Santosh Devi, Bangalore V. ITO, Bangalore

CO 50/BANG/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9538 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S VENKATESAN
• Assessee Lawyers: PRISCILLA SINGSIT CITIII
• Keywords: Charitable institution; Tax effect; Capital receipt; Condonation of delay
• Section: 234B; 260A; 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NOS.1439 & 1554/BANG/2012 ASSESSMENT YEARS : 2008-09 & 2009-10 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3), BANGALORE. VS. M/S. CHILDRENS EDUCATION SOCIETY, # 40, IST PHASE, J.P. NAGAR, BANGALORE 560 078. PAN : AAATC 1553A APPELLANT RESPONDENT ITA NOS.1657 & 1658/BANG/2012 & CO NOS. 50 & 51/BANG/2013 (A/O ITA NOS.1439 & 1554/BANG/2012) ASSESSMENT YEARS : 2008-09 & 2009-10 M/S. CHILDRENS EDUCATION SOCIETY, # 40, IST PHASE, J.P. NAGAR, BANGALORE 560 078. PAN : AAATC 1553A VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3), BANGALORE. APPELLANT/CROSS OBJECTOR RESPONDENT REVENUE BY : MS. PRISCILLA SINGSIT, CIT-III (DR) RESPONDENT BY : SHRI S. VENKATESAN, C.A. DATE OF HEARING : 15.05.2014 DATE OF PRONOUNCEMENT : 30.05.2014 ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 2 OF 18 O R D E R PER BENCH ITA NO. 1439/B/12 IS AN APPEAL BY THE REVENUE AND ITA NO.1657/B/12 AND CO 51/B/13 ARE APPEAL AND CROSS OB JECTION BY THE ASSESSEE. THESE APPEALS AND CROSS OBJECTIONS ARE D IRECTED AGAINST THE ORDER DATED 5.9.2012 OF THE CIT(APPEALS)-VI, BANGALORE RE LATING TO ASSESSMENT YEAR 2008-09. ITA NO.1439/B/12 2. WE WILL FIRST TAKE UP FOR CONSIDERATION THE APPE AL BY THE REVENUE. THE GROUNDS RAISED BY THE REVENUE READ AS FOLLOWS:- GROUND NO.1. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN DIRECTING THE A.O TO ADOPT THE STATUS OF THE ASSESS EE AS AJP. GROUND NO.2. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN DIRECTING THE A.O TO ALLOW EXEMPTION TO THE ASSESSE E U/S. 10(23C)(IIIAD). GROUND NO.3. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN DIRECTING THE A.O TO DELETE THE ADDITION MADE IN RE SPECT OF THE BUILDING FUND AND INFRASTRUCTURE DEVELOPMENT FUND. GROUND NO.4. THE LEARNED CIT(A) ERRED IN FACT AND I N LAW IN DIRECTING THE A.O TO DELETE THE ADDITION MADE IN RE SPECT OF DONATIONS MADE TO NON-APPROVED INSTITUTIONS U/S.12A OF THE ACT. HENCE, THE ORDER OF CIT(A)-VI, BANGALORE IS NOT ACCEPTABLE IN PRINCIPLE AND SINCE THE TAX EFFECT IN VOLVED IN THIS CASE EXCEEDS THE MONETARY LIMIT PRESCRIBED IN THE C BDT INSTRUCTION NO.3/2011, FURTHER APPEAL TO HON .ITAT IS SUGGESTED IN VIEW OF THE ABOVE. ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 3 OF 18 3. THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE K ARNATAKA SOCIETIES REGISTRATION ACT, 1960 ON 30.9.1974. FOR THE A.Y. 2008-09, THE ASSESSEE FILED RETURN OF INCOME IN THE STATUS OF ASSOCIATION OF JURIDICAL PERSON [ AJP ] DECLARING NIL INCOME AND CLAIMING EXEMPTION U/S. 11 OF THE ACT OF RS.13,32,75,393. THE ASSESSEE CLAIMED THAT IT WAS RUNNING AS MANY AS 39 EDUCATIONAL INSTITUTIONS IN BANGALORE. THE FURTHER CLAIM OF THE ASSESSEE WAS THAT THE ANNUAL RECEIPTS OF EACH OF THE EDUCATI ONAL INSTITUTIONS HAVE TO BE TAKEN SEPARATELY WITHOUT AGGREGATION FOR THE PUR POSE OF ALLOWING EXEMPTION TO THE ASSESSEE U/S.10(23)(IIIAD) OF THE ACT. ITS FURTHER SUBMISSION WAS THAT OUT OF THE 39 EDUCATIONAL INSTI TUTIONS RUN BY THE ASSESSEE; WHERE THE RECEIPTS ARE LESS THAN RS.ONE C RORE, THEN THE ASSESSEE SHOULD BE ALLOWED EXEMPTION U/S. 10(23C)(I IIAD) OF THE ACT; AND IN RESPECT OF THE EDUCATIONAL INSTITUTIONS WHERE THE R ECEIPTS ARE MORE THAN RS.ONE CRORE, THE ASSESSEE SHOULD BE ALLOWED EXEMPT ION U/S. 11 OF THE ACT. 4. THE ISSUES BEFORE THE AO WAS (I) WHETHER THE STATUS OF THE ASSESSEE IS TO BE TR EATED AS AJP AS DECLARED BY THE ASSESSEE OR AOP AS PROPOSED BY THE AO; (II) WHETHER THE ASSESSEE WAS ENTITLED TO EXEMPTIO N U/S. 10(23C)(IIIAD) OF THE ACT; AND (III) WHETHER THE ASSESSEE WAS ENTITLED TO EXEMPTIO N U/S. 11 OF THE ACT. ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 4 OF 18 5. TWO OTHER ISSUES HAD ALSO CROPPED UP BEFORE THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE FIRST ISSUE WAS AS TO WHETHER THE AMOUNT COLLECTED BY THE ASSESSEE UNDER THE CAPTION BUILDI NG FUNDS AND INFRASTRUCTURE DEVELOPMENT FUND SHOULD BE RECOGNIZ ED AS CAPITAL RECEIPT NOT CHARGEABLE TO TAX AS CONTENDED BY THE ASSESSEE. THE ASSESSEE HAD ALSO RAISED AN ALTERNATE CONTENTION THAT THE AFORES AID FUND, EVEN ASSUMING IT IS TO BE TREATED AS A REVENUE RECEIPT, CAN BE CO NSIDERED FOR AVAILING EXEMPTION U/S. 11 OF THE ACT SUBJECT TO FULFILLMENT OF THE OTHER CONDITIONS. 6. THE SECOND ISSUE WAS AS TO WHETHER THE AMOUNTS P AID AS DONATIONS BY THE ASSESSEE TO OTHER INSTITUTIONS CAN BE CONSID ERED AS APPLICATION BY THE ASSESSEE FOR CHARITABLE PURPOSES. 7. THE AO CONCLUDED THE ASSESSMENT IN THE FOLLOWING MANNER. WITH REGARD TO THE STATUS IN WHICH THE ORDER OF ASSESSME NT SHOULD BE FRAMED, THE AO FOUND THAT IN ASSESSEES OWN CASE, THE TRIBU NAL IN ITA NOS. 329 TO 331/BANG/2008 FOR THE A.YS. 2003-04 TO 2005-06, BY ORDER DATED 11.7.2008, HAD HELD THAT THE STATUS OF THE ASSESSEE MUST BE ADOPTED AS AJP AND NOT AS AOP. THE AO, HOWEVER, WAS OF THE VI EW THAT THE AFORESAID DECISION OF THE TRIBUNAL HAS NOT BEEN ACCEPTED BY T HE REVENUE AND AN APPEAL HAD BEEN FILED AGAINST THE ORDER OF THE TRIB UNAL BEFORE THE HONBLE HIGH COURT OF KARNATAKA U/S. 260A OF THE ACT AND TH EREFORE, TO KEEP THE ISSUE ALIVE, THE AO CHOSE TO ADOPT THE STATUS OF TH E ASSESSEE AS AOP. ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 5 OF 18 8. ON THE ISSUE OF EXEMPTION U/S. 10(23C)(IIIAD) OF THE ACT, THE AO NOTICED THAT IN ASSESSEES OWN CASE IN ITA NOS. 32 9 TO 331/BANG/2008 FOR THE A.YS. 2003-04 TO 2005-06, BY ORDER DATED 11.7.2 008, THE TRIBUNAL HAD HELD THAT EACH OF THE 39 EDUCATIONAL INSTITUTIONS R UN BY THE ASSESSEE AND ITS RECEIPTS HAVE TO BE CONSIDERED SEPARATELY AND NOT B Y AGGREGATING ALL THE RECEIPTS FOR THE PURPOSE OF ALLOWING EXEMPTION U/S. 10(23)(IIIAD) OF THE ACT. THE TRIBUNAL THEREFORE HELD THAT WHEREVER THE TOTAL RECEIPTS OF EACH OF THE EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE IS LES S THAN RS.ONE CRORE, THEN THE ASSESSEE SHOULD BE GIVEN THE BENEFIT OF EXEMPTI ON U/S. 10(23C)(IIIAD) OF THE ACT. THE AO, HOWEVER, HELD AS FOLLOWS:- 4.2 FOLLOWING THE ABOVE CIT APPEALS DECISION FOR A.Y.2006- 07 AND ON THE FACTS OF THE ASSESSEES CASE AS DETAI LED IN THE ASSESSMENT ORDER FOR THE A.Y.2006-07 & 2007-08, IT IS HELD THAT: I) M/S CHILDRENS EDUCATION SOCIETY IS THE ONLY P ERSON TO WHICH THE EXEMPTION U/S 10(23C)(IIIAD) CAN BE APPLI ED; II) THERE CANNOT BE A SELECTIVE APPLICATION OF SECT ION L0(23C)(IIIAD) TO EACH EDUCATIONAL INSTITUTION AS T HEY ARE NOT SEPARATE ASSESSEE AND EACH SEPARATE INSTITUTION RUN BY THE SOCIETY CANNOT FALL UNDER ANY LEGAL DEFINITION UNDER THE I. T. ACT AND THERE IS ONLY ONE PERSON I.E., THE SOCIETY TO WHICH THE I.T. ACT WOULD APPLY. III) THERE IS NO LEGAL DISTINCTION BETWEEN THE ASS ESSEE SOCIETY AND EACH OF THE INDIVIDUAL EDUCATIONAL INSTITUTIONS RUN BY IT; IV) THERE IS NO COMMERCIAL DISTINCTION BETWEEN TH E TWO ALSO AS HAS BEEN POINTED OUT ON THE FACTS OF THE ASSESSE ES CASE; V) IN THE LIGHT OF THERE BEING NO LEGAL AS WELL AS COMMERCIAL DISTINCTION BETWEEN THE TWO FOLLOWING THE DOCTRINE OF APPROBATE ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 6 OF 18 AND REPROBATE, THERE CANNOT BE A SEPARATION FOR DET ERMINING THE LIMIT OF AGGREGATE ANNUAL RECEIPTS SPECIFIED IN L0( 23C)(IIIAD) R/W RULE 2BC; IN VIEW OF THE ABOVE, THE SOCIETY DOES NOT QUALIF Y FOR EXEMPTION U/S. 10(23C)(IIAD) SINCE THE AGGREGATE AN NUAL RECEIPTS OF THE SOCIETY EXCEED THE LIMIT SPECIFIED OF RS. 1 CRORE. AS THE SOCIETY DOES NOT QUALIFY FOR THE EXEMPTION, THE ASS ESSEES CLAIM FOR EXEMPTION CANNOT BE GRANTED AND THEREFORE THE E NTIRE EXCESS OF INCOME OVER EXPENDITURE OF THE SOCIETY, WILL BE TAXED. 9. WITH REGARD TO THE CLAIM FOR EXEMPTION U/S. 11 O F THE ACT, THE AO FOUND THAT THE ASSESSEES APPLICATION FOR GRANT OF REGISTRATION U/S. 12A OF THE ACT DID NOT EXIST AND THEREFORE THE BENEFIT OF SECTION 11 OF THE ACT CANNOT BE CLAIMED BY THE ASSESSEE. 10. THE ASSESSEE HAD POINTED OUT BEFORE THE AO THAT THE TRIBUNAL IN ITA NO.1145/BANG/2007 DATED 11.7.2008 HAD HELD THAT THE ASSESSEE WAS ENTITLED TO REGISTRATION U/S. 12A OF THE ACT. BASE D ON THE ABOVE ORDER OF THE TRIBUNAL THE ASSESSEE REQUESTED THE AO TO CONSIDER ITS CLAIM U/S. 11 OF THE ACT. THE AO, HOWEVER, TOOK THE VIEW THAT THE ORDER OF THE TRIBUNAL HAD NOT BEEN ACCEPTED BY THE REVENUE AND AN APPEAL HAD BEEN FILED BEFORE THE HONBLE HIGH COURT OF KARNATAKA. SINCE THE ISSUE HA D NOT BECOME FINAL, THE AO CHOSE TO DENY THE CLAIM OF THE ASSESSEE FOR EXEM PTION U/.S 11 OF THE ACT FOR WANT OF REGISTRATION U/S. 12A OF THE ACT. 11. ON THE ISSUE OF TREATING THE BUILDING FUND AND INFRASTRUCTURE DEVELOPMENT FUND AS CAPITAL RECEIPT, OR IN THE ALT ERNATIVE, CONSIDER THE ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 7 OF 18 SAME AS APPLICATION OF INCOME FOR CHARITABLE PURPOS ES, THE AO HELD THAT IN THE A.Y. 2006-07, SIMILAR CLAIM OF THE ASSESSEE WAS REJECTED AND CONFIRMED BY THE CIT(APPEALS). FOLLOWING THE SAME, THE AO RE JECTED THE CONTENTION OF THE ASSESSEE. 12. WITH REGARD TO THE CLAIM OF THE ASSESSEE FOR TR EATING THE DONATIONS GIVEN TO INSTITUTIONS CARRYING ON SIMILAR ACTIVITY AS THAT OF THE ASSESSEE AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES, THE AO REJECTED THE SAME. 13. FINALLY, THE AO DETERMINED THE TOTAL INCOME OF THE ASSESSEE AS FOLLOWS:- EXCESS OF INCOME OVER EXPENDITURE OF THE SOCIETY AS RETURNED WITHOUT CONSIDERING THE SURPLUS OF TWELVE EDUCATIONAL INSTITUTION WHOSE AGGREGATE ANNUAL RECEIPTS ARE CLAIMED TO BE LESS THAN RS. 1 CRORE FO R THE REASONS AS DISCUSSED ABOVE 6,71,03,352 ADD: BUILDING FUND ADDED BY THE ASSESSEE TO THE NET SURPLUS FUND BEFORE CLAIMING EXEMPTION U/S 11 10,31,785 ADD: INFRASTRUCTURE DEVELOPMENT FUND ADDED BY THE ASSESSEE TO THE NET SURPLUS FUND BEFORE CLAIMING EXEMPTION U/S 11 6,51,40,255 ADD: DONATION DISALLOWED TO THE EXTENT NOT MADE TO THE APPROVED INSTITUTIONS AS DISCUSSED ABOVE 2,80,301 TOTAL SURPLUS OF THE SOCIETY 13,35,55,693 LESS: EXEMPTION U/S 11 CLAIMED IS NOT ALLOWED FOR THE REASONS AS DISCUSSED ABOVE SINCE REGISTRATION U/S 1 2A HAS NOT BEEN GRANTED TO THE ASSESSEE NIL TOTAL INCOME 13,35,55,693 14. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE CIT(APPEALS), WHO HELD AS FOLLOWS:- ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 8 OF 18 15.1 ON THE QUESTION OF STATUS OF THE ASSESSEE, FOL LOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 329 TO 331/BANG/2008 FOR THE A.YS. 2003-04 TO 2005-06, BY ORDER DATED 11.7.2 008, THE CIT(A) HELD THAT THE STATUS OF THE ASSESSEE SHOULD BE ADOPTED A S AJP AND NOT AS AOP. 15.2 WITH REGARD TO THE EXEMPTION U/S. 10(23C)(III AD) OF THE ACT, THE CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL, HELD TH AT THE ASSESSEE WAS ENTITLED TO EXEMPTION U/S. 10(23C)(IIIAD) OF THE AC T. FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE CIT(A). 2.4.3 IN COURSE OF HEARING BEFORE ME, THE AP PELLANT HAS FILED A COPY OF THE ORDER OF THE HONBLE ITAT IN IT A NO.140 & 141/BANG/2010 FOR THE ASSESSMENT YEAR 2006-07 DAT ED 20.05.2010 IN WHICH THE ORDER OF THE CIT (APPEALS) FOR THE ASSESSMENT YEAR 2006-07 HAS BEEN REVERSED. IN PARA (31 & 32) OF THE TRIBUNALS ORDER IN ITA NO.140 & 141/BANG/20 10 DATED 20.05.2010, IT HAS BEEN HELD AS FOLLOWS: 31. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, W E FIND THAT THE CIT(A) HAS GONE WRONG IN RELYING ON THE JUDGEMENT OF UTTARKHAND HIGH COURT IN THE CASE OF QUEEN EDUCATIONAL SOCIETY DELIVERED IN A DIFFERENT FACTUAL CONTEXT BY OVERLOOKING THE ORDERS OF THE TRIBUNAL PASSED IN ASSESSEE S OWN CASE FOR EARLIER ASSESSMENT YEARS. 32. THEREFORE, WE FIND THAT WE HAVE TO FOLLOW THE ORDERS OF THE TRIBUNAL FOR THE EARLIER ASSESSMENT YEARS IN ASSESSEE S OWN CASE ON THE SAME ISSUE AND HOLD THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 10(23C)(IIIAD). ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS POINT AND DIRECT THE ASSESSING AUTHORITY TO GRANT EXEMPTION TO THE ASSESSEE U/S. 10(23C)(IIIAD) . 2.4.4 RESPECTFULLY FOLLOWING THE DECISION OF THE HO NBLE ITAT IN THE APPELLANTS OWN CASE FOR THE ASSESSMENT YEAR 2006-07, I HOLD THAT THE APPELLANT IS ENTITLED TO E XEMPTION ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 9 OF 18 UNDER SECTION 10(23C)(IIIAD) OF THE ACT AND THE SAM E IS ALLOWED. THE GROUND OF APPEAL RAISED IS ALLOWED. 15.3 WITH REGARD TO THE GRANT OF EXEMPTION U/S. 11 OF THE ACT, THE CIT(A) HELD THAT SINCE THE ASSESSEE IS BEING GRANTED EXEMP TION U/S. 10(23C)(IIIAD) OF THE ACT, THE ALTERNATE PLEA FOR GRANT OF EXEMPTI ON U/S. 11 OF THE ACT DOES NOT SURVIVE. THE RELEVANT OBSERVATIONS OF THE CIT( A) IN THIS REGARD ARE AS FOLLOWS:- 2.5.1 THE ABOVE GROUNDS OF APPEAL RELATES TO T HE ALTERNATE CONTENTION OF THE APPELLANT THAT IT IS ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE ACT. IN PARA (34) OF THE ORDER OF THE HONBLE ITAT IN THE APPELLANTS OWN CASE FOR THE ASSESSMENT YEAR 2006- 07 IN ITA NO.140 & 141/BANG/2010 DATED 20.05.2010, IT HAS BEEN HELD AS FOLLOWS: 34. THE FIFTH GROUND RAISED BY THE ASSESSEE IS A GROUND ALTERNATE TO ITS GROUND RELATING TO EXEMPTIO N U/S.10(23C). THE ALTERNATE GROUND IS THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION U/S. 11 AND 12. IT IS TRUE THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION U/S. 12A AT THE INTERVENTION OF THE TRIBUNAL ON THE BASIS OF THE FINDING THAT THE ASSES SEE IS A CHARITABLE INSTITUTION. BUT AS THE ISSUE OF CHARITABLE INSTITUTION HAS BEEN ADJUDICATED IN FAVO UR OF THE ASSESSEE UNDER THE PROVISIONS OF LAW CONTAIN ED IN SECTION 10(23C)(IIIAD), THIS ALTERNATE GROUND DO ES NOT SURVIVE. ACCORDINGLY, IT IS TECHNICALLY REJECTE D. 2.5.2 RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE ITAT, I HOLD THAT THE ABOVE ALTERNATE GROUND DOES NOT SUR VIVE IN AS MUCH AS, THE MAIN RELIEF CLAIMED WITH REGARD TO EXEMPTIO N UNDER SECTION L0(23C)(IIIAD) OF THE ACT HAS BEEN GRANTED. ACCORDINGLY, THIS GROUND IS TECHNICALLY REJECTED. ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 10 OF 18 15.4 WITH REGARD TO RECEIPTS ON ACCOUNT OF BUILDIN G FUNDS AND INFRASTRUCTURE DEVELOPMENT FUND COLLECTED BY THE AS SESSEE, THE CIT(A) FOUND THAT THE TRIBUNAL HAD ACCEPTED THE PLEA OF TH E ASSESSEE IN ITS OWN CASE FOR THE A.YS. 2006-07 AND FOLLOWING THE SAME, DIRECTED THE AO TO DELETE THE ADDITION MADE. THE RELEVANT OBSERVATION S OF THE CIT(A) WERE AS FOLLOWS:- 2.6.1 THE ABOVE GROUNDS RAISED BY THE APPELLANT WI TH REGARD TO THE ADDITION OF RS.10,31,785/- IN RESPECT OF BUILDI NG FUND AND RS.6,51,40,255/- IN RESPECT OF THE INFRASTRUCTURAL DEVELOPMENT FUND ARE ALSO COVERED. IN PARA (35 & 36) OF THE ORD ER OF THE HONBLE ITAT IN ITA NO.140 & 141/BANG/2010 DATED 20.05.2010, IT HAS BEEN HELD AS FOLLOWS :- THE SIXTH AND SEVENTH GROUNDS RAISED BY THE ASSESSEE ARE THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITIONS OF RS. 28,04,505/- & RS. 16,39,73,678/- RELATING TO BUILDING FUND AND INFRASTRUCTURE DEVELOPMENT FUND RESPECTIVELY. THIS ISSUE WAS CONSIDERED BY THE TRIBUNAL IN PARA 51 OF ITS ORDER PASSED FOR THE ASSESSMENT YEARS 1999- 00, 2000-01, 2001-02 AND 2002-03 DATED 23.2.2006. AFTER DISCUSSING THE ISSUE IN DETAIL AND RELYING ON THE JUDGEMENT OF THE PUNJAB AND HARAYANA HIGH COURT IN THE CASE OF CIT V. DUTTOM ENTERPRISES (197 CTR 606) AND THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. BIJLI COTTON MILLS P. LTD. (116 ITR 60), THE TRIBUNAL HELD THAT THE ASSESSING AUTHORITY WAS NOT JUSTIFIED IN MAKING SUCH AN ADDITION . 2.6.2 RESPECTFULLY FOLLOWING THE DECISION OF THE H ONBLE ITAT IN THE APPELLANTS OWN CASE, THE ADDITIONS MADE OF RS.L0,31,785/- AND RS.6,51,40,255/- ARE HEREBY DELETED. THE GROUND S RAISED ARE ALLOWED. 15.5 WITH REGARD TO THE DONATIONS GIVEN BY THE ASS ESSEE TO OTHER EDUCATIONAL INSTITUTIONS, THE CIT(A) FOUND THAT IN THE A.Y. 2006-07, THE ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 11 OF 18 TRIBUNAL HAD ALLOWED SIMILAR CLAIM OF THE ASSESSEE. FOLLOWING THE SAME, THE ADDITION MADE BY THE ASSESSEE WAS DIRECTED TO BE DE LETED. FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE CIT(A):- 2.7.2 IN PARA (37) OF THE ORDER OF THE HONBLE ITAT IN ITA NO.140 & 141/BANG/2010 DATED 20.05.2010, IT HAS BEE N HELD AS FOLLOWS :- 37. THE EIGHTH GROUND RAISED BY THE ASSESSEE IS THAT THE CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION MADE TO THE EXTENT OF 50% AS AGAINST A SUM OF RS.17,51,540/- ADDED BY THE AO. THIS ISSUE WAS CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06, THROUGH THEIR ORDER DATED 11.7.2008 PASSED IN ITA NOS.329 TO 331/BANG/2008. AFTER DISCUSSING THE MATTER IN DETAIL, THE TRIBUNAL HELD THAT SUCH A DISALLOWANCE IS NOT CALLED FOR. EVEN OTHERWISE THE FUNDAMENTAL PRINCIPLE WITH REGARD TO TAXATION OF CHARITABLE INSTITUTION IS DONATION FOR AN EQUALLY CHARITABLE PURPOSE IS APPLICATION OF FUND FOR CHARITABLE PURPOSES. ACCORDINGLY, WE DELETE THE PARTIAL DISALLOWANCE CONFIRMED BY THE CIT(A) IN THIS REGARD AND ALLOW THIS GROUND RAISED BY THE ASSESSEE.: 2.7.3 RESPECTFULLY FOLLOWING THE DECISION OF THE H ONBLE ITAT IN THE APPELLANTS OWN CASE, THE ADDITION MADE OF R S.2,80,301/- IS HEREBY DELETED. THE GROUND RAISED IS ALLOWED. 16. AGGRIEVED BY THE RELIEFS GIVEN BY CIT(A), THE REVENUE HAS PREFERRED APPEAL BEFORE THE TRIBUNAL. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS) IN NOT ANNULLING THE ORDER OF ASSESSMENT ON THE GROUND THAT WHEN A RETURN IS FILED IN THE STATUS OF AJP, THE AO CANNOT CHANGE TH E STATUS TO AOP AND FRAME THE ASSESSMENT, THE ASSESSEE HAS FILED APPEAL BEFORE THE TRIBUNAL. ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 12 OF 18 ACCORDING TO THE ASSESSEE, THE RETURN WAS FILED IN THE STATUS OF AJP AND PROCEEDINGS TAKEN ON THAT RETURN SHOULD HAVE BEEN D ROPPED AND FRESH PROCEEDINGS SHOULD HAVE BEEN INITIATED AGAINST THE ASSESSEE IN THE STATUS OF AOP AND THEREAFTER ASSESSMENT FRAMED. IN THIS R EGARD, THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- (I) CIT VS. K.ADINARYANAMURTHY, 65 ITR 607 (SC) (II) ABDUL SATTAR M.MOKASHI VS. CIT, 174 ITR 368 ( KAR) 17. THE OTHER ISSUE RAISED BY THE ASSESSEE IN ITS CROSS APPEAL IS WITH REGARD TO THE ORDER OF CIT(A) WHEREBY HE HAD HELD T HAT EXEMPTION U/S. 11 OF THE ACT IS ACADEMIC, BECAUSE THE ASSESSEE HAS ALREA DY GOT RELIEF U/S. 10(23C)(IIIAD) OF THE ACT. AS THE ASSESSEE HAD ALSO RAISED A GROUND WITH REGARD TO LEVY OF INTEREST U/S. 234B OF THE ACT, IT IS THE PLEA OF THE ASSESSEE THAT IT WAS ENJOYING EXEMPTION U/S. 11 OF THE ACT F OR OVER THREE DECADES AND THEREFORE THERE WAS NO QUESTION OF ESTIMATING TAXAB LE INCOME U/S. 209 OF THE ACT AND PAYING ADVANCE TAX. IN OUR VIEW, THIS GROUND IS UNSUSTAINABLE BECAUSE THE ASSESSEE PRESUMES ITS INCOME IS EXEMPT UNDER CHAPTER III OF THE ACT. SUCH PRESUMPTION CANNOT BE THE BASIS OF N OT PAYING ADVANCE TAX AND WILL DEPEND ON THE ULTIMATE ASSESSMENT TO BE FR AMED. IN THAT VIEW OF THE MATTER, WE HOLD THAT THE LEVY OF INTEREST U/S. 234B OF THE ACT IS PURELY CONSEQUENTIAL. ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 13 OF 18 18. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUES RAISED BY THE REVENUE IN ITS GROUND OF APPEAL HAVE ALL BEEN DEALT WITH BY THE HONBLE HIGH COURT OF KARNATAKA IN THE ASSESSEE S OWN CASE VIZ., CHILDREN EDUCATION SOCIETY, 358 ITR 373 (KAR) . ON THE QUESTION OF STATUS OF THE ASSESSEE, THE HONBLE HIGH COURT HAS HELD THAT THE SAME HAS TO BE ADOPTED AS AJP. ON THE QUESTION OF EXEMPTION U/S. 10(23C)(IIIAD) OF THE ACT, THE HONBLE HIGH COURT HAS HELD THAT THE A SSESSEE WAS ENTITLED TO THE SAID EXEMPTION AND THAT THE RECEIPTS OF EACH OF THE EDUCATIONAL INSTITUTIONS HAVE TO BE CONSIDERED SEPARATELY AND N OT BY AGGREGATION. WITH REGARD TO THE RECEIPTS BY WAY OF BUILDING FUND AND INFRASTRUCTURE DEVELOPMENT FUND, THE HONBLE HIGH COURT IN PARA 28 OF ITS ORDER, REMANDED THE SAME TO THE ASSESSING OFFICER FOR FRESH CONSIDE RATION TO LOOK INTO THE LEDGER BOOKS AND OTHER ACCOUNTS SHOWING THE RECEIPT S ON ACCOUNT OF BUILDING FUND AND INFRASTRUCTURE FUND AND ITS UTILI ZATION FOR THE PURPOSE OF CONSTRUCTION AND ON THAT BASIS, PASS SUITABLE ORDER S. 19. IT WAS SUBMITTED BY THE LD. COUNSEL FOR THE AS SESSEE BEFORE US THAT IN THE PRESENT CASE SUCH AN EXERCISE HAS ALREADY BE EN CARRIED OUT AND THERE IS NO ADVERSE MATERIAL AGAINST THE ASSESSEE. WE ARE OF THE VIEW THAT NO SUCH FINDING HAS BEEN RENDERED BY THE AO AND THE REFORE IN THE LIGHT OF THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA SUPRA , THIS ISSUE HAS TO BE REMANDED TO THE AO FOR FRESH CONSIDERATION. IT IS ORDERED ACCORDINGLY. THUS, GROUND NO.3 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 14 OF 18 20. AS FAR AS THE DONATIONS MADE BY THE ASSESSEE A RE CONCERNED, WE FIND THAT THE CIT(APPEALS) HAS RELIED UPON ON THE O RDER OF THE TRIBUNAL WHILE ALLOWING RELIEF TO THE ASSESSEE. THE FACT THAT THE REVENUE HAS NOT ACCEPTED THE SAID ORDER CANNOT BE A GROUND TO MAKE THE IMPUG NED DISALLOWANCE. CONSEQUENTLY, WE DISMISS GROUNDS NO.1, 2 & 4 RAISED BY THE REVENUE. 21. IN THE RESULT, THE APPEAL BY THE REVENUE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ITA 1657/BANG/2012 22. AS FAR AS THE APPEAL OF THE ASSESSEE IS CONCER NED, WE FIND THAT THE QUESTION, AS TO WHETHER THE ASSESSMENT ORDER SHOULD BE ANNULLED BECAUSE OF ADOPTING THE STATUS DIFFERENT FROM THE ONE DECLA RED BY THE ASSESSEE IN THE RETURN OF INCOME FILED, HAS ALREADY BEEN CONSID ERED AND HELD AGAINST THE ASSESSEE BY THIS TRIBUNAL, AS HAS BEEN NOTICED BY THE CIT(A) IN PARA 2.3.2 OF HIS ORDER, WHICH READS AS FOLLOWS:- 2.3.2 THE ABOVE GROUND OF APPEAL IS WITH REG ARD TO THE ASSESSMENT OF THE APPELLANT IN THE STATUS OF AOP AS AGAINST THE CLAIM THAT THE APPELLANT SHOULD BE ASSESSED IN THE STATUS OF AJP. THE HONBLE ITAT IN THE APPELLANTS OWN CASE IN ITA NOS. 329 TO 331(BANG)/2008 FOR THE ASSESSMENT YEARS 2003-04 TO 2005-06 DATED 11.07.2008 HAS HELD THAT THE APPELLANT MUST B E ASSESSED IN THE STATUS OF AJP AND NOT AOP. THE PLEA OF THE APPELLANT THAT THE ASSESSMENT MUST BE ANNULLED ON ACCOUNT OF THE S TATUS BEING ADOPTED AS AOP HAS BEEN CONSIDERED IN ANOTHER ORD ER OF THE HONBLE ITAT IN ITA NO.140 & 141/BANG/2010 FOR THE ASSESSMENT YEAR 2006-07 DATED 20.05.2010. IN THE SA ID ORDER, THE HONBLE ITAT HAS HELD AT PARA (16) THAT THERE CANNO T BE A CASE FOR ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 15 OF 18 ANNULMENT OF THE ASSESSMENT. RATHER, THE STATUS DIR ECTED TO BE ADOPTED IS AJP. FOLLOWING THE SAID ORDERS OF THE TRIBUNAL IT IS HELD THAT THE APPELLANT IS ENTITLED TO A RELIEF OF BEING ASSESSED IN THE STATUS OF AJP. HOWEVER, THE ANNULMENT OF THE ASSESSMENT CANNOT BE ACCEPTED. THE GROUND OF APPEAL RAISED IS PARTLY ALLOWED AND THE A.O. IS DIRECTED TO ADOPT THE STATUS OF THE APPELLANT AS AJP. 23. IN THE LIGHT OF THE AFORESAID DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE ARE OF THE VIEW THAT THE RELEVANT GROU ND OF APPEAL RAISED BY THE ASSESSEE IN ITS APPEAL DESERVES TO BE DISMISSED . 24. WITH REGARD TO THE GRIEVANCE OF THE ASSESSEE R EGARDING NOT ALLOWING THE ASSESSEE EXEMPTION U/S. 11 OF THE ACT, WE HAVE ALREADY SEEN THAT THE CIT(APPEALS) TOOK THE VIEW THAT SINCE THE ASSESSEE WAS GETTING RELIEF U/S. 10(23C)(IIIAD) OF THE ACT, EXEMPTION U/S. 11 OF THE ACT DOES NOT SURVIVE. ON THIS ISSUE, WE FIND THAT THE VARIOUS EDUCATIONAL IN STITUTIONS RUN BY THE ASSESSEE DO NOT GET EXEMPTION U/S. 10(23C)(IIIAD) O F THE ACT, AS THE TOTAL RECEIPTS IN SOME OF THE INSTITUTIONS EXCEED RS. ONE CRORE WHICH IS THE THRESHOLD LIMIT FIXED U/S. 10(23C)(IIIAD) OF THE AC T. SINCE THE ASSESSEE HAS NOW BEEN GRANTED EXEMPTION U/S. 12A OF THE ACT, IT WOULD BE JUST AND PROPER TO DIRECT THE AO TO EXAMINE THE CLAIM OF EXE MPTION U/S. 11 OF THE ACT AFRESH. WE HOLD AND DIRECT ACCORDINGLY. THUS, GR OUNDS NO.3 AND 3.1 RAISED BY THE ASSESSEE ARE PARTLY ALLOWED FOR STATI STICAL PURPOSES, WHILE THE OTHER GROUNDS ARE DISMISSED. ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 16 OF 18 25. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. CO 51/BANG/2013 26. THE GROUNDS RAISED IN THE CROSS OBJECTION ARE IDENTICAL TO THE GROUNDS RAISED IN THE APPEAL BY THE ASSESSEE AND TH EREFORE THE DECISION RENDERED IN THE CROSS APPEAL IN ITA NO.1657/BANG/20 12 WILL APPLY TO THE GROUNDS RAISED IN THE CROSS OBJECTIONS AS WELL. CO NSEQUENTLY, THE CROSS OBJECTION IS TREATED AS PARTLY ALLOWED FOR STATISTI CAL PURPOSES. ITA NO.1554 & 1658/BANG/2012 & CO 52/BANG/2013 27. ITA 1554/B/12 IS AN APPEAL BY THE REVENUE, ITA 1658/B/12 IS AN APPEAL BY THE ASSESSEE AND CO 52/B/13 IS ALSO BY TH E ASSESSEE. ALL THESE APPEALS ARE DIRECTED AGAINST THE ORDER DATED 5.9.20 12 OF THE CIT(APPEALS)- VI, BANGALORE RELATING TO ASSESSMENT YEAR 2009-10. 28. THERE IS A DELAY OF 18 DAYS IN FILING THE APPE AL BY THE REVENUE. THE SAME HAVE BEEN EXPLAINED BY THE DCIT, CENTRAL CIRCL E 1(3) IN AN AFFIDAVIT, WHEREFROM IT TRANSPIRES THAT THE OMISSION TO FILE A N APPEAL FOR THE A.Y. 2009-10 ALONG WITH THE APPEAL FOR A.Y. 2008-09 WAS PURELY INADVERTENT AS NO SEPARATE FOLDER WAS PREPARED FOR A.Y. 2009-10. WE ACCEPT THE REASONS GIVEN IN THE AFFIDAVIT FOR CONDONATION OF DELAY AND CONDONE THE DELAY IN FILING THE APPEAL. ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 17 OF 18 29. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEA L ARE IDENTICAL TO THE GROUNDS RAISED BY IT FOR THE A.Y. 2008-09. SIMILAR LY, THE GROUNDS RAISED BY THE ASSESSEE ITS APPEAL AND THE CROSS OBJECTION ARE IDENTICAL TO GROUNDS RAISED IN THE APPEAL AND CO FOR THE A.Y. 2008-09. FOR THE REASONS STATED WHILE DECIDING THE AFORESAID GROUNDS IN THE A.Y. 20 08-09, WE DISMISS GROUNDS NO.1, 2 AND 4 RAISED BY THE REVENUE AND ALL OW GROUND NO.3 FOR STATISTICAL PURPOSES. WITH REGARD TO APPEAL OF THE ASSESSEE, WE ALLOW IN PART GROUND NOS.3 AND 3.1 AND DISMISS THE OTHER GROUNDS. SIMILARLY, WE ALLOW FOR STATISTICAL PURPOSE GROUND NOS.3 AND 3.1 AND DI SMISS THE OTHER GROUNDS IN THE CROSS OBJECTION BY THE ASSESSEE. 30. IN THE RESULT, THE APPEALS BY THE REVENUE AND THE APPEALS AS WELL AS CROSS OBJECTIONS BY THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF MAY , 2014 . SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 30 TH MAY , 2014 . /D S/ ITA NOS. 1439 & 1554/B/12, AND 1657 & 1658/B/12 & CO 51 & 52/B/13 PAGE 18 OF 18 COPY TO: 1. REVENUE 2. ASSESSEE 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.