M/S Malwa Education Service Society, Indore V. THE ACIT 2(1), Indore

ITA 917/IND/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2388 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 05-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N AGARWALPANKAJMOGRA CA S
• Keywords: Depreciation
• Section: 12A; 6; 12; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.917/IND/2016 ASSESSMENT YEAR: 2005-06 M/S MALWA EDUCATION SERVICE SOCIETY, GRAM LIMBODI, KHANDWA ROAD, INDORE(MP) / VS. ACIT - 2 ( 1 ), INDORE (APPELLANT) (REVENUE ) P.A. NO. AAATM1743N APPELLANT BY SHRI S.N. AGARWAL&PANKAJMOGRA CA S REVENUE BY SHRI RAJIV JAIN , SR. DR DATE OF HEARING: 03.01.2018 DATE OF PRONOUNCEMENT: 10.01.2018 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-22, NEW DELHI H OLDING THE CHARGE OF LD. COMMISSIONER OF INCOME TAX(APPEALS),I NDORE-2, (IN SHORT CIT(A)), DATED 15.06.2016 PERTAINING TO THE A.Y. 2005-06. IN ADDITION TO GROUNDS OF APPEAL AS RAISED WHILE FILIN G THE APPEAL, THE ASSESSEE HAS TAKEN FOLLOWING ADDITIONAL GROUND OF A PPEAL: MALWA EDUCATION S. S. 2 FIRST WE TAKE UP THE ADDITIONAL GROUNDS THAT READ A S UNDER: 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE APPELLANT TRUST IS ELIGIBLE TO GET REGISTRATION U/S 12A OF THE INCOME TAX ACT. SINCE, THE APPLICATION AS FILED FOR THE REGISTRATION OF THE TRUST U/S 12A FOR THE ACT WAS N OT DISPOSED OFF WITHIN 6(SIX) MONTHS FROM THE DATE OF APPLICATION I N VIEW OF DIRECT DECISION OF THE HON'BLE APEX COURT IN THE CA SE OF CIT VS. SOCIETY FOR THE PROMOTION OF EDUCATION AS REPORTED IN 382 ITR 0006 (SC) 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AS PER PROVISO TO SECTION 12A(2) OF THE ACT, THE REGISTRAT ION THOUGH GRANTED FROM THE DATE OF APPLICATION ALSO APPLICABL E ON ALL THE CASES PENDING AS ON THE DATE OF REGISTRATION AND TH EREFORE THE SAME IS ALSO APPLICATION IN THE ASSESSMENT YEAR UND ER CONSIDERATION. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. ASSESSING OFFICER ERRED IN NOT EXCLUDING 15% OF THE RECEIPT AVAILABLE FOR SET-APART WHILE CALCULATING TOTAL INC OME OF THE ASSESSEE. 2 . BRIEFLY STATED FACTS IN RESPECT OF THE ADDITIONAL GROUNDS ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE CLAI MED DEEMED REGISTRATION U/S. 12A. HENCE REQUESTED FOR EXEMPTIO N U/S 11 & 12 OF THE ACT, THE SAID REQUEST OF THE ASSESSEE WAS RE JECTED BY THE AO.ON FURTHER APPEAL TO THE LD. CIT(A), ACTION OF A SSESSING OFFICER WAS CONFIRMED. 3. BEFORE THE LD. CIT(A), THESE GROUNDS ARE NOT TAK EN ASTHESE HAVE BEEN TAKEN FIRST TIME. HOWEVER, BEING LEGAL GROUNDS SAME ARE ADMITTED FOR ADJUDICATION. 4. THE LD. AUTHORIZED REPRESENTATIVE VEHEMENTLY ARG UED THAT AUTHORITIES BELOW WERE NOT JUSTIFIED IN NOT ALLOWIN G THE BENEFIT OF SECTION 11& 12 OF THE ACT. HE REITERATED THE SUBMIS SIONS AS MADE MALWA EDUCATION S. S. 3 BEFORE THE LD. CIT(A). THE LD. AR SUBMITTED THAT TH E ASSESSEE HAD FILED AN APPLICATION U/S 12A ALONG WITH COPY OF FOR M NO.10A ON 02.04.2007. HE SUBMITTED THAT THE AUTHORITIES BELOW OUGHT TO HAVE GRANTED THE EXEMPTION. THE LD. AR WAS CONFRONTED WI TH THE PROVISIONS OF SECTION 12A AND 12AA. THE LD. AR COUL D NOT RESPOND THE QUERY RAISED DURING THE COURSE OF HEARING. ON T HE CONTRARY, THE LD. DR SUPPORTED THE ORDER OF THE AUTHORITIES BELOW AND TOOK US THROUGH THE PROVISIONS OF SECTION 12A. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT BEFORE THE LD. CI T(A), THE ASSESSEE ITSELF HAD CONSIDERED THE FACTS THAT THE ASSESSEE T RUST IS ELIGIBLE TO TAKE ADVANTAGE OF PROVISIONS OF SECTIONS 11 & 12 FR OM THE A.Y. 2008-09. HAVING CONSIDERED THE PROVISION OF SECTION 12A WERE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT HE IS EN TITLED FOR THE BENEFIT UNDER THE DEEMING CATEGORY OF REGISTRATION. THESE ADDITIONS GROUNDS OF ASSESSEE ARE DISMISSED. 6. NOW COMING TO THE GROUNDS OF APPEAL. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL AS UNDER: 1.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN MAINTAINING FOLLOWING DISALLOWANCE OUT OF THE VARIOUS EXPENSES: S. NO. NATURE OF EXPENSES AMOUNT (RS.) 1 OUT OF CAR RUNNING & MAINTENANCE EXPENSES 28,351 2 OUT OF DEPRECIATION 75,736 3 OUT OF CONVEYANCE EXPENSES 58,263 MALWA EDUCATION S. S. 4 4 OUT OF INSURANCE EXPENSES 10,683 1,73,033 THE EXPENSES AS DISALLOWED BY THE ASSESSING OFFICER AND AS MAINTAINED BY THE LD. CIT(A) WITHOUT PROPERLY APPRE CIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HIM WA S NOT PROPER. 2.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE DISALLOWANCE AS MADE BY THE ASSESSING OFFICER OF RS.5,61,620/- BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT EVEN WHEN NO SUCH AMOUNT WAS SHOWN AS PAYAB LE IN THE BOOKS OF ACCOUNT IS NOT JUSTIFIABLE IN VIEW OF DIRECT DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF VICTOR SHIPPING P. LTD. 2.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. ASSESSING OFFICER ERRED IN DISALLOWING ENTIRE A MOUNT OF EXPENSES BY INVOKING THE PROVISION OF SECTION 40(A) (IA) OF THE ACT EVEN WHEN 30% OF SUCH EXPENSES CAN ONLY BE DISALLOW ABLE UNDER THIS SECTION. 7. GROUND NO.1 IS AGAINST AD HOC DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A). THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAS MADE AD HOC DISALLOWANCE WITHOUT ANY CONCRETE EVIDE NCE, AND ON THE BASIS OF CONJECTURES AND SURMISES ALONE. 8.ON THE CONTRARY, THE LD. DR SUPPORTED THE ORDER O F THE AO. 9. WE FIND MERIT INTO THE CONTENTION THAT AO HAS MA DE AD HOC DISALLOWANCE ON ESTIMATE BASIS. NO MATERIAL IS PLAC ED ON RECORD THAT THE VEHICLES WERE USED BY THE ASSESSEE FOR OTHER TH AN THE BUSINESS ACTIVITY. THEREFORE, IN OUR VIEW, THE AO WAS NOT JU STIFIED IN DISALLOWING THE DEPRECIATION AND INSURANCE ON CARS. FURTHER, THE AO MADE DISALLOWANCE ON AD HOC BASIS IN RESPECT OF CON VEYANCE AND MALWA EDUCATION S. S. 5 TRAVELLING EXPENSES, STUDENT WELFARE EXPENSES AND A LSO WITHOUT BRINGING ANY MATERIAL EVIDENCE ON RECORD. WE, THERE FORE, DIRECT THE AO TO DELETE THIS DISALLOWANCE. 10. NOW COMING TO GROUND NO.2.1 & 2.2 AGAINST THE D ISALLOWANCE MADE BY INVOKING PROVISIONS OF SECTION 40(A)(IA). 11. APROPOS GROUND NO.2.1, THE LD. AR HAS RELIED UP ON THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT REFERRED IN THE CASE OF VICTOR SHIPPING P. LTD. THIS JUDGMENT HAS BEEN OVER RULED BY THE HON'BLE APEX COURT IN THE CASE OF PALAM GAS SERVICE S VS. CIT VIDE JUDGMENT DATED 3 RD MAY 2017, THUS, GROUND 2.1 IS REJECTED. 12. APROPOS GROUND NO.2.2,THE COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) IN PARA4 .6.1 & 4.4.2 OF HIS SUBMISSIONS WHICH ARE REPRODUCED AS UNDER: 4.6.1 IN THE P & L A/C THE ASSESSEE HAD DEBITED KI TCHEN EXP. OF RS.14,73,071/-. IN THIS CONTEXT VIDE OFFICE QUER Y LETTER DATED 20.12.2007 ALONG WITH NOTICE U/S 142(1), THE ASSESS EE WAS ASKED TO FURNISH NECESSARY DETAILS/EVIDENCES TO JUS TIFY ITS CLAIM OF EXPENDITURE. THE ASSESSEE WAS REQUIRED TO FURNIS H DETAILS/EVIDENCES ON 14.12.2007. 4.6.2 THE ASSESSEE HAD FURNISHED THE COPY OF THE LE DGER OF THE EXPENSES HOWEVER NO OTHER DETAILS ESPECIALLY THE VO UCHERS RELATED TO THESE EXPENSES WERE FURNISHED. BESIDES T HIS THE ASSESSEE HAD CONTENDED THAT THIS EXPENDITURE WAS PR IMARILY INCURRED FOR PROVING MEALS TO THE STUDENTS. 10. ON THE CONTRARY LD. DR SUPPORTED THE ORDER OF T HE AO. 11. WE HAVE HEARD THE RIVAL CONTENTIONS, THE ASSESS EE HAS RELIED UPON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN TH E CASE OF CIT VS. ANSAL LANDMARK (SUPRA). THE HON'BLE HIGH COURT HAS CONFIRMED THE FINDINGS OF THE TRIBUNAL THAT IF THE RECIPIENT HAD OFFERED MALWA EDUCATION S. S. 6 THEPAYMENT FOR TAXATION NO DISALLOWANCE U/S 40(A)(I A) CAN BE MADE. RESPECTFULLY, FOLLOWING THE SAME WE HEREBY SET ASID E THIS ISSUE TO THE FILE OF THE AO TO VERIFY WHETHER THE RECIPIENTS HAVE OFFERED THE PAYMENT MADE TO THEM FOR TAX. THESE GROUNDS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSE. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 10.01.201 8. SD/- (MANISH BORAD) SD/- (KUL BHARAT) /ACCOUNTANT MEMBER / JUDICIALMEMBER INDORE; DATED : 10/ 01/2018 PATEL, P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE