TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 1745
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....68,95,083/- made by the AO on account of administrative expenses ignoring the fact that the assessee could not substantiate the increase in expenditure and did not furnish any justification and explanation in this regard during the assessment proceedings. 4. Ld. Commissioner of Income Tax (A] has erred in law and facts by deleting the addition of Rs. 7,96,45,128/- made on account of disallowances of interest paid on term loan ignoring the fact that the interest on term loan is capital expenditure, which cannot be claimed in Income & Expenditure account. 5. Ld. Commissioner of Income Tax (A) has erred in law and facts by deleting the addition of Rs. 3,65,00,000/- made on account of anonymous donations as the assessee could not establish the identity and capability/financial status of the donors. 6. The order of Ld. CIT (A) be cancelled and the order of the A.O. restored. 7. Appellant craves leave to modify/amend or add any one or more grounds of appeal." 2. Ground No. 6 & 7 of the appeal are general in nature and do not require any specific adjudication therefore, these grounds are dismissed. 3. Arguing Ground No. 1, the ld. DR submitted that the a....
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....e facts and circumstances of the case. I have considered the observation of the Assessing Officer and the arguments assailed by the appellant. I find that the appellant is a deemed university established by Special Ordinance of U. P. Government dated 04.07.2012 as per the clause-(29) of the Extra Ordinarily Gazette the appellant through its Executive Council is empowered to fix fee for admission to University as stated in clause-(e) of the Power to make ordinance. The appellant furnished the minutes of the Fee Fixation Committee through which the appellant has fixed the fee structure for session 2012-13 for courses run by the University. The contention of the appellant is that the appellant is charging fee as per the said order and it is not governed by the Admission and Fee Regulation Committee, Department of Technical Education, Government of Uttar Pradesh as it is a deemed university and has its own norms for fixation of Fee as set out in the Ordinance. The fees have been charged from the students on the basis of Fee fixed by the Fee Fixation Committee and no excess fee has been charged beyond the fee specified in the said order. Further Hon'ble Madras High Court in case ....
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.... Fee Regulation Committee, Department of Technical Education, Government of Uttar Pradesh. The A.O. in generality has stated that the fee structure of the colleges is within the range of Rs. 61500/- to Rs. 65000/- per student. The A.O. has not appreciated the fee structure given by the appellant, which is approved by the Fee Fixation Committee of the Universe as stated above. The A. O. has not established profit motive out of fee collected by the appellant trust. He has not examined whether the activities of the appellant trust was solely to generate profit or whether the activities undertaken was for the benefit of the students. Merely relying on the fee structure of the Stat Government for Educational Institute and drawing a comparison with the fee structure of a deemed university does not constitute that the Appellant is working on commercial line and for profit motive and even when the registration u/s 12A has been restored by the Hon'ble I.T.A.T. There is no change in the activities of the current year as compared to earlier years where in the A. O. has granted benefit of Section 11 of the I.T. Act on similar activities. More so registration u/s 12AA of I. ....
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....ear under consideration in respect to fee income was 31.73% as against 40.20% in the earlier year which was lower than the earlier year. The Assessing Officer had made the disallowance only on ad hoc basis without rejection of books of account and without pointing out any deficiency in the vouchers. We further find that the assessee had placed on record complete list of personal expenses and copy of which is also placed at P.B. Pages 135 to 147 and therefore, there was no justification of the Assessing Officer to make the addition and therefore, the ld. CIT (A) has rightly deleted the same by holding as under: "8.2 AO noted that personal expenses increased to Rs. 2,76,24,713/- as compared to Rs. 1,00,52,500/- in the earlier year. AO held that appellant failed to produce proper vouchers, therefore, increase of 10% in expenditure as compared to earlier year was allowed and balance was disallowed. This disallowance worked out to Rs. 1,65,66,963/-. 8.3 I have examined the facts and circumstances of the case. I have considered the observations of the A. 0. in the assessment order and the submissions of the Appellant. The appellant has furnished the details of per....
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....ularly maintained by the assessee. None of the auditors have given any adverse comment in the report. The disallowance was made for sake of disallowance without giving any cogent reasons. The ad hoc addition made by AO has been rightly deleted by Ld. CIT(A). The Hon'ble ITAT, Lucknow Bench in judgement dated 13.07.2011 in case of Rajmata Devi, Basti Held that AO has not pointed out single instance of expenditure which is not supported by voucher. It seems that AO has made the disallowance without bringing any supporting evidence to justify his action. Considering the entire facts and circumstances of the present case, we delete the disallowance. The Hon'ble ITAT, Lucknow Bench in M/s Kanha Vanaspati Ltd. Vs. JCIT, SR-II, Lucknow 2006(7) MTC 339 held ad hoc disallowance out of expenses. No specific disallowable item pointed out-Vague observation that some expenses were not verifiable Disallowance not justified The Hon'ble ITAT, Allahabad Bench in Dr. Mahendra Kr. Aggarwal Vs. ITO 2007(a) MTC 97 (Trib. Allahabad) held as under Ad hoc 10% disallowance of expenses-No specific instances of unverifiable expenditure pointed out Disallowance not justified. In the pr....
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....ough the material placed on record. We noted that the issue involved in the present appeal is duly covered in favour of the assessee in assessee's own case for the assessment year 2013-14 by the order of this Bench of the Tribunal in I.T.A. No. 557/Lkw/2017 wherein vide para 24 and 25 of its order, the Tribunal has held as under: 24. Next Ground No. 5 is regarding disallowance of expenditure out of administrative expenses on ad hoc basis. In this respect, also we find that the assessee had filed complete details of vouchers and books of accounts, which was not rejected by the Assessing Officer and he arbitrarily disallowed 25% of the expenditure without observing that TDS was duly deducted on some of the expenses wherever it was applicable. The details of said expenses are placed at Pages 148 to 197 of the paper book. The ld. CIT (A) has allowed this ground of appeal by holding as under: "9.2 AO noted that administrative expenses increased from 79,53,597/- to Rs. 3,77,55,127/- which includes advertisement expenses of Rs. 1,65,11,445/-. The AO held that in respect of expenses to tune of Rs. 1,53,69,201/- there is no justification or explanation availabl....
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....neral observation of AO that vouchers are self-made cannot be made issue for an addition. At best it can be starting point of enquiry. The Hon'ble ITAT Agra Bench in M/s Atul Construction Co. vs. ITO in ITA Appeal No. 361 of 2013 dated 31.01.2014 held that mere fact that some of the vouchers were self-made cannot be a reason enough to disallow the expenses on ad hoc basis. The Hon'ble ITAT, Lucknow Bench in U.P. Corporative Federation Vs. Deptt. Of Income Tax in ITA No. 33/Lkw/2011 dated 22.03.2011 held that there was no justification is suspecting the genuineness of entire claim and resorting to estimated disallowance. The AO has not given any reason for estimating the disallowance at 5% of the claim. The AO has not doubted the correctness of books of accounts regularly maintained by the assessee. None of the auditors have given any adverse comment in the report. The disallowance was made for sake of disallowance without giving any cogent reasons. The ad hoc addition made by AO has been rightly deleted by Ld. CIT(A). The Hon'ble ITAT, Lucknow Bench in judgement dated 13.07.2011 in case of Rajmata Devi, Basti Held that AO has not pointed out single insta....
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....e had claimed interest on term loan which was obtained for the purpose of construction of building and therefore, the expenditure was a capital in nature, which cannot be claimed in income & expenditure account and learned CIT (A) was not justified in deleting the same. 13. Learned A. R., on the other hand, supported the order of learned CIT (A) and submitted that the issue involved in the present appeal is duly covered in favour of the assessee in assessee's own case for the assessment year 2013-14 by the order of Lucknow Bench of the Tribunal in I.T.A. No. 557/Lkw/2017. Learned D. R. even though relied on the order of the Assessing Officer but did not disagree that the issue is not covered in favour of the assessee by the order of Lucknow Bench of the Tribunal. 14. We have heard the rival parties and have gone through the material placed on record. We noted that the issue involved in the present appeal is duly covered in favour of the assessee in assessee's own case for the assessment year 2013-14 by the order of this Bench of the Tribunal in I.T.A. No. 557/Lkw/2017 wherein vide para 26 and 27 of its order, the Tribunal has held as under: "26. Now coming to last gro....
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....s. Virendra Singh Memorial Shiksha Samiti reported in 18 DTK 502. The ground of appeal No. 12 is allowed." 27. In view of above facts and circumstances of the case, we do not find any infirmity in the order of the ld. CIT(A), the last Ground No. 6 is also dismissed." 14.1 Respectfully following the aforesaid findings of the Tribunal in assessee's own case, we do not find any infirmity in the order of learned CIT (A) and delete the addition made by the Assessing Officer. 15. Arguing ground No. 5, Learned D. R. submitted that the Assessing Officer had made the addition on account of anonymous donations as the assessee could not establish the identity and capability/financial status of the donors and learned CIT (A) was not justified in deleting the addition made by the Assessing Officer. 16. Learned A. R., on the other hand, supported the order of learned CIT (A) and submitted that the issue involved in the present appeal is duly covered in favour of the assessee in assessee's own case for the assessment year 2013-14 by the order of Lucknow Bench of the Tribunal in I.T.A. No. 557/Lkw/2017. Learned D. R. even though relied on the order of the Assessing Of....
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....9,27,592/- was made U/s 68 of the Act. * These donations had already been shown as income of the appellant. * The appellant produced books of accounts like ledger accounts, bank statements etc. to explain the details of donors. Anonymous donations are covered u/s 115BBC of the Act discussed in following paragraphs of this order. The AO has made addition u/s 68 of the Act. 6.1.3 In order to prevent channelization of unaccounted money to these institutions by way of anonymous donations, a new section 115BBC has been inserted to provide that any income of a wholly charitable trust or institution by way of any anonymous donation shall be included in its total income and taxed at the rate of 30%. Anonymous donation to wholly religious trusts or institutions will not be taxed. 6.1.4 Anonymous donation has been defined in the new section to mean any voluntary contribution referred to in section 2(24) (iia) of the Act, where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed. To be excluded from the definition of anonymous donations....
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....trust has duly discharged its onus as cast upon it by furnishing the name and address of the donors. The A.O. has not doubted the identity of the donor and genuineness of the transaction. The Provisions of Section 115BBC with regard to anonymous donation are also not violated by the appellant trust as details of donors with their name and address were duly furnished before the Ld. A. 0. Anonymous Donation has been defined in Section 2(24)(iia) of the Act to mean any voluntary contribution where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed. The assessee has submitted the complete particulars of the Donor giving their name and address and it can be held that the appellant has established the identity of the donors as required u/s 115 BBC of the Act and donation cannot be categorized as anonymous donation. Further, Section 68 has no application to the facts of the instant case because the assessee has disclosed the donation as its income and applied the same for charitable purpose. In my considered opinion adding part of the don....
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....ritable or religious trust is entitled to deduction of certain income from its total income of the previous year. The income so exempt is the income which is applied by the charitable or religious trust to its charitable or religious purposes in India. This is, of course, subject to accumulation up to a specified maximum which was 25 per cent. In that case it was found, as in the present case that the assessee had applied more than 75% of the donations for charitable purposes as per its objects. The Delhi High Court further held that Section 68 of the Act has no application in such case where the assessee had disclosed donations as its income. It was also not disputed that all receipts, other than corpus donations, would be income in the hands of the assessee. If there is Full disclosure of the donation for whatever purpose and that the registration under Section 12-A is continuing and valid, exemptions cannot be denied. 4 [2005] 278 ITR 152 (Delhi) In the Delhi High Court in the case of Director of Income Tax (Exemption) Vs. Keshav Social and Charitable Foundation. The assessee, a charitable trust, was engaged in the activity of providing medical advise to the poor and needy in....