Golden Public School Samiti, Ghaziabad V. ITO (Exemptions), Ghaziabad

ITA 897/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2865 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 22-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Opportunity of being heard; Capital expenditure
• Section: 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT ITA NO.897/DEL/2016 ASSESSMENT YEAR : 2010-11 GOLDEN PUBLIC SCHOOL SAMITI, D-BLOCK, MAIN ROAD, PRATAP VIHAR, GHAZIABAD. PAN: AABHG1905R VS. ITO (EXEMPTIONS), GHAZIABAD. ASSESSEE BY : SHRI SOMIL AGARWAL, ADVOCATE DEPTT. BY : NONE DATE OF HEARING : 18.12.2017 DATE OF PRONOUNCEMENT : 18.12.2017 ORDER THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 21.12.2015 IN RELATION TO THE ASSE SSMENT YEAR 2010-11. 2. NO ONE WAS PRESENT ON BEHALF OF THE REVENUE. IN FACT, THE REVENUE HAS FILED EN BLOC ADJOURNMENT APPLICATIONS FOR ALL THE ITA NO.897/DEL/2016 2 CASES LISTED TODAY. EX CONSEQUENTI , THERE IS NO ONE IN THE COURT ROOM TO REPRESENT THE REVENUE. THE LD. AR SERIOUSL Y OBJECTED TO THE GRANT OF ADJOURNMENT IN HIS CASE. AS SUCH, I AM NOT INCLINED TO ACCEPT THE ADJOURNMENT APPLICATION FILE D FOR THE REVENUE AND PROCEEDING TO DISPOSE OF THE APPEALS ON MERITS EX PARTE QUA THE REVENUE. 3. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGA INST THE SUSTENANCE OF ADDITION TO THE TUNE OF RS.7,82,465/- ON ACCOUNT OF HONORARIUM. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A REGISTERED SOCIETY DULY APPROVED BY THE CIT, MEER UT, BUT WITHOUT THERE BEING ANY CERTIFICATE FOR EXEMPTION U /S 80G OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, IT WAS OBSERVED THAT OUT OF GROSS RECEIPTS OF RS.43,27,675 /-, THE ASSESSEE CLAIMED SALARY OF RS.21,72,890/-. APART F ROM SALARY, THE ASSESSEE ALSO CLAIMED DEDUCTION FOR A SUM OF RS .7,82,465/- UNDER THE HEAD HONORARIUM EXPENSES. VIDE ORDER SH EET DATED ITA NO.897/DEL/2016 3 12.03.2013, THE ASSESSEE WAS ASKED TO PROVIDE DETAI LS OF THE PERSONS WITH NAME AND ADDRESS, TO WHOM SUCH HONORAR IUM WAS PAID ALONG WITH THEIR IDENTITY, QUALIFICATION AND P ROOF OF SERVICE RENDERED. THE CASE WAS FIXED FOR 15.03.201 3. ON SUCH DATE, THE ASSESSEE SUBMITTED ONE CONFIRMATORY LETTE R ALONG WITH PAN CARD WITHOUT BEING BACKED BY THE NATURE OF SERV ICES RENDERED. THE ASSESSEE SIMPLY STATED THAT SOME LECT URES WERE DELIVERED BY THESE PERSONS FOR WHICH THE HONORARIUM WAS PAID. ON PERUSAL OF SUCH LIST OF PERSONS PLACED ON RECORD BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT 52 PE RSONS WERE SHOWN TO HAVE BEEN PAID HONORARIUM RANGING BETWEEN RS.9,000/- TO RS.16,000/-. IN THE ABSENCE OF THE A SSESSEE FURNISHING COMPLETE REQUISITE DETAILS, THE ASSESSIN G OFFICER MADE DISALLOWANCE OF RS.7,82,465/-. THIS WAS DONE AFTER CONSIDERING CERTAIN INFIRMITIES IN PARTIAL DETAILS FURNISHED BY THE ASSESSEE, AS HAS BEEN RECORDED ON PARA 6 OF THE ASSESSMENT ORDER. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. ITA NO.897/DEL/2016 4 5. AFTER HEARING THE LD. AR AND PERUSING THE RELEVA NT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ASSESSI NG OFFICER RAISED QUERY ON 12.03.2013 AND THE ASSESSMENT ORDER WAS PASSED ON 28.03.2013. THE LD. AR CONTENDED THAT IN SUFFICIENT OPPORTUNITY WAS GRANTED BY THE ASSESSING OFFICER FO R PROVIDING NECESSARY DETAILS. CONSIDERING THE TIME ALLOWED BY THE ASSESSING OFFICER AND THE NATURE OF EVIDENCE RE QUIRED, I AM OF THE CONSIDERED OPINION THAT THE ENDS OF JUSTICE WOULD MEET ADEQUATELY IF THE IMPUGNED ORDER ON THIS ISSUE IS S ET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF ASSESSING OFF ICER. I ORDER ACCORDINGLY AND DIRECT HIM TO DECIDE THIS ISSUE AFR ESH AS PER LAW, AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. 6. GROUND NO.2 IS AGAINST CONFIRMATION OF DISALLOWA NCE OF RS.4,54,300/-, BEING, THE AMOUNT OF SALARY PAID TO FAMILY MEMBERS OF THE MANAGEMENT OF THE SOCIETY. ITA NO.897/DEL/2016 5 7. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSES SEE PAID A SUM OF RS.1,38,000/- TO SHRI R.K. GUPTA; RS.1,12,80 0/- TO SMT. KIRAN GUPTA; RS.1,23,700/- TO SHRI ROHIT GUPTA; AND RS.79,800/- TO MISS NIDHI GUPTA. INVOKING THE PROV ISIONS OF SECTION 13(3) READ WITH SECTION 13(2), THE ASSESSIN G OFFICER TREATED THE ENTIRE AMOUNT AS EXCESSIVE. THIS LED TO THE DISALLOWANCE OF RS.4,54,300/-. THE LD. CIT(A) SUST AINED THE ADDITION AFTER CONSIDERING THE ASSESSEES EXPLANATI ON, WHICH HAS BEEN RECORDED ON PAGE 8 OF THE IMPUGNED ORDER. 8. HAVING HEARD THE LD. AR AND PERUSED THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ASSESSEE RUNS A SCHOOL HAVING A STRENGTH OF 1030 STUDENTS. SMT. KIRAN GUPTA, WHO WAS PAID RS.1,12,800/-, IS THE PRINCIPAL AND PRESIDENT OF TH E SOCIETY. SHRI R.K. GUPTA, WHO WAS PAID RS.1,38,000/- IS THE SECRETARY OF THE SOCIETY, LOOKING AFTER OVERALL WORK AT THE S CHOOL. THE OTHER TWO PERSONS, NAMELY, SHRI ROHIT GUPTA AND MIS S NIDHI GUPTA ARE B.ED. AND DREW SALARY AT A NOMINAL LEVEL. PAYMENTS ITA NO.897/DEL/2016 6 MADE TO THESE PERSONS ARE NOT EXCESSIVE, CALLING FO R ANY DISALLOWANCE. SIMILAR EXPENSES WERE INCURRED IN THE SUCCEEDING YEARS AS WELL, WHICH GOT ALLOWED AT THE HANDS OF THE ASSESSING OFFICER. UNDER THESE CIRCUMSTANCES, I AM OF THE CONSIDERED OPINION THAT THE DISALLOWANCE OF RS.4,54 ,300/- WAS WRONGLY SUSTAINED. THE SAME IS ORDERED TO BE DELET ED. 9. GROUND NO.3 HAS TWO COMPONENTS, NAMELY, DISALLOW ANCE OF DEPRECIATION AND INTEREST. THE ASSESSEE CLAIMED DEPRECIATION ON HONDA CITY CAR AND I10 CARS. IN TH E ABSENCE OF ANY LOG BOOK OF CARS AND THE FURTHER FACT THAT N O SALARY PAYMENTS WERE MADE TO THE DRIVERS, THE ASSESSING OF FICER DISALLOWED THE AMOUNT OF DEPRECIATION, WHICH ACTION CAME TO BE UPHELD IN THE FIRST APPEAL. THE ASSESSEE IS AGGR IEVED AGAINST SUCH SUSTENANCE OF DISALLOWANCE. 10. IT IS OBSERVED FROM THE ASSESSEES SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW THAT THE CARS WERE USE D BY THE SOCIETY FOR ITS WORK OF SCHOOL. THE ASSESSEE SUBMI TTED THAT ITA NO.897/DEL/2016 7 THESE CARS WERE USED FOR VARIOUS PURPOSES, SUCH AS, LIAISONING WITH DIOS AND CBSE BOARD ETC. SUCH CONTENTIONS HAV E NOT BEEN REFUTED WITH ANY COGENT EVIDENCE EXCEPT FOR TH E FACT THAT NO SERVICE OF DRIVER WAS AVAILED AND, FURTHER, THE LOG BOOK WAS NOT MAINTAINED. IT IS SEEN THAT THE ASSESSEE SOCIE TY HAS USED VEHICLES IN THE SUCCEEDING YEARS AS WELL FOR WHICH NO DISALLOWANCE OF DEPRECIATION HAS BEEN MADE. IN VIE W OF THE FOREGOING DISCUSSION, I AM SATISFIED THAT THE LD. C IT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF DEPRECIATION AND THE SAME IS DIRECTED TO BE DELETED. 11. THE OTHER COMPONENT OF THIS GROUND IS DISALLOWA NCE OF INTEREST. THE ASSESSING OFFICER OBSERVED THAT FUND S OF THE SOCIETY WERE DIVERTED TO M/S DEV PACKAGING AND SHRI SANJAY GUPTA, WHO IS ONE OF THE TRUSTEES OF THE SOCIETY. S UCH DIVERSION OF FUNDS TO M/S DEV PACKAGING AND SHRI SANJAY GUPTA AMOUNTED TO RS.17 LAC. THE ASSESSING OFFICER HELD THAT THE ASSESSEE SHOULD HAVE EARNED INTEREST @ 10% FROM THE SE ITA NO.897/DEL/2016 8 PERSONS. THAT IS HOW, ADDITION OF RS.1,70,000/- WA S MADE. THE LD. CIT(A) ALLOWED RELIEF OF RS.1,19,000/- BY H OLDING THAT THE RATE OF INTEREST AT 10% FOR THREE MONTHS WAS QU ITE EXCESSIVE. APPLYING THE RATE OF 12% FOR THREE MONT HS, HE REDUCED THE DISALLOWANCE TO RS.51,000/-. THE ASSES SEE IS AGGRIEVED AGAINST THIS DISALLOWANCE. 12. THE LD. AR CONTENDED THAT THE FUNDS TO M/S DEV PACKAGING AND SHRI SANJAY GUPTA WERE GIVEN FOR PURC HASE OF SOME PROPERTY, WHICH TRANSACTION COULD NOT FRUCTIFY . IT WAS FURTHER STATED THAT SUCH AMOUNT OF RS.17 LAC GIVEN TO M/S DEV PACKAGING AND SHRI SANJAY GUPTA WAS LATER RETURNED. THE LD. AR STILL FURTHER CONTENDED THAT THE ASSESSING OFFIC ER DID NOT GRANT ADEQUATE OPPORTUNITY TO THE ASSESSEE TO PUT F ORTH THE EVIDENCE IN SUPPORT OF THIS CONTENTION. CONSIDERIN G THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES AS PREVAILI NG IN THE INSTANT CASE, I SET ASIDE THE IMPUGNED ORDER ON THI S SCORE AND REMIT THE MATTER TO THE FILE OF ASSESSING OFFICER F OR EXAMINING ITA NO.897/DEL/2016 9 THE CONTENTION OF THE ASSESSEE IN THE LIGHT OF EVID ENCE, WHICH IT PROPOSES TO FILE. NEEDLESS TO SAY, THE ASSESSEE WIL L BE ALLOWED A REASONABLE OPPORTUNITY OF HEARING. 13. THE LAST GROUND IS AGAINST THE ADDITION OF RS.2 ,04,757/-. THE ASSESSING OFFICER TREATED `SURPLUS AS INCOME. THE LD. CIT(A) NOTICED THAT THE ASSESSEE WAS ENJOYING REGIS TRATION U/S 12A OF THE ACT AND ITS INCOME WAS EXEMPT U/S 11. C ONSIDERING THE APPLICATION OF INCOME AT 85%, THE LD. CIT(A) HE LD THAT THE ADDITION WAS NOT CALLED FOR. HOWEVER, ON PERUSAL O F THE DETAILS FILED BY THE ASSESSEE FOR APPLICATION OF INCOME, HE OBSERVED THAT THE ASSESSEE, INTER ALIA, CLAIMED INCURRING OF CAPITAL EXPENDITURE OF RS.2,04,757/- TOWARDS COST OF CONSTR UCTION OF BUILDING AND OTHER CAPITAL ASSETS, FOR WHICH NO DET AILS/EVIDENCE WERE GIVEN. THIS IS HOW, SURPLUS OF RS.2,04,757/- WAS ADDED. 14. THE LD. AR CONTENDED THAT THE LD. CIT(A) DID NO T GIVE ANY OPPORTUNITY BEFORE TREATING UTILIZATION OF SURPLUS OF RS.2,04,757/- AS NOT BACKED BY ANY EVIDENCE. IT WA S SUBMITTED ITA NO.897/DEL/2016 10 THAT THE ADDITION WAS MADE BY THE LD. CIT(A) WITHOU T CONFRONTING THE ASSESSEE WITH HIS POINT OF VIEW. C ONSIDERING THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, I AM OF THE CONSIDERED OPINION THAT THE ENDS OF JUSTICE WOULD M EET ADEQUATELY IF THE IMPUGNED ORDER ON THIS ISSUE IS A LSO SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF ASSESSING OFFICER FOR DECIDING IT AFRESH AS PER LAW, AFTER ALLOWING A REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.12.2017. SD/- [R.S. SYAL] VICE PRESIDENT DATED, 18 TH DECEMBER, 2017. DK ITA NO.897/DEL/2016 11 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.