M/S R.N. TAGEORE PUBLIC SCHOOL SANSTHAN, JHUNJHUNU V. ITO, JHUNJHUNU

ITA 33/JPR/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7774 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 12-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Depreciation; Source of fund
• Section: 133A; 80G; 12A; 12AA

Judgement Text

ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 33/JP/2012 ASSESSMENT YEAR : 2008-09 PAN : AABTR 3022 L M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. THE ITO ROAD NO.3, JHUNJHUNU WARD- 1, JHUNJHUNU (APPELLANT) (RESPONDENT) ITA NO. 57/JP/2012 ASSESSMENT YEAR : 2008-09 PAN : AABTR 3022 L THE ITO VS. M/S. R.N. TAGORE PUBLIC SCHOOL WARD- 1, JHUNJHUNU SANSTHAN, ROAD NO. 3, JHUNJHU NU (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.L. MOOLCHANDANI DEPARTMENT BY: SHRI D.C. SHARMA DATE OF HEARING: 06-08-2014 DATE OF PRONOUNCEMENT: 05-09-2014 ORDER PER R.P. TOLANI, JM THESE ARE THE CROSS APPEALS AGAINST THE ORDER OF THE LD. CIT(A)- III, JAIPUR DATED 13-10-2011 FOR THE ASSESSMENT YEAR 2008-09. 2.1 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS I N ITS APPEAL. ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 2 1. UNDER THE FACTS AND CIRCUMSTANCES, THE AO HAS WRONGLY TAXED THE SURPLUS INCOME OVER EXPENDITURE A S OUR INCOME IS EXEMPT 10(23)IIIAD OF I.T. ACT BEING NON- PROFIT MAKING EDUCATIONAL INSTITUTION. 2. UNDER THE FACTS AND CIRCUMSTANCES, THE AO HAS WRONGLY MADE ADDITION IN GROSS RECEIPTS FOR A SUM O F RS. 2,08,024/- FOR STUDENT FUND, RS. 2,12,919/- FOR MIS C. RECEIPTS, RS. 1,72,000/- FOR SALE OF SWEATER AND COAT, RS. 1, 99,690/- FOR SALE OF BOOKS AND ENHANCED GROSS RECEIPTS FROM RS. 93,95,337/- TO RS. 1,02,87,970/-. 3.1 THE REVENUE HAS RAISED THE SOLITARY GROUND IN I TS APPEAL AS UNDER:- THE LD. CIT(A) HAS PASSED A PERVERSE ORDER BY REL YING ON THE DECISION AND FACTS WHICH WERE DISTINGUISHED FROM THE FACTS AND CIRCUMSTANCES IN THE CASE OF THE ASSESSEE AND DELETED THE ADDITION OF RS. 15,75,148/- MADE BY THE AO U/S 40(A)(IA) OF THE I.T. ACT, 1961. 4.1 THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SOCIETY DULY REGISTERED UNDER THE RELEVANT LAWS. IT IS AN EDUCATIONAL INSTI TUTION WITH THE MAIN OBJECTS OF PROVIDING EDUCATION IN HINDI AND ENGLISH MEDIUM AND SUPERVISE THE HOSTEL FACILITIES FOR THE STUDENTS. IN PAST YEARS, THE ASSESSEE WAS EXTENDED EXEMPTION U/S 10(23C)(IIIAD). FOR THIS YEAR ALSO, T HE ASSESSEE ACCORDINGLY FILED THE RETURN OF INCOME DECLARING NIL INCOME. TH E SURVEY OPERATION U/S 133A OF THE ACT WAS CARRIED OUT AT THE ASSESSEES P REMISES ON 7-03-2008 I.E. DURING THE FINANCIAL YEAR IN QUESTION. AS PER BOOKS OF THE ASSESSEE, THE RECEIPTS FROM THE STUDENTS WERE SHOWN AT RS. 93,95, 337/-. SOME OTHER PAPERS ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 3 WERE ALSO FOUND IMPOUNDED WHICH CONTAINED THE DETAI LS OF MISCELLANEOUS RECEIPTS LIKE SALE AND PURCHASE OF BOOKS, UNIFORM, COLLECTION OF EXAMINATION AND BOARD FEES ETC. AGGREGATING TO RS. 8,92,633/- W HICH ACCORDING TO THE AO DID NOT FIND PLACE IN THE BOOKS OF THE SOCIETY. IN THE ASSESSMENT PROCEEDINGS, THE AO COMPUTED THE INCOME OF THE ASSESSEE AS UNDER BY REJECTING THE CLAIM OF THE ASSESSEE. SURPLUS AS PER INCOME & EXPENDITURE RS. 4,62,721 /- ADDITION/ DISALLOWANCES 1. PROFIT ON SALE OF BOOKS RS. 4,953/- 2 PROFIT ON SALE OF SWEATER & COATS RS. 17,200/- 3. MISC. RECEIPTS AS DISCUSSED RS. 21,919/- 4. INCOME BY WAY OF STUDENT FUND RS. 2,08,024/- 5. PERSONAL & INADMISSIBLE NATURE RS. 3,01,320/- 6. DISALLOWANCE OF EXPENDITURE IN VIEW OF PROVISION OF SECTION 40(IA) RS. 15,75,148/- 7. DISALLOWANCE OUT OF SALARY CLAIM RS. 1,00,000/- 8. DISALLOWANCE OUT OF EXPENSE CLAIM RS. 40,896/- RS. 23,09,460/- RS. 27,72,181/- ROUNDED OFF RS.27,72,180/- AT THE RELEVANT POINT OF TIME, THE ASSESSEE SOCIETY HAD ALSO APPLIED FOR REGISTRATION U/S 12A OF THE ACT W.E.F. 01-04-2008. ON THE BASIS OF SURVEY REPORT, THE LD. CIT-III, JAIPUR REJECTED THE APPLIC ATION OF THE SOCIETY U/S 12AA OF THE ACT. THE ASSESSEE PREFERRED THE APPEAL BEFOR E ITAT, JAIPUR BENCH WHICH WAS PLEASED TO GRAND THE REGISTRATION W.E.F. 01-04-2008 U/S 12A AND ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 4 80G OF THE ACT VIDE ITS ORDER DATED 12-10-2011 IN I TA NOS. 737 & 738/JP/2009 AND THE SAME IS PLACED ON RECORD. 4.2 AGGRIEVED AGAINST THE ORDER OF THE AO, THE ASSE SSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT WHO VIDE HIS ORDER DATED 13-10-2011 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE SOCIETY WHEREIN IT WAS PLEADED THAT MISCELLANEOUS RECEIPTS DID NOT TAKE PART OF THE CHA RACTER OF THE TURNOVER AS MENTIONED IN SECTION 10(23C)(IIIAD) OF THE ACT. SIN CE THE GROSS RECEIPTS OF THE ASSESSEE FROM EDUCATIONAL INSTITUTION WAS LESS THAN RS. 1.00 CRORER, THEREFORE, NO PRIOR APPROVAL AS ENVISAGED IN SECTIO N 10(23C)(IIIAD) OF THE ACT WAS REQUIRED. OTHER MISC. RECEIPTS WERE NOT TH E RECEIPTS OF THE ASSESSEE SOCIETY INASMUCH AS THEY WERE COLLECTED FOR AND ON BEHALF OF THE EDUCATIONAL BOARD FROM THE STUDENTS TO BE HANDED OVER TO THE RE SPECTIVE BOARD WITHOUT ANY PROFIT MOTIVE. THUS THE ASSESSEE SOCIETY WAS AC TING AS A CUSTODIAN OF THE FUNDS SO COLLECTED AND THE ASSESSEE SOCIETY WAS HEL D AS REPRESENTATIVE OF THE BOARD FROM THE STUDENTS SIDE TO MEET OUT THEIR EXA MINATION AND UNIFORM RELATED OBLIGATIONS. APROPOS STUDENTS FUNDS OF RS. 2,08,024/-, THERE WAS A SEPARATE CORPS MAINTAINED FOR THE STUDENTS WHICH HA D NOTHING TO DO WITH THE SOCIETY GROSS RECEIPTS. THE AO FURTHER HELD THAT A N EXPENDITURE OF RS. 3,01,320/- WAS INCURRED BY THE ASSESSEE SOCIETY ON THE BASIS OF SPECIFIED PERSONS. HOWEVER, THE AO HAS NOT BEEN ABLE TO POINT OUT EVEN A SINGLE ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 5 INSTANCE TO SHOW THAT THESE MOBILE AND VEHICLES WER E UTILIZED BY THE SPECIFIED PERSONS FOR THEIR PERSONAL PURPOSES. THIS TYPE OF EXPENDITURE WAS ALLOWED IN PAST AND IT WAS ONLY FOR THE PROMOTION O F THE EDUCATIONAL ACTIVITIES CONDUCTED BY THE SCHOOL. THE LD. CIT HOW EVER, CONFIRMED THE ORDER OF THE AO 5.1 AGGRIEVED, THE ASSESSEE IS BEFORE US 5.2 THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY REL IED ON THE JUDGMENT DATED 312-08-2012 OF ITAT DELHI BENCH F IN THE CA SE OF PARAM HANS SWAMI UMA BHARTI MISSION VS. ACIT FOR THE ASSESSMEN T YEAR 2006-07 (IN ITA NO. 4154(DEL.) 2011) WHEREIN THE IT WAS HELD TH AT THE MISCELLANEOUS RECEIPTS OF THE SCHOOL CANNOT BE CONSIDERED TOWARDS GROSS RECEIPTS OF THE SOCIETY BY FOLLOWING OBSERVATIONS. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH TH E PARTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD INCLUDING DETAILED SYNOPSIS. WE FIND THAT SOCIETY IS RUNNING THE SCHOO L UNDER THE MANAGEMENT OF RECEIVER APPOINTED BY HON'BLE HIGH COURT. FOR TH E ENTIRE YEARS THE INCOME OF THE SCHOOL WAS EXEMPT AND FOR THE ASSESSM ENT YEAR 2007-08, THE ASSESSEE HAD OBTAINED PRIOR APPROVAL OF CCIT, PANCH KULLA FOR EXEMPTION U/S 10(23)(VI). THE RECEIPTS OF THE ASSESSEE DURING ASSESSMENT YEAR 2006- 07 INCLUDING INTEREST ON FDRS EXCEEDED. ONE CRORE B UT THE ASSESSEE UNDER BONA FIDE BELIEF THAT INTEREST ON FDR WAS NOT TO BE CONSIDERED FOR ARRIVING AT ANNUAL RECEIPTS DID NOT APPLY FOR PRIOR APPROVAL AND CONTINUED TO CLAIM EXEMPTION U/S 10(23C)(IIIAD). THE BELIEF OF THE ASS ESSEE CANNOT BE SUSPECTED BECAUSE IN THE NEXT YEAR WHEN ANNUAL RECE IPTS EXCLUDING INTEREST ON FDR EXCEEDED RS. ONE CRORE, THE PRIOR APPROVAL O F CCIT, PANCHKULLA WAS OBTAINED. TO DECIDE THE CASE OF THE ASSESSEE LE T US FIRST UNDERSTAND THE PROVISIONS OF SECTION 10(23C)(IIIAD). THE SAID SECT ION READS AS UNDER:- ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTE EXIS TING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT , IF THE AGGREGATE ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 6 ANNUAL RECEIPTS OF SUCH UNIVERSITY OR EDUCATIONAL I NSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRESCRIBED. THE PRESCRIBED LIMIT OF ANNUAL RECEIPTS IS RS. . ON E CRORE. FROM THE PLAIN READING OF SECTION 10(23C) (IIIAD), IT EMERGES THAT LEGISLATURE HAD IN ITS MIND ANNUAL RECEIPTS OF SCHO OL OR UNIVERSITY AS THE CASE MAY BE FOR CONSIDERATION OF EXEMPTION LIMIT AN D NOT THAT OF TOTAL INCOME OF SOCIETY RUNNING THAT SCHOOL OR UNIVERSITY . THE PRESENT CASE IS OF A SOCIETY RUNNING A SCHOOL. THE SOCIETY BESIDES INCOME FROM RUNNING OF A SCHOOL IS HAVING O THER SOURCES OF INCOME ALSO. IN THE PRESENT CASE, THE INCOME FROM INTEREST ON FDRS IS AN ADDITIONAL INCOME OF SOCIETY AND IT CANNOT BE CONSI DERED TO BE PART OF ANNUAL RECEIPTS OF THE SCHOOL. THEREFORE, IN OUR CO NSIDERED OPINION ASSESSEE WAS ELIGIBLE FOR EXEMPTION U/S 10(23)(IIIA D) AS ANNUAL SCHOOL RECEIPTS DID NOT EXCEED RS ONE CRORE. 5.3 THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT ITAT DELHI BENCH IN THE CASE OF PARAM HANS SWAMI UMA BHARTI MISSION (SU PRA) HELD THAT MISCELLANEOUS RECEIPTS CANNOT BE INCLUDED IN THE GR OSS RECEIPTS OF THE SOCIETY. THUS THE RATIO IS SQUARELY APPLICABLE TO T HE ASSESSEE'S CASE. THE LD. AR SUBMITTED THAT GROSS RECEIPTS OF THE SOCIETY ARE RS. 93,95,337/- WHICH IS LESS THAN RS. 1.00 CRORE. THEREFORE, THE ADVERSE IN FERENCE DRAWN ON THIS COUNT BY THE LOWER AUTHORITIES HAS NO JUSTIFICATION . 5.4 THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY RE LIED ON CONSOLIDATED ORDER OF ITAT JAIPUR BENCH DATED 24-04-2009 IN THE CASE OF JHUNJHUNU ACADEMY SAMITI, JHUNJHUNU VS. ITO AND PRAYED THAT I T IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. SOME OF THE EXCERPTS OF THE JUDGEMENT DECIDED BY ITAT JAIPUR BENCH IN THE CASES OF JHUNJHUNU ACADEMY SAMITI VS. ITO IN ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 7 ITA NOS. 759/JP/08 FOR THE ASSESSMENT YEAR 2000-01V IDE ITS ORDER DATED 24- 09-2005 TO SHOW THE PARITY OF THE FACTS AND ISSUES ARE AS UNDER:- 3. WE HAVE HEARD THE PARTIES. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SOCIETY IS REGISTERED WITH THE REGISTRAR O F THE SOCIETIES AND RUNNING AN EDUCATIONAL INSTITUTION NAMELY JHUNJHUNU ACADEMY SA MITI WITH A HOSTEL. A SURVEY U/S 133A WAS CONDUCTED AT THE PREMISES OF THE ASSES SEE ON 29-10-03. ON THE SURPLUS DECLARED ASSESSEE CLAIMED EXEMPTION U/S 10( 23C)(IIIAD). AO NOTED THAT SOCIETY IS FORMED TO EARN PROFIT, SURPLUS IS UTILIZ ED FOR ACQUIRING THE ASSETS, RECEIPT FROM DONATION FROM THE STUDENTS IS A SORT OF FORCED AMOUNT IN MINUTES DATED 23- 04-93 THERE IS NO MENTION ABOUT THE DONATION TO BE CHARGED, THERE IS NO CLAUSE IN THE OBJECT TO COLLECT DONATION FROM THE STUDENTS, S URPLUS IS INCREASING FROM YEAR TO YEAR, PROFIT EARNED IS DIVERTED TO FAMILY MEMBERS A S REMUNERATION/ RENT, DEPRECIATION CLAIMED WHICH SHOWS THAT THE ACTIVITIE S ARE COMMERCIAL IN NATURE, THESE FINDINGS WERE UPHELD BY LD. CIT (A) IN AY 199 9-2000 AND COMMISSIONER OF INCOME TAX JAIPUR III HAS REJECTED THE APPLICATION FRO GRANT OF REGISTRATION U/S 12A. ACCORDINGLY, EXEMPTION U/S 10(23C)(IIIAD) WAS DENIED AND THE SURPLUS OF RS.4,17,239/- WAS MADE LIABLE FOR TAX. 4. 5. .. 6. 7. AFTER HAVING CONSIDERED THE FACTS AND RIVAL SUBM ISSIONS, WE FIND THAT FOR THE YEAR UNDER CONSIDERATION, ASSESSEE HA S FILED DOCUMENTS PARTICULARLY THE FEES RECEIPT (PB 17-22) AND THE FEES PAMPHLET T O SHOW THAT THE SO CALLED DONATION IS NOTHING BUT THE QUARTERLY FEES CHARGED FROM THE STUDENTS UNDER THE NAME CONTRIBUTION AND DONATION BUT SHOWN UNDER INCO ME AND EXPENDITURE ACCOUNT AS DONATION. THERE IS NO DISPUTE AS TO THE FACT THAT THE OBJECT OF THE SOCIETY IS TO IMPART EDUCATION WHICH THE SOCIETY IS DOING IN THE PRESENT CASE. THE REGISTRATION U/S 12A, AFTER CONSIDERING THESE FACTS WAS ALLOWED BY THIS BENCH IN ITA NO. 385/JP/2006 ORDER DATED 31-03-2008. THESE F ACTS WERE NOT AVAILABLE BEFORE THE BENCH WHILE DECIDING THE APPEAL OF THE A SSESSEE FOR AY 2001-02 AND 2002-03 IN ITA NO.730 & 731/JP/2005 DATED 31-03-200 6. IT IS NOT THE CASE OF THE AO THAT SALARY/ RENT PAID TO THE MEMBERS OF THE SOC IETY OR ITS RELATIVE IS UNREASONABLE OR THE FUNDS/ INCOME OF THE SOCIETY HA S BEEN USED BY THEM FOR THERE PERSONAL PURPOSE AND NOT FOR THE PURPOSE OF THE OBJ ECT OF THE TRUST. THE FACTS FOR THE YEAR UNDER CONSIDERATION ON RECORDS ARE THUS NO T SIMILAR TO THE FACTS ON RECORDS FOR AY 2001-02 & 2002-03. IN THESE FACTS AN D CIRCUMSTANCES OF THE CASE WE DIRECT THE AO TO ALLOW EXEMPTION U/S 10(23C)(III AD) TO THE ASSESSEE IN RESPECT OF ITS SURPLUS FOR THE YEAR. THUS GROUND NO. 1 AND 2 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 8 6.1 COMING TO OTHER EXPENSES, IT IS VEHEMENTLY ARGU ED THAT BOARD FEE, UNIFORM FEE AND OTHER MISCELLANEOUS LEVIES ARE TAKE N BY THE SCHOOL TO FACILITATE THE STUDENTS AND WHILE DOING SO THE STAF F OF THAT SCHOOL ACTS AS TRUSTEE/ AGENT. THEREFORE, IT CANNOT BE INCLUDED IN THE ASSESSEE- SOCIETY GROSS RECEIPTS. COUNTERING THE ALLEGATION THAT ANY EXPEND ITURE WAS INCURRED BY THE SOCIETY TOWARDS PERSONAL EXPENDITURE OF THE SPECIFI ED PERSONS, THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT NO INSTANCE OF ANY ASSETS BEING USED BY THE ANY SPECIFIED PERSONS HAS BEEN DE MONSTRATED BY THE AO. 6.2 THE LD. DR RELIED ON THE ORDER OF THE AO. 6.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. COMING TO THE ASSESSEE'S APPEA L, THE FIRST ISSUE IS REGARDING APPLICABILITY OF SECTION 10(23C)(IIIAD) A ND ITS GROSS RECEIPTS BEING LESS THAN RS. 1.00 CRORER IS CONCERNED, WE ARE OF T HE VIEW THAT THE MISCELLANEOUS RECEIPTS OF THE SCHOOL CANNOT BE HELD AS GROSS RECEIPTS OF THE SOCIETY WHICH IS SUPPORTED BY ITAT DELHI BENCH JUDG EMENT IN THE CASE OF PARAM HANS SWAMI UMA BHARTI MISSION VS. ACIT (SUPRA ) AND BY RESPECTFULLY THE SAME, WE ALLOW THIS GROUND OF THE ASSESSEE. 7.1 APROPOS, THE SECOND ISSUE ABOUT THE ADDITION TO THE GROSS RECEIPTS AND INCOME THEREON FROM THE SALE OF BOOKS, SWEATERS, CO ATS, EDUCATION FEE ETC. WE ARE OF THE VIEW THAT THESE WERE THE GROSS RECEIPTS OF THE SCHOOL AND THE AO ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 9 HAS FAILED TO DEMONSTRATE ANY PROFIT MAKING BY THE SOCIETY AND THE ADDITION HAS BEEN MADE ON THE BASIS OF CONJECTURE AND SURMIS E. SIMILARLY, THE ALLEGATION THAT SPECIFIED PERSONS EXPENDITURE WAS I NCURRED BY THE SOCIETY IS ALSO UNFOUNDED. IN THIS BEHALF, RESPECTFULLY FOLLOW ING THE JUDGEMENTS OF ITAT JAIPUR BENCH IN THE CASES OF JHUNJHUNU ACADEMY SAMITI VS. ITO , JHUNJHUNU (ITA NO. 759/JP/2008 FOR THE ASSESSMENT YEAR 2000-01 DATED 24- 04-2009) AND M/S. COSMOPOLITAN EDUCATIONAL SOCIETY VS. ACIT (ITA NO. 1189/JP/94 FOR THE ASSESSMENT YEAR 1990-91 DATED 26 -10-1998), WE ALLOW SECOND GROUND OF THE ASSESSEE. 8.1 APROPOS REVENUES APPEAL, THE LD. CIT(A)S FIND ING IN THIS BEHALF IS AS UNDER:- 4.3. THE BRIEF FACTS OF THE ISSUE ARE THAT THE AO H AS OBSERVED THAT THE APPELLANT DID NOT DEPOSITED/PAID TDS, I.R.O., V ARIOUS CONTRACTUAL PAYMENTS MADE DURING THE RELEVANT PERIOD, IN TIME OR BEFORE THE TIME LIMIT GIVEN TO FILE THE RETURN U/S. 139(1) OF THE ACT. ACCORDINGLY, HE DISA LLOWED THE TOTAL OF SUCH EXPENDITURE OF RS. 15,75,1487- U/S. 40A(IA) OF THE ACT THE LD. AR ON THE OTHER HAND ARGUED THAT IN VIEW OF VARIOUS DECISION OF HON 'BLE ITAT JAIPUR BENCH, INCLUDING M/S. JVVNL 26 DTP 79, THE PROVISION OF SE C. 40A(IA) IS APPLICABLE IN A CASE WHERE THE RELEVANT PAYMENTS ARE REMAINED PAY ABLE AT THE END OF THE FINANCIAL YEAR. HE FURTHER SUBMITTED THAT NO SUCH P AYMENT WAS OUTSTANDING AS ON 31-03-2008, IN THE CASE OF SUCH CONTRACTUAL OBLI GATIONS. ACCORDINGLY THE PROVISION OF SEC. 40A(IA) IS NOT APPLICABLE IN THEI R CASE. AFTER ANALYZING THE FACTS OF THE ISSUE UNDER QUESTION, I FIND MERIT IN THE LD. AR CONTENTIONS MADE IN THIS REGARD. THUS, WHILE FOLLOWING THE ABOVE DECISI ONS OF THE HON'BLE ITAT, JAIPUR BENCH, I ALSO UPHOLD THE PROVISIONS OF SECTION 40(A )(IA) ARE NOT APPLICABLE IN THE APPELLANTS CASE AS THE EXPENSES, UNDER CONSIDERATI ON, WERE ALREADY PAID DURING THE CURRENT YEAR AND NOT REMAINED PAYABLE OR OUTSTA NDING, AS SUCH, THEREFORE, THE PROVISION OF SECTION 40(A)(IA) ARE NOT APPLICABLE O N SUCH MATTERS. ACCORDINGLY THE ADDITION OF RS. 1575148/- MADE U/S 40(A)(IA) IS HER EBY DELETED. 8.2 THE LD. DR RELIED ON THE ORDER OF THE AO. ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 10 8.3 THE LD. COUNSEL FOR THE ASSESSEE IN REPLY CONTE NDS THAT SINCE THE ENTIRE INCOME OF THE ASSESSEE ARISES OUT OF GROSS RECEIP TS LESS THAN RS. 1.00 CRORE, THEREFORE, IT IS EXEMPT U/S 10(23C)(IIIAD). IT CLE ARLY POSTULATES THAT ONCE THE ASSESSEE HAS TURNOVER OF LESS THAN RS. 1.00 CROR ER THEN WHATEVER BE THE TAXABLE INCOME IT IS EXEMPT. THOUGH THE PAYMENT OF RENT WAS MADE ON 22- 11-2008 I.E. AFTER DUE DATE OF FILING OF RETURN YET THE ADDITION CANNOT BE MADE FOR THE SIMPLE REASON THAT ONCE THE ASSESSEE'S INCO ME IS EXEMPT U/S 10(23C)(IIIAD) AND WHATEVER INCOME IT EARNS IS EXE MPT AND EVEN IF SOME EXPENDITURE IS TECHNICALLY DISALLOWED U/S 40(A)(IA) . THUS THE ASSESSEES INCOME HAS TO REMAIN EXEMPT. 8.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND MERIT IN THE ARGUMENTS OF THE LD. AR THAT THE ASSESSEE FALLS IN THE CATEGORY OF SECTION 10(23C)(I IIAD). AS WE HAVE HELD ABOVE THE LOGICAL CONCLUSION OF THIS EXEMPTION IS T O THE EFFECT THAT WHATEVER INCOME OF THE ASSESSEE IS ASSESSED AND IT WILL BE E XEMPT BY VIRTUE OF EXPRESSED PROVISION OF SECTION 10(23C)(IIIAD) OF TH E ACT. CONSEQUENTLY, WE ARE OF THE VIEW THAT THE ADDITION IN QUESTION IN TH E GARB OF SECTION 40(A)(IA) OF THE ACT CANNOT BE MADE IN ASSESSEE'S CASE. THUS THE SOLITARY GROUND OF THE REVENUE IS DISMISSED. ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 11 9.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AND THAT OF THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 05-09 -2014 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 05 TH SEP. 2014 *MISHRA COPY FORWARDED TO:- 1. M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN, JHUNJ HUNU 2. THE ITO WARD- 1, JHUNJHUNU 3. THE LD. CIT 4. THE LD. CIT(A), JAIPUR BY ORDER 5..THE LD. DR 6.THE GUARD FILE (IT NO. 33/JP/2012) AR ITAT, JAIPUR ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 12 ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 13 ITA NO. 33//JP/2012 M/S. R.N. TAGORE PUBLIC SCHOOL SANSTHAN VS. ITO , W ARD- 1, JHUNJHUNU 14