SPRINGBIRD EDUCATIONS PVT. LTD., MUMBAI v. I.T.O. WARD 4(3)(4), MUMBAI

ITA 4471/MUM/2012 | 2009-2010
Pronouncement Date: 31-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 447119914 RSA 2012
Assessee PAN AAJCS8990B
Bench Mumbai
Appeal Number ITA 4471/MUM/2012
Duration Of Justice 4 year(s) 3 month(s) 29 day(s)
Appellant SPRINGBIRD EDUCATIONS PVT. LTD., MUMBAI
Respondent I.T.O. WARD 4(3)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 31-10-2016
Date Of Final Hearing 25-01-2016
Next Hearing Date 25-01-2016
Assessment Year 2009-2010
Appeal Filed On 02-07-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI C.N. PRASAD JUDICIAL MEMBER AND SHRI RAMIT KOCHAR ACCOUNTANT MEMBER ITA NO. 4471 /MUM/20 12 : (A.Y : 2009 - 10 ) M/S. SPRINGBIRD EDUCATIONS PVT. LTD. PAREKH NAGAR GOKUL NAGAR OFF S.V. ROAD KANDIVALI (W) MUMBAI 400067. PAN : AAJCS8990B ( APPELLANT ) VS. ITO WARD - 4(3)(4) MUMBAI (RESPONDENT) ASSESSEE BY : SHRI SATISH MODY REVENUE BY : SHRI SANJEEV KASHYAP DATE OF HEARING : 02/08 /2016 DATE OF PRONOUNCEMENT : 31 / 1 0 /2016 O R D E R PER C.N. PRASAD JM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 8 MUMBAI DATED 28.5.2012 FOR ASSESSMENT YEAR 2009 - 10. 2. THE FIRST ISSUE IN THE APPEAL OF ASSESSEE IS THAT CIT (A) ERRED IN NOT CONSIDERING DEDUCTION OF RS.25 LACS U/S 35(1)(III) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) PAID TO RESEARCH FOUNDATION FOR JAINOLOGY ON THE GROUND THAT THE CBDT HAS NOT ISSUED NOTIFICATION IN OFFICIAL GAZETTE FOR THE PERIOD FROM 1.4.2006 TO 31.3.2009 THOUGH THE FOUNDATION WAS APPROVED BY THE DEPARTMENT OF SCIENTIFIC & INDUSTRIAL RESEARCH 2 M/S. SPRINGBIRD EDUCATIONS PVT. LTD. ITA NO. 4471/MUM/2012 GOVERNMENT OF INDIA. IN THE ALTERNATIVE ASSES SEE CONTENDED THAT DEDUCTION SHOULD HAVE BEEN ALLOWED U/S 80G OF THE ACT FOR THE DONATION GIVEN TO THEM . 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE - COMPANY WHICH WAS RUNNING A SCHOOL FILED ITS RETURN OF INCOME ON 24.9.2009 DECLARING NIL INCOME. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 12.12.2011 DETERMINING THE INCOME OF ASSESSEE AT RS.42 38 240/ - . WHEN COMPLETING THE ASSESSMENT ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED DEDUCTION U/S 80GGA OF THE ACT ON THE DONATION/CONTRIBUTION OF RS. 25 LACS PAID BY ASSESSEE TO RESEARCH FOUNDATION FOR JAINOLOGY . THE ASSESSING OFFICER REQUI RED THE ASSESSEE TO EXPLAIN AS TO HOW THE DEDUCTION U/S 80GGA OF THE ACT IS ALLOWABLE FOR THE REASON THAT NO DEDUCTION U/S 80GGA IS ALLOWABLE IN A CASE WHERE THE GROSS TOTAL INCOME INCLUDES INCOME CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSI NESS OR PROFESSION. ASSESSEE VIDE LETTER DATED 4.8.2011 SUBMITTED THAT CLAIM OF ASSESSEE IS ADMISSIBLE U/S 35(1)(II) OF THE ACT. IT WAS SUBMITTED THAT DEDUCTION IS ALLOWABLE AT 125% IN RESPECT OF DONATION TO RESEARCH INSTITUTION OR ASSOCIATION APPROVED U/S 35(1)(II) OF THE ACT AND HENCE CLAIM WAS MADE U/S 35(1)(II) OF THE ACT AT RS.31 25 000/ - . THE ASSESSING OFFICER HOWEVER DENIED THE DEDUCTION OBSERVING THAT ASSESSEE HAS NOT CLAIMED DEDUCTION U/S 35(1)(II) IN THE RETURN OF INCOME NOR ANY REVISED RETU RN WAS FILED AND IT WAS ONLY DEDUCTION U/S 80GGA WHICH WAS CLAIMED. THE ASSESSING OFFICER REFERRING TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT 284 ITR 323 DENIED THE CLAIM OF ASSESSEE OBSERVING THAT THERE IS NO CL AIM IN THE RETURN. THE ASSESSING OFFICER WAS 3 M/S. SPRINGBIRD EDUCATIONS PVT. LTD. ITA NO. 4471/MUM/2012 ALSO OF THE OPINION THAT EVEN ON MERITS THE CLAIM OF ASSESSEE U/S 35(1)(II) IS NOT ALLOWABLE OBSERVING THAT ASSESSEE FAILED TO FILE ANY EVIDENCE TO SHOW THAT RESEARCH FOUNDATION FOR JAINOLOGY WAS NOTIFIED IN THE OFFICIAL GAZETTE BY THE CENTRAL GOVERNMENT AND FURTHER THAT IT WAS RECOGNIZED FOR CLAIMING DEDUCTION U/S 35(1)(II) OR 35(1)(III) OF THE ACT. HE ALSO OBSERVED THAT THE NOTIFICATION NO. 264 OF 2004 WHICH WAS EARLIER ISSUED WAS OF 20.10.2004 AND IT WA S VALID ONLY FOR THE PERIOD FROM 1.4.2003 TO 31.3.2006. THE CURRENT ASSESSMENT YEAR BEING 2009 - 10 ASSESSING OFFICER DENIED THE CLAIM OF ASSESSEE. ASSESSEE PREFERRED AN APPEAL BEFORE CIT(A) AND CIT(A) AFFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFIC ER. THE ASSESSEE CLAIMED BEFORE THE CIT(A) THAT RESEARCH FOUNDATION FOR JAINOLOGY WAS APPROVED U/S 35(1)(III) UPTO 31.3.2006 AND THEY HAVE APPLIED FOR RENEWAL TO CBDT. THE ASSESSEE CONTENDED THAT CBDT HAS REJECTED THE APPLICATION ON 28.5.2008 AND WRIT PETITION WAS FILED AGAINST THE REJECTION OF THE APPLICATION. THUS CIT(A) CONCLUDED THAT THERE IS NO APPROVAL U/S 35(1)(III) OF THE ACT GRANTED TO RESEARCH FOUNDATION FOR JAINOLOGY FOR ASSESSMENT YEAR 2007 - 08 ONWARDS. THEREFORE HE REJECTED THE CLAIM O F ASSESSEE U/S 35(1)(II)/(III). THE ALTERNATIVE CLAIM MADE BY THE ASSESSEE BY WAY OF ADDITIONAL GROUND THAT THE CONTRIBUTION OF RS. 25 LACS MADE TO THE SOCIETY RESEARCH FOUNDATION FOR JAINOLOGY BE ALLOWED U/S 80G OF THE ACT WAS ALSO REJECTED BY THE CIT (A) OBSERVING THAT THERE IS NO CLAIM BY THE ASSESSEE IN THE ORIGINAL RETURN AS THE CLAIM IN THE ORIGINAL RETURN WAS FOR DEDUCTION U/S 80GGA OF THE ACT AND AS PER THE LETTER OF ASSESSEES REPRESENTATIVE DATED 17.8.2011 REVISED RETURN WAS FILED FOR THE CLAI M U/S 35(1)(II)/(III) OF THE ACT. THEREFORE HE CONCLUDED THAT SINCE THERE IS 4 M/S. SPRINGBIRD EDUCATIONS PVT. LTD. ITA NO. 4471/MUM/2012 NO CLAIM IN THE REVISED RETURN U/S 80G OF THE ACT ASSESSEE IS NOT ENTITLED FOR DEDUCTION. 4. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY SUBMITS THAT CIT(A) I S NOT AT ALL JUSTIFIED IN NOT ACCEPTING THE ALTERNATIVE PLEA OF ASSESSEE U/S 80G OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THE CIT(A) BEING AN APPELLATE AUTHORITY HAS AMPLE POWERS TO ADMIT ANY CLAIM OF ASSESSEE EVEN THOUGH ASSESSEE HAS NOT CLAIMED IT IN THE RETURN OF INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE PLACING RELIANCE ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PRUTHVI BROKERS & SHAREHOLDERS PVT. LTD. ( 349 ITR 336 ) SUBMITTED THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) WAS EXPLAINED AND IT WAS HELD THAT APPELLATE AUTHORITIES HAVE JURISDICTION TO ADMIT THE CLAIM WHICH WAS NOT THERE BEFORE THE ASSESSING OFFICER OR IN THE RET URN FILED ORIGINALLY . 5. THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS RELIED ON. INSOFAR AS THE DEDUCTION U/S 35(1)(II)/(II I) OF THE ACT IS CONCERNED THE LEARNED COUNSEL FOR THE ASSESSEE FAILED TO SUBMIT BEFORE US AS TO HOW THE DEDUCTION IS ALLOWABLE IN THE ABSENCE OF APPROVAL BY THE CBDT. THUS THE ORDER OF CIT(A) ON THIS ISSUE IS SUSTAINED. HOWEVER IN RESPECT OF THE ALTE RNATIVE CLAIM OF ASSESSEE THAT THE DONATION PAID BY IT TO RESEARCH FOUNDATION FOR JAINOLOGY IS TO BE ALLOWED AS DEDUCTION U/S 80G WE ARE INCLINED TO SET 5 M/S. SPRINGBIRD EDUCATIONS PVT. LTD. ITA NO. 4471/MUM/2012 ASIDE THIS MATTER TO THE FILE OF ASSESSING OFFICER TO EXAMINE THIS ISSUE AFRESH IN ACCORDANCE WITH L AW. CIT(A) SHOULD HAVE ENTERTAINED THE CLAIM OF ASSESSEE AS THERE ARE NO RESTRICTIONS IN HIS APPELLATE POWERS TO ENTERTAIN ANY CLAIM OF ASSESSEE WHICH IS NOT MADE IN THE RETURN OF INCOME. THIS POSITION IS CLEARLY EXPLAINED BY THE JURISDICTIONAL HIGH COUR T IN THE CASE OF CIT VS. PRUTHVI BROKERS & SHAREHOLDERS PVT. LTD. (SUPRA). THUS RESPECTFULLY FOLLOWING THE SAID DECISION WE DIRECT THE ASSESSING OFFICER TO CONSIDER THE ALTERNATIVE CLAIM OF ASSESSEE U/S 80G OF THE ACT IN ACCORDANCE WITH LAW. 7 . THE NEXT ISSUE IN THE APPEAL OF ASSESSEE IS THAT CIT(A) ERRED IN SUSTAINING THE ORDER OF ASSESSING OFFICER IN TREATING THE EXPENDITURE OF RS.12 75 141/ - AS CAPITAL EXPENDITURE BEING AN EXPENDITURE INCURRED ON WIRE MESH FITTED ON THE BUSES PLIED BY ASSESSEE FOR THE SCHOOL CHILDREN. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT TREATED THE EXPENDITURE INCURRED BY ASSESSEE TO THE EXTENT OF RS.12 75 141/ - AS CAPITAL EXPENDITURE OBSERVING THAT ASSESSEE HAS INCURRED CERTAIN EXPENDITURE TOWARDS ALUMINIUM ME SH FOR 41 BUSES AND THIS ALUMINIUM MESH FITTED ON THE BUSES CANNOT BE TERMED AS REPAIR WORK BUT IS AN ADDITION TO THE ASSET. H E TREATED THIS ADDITION TO THE ASSET AS AN ENDURING BENEFIT TO THE ASSESSEE AND THEREFORE NOT A REVENUE EXPENDITURE. THE ASSE SSING OFFICER HOWEVER ALLOWED DEPRECIATION ON SUCH EXPENDITURE. ON APPEAL CIT(A) SUSTAINED THE ACTION OF ASSESSING OFFICER IN TREATING THE SAID EXPENDITURE AS CAPITAL EXPENDITURE OBSERVING THAT ALUMINIUM WIRE MESH INSTALLED IS IN THE NATURE OF CAPITAL EXPENDITURE PROVIDING ENDURING BENEFIT TO THE USABILITY OF THE ASSESSEE. 6 M/S. SPRINGBIRD EDUCATIONS PVT. LTD. ITA NO. 4471/MUM/2012 8. THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US SUBMITS THAT THERE IS NO ENDURING BENEFIT IN PROVIDING ALUMINIUM MESH TO THE BUSES AS IT IS ONLY A CURRENT REPAIRS TO THE EXISTING ASSET AS ASSESSEE HAS TO TAKE SOME PRECAUTIONARY MEASURES FOR THE SAFETY OF CHILDREN. THEREFORE ALUMINIUM MESH WAS PROVIDED ON THE BUSES WHICH TRANSPORT THE SCHOOL CHILDREN TO SCHOOL. THE ADDITION TO ASSET BY ALUMINIUM MESH HAS NO ENDURING BENEFIT AND IS TO BE ALLOWED AS REVENUE EXPENDITURE ONLY . 9 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSING OFFICER TREATED THE EXPENDITURE INCURRED BY ASSESSEE FOR ALUMINIUM MESH FITTED ON THE BUSES AS CAPITAL EX PENDITURE OBSERVING THAT IT HAS ENDURING BENEFIT WHICH THE CIT(A) SUSTAINED. IT IS THE SUBMISSION OF ASSESSEE THAT IN ORDER TO TAKE PRECAUTIONARY MEASURES FOR SAFETY OF CHILDREN THE SCHOOL HAD TO PROVIDE ALUMINIUM MESH ON THE BUSES AND THERE IS NO ENDUR ING BENEFIT TO THE ASSESSEE. THE ADDITION MADE IN THE FORM OF WIRE MESH IS ONLY IN THE FORM OF CURRENT REPAIRS TO THE ASSET AND THE EXPENDITURE IS ALLOWABLE U/S 37 OR 31 OF THE ACT. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES WE ARE OF THE VIEW THAT THE EXPENDITURE INCURRED BY ASSESSEE ON THE ALUMINIUM MESH FITTED ON THE BUSES IS NOT AN ASSET WHICH IS CREATING AN ENDURING BENEFIT TO THE ASSESSEE. EVERY ADDITION TO THE ASSET IS NOT A CAPITAL EXPENDITURE. THE ALUMINIUM MESH PROVIDED TO THE BUSES IS NOT IN THE CAPITAL FIELD BUT IS OF REVENUE IN NATURE AND THERE IS NO ENDURING BENEFIT TO THE ASSESSEE. THUS WE REVERSE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO ALLOW THE EXPENDITURE AS REVENUE EXPENDITURE. 7 M/S. SPRINGBIRD EDUCATIONS PVT. LTD. ITA NO. 4471/MUM/2012 10 . I N THE RESULT APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 S T OCTOBER 2016. SD/ - SD/ - ( RAMIT KOCHAR ) ACCOUNTANT MEMBER ( C.N. PRASAD ) JUDICIAL MEMBER MUMBAI DATE : 3 1 S T OCTOBER 2016 * SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R E BENCH MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T MUMBAI