Shree Jyoti Education & Management Trust, Dhenkanal V. ACIT(CPC), Bangalore

ITA 376/CTK/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0800 (ITAT-CUTTACK)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 18-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P K SAHU
• Keywords: Charitable institution; Opportunity of being heard; Revenue expenditure
• Section: 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 376 /CTK/201 9 ( / ASSESSMENT YEAR : 20 14 - 201 5 ) SHREE JYOTI EDUCATION & MANAGEM ENT TRUST, GOLDEN STREET, DHENKANAL, ORISSA - 759001 VS. ACIT(CPC), BANGALORE ./ PAN NO. : A ALTS 0305 D ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI P.K.SAHU, CA /REVENUE BY : SHRI D.K.PRADHAN, JCIT - DR / DATE OF HEARING : 09 / 0 6 /20 20 / DATE OF PRONOUNCEMENT : 11 / 06 /20 20 / O R D E R PER L.P.SAHU , A M : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY LEARNED CIT(A) - 1 , B HUBANESWAR , DATED 20.09.2019 FOR THE ASSESSMENT YEAR 201 4 - 201 5 , ON THE FOLLOWING GROUNDS OF APPEAL : - 1 . INCOME TAX HAS BEEN CALCULATED ON TOTAL RECEIPTS WITHOUT CONSIDERING EXPENSES AND ORDER PASSED BY LEARNED ASSESSING OFFICER IS BAD IN LAW. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM RUNNING A CHARITABLE TRUST. THE ASSESSEE FILED RETURN OF INCOME ELECTRONICALLY ON 30.10.2015 SHOWING NIL INCOME. IN THE INTIMATION U/S.143(1) OF THE ACT, THE TOTAL INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT RS.1,72,83,668/ - . THEREAFTER THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AGAINST THE ABOVE INTIMATION ISSUED BY THE ITA NO. 376 /CTK/201 9 2 AO(CPC). HOWEVER, THE CIT(A) DID NOT FIND ANY INFIRMITY IN THE INTIMATION ISSUED TO THE ASSESSEE U/S.143(1) OF THE ACT BY THE AO(CPC) ASSESSING THE TOTAL INCOME OF THE ASSESSEE TAKING THE TOTAL RECEIPTS OF RS.1,72,83,668/ - AND DISMISSED THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED FROM THE CIT(A)S ORDER, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL . 4. LD. AR BEFORE US SUBMITTED THAT THE ASSESSEE IS A REGISTERED TRUST RUNNING EDUCATIONAL INSTITUTE IMPARTING ITI AND DIPLOMA ENGINEERING AND EARNS INCOME IN THE FORM OF COURSE FEE AND OTHER FEES. THE CPC H AS WRONGLY ASSESSED THE ASSESSEE ONLY TAKING T HE TOTAL RECEIPT OF RS.1,72,83,668/ - AS INCOME AND DETERMINED THE TAX OF RS.82,06,975/ - WITHOUT ADJUSTING THE EXPENDITURE WHICH WAS INCURRED TO EARN THAT INCOME WHICH IS NOT A PRUDENT PRACTICE OF TAX LAW. TO SUPPORT HIS CONTENTIONS, LD. AR RELIED ON THE OR DER OF THE SMC BENCH OF THE TRIBUNAL IN THE CASE OF SAHAYEEKA VS. DCIT(CPC), IN ITA NO.322/CTK/2018, ORDER DATED 06.02.2019 AND SUBMITTED THAT THE TRIBUNAL CONSIDERING THE SIMILAR ISSUE HAS DIRECTED THE AO TO ALLOW THE CLAIM OF EXPENDITURE OF THE ASSESSEE PERTAINING TO THE RELEVANT FINANCIAL PERIOD AFTER DUE VERIFICATION OF PURPOSE AND QUANTUM OF EXPENDITURE. ACCORDINGLY, THE LD. AR SUBMITTED THE APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED. 5. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW. ITA NO. 376 /CTK/201 9 3 6. AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE AO(CPC) ASSESSED THE ASSESSEES INCOME ONLY TAKING THE TOTAL RECEIPT OF RS.1,72,83,668/ - AND DETERMINED TAX OF RS.82,06,975/ - . IN APPEAL CIT(A) OB SERVED THAT IN THE RETURN THOUGH THE TRUST IS NOT REGISTERED U/S.12A OF THE ACT, ERRONEOUSLY CLAIM WAS MADE U/S.11 OF THE ACT. IT WAS FURTHER OBSERVED BY THE CIT(A) THAT THE ASSESSEE DID NOT SATISFY THE CONDITIONS FOR APPLICABILITY OF SECTION 11 OF THE AC T AS IT HAS NO REGISTRATION U/S.12AA OF THE ACT, THEREFORE, THE CIT(A) DID NOT GIVE THE BENEFIT OF PROVISIONS OF SECTION 11 OF THE ACT. IN OUR OPINION, FOR ASCERTAINING THE NET INCOME/SURPLUS, THE ASSESSING OFFICER HAS TO ALLOW EXPENDITURE INCURRED BY THE ASSESSEE OUT OF GROSS RECEIPTS DURING THE RELEVANT FINANCIAL PERIOD. IN THE CASE OF NIRMAL AGRICULTURAL SOCIETY VS ITO, (1999) 71 ITD 0152 (HYD) THE ITAT HYDERABAD BENCH OF THE TRIBUNAL HAS HELD THAT EVEN IN ABSENCE OF REGISTRATION U/S.12A OF THE ACT, THE ASSESSING OFFICER COULD ASSESS ONLY NET INCOME OF THE ASSESSEE AND NOT THE ENTIRE GROSS RECEIPTS. ACCORDINGLY, WE HAVE NO HESITATION TO HOLD THAT EVEN IN ABSENCE OF REGISTRATION U/S.12A OF THE ACT, THE ASSESSING OFFICER COULD ASSESS ONLY NET INCOME OF THE ASSESSEE AND NOT THE ENTIRE RECEIPTS BECAUSE IN ABSENCE OF REGISTRATION U/S.12A OF THE ACT, THE ASSESSEE SHOULD BE ASSESSED IN THE CAPACITY OF AOP ON THE COMMERCIAL PRINCIPLES, WHEREIN, THE TOTAL GROSS RECEIPTS CANNOT BE TREATED AS ITA NO. 376 /CTK/201 9 4 INCOME OF THE ASSESSEE WITHOUT ALLOWING REVENUE EXPENDITURE INCURRED BY THE ASSESSEE DURING THE RELEVANT SAME PERIOD AND THUS, WE ARE INCLINED TO HOLD THAT THE AUTHORITIES BELOW WERE NOT RIGHT IN DISALLOWING THE CLAIM OF EXPENDITURE OF THE ASSESSEE. HOWEVER, WE MAY POINT OUT TH AT THE ASSESSING OFFICER HAS FRAMED ASSESSMENT U/S.143(1) OF THE ACT WITHOUT VERIFYING THE QUANTUM OF EXPENDITURE CLAIMED BY THE ASSESSEE AND THE CIT(A) HAS NOT VERIFIED THE SAME DURING THE RELEVANT APPELLATE PROCEEDINGS. THEREFORE, WE DIRECT THE ASSESSI NG OFFICER TO VERIFY THE QUANTUM OF EXPENDITURE CLAIMED BY THE ASSESSEE. IF THE AO FINDS THAT THE EXPENDITURES HAVE BEEN INCURRED FOR THE OBJECT OF THE SOCIETY THEN THE AO IS DIRECTED TO ALLOW THE SAME AND DECIDE THE ISSUE AS PER LAW. NEEDLESS TO SAY, REAS ONABLE OPPORTUNITY OF BEING HEARD SHALL BE GIVEN TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO AVOID TAKING UNNECESSARY ADJOURNMENTS AND COOPERATE WITH THE AO FOR EARLY DISPOSAL OF THE CASE. ACCORDINGLY, THE SOLE GROUND OF APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 / 06 / 20 20 . SD/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 11 /06 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. ITA NO. 376 /CTK/201 9 5 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITAT, CUTTACK 1. / THE APPELLANT - SHREE JYOTI EDUCATION & MANAGEMENT TRUST, GOLDEN STREET, DHENKANAL, ORISSA - 759001 2. / THE RESPONDENT - ACIT(CPC), BANGALORE 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//