Income Tax Appellate Tribunal - Indore
M/S Malwa Education Service Society, ... vs The Acit 2(1), Indore on 10 January, 2018
आयकर अपील
य अ धकरण, इ दौर यायपीठ, इ दौर
IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER
AND
SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA No.917/Ind/2016
Assessment Year: 2005-06
M/s Malwa Education ACIT -2(1),
Service Society, बनाम/ Indore
Gram Limbodi, Khandwa
Vs.
Road,
Indore(MP)
(Appellant) (Revenue )
P.A. No.AAATM1743N
Appellant by ShriS.N. Agarwal&PankajMogra CAs
Revenue by ShriRajiv Jain, Sr. DR
Date of Hearing: 03.01.2018
Date of Pronouncement: 10.01.2018
आदे श / O R D E R
PER KUL BHARAT, J.M:
This appeal by the Assessee is directed against the order of Ld. Commissioner of Income Tax(Appeals)-22, New Delhi holding the charge of Ld. Commissioner of Income Tax(Appeals),Indore-2, (in short 'CIT(A)'), dated 15.06.2016 pertaining to the A.Y. 2005-06. In addition to grounds of appeal as raised while filing the appeal, the assessee has taken following additional ground of appeal:
Malwa Education S. S. First we take up the additional grounds that read as under:
"3. That on the facts and in the circumstances of the case the appellant trust is eligible to get registration u/s 12A of the Income Tax Act. Since, the application as filed for the registration of the trust u/s 12A for the Act was not disposed off within 6(six) months from the date of application in view of direct decision of the Hon'ble Apex Court in the case of CIT vs. Society for the promotion of Education as reported in 382 ITR 0006 (SC)
4. That on the facts and in the circumstances of the case as per proviso to section 12A(2) of the Act, the registration though granted from the date of application also applicable on all the cases pending as on the date of registration and therefore the same is also application in the assessment year under consideration.
5. That on the facts and in the circumstances of the case the Ld. Assessing Officer erred in not excluding 15% of the receipt available for set-apart while calculating total income of the assessee."
2. Briefly stated facts in respect of the additional grounds are that during the assessment proceedings the assessee claimed deemed registration u/s. 12A. Hence requested for exemption u/s 11 & 12 of the Act, the said request of the assessee was rejected by the AO.On further appeal to the Ld. CIT(A), action of Assessing Officer was confirmed.
3. Before the Ld. CIT(A), these grounds are not taken asthese have been taken first time. However, being legal grounds same are admitted for adjudication.
4. The Ld. Authorized Representative vehemently argued that authorities below were not justified in not allowing the benefit of section 11& 12 of the Act. He reiterated the submissions as made 2 Malwa Education S. S. before the ld. CIT(A). The Ld. AR submitted that the assessee had filed an application u/s 12A along with copy of Form No.10A on 02.04.2007. He submitted that the authorities below ought to have granted the exemption. The Ld. AR was confronted with the provisions of section 12A and 12AA. The Ld. AR could not respond the query raised during the course of hearing. On the contrary, the Ld. DR supported the order of the authorities below and took us through the provisions of section 12A.
5. We have heard the rival contentions and perused the material available on record. We find that before the Ld. CIT(A), the assessee itself had considered the facts that the assessee trust is eligible to take advantage of provisions of sections 11 & 12 from the A.Y. 2008-09.
Having considered the provision of section 12A were unable to accept the contention of the assessee that he is entitled for the benefit under the deeming category of registration. These additions grounds of assessee are dismissed.
6. Now coming to the grounds of appeal.
The assessee has raised following grounds of appealas under:
"1.That on the facts and in the circumstances of the case the Ld. CIT(A) erred in maintaining following disallowance out of the various expenses:
S. No. Nature of Expenses Amount (Rs.)
1 Out of car Running & 28,351
maintenance Expenses
2 Out of depreciation 75,736
3 Out of conveyance 58,263
Expenses
3
Malwa Education S. S.
4 Out of Insurance Expenses 10,683
1,73,033
The expenses as disallowed by the Assessing Officer and as maintained by the Ld. CIT(A) without properly appreciating the facts of the case and submission made before him was not proper.
2.1 That on the facts and in the circumstances of the case the disallowance as made by the Assessing Officer of Rs.5,61,620/- by invoking the provision of section 40(a)(ia) of the Act even when no such amount was shown as payable in the books of account is not justifiable in view of direct decision of the Hon'ble' Allahabad High Court in the case of Victor Shipping P. Ltd.
2.2 That on the facts and in the circumstances of the case, the ld. Assessing Officer erred in disallowing entire amount of expenses by invoking the provision of section 40(a)(ia) of the Act even when 30% of such expenses can only be disallowable under this section."
7. Ground No.1 is against ad hoc disallowance made by the AO and confirmed by the Ld. CIT(A).
The Ld. Counsel for the assessee submitted that the AO has made ad hoc disallowance without any concrete evidence, and on the basis of conjectures and surmises alone.
8.On the contrary, the Ld. DR supported the order of the AO.
9. We find merit into the contention that AO has made ad hoc disallowance on estimate basis. No material is placed on record that the vehicles were used by the assessee for other than the business activity. Therefore, in our view, the AO was not justified in disallowing the depreciation and insurance on cars. Further, the AO made disallowance on ad hoc basis in respect of conveyance and 4 Malwa Education S. S. travelling expenses, student welfare expenses and also without bringing any material evidence on record. We, therefore, direct the AO to delete this disallowance.
10. Now coming to ground No.2.1 & 2.2 against the disallowance made by invoking provisions of section 40(a)(ia).
11. Apropos ground no.2.1, the Ld. AR has relied upon the judgment of Hon'ble' Allahabad High Court referred in the case of Victor Shipping P. Ltd. This judgment has been over ruled by the Hon'ble Apex Court in the case of Palam Gas Services vs. CIT vide judgment dated 3rd May 2017, Thus, ground 2.1 is rejected.
12. Apropos ground no.2.2,the counsel for the assessee reiterated the submissions made before the Ld. CIT(A) in para4.6.1 & 4.4.2 of his submissions which are reproduced as under:
"4.6.1 In the P & L a/c the assessee had debited kitchen Exp. Of Rs.14,73,071/-. In this context vide office query letter dated 20.12.2007 along with notice u/s 142(1), the assessee was asked to furnish necessary details/evidences to justify its claim of expenditure. The assessee was required to furnish details/evidences on 14.12.2007.
4.6.2 The assessee had furnished the copy of the ledger of the expenses however no other details especially the vouchers related to these expenses were furnished. Besides this the assessee had contended that this expenditure was primarily incurred for proving meals to the students."
10. On the contrary Ld. DR supported the order of the AO.
11. We have heard the rival contentions, the assessee has relied upon the Judgment of Hon'ble Delhi High Court in the case of CIT vs. Ansal landmark (Supra). The Hon'ble High Court has confirmed the findings of the Tribunal that if the recipient had offered 5 Malwa Education S. S. thepayment for taxation no disallowance u/s 40(a)(ia) can be made. Respectfully, following the same we hereby set aside this issue to the file of the AO to verify whether the recipients have offered the payment made to them for tax. These grounds of the assessee are partly allowed for statistical purpose.
12. In the result, the appeal of the assessee is partly allowed for statistical purpose.
Order was pronounced in the open court on 10.01.2018.
Sd/- Sd/-
(MANISH BORAD) (KUL BHARAT)
लेखा सद य/ACCOUNTANT MEMBER या यक सद य / JUDICIALMEMBER
Indore; दनांक Dated : 10/ 01/2018
Patel, P.S/. न.स.
Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file.
By order Private Secretary/DDO, Indore 6