The ACIT, 3 (1), v. Shri Tapasya Shiksha Samiti,

ITA 306/IND/2008 | misc
Pronouncement Date: 15-01-2010 | Result: Dismissed

Appeal Details

RSA Number 30622714 RSA 2008
Bench Indore
Appeal Number ITA 306/IND/2008
Duration Of Justice 1 year(s) 6 month(s) 8 day(s)
Appellant The ACIT, 3 (1),
Respondent Shri Tapasya Shiksha Samiti,
Appeal Type Income Tax Appeal
Pronouncement Date 15-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 15-01-2010
Date Of Final Hearing 13-01-2010
Next Hearing Date 13-01-2010
Assessment Year misc
Appeal Filed On 07-07-2008
Judgment Text
1 IN THE INCOME TAX APPELATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH AND SHRI V.K. GUPTA AM ITA NO.306/IND/08 A.Y. 2005-06 ASSTT. COMMR. OF INCOMETAX 3(1) BHOPAL APPELLANT VS SHRI TAPASYA SHIKSHA SAMITI BHOPAL RESPONDENT PAN - AAAAT-6145J C.O. NO. 58/IND/08 ARISING OUT OF ITA NO. 306/IND/08 SHRI TAPASYA SHIKSHA SAMITI BHOPAL OBJECTOR VS ASSTT. COMMR. OF INCOMETAX 3(1) BHOPAL RESPONDENT DEPARTMENT BY SMT. APARNA KARAN SR.DR ASSESSEE BY SHRI PRAKASH JAIN CA O R D E R PER JOGINDER SINGH JM THE REVENUE HAS FILED THIS APPEAL AND CROSS OBJECTI ON BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 4.4.2 008. DURING HEARING WE HAVE 2 HEARD SMT. APARNA KARAN LEARNED ADDL. CIT DR AND SHRI PRAKASH JAIN LEARNED COUNSEL FOR THE ASSESSEE. AT THE OUTSET T HE LEARNED COUNSEL FOR THE ASSESSEE PLEADED THAT HE MAY BE PERMITTED TO WITHDR AW THE CROSS OBJECTION FILED BY THE ASSESSEE. THE LEARNED DR HAS NO OBJECTION TO SUCH REQUEST. WE THEREFORE DISMISS THE CROSS OBJECTION OF THE ASSES SEE AS NOT PRESSED. 2. NOW WE SHALL TAKE UP THE APPEAL OF THE REVENUE W HEREIN THE FIRST GROUND RAISED IS THAT THE LEARNED CIT(A) ERRED IN ALLOWIN G RELIEF ON THE ISSUE OF VIOLATION OF SECTION 11(5) OF THE ACT EVEN AS THE A SSESSEE ITSELF HAS ADMITTED THAT THE REVERSE ENTRY WAS PASSED IN THE BOOKS IN THE YE AR 2006-07 WHILE THE SAME DID NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. T HE LEARNED SENIOR DR DEFENDED THE ASSESSMENT ORDER WHEREAS THE LEARNED C OUNSEL FOR THE ASSESSEE SUPPORTED THE IMPUGNED ORDER. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS ARE THAT THE ASSESS EE IS A CHARITABLE TRUST REGISTERED U/S 12A OF THE ACT AND EX FACIE ENTITLED TO BE ASSE SSED U/S 11 OF THE ACT. THE ASSESSEE ADVANCED RS. 6 LACS TO BETWA GRAH NIRMAN S AHKARI SANSTHA MARYADIT BHOPAL ON 25.9.2001. AS PER THE REVENUE SHRI SAN JIV SAXENA PRESIDENT OF THE ASSESSEE WAS ALSO PRESIDENT OF THE SAID SANSTHA CO NSEQUENTLY COMMITTED BREACH OF SECTION 13(1)(C )(II) OF THE ACT. WE ARE OF THE VIEW THAT THIS STAND OF THE REVENUE IS NOT JUSTIFIED BECAUSE THE LANGUAGE USED IN SECTION 13(1)(C )(II) IS ANY PART OF SUCH INCOME OF THE TRUST DURING THE PREVIOU S YEAR USED OR APPLIED. IN THE PRESENT APPEAL THE AMOUNT WAS GIVEN ON 25.9.2001 A ND NOT DURING THE PREVIOUS 3 YEAR. EVEN OTHERWISE THERE IS NO ALLEGATION THAT S HRI SANJIV SAXENA HAS SUBSTANTIAL INTEREST IN THE AFORESAID SANSTHA AS IT WAS A LIMITED COOPERATIVE SOCIETY REGISTERED WITH THE REGISTRAR OF SOCIETIES UNDER THE M.P. COOPERATIVE SOCIETIES ACT FOR THE BENEFIT OF ITS MEMBERS FOR CO NSTRUCTION OF THEIR HOUSES. THEREFORE IT CAN BE SAID THAT SHRI SANJIV SAXENA HAD NO PERSONAL INTEREST IN THE SOCIETY. THE REGISTRATION U/S 12AA WAS GRANTED TO T HE SOCIETY ON 18.10.2004 WITH EFFECT FROM 1.4.2003 WHEREAS THE IMPUGNED ADVA NCE WAS GIVEN TO THE SANSTHA ON 25.9.2001 I.E. MUCH PRIOR TO THE DATE OF REGISTRATION CONSEQUENTLY THERE IS NO MERIT IN THE STAND OF THE REVENUE THER EFORE THIS GROUND IS DISMISSED. 3. THE NEXT GROUND RAISED BY THE REVENUE IS THAT TH E LEARNED CIT(A) ERRED IN ALLOWING RELIEF TO THE ASSESSEE ON THE ISSUE OF DIV ERSION OF FUNDS OF THE SOCIETY FOR THE BENEFIT OF THE PERSONS COVERED U/S 13(1)(D) EVEN THOUGH IT WAS ESTABLISHED BY THE REVENUE THAT THE FUNDS WERE TRAN SFERRED TO THE ACCOUNT OF THE PRESIDENT FOR WHICH NO SATISFACTORY REPLY WAS FURNI SHED BY THE ASSESSEE. THE LD. DR DEFENDED THE ASSESSMENT ORDER WHEREAS THE LEARNE D COUNSEL FOR THE ASSESSEE SUPPORTED THE IMPUGNED ORDER. ON CONSIDERATION OF RIVAL SUBMISSIONS WE HAVE FOUN D THAT THERE WAS A DEBIT BALANCE OF RS. 9 64 047/- IN THE ACCOUNT OF S ANJIV SAXENA PRESIDENT OF THE ASSESSEE TRUST. THE SUSPICION OF THE AO IS THAT UN DER WHAT CIRCUMSTANCES THE SAID DEBIT BALANCE CAME AND CONCLUDED THAT IT WAS D IVERSION OF FUNDS FOR THE BENEFIT OF ITS PRESIDENT WHICH IS VIOLATIVE OF SECT ION 13(I)(D) OF THE ACT. ADMITTEDLY THE FEE IS COLLECTED BY THE EDUCATIONAL INSTITUTION MANAGED BY THE 4 SANSTHA AS IS EVIDENT FROM RECEIPT ISSUED FOR THE P URPOSE. THE IMPUGNED AMOUNT WAS DEBITED TO THE SUSPENSE ACCOUNT IN THE B OOKS OF THE TRUST MEANING THEREBY THE AMOUNT WAS TO BE RECOVERED FROM THE PER SONS AT FAULT AS THE ACCOUNTANT DID NOT FULLY DEPOSIT THE AMOUNT IN THE ACCOUNT OF THE TRUST. AT THE END OF THE YEAR THE SUSPENSE ACCOUNT IS SQUARED UP BY DEBITING THE LIABILITY AND BY FIXING THE RESPONSIBILITY OF THE DEFAULTER IF A NY FOR SHORT DEPOSIT. EVEN THE AO DID NOT ASSIGN ANY REASON. IN ANY SITUATION IT CANNOT BE TREATED AS ADVANCE TO THE PRESIDENT. THERE IS A FINDING IN THE IMPUGN ED ORDER THAT IT IS A CASE OF RECOVERY AND NOT OF PAYMENT AS THE AO HAS NOWHERE S TATED IN THE ASSESSMENT ORDER THAT THE IMPUGNED PAYMENT WAS MADE TO SHRI SA NJIV SAXENA. THIS FINDING WAS NOT CONTROVERTED BY THE REVENUE. IN VIEW OF THE SE FACTS IT CAN BE SAID THAT NO UNDUE FAVOUR HAS BEEN MADE TO ANY PERSON AS SPEC IFIED U/S 13(1)(D) OF THE ACT CONSEQUENTLY THE TRANSACTION OF RECOVERY OF A NY AMOUNT FROM ANYONE CANNOT BE CONCLUDED AS PAYMENT. THE STAND OF THE LD . CIT(A) IS THEREFORE AFFIRMED. 4. THE LAST GROUND RAISED IS THAT THE LEARNED CIT(A ) ERRED IN DELETING THE ADDITION OF RS. 3 48 341/- MADE BY DISALLOWING THE EXPENSES CLAIMED UNDER THE HEAD ELECTRICITY BY ADMITTING FRESH EVIDENCE IN V IOLATION OF RULE 46A OF THE IT RULES 1962. THE LD. DR SUPPORTED THE ASSESSMENT O RDER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDE R. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED 5 EXPENSES OF RS. 3 48 341/- UNDER THE HEAD ELECTRIC ITY EXPENSES. THE AO REQUIRED THE ASSESSEE TO PRODUCE BILLS FOR THE SAME BUT THE ASSESSEE FAILED TO PRODUCE THE SAME. THE AO THEREFORE DISALLOWED TH E ELECTRICITY EXPENSES OF RS. 3 48 341/-. ON APPEAL BEFORE THE LEARNED CIT(A) IT WAS PLEADED BY THE ASSESSEE THAT THE ELECTRICITY EXPENSES ARE MANDATORY IN NATURE AN D THE GENUINENESS OF EXPENSES COULD NOT BE DOUBTED BECAUSE IT WAS IMPRAC TICABLE TO RUN THREE EDUCATIONAL INSTITUTIONS WITHOUT ELECTRICITY. IT W AS ALSO SUBMITTED THAT SINCE THE EDUCATIONAL INSTITUTIONS ARE BEING RUN IN THE RURAL AREAS WHERE REGULAR SUPPLY OF ELECTRICITY WAS NOT AVAILABLE THE REQUIREMENT OF E LECTRICITY WAS BEING MANAGED BY THE ASSESSEE THROUGH SUPPLIES BY HIRING DG SETS. SINCE THE HIRING OF DG SET WAS A COSTLIER AFFAIR THE ASSESSEE SOCIETY APPROAC HED THE MP ELECTRICITY BOARD WITH A PROPOSAL TO SUPPLY THE TRANSFORMERS TO THEM WHICH PROPOSAL WAS ACCEPTED BY THE MP ELECTRICITY BOARD AND THE SUPPL Y OF ELECTRICITY WAS MADE POSSIBLE IN THIS WAY. THE ASSESSEE SUBMITTED COPIE S OF BILLS AND ACCOUNTS IN THIS BEHALF BEFORE THE LEARNED CIT(A). THE LEARNED CIT( A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE EXPEN SES SO MADE BY THE ASSESSEE ARE REASONABLE AND JUSTIFIED AND IN A SITUATION WHE RE IT IS NOT POSSIBLE TO TREAT AS ASSETS ON ACCOUNT OF PURCHASE OF CAPITAL ASSETS TH ESE EXPENSES COULD BE SHOWN AS DEFERRED REVENUE EXPENDITURE. HE HOWEVER OBSE RVED THAT IN THE EDUCATIONAL INSTITUTIONS DEFERRED REVENUE EXPENSES COULD NOT B E WRITTEN OFF OVER A PERIOD OF TIME. IN THE OPINION OF THE LEARNED CIT(A) WRITI NG OFF OF THE DEFERRED REVENUE 6 EXPENSES IN A SINGLE GO IS JUSTIFIED CONSEQUENTLY WE HAVE NOT FOUND ANY INFIRMITY IN THE STAND OF THE LD. CIT(A) AS HE HAS RIGHTLY OBSERVED THAT IN THE EDUCATIONAL INSTITUTIONS DEFERRED REVENUE EXPENSES COULD NOT BE WRITTEN OFF OVER A PERIOD OF TIME THEREFORE WRITING OFF THE SAME I N A SINGLE GO IS JUSTIFIED CONSEQUENTLY THE ORDER OF THE LEARNED CIT(A) IS U PHELD AND THIS GROUND OF APPEAL OF THE REVENUE IS ALSO DISMISSED. 5. IN THE RESULT THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES AT THE CONCLUSION OF HEARING ON 13 TH JANUARY 2010. (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED - 15.01.2010 COPY TO APPELLANT RESPONDENT CIT CIT(A) DR GU ARD FILE DN/-