I.T.O.-5(1), Firozabad v. M/s Chaudhary Hardayal Singh Shiksha Samiti, Firozabad

ITA 180/AGR/2013 | 2009-2010
Pronouncement Date: 18-10-2013 | Result: Dismissed

Appeal Details

RSA Number 18020314 RSA 2013
Assessee PAN AAAAH5528D
Bench Agra
Appeal Number ITA 180/AGR/2013
Duration Of Justice 4 month(s) 15 day(s)
Appellant I.T.O.-5(1), Firozabad
Respondent M/s Chaudhary Hardayal Singh Shiksha Samiti, Firozabad
Appeal Type Income Tax Appeal
Pronouncement Date 18-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 18-10-2013
Date Of Final Hearing 15-10-2013
Next Hearing Date 15-10-2013
Assessment Year 2009-2010
Appeal Filed On 03-06-2013
Judgment Text
I.T.A. NO.: 180/AGRA/2013 ASSESSMENT YEAR: 2009-10 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA [ CORAM : BHAVNESH SAINI JM AND PRAMOD KUMAR AM] I.T.A. NO.: 180/AGRA/2013 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER WARD 5(1) FIROZABAD .......APPELLANT VS. SHRI HARDAYAL SINGH EDUCATIONAL SOCIETY RESPO NDENT 318 SHAMBHU NAGAR SHIKOHABAD [ PAN : AAAAH5528D] APPEARANCES BY: SHRI WASEEM ARSHAD DR FOR THE APPELLANT SHRI RAVINDRA KUMAR AGARWAL ADVOCATE FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : OCTOBER 15 2013 DATE OF PRONOUNCING THE ORDER : OCTOBER 18 2013 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL THE APPELLANT ASSESSING O FFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 15 TH MARCH 2013 PASSED BY THE COMMISSIONER (APPEALS) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REF ERRED TO AS THE ACT) FOR THE ASSESSMENT YEAR 2009-10. 2. GROUNDS OF APPEAL NUMBER 1 AND 2 WHICH ARE INTE RCONNECTED AND WHICH WE WILL TAKE UP TOGETHER ARE AS FOLLOWS: 1. THAT THE LEARNED CIT(A)-II AGRA HAS ERRED IN LAW AND ON FACTS BY HOLDING THAT THE PROVISIONS OF SECTION 10( 23C)(VI) ARE NOT APPLICABLE IN THIS CASE PARTICULARLY IN VIEW O F THE PROVISIONS OF SECTION 2(24)(IIA). I.T.A. NO.: 180/AGRA/2013 ASSESSMENT YEAR: 2009-10 PAGE 2 OF 7 2. THAT THE LEARNED CIT(A)-II AGRA HAS ERRED IN LAW AND ON FACTS HOLDING THAT THE DONATION RECEIPT OF RS 9 75 000 AND AGRICULTURAL INCOME OF RS 25 23 230 CANNOT BE TAKEN INTO CONSIDERATION OF CALCULATION OF EXEMPTION LIMIT FOR THE PURPOSE OF SECTION 10(23C)(IIAD) SPECIALLY IN VIEW OF THE P ROVISIONS OF SECTION 2(24)(IIA). 3. THE SHORT ISSUE THAT WE REALLY NEED TO ADJUDICAT E IN THE ABOVE GROUNDS OF APPEAL IS WHETHER OR NOT ON THE FACTS A ND IN THE CIRCUMSTANCES OF THIS CASE THE ASSESSEE WAS INDEED ENTITLED TO T HE BENEFIT OF EXEMPTION UNDER SECTION 10(23C) OF THE ACT. 4. THE MATERIAL FACTS ARE NOT IN DISPUTE. THE ASSES SEE BEFORE US IS A REGISTERED SOCIETY AND IS ENGAGED IN THE ACTIVITY O F SPREADING EDUCATION BY WAY OF MANAGING SEVERAL EDUCATIONAL INSTITUTIONS . DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE WAS ENGAGED IN MANAGING FOUR EDUCATIONAL INSTITUTIONS NAMELY SMT MARGSHREE KANYA MAHAVIDYAL AYA (SMKM) SMT MARGSHREE KANYA INTER COLLEGE (SMKIC) BABA TIKAM S INGH KANYA MAHAVIDHYALAY(BTSKM) AND BABA TIKAM SINGH JUNIOR HI GH SCHOOL (BTSJHS). ALL THESE FOUR EDUCATIONAL INSTITUTIONS HAVE THEIR INDEPENDENT ADMINISTRATION AND ARE STANDALONE UNITS. THE RECEI PTS OF THESE FOUR INSTITUTIONS WERE AS FOLLOWS: (A) SMKM 39 05 967 (B) SMKIC 12 93 700 (C) BTSJKM 33 62 590 (D) BTSJHS 13 60 060 TOTAL OF (A) TO (D) ABOVE 99 23 317 5. THE ASSESSEE HAD CLAIMED EXEMPTION OF ITS INCOME UNDER SECTION 10(23C) (IID) AS THE ASSESSEE WAS AN EDUCATIONAL IN STITUTION WITH TOTAL RECEIPTS OF LESS THAN RS 1 00 00 000. THIS CLAIM H OWEVER DID NOT IMPRESS THE ASSESSING OFFICER. HE NOTED THAT IN ADDITION T O THE ABOVE FEES AGGREGATING TO RS 99 23 317 THE ASSESSEE HAS ALSO EARNED INTEREST INCOME OF RS 93 493 + RS 5 284 AND AGRICULTURAL INCOME OF RS 25 23 230. THE I.T.A. NO.: 180/AGRA/2013 ASSESSMENT YEAR: 2009-10 PAGE 3 OF 7 ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAS RECEIVED A SUM OF RS 9 75 000 FROM MP LOCAL AREA DEVELOPMENT FUND. HE WA S OF THE VIEW THAT ANY KIND OF RECEIPTS WHETHER TAXABLE OR NOT WILL HAVE TO BE TAKEN INTO ACCOUNT FOR LIMIT OF RS 1 00 00 000 PRESCRIBED UND ER SUB CLAUSE (IIIAD) OF SECTION 10 (23C). THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE ALL THESE AMOUNTS TAKEN TOGETHER WORK OUT TO RS 1 35 19 324 THE ASSESSEE IS NOT ENTITLED TO EXEMPTION UNDER SECTION 10(23C). IT WAS ALSO OBSERVED THAT SINCE ONLY ONE INCOME TAX RETURN IS FILED IN R ESPECT OF ALL THE FOUR EDUCATIONAL INSTITUTIONS MANAGED AND RUN BY THE ASS ESSEE THE COMBINED RECEIPTS OF ALL THE EDUCATIONAL INSTITUTIONS BEING RUN BY THE ASSESSEE WILL HAVE TO BE TAKEN TOGETHER. ACCORDINGLY EXEMPTION UNDER SECTION 10(23C) WAS DECLINED. AGGRIEVED ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE CIT(A). LEARNED CIT(A) UPHELD THE GRIEVANCE OF THE ASSESSEE AND REVERSED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING AS FOLLOWS: 3.2 I HAVE CAREFULLY CONSIDERED THE AOS ORDER AS W ELL AS THE WRITTEN SUBMISSION OF THE APPELLANT AND ALSO THE CASE LAW RELIED ON BY THE APPELLANT. THE RECEIPTS OF THE SOCIETY INCLUDING INTEREST ON FDR AND OTHER RECEIPT S EXCEEDS RS.1 CRORE. THE CASE OF ASSESSING OFFICER IS THAT THE ASSESSEE SHOULD HAVE OBTAINED APPROVAL FROM CCIT AS REQUIRED U/S 10(23C)(VI) OF THE ACT AS THE ANNUAL R ECEIPTS WAS MORE THAN RS.1 CRORE BY ADDING DONATION RECEIVED FROM MP LAD FUND ETC. W HEREAS THE APPELLANTS CONTENTION IS THAT ALL RECEIPTS DO NOT CONSTITUTE A GGREGATE ANNUAL RECEIPTS AND IT IS ONLY THOSE RECEIPTS FROM ACTIVITIES OF PROVIDING OF EDUCATION AND WHICH HAS AN ELEMENT OF REOCCURRENCE CAN BE REGARDED AS ANNUAL R ECEIPTS. THE FACT THAT THE ANNUAL RECEIPTS FROM EDUCATIONAL INSTITUTION RECEIV ED AS FEES IS BELOW RS.1 CRORE IS NOT IN DISPUTE. THE TERM ANNUAL RECEIPTS HAS NOT BEEN DEFINED IN SECTION 10(23)(IIIAD) OF THE I.T. ACT. THE ITAT DELHI F. BE NCH IN THE CASE OF PARAM HANS SWAMI UMA BHARTI VS. ACIT HAS HELD THAT INTEREST ON FDR IS AN ADDITIONAL INCOME AND CANNOT BE CONSIDERED TO BE PART OF THE ANNUAL R ECEIPTS OF THE SCHOOL. WHAT EMERGES FROM THIS DECISION IS THAT ONE TIME GRANT R ECEIVED FROM THE MP LAD FUND WHICH IS NOT A RECEIPT OF THE EDUCATIONAL INSTITUTI ON CANNOT BE CONSIDERED TO BE PART OF ANNUAL RECEIPTS FOR THE PURPOSE OF SEC 10(23C)(I IIAD). RESPECTFULLY FOLLOWING THE PROPOSITION OF LAW AS LAID DOWN IN THE ABOVE CASE I AM OF THE VIEW THAT INTEREST RECEIPTS AS WELL AS DONATION RECEIPTS AND AGRICULTU RAL INCOME CANNOT BE TAKEN INTO I.T.A. NO.: 180/AGRA/2013 ASSESSMENT YEAR: 2009-10 PAGE 4 OF 7 CONSIDERATION FOR CALCULATION OF THE EXEMPTION LIMI T FOR THE PURPOSE OF SEC. 10(23C)(IIIAD). THEREFORE THE ADDITION MADE BY THE AO IS DIRECTED TO BE DELETED. 6. THE ASSESSING OFFICER IS NOW AGGRIEVED OF THE RE LIEF GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CA SE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 8. WE FIND THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY DECISIONS OF COORDINATE BENCHES IN THE CASES OF PAR AM HANS SWAMI BHARTI MISSION VS ACIT ( 29 TAXMANN.COM 223) AND JAT EDUC ATION SOCIETY VS DCIT ( 58 DTR 188). LEARNED DEPARTMENTAL REPRESENTA TIVE ALSO DOES NOT DISPUTE THIS POSITION BUT HE SUBMITS THAT HIS ARGUM ENT TO THE EFFECT THAT WHAT IS MATERIAL FOR THE PURPOSE OF EXEMPTION UNDER SECTION 10(23C) IS THE PERSON RECEIVING THE MONIES IN RESPECT OF EDUCA TIONAL INSTITUTIONS AND THEREFORE ONLY THE AGGREGATE AMOUNT OF ALL T HE INSTITUTIONS PUT TOGETHER CAN BE TAKEN INTO ACCOUNT. EVEN THIS ARGU MENT DOES NOT REALLY HELP HIM MUCH BECAUSE AS HELD IN THE CASE OF PARAM HANS (SUPRA) ONLY THE EDUCATIONAL RECEIPTS CAN BE TAKEN INTO ACCOUNT AND NOT THE ALLIED RECEIPTS SUCH AS BANK RECEIPTS AND AGRICULTURAL INC OME ETC. ONCE THESE AMOUNTS ARE EXCLUDED TOTAL RECEIPTS FOR THIS PURPO SE ARE ADMITTEDLY LESS THAN RS 1 00 00 000. RESPECTFULLY FOLLOWING THE DEC ISIONS OF THE COORDINATE BENCHES WE UPHOLD THE ACTION OF THE CIT (A) AND DECLINE TO INTERFERE IN THE MATTER. THE ORDER OF THE CIT(A) ST ANDS CONFIRMED. 9. GROUND NOS 1 AND 2 ARE THUS DISMISSED. 10. IN GROUND NO 3 THE ASSESSING OFFICER IS AGGRIE VED OF THE CIT(A) DELETING THE ADDITION OF RS 21 76 100 IN RESPECT OF AGRICULTURAL INCOME. I.T.A. NO.: 180/AGRA/2013 ASSESSMENT YEAR: 2009-10 PAGE 5 OF 7 11. AS FAR AS THIS ADDITION IS CONCERNED THE RELEV ANT MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF THE ASSESSMENT PROC EEDINGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD DECLARED AN AGR ICULTURAL INCOME OF RS 25 23 230 AGAINST WHICH EXPENDITURE OF ONLY RS 43 5 00 IS SHOWN. THE ASSESSING OFFICER WAS OF THE VIEW THAT THIS EXPENSE IS QUITE AT VARIANCE WITH THE TREND SHOWN IN EARLIER YEARS IN WHICH THE INCOME WAS 7.98 TIMES THE EXPENSES SHOWN ON AGRICULTURE. BASED ON THIS WO RKING HE RECOMPUTED THE ESTIMATED AGRICULTURAL INCOME AND TO THE EXTENT AGRICULTURAL INCOME DECLARED EXCEEDED THE AMOUNT SO COMPUTED ON HYPOTHE TICAL BASIS THE ADDITION WAS MADE AS INCOME FROM OTHER SOURCES. IN APPEAL LEARNED CIT(A) NOTED THAT ALL THE INCOME AND EXPENSES ARE DULY SUPPORTED BY BOOKS OF ACCOUNTS AND MANDI RECEIPTS AND VOUCHERS E TC AND AS SUCH THERE WAS NO OCCASION FOR ESTIMATION OF INCOME BY T HE ASSESSING OFFICER. ACCORDINGLY THE ADDITION WAS DELETED. THE ASSESSIN G OFFICER IS NOT SATISFIED AND IS IN APPEAL BEFORE US. 12. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING P ERUSED THE MATERIAL ON RECORD WE SEE NO NEED TO INTERFERE IN THE WELL REASONED CONCLUSIONS ARRIVED AT BY THE CIT(A). ONCE THE DETAILS FURNISHE D BY THE ASSESSEE AND EVIDENCES CITED BY THE ASSESSEE ARE NOT PROVED INC ORRECT THERE CANNOT BE ANY OCCASION TO RESORT TO ESTIMATION OF INCOME ON T HE BASIS OF THE TRENDS FOR LAST YEARS. SUCH DEVIATIONS CAN AT BEST BE STAR TING POINT FOR INQUIRES BUT CANNOT BE BY ITSELF REASONS ENOUGH FOR ADDITI ONS BEING MADE- AS HAS BEEN DONE IN THIS CASE. LEARNED CIT(A) WAS THEREFO RE QUITE JUSTIFIED IN DELETING THE IMPUGNED ADDITION. WE APPROVE HIS ACTI ON AND DECLINE TO INTERFERE IN THE MATTER. 13. GROUND NO. 3 IS ALSO DISMISSED. 14 IN GROUND NO 4 THE ASSESSING OFFICER IS AGGRIEV ED THAT THE CIT(A) ERRED IN NOT APPRECIATING THAT DONATION OF RS 25 00 000 BY THE ASSESSEE TO I.T.A. NO.: 180/AGRA/2013 ASSESSMENT YEAR: 2009-10 PAGE 6 OF 7 HARDAYAL CHARITABLE AND EDUCATION TRUST AMOUNTS TO APPLICATION OF FUNDS FOR PURPOSES OTHER THAN EDUCATION PURPOSES AND THE ASSESSEE SHOULD HAVE LOST ITS EXEMPTION UNDER SECTION 10(23C) FOR THIS R EASON ALSO. 15. LEARNED CIT(A) HAS DECIDED THIS ISSUE ON THE SH ORT GROUND THAT THE APPLICATION OF FUNDS BY DONATING THE SAME TO OTHER CHARITABLE AND EDUCATIONAL INSTITUTION DOES NOT AFFECT EXEMPTION UNDER SECTION 10(23C) AS THE PROVISIONS OF SECTION 11 12 AND 13 OF THE A CT DO NOT COME INTO PLAY IN SUCH CASE. IN THE COURSE OF ARGUMENTS BEFOR E US WHEN LEARNED DEPARTMENTAL REPRESENTATIVE WAS ASKED TO POINT OUT INFIRMITY IN THIS LINE OF REASONING HE DID NOT HAVE MUCH TO SAY EXCEPT TO PLACE BLAND RELIANCE ON THE STAND OF THE ASSESSING OFFICER. NO BAR WAS S HOWN IN THE END USE OF FUNDS BY WAY OF DONATING FOR CORPUS DONATION OF ANO THER EDUCATIONAL INSTITUTION. NO OTHER ARGUMENT WAS RAISED BEFORE U S IN SUPPORT OF THE STAND OF THE ASSESSING OFFICER. IN THIS VIEW OF THE MATTER AND BEARING IN MIND ENTIRETY OF THE CASE WE APPROVE THE CONCLUSIO NS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 16. GROUND NO. 4 IS ALSO DISMISSED. 17. IN GROUND NO. 5 THE ASSESSING OFFICER IS AGGRI EVED THAT THE AMOUNT OF RS 9 75 000 RECEIVED AS DONATION FROM MP LAD FUN D FOR CONSTRUCTION OF SCHOOL BUILDING HAS NOT BEEN HELD AS OF INCOME NATU RE BY THE CIT(A). 18. IN THIS CASE THERE IS NO DISPUTE THAT THE AMO UNT HAS BEEN RECEIVED AS A CAPITAL DONATION FOR CONSTRUCTION OF SCHOOL BU ILDING. YET ASSESSING OFFICER HAS TREATED IT AS INCOME AS THERE IS ACCOR DING TO HIM CONCEPT OF CORPUS FUNDS IN CASES COVERED BY SECTION 10(23C) AN D ALL THE RECEIPTS OF WHATEVER NATURE ARE TO BE TAXED IN THE HANDS OF TH E ASSESSEE. LEARNED CIT(A) HAS HELD THAT THE RECEIPT BEING CAPITAL IN N ATURE AND FOR SPECIFIC PURPOSE OF SCHOOL CONSTRUCTION THE SAME CANNOT BE TREATED AS INCOME. THE ASSESSING OFFICER IS AGGRIEVED AND IS IN APPEAL BEFORE US. I.T.A. NO.: 180/AGRA/2013 ASSESSMENT YEAR: 2009-10 PAGE 7 OF 7 19. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING P ERUSED THE MATERIAL ON RECORD WE SEE NO NEED TO INTERFERE IN THE ORDER OF THE CIT(A) ON THIS COUNT AS WELL PARTICULARLY AS THERE IS NO DISPUTE THAT THE AMOUNT IS A CAPITAL RECEIPT. IT IS ONLY ELEMENTARY THAT INCOME DOES NOT INCLUDE CAPITAL RECEIPTS UNLESS THEY ARE SPECIFICALLY HELD TO BE T AXABLE SUCH AS IN THE CHARACTER OF CAPITAL GAINS. THE ALL IMPORTANT DISTI NCTION BETWEEN CAPITAL AND REVENUE RECEIPT CANNOT BE IGNORED FOR THE PURPO SE OF TAXATION OF AN INCOME. ONCE THE RECEIPT BEING IN THE NATURE OF CAP ITAL RECEIPT IS NOT IN DISPUTE AS IN THIS CASE THE SAME CANNOT BE BROUG HT TO TAX IN THE HANDS OF THE ASSESSEE UNLESS AS WE HAVE NOTED ABOVE IT IS SPECIFICALLY HELD TO BE TAXABLE IN CHARACTER. THE LINE OF REASONING ADOPTE D BY THE CIT(A) MEETS OUR APPROVAL. WE CONFIRM THE SAME. 20. GROUND NO 5 IS ALSO DISMISSED. 21. IN THE RESULT THE APPEAL IS DISMISSED. PRONOUN CED IN THE OPEN COURT TODAY ON 18TH DAY OF OCTOBER 2013. SD/- SD/- BHAVNESH SAINI PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AGRA THE 18 TH DAY OF OCTOBER 2013 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA