M/s. Maruti Education Society, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-1(4), Veraval

ITA 442/RJT/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6862 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 28-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR ADHIA
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV , JUDICIAL MEMBER ./ ITA NO . 442 / RJT / 20 1 5 / ASS TT. YEAR : 20 1 0 - 11 M/S.MARUTI EDUCATION SOCIETY BUILDING NO.1819 MAIN ROAD, GADULIWADI VANAKBARA DIU VS THE ITO, WARD - 1(4) VERAVAL. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI D.R. ADHIA, AR REVENUE BY : SHRI PRAVIN VERMA, DR / DATE OF HEARING : 01 / 1 1 /201 7 / DATE OF PRONOUNCEMENT: 02 / 1 1 /201 7 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF LD.CIT(A) - 3 , RAJKOT DATED 24.8.2015 PASSED FOR THE ASSTT.YEAR 20 1 0 - 11 . 2. THOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS IN THE GROUNDS OF APPEAL, HOWEVER, MAIN GRIEVANCE OF THE ASSESSEE REVOLVES AROUND A SINGLE VIZ. THE LD.CIT(A) HAS ERRED IN MAKING ADDITION OF GROSS RECEIPTS OF RS.25,57,220/ - WITHOUT CONSIDERING EXPENSES INCURRED BY TH E ASSESSEE OF RS.24,81,361/ - ON THE GROUND THE ASSESSEE HAS FAILED TO PRODUCE REGISTRATION CERTIFICATE UNDER SECTION 12A OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A CHARITABLE TRUST CARRYING ON EDUCATIONAL ACTIVITIES FOR THE BENEFIT OF WEAKER SECTIONS OF THE SOCIETY. IT IS RUNNING A SCHOOL APPROVED BY THE GOVERNMENT. THE ASSESSEE - TRUST FILED ITS RETURN OF INCOME FOR THE ASSTT.YEAR 2010 - 11 ON ITA NO . 442 /RJT/201 5 2 22 - 3 - 2011 DECL ARING TOTAL INCOME AT RS.75,860/ - . ON SCRUTINY OF THE ACCOUNT, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS MADE INCOME OF RS.25,57,220/ - AND CLAIMED DEDUCTION OF EXPENSES TO THE EXTENT OF RS.24,81,362/ - . ACCORDING TO THE ASSESSING OFFI CER, SINCE THE ASSESSEE HAS NOT REGISTERED UNDER SECTION 12AA OF THE ACT AND RETURN HAS NOT BEEN FILED WITHIN TIME LIMIT PRESCRIBED UNDER SECTION 139(1) OF THE ACT, THE ASSESSING OFFICER DENIED CLAIM OF EXPENDITURE OF RS.24,81,362/ - AS CONTEMPLATED UNDER S ECTION 11 OF THE ACT. AGGRIEVED BY THE ACTION OF THE ASSESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEFORE THE LD.FIRST APPELLATE A UTHORITY . BEFORE THE LD.CIT(A) IT WAS CONTENDED BY THE ASSESSEE THAT THE ASSESSEE - TRUST WAS GRANTED REGISTRATION UNDER SECT ION 12A BY THE CIT W.E.F. 1.4.2013 AND IN VIEW OF AMENDMENT IN SECT I ON 12A(2) BY FINANCE (NO.2) ACT 2014, ONCE A REGISTRATION IS GRANTED IN SUBSEQUENT YEAR, THE SAME COULD BE CONSIDERED AS GRANTED FOR PRECEDING YEAR ALSO. THE LD.CIT(A), HOWEVER, CALLED FO R A REMAND REPORTED FROM THE ASSESSING OFFICER TO VERIFY CORRECTNESS OF CLAIM OF THE ASSESSEE AND COMPUTE THE INCOME WHICH IS TO BE TAXED. THE ASSESSING OFFICER VIDE ITS REPORT DATED 25.5.2015 STATED THAT SINCE ASSESSEE HAS NOT GOT REGISTRATION UNDER SECTION 12A OF THE ACT, IT WAS NOT ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC TION 11. HOWEVER, THE ASSESSING OFFICER HAS COMPUTED TAXABLE INCOME OF THE ASSESSEE AT RS.75,858/ - AS PER SECTION 164(2) OF THE ACT AFTER CONSIDERING EXPENSES OF RS.24,81,362/ - CLAIMED BY THE ASSESSEE. AFTER CONSIDERING THE REMAND REPORT OF THE ASSESSING OFFICER, THE LD.CIT(A) DENIED THE CLAIM OF THE ASSESSEE ON THE GROUND OF BELATED FILING AND NON - REGISTRATION UNDER SECTION 12A OF THE ACT. AGGRIEVED BY THIS ORDER, THE ASSESSEE IS NOW IN FURTHER APPEAL BEFORE US. 4. WITH THE ASSISTANCE OF THE LD.REPRES ENTATIVES, WE HAVE GONE THROUGH THE RECORD. SINCE THE ASSESSEE GOT THE REGISTRATION AFTER PASSING THE ASSESSMENT ORDER, WE DEEM IT APPROP RIATE TO SET ASIDE THE ISSUES TO THE FILE OF THE LD.AO. HE SHALL KEEP IN MIND THE AMENDMENT ITA NO . 442 /RJT/201 5 3 MADE IN SECTION 12A(2) BY FINANCE (NO.2) ACT, 2014. IN OTHER WORDS, THE LD.AO SHALL DECIDE THE IMPACT OF THIS AMENDMENT ON THE FACTS OF THE ASSESSEE S CASE. IT IS ALSO IMPORTANT TO NOTE THAT FOR THE SAKE OF ARGUMENTS, ASSUMING IF SECTION 11 OF INCOME TAX ACT BENEFIT IS NOT THERE TO THE ASSESSEE, THEN ALSO GROSS RECEIPT CANNOT BE TAXED. ONLY THE NET RECEIPT IS TO BE TAXED. WITH THE ABOVE OBSERVATION, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THE LD.AO SHALL DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER HEARING THE ASSESSEE. 5 . IN THE RESULTS, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE CO URT ON 2 N D NOVEMBER, 201 7 AT RAJKOT . S D / - S D / - ( PRAMOD KUMAR ) ACCOUNTANT MEMBER ( RAJPAL YADAV) JUDICIAL MEMBER