M/s Sacred Heart Educaional and Welfare Soceity, Barnala V. ITO, (E), Ward, Chandiarh

ITA 290/CHANDI/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7550 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 07-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NOS.290 & 291/CHD/2018 (ASSESSMENT YEARS: 2012-13 & 2014-15) M/S SACRED HEART EDUCA- VS. THE INCOME TAX OFFICER(EXEMPTION S), TIONAL & WELFARE SOCIETY, WARD CHANDIGARH. DHANAULA ROAD, BARNALA. PAN: AAAABTT2083M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH, ADV. RESPONDENT BY : SHRI MANJIT SINGH, SR.DR DATE OF HEARING : 19.06.2018 DATE OF PRONOUNCEMENT : 04.07.2018 ORDER PER ANNAPURNA GUPTA, A.M. : BOTH THE ABOVE APPEALS HAVE BEEN PREFERRED BY THE SAME ASSESSEE AGAINST THE SEPARATE ORDERS OF LEARNE D COMMISSIONER OF INCOME TAX(APPEALS), PATIALA BOTH D ATED 1.1.2018 RELATING TO ASSESSMENT YEARS 2012-13 AND 2 014- 15. 2. SINCE THE ISSUES INVOLVED IN BOTH THE APPEALS AR E IDENTICAL, THEY WERE HEARD TOGETHER AND ARE DISPOSE D OFF BY THIS COMMON ORDER. 3. THE SOLE ISSUE INVOLVED IN THE PRESENT APPEALS I S THE TREATMENT OF THE ASSESSEE SOCIETY AS AOP AND TAXING THE SURPLUS OF INCOME OVER EXPENDITURE FOR THE YEAR, FO R THE REASON AND ON ACCOUNT OF THE FACT THAT ITS APPLICAT ION FOR APPROVAL WITHIN THE MEANING OF SECTION 10(23C) (VI) OF THE ITA NO.290 & 291/C HD/2018 AYS. 2012-13 & 2014-15 2 INCOME TAX ACT, 1961 (IN SHORT THE ACT) WAS REJEC TED BY THE PRESCRIBED AUTHORITY I.E. CCIT, CHANDIGARH. 4. BRIEFLY STATED, THE ASSESSEE IS AN EDUCATIONAL S OCIETY RUNNING BY THE NAME OF SACRED HEART EDUCATIONAL AND WELFARE SOCIETY, HAVING TWO EDUCATIONAL INSTITUTION S UNDER ITS AEGIS I.E. SACRED HEART INTERNATIONAL COLLEGE OF EDUCATION AT BARNALA AND BARNALA POLYTECHNIC COLLEGE. THE S AID SOCIETY CLAIMED ITSELF TO BE EXISTING SOLELY FOR ED UCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT AND, THE REFORE, CLAIMED EXEMPTION UNDER THE PROVISIONS OF SECTION 10(23C)(VI) OF THE ACT, THEREBY FILING NIL RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEARS. HOWEVER, SINCE THE A SSESSEE SOCIETYS APPLICATION FOR APPROVAL, WITHIN THE MEAN ING OF SECTION 10(23C)(VI) OF THE ACT, WAS REJECTED BY TH E PRESCRIBED AUTHORITY I.E. CCIT, CHANDIGARH (VIDE F NO.CC/10(23C)/2011-12/2143; DATED 24.07.2012), TH E AO, WHILE SCRUTINIZING THE AFORESAID NIL RETURNS OF INC OME, HELD THE ASSESSEE SOCIETY TO BE AN AOP AND THEREAFTER PR OCEEDED TO TAX THE SURPLUS OF INCOME OVER EXPENDITURE FOR T HE PERIODS UNDER CONSIDERATION IN ITS ORDER PASSED U/S 143(3) OF THE ACT. 5. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS) WHO UPHELD THE ORDER OF THE ASSESSI NG OFFICER OBSERVING THAT THE ASSESSEE SOCIETY HAD FIL ED A CIVIL PETITION IN THE HIGH COURT, UNDER ARTICLE 226/227 OF THE CONSTITUTION, FOR ISSUANCE OF WRIT IN THE NATURE O F CERTIORARI ITA NO.290 & 291/C HD/2018 AYS. 2012-13 & 2014-15 3 AGAINST THE ORDER PASSED BY THE CCIT, REJECTING ASS ESSEES APPLICATION FOR GRANT OF APPROVAL U/S 10(23C)(VI) OF THE ACT AND THE HIGH COURT HAD ALLOWED THE WRIT SETTING ASI DE THE ORDER OF THE CCIT FOR DECIDING AFRESH IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS. THE CIT(A) NOTED THAT THE REMANDED MATTER HAD NOT YET BEEN DECIDED AND , THER EFORE, HELD THAT FOR ALL PURPOSES, THE ASSESSEE SOCIETY WA S NOT AN APPROVED SOCIETY FOR THE PURPOSE OF CLAIMING EXEMPT ION. THE LD.CIT(APPEALS), HOWEVER, ADDED THAT IF THE PRESCRI BED AUTHORITY APPROVED THE ASSESSEE SOCIETY FOR THE SAI D EXEMPTION, THERE SHALL BE NO INCIDENCE OF TAX. THER EFORE, SUBJECT TO THE OUTCOME OF THE APPROVAL PENDING BEFO RE THE CIT(E), THE LD.CIT(APPEALS) DISMISSED THE ASSESSEE S APPEAL. 6. AGGRIEVED BY THE SAME, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US RAISING FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE FINDING OF THE ASSESSING OFFI CER THAT THE ASSESSEE IS AN AOP FOR TAXATION PURPOSES A ND IS NOT AN APPROVED SOCIETY FOR CLAIMING OF EXEMPTION U/S 10(23C)(VI) WHICH IS ARBITRARY AND UNJUSTIFIED AND AS SUCH THE ASSESSMENT MERITS ANNULMENT. 2 THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN UPHOLDING THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER THEREBY TREATING THE EXCES S OF SURPLUS OF RS.74,85,7507- OVER EXPENDITURE TO BE TAXABLE RESULTING IN AN ADDITION OF RS.74,85,750/- W HICH IS ARBITRARY AND UNJUSTIFIED. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS FURTHER ERRED IN UPHOLDING THE ADDITION OF RS.1,37,69 0/- ON ACCOUNT OF ALLEGED DIFFERENCE IN THE INTEREST ON F DRS WHICH IS ARBITRARY AND UNJUSTIFIED. ITA NO.290 & 291/C HD/2018 AYS. 2012-13 & 2014-15 4 4. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF THE CASE AND IS, THUS, UNTENABLE. 7. DURING THE COURSE OF HEARING BEFORE US THE LD. C OUNSEL FOR ASSESSEE STATED THAT THE ASSESSEE HAD BEEN GRAN TED APPROVAL U/S 10(23C)(VI) OF THE ACT FOR THE IMPUGNE D YEARS VIDE ORDER OF THE CIT(E), CHANDIGARH DATED 26.4.201 8. COPY OF THE ORDER WAS PLACED BEFORE US AND IT WAS POINTE D OUT THEREFROM THAT THE APPROVAL HAD BEEN GRANTED FROM ASSESSMENT YEAR 2012-13 ONWARDS. THE LD. COUNSEL FO R ASSESSEE STATED, THEREFORE, THAT IN THE LIGHT OF TH E AFORESAID FACTS AND IN VIEW OF THE ORDER OF THE LD.CIT(APPEAL S) PASSED SUBJECT TO APPROVAL GRANTED BY THE CIT(E) U/S 10(23 C)(VI) OF THE ACT, THE ASSESSEES INCOME IS ENTITLED FOR EXEM PTION U/S 10(23C)(VI) OF THE ACT AND THE EXCESS OF INCOME OVE R EXPENDITURE SUBJECT TO TAX BY THE ASSESSING OFFICER , THEREFORE, BE DELETED. 8. THE LD. DR PRAYED THAT THE MATTER BE RESTORED TO THE ASSESSING OFFICER TO PASS AFRESH ORDER AFTER CONSID ERING THE FACT OF THE APPROVAL HAVING BEEN GRANTED TO THE ASS ESSEE U/S 10(23C)(VI) OF THE ACT AS CANVASSED BY IT. 9. THE LD. COUNSEL FOR ASSESSEE DID NOT OBJECT TO T HE SAME. 10. IN VIEW OF THE ABOVE, WE CONSIDER IT FIT TO RES TORE THE ISSUE, IN BOTH THE APPEALS BEFORE US, BACK TO THE F ILE OF THE ASSESSING OFFICER TO PASS ORDER AFRESH AFTER CONSI DERING THE APPROVAL GRANTED BY THE CIT(E) TO THE ASSESSEE U/S 10(23C)(VI) OF THE ACT.. ITA NO.290 & 291/C HD/2018 AYS. 2012-13 & 2014-15 5 11. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 4 TH JULY, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH