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2015 (10) TMI 1891 - ITAT AMRITSAR

2015 (10) TMI 1891 - ITAT AMRITSAR - TMI - Entitlement to exemption u/s 10(23C)(iiiad) denied - Held that:- The only activity carried on by the assessee during the year is that of construction of the school building. This fact remains undisputed by both the Taxing Authorities. Now, in ‘Commissioner of Income Tax vs. Om Sarala Babu Educational Trust’(2014 (6) TMI 377 - ALLAHABAD HIGH COURT), the assessee had taken various steps, including the construction of the building of the school. The CIT(A) .....

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s incurred were expenses incurred only on account of bank charges and interest, books and periodicals and purchase of dresses and lease rent and nothing else.

Apropos the donations too, the affidavits of the donors were simply rejected summarily, without controverting the contents thereof and without showing the donations to be sham. It is pertinent to note that the capital contribution of ₹ 10,99,500/- was accepted by both the authorities below. Moreover, the assessee has obvio .....

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e following grounds: (i) That the Ld. CIT(A) has not appreciated the objective clause of the educational institution that it is mainly or solely for educational purpose. (ii) That the educational instituation has been approved by the Central Board of Secondary Education [CBSE], Delhi vide their letter dated 11.6.10. (i) Alternative Ground: That the Ld. AO/CIT(A) has not appreciated the fact that in the year under appeal the amount spent at ₹ 9,18,960/- is a capital expenditure. (ii) That t .....

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during the assessment proceedings, it was noticed by the AO that the main aims and objective of the assessee society was to impart education. The assessee alleged to have received donations from 112 persons in cash, for a total amount of ₹ 10,99,500/-. Against such receipts, the assessee society claimed expenses on account of bank charges and interest, books and periodicals, purchase of dress and lease rent. The excess of income over expenditure of ₹ 9,18,956/- alongwith unsecured l .....

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ding had not been completed during the year under consideration. The assets purchased were not put to use during the year and no depreciation had also been claimed. It was also held by the AO that there was no corpus fund with the society and the donations were alleged to have been received from agriculturists, who were not men of means. The affidavits of such donors, without supporting documentary evidence, were held to be nothing but selfserving statements, giving to prove the genuineness of t .....

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ent on education during the year and thus, the receipts, according to the A.O., could not be construed as exempt u/s 10(23) of the I.T. Act. It was held by the AO that in such circumstanes, as there was no beneficiary and the educational institution was not functional during the year, the claim of exemption u/s 10(23C)(iiiad) was wholly misplaced and that thus, it could not be allowed. 4. During the appellate proceedings before the CIT(A), the assessee contended that the exemption u/s 10(23C)(ii .....

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n certain judgements. The CIT(A) held that in the case of Nitya Education Scoiety vs. JCIT, Noida Range, Noida , 51 SOT 103 (Delhi), exemption u/s 10(23C)(iiiad) was allowed, as the assessee had corpus donation for a specified object, while in the assessee s case, there was no corpus fund with the assessee; that the construction work started with the cash donations received from persons who were agriculturists; that the affidavits filed by them were not supported by any documentary evidence in r .....

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as exempt u/s 10(23C)(iiiad) of the Act; that in the case of CIT vs. Sree Narayana Chandrika Trust , 212 ITR 456 (Kerala), it has been held that the work relating to the hospital started in the year 1973, though it became functional as a hospital only on April 25, 1978 and that the Tribunal was justified in holding that the assessee was entitled to the exemption u/s 10(22A) for the years 1977-78 and 1979-80; that it has further been mentioned in the said judgment that the Tribunal found as a fa .....

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AO found that the loan had been sanctioned by the bank for construction of the school building and the collateral was the landed property of persons who belonged to the same family which had floated the society, which clearly indicated that the assessee society was nothing but a family enterprise of the same persons, who had had founded it for the purposes of profit; that further, the findings of the AO had not been rebutted by the assessee by adducing any evidence in support of its contentions; .....

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bmissions have also been filed. 6. On the other hand, the learned DR has placed strong reliance on the impugned order, contending that no educational purpose was carried out by the assessee during the year under consideration; that the assessee did not possess any corpus for carrying out any educational purpose; and that the assessee had taken loan only for profit, else why anyone would take a loan in order to do profit. 7. We have heared the parties and have perused the material on record. The .....

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ution existed solely for educational purposes and not for purposes of profit. The case of the assessee is that during the year, it had received donations amounting to ₹ 10,99,500/-. Thereagainst, it had claimed expenses on account of bank charges and interest, books and periodicals, purchase of dress and lease rent. The excess of income over expenditure was shown to have been utilized for construction of the school building started during the year. The assesseee was held not to have initia .....

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) endorsed these findings of the AO, distinguishing the case laws cited on behalf of the assessee, as above, and further holding that the collateral for the loan sanctioned by the bank for construction of the school building was the landed property of the same family as had floated the assessee society, clearly indicating that it was but a family enterprise of all the persons, who had founded it for purposes of profit. 8. In this regard, it is seen that the only activity carried on by the assess .....

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