The Dy.Director of Incom tax(Exemptions), Ahmedabad V. Navjivan High School Trust, Ahmedabad

ITA 3167/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5575 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-07-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 23-07-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Assessee Lawyers: S N SOPARKAR
• Keywords: Charitable institution; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI D.C. AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 14/07/2010 DRAFTED ON: 15 /07/2010 ITA NO.3167/AHD/2007 ASSESSMENT YEAR : 2004-05 DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTIONS) AHMEDABAD VS. NAVJIVAN HIGH SCHOOL TRUST N.D. SHUKLA CHOWK KHAMASA GATE AHMEDABAD 380 001 PAN/GIR NO. : AAATN 1475 C (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI K.M. MAHESH, SR. D.R. RESPONDENT BY: SHRI S.N. SOPARKAR O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL OF THE REVENUE WHICH HAD COME UP OUT OF THE ORDER OF THE LEARNED CIT(APPEALS)-XX, AHMEDABAD DAT ED 25/05/2007. THE SUBSTANTIVE GROUND OF THE REVENUE IS THAT THE L EARNED CIT(APPEALS) HAS ADMITTED AN ALTOGETHER FRESH CLAIM U/S.10(23C)( IIIAB) OF THE I.T. ACT, 1961. IT HAS ALSO BEEN OBJECTED THAT THE LEARNED CIT(APPEALS) HAS ADMITTED AN ADDITIONAL EVIDENCE IN THE FORM OF AN A UDIT REPORT IN FORM NO.10B OF THE I.T. ACT, 1961 BY INFRINGING THE PROV ISIONS OF RULE 46A(3) OF THE I.T. RULES, 1962. 2. THE ASSESSEE-TRUST IS STATED TO BE AN EDUCATIONA L INSTITUTION. FOR THE YEAR UNDER CONSIDERATION, AN INCOME OF RS.24,26 0/- WAS DECLARED. DURING THE COURSE OF SCRUTINY, THE ASSESSING OFFICE R HAD CALLED FOR A COPY ITA NO.3167/AHD/2007 DY.DIT (EXEMPTION) VS. NAVJIVAN HIGH SCHOOL TRUST ASST.YEAR 2004-05 - 2 - OF CERTIFICATE OF REGISTRATION U/S.12AA OF THE I.T. ACT, 1961. THE ADMITTED FACTUAL POSITION IS THAT THE SAME WAS NOT FILED TO THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS, THEREFORE, IS SUED A SHOW-CAUSE NOTICE POINTING OUT THAT IN THE ABSENCE OF REGISTRA TION U/S.12AA OF THE I.T. ACT, 1961 AND THE AUDIT REPORT IN FORM NO.10B WHY THE CLAIM OF EXEMPTION U/S.11 BE NOT DISALLOWED. THE EXPLANATIO N OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS UNDER:- THAT OUR TRUST IS REGISTERED IN 1988 BY REG.NO.HQ- II-38N/15/88- 89 DATED 30/02/1988. OUR CLIENT HAS MISPLACED THE CERTIFICATE AS IT IS VERY OLD. OUR CLIENT HAS APPLIED FOR A DUPL ICATE CERTIFICATE AND HENCE WE REQUEST YOU TO WAIT TILL WE RECEIVE IT FROM I.T. DEPT. THAT OUR CLIENT HAD BY MISTAKE AND THROUGH OVERSIGH T FORGOT TO ATTACH FORM NO.10B ALONGWITH RETURN OF INCOME. THE Y HAD ALREADY OBTAINED THE FORM NO.10B ON 18/10/2004 AND THE ORIGINAL COPY OF FORM NO.10B IS ENCLOSED HEREWITH. WE HAVE TO REQUEST YOU TO CONSIDER THIS FORM NO.10B AS DUE COM PLIANCE TO YOUR SHOW-CAUSE NOTICE DATED 20/11/2006 AND NOT TO TREAT OUR CLIENT IN ANY DEFAULT. WE ALSO OBJECT TO YOUR PRO POSAL TO DISALLOW EXPENSES CLAIMED BY OUR CLIENT AS PER AUDITED ACCOU NTS. FURTHER, OUR CLIENT IS WHOLLY CHARITABLE TRUST AND IS AN EDU CATIONAL TRUST WHOSE INCOME IS EXEMPT U/S.10 & 11 OF THE I.T. ACT. FURTHER, AS HELD IN 42 ITD 62 IN CASE OF CALCUTTA MANAGEMENT AS SOCIATION V/S. I.T.O. IT IS HELD THAT THIS REPORT CAN EVEN BE FIL ED AT THE TIME OF APPEAL BEFORE THE COMMISSIONER (APPEALS) AND COPY O F ORDER IS ENCLOSED FOR YOUR REFERENCE. WE HAVE THEREFORE TO OBJECT TO YOUR PROPOSAL TO DISALLOW EXPENSES AS CLAIMED IN AUDIT R EPORT FOR VARIOUS REASONS STATED ABOVE WE ARE ENCLOSING HEREW ITH ORIGINAL FORM NO.10B BEFORE YOU WHICH IS BEFORE FINALIZATION OF ASSESSMENT. 2.1. THE ASSESSING OFFICER WAS NOT CONVINCED AND H ELD THAT IN THE ABSENCE OF STATUTORY AUDIT AS ALSO THE STATUTORY REGISTRATION, THE ITA NO.3167/AHD/2007 DY.DIT (EXEMPTION) VS. NAVJIVAN HIGH SCHOOL TRUST ASST.YEAR 2004-05 - 3 - ASSESSEE-TRUST WAS NOT ENTITLED FOR THE CLAIM OF DE DUCTION U/S.11 OF THE I.T. ACT, 1961. THEREFORE, AN INCOME OF RS.50,96,7 81/- WAS TAXED IN THE HANDS OF THE ASSESSEE-TRUST. BEING AGGRIEVED, THE ISSUE WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 3. IN ADDITION TO THE MAIN CONTENTION THAT THE CERT IFICATE OF REGISTRATION WAS MISPLACED, BESIDES THAT, IT WAS AL SO CONTESTED THAT THE APPELLANT HAPPENED TO BE A PUBLIC CHARITABLE TRUST CREATED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE EDUCATION. IT WAS ALSO INFORMED THAT THE FUNCTIONING OF THE TRUST WERE DIRECTLY UNDER TH E SUPERVISION OF GOVERNMENT OF GUJARAT, HENCE, ALTERNATIVELY IT WAS ALSO CLAIMED THAT THE INCOME IS EXEMPT U/S.10(23C)(IIIAB) OF THE I.T. ACT , 1961. AN ANOTHER IMPORTANT FACT HAS ALSO BEEN DISCLOSED TO THE LEA RNED CIT(APPEALS) THAT OUT OF THE TOTAL INCOME OF RS.51,21,043/-, GOVERNME NT OF GUJARAT HAS GIVEN A GRANT OF A SUM OF RS.48,67,307/- TO THE AS SESSEE-TRUST. SINCE THE TRUST BEING AN EDUCATIONAL INSTITUTION SOLELY EXIST ED FOR EDUCATIONAL PURPOSES AND MAINLY RUN BY THE GRANT OF GOVERNMENT , THEREFORE, ENTITLED FOR EXEMPTION U/S.10(23C)(IIIAB) OF THE I.T. ACT, 1 961. IN SUPPORT OF THIS CONTENTION, CITED THE DECISION OF HON'BLE GUJARAT H IGH COURT IN THE CASE OF GUJARAT STATE CO-OP.UNION VS. CIT REPORTED AS 195 ITR 279 (GUJ.). REST OF THE ARGUMENTS WERE IN RESPECT OF THE MISPLA CED REGISTRATION U/S.12A OF THE I.T. ACT, 1961 WHICH WAS CLAIMED TO HAVE BEEN ISSUED BEARING NO.HQ-11-38 N/15/88-89 DATED 30/01/1998 FOR CLAIM OF EXEMPTION U/S.11 TO 13 OF THE I.T. ACT, 1961. IT H AS ALSO BEEN CONTESTED THAT NON-FILING OF FORM NO.10B OF THE I.T. ACT, 196 1 WAS MERELY A ITA NO.3167/AHD/2007 DY.DIT (EXEMPTION) VS. NAVJIVAN HIGH SCHOOL TRUST ASST.YEAR 2004-05 - 4 - PROCEDURAL DEFECT AND THE AUDIT REPORT CAN BE FILED EVEN AT THE APPELLATE STAGE. IN SUPPORT THIS CONTENTION, FEW CASE LAWS HAVE ALSO BEEN CITED. 3.1. SO FAR AS THE CLAIM OF EXEMPTION U/S.11 OF THE I.T. ACT, 1961 IS CONCERNED, THE LEARNED CIT(APPEALS) HAS HELD THAT I N THE ABSENCE OF PROPER CERTIFICATE, THE EXEMPTION U/S.11 OF THE I.T . ACT, 1961 COULD NOT BE GRANTED, THEREFORE, THIS LIMB OF THE ARGUMENT WA S REJECTED. 3.2. AS FAR AS THE ISSUE OF EXEMPTION U/S.10(23C)(I IIAB) OF THE I.T. ACT, 1961 WAS CONCERNED, THE SAME WAS GRANTED VIDE PARA GRAPH NO.6.1; REPRODUCED BELOW:- ISSUE (A) : 6.1 AS SEEN FROM THE DETAILS FURNISHED AND DISCUSS ED ABOVE, THE APPELLANT TRUST IS ENGAGED IN RUNNING EDUCATIONAL I NSTITUTION AND THUS IS SOLELY EXISTING FOR EDUCATIONAL PURPOSE. THERE IS NO CONTRARY FINDING BY THE ASSESSING OFFICER. INCOME AND EXPENDITURE AS REFLECTED IN THE INCOME & EXPENDITURE ACCOUNT F ILED ARE AS UNDER: INOME (RS.) EXPEND ITURE (RS.) INTEREST ON F.D. & SAVING BANK A/C. 2,00,052 AUDIT FEE 2,700 DONATION (IN CASH) 3.600 DEPRECIAT ION 32,451 GRANT 48,67,307 EXPEN SES ON EDUCATION 50,61,630 RECOVERY OF FEES & OTHER INCOME 1,42,792 SURPLUS IN INCOME TRANSFERRED TO B/S. 1,16,970 TOTAL : 52,13,751 TOTAL 52,13,751 ITA NO.3167/AHD/2007 DY.DIT (EXEMPTION) VS. NAVJIVAN HIGH SCHOOL TRUST ASST.YEAR 2004-05 - 5 - THE ABOVE DETAILS SHOW THAT THE TRUST IS RUNNING TH E SCHOOL MAINLY FROM THE GRANT RECEIVED FROM THE GOVERNMENT OF GUJA RAT WHICH IS SPENT FOR RUNNING THE INSTITUTION AND THERE IS NO O THER ACTIVITY. HENCE, THE APPELLANT TRUST IS ENTITLED FOR EXEMPTIO N U/S.10(23C)(IIIAB) (IN RESPECT OF SURPLUS SHOWN IN THE INCOME AND EXPENDITURE ACCOUNT) AS THE APPELLANT TRUST IS SUBS TANTIALLY (ALMOST WHOLLY) FINANCED BY THE GOVT.IN RUNNING THE SCHOOL. (THE APPELLANTS CLAIM FOR EXEMPTION U/S.10(23C)(IIIAD) IS NOT CORRECT.) HENCE, THERE IS NO CASE TO TAX EITHER THE GROSS REC EIPTS OR THE NET INCOME OF THE APPELLANT TRUST FOR THE ASSESSMENT YE AR 2004-05. THE ASSESSING OFFICER IS DIRECTED TO GRANT EXEMPTIO N U/S.10(23C)(IIIAB) AND COMPUTE THE TOTAL INCOME AT RS.NIL. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFF ICER AT RS.50,96,781/- IS DELETED. 4. WE FIND NO FALLACY IN THE ABOVE DECISION OF THE LEARNED CIT(APPEALS) BECAUSE THE RECEIPTS OF THIS EDUCATIO NAL INSTITUTION IS OTHERWISE COVERED UNDER SUCH CATEGORY OF INCOME WHI CH IS NOT TO BE INCLUDED IN THE TOTAL INCOME AS PRESCRIBED U/S.10( 23C)(IIIAB) OF THE I.T. ACT, 1961 WHICH READS AS UNDER:- SECTION 10(23C)(IIIA):- ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE S AND NOT FOR PURPOSES OF PROFIT, AND WHICH IS WHOLLY OR SUBSTANT IALLY FINANCED BY THE GOVERNMENT. 4.1. THIS SECTION INTER-ALIA HAS DULY SUPPORTED TH E CLAIM OF THE ASSESSEE BECAUSE FIRSTLY THIS INSTITUTION IS AN EDUCATIONAL INSTITUTION SU BSTANTIALLY FINANCED BY THE GOVERNMENT, SECONDLY IT EXISTED SOLELY FOR THE EDUCATIONAL PURPOSES AND THIRDLY IT HAS NOT BEEN DEMONSTRATED BY THE REVENUE THAT IT WAS CREATED FOR THE PURPOSES OF PRO FIT. LASTLY FACTS OF THE CASE HAVE DEMONSTRATED THAT THIS INSTITUTION HAS OT HERWISE APPARENTLY NOT ITA NO.3167/AHD/2007 DY.DIT (EXEMPTION) VS. NAVJIVAN HIGH SCHOOL TRUST ASST.YEAR 2004-05 - 6 - INFRINGED THE GENERAL PROVISIONS OF THE ACT. ONC E ALL THE CONDITIONS ARE FULFILLED BY THIS INSTITUTION, THEREFORE, THE VIEW TAKEN BY THE LEARNED CIT(APPEALS) IS HEREBY AFFIRMED. SINCE REVENUE HAS NOT GIVEN ANY OTHER CONTRARY DECISION TO REBUT THE SAID DECISION, THERE FORE, GROUNDS ARE HEREBY DISMISSED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 23/ 07 /2010. SD/- SD/- ( D.C. AGRAWAL) ( MUKUL KR. SH RAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23 / 07 /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XX, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD