M/s Bellary Dioceses Board of Education (EH), Bellary V. DCIT, Bellary

ITA 467/BANG/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9418 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-07-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 14-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: MANOJ PUKALE
• Keywords: Set aside
• Section: 142(1); 12A

Judgement Text

PAGE 1 OF 7 ITA NO.467/BANG/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B' BEFORE SHRI K P T THANGAL, VICE PRESIDENT AND SHRI N L KALRA, A.M. ITA NO.467/BANG/09 (ASST. YEAR 2005-06) BELLARY DIOCESES BOARD OF EDUCATION, BISHOP HOUSE, CANTONMENT, BELLARY 583101. - APPELLANT VS THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, BELLARY. - RESPONDENT APPELLANT BY : SHRI MANOJ PUKALE RESPONDENT BY : SMT. V S SREELEKHA O R D E R PER N L KALRA : THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF LEARNED CIT(A), HUBLI DATED 6TH MARCH, 2009. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- I) THE LEARNED CIT(A) ON THE FACTS OF THE CASE OUGHT TO HAVE ACCEPTED THE EXPLANATION OF THE APPELLANT AND REFRAINED FROM UPHOLDING THE IMPUGNED ADDITION, MUCH LESS DIRECTING THE ENHANCEMENT OF THE SAME ON RECOMMENDATION OF THE RESPONDENT ASSESSING OFFICER(AO). PAGE 2 OF 7 ITA NO.467/BANG/2009 2 II) THE LEARNED CIT(A) ERRED TO FURTHER ENHANCE THE ASSESSMENT ON REMAND REPORT FROM RESPONDENT ASSESSING OFFICER, WITHOUT REASONABLE OPPORTUNITY FOR APPELLANT TO SHOW CAUSE PARTICULARLY AGAINST SUCH ENHANCEMENT. III) THE LEARNED CIT(A) ERRED TO GIVE FINDING THAT RECEIPTS IN APPELLANT'S HAND EXCEEDED RS.1 CRORE WITH THE ALLEGATION THAT ALL MEMBER INSTITUTIONS ARE UNDER THE CONTROL OF THE APPELLANT AND HENCE ALL RECEIPTS OF MEMBER INSTITUTIONS ARE OF APPELLANT. IV) THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT ALL MEMBER INSTITUTIONS FURNISHED THEIR RETURNS OF INCOME INDEPENDENTLY AND EVEN THE FUNDS REMAINED WITH THE RESPECTIVE MEMBER INSTITUTIONS AND WERE NEVER TRANSFERRED TO THE APPELLANT. V) THE LEARNED CIT(A) ERRED IN PARA 5.1(E) TO SET ASIDE THE ASSESSMENT BY REFERRING THE CASE BACK TO THE AO WITH DIRECTIONS TO COLLECT INFORMATION ABOUT ENTIRE RECEIPTS IN APPELLANT'S HANDS TO ASSESS INCOME ACCORDINGLY. VI) THE LEARNED CIT(A) ERRED TO OBSERVE (IN PARA 5.1(E) OF THE ORDER) THAT APPELLANT HAS NO OBJECTION TO AO'S REMAND REPORT FOR ENHANCEMENT AS HE FAILED TO CONSIDER APPELLANT'S CAUSE AND PRAYER IN APPEAL. VII) THE LEARNED CIT(A) ALSO FAILED TO CONSIDER WRITTEN SUBMISSION WHERE ADDITION OF RECEIPTS OF MEMBER INSTITUTION WAS RESISTED AND THE REPLY TO REMAND REPORT (AT PARA 2 PG.3) WHERE CONFIRMATION OF INDEPENDENT RETURNS MADE SEPARATELY BY MEMBER INSTITUTIONS IS URGED. VIII) THE LEARNED CIT(A) ERRED IN ENHANCING THE ORDER OF THE AO AND THE CHARGE OF INTEREST U/S 234. PAGE 3 OF 7 ITA NO.467/BANG/2009 3 3. THE ASSESSEE IS A REGISTERED BODY, REGISTERED UNDER MYSORE SOCIETIES REGISTRATION ACT. THE MAIN O BJECTS OF THE SOCIETY IS TO ESTABLISH AND ADMINISTER EDUCATION AL INSTITUTIONS FOR THE CHRISTIAN COMMUNITY AND ALSO FO R ALL COMMUNITIES, IRRESPECTIVE OF RELIGION, CASTE, LANGU AGE WITH SPECIAL CONCESSION FOR POOR AND DOWNTRODDEN. THE A SSESSING OFFICER RECEIVED INFORMATION THAT INFANT JESUS SCHO OL, RAICHUR HAS REMITTED CASH INTO THE ACCOUNT OF THE ASSESSEE AT CANARA BANK DURING THE ACCOUNTING YEAR RELEVANT TO THE ASST . YEAR UNDER CONSIDERATION TO THE EXTENT OF RS.13,52,160/- . NOTICE U/S 142(1) WAS ISSUED TO INFANT JESUS SCHOOL, RAICH UR, VIDE WHICH, THE SCHOOL WAS REQUIRED TO FILE THE RETURN O F INCOME. IN RESPONSE TO THE SAID NOTICE, FATHER THOMAS MICHAEL OF INFANT JESUS SCHOOL, RAICHUR STATED THAT THEIR EDUCATIONAL INSTITUTION IS NOT AN INDEPENDENT BODY AND IT COMES UNDER THE AP PELLANT. ON THE BASIS OF THIS INFORMATION, A NOTICE U/S 142( 1) WAS ISSUED TO THE APPELLANT ON 16TH FEBRUARY, 2007. IN RESPONS E TO THAT NOTICE, THE APPELLANT SOCIETY SUBMITTED THAT THE SCH OOL IS AN INDEPENDENT INSTITUTION AND MANAGER IS LOOKING AFTE R THE ADMINISTRATION. THAT SCHOOL HAS MADE A DEPOSIT IN CANARA BANK. THE RELEVANT TRANSACTION AND EXPENDITURE IS DONE BY THE MANAGER. IT WAS FURTHER SUBMITTED THAT THERE WERE NO FINANCIAL TRANSACTION BETWEEN THE APPELLANT AND THE SCHOOL. ALL THE SCHOOLS ARE INDEPENDENT. THE SCHOOLS WERE ALSO INSTRUCTED TO FILE THEIR INCOME TAX RETURNS BECAUSE THEY ARE IN DEPENDENT PAGE 4 OF 7 ITA NO.467/BANG/2009 4 AND ARE SEPARATE UNITS. THE AO NOTICED THAT THE AS SESSEE HAS RECEIVED MEMBERSHIP FEE FROM 17 SCHOOLS. IT WAS SU BMITTED THAT THE ASSESSEE IS ONLY RECEIVING MEMBERSHIP FEE. THE AO NOTICED FROM THE MEMORANDUM OF ASSOCIATION THAT THE ASSESSEE HAS POWER TO MAKE POLICY DECISION IN RESPECT OF ALL THE CONSTITUENT INSTITUTION AS WELL AS TO FRAME RULES N ECESSARY FOR CARRYING OUT THE OBJECTS OF THE ASSESSEE SOCIETY. TH E GOVERNING BODY HAS POWER TO RATIFY APPOINTMENT OF TEA CHERS AND OTHER EMPLOYEES OF INSTITUTION COMING UNDER THE EDUC ATION BOARD. THE SOCIETY HAS ALSO POWER TO TRANSFER THE T EACHERS AND OTHER EMPLOYEES FROM ONE INSTITUTION TO ANOTHER UNDE R THE MANAGEMENT OF THE ASSESSEE SOCIETY. CONSIDERING THE SE FACTS, THE ASSESSING OFFICER CONCLUDED THAT ALL THE SCHOOL S ARE RUN BY THE APPELLANT SOCIETY. BEFORE THE ASSESSING OFFICER THE ASSESSEE FILED AN AFFIDAVIT SIGNED BY THE SECRETARY O F THE ASSESSEE SOCIETY. IN THE AFFIDAVIT, IT WAS MENTIONE D THAT THE SOCIETY UNDERTAKES THE CAPACITY BUILDING OF TEACHERS AND THE MANAGEMENT. IT ALSO EDUCATES THE MANAGEMENT AND TE ACHERS OF VARIOUS SCHOOLS. FOR THIS, THE SOCIETY IS CONDUCTIN G TRAININGS FOR THE MANAGEMENT AND THE TEACHERS. FOR THIS PURPOSE, THE SOCIETY IS RECEIVING MEMBERSHIP FEE. THE SUBSCRIPTI ON IS ACCOUNTED IN THE BOOKS OF ACCOUNT OF THE SOCIETY. T HE SOCIETY DOES NOT INTERFERE IN ANY WAY WITH THE MANAGEMENT OF VARIOUS SCHOOLS/COLLEGES. ALL THE SCHOOLS/COLLEGES ARE IND EPENDENT AND HAVE THEIR OWN MANAGEMENT AND FINANCIAL COMMITMENTS . ALL SUCH SCHOOLS HAVE BEEN RECOGNIZED BY THE DEPARTMENT OF ED UCATION PAGE 5 OF 7 ITA NO.467/BANG/2009 5 INDEPENDENTLY IN ITS RESPECTIVE INSTITUTIONS NAMES. IT WAS FURTHER SUBMITTED THAT TOTAL RECEIPTS OF ALL THE ED UCATIONAL INSTITUTION DOES NOT EXCEED RS.1 CRORE AND RECEIPTS OF ALL THE INSTITUTIONS CANNOT BE CLUBBED TO COME TO THE CONCL USION THAT RECEIPTS EXCEED RS.1 CRORE. THE SOCIETY HAS APPLIED FOR REGISTRATION U/S 12A AND THE APPLICATION IS PENDING BEFORE THE COMMISSIONER OF INCOME TAX. THE ASSESSEE HAS NOT F ILED ANY CONSOLIDATED RECEIPTS AND PAYMENTS ACCOUNT AND INCOM E AND EXPENDITURE ACCOUNT. IN ABSENCE OF THE DETAILS, TH E ASSESSING OFFICER ASSESSED THE INCOME AT RS.13,52,160/- WHICH REPRESENTED THE SUM PAID INTO THE BANK ON VARIOUS D ATES AND THE SOURCE OF SUCH SUM WAS STATED TO BE OUT OF FEES COLLECTED FROM THE STUDENTS. 4. THE ASSESSEE FILED APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) OBTAINED THE DETAILS OF INCOME AND EXPENDITURE ACCOUNT OF THE VARIOUS SCHOOLS. AS PER COPY OF THE REMAND REPORT FILED BY THE ASSESSING OFFICER TO THE LEARNED CIT(A), NET ACCESS OF INCOME OVER EXPENDITURE IN RE SPECT OF THE SCHOOLS CAME TO RS.22,00,829/-. THE LEARNED CI T(A) ENHANCED THE INCOME OF RS.22,00,829/- AS AGAINST RS.13,52,160/- ASSESSED BY THE ASSESSING OFFICER. 5. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. AN EDUCATIONAL INSTITUTION IS EXEMPT U/S 10(23C)(IIIAD ). THE WORD MENTIONED IN THE SECTION IS 'INSTITUTION'. IF THE RECEIPT OF THE PAGE 6 OF 7 ITA NO.467/BANG/2009 6 INSTITUTION DO NOT EXCEED RS.1 CRORE, THEN THE INCO ME IS EXEMPT IN CASE THE EDUCATIONAL INSTITUTION EXISTS SOLELY FO R EDUCATIONAL PURPOSES. THIS BENCH IN ONE OF THE CASES HAS HELD THAT RECEIPTS OF ALL THE INSTITUTIONS CANNOT BE CLUBBED TO SEE AS TO WHETHER THE LIMIT PRESCRIBED U/S 10(23C)(IIIAD) EXCEEDS OR NOT. HOWEVER, THERE IS NO DISCUSSION ON THIS ISSUE IN TH E ORDER OF THE LOWER AUTHORITIES. THERE IS NO FINDING THAT EDUCAT IONAL INSTITUTIONS ARE NOT EXISTING SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT. MOREOVER, THE ASSES SEE SOCIETY HAS ALSO APPLIED FOR REGISTRATION U/S 12A AND WE AR E NOT AWARE AS TO WHETHER THAT APPLICATION STANDS ACCEPTED OR R EJECTED BY THE CIT. THE LEARNED CIT(A) HAS MADE AN ENHANCEMEN T WITHOUT AFFORDING REASONABLE OPPORTUNITY TO THE ASSESSEE. T HERE ARE NOT ENOUGH FACTS TO ASCERTAIN AS TO WHETHER THE SCH OOLS ARE INDEPENDENT OR ARE BEING RUN BY THE SOCIETY. THEIR I NDEPENDENT STATUS IS TO BE EXAMINED. WE WERE INFORMED DURING THE COURSE OF PROCEEDINGS THAT SCHOOLS HAVE ALSO FILED THEIR I NCOME TAX RETURNS AND WE ARE NOT AWARE AS TO WHETHER THE REVE NUE HAS ACCEPTED SUCH RETURNS OR HAS TAKEN ACTION TO ASSESS THE INCOME IN THE HANDS OF THE SCHOOLS ON PROTECTIVE BASIS. D UE TO INSUFFICIENCY OF FACTS AVAILABLE ON RECORD, IT IS NO T POSSIBLE FOR US TO DECIDE THE GROUNDS OF APPEAL RAISED BY THE ASS ESSEE. HENCE WE ARE LEFT WITH NO ALTERNATIVE BUT TO SET AS IDE THE ASSESSMENT TO BE FRAMED AFRESH AS PER THE PROVISION S OF LAW. PAGE 7 OF 7 ITA NO.467/BANG/2009 7 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 7TH AUGUST, 2009. SD/- SD/- (K P T THANGAL) (N L KALRA) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE, DTD.07/8/2009 COPY TO : 1. THE ASSESSEE 2.THE REVENUE 3. THE CIT( A) CONCERNED.4. THE CIT CONCERNED. 5. THE DR 6. GUAR D FILE. 7. GF, ITAT, NEW DELHI. MSP/31.7. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.