College of Pharmaceutical Sciences, Berhampur V. ITO(Exemptions), Berhampur

ITA 277/CTK/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1416 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 06-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: P R MOHANTY
• Keywords: Capital asset; Capital receipt; Capital expenditure; Set aside
• Section: 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 277 /CTK/20 1 7 ( / A SSESSMENT Y EAR : 20 06 - 20 07 ) COLLEGE OF PHARMACEUTICAL SCIEN CE, BERHAMPUR, MAHUDA, GANJAM VS. ITO(EXEMPTIONS), BERHAMPUR PAN NO. : AAAAG 5146 J ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI P.R.MOHANTY , AR /REVENUE BY : SHRI S.C.MOHANTY , DR / DATE OF HEARING : 12 / 0 3 /20 2 1 / DATE OF PRONOUNCEMENT : 12 / 0 3 /20 2 1 / O R D E R PER BENCH : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 03.03.2017 , PASSED BY THE CIT (A) - 3 , BHUBANESWAR FOR THE ASSESS MENT YEAR 20 06 - 20 07 , ON THE FOLLOWING GROUNDS OF APPEAL : - 01. THE LD. CIT(APPEAL) ERRED IN ADDING THE DEVELOPMENT FEES OF RS. 62,44,483/ - RECEIVED BY THE INSTITUTION WHICH HAS BEEN UTILIZED SPECIFICALLY FOR THE INFRASTRUCTURE DEVELOPMENT OF THE INSTITUT ION DURING THE YEAR, PARTICULARLY WHEN THE ENTIRE AMOUNT HAS BEEN SPENT TOWARDS CAPITAL APPLICATION AND THE ORGANIZATION DOES NOT HAVE ANY CORPUS CREATED OUT OF IT. 02. THE LD. CIT(APPEAL) ERRED IN ADDING THE GRANT - IN - AID OF RS. 17,56,084/ - RECEIVED FROM AICTE, NEW DELHI WITH DIRECTION TO DISBURSE AMONGST THE M. PHARMA STUDENTS FOR CONDUCTING HIGHER STUDIES, AND RESEARCH WHICH HAS BEEN DISBURSED AS PER THE DIRECTIONS . 03. SINCE THE INSTITUTION IS BEING ENGAGED IN CHARITABLE ACTIVITY AS HAS BEEN ENVIS AGED U/S 2(15) AND A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860, ASSESSING THE ENTITY AS THAT OF CARRYING ON BUSINESS, IGNORING THE BASIS PROVISIONS OF SEC 11 AND 12, IS AGAINST THE INTEREST OF EQUITY AND JUSTICE. ITA NO. 277 /CTK/201 7 2 04. THE APPELLANT CRAV ES TO PUT FORTH ADDITIONAL GROUNDS DURING THE COURSE OF APPEAL PROCEEDINGS. 06. THAT, THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE FINAL HEARING, IF NECE SSITY SO ARISES. 2. FROM THE ABOVE GROUNDS, THERE ARE ONLY TWO ISSUES INVOLVED OUT OF ONE IS WHETHER THE DEVELOPMENT FEE IS TREATED AS A CAPITAL RECEIPT AND RS.17,56,084/ - IS TO BE TREATED AS CORPUS FUND. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN AOP RUNS A PHARMACEUTICAL COLLEGE IN THE NAME & STYLE COLLEGE OF PHARMACEUTICAL SCIENCES AT MOHUDA, DISTRICT GANJAM. THE ASSESSEE IN THIS CASE WAS COMPLETED ORIGINALLY U/S.143(3)/147 OF THE ACT ON 18.11.2011 DETERMINING TOTAL LOSS AT RS.4,95,470/ - . SUBSEQUENTLY THE CIT VIDE HIS ORDER U/S.263 OF THE ACT DATED 27.03.2014 HAS SET ASIDE THE CASE TO THE FILE OF AO TO REDO THE ASSESSMENT. ACCORDINGLY, THE AO PASSED HIS ORDER ON 17.03.2015 BY ADDING TO THE DEVELOPMENT FEE OF RS.62,44,483/ - AND GRANT - IN - AI D RECEIVED FROM AICTE OF RS.17,21,377/ - AND TRIPURA GOVT. OF RS.34,707/ - . THERE IS NO DISPUTE THAT THE ASSESSEE IS ENGAGED ONLY FOR IMPARTING EDUCATION. THE DEVELOPMENT FEES COLLECTED FROM THE STUDENTS AND BREAK UP OF GRANT - IN - AID WHICH ARE AS UNDER : - DEV ELOPMENT FEES GRANTS - IN AID D. PHARMA RS.9,27,500/ - AICTE RS. 17,21,377/ - B. PHARMA RS.22,24,800/ - TRIPURA GOVT. RS.34,707/ - . M. P HARMA RS.30,06,183/ - BIO - SCIENCE RS.46,000/ - TOTAL RS.62,44,483/ - RS.17,56,084/ - ITA NO. 277 /CTK/201 7 3 T HE INSTITUTION RECEIVED THE ABOVE DEVELOPMENT FEES ON DIFFERENT INSTALLMENTS FROM THE STUDENTS. HOWEVER, TH E AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND TREATED IT AS REVENUE RECEIPT AND GRANT - IN - AID RECEIPT WAS ALSO TREATED AS REVENUE RECEIPT AFTER RELYING CERTAIN JUDGMENTS AND COMPLETED THE ASSESSMENT ACCORDINGLY. 4. FEELING AGGRIEVED FROM ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. FURTHER FEELING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 6. LD. AR OF THE ASSESSEE SUBMITTED THAT THE INS TITUTION IS CHARGING DEVELOPMENT FEE AS PER THE DIRECTION OF THE GOVERNMENT OF ODISHA. THE RESOLUTION OF THE GOVERNMENT OF ODISHA HEALTH & FAMILY WELFARE DEPARTMENT DATED 11.09.2003, IS PLACED AT PAPER BOOK PAGE NO.27 & 28. HE ALSO SUBMITTED THAT THE GRANT - IN - AID HAS BEEN RECEIVED FROM THE TECHNICAL EDUCATION. THE DETAILS ARE AT PAPER BOOK PAGE NOS.5, 6 & 9 AND THE UTILIZATION CERTIFICATE HAS ALSO BEEN SUBMITTED REGARDING PROPER UTILIZATION OF THE FUNDS. HE STRONGLY CONTESTED THAT THESE ARE THE NATURE OF CA PITAL RECEIPT, THEREFORE, IT HAS NOT BEEN CREDITED INTO THE INCOME AND EXPENDITURE ACCOUNT OF THE ASSESSEE AND HAS SPENT ENTIRELY FOR THE PURPOSE OF THE FUNDS RECEIVED. THE ASSESSEE HAS NOT UTILIZED ANY FUND OTHER THAN FOR THE PURPOSE OF RECEIPT. HE ALSO S UBMITTED IN COMPUTATION ITA NO. 277 /CTK/201 7 4 WHICH IS PLACED AT PAPER BOOK PAGE NOS.31 & 32, IF OTHERWISE THE ASSESSEES CONTENTION IS NOT ACCEPTED BY THE GOVERNMENT OF ODISHA DEPARTMENT, THE ASSESSEE HAS COMPLIED THE MANDATORY PROVISIONS OF SECTION 11(1) OF THE ACT. THE AUTHO RITIES BELOW HAVE WRONGLY INTERPRETED AND APPLIED WITHOUT CONSIDERING THE ACTUAL FACTS OF THE ASSESSEE AND NOT ACCEPTED THE CONTENTION OF THE ASSESSEE. HE HAS ALSO FILED PAPER BOOK CONTAINING PAGE NOS.1 TO 135. 7 . ON THE OTHER HAND, LD. DR STRONGLY RELIED ON THE ORDERS OF AUTHORITIES BELOW AND TRIED TO DISTINGUISH THE CONTENTION OF LD. AR AND SUPPORTED THE CASE LAWS RELIED ON BY THE LOWER AUTHORITIES. 8 . AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSE SSEE - SOCIETY IS A REGISTERED SOCIETY AND HAS GOT REGISTRATION U/S.12AA(1)(B)(I) R.W.S.254(1) OF THE ACT ON 17.05.2016 IN PURSUANCE TO THE ORDER OF THE CIT(EXEMPTIONS) ON THE BASIS OF APPLICATION FILED BY THE ASSESSEE DATED 30 TH MAY, 2007 . BUT IN THE IMPUGN ED ORDER THE SOCIETY HAD NO REGISTRATION AS PER THE PROVISIONS OF THE INCOME TAX ACT BUT THIS ISSUE HAS NOT BEEN DISPUTED BY THE AO AND THE CIT(A) HAS ALSO DEALT THIS ISSUE AT PAGE NO.3,4 & 5 IN HIS ORDER, THEREFORE, THERE IS NO ISSUE IN REGARD TO THE REGI STRATION. ACCORDINGLY, THE ASSESSEE SOCIETY IS DEEMED FOR REGISTRATION FOR THE IMPUGNED ASSESSMENT YEAR. ITA NO. 277 /CTK/201 7 5 9 . ON PERUSAL OF THE CASE RECORDS, IT HAS BEEN NOTICED THAT THE ASSESSEE IS IMPARTING EDUCATION ONLY AND COLLECTING DEVELOPMENT FEE FROM THE STUDENTS. THE ASSESSEE HAS INCURRED CAPITAL EXPENDITURE DURING THE YEAR. THE ASSESSEE HAS ALSO RECEIVED GRANT - IN - AID FROM THE AICTE AND GOVERNMENT OF TRIPURA, WHICH HAS BEEN INCURRED FOR THE DESIGNATED PURPOSE AND UTILIZATION CERTIFICATE HAS ALSO BEEN SUBMITTED AS P ER THE REQUIREMENTS. CONSIDERING THE FINDINGS OF THE AUTHORITIES BELOW AND THE SUBMISSIONS OF THE ASSESSEE, IF WE IGNORE AS TO WHETHER IT IS A CAPITAL RECEIPT OR REVENUE RECEIPT, THE ASSESSEE HAS COMPLIED THE PROVISIONS OF SECTION 11(1) OF THE ACT, WHICH I S CLEAR FROM THE CALCULATION SUBMITTED BY THE ASSESSEE AT PAPER BOOK PAGE NOS.31 & 32. WE FOUND SUBSTANCE ON THE SUBMISSION MADE BY THE LD. AR AND AFTER TAKING INTO CONSIDERATION OF THE CALCULATION SUBMITTED AT PAGE NO.S31 & 32, AND THE ASSESSEE HAS COMPL IED THE PROVISIONS OF SECTION 11(1) OF THE ACT, THEREFORE, NO ADDITION IS CALLED FOR. THE CIT(A) HAS DOUBTED ON THE CAPITAL EXPENDITURE INCURRED BY THE ASSESSEE BUT AFTER GOING THROUGH THE FINANCIAL STATEMENTS, WE OBSERVE THAT THE ASSESSEE HAS MADE EXPENDI TURE TOWARDS PURCHASE OF CAPITAL ASSETS DURING THE YEAR AND THE ADVANCE HAS BEEN GIVEN TO THE CONTRACTORS DURING THIS YEAR. THEREFORE, THESE ARE TO BE TREATED AS AN APPLICATION OF INCOME FOR THE YEAR UNDER CONSIDERATION. THEREFORE, WE ARE OF THE CONSIDERED VIEW ITA NO. 277 /CTK/201 7 6 THAT THE ASSESSEE HAS RIGHTLY COMPLIED THE PROVISIONS OF SECTION 11(1) OF THE ACT. ACCORDINGLY, WE ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 12 / 0 3 / 2 0 2 1 . SD/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 12 / 0 3 /20 2 1 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE O RDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRE TARY ) , /ITAT, CUTTACK 1. / THE APPELLANT - COLLEGE OF PHARMACEUTICAL SCIENCE, BERHAMPUR, MAHUDA, GANJAM 2. / THE RESPONDENT - ITO(EXEMPTIONS), BERHAMPUR 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//