TaxTMI 
TaxTMI 
2016 (5) TMI 412
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....untants of India (formerly known as the Institute of Cost and Works Accountants of India) (hereinafter referred to as ICWAI) is an Institution established under the Cost and Works Accountants Act, 1959 for the regulation of the Profession of Cost and Works Accountants. The objectives of the ICWAI are specified in the Cost and Works Accountants Act, 1959 and the Cost and Works Accountants Regulations, 1959. The main objects of ICWAI are :- i) enrolling students for the examinations conducted by the ICWAI and framing regulations for training of the students. ii) conducting various examinations of the ICWAI. iii) imparting training to the registered students by way of establishing and operating Coaching Administration. iv) Granting Certificate of Membership to persons qualifying specified examinations conducted by the ICWAI. v) Imparting or arranging to impart practical and/or theoretical training to the Members of the ICWAI- Continuing Education Programmes. 3.1 In the Preamble to the CWA Act it was stated that the said Act was being enacted to make provision for the regulation of the profession of cost and works accountants. 3.2 The ....
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....uch expenses were reduced from the gross incomes for claiming exemption of the net income u/s 10(23A). It was specifically submitted before the Learned AO that all expenses, other than those considered as directly relating to the income covered u/ s 10(23A), were actually 'Applications' of the balance of incomes of the year and so such incomes to the extent of the 'Application' were exempt u/s 11(l)(a). 3.4 The Learned AO stated in the order that according to him the expenses not specifically considered by the assessee towards income, eligible for exemption u/s 10(23A), should be considered as "Common Expenses" and the same should be apportioned in between the segment u/s 10(23A) and segment u/s 11(1) on the basis of the gross incomes considered under sections 10(23A) and 11(1). The Learned AO determined the ratio of 10.21:1 of incomes in between the segment u/s 10(23A) and the segment u/s 11(1). The Learned AO applied the above-mentioned ratio determined by him and held that the expenses aggregating to Rs. 16,69,67,652/-, being other than the particular expenses shown as relating to the income eligible for exemption u/s 10(23A), should be allocated as Rs. 15,20,....
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....rds its educational activities. The assessee submitted that the approval given by the Government of India u/s. 10(23A) shows the recognition by the Govt. of India of the assessee's activities for the regulation of the profession of accountancy. The registration by the Income-tax Department u/s 12A recognises the assessee's charitable status. The assessee submitted that those expenses had been incurred by the assessee not to earn any income but those were actually 'Application' of the incomes towards educational activities of the assessee. 3.7 The assessee submitted that the capital expenses had been incurred by the assessee for acquiring new fixed assets for the purposes of its educational activities, out of the Incomes of the appellant and therefore such capital expenses were of the nature of 'Applications' of incomes which were exempt u/s l1(l)(a). The assessee submitted that there should not be any allocation of the capital expenditure in between the incomes considered u/s. 10(23A) and 11(1)(a). 3.8 The assessee submitted reiterated its submissions before the Learned CITA and prayed that the Learned AO may be directed to consider the entire capital expendit....
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....11 segment in the ratio of direct expenses incurred by each of the segments. He further placed copy of the scrutiny assessment orders passed by the ld.AO for the A.ys 2010-11, 2011-12 & 2012-13, wherein it has been mutually agreed by both the department as well as the assessee institution for apportionment of common expenses in the ratio of direct expenses incurred by the respective segments. 7. We have heard the rival submissions and perused the materials available on record. The facts stated herein above remain undisputed and hence the same are not reiterated herein for the sake of brevity . The short point that requires to be adjudicated is apportionment of common expenses/indirect expenses between section 10(23A) segment and section 11 segment in a rational manner. The ld.AO has apportioned the same in the ratio of gross receipts of the respective segments. However, on perusal of the scrutiny assessment orders framed u/s. 143(3) of the Act by the ld.AO for the A.Ys 2010-11, 2011-12 & 2012-13, it is seen that both the revenue as well as the assessee institution had arrived at a consensus with regard to apportionment of common expenses/indirect expenses in the ratio of direct ....
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....that the provision had been made on the basis of certain acceptable scientific method to a reasonable certainty in reference to past records and he declined to accept the provision as an ascertained liability. The ld. AO also stated that the claim of the assessee to treat the provision made for arrear salaries was being disallowed by him since according to him the liability had allegedly been made on estimate and said liability had allegedly not crystallised during the year. 9.2 The assessee submitted that the liability of Rs. 2,90,19,741/- had been calculated only on the basis of the past records of the concerned employees and the said liability should not be considered as an alleged unascertained liability. The assessee further submitted that it had also been brought to the attention of the ld. AO that the said liability had since been discharged by the assessee by actual payments made during the FY 2008-09 itself and in the subsequent two FYs which would prove the correctness in computation of the liability towards arrear salaries. The assessee submitted that the ld. AO did not mention anything in his order about the explanations furnished by the assessee and also the fact of....