Vidyananda Educational society, Hyderabad V. DDIT, Hyderabad

ITA 123/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61850 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 27-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: C SUBRAMANYAM
• Keywords: Business income; Charitable institution; Reasonable cause; Capital receipt; Benefit of exemption; Condonation of delay
• Section: 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER. ITA NO. ASSESSMENT YEAR APPELLANT RESPONDENT 989/HYD/2010 - VIDYANANDA EDUCATIONAL SOCIETY, HYDERABAD (PAN: AAATV3962C DIRECTOR OF INCOME- TAX (EXEMPTION), HYDERABAD 122/HYD/2010 123/HYD/2010 124/HYD/2010 2002-03 2003-04 2004-05 VIDYANANDA EDUCATIONAL SOCIETY, HYDERABAD DY. DIRECTOR OF INCOME-TAX (EXEMPTION)-II, HYDERABAD APPELLANT BY: SHRI C. SUBRAMANYAM RESPONDENTS BY: SHRI Y.V.S.T.SAI DATE OF HEARING: 3.4.2012 DATE OF PRONOUNCEMENT: 30.4.2012 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE FOUR APPEALS ARE FILED BY THE ASSESSEE SOCIET Y. WHILE THE FIRST OF THESE APPEALS, BEING ITA LNO.989 /HYD/2010 IS DIRECTED AGAINST THE ORDER OF THE DIRECTOR OF IN COME- TAX(EXEMPTION) DATED 12.10.2004, THE OTHER THREE AP PEALS, BEING ITA NOS.122 TO 124/HYD/2010 ARE DIRECTED AGAI NST A COMMON ORDERS OF THE CIT(A) IV, HYDERABAD DATED 30.11.2009 FOR THE ASSESSMENT YEARS 2002-03 TO 2004 -05. SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS ARE BEING DISPOSED OF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. AT THE OUTSET, WE MAY NOTE THAT THE FIRST OF THE SE APPEALS, BEING ITA NO.989/HYD/2010, WHICH IS DIRECT ED AGAINST THE ORDER OF THE DIRECTOR OF INCOME-TAX(EXE MPTION) ITA NO.989/HYD/2010 & 3 ORS. VI DYANANDA EDUCATIONAL SOCIETY, HYD. =================== 2 DATED 12.10.2004, HAS BEEN FILED BY THE ASSESSEE BE FORE THIS TRIBUNAL ON 8.7.2010, WITH A DELAY OF 2032 DAYS. A SSESSEE HAS FILED A PETITION SEEKING CONDONATION OF DELAY. 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE SOCIETY IS RUNNING AN EDUCATIONAL INSTITUT ION AND CAME INTO EXISTENCE FROM 17.5.2001, APPLIED FOR REG ISTRATION UNDER S.12AA VIDE APPLICATION DATED 29.4.2003. AS THE SAID APPLICATION FILED BY THE ASSESSEE AS ABOVE COULD NO T BE TRACED, ON ADVICE, THE ASSESSEE SOCIETY FILED ANOTHER APPLI CATION IN FORM NO.10A ON 12.10.2004. THE SAID SECOND APPLICA TION FILED BY ASSESSEE HAS BEEN DISPOSED OFF BY THE DIRE CTOR OF INCOME-TAX(EXEMPTION) ON 12.10.2004, GRANTING REGIS TRATION TO THE ASSESSEE WITH EFFECT FROM 1.4.2004. IT WAS S UBMITTED ON BEHALF OF THE ASSESSEE THAT THE SOCIETY AUDITORS ADVISED THAT UNDER THE PROVISIONS OF S.12AA(2), IF THE APPL ICATION WAS NOT DISPOSED OFF WITHIN SIX MONTHS, THE SOCIETY DEE MED TO HAVE BEEN GRANTED REGISTRATION FROM THE DATE OF WHI CH REGISTRATION AS SOUGHT. HAVING BEEN SO ADVISED, TH E ASSESSEE DID NOT PREFER AN APPEAL, TILL SUCH TIME WHEN REGUL AR APPEAL AGAINST ORDER PASSED UNDER S.143(3) READ WITH S.147 WAS FILED BEFORE THE ITAT, WHEN THE SOCIETY WAS ADVISED TO FILE AN APPEAL AGAINST THE ORDERS PASSED UNDER S.12AA OF TH E ACT. THUS, IT IS THE PLEA OF THE ASSESSEE THAT THE DELAY IN THE FILING OF THE PRESENT APPEAL IS ON ACCOUNT OF THE IMPRESS ION NURSED BY IT AS TO THE DEEMED GRANT OF REGISTRATION IN ITS FAVOUR ON ACCOUNT OF NON-PASSING OF ORDER ON ITS APPLICATION WITHIN A PERIOD OF SIX MONTHS. LEARNED COUNSEL FOR THE ASSE SSEE ALSO SUBMITTED THAT THE ASSESSEE IS RUNNING AN EDUCATION AL SOCIETY AND THERE IS NO PROFIT MOTIVE AND THERE IS NO MALA FIDE INTENTION IN NOT FILING THE APPEAL WITHIN THE STATU TORY PERIOD. ITA NO.989/HYD/2010 & 3 ORS. VI DYANANDA EDUCATIONAL SOCIETY, HYD. =================== 3 CITING A NUMBER OF CASES, IT IS ALSO SUBMITTED THAT UNDER SIMILAR FACTS AND CIRCUMSTANCES, DELAY IN FILING TH E APPEAL HAS BEEN CONDONED AND IN ONE SUCH CASE DELAY OF MORE TH AN SIX YEARS WAS CONDONED. ELABORATE WRITTEN SUBMISSIONS HAVE ALSO BEEN MADE NOT ONLY ON THE ASPECT OF THE LATE FILING OF THE APPEAL AND IN SUPPORT OF THE PLEA FOR THE CONDONATI ON OF DELAY, BUT ALSO ON THE MERITS OF THE CASE IN RELATION TO T HE ISSUE INVOLVED IN THE APPEAL, VIZ. GRANT OF REGISTRATION UNDER S.12AA TO THE ASSESSEE-SOCIETY WITH EFFECT FROM 1.4.2004, INSTEAD OF FROM THE DATE OF INCEPTION OF THE ASSESSEE SOCIETY. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND, OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSE L FOR THE ASSESSEE AND SUBMITTED THAT THERE IS NO JUSTIFICATI ON FOR THE BELATED FILING OF THE APPEAL. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD AND NUMEROUS CASE LAW CITED BY THE PARTIES ON VARIOUS ISSUES AGITATED BY THE PA RTIES. WE HAVE ALSO CAREFULLY GONE THROUGH THE CASE-LAW RELIE D UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE. THE EXPLANAT ION GIVEN BY THE ASSESSEE FOR DELAY IS VERY VAGUE THAT INCOR RECT ADVICE RECEIVED BY IT AND THE WRONG IMPRESSION NURSED BY I T AS TO THE DEEMED REGISTRATION IN ITS FAVOUR ON ACCOUNT OF NON -DISPOSAL OF ITS APPLICATION FOR REGISTRATION BY THE COMPETEN T AUTHORITY WITHIN A PERIOD OF SIX MONTHS IN TERMS OF S.12AA(2) . IN OUR OPINION, THE ASSESSEE HAS NOT OFFERED ANY REASONABL E OR VALID EXPLANATION FOR THE DELAY. IN THE CIRCUMSTANCES AN D CONSIDERING THE INORDINATE PERIOD OF DELAY INVOLVED AND ABSENCE OF COMMENSURATE EXPLANATION FOR THE SAME, W E ARE NOT INCLINED TO CONDONE THE DELAY. THE REASONABLEN ESS OF THE CAUSE FOR THE DELAY AND JUSTIFICATION FOR THE DELAY HAS TO BE ITA NO.989/HYD/2010 & 3 ORS. VI DYANANDA EDUCATIONAL SOCIETY, HYD. =================== 4 EXAMINED IN THE LIGHT OF THE FACTS AND CIRCUMSTANCE S OF EACH CASE, APPROPRIATELY WEIGHING THE EXPLANATION OFFERE D BY THE ASSESSEE FOR SUCH DELAY. WHILE THERE IS NO QUARREL WITH REGARD TO THE RATIO LAID DOWN IN THE CASE-LAW RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE, CONSIDERING THE F ACTUAL MATRIX OF THE CASE ON HAND, WE FIND NO JUSTIFICATIO N OR SUFFICIENT CAUSE WAS SHOWN BY THE ASSESSEE FOR THE INORDINATE DELAY IN FILING THE PRESENT APPEAL. ON THE OTHER HAND, OUR DECISION IN THIS BEHALF, IS FORTIFIED BY THE THIRD MEMBER DECISION OF TRIBUNAL(CHENNAI) IN THE CASE OF JT. CI T V/S. TRACTORS & FARMS LTD. (104 ITD 149) (TM), WHEREIN D RAWING OUT A DISTINCTION BETWEEN NORMAL DELAY AND INORDINA TE DELAY, IT HAS BEEN OBSERVED, VIDE HEAD-NOTE ON PAGE 150 OF TH E REPORTS (104 ITD) AS FOLLOWS- A DISTINCTION MUST BE MADE BETWEEN A CASE WHERE TH E DELAY IS INORDINATE AND A CASE WHERE THE DELAY IS OF A FE W DAYS. WHEREAS IN THE FORMER CASE, THE CONSIDERATION OF PR EJUDICE TO THE OTHER SIDE WILL BE A RELEVANT FACTOR, SO TH E CASE CALLS FOR MORE CAUTIOUS APPROACH, IN THE LATTER CASE, NO SUCH CONSIDERATION MAY ARISE AND SUCH A CASE DESERVES A LIBERAL APPROACH. NO HARD AND FAST RULE CAN BE LAID DOWN I N THIS REGARD. THE COURT HAS TO EXERCISE THE DISCRETION ON THE FACTS OF EACH CASE, KEEPING IN MIND THAT IN CONSIDERING T HE EXPRESSION SUFFICIENT CAUSE, THE PRINCIPLE OF ADV ANCING SUBSTANTIAL JUSTICE IS OF PRIME IMPORTANCE. 6. THAT BEING SO, THE CASE-LAW RELIED BEFORE US HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. FURT HER WE MAKE IT CLEAR THAT THERE IS NO HARD AND FAST RULE WHICH CAN BE LAID DOWN IN THE MATTER OF CONDONATION OF DELAY AND COUR TS SHOULD ADOPT A PRAGMATIC APPROACH AND DISCRETION ON THE FA CTS OF EACH CASE KEEPING IN MIND THAT IN CONSIDERING THE E XPRESSION SUFFICIENT CAUSE THE PRINCIPLES OF ADVANCING SUBS TANTIAL JUSTICE IS OF PRIME IMPORTANCE AND THE EXPRESSION SUFFICIE NT CAUSE SHOULD RECEIVE A LIBERAL CONSTRUCTION. A LIBERAL V IEW OUGHT TO ITA NO.989/HYD/2010 & 3 ORS. VI DYANANDA EDUCATIONAL SOCIETY, HYD. =================== 5 BE TAKEN IN TERMS OF DELAY OF FEW DAYS. HOWEVER, W HEN THERE IS INORDINATE DELAY, ONE SHOULD BE VERY CAUTIOUS WH ILE CONDONING THE DELAY. THE DELAY CANNOT BE CONDONE D SIMPLY BECAUSE THE ASSESSEES CASE IS HARD AND CALLS FOR S YMPATHY OR MERELY OUT OF BENEVOLENCE TO THE PARTY SEEKING RELI EF. IN GRANTING THE INDULGENCE AND CONDONING THE DELAY, IT MUST BE PROVED BEYOND THE SHADOW OF DOUBT THAT THE ASSESSEE WAS DILIGENT AND WAS NOT GUILTY OF NEGLIGENCE WHATSOEVE R. THE SUFFICIENT CAUSE WITHIN THE CONTEMPLATION OF THE LI MITATION PROVISION MUST BE A CAUSE WHICH IS BEYOND THE CONTR OL OF THE PARTY INVOKING THE AID OF THE PRO VISIONS. THE SUP REME COURT IN THE CASE OF RAMLAL V. REWA COALFIELDS LTD., AIR 1962 SC 361 HAS HELD THAT THE CAUSE FOR THE DELAY IN FILING THE APPEAL WHICH BY DUE CARE AND ATTENTION COULD HAVE BEEN AVO IDED CANNOT BE A SUFFICIENT CAUSE WITHIN THE MEANING OF THE LIMITATION PROVISION. WHERE NO NEGLIGENCE, NOR INA CTION, OR WANT OF BONA FIDES CAN BE IMPUTED TO THE ASSESSEE A LIBERAL CONSTRUCTION OF THE PROVISIONS HAS TO BE MADE IN OR DER TO ADVANCE SUBSTANTIAL JUSTICE. SEEKERS OF JUSTICE MU ST COME WITH CLEAN HANDS. IN THE PRESENT CASE, THE REASONS ADVANCED BY THE ASSESSEE DO NOT SHOW ANY GOOD AND SUFFICIENT REASON TO CONDONE THE DELAYS. THE DELAYS ARE NOT PROPERLY EXPLAINED BY THE ASSESSEE. THERE IS NO REASON FOR CONDONING SUCH DELAY IN THIS CASE. THE DELAY IS NOTHING BUT NEGLIGENCE AND INACTION OF THE ASSESSEE WHICH COULD HAVE BEEN VERY WELL AVO IDED BY THE EXERCISE OF DUE CARE AND ATTENTION. THERE EXIS TS NO SUFFICIENT OR GOOD REASON FOR CONDONING INORDINATE DELAYS OF MORE THAN 2032 DAYS IN FILING APPEAL BEFORE US. AC CORDINGLY, THIS APPEAL IS DISMISSED AS BARRED BY LIMITATION. ITA NO.989/HYD/2010 & 3 ORS. VI DYANANDA EDUCATIONAL SOCIETY, HYD. =================== 6 7. NOW, LET US TAKE UP FOR CONSIDERATION, THE OTHER THREE APPEALS, VIZ. ITA 122 TO 124/HYD/2010 FOR THE ASSES SMENT YEARS 2002-03 TO 2004-05, WHEREIN THE EFFECTIVE GRI EVANCE OF THE ASSESSEE IS AGAINST DENIAL OF EXEMPTION UNDER S .11A OF THE ACT, AND DETERMINATION OF THE INCOME OF THE ASS ESSEE AT RS.13,59,486, RS.62,98,060 AND RS.1,11,58,826 FOR T HE ASSESSMENT YEARS 2002-03 TO 2004-05 RESPECTIVELY, B Y THE ORDERS OF ASSESSMENT, ALL DATED 18.8.2009, PASSED U NDER S.143(3) READ WITH S.147 OF THE ACT. 8. FACTS IN BRIEF RELATING TO THESE APPEALS ARE THA T THE ASSESSEE FILED RETURNS OF INCOME ORIGINALLY DECLARI NG LOSS OF RS.1,20,514, RS.80,80,865 AND RS.26,77,429 FOR THE ASSESSMENT YEARS 2002-03 TO 2004-05. A SURVEY UND ER S.133A OF THE ACT WAS CONDUCTED IN THE ASSESSEES C ASE ON 4.2.20009. IT WAS NOTICED THAT THE ASSESSEE HAD BE EN GRANTED REGISTRATION WITH EFFECT FROM 1.4.2004 ONLY BY THE DIRECTOR OF INCOME-TAX(EXEMPTION), VIDE ORDER DATED 12.10.2004. THE ASSESSING OFFICER, THEREFORE, CONCL UDED THAT THE ASSESSEE WAS ENTITLED TO THE BENEFITS OF REGIST RATION UNDER S.12AA ONLY FROM THE ASSESSMENT YEAR 2005-06. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD GEN ERATED A CAPITAL FUND OF RS.14 LAKHS AND RS.35,67,625 FROM T HE ASSESSMENT YEARS 2002-03 AND 200-04 AS SHOWN IN TH E BALANCE SHEET AND HAD COLLECTED DEVELOPMENT FUND OF RS.80,000, RS.1,08,11,300 AND RS.1,38,36,255 FOR TH E ASSESSMENT YEAR 2002-03, 2003-04 AND 2004-05. SINC E THE ASSESSEE, AS SUCH DID NOT HAVE VALID EXEMPTION ENTI TLEMENT, THE ASSESSING OFFICER ISSUED NOTICE UNDER S.148 OF THE ACT ON 6.2.2009. IN RESPONSE, ASSESSEE FILED COPIES OF T HE ORIGINAL RETURNS FIELD AND PLEADED THAT NO INCOME HAD ESCAPE D ITA NO.989/HYD/2010 & 3 ORS. VI DYANANDA EDUCATIONAL SOCIETY, HYD. =================== 7 ASSESSMENT . HOWEVER, THE ASSESSING OFFICER PROCEE DED TO CONSIDER THE CAPITAL FUND AND ALSO DEVELOPMENT FUND , AS INCOME OF THE ASSESSEE FORM OTHER SOURCES, PROCEEDE D TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE AT RS.13,59,486,RS.62,98,060 AND RS.1,11,58,826 RESPEC TIVELY FOR THE THREE ASSESSMENT YEARS UNDER APPEAL RESPEC TIVELY. 9. ON APPEAL BEFORE THE CIT(A), LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED IN THE F IRST PLACE THAT EVEN THOUGH THE ASSESSEE HAS APPLIED FOR REGIS TRATION UNDER S.12AA ON 4.6.2004, WITH EFFECTIVE FROM 1.4. 2001, ALONG WITH AN APPLICATION FOR A CONDONATION OF DELA Y IN FILING THE SAID APPLICATION, THE DIRECTOR OF INCOME-TAX(EX EMPTION) VIDE HIS ORDER DATED 12.10.2004, GRANTED REGISTRATI ON FROM 1.4.2005 ONLY. EVEN OTHERWISE, IT IS SUBMITTED THA T THE ASSESSEE IS ENTITLED FOR EXEMPTION OF ITS INCOME UN DER S.10(23C)(IIIAD) OF THE ACT. IT IS ALSO SUBMITTED THAT WHILE THE ASSESSING OFFICER ERRED IN HOLDING THE INTEREST FRE E UNSECURED LOANS FROM THE FOUNDER MEMBERS AS REVENUE RECEIPT, HE DID NOT APPRECIATE THAT THE BUILDING FUND WAS ALSO IN T HE NATURE OF CORPUS DONATION AS THE DONORS HAD SPECIFICALLY DONA TED THE AMOUNTS TOWARDS THE SAME. IT WAS PLEADED THAT THE SAME ARE IN THE NATURE OF CAPITAL RECEIPTS AND COULD NOT HAVE BEEN APPLIED TO CHARITABLE PURPOSES. IT WAS ALSO CONTEN DED THAT ADDITIONS HAVE BEEN MADE WITHOUT BRINGING ANY EVIDE NCE ON RECORD TO SHOW THAT THE FUNDS HAD BEEN APPLIED FOR THE PURPOSE OTHER THAN FOR WHICH THE SAME WERE RECEIVED . LEARNED AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT EVEN AFTER THE 1989 AMENDMENT TO S.2(24)(IIA), CONTRIBUT IONS SPECIFICALLY MADE TO THE CORPUS/CAPITAL FUND OF A C HARITABLE TRUST ARE NOT TAXABLE. IT WAS FURTHER PLEADED THAT THAT THE ITA NO.989/HYD/2010 & 3 ORS. VI DYANANDA EDUCATIONAL SOCIETY, HYD. =================== 8 ASSESSING OFFICER BROUGHT TO TAX THE CORPUS DONATIO NS TO TAX. IT WAS SUBMITTED THAT THOUGH IT IS GENERALLY UNDERS TOOD THAT A TRUST ENJOYING BENEFIT OF EXEMPTION UNDER S.11 ONLY CAN GET EXEMPTION OF DONATION TO CORPUS FUNDS UNDER S.11(1) (D), IT IS A MISCONCEIVED INTERPRETATION OF S.2(24)(IIA). HE A RGUED THAT VOLUNTARY CONTRIBUTIONS AS REFERRED TO IN S.2(24)(I IA) DO NOT INCLUDE CONTRIBUTION TO CORPUS FUND AS THOSE DO NO T CONSTITUTE THE INCOME OF THE DONEE TRUST. IT WAS THUS THE CON TENTION OF THE ASSESSEE BEFORE THE CIT(A) THAT EVEN THOUGH THE ASSESSEE WAS NOT GRANTED REGISTRATION UNDER S.12AA OF THE AC T, CONTRIBUTIONS TO CORPUS FUND AND CAPITAL FUND CANNO T BE TREATED AS REVENUE RECEIPTS. IT IS ALSO CONTENDED IN THE ALTERNATIVE THAT GROSS RECEIPT OF ASSESSEE BEING LE SS THAN RS. ONE CRORE IN ASSESSMENT YEAR 2002-03, EVEN AFTER IN CLUDING THE CONTRIBUTIONS TO CAPITAL FUND AND THE CORPUS FU ND, AS PRESCRIBED BY RULE 2BC, THE ASSESSEES INCOME WAS T OTALLY EXEMPT UNDER S.10(23C)(IIIAD). 10. THE CIT(A) WAS NOT CONVINCED WITH ANY OF THE CONTENTIONS OF THE ASSESSEE. HE FOUND THAT THE DIRE CTOR OF INCOME-TAX(EXEMPTION) HAVING NOT CONDONED THE DELAY AND GRANTED REGISTRATION ONLY FROM 1.4.2004, THE ASSESS ING OFFICER WAS JUSTIFIED IN NOT GRANTING EXEMPTION UNDER S.11 OF THE ACT FOR THESE YEARS. THE CIT(A) HELD THAT THE CONTENT IONS OF THE ASSESSEE OF HAVING RECEIVED THE UNSECURED LOANS FRO M THE FOUNDER MEMBERS, OR HAVING RECEIVED ANY DONATIONS W ITH THE SPECIFIC DIRECTION TO CONSTITUTE CORPUS OF THE DONE E TRUST ARE NOT SUBSTANTIATED BY THE ASSESSEE DULY FURNISHING ANY EVIDENCE IN THE FORM OF RECEIPT BOOKS, DONATION REC EIPTS, ETC. TO THAT EFFECT. IN THE CIRCUMSTANCES, HE FOUND NO INFIRMITY IN THE ACTION OF THE ASSESSING OFFICER IN TREATING THE CAPITAL FUND ITA NO.989/HYD/2010 & 3 ORS. VI DYANANDA EDUCATIONAL SOCIETY, HYD. =================== 9 AND ALSO THE DEVELOPMENT FUND AS VOLUNTARY CONTRIBU TIONS CONSTITUTING THE INCOME WITHIN THE MEANING OF S.12 OF THE ACT. HE ALSO FOUND NO MERIT IN THE CONTENTION OF THE ASS ESSEE THAT ITS INCOME FOR THE ASSESSMENT YEAR 2002-03 WOULD BE EXEMPT U/S. 10(23C)((IIIAD) AS ITS GROSS RECEIPTS WERE BE LOW RS. ONE CRORE, SINCE THE CLAIM OF THE ASSESSEE THAT THE EDU CATIONAL INSTITUTION RUN BY THE ASSESSEE-SOCIETY WAS NOT FOR THE PURPOSE OF PROFIT, HAS NOT BEEN ESTABLISHED. WITH THESE FINDINGS, THE CIT(A) CONFIRMED THE ACTION OF THE AS SESSING OFFICER AND DISMISSED THE APPEALS OF THE ASSESSEE F OR ALL THE THREE YEARS. 11. AGGRIEVED BY THE ORDER OF THE CIT(A), ASSESSEE PREFERRED THESE APPEALS BEFORE US. BEFORE US T HE ASSESSEE NOT PRESSED THE GROUND RELATING TO REOPENING OF ASS ESSMENT AND THE SAME IS DISMISSED AS NOT PRESSED. 12. REGARDING EXEMPTION U/S. 11, IN OUR OPINION, IN VIEW OF OUR DECISION IN ITA NO 989/HYD/2010, CITED SUPRA, W HEREIN WE HAVE NOT ADMITTED THE APPEAL OF THE ASSESSEE HOLDIN G THAT THERE IS NO REASONABLE CAUSE FOR FILING THE APPEAL BELATEDLY BEFORE US BY 2032 DAY AS SUCH THE ORDER OF THE DIT( E) DATED 12.10.2004 GRANTING REGISTRATION U/S. 12A WITH EFFE CT FROM 1.4.2004 HAS BECOME FINAL. THUS FOR THE ASSESSMENT YEAR 2002-03, 2003-04 AND 2004-05 THE ASSESSEE BEING NOT HAVING VALID REGISTRATION U/S. 12A OF THE IT ACT AND THE A SSESSEE IS NOT ENTITLED TO CLAIM EXEMPTION U/S.11 THE ASSESSME NT YEARS 2002-03, 2003-04 AND 2004-05. ACCORDINGLY, THE CLAI M OF THE ASSESSEE U/S. 11 OF THE IT ACT IS DISMISSED. 13. THE ASSESSEES COUNSEL PLEA FOR THE ASSESSMENT YEAR 2002-03 IS THAT THE GROSS RECEIPTS FOR THIS ASSESSM ENT YEAR IS ITA NO.989/HYD/2010 & 3 ORS. VI DYANANDA EDUCATIONAL SOCIETY, HYD. =================== 10 BELOW RS. 1 CRORE. FOR THIS ASSESSMENT YEAR THE AS SESSEE IS TO BE CONSIDERED AS AN EDUCATIONAL INSTITUTION RUNN ING WITHOUT ANY PROFIT MOTIVE, ITS INCOME IS TO BE EXEMPTED U/S . 10(23)(IIIAD). HE SUBMITTED THAT IF THE GROSS RECE IPT IS MORE THAN RS. 1 CRORE, THEN ONLY PROVISIONS OF SECTION 1 0(23)(VI) ARE APPLICABLE WHICH REQUIRES APPROVAL BY THE PRESC RIBED AUTHORITY. THE LEARNED AR PLACED RELIANCE ON VARIOU S JUDGEMENTS IN HIS SUPPORT WHICH ARE PLACED ON RECOR D IN THE PAPER BOOK. WE HAVE CAREFULLY GONE THROUGH THEM. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS BEEN COL LECTING VERY HIGH FEE LIKE PROSPECTUS CHARGES, ADMISSION FE E, DEVELOPMENT FEE, TRANSPORT FEE AND IT HAS BEEN COLL ECTED IN A COMMERCIAL MANNER. FURTHER IT WAS SUBMITTED THAT T HE INCOME SO EARNED APPLIED FOR ACQUISITION OF FIXED A SSETS TO EXPAND INSTITUTION AND AS SUCH, AS HELD BY THE UTTA RAKHAND HIGH COURT IN THE CASE OF QUEENS EDUCATIONAL SOCIET Y, 319 ITR 160, THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S . 10(23C)(IIIAD) OF THE IT ACT. 14. FROM THE FACTS FURNISHED, WE FIND THAT FOR THE ASSESSMENT YEAR 2002-03, THE GROSS RECEIPTS ARE ONL Y RS.14,80,000/-. THOUGH THE RECEIPT FOR THE ASSESSME NT YEAR 2002-03 IS BELOW RS. 1 CRORE, THE ASSESSEE IS REQUI RED TO PROVE THAT THE EDUCATIONAL INSTITUTION RUN BY THE A SSESSEES SOCIETY WAS NOT FOR PROFIT MOTIVE AND SOLELY FOR ED UCATIONAL PURPOSES. THE OBJECTS OF THE SOCIETY ARE NOT CONFI NED TO EDUCATION ALONE. THERE ARE MANY OBJECTS WHICH CANN OT BE STATED TO BE SOLELY FOR EDUCATION PURPOSE. THIS IS EVIDENT FROM THE COPY OF ARTICLES FILED BY THE ASSESSEE WHICH IS PLACED ON RECORD IN THE PAPER BOOK FILED BY THE ASSESSEE PAGE S 15 TO 20 WHICH READS AS FOLLOW: ITA NO.989/HYD/2010 & 3 ORS. VI DYANANDA EDUCATIONAL SOCIETY, HYD. =================== 11 OBJECT NO. DESCRIPTION XIII) TO ESTABLISH HOSPITALS, NURSING HOMES, CLINICS, SUR GICAL THEATRES, HEALTH UNITS ETC., AND PROVIDE MEDICAL FA CILITIES TO PUBLIC. XIV) TO ASSIST AND GUIDE EDUCATED UNEMPLOYED PEOPLE IN SEEKING EMPLOYMENT. XV) TO HONOUR AND ENCOURAGE OUTSTANDING DISTINGUISH ED AND DESERVING PERSONS IN PUBLIC LIFE, SOCIAL SERVICE, M USIC, ART AND LITERATURE, ETC. XVII) TO ESTABLISH, MAINTAIN AND GRANT AID TO HOMES , ORPHANAGES OR OTHER ESTABLISHMENTS FOR RELIEF AND H ELP TO THE POOR AND NEEDY, WITHOUT REFERENCE TO CASTE OR C REED TO WHICH ONE BELONGS. XVIII) TO MAKE AN ENDEAVOUR TO PROVIDE THE POSSIBLE RELIEF DURING NATURAL CALAMITIES SUCH AS FAMINE, EARTH QUA KE, FLOOD, FIRE, PESTILENCE AND OTHER OCCASIONS OF SIMI LAR NATURE BY METHODS SUCH AS PRIVATE DONATIONS, SUBSCRIPTIONS OR CONTRIBUTIONS TO INSTITUTIONS, ESTABLISHMENTS OR PERSONS AFFECTED IN SUCH CALAMITI ES. XIX) TO ESTABLISH COMMUNITY HALLS FOR FOSTERING SOC IAL CONTRACTS AND SERVING THE SOCIAL NEEDS OF THE PUBLIC AT LARGE . XX) TO RECRUIT YOUTH TO ACHIEVE THE OBJECTS OF THE SOCIETY. XI) TO PROVIDE BOARDING AND LODGING FACILITIES TO S TUDENTS AND WORKING PEOPLE. VIII) TO PROMOTE NATIONAL INTEGRATION AND UNITY OF THE COUNTRY. I) TO PROMOTE SOCIAL, CULTURAL, EDUCATIONAL, SCIENT IFIC, IT AND RESEARCH ACTIVITIES AMONG MEN AND WOMEN, PARTICULAR LY THE YOUTH. IV) TO UNDERTAKE RESEARCH, ORGANISATION AND DEVELOP MENT PROGRAMMES AND CONTRACT WITH GOVERNMENT, QUASI- GOVERNMENT, LOCAL BODIES, PUBLIC OR PRIVATE AGENCIE S. V) TO PROMOTE SELF-CONFIDENCE AND SPIRIT OF SELF RE LIANCE AMONG YOUTH, TO ENABLE THEM TO ACQUIRE NECESSARY SK ILLS AND GUIDE THEM TO ACHIEVE EXCELLENCE IN THEIR FIELD OF ACTIVITY. ITA NO.989/HYD/2010 & 3 ORS. VI DYANANDA EDUCATIONAL SOCIETY, HYD. =================== 12 15. WE ARE ALSO UNABLE ACCEPT THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSING OFFICER /CIT(A) HAD NOT DISCHARGED THE BURDEN TO SHOW THAT THE AS SESSEE WAS NOT ENTITLED TO THE EXEMPTION CLAIMED. THE ORD ERS OF LOWER AUTHORITIES CLEARLY SHOW THAT THE ASSESSEE HA D CLAIMED EXEMPTION AND THE AUTHORITIES HAD CONSIDERED IT. I T WAS, THEREFORE, FOR THE ASSESSEE TO SHOW HOW IT WAS ENTI TLED TO THE EXEMPTION CLAIMED. THEREFORE, THE ASSESSEES CLAIM OF EXEMPTION MUST FAIL. IN THE CIRCUMSTANCES, FOR THE ASSESSMENT YEAR 2002-03, THE ASSESSEE IS NOT ENTITLED TO EXEMP TION UNDER SECTION 10(23C)(IIIAD) OF THE ACT. OR U/S 11 OF THE ACT. 15. FOR THE ASSESSMENT YEAR 2003-04 THE TOTAL RECEI PT OF THE ASSESSEE TRUST IS RS.1,43,78,925/- AND FOR THE ASSE SSMENT YEAR 2004-05, THE TOTAL RECEIPT INCLUDING THAT OF D EVELOPMENT FUND IS RS.1,38,36,355/- THUS, FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05, THE ASSESSEE ANY HOW, CANNOT C LAIM EXEMPTION UNDER SECTION 10(23C)(IIIAD). 15. FURTHER, WE MAKE IT CLEAR THAT DONATIONS TOWAR DS CORPUS FUNDS OF CHARITABLE TRUST ARE EXEMPT UNDER SECTION 12. HOWEVER, SECTION 12 PROVIDES THAT PROVISIONS OF SEC TION 11 AND 12 SHALL NOT APPLY UNLESS THE TRUST IS REGISTER ED UNDER SECTION 12AA. IN THIS VIEW OF THE MATTER EVEN CORP US CONTRIBUTION FOR THE ASSESSMENT YEARS 2003-04 AND 0 4-05 WILL NOT BE ELIGIBLE FOR EXEMPTION UNDER SECTION 11, AS THE ASSESSEE TRUST DID NOT HAVE REQUISITE APPROVAL UNDE R SECTION 12AA. FURTHER, WE MAKE IT CLEAR THAT THERE WAS INS ERTION OF CLAUSE (D) TO SECTION 11(1) BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, WITH EFFECT FROM 1.4.1989. SECTION 2(24) OF THE ACT HAS ALSO BEEN AMENDED BY THE SAME ITA NO.989/HYD/2010 & 3 ORS. VI DYANANDA EDUCATIONAL SOCIETY, HYD. =================== 13 AMENDMENT ACT. THE EFFECT OF AMENDMENT IS THAT ALT HOUGH CORPUS DONATION SHOULD BE TREATED AS INCOME IN THE HANDS OF THE RECIPIENT, BUT IN THE CASE OF TRUST OR INSTITUT ION, WHO COMPLY WITH THE REQUIREMENT FOR EXEMPTION U/S. 11, THEY WILL BE EXEMPTED FROM THEIR INCOME. HOWEVER, THE TRUST OR INSTITUTION LOSES THE EXEMPTION U/S. 11, EITHER BY NOT COMPLYING WITH THE CONDITION LAID DOWN IN SECTION 1 2A OR BY FALLING WITHIN THE MISCHIEF OF SECTION 13, CORPUS D ONATION WILL BE INCLUDED IN THE INCOME OF THE INSTITUTION AND TO BE ASSESSED ACCORDINGLY. IN VIEW OF THIS, THE ASSESSING OFFICE R IS DIRECTED TO COMPUTE THE INCOME IN ACCORDANCE WITH LAW FOR AS SESSMENT YEARS 2002-03, 2003-04 AND 2004-05 AND IT IS NEEDL ESS TO MENTION HEREIN THAT WHEN THE INCOME IS COMPUTED IN ACCORDANCE WITH LAW AS BUSINESS INCOME IN THE LIGHT OF THE ABOVE FINDINGS, THE USUAL DEDUCTION ARE ALLOWABLE U NDER THE PROVISIONS OF THE ACT WHILE COMPUTING THE INCOME UN DER THE HEAD BUSINESS MORE SO UNDER SECTIONS 30 TO 38 O F THE IT ACT, IT IS TO BE ALLOWED IF IT IS NOT ALREADY GRANT ED TO THE ASSESSEE. 16. IN THE RESULT, ITA NO. 989/H/2010 OF THE ASSESS EE IS DISMISSED AS BEING TIME-BARRED. THE APPEALS OF THE ASSESSEE IN ITA NO 122/H/2010, 123/H/2010 AND 124/H/2010 FOR THE ASSESSMENT YEARS 2002-2003, 2003-04 AND 2004-05 RESPECTIVELY ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2012 SD/- (SAKTIJIT DEY) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 30 TH APRIL, 2012. ITA NO.989/HYD/2010 & 3 ORS. VI DYANANDA EDUCATIONAL SOCIETY, HYD. =================== 14 COPY FORWARDED TO: 1. VIDYANANDA EDUCATIONAL SOCIETY (DELHI PUBLIC SCH OOL), SURVEY NO.74, KHAJAGUDA VILLAGE, GOLKONDA POST, HYDERABAD 500 008. 2. DY DIRECTOR OF INCOME-TAX (EXEMPTION)-II, HYDER ABAD 4. COMMISSIONER OF INCOME-TAX(APPEALS) IV HYDERABAD 5. DIRECTOR OF INCOME-TAX (EXEMPTION) HYDERABAD 6. DEPARTMENTAL REPRESENTATIVE , ITAT, HYDERABAD B.V.S./TPRAO