Asstt. Commissioner of Income Tax-1, Kanpur V. M/s Maharana Pratap Education Centre, Kanpur

ITA 758/LKW/2014

• Counselvise Citation: 75823714 RSA 2014
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 26-03-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 30-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K KAPOOR
• Keywords: Opportunity of being heard
• Section: 12A; 12; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.758/LKW/2014 ASSESSMENT YEAR:2010 - 11 M/S MAHARANA PRATAP EDUCATION CENTRE, 117/Q/66, SHARDA NAGAR, KANPUR. PAN:AABTM5254H VS A.C.I.T. - 1, KANPUR. (RESPONDENT) (APPELLANT) SHRI PUNEET KUMAR, D. R. APPELLANT BY SHRI P. K. KAPOOR, C.A. RESPONDENT BY 31/03/2015 DATE OF HEARING 05 /06/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, KANPUR DATED 12/06/2014 FOR THE ASSESSMENT YEAR 2010 - 11. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, K ANPUR HAS ERRED IN LAW AND ON F ACTS IN ALLOWING EXEMPTION U/S 11 & 12 OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE LD. CIT - I, K ANPUR HAS WITHDRAWN THE REGISTRATION U/S 12A OF THE INCOME TAX AC T, 1961, GRANTED TO THE ASSESSEE ON THE BASIS THAT THE ASSESSEE WAS CARRYING ON ITS EDUCATIONAL ACTIVITIES ON COMMERCIAL BASIS AND INCOME DERIVED THEREFORE WAS BEING DIVERTED FOR THE PERSONAL USES OF THE MEMBERS OF THE SOCIETY. 2. THAT THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) - II , KANPUR HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT RESTORATION OF REGISTRATION U/S 12A OF THE 2 INCOME TAX ACT , 1961 BY HON'BLE ITAT WAS NOT ACCEPTED BY THE DEPARTMENT AND THE SAME IS PENDING BEFORE HON'BLE H IGH COURT, ALLAHABAD FOR ADJUDICATION. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II , KANPUR HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE ASSESSING OFFICER HAS RIGHTLY TREATED INCOME OF THE ASSESSEE AS INCOME FROM BUSINESS OR PROFESSION TREATING THE STATUS OF THE SOCIETY AS AN AOP. 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II , KANPUR HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT PAYMENT OF SALARY TO PERSONS SPECIFIED U/S 13(3) OF THE INCOME TAX ACT, 1961 WAS EXCESSIVE AND THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED RS.5,40,000/ - UNDER THIS HEAD. 5. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.1,72,908 / - UNDER THE HEAD INTEREST ON TDS WITHOUT APPRECIATING THE FACT THE ASSESSEE COULD N OT SUBSTANTIATE THE EXPENDITURE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 6. THAT THE ORDER OF LEARNED CIT(A) - II, KANPUR DATED 12/06/2014 NEEDS TO BE QUASHED AND THE ORDER PASSED BY THE ASSESSING OFFICER DATED 25/02/2013 TO BE RESTORED. 3. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO SUBMITTED THAT THE ISSUES RAISED BY THE REVENUE ARE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER FOR ASSESSMENT YEAR 2008 - 09 IN I.T.A. NO.132/LKW/2012 DATED 23/05/2014, COPY OF WHICH IS AVAILABLE ON PAGES 16 TO 19 OF THE PAPER BOOK. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT IN ASSESSMENT YEAR 2008 - 09 ALSO, THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL WERE SIMILAR. IN THAT YEAR, IT WAS HELD BY THE TRIBUNAL THAT SINCE THE TRIBUNAL ORDER, AS PER WHICH THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12A HAS BEEN 3 RESTORE D BY THE TRIBUNAL , IS STILL VALID AND THEREFORE, THE INCOME OF THE ASSESSEE HAS TO BE COMPUTED AS PER SECTION 11 & 12 OF THE ACT. THE TRIBUNAL ALSO HELD IN THAT YEAR THAT THE INCOME OF THE ASSESSEE SHOULD BE ASSESSED UNDER THE PROVISIONS OF SECTION 11 & 1 2 OF THE ACT AND IF THE ASSESSEE IS ABLE TO ESTABLISH THAT 85% OR MORE OF THE INCOME OF THE ASSESSEE HAS BEEN UTILIZED FOR THE PURPOSE OF ASSESSEE INSTITUTION THEN THE INCOME OF THE ASSESSEE SHOULD BE EXEMPT. ACCORDINGLY, WE HOLD THAT IN THE PRESENT YEAR ALSO, THE INCOME OF THE ASSESSEE SHOULD BE ASSESSED AS PER SECTION 11 & 12 OF THE ACT AND IF THE ASSESSEE IS ABLE TO ESTABLISH THAT 85% OR MORE OF THE INCOME OF THE ASSESSEE HAS BEEN UTILIZED FOR THE PURPOSE OF ASSESSEE INSTITUTION THEN THE INCOME OF THE A SSESSEE SHOULD BE EXEMPT . B ECAUSE THERE IS NO FINDING OF THE AUTHORITIES BELOW ON THIS ASPECT OF THE MATTER , W E RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISION AFTER EXAMINING THE FACTS OF THE PRESENT CASE REGARDING APPLICATION OF INCOME FOR THE PURPOSE OF OBJECTS OF THE ASSESSEE TRUST/INSTITUTION. IN THIS MANNER, GROUND NO. 1 TO 3 ARE ALLOWED FOR STATISTICAL PURPOSES. 5. REGARDING GROUND NO. 4, WE FIND THAT THE SAID DISALLOWANCE OF RS.5.40 LAC WAS DELETED BY THE TRIBUNAL IN EARLIER YEARS ON THE BASIS THAT THE GROSS RECEIPT HAS INCREASED SUBSTANTIALLY IN COMPARISON TO THE EARLIER YEARS BUT THE PAYMENT OF REMUNERATION IS THE SAME AND THEREFORE, IF THE PAYMENT OF REMUNERATION WAS HELD TO BE ALLOWABLE IN THE EARLIER YEAR, THE SAME CANNOT BE SAID THAT IT IS EXCESSIVE I N THE PRESENT YEAR . T HE LEARNED D.R. OF THE REVENUE COULD NOT POINT OUT ANY DIFFERENCE IN FACTS AND THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) ON THIS ISSUE. GROUND NO. 4 IS REJECTED. 6. REGARDING GROUND NO. 5, WE FIND THAT THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON THE BASIS THAT THE TDS WAS NOT DEDUCTED AND THE SAME WAS DELETED BY CIT(A) THAT SINCE THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12A HAS BEEN RESTORED, THE DISALLOWANCE IS NOT JUSTIFIED 4 PARTICULARLY WHEN THE PROVISIONS OF SECTION 13 ARE NOT APPLICABLE . WE FAIL TO UNDERSTAND THE BASIS ADOPTED BY CIT(A) TO DELETE THIS DISALLOWANCE BECAUSE WHEN THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER FOR THE REASON THAT TDS WAS NOT DEDUCTED FROM INTEREST PAYMENT, SUCH INTEREST PAYMENT CANNOT BE CONSIDERED AS A N EXPENDITURE FOR COMPUTING THE INCOME OF THE ASSESSEE AND THEREFORE, THE ASSESSEE HAS TO SHOW UTILIZATION OF 85% OF SUCH INCREASED INCOME AFTER MAKING DISALLOWANCE FOR NON DEDUCTION OF TDS. WE, THEREFORE, REVERSE THE ORDER OF CIT(A) ON THIS ISSUE AND RES TORE THAT OF THE ASSESSING OFFICER BUT THERE WILL BE NO ACTUAL ADDITION ON THIS ACCOUNT IF THE ASSESSEE IS ABLE TO ESTABLISH THAT THE INCOME OF THE ASSESSEE AFTER MAKING DISALLOWANCE WAS UTILIZED TO THE EXTENT OF 85% OR MORE OF SUCH INCOME. THE A.O. SHOULD DECIDE THIS ISSUE AFRESH AS PER ABOVE DISCUSSION AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THIS MANNER, GROUND NO. 5 IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 05 /06/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR