A.C.I.T., Circle-3(1), Gwalior V. M/s Miss Hill Exucation Society, Gwalior

ITA 5/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0659 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 4 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-06-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order; Revenue expenditure
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 04 & 05/AGRA/2013 ASSTT. YEAR : 2003-04 ACIT, CIRCLE 3(1), VS. M/S. MISS HILL EDUCATION SOCIETY, GWALIOR. LAXMI BAI COLONY, GWALIOR. (PAN: AAATM 8693 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI AJAY WADJIKAR, C.A. DATE OF HEARING : 19.06.2013 DATE OF PRONOUNCEMENT OF ORDER : 28.06.2013 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE APPEALS BY THE REVENUE ARE DIRECTED AGAIN ST DIFFERENT ORDERS OF THE LD. CIT(A), GWALIOR DATED 12.10.2012 FOR THE ASSESS MENT YEAR 2003-04. 2. IN ITA NO. 05/AGRA/2013, THE REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.18,17,550/- MADE ON ACCOUNT OF DISALLOWANCE O F AMOUNT DEBITED IN GRANT AND AID ACCOUNT. THE LD. CIT(A) NOTED THAT THE AO WHILE COMPETING THE ASSESSMENT DENIED EXEMPTION CLAIMED U/S. 10(23C) AND TREATED T HE ASSESSEE AS AOP FOR TAXATION PURPOSES. TOTAL INCOME WAS ASSESSED AT RS. 40,18,771/-, BEING SURPLUS SHOWN IN THE INCOME AND EXPENDITURE ACCOUNT OF THE ASSESSEE FOR THE RELEVANT ITA NO. 04 & 05/AGRA/2013 2 PERIOD. THE ASSESSEE CHALLENGED THE ORDER OF THE AO FOR CHANGING THE STATUS AND DENYING THE EXEMPTION WHICH WAS CONFIRMED BY THE LD . CIT(A). THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSES SEE IS NOT IN APPEAL AGAINST THESE FINDINGS OF LD. CIT(A) BEFORE THE TRIBUNAL. THE OTH ER ISSUE BEFORE THE LD. CIT(A) WAS DEDUCTION CLAIMED ON ACCOUNT OF SALARY OF RS.18 ,17,520/-, WHICH WAS NOT CHARGED TO THE INCOME AND EXPENDITURE ACCOUNT. IT W AS STATED THAT THE ASSESSEE ALSO FILED APPLICATION U/S. 154 BEFORE THE AO AND ON REJ ECTION, FILED FURTHER APPEAL BEFORE THE LD. CIT(A). THE ASSESSEE FOR CLAIM OF DE DUCTION OF SALARY SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE IS RUNNING A SCHOOL IN WHICH OVER 3000 STUDENTS ARE STUDYING. TO IMPART PROPER EDUCATION T O THESE STUDENTS, SUFFICIENT NUMBER OF TEACHERS HAVE BEEN RETAINED AND SALARY HA VE BEEN PAID TO THE TEACHERS AND SALARY OF SOME OF THE TEACHERS WAS BEING PARTLY REIMBURSED BY THE GOVERNMENT OF M.P. UNDER VARIOUS SCHEMES BY WAY OF GRANT. AN A MOUNT OF RS.18,17,520/- REPRESENTS THE PORTION OF SALARY FOR WHICH REIMBURS EMENT WAS DUE TO BE RECEIVED WAS NOT CHARGED TO THE EXPENSES BY THE ASSESSEE AND WERE SHOWN AS ADVANCE IN THE BALANCE SHEET. LATER ON, THE GOVERNMENT OF M.P. PAS SED RESOLUTION AS PER THEIR LETTER DATED 25.10.2001 AND IT WAS INFORMED THAT SU CH AMOUNT WILL NOT BE REIMBURSED. COPY OF WHICH IS FILED AT PAGE 26 OF TH E PAPER BOOK. IT WAS SUBMITTED THAT SINCE SALARY IS PAID TO THE NUMBER OF STAFF, W HICH IS REVENUE IN NATURE, THEREFORE, THE SALARY PAID TO THE STAFF MAY BE ALLO WED. THE LD. CIT(A) ON GOING ITA NO. 04 & 05/AGRA/2013 3 THROUGH THE DETAILS OF ADVANCE SALARY PAID AND THE CIRCULAR OF THE EDUCATION OFFICER, GWALIOR DATED 25.10.2001 FOUND THE CLAIM OF THE ASS ESSEE TO BE CORRECT AND HELD THAT THE EXPENDITURE CLAIMED ON ACCOUNT OF ADVANCE SALARY PAID TO THE SANCTIONED STAFF IS REVENUE IN NATURE AND ACCORDINGLY DELETED THE ADDITION OF RS.18,17,520/-. 3. THE LD. DR RELIED UPON THE ORDER OF THE AO AND S UBMITTED THAT WHEN THE AMOUNT IS TO BE REIMBURSED BY THE GOVERNMENT OF M.P . AND NO CLAIM IS MADE FOR DEDUCTION OF THE EXPENDITURE, THEREFORE, SUCH ADDIT ION SHOULD NOT HAVE BEEN DELETED BY THE LD. CIT(A). ON THE OTHER HAND, THE LD. COUNS EL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. 4. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. THE ASSESSEE CLAIMED EXEMPTI ON U/S. 10(23C) BEFORE THE AO, WHICH WAS, HOWEVER, NOT GRANTED BY THE AO. THER EFORE, SURPLUS SHOWN IN THE INCOME AND EXPENDITURE ACCOUNT IN A SUM OF RS.40,18 ,771/- WAS CONSIDERED AS INCOME OF THE ASSESSEE AND STATUS OF THE ASSESSEE W AS TAKEN AS AOP. ON THE FACE OF THESE FINDINGS, THE INCOME OF THE ASSESSEE IS COMPU TED IN THE NORMAL COURSE OF BUSINESS BECAUSE THE LD. CIT(A) ALSO DENIED EXEMPTI ON U/S. 10(23C). WHEN THE INCOME IS COMPUTED IN NORMAL COURSE, THE DEDUCTION CLAIMED BY THE ASSESSEE IN NORMAL COURSE OF BUSINESS SHOULD HAVE BEEN ALLOWED AS DEDUCTION IN FAVOUR OF THE ITA NO. 04 & 05/AGRA/2013 4 ASSESSEE IF EXPENDITURES ARE INCURRED WHOLLY AND EX CLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION. THE ASSESSEE CLAIMED THAT T HE AMOUNT OF THE SALARY WAS TO BE REIMBURSED BY THE M.P. GOVERNMENT. THEREFORE, IT WAS TREATED AS ADVANCE SALARY TO SANCTIONED STAFF, BUT VIDE LETTER DATED 25.10.20 01 WHEN THE GOVERNMENT INTIMATED THAT THERE WOULD BE NO REIMBURSEMENT TO T HE ASSESSEE, SUCH EXPENDITURE HAS BEEN CORRECTLY CLAIMED AS REVENUE EXPENDITURE I NCURRED FOR THE PURPOSE OF EARNING INCOME. THE ASSESSEE HAS FILED COMPLETE DET AILS IN THE PAPER BOOK TO SHOW THAT THE ACTUAL PAYMENTS HAVE BEEN MADE TO THE SANC TIONED STAFF ON ACCOUNT OF SALARY. THE ASSESSEE IS RUNNING A SCHOOL. THEREFORE , PAYMENT OF SALARY TO THE TEACHERS IS CONNECTED WITH THE ACTIVITIES OF THE AS SESSEE AND IS RIGHTLY HELD TO BE REVENUE IN NATURE. THE DEPARTMENTAL APPEAL FAILS AN D IS DISMISSED. IN THE RESULT, ITA NO. 05/AGRA/2013 IS DISMISSED. 5. IN ITA NO. 04/AGRA/2013, THE REVENUE SIMILARLY C HALLENGED DELETION OF SAME ADDITION IN THE PROCEEDINGS U/S. 154 OF THE IT ACT. THE LD. CIT(A) FOUND THAT SINCE HE HAS DELETED SIMILAR ADDITION IN THE MAIN APPEAL AGAINST THE ASSESSMENT FRAMED U/S. 143(3) ON DATED 20.03.2006, THEREFORE, SIMILAR DEDUCTION IS ALLOWED U/S. 154 AS WELL AND THE APPEAL OF THE ASSESSEE HAS BEEN ALLOWE D. ITA NO. 04 & 05/AGRA/2013 5 6. SINCE WE HAVE ALSO DISMISSED THE DEPARTMENTAL AP PEAL ON THE SAME ISSUE IN REGULAR APPEAL NO. 05/AGRA/2013, THEREFORE, SIMILAR APPEAL ARISING OUT OF RECTIFICATION ORDER U/S. 154 WOULD NOT BE MAINTAINA BLE. THE DEPARTMENTAL APPEAL FAILS AND IS ACCORDINGLY DISMISSED. AS A RESULT, TH E DEPARTMENT APPEAL IN ITA NO. 04/AGRA/2013 IS DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY