TaxTMI 
TaxTMI 
2025 (5) TMI 1473
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....on No.56/Del/2024 (In ITA No.144/Del/2024) for AY 2018-19. ITA No.143/Del/2024 [Assessment Year : 2017-18] (Revenue's appeal) C.O.55/Del/2024 [Assessment Year :2017-18] (Assessee's Cross-Objection) 3. Briefly stated, the assessee is a society registered under Society Registration Act, 1860 and is also registered under s. 12A of the Act. The assessee society (trust/institution) as may be called, is also notified under s. 80G of the Act. As per the aims and objects stated in the Memorandum, the assessee society is formed with the object to establish educational institutions, schools, polytechnics, vocational, management training institutes and colleges etc. The assessee society is an umbrella entity for various educational institutions being run under the name of 'AMITY' with the setting up of schools way back in 1991, the society has set up university, schools, colleges across all fields like science, technology, medicines etc. These schools, colleges etc. are also affiliated to Central Board of Education with various universities and also its own university set up under the State Legislature. The assessee claims that the assessee is a society constituted for charitable purpos....
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.... above disallowance was based on facts, sound logic and proper reasoning and not some disallowance of arbitrary nature as stated by CIT(A). Whether for the same amount Ld.CIT(A) was correct in taking a view that since no disallowance was made in the original order dated 31.12.2019, the same could not be done in any fresh assessment or reassessment proceeding. 4. Whether for the amount of Rs. 5,31,06,000/- (Addition on account of payment made to concerns in which persons referred u/s. 13(3) are substantially interested.), the Ld.CIT(A) was justified in partly allowing the appeal of the assessee to the extent of confirmation of disallowance only to the amount of Rs. 1,51,84,400/-by treating 50% disallowance as excessive and allowing a disallowance of only 20% premised on the basis that specified persons have paid taxes at MMR. Whether for the amount 2,82,90,000/- which was paid to Stratega Finance Company Pvt. Ltd. by the assessee for AY 2017-18, the Ld.CIT(A) was justified in not treating the same as violation of section 13(1)(c) of IT Act i.e. payment made to specified person. 5. Whether for the amount of Rs. 358,25,00,000/- (Addition on account of violat....
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....n facts. 4. On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law, in confirming the addition of Rs. 1,51,84,400/- on account of payment made to entities in which specified persons are substantially interested treating the same as excessive and unreasonable under section 13(3) r.w.s 13(1)(c) r.w.s 13(2)(c) of the Act. (ii) That the above addition has been confirmed rejecting the submission and explanation given by the assessee to justify that the payments made by the assessee trust are neither excessive nor unreasonable and cannot be added invoking the provision of section 13(3) of the Act. (iii) That the above said addition has been confirmed arbitrarily by applying rate of 20% without there being any justification for the same. (iv) That the addition has been confirmed ignoring the detailed submission and explanation given by the assessee to justify that these payments have been made solely & exclusively for the activities of the assessee society & be allowed as application of income." 8. We now advert to respective issues arising in the present appeals here under. 9. Ground No.1 of the Revenue a....
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....at the enquiry on the issue of payments of salary to specified persons also made in original assessment by issuing show cause notice to this effect. The AO in the original proceedings however duly accepted the plea of the assessee towards salary payments and did not resort to any disallowance. The CIT(A) further noted that the salary payments made to Shri Atul Chauhan & Shri Aseem Chauhan by Dubai Branch has already been disallowed for the purposes of claiming exemption under s. 11 of the Act. The AO thus cannot take a different view on the basis of same facts. The CIT(A) also noted that in the absence of any evidence as to fair market value of the service, the Revenue ought not to sit in the arm chair of the assessee and decide the payment structure of salary/reimbursement. The CIT(A) also took note of fact that salary received from the trust have been duly offered in their respective individual return and thus Revenue has not suffered any loss by so-called excessive payments. The CIT(A) thus adjudicated the issue of disallowance towards excessive payment of salary in favour of the assessee. 10.6. The process of reasoning adopted by the CIT(A) are reproduced as under:- ....
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....ation, experience, designation, name of the institute where they were employed, etc. were submitted. The assessee submitted that after consideration of the above details, the Ld. AO duly admitted the salary payments and hence no disallowance was made on account of the same vide order assessment dated 29.04.2021 passed u/s. 143(3) of the Act (Refer Pg 3331-3353 of PB) Accordingly, at the very outset, it is reiterated that when the Hon'ble Delhi High Court had only allowed to grant a personal hearing and again pass the assessment order as per law, then having accepted the salary payments, ad-hoc disallowance of 50% on account of the same in the impugned assessment order involves the contempt of order of Court, and hence, the said disallowances are liable to be deleted. From the above one thing is clear that no disallowance was made in the original order however in the subsequent order on the basis of same facts addition/disallowance of Rs. 5,43,16,824/ has been made by the Ld. AO on account of 50% of the aggregate salary payments of Rs. 10,86,33,648/-. Two issues emerges (i) whether the AO can take a different view on the basis of same facts, (ii) wheth....
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....nt structure of salary/remuneration to be paid to the professors/administrative staffs. In other words, the department cannot manage or control the managerial affairs of the educational trust. These aspects would not come within the purview of the authorities to decide the income tax liability merely on suspicion that the assessee is claiming huge expenditures to get the corresponding benefits of allowable deductions. No grounds are raised by the revenue relating to the deletion of the additions made by the CIT (Appeals) before the Tribunal, whereas reference was made to the provisions of section 13(1)(c) of the Act only to draw support for denying exemption under section 11 of the Act. The Tribunal has rightly rejected the plea of the revenue as bereft of merit. The alleged breach of section 13(1)(c) of the Act based on these factors is baseless, wholly untenable. Thus, we answer the substantial question of law No. 1 in favour of the assessee and against the revenue" Considering the facts (i) that no disallowance was made in the original order, (ii) that salary paid to Atul Chauhan and Aseem Chauhan by Dubai Branch has already been disallowed in computat....
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....8,000/- made on account of professional charges being 50% of the total professional charges of INR 2,47,16,000/- paid to Ms. Pooja Chauhan. 11.1. With reference to the issue, the assessee submitted the details of audit work done and the qualification and experience of the internal auditor Ms. Pooja Chauhan to justify the professional charges. It was pointed out that Ms. Pooja Chauhan is a Chartered Accountant and is engaged in providing internal audit related services to the assessee since more than 18 years and to more than 35 institutions operating under the assessee trust situated in different geographical locations across the country. A copy of return of income of the recipients, ledger account etc. were placed. The AO however concluded that the payment of INR 2,47,16,000/- made to M/s. Pooja Chauhan & Associates is highly excessive and nothing but diversion of funds of the assessee trust to enrich the persons specified under s. 13(3) and thereby attracting the provision of s. 13(1)(c) of the Act. 11.2. The CIT(A) in first appeal observed that firstly, profit of M/s. Pooja Chauhan & Associates has been duly offered to tax and entire tax position is neutral; secondly, the ....
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....the CIT(A) that the action of the AO is not justified for several reasons viz these concerns are operational for more than 20 years; the services rendered by these concerns are sync of the profile and specialized executional capacity of such concerns; the copy of ITR and Audited Financial statement of these concerns show that such income has been offered to taxation by the different specified concerns with no loss to Revenue. 12.3. As regards justification of reasonableness of the payments, the assessee submitted before the CIT(A) as under:- • Cross Border Placement Pvt Ltd (Payment made Rs. 5,35,03,000/-) a. Company was established in 30.07.1996 The company has provided the placement services to the assessee trust which includes identifying the appropriate human resource, all necessary placement related support services, conduct of interviews and related support facilities. Further the company is extensively engaged in post qualification placement related services to students of the various universities of the assessee trust. It handles all placement cell related operations, coordinates with participating MNC's and domestic companies, manages the datab....
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....aining required approvals for setting up such projects, coordinate with Architects and Government authorities for approval of building plans, environmental approvals, pollution, fire safety and any other regulatory approvals that may be required for successful completion and commencement of the project. c. Also oversee and liaise with our contractors to ensure that the project follows the approvals given. Also, the company ensures the essential part of safety management i.e. preventive management of any mishappening by conducting regular meetings with concerned stakeholders. During the year a sum of Rs 2,44,19,000/-has been paid to the Company. A sum equivalent to 2% of the civil construction cost is paid to the company based on progress of the project each month due." 12.4. The assessee thus contended before the CIT(A) that these specified concerns were established and are operational for more than 20 years. These companies have also been subjected to scrutiny assessment in the past years and no additions have been made whatsoever. The assessee also contended that no disallowances have been made in the past towards such payments and doctrine of consistency required to ....
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....te, I am of the opinion that a disallowance of 20% of total payment would meet the end of justice. Addition of Rs. 1,07,00,600 is confirmed; the AO is therefore directed to delete the balance addition w.r.t. this entity. (ii) Stratega Finance Company Pvt. Ltd.- Rs. 2,82,90,000/- (inclusive of Service Tax and GST) The AO has stated that the major expense of the company is salary and incentives of Rs. 1,26,67,283/-, out of which 50% was paid to specified persons, and a profit of Rs. 1,08,22,325/- has been derived, le. about 44%. In this connection, it is submitted that the company was established way back in year 1986 on 07th of November. The company has handled and executed the support facilities in relation to obtaining the term loan facility, working capital credit and other financial support facility to the assessee trust during the year under consideration. Following services had been provided by the company to the assessee society during the year (a) Seeking various approvals and sanctions from governmental regulatory bodies (b) Furnishing of financials and liasioning thereof with regulatory bodies in educational sector i.e. State UG....
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....hart showing payments made to the concerns S. No. Name of concerns AY 2015-16 (FY 2014-15) AY 2016-17 (FY 2015-16) AY 2017-18 (FY 2016-17) AY 2018-19 (FY 2017-18) 1. Cross Border Placement Pvt.Ltd. 4,48,28,269 5,31,24,045 5,35,03,000 6,55,15,228 2. Stratega Fiannce Co.Pvt.Ltd. 1,82,83,200 2,71,77,520 2,82,90,000 3,02,59,500 3. Tegro India Pvt.Ltd. 3,89,20,740 4,54,12,040 2,44,19,000 4,47,92,240 12.8. The assessee thus contends that similar payments have been made in earlier years as well as in the succeeding years which has not been disturbed and therefore principle of consistency should be applied. The assessee vociferously submitted that considering the mammoth size of the assessee trust, the expenses incurred to achieve the objects of the assessee trust cannot be said to be excessive in any manner. The payments made are more than reasonable, having regard to the volume of work and nature of services. 13. The material facts that emerges are; (a) receipts from the assessee by these concerns have been duly offered to tax and therefore overall position is ta....
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....lly funds transferred to Dubai by the society during AY 2016-17 was taken to be difference of these two figures i.e. INR 358.25 crore. In the assessment proceedings, the source of investment made abroad was enquired. 16.2. In respect of funds remitted to Dubai, the assessee furnished the following documents to substantiate its claim that funds were remitted out of loan funds and the same have been added back in the computation of income and no exemption have been claimed under s.11 in respect of such remittances: * "Copy of RBI approval for acquisition and pledge of immoveable property by overseas overseas branch office of RBEF at UAE (Refer Pg 865 of PB) * Copy of letter from Axis Bank sanctioning the term loan facility (Refer Pg 866-879 of PB) * Copy of letter from Union Bank of India sanctioning the credit facility (Refer Pg 880-889 of PB) * Copy of letter with regards to start off-campus centre(s) (Refer Pg 890 of PB) * Copy of NOC issued by the Ministry of External Affairs for setting up off campus in Dubai (Refer Pg 895 of PB)." 16.3. The AO however did find the explanation of the assessee to be satisfactory and made the enti....
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....nbsp; Expenditure Incurred towards the object of the Trust 6,77,61,13,695 Less: Depreciation 1,17,94,20,118 Less: Provision for Gratuity 9,15,81,012 Add: Gratuity Paid 52,08,490 Add: Capital Expenditure 3,25,33,80,548 10,76,37,01,603 Less: Expenditure Incurred outside India has not been considered while 69,58,57,552 calculating application of Income u/s. 11(1) 10,06,78,44,050 Net Surplus/(Deficit) 8,28,81,533 Less: 15% of Gross receipts extent to available surplus 8,28,81,533 Net Taxable Income NILL Tax Due NILL Less: Taxes Paid (TDS) 5,99,31,362 Refund Due 5,99,31,362 Refund Due 5,99,31,362 Name: RITNAND BALVED EDUCATION FOUNDATION Address: E-27, Defence Colony New Delhi Status: AOP (TRUST) Financial Year: 01.04.2014 to 31.03.2015 Assessment Year: 2015-2016 P. A. No.: AAATR7314Q Statement of Assessable Income Amount (Rs.) Amount (Rs.) Gross Receipt as par income & Expenditure A/c 11,66,50,49,236 Less: Expenditure Incurred towards the object of the Trust 9,58,53,27,523 ....
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....o available surplus 2,25,87,87,141 Net Taxable Income Tax Due NIL Less: Taxes Paid TDS, TCS & Advance Tax 3,15,70,138 Refund Due 3,15,70,138 It shows that Gross Receipt as per Income & Expenditure A/c was Rs. 18,30,30,16,422/- and total expenditure including expenditure incurred outside India was Rs. 16,77,81,23,568/-. As the Gross Receipt (as per Income & Expenditure A/c) of Rs. 18,30,30,16,422 was more than total expenditure (including expenditure incurred outside India) of Rs. 16,77,81,23,568/-, it can be, presumed that the expenditure Incurred outside India was out of current years receipts. Therefore the same has to be disallowed u/s. 11(1)(c) as assessee has not obtained permission under proviso to sec 11(1)(c). As the assessee has suo-moto disallowed the same (Rs.2,47,40,93,045/-) in the computation Itself, addition of same by AO would result in double addition. The AO is therefore directed to delete this addition. This ground of appeal is allowed." In the present year On merits The AO held that the money set aside in earlier year was used for these expenses and added the same u/s. 11(1)(a). ....
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....i. The assessee has categorically submitted that no benefit has been obtained under s. 11 in relation to such foreign remittances. The assessee has prepared the computation of income and has claimed exemption only in regard to the income applied for charitable purposes in India. No expenditure incurred abroad has been claimed as applied in India. 16.6. Under these facts, the nuanced analysis by the CIT(A) in AYs 2018-19 and 2017-18 cannot be faulted with. No cogent reasons has been brought on record by the Revenue to depart from the view expressed by the CIT(A). 16.7. We thus decline to interfere. Ground No.5 of the Revenue's appeal is thus dismissed. 17. In the result, the appeal of Revenue in ITA No.143/Del/2024 [Assessment Year 2017-18] is dismissed and Cross Objection of the assessee in C.O.No.55/Del/2024 [Assessment Year 2017-18] is allowed. ITA No.144/Del/2024 [Assessment Year : 2018-19] (Revenue's appeal) C.O.56/Del/2024 [Assessment Year :2018-19] (Assessee's Cross-Objection) 18. The grounds of appeal raised by the Revenue read as under:- 1. "Whether on the facts and circumstances of the case, the Ld.CIT(A) has erred both on facts and in law in allowi....
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.... fresh assessment or reassessment proceeding disregarding the fact that Hon'ble High Court of Delhi had given liberty to revenue to conduct its proceedings without any preconditions. 8. Whether for the amount of Rs. 1,29,53,000/- (Addition on account of professional charges paid to specified persons), the Ld.CIT(A) was justified in allowing the appeal of the assessee by treating the above disallowance as ad-hoc and not permissible u/s. 13(1)(c) of the IT Act, disregarding the very fact that the above disallowance was based on facts, sound logic and proper reasoning and not some disallowance of arbitrary nature as stated by CIT(A). Whether for the same amount Ld.CIT(A) was correct in taking a view that since no disallowance was made in the original order dated 29.04.2021, the same could not be done in any fresh assessment or reassessment proceeding disregarding the fact that Hon'ble High Court of Delhi had given liberty to revenue to conduct its proceedings without any preconditions. 9. Whether for the amount of Rs. 43,10,17,322/- (Addition on account of payment made to concerns in which persons referred u/s. 13(3) are substantially interested.), t....
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.... AY 2014-15 and 2015-16 on the above issue, the same is in violation of principle of consistency if added in AY 2018-19. Whether the Ld.CIT(A) was justified in taking a view that payments made to Facebook Ireland Limited are advertisement charges used for enrolling the foreign students with Amity India and not in any foreign country therefore the addition with respect to payment to above entity should be deleted. 12. Whether the CIT(A) was justified in partly allowing the appeal of assessee for recomputing the interest u/s. 234B and 234D." 19. The assessee, as per its cross-objection has also contested the additions to the extent of INR 3,38,06,546/- confirmed by the CIT(A) on account of payments made to entities in which specified persons are substantially interested treating the same as excessive and unreasonable under s. 13(3) r.w.s 13(1)(c) r.w.s 13(2)(c) of the Act. As per the cross- objection, the CIT(A) has partly confirmed the action of the AO by scaling down the disallowance from 50% to 20% without assigning any justification. 20. Ground Nos. 1 & 2 of the Revenue's appeal are general in nature and thus do not call for any adjudication. 21. As per....
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....e of the Jurisdictional High court in DIT(E) Vs Agrim Charan Foundation [2002] 253 ITR 593, maintains the same view The Hon'ble jurisdictional High Court of Dethi has relied its judgment on the findings of the Hon'ble High Court of Mumbai in the case DIT (Exemption) v Sheth Mafatlal Gagalbhai Foundation Trust, [2001] 114 Taxman 19 (Bombay). The Hon'ble HC of Mumbai has clearly held that reading of Section 13(1)(d) of the Act makes it clear that it is only the income from such investment or deposit which has been made in violation of Section 11(5) of the Act that is liable to be taxed and that violation under Section 13(1)(d) does not tantamount to the denial of exemption under Section 11 on the total income of the assesses Further, there are other case laws which favors the stand of the assessee in the case of The Commissioner of income Tax vs Audyogik Shikshan Mandal on 18 December 2018(Mumbai) and CIT v. Working Women's Forum (2015) 53 taxmann.com 85 (Mad.) [SLP dismissed in DIT v Working Women's Forum (2015) 63 laxmann.com 324/235 Taxman 516 (SC)] support the view that the entire income shall not attract the Maximum Marginal rate of tax. The Maximum Marginal ....
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....ed the assessee's contention u/s. 154, observing as under:- "9. Based on the above discussion, it is clear that the contention of the assessee submitted vide applications dated 22/07/2022, 16/11/2022 and 20/03/2023 is correct. There is a mistake that is apparent from records as per CBDT Circular No. 68 dated 17-11-1971." The AO in Para 5.7 and 8 of order u/s. 154 reproduced earlier held that exemption us 11 would be available to assessee except the amount covered u/s. 13(1)(c). However while computing the income deduction u/s. 11(1)(a) was not given. On identical facts the AO vide order dated 30.3.2023 for AY 2017-18 allowed the exemption u/s. 11(1)(a). The computation for AY 2017-18 is reproduced for ready- reference: "Scrutiny assessment of the assessee, for the Assessment Year under consideration, is proposed to be completed u/s. 143(3) r.w.s. 263 read with section 144B of the Income Tax Act as under. Sl. No. Description Amount (in INR) 1. Income as per Return of Income filed u/s. 139(1) 0 2. Variation 1: 50% of the salary of Rs. 8,46,14,412/- paid to the persons referred to under sec 13(3) found as unreasonabl....
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.... AO that the assessee society had incurred capital expenditure for the year under consideration for purchase of various assets like buildings, Air Conditioners, computers, furniture, electrical equipments and so on. The AO issued notice under s. 142(1) of the Act and called for the details of the additions. The AO however in a separate order passed under s. 154 of the Act, made the impugned additions on the ground that such expenditure being capital expenditure, cannot be allowed while computing the income. 24.2. The assessee challenged the action of the AO before the CIT(A). The CIT(A) observed that firstly, as per the rectification order under s. 154 himself has observed that exempt available to the assessee except the amount covered under s. 13(1)(c) of the Act. However while framing the computation of income disallowed the aforesaid amount. The CIT(A) also noted that in identical facts, exemption towards capital expenditure has been allowed under s. 11(1)(a) of the Act in AY 2017-18. The relevant para dealing with the issue by the CIT(A) is reproduced here under:- Ground No.18: "The facts are similar to ground no.17, once it is held that on rest of the inco....
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....e under 13(1)(c) of the Act. The CIT(A) also observed that relevant documentary evidences have been filed to support the claim that payments made are commensurate with educational qualification, rich experience and skills needed for achieving aim and objects of the society. 25.1. The issue raised is identical to Ground No.2 of the appeal of the Revenue concerning AY 2017-18. The issue has been discussed in length in para 10 (supra). In consonance with the findings in AY 2017-18, the additions made by the AO was rightly deleted by the CIT(A). We do not see any reason to interfere with the findings of the CIT(A). 25.2. Ground No.7 of the Revenue's appeal is dismissed. 26. Ground No.8 concerns additions of INR 1,29,53,000/- on account of professional charges paid to specified persons. The CIT(A) observed that relevant documentary evidences have been filed to support the bonafides of the payments and corresponding adequacy of services. 26.1. Identical issue has cropped up in AY 2017-18 as well as and discussed in length in para 11(supra). The additions made on this score thus has been rightly reversed by the CIT(A). 26.2. Ground No.8 of the Revenue's appeal is dismissed.....
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....noted under:- Amity Energy & Environment Consultants Pvt Ltd.-Rs.66,83,250/- (inclusive of Service Tax and GST) a. The company was established on 15.01.2004. The company has provided energy conservation consultancy including planning and control of required electrical load, generators, panels etc. planning, implementation and control of air conditioning systems, site remediation planning services, i.e. preparation of plans for the abatement of environmental contamination, usually at a specific site, and evaluation of environmental studies, i.e. provision of analysis that explains the strengths or weaknesses of an environmental study and provides the basis for alternative judgments. b. The amount of Rs. 66,83,250/- paid to the entity during the year under consideration is towards the professional fee for Planning, Implementation & Control of Generator, Electrical Load, Air Conditioning, and site restoration and installation of roof top solar system. c. The services provided by the Company are necessary for the assessee trust to develop and maintain it educational institutions/campuses in compliance with energy, environment and other norms issued b....
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.... Pvt. Ltd.- Rs. 11,15,33,908 a) The above said concerns established in 15/11/1988. It is an ISO 27001 certified company and has a team of more than 230 experienced and qualified software professionals and hardware engineers, who are driven by a passion for excellence in software development, and work diligently to achieve the Company's goal of being to cater to the entire gamut of the computing needs of varied customers. The company is engaged in providing wide range of data services including consultancy, application services, infrastructure services and mobility services which includes: - Enterprise-wide Web Solutions that includes Web Application Development, Website Development, Ecommerce Implementation utilizing Microsoft technologies and Open Source Technologies. - Software Project Management and Improvement Process. - Software, Hardware and networking maintenance and support services. - Database Maintenance services - Establishment and Maintenance of our own data center with enterprise class Blade servers, Storages, Firewall, Bandwidth management devices and virtualization - Installation and maintenance of Wi....
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....ogress of the project each month due. First Grade Force Pvt. Ltd.- Rs. 7,91,45,536/- a) The company was established way back in year 1995 on 14th of July. The company is engaged in providing physical security services through security guards, personals. The trust has availed the services of the company for multiple institutions, colleges and campuses located in different geographical locations during the year under consideration. b) Further it is pertinent to mention here that the company had employed more than 250 employees and expanded Rs. 6.52 Crore (Approx) towards employee benefit expenses (excluding payment to directors and relatives). In view of this, it cannot be presumed that the payments made to company by the trust are not related to objectives and further payments to directors and relatives by the company are unreasonable. Amity Education Services Pvt. Ltd.- Rs. 27,36,77,206/- a) The company "Amity Education Services Private Limited" is engaged in providing admission related services, including liasoning with students and educational students, Further the company is engaged in providing with vocational training and committed ....
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....ms/courses among the students and prospective candidates" and "advertisement/ online marketing/lead generation services". In addition to above, the key activities of the Univo Edtech LLP include provision of "Learning Management System" (known as LMS) solution for online programs run/offered by the University. The facility of Learning Management System includes, inter alia, the following features: • Enrolling the students, fee collection solution, and documents management relation to students onboarding to the courses. • Students Information System facility which is an information solution assisting in providing, generation of data and reports relating to enrollment details of candidates, semester fee details, queries, results publication interface and importantly a comprehensive students support desk through inbuilt virtual technical support system. • Digital content management including viewing learning content, assignments submission, and assessment. • Faculties support system which includes creating asynchronous multimedia rich content, conducting live interactive video sessions or lectures, webinars from anywhere, assisting t....
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....rials including procurement of printing and stationery of IT mannual, Class syllabuses, and almanac covers, housekeeping items and housekeeping material for schools cleaning material, A4 Copier paper, answer sheet with OMR, vouchers, gate passes, Library books for senior library and Class libraries, printing of Question Bank for students etc. The trust has mainly engaged in procuring the printing and stationary material, housekeeping material, uniforms, and other essential accessories required to fulfill the students' needs at school and campuses levels. c. It may be pertinent to reiterate the fact that payments made to above organization are for purchase of goods. Because the assessee trust is running educational institutions at various locations across India, the above sum of Rs. 12.29 Crore has been incurred as expenditure on procurement of essential educational supplies for different locations of the assessee trust. More importantly, no remuneration has been paid from said entity to any partner of the firm during the year. Amity Education Services, Dubai/ Professional Fees of Rs. 12,40,50,268/- (inclusive of Service tax and GST) a. Amity Education....
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....consistency', there being no change in the facts and circumstances of the aforesaid payments, no addition is sustainable in the eyes of law. Amounts paid are within the applicable limits of remuneration as laid down in the companies Act, 2013 along with requisite approvals wherever required. It is important to point out that the genuineness of the services provided and the payments made by the assessee has not been doubted by the AO. The fact that the above service was provided by them and are not in dispute. Further, payments to these entities being made consistently as tabulated below and no disallowance been made in this regard in the assessment made. Name of concerns AY 2015-16 (FY 2014-15) Ay 2016-17 (FY 2015-16) AY 2017-18 (FY 2016-17) AY 2018-19 (FY 2017-18) Amity Energy & Environment Consultants Pvt. Ltd. 37,07,880 63,61,980 65,55,000 66,83,250 Cross Border Legal Systems Pvt.Ltd. 2,62,24,800 3,52,12,133 3,47,30,000 4,66,21,000 Cross Border Placements Pvt.Ltd. 4,48,28,269 5,31,24,045 5,35,03,000 6,55,15,228 AKC Data Systems (India) Pvt.Ltd. 8,56,24,793 10,10,21,500 ....
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....Ld. AO, and hence no disallowance was made on account of the same vide order assessment dated 29.04.2021 passed u/s. 143(3) of the Act (Refer Pg 3331- 3353 of PB). Accordingly, at the very outset, it is reiterated that when the Hon'ble Delhi High Court had only allowed to grant a personal hearing and again pass the assessment order as per law, then having accepted such payments, disallowance on account of the same in the impugned assessment order involves the contempt of order of Court, and hence, the said disallowance is liable to be deleted. The principles of consistency It was seen that in earlier year (AY 2014-15, AY 2015-16)) also assessee has incurred similar expenditure. In earlier years the assessee disallowed the same in computation of income itself however no separate addition was made by AO in these years. As the appeals for these years are also before me the fact are verifiable. For ready reference the computation for these years is reproduced below- Name: RITNAND BALVED EDUCATION FOUNDATION Address: E-27, Defence Colony New Delhi Status: AOP (TRUST) Financial Year: 01.04.2013 to 31.03.2014 Asse....
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....years. When on identical facts no addition was made in AY 2014-15 and 2015-16 then, it was not open for the AO to take one view in those years and another view in this year. Therefore the addition deserves to be deleted on the principles of consistency itself. On merits The AO held that the money set aside in earlier year was used for these expenses and added the same u/s. 11(1)(a). For ready reference the computation of income for current year is reproduced below: Name: RITNAND BALVED EDUCATION FOUNDATION Address: E-27, Defence Colony New Delhi Status: AOP (TRUST) Financial Year: 01.04.2017 10 31.03.2018 Assessment Year: 2018-2019 P. A. No.: AAATR7314Q Amount (Rs.) Amount (Rs.) Gross Receipt as per Income & Expenditure A/c 18,30,30,16,422 Less: Expenditure Incurred towards the object of the Trust 16,77,61,23,568 Less: Depreciation 2,43,15,66,820 Provision for Gratuity 10,08,20,446 Add: Gratuity Paid 2,10,82,830 Add: Capital Expenditure 4,25,15,03,192 18,51,83,22,325 Less: Expenditure Incurred outside India has not been considered while 2,47,40,....
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....ince the acquired Institutions are not part of the assessee trust and are located at outside India, the AO disallowed these payments. It was contended before the AO that the payments have been made to these entities towards due diligence and site assessment consulting for expansion of AMITY Group. Such payments are directly linked to aim and object of the Trust for educational objectives which include the establishment and expansion of educational institutions both in India and abroad. The AO however disallowed the payments. The AO also disallowed the payments made for advertisement charges paid to 'Facebook Ireland Ltd.' stating that the advertisement in foreign media to attract foreign students are not in the line of trust objectives and the expenditure was not for the benefit of Indian student. The AO also disallowed the payments for the reason that the assessee lacked approval under s. 11(1)(c) to treat this as an application of income outside India. The assessee contended before the AO that the payment to Face book Ireland Ltd. are made for advertisement purposes and made for promoting the charitable educational programme and events conducted by the assessee in India. The adve....
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....ntion of the Ld. AO that advertisements given in foreign newspapers and foreign media to attract foreign students is not in line with the objects of the trust is without any shred of evidence. In-fact, the Ld. AO has himself deployed the phrase 'prima facie, which is self-sufficient to discern that the order has been passed in a dilemmatic state of mind, without appreciating the peculiar facts of the present case in the right perspective. It is seen that the Payments made to 'Herrick Feinstein LLP' and 'Jones Lang Americas, INC' are in connection with acquisition of a property in USA. When application of income outside India is not allowable u/s. 11(1)(c) of the IT Act, (unless Board's approval is taken) then the incidental expenses to the same are also not allowable u/s. 11(1)(c) of the act. Therefore the addition w.r.t. these entities is confirmed. The same would be considered along with other disallowance of similar nature in ground no.12 & 13. It is seen that Payments made to Face book Ireland Ltd. are towards advertisement charges. Even if the payment is made outside India, the same was to enroll the foreign ....
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....nts given in foreign newspapers and foreign media to attract foreign students is not in line with the objects of the trust is without any shred of evidence. In-fact, the Ld. AO has himself deployed the phrase 'prima facie', which is self-sufficient to discern that the order has been passed in a dilemmatic state of mind, without appreciating the peculiar facts of the present case in the right perspective. k. Thus, all the foreign remittances have been incurred for the sole objective of the trust i.e. education, promoting the educational activities and establishment of educational institutions. l. In this regard, reliance may be placed on the decision of Karnataka High Court in the case of CIT (Exemptions), Bangalore vs Ohio University Christ College [2018] 408 ITR 352, wherein the Hon'ble Court has affirmed the views of the Bangalore Tribunal, wherein it has been further observed that what is determinative is not the place where expenditure has been incurred, but the place where such expenditure has been utilized, and in case the expenditure incurred in foreign country is in respect of charitable objects carried out in India, then the same is allowable ....