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TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 110
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.... despite the fact that no rental income had been offered during the year under consideration. 2. The facts, as borne out from the record, reveal that the assessee is engaged in the business of leasing infrastructure facilities to educational institutions and also in running its own educational institution. During the year under consideration, the assessee acquired an immovable property comprising land and building situated at Singena Agrahara, Gottamaranahalli Village, Anekal Taluka, Bangalore, admeasuring approximately 5.2260 acres along with additional land and building admeasuring about 99,096 square feet, for a total consideration of Rs. 72,71,88,480/-. It is the consistent stand of the assessee that the said property was not acquired as a passive investment but was immediately deployed as a business asset for establishing and running its own pre-primary school under the name "Ebenezer Beginnings". 3. The assessee filed its return of income on 28.09.2016 declaring total income of Rs. 1,02,639/-. Subsequently, the assessment was reopened under section 147 by issuance of notice under section 148 dated 30.03.2021 on the premise that income chargeable to tax had escaped asses....
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....security deposit of Rs. 4,65,000/- and admission form fees of Rs. 47,000/-, and it was submitted that these receipts were duly accounted for and offered to tax in A.Y. 2016-17 in accordance with the matching principle. 7. The assessee further substantiated its claim by placing on record audited financial statements, ledger accounts of AMET, comparative balance sheet schedules, and extracts of Profit & Loss Accounts for the relevant as well as subsequent years, which clearly demonstrated that the amount of Rs. 21,68,000/- was initially reflected under the head "Short Term Loans & Advances" and subsequently regrouped under the head "Trade Receivables", thereby evidencing that there was merely a reclassification without any alteration in the intrinsic nature of the receipts; it was also brought on record that in A.Y. 2016-17, the income from school operations, including the very same receipts, had been duly recognized and accepted in scrutiny assessment under section 143(3) vide order dated 17.12.2018, thereby establishing that the accounting treatment adopted by the assessee was in consonance with the matching principle and had attained finality at the hands of the Department; fur....
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....contra, the learned counsel for the assessee drew our attention to the entire documentary material placed on record, including audited financial statements, tabulated break-up of receipts, comparative balance sheet schedules, and the order passed under the Wealth Tax Act, to submit that the property had already been put to use for business purposes during the relevant previous year and therefore fell outside the ambit of section 22, rendering section 23 wholly inapplicable. 10. We have heard the rival submissions at considerable length, perused the orders of the authorities below, and carefully examined the entire material placed on record, including the detailed findings recorded by the learned CIT(A), the financial statements, and the evidentiary documents furnished by the assessee. The controversy, though projected by the Revenue as one of non-disclosure of rental income, in essence revolves around a far more foundational issue, namely, whether the property in question had been put to use for the purposes of the assessee's business during the year under consideration so as to fall outside the ambit of section 22, or whether it remained a vacant or commercially idle asset so a....
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....t, balance sheet schedules, and audited financial disclosures, and are not in dispute. It has been specifically clarified, and not controverted by the Revenue, that these receipts were collected during the admission process for the academic year 2015-16 but pertained to services to be rendered in the subsequent financial year, and therefore, in accordance with the well-settled matching principle, the same were offered to tax in A.Y. 2016-17 when the corresponding educational services were actually rendered. 13. The Assessing Officer's characterization of the said amount as mere "canteen fees receivable" is thus factually erroneous and demonstrably contrary to the record, as the tabulated break-up itself reveals that the receipts span across multiple heads of educational and ancillary services intrinsically connected with the business of running a school. Further, the financial statements as on 31.03.2015 and 31.03.2016, when read conjointly, clearly indicate that the amount of Rs. 21,68,000/- was initially reflected under the head "Short Term Loans & Advances" and subsequently regrouped under "Trade Receivables", without any alteration in its intrinsic character. The comparative....