TMI Blog2016 (4) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer issued query letter on 17/10/2012 on both the issues in item No. 3,4 and 8, which was replied by the assessee vide letter dated 19/11/2012 at item No. 3 and 8. Thus, the Assessing Officer made detailed enquiry on both the issues and no adverse inference had been drawn by him. Further both the issues i.e. aggregate annual receipts and depreciation are also covered in favour of the assessee as various ITATs as well as Hon'ble High Courts have held that other receipts, which are not directly related with the receipts of the institution/trust, are not part of aggregate annual receipts. On depreciation also, various ITATs and Hon'ble High Courts have held that the income of the Trust is to be calculated as per Act. The depreciation is allowable even the assessee had applied its receipts against the assets which seems to be double deduction to the Assessing Officer but various courts has decided that the depreciation on assets is allowable. Now the law has been amended on this issue but which is operative prospectively. The case laws relied by the assessee are squarely applicable. We find that the Assessing Officer has formed one of the view but the ld CIT(Exemption) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under consideration to which, the Appellant Samiti is otherwise entitled to on a true and correct interpretation of the proviso to Sec.12A(2) of the Act. The said proviso was brought with a view to remove the unintended hardship and therefore, should be given a retrospective effect. Accordingly, the Appellant Samiti kindly be held entitled to the benefit of Sec. 11 12 of the Act pursuant to the registration granted u/s 12A of the Act, in this year also. 6. The CIT (Exemption), Jaipur further erred in law as well as on the fact of the case in holding that the depreciation is merely a notional expenditure and not an outgoing and same is not an application of income permissible u/s 11 (1)(a) of the Act, which is contrary to the provisions of law and facts and hence, to the extent of the depreciation, so disallowed, the income be treated as application eligible u/s 11 (1)(a) of the Act. 2. All the grounds of the assessee s appeal are revolving around passing order U/s 263 of the Income Tax Act, 1961 (in short the Act), treating receipts more than ₹ 1 crore, denying the benefit U/s 11 and 12 and not allowing depreciation. The ld CIT(Exemption) has observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been granted to the trust or institution u/s 12AA, then the provision of section 11 and 12 shall apply m respect of any income derived from the property held under trust of any A.Y. preceding the aforesaid AY, for which assessment proceedings are pending before the AO as on the date of such registration. This proviso inserted w.e.f 01.10.2014 is a beneficial proviso to remove the unintended hardship and therefore it has a retrospective effect. Therefore, once the registration has been granted to the assessee u/s 12AA, the benefit of section 11 and 12 is allowable to the assessee for earlier years also. Therefore, the order passes by AO allowing the exemption u/s 11 in the year under consideration cannot be said to be erroneous and prejudicial to the interest of the revenue considering the legislative intent for which proviso to section 12AA(2) has been inserted. 2. The assessee society is an educational institution running educational institutions at Mahwa (Dausa) like, Mahatma Gandhi P.G. Mahavidhyala, Mahatma Gandhi Teachers Training College and Mahatma Gandhi ITI College to impart education to students of every caste, religion, etc. All the income of the society is app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iti Mission (2012) 73 DTR 195 (Del.)(HC) CIT Vs. Market Committee, Pipli 330 ITR 16 (P H)(HC) CIT Vs. Tiny Tots Educational Society 330 ITR 21 (P H)(HC) CIT Vs. Shri Gujrati Samaj (Regd) 349 ITR 559 (MP)(HC) CIT Vs. Institute of Banking Personnel Selection 265 ITR 110 (Bom.)(HC) In view of above and considering the fact that all the issued raised by you has been considered by the AO while framing the assessment u/s 143(3), the order passed by the him is neither erroneous nor prejudicial to the interest of the revenue and therefore it is requested your honour to please drop the proceedings initiated u/s 263 and oblige. The assessee society had also submitted reply and he held that the assessee society had received 12AA registration subsequently, it should be given benefit of newly inserted proviso to Section 12A(2). However, as the new provision has been inserted w.e.f. 01/10/2014, therefore, the benefit of the same provision cannot be given to the appellant society as it filed application for registration on 04/2/2011. As per Section 10(23)(iiiad), the assessee has to fulfill the following condition:- (i) Assessee must be a university or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For which he relied on the decision in the case of Malabar Industrial Co. Ltd. Vs. CIT (2000) 243 ITR 83 (SC). He also relied on the decision in the case of CIT Vs. Max India Ltd. (2007) 295 ITR 282 (SC). He further argued that scholarship fees receipts by the assessee is not part of the aggregate annual receipt. Aggregate annual receipt includes only those receipts to which the institution has lawful right to make recoveries e.g. the receipt of school fees, library fees, sports fees, canteen fees etc., which the institution by virtue of an agreement with the student/scholar. In the case of assessee, the assessee samiti is custodian of receipt of scholarship received from the state government and had been distributed the amount to the eligible student. The appellant kept such receipts in the fiduciary capacity as a trustee of the State Government as a liability, which has been shown in the balance sheet. He has drawn our attention on page No. 9 to 37 of the paper book and argued that most of the scholarship receipts had been distributed but partly had not been distributed. It is a continuous process in every year to carry forward certain undistributed scholarship in the subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer also passed order by applying his mind after making proper enquiry. The ld CIT(Exemption) has not given show cause notice on proper enquiry, even then he has decided that the Assessing Officer has not made proper enquiry. He has drawn our attention on the show cause letter issued by the ld CIT(Exemption) at page 47 to 53 of the paper book and argued that no such issue was raised by the ld CIT(Exemption). Therefore, findings given by the ld CIT(Exemption) U/s 263 are against the principles of natural justice, for which he relied on the decision in the case of B.S. Sangwan Vs ITO (2015) 38 ITR 11 (Delhi)(Trib) wherein it has been held that the revision on grounds different from those set down in show cause notice is not permissible. The ld Assessing Officer scrutinized the case thoroughly after making proper enquiry. All the details, queries were replied by the assessee against the questionnaire dated 17/10/2012. The assessee submitted various replies on 19/11/2012 and 15/12/2012. The accounts were audited and no adverse remark has been made by the Accountant. The issue of scholarship has been considered by the Assessing Officer for which he has drawn our attention on page N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er both the issues i.e. aggregate annual receipts and depreciation are also covered in favour of the assessee as various ITATs as well as Hon'ble High Courts have held that other receipts, which are not directly related with the receipts of the institution/trust, are not part of aggregate annual receipts. On depreciation also, various ITATs and Hon'ble High Courts have held that the income of the Trust is to be calculated as per Act. The depreciation is allowable even the assessee had applied its receipts against the assets which seems to be double deduction to the Assessing Officer but various courts has decided that the depreciation on assets is allowable. Now the law has been amended on this issue but which is operative prospectively. The case laws relied by the assessee are squarely applicable. We find that the Assessing Officer has formed one of the view but the ld CIT(Exemption) has formed another view on same facts and circumstances, therefore, change of opinion is not permissible under the law. Accordingly, we set aside the order of the ld CIT(Exemption) passed U/s 263 of the Act. 6. In the result, the assessee s appeal is allowed. Order pronounced in the open ..... X X X X Extracts X X X X X X X X Extracts X X X X
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