Income Tax Appellate Tribunal - Agra
Swami Atmdev Gopalanand Shiksha ... vs Department Of Income Tax on 18 September, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL,
AGRA BENCH, AGRA
BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND
SHRI A.L. GEHLOT, ACCOUNTANT MEMBER
ITA No. 74 & 218/Agra/2011
Asstt. Year : 2005-06 & 2006-07
Addl. C.I.T., Range-2, vs. Swami Atmdev Gopalanand,
Farrukhabad. Shiksha Sansthan, Ugarpur,
Pipargaon, Farrukhabad.
(Appellant) (Respondent)
Appellant by : Shri Waseem Arshad, Sr. D.R.
Respondent by : Shri I.A. Ansari, Advocate
Date of hearing : 18.09.2012
Date of pronouncement of order : 21.09.2012
ORDER
Per Bhavnesh Saini, J.M.:
Both the appeals by the Revenue are directed against different orders of ld. CIT(A), Ghaziabad dated 28.12.2010 for the assessment year 2005-06 and dated 25.03.2011 for the assessment year 2006-07.
2. We have heard the ld. Representatives of both the parties and perused the findings of the authorities below.
3. Briefly, the facts of the case are that the assessee is registered society, running an institution in the name of Swami Atmdev Gopalanand Inter College, 2 ITA No. 74 & 218/Agra/2011 Ugarpur and also running a residential primary school of Scheduled Caste and a residential school for handicapped and girls' boarding hostel. The return was filed at nil income. The AO has mentioned that all the assertions made by the assessee including the fact that it is backed by the Government Funds and is, therefore, claiming exemption u/s. 10(23C)(iiiab) of the IT Act. Although, claim of exemption under the above provision was not challenged by the AO, but he has made certain additions on account of unproved grant, unsecured loans and unproved donations. The assessee challenged all the three additions before the ld. CIT(A). The ld. CIT(A), considering the explanation of the assessee, found that aims and objects of the assessee society are to impart education and government has funded the educational and technical programmes. Therefore, since the educational programmes of the assessee society are being run on the backing of the Government sponsored funds, apart from donations, the assessee is eligible for exemption u/s. 10(23C)(iiiab) of the IT Act. The ld. CIT(A) further noted that due to this finding, the other additions become redundant because any and all income of the society would be exempt from taxation. The ld. CIT(A), on merit also, deleted all the three additions. After deleting all the three additions, the ld. CIT(A) further held that the assessee would be entitled for exemption under the above provision. In assessment year 2005-06, the Revenue challenged deletion of addition of Rs.44,60,000/- on account of unsecured loans. In assessment year 2006-07, the Revenue challenged the deletion of addition of Rs.35,50,000/- on 3 ITA No. 74 & 218/Agra/2011 account of unsecured loans u/s. 68 of the IT Act in violation of Rule 46A of the IT Rules. In assessment year 2005-06, the ld. CIT(A), considering the evidences and material on record, deleted the addition and same order was followed in assessment year 2006-07 and the additions were deleted.
4. After hearing the rival submissions, we do not find any merit in both the appeals of the Revenue. The AO has not disputed that the assessee is entitled for exemption u/s. 10(23C)(iiiab) of the IT Act. The ld. CIT(A) also considering the aims and objects of the assessee found that the assessee has been imparting education and was existing solely for the educational purpose and the activities of the assessee were funded by the government, apart from donations etc. These findings have not been disputed that the assessee is entitled for exemption u/s. 10(23C)(iiiab) of the IT Act. Before proceeding further on merits, we note that the relevant provision of section 10(23C)(iiiab) provides "In computing the total income of the previous year of any person, any income falling within any of the following clauses shall not be included in income received by any person on behalf of -
(iiiab). any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government."
4.1 The above provision has been inserted in the IT Act by Finance Act, 1998 w.e.f. 01.04.1999. Prior to that, same provision was incorporated in the Act u/s. 10(22) which provides exemption on "any income of a university or other 4 ITA No. 74 & 218/Agra/2011 educational institution, existing solely for educational purposes and not for the purposes of profit;" The above provision contained u/s. 10(22) has been omitted by Finance Act, 1998 w.e.f. 01.04.1999. This provision contained in section 10(22) has been re-enacted in section 10(23C) in different forms, i.e., "(iiiab), (iiiad) and
(vi)" of section 10(23C). The language of both the provisions are, therefore, similar except where the funds have been financed by the government or where annual receipts do not exceed the prescribed limit or where annual receipts exceeded the prescribed limit, the approval of prescribed authority is required. Since the language of section 10(22) and 10(23C) are similar and additions have been made u/s. 68 of the IT Act, would prove that the income of the assessee has been computed by making certain additions. When the assessee is entitled for exemption u/s. 10(23C), the assessee can claim the benefit thereof for the purpose of income deemed to be chargeable to tax u/s. 68 of the IT Act. We rely upon the decision of Hon'ble Delhi High Court in the case of DIT (Exemption) vs. Raunaq Education Foundation, 294 ITR 76 (Del.), in which it was held -
"The words "derived from" (or some other similar words) do not occur in section 10(22) of the Income-tax Act, 1961, and, therefore, the word "income" as occurring in section 10(22) cannot be given a restrictive meaning and must be given its natural meaning or the meaning ascribed to it in section 2(24). Hence, an assessee who is entitled to exemption under section 10(22) can claim the benefit thereof for the purpose of income deemed to be chargeable to tax under section 68."5 ITA No. 74 & 218/Agra/2011
5. Considering the above discussion and the decision of Hon'ble Delhi High Court, it is clear that when the assessee is entitled for exemption of income u/s. 10(23C) of the IT Act, the addition made u/s. 68 would also be covered by the same exemption and accordingly, the appeals of the Revenue would not be maintainable in the present form. In view of the above, we do not find any justification to interfere with the order of ld. CIT(A) in allowing the appeal of the assessee. In view of the above, there is no need to decide the additions on merits because it would be academic in nature.
6. In the result, both the departmental appeals are dismissed.
Order pronounced in the open court.
Sd/- Sd/-
(A.L. GEHLOT) (BHAVNESH SAINI)
Accountant Member Judicial Member
*aks/-
Copy of the order forwarded to :
1. Appellant
2. Respondent
3. CIT(A), concerned By order
4. CIT, concerned
5. DR, ITAT, Agra
6. Guard file Sr. Private Secretary
True copy