ACIT(E), Circle- 2(1) , New Delhi V. National Council for Hotel Management & Catering Technology, Noida

ITA 6811/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2714 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 13-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV PUNDIR
• Assessee Lawyers: K P GARG
• Section: 271(1)(c); 143(3); 234B; 10B; 64; 10(23C); 12; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI E BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.6811/DEL/2017 ASSESSMENT YEAR : 2012-13 ACIT(E), CIRCLE-2(1), NEW DELHI VS NATIONAL COUNCIL OF HOTEL MANAGEMENT & CATERING TECHNOLOGY, A-34, SECTOR-62, NOIDA, UTTAR PRADESH. PAN-AAATN4791M APPELLANT RESPONDENT APPELLANT BY SH. GAURAV PUNDIR, SR.DR RESPONDENT BY SH. K.P.GARG, CA DATE OF HEARING 15 .09.2021 DATE OF PRONOUNCEMENT 27 . 1 0.2021 ORDER PER KUL BHARAT, JM : THIS APPEAL FILED BY THE REVENUE PERTAINING TO ASSE SSMENT YEAR 2012-13 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-I, NOID A DATED 30.03.2017. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.1,8 5,57,807/- AND RS.24,65,628/- MADE ON ACCOUNT OF PROVISIONS FOR GR ATUITY AND PRIOR PERIOD EXPENSES RESPECTIVELY. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD.CIT(A) HAS ERRED IN ALLOWING THE EXEMPTIONS U/S 11 & 12 EV EN WHEN ASSESSEE HAS NOT SUBMITTED FORM 10B ALONGWITH LATE FILING OF INCOME TAX RETURN FOR A.Y.2012-13. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD.CIT(A) HAS ERRED IN ALLOWING THE EXEMPTION U/S 10(23C)(VI) OF THE IT ACT, 1961 WHILE THE ASSESSEE HAS CLAIMED EXEMPTION U/S 11 & 1 2 AS PER RETURN OF INCOME. ITA NO.6811/DEL/2017 ASSESSMENT YEAR : 2012-13 2 | P A GE 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR A MEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. GROUND NOS. 1, 2 AND 3 RAISED BY THE REVENUE ARE INTER-CONNECTED. 3. GROUND NO.1 RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS.1,85,57,807/- AND RS.24,65,628/- MADE ON ACCOUNT OF PROVISIONS OF GRATUITY AND PRIOR PERIOD EXPENSES RESPECTIVELY. 4. FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT IN THE CASE, ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) VIDE ORDER DATED 06.02.2015. THE ASSESSEE IS A NATIONAL BODY SET UP BY GOVERNME NT OF INDIA, MINISTRY OF TOURISM IN 1982. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 31.03.2013 DECLARING NIL INCOME. THE CASE WAS SELE CTED UNDER SCRUTINY THROUGH CASS. THE ASSESSING OFFICER DURING THE ASS ESSMENT PROCEEDINGS ON PERUSAL OF AUDIT REPORT OF THE ASSESSEE FOR ASSESSM ENT YEAR 2012-13, NOTICED THAT THE ASSESSEE HAD CLAIMED PROVISION OF GRATUITY AND PRIOR PERIOD EXPENSES OF RS.1,85,57,807/- AND RS.24,65,628/- RESPECTIVELY . THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE ASSESSEE HAS BEEN EN JOYING EXEMPTION U/SECTIONS 10,11 OR 12 OF THE ACT SINCE INCEPTION A ND THE PROVISIONS AND PRIOR PERIOD EXPENSES CAN NOT BE ALLOWED TO THE ASSESSEE HENCE, THE SAME WERE ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT CLAIMED EXEMPTION U/S 10(23)(IIIAB ) OF THE ACT AND FAILED TO SUBMIT REQUISITE AUDIT REPORT IN FORM NO.10B. ITA NO.6811/DEL/2017 ASSESSMENT YEAR : 2012-13 3 | P A GE 5. AGGRIEVED AGAINST THIS, THE ASSESSEE PREFERRED A PPEAL BEFORE LD.CIT(A) WHEREIN LD.CIT(A) DELETED THE ADDITION ON THE GROUN D THAT THE ASSESSEE COUNCIL WAS AN EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. THEREFORE, THE INCOME I S NOT TO BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE, LIABLE TO TAX. 6. AGGRIEVED AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 7. LD. SR. DR VEHEMENTLY ARGUED THAT THE DELETION BY LD.CIT(A) IS NOT JUSTIFIED. HE SUBMITTED THAT THE ASSESSEE HAD NOT SUBMITTED AUDIT REPORT ALONGWITH THE FILING OF INCOME TAX RETURN FOR THE Y EAR UNDER CONSIDERATION. FURTHER, LD.CIT(A) GROSSLY ERRED IN ALLOWING THE EX EMPTION U/S 10(23C)(VI) OF THE ACT WHILE THE ASSESSEE HAD ONLY CLAIMED EXEMPTI ON U/S 11 & 12 OF THE ACT AS PER THE RETURN OF INCOME. 8. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS AS MADE IN THE WRITTEN SYNOPSIS AND SUBMITTED THAT THERE IS NO ILL EGALITY INTO THE ORDER OF LD.CIT(A). HE SUBMITTED THAT THE SUBMISSIONS OF THE REVENUE IS GROSSLY CONTRARY TO THE RECORDS AS THE ASSESSEE HAD FILED I TS RETURN OF INCOME CLAIMING EXEMPTION U/S 10(23C)(IIIAB) OF THE ACT. HE DREW O UR ATTENTION TO PAGES 64 TO 76 TO BUTTRESS THIS CONTENTION. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORDS. THE CASE OF THE REVENUE IS THAT LD.CIT (A) FAILED TO APPRECIATE THE FACT IN RIGHT PERSPECTIVE AS THE ASSESSEE HAS NOT M ADE ITS CLAIM U/S 10(23C) OF THE ACT. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATT ENTION TO THE TAX RETURN ITA NO.6811/DEL/2017 ASSESSMENT YEAR : 2012-13 4 | P A GE ENCLOSED WITH PAPER BOOK DEMONSTRATING THAT THE CON TENTION OF THE REVENUE IS EX-FACIE INCORRECT. THE ASSESSING OFFICER HAD DENIED THE E XEMPTION ON THE GROUND THAT THE ASSESSEE FAILED TO FILE REQUISITE AUDIT REPORT IN FORM 10B. 10. FROM THE RECORDS PLACED BEFORE US, THE ASSESSEE WAS GRANTED REGISTRATION U/S 10(23C) OF THE ACT VIDE ORDER DATED 27.06.2005 FOR ASSESSMENT YEARS 1999-2000 TO 2001-2002. IT IS SEEN FROM THE RECORD THAT THE ASSESSEE WAS GRANTED REGISTRATION U/S 10(23C)(VI) OF THE ACT VID E ORDER DATED 26.03.2015 FOR THE ASSESSMENT YEAR 2014-15 AND ONWARDS. DURING TH E COURSE OF HEARING, LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAGE 65 OF THE PAPER BOOK TO BUTTRESS THE ARGUMENTS THAT CLAIM WAS MADE IN THE R ETURN OF INCOME. 11. WE HAVE HEARD THE LD. COUNSEL FOR THE PARTIES A ND PERUSED THE MATERIAL AVAILABLE ON RECORDS. WE FIND THAT THE ASSESSING O FFICER HAD DECLINED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER:- 4. ASSESSEE HAS SHOWN TOTAL INCOME OF RS.7,70,71,0 09/- AND TOTAL EXPENDITURE OF RS.7,37,84,149/- AND HAVING SURPLUS OF RS.32,86,860/-. ASSESSEE IN ITS RETURN HAS CLAIMED EXEMPTION U/S 12 , AND DURING THE ASSESSMENT PROCEEDINGS ASSESSEE HAS CLAIMED TO BE C OVERED U/S 10(23) (IIIAB) OF THE INCOME TAX ACT, 1961. FIRSTLY ASSESS EE HAS NOT CLAIMED EXEMPTION U/S 10(23)(IIIAB) IN THE RETURN OF INCOME , HENCE ITS CLAIM CANNOT BE CONSIDERED. SECONDLY, AS PER ITS INCOME & EXPEND ITURE ACCOUNT FOR F.Y. 2011-12, THE GRANTS RECEIVED FROM GOVERNMENT IS NIL , HENCE IT IS NOT IN RECEIPT OF REGULAR GRANTS FOR PLANNED OR UNPLANNED EXPENDITURE FROM GOVERNMENT THEREFORE IT IS NOT SUBSTANTIALLY FINANC ED BY THE GOVERNMENT. ON PERUSAL OF THE RETURN OF INCOME SUBMITTED BY THE ASSESSEE IT IS NOTED THAT ASSESSEE HAS FILED LATE RETURN OF INCOME , WHICH IS NOT ITA NO.6811/DEL/2017 ASSESSMENT YEAR : 2012-13 5 | P A GE ACCOMPANIED BY FORM 10B. THUS THE CONDITION ENUMERA TED IN SECTION 12A(B) HAS NOT BE COMPLIED. AS PER SECTION 12A(B) F ILING OF FORM NO. 10B DULY SIGNED BY AUDITORS IS MANDATORY. AS PER SECTION 12A(B) 'WHERE THE TOTAL INCOME OF THE TRUST OR INSTITUTION S AS COMPUTED UNDER THIS ACT WITHOUT GIVING EFFECT TO THE PROVISION OF SECTI ON 11 AND SECTION 12 EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX IN ANY PREVIOUS YEARS], THE ACCOUNTS OF THE TRUST IS I NSTITUTIONS FOR THAT YEARS HAVE BEEN AUDITED BY AN ACCOUNTANT AS DEFINED IN TH E DONATION BELOW SUB- SECTION (2) OF SECTION 288 AND THE PERSON INN RECEI PT OF THE INCOME FURNISHES ALONG WITH THE RETURN OF INCOME FOR THE R ELEVANT ASSESSMENT YEAR THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FROM DUL Y SINGED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED.' AS PER RULE 17B THE REPORT OF AUDIT OF THE ACCOUNTS OF A TRUST OR I NSTITUTION WHICH IS REQUIRED TO BE FURNISHED UNDER CLAUSE (B) OF SECTION 12A, SH ALL BE IN FORM NO. 10B. SINCE THE ASSESSEE HAS NOT COMPLIED WITH PROVISION OF SECTION 12A(B) EXEMPTION UNDER SECTION 11 & 12 IS DENIED AND THE I NCOME IS COMPUTED AS FOLLOWS:- TOTAL INCOME AS PER INCOME & EXPENDITURE A/C RS.7,70 ,71,009/- TOTAL EXPENDITURE AS PER INCOME & EXPENDITURE A/C RS .7,37,84,149/- SURPLUS RS. 32,86,860/- ADDITION ON ACCOUNT OF PROVISION FOR GRATUITY & PRIOR PERIOD EXPENSES (18557807 +2465628) RS.2,10, 23,435/- NET TAXABLE INCOME RS.2,43,L0,295/- THE ASSESSMENT IS COMPLETED U/S 143(3) OF RS.2,43, 10,295/- TO TAXED AS AOP AGAINST RETURNED INCOME OF RS.NIL. CHARGE INTER EST U/S 234A, 234B & 234C AS PER LAW. ISSUE NOTICE OF DEMAND AND CHALLAN . PENALTY INITIATED SEPARATELY U/S 271(1)(C) FOR CONCEALMENT OF INCOME AND ISSUE SEPARATELY. ITA NO.6811/DEL/2017 ASSESSMENT YEAR : 2012-13 6 | P A GE 12. HENCE, THE CLAIM OF THE ASSESSEE WAS REJECTED P URELY ON THE GROUND THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME WITHOUT ENCLOSING FORM 10B HENCE, FAILED TO COMPLY THE MANDATE OF SECTION 12A(B) OF T HE ACT. BUT THE LD.CIT(A) ALLOWED THE CLAIM BY OBSERVING AS UNDER:- 16. AS THE APPELLANT IS THE OTHER EDUCATIONAL INS TITUTION EXISTING SOLELY FOR THE EDUCATIONAL PURPOSES AND NOT FOR THE PURPOS ES OF PROFIT THE INCOME OF THE APPELLANT WHICH IS NOT ELIGIBLE FOR EXEMPTIO N FROM TAX UNDER SECTION 11 AND 12 OF I.T. ACT, 1961 IS NOT TO BE INCLUDED I N THE TOTAL INCOME OF THE APPELLANT OF THE PREVIOUS YEAR 2011-12 RELEVANT FOR A.Y. 2012-13 AND THEREFORE, RS.6,81,76,300/- BEING THE INCOME OF TH E APPELLANT IS NOT TO BE INCLUDED IN THE TOTAL INCOME OF THE APPELLANT LIAB LE TO TAX. THE INCOME OF THE APPELLANT IS TO BE TREATED AS NIL THOUGH NOT FO R THE REASONS CANVASSED BY THE APPELLANT NOR IN THE LIGHT OF THE IMPUGNED A SSESSMENT ORDER BUT INDEPENDENT OF BOTH AND IN THE LIGHT OF THE APPROVA L GRANTED BY THE CBDT TO THE CASE OF THE APPELLANT FOR THE PURPOSES OF SE CTION 10(23C)(VI) OF I.T. ACT, 1961. 17. IN VIEW OF THE ABOVE THE IMPUGNED ASSESSMENT OR DER IS DELETED AS NOT SUSTAINABLE IN THE EYES OF THE LAW THOUGH NOT F OR THE GROUNDS CANVASSED BY THE APPELLANT. THE APPELLANT GET RELIE F TO THAT EXTENT AND THE APPEAL OF THE APPELLANT IS ALLOWED FOR THE REASONS RECORDED ABOVE. HOWEVER, THE LD.CIT(A) ALLOWED THE CLAIM ALTOGETHE R DIFFERENT GROUND. 13. LD.CIT(A) HAS RECORDED A FINDING THAT THE ASSES SEE IS AN EDUCATIONAL INSTITUTION AND EXISTING SOLELY FOR EDUCATION PURPO SE AND NOT FOR THE PURPOSE OF PROFIT. IT IS NOTICED THAT THE ASSESSING OFFICER H AS INCORRECTLY STATED THAT THE ASSESSEE HAD NOT MADE ANY CLAIM U/S 10(23)(IIIAB) O F THE ACT. IN FACT, THE ASSESSEE HAD MADE CLAIM U/S 10(23)(IIIAB) OF THE AC T. THEREFORE, WE DO NOT FIND ITA NO.6811/DEL/2017 ASSESSMENT YEAR : 2012-13 7 | P A GE ANY INFIRMITY IN TREATING THE INCOME AT NIL BY LD.C IT(A). THUS, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ABOVE DECISION WAS PRONOUNCED ON CONCLUSION OF VIRT UAL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 27 TH OCTOBER, 2021. SD/- SD/- (R.K.PANDA) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIA L MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI