M/s Science Forum for Rural Development & Research (Takshshila Junior College), Ujjain V. Income Tax Officer (Exemption), Ujjain, Ujjain

ITA 482/Ind/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0301 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-03-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 04-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Capital expenditure; Set aside
• Section: 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCHE, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.482/IND/2017 ASSESSMENT YEAR: 2014-15 ITO, ( EXEMPTION ) , AAYAKAR BHAWAN, BHARATPURI,UJJAIN / VS. M/S. SCIENCE FORUM FOR RURAL DEVELOPMENT & RESEARCH (TAKSHSHILA JR. COLLEGE) GRAM-MINDIA, NAVAKHEDA, UJJAIN (M.P.) ( REVENUE ) ( RESPONDENT ) P.A. NO. AAQFS814 2R REVENUE BY SHRI K.C. SELVAMANI , SR. DR RESPONDENT BY SHRI S.S. DESHPANDE , & BHAVESH NERKAR, CAS DATE OF HEARING: 20.03.2019 DATE OF PRONOUNCEMENT: 29.03.2019 / O R D E R PER KUL BHARAT, J.M: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS), UJJAIN SCIENCE FORUM FOR RURAL DEVE LOPMENT & RESEARCH 2 DATED 18/04/2017 PERTAINING TO ASSESSMENT YEAR 2014-15. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE: - WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 73,62526/- ,BEING THE CAPITAL EXPENDITURE ON ACQUISITION OF BU SES TRANSFERRED TO A PERSON CO RED BY SECTION 13( 1 )( C) NAMELY TI MT WITHOUT CONSIDERING THE VARIOUS DISCREPANCIES POINTED OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER? 2. WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF T HE CASE, THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITIO N OF RS. 76,789/- ON ACCOUNT OF INTEREST PAYMENT MADE ON LOA N FOR PURCHASE OF BUSES WITHOUT CONSIDERING THE VARIOUS D ISCREPANCIES POINTED OUT BY THE ASSESSING OFFICER IN THE ASSESSM ENT ORDER? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE AFORESAID A DDITION OF RS. 3,70.488/- ON ACCOUNT OF EXCESS ALARY TO THE SECRET ARY OF THE SOCIETY COVERED U/S 13(3) OF THE I.T.ACT WITHOUT CO NSIDERING THE VARIOUS DISCREPANCIES POINTED OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE. THE LD.CIT(A) WAS JUSTIFIED THE CLAIM OF SOCIETY U/S 10 (23C)(VI) OF THE LT ACT WITHOUT CONSIDERING THAT THE CASE COVERED UN DER THE PURVIEW OF 13(J)(C) AND 13(L)D) AS POINTED OUT BY T HE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND THEREFORE SOCIE TY IS EXISTING 'FOR PURPOSE OF PROFIT' WITHIN THE MEANING OF SAID TERM U/10(23C)(VI)? 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 43(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER C ALLED AS THE ACT) WAS FRAMED VIDE ORDER DATED 29.12.2016. THE ASSESSING OFFICER OBSERVED THAT DURING THE YEAR UNDER SCIENCE FORUM FOR RURAL DEVE LOPMENT & RESEARCH 3 CONSIDERATION THE ASSESSEE SOCIETY HAD TRANSFERRED ITS MOVABLE ASSETS TO ANOTHER ENTITY NAMELY TAKSHSHILA INSTITUTE OF MANAGEMENT AND TECHNOLOGY. THE ASSESSING OFFICER TAKING THE WDV OF BUSES AT RS.73,62,526/- AS INCOME OF THE ASSESSEE SINCE THE ASSESSEE HAD CLAIMED CAPITAL EXPENDITURE. FURTHER THE ASSESSING OFFICER MADE ADDITION OF INTEREST IN RESPECT OF, THE INTEREST EX PENSES ON THE LOAN TAKEN FOR PURCHASE OF BUSES. THE ASSESSING OFF ICER ALSO MADE ADDITION OUT OF EXCESS CLAIM OF DEPRECIATION AN D THE SALARY EXPENSES. 3. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPEAL B EFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APPEAL. THEREBY, LD. CIT(A) DELETED THE AD DITION OF RS.73,62,526/- MADE ON ACCOUNT OF TRANSFER OF BUSE S AND INTEREST THEREON OF RS.76,789/-. FURTHER THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.15,817/- CLAIMED AS EXCES S DEPRECIATION HOWEVER THE LD. CIT(A) DELETED THE ADDIT ION MADE OUT OF SALARY EXPENSES BY THE ASSESSING OFFICER. 4. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 5. GROUND NO.1 IS AGAINST THE DELETION OF ADDITION OF RS.73,62,526/- MADE ON ACCOUNT OF TRANSFER OF BUSES. L D. DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER O F SCIENCE FORUM FOR RURAL DEVE LOPMENT & RESEARCH 4 THE ASSESSING OFFICER AND SUBMITTED THAT THE LD. CIT(A ) WAS NOT JUSTIFIED IN DELETING THE ADDITION. HE SUBMITTED THAT ADMITTEDLY, THE ASSESSEE HAD TRANSFERRED THE BUSES TO OTHER SOCIETY. HE FURTHER SUBMITTED THAT THE ASSESSEE DID N OT PLACE ON RECORD ANY LEASE DEED ETC. AS CLAIMED BY THE ASSESSEE HOWEVER THE ASSESSEE HAS BEEN STRUCK OFF FROM THE BALANCE SHEET OF THE ASSESSEE SOCIETY. 6. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT IT WAS NOT A TRANSFER IT WAS MERELY JOURNAL ENTRY AS BUSES WERE NOT BEING USED BY THE ASSESSEE SOCIETY, THEREFORE, SAME WAS GIVEN TO THE SISTER CONCERN WHO I S CARRYING OUT CHARITABLE ACTIVITIES. UNDER THESE FACTS TH E ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDIT ION MOREOVER, THESE BUSES WERE SUBSEQUENT BROUGHT BACK TO THE ASSESSEE SOCIETY. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDER S OF THE AUTHORITIES BELOW. THE LD. CIT(A) HAS GIVEN A FIND ING OF FACT BY OBSERVING AS UNDER: THROUGH THIS GROUND OF APPEAL THE APPELLANT HAS CH ALLENGED THE ADDITION OF RS.73,62,526/- ON ACCOUNT OF TRANSF ER OF BUSES. THE AO MADE THE ADDITION ON THE GROUND THAT THE APP ELLANT HAS SOLD THE BUSES TO TIMT. THE SOCIETY PASSED THE RESO LUTION TO SEGREGATE THE TEACHING WORKS AND ADMINISTRATION WOR KS. THEREFORE, THE RUNNING AND MAINTENANCE OF BUSES, SA LE AND SCIENCE FORUM FOR RURAL DEVE LOPMENT & RESEARCH 5 PURCHASE OF BOOKS AND DRESS MATERIAL ARE GIVEN TO T IMT. THE BUSES WERE GIVEN ON LEAS BASIS TO TIMT. THE REGISTR ATION AND INSURANCE OF THE VEHICLES ARE STILL IN THE NAME OF THE APPELLANT SOCIETY. THEY HAD NOT SOLD TO THE TIMT. THE BUSES H AVE ALREADY BEEN MORTGAGED/HYPOTHECATED TO THE BANK/FINANCIAL I NSTITUTE AND THE SAME CANNOT BE TRANSFERRED WITHOUT REPAYMEN T OF LOAN. IT WAS GENERA ENTRY MADE BUT NO TRANSFER OF BUSES H AS TAKEN PLACE. THEREFORE, THE ADDITION MADE BY THE AO AMOUN TING TO RS.73,62,526/- IS DELETED. THEREFORE, THE APPEAL ON THIS GROUND IS ALLOWED. 8. IT IS CONTENTION OF THE ASSESSEE THAT IT WAS A TEMPO RARY ARRANGEMENT, IN FACT THE BUSES WERE NOT TRANSFERRED TO THE OTHER SOCIETY AND SUBSEQUENTLY, THESE BUSES WERE BRO UGHT BACK TO THE ASSESSEE SOCIETY. THESE FACTS REQUIRE VERIFICATION BY THE ASSESSING OFFICER, THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THIS ISSUE T O THE ASSESSING OFFICER TO VERIFY WHETHER THESE BUSES HAVE SUBSEQUENTLY CAME TO THE ASSESSEE AND IT WAS MERELY JOURNAL ENTRY. THIS GROUND OF THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 9. NOW COMING INTO GROUND NO.2, THIS GROUND IS AGAINS T DELETING ADDITION OF RS.76,789/-. THIS GROUND IS CON NECTED WITH GROUND NO.1 SINCE THE DISALLOWANCE IS ON ACCOUNT OF INTEREST PAYMENT MADE ON LOAN FOR PURCHASE OF BUSES, THEREFORE, THIS ISSUE IS ALSO RESTORE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE IT AFRESH. SCIENCE FORUM FOR RURAL DEVE LOPMENT & RESEARCH 6 10. GROUND NO.3 IS AGAINST DELETING ADDITION OF RS.3,70,488/-. LD. DR SUPPORTED THE ORDER OF THE ASS ESSING OFFICER. 11. PER CONTRA LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A). 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORDS AND GONE THROUGH THE ORDER S OF THE AUTHORITIES BELOW. THE ASSESSING OFFICER DISALL OWED THE SALARY ON THE BASIS THAT THE PRINCIPAL OF THE SCHOOL WAS BEING PAID AT THE RATE OF RS.55,226/-PM. THE ASSESSING OFFICER HAS NOT BROUGHT OUT AS TO WHY THE PRINCIPAL S ALARY SHOULD BE COMPARED WITH SALARY OF OTHER TEACHING STAFF. THE ASSESSING OFFICER OUGHT TO HAVE COMPARED THE SALARY OF PRINCIPAL OF OTHER SCHOOL THAT EXERCISE IS NOT DONE. THEREFORE, THE FINDING OF THE ASSESSING OFFICER CANNO T BE AFFIRMED, WE DO NOT SEE ANY REASON TO INTERFERE IN THE FINDING OF THE LD. CIT(A). THIS GROUND OF REVENUES APPEAL IS DISMISSED. 13. GROUND NO.4 IS AGAINST ALLOWING THE CLAIM OF ASSESS EE SOCIETY EXEMPTION U/S 10(23C) OF THE ACT. 14. LD. DR SUPPORTED THE ORDER OF THE ASSESSING OFFI CER. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORDS AND ONE THROUGH THE ORDERS OF SCIENCE FORUM FOR RURAL DEVE LOPMENT & RESEARCH 7 THE AUTHORITIES BELOW. LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A). THE LD. CIT( A) HAS GIVEN A FINDING OF FACT BY OBSERVING AS UNDER: THROUGH THIS GROUND OF APPEAL THE APPELLANT HAS CH ALLENGED THE REJECTION OF CLAIM OF THE SOCIETY U/S 10(23C)/1 1 OF THE I.T. ACT. THE APPELLANT SOCIETY IS RUNNING THIS SCHOOL S INCE 1995 AND BEFORE THIS ASSESSMENT THE APPELLANT SOCIETY HAS UN DERGONE 5 TO 6 SCRUTINY ASSESSMENTS AND DURING PREVIOUS ASSESSME NT PROCEEDINGS NO SUCH ISSUE WAS RAISED IN ANY OF THE ASSESSMENT. THE ISSUE WAS DISCUSSED IN DETAILS AT T HE TIME OF GRANT OF EXEMPTION U/S. 10(23) ALSO AND NO SUCH DIS CREPANCY WAS NOTICED EARLIER OR TILL DATE. THE ASSESSING OFF ICER HAS CONSIDERED THE PLAIN READING OF THE SECTION 13(1) AND 13(1)(D) AND DID NOT CONSIDERED THAT THE MEMBER (SECRETARY) IS NOT TAKING AN UNDUE BENEFIT WHEREAS HE IS PUTTING MORE EFFORTS IN TERMS OF TIME AS WELL FOR EDUCATIONAL BENEFITS. THEREFORE, T HE APPELLANT IS ENTITLE FOR EXEMPTION U/S 10(23C). THEREFORE THE AP PEAL ON THIS GROUND IS ALLOWED. 16. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION FOR TH E LD. CIT(A), WE FIND THAT THE ASSESSING OFFICER HAS NOT POI NTED OUT THAT THE ASSESSEE SOCIETY IS NOT FUNCTIONING IN ACCORDANCE WITH THE OBJECT AND IS ENGAGED IN PROFIT MAKI NG. IN THE ABSENCE OF SUCH FINDING WE DO NOT SEE ANY REASO N TO INTERFERE IN THE FINDING OF THE LD. CIT(A) SAME IS H EREBY AFFIRMED. THIS GROUND OF REVENUES APPEAL IS DISMISSED . SCIENCE FORUM FOR RURAL DEVE LOPMENT & RESEARCH 8 17. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITANO.482/IND/2017 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29.03.20 19. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED : 29/03/2019 PATEL, P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE