M/s Gagan Academic Society, Aligarh v. Addl. CIT, Aligarh

ITA 149/AGR/2009 | 2004-2005
Pronouncement Date: 29-10-2010 | Result: Allowed

Appeal Details

RSA Number 14920314 RSA 2009
Assessee PAN AAATG5355L
Bench Agra
Appeal Number ITA 149/AGR/2009
Duration Of Justice 1 year(s) 6 month(s) 15 day(s)
Appellant M/s Gagan Academic Society, Aligarh
Respondent Addl. CIT, Aligarh
Appeal Type Income Tax Appeal
Pronouncement Date 29-10-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 29-10-2010
Date Of Final Hearing 15-09-2010
Next Hearing Date 15-09-2010
Assessment Year 2004-2005
Appeal Filed On 13-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI P.K. BANSAL ACCOUNTANT MEMBER ITA NO.149/AGR/2009 ASST. YEAR: 2004-05 M/S. GAGAN ACADEMIC SOCIETY VS. ADDL. C.I.T. RA NGE-1 C/O. DEEPAK SINGH ADVOCATE ALIGARH. 2 COURT OF WARS COMPOUND ALIGARH. (PAN : AAATG 5355 L). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PANKAJ GARGH ADVOCATE RESPONDENT BY : SHRI VINOD KUMAR JR. D.R. ORDER PER P.K. BANSAL A.M.: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 25.02.2009 BY TAKING AS MUCH AS 6 GROUNDS OF APPEAL WHICH WERE SUBSEQUENTLY AMENDED VIDE LETTER DATED 03.09.2010. THE AMENDED GROUNDS READ AS UNDER :- 1. BECAUSE THE ASSESSING OFFICER AS WELL AS LD. CI T(A) HAS ERRED IN NOT ALLOWING EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT AS THE ANNUAL RECEIPT IS BELOW RS.1 CRORE. 2. BECAUSE WITHOUT PREJUDICE TO THE ABOVE GROUND T HE TRUST BEING REGISTERED U/S 12AA OF THE ACT THE ASSESSEE SOCIETY IS ENTITL ED TO EXEMPTION U/S 11(1)(A) OF THE ACT. THE ASSESSING OFFICER AS WELL AS LD. CIT( A) HAS ERRED IN NOT ALLOWING THE EXEMPTION U/S 11(1)(A) OF THE INCOME TAX ACT. 3. BECAUSE THE ASSESSING OFFICER AS WELL AS LD. CIT (A) HAS ALSO ERRED IN NOT TREATING THE INVESTMENT IN CAPITAL ASSETS AS APPLIC ATION OF INCOME FOR THE OBJECTS OF THE TRUST AND IN NOT ALLOWING DEDUCTION OF THE SAME FROM THE SURPLUS. THE 2 AUTHORITIES BELOW HAVE ALSO ERRED IN IGNORING THE A PPELLANT SUBMISSION ON THIS ISSUE. 4(I) BECAUSE THE LD. CIT(A) HAS WRONGLY AND ARBITRA RILY CONFIRMED THE ASSESSING OFFICERS FINDING THAT THE ASSESSEE SOCIE TY HAS MADE CASH PAYMENT FOR THE CONSTRUCTION OF COLLEGE BUILDING TO THE ICEC T HE BUILDER IGNORING THE APPELLANT SUBMISSION AND THE FACT THAT THE PAYMENT TO THE BUILDER WAS MADE BY ACCOUNT PAYEE CHEQUES. THE AMOUNT INVESTED IN CONS TRUCTION HAS ALSO BEEN WRONGLY MENTIONED BY THE ASSESSING OFFICER. 4(II) BECAUSE THE CLERICAL MISTAKE IN THE MINUTES R ECORDED CANNOT BE MADE BASIS OF REJECTING THE APPELLANTS CLAIM THAT THE B UILDING WAS CONSTRUCTED UPTO MAY 2004 AND NOT IN THE EARLIER YEAR. THE LD. CIT( A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER AND IN REJECTING TH E APPELLANTS SUBMISSION AND EVIDENCE ON RECORD. 4(III) BECAUSE THE LD. CIT(A) HAS ALSO ERRED IN IGN ORING THE FACT THAT THE PROCEEDINGS INITIATED U/S 147 OF THE ACT FOR ASSESS MENT YEAR 2003-04 ON THE BASIS OF THE ASSESSING OFFICERS FINDING THAT THE BUILDIN G WAS CONSTRUCTED IN EARLIER YEAR HAS BEEN DROPPED. 5. BECAUSE THE LD. CIT(A) HAS ALSO WRONGLY AND ILLE GALLY CONFIRMED THE ADDITION OF ` 2 69 360/- MADE BY THE ASSESSING OFFICER BEING THE AMOUNT OF BOOKS PURCHASED FROM ASHA PUBLISHING HOUSE REJECTING THE APPELLANT SUBMISSION AND IGNORING THE FACT THAT THE PURCHASE AMOUNT OF BOOK HAS NOT BEEN DEBITED TO INCOME & EXPENDITURE ACCOUNT. 6. BECAUSE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE SOCIETY IS ENTITLED TO EXEMPTION U/S 10(23C)(IIIAD) AND ALTERN ATIVELY :- I) U/S 11(1)(A) OF THE INCOME TAX ACT. II) CAPITAL EXPENDITURE TO BE TREATED AS APPLICATIO N OF INCOME. 2. THE LD. A.R. POINTED OUT THAT THE REVISED/AMENDE D GROUNDS ARE MERELY EXTENSION OF THE ORIGINAL GROUNDS AND IT DID NOT CONTAIN ANY FRESH G ROUND OF APPEAL. THE LD. D.R. WAS FAIR ENOUGH TO CONCEDE THE POSITION. WE THEREFORE AFTER HEAR ING THE RIVAL SUBMISSIONS ADMIT THE AMENDED GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A SOCIETY AND IS RUNNING EDUCATIONAL INSTITUTIONS. THE ASSESSEE IS REGISTERED AS SOCIET Y UNDER THE SOCIETIES REGISTRATION ACT 1860 ON 3 11.02.2003 AND UNDER THE INCOME-TAX ACT UNDER SECTI ON 12AA SINCE 01.04.2003. THE ASSESSEE SUBMITTED THE INCOME TAX RETURN SHOWING NIL INCOME. THE TOTAL RECEIPTS SHOWN BY THE ASSESSEE IS ` 33 90 727/- WHICH INCLUDES A SUM OF RS.28 72 500/- BEING DONATION RECEIVED BY THE ASSESSEE. THE EXCESS OF INCOME OVER THE EXPENDITURE IS SHOWN AT ` 21 29 630/-. THE APPLICATION OF THE INCOME OF THE ASSESSEE HAS BEEN SHOWN AS UNDER :- REVENUE EXPENDITURE ` 9 48 918/- DEPRECIATION DEBITED TO P&L ACCOUNT ` 3 12 178/- CAPITAL EXPENDITURE ` 27 92 431/- 4. THE RETURN WAS ACCOMPANIED WITH AUDIT REPORT. T HE ASSESSING OFFICER NOTICED THAT SMT. SHASHI BALA SHARMA AND HER HUSBAND SHRI S.C. SHARMA WERE HOLDING THE OFFICE OF THE PRESIDENT AND SECRETARY OF THE SOCIETY. IT WAS ALSO NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE CLAIMED INVESTMENT IN THE COLLEGE BUILDING AS APPLI CATION FOR CHARITABLE PURPOSE. THE ASSESSEE RECEIVED DONATION OF ` 16 00 000/- FROM GAGAN EDUCATION SOCIETY IN WHICH A LSO SMT. SHASHI BALA SHARMA AND SHRI S.C. SHARMA WERE PRESIDENT AND SECR ETARY WHICH WAS SHOWN DIRECTLY PAID TO M/S. ICEC CONSTRUCTION COMPANY FOR THE CONSTRUCTION OF THE BUILDING. THIS FIRM CAME INTO EXISTENCE ON 01.04.2003 AND THE BANK ACCOUNT OF THE SAID FIRM IN BANK OF BARODA WAS INTRODUCED BY SMT. SHASHI BALA SHARMA. AS PER INSPECTORS REP ORT THE CASH RECEIVED BY THE SAID FIRM AMOUNTING TO RS.10 TO 15 LAKHS IN CASH NOT REFLECTE D IN THE BOOKS OF THE ASSESSEE. THE ASSESSING OFFICER ALSO OBSERVED THAT THE RESOLUTION FOR GIVIN G THE CONSTRUCTION WORK TO M/S. ICEC CONSTRUCTION COMPANY WAS PASSED ON 12.05.2003 AND T HE CONSTRUCTION HAS BEEN COMPLETED AND PAYMENT MADE TO M/S. ICEC CONSTRUCTION COMPANY WAS ALSO APPROVED VIDE RESOLUTION DATED 24.05.2003. THE ASSESSING OFFICER WAS OF THE VIEW THAT SUCH A HUGE CONSTRUCTION COULD NOT HAVE BEEN COMPLETED WITHIN 12 DAYS AND ACCORDINGLY HE AS KED THE ASSESSEE WHY EXEMPTION UNDER 4 SECTION 11 MAY NOT BE DISALLOWED. THE ASSESSEE STA TED THAT NO CASH PAYMENT WAS MADE TO M/S. ICEC CONSTRUCTION COMPANY. THE ASSESSEE WAS HAVING OPENING BALANCE OF ` 1 60 156/- IN THE BUILDING ACCOUNT AND THE ASSESSEE HAS INVESTED AS PER THE BALANCE SHEET A SUM OF ` 21 09 278/- IN THE SO CALLED CONSTRUCTION OF THE COLLEGE BUILDI NG DURING JUNE 2003 TO MARCH 2004. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE CONSTRUC TION OF THE BUILDING HAS ALREADY BEEN COMPLETED BY THE ASSESSEE BEFORE 01.04.2003 OUT OF UNEXPLAINED FUNDS OF THE TRUSTEES. A SUM OF ` 21 09 278/- SHOWN AS CONSTRUCTION DURING JUNE 2003 TO MARCH 2004 CONSISTING OF THE ARRANGED BILLS RAISED BY M/S. ICEC AND THE SAME WERE PAID AS DONATION OF ` 17 00 697/- AND OF LOAN OF ` 4 08 581/- FROM OTHER SISTER INSTITUTION NAMELY GAG AN EDUCATIONAL SOCIETY HAVING THE SAME OFFICE BEARERS SMT. SHASHI BALA SHARMA AND HER HUSB AND SHRI S.C. SHARMA. THE ASSESSING OFFICER WAS ALSO OF THE VIEW THAT THE DRAWINGS MADE BY THE BUILDER OUT OF THE CURRENT ACCOUNT NO.939 WITH BANK OF BARODA WERE FOR THE BENEFIT OF THE TRUSTEES WITH WHOSE UNACCOUNTED FUNDS THE BUILDER HAD COMPLETED THE CONSTRUCTION OF THE C OLLEGE BUILDING EARLIER. IT WAS ALSO NOTICED BY HIM THAT THE LAND ON WHICH THE COLLEGE BUILDING WAS CONSTRUCTED IS IN THE NAME OF SMT. SHASHI BALA SHARMA I.E. A PERSON SPECIFIED UNDER SECTION 1 3(2) OF THE ACT. THUS THE A.O. TOOK THE VIEW THAT THE INCOME SHOWN AS INVESTMENT IN THE CONSTRUC TION OF THE COLLEGE BUILDING CANNOT BE SAID TO HAVE APPLIED FOR CHARITABLE PURPOSE AND ACCORDINGLY THE EXEMPTION UNDER SECTION 11 WAS DENIED. EVEN THE EXEMPTION UNDER SECTION 10(23C) WAS ALSO D ENIED TO THE ASSESSEE. SIMILARLY THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PUR CHASED BOOKS FROM M/S ASHA PUBLISHING HOUSE KAMLA NAGAR FOR ` 2 69 360/- BUT THE FIRM WAS NOT IN EXISTENCE AT THE GIVEN ADDRESS. ACCORDINGLY HE ADDED THE SAID SUM IN THE INCOME OF THE ASSESSEE. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING AS UNDER :- 5 THE SUBMISSIONS OF THE LEARNED AR HAVE BEEN CONSID ERED. I HAVE ALSO CONSIDERED THE FACTS & MATERIAL BROUGHT OUT BY THE AO IN THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORT. PERUSAL OF RECORDS S HOWS THAT THE ASSESSEE FILED ITS RETURN ON 31.10.2004 DECLARING NIL INCOME. AS PER THE DETAILS ENCLOSED WITH THE RETURN THE ASSESSEE HAS SHOWN TOTAL RECEIPT OF ` 33 90 727/- INCLUDING DONATION OF ` 28 72 500/-. THE EXCESS OF INCOME OVER EXPENDITURE WAS SHOWN AT ` 21 29 630/-. THE ASSESSEE HAS ALSO SHOWN CAPITAL E XPENDITURE AMOUNTING TO ` 27 92 431/-. THE ASSESSEE THEN CLAIMED EXEMPTION U /S 11 OF I.T. ACT 1961 AND FILED THE RETURN DECLARING NIL INCOME. THE AO HAS BROUGHT ON RECORD THAT THE ASSESSEE HAS CLAIMED INVESTMENT IN THE BUILDING AND CLAIMED THE INCOME TO THAT EXTENT AS APPLIED TO CHARITABLE PURPOSE I.E. IN CON STRUCTION OF COLLEGE BUILDING OF GAGAN MANAGEMENT AND TRAINING A COLLEGE RUN BY THE SOCIETY. PERUSAL OF DETAILS SHOWED THAT THE ASSESSEE MADE INVESTMENT IN THE CON STRUCTION OF COLLEGE BUILDING AMOUNTING TO ` 2 27 92 431/-. THE MINUTES BOOK OF THE ASSESSEE SO CIETY PRODUCED BEFORE THE AO SHOWS THAT AS PER MINUTE BOOK DATED 1.5.2003 THE CONSTRUCTION WORK OF THE COLLEGE BUILDING SHOULD BE GIVEN TO M/S ICEC AND AS PER MINUTE BOOK DATED 25.5.2003 THE SAID CONSTRUCTION IS STATED TO HAVE BEEN COMPLETED AND PAYMENT IS GIVEN WHICH SHOWS THAT THE CONSTRUCTION OF THE SAID BUILDING WAS COMPLETED WITHIN A PERIOD OF 12 DAYS. AS HAS BEEN RIGHTLY POINTED OUT BY THE AO IT IS PRACTICALLY IMPOSSIBLE TO CONSTRUCT A BUILDIN G INVOLVING INVESTMENT IN SUCH CONSTRUCTION EXCEEDING OVER ` TWO CRORES WITHIN A PERIOD OF 12 DAYS. THE AO HAS FURTHER POINTED OUT THAT M/S ICEC HAS STATED TO HAVE BEEN RECEIVED CASH FROM THE ASSESSEE TO THE EXTENT OF RS.10 15 LAKHS BUT THE SAME HAS NOT BEEN REFLECTED IN THE BOOKS OF ACCOUNT. ALL THESE FACTS CLEARLY E STABLISH THAT THE BOOKS OF THE ASSESSEE SOCIETY DOES NOT REFLECT THE CORRECT PICTU RE. AS HAS BEEN RIGHTLY OBSERVED BY THE AO FROM THE MATERIAL ON RECORD IT APPEARS T HAT THE BUILDING WAS GOT CONSTRUCTED EARLIER WHEREIN UNEXPLAINED MONEY IS IN VESTED THROUGH M/S ICEC CO. I.E. FIRST CHEQUE IS ISSUED AND THEN THE CASH RECEI VED BACK. AS PER THE MINUTE BOOKS THE CONSTRUCTION OF THE BU ILDING WAS COMPLETED ON 25.5.2003 HENCE THE CLAIM OF THE ASSESSEE THAT IT HAS INVESTED A SUM OF ` 21 09 278/- TOWARDS CONSTRUCTION OF BUILDING DURING THE PERIOD JUNE 2003 TO MARCH 2004 CAN ALSO NOT BE ACCEPTABLE. IT IS FURT HER NOTICED THAT DURING ASSESSMENT PROCEEDINGS THE AO REQUIRED THE ASSESSE E TO PRODUCE THE PARTNER OF M/S ICEC CONSTRUCTION CO. HOWEVER INSPITE OF OPPO RTUNITIES PROVIDED THE ASSESSEE FAILED TO PRODUCE THE PARTNER OF M/S ICEC CONSTRUCTION CO. EVEN DURING APPELLATE PROCEEDINGS THE LEARNED AR HAS NO T BEEN ABLE TO EXPLAIN AS TO WHY THE ASSESSEE FAILED TO PRODUCE THE PARTNER OF M /S ICEC CONSTRUCTION CO. THE AO HAS ALSO BROUGHT ON RECORD THAT THE LAND ON WHICH THE COLLEGE BUILDING IS CONSTRUCTED IS IN THE NAME OF SMT. SHAS HI BALA SHARMA I.E. A PERSON SPECIFIED U/S 13(2) OF I.T. ACT AND HENCE THERE IS INDIRECT BENEFIT TO HER. THE ABOVE FACTS CLEARLY INDICATE THAT THE ACTIVITIE S OF THE SOCIETY DO NOT APPEAR TO BE FOR CHARITABLE PURPOSES. THE ABOVE FA CTS ALSO PROVE THAT THE INCOME SHOWN AS INVESTED IN CONSTRUCTION OF COLLEGE BUILDI NG CAN ALSO NOT BE SAID TO HAVE APPLIED FOR CHARITABLE PURPOSE. IN VIEW OF THIS IT IS HELD THAT THE AO HAS RIGHTLY 6 DENIED ASSESSEES CLAIM FOR EXEMPTION U/S 11 OF I.T . ACT. FURTHER THE AO HAS ALSO RIGHTLY HELD THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 10(23C) OF I.T. ACT. THE ACTION OF THE AO ON THIS SCORE IS ACCORDINGLY C ONFIRMED. AS REGARDS THE DISALLOWANCE OF EXPENDITURE CLAIMED AT ` 2 69 360/- ON ACCOUNT OF PURCHASE OF BOOKS. THE ASSESSEE CLAIMED THAT IT HAD PURCHASED BOOKS FROM M/S ASHA PUBLISHING HOUSE KAMLA NAGAR FOR AN AMOUNT OF ` 2 69 360/-. THE AO HAS OBSERVED THAT THE ASSESSEE FAILED TO PRO VE THE PURCHASE OF SAID BOOKS. THE AO HAS FURTHER BROUGHT ON RECORD THAT ON ENQUIR Y IT WAS REVEALED THAT THERE DOES NOT EXIST ANY CONCERN IN THE NAME OF M/S ASHA PUBLISHING HOUSE KAMLA NAGAR IN THE GIVEN ADDRESS. EVEN DURING APPELLATE PROCEEDINGS THE LEARNED AR HAS NOT BEEN ABLE TO FURNISH ANY COGENT EVIDENCE TO CONTROVERT THE AOS OBSERVATION. HENCE THE DISALLOWANCE MADE BY THE AO ON THIS SCORE IS CONFIRMED. 5. THE LD. A.R. BEFORE US VEHEMENTLY CONTENDED THAT THE TOTAL RECEIPTS OF THE ASSESSEE WAS LESS THAN ` 1 CRORE. THEREFORE THE ASSESSEE WAS ENTITLED FOR EXEMPTION UNDER SECTION 10(23C)(IIIAD). THE ASSESSING OFFICER HAS DENIED E XEMPTION WITHOUT GIVING ANY REASON WHY THE EXEMPTION UNDER SECTION 10(23C)(IIIAD) CANNOT BE AL LOWED TO THE ASSESSEE. REFERRING TO THE SECTION IT WAS POINTED OUT THAT THE ONLY REQUIREME NT IS THAT THE INSTITUTION MUST EXIST SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSES OF PR OFIT. THE ASSESSING OFFICER HAS NOT DENIED THAT THE ASSESSEE INSTITUTION IS NOT ENGAGED SOLELY FOR EDUCATIONAL PURPOSES. EVEN HE HAS ALSO NOT STATED THAT THE ASSESSEE IS ENGAGED SOLELY IN EDUCA TION FOR PROFIT PURPOSES. THE ASSESSEE HAS MADE AN ADDITION IN THE BUILDING FOR A SUM OF RS. 21 09 278/- FOR WHICH OUR ATTENTION WAS DRAWN TO PAGE NO.55 OF THE PAPER BOOK BEING THE ANNEXURE OF FIXED ASSETS FORMING PART OF THE AUDITED BALANCE SHEET AND P&L ACCOUNT. THE BUILDING WAS CO NSTRUCTED BY M/S. ICEC CONSTRUCTION COMPANY WHICH WAS DULY CONFIRMED BY THEM. THE WHOL E PAYMENT WAS RECEIVED THROUGH CHEQUE. IN THIS REGARD ATTENTION WAS DRAWN TOWARD S PAGE NOS.66 TO 69 OF THE PAPER BOOK. THE ASSESSING OFFICER HAS WRONGLY OBSERVED THAT THE BUI LDING WAS COMPLETED PRIOR TO ASSESSMENT YEAR 1994-95 MERELY ON THE BASIS OF THE WRONG DATE BEING PUT ON THE COPY OF MINUTES BY MISTAKE. HE ALSO SUBMITTED COPY OF THE MINUTES BOOK DATED 24.05.2004 IN WHICH IT WAS POINTED 7 OUT THAT M/S. ICEC CONSTRUCTION COMPANY HAS COMPLET ED THE CONSTRUCTION WORK OF GAGAN COLLEGE OF MANAGEMENT AND TECHNOLOGY TO JUSTIFY THA T IN THE EARLIER MINUTES THE YEAR 2003 WAS WRONGLY MENTIONED. HE INITIATED THE PROCEEDINGS UN DER SECTION 148 OF THE ACT FOR THE ASSESSMENT YEAR 1993-94 WHICH IS APPARENT FROM PAGE NO.8 OF THE ASSESSMENT ORDER. THE ASSESSEE IN COMPLIANCE OF NOTICE ISSUED UNDER SECT ION 148 OF THE ACT SUBMITTED THE RETURN FOR THE ASSESSMENT YEAR 1993-94 CLAIMING EXEMPTION UNDE R SECTION 11 BUT THE PROCEEDINGS UNDER SECTION 148 WERE DROPPED STATING THEREIN THAT THE PROCEEDINGS INITIATED VIDE NOTICE U/S 148 DATED 07.01.2005 ARE HEREBY DROPPED AS THERE IS NO MATERI AL ON RECORD TO MAKE THE ASSESSMENT AND NO RETURN HAS ALSO BEEN FILED. THIS ITSELF PROVES TH AT THE BUILDING WAS CONSTRUCTED DURING THE YEAR ON WHICH A SUM OF ` 21 09 278/- WAS INCURRED BY THE ASSESSEE. EVEN OTH ERWISE IT WAS CONTENDED THAT SINCE THE ASSESSEE IS ENTITLED FOR THE EXEMPTI ON UNDER SECTION 10(23C)(IIIAD) THE QUESTION OF COMPLYING WITH THE PROVISIONS OF SECTION 11 DOES NO T ARISE. IT WAS ALSO POINTED OUT THAT DURING THE ASSESSMENT YEAR 2008-09 THE ASSESSING OFFICER ALLOWED EXEMPTION TO THE ASSESSEE