Maharashtra Academy of Engineering and Educational Research, Pune V. Income-tax Officer,

ITA 80/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9502 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 10-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL U PATH AK
• Keywords: Depreciation; Charitable institution
• Section: 40A(3); 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO S . 2401 & 2402 /P U N/20 12 / ASSESSMENT YEAR S : 2008 - 09 & 20 09 - 10 MAHARASHTRA ACADEMY OF ENGINEERING AND EDUCATIONAL RESEARCH, S.NO.124, EX - SERVICEMAN COLONY, PAUD ROAD, KOTHRUD, PUNE 411029 . / APPELLANT PAN: AA AAM1206F VS. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), PUNE . / RESPONDENT . / ITA NO. 80 /P U N/20 14 / ASSESSMENT YEAR : 2010 - 11 MAHARASHTRA ACADEMY OF ENGINEERING AND EDUCATIONAL RESEARCH, S.NO .124, EX - SERVICEMAN COLONY, PAUD ROAD, KOTHRUD, PUNE 411029 . / APPELLANT PAN: AAAAM1206F VS. THE INCOME TAX OFFICER, WARD 11(1), PUNE . / RESPONDENT / APPELLANT BY : S /S HRI SUNIL U PATHAK AND MAHAVIR JAIN / RESPONDENT BY : S HRI RAJEEV KUMAR, CIT / DATE OF HEARING : 2 2 . 0 2 .201 7 / DATE OF PRONOUNCEMENT: 23 . 0 5 .201 7 ITA NO S . 2401 & 2402 /P U N/20 1 2 ITA NO.80/PUN/2014 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RES EARCH 2 / ORDER PER SUSHMA CHOWLA, J M : OUT OF T H IS BUNCH OF APPEALS , TWO APPEALS FILED BY THE ASSESSEE ARE AGAINST CONSOLIDATED ORDER OF CIT (A) - I, PUNE , DATED 2 6 . 0 9 .20 1 2 RELATING TO ASSESSMENT YEAR S 20 0 8 - 0 9 AND 2009 - 10 AGAINST RESPECTIVE ORDERS PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . THE ASSESSEE IS ALSO IN APPEAL AGAINST THE ORDER OF CIT(A) - I, PUNE , DATED 31 . 10 .20 13 RELATING TO ASSESSMENT YEAR 2010 - 11 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT. 2 . ALL THE SE APPEALS RELATING TO THE SAME ASSESSEE ON IDENTICAL ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE . HOWEVER, REFERENCE IS BEING MADE TO THE FACTS AND ISSUES IN ITA NO.2401/PUN/2012 TO ADJUDICATE THE ISSUE. 3. THE ASSESSEE IN ITA NO.2401/PUN/2012 RELATING TO ASSESSMENT YEAR 2008 - 09 HAS FILED ABRIDGED GROUNDS OF APPEAL , WHICH READ AS UNDER : - 1. THE LEARNED ASSESSING OFFICER ERRED IN ASSESSING THE TOTAL INCOME OF THE APPELLANT AT RS. 24,57,86,566/ - AS AGAINST THE RETURNED NIL INCOME AND THE LEARNED CIT(A) ERRED IN CONFIRMING SUCH ASSESSMENT. 2. THE LEARNED ASSESSING OFFICER ERRED IN HOLDING THAT THE APPELLANT WAS NOT ENTITLED TO EXEMPTION U/S. 10(23C)(VI) OF THE ACT AND THE LEARNED CIT(A) ERRED IN CONFIRMING THE SAME. 3. THE LEARNED ASSESSING OFFI CER AND THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APPELLANT IS NOT ENTITLED TO DEDUCTION TO DEDUCTION U/S. 11 OF THE ACT. 4. THE LEARNED ASSESSING OFFICER AND THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 13 OF THE ACT ARE VIOLATED . ITA NO S . 2401 & 2402 /P U N/20 1 2 ITA NO.80/PUN/2014 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RES EARCH 3 5. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THERE ARE NO VIOLATIONS OF SECTION 13 IN THE RELEVANT YEAR. 6. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER BY ADOPTING THE RECAST INCOME AND EXPENDITURE ACCOU NT. 7. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.3,93,585/ - MADE BY THE LEARNED ASSESSING OFFICER BY WAY OF DISALLOWANCE OF EXPENDITURE W.R.T. WORLD PACE ACTIVITIES. 8. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.13,65,811/ - MADE BY THE LEARNED ASSESSING OFFICER BEING FOREIGN TOUR EXPENDITURE. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FILED TABULATED GROUND - WISE DETAILS AND POINTED OUT THAT THE ISSUES RAISED IN THE PRESENT BUNCH OF APPEALS ARE MAINLY COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS.915/PUN/2012 TO 920/PUN/2012, RELATING TO ASSESSMENT YEARS 1999 - 2000 TO 2004 - 05, ORDER DATED 10.02.2017. WE PROCEED TO DECIDE EACH OF THE APPEAL GROUND - WISE IN THE PARAS HEREIN BELOW. ITA NO.2401 /PUN/2012, RELATING TO ASSESSMENT YEAR 2008 - 09 5. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS GENERAL IN NATURE AND HENCE, THE SAME IS DISMISSED. 6 . THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS AGAINST DENIAL OF DEDUCTION UNDER SECTION 10( 23C)(VI) F THE ACT. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY ADMITTED THAT THE TRIBUNAL IN EARLIER ORDER DATED 10.02.2017 (SUPRA) VIDE PARAS 122 AND 123 AT PAGES 74 AND 75 HAD HELD THE ISSUE AGAINST THE ASSESSEE. FOLLOWING ITA NO S . 2401 & 2402 /P U N/20 1 2 ITA NO.80/PUN/2014 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RES EARCH 4 THE S AME PARITY OF REASONING, GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS DISMISSED. 8. THE ISSUE IN GROUNDS OF APPEAL NO.3, 4, 5 AND 8 RAISED BY THE ASSESSEE ARE INTER - LINKED I.E. AGAINST THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. THE TRIBUNAL I N THE EARLIER YEAR (SUPRA) HAS ELABORATELY CONSIDERED THE ISSUE AND HELD THE ASSESSEE ENTITLED TO THE EXEMPTION UNDER SECTION 11 OF THE ACT BUT HAS DENIED THE SAID DEDUCTION ON THE INCOME ASSESSED IN THE HANDS OF ASSESSEE ON ACCOUNT OF VIOLATION OF SECTIO N 13(1)(C) OF THE ACT. THE TRIBUNAL FURTHER IN ASSESSEES OWN CASE IN ITA NO. 922/PUN/2012, RELATING TO ASSESSMENT YEAR 2006 - 07, ORDER DATED 16.05.2017 HAS ALSO DECIDED THE ISSUE AND HELD THE ASSESSEE TO BE ENTITLED TO CLAIM EXEMPTION UNDER SECTION 11 OF T HE ACT EXCEPT ON THE INCOME ASSESSED IN THE HANDS OF ASSESSEE ON ACCOUNT OF VIOLATION OF SECTION 13(1)(C) OF THE ACT. ACCORDINGLY, WE HOLD SO. 9. NOW, WE SHALL TAKE UP THE DISALLOWANCE MADE UNDER SECTION 13(1)(C) OF THE ACT IN THE YEAR UNDER CONSIDERATIO N. THE DISALLOWANCE HAS BEEN MADE ON ACCOUNT OF FOREIGN TRAVELLING EXPENSES BY THE EXECUTIVE DIRECTOR AND OTHER EMPLOYEES OF THE ASSESSEE TRUST AND INTEREST ON LOAN TO MR. RAHUL KARAD . 10. BR IEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD INC URRED SUM OF RS.6,62,483/ - ON THE VISIT OF DR. VISHWANATH KARAD , EMPLOYEE CUM DIRECTOR OF MIT TO HANOI FROM 25.08.2007 TO 01.09.2007 ALONG WITH HIS WIFE MRS. USHA KARAD. THE ASSESSEE EXPLAINED THAT THE VISIT WAS IN CONNECTION WITH ROBOCON EVEN T WHICH WAS HELD ONCE EVERY YEAR IN INDIA AND ABROAD IN EVERY SECOND YEAR TO ENCOURAGE STUDENTS REGARDING MANUFACTURING AND OPERATION OF ROBOTS ITA NO S . 2401 & 2402 /P U N/20 1 2 ITA NO.80/PUN/2014 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RES EARCH 5 THE ASSESSING OFFICER DENIED THE CLAIM AS THE ASSESSEE TRUST WAS NOT ABLE TO SUITABLY DEMONSTRATE THAT THE ENGINEERING COURS E RUN BY THE INSTITUTE HAD ANY COMPONENT RELATED TO ROBOTS. FURTHER, NO JUSTIFICATION FOR TRAVEL BY MRS. KARAD AND THE CAPACITY IN WHICH SHE TRAVELLED AND EXPENDITURE INCURRED ON STAY AND TRAVEL HAD NOT BEEN ELABORATED. DURING THE SAME FINANCIAL YEAR, DR . KARAD ALSO VISITED PARIS FROM 16.10.2007 TO 20.10.2007 FOR UNESCO GENERAL CONFERENCE AL ONG WITH MRS. SUCHITRA NAGARE, WHO WAS AN EMPLOYEE AS WELL AS EXECUTIVE DIRECTOR INCHARGE OF MIMER MEDICAL COLLEGE, MALEGAON, PUNE AND S UM OF RS.7,03,328/ - WAS INCURRE D FOR THE SAID TRIP. THE ASSESSEE CLAIMED THAT THE SAID TRIP WAS UNDERTAKEN PURELY FOR THE OBJECTS OF TRUST AND NOT FOR PERSONAL PURPOSES. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ARGUED THAT THE VISIT TO PARIS WAS IN CONNECTION WITH DR. KA RAD BEING NOMINATED AS UNESCO CHAIR IN PEACE, HUMAN RIGHTS AND DEMOCRACY OF WORLD PEACE CENTRE OF MIMER BY THE MINISTRY OF HUMAN RESOURCE DEVELOPMENT, GOVT. OF INDIA AND HIS AIR TICKET WAS SPONSORED BY THE GOVERNMENT. THE ASSESSING OFFICER REJECTED THE CL AIM OF ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT AND ALSO DENIED EXEMPTION UNDER SECTION 11 OF THE ACT. 11. THE CIT(A) NOTED THE FIRST ASPECT OF DISALLOWANCE OF FOREIGN EXPENDITURE AND ALSO THE DISALLOWANCE MADE ON ACCOUNT OF INT EREST DUE ON LOAN TO MR. RAHUL KARAD FOR HIS EDUCATION ABROAD. THE PLEA OF THE ASSESSEE THAT MR. RAHUL KARAD WAS ONE OF THE EMPLOYEES WAS HELD TO BE NOT CORRECT BECAUSE HE WAS SON OF MANAGING DIRECTOR AND NO SUCH LOAN WAS GIVEN TO ANY OTHER PERSON. IN VI EW OF THE SAME , DISALLOWANCE WAS MADE ON ACCOUNT OF INTEREST ITA NO S . 2401 & 2402 /P U N/20 1 2 ITA NO.80/PUN/2014 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RES EARCH 6 DUE ON THE LOAN AND ALSO ON ACCOUNT OF FOREIGN TOUR OF EXPENSES DEBITED BY THE ASSESSEE , T HE CIT(A) UPHELD BOTH THE ADDITIONS. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. TH E TRIBUNAL IN ASSESSMENT YEAR 2003 - 04 HAS LAID DOWN THAT THERE COULD NOT BE WHOLESALE DENIAL OF EXEMPTION UNDER SECTION 11 OF THE ACT, WHERE THE ASSESSEE HAS FULFILLED ALL THE OTHER CONDITIONS AND HAS BEEN APPROVED AS A CHARITABLE TRUST UNDER SECTION 12 OF THE ACT. HOWEVER, THE ADDITIONS MADE ON ACCOUNT OF VIOLATION OF SECTION 13(1)(C) R.W.S. 13(3) OF THE ACT ARE TO BE BROUGHT TO TAX AND NO EXEMPTION UNDER SECTION 11 OF THE ACT IS TO BE ALLOWED ON SUCH DISALLOWANCE. IN THE YEAR UNDER CONSIDERATION, THE FI RST EXPENDITURE WHICH WAS CONSIDERED WAS THE EXPENDITURE ON FOREIGN TRAVELLING EXPENSES OF THE ASSESSEE, HIS WIFE AND OTHER EMPLOYEES. FIRST OF ALL, WE TAKE THE FOREIGN TRAVEL EXPENSES OF SPOUSE OF THE EMPLOYEE, ADMITTEDLY, H AS NO BUSINESS CONNECTION WITH THE ASSESSEE, EXCEPT THE RELATION WITH THE MANAGING DIRECTOR OF THE TRUST. ADMITTEDLY, THE SAID FOREIGN TRAVEL EXPENDITURE WHICH HAS BEEN INCURRED ON THE WIFE OF MANAGING DIRECTOR IS NOT TO BE ALLOWED AS DEDUCTION. 13. N OW, COMING TO BALANCE EXPENDITU RE I.E. EXPENDITURE INCURRED ON FOREIGN TRAVEL OF MANAGING DIRECTOR AND OTHER EMPLOYEES. THE ASSESSEE HAD BOOKED TWO EXPENSES I.E. ONE ON ACCOUNT OF TRAVEL TO HONOI FOR ROBOCON EVENT AND THE SECOND ON ACCOUNT OF PARIS FOR UNESCO CONFERENCE. VIS - - VIS FIR ST EXPENDITURE FOR ROBOCON EVENT, THE EXECUTIVE DIRECTOR HAD VISITED ALONG WITH OTHER HEADS OF DEPARTMENTS AND PROFESSORS AND STUDENTS TO ATTEND AN EXHIBITION OF ROBOTICS . THE SAID BEING IN THE LINE OF BUSINESS CARRIED ON BY THE ASSESSEE, THE SAME IS TO B E ALLOWED AS DEDUCTION IN THE HANDS OF ASSESSEE ITA NO S . 2401 & 2402 /P U N/20 1 2 ITA NO.80/PUN/2014 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RES EARCH 7 I.E. THE EXPENDITURE INCURRED ON PERSONS OTHER THAN TRUSTEES OR THEIR RELATIVES. IN RESPECT OF EXPENDITURE INCURRED ON THE EXECUTIVE DIRECTOR OF ASSESSEE TRUST, THE SAME IS HIT BY THE PROVISIONS OF SECTION 1 3(1)(C) OF THE ACT AND ACCORDINGLY, THE SAME IS NOT TO BE ALLOWED AS DEDUCTION AS THE EXPENDITURE IS INCURRED ON RELATED PARTY AS MENTIONED IN SECTION 13(3) OF THE ACT. WE HAVE ALREADY HELD THAT THE FOREIGN TRAVEL EXPENSES OF WIFE OF EXECUTIVE DIRECTOR AR E ALSO TO BE DISALLOWED. SIMILARLY, EXPENDITURE INCURRED FOR MRS. VIDYA JOSHI WIFE OF SHRI PRAKASH JOSHI WHO WAS THE HEAD OF DEPARTMENT BEING NOT FOR THE PURPOSE OF BUSINESS IS ALSO DISALLOWED. 14. THE OTHER EXPENDITURE BOOKED BY THE ASSESSEE IS WITH RE GARD TO TRAVELLING EXPENSES TO PARIS FOR ATTENDING UNESCO CONFERENCE. THE ASSESSEE CLAIMS THAT ITS CHAIRMAN SHRI V.D. KARAD WAS THE PRESIDENT OF UNESCO CHAIR AND HAD TO ATTEND THE 34 TH GENERAL CONFERENCE OF UNESCO FOR THE PERIOD 16 24, OCTOBER, 2007. T HE CONFERENCE WAS ALSO ATTENDED BY ANOTHER EMPLOYEE OF THE ASSESSEE TRUST MRS. SUCHITRA NAGARE AND THE TOTAL EXPENDITURE DEBITED WAS RS.7,03,328/ - . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE INVITATION TO BE PART OF UNESCO CHAI R. THE PERUSAL OF THE SAID INVITATION REFLECTS THAT THE COST OF TRIP HAD TO BE BORNE BY THE GOVERNMENT OF INDIA . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD WAS ASKED TO EXPLAIN AS TO WHY WH Y THE COST OF TRAVELLING EXPENDITURE W AS INCURRED AND DEBITED FOR THE YEAR UNDER CONSIDERATION . IN REPLY THERETO, THE ASSESSEE FURNISHED LETTER DATED 20.12.2007, WHEREIN THE ASSESSEE HAD MADE A REQUEST FOR REIMBURSEMENT OF EXPENSES OF RS.1,63,370/ - TOWARDS THE SAID TRIP BUT NO SUCH PAYMENT HA S BEEN RECEIVED FROM THE GOVERNMENT IN THIS REGARD. IN THE TOTALITY OF THE ABOVE ITA NO S . 2401 & 2402 /P U N/20 1 2 ITA NO.80/PUN/2014 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RES EARCH 8 SAID FACTS AND CIRCUMSTANCES, WHERE THE INVITATION WAS FROM THE GOVERNMENT TO ATTEND THE CONFERENCE OF UNESCO, THEN THE EXPENDITURE AS IS ELIGIBLE TO HIM MERITS TO BE ALLOWED IN THE HANDS OF ASSESSEE I.E. TO THE EXTENT OF RS.1,63,370/ - . FURTHER, THE EXPENDITURE INCURRED ON MRS. SUCHITRA NAGARE WHO IS THE EMPLOYEE AS WELL AS THE EXECUTIVE DIRECTOR INCHARGE OF MEDICAL COLLEGE ALSO, MERITS TO BE ALLOWED. THE BALANCE EXPENDITURE IS TO BE DISALLOWED IN THE HANDS OF ASSESSEE BEING IN VIOLATION OF PROVISIONS OF SECTION 13(1)(C) R.W.S. 13(3) OF THE ACT. ACCORDINGLY, WE HOLD SO. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE CLAIM OF ASSESSEE IN THIS REGARD AND ALLOW THE SAME ACCOR DINGLY. ACCORDINGLY, THE GROUND OF APPEAL RAISED BY THE ASSESSEE IN RESPECT OF FOREIGN TRAVEL EXPENSES IS PARTLY ALLOWED. 15. ANOTHER EXPENDITURE WHICH HAS BEEN REFERRED TO BY THE CIT(A) IS THE INTEREST DUE ON THE LOAN TO MR. RAHUL KARAD. WE HAVE ALREAD Y DECIDED THIS ISSUE AGAINST THE ASSESSEE BY OUR DECISION IN APPEALS RELATING TO ASSESSMENT YEARS 2006 - 07 TO 2008 - 09. HOWEVER, THE ASSESSING OFFICER IS DIRECTED TO VERIFY WHETHER ANY SUCH DISALLOWANCE WAS MADE IN THE HANDS OF ASSESSEE IN THE INSTANT ASSES SMENT YEAR AND IF SO, THEN THE SAME IS UPHELD. 1 6 . NOW, COMING TO ANOTHER EXPENDITURE I.E. ON ACCOUNT OF WORLD PEACE CENTRE AMOUNTING TO RS.3,93,585/ - . THE SAID EXPENDITURE HAS BEEN HELD TO BE ALLOWABLE BY THE TRIBUNAL IN ASSESSMENT YEAR 2003 - 04 ON THE G ROUND THAT THE OBJECTS OF WORLD PEACE CENTRE WERE EDUCATIONAL IN NATURE AND IT WAS ALSO HELD THAT MERE NON - INTIMATING THE CHANGE IN TRUST DEED WOULD NOT RESULT ANY DISALLOWANCE OF EXPENSES INCURRED ON THE OBJECTS OF THE TRUST. IT WAS ALSO HELD BY THE TRIB UNAL THAT THE EXPENDITURE INCURRED ABROAD FOR WPC COULD NOT BE ITA NO S . 2401 & 2402 /P U N/20 1 2 ITA NO.80/PUN/2014 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RES EARCH 9 HELD AS NOT FOR THE OBJECTS OF THE TRUST AND THAT EXEMPTION UNDER SECTION 11 OF THE ACT COULD NOT BE DENIED. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE EXPENDITURE INCURRED ON WO RLD PEACE CENTRE IS DEDUCTIBLE EXPENSES. THE GROUND OF APPEAL NO.7 RAISED BY THE ASSESSEE IN THIS REGARD IS THUS, ALLOWED. 1 7 . NOW, COMING TO LAST GROUND OF APPEAL NO.6 RAISED BY THE ASSESSEE I.E. AGAINST ADDITION MADE BY ADOPTING RECASTED INCOME AND EXP ENDITURE ACCOUNT. THE ASSESSING OFFICER HELD THAT THE INCOME OF THE ASSESSEE IS TO BE ASSESSED AS AOP AND CONSEQUENTLY, THE INCOME AND EXPENDITURE ACCOUNT WAS RECASTED. ACCORDING TO THE RECASTED INCOME AND EXPENDITURE ACCOUNT, THE PROFIT WAS RS. 24,40,27, 170/ - , AFTER ALLOWING DEPRECIATION ON ASSETS AS PER THE PROVISIONS OF THE ACT. THE ASSESSEE HAD CLAIMED PROVISION ON ACCOUNT OF GRATUITY BUT SINCE THE ASSESSEE HAD NOT CONTRIBUTED THE PROVISIONS T O WARDS APPROVED GRATUITY FUND, THE SAME WAS NOT ALLOWED AS EXPENDITURE, IN VIEW OF SECTION 40A(7) OF THE ACT. FURTHER, THE EXPENDITURE INCURRED ON UNAPPROVED OBJECT OF WORLD PEACE TO THE TUNE OF RS. 3,93,585/ - WAS DISALLOWED, EXPENDITURE ON FOREIGN TRIP WAS ALSO DISALLOWED TO THE EXTENT OF RS.13,65,811/ - . THE ASS ESSING OFFICER THUS, REVISED THE TOTAL INCOME AT RS.24,57,86,566/ - . 1 8 . THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER SINCE THE ASSESSEE WAS HELD NOT ENTITLED TO THE DEDUCTION UNDER SECTION 10(23C)(VI) OF THE ACT AND SECTION 11 OF THE ACT. 1 9 . THE A SSESSEE IS IN APPEAL AGAINST THE ADDITION OF RS. 18,62,575/ - AND DISALLOWANCE OF RS.24 CRORES BASED ON RECASTED INCOME AND EXPENDITURE ITA NO S . 2401 & 2402 /P U N/20 1 2 ITA NO.80/PUN/2014 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RES EARCH 10 ACCOUNT. IN THE WRITTEN NOTE FURNISHED BY THE ASSESSEE, IT HAS BEEN FAIRLY ADMITTED BY THE ASSESSEE THAT IT IS NOT HAVING THE LETTERS OF DONORS FOR TREATING THE DONATIONS FOR CORPUS DONATIONS, ACCORDINGLY, AS IN THE PAST YEAR, RS.18,62,575/ - IS TO BE INCLUDED IN INCOME UNDER SECTION 11 OF THE ACT. THE ASSESSEE FURTHER ADMITS THAT FOLLOWING THE ORDER OF TRIBUNAL, THE ASSESSI NG OFFICER BE DIRECTED TO DETERMINE THE INCOME AS PER SECTION 11 OF THE ACT. IN THE WRITTEN NOTE, T HE ASSESSEE FURTHER IN RESPECT OF APPROPRIATION ENTRY OF RS.24 CRORES, SUBMITTED THAT IT HAS NOT CLAIMED THE APPROPRIATION AMOUNT AS THE DEDUCTION IN ITS CO MPUTATION OF INCOME. EVEN OTHERWISE, THE ASSESSEES NET INCOME IS DEFICIT AS PER CHART 1 AND AFTER GRANTING EXEMPTION UNDER SECTION 11 OF THE ACT, THERE WOULD BE NO TAXABLE INCOME. ACCORDINGLY, THE ASSESSEE DID NOT PRESS THE CLAIM FOR APPROPRIATION OF RS.24 CRORES AS DEDUCTION. 20 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 21 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BY WAY OF GROUND OF APPEAL NO.6 , THE ASSESSEE IS IN APPEAL AGAINST RECASTED INCOME AND EXPENDITURE ACCOUNT, WHEREIN RS.24 CRORES WAS THE APPROPRIATION ENTRY. THE ASSESSEE HAS NOT PRESSED THE CLAIM OF APPROPRIATION OF RS.24 CRORES AS DEDUCTION, HENCE, THIS PART OF GROUND OF APPEAL IS DI SMISSED. 2 2 . IN RESPECT OF OTHER PART OF GROUND OF APPEAL N.6 I.E. THE ASSESSEE HAS NO LETTERS OF DONORS AGAINST ITS CLAIM OF DONATIONS BEING CORPUS DONATIONS TO THE EXTENT OF RS.18,62,575/ - . WE HOLD THAT THE SAID RECEIPTS ARE TO BE ADDED IN THE HANDS OF ASSESSEE. HOWEVER, THE ASSESSEE IS NOT ENTITLED TO CLAIM ITA NO S . 2401 & 2402 /P U N/20 1 2 ITA NO.80/PUN/2014 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RES EARCH 11 DEDUCTION UNDER SECTION 11 OF THE ACT IN RESPECT OF SUCH DONATIONS. HENCE, THE GROUND OF APPEAL NO.6 IS DECIDED AGAINST THE ASSESSEE. ? 2 3 . NOW, COMING TO THE APPEALS IN ASSESSMENT YEARS 2009 - 1 0 AND 2010 - 11. 2 4 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUES RAISED IN THE SAID APPEALS ARE IDENTICAL TO THE ISSUES RAISED IN ASSESSMENT YEAR 2008 - 09 EXCEPT FOR GROUND OF APPEAL NO.8 RAISED IN ASSESSMENT YEAR 2010 - 11. FOLLOWING THE SAME PARITY OF REASONING, OUR DECISION IN ASSESSMENT YEAR 2008 - 09 SHALL APPLY MUTATIS MUTANDIS TO ASSESSMENT YEARS 2009 - 10 AND 2010 - 11, EXCEPT FOR GROUND OF APPEAL NO.8 IN ASSESSMENT YEAR 2010 - 11. 2 5 . NOW, COMING TO THE LAST ISSUE WHICH IS RAISED IN ASSESSMENT YEAR 2010 - 11 BY WAY OF GROUND OF APPEAL NO.8 IS AGAINST DISALLOWANCE OF PROVISION MADE FOR GRATUITY AMOUNTING TO RS.1,29,53,886/ - UNDER SECTION 40A(7)(B) OF THE ACT. 2 6 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD POINTED OUT THAT THE TRIBUNAL IN ASSESSMENT YEAR 2003 - 04 HAS HELD THAT WHILE COMPUTING THE INCOME UNDER SECTION 11 OF THE ACT, VARIOUS DISALLOWANCES OR ADDITIONS UNDER SECTION S 43B, 40A(7) AND 40A(3) OF THE ACT COULD NOT BE MADE UNDER SECTION 28 TO 43 OF THE ACT. ITA NO S . 2401 & 2402 /P U N/20 1 2 ITA NO.80/PUN/2014 MAHARASHTRA ACADEMY OF ENGG. AND EDUCATIONAL RES EARCH 12 2 7 . WE FIND THAT THE TRIBUNAL IN PARAS 160 T O 162 AT PAGE 116 HAD SO HELD AND FOLLOWING THE SAME PARITY OF REASONING, WE ALLOW THIS CLAIM OF ASSESSEE. THE GROUND OF APPEAL NO.8 RAISED BY THE ASSESSEE IS THUS, ALLOWED. 2 8 . IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE PARTLY ALLOWED. ORDER P RONOUNCED ON THIS 23 RD D AY OF MA Y , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 23 RD MAY , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE AP PELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - III , PUNE ; 4. / THE CIT , CENTRAL, PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORD ER, // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE