M/s Kamala Nehru Institute of Child Education, Lucknow V. Income Tax Officer-2(2), Lucknow

ITA 491/LKW/2015

• Counselvise Citation: 49123714 RSA 2015
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 142(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.491/LKW/2015 ASSESSMENT YEAR 2008-09 INCOME TAX OFFICER-II (2). AAYAKAR BHAWAN, LUCKNOW VS M/S KAMALA NEHRU INSTITUTE OF CHILD EDUCATION, 1 MOTI MAHAL MARG, HAZARATGANJ, LUCKNOW PAN AAATK 2342 M (RESPONDENT) (APPELLANT) SHRI D.D. CHOPRA, ADVOCATE APPELLANT BY S HRI RAJNISH YADAV, DR RESPONDENT BY 1 4 / 10 /2015 DATE OF HEARING 11 /12/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF LD. CIT (A), LUCKNOW DATED 30.03.2015 FOR THE AY 2008-09. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. BECAUSE THE LEARNED COMMISSIONER OF INCO ME TAX (APPEALS) HAS GROSSLY ERRED IN UPHOLDING THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT WITHOUT APPRECIATI NG THAT THE LEARNED ASSESSING OFFICER WHILE ADMITTING THAT THE APPELLANT INSTITUTE IS AN EDUCATIONAL SOCIETY HAS A DDED RS. 5,80,1007- CLAIMED TO BE REFUNDABLE CAUTION MONEY R ECEIVED AT THE TIME OF ADMISSION OF THE STUDENT TO THE AGGR EGATE ANNUAL RECEIPT FROM TUITION FEE OF THE APPELLANT IN STITUTE AMOUNTING TO RS. 98,71,558.00 THUS EXCEEDING THE PR ESCRIBED GROSS ANNUAL RECEIPT OF RS. 1.00 CRORE THEREBY DISQ UALIFYING THE APPELLANT ASSESSEE FOR CLAIMING EXEMPTION U/S 1 0(23C) (IIIAD) OF THE INCOME TAX ACT WITHOUT APPRECIATING THAT THE 2 REFUNDABLE CAUTION MONEY IS NOT A TRADING RECEIPT L IABLE TO TAX AND THEREFORE THE SAME CANNOT BE INCLUDED IN THE AN NUAL RECEIPT OF THE APPELLANT INSTITUTE. 2. BECAUSE THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) HAS GROSSLY ERRED IN UPHOLDING THE ASSESSMENT ORDER BY WHICH THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF R EFUNDABLE CAUTION MONEY OF RS. 5,80,1007-RECEIVED BY THE APPE LLANT DURING THE YEAR UNDER CONSIDERATION ON THE GROUND T HAT THE ASSESSEE COULD NOT FURNISH DETAILS OF STUDENT TO WH OM REFUNDS WERE STATED TO BE GIVEN BY THE APPELLANT WI THOUT APPRECIATING THAT THE ASSESSEE HAS NOT CLAIMED ANY REFUND OF CAUTION MONEY TO THE STUDENTS IN ITS BOOKS OF ACCOU NT DURING THE YEAR UNDER CONSIDERATION. 3. BECAUSE THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 5,80,100/- RECEIVED BY THE APPELLANT TOWARDS REFUNDABLE CAUTIO N MONEY/SECURITY DURING THE YEAR UNDER CONSIDERATION ON THE GROUND THAT THE ASSESSEE COULD NOT FURNISH BEFORE T HE ASSESSING OFFICER DETAILS OF STUDENTS TO WHOM REFUN DS WERE STATED TO BE GIVEN BY THE APPELLANT WITHOUT APPRECI ATING THAT THE ASSESSEE IN RESPONSE TO NOTICE U/S 142(1) DATED 08.02.2010 HAD EXPLAINED THE NATURE OF CAUTION MONE Y AND ALSO FILED COPY OF LEDGER ACCOUNT ALONG WITH ITS RE PLY DATED 06.12.2010 FILED BEFORE THE ASSESSING OFFICER AND T HE LEARNED ASSESSING OFFICER HAD NEVER ASKED FOR THE NAMES AND DETAILS OF THE STUDENTS TO WHOM THE SECURITY WAS REFUNDED B Y THE ASSESSEE. EVEN OTHERWISE, NON FURNISHING OF THE DET AILS OF THE STUDENTS WHOM REFUNDABLE CAUTION MONEY/SECURITY WAS CLAIMED TO BE REFUNDED WOULD NOT JUSTIFY THE ADDITI ON OF THE AMOUNT OF REFUNDABLE SECURITY DEPOSIT RECEIVED DURI NG THE YEAR TO THE ANNUAL TURNOVER OF THE APPELLANT INSTIT UTE. 4. BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT THE REFUNDABLE CAUTIO N MONEY RECEIVED CANNOT BE TREATED TO BE THE PART OF ANNUAL TURNOVER OF THE APPELLANT INSTITUTE BECAUSE THE CAUTION MONE Y SO COLLECTED IS A LIABILITY OF THE INSTITUTE AND THE S AME IS REFUNDABLE AT THE TIME STUDENT LEAVES INSTITUTE AND THE ASSESSING OFFICER BY MAKING THE ABOVE ADDITION OF R S. 5,80,100/- TOWARDS CAUTION MONEY TO THE AGGREGATE A NNUAL RECEIPT AMOUNTING TO RS. 98,71,558.00 HAS DENIED EX EMPTION U/S 10(23C)(IIIAD) BECAUSE AFTER ADDITION THE AGGRE GATE 3 ANNUAL RECEIPT OF THE APPELLANT EXCEEDS THE PRESCRI BED LIMIT, OF RS. 1.00 CRORE. 5. BECAUSE THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) WHILE DISMISSING THE APPEAL OF APPELLANT HAS FAILED TO APPRECIATE THAT THE APPELLANT HAD FURNISHED COMPLET E DETAILS OF THE CAUTION MONEY RECEIVED DURING THE YEAR BEFOR E THE COMMISSIONER OF INCOME TAX (APPEALS) WHO APPEARED T O BE SATISFIED AS NO FURTHER QUERY IN THIS REGARD WAS RA ISED. 6. BECAUSE THE TERM 'ANNUAL RECEIPTS' AS AP PEARING IN SECTION 10(23C)(IIIAD) MEANS THE TURNOVER OF AN ASSESSEE IN THE RELEVANT ASSESSMENT YEAR, BEING THE AGGREGATE OF TU ITION FEE RECEIVED AND THAT THE REFUNDABLE CAUTION MONEY RECE IVED FROM STUDENT AT THE TIME OF ADMISSION CANNOT BY ANY STRETCH OF IMAGINATION BE TREATED TO BE A PART OF THE TURNO VER OF THE INSTITUTE FOR THE PURPOSES OF EXEMPTION U/S 10(23C) (IIIAD) OF THE INCOME TAX ACT, 1961. 7. BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) BY DISMISSING THE APPEAL OF THE APPELLANT HAS FAILE D TO APPRECIATE THAT FOR THE ASSESSMENT YEAR 2006-07 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHILE DECIDING THE APPEAL OF THE SAME APPELLANT HAD ALLOWED EXEMPTION U/S 10(23C)(IIIAD) IN THE FAVOUR OF APPELLANT ON SIMILA R ISSUE HAS HELD THAT THE REFUNDABLE SECURITY BY NATURE IS LIAB ILITY ON THE INSTITUTIONS BEING REFUNDABLE IN NATURE, THUS CANNO T BE CONSIDERED AS AGGREGATE ANNUAL RECEIPT. WITHOUT ASS IGNING ANY REASON THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT FOLLOWING THE ORDER PASS ED IN PRECEDING YEAR IN APPEAL OF THE ASSESSEE ON SIMILAR FACTS THEREBY NOT FOLLOWING THE WELL SETTLED RULE OF CONS ISTENCY. 8. BECAUSE THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) WHILE UPHOLDING THE ASSESSMENT ORDER HAS FAILED TO APPRECIATE THAT THE CAUTION MONEY DEPOSITED BY THE STUDENT AT THE TIME OF ADMISSION DID NOT BELONG TO THE APPE LLANT ASSESSEE AS THE MONEY REMAINED AS THAT OF THE STUDE NT AND THE SAME IS REFUNDABLE TO THE STUDENT AT THE TIME O F LEAVING SCHOOL AND THEREFORE THE SAID CAUTION MONEY CANNOT BE CONSIDERED AND TREATED AS A REVENUE RECEIPT UNDER T HE PROVISIONS OF SECTION 10(23C)(IIIAD) OF THE INCOME TAX ACT, 1961. 4 3. LD. AR OF THE ASSESSEE HAS PLACED RELIANCE ON TH E JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CITY M ONTESSORI SCHOOL (REGD.) VS. UNION OF INDIA AND OTHERS REPORTED IN 315 ITR 48 (A LL). HE ALSO DRAWN OUR ATTENTION TO THE PAGE NO. 7 OF THE PAPER BOOK BEING WRITTEN S UBMISSION FILED BEFORE THE ASSESSING OFFICER ON 20.12.2010 AS PER WHICH IT WAS SUBMITTED THAT RECEIPTS OF THE ASSESSEE ARE ONLY RS.99,24,948/- INCLUDING TUITION FEES, INTEREST AND FDR INTEREST. REGARDING CAUTION MONEY RS.5,80,100/- AND LOAN FRO M KNI TRUST RS.7,00,000/- IT WAS SUBMITTED THAT THESE ARE REFUNDABLE MONEY AND I S NOT PART OF RECEIPTS OF THE ASSESSEE AND THEREFORE, THE ASSESSEES CASE IS COVE RED U/S 10(23C)(IIIAD) OF THE I.T. ACT. HE ALSO DRAWN OUR ATTENTION TO PARA 5 OF THE O RDER OF LD. CIT(A), WHERE HE OBSERVED THAT THE ASSESSING OFFICER HAD NOTED THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THAT CREDIT OF RS.5,80,100/- SHOWN IN THE BALANCE SHEET WAS LIABILITY OF REFUNDABLE NATURE. HE SUBMITTED THAT IF THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER OR TO THE CIT(A), THE ASSESSEE WE LL BEING ON RECORD THE DETAILS AND EVIDENCE OF REFUNDS IN NEXT YEAR, IN ORDER TO E STABLISH THAT THIS LIABILITY IS OF REFUNDABLE NATURE. 4. LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF TH E AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE ARE OF THE CONSIDERED OPINION THAT IF THIS LIABILITY OF RS.5,80,100/- SHOWN BY TH E ASSESSEE AS CAUTION MONEY IS IN FACT REFUNDABLE IN NATURE THEN THE SAME CANNOT BE A DDED IN THE RECEIPTS OF THE ASSESSEE FOR THE PURPOSE OF DECIDING THE APPLICABIL ITY OF SECTION 10(23C)(IIIAD) AND RULE 2BC AS PER WHICH THE LIMIT PRESCRIBED IS ANNUA L RECEIPT OF RS.1.00 CRORE. BUT, THE ASSESSEE COULD NOT SUBSTANTIATE BEFORE US OR BE FORE THE AUTHORITIES BELOW THAT THIS CREDIT OF RS.5,80,100/- IS OF REFUNDABLE NATUR E. HOWEVER, WE FEEL THAT IN THE INTEREST OF JUSTICE, ONE MORE OPPORTUNITY MAY BE PR OVIDED TO THE ASSESSEE TO ESTABLISH THIS CLAIM THAT THIS AMOUNT OF RS.5,80,10 0/- IS OF REFUNDABLE NATURE. HENCE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND RES TORE THE MATTER BACK TO HIS FILE FOR FRESH DECISION. THE BURDEN IS ON THE ASSESSEE T O BRING DETAILS AND EVIDENCE ON RECORD TO ESTABLISH THAT THIS LIABILITY OF RS.5,80, 100/- APPEARING IN THE BALANCE SHEET 5 IS OF REFUNDABLE NATURE AND WHEN THE SAME WAS ACTUA LLY REFUNDED. IF THE ASSESSEE IS ABLE TO DO SO THEN SUCH REFUNDABLE AMOUNT SHOULD NOT BE ADDED IN THE RECEIPTS OF THE ASSESSEE. LD. CIT(A) SHALL PASS NECESSARY OR DER AS PER LAW IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING REASONABLE OPPORTU NITY OF BEING HEARD TO BOTH SIDES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A.K. GAROD IA ) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 11/12/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR