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2023 (9) TMI 540 - AT - Income TaxAddition made for surplus for both funds of students - As submitted both the schools are run by the Trust only but the appellant has not taken into account surplus of both these schools into account while consolidating the total accounts of the Trust - HELD THAT - During the course of assessment proceedings the AO made the addition by observing that the assessee society neither had taken the income/ the expenditure of the funds nor did it take the surplus so generated of both funds while computing the surplus of the society in consolidation. Thus a sum being surplus of both funds was not taken into account while consolidating the total accounts. In first appeal, the CIT(A) has confirmed the addition made by the AO. The Bench has noted the submission of the ld. AR of the assessee and found that the submission made by assessee is appropriate as surplus fund can never by utilized at the discretion of the Management as it is controlled by the Head of the Institution for the welfare of students only. We concur with the submissions of assessee and thus the Ground No. 4 of the assessee is allowed. Disallowance of corpus donation - HELD THAT - It is noted that assessee during the course of hearing produced the certificates from the donors who confirmed the above payments made to the assessee trust. Taking into consideration confirmation by the donors for above payments, we allow the Ground No. 5 of the assessee. Disallowance of small amount for purchase of Invertor for the use of students of school - HELD THAT - At the time of hearing, the ld. AR placed details of payment for purchase of Invertor for the welfare of the students of the school. Hence, looking to the fairness of the assessee with regard to payment to the party M/s.Kiran Battery Co. Ajmer, we allow the Ground No.6 of the assessee.
Issues Involved:
1. Admissibility of appeal against the order passed u/s 143(3) IT Act. 2. Addition of Rs. 2,580,033/- and charging tax thereon. 3. Addition of Rs. 881,362.50 as corpus fund for building construction. 4. Addition of Rs. 215,235/- for surplus of students' funds. 5. Disallowance of corpus donation of Rs. 108,340/-. 6. Disallowance of capital expenditure on account of Inverter Rs. 14,000/-. 7. Treatment of fixed deposits as capital assets. 8. Denial of exemption benefit u/s 10(23C)(iiirad) against section 11. 9. Misplacement of Form 10 by the department. 10. General grounds on the legality of the order. 11. Additional grounds not taken at CIT (Appeal). Summary: Issue 1, 2, 10 & 11: Admissibility and General Grounds The Bench noted that Ground Nos. 1, 2, 10 & 11 were general in nature and did not require adjudication. The ld. AR raised no arguments on these grounds, leading to their dismissal. Issue 3: Addition of Rs. 881,362.50 as Corpus Fund The assessee claimed this amount as a corpus fund for building construction. The CIT(A) confirmed the addition due to lack of evidence showing it was received with a specific direction for the corpus fund. The assessee did not press this ground during the hearing, leading to its dismissal. Issue 4: Addition of Rs. 215,235/- for Surplus of Students' Funds The CIT(A) confirmed the addition, stating the surplus was not included in the consolidated accounts. However, the Bench found the submission that the surplus could not be utilized at the discretion of the Management but was controlled by the Head of the Institution for student welfare to be appropriate. Thus, this ground was allowed. Issue 5: Disallowance of Corpus Donation of Rs. 108,340/- The CIT(A) confirmed the addition due to incomplete addresses of donors. During the hearing, the assessee provided donor confirmations. The Bench allowed this ground based on the confirmations. Issue 6: Disallowance of Capital Expenditure on Inverter Rs. 14,000/- The CIT(A) confirmed the addition due to lack of documentary evidence. The assessee provided details of the payment made through cheque for the inverter. The Bench allowed this ground based on the provided evidence. Issue 7 & 8: Treatment of Fixed Deposits and Denial of Exemption The CIT(A) justified the taxation of net surplus and denial of exemption u/s 10(23C)(iiirad) due to failure to apply 85% of total receipts and non-submission of Form 10. The Bench dismissed these grounds as they were not tenable in law. Issue 9: Misplacement of Form 10 The assessee claimed Form 10 was misplaced by the department during file transfer. The Additional Commissioner had directed the AO to consider the benefit after reviewing the Resolution. The Bench restored this issue to the AO to act as per the Additional Commissioner's instructions, allowing this ground for statistical purposes. Conclusion: The appeal of the assessee was partly allowed for statistical purposes. The order was pronounced in the open court on 24/08/2023.
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