Appeal details
Counselvise Citation
[2010] 136 COUNSELVISE.COM (IT) 2939 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 3 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-04-2010
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
21-04-2010
Assessment Year
2001-2002
Appeal Filed On
20-01-2009
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER ITA NOS.6 TO 9/IND/2009 AYS: 2000-01 TO 2002-03 & 2005-06, ACIT-1(1), BHOPAL ..APPELLANT V/S. MADHYA PRADESH PATHYA PUSTAK NIGAM, PUSTAK BHAWAN, JAIL ROAD, BHOPAL (PAN AAAAM 0318 C) ..RESPONDENT AND, ITA NO.520/IND/2008 AY: 2001-02 MADHYA PRADESH PATHYA PUSTAK NIGAM, PUSTAK BHAWAN, JAIL ROAD, BHOPAL (PAN AAAAM 0318 C) ..APPELLANT V/S. ACIT-1(1), BHOPAL ..RESPONDENT DEPARTMENT BY : SHRI K.K. SINGH, CIT, DR ASSESSEE BY : SHRI PRAKASH JAIN, CA 2 O R D E R PER BENCH THE REVENUE IS IN APPEAL FOR ASSESSMENT YEARS 2000- 01 TO 2002-03 & 2005-06 AND THE ASSESSEE IS IN CROSS-APPEAL FOR ASS ESSMENT YEAR 2001-02. THE REVENUE IN ITS APPEALS HAS RAISED THE FOLLOWING COMMON GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN: 1. DELETING THE DISALLOWANCE OF RS.15,49,520/-, 15,16,824/-, 15,09,253/- & 14,13,858/-, RESPECTIVELY, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EX-GRATIA PAYMENT. 2. DELETING THE DISALLOWANCE OF RS.1,69,330/-, 1,90,296/-, 1,47,285/- & 1,71,810/-, RESPECTIVELY, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CHAIRMANS & VICE CHAIRMANS EXPENSES. 3. DELETING THE DISALLOWANCE OF RS.1,42,271/-, 1,32,469/-,1,72,596/-& 1,71,810/-, RESPECTIVELY, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF REFRESHMENT AND LUNCH. 4. DELEING THE ADDITION OF RS.59,28,475/-, 2,20,48,739/-, 2,02,47,051/- & 1,04,97,145/-, RESPECTIVELY, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF OBSOLETE STOCK. 5. DELETING THE DISALLOWANCE OF RS.36,96,477/-, 38,44,507/-, 75,70,124/- & 86,49,523/-, RESPECTIVELY, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF OUTSTANDING LIABILITIES U/S 43B OF THE ACT. 6. DELETING THE DISALLOWANCE OF RS.62,80,008/-, 3,59,05,950/-, 3,67,99,970/- & 1,28,11,000/-, RESPECTIVELY, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISBURSEMENT OF GRANT. 7. DELETING THE ADDITION OF RS.99,059/-, 1,12,439/-, 1,04,570/- & 1,62,823/-, RESPECTIVELY, MADE BY 3 THE ASSESSING OFFICER ON ACCOUNT OF DEPRECIATION. 8. DELETING THE DISALLOWANCE OF RS.1,62,722/-, 5,08,166/-, 58,663/- & 23,23,218/-, RESPECTIVELY, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION OF PF. 2. DURING HEARING OF THESE APPEALS, WE HAVE HEARD S HRI K.K. SINGH, LD. CIT, DR AND SHRI PRAKASH JAIN, LD. COUNSEL FOR ASSE SSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS IN SUPPORT TO THE ASSESSMENT ORDER WHEREAS THE LD. COUNSEL FOR ASSESSEE DEFENDED THE I MPUGNED ORDER. 3. WE HAVE CONSIDERED THE ARGUMENTS PUT FORTH BY TH E LD. RESPECTIVE COUNSEL AND PERUSED THE MATERIAL AVAILABLE ON THE F ILE. SINCE COMMON GROUNDS HAVE BEEN RAISED AND A CONSOLIDATED ORDER HAS BEEN FRAMED BY THE LD. FIRST APPELLATE AUTHORITY, THEREFORE, THESE APPEALS CAN B E DISPOSED OF BY A COMMON AND CONSOLIDATE ORDER FOR THE SAKE OF CONVENIENCE. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE IS A GOVT. CORPORATION CLAIMED ITS INC OME OF RS.14,26,67,399/-, RS.3,05,56,884/-, RS.1,20,43,170/- & RS.6,69,77,658 /-, RESPECTIVELY, AS EXEMPT U/S 10(23C)(IIIAB) OF THE ACT. THE LD. ASSES SING OFFICER FOUND THAT AS PER APPELLATE ORDER DATED 29.8.2003, THE ASSESSEE W AS CONSTITUTED DURING THE PERIOD 1968-69 TO 1973-74 AND STARTED ITS ACTIVITY AFTER TAKING A LOAN OF RS.10 LACS FROM THE STATE GOVT. AND FURTHER LOAN OF RS.4. 7 LACS FROM MADHYA PRADESH BOARD OF SECONDARY EDUCATION (IN SHORT M.P.B.S.C.) AND THE ENTIRE LOAN WAS REPAID IN THE RELEVANT PERIOD AND THE ASSESSEE IS I N A POSITION TO CARRY ON ITS ACTIVITY FROM ITS OWN SOURCES OF INCOME AND NO FINA NCIAL AID IS PROVIDED BY THE 4 GOVT. IN VIEW OF THIS FACT, A QUESTION AROSE WHETHE R THE ASSESSEE IS COVERED U/S 10(23C)(VI) OF THE ACT, WHICH REQUIRES APPROVAL BY PRESCRIBED AUTHORITY. ULTIMATELY, THE MATTER TRAVELLED TO THE TRIBUNAL AN D WAS DECIDED IN FAVOUR OF THE ASSESSEE. AS PER RETURN FILED ON 29.8.2007, IN RESPONSE TO NOTICE U/S 148, THE ASSESSEE CLAIMED THAT ITS INCOME IS EXEMPT U/S 10(23C)(IIIAB) OF THE ACT. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM FOR SUC H EXEMPTION, DURING ASSESSMENT PROCEEDINGS, WHEREIN THE ASSESSEE VIDE R EPLY DATED 23.11.2007 CLAIMED AS UNDER: THE FINANCE ACT (NO.2) ACT, 1998 HAS INTRODUCED NEW PROVISION IN SUB-CLAUSE (IIIAB), (IIIAD). (VI) UNDER SECTION 10(23C) IN RELATION TO EDUCATIONAL INSTITUTIONS. ALL THESE SUB CLAUSES OF SECTION 10(23C) SPECIFY THE SAME PRECONDITION AS REQUIRED BY THE EARLIER SECTION 10(22) IN THAT THE INSTITUTI ON MUST EXIST SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT. THE WORDS SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT EXISTED IN THE OMITTED SECTION 10(22). A LARGE NUMBER OF JUDGMENTS AND TRIBUNAL DECISIONS HAVE INTERPRETED THE SCOPE OF THESE WORDS IN THE CONTEXT OF SECTION 10(22). THESE DECISIONS SHOULD EQUALLY APPLY EVEN TO THE CASES COVERED UNDER SECTION 10(23C), AS THIS CONCEPT HAS ALSO BEEN JUDICIALLY REVIEWED MANY A TIMES, HOWEVER IN THE CONTEXT OF THE OMITTED SECTION 10(22) WHICH ALSO USED THE VERY SAME WORDS. THEREFORE DISCUSSION BELOW INVOLVES THE PROVISIONS OF SECTION 10(22) WHICH IS NOW BEEN REPLACED BY SECTION 20(23C). .............. .............. WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVT. 5 THE ASSESSEE INSTITUTION IS WHOLLY OR SUBSTANTIALLY FINANCED BY GOVT. IN THIS REGARD WE WOULD LIKE TO STATE THAT THE M.P. TEXT BOOK CORPORATION WAS REGISTERED WITH THE REGISTRAR OF SOCIETIES UNDER MP SOCIETIES REGISTRATION ACT 1959 ON DATED 07.08.1968. THAT THE M.P. TEXT BOOK CORPORATION IS CONSTITUTED AND OWNED BY GOVT. OF MP. MP GOVT. HAD CONTRIBUTED THE INITIAL CAPITAL. ALSO M.P. TEXT BOOK CORPORATION REGULATION 1974 IS APPROVED BY GOVT. OF M.P., BY WHICH THE ASSESSEE IS GOVERNED. EVEN THE ANNUAL REPORT OF THE CORPORATION IS PRESENTED BY THE HONBLE MINISTER OF EDUCATION ON THE FLOOR OF VIDHAN SABHA DURING ASSEMBLY PROCEEDINGS AS IS REQUIRED UNDER RULE 48 M.P. TEXT BOOK CORPORATION REGULATION, 1974. IT IS THUS EVIDENCED THAT THE ASSESSEE SOCIETY BELONGS TO GOVT. OF M.P. AS THE ASSESSEE SOCIETY IS COMPLETELY CONTROLLED BY THE MINISTER OF EDUCATION AND OTHER HEADS OF THE DEPARTMENT. AS OF DATE THE OPERATIONS OF THE ASSESSEE INSTITUTION IS FINANCED BY THE SURPLUS FUND GENERATED OVER THE PERIOD, AS THE SAME WAS BEING UTILISED FOR THE PURPOSE OF EDUCATION ONLY. IN CASE OF ANY ENTITY THE CAPITAL AND UNCLASSIFIED RESERVES & SURPLUS INCLUDING ACCUMULATED PROFITS EVIDENCE THE OWNERSHIP INTEREST. RETAINED EARNINGS IS A SECOND CATEGORY OF OWNERS CAPITAL. THE RETAINED EARNINGS REPRESENTS THAT PART OF THE TOTAL EARNINGS THAT HAS BEEN RETAINED FOR USE IN THE BUSINESS. THEREFORE AS THE RESERVES & SURPLUS OF ANY ORGANISATION IS PART AND PARCEL OF ITS CAPITAL FUND AND IN THE INATANCE ALSO THE ASSESSEE IS ABLE TO CARRY ON ITS ACTIVITIES WITH THE ACCUMULATED SURPLUS, HENCE THE ASSESSEE INSTITUTION IS WHOLLY FINANCED BY THE GOVT. OF MP. THE CRUX OF SUBMISSIONS ON BEHALF OF THE ASSESSEE FROM ASSESSMENT STAGE ITSELF IS THAT IT IS AN EDUCATIONAL INSTITUTI ON EXISTING SOLELY FOR EDUCATIONAL PURPOSES, CONSEQUENTLY, ITS INCOME IS EXEMPTED U/S 10(23C)(IIIAB) OF THE ACT WHICH WAS AFFIRMED VIDE ORDER DATED 25.10.2002 (ITA NO.363/IND/1999 FOR AY 6 1995-96) WHEREIN IT WAS HELD THAT THE ASSESSEE IS A N INSTITUTION FOR EDUCATIONAL PURPOSES WITHIN THE MEANING OF SEC. 10( 22) OF THE ACT. HOWEVER, THE LD. ASSESSING OFFICER PLACED RELIANCE ON VARIOU S JUDICIAL PRONOUNCEMENTS AS CONTAINED IN THE RESPECTIVE ASSESSMENT ORDER AND IN VIEW OF SEC. 10(23C)(VI) AND CONDITIONS CONTAINED IN SEC. 10(23C )(IIIAB) OF THE ACT WAS OF THE VIEW THAT THE ASSESSEE NEITHER ENTITLED FOR EXE MPTION U/S 10(23C)(IIIAB) AND 10(23C)(VI) AND MADE THE IMPUGNED ADDITIONS. HO WEVER, THE LD. CIT(A) DECIDED IN FAVOUR OF THE ASSESSEE WHICH IS UNDER CH ALLENGE BEFORE THIS TRIBUNAL BY THE REVENUE. BEFORE COMING TO ANY CONCL USION, WE ARE REPRODUCING HEREUNDER THE YEAR-WISE COLLECTION OF RECEIPTS BY T HE ASSESSEE: A.Y S . 2000 - 01 2001 - 02 2002 - 03 2003 - 04 2004 - 05 2005 - 06 2006 - 07 2007 - 08 TOTAL RECEIPTS 376824649 377317262 496300945 4487091386 583113632 722303395 738791535 918209703 RECEIPTS FROM THE SALE OF BOOKS 309350891 318023770 438996280 4447533139 526150005 675751058 698712648 887720577 RECEIPTS FROM THE SALE OF BOOKS AS A % OF TOTAL RECEIPTS 82.09 84.29 88.45 99.12 90.23 93.56 94.58 96.68 INTEREST RECEIPTS 64420176 55523388 52862039 35099467 52003608 32740868 30096607 22316877 INTEREST RECEIPTS AS A % OF TOTAL RECEIPTS 17.10 14.72 10.65 0.78 8.92 4.53 4.07 2.43 OTHER RECEIPTS 3053582 3770104 4442626 4458780 4960019 13811469 9982280 8172249 OTHER RECEIPTS AS % OF TOTAL RECEIPTS 0.81 1.00 0.90 0.10 0.85 1.91 1.35 0.89 7 4. IT IS PERTINENT TO MENTION HERE THAT THE ISSUE O F GRANT OF REGISTRATION U/S 12AA OF THE ACT, AGAINST THE ORDER DATED 15 TH APRIL, 2009, REFUSING REGISTRATION, TRAVELLED TO THE TRIBUNAL, WHEREIN VI DE ORDER DATED 23 RD SEPTEMBER, 2009 (ITA NO. 300/IND/2009), THE IMPUGNE D ORDER WAS SET ASIDE AND AFTER FOLLOWING VARIOUS JUDICIAL PRONOUNCEMENTS , AS CONTAINED IN THE SAID ORDER, DIRECTED THE LEARNED COMMISSIONER TO GRANT R EGISTRATION TO THE ASSESSEE U/S 12A/12AA OF THE ACT. 5. THE FIRST GROUND RAISED BY THE REVENUE PERTAINS TO THE IMPUGNED AMOUNTS ON ACCOUNT OF EX-GRATIA PAYMENT. IT WAS FO UND BY THE LEARNED AO THAT THE RESPECTIVE AMOUNTS WERE DEBITED TO THE INC OME AND EXPENDITURE AMOUNTS AS EX GRATIA PAYMENTS UNDER THE HEAD ESTAB LISHMENT CHARGES WHEREAS IN ITS REPLY, THE ASSESSEE CLAIMED THAT THE IMPUGNED EXPENSES ARE IN THE NATURE OF BONUS TO THE EMPLOYEES, THEREFORE, AR E ALLOWABLE UNDER SECTION 36(1)(II) OF THE ACT. THE AO ADDED THE SAME BACK TO THE INCOME OF THE ASSESSEE. THERE IS NO DISPUTE THAT THE IMPUGNED AMO UNT REPRESENTS PAYMENTS TO EMPLOYEES AND ARE AKIN TO BONUS OR AT BEST COULD BE CATEGORISED AS ADDITIONAL REMUNERATION WHICH IS ALLOWABLE UNDER SE CTION 36(1)(II) OF THE ACT BECAUSE THERE IS NO SUCH BAR FOR MAKING THE IMPUGNE D PAYMENTS. CONSEQUENTLY, THERE IS NO INFIRMITY IN THE IMPUGNED ORDER. WE, THEREFORE, CONFIRM THE SAME. 6. THE NEXT GROUND PERTAINS TO DELETING THE DISALLO WANCE ON ACCOUNT OF CHAIRMAN AND VICE CHAIRMAN EXPENSES. THE IMPUGNED AMOUNTS WERE 8 INCURRED DURING THE RELEVANT ASSESSMENT YEARS WHICH WERE CLAIMED TO BE BOOKED AS CHAIRMAN AND VICE CHAIRMAN EXPENSES. IT WAS EXPLAINED THAT THESE EXPENSES PERTAIN TO TELEPHONE, CONVEYANCE, ST AFF WELFARE, TRAVELLING EXPENSES, EXCLUSIVELY INCURRED DURING PERFORMANCE O F DUTIES FOR THE CORPORATION WHICH CAN BE VERIFIED FROM THE BILLS AN D VOUCHERS. IT WAS FURTHER CLAIMED THAT IN THE BOOKS OF ACCOUNTS, THESE EXPENS ES WERE BIFURCATED AND BOOKED AS EXPENSES AS CHAIRMAN AND VICE CHAIRMAN EX PENSES. THIS FACTUAL FINDING WAS NOT CONTROVERTED BY THE REVENUE, THEREF ORE, WE ARE OF THE VIEW THAT THESE ARE ALLOWABLE EXPENSES U/S 37(1), THEREF ORE, THERE IS NO INFIRMITY IN THE STAND OF THE LEARNED CIT(A). 7. THE NEXT GROUND PERTAINS TO DISALLOWANCE OF RESP ECTIVE AMOUNTS ON ACCOUNT OF REFRESHMENT AND LUNCH FOR THE IMPUGNED A SSESSMENT YEARS, WHICH WERE CLAIMED TO BE IN THE NATURE OF STAFF WELFARE A ND WERE EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THERE IS A FINDING IN THE IMPUGNED ORDER THAT FOR ITS REASONABLENESS THE BILL S AND VOUCHERS WERE PRODUCED FOR VERIFICATION. IN VIEW OF THIS UNCONTRO VERTED FINDING, WE FIND NO INFIRMITY IN THE STAND OF THE LEARNED CIT(A), SINCE THE EXPENSES ARE GENUINE AND VERIFIABLE. 8 THE NEXT GROUND PERTAINS TO DELETING THE RESPECTI VE AMOUNTS ON ACCOUNT OF OBSOLETE STOCK MADE FOR THE RESPECTIVE A SSESSMENT YEARS AND WRITTEN OFF AT THE CLOSE OF THE YEAR AS THE BOOKS W ERE OBSOLETE. THE QUANTITY OF OBSOLETE STOCKS WAS DERIVED FROM STOCK RECORDS M AINTAINED AT EACH OF THEIR 9 DEPOT AND WERE SUBSEQUENTLY VERIFIED BY THE MANAGEM ENT. THERE IS A FINDING THAT THE VALUATION OF OBSOLETE STOCK WAS DONE ON TH E BASIS OF COST INCURRED ON SUCH BOOKS. THERE IS A FURTHER FINDING IN THE IMPUG NED ORDER THAT YEAR AFTER YEAR THE BOOKS ARE MODIFIED AND THE STOCK OF OLD TE XT BOOKS BECAME STALE, THEREFORE, COULD NOT BE SOLD EXCEPT IN THE FORM OF SCRAP, CONSEQUENTLY, IT IS AN ALLOWABLE DEDUCTION. IN VIEW OF THIS UNCONTROVERTE D FINDING, WE FIND NO INFIRMITY IN THE STAND OF THE LEARNED CIT(A), THER EFORE, IT IS AFFIRMED. 9. THE NEXT GROUND PERTAINS TO DELETING THE RESPECT IVE DISALLOWANCE ON ACCOUNT OF OUTSTANDING LIABILITIES U/S 43B OF THE A CT. THE LEARNED AO DISALLOWED THE RESPECTIVE AMOUNTS WHICH WERE OUTSTA NDING LIABILITIES REPRESENTING THE PROVISIONS FOR AUDIT FEE PAYABLE D URING THE IMPUGNED ASSESSMENT YEARS BY APPLYING THE PROVISIONS OF SECT ION 43B OF THE ACT. ADMITTEDLY, THE PROVISIONS OF SECTION 43B APPLY TO DUTY, CESS, TAX AND OTHER STATUTORY LIABILITIES MENTIONED IN THE SECTION WHIC H DO NOT INCLUDE AUDIT FEE. OUR VIEW FINDS SUPPORT FROM THE DECISION FROM HONB LE BOMBAY HIGH COURT IN CIT V. SHREE VARNA SAHKARI SHAKKAR KARKHANA LIMITED ; 253 ITR 226 WHEREIN IT WAS HELD THAT GOVERNMENT AUDIT FEE IS NOT COVERED U NDER SECTION 43B OF THE ACT AND THE DEDUCTION IS TO BE ALLOWED IN FULL. THE STAND OF THE LEARNED CIT(A) IS, THEREFORE, AFFIRMED. 10. THE NEXT GROUND PERTAINS TO DELETING THE ADDITI ONS OF THE RESPECTIVE AMOUNTS ON ACCOUNT OF DISBURSEMENT OF GRANT. THE IM PUGNED AMOUNTS WERE DISBURSED TO DISTRICT COLLECTORS FOR THE PURPOSE OF AID TO EDUCATIONAL ACTIVITY 10 IN THEIR RESPECTIVE AREA. THE SAID GRANTS WERE GIVE N BY THE ASSESSEE AS PER THE POLICY OF THE GOVERNMENT AND THAT TOO AFTER GET TING THE APPROVAL NFROM THE BOARD. IN VIEW OF THIS UNCONTROVERTED FINDING, IT CAN BE SAID THAT THE EXPENDITURE WAS INCURRED TO FULFIL THE MAIN OBJECTI VES OF THE ASSESSEE, THEREFORE, IT IS AN ALLOWABLE EXPENDITURE. WE AFFIR M THE STAND OF THE LEARNED CIT(A). 11. THE NEXT GROUND PERTAINS TO DELETING THE RESPEC TIVE ADDITION ON ACCOUNT OF DEPRECIATION. THE LEARNED AO DISALLOWED THE CLA IM OF DEPRECIATION ON THE GROUND THAT STOCK REGISTER WAS NOT MAINTAINED, WHER EAS THE CLAIM OF THE ASSESSEE IS THAT THE DEPRECIATION ON FIXED ASSETS W AS CLAIMED ON THE BASIS OF ORIGINAL BILLS AND VOUCHERS SHOWING EVIDENCE OF ACQ UIRING THE CONCERNED ASSET AND NOT MAINTENANCE OF FIXED ASSET REGISTER CANNOT BE THE GROUND TO MAKE THE DISALLOWANCE OF DEPRECIATION. OUR ATTENTION WAS IN VITED TO SECTION 32 OF THE ACT. WE ARE IN AGREEMENT WITH THE OBSERVATION OF T HE LEARNED CIT(A) THAT NON-MAINTENANCE OF THE STOCK REGISTER DOES NOT CONS TITUTE SUFFICIENT JUSTIFICATION FOR DISALLOWING THE DEPRECIATION, ESP ECIALLY WHEN THE EXISTENCE OF ASSET AND ITS USE FOR BUSINESS PURPOSES IS NOT IN D ISPUTE. WE FIND NO INFIRMITY IN THE STAND OF THE LEARNED CIT(A) AND CONFIRM THE SAME. 12. THE LAST GROUND PERTAINS TO DELETING THE RESPEC TIVE DISALLOWANCES MADE ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTI ON TO PF. ON PERUSAL OF RECORD AND AFTER HEARING THE RIVAL SUBMISSIONS, WE HAVE FOUND THAT THE LEARNED AO DISALLOWED THE RESPECTIVE AMOUNTS ON THE PLEA THAT THE PAYMENTS 11 ARE LATE. THERE IS AN UNCONTROVERTED FINDING IN THE IMPUGNED ORDER THAT THE IMPUGNED AMOUNTS WERE PAID DURING THE FINANCIAL YEA R ITSELF. THE CHANGE BY WAY OF INSERTION OF SECOND PROVISO WITH EFFECT FROM 1.4.1988 AND THE SUBSTITUTION IN THE PRESENT FORM W.E.F. 1.4.1989 TO SECTION 43B IS THAT THE DEDUCTION IN RESPECT OF ANY SUM PAYABLE BY THE ASSE SSEE AS EMPLOYER BY WAY OF CONTRIBUTION TO PROVIDENT FUND OR SUPERANNUATION FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLOYEES SHA LL BE ALLOWED FOR THE ASSESSMENT YEAR 1988-89 AND SUBSEQUENT ASSESSMENT Y EAR ONLY WHEN THERE ARE PAID ON OR BEFORE THE DUE DATE AS DEFINED IN EX PLANATION GIVEN BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36 OF THE ACT. EVEN WHERE THE PAYMENT TOWARDS PROVIDENT FUND AND EMPLOYEES STATE INSURANCE ARE MADE WITHIN THE GRACE PERIOD ALLOWED UNDER THE RELEVANT STATUTE, IT IS TO BE ALLOWED. SUPPORT CAN BE DRAWN FROM CIT V. UDAIPUR DISTILLERY COMPANY LIMITED; 137 TAXMAN 201 (RAJ), CIT V. SALEM COOPERATIVE SPINNING MILLS; 284 ITR 621 (MAD) AND THE DECISION IN CIT V. AMCO BATTERIES; 15 5 TAXMAN 167 (KARN.). THEREFORE, IN VIEW OF THE UNCONTROVERTED FINDING TH AT THE PAYMENT WERE MADE WITHIN THE FINANCIAL YEAR ITSELF, THEREFORE, THERE IS NO INFIRMITY IN THE STAND OF THE LEARNED CIT(A). WE AFFIRM THE SAME. RESULTANTLY, THESE APPEALS OF THE REVENUE ARE DISM ISSED. 14. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE (ITA NO. 520/IND/2008) WHEREIN THE FIRST GROUND RAISED IS TH AT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY ERRED IN NOT 12 GRANTING EXEMPTION U/S 10(23C)(IIIAB) OF THE ACT WI THOUT APPRECIATING THE FACTS AND WITHOUT RELYING UPON THE ORDER OF THE TRI BUNAL. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL FOR ASSESSEE REITERATE D THE SUBMISSIONS WHICH ARE IDENTICAL TO THE GROUNDS RAISED. THE LEARNED CIT DR POINTED OUT THAT WHETHER THE ASSESSEE IS BEING RUN WITH THE AID OF THE GOVER NMENT FUNDS HAS NOT BEEN CONSIDERED. ON THE OTHER HAND, THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT IDENTICALLY THE TRIBUNAL REMANDED THE ISSUE BACK TO THE FILE OF THE LEARNED AO VIDE ORDER DATED 4.11.2009 BY FURTHER POINTING OUT THAT THE HONBLE APEX COURT IN ASSAM STATE TEXT BOOK PRODUCTION & PUBLICA TION CORPORATION LIMITED V. CIT (201) 14 ITJ 301 (SC) HAS POINTED OUT TO THE CIRCULAR OF THE CBDT WHICH ARE REFERRED IN THE DECISION OF THE RAJASTHAN HIGH COURT GRANTING BENEFIT OF EXEMPTION U/S 10(22) OF THE ACT, THEREFO RE, IT MAY BE REMANDED BACK TO THE AO. WE HAVE FOUND THAT THE HONBLE APE X COURT ALSO REMANDED THE ISSUE BACK TO THE FILE OF THE LEARNED AO AND EV EN THE TRIBUNAL IN THE CASE OF THE ASSESSEE VIDE ORDER DATED 4.11.2009 REMANDED THE ISSUE BACK TO THE FILE OF THE AO. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREUNDER :- THIS IS BUNCH OF FIVE APPEALS WHEREIN THE ASSESSEE IS IN APPEAL FOR ASSESSMENT YEAR 2006-07 AND FOR TH E REMAINING THE REVENUE IS IN APPEALS FOR DIFFERENT ASSESSMENT YEARS. FIRST WE SHALL TAKE UP APPEAL OF THE ASSESSEE (ITA NO.186/IND/2009) WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED: 1. THAT IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS BAD IN LAW AS WELL AS ON THE FACTS, IT IS BASED ON INCORRECT INTERPRETATION OF LAW AND THE FA CTS HAVE ALSO BEEN INCORRECTLY CONSTRUED. 13 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT ERRED IN NOT APPRECIATING THE FAC T THAT APPELLANT IS ENTITLED TO CLAIM EXEMPTION U/S 1 1 OF THE IT ACT AS ITS APPLICATION FOR EXEMPTION U/S 12A IS PENDING BEFORE THE CIT. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE IS A OTHER EDUCATIONAL INSTITUTION FINANCED BY THE GOVT. OF MP AND ACCORDINGLY ITS INCOME IS EXEMPT U/S 10(23C)(IIIAB). WITHOUT PREJUDICE TO THE ABOVE 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE APPELLANT SOCIETY IS SUBSTANTIALLY FINANCE D BY THE GOVT. AND EXIST SOLELY FOR THE EDUCATIONAL PURPOSES CONSEQUENT THERE TO ENTITLE FOR EXEMPTION U/S 10(23C)(VI). DURING HEARING OF THIS APPEAL, WE HAVE HEARD LD. REPRESENTATIVES FROM BOTH SIDES AND CONSIDERED THE ARGUMENTS ADVANCED BY THEM. AT THE OUTSET, THE LD. COUNSEL FOR ASSESSEE DID NOT PRESS GROUND NO.3 & 4 ABOVE, THEREFORE, BOTH THESE GROUNDS ARE DISMISSED AS NOT PRESSED. FOR GROUND NO.2, IT WAS POINTED OUT THAT THE TRIBUNAL HAS ALREADY GRANTED REGISTRATION U/S 12A, THEREFORE, THE ASSESSEE IS NOT AGGRIEVED FOR WHICH OUR ATTENTION WAS INVITED TO PAGE 35 TO 58 OF THE PAPER BOOK (ORDER OF THE TRIBUNAL DATED 23.9.2009). FOR GROUND NO.1, IT WAS POINTED OUT THA T IDENTICAL ISSUE WAS REMANDED BACK BY THE HONBLE JURISDICTIONAL HIGH COURT, THAT TOO IN THE CASE OF THE ASSESSEE (MITA NO.56 OF 2003) VIDE ORDER DATED 2.4.2009, THEREFORE, IT WAS PRAYED THAT THE APPEAL OF THE ASSESSEE MAY ALSO BE REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER. THIS ASSERTION OF THE LD. COUNSEL FOR ASSESSEE WAS NOT CONTROVERTED BY THE REVENUE BEING FACTUALLY CORRECT. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON THE FILE. IN THE LIGHT OF THE ABOVE, THE RELEVANT PARA 18 OF THE AFORESAID ORDER DATED 2.4.2009 IS REPRODUCED HEREUNDER: 14 IN VIEW OF THE AFORESAID ANALYSIS AND REGARD BEING HAD TO THE CONCEPT OF EDUCATIONAL PURPOSE AS IS UNDERSTOOD IN THE CONTEXT OF SECTION 10(22) OF THE ACT, WE ARE OF THE CONSIDERED OPINION THAT THE FORUMS BELOW HAVE REALLY NOT APPLIED THEIR MIND TO THE RELEVANT ISSUE. IT IS WORTH NOTHING THERE HAS BEEN NO DISSECTION OF THE ROLE PLAYED BY THE CORPORATION AND WHETHER ITS ACTIVITY HAS ANY NEXUS WITH THE EDUCATIONAL PURPOSE AS PER THE PRINCIPLES LAID DOWN BY THEIR LORDSHIPS OF THE APEX COURT AND VARIOUS HIGH COURTS. WE ARE DISPOSED TO THINK THAT THERE HAS TO BE DETAILED ANALYSIS OF THE FACTS PERTAINING TO THE ACTIVITIES CARRIED OUT BY THE ASSOCIATION FROM YEAR TO YEAR AND THEREAFTER ARRIVE AT A CONCLUSION WHETHER THE ASSESSEE IS ENTITLED TO GE T THE BENEFIT OF EXEMPTION. BE IT NOTED, THE EXEMPTIO N NEED NOT BE IN ENTIRETY OR TOTALITY. THERE CAN BE A CASE WHERE THERE CAN BE A PARTIAL EXEMPTION IF THE INCOME OF THE PREVIOUS YEAR FALLS WITHIN THE BASIC CONCEPTUALITY OF SECTION 10(22) OF THE ACT. BEREFT OF THE AFORESAID ANALYSIS, THE ORDERS ARE UNSUSTAINABL E. HENCE, IT WOULD BE APPOSITE TO SET ASIDE THE ORDER PASSED BY THE FORUMS IN ALL THE APPEALS AND REMIT THE MATTER TO THE ASSESSING OFFICER TO CONSIDER THE CASE AFTER AFFORDING AN OPPORTUNITY OF HEARING TO T HE ASSESSEE. IT WOULD BE OPEN TO THE ASSESSEE CORPORATION TO FILE REQUISITE DOCUMENTS TO BRING TH E CASE WITHIN THE PARAMETERS OF LAW WHICH WE HAVE REFERRED TO ABOVE. IN THE LIGHT OF THE ABOVE AND ALSO THAT THE ORDER OF THE TRIBUNAL GRANTING REGISTRATION U/S 12A WAS NOT AVAILABLE WITH THE ASSESSING OFFICER WHILE FRAMING ASSESSMENT, THEREFORE, THE IMPUGNED GROUND IS REMANDED BACK TO THE FILE OF LD. ASSESSING OFFICER ON IDENTICAL DIRECTIONS AS CONTAINED IN THE AFORESAID ORDER OF THE HONBLE HIGH COURT. NEEDLESS TO MENTIO N HERE THAT DUE OPPORTUNITY OF BEING HEARD BE PROVIDED TO THE ASSESSEE, CONSEQUENTLY, THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 15 NOW WE SHALL TAKE UP THE APPEALS OF THE REVENUE (ITA NO.623 TO 626/IND/2007). THE LD. REPRESENTATIVES FROM BOTH THE SIDES CANVASSED THAT THESE APPEALS MAY ALSO BE REMANDED BACK TO THE FILE OF THE LD ASSESSING OFFICER, THEREFORE, WITHOUT DELIBERATING UPON THE ISSUE INVOLVED AND THE ASSERTION MADE BY THE LD. COUNSEL FROM BOTH SIDES, THESE APPEALS OF THE REVENUE ARE ALSO REMANDED TO THE FILE OF THE LD. AO, KEEPING IN VIEW THE ARGUMENTS/DECISION IN ITA NO.186/IND/2009 AND THE DIRECTION OF THE HONBLE JURISDICTIONAL HIGH COURT CONTAINED IN ORDER DATED 2.4.2009, THESE APPEALS OF THE REVENUE ARE ALSO ALLOWED FOR STATISTICAL PURPOS ES. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THAT OF THE REVENUE ARE ALSO ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AFT ER THE CONCLUSION OF THE HEARING ON 4.11.2009. IN VIEW OF THE ABOVE, WE REMAND THIS ISSUE BACK TO THE FILE OF THE LEARNED AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW, KEEPING IN MIND THE OBSERVATIONS MADE BY THE TRIBUN AL AS WELL AS THE AFORESAID ORDER OF THE HONBLE APEX COURT AN D THE ASSERTION OF THE LEARNED CIT DR. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 15. AS FAR AS THE ISSUE OF SECTION 12A IS CONCERNED, IT HAS ALREADY BEEN DECIDED BY THE TRIBUNAL, THEREFORE, IT HAS BECOME INFRUCTUOUS. RESULTANTLY, THIS APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES ONLY. 16 FINALLY, THE APPEALS OF THE REVENUE ARE DISMISSED A ND THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. ORDER PRONOUNCED IN OPEN COURT 22ND APRIL, 2 010. (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER APRIL 22 , 2010 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE *DBN/
