9911796707
TMI Blog2015 (12) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... in law in deleting the addition of Rs. 13,92,059/- made by the Assessing Officer on account of excess income over expenditure by allowing the exemption under section 10(23c)(iiiad) of the I.T. Act, 1961 without appreciating the full facts of the case. 3. On the facts and in the circumstances of the case, the CIT (A) has erred in law in deleting the addition of Rs. 1,03,900/- made by the Assessing Officer on account of excess income over expenditure by allowing the exemption under section 10(23c)(iiiad) of the I.T. Act, 1961 without appreciating the full facts of the case." 3. The grounds of appeal taken by the Revenue for the assessment year 2004-05 are as under :- "1. On the facts and in the circumstances of the case, the CIT (A) has erred in law in deleting the addition of Rs. 22,99,500/- made by the Assessing Officer on account of income siphoned out, as the amount was transferred without any authority to transfer the funds from one institution by allowing the exemption under section 10(23c)(iiiad) of the I.T. Act, 1961 without appreciating the full facts of the case. 2. On the facts and in the circumstances of the case, the CIT (A) has erred in law in deleting the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shamli Samaj Kalyan Samiti Balance brought forward Rs.1,33,32,987/- Income Rs. 15,32,930/- Rs.1,48,65,917/- Paid during the year 17,00,000/- Rs. 1,31,65,917/- Security deposit Rs. 4,90,000/- Rs.1,36,55,917/- From the perusal of sanction of the amount withdrawn from the corpus fund of Sarti Devi Raja Ram Public School (hereinafter 'the school'), the AO observed that the amount withdrawn was not for educational purpose and vouchers related to Rs. 2,00,000/- was for social work but was claimed to have made investment at Rs. 11,78,449/- in the construction. The AO further observed that there was no authority for sanction of remaining Rs. 15,00,000/-. Accordingly, vide order sheet noting dated 30.03.2010, the assessee was required to explain how the amount withdrawn from corpus fund of the school was utilized. For the sake of clarity, the same is reproduced as under:- "........ From the -letter dated 29-05-2002 addressed to Manager, Sarti Devi Raja Ram Public School, request is made by the Secretary of the society to make arrangement of Rs. 2,00,000/- from the account of SDRR Public School as same is required for social work of society. The amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee trust revealed that the trust had lent a sum of Rs. 1,31,65,917.14 as on 31.03.2003 out of capital of Sarti Devi Raja Ram Public School and the amount received from the said School was not claimed as expenses or application of income strictly by account payee cheques and as such, the same could not be treated as income of the assessee. Further, it was observed by the AO that as per the assessee there was no bar in law to permit funds of the society to be used by units or funds of the units to be used by the society trust as ultimately it was the trust which was to form the consolidated results; and there was also no requirement for recording such entries in the minute book as the same was passed on by the authority of executive of the relevant bodies. However, the AO held that the submissions made by the assessee as unsatisfactory on the ground that there was no authority or sanction to transfer the amount from the School to any other account, whereas the voucher having sanction of expenditure/transfer were maintained. Accordingly, the AO concluded that the expenditure on account of addition to construction out of payment from corpus fund was not genuine and the amount of Rs. 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucational activity which is charitable u/s 2(15) of the Act and has maintained separate accounts in respect of each educational institution. The institutions of the society is entitled for Claiming benefit of section 10(23C)(iiiad) of the Act being income of each educational institutions being less than Rs. 1 Crore. Hence the A.O. has wrongly invoked the provisions of section 11 of the Act as the appellant society is running educational institutions which are exempt u/s 10(23C)(iiiad) of the Act. The appellant has fully explained the out flow of the amount of Rs. 17,00,000/- by requisite details/evidences from books of accounts which were produced before the A.O. also and clearly showed that the same has been invested in educational activities of charitable purposes which are exempt u/s 10(23C)(iiiad) of the Act. The A.O., just based his findings on the outflow without examining its ultimate use and its accounting done by the appellant. Further, the A.O. has not brought any adverse material evidence on record to conclusively hold that the amount of Rs. 17,00,00/- was utilized for other than educational /charitable purposes. Thus inference drawn by the A.O. that expenditure on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e advance of Rs. 6,70,000/- to M/s Gupta Builder in which the trustee is partner. The said contractor further advanced Rs. 2,00,000/- to Sh. Mohit Gupta, a close associate of the secretary. It showed that the institution was not running wholly and exclusively for education. (ii) Sh. Anand, the contractor was having bank account with Union Bank of India, Shamli. The cheques issued by the society were deposited in the bank by the employees of the trust. It was also evidenced that the society was not running wholly and exclusively for the education which was an essential condition for exemption u/s 10(23C)(iiiad) of the Act. (iii) The assessee society was also running a hospital in the name of Jeevan Jyoti Charitable Hospital. Thus again the object of the society was not wholly and exclusively for education. Thus, the AO on the basis of above reasoning initiated action u/s 147 and issued notice u/s 148 on 15.07.2009 with the remark that request to issue reasons for issuing notice u/s 148 be made after filing the return. However, the assessee did not apply for supply of copy of reasons recorded after filing the return. The reasons u/s 147 of the Act recorded by the AO are repro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the return of Sh. Anand Kumar it is noticed that the amount of Rs. 6,70,000/- is advanced to M/s Gupta Builders in which, the Secretary of M/s Shamli Kalyan Samiti, Shamli is one of the partner. It shows that trust, M/s Shamli Kalyan Samiti, Shamli and the funds of the institution is being diverted for some personal use of the trustees. (d) The cheques issued by the assessee, M/s Shamli Kalyan Samiti, Shamli in favour of "Anand contractor" are being deposited in bank of Anand Contractor by the employees of the assessee's trust. It is also gathered that the cheques issued by Anand contractor have also been encashed by the employee of the trust. Thus the fund is being diverted by showing construction. (e) The assessee M/s. Shamli Kalyan Samiti, Shamli is also running a hospital which means that the assessee M/s Shamli Kalyan Samiti, Shamli is not wholly and exclusively for education and the exemption is not allowed u/s 10(23C)(iiiad) of the Income-tax Act. 1961. From the perusal of record, it is also appeared that neither any return is filed by the assessee nor any notice u/s 148 has been issued for assessment year 2003-04 and in view of above, I am having reason to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT (A) be upheld. 15. We have heard both the sides and perused the material on record. The issue involved in this ground is against the deletion of addition of Rs. 13,92,059/- made by the AO on account of excess income over expenditure by allowing the exemption u/s 10(23C)(iiiad) of the Act. We have concurred with the ld. CIT (A) that the assessee's income from educational institutions is exempt u/s 10(23C)(iiiad) of the Act. Thus, the conclusion of ld. CIT (A) that excess of income over expenditure in Sarti Devi Raja Ram Public School at Rs. 15,32,930/- and from Hindu Mahila Vidhyalya at Rs. 2,16,117/- is exempt u/s 10(23C)(iiiad) of the Act and thus, net surplus determined by the AO at Rs. 13,92,059/- has no basis, is correct and needs no interference. There is no merit in the contention of the revenue on this ground and so dismissed. 16. Ground No.3 is against the deletion of addition of Rs. 1,03,900/- on account of membership fee received during the year as the assessee was not registered u/s 12AA of the Act. 17. The assessee was in receipt of membership fee of Rs. 1,03,900/- which was also held as income of the assessee and as such added to its income. The ld. CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke a different view, so we do not find any infirmity in the order of the CIT (A) and we uphold the same on this issue. It is ordered accordingly. Ground No.1 is rejected. 23. Ground No.2 is against the deletion of addition of Rs. 2,29,950/- on account of depreciation without appreciating the full facts of the case as the AO held that there was no construction carried out during the year. 24. Ld. CIT (A) observed that the AO has made addition of Rs. 2,29,950/- in the computation of assessment order and has not discussed the impugned issue at all. Against the addition made at Rs. 2,29,950/-, the A.O. has only mentioned depreciation on Rs. 22,99,500/- not utilized during the year. The ld. CIT (A) further observed that the AO has not brought any adverse material evidence on record to conclusively hold that depreciation at Rs. 22,99,500/- was not utilized during the year and thus 10% of the same at Rs. 2,29,950/- was required for disallowance. On the other hand, the assessee has contended that in the Balance Sheet of Shamli Samaj Kalyan Samiti, the addition to the fixed assets i.e. Building of the degree college is well proved and fully verifiable. Thus, the ld. CIT (A) held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
