Addl. C.I.T., Range-1, Aligarh V. Jamia Urdu, Aligarh

ITA 121/AGR/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0456 (ITAT-AGRA)
• Duration Of Justice: 8 year(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-05-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 05-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P K SEHGAL
• Keywords: Business income; Non compliance; Condonation of delay; Capital expenditure; Set aside
• Section: 40A(3); 143(3); 142(1); 133A; 12A; 12AA; 144; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.121/AGRA/2011 ASSESSMENT YEAR: 2002-03 ADDL. COMMISSIONER OF INCOME TAX (AO), VS. JAMIA UR DU, RANGE-1, ALIGARH. MEDICAL ROAD, DODHPUR, ALIGARH (PAN : AAATJ 5521 B). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI P.K. SEHGAL, ADVOCATE DATE OF HEARING : 15.05.2013 DATE OF PRONOUNCEMENT : 17.05.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 23.02.2011 PASSED BY THE LD. CIT(A), GHAZIABAD FOR THE ASSESSM ENT YEAR 2002-03. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT(A)S ORDER IS PERVERSE AS HIS PRESU MPTION THAT DECEASED MOHD. ANWAR SAEED HAS ACCEPTED THE ORDER. 2 ITA NO.121/AGRA/2011 A.Y. 2002-03 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE TOTAL ADDITION OF RS.34,71,646/- STATING THAT INCOM E OF THE ASSESSEE IS LIABLE TO BE COMPUTED IN ACCORDANCE WITH SECTION 11 TO 13, IGNORING THE FACT THAT MOHD. SAEED, REGISTRAR OF THE SOCIETY GOT BENEFITED BY THE TRUST AND COMES UNDER THE AMBIT OF SECTION 13(3)(CC ) AND THEREBY ASSESSEE IS NOT ENTITLED FOR EXEMPTION UNDER THE SE CTION 11 OF THE IT ACT. 3. THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN I GNORING THE APPLICATION AND IMPLICATION OF SECTION 13 OF THE IT ACT. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE TOTAL ADDITION OF RS.34,71,646/- MERELY ON THE BASI S THAT THE ASSESSMENT OF THE ASSESSEE WAS MADE ON PROTECTIVE B ASIS. 5. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN IGNORING THE DOCTRINE OF RES-JUDICATA IS NOT APPLICABLE IN THE I NCOME TAX PROCEEDING AND EVERY ASSESSMENT IS SEPARATE THAN THAT OF THE O THER ASSESSMENT YEAR. FINDINGS OF ONE YEAR CANNOT BE IMPOSED UPON THE ASSESSMENT PROCEEDINGS OF THE OTHER YEAR UNLESS THERE IS SUITA BLE REASON TO DO THAT. 6. THE LD. CIT(A)S ORDER IS NOT CORRECT IN THE EYE S OF LAW AS HE IGNORED THE FACTS AND CIRCUMSTANCES OF THE CASE THA T THE ASSESSMENT ORDER HAS BEEN PASSED U/S 144 OF THE IT ACT DUE TO NON CO-OPERATION OF THE ASSESSEE. 7. APPELLANT CRAVES LEAVE TO AMEND, ALTER, ADD, OR MODIFY ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE A.O. MA DE THE ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE AC T HEREINAFTER). THE A.O. COMPLETED THE ASSESSMENT UNDER SECTION 144 OF THE A CT ON 24.03.2005 ON TOTAL INCOME OF RS.31,45,000/- AGGRIEVED BY THE ASSESSME NT ORDER DATED 24.03.2005, 3 ITA NO.121/AGRA/2011 A.Y. 2002-03 THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) VIDE HIS ORDER DATED 14.01.2006 CONFIRMED THE ACTION OF THE A.O. THE AS SESSEE FILED APPEAL BEFORE THE I.T.A.T. THE I.T.A.T. DECIDED THE APPEAL IN ITA NO .51/AGRA/2006 VIDE ORDER DATED 27.09.2007. IN THE SAID ORDER, THE I.T.A.T. RESTORED THE ISSUE BACK TO THE FILE OF A.O. WITH CERTAIN DIRECTIONS. IN THE SECOND ROU ND OF LITIGATION, THE A.O. COMPLETED THE ASSESSMENT ON TOTAL INCOME WHICH WERE ASSESSED IN THE FIRST ROUND OF LITIGATION AS UNDER :- (PAGE NOS.1 & 2) ON PERUSAL OF THE RECORD IT IS SEEN THAT THE ASSER TION OF LD. AR BEFORE ITAT IS NOT CORRECT. THE ASSESSMENT ORDER F OR A.Y. 2002-03 HAS NOT BECOME FINAL IN CASE OF SHRI ANWAR SAEED. IN FACT BECAUSE OF NUMBER OF CRIMINAL PROCEEDINGS LAUNCHED BY THE ASSE SSEE AGAINST SHRI ANWAR SAEED, HE IS ABSCONDING AND THEREFORE HE IS N OT IN A POSITION TO CHALLENGE HIS ASSESSMENT ORDER BEFORE LD. CIT(A). HOWEVER, THE POSSIBILITY OF SHRI ANWAR SAEED FILING AN APPEAL BE FORE LD. CIT(A) WITH THE PETITION FOR CONDONATION OF DELAY DUE TO C IRCUMSTANCES BEYOND HIS CONTROL, CANNOT BE RULED OUT. IN THESE CIRCUMSTANCES, I AM OF THE OPINION THAT THE HONBLE ITAT HAS GRANTED TH E RELIEF TO ASSESSEE ONLY ON THE BASIS OF ASSERTION OF LD. AR WHICH WAS NOT QUITE CORRECT. THE CASE WAS FIXED AND ISSUE NOTICE DATE 25.08.2008 U/S 143(2) FIXED THE DATE ON 11.09.2008. ON 11.09.2008 PRESEN T SHRI ABDUL MAJID ACCOUNTS OFFICER OF JAMIA URDU, FILED REQUEST APPLICATION CASE ADJOURNED TO 07.10.2008. ON 07.10.2008 NOBODY ATTE NDED NOR THE ASSESSEE FILED ANY REPLY. ON 13.10.2008 A REQUEST APPLICATION RECEIVED BY FAX . ISSUE NOTICE U/S 142(1) DATED 13.10.2008 FOR FIXED THE DA TE ON 23.10.2008. ON 23.10.2008 AGAIN REQUEST APPLICATION RECEIVED BY FAX. 4 ITA NO.121/AGRA/2011 A.Y. 2002-03 ON 06.11.2008 ISSUE NOTICE U/S 142(1) GIVEN FINAL O PPORTUNITY FOR FIXED THE DATE N 17.11.2008. ON 17.11.2008 NOB ODY ATTENDED NOR THE ASSESSEE FILED ANY REPLY. ON 18.11.2008 A LETT ER DATE 17.10.2008 RECEIVED ALONG WITH ITAT ORDER. AGAIN NOTICE U/S 142(1) DATED 25.11.2008 ISSUED FOR FIXED THE DATE ON 04.12.2008. ON 04.12.2008 NOBODY ATTENDED NOR THE ASSESSEE FILED ANY REPLY. IN THE FACE OF REPEATED NON COMPLIANCE I HAVE NO OP TION BUT TO PASS THE ASSESSMENT ORDER EXPARTE U/S 144 OF THE IT ACT, 1961. AS DISCUSSED ABOVE, SINCE THE ASSESSMENT ORDER IN CASE OF SHRI ANWAR SAEED FOR A.Y. 2002-03 HAS NOT BECOME FINAL AND THE RE IS NOT QUESTION OF DOUBLE TAXATION OF INCOME IN THE HANDS OF THE AS SESSEE. THEREFORE I HAVE NO SUBSTANTIAL GROUND TO DEVIATE FROM THE FIND ING GIVEN BY MY PREDECESSOR IN HIS ORDER DATED 24.03.2005. CONSEQU ENTLY I TOO, ASSESS THE INCOME OF ASSESSEE AT RS. 31,45,000/- ON THE BASIS OF REASONS IN THE ORDER U/S 144 OF THE IT ACT, 1961 DATED 24.03.2005 PASSED BY MY PREDECESSOR (COPY OF ASSESSMENT ORDER (TWELVE PAGES ) DATED 24.03.2005 IS ANNEXED AS PART OF THIS ORDER). 4. THE CIT(A) DELETED THE ADDITION AS UNDER :- (PAR AGRAPH NO.8.4, PAGE NO.23) 8.4 KEEPING IN VIEW THE FACT THAT THE APPELLANT HA S BEEN GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT AND ITS INCOME IS LIABLE TO BE COMPUTED IN ACCORDANCE WITH SECTION 11 TO 13 OF THE ACT AND THE PROVISIONS OF CHAPTER IV-D RELATING TO COMP UTATION OF BUSINESS INCOME ARE NOT APPLICABLE TO IT. SECTION 40A(3) FALLS WITHIN CHAPTER IV-D AND WOULD NOT HAVE APPLICATION IN CASE OF INSTITUTION REGISTERED UNDER SECTION 12A OF THE ACT UNLESS IT I S ENGAGED IN BUSINESS OR PROFESSION. I HAVE ALREADY HELD THAT T HE APPELLANT INSTITUTE IS NOT ENGAGED IN ANY BUSINESS OR PROFESSION THEREF ORE, DISALLOWANCE UNDER SECTION 40A(3) BECOMES, UNSUSTAINABLE AND IS ACCORDINGLY DELETED. 5 ITA NO.121/AGRA/2011 A.Y. 2002-03 5. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE LD. REPRESENTATIVES OF THE PARTIES SUBMITTED TH AT THE ISSUES ARE SQUARELY COVERED BY THE ORDER OF I.T.A.T. IN ASSESSEES OWN CASE IN ITA NOS.221, 222, 223 & 224/AGR/2011 FOR A.YS. 1997-98, 1997-98, 1998-99 & 1998-99 RESPECTIVELY VIDE ORDER DATED 05.10.2012. THE RELEVANT GROUNDS OF APPEAL FOR A.Y. 1997-98 AND BRIEF FACTS AND FINDING OF I.T.A.T. ARE REPRODUCED AS UNDER :- GROUNDS OF ITA NO.222/AGR/2011 FOR A.Y. 1997-98:- 1. THE LD. CIT(APPEALS) HAS ERRED IN LAW AND ON FA CTS DELETING THE ADDITION OF RS.1,35,93,560/- ALLOWING EXEMPTION U/S 10(22) OF THE IT ACT, 1961 TO THE ASSESSEE. 2. THE LD. CIT(APPEALS)S ORDER IS NOT CORRECT IN T HE EYE OF LAW AS HE IGNORED THE FACTS & CIRCUMSTANCE OF THE C ASE THAT THE ASSESSMENT ORDER HAD BEEN PASSED U/S 144 OF THE IT ACT DUE TO NON CO-OPERATION OF ASSESSEE. 3. APPELLANT CRAVES LEAVE TO AMEND, ALTER, ADD OR M ODIFY ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF CASE. 4. THE BRIEF FACTS NOTED FROM THE A.Y. 1997-98 ARE THAT THE ASSESSEE CLAIMING TO BE AN EDUCATIONAL INSTITUTE STYLED AS J AMIA URDU, MEDICAL ROAD, ALIGARH REGISTERED UNDER SOCIETIES ACT. THE ASSESS EE CLAIMED EXEMPTION OF ITS INCOME UNDER SECTION 10(22) OF THE INCOME TAX A CT, 1961 (THE ACT HEREINAFTER). THIS IS SECOND ROUND OF LITIGATION. IN THE FIRST ROUND, THE CIT(A), GHAZIABAD PASSED AN ORDER ON 31.05.2005 ALL OWING APPEAL OF THE ASSESSEE IN PART. THE SAID ORDER OF THE CIT(A) WAS CHALLENGED BEFORE THE I.T.A.T., AGRA BENCH. THE AGRA BENCH VIDE ITS ORDE R DATED 6 TH SEPTEMBER, 2007 IN ITA NOS. 371, 372, 373 & 374/AGR/2005 SENT BACK THE MATTER TO THE FILE OF THE CIT(A). IN COMPLIANCE TO THE DIRECTION OF I.T.A.T., THE CIT(A) AFTER CONSIDERING THE ASSESSEES SUBMISSION, DECIDE D THE APPEAL IN FAVOUR OF 6 ITA NO.121/AGRA/2011 A.Y. 2002-03 THE ASSESSEE. THE CIT(A) NOTED THAT THE ASSESSEE W AS ALSO GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT W.E.F. 01 .04.2004. THE ISSUE BEFORE THE CIT(A) WERE OF FOUR FOLDS WHICH READS AS UNDER :- (PAGE NO.20) I) ONE IS WHETHER THE APPELLANT IS ENTITLED FOR EXE MPTION UNDER SECTION 10(22) OF THE I.T. ACT, 1961. II) THE OTHER ONE IS FIND THE EFFECT AND FATE OF AD DITION MADE IN THE HAND ON PROTECTIVE BASIS AND MADE ON SUBSTANTIVE BA SIS IN THE HAND OF SHRI S. ANWAR SAEED. III) REMAINING QUESTION IS WITH REGARD TO TWO OTHER ADDITIONS I.E. CAPITAL EXPENDITURE DEBITED TO INCOME & EXPENDITURE ACCOUNT AND DISALLOWANCE MADE BY RESORTING TO SECTION 40A(3 ) OF THE ACT. IV) OTHER ISSUES LIKE CHARGING OF INTEREST UNDER DI FFERENT SECTION OF THE ACT. 5. THE CIT(A) DECIDED THE FIRST ISSUE IN FAVOUR OF THE ASSESSEE AS UNDER :- (PARAGRAPH NOS.7.4, 7.5 & 7.6, PAGE NOS.22, 23 & 24 ) 7.4 NO OTHER PURPOSE OF THE APPELLANT HAS BEEN ALL EGED (I WOULD REFER TO ASPECT OF NOT FOR PROFIT PURPOSE, LI TTLE LATER). FURTHER, THE CIT, ALIGARH HAS HIMSELF GRANTED THE A PPELLANT REGISTRATION UNDER SECTION 12A OF THE ACT ON THE GR OUND THAT IT WAS AN EDUCATIONAL INSTITUTION WITHIN MEANING OF SE CTION 2(15) OF THE ACT. FURTHER, THE APPELLANT IS CONDUCTING COURSE UPTO THE LEVEL OF B.ED. AND IS RECOGNIZED BY VARIOUS UNI VERSITIES AND GOVERNMENT BODIES AND THUS IMPARTING REGULAR EDUCAT ION. NOTHING HAS BEEN BROUGHT ON RECORD THAT, IT HAS BEE N DOING SOMETHING ELSE OTHERWISE THAN IMPARTING EDUCATION. THE OBSERVATION OF THE AO THAT THE DEGREE OF THIS INSTRUCTION HAVE BEEN DERECOGNIZED BY THE ALIGARH M USLIM UNIVERSITY IS ALSO FOUND TO BE FACTUALLY WRONG. O N MY DIRECTION DURING APPELLATE PROCEEDINGS, THE APPELLA NT HAS PLACED DOCUMENTS OF AMU CURRICULUM AND PROSPECTS WH ICH 7 ITA NO.121/AGRA/2011 A.Y. 2002-03 CLEARLY ESTABLISH THAT IN TIME PERIODS, BOTH BEFORE THE SURVEY ACTION AS WELL AS AFTER IT; THE COURSES CONDUCTED A ND DEGREES AWARDED BY THE APPELLANT, REMAINED RECOGNIZED ON TH E CURRICULUM OF AMU. IT IS ALSO OBSERVED THAT LARGE NUMBER OF STUDENTS W ERE ENROLLED IN THE COURSES, RUN BY THE APPELLANT INSTI TUTE. FURTHER, THIS IS ALSO ON RECORD THAT VARIOUS GOVT. DEPARTMENTS OF CENTRAL AS WELL AS STATE GOVERNMENTS AS WELL AS VARIOUS OTHER EDUCATIONAL INSTITUTES WERE GIVING RE COGNITION TO THE COURSE RUN BY THE APPELLANT INSTITUTE. THESE D OCUMENTARY EVIDENCES LEND CREDENCE TO THE APPELLANTS CLAIM TH AT IT WAS EXISTING FOR EDUCATION PURPOSES. THE OBJECTION OF THE AO IN SO FAR AS NON FILING OF RETURN INSPITE OF HAVING RECEIPTS OF OVER RS.1 CRORE IS N OT TENABLE FOR THE REASON THAT SECTION 10(22) OF THE ACT, AS IT ST OOD AT THE RELEVANT TIME DID NOT PROVIDE FOR ANY SUCH CAP ON T OTAL RECEIPTS. IT WAS ONLY AFTER THE AMENDMENT BROUGHT BY FINANCE (NO.2) ACT, 1998 THAT THIS SECTION WAS AMENDED W.E.F. 01.04.199 9 I.E., ASSESSMENT YEAR 1999-2000 AND CAP ON TOTAL RECEIPT WAS PLACED. HONBLE SUPREME COURT IN THE CASE OF 301 I TR 86 HAS CLEARLY MENTIONED THAT SECTION 11 TO 13 HAD NO APPL ICATION IN THE MATTER OF EXEMPTION UNDER SECTION 10(22) OF THE ACT ! THE CASE LAWS OF ST. MICHAEL EDU FOUNDATION 43 ITD 656 (ITAT DELHI) AND OF M.D. MEMORIAL CHARITY & EDUCAT IONAL SOCIETY 74 TTJ 595 (ITAT DELHI) ARE ALSO APPLICABLE ON THIS ISSUE. ALSO THE ACT, DID NOT PROVIDE ANY CONDITION OR FILING OF RETURN AND AUDIT OF ACCOUNTS TO AVAIL EXEMPTION UND ER SECTION 10(22) OF THE ACT, AND THUS, THE CONCLUSION IS IN EVITABLE THAT THE APPELLANT IS EDUCATIONAL INSTITUTION AND EXISTI NG SOLELY FOR THE PURPOSE OF EDUCATION. 7.5 HERE, THE OTHER QUESTION ARISES WHETHER IT WAS EXISTING NOT FOR THE PURPOSE OF PROFIT. IN THIS READ, TREAD ING THE ASSESSMENT ORDER WOULD REVEAL THAT THE ONLY OBJECTI ON OF THE ASSESSING OFFICER, BASED ON SURVEY CONDUCTED ON 21. 11.2002, 8 ITA NO.121/AGRA/2011 A.Y. 2002-03 SPECIAL AUDIT AND THE STATEMENT OF ONE ABDUL MAJID, ACCOUNTS OFFICER IS THAT SHRI S. ANWAR SAEED, THE THEN REGIS TRAR OF THE INSTITUTE WAS RUNNING THE INSTITUTE FOR PERSONAL PR OFITS AND HE HAD USED THE INSTITUTION FOR HIS PERSONAL GAINS. T HE AO HAS WHILE ALLOWED THE SALARY PAID TO SHRI S. ANWAR SAEE D, BUT HAS DISALLOWED THE EXPENDITURE OF SUCH PERSONAL ADVANTA GE GAINED BY HIM FROM THE HANDS OF THE APPELLANT AND THAT TOO ON PROTECTIVE BASIS TO BE TAXED IN THE HANDS OF SHRI S . ANWAR SAEED ON SUBSTANTIVE BASIS. ON GOING THROUGH THE ENTIRE MATERIAL, I AM UNABLE TO REACH TO THE CONCLUSION THAT MERELY BE CAUSE THE EMPLOYEE OF THE INSTITUTION HAS GAINED PERSONAL BEN EFIT ON ACCOUNT OF HIS POSITION OR MISAPPROPRIATE FUNDS OF THE INSTITUTION, IT CAN BE SAID THAT THE CHARACTER OF I NSTITUTION AS A WHOLE WAS CHANGED FROM NON PROFIT TO PROFIT. THUS, THIS CONSIDERATION OF MISAPPROPRIATION OF FUNDS OR UTILI ZATION OF FACILITIES FOR PERSONAL GAINS BY ANY EMPLOYEE, TO H OLD THE INSTITUTION ITSELF AS EXISTING FOR PROFIT WOULD N OT BE CORRECT. THE INSTITUTION (I.E., THE APPELLANT) AND ITS REGIS TRAR ARE TWO SEPARATE AND DISTINCT ENTITIES. WHILE THE REGISTRA R IS PAID EMPLOYEE ON REGULAR ROLLS OF THE INSTITUTE, WHO HAS LATER BEEN REMOVED AND VARIOUS CRIMINAL PROCEEDINGS AND OTHER ACTIONS WERE TAKEN AGAINST HIM MAY HAVE PROFIT MOTIVE, BUT HIS MOTIVE CANNOT BE IMPORTED AS THE MOTIVE OF THE INSTITUTION . NO OTHER CASE HAS BEEN MADE OUT BY AO TO HOLD THE APPELLANT AS EXISTING FOR PROFITS. I HAVE ALSO GONE THROUGH THE DECISIO NS CITED BY LEARNED AR REPRODUCED IN EARLIER PART OF THIS ORDER AND AGREE WITH HIM IN THIS REGARD. I AM NOT REPRODUCING THOS E JUDGMENTS FOR THE SAKE OF BREVITY, BUT THE CONCLUSION HAS BEE N ARRIVED BY ME ON THE BASIS OF GUIDANCE OF THOSE JUDGEMENTS. 7.6. THUS, ON THE ABOVE DISCUSSION, I HOLD THAT THE APPELLANT INSTITUTION IS AN EDUCATIONAL INSTITUTION EXISTING SOLELY FOR THAT PURPOSE AND NOT FOR THE PURPOSE OF PROFIT AND THUS FULFILLS THE CONDITIONS OF SECTION 10(22) OF THE ACT AND ACCORDI NGLY THE APPELLANT IS ENTITLED FOR EXEMPTION UNDER SECTION 1 0(22) OF THE ACT IN RESPECT OF ITS INCOME AND IS ACCORDINGLY HEL D SO. 9 ITA NO.121/AGRA/2011 A.Y. 2002-03 6. THE OTHER ISSUES RELATING TO DISALLOWANCE ON PRO TECTIVE BASIS, ADDITION IN THE HANDS OF SHRI S. ANWAR SAEED AND DISALLOWANC E UNDER SECTION 40A(3) HAS BEEN DECIDED BY THE CIT(A) IN FAVOUR OF THE ASS ESSEE ON THE GROUND THAT THE QUESTION OF SUSTAINING THE DISALLOWANCE FOR ANY REASON DOES NOT SURVIVE, BECAUSE ONCE THE INSTITUTION IS HELD TO BE ELIGIBLE FOR EXEMPTION UNDER SECTION 10(22) OF THE ACT, WHOLE OF ITS INCOME IS E LIGIBLE FOR EXEMPTION. THE CIT(A) FURTHER OBSERVED THAT SECTION 10(22) OF THE ACT DOES NOT RESTRICT THE INCOME DERIVED FROM EDUCATIONAL ACTIVITIES ONLY AS EXEMPT, BUT ALL INCIDENTAL INCOME WOULD ALSO BE SO ELIGIBLE. THE CIT(A) FOLL OWED THE JUDGEMENT OF HONBLE DELHI HIGH COURT WHICH IS DIRECTLY ON THE I SSUE IN THE CASE OF DIT(E) VS. RAUNAQ FOUNDATION 294 ITR 76. THE CIT(A ) HAS ALSO HELD THAT WHEN THE DISALLOWANCE WAS MADE IN THE CASE OF ASSES SEE ON PROTECTIVE BASIS AND THE SAME WERE ADDED IN THE HANDS OF SHRI S. ANW AR SAEED ON SUBSTANTIVE BASIS, THE DISALLOWANCE MADE ON PROTECTIVE BASIS CA NNOT BE SUSTAINED. SIMILAR FINDING WAS GIVEN BY THE CIT(A) IN RESPECT OF DISALLOWANCE UNDER SECTION 40A(3) OBSERVING THAT WHEN ASSESSEE IS ELIG IBLE FOR EXEMPTION UNDER SECTION 10(22) OF THE ACT, THE DISALLOWANCE UNDER S ECTION 40A(3) BECOMES ACADEMIC. 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE LD. DEPARTMENTAL REPREHENSIVE DID NOT DISPUTE REGARDING THE FACTS OF THE CASE. THE ADMITTED FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN EDUCATIONAL INSTITUTE AND ITS INCOME ARE EXEMPT UND ER SECTION 10(22) OF THE ACT. WE NOTICED THAT THE CIT(A) HAS RIGHTLY ALLOWE D THE ASSESSEES CLAIM AFTER A DETAILED DISCUSSION THAT THE ASSESSEE IS AN EDUCATIONAL INSTITUTION EXISTING SOLELY FOR THE THAT PURPOSE AND NOT FOR TH E PURPOSE OF PROFIT AND THUS FULFILLED THE CONDITIONS OF SECTION 10(22) OF THE A CT. THE CIT(A) HAS RIGHTLY DELETED THE ADDITION WHICH WAS MADE IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS AS THE ADDITION IN THE HANDS OF SH RI S. ANWAR SAEED HAS BEEN ADDED ON SUBSTANTIVE BASIS. EVEN ON MERIT, TH E CIT(A) FOUND THAT MERELY BECAUSE THE EMPLOYEE HAS GAINED PERSONAL BEN EFIT, IT CANNOT CHANGE THE CHARACTER OF THE INSTITUTION AS A WHOLE FROM NO N-PROFIT INSTITUTION TO A PROFIT MAKING INSTITUTION. 8. AS REGARDS THE DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT, WE FIND THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION HO LDING THAT THE INCOME OF THE INSTITUTION IS EXEMPT UNDER SECTION 10(22) OF T HE ACT. THEREFORE, THE DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT BECAME ACADEMIC. 10 ITA NO.121/AGRA/2011 A.Y. 2002-03 9. ONE MORE GROUND RAISED IN REVENUES APPEAL IS IN RESPECT OF ASSESSMENT MADE UNDER SECTION 144 OF THE ACT. THIS GROUND DOES NOT CARRY ANY SUBSTANCE BECAUSE THE CASE OF THE ASSESSEE HAS BEEN TRAVELLED NUMBER OF TIMES BEFORE THE APPELLATE AUTHORITIES IN RESPECT O F REGISTRATION UNDER SECTION 12A OF THE ACT AS WELL AS MERIT OF THE CASE. THE C ASE OF THE ASSESSEE WAS ALSO SUBJECT TO SURVEY UNDER SECTION 133A OF THE AC T. FURTHER THE BOOKS OF ACCOUNT OF THE ASSESSEE IS ALSO SUBJECT TO AUDIT UN DER SECTION 142(2A) OF THE ACT. THE CIT(A) HAS GIVEN FINDING THAT THE A.O. HI MSELF HAS CONSIDERED IN THE ASSESSMENT ORDER ITSELF THAT THE ASSESSEE IS AN EDUCATIONAL INSTITUTION. APART FROM ABOVE FACTS, WE NOTICE THAT THE CIT(A) H AS DECIDED THE ISSUE AFTER A DETAILED DISCUSSION ON EACH AND EVERY ISSUE. THE REVENUE HAS FAILED TO POINT OUT HOW THE ASSESSMENT MADE UNDER SECTION 144 OF THE ACT WAS IN FAVOUR OF THE REVENUE PARTICULARLY WHEN THE CIT(A) HAS CONSIDERED EACH AND EVERY ISSUE AND ASPECT OF THE A.O. THE CIT(A) HAS CO-TERMINUS POWER OF THE A.O. AND FROM THE DETAILED DISCUSSION IN THE CIT(A) S ORDER, WE DO NOT FIND ANY SUBSTANCE IN THIS GROUND OF THE APPEAL OF THE R EVENUE AND, THEREFORE, THE SAME IS DISMISSED. 10. GROUND NO.3 IS GENERAL IN NATURE REQUIRES NO IN DEPENDENT FINDING. 11. THE REVENUE HAS FAILED TO POINT OUT ANY CONTRAR Y MATERIAL OR EVIDENCE NOR THE SAME ARE AVAILABLE ON RECORD AGAINST THE FI NDING OF CIT(A). THEREFORE, IN THE LIGHT OF ABOVE DISCUSSION, ORDERS OF THE CIT(A) ARE CONFIRMED. 6. SINCE THE FACTS ARE IDENTICAL, WE FOLLOW THE ORD ER OF I.T.A.T., AGRA BENCH IN ASSESSEES OWN CASE IN ITA NOS.221, 222, 223 & 224/ AGR/2011 FOR A.YS. 1997-98, 1997-98, 1998-99 & 1998-99 RESPECTIVELY VIDE ORDER DATED 05.10.2012 AND IN THE LIGHT OF THAT, ORDER OF CIT(A) IS CONFIRMED. THE O RDER OF CIT(A) IS ALSO SUSTAINABLE ON THE FACT THAT THE A.O. RELIED ORIGINAL ORDER OF HIS PREDECESSOR WHICH HAS ALREADY BEEN SET ASIDE BY THE I.T.A.T. IN FIRST ROUND OF LI TIGATION. 11 ITA NO.121/AGRA/2011 A.Y. 2002-03 7. THE OTHER GROUNDS RAISED ARE GENERAL IN NATURE R EQUIRE NO FINDING. 8. BEFORE PARTING FROM THE MATTER, IT IS RELEVANT T O MENTION THAT THE A.O. WHILE DECIDING THE MATTER AFRESH ON THE DIRECTION OF THE I.T.A.T., HAS MADE SOME COMMENTS/OBSERVATIONS. AT THE COST OF REPETITION, THE RELEVANT OBSERVATION/ COMMENT OF THE A.O. IS REPRODUCED AS BELOW:- IN THESE CIRCUMSTANCES, I AM OF THE OPINION THAT T HE HONBLE ITAT HAS GRANTED THE RELIEF TO ASSESSEE ONLY ON THE BASIS OF ASSERTION OF LD. AR WHICH WAS NOT QUITE CORRECT. 9. SUCH OBSERVATIONS/COMMENTS ARE AGAINST JUDICIAL DISCIPLINE. HERE WE WOULD LIKE TO MENTION THAT THE PRINCIPLES OF JUDICIAL DIS CIPLINE REQUIRE THAT THE ORDERS OF HIGHER APPELLATE AUTHORITIES SHOULD BE FOLLOWED BY THE SUBORDINATE AUTHORITIES OTHERWISE; ENTIRE JUDICIAL SYSTEM WOULD LEAD TO CHA OS. IN THIS REGARD, WE WOULD LIKE TO REFER THE FOLLOWING OBSERVATIONS OF HONBLE DELHI HIGH COURT IN THE CASE OF NOKIA CORPORATION VS. DIRECTOR OF INCOME TAX (INTER NATIONAL TAXATION) [2007] 162 TAXMAN 369 (DELHI) :- 12. THE SUPREME COURT STATED, MANY YEARS AGO, IN U NION OF INDIA V. KAMLAKSHI FINANCE CORPN. LTD. [1991] (55) ELT 433 A S FOLLOWS :- ...THE PRINCIPLES OF JUDICIAL DISCIPLINE REQUIRE T HAT THE ORDERS OF THE HIGHER APPELLATE AUTHORITIES SHOULD BE FOLLOWED UNRESERVED LY BY THE SUBORDINATE AUTHORITIES.... (P. 436) 12 ITA NO.121/AGRA/2011 A.Y. 2002-03 IT WAS FURTHER OBSERVED BY THE SUPREME COURT THAT I F THE ORDER OF AN APPELLATE AUTHORITY IS THE SUBJECT-MATTER OF FURTHE R APPEAL, THAT CANNOT FURNISH ANY GROUND FOR NOT FOLLOWING IT, UNLESS ITS OPERATION HAS BEEN SUSPENDED BY A COMPETENT COURT. THE SUPREME COURT W ENT ON TO SAY THAT IF THIS HEALTHY RULE IS NOT FOLLOWED; THE RESULT WILL NOT ONLY BE UNDUE HARASSMENT TO ASSESSEES BUT CHAOS IN THE ADMINISTRA TION OF TAX LAWS. 13. IN CIT V.RALSON INDUSTRIES LTD. [2007] 2 SCC 32 6, THE SUPREME COURT HELD : 9. WHEN AN ORDER IS PASSED BY A HIGHER AUTHORITY, THE LOWER AUTHORITY IS BOUND THEREBY KEEPING IN VIEW THE PRINCIPLES OF JUD ICIAL DISCIPLINE.... (P. 330) THE SUPREME COURT DREW SUPPORT FROM BHOPAL SUGAR IN DUSTRIES LTD. V. ITO [1960] 40 ITR 618 WHEREIN IT WAS HELD : IF A SUBORDINATE TRIBUNAL REFUSES TO CARRY OUT DIR ECTIONS GIVEN TO IT BY A SUPERIOR TRIBUNAL IN THE EXERCISE OF ITS APPEL LATE POWERS THE RESULT WILL BE CHAOS IN THE ADMINISTRATION OF JUSTI CE.... (P. 622) IT WAS FURTHER OBSERVED IN BHOPAL SUGAR INDUSTRIES LTD.S CASE (SUPRA):- ...THE JUDICIAL COMMISSIONER WAS NOT SITTING IN AP PEAL OVER THE TRIBUNAL AND WE DO NOT THINK THAT, IN THE CIRCUMSTANCES OF T HIS CASE, IT WAS OPEN TO HIM TO SAY THAT THE ORDER OF THE TRIBUNAL WAS WRONG AND, THEREFORE, THERE WAS NO INJUSTICE IN DISREGARDING THAT ORDER. AS WE HAVE SAID EARLIER, SUCH A VIEW IS DESTRUCTIVE OF ONE OF THE BASIC PRINCIPLES OF THE ADMINISTRATION OF JUSTICE. (P. 623) 14. SIMILARLY, IN TRIVENI CHEMICALS LTD. V. UNION OF INDIA [2007] 2 SCC 503, THE SUPREME COURT REITERATED THE PRINCIPLE THA T ADJUDICATING AUTHORITIES ARE BOUND BY THE DOCTRINE OF JUDICIAL DISCIPLINE. 13 ITA NO.121/AGRA/2011 A.Y. 2002-03 10. THE CONCERNED C.C.I.T. IS DIRECTED TO CONTROL S UCH ERRING ASSESSING OFFICER THROUGH HIS ADMINISTRATIVE POWERS AND ISSUE NECESSA RY INSTRUCTIONS TO HIS OFFICERS TO MAINTAIN JUDICIAL DISCIPLINE. 11. FURTHER, IF THE SUBORDINATE OFFICERS ARE NOT RE STRAINED FROM MAKING SUCH COMMENTS ON THE ORDER OF APPELLATE AUTHORITY IN FUT URE, WE MAY COMPEL TO TAKE NECESSARY CONTEMPT ACTION AGAINST THE ERRING OFFICE R. 12. THE REGISTRY IS DIRECTED TO SEND A COPY OF THIS ORDER TO THE CONCERNED C.C.I.T. 13. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY