M/S Kothari Educational Foundation, Indore V. THE ACIT 2(1), Indore

ITA 419/IND/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5994 (ITAT-INDORE)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 26-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Condonation of delay; Revised return
• Section: 142(1); 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO. 419/IND/2016 A.Y. : 2005-06 KOTHARI EDUCATIONAL FOUNDATION, ACIT, 2(1), INDORE. VS. INDORE APPELLANT RESPONDENT PAN NO. AAAAK2770Q A PPELLANT S BY : SHRI SUDHIR PADLIYA, C. A. RESPONDENT BY : SHRI R. A. VERMA, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-22 (HOLDING CONCURRENT JURISDICTION OF CI T(A), INDORE- 2),NEW DELHI, CAMP OFFICE AT INDORE, DATED 16.02.22 016 FOR THE ASSESSMENT YEAR 2005-06. DATE OF HEARING : 25 .0 5 20 16 DATE OF PRONOUNCEMENT : 21 .0 6 . 201 6 KOTHARI EDUCATIONAL FOUNDATION, INDORE VS. ACIT, 2( 1), INDORE I.T.A.NO. 419/IND/2016 A.Y. 2005-06 2 2 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL :- 1. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DENYING CLAIM OF BENEFITS OF SECTION 11 ON THE GROUND THAT IT IS BEYOND HIS JURISDICTION AS THE POWER OF THE SAME LIES WITH PR. CIT OR CIT ONLY. 2. THAT LD. CIT HAS ERRED IN NOT FOLLOWING THE DIRECTION OF HON'BLE I.T.A.T. INDORE BENCH VIDE ORDER DATED 23.09.2008 IN CONNECTION WITH CONDONATION OF DELAY IN FILING APPLICATION U/S 12AA IN ABSENCE OF ANY CONSEQUENTIAL ORDER OF THE CIT GRANTING REGISTRATION W.E.F. 01.04.2005 ,OR EARLIER, INSTEAD OF REFERRING THE MATTER TO CONCERNED CIT OR PR. CIT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME DECLARING LOSS OF RS. 1,25,320/- WAS FILED BY THE ASSESSEE ON 31.03.2006. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961. SUBSEQUENTLY, VIDE THI S OFFICE NOTICE U/S 143(2) DATED 29.03.2007 DULY SERVED UPON THE KOTHARI EDUCATIONAL FOUNDATION, INDORE VS. ACIT, 2( 1), INDORE I.T.A.NO. 419/IND/2016 A.Y. 2005-06 3 3 ASSESSEE ON THE SAME DAY ITSELF, THE RETURN WAS SELE CTED FOR SCRUTINY. THEREAFTER, NOTICE U/S 142(1) ALONGWITH QU ERY LETTER WAS ISSUED ON 5.11.2007. THE ASSESSEE IS AN INSTITUT ION INCORPORATED ON 02.09.1996 AS A SOCIETY. THE SAME WA S REGISTERED WITH THE REGISTRAR OF SOCIETIES VIDE REGI STRATION NO. IND/2689/96 DATED 02.09.1998. THE ASSESSEE IS RUNNI NG A COLLEGE IN THE NAME INTERNATIONAL COLLEGE OF MANAG EMENT SCIENCE AND TECHNOLOGY. IN THE STATEMENT OF COMPUT ATION OF TOTAL INCOME FURNISHED ALONGWITH THE RETURN, THE ASS ESSEE HAD CLAIMED EXEMPTION OF RS. 3,99,450/- BEING 15% OF TH E ACCUMULATION OF INCOME U/S 11(2) OF THE INCOME-TAX ACT, 1961. THUS, AFTER CLAIMING THIS DEDUCTION AND SETTING OFF THE OTHER EXPENSES AMOUNTING TO RS. 21,38,235/-, THE ASSESSEE HAD CLAIMED THE LOSS OF RS. 1,25,323/-. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) HAS HELD AS UNDER :- 10. WITHOUT PREJUDICE TO THE SAME, EVEN IF APPELLANT HA D BEEN GRANTED REGISTRATION FOR THE YEAR UNDER APPEAL , THE ACCUMULATION U/S 11(1)(A) IS ALLOWED AT 15% ,OF THE INCOME DERIVED FROM THE PROPERTY HELD IN TRUST. THE APPELL ANT HAS KOTHARI EDUCATIONAL FOUNDATION, INDORE VS. ACIT, 2( 1), INDORE I.T.A.NO. 419/IND/2016 A.Y. 2005-06 4 4 CLAIMED ACCUMULATION AT 15% GROSS RECEIPTS OF RS. 26,63,006/-. IN FACT AFTER CONSIDERING THE EXPENSES OF RS. 21,38,235/- THE INCOME COMES TO ONLY RS. 5,24,771/- . THEREFORE, THE APPELLANTS CLAIM IS NOT EVEN MATHEM ATICALLY CORRECT. MOREOVER, SECTION 11(1)(A) ALLOWS ACCUMULA TION OF INCOME AND NOT DEDUCTION OF AN EXPENDITURE. THEREFO RE, SUCH ACCUMULATION OF INCOME CANNOT BE CLAIMED AS DEDUCTION TO CREATE A LOSS WHEN THERE IS NO SUCH IN COME AVAILABLE FOR ACCUMULATION 11. GROUNDS NO. 3.2 & 3.3 PERTAIN TO CLAIM U/S 10(23C)(IIIAD). THE SAID CLAIM WAS NOT MADE BY FILI NG A REVISED RETURN WITHIN STATUTORY TIME LIMIT AND, THE REFORE, NOT ALLOWABLE IN VIEW OF THE DECISION OF THE APEX C OURT IN THE CASE OF GOETZE (INDIA) LIMITED, REPORTED IN 284 ITR 323. IN THE APPELLATE PROCEEDINGS, IT CANNOT BE HELD THA T THE AO ERRED IN NOT ACCEPTING THE CLAIM OF THE APPELLANT, WHEN THE AOS ACTION IS IN ACCORDANCE WITH THE DECISION OF T HE APEX COURT. CONSEQUENTLY, GROUNDS NO. 3.2 & 3.3 ARE DISM ISSED. 12. WITHOUT PREJUDICE TO THE SAME THE EXEMPTION U/S 10(23C)(IIIAD) IS ALLOWED IF AN EDUCATIONAL INSTITU TE EXIST KOTHARI EDUCATIONAL FOUNDATION, INDORE VS. ACIT, 2( 1), INDORE I.T.A.NO. 419/IND/2016 A.Y. 2005-06 5 5 SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR THE PURP OSE OF PROFIT. AS MENTIONED ABOVE, THE APPELLANT HAD DERIV ED OF INCOME OF RS. 5,24,771/- GROSS RECEIPTS OF RS. 26,6 3,006/- WHICH COMES TO 19.7 % PROFIT. SUCH A HIGH PROFIT CA NNOT BE AN INCIDENTAL WITHOUT ANY EFFORT TO EARN PROFIT. UN LESS THE APPELLANT ESTABLISHES THAT THE INSTITUTION DOES NOT EXIST FOR THE PURPOSE OF PROFIT, THE CLAIM U/S 10(23C)(IIIAD) IS NOT ALLOWABLE, EVEN OTHERWISE. 5. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PRAYED THAT THE NECESSARY INSTRUCTIONS BE ISSUED TO ALLOW THE BENEFITS OF SECTION 10(23)(IIIAD) TO THE ASSESSEE. 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW. 7. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE ASSESSEE IS AN EDUCATIONAL TRUST AND ASSESSEE T RUST IS REGISTERED AS ASSOCIATION OF PERSON. THE ASSESSEE T RUST HAS APPLIED FOR REGISTRATION U/S 12A BEFORE THE COMMISS IONER OF INCOME-TAX , ON 1 ST JUNE, 2005,, IN FORM NO.10A ALONGWITH ALL THE REQUIRED ENCLOSURES AND ANNEXURES. THE ASSESSEE TRUST KOTHARI EDUCATIONAL FOUNDATION, INDORE VS. ACIT, 2( 1), INDORE I.T.A.NO. 419/IND/2016 A.Y. 2005-06 6 6 HAS ALSO APPLIED FOR CONDONATION OF DELAY. I FIND T HAT AFTER APPLYING THIS BEFORE THE CIT, THE COMMISSIONER HAS NOT GRANTED THE REGISTRATION U/S 12A AND THE ASSESSEE T RUST CANNOT GET THE BENEFIT U/S 12AA OF THE INCOME-TAX A CT, 1961. THEREFORE, I AM OF THE VIEW THAT THIS MATTER REQUIRE S TO BE RESTORED TO THE FILE OF CIT (ADMN.) TO DECIDE THE A SSESSEES APPLICATION U/S 12A OF THE INCOME-TAX ACT, 1961. TH EREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, I RESTORE TH IS MATTER TO THE LD. CIT FOR DECIDING APPLICATION FOR REGISTRATION U /S 12A. ON DECIDING THIS APPLICATION, THE MATTER IS RESTORED, THEREAFTER, THE AO IS DIRECTED TO DECIDE THE ASSESSMENT ORDER DE NO VO. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 21 ST JUNE, 2016. SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 21 ST JUNE, 2016. KOTHARI EDUCATIONAL FOUNDATION, INDORE VS. ACIT, 2( 1), INDORE I.T.A.NO. 419/IND/2016 A.Y. 2005-06 7 7 CPU*