UNDER SECTION 11 AND HELD THAT THE ASSESSEE WAS ENGAGED F OR CHARITABLE PURPOSES. RELATING TO THE DISALLOWANCE IN RESPECT OF PAYMENT MADE FOR BOOKS P URCHASED FROM M/S. ASHA PUBLISHING HOUSE IT WAS CONTENDED THAT THE DISALLOWANCE OF TH IS EXPENDITURE WILL NOT AFFECT THE EXEMPTION AVAILABLE UNDER SECTION 10(23C)(IIIAD). THE LD. D. R. ON THE OTHER HAND RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDERS OF THE AUTHORITIES BELOW. SU B-SECTION (15) OF SECTION 2 OF THE ACT AS WERE IN EXISTENCE DURING THE YEAR UNDER CONSIDERATION RE ADS AS UNDER :- (15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE P OOR EDUCATION MEDICAL RELIEF AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. 8 7. IT IS NOT DENIED THAT THE ASSESSEE SOCIETY WAS D ULY REGISTERED UNDER SECTION 12AA OF THE ACT SINCE 01.04.2003. THE ASSESSEE IS RUNNING COLL EGE IN THE NAME OF GAGAN COLLEGE OF MANAGEMENT AND TECHNOLOGY AND CONDUCTING BBA AND BC A COURSES IN AFFILIATION WITH DR. AMBEDKAR UNIVERSITY AGRA. THE CARRYING ON EDUCATI ON IS A CHARITABLE PURPOSE. THE WORD EDUCATION HAS BEEN USED IN SECTION 2(15) IN THE S ENSE OF SYSTEMATIC INSTRUCTION SCHOOLING OR TRAINING GIVEN TO THE YOUNG IN PREPARATION FOR THE WORK OF LIFE. SIMILARLY EXTENDING FINANCIAL ASSISTANCE/SCHOLARSHIP ETC. TO STUDENTS FOR THEIR EDUCATIONAL PURPOSE WOULD SQUARELY FALL WITHIN THE CONNOTATION OF EDUCATION AS PER THE RATIO LAI D DOWN IN THE CASE OF CIT VS. SARASWATH POOR STUDENTS FUND 150 ITR 142 (KARNATAKA). SINCE THE ASSESSEE WAS ENGAGED IN RUNNING THE EDUCATIONAL INSTITUTION THEREFORE IT CANNOT BE SA ID THAT THE ASSESSEE WAS NOT ENGAGED IN CHARITABLE ACTIVITIES. THIS FACT IS ALSO CLEAR FROM THE ASSES SMENT ORDER OF THE ASSESSMENT YEAR 2008-09 AS WELL AS THE REGISTRATION GRANTED TO THE ASSESSEE UN DER SECTION 12AA OF THE ACT. THE REGISTRATION GRANTED TO THE ASSESSEE SOCIETY WAS NOT WITHDRAWN T ILL DATE. EARLIER THE EXEMPTION WAS AVAILABLE TO THE EDUCATIONAL INSTITUTION UNDER SECTION 10(22) OF THE ACT WHICH WAS OMITTED BY THE FINANCE (NO.2) ACT 1998 W.E.F. 01.04.1999. THE EXEMPTION IN THE SAID SECTION AT THE RELEVANT TIME WAS OF AN INCOME OF ANY UNIVERSITY OR OTHER EDUCATIONA L INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT. NOW THE EXEMPTION IS AVAILABLE TO EDUCATION INSTITUTION UNDER SECTION 10(23C) SUB-CLAUSES (IIIAB) TO (IIIAE ) WERE INSERTED BY FINANCE (NO.2) ACT 1998 W.E.F. 01.04.1999. THE ISSUE BEFORE US RELATES TO SUB-CLAUSE (IIIAD) WHICH READS AS UNDER :- ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EX ISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT IF THE AGGR EGATE ANNUAL RECEIPTS OF SUCH UNIVERSITY OR EDUCATIONAL INSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRESCRIBED. 