Addl. C.I.T., Range-1, Aligarh V. Gaurav Shiksha Samiti, Aligarh

ITA 381/AGR/2011

• Counselvise Citation: 38120314 RSA 2011
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-04-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 05-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: MANISHA VISHNOI
• Keywords: Capital receipt
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 381/AGRA/2011 ASSTT. YEAR : 2006-07 ADDL. C.I.T., RANGE-1, VS. GAURAV SHIKSHA SAMIT I, ALIGARH. PREM VIHAR GONDA ROAD, ALIGARH. (PAN : AABTG 0148C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. SHARMA, JR. D.R. RESPONDENT BY : SMT MANISHA VISHNOI, ADVOCATE DATE OF HEARING : 25.04.2012 DATE OF PRONOUNCEMENT OF ORDER : 27.04.2012 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), GHAZIABAD DATED 20.07.2011 FOR THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS : 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.16,00,000/- ON ACCOUNT OF DONATION R ECEIVED FROM MLC FUND, WHICH WAS RESULT OF WITHDRAWAL OF EXEMPTION U /S. 11 OF THE I.T. ACT, AS THE ASSESSEE DID NOT HAVE REGISTRATION U/S. 12AA OF THE I.T. ACT, FOR THE YEAR UNDER CONSIDERATION. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.16,00,000/- ON ACCOUNT OF DONATION R ECEIVED FROM MLC FUND, AFTER ALLOWING THE EXEMPTION U/S. 10(23)(C) O F THE I.T. ACT, TO THE ASSESSEE WITHOUT GIVING DUE WEIGHTAGE TO THE ESSENC E OF SECTION ITA NO. 381/AGRA/2011 2 10(23)(C)(IIIAD), WHEREIN IT IS CLEARLY MENTIONED T HAT FOR GRANT OF EXEMPTION UNDER THIS SECTION EDUCATION INSTITUTION SHOULD EXIST SOLELY FOR THE PURPOSE OF EDUCATION. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.16,00,000/- ON ACCOUNT OF DONATION R ECEIVED FROM MLC FUND, ALLOWING THE EXEMPTION U/S. 10(23)(C) OF THE I.T. ACT, TO THE ASSESSEE WHICH S AGAINST THE ORDER OF HONBLE APEX COURT IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHAN TRUST VS. CIT (1975) 101 ITR 234 (SC) WHEREIN IT IS CLEARLY MENTIONED THAT WORD EDUCATION CONNOTES IN THAT CLAUSE IN PROCESS OF TRAINING AND DEVELOPING O F KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS BY NORMAL SCHOOLING AND ORDER OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. MAHARAJA SAWAI MAN SINGH MUSEUM TRUST (1988) 169 ITR 379, WHEREIN IT IS CLEARLY FOR THE PURPOSE OF EDUCATION. SOLELY MEANS EXCLUSIVELY AND NOT PRIMARILY, WHEREAS IN THE MEMORANDUM OF SOCIETY AS PER OBJECT NO. 6 & 7, IT IS CLEAR THAT THE ASSESSEE IS NOT EXCLUSI VELY AND PRIMARILY WORKING FOR EDUCATION. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE FINDINGS OF AUTHORITIES BELOW. 3. BRIEFLY, THE FACTS NOTED BY THE AO ARE THAT THE ASSESSEE TRUST IS ENGAGED IN THE SOCIAL ACTIVITIES AND RUNNING EDUCATIONAL INSTI TUTION IN THE NAME OF GAURAV PUBLIC SCHOOL, PREM NAGAR GONDA ROAD, ALIGARH. THE RETURN OF INCOME WAS FILED DECLARING INCOME OF RS.32,310/- WHICH WAS ACCOMPANI ED BY THE AUDITORS REPORT WITH AUDITED INCOME & EXPENDITURE ACCOUNT AND BALAN CE SHEET. THE ASSESSEE CLAIMED EXEMPTION U/S. 11 OF THE IT ACT, BUT IT WAS FOUND THAT SINCE THE ASSESSEE HAS BEEN GRANTED REGISTRATION BY THE LD. CIT, ALIGA RH W.E.F. 01.04.2008, THEREFORE, ITA NO. 381/AGRA/2011 3 THE BENEFIT OF SECTION 11 WAS NOT AVAILABLE TO THE ASSESSEE IN THE ASSESSMENT YEAR UNDER APPEAL. THE AO FOUND THAT THE ASSESSEE HAS R ECEIVED ASSISTANCE OF RS.16,00,000/- FROM MLC FUND, WHICH WAS NOT DISCLOS ED IN THE INCOME AND EXPENDITURE ACCOUNT. SINCE BENEFIT OF SECTION 11 WA S NOT AVAILABLE TO THE ASSESSEE SOCIETY, THEREFORE, IN THE ABSENCE OF REGISTRATION U/S. 12AA OF THE IT ACT, THE RECEIPT OF RS.16,00,000/- FROM MLC FUND WAS TREATED AS INCOME OF THE YEAR UNDER CONSIDERATION AND ADDITION WAS ACCORDINGLY MADE IN THE HEAD GRANT RECEIVED FROM MLC. THE ADDITION WAS CHALLENGED BEFORE THE L D. CIT(A) AND IT WAS EXPLAINED THAT THE ASSESSEE IS REGISTERED UNDER THE SOCIETIES REGISTRATION ACT AND THE MAIN OBJECT OF SOCIETY IS TO IMPART EDUCATION T O CHILDREN AND TO DEVELOP THEIR PERSONALITY AND CHARACTER THROUGH SOCIAL, MORAL, ED UCATIONAL, PHYSICAL AND INTELLECTUAL ADVANCEMENT. THE ASSESSEE RUNS EDUCATI ONAL SCHOOL TO ACHIEVE MANY OBJECTIVES OF THE SOCIETY. THEREFORE, ITS INCOME IS EXEMPT U/S. 10(23C)(IIIAD) OF THE IT ACT, AS THE GROSS RECEIPTS OF THE ASSESSEE WERE BELOW RS.1 CRORE. IT WAS ALSO EXPLAINED THAT GRANTS WERE RECEIVED FROM MLC FUND F OR CONSTRUCTION OF SCHOOL PREMISES, DETAILS OF WHICH WERE FILED, WHICH IS CAP ITAL RECEIPTS IN NATURE AND CANNOT BE CONSIDERED AS REVENUE RECEIPT. THE WRITTEN SUBMI SSION OF THE ASSESSEE IS REPRODUCED IN THE IMPUGNED ORDER IN WHICH ALSO, IT WAS REITERATED THAT THE ASSESSEE RECEIVED DONATION FROM MLC FUND OF RS.16,00,000/- F OR CONSTRUCTION OF THE SCHOOL BUILDING AND THE SAME HAS BEEN UTILIZED FOR THE AFO RESAID PURPOSE. SUBSTANTIAL ITA NO. 381/AGRA/2011 4 AMOUNT HAS ALREADY INCURRED FOR SCHOOL BUILDING AND SMALL AMOUNT WAS LEFT WHICH WAS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. ALL THE TRANSACTIONS ARE SUPPORTED BY BILLS AND VOUCHERS AND AS SUCH, THE GR ANT CANNOT BE TREATED AS INCOME OF THE ASSESSEE. THE LD. CIT(A) ACCEPTED THE CONTEN TION OF THE ASSESSEE AND NOTED THAT IF BENEFIT OF SECTION 12A IS NOT AVAILABLE TO THE ASSESSEE ON THE DATE OF RECEIPT OF THE DONATION, THE DONATION WOULD BECOME CAPITAL RECEIPT AND CANNOT BE ADDED AS REVENUE INCOME. THE LD. CIT(A) FOUND THAT THE AFORE SAID GRANT WAS RECEIVED FROM MLC FUND AND SOURCE IS FULLY EXPLAINED. THEREFORE, NO ADDITION COULD BE MADE AGAINST THE ASSESSEE IN RESPECT OF THE CAPITAL RECE IPT. THE LD. CIT(A) ON EXAMINATION OF THE FACTS ALSO FOUND THAT THE ASSESS EE IS SOLELY ENGAGED IN THE EDUCATIONAL ACTIVITIES AND THE RECEIPTS OF THE ASSE SSEE ARE LESS THAN RS.1 CRORE INCLUDING THE GRANT RECEIVED FROM MLC FUND. THEREFO RE, THE AO SHOULD HAVE GRANTED EXEMPTION TO THE ASSESSEE U/S. 10(23C)(IIIA D) OF THE IT ACT. THE LD. CIT(A) ALSO FOUND THAT THE ASSESSEE RECEIVED CAPITAL RECEI PT AND UTILIZED SUBSTANTIAL PORTION FOR CONSTRUCTION OF THE SCHOOL BUILDING AND ALL THE EXPENSES ARE VOUCHED AND SUPPORTED BY BILLS. THE ADDITION WAS, ACCORDINGLY, DELETED. 4. THE LD. DR RELIED UPON THE ORDER OF THE AO. ON T HE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. ITA NO. 381/AGRA/2011 5 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE LD. CIT(A).THE AO F OUND THAT THE ASSESSEE HAS RECEIVED RS.16,00,000/- AS ASSISTANCE FROM MLC FUND . BEFORE THE LD. CIT(A), IT WAS SPECIFICALLY PLEADED THAT IT WAS A DONATION REC EIVED FOR THE PURPOSE OF CONSTRUCTION OF THE SCHOOL BUILDING AND ENTIRE AMOU NT HAS BEEN UTILIZED FOR THE CONSTRUCTION OF THE SCHOOL BUILDING. EVEN IN THE GR OUNDS OF APPEAL, THE REVENUE DID NOT DISPUTE THE FACT THAT RS.16,00,000/- WAS RECEIV ED ON ACCOUNT OF DONATION FROM MLC FUND. THEREFORE, IT IS CLEAR THAT THE ASSESSEE RECEIVED GRANT OR DONATION FROM MLC FUND FOR THE PURPOSE OF CONSTRUCTION OF SCHOOL BUILDING. THE ASSESSEE PRODUCED SUFFICIENT EVIDENCES TO SHOW THAT THE GRAN T/DONATION WAS SPENT FOR CONSTRUCTION OF THE SCHOOL BUILDING. THUS, THE LD. CIT(A) RIGHTLY HELD THAT NO ADDITION COULD BE MADE AGAINST THE ASSESSEE ON ACCO UNT OF REVENUE RECEIPTS OF THE AFORESAID SUM. THE ASSESSEE IS EDUCATIONAL INSTITUT E AND SOLELY EXISTS FOR EDUCATIONAL PURPOSE AS FOUND BY THE LD. CIT(A) AND THE RECEIPT OF THE ASSESSEE WAS FOUND TO BE LESS THAN THE PRESCRIBED LIMIT OF RS.1 CRORE. THEREFORE, WHETHER THE REGISTRATION IS GRANTED IN THE ASSESSMENT YEAR UNDE R APPEAL U/S. 12AA OF THE IT ACT OR NOT, WOULD NOT JUSTIFY THE ORDER OF THE AO IN MA KING ADDITION AGAINST THE ASSESSEE. THE GRANT RECEIVED FROM MLC FUND WAS RECE IVED FOR THE PURPOSE OF CONSTRUCTION OF SCHOOL BUILDING AND MEANT FOR PROMO TING THE EDUCATIONAL ACTIVITIES ITA NO. 381/AGRA/2011 6 AND, THUS, WAS CAPITAL RECEIPT IN NATURE OR RECEIVE D TOWARDS CORPUS FUND OF THE ASSESSEE SOCIETY. THE LD. CIT(A), THEREFORE, ON PRO PER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION. IT IS A DEPARTMENTAL APPEAL AND NO MATERIAL IS PRODUCED BEFORE US TO REBUT THE FINDING S OF THE LD. CIT(A) IN DELETING THE ADDITION. IN THE ABSENCE OF ANY CONTRARY MATERI AL ON RECORD, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DE LETING THE ADDITION. 6. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. 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