I.T.O.5(1), Firozabad V. M/s Chaudhary Hardayal Singh Shiksha Samiti, Firozabad

ITA 354/AGR/2013

• Counselvise Citation: 35420314 RSA 2013
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-01-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 25-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ATHESHAM ANSARI
• Assessee Lawyers: R K AGARWAL
• Keywords: Charitable institution
• Section: 11; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO.354/AGRA/ 2013 ASSESSMENT YEAR: 2010-11 INCOME TAX OFFICER-5(1), VS. M/S CHAUDHARY HARDA YAL SINGH FIROZABAD. SHIKSHA SAMITI, VILL. PENDHAT, POST EKA, TEH: JASRANA, DISTT. FIROZABAD. (PAN AABTC 0381 M) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ATHESHAM ANSARI, JR. D.R. RESPONDENT BY : SHRI R.K. AGARWAL, ADVOCATE DATE OF HEARING : 28.01.2014 DATE OF PRONOUNCEMENT : 31.01.2014 ORDER PER PRAMOD KUMAR, ACCOUNTANT MEMBER: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF LEARNED CIT(A)S ORDER DATED 30 TH AUGUST, 2013, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961, FOR THE ASSESSMENT YEAR 2010-11. 2. IN GROUND NUMBER 1, 2 & 3, WHICH WE WILL TAKE UP TOGETHER, THE ASSESSING OFFICER HAS RAISED THE FOLLOWING GRIEVANCES:- ITA NO.354/AGRA/2013 A.Y. 2010-11 2 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S)-II, AGRA HAS ERRED IN LAW & FACTS BY HOLDING THAT ASSESSEE S OCIETY IS ENTITLED FOR EXEMPTION U/S 10(23C)(IIIAD) OF THE I.T. ACT. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS )-II, AGRA HAS ERRED IN LAW & FACTS IN DELETING ADDITION OF RS .29,03,901/- BY ALLOWING EXEMPTION U/S 10(23C)(IIIAD) OF I.T. ACT, IGNORING THE FACT THAT BY GIVING DONATION OF RS.41,00,000/- TO M/S HA R DAYAL CHARITABLE & EDUCATIONAL TRUST, THE ASSESSEE HAS AP PLIED ITS FUND FOR PURPOSES OTHER THAN EDUCATIONAL BECAUSE THE AMOUNT OF DONATION BY THE ASSESSEE TO THE OTHER SOCIETY WHICH ITSELF IS N OT SOLELY EXISTING FOR EDUCATIONAL PURPOSES CANNOT BE SOLELY USED/UTILISED FOR EDUCATIONAL PURPOSES. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS )-II, AGRA HAS ERRED IN LAW & FACTS BY IGNORING THE FACT THAT THE DONEE SOCIETY, NAMELY; HAR DAYAL CHARITABLE & EDUCATIONAL TRUST EX ISTS FOR A LARGE NUMBER OF OMNIBUS PURPOSES AND DONATION TO IT BY TH E ASSESSEE CANNOT BE SOLELY USED FOR EDUCATIONAL PURPOSES. 3. LEARNED REPRESENTATIVES FAIRLY AGREED THAT THE A BOVE ISSUES ARE COVERED, IN FAVOUR OF THE ASSESSEE, BY OUR ORDER DATED 20 TH DECEMBER, 2013 IN ASSESSEES OWN CASE, WHEREIN WE HAVE, INTER ALIA OBSERVED AS FOLLOWS:- 5. WE FIND THAT IT IS AN UNDISPUTED POSITION THAT THE ASSESSEE DID GIVE AN INTEREST FREE LOAN OF RS 10,00,000 TO A COMMERCIAL CONCERN, IN WHICH MEMBERS OF THE MANAGING COMMITTEE WERE INTERESTED, BUT THAT LOAN WAS FOR A VERY SHORT PERI OD. EVEN AS WE NOTE THIS POSITION, WE FIND THAT THE REQUIREMENT OF SECTION 10(23C) IS THAT THE INSTITUTION MUST EXIST SOLELY FOR EDUCATIONAL PURPOSES AND THAT THE LEARNED CIT(A) HAS HELD THA T THIS SHORT TERM LOAN DOES NOT ALTER OR CHANGE THE PURPOSES FOR WHICH THE INSTITUTION EXISTS. A TRANSACTION OF THIS NATURE DO ES NOT OBLITERATE OR DILUTE THE OBJECTS OF THE ASSESSEE INSTITUTION. IT IS ALSO IMPORTANT TO BEAR IN MIND THAT THE PRESENT IS QUITE DISTINCT FROM A SITUATION ENVISAGED IN SECTION 13 WHICH DEALS WIT H THE SITUATIONS IN WHICH BENEFITS OF SECTION 11 CAN BE D ECLINED. THERE ARE NO SUCH CORRESPONDING DISABLING PROVISIONS SO F AR AS BENEFITS OF SECTION 10(23C) ARE CONCERNED. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF TH E CASE, WE ITA NO.354/AGRA/2013 A.Y. 2010-11 3 APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AN D DECLINE TO INTERFERE IN THE MATTER. 14. WE ARE UNABLE TO SEE LEGALLY SUSTAINABLE MERIT S IN THE GRIEVANCE OF THE ASSESSING OFFICER. ONCE IT IS AN U NDISPUTED POSITION, AS IS THE POSITION ON THE FACTS OF THIS C ASE, THAT THE MONIES SO GIVEN ARE TO BE USED ONLY FOR EDUCATIONAL PURPOSES, IT CANNOT BE SAID THAT MERELY BECAUSE MONIES WERE USED THROUGH ANOTHER CHARITABLE INSTITUTION, ONE COULD CONCLUDE THAT THE INSTITUTION DID NOT EXIST SOLELY FOR EDUCATIONAL PU RPOSES. WE, THEREFORE, REJECT THE GRIEVANCE OF THE AO AND CONFI RM THE ACTION OF THE CIT(A) ON THIS POINT AS WELL. 4. IN VIEW OF THE ABOVE DISCUSSIONS, WHICH IS AN AG REED POSITION BETWEEN THE PARTIES, WE CONFIRM THE CONCLUSIONS ARRIVED AT BY T HE CIT(A) ON THESE ISSUES AND DECLINE TO INTERFERE IN THE MATTER. 5. GROUND NO. 1 TO 3 ARE THUS DISMISSED. 6. IN GROUND NO.4, THE ASSESSING OFFICER HAS RAISED THE FOLLOWING GRIEVANCE:- 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S)-II, AGRA HAS ERRED IN LAW & FACTS IN DELETING THE ADDITION O F RS.5,73,721/- BEING DISALLOWANCE OF EXPENSES, AS THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT ETC. BEFORE THE AO FOR THEIR VERIF ICATION. 7. SO FAR AS THIS GRIEVANCE IS CONCERNED, RELEVANT MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER DISALLOWED RS.5,73,721/- BY OBSERVING AS FOLLOWS:- ITA NO.354/AGRA/2013 A.Y. 2010-11 4 SINCE, THE ASSESSEE HAS FAILED TO PRODUCE ACCOUNT BOOKS, DOCUMENTS ETC. REQUIRED BY THE UNDERSIGNED, 15% OF THE EXPENSES CLAIMED BY IT IN THE INCOME AND EXPENDITURE ACCOUNT (I.E.15% OF RS.38,22,809/- OR RS.5,73,721/-), AS PROPOSED IN TH E SHOW CAUSE NOTICE, ARE ADDED TO THE INCOME OF THE ASSESSEE SOC IETY. 8. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO DELETED THE SAID DISALLOWANCE AND OBSERVED AS FOLLO WS:- AS REGARDS TO DISALLOWANCE OF EXPENSES MADE BY THE AO ON ESTIMATE BASIS TAKING 15% OF TOTAL EXPENSES OF RS.3 8,22,809/- COMING TO RS.5,73,721/- AS CHALLENGED BY THE APPELLANT SOC IETY IN GROUND NO.2, I FIND THAT THE AO HAS NOT GIVEN ANY FINDING ABOUT INADMISSIBILITY OF SUCH EXPENSES. NOW, AFTER I HAVE HELD THAT SURPL US SHOWN BY THE ASSESSEE IN THE INCOME AND EXPENDITURE ACCOUNT IS N OT TAXABLE IN VIEW OF THE PROVISION OF SECTION 10(23C) (IIIAD), SUCH D ISALLOWANCE MADE BY THE AO WOULD NOT SERVE ANY PURPOSE, UNLESS IT IS SH OWN THAT SUCH EXPENSES HAVE BEEN INCURRED BY THE APPELLANT SOCIET Y FOR NON EDUCATIONAL PURPOSES BUT NO SUCH FINDING HAS BEEN G IVEN IN THE ASSESSMENT ORDER. THEREFORE, THE ADDITION OF RS.5,7 3,721/- HAS ALSO BEEN DELETED AND ACCORDINGLY, GROUND NO.2 IS ALLOWE D. 9. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED AND IS IN APPEAL BEFORE US. 10. WE HAVE NOTED THAT THE ASSESSING OFFICER HAD DI SALLOWED THE EXPENSES AS THE SAME WOULD NOT BE VERIFIED FOR WANT OF PRODUCTION O F BOOKS OF ACCOUNTS AND VOUCHERS ETC. UNDER SUCH CIRCUMSTANCES, IT WAS INDE ED INAPPROPRIATE FOR THE CIT(A) TO DELETE THE DISALLOWANCE FOR THE REASON TH AT THERE IS NO FINDING TO THE EFFECT THAT EXPENDITURE IS NOT FOR EDUCATIONAL PURP OSES. CLEARLY, THERE CANNOT BE ANY ITA NO.354/AGRA/2013 A.Y. 2010-11 5 OCCASION FOR SUCH A FINDING UNTIL AND UNLESS THERE IS OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE AND VERIFY THE BOOKS OF ACCOUNTS AND VOUCHERS ETC. IN OUR CONSIDERED VIEW, THE RIGHT OF COURSE OF ACTION IS T O REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR NECESSARY VERIFICATION , AND ADJUDICATION DE NOVO . WE ORDER SO. 11. GROUND NO.3 IS THUS ALLOWED FOR STATISTICAL PUR POSES. 12. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 31.01.2014) SD/- SD/- (BHAVNESH SAINI) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 31.01.2014 PBN/* COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY