Appeal details
Counselvise Citation
[2009] 114 COUNSELVISE.COM (IT) 8085 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-06-2009
Appeal Filed By
Department
Order Result
Allowed
Bench Allotted
D
Next Hearing Date
30-06-2009
Assessment Year
2003-2004
Appeal Filed On
27-05-2008
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `D: NEW DELHI BEFORE SHRI R.P. TOLANI, JM AND SHRI A.K. GORAD IA, AM I.T.A. NO.2077/DEL OF 2008 ASSESSMENT YEAR: 2003-04 ADDL. COMMR. OF INCOME-TAX, KHALSA MO NTESSORI SR. SECONDARY BULANDSHAHAR. VS SCHOOL, BULANDSHAHR. APPELLANT RESPONDENT APPELLANT BY: SHRI S. REHMAN RESPONDENT BY: NONE ORDER PER R.P. TOLANI, JM: THIS IS REVENUES APPEAL. FOLLOWING GROUNDS ARE R AISED: 1. IN THE FACTS AND CIRCUMSTANCES OFF THE CASE LD. CIT(A) HAS ERRED IN LAW IN ALLOWING THE EXEMPTION U/S 10(23C)(IIIAD) OF THE I.T. ACT IGNORING THE FAC T THAT THE ASSESSEE HAS GIVEN DONATIONS OF RS.1,50,000/- FOR THE CONSTRUCTION OF SHED AND SITTING PLACE IN SHAMSHAN GHAT WHICH HAD BEEN INCURRED OTHER THAN FOR EDUCATIONAL PURPOSES. 2. IN THE FACTS AND CIRCUMSTANCES OFF THE CASE LD. CIT(A) HAS ERRED IN LAW IN ALLOWING THE EXEMPTION U/S 10(23C)(IIIAD) OF THE I.T. ACT IGNORING THE FAC T THAT THE ASSESSEE ADVANCED A LOAN OF RS.17 LACS TO GURUDWARA SHRI GURU SINGH SABHA WHICH HAS BEEN INCURRED OTHER THAN FOR EDUCATIONAL PURPOSES. 3. IN THE FACTS AND CIRCUMSTANCES OFF THE CASE LD. CIT(A) HAS ERRED IN LAW IN OBSERVING THAT THE 2 ASSESSEE IS CLEARLY ENTITLED FOR DERIVING EXEMPTION PROVIDED U/S 11 READ WITH SECTION 12 IGNORING THE FACT THAT THE REGISTRATION TO THE TRUST WAS GRANTED BY AN ORDER PASSED ON 23.1.2007 WITHOUT CONDONATION OF DELAY AND THE AY UNDER CONSIDERATION IS 2003- 04. 2. ASSESSEES COUNSEL HAS APPLIED FOR ADJOURNMENT, WHICH IS FOUND TO BE INSUFFICIENT. THE REASON GIVEN IS GENERAL IN NATUR E I.E. SOME TIME BARRING PROFESSIONAL WORK IS THERE. IN OUR VIEW, ITAT IS A SECOND APPELLATE AUTHORITY AND IF THERE IS A TIME BARRING MATTER BEFORE LOWER AUTHORITIES, THE SAME CANNOT BE PREFERRED OVER TRIBUNAL. FROM THE LANGUA GE OF ASSESSEES LETTER, IT APPEARS THAT THE COUNSEL HAD SOME TIME BARRING WORK THOUGH NO AUTHORITY IS SPECIFIED, THE IMPLICATION IS OF SOME ASSESSMENT. IN VIEW THEREOF, WE REJECT THE ASSESSEES ADJOURNMENT APPLICATION. THE MATTER IS DECIDED EX PARTE QUA THE ASSESSEE AND HEARING THE LEARNED DR. 3. LEARNED DR CONTENDS THAT THE ASSESSEE HAS CLAIME D EXEMPTION U/S 10(23C)(IIIAD), WHICH PROVIDES THAT CERTAIN TYPES O F INCOME SHALL BE EXEMPT FROM TAX AND THIS CLAUSE READS AS UNDER: 10(23C)(IIIAD) : ANY UNIVERSITY OR EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE S AND NOT FOR PURPOSES OF PROFIT IF THE AGGREGATE ANNUAL RECEIPTS OF SUCH UNIVERSITY OR EDUCATIONAL INSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRESCRIBED; OR 3 THE PLAIN LANGUAGE OF THE CLAUSE CLEARLY SPELLS OUT THAT (I) THE EDUCATIONAL INSTITUTION SHOULD SOLELY EXIST FOR EDUCATIONAL PUR POSES; AND (II) NOT FOR THE PURPOSES OF PROFITS. ACCORDING TO LEARNED DR, THES E TWO CONDITIONS SHOULD EXIST SIMULTANEOUSLY IN THE ASSESSEES EDUCATIONAL INSTITUTION FOR CLAIMING EXEMPTION U/S 10(23C)(IIIAD). ASSESSEE DONATED AN AMOUNT OF RS.1,50,000/- FOR CONSTRUCTION OF SHED AND SITTING PLACE IN A CRE MATORIUM (SHAMSHAN GHAT) AND DONATED RS.17 LACS TO GURUDWARA SHRI GURU SINGH SABHA, THESE CANNOT BE CALLED EDUCATIONAL PURPOSES. THE REGISTRATION U/S 11 READ WITH SECTION 12 WAS GRANTED W.E.F. 23.1 .2007 WHEREAS THE ASSESSMENT YEAR IN QUESTION IS 2003-04, WHICH ALSO IS NOT APPLICABLE TO YEAR IN QUESTION. CIT(A) IGNORED THE RELEVANCE OF FIRST CONDITION AND ALLOWED THE RELIEF TO ASSESSEE BY FOLLOWING OBSERVATIONS: I FIND SUBSTANTIAL FORCE IN ALL THE CONTENTIONS RAISED BY THE APPELLANTS COUNSEL. I ALSO OBSERVE THAT IN THE REMAND REPORT, ON ALMOST ALL THE POINTS , THE AO HAS CONCEDED TO THESE ARGUMENTS RAISED BY THE APPELLANT. VERY BRIEFLY, THE GROSS RECEIPT DOES NOT EXCEED RS. 1 CRORE. THEREFORE, AS PER PROVISIONS OF SECTION 10(23C)(IIIAD) OF THE I.T. ACT WHAT THE AO HAS TO SEE IS WHETHER INCOME IS BEING EARNED SOLELY FROM RUNNING OF EDUCATIONAL INSTITUTION AND THAT THERE I S NO PURPOSE OF PROFIT INVOLVED. ONCE THIS IS ESTABLISHED, THE AO IS NOT EMPOWERED TO UNNECESSARILY DELVE INTO APPLICATION SIDE OF THE INCOME. THUS, EVEN DONATION OF RS.1,50,000/- TO SHAMSHAN GHAT SHOULD NOT HAVE BEEN QUESTIONED. 4 IT IS DIFFERENT THING THAT THE APPELLANT HAS GIVEN COGENT EXPLANATION AS TO HOW THIS DONATION WAS RELATED TO ITS EDUCATIONAL ACTIVITY. I AM ALSO IMPRESSED WITH THE APPELLANTS ALTERNATIVE ARGUMENT THAT EVEN IF BY ANY REASONING, SECTION 10(23C) BENEFIT IS NOT APPLICABLE; STILL TH E ASSESSEE IS CLEARLY ENTITLED FOR DERIVING EXEMPTION PROVIDED U/S 11 READ WITH SECTION 12. THUS, ON NO ACCOUNT, THE AOS ACTION OF ASSESSING ANY POSITIVE INCOME IN THE HANDS OF THE ASSESSEE CAN BE SUSTAINED. THE AO IS DIRECTED TO ACCEPT THE RETURNED INCOME OF THE ASSESSEE. ACCORDING TO LD. DR, THE CIT(A) HAS NOT ONLY GIVEN RELIEF U/S 10(2)(C )(IIIAD) BUT ALSO U/S 11 & 12 WITHOUT REALIZING THE PROSPECT IVITY OF THE REGISTRATION. 4. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MAT ERIAL ON RECORD. AS THE FACTS EMERGE, THE PLAIN AND SIMPLE READING OF T HE PROVISIONS CLEARLY SPELLS OUT ONE OF THE TWO CONDITIONS MENTIONED ABOVE, WHI CH IS MANDATORY I.E. THE INSTITUTION SHOULD EXIST SOLELY FOR EDUCATIONAL PUR POSES WHEREAS THE DONATIONS HAVE BEEN GIVEN TO NON EDUCATIONAL CHARIT IES. A QUESTION WAS ASKED ABOUT ANY RETROSPECTIVE OPERATIONS OF ORDER I N RESPECT OF SECTION 11 & 12, IT WAS CONTENDED BY LD. DR THAT CIT(A) DOESNT MENTION SO. IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES, WE RESTORE THE ISSUE BACK TO THE FILE OF CIT(A) TO RE-CONSIDER THE SAME IN THE LIGHT OF A BOVE OBSERVATIONS AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 5 5. IN THE RESULT, APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2009. (A.K. GORADIA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH JUNE, 2009 VIJAY COPY TO: 1. APPELLANT 2. RESPONDENT. 3. CIT 4. CIT(A), MEERUT. 5. DR ASSISTANT REGISTRAR
