INCOME TAX OFFICER, (EXEMPTION), WARD-1, JAIPUR V. M/S ALPHA BETA SHIKSHA SAMITI, JAIPUR

ITA 797/JPR/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2398 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 27-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Procedural lapse
• Section: 131; 10; 143(3); 133(6); 12AA; 13; 145(3); 10(23C); 20

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,’B’ VC, JAIPUR Jh laanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 797/JP/2019 Income Tax Officer, (Exemptions), Ward-1, Jaipur. cuke Vs. M/s. Alpha Beta Shiksha Samiti, Sector-6, Pratap Nagar, Sanganer, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AAATA 6177 E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri Manish Agarwal (CA) jktLo dh vksj ls@ Revenue by : Smt. Runi Pal (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 04.05.2022. ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 12/05/2022. vkns'k@ ORDER PER SANDEEP GOSAIN, J.M. This appeal by the revenue is directed against the order of ld. CIT (A), Kota dated 22.03.2019 passed under section 143(3) of the I.T. Act 1961 for the assessment year 2015-16. The grounds raised by the revenue are reproduced below :- 1. On the facts and in the circumstances of the case and in law the CIT (A) has erred in holding that the assessee is eligible for exempted provisions for charitable institutions provided in section 10, 11, 12 & 13 of the Income-tax Act when specific defects in books of accounts were pointed out by the AO. 2. On the facts and in the circumstances of the case and in law the CIT (A) has erred in deleting the addition of Rs. 1,75,05,508/- (decrease in asset(s) without appreciating the facts that transfer of WIP (building) was merely a transfer entry and no such 2 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. corresponding entry was found in the books of account of the assessee nor in the books of M/s. Sysnet Global Technologies Pvt. Ltd. 3. Any other question of law as deemed fit in the facts and circumstances of the case may also be framed before the Hon’ble Tribunal in the interest of justice. 2. The brief facts of the case are that the assessee is a co-operative society registered under Rajasthan Societies Registration Act, 1958. Assessee society runs school providing education and is holding approval under sub clause (vi) of clause (23C) of section 10 of the Income Tax Act, 1961 by the Commissioner of Income Tax (Exemptions), Jaipur. The assessee e-filed its return of income for the year under consideration on 18.09.2015 and the assessment was completed u/s 143(3) of the I.T. Act, 1961 after obtaining and considering details and explanations sought, by making addition of Rs. 1,75,05,508/- on the basis of entry made in Receipt and Payment account by presuming the same as sale of fixed assets and by further withdrawing exemption, and the ld. AO assessed the total income of assessee at Rs. 1,62,54,838/- after allowing set off of Rs. 12,50,670/- being deficit as per Income and Expenditure account. Being aggrieved, the assessee preferred appeal before ld. CIT (A), who allowed the appeal of the assessee by deleting the addition. Now the revenue is in appeal before us. 3. Before us, the ld. D/R supported the order of AO and argued that exemption u/s 11 & 12 has been rightly denied by the AO, as condition prescribed u/s 12A(1)(b) of maintaining proper books of accounts are not found fulfilled as there are defects in the books of accounts. Moreover, exemption u/s 10(23C)(vi) is akin to exemption u/s 11 & 12 and therefore, order of ld. AO may be upheld and order of 3 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. CIT(A) may be set aside. It was further argued that since exemption has been withdrawn by AO, the addition so made by him on the basis of entry in receipt and payment account amounting to Rs. 1,75,05,508/- may be upheld and order of CIT(A) may be reversed. The ld. DR cited some cases also to support her argument. 4. On the other hand, the ld. A/R furnished written submissions as under :- 4.1. Facts pertaining to the ground of appeal no. 1 are that since assessee is running a school, gross receipts wherefrom were below Rs.100 lacs till A.Y.2014-15 therefore, assessee was claiming exemption u/s 10(23C)(iiiad) of the Income Tax Act, 1961. For the assessment year under consideration assessee has been granted approval under sub clause (vi) of clause (23C) of the Income Tax Act,1961 vide unique Registration No. AAATA6177E/08/15-16/S-0006/10(23C)(vi) vide letter no. 3142 dated 15.09.2016 by Commissioner of Income Tax (Exemptions), Jaipur and since the total receipts also exceeded Rs. 1.00 crores, thus it is eligible for exemption u/s 10(23C)(vi) and was claimed accordingly. 4.2. During the year under consideration, ld. AO has made addition of Rs.1,75,05,508/- to the income of the assessee on the basis of an entry in receipt and payment account, which was inadvertently made by assessee and was not in any manner representing income of the assessee. Also, ld. AO proceeded to hold that “...........the books of accounts maintained by assessee are neither reliable nor correct which violates the basic condition of maintaining proper books of accounts as required under section 12A(1)(b) of the I.T. Act, 1961.” Then, ld.AO has went on specifying the conditions for applicability of section 11 & 12 of the Income Tax Act and has held that, “....the basic conditions for claiming benefit of section 11& 12 of the I.T. Act, 1961 are that the assessee should be registered under section 12AA of 4 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. the I.T. Act and should maintain proper books of accounts and get it audited from the accountant defined under section 288(2) of the I.T. Act, 1961” With these remarks, AO concluded that assessee has not maintained proper books of accounts and therefore books of accounts maintained by assessee are rejected and provisions of section 145(3) are invoked. Ld. AO further held that assessee has failed to fulfill the primary condition of proper maintenance of books of accounts as required u/s 12A(1)(b) of the I. T. Act, 1961 and entries reflected in receipt and payment account are not found subject to verification and therefore activities of the Samiti cannot be held as genuine and accordingly assessee is not found entitled for claiming exemption u/s 12AA of the Income Tax Act, 1961. At the outset, it is pertinent to note here that entire discussion of ld.AO revolves around denial of exemption u/s 11 & 12, which has never been claimed by assessee, which shows that ld.AO has acted in very casual manner. Your goodself would appreciate that assessee is fulfilling all the conditions of claiming exemptions u/s 10(23C)(vi) and in fact ld.AO has not brought on record any single discrepancy for denying the exemption u/s 10(23C)(vi) claimed by assessee and considering these facts, ld. CIT(A) has rejected the view of ld. AO and allowed the claim of assessee. From perusal of assessment order, it is evident that ld. AO has denied exemption by citing “conditions for fulfillment of claiming exemption u/s 11 & 12” which are not applicable in the case of the assessee and furthermore has stated that since assessee is not maintaining proper books of accounts as required u/s 12A(1)(b), assessee is not eligible for exemption. In this regard, it is submitted that provisions of section 12A(1)(b) are not applicable to claim exemption u/s 10(23C)(vi). Further, undoubtedly requirement as regards to get books of accounts audited is applicable 5 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. to claim exemption u/s 10(23C) also, and in fact assessee has maintained regular books of accounts, which have been duly audited by chartered accountants without any adverse remarks (APB 5-20). In fact, ld.AO has not pointed out any specific defect in books of accounts and has made such a huge addition solely on the basis of an entry inadvertently made in Receipt and Payment account without even mentioning how the same represented income of assessee. Apart from this entry, no discrepancy of whatsoever nature was pointed out in Income & Expenditure account. It is further submitted that mistake in books of accounts is merely a procedural lapse and in the absence of any specific finding that assessee is not carrying out objects of imparting of education as defined u/s 10(23C)(vi), exemption cannot be withdrawn more particularly when there is no allegation regarding siphoning off of funds by officials for personal benefit and the only allegation of ld.AO is regarding maintenance of books, which is also not correct as assessee has maintained regular books of accounts and the same are duly audited also without any adverse remarks. It is further submitted that ld. AO has exceeded his jurisdiction in denying the exemption u/s 10(23C)(vi), when assessee was holding approval by competent authority, i.e. CIT(Exemption), same can only be withdrawn only by CIT(Exemption) only and that too under the circumstance specified under 13 th proviso of section 10(23C), which is reproduced below for the sake of easy reference. Provided also that where the fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) is notified by the Central Government or is approved by the prescribed authority, as the case may be, or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical 6 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. institution referred to in sub-clause (via), is approved by the prescribed authority and subsequently that Government or the prescribed authority is satisfied that— (i) such fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not— (A) applied its income in accordance with the provisions contained in clause (a) of the third proviso; or (B) invested or deposited its funds in accordance with the provisions contained in clause (b) of the third proviso; or (ii) the activities of such fund or institution or trust or any university or othereducational institution or any hospital or other medical institution— (A) are not genuine; or (B) are not being carried out in accordance with all or any of the conditions subject to which it was notified or approved, it may, at any time after giving a reasonable opportunity of showing cause against the proposed action to the concerned fund or institution or trust or any university or other educational institution or any hospital or other medical institution, rescind the notification or, by order, withdraw the approval, as the case may be, and forward a copy of the order rescinding the notification or withdrawing the approval to such fund or institution or trust or any university or other educational institution or any hospital or other medical institution and to the Assessing Officer: In view of above, it is clearly beyond doubt that approval granted to an institution u/s 10(23C) can be withdrawn only under circumstances mentioned above and that too by authority granting the approval and only after giving assessee a reasonable opportunity of being heard. Thus, in the instant case, the exemption availed by the assessee could not be withdrawn by ld.AO, and such action of ld. AO is unjustified bad in law and beyond his jurisdiction. It is therefore stated that ld.CIT(A) has rightly reversed the action of ld. AO for exemption u/s 10(23C(vi) and such order of ld. CIT(A) deserves to be upheld. 4.3. Facts pertaining to the ground no. 2 of appeal are that during the year under consideration, assessee Society had suffered a loss of Rs.12,50,670/- from regular 7 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. activities of Society. During the course of assessment proceedings, ld.AO observed that assessee had shown a sum of Rs.1,75,05,508/- on receipt side of Receipt & Payment account under the heading “Decrease in Fixed assets”. Basically, assessee had a loan outstanding from M/s Sysnet Global Technology Pvt. Ltd. Against the security of asset, however inadvertently loan was reduced with the amount of security and this is how such “receipt” appeared in Receipt and payment account. This was done by the accountant to show the true and real value of the asset in the final accounts. Since, both the accounts affected by such entry, i.e. “Fixed Assets” and “Secured Loans” were in the nature of Real accounts, the same did not have any impact over the Income of society in any manner. During the course of assessment proceedings, when clarification was sought by ld.AO on this issue, it was explained by assessee that firstly, actual decrease in fixed assets amounted to Rs.1,60,72,675/- as against Rs.1,75,05,508/- which has been worked out as under: Decrease in fixed assets as per Receipt & Payment a/c Rs.1,75,05,508/- Less: depreciation charged Rs. 21,51,929/- Less: Sale of fixed Assets Rs. 5,300/- Add: Addition in fixed assets Rs. 7,24,396/- Actual decrease in fixed assets Rs.1,60,72,675/- It was further explained that such decrease was merely a transfer entry where an asset account was transferred to loan account of M/s Sysnet Global Private Limited to the extent of the value of the loan. However, explanation of assessee was not considered by ld. AO who had also made direct enquiry from M/s Sysnet Global private Limited inter alia seeking copy of ledger account of assessee in its books and further details regarding addition of amount shown as decrease in fixed assets as addition to fixed assets in its books of accounts which were partly provided by the 8 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. said company in the manner ld.AO desired. Based on such enquires ld. AO concluded that M/s Sysnet Global Private Limited has not shown such addition to its assets in the books of accounts maintained by it and addition was made for the entire sum of Rs.1,75,05,508/- as appearing in receipt and Payment account in the hands of appellant. In this regard, at the outset, it is submitted that ld.AO himself accepts that no such fixed assets worth Rs.1,75,05,508/- have been shown as Addition in the books of M/s Sysnet Global Private Limited, which itself clears beyond doubt that assessee has not sold fixed assets. Had any sale transaction actually taken place, why would not other party show it in its books of accounts more particularly when it is a private limited company and is under obligation to maintain books of accounts which are subject to audit. In fact, ld. CIT(A) has also allowed appeal of assessee on the observation that there is definitely no transfer of asset as otherwise why an entity purchasing such a high priced asset would not reflect it in their books of accounts and would not claim benefit of depreciation on the same. Moreover, ld. CIT(A) has observed that No transfer deed is mentioned as having been executed for this purpose. It is therefore submitted that ld.CIT(A) has rightly deleted the addition more particularly when the outstanding balance of M/s Sysnet Global was paid off by assessee by issuing cheque. 4.4. So far as allegation of ld. AO regarding non submission of ledger of assessee in the books of Sysnet Global is concerned, it is submitted that non submission of details sought u/s 133(6) by lender cannot be basis to draw adverse inference in the case of assessee. Hon’ble Delhi ITAT in the case of Phool Singh vs ACIT, ITANo.2901/Del/2014, wherein purchases made by assessee from certain 9 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. supplier was doubted for the reason that notices issued to them u/s 133(6) returned unserved has categorically held that: “.......assessee is regularly purchasing material from the above party and in the past the assessment under section 143(3) were made in case of the assessee wherein purchases from these parties are accepted. The purchases are made from the party through account payee cheques and the proper adequate bills supporting purchases were submitted. The assessee has submitted the confirmed copy of the account from the books of the supplier and also stated that he is assessed to income tax with ITO Ward 25/4 New Delhi. Further regarding the address supplied by the assessee on which notices under section 133(6) remained unserved, assessee supplied the same address which is also shown in the income tax return of the supplier. Non compliance of summons under section 131 by the suppliers cannot be the concern of the assessee. It is not the case of the revenue that assessee was asked to produce the supplier. ............ ............ The assessing officer made the whole addition by pointing out certain lacunas in the bank account of the suppliers of the assessee, which cannot be permitted. Merely because 133(6) notices issued to the party returned un-served though it was the same address, which was supplied by supplier while filing its income tax return, no fault can be put on the shoulder of assessee. Further, the learned Commissioner (Appeals) confirmed the finding of the learned assessing officer without giving any reason but merely reiterating the findings of the assessing officer. In view of this the addition made by the learned assessing officer of Rs. 2657303 from Suresh HYP Enterprises cannot be sustained and hence, deleted. In the result ground No. 2 of the appeal of the assessee is allowed.” Thus, Hon’ble ITAT has held that even if notices u/s 133(6) remained non-complied with, no burden can be cast upon assessee. Whereas, assessee’s case is on far better footing that M/s Sysnet Global has replied and has in fact furnished the details may be not the full details to the satisfaction of ld. AO. Thus no adverse could be drawn in the case of assessee if third party could not furnish part of the details of sought. It is further submitted that the sum involved in impugned transfer entry cannot be treated as income of assessee by any stretch of imagination for the very basic reason that for a sum to be taxable, it has to be really earned or received by 10 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. assessee, whereas in the instant case neither has assessee received anything in real terms nor has any income accrued to assessee. It is submitted that Section 5 of the Income Tax Act, 1961 provides for scope of income chargeable to tax and to the extent relevant to the issue it reads: "accrues or arises or is deemed to accrue or arise to him . . . .". What is chargeable to tax is income, which has accrued or arisen to a person. The concept of accrual was considered in E. D. Sassoon & Co. v. CIT, (1954) 26 ITR 27 (SC) and it was held: "What is sought to be taxed must be income and it cannot be taxed unless it has arrived at a stage when it can be called income". In the present case no income whatsoever has arisen to the assessee and it was a mere book entry passed which was totally erroneously treated as income by the ld. AO. The concept of real income is applicable in the case as the assessee has not earned any income eligible for payment of tax. In this regard reliance is placed on the following decisions: The Hon’ble Supreme Court in case of CIT V/s. Shoorji Vallabhdas and Co.[1962] 046 ITR 0144 has held as under: “Income-tax is a levy on income. Though the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt, yet the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a "hypothetical income", which does not materialise.Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account.” Hon’ble Rajasthan High court in the case of CIT vs. VTC Leasing & Financing Ltd. reported in 39 TW 211 has held that tax liability cannot be attracted merely on the basis of entries made in the account books. 11 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. The Hon’ble Karnataka High Court in case of CIT (Asst.) V/s. Industrial Credit and Development Syndicate Ltd. [2006] 285 ITR 0310 has held that only real income alone is taxable. The relevant observations of the Hon’ble court are as under: Income-tax—General principles--Income--Definition--Inclusive--But to be construed by natural connotation--Real income alone taxable. The inclusive definition of the word “income” in section 2(24) of the Income- tax Act, 1961 adds several artificial categories to the concept of income, but on that account, the expression does not lose its natural connotation. It has to be construed as comprehending only such things which are income according to the natural import of the term. It is the income which has really accrued or arisen to the assessee that is taxable. Whether the income has really accrued or arisen to the assessee must be judged in the light of the reality of the situation. When in reality there is neither accrual nor receipt of income by the assessee, even though an entry to that effect might in certain circumstances have been made in the books of account, it would not constitute income for the purpose of levy of tax. A rebate obtained by the purchaser or remission of debt by a creditor would not result in the creation of income in the hands of the purchaser or debtor. 225 ITR 746 Godhara Electricity Co. Vs. CIT (SC) Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a hypothetical income, which does not materialize. 171 ITD 360 – DCIT-14(1)(2) Vs. Commtel Networks (P) Ltd. (Mumbai) Where assessee entered into contract for providing telecommunication services and in terms of contract certain amount was withheld by contractee towards retention money for satisfactory execution of contract by assessee, retention money was to be taxed in assessment year in which it was actually paid to assessee – Section 5 of the Income tax Act, 1961 – Income – Accrual of (Retention money) – Assessment years 2010-11 to 2012-13 – Whether a mere book keeping entry cannot be income unless income has actually resulted and if income does not result at all, there cannot be a tax – Held, yes 12 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. – Assessee, was involved in business of design, engineering, integration, testing, supply, installation and commissioning state of art telecommunication system – Assessee entered into contract for providing telecommunication system with one of its customers, ONGC – As per terms of contract, 10 per cent of total contract value was to be withheld by ONGC towards retention money fo4r satisfactory execution of contract by assessee – During year under consideration, assessee showed such retention money, held by ONGC, in its books of account – Assessing Officer made additions in respect of amount shown by assessee as retention money – Whether since assessee was entitled to receive retention money only after successful completion of contract or when performance guarantee period was over and contractee release payment, Assessing Officer was unjustified in bringing said retention money to tax in relevant assessment year. Held, yes – Whether merely because retention money to tax in relevant assessment year. Held, yes – Whether merely because retention money was accounted for in books of account, same could not be brought to tax without income having been actually accrued to assessee – Held, yes [Paras 17, 18, 20 and 22] [in favour of assessee]. In view of above, it is submitted that ld. CIT(A) has rightly deleted the addition of Rs.1,75,05,508/- in view of fact that in case of sale of fixed assets i.e. any immovable property, title of the same is transferred through a registered deed and other legal formalities should also be done and the same cannot be transferred by book entry. However, in the instant case no such activity was ever carried out by the appellant society. Further the title of immovable property is a document which could be easily verifiable from the revenue records and ld. AO has made no efforts to verify the same. In view of above, it is submitted that since no transfer of any assets has taken place and income has accrued to assessee at all, addition made in the case of assessee is completely arbitrary, unjustified and deserves to be deleted. Your honours would appreciate that even if had there been actual transfer of asset, and any income would have accrued, assessee being eligible for exemption u/s 10(23C)(vi), no useful purpose would be served in not disclosing the same as 13 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. income (which would in any way be exempt) and getting into unnecessary litigation, which not only involves usage of time and resources of institution. So far as case laws furnished by ld. D/R in paper book are concerned, none of them is applicable to the facts of the case for following reasons: (i) 177 Taxman 326 (Uttranchal HC) CIT vs Queen’s Educational Society dated 24.09.2007: Facts of the case are that educational society imparting education to children had invested its surplus in fixed assets and buildings to expand institution, which was held to be not eligible for exemption u/s 10(23C)(iiid). Whereas in the instant case, issue under consideration is as to whether inadvertent transfer entry of reduction in value of fixed asset passed without actual sale of asset could have led to withdrawal of exemption u/s 10(23C)(vi). Thus case relied upon is factually different. (ii) [1964] 53 ITR 122 (SC) CIT vs A. KrishnaswamiMudaliar:” In this case, AO had made addition by estimating value of unexpired exploitation rights of firm at the end of the previous year, though the assessee was following cash system of accounting. Again, it is not clear as to how the case is applicable to the present case as controversy in the present case is not about method of accounting and rather is that no “transfer of asset” has taken place and thus no income has even accrued to the assessee. Case of assessee is merely of an accounting entry being passed mistakenly. (iii) [1971] 82 ITR 835 (SC) Morvi Industries Ltd. vs CIT: In this case, addition was made by ld.AO on the ground that assessee had relinquished its rights to receive certain income after it accrued to the assessee and it was held that assessee could not escape tax liability with such unilateral act of relinquishment. Whereas in the case of assessee no income has accrued at all nor has been received, thus there is no question of escaping from tax liability. (iv) Sh. Pawan Kumar vs ITO, Malerkotla, ITA No. 1119/Chd./2019 (ITAT Chandigarh): In this case, assessee is a proprietor of Oil Mill, thus issue of rejection of books in that case cannot be compared with the case of assessee since the assessee is engaged in educational activity and the case of a oil mill cannot be put at par with it more particularly when there is no profit motive involved in the activity of the assessee. 14 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. In the circumstances, it is humbly prayed that the addition made by the ld. AO is contrary to the facts of the case and also against the settled proposition of law and therefore, deserves to be deleted. 5. We have heard the rival contentions and perused the material available on record. On perusal of the assessment order, it is seen that AO has all along been dealing with provision of sub section 11 and 12 of I.T. Act. The AO has tried to point out some not so significant defects in the books of accounts and then proceeded to assume that proper books of accounts as required u/s 12A(1)(b) are not maintained by the appellant and since proper books are not maintained, benefit u/s 11 and 12 is denied. The Ld. A/R of the appellant has argued before us that the appellant has not claimed exemption u/s 11 and 12 and has in fact claimed exemption u/s 10(23C) of I.T. Act. Moreover, the A/O has nowhere given a finding that exemption u/s 10(23C) is being denied to the appellant nor the AO has pointed out any defects or any violation of any condition and consequently holding denial of exemption u/s 10(23C) to the appellant. The Ld. A/R submitted that provisions of section 12A(1)(b) are not applicable to claim exemption u/s 10(23C)(vi) of I.T. Act though books of account are to be audited to claim exemption u/s 10(23C) and the appellant has duly fulfilled the condition. The ld. CIT (A) is justified in holding that the AO is not legally correct in denying the exemption under section 12AA which assessee never claimed nor was the society registered u/s 12AA, the addition by way of denial of exemption u/s 11 & 12 is legally also not justified. The assessee has claimed exemption under section 10(23C)(vi) of the Act which has been denied by the AO without pointing any discrepancy. The ld. CIT (A) allowed the exemption by observing that the AO has 15 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. not brought any single defect/discrepancy in the books of account so as to deny the exemption to the assessee. Thus even without going to the merits of the ground so taken by the department and outcome of the ground which are mainly related against the finding of CIT(A) about holding the assessee to be eligible for exemption u/s 10, 11 and 12, it is seen that either way outcome of the ground is not going to help the department, as the exemption is claimed by the appellant u/s 10(23C)(vi) and not u/s 11 & 12 and moreover no any adverse finding has been brought on record by the Ld. AO holding denial of exemption u/s 10(23C)(vi) to the appellant. The ld. A/R has rightly argued that in any case exemption u/s 10(23C)(vi) can be withdrawn only by the authority granting the approval and that too after giving a reasonable opportunity of being heard. Thus, we find no infirmity in the order of the ld. CIT (A) granting exemption u/s 10(23C)(vi) of the Act. Ground no. 1 of the revenue is dismissed. Ground no. 2 relates to deletion of addition of Rs. 1,75,05,508/- (decrease in assets) without appreciating the facts that transfer of WIP (building) was merely a transfer entry and no such corresponding entry was found in the books of account of the assessee nor in the books of M/s. Sysnet Global Technologies Pvt. Ltd. 6. We have heard the rival contentions and gone through the material available on record. The ld. CIT (A) has decided this ground by deleting the addition by observing at page 20 of his order as under :- “ As regards Grounds no. 3 & 4 related to the entry pertaining to fixed assets which the A.0 has relied upon to reject the claim of exemption wrongly, the fact as emerged from a perusal of the books was that the assessee had an outstanding loan from M/s Sysnet Global Technology Pvt. Ltd. against the 16 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. security of asset, however inadvertently loan was reduced with the amount of security and the said "receipt" appeared in Receipt and payment account. Since, both the accounts affected by such entry, i.e. "Fixed Assets" and "Secured Loans" were in the nature of Real accounts, the same did not have any revenue related impact over the Income of society in any manner. Thus, the decrease in asset was merely a transfer entry where the entry in asset account was transferred to loan account of M/s Sysnet Global Private Limited to the extent of the value of the loan. On making an enquiry from M/s Sysnet Global private Limited inter alia seeking copy of ledger account of assessee in its books and further details regarding addition of amount shown as decrease in fixed assets as addition to fixed assets in its books of accounts the A.0 himself concluded that M/s Sysnet Global Private Limited has not shown such addition to its assets in the books of accounts maintained by it. This goes to show that there was no transfer of an asset otherwise why an entity purchasing such a high priced asset would not reflect it in their books to claim benefit of depreciation against the profits? In fact in the letter written to the A.0 dated 22/12/2017, the assessee society had clearly clarified the transaction Capital WIP had been credited with the amount and Sysnet Global debited. No transfer deed is mentioned as having been executed for this purpose. Further in the letter dated 26.12.2017, it was mentioned clearly that the outstanding balance of Sysnet Global was cleared by the issue of a cheque from the Bank 0/D account (which is a secured loan). Under the circumstances, both on the legal ground as well as on the factual grounds, I find no merit in the addition made by the A.O. amounting to Rs. 1,75,05,508/-. The same is being deleted.” It is seen that on being asked by the AO about the sum of Rs. 1,75,05,508/- shown on the receipt side of “receipt and payment account” under the head decrease in fixed asset, it was explained by the assessee that basically the assessee had outstanding loan from M/s. Sysnet Global Technology Pvt. Ltd. against the security of asset. However, inadvertently loan was reduced with the amount of security and accordingly such amount was shown as “receipt” in the receipt and payment 17 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. account. The AO has mentioned about the actual decrees in the fixed assets amounting to Rs. 1,60,72,675/- along with the working of the same as reproduced in the written submission of Ld. AR. It was also argued that no such transaction of sale of fixed assets has actually taken place and it was only inadvertent error in proper accounting of the entry. AO has made the addition primarily considering that an enquiry from M/s. Sysnet Global Pvt. Ltd. u/s 133(6) the company has not shown any addition in assets in its books. The ld. CIT(A) among other reasons for allowing the appeal of appellant, has also observed that there is definitely no transfer of asset from the appellant to the M/s. Sysnet Global Pvt. Ltd. as otherwise if there was such transfer, then the company would have surely reflected such high priced asset in its books of account and would have claimed benefit of depreciation on the same. The CIT(A) has also mentioned that since there is no actual transfer/sale of asset by the appellant, there would not be any transfer deed as such. We have noticed that the case laws cited by the ld. D/R are distinguishable and different from the facts of instant case of appellant. Accordingly, we see no reason to interfere with the order of CIT(A) on the issues under consideration. The ground of the revenue is dismissed. 7. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 12/05/2022. Sd/- Sd/- ¼ jkBkSM+ deys'k t;arHkkbZ] ½ ¼lanhi xkslkbZ½ (RATHOD KAMLESH JAYANTBHAI) (SANDEEP GOSAIN) ys[kk lnL;@ Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@ Jaipur fnukad@Dated:- 12/05/2022. 18 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. das/ vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- M/s. Alpha Beta Shiksha Samiti, Jaipur. 2. izR;FkhZ@ The Respondent-The ITO (Exemptions), Ward (1), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File {ITA No. 797/JP/2019} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar 19 ITA No. 797/JP/2019 M/s. Alpha Beta Shiksha Samiti. Sl. No. Date Initial 1 Date of dictation 2 Date on which the typed draft is placed before the Dictating Member ............ Other Member................. 3 Date on which the approved draft comes to the Sr.P.S./P.S 4 Date on which the fair order is placed before the Dictating Member for pronouncement 5 Date on which the fair order comes back to the Sr.P.S./P.S. 6 Date on which the file goes to the Bench Clerk 7 Date on which the file goes to the Head Clerk 8 The date on which the file goes to the Assistant Registrar for signature on the order 9 Date of Dispatch of the Order