M/s Arya Model High School, Moga V. Income Tax Officer (Exemptions), Jalandhar

ITA 14/ASR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3290 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 20-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-06-2018
• Assessment Year: misc
• Appeal Filed On: 02-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: B M MONGA; ROHIT KAURA L D
• Keywords: Earning of tax free income; Competent authority; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.562(ASR)/2017 ASSESSMENT YEAR:2014- 15 M/S ARYA MODEL HIGH SCHOOL, 2-NEW TOWN, MOGA, PUNJAB PAN:AABTA8424H VS. ITO, (EXEMPTIONS) JALANDHAR WARD, JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. B.M. MONGA & SH. ROHIT KAURA ( L D.ADV.) RESPONDENT BY: SH. CHARAN DASS (LD. DR) DATE OF HEARING: 28.05.2018 DATE OF PRONOUNCEMENT:31.05.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/APPELLANT, ON FEELING AGGRIEVED AGAINST THE ORD ER DATED 27.06.2017, IMPUGNED HEREIN, PASSED BY THE LD. CIT(A) -4, LUDHIANA, U/S 250(6) OF THE I.T. ACT, 1961 (HEREINAFT ER CALLED AS THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEA L. 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEAL) HAS ERRED IN UPHOLDING THE ORDER OF ASSESSING OFFIC ER, WITHOUT CONSIDERING THE EXPLANATION, EVIDENCES OF THE ASSES SEE, ITA NO.562/ASR/2017 (A.Y:2014-15) MS. ARYA MODEL HIGH SCHOOL, MOGA VS. ITO 2 VARIOUS JUDICIAL PRONOUNCEMENTS REGARDING GENUINENE SS OF ACTIVITIES OF THE APPELLANT SCHOOL AND ITS EXISTENC E SOLELY FOR THE PURPOSE OF EDUCATION ONLY. 2. THAT THE LEARNED CIT(APPEALS) IS NOT JUSTIFIED I N UPHOLDING THE ORDER OF ASSESSING OFFICER SOLELY ON THE BASIS OF ORDER OF CIT (A), LUDHIANA FOR EARLIER ASSESSMENT Y EARS, WITHOUT APPLICATION OF HIS INDEPENDENT MIND, WHEREA S, THE EARLIER ORDERS WERE BASED ONLY ON ORDER OF CCIT, LU DHIANA, WHICH ORDER ITSELF NOW STANDS SET-ASIDE BY THE HON' BLE PUNJAB & HARYANA HIGH COURT. 3. THAT THE LEARNED CIT (APPEAL) HAS ERRED IN NOT K EEPING THE APPELLATE PROCEEDINGS IN ABEYANCE DESPITE THE F ACT THAT ORDER OF CCIT LUDHIANA, REJECTING EXEMPTION U/S 10( 23C)(VI) ITSELF HAS SET ASIDE BY HON'BLE PUNJAB & HARYANA HI GH COURT WITH A DIRECTION TO CIT (EXEMPTIONS) TO DECIDE THE APPLICATION FOR EXEMPTION AFRESH, WHICH IS STILL PENDING. 4. THAT THE LEARNED CIT(A) HAS ERRED IN UPHOLDING T HE ORDER OF AO, WITHOUT CONSIDERING THAT THE AGGREGATE ANNUA L RECEIPTS OF THE APPELLANT FROM EDUCATIONAL ACTIVITY IS RS.78 ,04,243/- WHICH IS LESS THAN RS. 1 CRORE THUS ENTITLING THE A PPELLANT FOR EXEMPTION U/S 10(23C)(IIIAD). 5. THAT THE LEARNED CIT(A) HAS ERRED IN BRUSHING AS IDE THE SUBMISSIONS OF THE ASSESSEE THAT THE SURPLUS HAD AL READY BEEN PLOUGHED BACK BY THE APPELLANT BY PURCHASING L AND FOR SCHOOL BUILDING, THUS SHOWING THAT THE APPELLANT IS EXISTING SOLELY AND EXCLUSIVELY FOR EDUCATION ONLY WITHOUT A NY PROFIT MOTIVE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SOCIETY IS RUNNING AN EDUCATIONAL INSTITUTION AND FILED ITS RETUR N OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30.09.2014 DECLARI NG TOTAL INCOME OF RS. NIL CLAIMING EXCESS INCOME OVER EXPENDITURE AMOUNT OF RS.39,98,204/- AS EXEMPT INCOME U/S 10(23C)(I IIAD) OF THE I.T. ACT. THE RETURN WAS PROCESSED U/S 143 OF THE I.T. ACT. ITA NO.562/ASR/2017 (A.Y:2014-15) MS. ARYA MODEL HIGH SCHOOL, MOGA VS. ITO 3 THE CLAIM OF THE ASSESSEE WAS DENIED ON THE GROUNDS INTER ALIA THAT THE APPLICATION OF THE ASSESSEE FOR GRANT OF APPROV AL U/S 10(23C)(VI) OF THE ACT FOR THE YEAR FINANCIAL YEAR:20 12-13 RELEVANT TO ASST. YEAR: 2013-14 ONWARD WAS REJECTED BY THE COMPETENT AUTHORITY I.E., WORTHY CCIT, LUDHIANA VIDE ORDER NO. CCIT/LDH/JB/10(23C)(VI)/221/2013-14/2053 DATED 03.0 9.2013 ON THE GROUND THAT THE ASSESSEE SOCIETY DID NOT EXISTS SOLE LY FOR THE PURPOSES OF EDUCATION. IT WAS ALSO OBSERVED BY THE ASSE SSING OFFICER THAT ANOTHER APPLICATION FILED BY THE ASSESSEE SO CIETY ON DATED 25.09.2014 FOR GRANT OF APPROVAL U/S 10(23C) ( VI) OF THE ACT WAS ALSO REJECTED BY THE WORTHY CCIT, LUDHIANA VIDE HIS OFFICER ORDER NO. CCIT/LDH/JB/10(23C)(VI)/239/2015-1 6/2853 DATED 30.09.2015, FURTHER, THE APPLICATION U/S 10(23C )(VI) OF THE ACT WAS ALSO REJECTED BY THE LD. CIT(A) VIDE HIS OFFICE ORDER DATED 23.09.2016. THE ASSESSEE HAS ALSO BROUGHT TO THE KNOWLEDGE OF THE ASSESSING OFFICER THAT APPEAL AGAINST TH E REJECTION ORDER OF THE COMPETENT AUTHORITY BY WHICH A PPROVAL WAS DENIED, IS PENDING BEFORE THE HONBLE PUNJAB & HARY ANA HIGH COURT FOR ADJUDICATION. HOWEVER, WHILE CONSIDERING THE RETURN OF THE ASSESSEE ON MERIT, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT RECEIPTS OF THE ASSESSEE SOCIETY DURING THE YEAR UNDER CONSIDERATION WERE UNDOUBTEDLY EXCEEDED THE LIMIT OF ONE CRORE AND APPROVAL U/S 10(23C)(VI) OF THE ACT HA S ALSO NOT BEEN GRANTED TO THE ASSESSEE SOCIETY. FINALLY, THE ASSESSING OFFICER MADE ADDITION OF RS.39,98,204/- WHICH WAS CLAIME D BY THE ASSESSEE SOCIETY ON THE EXCESS OF INCOME OVER EXPENDITU RE . ITA NO.562/ASR/2017 (A.Y:2014-15) MS. ARYA MODEL HIGH SCHOOL, MOGA VS. ITO 4 THE SAID ADDITION WAS CHALLENGED BY THE ASSESSEE SOCIETY BEF ORE THE LD. CIT(A), WHO DISMISSED THE APPEAL OF THE ASSESSEE S OCIETY BY CITING THE REASON INTER ALIA THAT THE ASSESSEE SOCIETY IS NOT ENTITLED FOR CLAIM OF EXEMPTION OF ITS INCOME U/S 10(23 C0(IIIAD) OF THE ACT BEACUSE APPLICATION FOR APPROVAL U/S 10(23C)( VI) OF THE ACT WAS REJECTED BY THE COMPETENT AUTHORITY AND APP ROVAL OF THE COMPETENT AUTHORITY IS A MANDATORY CONDITION AS RECE IPTS OF THE ASSESSEE SOCIETY FOR THE YEAR UNDER CONSIDERATION UNDOUBTEDLY EXCEEDED RS.1 CRORES. IT WAS FURTHER OBSERVE D BY THE LD. CIT(A) THAT EVEN COMPETENT AUTHORITY HAS NOT PASSED ANY FRESH ORDER TILL DATE. FINALLY IT WAS OPINED BY T HE LD. CIT(A) THAT THE ACTION OF THE ASSESSING OFFICER IN MAKING THE A DDITION OF RS.39,98,204/- IN THIS CASE ON ACCOUNT OF DENIAL OF DEDUCTION/EXEMPTION TO THE ASSESSEE SOCIETY ON EXCESS OF INCOME OVER EXPENDITURE U/S 10(23C)(IIIAD) R.W. SEC.10 (23C)(VI) OF THE ACT CANNOT BE SAID TO BE UNJUSTIFIED. 4. ON FEELING AGGRIEVED AGAINST THE ORDER PASSED BY THE LD. CIT(A), THE ASSESSEE PREFERRED THE INSTANT APPEAL. 5. AT THE OUTSET, THE LD. AR SUBMITTED A COPY OF THE ORDER DATED 19.04.2018 PASSED U/S 10(23C)(VI) OF THE ACT BY THE CIT, (EXEMPTIONS), CHANDIGARH, BY WHICH THE LD. CIT(E) HA S APPROVED THE REGISTRATION U/S 10(23C)(VI) OF THE ACT TO THE ASSESSEE SOCIETY. ITA NO.562/ASR/2017 (A.Y:2014-15) MS. ARYA MODEL HIGH SCHOOL, MOGA VS. ITO 5 6. AS WE OBSERVED THAT BOTH THE REVENUE AUTHORITIES BELOW HAVE DENIED THE EXEMPTION U/S 10(23C)(IIIAD) TO THE ASSESSEE SOCIETY MAINLY ON THE GROUND THAT ASSESSEE SOCIETY DO NOT HAVE ANY REGISTRATION/APPROVAL U/S 10(23C)(VI) OF THE ACT. HOWEVER THE SAME HAS BEEN GRANTED VIDE ORDER DATED 19 TH APRIL, 2018 PASSED BY THE LD CIT(E), PER THE SAME, THE APPROVAL SH ALL BE APPLICABLE FROM ASSESSMENT YEAR 2014-15 ONWARDS BECAUSE TH E MOA OF THE SOCIETY WAS AMENDED ONLY ON 1 ST JANUARY, 2014 AND IS FURTHER SUBJECT TO CONDITIONS STIPULATED THEREIN. KEEPING IN VIEW THE AFORESAID APPROVAL, WE ARE INCLIN ED TO SET ASIDE THE ORDER PASSED BY THE LD. CIT(A), THE ORDER IMPUGNED HEREIN AS WELL AS ASSESSMENT ORDER, HOWEVER WE FEEL IT APPROPRIATE TO REMAND BACK THE CASE TO THE FILE OF ASSESSING OFFICER FOR DECISION AFRESH WHILE CONSIDERING THE CONDITIO NS STIPULATED IN THE AFORESAID APPROVAL, HENCE ORDERED ACCO RDINGLY . 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 .05.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED: 31.05.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) M/S. ARYA MODEL HIGH SCHOOL, MOGA (2) THE ITO (EXEMPTIONS), JALANDHAR WARD, JALAN DHAR (3) THE CIT(A)-4, LUDHIANA (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER