The ACIT, 2(1), Bhopal V. M/s Hai Hey Kshetriya Education Society, Bhopal

MA 41/IND/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8078 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 16-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAV SAXENA
• Assessee Lawyers: H CHIMNANI
• Keywords: Depreciation; Charitable institution; Period of limitation; Benefit of exemption; Time period of passing order; Capital expenditure
• Section: 133A; 12A; 6; 12

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI R.C. SHARMA , AM M.A. NOS. 36 TO 42/IND/2011 ARISING OUT ITA NOS.51, 56,510,52,53,54 & 55/IND/20 10 A.YS.1998-99, 2003-04,2004-05,1999-00,2000-01,2001- 02 & 2002-03 ACIT 2(1) BHOPAL :: APPLICANT VS M/S. HAI HAY KSHETRIYA EDUCATION SOCIETY BHOPAL PAN AAATL -1635N :: RESPONDENT APPELLANT BY SHRI KESHAV SAXENA RESPONDENT BY SHRI H.CHIMNANI DATE OF HEARING 11 .05.2012 DATE OF PRONOUNCEMENT 2 1 .05.2012 O R D E R PER R.C. SHARMA, AM THESE MISCELLANEOUS APPLICATIONS ARE FILED BY THE REVENUE TO RECTIFY THE MISTAKES ALLEGED TO BE APPAR ENT IN THE ORDER OF THE TRIBUNAL DATED 23 RD MAY, 2011. 2. THE SUBMISSION OF THE LEARNED CIT DR IN THE MISCELLANEOUS APPLICATION SO FILED WAS AS UNDER :- 2 THE DECISION TAKEN BY THE HONBLE ITAT VIDE ORDER D ATED 23TH MAY, 2011 IS FACTUALLY AND LEGALLY INCORRECT AND REQUIRES RECTIFICATION U/S 254 OF THE I.T. ACT IN VIE W OF THE FOLLOWING SETTLED PRINCIPLES OF LAW:- (1) WHILE DECIDING THE ISSUE WHETHER ADVANCE OF RS. 41. 75 LAC TO THE THAN SECRETARY OF THE SOCIETY SHRI JAY NARAY AN CHOUKSEY, IS FOR PERSONAL PURPOSES OR FOR PURCHASE OF LAND, THE HONBLE ITAT CONSIDERED THE ARGUMENT OF ASSESSEE ONLY AND FAILED TO CONSIDER THE ARGUMENT O F THE DEPARTMENT (SUBMISSION DATED 05.04.2011, COPY ENCLOSED) RELEVANT PART OF WHICH IS REPRODUCED BELO W FOR READY REFERENCE:- DURING SURVEY U/S 133A DATED 03.07.2001 IMPOUNDED PAGE NO. 152 AND 153 WAS LETTER WRITTEN BY SECRETARY SH RI JAY NARAYAN CHOUKSEY OF HAI HAY EDUCATION SOCIETY, BHOPAL TO ITS PRESIDENT DATED 18.10.1996 WHICH IS REPRODUCED IN THE ASSESSMENT ORDER. THIS SHOWS THAT BETWEEN 20.09.1994 TO 1996 AN AMOUNT OF RS. 41.75 L AC WAS GIVEN AS ADVANCE TO THE PRESIDENT OF THE SOCIETY WITHOUT ANY INTEREST AND WITHOUT ANY SECURITY. AS PER THIS LETTER, RS. 25 LAC WAS BE SHOWN AS ADVANCE TOWARDS L AND TO SAVE HIS PRESTIGE. THE SOCIETY HAS RECEIVED REGISTRATION U/S 12A OF THE I .T. ACT FROM 01.04.1996. IN A.Y. 1996-97 AFTER RECEIVING THE REGISTRATION THE ASSESSEE SOCIETY GAVE ADVANCE OF RS. 4.5 LAC TO ITS PRESIDENT AND THERE WAS OUTSTANDING BALANC E OF RS. 36.75 LAC. EVEN NOW AN AMOUNT OF OVER RS. 8.00 L AC IS OUTSTANDING. IN THIS REGARDS I WOULD LIKE TO STATE THAT THE ENTI RE AMOUNT OF RS. 41.75 LAC WAS EXTENDED TO THE PRESIDEN T OF THE SOCIETY FOR HIS PERSONAL USE. THE ASSESSEE COMPLETELY FAILED TO FURNISH ANY LAND DOCUMENT/AGREEMENT/OR EVE N SURVEY NO. OF ANY LAND PERTAINING TO SHRI SUBHASH SHA RMA (AS MENTIONED IN THE LETTER). ONUS WAS ON ASSESSEE TO PROVIDE PROOF REGARDING THE SO CALLED LAND, BUT ASSESSE E FAILED TO GIVE DETAIL OF ANY SUCH LAND. BESIDES IF LAND WAS 3 TO BE PURCHASED/LEASED BY THE ASSESSEE SOCIETY FROM THE LAND OWNER PAYMENT SHOULD HAVE BEEN MADE TO THE LAND OWNER AND THERE IS NO LOCUS STANDI TO MAKE ANY PAYM ENT TO THE PRESIDENT OF THE SOCIETY. BESIDES THIS, THE P AYMENT TO THE PRESIDENT IS MADE EVERY MONTH WHICH CAN NEVER B E FOR LAND ADVANCE AND IT IS TOWARDS PERSONAL USE OF THE PRESIDENT ONLY. EVEN IF IN THE WORST CASE ASSESSEES EXPLANATION IS ACCEPTED, EVEN THEN ONLY AN AMOUNT O F RS. 25 LAC CAN BE CONSIDERED AS ADVANCED TOWARDS LAND AND BALANCE OUT OF RS. 16.75 LAC IS ADMITTEDLY TOWARDS PERSONAL USE OF PRESIDENT AND WHICH IS NOT PERMITTED B Y LAW. AS PER SETTLED POSITION OF LAW THE TRIBUNAL HAS TO R ECALL AN APPEAL IF IT FINDS THAT IT HAS OMITTED TO DEAL WIT H AN IMPORTANT GROUND OR AN IMPORTANT ARGUMENT OR AN IMPORTANT JUDGEMENT URGED BY THE PARTIES AS HELD IN THE FOLLOWING CASES:- (I) MODU TIMBLO VS. ITO (ITAT, PUNE) 53 ITD 53. (II) MOHAN MEAKIN LTD. VS. ITO (ITAT, DEL-TM) 89 ITD 179. (III) HANSA AGENCIES (P) LTD. VS. IAC (ITAT, ASR.) 71 ITD 359. (2) NOT ONLY THE AFORESTATED ARGUMENT OF THE DEPARTMENT WAS NOT CONSIDERED BY THE TRIBUNAL BUT HONBLE TRIBUNAL CAME TO THE CONCLUSION THAT SUCH ADVANCES TO SHRI J.N. CHOU KSEY, THE SECRETARY OF THE SOCIETY WAS FOR THE PURPOSE OF THE P URCHASE OF LAND WITHOUT HAVING ANY EVIDENCE OF LAND PURCHASE ON RECORD. SUCH DECISION OF HONBLE TRIBUNAL WAS PURELY BASED ON ASSUMPTIONS, CONJECTURES & SURMISES BECAUSE OF T HE FOLLOWING REASONS:- A) THE ASSESSEE FAILED TO PROVIDE ANY LAND AGREEMENT/LAND DOCUMENTS OR ANY OTHER PROOF TO ESTABLISH ANY LAND PURCHASE THROUGH SHRI J.N. CHOUKSEY. MINUTES OF MEETING OF THE BOARD ALSO DOES NOT PROVE ANYTHING. B) NEITHER ANY SURVEY NO. OF THE LAND NOR NAME & ADDRE SS OF ITS OWNER WAS PROVIDED. IT IS NOWHERE STATED BY 4 ASSESSEE AS TO WHAT WAS LAND SIZE, TOTAL SALE CONSIDERATION FOR LAND & HOW MUCH ADVANCE WAS GIVEN TO LAND OWNER IN ORDER TO EXPLAIN SUCH ADVANCE OF R S. 41.75 LACS. C) ASSESSEE FAILED TO GIVE ANY REASON AS TO WHY PAYMEN T HAS BEEN MADE TO SHRI J.N. CHOUKSEY, SECRETARY OF T HE SOCIETY AND NOT TO THE OWNER OF THE LAND. D) AS PER THE IMPOUNDED PAPERS NO. 152 & 153 THE PAYMENT IS MADE TO SHRI J.N. CHOUKSEY MOSTLY IN CAS H IN AMOUNTS VARYING FROM RS. 50,000/- TO RS. 5,00,00 0/- IN CASH. WHY THIS PAYMENT WAS MADE IN CASH AND NOT THROUGH CHEQUE IS NOT YET EXPLAINED. TWO OF THE PAYMENTS NAMELY RS. 2 LAC PAID ON 20.09.1994 AND RS . 9 LAC PAID ON 08.10.1994 ARE DEMAND DRAFT PAID TO MPF, AND PAYMENT OF RS. 1.25 LAC IS CASH PAID IN GWALIOR. THESE PAYMENTS ARE CLEARLY TOWARDS PERSONA L EXPENSES OF SHRI J.N. CHOUKSEY. WHEN THESE PAGES 15 2 & 153 WERE REPRODUCED IN THE ASSESSMENT ORDER AND ARGUED BEFORE THE HONBLE ITAT IT SHOULD HAVE BEEN CONSIDERED THAT THESE PAYMENT COULD NOT BE FOR PURCHASE OF LAND BUT THEY WERE GIVEN FOR PERSONAL U SE OF SHRI J.N. CHOUKSEY, BECAUSE FIRSTLY LAND ADVANC E IS NOT GIVEN IN SUCH SMALL INSTALLMENTS, SECONDLY SPEC IFIC MENTION IS THERE FOR PERSONAL EXPENSES OF SHRI J.N . CHOUKSEY AND THIRDLY LAND ADVANCES ARE NEVER MADE I N CASH. E) IN THE LETTER DATED 18.10.1996 ITSELF SHRI J.N. CHO UKSEY HIMSELF WROTE TO THE PRESIDENT TO SHOW THIS AMOUNT UPTO RS. 25 LAC AS ADVANCES TOWARDS LANDS TO SAVE HIS PRESTIGE . IF IT WAS A GENUINE ADVANCE TOWARDS LAND THE PRESTIGE OF SHRI J.N. CHOUKSEY WOULD NOT BE AT STAK E. ON NO ACCOUNT WHATEVER SHOULD THE TRIBUNAL BASE ITS FINDINGS ON SUSPICIONS, CONJECTURES OR SURMISES, NOR SHOULD IT ACT ON NO EVIDENCE AT ALL O R ON IMPROPER REJECTION OF MATERIAL AND RELEVANT EVIDENCE, AS HELD IN FOLLOWING CASES:- I. J. BHEEMANANDA GUPTA (2001) 250 ITR 537 (KAR.) II. LALCHAND BHAGAT AMBICA RAM (1959) 37 ITR 288 (SC). 5 (3) NOT TAKING NOTE OF FACTS OF THE CASE, NOR LEGAL POSITION AND NOT EVEN REFERRING TO THE FACTS OF THE CA SE INVOLVED IN THOSE DECISIONS ON WHICH THE RELIANCE I S PLACED FOR DECIDING THE APPEAL AMOUNTS TO NON EXERCISE OF APPELLATE POWER BY THE TRIBUNAL AS HELD IN THE CASE OF G.M. MITTAL STAINLESS STEEL LTD. [2004] 271 ITR 219 (MP ), WHICH IS A DECISION OF INDORE BENCH OF JURISDICTIONAL HIGH C OURT AND BINDING ON THE TRIBUNAL. THE HONBLE MEMBERS REPEATEDLY ARGUED IN THEIR DECISION THAT AFORESAID AMOUNT OF ADVANCES WAS NOT GIVEN IN THE YEAR UNDER CONSIDERATION. BUT AS PER THE UNDISP UTED FACTS, RS. 8,87,518/- ADVANCES WERE STILL OUTSTANDING. THE REQUIREMENT OF SECTION 13 (2)(A) OF THE I.T. ACT IS THAT THE AMOUNT OF ADVANCE IS LENT OR CONTINUES TO BE LENT, THEN SECTION WILL APPLY. THEREFORE THIS SECTION APPLIES EVEN IF SUCH ADVANCES CONTINUES TO BE LENT IN SUBSEQUENT YEARS. HENCE HONBLE MEMBERS INCORRECTLY APPLIED THE PROVISIONS OF SECTION 13 (2)(A) OF THE I.T. ACT. BESIDES THIS THEY APPLIED THE CASE OF GURU GOVIND SINGH EDUCATION SOCIETY 118 ITD 207 (ASR.) IN FAVOUR OF ASSESSEE WHICH IS INFACT AGAINST THE ASSESSEE. IT IS BECAUSE AS PER PARA 24 OF THIS ORDER THE CONCERNED PERSONS SHRI VIJAY KUMAR AND SHRI AJITLAL TO WHOM ADVANCE FOR LAND WAS GIVEN, WE RE NOT ONLY PRODUCED BUT AFFIDAVITS OF SUCH PERSONS WERE ALSO F ILED. IN THE PRESENT CASE SUCH LAND OWNER WAS NEITHER PRODUCED N OR HIS AFFIDAVIT WAS SUBMITTED THEREBY FAILING TO PROVE AN Y LAND TRANSACTION. THE HONBLE MEMBERS HAVE ALSO APPLIED ANOTHER DECISION IN CASE OF COSMOPOLITAN EDUCATION SOCIETY 241 ITR (ST.) 132 BUT THIS IS A DECISION ON SECTION 10 (22) OF THE I.T. ACT AND NOT ON SECTION 13 (2)(A) OF THE I.T. ACT. T HE RESTRICTIONS OF SECTION 13 (2)(A) OF THE I.T. ACT ARE NOT APPLIC ABLE TO SECTION 6 10 (22) AND THEREFORE THAT CASE LAW HAS NO APPLICAT ION IN PRESENT CASE WHERE ASSESSEE HAS CLAIMED EXEMPTION U /S 11 OF THE I.T. ACT. INFACT THAT DECISION OF COSMOPOLITAN EDUCATION SOCIETY 241 ITR (ST.) 132 WAS NOT EVEN FOLLOWED IN CASE OF COSMOPOLITAN EDUCATION SOCIETY ITSELF IN SUBSEQUENT YEAR WHEN DECISION OF TRIBUNAL WAS SET-ASIDE BY THE HIGH COURT WITH THE DIRECTION TO EXAMINE MIS-UTILIZATION OF TH E FUNDS BY THE TRUSTEES AS REPORTED IN 299 ITR 47 (RAJ.). IN VIEW OF THE ABOVE, THE ONLY DECISION OF HIGH CO URT AVAILABLE ON SECTION 13 (2)(A) WAS OF PT. KANAHYALAL PUNJ CHARITABLE TRUST- 297 ITR 66 (DEL) WHICH IS ON THE FACTS EXACTLY SIMILAR TO THAT OF ASSESSEE, AS IN THAT CASE ALSO A DVANCE OF RS. 75 LAC WAS GIVEN TO M/S PUNJ LLOYED LTD. AS EARNEST MONEY FOR PURCHASE OF LAND FOR A SCHOOL PROJECT AND THE AMOUN T WAS SUBSEQUENTLY FULLY RETURNED BUT THE HONBLE HIGH CO URT HELD THAT THE TRUST SHOULD USE THEIR FUNDS ONLY FOR THE CHARITABLE OBJECT AND THEY CANNOT BE PERMITTED TO LOAN OR DEPO SIT FUNDS AVAILABLE WITH THEM WITHOUT INTEREST AND WITHO UT ANY ADEQUATE SECURITY. THUS THERE IS CLEAR VIOLATION OF SECTION 13(1)(C) AND 13 (2)(A) OF THE I.T. ACT. THEREFORE EX EMPTION U/S 11 & 12 IS DENIED. IT IS SETTLED POSITION OF LAW THAT IF THERE IS ONLY ONE HIGH COURT DECISION ON ANY SECTION OF THE ACT THEN IT IS BINDING ON ALL THE TRIBUNALS AS HELD IN FOLLOWING CA SES:- (I) G.M. MITTAL STAINLESS STEEL LTD. (2004) 271 ITR 219 (MP). (II) CIT VS. SODAVRIDEVI SARAF (BOM.) 113 ITR 589 (III) ITO VS. PM SUTHAR (ITAT-AHM. TM) 53 ITD 1. THERE IS THEREFORE MISTAKE APPARENT FROM THE RECORD BECAUSE THE BINDING PRECEDENT IN THE CASE OF PT. KA NAHYALAL PUNJ CHARITABLE TRUST- 297 ITR 66 (DEL) WHICH WAS DULY C ITED BY REVENUE WAS NOT FOLLOWED BY THE HONBLE ITAT AND TH EREFORE IT IS REQUESTED THAT SUCH MISTAKE SHOULD BE RECTIFIED U/S 254 OF THE I.T. ACT FOLLOWING THE BINDING DECISION OF JURISDICTIONA L HIGH COURT IN CASE OF G.M. MITTAL STAINLESS STEEL LTD. AND ALSO B ECAUSE OF 7 BINDING STRENGTH OF DECISION OF PT. KANAHYALAL PUNJ CHARITABLE TRUST. (4) EVEN FOR A.Y. 1998-99 EXEMPTION U/S 11 IS CLAIMED AND NO EXEMPTION IS CLAIMED BY ASSESSEE U/S 10 (22) OF I.T . ACT. AS A RESULT OF VIOLATION OF PROVISIONS OF SECTION 13(2)( A) & 13 (1)(C) OF THE I.T. ACT CLAIM OF ASSESSEE U/S 11 & 12 OF I. T. ACT IS LOST AND IN SUCH CIRCUMSTANCES CLAIM U/S 10 (22) OF I.T. ACT CANNOT BE ALLOWED TO ASSESSEE, BECAUSE FIRSTLY IT IS NOT C LAIMED IN THE RETURN FILED BY ASSESSEE, SECONDLY FROM A.Y. 1999-2 000, ASSESSEE IS NOT APPROVED BY PRESCRIBED AUTHORITY TO CLAIM DEDUCTION U/S 10 (23C) (VI) OF THE I.T. ACT AND THI RDLY MISUSE AND EMBEZZLEMENT OF PUBLIC FUNDS IS ESTABLISHED WHI CH IS SERIOUSLY VIEWED BOTH BY STATUTE & BY THE COURTS. 3. THE FURTHER SUBMISSION OF THE LEARNED CIT DR WAS AS UNDER :- IN THIS CASE A SURVEY ACTION TOOK PLACE IN WHICH TW O IMPOUNDED INCRIMINATING PAPER 152 & 153 WERE REPRODUCED IN BODY OF ASSESSMENT ORDER SHOWING AN ADVANCE OF CASH OF RS. 41.75 LAC TO SHRI J.N. CHOUKSEY, THE THEN SECRETARY OF THE SOCIETY DULY COVERED IN LIST OF INTERESTED PERSON AS DEFINED UNDER SECTION 13(3) OF THE I.T. ACT IN THAT PAGE ITSELF SHRI J.N. CHOUKSEY REQ UESTED TO SHOW RS. 25 LAC OUT OF THE ABOVE AS LAND ADVANCE TO SAVE HIS PRESTIGE . THIS ITSELF SHOWS THAT IT WAS NOT A LAND ADVANCE BUT PERSONAL ADVANCE. OUT OF THIS RS. 8,87, 518/- REMAIN OUTSTANDING & WAS LOST FOR EVER AS SHRI J.N. COUKSEY EXPIRED. THIS TENTAMOUNTS TO EMBEZZLEMENT OF PUBLIC FUNDS, WHICH HAPPENED BECAUSE SUCH ADVANCE TO SHRI J.N. CHOUKSEY WAS NOT SECURED AS REQUIRED U/S 13(2)(A) O F THE I.T. ACT. DURING ORIGINAL HEARING IT WAS ARGUED (SUBMISSION DATED 05.04.2011 COPY ENCLOSED ANNEXURE 1) BY UNDERSIGNED THAT THERE IS NO LAND DEAL SINCE ASSESSEE 8 HAS NOT GIVEN ANY LAND SURVEY NO. OR NAME & ADDRESS OF LAND OWNER OR AMOUNT OF TRANSACTIONS INVOLVED. WITH OUT GIVING SUCH DETAILS HOW CAN IT BE TERMED AS ADVANCE FOR LAND WITHOUT HAVING BROUGHT ANY PROOF OF LAND PURCHASE ON RECORD. THE HONBLE MEMBERS CAME TO CONCLUSION T HAT SUCH AMOUNT WAS GIVEN TO SHRI J.N. CHOUKSEY AS LAN D ADVANCE. THEREFORE AN MA APPLICATION WAS FILED. DU RING HEARING OF MA APPLICATION FOLLOWING ISSUES WERE AGA IN SPECIFICALLY RAISED BEFORE HONBLE MEMBERS, THROUGH ARGUMENTS AS WELL AS THROUGH WRITTEN SUBMISSION DAT ED 24.02.2012 (COPY ENCLOSED, ANNEXURE-2):- (I) THAT TILL DATE ASSESSEE HAS NOT BROUGHT ON RECORD A NY AGREEMENT FOR PURCHASE OF LAND. ANY PAYMENT TO LAND OWNER IS POSSIBLE ONLY WHEN AGREEMENT OF SOME KIND IS THERE. (II) EVEN THE SURVEY NO. OF LAND, NAME & ADDRESS OF LANDO WNER, HIS CONFIRMATION FOR RECEIVING SUCH AMOUNT WAS NOT FILED AS THE AMOUNT AS PER RECORD WAS NOT PAID TO LAND OWNER BUT WAS PAID TO SHRI J.N. CHOUKSEY, THE SECRETARY OF TH E ASSESSEE TRUST. (III) SPECIFIC ISSUE WAS RAISED DURING HEARING BY UNDERSI GNED THAT IF NO PROOF OR DETAILS ARE SUBMITTED BY ASSESS EE IN TERMS OF LAND PURCHASE AGREEMENT AND EVEN COPY OF L EDGER AMOUNT IS NOT SUBMITTED SHOWING ADVANCE FOR LAND, T HEN HOW HONBLE MEMBERS CAME TO CONCLUSION THAT SUCH AMOUNT OF RS. 41.75 LAC WAS ADVANCE FOR LAND. FROM WHERE THIS AMOUNT WAS VERIFIED BY HONBLE MEMBERS & HOW I T WAS DECIDED THAT SUCH AMOUNT WAS GIVEN FOR PURCHASE OF LAND. ON THIS ISSUE THEY HEAVILY RELIED ON PAGE NO. 57 TO 66 OF PAPER BOOK (AS PER PAGE 46 OF THE ITAT ORDER COP Y ENCLOSED, ANNEXURE-3) SUBMITTED BY ASSESSEE WHICH A RE MINUTES OF MANAGING COMMITTEE MEETING. ENTIRE CONTEN T OF THESE PAGES IS READ BY LD. AR IN COURT BUT NO WH ERE SUCH AMOUNT OF RS. 41.75 LAC WAS MENTIONED AND THERE WAS NO 9 MENTION OF ANY ADVANCE TO SHRI J.N. CHOUKSEY FOR PU RPOSE OF LAND PURCHASE. IF IMPOUNDED INCRIMINATING PAPERS COULD EXPLAIN ITS OWN CONTENTS THEN WHOLE INVESTIGATION SET UP WILL C OLLAPSE. INCRIMINATING PAPERS CAN ONLY BE EXPLAINED BY ASSESSEE BY REFERRING TO BOOKS OF ACCOUNTS , BY SUBMITTING CORRESPONDING LEDGER ACCOUNTS OF LAND ADVANCE, ACCOUNT OF SHRI J.N. CHOUKSEY AND AGREEMENT FOR PURCHASE OF LAND BUT NO SUCH DETAILS COULD BE FILED BY ASSESSEE BECAUSE NO SUCH DETAILS EXIST. IT WAS THE DUTY OF THE ASSESSEE TO FILE SUCH DETAILS BUT HE COULD FILE THEM ONLY IF ANY LAND DEAL ACTUALLY EXISTED. THIS ISSUE DOES NOT REQUIRE ELABORATE ARGUMENTS. FUNDS OF RS. 41.75 LAC OF ASSESSEE SOCIETY ARE GIVE N IN CASH TO SECRETARY OF THE SOCIETY & NOT TO ANY LAND OWNER. THE CHAIN OF EVENTS STOPPED THERE. IT COULD PROCEED FURTHER ONLY WHEN A LAND OWNER IS BROUGHT INTO PI CTURE. NAME & ADDRESS OF LAND OWNER WAS NEVER PROVIDED. NO PROOF WAS ADDUCED TO SHOW THAT ANY AMOUNT WAS GIVEN TO LAND OWNER. NEITHER ANY SUCH LANDOWNER WAS PRODUCED NOR HIS CONFIRMATION/AFFIDAVIT FILED TO PROVE THAT SUCH AMOUNT WAS EVER GIVEN TO HIM. NO AGREEMENT FOR PURCHASE OF LAND WAS SUBMITTED. EVEN SURVEY NO. OF LAND AND AMOUNT OF PURCHASE CONSIDERATION WAS NOT GIVEN. IN THESE CIRCUMSTANCES THERE WAS NO BASIS WHATSOEV ER TO ARRIVE AT A CONCLUSION THAT SHRI J.N. CHOUKSEY P AID SUCH MONEY TO THE LAND OWNER & SUCH DECISION WAS MERELY BASED ON CONJECTURES & SURMISES. EVEN FROM CONTENTS OF IMPOUNDED PAPERS IT IS CLEAR THAT SUCH AMOUNT OF RS. 41.75 LAC WAS PERSONAL LOAN TO SHRI J.N. CHOUKSEY, SECRETARY OF THE SOCIETY, BECAU SE IT WAS GIVEN TO HIM & NOT TO THE LAND OWNER. IT WAS SHOWN IN 10 BOOKS OF THE ASSESSEE, AS A ADVANCES TO MEMBERS & NOT AS ADVANCE FOR LAND. IF IT WAS PAID FOR PURCHASE OF LAND, THE AMOUNT SHOULD HAVE BEEN SHOWN IN ACCOUNT AS ADVANCE FOR LAND AS SUCH ACCOUNT WAS THERE IN THE BALANCE SHEET OF ASSESSEE, BUT THIS AMOUNT WAS NOT SHOWN IN THAT ACCOUNT. THEREFORE WHOLE THEORY OF ASSESSEE COLLAPSES BECAUSE IF SHRI J.N. CHOUKSEY WAS MERELY A CONDUIT, TO RECEIVE THIS CASH, TO HAND IT OVER TO T HE LAND- OWNER, THE AMOUNT SO GIVEN, SHOULD GO INTO ADVANCE FOR LAND ACCOUNT AND IT COULD NEVER GO INTO ADVANCE ACCOUNT OF SHRI J.N. CHOUKSEY (COPY ENCLOSED, ANNEXURE-4). IF THE AMOUNT GIVEN TO SHRI J.N. CHOUKSEY IS REFLEC TED IN THE DEPOSITS & ADVANCES A/C UNDER THE HEAD ADVANCE TO MEMBERS IN BOOKS OF ASSESSEE AND THERE IS NO PROOF THAT SHRI J.N. CHOUKSEY GAVE IT TO ANY LAND O WNER, THEN IT HAS TO BE ACCEPTED AS PERSONAL LOAN TO SHRI J.N. CHOUKSEY. THERE IS A PROHIBITION IN THE INCOME TAX ACT FOR EXTENDING ANY AMOUNT TO ANY INTERESTED PERSON LIK E SHRI J.N. CHOUKSEY [SECTION 13(3)] ESPECIALLY WHEN IT IS GIVEN TO HIM WITHOUT TAKING ANY SECURITY AND WITHOUT CHARGING ANY INTEREST, AS WAS MANDATORY UNDER SECTION 13(2)(A) OF THE I.T. ACT. AS THE CONDITIONS LAID DOWN U/S 13(2) (A), 13(2)(C) AND 13(3) ARE VIOLATED, EXEMPTION U/S 11 O F THE I.T. ACT WILL NOT BE AVAILABLE TO ASSESSEE. CONDITION U/ S13(2)(A) IS THAT AMOUNT IS LENT OR CONTINUES TO BE LENT . SINCE AMOUNT OF RS. 8,87,518/- IS STILL OUTSTANDING OUT O F THE AFORESAID ADVANCES TO SHRI J.N. CHOUKSEY THEREFORE SECTION 13(2)(A) WILL APPLY. ON SIMILAR FACTS IT WAS HELD BY DELHI HIGH COURT IN CASE OF PT. KANAHYALAL PUNJ CHARITABLE TRUST- 297 ITR 66 (D EL) (COPY ENCLOSED, ANNEXURE-5) , THAT SINCE ADVANCE WAS GIVEN TO INTERESTED PERSON WITHOUT CHARGING ANY INTEREST & 11 WITHOUT TAKING ANY SECURITY PURPORTEDLY FOR PURCHAS E OF LAND FOR A SCHOOL, THERE WAS A VIOLATION OF SECTIO N 13(2)(A) & SECTION 13(1)(C) OF THE I.T. ACT & HENCE NO EXEMP TION IS AVAILABLE U/S 11,12 & 13 OF THE I.T. ACT. THIS DECI SION IS DIRECTLY APPLICABLE IN PRESENT CASE AND IS A BINDIN G PRECEDENT BECAUSE IT IS THE ONLY DECISION BY A HIGH COURT ON SECTION 13(2)(A) OF THE I.T. ACT. WHEN A CASE OF MISUTILIZATION OF TRUST FUNDS IS ESTABLISHED, COURT S HAVE DENIED EXEMPTION BOTH U/S 10(22) AS WELL AS SECTION 11, 12 & 13 OF THE I.T. ACT ON THE SIMPLE LOGIC THAT FUNDS OF PUBLIC TRUSTS CANNOT BE ALLOWED TO BE MISUSED. 4. DURING THE COURSE OF HEARING, THE LEARNED CIT DR ALSO DREW OUR ATTENTION TO PAGE 46 IN SUPPORT OF HI S PROPOSITION STATED ABOVE. 5. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO MISTAKE MUCH LE SS AN APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL. THE LD.COUNSEL FOR THE ASSESSEE PLACED ON RECORD DETAIL ED CHART MENTIONING EACH AND EVERY OBJECTION RAISED BY THE DEPARTMENT IN THE ORDER OF THE TRIBUNAL WHICH WAS D EALT WITH BY THE TRIBUNAL IN RESPECTIVE PARAS. OUR ATTEN TION WAS ALSO INVITED TO THE RESPECTIVE PAGES AND PARAS IN THE TRIBUNAL ORDER WHEREIN THE TRIBUNAL HAS CONSIDERED ALL 12 THE SUBMISSIONS AND CASE LAWS CITED BY BOTH THE SID ES. HE SUBMITTED THAT A CLEAR FINDING HAS BEEN RECORDED BY THE TRIBUNAL TO THE EFFECT THAT MAJOR MONEY WAS GIV EN BEFORE REGISTRATION U/S 12A OF THE ACT. OUR ATTENT ION WAS ALSO INVITED TO THE OBSERVATIONS MADE TO THE EFFECT THAT SUCH TRANSACTIONS CANNOT BE AN AFTER-THOUGHT SINCE THE LETTER IMPOUNDED IN SURVEY PROCEEDINGS, WHICH COULD NOT BE FORESEEN. HE SUBMITTED THAT THE CASE LAW CITED BY THE LD.COUNSEL FOR THE ASSESSEE IN THE CASE OF GURU GOVINDSINGH; 118 ITD 207 (AMRITSAR BENCH) IS NOT APPLICABLE INSOFAR AS IT WAS NOT ADVANCED OR MON EY LENT AT ALL. 6. WE HAVE CAREFULLY GONE THROUGH THE MISCELLANEOUS APPLICATION FILED BY THE DEPARTMENT AND THE CONTENT IONS MADE BY THE LEARNED CIT DR DURING THE COURSE OF HEA RING BEFORE US AS WELL AS THE REPLY FILED BY THE LD.COUN SEL FOR THE ASSESSEE TO PRECISE OBJECTION OF THE DEPARTMENT TO INDICATE THAT IT WAS A MISTAKE IN THE ORDER OF THE 13 TRIBUNAL. WE HAVE ALSO DELIBERATED ON VARIOUS CASE LAWS CITED BY THE LEARNED CIT DR AND ALSO THE DECISIONS CITED BY THE LD.COUNSEL FOR THE ASSESSEE IN THE CONTEXT O F FACTUAL MATRIX OF THE INSTANT CASE. THERE IS NO DIS PUTE TO THE WELL SETTLED LEGAL PROPOSITION THAT THE POWERS OF THE TRIBUNAL U/S 254(2) OF THE ACT ARE LIMITED TO RECTI FY A MISTAKE WHICH IS APPARENT IN THE ORDER. SECTION 254 (2) DOES NOT EMPOWER THE TRIBUNAL TO REVIEW ITS ORDER O R TO CHANGE THE JUDGMENT ALREADY ARRIVED AT AFTER DUE DELIBERATION. THUS, THE POWERS OF THE TRIBUNAL U/S 254(2) OF THE ACT CANNOT BE EXERCISED FOR REVIEWING A CONS IDERED AND CONSCIOUS DECISION ON GROUNDS WHICH ARE INHEREN TLY SUBJECTIVE AND CAN BE OF DEBATE AND DISCUSSION ON ADOPTION OF ONE VIEW OR THE OTHER. U/S 254(2) POWE RS OF THE TRIBUNAL ARE LIMITED TO CORRECTING AN ERROR APP ARENT ON THE FACE OF RECORD AND NOT TO AN ERROR TO BE DIS COVERED BY LONG DRAWN PROCESS OF REASONING. 14 7. WITH REGARD TO THE CONTENTION OF THE LEARNED CIT WITH RESPECT TO ADVANCE OF RS. 41.75 LACS TO THE EX-PRES IDENT OF THE SOCIETY, IT HAS BEEN OBSERVED BY THE TRIBUNA L IN ITS ORDER THAT NO PERSONAL LOAN WAS GIVEN TO EX-PRESIDE NT, SHRI RANJIT JAISWAL BUT IT WAS ACTUALLY ADVANCE TO HIM FOR PURCHASE OF LAND FOR THE TRUST. IT WAS FURTHER OBS ERVED THAT SINCE THE SAID TRANSACTION OR PURCHASE OF LAND DID NOT MATERIALISE FULL EFFORTS WERE MADE BY THE ASSES SEE TRUST TO RECOVER THE SAME FROM HIM. IT WAS ALSO OB SERVED THAT MOST OF THE ADVANCES WERE GIVEN FOR PURCHASE O F LAND PRIOR TO GRANT OF REGISTRATION TO THE ASSESSEE SOCIETY U/S 12A OF THE ACT BY THE DEPARTMENT. AFTER VERIFY ING THE PROCEEDINGS OF THE MANAGING COMMITTEE, WHICH INDICA TED THAT ADVANCE OF RS.41.75 LACS WAS GIVEN TO SHRI JAI SWAL IN THE YEAR 1994 TO 1996 OUT OF WHICH RS. 32.88 LAC S WERE RECOVERED AND THE BALANCE AMOUNT OF RS. 887 LA CS COULD NOT BE RECOVERED FROM HIM DUE TO HIS ILL HEAL TH FOLLOWED BY HIS DEATH. THE TRIBUNAL HAS ALSO CATEGO RICALLY RECORDED THAT DURING THE RELEVANT PREVIOUS YEAR, UN DER 15 CONSIDERATION, NO ADVANCE WAS GIVEN TO THE EX-PRESI DENT, HENCE, A WRONG CONCLUSION WAS DRAWN BY THE ASSESSIN G OFFICER ON THE FACTS OF THE CASE. 8. IT WAS ARGUED BY THE LEARNED CIT DR THAT THIS LO AN REMAINED PENDING AND UNPAID TO THE EXTENT OF RS.8.8 7 LACS FROM THE ASSESSMENT YEAR 1998-99 TO 2004-05 WH ICH RESULTED IN VIOLATION OF CONDITION OF SECTION 13(2) (A) INSOFAR AS RS.8.87 LACS CONTINUED TO BE LENT TO THE EX- PRESIDENT WITHOUT CHARGING ADEQUATE SECURITY OR ADEQUATE INTEREST OR BOTH. HE FURTHER SUBMITTED TH AT THERE WAS A CLEAR VIOLATION OF SECTION 13(2)(A), TH EREFORE, THE CLAIM OF THE ASSESSEE U/S 11 WAS NOT ALLOWABLE WHEREAS THE TRIBUNAL HAS ALLOWED THE SAME. 9. WE FIND THAT A DETAILED ORDER HAS BEEN PASSED BY THE TRIBUNAL WHICH CONTAINS 68 PAGES AFTER CONSIDERING THE CONTENTIONS OF THE LEARNED CIT DR AS WELL AS OF THE LD.COUNSEL FOR THE ASSESSEE. THE DETAILED REASONIN G AND JUSTIFICATION WAS GIVEN FOR AGREEING WITH THE VIEW OF THE 16 COMMISSIONER OF INCOME TAX (APPEALS) AND FINDINGS RECORDED BY HIM, WHICH RESULTED INTO DISMISSAL OF T HE REVENUES APPEAL. EVEN THE LONG ARGUMENTS GIVEN IN THE MISCELLANEOUS PETITION INDICATE THAT THERE WAS NO APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL WHICH COULD BE RECTIFIED U/S 254(2) OF THE ACT. THE CONT ENTIONS OF THE LEARNED CILT DR WERE RECORDED IN PARA 7. AF TER CONSIDERING THE SAME, THE TRIBUNAL HAS GIVEN ITS VE RDICT AT PAGE 18 WHEREIN IT WAS HELD THAT THE ASSESSEE CO ULD NOT SHOW THAT THE ORDER WAS NOT PASSED ON 27 TH MARCH, 2006 WHICH WAS STILL WITHIN THE LIMITATION PERIOD O F 31 ST MARCH, 2006. THUS, IT WAS HELD BY THE TRIBUNAL THAT THE ORDER WAS PASSED BY THE ASSESSING OFFICER WITHIN TH E STATUTORY TIME LIMIT. 10. WITH REGARD TO THE CONTENTION IN THE MISCELLANEOUS APPLICATION TO THE EFFECT THAT THE TR IBUNAL HAS NOT CONSIDERED THE ARGUMENTS OF THE LEARNED CIT DR AND THE JUDICIAL PRONOUNCEMENTS CITED BY HIM, WE WO ULD 17 LIKE TO REPRODUCE THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL WHICH READS AS UNDER :- 30. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO DELIBERATED ON THE CASE LAWS CITED BY THE LD. AUTHORIZED REPRESENTATIVE AND LD. SENIOR D.R. DURING THE COURSE OF HEARING BEFORE US, WE HAD ALSO DELIBERATED ON THE CASE LAWS RELIED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS WITH REFERENCE TO THE FACTUAL MATRIX OF THE CASE. FROM THE RECORD, WE FIND THAT THE ASSESSEE SOCIETY EXISTED SOLELY FOR EDUCATIONAL PURPOSES AND INCOME WAS DERIVED SOLELY FROM THE EDUCATIONAL INSTITUTION. IT IS ALSO NOT THE CASE OF AO THAT ACTIVITIES OF THE SOCIETY ARE FOR PROFIT EARNING. AS PER PROVISIONS OF SECTION 10(22) ANY INCOME OF UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT, WILL NOT FORM PART OF TOTAL INCOME. RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION IS 1998-99 DURING WHICH PROVISIONS OF SECTION 10(22) WAS APPLICABLE. HOWEVER, BY FINANCE NO.2 ACT 1998 W.E.F. 1.4.1999, THE PROVISIONS OF SECTION 10(22) WERE NOT MADE APPLICABLE FROM ASSESSMENT YEAR 1999-2000 ONWARDS. HOWEVER, THE FINANCE NO.2 ACT, 1998, EVEN THOUGH DELETED SECTION 10(22) AND 10(22A), BUT THE EXEMPTION WAS INCORPORATED WITH RESPECT TO INCOME OF UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT U/S 10(23-C) OF THE INCOME-TAX ACT, 1961, W.E.F. ASSESSMENT YEAR 1999-2000. HON'BLE KARNATAKA HIGH COURT IN THE CASE OF SARASWATI POOR STUDENTS FUND, 150 ITR 142, HELD THAT EXEMPTION U/S 10(22) IS IN RESPECT OF WHOLE INCOME OF THE ASSESSEE AND THE SAME CANNOT BE RESTRICTED TO SUCH INCOME, WHICH IS APPLIED OR ACCUMULATED FOR CHARITABLE OR RELIGIOUS PURPOSES 18 AS PROVIDED U/S 11 OF THE INCOME-TAX ACT. IT WAS FURTHER HELD THAT THE SCOPE OF SECTION 10(22) IS VERY MUCH WIDER THAN THAT OF SECTION 11. IN THIS CASE, THE HON'BLE HIGH COURT FOUND THAT THE ASSESSEE SOCIETY CLAIMED EXEMPTION U/S 10(22) AS AN ALTERNATIVE. IT ALSO CLAIMED ITS INCOME AS EXEMPT ATLEAST TO THE EXTENT OF APPLICATION TO THE CHARITABLE PURPOSES U/S 11 OF THE INCOME-TAX ACT, 1961. THE AO REJECTED PRIMARY CONTENTION BUT ACCEPTED THE ALTERNATIVE CLAIM AND GRANTED RELIEF U/S 11. THE HON'BLE HIGH COURT HELD THAT THERE CAN BE NO DISPUTE WITH REGARD TO THE RELIEF GIVEN T O THE SOCIETY BY THE ASSESSING OFFICER U/S 11, IT WAS FURTHER HELD THAT IN ORDER TO CLAIM THE BENEFIT OF SECTION 10(22), THE ASSESSEE NEED NOT ITSELF IMPART EDUCATION TO THE STUDENTS. IT WILL BE SUFFICIENT IF THE ASSESSEE IS RUNNING A SCHOOL OR COLLEGE SO AS TO ENTITLE IT TO CLAIM EXEMPTION U/S 10(22). HON'BLE SUPREME COURT IN THE CASE OF BAR COUNCIL OF MAHARASHTRA, 130 ITR 28 HELD THAT THE ASSESSEE CAN CLAIM RELIEF SIMULTANEOUSLY U/S 10(22) AND U/S 11 OF THE INCOME-TAX ACT, 1961, THUS, THE INCOME OR PART OF THE INCOME IN RESPECT OF WHICH EXEMPTION U/S 10(22) IS NOT GRANTED, CAN BE CLAIMED AS EXEMPT U/S 11 SUBJECT TO THE COMPLYING WITH THE CONDITIONS SPECIFIED IN THAT SECTION. C. B. D. T. CIRCULAR NO. 1112 DATED 29.10.77 HAVE BEEN ELABORATELY DEALT WITH BY MADRAS HIGH COURT IN THIAGARAJAR EDUCATIONAL TRUST V. ITO AND BY THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF BIRLA VIDYA TRUST V. CIT, (1982) 136 ITR 445, WHICH FULLY SUPPORT OUR VIEW WITH REGARD TO SIMULTANEOUS CLAIM OF EXEMPTION U/S 10(22) AND SECTION 11 OF THE INCOME-TAX ACT, 1961. 31. THE ISSUE WITH REGARD TO GRANT OF EXEMPTION U/S 11 WAS DECLINED BY THE ASSESSING OFFICER. THE ISSUE HAS BEEN DISCUSSED AT PAGES 2 TO 6 PARAS 5 AND 6 OF THE ASSESSMENT ORDER. AS PER THE ASSESSING OFFICER, REQUIREMENTS OF SECTIONS 11 AND 13 WERE NOT FULFILLED BY THE ASSESSEE 19 SOCIETY AND THAT THE ADVANCE GIVEN TO RANJIT JAISWAL, EX-PRESIDENT OF THE SOCIETY, WHICH REMAINED TO BE RECOVERED FROM HIM TILL HIS DEATH. THE ASSESSING OFFICER HAS ALSO STATED THAT THE SECRETARY OF THE SOCIETY, SHRI J.N. CHOKSI, HAD BEEN BENEFITED FROM THE ASSETS AND FUNDS OF THE SOCIETY. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DISCUSSED THE ISSUE AT PAGES 12 TO 25 OF HIS ORDER AND THE VERDICT HAS BEEN GIVEN AT PAGES 23 TO 25 AFTER RECORDING DETAILED FINDINGS AND HELD THAT THE SOCIETY IS ENTITLED FOR EXEMPTION U/S 10(22) OF THE ACT AS APPLICABLE TO THE ASSESSMENT YEAR 1998-99. 32. IN THE INSTANT CASE, WE FOUND THAT THE SOURCE OF INCOME OF THE ASSESSEE WAS EDUCATIONAL INSTITUTION RUN FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. HON'BLE CALCUTTA HIGH COURT IN THE CASE OF BIRLA VIDYA VIHAR TRUST, 133 ITR 144, HELD THAT A PERSON MAY HAVE INCOME FROM DIFFERENT SOURCES, BUT HAVE A PARTICULAR INCOME IS FROM AN EDUCATIONAL INSTITUTION OR UNIVERSITY, WHICH EXISTS SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSES OF PROFIT, THEN THAT INCOME WHICH IS FROM EDUCATIONAL INSTITUTION WOULD BE ENTITLED TO EXEMPTION. IN THE APPELLATE ORDER, LD. CIT(A) HAS ALSO DEALT WITH THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF ACADEMY OF GENERAL EDUCATION, 150 ITR 135, WHEREIN IT WAS HELD THAT IN ORDER TO CLAIM THE BENEFIT OF SECTION 10(22), THE PERSON WHO CLAIMED THE BENEFIT NEED NOT NECESSARY BE A SCHOOL OR COLLEGE WHERE EDUCATION IS IMPARTED. IN THIS CASE, THE ASSESSEE IS A REGISTERED SOCIETY CARRYING ON THE ORGANIZED ACTIVITIES AS PER THE OBJECTS SET OUT IN THE MEMORANDUM, WHICH WAS TO ESTABLISH SUPPORT MAINLY OR CONDUCT SCHOOLS, COLLEGES AND SUCH OTHER EDUCATIONAL INSTITUTIONS. IT HAD INCOME OF IT S OWN. THE ASSESSEE, IN ITS BALANCE SHEET, INCOME OF 22 COLLEGES OR INSTITUTION ESTABLISHED UNDER SEPARATE TRUST HAD NOT BEEN INCLUDED NOR WAS 20 INCLUDED THE INCOME OF THE NINE SCHOOLS, WHICH WERE RUN DIRECTLY BY THE ASSESSEE. THE ASSESSEE SOCIETY, OUT OF ITS INCOME HAD GIVEN DIFFERENT GRANTS TO SOME OF THESE SCHOOLS, IT WAS HELD THAT THE ASSESSEE HAD NOT SPENT ITS INCOME FOR ANY PURPOSE UNCONNECTED WITH THE EDUCATION, ACCORDINGLY, THE ASSESSEE WAS HELD TO BE EDUCATIONAL PURPOSES AND NOT FOR PROFIT, THE INCOME OF WHICH WAS EXEMPT U/S 10(22) OF THE INCOME-TAX ACT, 1961. 33. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ALSO HELD THAT DENIAL OF EXEMPTION U/S 11 OF THE ACT BY THE ASSESSING OFFICER WAS NOT JUSTIFIED SINCE THE ASSESSEE SOCIETY HAD FULFILLED ALL THE REQUIREMENTS OF SECTIONS 11 TO 13 OF THE ACT. WITH REGARD TO THE REJECTION OF CLAIM OF EXEMPTION U/SS 11 AND 12, THE CONTENTION OF THE LEARNED CIT DR WAS THAT ADVANCE WAS GIVEN TO RANJIT JAISWAL, PRESIDENT OF THE SOCIETY, FOR PERSONAL USE WITHOUT ANY INTEREST AND WITHOUT ANY SECURITY WHICH RESULTED INTO INFRINGEMENT OF SECTION 13(1), 13(1)(A) AND SECTION 13(3) OF THE ACT. HE ALSO REFERRED TO SURVEY CONDUCTED U/S 133A IN CASE OF H.K. KALCHURI TRUST, WHEREIN A LETTER WRITTEN BY THE SECRETARY, JAI NARAIN CHOKSI TO ITS PRESIDENT DATED 18.10.1996 WAS FOUND. HE FURTHER SUBMITTED THAT THE SOCIETY HAS RECEIVED REGISTRATION U/S 12A FROM 1.4.1996 AND IN THE ASSESSMENT YEAR 1996-97 THE ASSESSEE SOCIETY HAS GIVEN ADVANCE OF RS. 4.5 LACS TO ITS PRESIDENT AND THERE WAS OUTSTANDING BALANCE OF RS. 36.57 LACS AS AT THE END OF THE YEAR. HE FURTHER ARGUED THAT SINCE THE AMOUNT OF PERSONAL ADVANCE GIVEN TO THE PRESIDENT CONTINUES TO BE LENT WITHOUT ANY INTEREST AND SECURITY FROM 1.4.1996 ONWARDS, WHICH IS THE DATE OF REGISTRATION U/S 12A, THE PURPOSE OF THIS CLAUSE, THE INCOME OF TRUST WILL BE DEEMED TO BE APPLIED TOWARDS THE BENEFIT OF THE PRESIDENT OF THE 21 SOCIETY U/S 13(3) OF THE ACT. RELIANCE WAS PLACED BY THE LEARNED CIT DR ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF KANHAIYALAL PUNJ CHARITABLE TRUST; 297 ITR 66, NAGARTHU VAISIYARGAL SANGAM; 246 ITR 164 AND AGAPPA CHILLED CENTRE; 226 ITR 211. OUR ATTENTION WAS ALSO INVITED BY THE LEARNED CIT DR TO THE STATEMENT OF PUNAM CHOKSI WIFE OF THE MANAGING TRUSTEE WHICH WAS RECORDED DURING THE COURSE OF SURVEY. 34. WE FIND THAT AS PER THE MATERIAL PLACED ON RECORD, ALL THE REQUIREMENTS OF SECTIONS 11 TO 13 OF THE ACT HAVE BEEN DULY COMPLIED WITH AND FOR WHICH A CATEGORICAL FINDING HAS BEEN GIVEN BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER RELYING UPON VARIOUS JUDICIAL PROPOSITIONS AS DISCUSSED HEREINABOVE AND APPLYING THE SAME TO THE FACTS OF THE INSTANT CASE. WE ALSO FIND THAT NO PERSONAL LOAN WAS GIVEN TO EX-PRESIDENT, SHRI RANJIT JAISWAL, BUT IT WAS ACTUALLY ADVANCED TO HIM FOR PURCHASE OF LAND FOR THE TRUST. AS THE SAID TRANSACTION FOR PURCHASE OF LAND DID NOT MATERIALIZE, FULL EFFORTS WERE MADE BY THE ASSESSEE TRUST TO RECOVER THE SAME FROM HIM. IT IS PERTINENT TO MENTION HERE THAT SUCH MOST OF THE ADVANCES WERE GIVEN FOR PURCHASE OF LAND EVEN PRIOR TO THE GRANT OF REGISTRATION U/S 12A BY THE DEPARTMENT. WE HAVE ALSO VERIFIED THE PROCEEDINGS OF THE MANAGING COMMITTEE AS AVAILABLE AT PAGES 57 TO 66 OF THE PAPER BOOK WHICH INDICATE THAT THE ADVANCE OF RS. 41.75 LACS WAS GIVEN TO SHRI JAISWAL IN THE YEARS 1994 TO 1996 OUT OF WHICH RS. 31.88 LACS WERE RECOVERED AND THE BALANCE AMOUNT OF RS. 8.87 LACS COULD NOT BE RECOVERED FROM HIM DUE TO HIS ILL-HEALTH FOLLOWED BY HIS DEATH. HOWEVER, DURING THE RELEVANT PREVIOUS YEAR, UNDER CONSIDERATION, NO ADVANCE WAS GIVEN 22 TO THE EX-PRESIDENT, HENCE, A WRONG CONCLUSION WAS DRAWN BY THE ASSESSING OFFICER ON THE FACTS OF THE CASE. FOR THIS PURPOSE, WE MAY PLACE RELIANCE ON THE DECISION OF THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF GURU GOVIND SINGH EDUCATION SOCIETY; 118 ITD 207. IT WAS ALSO ALLEGED BY THE ASSESSING OFFICER THAT SHRI J.N. CHOKSI, THE SECRETARY OF THE SOCIETY, WAS BENEFITED FROM THE FUNDS AND ASSETS OF THE SOCIETY BY WAY OF USE OF CAR, SERVANTS SALARIES, TELEPHONE FACILITIE S AND ELECTRICITY EXPENSES. IN THIS REGARD, WE FIND THAT THE OFFICE OF THE ASSESSEE SOCIETY WAS SITUATE D IN THE HOUSE OWNED BY SHRI J.N. CHOKSI FOR WHICH HE WAS NOT CHARGING ANY RENT FROM THE SOCIETY, MEANING THEREBY THAT THE OFFICE PREMISES WAS GIVEN BY SHRI CHOKSI WITHOUT ANY RENT FOR CARRYING OUT ADMINISTRATIVE WORK OF THE SOCIETY. WE ALSO FIND THAT SHRI CHOKSI WAS HAVING HIS OWN VEHICLES, TELEPHONE CONNECTION AND PERSONAL SERVANTS, THEREFORE, THERE WAS NO OCCASION FOR USE OF THE SOCIETYS CAR, SERVANTS OR TELEPHONE FOR PERSONAL PURPOSES. THE USE OF THE SOCIETYS CAR FOR PURPOSE OF SOCIETYS ACTIVITIES CANNOT BE SAID TO B E FOR PERSONAL PURPOSES. SINCE THE COLLEGES RUN BY THE SOCIETY ARE SITUATED AT FAR AWAY PLACES, TO HAVE AN ADMINISTRATIVE CONTROL OVER THEM, HE USED TO VISIT THE COLLEGES AND IT WAS ONLY FOR THE PURPOSE OF THE ASSESSEE SOCIETY ONLY. SUCH USE OF CAR CANNOT BE SAID TO BE PERSONAL USE OF CAR BY MR. CHOKSI. THE ALLEGATION OF THE ASSESSING OFFICER THAT ELECTRICITY BILL WAS BORN BY THE ASSESSEE IS OF NO EFFECT INSOFAR AS MINOR AMOUNT OF ELECTRICITY BILL WAS NOTHING AGAINST THE RENT FROM ACCOMMODATION GIVEN TO THE SOCIETY AND FOR THIS PURPOSE RELIANCE MAY BE PLACED ON THE DECISION OF ITAT, JAIPUR BENCH, IN THE CASE OF ARVIND BHARTIYA VIDYALAYA SAMITI; 115 TTJ 351. 23 THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF COSMOPOLITAN EDUCATION SOCIETY (SUPRA) IS VERY RELEVANT INSOFAR AS EVEN THE SLP FILED AGAINST THIS DECISION WAS REJECTED BY THE HONBLE SUPREME COURT WHICH HAS BEEN REPORTED AT 241 ITR (ST.) 132. 35. WE HAVE CONSIDERED THE RIVAL CONTENTIONS WITH REGARD TO ADMISSIBILITY OF NEW GROUND BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR THE FIRST TIME. WE FIND THAT UNDISPUTEDLY, THE ASSESSEE WAS RUNNING EDUCATIONAL INSTITUTION WHICH WAS ADMITTED BY THE ASSESSING OFFICER EVEN IN THE COURSE OF ASSESSMENT PROCEEDINGS. HOWEVER, THE CLAIM U/S 10(22) WITH REGARD TO EXEMPTION OF INCOME OF EDUCATIONAL INSTITUTION WAS FOR THE FIRST TIME PUT UP BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). THERE IS A DIRECT DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF JUTE CORPORATION OF INDIA WHEREIN IT WAS HELD THAT A GROUND WHICH GOES TO THE ROOT OF THE MATTER CAN BE RAISED AS AN ADDITIONAL GROUND BEFORE THE APPELLATE AUTHORITY FOR THE FIRST TIME A T THE TIME OF HEARING OF THE APPEAL. FURTHERMORE, EVEN AS PER EXPLANATION TO SECTION 251 WHILE DISPOSING OF THE APPEAL, THE FIRST APPELLATE AUTHORITY MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST WAS PASSED NOT-WITH-STANDING THAT SUCH MATTER WAS NOT RAISED BY THE ASSESSEE IN APPEAL GROUNDS. THE POWERS OF THE FIRST APPELLATE AUTHORITY ARE NOT CONFINED TO THE SUBJECT MATTER OF THE APPEAL BUT EXTENDED TO THE SUBJECT MATTER OF ASSESSMENT AND ENTIRE ASSESSMENT IS THROWN BEFORE HIM. SO LONG AS IT DOES NOT TRAVEL OUTSIDE THE MATTERS CONSIDERED BY THE ASSESSING OFFICER, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) CAN CORRECT ANY DECISION OF THE 24 ASSESSING OFFICER EVEN IF THE ASSESSEE IS SATISFIED AND AGREED WITH THE CONCLUSION OF THE ASSESSING OFFICER AND HAD NOT SPECIFICALLY CHALLENGED BEFORE THE FIRST APPELLATE AUTHORITY. AS PER OUR CONSIDERED VIEW, THE FIRST APPELLATE AUTHORITY MAY DEAL WITH ALL THE POINTS AND GROUNDS WHICH ARISE OUT OF THE ORDER OF THE ASSESSING OFFICER. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR AGREEING TO CONSIDER THE ASSESEES CLAIM FOR EXEMPTION U/S 10(22) OF THE ACT. 36. WITH REGARD TO THE ALLEGATION OF THE ASSESSING OFFICER THAT THE PRESIDENT OF THE SOCIETY WAS PAID THE AMOUNT FOR HIS PERSONAL BENEFIT, WE FIND FROM THE COPY OF MINUTES OF THE MEETING OF THE ASSESSEE SOCIETY FROM 1994-95 ONWARDS WHEREIN AS PER RESOLUTION NO. 4 ADVANCE WAS GIVEN FOR PURCHASE OF LAND AND AS PER RESOLUTION NO. 2 THERE WAS MENTION OF CANCELLATION OF EARLIER LAND DEAL. WE ALSO FIND THAT COPIES OF MEMBERS REGISTER AS WELL AS THE MINUTES OF THE MEETING OF THE ASSESSEE SOCIETY HAVE BEEN FILED AND REPORTED BEFORE THE REGISTRAR OF FIRMS AND SOCIETIES, GOVERNMENT OF MADHYA PRADESH, WHEREFROM IT IS CLEAR THAT THE AMOUNT OF ADVANCE TO THE PRESIDENT WAS FOR PURCHASE OF LAND FOR THE SOCIETY AND NOT FOR HIS PERSONAL BENEFIT AS ALLEGED BY THE ASSESSING OFFICER. HOWEVER, WITHOUT APPRECIATING THE MATERIAL PLACED BEFORE HIM, THE ASSESSING OFFICER HAS HELD THAT NO LAND FOR PURCHASE WAS ARRANGED BY THE PRESIDENT THOUGH THE ABOVE SOCALLED LAND ADVANCE WAS GIVEN. THE ASSESSING OFFICER ALSO ALLEGED THAT THE THEN PRESIDENT WAS BENEFITED BY THE ADVANCE AMOUNT OF RS. 41.75 LACS FOR HIS PERSONAL USE. THE ASSESSING OFFICER ALSO STATED THAT THE THEN PRESIDENT NOT ONLY 25 RETAINED THE AMOUNT AND SOCALLED LAND ADVANCE FOR LONG TIME WITH HIM FOR HIS PERSONAL USE BUT ALSO DID NOT PAY ANY INTEREST THEREON. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN HIS ORDER AT PAGES 31, 33 AND 33 HAS DEALT WITH EACH AND EVERY OBJECTION AND ALLEGATION OF THE ASSESSING OFFICER IN HIS ORDER AND AFTER GIVING DETAILED FINDING HELD THAT NO ADVANCE WAS GIVEN TO THE PRESIDENT FOR HIS PERSONAL BENEFIT BUT FOR THE PURPOSE OF THE SOCIETY AND THAT ALSO FOR PURCHASE OF LAND. WE ALSO FOUND THAT NOTHING POSITIVE WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER TO ALLEGE THAT ANY PERSONAL BENEFIT WAS ENJOYED BY THE PRESIDENT OUT OF SUCH ADVANCE. SINCE IT WAS ESTABLISHED THAT THERE WAS NO PERSONAL ADVANCE TO THE PRESIDENT OF THE SOCIETY, THERE WAS NO INFRINGEMENT OF SECTIONS 13(1), 13(2)(A) AND 13(3) OF THE ACT. ACCORDINGLY, THE CASE LAWS CITED BY THE LD. CIT DR ARE NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE, WHEREIN IT WAS HELD THAT IN CASE OF ANY PERSONAL BENEFIT TO THE TRUSTEES OUT OF ASSETS OF THE TRUST WILL ATTRACT THE PROVISIONS OF SECTION 13(1)(C)/13(2)(A)/13(3) AND THE BENEFIT OF EXEMPTION WILL BE WITHDRAWN. FINDING RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS AS PER MATERIAL PLACED ON RECORD, THEREFORE, DOES NOT WARRANT ANY INTERFERENCE. RELIANCE WAS ALSO PLACED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ON THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF COSMOPOLITAN EDUCATION SOCIETY (SUPRA) WHEREIN IT WAS HELD THAT IF THERE WAS ANY MIS-APPLICATION OF FUNDS, ACTION COULD LIE AGAINST THE PERSON RESPONSIBLE BUT THE CHARITABLE INSTITUTION CANNOT BE DENIED EXEMPTION WHICH DEPENDS UPON OBJECTS OF THE TRUST. THIS VIEW OF 26 THE HONBLE HIGH COURT WAS UPHELD AS THE SLP FILED BY THE DEPARTMENT AGAINST THE JUDGMENT WAS DISMISSED BY THE HONBLE SUPREME COURT AS REPORTED IN 241 ITR (ST) 132. IN VIEW OF THIS JUDGMENT, WHERE THERE IS MISCONDUCT ON THE PART OF THE TRUSTEE, THE CHARITABLE INSTITUTION IS CERTAINLY EXPECTED TO TAKE APPROPRIATE ACTION AGAINST SUCH TRUSTEE FOR RECOVERY OF THE AMOUNT BUT THAT DOES NOT MEAN THAT THE EXEMPTION GRANTED TO INSTITUTION SHOULD BE FORFEITED. ACCORDINGLY, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DECLINING THE CLAIM OF EXEMPTION U/S 11 TO THE ASSESSEE SOCIETY. 37. THE ASSESSING OFFICER HAS ALSO DRAWN A COROLLARY BETWEEN THE ASSESSEE SOCIETY AND H.K. KULCHURY EDUCATIONAL TRUST. AS BOTH THE ASSESSES ARE SEPARATE ENTITIES AND THE FACTS AND CIRCUMSTANCES OF BOTH WERE DIFFERENT, THERE IS NO REASON FOR DRAWING ANY COROLLARY BETWEEN THE ASSESSEE AND H.K. KULCHURY EDUCATIONAL TRUST WHICH HAS BEEN VERY ELABORATELY DISCUSSED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AT PAGES 33 TO 37 OF HIS ORDER. THE FINDINGS RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ARE AS PER THE MATERIAL ON RECORD AND DO NOT REQUIRE ANY INTERFERENCE. 38. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT THE EDUCATIONAL INSTITUTION RUN BY THE ASSESSEE SOCIETY WAS SIMILAR TO A BUSINESS ENTITY, THEREFORE, NOT ENTITLED TO EXEMPTION OF ITS INCOME. THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE AT PAGE 7.2 OF HIS ORDER WHEREIN HE HELD THAT SINCE THE INCOME HAS BEEN USED/APPLIED DURING THE YEAR FOR THE BENEFIT OF THE FAMILY OF THE SECRETARY OF THE ASSESSEE SOCIETY, HENCE, THE ASSESSEE SOCIETY IS JUST SIMILAR TO A BUSINESS ENTITY NOT 27 ENTITLED TO EXEMPTION. AFTER DISCUSSING THE ISSUE IN ENTIRETY, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AS DISCUSSED HEREINABOVE HAS RECORDED HIS FINDINGS AT PAGES 32 TO 37 AND HELD THAT NO PERSONAL BENEFIT WAS DERIVED BY THE SECRETARY FROM THE ASSETS AND PROPERTIES OF THE TRUST NOR ANY PERSONAL EXPENSES PERTAINING TO THE TRUST WERE BORNE BY THE ASSESSEE SOCIETY. 39. THE ASSESSING OFFICER HAS ALSO DISALLOWED VARIOUS EXPENSES ON THE ALLEGATION THAT THESE PERSONAL EXPENSES OF SHRI J.K. CHOKSI AND HIS FAMILY MEMBERS IN THE ASSESSMENT YEARS 1998- 99, 1999-00, 2000-01 AND 2001-02. IN THE ASSESSMENT YEAR 1998-99 THE ASSESSING OFFICER HAS DISCUSSED THE ISSUE AT PAGES 5 AND 6 OF THE ASSESSMENT ORDER AND THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DISCUSSED THE SAME AT PAGES 40 AND 41 OF HIS APPELLATE ORDER. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER DISCUSSING IN DETAIL ASSESSING OFFICERS OBSERVATION VIS--VIS INSPECTORS REPORT AND THE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE TO CONTROVERT THE ASSESSING OFFICERS FINDINGS, WHICH WERE ALSO PLACED BEFORE THE ASSESSING OFFICER, REACHED TO THE CONCLUSION THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.1,23,217/- OUT OF THE EXPENSES IN THE NATURE OF SALARY, VEHICLE MAINTENANCE AND DEPRECIATION, ELECTRICITY AND TELEPHONE ON ESTIMATE. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ALSO OBSERVED THAT RELIANCE ON THE FINDING IN THE ASSESSMENT ORDER OF H.K. KALCHURI TRUST FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04 AND THE INSPECTORS REPORT IN THAT CASE, CANNOT BE CO- RELATED WITH THAT OF DIFFERENT FACTS AND CIRCUMSTANCES IN THE CASE OF THE ASSESSEE SOCIETY. IT WAS ALSO OBSERVED THAT THE ASSESSING OFFICER 28 HAS MADE THE ADDITION ON ESTIMATE BASIS AND NOT BY HIS SPECIFIC FINDINGS IN RESPECT OF PARTICULAR ITEM OF EXPENSES/PURCHASES AS NOT GENUINE IN THE ASSESSEE SOCIETYS CASE. IT WAS ALSO OBSERVED THAT THERE IS NO ADVERSE REMARK IN THE AUDITED FINANCIAL STATEMENT BY THE AUDITORS OF THE ASSESSEE SOCIETY FOR THE CURRENT ASSESSMENT YEAR. ONLY DUE TO THE FACT THAT THE TRUST OFFICE WAS RUNNING FROM THE PREMISES OF ITS SECRETARY, THE ASSESSING OFFICER CONCLUDED THAT THE EXPENSES OF RS.1,23,217/- WERE PERSONAL IN NATURE AND FOR THE BENEFIT OF THE SECRETARY/TRUSTEES. SINCE THE ASSESSING OFFICER HAS MADE THE ADDITION ON CO- RELATION AND ESTIMATE WITHOUT BRINGING ANY SPECIFIC FINDING OF ANY PARTICULAR EXPENSE NOR ANY EVIDENCE TO SUBSTANTIATE SUCH FINDING TO THE EFFECT THAT THE EXPENSES WERE INCURRED FOR THE BENEFIT OF THE TRUSTEE OF THE ASSESSEE SOCIETY, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DELETED THE SAME BY RELYING UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF DEV RADHA MADHAVLAL JI GENDA TRUST; 251 ITR 531 WHEREIN IT WAS HELD THAT MAINTENANCE OF TRUST PROPERTY, PAYMENT TO EMPLOYEES AND OTHER EXPENSES ARE INCIDENTAL AND CONNECTED WITH THE OBJECTS OF THE CHARITABLE TRUST. THE SAME, THEREFORE, CANNOT BE DISALLOWED. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS CORRECTLY APPLIED THE PROPOSITION OF LAW AS LAID DOWN BY JURISDICTIONAL HIGH COURT TO THE FACTS OF THE INSTANT CASE. NO INTERFERENCE IS, THEREFORE, WARRANTED IN THE FINDINGS AND CONCLUSION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). THE FACTS AND CIRCUMSTANCES IN THE SUBSEQUENT ASSESSMENT YEARS 1999-00, 2000-01 AND 2001- 02 ARE THE SAME, THEREFORE, FOLLOWING THE SAME REASONING AND THE FINDINGS RECORDED BY THE 29 LEARNED COMMISSIONER OF INCOMETAX (APPEALS), WE CONFIRM THE ACTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR DELETING THE DISALLOWANCE OF EXPENSES. 40. THE NEXT GRIEVANCE RELATES TO DISALLOWANCE OF LAB EQUIPMENT/CONSUMABLE EXPENSES. IN THE ASSESSMENT YEAR 1998-99 THE ASSESSING OFFICER HAS DISALLOWED RS. 2,01,987/- OUT OF LAB EQUIPMENT/CONSUMABLE EXPENSES ON ESTIMATE BASIS WHICH WAS COMPUTED AT 15% OUT OF PURCHASES MADE DURING THE YEAR. BY THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DELETED THE DISALLOWANCE BY OBSERVING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ESTIMATED DISALLOWANCE BY RELYING UPON THE ASSESSMENT ORDER IN THE CASE OF H.K. KULCHERY EDUCATION SOCIETY FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04 INSOFAR AS THE FACTS ARE QUITE DIFFERENT. IT WAS OBSERVED THAT THE DISALLOWANCE WAS MADE ON ESTIMATE AND NOT BY SPECIFIC FINDING IN RESPECT OF PARTICULAR ITEMS OF EXPENSES/PURCHASES AS NONE-GENUINE IN THE ASSESSEE SOCIETYS CASE. WE ALSO FIND THAT THERE WAS NO ADVERSE REMARK IN THE AUDITED FINANCIAL STATEMENT OF THE ASSESSEE SOCIETY. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DISCUSSED THE ISSUE AT PAGES 49 TO 51 AND AFTER RECORDING DETAILED FINDINGS DELETED THE DISALLOWANCE. NO INTERFERENCE IS REQUIRED IN SUCH CONCLUSION OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 41. AS PER OUR CONSIDERED VIEW, EVEN IN THE CASE OF CHARITABLE TRUST, THE INCOME OF THE TRUST IS TO BE CALCULATED ON COMMERCIAL PRINCIPLES. THERE IS NO DIFFERENCE BETWEEN THE REVENUE AND CAPITAL EXPENDITURE FOR ASCERTAINING THE ACCUMULATED INCOME OF A TRUST WHICH IS NOT LIABLE TO TAX. THE 30 ASSESSING OFFICER HAS MADE AD HOC DISALLOWANCE WITHOUT PIN-POINTING ANY SPECIFIC DEFECT/INSTANCE OF NON-VERIFIABILITY OR GENUINENESS OF EXPENSES. THUS, KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES VIS--VIS THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), WE DO NO FIND ANY MERIT IN THE DISALLOWANCE SO MADE BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IS CONFIRMED. 42. SIMILAR DISALLOWANCE HAS BEEN MADE IN THE ASSESSMENT YEARS 1999-00, 2000-01 AND 2001- 02. FOLLOWING THE SAME ANALOGY AND REASONINGS, WE CONFIRM THE ACTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 43. THE NEXT ISSUE RELATES TO THE TREATMENT OF CONTRIBUTION TOWARDS DEVELOPMENT FUND AS REVENUE RECEIPT. THE ASSESSING OFFICER HAS TREATED SUCH CONTRIBUTION AS REVENUE IN NATURE AND THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. SINCE THE ASSESSEE TRUST HAS ALREADY GRANTED EXEMPTION U/S 11/10(22)/10(23C), IT WILL NOT AFFECT THE TREATMENT GIVEN BY THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), BUT, HOWEVER, IT IS NOT IN DISPUTE THAT THE CONTRIBUTION SO RECEIVED WAS ONLY TOWARDS DEVELOPMENT FUND OF THE ASSESSEE SOCIETY AND ACTUALLY USED BY THE ASSESSEE SOCIETY FOR DEVELOPMENT OF THE SOCIETY AND NOT FOR MEETING RECURRING EXPENSES OF THE SOCIETY. WE ALSO FIND THAT AS PER THE STATEMENT OF TOTAL INCOME, EVEN AFTER ADDING BACK THE CONTRIBUTION TOWARDS DEVELOPMENT FUND, WHICH HAS BEEN TREATED BY THE LOWER AUTHORITIES AS REVENUE RECEIPT, THE NET 31 ACCUMULATION IS STILL NEGATIVE. EVEN AFTER DEDUCTING 25%/15% OF THE GROSS RECEIPTS AND AFTER DEDUCTING CAPITAL EXPENDITURE INCURRED FOR WHICH SUCH FEES WAS ADJUSTED. 44. THE NEXT ISSUE RELATES TO DELETION OF INTEREST ON BANK LOAN. IN THE ASSESSMENT YEAR 1999-00, THE ASSESSING OFFICER HAS DISCUSSED THE ISSUE AT PAGE 7 OF THE ASSESSING OFFICER WHEREIN BANK INTEREST HAS BEEN DISALLOWED ON TERM LOAN TAKEN FOR CONSTRUCTION OF COLLEGE BUILDING. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DISCUSSED THE ISSUE AT PAGES 8 TO 10 OF HIS ORDER. ONCE THE EXEMPTION IS ALLOWED U/S 11, EVEN THE CAPITAL EXPENDITURE IS DEDUCTIBLE. HOWEVER, THE INTEREST ON BANK LOAN IS UNDISPUTEDLY REVENUE IN NATURE. THERE IS NO MERIT IN DISALLOWING THE SAME. OUR VIEW IS SUPPORTED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF INDIA CEMENT LIMITED; 60 ITR 52. SIMILAR DISALLOWANCE HAS ALSO BEEN MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT YEARS 2000-01 TO 2004-05. ON THE SAME ANALOGY AND REASONING, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE BANK INTEREST PAID BY THE ASSESSEE. 45. THE NEXT GRIEVANCE RELATES TO DELETION OF CONTRIBUTION TOWARDS DEVELOPMENT FUND OF NARAIN SHRI HOMEOPATHIC COLLEGE FOR THE ASSESSMENT YEARS 2000-01, 2001-02 AND 2003-04. THIS ISSUE IS SIMILAR TO GROUND NO. 6 OF THE DEPARTMENTAL APPEAL WITH REGARD TO TREATMENT OF CONTRIBUTION TOWARDS DEVELOPMENT FUND. FOLLOWING THE SAME ANALOGY AND REASONING, WE CONFIRM THE ACTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR DELETING THE DISALLOWANCE OF CONTRIBUTION PAID TOWARDS DEVELOPMENT OF NARAIN SHRI HOMEOPATHIC COLLEGE. 32 46. THE LAST ISSUE PERTAINS TO ADDITION OF DONATION OF RS. 57,880/- GIVEN BY THE ASSESSEE TRUST IN THE ASSESSMENT YEAR 2001-02. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS NOT DISCUSSED THE ISSUE BUT WHILE COMPUTING THE TOTAL INCOME IN THE LAST PAGE, DISALLOWANCE WAS MADE. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS DISCUSSED IT AT PAGES 43 AND 44 OF HIS ORDER. SINCE THE ASSESSEE SOCIETY WAS FOR CHARITABLE PURPOSES, THE DONATION IS PERMISSIBLE OUT-LET TOWARDS FURTHERANCE OF OBJECTS OF THE TRUST AND CANNOT BE DISALLOWED AS DONE IN THE CASE OF COMMERCIAL ENTITIES. FURTHERMORE, COMPUTATION OF TAXABLE INCOME IN CASE OF TRUST IS ENTIRELY ON DIFFERENT PRINCIPLES WHEREIN ALL THE OUT-LETS REVENUE/CAPITAL ARE TAKEN INTO CONSIDERATION FOR CALCULATION OF TAXABLE SURPLUS FOR WHICH RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF AMERICAN HOTEL; 301 ITR 86 WAS PLACED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). ACCORDINGLY, NO INTERFERENCE IS REQUIRED IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). IT IS CLEAR FROM THE ABOVE THAT FOR EACH AND EVERY ASPECT, THE TRIBUNAL HAS TAKEN INTO CONSIDERATION NOT ONLY THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) BUT ALSO THE CONTENTIONS OF THE LD.COUNSEL FOR THE ASSESSEE AND THE LEARNED CIT DR DURING THE COURSE OF HEARING BEFORE 33 BENCH. APPLYING OUR MIND TO THE DETAILED DISCUSSION MADE IN THE ORDER AND ACTING AS PER OBJECTIONS RAIS ED IN THE MISCELLANEOUS APPLICATION AMOUNTS TO REVIEW OF CONSCIOUS DECISION ALREADY TAKEN WHICH IS NOT PERMISSIBLE U/S 254(2) OF THE ACT. THUS, WE DO NOT FIND ANY MISTAKE MUCH LESS AN APPARENT MISTAKE IN THE OR DER OF THE TRIBUNAL WHICH COULD BE RECTIFIED U/S 254(2) OF THE ACT. 11. IN THE RESULT, THE MISCELLANEOUS APPLICATIONS F ILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21 ST MAY, 2012 SD SD (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER 21 ST MAY, 2012 DN/-