M/S. JYOTI VIDYAPEETH TRUST, JAIPUR V. DCIT (EXEMPTION), CIRCLE

ITA 1389/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6979 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 27-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMBRISH BEDI
• Assessee Lawyers: P.C AGARWAL
• Keywords: Charitable institution; Maximum Marginal Rate; Benefit of exemption; Capital expenditure; Set aside
• Section: 11; 143(3); 12AA; 201; 43; 13(2); 13

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,A JAIPUR JH JESK LH-'KEKZ] YS[KK LNL; ,O LAANHI XKSLKBZ] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI SANDEEP GOS AIN, JM VK;DJ VIHY LA- @ ITA NO. 1389 & 1390/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16 & 2016-17 M/S. JYOTI VIDYAPEETH TRUST 143, GOMEZ DEFENCE COLONY VAISHALI NAGAR, JAIPUR CUKE VS. THE DCIT (EXEMPTION) CIRCLE-JAIPUR , JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAATJ 4910 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 70 & 68/JP/2020 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16 & 2016-17 THE DCIT (EXEMPTION) CIRCLE-JAIPUR , JAIPUR CUKE VS. M/S. JYOTI VIDYAPEETH TRUST 143, GOMEZ DEFENCE COLONY VAISHALI NAGAR, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAATJ 4910 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C AGARWAL, CA JKTLO DH VKSJ LS @ REVENUE BY: SHRI AMBRISH BEDI, CIT-DR LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 20/08/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 09/09/2020 VKNS'K@ ORDER PER: SANDEEP GOSAIN, J.M. THESE FOUR APPEALS ARE THE CROSS APPEALS FILED ASSE SSEE AND REVENUE AGAINST TWO DIFFERENT ORDERS OF LD.CIT(A)-3 , JAIPUR DATED ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 2 15-11-2019 FOR THE ASSESSMENT YEAR 2015-16 & 2016-1 7 PASSED U/S 143(3) OF THE I.T. ACT, 1961. DUE TO PREVAILING C OVID-19 PANDEMIC CONDITION, THE HEARING OF THE APPEAL IS CONCLUDED T HROUGH VIDEO CONFERENCE. 2.0 THE ASSESSEE AND REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL IN THE RESPECTIVE APPEALS. ITA NO. 1389/JP/2019 A.Y.2015-16- ASSESSEE THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF RS.11,02,000/- ON AC COUNT OF ALLEGED EXCESS PAYMENT OF SALARY TO SPECIFIED PERSO NS U/S 13 OF IT ACT, 1961. ITA NO. 1390/JP/2019 A.Y.2016-17- ASSESSEE THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF RS.15,90,480/- ON AC COUNT OF ALLEGED EXCESS PAYMENT OF SALARY TO SPECIFIED PERSO NS U/S 13 OF IT ACT, 1961 ITA NO. 70/JP/2020 A.Y. 2015-16- REVENUE (I) ON THE FACTS, THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE TRUST HAS P ROVIDED UNDUE BENEFIT IN LIEU OF SALARY TO THE PERSONS SPEC IFIED U/S 13(3) OF THE ACT AND THUS PROVISIONS OF SECTION 13( 1)(C)(II) R.W.S. 13(2)(C) OF THE ACT WERE CLEARLY ATTRACTED. ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 3 (II) ON THE FACTS, THE CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE BY RELY ING UPON THE ORDER OF HONBLE ITAT DT. 18.07.2017 IN ITA NO.300/JP/2018 IGNORING THE FACT THAT DEPARTMENT HA S PROCEEDED FOR FURTHER APPEAL BEFORE HONBLE RAJASTH AN HIGH COURT AGAINST THE ORDER WHICH IS PENDING. (III) ON THE FACTS, THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F SURPLUS AMOUNTING TO RS.3,52,40,552/- MADE ON ACCOUNT OF RE JECTION OF EXEMPTION U/S 11 OF THE ACT BY INVOKING PROVISIO NS OF SECTION 13(1)(II) R.W.S. 13(2)(C) OF THE ACT. (IV) ON THE FACTS, THE CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF C APITAL EXPENDITURE OF RS.1,97,34,909/- TO THE ASSESSEE SOC IETY WITHOUT APPRECIATING THE FACT THAT ACTIVITIES OF AS SESSEE SOCIETY CANNOT BE TREATED AS CHARITABLE ACTIVITY AN D ACCORDINGLY PROVISION OF SECTION 11 OF THE ACT WERE NOT APPLICABLE IN THE ASSESSEES CASE. ITA NO. 68/JP/2020 A.Y. 2016-17- REVENUE (I) ON THE FACTS, THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE TRUST HAS P ROVIDED UNDUE BENEFIT IN LIEU OF SALARY TO THE PERSONS SPEC IFIED U/S 13(3) OF THE ACT AND THUS PROVISIONS OF SECTION 13( 1)(C)(II) R.W.S. 13(2)(C) OF THE ACT WERE CLEARLY ATTRACTED. (II) ON THE FACTS, THE CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE BY RELY ING UPON ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 4 THE ORDER OF HONBLE ITAT DT. 18.07.2017 IN ITA NO.300/JP/2018 IGNORING THE FACT THAT DEPARTMENT HA S PROCEEDED FOR FURTHER APPEAL BEFORE HONBLE RAJASTH AN HIGH COURT AGAINST THE ORDER WHICH IS PENDING. (III) ON THE FACTS, THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F SURPLUS AMOUNTING TO RS.3,54,42,035/- MADE ON ACCOUNT OF RE JECTION OF EXEMPTION U/S 11 OF THE ACT BY INVOKING PROVISIO NS OF SECTION 13(1)(II) R.W.S. 13(2)(C) OF THE ACT. (IV) ON THE FACTS, THE CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF C APITAL EXPENDITURE OF RS.5,80,24,965/- TO THE ASSESSEE SOC IETY WITHOUT APPRECIATING THE FACT THAT ACTIVITIES OF AS SESSEE SOCIETY CANNOT BE TREATED AS CHARITABLE ACTIVITY AN D ACCORDINGLY PROVISION OF SECTION 11 OF THE ACT WERE NOT APPLICABLE IN THE ASSESSEES CASE. 2.1 FIRST OF ALL, WE TAKE UP THE APPEALS OF THE REV ENUE FOR ADJUDICATION. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SOCIE TY IS REGISTERED U/S 12AA OF THE I.T. ACT, 1961 VIDE ORDER DATED 13-02-2004. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING OBSERVED THAT THE ASSESSEE HAD MADE PAYMENT OF RS. 74,84,455/- TOWARDS SALARY TO THE FO UNDER OF THE TRUST , TREASURER OF THE TRUST AND THE PERSON SPECIFIED U/S 13(3) OF THE ACT. AFTER COMPARING THE SALARY IN THE LAST YEAR, THE AO HELD THAT IN SOME CASE INCREASE IN SALARY IS ALMOST 40% , ACCORDINGLY THE AO MADE DISALLOWANCE ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 5 OF RS. 27,83,520/- IN RESPECT OF FIVE PERSONS IN TH E ORDER OF ASSESSMENT. IT WAS FURTHER HELD THAT EXCESS SALARY SO PAID AMOUNTS TO BENEFIT GIVEN TO THE TRUSTEE SPECIFIED U/S 13(3) OF THE ACT AND THUS SEC TION 13(1)(II) IS ATTRACTED. ACCORDINGLY, THE AO DISALLOWED THE CLAIM OF EXEMPTION U/S 11 OF THE ACT AND TAXED THE INCOME AT MAXIMUM MARGINAL RATE (MMR) UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION IN T HE STATUS OF AOP U/S 164(2) OF THE ACT. 2.2 IN FIRST APPEAL, THE LD. CIT(A), AFTER CONSIDER ING THE EXPLANATION OF THE ASSESSEE RESTRICTED THE DISALLOWANCE OF SALARY PAID TO THE TRUSTEES BY COMPARING SALARY PAID TO THESE PERSONS IN A.Y. 2012 -13 WITH AN INCREASE OF 10% AND FURTHER OBSERVED THAT EXEMPTION U/S 11 C ANNOT BE DENIED IN TOTALITY RATHER THE DISALLOWED PART CAN BE SUBJECTE D TO TAX AT MMR. 2.3 AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE R EVENUE HAS FILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED H EREIN ABOVE. 2.4 THE GROUND NO. 1 TO 3 RAISED BY THE REVENUE ARE INTERRELATED AND INTERCONNECTED AND RELATES TO CHALLENGING THE ORDER OF THE LD. CIT(A) IN ALLOWING THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE TR UST PROVIDED UNDUE BENEFIT IN LIEU OF SALARY TO THE PERSONS SPECIFIED U/S 13(3) OF THE ACT. ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 6 THEREFORE, WE THOUGHT IT FIT TO DISPOSE OFF THESE G ROUNDS THROUGH A COMMON ORDER. 2.5 THE LD. DR APPEARING ON BEHALF OF THE REVENUE S UBMITTED THAT THE LD. CIT(A) HAS ERRED IN ALLOWING BENEFIT OF EXEMPTI ON U/S 11 OF THE ACT TO THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE TRUST WAS PROVIDED UNDUE BENEFIT IN LIEU OF SALARY TO THE PE RSONS SPECIFIED U/S 13(3) OF THE ACT AND THUS THE PROVISION OF SECTION 13(1) (C)(II) R.W.S. 13(II)(C) OF THE ACT WERE CLEARLY ATTRACTED IN THIS CASE. IT WAS FURTHER ARGUED THAT THE LD. CIT(A) HAS ALSO ERRED IN ALLOWING BENEFIT U/S 1 1 OF THE ACT TO THE ASSESSEE BY RELYING UPON THE ORDER OF ITAT JAIPUR B ENCH IN ITA NO. 300/JP/2018 DATED 18-07-2018 BY IGNORING THE FACT T HAT THE DEPARTMENT HAS PROCEEDED IN FURTHER APPEAL BEFORE THE HON'BLE RAJASTHAN HIGH COURT, JAIPUR. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A ) FELL IN ERROR IN DELETING THE ADDITION OF SURPLUS AMOUNT MADE ON ACCOUNT OF R EJECTION OF EXEMPTION U/S 11 OF THE ACT AND THE REVENUE HAS RELIED THE O RDER PASSED BY THE AO. 2.6 ON THE OTHER HAND, THE LD.AR OF THE ASSESSEE REITERATED THE SAME ARGUMENTS AS WERE RAISED BY HIM BEFORE THE LD. CIT( A) AND HE ALSO RELIED ON THE WRITTEN SUBMISSION SUBMITTED BEFORE US WHICH IS REPRODUCED BELOW. ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 7 FACTS:- 1 THE ASSESSEE SOCIETY IS REGISTERED U/S 12AA OF THE INCOME TAX ACT, 1961 VIDE ORDER DATED 13.02.2004. O NE OF THE OBJECTS OF THE TRUST IS TO INCREASE THE LEVEL OF GIRL EDUCA TIONESPECIALLY IN RURAL AREA. IN PURSUANCE OF THIS OBJECT ASSESSEE IS RUNNI NG WOMENS UNIVERSITY NAMED JYOTIVIDYAPEETH WOMENS UNIVERSIT Y AT VILLAGE MEHLA, BAGRU 2. THE AO OBSERVED THAT ASSESSEE HAS MADE PAYMENT O F RS.74,84,455/- TOWARDS SALARY TO FOUNDER OF TRUST, TREASURE OF TRUST AND THE PERSON SPECIFIED U/S 13(3). THE PAYMENT OF SALA RY TO THESE PERSONS IS AS UNDER:- S.NO. NAME OF PERSON AMOUNT 1. DR. PANKAJGARG 21,00,000/- 2. SMT. VIDUSHI GARG 31,60,000/- 3. HEMA CHOUDHARY 5,87,920/- 4. DEEPAK CHOUDHARY 4,80,996/- 5. DEEPTI RASTOGI 5,75,600/- 6. MEGHNA SINGHAL 5,79,939/- TOTAL 74,84,455/- HE COMPARED THE SALARY PAYMENT TO ABOVE PERSONS WIT H THAT GIVEN IN LAST YEAR AND NOTED THAT IN LAST YEAR SALARY PAID T O THESE PERSONS WAS ONLY RS.58,49,909/-. HE FURTHER OBSERVED THAT IN SO ME CASES INCREASE IN SALARY IS ALMOST 40% WHEREAS TO OTHER EMPLOYEES THE INCREASE IN SALARY IS AROUND 10%-15%. ACCORDINGLY, AFTER ACCEPTING THE SALARY PAYMENT TO MR. DEEPAK CHOUDHARY HE DISALLOWED SALARY OF RS. 27,83,520/- TO THE REMAINING 5 PERSONS AS MENTIONED AT PG 5, PARA 6.2 OF THE ASSESSMENT ORDER. HE FURTHER HELD THAT THE EXCESS S ALARY SO PAID AMOUNTS TO BENEFIT GIVEN TO THE TRUSTEES SPECIFIED U/S 13(3) OF THE ACT AND THUS SECTION 13(1)(C)(II) R.W.S. 13(1)(II) IS A TTRACTED. ACCORDINGLY, HE DISALLOWED THE CLAIM OF EXEMPTION U/S 11 OF THE ACT AND AFTER DISALLOWING THE CLAIM OF CAPITAL EXPENDITURE COMPUT ED THE TOTAL INCOME AT RS.5,77,58,981/- (SURPLUS RS.3,52,40,552/- + EXC ESS SALARY PAID RS.27,83,520/- + CAPITAL EXPENDITURE RS.1,97,34,909 /-). HE FURTHER TAXED SUCH INCOME AT MAXIMUM MARGINAL RATE UNDER TH E HEAD INCOME FROM BUSINESS AND PROFESSION IN THE STATUS OF AOP U /S 164(2) OF THE ACT. 3. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF ASSESSEE RESTRICTED THE DISALLOWANCE OF SALARY PAID TO THE T RUSTEES AT RS.11,02,000/- BY COMPARING SALARY PAID TO THESE PE RSONS IN AY 2012- ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 8 13 WITH AN INCREASE OF 10%. HE FURTHER OBSERVED THA T AFTER DISALLOWING THE EXCESS PAYMENT OF SALARY, THE EXEMPTION U/S 11 CANNOT BE DENIED IN TOTALITY RATHER THE DISALLOWED PART CAN BE SUBJECTE D TO TAX AT MMR FOR WHICH HE RELIED ON THE DECISION OF HONBLE ITAT IN ASSESSEES OWN CASE FOR AY 2014-15. HE FURTHER HELD THAT AS EXEMPT ION U/S 11 IS AVAILABLE TO THE ASSESSEE, THE SURPLUS OF RS.3,52,4 0,552/- CANNOT BE TAXED AND CAPITAL EXPENDITURE IS TO BE ALLOWED. SUBMISSION:- 1. AT THE OUTSET IT IS SUBMITTED THAT THERE IS NO D ISPUTE AS TO THE FACT THAT ASSESSEE IS IMPARTING THE EDUCATION WITHO UT ANY PROFIT MOTIVE AND THUS, ASSESSEE IS A CHARITABLE INSTITUTION. THE ONLY ALLEGATION AGAINST THE ASSESSEE FOR DENYING THE CLAIM OF EXEMP TION U/S 11 BY THE AO IS THAT ASSESSEE HAS PAID EXCESS SALARY TO THE 5 TRUSTEES. IN FACT ASSESSEE HAS PAID SALARY TO THESE PERSONS IN EARLIE R YEARS ALSO WHERE THE SAME HAS BEEN ACCEPTED EXCEPT IN AY 2014-15. IN THA T YEAR ALSO BECAUSE OF THE ALLEGED EXCESS PAYMENT OF SALARY, AO DISALLOWED THE CLAIM OF EXEMPTION U/S 11 AND TAXED THE ENTIRE SURP LUS. THE HONBLE ITAT AFTER ANALYSING THE PROVISIONS OF SECTION 13(1 )(C)(II) R.W.S. 13(II)(C) AT PG 11-13 OF THE ORDER (PB 29-42) HELD AS UNDER:- CO-JOINT READY OF PROVISIONS OF SECTION 13(1), REA D 13(2) AND SECTION 13(3) REVEALS THE BENEFIT OF SECT IONS 11 OR 12 SHALL NOT BE AVAILABLE INTER ALIA IN THE CASE WHERE THE INCOME WHICH IS APPLIED OR USED DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSON REFERRED TO SECTION 13(3) OF THE ACT. SO FAR AS THE SALARIES OR ALLOWANCES PAID TO ANY PERSON REFERRED IN SECTION 13(3) THE SAME HAS TO BE CONSIDERED IN THE CONTEXT OF SERVICE RENDERED BY SUCH PERSONS AND IF THE AMOUNT SO PAID IS FOUND IN EXCESS WHAT MAY BE REASONABLY PAID FOR SUCH SERVICE S THEN, ONLY TO THE EXTENT OF EXCESS AMOUNT IT WILL BE DEEM ED AS APPLIED OR USED FOR THE BENEFIT OF SUCH PERSONS. HENCE, THE DISALLOWANCE U/S 13(1) R.W.S. 13(2) AND 13(3) OF THE ACT IS ONLY IN RESPECT OF THE INCOME WHICH IS APPLIED FOR THE BENEFIT OF THE PERSONS SPECIFIED U/S 13(3) OF THE ACT AND NOT ENTIRE INCOM E OF THE ASSESSEE TRUST. SUB-SECTION (2) OF SECTION 13 PRESC RIBES THE MANNER IN CASE OF PAYMENT OF SALARY OR ALLOWANCE OR OTHERWISE TO THE SPECIFIED PERSONS FOR THE SERVICES RENDERED AND TESTING THE SAME AS PER THE PARA METER OF REASONABLY PAID F OR SUCH SERVICES. IT IS APPARENT THAT THE PAYMENT MADE TO T HESE PERSONS CLEARLY ATTRACTS THE PROVISIONS OF SECTIONS 13(1) A ND 13(2) OF THE ACT HOWEVER, ONLY TO THE EXTENT OF THE PAYMENT WHICH IS FOUND TO BE EXCESS OF WHAT MAY BE REASONABLY PAID F OR SUCH ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 9 SERVICE. IN CASE NO SERVICES WERE RENDERED THEN THE ENTIRE PAYMENTS TO SUCH PERSONS WOULD BE TREATED AS THE AP PLICATION OF INCOME OF THE TRUST IN VIOLATION OF THE PROVISIO N OF SECTION 13(1) R.W.S. 13(3) OF THE ACT AND THEREFORE, TO THE EXTENT OF THE PAYMENT THE BENEFIT OF SECTION 11 WILL NOT BE AVAIL ABLE. SINCE NEITHER THE AO NOR THE LD. CIT(A) HAS EXAMINED THE RELEVANT FACTS ON THE POINT WHETHER ALL THESE PERSONS POSSES S THE REQUISITE QUALIFICATION FOR HOLDING THE POSITION AS SHOWN BY THE ASSESSEE AND FURTHER WHETHER THEY HAVE RENDERED ANY SERVICES TO THE TRUST. 6. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE SET ASIDE T HE IMPUGNED ORDER OF THE LD. CIT(A) AND REMIT THE MATTER TO THE RECORD OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER PROP ER VERIFICATION AND EXAMINATION TO ALL THE RELEVANT FA CTS. THE ASSESSEE IS DIRECTED TO PRODUCE TO ALL THE RELEVANT FACTS TO ESTABLISH THE ACTUAL RENDERING OF SERVICES BY THESE PERSONS AS WELL AS ALL THE RELEVANT RULES APPLICABLE IN RESPEC T OF THE QUALIFICATION AND APPOINTMENT OF PERSONS ON SUCH PO ST. AS REGARDS OTHER ISSUE WHICH ARE DECIDED BY THE LD. CI T(A) THE SAME WERE NOT CHALLENGED BEFORE US AND THEREFORE, A TTAINED FINALITY. 2. FROM THE ABOVE DECISION OF HONBLE ITAT IN ASSES SEES OWN CASE, EVEN IF THE SALARY PAID TO THE TRUSTEES HELD TO BE UNREASONABLE THE EXEMPTION U/S 11 CANNOT BE DENIED. ONLY THE EXCESS/ UNREASONABLE SALARY PAID TO THE TRUSTEES WOULD NOT BE ENTITLED T O BENEFIT SECTION 11. IN VIEW OF THE ABOVE DECISION OF HONBLE ITAT IN ASSES SEES OWN CASE, THE LD. CIT(A) HAS CORRECTLY HELD THAT EXEMPTION U/ S 11 CANNOT BE DENIED IN RESPECT OF THE ENTIRE SURPLUS OF THE SOCI ETY AND RIGHTLY HELD THAT ADDITION OF RS.3,52,40,552/- MADE BY THE AO IS TO BE DELETED. THE DEPARTMENT IN GROUND NO.1 TO 3 HAVE FILED THE APPEA L BEFORE HONBLE ITAT ONLY FOR THE REASON THAT IT HAS NOT ACCEPTED T HE DECISION OF ITAT AND HAS FILED FURTHER APPEAL BEFORE THE HONBLE RAJ ASTHAN COURT. THUS, THESE GROUNDS IS FULLY COVERED BY THE HONBLE ITAT IN ASSESSEES OWN CASE AND THEREFORE, ALL THESE 3 GROUNDS OF DEPARTME NT BE DISMISSED. 2.7 WE HAVE HEARD THE LD. COUNSELS FOR BOTH THE PAR TIES AND WE HAVE ALSO PERUSED THE MATERIALS PLACED ON RECORD, DELIB ERATED UPON JUDGEMENTS ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 10 CITED BY THE PARTIES AND MENTIONED IN THE ORDER PAS SED BY REVENUE AUTHORITIES AS WELL AS THE ORDERS PASSED BY THE RE VENUE AUTHORITIES. FROM THE RECORDS, WE NOTICED THAT THE ASSESSEE SOCI ETY IS REGISTERED U/S 12AA OF THE ACT VIDE ORDER DATED 13-02-2004. ONE OF THE OBJECTS OF THE TRUST IS TO INCREASE THE LEVEL OF GIRL EDUCATION ES PECIALLY IN RURAL AREAS AND THIS FACT HAS NOT BEEN DISPUTED BY EITHER OF THE PA RTIES THAT THE ASSESSEE IS IMPARTING EDUCATION WITHOUT ANY PROFIT MOTIVE. THE ONLY ALLEGATION AGAINST THE ASSESSEE FOR DENYING THE CLAIM OF EXEMP TION U/S 11 OF THE ACT BY THE AO IS THAT THE ASSESSEE HAS PAID EXCESS SALA RY TO 05 PERSONS. HOWEVER, THE ASSESSEE HAS PAID SALARY TO THESE PERS ONS IN EARLIER YEARS AND ALSO THE SAME HAS BEEN ACCEPTED EXCEPT IN A.Y. 201 4-15. IN THAT YEAR ALSO, THE ITAT JAIPUR BENCH AFTER ANALYZING THE PRO VISION OF SECTION 13(1)(II) HAD PASSED THE ORDER. THE OPERATIVE PORT ION OF THE SAID ORDER IS REPRODUCED BELOW. CO-JOINT READY OF PROVISIONS OF SECTION 13(1), REA D 13(2) AND SECTION 13(3) REVEALS THE BENEFIT OF SECT IONS 11 OR 12 SHALL NOT BE AVAILABLE INTER ALIA IN THE CASE WHERE THE INCOME WHICH IS APPLIED OR USED DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSON REFERRED TO SECTION 13(3) OF THE ACT. SO FAR AS THE SALARIES OR ALLOWANCES PAID TO ANY PERSON REFERRED IN SECTION 13(3) THE SAME HAS TO BE CONSIDERED IN THE CONTEXT OF SERVICE RENDERED BY SUCH PERSONS AND IF THE AMOUNT SO PAID IS FOUND IN ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 11 EXCESS WHAT MAY BE REASONABLY PAID FOR SUCH SERVICE S THEN, ONLY TO THE EXTENT OF EXCESS AMOUNT IT WILL BE DEEM ED AS APPLIED OR USED FOR THE BENEFIT OF SUCH PERSONS. HENCE, THE DISALLOWANCE U/S 13(1) R.W.S. 13(2) AND 13(3) OF THE ACT IS ONLY IN RESPECT OF THE INCOME WHICH IS APPLIED FOR THE BENEFIT OF THE PERSONS SPECIFIED U/S 13(3) OF THE ACT AND NOT ENTIRE INCOM E OF THE ASSESSEE TRUST. SUB-SECTION (2) OF SECTION 13 PRESC RIBES THE MANNER IN CASE OF PAYMENT OF SALARY OR ALLOWANCE OR OTHERWISE TO THE SPECIFIED PERSONS FOR THE SERVICES RENDERED AND TESTING THE SAME AS PER THE PARA METER OF REASONABLY PAID F OR SUCH SERVICES. IT IS APPARENT THAT THE PAYMENT MADE TO T HESE PERSONS CLEARLY ATTRACTS THE PROVISIONS OF SECTIONS 13(1) A ND 13(2) OF THE ACT HOWEVER, ONLY TO THE EXTENT OF THE PAYMENT WHICH IS FOUND TO BE EXCESS OF WHAT MAY BE REASONABLY PAID F OR SUCH SERVICE. IN CASE NO SERVICES WERE RENDERED THEN THE ENTIRE PAYMENTS TO SUCH PERSONS WOULD BE TREATED AS THE AP PLICATION OF INCOME OF THE TRUST IN VIOLATION OF THE PROVISIO N OF SECTION 13(1) R.W.S. 13(3) OF THE ACT AND THEREFORE, TO THE EXTENT OF THE PAYMENT THE BENEFIT OF SECTION 11 WILL NOT BE AVAIL ABLE. SINCE NEITHER THE AO NOR THE LD. CIT(A) HAS EXAMINED THE RELEVANT FACTS ON THE POINT WHETHER ALL THESE PERSONS POSSES S THE REQUISITE QUALIFICATION FOR HOLDING THE POSITION AS SHOWN BY THE ASSESSEE AND FURTHER WHETHER THEY HAVE RENDERED ANY SERVICES TO THE TRUST. 6. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE SET ASIDE T HE IMPUGNED ORDER OF THE LD. CIT(A) AND REMIT THE MATTER TO THE RECORD OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER PROP ER VERIFICATION AND EXAMINATION TO ALL THE RELEVANT FA CTS. THE ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 12 ASSESSEE IS DIRECTED TO PRODUCE TO ALL THE RELEVANT FACTS TO ESTABLISH THE ACTUAL RENDERING OF SERVICES BY THESE PERSONS AS WELL AS ALL THE RELEVANT RULES APPLICABLE IN RESPEC T OF THE QUALIFICATION AND APPOINTMENT OF PERSONS ON SUCH PO ST. AS REGARDS OTHER ISSUE WHICH ARE DECIDED BY THE LD. CI T(A) THE SAME WERE NOT CHALLENGED BEFORE US AND THEREFORE, A TTAINED FINALITY. FROM THE ABOVE DECISION OF THE ITAT IN ASSESSEE'S OWN CASE, WE NOTICED THAT EVEN IF THE SALARY PAID TO THE TRUSTEE ARE HE LD TO BE UNREASONABLE EVEN THEN THE EXEMPTION CANNOT BE DENIED. ONLY EXCESS/ U NREASONABLE SALARY PAID TO THE TRUSTEE, WOULD NOT BE ENTITLED TO THE B ENEFIT OF SECTION 11 OF THE ACT. THEREFORE, WE ARE OF THE CONSIDERED VIEW T HAT THE LD. CIT(A) AFTER TAKING INTO CONSIDERATION THE DECISION OF ITAT JAIP UR BENCH (SUPRA) IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2014-15 HAD CORRECTLY HELD THAT EXEMPTION U/S 11 CANNOT BE DENIED IN RESPECT O F ENTIRE SURPLUS OF THE SOCIETY. THE PRESENT GROUND HAS BEEN TAKEN IN APPEA L BY THE DEPARTMENT ONLY ON THE GROUND THAT THE ORDER OF ITAT FOR THE A .Y. 2014-15 WAS NOT ACCEPTED BY THE DEPARTMENT. IN OUR VIEW, THESE ARGU MENTS OF THE REVENUE ARE NOT SUSTAINABLE IN THE EYE OF LAW AS MERELY FIL ING OF APPEAL AGAINST THE ORDER OF ITAT IS NOT ENOUGH AND THE REVENUE HAS TO SHOW AS TO WHETHER THE HON'BLE HIGH COURT HAS STAYED THE OPERATION OF THE SAID IMPUGNED ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 13 ORDER AND IN CASE THERE IS NO STAY ORDER BY THE HON 'BLE HIGH COURT THEN THE REVENUE IS BOUND AS ON TODAY BY THE DECISION O F THE COORDINATE BENCH OF ITAT IN ASSESSEE'S OWN CASE (SUPRA) FOR TH E A.Y. 2014-15 AND THUS WE DISMISS THESE GROUNDS RAISED BY THE REVENU E. ACCORDING, THE GROUND NO. 1 TO 3 RAISED BY THE REVENUE ARE DISMISS ED. 3.1 THE GROUND NO. 4 RAISED BY THE REVENUE RELATES TO CHALLENGING THE ORDER OF THE LD. CIT(A) IN ALLOWING THE CLAIM OF CA PITAL EXPENDITURE. 3.2 AFTER HEARING BOTH THE PARTIES AT LENGTH, WE FO UND THAT ONCE THE ITAT COORDINATE BENCH IN ASSESSEE'S OWN CASE FOR TH E A.Y. 2014-15 HAS ALREADY HELD THAT THE ASSESSEE IS ENTITLED TO EXEMP TION U/S 11 OF THE ACT THEN THE CAPITAL EXPENDITURE IS TO BE CONSIDERED AS APPLICATION OF INCOME IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. THER EFORE, THE LD. CIT(A) UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE HAS RIGHTLY DIRECTED THE AO TO ALLOW THE CLAIM OF CAPITAL EXPENDITURE AS APP LICATION OF INCOME. NO NEW FACTS OR CIRCUMSTANCES HAVE BEEN BROUGHT BEFORE US IN ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY THE LD. CIT(A). THEREFORE, WE FIND NO REASON TO INTERFERE INTO THE LAWFUL FIND INGS SO RECORDED BY THE LD. CIT(A). THUS THE GROUND NO. 4 RAISED BY THE REV ENUE ALSO STANDS DISMISSED. ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 14 4.1 NOW WE TAKE UP THE GROUNDS OF APPEAL OF THE ASS ESSEE FOR THE ASSESSMENT YEAR 2015-16 FOR ADJUDICATION. 4.2 THE ONLY GROUND RAISED BY THE ASSESSEE IN THIS APPEAL RELATES TO CHALLENGING THE ORDER OF THE LD. CIT(A) IN CONFIRMI NG THE DISALLOWANCE OF RS. 11,02,000/- ON ACCOUNT OF EXCESS PAYMENT OF SAL ARY TO SPECIFIED PERSON U/S 13 OF I.T. ACT, 1961. 4.3 WE HAVE HEARD LD. COUNSELS FOR BOTH THE PARTIE S AND WE HAVE ALSO PERUSED THE MATERIALS PLACED ON RECORD, DELIBERATE D UPON THE JUDGEMENTS CITED BY THE PARTIES AS WELL AS THE ORDERS PASSED B Y THE REVENUE AUTHORITIES. FROM THE RECORDS, WE FOUND THAT IN A.Y . 2014-15, THE IDENTICAL ISSUES WAS SET ASIDE BY THE ITAT JAIPUR B ENCH IN ASSESSEE'S OWN CASE IN ITA NO. 300/JP/2018 TO THE FILE OF THE AO WITH THE DIRECTION TO THE ASSESSEE TO PRODUCE THE RELEVANT FACTS TO ESTAB LISH THE ACTUAL RENDERING OF SERVICES BY THESE FIVE PERSONS NAMELY DR.PANKAJ GARG, SMT. VIDUSHI GARG, HEMA CHOUDHARY, DEEPTI RASTOGIN AND MEGHANA S INGHAL AS WELL AS RELEVANT RULES APPLICABLE IN RESPECT OF QUALIFICATI ON AND APPOINTMENT OF SUCH PERSONS IN SUCH POST AND THEREAFTER EXAMINING THE REASONABILITY OF PAYMENT OF SALARY. IN THIS RESPECT, IT WAS SUBMITTE D BY THE LD.AR OF THE ASSESSEE THAT THE AO HAS SINCE COMPLETED THE SET AS IDE ASSESSMENT ORDER ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 15 FOR A.Y. 2014-15 ON 9-12-2019, THE COPY OF WHICH IS PLACED AT PAGES 43 TO 45 OF THE PAPER BOOK, WHERE AFTER CONSIDERING TH E DUTIES PERFORMED BY SPECIFIED PERSONS AND THE APPOINTMENT LETTER OF THE SE PERSONS, THE AO ACCEPTED THE SALARY PAID TO ALL THE PERSONS EXCEPT THAT PAID TO DR.PANKAJ GARG AND SMT. VIDUSHI GARG WHERE HE DISALLOWED THE SALARY PAYMENT TO THE EXTENT OF 25% & 30% OF THE SALARY SO PAID. AGAI NST THIS ORDER, THE ASSESSEE HAS FILED AN APPEAL WHICH IS PENDING BEFOR E THE LD. CIT(A) FOR ADJUDICATION. 4.4 BE THAT AS IT MAY, SINCE THE ORDER OF THE AO IN SET ASIDE PROCEEDINGS FOR THE A.Y. 2014-15 WAS PASSED IN PURS UANCE TO THE DIRECTION OF ITAT FOR A.Y. 2014-15 WHEREIN SALARY P AID TO HEMA CHOUDHARY, DEEPAK RASTOGI AND MEGHNA SINGHAL HAS BE EN ACCEPTED AS REASONABLE. THEREFORE, WE SET ASIDE THE ORDER OF TH E LD. CIT(A) FOR THE YEAR UNDER CONSIDERATION AND DELETE THE DISALLOWANC E OF SALARY PAID TO THESE PERSONS I.E. HEMA CHOUDHARY, DEEPAK RASTOGI A ND MEGHNA SINGHAL. SO FAR AS THE SALARY PAID IN RESPECT OF DR .PANKAJ GARG AND SMT. VIDUSHI GARG ARE CONCERNED, WE RESTORE THE MATTER B ACK TO THE RECORD OF THE AO FOR AFRESH ADJUDICATION AFTER PROPER VERIFIC ATION AND EXAMINATION OF ALL THE RELEVANT FACTS. THUS THE ASSESSEE IS DIR ECTED TO PRODUCE ALL THE ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 16 RELEVANT FACTS TO ESTABLISH THE ACTUAL RENDERING OF SERVICES BY THESE TWO PERSONS AND ALSO ALL THE RULES APPLICABLE IN RESPEC T OF THE QUALIFICATION AND APPOINTMENT OF PERSONS ON SUCH POSTS. THUS THE APPE AL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5.1 AS REGARDS THE APPEAL OF THE REVENUE IN ITA NO. 68/JP/2020 FOR THE A.Y. 2016-17, THE BENCH OBSERVED THAT THE I SSUES RAISED BY THE REVENUE ARE SIMILAR TO THE A.Y. 2015-16 WHEREIN THE APPEAL OF THE REVENUE HAS BEEN DISMISSED. IN THIS VIEW OF THE MAT TER, THE DECISION TAKEN BY THIS BENCH FOR THE ASSESSMENT YEAR 2015-16 SHALL APPLY MUTATIS MUTANDIS IN THE APPEAL OF THE REVENUE FOR THE ASSES SMENT YEAR 2016-17 BEING SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE. THUS THE APPEAL OF THE REVENUE IS DISMISSED. 6.1 AS REGARDS THE APPEAL OF THE ASSESSEE IN ITA NO . 1390/JP/2019 FOR THE A.Y. 2016-17, THE BENCH OBSERVED THAT THE ISSUE RAISED BY THE ASSESSEE IS SIMILAR TO THE A.Y. 2015-16 WHEREIN THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES IN THIS VIEW OF THE MATTER, THE DECISION TAKEN BY THIS BENCH FOR THE ASSESSMENT YEA R 2015-16 SHALL APPLY MUTATIS MUTANDIS IN THE APPEAL OF THE ASSESSE E FOR THE ASSESSMENT ITA NO.1389/JP/2019 M/S. JYOTI VIDYAPEETH TRUST, JAIPUR VS DCIT (E) , C IRCLE- JAIPUR 17 YEAR 2016-17 BEING SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE. THUS THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATIS TICAL PURPOSES. 7.0 IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED AND THAT OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATIST ICAL PURPOSES WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 09 /09/ 2020. SD/- SD/- JESK LH-'KEKZ LANHI XKSLKBZ (RAMESH C. SHARMA) (SANDEEP GOSAI N) YS[KKLNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 09 /09/2020. *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. JYOTI VIDYAPEETH TRUST, JAIPURN 2. IZR;FKHZ@ THE RESPONDENT-THE DCIT (EXEMPTIONS) , JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR . 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 1389/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSTT. REGISTRAR