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TMI Blog2019 (11) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no error in the order passed by the Assessing Officer, hence, there is no case for revision u/sec. 263 Disallowance of hostel expenses and bonus to staff - assessee had accepted the disallowance in view of the fact that even though the expenses are disallowed, the increases in income, is entitled for exemption u/sec. 10(23C)(iiiad) of the Act and does not result into taxable income - HELD THAT:- Assessing Officer has called for various information as per the questionnaire issued during the assessment proceedings. The assessee s gross receipts did not exceed the prescribed limit as mentioned in section 10(23C) of the act, hence, granting of exemption u/sec. 10(23C) is not required in assessee s case. There is no discussion with regard to the disallowance of expenses in the assessment order. In the instant case, the assessee contended that increased income due to disallowance of expenses also gets exemption and net the result would be zero taxable income. As per the act, the assessee is entitled for exemption of income u/sec. 10(23)(iiiad) of the Act. Thus, the assessee is also eligible for exemption of the increased income since, it is carrying on educational activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng exemption u/sec. 10(23C)(iiiad) of the Act up to the A.Y. 2012-13. For the A.Y. 2013-14, the assessee-society filed an application dated 26/09/2013 in Form No.56D before the Ld.CCIT, Visakhapatnam for granting exemption u/sec. 10(23C) of the Act and simultaneously filed the return of income on the same date. The said application of the society was rejected by the CCIT in F.No.CCIT/VSP/Tech/10(23C)/2/2014-15, dated 26/09/2014. 3.1 During the course of assessment proceedings, the Assessing Officer has found that the assessee has sold its land admeasuring 7308.4 sq.yds. and RCC building consisting of ground + 3 floors with plinth are of 40,448 sft., situated at Singupuram village, Srikakulam Mandalam for a consideration of ₹ 2,55,94,000/- vide registered sale deed dated 31/12/2012 to another society viz. Sri Surya Educational Society, Nandyal. As per the registered sale document, the value of the land of 7308.4 sq.yds. was ₹ 37,64,000/- and the constructed area of 40,448 sft., of RCC building was valued at ₹ 2,18,30,000/- aggregating to ₹ 2,55,94,000/-. The Assessing Officer found from the balance sheet that the movable asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income while completing the assessment for A.Y. 2013-14. 4.1 Therefore, the ld.CIT(E) held that the assessment order passed by the Assessing Officer was erroneous and prejudicial to the interest of the Revenue. Accordingly, called for explanation of the assessee as to why the assessment should not be revised? In response, the assessee filed the replies to the notice on 14/02/2018 28/03/2018 objecting for the proposed revision. The assessee stated before the ld.CIT(E) that it is an educational institution and the income of the assessee is exempt u/sec. 10(23C)(vi) of the Act. With regard to capital gains, the assessee has submitted before the ld.CIT(E) that the assessee has sold the property which was correctly declared in the income tax returns. Subsequent to rejection of assessee s application for grant of registration u/sec. 10(23C) by the ld.CCIT, the assessee had filed the revised return of income before the Assessing Officer and the entire capital receipts were excluded from the gross receipts, since, the capital receipts does not include the gross receipts for the purpose of section 10(23C)(iiiad) of the Act. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) bonus to staff. 10. With regard to capital gains, the Assessing Officer called for information and examined the issues in detail which is evident from the assessment order page No.2. In the revised return, the assessee has excluded the capital receipts from the gross receipts and submitted the computation before the AO justifying the exclusion of capital receipt placing reliance on the judgment of the Hon'ble Madras High Court in the case of CIT Vs. Madrasa E.Bhakhiyath-Us-Salihath Arabic College in T.C.(A).No. 450/2014, dated 11.08.2014. The Assessing Officer after considering the judicial precedent and the revised return, did not consider to include the capital receipt in the gross receipt. Apart from the above, it is found from the assessment order page No. 3 that the Assessing Officer has verified the balance sheet and taxed the movable assets valuing at ₹ 30,51,396/- consisting of furniture, fittings, vehicles and computers etc., since the assessee did not admit the said receipts of transfer of furniture and other movables in the income and expenditure account. 10.1 The ld.CIT(E) taken the market value of the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act and does not result into taxable income. This issue was explained before the Assessing Officer in detail and the Assessing Officer had accepted the said issue and did not make any addition. Therefore, argued that there is no case for revision u/sec. 263 and the 263 order should be quashed. 13. On the other hand, ld.DR strongly supported the order of the ld.CIT(E). 14. In the instant case, the Assessing Officer has called for various information as per the questionnaire issued during the assessment proceedings. The assessee s gross receipts did not exceed the prescribed limit as mentioned in section 10(23C) of the act, hence, granting of exemption u/sec. 10(23C) is not required in assessee s case. There is no discussion with regard to the disallowance of expenses in the assessment order. In the instant case, the assessee contended that increased income due to disallowance of expenses also gets exemption and net the result would be zero taxable income. As per the act, the assessee is entitled for exemption of income u/sec. 10(23)(iiiad) of the Act. Thus, the assessee is also eligible for exemption of the incre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Loss declared ₹ 21,87,886/- Less: Rental income ₹ 3,50,000/- Hostel Expenses ₹ 6,84,708/- Boarding Exp ₹ 3,74,048/- Bonus to staff ₹ 6,85,002/- ₹ 20,93,758/- ₹ 94,128/- Add: Addition on movable assets: ₹ 30,51,396/- Total income ₹ 29,57,268/- Against which the Assessing Officer computed the total income of ₹ 30,51,400/- without allowing th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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