Mercedes Benz Education Academy, Pune V. Income-tax Officer,

ITA 1914/PUN/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0868 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-06-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 30-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Reopening of assessment; Wrong claim; Difference of opinion; Competent authority; Capital receipt; Benefit of exemption; Reason to believe; Change of opinion
• Section: 143(3); 142(1); 28; 2; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO S . 1913 TO 1916 /PN/20 1 3 / ASSESSMENT YEAR S : 200 2 - 0 3 TO 20 0 4 - 0 5 & 2007 - 08 MERCEDES BENZ EDUCATION ACADEMY, PLOT NO.26, RAJIV GANDHI INFOTECH PARK, MIDC PHASE I, HINJEWADI, PUNE 4110 57 . / APPELLANT PAN: A AATM 1757A VS. THE INCOME TAX OFFICER, WARD 11(1), PUNE . / RESPONDENT WARD 11(1), PUNE . / RESPONDENT / APPELLANT BY : SHRI KISHORE PHADKE / RESPOND ENT BY : S HRI B.C. MALAKAR / DATE OF HEARING : 2 1 .0 9 .201 5 / DATE OF PRONOUNCEMENT: 30 . 1 1 .2015 / / ORDER PER SUSHMA CHOWLA, JM: ALL THE APPEAL S FILED BY THE ASSESSEE ARE AGAINST SEPARATE ORDER S OF CIT (A) - I , PUNE , DATED 30 . 0 8 .2013 RELATING TO ASSESSMENT YEAR S 200 2 - 0 3, 2003 - 04, 2004 - 0 5 AND 20 0 7 - 0 8 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 14 3(3) R.W.S. 1 4 7 AND 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 2 2. ALL THE APPEALS FILED BY THE ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONS OLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS AND ISSUES IN ITA NO. 1913 /PN/201 3 TO ADJUDICATE THE ISSUES. 3. THE ASSESSEE IN ITA NO. 1913 /PN/201 3 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE LEARNED CI T (APPEALS) - I, PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING THE VALIDITY OF RE - OPENING OF THE ASSESSMENT U/S 147 R . W.S. 148 OF THE ITA , 1961 BY THE AO. THE LEARNED CIT(APPEALS) DID NOT APPRECIATE THE FACT THAT THE THE AO. THE LEARNED CIT(APPEALS) DID NOT APPRECIATE THE FACT THAT THE ASSESSMENT WAS RE - OPENED MERELY THE BASIS OF CHANGE OF OPINION I REAPPLICATION OF MIND WHEN THERE WAS NO CHANGE IN THE FACTUAL MATRIX. 2. THE LEARNED CIT (APPEALS) - I, PUNE ERRED IN LAW AND ON FACTS IN CONFIRMIN G THE ACTION OF THE LEARNED AO IN DENYING THE BENEFIT OF EXEMPTION U/S 10(23C)(VI) OF T HE ITA, 1961 . THE LEARNED CIT(APPEALS) - I, PUNE OUGHT TO HAVE APPRECIATED THAT THE VERY SAME ISSUE WAS DECIDED IN FAVOUR OF THE APPELLANT TRUST FOR THE A.Y. 2005 - 06 BY THE HON'BLE ITAT , PUNE VIDE ORDER DATED 31 - 05 - 2011. 3. THE LEARNED C IT (APPEALS) FURTHE R ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE APPELLANT HAS BEEN SUBMITTING FORM 56 D (FOR CLAIMING EXEMPTION U/S 10(23C)(VI) OF THE ITA, 1961) FROM TIME TO TIME TO THE CHIEF COMMISSIONER OF INCOME TAX , PUNE THROUGH THE OFFICE OF COMMISS IONER OF INCOME TAX, PUNE. INCOME TAX , PUNE THROUGH THE OFFICE OF COMMISS IONER OF INCOME TAX, PUNE. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE PROCEDURE ADOPTED BY THE APPELLANT WAS IN TANDEM WITH THE FOOTNOTE & ACTION POINT GIVEN AT THE END OF FORM 56D. 4. THE LEA R NED CIT(A PPEAL S ) - I , PUNE HAS ALSO E RRED IN LAW A N D O N FACTS I N CO N F I R M I N G TH E ACTION O F A O IN DECIDING TH E STATUS O F TH E A PPELL A NT AS T H AT O F AN A SSOCIATION OF PERSONS (AOP) INSTEAD OF AN INSTITUTION S OL E L Y EX I S TIN G FOR IMPARTING EDUCATION. 5. A LT E RNATI VE L Y AND WITHOUT PREJUDICE, THE L E ARN E D CI T ( A) HA S ER R E D IN LA W AND ON FAC T S IN NOT G RANTING BENEFIT OF S E T O FF OF PAST YE AR S D E FICIT S ( LO SSES) AGAIN S T TH E T A X ABL E INCOM E OF THE APPELLANT . 6. T H E APP E LL A N T CRA VES L E A VE TO ADD / MODIFY / D E L E T E A LL OR A N Y OF TH E G ROUNDS O F 6. T H E APP E LL A N T CRA VES L E A VE TO ADD / MODIFY / D E L E T E A LL OR A N Y OF TH E G ROUNDS O F APP E AL . 4 . IN THE APPEALS RELATIN G TO ASSESSMENT YEARS 2002 - 03, 2003 - 04 AND 2004 - 05, THE ASSESSEE HAS RAISED THE GROUND OF APPEAL NO.1 AGAINST THE VALIDITY OF REOPENING OF THE ASSESSMENT UNDER SECTION 147 R.W.S. 148 OF THE ACT. 5. THE SECOND ISSUE RAISED IN ALL THE APPEALS I.E. ASSESSMEN T YEARS 2002 - 03, 2003 - 04 , 2004 - 05 AND 2007 - 08 IS IN RELATION TO THE CLAIM OF EXEMPTION UNDER SECTION ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 3 10(23C)(VI) OF THE ACT. AN ALTERNATE PLEA HAS BEEN RAISED BY THE ASSESSEE THAT WITHOUT PREJUDICE, THE ASSESSEE IS ENTITLED TO THE BENEFIT OF SET OFF OF PA ST YEARS DEFICIT / LOSSES AGAINST THE TAXABLE INCOME OF THE ASSESSEE. THE SAID PLEA HAS BEEN RAISED IN ASSESSMENT YEAR 2002 - 03 AND NOT IN ASSESSMENT YEARS 2003 - 04 AND 2004 - 05 . 6. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE FOR THE YEAR UNDER CONSIDE RATION HAD FURNISHED RETURN OF INCOME AT RS.NIL. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD BEEN CLAIMING ITS INCOME TO BE EXEMPT UNDER SECTION 10(23C)(VI) OF THE ACT. THE ASSESSEE HAD FILED AN APPLICATION SEEKING APPROVAL OF THE PRESCRIBED AUTHOR ITY UNDER SECTION 10(23C)(VI) OF THE ACT ON 28.12.1999. THE CHIEF COMMISSIONER OF INCOME - TAX, PUNE VIDE ORDER DATED 28.11.2008 HAD GRANTED APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT FROM ASSESSMENT YEAR 2008 - 09 ONWARDS. THE ASSESSING OFFICER THUS, OBS ERVED THAT IN RESPECT OF EARLIER YEARS, THE ASSESSEE WAS NOT APPROVED FOR THE PURPOSE OF SECTION 10(23C)(VI) OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS RELATING TO ASSESSMENT YEAR 2006 - 07, IN VIEW OF THE CCITS ORDER DATED 28.11.2008 , THE SURPLUS OF TH E ASSESSEE FOR ASSESSMENT YEAR 2006 - 07 WAS BROUGHT TO TAX. THE CLAIM OF THE ASSESSEE IN THE PROCEEDINGS RELATING TO ASSESSMENT YEAR 2006 - 07 WAS THAT IN CASE ITS SURPLUS WAS TO BE TREATED AS TAXABLE, THEN IT SHOULD BE ALLOWED TO CARRY FORWARD ITS LOSSES OF EARLIER YEARS AND THE SAME SHOULD BE SET OFF AGAINST THE INCOME OF THE SUCCEEDING YEARS. THIS PLEA OF THE ASSESSEE WAS NOT ACCEPTED FOR THE REASON THAT THE ASSESSMENT OF THE EARLIER YEARS WERE COMPLETED ON THE ASSUMPTION THAT THE INCOME OF THE ASSESSEE H AD ARISEN FROM NON - TAXABLE SOURCE AND THE SAME COULD NOT BE SET OFF AGAINST TAXABLE SOURCE. FURTHER, SUMS RECEIVED BY THE ASSESSEE BY WAY OF CAPITAL OUTLAY CONTRIBUTION WERE TREATED AS REVENUE RECEIPT AGAINST THE ASSESSEES CLAIM THAT THESE WERE CAPITAL R ECEIPTS. THE ASSESSING OFFICER THUS, WAS OF THE VIEW THAT THE ASSESSEES CLAIM FOR EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT IN THE EARLIER YEARS NEEDS TO BE WITHDRAWN. IN THE ASSESSMENT YEAR 2002 - 03, FOR WHICH THE PERMISSION FOR REOPENING THE ASSES SMENT WAS BEING SOUGHT, THE ASSESSEE HAD RETURNED A DEFICIT OF ( - ) ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 4 RS.33,60,746/ - . IN THE SAID YEAR, THE ASSESSEE HAD RECEIVED CAPITAL OUTLAY CONTRIBUTION OF RS.48,43,750/ - , WHICH WAS TREATED AS CAPITAL RECEIPTS BY THE ASSESSEE. SINCE THE SAID CONTRIBUTI ON PART TOOK THE NATURE OF REVENUE RECEIPTS, THE ASSESSING OFFICER HAD RECORDED REASONS FOR REOPENING THE ASSESSMENT SINCE THE SAME HAD TO BE BROUGHT TO TAX AND THE EXCESSIVE LOSSES ALLOWED TO THE ASSESSEE HAD TO BE REDUCED. FOR ASSESSMENT YEAR 2002 - 03, W HERE THE ASSESSMENT WAS SOUGHT TO BE RE OPENED BEYOND THE PERIOD OF FOUR YEARS, WHERE THE INCOME ESCAPING THE ASSESSMENT WAS ABO VE RS.1,00,000/ - AND THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT HAD BEEN COMPLETED, THE ASSESSING OFFICER SOUGHT PERMISSION F ROM COMMISSIONER TO REOPEN THE ASSESSMENT. THEREAFTER, REASONS WERE RECORDED FOR REOPENING THE ASSESSMENT AND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE. CONSEQUENT THERETO, NOTICES UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSU ED. THE ASSESSEE SOUGHT REASONS FOR REOPENING THE ASSESSMENT WHICH WERE FORWARDED BY THE ASSESSING OFFICER AND ON THE BASIS OF THE SAME, THE ASSESSEE REQUESTED TO DROP THE PROCEEDINGS INITIATED UNDER SECTION 148 OF THE ACT. THE CLAIM OF THE ASSESSEE BEFO RE THE ASSESSING OFFICER WAS THAT THE APPLICATIONS EARLIER TO ASSESSMENT YEAR 2008 - 09 WERE PENDING FOR APPROVAL WITH THE CCIT, PUNE. THE ASSESSEE HAD NOT MADE ANY DEFAULT IN SUBMITTING THE REQUISITE INFORMATION / FORMS IN THE SAID RESPECT. 7. THE NEXT PL EA OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT UNLESS AND UNTIL THE EARLIER APPLICATIONS WERE DISPOSED OF BY THE CCIT, PUNE, IT WOULD BE WHOLLY INCORRECT TO IN F ER THAT THE ASSESSEE TRUST WAS NOT APPROVED UNDER SECTION 10(23C)(VI) OF THE ACT, FOR ALL THE YEARS PRIOR TO ASSESSMENT YEAR 2008 - 09. FURTHER, PLEA OF THE ASSESSEE WAS THAT THE DELAY IN DECIDING THE APPLICATION FOR APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT OUGHT NOT BE ATTRIBUTED TO THE ASSESSEE. THE ASSESSING OFFICER REJECTED THE PLE A OF THE ASSESSEE BEING NOT TENABLE. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT UNDER THE INCOME - TAX ACT, THE DEDUCTION CLAIMED UNDER SECTION 10(23C)(VI) OF THE ACT WAS NOT AUTOMATIC. THE SAME WAS AVAILABLE ONLY WHEN THE APPROPRIATE ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 5 AUTHORITY HAD GIVE N ITS APPROVAL. THE ASSESSING OFFICER FURTHER OBSERVED THAT MERE APPLYING FOR THE APPROVAL IN FORM NO.5 6 D COULD NOT TANTAMOUNT TO AN APPROVAL BEING GIVEN UNDER SECTION 10(23C)(VI) OF THE ACT, UNTIL SUCH TIME , THE ASSESSEE HAD TO BE MANDATORILY TREATED TO BE WITHOUT APPROVAL. THE ASSESSING OFFICER FURTHER OBSERVED THAT THERE WAS NO MERIT IN THE CLAIM OF THE ASSESSEE THAT UNDER THE PROVISIONS OF SECTION 147(2) OF THE ACT, THERE WAS A DISTINCTION BETWEEN MEANING OF PHRASE EXEMPTION IS WITHDRAWN AS USED IN THE REASONS RECORDED FOR THE REOPENING THE ASSESSMENT TO THE PHRASE EXCESSIVE RELIEF OR ANY ALLOWANCE AS USED IN CLAUSE (C) OF EXPLANATION (2) OF SECTION 147 OF THE ACT. THE ASSESSING OFFICER ALSO REJECTED THE PLEA OF THE ASSESSEE WITH REGARD TO CAPITAL OUTLAY CONTRIBUTION, WHEREIN IT WAS CLAIMED THAT SINCE THE ASSESSEE TRUST WAS EXISTING SOLELY FOR THE PURPOSE OF EDUCATION, ITS ASSUMPTION AS TO THE ELIGIBILITY OF EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT WAS NEVER INCORRECT AND HENCE, THAT IS WHY T HE CAPITAL OUTLAY CONTRIBUTION WAS NOT TREATED AS REVENUE RECEIPTS. THE ASSESSING OFFICER HELD THAT IN THE ABSENCE OF ANY APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT, CAPITAL OUTLAY CONTRIBUTION OUGHT TO BE TREATED AS RECEIPTS IN THE HANDS OF THE ASSESS EE. WITH THESE, THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE NOTICE UNDER SECTION 148 OF THE ACT WERE REJECTED. THEREAFTER, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WAS MANAGING AN INTERNATIONAL SCHOOL BY THE NAME MERCEDES BENZ EDUCATION ACADEM Y AT HINJEWADI, PUNE. IN THE RETURN OF INCOME FILED BY IT, THE ASSESSEE HAD CLAIMED DEFICIT OF RS.33,60,746/ - . THE ASSESSEE FAILED TO PRODUCE THE EXEMPTION CERTIFICATE GRANTED UNDER SECTION 10(23C) OF THE ACT AND MAINLY RELIED ON THE APPLICATION MOVED BY THE ASSESSEE UNDER SECTION 10(23C) OF THE ACT. THE ASSESSING OFFICER HELD THAT WHERE THE EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT WAS NOT AUTOMATIC AND WAS ONLY AVAILABLE TO EDUCATIONAL INSTITUTIONS APPROVED BY THE PRESCRIBED AUTHORITY, HENCE, THE INCOME OF THE ASSESSEE BEC A ME CHARGEABLE TO TAX AND WAS TO BE COMPUTED UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 28 TO 43D OF THE ACT. FOR THE YEAR UNDER CONSIDERATION, THE ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 6 ASSESSEE HAD RECEIVED SUM O F RS.48,43,750/ - AGAINST CAPITAL OUTLAY CONTRIBUTION, WHICH AS PER THE ASSESSEE WAS REQUIRED IN VIEW OF THE FACT THAT THE SAID SCHOOL WAS UN - AIDED AND UN - RECOGNIZED IN INDIA AND IT NEEDS FUNDS TO PROVIDE EDUCATION OF INTERNATIONAL STANDARDS. THE ASSESSEE HAD TREATED THE SAID CONTRIBUTION OF RS.48,43,750/ - AS CONTRIBUTION RECEIVED AS CAPITAL RECEIPTS. HOWEVER, THE SAME WAS TREATED AS REVENUE RECEIPT BY THE ASSESSING OFFICER. AS PER THE ASSESSING OFFICER SINCE THE FUNDS COMING IN THE CAPITAL OUTLAY CONTRIB UTION WERE WITHOUT ANY SPECIFIC DIRECTION FROM THE CONTRIBUTOR, WITH REGARDS TO SPECIFIC UTILIZATION THEREOF AND THE SAID AMOUNT WAS UTILIZED TO MEET BOTH THE EDUCATIONAL AS WELL AS OTHER DAY - TO - DAY NEEDS, HENCE, THE SAID CAPITAL OUTLAY CONTRIBUTION WAS HE LD TO BE NEITHER IN THE NATURE OF CORPUS FUND NOR CONTRIBUTION RECEIVED WITH ITS SPECIFIC DIRECTION TO BE PART OF CORPUS FUND. THE SAID CONTRIBUTIONS AS PER THE ASSESSING OFFICER COULD NOT TAKE THE NATURE OF CORPUS AS THESE WERE NOT VOLUNTARY AND WHERE MA NDATORILY REQUIRED TO BE GIVEN IN VIEW OF ADMISSION GIVEN TO THE WARDS OF CONTRIBUTING PARENTS. HENCE, SUCH RECEIPTS COULD NOT BE PART OF CORPUS BEING NOT VOLUNTARY IN NATURE AS THE SAME WERE GIVEN IN LIEU OF ADMISSION. IN THE ABSENCE OF ANY SPECIFIC DIR ECTIONS FROM THE CONTRIBUTORS FOR ITS UTILIZATION, THE SAME CANNOT BE HELD TO FORM PART OF CORPUS. THE ASSESSING OFFICER THUS, TREATED THE SAID RECEIPTS TO BE IN THE NATURE OF REVENUE RECEIPTS AND NOT CAPITAL RECEIPTS AS CLAIMED BY THE ASSESSEE. ACCORDIN GLY, SUM OF RS.48,43,750/ - WAS BROUGHT TO TAX AND IN THE ABSENCE OF ANY APPROVAL UNDER SECTION 10(23C) (VI) OF THE ACT, THE INCOME (SURPLUS) WAS SUBJECT TO TAX UNDER SECTION 28 OF THE ACT. THE ASSESSING OFFICER FURTHER NOTED THAT FIGURES OF RS.80 , 67 ,000/ - MENTIONED AS CAPITAL OUTLAY RECEIPTS WAS THE PROGRESSIVE FIGURE INCLUDING THAT OF EARLIER YEARS , H OWEVER, THE RECEIPTS RELATING TO THE PERIOD UNDER CONSIDERATION TOTAL ED TO RS.48,43,750/ - . 8. THE CIT(A) WHILE DECIDING THE APPEAL FOR ASSESSMENT YEAR 2002 - 03 NOTED THAT NO ASSESSMENT WAS MADE UNDER SECTION 143(3) OF THE ACT BEFORE THE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT ON 25.03.2009. THUS, THE CONTENTION OF THE ASSESSEE THAT ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 7 THERE WAS NO FAILURE ON ITS PART TO FILE RETURN OF INCOME UNDER SECTION 139 OF THE ACT AND/ OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND HENCE, THE REOPENING OF ASSESSMENT WAS BAD IN LAW, WAS HELD TO BE NOT LEGALLY SUSTAINABLE. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE H ONBLE SUPREME COURT IN ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. (2007) 291 ITR 500 (SC). THE SECOND CONTENTION OF THE ASSESSEE THAT THE REASONS RECORDED FOR THE REOPENING OF ASSESSMENT APPEARS TO BE IN AN EXERCISE OF APPLICATION OF MIND TO THE SAM E FACTUAL MATRIX, WHICH WAS ALREADY CONSIDERED BY THE DEPARTMENT WAS ALSO REJECTED IN VIEW OF THE FACT THAT THE INTIMATION, IF ANY , UNDER SECTION 143(1) OF THE ACT, WAS NOT AN ORDER OF ASSESSMENT AND THEREFORE, THE QUESTION OF CHANGE OF OPINION DOES NOT AR ISE. REFERENCE IN THIS REGARD WAS AGAIN MADE TO THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. (SUPRA). THE CIT(A) NOTED THAT THE REASONS FOR REOPENING THE ASSESSMENT WERE RECORDED PRIOR TO THE ORDER P ASSED BY THE TRIBUNAL IN ASSESSMENT YEAR 2005 - 06 ON 31.05.2011, WHEREIN THE CLAIM OF THE ASSESSEE WAS ALLOWED. THE CIT(A) ALSO NOTED THAT THERE WAS PRIMA FACIE REASONS TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT SINCE THE ASSESSEE HAD BEEN CLAIMING EXEMPTION UNDER SECTION 10(23C) (VI) OF THE ACT WITHOUT OBTAINING THE NECESSARY APPROVAL FROM THE PRESCRIBED AUTHORITY FOR AVAILING THE SAID EXEMPTION. CONSEQUENTLY, THERE WERE NOT ONLY REASONS FOR FORMATION OF BELIEF THAT INCOME HAD ESCAPED ASSESSMENT BUT ALSO THE REASONS HAD RATIONAL CONNECTION OR NEXUS WITH THE MATERIAL THAT HAD COME TO THE NOTICE OF THE ASSESSING OFFICER FOR FORMATION OF BELIEF. WHERE THE ASSESSING OFFICER HAD RECORDED APPROPRIATE REASONS FOR FORMATION OF BELIEF THAT THE INCOME ESCAPED ASSESSMENT FOR THE YEAR BEFORE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT, ALL THE CONDITIONS NECESSARY FOR REOPENING THE ASSESSMENT UNDER THE MAIN PROVISIONS OF SECTION 147 OF THE ACT AND FOR ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT WAS SATISFIED I N THE CASE OF THE ASSESSEE. IN VIEW THEREOF, THE CIT(A) HELD THAT THE REOPENING OF THE ASSESSMENT AND THE NOTICE ISSUED UNDER ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 8 SECTION 148 OF THE ACT FOR THE YEAR UNDER CONSIDERATION WAS BOTH LEGAL AND VALID AND THERE WAS NO INFIRMITY OR ANY ILLEGALITY IN REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT. 9 . COMING TO THE MERITS OF THE CASE, THE CIT(A) NOTED THAT THE FIRST OBJECTION RAISED BY THE ASSESSEE WAS AGAINST THE DENIAL OF EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT IN RESPECT OF ITS INCOM E. THE SAID EXEMPTION WAS DENIED TO THE ASSESSEE IN THE ABSENCE OF NECESSARY APPROVAL OF THE COMPETENT AUTHORITY AS REQUIRED UNDER SECTION 10(23C)(VI) OF THE ACT. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE CLAIMED THAT IT HAD FILED FORM NO.56D IN THE OFFICE OF CIT - V, PUNE, BUT WHERE THE COMPETENT AUTHORITY WAS CCIT, PUNE. REFERENCE WAS MADE TO THE LETTER DATED 24.11.2011 ISSUED BY CCIT, PUNE TO THE ASSESSEE THAT IT COULD NOT TAKEN COGNIZANCE OF THE APPLICATIONS FOR APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT SINCE THESE WERE NOT FILED BEFORE THE CCIT, PUNE. THE COPY OF THE LETTER IS ANNEXED AS ANNEXURE A TO THE APPELLATE ORDER. ANOTHER LETTER WAS WRITTEN BY THE ASSESSEE DATED 14.05.2012, WHICH WAS REPLIED BY CCIT, PUNE VIDE LETTER DATED 01.10.20 12, WHEREIN ALSO THE PLEA OF THE ASSESSEE THAT THE APPLICATION IN FORM NO.56D WAS FILED FOR ASSESSMENT YEAR 2002 - 03 AND 2007 - 08 WAS ALSO REJECTED. THE COPY OF THE LETTER IS ANNEXED AS ANNEXURE B TO THE APPELLATE ORDER. THE CIT(A) HELD THAT WHERE THE FO RM NO.56D FILED BY THE ASSESSEE HAS BEEN REJECTED BY THE CIT - V, PUNE AND CCIT, PUNE, THEN IN THE ABSENCE OF ANY ORDER GRANTING APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT, NO EXEMPTION IN RESPECT OF THE INCOME C HOULD BE ALLOWED TO THE ASSESSEE. THE CIT( A) FURTHER NOTED THAT THE CCIT, PUNE VIDE LETTER DATED 01.10.2012 HAD CATEGORICALLY STATED THAT THE APPLICATION IN FORM NO.56D WAS NOT FILED BEFORE THE CCIT, PUNE AND IN THE ABSENCE OF ANY EVIDENCE BEING PRODUCED TO SHOW THAT THE APPLICATION WAS FILED EITH ER WITH THE CIT OR CCIT, THE CONTENTION OF THE ASSESSEE THAT THE APPLICATION FILED IN FORM NO.56D HAD NOT REACHED FINALITY, IS DE VOID OF MERIT. IN THE ABSENCE OF ANY APPROVAL BEING GRANTED BY THE ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 9 PRESCRIBED AUTHORITY, THE CIT(A) UPHELD THE ORDER OF ASSES SING OFFICER IN DENYING THE EXEMPTION CLAIMED UNDER SECTION 10(23C)(VI) OF THE ACT. 1 0 . THE OFFSHOOT OF THE ISSUE WAS THE STATUS OF APPELLANT TAKEN AS AOP BY THE ASSESSING OFFICER INSTEAD OF AN INSTITUTION ENGAGED IN PROVIDING EDUCATION. IN VIEW OF THE A SSESSEE HAV ING NOT FILED THE NECESSARY APPROVAL FROM THE PRESCRIBED AUTHORITY, THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER IN ADOPTING THE STATUS OF ASSESSEE AS AOP. THE ASSESSEE WAS ALSO AGGRIEVED BY THE ORDER OF ASSESSING OFFICER MAKING AN ADDITION OF RS.48,43,750/ - BY TREATING THE CAPITAL OUTLAY CONTRIBUTION AS TAXABLE REVENUE RECEIPTS. THE CIT(A) ELABORATELY DISCUSSED THE ISSUE UNDER PARAS 10.2 TO 10.4 AND OBSERVED THAT THE CONTRIBUTIONS WERE COLLECTED BY THE ASSESSEE FROM THE APPLICANTS SEEKING ADMISSION IN THE INSTITUTIONS FOR THE REASONS THAT THE INSTITUTION RUN BY THE ASSESSEE WAS UN - AIDED AND UN - RECOGNIZED AND IT DID NOT GET GOVERNMENT GRANT FOR RUNNING ACADEMY. THE CIT(A) OBSERVED THAT THERE WAS NO MERIT IN THE CLAIM OF THE ASSESSEE THAT TH E SAID RECEIPTS WERE DONATIONS SINCE A DONATION HAS TO BE VOLUNTARY IN NATURE, BUT WHEN THERE IS QUID PRO QUO I.E. FOR ADMISSION IN A COURSE, IT DEFINITELY LOSSES THE CHARACTER OF VOLUNTARY CONTRIBUTION AND HAS TO BE TREATED AS ADDITIONAL FEES FOR OBTAININ G ADMISSION IN THE INSTITUTION. THE CIT(A) ALSO OBSERVED THAT WHERE THE ASSESSEE WAS COLLECTING HUGE SUMS FOR OFFERING SEAT IN THE INSTITUTION AND THE CONTRIBUTION BY THE STUDENTS OF THE PARENTS, WHETHER FEES OR DONATION OR CONTRIBUTION, BY WHATEVER NAME CALLED, WAS NOT AT ALL VOLUNTARY, BUT A COMPULSORY EXACTION FOR ADMISSION. IN VIEW THEREOF, THE SAME WERE TO BE TREATED AS REVENUE RECEIPTS IN THE HANDS OF THE ASSESSEE. 1 1 . THE ALTERNATE PLEA OF THE ASSESSEE THAT IT SHOULD BE ALLOWED CARRY FORWARD OF PAST LOSSES AS PER THE RETURN OF INCOME FILED FROM TIME TO TIME AND SET OFF AGAINST THE INCOME OF THIS YEAR, WAS ALSO REJECTED BY THE CIT(A) SINCE THE ASSESSEE FAILED TO FURNISH THE DETAILS OF SUCH BROUGHT FORWARD LOSSES OF EARLIER YEARS , WHERE THE INCOME ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 10 WAS CLAIMED AS EXEMPT IN THE EARLIER YEARS. THE ALTERNATE PLEA RAISED BY THE ASSESSEE WAS THUS, REJECTED. 1 2 . THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 1 3 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AFTER TAKING US THROUGH THE FACTS OF THE CASE POINTED OUT THAT THE REGISTRATION ENVISAGED UNDER SECTION 10(23C)(VI) OF THE ACT WAS GRANTED TO THE ASSESSEE IN THE YEAR 2008 AND THEREAFTER, IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT IN TH E EARLIER YEARS, THE APPLICATION IN REQUISITE FORM WAS FILED, BUT NO ORDER WAS PASSED BY THE STATUTORY AUTHORITIES. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE APPLICATION DATED 27.12.1999 FILED THROUGH THE OFFICE OF CIT, PUNE, WHICH IS PLACED AT PAGE 68 OF PAPER BOOK, ALONG WITH REQUISITE INFORMATION IN FORM NO.56D, MEMORANDUM OF ASSOCIATION / TRUST DEED, NOTE ON ACTIVITIES OF THE TRUST AND THE REGISTRATION UNDER THE SOCIETIES REGISTRATION ACT AND BPT ACT. THE LEARNED AUTHORIZE D REGISTRATION UNDER THE SOCIETIES REGISTRATION ACT AND BPT ACT. THE LEARNED AUTHORIZE D REPRESENTATIVE FOR THE ASSESSEE FURTHER CLAIMED THAT IT HAD WRITTEN A LETTER DATED 11.03.2002 TO THE CIT, AKURDI, PUNE IN RELATION TO ITS APPLICATION MOVED UNDER SECTION 10(23C)(VI) OF THE ACT THAT THE APPROVAL FOR ITS INSTITUTION HAD NOT BEEN RECEIVED, THE SAID LETTER WAS FILED ON 13.03.2002. THEREAFTER, THE ASSESSEE FURNISHED THE FORM NO.56D ALONG WITH RETURN OF INCOME, COPY OF WHICH IS PLACED AT PAGES 95 TO 97 OF PAPER BOOK AND IN THE NOTE, IT WAS MENTIONED THAT THE ASSESSEE HAD SUBMITTED AN APPLICATI ON ON 28.12.1999 FOR GRANT OF REGISTRATION W.E.F. ASSESSMENT YEAR 1999 - 2000 AND REQUEST WAS MADE TO GRANT THE EXEMPTION FOR A FURTHER PERIOD AS UNDER LAW. THE NEXT APPLICATION WAS MADE FOR FURTHER PERIOD AFTER EXPIRY OF PERIOD OF EARLIER APPLICATION DATED 28.12.1999. THE ASSESSEE FURTHER VIDE LETTER DATED 24.12.2002 ADDRESSED TO THE CIT POINTED OUT THAT THE APPLICATION FOR EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT WAS INITIALLY FILED ON 11.03.2002 AND RENEWED APPLICATION DATED 31.10.2002. A REQUEST WAS MADE FO R ORAL AND WRITTEN SUBMISSIONS TO BE FILED BEFORE THE CIT, COPY OF WHICH IS ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 11 PLACED AT PAGE 98 OF THE PAPER BOOK. THE LEARNED AUTHORIZED REPRESENTATIV E FOR THE ASSESSEE POINTED OUT THEREAFTER WITH REGARD TO THE NOTICE ISSUED UNDER SECTION 142(1) OF THE ACT AND QUESTIONNAIRE RAISED BY THE ASSESSING OFFICER WHICH IS PLACED AT PAGES 99 AND 100, IN WHICH THE ASSESSING OFFICER REQUESTED THE ASSESSEE TO FILE COPY OF APPLICATION IN FORM NO.56D MADE ON 28.12.1999 UNDER SECTION 10(23C)(VI) OF THE ACT AND THE COPY OF THE RENEWAL APPLICATION DATED 31.10.2002. IN REPLY, THE ASSESSEE THEREAFTER CLAIMED THAT IT HAD FURNISHED AN APPLICATION UNDER SECTION 10(23C)(VI) OF THE ACT WITH THE CIT - V, PUNE ON 14.03.2006, UNDER WHICH, IT WAS EXPLAINED THAT AS PER THE PRO CEDURE LAID DOWN IN THE SECTION, THE FORM NO.56D WAS REQUIRED TO BE FILED WITH THE CCITS OFFICE THROUGH THE CIT. HOWEVER, TILL THE END OF YEAR 2001, THE SAID FORM WAS REQUIRED TO BE FILED WITH THE CBDT THROUGH CIT, THE ASSESSEE THEREAFTER REFERRED TO FOR M NO.56D FURNISHED FROM TIME TO TIME I.E. 28.12.1999 FILED IN THE OFFICE OF CIT, PUNE, ON 03.03.2002 LETTER FILED WITH THE CITS OFFICE IN INFORMING THE CHANGE OF ADDRESS, ON 24.12.2002 ANOTHER LETTER FILED WITH CIT - V, PUNE FOR FURTHER FOLLOW UP OF THE APP ROVAL AND ON 22.10.2002, ANOTHER SUBMISSION FILED IN FORM NO.56D FOR ONWARD FILING WITH THE CIT / CCIT OFFICE AND ON 27.10.2005 ALONG WITH RETURN OF INCOME, THE APPLICATION IN FORM NO.56D WAS FILED SEEKING APPROVAL OF EXEMPTION FOR THE NEXT THREE YEARS STA RTING FROM ASSESSMENT YEAR 2005 - 06. THE COPIES OF THE SAID COMMUNICATIONS ARE PLACED AT PAGES 101 TO 104 OF THE PAPER BOOK. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT UNDER RULE 2CA(1) OF INCOME - TAX RULES, 1962, THE SAID FORM IN FORM NO.56D HAD TO BE FILED BEFORE THE CIT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005 - 06 HAS GRANTED THE EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT AND THE RATIO LAID DOWN BY THE TRIBUNAL IS SQUARELY APPLICABLE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER DREW OUR ATTENTION TO THE MISCELLANEOUS APPLICATION DISPOSED OF BY THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMEN T YEAR 2005 - 06. IN THE ABOVE SAID ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 12 BACKGROUND, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE INCOME DECLARED BY THE ASSESSEE IS EXEMPT FROM TAX AS THE APPROVAL IS DEEMED TO HAVE BEEN GRANTED UNDER SECTION 10(23C)(VI) OF THE AC T . 1 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE IN REPLY, STATED THAT THERE WERE NO WORDS LIKE DEEMING EXEMPTION TO BE ALLOWED TO THE ASSESSEE IN SECTION 10(23C)(VI) OF THE ACT. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE FULL BENCH DECISION OF HONBLE ALLAHABAD HIGH COURT IN CIT VS. MUZAFAR NAGAR DEVELOPMENT AUTHORITY IN INCOME TAX APPEAL NO.348 OF 2008, ORDER DATED 05.02.2015. I T WAS FURTHER POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT WHERE THE CIT HAD NOT EXERCISED ITS POWER CORRECTLY, A REMEDY AVAILABLE TO THE ASSESSEE WAS BY WAY OF WRIT BEFORE THE JURISDICTIONAL HIGH COURT. REFERENCE WAS MADE TO THE RELIANCE PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN TH IS REGARD ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF ORISSA IN PADMASHREE KRUTARTH ACHARYA INSTITUTE OF ENGINEERING & TECHNOLOGY VS. CCIT (2009) 309 ITR 13 (ORI) , WHERE THE ISSUE WAS DECIDED BY WAY OF WRIT PETITION . T HE LEARNED DEPARTMENTAL REPRE SENTATIVE FOR THE REVENUE POINTED OUT THAT IN VIEW OF FULL BENCH DECISION OF THE HONBLE ALLAHABAD HIGH COURT (SUPRA) , THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE WAS NOT GOOD LAW. HE FURTHER STATED THAT RIGHTLY OR WRONGLY, IF THE CIT DOES NOT GRA NT APPROVAL, EXEMPTION COULD NOT BE ALLOWED TO THE ASSESSEE. REFERRING TO THE APPROVAL GRANTED BY THE CIT IN ASSESSMENT YEAR 2008 - 09, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE SAID APPROVAL WAS FOR FUTURE AND FOR EARLIER YEARS, THERE WAS NO SUCH ORDER OF CIT. WITH REGARD TO THE ASSESSMENT, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE ASSESSEE HAD CLAIMED THE EXEMPTION ON THE BASIS OF AN APPLICATION MOVED IN THE YEAR 1999 AND WHERE THE ASSE SSEE HAD NOT FULLY AND TRULY DISCLOSED ITS INCOME, WHERE THERE WAS NO DISCLOSURE OF DEEMED GRANT, THEN NORMALLY THE SAME COULD BE CORRECTED ONLY BY WAY OF SECTION 147 OF THE ACT. THE LEARNED DEPARTMENTAL ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 13 REPRESENTATIVE FOR THE REVENUE FURTHER POINTED OUT THAT NO ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) OF THE ACT IN ASSESSMENT YEAR 2002 - 03 THOUGH IN ASSESSMENT YEAR 2003 - 04, THERE WAS AN ORDER OF ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT IN GRANTING EXEMPTION UNDER SECTION 10(23C) OF THE ACT . THE ASSESSMENT WAS BEYOND FOUR YEAR S AND BECAUSE OF NON - DISCLOSURE OF TRUE AND COMPLETE FACTS BY THE ASSESSEE, REOPENING WAS VALID. IN RESPECT OF ASSESSMENT YEAR 2004 - 05, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE REOP ENING OF ASSESSMENT WAS WITHIN FOUR YEARS AND WAS AS PER LAW. IN RESPECT OF CLAIM OF CARRY FORWARD LOSSES, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT IF THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME FOR THE RESPECTIVE YEARS IN TIME AND THE INCOME IN THE HANDS OF ASSESSEE WAS TREATED AS NON - EXEMPT, THEN CARRY FORWARD OF THE LOSSES MAY BE PERMITTED IN ACCORDANCE WITH THE LAW, BUT THE INCOME IN ALL THE YEARS HAD TO BE TREATED AS FROM NON - EXEMPT SOURCES. 1 5 . THE LEARNED AUTHO RIZED REPRESENTATIVE FOR THE ASSESSEE IN REJOINDER PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) AND STATED THAT WHERE THE ASSESSEE HAD MADE FULL DISCLOSURE, THERE WAS NO MER IT IN THE REOPENING OF THE ASSESSMENT. 1 6 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FIRST ISSUE RAISED IN ASSESSMENT YEARS 2002 - 03, 2003 - 04 AND 2004 - 05 IS AGAINST THE VALIDITY OF REOPENING OF THE ASSESSMENT UNDER SECTION 147 / 148 OF THE ACT. IN ITA NO. 1913/PN/2013 , THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING LOSS OF RS.33,60,746/ - . THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND NO SCRUTINY ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED AGAINST TH E ASSESSEE FOR CAPTIONED ASSESSMENT YEAR. THE ASSESSING OFFICER FURTHER RE CORD ED REASONS FOR REOPENING THE ASSESSMENT, ISSUED NOTICE UNDER SECTION 148 OF THE ACT ON 25.03.2009 I.E. WITHIN THE PERIOD OF SIX YEARS FROM THE END OF ASSESSMENT YEAR. THE ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 14 ASSES SING OFFICER RECORDED REASONS FOR REOPENING THE ASSESSMENT ON THE GROUND THAT DEDUCTION UNDER SECTION 10(23C)(VI) OF THE ACT WAS CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME, WHICH WAS NOT ALLOWABLE TO THE ASSESSEE IN THE ABSENCE OF CERTIFICATE ISSUED B Y THE CCIT, PUNE RECOGNIZING THE ASSESSEE UNDER SECTION 10(23C)(VI) OF THE ACT . IN VIEW OF NO ASSESSMENT BEING COMPLETED UNDER SECTION 143(3) OF THE ACT, WE FIND MERIT IN THE ORDER OF CIT(A) IN HOLDING THAT THE REOPENING OF ASSESSMENT WAS VALID, IN VIEW O F THE RATIO LAID DOWN BY THE HON BLE SUPREME COURT IN ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. (SUPRA). THE PLEA OF THE ASSESSEE THAT RECORDING OF REASONS UNDER SECTION 147 OF THE ACT WAS NOT ALLOWED AS THERE WAS CHANGE IN THE OPINION BY ISSUE OF N OTICE UNDER SECTION 148 OF THE ACT DOES NOT STAND IN VIEW OF NO ASSESSMENT ORDER BEING PASSED UNDER SECTION 143(3) OF THE ACT. EVEN THE REASONS FOR REOPENING THE ASSESSMENT WERE RECORDED PRIOR TO THE ORDER PASSED BY THE TRIBUNAL IN ASSESSMENT YEAR 2005 - 06 ON 31.05.2011, WHEREIN THE CLAIM OF THE ASSESSEE WAS ALLOWED BY APPLYING DEEMING PROVISIONS. SINCE THE ASSESSEE HAD BEEN CLAIMING EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT WITHOUT OBTAINING NECESSARY APPROVAL FROM THE PRESCRIBED AUTHORITY FOR AVAILI NG THE EXEMPTION, WE HOLD THAT THERE WAS PRIMA FACIE REASON TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT. FURTHER, THE REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT PURSUANT TO ASSESSMENT BEING COMPLETED IN THE HANDS OF ASSES SEE RELATING TO ASSESSMENT YEAR 2006 - 07, WHEREIN IT CAME TO THE KNOWLEDGE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS NO APPROVAL FROM THE PRESCRIBED AUTHORITY FOR AVAILING THE SAID EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT AND IN VIEW OF THE MATER IAL WHICH HAD COME TO THE NOTICE OF ASSESSING OFFICER ON A LATER DATE, THERE WERE APPROPRIATE REASONS WITH THE ASSESSING OFFICER FOR FORMATION OF BELIEF THAT THE INCOME HAD ESCAPED ASSESSMENT FOR THE YEAR FOR ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. SINCE ALL THE CONDITIONS NECESSARY FOR REOPENING OF THE ASSESSMENT WERE ATTRACTED, WE UPHOLD THE RECORDING OF REASONS UNDER SECTION 147 OF ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 15 THE ACT AND THEREAFTER, ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT AS BOTH LEGAL AND VALID. 1 7 . IN RESPECT OF AS SESSMENT YEARS 2003 - 04 AND 2004 - 05 , THE ASSESSEE HAD FILED THE RETURN OF INCOME SHOWING LOSS OF RS.49,46,947/ - AND LOSS OF RS.94,84,945/ - RESPECTIVELY. THE ASSESSMENT IN THE HANDS OF ASSESSEE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT BY ACCEPTING LOSS . THE RE - ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEARS 2003 - 04 AND 2004 - 05 WERE INITIATED BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT ON 25.03.2009 . IN RESPECT OF ASSESSMENT YEAR 2004 - 05, THE SAID NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED WITHIN P ERIOD OF FOUR YEARS. HOWEVER, THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED BEYOND FOUR YEARS, BUT WITHIN SIX YEARS IN RELATION TO ASSESSMENT YEAR 2003 - 04 . IN BOTH THE YEARS, THE ASSESSEE HAD CLAIMED THE DEDUCTION UNDER SECTION 10(23C)(VI) OF THE AC T WITHOUT COMPLYING WITH THE CONDITIONS OF THE SAID PROVISION I.E. IN THE ABSENCE OF ANY APPROVAL FROM THE PRESCRIBED AUTHORITY EXEMPTING THE INSTITUTION, AND THE SAME HAD RESULTED IN ESCAPEMENT OF INCOME IN THE HANDS OF ASSESSEE AND WHERE THE SAID ERROR H AD OCCURRED BECAUSE OF THE CONDUCT OF ASSESSEE IN MAKING THE WRONG CLAIM, WE HOLD THAT THE ASSESSING OFFICER WAS WITHIN HIS JURISDICTION TO RECORD THE REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT AND FURTHER, ISSUE NOTICE UNDER SECTION 148 OF THE ACT. IN VIEW THEREOF, WE UPHOLD THE REOPENING OF THE ASSESSMENT UNDER SECTION 147 AND ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT IN LINE WITH OUR REASONS VIS - A - VIS REOPENING OF ASSESSMENT RELATING TO ASSESSMENT YEAR 2002 - 03 UNDER SECTION 147 / 148 OF THE ACT. 18 . NOW, COMING TO THE RELIANCE PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN CIT VS. KELVINATOR OF INDIA LTD. (SUPRA) . THE CLAIM OF THE ASSESSEE FOR EXEMP TION OF DEDUCTION UNDER SECTION 10(23C)(VI) OF THE ACT WITHOUT APPROPRIATE APPROVAL FROM THE CONCERNED AUTHORITY AND MAKING DISCLOSURE THAT IT HAD THE REQUISITE APPROVAL, CANNOT BE ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 16 HELD TO BE FULL AND TRUE DISCLOSURE MADE BY THE ASSESSEE. IN VIEW THEREOF, THERE IS NO MERIT IN THE RELIANCE PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON CIT VS. KELVINATOR OF INDIA LTD. (SUPRA). ACCORDINGLY, WE REJECT THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IN ASSESSMENT YEARS 2002 - 03, 2003 - 04 AND 2004 - 05 VIS - - VIS THE VALIDITY OF REOPENING OF THE ASSESSMENT UNDER SECTION 147 / 148 OF THE ACT. THE ASSESSMENT COMPLETED IN ASSESSMENT YEAR 2007 - 08 WAS UNDER SECTION 143(3) OF THE ACT AND HENCE, THERE IS NO GROUND OF APPEAL IN THIS REGARD. 19 . THE SECOND PLEA RAISED ON THE MERITS BY THE ASSESSEE IN ALL THE CAPTIONED APPEALS AGAINST THE ORDERS OF AUTHORITIES BELOW IS IN DENYING THE BENEFIT OF EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT , ESPECIALLY IN VIEW OF THE DECISION BEING RENDERED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE FOR ASSESSMENT YEAR 2005 - 06 VIDE ORDER DATED 31.05.2011 . THE CASE OF THE ASSESSEE BEFORE US WAS THAT IT HAD BEEN SUBMITTING THE FORM NO.56D FOR CLAIMING THE EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT FROM TIME TO TIM E BEFORE THE CCIT, PUNE THROUGH THE OFFICE OF CIT, PUNE AND WHERE IT HAD FOLLOWED THE PROCEDURE, EVEN IF NO APPROVAL HAD BEEN GRANTED BY THE PRESCRIBED AUTHORITY, THE ASSESSEE WAS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 10(23C)(VI) OF THE ACT . TH E NEXT PLEA RAIS ED IN THIS REGARD WAS THERE WAS NO MERIT IN THE ORDERS OF AUTHORITIES BELOW IN TREATING THE ASSESSEE AS AOP INSTEAD OF AN INSTITUTION SOLELY EXISTING FOR IMPARTING EDUCATION. ELABORATE SUBMISSIONS HAVE BEEN MADE BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW AND EVEN BEFORE US IN RESPECT OF THE COMPLIANCE MA DE BY THE ASSESSEE FOR THE GRANT OF APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT . ADMITTEDLY, THE ASSESSEE INSTITUTION W AS NOT APPROVED BY THE CIT / CCIT, PUNE UNDER SECTION 10(23C)(VI) OF THE ACT FOR ANY OF THE YEARS. THE FIRST APPROVAL FROM CCIT, PUNE WAS RECEIVED BY THE ASSESSEE ON 28.11.2008 FROM ASSESSMENT YEAR 2008 - 09 ONWARDS. NO APPROVAL WAS GRANTED BY THE CCIT, PUNE FOR ANY OF THE EARLIER YEARS UNDER SECTION 10(23C)(VI) OF THE A CT . HOWEVER, THE ASSESSEE FROM YEAR TO YEAR, I N ITS RETURN OF INCOME FILED FROM ASSESSMENT YEAR 1999 - 2000 ONWARDS HAD BEEN CLAIMING THE ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 17 EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT VIS - A - VIS IN THIS REGARD, THE DONATION RECEIVED BY THE ASSESSEE WAS TREA TED AS CAPITAL RECEIPTS AND THE BALANCE RECEIPTS WERE SET OFF AGAINST THE EXPENDITURE INCURRED AND LOSSES HAVE BEEN CLAIMED ON ACCOUNT OF DEFICIT FOR THE RESPECTIVE YEARS AS UNDER: - A.Y. PROFIT / (DEFICIT) FOR THE YEAR 1 999 - 00 (3,896,994) 2000 - 01 (2,58 2,275) 2001 - 02 (1,449,601) 2002 - 03 (3,360,746) 2003 - 04 (4,946,947) 2004 - 05 (9,484,942) 2 0 . THE SEQUENCE OF THE COMPLIANCES MADE BY THE ASSESSEE FOR GETTING THE APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT VIS - A - VIS WAS BY WAY OF PETITION BEFORE THE CBDT BOARD ON 28.12.1999 ALONG WITH REQUISITE DOCUMENTS, WHEREIN FORM NO.56D WAS FILED FOR ASSESSMENT YEARS 1999 - 2000 TO 2001 - 02 I.E. IN RESPECT OF ALL THE YEARS WHICH ARE NOT APPEAL BEFORE US . THE COPY OF THE SAID APPLICATION AND DOCUMENTS ARE WHICH ARE NOT APPEAL BEFORE US . THE COPY OF THE SAID APPLICATION AND DOCUMENTS ARE PLACED AT PAGES 68 TO 93 OF THE PAPER BOOK . THEREAFTER, ON 22.10.2002, THE ASSESSEE FILED FORM NO.56D ALONG WITH THE RETURN OF INCOME FOR ASSESSMENT YEAR 2002 - 03 , COPY OF THE SAID FORM NO.56D IS ATTACHED AT PAGES 95 TO 97 OF THE PAPER BOOK. THE ASSESSEE CLAIMS TH AT FOLLOW UP LETTER WAS FILED BEFORE CIT - V, AKURDI, PUNE WITH RESPECT TO THE APPLICATION FOR EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT ON 28.12.1999 AND RENEWAL APPLICATION FILED ON 31.10.2002 WITH THE RETURN OF INCOME, ON 24.12.200 2 , COPY OF WHICH IS PLACED AT PAGE 98 OF THE PAPER BOOK. THE ASSESSEE FURTHER CLAIMS THAT DURING THE ASSESSMENT PROCEEDINGS RELATING TO ASSESSMENT YEAR 2003 - 04, THE ABOVE SAID APPLICATION MADE ON 28.12.1999 ALONG WITH RENEWAL APPLICATION WAS FURNISHED. ANOTHER APPLICATION FOR APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT WAS FILED BEFORE CIT - V, AKURDI, PUNE FOR ALL THE EARLIER YEARS ON 14.03.2006 , COPY OF WHICH IS PLACED AT PAGES 101 TO 104 OF THE PAPER BOOK. THE ASSESSEE DID NOT RECEIVE ANY APPROVAL FROM THE PRESCRIBED AU THORITY UNDER SECTION 10(23C)(VI) OF THE ACT IN ANY OF THE YEARS. THE ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 18 CCIT, PUNE VIDE ORDER DATED 28.11.2008 GRANTED APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT FROM ASSESSMENT YEAR 2008 - 09 ONWARDS. THE COPY OF THE SAID APPROVAL IS PLACED AT PAGE 41 OF PAPER BOOK. SINCE AT THE RELEVANT TIME THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT RELATING TO ASSESSMENT YEAR 2006 - 07 WERE PENDING BEFORE THE ASSESSING OFFICER, IN VIEW OF THE CCITS ORDER ACCORDING APPROVAL FROM ASSESSMENT YEAR 2008 - 09 , THE SURPLUS OF THE ASSESSEE FOR ASSESSMENT YEAR 2006 - 07 WAS BROUGHT TO TAX. THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT UNDER SECTION 143(3) OF THE ACT NOTED TWO ASPECTS; THE PLEA OF THE ASSESSEE IN ASSESSMENT YEAR 2006 - 07 WAS THAT IN CASE THE SURPL US WAS TO BE TREATED AS TAXABLE, THEN IT SHOULD BE ALLOWED TO CARRY FORWARD ITS LOSS ES OF EARLIER YEARS AND THE SAME SHOULD BE SET OFF AGAINST THE INCOME OF SUCCEEDING YEAR. THE PLEA OF THE ASSESSEE WAS NOT ACCEPTED FOR THE REASON THAT THE ASSESSMENTS OF EARLIER YEARS WERE COMPLETED ON THE ASSUMPTION THAT THE INCOME OF THE ASSESSEE HAD ARISEN FROM NON - TAXABLE SOURCES. FURTHER, SUMS RECEIVED BY THE ASSESSEE BY WAY OF CAPITAL OUTLAY CONTRIBUTION WERE TREATED AS REVENUE RECEIPTS AGAINST THE ASSESSEES CLAIM THAT THEY WERE IN THE NATURE OF CAPITAL RECEIPTS. IN VIEW OF ORDER S OF CCIT , PUNE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE S CLAIM OF EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT IN THE EARLIER YEARS NEEDS TO BE WITHDRAWN. 2 1 . THE ASS ESSING OFFICER NOTED THAT IN ASSESSMENT YEAR 2002 - 03 FOR WHICH PERMISSION FOR REOPENING OF THE ASSESSMENT WAS BEING SOUGHT, THE ASSESSEE HAD WRITTEN A DEFICIT OF RS.33,60,746/ - . FURTHER, THE ASSESSEE HAD RECEIVED CAPITAL OUTLAY CONTRIBUTION OF RS.48,43,75 0/ - , WHICH WAS TREATED AS CAPITAL RECEIPTS BY THE ASSESSEE. HOWEVER, SINCE THE CONTRIBUTIONS PART TOOK THE NATURE OF REVENUE RECEIPTS, AS PER THE ASSESSING OFFICER, THE SAME NEEDED TO BE BROUGHT TO TAX AND THE EXCESSIVE LOSSES ALLOWED TO THE ASSESSEE NEED TO BE REDUCED. THE CLAIM OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT IT HAD APPLIED FOR EXEMPTION IN FORM NO.56D FOR VARIOUS ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 19 YEARS, AND TILL ITS APPLICATIONS WERE NOT DISPOSED OFF BY THE CCIT, PUNE, IT COULD NOT BE SAID THAT THE ASSESSEE HAS NO APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT . THE ASSESSING OFFICER REJECTED THE SAID OBJECTION OF THE ASSESSEE BEING NOT TENABLE AND OBSERVED THAT THE DEDUCTION UNDER SECTION 10(23C)(VI) OF THE ACT WAS NOT AUTOMATIC. THE SAME WAS AVAILABLE ONLY WHEN T HE APPROPRIATE AUTHORITY HAD GIVEN ITS APPROVAL AND UNDER THE ACT, THE POWER TO GIVE SUCH APPROVALS VESTED WITH CIT / CCIT ONLY AND THEY WERE NOT WITH THE ASSESSING OFFICER. HENCE, TILL APPROVAL WAS GIVEN BY THE CIT / CCIT, MERE APPLYING FOR APPROVAL IN F ORM NO.56D COULD NOT TANTAMOUNT TO APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT AND TILL SUCH TIME, THE ASSESSEE HAD TO BE MANDATORILY TREATED TO BE WITH OUT APPROVAL. THE OBJECTION OF THE ASSESSEE IN THIS REGARD WAS THUS, DISMISSED. 2 2 . THE CIT(A) UPHEL D THE ORDER OF ASSESSING OFFICER VIS - A - VIS CLAIM OF EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT AND REJECTED THE PLEA OF THE ASSESSEE THAT IT WAS ENTITLED TO THE CLAIM OF AFORESAID DEDUCTION, IN VIEW OF THE FACT THAT FORM NO.56D WAS FILED IN THE OFFICE OF CIT - V, PUNE AND THE APPROVAL WAS AWAITED. THE CIT(A) ALSO RECEIVED THE LETTER FROM CCIT, PUNE DATED 01.10.2012, WHICH IS ENCLOSED WITH THE APPELLATE ORDER, WHEREIN IT WAS CATEGORICALLY SAID THAT THE APPLICATIONS IN FORM NO.56D WERE NOT FILED BEFORE THE CCIT, PUNE AND NO EVIDENCE WAS PRODUCED TO SHOW THAT THE APPLICATIONS WERE FILED EITHER WITH CIT OR THE CCIT, PUNE. HENCE, THE SAID CLAIM OF THE ASSESSEE WAS FOUND TO BE DEVOID OF MERITS AND THUS, REJECTED. 2 3 . THE FIRST ISSUE WHICH NEEDS ADJUDICATION I N THE PRESENT SET OF APPEALS IS WHETHER WHERE THE ASSESSEE HAD NOT RECEIVED THE APPROVAL FROM THE PRESCRIBED AUTHORITY UNDER SECTION 10(23C)(VI) OF THE ACT , WAS THE EXEMPTION UNDER THE ACT AVAILABLE TO THE ASSESSEE IN THE RESPECTIVE YEARS, WHERE NO SUCH AP PROVAL WAS GRANTED. THE PLEA OF THE ASSESSEE BEFORE US IN THIS REGARD WAS THAT THE SAID ISSUE IS SETTLED BY PUNE BENCH ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 20 OF TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.672/PN/2009, RELATING TO ASSESSMENT YEAR 2005 - 06, WHEREIN THE TRIBUNAL VIDE ORDER DATED 31. 05.2011 HAD DIRECTED THE ASSESSING OFFICER TO FRAME THE ASSESSMENT FOR THE YEAR IN QUESTION TREATING THE ASSESSEE AS ENJOYING APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT FOR THE CLAIM PERIOD IN ITS APPLICATION DATED 31.03.2006 I.E. ACQUIRING DEEMED APPRO VAL. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT THE MISCELLANEOUS APPLICATION FILED BY THE DEPARTMENT AGAINST THE ORDER OF TRIBUNAL HAS ALSO BEEN DISMISSED BY THE TRIBUNAL AND CONSEQUENTLY, THE SAID PROPOSITION IS TO B E APPLIED FOR THE CAPTIONED ASSESSMENT YEAR TO BE ADJUDICATED BY US. 2 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, POINTED OUT THAT THE SAID RATIO IS NOT APPLICABLE, IN VIEW OF THE APPEAL FILED BY THE REVENUE BEFORE THE HONBLE BOMBAY HIGH COURT BEING ADMITTED AGAINST THE ORDER PASSED BY THE TRIBUNAL. THE REVENUE HAD CHALLENGED THE ORDER OF TRIBUNAL IN DIRECTING THE ASSESSING OFFICER TO BE TREATED AS DEEMED APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT ON THE GROUND THAT THE CCIT HAD FAILED TO PASS ANY ORDER ON THE ASSESSEES APPLICATION MADE ON 31.03.2006. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FURTHER POINTED OUT THAT THE ISSUE IS DECIDED BY THE LARGER BENCH OF HONBLE ALLAHABAD HIGH COURT IN CIT VS. M UZAFAR NAGAR DEVELOPMENT AUTHORITY IN INCOME TAX APPEAL NO.348 OF 2008, ORDER DATED 05.02.2015. THE QUESTIONS OF LAW RAISED BEFORE THE FULL BENCH WERE AS UNDER: - ( I ) WHETHER THE NON DISPOSAL OF AN APPLICATION FOR REGISTRATION, BY GRANTING OR REFUSING REGISTRA TION, BEFORE THE EXPIRY OF SIX MONTHS AS PROVIDED UNDER SECTION 12AA(2) OF THE INCOME TAX ACT, 1961 WOULD RESULT IN DEEMED GRANT OF REGISTRATION; AND ( II ) WHETHER THE DIVISION BENCH JUDGMENT OF THIS COURT IN THE CASE OF SOCIETY FOR THE PROMOTION OF EDUCATION, ADVENTURE SPORT & CONSERVATION OF ENVIRONMENT VS. COMMISSIONER OF INCOME TAX (2008) 216 CTR (ALL) 167 HOLDING THAT THE EFFECT OF NON CONSIDERATION OF THE APPLICATION FOR REGISTRATION WITHIN THE TIME FIXED BY SECTION 12AA(2) WOULD BE DEEMED GRANT OF REGISTR ATION, IS LEGALLY CORRECT. ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 21 2 5 . THE HONBLE HIGH COURT FURTHER ELABORATING UPON THE ISSUE AT LENGTH HAD OBSERVED THAT WHERE THE LEGISLATURE HAD NOT MADE ANY PROVISION TO THE EFFECT THAT THE APPLICATION FOR REGISTRATION SHOULD BE DEEMED TO HAVE BEEN GRANTED , IF IT IS NOT DISPOSED OFF WITHIN SIX MONTHS WITH AN ORDER IN WRITING EITHER ALLOWING REGISTRATION OR REFUSING TO GRANT IT, THEN THE SAME WOULD NOT BE DEEMED TO HAVE BEEN ALLOWED TO THE ASSESSEE. THE HONBLE HIGH COURT NOTED THAT IN THE PRESENT CASE, PAR LIAMENT HA S NOT LEGISLATED A CONSEQUENCE OF A FAILURE TO DECIDE AN APPLICATION WITHIN A PERIOD OF SIX MONTHS. IN THE CIRCUMSTANCES, WE ANSWER THE QUESTIONS REFERRED TO THE FULL BENCH FOR REFERENCE IN THE FOLLOWING TERMS: ( I ) NON DISPOSAL OF AN APPLICATION FOR REGISTRATION, BY GRANTING OR REFUSING REGISTRATION, BEFORE THE EXPIRY OF SIX MONTHS AS PROVIDED UNDER SECTION 12AA(2) OF THE INCOME TAX ACT, 1961 WOULD NOT RESULT IN A DEEMED GRANT OF REGISTRATION; AND ( II ) THE JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN SOCIETY FOR THE PROMOTION OF EDUCATION ADVENTURE SPORT & CONSERVATION OF ENVIRONMENT (SUPRA) DOES NOT LAY DOWN THE CORRECT POSITION OF LAW. 2 6 . IN VIEW OF THE RATIO LAID DOWN BY THE LARGER BENCH OF THE HONBLE ALLAHABAD HIGH COURT (SUPRA) AND IN THE FACTS OF THE PRESENT CASE, WHERE ADMITTEDLY, THE ASSESSEE HAD NOT RECEIVED THE APPROVAL FROM THE PRESCRIBED AUTHORITY UNDER SECTION 10(23C)(VI) OF THE ACT , IT COULD NOT BE SAID THAT NON - DISPOSAL OF AN APPLICATION UNDER SECTION 10(23C)(VI) OF THE ACT WOULD RESUL T IN DEEMED GRANT OF APPROVAL TO THE ASSESSEE, ENABLING IT TO CLAIM DEDUCTION UNDER SECTION 10(23C)(VI) OF THE ACT. WE ARE NOT GOING INTO THE MERITS OF VARIOUS APPLICATIONS FILED BY THE ASSESSEE EITHER ALONG WITH RETURN OF INCOME AND / OR NOT BEFORE THE C CIT, PUNE, IN VIEW OF OUR RELIANCE ON THE RATIO LAID DOWN BY LARGER BENCH OF HONBLE ALLAHABAD HIGH COURT (SUPRA). THUS, WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE IN THIS REGARD AND UPHOLDING THE ORDER OF CIT(A) , WE HOLD THAT THE ASSESSEE IS NOT ENTITL ED TO THE AFORESAID DEDUCTION UNDER SECTION 10(23C)(VI) OF THE ACT , IN THE ABSENCE OF A APPROVAL BEING GRANTED BY THE PRESCRIBED AUTHORIT Y . WE ALSO ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 22 UPHOLD THE ORDER OF ASSESSING OFFICER IN TREATING THE ASSESSEE AS AOP INSTEAD OF AN INSTITUTION SOLELY EXIS TING FOR IMPARTING EDUCATION. 2 7 . THE FALL OUT OF THE DENIAL OF DEDUCTION UNDER SECTION 10(23C)(VI) OF THE ACT IS THE TAXABILITY OF RECEIPTS AFTER ADJUSTMENT OF EXPENDITURE IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WAS M ANAGING AN INTERNATIONAL SCHOOL BY THE NAME MERCEDES BENZ EDUCATION ACADEMY AT HINJEWADE, PUNE. IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 2002 - 03 , THE ASSESSEE HAD CLAIMED DEFICIT OF RS.33,60,746/ - . FURTHER, THE ASSESSEE HAD CREDITED SUM OF RS.48,43,75 0/ - UNDER THE HEAD CAPITAL OUTLAY CONTRIBUTION. THE ASSESSING OFFICER NOTED THAT THE SAID CONTRIBUTION WAS MADE BY THE PARENTS OF EVERY STUDENT SEEKING ADMISSION TO THE ACADEMY , I N VIEW OF THE FACT THAT THE SCHOOL WAS UN - AIDED AND UN - RECOGNIZED IN INDIA A ND ACADEMY NEEDS FUNDS TO PROVIDE EDUCATION OF INTERNATIONAL STANDARDS. THE BREAK - UP OF THE RE CEIPTS CLASSWISE FROM DIFFERENT ENTITIES IS PROVIDED UNDER PARA 4.2 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER TREATED THE SAID RECEIPTS AS REVENUE RECEIPTS SINCE THE SAME WAS CREDITED TO CAPITAL OUTLAY CONTRIBUTION FUNDS AND THE CONTRIBUTION WAS FOR ADMISSION I.E. ENTRY OF THE STUDENT INTO THE SCHOOL , IT WAS NOT FOR CONTINUATION OF THE STUDENTS IN THE SCHOOL, WHICH DEPENDENT UPON ENTIRELY DIFFERENT SET OF CO NDITIONS AS LAID DOWN IN THE RULES AND REGULATIONS OF THE SCHOOL. THE ASSESSEE WAS CHARGING RS.2 OR RS.3 LAKHS AS MAY BE APPLICABLE FROM EACH STUDENT AT THE TIME OF ADMISSION TO THE ACADEMY. FURTHER, THE PARENTS WHO WERE CONTRIBUTING DID NOT STATE SPECIF ICALLY AS TO HOW THE CONTRIBUTION SHOULD BE UTILIZED WHETHER FOR CREATING INFRASTRUCTURE FACILITIES OR FOR INCURRING DAY - TO - DAY EXPENSES. THE ASSESSING OFFICER FURTHER HELD THAT THE BENEFIT DERIVED BY THE PERSON GIVING THE CONTRIBUTION WAS AN IMMEDIATE AN D DIRECT I.E. SUBJECT TO THE APPLICANT FULFILLING THE OTHER CONDITIONS, PAYMENT OF THIS CONTRIBUTION ASSURES THE PE RSON OF ADMISSION TO THE ACADEMY. SINCE THE FUNDS COMING TO THE CAPITAL OUTLAY CONTRIBUTION WERE WITHOUT ANY SPECIFIC DIRECTION FROM THE CON TRIBUTORS WITH REGARD TO ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 23 SPECIFIC UTILIZATION THEREOF AND THE SAID AMOUNT WAS USED TO MEET THE OPERATIONAL AS WELL AS OTHER DAY - TO - DAY NEEDS FOR THE PURPOSE OF RUNNING THE ACADEMY, THE ASSESSING OFFICER HELD THAT THE SAME COULD NEITHER BE SAID TO BE A FUND IN THE NATURE OF CORPUS FUND NOR THE CONTRIBUTIONS RECEIVED WITH A SPECIFIC DIRECTION TO BE PART OF CORPUS FUND. SINCE THE CONTRIBUTIONS WERE NOT VOLUNTARY, BUT WERE MANDATORILY REQUIRED TO BE GIVEN IN LIEU OF ADMISSION GIVEN TO THE WARD OF CONTRIBUTING PARENT, THE ASSESSING OFFICER HELD THAT THE SAID CONTRIBUTION COULD NOT BE SAID TO BE IN THE CHARACTER OF CORPUS. THE ASSESSING OFFICER REFERRED TO THE PROVISIONS OF SECTION 11(1)(D) OF THE ACT, UNDER WHICH ONLY THOSE RECEIPTS WERE EXCLUDED FROM THE SCOPE OF INCOME, WHICH WERE IN THE NATURE OF VOLUNTARY CONTRIBUTION AND THAT TOO WITH SPECIFIC DIRECTION TO FORM PART OF CORPUS. SINCE BOTH THESE CONDITIONS WERE MISSING, THE SAID RECEIPTS WERE HELD TO BE REVENUE RECEIPTS AND NOT CAPITAL RECEIPTS AS CLAIMED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. ACCORDINGLY, CAPITAL OUTLAY CONTRIBUTION OF RS.48,43,750/ - WAS TREATED AS REVENUE RECEIPTS OF THE ASSESSEE. 28 . IN VIEW OF THE FACTUAL FINDINGS OF THE ASSESSING OFFICER IN THIS REGARD AND IN THE ABSENCE OF APPROVA L BEING GRANTED TO THE ASSESSEE UNDER SECTION 10(23C)(VI) OF THE ACT , THE CAPITAL OUTLAY CONTRIBUTION IS TO BE TREATED AS REVENUE RECEIPT IN THE HANDS OF ASSESSEE, AGAINST WHICH THE DEFICIT CLAIMED BY THE ASSESSEE IS TO BE ADJUSTED. 29 . THE NEXT PLEA OF THE ASSESSEE BEFORE US WAS THAT IN THE ALTERNATE, IN CASE THE RECEIPTS ARE HELD TO BE TAXABLE IN ITS HANDS THEN, THE BENEFIT OF SET OFF OF BROUGHT FORWARD LOSSES SHOULD BE GIVEN TO THE ASSESSEE. THE TABULATED DETAILS FILED BY THE ASSESSEE FOR ASSESSMENT YEARS 1999 - 2000 TO 2001 - 02 REFLECT THAT THE ASSESSEE HAD SHOWN DEFICIT IN ITS HANDS. ADMITTEDLY, THE ASSESSEE WAS CLAIMING ITS INCOME AS EXEMPT UNDER SECTION 10(23C)(VI) OF THE ACT . THE ASSESSEE HAS FURNISHED THE DEFICIT FOR THE ASSESSMENT YEARS 1999 - 200 0 TO 2001 - 02. HOWEVER, THE PERUSAL OF THE DETAILS ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 24 FURNISHED BY THE ASSESSEE DOES NOT CLARIFY THE OBJECTION RAISED BY THE CIT(A) WHETHER THE SAID RETURNS OF INCOME WERE FILED IN TIME AS THE REQUIREMENT OF LAW IS THAT THE LOSS SHALL BE ALLOWED ONLY IF THE R ETURN OF INCOME IS FILED WITHIN DUE DATE PRESCRIBED UNDER SECTION 139(1) OF THE ACT. THE SECOND OBJECTION OF THE CIT(A) WAS THAT IT WAS NOT CLEAR WHETHER THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT IN THE RESPECTIVE YEARS . IN CASE THE CAPITAL OUTLAY HAS NOT BEEN BROUGHT TO TAX AND ONLY THE DEFICIT HAS BEEN ASSESSED AS LOSS, THEN WHERE THE ASSESSEE HAS CLAIMED THE SAID CAPITAL OUTLAY TO BE EXEMPT UNDER SECTION 10(23C)(VI) OF THE ACT , T HE LOSSES ARISING THEREFROM CANNOT BE SET OF F AGAINST THE INCOME OF THE PRESENT ASSESSMENT YEARS. THE ASSESSING OFFICER IS DIRECTED TO CARRY OUT THE NECESSARY VERIFICATION AND DECIDE THE ISSUE IN LINE WITH OUR DIRECTION AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 3 0 . THE I SSUE RAISED BY THE ASSESSEE IN ALL THE APPEALS BEFORE US IS WITH REGARD TO REOPENING OF ASSESSMENT AND ASSESSABILITY OF INCOME IN ITS HANDS. IN VIEW OF OUR FINDINGS IN PARAS HEREINABOVE, THE SAID ISSUES ARE DECIDED AGAINST THE ASSESSEE AND ONLY IN ASSESSM ENT YEAR 2002 - 03, THE ASSESSING OFFICER SHALL VERIFY THE CLAIM OF THE ASSESSEE VIS - A - VIS SET OFF OF BROUGHT FORWARD LOSSES. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IN ASSESSMENT YEARS 2002 - 03 TO 2004 - 05 IS AGAINST REOPENING OF ASSESSMENT IS DISMI SSED. FURTHER, GROUNDS OF APPEAL NO.2, 3 AND 4 RAISED BY THE ASSESSEE IN THE SAID ASSESSMENT YEARS ARE AGAINST THE CLAIM OF EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT , ARE ALSO DISMISSED, IN VIEW OF NO APPROVAL BEING GRANTED BY THE PRESCRIBED AUTHORIT Y. THE ALTERNATE PLEA RAISED BY THE ASSESSEE IN ASSESSMENT YEAR 2002 - 03 FOR GRANT OF SET OFF OF PAST YEARS LOSSES IS ALLOWED FOR STATISTICAL PURPOSES. THE GROUNDS OF APPEAL NO.1 TO 3 RAISED BY THE ASSESSEE IN ASSESSMENT YEAR 2007 - 08 ARE ALSO DISMISSED. ITA NO S. 1913 TO 1916 /PN/2013 MERCEDES BENZ EDUCATION ACADEMY 25 31. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ASSESSMENT YEAR 2002 - 03 IS PARTLY ALLOWED AND OTHER APPEALS OF ASSESSEE IN ASSESSMENT YEARS 2003 - 04, 2004 - 05 AND 2007 - 08 ARE DISMISSED. ORDER PRONOUNCED ON THIS 30 TH DAY NOVEMBER , 201 5 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 30 TH NOVEMBER , 2015. GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / TH E APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I, PUNE ; ( ) 4. / THE CIT - I , PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE