Indian Institute of Foreign Trade, New Delhi V. DCIT (E), New Delhi

ITA 1763/DEL/2015

• Counselvise Citation: 176320114 RSA 2015
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Assessment Year: 2011-2012
• Appeal Filed On: 27-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Keywords: Charitable institution
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 1 , NEW DELHI BEFORE SH. N. K. SAINI, AM ITA NO. 1763 /DEL/201 5 : ASSTT. YEAR : 2011 - 1 2 IN DIAN INSTITUTE OF FOREIGN TRADE B - 21, QUTUB INSTITUTIONAL AREA, MEHRAULI, NEW DELHI - 110016 VS DEPUTY COMMISSIONER OF INCOME TAX(E), CIRCLE - 1 (1), NEW DEL HI (APPELLANT) (RESPONDENT) PAN NO. A AATI0438E ASSESSEE BY : SMT. LALITA KRISHNAMURTHY, CA REVENUE BY : SH. K. K. JAISWAL , SR. DR DATE OF HEARING : 18 .0 8 .2015 DAT E OF PRONOUNCEMENT : 16 .09 .2015 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 17.02.2015 OF LD. CIT (A) - 40 , NEW DELHI . 2 . FOLLOWING GROUND HAVE BEEN RAISED IN THIS APPEAL: 1. THAT THE PROVISIONS OF SECTION 11 OF TH E INCOME TAX ACT AS CONSIDERED BY THE ASSESSING OFFICER/CIT(APPEALS) IS NOT APPLICABLE AND ACCORDINGLY THE INFERENCE DRAWN BY THE AUTHORITIES BELOW BASED ON SECTION 11 IS ARBITRARY, UNJUST, BAD IN LAW AND DESERVES TO BE EXPUNGED. 2. THAT THE OBSERVATIO N OF THE CIT(APPEALS) THAT THE EXPENDITURE IN TANZANIA FOR THE BOARDING AND LODGING ETC. WHICH MAY BE FOR PERSONAL TRIP OF THE FACULTY MEMBERS IN THE GARB OF OFFICIAL TOUR WHICH CANNOT BE SAID TO BE APPLICATION OF THE FUND FOR CHARITABLE PURPOSES IN INDIA IS BASED ON SURMISE, CONJECTURE, ITA NO.1763 /DEL /2015 INDIAN INSTITUTE OF FOREIGN TRADE 2 PRESUMPTION AND CONTRARY TO THE FACTS AND HISTORY OF THE CASE AND ACCORDINGLY THE ASSESSMENT SO FRAMED BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(APPEALS) ON SUCH ILLOGICAL AND SUSPICIOUS INFERENCE IS BAD IN LAW. 3. THAT WITHOUT PREJUDICE TO GROUND NOS. 1 AND 2 ABOVE, THE ASSESSING OFFICER/CIT(APPEALS) FAILED TO APPRECIATE THAT THE EXPENSES AT TANZANIA ARE INCURRED IN RELATION TO THE IMPARTING OF EDUCATION TO THE STUDENTS BASED IN TANZANIA AND ENROLLED FOR THE MBA (I NTERNATIONAL BUSINESS) PROGRAM OF IIFT WHERE FROM THE FEES HAS ALSO BEEN RECEIVED AND ACCORDINGLY ONLY THE NET INCOME AFTER DEDUCTING THE EXPENSES SO INCURRED IN RELATION THERETO HAS TO BE SEEN, AS ACCEPTED IN EARLIER YEARS AND CONSEQUENTLY THE ASSESSMENT SO FRAMED BY THE ASSESSING OFFICER AND SUSTAINED BY CIT(APPEALS) DISALLOWING THE EXPENSES AT TANZANIA IS ARBITRARY, UNJUST AND AGAINST RULES OF CONSISTENCY. 4. THAT WITHOUT PREJUDICE TO GROUND NOS. 1 AND 2 ABOVE, THE ASSESSING OFFICER/CIT(APPEALS) BOTH HA VE ERRED IN FAILING TO CONSIDER THAT ALL THE INCOME ARISES TO THE ASSESSEE AFTER THE EXPENDITURE HAS BEEN INCURRED AND APPLIED ONLY FOR OBJECTS OF TRUST AND ACCORDINGLY THE ASSESSMENT SO FRAMED BY THE ASSESSING OFFICER AND SUSTAINED BY CIT(APPEALS) IS ARBI TRARY, UNJUST AND BAD IN LAW. 5. THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. 6. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY OF THE GROUNDS O F APPEAL AT THE TIME OF HEARING. ITA NO.1763 /DEL /2015 INDIAN INSTITUTE OF FOREIGN TRADE 3 3 . DURING THE COURSE OF HEARIN G, IT WAS THE COMMON CONTENTION OF BOTH THE PARTIES THAT THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS INVOLVED FOR THE ASSESSMENT YEAR 2010 - 11 IN ITA NO. 1639/DEL/2014 , WHICH WAS ARGUED BEFORE THIS BENCH ON 06.07.2015 . THEREFORE, T HE ORDER IN THE SAID APPEAL SHALL BE APPLICABLE FOR THIS YEAR ALSO. 4. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. A SIMILAR ISSUE HAS BEEN DECIDED VIDE ORDER OF THE EVEN DATE IN ITA NO. 1639/DEL /2014 FOR THE ASSESSMENT YEAR 2010 - 11 AND THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 10 & 11, WHICH READ AS UNDER: 10. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE IS OFFERING THE MBA COURSE ON INTERNATIONAL BUSINESS AND HAS SOME FOREIGN STUDENTS FROM TANZANIA, THE FACULTY MEMBERS WENT TO TANZANIA FOR IMPARTING EDUCATION TO THE FOREIGN STUDENTS AS SUCH THE IMPUGNED EXPENSES WERE FOR THE PURPOSE OF EDUCATION. A SIMILAR ISSUE WAS INVOLVED IN THE ASSESSMENT YEAR 2009 - 10 WHEREIN ON THE IDENTICAL FACTS, THE AO NOTED THAT THE EXPENSES WERE INCURRED BY THE FACULTY ON IMPARTING OF EDUCATION IN TANZANIA. IN THE SAID YEAR, THE AO HIMSELF ALLOW ED THE EXPENSES INCURRED BY THE ASSESSEE ON IMPARTING OF EDUCATION IN TANZANIA. HOWEVER, HE MADE THE DISALLOWANCE OF THE SURPLUS AMOUNT BY TREATING THE ACTIVITY OF THE ASSESSEE AS A BUSINESS ACTIVITY. THE AFORESAID SAID FACT HAS BEEN MENTIONED BY THE ITAT IN PARA 5 OF THE ORDER DATED 15.02.2013 IN ITA NO. 6189/DEL/2011 WHICH READ AS UNDER: ITA NO.1763 /DEL /2015 INDIAN INSTITUTE OF FOREIGN TRADE 4 5. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT GROUND OF APPEAL TAKEN BY THE REVENUE DOES NOT ARISE FROM THE FINDINGS OF THE LEARNED CI T(APPEALS). THE EXPENDITURE INCURRED BY THE ASSESSEE ON IMPARTING OF EDUCATION IN TANZANIA AMOUNTING TO RS. 25,49,719/ - HAS ALREADY BEEN ALLOWED BY THE LEARNED ASSESSING OFFICER. HE HAS ONLY TAXED THE SURPLUS BY TREATING THE ACTIVITY OF THE ASSESSEE AS A B USINESS ACTIVITY. FROM THE SUBMISSIONS EXTRACTED SUPRA, IT REVEALS THAT THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY, RATHER IT HAS IMPARTED EDUCATION ONLY. IN THAT PROCESS, IT HAS A SURPLUS AMOUNT OVER THE EXPENDITURE. THE ASSESSEE IS ENJOYING R EGISTRATION UNDER SEC. 12A(A) AS WELL AS BENEFIT UNDER SEC. 10(23C)(IV) OF THE ACT. LEARNED ASSESSING OFFICER HAS TO VISUALIZE, WHETHER THE GROSS RECEIPTS EARNED BY IT HAVE BEEN APPLIED FOR THE OBJECTS OF THE ASSESSEE AS PER SEC. 11 OF THE ACT OR NOT? IN T HAT EXERCISE, LEARNED ASSESSING OFFICER WAS SATISFIED THAT THE APPLICATION OF INCOME ON THE OBJECTS OF THE ASSESSEE WITHIN THE INDIA IS MORE THAN 85% AS DISCERNIBLE IN THE FINDINGS OF THE ASSESSING OFFICER EXTRACTED SUPRA. WE FAIL TO UNDERSTAND UNDER WHAT PROVISIONS HE HAS CARVED OUT THE TAXABILITY OF RS. 18,84,420. THE SURPLUS AMOUNT COLLECTED BY THE ASSESSEE FROM TANZANIA IS IN FURTHERANCE OF ITS OBJECTS, IT HAS NOT APPLIED ITS RESOURCES ON THE STUDENTS OF A FOREIGN COUNTRY. IT HAS JUST EARNED SOME AMOUNT FROM THAT ACTIVITY. IN THE LAST THREE YEARS, THIS ACT OF THE ASSESSEE WAS TREATED AS A CHARITABLE ONE. 11. FROM THE ABOVE NARRATED FACTS AND DISCUSSION MADE IN THE FORMER PART OF THIS ORDER, IT IS CLEAR THAT A SIMILAR DISALLOWANCE WAS DELETED BY THE LD . CIT(A) FOR THE ASSESSMENT YEARS 2006 - 07 TO 2008 - 09, NOTHING IS BROUGHT ON RECORD THAT THE SAID ORDERS WERE CHALLENGED BY THE DEPARTMENT. MOREOVER, IN THE ASSESSMENT YEAR 2009 - 10, THE AO HIMSELF HAD ACCEPTED THE CLAIM OF THE ASSESSEE WHICH IS CLEAR FROM T HE AFORESAID REFERRED TO PARA 5 OF THE ORDER DATED 15.02.2013 PASSED BY THE ITAT IN ITA NO.1763 /DEL /2015 INDIAN INSTITUTE OF FOREIGN TRADE 5 ASSESSEE S OWN CASE. THEREFORE BY CONSIDERING THE TOTALITY OF THE FACT, I AM OF THE VIEW THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE MADE BY THE AO . ACCORDINGLY, THE SAME IS DELETED. 5. SO, RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF EVEN DATE IN ITA NO. 1639/DEL/2014 FOR THE ASSESSMENT YEAR 2010 - 11 IN ASSESSEE S OWN CASE T HE DISALLOWANCE SUSTAINED BY THE LD. CIT(A) IS DELETED. 6 . IN THE RESUL T, THE APPEAL OF THE ASSESSEE IS ALLOWED . ( ORDER PRON OUNCED IN THE COURT ON 16 /09 /2015 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DATED: 16 /09 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR