ACIT, Jaipur V. PUBLIC ROSE SHIKSHA SAMITI, Alwar

ITA 363/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99283 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DILIP SHARMA
• Keywords: Charitable institution; Opportunity of being heard; Assessment record
• Section: 143(3); 12AA

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 363/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, ALWAR. CUKE VS. M/S PUBLIC ROSE SHIKSHA SAMITI, TIJARA ROAD, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAATP 5173 D VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI DILIP SHARMA (JCIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 21/07/2015 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 11/08/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 10/01/2013 PASSED BY THE LEARNED CIT (A), ALWAR FOR A.Y. 2009-10 THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD CIT(A), ALWAR WAS JUSTIFIED IN HOLDING THAT ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 2 ANNUAL AGGREGATE RECEIPTS OF THE ASSESSEE ARE LESS THAN RS. 1 CR. AS AGAINST RS. 1,46,81,760/- DETERMINED BY THE A.O. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A), ALWAR WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE SAMITI SOLELY EXISTED FOR PURPOSE OF EDUCATION AND NOT FOR THE PURPOSE OF PROFIT AND HENCE ELIGIBLE FOR EXEMPTION U/S 10(23C)(IIIAD) WITHOUT CONSIDERING THE DEFICIENCIES POINTED OUT BY THE A.O. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A), ALWAR WAS JUSTIFIED IN NOT CONSIDERING THE DECISION OF HONBLE HIGH COURT IN THE CASE OF MAHARAJA SINGH MUSEUM TRUST 169 ITR 379 (RAJ) AND SUPREME COURT OF INDIA IN THE CASE OF SOLE TRUSTEE LOK SIKSHAN TRUST VS. CIT 101 ITR 234 (SC) WHEREIN THE WORD SOLELY HAS BEEN DEFINED. 2. ALL THE GROUNDS OF THE REVENUES APPEAL ARE REVO LVING AROUND ANNUAL CREDIT RECEIPT IS MORE THAN ONE CRORE IS NOT ELIGIBLE FOR EXEMPTION U/S 10(23C)(IIIAD) HONBLE RAJASTHAN HIGH COURT DECISION IN THE CASE OF MAHARAJA SINGH MUSEUM TRUST 169 ITR 3 79 (RAJ) AND THE DECISION OF HONBLE SUPREME COURT OF INDIA IN T HE CASE OF SOLE TRUSTEE LOK SIKSHAN TRUST VS. CIT 101 ITR 234 (SC). THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS AN EDUCATIONAL INSTITUTION, FILED ITS RETURN AS THE STATUS OF AOP ON 22/09/2009 AT NIL AFTER CLAIMING EXEMPTION U/S 10(23C)(IIIAD) OF THE INCOME TAX ACT, ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 3 1961 (HEREINAFTER REFERRED AS THE ACT). THE ASSESSEE HAD ALSO CLAIMED LOSS OF RS. 29,756/- UNDER THE HEAD PROFIT AND GAI NS OF BUSINESS. IN THE COMPUTATION FILED ALONGWITH THE RETURN OF INCOME , THE ASSESSEE HAD CLAIMED TO CARRY FORWARD BUSINESS LOSS OF RS. 29 ,756/-. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE ACT. THE CASE OF TH E SAMITI FOR EARLIER YEAR I.E. A.Y. 2006-07, 2007-08 AND 2008-09 WERE ALSO SCRUTINIZED U/S 143(3) WHEREIN THE CLAIM OF EXEMPTI ON U/S 10(23C)(IIIAD) WAS DENIED BY THE A.O. FOR THE DETAIL ED REASONS GIVEN IN THE RESPECTIVE ASSESSMENT ORDERS. THEREFORE, THE ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE ON THE BASIS OF FINDING GIVEN FROM A.Y. 2006-07 TO 2008-09. THE ASSESSEE REPLIED VIDE LETTER DATED 07/10/2011, WHICH WAS REPRODUCED BY THE ASSESSING OFFICER ON PAGE NO. 2 OF THE ASSESSMENT ORDER. AFTE R CONSIDERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER OBSERVED THAT IN INCOME AND EXPENDITURE ACCOUNT FOR THE CURRENT ASSESSMENT YEAR , THE ASSESSEE HAD CLAIMED EXCESS OF EXPENDITURE OVER INCOME TO TH E TUNE OF RS. 29,755.70. THE ASSESSEE HAD SHOWN GROSS INCOME OF RS. 90,87,042/- AND EXPENDITURE OF RS. 91,16,798/- IN THE INCOME AN D EXPENDITURE ACCOUNT. HOWEVER, ON PERUSAL OF THE BALANCE SHEET, T HE TOTAL RECEIPT OF THE SAMITI ARE MORE THAN RS. ONE CRORE. IN THE S CHEDULE ANNEXED ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 4 WITH THE BALANCE SHEET, A PROFIT ON SALE OF LAND HAD BEEN SHOWN AT RS. 34,52,940/-. FURTHER, THE ASSESSEE HAS SHOWN FOL LOWING RECEIPTS IN THE RECEIPT AND PAYMENT ACCOUNT BUT NOT DECLARED IN THE INCOME AND EXPENDITURE ACCOUNT. SALE OF LAND RS. 4790000.00 PRAVEEN JAIN RS. 25000.00 SCHOLARSHIP RS. 276800.00 MULAYAM SINGH RS. 100000.00 DR. R.K. SINGH RS. 180000.00 VINOD GUPTA RS. 20000.00 SURESH KUMAR RS. 30000.00 ADM FEE RS. 8954200.00 MEMBERSHIP FEE RS. 11016.00 FDR INTEREST RS. 38269.00 RAGHUVEER SINGH RS. 15226.00 CAUTION MONEY RS. 120000.00 BHUPENDRA & COMPANY RS. 7700.00 TDS RECEIVED SHIV CHARAN LAL GUPTA RS. 3399.00 O.P. AGARWAL RS. 5150.00 SALE OF CAR RS. 105000.00 ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 5 THUS THE ANNUAL AGGREGATE RECEIPTS OF THE SAMITI ARE MORE THAN RS. ONE CRORE. THEREFORE, THE ASSESSEE CLAIM FOR EXEMPT ION U/S 10(23C)(IIIAD) IS NOT ALLOWABLE. THE ASSESSEE HAS ALS O NOT TAKEN APPROVAL FROM THE CHIEF COMMISSIONER OF INCOME TAX A S MANDATED U/S 10(23C)(VI) OF THE ACT, THE EXEMPTION U/S 10(23 C)(VI) ALSO CANNOT BE ALLOWED. THE LD ASSESSING OFFICER HAS REPRODUCED S TATUTORY PROVISIONS OF SECTION 10(23C)(IIIAD) OF THE ACT ON PAGE 4-5 OF THE ASSESSMENT ORDER FOR EXEMPTION U/S 10(23C)(IIIAD) O R SECTION 10(23C)(VI) OF THE ACT. IT IS NECESSARY THAT SAMITI MUST EXIST FOR EDUCATIONAL PURPOSES AND EDUCATIONAL INSTITUTION, I T SHOULD NOT BE EXISTED FOR THE PURPOSE OF PROFIT. THE RECEIPT OF T HE INCOME MUST HAVE THE CHARACTER OF AN EDUCATIONAL INSTITUTION TO BE A SCERTAINED FROM ITS OBJECTS. IN THIS SECTION WORD SOLELY MEANS EXCLUSI VELY AND NOT PRIMARILY. IN USING THE EXPRESSION SOLELY THE LEG ISLATURE HAS MADE IT CLEAR THAT IT INTENDS TO EXEMPT THE INCOME OF THE I NSTITUTIONS ESTABLISHED SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR COMMERCIAL ACTIVITIES. THIS REQUIREMENT WOULD MILITATE AGAINST A N INSTITUTION PURSUING OBJECTS OTHER THAT EDUCATION. EVEN IF ONE OF THE OBJECTS ENABLES THE INSTITUTION TO UNDERTAKE COMMERCIAL ACT IVITIES, IT WOULD NOT BE ENTITLED FOR APPROVAL U/S 10(23C)(VI) OF THE ACT. THE LD ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 6 ASSESSING OFFICER FURTHER OBSERVED THAT IF THERE AR E SEVERAL OBJECTS OF A SOCIETY, SOME OF WHICH RELATE TO EDUCATION AND OTH ERS WHICH DO NOT, AND THE TRUSTEES OR THE MANAGERS IN THEIR DISCRETIO N ARE ENTITLED TO APPLY THE INCOME OR PROPERTY TO ANY OF THOSE OBJECT S, THE INSTITUTION WOULD NOT BE LIABLE TO BE REGARDED AS ONE EXISTING S OLELY FOR EDUCATIONAL PURPOSES, AND NO PART OF ITS INCOME WOUL D BE EXEMPT FROM TAX. IN OTHER WORDS, WHERE THE MAIN OR PRIMARY O BJECTS ARE DISTRIBUTIVE, EACH AND EVERYONE OF THE OBJECTS MUST RELATE TO EDUCATION IN ORDER THAT THE INSTITUTION MAY BE HE LD ENTITLED FOR THE BENEFITS U/S 10(23C)(VI) OF THE ACT. THE LD ASSESSIN G OFFICER RELIED ON THE DECISION IN THE CASE OF SURAT ART SILK MANUFACT URERS ASSOCIATION. THE LD ASSESSING OFFICER REPRODUCED THE OBJECTIVE GI VEN IN CLAUSE (3) OF THE CONSTITUTION LETTER ON PAGE 4-5 OF THE ASSES SMENT ORDER, WHICH IS REPRODUCED AS UNDER:- 1- VIKFGT O FO/KOK VKSJRKSA DKS JKTSXKJ NSUK RKFD MUDK EUKSCY C<+SAA 2- CKYD O CKFYDKVKSA DKS VPNH F'K{KK NSUK O JKV DS FY;S TKXZR JGUS DH IZSJ.KK NSUKA 3- ;QOK IH<+H DKS 'KKJHFJD IZF'K{KD NSUK O VUDS [K SYDWN DJKUK TKS MTTOY HKFO; DS LKFK NS'K DS VPNS UKXFJD CU L DSA 4- U'KHYS INKFKZ DS LSOU LS ;QOK IH<+H DKS EQDR DJ KUKA ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 7 5- DYK ,OE VUQLA/KKU DK;KSZ DS FODKL GSRQ IZKSRLKG U O LGK;RK IZNKU DJUKA 6- XJHC ,OE~ FINM+S OXZ DKS LLRH LQYHK FPFDRLK NSU K O MIYC/K DJKUKA 7- ,SLS VUSD DK;KSZ ESA LKFK NSUK TKS LJDKJ DS VUQ DWY GKSA THE LD ASSESSING OFFICER HAS HELD THAT EXCEPT OBJECT IVE AT SERIAL NO. 2, THE OTHER OBJECTS ARE NOT COVERED UNDER THE PURV IEW OF EDUCATION, THEREFORE, IT CANNOT BE COMPLETED THAT THE SAMITI D OES NOT EXIST SOLELY FOR THE PURPOSE OF EDUCATION. THE LD ASSESSING OFFIC ER RELIED ON THE DECISIONS IN THE CASE OF HONBLE HIGH COURT IN THE CASE OF MAHARAJA SINGH MUSEUM TRUST (SUPRA) AND SUPREME COURT OF INDI A IN THE CASE OF SOLE TRUSTEE LOK SIKSHAN TRUST VS. CIT (SUPRA) WHE REIN THE WORD SOLELY HAS BEEN DEFINED AND INTERPRETED. THE HONBLE COURTS HAVE OBSERVED THAT EXISTING SOLELY FOR THE PURPOSE OF EDUCATION MEANS EXCLUSIVELY AND NOT PRIMARILY MEANING THEREBY T HAT THE SOLE OBJECTIVE OF THE INSTITUTION MUST BE EDUCATION AND IF THERE ARE OTHER OBJECTIVES ALSO WHETHER CHARITABLE OR OTHERWISE, MAKE S THE CASE DISENTITLE FOR CLAIMING EXEMPTION U/S 10(23C)(IIIAD ) OR SECTION 10(23C)(VI) OF THE ACT. ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 8 2.1 THE LD ASSESSING OFFICER FURTHER ANALYSED THE US E OF THE FUND AND OBSERVED THAT SECRETARY OF THE SAMITI SHRI RAKE SH CHOUHAN HAD WITHDRAWN FUNDS TO THE TUNE OF RS. 7,57,781/- FROM TH E SAMITI ACCOUNTS FOR PERSONAL PURPOSES. THE DETAIL HAS BEEN GIVEN BY THE ASSESSING OFFICER ON PAGE NO. 6-7 OF THE ASSESSMENT ORDER. HE ALSO SOUGHT CLARIFICATION FROM THE ASSESSEE. AFTER CONSI DERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER OBSERVED AS UNDER:- A) VOUCHER FOR PAYMENT TO SH. RAKESH CHAUHAN JKDS'K LJ DKS UXN FN;S B) RECEIPTS IN THE NAME OF SH. ABDUL HAMEED ESA- VCNQY GEHN IQ= JH ESGJKO [KKA XKAO /KKSYHNWC U S :I;S 55]000@& IPIU GTKJ :I;S EK= CKCR MKWA JKDS'K PKSGKU DS EDKU DS FUEKZ.K DK DK;Z FD;KA ;G JKF'K ESUSA GSYFK ,.M GKBZFTU UFLZX BFULVVWV LS IZKIR DJ JLHN FY[K NH GSA RKDH LE; IJ DKE VKOSAA (A COPY OF VOUCHER DATED 30/09/2008 PAID TO SH. RAK ESH CHAUHAN AND RECEIPT DATED 31/5/2008 OF SH. ABDUL HAMEED, S/ O- MEHRAB KHAN ARE ANNEXED TO THIS ORDER AS ANNEXURE 1&2 RESPECTIV ELY.) FROM THE ABOVE, IT IS EVIDENT THAT THE FUNDS OF SA MITI WERE CONTINUOUSLY DIVERTED FOR THE PERSONAL USE OF THE S ECRETARY OF THE SOCIETY. ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 9 IT IS ALSO NOTICED THAT FOLLOWING ADVANCES/SECURITY ETC. ARE APPEARING IN THE BALANCE SHEET OF THE ASSESSEE WHICH ARE NOT RELATED TO THE ACTIVITIES OF IMPARTING EDUCATION. 1. SECURITY FOR HOSTEL A-65 HASAN KHAN MEWAT NAGAR R S. 2,00,00/-: MADE TO SH. RAJESH KUMAR SINGH. 2. SECURITY FOR HOSTEL SAI DHAM COLONY RS. 1,00,000 /-: MADE TO SMT. SUNITA SINGH. 3. NIRWAN CHARITABLE TRUST RS. 46,35,000/- & RAJASTHA N DENTAL COLLEGE RS. 45,63,807/-. FROM THE ABOVE DETAILS OF ADVANCES ETC., IT CAN BE CLEARLY NOTICED THAT A MAJOR PART OF SAMITIS FUNDS ARE IN STILL IN UTIL IZATION FOR PURPOSES OTHER THAN PURPOSE OF EDUCATION AS WELL AS THE FOR P URPOSES OTHER THAN OBJECTS OF THE SAMITI WHICH AUTHENTICATES DISQU ALIFICATION FOR BEING INSTITUTION EXISTING SOLELY FOR EDUCATION PUR POSES. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES AS ABOV E, I DISALLOW THE CLAIM OF ASSESSEE FOR EXEMPTION U/S 10( 23C)(IIIAD) AS THE TOTAL RECEIPTS OF THE ASSESSEE ARE MORE THAN RS. 1, 00CRORE AND SIMULTANEOUSLY FOR NOT BEING AN INSTITUTION EXISTIN G SOLELY FOR EDUCATION PURPOSES AS DISCUSSED IN PRECEDING PARA. 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASS ESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A), WHO HAD ALLOWED THE APPEAL BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE ASSESSMENT ORDER, ASSESSMENT RECORD AS WELL AS SUBMISSIONS MADE BY THE APPELLANT AND ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 10 THE CASES RELIED UPON. THE A.O. HAS AGGREGATED THE RECEIPTS OF THE SAMITI AS PER RECEIPT AND PAYMENT ACCOUNT, INCOME AND EXPENDITURE ACCOUNT AND THE BALANCE SHEET TO ARRIVE AT THE TOTAL RECEIPT OF RS. 14681760/-. THIS AGGREGATE AMOUNT HAS BEEN CONSIDERE D AS THE ANNUAL AGGREGATE RECEIPT OF THE SAMITI AND S INCE IT IS MORE THAN ONE CRORE, CLAIM OF EXEMPTION U/S 10(23C)(IIIAD) HAS BEEN DENIED. RULE 2BC(1) OF THE IT RULES PROVIDE AS UNDER: FOR THE PURPOSE OF SUB-CLAUSE (IIIAD) OF CLAUSE (23 C) OF SECTION 10, THE AMOUNT OF ANNUAL RECEIPTS ON OR AFT ER 1 ST DAY OF APRIL, 1998, OF ANY UNIVERSITY OR OTHER EDUCATIO NAL INSTITUTIONAL, EXISTING SOLELY FOR EDUCATIONAL PURP OSES AND NOT FOR THE PURPOSE OF PROFIT, SHALL BE ONE CRORE RUPEE S. THE TERMS AGGREGATE ANNUAL RECEIPT HAS NOT BEEN DEF INED IN THE ACT. AS PER OXFORD ADVANCED LEARNERS DICTION ARY THE TERM ANNUAL MEANS (A) HAPPENING OR DONE ONCE EV ERY YEAR, (B) RELATING TO A PERIOD OF ONE YEAR. IN MY CONSIDERED OPINION THE TERM ANNUAL RECEIPT IN RULE 2BC AND IN SECTION 10(23C)(IIIAD) HAS BEEN USED TO MEAN HAPPENING OR DONE ONCE EVERY YEAR SINCE IN INCOME TA X THE RECEIPTS RELATING TO A PERIOD OF ONE YEAR IS CO NSIDERED FOR ASSESSMENTS EVEN OTHERWISE. IN THE CASE CITED AS 88 ITR 192 (SC) CIT VS. VEGETABL E PRODUCTS LTD., HONBLE APEX COURT HAS OBSERVED AS U NDER: THERE IS NO DOUBT THAT THE ACCEPTANCE OF ONE OR THE OTHER INTERPRETATION SOUGHT TO BE PLACED ON SECTION 271(1 )(A)(I) BY THE PARTIES WOULD LEAD TO SOME INCONVENIENT RESULT, BUT THE ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 11 DUTY OF THE COURT IS TO READ THE SECTION, UNDERSTAN D ITS LANGUAGE AND GIVE EFFECT TO THE SAME. IF THE LANGU AGE IS PLAIN, THE FACT THAT THE CONSEQUENCES OF GIVING EFF ECT TO IT MAY LEAD TO SOME ABSURD RESULT IS NOT A FACTOR TO B E TAKEN INTO ACCOUNT IN INTERPRETING A PROVISION. IT IS FOR THE LEGISLATURE TO STEP IN AND REMOVE THE ABSURDITY. ON THE OTHER HAND, IF TWO REASONABLE CONSTRUCTIONS OR A TA XING PROVISION ARE POSSIBLE, THAT CONSTRUCTION WHICH FAV OURS THE ASSESSEE MUST BE ADOPTED. THIS IS A WELL ACCEPTED R ULE OF CONSTRUCTION RECOGNIZED BY THIS COURT IN SEVERAL OF ITS DECISIONS. HENCE, ALL THAT WE HAVE TO SEE IS, WHAT IS THE TRUE EFFECT OF THE LANGUAGE EMPLOYED IN SECTION 271(1)(A )(I). IF WE FIND THAT LANGUAGE TO BE AMBIGUOUS OR CAPABLE OF MORE MEANINGS THAN ONE, THEN WE HAVE TO ADOPT THAT INTERPRETATION WHICH FAVOURS THE ASSESSEE, MORE PAR TICULARLY SO BECAUSE THE PROVISION RELATES TO IMPOSITION OF P ENALTY. IN VIEW OF THE DECISION OF THE APEX COURT CITED HAS CIT VS. VEGETABLE PRODUCTS LTD. 88 ITR 192, I AM INCLINE D TO AGREE WITH THE APPELLANT THAT THE AGGREGATE ANNUAL RECEIPTS SHOULD INCLUDED RECEIPTS WHICH ARE BEING RE CEIVED ON ANNUAL BASIS AND NOT OCCASIONALLY OR ON SOME OTH ER COUNTS. THE RECEIPTS MUST BE RELATED TO THE ACTIVITY OF THE INSTITUTION LIKE FEE RECEIPTS RECEIVED FROM STUDENT S. BUT IT SHOULD NOT INCLUDE (I) OTHER RECEIPTS RECEIVED FROM GOVT. OR ANY SUCH DEPARTMENT TO REPAY OR DISTRIBUTE TO ST UDENTS UNDER ANY SCHEME LIKE SCHOLARSHIP ETC. (II) ANY LOA N OR DEBT, (III) ANY ADVANCES RECEIVED FOR SALE OF ANY L AND, SALE CONSIDERATION OF ANY ASSETS (IV) INTEREST EARNED ON ANY INVESTMENT LIKE FDR WHICH HAS NO NEXUS WITH ACTIVITY OF EDUCATION. ACCORDINGLY, IT IS HELD THAT THE ANNUAL RECEIPTS FOR THE APPELLANT WOULD BE RS. 9036200/-, BEING THE ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 12 ADMISSION FEE AS PER INCOME AND EXPENDITURE ACCOUNT . THE A.O. WAS NOT CORRECT IN HOLDING THAT THE AGGREGAT E ANNUAL RECEIPTS WOULD BE MORE THAN RS. 1 CRORE AT RS . 14681760/- AND IN DENYING THE EXEMPTION U/S 10(23C)(IIIAD) TO THE APPELLANT ON THIS GROUND. GRO UND NO. 1,2,3,4 & 5 ARE ALLOWED. 3.1 THE LD CIT(A) ALSO DECIDED THE ISSUE THAT THE AP PELLANT DID NOT EXIST SOLELY FOR THE PURPOSE OF EDUCATION & MIS-UTI LIZATION OF FUNDS BY RELYING UPON THE ORDER OF THE HONBLE ANDHRA PRADES H HIGH COURT IN THE CASE OF RRM EDUCATIONAL SOCIETY VS. CCIT 339 IT R 323 WHEREIN CHIEF COMMISSIONER OF INCOME TAX HAD REJECTED THE AP PLICATION FOR GRANTING APPROVAL ON THE GROUND THAT THE OBJECTS IN CLUDED NON- EDUCATIONAL OBJECTS CANNOT BE FAULTED. THE APPELLAN T SAMITI HAD NOT CONDUCTED ANY OTHER ACTIVITY OTHER THAN EDUCATIONAL DURING THE YEAR AND ONLY OBJECT OF THE EDUCATION WAS BEING PURSUED D URING THE YEAR. THE APPELLANT DOES NOT EXIST FOR THE PURPOSE OF PROF ITS AND THERE WAS NO OTHER BUSINESS OR ANY PROFIT MAKING ACTIVITY. THE RE IS EITHER NO SURPLUS OR VERY SMALL AMOUNT OF SURPLUS IN EARLIER YEARS AND THE SAMITI IS UTILIZING ITS FUND EXCLUSIVELY FOR THE PURPOSE O F ITS EDUCATIONAL OBJECTIVE. IN A.Y. 2007-08, THE SAMITI ALSO CLAIME D EXEMPTION, WHICH WAS ALLOWED BY THE LD CIT(A) VIDE ORDER DATED ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 13 14/11/2011. HE HELD THAT THE APPELLANT SAMITI IS RU NNING A NURSING INSTITUTE AND A B-ED COLLEGE AND NO EVIDENCE OF PUR SUING ANY ACTIVITY RELATING TO OTHER NON-EDUCATIONAL OBJECTS, MENTIONE D IN THE CONSTITUTION OF THE SOCIETY, HAS BEEN BROUGHT ON RE CORD. THE SAMITI IS EXISTING SOLELY FOR THE PURPOSE OF EDUCATION AND NO T FOR PROFIT, HAD TO BE EXAMINED EVERY YEAR IN THE LIGHT OF ACTIVITIES U NDER TAKEN BY THE SOCIETY. THE FACT THAT IT HAD OTHER OBJECTS WOULD NOT DISENTITLE IT TO THE EXEMPTION SO LONG AS THE ACTIVITY CARRIED OUT B Y IT IN THAT ASSESSMENT YEAR WAS THAT OF RUNNING AN EDUCATIONAL I NSTITUTION AND NOR FOR PROFIT. HE RELIED ON THE DECISION OF HONBL E BOMBAY HIGH COURT IN THE CASE OF VANITA VISHRAM TRUST VS. CCIT 327 ITR 1 21, CIT VS. VIDYA VIKAS VIHAR 256 ITR 489 (BOM). THE MISUTILIZATI ON OF FUNDS REFERRED BY THE LD ASSESSING OFFICER IN HIS ASSESSM ENT ORDER ALSO EXPLAINED BY THE ASSESSEE EITHER RECOVERED FROM THE SECRETARY OR AMOUNT GIVEN IN EARLIER YEAR. THEREFORE, THE LD CIT(A ) HAS HELD THAT EXEMPTION U/S 10(23C)(IIIAD) HAD BEEN ALLOWED IN THE CASE OF APPELLANT VIDE HIS OFFICE ORDER DATED 18/11/2011 IN APPEAL NO. 305/2009-10 FOR A.Y. 2007-08. ACCORDINGLY, IT HAS B EEN HELD THAT THE APPELLANT SAMITI EXISTED SOLELY FOR THE PURPOSE OF EDUCATION AND NOT FOR THE PURPOSE OF PROFIT DURING THE A.Y. 2009-10. THE ANNUAL RECEIPT ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 14 IS ALSO LESS THAN RS. ONE CRORE, THEREFORE, THE ASS ESSING OFFICER WAS DIRECTED TO ASSESS THE TOTAL INCOME FOR A.Y. 2009-1 0 AT NIL. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD. D R VEHEMENTLY SUPPORTED THE ORDER OF THE LD. ASSESSING OFFICER. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS SUPPORTED THE ORDER OF THE LD CIT(A) AND FURTHER SUBMITTED AS UNDER:- 1. THE AO FROM THE PERUSAL OF RECEIPT & PAYMENT A/C OF THE ASSESSEE OBSERVED THAT IT HAS SHOWN RECEIPTS AGGREGA TING RS. 1,46,81,760/- (AS MENTIONED AT PAGE 3 OF THE ASSESSMENT ORDER) BUT DECLARED GROSS INCOME OF RS.90,87,043/- IN THE INCOME & EXPENDITURE A/C. ACCORDINGLY, HE HELD THAT THE AGGREGATE ANNUAL RECE IPTS OF THE ASSESSEE ARE MORE THAN RS. 1 CRORES AND THEREFO RE ITS CLAIM OF EXEMPTION U/S 10(23C)(IIIAD) IS NOT ALLOWAB LE 2. BEFORE LD. CIT(A), ASSESSEE GAVE A DETAILED SUBMI SSION EXPLAINING THE MEANING OF THE WORDS ANNUAL RECEIPT AND THE NATURE OF EACH AND EVERY RECEIPT WHICH HAS BEEN ALLEGEDLY ADDED BY THE AO IN ARRIVING AT ANNUAL RE CEIPT OF RS.1,46,81,760/-. THE ASSESSEE ALSO PLACED RELIANCE IN CASE OF PARAM HANS SWAMI UMA BHARTI MISSION VS. ACIT (2013 ) 140 ITD 429 (DEL.) (TRIB.) WHEREIN IT WAS HELD THAT IN COME FROM INTEREST ON FDRS IS AN ADDITIONAL INCOME OF SO CIETY ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 15 AND IT CANNOT BE CONSIDERED TO BE PART OF ANNUAL RE CEIPTS OF THE SCHOOL AND THUS ASSESSEE IS ELIGIBLE FOR EXEMPT ION U/S 10(23C)(IIIAD) AS ANNUAL SCHOOL RECEIPTS DID NOT EX CEED RS. 1 CRORES. AFTER CONSIDERING THE SAME, THE LD. CIT(A) GAVE THE FOLLOWING FINDINGS [PAGE 18-19 OF THE ORDER, PAR A 4.3]:- IN VIEW OF THE DECISION OF APEX COURT IN CASE OF C IT VS. VEGETABLE PRODUCTS LTD. 88 ITR 192, I AM INCLINED T O AGREE WITH THE APPELLANT THAT THE AGGREGATE ANNUAL RECEIP TS SHOULD INCLUDE RECEIPTS WHICH ARE BEING RECEIVED ON ANNUAL BASIS AND NOT OCCASIONALLY OR ON SOME OTHER COUNTS. THE R ECEIPTS MUST BE RELATED TO THE ACTIVITY OF THE INSTITUTION LIKE FEE RECEIPTS RECEIVED FROM STUDENTS. BUT IT SHOULD NOT INCLUDE (I) OTHER RECEIPTS RECEIVED FROM GOVERNMENT OR ANY SUCH DEPARTMENT TO REPAY OR DISTRIBUTE TO STUDENTS UNDER ANY SCHEME LIKE SCHOLARSHIP ETC. (II) ANY LOAN OR DEBT (III) ANY ADVANCE RECEIVED FOR SALE OF ANY LAND, SALES CONSID ERATION OF ANY ASSETS (IV) INTEREST EARNED ON ANY INVESTMENT L IKE FDR WHICH HAS NO NEXUS WITH ACTIVITY OF EDUCATION. ACCO RDINGLY, IT IS HELD THAT ANNUAL RECEIPTS OF THE APPELLANT WO ULD BE RS.90,36,200/-, BEING THE ADMISSION FEE AS PER INCO ME AND EXPENDITURE ACCOUNT. THE AO WAS NOT CORRECT IN HOLD ING THAT THE AGGREGATE ANNUAL RECEIPTS WOULD BE MORE THAN RS . 1CRORES AT RS.1,46,81,760/- AND IN DENYING EXEMPTIO N U/S 10(23C)(IIIAD). 3. THE SUBMISSION SUPPORTED BY VARIOUS CASE LAWS PUT FORTH BEFORE THE LD. CIT(A) AND THE FINDINGS OF CIT(A) IS RELIED UPON. RELIANCE IS FURTHER PLACED IN CASE OF CIT VS. MADRASA E-BAKHIYATH-US-SALIHATH ARABIC COLLEGE (2015) 120 D TR 238/226 TAXMAN 372 (MAD.) (HC) WHEREIN IT WAS HELD THAT IN SEC. 10(23C)(IIIAD), THE KEY EMPHASIS IS ON THE WORDS ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 16 ANNUAL RECEIPTS. THE SALE PROCEEDS OF LAND AND BO NDS CANNOT BE EQUATED TO ANNUAL RECEIPTS AS STATED U/S 10(23) OF THE ACT. THEREFORE, THE DENIAL OF BENEFIT OF SEC. 10(23C) OF THE ACT TO THE ASSESSEE BY THE AO WAS RIGHTLY INT ERFERED BY THE CIT(A) AND CONFIRMED BY THE TRIBUNAL. IN VIEW OF ABOVE, THERE IS NO ERROR IN THE FINDING O F CIT(A) AND THEREFORE THE GROUND OF THE DEPARTMENT BE DISMISSED . LD. A.R. FURTHER SUBMITTED THAT FOR THE PURPOSE OF EDUCATION AND NOT FOR THE PURPOSE OF PROFIT AND VARIOUS DEFICIENCIES POINTED OUT BY THE ASSESSING OFFICER AND JURISDICTIONAL HIGH COURT DEC ISION IN THE CASE OF MAHARAJA SINGH MUSEUM TRUST (SUPRA) AND SUPREME COUR T OF INDIA IN THE CASE OF SOLE TRUSTEE LOK SIKSHAN TRUST VS. CIT (S UPRA). HE FURTHER SUBMITTED AS UNDER:- MERELY BECAUSE ASSESSEE HAS OBJECTS OTHER THAN EDUC ATION BUT THOSE OTHER OBJECTS WERE NEVER CARRIED OUT BY IT WOUL D NOT MEAN THAT ASSESSEE WAS NOT EXISTING SOLELY FOR EDU CATIONAL PURPOSES AND THUS, NOT ENTITLED TO EXEMPTION U/S 10(23C)(IIIAD). APART FROM THE CASES RELIED BEFORE THE LD. CIT(A), RELIANCE IS FURTHER PLACED ON FOLLOWING CASES :- - SARASWATI EDUCATIONAL & WELFARE SOCIETY (REGD.) (201 5) 152 ITD 527 (CHAND.) (TRIB) - GEETANJALI EDUCATION SOCIETY VS. ADIT (2014) 101 DTR 337 (KAR.) (HC) - NEERAJ JANHITKARI GRAMIN SEWA SANSTHAN VS. CCIT & ORS . (2014) 360 ITR 168 (ALL.) (HC) ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 17 - DIGEMBER JAIN SOCIETY FOR CHILD WELFARE VS. DGIT (20 10) 329 ITR 0459 (DEL.) (HC) THE DEPARTMENT IN GROUND NO. 3 HAS CHALLENGED THAT THE LD. CIT(A) ERRED IN NOT CONSIDERING THE DECISION IN CASE OF MAHARAJA SINGH MUSEUM TRUST 169 ITR 379 (RAJ.) AND IN CASE OF SOLE TRUSTEE SIKSHAN TRUST VS. CIT 101 ITR 234 (SC) WHEREIN THE WORD SOLELY HAS BEEN DEFINED. IN THIS CON NECTION, IT IS TO BE NOTED THAT THE RAJASTHAN HIGH COURT DECISI ON IN CASE OF MAHARAJA SINGH MUSEUM TRUST 169 ITR 379 HAS BEEN DISTINGUISHED BY GUJARAT HIGH COURT IN CASE OF GUJA RAT STATE CO-OPERATIVE UNION VS. CIT 195 ITR 279 IN PARA 7 AS U NDER:- IT IS SEEN FROM DECISION IN CASE OF MAHARAJA SING H MUSEUM TRUST 169 ITR 379 (RAJ.) THAT THE ASSESSEE WAS A PU BLIC CHARITABLE TRUST HAVING A MUSEUM IN A PORTION OF TH E CITY PALACE, JAIPUR FOR THE BENEFIT OF THE PUBLIC. SOME PROPERTIES WERE SETTLED ON THE TRUST AND IT WAS TREATED AND AC CEPTED AS A TRUST FOR CHARITABLE PURPOSES WITHIN THE MEANING OF S. 2(15) AND HAD ENJOYED THE EXEMPTION FROM TAX U/S 11 OF TH E SAID ACT. THE ASSESSEE LATER ON CONTENDED THAT IT WAS AN EDUCATIONAL INSTITUTION WITHIN THE MEANING OF S.10( 22) OF THE ACT. IT IS IN THIS CONTEXT THAT DRAWING UPON THE OB SERVATIONS OF THE SUPREME COURT IN LOK SHIKSHANA TRUST'S CASE IN WHICH THE SUPREME COURT INDICATED THAT THE WORD EDUCATION' W AS NOT USED IN A WIDE OR EXTENDED SENSE SO AS TO INCLUDE A DDITION TO THE KNOWLEDGE OF A VISITOR TO A ZOO OR MUSEUM, THE HIGH COURT HELD THAT THE MUSEUM CANNOT BE TAKEN TO BE AN EDUCA TIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE S. THE SAID DECISION, THEREFORE, CANNOT HELD THE REVENUE SINCE IN THE PRESENT CASE, WE HAVE FOUND THAT ASSESSEE HAVING RE GARD TO ITS OBJECTS AND NATURE OF ITS ACTIVITIES, IS CLEARL Y AN EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE S. ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 18 IN GROUND NO. 2, THE DEPARTMENT HAS CHALLENGED THAT THE LD. CIT(A) ERRED IN HOLDING THAT ASSESSEE IS ELIGIBLE FO R EXEMPTION U/S 10(23C)(IIIAD) WITHOUT CONSIDERING THE DEFICIENC IES POINTED OUT BY THE AO. IT MAY BE NOTED THAT THE LD. CIT(A) I N HOLDING THAT ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 10(23C) (IIIAD) HAS CONSIDERED EACH AND EVERY DEFICIENCY POINTED OUT BY THE AO AS EVIDENT FROM HIS FINDINGS GIVEN IN PARA 5.3 (B) PAG E 29 OF THE ORDER AFTER CONSIDERING THE REPLY OF THE ASSESSEE A T PARA 5.2(C) AT PAGE 23-24 OF THE ORDER. IT MAY BE FURTHER NOTED THAT THE HONBLE ITAT VIDE ORDER DT. 28.11.2014 IN ASSESSEES OWN CASE FOR A.Y. 03-04 TO 07-08 HAS ALLOWED THE ASSESSEES C LAIM OF EXEMPTION U/S 10(23C)(IIIAD) BY HOLDING THAT THE AS SESSEE IS SATISFYING ALL THE FOUR CONDITIONS OF SEC. 10(23C)( IIIAD). IN VIEW OF ABOVE, THERE IS NO ERROR IN THE FINDING O F CIT(A) AND THEREFORE THE GROUNDS OF THE DEPARTMENT BE DISMISSE D. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. AS PE R THE ASSESSING OFFICER THE TOTAL RECEIPT OF THE SAMITI WAS AT RS. 1 ,46,81,760/-. HOWEVER, THE LD CIT(A) FOUND THAT TOTAL RECEIPTS WERE LESS THAN RS. ONE CRORE. ON VERIFICATION OF THE TOTAL RECEIPT MEN TIONED BY THE ASSESSING OFFICER ON PAE 3 OF THE ASSESSMENT ORDER, THERE WAS A TRANSACTION OF SALE OF LAND FOR RS. 47,90,000/-. THE HONBLE MADRAS HIGH COURT HAS CONSIDERED THE ISSUE OF ANNUAL RECEI PTS AS ENVISAGED ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 19 IN SECTION 10(23C)(IIIAD) OF THE ACT IN THE CASE CI T VS. MADRASA E- BAKHIYATH-US-SALIHATH ARABIC COLLEGE (2015) 120 DTR 238/226 TAXMAN 372 (MAD.) (HC)WHEREIN THE ANNUAL RECEIPT, THE SALE PROCEED OF LAND AND BOND HELD NOT TO BE EQUATED TO ANNUAL R ECEIPTS AS STATED U/S 10(23C)(IIIAD) OF THE ACT. IF THE SALE OF LAND TO THE TUNE OF RS. 47,90,000/- REDUCED FROM THE TOTAL RECEIPT, IT COME S WITHIN THE LIMIT PRESCRIBED U/S 10(23C)(IIIAD) OF THE ACT. FURTHER T HE HONBLE JURISDICTIONAL HIGH COURT AND HON'BLE SUPREME COURT S DECISION REFERRED BY THE ASSESSING OFFICER HAS BEEN CONSIDER ED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT STATE CO- OPERATIVE UNION VS. CIT 195 ITR 279 WHEREIN IT HAS BEEN HELD THAT WORD EDUCATION WAS NOT USED IN A WIDE OR EXTENDED SENSE SO AS TO INC LUDE ADDITION TO THE KNOWLEDGE OF A VISITOR TO A ZOO OR MUSEUM, THE H IGH COURT HELD THAT THE MUSEUM CANNOT BE TAKEN TO BE AN EDUCATIONA L INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES. THE OBJECT OF THE SAMITI AS MENTIONED BY THE ASSESSING OFFICER IN HIS ASSESSMEN T ORDER SUPPORTS THE ASSESSEES CLAIM THAT IT IS AN EDUCATIONAL INST ITUTION. THE COORDINATE BENCH HAS ALLOWED THE ASSESSEES REGIS TRATION U/S 12AA OF THE ACT IN ITA NO. 676/JP/2010 ORDER DA TED ITA 363/JP/2013_ ACIT VS. M/S PUBLIC ROSE SIKSHA SAMITI 20 13/5/2011 FROM FINANCIAL YEAR 2000-01. THEREFORE, WE UPHOLD THE ORDER OF THE LD CIT(A). 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 11/08/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 11 TH AUGUST, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CIRCLE-1, ALWAR. 2. IZR;FKHZ @ THE RESPONDENT- M/S PUBLIC ROSE SHIKSHA SAMITI, ALWAR . 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 363/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR