TaxTMI 
TaxTMI 
2025 (2) TMI 1427
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....med in return of income filed. 2. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in allowing the exemption u/s 11/12AA when the assessee failed to substantiate the genuineness of the expense and payment on account of these inflated expenses diverted to related concerns." 3. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in allowing claim u/s 11 & 10(23C)(iv) of the addition of Rs. 54,16,704/- made on account of excessive salary, which was disallowed on contravening the provisions of sections of 13(1)(c), 13(2)(c) and 13(2)(g) of the I.T. Act, 1961 read with section 13(3) by the assessee resulting into forfeiture of the exemptions u/s 11 and 12 of the I. T. Act." 4. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 1,71,64,553/- made on account of surplus income of the assessee when the trust fund were diverted to related concerns by inflating expenses under various heads which resulted into withdrawal of exemption u/s.11." 5. "Whether on points of Jaw and on facts & circ....
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....d in appellate order?". 13. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) has erred by giving a finding which is contrary to the evidence on record, as the Ld. CIT(A) has accepted the submission of the assessee which is factually incorrect, thereby rendering the decision, which is perverse?". 14. "The order of Ld. CIT(A) is erroneous both in law and on facts". 15. That the appellant reserve the right to add, alter or amend the grounds of appeal before the appeal is decided." 2. On the other hand, the assessee society is before us as a crossobjector on the following grounds:- Grounds of cross objection in CO No. 15/RPR/2018 "1. In the facts of the case, Ld. CIT(A) erred in holding that the assessment order passed by AO is not barred by limitation. The assessment order was passed beyond the limitation date and is liable to be quashed. 2. In the facts and circumstances of the case and in law, Ld. CIT(A), erred in confirming the disallowance of Rs. 2,18,48,453/- made by the AO on account of depreciation. The order of Ld. CIT(A) on this issue is contrary to provisions of law and is against the ....
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....round No.1, 2 and 4: Challenging the justification in the decision of CIT(A) in allowing the exemption u/s.10(23C)(vi) and exemption u/s. 11/12AA of the Act to the assessee. 9.1 The observations of A.O, while declining the claim of exemption of the assessee society u/s.11/12AA is culled out as under (relevant extract): "6. Surplus Income of the assessee: As the assessee society is not entitled for exemption u/s 11& 12 of the IT. Act, its income during the assessment year becomes taxable and therefore is determined like any other business organization. In the I & E account, there is surplus of Rs. 1,71,64,553/-. This amount is to be included in the taxable income of the assessee. 17. Denial of Exemptions: The discussions in the forgoing paras have clearly established that all the payments made under aforesaid heads to the associate concerns are not genuine and reasonable and considerable amounts have been diverted to the sister concerns or individual members of the society in the garb of salary or expenses in violation of the provisions of sections of 13(1)(c), 13(2)(c) and 13(2)(g) of the Income Tax Act, 1961 read with section 13(3) of the Act. Clearly....
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....d submitted that the same was uploaded in time as per law. Elaborating further, the Ld. AR submitted that the assessee society during the assessment proceedings, vide letter on 12.09.2016 had explained to the A.O that it was eligible for exemption u/s.10(23C)(vi) of the Act (Page 226-227 of the APB). The Ld. AR further submitted that the assessee society had raised the issue before CIT(A) vide ground no.3 in the appeal memo (Form 35) and necessary submissions supporting the claim of assessee were furnished before the CIT(A). The Ld. AR to fortify his contention had drawn our attention to the observations of the CIT(Appeals), which reads as under: "2.3.2 Exemption u/s.10(23)(c): In ground no. 3 the appellant has agitated the issue that AO has not allowed exemption u/s.10(23)(c)(iv). Appellant is registered u/s 10(23)(c)(iv) by the CCIT, Raipur vide registration dated 14/12/2007 and further corrigendum dated 18/12/2007. Assessee has claimed exemption u/s. 10(23) as per letter dated 12.09.2016 as under- The assessee society is running a University in the name of Dr. CV Raman University at Kargi Road Kota, Bilaspur, Chhattisgarh, your assessee is involved in education....
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....to an educational institution under s.10(22) it is not necessary to look at the profit of each year but to consider the activities of the trust and once approval under s. 10(22) is granted, the provisions of ss. 11 to 13 did not apply. It is undisputed fact that assessee is an educational institution imparting education from Class KG to Class VIII No other activities have been alleged. The argument of learned Departmental Representative that some benefit is imparted to the founder of the trust resulting from inflated expenditure would also disable the trust from getting exemption under s. 10(22) is out rightly rejected because firstly, there is no evidence that such benefit has been imparted to the founder member of the trust and secondly, even if it is so then such instances would only hit the case of the assessee within the meaning of ss. 11 to 13 and cannot be imported to deny exemption under s. 10(22)/10(23C)(iiiad) provided a clear finding on the basis of material on record is given that assessee trust is not existing solely for educational purposes. Here purpose is what described in the memorandum of objects of the trust. Some items of disallowances out of expenses claimed ca....
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....le section (i.e., sections 11/12), then it was not open for the assessee society to feed the figures in column for other section (i.e., section 10(23C)(vi)). The Ld. AR submitted that the assessee society could not have been declined exemption u/s. 10(23C)(vi) for failing to do something which was impossible and beyond its control. 9.7 Per contra, Shri S. L. Anuragi, Ld. CIT-DR submitted that the assessee society had not raised a claim of exemption in the return form in the relevant column provided for exemption u/s.10(23C)(vi). Elaborating further on his contention, the Ld. DR submitted that as the A.O was not vested with any jurisdiction to allow any claim for exemption that was not raised by the assessee society in its return of income, therefore, the only remedy available with the assessee society for raising such claim of exemption was by filing a revised return which it had failed to do. The Ld. DR placed reliance on the judgment of the Hon'ble Apex Court in the case of Goetze (India) Ltd. Vs CIT, (2006) 284 ITR 323 (SC) dated 24.06.2006. Carrying his contention further, the Ld. DR submitted that as the CIT(Appeals) had wrongly allowed the assessee's claim for exemption u/....
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....ption u/s. 10(21), 10(22B), 10(23A), 10(23B), 10(23C)(iv), 10(23C)(v), 10(23C)(vi), 10(23C)(via)" was filled with "0"(zero), whereas the amount of exemption was claimed u/ss. 11/12 in Column 9(i) regarding "amount applied to charitable purposes in India during the previous year". At the same time, the assessee society had filled the details of audit report u/s 10(23C)(vi) in its return of income i.e. in the specified columns for that purpose. 9.11 Before proceeding any further, we deem it fit to cull out the provisions of Section 10(23C)(vi) of the Act as were available on the statute during the subject year, i.e. A.Y.2014-15, which reads as under: "10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- xxx xxx xxx xxx xxx xxx (23C) any income received by any person on behalf of- xxx xxx &....
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....clusively to the objects for which it is established and in a case where more than fifteen per cent of its income is accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount exceeding fifteen per cent of its income shall in no case exceed five years; and (b) does not invest or deposit its funds, other than- (i) any assets held by the fund, trust or institution or any university or other educational institution or any hospital or other medical institution where such assets form part of the corpus of the fund, trust or institution or any university or other educational institution or any hospital or other medical institution as on the 1st day of June, 1973; (ia) any asset, being equity shares of a public company, held by any university or other educational institution or any hospital or other medical institution where such assets form part of the corpus of any university or other educational institution or any hospital or other medical institution as on the 1st day of June, 1998; (ii) any assets (being debentures issued by, or on behalf of, any company or corporation), acquired by the fund, trust or instituti....
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....via) shall apply in relation to any income of the fund or trust or institution or any university or other educational institution or any hospital or other medical institution, being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of account are maintained by it in respect of such business: Provided also that where the total income, of the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), without giving effect to the provisions of the said sub-clauses, exceeds the maximum amount which is not chargeable to tax in any previous year, such trust or institution or any university or other educational institution or any hospital or other medical institution shall get its accounts audited in respect of that year by an accountant as defined in the Explanation below sub-section (2) of [section 288 and furnish along with the return of income for the relevant assessment year], the report of such audit in the prescribed form duly signed and verified by su....
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....all not be treated as application of income to the objects for which such fund or trust or institution or university or educational institution or hospital or other medical institution, as the case may be, is established : Provided also that where the fund or institution referred to in sub-clause (iv) or trust or institution referred to in subclause (v) is notified by the Central Government or is approved by the prescribed authority, as the case may be, or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via), is approved by the prescribed authority and subsequently that Government or the prescribed authority is satisfied that- (i) such fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not- (A) applied its income in accordance with the provisions contained in clause (a) of the third proviso; or (B) invested or deposited its funds in accordance with the provisions contained in clause (b) of the third proviso; or [(ii) the activities of such fund or institution ....
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.... said sub-clauses, exceeds the maximum amount which is not chargeable to tax in any previous year, such trust or institution or any university or other educational institution or any hospital or other medical institution shall get its accounts audited in respect of that year by an accountant as defined in the Explanation below sub-section (2) of section 288 and furnish along with the return of income for the relevant assessment year, the report of such audit in the prescribed form duly signed and verified by such accountant setting forth such particulars as may be prescribed. For the sake of clarity, the "eighth proviso" to Section 10(23C)(vi) of the Act (as was available on the statute for the subject year, i.e. A.Y.2014-15) is culled out as under: "Provided also that where the total income, of the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), without giving effect to the provisions of the said sub-clauses, exceeds the maximum amount which is not chargeable to tax in any previous year, such trust or institu....
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....y by the prescribed authority could be withdrawn, viz. (i) the society had not applied its income in accordance with the provisions contained in clause (a) of the "third proviso"; or (ii) the society had not invested or deposited its funds in accordance with the provisions contained in clause (b) of the "third proviso" to Section 10(23C)(vi) of the Act; or (iii) the activities of the society are not genuine; or (iv) the activities of the society are not being carried out in accordance with all or any of the conditions subject to which it was notified or approved, then it may, at any time after giving a reasonable opportunity of showing cause against the proposed action to the concerned society, by an order withdraw the approval, and forward a copy of the order withdrawing the approval to such society and to the A.O. For the sake of clarity, the "thirteenth proviso" to Section 10(23C)(vi) of the Act is culled out as under: "Provided also that where the fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) is notified by the Central Government or is approved by the prescribed authority, as the case may be, or any university ....
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....on under the said statutory provision, therefore, we are unable to comprehend that on what basis its said claim for exemption had not been considered by the A.O. Accordingly, we find no infirmity in the view taken by the CIT(Appeals) who had rightly allowed the assessee's claim for exemption u/s. 10(23C)(vi) of the Act and, thus, uphold the same. 9.18 Before parting qua the aforesaid issue, it would be relevant to observe that as per the settled position of law it is not permissible for an Assessing Officer to entertain a claim for deduction otherwise than based on a revised return of income filed by the assessee. Our aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 323 (SC). At the same time, we also cannot remain oblivion of the fact, that as observed by the Hon'ble Apex Court in its aforesaid order in the case of Goetze (India) Ltd. (supra), the restriction in entertaining a claim for deduction otherwise than by filing a revised return of income is limited to the power of the assessing authority and does not impinge on the powers of the Income-tax Appellate Tribunal. For the sake of clarity, the ....
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....roceeding any further, we deem it fit to cull out Section 13(2)(c) of the Act, which reads as under: "13. (2) Without prejudice to the generality of the provisions of clause (c) and clause (d) of sub-section (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in sub-section (3),- xxx xxx xxx xxx xxx xxx (c) if any amount is paid by way of salary, allowance or otherwise during the previous year to any person referred to in sub-section (3) out of the resources of the trust or institution for services rendered by that person to such trust or institution and the amount so paid is in excess of what may be reasonably paid for such services; xxx xxx xxx xxx &nb....
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....observed that the is a qualified person who had been selected for Indian Engineering Services (1977) and Indian Civil Services (1982) and has been rendering services to the Society since its inception. He has been working in. the Capacity of Chancellor as per the norms fixed by the Government of Chhattisgarh vide notification Doted 31.12.2009. His remuneration hos been fixed by the Board of Management & approved by the Government body, which includes the two members nominated by the visitor (the Governor of the state) & one member nominated by the Higher Education Department of the state." It may also be mentioned that salary/honorarium payable to person at a similar post in private universities ranges from Rs. 50 lacs to Rs. 100 lacs p.a. in the country. The assessee enclosing herewith a copy of the news published in the economics Times, the relevant extracts of which are reported herein below "The ever-increasing demand for faculty in private, new-age universities has pushed the salary packages of senior faculty like Vice-Chancellor and deans past the Rs. 1 crore mark. Private universities are paying crore plus salaries to senior most faculty members. At least five head ....
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....charitable purposes and drawing unreasonably excessive salary, as discussed above, out of the resources of the society, which are meant for charitable activities. Thus, the assessee contravened the provisions of sections of 13(1)(c), 13(2)(c) and 13(2)(g) of the Income Tax Act,1961 read with section 13(3) resulting Into forfeiture of the exemptions u/s 11 and 12 of the IT Act. Penalty proceeding u/s. 271(1)(c) of the Income tax Act are initiated for furnishing of inaccurate particulars of income as discussed in this para. 5. Excessive salary of Shri Anurag Seetha: Similarly salary of Shri Anurag Seetha is on higher side Rs. 1233408/-. Shri Anurag Seetha is also one of the founder members of the Society. He resides manly in Bhopal. He visits and lives in University campus at Bilaspur for approximately fifteen days a month, as stated by shri Vineet Shukla, Chief finance and accounts officer of the University. It was submitted that he was deriving equal amount of salary in his previous occupation as well. Looking to the fact that he was working simultaneously in various institutions and devoted only fifteen days p.m. to this university the salary paid to Shri Anurag ....
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....of Rs. 12,33,408/-. AO disallowed 50%. ii) Allowed fully in scrutiny assessment of AY 2015/16 -Comparative chart of expenses at PN 1 of compilation of 12 pages. - Assessment order of AY 2015/16 at PN 2 to 7 of compilation of 12 pages. - AO allowed himself even without directions u/s 144A. iii) He was employed by Makhanlal Chaturvedi National University, his service taken on lien, PN 118 to 120 of PB. iv) He was involved in research and preparation of course material. v) His physical presence not required all the time. vi) Disallowance is baseless, arbitrary. Nothing brought on record." 10.4 The CIT(Appeals) while vacating the disallowance made by A.O had observed as under: "In the present case the AO's objection is regarding quantum of salary to be paid. While the finding has been given that the salary is excessive, but there is no basis for ascertaining that salary paid to the two persons is excessive. Comparison with salary paid by MATs University is illogical. Just like in private businesses the salary of executives is a matter of contract between the employer and employee, same will hold goo....
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....onth. The Ld. AR further submitted that the salary of Shri Anurag Seetha, who happened to be the founder member of the assessee society and was paid a sum of Rs. 12,33,408/- was without any basis restricted by the A.O to 50% of the salary paid i.e., at Rs. 6,16,704/- stating that the same is unreasonable and excessive. The Ld. AR submitted that similar amounts paid by the assessee society in the succeeding year, even with further enhancement, have been allowed by the revenue without any embargo. The Ld. AR to substantiate his contentions had furnished before us a "chart" showing the expenses claimed under various heads in the relevant AY 2014-15 as compared to AY 2015-16, which for the sake of clarity is culled out as under: All India Society for Electronics & Computer Technology (AISECT) Chart Showing expenses claimed under various head and expenses disallowed in the assessment order Particulars A.Y. 2014-15 A.Y. 2015-16 Expense Claimed Disallowance made by AO Expense Claimed Disallowance made by AO U/s 13(3) Salary S.K.Choubey 72,00,000 48,00,000 1,14,00,000 ....
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....hus, has been rightly vacated by the CIT(A). 10.8 Per contra, Ld. CIT-DR supported the order of A.O. 10.9 We have considered the rival contentions, perused the material available on record and the submissions advanced by the parties. On perusal of the observations of the lower authorities and the material placed before us, it transpires that the department itself had deliberated upon the facts of various issues which are the subject matter in the instant case, viz. excessive salary paid to Shri S. K. Chaubey (supra) on which directions were issued by the Ld. JCIT(E), Bhopal vide his order u/s 144A dated 29.12.2017 for the succeeding AY 2015-16, wherein he had recorded a categorical finding that the salary paid to Mr. S.K. Chaubey, Chairman of the society was commensurate with his experience and contribution made to the assessee society. Also, salary of Shri Anurag Seetha (supra) paid in the AY 2015-16 was found reasonable and accepted by the revenue. Accordingly, we are of a firm conviction that an inconsistent view for the year under consideration adopted by the revenue does not stand good in the eyes of law unless there is some distinguishing feature brought on record. Acco....
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....ition/ disallowance made by the A.O qua the Student's Data Processing Expenses, Books and Course Material Purchased, Printing & Stationary Expenses and Other Expenses cannot be sustained. We, thus, concur with decision of CIT(A) on subject issues wherein after deliberations the additions/disallowances were rightly vacated by him. Consequently Grounds of appeal No. 5, 10, 11 & 12 of the revenue's appeal are rejected, being devoid and bereft of any merit. 12. Ground No. 6, 7 & 9: Regarding deleting the addition of Rs. 1,37,458/- VC House Expenses Rs. 3,20,74,537/- Advertisement Expenses, 41,95,800/- Computer Software expenses. 12.1 Apropos the VC House expenses, the Ld. AR submitted that the Vice Chancellor Dr. Surekha Thakkar is an unrelated party, thus provisions of section 13(3) do not apply. It is further explained that the expenses allowed are in terms of employment, therefore, there can be no personal expenditure and, thus, the same had rightly been allowed by the CIT(A). The Ld. AR also submitted that as similar quantum and nature of expense for Rs. 1,20,441/- incurred by the assessee society have not been disputed by the revenue in AY 2015-16, therefore, such addition o....
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....elations with the hardware and software supplying companies, therefore, for better deal the subject purchase transactions were done through them. The Ld. AR further submitted that as similar expenses were allowed by the A.O in immediately succeeding year i.e. A.Y 2015-16 for Rs. 10,84,500/-, therefore, no adverse inferences for the subject year were liable to be drawn. 12.5 Rebutting the aforesaid contentions of the Ld. AR, Ld.CIT-DR supported the order of A.O and submitted that the disallowance made by him be sustained. 12.6 We have considered the rival contentions, perused the material available on record in the backdrop of the settled position of law regarding the subject issues. All these issues are dealt with and discussed by the CIT(A), wherein the contentions of the assessee were considered along with the findings of the A.O. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: "AO has given the finding in the assessment order that payment under-the head salary, payment of AISECT Limited, VC house expenses, advertisement expenses, computer software expenses, book purchases, printing and stationary expenses and other expenses h....
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....to the sister concerns in violation of sections of 13(1)(c), 13(2)(c) and 13(2)(g) of the Income Tax Act, 1961. In arriving at this conclusion the AO has ignored the fact that these bills have been raised for student registration, data processing student data updation on website, website maintenance. Further the income of the assessee is exempt whereas AISECT Ltd. is a company not enjoying any exemption. Therefore there cannot be any intention of the management of the group to divert funds from exempt entity to tax paying entity. Further AO has alleged that since bills have been raised by AISE T on adhoc basis the payment made to AISECT Ltd was excessive. On going through the submission and detailed working of basis of payment which was produced during the assessment, it is seen that payment has been computed per student wise. For IODE Exam Expense Rs. 93.90, for IODE Teaching & Leaning Expense Rs. 8.01, for IODE Books and course material Rs. 66.51 and for IODE Student Data Processing Rs. 172.18 per student has been paid. Working of these rates have been done by details charts by considering Total no. of papers, papers hours, Online training and learning hours, course mate....
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....T Ltd made a huge disallowance of Rs. 75,00,000/- due to unverifiable/inflated purchase/printing of the books and course material. Moreover, during the survey proceeding u/s 133A of the IT act in the case of AISECT Ltd. Bhopal on 09.10.2015, it was found that bogus purchases of books were being shown in the accounts of AISECT Ltd. Bhopal from Itarsi & Raipur based Printers. None of such suppliers of books were found at the addresses mentioned in the bills produced by AISECT Ltd. Bhopal, Thus, the genuineness of the supplying the books/course material by AISECT Ltd, Bhopal to the assessee society is not credible. Regarding the printing and stationary expenses paid to AISECT Ltd the AO has stated that the contention of the assessee is not acceptable. Certainly, it gives on opportunity of double billing. The assessee failed to produce the credible evidences to show that the material purchased in the name of AISECT Ltd, Bhopal from the printers of Bhopal and others have actually been delivered to AISECT, Raipur. The correctness of the claim made by the society is not established. So, this amount of Rs. 23,15,744/- pertaining to improper bill are disallowed & Included in the total Incom....
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.... it is natural that bills may be raised on AISECT Ltd which then charges the amount from assessee. No adverse inference can be drawn on this fact. During survey operation u/s 133A the assessee was informed by the survey team that some suppliers on field inquiry were not found at the given addresses and have accordingly raised doubt about the genuineness of certain expenses recorded by the M/s AISECT Ltd. On such input a disclosure in respect of expenses attributed to those suppliers. Subsequently on verification of the facts and records it was found that all the purchase invoices were duly recorded in the books of account and the payments of the same have also been made through banking channel. The books purchased were duly provide to users and these facts were also recorded and payments were also received through banking channels. Accordingly the invoices did not reflect any inflated purchases. Thereafter vide affidavit dated 7.11.2015 Shri SK Choubey the Director of M/s AISECT Ltd has retracted the said disclosure on behalf of the company. The mention of above disclosure has not been confirmed and no reverse view can be taken against the assessee. Thus in view o....
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....as compulsory and mostly in cash that was received along with fee at the time of admission of students. It was alleged by the AO that the "Development Fund" collected from the students has a direct nexus between the admission and the fee receipts revealed that such collection was not voluntary in nature but was paid as a "quidpro- quo" to get the admissions. It was observed by him that as the subject amounts were neither in the nature of voluntary contributions nor are given with the directions by the payers to form part of the corpus of the assessee society, therefore, the same did not qualify for exemption u/s 11(1)(d) of the Act. Accordingly, the A.O backed by his aforesaid observations made an addition of Rs. 14,56,75,819/-. For the sake of clarity, the observations of the A.O on this issue are culled out as under: "7. Development Fund:- It has been found that the assessee society had collected amount of Rs. 14,56,75,819/- from the students as Development charges during the relevant F. Yr. and had taken the same directly to the Balance Sheet under the head "University Development Fund" . These amounts have not been treated as Income and not credited in I & E account. ....
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....ound. The AO is of the opinion that development fund of Rs. 14,56,76,819/- has been received not as voluntary collection and there is quid pro quo to get admissions. Since it is not voluntary, exemption u/s 11(1)(d) cannot be allowed. Assessee has contended that development funds are balance sheet items and not in the nature of corpus donation. As per AO since it is -quid pro quo to admission of student, it is income of the assessee. On the issue of corpus donation the courts are more liberal and have ruled in favour of assessee. In a case before Delhi HC the issue was whether, where donations were not proved genuine, can the amount was disallowed u/s 115BBC. The decision of the honorable HC is as under- Director of Income-tax (Exemption) v. Keshav Social & Charitable Foundation (2006) 9 (I) ITCL 7 (Del-HC): (2005) 278 ITR 152 (Del):- For the proposition that the assessee is a charitable trust has disclosed donations received by it as its income and spent 75% of the amount for charitable purposes and on failure of assessee to furnish details of donations, Assessing Officer treated that amount as cash credit under section 68 and benefit under section 11 was denied ....
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....ly with the provision of section 11. Together with the receipt of Rs. 63,79,68,858/- total income in that case will be Rs. 78,36,44,677/- and 85 percent of the amount being Rs. 66,60,97,975/- is required to be applied during the year. Against this the total application by the assessee is Rs. 69,08,04,304/- as seen in above para. Therefore, even if the corpus donation is treated as revenue item still the condition of Sec. 11 will not be violated." 13.3 On the aforesaid issue, Ld. AR submitted that the subject amount received was used for development of infrastructure of the assessee society. It was submitted by him that during the year under consideration the assessee society had spent an amount of Rs. 7,31,22,097/-. The collection of development fund was in accordance with Clause 24 of the bye-laws dated 29.09.2007 of the assessee society. It was further submitted by him that the collection of fund was approved by "Niji Vishwa Vidyalaya Ayog", i.e. the regulatory body of State Government. The Ld. AR further submitted that the assessee had applied 85% of the income including the receipts on account of "Development Fund" received during the year. The Ld. AR to support his contenti....
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....orm part of the corpus, therefore, the same holds the character of revenue receipts. We, thus, find substance in the observation of the AO that as the same cannot be treated as a corpus fund or a capital receipt, therefore, there was a violation of the provisions of section 11(1)(d) and the exemption claimed by assessee society treating the "development fund" as a capital receipt cannot be allowed. Accordingly, the first contention raised by the assessee society fails. 13.8 We shall now deal with the second limb of the contention raised by the assessee society, i.e. if the "development funds" collected by it are considered as revenue receipts, then, considering the fact that the funds so received are utilized for more than 85% of the total receipts (including development fund) for the subject year, therefore, the pre-condition to claim exemption u/s.11/12 stands fulfilled and, thus, the subject addition so made cannot be sustained. We are of a firm conviction that as the said aspect was duly considered by the CIT(A), which in our considered opinion has been appropriately adjudicated, therefore, finding no perversity, we approve the same. In result, Ground of appeal No. 8 of the ....
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.... by post only on 7th January. 2017 and was received by the Assessee on 9th January 2017. Contending that in terms of Section 153B of the Act the assessment order has to in fact be communicated to the Assessee on or before 31st December, 2016 and therefore, was time barred, the Assessee assailed the said order before the Commissioner Income Tax (Appeals)[CIT(A)] apart from other grounds. However, the CIT(A) observed that the assessment order was dated 30th December, 2016 and there was no material to show that the AO had revisited the order thereafter. Accordingly, the CIT(A) upheld the order relying on the decision of the Calcutta High Court in Commissioner of Income Tax, Central-1 v. M/s. Binani Industries Ltd. (2015) 59 Taxmann.Com 389 (Cal). 7. As rightly noted by the ITAT the requirement under Section 153B(1) is for the AO t9 make the assessment order within a period of twenty-one months from the end of the financial year in which the last of the authorization for the search under Section 132 of the Act was executed. In the present case, there is no doubt that the last date by which the assessment had to be made was 31st December, 2016. As further rightly noticed Sectio....
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.... (2021) 438 ITR 0288 (SC) dated 07.10.2021, wherein it was held as under: "4.3 On a fair reading of sub-section (2) of Section 263 it can be seen that as mandated by sub- section (2) of Section 263 no order under Section 263 of the Act shall be "made" after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. Therefore the word used is "made" and not the order "received" by the assessee. Even the word "dispatch" is not mentioned in Section 263(2). Therefore, once it is established that the order under Section 263 was made/passed within the period of two years from the end of the financial year in which the order sought to be revised was passed, such an order cannot be said to be beyond the period of limitation prescribed under Section 263(2) of the Act. Receipt of the order passed. Under Section 263 by the assessee has no relevance for the purpose of counting the period of limitation provided under Section 263 of the Income Tax Act. In the present case, the order was made/passed by the learned Commissioner on 26.03.2012 and according to the department it was dispatched on 28.03.2012. The relevant last date for the p....
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....r in which the income was first assessable." Following the analogy flowing from the judgment relied by the revenue, that "the word used in the relevant section is "made" and not "dispatch" or "received" by the assessee, therefore, date of passing of the order within the prescribed time of limitation is relevant, dispatch of order or receipt by the assessee has no relevance for the purpose of counting the period of limitation provided under the relevant section of the Income Tax Act", there is no scope for us to decide the aspect of limitation on a different benchmark which is not arising from the mandate in the statute. Since the impugned assessment order u/s.143(3) was made on 31.12.2016, a fact which could not be disproved by the assessee, therefore, the dispatch thereof on 04.01.2017 or receipt by the assessee after 31.12.2016, cannot be a basis to treat the same as barred by limitation or passed beyond the prescribed date of limitation. Consequently, Ground No. 1 of cross-objection in the present case filed by the assessee stands dismissed. 17. Ground No. 2: Regarding confirming the disallowance of Rs. 2,18,48,453/- on account of Depreciation. 17.1 Observation of the A.O ....
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....s.11(1)(a) of the Act. Therefore, in addition to the allowance of 100 percent cost of asset, again allowing depreciation will lead to additional debit or double deduction. For example if the asset in question is a building then in addition to 100 percent deduction 011 application basis. if depreci.at on is allowed at 10 percent on the basis of assessee's claim then the addition 10 percent will be giving double benefit to the assessee. In other words, by spending Rs. 100 the charitable trust will get debit of Rs. 110/-. This is an absurd position. This was not the intention of the legislature in allowing deprecation to the assessee. The decision of Karna aka High Court in the case of Lissie Medical institution (Supra) is exactly on the same line. The Hon'ble High Court has said that depreciation cannot be allowed when the full cost has been treated as application in any one year. This is one of the recent decision the tenor which has been accepted by the Government by explicitly bringing it as amendment by inserting Sec. 11(6). An entity with 12A registration is allowed 100 percent deduction of cost of asset by way of application whereas any business entity without ....
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....Hon'ble Supreme Court while answering the question has held as; "4. Question No. 2 herein is identical to the question which was raised before the Bombay High Court in the case of Director of Director of Income-Tax (Exemption) v. Framjee Cawasjee Institute [1993] 109 CTR 463. In that case, the facts were as follows: The assessee was the Trust. It derived its income from depreciable assets. The assessee took into account depreciation on those assets in computing the income of the Trust. The ITO held that depreciation could not be taken into account because, full capital expenditure had been allowed in the year of acquisition of the assets. The assessee went in appeal before the Assistant Appellate Commissioner. The Appellant was rejected. The Tribunal, however, took the view that when the ITO stated that full expenditure had been allowed in the year of acquisition of the assets, what he really meant was that the amount spent on acquiring those assets had been treated as 'application of income' of the Trust in the year in which the income was spent in acquiring those assets. This did not mean that in computing income from those assets in subsequent years, depreciatio....
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....w the claim of depreciation raised by the assessee society in the instant case. We, thus, direct the A.O. to vacate the disallowance made on this account and set aside the order of revenue authorities. In result, Ground no. 2 of the cross-objection of the assessee stands allowed. 17.6 In result, the cross-objection of assessee society in CO No.15/RPR/2018 is partly allowed, in terms of our aforesaid observations. 17.7 In combined result, the appeal of the revenue in ITA No. 176/RPR/2018 and CO No. 15/RPR/2018 of the assessee, both are partly allowed in terms of our aforesaid observations. Order pronounced in open court on 28th day of February, 2025. ============= Document 1 In view of the above discussions, total income of the assessee is computed as 1. inder .- Returned Income Rs. NIL Add :- 1. Surplus as per I & E account (para-6) Rs. 171,64,553/- 2. Disallowance of excess salary paid to Shri S.K.Choubey & Shri Anurag Seetha (para 4 and 5) Rs. . 5416704/- 3. Addition of Development fund collected during the year F.Y. 2013-14 (para-7) Rs. 145675819/- 4. Disallowance of student Data processing expenses (Para-8) Rs. 29441280/- 5. Disallo....
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....h.) For, Chlef Commissioner of Income tax, Raipur. Document 3 Government of frid-) बिल मंशालय : रांजरव विà¤à¤¾à¤— कारà¥à¤¯à¤¾à¤²à¤¯ मà¥à¤–à¥à¤¯ आयकर आयà¥à¤•à¥à¤¤ Ministry of Finance : Deott of navenue Office of the Chief Commissioner cl Income Tax ·Thà nh knihy, muy? (v.n.) 492 001 Central Revenue Burning. Civil Unes, Raipull (C.G.) 492 001 BR/Gram:AAYAKAR & TT/Phone:2331600.5038759 a QRFT/Fax : 0771-2428636 F.No.CCIT/Tech/10(23C)(vi)/ 34/07-08/ Date:14-12-2007 APPROVAL UNDER SUB-CLAUSE (VI) OF CLAUSE (23C) OF SECTION 10 OF THE INCOME TAX ACT. 1961 in exercise of the powers conferred by sub-clause (vi) of clause (23C) of section 10 of the Income Tax Act, 1961 1, the Chief Commissioner of Income Tax, Raipur (Chhattisgarh) hereby accord approval to "All Indla. Society for Electronics and Computer Technology (AISECT), Ralpur, (C.G.)" for the purpose of said sub-clause, for the F.Yr. 2006-07, ( A.Yr. 2007-2008), subject to the conditions mentioned hereunder: ....
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....ENUE) OFFICE OF THE COMMISSIONER OF INCOME-TAX. CENRAL REVENUE BUILDING, CIVIL LINES, RAIPUR, CHHATTISGARH Gram: AAYAKAR: PHONE. 0771- 2424187, 4053372(D) FAX -0771- 2427789 NAME OF THE ASSESSEE ALL INDIA SOCIETY FOR ELECTRONICS AND COMPUTER TECHNOLOGY(AISECT), N-3 C-SECTOR. AVANTI VIHAR. MAHASAMUND ROAD, RAIPUR 26-10-2010 DATE OF ORDER ORDER UNDER SECTION 12A (W .: 254(1) OF INCOMETAX ACT, 1961 ALL INDIA SOCIETY FOR ELECTRONICS AND COMPUTER TECHNOLOGY (AISECT), N-3 C.SECTOR, AVANTI VIHAR, MAHASAMUND ROAD, RAIPUR hos filed application on 07.03.2007 for seeking registration u/s 12A of the Income Tax Act, 1961 in the prescribed Proforma, The application has been entered at Serial No. 43 in the register of application u/s 12A maintained in this office. The applicant fulfilis all the conditions for grant of registration. Having satisfied about the objects of the Trust/Association/Institution and genuineness of its activities registration to the Trust/Association/Institution is hereby granted which will be effective from 01.04.2007 's con ficate is without prejudice la the examination on merits of the kim of exemption atfor the return is filed. (K.K. SHARMA) Comm....
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....ance pricing agreement (e) Residential status? RES Whether any income included in total income for which for which claim under section 90/904/91 has been made? NO (R) Whether any transaction has been made with a person located in a jurisdiction notified uis 94A of the Act? NO (h) In the case of non-resident, is there a permanent establishment (PE) in India No Whether this return is being filed by a representative assessce? If yes, please furnish following Information NG Name of the representative (1) Address of the representative (2) (3) Permanent Account Number (PAN) of the representative Where, in any of the projects/institutions run by you, one of the charitable purposes No is advancement of any other object of general public utility then,- If filed, in response to a notice u/s 139(9)/142(1)/148/153A/153C enter date of such notice, or u/s 92CD enter date of advance pricing agreement Whether any transaction has been made with a person located in a jurisdiction notified uis 94A of the Act? Name of the representative (1) OTHER DETAILS whether there is any activity in the nature of trade, commerce or business referred to in ....
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....change in the objects/activities during the Year on the basis of which approval/registration was granted? J Whether liable Is this your first return? Are you liable for audit? Date of audit report SI.No. Section under which you are liable for audit Date of audit report Section under which you are liable for audit SI.No. AUDIT DETAILS 7 SUDEEP MOITRA Name of the auditor signing the tax audit report Membership no. of the auditor 400340 ANUP SHRIVASTAVA AND ASSOCIATES Name of the auditor (proprietorship/ firm) AAGFA2687P Permanent Account Number (PAN) of the proprietorship/ firma 02/08/2014 Date of audit report 02/08/2014 Date of furnishing of the audit report (DD/MM/ YYYY) Part B - 11 STATEMENT OF INCOME FOR THE PERIOD ENDED ON 31ST MARCH 2014 Income from house property |3c of Schedule HP] (enter mil (f loss) 2 Profits and gains of business or profession jas per item no. E 35 of schedule BPI STATEMENT OF INCOME Income under the head Capital Gains Ja Short term a Jb Long term b € Total capital gains (3a + 3b) (enter mil if loss) 637968838 4 Income from other sources ....
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....hat is included In 12 above 14 Amount eligible for exemption under section 10(21), 10(2288), 10(23A), 10(238), 10(23CM(iv), 10(23C)(v), 10(23C)(vi), 10(23C)(via) 14 15 Amount eligible for exemption under section 10(23CM(iliad), 10(23CM(iliac), 10(24), 10(46), 10(47) 16 Amount eligible for exemption under any clause, other than those at 14 and 15, of section 10 16 17 Income chargeable under section 11(3) read with section 10(21) IN Income claimed/ exempt under section 13A or 13B in case of a Political Party or Electoral Trust (fill Schedule LA or ET) 18 19 Income chargeable to tax (6 - 8 - 9vili + 10v + 11 - 13-14 - 15 - 16 + 17 - 18) 19 20 21 Losses of current year to be set off against 19 (total of 2ix, 3ix and 4ix of Schedule CYLA) 20 Gross Total Income (19 - 20) 21 22 Income chargeable to tax at special rate under section 111A, 112 etc. included in 21 2 23 Deduction u/s 10A or 10AA 24 Deductions under chapter VIA (limited to 21 - 22) 24 25 Total Income |21-23-24] 24 26 Income which is included in 25 and chargeable to tax at special rates (total of (i) of schedule SI) 26 27 Net Agricultural income for rate purpose 28 Aggregate Income....
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....he information required by A.O. during the course of assessment proceedings. Assessee submission was sent to A.O. for his parawise comments, which has been considered and reply of assessee was sought on the same. The issues which has been brought to notice of undersigned by the assessee, on which the submission given by the assessee and report of A.O. are as under :- 1. To support the claim of students enrolled in various courses including online courses, assessee has submitted the course wise strength of the students . and receipt books on sample basis. Assessee has stated that the same course wise material has been submitted at Page 604 to 609 of the paper book filed before A.O. Hence the assessee has substantiated the receipt/and . Nt Document 10 the strength of the students. Until and unless there are any new facts comes to light and brought on record, there is no case of challenging the same. 2. Books, course material, online course material & reference books :- As per the assessee's submission there are total 1,11,205 students in the University & the total expenditure on the above study material is Rs. 14,88,04,199/- per annum which comes around Rs. 1,338 per ....
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....ed third party independent rates of data processing available on various websites on internet. A.O. has stated that assessce has submitted comparative chart but has not submitted details of advertisement. From the above discussion, facts and records and submissions made by assessee and A.O. report, it appears the payments. made to AISECT Ltd. is fair and reasonable and at arm's length rates and there is no apparent violation of section 13(3) of the I.T. Act. - 4. Subscription fee :- As per the discussion with assessee representative Shri Rajendra Sharma the subscription payments is nothing but the subscription fees for a monthly magazine called 'Electroniki Aap Ke Liye' published by the AISECT Ltd. This magazine is also supplied to various Govt. Departments Chhattisgarh Legislative Assembly Secretariat, Vigyan Prasar and Homi Bhabha Centre for Science Education. To these organizations the subscriptions is provided for an annual payment of Rs. 330. AISECT Raipur, has received the subscription of this magazine for an annual payment of Rs. 264 which is 20% less than the price charged by the AISECT Ltd. to third parties, hence, it appears that the payment made for subscript....
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....ri S.K. Choubey is not only a well qualified educationalist having engineering degree and vast experience of heading various organizations, participating in international conferences and recipient of various National & State level awards, he also have the responsibilities that the University should govern and operate as per law. He is responsible to the AISECT Society, Raipur at large for showing excellent results & making an improvement every year by innovating creative ways to achieve the objective of the society. To support his clam assessee has submitted photocopies of awards received by Shri S.K.Choubey. Hence, Os per the assessee the salary paid to Shri S.K. Choubey is in commensurate with his qualification, experience and responsibility. 1 Dutr. Document 13 Assessee has further stated that the appointment of the Chancellor is approved by Governor of the State and the salary is decided by the Governing Council which constitute of 9 members out of which 2 are nominated by the Governor and 1 is nominated by the State Government. Hence the pay is decided by the Governing Council on the basis of ability and experience of the Chancellor. Assessce has further submitted....