Vaish Model Primary School, Haryana V. ITO, Bhiwani

ITA 5300/DEL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3268 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 16-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: UMESH CHAND DUBEY
• Assessee Lawyers: R P BASIA
• Keywords: Charitable institution; Capital receipt
• Section: 234B

Judgement Text

1 ITA NO. 5300/DEL/2012 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI R. S. SYAL, VICE PR ESIDENT AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A .NO. 5300/DEL/2012 (ASSESSM ENT YEAR-2009-10) VAISH MODEL PRIMARY SCHOOL LOHARU ROAD, BHIWANI, HARYANA AAAAV4102H (APPELLANT) VS ITO WARD-1 BHIWANI (RESPONDENT) APPELLANT BY SH. R. P. BASIA, FCA RESPONDENT BY SH. UMESH CHAND DUBEY, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 6/8/2012 PASSED BY CIT(A)-ROHTAK FOR THE ASSESSMENT YEAR 2009-10. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE ADDITION OF RS. 59,51,645/- MADE BY THE LD . A.O. AND DENIAL OF BENEFITS U/S 10(23C)(VI) OF THE INCOME TAX ACT IS U NTENABLE, GIVEN THE FACTS OF THE CASE. 2. THE LD. A.O. AND THE CIT(A) HAVE WRONGLY DENIED TH E EXEMPTION U/S 10(23C)(VI) OF THE INCOME TAX ACT, 1961 WITHOUT GIV ING APPROPRIATE OPPORTUNITY AND IGNORING ALL MERITS OF THE CASE. 3. THAT APPLICATION FOR APPROVAL OF EXEMPTION HAS BEE N WRONGLY DENIED BY DATE OF HEARING 25.04.2017 DATE OF PRONOUNCEMENT 28.04.2017 2 ITA NO. 5300/DEL/2012 THE LD. CCIT, PANCHKULA DESPITE THE SAME HAVING BEE N ALLOWED BY THE HONORABLE HIGH COURT OF PUNJAB & HARYANA, VIDE ITS ORDER DATED 17/08/2010. THE APPELLANT SOCIETY HAS RE-FILED A CI VIL WRITS PETITION WITH THE HONORABLE HIGH COURT, THE DECISION IN WHIC H CASE REMAINS PENDING AS ON DATE. THE LD. A.O. AND THE CIT(A) HAV E ERRED IN LAW BY NOT GIVING DUE CONSIDERATION TO THE ABOVE SITUATION. 4. THAT ON FACTS OF THE CASE THE LD. A.O. HAS ERRED I N ASSUMING THAT THE AMOUNT OF RS. 24,60,600/- TRANSFERRED TO BUILDING A ND BUILDING MAINTENANCE FUND BEING CLAIMED AS EXPENSES IS TANTA MOUNT TO FURNISHING INACCURATE PARTICULARS. IN THIS REGARD W E WOULD LIKE TO POINT OUT THE FOLLOWING:- A. THE APPELLANT SOCIETY HAS TREATED THE SAME AS EXPE NSES CONSIDERING THE SAME AS INCOME RECEIVED ON BEHALF OF, AS THE SAME WAS SET ASIDE FOR A PRE SPECIFIED PURPOSE AB INITIO. B. FURTHER, FULL AND ACCURATE DETAILS OF THE SAME HAV E BEEN PROVIDED IN THE INCOME & EXPENDITURE ACCOUNT, AND THE RETURN HAS BE EN FILED ALONG WITH THE AUDIT REPORT PREPARED IN THE PRESCRIBED FORMAT. THI S MAKES IT AMPLY CLEAR THAT, NOR WAS THERE ANY MALAFIDE INTENTION ON PART OF ASS ESSEE IN MAKING SUCH CLAIM, AND NEITHER ANY INFORMATION FURNISHED BY THE ASSEESSEE WAS FOUND TO BE INCORRECT. IT WAS ONLY, IF AT ALL, AN ERRONEOUS CLAIM WHICH UNDOUBTEDLY DOES NOT FALL INTO THE DEFINITION OF INACCURATE PARTICUL ARS. 5. THAT THE RECEIPTS OF RS. 24,60,600/- HAVE BEEN CLAIMED AS CAPITAL RECEIPTS AS THE SAME HAVE BEEN RECEIVED FOR THE PUR POSE OF CONSTRUCTION OF BUILDING. HOWEVER, EVEN IF ON A LATER STAGE, THE LD. A.O. DOES NOT ACCEPT THIS VIEW OF THE APPELLANT SOCIETY, HE CAN B Y NO MEANS CONSIDER THE SAME AS A CASE OF FURNISHING INACCURATE PARTICU LARS. 6. THE LD. ASSESSING OFFICER HAS WRONGLY CHARGED IN TEREST U/S 234B ON THE EXCESS DEMAND CREATED. 7. THE LD. AO HAS ERRED IN INITIATING PENALTY PROCEEDINGS U/S 271 (1) (C) AS THERE IS NO CASE OF FURNISHING OF I NACCURATE PARTICULARS. 8. THE LD. A.O. AND THE CIT(A) HAVE PASSED THE ORDER IN HASTE, AGAINST THE FACTS, LAW AND PROVISIONS OF THE INCOME TAX ACT, 19 61 AND RULES MADE THERE UNDER. 9. THE APPELLANT TRUST WISHES TO FILE DETAILED ARGU MENTS/ PRODUCE DOCUMENTS AT THE TIME OF HEARING OF APPEAL AND CRAV ES TO ADD/ MODIFY/ 3 ITA NO. 5300/DEL/2012 DELETE/ WITHDRAW THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 3. THE LD. AR FILED AN ADJOURNMENT APPLICATION ON T HE GROUND THAT THE WRIT PETITION IS PENDING BEFORE THE HONBLE PUNJAB AND H ARYANA HIGH COURT IN RESPECT OF THE ISSUE OF REJECTION OF REGISTRATION. THE SAME IS REJECTED BY US AND TAKING THE MATTER FOR HEARING. 4. THE ASSESSEE SOCIETY DERIVES INCOME FROM RUNNING OF EDUCATIONAL INSTITUTION IN THE NAME AND STYLE OF VAISH MODEL PR IMARY SCHOOL. THE ASSESSEE DECLARED NIL TOTAL INCOME AFTER CLAIMING EXCESS OF INCOME OVER EXPENDITURE OF RS. 34,91,045/- AS EXEMPT UNDER SECTION 10(23C) (VI ) OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER NOTED THAT THE ANNUAL A GGREGATE RECEIPTS OF THE ASSESSEE EXCEEDED RS. 1.00 CRORE (RS. 1,13,52,721/- ) BUT THE ASSESSEE FAILED TO SUBMIT THE COPY OF APPROVAL BY CCIT FOR CLAIMING EX EMPTION U/S. 10(23C)(VI) OF THE ACT. THEREFORE, THE ASSESSING OFFICER ADDED THE ENTIRE SURPLUS OF RS. 34,91,045/- TO THE INCOME OF THE ASSESSEE AND THE B UILDING FUND & BUILDING MAINTENANCE FUND OF RS.24,60,600/-. 5. AGGRIEVED BY THE SAME THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) HELD THAT THE ASSESSEE SOCIETY HAS NOT RECEI VED THE REQUISITE APPROVALS FROM CCIT. THEREFORE, THE ACTION OF THE AO IN BRING ING THE SURPLUS TO TAX WAS UPHELD BY THE CIT(A). 6. THE LD. AR SUBMITTED THAT THE ASSESSEE SOCIETY I S AN EDUCATIONAL INSTITUTION AND CLAIMED EXEMPTION U/S 10(23C) (IIIA D) OF THE ACT SINCE ITS RECEIPTS WERE BELOW RS.1.00 CRORE. AS PER PROVISIO NS OF THE ACT, AFTER ITS RECEIPTS CROSSED 1.00 CRORE RUPEES, THE ASSESSEE SO CIETY HAD CLAIMED DEDUCTION U/S 10(23C) (VI) OF INCOME TAX ACT, 1961. AS PER P ROVISIONS OF INCOME TAX ACT, 1961 THE SOCIETY IS REQUIRED TO TAKE APPROVAL FROM CCIT FOR CLAIMING EXEMPTION U/S 10(23C) (IV). THE CCIT, PANCHKULA HAD REJECTED THE APPROVAL IN THE CASE OF 4 ITA NO. 5300/DEL/2012 THE ASSESSEE ON FLIMSY GROUNDS. THE MATTER WAS REF ERRED TO THE HONBLE PUNJAB & HARYANA HIGH COURT IN A WRIT PETITION, WHO AFTER HEARING BOTH THE PARTIES AND IN THE LIGHT OF JUDGMENT OF PINE GROVE INTERNATION AL CHARITABLE TRUST & ORS VS. UNION OF INDIA & ORS HAD REFERRED BACK THE MATTER TO CCIT FOR RE CONSIDERATION AFRESH. THE CCIT AGAIN REJECTED THE APPROVAL ON TH E CASUAL GROUNDS, AGAINST WHICH THE APPELLANT SOCIETY FOR THE 2 ND TIME FILED WRIT PETITION BEFORE HONBLE PUNJAB & HARYANA HIGH COURT AGAINST THE IMPUGNED OR DER OF REJECTION OF APPROVAL U/S 10(23C) (IV). THERE IS A DIRECT NEXUS BETWEEN THE APPROVAL FOR CLAIMING DEDUCTION U/S 10(23C) (IV) AND APPEAL FILE D AGAINST THE ORDER OF ITO WARD-1, BHIWANI DISALLOWING THE EXEMPTION U/S 10(23 C) (IV). THE CIT(A) ALSO FOLLOWED THE ORDER OF A.O. AND THUS THE MATTER IS B EFORE THE AFOREMENTIONED HONBLE ITAT BENCH. THE LD. AR SUBMITTED THAT THE APPELLANT SOCIETY IS FULLY ENTITLED TO EXEMPTION U/S 10(23C) (IV). THE ASSESSI NG OFFICER HAD DETERMINED THE TOTAL INCOME OF THE APPELLANT SOCIETY AT RS. 59 ,51,645/- VIDE ORDER DATED 22/12/2011 AFTER DISALLOWING EXEMPTION CLAIMED U/S 10(23C) (IV) OF THE TAX DEMAND VIDE FOUR NUMBER OF CHALLANS. 7. THE LD. DR RELIED UPON THE ORDERS OF THE ASSESSI NG OFFICER AND THE CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES. IT IS PERTINENT TO NOTE THAT AS ON TODAY THE ASSESSEE HAS NOT RECEIVED THE REQUISITE APPROVA LS FROM THE CHIEF COMMISSIONER OF INCOME TAX (CCIT), PANCHKULA. WHEN THERE IS NOT APPROVAL WHICH IS STATUTORY REQUIREMENT FOR CLAIMING EXEMPTI ON UNDER SECTION 10(23C)(VI) OF THE ACT, THE ASSESSING OFFICER HAS R IGHTLY MADE AN ADDITION. THE CIT(A)HAS ALSO AS PER THE LAW UPHELD THE SAID ORDER . MERELY BECAUSE THE ISSUE IS PENDING BEFORE THE HONBLE HIGH COURT DOES NOT A LLOW ASSESSEE TO PRAY FOR IGNORING THE REQUISITE APPROVAL FROM THE CCIT WHICH IS MANDATORY WHILE CLAIMING EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT. THEREFORE, IN LIGHT OF THIS THE ORDERS OF THE ASSESSING OFFICER AND CIT(A) ARE UPHELD. 5 ITA NO. 5300/DEL/2012 9. IN RESULT, THE APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH APRIL, 2017 . SD/- SD/- (R. S. SYAL) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER DATED: 28/04/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 26/04/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 27/04/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 6 ITA NO. 5300/DEL/2012 5. APPROVED DRAFT COMES TO THE SR.PS/PS 28.04.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 28.04.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.