The ACIT,GNR Circle, Gandhinagar V. Gujarat State Tribal Development Residential Educational Institution Society, Gandhinagar

ITA 2313/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50958 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 29-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARTAR SINGH
• Assessee Lawyers: VIRK H P SINGH
• Keywords: Capital asset
• Section: 143(3); 234B; 10

Judgement Text

, , . .. . . .. . , , , , ! !! ! . .. .'# !'# '# !'# '# !'# '# !'# , $ $ $ $ % % % % IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD BEFORE HONBLE SHRI D.K.TYAGI, J.M. & HONBLE SHRI A.MOHAN ALANKAMONY, A.M.) ! ! ! !. ITA NO. 2313/AHD./2009 : # &'- 2006-2007 ACIT, GANDHINAGAR CIRCLE, GANDHINAGAR . (*+ /APPELLANT) -VS- GUJARAT STATE TRIBAL DEVELOPMENT RESIDENTI AL EDUCATION INSTITUTIONAL SOCIETY (PAN: AAAAT 3689H) ( ,*+ /RESPONDENT ) *+ - . / APPELLANT BY : SHRI KARTAR SINGH, CIT, D.R. ,*+ - . / RESPONDENT BY : SHRI VIRK H.P. SINGH, A.R. /#0 - 1$ / DATE OF HEARING : 21/11/2011 2'& - 1$ / DATE OF PRONOUNCEMENT : 25/11/2011 3 3 3 3 / ORDER PER SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), GANDHINAGAR IN APPEAL NO.CIT(A)GNR/152/2008-09 DATED 18.05.2009 FOR THE A SSESSMENT YEAR 2006-2007 PASSED UNDER SECTION 250 R.W.S. 143(3) OF THE I.T. ACT, 1961. 2. THE REVENUE HAS RAISED THREE GROUNDS IN ITS APP EAL WHEREIN THE CRUX OF THE ISSUE IS THAT THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE EXEMPTION UNDER SECTION 10(23C)(IIIAB) OF THE I.T. ACT. 3. THE ASSESSEE IS A 100% GOVERNMENT OF GUJARAT CON TROLLED SOCIETY CONSTITUTED UNDER THE BOMBAY PUBLIC TRUST ACT, 1950 AND THE SOC IETIES REGISTRATION ACT, 1860 ON 03.10.2000 REGISTRATION NO. F/676/GANDHINAGAR AND G UJ/719/GANDHINAGAR, IN COMPLIANCE WITH THE DIRECTIONS OF THE CENTRAL GOVER NMENT AND RECEIVED GRANTS FROM ITA NO. 2313-AHD-09 2 THE CENTRAL GOVERNMENT UNDER THE FIRST PROVISO TO A RTICLE 275(1) OF THE CONSTITUTION OF INDIA. THE ASSESSEE FILED ITS RETURN OF INCOME ON 2 2.12.2006. THE CASE WAS TAKEN UP FOR SCRUTINY ASSESSMENT WHEREBY THE ASSESSMENT WAS COMP LETED UNDER SECTION 143(3) OF THE ACT ON 27.11.2008. DURING THE COURSE OF THE ASS ESSMENT PROCEEDINGS, THE LD. A.O. CAME TO A CONCLUSION THAT THE ASSESSEE DOES NOT RUN ANY COMPOSITE OR INTEGRATED COURSE OF ORGANIZED AND SYSTEMATIC TRAINING AND IS NOT AFF ILIATED OR REGISTERED WITH ANY RECOGNIZED AUTHORITY. THEREFORE, THE TRUST CANNOT B E HELD TO BE A UNIT OR EDUCATIONAL INSTITUTION AS ENVISAGED IN THE ACT. RELYING ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SOURASHTRA EDUCATION FOUN DATION VS- CIT CITED IN (2005) 273 ITR 139 (GUJ.), THE AO DENIED THE EXEMPTION UND ER SECTION 10(23C)(IIIAB) OF THE ACT. THE RELEVANT PORTION OF THE ORDER IS REPRODUCE D HEREINBELOW FOR REFERENCE: 7.' IN VIEW OF THE ABOVE PROVISIONS, A UNIVERSITY OR OT HER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES IS EXEMPT FROM TAX. THE EXPRESSION 'OTHER EDUCATIONAL INSTITUTION' IN THE SECTION WOUL D MEAN AN INSTITUTION IMPARTING FORMAL EDUCATION IN AN ORGANIZED AND SYST EMATIC MANNER. THE ASSESSEE DOES NOT RUN ANY COMPOSITE OR INTEGRATED C OURSE OF ORGANIZED AND SYSTEMATIC TRAINING AND IS NOT AFFILIATED OR REGIST ERED WITH ANY AUTHORITY. THE TRUST CAN CERTAINLY BE CONSIDERED AS QUALIFYING U/S . 11(1)(A) BUT THE TERM 'OTHER EDUCATIONAL INSTITUTION' CONTEMPLATED BY SECTION 10 (22) [NOW SECTION 10(23C)] IS A NARROWER CONCEPT. THE ASSESSEE IS NOT IMPARTIN G FORMAL EDUCATION IN AN ORGANIZED AND SYSTEMATIC MANNER, THEREFORE IT DOES NOT COME UNDER THE EXPRESSION 'OTHER EDUCATIONAL INSTITUTION'. THEREFO RE, THE ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S. 10(23C) (IIIAB). THIS VIEW IS SUPPORTED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF SAURASHTRA EDUCA TION FOUNDATION VS CIT IN [2005] 273 ITR 139. THEREFORE, THE ASSESSEE'S CONT ENTION IS REJECTED. 8. SUBJECT TO THE ABOVE DISCUSSION, INCOME OF THE ASSESSEE IS COMPUTED AS UNDER:- GRANT RECEIVED DURING THE YEAR AS SHOWN RS.30,30,00,000/- ADD: INCOME AS SHOWN IN INCOME & EXPENDITURE ACCOUNT RS. 8,36,891/- RS. 30,38,36,891/- LESS: INCOME APPLIED AS SHOWN RS. 1,07,01,083/- INCOME APPLIED ON CAPITAL ASSETS RS. 4,72,26,815/- EXEMPTION ALLOWED U/S 11(1)(A) @ 15% RS. 4,55,75,533/- RS. 10,35,03,431/- TOTAL INCOME RS.20 ,03,33,460/- ITA NO. 2313-AHD-09 3 9. ASSESSED U/S. 143(3) OF THE ACT ON TOTAL INCOME AT RS. 20,03,33,460/-. ISSUE DEMAND NOTICE AND CHALLAN ACCORDINGLY. CHARGE INTER EST U/S 234B OF THE ACT. THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS O F INCOME FOR WHICH PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) R.W.S. 274 OF T HE ACT ARE INITIATED SEPARATELY. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). BEFORE THE LD. CIT(A), THE ASSESSEE PRODUCED VARIOUS DOCUMENTS TO ESTABLIS H THAT THE ASSESSEE WAS RUNNING SCHOOLS AND OTHER INSTITUTIONS, AS PER THE SCHEMES PRESCRIBED UNDER THE ACT AND THEREFORE ENTITLED TO DEDUCTION UNDER SECTION 10(23 C)(IIIAB) OF THE ACT. THE LD. CIT(A) FORWARDED THE SUBMISSIONS AND THE DOCUMENTS PRODUCE D BEFORE HIM BY THE ASSESSEE TO THE LD. AO FOR OBTAINING REMAND REPORT. AFTER AN EL ABORATE DISCUSSION ON THE ISSUE AND AFTER OBTAINING THE REMAND REPORT FROM THE AO, THE LD. CIT(A) CAME TO THE FOLLOWING CONCLUSION: 2,3.2. COMING TO THE ISSUE AS TO WHETHER U/S.10(23 C)(IIIAB) IS APPLICABLE TO THE APPELLANT OR NOT, I THINK AMPLE EVIDENCES HAVE BEEN PRODUCED BY THE AUTHORISED REPRESENTATIVE TO ESTABLISH THAT THE ASSESSEE SOCIE TY IS RUNNING EDUCATIONAL INSTITUTIONS. THEY HAVE GIVEN DETAILS OF THE SANCTI ON ORDERS OF THE STATE PRIMARY SCHOOL AUTHORITIES AS WELL AS THE SECONDARY SCHOOL AUTHORITIES, THEY HAVE GIVEN DETAILS OF THE STRENGTH OF THE SCHOOLS BEING RUN BY THEM, THE EXPENDITURE INCURRED IN VARIOUS SCHOOLS, THE APPOINTMENT OF TEA CHERS, THE DETAILS OF PENDING VACANCIES, THE DETAILS OF THE BUILDING UNDER CONSID ERATION ETC. ALTHOUGH SECTION 10(23C)(IIIAB) DOES NOT QUALIFY 'OTHER EDUCATIONAL INSTITUTIONS' WITH THE CONDITION OF BEING ATTACHED WITH ANY UNIVERSITY OR BOARD, IN THE INSTANT CASE, THE SCHOOLS ARE DULY ATTACHED TO THE GUJRAT SECONDARY E DUCATION BOARD. THE SECTION ALSO DOES NOT DISTINGUISH BETWEEN THE LEVEL S OF STUDIES I.E. BETWEEN PRIMARY, SECONDARY OR COLLEGE EDUCATION. MOST OF TH E OBJECTIONS RAISED BY THE ASSESSING OFFICER CONCERNING LACK OF FACILITIES LIK E LAND OR BUILDING OR TEACHERS WOULD NOT IN ITSELF LEAD TO THE CONCLUSION THAT THE APPELLANT IS NOT RUNNING EDUCATIONAL INSTITUTIONS. IF THE APPELLANT IS ABLE TO MANAGE RUNNING OF THE SCHOOLS, INSPITE OF NON-AVAILABILITY OF THESE FACIL ITIES, OBVIOUSLY, IT HAS PUT INTO PLACE CERTAIN OTHER SYSTEMS TO RUN CLASSES AND TEAC H THE STUDENTS TO MAKE THEM EDUCATED, I THINK THE APPELLANT'S AUTHORISED REPRES ENTATIVE HAS ABLE TO COUNTER MOST OF THE GROUNDS / OBJECTIONS RAISED BY THE ASSE SSING OFFICER IN ITS COMMENTS OR COUNTER COMMENTS. 2.3.3. AS FAR AS THE OTHER MATERIAL CONDITIONS TO T HE SECTION 10(23C)(IIIAB) IS CONCERNED, IT IS AN UNCONTESTED FACT THAT THE SOCIE TY IS NOT OPERATING FOR PROFIT AND ALSO THE SCHOOLS ARE BEING RUN SOLELY WITH THE GOVERNMENT GRANTS. ITA NO. 2313-AHD-09 4 2.3.3. THEREFORE, CONSIDERING ALL THE FACTS OF THE CASE, 1 AM CONVINCED THAT THE ASSESSEE IS COVERED BY THE CONDITIONS OF SECTION 10 (23C)(IIIAB) AND THEREFORE THE INCOME, IF ANY, IS CONSEQUENTIALLY EXEMPT. 2.3.4. ALTHOUGH, CONSEQUENT TO THE ABOVE DECISION, THE AUTHORISED REPRESENTATIVE'S CONTENTION RAISED IN ITS WRITTEN S UBMISSIONS DATED 13/02/2009 THAT IT HAD RECEIVED GRANTS OF ONLY RS.20,30,00,000 /- AND NOT RS.10,00,00,000/- PLUS RS.20,30,00,000/- AS STATED BY THE ASSESSING O FFICER IN THE ASSESSMENT ORDER, WILL NOT MAKE MATERIAL DIFFERENCE TO THE COM PUTATION OF TAXABLE INCOME, YET THE AUTHORISED REPRESENTATIVE'S ASSERTION THAT TILL THE GRANTS RECEIVED FROM GOVERNMENT OF INDIA ARE PLACED IN THE HANDS OF THE STATE GOVERNMENT AND THE STATE GOVERNMENT TRANSFERS THE SAME TO GSTDREIS AND THE TOTAL OF SUCH GRANTS COMES TO RS.23,00,00,000/-, SHOULD BE VERIFIED AT T HE TIME OF GIVING APPEAL EFFECT AND THE ASSESSING OFFICER MAY MAKE SPECIFIC COMMENTS ON THE ISSUE FOR FUTURE REFERENCE. 5. DURING THE COURSE OF HEARING BEFORE THE TRIBUNAL , THE LD. D.R. SUPPORTED THE ARGUMENTS OF THE LD. A.O. AND SUBMITTED THE DECISIO N OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SOURASHTRA EDUCATION FOUNDATIO N VS- CIT CITED IN (2005) 273 ITR 139 (GUJ.) AND PRAYED THAT THE ORDER OF THE LD. A.O. SHOULD BE RESTORED. 6. THE LD. A.R. FORCIBLY SUBMITTED THAT THE ASSESSE E IS A 100% GOVERNMENT ORGANIZATION IMPARTING EDUCATION TO THE TRIBALS IN THE REGION, AS PER THE DIRECTIONS OF THE CENTRAL GOVERNMENT FROM WHOM THE GRANTS ARE REC EIVED. THE LD. A.R. FURTHER SUBMITTED ONE VOLUMINOUS PAPER BOOK RUNNING FROM 1 TO 220 PAGES WHICH CONTAIN THE FOLLOWING DOCUMENTS: 1. CERTIFICATES OF REGN. AS SOCIETY ARID TRUST AND MEMORANDUM OF ASSOCIATION 2. FIRST TWO GRANT ORDERS OF GOVT. OF INDIA 3. ADITANAR EDUCATIONAL INSTN. V. ADDL. CIT 224 ITR 0310 [1997] SC 4. REGISTRATION CERTIFICATES OF EKIAVYA MODEL RESIDENTIAL SCHOOLS (EMRS) WITH DISTT. EDUCATION OFFICERS AND STATE EDUCAT ION BOARD 5. SAURASHTRA EDUCATION FOUNDATION V. CIT 273 ITR 0139 [2005] GUJ 6. YEARWISE / STANDARDWISE POSITION OF STUDENT S (KUMAR / KANYA) FROM 2000-2001 TO 2008-200 9 7. DETAILS OF OWNED / RENTED / IN GOVT. MODEL SCHOOLS FOR 2005-2006 8. DETAILS OF SCHOOLWISE EXPENDITURE FOR FINAN CIAL YEAR 2005-2006 9. DETAILS OF ACADEMIC STAFF FOR VARIOUS SCHOO LS 10. APPOINTMENT LETTERS TO ACADEMIC STAFF 11. GRANT ORDERS - GOVT. OF GUJARAT TO GSTDREIS 12. GRANT ORDER - GOVT. OF INDIA TO GOVT. OF GUJ ARAT ITA NO. 2313-AHD-09 5 13. GRANT ORDERS - GOVT. OF INDIA TO GOVT. OF GU JARAT 14. GUIDELINES FOR ADMISSION ISSUED BY GSTDREIS TO EMRS PRINCIPALS AND ADVERTISEMENT FOR ADM ISSION 15. SCHOOL REGISTER ISSUED BY GUJARAT SECONDARY AND HIGHER SECONDARY EDUCATION BOARD, EXAMINATION WING, VADODAR A FOR 02 SCHOOLS 16. DELEGATION OF POWERS TO OFFICIALS AND PRINCI PALS OF EMRS 17. COMMUNICATION FROM GSTDREIS TO PRINCIPALS OF EMRS 18. PHOTOGRAPHS OF STUDY TOURS AND SPORTS MEET O F EMRS 19. MINUTES OF MEETING OF 04.10.2005 AT GSTDREIS WITH PRINCIPALS OF EMRS FOR EXAMINATION RESULTS, ETC. 20. SUBMISSION OF MEMBER SECRETARY GSTDREIS TO A CIT, GANDHINAGAR CIRCLE, GANDHINAGAR CLAIMING EXEMPTION U/S. 10(23 C)(IIIAB) OF THE INCOME-TAX ACT, 1961 21. ACKNOWLEDGEMENT NO. 2307000527 DATED 22.12.2 006 AND ANNUAL INCOME-TAX RETURN OF GSTDREIS FOR AY 2006-2007 6.1 THE LD. A.R. FURTHER SUBMITTED THAT ALL THE DOC UMENTS WERE FURNISHED BEFORE THE LD. CIT(A) WHO HAS PASSED REASONABLE ORDER, AFTER O BTAINING A REMAND REPORT FROM THE A.O, THEREFORE, IT WAS PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE UPHELD. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY PE RUSED THE MATERIALS PRODUCED BEFORE US. AFTER PERUSING THE PAPER BOOK, IT IS EVI DENT THAT THE ASSESSEE IS RUNNING EDUCATIONAL INSTITUTIONS SUCH AS SCHOOLS, ETC. IMPA RTING FORMAL EDUCATION, AS PRESCRIBED UNDER THE ACT. THE LD. CIT(A) HAD ELABORATELY DEALT WITH THE MATTER AFTER PERUSING VARIOUS DOCUMENTS SUBMITTED BY THE ASSESSEE AND AFT ER OBTAINING REMAND REPORT HAD COME TO THE ABOVE-MENTIONED CONCLUSION CITED ( SUPRA ). THE REVENUE DID NOT COME OUT WITH ANY CONVINCING ARGUMENT OR EVIDENCE AGAINST TH E DOCUMENTS PRODUCED BY THE ASSESSEE BEFORE US. IN THESE CIRCUMSTANCES, WE HAVE NO OTHER OPTION BUT TO CONFIRM THE ORDER OF THE LD. CIT(A). IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 4 3 - 2'& 5#!' 25 / 11 /2011 ' 6 - 0 7 SD/- SD/- (D.K.TYAGI) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED : 25/11/2011 ITA NO. 2313-AHD-09 6 3 3 3 3 - -- - ,18 ,18 ,18 ,18 98&1' 98&1' 98&1' 98&1'- -- - 1. *+ 2. ,*+ 3. !! 1 /= 4. /=- - 5. 8@ ,1# , , 7 6. B4 3 , C/ !E , 7 TALUKDAR/ SR. P.S.