HASNEN EDUCATION WELFARE TRUST,JUNAGADH V. .ITO EXEMPTION WARD 2, RAJKOT, RAJKOT

ITA 195/RJT/2024

AI Insights

The case involves the Hasnen Education & Welfare Trust, which appealed against the order of the Learned Commissioner of Income Tax (Appeals) concerning the assessment year 2019-20. The primary contention was the incorrect taxation of gross income instead of net income after deducting expenses. The trust argued that its income, being less than Rs. 1 crore and used entirely for educational purposes, should not be taxed on a gross basis but rather on the net income, which was declared as nil after expenses. The Revenue argued that the trust did not file its return within the prescribed time, leading to the disallowance of its claims. The Tribunal directed a re-assessment, focusing on the net income and allowing the trust to present its case afresh.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470478 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: SAMIR JANI
• Section: 250; 11; 12AA; 139(1); 10(23C)

Judgement Text

"ITA No.195/Rjt/2024 (AY-19-20) Hasnen Edu & Welfare Trust 1 आयकर अपीलीय अिधकरण, राजकोट Ɋायपीठ, राजकोट । IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./ITA No.195/RJT/2024 िनधाŊरण वषŊ / Assessment Year: (2019-20) Hasnen Education & Welfare Trust, 308/309, Suvidha Complex, Above VMC Bank Talav Street, Junagadh-362 001 बनाम Vs. Income Tax Exemption- Ward-2, Rajkot, IT Office, New Aaykar Bhavan, Vatika, Rajkot-400 020 Öथायीलेखासं./जीआइआरसं./PAN/GIR No. AABTH 3359 N (अपीलाथȸ/Assessee) .. (Ĥ×यथȸ/Respondent) Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri Samir Jani, AR राजèव कȧ ओर से/Revenue by : Shri Abhimanyu Singh Yadav, Sr-DR सुनवाई कȧ तारȣख/Date of Hearing : 24/09/2024 घोषणा कȧ तारȣख/Date of Pronouncement : 18/12/2024 आदेश/Order Per Dr. Arjun Lal Saini, A.M Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2019-20, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)/ADDL/JCIT(A)-13, Mumbai [in short ‘Ld.CIT(A)’], under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), dated 08.02.2024. 2. The grounds of appeal raised by the assessee are as follows: “1. The Ld.JCIT/ADDL.CIT(Appeals) has erred in passing the order dated 08.02.2024 without granting a Video Conference. The same is prayed for quashing. 2. The Ld.JCIT/ADDL.CIT(Appeals) has erred in not adjudicating Ground No.2 and 3 for taxing net income instead of gross income after deduction of expenses incurred and that of taxing real income only and not gross income. the assessee prays for directing the Appellate Authority to tax real income. ITA No.195/Rjt/2024 (AY-19-20) Hasnen Edu & Welfare Trust 2 3. The assessee seeks leave to add, amend, alter or modify any of the grounds at or before the time of final hearing.” 3. At the outset, Ld. Counsel for the assessee submitted that assessee’s gross income is to the tune of Rs.4,75,648/- and assessee has shown the net loss to the tune of Rs.3,048/- (Rs.4,78,696 Expenses – 4,75,648 Income). The Ld. Counsel for the assessee contended that gross income of the assessee should not be taxable in the hands of assessee and only net income should be taxable. Therefore, the matter may be restored back to the file of Assessing Officer with a direction to examine the income and expenses of the assessee and then tax the net income / loss of the assessee for the year under consideration. 4. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue submitted that assessee-trust has not filed, its return of income within prescribed time limit, therefore, the Centralized Processing Center (‘CPC’ for short, the Assessing Officer) has disallowed the claim of assessee. Therefore, Ld. DR stated that if the matter is remitted back to the file of Assessing Officer for fresh adjudication then the assessee should also explain the reason of late filing its return of income before Assessing Officer and should file the relevant documents and evidences before Assessing Officer, to compute the net taxable income. 5. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that assessee had filed its Income Tax Return (return of income) on 24.06.2020, declaring total income at Rs. NIL, after deduction of expenditure for the object of the trust from the Gross Total Income. The Gross Income was at Rs. 4,75,648/-, whereas the application for the object of the Trust was more than Rs.4,75,648/-, that is, Rs.4,78,696/-, as such, after adjustment of expenditure, the Net Taxable Income was shown at Rs. ITA No.195/Rjt/2024 (AY-19-20) Hasnen Edu & Welfare Trust 3 NIL. We note that assessee- trust is not registered u/s 12AA of the Act, and therefore, as such did not claim exemption under section 11 of the Act but offered Net Income after application of expenditure for the object of the Trust amounting to Rs.4,78,696/-. Before learned CIT(A), it was argued by the assessee that since the assessee Trust is for imparting education and has an income of Rs.4,75,648/-, which is much less than Rs.1 Cr, the assessee Trust is also eligible for exemption u/s 10(23C (iiiad) of the Act. Section 10(23C)(iiiad) of the Income Tax Act, 1961, is a provision that exempts income earned by any university or educational institution from taxation. This section covers various types of income that an educational institution can earn, including income from research grants, donations, and other sources. The objective of this provision is to encourage educational institutions to invest in research and development, which can help in the growth and development of the country. However, the assessee did not file the return of income within the time limit, prescribed under section 139(1) of the Act, therefore, ld. CIT(A) held that assessee is not eligible for exemption under Section 10(23C) (iiiad) of the Act. The ld CIT(A) also noticed that assessee has not fulfilled certain conditions such as, an educational institution must meet certain criteria, that is, first and foremost, it must be approved by the government of India. Additionally, the institution must be a non-profit organization, which means that its primary objective must be the promotion of education rather than making profits. Therefore, assessee`s appeal was dismissed by the ld. CIT (A). 6. In these circumstances, we are of the view that assessee`s income may be computed by applying the concept of ‘income from business or profession’, therefore, from the gross total income, the expenses, should be deducted, to arrive at the net taxable income or loss, if any. We note that assessee filed its return of income late therefore the CPC, Bengaluru, (Assessing Officer) has disallowed the claim of assessee. Before Ld.CIT(A), the assessee took the ITA No.195/Rjt/2024 (AY-19-20) Hasnen Edu & Welfare Trust 4 ground that instead of assessing gross income of assessee, the net income or loss should be assessed, because income-tax, is to be paid on the “net income” and not on the ‘gross income’. Therefore, we direct the Assessing Officer to examine the income and expenditure account of assessee and other relevant documents and evidences furnished by assessee, to examine and to compute the net income or net loss, if any, and adjudicate the issue afresh in accordance with law. Needless to direct that before passing the order afresh, the Assessing Officer shall allow opportunity of hearing to the assessee. The assessee is also directed to furnish all the evidences at the earliest possible of time before Assessing Officer as and when call for. In the result, grounds raised by the assessee are allowed for statistical purposes. 7. In the result, the appeal of the assessee is allowed for statistical purposes, in above terms. Order is pronounced in the open court on 18/12/2024 Sd/- Sd/- (DINESH MOHAN SINHA) (DR. ARJUN LAL SAINI) Æयाियक सदÖय/JUDICIAL MEMBER लेखा सदÖय/ACCOUNTANT MEMBER राजकोट /Rajkot िदनांक/ Date: 18/12/2024 DKP Outsourcing Sr.P.S True Copy आदेश कì ÿितिलिप अúेिषत/ Copy of the order forwarded to :  अपीलाथê/ The Assessee  ÿÂयथê/ The Respondent  आयकर आयुĉ/ CIT  आयकर आयुĉ(अपील)/ The CIT(A)  िवभागीय ÿितिनिध, आयकर अपीलीय आिधकरण, राजकोट/ DR, ITAT, RAJKOT  गाडªफाईल/ Guard File By order/आदेश से, सहायक पंजीकार / Sr. PS आयकर अपीलीय अिधकरण, राजकोट "