 12.7.2001, A DIFFERENT ENTITY H. K. KALCHURI EDUCATION TRUST (INCORPORATED ON 8.5.1998) BHOPAL TOOK OVER ALL THE ASSETS OF THE AFORESAID COLLEGE. SHRI JAL NARAYAN CHOUKSEY, SECRETARY OF THE ASSESSEE SOCIETY IS THE MANAGING TRUSTEE OF H. K. KALCHURI EDUCATION TRUST. THE ASSESSEE SOCIETY STILL ENJOYS THE REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961, AND IS PRESENTLY RUNNING A HOMEOEPATHIC COLLEGE IN THE NAME OF NARAYAN SHREE HOMEOPATHIC MEDICAL COLLEGE AND HOSPITAL AT BHOPAL. (IV) AS PER THE ASSESSEE SOCIETYS BYE LAWS, ITS MAIN OBJECT IS CONSTRUCTION -: 7: - 7 AND RUNNING OF BAL NIKETAN, NARI NIKETAN, EDUCATIONAL INSTITUTION, DHARMSHALA, HOSTEL, HOSPITAL, LIBRARY ETC. (V) THE ASSESSEE SOCIETY HAD FURNISHED ITS RETURN OF TOTAL INCOME ON 31.10.2001 VIDE ACK.NO.007025 FOR THE ASSESSMENT YEAR 1998-99 RETURNING NIL INCOME AFTER CLAIMING EXEMPTION U/S 11 OF THE INCOME-TAX ACT, 1961, OF RS. 26,27,159/- (VI) A NOTICE U/S 148 OF THE INCOME-TAX ACT, 1961, DATED 22.4.2005 WAS ISSUED TO THE ASSESSEE SOCIETY BY THE ITO 2(20), BHOPAL, FOR THE CURRENT ASSESSMENT YEAR. NO SEPARATE RETURN WAS FILED IN RESPONSE TO THE ABOVE- MENTIONED NOTICE. THE ASSESSEE SOCIETY DURING THE ASSESSMENT PROCEEDINGS SUBMITTED THAT THE RETURN FILED ON 31.10.2001 MAY BE -: 8: - 8 TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE INCOME-TAX ACT, 1961. (VII) THE AO IN THE ORDER PASSED U/S 147 OF THE INCOME-TAX ACT, 1961, ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS. 84,30,860/- BY HOLDING THAT THE ASSESSEE SOCIETY IS NOT ENTITLED TO EXEMPTION U/S 11 OF THE INCOME-TAX ACT, 1961. 7. IT WAS CONTENDED BEFORE THE CIT(A) THAT THE ASSESSM ENT ORDER U/S 147 DATED 27.3.2006, WHICH WAS SERVED ON ASSESSEE ON 19.5.2006 IS OUT OF DATE AND BAD IN LAW. ACCORDI NGLY, THE SAME DESERVES TO BE ANNULLED. IT WAS FURTHER SUBMIT TED THAT THE ASSESSMENT ORDER DATED 27.3.2006 SERVED ON IT O N 19.5.06 I.E. AFTER 52 DAYS IS CLEARLY AND BEYOND DOUBT, OUT OF DATE AND THEREFORE, BAD IN LAW. COPY OF THE POSTAL RECEIPT D ATED 19.5.2006 WAS SUBMITTED DURING THE APPELLATE PROCEE DINGS. LETTER DATED 30-5-2006 ISSUED BY THE SPEED POST BUSINESS CENTRE, ARERA HILLS, BHOPAL, POSTAL DEPART MENT, GOVERNMENT OF INDIA, CERTIFYING THAT THE SAID ORDER WAS -: 9: - 9 RECEIVED BY IT FOR DESPATCH ONLY ON 18-5-2006 FROM THE INCOME TAX DEPARTMENT, BHOPAL WAS ALSO SUBMITTED. L D. COUNSEL SUBMITTED THAT THIS CLEARLY SHOWS THAT THE IMPUGNED ASSESSMENT ORDER WAS NOT PASSED ON 27-3- 2006. THE ASSESSEE SOCIETY FAILS TO UNDERSTAND THE REASON FOR SUCH DELAY IN SERVING THE IMPUGNED ASSESSMENT ORDER TO IT BY THE ASSESSING OFFICER, MO RE SO WHEN HUGE DEMAND OF RS. 73,48,76/- WAS CREATED. THE LEARNED COUNSEL SUBMITTED THAT IT IS, THEREFORE, A CLEAR CUT CASE WHERE AN ASSESSMENT ORDER HAS BEEN PURPORT ED TO HAVE BEEN PASSED WITHIN THE PRESCRIBED PERIOD OF LIMITATION BUT THE SAME IS SERVED ON THE ASSESSEE A FTER A LONG DELAY WITHOUT THERE BEING AN EXPLANATION COMI NG FORWARD FOR SUCH DELAY. UNDER THESE CIRCUMSTANCES, IT MUST BE PRESUMED THAT THE ORDER WAS NOT MADE ON THE DATE ON WHICH IT PURPORTS TO HAVE BEEN MADE. 8. WITH REGARD TO DELAY IN PASSING OF ASSESSMENT ORDER AND ITS SERVICE, THE CONTENTION OF LD. AUTHOR IZED REPRESENTATIVE BEFORE THE CIT(A) WAS THAT THE EXPRE SSION ASSESSMENT IN SECTION 153 IS REFERABLE TO THE FINAL -: 10: - 10 ORDER OF ASSESSMENT MADE BY THE ASSESSING OFFICER, AND NOT IN THE WIDER SENSE INCLUSIVE OF THE WHOLE PROCE DURE OF IMPOSITION OF TAX AND ITS FINALITY. RELIANCE WAS ALSO PLACED ON THE DECISION IN THE CASE OF CF. K. MOHD. OSMAN SAHEB & CO. VS. STATE OF ANDHRA PRADESH, (1971) 27 STC 303 (AO). THE PROVISIONS OF SECTION 153(1), ( 2) AND (2A) ARE ABSOLUTE. THEY IMPOSE A FETTER UPON TH E INCOME TAX AUTHORITIES TO MAKE AN ASSESSMENT AFTER THE EXPIRY OF THE PERIODS MENTIONED IN THOSE SUB-SECTIO NS. THIS IS A STATUTORY FETTER WHICH IS NOT FOR THE ASS ESSEE TO RELAX OR WAIVE. IN OTHER WORDS, THE POWER TO MAKE ASSESSMENTS LAPSES COMPLETELY UPON THE EXPIRY OF TH E PERIODS MENTIONED IN THOSE SUB-SECTIONS. THEREFORE, AN ASSESSMENT ORDER MADE AFTER THE EXPIRY OF THE AFORE SAID PERIODS IS INVALID. RELIANCE WAS ALSO PLACED ON THE DECISION OF CIT VS. SRIMATI MINABATI AGARWALLA, (19 71) 79 ITR 278 (CAL); VIMALCHAND V. CIT, (1985) 155 ITR 593 (RAJ); SMT. SOBHARANI VS. CIT, (1986) 160 ITR 453 (RAJ)AND UNENFORCEABLE IN THE EYE OF LAW [CEMENT DISTRIBUTORS (P) LTD VS. CY. CTO, (1969) 23 STC 86, 9 7 -: 11: - 11 (MAD); A. VELAYUTHA RAJA V. BOARD OF REVENUE, (1970 ) 26 STC 176, 185(MAD), AHMEDABAD MFG. & CALICO PRINTING CO. LTD. V. S.G.MEHTA, (1963) 48 ITR (S.C.) 154, 17 1; CIT VS. RAMESHWARLAL SANWARMAL, (1971) 82 ITR 628, 632 (S.C.); CIT V. BRITISH INDIA CORPORATION, (1979) 11 7 ITR 651 (ALL). THE LEARNED COUNSEL PLACED RELIANCE ON T HE DECISION OF CIT V. ESCORTS FARMS P.LTD., (1989) 180 ITR 280 (DEL) WHEREIN IT WAS HELD THAT THE AO GETS JURISDICTION TO PASS AN ASSESSMENT ORDER IF IT IS W ITHIN LIMITATION. IF THE ASSESSMENT IS BARRED BY TIME, TH EN ANY DECISION MERITS, WOULD BE OF NO CONSEQUENCE, AND FO R THE SAME REASON, THE DECISION, ON MERITS, BY APPELLATE AUTHORITIES WOULD ALSO BE OF NO CONSEQUENCE AND WOU LD HAVE TO BE IGNORED. 9. CONTENTION OF THE LD. A.R. BEFORE THE CIT(A) WAS THAT IN ORDER TO MAKE THE ASSESSMENT ORDER COMPLETE AND EFFECTIVE, IT SHOULD BE ISSUED SO AS TO BE BEYO ND THE CONTROL OF THE AUTHORITY CONCERNED, FOR ANY POSSIBL E CHANGE OR MODIFICATION. THIS SHOULD BE DONE WITHIN THE PRESCRIBED PERIOD, THOUGH THE ACTUAL SERVICE OF THE ORDER -: 12: - 12 MAY BE BEYOND THAT PERIOD. RELIANCE IS PLACED ON TH E DECISION IN THE CASE OF CAGIT . KAPPUMALAI ESTATE, (1998) 234 ITR 187 (KER), APPLYING GOVERNMENT WOOD WORKS V. STATE OF KERALA, (1988) 69 STC 62 ( KER.). THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE WAS THAT SERVICE OF ASSESSMENT ORDER AFTER THE EXPIRY OF THE PERIOD OF LIMITATION RAISES A PRESUMPTION AGAINST PASSING OF THE ORDER WITHIN TIME-LIMIT. WHERE AN ASSESSMENT ORDER HAS BEEN PURPORTED TO HAVE BEEN PASSED WITHIN THE PRESCRIBED PERIOD OF LIMITATION BUT THE SAME IS SER VED ON THE ASSESSEE AFTER A LONG DELAY WITHOUT THERE BEING AN EXPLANATION COMING FORWARD FOR SUCH DELAY, IN THE ABSENCE OF ANY EXPLANATION WHATSOEVER, IT MUST BE PRESUMED THAT THE ORDER WAS NOT MADE ON THE DATE ON WHICH IT PURPORTS TO HAVE BEEN MADE AND ON THE BASI S OF SUCH PRESUMPTION, IT CAN BE HELD THAT THE ORDER WAS PASSED AFTER THE EXPIRY OF THE PERIOD OF LIMITATION AND THE SAME IS LIABLE TO BE QUASHED. RELIANCE IS PLACE D ON THE DECISION IN THE CASE OF MAFATLAL INDUSTRIES LIM ITED V. CTO, (1996) 101 STC 461 (WBTT), FOLLOWING STATE OF -: 13: - 13 ANDHRA PRADESH V. M. RAMAKISHTIAH & CO.: KHETMAL PAREKH, (1994) 93 STC 406, 407-08 (S.C.). ALSO SEE SHAW WALLACE & CO. LTD. VS. STATE OF ANDHRA PRADESH , (1997) 104 STC 497 (AO); USHODAYA EBETERORUSES LTD. V. CCT, (1998) 111 STC 711 (AO-FB). AN ASSESSMENT ORDE R BECOMES EFFECTIVE ONLY WHEN IT IS ISSUED FROM THE O FFICE OF THE ASSESSING AUTHORITY. AN ASSESSMENT WILL NOT BE OVER UNTIL IT IS COMMUNICATED TO THE ASSESSEE. THE ASSESSMENT ORDER BECOMES OPERATIVE ONLY ON SERVICE ON THE PARTY INTENDED TO BE AFFECTED THEREBY. RELIANCE IS PLACED ON THE DECISION IN THE CASE OF COCHIN PLANTA TIONS LIMITED V. STATE OF KERALA, (1997) 227 ITR 38, 42 ( KER) OF CF B.T. MAMMOO V. ASST. CST, (1997) `107 STC 426 427 (KER.). 10. DURING THE COURSE OF HEARING BEFORE US, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE THA T IN THE PRESENT CASE, THE ASSESSMENT ORDER ALONGWITH NO TICE OF DEMAND HAS BEEN SERVED AS LATE AS ON 19.5.2006 WHERE AS THE ORDER IS DATED 27.3.2006. IT HAS ALSO BEEN VERIFIED FROM THE POSTAL RECEIPT THAT THE SAME WAS -: 14: - 14 DISPATCHED THROUGH POST ONLY ON 18.5.2006 WHICH CLEARLY SHOWS THAT ORDER WAS NOT PASSED ON 27.3.200 6 BUT BELATEDLY AND WAS BACK DATED. THE LEARNED COUNS EL SUBMITTED THAT IT HAS BEEN HELD BY THE HON'BLE RAJASTHAN HIGH COURT THAT UNDER SECTION 292 B, TIME BARRING ASSESSMENT CANNOT BE CURED AS THAT IS NOT A PROCEDURAL MISTAKE, WHICH CAN BE RECTIFIED. THE LEA RNED COUNSEL THEREFORE SUBMITTED THAT THE IMPUGNED ASSESSMENT ORDER PASSED BEYOND LIMITATION PERIOD BE QUASHED. 11. IN VIEW OF THE ABOVE SUBMISSION, CONTENTION OF THE ASSESSEE WAS THAT ORDER PASSED U/S 147 DATED 27.3.2 006 WAS BARRED BY LIMITATION, AS IT WAS SERVED ONLY ON 19.5.2006. FOR THIS PURPOSE, RELIANCE WAS PLACED ON THE DECISION OF CASE REPORTED AT 190 ITR 464 (KERALA) A ND 157 ITR 122 (MP). 12. BY THE IMPUGNED ORDER AFTER CONSIDERING VARIOUS CASE LAWS CITED BY THE LD. AUTHORIZED REPRESENTATIV E, THE LD. CIT(A) DISMISSED THIS GROUND AFTER HAVING THE FOLLOWING OBSERVATIONS :- -: 15: - 15 I HOLD THAT THE LIMITATION PERIOD PRESCRIBED IN SECTION 153 OF THE 1. TAX ACT IS THE PERIOD WITHIN WHICH THE ASSESSING OFFICER HAS TO COMPLETE THE ASSESSMENT OF INCOME AND THE DETERMINATION OF TAX PAYABLE. IT IS NOT NECESSARY THAT THE ORDER OF ASSESSMENT SHOULD ALSO BE COMMUNICATED TO THE ASSESSEE WITHIN THAT PERIOD. THUS, WHAT IS REQUIRED FOR COMPLETION OF THE ASSESSMENT IS THE DETERMINATION OF THE TAX LIABILITY AND ISSUE OF DEMAND NOTICE BUT CERTAINLY NOT THE SERVICE OF THE SAME ON THE ASSESSEE. FOR THE AFORESAID PROPOSITION, RELIANCE WAS PLACED ON THE FOLLOWING JUDGMENTS: (I) INDIA FERRO ALLOY INDUSTRY P. LTD VS. CIT, 202 ITR 671 (CAL.) (II) K. U. SRINIVASA RAO VS. CWT, 152 ITR 128 (A.P.) (III) CIT VS. BALKRISHNA MALHOTRA, 81 ITR 759 (S .C.) -: 16: - 16 ACCORDINGLY, THE GROUND NO.1 RAISED BY THE ASSESSEE SOCIETY IS REJECTED BY CIT(A) AGAINST WHICH ASSESSE E HAS FILED CROSS OBJECTION BEFORE US. 13. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. THIS GRIEVANCE IN THE CROSS OBJECTION RELATES TO ILLEGALITY OF THE ORDER ON THE PLEA THAT THE ASSESSMENT ORDER WAS OUT OF DATE. THE CONTENTION OF THE LEARNED COUNSEL F OR THE ASSESSEE WAS THAT THE ASSESSMENT ORDER WAS DATED 27.3.2006 BUT IT WAS SERVED ON THE ASSESSEE ON 19.5.2006. IT WAS POINTED OUT THAT LETTER OF SPEED P OST BUSINESS CENTRE WAS DATED 30.5.2006 WHICH CLEARLY STATED THAT THE ASSESSMENT ORDER WAS RECEIVED BY IT FOR DISPATCH ON 18.5.2006 AND THE SAME WAS SERVED ON 19.5.2006. THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. JEEJI BAI SHINDE; 157 ITR 122 WHEREIN IT WAS HELD THAT THE ORDER MUST BE COMMUNICATED TO THE ASSESSEE BEFORE THE DUE DATE TO BE A VALID ORDER AND -: 17: - 17 ORDER BECOMES INVALID ONLY WHEN IT IS SERVED ON THE ASSESSEE. THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS THAT SINCE THE LAST DATE BY WHICH THE ORDER COULD HAVE BEEN PASSED AND SERVED WAS 31 ST MARCH, 2006, THE SERVICE OF ORDER ON 19.5.2006 CLEARL Y INDICATES THAT IT WAS NOT PASSED ON 31 ST MARCH, 2006, THEREFORE, THE SAME SHOULD BE ANNULLED. 14. ON THE OTHER HAND, THE CONTENTION OF THE LEARNED CIT DR WAS THAT EVEN AS PER DEMAND AND COLLECTION REGISTER OF DCIT-2(1), BHOPAL, ASSESSMENT ORDER WAS DULY PASSED AND ENTERED ON 27.3.2006. HE PRODUCED BEFORE THE BENCH ORIGINAL DCR WHICH WE HAVE VERIFIED. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF TH E AUTHORITIES BELOW AND THE MATERIAL PRODUCED BEFORE US. UNDER THE PROVISIONS OF SECTION 153 OF THE INCOME T AX ACT, THE ONLY REQUIREMENT IS TO PASS THE ORDER WITHIN -: 18: - 18 THE LIMITATION PERIOD AND THERE IS NO REQUIREMENT TO SHOW THAT EVEN SERVICE OF ORDER WAS WITHIN THE SPECIFIED PERIOD. SINCE THE ASSESSEE COULD NOT SHOW THAT THE ORDER WAS NOT PASSED ON 27 TH MARCH, 2006, WHICH WAS WELL WITHIN THE LIMITATION PERIOD OF 31 ST MARCH, 2006, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR HOLDING THAT THE ORDER WAS PASSED WELL WITHIN TH E STIPULATED TIME. ACCORDINGLY, THIS GROUND RAISED IN THE CROSS OBJECTION IS DISMISSED. 15. NEXT GROUND BEFORE THE LD. CIT(A) WAS THAT THE AO W AS NOT JUSTIFIED IN CONCLUDING THAT THE ASSESSEE SOCIE TY HAS NOT FULFILLED THE REQUIREMENTS AS MENTIONED IN SECTION 11 & 13 OF THE INCOME-TAX ACT, 1961, THEREFORE, ITS INCOME OVE R EXPENDITURE IS NOT EXEMPT UNDER THE INCOME-TAX ACT, 1961. 16. IT WAS FURTHER SUBMITTED THAT THE INCOME OF THE SOC IETY AND ITS EDUCATIONAL INSTITUTION LAXMI NARAYAN COLLE GE OF -: 19: - 19 TECHNOLOGY IS EXEMPT U/S 10(22) OF THE INCOME-TAX A CT, 1961. THE FULFILLMENT OF REQUIREMENTS OF SECTION 11 AND S ECTION 13 ARE NOT APPLICABLE TO THE ASSESSEE SOCIETY FOR THE CURRENT ASSESSMENT YEAR 1998-99 AS THE PROVISIONS OF SECTIO N 10(22) WHICH ARE APPLICABLE FOR THE CURRENT ASSESSMENT YEA R IN THE CASE OF ASSESSEE SOCIETY RUNNING AN EDUCATIONAL INS TITUTION, EXEMPTS ITS INCOME. 17. THE LD. COUNSEL SUBMITTED THAT UNDER SECTION 10(22) OF THE ACT, THE INCOME OF AN UNIVERSITY OR O THER EDUCATIONAL INSTITUTIONS, EXISTING SOLELY FOR EDUCA TIONAL PURPOSES, AND NOT FOR PURPOSES OF PROFIT, IS EXEMPT . THE LEARNED COUNSEL FURTHER PLACED RELIANCE ON THE JUDGEMENT IN THE CASE OF EDUCATIONAL INSTITUTE OF AMERICAN HOTEL AND MOTEL ASSOCIATION V. CIT, (19196 ) 219 ITR 183 (AAR), WHEREIN THE CONDITIONS FOR EXEMPTION U/S 10(22) ARE SET OUT AS BELOW :- (A) THE EDUCATIONAL INSTITUTION MUST ACTUALLY EXIST FOR THE APPLICATION OF THE SAID SECTION AND THE MERE TAKING OF STEPS -: 20: - 20 WOULD NOT BE SUFFICIENT TO ATTRACT THE EXEMPTION ; (B) THE EDUCATIONAL INSTITUTION NEED NOT BE AFFILIATED TO ANY UNIVERSITY OR BOARD, IN FACT A SOCIETY NEED NOT ITSELF BE IMPARTING EDUCATION AND IT IS ENOUGH IF IT RUNS SOME SCHOOLS OR COLLEGES; (C) THE EDUCATIONAL INSTITUTION MUST EXIST SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT BUT MERELY BECAUSE THERE IS A SURPLUS, THAT IS TO SAY, A SURPLUS OF RECEIPTS OVER EXPENDITURE, IT CANNOT BE SAID THAT THE EDUCATIONAL INSTITUTION EXISTS FOR PROFIT; (D) AN ENTITY MAY BE HAVING INCOME FROM DIFFERENT SOURCES BUT IF A PARTICULAR INCOME IS FROM AN EDUCATIONAL INSTITUTION WHICH EXISTS SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT, THEN, THAT INCOME WOULD BE ENTITLED TO -: 21: - 21 EXEMPTION, AND FURTHER THE INCOME SHOULD BE DIRECTLY RELATABLE TO THE EDUCATIONAL ACTIVITY. 18. RELIANCE WAS ALSO PLACED BY THE LEARNED COUNSEL ON THE JUDGMENT IN THE CASE OF CIT VS. OXFORD UNIVE RSITY PRESS (1996) 221 ITR 77 (BOM ) WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT FOR CLAIMING EXEMPTION U/S 10(22), THE EDUCATIONAL INSTITUTION MUST EXIST AS A N EDUCATIONAL INSTITUTION SOLELY FOR EDUCATIONAL PURP OSES IN INDIA. IN OTHER WORDS, THE RECIPIENT OF THE INCO ME MUST HAVE THE CHARACTER OF AN EDUCATIONAL INSTITUTI ON IN INDIA. THE LEARNED COUNSEL ALSO RELIED ON THE JUDGM ENT IN THE CASE OF BRAHMIN EDUCATIONAL SOCIETY V. ACIT, (1997) 227 ITR 317 (KER), WHEREIN THE OBJECTS OF T HE SOCIETY WERE TO ESTABLISH, MAINTAIN AND RUN SCHOOL. COLLEGES, POLYTECHNICS, TO PROMOTE STUDIES OF SANSK RIT AND PROMOTE RESEARCH WORK IN ART, LITERATURE, SCIEN CE AND TECHNOLOGY ETC. IT HAD ORGANIZED CHIT BUSINESS USED FOR EDUCATIONAL PURPOSES. REVENUE WAS OF THE VIEW T HAT SINCE CHIT WAS BEING CONDUCTED, WHICH WAS A BUSINES S -: 22: - 22 ACTIVITY, THE SOCIETY WAS NOT ENTITLED TO ANY EXEMP TION U/S 10(22). 19. THE HON'BLE HIGH COURT HELD THAT :- (A) IF AN INSTITUTION EXISTS SOLELY FOR THE PURPOSE OF EDUCATION AND IT DERIVES INCOME FROM ANY OTHER SOURCE AND IF THAT INCOME IS USED ONLY FOR THE PURPOSE OF EDUCATION, THEN IT WILL COME U/S 10(22). (B) IT IS CLEAR FROM THE MEMORANDUM OF ASSOCIATION OF THE SOCIETY THAT CHITS ARE BEING CONDUCTED IN ORDER TO MAKE USE OF THE COMMISSION FOR THE PURPOSE OF EDUCATION. (C) THERE IS NO CASE FOR THE DEPARTMENT THAT THIS AMOUNT IS BEING USED FOR ANY OTHER PURPOSE. THE HON'BLE HIGH COURT FURTHER HELD THAT WHAT IS RELEVANT IS NOT WHETHER THE INCOME IS RECEIVED FROM -: 23: - 23 EDUCATIONAL ACTIVITIES BUT WHETHER IT EXISTS FOR THE PURPOSE FOR WHICH THE SOCIETY IS UTILIZING THE INCOME. 20. AFTER CONSIDERING ASSESSEES SUBMISSION, BY THE IMPUGNED ORDER, THE LD. CIT(A) ALLOWED TO RAISE AND CONSIDER THE CLAIM OF ASSESSEE SOCIETY THAT ITS INC OME IS ELIGIBLE FOR EXEMPTION U/S 10(22). FOLLOWING WAS TH E PRECISE OBSERVATION AND FINDING OF THE CIT(A) :- AS REGARDS ALTERNATIVE PLEA BEFORE THE FIRST APPELLATE AUTHORITY , THE LD. COUNSEL SUBMITTED THAT WHERE A CASH CREDIT IS TREATED AS INCOME OF A PARTICULAR YEAR FROM UNDISCLOSED SOURCE, IT IS OPEN TO THE ASSESSEE TO TAKE AN ALTERNATIVE PLEA BEFORE THE APPELLATE AUTHORITY THAT THE CASH CREDIT WAS OUT OF UNDISCLOSED INCOME TAXED IN EARLIER YEAR(S). THE APPELLATE AUTHORITY IS COMPETENT TO GRANT RELIEF IF SATISFIED ON THAT POINT AS HELD IN THE FOLLOWING JUDGMENTS [ADDS. CIT V. GHAI LIME STONE -: 24: - 24 CO., (1983) 144 ITR 140 (MP); ADDL. CIT V. DHARAMDAS AGARWAL, (1983) 144 ITR 143 (MP); CIT V. RAM SANEHI GIAN CHAND, (1972) 86 ITR 724 (PUNK); CIT V. SAHU BROS., (1978) 115 ITR 438 (MP)]. THE LEARNED COUNSEL ALSO SUBMITTED THAT IT HAS BEEN HELD BY THE JURISDICTIONAL HIGH COURT THAT IT IS THE DUTY OF THE FIRST APPELLATE AUTHORITY TO CONSIDER A MATTER PLACED BEFORE IT IN ALL ITS ASPECTS. THIS IS ALL THE MORE SO WHEN THE ASSESSING AUTHORITY HAD FAILED TO CONSIDER THE MATTER IN DETAIL OR IN A PROPER MANNER. THEREFORE, THE FIRST APPELLANT AUTHORITY IS COMPETENT TO CONDUCT A DETAILED EXAMINATION OF ANY ASPECT DEALT SUMMARILY OR BRIEFLY BY THE ASSESSING AUTHORITY [NARAINDAS NANDLAL VS. CST, (1995) 98 STC 17, 18 (MP)]. IT WAS FURTHER SUBMITTED THAT AS HELD IN JUTE CORPORATION OF INDIA LIMITED VS. CIT , -: 25: - 25 (1991) 187 ITR 688 ( S. C.), THE FIRST APPELLATE AUTHORITY HAS THE POWER TO CONSIDER AN ADDITIONAL GROUND RAISED BY THE ASSESSEE FOR THE FIRST TIME AT THE APPELLATE STAGE. RELIANCE IS ALSO PLACED ON ASBESTOS CEMENT LIMITED V. CIT, (1993) 203 ITR 358 (BOM). RELIANCE IS ALSO PLACED ON THE DECISION IN THE CASE OF NEW INDIA INDUSTRIES LTD. VS. CIT, (1994) 207 ITR 1010, 1016 (GUJ), WHEREIN IT HAS BEEN HELD THAT THE FIRST APPELLATE AUTHORITY OUGHT TO HAVE PERMITTED THE ASSESSEE TO RAISE THE ADDITIONAL CLAIM OF WEIGHTED DEDUCTION U/S 35B IN RESPECT OF THREE ITEMS AS MATERIAL IN RESPECT OF SUCH ADDITIONAL CLAIM WAS THERE ON THE RECORD. 21. IT WAS SUBMITTED BEFORE THE CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS, THAT INCOME OF THE SOCIETY IS EXEMPT U/S 10(22) OF THE INCOME-TAX ACT AND SUCH CLAIM WAS NOT MADE BEFORE THE ASSESSING OFFICE R -: 26: - 26 DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SINCE, THE CLAIM OF EXEMPTION OF INCOME U/S 10(22) OF THE INCOME TAX ACT WAS MADE FOR THE FIRST TIME BEFORE CIT(A), HE SENT THE ARGUMENTS WITH RESPECT TO EXEMPTION U/S 10(22), PUT FORWARD BY LD. COUNSEL OF THE ASSESSEE SOCIETY, TO THE AO FOR HIS COMMENTS. THE AO WAS ALSO DIRECTED TO SUBMIT HIS REPORT BY 7.11.2006 VIDE LE TTER DATED 30.10.2006. HOWEVER, THE AO HAS NOT SUBMITTED HIS REPORT ON THIS ISSUE BY THE STIPULATED DATE. ACCORDINGLY, THE GROUND OF APPEAL RAISED BY THE ASS ESSEE WITH RESPECT TO ITS CLAIM U/S 10(22) OF THE INCOME-T AX ACT, 1961, AFTER CONSIDERATION OF THE SUBMISSIONS O F THE ASSESSEE WAS DECIDED BY CIT(A) ON MERITS OF THE CAS E, IN FOLLOWING TERMS . I FIND FORCE IN THE LD. AUTHORIZED REPRESENTATIVES CONTENTION THAT THE ASSESSEE SOCIETYS CASE IS COVERED BY THE DECISION IN THE CASE OF SARASWATH POOR STUDENTS FUND, 150 ITR 142 (KARN), WHEREIN IT HAS BEEN HELD THAT SCOPE OF SECTION 10(22) IS MUCH WIDER THAN THAT OF -: 27: - 27 SECTION 11 AND THAT EXEMPTION U/S 10(22) IS IN RESPECT OF THE WHOLE INCOME OF AN ASSESSEE AND NOT RESTRICTED TO SUCH INCOME APPLIED AS PROVIDED U/S 11 OF THE INCOME-TAX ACT, 1961. IT HAS ALSO BEEN HELD THAT IN ORDER TO CLAIM THE BENEFIT OF SECTION 10(22), THE CLAIMANT NEED NOT ITSELF IMPART EDUCATION, IT SHOULD BE RUNNING A SCHOOL OR COLLEGE TO BE ENTITLED TO CLAIM EXEMPTION U/S 10(22). I ALSO FOLLOW THE HON'BLE SUPREME COURTS DECISION IN THE CASE OF CIT VS. BAR COUNCIL OF MAHARASHTRA, WHEREIN IT HAS BEEN HELD THAT AN ASSESSEE CAN CLAIM RELIEF SIMULTANEOUSLY U/S 10(22) AND U/S 11 OF THE INCOME-TAX ACT, 1961. I ALSO RELY ON THE DECISION OF THE HON'BLE SUPREME COURT REPORTED IN 224 ITR 310 WHEREIN IT HAS BEEN HELD THAT AN EDUCATIONAL SOCIETY RUNNING AN EDUCATIONAL INSTITUTION SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSES OF PROFIT COULD BE REGARDED AS OTHER -: 28: - 28 EDUCATIONAL INSTITUTION COMING WITHIN SECTION 10(22) OF THE INCOME-TAX ACT, 1961. I ALSO RELY ON THE CBDT INSTRUCTION NO. 1112 DATED 29.10.1977 REPRODUCED IN THE DECISIONS OF MADRAS TRIBUNAL REPORTED IN 8 TAXMAN 77 AND THE HON'BLE CALCUTTA HIGH COURT REPORTED IN 136 ITR 445, WHEREIN IT WAS STATED THAT A TRUST WHICH RUNS AN EDUCATIONAL INSTITUTION IS ITSELF ELIGIBLE FOR EXEMPTION U/S 10(22). THE ASSESSEE SOCIETYS ALTERNATE/EXPANDED CLAIM OF EXEMPTION U/S 10(22) BESIDES AVAILABILITY OF EXEMPTION U/S 11 OF THE INCOME- TAX ACT, 1961, IS ALSO PERMITTED. FOR THIS, I RELY UPON THE UNDER MENTIONED JUDGEMENTS : (I) CIT VS. BHARAT CURIO STORES, 235 ITR 507 (ALL). (II) UNION COAL CO.LTD. VS. CIT, 70 ITR 45 ( CAL). (III) CIT VS. CENTRAL PROVINCES MANGANESE ORE CO.LTD.,112 ITR 734 (BOM) (IV) CIT VS. SAHU BROS, 115 ITR 438 (MP). -: 29: - 29 (V) INVESTORS INDUSTRIAL CORPN. LTD. VS. CIT, 194 ITR 548 BOM). (VI) CIT VS. AHMEDABAD CRUCIBLE CO., 206 ITR 574 ( GUJ ) (VII) TOLIN RUBBERS PVT.LTD. VS. ACIT, 264 ITR 439 (KER). I ALSO FIND THAT THE AO HAS NOWHERE DENIED THAT THE ASSESSEE SOCIETY WAS NOT RUNNING EDUCATIONAL INSTITUTION AS PER ITS OBJECTS. THIS MATERIAL FACT WAS ON RECORD BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS, THUS, THE ASSESSEE SOCIETYS CLAIM FOR EXEMPTION U/S 10(22) IS BASED ON EVIDENCE AND MATERIAL ON RECORD TO SUPPORT SUCH CLAIM EVEN WHEN SUCH A CLAIM WAS NOT MADE DURING THE ASSESSMENT PROCEEDINGS. ACCORDINGLY, THE CLAIM OF THE APPELLANT SOCIETY THAT ITS INCOME IS ELIGIBL E FOR EXEMPTION U/S 10(22) IS ACCEPTED. THUS GROUND NO. 2 IS DECIDED IN FAVOUR OF THE APPELLANT . THE CIT(A) ALSO FOUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER -: 30: - 30 ERRED IN HOLDING THAT SHRI RANJEET JAISWAL, ERSTWHILE PRESIDENT OF THE SOCIETY WAS BENEFITED BY THE ADVANCE AMOUNT OF RS. 41.75 LACS FOR HIS PERSONAL USE. THE CIT(A) OBSERVED THAT THE ASSESSING OFFICER'S MISLEADING CONCLUSION THAT DIRE CT BENEFIT WAS DERIVED BY THE ERSTWHILE PRESIDENT FROM THE FUNDS OF THE ASSESSEE SOCIETY IS CONTRARY AND INCORRECT FROM THE RECORDS AND FACTS OF THE CASE. A S POINTED OUT BY THE ASSESSING OFFICER, IN THE SCHEDU LE NO.2 BEING ADVANCES TO MEMBERS OF RS. 8,87,518/- IN THE AUDITED BALANCE SHEET OF THE ASSESSEE SOCIETY AS ON 31-3-98, THE SAME IS NOTHING BUT BALANCE OUTSTANDING FROM THE ERSTWHILE PRESIDENT MR. RANJEET JAISWAL. THE SAID FACT STANDS PROVED FROM THE STATEMENT OF SHRI. J.N. CHOUKSEY, SECRETARY OF THE ASSESSEE SOCIETY STATED THAT THE SAID AMOUNT WAS ADVANCED FOR PURCHASE OF LAND. HE ALSO STATED THAT MOSTLY THE ADVANCE HAS BEEN REPAID BY THE ERSTWHILE PRESIDENT AS THE LAND DEAL DID NOT MATERIALIZE. HOWEVER, AN AMOUNT OF -: 31: - 31 APPROXIMATELY RS. 8 LACS STILLS REMAINS OUTSTANDING . SHRI J.N. CHOUKSEY ALSO STATED THAT SHRI RANJEET JAISWAL HAS SINCE EXPIRED ABOUT 2 YEARS BACK. HE ALSO STATED THAT THESE TRANSACTIONS HAVE BEEN DULY ACCOUNTED FOR IN THE ASSESSEE SOCIETYS BOOKS. 22. WITH REGARD TO DISALLOWANCE OF RS. 1,23,217/- OUT OF THE EXPENSES IN THE NATURE OF SALARY, VEHICLE MAINTENANCE AND DEPRECIATION, ELECTRICITY AND TELEPHONE ON ESTIMATE BASIS, THE OBSERVATION AND CONCLUSION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS AS UNDER :- I HAVE CONSIDERED THE DETAILED SUBMISSIONS OF THE LD. COUNSEL. I HAVE ALSO CONSIDERED THE ASSESSING OFFICERS OBSERVATIONS AND FINDINGS MENTIONED IN THE ASSESSMENT ORDER. AFTER DUE CONSIDERATION OF THE FACTS, I HOLD THAT THE A.O. WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 1,23,217/-OUT OF EXPENSES IN THE NATURE OF SALARY, VEHICLE MAINTENANCE AND DEPRECIATION, ELECTRICITY AND TELEPHONE ON ESTIMATE. THE ASSESSING OFFICERS RELIANCE ON THE FINDING IN THE ASSESSING OFFICER IN THE CASE OF H K KALCHURI EDUCATION TRUST FOR THE ASSESSMENT YEAR 2002-03 AND 2003-04 AND INSPECTOR -: 32: - 32 REPORT IN THAT CASE CANNOT BE CORRELATED WITH THAT OF THE DIFFERENT FACTS AND CIRCUMSTANCES IN THE CASE OF THE APPELLANT SOCIETY. THE A.O. HAS MADE THE ADDITION ON ESTIMATE BASIS AND NOT BY HIS SPECIFIC FINDING IN RESPECT OF PARTICULAR ITEM OF EXPENSE/PURCHASE AS NON GENUINE IN THE APPELLANT SOCIETYS CASE. FURTHER, THERE IS NO ADVERSE REMARK IN THE AUDITED FINANCIAL STATEMENTS BY THE AUDITOR OF THE APPELLANT SOCIETY FOR THE CURRENT ASSESSMENT YEAR. I FIND FORCE IN THE LD. COUNSELS SUBMISSION THAT SINCE TRUSTS OFFICE WAS RUNNING FROM 31, SHYMALA HILLS, BHOPAL, BESIDES THE TRUSTEES RESIDENCE, THE A.O. HAD WRONGLY CONCLUDED THAT THE ABOVE EXPENSES OF RS. 1,23,217/- ARE OF PERSONAL NATURE FOR THE BENEFIT OF TRUSTEES. THE ADDITION OF RS.1,23,217/- MADE BY THE A.O. IS DELETED AS THE A.O. ONLY MADE THE ADDITION ON CORRELATION AND ESTIMATE AND NEITHER BY SPECIFIC FINDING OF ANY PARTICULAR EXPENSE NOR SUBSTANTIATED HIS FINDING BY ANY SUPPORTING VOUCHER EXPENSE SAID TO BE INCURRED FOR THE BENEFIT OF TRUSTEES OF THE APPELLANT SOCIETY. I ALSO RELY ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DEO RADHA MADHWA LALJI GENDA TRUST V. PROPERTY TAX OFFICER 251 ITR 531 WHEREIN IT WAS HELD THAT MAINTENANCE OF THE TRUST PROPERTY, PAYMENT TO EMPLOYEES AND OTHER EXPENSES WHICH ARE INCIDENTAL TO AND CONNECTED WITH THE OBJECTS OF THE CHARITABLE TRUST ARE ALLOWABLE. ACCORDINGLY, GROUND NOS. 6 AND 9 ARE DECIDED IN FAVOUR OF THE APPELLANT. -: 33: - 33 23. WITH REGARD TO DISALLOWANCE OUT OF LAB AND PRACTICAL EQUIPMENT/CONSUMABLES AMOUNTING TO RS.2,01,987/- ON ESTIMATE BASIS, THE OBSERVATION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS AS UNDER :- I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. COUNSEL. I HAVE ALSO CONSIDERED THE ASSESSING OFFICERS OBSERVATIONS MENTIONED IN THE ASSESSING OFFICER. AFTER DUE CONSIDERATION OF THE FACTS, I HOLD THAT THE A.O. WAS NOT JUSTIFIED IN MAKING DISALLOWANCE OF RS.2,01,987/- OUT OF LAB AND PRACTICAL EQUIPMENT/CONSUMABLES ON ESTIMATE. THE ASSESSING OFFICERS RELIANCE ON THE ASSESSMENT ORDER IN THE CASE OF H.K. KALCHURI EDUCATION TRUST FOR THE ASSESSMENT YEAR 2002-03 AND 2003- 04 WILL NOT HOLD GOOD IN THE CASE OF APPELLANT SOCIETY FOR THE ASSESSMENT YEAR 1998-99, WHEN THE A.O. HAS MADE THE DISALLOWANCE ON ESTIMATE AND NOT BY SPECIFIC FINDING IN RESPECT OF PARTICULAR ITEMS OF EXPENSE/PURCHASE AS NON GENUINE IN THE APPELLANT SOCIETYS CASE. FURTHER, THERE IS NO ADVERSE REMARK IN THE AUDITED FINANCIAL STATEMENT BY THE AUDITOR OF THE APPELLANT SOCIETY FOR THE CURRENT ASST. YEAR. ACCORDINGLY, THE DISALLOWANCE OF RS. 2,01,987/- OUT OF -: 34: - 34 LABAND PRACTICAL EQUIPMENT/CONSUMABLES IS DELETED. THE GROUND NO. 8 IS DECIDED IN FAVOUR OF THE APPELLANT. 24. WITH REGARD TO THE TREATMENT OF CAPITAL EXPENDITURE IN CASE OF CHARITABLE TRUST, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF HCTM TIRUPPANI TRUST; 235 ITR 636 WHEREIN IT WAS HELD THAT ALL CAPITAL EXPENDITURE LAID OUT IN FURTHERANCE OF THE OBJECT AND PURPOSE OF THE TRUST WILL BE TREATED AS APPLICATION OF THE INCOME. 25. WITH REGARD TO THE CONTENTION THAT INCOME OF THE TRUST HAS TO BE ARRIVED AT AS PER THE COMMERCIAL PRINCIPLES, RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF GOVIND UNIKER ESTATE V. ASSTT. DIRECTOR OF INCOME TAX; 248 ITR 368 WHEREIN IT WAS HELD THAT INCOME OF THE TRUST HAS -: 35: - 35 TO BE ARRIVED AT HAVING DUE REGARD TO THE COMMERCIAL PRINCIPLES AND THAT SECTION 11 OF THE ACT IS OF BENEVOLENT AND THAT EXPENDITURE INCURRED ON RELIGIOUS OR CHARITABLE PURPOSE IN AN EARLIER YEAR OR YEARS CAN BE ADJUSTED AGAINST THE INCOME OF THE SUBSEQUENT YEAR. 26. IN SUPPORT OF THE PROPOSITION THAT ACCUMULATION OF INCOME U/S 11(1A) IS TO BE CALCULATED ON THE GROS S INCOME AND NOT ON NET INCOME, RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE HIGH COURT IN THE CASE O F PROGRAMME FOR COMMUNITY ORGANISATION . FURTHER RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ALN RAO CHARITABLE TRUST; 216 ITR 697 WHEREIN IT WAS HELD THAT IF ACCUMULATION IS IN EXCESS OF 25% OF INCOME, IT IS ONL Y THE SURPLUS IN EXCESS OF 25% WHICH WILL BE LIABLE TO TAX AND NOT THE ENTIRE SURPLUS SINCE THE ACCUMULATION U/S 11(2) IS IN ADDITION TO THE ACCUMULATION U/S 11(1A). -: 36: - 36 27. IT WAS ALSO CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE INCOME OF THE TRUST SHOULD BE COMPUTED IN A COMMERCIAL SENSE WITHOUT REFERENCE TO THE HEADS OF INCOME SPECIFIED IN SECTION 14 I.E. BOO K INCOME AND NOT TOTAL INCOME AS PER SECTION 2(45)(I) AS HELD IN THE CASE OF TRUSTEES OF HED NIZAM SUPPLEMENTARY; 127 ITR 378, AND RAO BAHADUR CULWALLA GUNAN; 135 ITR 485. 28. RELIANCE WAS ALSO PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ON THE DECISION OF THE ITAT, AMRITS AR BENCH IN THE CASE OF GURU GOVOIND SINGH EDUCATIONAL SOCIETY WHEREIN IT WAS HELD THAT ADVANCE GIVEN TO MEMBERS FOR PURCHASE OF LAND FOR SOCIETY, REGISTRATIO N U/S 12AA CANNOT BE CANCELLED UNLESS ANY PROOF OF BENEFIT DERIVED BY TRUSTEES IS BROUGHT ON RECORD. 29. ON THE OTHER HAND,THE CONTENTION OF THE LEARNED CIT DR WAS THAT DEVELOPMENT FUNDS RECEIVED ARE -: 37: - 37 REVENUE IN NATURE INSOFAR AS THIS FEES IS RECEIVED BY THE COLLEGE FROM THE STUDENTS IN THE NAME OF TUITION FEE S AND IT IS RECEIVED QUARTERLY OR HALF-YEARLY, THEREFORE, IT IS RECURRING IN NATURE. 30. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND ALSO DELIBERATED ON THE CASE LAWS CITED B Y THE LD. AUTHORIZED REPRESENTATIVE AND LD. CIT D.R. DURIN G THE COURSE OF HEARING BEFORE US, WE HAD ALSO DELIBE RATED ON THE CASE LAWS RELIED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS WITH REFERENCE TO THE FACTUAL MAT RIX OF THE CASE. FROM THE RECORD, WE FIND THAT THE ASSESSE E SOCIETY EXISTED SOLELY FOR EDUCATIONAL PURPOSES AND INCOME WAS DERIVED SOLELY FROM THE EDUCATIONAL INSTITUTION. IT IS ALSO NOT THE CASE OF AO THAT ACTI VITIES OF THE SOCIETY ARE FOR PROFIT EARNING. AS PER PROVISIO NS OF SECTION 10(22) ANY INCOME OF UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATI ONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT, WILL NO T FORM -: 38: - 38 PART OF TOTAL INCOME. RELEVANT ASSESSMENT YEAR UNDE R CONSIDERATION IS 1998-99 DURING WHICH PROVISIONS OF SECTION 10(22) WAS APPLICABLE. HOWEVER, BY FINANCE N O.2 ACT 1998 W.E.F. 1.4.1999, THE PROVISIONS OF SECTION 10(22) WERE NOT MADE APPLICABLE FROM ASSESSMENT YEA R 1999-2000 ONWARDS. HOWEVER, THE FINANCE NO.2 ACT, 1998, EVEN THOUGH DELETED SECTION 10(22) AND 10(22A ), BUT THE EXEMPTION WAS INCORPORATED WITH RESPECT TO INCOME OF UNIVERSITY OR OTHER EDUCATIONAL INSTITUTI ON EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FO R THE PURPOSE OF PROFIT U/S 10(23-C) OF THE INCOME-TAX ACT, 1961, W.E.F. ASSESSMENT YEAR 1999-2000. HON'BLE KARNATAKA HIGH COURT IN THE CASE OF SARASWATI POOR STUDENTS FUND, 150 ITR 142, HELD THAT EXEMPTION U/S 10(22) IS IN RESPECT OF WHOLE INCOME OF THE ASSESSE E AND THE SAME CANNOT BE RESTRICTED TO SUCH INCOME, WHICH IS APPLIED OR ACCUMULATED FOR CHARITABLE OR RELIGIOUS PURPOSES AS PROVIDED U/S 11 OF THE INCOME-TAX ACT. I T WAS FURTHER HELD THAT THE SCOPE OF SECTION 10(22) I S VERY MUCH WIDER THAN THAT OF SECTION 11. IN THIS CASE, T HE -: 39: - 39 HON'BLE HIGH COURT FOUND THAT THE ASSESSEE SOCIETY CLAIMED EXEMPTION U/S 10(22) AS AN ALTERNATIVE. IT ALSO CLAIMED ITS INCOME AS EXEMPT ATLEAST TO THE EXTENT OF APPLICATION TO THE CHARITABLE PURPOSES U/S 11 OF TH E INCOME-TAX ACT, 1961. THE AO REJECTED PRIMARY CONTENTION BUT ACCEPTED THE ALTERNATIVE CLAIM AND GRANTED RELIEF U/S 11. THE HON'BLE HIGH COURT HELD T HAT THERE CAN BE NO DISPUTE WITH REGARD TO THE RELIEF G IVEN TO THE SOCIETY BY THE ASSESSING OFFICER U/S 11, IT WAS FURTHER HELD THAT IN ORDER TO CLAIM THE BENEFIT OF SECTION 10(22), THE ASSESSEE NEED NOT ITSELF IMPART EDUCATI ON TO THE STUDENTS. IT WILL BE SUFFICIENT IF THE ASSESSEE IS RUNNING A SCHOOL OR COLLEGE SO AS TO ENTITLE IT TO CLAIM EXEMPTION U/S 10(22). HON'BLE SUPREME COURT IN THE CASE OF BAR COUNCIL OF MAHARASHTRA, 130 ITR 28 HELD THAT THE ASSESSEE CAN CLAIM RELIEF SIMULTANEOUSLY U /S 10(22) AND U/S 11 OF THE INCOME-TAX ACT, 1961, THUS, THE INCOME OR PART OF THE INCOME IN RESPECT OF WHIC H EXEMPTION U/S 10(22) IS NOT GRANTED, CAN BE CLAIMED AS EXEMPT U/S 11 SUBJECT TO THE COMPLYING WITH THE -: 40: - 40 CONDITIONS SPECIFIED IN THAT SECTION. C. B. D. T. CI RCULAR NO. 1112 DATED 29.10.77 HAVE BEEN ELABORATELY DEALT WITH BY MADRAS HIGH COURT IN THIAGARAJAR EDUCATIONAL TRUST V. ITO AND BY THE HON'BLE CALCUTTA HIGH COURT I N THE CASE OF BIRLA VIDYA TRUST V. CIT, (1982) 136 IT R 445, WHICH FULLY SUPPORT OUR VIEW WITH REGARD TO SIMULTANEOUS CLAIM OF EXEMPTION U/S 10(22) AND SECT ION 11 OF THE INCOME-TAX ACT, 1961. 31. THE ISSUE WITH REGARD TO GRANT OF EXEMPTION U/S 11 WAS DECLINED BY THE ASSESSING OFFICER. THE ISSU E HAS BEEN DISCUSSED AT PAGES 2 TO 6 PARAS 5 AND 6 OF THE ASSESSMENT ORDER. AS PER THE ASSESSING OFFICER, REQUIREMENTS OF SECTIONS 11 AND 13 WERE NOT FULFILLE D BY THE ASSESSEE SOCIETY AND THAT THE ADVANCE GIVEN TO RANJIT JAISWAL, EX-PRESIDENT OF THE SOCIETY, WHICH REMAINED TO BE RECOVERED FROM HIM TILL HIS DEATH. TH E ASSESSING OFFICER HAS ALSO STATED THAT THE SECRETARY OF THE SOCIETY, SHRI J.N. CHOKSI, HAD BEEN BENEFITED FR OM -: 41: - 41 THE ASSETS AND FUNDS OF THE SOCIETY. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DISCUSSED THE ISSUE AT PAGES 12 TO 25 OF HIS ORDER AND THE VERDICT HAS BEEN GIVEN AT PAGES 23 TO 25 AFTER RECORDING DETAILED FINDINGS AND HELD THAT THE SOCIETY IS ENTITLED FOR EXEMPTION U/S 10(22) OF THE ACT AS APPLICABLE TO THE ASSESSMENT YEAR 1998-99. 32. IN THE INSTANT CASE, WE FOUND THAT THE SOURCE OF INCOME OF THE ASSESSEE WAS EDUCATIONAL INSTITUTION RUN FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. HON'BLE CALCUTTA HIGH COURT IN THE CASE OF B IRLA VIDYA VIHAR TRUST, 133 ITR 144, HELD THAT A PERSON MAY HAVE INCOME FROM DIFFERENT SOURCES, BUT HAVE A PARTICULAR INCOME IS FROM AN EDUCATIONAL INSTITUTIO N OR UNIVERSITY, WHICH EXISTS SOLELY FOR EDUCATIONAL PUR POSES AND NOT FOR THE PURPOSES OF PROFIT, THEN THAT INCOM E WHICH IS FROM EDUCATIONAL INSTITUTION WOULD BE ENTI TLED TO EXEMPTION. IN THE APPELLATE ORDER, LD. CIT(A) HA S ALSO DEALT WITH THE DECISION OF KARNATAKA HIGH COURT IN THE -: 42: - 42 CASE OF ACADEMY OF GENERAL EDUCATION, 150 ITR 135, WHEREIN IT WAS HELD THAT IN ORDER TO CLAIM THE BENE FIT OF SECTION 10(22), THE PERSON WHO CLAIMED THE BENEFIT NEED NOT NECESSARY BE A SCHOOL OR COLLEGE WHERE EDUCATIO N IS IMPARTED. IN THIS CASE, THE ASSESSEE IS A REGISTERE D SOCIETY CARRYING ON THE ORGANIZED ACTIVITIES AS PER THE OBJECTS SET OUT IN THE MEMORANDUM, WHICH WAS TO ESTABLISH SUPPORT MAINLY OR CONDUCT SCHOOLS, COLLEG ES AND SUCH OTHER EDUCATIONAL INSTITUTIONS. IT HAD INC OME OF ITS OWN. THE ASSESSEE, IN ITS BALANCE SHEET, INC OME OF 22 COLLEGES OR INSTITUTION ESTABLISHED UNDER SEPARA TE TRUST HAD NOT BEEN INCLUDED NOR WAS INCLUDED THE INCOME OF THE NINE SCHOOLS, WHICH WERE RUN DIRECTLY BY THE ASSESSEE. THE ASSESSEE SOCIETY, OUT OF ITS INCO ME HAD GIVEN DIFFERENT GRANTS TO SOME OF THESE SCHOOLS, IT WAS HELD THAT THE ASSESSEE HAD NOT SPENT ITS INCOME FOR ANY PURPOSE UNCONNECTED WITH THE EDUCATION, ACCORDINGLY , THE ASSESSEE WAS HELD TO BE EDUCATIONAL PURPOSES AN D NOT FOR PROFIT, THE INCOME OF WHICH WAS EXEMPT U/S 10(22) OF THE INCOME-TAX ACT, 1961. -: 43: - 43 33. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ALSO HELD THAT DENIAL OF EXEMPTION U/S 11 OF THE ACT BY THE ASSESSING OFFICER WAS NOT JUSTIFIED S INCE THE ASSESSEE SOCIETY HAD FULFILLED ALL THE REQUIREMENT S OF SECTIONS 11 TO 13 OF THE ACT. WITH REGARD TO THE REJECTION OF CLAIM OF EXEMPTION U/SS 11 AND 12, THE CONTENTION OF THE LEARNED CIT DR WAS THAT ADVANCE WAS GIVEN TO RANJIT JAISWAL, PRESIDENT OF THE SOCIETY, FOR PERSONAL USE WITHOUT ANY INTEREST AND WITHOUT ANY SECURITY WHICH RESULTED INTO INFRINGEMENT OF SECTIO N 13(1), 13(1)(A) AND SECTION 13(3) OF THE ACT. HE ALS O REFERRED TO SURVEY CONDUCTED U/S 133A IN CASE OF H. K. KALCHURI TRUST, WHEREIN A LETTER WRITTEN BY THE SECRETARY, JAI NARAIN CHOKSI TO ITS PRESIDENT DATED 18.10.1996 WAS FOUND. HE FURTHER SUBMITTED THAT THE SOCIETY HAS RECEIVED REGISTRATION U/S 12A FROM 1.4.1996 AND IN THE ASSESSMENT YEAR 1996-97 THE -: 44: - 44 ASSESSEE SOCIETY HAS GIVEN ADVANCE OF RS. 4.5 LACS TO ITS PRESIDENT AND THERE WAS OUTSTANDING BALANCE OF RS. 36.57 LACS AS AT THE END OF THE YEAR. HE FURTHER ARGUE D THAT SINCE THE AMOUNT OF PERSONAL ADVANCE GIVEN TO THE PRESIDENT CONTINUES TO BE LENT WITHOUT ANY INTEREST AND SECURITY FROM 1.4.1996 ONWARDS, WHICH IS THE DATE OF REGISTRATION U/S 12A, THE PURPOSE OF THIS CLAUSE, THE INCOME OF TRUST WILL BE DEEMED TO BE APPLIED TOWARDS THE BENEFIT OF THE PRESIDENT OF THE SOCIETY U/S 13( 3) OF THE ACT. RELIANCE WAS PLACED BY THE LEARNED CIT DR ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF KANHAIYALAL PUNJ CHARITABLE TRUST; 297 ITR 66, NAGARTHU VAISIYARGAL SANGAM; 246 ITR 164 AND AGAPPA CHILLED CENTRE; 226 ITR 211. OUR ATTENTION WAS ALSO INVITED BY THE LEARNED CIT DR TO THE STATEMENT OF PUNAM CHOKSI WIFE OF THE MANAGING -: 45: - 45 TRUSTEE WHICH WAS RECORDED DURING THE COURSE OF SURVEY. 34. WE FIND THAT AS PER THE MATERIAL PLACED ON RECORD, ALL THE REQUIREMENTS OF SECTIONS 11 TO 13 OF THE ACT HAVE BEEN DULY COMPLIED WITH AND FOR WHICH A CATEGORICAL FINDING HAS BEEN GIVEN BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER RELYING UPON VARIOUS JUDICIAL PROPOSITIONS AS DISCUSSED HEREINABOVE AND APPLYING THE SAME TO THE FACTS OF THE INSTANT CASE. WE ALSO FIND THAT NO PERSONAL LOAN WAS GIVEN TO EX-PRESIDENT, SHRI RANJIT JAISWAL, BUT IT WAS ACTUALLY ADVANCED TO HIM FOR PURCHASE OF LAND FOR THE TRUST. AS THE SAID TRANSACTION FOR PURCHASE OF LAND DID NOT MATERIALIZE, FULL EFFORTS WERE MADE BY THE ASSESSEE TRUST TO RECOVER THE SAME FROM HIM. IT IS PERTINENT TO MENTION HERE THAT MOST OF THE ADVANCES WERE GIVEN FOR PURCHASE OF LAND EVEN PRIOR TO THE GRANT OF REGISTRATIO N -: 46: - 46 U/S 12A BY THE DEPARTMENT. WE HAVE ALSO VERIFIED THE PROCEEDINGS OF THE MANAGING COMMITTEE AS AVAILABLE AT PAGES 57 TO 66 OF THE PAPER BOOK WHICH INDICATE THAT THE ADVANCE OF RS. 41.75 LACS WAS GIVEN TO SHRI JAISWAL IN THE YEARS 1994 TO 1996 OUT OF WHICH RS. 31.88 LACS WERE RECOVERED AND THE BALANCE AMOUNT OF RS. 8.87 LACS COULD NOT BE RECOVERED FROM HIM DUE TO HIS ILL- HEALTH FOLLOWED BY HIS DEATH. HOWEVER, DURING THE RELEVANT PREVIOUS YEAR, UNDER CONSIDERATION, NO ADVANCE WAS GIVEN TO THE EX-PRESIDENT, HENCE, A WRONG CONCLUSION WAS DRAWN BY THE ASSESSING OFFICER ON THE FACTS OF THE CASE. FOR THIS PURPOSE, WE MAY PLACE RELIANCE ON THE DECISION OF THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF GURU GOVIND SINGH EDUCATION SOCIETY; 118 ITD 207. IT WAS ALSO ALLEGED BY THE ASSESSING OFFICER THAT SHRI J.N. CHOKSI, THE SECRETAR Y OF THE SOCIETY, WAS BENEFITED FROM THE FUNDS AND ASSE TS -: 47: - 47 OF THE SOCIETY BY WAY OF USE OF CAR, SERVANTS SALARIES , TELEPHONE FACILITIES AND ELECTRICITY EXPENSES. IN TH IS REGARD, WE FIND THAT THE OFFICE OF THE ASSESSEE SOCIET Y WAS SITUATED IN THE HOUSE OWNED BY SHRI J.N. CHOKSI FOR WHICH HE WAS NOT CHARGING ANY RENT FROM THE SOCIETY, MEANING THEREBY THAT THE OFFICE PREMISES WAS GIVEN BY SHRI CHOKSI WITHOUT ANY RENT FOR CARRYING OU T ADMINISTRATIVE WORK OF THE SOCIETY. WE ALSO FIND THAT SHRI CHOKSI WAS HAVING HIS OWN VEHICLES, TELEPHONE CONNECTION AND PERSONAL SERVANTS, THEREFORE, THERE WAS NO OCCASION FOR USE OF THE SOCIETYS CAR, SERVANTS OR TELEPHONE FOR PERSONAL PURPOSES. THE USE OF THE SOCIETYS CAR FOR PURPOSE OF SOCIETYS ACTIVITIES CANN OT BE SAID TO BE FOR PERSONAL PURPOSES. SINCE THE COLLEG ES RUN BY THE SOCIETY ARE SITUATED AT FAR AWAY PLACES, TO HAVE AN ADMINISTRATIVE CONTROL OVER THEM, HE USED TO VISIT THE COLLEGES AND IT WAS ONLY FOR THE PURPOSE O F THE -: 48: - 48 ASSESSEE SOCIETY ONLY. SUCH USE OF CAR CANNOT BE SAID TO BE PERSONAL USE OF CAR BY MR. CHOKSI. THE ALLEGATION OF THE ASSESSING OFFICER THAT ELECTRICITY B ILL WAS BORN BY THE ASSESSEE IS OF NO EFFECT INSOFAR AS MINOR AMOUNT OF ELECTRICITY BILL WAS NOTHING AGAINST THE RENT FROM ACCOMMODATION GIVEN TO THE SOCIETY AND FOR THIS PURPOSE RELIANCE MAY BE PLACED ON THE DECISI ON OF ITAT, JAIPUR BENCH, IN THE CASE OF ARVIND BHARTIYA VIDYALAYA SAMITI; 115 TTJ 351. THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF COSMOPOLITAN EDUCATION SOCIETY (SUPRA) IS VERY RELEVANT INSOFAR AS EVEN THE SLP FILED AGAINST THIS DECISION WAS REJECTED BY THE HONBLE SUPREME COURT WHICH HAS BEEN REPORTED AT 241 ITR (ST.) 132. 35. WE HAVE CONSIDERED THE RIVAL CONTENTIONS WITH REGARD TO ADMISSIBILITY OF NEW GROUND BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR THE FIRST TI ME. -: 49: - 49 WE FIND THAT UNDISPUTEDLY, THE ASSESSEE WAS RUNNING EDUCATIONAL INSTITUTION WHICH WAS ADMITTED BY THE ASSESSING OFFICER EVEN IN THE COURSE OF ASSESSMENT PROCEEDINGS. HOWEVER, THE CLAIM U/S 10(22) WITH REGARD TO EXEMPTION OF INCOME OF EDUCATIONAL INSTITUTION WAS FOR THE FIRST TIME PUT UP BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). THERE IS A DIRECT DECISION OF THE HONBLE SUPREME COURT IN TH E CASE OF JUTE CORPORATION OF INDIA WHEREIN IT WAS HELD THAT A GROUND WHICH GOES TO THE ROOT OF THE MATTER CAN BE RAISED AS AN ADDITIONAL GROUND BEFORE THE APPELLATE AUTHORITY FOR THE FIRST TIME AT THE TIME OF HEARING OF THE APPEAL. FURTHERMORE, EVEN AS PER EXPLANATION TO SECTION 251 WHILE DISPOSING OF THE APPEAL, THE FIRST APPELLATE AUTHORITY MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST WAS PASSED NOT-WITH-STANDING -: 50: - 50 THAT SUCH MATTER WAS NOT RAISED BY THE ASSESSEE IN APPEAL GROUNDS. THE POWERS OF THE FIRST APPELLATE AUTHORITY ARE NOT CONFINED TO THE SUBJECT MATTER OF TH E APPEAL BUT EXTENDED TO THE SUBJECT MATTER OF ASSESSMENT AND ENTIRE ASSESSMENT IS THROWN BEFORE HIM. SO LONG AS IT DOES NOT TRAVEL OUTSIDE THE MATTER S CONSIDERED BY THE ASSESSING OFFICER, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) CAN CORRECT ANY DECISION OF THE ASSESSING OFFICER EVEN IF THE ASSES SEE IS SATISFIED AND AGREED WITH THE CONCLUSION OF THE ASSESSING OFFICER AND HAD NOT SPECIFICALLY CHALLENGED BEFORE THE FIRST APPELLATE AUTHORITY. AS PER OUR CONSIDERED VIEW, THE FIRST APPELLATE AUTHORITY MAY DEAL WITH ALL THE POINTS AND GROUNDS WHICH ARISE OUT OF THE ORDER OF THE ASSESSING OFFICER. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR AGREEING TO -: 51: - 51 CONSIDER THE ASSESEES CLAIM FOR EXEMPTION U/S 10(22) OF THE ACT. 36. WITH REGARD TO THE ALLEGATION OF THE ASSESSING OFFICER THAT THE PRESIDENT OF THE SOCIETY WAS PAID TH E AMOUNT FOR HIS PERSONAL BENEFIT, WE FIND FROM THE COP Y OF MINUTES OF THE MEETING OF THE ASSESSEE SOCIETY FR OM 1994-95 ONWARDS WHEREIN AS PER RESOLUTION NO. 4 ADVANCE WAS GIVEN FOR PURCHASE OF LAND AND AS PER RESOLUTION NO. 2 THERE WAS MENTION OF CANCELLATION OF EARLIER LAND DEAL. WE ALSO FIND THAT COPIES OF MEMBERS REGISTER AS WELL AS THE MINUTES OF THE MEETING OF THE ASSESSEE SOCIETY HAVE BEEN FILED AND REPORTED BEFORE THE REGISTRAR OF FIRMS AND SOCIETIES, GOVERNMENT OF MADHYA PRADESH, WHEREFROM IT IS CLEAR THAT THE AMOUNT OF ADVANCE TO THE PRESIDENT WAS FOR PURCHASE OF LAND FOR THE SOCIETY AND NOT FOR HIS PERSONAL BENEF IT AS ALLEGED BY THE ASSESSING OFFICER. HOWEVER, WITHOU T -: 52: - 52 APPRECIATING THE MATERIAL PLACED BEFORE HIM, THE ASSESSING OFFICER HAS HELD THAT NO LAND FOR PURCHASE WAS ARRANGED BY THE PRESIDENT THOUGH THE ABOVE SOCALLED LAND ADVANCE WAS GIVEN. THE ASSESSING OFFICER ALSO ALLEGED THAT THE THEN PRESIDENT WAS BENEFITED BY THE ADVANCE AMOUNT OF RS. 41.75 LACS FOR HIS PERSONAL USE. THE ASSESSING OFFICER ALSO STATED THAT THE THEN PRESIDENT NOT ONLY RETAINED THE AMOUNT AND SOCALLED LAND ADVANCE FOR LONG TIME WITH HIM FOR HIS PERSONAL USE BUT ALSO DID NOT PAY ANY INTEREST THEREON. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN HIS ORDER AT PAGES 31, 33 AND 33 HAS DEALT WITH EACH AND EVERY OBJECTION AND ALLEGATION OF THE ASSESSING OFFICE R IN HIS ORDER AND AFTER GIVING DETAILED FINDING HELD TH AT NO ADVANCE WAS GIVEN TO THE PRESIDENT FOR HIS PERSONAL BENEFIT BUT FOR THE PURPOSE OF THE SOCIETY AND THAT ALSO FOR PURCHASE OF LAND. WE ALSO FOUND THAT NOTHING -: 53: - 53 POSITIVE WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER TO ALLEGE THAT ANY PERSONAL BENEFIT WAS ENJOYED BY THE PRESIDENT OUT OF SUCH ADVANCE. SINCE IT WAS ESTABLISHED THAT THERE WAS NO PERSONAL ADVANCE TO THE PRESIDENT OF THE SOCIETY, THERE WAS NO INFRINGEMENT OF SECTIONS 13(1), 13(2)(A) AND 13(3) OF THE ACT. ACCORDINGLY, THE CASE LAWS CITED BY THE LD. CIT DR AR E NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE, WHEREIN IT WAS HELD THAT IN CASE OF ANY PERSONAL BENEFIT TO THE TRUSTEES OUT OF ASSETS OF THE TRUST WILL ATTRACT THE PROVISIONS OF SECTION 13(1)(C)/13(2)(A)/13(3) AND THE BENEFIT OF EXEMPTION WILL BE WITHDRAWN. FINDING RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS AS PER MATERIAL PLACED ON RECORD, THEREFORE, DOES NOT WARRANT ANY INTERFERENCE. RELIANCE WAS ALSO PLACED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ON THE DECISION OF THE HONBLE -: 54: - 54 RAJASTHAN HIGH COURT IN THE CASE OF COSMOPOLITAN EDUCATION SOCIETY (SUPRA) WHEREIN IT WAS HELD THAT IF THERE WAS ANY MIS-APPLICATION OF FUNDS, ACTION COULD LIE AGAINST THE PERSON RESPONSIBLE BUT THE CHARITABLE INSTITUTION CANNOT BE DENIED EXEMPTION WHICH DEPENDS UPON OBJECTS OF THE TRUST. THIS VIEW OF THE HONBL E HIGH COURT WAS UPHELD AS THE SLP FILED BY THE DEPARTMENT AGAINST THE JUDGMENT WAS DISMISSED BY THE HONBLE SUPREME COURT AS REPORTED IN 241 ITR (ST ) 132. IN VIEW OF THIS JUDGMENT, WHERE THERE IS MISCONDUCT ON THE PART OF THE TRUSTEE, THE CHARITABLE INSTITUTION IS CERTAINLY EXPECTED TO TAKE APPROPRIATE ACTION AGAINST SUCH TRUSTEE FOR RECOVERY OF THE AMOUNT BUT THAT DOES NOT MEAN THAT THE EXEMPTION GRANTED TO INSTITUTION SHOULD BE FORFEITED. ACCORDINGLY, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DECLINING THE CLAIM OF EXEMPTION U/S 11 TO THE ASSESSEE SOCIETY. -: 55: - 55 37. THE ASSESSING OFFICER HAS ALSO DRAWN A COROLLARY BETWEEN THE ASSESSEE SOCIETY AND H.K. KULCHURY EDUCATIONAL TRUST. AS BOTH THE ASSESSES ARE SEPARATE ENTITIES AND THE FACTS AND CIRCUMSTANCES OF BOTH WERE DIFFERENT, THERE IS NO REASON FOR DRAWING ANY COROLLARY BETWEEN THE ASSESSEE AND H.K. KULCHURY EDUCATIONAL TRUST WHICH HAS BEEN VERY ELABORATELY DISCUSSED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AT PAGES 33 TO 37 OF HIS ORDER. THE FIND INGS RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ARE AS PER THE MATERIAL ON RECORD AND DO NOT REQUIRE ANY INTERFERENCE, WITH REGARD TO GRANT OF EXEMPTION U/S 11 IN THE ASSESSMENT YEARS 1999-2000 TO 2004-05. 38. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT THE EDUCATIONAL INSTITUTION RUN BY THE ASSESSEE SOCIET Y WAS SIMILAR TO A BUSINESS ENTITY, THEREFORE, NOT ENTIT LED TO EXEMPTION OF ITS INCOME. THE ASSESSING OFFICER H AS -: 56: - 56 DISCUSSED THIS ISSUE AT PAGE 7.2 OF HIS ORDER WHEREIN HE HELD THAT SINCE THE INCOME HAS BEEN USED/APPLIED DURING THE YEAR FOR THE BENEFIT OF THE FAMILY OF THE SECRETARY OF THE ASSESSEE SOCIETY, HENCE, THE ASSESSEE SOCIETY IS JUST SIMILAR TO A BUSINESS ENTITY NOT ENTI TLED TO EXEMPTION. AFTER DISCUSSING THE ISSUE IN ENTIRE TY, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AS DISCUSSED HEREINABOVE HAS RECORDED HIS FINDINGS AT PAGES 32 TO 37 AND HELD THAT NO PERSONAL BENEFIT WAS DERIVED BY THE SECRETARY FROM THE ASSETS AND PROPERTIES OF THE TRUST NOR ANY PERSONAL EXPENSES PERTAINING TO THE TRUST WERE BORNE BY THE ASSESSEE SOCIETY. 39. THE ASSESSING OFFICER HAS ALSO DISALLOWED VARIOUS EXPENSES ON THE ALLEGATION THAT THESE ARE PERSONAL EXPENSES OF SH J.K.CHOKSI AND HIS FAMILY MEMBERS IN THE A.YRS. 1998-99, 1999-00, 2000-01 -: 57: - 57 AND 2001-02. IN THE ASSESSMENT YEAR 1998-99 THE ASSESSING OFFICER HAS DISCUSSED THE ISSUE AT PAGES 5 AND 6 OF THE ASSESSMENT ORDER AND THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DISCUSSED THE SAME AT PAGES 40 AND 41 OF HIS APPELLATE ORDER. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER DISCUSSING IN DETAIL ASSESSING OFFICERS OBSERVATION VIS- -VIS INSPECTORS REPORT AND THE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE TO CONTROVERT THE ASSESSING OFFICERS FINDINGS, WHICH WERE ALSO PLACED BEFORE THE ASSESSING OFFICER, REACHED TO THE CONCLUSION THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.1,23,217/- OUT OF THE EXPENSES IN THE NATURE OF SALARY, VEHICLE MAINTENANCE AND DEPRECIATION, ELECTRICITY AND TELEPHONE ON ESTIMATE. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ALSO OBSERVED THAT RELIANCE ON THE FINDING IN THE -: 58: - 58 ASSESSMENT ORDER OF H.K. KALCHURI TRUST FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04 AND THE INSPECTORS REPORT IN THAT CASE, CANNOT BE CO-RELATED WITH THAT OF DIFFERENT FACTS AND CIRCUMSTANCES IN THE CASE OF THE ASSESSEE SOCIETY WHERE THERE WAS NO SURVEY. IT WAS ALSO OBSERVED THAT THE ASSESSING OFFIC ER HAS MADE THE ADDITION ON ESTIMATE BASIS AND NOT BY HIS SPECIFIC FINDINGS IN RESPECT OF PARTICULAR ITEM OF EXPENSES/PURCHASES AS NOT GENUINE IN THE ASSESSEE SOCIETYS CASE. IT WAS ALSO OBSERVED THAT THERE IS NO ADVERSE REMARK IN THE AUDITED FINANCIAL STATEMENT BY THE AUDITORS OF THE ASSESSEE SOCIETY FOR THE CURRENT ASSESSMENT YEAR. ONLY DUE TO THE FACT THAT THE TRUST OFFICE WAS RUNNING FROM THE PREMISES OF ITS SECRETARY , THE ASSESSING OFFICER CONCLUDED THAT THE EXPENSES OF RS.1,23,217/- WERE PERSONAL IN NATURE AND FOR THE BENEFIT OF THE SECRETARY/TRUSTEES. SINCE THE A.O. H AS -: 59: - 59 MADE THE ADDITION ON CO-RELATION AND ESTIMATE WITHOUT BRINGING ANY SPECIFIC FINDING OF ANY PARTICULAR EXPENSE NOR ANY EVIDENCE TO SUBSTANTIATE SUCH FINDING TO THE EFFECT THAT THE EXPENSES WERE INCURRED FOR THE BENEF IT OF THE TRUSTEE OF THE ASSESSEE SOCIETY, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DELETED THE SAME BY RELYING UPON THE DECISION OF THE JURISDICTIO NAL HIGH COURT IN THE CASE OF DEV RADHA MADHAVLAL JI GENDA TRUST; 251 ITR 531 WHEREIN IT WAS HELD THAT MAINTENANCE OF TRUST PROPERTY, PAYMENT TO EMPLOYEES AND OTHER EXPENSES ARE INCIDENTAL AND CONNECTED WITH THE OBJECTS OF THE CHARITABLE TRUST. THE SAME, THEREFO RE, CANNOT BE DISALLOWED. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS CORRECTLY APPLIED THE PROPOSITION OF LAW AS LAID DOWN BY JURISDICTIONAL HIGH COURT TO THE FACTS OF THE INSTANT CASE. NO INTERFERE NCE IS, THEREFORE, WARRANTED IN THE FINDINGS AND CONCLUSIO N -: 60: - 60 OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). THE FACTS AND CIRCUMSTANCES IN THE SUBSEQUENT ASSESSMENT YEARS 1999-00, 2000-01 AND 2001-02 ARE THE SAME, THEREFORE, FOLLOWING THE SAME REASONING AND THE FINDINGS RECORDED BY THE LEARNED COMMISSIONER O F INCOMETAX (APPEALS), WE CONFIRM THE ACTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR DELETING THE DISALLOWANCE OF EXPENSES. 40. THE NEXT GRIEVANCE RELATES TO DISALLOWANCE OF LAB EQUIPMENT/CONSUMABLE EXPENSES. IN THE ASSESSMENT YEAR 1998-99 THE ASSESSING OFFICER HAS DISALLOWED RS. 2,01,987/- OUT OF LAB EQUIPMENT/CONSUMABLE EXPENSES ON ESTIMATE BASIS WHICH WAS COMPUTED AT 15% OUT OF PURCHASES MADE DURING THE YEAR. BY THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DELETED THE DISALLOWANCE BY OBSERVING THAT THE ASSESSING OFFICER -: 61: - 61 WAS NOT JUSTIFIED IN MAKING THE ESTIMATED DISALLOWANCE BY RELYING UPON THE ASSESSMENT ORDER IN THE CASE OF H.K. KULCHERY EDUCATION SOCIETY FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04 INSOFAR AS THE FACTS ARE QUITE DIFFERENT. IT WAS OBSERVED THAT THE DISALLOWANCE WAS MADE ON ESTIMATE AND NOT BY SPECIFIC FINDING IN RESPECT OF PARTICULAR ITEMS OF EXPENSES/PURCHASES AS NONE-GENUINE IN THE ASSESSEE SOCIETYS CASE. WE ALSO FIND THAT THERE WAS NO ADVERSE REMARK IN THE AUDITED FINANCIAL STATEMENT OF THE ASSESSEE SOCIETY. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DISCUSSED THE ISSUE AT PAGES 49 TO 51 AND AFTER RECORDING DETAILED FINDINGS DELETED THE DISALLOWANCE. NO INTERFERENCE IS REQUIRED IN SUCH CONCLUSION OF TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 41. AS PER OUR CONSIDERED VIEW, EVEN IN THE CASE OF CHARITABLE TRUST, THE INCOME OF THE TRUST IS TO BE -: 62: - 62 CALCULATED ON COMMERCIAL PRINCIPLES. THERE IS NO DIFFERENCE BETWEEN THE REVENUE AND CAPITAL EXPENDITURE FOR ASCERTAINING THE ACCUMULATED INCOME OF A TRUST WHICH IS NOT LIABLE TO TAX. THE ASSESSING OFFICER HAS MADE AD HOC DISALLOWANCE WITHOUT PIN- POINTING ANY SPECIFIC DEFECT/INSTANCE OF NON- VERIFIABILITY OR GENUINENESS OF EXPENSES. THUS, KEE PING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES VIS--VI S THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOMETA X (APPEALS), WE DO NO FIND ANY MERIT IN THE DISALLOWANCE SO MADE BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IS CONFIRMED. 42. SIMILAR DISALLOWANCE HAS BEEN MADE IN THE ASSESSMENT YEARS 1999-00, 2000-01 AND 2001-02. FOLLOWING THE SAME ANALOGY AND REASONINGS, WE CONFIRM THE ACTION OF THE LEARNED COMMISSIONER OF -: 63: - 63 INCOMETAX (APPEALS) FOR DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 43. THE NEXT ISSUE RELATES TO THE TREATMENT OF CONTRIBUTION TOWARDS DEVELOPMENT FUND AS REVENUE RECEIPT. THE ASSESSING OFFICER HAS TREATED SUCH CONTRIBUTION AS REVENUE IN NATURE AND THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. SINC E THE ASSESSEE TRUST HAS ALREADY GRANTED EXEMPTION U/S 11/10(22)/10(23C), IT WILL NOT AFFECT THE TREATMENT GIVEN BY THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), BUT, HOWEVER, I T IS NOT IN DISPUTE THAT THE CONTRIBUTION SO RECEIVED WAS ONLY TOWARDS DEVELOPMENT FUND OF THE ASSESSEE SOCIETY AND ACTUALLY USED BY THE ASSESSEE SOCIETY FOR DEVELOPMENT OF THE SOCIETY AND NOT FOR MEETING RECURRING EXPENSES OF THE SOCIETY. WE ALSO FIND THAT AS -: 64: - 64 PER THE STATEMENT OF TOTAL INCOME, EVEN AFTER ADDING BACK THE CONTRIBUTION TOWARDS DEVELOPMENT FUND, WHICH HAS BEEN TREATED BY THE LOWER AUTHORITIES AS REVENUE RECEIPT, THE NET ACCUMULATION IS STILL NEGATIV E. EVEN AFTER DEDUCTING 25%/15% OF THE GROSS RECEIPTS AND AFTER DEDUCTING CAPITAL EXPENDITURE INCURRED FOR WHICH SUCH FEES WAS ADJUSTED. 44. THE NEXT ISSUE RELATES TO DELETION OF INTEREST ON BANK LOAN. IN THE ASSESSMENT YEAR 1999-00, THE ASSESSING OFFICER HAS DISCUSSED THE ISSUE AT PAGE 7 OF THE ASSESSING OFFICER WHEREIN BANK INTEREST HAS BEEN DISALLOWED ON TERM LOAN TAKEN FOR CONSTRUCTION OF COLLEGE BUILDING. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DISCUSSED THE ISSUE AT PAGES 8 TO 10 OF HIS ORDER. ONCE THE EXEMPTION IS ALLOWED U/S 11, EVEN THE CAPITAL EXPENDITURE IS DEDUCTIBLE. HOWEVER, THE INTEREST ON BANK LOAN IS UNDISPUTEDLY -: 65: - 65 REVENUE IN NATURE. THERE IS NO MERIT IN DISALLOWING THE SAME. OUR VIEW IS SUPPORTED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF INDIA CEMENT LIMITED; 60 ITR 52. SIMILAR DISALLOWANCE HAS ALSO BEEN MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT YEARS 2000-01 TO 2004-05. ON THE SAME ANALOGY AND REASONING, WE DIRECT THE ASSESSING OFFICER TO ALLOW T HE BANK INTEREST PAID BY THE ASSESSEE. 45. THE NEXT GRIEVANCE RELATES TO DELETION OF CONTRIBUTION TOWARDS DEVELOPMENT FUND OF NARAIN SHRI HOMEOPATHIC COLLEGE FOR THE ASSESSMENT YEARS 2000- 01, 2001-02 AND 2003-04. THIS ISSUE IS SIMILAR TO GROUND NO. 6 OF THE DEPARTMENTAL APPEAL WITH REGARD TO TREATMENT OF CONTRIBUTION TOWARDS DEVELOPMENT FUND. FOLLOWING THE SAME ANALOGY AND REASONING, WE CONFIRM THE ACTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR DELETING THE DISALLOWANCE OF CONTRIBUTIO N -: 66: - 66 PAID TOWARDS DEVELOPMENT OF NARAIN SHRI HOMEOPATHIC COLLEGE. 46. THE LAST ISSUE PERTAINS TO ADDITION OF DONATION OF RS. 57,880/- GIVEN BY THE ASSESSEE TRUST IN THE ASSESSMENT YEAR 2001-02. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS NOT DISCUSSED THE ISSUE BU T WHILE COMPUTING THE TOTAL INCOME IN THE LAST PAGE, DISALLOWANCE WAS MADE. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DISCUSSED IT AT PAGES 43 AND 44 OF HIS ORDER. SINCE THE ASSESSEE SOCIETY WAS FOR CHARITABLE PURPOSES, THE DONATION IS PERMISSIBLE OUT- LET TOWARDS FURTHERANCE OF OBJECTS OF THE TRUST AND CANNOT BE DISALLOWED AS DONE IN THE CASE OF COMMERCIAL ENTITIES. FURTHERMORE, COMPUTATION OF TAXABLE INCOME IN CASE OF TRUST IS ENTIRELY ON DIFF ERENT PRINCIPLES WHEREIN ALL THE OUT-LETS REVENUE/CAPITAL ARE TAKEN INTO CONSIDERATION FOR CALCULATION OF TAXABLE -: 67: - 67 SURPLUS FOR WHICH RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF AMERICAN HOTEL; 301 ITR 86 WAS PLACED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). ACCORDINGLY, NO INTERFERENCE I S REQUIRED IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). 47. IN THE CROSS OBJECTION, THE ASSESSEE IS AGGRIEVED WITH THE REOPENING OF ASSESSMENT WITHOUT RECORDING THE REASONS. THE CONTENTION OF THE LEARNE D COUNSEL FOR THE ASSESSEE FOR THE ASSESSMENT YEARS 1999-00 TO 2000-01 BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS THAT THE CASE OF THE ASSESSEE WAS REOPENED WITHOUT RECORDING REASONS AND OBTAINING PERMISSION OF HIGHER AUTHORITIES. HOWEVER, BEFORE US, THIS GROUND WAS NOT PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, THE SAME IS -: 68: - 68 DISMISSED IN LIMINE. ACCORDINGLY, THE CROSS OBJECTI ON RAISED BY THE ASSESSEE IS DISMISSED. 48. IN THE RESULT, ALL THE APPEALS FILED BY THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 23 RD MAY, 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD MAY, 2011. CPU* 6.5