M/s Islamic Council for Productive Education, Lucknow V. Commissioner of Income Tax (Exemption), Lucknow

ITA 308/LKW/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4811 (ITAT-LUCKNOW)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 15-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Principle of natural justice
• Section: 143(3); 10B; 263; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.308/LKW/2015 ASSESSMENT YEAR 2010-11 THE COMMISSIONER OF INCOME TAX (EXEMPTION), LUCKNOW VS. M/S ISLAMIC COUNCIL FOR PRODUCTIVE EDUCATION, DASAULI, SPORTS COLLEGE, KURSI ROAD, LUCKNOW PAN AAAT 0942 F (RESPONDENT) (APPELLANT) SHRI K.R. RASTOGI, CA APPELLANT BY SHRI AJEET KUMAR SINGH, CIT, DR RESPONDENT BY 30 / 12 /201 5 DATE OF HEARING 13/01/2016 DATE OF PRONOUNCEMENT O R D E R PER SUNIL KUMAR YADAV, JM. 1. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(EXEMPTION) PASSED U/S 263 OF THE INCOME TAX ACT , 1961, INTERALIA ON VARIOUS GROUNDS WHICH ARE AS UNDER:- (1) THAT THE ORDER PASSED U/S 263 OF I.T. ACT SETTI NG ASIDE ASSESSMENT ORDER U/S 143(3) DATED 18.12.2012 BY LD. C.L.T. (EXEMPTION), LUCKNOW IS CONTRARY TO THE PROVISIONS OF LAW SINCE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICI AL TO THE INTEREST OF REVENUE. (2) THE LD. C.I.T.(EXEMPTION), ERRED ON FACTS AND IN LAW IN HOLDING THAT DEVELOPMENT FUNDS RECEIVED FROM STUDENTS RS. 5 .12,67,100- 00 HAD NOT BEEN SHOWN AS INCOME WITHOUT APPRECIATIN G THAT THE SAME HAS BEEN ADDED AS SURPLUS WHILE COMPUTING THE FUNDS UTILIZED U/S 11 OF I.T. ACT IN THE ANNEXURE TO FORM 10B OF AUDIT REPORT AND CONSIDERED IN ASSESSMENT. 2 (3) THE LD. C.L.T. (EXEMPTION) DID NOT APPRECIATE D THAT THE DEVELOPMENT FUNDS HAS BEEN UTILIZED FOR CONSTRUCTIO N OF COLLEGE BUILDING. REQUIRED DETAILS REGARDING RECEIVING AS W ELL AS FUNDS UTILIZED FOR CONSTRUCTION HAS BEEN EXAMINED BY THE LD. A. O. IN THE ASSESSMENT PROCEEDINGS. (4) THE LD. C.L.T. (EXEMPTION) HAD NOT DOUBTED TOTAL RECEIVING RS. 47,72.01.3967-WHICH ALSO INCLUDES DEVELOPMENT FEES RS. 5,12,67,100-00/- AND FUNDS UTILIZED FOR EDUCATIONAL PURPOSES INCLUDING COLLEGE BUILDING CONSTRUCTION RS. 41,17,9 4,904/-. THUS, THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJU DICIAL TO THE INTEREST OF REVENUE. (5) THAT THE PRESENT ORDER IS CONTRARY TO THE FACTS, LAW. PRINCIPLE OF NATURAL JUSTICE AND WITHOUT PROVIDING SUFFICIENT TI ME AND OPPORTUNITY TO HAVE ITS SAY ON THE REASONS RELIED U PON. 2. DURING THE COURSE OF HEARING, LD. COUNSEL FOR TH E ASSESSEE HAS INVITED OUR ATTENTION TO THE ORDER OF THE CIT(EXEMPTION) PASSED U/S 263 OF THE ACT WITH THE SUBMISSION THAT CIT(EXEMPTION) HAS REVISED THE ASSE SSMENT ORDER ON THE GROUND THAT THE DEVELOPMENT FUND RECEIVED FROM THE STUDENT S OF INTEGRAL UNIVERSITY HAVE NOT BEEN ROUTED THROUGH INCOME AND EXPENDITURE ACCO UNT AND WAS DIRECTLY CREDITED IN THE BALANCE SHEET. LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT IN THE SHOW CAUSE NOTICE, CIT(EXEMPTION) HAS S IMPLY SAID THAT THE DEVELOPMENT FUND SHOWN IN THE COMPUTATION IS A CAPI TATION FEES AND SHOULD HAVE BEEN DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. HE HAS INVITED OUR ATTENTION TO THE FACT THAT THE RECEIPT OF DEVEL OPMENT FUND WAS EXAMINED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSME NT FOR OTHER AYS 2007-08 AND 2009-10. COPIES OF THE ORDERS ARE PLACED ON REC ORD, WHICH ARE AVAILABLE ON PAGES 29 TO 37 OF THE COMPILATION OF THE ASSESSEE. SINCE THE ASSESSING OFFICER HAS FOLLOWED ITS VIEW TAKEN IN EARLIER ASSESSMENT Y EAR AND ADJUDICATED THE ISSUE, THE ASSESSMENT ORDER CANNOT BE CALLED TO BE ERRONEO US AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. LD. COUNSEL FOR THE ASSESS EE FURTHER CONTENDED THAT CIT(EXEMPTION) HAS NOT MADE OUT A CASE THAT ON ACCO UNT OF RECEIPT OF DEVELOPMENT FUND, THE EXEMPTION GRANTED U/S 11 CAN BE WITHDRAWN AS IT AMOUNT 3 TO A CAPITATION FEES. THE ASSESSING OFFICER HAS ALR EADY TAKEN THIS AMOUNT IN THE INCOME AND EXPENDITURE ACCOUNT AND THEREAFTER CREDI TED IT TO THE BALANCE SHEET. AT THE MOST, THE ORDER OF THE ASSESSING OFFICER CAN ONLY BE CALLED ERRONEOUS BY NOT EXAMINING THE FACT BUT IT IS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN SUPPORT OF HIS CONTENTION THAT PROVISIONS OF SECTIO N 263 OF THE ACT CAN ONLY BE INVOKED WHERE THE ASSESSMENT ORDER IS HELD TO BE ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE HAS PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS:- 1) CIT VS. R.K. CONSTRUCTION CO. REPORTED IN 313 IT R 65. 2) CIT BANGALORE VS. KURLON LTD. REPORTED 232 TAXMA N 107 3) SHRI DEEPAK SINGH VS. PRINCIPAL COMMISSIONER OF INCOME TAX, ITA NO. 276/LKW/2015 4. CIT VS. ASSOCIATED FOOD PRODUCTS PVT. LTD. REPOR TED IN 280 ITR 377. 5. CIT VS. ESCORTS LIMITED REPORTED IN 198 TAXAMAN 324. 6. VENUS WOOLEN MILLS VS. CIT REPORTED IN 166 TTJ 5 8. 7. CIT VS. CONTIMETERS ELECTRICALS PVT. LTD. REPORT ED IN 317 ITR 249. 3. LD. DR ON THE OTHER HAND HAS PLACED RELIANCE UPO N THE ORDER OF THE LD. CIT(EXEMPTION). 4. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE ISSUE OF RECEIP T OF DEVELOPMENT FUND WAS DULY EXAMINED BY THE ASSESSING OFFICER IN THE AYS 2007-0 8 AND 2009-10 WHILE COMPLETING THE ASSESSMENT U/S 143(3) OF THE ACT. MO REOVER, THE CIT(EXEMPTION) HAS OBSERVED IN A SHOW CAUSE NOTICE THAT THE DEVELO PMENT FUND WAS NOT ROUTED THROUGH INCOME AND EXPENDITURE ACCOUNT AND WAS DIRE CTLY TAKEN TO THE BALANCE SHEET. THE OBSERVATIONS OF THE CIT(EXEMPTION) IS NO T CORRECT AS THE ASSESSEE HAS TAKEN THIS AMOUNT AS INCOME IN THE INCOME AND EXPEN DITURE ACCOUNT AND THEREAFTER IT WAS CREDITED TO THE BALANCE SHEET AND HAVING APPLIED ITS INCOME TO THE CHARGEABLE PURPOSE, THE ASSESSEE HAS CLAIMED EX EMPTION U/S 11 OF THE ACT. 4 WE HAVE ALSO CAREFULLY PERUSED THE JUDGMENTS RELIED BY THE ASSESSEE AND WE FIND THAT FOR INVOKING THE PROVISION OF SECTION 263 OF T HE ACT, THE ASSESSMENT IS REQUIRED TO BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IF THE ASSESSMENT ORDER IS ONLY ERRONEOUS AND NOT P REJUDICIAL TO THE INTEREST OF THE REVENUE THE PROVISION OF SECTION 263 OF THE ACT CANNOT BE INVOKED. 5. SINCE THE ASSESSEE HAS TAKEN THE DEVELOPMENT FUN D TO THE INCOME AND EXPENDITURE ACCOUNT AFTER TREATING IT TO BE INCOME, THE ASSESSMENT ORDER CANNOT BE CALLED TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE, THOUGH IT MAY BE ERRONEOUS FOR CERTAIN REASONS. IN THE LIGHT OF THES E FACTS, WE ARE OF THE VIEW THAT SINCE THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE PROVISIONS OF SECTION 263 CANNOT B E INVOKED. WE ACCORDINGLY, SET ASIDE THE ORDER OF THE CIT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALL OWED. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 13 TH JANUARY, 2016 AKS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR