Income Tax Appellate Tribunal - Delhi
Vikramaditya Education Society, ... vs Assessee on 9 February, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : H : NEW DELHI
BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER
AND
SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
ITA No.1698/Del/2011
Assessment Year : 2007-08
Vikramaditya Education Vs. DCIT,
Society, Sonepat Circle,
VPO Baliyana, Sonepat.
Distt. Rohtak.
PAN : AAFFV9779E
(Appellant) (Respondent)
Assessee by : Shri Gautam Jain, Advocate
Revenue by : Shri Tarun Seem, Sr.DR
ORDER
PER A.D. JAIN, JUDICIAL MEMBER
This is an appeal filed by the Assessee for Assessment Year 2007-08 against the order dated 09.02.2011 passed by the CIT (A)- Rohtak, taking the following effective grounds:-
"1. That the learned Commissioner of Income Tax (Appeals), Rohtak has grossly erred both in law and on facts in upholding the disallowance of Rs.1,19,723/- u/s 10(23C) (iiiad) of the Act.
2. That without prejudice to the aforesaid, the learned Commissioner of Income Tax (Appeals), ought to have held that income of Rs.1,19,723/- is also eligible for exemption u/s 11 of the Act.
3. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the addition of Rs.15,94,000/- representing corpus donations received by the appellant society by invoking section 115BBC of the Act.2 ITA No.1698/Del/2011
4. That the learned Commissioner of Income Tax (Appeals), has further erred both in law and on facts in upholding the levy of interest u/s 234B of the Act.
5. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in framing the order of assessment without granting any fair and proper opportunity of being heard to the appellant and the same is contrary to the principles of natural justice."
2. By way of ground No.5, the assessee has contended that the Ld. CIT (A) has failed to grant fair and proper opportunity of hearing to the assessee.
3. The assessment in this case was completed u/s 144 of the IT Act. Before the Ld. CIT (A), vide written submissions dated 03.02.2010 (copy at APB 23-31), the assessee submitted, inter alia, as follows:-
"4. In fact the accountant of the appellant did, appear on the said date, but I was asked by the assessing authority to come after some days verbally. But unfortunately, his attendance was not noted on 09.12.09. When he again attended office later on, he was confirmed that case was going to be time barred, it has been finalized and the assessment made Ex-parte u/s 144 of the I income tax act. The assessment finalized u/s 144 is thus unjustified and is liable to be set aside.
4 (a) In any case, without prejudice to the above said contention Ld A.O. wrongly assessed surplus income amounting to Rs. 1,19,723/-, which had been claimed by the appellant society as exempt u/s 10(23 C)(iiiad) of the income tax act, wrongly relying upon the judgment of the Hon 'ble Uttarakhand High Court in the case of CIT Vs. Queen Educational Society reported in 177 Taxmann
386. He erred in misreading and misinterpreting the said judgment.
(b) 1n fact, there in no doubt that in the Memorandum of Association and Aims and Objects, one of the Objects is for setting personal disputes of people in peaceful manner, for eradication of social evils Like dowry, Drug Addiction, Alcoholism, Smoking etc. and also to help people in drought, floods and other natural calamities. It does not mean that the society does not exit solely for imparting education.
3 ITA No.1698/Del/2011(c) The legal position is thus well established on the strength of the various judgments that if a trust or society exists solely for the educational purpose and it runs an educational institution, its income will be the income of the educational institution and therefore exempt u/s 10(23 C) (iiiad) of the income tax act. The fact, that the appellant had other objects will not disentitle it to the exemption so long as the activity carried on by it in that assessment year was that of running an educational institutional and not for profit.
In view of the above said facts & legal position, it is submitted that the appellant society is entitled to exempt u/s 10(23 C) (iiiad) of the income tax act
5. The addition of Rs. 15,94,000/- representing donation to the corpus fund of the appellant society by various donors is unjustified. The Ld A.O. is wrong in holding that the appellant has no details of these donations & are made by some anonymous persons. 1n fact, there are complete details of such donors in its account books.
Now, the ground of appeal are discussed as under
The 1st ground of appeal is general in nature.
The 2nd ground of appeal is against completing the assessment U/s 144 of the act. In spite of the fact that all requisite information, in the possession of the appellant, was already filed/explained to the Ld AO. on different dates and this fact has been accepted by the Ld A.O in para 3 page 2 of the assessment order under appeal. Under these circumstances the Ld A.O. should have passed the order U/s 143(3) of the act and not U/s 144 of the act.
The 3rd ground of appeal is against denial of exemption U/s 10(23C)(iiiad) of the income tax act. The said section is reproduced as under:-
"any university or other educational institution existing solely for educational purposes and not/or purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed."
The Ld A.O. has alleged that some objects of the society do not relate to education. The primary objects of the appellant society is imparting education and for fulfillment of that object the society is running a B. Ed college and this fact has been accepted by the Ld A.O. in para 2 of the assessment order under 4 ITA No.1698/Del/2011 appeal. The Hon'ble Punjab & Haryana High Court in the case of ClT Panchkula Vs. Haryana Ware Housing corporation reported at 43 Indian Taxation Reports page 580 has held as "if the primary or predominant object of any institution is charitable, any other object which might not be charitable but which is ancillary to dominant purpose eligible as valid charitable institution."
The ratio of judgment delivered in the above judgment is fully applicable to the facts of the case. The Ld A.O. while denying the exemption U/s 10(23C)(iiiad) of the act has relied on the judgment of Hon'ble Uttarakhand High Court in the case of CIT Vs. Queens Educational Society. The said judgment was over ruled by the jurisdictional High Court in the case of Pine Grove International Charitable Trust vs, Union of India reported at 2 Saral e-taxation page 102. And as such your good self is prayed to allow the exemption claimed U/s 10(23C) (iiiad) of the act.
The 4th ground of appeal is against addition of Rs. 1594000/- made u/s 115BBC(i) of the act. This section applies only where no detail of contribution has been maintained by the institution. Your appellant is maintaining complete details of the persons who had contributed towards corpus of Rs. 15,94,000/-. The appellant was asked by the Ld A.O. to file such details in the next week but when the accountant of the appellant reached the office of the Ld A.O. he was told that your case has been decided and as such the required details could not be filed during the course of assessment. The required details are attached here with for your kind consideration.
The 5th ground of appeal is against charging interest U/s 234B of the act. The Hon'ble P&H High Court in the case of CIT Vs. Sushila Devi Jain reported at 191 CTR 175 has held "Interest u/s 234B is levied on the basis of returned income and not on the basis of assessed income."
Sir, the appellant would be too willing to provide any further information, which your good self shall require to dispose off the appeal." (Relevant portion at APB 24 to 27).
4. However, apropos Ground Nos.1 & 2, the Ld. CIT (A) held as follows:-
"5. ......For Ground No.2 of appeal, the AR submitted before me that all the requisite information was filed/explained to the A.O. on different dates during the assessment proceedings. Therefore, the A.O. should have passed the order u/s 143 (3) and not u/s 144 of the IT Act.
5 ITA No.1698/Del/2011I have considered the issue and the submissions made by the AR. The A.O. gave a finding of fact that no details were furnished before him in spite of sufficient opportunities. The AR could not controvert the above finding of the A.O. by any documentary evidence. Therefore, the action of the A.O. is upheld and the ground of appeal is dismissed.
5.1 With regard to the denial of claim of exemption u/s 10 (23C) (iiiad), contested in ground No.3 of appeal, the AR submitted that the primary object of the appellant society is imparting education and for the fulfillment of that object, a primary school is being run. He relied upon the case law of jurisdictional High Court in CIT vs. Haryana Warehousing Corporation, 43 ITR 580 wherein it was held that if the primary or predominant object of any Institution is charitable, any other object which might not be charitable but which is ancillary to dominate purpose -eligible as valid charitable institution. The AR further submitted that the case law of Queens Educational Society of Uttrakhand High Court has been reversed by the jurisdictional High Court in the case of Pinegrove International Charitable Trust vs. UOI and therefore exemption claimed u/s 10 (23C) (iiiad) is allowable.
I have considered the issue and the submissions made by the AR. Section 10(23C)(iiiad) mandates that the Educational Institution should exist solely for educational purposes. In the present case, from the Aims & Objects of the society as recorded in the Memorandum of Association and from the expenditure incurred under various heads, it is evident that the appellant society is not existing solely for educational purposes. The case law relied upon by the AR is distinguishable on facts in as much as in the present case it is not a question of being charitable institution but whether the appellant is existing solely for educational purpose or not. The A.O. has not denied the exemption on the ground of making systematic profits as held in the case of Queens Educational Society of Uttrakhand High Court but on the ground that the exemption u/s 10 (23C) (iiiad) is not available as the society is not existing solely for education purposes. In view of the above, the action of the A.O. in denying exemption u/s 10 (23C) (iiiad) is upheld and this ground of appeal is dismissed."
5. So far as regards ground No.3, Ld. CIT (A) held as follows:-
"5.2 With regard to ground No.4 of appeal, the AR submitted that the provisions of section 115BBC (i) are applicable only where no details of contribution has been maintained by the Institution. In the present case, the appellant is maintaining 6 ITA No.1698/Del/2011 complete details of persons who contributed towards the corpus of ` 15,94,000/- and the A.O. completed the assessment before the appellant could file the details. The AR furnished a statement before me giving list of 82 donors who contributed not more than ` 20,000/- each.
I have considered the issue and the submissions made by the AR. No cogent reasons have been brought on record by the AR as to why the said details could not be furnished before the A.O. Further, no application for admission of additional evidence of the contributions mark by donors has been filed before me. Therefore, I deem it proper not to entertain this evidence. In view of the above, the action of the A.O. in making the addition u/s 115BBC (i) of ` 15,94,000/- is upheld and the ground of appeal is dismissed."
6. Concerning Ground No.4, it was held by the Ld. CIT (A) that:
"5.3 With regard to the charging of interest u/s 234B of the IT Act, the AR contested the action relying upon the case of CIT vs. Sushila Devi Jain, 191 CTR 175 (P&H) wherein it was held that interest u/s 234B is levied on the basis of returned income and not on the basis of assessed income.
It is seen from the above referred case law that it is with respect to the levy of interest u/s 234B upto the completion of assessment u/s 143 (1) (a). In the present case, the assessment has been completed u/s 143 (3) and therefore the case law is distinguishable on facts. In view of the above, the action of the A.O. is upheld and the ground of appeal is dismissed."
7. A bare perusal of the aforesaid observations of the Ld. CIT (A) regarding the issues involved shows that indeed, the grievance of the assessee, taken by way of Ground No.5, to the effect that fair and proper opportunity of hearing was not granted to the assessee by the Ld. CIT (A), is found to be justified and is accepted as such. The Order under appeal has been passed without even adverting to the afore- quoted written submissions filed by the assessee before the Ld. CIT (A). Therefore, it would be in the interest of justice to remit this case to the file of the Ld. CIT (A), to be decided afresh, in accordance with 7 ITA No.1698/Del/2011 law on affording due and adequate opportunity of hearing to the assessee. The assessee, no doubt, shall cooperate in the proceedings before the Ld. CIT (A). Held accordingly.
8. In the result, for statistical purposes, the appeal of the assessee is treated as allowed.
The order pronounced in the open court on 12.04.2013.
Sd/- Sd/-
[T.S. KAPOOR] [A.D. JAIN]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated, 12.04.2013.
dk
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
TRUE COPY
By Order,
Deputy Registrar,
ITAT, Delhi Benches