Vinayak Education Society, New Delhi V. JCIT, Noida

ITA 3270/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5100 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 24-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUMIT GOE L; RAJ KAMAL GUPTA
• Keywords: Charitable institution
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO.3270/DEL/2017 ASSESSMENT YEAR 2010-11 VINAYAK EDUCATION SOCIETY, 6-B, KNOWLEDGE PARK-II, GREATER NOIDA, GAUTAM BUDH NAGAR V. JCIT, RANGE-1, NOIDA. TAN/PAN: AAATV5466F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAJ KAMAL GUPTA, CA & SHRI SUMIT GOEL, CA RESPONDENT BY: SHRI PARIKSHIT SINGH, SR.D.R. DATE OF HEARING: 11 02 2020 DATE OF PRONOUNCEMENT: 17 02 2020 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 30.03.2017, PASSED BY COMMISSIONER OF INCOME TAX (APPEALS)-I, NOIDA FOR T HE QUANTUM OF ASSESSMENT PASSED U/S.143(3) FOR THE ASSESSMENT YEAR 2010-11. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE IMP UGNED ASSESSMENT ORDER DETERMINING INCOME AT RS. 12,31,45 8/- AND THE IMPUGNED CIT (A) ORDER SUSTAINING THE ADDITIONS MAD E BY THE AO AND FURTHER ENHANCING THE ASSESSABLE INCOME TO RS. 11,95,01,215/- ARE ILLEGAL AND UNSUSTAINABLE IN LAW AS WELL AS ON MERITS. I.T.A. NO.3270/DEL/2017 2 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE LD. AO ERRED IN LAW AS WELL AS ON MERITS IN TREATING THE EXCESS OF INCOME OVER EXPENSES OF HOSTEL DIVISION OF RS.7,38,410/- AS BUS INESS INCOME AND FURTHER ERRED IN TAXING THE SAME U/S.11 (4A) R. W.S. 2(15) OF THE I.T ACT. LD. CIT (A) ALSO ERRED IN NOT HOLDING THE SAID AMOUNT AS EXEMPTED U/S.11. 3. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE LD. AO ERRED IN LAW AS WELL AS ON MERITS IN DISALLOWING ADVERTISEME NT EXPENSES OF RS.4,93,048/- CLAIMED IN HOSTEL DIVISION EXPENSES A ND IN TAXING THE SAME AS NORMAL INCOME. LD. CIT (A) ALSO ERRED IN NO T DELETING THE SAID DISALLOWANCE. 4. THAT UNDER THE FACTS AND CIRCUMSTANCES, LD. CIT (A) ERRED IN LAW AS WELL AS ON MERITS IN ENHANCING THE ASSESSED INCOME OF RS. 12,31,458/- TO RS.11,95,01,215/-, THUS IN MAKING A NET ENHANCEMENT OF RS.11,82,69,757/- BY WRONGLY HOLDING THE TOTAL FEE RECEIPTS OF RS.6,63,62,413/- FROM STUDENTS AND TOTA L DONATION RECEIPTS OF RS.5,31,38,802/- AS CHARGEABLE TO TAX U /S.56 OF THE ACT AS INCOME FROM OTHER SOURCES AND IN HOLDING THAT THE SAME AS NOT ELIGIBLE FOR EXEMPTION U/S.11 OF THE L.T ACT. 5. THAT WITHOUT PREJUDICE TO G.N. 4, THE LD. CIT ( A) EXCEEDED HIS JURISDICTION IN EXAMINING THE ISSUE OF ELIGIBILITY OF CLAIM OF SECTION 11 AND FURTHER EXCEEDED HIS JURISDICTION IN HOLDING TH E FEE RECEIPTS AND DONATIONS AS TAXABLE U/S.56 BEING NOT ELIGIBLE FOR EXEMPTION U/S. 11 OF THE I.T. ACT. 6. THAT UNDER THE FACTS AND CIRCUMSTANCES THE LD. CIT (A) EXCEEDED IN HIS JURISDICTION AS WELL AS ERRED IN LA W AS WELL AS ON MERITS IN HOLDING THAT NO DEDUCTION SHALL BE ALLOWE D, WHICH FINDING IS WITHOUT ANY BASIS AND MATERIAL ON RECORD. I.T.A. NO.3270/DEL/2017 3 7. THAT THE ISSUE OF NOT ALLOWING THE DEDUCTION, S INCE NOT A PART OF SHOW CAUSE NOTICE U/S.251 (2) OF THE I.T ACT, THERE FORE THIS ISSUE COULD NOT HAD BEEN EXAMINED AND ADJUDICATED AND ALSO, THEREFO RE, OUTSIDE THE SCOPE AND JURISDICTION OF LD. CIT (A), FOR MAKING E NHANCEMENT IN THE INCOME ON ACCOUNT OF NOT ALLOWING THE DEDUCTIONS. 2. LD. COUNSEL FOR THE ASSESSEE INFORMED THAT THE L D. CIT (A) HAS PASSED AN EX-PARTE ORDER, BECAUSE THE NOTICES W ERE SENT ON WRONG ADDRESS, AND THEREFORE, NO INTIMATION OR NOTI CE COULD BE RECEIVED ABOUT THE DATE OF HEARING. HE INFORMED THA T IN FORM NO.35, ADDRESS FOR SENDING THE NOTICE HAS BEEN DULY MENTIONED AND THE NOTICE HAS BEEN SENT ON THE ADDRESS MENTION ED IN THE ASSESSMENT ORDER. THUS, IN THE INTEREST OF JUSTICE, THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSEE TO DECIDE THE ISSUE AFRESH. 3. LD. DR ALSO ACCEPTED THAT THE MATTER CAN BE REST ORED BACK TO THE FILE OF THE LD. CIT (A). 4. HERE, IN THIS CASE, THE ASSESSEE IS A SOCIETY WH ICH WAS ESTABLISHED TO PROMOTE AND PROVIDE EDUCATION IN VAR IOUS FIELDS, WHICH WAS RUNNING INSTITUTE IN THE NAME AND STYLE O F M/S. GIRLS INSTITUTE OF TECHNOLOGY, KNOWLEDGE PARK-2, GREATER NOIDA. LOOKING TO ITS AIMS AND OBJECTS, REGISTRATION U/S.1 2A HAS BEEN GRANTED. LD. ASSESSING OFFICER HAS MADE VARIOUS ADD ITIONS, DENYING EXEMPTION U/S. 11(1) ON VARIOUS GROUNDS. 5. LD. CIT (A) HAS NOT ONLY HAS CONFIRMED THE ACTIO N OF THE ASSESSING OFFICER ALTHOUGH ON MERITS, BUT HAS MADE HUGE ENHANCEMENT AND HAS DETERMINED THE INCOME OF RS. 11,95,01,215/- BY ADDING THE ENTIRE FEES RECEIVED F ROM THE I.T.A. NO.3270/DEL/2017 4 STUDENTS AS WELL AS DONATIONS AS COMPARED TO ASSESS MENT MADE BY THE ASSESSING OFFICER AT A NET PROFIT OF RS.12,3 1,458/- ON A VIOLATION OF SECTION 11(4A). LD. CIT (A) WAS MADE T HE ENHANCEMENT BUT THE NOTICE OF ENHANCEMENT WAS SENT ON A WRONG ADDRESS. NOT ONLY HE HAS DENIED THE BENEFIT O F SECTION 11 TO 13 BUT HAS TAXED THE ENTIRE RECEIPTS FROM CARRYI NG OUT THE ACTIVITY OF EDUCATION, DENYING ALL THE EXPENSES INC LUDING THE DONATIONS. ONCE REGISTRATION HAS BEEN GRANTED U/S.1 2A THEN THE COMPUTATION OF SUCH CHARITABLE TRUST/SOCIETY HAS TO BE DONE IN ACCORDANCE WITH SECTION 11 TO 13 AND ONLY THOSE ADDITIONS/DISALLOWANCES CAN BE MADE IF THEY ARE IN VIOLATION OF CONDITIONS THEREIN. IT IS UNFATHOMABLE THAT THE ENT IRE RECEIPTS AND DONATIONS RECEIPT CAN BE TAXED AS INCOME OF THE ASSESSEE WITHOUT ALLOWING ANY EXPENSES DEBITED TO THE INCOME AND EXPENDITURE ACCOUNT. ONCE IT IS A FACT THAT ASSESSE E WAS RUNNING AN EDUCATIONAL INSTITUTION AND WAS REGISTER ED AS A CHARITABLE SOCIETY, THEN IT WAS INCUMBENT UPON THE CIT (A) TO COMPUTE THE INCOME AS PER SECTION 11 TO 13 OF THE A CT. SINCE IT IS AN EX-PARTE ORDER, THEREFORE, THE MATTER IS REMA NDED BACK TO THE FILE OF THE LD. CIT (A) TO BE DECIDED AFRESH AN D IN ACCORDANCE WITH LAW. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY, 2020. SD/- SD/- [O.P. KANT] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 TH FEBRUARY, 2020 PKK: