ACIT, Bhubaneswar V. Kalinga Institute of Industrial Technology, Bhubaneswar

ITA 170/CTK/2012

• Counselvise Citation: 17022114 RSA 2012
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 18-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 05-03-2012
• Court: TRIBUNAL
• Department Lawyers: AGAINST
• Keywords: Search and seizure; Charitable institution; Maximum Marginal Rate; Rule of consistency; Additional evidence; Question of law; Bad and doubtful debts; Benefit of exemption; Condonation of delay; Capital expenditure
• Section: 11; 139; 143(3); 260A; 80G; 12A; 12AA; 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 (FILED BY THE ASSESSEE) / ASSESSMENT YEAR 2007 - 08 ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), BHUBANESWAR. - - - VERSUS - KALINGA INSTITUTE OF INDUS T RIAL TECHNOLOGY, 383/384, KIIT CAMPUS, PATIA, BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / S MT. PARAMITA TRIPATHY, CIT - DR / FOR THE RESPONDENT: / SHRI P. S.PANDA/S.K.AGRAWAL/K.K.AGARWAL,ARS / DATE OF HEARING: 18.12.2012 / DATE OF PRONOUNCEMENT: 21.12.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE A GAINST THE ORDER DT.7.12.2011 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2007 - 08, RAISING THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING EXEMPTION U/S.11 OF THE I.T. ACT TO THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING THE EXPENDITURE CLAIMED BY THE ASSESSEE ON ACCOUNT OF DONATION AND ADVANCE WRITTEN OFF. 3. ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING THE EXPENDITURE CLAIMED UNDER THE HEAD PR & IMAGE BUILDING, WHEN THE AMOUNT IS NOT SPENT FOR THE SAME PURPOSE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. C1T(A) IS NOT JUSTIFIED IN ALLOWING PRIOR PERIOD EXPENDITURE RELATING TO EARLIER YEAR. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING EXPENSES TOWARDS RESEARCH A I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 2 DEVELOPMENT ON THE BASIS OF ADDITIONAL DETAILS SUBMITTED BEFORE HIM WITHOUT ALLOWING OPPORTUNITY TO THE AO. 2. THE ASSESSEE HAS FILED CROSS OBJECTION SUPPORTING THE IMPUGNED ORDER OF THE LEARNED CIT(A) BY SUBMITTING AS GROUNDS OF CROSS OBJECTION AS UNDER : 1. THAT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPEAL FILED BY APPELLANT (I.E. THE LD. ASSESSING OFFICER) AGAINST THE ORDER PASSED U/S 253 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED AS THE ACT) IS LIABLE TO BE DISMISSED, WHICH IS NOT AN APPEALABLE ORDER AS PER THE PROVISIONS OF SECTION 253 OF THE A CT. 2. THAT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS LEGALLY AS WELL AS FACTUALLY CORRECT IN DIRECTING THE LD. ASSESSING OFFICER TO ALLOW THE BENEFIT OF SECTION 11 OF THE ACT TO THE RESPONDENT. 3. THAT, IN THE FACTS AND CIRCUMSTANCES, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS FACTUALLY AS WELL AS LEGALLY CORRECT IN DELETING THE ADDITIONS ON ACCOUNT OF DONATION AND ADVANCES W/OFF. 4. THAT, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS FACTUALLY AS WELL AS LEGALLY CORRECT IN DELETING THE ESTIMATED ADDITIONS OF 20% (I.E. ADHOC DISALLOWANCE) OF EXPENDITURE INCURRED UNDER THE HEAD PR & IMAGE BUILDING. 5. THAT, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS CORRECT IN APPRAISING THE PROVISIONS OF SE CTION 11 OF THE ACT PROPERLY AND DELETING THE DISALLOWANCES OF EXPENSES UNDER THE HEAD PRIOR PERIOD EXPENSES. 6. THAT, THE APPELLANT IS UNDER THE WRONG SURMISE IN STATING THAT THE ASSESSEE PRODUCED THE ADDITIONAL DETAILS BEFORE THE LD. COMMISSIONER OF I NCOME TAX (APPEALS). BUT AS A MATTER FACT THE ASSESSEE PRODUCED THE COPY OF THE LETTER DULY ACKNOWLEDGED BY THE LD. ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THEREFORE THE GROUND OF THE APPELLANT IS NOT SUSTAINABLE AND THE ACTION OF THE LD. COMM ISSIONER OF INCOME TAX (APPEALS) IS CORRECT IN DELETING THE ADDITIONS OF EXPENSES INCURRED UNDER THE HEAD RESEARCH & DEVELOPMENT. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A REGISTERED SOCIETY UNDER SOCIETY REGISTRATION ACT,1860. IT WAS GRANTED REG ISTRATION U/S.12A OF THE I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 3 I.T.ACT,1961. THE ASSESSEE SOCIETY IS ENGAGED IN THE CHARITABLE ACTIVITIES INTER ALIA IMPLEMENTING OF DIFFERENT GOVT. SPONSORED PROGRAMS AND ALSO RUNNING EDUCATIONAL INSTITUTIONS ESPECIALLY IN TECHNICAL & PROFESSIONAL EDUCATION. IT FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 31.10.2007 AT A LOSS OF 54,01,64.235, WHICH WAS SELECTED FOR SCRUTINY. IN THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER DID NOT ACCEPT THE RETURNED INCOME AS CORRECT, COMPLETE AND TRUE AND MADE VARIOUS ADDITIONS, DISALLOWED THE BENEFITS OF THE PROVISIONS OF SECTION 11 AND ALSO NOT CONSIDERED THE CARRY FORWARD LOSSES AND ASSESSED THE TOTAL INCOME AT 5,23,78,610. THE ASSESSING OFFICER HAS MADE ADDITIONS OF 6,04,13,594 BEING DONATION AS BEING NOT ALLOWED AS APPLICATION FOR VIOLATION OF SECTION13, 4,58,617 BEING 20% OF PR & IMAGE BUILDING EXPENSES, 3,96,892 WRITTEN OFF, 14,42,068 ON ACCOUNT OF RESEARCH EXPENSES AND 21,06,884 ON ACCOUNT OF PRIOR PERIOD OF EXPENSES. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, WHO AFTER CONSIDERING THE FACTS A ND CIRCUMSTANCES OF THE CASE AND THE SUBMISSIONS OF THE ASSESSEE SOCIETY BEFORE HIM, THE LEARNED CIT(A) ALLOWED EXEMPTION U/S.11 OF THE I.T.ACT AND ALSO DELETED THE ADDITIONS SO MADE BY THE ASSESSING OFFICER. AGAINST THIS ORDER OF THE LEARNED CIT(A) THE RE VENUE IS IN APPEAL. 5. WE HAVE HEARD BOTH PARTIES AND CAREFULLY GONE THROUGH THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND MATERIAL MADE AVAILABLE TO THE TRIBUNAL. IT IS UNDISPUTED FACT THAT THE ASSESSEE SOCIETY IS DULY REGISTERED U/S.12A OF THE I.T.ACT . THERE IS ALSO NO DISPUTE ABOUT THE OBJECTS OF THE SOCIETY. ON PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THE AO HAS DISCUSSED SEVERAL ISSUES FOR DENYING THE BENEFIT OF SECTIONS 11 AND 12. IN PARA - 8 OF THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS DR AWN UP A TABLE IN I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 4 WHICH THE SURPLUS AND DEFICIT HAS BEEN WORKED OUT, FROM WHICH THE ASSESSING OFFICER CAME TO CONCLUDE THAT ASSESSEE IS RUNNING AS A BUSINESS ESTABLISHMENT. THAT THE ASSESSEE HAS BEEN SPENDING LARGE SUMS OF MONEY ON ADVERTISEMENT, PR & IMA GE BUILDING, POINTS TO THE FACT, ACCORDING TO THE ASSESSING OFFICER, THAT THE ASSESSEE IS NOT RUNNING AN EDUCATIONAL INSTITUTION. THE ASSESSING OFFICER HAS ALSO GIVEN ONE EXAMPLE OF LEDGER ENTRY ON 20.12.2006 WHICH SHOWS THAT AN EXPENDITURE OF 33,641 WAS SPENT FOR LODGING THE GUESTS IN MAYFAIR HOTEL. ACCORDING TO THE ASSESSING OFFICER CHARITY IS THE SOUL OF THE EXPRESSION IN CHARITABLE PURPOSE AND MERE TRADE OR COMMERCE IN THE NAME OF EDUCATION CANNOT BE SAID TO BE A CHARITABLE PURPOSE. FOR THIS PROPOSIT ION, THE ASSESSING OFFICER HAS RELIED ON THE DECISION OF HONBLE HIGH COURT OF UTARAKHAND IN CIT VS. NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING SOCIETY(2009) 226 (UTARAKHAND) 582. HE HAS ALSO RELIED ON THE VARIOUS DECISIONS IN THE CASES OF VICTORIA T ECHNICAL INSTITUTE VS . ADDL. CIT (1991) 94 CTR (SC) 153 : (1991) 188 ITR 57 (SC), ADDL. CIT VS. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (1980) 121 ITR 1 (SC), DHARMADEEPTI US. CIT (1978) 114 ITR 454 (SC), CIT VS. RED ROSE SCHOOL (2007 221 CTR(ALL.). FURTHER HE RELIED ON THE DECISION IN THE CASE OF VODITHALA EDUCATION SOCIETY VS. ADIT (EXMP.) (2008 20 SOT 353 (HYD.) AND CAME TO CONCLUDE THAT THE ASSESSEE IS A PROFIT MAKING ORGANIZATION AND NOT EXISTING FOR CHARITY. THE ASSESSING OFFICER REFERRED TO A SEARCH AND SEIZURE OPERATION FOR THE EARLIER YEARS AND HAS QUESTIONED THE GENUINENESS OF THE ORGANIZATION. THEREAFTER HE HAS DISCUSSED THE FEE STRUCTURE, MISCELLANEOUS COSTS AND MANAGEMENT QUOTA SEATS. ON THESE BASIS, HE FORMED AN OPINION THAT THE ASSESSEE IS DEFEATING THE CHARITABLE PURPOSE FOR WHICH THE SOCIETY WAS FORMED AND REGISTRATION WAS GRANTED. FURTHER THE ASSESSING OFFICER QUESTIONED THE REIMBURSEMENT OF TELEPHONE AND MOBILE BILLS OF THE EXECUTIVE I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 5 COMMITTEE MEMBERS. HE HAS NOTED THE INCREASE IN HO NORARIUM PAID TO THE EXECUTIVE MEMBERS, WHICH ACCORDING TO HIM, IS IN VIOLATION OF SECTION 13 FOR WHICH HE DENIED THE BENEFIT OF EXEMPTION OF SECTION 11 OF THE ACT TO THE ASSESSEE. 6. THE LEARNED CIT - DR SUPPORTED THE IMPUGNED ORDER OF THE ASSESSING OFFICER FOR HER PART OF SUBMISSIONS. 7. WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE WHILE SUPPORTING THE IMPUGNED ORDER OF THE LEARNED CIT(A), SUBMITTED ON REITERATION OF THE FACT THAT THE ASSESSEE IS A SOCIETY DULY REGISTERED UNDER THE SOCIETIES ACT,1860 AND IS ALSO REGISTERED U/S.12A OF THE I.T.ACT,1961. IT S MAIN OBJECTIVES ARE BASICALLY TO IMPART EDUCATION TO STUDENTS IN TECHNICAL, PROFESSIONAL AND VOCATIONAL COURSE, TO UNDERTAKE CHARITABLE AND SOCIO DEVELOPMENTAL ACTIVITIES FOR WEAKER SECTIONS OF THE SOCIE TY INCLUDING THE UN - PRIVILEGED AND UNDER - PRIVILEGED PEOPLE AND TO UNDERTAKE FILED STUDIES AND RESEARCH PROGRAMS IN THE AREA OF IRRIGATION, HEALTH, AGRICULTURE, POWER, RURAL LAND, URBAN DEVELOPMENT, ECOLOGY, FORESTRY AND POLLUTION CONTROL, LABOUR WELFARE AN D SUCH OTHER FIELDS OF INDUSTRY AND SOCIOLOGICAL ACTIVITIES . THE ASSESSEE SOCIETY HAS NOT LIMITED ITS ACTIVITIES TO FORMAL EDUCATION ONLY. FACILITIES HAVE ALSO BEEN CREATED TO IMPART VOCATIONAL AND SELF EMPLOYMENT TRAININGS TO THESE STUDENTS SO THAT AFTER LEAVING THE INSTITUTION OF THE ASSESSEE THESE STUDENTS CAN GO FOR JOB EMPLOYMENT OR SOME SELF EMPLOYMENT ACTIVITIES FOR EARNING THEIR LIVELIHOOD. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AFTER DULY APPRAISING THE CHARITABLE ACTIVITIES CARRIED O UT BY THE APPELLANT THE INCOME TAX DEPARTMENT HAS GRANTED THE REGISTRATION U/S. 12A OF THE INCOME TAX ACT, 1961. AS PER THE OBJECTS CLAUSE SPELLED OUT IN THE MEMORANDUM OF ASSOCIATION, THE ASSESSEE IS RUNNING DIFFERENT EDUCATIONAL PROGRAMS IN DIFFERENT STR EAMS WHICH ARE DULY APPROVED BY THE UGC, AICTE, I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 6 ACCREDITED BY NATIONAL BOARD OF ACCREDITATION (NBA) FOR VARIOUS COURSES LIKE MBA, MCA, BTECH. ETC., +2 SC. IS APPROVED BY HIGHER SECONDARY COUNCIL OF ORISSA, MBBS BY MEDICAL COUNCIL OF INDIA, BDS BY DENTAL CO UNCIL OF INDIA, DIPLOMA BY AICTE, ITI BY NATIONAL COUNCIL OF VOCATIONAL TRAINING. LIKE ALL OTHER COURSES RUN BY THE SOCIETY ARE ALSO DULY APPROVED AND ACCREDITED BY THE PROPER AUTHORITY. ALL THE ACTIVITIES CARRIED OUT BY THE ASSESSEE ARE WITHIN THE FRAME W ORK OF THE OBJECTS WRITTEN IN THE MEMORANDUM OF ASSOCIATION OF THE SOCIETY AND HAS COME A LONG WAY IN ESTABLISHING VARIOUS EDUCATIONAL INSTITUTIONS. DUE TO ITS QUALITY TEACHING AND QUALITY OF INFRASTRUCTURE FACILITIES IT WAS DECLARED AS DEEMED UNIVERSITY IN FEB. 2004 BY THE MINISTRY OF HRD, GOVT. OF INDIA ON RECOMMENDATION OF THE UGC. THE ASSESSEE WAS THE QUICKEST UNIVERSITY IN INDIA WHEN IT GOT THE UNIVERSITY STATUS FROM THE MINISTRY OF HUMAN RESOURCES OF INDIA AND UNIVERSITY GRANT COMMISSION OF INDIA. THE ASSESSEE HAS 11 CAMPUSES IN BHUBANESWAR, ONE AT BANGALORE, ONE AT PUNE AND ONE AT NEW DELHI. IN MANY OF THE CAMPUSES IT HAS OWN HOSTEL FACILITIES. HOWEVER IT HAS HIRED SOME BUILDING FOR ITS GUEST HOUSE PURPOSE, OFFICE PURPOSE, HOSTEL PURPOSE, STAFF QUA RTER PURPOSES ETC. TO ATTAIN ITS OBJECTIVE. 7 .1. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE IS FILING ITS REGULAR RETURN OF INCOME U/S . 139 OF THE INCOME TAX ACT, 1961 WITHIN THE DUE DATE. IN ITS RETURN OF INCOME, THE ASSESSEE IS CLAIMING THE BENEFITS OF SECTION 11 SINCE ITS INCEPTION AND THE INCOME TAX DEPARTMENT IS ASSESSING THE INCOME OF THE APPELLANT BY ALLOWING THE BENEFITS OF THE SECTION 11. HE POINTED OUT THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED BY THE DEPARTMENT ON THE PREMISES OF THE ASSESSEE ON 9.8.2005 , WHEREAFTER THE LEARNED CIT ISSUED SHOW CAUSE FOR CANCELLATION OF 12A REGISTRATION TO THE APPELLANT, ON WHICH THE APPELLANT SUBMITTED ITS REPLY IN EACH AND EVERY POINT I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 7 ON 4 .12.2006 . HOWEVER , THE LEARNED CIT, AGAI NST WHICH THE APPEAL BEFORE THE TRIBUNAL, WHEN THE TRIBUNAL OBSERVED - THE PRESENT ACT OF THE CIT AMOUNTS TO INTERRUPTION IN THE ASSESSMENT PROCEEDING. THE POWER U/S 12AA (3) HAS BEEN ENUNCIATED UNDER THE ACT IS AN UNBRIDLED POWER IN THE HANDS OF CIT TO SAFEGUARD THE INTEREST OF REVENUE AS AND WHEN HE IS SATISFIED TO DO SO. IT DOES NOT MEAN THAT THIS UNBRIDLED POWER GIVEN BY THE ACT AFTER MUCH DELIBERATION IN THE PARLIAMENT SHOULD BE UTILIZED WITHOUT CLEAR CUT SATISFACTION. AS PER STRICT JUDICIAL DISCI PLINE WE CONSIDER THAT POWER OF PUNISHMENT IS A UNBRIDLED POWER LIKE THE PRESENT POWER OF CANCELLATION ENVISAGED U/S 12AA (3). BUT SUCH UNBRIDLED POWER SHOULD BE UTILIZED QUITE CAUTIOUSLY AND CONSCIOUSLY. WITH THE AFORESAID FINDINGS WE ARE OF THE CONSIDERE D OPINION THAT THE ORDER OF THE CIT IS A PREMATURED ONE WHICH HAS BEEN UTILIZED AT A PREMATURED STAGE IN HASTE. ON 31.12.2007 , THE ASSESSING OFFICER COMPLETED THE SEARCH ASSESSMENTS BY RAISING A DEMAND OF 17.35 CRORE S . ON APPEAL, THE CIT(A) PARTLY ALLOW ED THE APPEALS, AGAINST WHICH THE ASSESSEE AS WELL AS THE DEPARTMENT WENT IN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL DISPOSED OFF THE CASE IN TWO PHASES. I.E FOR THE ASST. YEAR 2006 - 07 VIDE ORDER 4.12.2009 AND FOR THE ASST. YEAR 2000 - 01 TO 2005 - 06 V IDE ORDER 26.2.2010, WHEN THE TRIBUNAL WAS PLEASED TO PASS THE ORDERS FOR SEARCH PERIOD (I.E. FOR THE ASST. YEAR 2000 - 01 TO 2005 - 06) BY GIVING DIRECTION TO ALLOW THE BENEFIT OF SECTION 11 TO THE ASSESSEE IN THEIR ORDER DATED 26.2.2010, VIDE PARAGRAPH 7.6 O F THEIR ORDER, WHICH IS REPRODUCED AS UNDER . 7.6 IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT DIRECTION OF THE CIT(A) THAT EXEMPTION UNDER SECTION 11 IS ALLOWED SUBJECT TO SATISFACTION OF OTHER CONDITIONS PROV IDED IN THAT SECTION (PROBABLY) SECTION 11) IS MODIFIED AND WE DIRECT THE AO TO ALLOW THE ASSESSEE BENEFITS OF EXEMPTION AVAILABLE UNDER SECTION 11 OF THE ACT. THIS ISSUE THEREFORE DECIDED IN ASSESSEES FAVOUR AND AGAINST THE REVENUE. AGAINST SUCH ORDER, THE APPEAL FILED BY THE DEPARTMENT WAS DISMISSED BY THE HONBLE HIGH COURT FINDING NO SUBSTANTIAL QUESTION OF LAW INVOLVED THEREIN. I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 8 7.2. KEEPING THE ABOVE FACTUAL MATRIX OF THE CASE IN MIND, NOW WE DISPOSE OF THE ISSUES GROUND - WISE RAISED BY THE REVENUE. 7.3. WITH RESPECT TO GROUND NO.1 OF THE REVENUE, WE FIND THAT THE ASSESSING OFFICER HAS DISCUSSED SEVERAL ISSUES FOR DENYING THE BENEFIT OF SECTION S 11 AND 12 AS ALREADY NOTED EARLIER IN PARAGRAPH 5 IN THIS ORDER . LEARNED COUNSEL FOR THE ASSESSEE HAS POIN TED OUT THAT THIS ISSUE ADDRESSED BY THE LEARNED CIT(A) THAT THE ASSESSEE IS A REGISTERED SOCIETY AND SINCE ITS INCEPTION CARRYING ON CHARITABLE ACTIVITIES INCLUDING IMPARTING OF EDUCATION IN THE PROFESSIONAL AND TECHNICAL COURSES. SINCE INCEPTION THE ASSE SSEE HAS BEEN CLAIMING EXEMPTION U/S.11 OF THE ACT AND THE SAME WAS ACCEPTED BY THE DEPARTMENT. CONSEQUENT UPON SEARCH OPERATION CARRIED OUT IN THE PREMISES OF THE ASSESSEE ON 09.08.2005, THE AO HAS DISALLOWED THE BENEFIT OF SECTION 11 FOR THE A.Y. 2000 - 01 TO 2006 - 07. ON FURTHER APPEAL HONBLE ITAT, CUTTACK BENCH, HAS ALLOWED THE BENEFIT OF SECTION 11 AND THE RELEVANT PORTION OF THE ORDER IS AS UNDER : - 7.6 IN TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT DIRECTIO N FO THE CIT (A) THAT EXEMPTION UNDER SECTION 11 IS ALLOWED SUBJECT TO THE SATISFACTION OF OTHER CONDITIONS PROVIDED CONDITIONS PROVIDED IN THAT SECTION (PROBABLY ) SECTION 11) IS MODIFIED AND WE DIRECT THE AO TO ALLOW THE ASSESSEE BENEFITS OF EXEMPTION AVAILABLE UNDER SECTION 11 OF THE ACT. THIS ISSUE THEREFORE DECIDED IN ASSESSEES FAVOUR AND AGAINST THE REVENUE. ACCORDINGLY, IT WAS ALLOWED BENEFIT OF SECTION 11 OF THE ACT IN ACCORDANCE WITH THE ORDER OF THE TRIBUNAL . THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT IT WELL SETTLED THAT THE ORDER OF THE TRIBUNAL IS BINDING ON ALL LOWER AUTHORITIES. THOUGH RES JUDICATA IS HAVING NO APPLICABILITY TO THE INCOME TAX PROCEEDINGS STILL RULE OF CONSISTENCY NEEDS TO BE FOLLOWED OF FACTUAL MATTERS REPEATED FRO M YEAR TO YEAR. IN HIS ORDER, THE LEARNED CIT(A) I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 9 HAS OBSERVED THAT THE ASSESSEE BROUGHT TO HIS NOTICE THE DECISION IN THE CASE OF ARVIND FASHIONS LTD. VS. ACIT (2010) 45 DTR (AHD. B) 299 IN WHICH IT IS HELD THAT, CHORD OF CONSISTENCY RUNNING THROUGH THE A SSESSMENTS OF SEVERAL YEARS CAN BE CUT OFF ONLY IF FACTS ARE SUBSTANTIALLY DIFFERENT FROM THE EARLIER ASSESSMENT YEARS CAPABLE OF LEADING TO DIFFERENT FINDS. IN THE CASE OF THE APPELLANT SEARCH WAS CONDUCTED AND POST SEARCH INVESTIGATION WAS DONE. THEREAF TER BASING ON THE FACTS THE TRIBUNAL HAS ALLOWED THE APPEAL OF THE APPELLANT AND DIRECTED THE AO TO ALLOW THE BENEFIT OF SECTION 11 OF THE ACT. THE APPELLANT SUBMITS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF THE CURRENT YEAR, THE ASSESSING OFFI CERS ACTION IN NOT ALLOWING THE BENEFITS OF SECTION 11 OF THE ACT IS NOT JUST AND PROPER. 7.4. THE ASSESSEE HAS REFERRED TO THE DECISION IN THE CASE OF DCIT VS. M.P. MADHYAM, (2009) 31 DTR (MP) 15. IN THIS CASE THE HONBLE HIGH COURT OF MADHYA PRADESH HAS CLEARLY HELD, FURTHER, WHEN THE ACTIVITIES THAT HAVE BEEN CARRIED OUT BY THE INSTITUTION FROM 1985 - 86 ARE THE SAME AND THERE HAS BEEN NO CHANGE, THERE WAS NO JUSTIFICATION TO RECORD A DIFFERENT FINDING AND PROCEED FOR ASSESSMENT. THE ASSESSEE SUBMIT TED THAT IT HAS BEEN GRANTED EXEMPTION U/S.11 OF THE ACT EVER SINCE ITS INCEPTION. THE DEPARTMENTS ATTEMPT TO DENY THE BENEFIT OF SECTION 11 DID NOT FIND FAVOUR WITH THE JURISDICTIONAL ITAT ON FACTS. SINCE THE APPELLANT HAS BEEN ENJOYING BENEFIT U /S.11 AND T HERE HAS BEEN NO CHANGE IN THE FACTS, THE APPELLANT SUBMITS, DENIAL OF BENEFIT OF SECTION 11 OF THE ACT IS NOT PROPER. THE ASSESSEE FURTHER REFERRED TO THE DECISION OF THE HONBLE CUTTACK HIGH COURT WHERE IN THE APPEAL FILED BY THE DEPARTMENT AGAINST THE I TAT ORDER FOR THE A.Y. 2000 - 01 TO 2006 - 07 WHERE IN THE APPEAL WAS NOT ADMITTED. IT ALSO CHALLENGED THE TABLE GIVEN BY THE AO IN PAGE - 4 OF THE ASSESSMENT ORDER FROM WHICH IT APPEARS THAT THE APPELLANT IS GENERATING SURPLUS YEAR - AFTER - YEAR. THE I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 10 APPELLANT S UBMITS THAT THE AO HAS CALCULATED THE SURPLUS FIGURE WITHOUT CONSIDERING THE CAPITAL EXPENDITURE WHICH WERE APPLIED FOR CHARITABLE PURPOSE AND AS SUCH ENTITLED FOR EXEMPTION U/S.11 OF THE ACT. THE RESPONDENT HAS INCURRING DEFICIT AND ACCORDING TO IT THE FO LLOWING IS THE REAL PICTURE. ASST. YEAR GROSS RECEIPT OPERATIONA L EXPENSES DEPRECIATIO N AS PER INCOME TAX ACT ALLOWED BY THE AO IN THE ASSESSMENT SURPLUS FROM OPRATION CAPITAL EXPENDITUR E (I.E. APPLICATION OF EXPENDITUR E AS PER PROVISIONS OF SECTION 11 O F THE ACT) NET SURPLUS (DEFITI) 2000 - 01 51,858,247 43,023,415 9,861,181 (1,026,349) 32,600,572 (33,626,921) 2001 - 02 67,857,739 58,365,190 11,490,688 (1,998,139) 40,989,052 (42,987,191) 2002 - 03 94,190,241 76,531,152 14,392,064 3,268,025 56,230,227 (52,963,202) 2003 - 04 148,318,38 2 105,646,122 17,860,711 24,811,549 126,053,009 (101,241, 460) 2004 - 05 197,198,77 1 148,472,614 23,709,643 25,016,514 144,136,765 (119,120,261) 2005 - 06 394,646,56 0 326,294,874 35,180,769 33,170,917 297,612,233 (264,441,316) 2006 - 07 629,607,65 0 375,344,681 125,621,095 128,641,874 793,237,441 (664,595,567) 2007 - 08 738,373,50 0 636,913,274 182,405,619 (80,945,393) 627,724,786 (708,670,179) REGARDING THE AOS OBSERVATION OF VIOLATION OF SECTION 13 OF THE ACT, THE ASSESSEES SUBMISSION S WERE THAT IN 15 TH PARA THE ASSESSING OFFICER HAD POINTED OUT THE HONORARIUM GIVEN TO THE MEMBER OF THE SOCIETY. FURTHER IN THE SAME PARA HE POINTED OUT THAT, THE TELEPHONE & MOBILE BILLS OF THE MEMBERS ARE REIMBURSED TO THEM. BUT AS A MATTER OF FACT, THE TELEPHONE & MOBILE BILLS ARE NOT REIMBURSED TO THEM, RATHER THOSE ARE DEBITED TO THE ACCOUNTS OF THE SOCIETY AS THOSE ARE INCURRED FOR CHARITABLE PURPOSE. SO PERHAPS THE ASSESSING OFFICER OVER SIGHTED THE LEDGER COPY OF THE TELEPHONE EXPENSES AND MADE ALLEGATIONS THAT, SUCH EXPENDITURES ARE REIMBURSED AND ALSO FORMED A DIFFERENT OPINION THAT, BUT SUCH REIMBURSEMENTS ARE USUALLY DONE FOR A BUSINESS UNDERTAKING .. FURTHER WHILE I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 11 COMPAR ING THE HONORARIUM OF THE MEMBERS FROM THAT OF THE PREVIOUS YEAR HE WAS AT AN OPINION THAT, THE INCREASE IN HONORARIUM PAID IS PERHAPS TAKING INTO CONSIDERATION THE INFLATION . THESE POINTS STRONGLY INDICATE THAT SUCH PAYMENTS ARE MADE TO THE MEMBERS FOR T HEIR BENEFIT. CHARITY SHOULD NOT BE USED TO FEED THE MEMBERS. HERE HE FAILED TO APPRECIATE THE HONORARIUM PAID TO THE MEMBER ARE NOT TO F R EE THE MEMBERS, RATHER THESE HONORARIUM WERE PAID FOR THE WORK THEY HAVE BEEN DONE FOR THE SOCIETY AND FOR THE TIME DEVOTED BY THEM FOR THE ACTIVITIES OF THE INSTITUTION. FURTHER THE ASSESSING OFFICER FAILED TO APPRECIATE THE PROVISIONS OF SECTION 13(2)(C) OF THE ACT, IN WHICH IT SAYS THAT, IF ANY AMOUNT IS PAID BY WAY OF SALARY, ALLOWANCE OR OTHERWISE DURING THE PREV IOUS YEAR TO ANY PERSON REFERRED TO IN SUB - SECTION - 3 OUT OF THE RESOURCES OF THE TRUST OR INSTITUTION FOR SERVICES RENDERED BY THAT PERSON TO SUCH TRUST OR INSTITUTION AND THE AMOUNT SO PAID IS IN EXCESS OF WHAT MAY BE REASONABLY PAID FOR SUCH SERVICES, T HEN THAT WILL BE DEEMED TO BE VIOLATION OF PROVISIONS OF SECTION - 13. IN THE INSTANT CASE THE ASSESSING OFFICER ASKED FOR THE SUBMISSION OF THE DETAILS OF THE HONORARIUM ETC PAID TO THE MEMBERS ALONG WITH THE DETAILED OF SERVICES RENDERED BY THEM AND IN C OMPLIANCE TO THE SAME, THE APPELLANT HAD FILED THE DETAILS ON 15TH DECEMBER 2009 ON WHICH THE ASSESSING OFFICER WAS SATISFIED AND DID NOT RAISE FURTHER QUESTION. SO WHATEVER THE ALLEGATIONS/OBSERVATIONS MADE IN THE ASSESSMENT ORDER ARE NOT SUSTAINABLE IN THE EYE OF LAW. 7.5. FURTHER THE LE A RNED COUNSEL FOR THE ASSESSEE HAS REFERRED TO THE ANALYSIS MADE IN 191 TAXMAN 25 (MAG.) WHERE IN IT IS OBSERVED THAT : SIMILARLY, AS REGARDS THE THIRD CONTROVERSY REGARDING SURPLUS OF INCOME ALSO, THE COURTS IN NUMBER OF DECISIONS HAVE OBSERVED THAT EXEMPTION WILL NOT BE DENIED SIMPLY FOR THE REASON THAT 31 TAXAMAN - MAGAZINE {VOL. 191 THERE HAS BEEN SURPLUS FROM THE RUNNING OF EDUCATIONAL INSTITUTION IN CASE SAME IS USED FOR I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 12 EDUCATIONAL PURPOSES ONLY. IN FACT, T HE SUPREME COURT IN THE CASE OF ADDL. CIT VS. SURAT ART SILK & CLOTH MFRS. ASSOCIATION [1980] 121 ITR 1, 26/[1979] 2 TAXMAN 501 OBSERVED THAT . WHERE THE PREDOMINANT OBJECT THE ACTIVITY IS TO CARRY OUT THE CHARITABLE PURPOSE AND NOT TO EARN PROFIT, IT WO ULD NOT LOSE ITS CHARACTER OF A CHARITABLE PURPOSE MERELY BECAUSE SOME PROFIT ARISES FROM THE ACTIVITY. THE EXCLUSIONARY CLAUSE DOES NOT REQUIRE THAT THE ACTIVITY MUST BE CARRIED ON IN SUCH A MANNER THAT IT DOES NOT RESULT IN ANY PROFIT. IT WOULD INDEED TO BE DIFFICULT FOR PERSONS IN CHARGE OF A TRUST OR INSTITUTION TO SO CARRY ON THE ACTIVITY THAT THE EXPENDITURES BALANCES THE INCOME AND THERE IS NO RESULTING PROFIT. THAT WOULD NOT ONLY BE DIFFICULT OF PRACTICAL REALIZATION BUT WOULD ALSO REFLECT UNSOUND P RINCIPLE OF MANAGEMENT. FURTHER, THE HONBLE SUPREME COURT IN THE CASE OF ADITANAR EDUCATIONAL INSTITUTION V. ADDL. CIT[1997] 224 ITR 310/90 TAXMAN 528, 534 OBSERVED THAT . WE MAY STATE THAT THE LANGUAGE SECTIN 10(22) IS P LAIN AND CLEAR AND THE AVAILA BILITY OF THE EXEMPTION SHOULD BE EVALUATED EACH YEAR TO FIND OUT WHETHER THE INSTITUTION EXISTED DURING THE RELEVANT YEAR SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. AFTER MEETING THE EXPENDITURE, IF ANY SURPLUS RESULTS INCIDENTALLY FROM THE ACTIVITIES LAWFULLY CARRIED ON BY THE EDUCATIONAL INSTITUTION, IT WILL NOT CEASE TO BE ONE EXISTING SOLELY FOR EDUCATIONAL PURPOSE, SINCE THE OBJECT IS NOT ONE TO MAKE PROFIT. THE DECISIVE OR ACID TEST IS WHETHER ON AN OVERALL VIEW OF THE MATTER, THE OBJECT IS TO MAKE PROFIT.. 7.6. IT ALSO REFERRED TO THE OBSERVATION OF THE HONBLE SUPREME COURT IN THE CASE OF S.R.M.M. CT. M. TIRUPPANI TRUST V. CIT (1998) 230 ITR 636 WHICH HELD THAT EXPENDITURE TOWARDS PURCHASE AND CONSTRUCTION OF BUILDING WAS A VALID EXPENDITURE FOR CHARITABLE PURPOSE IS OF RELEVANCE IN THE PRESENT CASE. THE OBSERVATION OF THE HONBLE SUPREME COURT IN THE CASE OF S.R.M.M. CT. M. TIRUPPANI TRUST(SUPRA)IS AS UNDER : - IN THE PRESENT CASE THE ASSESSEE HAS APPLIED 8 LAKHS FOR CHA RITABLE PURPOSE IN INDIA BY PURCHASING A BUILDING WHICH IS TO BE UTILIZED AS A HOSPITAL. THIS INCOME, THEREFORE, IS ENTITLED TO AN EXEMPTION U/S. 11(1). I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 13 THE AOS ACTION IN DENYING CAPITAL EXPENDITURE AS APPLICATION OF INCOME IS NOT CORRECT. THE ISSUE HAS ALREADY BEEN SETTLED BY THE APEX COURT. SINCE CAPITAL EXPENDITURE WAS ALLOWED IN S.R.M.M. CT. M. TIRUPPANI TRUST(SUPRA), THE APPELLANT, IN THE PRESENT ASSESSMENT, IS ALSO ENTITLED FOR CLAIMING EXEMPTION ON THE CAPITAL EXPENDITURE. 7.6. IT IS ALSO MENTIONE D BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT IN A VERY RECENT CASE THE ALLAHABAD HIGH COURT HAS CLEARLY STATED THAT EXPENDITURE INCURRED ON CREATION OF INFRASTRUCTURE AND BUILDING ARE PERMISSIBLE EXPENDITURE UNDER SECTION 11(1)(A). THE CASE IS CIT VS. MO OL CHAND SHARBATI DEVI HOSPITAL TRUST [2010] 190 TAXMAN 338,[2010] 197 CTR 234 (ALL.). THE CRUCIAL OBSERVATIONS OF THE ALLAHABAD HIGH COURT ARE AS UNDER : ADMITTEDLY, THE ASSESSEE - TRUST WAS REGISTERED UNDER SECTION 12A. THE GENUINENESS OF ITS EXISTENCE W AS UNDISPUTED. THE OBJECT OF THE ASSESSEE - TRUST WAS PRIMARILY TO RUN THE HOSPITAL, NURSING HOME, ETC., FOR MEDICAL AID TO THE GENERAL PUBLIC. SUCH OBJECT FELL WITHIN THE PURVIEW OF CHARITABLE PURPOSES DEFINED UNDER SECTION 2(15). CONSTRUCTION OF THE BUILDI NG FOR RUNNING THE HOSPITAL OR DISPENSARY WAS THE BASIC NECESSITY. WITHOUT THE BUILDING, HOSPITAL COLD NOT RUN AND THE MEDICAL FACILITY COLD NOT BE PROVIDED TO THE PUBLIC AT LARGE. THEREFORE, ANY EXPENDITURE INCURRED FOR CHARITABLE PURPOSES. FOR THE CONSTR UCTION OF THE BUILDING IF THE LAND WAS TAKEN ON LEASE FROM PMT SOCIETY ON WHICH HOSPITAL WAS CONSTRUCTED AND WAS BEING RUN, IT COULD NOT BE SAID THAT THE AMOUNT INCURRED ON THE CONSTRUCTION OF THE HOSPITAL BUILDING ON THE LAND TAKEN ON LEASE FROM PMT SOCIE TY WAS NOT FOR CHARITABLE PURPOSES. THE OBJECT OF THE PMT SOCIETY WAS WHOLLY IRRELEVANT TO JUDGE THE OBJECT OF THE ASSESSEE. HOWEVER, THE FACT WAS THAT THE OBJECT OF PMT SOCIETY HAD ALSO BEEN TREATED AS CHARITABLE OBJECT BY THE APPELLATE AUTHORITY WHICH WA S VALID TILL RELEVANT DATE. THEREFORE, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1985 - 86 WAS ENTITLED TO EXEMPTION UNDER SECTION TO EXEMPTION UNDER SECTION 11. I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 14 7.7. AS REGARD SYSTEMATIC PROFIT AND CAPITAL EX PENDITURE THE AOS RELIANCE WAS PRIMARILY IN THE CASE OF CIT VS. QUEENS EDUCATIONAL SOCIETY [2009] 177 TAXMAN 326 (UTARAKHAND). THE RELEVANT PORTION OF THE SAID ORDER IS AS UNDER : THE LAW IS WELL SETTLED THAT IF THE PROFIT IS PROVED BY AN EDUCATIONAL SOCI ETY THEN THAT WILL BE INCOME OF THE SOCIETY. IN THE INSTANT CASE, THE SURPLUS AMOUNT REMAINED IN THE ACCOUNT BOOKS OF THE ASSESSEE - SOCIETY AFTER MEETING ALL THE EXPENSES INCURRED TOWARDS IMPARTING THE EDUCATION. [PARA 8]. INVESTMENT IN THE FIXED ASSETS LIK E FURNITURE AND BUILDINGS WERE THE PROPERTIES OF THE ASSESSEE AND MIGHT BE CONNECTED WITH THE IMPARTING OF EDUCATION, BUT THE SAME HAD BEEN CONSTRUCTED AND PURCHASED OUT OF INCOME FORM IMPARTING THE EDUCATION WITH A VIEW OF EXPAND THE INSTITUTION AND TO E ARN MORE INCOME. [PARA10] IT WAS SUBMITTED THAT THE DECISION OF QUEENS CASE (SUPRA) WAS CONSIDERED IN THE MORE RECENT CASE OF PINERGROVE INTERNATIONAL CHARITBALE TRUST VS. UNION OF INDIA [2010] 188 TAXMAN 402 (PUNJ. & HAR.) BY THE HONBLE HIGH COURT OF PUNJAB & HARAYANA. WHILE QUEENS EDUCATIONAL SOCIETY DECISION IS ON 10(23C)(IIIAD), NO SURPLUS/PROFIT ETC. ARE STIPULATED. THE ONLY STIPULATION IS ANNUAL RECEIPT NOT TO EXCEED 1 CRORE. WHEREAS IN 10(23C)(VI), THE REQUIREMENT IS AS PER SECT ION 11 AND THE DECISION OF THE P INEGROVE INTERNATIONAL CHARITABLE TRUST CASE IS MORE APPLICABLE TO THE APPELLANTS CASE. IN PINEGROVE OF INTERNATIONAL CHARITABLE TRUST (SUPRA) IT WAS CLEARLY HELD AS UNDER : - THE CAPITAL EXPENDITURE HAD TO BE DEDUCTED FROM THE GROSS TOTAL INCOME OF THE EDUCATIONAL INSTITUTE LIKE THE ASSESSEE SOCIETY AND THE CCIT HAD COMMITTED A GRAVE ERROR, IN LAW, BY REFUSING TO DO SO. THE VIEW OF THE CCIT WAS CONTRARY TO THE THIRD PROVISO TE SECTION 10(23C). [PARA 8.1] I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 15 7.8. FURTHER IT WAS MENTIONED THAT THE DETAILED REASONS HAVE BEEN GIVEN IN PARA 8.8 OF THE SAID JUDGMENT FOR THE COURT NOT TO ACCEPT THE DECISION OF UTTRAKHAND IN THE CASE OF QUEENS CASE (SUPRA) AND THE SAME IS AS UNDER : - WE HAVE NOT BEEN ABLE TO PERSUADE OURSELVES TO ACCEPT THE VIEW EXPRESSED BY THE DIVISION BENCH OF THE UTTRAKHAND HIGH COURT IN THE CASE OF QUEENS EDUCATIONAL SOCIETY (SUPRA). THERE ARE VARIETY OF REASONS TO SUPPORT OUR OPINION. FIRST LY, THE SCOPE OF THE THIRD PROVISO WAS NOT UNDER CONSIDERATION, INAS MUCH AS, THE CASE BEFORE THE UTTRAKHAND HIGH COURT PERTAINED TO SECTION 10(23C)(IIIAD) OF THE ACT. THE THIRD PROVISO TO SECTION 10(23C)(VI) IS NOT APPLICABLE TO THE CASES FALLING WITHIN THE PURVIEW OF SECTION 10(23C)(IIIAD). SECONDLY, THE JUDGMENT RENDERED BY THE UTTRAKHAND HIGH COURT RUNS CONTRARY TO THE PROVISIONS OF SECTION 10(23C)(VI) OF THE ACT INCLUDING THE PROVISOS THEREUNDER. SECTION 10(23C)(VI) OF THE ACT IS EQUIVALENT TO THE PR OVISIONS OF SECTION 10(22) EXISTING EARLIER, WHICH WERE INTRODUCED WITH EFFECT FROM 1 - 4 - 1999 AND IT IGNORES THE SPEECH OF THE FINANCE MINISTER MADE BEFORE THE INTRODUCTION OF THE SAID PROVISIONS, NAMELY, SECTIN 10(23C) OF THE ACT[SEE OBSERVATIONS IN AMERIC AN HOTEL & LODGING ASSOCIATION, EDUCATIONAL INSTITUTES CASE (SUPRA)]. THIRDLY, THE UTTRAKHAND HIGH COURT HAS NOT APPRECIATED CORRECTLY THE RATIO OF THE JUDGMENT INCLUDING THE JUDGMENT WHICH HAD BEEN RENDERED BY HONBLE SUPREME COURT IN THE CASE OF CHILDR EN BOOK TRUST(SUPRA), IT LOST SIGHT OF THE AMENDMENT WHICH HAD BEEN CARRIED OUT WITH EFFECT FROM 1 - 4 - 1999 LEADING TO THE INTRODUCTION OF THE PROVISIONS OF SECTION 10(23C) OF THE ACT. LASTLY, THAT VIEW IS NOT CONSISTENT WITH THE LAW LAID DOWN BY THE HONBL E SUPREME COURT IN AMERICAN HOTEL & LODGING ASSOCIATION, EDUCATIONAL INSTITUTE (SUPRA). THE RESPONDENT FURTHER SUBMITTED THAT THE ISSUE AGAIN CAME UP RECENTLY BEFORE THE MUMBAI HIGH COURT IN THE CASE OF VANITA VISHRAM TRUST VS. CCIT [2010] 192 TAXMAN 38 9 (BOM). IN THIS CASE, THE HONBLE MUMBAI HIGH COURT HAS ALSO CONSIDERED THE DECISION OF THE UTTRAKHAND HIGH COURT IN QUEENS EDUCATIONAL SOCIETYS CASE AND HAS COME TO A CONCLUSION THAT VIEWS EXPRESSED BY THE UTTRAKHAND HIGH COURT ARE NOT ACCEPTABLE. THE H ONBLE I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 16 BOMBAY HIGH COURT HAS DIRECTED THE CCIT TO GRANT APPROVAL TO THE TRUST U/S.10(23C)(VI) OF THE ACT. 7.9. AS REGARD THE ASSESSING OFFICER S STATEMENT IN PARA - 12 AND 13 OF THE ASSESSMENT ORDER THAT THE APPELLANT IS COLLECTING FEES WHICH ARE EXCESSIVE. IN THIS REGARD THE ASSESSEE STATED THAT IT CAN COLLECT FEES FOR UPKEEP AND MAINTENANCE OF THE CAPITAL COST OF INSTITUTION. IN THIS CONTEXT RELIANCE CAN BE PLACED IN THE SUPREME COURT RULING IN T.M.A. PAI FOUNDATION VS. STATE OF KARNATAKA [2002] 8 SCC 48 1, AND SUBSEQUENT DECISION OF T HE APEX COURT IN THE CASE OF ISLAMIC ACADEMIC OF EDUCATION VS. STATE OF KARNATAKA [14.08.2003], P.A. INAMDAR AND ORS. VS. STATE OF MAHARASHTRA (12.08.2006). THE ASSESSING OFFICER HAS NOT BROUGHT OUT ANY MATERIAL TO SUGGEST THAT FEE STRUCTURE AND MISC. FEES CHARGED BY THE ASSESSEE ARE IN ANY WAY EXCESSIVE. IN FACT AT PAGE - 7 OF THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS GIVEN CERTIFICATE TO THE ASSESSEE HOW CORPORATE AND INDUSTRIAL GIANTS MAKE A BEELINE FOR THE KIITS STUDENTS IN THE FOLLOWING LANGUAGE. KIIT IS PROVIDING WORLD CLASS INFRASTRUCTURE AND BEST FACILITIES IN ITS CAMPUS. IT ADOPTS ALL THE NEW EMERGING TECHNOLOGIES COMING FROM TIME TO TIME TO EXPOSE ITS STUDENTS TO FIRST CHANGING WORLD OR TECHNOLOGY. IT NOT ONLY ADD S TO THEIR TECHNICAL AWARENESS AND KNOWLEDGE BUT ALSO MAKES THEM DIFFERENT FROM OTHERS. AS A RESULT OF WHICH, ALL THE CORPORATE AND INDUSTRIAL GIANTS MAKE A BEE LINE FOR THE KIIT STUDENTS. FOR THE CONVENIENCE OF THE STUDENTS, THE INSTITUTE IS PROVIDING ENT IRE TEXT BOOKS AND NOTE BOOKS, BLAZSER, DRAWING INSTRUMENT BOX, DRAFTER, AND IMB/HP WIRELESS P4 LAPTOP (CENTRINO MODEL) ETC TO ALL THE STUDENTS. SO A STUDENT NEED NOT HAVE TO PURCHASE A SINGLE STUDY MATERIAL DURING THIS ENTIRE STUDY PERIOD AT KIIT. ALL THO SE ARTICLES WILL BE STUDENTS OWN ASSET. THEY NEED NOT HAVE TO RETURN THOSE ARTICLES AFTER COMPLETION OF SEMESTER/COURSE. AS IT IS A SELF FINANCING INSTITUTE MISCELLANEOUS FEES OF 45,000.00 IS CHARGES FROM THE STUDENTS ANNUALLY TOWARDS MAINTENANCE OF THESE FACILITIES INCLUDING HI - TECH FACILITIES, UTILITY CHARGES, COST I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 17 OF ABOVE MENTIONED ARTICLES (LAPTOP, BOOKS, NOTEBOOKS DRAWING AND INSTRUMENT BOX, DRAFTER, BLAZER ETC.), IDENTITY CARD, LIBRARY CARD, ANNUAL MAINTENANCE COST OF LAPTOP, INSURANCE OF THE LAPTOP FOR FOUR YEARS, HEALTH INSURANCE UP TO LIMIT OF 50,000.00 ETC. THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY STATED THAT SINCE NO EVIDENCE HAS BEEN ADDUCED BY THE ASSESSING OFFICER TO PROVE THAT FEES CHARGED ARE ANYWAY EXCESSIVE OR UNREASONABLE COMPARED TO FACILITIES OFFERED, IT CANNOT BE SAID THAT THE APPELLANT IS RUNNING A BUSINESS ESTABLISHMENT. IN FACT THE APPELLANT IS A DEEMED UNIVERSITY UNDER THE REGULATORY AUTHORITY O F UGC MONITORS AND APPROVES THE APPELLANTS ACTIVITIES. NO EVIDENCE IS AVAILABLE ON RECORD TO SUGGEST THAT UGC AT ANY POINT OF TIME HAS FOUND ANYTHING ADVERSE IN THE APPELLANTS ACTIVITIES. SO LONG AS THE APPELLANT IS RECOGNIZED AS A DEEMED UNIVERSITY UNDE R UGC AND SO LONG AS REGISTRATION U/S. 12A IS VALID, THERE IS NO MERIT IN THE ASSESSING OFFICER S ACTION IN DENYING BENEFIT U/S. 11 OF THE ACT. 8. ON THE FACTS AND CIRCUMSTANCES AS WELL AS VARIOUS CASE LAWS, WHICH HAVE BEEN REFERRED TO ABOVE AND ALSO BY TH E LEARNED CIT(A) IN HIS ORDER, WE HAVE NO HESITATION TO UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(A) IT BEING A WELL REASONED ORDER ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN HOLDING THAT THERE IS NO MERIT IN THE ASSESSING OFFICERS ACTION IN DENYING BENEFIT U/S.11 OF THE ACT. GROUND NO.1 RAISED BY THE REVENUE IS THEREFORE DISMISSED. 9. AS REGARDS GROUND NO.2 THAT THE CIT (A) IS NOT JUSTIFIED IN ALLOWING THE EXPENDITURE CLAIMED BY THE ASSESSEE ON ACCOUNT OF DONATION AND ADVANCE WRITTEN OFF , WE FIND TH AT THE ASSESSING OFFICER IN HIS ORDER IS OF THE VIEW THAT KRCT FALLS UNDER THE FOURTH LIMB OF THE DEFINITION OF CHARITABLE PURPOSE AND ITS IS CATERING TO GENERAL PUBLIC UTILITY. THE LD AO HAS ALSO ALLEGED I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 18 VIOLATION OF SECTION 13(1)(C) OF THE ACT IN RESPEC T OF DONATIONS. THE ASSESSING OFFICER ALSO MENTIONED THAT FULL DETAILS OF DONATION AND NOT GIVEN AND ANY EXPENDITURE WHICH IS INEXTRICABLY LINKED WITH EARNING OF INCOME IS ALLOWABLE. DONATION IF ALLOWABLE ONLY IF THE CLAIM IS US/. 80G OF THE ACT WHICH IS NOT IN THIS CASE. ACCORDINGLY HE DISALLOWED THE ENTIRE DONATION OF 6,04,13,594. ON APPEAL, THE LEARNED CIT(A) HAS ALLOWED THE SAID EXPENDITURE CLAIMED BY THE ASSESSEE ON ACCOUNT OF DONATION AND ADVANCE WRITTEN OFF. 9.2. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS RAISED BEFORE THE LEARNED CIT(A) B ASED ON WHICH THE LEARNED CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAS BEEN CONTRIBUTING TO THE KRCT FROM ITS INCEPTION AND ALSO DONATING MONEY FOR OTHER CHARITABLE ACTIVITIES. THERE IS NO CHANGE IN THE FACTS FOR THIS YEAR . THEREFORE THE RULE OF CONSISTENCY NEED TO BE APPLIED AS DISCUSSED IN DETAIL EARLIER. WITHOUT ANY VALID BASIS IT IS NOT CORRECT ON AOS PART TO SUDDENLY HOLD THAT DONATIONS ARE NOT CHARITY. IT WAS FURTHER CONTENTED THAT NO SPECIFIC DEFECT IS POINTED OUT REGARDING THE DONATION AND ENTIRE AMOUNT WAS DISALLOWED WHICH IS HIGHLY IMPROPER. IT IS TO BE NOTED THAT THE AO HAS FOUND ANY OF THE DONATIONS MEANT FOR PERSONAL BENEFIT OF SPECIFIED PERSONS OR NOT MADE AT ALL. THE ENTIRE ADDITION WAS BASED ON SURMISES AN D CONJECTURES AND WITH IMPROPER APPRECIATION OF THE LAW. THE ASSESSEE ALSO SUBMITTED THAT IT IS TO BE EXAMINED WHETHER DONATIONS MADE BY THE APPELLANT ARE APPLICATION OF INCOME FOR CHARITABLE PURPOSES WITHIN THE MEANING OF SECTION 11. IF THE DONATIONS ARE APPLICATION OF INCOME, THEN OBVIOUSLY ASSESSING OFFICER S ACTION WILL HAVE NO BASIS. SIMILAR CASE DECIDED BY THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. HPS SCHOOL WELFARE FOUNDATION [2010] 43 DTR (DEL) 67 IN WHICH AN WORSE CASE WAS DECIDED IN F AVOUR OF THE ASSESSEE WITH THE FOLLOWING RULING OF THE HONBLE HIGH COURT; I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 19 THERE WAS ABSOLUTELY NO MATERIAL BEFORE THE AO TO SHOW THAT THE FUNDS GIVEN TO THESE NGOS/INSTITUTIONS WERE USED FOR PERSONAL BENEFIT OF HCL PEROT SYSTEM OR ANY OF ITS DIRECTORS. THEREFORE, IT CANNOT BE SAID THAT THE FINDING OF FACT RECORDED BY CIT(A) AND TRIBUNAL UPHOLDING GENUINENESS OF THE DONATIONS IS PERVERSE, CALLING FOR INTERVENTION BY THIS COURT. NO CONTRAVENTION OF S. 13 OF IT ACT HAVING BEEN MADE OUT AND THE GENUINENESS O F THE DONATIONS HAVING IT ACT HAVING BEEN MADE OUT AND THE GENUINENESS OF THE DONATIONS HAVING BEEN ACCEPTED BY CIT(A) AS WELL AS BY THE TRIBUNAL, THERE IS NO GROUND FOR INTERFERENCE BY THIS COURT UNDER S. 260A OF IT ACT. NO SUBSTANTIAL QUESTION OF LAW ARI SES FOR OUR CONSIDERATION IN THIS CASE. THE APPEAL AS WELL AS CM NO. 3907 OF 2010 FOR CONDONATION OF DELAY ARE HEREBY DISMISSED . IT WAS ALSO ARGUED THAT THIS RULING IS CLEARLY APPLICABLE TO THE RESPONDENT. IN THE ABSENCE OF ANYTHING ADVERSE IN THE DONATI ONS FOUND IN THE RECORD, THE DONATIONS PER SE CANNOT BE TREATED AS NON CHARITABLE ACTIVITY AS DECIDED IN THE CASE OF CIT VS. HPS SCHOOL WELFARE FOUNDATION [2010] 43 DTR (DEL) 67. IN VIEW OF THIS, ASSESSING OFFICER S ACTION IN ADDING THE DONATION IS NOT SUS TAINABLE. FURTHER IT WAS SUBMITTED THAT T HE ASSESSING OFFICER HAS ALSO VIOLATED INSTRUCTION NO. 1132 DT. 05.01.1978 ISSUED BY THE CBDT IN WHICH IT CLEARLY STATES THAT AMOUNTS OF DONATION MADE TO OTHER CHARITABLE TRUST ARE ELIGIBLE FOR EXEMPTION U/S. 11 OF THE ACT. THE RELEVANT PORTION OF THE INSTRUCTION IS AS UNDER: - A QUESTION HAS BEEN RAISED REGARDING THE AVAILABILITY OF EXEMPTION IN THE HANDS OF CHARITABLE TRUSTS OF AMOUNTS PAID AS DONATION TO OTHER CHARITABLE TRUSTS. THE ISSUE HAS BEEN CONSIDERED BY THE BOARD AND IT HAS BEEN DECIDED THAT AS THE LAW STANDS AT PRESENT, THE PAYMENT OF A SUM BY ONE CHARITABLE TRUST TO ANOTHER FOR UTILIZATION BY THE DONEE TRUST TOWARDS ITS CHARITABLE OBJECTS IS PROPER APPLICATION OF INCOME FOR CHARITABLE PURPOSE IN THE HAN DS OF THE DONEE TRUST; AND THE DONOR TRUST WILL NOT LOSE EXEMPTION UNDER S. 11 OF THE IT ACT, 1961, MERELY I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 20 BECAUSE THE DONEE TRUST DID NOT SPENT THE DONATION DURING THE YEAR OF RECEIPT ITSELF. THE RESPONDENT FURTHER SUBMITTED THAT THE DECISION IN THE CASE OF CIT VS. MATHSEVA TRUST [2000] 158 CTR (MAD) 433 IN ITS FAVOUR WHEREIN IT WAS DECIDED THAT DONATION TO ANOTHER CHARITABLE TRUST WOULD BE APPLICABLE OF INCOME FOR CHARITABLE PURPOSES SATISFYING THE REQUIREMENT OF SECTION 11 OF THE ACT. 9.3. THE ASSESSIN G OFFICER DISALLOWED ADVANCES WRITTEN OFF OF 3,96,842 WITH A CONTENTION THAT NO CORPORATIVE FACTS ARE AVAILABILITY. IN THIS REGARD THE RESPONDENT STATED THAT OUT OF THE ADVANCES GIVEN A SUM OF 3,96,842 WAS WRITTEN OFF BEING NON RECOVERABLE. DURING THE ASSESSMENT PROCEEDINGS THE APPELLANT HAS GIVE N THE DET AILS OF SUCH ADVANCES TO THE ASSESSING OFFICER. THE ASSESSING OFFICER NEVER ASKED THE APPELLANT TO SUBMIT ANY CORROBORATIVE FACTS. IT WAS SUBMITTED BY THE ASSESSEE THAT WHEN PROVISION FOR EXPENSES BECOME NON - PAYABLE THE APPELLANT CREDITS THE SAME TO THE INCOME AND EXPENDITURE ACCOUNT AND LIKEWISE WHEN THE ADVANCES FOR EXPENSES BECOME NON - RECOVERABLE, IT IS WRITTEN OFF IN THE BOOKS OF ACCOUNTS. THERE IS NOTHING BEING UNUSUAL WHICH WOULD MERIT ADDITION BY THE AO. IT WAS ALSO SUBMITTED THAT EVEN IN THE CASE OF BUSINESS CONCERNS, THE BAD DEBTS WRITTEN OFF IS ALLOWED, AN IN THOSE CASES THE ASSESSEES NEED NOT ESTABLISH THAT THE DEBT IS IRRECOVERABLE AS DECIDED BY THE HONBLE APEX COURT IN THE CASE OF T.R.F. LIMITED V. CIT [2010] 230 CTR (SC) 14. 10. CO NSIDERING ALL THESE FACTS AND SUBMISSIONS AS WELL AS THE CASE LAWS RELIED ON BY THE ASSESSEE, WHEN THE LEARNED CIT(A), IN OUR CONSIDERED VIEW, IS JUSTIFIED IN ALLOWING THE EXPENDITURE CLAIMED BY THE ASSESSEE ON ACCOUNT OF I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 21 DONATION AND ADVANCE WRITTEN OFF. WE UPHOLD THE SAME AND DISMISS GROUND NO.2 OF THE REVENUE. 11. AS REGARDS GROUND NO.3 RAISED BY THE REVENUE INSOFAR AS THE ALLOWANCE OF THE EXPENDITURE CLAIMED UNDER THE HEAD PR & I BUILDING, THE ASSESSING OFFICER WAS OF THE VIEW THAT A CHARITABLE ORGANIZ ATION SPENDING HUGE AMOUNT OF MONEY AND CLAIMING AS APPLICATION ON STAR CATEGORIES HOTELS . ACCORDINGLY HE DISALLOWED 20% OF TOTAL PR AND IMAGE BUILDING EXPENSES AMOUNTING TO 4,58,617 , WHICH ON APPEAL, THE LEARNED CIT(A) HAS ALLOWED. 11.1. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS RAISED BEFORE THE LEARNED CIT(A) THAT SUCH CONCLUSION THE AO IS NOTHING BUT NON APPLICATION OF MIND, BECAUSE IT HAD PROD UCED THE BILLS AND VOUCHERS, BOOKS OF ACCOUNTS AND OTHER DOCUMENTARY EVIDENCE IN SUPPORT OF THE CLAIM. THE AO HAS NOT GATHERED ANY EVIDENCE TO THE EFFECT THAT THE EXPENDITURE HAS NOT BEEN INCURRED BY THE APPELLANT FOR THE PURPOSE OF ITS OBJECT. T HE ACCOUNT S OF APPELLANT WERE DULY AUDITED AS A CHARITABLE ORGANIZATION AND THE ACCOUNTANT HAS NOT FOUND ANY DEFECT IN THE ACCOUNTS NOR HAS HE POINTED OUT ANY MONEY NOT INCURRED FOR CHARITABLE PURPOSES. THE APPELLANT RELIED ON THE DECISION OF THE ITAT, JAYPUR IN THE CASE OF RAJ ENTERPRISES VS. ITO, WHEREIN IT IS HELD THAT AD HOC DISALLOWANCE WITHOUT ANY COGENT REASON ARE NOT SUSTAINABLE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER ARGUED THAT WHICH ARE THE ITEMS NOT APPLIED FOR THE PURPOSES OF CHARITY HAS NOT BEEN S PELT OUT IN THE ASSESSMENT ORDER. IN THE ABSENCE OF SPECIFIC DEFECTS DETECTED IN ANY CLAIM AND VALID EVIDENCE TO DENY THE CLAIM, THE VERACITY OF THE CLAIM CANNOT BE QUESTIONED; ESPECIALLY WHEN THE ACCOUNTS HAVE BEEN AUDITED AND THE ACCOUNTANT HAS CERTIFIED THAT THE EXPENSES HAVE BEEN INCURRED FOR CHARITABLE PURPOSES. THE ASSESSING OFFICERS OBSERVATION IS GENERAL AND IS BASED ON SURMISES AND CONJECTURE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 22 SUBMITTED THAT A REGISTERED TRUST U/S. 12AA OF THE ACT. AS P ER THE PROVISION OF THE ACT THE EXPENDITURE WHICH VIOLATES THE PROVISIONS OF SECTION 13(1)(C)/13(1)(D) OF THE ACT ARE LIABLE TO BE TAXED AT THE MAXIMUM MARGINAL RATE. THE AO HAS NOT POINTED OUT ANY SUCH VIOLATION IN THE ASSESSMENT ORDER. W HILE DOING THE AS SESSMENT UNDER THE PROVISIONS OF SECTION 143(3) OF THE ACT, THE ACT, THE AO HAS TO VERIFY THE EXPENDITURE CLAIMED BY THE APPELLANT IN ITS FINAL ACCOUNTS AND IF THE AO FOUND THAT ANY EXPENDITURE WHICH IS NOT INCURRED FOR THE ACTIVITIES AS PER THE OBJECTS OF THE TRUST DEED THEN HE HAS TO DISALLOW THE SPECIFIC EXPENDITURE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSING OFFICER IS NOT EMPOWERED TO ESTIMATE THE EXPENDITURE WHILE COMPLETING THE ASSESSMENT U/S. 143(3) OF THE ACT. 11.2. ALL THESE SUBMISSIONS HAD BEEN MADE BEFORE THE LEARNED CIT(A), WHO AFTER CONSIDERING THE SAME HAS ALLOWED THE EXPENDITURE CLAIMED UNDER THE HEAD PR & IMAGE BUILDING. THE LEARNED CIT(A) HAS DISCUSSED THE ISSUE IN DETAIL IN HIS ORDER AND HAS COME TO A RIGHT CONCLUSION IN DELETING THE DISALLOWANCE OF EXPENDITURE CLAIMED IN THIS REGARD. THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THIS BEING A REASONED ONE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE SAME. WE UPHOLD THE SAME AND DISMISS GROUND NO.3 12. AS RE GARDS GROUND NO.4 IN ALLOWING PRIOR PERIOD EXPENDITURE RELATING TO EARLIER YEARS, THE ASSESSING OFFICER WAS OF THE VIEW THAT SUCH PRIOR PERIOD EXPENSES CAN ONLY BE ALLOWED IF SUCH EXPENSES CRYSTALLIZED DURING F.Y. 2006 - 07. IN ABSENCE OF ANY SUCH INFORMATIO N HE DISALLOWED THE PRIOR PERIOD EXPENSES OF 21,06,884 CLAIMED BY THE ASSESSEE . THE LEARNED CIT(A) HAS ALLOWED SUCH CLAIM OF THE ASSESSEE. 12.1. THE PRIOR PERIOD EXPENSES ARE THE EXPENSES RELATING TO EARLIER YEARS WHICH ARE OBVIOUSLY NOT DEBITED IN THE FINAL ACCOUNTS OF THOSE YEARS BUT ARE DEBITED DURING THE CURRENT YEAR. THE LEARNED CIT(A) WAS OF THE VIEW THAT IN I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 23 THE CASE OF A CHARITABLE TRUST EXPENSES ARE TO BE ALLOWED IF THEY ARE APPLIED FOR THE PURPOSES OF CHARITY. EVEN EARLIER YEARS DEFICIT NEEDS TO BE ALLOWED IN THE CURRENT YEAR. WE DO FIND FO RCE IN THE VIEW EXPRESSED BY THE LEARNED CIT(A) AND THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN THIS REGARD IN ALLOWING THE PRIOR PERIOD EXPENSES OF 21,06,884. GROUND NO.4 RAISED BY THE ASSESSEE IS THEREFORE DISMISSED. 13. AS REGARDS GROUND NO.5 INSOFAR AS THE LEARNED CIT (A) IS NOT JUSTIFIED IN ALLOWING EXPENSES TOWARDS RESEARCH & DEVELOPMENT ON THE BASIS OF ADDITIONAL DETAILS SUBMITTED BEFORE HIM WITHOUT ALLOWING OPPOR TUNITY TO THE ASSESSING OFFICER, WE FIND THAT THE ASSESSING OFFICER HAS DISALLOWED THE EXPENSES IN RESPECT OF RESEARCH DEVELOPMENT EXPENSES INCURRED BY THE KCSD, AN UNIT OF THE ASSESSEE TRUST FOR 14,42,068. HOWEVER, CONSIDERING SUCH DETAILS, THE LEARNED C IT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE. 13.1. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE DETAILS OF THE ABOVE EXPENDITURE WERE SUBMITTED BEFORE THE ASSESSING OFFICER EVIDENCE OF WHICH WAS SUBMITTED BEFORE THE CIT (A) HENCE THE QUESTION OF ADDITIONAL EVIDENCE DOES NOT ARISE. MOREOVER THE APPELLANT TRUST HAS BEEN AUDITED AND THE APPELLANT HAS FILED FORM NO. 10B BEFORE THE ASSESSING OFFICER . THE AUDITORS HAVE NOT POINTED OUT ANY EXPENDITURE FOR NON CHARITABLE PURPOSES. THEREFORE, THE SUMMARY DISALLOWANCE WITHOUT ANY VALID REASON OR LOGIC, MADE BY THE AO IS NOT SUSTAINABLE. THE LEARNED CIT - DR COULD BRING ANY MATERIAL ON RECORD BEFORE US NEGATING THE ABOVE SUBMISSIONS OF THE ASSESSEE. THEREFORE, WHEN THE LEARNED CIT(A) ALLOWED THE CLAIM OF THE A SSESSEE AFTER VERIFICATION OF DETAILS, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN THIS REGARD. WE UPHOLD THE SAME AND DISMISS GROUNDNO.5. I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 24 14. TO CONCLUDE, WE DO FIND THAT THE LEARNED CIT(A) HAS ADDRESSED ALL THE CONTENTIONS OF THE ASSESSING OFFICER IN FULL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES AS HAVE BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER OF WHICH THE LEARNED CIT(A) HAS DEALT WITH EACH ISSUE, WHICH IS NOW DISPUTED BY THE REVENUE BEFORE US, KEEPING IN VIEW TH E TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS WERE AVAILABLE TO THE ASSESSING OFFICER WHICH ON THE BASIS OF LEARNED COUNSELS SUBMISSION AS OF NOW STANDS RATIFIED. IN THIS VIEW OF THE MATTER, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE L EARNED CIT(A) BY DISMISSING THE APPEAL OF THE REVENUE FINDING NO MERITS IN THE GROUNDS RAISED BY THEM. 15. SINCE, WE HAVE DISMISSED THE APPEAL OF THE REVENUE AND UPHELD THE IMPUGNED ORDER OF THE LEARNED CIT(A), THE CROSS OBJECTION FILED BY THE ASSESSEE SUP PORTING THE SAME IS DISPOSED OF ACCORDINGLY. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISPOSED OF ACCORDINGLY. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 21.12.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY, 383/384, KIIT CAMPUS, PATIA, BHUBANESWAR. 2 / THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 170/CTK/2012 C.O.NO.20/CTK/2012 25 / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 18.12.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19.12.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEM BER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.12.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..