M/s Vichar Bharti Education Society, Bhopal V. The ACIT, 3(1), Bhopal

CO 9/IND/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6760 (ITAT-INDORE)
• Duration Of Justice: 8 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-10-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 19-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KESHAV SAXENA
• Assessee Lawyers: R N GUPTA
• Keywords: Depreciation; Charitable institution; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 12A; 148; 12; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NOS. 15 AND 16/IND/2011 A.YS. 2002-03 AND 2005-06 ASSTT. COMMISSIONER OF INCOME TAX 3(1) BHOPAL ... APPELLANT VS VICHAR BHARTI EDUCATION SOCIETY BHOPAL PAN AAAAV-0976F ... RESPONDENT CO NO. 9/IND/2011 ARISING OUT OF ITA NO. 15/IND/2011 VICHAR BHARTI EDUCATION SOCIETY BHOPAL ... OBJECTOR VS ASSTT. COMMISSIONER OF INCOME TAX 3(1) BHOPAL ... RESPONDENT REVENUE BY : SHRI KESHAV SAXENA ASSESSEE BY : SHRI R.N. GUPTA DATE OF HEARING : 19.12.2011 DATE OF PRONOUNCEMENT : 22.12.2011 2 O R D E R PER JOGINDER SING THE REVENUE IS AGGRIEVED BY DIFFERENT ORDERS OF LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 11.11.20 10 FOR THE ASSESSMENT YEARS 2002-03 AND 2005-06 AND THE ASSESS EE HAS PREFERRED CROSS OBJECTION FOR THE ASSESSMENT YEAR 2 002-03 (ARISING OUT OF ITA NO. 15/IND/2011). FOLLOWING IDENTICAL GROUND S HAVE BEEN RAISED BY THE REVENUE :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY ERRED I N :- (I) HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR THE BENEFITS U/S 11 AND 12 OF THE ACT AND THE PROVISIONS OF SECTION 30 IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE (II) HOLDING THAT THE PROVISIONS OF SECTION 13(2)(H) AND 13(2)(A) HAVE NO APPLICATION IN THE CASE OF THE ASSESSEE WITHOUT APPRECIATING THE FACT NARRATED IN THE ASSESSMENT ORDER AND THUS NOT TREATING THE 3 FUNDS DIVERTED TO ITS SISTER SOCIETY M/S DEVI SHAKUNTALA CHARITABLE FOUNDATION IN VIOLATION OF SECTION 13(2)(H) OF THE ACT. (III) HOLDING THAT THE ASSESSEE IS ENTITLED FOR DEPRECIATION AMOUNTING TO RS. 53,04,429/- (A.Y. 2002-03) AND RS. 1,33,29,272/- (A.Y. 2005-06) AS AN APPLICATION OF INCOME U/S 11 WITHOUT APPRECIATING THE FACTS NARRATED IN THE ASSESSMENT ORDER. (IV) DELETING THE ADDITION OF RS.34,05,546/- (A.Y.2002-03) AND RS. 1,46,62,229/- (A.Y. 2005-06) ON ACCOUNT OF ADVANCE TUITION FEE WHICH WAS THE INCOME DURING THE ABOVE ASSESSMENT YEARS (V) DELETING THE ADDITION OF RS. 8,75,459/- (A.Y. 2002-03) AND RS. 8,75,459/- (A.Y. 2005-06) MADE BY THE ASSESSING OFFICER ON ACCOUNT OF REFUNDABLE DEPOSITS. (VI) HOLDING THAT THE ASSESSEE IS FULLY ELIGIBLE FO R THE DEDUCTION CLAIMED AT RS. 3,63,73,250/- (A.Y. 2002-03) AND RS.2,33,89,836/- (A.Y. 2005-06) AS AN APPLICATION OF INCOME 4 U/S 11 AND 12 FOR THE ACQUISITION OF FIXED ASSETS, WITHOUT APPRECIATING THE FACTS NARRATED IN THE ASSESSMENT ORDER (VII) HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION U/S 11(1)(A) OF THE I.T. ACT, 1961 2. DURING HEARING OF THESE APPEALS, THE LEARNED CI T DR, SHRI KESHAV SAXENA, SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI R.N. GUPTA, DEFENDED THE IMP UGNED ORDERS BY FURTHER ASSERTING THAT THE IMPUGNED ISSUES ARE COVE RED IN FAVOUR OF THE ASSESSEE BY THE ORDER DATED 13 TH JULY, 2010 OF THE TRIBUNAL IN ITA NOS. 504 TO 542/IND/2007, 317 AND 318/IND/2006 AND ITA N O. 256/IND/2007 FOR DIFFERENT ASSESSMENT YEARS. THIS FACTUAL MATRI X WAS NOT CONTROVERTED BY THE REVENUE, THEREFORE, WE PROCEED TO DISPOSE OF THE IMPUGNED GROUNDS. 3. SO FAR AS GROUND NOS. 1 AND 2 ARE CONCERNED, WE FIND THAT THE TRIBUNAL HAS DISCUSSED THE ISSUE IN PARAS 15 TO19 O F THE SAID ORDER AS UNDER :- 15. THE AO, THEREAFTER RE-WORKED OUT THE INCOME DE RIVED FROM PROPERTY HELD BY THE SOCIETY AND MADE ADJUSTME NTS FOR VARIOUS ADDITIONS/CLAIMS REJECTED BY HIM AND FOUND THAT THE ASSESSEE HAD APPLIED ONLY A SUM OF RS. 4.57 CRORES AS AGAINST 5 REQUIRED AMOUNT OF RS. 7.85 CRORES, HENCE, NOT APPL IED 85 % OF ITS RECEIPT AND THEREFORE, THE ASSESSEE WAS NOT ENT ITLED FOR EXEMPTION U/S 11. THEREAFTER, THE AO RE-CASTED THE INCOME AND EXPENDITURE ACCOUNT AND WORKED OUT THE TOTAL IN COME AT RS. 3,86,39,632/-. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHEREIN IT WAS CONTEN DED THAT THE SOCIETY WAS REGISTERED U/S 12A OF THE INCOME-TAX AC T,1961, AND WAS RUNNING ENGINEERING COLLEGE AT BHOPAL, WHICH WA S REGISTERED WITH AICTE. THE LD. COUNSEL FURTHER SUBM ITTED THAT IN ASSESSMENT YEAR 2001-02 AND 2002-03, IT HAD BEEN HE LD THAT THE AO WAS NOT JUSTIFIED IN DENYING BENEFIT OF SECT IONS 11 & 12 OF THE ACT, AS THE ASSESSEE HAD NOT VIOLATED THE PR OVISIONS OF SECTION 11 OF THE ACT. THE ASSESSEE FURTHER SUBMITT ED THAT EVEN IF THE SURPLUS WAS GENERATED, THE EXEMPTION CO ULD NOT BE DENIED, IF THE SURPLUS SO GENERATED WAS USED FOR AD VANCEMENT OF EDUCATION, BEING THE PURPOSE OF ASSESSEE SOCIETY . THE ASSESSEE, IN THIS REGARD, RELIED ON THE FOLLOWING J UDICIAL DECISIONS :- (A) ARR TRUST VS. ACIT, 97 ITD 203 (CHENNAI) (B) CIT VS. RAJATHAN TEXT BOOK BOARD, 244 ITR 667 (RAJ) (C) ARYAN EDUCATIONAL SOCIETY VS. CIT, (2006) 8 (11) (I TCL)454 (DEL) (D) DY. CIT VS. ST.PAUL SECONDARY SCHOOL, 9 SOT 702 (DE L) (E) CIT VS. PULIKKAL MEDICAL FOUNDATION, 210 ITR 299 (K ER). 16. IT WAS ALSO CONTENDED THAT EXPENDITURE INCURR ED ON ACQUISITION OF FIXED ASSETS WAS ALSO A CASE OF APPL ICATION OF INCOME AND, THEREFORE, AMOUNT SPENT ON ACQUISITION OF FIXED ASSETS WAS LIABLE TO BE CONSIDERED AS APPLICATION O F INCOME. IN THIS REGARD, THE ASSESSEE RELIED ON FOLLOWING JUDIC IAL DECISIONS :- (A) GUJARAT HIGH COURT IN THE CASE OF SATYA VIJAY PATEL HINDU DHARAMSALA TRUST VS. CIT, 86 ITR 683 (GUJ). (B) S.RM. M. CT.M.TIRUPPANI TRUST VS. CIT, 230 ITR 636 (S. C.) (C) CIT VS. JANMABHUMI PRESS TRUST, 242 ITR 703. (D) CIT VS. INSTITUTE OF BANKING, 264 ITR 110 (MUM) 17. IT WAS ALSO SUBMITTED THAT IN THIS YEAR THE RE WAS A DEFICIT. HENCE, NO INCOME WAS ACCUMULATED AND SET APART AND, THEREFORE, THERE WAS NO QUESTION OF VIOLATION OF PR OVISO TO SUB SECTION (2) OF SECTION 11 OF THE ACT. IT WAS ALSO C ONTENDED THAT IN SUCH A CASE, THERE WAS NO REQUIREMENT OF ACCUMUL ATION AND SETTING APART OF INCOME OF 15 % U/S 11(1)(A) OF THE INCOME-TAX 6 ACT,1961. FOR THIS PROPOSITION, THE ASSESSEE RELIED ON THE DECISION OF THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF JAIPUR STOCK EXCHANGE VS. ITO, AS REPORTED IN 6 SOT 11. THE LD.CIT(A) HELD THAT THE APPELLANT WAS REGISTERED U/ S 12A AND THE LD.CIT(A)-I, BHOPAL IN ASSESSMENT YEAR 2001-01 AND 2002- 03 HAD ALSO HELD THAT OBJECT OF THE ASSESSEE INSTIT UTION WERE CHARITABLE WITHIN THE MEANING OF PROVISIONS OF SECT ION 2(15) OF THE ACT AND THE LD.CIT(A) CONCURRED WITH THIS FINDI NG OF THE LD.CIT(A)-I. THUS, AFTER CONSIDERING THIS POSITION AS WELL AS JUDICIAL DECISIONS CITED BY THE ASSESSEE, DIRECTED THE AO TO COMPUTE THE APPELLANTS INCOME IN ACCORDANCE WITH T HE PROVISIONS OF SECTION 11 & 12 OF THE ACT AND ALSO T O TREAT THE INVESTMENT IN FIXED ASSETS AS APPLICATION OF THE IN COME. 18. AS REGARD TO ALLEGED VIOLATION OF SECTION 1 3(2)(H) AND SECTION 13(2)(A), THE ASSESSEE SUBMITTED THAT DEVI SHAKUNTALA CHARITABLE FOUNDATION WAS ALSO EDUCATIONAL INSTITUT ION DULY REGISTERED U/S 12 OF THE ACT AND THE FUNDS WERE ADV ANCED TO SUCH FOUNDATION TO MEET THE REQUIREMENT TO CONSTRUC T THE BUILDING AND SINCE THIS INSTITUTION WAS ALSO ENGAGE D IN CHARITABLE CAUSE, NO INTEREST WAS CHARGED. IT WAS A LSO CONTENDED THAT NONE OF THE PERSONS OF THE ASSESSEE SOCIETY WERE HAVING SUBSTANTIAL INTEREST IN DEVI SHAKUNTALA CHARITABLE FOUNDATION NOR SUCH INSTITUTION WAS A PERSON FALLIN G UNDER SUB SECTION (3) OF SECTION 13. IT WAS ALSO SUBMITTED TH AT BOTH CHARITABLE INSTITUTIONS WERE DISTINCT AND SEPARATE AND THEY HAD SEPARATE SET OF MEMBERS AND OFFICE BEARERS AND, THE REFORE, THE FINDINGS OF THE AO WITH REGARD TO APPLICABILITY OF SECTION 13(2)(H) AND 13(2)(A) WERE WHOLLY INCORRECT. THE AS SESSEE ALSO SUBMITTED DOCUMENTARY EVIDENCE TO SUPPORT SUCH CLAI MS. THE LD.CIT(A) ACCEPTED THESE CLAIMS OF THE ASSESSEE AND THE RELEVANT FINDINGS OF THE LD.CIT(A) ARE AS UNDER :- I HAVE CONSIDERED THE SUBMISSIONS OF THE COUNSEL, AND THE CASE LAWS RELIED UPON BY HIM. THE REASONING OF THE AO IS ALSO SEEN. EXPLANATION (3) TO SUB-SECT ION (13) DEFINES THE SUBSTANTIAL INTEREST IN A CONCERN. THE AO HAS NOT PROVED AS TO HOW DEVI SHAKUNTALA CHARITABLE FOUNDATION FALLS WITHIN THE TWO SUB- CLAUSES, BECAUSE SUB-CLAUSE (I) APPLIES TO COMPANIE S, 7 WHICH HAVE SHARE CAPITAL. THE SUB-CLAUSE BECOMES APPLICABLE IN A SITUATION WHERE THE PERSONS REFERRE D TO IN CLAUSES (A), (B),(C), (CC) AND (D) HAVE SHARE - HOLDING OF 20 % AND ABOVE IN THE SAID COMPANY, WHICH IS NOT A CASE HERE. SUB-CLAUSE (II) IS ALSO N OT APPLICABLE, BECAUSE IT APPLIES TO CONCERN IN WHICH THE PERSONS REFERRED TO IN CLAUSES (A), (B), (C), (CC) AND (D) HAVING INTEREST OF 20 % OR MORE IN THE PROFITS OF S UCH CONCERN, WHICH IS ALSO NOT A CASE HERE. FURTHER, TH E APPELLANT INSTITUTION HAS ALSO NOT LENT THE INCOME OR THE PROPERTY OF THE INSTITUTION TO ANY PERSON REFER RED TO IN SUB-SECTION (3). THEREFORE, I AM OF THE VIEW THAT THE PROVISIONS OF SECTION 13(2)(H) AND 13(2)(A) HAV E NO APPLICATION IN THE CASE OF THE APPELLANT. I THER EFORE DECIDE THE GROUND NOS. 9 & 10 IN FAVOUR OF THE ASSESSEE. 19. AS REGARD TO THE AOS VIEW THAT THE ASSESS EE HAD VIOLATED PROVISIONS OF SECTION 13(1)(D)(I) READ WITH SECTION 11(5) OF THE INCOME-TAX ACT,1961, THE ASSESSEE SUBMITTED THAT INVESTMENTS MADE WERE NOT IN VIOLATION OF SECTION 11(5) OF THE ACT. IT WA S ALSO SUBMITTED THAT THE OWNER OF THE LAND WAS ASSESSEE SOCIETY, WHICH WAS DULY REFLECTED IN THE BALANCE SHEET OF THE SOCIETY AND THE NAME OF THE SOCIETY AS OWNER OF THE LAND WAS ALSO MENTIONED IN GOVERNMENT RECORDS. THUS, MERELY, BECAUSE THE NAME OF SHRI K.L. THAKRAL WAS MENTIONED IN THE REGISTRATION DOCUMENTS, WHICH WAS ALSO IN THE CAPACITY AS THE PRESIDENT OF THE SOCIETY, THE AO WRONGLY INFERRED THAT THE SAID LANDS WERE THE PROPERTY OF SHRI K.L. THAKRAL IN HIS INDIVIDUAL CAPACITY. THE LD.CIT(A) ACCEPTED THIS CLAIM OF THE ASSESSEE BY HOLDING AS UNDER :- I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE. I FIND THAT THE DETAILS OF SUCH LAND-HOLDINGS ARE GIV EN BY THE ASSESSING OFFICER IN PARA 9 OF HIS ORDER. TH E LANDS IN QUESTION WERE NOT PURCHASED IN THIS YEAR, BUT THEY WERE PURCHASED IN THE YEAR 1993 & 1998. IN THE SAID PARA THE NAME OF THE VENDEE HAS ALSO BEEN MENTIONED, AND FROM READING OF SUCH NAME IT 8 IS CLEAR THAT K.L.THAKRAL IN THE CAPACITY OF PRESID ENT HAS ACTED AS THE SIGNATORY TO THE DOCUMENT. THE AO HAS NOT DISPUTED THE FACT THAT ALL THE LANDS ARE IN THE POSSESSION OF THE SOCIETY. THE BUILDING HAS ALS O BEEN CONSTRUCTED ON THE LAND AT BHOPAL AND THE COLLEGE IS BEING RUN FROM THE SAID BUILDING. THE DOCUMENT PLACED BEFORE ME IN THE PAPER BOOK ALSO SHOWS THAT THE OWNERSHIP OF THE LANDS IS WITH THE APPELLANT INSTITUTION. THUS, I HOLD THAT THE PROVIS IONS OF SECTION 13(1)(D)(I) READ WITH SECTION 11(5) HAVE NO APPLICATION IN THIS CASE. THEREFORE, I DECIDE TH E GROUND NO.11 IN FAVOUR OF THE ASSESSEE. 4. THE TRIBUNAL ULTIMATELY IN PARA 34 OF THE AFORES AID ORDER HELD AS UNDER :- 34. AS REGARD TO ISSUES RAISED IN GROUND NOS. 2 & 3, WE FIND THAT NONE OF THE PERSONS OF THE ASSESSEE SOCIETY ARE HAVING SUBSTANTIAL INTEREST IN M/S. DEV I SHAKUNTALA THAKARAL AND CHARITABLE FOUNDATION AND THE LAND IS ALSO REGISTERED IN THE NAME OF THE ASSESSEE SOCIETY. HENCE, IN OUR OPINION, THE PROVISIONS OF SECTION 13(2)(H) READ WITH SECTION 13(2)(A) AND 13(1)(D)(1) ARE ALSO NOT APPLICABLE. T HIS VIEW IS BASED UPON THE DOCUMENTARY EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE IN REGARD TO THESE ISSUES. THUS, BOTH THESE GROUNDS ARE ALSO DISMISSED. 5. IF THE CONCLUSION DRAWN IN THE ORDER OF THE TRIB UNAL AND THE FACTS OF THE APPEAL UNDER CONSIDERATION ARE KEPT IN JUXTAPOS ITION AND ANALYSED, WE FIND THAT THE GRIEVANCE OF THE REVENUE IS THAT D EVI SHAKUNTALA THAKRAL CHARITABLE FOUNDATION IS A CONCERN IN WHICH THE PERSONS REFERRED TO IN CLAUSES (A), (B), (C), (CC) AND (D) HAS SUBSTANTIAL INTEREST. 9 HOWEVER, IF EXPLANATION (3) TO SECTION 13 OF THE IN COME TAX ACT IS ANALYSED, WE FIND THAT THE ASSESSEE SOCIETY IS REGI STERED UNDER THE SOCIETIES REGISTRATION ACT, 1973 AND THE REGISTRAR OF SOCIETIES HAS GRANTED A CERTIFICATE OF REGISTRATION. UNDER THE P ROVISIONS OF THE SOCIETIES ACT, NO MEMBER OF THE SOCIETY IS PERMITTE D TO SHARE THE PROFITS OF THE SOCIETY. THE CONTENTION OF THE ASSESSEE IS THAT SO FAR AS SECTION 11(5) OF THE ACT IS CONCERNED, IT PRESCRIBES THE FO RMS AND MODES OF INVESTING OR DEPOSITING THE MONEY REFERRED TO IN CL AUSE (B) OF SUB-SECTION (2) OF SECTION 11. SECTION 11(2) TALKS ABOUT APPLI CATION OF 85% OF THE INCOME FOR THE PURPOSES/CHARITABLE PURPOSES AS PER THE OBJECTS OF THE SOCIETY AND THE REMAINING 15% CAN BE ACCUMULATED AN D SET APART AND AT THE SAME TIME, THE ASSESSEE IS TO NOTIFY SUCH ACCUM ULATION TO THE ASSESSING OFFICER. ANOTHER CONTENTION WAS ALSO RAIS ED BY THE ASSESSEE THAT THE ASSESSEE DID NOT ACCUMULATE OR SET APART T HE RESERVE, THEREFORE, THERE IS NO QUESTION OF ATTRACTING THE PROVISION. WE FURTHER FIND THAT DEVI SHAKUNTALA THAKRAL CHARITABLE FOUNDATION IS NOT A P ERSON FALLING U/S 13(3) OF THE ACT AS THERE IS NO SUBSTANTIAL INTERES T OF ANY PERSON. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSIN G OFFICER THAT DEVI SHAKUNTALA THAKRAL CHARITABLE FOUNDATION FALLS WITH IN THE CLAUSES OF SECTION 13. THE SUB-CLAUSES BECOME APPLICABLE IN A SITUATION WHERE THE PERSONS REFERRED TO IN VARIOUS CLAUSES OF SECTION 1 3 HAVE SHARE HOLDING OF 20% AND ABOVE IN A SAID COMPANY WHICH IS NOT THE CASE HERE. AS 10 MENTIONED EARLIER, THE TRIBUNAL VIDE ORDER DATED 13 .7.2010 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AGAINST WHICH N EITHER CONTRARY FACTS OR CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE BY EITHER SIDE AND SPECIFICALLY BY THE REVENUE, THEREFORE, WE FIND NO INFIRMITY IN THE STAND OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IT I S AFFIRMED. 6. SO FAR AS ENTITLED FOR CLAIM OF DEPRECIATION AND APPLICATION OF INCOME U/SS 11 AND 12 IS CONCERNED, WE FIND THAT TH E TRIBUNAL IN THE AFORESAID ORDER DATED 13 TH JULY, 2010 HAS DISCUSSED THE ISSUE AND ULTIMATELY IN PARA 31 HAS DECIDED THE ISSUE AS UNDE R : 31. AS REGARD TO ALLOWABILITY OF DEPRECIATION ON ASSETS , WHOSE COST HAS BEEN TREATED AS AN APPLICATION OF INCOME, WE FIND THAT NOW IT HAS BECOME SETTLED POSI TION THAT BOTH THESE ASPECTS ARE DIFFERENT AND THE ASSET S UTILIZED FOR THE ATTAINMENT OF OBJECTS OF THE ASSES SEE SOCIETY, THEN THE ASSESSEE CAN CLAIM DEPRECIATION THEREON. THIS VIEW IS DULLY SUPPORTED BY THE DECIS ION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. RAIPUR PALLOTINE SOCIETY AS REPORTED IN 50 TAXMAN 2 33 ( M.P.). THUS, THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 7. IF THE TOTALITY OF FACTS IS ANALYSED, THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS THAT IN THE ABSENCE OF SPECIFIC P ROVISIONS IN THE ACT, DEPRECIATION CANNOT ALLOWED ON THE ASSET WHOSE COST HAS ALREADY BEEN ALLOWED FOR THE PURPOSES OF APPLICATION FOR CLAIMIN G EXEMPTION U/S 11 READ WITH SECTIONS 12 AND 13 OF THE ACT WHEREAS THE CLAIM OF THE 11 ASSESSEE IS THAT IDENTICALLY THE DEPRECIATION HAS B EEN ALLOWED BY THE TRIBUNAL IN THE CASE OF MADHYA PRADESH MADHYAM AND ALSO BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T V. RAIPUR PALLOTINE SOCIETY (50 TAXMAN 233) (MP). IT IS SEEN THAT THE TRIBUNAL IN THE ORDER DATED 13.7.2010 BY FOLLOWING THE AFORESAID ORDER FR OM THE HON'BLE JURISDICTIONAL HIGH COURT DECIDED THE ISSUE IN FAVO UR OF THE ASSESSEE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION FROM THE HON'BLE HIGH COURT, WE FIND NO INFIRMITY IN THE ORDER OF THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS). IT IS AFFIRMED. 