M/S. HERO'S EDUCATION AND WELFARE SOCIETY, Bhopal V. THE ACIT 3(1), Bhopal

ITA 232/IND/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5993 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 08-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S S DESHPANDE
• Keywords: Unexplained cash credit; Business income; Charitable institution; Cost of acquisition
• Section: 143(3); 11A; 12A; 12AA; 68; 10; 11; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., .., % BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER HEROS EDUCATION AND WELFARE SOCIETY, BHOPAL .. ./ PAN: AAAAH1113N VS. ACIT, 3(1), BHOPAL / APPELLANT / RESPONDENT / APPELLANT BY SHRI S.S.DESHPANDE, C. A. / RESPONDENT BY SHRI MOHD. JAVED, SR. DR DATE OF HEARING 15.12.2016 DATE OF PRONOUNCEMENT 10.01.2017 / O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-II, BHOPAL [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 06.01 .2015 AND .. . / I.T.A. NO. 232/IND/2015 %' ' / ASSESSMENT YEAR: 2010-11 I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 2 OF 29 PERTAINS TO ASSESSMENT YEAR 2010-11 AS AGAINST APPE AL DECIDED IN ASSESSMENT ORDER PASSED U/S 143(3) OF T HE ACT DATED 28.03.2013 OF ACIT, 3(1), BHOPAL [HEREINAFTER REFERRED TO AS THE AO]. 2. GROUND NO. 1 RELATES TO NOT JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF DEDUCTION U/S 10(23C)(IIIAD) OF THE INCOME-TAX ACT, 1961. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE SOCIETY IS AN EDUCATIONAL INSTITUTION REGI STERED UNDER THE M.P. SOCIETY REGISTRIKARAN ADHINIYAM, 1973. IT IS ALSO REGISTERED U/S 12A OF THE INCOME-TAX ACT, 1961, VID E CIT BHOPAL ORDER DATED 31.12.2003 W.E.F. 21.01.2003. AS PER RETURN FILED ON 29.09.2011, EXCESS OF INCOME OVER E XPENDITURE HAS BEEN DECLARED AT RS. 9,41,272/- WHICH HAS BEEN C LAIMED AS EXEMPT U/S 11 OF THE INCOME-TAX ACT, 1961. ALTER NATIVELY, IT HAS ALSO CLAIMED EXEMPTION U/S 10(23C)(IIIAD) DURIN G ASSESSMENT PROCEEDINGS AS ITS GROSS RECEIPTS ARE LE SS THAN RS. 1 CRORE DURING THE YEAR UNDER CONSIDERATION . VIDE ORDER DATED 28.03.2013 PASSED U/S 143(3) OF THE ACT, ITS INCOME HAS BEEN ASSESSED AT RS. 1,30,71,470 BY DENYING ITS CLAIM OF EXEMPTION I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 3 OF 29 OF RS. 9,41,272/- AND MAKING FURTHER ADDITIONS OF R S. 58,63,000/- FOR STCG ON SALE OF LAND AND OF RS. 62, 67,200/- FOR UNEXPLAINED CASH CREDITS U/S 68 RECEIVED MAINLY FROM SOCIETY MEMBERS. THE ASSESSEE SOCIETY HAS BEEN DENI ED CLAIMED EXEMPTION U/S 11 AND U/S 10(23C)(IIIAD) AS CLAIMED DURING ASSESSMENT PROCEEDINGS. 4. BEING AGGRIEVED THE ASSESSEE FILED THE APPEAL BEFOR E THE LD. CIT(A). 5. DURING THE COURSE OF APPEAL PROCEEDINGS, THE ASSESS EE HAS SUBMITTED THAT THE ASSESSEE SOCIETY WAS ENTITLED TO EXEMPTION U/S 10(23C)(IIIAD) AS ITS GROSS RECEIPTS ARE LESS THAN RS. 1 CRORE. IT HAS FURTHER STATED THAT A COPY OF T HE MEMORANDUM OF THE SOCIETY WAS PROVIDED TO THE AO. T HE VERY FIRST THREE OBJECTS MENTIONED IN THE MEMORANDUM ARE DEDICATED TO THE PROVIDING OF EDUCATION THROUGH EST ABLISHMENT OF SCHOOLS, THERE ARE OTHER OBJECTS ALSO MENTIONED IN THE MEMORANDUM, WHICH ARE ALL CHARITABLE IN NATURE AS SP ELT OUT IN SECTION 2(15) OF THE INCOME-TAX ACT, 1961. BUT T HESE OBJECTS ARE NOT PURSUED AT ALL BY THE ASSESSEE. HOWEVER, I N THE I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 4 OF 29 OPINION OF THE ASSESSEE, MERELY ON THE BASIS OF THE RE BEING OTHER OBJECTS MENTIONED IN THE MEMORANDUM OF WHICH O NLY EDUCATIONAL OBJECTS ARE BEING PURSUED, IT CANNOT BE SAID THAT IT DID NOT EXIST SOLELY FOR THE PURPOSES OF EDUCATION. THE LD. CIT(A) UPHELD THE FINDING OF THE AO ON THE GROUND T HAT THE EMPHASIS IN SECTION 10(23C) IS ON THE WORD SOLELY. SOLELY MEANS EXCLUSIVELY AND NOT PRIMARILY. ALSO, THE WORD EDUCATION HAS NOT BEEN USED IN THAT WIDE AND EXTENDED SENSE, A CCORDING TO WHICH EVERY ACQUISITION OF FURTHER KNOWLEDGE CONST ITUTES EDUCATION. THE SOCIETY HAS ALSO BEEN REGULARLY EARN ING SURPLUS/PROFITS YEAR AFTER YEAR. 6. BEING AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 7. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE INSTITUTION IS RUNNING ONLY EDUCATIONAL IN STITUTION. NO ACTIVITY HAS BEEN UNDERTAKEN EXCEPT EDUCATIONAL ACT IVITIES. IT HAD NEVER BEEN DOUBTED THAT THE ASSESSEE WAS DOING EDUCATIONAL ACTIVITIES ONLY. THE LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT MERELY IF THE OBJECT PROVIDED FOR OT HER I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 5 OF 29 CHARITABLE ACTIVITIES, BUT NO ACTIVITIES, IN FACT, ARE CARRIED, THE ASSESSEE CANNOT DISENTITLE FOR EXEMPTION. IT WAS CON TENDED THAT THE SOCIETY HAS BEEN EXISTING SOLELY FOR EDUCA TIONAL PURPOSES AND THIS IS WELL ESTABLISHED FROM THE FACT THAT THE ASSESSEE HAS NOT DONE ANY ACTIVITY OTHER THAN EDUCA TIONAL DURING THE YEAR UNDER CONSIDERATION OR IN ANY OTHE R YEARS IN THE PAST. THIS CAN BE VERIFIED FROM THE BALANCE SHE ET FILED ALONGWITH RETURN. SECTION 10(23C)(IIIAD) OF THE ACT PROVIDES EXEMPTION TO ANY UNIVERSITY OR OTHER EDUCATIONAL IN STITUTIONS EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FO R PURPOSE OF PROFIT. IF THE AGGREGATE ANNUAL RECEIPT DOES NOT EX CEED THE PRESCRIBED LIMIT, THE SECTION CONTEMPLATES THAT OBJ ECTS SHOULD BE EXCLUSIVELY AND SOLELY FOR THE PURPOSE OF EDUCAT ION, THE WORDS USED INSTITUTION EXISTING SOLELY FOR EDUCATIO NAL PURPOSES. THUS, SECTION 10(23C)(IIIAD) OF THE ACT CONTEMPLATES THAT THE ACTIVITY SHOULD BE SOLELY FOR THE PURPOSES OF EDUCATION. IN SUPPORT OF THIS PROPOSITI ON, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SURAT ART SILK MFG. I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 6 OF 29 ASSOCIATION, 121 ITR 1 ( S.C.) AND FEDERATION OF IN DIAN CHAMBERS AND COMMERCE INDUSTRIES, 130 ITR 186 ( S.C .) IN WHICH IT WAS HELD IF THE DOMINANT OR PRIMARY PURPOSE OF THE ASSOCIATION IS CHARITABLE, THE SUBSIDIARY OBJECT WOU LD NOT MITIGATE AGAINST THE CHARITABLE CHARACTER. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER PLACED RELIA NCE IN THE CASE OF HARF CHARITABLE TRUST, 63 TAXMANN.COM 53 (P &H), WHEREIN IT WAS HELD THAT MERELY BECAUSE ONE OF THE CL AUSES OF THE TRUST DEED OF THE ASSESSEE TRUST PROVIDE THAT T HE TRUST COULD CARRY ON OTHER BUSINESS AS DECIDED BY THE TR USTEES, IT WOULD NOT PER SE DIS-ENTITLE TRUST FROM BEING CONSID ERED FOR REGISTRATION U/S 10(23C)(VI). IN THE CASE OF ITO VS . SHRI BALAJI PREM ASHARAM, 64 TAXMANN.COM 112 (CHD), WHERE ASSESS EE- TRUST WAS CARRYING OUT ACTIVITY OF EDUCATION DURING RELEVANT YEAR AND ITS RECEIPT FROM SAID ACTIVITY WAS LESS THA N RS. ONE CRORE, ASSESSEES CLAIM FOR EXEMPTION U/S 10(23C)(I IIAD) OF THE ACT COULD NOT BE REJECTED ON GROUND THAT IT HAD MEN TIONED OTHER OBJECTS ALSO IN TRUST DEED. THE LD. AUTHORIZE D REPRESENTATIVE OF THE ASSESSEE FURTHER RELIED IN TH E CASE OF I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 7 OF 29 ALLAHABAD YOUNG MENS CHRISTIAN ASSOCIATION, 371 IT R 23 ( ALL), WHEREIN IT WAS HELD THAT MERELY BECAUSE THERE A RE OTHER OBJECTS OF SOCIETY DOES NOT MEAN THAT EDUCATIONAL I NSTITUTION IS NOT EXISTING SOLELY FOR EDUCATIONAL PURPOSE. SAME V IEW WAS ALSO HELD IN THE CASE OF NEERAJ JANHITKARI GRAMIN S EWA SANSTHAN V. CHIEF COMMISSIONER OF INCOME-TAX, (2014 ) 49 TAXMANN.COM 535 (ALLD.) AND C.P. VIDYA NIKETAN VIDY A SHIKSHAN SANSTHAN, 359 ITR 322 (ALLD). THE LD. AUTH ORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER CONTENDED TH AT THE EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT IS AVAILABL E TO INSTITUTION AND NOT TO ASSESSEE. THE SOCIETY RUNNIN G A HOSPITAL AND ALSO MEDICAL COLLEGE WOULD BE APPLICABLE U/S 10 (23C)(IIIAD) AS WELL AS U/S 10(23C)(IIIAE) OF THE ACT AS EACH IN STITUTION IS TO BE SEEN SEPARATELY. IN THE PRESENT CASE, THE ASSESS EE IS RUNNING TWO INSTITUTIONS ONE COLLEGE AND ANOTHER WAS SCHOOL. BOTH THE INSTITUTIONS WERE HAVING EDUCATIONAL PURPO SES. THERE MAY BE VARIOUS OTHER PURPOSES IN THE OBJECTS, BUT T HE SPECIFIC PURPOSE FOR WHICH THESE INSTITUTIONS ARE ONLY EDUCA TIONAL PURPOSES. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 8 OF 29 FURTHER CITED A DECISION IN THE CASE OF CIT VS. CHI LDRENS EDUCATIONAL SOCIETY, (2013) 34 TAXMAN.COM 285 (KARN ATAKA), WHEREIN IT WAS HELD THAT IF AN ASSESSEE IS RUNNING S EVERAL EDUCATIONAL INSTITUTIONS AND IF ANY OF THEM IS WHOLL Y OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT, THEN THE INCOME FROM SUCH EDUCATIONAL INSTITUTION RECEIVED BY THE A SSESSEE IS NOT INCLUDED WHILE COMPUTING ITS TOTAL INCOME. SIMI LARLY, INCOME FROM EACH EDUCATIONAL INSTITUTION IF THEY AR E NOT RECEIVING ANY AID FROM THE GOVERNMENT WHOLLY OR SUBS TANTIALLY IN RESPECT OF WHICH THE AGGREGATE ANNUAL RECEIPT DOE S NOT EXCEED RS. 1 CRORE IS ALSO NOT INCLUDED WHILE COMPUT ING ANNUAL TOTAL INCOME OF THE ASSESSEE.(PARA 23). THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER S UPPORTED HIS VIEW BY PLACING RELIANCE IN THE CASE OF JAT EDUC ATION SOCIETY VS. DY. CIT, (2011) 47 SOT 35 (DEL), CIT VS . CHILDRENS EDUCATION SOCIETY,(2013) 358 ITR 373 (KARNATAKA), U .P. FOREST CORPN. VS. DY. CIT, (2008) 297 ITR 1 ( S.C.), BIRLA VIDYA VIHAR TRUST, 135 ITR 144. THE LD. AUTHORIZED REPRESENTATI VE OF THE ASSESSEE FURTHER SUBMITTED THAT THE USE OF THE PHRA SE SOLELY I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 9 OF 29 QUALIFIES THE WORDS NOT FOR THE PURPOSE OF PROFIT. A S PER SECTION, THE INSTITUTION SHALL BE FOR EDUCATIONAL P URPOSES AND NOT FOR THE PURPOSE OF PROFIT. USING THE WORDS NOT FOR THE PURPOSE OF PROFIT IS AN IMPORTANT PHRASE. IT WAS FU RTHER EXPLAINED THAT WHEN ANY SOCIETY IS CREATED, THE BYE- LAWS ARE ALWAYS PROVIDED IN THE WIDEST SENSE. THE REASON IS TH AT THE INSTITUTION WANTS TO ASSURE THAT ALL THE INTENDED AC TIVITIES ARE CARRIED ON, WHICH MAY PROMOTE THE BASE OBJECTIVE. 8. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED THAT CASE LAWS RELIED UPON BY THE LD. CIT(A) ARE DISTINGUISHABLE ON FACTS. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT IN TH E CASE OF DELHI STOCK EXCHANGE ASSOCIATION, 225 ITR 235 ( S. C.), THE ASSESSEE WAS RUNNING A STOCK EXCHANGE AND DID NOT HA D A CLAUSE THAT THE PROFITS SHALL BE USED FOR CHARITABL E PURPOSES. BUT THE PROFITS COULD BE DISTRIBUTED TO SHAREHOLDER S. IN THAT BACKGROUND, IT WAS HELD THAT THERE MUST BE AN OBLIGA TION TO SPEND THE MONEY EXCLUSIVELY AND ESSENTIALLY ON CHAR ITY. IN THE PRESENT CASE, THERE WAS NO SUCH OBLIGATION, MORE SO, PROFIT I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 10 OF 29 COULD BE DISTRIBUTED BY WAY OF DIVIDENDS. DISTRIBUTI ON OF PROFITS, IS A VERY DIFFERENT THING FROM HAVING OTHE R CHARITABLE OBJECTS. IN THE CASE OF DHARMAPOSHANAM CO., 114 ITR 463 ( S. C.), THE TRUST WAS PARTLY A CHARITABLE TRUST AND PAR TLY FOR PROFIT PURPOSES. IT WAS DOING CERTAIN BUSINESS LIKE MANUFAC TURING OF KURIS AND MONEY LENDING AS A COMMERCIAL ACTIVITIES. IT WAS, THEREFORE, HELD THAT SUCH OBJECTS ARE NOT CHARITABL E PURPOSES BUT FOR THE PURPOSE OF PROFIT. IN THE PRESENT CASE, THE OTHER OBJECTS ARE ALSO CHARITABLE AND IT CANNOT BE SAID T HAT THE OBJECTS ARE FOR PROFIT MAKING. IN THE CASE OF SOLE TRUSTEE, LOK SHIKSHANA TRUST, 101 ITR 234 ( S. C.), THE WORD EDU CATION HAS BEEN DISCUSSED. IT IS STATED THAT EVERY ADVANCE MENT OF KNOWLEDGE IS NOT EDUCATION, WHEREAS THE ASSESSEE IS R UNNING A SCHOOL AND A COLLEGE. RUNNING AN EDUCATIONAL INSTIT UTION OF THIS SORT, DEFINITELY PREPARES PEOPLE FOR THE WORK O F LIFE. 9. THE LD. SR. DEPARTMENTAL REPRESENTATIVE RELIED ON T HE ORDERS OF AO AS WELL AS LD. CIT(A) AND SUBMITTED THA T THE OBJECTS OF THE SOCIETY WERE MULTIFARIOUS. HENCE, TH E SAME CANNOT BE TREATED AS SOLELY OBJECTIVE FOR THE PURPO SE OF I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 11 OF 29 EDUCATION. THEREFORE, THE LD. CIT(A) WAS RIGHT IN UP HOLDING THE FINDINGS OF THE AO. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. THE UNDIS PUTED FACT OF THE CASE ARE THAT THE ASSESSEE SOCIETY DOES NOT POSSESS REGISTRATION U/S 12A OF THE ACT FOR THE YEAR UNDER CONSIDERATION . HOWEVER, IT CAN CLAIM EXEMPTION U/ S 10(23C)(IIIAD) OF THE ACT, IF THE CONDITION ENUMERA TED THEREIN ARE SATISFIED. WE FIND THAT AGGREGATE ANNUAL RECEIP T OF THE SOCIETY DOES NOT EXCEED THE AMOUNT OF RS. 1 CRORE F OR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. THEREFORE, TH E ONLY ISSUE REMAINS TO BE ANALYZED WHETHER THE ASSESSEE IS EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PUR POSE OF PROFIT. FROM THE PERUSAL OF THE BALANCE SHEET AND I NCOME AND EXPENDITURE ACCOUNT PLACED IN THE PAPER BOOK, IT IS NOTICED THAT THE ONLY ACTIVITY CARRIED OUT BY THE ASSESSEE DURING THE YEAR IS RELATING TO EDUCATION ONLY. IT IS ALSO NOT THE CASE OF THE AO THAT THE ASSESSEE HAS CARRIED OUT ANY OTHER ACTI VITY OTHER THAN EDUCATIONAL DURING THE YEAR UNDER CONSIDERATIO N. THE I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 12 OF 29 ASSESSEE MAY BE HAVING MANY OTHER OBJECTS IN TRUST DEED, BUT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS NOT CARRIED OUT ANY OTHER ACTIVITIES OTHER THAN EDUCATI ON. THERE IS NO ALLEGATION BY THE AO THAT THE ASSESSEE HAS DEVIA TED FROM ITS OBJECTS AND THE ASSESSEE IS CARRYING ON OTHER ACTIV ITIES OTHER THAN EDUCATION. THE PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT IMPARTING OF EDUCATIONAL NATURE OF ACTIVITIES CARRIED ON BY THE ASSESSEE HAS NOT BEEN DOUBTED BY THE AO. THE PR OVISIONS OF SECTION 10(23C)(IIIAD) OF THE ACT READS AS UNDER :- (IIIAD) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTIT UTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FO R PURPOSES OF PROFIT IF THE AGGREGATE ANNUAL RECEIPTS OF SUCH UNIVERSITY OR EDUCATIONAL INSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRESCRIBED; OR 11. THE PERUSAL OF THE ABOVE PROVISION SHOWS THAT THE EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT IS AVAILABL E TO AN INSTITUTION, WHICH IS SOLELY EXISTS FOR EDUCATIONAL PURPOSES. THEREFORE, THE PHRASE USED AS SOLELY MEANS THAT N OT FOR THE I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 13 OF 29 PURPOSES OF PROFIT. THEREFORE, PLAIN READING OF THE SAID SECTION MEANS THAT AN EDUCATIONAL INSTITUTION, WHICH IS ENGA GED SOLELY FOR THE PURPOSE OF IMPARTING EDUCATION IS SOLELY FO R THE PURPOSE OF IMPARTING EDUCATION IS QUALIFIES FOR THE EXEMPTION U/S 10(23C)(IIIAD). THE SOLELY WORDS USED THEREIN MEANS THAT THE ASSESSEE INSTITUTION IS NOT CARRYING OUT OTHER ACTIVITIES OF EARNING OF PROFIT. WE HAVE GONE THROUGH THE CASE LA WS RELIED UPON BY THE LD. AUTHORIZED REPRESENTATIVE OF THE A SSESSEE. WE FIND THAT IN THE CASE OF CIT VS. CHILDRENS EDUCATI ONAL SOCIETY, (2013) 34 TAXMAN.COM 285 (KARNATAKA), WHEREIN IT WAS HELD THAT IF AN ASSESSEE IS RUNNING SEVERAL EDUCATIONAL INSTITUTIONS AND IF ANY OF THEM IS WHOLLY OR SUBSTANTIALLY FINANC ED BY THE GOVERNMENT, THEN THE INCOME FROM SUCH EDUCATIONAL INSTITUTION RECEIVED BY THE ASSESSEE IS NOT INCLUDE D WHILE COMPUTING ITS TOTAL INCOME. SIMILARLY, INCOME FROM EACH EDUCATIONAL INSTITUTION IF THEY ARE NOT RECEIVING A NY AID FROM THE GOVERNMENT WHOLLY OR SUBSTANTIALLY IN RESPECT OF WHICH THE AGGREGATE ANNUAL RECEIPT DOES NOT EXCEED RS. 1 CROR E IS ALSO NOT INCLUDED WHILE COMPUTING ANNUAL TOTAL INCOME OF THE I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 14 OF 29 ASSESSEE. SIMILARLY, IN THE CASE OF NEERAJ JANHITKA RI GRAMIN SEWA SANSTHAN, (2014) 49 TAXMNN.COM 535 (ALL), IT WA S HELD THAT MERE PRESENCE OF OBJECTS IN MEMORANDUM PROVIDI NG FOR OTHER CHARITABLE ACTIVITIES WOULD NOT DISENTITLE A S OCIETY TO CLAIM APPROVAL U/S 10(23C)(VI), WHERE IT IS ESTABLIS HED THAT INSTITUTION IS, IN FACT, CARRYING ON ONLY EDUCATION AL ACTIVITIES. SIMILARLY, IN THE CASE OF HARF CHARITABLE TRUST, 63 TAXMANN.COM 53 (P&H), WHEREIN IT WAS HELD THAT MERELY BECAUSE ONE OF THE CLAUSES OF THE TRUST DEED OF THE ASSESSEE TRUST PROVIDE THAT THE TRUST COULD CARRY ON OTHER B USINESS ACTIVITY AS DECIDED BY THE TRUSTEES, IT WOULD NOT P ER SE DIS- ENTITLE TRUST FROM BEING CONSIDERED FOR REGISTRATIO N U/S 10(23C)(VI) OF THE ACT. SIMILARLY, HON'BLE SUPREME COURT IN THE CASES OF SURAT ART SILK MFG. ASSOCIATION, 121 ITR 1 ( S.C.) AND FEDERATION OF INDIAN CHAMBERS AND COMMERCE INDUSTRI ES, 130 ITR 186 ( S.C.) IN WHICH IT WAS HELD IF THE DOMAIN O R PRIMARY PURPOSE OF THE ASSOCIATION IS CHARITABLE, THE SUBSI DIARY OBJECT WOULD NOT MITIGATE AGAINST THE CHARITABLE CHARACTER. THUS, WE ARE OF THE OPINION THAT THE SOCIETY HAS NOT CARRIED OUT ANY I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 15 OF 29 OTHER ACTIVITIES OTHER THAN EDUCATION DURING THE YE AR UNDER CONSIDERATION , THEN IT IS ELIGIBLE FOR EXEMPTION U NDER SECTION 10(23C)(IIIAD) OF THE ACT. IN THE CASE OF THE ASSES SEE, WE FIND THAT THE ASSESSEE SOCIETY HAS NOT CARRIED OUT ANY O THER ACTIVITY OTHER THAN EDUCATION, THEREFORE, THE ASSESSEE IS EL IGIBLE FOR DEDUCTION U/S 10(23C)(IIIAD) OF THE ACT. SIMILARLY, IN GEETANJALI EDUCATION SOCIETY VS. ASSISTANT DIRECTOR OF INCOME- TAX (EXEMPTION), (2014) 101 DTR 337 (KAR), HON'BLE KA RNATAKA HIGH COURT HAS HELD AS UNDER :- (HEAD NOTE) EXEMPTIONS INCOMES OF CERTAIN TRUSTS OF NATIONAL IMPORTANCE, UNIVERSITIES, EDUCATIONAL INSTITUTIONS, HOSPITALS, ETC. ALLOWABILITY ASSESSEE SOCIETY FILED ITS RETURN OF INCOME DECLARING IT NIL, CLAIMING EXEMP TION U/S 10(23C)(IIIAD) AO IN REOPENING PROCEEDINGS DETER MINED TOTAL INCOME OF SOCIETY AT RS. 23,90,710 FOR ASSESS MENT YEAR 2006-07 AND RS. 37,72,420/- FOR ASSESSMENT YEA R 2007-08 DECLARING THEIR INCOME EXCESS OVER EXPENDIT URE HOLDING THAT SOCIETY WAS NOT EXISTING SOLELY FOR ED UCATIONAL I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 16 OF 29 PURPOSE, SINCE IT INCLUDED CERTAIN OBJECTS IN ITS MEMORANDUM NOT CONNECTED WITH EDUCATION AND WAS, THEREFORE, NOT ENTITLED FOR EXEMPTION U/S 10(23C)(I IIAD) ASSESSEE FILED APPEAL BEFORE COMMISSIONER (APPEALS) WHO ALLOWED APPEAL FOR BOTH ASSESSMENT YEARS HOLDING TH AT SOCIETY HAD NOT CARRIED ON ANY ACTIVITY OTHER THAN EDUCATIONAL ACTIVITY AND GRANTED EXEMPTION REVENUE FILED APPEAL BEFORE TRIBUNAL TRIBUNAL ALLOWED APPEAL HO LDING THAT SOCIETY INCLUDED CERTAIN OBJECTS, NOT CONNECTE D WITH EDUCATION IN ITS MEMORANDUM OF OBJECTS AND, THEREFO RE, IT CANNOT BE REGARDED AS EXISTING SOLELY FOR PURPOSES OF EDUCATION HELD, IN ABSENCE OF ANY ALLEGATION OR M ATERIAL AGAINST SOCIETY SHOWING THAT THEY ARE INVOLVED IN A NY OTHER ACTIVITIES THAN EDUCATIONAL ACTIVITIES, IT CA NNOT BE DENIED EXEMPTION U/S 10(23C(IIIAD) VIEW TAKEN BY TRIBUNAL IS NOT CORRECT. 12. THIS VIEW IS ALSO SUPPORTED BY THE DECISION IN THE CASE OF RAMPYARI DEVI CHARITABLE TRUST VS. DGIT, (DEL) I N W.P.NO.4725/2012 AND C.M. NO. 9795/2012 DATED 24 TH I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 17 OF 29 SEPTEMBER, 2015, WHEREIN THE HON'BLE SUPREME COURT H AS HELD AS UNDER :- WE FIND THAT IT IS AN ADMITTED FACT IN THE PRESENT CASE THAT THE ONLY ACTIVITY OF THE PETITIONER IS TH AT OF RUNNING OF A SCHOOL AND THAT THE PETITIONER IS NOT INDULGING IN ANY ACTIVITY FOR THE PURPOSES OF PROFI T AND THESE ARE THE ONLY REQUIREMENTS FOR GRANT OF APPROVAL AND, THEREFORE, IN THE SAME MANNER IN THE CASE OF DIGAMBAR JAIN SOCIETY, WE ISSUE A WRIT OF MANDAMUS DIRECTING THE RESPONDENTS TO GRANT APPROVAL TO THE PETITIONER UNDER SECTION 10(23C)(VI ) OF THE ACT FOR THE ASSESSMENT YEAR 2011-12 ONWARDS. SIMILARLY, IN PARA 10 & 11 OF THE SAID DECISION, TH E HON'BLE HIGH COURT HELD AS UNDER :- 10. IT IS NOT DENIED BY THE REVENUE THAT THE ONLY ACTIVITY THAT THE PETITIONER IS INDULGING IN IS EDUCATION NAMELY RUNNING OF A SCHOOL AND NO OTHER ACTIVITY. I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 18 OF 29 11. THE REQUIREMENTS OF SECTION 10(23C)(VI) AS LAID DOWN BY THE SUPREME COURT ARE : (I) EXISTENCE OF AN EDUCATIONAL INSTITUTION AND (II) APPROVAL OF THE PRESCRIBED AUTHORITY FOR THE PURPOSES OF GRANT OF EXEMPTION FOR WHICH AN APPLICATION IN THE PRESCRIBED FORM HAS BEEN FILED. IN THE PRESENT CASE, THE PETITIONER SATISFIES BOTH THE TESTS. THERE IS ADMITTEDLY AN EDUCATIONAL INSTITUTION IN EXISTENCE AND THE PETITIONER HAS ALSO MOVED AN APPLICATION IN THE PRESCRIBED FORM. 13. IN THE LIGHT OF ABOVE, WE FIND THAT THE FACTS OF THE PRESENT CASE ARE SQUARELY COVERED BY THE ABOVE DEC ISION. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT TH E LOWER AUTHORITIES WERE NOT JUSTIFIED IN NOT ALLOWING THE D EDUCTION TO THE ASSESSEE U/S 10(23C)(IIIAD) OF THE INCOME-TAX A CT, 1961. ACCORDINGLY, THE AO IS DIRECTED TO TREAT THE SOCIET Y AS COVERED BY SECTION 10(23C)(IIIAD) OF THE ACT AND ALLOW THE RELIEF ACCORDINGLY. ACCORDINGLY, GROUND NO.1 IS ALLOWED. 14. GROUND NOS. 2 & 3 RELATE TO NOT JUSTIFIED IN UPHOL DING REJECTION OF REGISTRATION U/S 12AA OF INCOME-TAX AC T, 1961, I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 19 OF 29 AND CONSEQUENTLY UPHOLDING THE ADDITION OF RS. 9,41 ,272/- BASED ON WRONGFUL REJECTION OF REGISTRATION U/S 12AA OF THE ACT. 15. BRIEFLY STATED, THE FACTS OF THE CASE OF THESE GROU NDS ARE THAT THE ASSESSEE SOCIETY IS REGISTERED U/S 12A OF THE IT ACT VIDE CIT BHOPAL ORDER NO. 58/2003-04 DATED 31.12.20 03 W.E.F. 21.01.2003 AND ACCORDINGLY THE SOCIETY HAS CLAIMED EXEMPTION OF INCOME OVER EXPENDITURE DURING THE YEAR UNDER CONSIDERATION. HOWEVER, THE AO NOTED THAT THE REGI STRATION U/S 12AA WAS GRANTED TO THE ASSESSEE SOCIETY WITH THE FOLLOWING CONDITIONS :- THE RETURN SHALL BE REGULARLY FILED BY THE SOCIET Y WITHIN THE PRESCRIBED TIME AS PER SUB-SECTION 4A READ WITH EXPLANATION -2 BELOW SUB-SECTION (1) OF SECTION 139 . THE CERTIFICATE SHALL CEASE TO HAVE EFFECT IN CASE OF N ON- COMPLIANCE OF THIS REQUIREMENT. 16. SINCE THE ASSESSEE SOCIETY FOR THE YEAR UNDER CONSIDERATION HAS FILED ITS RETURN OF INCOME ON 29 .09.2011. HENCE, THE RETURN IS DELAYED BY ALMOST ONE YEAR, TH EREFORE, THE I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 20 OF 29 AO HELD THAT THE CERTIFICATE GRANTING REGISTRATION U/S 12A IS CEASED TO EXIST. CONSEQUENTLY, THE AO HELD THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 11 OF THE ACT. 17. AGGRIEVED WITH THE ORDER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), WHO ECHOED THE ASSESSMENT ORD ER OF THE AO. 18. AGGRIEVED THE ASSESSEE FILED THE APPEAL BEFORE US. 19. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME U/S 139(4A) , HENCE, THE REGISTRATION GRANTED BY THE CIT, BHOPAL, HAS NOT C EASED TO BE EXIST AS THE RETURN SO FILED IS AS PER THE CONDITIO NS PRESCRIBED BY GRANTING THE REGISTRATION TO THE SOCIETY. 20. THE LD. SR. DEPARTMENTAL REPRESENTATIVE SUPPORTED T HE ORDER OF THE A.O. 21. WE HAVE CONSIDERED THE FACTS AND FIND THAT THE ASSESSEE HAS FAILED TO FILE RETURN OF INCOME U/S 13 9(4A) READ WITH SECTION 121 TO SECTION 139(1). IN OUR CONSIDERE D VIEW, FOR MAKING ELIGIBLE TO EXEMPTION U/S 11 IN ACCORDANCE W ITH THE CERTIFICATE GRANTED U/S 12A BY THE CIT, BHOPAL, THE ASSESSEE I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 21 OF 29 SHOULD HAVE FILED ITS RETURN OF INCOME WITHIN THE DU E DATE AS PRESCRIBED U/S 139(1) OF THE ACT READ WITH EXPLANATI ON 2 TO SECTION 139(1) OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 139(4) OF THE INCOME-TAX ACT, 1961. SINCE THE ASSESSEE HAS FAILED TO FURNISH THE RETURN AS PE R THE TERMS AND CONDITIONS LAID DOWN WHILE GRANTING THE REGISTRAT ION TO THE SOCIETY, THE AO HAS CORRECTLY REJECTED AND HELD THA T THE ASSESSEE IS NOT ELIGIBLE TO EXEMPTION U/S 11 AS ITS REGISTRATION HAS BEEN CEASED TO EXIST FOR THE ASSESSMENT YEAR UN DER CONSIDERATION FOR NON-COMPLIANCE OF THE TERMS AND C ONDITIONS STIPULATED WHILE GRANTING CERTIFICATE U/S 12AA BY TH E COMMISSIONER OF INCOME-TAX, BHOPAL. ACCORDINGLY, G ROUND NO. 2 & 3 OF THE APPEALS ARE DISMISSED. 22. GROUND NO. 4 RELATES TO UPHOLDING THE ADDITION OF RS. 58,63,000/- AS SURPLUS ON SALE OF LAND AS SHORT TER M CAPITAL GAIN. 23. BRIEFLY STATED, THE FACTS OF THIS GROUND ARE THAT T HE ASSESSEE HAS SHOWN RS. 58,63,000/- AS SURPLUS ON SAL E OF LAND UNDER THE HEAD GENERAL FUND. SINCE THE ASSES SEE DID I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 22 OF 29 NOT PROVIDE ANY DETAILS WHATSOEVER REGARDING VALUE O F SALE CONSIDERATION, INDEXED COST OF ACQUISITION, COST OF IMPROVEMENT IF ANY ETC. IN VIEW OF REJECTION OF 12A TO THE ASSE SSEE, THE PROFIT EARNED ON THIS TRANSACTION, WAS HELD AS SHORT TERM C APITAL GAIN AND ADDED BACK AS CHARGEABLE TO TAX. 24. IN APPEAL, THE LD. CIT(A) NOTED THAT THE ASSESSEE I S NOT FOUND TO BE ENTITLED FOR EXEMPTION U/S 11. THE SUBM ISSIONS MADE BY THE ASSESSEE WERE FOUND TO BE DEVOID OF MER ITS. FURTHER, THE ONLY EVIDENCE FURNISHED BY THE ASSESSE E WAS A PHOTOCOPY OF DESCRIBED THE PROPERTY IN QUESTION ONE ACRE LAND SITUATED AT VILLAGE KHAJURIKHURD, WHICH HAS BEEN TRA NSFERRED IN THE LAND RECORDS IN THE NAME OF THE ASSESSEE THR OUGH ITS PRESIDENT SHRI ISAM SINGH MORYE SINCE 22.11.2003 AN D AS BEING SOLD TO M/S. ESSARJEE CONSTRUCTION (P) LIMITE D THROUGH ITS MANAGING DIRECTOR, SHRI SUNIL KUMAR GUPTA FOR R S. 62,50,000/-. THE ASSESSEE HAS PAID RS. 18,50,000/- IN CASH ON 08.07.2009 WHEREAS RS. 11,00,000/- HAS BEEN PAID THROUGH CHEQUE ON VARIOUS DATES. SINCE THE ASSESSEE WAS FOUND TO BE LIABLE AND THE LAND TRANSFERRED IN THE NAME OF THE I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 23 OF 29 ASSESSEE W.E.F. 12.11.2003, THE LD. CIT(A) HAS HELD THAT THE ASSESSEE HAS TO PAY LONG TERM CAPITAL GAIN ON SALE OF THIS LAND. ACCORDINGLY, THE AO WAS DIRECTED TO COMPUTE LONG TE RM CAPITAL GAIN ON SUCH TRANSACTION. 25. BEING AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 26. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE ASSESSEE HAS PURCHASED THE LAND FOR RS. 3,87,000/- AND SAME WAS SOLD FOR RS. 62.50 LAKHS DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE ASSESSEE HAS EARNED A SUM OF RS. 58.63 LAKHS AS SURPLUS. SINCE THE ASSESSEE HAS BEEN GRANTED EXEMPTION U/S 11A AND THE ASSESSEE HAS HAVI NG INVESTED A SUM OF RS. 2,76,33,075/- ON ACCOUNT OF PURCHASE/CONSTRUCTION OF LAND AND BUILDING FOR SCHO OL. THUS, THE ASSESSEE HAS SPENT MUCH MORE THAN THE SALE VALU E OF THE PROPERTY SOLD AND ELIGIBLE FOR EXEMPTION U/S 10(23C)(IIIAD)/11(1A) OF THE ACT. HENCE, NO ADDITIO N ON THIS ACCOUNT IS REQUIRED TO BE MADE. I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 24 OF 29 27. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 28. WE HAVE CONSIDERED THE FACTS AND FIND THAT THE ASSESSEE IS FOUND TO BE ELIGIBLE FOR EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT, HENCE SURPLUS EARNED ON ACCOUNT OF SALE OF LAND AT RS. 58.68 LAKHS HAS BEEN APPLIED FO R PURCHASE OF CONSTRUCTION OF LAND AMOUNTING TO RS. 276 LAKHS. HENCE, THE SURPLUS EARNED ON THIS TRANSACTION BY THE SOCI ETY NOT TAXABLE, AS THE INCOME OF THE SOCIETY IS HELD AS EX EMPT IN OUR FINDING AS GIVEN IN GROUND NO.1 ABOVE. THIS GROUND IS, THEREFORE, ALLOWED. 29. GROUND NO. 4 RELATES TO ADDITION ON ACCOUNT OF UNSECURED LOAN AMOUNTING TO RS. 62,67,200/-, THE ID ENTITY OF CREDITOR, CAPACITY TO PAY AND THE GENUINENESS OF TH E TRANSACTION WAS PROVED BEYOND DOUBT BEFORE THE CIT(A )-II. 30. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE AO HAS MADE ADDITION OF RS. 62,67,200/- ON ACCOUNT OF UNSECURED LOAN RAISED BY THE ASSESSEE. THE AO NOTED THAT THE ASSESSEE DID NOT PROVIDE ANY DETAILS NOR SUBMITTED ANY I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 25 OF 29 DOCUMENTS IN SUPPORT OF CREDITWORTHINESS AND GENUINE NESS OF THE LOANERS AND THE ONLY DOCUMENTS PROVIDED BY THE ASSESSEE IS AN AGREEMENT OF LOAN REGARDING RS. 20 LAKHS. ANO THER RS. 20 LAKHS AND A SUM OF RS. 10 LAKHS BORROWED BY SHRI MO RYE. THE AO NOTICED THAT THE SALE DEED WAS ENTERED ON 29.03.2 010 WITH THE SOCIETY THROUGH SHRI I. S. MORYE, WHO HAPPENS TO BE THE PRESIDENT OF THE SOCIETY BETWEEN MR. ANAND CHATURVE DI, SHRI SUSHIL CHATURVEDI, SHRI SUMANT CHATURVEDI FOR SALE OF LAND AND BUILDING PERTAINED TO VILLAGE HATHIKHEDA FOR SA LE CONSIDERATION OF RS. 2.50 CRORES. THE SALE DEED SPE CIFIED THAT AN AMOUNT OF RS. 80 LAKHS WAS OUT OF TOTAL SALE CONS IDERATION WAS PAID BY CHEQUE AS WELL AS BY CASH. THUS, THE AO CONCLUDED THAT THIS IS A SYPHONING OF FUNDS OF THE SOCIETY FOR PERSONAL INTEREST OF SHRI I. S. MORYA THROUGH THE A BOVE CHANNELS, HENCE THE AO MADE ADDITION OF RS. 62,67,2 00/-. 31. IN APPEAL, THE LD. CIT(A) OBSERVED THAT THE ASSESSE E IS FOUND TO HAVE SHOWN UNSECURED LOAN FROM ITS MEMBERS, WHO IN TURN, HAVE RECEIVED THE SAME FROM PARTIES, WHO HA VE ENTERED INTO AGREEMENT FOR SALE OF IMMOVABLE PROPER TY WITH THE I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 26 OF 29 PRESIDENT OF THE SOCIETY FOR RS. 2.50 LAKHS AND PAY MENT FOR WHICH HAVE BEEN MADE OUT OF FUNDS OF THE ASSESSEE S OCIETY. THUS, THERE HAS BEEN DIVERSION OF ASSESSEE SOCIETY FUND FOR PERSONAL BENEFIT OF SPECIFIED PERSON IN VIOLATION O F PROVISIONS OF SECTION 13 OF THE INCOME-TAX ACT, 1961. SINCE THE I NCOME OF THE ASSESSEE FOUND ASSESSABLE AS PER NORMAL PROVISI ONS OF INCOME-TAX ACT FROM BUSINESS INCOME, PROVISIONS OF SECTION 68 ARE FOUND APPLICABLE, HENCE, THE LD. CIT(A) UPHELD THE ACTION OF THE AO. 32. AGGRIEVED WITH THE ORDER, THE ASSESSEE HAS FILED APP EAL BEFORE US. 33. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED CONFIRMATION OF THE CREDITORS, WH O WERE THE OFFICE BEARER AND HAVE BROUGHT THE MONEY AS LOAN TO THE SOCIETY FOR THE PURCHASE OF THE BUILDING OF THE SOC IETY. THE BANK STATEMENTS HAVE BEEN FURNISHED AND THE SOURCE OF SOURCE IS ALSO ESTABLISHED FOR THE PURPOSE OF REGIS TRATION WITHIN THE STIPULATED PERIOD, THE OFFICE BEARERS RAI SED THE LOANS AND HAVE GIVEN THE LOAN TO THE SOCIETY. THE COURT C ASES ARE I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 27 OF 29 GOING ON FOR THE RECOVERY OF THIS AMOUNT FROM THE R ESPECTIVE CREDITORS. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ALSO FILED THE COPIES OF THE SAME AS A CORROBORATIV E EVIDENCE. THEREFORE, IT WAS SUBMITTED THAT ALL THE CREDITORS A RE INCOME TAX ASSESSEES AND HAVE CONFIRMED THE TRANSACTIONS A ND HAVE ALSO EXPLAINED THE SOURCE OF SOURCE. THEREFORE, UND ER NO CIRCUMSTANCES, THE ADDITION CAN BE MADE IN VIEW OF T HE JUDGEMENT OF HON'BLE M.P. HIGH COURT IN THE CASE OF METACHEM INDUSTRIES, 245 ITR 160 AND PITHAMPUR COETZA, 240 I TR 442 (M.P.). THE LD. AUTHORIZED REPRESENTATIVE OF THE AS SESSEE FURTHER SUBMITTED THAT EVEN OTHERWISE IF THE CLAIM U /S 10(23C)(IIIAD) OR SECTION 11 IS CONSIDERED, ALL THE INCOME WOULD BE EXEMPT, SINCE IT HAS BEEN APPLIED FOR THE OBJECT OF THE SOCIETY. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED THAT OBSERVATION OF THE AO THAT F UNDS OF THE ASSESSEE SOCIETY HAVE BEEN SYPHONED OFF FOR THE PER SONAL INTEREST OF SHRI I. S. MORYA, PRESIDENT OF THE SOCI ETY IS ALSO WITHOUT ANY MERITS AS THE OFFICE BEARERS HAVE ADVANC ED LOANS TO THE SOCIETY AND IN TURN, SOCIETY HAVE PURCHASED LAND FOR ITS I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 28 OF 29 USE. THEREFORE, IT IS NOT UNDERSTOOD AS TO HOW THE P ERSONAL INTEREST OF THE OFFICE BEARER IS INVOLVED. 34. THE LD. SR. DEPARTMENTAL REPRESENTATIVE RELIED ON T HE ORDERS OF THE LOWER AUTHORITIES. 35. WE HAVE CONSIDERED THE FACTS AND RIVAL SUBMISSIONS. WE FIND THAT THE SOCIETY IS ELIGIBLE FOR EXEMPTION U/S 10(23C)(IIIAD) AS HELD IN GROUND NO.1 ABOVE. FURTHE R, THE ASSESSEE HAS FILED THE CONFIRMATIONS OF THE CREDITO RS EXPLAINING THE SOURCE OF SOURCE, WHO IN TURN, OBTAINED LOANS FR OM THE PERSONS, WHO ARE ALSO FACING COURT CASES FOR NON RET URN OF SUCH LOANS. FURTHER, THE AMOUNT HAS BEEN INVESTED B Y THE SOCIETY IN LAND AND BUILDING. HENCE, THE BORROWED F UNDS HAVE BEEN UTILIZED FOR THE BENEFIT OF THE SOCIETY. THERE FORE, THE FINDING OF THE LOWER AUTHORITIES ARE WITHOUT ANY BAS IS AND NOT IN ACCORDANCE WITH LAW. THEREFORE, THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT IS DELETED. I.T.A.NO. 232/IND/2015-A.Y.2010-11 M/S.HEROS EDUCATION & WELFARE SOCIETY, BHOPAL. PAGE 29 OF 29 36. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 10 TH JANUARY, 2017. SD/- (..) (D.T.GARASIA) JUDICIAL MEMBER SD/- (..) (O.P.MEENA) ACCOUNTANT MEMBER * / DATED : 10 TH JANUARY, 2017. CPU*