Rohini Educational Society, v. Asst.DCIT(Exem),

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B NEW DELHI BEFORE SHRI G.E. VEERABHDRAPPA VICE PRESIDENT AND SHRI RAJPAL YADAV JUDICIAL MEMEBR I.T.A NO. 4462/DEL/04 ASSTT. YEAR 1997-98 ROHINI EDUCATIONAL SOCIETY C-1/30 PARSHANT VIHAR SECTOR 14 ROHINI NEW DELHI. VS. ASSTT. DIRECTOR OF INCOME TAX (EXEMPTIONS) INV. CIRCLE 11 MAYUR BHAWAN NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI K. SAMPATH ADVOCATE RESPONDENT BY: SHRI MANISH GUPTA DR ORDER PER RAJPAL YADAV JM: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LD. CIT(A) DATED 28 TH APRIL 2004 PASSED FOR ASSTT. YEAR 1997-98. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE READ AS UND ER: - (I) DENYING BENEFIT U/S 10(22) OF THE ACT BY ERRON EOUSLY TREATING CERTAIN RECEIPTS WHICH WERE INCIDENTAL TO THE OBJE CTS OF THE SOCIETY AS INCOME CHARGEABLE TO TAX. IN DOING SO THE ASSESSING OFFICER IGNORED THE PLEADINGS OF THE SOCI ETY THAT ITS MAIN OBJECT WAS TO IMPART EDUCATION TO CHILDREN AND THERE ITA NO. 4462/DEL/2004 ASSTT. YEAR 1997-98 2 WAS NO DEVIATION FROM ITS MAIN PURPOSE AND THAT THE SOCIETY WAS VERY MUCH ENJOYING SUCH BENEFITS IN THE PAST; (II) MAKING AN ADDITION OF RS. 6 08 342/- BY TREATI NG THE UNSECURED CASH CREDITS AS UNEXPLAINED INCOME OF THE APPELLANT U/S 68 OF THE ACT DESPITE THE APPELLANT H AVING FULLY DISCHARGED ITS ONUS AS CAST ON IT IN LAW AND ALSO F URNISHING NECESSARY CONFIRMATIONS FROM THE CASH CREDITORS; (III) DENYING GRANT OF EXEMPTION U/S 11 OF THE ACT; 2. LD. COUNSEL FOR THE ASSESSEE WHILE IMPUGNING THE ORDER OF LD. CIT (A) SUBMITTED THAT EXEMPTION U/S 10(22) WAS DEN IED TO THE ASSESSEE BY THE AO IN ASSTT. YEAR 1994-95 ON THE GROUND THAT IT HAS VIOLATED THE PROVISION OF SECTION 11(5) OF THE INCOME TAX ACT. T HE LD. CIT (A) HAS ALLOWED THE EXEMPTION TO THE ASSESSEE VIDE ORDER DA TED 12 TH JUNE 1997. THIS ORDER WAS CHALLENGED BY THE REVENUE BEFORE THE TRIBUNAL IN ITA NO. 4761/D/97. THE APPEAL OF THE REVENUE HAS BEEN DISMI SSED BY THE TRIBUNAL VIDE ORDER DATED 27.11.2002. SIMILARLY IN ASSTT. YEAR 1993-94 ALSO THE AO HAS DENIED THE EXEMPTION TO THE ASSESSE E U/S 10(22) OF THE ACT. THE LD. CIT(A) HAS ALLOWED THIS EXEMPTION AND THE ORDER OF THE LD. CIT(A) HAS BEEN CONFIRMED BY THE TRIBUNAL IN ITA NO . 3096/D/97. HE PLACED ON RECORD COPIES OF ALL THESE ORDERS AND POI NTED OUT THAT ASSESSEE IS A SOCIETY WHICH HAS BEEN RUNNING EDUCA TIONAL INSTITUTION WITHOUT ANY PROFIT MOTIVE. HE FURTHER POINTED OUT THAT PRIOR TO 1993-94 ITA NO. 4462/DEL/2004 ASSTT. YEAR 1997-98 3 AO HIMSELF ALLOWED THE EXEMPTION TO THE ASSESSEE U/ S 10(22) OF THE INCOME TAX ACT. THERE IS NO VARIATION ON THE FACTS AND CIRCUMSTANCES WHICH HAS BEEN POINTED OUT BY THE AO IN THE PRESENT ASSTT. YEAR. THE GRIEVANCE OF THE AO IN THE PRESENT YEAR IS THAT ASS ESSEE HAS LET OUT THE PART OF SCHOOL BUILDING TO THE ORIENTAL BANK OF COM MERCE WHICH HAS ESTABLISHED ITS EXTENSION COUNTER FOR COLLECTING FE ES ETC. THE OTHER GRIEVANCE OF THE AO IS THAT ASSESSEE HAD MADE A DEP OSIT OF RS. 20 000/- WITH ONE SMT. SATYAWATI WHICH IS IN VIOLATION OF TH E PROVISION OF SECTION 11 (5) READ WITH SECTION 13(1)(D) OF THE ACT. THE L D. COUNSEL FOR THE ASSESSEE CONTENDED THAT THIS LOAN WAS GIVEN TO SMT. SATYAWATI AS A TEMPORARY HELP FOR A SHORT PERIOD AND SHE WAS VERY HELPFUL TO THE SOCIETY. LD. COUNSEL FOR THE ASSESSEE FURTHER POIN TED OUT THAT THE OTHER GRIEVANCE OF THE AO IS THAT ASSESSEE FAILED TO EXPL AIN SOURCE OF UNSECURED LOANS AMOUNTING TO RS. 6 08 342/-. HE TOO K US THROUGH THE COMPUTATION OF INCOME MADE BY THE AO AND POINTED OU T THAT AO HAS TOTALLY IGNORED THE FACTOR THAT HE WAS COMPUTING TH E INCOME OF A SOCIETY. HE HAS TO FIND OUT HOW MUCH INCOME WAS TO APPLIED F OR THE OBJECTS OF SOCIETY I.E. WHETHER THERE IS AN APPLICATION OF INC OME FOR EDUCATION PURPOSE AT 75% OR NOT. THE AO HAS COMPUTED THE INCO ME AS IF SHE WAS COMPUTING OF A BUSINESS ESTABLISHMENT. THE ASSESSEE HAS SHOWN NIL INCOME WHEREAS AO HAS DETERMINED THE TAXABLE INCOME OF RS. 35 800/-. ITA NO. 4462/DEL/2004 ASSTT. YEAR 1997-98 4 HE POINTED OUT THAT THE ISSUES ARE REQUIRED TO BE R EEXAMINED AT THE LEVEL OF THE AO IN THE LIGHT OF TRIBUNALS ORDER IN EARLI ER ASSTT. YEARS. THE LD. DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 3. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. AFTER TAKING INTO CONSIDERATI ON THE ORDERS OF THE TRIBUNAL IN ASSTT. YEAR 1993-94 AND 1994-95 WE ARE OF THE OPINION THAT ALL THE ISSUES ARE REQUIRED TO RE APPRECIATED AT THE LE VEL OF THE AO. THE MAIN GRIEVANCE OF THE AO IS THAT ASSESSEE HAS LET O UT A PORTION OF BUILDING TO A BANK AND THEREFORE IT IS NOT A SOCIET Y WORKING EXCLUSIVELY FOR THE EDUCATION PURPOSE. ON DUE CONSIDERATION THE ASSTT. ORDER IT IS NOT DISCERNABLE WHETHER AO HAS EXAMINED THE DETAILS OF RECEIPT VIZ. A VIZ. APPLICATION OF INCOME FOR EDUCATIONAL PURPOSE. THE ASSESSEE HAS BEEN CONSISTENTLY PLEADING THAT IT IS RUNNING EDUCATION AL INSTITUTIONS WITHOUT ANY PROFIT MOTIVE. ALL THESE ASPECTS HAVE NOT BEEN CONSIDERED BY THE AO. HE SIMPLY GOT INFLUENCE WITH THE FACTOR OF ALLE GED ADVANCEMENT OF LOAN TO SMT. SATYAWATI AMOUNTING TO RS. 20 000/- AN D LETTING OUT OF THE BUILDING TO THE BANK FOR RUNNING AN EXTENSION COUNT ER. IN OUR OPINION AO HAS TO EXAMINE THE FACTS IN THE LIGHT OF PAST HISTO RY AND THE OBJECTS OF THE SOCIETY ALSO. TAKING INTO CONSIDERATION ALL THESE A SPECTS WE SET ASIDE ALL THE ISSUES TO THE FILE OF AO FOR DENOVO ASSESSMENT. IT IS NEEDLESS TO SAY ITA NO. 4462/DEL/2004 ASSTT. YEAR 1997-98 5 THAT OBSERVATION MADE BY US WILL NOT IMPAIR OR INJ URE THE CASE OF AO OR WOULD CAUSE ANY PREJUDICE TO THE EXPLANATION / DEFE NCE OF ASSESSEE. THE AO SHALL GIVE DUE OPPORTUNITY OF HEARING AND TH E ASSESSEE WILL BE AT LIBERTY TO SUBMIT REQUISITE DETAILS BEFORE THE AO. 4. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 9.4.2010. [G.E. VEERABHDRAPPA] [RAJPAL YADAV] VICE PRESIDENT JUDICIAL MEMBER VEENA DATED: COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT