GUJRATI MAHAMANDAL HATI BHATA, AJMER V. INCOME TAX OFFICER (EXEMPTION), AJMER

ITA 810/JPR/2018

AI Insights

The case involves M/s. Gujrati Mahamandal Hati Bhata, a registered society engaged in educational activities, appealing against the order of the CIT(A) which confirmed the additions made by the AO for the assessment year 2013-14. The additions included discrepancies in reported income and unsubstantiated claims for corpus donations and capital expenditures. The Tribunal noted that the assessee failed to provide adequate evidence or arguments to support their claims during the hearings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 112953 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2022
• Appeal Filed By: Assessee
• Order Result: DismissedPartlyAllowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 10-06-2018
• Other Referred Cases: CIT vs Prem Kumar Murdia, CIT v Hindusthan Welfare Trust
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Valuation report; Benefit of exemption; Capital expenditure
• Section: 10; 11; 143(3); 142(1); 143(2)

Judgement Text

1 vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Jh laanhi xkslkbZ] U;kf;d lnL; ,oa Mk0 ehBk yky ehuk] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & DR MEETHA LAL MEENA, AM vk;dj vihy la-@ITA No. 810/JP/2018 fu/kZkj.k o"kZ@Assessment Year : 2013-14 M/s. Gujrati Mahamandal Hati Bhata, Ajmer cuke Vs. The ITO (Exemption) Ajmer LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAATG 0756 B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : None jktLo dh vksj ls@Revenue by: Smt. Monisha Choudhary, JCIT-DR lquokbZ dh rkjh[k@Date of Hearing : 07/09/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 26/09/2022 vkns'k@ORDER PER: SANDEEP GOSAIN, JM This is an appeal filed by the asseseess against the order of the ld. CIT(A)- Ajmer dated 19-03-2018 for the assessment year 2013-14 raising therein following grounds of appeal. ‘’In the facts & circumstances of the case the Ld. CIT Appeals, Ajmer has erred in not admitting the appeal for order passed u/s, 143(3) 1.T. Act 1. The assesse has filed an appeal with Ld CIT(appeals) Ajmer against the order dated 16/08/2016 passed 143(3) IT. Act ITO (Exemption). Ajmer against the addition of Rs 2580033/- and charging tax thereon without appreciating the full facts and circumstances of the case. The Difference of addition made on different account was quite unreasonable and unjustified. 2 ITA NO. 810/JP/2018 GUJRATI MAHAMANDAL VS ITO (EXEMPTION), AJMER 2. That the Ld CIT (appeals) has erred in conforming the order of the learned ITO (Exemption) Ajmer in respect of different accounts (Mention Below) was quite unreasonable and unjustified. 3. That the addition an account of development fees for Rs. 881362.50 was wrong as it is a corpus fund for building construction cannot become part of Income as it is capital assets and will be used in development of Building Constructions. 4. The addition made for surplus of Rs. 215235/- for both funds of students is quite wrong and unjustified. The Boys Fund. surplus of students fund can never be utilized at the discretion of Management but it has been controlled by Head of the institution for the welfare of students only. 5. That the disallowance of corpus donation of Rs. 108340/ Received From Manju Mittal (Rs 22500/-), Ram singh (Rs 34880/-) and Maitra saraswat (Rs 51000/-) is quite wrong and unjustified in view of complete address & name with PAN supplied, As Previously the address supplied was old as per records available. 6. That the disallowance of capital expenditure on account of Inverter Rs 14000/- is also wrong as payment is being made by chque. 7. That the Ld CIT(appeals) has erred in not following the Board itself in Circular No. 52 dated December 30, 1970 which has accepted fixed deposit for duration of more than six months as a capital asset. Similar view has been taken in CIT v Hindusthan Welfare Trust (1994) 206 ITR 138 (Cal). The CBDT circular No 52 dated December 30,1970 has accepted fixed deposit for duration of more than six month as a capital asset. Fixed deposits (FDs), debentures and bonds are ordinarily capital assets Hence Investment in Fixed Deposit should be treated as Capital Expenditure. 8. That the Ld CIT(appeals) has erred in not allowing exemption benefit u/s 10 (23C) (iiirad) as against section 11 and hence there is no liability on school income u/s 10 (23C) (iiirad) as our society is running educational institution only and not for purposes of profit and annual receipt is below one crore. A separate books of Accounts is being Kept. Merely a society is doing two different charitable activity the benefit of exemption cannot be denied. 9. Form 10 is already submitted but misplaced by department in file transfer the additional Commissioner has given a direction to give the benefit after considering the Resolution, but AO was failed to do so. 10. That the order is bad in law. 11.The Appellant has not taken the following grounds of appeal at CIT (Appeal). Ajmer request your honor to please consider the following grounds with above mention grounds of appeal as it will have material affect. 3 ITA NO. 810/JP/2018 GUJRATI MAHAMANDAL VS ITO (EXEMPTION), AJMER (i) In reference to Addition of surplus of boys fund Rs 215235/- was added twice in Income and needs to be corrected. (ii) In reference to disallowance of capital expenses Rs 14000/- Inverter was added Twice while calculating Tax liability. 2.1 During the course of hearing, none appeared on behalf of the assessee. The Bench noted from the records that the assessee was provided numerous opportunities to attend the case fixed for hearing. However, the last opportunity was granted on 4 th Aug. 2022 by the Bench fixing the date of hearing on 07-09- 2022 in the case of the assessee but in spite of that the assessee has not bothered to attend the case on the date of hearing i.e. 7-09-2022. In this view of the matter, the Bench decided to dispose off the appeal ex-parte based on the material available on record. 2.2 It is pertinent to mention that during the course of hearing, the ld. DR supported the order of the ld. CIT(A) on the grounds of appeal raised by the assessee hereinabove. 2.3 Brief facts of the case are that the return of income was filed by the asseessee trust on 29-09-2013 declaring Nil total income. The case was selected for the scrutiny under CASS. Notice u/s 143(2) of the Act was issued on 22-09-2014 which was served upon the assessee fixing the date of hearing on 29-09-2014. Subsequently notices u/s 142(1) of the Act and the query letter were issued from time to time. In response to notices issued the ld. AR of the assessee attended the 4 ITA NO. 810/JP/2018 GUJRATI MAHAMANDAL VS ITO (EXEMPTION), AJMER proceedings. It is also noted that the assessee is a Registered as a Society under the Registration of Societies Act, 1958 and assessee is also registered u/s 12A(a) of the Act vide letter No. SIB/Sec12A(a)/CIT.Raj-1/2809 dated 22-01-1976 which is engaged in imparting education to the students alongwith other activities. It is further noted that the assesses society is in appeal against the order of the ld. CIT(A) who had confirmed the action of the AO as mentioned in the assessment order. 3.1 Apropos Ground No. 1 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- ‘’4.3 I have gone through the assessment order, statement of facts, ground of appeal, written submission, remand report and rejoinder carefully. It is seen that the addition has been made by the AO on the basis of valuation report received from the DVO. The DVO has valued the cost of construction of building at Rs.36,97,900/-. The assessee has shown the investment at Rs. 28,37,361/-. The difference of Rs.8,60,539/- (Rs.36,97,900 – Rs. 28,37,361) has been added by the AO to the income of the appellant. The appellant relying on various decisions of Supreme Court and High Courts has contended that the valuation has to be made prevailing State PWD rates whereas the DVO has valued the property by applying CPWD rates. The contention of the appellant is found to be correct. Following the decision of Rajasthan High Court in the case of CIT vs Prem Kumar Murdia (204 CTR 343) Rajasthan, the AO is directed to reduce the valuation made by the DVO by 20%. Thus the valuation of the building would be Rs.29,58,320/-. Accordingly, the addition of Rs.1,20,959/- (Rs.29,58,320 – Rs.28,37,361) is hereby confirmed and remaining addition of Rs.7,39,580/- is hereby deleted.’’ 5 ITA NO. 810/JP/2018 GUJRATI MAHAMANDAL VS ITO (EXEMPTION), AJMER 3.2 After hearing the ld. DR and perusing the materials available on record, the Bench noted that the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 1 of the assessee is dismissed. 4.1 Apropos Ground No. 3 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- ‘’5.3 I have gone through the assessment order, statement of facts, ground of appeal, written submission, remand report and rejoinder carefully. It is seen that the appellant has taken the 50% of development fee i.e. Rs.8,81,362/- directly to the Balance Sheet on the ground that this was donation for the specific object. i.e. corpus donation. The assessee has not produced any evidence to show that 50% of development was the donation received with the specific direction for corpus fund. Therefore, the addition of Rs.8,81,362/- is hereby confirmed.’’ 4.2 After hearing the ld. DR and perusing the materials available on record, the Bench noted that the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 3 of the assessee is dismissed. 5.1 Apropos Ground No. 4 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- 6 ITA NO. 810/JP/2018 GUJRATI MAHAMANDAL VS ITO (EXEMPTION), AJMER ‘’6.3 I have gone through the assessment order, statement of facts, ground of appeal, written submission, remand report and rejoinder carefully. It is seen that both the schools are run by the Trust only but the appellant has not taken into account surplus of both these schools into account while consolidating the total accounts of the Trust. Therefore, the addition of Rs.2,15,235/- made by the AO is held to be in accordance with the provisions of law. Hence, this ground of appeal is dismissed.’’ 5.2 After hearing the ld. DR and perusing the materials available on record, the Bench noted that the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 4 of the assessee is dismissed. 6.1 Apropos Ground No. 5 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- ‘’7.3 I have gone through the assessment order, statement of facts, ground of appeal, written submission, remand report and rejoinder carefully. It is seen that appellant had failed even to furnish complete address of the person from whom corpus donation of Rs.1,08,340/- was claimed to have been received by the appellant. Therefore, the addition of Rs.1,08,340/- made by the AO is hereby confirmed.’’ 6.2 After hearing the ld. DR and perusing the materials available on record, the Bench noted that the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other 7 ITA NO. 810/JP/2018 GUJRATI MAHAMANDAL VS ITO (EXEMPTION), AJMER alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 5 of the assessee is dismissed. 7.1 Apropos Ground No. 6 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- ‘’8.3 I have gone through the assessment order, statement of facts, ground of appeal, written submission, remand report and rejoinder carefully...... Further, the addition of Rs.14,000/- made by the AO in respect of the inverter claimed as application in form of purchase of inverter is also confirmed because the appellant has failed to furnish any documentary evidence to substantiate the claim.’’ 7.2 After hearing the ld. DR and perusing the materials available on record, the Bench noted that the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 6 of the assessee is dismissed. 8.1 Apropos Ground No. 7,8 & 9 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- ‘’9.3 I have gone through the assessment order, statement of facts, ground of appeal, written submission, remand report and rejoinder carefully. The AO has taxed the net surplus of Rs.25,80,833/- as the appellant had failed to apply 85% of total 8 ITA NO. 810/JP/2018 GUJRATI MAHAMANDAL VS ITO (EXEMPTION), AJMER receipts of Rs.1,36,01,164/-. The appellant was required to apply Rs.1,15,60,989/- whereas the appellant had applied only Rs.1,08,63,975/-. The appellant had not submitted Form No. 10 as required u/s 11(2)(a) of the Act before the due date of filing of return of income. Thus, the accumulation of income was more than 15% of the gross receipts. As the appellant had failed to fulfill the condition laid down u/s 11 (2)(a), hence the action of the AO denying the benefit of Section 11(2) of the appellant is held to be fully justified and in accordance with the provisions of law. Further, the AO has also discussed the objects of the Trust. I agree with the view of the AO that the Trust was not existing solely for education purposes. Therefore, the exemption denied by the AO u/s 10(23c)(iiiad) is also held to be valid and in accordance with the provisions of law. Hence, this ground of appeal is dismissed.’’ 8.2 After hearing the ld. DR and perusing the materials available on record, the Bench noted that the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground Nos. 7,8 &9 of the assessee are dismissed. 9.1 The Ground No. 2 and 10 are general in natures which do not require any adjudication. Hence, the same are dismissed. 9 ITA NO. 810/JP/2018 GUJRATI MAHAMANDAL VS ITO (EXEMPTION), AJMER 10.1 Regarding Ground No. 11 raised above by the assessee, the Bench noted that the assessee had not advanced any documents to substantiate its claim. Hence the same are infructuous. 11. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 26/09/2022 Sd/- Sd/- ¼ Mk0 ehBk yky ehuk ½ ¼lanhi xkslkbZ½ (Dr. Meetha Lal Meena) (Sandeep Gosain) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 26/09/2022 *Mishra vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- M/s. Gujrati Mahamandal, Hati Bhata, Ajmer 2. izR;FkhZ@ The Respondent- The ITO (Exemption), Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 810/JP/2018) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar