TMI Blog2015 (12) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... outflow without examining its ultimate use and its accounting done by the assessee. Further, we also find that the AO has not brought any adverse material evidence on record to conclusively hold that the amount of ₹ 17,00,000/- was utilized for other than educational /charitable purposes. Accordingly, we do not find any infirmity in the order of the ld. CIT (A) on this issued and the same is upheld. - Decided against revenue Addition on account of excess income over expenditure by allowing the exemption u/s 10(23C)(iiiad) - CIT(A) deleted the addition - Held that:- We have concurred with the ld. CIT (A) that the assessee’s income from educational institutions is exempt u/s 10(23C)(iiiad) of the Act. Thus, the conclusion of ld. CIT (A) that excess of income over expenditure in Sarti Devi Raja Ram Public School at ₹ 15,32,930/- and from Hindu Mahila Vidhyalya at ₹ 2,16,117/- is exempt u/s 10(23C)(iiiad) of the Act and thus, net surplus determined by the AO at ₹ 13,92,059/- has no basis, is correct and needs no interference. There is no merit in the contention of the revenue on this ground and so dismissed.- Decided against revenue Addition on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 10(23c)(iiiad) of the I.T. Act, 1961 without appreciating the full facts of the case. 2. On the facts and in the circumstances of the case, the CIT (A) has erred in law in deleting the addition of ₹ 13,92,059/- made by the Assessing Officer on account of excess income over expenditure by allowing the exemption under section 10(23c)(iiiad) of the I.T. Act, 1961 without appreciating the full facts of the case. 3. On the facts and in the circumstances of the case, the CIT (A) has erred in law in deleting the addition of ₹ 1,03,900/- made by the Assessing Officer on account of excess income over expenditure by allowing the exemption under section 10(23c)(iiiad) of the I.T. Act, 1961 without appreciating the full facts of the case. 3. The grounds of appeal taken by the Revenue for the assessment year 2004-05 are as under :- 1. On the facts and in the circumstances of the case, the CIT (A) has erred in law in deleting the addition of ₹ 22,99,500/- made by the Assessing Officer on account of income siphoned out, as the amount was transferred without any authority to transfer the funds from one institution by allowing the exemption under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he deletion of the additions challenged by the revenue ground-wise. 6. Ground No.1 is against the deletion of addition of ₹ 17,00,000/- made by the AO on account of income siphoned out. 7. The assessee had made withdrawal of ₹ 17,00,000/- from the corpus fund of SDRR Public School. The liability side of the balance sheet as on 31.03.2003 was reproduced by the A.O. as under.- Shamli Samaj Kalyan Samiti Balance brought forward Rs.1,33,32,987/- Income ₹ 15,32,930/- Rs.1,48,65,917/- Paid during the year 17,00,000/- ₹ 1,31,65,917/- Security deposit ₹ 4,90,000/- Rs.1,36,55,917/- From the perusal of sanction of the amount withdrawn from the corpus fund of Sarti Devi Raja Ram Public School (hereinafter the school ), the AO observed that the amount withdrawn was not for educational purpose and vouchers related to ₹ 2,00,000/- was for social work but was claimed to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Jeevan Jyoti Hospital and in respect of trust and three units, separate accounts were maintained and were consolidated in the balance sheet of the trust. The assessee further submitted that the Trust and its three units were all in the nature of public charitable purpose and not for profit and as such, were governed by provisions of section 11, 12 13 as well as section 10(23C)(iiiad) specially meant for educational institutions. The assessee submitted that there was nothing unusual if the funds required by one unit were passed on to the other unit in account (involving no income or expenditure under either of the unit). However, the AO observed that a perusal of balance sheet as on 31.03.2003 of the assessee trust revealed that the trust had lent a sum of ₹ 1,31,65,917.14 as on 31.03.2003 out of capital of Sarti Devi Raja Ram Public School and the amount received from the said School was not claimed as expenses or application of income strictly by account payee cheques and as such, the same could not be treated as income of the assessee. Further, it was observed by the AO that as per the assessee there was no bar in law to permit funds of the society to be used by uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of Sarti Devi Raja Ram Public School as appearing in the books of the appellant society the amount of ₹ 17,00,000/- have been received through cheques with have been credited to its account and the amount of ₹ 15,32,930/-being corpus during the year has been debited to its account and the same is reflected in the balance sheet of Sarti Devi Raja Ram Public School as income of the year. This implies that the amount of ₹ 1,31,65,917/- has been derived after accounting for the amount of ₹ 17,00,000/- in the books of the appellant society and no adverse inference is drawn. The society is not registered u/s 12AA of the Act. Therefore, the benefit of exemption u/s 11 is not permitted to it. However, the society is definitely engaged in educational activity which is charitable u/s 2(15) of the Act and has maintained separate accounts in respect of each educational institution. The institutions of the society is entitled for Claiming benefit of section 10(23C)(iiiad) of the Act being income of each educational institutions being less than ₹ 1 Crore. Hence the A.O. has wrongly invoked the provisions of section 11 of the Act as the appellant society is runn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AO has not brought any adverse material evidence on record to conclusively hold that the amount of ₹ 17,00,000/- was utilized for other than educational /charitable purposes. Accordingly, we do not find any infirmity in the order of the ld. CIT (A) on this issued and the same is upheld. This ground is rejected. 10. Ground No.2 is against the deletion of addition of ₹ 13,92,059/- made by the AO on account of excess income over expenditure by allowing the exemption u/s 10(23C)(iiiad) of the Act. 11. The facts relating to this ground are as follows. During the assessment proceedings for AY 2005-06, the AO observed that the exemption u/s 11 and 10(23C)(iiiad) was not allowable to the assessee due to the following reasons:- (i) Shri Anand contractor engaged for construction work had made advance of ₹ 6,70,000/- to M/s Gupta Builder in which the trustee is partner. The said contractor further advanced ₹ 2,00,000/- to Sh. Mohit Gupta, a close associate of the secretary. It showed that the institution was not running wholly and exclusively for education. (ii) Sh. Anand, the contractor was having bank account with Union Bank of India, Shamli. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther advanced ₹ 2,00,000/- to Sh.Mohit Gupta, a close associate of the secretary, the relevant evidences available on the Income-tax record of Sh. Anand Kumar (balance sheet as on 31.03.2005 and 31.03.2006 specifically copy of account of Sh. Anand Kumar in the books of account of M/s Gupta Builders, Shamli duly signed by the Secretary is on the record and is also part of assessment for that year. It shows that the institution is not running wholly and exclusively for education as stipulated in section 10(23C)(iiiad) of the Income-tax Act. (c) As discussed above in the construction work Sh. Anand Kumar, contractor is engaged. Sh. Anand Kumar is having account in the Union Bank of India, Shamli, the banking authority failed to intimate name and address of the person who had introduced the bank account of Sh. Anand Kumar but on perusal of the return of Sh. Anand Kumar it is noticed that the amount of ₹ 6,70,000/- is advanced to M/s Gupta Builders in which, the Secretary of M/s Shamli Kalyan Samiti, Shamli is one of the partner. It shows that trust, M/s Shamli Kalyan Samiti, Shamli and the funds of the institution is being diverted for some personal use of the truste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as such, he added the amount of ₹ 13,92,0591- to the income of the assessee. 12. The ld. CIT (A) deleted the addition by observing as under :- The facts of the case as well as submissions made by the appellant have carefully been considered. It is observed that in the preceding para it is held that the appellant's income from educational institutions is exempt u/s 10(23C)(iiiad) of the Act. Thus excess of income over expenditure in Sarti Devi Raja Ram Public School at ₹ 15,32,930/- and from Hindu Mahila Vidhyalya at ₹ 2,16,117/- is exempt u/s 10(23C)(iiiad) of the Act. Thus net surplus determined by the A.O. at ₹ 13,92,059/- has no basis and is held as untenable. Addition of ₹ 13,92,9301- is directed to be deleted . 13. Ld. DR relied on the order of the AO. 14. Ld. AR reiterated the submissions made before the ld. CIT (A) and prayed that the order of the ld. CIT (A) be upheld. 15. We have heard both the sides and perused the material on record. The issue involved in this ground is against the deletion of addition of ₹ 13,92,059/- made by the AO on account of excess income over expenditure by allowing the exemption u/s 10(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y from its regular and new members which is meant for Corpus fund of the society. We further find that such receipts have been corroborated with documentary evidences and which had not been rebutted by the AO even in the remand report, so we uphold that the nature of the receipts as claimed by the assessee was acceptable and there was no reason to tax the same as donation in the hands of the society. We further find that membership fees have been credited directly to the Corpus Fund in the Balance Sheet and the amount cannot be taken as income of the Samiti in any case. Accordingly, we do not find any infirmity in the impugned order of the ld. CIT (A), so the ground is dismissed. 21. Now, we take the appeal for assessment year 2004-05 in ITA No.5782/Del/2011. 22. Ground No.1 is similar to ground no.1 for assessment year 2004-05. The facts remaining the same this year too and the ld. DR failed to bring to our notice any change in facts, so we could take a different view, so we do not find any infirmity in the order of the CIT (A) and we uphold the same on this issue. It is ordered accordingly. Ground No.1 is rejected. 23. Ground No.2 is against the deletion of addition of & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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