Mahalakshmi Educational Society, Srikakulam V. The Income Tax Officer (Exemptions), , Visakhapatnam

ITA 137/VIZ/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7706 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 26-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S N MURTHY
• Assessee Lawyers: C V S MURTHY
• Keywords: Sale consideration of property below Jantri Value; Capital receipt; Revised return; Set aside; Capital Gains
• Section: 143(3); 50C; 201; 263; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 137 / VIZ /201 8 (ASST. YEAR : 20 13 - 14 ) M/S. MAHALAKSHMI EDUCATIONAL SOCIETY , H.NO. 15 - 7 - 91, ARASAVILLI ROAD , SRIKAKULAM. V S . ITO (EXEMPTIONS), VISAKHAPATNAM. PAN NO. AACTM 9187 A (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C.V.S. MURTHY CA DEPARTMENT BY : SHRI T.S.N. MURTHY CIT DR DATE OF HEARING : 25 / 0 9 /201 9 . DATE OF PRONOUNCEMENT : 31 / 1 0 /201 9 . O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX ( EXEMPTIONS ) , HYDERABAD , DATED 31 /0 3 /201 8 FOR THE ASSESSMENT YEARS 20 13 - 14 . 2. ALL THE GROUNDS OF THIS APPEAL ARE RELATED TO THE ORDER PASSED BY THE LD. CIT(E) U/SEC. 263 OF THE INCOME TAX ACT, 1961 (FOR SHORT, 'ACT') . 3 . THE ASSESSEE IS AN EDUCATIONAL INSTITUTION . FOR THE A.Y. 2013 - 14, FILED ITS RETURN OF INCOME DECLARING NIL INCOME AFTER CLAIMING 2 ITA NO. 137/VIZ/2018 ( M/S. MAHALAKSHMI EDUCATIONAL SOCIETY ) EXEMPTION OF THE EXCESS OF INCOME OVER EXPENDITURE TO THE EXTENT OF RS. 1,30,19,063/ - U/SEC. 10(23C)(VI) OF THE ACT. THE ASSESSEE WAS CLAIMING EXEMPTION U/SEC. 10(23C)(IIIAD) OF THE ACT UP TO THE A.Y. 2012 - 13 . FOR THE A.Y. 2013 - 14 , THE ASSESSEE - SOCIETY FILED AN APPLICATION DATED 26/09/2013 IN FORM NO.56D BEFORE THE L D .CCIT, VISAKHAPATNAM FOR GRANTING EXEMPTION U/SEC. 10(23C) OF THE ACT AND SIMULTANEOUSLY FILED THE RETURN OF INCOME ON THE SAME DATE . THE SAID APPLICATION OF THE SOCIETY WAS REJECTED BY THE CCIT IN F.NO.CCIT/VSP/TECH/10(23C)/2/2014 - 15 , DATED 26/09/2014 . 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAS FOUND TH A T THE ASSESSEE HAS SOLD ITS LAND ADMEASURING 7308.4 SQ.YDS. AND RCC BUILDING CONSISTING OF GROUND + 3 FLOORS WITH PLINTH ARE OF 40,448 SFT. , S ITUATED AT SINGUPURAM VILLAGE , SRIKAKULAM MANDALAM FOR A CONSIDERATION OF RS. 2,55,94,000/ - VIDE REGISTERED SALE DEED DATED 31/12/2012 TO ANOTHER SOCIETY VIZ. SRI SURYA EDUCATIONAL SOCIETY , NANDYAL . AS PER THE REGISTERED SALE DOCUMENT , THE VALUE OF THE LAND OF 7308.4 SQ.YDS. WAS RS.37,64,000/ - AND THE CONSTRUCTED AREA OF 40,448 SFT. , O F RCC BUILDING WAS VALUED AT RS.2,18,30,000/ - AGGREGATING TO RS. 2,55,94,000/ - . THE ASSESSING OFFICER FOUND FROM THE BALANCE SHEET THAT THE MOVABLE ASSETS WITH THE BOOK VALUE OF RS. 30,51,396/ - CONSISTING OF FURNITURE, VEHICLES AND COMPUTERS ETC., 3 ITA NO. 137/VIZ/2018 ( M/S. MAHALAKSHMI EDUCATIONAL SOCIETY ) WERE ALSO AVAILABLE AND THE VALUE OF THE SAID MOVABLE ASSETS WAS TAKEN AT RS. NIL. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE SOCIETY HAS NOT RECEIVED ANY EXTRA CONSIDERATION FOR SALE OF IM MOVABLE PROPERTY SEPARATELY OVER AND ABOVE THE SALE CONSIDERATION MENTIONED IN THE SALE DOCUMENT , HENCE, SUBMITTED THAT IT DID NOT SEPARATELY ADMIT ANY INCOME RELATING TO THE TRANSFER OF FURNITURE, FITTING, VEHICLES AND COMPUTERS ETC. AMOUNTING TO RS. 30,51,396/ - . HOWEVER, THE ASSESSEE EXPRESSED NO OBJECTION FOR THE ADDITION OF RS. 30,51,396/ - AS ADDITIONAL INCOME . ACCORDINGLY, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT ON TOTAL INCOME OF RS. 30,51,396/ - . 4 . THE LD. CIT(E) HAS TAKEN THE CASE FOR REVISION U/S 263 AND ISSUED SHOW - CAUSE NOTICE TO THE ASSESSEE BY STATING THAT THE ASSESSMENT FRAMED U/SEC. 143(3) WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE DUE TO FOLLOWING ISSUES WHICH WERE OMITTED TO BE CONSIDER ED BY THE ASSESSING OFFICER : - A) CAPITAL GAINS : - THE ASSESSEE HAS SOLD AN IMMOVABLE PROPER T Y TO M/S. SRI SURYA EDUCATIONAL SOCIETY, NANDYAL TO AN UNDERTAKING OF KESAVA REDDY GROUP OF INSTITUTIONS FOR A SUM OF RS. 2,55,94,000/ - . THE SAID PROPERTY WAS REFERRED TO THE DVO , VALUATION CELL WHO HAS VALUED THE PROPERTY AT RS. 3,54,27,090/ - AND THE AO DID NOT CONSIDER THE DIFFERENCE FOR CAPITAL GAINS TAX. 4 ITA NO. 137/VIZ/2018 ( M/S. MAHALAKSHMI EDUCATIONAL SOCIETY ) B) DISALLOWANCE OF CLAIM OF HOSTEL EXPENSES : - THE ASSESSEE CLAIMED VARIOUS EXPENSES OUT OF WHICH HOSTEL EXPENSES OF RS. 6,84,708/ - . THE CIT(E) FOUND THAT THE ASSESSEE HAS CLAIMED EXPENDITURE FOR THE FIRST QUARTER OF F.Y. 2012 - 13 AND THERE WERE NO STUDENTS AND THE REPRESENTING INCOME FOR THE MONTHS OF APRIL, & MAY . THUS, THE ASSESSING OFFICER PROPOSED TO RESTRICT THE EXPENSES FOR THE MONTHS OF APRIL, MAY & JUNE , HOWEVER, THE ASSESSING OFFICER HAS OMITTED IN THE ASSESSMENT ORDER TO DISALLOW THE AMOUNTS WHILE COMPUTING THE TAXABLE INCOME FOR THE A.Y. 2013 - 14 . C) DISALLOWANCE OF CLAIM OF BONUS : - THE ASSESSING OFFICER HAS PROPOSED TO DISALLOW THE CLAIM OF BONUS TO STAFF OF RS. 6,85,000/ - , FOR WHICH THE SECRETARY OF THE ASSESSEE SOCIETY HAS AGREED FOR DISALLOWANCE. HOWEVER, THE ASSESSING OFFICER HAS OMITTED TO DISALLOW THE SAID AMOUNTS IN THE COMPUTATION OF TAXABLE INCOME WHILE COMPLETING THE ASSESSMENT FOR A.Y. 2013 - 14 . 4.1 THEREFORE, THE LD. CIT(E) HELD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE . ACCORDINGLY, CALLED FOR EXPLANATION OF THE ASSESSEE AS TO WHY THE ASSESSMENT SHOULD NOT BE REVISED ? IN RESPONSE , T HE ASSESSEE FILED THE REPLIES TO THE NOTICE ON 14/02/2018 & 28/03/2018 OBJECTING FOR THE P ROPOSED REVISION . THE ASSESSEE STATED BEFORE THE LD. CIT(E) THAT IT IS AN EDUCATIONAL INSTITUTION AND THE INCOME OF THE ASSESSEE IS EXEMPT U/SEC. 5 ITA NO. 137/VIZ/2018 ( M/S. MAHALAKSHMI EDUCATIONAL SOCIETY ) 10(23C)(VI) OF THE ACT . WITH REGARD TO CAPITAL GAINS, THE ASSESSEE HAS SUBMITTED BEFORE THE LD. CIT(E) THAT THE ASSESSEE HAS S OLD THE PROPERTY WHICH WAS CORRECTLY DECLARE D IN THE INCOME TAX RETURNS . SUBSEQUENT TO REJECTION OF ASSESSEES APPLICATION FOR GRANT OF REGISTRATION U/SEC. 10(23C) BY THE LD.CCIT , THE ASSESSEE HA D FILED THE REVISED RETURN OF INCOME BEFORE THE ASSESSING OFFICER AND THE ENTIRE CAPITAL RECEIPTS WERE EXCLUDED FR OM THE GROSS RECEIPTS , SINCE , THE CAPITAL RECEIPTS DOES NOT INCLUDE THE GROSS RECEIPTS FOR THE PURPOSE OF SECTION 10(23C) (IIIAD) OF THE ACT. THE ASSESSING OFFICER AFTER HAVING EXAMINED THE EXPLANATION , HAS COMPLETED THE ASSESSMENT AFTER BEING SATISFIED WITH REGARD TO EXEMPTION CLAIMED BY THE ASSESSEE AND HENCE SUBMITTED THAT THERE WAS NO ER ROR IN THE ASSESSMENT ORDER WHICH CALLS FOR ACTION U/SEC. 263 . SECONDLY , WITH REGARD TO HOSTEL EXPENSES AND BONUS TO THE STAFF THE ASSESSEE SUBMITTED THAT THOUGH THE ASSESSING OFFICER HA D PROPOSED TO DISALLOW THE EXPENSES , SINCE , THE INCOME IS EX E MPT U/SEC. 10(23C) (IIIAD) , NO SEPARATE ADDITION I S CALLED FOR AND THE ASSESSING OFFICER RIGHTLY MADE THE ASSESSMENT WITHOUT MAKING THE SEPARATE ADDITIONS . THE AR OF THE ASSESSEE STATED TO HAVE EXPLAINED ALL THE ISSUES BEFORE THE ASSESSING OFFICER AND AFTER DUE CONSIDERATION OF THE FACTS AND THE MATERIAL PLACED BEFORE THE ASSESSING OFFICER, THE ASSES SING OFFICER HAS ALLOWED THE EXEMPTION AND DID NOT MAKE THE 6 ITA NO. 137/VIZ/2018 ( M/S. MAHALAKSHMI EDUCATIONAL SOCIETY ) ADDITIONS . THEREFORE, ARGUED THAT THERE IS NO ERROR IN THE ORDER OF THE ASSESSING OFFICER, HENCE, REQUESTED TO DROP THE 263 PROCEEDINGS U/S 263 OF THE A CT . NOT BEING CONVINCED WITH THE EXPLANATION OF THE ASSESSEE, THE LD. CIT(E) PASSED THE ORDER U/SEC.263 HOLDING THAT THE ASSESSMENT FRAMED U/SEC.143(3) ON 3 1/03/20 16 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE , S INCE , THE ASSESSING OFFICER HAS OMITTED TO CONSIDER VALUATION MADE BY THE DVO FOR CAPITAL GAINS, HOSTEL EXPENSES AND BONUS TO THE STAFF AND THUS SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND DIRECT ED HIM TO REDO THE ASSESSMENT IN ACCORDANCE WITH LAW. 5. AGAINST THE ORDER OF THE LD. CIT(E) PASSED U/SEC. 263 , THE ASSESSEE IS IN APPEAL BEFORE TH IS TRIBUN A L . 6 . LD.AR DURING THE APPEAL HEARING, REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(E) IN 2 6 3 PROCEEDINGS. 7 . LD.DR STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(E) AND ARGUED THAT THERE WAS ERROR IN THE ORDER PASSED BY THE ASSESSING OFFICER WHICH CAUSED PREJUDICE TO THE REVENUE, HENCE , ARGUED THAT THE LD. CIT(E) HAS RIGHTLY TAKEN UP THE CASE FOR REVISION U/SEC. 263 . THEREFORE, REQUESTED TO UPHOLD THE ORDER OF THE LD. CIT(E) AND DISMISS THE APPEAL OF THE ASSESSEE. 7 ITA NO. 137/VIZ/2018 ( M/S. MAHALAKSHMI EDUCATIONAL SOCIETY ) 8 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL PLACED ON RECORD. 9. THE LD. CIT(E) HAS TAKEN THE CASE FOR REVISION U/SEC. 263 IN RESPECT OF THE FOLLOWING ISSUES: - (A) CAPITAL GAINS, (B) HOSTEL EXPENSES & (C) BONUS TO STAFF. 10 . WITH REGARD TO CAPITAL GAINS, THE ASSESSING OFFICER CALLED FOR INFORMATION AND EXAMINED THE ISSUES IN DETAIL WHICH IS EVIDENT FROM THE ASSESSMENT ORDER PAGE NO. 2 . IN THE REVISED RETURN , THE ASSESSEE HAS EXCLUDED THE CAPITAL RECEIPTS FROM THE GROSS RECEIPTS AND SUBMITTED THE COMPUTATION BEFORE THE AO JUSTIFYING THE EXCLUSION OF CAPITAL RECEIPT PLACING RELIANCE ON THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. MADRASA E.BHAKHIYATH - US - SALIHATH ARABIC COLLEGE IN T.C.(A).NO. 450 / 2014, DATED 11. 0 8.2014 . THE ASSESSING OFFICER AFTER CONSIDERING THE JUDICIAL PRECEDENT AND THE REVISED RETURN, DID NOT CONSIDER TO INCLUDE THE CAPITAL RECEIPT IN THE GROSS RECEIPT . APART FROM THE ABOVE, IT IS FOUND FROM THE ASSESSMENT ORDER PAGE NO. 3 THAT THE ASSESSING OFFICER HAS VERIFIED THE BALANCE SHEET AND TAXED THE MOVABLE AS S ETS VALUING AT RS. 30,51,396/ - CONSISTING OF FURNITURE, FITTINGS , VEHICLES AND COMPUTERS ETC. , SINCE THE ASSESSEE DID NOT 8 ITA NO. 137/VIZ/2018 ( M/S. MAHALAKSHMI EDUCATIONAL SOCIETY ) ADMIT THE SAID RECEIPTS OF TRANSFER OF FURNITURE AND OTHER MOVABLE S IN THE INCOME AND EXPENDITURE ACCOUNT. 10.1 THE LD. CIT(E) TAKEN THE MARKET VALUE OF THE PROPERTY AS ESTIMATED BY THE DEPARTMENT VALUATION CELL FOR THE PURPOSE OF CAPITAL GAINS. THE SALE CONSIDERATION ADMITTED BY THE ASSESSEE WAS STATED TO BE MORE THAN THE VALUE DETERMINED BY THE STAMPS & REGISTRATION AUTHORITIES AS PER THE INFORMATION AVAILABLE ON RECORD. THIS FACT WAS NOT CONTROVERTED BY THE REVENUE. ONCE, THE ASSESSEE ADMITS THE SALE CONSIDERATION MORE THAN THAT OF S EC. 50C VALUE , THERE IS NO CASE TO MAKE REFERENCE OF VALUATION OF THE PROPERTY TO THE DEPARTMENTAL VALUATION CELL. THERE IS NO MENTION IN THE ASSESSMENT ORDER WITH REGARD TO REFERENCE MADE TO DVO AND THE REASON FOR REFERENCE TO DVO WAS NOT DISCUSSED BY THE LD.CIT(E) . DURING THE APPEAL HEARING THE LD.DR COULD NOT SUBMIT ANY REASON FOR MAKING REFERENCE TO THE DVO . SECTION 50C PROVIDES FOR REFERENCE TO VALUATION OF THE PROPERTY IN A SITUATION WHERE THE ASSESSEE OBJECTS FOR ADOPTION OF 50C VALUE . IN THE INSTANT CASE THE DEPARTMENT HAS NOT MADE OUT CAS E THAT THE SALE CONSIDERATION WAS LESS THAN THE VALUE DETERMINED BY THE STAMPS & REGISTRATION AUTHORITIES. FROM TH E SALE DEED IT IS FOUND THAT THE SALE CONSIDERATION DECLARED BY THE ASSESSEE IS EQU IV AL E NT TO THE VALUE OF STAMPS AND REGISTRATION AUTHORITIES AND THUS THERE IS NO CASE 9 ITA NO. 137/VIZ/2018 ( M/S. MAHALAKSHMI EDUCATIONAL SOCIETY ) FOR REFERENCE TO THE DVO. SINCE THE ASSESSING OFFICER HAS CONSIDERED ALL THE FACTS AND ACCEPTED THE SALE CONSIDERATION OF RS. 2,55,94,000/ - WHICH IS ON PAR WITH THE VALUE OF SRO THERE IS NO ERROR IN THE ORDER PASSED BY TH E ASSESSING OFFICER, HENCE, THERE IS NO CASE FOR REVISION U/SEC. 263 . 11 . THE NEXT ISSUE FOR REVISION U/SEC. 263 IS WITH REGARD TO DISALLOWANCE OF HOSTEL EXPENSES AND BONUS TO STAFF . 12 . DURING THE APPEAL HEARING, LD.AR HAS SUBMITTED THAT THOUGH THERE WAS NO INCOME FROM THE HOSTEL FOR THE MONTHS OF APRIL, MAY & JUNE , THE ASSESSEE HAS TO INCUR THE RECURRING EXPENDITURE RELATING TO SALARIES TO STAFF AND MESS EXPENSES TO THE STAFF. THUS, SUBMITTED THAT THOUGH THERE WAS NO RECEIPT, EXPENDITURE WAS INCURRED TO HOSTEL STAFF AND S IMILARLY BONUS WAS ALSO PAID BY THE ASSESSEE . BOTH THE ABOVE AMOUNTS ARE WHOLLY AND EXCLUSIVELY SPENT FOR THE PURPOSE OF BUSINESS AND THEREFORE NO DISALLOWANCE IS CALLED FOR . THE ASSESSEE HAD ACCEPTED THE DISALLOWANCE IN VIEW OF THE FACT THAT EVEN THOUGH THE EXPENSES ARE DISALLOWED , THE INCREASES IN INCOME , IS ENTITLED FOR EXEMPTION U/SEC. 10(23C) (IIIAD) OF THE ACT AND DOES NOT RESULT INTO TAXABLE INCOME. THIS ISSUE WAS EXPLAINED BEFORE TH E ASSESSING OFFICER IN DETAIL AND THE ASSESSING OFFICER HAD ACCEPTED THE SAID ISSUE AND DID NOT 10 ITA NO. 137/VIZ/2018 ( M/S. MAHALAKSHMI EDUCATIONAL SOCIETY ) MAKE ANY ADDITION. THEREFORE, ARGUED THAT THERE IS NO CASE FOR REVISION U/SEC. 263 AND THE 263 ORDER SHOULD BE QUASHED . 13 . ON THE OTHER HAND, LD.DR STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(E). 14 . IN THE INSTANT CASE, THE ASSESSING OFFICER HAS CALLED FOR VARIOUS INFORMATION AS PER THE QUESTIONNAIRE ISSUED DURING THE ASSESSMENT PROCEEDINGS . THE ASSESSEES GROSS RECEIPTS D ID NOT EXCEED THE PRESCRIBED LIMIT AS MENTIONED IN SECTION 10(23C) OF THE ACT , HENCE, GRANTING O F EXEMPTION U/SEC. 10(23C) IS NOT REQUIRED IN ASSESSEES CASE. THERE IS NO DISCUSSION WITH REGARD TO THE DISALLOWANCE OF EXPENSES IN THE ASSESSMENT ORDER. IN THE INSTANT CASE, THE ASSESSEE CONTENDED THAT INCREASED INCOME DUE TO DISALLOWANCE OF EXPENSES ALSO GETS EXEMPTION AND NET THE RESULT WOULD BE ZERO TAXABLE INC OME. AS PER THE ACT, THE ASSESSEE IS ENTITLED FOR EXEMPTION OF INCOME U/SEC. 10(23)(IIIAD) OF THE ACT. THUS, THE ASSESSEE IS ALSO ELIGIBLE FOR EXEMPTION OF THE INCREASED INCOME SINCE, IT IS CARRYING ON EDUCATIONAL ACTIVITY. DURING THE APPEAL HEARING, LD.AR HAS SUBMITTED THAT THE ASSESSEE HAD EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE DISALLOWANCE REL A TING TO HOSTEL EXPENSES, BONUS TO THE STAFF THOUGH INCREASES THE INCOME, THE SAME WAS EXEMPT U/SEC. 10(23C)(IIIAD) OF THE ACT WHICH THE ASSESSING OF FICER HAD ACCEPTED. THEREFORE, THERE IS NO 11 ITA NO. 137/VIZ/2018 ( M/S. MAHALAKSHMI EDUCATIONAL SOCIETY ) ERROR IN THE ORDER PASSED BY THE ASSESSING OFFICER AND WE ARE OF THE VIEW THAT THE LD.CIT(E) HAS ERRONEOUSLY ASSUMED THE JURISDICTION U/SEC. 263 OF THE ACT. 15. THE NEXT ISSUE IN THE ORDER OF THE LD. CIT(E) IS THAT THE ASSESSEE IS NOT CARRYING ON THE EDUCATIONAL ACTIVITY AND IS NOT ELIGIBLE FOR EXEMPTION U/SEC. 10(23C)(IIIAD) OF THE ACT. THE OBSERVATION OF THE LD. CIT(E) IS BASED ON THE REMARKS OF THE LD.CCIT IN ITS ORDER IN F.NO.CCIT/VSP/10/(23C)/2/2014 - 15 , DATED 26/09/2014 . THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT U/SEC. 143(3) AFTER THE ORDER BEING PASSED BY THE LD.CCIT AND THIS FACT IS EVIDENT FROM THE PAGE NO.2 OF THE ASSESSMENT ORDER . THUS, THE ASSESSING OFFICER HAD CONSIDERED ALL THE ISSUES RAISED BY THE LD.CCIT (E) IN HIS ORDER. FURTHER WITH REGARD TO RENTAL INCOME AS PER LEASE AGREEMENT WITH SRI SURYA EDUCATIONAL SOCIETY OF RS. 50,000/ - PER MONTH, THE ASSESSEE EXPLAINED THAT THE PROPERTY WAS GIVEN ON LEASE ONLY TO MEET THE REQUIREMENTS OF OBTAINING THE PERMISSION. THUS, THE ASSESSEE STATED THAT IT HAS NOT RECEIVED ANY RENTAL INCOME FROM THE VENDEE . THERE IS NO EVIDENCE PLACED BY THE DEPARTMENT TO ESTABLISH THAT THE ASSESSEE HAD RECEIVED THE RENTAL INCOME. IN THE ABSENCE OF ANY EVIDENCE W E DO NOT SEE ANY REASON TO DISBELIEVE THE EXPLANATION OF THE ASSESSEE. 12 ITA NO. 137/VIZ/2018 ( M/S. MAHALAKSHMI EDUCATIONAL SOCIETY ) 16. WE HAVE HELD THAT THERE IS NO ERROR IN THE ASSESSMENT ORDER IN THE PRECEDING PARAGRAPS. EVEN IF IT IS PRESUME FOR THE SAKE OF ARGUMENT THAT THE RENTAL INCOME, HOSTEL EXPENSES AND B ONUS NEEDS TO BE ADDED TO THE TOTAL INCOME SINCE THE ASSESSEE STATED TO HAVE AGREED BEFORE THE AO, THE ASSESSEE HAD RETURNED THE LOSS OF RS. 21,87,886/ - AGAINST WHICH THE AO MADE THE ASSESSMENT ON TOTAL INCOME OF RS. 30,51,396/ - RELATING TO THE MOVABLE ASSETS, WITHOUT CONSIDERING THE LOSS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. THE ASSESSEE IS ENTITLED FOR SET OF F THE LOSS AGAINST THE ADDITIONS MADE IN THE SCRUTINY ASSESSMENT AND THUS TOTAL INCOME WORKS OUT AS UNDER: - LOSS DECLARED RS. 21,87, 886/ - LESS: RENTAL INCOME HOSTEL EXPENSES BOARDING EXP BONUS TO STAFF RS. 3,50,000 / - RS. 6,84,708 / - RS. 3,74,048/ - RS. 6,85,002/ - RS. 20,93,758/ - RS. 94,128/ - ADD: ADDITION ON MOVABLE ASSETS: RS. 30,51,396/ - TOTAL INCOME RS. 29,57,268/ - AGAINST WHICH THE ASSESSING OFFICER COMPUTED THE TOTAL INCOME OF RS. 30,51 ,400/ - WITHOUT ALLOWING THE SET OFF THE CURRENT YEAR LOSS. THE ASSESSED INCOME WAS MORE THAN THE CORRECT INCOME OF THE ASSESSEE. THUS, THERE IS NO UNDER ASSESSMENT 13 ITA NO. 137/VIZ/2018 ( M/S. MAHALAKSHMI EDUCATIONAL SOCIETY ) WHICH CAUSED PREJUDICE TO THE REVENUE AND HENCE, THERE IS NO CASE FOR REVISION U/SEC. 263 OF THE ACT. 1 7 . IN VIEW OF THE FOREGOING DISCUSSION, WE ARE OF THE VIEW TH A T THERE IS NO ERROR WHICH IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HENCE, WE SET ASIDE THE ORDER OF THE LD.CIT(E) AND ALLOW THE APPEAL OF THE ASSESSEE. 18 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 3 1 S T DAY OF OCT . , 201 9 . S D / - S D / - (V. DURGA RAO) ( D.S. SUNDER SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 3 1 S T O CTOBER , 201 9 . VR/ - COPY TO: 1. THE ASSESSEE - M/S. MAHALAKSHMI EDUCATIONAL SOCIETY, H.NO.15 - 7 - 91, ARASAVILLI ROAD, SRIKAKULAM. 2. THE REVENUE ITO(EXEMPTIONS), VISAKHAPATNAM. 3. THE CIT(E), HYDERABAD. 4. THE D.R . , VISAKHAPATNAM. 5. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.