TaxTMI 
TaxTMI 
2025 (2) TMI 1594
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....ollowing grounds : " 1. The Ld. CIT(Appeals) erred both in law and on facts of the case in granting relief to the assessee. 2. The Ld. CIT(Appeals) erred in admitting additional evidences filed by the assessee as the assessee did not provide any sufficient cause for non- submission of the said evidences before AO as per Rule 46(A) (b). 3. The Id. CIT (Appeals) has erred in concluding that the assessee is entitled to the benefit of exemption u/ s. 11 (a) of the Act, even though the assessee failed to produce the Books of A/c. both in assessment proceedings as well as appellate proceedings. 4. The Id. CIT (Appeals) has erred in holding the entire salary payable/ paid of Rs. 4,10,43,006/- made towards objects of the society, even though the assessee could substantiate such salary expenditure only to the extent of Rs. 73,24,994/-. 5. The Id. CIT (Appeals) has erred in holding interest expenditure claimed towards Interest Payable to APSFC at Rs. 60,09,115/-, Interest payable to UCO Bank at Rs. 4,07.616/-, Interest Payable to SBI(124) at Rs. 5,32,851/-, Interest Payable to SBI(1204) at Rs. 9,16,763/- & Other Expenditure Payable at Rs. 75,45,38....
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....ation, it enjoys the benefit of exemption u/s 11A of the Act. Thus, no such impugned addition shall be made taxable in the hands of assessee. 4. The Ld. CIT(A) erred in not adjudicating ground no.3 taken before him. 5. The Ld. CIT(A) erred in not adjudicating ground no.4 taken before him. 6. The Ld. CIT(A) erred in not adjudicating ground no.7 taken before him. 7. The Ld. CIT(A) erred in not adjudicating ground no.10 taken before him. 8. The appellant may, add or alter or amend or modify or substitute or delete and / or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal. 4. The brief facts of the case are that, the assessee is a society registered u/s. 12A of the Income Tax Act, 1961 ('the Act'), filed its Return of Income ("ROI") for A.Y. 2012-13 on 25.06.2012 admitting total income of Rs. Nil. Search and seizure operation u/s. 132 of the Act was conducted in the case of M/s. Aurora Educational Society and other group cases in which the assessee was also covered. Accordingly notice u/s 153A of the Act was issued to the assessee. In response to the notice issued u/s. 153A of the Act, the as....
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....filed by revenue before the bench and submitted that, the claim of the assessee that there was no incriminating material before the Ld. AO is not correct. Therefore, the Ld. DR prayed before the bench to dismiss the claim of the assessee. 9. We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. There is no dispute about the facts that the A.Y. 2012-13 was an unabated year and as per the decision of Hon'ble Supreme Court in the case of PCIT, Central-3 Vs. Abhisar Buildwell (P) Ltd. (supra), no addition can be made in the hands of the assessee in the unabated year in absence of any incriminating material. The relevant para of the decision of Hon'ble Supreme Court in PCIT, Central-3 Vs. Abhisar Buildwell (P) Ltd.(supra) is reproduced as under : "13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence o....
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....ated separately for furnishing of inaccurate particulars. Penalty provisions u/s 271(1)(b) are initiated separately for failure to comply with notices issued u/s 142(1) of the IT Act. Penalty provisions u/s 271A are initiated separately for non- maintenance of books of accounts." 9.2 On perusal of para no.9.7 of the order of Ld. AO, we found that, there is no reliance on any incriminating material by the Ld. AO while making the addition in the hands of the assessee. Further, the expenses which have been denied by the Ld. AO and the gross receipts which have been treated as income of the assessee by the Ld. AO, were already recorded in the books of account of the assessee. Therefore, in our considered opinion, the addition made by the Ld. AO is not based on any incriminating material. Therefore, respectfully following the decision of Hon'ble Supreme Court in the case of PCIT, Central-3 Vs. Abhisar Buildwell (P) Ltd.(supra), we hold that, the addition made by the Ld. AO without any incriminating material is not sustainable. Accordingly, the C.O. of the assessee is allowed and the appeal of the revenue is dismissed. 9.3 As we have decided the appeal on lega....
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....account before the Ld. AO & failed to substantiate that 85% of the gross receipts have been utilized for objects of society, ii) the assessee has not accounted the sale proceeds received from WIIZ Realtors LLP, iii) the assessee is engaged in real estate business & has not kept separate books of account as per the mandate of section 11(4A) of the Act and iv) the assessee has diverted the fund of the society for personal use of the Trustee violating the condition of section 13 of the Act. Accordingly, the assessee has violated the various conditions, which deprive the assessee from the exemption of section 11 of the Act. As the assessee is not eligible for any exemption u/s.11 of the Act, as per the combined reading of section 2(24)(2A) and 12A(1) of the Act, all the receipts of the assessee are liable to be considered as income of the assessee. Accordingly, there is no infirmity in the order passed by the Ld. AO in treating the gross receipts of the assessee as total income. However, brushing aside all the findings of Ld. AO, Ld. CIT(A) has allowed exemption u/s.11 to the assessee. Hence the order of the Ld. CIT(A) is liable to be set aside. In their alternate argument, the Ld. DR ....
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....by the Ld. CIT(A) at para no.8.3.1 of his order and the Ld. CIT(A) has deleted the addition made by the Ld. AO. However, the revenue has not filed any appeal before the ITAT against such findings of Ld. CIT(A). Therefore, the allegation of the Ld. DR in this regard is liable to be rejected. 14.3 As far as the allegation of the Ld. DR with regard to violation of section 13 is concerned, the Ld. AR submitted that, the Ld. DR / Ld. AO has only made a general allegation without making any specific instances of any violation. Further, with regards to transaction of payment/receipt with other associate societies, the Ld. AR submitted that, all such payments / receipts are in the nature of loan, which are for the achievement of the object of the society and has been recorded in the books of account. Accordingly, there is no contravention as far as section 13 of the Act is concerned. 14.4 Further, to strengthen their submission, the Ld. AR invited our attention to para no.6.5.3 of the order of Ld. CIT(A), wherein the Ld. CIT(A) has given the findings that, the Ld. AO had made a request to Ld. PCIT for cancellation of registration of assessee u/s. 12AA of the Act and the Ld. PCIT did ....
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.... Act. The AO had sent a proposal to the Pr.CIT (Central) for cancellation of the registration u/s.12AA of the Act. On being specifically asked if the registration of the society was cancelled, the AO, vide letter dated 31-03-2021 has communicated that no communication regarding cancellation was received from the office of the Pr.CIT (Central). In other words, the registration u/s.12A has not been cancelled and the assessee continues to enjoy the benefit of the benevolent provisions of Section 11 of the Act. 6.5.4 Section 11 of the IT Act provides that income derived from the property held under trust for charitable purposes is exempt provided the said income is applied to the extent of 85% of the gross income. The permitted forms and modes of investing or depositing money were mentioned in Section 11(5) of the Act. Section 11(5)(x) of the Act permits societies to invest in immovable property except in Plant & machinery. For ready reference Section 11(5)(x) of the Act is reproduced below: (x) Investment in immovable property. Explanation .- " Immovable property" does not include any machinery or plant (other than machinery or plant installed in a building ....
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....tiate that 85% of the gross receipts have been utilized for the object of the society. The Ld. CIT(A) has given his finding at para no. 6.5.7. and 6.5.8. of his order, that the assessee not only maintained the books of account but also has got the books audited. The Ld. CIT(A), after calling for the remand report from the Ld. AO has given such findings. Hence, the objection of the Ld. DR regarding non-production of books of account is rejected. 15.3 Further, it is the objection of the Ld. DR that, the assessee has not fully accounted the sale proceeds of the land received from WIIZ Realtors LLP. In this regards we found that, the Ld. AO had made an addition of Rs. 57 Lakhs on account of on money, which the Ld. CIT(A) at para no. 8.3 and 8.3.1 of his order has dealt with the issue and has deleted the addition made by the Ld. AO. Further, the revenue has not filed any appeal before us against the said deletion by the Ld. CIT(A). Hence there is no question of raising any such objection that the assessee has not accounted the alleged amount of Rs. 57 lakhs. Accordingly, the objection of the Ld. DR on this count is also rejected. 15.4 As far as the objection of the Ld. DR with reg....
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....the remand proceedings also, the assessee produced the details and the documents with regard to salary of Rs. 2,25,77,199/- only as against the total salary of Rs. 5,91,95,210/- Accordingly, the assessee failed to produce any details/documents with regard to balance expenditure of salary. Therefore, the balance expenditure of salary of Rs. 3,66,18,011/- is liable to be disallowed as application of income. 16.1 Further, the Ld. DR submitted that, the assessee has claimed expenditure of Rs. 17,08,128/-, on account of interest paid to UCO Bank, for which no details / evidences were furnished by the assessee to substantiate that the loan has been used towards the object of the society and the payment of interest is eligible as an application of income. Therefore, the interest payment of Rs. 17,08,128/- paid to UCO Bank is liable to be disallowed as application of income. 16.2 Further, on going through the computation of income of the assessee which is placed at page no.2 of the paper book, the Ld. DR submitted that, the assessee has claimed the amount of loan given to other societies as application of income, however, the same is not available as application of income, as the sam....
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.... interest payment to UCO Bank of Rs. 17,08,128/-. As the assessee could not furnish any information on the amount of interest paid and the purpose for which the loan was obtained, the AO was of the view that the interest payment should not be allowed. I have perused the ledger account of the bank loans. On perusal, it is seen that these were regular interest payments on various dates throughout the year. I see no reason why these interest expenses cannot be considered as application of income, just because the assessee has failed to furnish the purpose of these loans. The AO was at liberty to write to these banks to verify the purpose of these loans from the loan documents. Without clear evidence to show that the loans were diverted to non- charitable purposes, the observation of the AO only amounts to suspicion which cannot be the reason for disallowance. Therefore, in the absence of concrete evidence, I see no reason why these interest expenses cannot be considered as expenses towards the objects society. 17.1.1 The Ld. AR further submitted that, on perusal of ledger of bank loan, the Ld. CIT(A) found that these were regular payments of interest to the bank and accordingly all....
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.... & non teaching staff. A plain reading of these ledger accounts shows that all these payments are made through the bank account of the assessee. The assessee's society runs six colleges namely Aurora's Scientific Technological & Research Academy, Haindavi PG College, Sant Samarth Institute of Management, Bandlaguda, Aurora's Polytech Academy, Bandlaguda, Aurora's Legal Sciences Academy, Bandlaguda, Aurora's Design Academy, Banjara Hills, which has approximate students strength of 1,181 and teaching staff strength of 114 and non- teaching staff/driver of 85 persons. These colleges have various UG, PG and diploma courses. A table of bifurcating colleges and approximate staff, students and workers as furnished by the AR is reproduced below: S. No. College Courses Students Strength Staff Strength Non- Teaching, Substaff, Driver 1 Aurora's Scientific Technological & Research Academy UG Civil Engineering 467 24 25 Computer Science and Engineering Electronics & Communications Engineering Information Technology Data Sciences PG Transportation Engineering VLSI Computer Science and Engineering ....
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....salary and therefore the assessee had uploaded the evidences randomly with regard to salary expenditure of Rs. 2,25,77,199/-. We have also gone through page nos.16 & 17 of the paper book, wherein the assessee has requested the Ld. AO that the assessee is ready to furnish additional vouchers, if the Ld. AO would request for the same on test basis. Accordingly, we found that, there was no denial on the part of the assessee to produce any evidences corresponding to the salary expenditure. Further, the Ld. CIT(A) has also given the findings that, all the payments to staff has been made through banking channel and all the expenditure has been incurred towards the object of the society and eligible to claim as application of income. Under these factual matrix, we do not find any infirmity in the findings of the Ld. CIT(A) and accordingly, we uphold the findings of the Ld. CIT(A) qua this issue. Therefore, we dismiss the objection raised by the revenue qua this issue. 18.2 The other objection of the Ld. DR is that, the assessee has claimed expenditure of Rs. 17,08,128/- on account of interest paid to UCO Bank for which no details / evidences were furnished by the assessee to substantia....
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....objection of the DR regarding claim of depreciation on fixed assets, it was found that, the assessee has disallowed the depreciation in the computation of income (placed at page no.2 of the paper book), therefore, the Ld. DR did not press this issue. Accordingly, we dismiss the objection of the revenue qua this issue. 18.5 In the result, the issue of the Revenue related to " allowability of various expenditure as application of fund" is dismissed. 19. The next issue of the revenue is related to the addition of Rs. 7.20 Crores made by the Ld. AO u/s.68 of the Act and which was deleted by the Ld. CIT(A). The Ld. DR invited our attention to para no. 10 of the order of Ld. AO, which are to the following effect : 10. Unaccounted Credits in Books of Accounts : 10.1 Assessee has shown Rs. 6,00,00,000/- as Loan received from Other Members and Rs. 1,20,00,000/- as Loan from AES in their Balance Sheet for the Financial Year 2015-16. However, assessee has not provided any details regarding the identity of the loan giver, genuineness and creditworthiness of the said transaction. Neither ledger account copies from the said party, nor any bank account statements evincing ....
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....ing appellate proceedings, the AR contended that the amount credited in the books does not automatically take the character of income u/s.68 of the Act. Further the AR stated that an amount of Rs. 6 crores was received from WIZZ Realtors and the remaining amount of Rs. 1.2 crores pertains to outstanding balance to Aurora Society. The AR has filed ledger account of WIZZ Realtors and a certificate of confirmation of balance from Aurora Education Society. I have considered the submissions of the AR and the AO. The AR has now filed confirmations and explanation for the unexplained entries. Hence the cash credits no longer remain unexplained. However, the confirmations that were filed now were not before the AO. Therefore, the AO is directed to verify the same before allowing the same. Subject to the above directions, the disallowance of Rs. 7.2 crores as unexplained cash credit is directed to be deleted. Accordingly, Ground No.6 of the appellant is ALLOWED subject to the above entries. 19.4 On perusal of above, we found that, the Ld. CIT(A) after verifying the documents submitted by the assessee was convinced with the documents and deleted the addition. However, the Ld. CIT(A) was a....
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....expenses of Rs. 33,44,400/-, which the assessee has claimed as application of income. The Ld. DR submitted that, the Ld. CIT(A) has mentioned in his order that, even without considering these expenses i.e. advertisement expenses and guest faculty & honorarium expenses, the assessee has already applied 85% of the gross receipts towards the object of the trust. Accordingly, the assessee is not obliged to substantiate these expenditure with corresponding evidences. The Ld. DR further submitted that, the assessee is not at liberty to spend their surplus amount i.e. the amount available with the assessee over and above 85% of the gross receipts otherwise than on object of the society. The assessee is duty bound to keep the surplus fund under the mode specified u/s.11(5) of the Act or if the assessee has to spend the surplus amount, it has to spend the same towards the object of the trust only. As the assessee has failed to substantiate the claim of advertisement expenses of Rs. 19,97,440/- and guest faculty & honorarium expenses of Rs. 33,44,400/- with supporting vouchers/evidences, the trust has not followed the mandate of section 11 on this count also. 24. Per contra, the Ld. AR re....
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.... 13 to 15.7 of this order. Hence, our findings in ITA No.304/Hyd/2022 mutatis mutandis apply to the first issue involved in ITA No.306/Hyd/2022. Accordingly, the objections of the revenue qua first issue in ITA No.306/Hyd/2022 are dismissed. 29. As far as the objection of the revenue related to expenditure on account of salary, interest to bank and depreciation under the second issue in ITA No.306/Hyd/2022 is concerned, the facts of this case are identical to the objection of the revenue in ITA No.304/Hyd/2022, which we have decided against the revenue from para nos. 14 to 16.5 of this order. Hence, our findings in ITA No.304/Hyd/2022 mutatis mutnadis apply to the second issue involved in ITA No.306/Hyd/2022 related to expenditure on account of salary, interest to bank and depreciation. Accordingly, the objections of the revenue related to expenditure on account of salary, interest to bank and depreciation are dismissed. 29.1 The other objection of the revenue under second issue is related to claim of college maintenance expenditure of Rs. 25,78,765/-, examination and remuneration expenditure of Rs. 50,53,594/- and hostel maintenance expenditure of Rs. 36,25,553/-, which the ....
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....t to our notice by the revenue in support of their allegation that the assessee has spent their surplus amount i.e. the amount available with the assessee over and above 85% of the gross receipts, otherwise than on object of the society, the claim of the revenue cannot be hold good. Accordingly, we reject this objection of the revenue. 32. Accordingly, the objections of the revenue involved in second issue in ITA No.306/Hyd/2022 is dismissed. 33. The other issue of the revenue is related to the addition of Rs. 10,97,28,139/- made by the Ld. AO u/s.68 of the Act and which was deleted by the Ld. CIT(A). The Ld. DR invited our attention to para no. 10 of the order of Ld. AO, which are to the following effect : 10. Unaccounted Credits in Books of Accounts : 10.1 Assessee has shown Rs. 10,97,28,138/- as Loan received from Other Societies/Colleges/Members in their Balance Sheet for the Financial Year 2017-18. However, assessee has not provided any details regarding the identity of the loan giver, genuineness and creditworthiness of the said transaction. Neither ledger account copies from the said party, nor any bank account statements evincing the mode of payment ....
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.....Yashoda to substantiate his case that loans were received from these parties. The total of the balances match with that of the balance sheet. Therefore, the unexplained cash credit entry stands explained. However, this is a factual issue and the AO has not had an opportunity to verify these ledger accounts and balance sheets. The AO is therefore directed to verify the same. Subject to the above directions, the addition u/s.68 of Rs. 10,97,28,138/- is directed to be deleted. Accordingly, Ground No.5 of the appellant is ALLOWED. 35.1 On perusal of above, we found that, the Ld. CIT(A) after verifying the documents submitted by the assessee was convinced with the documents and deleted the addition. However, the Ld. CIT(A) was aware of the fact that the documents have not been verified by the Ld. AO, therefore, the Ld. CIT(A) has deleted the addition subject to the condition that the Ld. AO has to verify the documents before allowing the relief. As submitted by the Ld. AR, in consequential order, the Ld. AO after verifying all the documents has deleted the said addition. Therefore, finally the relief has been given to the assessee on the basis of satisfaction of the Ld. AO. Hence, i....
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....'s AR and thereon. Briefly, the facts are the AO noticed that the assessee purchased land at Kothur, Rangareddy district admeasuring Acs.10-29 gts vide Regd. Doc No.8207/2017 dated 16-11-2017 for Rs. 2,50,00,000/-. On being questioned that the same is not reflected in the receipts & payments schedule, the AR stated that this amount is already reflected in the receipts & payments schedule. The AO noted that an amount of Rs. 2,40,36,115/- was reflected as payment towards Nandigama land but not Kothur land. Not being satisfied with the reply of the assessee, the AO made the addition of Rs. 2.5 crores as unexplained and undisclosed investment u/s.69 of the Act. During appellate proceedings, the AR filed a written submission that the land is situated at Nandigama village, present Rangareddy District, then Kothur Mandal, falling in Mahaboobnagar district. It was also pointed out that the AO in the order for AY 2017-18 has reproduced a table at para 10.4 of the order wherein it was shown that Ac.10-29 Gts was shown to have been purchased for Rs. 4,29,00,000/- out of a total purchase of Ac.55-23 Gts. The AR stated that the AO hạs duly considered the land to the extent of Ac. 10-2....