9911796707
TMI Blog2006 (7) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income-tax, Bombay, vide registration dated 13-2-1989. It has also been approved for the purpose of section 80G of the Act vide certificate of exemption dated 7-11-2000. The assessee is an educational institution running a school in the name of St. Thomas High School at Dahisar, Mumbai. The assessee filed income-tax returns declaring "nil" income for the years under consideration on the ground that assessee was entitled to exemption under section 10(22) of the Act. The Audit Report under section 12A was also filed for all the years. On 18-8-1989, a search and seizure action under section 132 of the Act was carried out at the residential premises of Mr. A.F. Pinto, who is Trustee of St. Xavier Educational Trust. However, his wife Grace Pinto is the Trustee of the assessee-trust. In the course of the said search, cash amounting to Rs. 89,767 as well as certain incriminating materials were found and seized. However, no search was conducted at the premises of the assessee. Considering the materials found in the course of search at the residence of Mr. Pinto, the assessment of the assessee Trust was completed on the total income of Rs. 5,63,840 for assessment year 1989- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 was, however, rejected on account of contravention of section 11(5). On merits, the Learned CIT(A) directed the Assessing Officer to allow deduction of property expenses of Rs. 14,209 as well as depreciation of Rs. 22,113 on furniture and fixture in respect of assessment year 1990-91. He also deleted the addition of Rs. 2,60,000 on account of disproportionate investments in respect of assessment year 1990-91. However, the claim of assessee for deduction of Rs. 7,85,000 for assessment year 1992-93 was rejected on the ground that assessee was not entitled to exemption under section 11 of the Act. Aggrieved by the same, the assessee has preferred the appeal before the Tribunal for assessment year 1989-90 while the revenue preferred the appeals in respect of assessment years 1990-91 and 1992-93. 4. Both the parties have been heard at length. The learned D.R. has relied on the orders of the Assessing Officer as well as the materials found in the course of search at the residential premises of Mr. Pinto. On the other hand, the Learned Counsel for the assessee has relied on the reasonings given in the orders of the Learned CIT(A) for assessment years 1990-91 and 1992-93. Hence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the books of account of the assessee-trust. The Assessing Officer had considered 60% as recorded in the books and 40% unrecorded. 7. We have gone through the statement of Mr. Abraham Chacko recorded on the date of search under section 131 of the Act. At this stage, it may be clarified that Mr. Abraham Chacko, is son of Mr. Chacko Abraham, as is apparent from the statement of oath recorded under section 131 on 18-8-1989. The one of the trustees of assessee-trust is Mr. Chacko Abraham and, therefore, the statement of Mr. Abraham Chacko should not be confused with that of the trustee of the trust. Mr. Abraham Chacko, whose statement was recorded, was not at all connected with the assessee-trust, as is apparent from the answer to question No. 2, which is stated below : "I am working as Administrative in-charge of St. Xavier High School, Borivli (E) and I am also one of the trustees of St. Lawrence Education Society and St. Xavier Educational Trust. I am not drawing any specific remuneration as a trustee other than salary as mentioned above." The above statement of Mr. Abraham Chacko clearly reveals that he had no connection with the assessee-trust inasmuch as he was conn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay evidence and thus cannot be used as evidence against the assessee. There is no material whatsoever to suggest that assessee-trust received any donation in excess of amount recorded in the books of account. Therefore, in the absence of any adverse material, we are of the considered view that the addition of Rs. 8,000 made by the Assessing Officer and confirmed by the Learned CIT(A) cannot be sustained. The orders of the Learned CIT(A) is, therefore, set aside on this issue and consequently the addition of Rs. 8,000 made in assessment year 1989-90 is hereby deleted. In assessment year 1990-91, the Assessing Officer had made addition of Rs. 2,60,000 on account of income from undisclosed sources which has been deleted by the Learned CIT(A) and the same has been accepted by the revenue by not raising any ground against the deletion of the said addition. Since additions made by Assessing Officer stand deleted, no adverse inference can be drawn against the assessee in deciding the issue regarding exemption under section 10(22)/11 of the Act. 8. The only question which remains for our consideration is, whether the assessee is entitled to exemption under section 10(22) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re incurred for the purpose of education. Reference can be made to the decision of Hon ble Bombay High Court in the case of CIT v. Trustees of The Jadi Trust [1982] 133 ITR 494 wherein it was held that donation to other charitable trust could not deny exemption to assessee under section 11 of the Act. On the similar analogy, it has to be held that payments made to other educational institutions is for the purpose of education unless it is shown that diversion of funds was for non-educational purpose. It is pertinent to note that Assessing Officer himself considered the payments to other educational institutions as application of funds for education purposes as is apparent from the assessment orders for assessment years 1993-94 and 1994-95 appearing at pages 80 to 85 of the paper book. Further, the Apex Court in the case of S.RM.M.CT.M. Tiruppani Trust v. CIT [1998] 230 ITR 636 has held that expenditure on construction of building to be used for the objects of the trust has to be considered as application of fund for charitable purposes. If the above payments made by assessee are considered for the purpose of education then there is no surplus with the assessee. The addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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