Aarti Mahila Kalyan Samiti, Bhopal V. Assisstant Director of Income Tax, CPC, Bhopal

ITA 561/Ind/2023

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 5453 (ITAT-INDORE)
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-08-2024
• Assessment Year: 2019-2020
• Appeal Filed On: 29-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIK.BALAMURLIKRISHNA

Judgement Text

आयकरअपीलȣयअͬधकरण,इंदौरÛयायपीठ,इंदौर INTHEINCOMETAXAPPELLATETRIBUNAL INDOREBENCH,INDORE BEFORESHRIVIJAYPALRAO,JUDICIALMEMBER AND SHRIB.M.BIYANI,ACCOUNTANTMEMBER ITANo.561/Ind/2023 (AssessmentYear:2019-2020) AartiMahilaKalyanSamiti, J-213, E-6,AreraColony, Bhopal Vs. AssistantDirectorof IncomeTax,CPC, Bhopal (Appellant/Assessee)(Respondent/Revenue) PAN:AADAA8089M AssesseebyNone RevenuebyShriK.BalaMurliKrishna, SR.DR DateofHearing14.08.2024 DateofPronouncement20.08.2024 ORDER PerVijayPalRao,JM: Thisappealbytheassesseisdirectedagainsttheorderdated 03.11.2023oftheCommissionerofIncomeTax(Appeals),National FacelessAppealCenters,(NFAC)DelhiforA.Y.2019-20. 2.Nonehasappearedonbehalfoftheassesseewhenthisappeal wascalledforhearing.Ittranspiresfromtherecordthatonthe ITANo.561/Ind/2023 AartiMahilaKalyanSamiti Page2of6 earlier4datesofhearingsalsotherewasnorepresentationon behalfoftheassesseedespiterepeatednoticesissuedtothe assesseethroughRPADaswellasthroughe-mailonthee-mailID givenbytheassesseeinForm-36.Thenoticesissuedthrough registeredpostADhasbeenreceivedbackwiththepostalremarks thatonrepeatedvisitsthedoorisfoundlocked.Accordingly,the Benchproposedtohearanddisposeoffthisappealex-parte. 3.Theassesseehasraisedfollowinggroundsofappeal: “1.Underthefactsandinlaw,thelearnedCIT(A)erredinconfirming disallowanceoftheexemptionu/s10(23C)(ad)and/or10(23C)(vi) 1.1Underthefactsandinlaw,thelearnedCIT(A)erredindisallowingthe expenditureIncurredforrunningtheeducationinstitute/schools, affiliatedwithStateGovt.Educationboardagainstthefeeincome, receivedfromthestudents. 1.2ThelearnedCIT(A)erredinstatingthatentireincomeofthesocietyis subjecttoincometaxwithoutallowinglegitimateexpenditureincurred, eventhoughthefacthasbeenwellreportedtotheIncometax departmentandbeforetheCIT(A). 1.3Underthefactsandinlaw,thelearnedCIT(A)failedtoappreciatethe submissionmadebytheappellant.ThelearnedCIT(A)failedto appreciatethefactthatgrossreceiptisnotsubjecttoIncometax,but netreceipts,afterdeductingallthelegitimateandgenuineexpenditure, eventhoughappreciatingthefactthattheexpenditurehasbeen alreadyreportedandsamehasbeensubstantiatedwithaudited financialstatementandauditedreport. ITANo.561/Ind/2023 AartiMahilaKalyanSamiti Page3of6 1.4Withoutprejudicetotheabove,thelearnedCIT(A)haserredinnot consideringthefactthesocietyisrunningeducationalinstitute, namely,twoschools,affiliatedwithstateGovtBoard,forthelower andmiddlelower-classpeopleoftheBhopal,whilenotallowingthe genuineandlegitimateexpenditureforsalarytoteacher,student welfareexpensesetc. 2.Theappellantleavestoadd,alteroramendanyoftheaboveground ofappeal.” 4.AssesseeisaSocietyandengagedinrunning,operatingand managementofeducationalinstitutionsatBhopal.Theassessee fileditsreturnofincomeon31.10.2019andclaimedexemptionu/s 10(23C)(via)oftheActwhichwassubsequentlysoughttobe rectifiedasexemptionu/s10(23C)(iiiad)oftheAct.TheCPCwhile processingthereturnu/s143(1)oftheActdisallowedtheclaimof exemptionu/s10(23C)(iiiad)oftheActonthegroundthatthe grossreceiptoftheassesseeexceedsRs.1croreandconsequently theentiregrossreceiptswasassessedtotax.Theassessee challengedtheorderofCPCbeforeCIT(A)butcouldnotsucceed. TheLd.CIT(A)hasupheldtheassessmentmadebytheCPCby disallowingtheclaimofexemptionu/s10(23C)(iiiad)oftheActon thegroundthatthegrossreceiptoftheassesseeexceedsRs.1crore asprescribedmonetarylimitu/s10(23C)(iiiad)oftheAct. ITANo.561/Ind/2023 AartiMahilaKalyanSamiti Page4of6 5.Itispertinenttonotethattheassesseehasspecificallyraised thepointbeforeCIT(A)thatitrunstwoschoolsandtherefore,the grossreceiptsofeachschoolhastobeseparatelyconsideredwhile allowingtheclaimofexemptionu/s10(23C)(iiiad)oftheActwhile applyingtheconditionsofgrossreceiptsoflessthanRs.1croreas prescribedunderprovisionsofSection10(23C)(iiiad)readwithrule 2BC.Further,theassesseealsocontendedbeforeLd.CIT(A)that onlythenetincomeshouldbeassessedtotaxandnotthegross incomebecausetheexpenditureforearningtheincomeshouldbe allowedagainstgrossreceipt. 6.OntheotherhandLd.DepartmentalRepresentativehasrelied upontheimpugnedorderofCIT(A). 7.WehaveconsideredthesubmissionsofLd.Departmental RepresentativeandcarefullyperusedtheimpugnedorderofCIT(A). BeforeCIT(A)assesseehasspecificallypointedoutthatitoperates twoeducationalinstitutionsnamelyRoseMaryHighConvent HigherSecondarySchoolandRoseMaryHighSchooland contendedthatthemonetarylimitofRs.1croreasprescribedu/s 10(23C)(iiiad)readwithRule2BCoftheActshouldbeappliedin respectofthegrossreceiptsofeachoftheeducationalinstitutions ITANo.561/Ind/2023 AartiMahilaKalyanSamiti Page5of6 andnotontheaggregatereceiptsofboththeeducational institutions.Further,theassesseealsopointedoutthattheentire grossreceiptcannotbeassessedtotaxwithoutallowingeligible deductionagainstsaidincome.Wefindthattheabovestatedfacts havenotbeenproperlyconsideredbyCIT(A)whilepassingthe impugnedorderastheclaimoftheassesseewasdisallowedonthe groundthattheassesseeisneitherregisteredu/s12A/12AAnor approved/notifiedundertheprovisionsofSection10(23C)(iiiad)of theActandtherefore,theclaimoftheassesseewasdeniedasthe totalreceiptsaremorethanRs.1croreasprescribedunderthesaid provisionsofSection10(23C)(iiiad)readwithRule2BCoftheAct. However,CIT(A)hasnotdisputedthefactthattheassesseeis runningtwoseparateeducationalinstitutionsandtherefore,inour consideredviewthegrossreceiptsofeachoftheeducational institutionshastobeseparatelyconsideredforthepurposeof allowingtheclaimofexemptionu/s10(23C)(iiiad)oftheAct.In anycasethetotalincomeoftheassesseeoughttohavebeen assessedaspercommercialprinciplesandtheeligibleexpenditure againstthegrossreceiptsshouldhavebeenallowedwhile computingthetotalincome.Accordingly,inthefactsand ITANo.561/Ind/2023 AartiMahilaKalyanSamiti Page6of6 circumstancesofthecasewesetasidetheimpugnedorderofCIT(A) andthematterisremandedtotherecordofthejurisdictionalA.O forfreshadjudicationafterverificationandconsideringtherelevant factsaswellasinthelightofaboveobservation.Needlesstosay anopportunityofhearingbegiventotheassesseebeforepassing thefreshorder. 8.Intheresultappealoftheassesseeisallowedforstatistical purposes. Orderpronouncedintheopencourton20.08.2024. Sd/-Sd/- (B.M.BIYANI)(VIJAYPALRAO) AccountantMemberJudicialMember Indore,20.08.2024 Dev/Sr.PS Copiesto:(1)Theappellant (2)Therespondent (3)CIT (4)CIT(A) (5)DepartmentalRepresentative (6)GuardFile Byorder UECOPY Sr.PrivateSecretary IncomeTaxAppellateTribunal IndoreBench,Indore