9 8. INCOME TAX RULES 2BC PRESCRIBES THE LIMIT OF RS. 1 CRORE. IT MEANS THAT IF THE TURNOVER IS RS.1 CRORE OR LESS THEN THE EDUCATIONAL INSTITUTIO N HAS NOT TO BE APPROVED BY PRESCRIBED AUTHORITY. OTHERWISE EDUCATIONAL INSTITUTION HAS TO GET APPRO VED BY THE PRESCRIBED AUTHORITY. IN THE CASE OF THE ASSESSEE IT IS NOT DENIED THAT DURING THE ASSE SSMENT YEAR UNDER CONSIDERATION THE ANNUAL RECEIPT IS LESS THAN ` 1 CRORE. THEREFORE IN OUR OPINION THE ASSESSEE I S NOT REQUIRED TO GET THE APPROVAL BY ANY PRESCRIBED AUTHORITIES. WHERE THE RECEIPTS OF THE EDUCATIONAL INSTITUTION IS ` 1 CRORE OR MORE THE EXEMPTION IS AVAILABLE UNDER SECT ION 10(23C)(VI) PROVIDED SUCH INSTITUTION IS APPROVED BY THE PRESCRIBED AUTHORITY. PROVISO TO S ECTION 10(23C) ALSO REQUIRE CERTAIN CONDITIONS TO BE COMPLIED WITH BY AN EDUCATIONAL INSTITUTION W HICH IS ENTITLED FOR EXEMPTION UNDER SECTION 10(23C)(VI). THE CONDITIONS SPECIFIED IN THE PROVI SIONS ARE SIMILAR TO SOME EXTENT THE CONDITIONS AS SPECIFIED UNDER SECTION 11 OF THE ACT. BUT THE EDUCATIONAL INSTITUTION WHICH ARE ENTITLED FOR EXEMPTION UNDER SECTION 10(23C)(IIIAD) ARE NOT REQU IRED TO COMPLY WITH THE CONDITIONS AS STIPULATED UNDER PROVISO TO SECTION 10(23C). THERE FORE IN CASE THE EDUCATIONAL INSTITUTION IS ENTITLED FOR EXEMPTION UNDER SECTION 10(23C)(IIIAD) THERE IS NO RESTRICTION ABOUT THE APPLICATION OF INCOME MODE OF INVESTMENT AND THE ACCUMULATION OF THE INCOME. THE CONTENTIONS OF THE LD. A.R. ARE THAT THE ASSESSEE IS ENTITLED FOR EXEMPTIO N UNDER SECTION 10(23C)(IIIAD). THE ONLY REQUIREMENT UNDER SECTION 10(23C)(IIIAD) IS THAT TH E EDUCATIONAL INSTITUTION MUST EXIST SOLELY FOR EDUCATION PURPOSES AND NOT FOR THE PURPOSES OF PROF IT. THIS IS NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE DOES NOT EXIST SOLELY FOR EDUCATIONAL PURPOSES AND FOR THE PURPOSE OF PROFIT. THE ASSESSING OFFICER ALTHOUGH OBSERVED IN THE ASSESSME NT ORDER IN LAST BUT ONE PARA IN ONE LINE FURTHER EXEMPTION UNDER SECTION 10(23C) IS ALSO NO T AVAILABLE TO THE ASSESSEE. BUT DID NOT POINT OUT THE REASONS WHY THE EXEMPTION UNDER SECTI ON 10(23C)(IIIAD) IS NOT AVAILABLE TO THE ASSESSEE. WE NOTED FROM THE ORDERS PASSED BY THE A UTHORITIES BELOW THAT BOTH THE AUTHORITIES HAS EXAMINED THE CLAIM OF THE ASSESSEE IN RESPECT OF TH E EXEMPTION AVAILABLE UNDER SECTION 11 BUT DID 10 NOT GIVE ANY REASONS WHY THE EXEMPTION UNDER SECTIO N 10(23C)(IIIAD) IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. THE CIT(A) ALSO IN THE LAST SUB-PARA OF PARA NO.5 OF ITS ORDER EVEN THOUGH GAVE THE FINDING FURTHER THE ASSESSING OFFICER HA S ALSO RIGHTLY HELD THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION UNDER SECTION 10(23C) OF THE I.T. ACT. BOTH THE AUTHORITIES HAS ACCEPTED THAT THE TOTAL RECEIPT OF THE ASSESSEE SHOWN WERE ` 33 90 727/- INCLUDING DONATION OF ` 28 72 500/- BUT DID NOT FURTHER LOOK INTO THE PROVI SIONS OF SECTION 10(23C). SECTION 10(23C) CONTAINS SUB-CLAUSES (I) TO (VIA). THE CLAIM OF TH E ASSESSEE IS SPECIFICALLY MADE IN RESPECT OF EXEMPTION AVAILABLE UNDER SECTION 10(23C)(IIIAD). THE FINDING GIVEN BY THE ASSESSING OFFICER AND THE CIT(A) DENOTES THAT THEY HAVE NOT LOOKED IN TO THE SPECIFIC SUB-CLAUSES OF SECTION 10(23C) BUT DENIED THE EXEMPTION WITHOUT POINTING O UT HOW THE PROVISIONS OF SECTION 10(23C)(IIIAD) ARE NOT APPLICABLE IN THE CASE OF TH E ASSESSEE. THE SURPLUS HAS ARISEN TO THE ASSESSEE DURING THE COURSE OF CARRYING ON THE EDUCA TIONAL ACTIVITY. IT DOES NOT MEAN THAT THE ASSESSEE IS NOT EXISTING FOR EDUCATIONAL PURPOSES. WE HAVE TO SEE THAT THE MAIN OBJECT OF THE ASSESSEE SHOULD NOT BE FOR THE PURPOSES OF PROFIT. IF SOME INCOME ARISE DURING THE COURSE OF CARRYING ON THE EDUCATIONAL ACTIVITIES IT WILL NOT DEBAR THE ASSESSEE FROM CLAIMING THE EXEMPTION UNDER SECTION 10(23C)(IIIAD). THE LEGISLATION IS A WARE OF THE THIS FACT THAT IS WHY LEGISLATION HAS PERMITTED STATUTORY ACCUMULATION OUT OF THE TOTAL I NCOME TO THE EXTENT OF 15% UNDER THE PROVISO TO SECTION 10(23C) AND ACCUMULATION OF THE SHORTFAL L OF THE INCOME TO THE EXTENT IT IS NOT INCURRED FOR EDUCATIONAL PURPOSE UPTO 5 YEARS. WE HAVE ALRE ADY OBSERVED THAT THE PROVISO TO SECTION 10(23C) ARE NOT APPLICABLE TO AN EDUCATIONAL INSTIT UTION ENTITLED FOR EXEMPTING UNDER SECTION 10(23C)(IIIAD) BUT ARE APPLICABLE TO THE EDUCATIONA L INSTITUTION ENTITLED FOR EXEMPTION UNDER SECTION 10(23C)(VI) OF THE I.T. ACT BUT THIS PROVI SO SPEAKS OF THAT IF THE SURPLUS ARISES DURING THE YEAR IT WILL NOT SNATCH AWAY THE EXEMPTION AVAILAB LE TO THE ASSESSEE. WE EVEN DID NOT FIND ANY EVIDENCE OR MATERIAL BEING BROUGHT ON RECORD WHICH MAY PROVE THAT THE ASSESSEE WAS ENGAGED IN 11 ANY OF THE ACTIVITIES OTHER THAN EDUCATIONAL ACTIVI TIES SO THAT THE ASSESSEE MAY BE DISENTITLED FOR EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT. SINCE THE PROVISO TO SECTION 10(23C) ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE AND THE EXE MPTION IS CLAIMED UNDER SECTION 10(23C)(IIIAD) THE QUESTION OF APPLICATION OF THE INCOME FOR CONST RUCTION OF THE BUILDING AND THE QUESTION OF PURCHASING OF THE BOOKS IN OUR OPINION WILL NOT B E RELEVANT. THESE QUESTIONS ARE RELEVANT FOR THE PURPOSE OF ALLOWING THE EXEMPTION UNDER SECTION 11. WE ACCORDINGLY SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND ALLOW THE EXEMPTION TO THE AS SESSEE UNDER SECTION 10(23C)(IIIAD) OF THE ACT. OUR AFORESAID VIEW IS SUPPORTED BY THE DECISI ON OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CITY MONTESSORY SCHOOL (REGD.) VS. UNION OF INDIA & OTHERS 315 ITR 48 (ALLD) AND THAT OF EWING CHRISTIAN COLLEGE SOCIETY VS. CHIEF COMMIS SIONER OF INCOME-TAX 318 ITR 160 (ALLD.) AND AMERICAN HOTEL AND LODGING ASSOCIATION EDUCATIO NAL INSTITUTE VS. CBDT 301 ITR 86 (SC). 9. SINCE WE HAVE ALREADY ACCEPTED THE GROUND OF APP EAL ALLOWING THE ASSESSEE EXEMPTION UNDER SECTION 10(23C)(IIIAD) THEREFORE IN OUR OPI NION OTHER ALTERNATE GROUNDS TAKEN BY THE ASSESSEE WHICH RELATE TO THE EXEMPTION AVAILABLE UN DER SECTION 11 DOES NOT REQUIRE ANY ADJUDICATION AS THE SAME HAVE BECOME INFRUCTIOUS IN OUR OPINION . WE ACCORDINGLY ALLOW THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT APPEAL FIELD BY THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 29.10.201 0). SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 29 TH OCTOBER 2010. 12 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY