Vaish Model Senior Secondary School, Haryana V. ITO, Bhiwani

ITA 4939/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5350 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 31-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P BASIA
• Keywords: Charitable institution; Capital receipt; Capital expenditure

Judgement Text

ITA NO. 4939/D/2015 ASSESSMENT YEAR 2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI N.K. SAINI, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 4939/DEL/2015 ASSESSMENT YEAR: 2011-12 VAISH MODEL SENIOR SECONDARY SCHOOL, VS ITO , LOHARU ROAD, WARD-1, BHIWANI, BHIWANI. HARYANA-127021 (PAN: AAATV6211C) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI R.P. BASIA, CA ASSESSEE BY : SHRI SRIDHAR DORA, SR. DR DATE OF HEARING: 15.11.2018 DATE OF PRONOUNCEMENT: 28.01.2019 ORDER PER SUDHANSHU SRIVASTAVA, J.M. 1. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINS T THE ORDER OF THE LD. CIT (APPEALS), HISAR VIDE ORDER DA TED 13.02.2015 FOR ASSESSMENT YEAR 2011-12. 2.0 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A EDUCATIONAL SOCIETY AND HAD APPLIED FOR APPROVAL U/ S 10(23C)(VI) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED TH E ACT) FROM ASSESSMENT YEAR 2008-09 ONWARDS AFTER ITS RECEIPTS HAD CROSSED RS 1 CRORE. EARLIER IT HAD CLAIMED EXEMPTION UNDER SECTION ITA NO. 4939/D/2015 ASSESSMENT YEAR 2011-12 2 10(23C)(IIIAD) OF THE ACT. THE APPROVAL SOUGHT BY T HE ASSESSEE SOCIETY WAS DENIED FOR THE SECOND TIME BY THE PRESC RIBED AUTHORITY VIDE ORDER DATED 28.12.2010. AGGRIEVED, THE ASSESSEE SOCIETY FILED A WRIT PETITION BEFORE THE HON'BLE PU NJAB & HARYANA HIGH COURT VIDE PETITION NO. 7735 OF 2011. THE HON' BLE HIGH COURT OF PUNJAB & HARYANA SET ASIDE THE IMPUGNED OR DER AND REMANDED THE MATTER TO THE LD. COMMISSIONER OF INCO ME TAX (EXEMPTIONS) FOR PASSING A FRESH ORDER IN ACCORDANC E WITH THE LAW. PURSUANT TO THE ORDER OF HON'BLE HIGH COURT OF PUNJAB & HARYANA, LD. OMMISSIONER OF INCOME TAX (EXEMPTIONS) , CHANDIGARH, VIDE ORDER DATED 15.06.2015,PASSED AN O RDER AND APPROVED THE ASSESSEE SOCIETY (VIZ. VAISH MODEL SEN IOR SECONDARY SCHOOL EDUCATION SOCIETY) UNDER THE PROVISIONS OF S ECTION 10(23C)(VI) OF THE ACT WITH EFFECT FROM THE ASSESSM ENT YEAR 2008- 09. 2.1 HOWEVER, IN THE MEANWHILE, THE RETURN OF INCOM E FOR THE CAPTIONED YEAR WAS FILED DECLARING INCOME AT NI L AFTER CLAIMING EXEMPTION U/S 10(23C)(VI) OF THE ACT TO THE TUNE OF RS. 52,28,440/- WHICH WAS EXCESS OF INCOME OVER EXPENDI TURE FROM RUNNING THE SCHOOL IN THE NAME OF VAISH MODEL SENIO R SECONDARY SCHOOL. THE ASSESSING OFFICER TREATED THE BUILDING FUND AND ITA NO. 4939/D/2015 ASSESSMENT YEAR 2011-12 3 BUILDING MAINTENANCE FUND AMOUNTING TO RS. 62,97,30 0/- AS REVENUE RECEIPTS AND ADDED THE SAME TO THE INCOME O F THE ASSESSEE. THE ASSESSING OFFICER FURTHER DISALLOWED THE ASSESSEES CLAIM OF EXEMPTION U/S 10(23C)(VI) OF THE ACT. THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS. 1,15,235,740/-. 2.2 SUBSEQUENTLY, THE ASSESSEES APPEAL BEFORE THE LD. CIT (APPEALS) WAS ALSO DISMISSED ON THE GROUND THAT AT THE TIME OF ASSESSMENT, THE ASSESSEE WAS NOT HAVING ANY APPROVA L U/S 10(23C)(VI) OF THE ACT. NOW, THE ASSESSEE IS BEFOR E THE ITAT AND HAS CHALLENGED THE ACTION OF THE LD. CIT (APPEALS) IN DISMISSING THE ASSESSEES APPEAL AND THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED:- THE ADDITION OF RS. 1,15,25,740/- MADE BY THE LD. INCOME TAX OFFICER AND DENIAL OF BENEFITS UNDER SEC TION 10(23C)(VI) OF INCOME TAX ACT, 1961 BY THE LD. INCO ME TAX OFFICER IS UNTENABLE FOR THE FOLLOWING REASONS:- 1. THE LD. ASSESSING OFFICER HAVE WRONGLY DENIED THE EXEMPTION UNDER SECTION 10(23C)(VI) OF THE INCOME T AX ACT, 1961 WITHOUT GIVING APPROPRIATE OPPORTUNITY AN D IGNORING ALL MERITS OF THE CASE. 2. THAT APPLICATION OF EXEMPTION HAS BEEN WRONGLY DENIED BY THE LD. CCIT, PANCHKULA DESPITE THE SAME HAVING BEEN ALLOWED BY THE HON'BLE HIGH COURT OF PU NJAB & HARYANA VIDE ITS ORDER DATED 17.08.2010. THE APPELLANT SOCIETY HAS RE-FILED A CIVIL WRITS PETITI ON WITH THE HON'BLE HIGH COURT OF PUNJAB & HARYANA, THE DEC ISION ITA NO. 4939/D/2015 ASSESSMENT YEAR 2011-12 4 IN WHICH CASE HAS NOW COME ON 09.04.2015 SETTING ASIDE THE ORDER OF HON'BLE CHIEF COMMISSIONER OF INCOME T AX , PANCHKULA AND REFERRED THE MATTER TO THE HON'BLE COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH , NOW THE PRESCRIBED AUTHORITY FOR GRANTING EXEMPTION S UNDER SECTION 10(23C)(VI) , FOR A FRESH CONSIDERATION AS PER GUIDELINES MENTIONED IN THE ORDER OF HON'BLE HI GH COURT OF PUNJAB & HARYANA . 3. THE HON'BLE COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH, AFTER CONSIDERING AFRESH ON THE MATTER, HAS NOW GRANTED THE APPROVAL THROUGH HIS OR DER VIDE NO.CIT(E)/CHD/10(23C)/2014-15/1918 DATED 15.06.2015 W.E.F A/Y 2008-09, AS REQUIRED UNDER THE PROVISIONS OF SECTION 10(23C)(VI). A COPY OF THE OR DER OF HON'BLE COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH IS ENCLOSED. 4. THAT THE LD. ASSESSING OFFICER CUM INCOME TAX OFFICER HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN MAKING T HE ADDITION OF RS. 62,97,300/- BEING CAPITAL RECEIPTS ON ACCOUNT OF BUILDING FUND AND BUILDING MAINTENANCE F UND RECEIVED ESPECIALLY FOR THE PURPOSE OF CONSTRUCTION AND/OR MAINTENANCE OF BUILDING DURING THE YEAR. 5. THAT THE LD. ASSESSING OFFICER CUM INCOME TAX O FFICER HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN DENYING CAPITAL EXPENDITURE OF RS. 62, 97, 300/- AND AS PER PRINCIP AL OF LAW SUMMED UP BY PINEGROVE INTERNATIONAL CHARITABLE TRUST 'CAPITAL EXPENDITURE WHOLLY AND EXCLUSIVELY T O THE OBJECTS OF EDUCATION IS ENTITLED TO EXEMPTION AND W OULD NOT CONSTITUTE PART OF THE TOTAL INCOME AND IS ALLO WABLE EXPENDITURE WHILE CALCULATING INCOME IN RESPECT OF CONSTRUCTION AND/OR MAINTENANCE OF BUILDING DURING THE YEAR'. THEREFORE, CAPITAL EXPENDITURE IS AN ALLOWAB LE EXPENDITURE AND LD. ASSESSING OFFICER HAS NOT GIVEN THIS BENEFIT TO THE ASSESSEE SOCIETY. ITA NO. 4939/D/2015 ASSESSMENT YEAR 2011-12 5 6. THAT THE LD. ASSESSING OFFICER WRONGLY DENIED T HE EXEMPTION OF RS. 5228440/- ON EXCESS OF INCOME OVER EXPENDITURE. 7. THAT THE LD. ASSESSING OFFICER HAS WRONGLY ISS UED SHOW CAUSE NOTICE UNDER SECTION 271 READ WITH SECTI ON 274 FOR CONCEALMENT OF INCOME WHICH IS AGAINST THE FACTS AND THE DETAILS SUBMITTED. 3.0 AT THE OUTSET, THE LD. AR SUBMITTED THAT THE I SSUE STOOD COVERED IN FAVOUR OF THE ASSESSEE IN ASSESSEE S OWN CASE FOR ASSESSMENT YEARS 2008-09, 2009-10 AND 2010-11. COP IES OF THE ORDERS OF THE ITAT WERE ALSO PLACED ON RECORD. 4.0 THE LD. SR. DR PLACED RELIANCE ON THE CONCURRE NT FINDINGS OF BOTH THE LOWER AUTHORITIES AND ALSO HIG HLIGHTED THE FACT THAT AT THE TIME OF ASSESSMENT, THE ASSESSEE DID NO T HAVE THE BENEFIT OF APPROVAL U/S 10(23C)(VI) AND, THEREFORE, THE ASSESSING OFFICER WAS CORRECT IN DISALLOWING THE ASSESSEES C LAIM OF EXEMPTION. 5.0 HAVING HEARD BOTH THE PARTIES AND AFTER HAVING PERUSED THE MATERIAL ON RECORD, WE FIND THAT THE ISSUE IS C OVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASS ESSEES OWN CASE FOR ASSESSMENT YEARS 2010-11 IN ITA NO. 1687/D EL/2014 WHEREIN, VIDE ORDER DATED 11.3.2016, THE COORDINATE BENCH OF THE ITA NO. 4939/D/2015 ASSESSMENT YEAR 2011-12 6 TRIBUNAL HAS MADE THE FOLLOWING OBSERVATIONS IN PAR AGRAPHS 7 AND 8:- 7. UNDISPUTEDLY, CIT EXEMPTION VIDE ORDER DATED 15/6/2015 ACCORDED APPROVAL TO THE ASSESSEE SOCIETY U/S 10(23C) (VI) OF THE ACT SUBJECT TO THE TERMS AN D CONDITIONS LAID DOWN IN THE ORDER (SUPRA). 8. PRIMARILY THE A.O HAS DISALLOWED, THE EXEMPTIO N AND MADE THE ADDITION OF RS.97,27,160/-BY DENYING THE BENEFIT OF SEC 10(23C) (VI) OF THE ACT ON THE SOLE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THE APPROVAL OF CCIT TO CLAIM EXEMPTION U/S 10(23C) (VI) OF THE ACT . PERUSAL OF THE ORDER PASSED BY CIT EXEMPTION LYING AT PAGE 8 OF THE PAPER BOOK FILED BY THE ASSESSEE, APPARENTLY SHOWS THAT THE APPLICATION IN FORM 56D F OR CLAIMING EXEMPTION U/S 1 0(23C) (VI) OF THE ACT WAS FILED ON 15/03/2008 BY THE ASSESSEE AND CONSEQUENTLY CIT EXEMPTION ACCORDED THE APPROVAL WITH EFFECT FROM TH E ASSESSMENT YEAR 2008-09. 5.1 THEREFORE, WITHOUT GOING INTO THE MERITS OF TH E CASE AT THIS JUNCTURE, RESPECTFULLY FOLLOWING THE ORDER OF T HE COORDINATE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 20 10-11, WE RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFI CER TO DECIDE THE MATTER AFRESH IN LIGHT OF THE ORDER OF APPROVAL U/S 10(23C)(VI) OF THE ACT, VIDE ORDER DATED 15.6.2015, AND HAVING RET ROSPECTIVE EFFECT AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE STAN DS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 4939/D/2015 ASSESSMENT YEAR 2011-12 7 ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JANUARY 2019. SD/- SD/- (N.K. SAINI) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEM BER DATED: 28 TH JANUARY , 2019 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR ITA NO. 4939/D/2015 ASSESSMENT YEAR 2011-12 8 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 1