ACIT, Alwar V. M/S MODEL PUBLIC SCHOL, Alwar

ITA 859/JPR/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74822 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: KRANTI MEHTA
• Keywords: Benefit of exemption; Capital expenditure
• Section: 143(3); 260A; 12AA

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI H.M. MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER) I.T.A. NO. 859/JP/2012 ASSTT. YEAR- 2007-08 THE ASSTT. COMMISSIONER OF M/S MODEL PUBLIC SCHOO L, INCOME TAX, CIRCLE-2 VRS. MAIN ROAD, ALWAR. BHIWADI. PAN NO. AAAAM2006R (APPELLANT) (RESPONDENT) DEPARTMENT BY :- SHRI D.C. SHARMA, D.R. ASSESSEE BY :- SHRI KRANTI MEHTA. DATE OF HEARING : 20/01/2014 DATE OF PRONOUNCEMENT : 31/01/2014 O R D E R PER: N.K. SAINI, A.M. THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORD ER DATED 09/08/2012 OF THE LD. CIT(A), ALWAR. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL:- 1. THAT THE LD. CIT(A), ALWAR HAS ERRED IN LAW A S WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING ADDITION OF RS. 1,47,16,284/- MADE BY THE ASSESSING OFFICER BY DISA LLOWING THE BENEFIT OF SECTION 10(23C)(VI) OF THE INCOME TAX AC T, 1961. 2. THAT THE LD. CIT(A) ALWAR HAS ERRED IN LAW AS WE LL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDIT ION OF RS. 1,42,785/- MADE BY THE ASSESSING OFFICER BY DISALLO WING OUT OF VEHICLE EXPENSES. 3. THAT THE LD. CIT(A), ALWAR HAS ERRED IN LAW AS W ELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DIRECTING THE ASSE SSING OFFICER TO COMPUTE THE INCOME OF THE ASSESSEE AT NIL. ITA 859/JP/2012 2 2. FIRST ISSUE VIDE GROUND NO. 1 RELATES TO DELETI ON OF ADDITION OF RS. 1,47,16,284/- MADE BY THE ASSESSING OFFICER BY DISA LLOWING THE BENEFIT OF SECTION 10(23C)(VI) OF THE I.T. ACT, 1961 (HEREINAF TER REFERRED TO AS THE ACT) AND VIDE GROUND NO. 2, THE GRIEVANCE OF THE DEPARTMENT RELATES TO DELETION OF ADDITION OF RS. 1,42,785/- MADE BY THE ASSESSING OF FICER BY MAKING THE DISALLOWANCE OUT OF VEHICLE EXPENSES. 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE IS A REGISTERED SOCIETY WORKING UNDER THE NAME AND STYLE OF MODEL PUBLIC SC HOOL SOCIETY AND RUNNING A SCHOOL AT BHIWADI. THE ASSESSEE SOCIETY WAS GRANTED REGISTRATION U/S 12A(A) OF THE ACT BY THE C.I.T., JAIPUR VIDE ORDER DATED 19/7 /1988. CONSEQUENTLY, IT WAS FOUND THAT THE SOCIETY WAS NOT CARRYING OUT ITS ACT IVITIES ACCORDING TO AIMS AND OBJECTS OF THE SOCIETY, ACCORDINGLY, THE REGISTRAT ION EARLIER GRANTED WAS CANCELLED VIDE ORDER U/S 12AA(3) DATED 24/4/2006 BY THE CIT, ALWAR. HOWEVER, THE SAID ORDER OF THE CIT, ALWAR WAS QUASHED BY THE ITAT, JA IPUR BENCH VIDE ORDER DATED 22/2/2008 AND THE REGISTRATION U/S 12A(A) OF THE ACT WAS RESTORED. FURTHER THE CBDT VIDE ORDER DATED 23/3/2007 HAS ALSO GRANTE D EXEMPTION U/S 10(23C)(VI) OF THE ACT BY VIRTUE OF WHICH THE INCOM E OF THE ASSESSEE WAS EXEMPT. 4. THE ASSESSING OFFICER DURING THE COURSE OF ASSES SMENT PROCEEDINGS, POINTED OUT THAT THERE WAS A GRADUAL INCREASE IN TH E ACCUMULATION WHICH HAD BEEN UTILIZED FOR THE OBJECT OF THE SOCIETY WITHIN THE STIPULATED PERIOD BUT THERE WAS NO VOLUNTARY CONTRIBUTION AND ALL THE ACCUMULAT ION WAS MADE OUT OF THE FEES ITA 859/JP/2012 3 CHARGED FROM STUDENTS LIKE TUITION FEES, DEVELOPMEN T FUNDS FEES, HOSTEL FEES, LIBRARY FEES, BUILDING DEVELOPMENT FEES ETC.. THE A SSESSING OFFICER ON EXAMINATION OF BOOKS OF ACCOUNTS OF THE SOCIETY FOU ND AS UNDER:- I) TOTAL RECEIPT OF SCHOOL/SOCIETY ARE RS. 3,53,47 ,121/- WHICH INCLUDES AMOUNT RECEIVED BY THE SCHOOL FOR TUITION FEES RS. 1,90,36,545/- AND OTHER FEE RS. 1,47,75,740/- AND OUT OF SUCH HUGE RE CEIPTS THE SURPLUS GENERATED BY THE ASSESSEE SOCIETY IS RS. 95,81,822/ -. II) THE SOCIETY/SCHOOL HAS INVESTED IN FDRS AMOUNTI NG TO RS. 90,85,551/- AND IT IS EARNING HUGE INTEREST INCOME AMOUNTING TO RS. 12,78,446/- OUT OF SUCH INVESTMENTS. III) THE SOCIETY IS INCREASING ITS FINANCIAL POSITI ON BY CHARGING FEES FROM THE STUDENTS YEAR AFTER YEAR. IV) DURING THE COURSE OF ASSESSMENT PROCEEDINGS BOO KS OF ACCOUNTS WITH REGARD TO TRANSPORT FACILITY FOR STUDENTS WERE PRODUCED BY THE A/R, WHICH SHOWS NET SURPLUS OF RS. 14,38,284/- (VE HICLE FEE RECEIVED AT RS. 55,07,850/- LESS TRANSPORT PAYMENT RS. 16,60,220/- LESS VEHICLE EXPENSES RS. 14,27,847/- LESS DEPRECIA TION ON OWN VEHICLES RS. 9,81,499/-=14,38,284/-.). THIS ACTIVIT Y IS ALSO INDICATIVE OF PROFIT MOTIVE. THE ASSESSING OFFICER CONSIDERED THE SURPLUS INCOM E OVER EXPENDITURE AMOUNTING TO RS. 1,47,16,284/- AS INCOME OF THE ASS ESSEE ONLY FOR THE REASON THAT AN APPEAL HAD BEEN FILED BY THE DEPARTMENT U/ S 260A OF THE ACT BEFORE THE HON'BLE HIGH COURT AGAINST THE ORDER DATED 22/2/200 8 OF THE ITAT, JAIPUR BENCH. THE ASSESSING OFFICER ALSO MADE AN ADDITION OF RS. 1,42,785/- ON ACCOUNT OF DISALLOWANCE OUT OF VEHICLE EXPENSES. AC CORDINGLY, INCOME OF THE ASSESSEE WAS COMPUTED AT RS. 1,48,59,070/-. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A), WHO DELETED THE ADDITION BY OBSERVING THAT THE ASSESSIN G OFFICER HAD FAILED TO APPRECIATE THAT THE ACTIVITIES CARRIED OUT BY THE A SSESSEE WERE TOWARDS ACHIEVING ITA 859/JP/2012 4 ITS OBJECT OF RUNNING THE EDUCATIONAL INSTITUTION A ND THE SURPLUS GENERATED HAS BEEN UTILISED FOR THE OBJECTS OF THE SOCIETY, SO IT COULD NOT BE SAID THAT THE ASSESSEE WAS WORKING WITH A PROFIT MOTIVE. HE ALSO OBSERVED THAT THE DISALLOWANCE OF EXPENDITURE ON ACCOUNT OF CARS WAS ALSO FOUND TO BE WITHOUT ANY BASIS AS THE EXPENSES RELATED TO THE WORKING OF THE SOCIETY. 6. THE LD. CIT(A) CATEGORICALLY STATED THAT IT HAD NOT BEEN POINTED OUT BY THE ASSESSING OFFICER THAT THE VEHICLES WERE USED FOR T HE PURPOSES OTHER THAN THE OBJECTS OF THE SOCIETY. THE LD. CIT(A) ALSO POINTED OUT THAT THE WRITTEN SUBMISSIONS MADE BY THE ASSESSEE WERE FORWARDED TO THE ASSESSING OFFICER, WHO VIDE HIS REMAND REPORT, HAS STATED THAT THE FIG URES OF ACCUMULATION OF INCOME HAD BEEN WORKED OUT IN THE ASSESSMENT ORDER WITHOUT CONSIDERING THE APPLICATION OF INCOME TOWARDS CAPITAL EXPENDITURE M ADE DURING THE YEAR. THE LD. CIT(A) OBSERVED THAT THE DETAILS OF ACCUMULATIO N AFTER CONSIDERING THE CAPITAL EXPENDITURE HAD BEEN ENCLOSED WITH THE REMA ND REPORT, WHICH REVEALED THAT THE EXPENDITURE/APPLICATION OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS 96.29% OF THE INCOME/RECEIPTS. TH E LD. CIT(A) BY CONSIDERING THE REMAND REPORT OF THE ASSESSING OFFI CER AND THE SUBMISSIONS OF THE ASSESSEE AS INCORPORATED IN PARA 4.2 OF THE IMP UGNED ORDER HELD THAT THE ACTION BY THE CBDT HAD NOT BEEN WITHDRAWN AND THE N OTIFICATION GRANTING EXEMPTION U/S 10(23C)(VI) OF THE ACT HAD NOT BEEN R ESCINDED SO FAR AND THAT THE ASSESSEE HAD BEEN ALLOWED TO BENEFIT OF EXEMPTION U /S 10(23C)(VI) OF THE ACT IN THE ASSESSMENT ORDER DATED 15/2/2012 FOR ASSESSMENT YEAR 2010-11 PASSED U/S ITA 859/JP/2012 5 143(3) OF THE ACT AND ALSO BY THE CIT(A) VIDE ORDER DATED 24/2/2009 AND 17/9/2010 FOR THE ASSESSMENT YEAR 2005-06 AND 2006- 07 RESPECTIVELY. HE, THEREFORE, DELETED THE ADDITION MADE BY THE ASSESSI NG OFFICER. NOW THE DEPARTMENT IS IN APPEAL. 7. THE LD. D.R. STRONGLY SUPPORTED THE ASSESSMENT O RDER DATED 3/12/2009 PASSED BY THE ASSESSING OFFICER AND REITERATED THE OBSERVATIONS MADE IN THE SAID ASSESSMENT ORDER. 8. IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S TRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE FOR THE REASON THAT THE ORDER DATED 22/2/2008 PASSED BY THE ITAT, JAIPUR BENCH FOR RESTORING THE REGISTRATION U/S 12AA OF THE ACT HAD BEEN CHALL ENGED BEFORE THE HON'BLE HIGH COURT. HOWEVER, NOTHING IS BROUGHT ON RECORD T O SUBSTANTIATE THAT THE SAID ORDER HAS BEEN SET ASIDE OR REVERSED. IT ALSO APPEA RS THAT THE ASSESSING OFFICER WHILE CALCULATING THE APPLICATION OF INCOME HAD NOT CONSIDERED THE APPLICATION TOWARDS CAPITAL EXPENDITURE, HOWEVER, ADMITTED IN H IS REMAND REPORT THAT IF THE CAPITAL EXPENDITURE WAS TO BE CONSIDERED THE APPLIC ATION OF INCOME WAS AT 96.29% OF THE INCOME/RECEIPTS, THEREFORE, THE ASSES SEE FULFILLED THE CONDITIONS. MOREOVER, THE ASSESSING OFFICER FAILED TO BRING ANY MATERIAL ON RECORD THAT THE ITA 859/JP/2012 6 NOTIFICATION DATED 23/3/2007 OF THE CBDT FOR GRANTI NG EXEMPTION U/S 10(23C)(VI) OF THE ACT HAD BEEN RESCINDED. FURTHER MORE, THE ASSESSING OFFICER HIMSELF FOR THE ASSESSMENT YEAR 2010-11 VIDE ORDER DATED 15/2/2012 PASSED UNDER 143(3) OF THE ACT, ALLOWED THE BENEFIT OF EXE MPTION U/S 10(23C)(VI) OF THE ACT AND NOTHING IS BROUGHT ON RECORD THAT THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE DIFFERENT FROM THE FACTS INVOLVED IN THE ASSESSMENT YEAR 2010- 11. IN VIEW OF THE ABOVE SAID DISCUSSION, WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE IMPUGNED ADDITI ON MADE BY THE ASSESSING OFFICER. WE DO NOT SEE ANY VALID GROUND TO INTERFER E WITH THE FINDINGS OF THE LD. CIT(A). 10. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 31/01/2014) SD/- SD/- (HARI OM MARATHA) (N.K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 31/01/2014 * RANJAN COPY FORWARDED TO :- 1. APPELLANT THE ACIT, CIRCLE-2, ALWAR. 2. RESPONDENT- M/S MODEL PUBLIC SCHOOL, BHIWADI 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 859/JP/2012) BY ORDER, AR ITAT JAIPUR.