8. THE NEXT GROUND PERTAINS TO DELETING THE ADDITIO N ON ACCOUNT OF ADVANCE TUITION FEE. THE LEARNED CIT DR SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDER. WE FIND THAT THIS GROUND RELATES T O ADDITION OF RS.34,05,546/- (A.Y. 2002-03) AND RS.1,46,62,229/- (A.Y. 2005-06). THE LEARNED ASSESSING OFFICER HAS DELIBERATED UPON THIS ISSUE IN PARAS 5.6 AND 5.7. THE STAND OF THE REVENUE IS THAT THE INCOM E BY WAY OF ADVANCE FEE RECEIVED DURING THESE YEARS IS LIABLE TO BE ACC OUNTED AS SUCH AND OF INCOME SHOULD BE MADE OUT OF THESE INCOMES. IF THE CHART REPRODUCED AT PAGE 14 OF THE IMPUGNED ORDER IS ANALYSED, THERE IS A SPECIFIC FINDING THAT THE CLOSING BALANCES APPEARING IN THE ACCOUNTS FOR THE MONTH OF APRIL, 2002 TO JUNE, 2002 WHICH RELATES TO ASSESSME NT YEAR 2003-04 HAS 12 ALREADY BEEN TAXED AND IF THE CONTENTION OF THE REV ENUE IS CONSIDERED, IT WILL AMOUNT TO DOUBLE TAXATION. THE REMAND REPORT F ROM THE ASSESSING OFFICER AND THE REJOINDER TO THE REMAND REPORT HAS ALREADY BEEN DISCUSSED AND EXAMINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). ADMITTEDLY, THE INCOME FROM ADVANCE FEE WAS SHOWN BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR FOR FU LL 12 MONTHS AND THE SAME METHOD OF ACCOUNTING HAS BEEN REGULARLY EM PLOYED BY THE ASSESSEE IN EARLIER YEARS ALSO. SINCE NO CONTRARY FACTS WERE BROUGHT TO OUR NOTICE, THEREFORE, WE FIND NO INFIRMITY IN THE STAND OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IT IS AFFIRM ED. 9. SO FAR AS REFUNDABLE DEPOSITS ARE CONCERNED, THE STAND OF THE REVENUE IS THAT THE BALANCE-SHEET OF THE SOCIETY SH OWS CERTAIN DEPOSITS WHICH HAVE NOT BEEN REFLECTED IN THE INCOME AND EXP ENDITURE ACCOUNT AND THE SAME HAS BEEN DIRECTLY TAKEN TO LIABILITY S IDE OF THE BALANCE- SHEET. BASED ON THESE FINDINGS, THE INCREMENTAL DI FFERENCE I.E. DIFFERENCE BETWEEN CLOSING AND OPENING BALANCES WAS ADDED TO THE INCOME OF THE ASSESSEE. THE STAND OF THE ASSESSEE IS THAT THESE AMOUNTS REFLECT LIABILITIES I.E. CAUTION MONEY, ETC . WHICH ARE REFUNDABLE TO THE STUDENTS ON LEAVING THE COLLEGE. IT WAS ALSO CO NTENDED THAT SOME OF THE AMOUNTS ARE DEPOSITS OF CONTRACTORS AS EARNEST MONEY WHO ARE ENGAGED IN CONSTRUCTION WORK AND THESE ARE ALSO REF UNDABLE. THE 13 REMAND REPORT FROM THE ASSESSING OFFICER AND THE RE JOINDER FROM THE ASSESSEE WERE EXAMINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IDENTICALLY, THE TRIBUNAL HAS DECIDED T HE ISSUE IN FAVOUR OF THE ASSESSEE. IN THE ABSENCE OF ANY CONTRARY FACTS OR DECISION FROM HON'BLE HIGHER FORUM, THE STAND OF THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) IS AFFIRMED. 10. SO FAR AS ELIGIBILITY FOR DEDUCTION AS AN APPL ICATION OF INCOME U/S 11 FOR ACQUISITION OF FIXED ASSETS IS CONCERNED , WE FIND THAT ACQUISITION OF FIXED ASSETS IS A NECESSARY REQUIREM ENT FOR IMPARTING EDUCATION AND ANY APPLICATION OF MONEY FOR ACQUIRIN G THESE ASSETS ARE FOR THE FULFILMENT OF THE OBJECTS OF THE SOCIETY. IN THE ABSENCE OF FIXED ASSETS LIKE BUILDINGS, FURNITURE, ETC., THE OBJECTS OF THE SOCIETY CANNOT BE ACHIEVED, THEREFORE, IT IS RIGHTLY AN APPLICATION O F INCOME, CONSEQUENTLY, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER AND CONF IRM THE SAME. 11. THE LAST GROUND PERTAINS TO ELIGIBILITY FOR DED UCTION U/S 11(1)(A) OF THE ACT. WE FIND THAT IT IS A STATUTORY DEDUCTION AND HAS TO BE ALLOWED. THE GRIEVANCE OF THE ASSESSING OFFICER IS THAT THE SOCIETY HAS VIOLATED THE PROVISIONS OF SECTION 13, THEREFORE, THIS DEDUC TION IS NOT ALLOWABLE, WHEREAS THE STAND OF THE ASSESSEE IS THAT DEFICIT I .E. EXCESS OF EXPENDITURE OVER INCOME, HAS BEEN SHOWN BY THE ASSE SSEE AND IN THE ABSENCE OF ANY INCOME, THE DEDUCTION U/S 11(1)(A) I .E. 15% OF INCOME 14 WAS NOT CLAIMED. THERE IS A FINDING IN THE IMPUGNE D ORDER THAT THERE WAS DEFICIT OF RS.1,64,73,040/- (ASSESSMENT YEAR 20 02-03) AND RS.1,37,02,912/- FOR THE ASSESSMENT YEAR 2005-06. IN VIEW OF THIS UNCONTROVERTED FINDING, WE ARE OF THE CONSIDERED OP INION THAT THERE IS NO VIOLATION OF THE PROVISIONS OF SECTION 13 OF THE AC T, THEREFORE, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 11(1)(A) OF THE ACT, CONSEQUENTLY, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER AND CONF IRM THE SAME. IN THE RESULT, BOTH THESE APPEALS OF THE REVENUE A RE DISMISSED. 12. SO FAR AS THE CROSS OBJECTION OF THE ASSESSEE I S CONCERNED, THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER REGARDI NG APPROVING THE VALIDITY OF REOPENING U/S 148 OF THE ACT IS CONCERN ED, WE FIND THAT THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT PURSUANT TO SCRUTINY ASSESSMENT, THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT, TH EREFORE, IT IS A REAPPRAISAL OF SAME FACTS WHICH ARE ALREADY ON RECO RD, CONSEQUENTLY, IT IS A CHANGE OF OPINION. THERE IS A CLEAR FINDING TH AT THE REASSESSMENT PROCEEDINGS WERE INITIATED AFTER ISSUE OF NOTICE U/ S 148(2) AND THE REASSESSMENT WAS FINALISED AFTER AFFORDING DUE OPPO RTUNITY TO THE ASSESSEE. THERE IS ALSO AN UNCONTROVERTED FINDING T HAT THE REASONS RECORDED, PRIOR TO ISSUANCE OF NOTICE U/S 148 OF TH E ACT, WERE SUPPLIED TO THE ASSESSEE. THERE IS ANOTHER UNCONTROVERTED FIND ING THAT NO EVIDENCE OR MATERIAL WAS ADDUCED BY THE ASSESSEE SHOWING THA T ALL THE FACTS WERE 15 CONSIDERED DURING ORIGINAL ASSESSMENT STAGE, CONSEQ UENTLY, WE FIND NO INFIRMITY IN THE STAND OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND AFFIRM THE SAME, THEREFORE, THE CROSS OBJECTION OF THE ASSESSEE IS HAVING NO MERIT. FINALLY, THE APPEALS OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN IN THE PRE SENCE OF LEARNED REPRESENTATIVES FROM BOTH THE SIDES AT THE CONCLUSI ON OF THE HEARING. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22.12.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-