TMI Blog2016 (4) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... uble taxation of the same income. The Ld.D.R. before us could not demonstrate as to how the seized material could be said as evidence of income being earned by the Trust. Even otherwise as observed by the Ld.CIT(A) as the alleged unexplained receipts is aggregating to ₹ 1,70,23,219/- and the alleged unexplained expenditure is much above the same i.e. aggregating to ₹ 2,25,02,116/-. When the income of the assessee is exempt u/s 11, if this income is taxed as income of the Trust, then, as the same is applied, there would be no sum which can be taxed in the hands of the assessee. We also find that the Hon’ble Delhi High Court in the case of DIT(E) vs. Raunaq Education Foundation (2007 (4) TMI 61 - HIGH COURT, DELHI ), held that exemption u/s 11 of the Act is to be granted when income is brought to tax u/s 68 of the Act. Out of the additions u/s 68 and 69C totalling to ₹ 4,22,48,338/-, no amount can be brought to tax, as the deemed application u/s 11(1) would be ₹ 5,44,75,960/- and the application of income in respect of capital expenditure would be ₹ 12,69,84,028/- totalling to ₹ 18,14,59,988/-. This results in a net deficit of ₹ 3,07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted on the assessee Trust and u/s 133A of the Act on 10.8.2006 at its premises at Ghaziabad. During the course of survey certain loose papers, receipt books and other relevant records were found containing the transactions relevant to the receipt of admission fee, incurring of an expenditure etc. which were confronted to the Chairman of the Trust Dr.P.Mahalingam. Statement of the Chairman was recorded an oath on 21.8.2006 and 25.8.2006 respectively. Statement of Shri Kamal Kannan, Accounts Officer was recorded on the date of survey itself i.e. 10.8.2006. Mr.Kamal Kannan stated that he was not an authorised person. To further questions he stated that the fee structure of students of management quota and government quota was the same. It is contended by the assessee, that its Chairman, in order to keep mental peace and avoid unnecessary harassment and also without going into the authenticity of the documents found in several and on advise of the officials of Income Tax Department had declared additional income of ₹ 3 crores for the F.Y. 2006- 07 relevant to the A.Y. 2007-08 and has paid taxes thereon. 2.5. Thereafter the assessments for all these A.Ys were taken up and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated at 6 lakhs { considering pw component out of 12 lakhs total fees) per student i.e. 20*6 lakhs = 1.20 crores. Since the assessee has shown an amount of ₹ 3.02 crores out of project work receipts as fees the total addition on this accounts works out to ₹ 3.15+1.20-3.02 crores = 1.33. crores. The assessee was specifically asked to furnish the details of building under construction with supporting evidence vide note sheet entry dated 06.12.2006. The same was again asked vide note sheet entry dt. 8.12.2006. Thereafter the assessee appeared on 11.12.2006, 14.12.2006, 18.12.2006, 22.12.2006 and 26.12.2006 but no information was furnished stating that the same was used to be kept at Chennai Office and the same was destroyed due to tsunami on our premises at Elliots beach Chennai on 26.12.2004 and we are unable to provide the same. Since the receipts of assessee are not fully accounted for in its books of accounts, income from property held under trust to that extent has been diverted for purposes other than to meet the objects of the trust. In addition, in this case, even expenditure of ₹ 5,82,94,052/- through books for building under construction is unvo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing the decisions of various appellate authorities cited supra and also taking into consideration all the relevant facts and circumstances of the case, I am of the considered opinion that the Assessing Officer was not justified to tax the surplus amount of ₹ 2,04,12,921/- disclosed in the Income Expenditure A/c, after denying the benefit of exemption u/s. 11 of the Act and further the addition made on account of undisclosed fees to the extent of ₹ 1,33,00,000/- and therefore, not sustainable. Accordingly, the entire addition of ₹ 3,37,12,921/- made to the returned version is hereby deleted. I also allow exemption u/s. 11 of the Act to the appellant. 3.2. Aggrieved the Revenue is in appeal before us on the following grounds. 1. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of ₹ 2,04,12,921/- by allowing the benefit of s.11 and 12 of the Income Tax Act, 1961 (the Act) ignoring and overlooking the material gathered during the course of survey u/s 133A of the Act and also when the receipts were not fully accounted for in the books and the expenditure of ₹ 5,82,94,052/- on building unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y reference. i. DIT(E) vs. Raunaq Education Foundation 249 ITR 76 (Del) ii. DDIT vs. Shanti Devi Progressive Education Society 340 ITR 320 (Del) iii. ITO vs. Baba Dhall Educational Society of India 27 SOT 391 (Del.) iv. CIT vs. Geetanjali Education Society 174 Taxman 440 (Raj.) v. ACIT vs. Shri Ganpati Educational Society ITA 2655/Del/11(Delhi ITAT) vi. Gagan Education Society vs. ACIT 131 ITD 443 (Agra) vii. CIT vs. Khalsa Rural Hospital Nursing Training Institute 173 Taxman 180 (P H) viii. ACIT vs. Balaji Educational Charitable Public Trust 48 SOT 281 (Mad.)(2011) 11 ITR 179 (Mad.) ix. CIT vs. Mool Chand Sharbati Devi Hospital Trust 190 Taxman 338 (All.) x. Chief CIT vs. Geetanjali University Trust 352 ITR 433(Raj.) 5.4. Applying the propositions laid down in these case laws to the facts of the case, we find no infirmity in the order of the Ld.CIT(A) in granting exemption u/s 11 of the Act to the assessee and also in deleting the addition made on inferences, specifically when the registration u/s 12 continues and when Sec.11 exemption was granted both in earlier as well as later years. 5.5. The A.O. had also made an observation that the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961 (the Act) overlooking the fact that it was only because of discrepancies detected during the course of survey on 10.8.2006 that the assessee has subsequently revised the original return filed on 31.10.2005 by filing a revised return on 31.3.2007 and enhanced the surplus (excess of income over expenditure) from ₹ 4,56,95,467/- declared in the original return to ₹ 6,46,65,262/- in the revised return. Thus excess surplus amounting to ₹ 1,89,69,795/- was declared. 6.1. The A.O. in this A.Y. rejected the claim for exemption u/s 11 of the Act by observing as follows. In the instant case, during certain enquiries, it came into notice, that the assessee Institution is taking capitation fee from the students over and above the fee prescribed by the authorities. Thus the assessee has commercialised the education. The activities of the Society cannot be said to be for general public utility as the assessee society is providing education to rich people only and on pick and choose basis. Mere reservation of such benefits in the Objects Clause can lose the Trust from sight its exemption. 6.2. On appeal the Ld.CIT(A) for the reasons recorded at para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in deleting the addition of ₹ 6,46,65,262/- by allowing the benefit of s.11 and 12 of the Income Tax Act, 1961 (the Act) even when it was established on the basis of the material found during the course of survey u/s 133A of the Act on 10.8.2006 that the assessee was running educational institutions on commercial lines with profit motive. 2. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in allowing the exemption u/s 11 of the Act when it has been clearly established by the AO that activities of the Trust are commercial in nature. 7.1. The facts and circumstances of the case, as well as the issues and decisions of the Authorities below are identical with that of the case for the A.Y. 2005-06. 7.2. Consistent with the view taken by us for the A.Y. 2005-06 in ITA 2404/Del/08, we uphold the order of the First Appellate Authority and dismiss this appeal of the Revenue. 8. ITA 1477/Del/11 A.Y. 2007-08 : - This is a Revenue s appeal for the A.Y. 2007-08 on the following grounds. 1. In the facts and in the circumstances of the case, the Ld.CIT(A) has erred in allowing the benefit of s.11 and 12 of the Income Tax Act, 1961 (the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of receipt of donations and other receipts over and above the stipulated fee structure. It is pertinent to mention here that a view cannot be drawn in respect of each page of the annexure. Therefore, in the absence of detailed clarification coming from the assessee, it can only be possible to draw a reasonable view. While doing so explanations given by the Counsel of the assessee are also taken into consideration and to the best of my judgement. 8.2. Thereafter he made an addition of ₹ 2,50,74,146/- u/s 69C of the Act and ₹ 1,70,23,290/- u/s 68 and a further addition of ₹ 1,50,970/- u/s 69C of the Act. 8.3. Aggrieved the assessee carried the matter in appeal. 8.4. The First Appellate Authority at para 5 and 5.1 of his order has held as follows. 5. The second and the third issue pertains to the additions u/s 69C of ₹ 2,50,74,146/- and ₹ 1,50,970/- and of ₹ 1,70,23,219 u/s 68. 5.1. The assessee has stated that the AO has added both the expenditure as well as the receipts leading to double addition. Register A2 and A10 pertain to certain transaction which were not recorded in the books of accounts of the assessee. However the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly accepted by the Income Tax Department, hence, the question of taxing the same amount in the hands of the assessee shall amount to double taxation. It has been held of the case of Hira Singb And Co. Vs CIT (SC) 287 ITR 209 that additions made on the basis of admission by assessee is justified. 5.5. Once the Department has accepted the statement of Dr P Mahalingam which was recorded as a result of survey. The Assessing Officer without any evidence cannot make an addition of the same amount in the hands of the asessee. Thus, the addition of the following amounts ₹ 2,50,74,146/-, ₹ 1,70,23,219/- and ₹ 1,50,970/- is hereby deleted, since it has already been taxed in the hands of Dr P Mahalingam. It is also observed that instead of an unrecorded amount of ₹ 2,52,25,116/-, Dr. P Mahalingam has surrendered an amount of ₹ 3 Crores and therefore these amounts cannot be again added in the hands of the appellant. As such the addition of ₹ 4,22,48,335/- (Rs.2,50,74,146/- + ₹ 1,70,23,219/- + 1,50,970/-) is hereby deleted. 8.5. Aggrieved the Revenue is in appeal before us. 8.6. After hearing rival contentions we hold as follows. 8.7. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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