Shri Shivaji Education Society, Amaravati V. A.C.I.T Central Circle, Akola

ITA 1/NAG/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1648 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 01-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Unexplained cash credit; Depreciation; Loose papers; Charitable institution; Benefit of exemption
• Section: 143(3); 133A; 153A; 80G; 12A; 12AA; 131; 68; 132; 11

Judgement Text

1 ITA NOS. 01 & 06/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.01/NAG./2013 ( ASSESSMENT YEAR : 2008 09) SHRI SHIVAJI EDUCATION SOCIETY, SHIVAJI NAGAR, AMRAVATI 444601. PAN AAETS1500P APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, AKOLA. .. RESPONDENT ITA NO. 06/NAG./2013.____ ( ASSESSMENT YEAR : _2008 09) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, AKOLA. APPELLANT V/S SHRI SHIVAJI EDUCATION SOCIETY, SHIVAJI NAGAR, AMRAVATI 444601. .. RESPONDENT 2 ITA NOS. 01 & 06/NAG/2013 ASSESSEE BY : SHRI K.P. DEWANI. REVENUE BY : SHRI NARENDRA KANE. DATE OF HEARING 07 08 2015 DATE OF ORDER 24/09/2015 O R D E R PER MUKUL K. SHRAWAT, J.M. THESE CROSS APPEALS, ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE DEPARTMENT, HAVE EMANATED FROM THE ORDER DATE 30 TH OCTOBER 2012, PASSED BY THE LEARNED CIT(A) I, NAGPUR, FOR THE ASSESSMENT YEAR 2008 09. WE SHALL FIRST DEAL WITH THE APPEAL FILED BY THE ASSESSEE. (A) ASSESSEES APPEAL IN ITA NO.01/NAG./2013__ AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE HAS INFORMED THAT THE MAIN GROUND OF THE ASSESSEE IS IN RESPECT OF THE ELIGIBILITY OF 3 ITA NOS. 01 & 06/NAG/2013 EXEMPTION PRESCRIBED IN THE STATUTE IN RESPECT OF AN EDUCATIONAL INSTITUTION. IN THIS REGARD, FOLLOWING GROUNDS WERE R AISED: 1 THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT INCOME OF ASSESSEE IS EXEMPT UNDER SECTION 10(23C)(IIIAB) OF I.T. ACT 1961. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 10(23C)(IIIAB) OF I.T. ACT , 1961. 2. THE ASSESSING OFFICER HAS DENIED THE BENEFIT PRESCRIBED UNDER SECTION 10(23C)(IIIAB) OF THE ACT TO THE ASSESSEE AND THEREUPON ASSESSED THE INCOME AT ` 33,21,59,670/ - , VIDE AN ORDER PASSED UNDER SECTION 143(3) DATED 29 TH DECEMBER 2009. THE REASONS FOR NOT GRANTING EXEMPTION UNDER SECTION 10(23C) AS WELL AS THE CONNECTED FACTS IN THE SAID CORRESPONDING ASSESSMENT ORDER WERE AS UNDER. 2.1 IN THE ASSESSMENT ORDER, THERE WAS A MENTION OF A SEARCH UNDER SECTION 132 OF THE ACT, WHICH WAS CONDUCTED ON ONE DR . PADMAKAR SOMWANSHI, DEAN OF MEDICAL COLLEGE, (VIZ., DR. PUNJABRAO DESHMUKH MEDICAL COLLEGE). THE SAID SEARCH WAS CONDUCTED ON 2 ND AUGUST 2007. 4 ITA NOS. 01 & 06/NAG/2013 DURING SEARCH, AN UNACCOUNTED CASH OF ` 46,17,000/ - , WAS FOUND AND SEIZED FROM THAT PERSON. ACCORDING TO THE A SSESSING OFFICER, CERTAIN INCRIMINATING DOCUMENTS HAVE ALSO BEEN SEIZED DURING THE SEARCH. THOSE DOCUMENTS WERE SEIZED FROM THE OFFICE OF THE DEAN, MARKED BY REVENUE AS ANNEXURE B 1 OF PANCHANAMA DATED 23 RD AUGUST 2007. LOOSE PAPERS WERE STATED TO BE ORI GINAL DONATION RECEIPTS ISSUED BY THE ASSESSEE SOCIETY VIZ. SHRI SHIVAJI EDUCATION SOCIETY. BECAUSE OF THE REASON THAT THOSE DOCUMENTS BELONGED TO THE ASSESSEE SOCIETY, THEREFORE, NOTICE UNDER SECTION 153C OF THE ACT DATED 17 TH JANUARY 2008, WAS ISSUED TO THE ASSESSEE FOR THE RESPECTIVE YEARS. AT THIS JUNCTURE, IT IS WORTH TO MENTION THAT FOR THE ASSESSMENT YEAR 2002 03, 2003 04 AND 2004 05, THE APPEALS OF THE REVENUE IN ITA NO.1, 2 AND 3/NAG./2012, HAVE BEEN DECIDED BY THE TRIBUNAL, NAGPUR BENCH, VIDE ORDE R DATED 12 TH SEPTEMBER 2014 . IN THE SAID DECISION, IT WAS HELD THAT ASSUMPTION OF THE JURISDICTION UNDER SECTION 153C OF THE ACT IN THE CASE OF THE ASSESSEE WAS UNWARRANTED IN THE ABSENCE OF ANY INCRIMINATING MATERIAL. APPEALS FOR THOSE YEARS FILED BY THE REVENUE DEPARTMENT HAVE BEEN DISMISSED. THEREAFTER, FOR THE ASSESSMENT YEAR 2005 06, 2006 07 AND 2007 08 IN IT(SS)A NO.19 AND 20/NAG./2012 AND ITA NO.5/NAG./2013, VIDE ORDER 5 ITA NOS. 01 & 06/NAG/2013 DATED 30 TH APRIL 2012, THE TRIBUNAL, NAGPUR BENCH, HAS FOLLOWED EARLIER DECISION O F THE TRIBUNAL ON THE ISSUE OF LEGALITY OF THE PROVISIONS OF SECTION 153C OF THE ACT AND FINALLY, DISMISSED THOSE APPEALS OF THE REVENUE. SINCE REST OF THE YEARS HAVE ALREADY BEEN DECIDED, THEREFORE, NOW THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2 008 09, IS TO BE ADJUDICATED HEREIN BELOW. THE ASSESSING OFFICER HAS MENTIONED THAT THE ASSESSEE HAS NOT FURNISHED THE REGISTRATION UNDER SECTION 12A(A) OF THE ACT. ACCORDING TO THE ASSESSING OFFICER, THE RECEIPTS OF THE ASSESSEE WERE THE INCOME FOR THE AS SESSMENT YEAR 2008 09. THE ASSESSING OFFICER HAS LISTED THE DETAILS OF THE RECEIPTS AS UNDER: AS PER THE SUBMISSIONS THE RECEIPTS OF THE ASSESSEE SOCIETY FOR A. Y. 2008 - 09) .DE, A) DONATIONS RS. 1,99,41,203/ - ' B) SMRUTI BHAVAN DONATION RS. 3,00,000/ - ' C) BANK INTEREST RS. 9,96,205/ .: D) BUILDING RENT RS. 44,69,502/ - . 'X' E) AGRICULTURAL INCOME RS. 19,64,403/ - X 1) INCOME FROM PRODUCTION CENTRE RS. 1,09,138/ - G) INCOME FROM PRINTING PRESS RS. 18,48,181( - H) INCOME FROM SWIMMING POOL RS. 5,23,186/ - I) INCOME FROM MEDICAL STORE RS. 27,83,404/ -- .. J) INCOME FROM OTHER SOURCES RS. 26,76,72,813/ - K) ADMINISTRATIVE CHARGES RS. 3,68,680/ - 30 TR>. ' \ 6 ITA NOS. 01 & 06/NAG/2013 2.2 THE ADMITTED FACTUAL POSITION, AS NOTED BY THE ASSESSING OFFICER, WAS THAT THE ASSESSEE SOCIETYS MAIN RECEIPT WAS GOVERNMENT GRANT TO THE EXTENT OF 95% OF THE TOTAL RECEIPTS. AS PER THE COMPUTATION OF INCOME ENCLOSED ALONG WITH THE RETURN OF INCOME DECLARING NIL INCOME, THE ASSESSEE HAD CLAIMED THAT THE ACTIVITIES WERE CHARITABLE IN NATURE, THEREFORE, THE ENTIRE RECEIPTS / INCOME WERE EXEMPT UNDER SECTION 11 OF THE ACT. HOW EVER, THE ASSESSING OFFICER HAS ISSUED A SHOW CAUSE NOTICE THAT IN THE ABSENCE OF REGISTRATION UNDER SECTION 12A, THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 10(23C) OF THE ACT. IN THIS REGARD, THE ASSESSING OFFICER HAS ALSO NOTED THAT THE AS SESSEE HAD NOT FILED THE AUDIT REPORT IN THE PRESCRIBED FORM NO.10B R/W RULE 17B ALONG WITH THE RETURN OF INCOME. ON THE OTHER HAND, THE ASSESSEE HAS INSISTED THAT THE SOCIETY WAS IN EXISTENCE SINCE THE YEAR 1932 AND THE REGISTRATION WAS ALWAYS GRANTED UND ER SECTION 80B OF THE ACT. SINCE APPROVAL UNDER SECTION 80G WAS GRANTED, THEREFORE, NATURALLY, THE ASSESSEE WAS HAVING REGISTRATION UNDER SECTION 12A(1)(A) OF THE ACT. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE APPROVAL UNDER SECTION 80G 7 ITA NOS. 01 & 06/NAG/2013 WAS A DIFFERENT PROCEDURE THAN THE REGISTRATION UNDER SECTION 12A OF THE ACT. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE WAS NOT ENTITLED FOR EXEMPTION UNDER SECTION 11 OF THE ACT AS WELL. RELIANCE WAS PLACED ON CIT V/S U.P. FOREST CORPORATION, [1998] 165 TAXMAN 533 (SC) : 230 ITR 945 (SC) AND A DECISION OF CIT V/S RED ROSE SCHOOL, [2007] 212 CTR 394 (ALL.). THE ASSESSING OFFICER HAS CONCLUDED THAT IN ORDER TO AVAIL EXEMPTION FROM TAX UNDER THE PROVISIONS OF SECTION 11, IT IS SIN QUA NON TO OBTAIN THE REGI STRATION UNDER SECTION 12A / 12AA OF THE ACT. 2.3 THE NEXT OBJECTION OF THE ASSESSING OFFICER WAS THAT THE INSTITUTION WAS NOT EXISTED SOLELY FOR EDUCATIONAL PURPOSES. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE IS RUNNING A MEDICAL STORE, A PRODUCTION C ENTRE, A PRINTING PRESS, SWIMMING POOL, ETC. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE WAS EARNING SUBSTANTIAL PROFIT FROM THOSE ACTIVITIES. IT WAS ALSO FOUND BY THE ASSESSING OFFICER THAT THE ACTIVITIES WERE MANAGED BY THE ASSESSEE SOCIETY AND NOT BY THE CONNECTED EDUCATIONAL INSTITUTIONS. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE WAS MAKING A SYSTEMATIC PROFIT OUT OF THE BUSINESS OF FURNITURE PRODUCTION, OFF SET PRINTING, MEDICAL STORE AND SWIMMING TANK. THERE WAS A PROFIT MOTIVE AC TIVITIES OF THE ASSESSEE AS 8 ITA NOS. 01 & 06/NAG/2013 PER THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS PLACED RELIANCE IN THE CASE OF YOGIRAJ CHARITY TRUST V/S CIT, [1976] 103 ITR 777 (SC), CHAIRMAN, AP WELFARE FUND V/S CIT, [1983] 143 ITR 82 (A.P) AND CIT V/S QUEENS EDUCATIONAL SOCIETY & ANR., [2009] 223 CTR 395 (UTTARAKHAND). FOLLOWING THESE DECISIONS, THE ASSESSING OFFICER DRAWN A CONCLUSION THAT THE MOTIVE IN SOME OF THE ACTIVITIES WAS PROFIT EARNING, THEREFORE, THE CASE OF THE ASSESSEE WAS NOT COVERED UNDER SECTIO N 10(23C) OF THE ACT. THE SOCIETY WAS NOT EXISTED SOLELY FOR EDUCATIONAL PURPOSE BUT ALSO EARNING BUSINESS WITH THE MOTIVE TO EARN PROFIT. HE HAS ALSO HELD THAT THE PROFIT EARNED WAS TAXABLE IN THE HANDS OF THE ASSESSEE. 2.4 ONE MORE REASON FOR NOT GRANTING E XEMPTION WAS THE SEARCH ACTION ON A DEAN OF THE MEDICAL COLLEGE. THE ASSESSING OFFICER HAS REMARKED THAT THE SAID MEDICAL COLLEGE WAS UNDER THE AEGIS OF ASSESSEE SOCIETY. CERTAIN INCRIMINATING DOCUMENTS WERE SEIZED FROM THE OFFICE OF THE DEAN WHICH WERE CO NNECTED WITH THE ACTIVITY OF THIS SOCIETY. THE ASSESSING OFFICER HAS REPRODUCED THE CONTENTS OF THE DIARY IDENTIFIED AS DAINANDINI DIARY . SOME OF THE ENTRIES WERE ALSO REPRODUCED IN THE ASSESSMENT ORDER. ON THE OTHER HAND, THE ASSESSEE HAS DISOWNED DIARI ES. ACCORDING TO THE ASSESSEE, THERE WERE CERTAIN 9 ITA NOS. 01 & 06/NAG/2013 NOTINGS IN THE DIARY WHICH WERE MADE BY ONE SHRI V.M. PATIL, THE ACCOUNTANT OF THE MEDICAL COLLEGE, THEREFORE, THE ASSESSEE SOCIETY HAD NOTHING TO DO WITH THOSE ENTRIES MADE IN THE SEIZED DIARY. IT WAS EXPL AINED THAT THE ACCOUNTS OF THE MEDICAL COLLEGE WERE REGULARLY RECORDED ON DAY TO DAY BASIS IN THE CASH BOOK, THEREFORE, ENTRIES IN THE DIARIES BELONG TO THE MEDICAL COLLEGE AND NOT TO THE ASSESSEE SOCIETY. THE ASSESSING OFFICER HAS REPEATED THAT EVEN IF IT WAS CORRECT THAT THE DIARY PERTAINED TO THE ACTIVITY OF THE MEDICAL COLLEGE BUT THE FINANCIAL ACTIVITIES OF THE SAID MEDICAL COLLEGE WAS WITHIN THE AEGIS OF THE ASSESSEE SOCIETY. THE DIARY WAS MAINTAINED BY AN ACCOUNTANT OF THE MEDICAL COLLEGE WHO IS WORK ING UNDER THE DEAN OF THE MEDICAL COLLEGE AND THE MEDICAL COLLEGE IS RUN BY THE ASSESSEE SOCIETY, THEREFORE, THE ASSESSEE COULD NOT DISOWN THE ENTRIES MADE IN THE SAID DIARY. 2.5 IN RESPECT OF DIARY ON WHICH NOTINGS HAVE BEEN MADE BY SHRI V.M. PATIL, ACCOUNTA NT OF THE MEDICAL COLLEGE, SUBMISSION OF THE ASSESSEE WAS THAT THE SOCIETY HAD NOTHING TO DO WITH THOSE ENTRIES. THE SHIVAJI EDUCATION SOCIETY, THE APPELLANT, HAD NOT MAINTAINED THE SAID DIARY. MR. PATIL BEING AN ACCOUNTANT OF THE MEDICAL COLLEGE, WAS WORK ING UNDER THE DEAN OF THE MEDICAL COLLEGE. HOWEVER, THE 10 ITA NOS. 01 & 06/NAG/2013 ASSESSING OFFICER HAS POINTED OUT THAT THE TRANSACTIONS WERE RELATED TO THE SOCIETY. HE HAS REFERRED THAT SOME OF THE AMOUNTS WERE CONNECTED TO THE SOCIETY, THEREFORE, CREDITS IN THE SAID DIARY WHICH WERE NOT EXPLAINED WERE RELATED TO THE SOCIETY, THEREFORE, HELD TO BE AN INCOME OF THE SOCIETY UNDER SECTION 68 OF I.T. ACT. 2.6 THE ASSESSING OFFICER HAS ALSO NOTED THAT THE ASSESSEE SOCIETY AS WELL AS THE MEDICAL COLLEGE BOTH WERE MAINTAINING REGULAR DAY TO DAY CASH BOOK, THEREFORE, THE AMOUNT RECEIVED BY THE MEDICAL COLLEGE WAS DULY ACCOUNTED FOR BY THE SOCIETY. ACCORDING TO THE ASSESSING OFFICER, THE CASH BOOK AS MAINTAINED BY THE INSTITUTION AND AS MAINTAINED BY THE SOCIETY WERE NOT RELIABLE DUE TO THE RE ASON THAT THERE WAS EXISTENCE OF AN UNACCOUNTED CASH OF RS 46,17,000/ WHICH WAS SEIZED AT THE TIME OF SEARCH. THE SAID AMOUNT WAS NOT AT ALL RECORDED IN THE BOOKS OF ACCOUNTS. AS PER THE CASH BOOK OF THE MEDICAL COLLEGE, THE CASH BALANCE WAS RS 1,13,656/ . HOWEVER, THE HUGE CASH WAS FOUND ON THE DATE OF SEARCH CONDUCTED ON 2 ND AUGUST, 2007. THE SAID CASH WAS ALSO NOT RECORDED IN THE BOOKS OF THE ASSESSEE SOCIETY. ALTHOUGH LATER ON THE ASSESSEE SOCIETY HAS CLAIMED THE SEIZED CASH STATED TO BE RECORDED AS P ER 220 RECEIPTS WHICH WERE AMOUNTING TO ` 47,25,000/ . 11 ITA NOS. 01 & 06/NAG/2013 THE ASSESSING OFFICERS OBJECTION WAS THAT AT THE TIME OF SEARCH NO SUCH EVIDENCE WAS FOUND AND THE ASSESSEE HAD ALSO NOT PRODUCED ANY PROOF. SINCE THE RECEIPTS WERE NOT GENUINELY RECORDED, THEREFORE, THE CLAIM THAT THE REGULAR BOOKS OF ACCOUNTS WERE MAINTAINED HAD NO SUBSTANCE, AS PER THE ASSESSING OFFICER. 2.7 THE ASSESSING OFFICER HAS ALSO NOTED THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE HOSPITAL HAD NO SIGNATURE OF THE DEAN OR ANY STAMP WAS PUT, THER EFORE, NOT RELIABLE. THERE WERE DONATIONS RECEIVED AND RECORDED BUT REMAINED UNSUBSTANTIATED. THEREFORE, THE SAID AMOUNT WAS CONSIDERED AS UNEXPLAINED CREDIT UNDER SECTION 68 OF I.T. ACT. THE ASSESSING OFFICER HAS FINALLY DRAWN A CONCLUSION THAT SINCE THE DIARY WAS MAINTAINED UNDER THE AEGIS OF ASSESSEE SOCIETY, THEREFORE, THE ENTRIES FOR WHICH NO EXPLANATION WAS OFFERED BY THE ASSESSEE REPRESENTED THE UNEXPLAINED CREDIT IN THE DIARY WHICH WAS TAXED UNDER SECTION 68 IN THE HANDS OF THE ASSESSEE. 2.8 THE ASSES SING OFFICER HAS EXTRACTED THE ENTRIES FROM GREEN DAINANDINI DIARY TOTALING ` 2,97,63,208/ UNDER SECTION 68 OF I.T. ACT. 2.9 IN RESPECT OF CASH SEIZED OF ` 46,17,000/ SINCE THE ASSESSEE HAD OWNED UP THE SAID AMOUNT WHICH WAS FOUND IN POSSESSION OF THE DEAN 12 ITA NOS. 01 & 06/NAG/2013 OF THE MEDICAL COLLEGE, THEREFORE, IT WAS ALSO TAXED SEPARATELY IN THE HANDS OF THE ASSESSEE BY THE ASSESSING OFFICER. THE ASSESSEE HAS CLAIMED THAT THE AMOUNT IN QUESTION WAS OUT OF THE 220 RECEIPTS TOTALING ` 47,25,000/ . ACCORDING TO THE ASSESSING OFFI CER, THE RECEIPTS WERE NOT CORRECTLY ACCOUNTED FOR REGULARLY IN THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER HAS VERIFIED THE LIST OF 220 NAMES AS PER THE RECEIPTS AND HAVE NOTED THAT THE DONORS WERE THE AGRICULTURISTS SO THE SAID CLAIM WAS HELD AS NOT TRU E. THE ASSESSING OFFICER HAS MENTIONED FEW NAMES FROM WHOM STATEMENTS WERE RECORDED, WHICH ACCORDING TO A.O. WAS NOT A SATISFACTORY EXPLANATION. IT WAS COMMENTED THAT THE ASSESSEE SOCIETY HAS NOT DISCHARGED THE ONUS TO EXPLAIN THE UNACCOUNTED CASH. 2.10 ACCORDI NG TO THE ASSESSING OFFICER THE DONATIONS WERE RECEIVED AT THE INSTITUTIONS RUN BY THE ASSESSEE SOCIETY AND THOSE DONATIONS WERE LINKED WITH THE ADMISSION PROCESS IN THE MEDIAL COLLEGE. THE DONORS HAVE DEPOSITED THE AMOUNT OF DONATION TO THE INSTITUTION. T HE INSTITUTE HAD GIVEN A RECEIPT TO THE DONORS. IN THE ABSENCE OF PROPER MATCHING OF THE DONATIONS, THE ASSESSING OFFICER HAS HELD THAT THE ONUS WAS NOT DISCHARGED TO PROVE THE IDENTITY, GENUINENESS, CREDITWORTHINESS OF THOSE PERSONS WHO HAVE ADVANCED THE LOAN TO THE ASSESSEE SOCIETY. IN 13 ITA NOS. 01 & 06/NAG/2013 THE ABSENCE OF ANY SATISFACTORY EXPLANATION, THE ASSESSING OFFICER HAS TAXED THE SAID SUM OF ` 46,17,000/ UNDER SECTION 69A OF THE I.T. ACT. 2.11 A SURVEY WAS ALSO CONDUCTED UNDER SECTION 133A OF THE I.T. ACT AT THE PREMISES O F THE ASSESSEE SOCIETY ON 14 TH AUGUST, 2007. THE ASSESSING OFFICER HAS RECORDED THE NAMES OF THE INSTITUTIONS AND THE AMOUNT RECEIVED WHICH WERE STATED TO ` 1,54,22,981/ . SINCE THE DONATION WAS RECORDED IN THE RECEIPT BOOKS BUT THE ADDRESSES OF THE DONORS WERE NOT MENTIONED, THEREFORE, ALL THE DONATIONS WERE NOT ACCEPTED BY THE ASSESSING OFFICER. THE NAMES OF THE INSTITUTIONS AND THE AMOUNT OF RECEIPT ISSUED HAVE ALSO BEEN REPRODUCED BY THE ASSESSING OFFICER. HOWEVER, IN RESPECT OF THE SAID AMOUNT OF ` 1,54,49,981/ THE ASSESSING OFFICER HAS INVOKED THE PROVISIONS OF SECTION 115BBC AND TAXED IN THE HANDS OF THE ASSESSEE IN THE FOLLOWING MANNER : SEC. 115BB C OF THE ACT INSERTED BY FINANCE ACT, 2006 W.E.F. 01.04.2007 PROVIDES THAT, WHERE THE TOTAL INCOME OF THE TRUST OR INSTITUTION REFERRED TO IN SEC. 11 OR SEC. 10(23C)(IIIAD)/(IIIAE)/(IV)(V)/(VI) OR (VIA), INCLUDES ANY INCOME BY WAY OF ANY ANONYMOUS DONATIO N, THEN SUCH RECEIPTS SHALL BE CHARGEABLE TO INCOME TAX AT THE RATE OF 30% IRRESPECTIVE OF THE FACT THAT THE TRUST OR INSTITUTION IS RUNNING IN PROFIT OR LOSS. SEC. 115BBC (3) PROVIDES THAT, ANONYMOUS DONATION MEANS WHERE THE 14 ITA NOS. 01 & 06/NAG/2013 RECEIPT DOES NOT MAINTAIN A RE CORD OF THE IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING SUCH CONTRIBUTION AND SUCH OTHER PARTICULARS AS PRESCRIBED. 3. THE ASSESSING OFFICER HAS, THEREFORE, FINALLY DISALLOWED THE CLAIM OF EXEMPTION AND THE TOTAL RECEIPTS OF RS 29,45, 42,810/ WAS TAXED IN THE HANDS OF THE ASSESSEE BY HOLDING THAT THE EXEMPTION UNDER SECTION 11 WAS NOT TO BE ALLOWED SO THE ENTIRE INCOME IS CHARGEABLE TO TAX. 4. THE NEXT ADDITION MADE BY THE ASSESSING OFFICER IN THE LIGHT OF THE ABOVE DISCUSSION WA S IN RESPECT OF THE ENTRIES TO THE EXTENT OF RS 2,97,63,208/ REPRESENTING THE UNEXPLAINED CREDITS. AGAINST THESE ADDITIONS DISCUSSED ABOVE, THE ASSESSEE HAS PREFERRED AN APPEAL. 5. THE FIRST APPELLATE AUTHORITY HAD PASSED AN ELABORATE ORDER. IT WAS MENT IONED THAT THE ASSESSEE SOCIETY IS RUNNING SEVERAL SCHOOLS AND COLLEGES. DUE TO A SEARCH CONDUCTED ON 02 08 2007 AN UNACCOUNTED CASH OF ` 46,17,000/ WAS RECOVERED FROM ONE OF THE MEDICAL COLLEGE RUN BY THE SOCIETY. THE CASH WAS RECOVERED FROM THE DEAN OF MEDICAL COLLEGE DR. PADMAKAR SOMWANSHI. DUE TO THAT REASON THE ASSESSING OFFICER HAD HELD THAT THE ASSESSEE WAS NOT ENTITLED FOR THE EXEMPTION. THE ASSESSING OFFICER HAS ALSO HELD THAT THE RUNNING OF THE MEDICAL STORE, A PRINTING PRESS, A PRODUCTION CENTRE AND A SWIMMING POOL WAS A PROFIT MOTIVE ACTIVITIES, THEREFORE, THE ASSESSEE WAS HELD AS NOT ELIGIBLE FOR EXEMPTION 10(23C)(IIIAB). AN ANOTHER IMPORTANT FACT HAS AGAIN BEEN NOTED BY LEARNED CIT(APPEALS) 15 ITA NOS. 01 & 06/NAG/2013 THAT THE SOCIETY WAS RECEIVING GRANT FROM THE GOVERN MENT WHICH CONSTITUTED ABOUT 95% OF THE TOTAL RECEIPTS. 5.1 IN RESPECT OF THE ADDITION MADE BY THE ASSESSING OFFICER ONE OF THE GROUND DEALT WITH BY LD CIT(A) WAS IN RESPECT OF AN ADDITION OF ` 2,97,63,208/ UNDER SECTION 68 OF I.T. ACT. IN RESPECT OF THIS ISSUE THE CONTENTION OF THE ASSESSEE WAS THAT THE NOTINGS MADE IN THE SAID DIARY WERE PERSONAL NOTINGS OF ONE SHRI V.M. PATIL WHO WAS HANDLING THE CASH BELONGING TO THE SAID MEDICAL INSTITUTIO N INCLUDING THE CASH OF DR. PADMAKAR SOMWANSHI. CONSIDERING THE NATURE OF ENTRIES MADE IN THE DIARY WHICH WAS ALSO REPRODUCED IN THE APPELLATE ORDER, LEARNED CIT(APPEALS) HAS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN PRESUMING THAT THE IMPUGNED DIARY BELONGED TO THE ASSESSEE SOCIETY. FURTHER, LEARNED CIT(APPEALS) HAS ALSO DISCUSSED AN ANOTHER ADDITION WHICH WAS STATED TO BE BASED UPON LOOSE PAPERS AMOUNTING TO RS 1,25,12,536/ . THE SAID ADDITION WAS ALSO HELD AS UNWARRANTED. RELEVA NT PORTIONS ARE REPRODUCED BELOW : 7.2 IN THIS CONNECTION THE REPLY OF THE APPELLANT TO THE R EMAND REPORT IS RELEVANT. AO HAS IN THE ASSESSMENT ORDER LARGELY RELIED ON TH E PRESUMPTION PROVIDED U/S 132( 4)(A) AND STATED THAT APPELLANT HAS FAILED TO EXP L AIN THE CONTENTS OF THE DOCUMENTS. APPELLANT HAS STATED THAT SEIZED DOCUMENT I S WRITTEN BY SHRI V.M. PATI! AS HIS PERSONAL MEMORANDUM. AT THIS JUNCTURE I T IS RE LE VANT TO NOTE THAT SRI V.M. PATI! WAS NOT EXAMINED DU R ING THE COURSE OF ASSESSMENT PROCEEDIN GS, ALTHOUGH IT HAD A MATERIAL BEARING ON THE ISSUE. HOWEVER THE A.O HAS DURING THE COURSE OF THE REMAND PROCEEDINGS EXAMINED SRI V.FVL . PATI! . IN SUBMISSIONS BEFORE ME APPELLANT HAS STATED THAT IN THE STATEMENT WAS RECORDED FROM SHRI V.M. PATIL ON 19 - 03 - 2012 IT HAS BEEN AFFI R MED BY SHRI PATIL THAT BOOKS WERE HIS PERSONAL MEMORANDUM AND THAT THE DIARY BELONGS TO HIM . IN THE ANSWER TO QUESTION NO. 2, . . . 16 ITA NOS. 01 & 06/NAG/2013 . 4, 5 & 6 RECORDED IN RESPONSE TO STATEMENT U/S 131 ON 19 - 03 - 2012 SHRI PATIL HAS REITERATED THAT THIS DIARY IS MAINTAINED BY HIM IS PERSONAL MEMORANDUM AND CERTAIN TRANSACTIONS BELONGING TO SOCIETY WHICH ARE R ECORDED I N THE BOOKS OF ACCOUNT ARE ALSO AVAILABLE. ONLY A FEW NOTINGS PERTAINING TO THE ASSESSEE HAVE BEEN RECORDED. THESE A RE NOT REGULAR BOOKS OF ACCOUNT OF THE SOC I ETY THEREFORE NO ADDITION CAN BE MADE U/S 68 OF THE ACT AS THE NOTINGS ARE NOT R ECORDED IN THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE AND THEY ARE NOT UNEXPLA I NED CREDITS . THE EXAMINATION OF SRI V.M. PATIL IN REMAND PROCEED I NGS ALSO DOES NOT ADVANCE THE CASE OF THE A.O AS NO CONCLUS I VE MATER I AL SUPPORTED BY CORROBORAT I VE EVIDENCE IS AVAILABLE BASED ON WHICH ANY ADDITION IS WARRANTED IN APPELLANT'S HANDS. THE APPELLANT HAS FURTHER RELIED ON THE DECISION OF T HE HON'BLE SUPREME COURT IN THE CASE OF P.R. METRANI VS CIT 287 ITR 209 (S.C . ) WHEREIN IT HAS BEEN HELD THAT THE PRESUMPTION AVAILABLE U/S 132(4) IS NOT APPLICABLE IN FRAMING A REGULAR ASSESSMENT. THIS JUDGMENT IS SQUARELY APPLICABLE TO THE APPELLANT'S CASE . I THEREFORE FIND CONSIDERABLE MERIT IN THE SUBMISSION OF THE APPELLANT . AFTER CONSIDERING THE FINDINGS IN THE REMAND REPORT IT IS CLEAR THAT THE ADDITION MADE BY AO IS NOT REQUIRED. TO BE SUSTAINED. 7.1 IT IS FURTHER SEEN THAT AO HAS MADE ADDITIO N ON THE BASIS OF LOOSE PAPER BUNDLE ITEM NO. 2 OF THE PANCHANAMA. THIS AMOUNTS TO RS. 1,25,12,536/ - . IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ENTRIES IN THE LOOSE PAPER AADMITTEDLY DO NOT BEAR ANY DATES. IN THE ABSENCE OF ANY DATES BEINQ NOTED AO HAS HELD THAT LOOSE PAPERS SEIZED PERTAIN TO FY 2007 - 08. THE PRESUMPTION OF THE A.O. IS BASELESS AND REVEALS A LACKADAISICAL APPROACH. IN MY CONSIDERED OPINION THIS STAND OF THE AO IS NOT TENABLE. IT IS SEEN THAT AO HAS NOT EXAMINED ANY PERSON IN CONNE CTION WITH THE LOOSE PAPERS OR MADE ANY ATTEMPT TO ASCERTAIN THE DATES OF THE TRANSACTION IN THE ASSESSMENT PROCEEDINGS. EVEN IN THE REMAND PROCEEDINGS NO ATTEMPT HAS BEEN MADE TO ELICIT INFORMATION REGARDING THIS. I AM THEREFORE OF THE OPINION THAT THE ADDITION IS UNWARRANTED AND AO IS DIRECTED TO DELETE THIS. THIS GROUND IS THEREFORE ALLOWED. 5.2 THERE WAS AN ANOTHER GROUND AGAINST THE ADDITION OF CASH SEIZED OF ` 46,17,000/ AND CONNECTED ADDITION OF ` 1,08,000/ UNDER SECTION 68 OF I.T. ACT. ACCORD ING TO THE LEARNED CIT(APPEALS), THE EXISTENCE OF THE CASH WAS NOT EXPLAINED BY THE ASSESSEE. THERE WAS A DISCUSSION IN RESPECT OF COMPLAINT MADE TO ONE OF THE CONCERNED DEPARTMENT AND THE REPORT OF THE ENQUIRY COMMITTEE. AFTER CONSIDERING ALL THESE FACTS, LEARNED CIT(APPEALS) HAS UPHELD THE ADDITION IN THE FOLLOWING MANNER : THE CONCURRENT FINDINGS OF FACT BY ENQUIRY COMMITTEE AND THE A.O. REGARDING THE NATURE OF SEIZED CASH AS NOT ACCOUNTED IN THE BOOKS OF ACCOUNT, THE IDENTITY OF DONORS AS NOT ESTABLIS HED 17 ITA NOS. 01 & 06/NAG/2013 AND THE RECEIPTS FABRICATED ENTIRELY STRENGTHENS AND FORTIFIES THE CONTENTION OF THE A.O. THAT THE DONATIONS ARE UNACCOUNTED AND ARE REQUIRED TO BE ADDED BACK U/S 68. THE CREDIBILITY OF THE FINDINGS OF THE A.O. THUS EMERGES UNDISPUTED. IT IS SEEN THAT A.O. HAS PROVIDED AN OPPORTUNITY TO APPELLANT TO OFFER ITS EXPLANATION TO THE FINDINGS OF THE ENQUIRY COMMITTEE. HOWEVER NO EXPLANATION HAS BEEN FORTHCOMING. IT THEREFORE EMERGES THAT THE CLAIM OF THE ASSESSEE THAT THE SEIZED CASH HAS INDEED BEEN ACCOUNTE D FOR IS FACTUALLY INACCURATE AND NOT BORNE OUT BY FACTS ON RECORDS. THE SEIZURE OF THE CASH FROM THE PREMISES OF DR. PADMAKAR SOMWANSHI, DEAN OF DR, PUNJABRAO DESHMUKH MEMORIAL MEDICAL COLLEGE, AMRAVATI CLEARLY POINT OUT TO THE FACT THAT THERE HAS BEEN G ENERATION OF CASH RECEIPTS OUTSIDE THE BOOKS OF ACCOUNT OF THE ASSESSEE. I THEREFORE HOLD THAT AO'S ACTION BRINGING THESE AMOUNTS TO CASH AS UNEXPLAINED MONEY UNDER SECTION 69A OF ` 46,17,000/ IS TO BE UPHELD. SIMILARLY THE ADDITION OF THE AMOUNT OF DONATION OF ` 1,08,000/ U/S 68 IS ALSO TO BE UPHELD. THESE GROUNDS ARE THEREFORE DISMISSED. 6. THERE WAS A MAIN LEGAL GROUND RAISED BY THE ASSESSEE WHICH PERTAINED TO THE ELIGIBILITY OF EXEMPTION UNDER SECTION 10(23C) OF I.T. ACT. ALTHOUGH LEARNED CIT(APPEALS) HAS ACCEPTED THAT IN AN EARLIER ORDER PASSED FOR ASSESSMENT YEAR 2002 03 BEARING NO. CIT(A) I/344/09 10 IT WAS HELD THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 10 (23C) AND THAT THE INSTITUTION EXISTED SOLELY FOR THE PURPOSE OF EDUCATION AND NOT FOR THE PURPOSE OF PROFIT, BUT FOR THIS YEAR DISSENTED. IT WAS ALSO HELD IN THAT ORDER THAT THE SOCIETY WAS SUBSTANTIALLY FINANCED BY THE GOVERNMENT. HOWEVER, FOR THE YEAR UNDER CONSIDERATION IT WAS OPINED BY LEARNED CIT(APPEALS) THAT THE FACTUAL MATRIX WERE ENTIRELY DIFFERENT. ACCORDING TO HIM THE QUESTION OF EXEMPTION WAS TO BE EXAMINED AFRESH FOR THE YEAR UNDER CONSIDERATION. A DECISION OF ADITANAR EDUCATIONAL INSTITUTION 224 ITR 310 (SC) WAS MENTIONED FOR THE LEGAL PROPOSITION THAT THE QUESTION OF EXEMPTION IS REQUIRED TO BE EVALUATED 18 ITA NOS. 01 & 06/NAG/2013 EACH YEAR TO FIND OUT WHETHER THE INSTITUTION EXISTED SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. AFTER REFERRING TH E SEIZURE OF THE CASH AT THE TIME OF SEARCH AND THAT THE DONATIONS WERE REMAINED UNRECORDED, IT WAS OPINED THAT FOR ASSESSMENT YEAR 2008 09 THE ASSESSEE SOCIETY WAS NOT SOLELY RUNNING FOR THE PURPOSE OF EDUCATION BUT ALSO FOR THE PURPOSE OF PROFIT. DUE TO THAT REASON IT WAS HELD THAT THE ASSESSEE WAS NOT ENTITLED FOR THE EXEMPTION UNDER SECTION 10(23C) OF THE I.T. ACT. 6.1 LIKEWISE THE CLAIM OF EXEMPTION UNDER SECTION 11 WAS ALSO DENIED IN THE ABSENCE OF ANY CONCLUSIVE PROOF OF REGISTRATION UNDER SECTION 12 A OF I.T. ACT. FINALLY IN ONE OF THE GROUND THE CLAIM OF DEPRECIATION WHETHER PERMISSIBLE TO THE ASSESSEE, WAS ANSWERED IN FAVOUR OF THE ASSESSEE AND THE ASSESSING OFFICER WAS DIRECTED TO RE - COMPUTE THE INCOME AS PER LAW. SINCE LEARNED CIT(AP PEALS) HAS GIVEN THE VERDICT PARTLY IN FAVOUR OF THE ASSESSEE AND PARTLY IN FAVOUR OF THE REVENUE, THEREFORE, BOTH THE SIDES ARE NOW IN APPEAL BEFORE US. 7. FROM THE SIDE OF THE APPELLANT, LEARNED A.R. MR. K.P. DEWANI APPEARED AND ARGUED GROUND NO. 1 AN D 2 WHICH ARE IN RESPECT OF ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10(23C)(IIIAB). HE HAS PLEADED THAT ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTIONS EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF THE PROFIT AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT, THEN AS PER SECTION 10(23C), INCOME EARNED NOT TO BE INCLUDED IN THE TOTAL TAXABLE INCOME. LEARNED A.R. HAS INFORMED THAT FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE SOCIETY HAD RECEIVED GOVERNMENT GRANT 19 ITA NOS. 01 & 06/NAG/2013 OF `RS. 9 2,03,53,430/ . THE SAID GRANT WAS UNDISPUTEDLY ABOUT 95% OF THE TOTAL RECEIPTS OF THE ASSESSEE SOCIETY, WHICH HAS ALSO BEEN ACKNOWLEDGED BY THE ASSESSING OFFICER AS PER PARA 7 OF ASSESSMENT ORDER. EVEN THE FIRST APPELLATE AUTHORITY HAS ALSO NOT DISPUTED TH IS FACT. THE ASSESSING OFFICER HAS MENTIONED THAT IN THE ABSENCE OF REGISTRATION UNDER SECTION 12A THE EXEMPTION UNDER SECTION 10(23C) WAS NOT PERMISSIBLE. LEARNED A.R. HAS INFORMED THAT IT WAS INCORRECT TO ALLEGE THAT THE ASSESSEE WAS NOT REGISTERED UNDER SECTION 12A OF I.T. ACT. IN FACT THE SOCIETY WAS CONSTITUTED IN THE YEAR 1932 33 AND ENJOYING THE APPROVAL AVAILABLE AT THAT TIME. THE ASSESSEE WAS ALSO ENJOYING THE APPROVAL UNDER SECTION 80G OF I.T. ACT. ACCORDING TO HIM, SINCE 1975 THE RENEWAL OF THE R EGISTRATION WAS GRANTED BUT IT WAS NOT AVAILABLE, HENCE REQUESTED THE REVENUE AUTHORITIES TO INSPECT THE REGISTER MAINTAINED IN THE INCOME TAX OFFICE. HOWEVER, A BUNCH OF XEROX COPIES OF 80G CERTIFICATE AND THE CERTIFICATE WHICH WAS EARLIER GRANTED UNDER S ECTION 15B WERE FURNISHED BEFORE THE LOWER AUTHORITIES. HE HAS PLEADED THAT LEARNED CIT(APPEALS) HAS NOT CORRECTLY APPRECIATED THE OBJECT OF THE SOCIETY AND THE EDUCATIONAL ACTIVITIES CARRIED ON CONSISTENTLY. 7.1 LEARNED A.R., MR. DEWANI HAS DRAWN OUR ATTE NTION ON PARA 10.2 OF THE ORDER OF LEARNED CIT(APPEALS) WHEREIN IT WAS ACCEPTED THAT FOR ASSESSMENT YEAR 2002 03, CIT(APPEALS) I, NAGPUR IN ORDER NO. 344/09 10 DATED 17 12 2011 FOR ASSESSMENT YEAR 2002 03 HAS HELD THIS ISSUE IN FAVOUR OF THE ASSESSEE BY HO LDING VIDE PARA 8 THAT THE SOCIETY HAD FULFILL ALL THE RELEVANT CONDITIONS FOR EXEMPTION UNDER SECTION 10(23C)(IIIAB). WHILE ACCEPTING THE CLAIM OF THE ASSESSEE, LEARNED CIT(APPEALS) HAS EXAMINED CERTAIN FACTS ACCORDING TO WHICH THE ASSESSEE WAS RUNNING 26 9 SCHOOLS AND 20 ITA NOS. 01 & 06/NAG/2013 COLLEGES. IN THAT YEAR THE STRENGTH OF THE STUDENTS WAS ABOUT 1,09,676. LEARNED CIT(APPEALS) HAS ALSO EXAMINED THE OBJECTS AND PREAMBLE OF THE SOCIETY AND THEREUPON CAME TO THE CONCLUSION THAT THE ASSESSEE SOCIETY HAD EXISTED SOLELY FOR EDUCA TIONAL PURPOSES. A DECISION OF VANITA VISHRAM TRUST 327 ITR 121 (BOM.) WAS REFERRED. IN THAT DECISION IT WAS HELD THAT THE SURPLUS ARISING TO THE SAID SOCIETY WAS NOT A DISABLING FACTOR FOR GRANT OF BENEFIT OF EXEMPTION. 7.2 FURTHER, THERE WAS A MENTION OF AN ORDER OF THE TRIBUNAL PRONOUNCED IN ASSESSEES OWN CASE IN AN ORDER DATED 12 08 2009 BEARING ITA NO. 154/NAG/2009 WHEREIN IT WAS HELD THAT THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION UNDER SECTION 10(23C). THEREFORE, LEARNED CIT(APPEALS), FOR ASSESSMENT YEAR 2002 03, HAS HELD THAT IN A SITUATION WHEN THE SUBSTANTIAL GRANT WAS RECEIVED FROM THE GOVERNMENT AND THE VIEW HAD ALREADY BEEN EXAMINED BY THE RESPECTED TRIBUNAL IN THE PAST, THEREFORE, HELD THAT THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION. ALTHOUGH ALL THOSE FACTS WERE VERY MUCH IN THE NOTICE OF THE LEARNED CIT(APPEALS) WHILE PASSING THE ORDER FOR THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2008 09 BUT STILL HE HAS HELD THAT THE FACTUAL MATRIX FOR THE YEAR UNDER CONSID ERATION WAS ENTIRELY DIFFERENT BY MENTIONING THE DECISION OF ADIATNAR EDUCATIONAL INSTITUTION V/S. CIT REPORTED IN 224 ITR 310 (SC). HE HAS OPINED THAT THE ISSUE OF EXEMPTION SHOULD BE EVALUATED EACH YEAR TO FIND OUT WHETHER THE INSTITUTION IN FACT EXIST ED SOLELY FOR EDUCATIONAL PURPOSES. LEARNED CIT(APPEALS) HAS ALSO QUOTED THE DECISION OF OXFORD UNIVERSITY PRESS REPORTED IN 247 ITR 658 (SC) FOR THE LEGAL PROPOSITION THAT A PROVISION OF EXEMPTION FROM TAX IN A PHYSICAL STATUTE IS TO BE STRICTLY CONSTRUE D. LEARNED CIT(APPEALS) HAS SIMPLY MENTIONED THAT ON ACCOUNT OF THE FACT THAT THE CASH OF ` 46 LAKHS WAS SEIZED FROM 21 ITA NOS. 01 & 06/NAG/2013 THE DEAN, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION. IN HIS OPINION SINCE THERE WAS UNRECORDED DONATIONS RECEIVED, HENCE THE AS SESSEE WAS NOT IN EXISTENCE SOLELY FOR THE FOR THE PURPOSE OF EDUCATION BUT ALSO FOR THE PURPOSE OF PROFIT. LEARNED A.R. HAS ALSO MENTIONED THAT ALTHOUGH THE FACTS ARE ENTIRELY DIFFERENT BUT THE LEARNED CIT(APPEALS) HAS PLACED RELIANCE ON A DECISION OF VAL LIAMMAL SOCIETY 327 ITR 337 (MAD) FOR THE LEGAL PROPOSITION THAT WHERE THE RECEIPTS HAVE NOT BEEN PROPERLY EXPLAINED THEN A PRESUMPTION COULD BE DRAWN THAT THE CONDUCT OF THE INSTITUTION WAS NOT FOR THE PURPOSE OF EDUCATION, HENCE NOT ENTITLED FOR ANY BEN EFIT. LEARNED A.R. HAS VEHEMENTLY OPPOSED THE MANNER IN WHICH LEARNED CIT(APPEALS) HAS DISMISSED ALL THE CONTENTIONS OF THE ASSESSEE. 7.3 LEARNED A.R. HAS INFORMED THAT THE EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE SOCIETY ARE AFFILIATED WITH THE BOARD S OF SCHOOL EDUCATION AND UNIVERSITY. THE ASSESSEE SOCIETY IS REGULARLY GETTING GRANT FROM GOVERNMENT OF MAHARASHTRA WHICH IS NATURALLY BEING GRANTED AFTER EXAMINING THE NATURE OF EDUCATIONAL SERVICES PROVIDED BY THE ASSESSEE SOCIETY. HE HAS PLEADED THAT SINCE THE ASSESSEE SOCIETY IS IN EXISTENCES SOLELY FOR EDUCATIONAL PURPOSES, THEREFORE, ELIGIBLE FOR EXEMPTION. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS : (I) CIT V/S. BAR COUNCIL OF MAHARASHTRA 130 ITR 28 (SC). (II) ADDL. CIT V/S. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION 121 ITR 1 (SC) (III) VANITA VISHRAM TRUST V/S. CIT 327 ITR 121 (BOM.). 22 ITA NOS. 01 & 06/NAG/2013 7.4 IN ASSESSEES OWN CASE IN ITA NO. 154/NAG/2009 ITAT, NAGPUR VIDE AN ORDER DATED 12 08 2009 HAS HELD AS UNDER : WE ALSO DO NOT FIND ANY MERIT IN T HE CONTENTION OF LD. D.R. THAT THIS INSTITUTION WAS NOT NOTIFIED U/S 10(23C) AS IN SR. NO. 6 OF FORM NO. 10G, THE WORDS IF NOTIFIED HAVE BEEN USED AND IN THE PRESENT CASE THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 10(23C)(IIIAB) IN WHICH CASE NO SEPARAT E NOTIFICATION IS REQUIRED. HAVING STATED SO, WE FURTHER FIND THAT THE LD. CITS FINDING THAT FOR APPROVAL U/S 80G(5), REGISTRATION U/S 12A(A) WAS A PRE CONDITION IS ALSO NOT CORRECT BECAUSE AS PER CLAUSE (I) OF SECTION 80G(5), IF THE INCOME OF AN INSTIT UTION IS NOT LIABLE TO BE INCLUDED U/S 10(23C) OF THE ACT THAT WOULD MEET THE REQUIREMENT OF LAW FOR GRANTING REGISTRATION U/S 80G(5). ON THE OTHER HAND, IT IS ADMITTED FACT THAT THE APPELLANT SOCIETY DEPENDS ON MORE THAN 75% OF GRANTS BY THE GOVERNMENT AS IS EVIDENT FROM THE INCOME AND EXPENDITURE STATEMENT AND IN SUCH AN EVENT, THE CASE LAWS CITED STRENGTHEN THE CASE OF THE ASSESSEE. IN OUR CONSIDERED VIEW, THE CONDITIONS CONTAINED IN SECTION 80G(5)(I) TO (IV) ARE SATISFIED IN THE FACTS OF THE CASE OF THE ASSESSEE AND IN VIEW OF THIS, THERE WAS NO JUSTIFICATION FOR REJECTING THE APPLICATION FOR RENEWAL OF APPROVAL U/S 80G. WE, THEREFORE, DIRECT THE LD. CIT TO GRANT 80G APPROVAL AS APPLIED. 7. 5 THE ALLEGATION THAT THE ASSESSEE WAS EARNING PROFIT OUT OF RUNNING OF A SWIMMING POOL OR A MEDICAL STORE OR PRINTING PRESS WAS TOTALLY INCORRECT. EVEN THIS ASPECT WAS ALSO EXAMINED BY ITAT IN ASSESSEES OWN CASE IN ITA NO. 222/NAG/2009, ORDER DATED 25 TH JULY, 2011 WHEREIN THE ISSUE OF REGISTRATION UNDER SECTION 12AA REFUSED BY THE LEARNED COMMISSIONER. THE OBSERVATION OF THE TRIBUNAL WAS THAT THE SUBSTANTIAL GOVERNMENT FUNDING WAS RECEIVED BY THE ASSESSEE SOCIETY AND THE RUNNING OF SWIMMING POOL, MEDICAL STORE ETC. WERE TO PROMOTE THE OBJECTS OF THE SOCIETY. THE SWIMMING TANK IS MEANT FOR IMPARTING PHYSICAL EDUCATION TO THE STUDENTS. LIKEWISE THE MEDICAL STORE IS PART AND PARCEL OF THE RUNNING OF THE MEDICAL COLLEGE. 23 ITA NOS. 01 & 06/NAG/2013 THE PRODUCTION IS NOTHING BUT REPAIR O F FURNITURE ETC. OF EDUCATIONAL INSTITUTION AND NOT AVAILABLE FOR OUTSIDERS. THEREFORE, THERE WAS NO PROFIT MOTIVES . THE TRIBUNAL HAS HELD AS UNDER : IN OUR CONSIDERED OPINION, THE EXPLANATION RENDERED BY THE ASSESSEE CLEARLY BRINGS OUT THAT THE AFORES AID ACTIVITIES CANNOT BE CONSIDERED AS INDEPENDENT ACTIVITIES CARRIED OUT BY THE ASSESSEE. IN FACT, SUCH ACTIVITIES ARE SUBSERVIENT TO THE MAIN ACTIVITY OF THE ASSESSEE OF RUNNING EDUCATIONAL INSTITUTIONS IN DIFFERENT FIELDS, VIZ. MEDICAL, AGRICULTURAL COL LEGES ETC. THEREFORE, ON FACTS WE DO NOT FIND ANY JUSTIFICATION FOR THE COMMISSIONER TO INFER THAT SUCH ACTIVITIES ARE INDEPENDENT ACTIVITIES CARRIED OUT WITH A PROFIT MOTIVE. EVEN THE PRESENCE OF SUCH ACTIVITIES IN THE OBJECT CLAUSE DO NOT PER SE DISTRACT FROM THE FACT THAT SUCH ACTIVITIES ARE ONLY ENABLING ACTIVITIES FOR THE DOMINANT OBJECT OF EDUCATION, WHICH HAS NOT BEEN DISPUTED BY THE COMMISSIONER HIMSELF. FOR THE AFORESAID REASONS, WE FIND AMPLE FORCE IN THE PLEA OF THE ASSESSEE THAT IT WAS ENTITLED TO GET REGISTRATION UNDER SECTION 12AA OF THE ACT AND THAT THE COMMISSIONER WAS NOT JUSTIFIED IN DECLINING REGISTRATION UNDER SECTION 12AA OF THE ACT. LEARNED A.R. HAS FURTHER PLEADED THAT THE NOMINAL SURPLUS ARISING OUT OF THOSE ACTIVITIES WAS ALSO UTILI ZED FOR EDUCATIONAL OBJECTS. IF THOSE ACTIVITIES WERE SUPPORTING THE MAIN OBJECT OF THE ASSESSEE I.E. IMPARTING EDUCATION, THEN THE CLAIM SHOULD NOT BE REJECTED. CASE LAWS CITED ARE : (I) ICAI ACCOUNTING RESEARCH FOUNDATION & ANR. V/S DIRECTOR GENERAL OF INCO ME TAX (EXEMPTIONS) & ORS. 321 ITR 73 (DEL.) (II) ITO V/S. LOKMANYA SHIKSHA SAMIT 115 TTJ 135. (III) JAYPEE INSTITUTE OF INFORMATION TECHNOLOGY SOCIETY V/S. 24 ITA NOS. 01 & 06/NAG/2013 DGIT (EXEMPTIONS) 227 CTR 124. 7.6 LEARNED A.R. HAS ALSO PLEADED FROM THE NUMBER OF DECISIONS WHERE IT WAS HEL D BY THE RESPECTED TRIBUNAL THAT IF THE INSTITUTION IS SUBSTANTIALLY FINANCED BY THE GOVERNMENT THEN SUCH INCOME IS EXEMPT UNDER SECTION 10(23C) OF I.T. ACT. THE DECISIONS OF THE TRIBUNAL ARE ALSO FILED. ACCORDING TO HIM, EVEN IN THE CASE OF VANITA VISHRAM TRUST 280 ITR 354 IT WAS HELD THAT THE SOURCE OF MONEY OF A TRUST IS OF NO CONSEQUENCE. WHAT IS RELEVANT IS THE APPLICATION OF INCOME. SO LONG AS THE INCOME OF THE INSTITUTION IS APPLIED FOR EDUCATIONAL PURPOSES THEN ENTITLED FOR EXEMPTION UNDER SECTION 1 0(22) OF ACT. LEARNED A.R. HAS CLARIFIED THAT THE PROVISIONS OF SECTION 10(22) ARE ANALOGOUS TO THE NEWLY INSERTED PROVISIONS OF SECTION 10(23C) OF THE I.T. ACT. 7.7 ACCORDING TO THE LEARNED A.R. EVEN THE SEIZURE OF CASH WAS OF NO CONSEQUENCE FOR REJECTING THE EXEMPTION AS CLAIMED BY THE ASSESSEE. THE DONATION IN CASH IS GENERALLY RECEIVED BY SUCH EDUCATIONAL INSTITUTION, THEREFORE, THE CASH OF ABOUT 44 LAKHS WAS THE NORMAL RECEIPT OF THE SOCIETY AND IT WAS NOT A PERSONAL PROFIT. THERE WAS NO MOTIVE TO KEEP THE SAID DONATION OUTSIDE THE BOOKS OF ACCOUNT. ONCE THE SOCIETY HAS EXPLAINED THAT THE DONATION WAS RECEIVED FROM FEW PERSONS, A LIST GIVEN, THEN AN EXEMPTION SHOULD NOT HAVE BEEN DENIED. THE DONATION PERSE ARE ALWAYS VOLUNTARY AND THE ASSESSEE HAD NO CO NTROL OVER THE DONORS. HE HAS CONCLUDED THAT IN A SITUATION WHEN IN ASSESSEES OWN CASE THIS VERY TRIBUNAL HAS TIME AND AGAIN TAKEN A VIEW IN FAVOUR OF THE ASSESSEE BY NOT QUESTIONING THE OBJECTS OF THE SOCIETY THEN THE LOWER AUTHORITIES SHOULD NOT HAVE IG NORED THOSE FINDING AND SHOULD HAVE ALLOWED THE CLAIM. 25 ITA NOS. 01 & 06/NAG/2013 8. FROM THE SIDE OF THE REVENUE, LEARNED D.R. MR. NARENDRA KANE APPEARED AND SUPPORTED THE VIEW TAKEN BY THE REVENUE AUTHORITIES. HE HAS PLEADED THAT ONLY AFTER SEARCH ACTION IT WAS DETECTED THAT THE A SSESSEE SOCIETY WAS RECEIVING CASH DONATIONS FROM THE DONORS WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS. AN EDUCATIONAL SOCIETY, WHICH IS CREATED TO GIVE EDUCATION TO THE STUDENTS, SHOULD NOT HAVE INDULGED IN SUCH MALPRACTICE OF COLLECTING DONATIONS I N CASH AND SIDE BY SIDE NOT MENTIONED IN THE BOOKS OF ACCOUNTS. IN ADDITION TO THE ABOVE RECOVERY OF CASH THE ASSESSING OFFICER HAS ALSO RECORDED VARIOUS DISCREPANCIES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. A DIARY WAS ALSO SEIZED FROM THE OFFICE OF THE DEAN WHICH WAS CONTAINING THE DETAILS OF THE SEVERAL AMOUNTS CREDITED TO THE EXTENT OF RS ` 2.97 CRORES WHICH WAS TAXED BY THE ASSESSING OFFICER. BECAUSE OF THESE EXAMPLES OF DISCREPANCIES THE REVENUE AUTHORITIES WERE JUSTIFIED IN NOT GRANTING EXEMPTION UN DER SECTION 10(23C) OF I.T. ACT. 9. WE HAVE HEARD BOTH THE SIDES AT LENGTH. WE HAVE ALSO PERUSED SEVERAL PAPER BOOKS FILED IN THE LIGHT OF THE CASE LAWS AND THE RECORD OF THE CASE. THIS SOCIETY IS STATED TO BE RUNNING EDUCATIONAL INSTITUTIONS SINCE 1932 33 . UNDER THE SOCIETY ABOUT 269 SCHOOLS AND COLLEGES ARE IMPARTING EDUCATION TO A LARGE NUMBER OF STUDENTS. THE STRENGTH OF THE STUDENTS CLAIMED TO BE 1,09,600 IN NUMBER APPROXIMATELY. THE EDUCATIONAL INSTITUTIONS ARE CLAIMED TO HAVE BEEN AFFILIATED WITH THE EDUCATION BOARDS/BOARDS OF SCHOOL EDUCATION AND THE COLLEGES ARE AFFILIATED WITH THE UNIVERSITIES . ONE MORE FACT HAS BEEN BROUGHT TO OUR NOTICE THAT THE ASSESSEE IS REGULARLY GETTING GOVERNMENT GRANT WHICH IS ABOUT 95% OF THE TOTAL RECEIPTS. THE ASSESSEE S MAIN CLAIM WAS THAT SINCE THIS SOCIETY IS RUNNING EDUCATIONAL INSTITUTIONS AND 95% OF THE TOTAL 26 ITA NOS. 01 & 06/NAG/2013 RECEIPTS HAS CONSTITUTED GRANT RECEIVED FROM THE GOVERNMENT, THEREFORE, QUALIFIES FOR THE DEDUCTION UNDER SECTION 10(23C)(IIIAB). THIS SECTION PRESCRIBES AS U NDER : INCOMES NOT INCLUDED IN TOTAL INCOME. 10. = (23C) ANY INCOME RECEIVED BY ANY PERSON ON BEHALF OF (I) (IIIAB) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT, AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT, OR 9.1 HOWEVER, THE ASSESSING OFFICER HAS REJECTED THE SAID CLAIM. AS PER THE ASSESSING OFFICER THE ASSESS EE IS ALSO RUNNING BUSINESS AND GETTING PROFIT ON PRODUCTION OF FURNITURE, RUNNING OF PRINTING PRESS, A MEDICAL STORE AND A SWIMMING TANK. ACCORDING TO THE ASSESSING OFFICER ALTHOUGH THE RESPECTIVE ALLEGED PROFIT EARNING ACTIVITIES WERE CARRIED OUT BY SEVE RAL EDUCATIONAL INSTITUTES, SUCH AS DESHMUKH MEMORIAL MEDICAL COLLEGE AKOLA, ENGINEERING COLLEGE, NAGPUR MANAGEMENT STUDIES ETC. BUT DUE TO THE REASON THAT ALL THOSE EDUCATIONAL INSTITUTIONS WERE UNDER THE AEGIS OF THE ASSESSEE SOCIETY, THEREFORE, THE SOC IETY IS NOT QUALIFIED FOR THE EXEMPTION GRANTED UNDER SECTION 10(23C) OF THE ACT. ACCORDING TO THE ASSESSING OFFICER SINCE THE ASSESSEE WAS HAVING SYSTEMATIC MOTIVE OF EARNING PROFIT, THEREFORE, FOLLOWING FEW DECISIONS, NAMELY, YOGIRAJ CHARITY TRUST 103 IT R 777 (SC), QUEENS EDUCATION SOCIETY 223 CTR 395 27 ITA NOS. 01 & 06/NAG/2013 (UTTARAKHAND), RED ROSE SCHOOL 212 CTR 394 (ALL.) IT WAS HELD THAT NEITHER THE SOCIETY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 10(23C) NOR ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE I.T. ACT. THE CONSEQU ENT IMPACT OF THE REJECTION OF THE EXEMPTION WAS THAT THE ENTIRE RECEIPTS OF THE SOCIETIES, NAMELY, DONATIONS, INCOME FROM OTHER SOURCES, BUILDING RENT, MEDICAL STORE, SWIMMING POOL AND PRINTING PRESS ETC. TOTALLING ` 29,45,42,810/ WAS TAXED IN THE HANDS OF THE ASSESSEE. 9.2 THE NEXT IMPACT OF THE REJECTION OF CLAIM OF DEDUCTION UNDER SECTION 10(23C) OF THE ACT WAS THAT AS A RESULT OF SEARCH UNDER SECTION 132 CONDUCTED ON 2 ND AUGUST, 2007 AT THE OFFICE OF THE DEAN, A DIARY WAS RECOVERED AND IN THAT DIARY THE RECEIPTS WERE CALCULATED AND HELD AS INCOME OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 68 OF I.T. ACT. THUS AN ADDITION OF ` 2,97,63,208/ WAS MADE IN THE IMPUGNED ASSESSMENT ORDER. 10. ONE MORE ADDITION WAS MADE IN RESPECT OF SEIZURE OF CAS H OF ` 46,17,000/ RECOVERED FROM THE SAID DEAN DR. PADMAKAR SOMWANSHI. ACCORDING TO THE ASSESSING OFFICER IT WAS AN UNACCOUNTED CASH WHICH WAS RECOVERED FROM ONE OF THE MEDICAL COLLEGE RUN BY THE ASSESSEE. HENCE BY INVOKING THE PROVISIONS OF SECTION 69A ALSO TAXED IN THE HANDS OF THE ASSESSEE. 11. AS FAR AS THE ORDER OF LEARNED CIT(APPEALS) IS CONCERNED, THE ISSUE OF CLAIM OF EXEMPTION UNDER SECTION 10(23C) WAS REJECTED. THE REASON GIVEN WAS THAT A HUGE CASH OF ` 46,17,000/ WAS RECOVERED 28 ITA NOS. 01 & 06/NAG/2013 FROM ONE OF THE MEDICAL COLLEGE OF THE SOCIETY, WHICH HAS CONCLUSIVELY PROVED THAT THE ASSESSEE SOCIETY IS RUNNING A PROFIT MAKING INSTITUTION. ACCORDING TO THE LEARNED CIT(APPEALS), THE DISCREPANCIES NOTED IN THE SEIZED DIARY AND THE EXISTENCE OF CASH HAVE DEMONSTRATED T HAT THE APPELLANT WAS NOT SOLELY FOR THE PURPOSE OF EDUCATION. AS A RESULT, THE ENTITLEMENT OF EXEMPTION UNDER SECTION 10(23C) WAS DENIED. 11.1 THEREFORE, THE MAIN CONTROVERSY WHICH IS NOW RAKED UP BY BOTH THE SIDES IS WHETHER THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 10(23C)(IIIAB) OR NOT. WE HAVE ALREADY REPRODUCED THE LANGUAGE OF THIS SECTION. THE FIRST PLANK OF ARGUMENT OF THE LEARNED A.R. IS THAT IN A SITUATION WHEN THE ACT ITSELF HAS PROVIDED THAT A UNIVERSITY OR EDUCATIONAL INSTITUTION EX ISTED SOLELY FOR EDUCATION PURPOSES AND SUCH SOCIETY IS WHOLLY AND SUBSTANTIALLY FINANCED BY THE GOVERNMENT THEN ANY INCOME RECEIVED BY THE SAID SOCIETY IS EXEMPT AND THE INCOME IF ANY IS NOT TO BE AS THE TAXABLE INCOME OF THE SOCIETY. 11.2 A BASIC CONDIT ION FOR THE PURPOSE OF APPLICATION OF SECTION 10(23C) IS THAT THE SOCIETY OR EDUCATIONAL INSTITUTE OR UNIVERSITY SHOULD EXIST SOLELY FOR EDUCATIONAL PURPOSES AND THE SECOND MOST IMPORTANT REQUIREMENT IS THAT SUCH UNIVERSITY OR EDUCATIONAL INSTITUTION SHOUL D BE WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. WE HAVE BEEN INFORMED THAT TO OBTAIN THE GRANT FROM THE GOVERNMENT, SEVERAL CONDITIONS HAVE BEEN LAID DOWN AND SO THE ANNUAL GRANT IS SANCTIONED ONLY WHEN THOSE CONDITIONS ARE FULFILLED. THEREFORE, T HE CONDITIONS AS PRESCRIBED UNDER I.T. ACT ARE NOT THE ONLY CONDITIONS TO CHECK THE FUNCTIONING OF AN EDUCATIONAL SOCIETY BUT 29 ITA NOS. 01 & 06/NAG/2013 THERE ARE OTHER GOVERNMENT AGENCIES EMPOWERED TO CONTROL AND CHECK THE FUNCTIONING OF A EDUCATIONAL SOCIETY. THIS ARGUMENT HAS FU RTHER BEEN EXTENDED THAT IN A SITUATION WHEN THE ADMITTED FACTUAL POSITION WAS THAT THIS SOCIETY HAS RECEIVED ABOUT ` 92,03,53,430/ GRANT FROM THE GOVERNMENT FOR THE ACCOUNTING PERIOD ENDED ON 31 ST MARCH, 2008, THEREFORE, THE FUNCTIONING OF THE SOCIETY SH OULD NOT HAVE BEEN DOUBTED. THE SOCIETY HAS EXISTED FOR EDUCATIONAL PURPOSES WHICH WAS EXAMINED BY THE GOVERNMENT AGENCIES BEFORE GRANTING SUCH A HUGE GRANT. SO THE ARGUMENT IS THAT MERELY ON THE BASIS THAT THE SOCIETY IS RUNNING A MEDICAL STORE OR A SWIM MING TANK ETC. THE ASSESSING OFFICER HAD TAKEN AN ADVERSE VIEW BUT THE PROFIT EARNED THEREFROM WAS ALSO UTILIZED FOR THE OBJECT OF THE SOCIETY. WE FIND FORCE IN THE ARGUMENT OF THE ASSESSEE BECAUSE NO GOVERNMENT AGENCY CAN GIVE A GRANT TO THE EXTENT OF ` 9 2 CRORES UNLESS AND UNTIL FULLY SATISFIED ABOUT THE FUNCTIONING OF THE EDUCATIONAL SOCIETY. 11.3 ONE OF THE CASE LAW WHICH WAS RELIED UPON BY THE ASSESSING OFFICER WAS THAT IN THE CASE OF YOGIRAJ CHARITY TRUST 103 ITR 777 THE LEGAL PROPOSITION LAID DOWN W AS THAT IF ONE OF THE OBJECTS OF THE TRUST WAS NOT FOR CHARITABLE AND THE TRUST DEED CONFERS FULL DISCRETION TO THE TRUSTEES TO SPEND THE TRUST FUNDS FOR AN OBJECT OTHER THAN THE CHARITABLE OBJECT, THEN NOT ENTITLED FOR EXEMPTION. WE HAVE CAREFULLY PERUSED THIS JUDGMENT AND IN OUR HUMBLE OPINION THE FACTS AS WELL AS THE LEGAL ISSUE WAS ENTIRELY DIFFERENT FROM THE ISSUE IN HAND BEFORE US. RATHER IN ONE OF THE PARA, THE HONBLE COURT HAS OPINED THAT IF THE DOMINANT PURPOSE OF A TRUST IS CHARITABLE, ANOTHER O BJECT MAY OR MAY NOT BE CHARITABLE BUT ANCILLARY OR INCIDENTAL TO THE DOMINANT WOULD NOT PREVENT THE TRUST FROM BEING A VALID CHARITABLE TRUST. IN THE 30 ITA NOS. 01 & 06/NAG/2013 PRESENT CASE THERE IS NO DISPUTE ABOUT THE OBJECT OF THIS EDUCATIONAL SOCIETY. HOWEVER, THE ASSESSING OFF ICER HAS RAKED UP THE CONTROVERSY IN RESPECT OF FEW PROFIT EARNING ACTIVITIES CARRIED OUT, SUCH AS, RUNNING OF A MEDICAL STORE, SWIMMING POOL, BUT THOSE WERE NOTHING BUT ANCILLARY ACTIVITY CONNECTED WITH THE RUNNING OF THE EDUCATIONAL INSTITUTIONS BEING US ED BY THE STUDENTS AND SOLELY FOR THE PURPOSE TO SUPPORT THE OBJECTS, THEREFORE, ENTITLED FOR EXEMPTION. 11.4 WE HAVE ALSO NOTED THAT THE ASSESSING OFFICER HAS REFERRED A DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CHAIRMAN, ANDHRA PRADE SH WELFARE FUND 143 ITR 82 (A.P.) FOR THE LEGAL PROPOSITION THAT IF A SMALL PORTION OF THE VOLUNTARY CONTRIBUTION IS USED FOR NON CHARITABLE PURPOSES, THE ENTIRE CONTRIBUTION WILL LOSE THE BENEFIT OF EXEMPTION. WE HAVE PERUSED THIS JUDGMENT AS WELL AND THE REUPON NOTED THAT THE ADMITTED FACTUAL POSITION IN THE SAID CASE WAS THAT THE FUND COLLECTED WAS NOT USED FOR THE WELFARE ACTIVITY. THE HONBLE COURT HAS QUOTED THAT IT WAS AN UNFORTUNATE CASE WHERE A PUBLIC WELFARE FUND WAS UTILIZED FOR EXTRANEOUS PURPOSE S NOT CONNECTED WITH THE OBJECTS AND PURPOSES OF THE FUND. ON THE CONTRARY IN THE PRESENT CASE THERE IS NO SUCH ALLEGATION THAT THE SOCIETIES FUND WAS MISUTILIZED. EVEN IN RESPECT OF THE CASH FOUND, THE ONLY ALLEGATION WAS THAT IT WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS, HOWEVER THERE WAS NO ALLEGATION THAT THE FUNDS WERE NOT USED FOR RUNNING OF EDUCATIONAL INSTITUTIONS. OTHERWISE ALSO THE ASSESSEE SOCIETY HAS OWNED UP THE DONATION RECEIVED AND EXPLAINED THAT THE SOURCE OF DONATION WAS AVAILABLE, AS WELL AS UTILIZED FOR THE OBJECTS OF THE TRUST. 12. THERE IS A DECISION OF UTTARAKHAND HIGH COURT PRONOUNCED IN THE 31 ITA NOS. 01 & 06/NAG/2013 QUEENS EDUCATIONAL SOCIETY 223 CTR 395 (UTTARAKHAND) FOR THE LEGAL PROPOSITION THAT IF AN EDUCATIONAL INSTITUTION IS RUNNING WITH A PROFIT MOTIVE AND EARNING SYSTEMATIC PROFIT THEN NO EXEMPTION SHOULD BE AVAILABLE TO SUCH INSTITUTION. IN THE OPINION OF THE HONBLE HIGH COURT IF PROFITS HAVE BEEN EARNED THEN THE EXEMPTION UNDER SECTION 10(23C)(IIIAB) WAS NOT TO BE ALLOWED. HOWEVER, THAT VIEW OF THE HONBLE COURT WAS REVERSED BY THE HONBLE SUPREME COURT IN CIVIL APPEAL NO. 5167 OF 2008 VIDE AN ORDER DATED 16 TH OF MARCH, 2015 WHEREIN VARIOUS CASE LAWS ON THIS ISSUE HAVE BEEN DISCUSSED AND FINALLY VIDE PARA 19 IT WAS HELD THAT THE ISSUE OF THE HONBLE UTTARAKHAND HIGH COURT DATED 24 TH SEPT., 2007 WAS SET ASIDE AND THE REASONING GIVEN BY ITAT WAS MORE INCONSONANCE WITH THE LAW LAID DOWN. FINALLY THE ORDER OF THE TRIBUNAL WAS APPROVED. 13. AT THIS JUNCTURE IT IS WORTH TO MENTION THAT A DECISION OF HONBL E PUNJAB & HARYANA HIGH COURT DATED 29 TH JANUARY, 2010 PRONOUNCED IN THE CASE OF PINEGROVE INTERNATIONAL CHARITABLE TRUST 327 ITR 73 WAS ALSO CHALLENGED. THE HONBLE SUPREME COURT HAS APPROVED THE JUDGMENT OF PUNJAB & HARYANA HIGH COURT WITH THE REMARK T HAT THE PROVISIONS OF SECTION 10(23C) IS OF A GREAT IMPORTANCE. HOWEVER, THE ASSESSING AUTHORITIES MUST CAUTIOUSLY MONITOR FROM ASSESSMENT YEAR TO ASSESSMENT YEAR WHETHER SUCH INSTITUTIONS CONTINUED TO APPLY THEIR INCOME IN ACCORDANCE WITH THE LAW LAID DOW N. IN THIS JUDGMENT THE HONBLE COURT HAS MENTIONED THAT PREVIOUSLY IN THREE JUDGMENTS OF THE HONBLE SUPREME COURT, NAMELY, SURAT ART SILK CLOTH, ADITNATH EDUCATIONAL INSTITUTION AND AMERICAN HOTEL AND LODGING CERTAIN TESTS HAVE BEEN CARVED - OUT TO DET ERMINE WHETHER AN INSTITUTION EXISTS SOLELY FOR EDUCATIONAL PURPOSES OR NOT. WE HAVE EXTRACTED BELOW PARA 11 OF THIS JUDGMENT AS UNDER : 32 ITA NOS. 01 & 06/NAG/2013 THUS, THE LAW COMMON TO SECTION 10(23C)(IIIAD) AND (VI) MAY BE SUMMED UP AS FOLLOWS : (1) WHERE AN EDUCATIONAL INSTITUTION CARRIES ON THE ACTIVITY OF EDUCATION PRIMARILY FOR EDUCATING PERSONS, THE FACT THAT IT MAKES A SURPLUS DOES NOT LEAD TO THE CONCLUSION THAT IT CEASES TO EXIST SOLELY FOR EDUCATIONAL PURPOSES AND BECOMES AN INSTITUTION FOR THE PURPOSE OF MAKING PROFIT. (2) THE PREDOMINANT OBJECT TEST MUST BE APPLIED THE PURPOSE OF EDUCATION SHOULD NOT BE SUBMERGED BY A PROFIT MAKING MOTIVE. (3) A DISTINCTION MUST BE DRAWN BETWEEN THE MAKING OF A SURPLUS AND AN INSTITUTION BEING CARRIED ON FOR PROFIT NO INFERENCE ARIS E THAT MERELY BECAUSE IMPARTING EDUCATION RESULTS IN MAKING A PROFIT, IT BECOMES AN ACTIVITY FOR PROFIT. (4) IF AFTER MEETING EXPENDITURE, A SURPLUS ARISES INCIDENTALLY FROM THE ACTIVITY CARRIED ON BY THE EDUCATIONAL INSTITUTION, IT WILL NOT BE CEASE TO BE ONE EXISTING SOLELY FOR EDUCATIONAL PURPOSES. (5) THE ULTIMATE TEST IS WHETHER ON AN OVERALL VIEW OF THE MATTER IN THE CONCERNED ASSESSMENT YEAR THE OBJECT IS TO MAKE PROFITS AS OPPOSED TO EDUCATING PERSONS. BECAUSE OF THE LATEST DECISION OF THE HONBLE SUPREME COURT AS DISCUSSED ABOVE THROUGH WHICH THE DECISION OF HONBLE HIGH COURT (UTTARAKHAND) WHICH WAS RELIED UPON BY THE ASSESSING OFFICER, NOW STOOD REVERSED, THEREFORE, WE ARE OF THE CONSCIENTIOUS VIEW TH AT IT IS NOW MADE VERY MUCH CLEAR THAT EVEN IF THERE WAS AN ANCILLARY ACTIVITY TO EARN PROFIT BUT THE PROFIT OR ANY RECEIPT OR INCOME IS WHOLLY AND EXCLUSIVELY USED FOR THE EDUCATIONAL PURPOSES THEN SUCH AN EDUCATIONAL SOCIETY SHOULD NOT BE DEBARRED FROM T HE BENEFITS OF EXEMPTION. 33 ITA NOS. 01 & 06/NAG/2013 13.1 AS FAR AS THE VIEW TAKEN BY LEARNED CIT(APPEALS) IS CONCERNED, WE HAVE NOTED THAT MAINLY BECAUSE DURING THE COURSE OF SEARCH CASH WAS FOUND, IT WAS HELD THAT DUE TO THE PRESENCE OF UNRECORDED CASH THE SOCIETY HAD INCURRED IRR EGULARITIES HENCE NOT ENTITLED FOR EXEMPTION UNDER SECTION 10(23C) OF THE I.T. ACT. 13.2 AS FAR AS THE DECISION OF ADITANAR EDUCATIONAL INSTITUTION 224 ITR 310 (S.C.) IS CONCERNED, AS DISCUSSED BY LEARNED CIT(APPEALS), ON A CAREFUL READING WE HAVE NOTED TH AT THE OPINION EXPRESSED BY THE HONBLE SUPREME COURT WAS THAT IF IN SUBSTANCE AND REALITY THE SOLE PURPOSE FOR WHICH EDUCATIONAL INSTITUTION HAD COME INTO EXISTENCE TO IMPART EDUCATION AT THE LEVELS OF COLLEGES AND SCHOOLS THEN SUCH EDUCATIONAL SOCIETY S HOULD BE REGARDED AS AN EDUCATIONAL INSTITUTION COMING WITHIN SECTION 10(22) OF THE I.T. ACT. RATHER IT WAS COMMENTED THAT IT WILL BE UNREAL AND HYPER TECHNICAL TO HOLD THAT THE ASSESSEE SOCIETY WAS ONLY A FINANCIAL BODY AND, THEREFORE, WOULD NOT COME WI THIN THE SCOPE OF EDUCATIONAL INSTITUTION. THIS DECISION, THEREFORE, GOES IN FAVOUR OF THE ASSESSEE AS CONTESTED BEFORE US. 14. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS MADE ONE MORE OBSERVATION THAT IN A CASE WHERE ANONYMOUS DONATIONS HAVE BEEN R ECEIVED BY A TRUST THEN SUCH TRUST IS NOT ELIGIBLE FOR EXEMPTION AND THE RECEIPTS SHOWED CHARGEABLE TO INCOME TAX AS PRESCRIBED BY A NEWLY INSERTED SECTION 115BBC INTRODUCED BY FINANCE ACT 2006 WITH EFFECT FROM 01 04 2007. ACCORDING TO THE OBSERVATION OF THE ASSESSING OFFICER DURING THE COURSE OF SURVEY UNDER SECTION 133A ON THE PREMISES OF THE ASSESSEE SOCIETY CONDUCTED ON 14 08 2007 SEVERAL DONATION RECEIPT BOOKS WERE IMPOUNDED. THE ASSESSING 34 ITA NOS. 01 & 06/NAG/2013 OFFICER HAS REPRODUCED DETAILS OF THE RECEIPT BOOKS AND MENTIO NED THE NAMES OF THE INSTITUTIONS AND THE AMOUNT OF DONATION RECEIVED. ON THAT BASIS HE HAS HELD THAT IN THE ABSENCE OF NAMES, IDENTITY AND THE ADDRESS OF THE PERSONS WHO HAVE DONATED TO VARIOUS INSTITUTIONS, THOSE DONATIONS WERE NOTHING BUT ANONYMOUS DONA TIONS, THEREFORE, TO BE TAXED UNDER SECTION 115BBC. 13.3 DURING THE COURSE OF HEARING WE HAVE BEEN INFORMED THAT SECTION 115BBC DO NOT REFER SECTION 10(23C)(IIIAB), THEREFORE, NOT TO APPLY ON THE DONATIONS RECEIVED BY THIS ASSESSEE SOCIETY. FOR READY REFER ENCE, SECTION 115BBC READS AS UNDER : SECTION - 115BBC, INCOME - TAX ACT, 1961 - 2014 35 [ ANONYMOUS DONATIONS TO BE TAXED IN CERTAIN CASES. 115BBC. (1) WHERE THE TOTAL INCOME OF AN AS SESSEE, BEING A PERSON IN RECEIPT OF INCOME ON BEHALF OF ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION REFERRED TO IN SUB - CLAUSE (IIIAD) OR SUB - CLAUSE (VI) OR ANY HOSPITAL OR OTHER INSTITUTION REFERRED TO IN SUB - CLAUSE (IIIAE) OR SUB - CLAUSE (VIA) OR ANY FUND OR INSTITUTION REFERRED TO IN SUB - CLAUSE (IV) OR ANY TRUST OR INSTITUTION REFERRED TO IN SUB - CLAUSE (V) OF CLAUSE (23C) OF SECTION 10 OR ANY TRUST OR INSTITUTION REFERRED TO IN SECTION 11 , INCLUDES ANY INCOME BY WAY OF ANY ANONYMOUS DONATION, THE INCOME - TAX PAYABLE SHALL BE THE AGGREGATE OF 36 [( I ) THE AMOUNT OF INCOME - TAX CALCULATED AT THE RATE OF THIRTY PER CENT ON THE AGGREGATE OF ANONYMOUS DONATIONS RECEIVED IN EXCESS OF THE HIGHER OF THE FOLLOWING, NAMELY: ( A ) FIVE PER CENT OF THE TOTAL DONATIONS RECEIVED BY T HE ASSESSEE; OR ( B ) ONE LAKH RUPEES, AND ( II ) THE AMOUNT OF INCOME - TAX WITH WHICH THE ASSESSEE WOULD HAVE BEEN CHARGEABLE HAD HIS TOTAL INCOME BEEN REDUCED BY THE AGGREGATE OF ANONYMOUS DONATIONS RECEIVED.] THE FOLLOWING CLAUSE (II) SHALL BE SUBSTITUTED FOR THE EXISTING CLAUSE (II) OF SUB - SECTION (1) OF SECTION 115BBC BY THE FINANCE (NO. 2) ACT, 2014, W.E.F. 1 - 4 - 2015: ( II ) THE AMOUNT OF INCOME - TAX WITH WHICH THE ASSESSEE WOULD HAVE BEEN CHARGEABLE HAD HIS TOTAL INCOME BEEN REDUCED BY THE AGGREGATE OF ANO NYMOUS DONATIONS RECEIVED IN EXCESS OF THE AMOUNT REFERRED TO IN SUB - CLAUSE ( A ) OR SUB - CLAUSE ( B ) OF CLAUSE ( I ), AS THE CASE MAY BE. 35 ITA NOS. 01 & 06/NAG/2013 (2) THE PROVISIONS OF SUB - SECTION (1) SHALL NOT APPLY TO ANY ANONYMOUS DONATION RECEIVED BY ( A ) ANY TRUST OR INSTITUTION C REATED OR ESTABLISHED WHOLLY FOR RELIGIOUS PURPOSES; ( B ) ANY TRUST OR INSTITUTION CREATED OR ESTABLISHED WHOLLY FOR RELIGIOUS AND CHARITABLE PURPOSES OTHER THAN ANY ANONYMOUS DONATION MADE WITH A SPECIFIC DIRECTION THAT SUCH DONATION IS FOR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION RUN BY SUCH TRUST OR INSTITUTION. (3) FOR THE PURPOSES OF THIS SECTION, 'ANONYMOUS DONATION' MEANS ANY VOLUNTARY CONTRIBUTION REFERRED TO IN SUB - CLAUSE (IIA) OF CLAUSE (24) OF SECTION 2 , WHERE A PERSON RECEIVING SUCH CONTRIBUTION DOES NOT MAINTAIN A RECORD OF THE IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING SUCH CONTRIBUTION AND SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED.] 13.4 ALTHOUGH IT IS CORRECT THAT BY THE INTRODUCTION OF SECTION 115BBC A PERSON IN RECEIPT OF INCOME ON BEHALF OF ANY UNIVERSITY OR EDUCATIONAL INSTITUTION REFERRED TO IN CERTAIN SUB SECTIONS OF SECTION 10(23C) SHALL BE TAXED IN RESPECT OF ANY ANONYMOUS DONATIO NS BUT THIS SECTION HAS NOT INCLUDED THOSE EDUCATIONAL INSTITUTIONS EXISTED SOLELY FOR EDUCATIONAL PURPOSES AND SUBSTANTIALLY FINANCED BY THE GOVERNMENT. (SECTION 10(23C)(IIIAB) ). THE ASSESSEES CASE FALL UNDER THIS CATEGORY. AS AGAINST THAT, SECTION 115 BBC REFERRED CERTAIN EDUCATIONAL INSTITUTIONS NOT FINANCED BY THE GOVERNMENT OR CREATED FOR PUBLIC RELIGIOUS PURPOSES. THIS DISTINCTION WAS NOT NOTICED BY THE REVENUE AUTHORITIES. IN THIS REGARD OUR ATTENTION HAS ALSO BEEN DRAWN ON TWO CIRCULARS ISSUED BY CBDT BEARING NO. 014 OF 2006 DATED 28 TH DECEMBER, 2006 AND CIRCULAR NO. 5 OF 2010 DATED 3 RD JUNE, 2010. IT IS CLARIFIED THAT UNDER THE PROVISIONS OF SECTION 115BBC WHOLLY RELIGIOUS ENTITIES ARE ALSO OUTSIDE THE PURVIEW OF ANONYMOUS DONATIONS. IN OTHER WORD S, THE PROVISIONS OF SECTION 115BBC ARE TO BE APPLIED IN RESPECT OF SUCH INSTITUTIONS AS LISTED THEREIN. THIS SECTION IS APPLICABLE IN RESPECT OF VOLUNTARY CONTRIBUTIONS WHICH ARE IDENTIFIED IN RESPECT OF SUCH 36 ITA NOS. 01 & 06/NAG/2013 EDUCATIONAL INSTITUTIONS AS CLASSIFIED IN SECT ION 115BBC. IN OTHER WORDS THE EDUCATIONAL INSTITUTIONS MAINLY RUNNING WITH THE HELP OF GOVERNMENT GRANTS ARE NOT TOUCHED BY THIS SECTION. THEREFORE, WE ARE OF THE FIRM OPINION THAT ONCE THE STATUTE HAS NOT INCLUDED 10(23C)(IIIAB) IN SUB SECTION (1) OF SEC TION 115BBC HENCE THE DONATIONS ALLEGED TO BE ANONYMOUS OR OTHERWISE NOT TO BE TAXED UNDER THIS PROVISION OF THE ACT IN THE CASE OF THE ASSESSEE. 13.5 IN ADDITION TO THE ABOVE DISCUSSION AND CERTAIN CASE LAWS AS DISCUSSED HEREIN ABOVE, INTER ALIA, WE HAVE ALSO NOTED THAT IN ASSESSEES OWN CASE ITAT, NAGPUR BENCH VIDE AN ORDER DATED 12 09 2014 HAS TAKEN A VIEW THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL THE ASSUMPTION OF JURISDICTION UNDER SECTION 153C WAS UNWARRANTED FOR ASSESSMENT YEARS 2002 03, 200 3 04 AND 2004 05. FOLLOWING THE SAID DECISION, THE ITAT, NAGPUR BENCH VIDE AN ORDER DATED 30 TH OF APRIL, 2015 IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 2005 06, 2006 07 AND 2007 08 HAS HELD THAT SINCE ON THE ISSUE OF APPLICABILITY OF THE PROVISIONS OF SECTION 153C HAVE ALREADY BEEN ADJUDICATED UPON BY THE RESPECTED COORDINATE BENCH, THEREFORE, THE ASSUMPTION OF JURISDICTION UNDER SECTION 153A WAS INVALID. INTERESTINGLY IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2002 03 LEARNED CIT(APPEALS) I, NAGPUR VIDE AN ORDER DATED 17 10 2011 HAS ALSO HELD THAT THE INSTITUTION IS ONE WHICH IS WHOLLY AND SUBSTANTIALLY FINANCED BY THE GOVERNMENT AND EXISTS SOLELY FOR THE PURPOSE OF EDUCATION AND DOES NOT RUN FOR ANY PROFIT MOTIVE, THEREFORE, ELIGIBLE FOR EXEMPTION U NDER SECTION 10(23C)(IIIAB) OF I.T. ACT. FURTHER IT HAS ALSO BEEN BROUGHT TO OUR NOTICE THAT ITAT, NAGPUR BENCH IN ITA NO. 222/NAG/2009 ORDER DATED 25 TH JULY, 2011 HAS HELD THAT CERTAIN EDUCATIONAL INSTITUTIONS RUNNING WITHIN THE SOCIETY MAY BE 37 ITA NOS. 01 & 06/NAG/2013 DOING CERTA IN PROFIT EARNING ACTIVITIES BUT THOSE ACTIVITIES WERE SUBSERVIENT TO THE MAIN ACTIVITY OF THE ASSESSEE OF RUNNING EDUCATIONAL INSTITUTIONS IN DIFFERENT FIELDS. THE RESPECTED COORDINATE BENCH HAS HELD THAT THERE WAS NO JUSTIFICATION ON THE PART OF THE COMM ISSIONER TO HOLD THAT SUCH ACTIVITIES ARE INDEPENDENT ACTIVITIES CARRIED OUT WITH A PROFIT MOTIVE. IT WAS HELD THAT THE ASSESSEE WAS ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF I.T. ACT. IN THE PAST IN ASSESSEES CASE CONTROVERSY IN RESPECT OF GRANT OF APPROVAL UNDER SECTION 80G HAD ALSO CROPPED UP, BUT ITAT NAGPUR BENCH IN ITA NO. 154/NAG/2009 VIDE AN ORDER DATED 12 08 2009 HAS HELD THAT FOR THE APPROVAL UNDER SECTION 80G(5), THE REGISTRATION UNDER SECTION 12A(A) WAS NOT A PRE CONDITION. AS PER THE VER DICT OF THE TRIBUNAL IT WAS NOT CORRECT TO TAKE SUCH VIEW BECAUSE AS PER SECTION 80G(5) CLAUSE (I), IF THE INCOME OF AN INSTITUTION IS NOT LIABLE TO BE TAXED UNDER SECTION 10(23C) THAT WOULD MEET THE REQUIREMENT OF LAW FOR GRANTING REGISTRATION UNDER SECT ION 80G(5) OF THE ACT. IT HAS ALSO BEEN ACKNOWLEDGED BY THE TRIBUNAL THAT THE SOCIETY IS DEPENDENT ON MORE THAN 75% OF THE GRANT BY THE GOVERNMENT. THEREFORE, THE CONDITIONS AS PRESCRIBED UNDER SECTION 80G WERE SATISFIED AND HELD THAT THERE WAS NO JUSTIFIC ATION FOR REJECTING THE RENEWAL OF APPROVAL UNDER SECTION 80G. IN THE LIGHT OF THE OVERALL DISCUSSION ONLY ONE VIEW IS POSSIBLE THAT THE ASSESSEE SOCIETY BEING SUBSTANTIALLY FINANCED BY THE GOVERNMENT GRANT AND RUNNING SEVERAL EDUCATIONAL INSTITUTIONS, HEN CE THE EXEMPTION UNDER SECTION 10(23C)(IIIAB) SHOULD NOT BE SNATCHED AWAY FROM THE ASSESSEE THAT TOO ON THE BASIS OF A DEFAULT OF ONE DEAN OF AN INSTITUTION. MOREOVER, THE ASSESSEE HAS PLACED ON RECORD THE REQUISITE INFORMATION IN RESPECT OF THOSE DONATIO NS RECEIVED IN CASH AS FOUND DURING THE COURSE OF THE SEARCH. WE, THEREFORE, HOLD THAT THIS 38 ITA NOS. 01 & 06/NAG/2013 SOCIETY IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EDUCATION BY RUNNING EDUCATIONAL INSTITUTIONS, THEREFORE, ENTITLED FOR EXEMPTION UNDER SECTION 10(23)(IIIAB) OF I.T. ACT. GROUND NOS. 1 AND 2 ARE ALLOWED. 14. IN RESPECT OF GROUND NO. 3 AND 4, SINCE WE HAVE ALREADY TAKEN A VIEW THAT THE INCOME/RECEIPT IS EXEMPT UNDER SECTION 10(23C) OF I.T. ACT, THEREFORE, THE ADDITIONS MADE BY INVOKING THE PROVISIONS OF SECTION 68 AND SECTION 69A SHOULD ALSO FALL UNDER THE SAID EXEMPT CATEGORY. RESULTANTLY THE SAID IMPUGNED ADDITIONS SHALL NOT SURVIVE AND SHALL FORM A PART OF THE EXEMPTED INCOME. HENCE GROUND NOS. 3 AND 4 ARE ALSO ALLOWED. 15. IN RESPECT OF GROUND NO. 5, THE ASSESS EE HAS CLAIMED DEPRECIATION WHICH WAS REJECTED BY THE LEARNED CIT(APPEALS). HOWEVER, THIS ISSUE IS NOW COVERED BY THE FOLLOWING DECISIONS : (1) CIT V/S. DOOM DOOM INDIA LTD. (2009) 310 ITR 392 (SC). (2) CIT V/S. DHARAMAPOUR LEATHER CO. (1966) 60 ITR 165 (SC). (3) MADEVA UPENDRA SINAL V/S. UNION OF INDIA & ORS. (1975) 98 ITR 209 (SC). (4) CIT V/S. MAHENDRA MILLS (2000) 243 ITR 56 (SC). 16. IN ADDITION TO THE ABOVE JUDGMENT, THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SHETH MANILAL RANCHHO DDAS VISHRAM BHAVAN TRUST 198 ITR 598 ( GUJ.) HAS ALSO HELD THAT THE CHARITABLE TRUST IS ENTITLED FOR DEPRECIATION. RESPECTFULLY FOLLOWING THESE 39 ITA NOS. 01 & 06/NAG/2013 DECISIONS WE HEREBY ALLOW THIS GROUND FOR STATISTICAL PURPOSES WITH A DIRECTION THAT THE ASSESSEE SHALL FURNI SH THE NECESSARY INFORMATION ABOUT THE WDV OF THE ASSETS TO THE ASSESSING OFFICER SO THAT THE CORRECT DEPRECIATION CAN BE COMPUTED. WHILE COMPLYING WITH THE ABOVE DIRECTIONS THE A.O. SHALL ALSO EXAMINE THE DECISIONS OF DIRECTOR OF INCOME TAX VS. FRAMJEE CA WASJEE INSTITUTE 109 CTR 463 (BOM) & CIT VS. INSTITUTE OF BANKING PERSONNEL (2003) 131 TAXMANN 386 ( BOM). THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 17. REST OF THE GROUNDS ARE NOT REQUIRED TO BE ADJUDICATED UPON AT PRESENT BECAUSE NO LEGAL ISSUE H AS BEEN RAISED. 18. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED AS DISCUSSED ABOVE. 19. B) REVENUES APPEAL ITA NO.06/NAG/2013 : THE REVENUE HAS CHALLENGED THE DELETION OF AN ADDITION WHICH WAS MADE UNDER SECTION 68 OF I.T. ACT. THE IMPUGNED ADDITION WAS IN RESPECT OF CONTENTS OF THE DIARY WHICH WAS FOUND DURING THE COURSE OF SEARCH. THE UNDISPUTED FACT IS THAT THE ENTRIES AS QUOTED BY THE ASSESSING OFFICER FROM THE SEIZED DIARY WERE RELATED WITH THE FINANCIAL ACCOUNTS OF THE MEDICAL COLLEGE WHICH WAS UNDISPUTEDLY UNDER THE AEGIS OF THE ASSESSEE SOCIETY. THE EXPLANATION OF THE ASSESSEE WAS THAT ALL THOSE ENTRIES WERE INCORPORATED IN THE REGULAR COURSE IN THE BOOKS OF THE ASSESSEE SOCIETY. MOREOVER THE DIARY BELONGED TO ONE MR.PATIL WHO HAS ALS O RECORDED SOME INFORMATION FOR HIS PERSONAL 40 ITA NOS. 01 & 06/NAG/2013 MEMORY. ASSIGNING THOSE REASONS, LEARNED CIT(APPEALS) HAS GRANTED THE RELIEF. BE THAT AS IT WAS, IN A SITUATION WHEN THE TOTAL RECEIPTS HAVE BEEN UTILIZED UNDISPUTEDLY FOR THE PURPOSE OF THE OBJECT OF THE SOCIET Y AND THAT THE SOCIETY IS HELD AS EXEMPT UNDER SECTION 10(23C)(IIIAB), THEREFORE, THE GROUNDS RAISED BY THE REVENUE NOW STOOD MERGED WITH OUR DECISION MADE IN THE FOREGOING PARAGRAPHS. RESULTANTLY, ALL THESE GROUNDS ARE DISMISSED. REVENUES APPEAL IS DISMI SSED. 20. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/09/2015 SD/ SD/ SHAMIM YAHYA MUKUL K. SHRAWAT ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 24/09/2015 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE . Y BY ORDER ASSISTANT REGISTRAR WAKODE / ITAT, NAGPUR / / / / / / / /