ACIT CEN CIR 2, MUMBAI V. VIDYAVARDHINI TRUST, MUMBAI

ITA 3777/MUM/2012

• Counselvise Citation: 377719914 RSA 2012
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 26-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 29-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital expenditure
• Section: 68; 11; 143(3); 12AA

Judgement Text

VIDYAVARDHINI TRUST - 1 - VK;DJ VIHYH; VF/KDJ.K ,Q U;K;IHB EQACBZ ESAA IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI JH JKTSUNZ FLAG YS[KK LNL; ,OA JH FOOSD OEKZ] U;KF; D LNL; DS LE{K BEFORE SHRI RAJENDRA SINGH ACCOUNTANT MEMBER AND SH RI VIVEK VARMA, JUDICIAL MEMBER VK;DJ VIHY LA[;K /ITA NO. 3777/MUM/2012 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2008-09 INCOME TAX OFFICER, WARD 4[4] 2 ND FLOOR, QURESHI MANSION, GOKHALE ROAD, NAUPADA, THANE [W]- 400 602. CUKE@ VS. VIDYAVARDHINI TRUST C/O A.V. COLLEGE, VASAI ROAD, VASAI. PAN:- AAATV2687C VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT VIHYKFKHZ DH VKSJ LS @ ASESSEE BY SHRI SUBODH RATNAPARKHI IZR;FKHZ DH VKSJ LS @ REVENUE BY SHRI RAJESH RANJAN PRASAD VKNS'K@ VKNS'K@ VKNS'K@ VKNS'K@ ORDER PER RAJENDRA SINGH, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 28.2.2012 OF CIT(A) FOR THE ASSESSMENT YEAR 2 008-09. THE ONLY DISPUTE RAISED BY THE REVENUE IN THIS APPEAL I S REGARDING ALLOWABILITY OF EXEMPTION U/S 11 OF THE IT ACT. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FOR THE RELEVANT YEAR HAD DECLARED NIL INCOME IN THE RETURN FILED AF TER ADJUSTING THE BROUGHT FORWARD LOSS OF RS. 22,87,480/-. THE AO HOWEVER IN LQUOKBZ DH RKJH[K @ DATE OF HEARING 30-10-2013 ?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT 30-10-2013 VIDYAVARDHINI TRUST - 2 - THE ASSESSMENT MADE U/S 143(3) R.W.S 12AA(3) DISALL OWED THE CLAIM U/S 11 OF THE IT ACT AND ASSESSED THE TOTAL I NCOME AT RS. 4,14,64,690/-. AO HELD THAT SINCE THE REGISTRATION U/S 12AA GRANTED TO THE ASSESSEE HAD BEEN CANCELLED BY CIT ( CENTRAL) U/S 12AA(3) VIDE ORDER DATED 29.8.2007, THE ASSESSEE WA S NOT ENTITLED FOR EXEMPTION U/S 11 OF THE IT ACT. THE PL EA OF THE ASSESSEE IS THAT THE ORDER OF CIT (CENTRAL) HAD BEE N SET ASIDE BY THE TRIBUNAL WHO RESTORED THE REGISTRATION VIDE ORD ER DATED 14.5.2010, WHICH WAS NOT ACCEPTED BY THE AO ON THE GROUND THAT THE DEPARTMENT HAS NOT ACCEPTED THE ORDER OF T RIBUNAL AND HAS FILED APPEAL BEFORE THE HIGH COURT. THE ASSESSE E IN THE ACCOUNTS HAD CREDITED A SUM OF RS. 56 LAKH TO THE D EVELOPMENT FUNDS ACCOUNT IN THE BALANCE SHEET. IT WAS EXPLAINE D THAT DEVELOPMENT FUND WAS A PORTION OF FEES ACCEPTED FRO M STUDENTS WHICH HAD BEEN CREDITED TO THE INCOME AND THE EXPE NDITURE INCURRED AND SOURCE WAS THUS EXPLAINED. AO HOWEVER DID NOT ACCEPT THE EXPLANATION AND TREATED THE SAID AMOUNT AS INCOME U/S 68 OF THE IT ACT. THE AO ALSO DISALLOWED THE CL AIM OF CAPITAL EXPENDITURE OF RS. 3,28,85,818/- AND DEDUCTION CLAI MED U/S 11(1)(A), OF RS. 6,91,391/- ON THE GROUND THAT THE REGISTRATION GRANTED TO THE ASSESSEE HAD BEEN CANCELLED. 3. IN APPEAL, CIT(A) OBSERVED THAT THE TRIBUNAL IN THE ORDER IN ITA NO. 6509/MUM/2007 HAD SET ASIDE THE ORDER OF CIT(CENTRAL) CANCELLING THE REGISTRATION GRANTED TO ASSESSEE AND, THEREFORE, THE REGISTRATION U/S 12AA HAD BEEN RESTO RED WITH EFFECT FROM 1.4.2000 VIDE ORDER NO. NO. THN/CIT-III /V/2011- 12/1167. CIT(A) ALSO NOTED THAT THE TRIBUNAL IN THE QUANTUM APPEALS FOR ASSESSMENT YEARS 2000-01 TO 2006-07 IN THE ORDER VIDYAVARDHINI TRUST - 3 - DATED 20.01.2012 HAD ALSO HELD THAT SINCE THE REGIS TRATION U/S 12AA HAS BEEN RESTORED, EXEMPTION U/S 11HAS TO BE A LLOWED. CIT(A), THEREFORE, HELD THAT THE ASSESSEE HAD TO BE ALLOWED EXEMPTION U/S 11 OF THE IT ACT. CIT(A) FURTHER OBSE RVED THAT AN AMOUNT OF RS. 56 LAKH CREDITED TO THE DEVELOPMENT FUND ACCOUNT WAS PART OF THE RECEIPTS ALREADY DISCLOSED IN THE INCOME AND EXPENDITURE ACCOUNT AND, THEREFORE, ADDI TION MADE U/S 68 WAS NOT CALLED FOR. CIT(A) ALSO DELETED THE ADDITION MADE ON ACCOUNT OF CAPITAL EXPENDITURE AND DISALLOWANCE OF EXEMPTION U/S 11(1)(A) AS THE ADDITIONS HAD BEEN MA DE ON THE GROUND THAT THE ASSESSEE WAS NOT ENTITLED FOR EXEMP TION U/S 11 WHICH WAS NOT LEGALLY VALID AS HELD EARLIER. CIT(A) ACCORDINGLY, DELETED THE ADDITION MADE. AGGRIEVED BY THE DECISIO N OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE TRIBUNAL IN WHICH THE ONLY DISPUTE RAISED IS AS TO WHETHER THE ASSESSEE IS ENT ITLED FOR EXEMPTION U/S 11 OF THE IT ACT. 4. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECO RDS AND CONSIDERED THE MATTER CAREFULLY. THE ASSESSEE HAD B EEN GRANTED REGISTRATION U/S 12AA OF THE IT ACT. THE REGISTRATI ON SO GRANTED WAS HOWEVER CANCELLED BY CIT (CENTRAL) VIDE ORDER D ATED 29.8.2007 U/S 12AA(3). THE ASSESSEE HAD CHALLENGED THE ORDER OF CIT(CENTRAL) CANCELING THE GRANT OF REGISTRATION AND THE TRIBUNAL VIDE ORDER DATED 14.5.2010 IN ITA NO. 6509/MUM/2007 SET ASIDE THE ORDER OF CIT(CENTRAL) A S A RESULT OF WHICH REGISTRATION U/S 12AA WAS RESTORED TO THE ASSESSEE W.E.F 1.4.2000 VIDE ORDER NO. THN/CIT-III/V/2011-12 /1167 DATED 19-9-2011. THE AO HAS NOT ACCEPTED THE ORDER OF TRIBUNAL GRANTING REGISTRATION TO THE ASSESSEE U/S 12AA ON THE VIDYAVARDHINI TRUST - 4 - GROUND THAT THE DEPARTMENT HAD FILED APPEAL TO HIGH COURT AGAINST THE ORDER OF TRIBUNAL. THE VIEW TAKEN BY TH E AO IS NOT LEGALLY VALID, AS UNTIL THE ORDER OF TRIBUNAL IS RE VERSED BY THE HIGH COURT THE SAME IS BINDING ON ALL THE LOWER AUT HORITIES. MOREOVER IN THIS CASE, THE DEPARTMENT ITSELF HAS GI VEN EFFECT TO THE ORDER OF TRIBUNAL AND RESTORED THE REGISTRATION VIDE ORDER DATED 19-9-2011. THEREFORE, THE REGISTRATION ALREAD Y STANDS GRANTED TO THE ASSESSEE AND IN VIEW OF THIS IT IS N OT LEGALLY IN ORDER TO DENY EXEMPTION U/S 11 OF THE IT ACT. WE, T HEREFORE, UPHOLD THE ORDER OF CIT(A) HOLDING THAT THE ASSESSE E WAS ENTITLED FOR EXEMPTION U/S 11 OF THE IT ACT. 5. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED ON 30-10-2013 SD/- SD/- (VIVEK VARMA) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER SKS SR. P.S, MUMBAI DATED 30-10-2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI