Income Tax Appellate Tribunal - Agra
Chaudhary Hardayal Singh Shiksha ... vs Department Of Income Tax on 28 November, 2013
I .T . A . No . : 1 7 9/ A g r a / 2 0 1 3
A s s e s s m e n t y e ar : 2 0 0 9 - 1 0
Page 1 of 5
IN THE INCOM E TAX APPELLATE TRIBUNAL,
AGRA BENCH, AGRA
[ Coram : Bhavnesh Saini, JM, and Pramod Kum ar, AM]
I.T.A. No.: 179/Agra/2013
As sessment year: 2009-10
Income Tax Officer
Ward 5 (1), Firozabad
................Appellant
Vs.
Chaudhary Hardayal Singh Shiksha Samiti ...............Respondent
Village : Pend hat, Post Eka, Tehsil Jasrana
District Firozabad
[ PAN : AABTC0381M]
Appearances by:
Waseem Arshad, fo r t he appellant
Ra vind ra Kumar Agarwa l, fo r the respondent
Date of co ncluding the hearing : November 28,2013
Date of pronouncing the orde r : De cember 20, 2013
O R D E R
Per Pramod Kumar:
1. By way of this appeal, the appellant Assessing Officer has called into question correctness of the order dated 15 th March 2013, passed by the Commissioner (Appeals) in the matter of assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for the assessment year 2009-10.
2. In the first two grounds of appeal, which are interconnected and which we will take up together, the Assessing Officer has raised the following grievances:
1. That the Ld. CIT(A)-I1, Agra has erred in law and on facts in holding that the assessee is entitled to exemption u/s 10(23C)(iiiad) and in deleting the addition of Rs 37,24,193 I .T . A . No . : 1 7 9/ A g r a / 2 0 1 3 A s s e s s m e n t y e ar : 2 0 0 9 - 1 0 Page 2 of 5
2. That the Ld. CIT(A)-I1, Agra has erred in law and on facts in holding that the loan of Rs 10,00,000 given to M/s Hardayal Milk Products Pvt Ltd, without interest, cannot be for profit despite the fact that four members of the managerial committee are also directors of the said company, and president and vice president of the society are also relatives of the director of the company.
3. To adjudicate upon these grievances, only a very few material facts need to be taken note of. During the course of the assessment proceedings, the Assessing Officer noticed that as the assessee has given an interest free loan of Rs 10,00,000 to a commercial organization in which members of the managerial committee are the directors, it is clearly established that the society does not exist solely for educational purposes. Accordingly, deduction under section 10(23C)(iiiad) was declined. Aggrieved, assessee carried the matter in appeal before the CIT(A). Learned CIT(A) held that the mere fact that the assessee had advanced an interest free loan of Rs 10,00,000 for a short period does not obliterate the fact that the assessee was existing solely for educational purposes and no other activities were carried out. He also noted that the conditions laid down under section 10(23C) were duly satisfied and as such the exemption under the said section could not be declined. The short grievance of the Assessing Officer is against the CIT(A)'s granting exemption under section 10(23C) even though, as the grounds of appeal, vehemently emphasize , the assessee trust " was not existing solely for educational purposes", and this stand is supported by the undisputed finding that a non interest bearing advance was given to a concern in which members of the managerial committee had interest.
4. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case in the light of applicable legal position.
5. We find that it is an undisputed position that the assessee did give an interest free loan of Rs 10,00,000 to a commercial concern, in which members of the managing committee were interested, but that loan was for a very short period. Even as we note this position, we find that the requirement of Section I .T . A . No . : 1 7 9/ A g r a / 2 0 1 3 A s s e s s m e n t y e ar : 2 0 0 9 - 1 0 Page 3 of 5 10(23C) is that the institution must exist "solely for educational purposes" and that the learned CIT(A) has held that this short term loan does not alter or change the purposes for which the institution exists. A transaction of this nature does not obliterate or dilute the objects of the assessee institution. It is also important to bear in mind that the present is quite distinct from a situation envisaged in Section 13 which deals with the situations in which benefits of Section 11 can be declined. There are no such corresponding disabling provisions so far as benefits of Section 10(23C) are concerned. In view of these discussions, as also bearing in mind entirety of the case, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter.
6. Ground No. 1 and 2 are thus dismissed.
7. In ground no. 3, the appellant has raised the following grievance:
That the Ld. CIT(A)-I1, Agra has erred in law and on facts in deleting the addition of Rs 12,65,060 holding that that the AO has not given any reasons for not accepting agriculture income even though AO has mentioned reasons in his assessment order
8. Learned representatives fairly agree that this issue is covered, in favour of the assessee, by our decision dated 18 th October 2013 in assessee's group case, wherein, dealing with materially identical situation, we had held as follows:
10. In ground no 3, the Assessing Off icer is aggr ie ved of the CIT(A) deleting the add it ion of rs 21,76,100 in respect of a gricultu ral income.
11. As far a s this add itio n is concerned, the relev ant material facts are like thi s. Dur ing the course of the assessment proceedings , th e Assessing Off icer noted that the assessee had declared an agricultural in come of Rs 25,23,230 again st w hich expenditu re of only Rs 43,500 is shown. The Assessing Off icer was of the view that this expense is quite at variance with the trend shown in earlier years in which the income was 7.98 times the expenses shown o n a griculture. Based on this work ing he re computed the estimated a gricultur al income and to the extent agr icultu ral income declared exceeded the amount so computed on hypothe tical bas is, the add it ion w as made as income f rom other sources. In appeal, learned CIT(A) noted that all the in come and expenses are duly supported by I .T . A . No . : 1 7 9/ A g r a / 2 0 1 3 A s s e s s m e n t y e ar : 2 0 0 9 - 1 0 Page 4 of 5 books of acco unts and mand i receipts and vouchers e tc , and, as such, there was no o ccasion fo r est imation of in come by the Assessing Off icer.
Accordingly, the add ition was deleted. The Assessin g Off icer is not sat isf ied and is in appeal before us.
12. Havin g heard the rival co ntentio ns and hav ing p erused the material on record, we see no need to interfere in the well reasoned conclus ions arrived at by the CIT(A) . Once the details furn ishe d by the asse ssee, and evidences s ighted by the assessee, are not proved incorrect, there cannot be any occa sion to resort to estimat ion of income on the bas is of the trends fo r last years. Such deviat ions can at best be start ing point fo r inqu ires but cannot b e, by itself , reaso ns enough for add itions b eing made- as has been done in this case. Learned CIT(A) was, therefore, qu ite just if ied in deleting the impugned ad dit ion. We app rove his action and decline to interfere in the matter .
13. Ground No. 3 is also d ismissed.
9. We see no reasons to take any other view of the matter than the view so taken by us. Respectfully following the said decision, we uphold the order of the CIT(A) on this issue as well. No interference.
10. Grounds of appeal no. 3 is thus dismissed.
11. In ground no. 4, grievance raised is as follows:
That the Ld. CIT(A)-I1, Agra has erred in law and on facts in deleting the addition of Rs 15,00,000 which was given as donation by the assessee to Hardayal Charitable & Education Trust, ignoring that by doing so the assessee has indirectly applied its fund for purposes other than educational purposes as objects of of Hardayal Charitable and Educational Trust included objects which are not solely for educational purposes and does not qualify for exemption under section 10(23C)(vi).
12. So far as this grievance of the revenue is concerned, it is sufficient to take note of the fact that learned CIT(A) has given a finding , which is clear also from a perusal of letter dated 30 th March 2009 - copy of which is placed before us at page 41 of the paper book, that the amount so donated will be "exclusively utilized for educational and construction of campus building only". In the assessment proceedings, this amount was disallowed. The disallowance was reversed by the CIT(A) on having noted that the amount was used for I .T . A . No . : 1 7 9/ A g r a / 2 0 1 3 A s s e s s m e n t y e ar : 2 0 0 9 - 1 0 Page 5 of 5 permissible purposes only. Now the Assessing Officer contents that this application of funds establishes the fact that institution did not exist solely for educational purposes.
13. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case in the light of applicable legal position.
14. We are unable to see legally sustainable merits in the grievance of the Assessing Officer. Once it is an undisputed position, as is the position on the facts of this case, that the monies so given are to be used only for educational purposes, it cannot be said that merely because monies were used through another charitable institution, one could conclude that the institution did not exist solely for educational purposes. We, therefore, reject the grievance of the AO and confirm the action of the CIT(A) on this point as well.
15. Ground No. 4 is also dismissed.
16. In the result, the appeal is dismissed. Pronounced in the open court today on 20 th day of December, 2013.
Sd/- Sd/-
Bhavnesh Saini P ramod Kumar
(Judicial Member) (Accountant Member)
Agra, the 20 t h day of December, 2013
Copies to : (1) The appellant (2)The respondent
(3) The CIT (4) The CIT(A)
(4) DR (5) Gu ard File
By o rder etc
Income Tax Appellate Tribunal
Agra bench, Agra