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TMI Blog2014 (1) TMI 1944X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is claiming under two provisions of the Act i.e. Section 11(1)(a) and Section 10(23C)(iiiab) - AO asked the assessee to justify its claim and in response to the same, the assessee stated that its institute is approved as 100% Govt. Autonomous Body and the Government has not financed any paisa to the institute in last 5 years because the institute is already having a good amount lying in Fixed Deposits with Banks. This very reply of the assessee is against the assessee which is contrary to the provisions of Section 10(23C)(iiiab). According to the provision of Section 10(23C)(iiiab) one can only get exemption, if it fulfills the conditions of this Section. It is very much necessary for the assessee to fulfill all the conditions for exemption u/s 10(23C)(iiiab). In our considered view the assessee did not fulfill the required conditions as mentioned u/s 10(23C)(iiiab) of the Act and the FAA has wrongly deleted the additions in dispute without any basis as well without going through the relevant provisions of law. Assessee itself admitted before the AO in its reply which we have reproduced above that the institute is approved as the 100% Govt. Autonomous Body and the Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te has been accumulating funds year after year, which are parked with the banks in the form of FDRs, as is evident from its balance sheet as on 31.03.2009, total FDRs with the bank are of Rs. 11,27,93,116/-. Therefore, the assessee has not received any penny from the Government for the last 5 years as admitted by the assessee. Keeping in view the aforesaid discussion, we are of the view that learned First Appellate Authority has wrongly allowed the exemption to the assessee without applying its mind to the relevant provision of law as well as lack of documentary evidence, which are required for granting exemption in dispute. Appeal filed Revenue is allowed. - SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER Appellant by: Sh. Mahavir Singh, Sr. DR Respondent by: Sh. P.N. Arora, Advoate ORDER PER BENCH 1. The assessee has filed the present appeal against the order dated 21.06.2012 passed by learned CIT(A), Bathinda, for the assessment year 2009-10 on the following grounds: i. On the facts and in the circumstances of the case the learned CIT(A) has erred in accepting the claim of the assessee u/s 10(23C)(iiiab) of the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10(23C)(iiiab) of the Act. After perusing the statement of income filed along with return of income, the Assessing Officer asked the assessee to justify the exemption claimed by the assessee. In response to the same, the assessee filed its reply, which is reproduced as under: That the copy of Gazette of Punjab Govt. in which the institute is approved as the 100% Govt. Autonomous Body (copy of letter attached). That the Government have not financed any paisa to the institute in last 5 years because the institute is already having a good amount lying in Fixed Deposits with Banks. At time the institute is required any amount, then the institute will be substantially financed by the Govt. whenever it is needed. Further, it is stated that the institute is meeting the expenses from the receipts/fees fixed by the Govt. its own. The Govt. is responsible to finance the institute in case it is not meeting the expenses and is running in deficit budget or in losses. 5. The Assessing Officer considered the reply filed by the assessee and found that the assessee-society is neither registered under Section 12AA of the Act nor has been granted exemption under Section 10(23C)(vi) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the teaching staff and other employees, out of the collection made during the year from the students. Even then, the assessee has got excess of income over expenditure as stated earlier. Resultantly, the assessee has been accumulating funds year after year, which are parked with the banks in the form of FDRs, as is evident from its balance sheet audited as on 31.03.2009, total FDRs with bank are of Rs. 11,27,93,116/- which is an apparently a huge amount. Similarly, FDRs as on 31.03.2008 were shown by the assessee with banks to the tune of Rs. 8,85,53,194/- besides accrued interest of Rs. 35,46,306/-. This shows that the assessee is deriving income/surplus profit from running of educational institution year after year and the same is being invested in the form of FDRs without incurring expenditure towards the aims and objects of the institute. 8. The Assessing Officer also found that during the course of assessment proceedings, the assessee submitted that the funds will be utilized for extension of hostel buildings in subsequent years for which necessary approval of the Government of Punjab has been sought. He was of the view that this is not a case of registration under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the car was used on VVIP duties as requisitioned by the DC, Muktsar, who is also a member of the Board of Governors of the Society as appointed by the State Government. On asking from the assessee for the purpose of utilization of car, the assessee failed to explain the purpose of utilization of the car, which was said to be used on the duties of VVIPs. Keeping in view the facts and circumstances as well as the explanation given by the assessee, the Assessing Officer was of the view that the car was utilized for the purpose of Institute towards its aims and objects and he disallowed 1/3rd of total expenses claimed on this vehicle(car) i.e. Rs. 2,98,130/- and its depreciation i.e. Rs. 28,474/-, aggregating to Rs. 3,26,604/-, which comes to Rs. 1,08,868/- and the same is added back to the income of the assessee. 11. During the course of assessment proceeding, the assessing Officer also noticed that the assessee has filed a copy of audit report separately in respect of Development Fund of the Institute, as per which it has received a sum of Rs. 1,18,09,000/- during the year on this account besides accrued interest on FDRs of Rs. 20,71,559/- under this head. As per balance of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case is covered i.e. whether section 10(23C)(iiiab) or Section 10(23C)(vi) of the Act and without giving any categorical finding as such, how could the learned CIT(A) allow the appeal of the assessee. He further submitted that the assessee did not fulfill the conditions of the provisions of Section 10(23C)(iiiab) nor Section 10(23C)(vi) of the Act. Thus, Section 10(23C)(iiiab) is not applicable in the case of the assessee as the assessee is not wholly or substantially financed by the Government. He further stated that the Assessing Officer has passed a well reasoned order on the basis of records, which deserves to be upheld and the impugned order deserves to be cancelled because the assessee has neither sought nor was granted any registration under Section 12AA of the Act for which the assessee is claiming the exemption in dispute. 14. On the contrary, learned counsel for the assessee controverted the arguments advanced by learned DR and relied upon the order passed by learned First Appellate Authority. In support of his argument, he has also filed two small paper books and in the 1st paper-book containing pages from 1 to 10, he has attached the Copy of Written Submission filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Technology, Malout Punjab. ii. To take all steps of necessary for providing instructions, research in such branches of Management and dissemination and Engineering as the Institute may think fit and for the advancement of learning and dissemination of knowledge in such branches. iii. To prescribe rules and regulations for and to hold the test and examinations declare the results and give awards for course other than those for University degrees and in respect of the latter to make arrangements in accordance with the statutes and regulations of the University to which the Institute is affiliated. iv. To institute and award fellowships scholarships prizes and medals in accordance with the rules and by-laws. v. To confer honorary award or other distinctions. vi. To fix and demand such fees and other charges as may be laid down in the Bye-laws made under the Rules of the Society. vii. To establish, maintain and manage halls, hostel other buildings for furtherance of the objectives of the Society. viii. To provide for the maintenance of units of the National Cadet Corps NSS and other similar institutions for the students of the institute. ix. To create t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) Interest Income from Bank 9578470.00 (e) Misc. Income 2146313.00 136445430.17 67172043.17 Less: Amount Applied to Charitable or Religious Purposes in India During The Previous Year: (a) Revenue Expenditure 26968265.54 (b) Capital Expenditure 4648675.63 31616941.17 Balance 35555102.00 Less: Amount Deemed to be Applied @ 15% of Rs. 67172043/17 10075806.47 Balance 25479295.53 Less: Income Claimed exempt U/s 10(23C)(iiiab) 25479295.53 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that the Government of Punjab has established the assessee-institute and further allowed to get registered under Societies Registration Act, 1860 only, but did not finance the institute during the year under consideration or even in last 5 years at all as admitted by the assessee-institute in its reply, mentioned above. But the learned First Appellate Authority has wrongly allowed this exemption to the assessee on the basis of previous year as well as on the basis of order passed by CIT, Bathinda, under Section 268 of the Act, dated 23.03.2012. In our considered view, the learned First Appellate Authority has passed the impugned order by allowing the exemption under Section 10(23C) (iiiab) of the Act on the basis of previous year as well as the order passed under Section 263 of the Act, dated 23.03.2012 passed by learned CIT, Bathinda, wherein he has dropped the proceedings initiated under Section 263 of the Act for the year 2007-08. 19. It is very much necessary for the assessee to fulfill all the conditions for exemption under Section 10(23C)(iiiab) of the Act. In our considered view the assessee did not fulfill the required conditions as mentioned under Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the institution is being granted under section 10(23C)(iiiab) of the Act. In the assessment year 2009-10 the Assessing Officer is of the view that the institution has not received any grant from the government during the last 5-6 years. Hence, it is not treated to be financed by the government. During the appellate proceedings the learned counsel of the appellant brought to my notice that for the assessment year 2007-08 the notice u/s 263 has been given on the similar ground on which exemption was disallowed by the A.O. for the assessment year 2009-10 that since the institution has not been financed by the State Government during the year under consideration as well as during the preceding years, the institution is not wholly or substantially financed by the State Government, hence institution is not entitled to claim its income as exempt u/s 10(23)(iiiab) of the Income Tax Act. In response to the proceedings u/s 263, the appellant has filed the submissions before the learned CIT along with necessary paper book and case law to prove that the case of the assessee appellant is duly covered by exemption u/s 10(23C)(iiiab) of the Act. After considering the explanation of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year cannot affect or bind his decision for another year. This view is supported by various judgments rendered by Hon'ble Supreme Court of India, which includes in the case of New Jehangir Vakil Mills Co. Ltd. Vs. Commissioner of Income Tax, Bombay North, Kutch and Saurashtra, reported in (1963) 49 ITR 137 (SC); Commissioner of Income Tax, West Bengal Vs. Brij Lal Lohia and Mahabir Prasad Khemka, reported in (1972) 84 ITR 273 (SC); and Radhasoami Satsang Vs. Commissioner of Income Tax, reported in (1992) 193 ITR 321(SC). 24. It is a matter of record that the assessee has not produced any documentary evidence before the Assessing Officer, learned CIT(A) and even before us, proving that the assessee has got approval from the prescribed authority for the exemption under Section 10(23C)(iiiab) of the Act. Secondly, as regards to the exemption claimed by the assessee under Section 11(1)(a) of the Act, as mentioned in the computation of income regarding, its income applied towards charitable purpose and hence deducted 15% of its receipts deeming the same as to have been applied as per Sections 11(1)(a) of the Act. For claiming the exemption, under Section 11(1)(a) of the Act, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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