Siksha Niketan H.S. School, Agartala V. Assistant Commissioner of Income Tax, Circle - Agartala, Agartala

ITA 14/GTY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8490 (ITAT-GUWAHATI)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 29-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D LOYI J DATEOFHEARING
• Assessee Lawyers: NIRNOYPAUL J
• Keywords: Unexplained cash credit; Depreciation; Deemed to accrue or arise in india
• Section: 143(3); 131; 68

Judgement Text

] \ ' \ ' , ' , IN THEINCOMETAXAPPELLATE TRIBUNAL GUWAHATI BENCH, GUWAHATI BEFORE SHRIS.S.GODARA,JUDICIALMEMBER AND DR. A.L. SAINI, ACCOUNTANTMEMBER ITA NO. 14 - 19 / GAU / 2018 ASSESSMENT YEARS :2008-09 TO 2013-14 SIKSHA NIKETAN H.S. SCHOOL, INDRANAGAR, ITI ROAD, AGARTALA, WEST TRIPURA [ PAN NO.AAAJS 5135 J ] V/S . ACIT, CIRCLE-AGARTALA \ ' /APPELLANT .. / RESPONDENT ] ' J /BYASSESSEE SHRI NIRNOYPAUL, ADVOCATE J /BYRESPONDENT SHRI D.LOYI, ADDL. JCIT-DR ' _ /DATEOFHEARING 01-07-2019 /DATEOFPRONOUNCEMENT 03-07-2019 / ORDE R PERBENCH:- THE ASSESSEE HAS FILED INSTANT SIX APPEAL(S) RELATING TO ASSESSMENT YEARS(S) 2008-09 TO 2013-14 AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-SHILLONGS COMMON ORDER DATED 20.12.2017 PASSED IN CASE NOS.AGT-02-07/2017-18 INVOLVING PROCEEDINGS U/S 143(3) R.W.S. 147 OF THE INCOMETAXACT,1961;INSHORTTHEACT. HEARDBOTHTHELEARNEDREPRESENTATIVES. CASEFILE(S)PERUSED. 2. IT TRANSPIRES AT THE OUTSET THAT THE INSTANT LIS IS SECOND ROUND OF PROCEEDINGS BEFORE US. THE ASSESSEE PREFERRED EARLIER APPEALS AGAINST THE ITA NO.14-19/GAU/2018 A.YS2008-09 TO2013-14 SIKSHA NIKETAN HS SCHOOL VS.ACIT, CIR-AGR PAGE2 CIT(A)S FIRST ROUND ORDER(S) PASSED ON 30.12.2015 AFFIRMING THE ASSESSING OFFICERS ACTION TREATING THE RECEIPTS FROM SALE OF BOOKS AND TRANSPORTATION CHARGES FROM STUDENTS IN SCHOOL BUSES INVOLVING VARYING SUM TO BE UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. THE ASSESSEES FORMER TWO GRIEVANCES SOUGHT TO DELETE THE CORRESPONDING RECEIPTS TREATED AS UNEXPLAINED INCOME U/S 68 OF THE ACT. ITS THIRD AND FOURTH SUBSTANTIVE GRIEVANCES CHALLENGED CORRECTNESS OF BOTH THE LOWER AUTHORITIES CLAIM TREATING ITS PAYMENTS INVOLVING DIFFERENT SUMS MADE TO NEERA CHATTERJEE AS EXCESSIVE INVITING SEC. 40(A)(2) DISALLOWANCE. LEARNED LOWER AUTHORITIES THEREAFTER DISALLOWED ASSESSEES DEPRECIATION CLAIM(S) ON THE GROUND THAT THERE WAS NO EVIDENCE TENDERED DURING THE COURSE OF ASSESSMENT ESTABLISHING ITS STATUS EITHERASAN OWNER OR LESSEE QUA ASSETIN QUESTION. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS. THIS TRIBUNALS EARLIER ORDER APPEARS TO HAVE RESTORED ASSESSEES FIRST ROUND LIS BACK TO CIT(A) WITH THE DIRECTION TO DECIDE AS TO WHETHER ITS INCOME IN QUESTION WAS EXEMPT U/S10(23C)(IIIAD) OF THE ACT. THE CIT(A)S CONSEQUENTIAL LOWER APPELLATE ORDER IN ALL SIX ASSESSMENT YEAR(S) HOLDS THAT THE ASSESSEES RECEIPTS CROSS THRESHOLD LIMIT OF RS.1 CRORE AND THEREFORE, IT IS NOT ENTITLED FOR THE IMPUGNED EXEMPTION. THERE IS HARDLY ANY DISPUTE THAT HE HAS SIMPLY REITERATED HIS SAME FINDINGS IN FIRST ROUND OF LOWER APPELLATE ORDER INVOKING SEC. 68 OF THE ACT. ALL THIS CLINCHING FACTS HAVE GONE UNREBUTTED FROM THE REVENUESIDE. 4. MR. LOYI VEHEMENTLY CONTENDS DURING THE COURSE OF HEARING THAT CIT(A)S ORDER HAS BEEN PASSED IN COMPLIANCE TO THE TRIBUNALS REMAND DIRECTIONS IN LETTER AND SPIRIT AFTER TAKING INTO CONSIDERATION ALL THE RELEVANT FACTS AND CIRCUMSTANCES. HE FAILS TO DISPUTE THE CRUCIAL FACT THAT CIT(A) HAS HIMSELF ACCEPTED GENUINENESS OF THE ASSESSEES FORMER TWO RECEIPTS IN THE NATURE OF SALE OF BOOKS AS WELL AS TRANSPORTATION FEES TO BE GENUINE SO AS TO CONCLUDE THAT THE SAME CROSS THRESHOLD LIMIT(S) U/S 10(23C) OF THE ACT. WE CONCLUDE IN ITA NO.14-19/GAU/2018 A.YS2008-09 TO2013-14 SIKSHA NIKETAN HS SCHOOL VS.ACIT, CIR-AGR PAGE3 THIS BACKDROP OF FACTS THAT THERE IS HARDLY ANY MERIT LEFT IN REVENUES ARGUMENTS NOW SO FAR AS APPLICATION OF DEEMED INCOME ADDITION U/S 68 OF THE ACT IN THE NATURE OF UNEXPLAINED CASH CREDITS REGARDING THESE TWO FORMER HEAD(S) IS CONCERNED. WE THEREFORE DELETE THE TWO ADDITIONS U/S 68 FOR THIS PRECISE REASON ALONE. ALL THE CORRESPONDING ADDITIONS SUMS RELATING TO THESE FORMER TWO ISSUES IN ASSESSMENT YEAR(S) BEFORE US SHALL AUTOMATICALLY FOLLOW SUIT. 5. NEXT COMES U/S 40(A)(2) DISALLOWANCE MADE BY THE LOWER AUTHORITIES IN CASE OF REMUNERATION PAID TO SMT. N. CHATTERJEE. WE FIND FROM A PERUSAL OF THE CIT(A)S ORDER THAT NEITHER OF THE LOWER AUTHORITY HAS DRAWN ANY COMPARISON OF THE IMPUGNED PAYMENTS TO MARKET RATES COMPRISING A CASE OF IDENTICAL SERVICES RENDERED. WE WISH TO MAKE IT CLEAR THAT THE IMPUGNED STATUTORY PROVISION ENVISAGES DISALLOWANCE OF EXCESSIVE OR UNREASONABLE ELEMENT OF THE PAYMENTINISSUECOMPARED TOMARKETRATEASFOLLOWS:- 7.GROUNDNO.4 THIS GROUND IS DIRECTED AGAINST DISALLOWANCE OF RS.9,.39,000/- WHICH REPRESENTS REMUNERATION PAIDTOSMT.NEERA CHATTERJEE. 7.1 AO DEALT WITH THIS ISSUE AT PARA (9) OF HIS ORDER. ON BEING QUESTIONED REGARDING THE REMUNERATION PAID TO SMT. NEERA CHATTERJEE, THE ASSESSEE STATED BEFORE THE AO THAT AS PER DECISION OF THE MANAGING COMMITTEE OF THE SCHOOL, IT WAS AGREED THAT REMUNERATION OF RS.35,000/- P.M. WAS TO BE PAID TO SMT. NEERA CHATTERJEE. IT WAS STATED THAT THE MINUTE BOOK CONTAINING DECISIONS OF MANAGING COMMITTEE WAS MISPLACED. IT WAS ALSO STATED BEFORE THE AO THAT THE HONORARIUM WAS PAID TO SMT. NEERA CHATTERJEE CONSIDERING THE VOLUMINOUS SERVICE RE4NDERED BY HER TOWARDS THE TRUST AND SCHOOL AND ALSO PROVIDED HER OWN LANDED PROPERTY FOR THE PURPOSE OF THE SAID SCHOOL. THE AO STATED THAT NO DOCUMENTARY PROOF OF MANAGING COMMITTEE AUTHORIZING THE PAYMENT OF HONORARIUM WAS PRODUCED. HE ALSO STATED THAT AS PER STATEMENT OF THE VICE CHAIRMAN OF MANAGING COMMITTEE, THE HONORARIUM PAID WAS UTILIZED FOR CONSTRUCTION OF A SCHOOL IN KOLKATA. SINCE AO WAS NOT SATISFIED WITH EXPLANATION GIVEN, HE DISALLOWED THE SUM OF RS.9,39,000/- THAT WAS PAID TO SMT. NEERA CHATTERJEE. 7.2 I HAVE CAREFULLY CONSIDERED THE ISSUE. SMT. NEERA CHATTERJEE WAS PRESIDENT OF THE MANAGING COMMITTEE OF THE SCHOOL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, SRI GOPAL CHAKRABORTY, VICE PRESIDENT OF THE MANAGING COMMITTEE WAS SUMMONED BY THE AO U/S 131 OF THE ACT. ITWAS STATED BUY SRI CHAKRABORTY THAT SMT. NEERA CHATERJEE WAS INVOLVED IN RUNNING A SCHOOL NAMED OXFORD HOUSE IN KOLKATA. SHE WAS ALSO ENGAGED IN SETTING UP A NEW SCHOOL NAMED G.N.CHATTERJEE SIKSHA NIKETAN IN KOLKATA. IT WAS ALSO STATED THAT HONORARIUM RECEIVE BY HER WAS UTILIZED FOR FUNDING THE NEW SCHOOL BEING SET UP. STATEMENT OF AUDITOR OF ACCOUNTS OF APPELLANT WAS ALSO TAKEN AND FROM THAT STATEMENT, IT IS SEEN THAT THE PAYMENT MADE TO SMT. NEERA CHATTERJEE WAS INITIALLY SHOWN AS ADVANCES. THE ACCOUNT WAS REVISED SUBSEQUENTLY AND THE PAYMENT WAS LATER ON SHOWN AS HONORARIUM. UNDOUBTED FACTS ITA NO.14-19/GAU/2018 A.YS2008-09 TO2013-14 SIKSHA NIKETAN HS SCHOOL VS.ACIT, CIR-AGR PAGE4 ON THE ISSUE WERE THAT HONORARIUM/REMUNERATION WAS PAID TO CHAIRMAN OF MANAGING COMMITTEE. IT HAS BEEN STATED THAT THE MANAGING COMMITTEE HAD DECIDED TO PAY THE HONORARIUM @ RS.35,000/- PER MONTH W.E.F. FY 2006-07. THOUGH THE MINUTE OF THE COMMITTEE MEETING AUTHORIZING SUCH PAYMENTS WAS NOT PRODUCED, THE VICE PRESIDENT OF THE COMMITTEE, IN AN AFFIDAVIT DATED 12.08.2015 STATED THAT THE SCHOOL MANAGING COMMITTEE DECIDED TO PAY HONORARIUM @ RS.35,000/- PER MONTH W.E.F. APRIL, 2006 TILL FURTHER DECISIONS. THE HONORARIUM WAS STATED TO HAVE BEEN PAID TOWARDS HER CONTRIBUTIONS TO THE TRUST, SCHOOL, AND ALSO PROVIDING HER LANDED PROPERTY FOR THE SAID SCHOOL. THIS PIECE OF AFFIDAVIT CANNOT BE IGNORED OFF HAND. IT HAS TO BE CONSIDERED IN DECIDING THE ISSUE. I DO NOT FIND ANYTHING WRONG IF VOLUNTARY PAYMENT IS MADE FOR PROFESSIONAL SERVICE RENDERED WITHOUT THE NORMAL FEE. BUT THE ASSESSEE ITSELF HAS ADMITTED THAT THE MONTHLY HONORARIUM AUTHORIZED WAS RS.35,000/- PER MONTH. ANNUAL PAYMENT, THEREFORE, SHOULD NOT EXCEED RS.4,20,000/-. THE MONTHLY RATE OF RS.35,000/- HAS BEEN ADMITTED BY THE VICE PRESIDENT IN HIS AFFIDAVIT. BUT THE PAYMENT MADE WAS RS.39,39,00/-. THE EXCESS OF RS.9,39,000/- OVER RS.4,20,000/- WHICH COMESTORS.5,39,000/-HAS TOBE DISALLOWED. APAPE GETSRELIEFOFRS.4,20,000/- GROUNDNO.4IS PARTLY ALLOWED. 6. THERE IS FURTHER NO ISSUE RAISED BY ANY OF THE LOWER AUTHORITIES THAT SMT. CHATTERJEE / THE PAYEE HEREIN HAS NOT RENDERED ANY SERVICES AT ALL. WE THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED CORRESPONDING DISALLOWANCEINALLTHESEASSESSMENT YEARS. 7. WE ALL NOW LEFT ON ASSESSEES LAST SUBSTANTIVE GRIEVANCE THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN DISALLOWANCE ITS DEPRECIATION CLAIM(S) REGARDING SCHOOL BUILDING. WE ARE TAKEN TO CIT(A)S IDENTICAL FINDINGS IN GROUND NO.5 WHICHREADINGASUNDER:- 8.GROUNDNO.5 THIS GROUND IS DIRECTED AGAINST DISALLOWANCE OF DEPRECIATION AMOUNTING TO RS.5,20,829/-. 8.1 ASSESSEE WAS CLAIMING DEPRECIATION ON SCHOOL BUILDING. WHEN AO ASKED WHY THE DEPRECIATION SHOULD BE ALLOWED, IT WAS STATED THAT SCHOOL CONSTRUCTION WAS STARTED BY SRI (LATE) G.N.CHATTTERJEE, H/O SMT. NEERA CHATTERJEE. THE SCHOOL CONSTRUCTION KEPT ON INCREASING. THE LAND WAS AFTERWARDS GIVEN ON LEASE TO SIKSHA NIKETANM FOR 90 YEARS. IT WAS ALSO STATED THAT CONSTRUCTION WAS DONE FROM THE FUND OF THE SCHOOL ONLY. AO EXAMINED THE LAND DEED AND PROPERTY DOCUMENTS AND HE NOTICED THAT THE PROPERTY WAS IN THE NAME OF SMT.NEEREA CHATTERJEE. HE ALSO FOUND THAT THE LEASE CLAIMED BY APPELLANT WAS AGREED UPON ONLY ON 29.11.2014. SINCE ASSESSEE WAS NOT THE OWNER OF THE PROPERTY NOR WAS THE LESSEE AT THE MATERIAL TIME, AO DISALLOWED THE CLAIM OFDEPRECIATION. 8.2 BEFORE ME ALSO, APPELLANT WAS UNABLE TO GIVE ANY EVIDENCE TO SHOW THAT THE PROPERTY BELONGED TO IT OR WAS HOLDER OF LEASE AT THE RELEVANT TIME. IN ABSENCE OF ANY EVIDENCE, ASSESSEECANNOT CLAIMDEPRECIATION. ITA NO.14-19/GAU/2018 A.YS2008-09 TO2013-14 SIKSHA NIKETAN HS SCHOOL VS.ACIT, CIR-AGR PAGE5 THE CIT(A) HOLDS THAT THE ASSESSEE GOT LEASE AGREEMENT IN ISSUE ONLY ON 29.11.2014 AND THEREFORE, THE IMPUGNED DEPRECIATION CLAIM IS NOT ADMISSIBLE IN LEADING YEAR. WE NOTICE IN THIS BACKDROP OF FACTS THAT DEPARTMENT IS VERY FAIR IN NOT DENYING THE CLINCHING FACT ABOUT THE ASSESSEE HAVING RAISED CONSTRUCTION OF THE SCHOOL BUILDING IN ISSUE. THE HONBLE APEX COURTS LANDMARK DECISION IN MYSORE MINERAL LTD. VS. CIT (1999) 239 ITR 775 (SC). THEIR LORDSHIPS HOLD THAT BENEFICIAL OWNERSHIP IN SUCH A BACKDROP HAS TO BE TAKEN AS VESTED WITH THE PERSON HAVING DOMINIES OVER THE ASSET FOR BUSINESS PURPOSES. WE THEREFORE DELETE THIS LAST DEPRECIATION DISALLOWANCE IN CORRESPONDING ASSESSMENT YEARS.THISASSESSEESAPPEALSARE ALLOWEDINABOVETERMS. NO OTHER ISSUE HAS BEEN ARGUED BEFORE US BYTHE LEARNED REPRESENTATIVE DURINGTHECOURSE OF HEARING. 8. THESEASSESSEESSIXAPPEALSARE ALLOWED. ORDERPRONOUNCEDINTHEOPENCOURT 03/07/2019 SD/- SD/- ( ' ) ( ' ) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) GUWAHATI, *DKP ' ' - 03/07 /201 9 ' \ / COPY OF ORDER FORWARDED TO:- 1 . /ASSESSEE-SIKSHA NIKETAN H.S SCHOOLINDRANAGAR,ITIRD.AGARTALA,WESTTRIPURA 2. /REVENUE-ACIT, CIRCLE,AGARTALA,TRIPURA 3. - ' ] ] ' /CONCERNEDCIT GUWAHATI 4. ] ] - / CIT (A) SHILLONG 5. ' ' ' , ] \ ' \ ' , ' ' / DR,ITAT,GUWAHATI 6. ' [ /GUARDFILE. BYORDER/ , /TRUECOPY/ SR. PRIVATE SECRETARY(ONTOUR) ] \ ' \ ' ,