SHIKSHA SAMITEE BAL NIKETAN,PALI V. .ITO, WARD EXEMPTION, JODHPUR, JODHPUR

ITA 169/JODH/2024

AI Insights

The case involves Shiksha Samitee Bal Niketan, a charitable trust engaged in imparting education, which appealed against the order of the Addl. CIT(A)-13, Mumbai. The primary contention was the incorrect assessment of income where the gross receipts were taxed without allowing the corresponding expenditures. The trust had filed its return claiming exemption under section 11 of the Income Tax Act, but the audit report was initially filed in the incorrect form (10BB instead of 10B). This led to the AO assessing the gross receipts as income. The Tribunal noted that the Addl. CIT(A) dismissed the appeal without adequately addressing the ground concerning the non-allowance of expenditures against the gross receipts, which was unrelated to the pending condonation of delay application for the audit report.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 471467 (ITAT-JODHPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2020-2021
• Other Referred Cases: Kund Kund Kahan Digamber Jain Mumokshu Ashram Vs. ITO(E), Shri Krishna Mandir Trust Vs. ACIT, Saroj Gopal Educational Society Vs. ITO(E)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARNI DAN
• Assessee Lawyers: P.C. PARWAL
• Keywords: Condonation of delay; Revenue expenditure; Depreciation; Charitable institution
• Section: 250; 154; 143(1); 11; 12AA; 12; 119(2)(b); 10B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 169/Jodh/2024 Assessment Year: 2020-21 Shiksha Samitee Bal Niketan Veer Durgadas Nagar, Pali. [PAN: AAUTS1829F ] (Appellant) Vs. The ITO, Ward- Exemption, Jodhpur. (Respondent) Appellant by Sh. P.C. Parwal, FCA Respondent by Sh. Karni Dan, Addl.CIT Date of Hearing 15.10.2024 Date of Pronouncement 26 .12.2024 ORDER Per: DR. S. Seethalakshmi, JM: This appeal is filed by the assessee against the order of the Ld. Addl. CIT(A)-13, Mumbai dated 08.02.2024 for the assessment year 2020-21. 2. In this appeal, the assessee has raised following grounds: - “1. The Ld. CIT(A) has erred on facts and in law in dismissing the appeal without providing adequate opportunity of hearing. 2. The Ld. CIT(A) has erred on facts and in law in dismissing the appeal by holding that since assessee has filed application for condonation of delay in filing Form No. 10B with PCIT(Exemption), Delhi, the grounds of appeal taken by the assessee is infructuous at this stage. 3. The Ld. CIT(A) has erred on facts and in law in not deciding the ground of assessee that against the gross receipt of Rs. 1,13,74,839/-, the revenue expenditure including depreciation is Rs. 1,28,21,052/- and therefore income assessed at Rs. 1,13,74,839/- in the intimation u/s 143(1) without allowing the expenditure is against the provisions of the Act. ITA No. 169/Jodh/2024 Shiksha Samitee Bal Niketan 2 3. Brief facts of the case are that the assessee is a charitable trust registered u/s 12AA of IT Act, 1961 by CIT(E), Jaipur vide order dated 27.08.2018. In pursuance of its object, it is imparting education. The assessee filed its return of income on 12.02.2021 at Nil income after claiming exemption u/s 11 of the Act at Rs.1,13,74,839/-. For claiming the exemption, as required by section 12A(1)(b) it obtained the tax audit report in Form No. 10BB (required for claiming exemption u/s 10(23C)) instead of in Form No. 10B (required for claiming exemption u/s 11) and upload it on the e-portal on 15.01.2021. The ld AR claimed that the AO(CPC) processed the return of assessee and issued intimation u/s 143(1) dated 30.11.2021 assessing the total income at Rs.1,13,74,839/- by denying exemption u/s 11 on the ground that audit report was obtained in Form No. 10BB instead of Form No.10B. This fact came to the notice of assessee when e-filing portal was browsed on 25.09 2022. Accordingly assessee obtained the audit report in Form No.10B and filed the same on 28.10.2022. Simultaneously assessee also filed the application for condonation of delay u/s 119(2)(b) with PCIT(E), Delhi. 4. It is noted that against intimation assessee filed appeal before NFAC on 01.11.2022 with the request to condone the delay in filing the appeal. The Ld. Addl. CTT(A), NFAC issued notice dated 09.01.2024 u/s 250 of the Act. In response to the same assessee filed the ITA No. 169/Jodh/2024 Shiksha Samitee Bal Niketan 3 adjournment on 24.01.2024 (PB 1-2) with the request to keep the appeal pending till the receipt of final order for condonation of delay. The ld. Addl. CIT(A) NFAC dismissed the appeal filed by the assessee by holding that since assessee has filed an application for condonation of delay in filing Form No 10B before PCIT(Exemption), Delhi which is pending yet, the appellant may follow up for further procedure before the jurisdictional Assessing Officer for further remedial action u/s 154 of the Act after receiving the order from the jurisdictional CIT without disposing the another ground taken by the assessee is taxing the gross receipt on merit. 5. Before us, the ld.AR of the assessee has filed the following written submission with the prayer to direct the AO to assessee the total income at loss of Rs.14,46,213/- ‘’Submission:- 1. From the above facts it can be noted that against the notice dt. 09.01.2024 issued by Ld. CIT(A), assessee has filed the adjournment on 24.01.2024 (PB 1-2). The Ed. CIT(A) without issuing any further notice dismissed the appeal filed by the assessee. Thus the order passed by the Ld. CIT(A) dismissing the appeal without providing adequate opportunity of hearing of illegal & bad in law. 2. The Ld. CIT(A) dismissed the appeal without deciding one of the ground taken by the assessee in not allowing the revenue expenditure of Rs.1,28,21,052/- for earning the gross receipt of Rs.1.13,74,839/- in assessing the total income. This ground has no relation with the condonation application filed by the assessee before PCTT (Exemption). Delhi. Thus the Ld. (CIT(A) has erred in not deciding this ground of appeal and dismissing the appeal filed by the assessee as infructuous. 3. It is submitted that the lower authorities have assessed the gross receipt as income ignoring the expenditure incurred by the assessee. From the Income & Expenditure ITA No. 169/Jodh/2024 Shiksha Samitee Bal Niketan 4 Ne placed at PB 7, it can be noted that against the gross receipt of Rs. 1.13,74,839/- received by way of fees & other receipts, expenditure incurred for earning such receipt is Rs 1,28,21,052/-. If the income of assessee is to be computed without allowing exemption w/s 11, there would be deficit of Rs. 14,46,213/-. Therefore, the gross receipts cannot be assessed as income. What can be assessed as total income is only the surplus/deficit. However, since there is no surplus, no tax is leviable on the assessee. For this purpose reliance is placed on the decision of Hon'ble ITAT, Jaipur Bench in case of Kund Kund Kahan Digamber Jain Mumokshu Ashram Vs. ITO(E) ΙΤΑ No.165/JP/19 to 168/JP/19 order dt. 29.05.2019 where at Para 8 it is held as under:- 8. We have heard the rival contentions and perused the material available on record. We find that where the exemption claimed under section 11 and 12 has been denied by the Assessing officer, what can be brought to tax is the net income in the hands of the assessee trust and not the gross receipts In all these years, we find that while denying the exemption under section 11 and 12 for want of registration under section 12AA, the Accessing officer has brought gross receipts to tax which is against the basic tenets of law where only the real income which is determined after deducting expenses from gross receipts can be brought to tax. We therefore agree with the alternate contention so advanced by the Id AR and without going into merit of the other contention which is left open, the matter is set-aside to the file of the Assessing officer to examine the claim of the expenditure so claimed by the assessee trust against the gross receipts for each of the relevant years and where the Assessing officer determines the net receipts as not exceeding the maximum amount not chargeable to tax, allow the necessary relief to the assessee trust.” Following the decision of Kund Kund Kahan Digamber Jain Mumokshu Ashram, Hon'ble ITAT, Jaipur Bench in case of Shri Krishna Mandir Trust Vs. ACIT ITA No.255/JP/2022 order dt. 31.08.2022 has again held that gross receipt cannot be taxed as income and what can be taxed as income is only the surplus. Similarly Hon'ble ITAT, Raipur Bench in case of Saroj Gopal Educational Society Vs. ITO(E) (2023) 203 ITD 62 has held that AO, after treating the assessee as an unregistered society, was obligated to have considered its claim for deduction of expenses raised in the income and expenditure account while deducing its taxable income. In view of above, AO be directed to assess the total income at loss of Rs. 14,46,213/- .” In support of the various grounds so raised by the ld. AR of the assessee, he has filed the paper book containing 1 to 29 pages ITA No. 169/Jodh/2024 Shiksha Samitee Bal Niketan 5 S. No. Particulars Pg. No. Filed before AO/CIT(A) 1. Copy of acknowledgment and adjournment application dt. 24.01.2024 filed before Ld. CIT(A), NFAC 1-2 CIT(A) 2. Copy of acknowledgement of return along with computation of total income 3-5 Both 3. Copy of consolidated financial statement for FY. 2019-20 6-12 Both 4. Copy of decision of Hon'ble ITAT, Jaipur Bench in case of Kund Kund Kahan Digamber Jain Mumokshu Ashram Vs.ITO(E) ITA No. 165/JP/19 to 168/JP/19 order dt. 29.05.2019 13-19 Reference 5. Copy of decision of Hon'ble ITAT, Jaipur Bench in case of Shri Krishna Mandir Trust Vs. ACIT ITA No.255/JP/2022 order dt. 31.08.2022 20-26 Reference 6. Copy of decision of Hon'ble ITAT, Raipur Bench in case of Saroj Gopal Educational Society Vs. ITO(E) (2023) 203 ITD 62 27-29 Reference 6. Per contra, the ld. DR relied on the order of the ld. Addl. CIT *A) 7. We have heard the rival contentions and perused material available on record. We note that AO(CPC) processed the return and issued intimation u/s 143(1) by assessing the gross receipt of Rs.1,13,74,839/- as total income by denying exemption u/s 11 on the ground that audit report is obtained in Form No.10BB instead of Form No.10B. The assessee subsequently filed the audit report in Form No.10B on 28.10.2022 and also filed application for condonation of delay u/s 119(2)(b) to PCIT(E), Delhi. Before the Addl. Ld. CIT(A), NFAC, assessee has challenged the action of CPC in assessing the gross receipt as total income without allowing the expenditure. The Addl. Ld. CIT(A), NFAC, however, dismissed the appeal by holding that since the application for condonation of delay in filing the audit report in Form No.10B is pending before the Ld. CIT (E), the ground of the appeal taken by the appellant is infructuous at this stage. In holding so the Addl. Ld. CIT(A), NFAC, has not ITA No. 169/Jodh/2024 Shiksha Samitee Bal Niketan 6 adjudicated the ground of assessee that when assessee is engaged in imparting education, against the gross receipt of Rs.1,13,74,839/-, expenditure incurred of Rs.1,28,21,052/- (including depreciation of Rs.18,77,633/-) is allowable to the assessee. Hence we direct the AO to allow the expenditure claimed by the assessee after verification of the documents and thereafter assess the total income of assessee in accordance with law. 8. Before parting, we may make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by AO independently in accordance with law. 9.0 In the result, the appeal of the assesee is allowed for statistical purposes Order pronounced in the open court on. 26/12/2024 Sd/- Sd/- (Rathod Kamlesh Jayantbhai) (DR. S. Seethalakshmi) Accountant Member Judicial Member Santosh- Sr. P.S Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order "