Indian Kanoon - Search engine for Indian Law

Income Tax Appellate Tribunal - Jaipur

National Technical Education Society, ... vs Acit, Alwar on 28 November, 2016

           vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj
       IN THE INCOME TAX APPELLATE TRIBUNAL,
                 JAIPUR BENCHES (SMC), JAIPUR

            Jh HkkxpUn] ys[kk lnL; ds le{k
      BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER

            vk;dj vihy la-@ITA No. 733/JP/2016
            fu/kZkj.k o"kZ@Assessment Year : 2010-11

M/s. National Technical Education Society     cuke  The ACIT
40GH-30, Manu Marg, Housing Board, Vs.              Circle- 1
Alwar                                               Alwar
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAATN 3805 G
vihykFkhZ@Appellant                                 izR;FkhZ@Respondent

      fu/kZkfjrh dh vksj ls@Assessee by: Shri K.C. Mehta
      jktLo dh vksj ls@ Revenue by :Smt. Poonam Rai, DCIT-DR

            lquokbZ dh rkjh[k@ Date of Hearing :       25/11/2016
            ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 28/11/2016

                         vkns'k@ ORDER

PER BHAGCHAND, AM

The assessee has filed an appeal against the order of the ld.

CIT(A), Alwar dated 03-05-2016 for the assessment year 2010-11 raising therein grounds as under:-

''1. That the ACIT, Circle- 1, Alwar erred in passing the impugned order u/s 154 of the Act even when under the facts and circumstances of the case there was no mistake apparent on record in the assessment order uu143(3) dated 15-03-2013. Hence, the impugned order u/s 154 is bad in the eyes of law and deserves to be quashed.

National Technical Education Society vs. ACIT, Circle- 1, Alwar .

2. That without prejudice to the above ground, even on facts of the case the AO erred in holding that the application of income during the year was only 81.19% and the surplus was 18.18% while in fact the application of income was 124.49% which was more than the prescribed utilization limit of 85.00%. Accordingly, the addition of Rs. 2,04,475/- made by the AO which was revised to Rs. 2,41,747/- deserves to be deleted.'' 2.1 The facts as to the issue in question emerges from the order of the ld. CIT(A) is reproduced as under:-

''4.3 I have perused the rectification order as well as the submissions made by the appellant and find that rectified assessed income of the trust has been taken by the AO at Rs. 2,04,475/- after holding that surplus shown in the accounts exceeds 15% of the total receipts. The claim of depreciation was disallowed by the AO on the ground that capital expenditure has already been allowed as an application of income and further allowing depreciation would amount to claiming double deduction against the receipts/ income of the trust.

4.4 The appellant has stated that surplus income of the assessee trust does not exceed the threshold limit of 15% of total receipts. The AO was wrong in adopting the total income of Rs. 53,71,573/- and expenses of Rs. 49,89,565/-

.These figures of receipts and expenses mentioned in the show cause notice are not correct. The total income and expenses of the head office and branch are to be taken as per the consolidated income and expenditure account. It is further submitted that even if the claim of depreciation of Rs. 6,28,203/- is not allowed as expenditure still the application of income would be more than the total receipts.

National Technical Education Society vs. ACIT, Circle- 1, Alwar .

4.5 I have carefully considered the submissions made and find that the only issue involved in the case is as to whether the trust has incurred expenses to the extent of 85% of the receipts/income of the trust. Further, as regards the issue of claim of depreciation as an application of income is concerned, I find that amendment was made to the Provisions of Section 11 of the I.T. Act w.e.f. A.Y. 2005- 16,wherein it has been clarified that the claim of deduction for depreciation will not be allowable in a case where any deduction or allowance has been claimed for acquisition of such asset. The application has also in the written submissions filed accepted that the claim of depreciation may not be allowed as an application of income and has stated that despite this, there is an excess expenditure.

4.6 As per the provisions of Section 11 of the I.T. Act, a trust is required to accumulate not more than 15% of the total receipts/income in a year. I find that appellant has declared income and expenses for the trust on account of head office and branch separately. On consolidation of accounts of the head office and branch, the total income of the trust would come to Rs. 51,23,233/- and total expenses would come to Rs. 41,13,021/- which result in a surplus of Rs. 10,10,212/- which clearly reflects a surplus of more than 15% of the total income which is not permissible under the provisions of the Act. I find that 15% of the total income comes to Rs. 7,68,485/- and as against this the surplus generated by the trust in the period under consideration is Rs. 10,10,212/-.

4.7 Thus in view of the above discussion, the excess over 15% of the income (maximum, which can be accumulated) comes to Rs. 2,41,727/- as against which the AO has computed the same at Rs. 2,04,475/-. The mistake being apparent from record is prima facie rectifiable however, AO is being directed to re-check the computation, while giving effect to this order.'' 4 ITA No. 733/JP/2016 National Technical Education Society vs. ACIT, Circle- 1, Alwar .

2.2 After perusing the submissions of the both the parties and materials available on record, it is noticed that the ld. CIT(A) has directed the AO to re-check the computation in giving effect to his order. The relevant para of ld. CIT(A)'s order is reproduced as under:-

''4.7 Thus in view of the above discussion, the excess over 15% of the income (maximum, which can be accumulated) comes to Rs. 2,41,727/- as against which the AO has computed the same at Rs. 2,04,475/-. The mistake being apparent from record is prima facie rectifiable however, AO is being directed to re-check the computation, while giving effect to this order.'' It is further observed from the arguments of the ld. AR of the assessee that the main grievance of the assessee is regarding arithmetical calculations towards surplus and application of income which is clear from the grounds taken by the assessee. Therefore, I confirm the direction of the ld. CIT(A) to re-check the surplus and computation of application of income and then the net effect will be given by the AO. In this view of the matter, the appeal of the assessee is restored to the file of the AO to decide in view of the above directions. Thus the appeal of the assessee is allowed for statistical purposes.

National Technical Education Society vs. ACIT, Circle- 1, Alwar .

3.0 In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 28 /11/2016 Sd/-

                                                         ¼HkkxpUn½
                                                       (Bhagchand)
                                            ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur
fnukad@Dated:-                 28/11/ 2016

*Mishra

vkns'k dh izfrfyfi vxzfs "kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- M/s. National Technical Education Society, Alwar

2. izR;FkhZ@ The Respondent- The ACIT, Circle- 1, Alwar

3. vk;dj vk;qDr¼vihy½@ CIT(A).

4. vk;dj vk;qDr@ CIT,

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 733/JP/2016) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar