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2016 (5) TMI 873 - ITAT JAIPUR

2016 (5) TMI 873 - ITAT JAIPUR - TMI - Disallowance of exemption claimed U/s 10(23C)(iiiad)/ 10(23C)(iiiab) - Capital Subsidy grant received from State Government of Rajasthan - whether treated as Revenue Receipt and included in calculation of total receipts for calculation of the exemption limit prescribed u/s 10(23C)(iiiad)? - Held that:- It is undisputed fact that the assessee is a charitable institution covered U/s 10(23C)(iiiab) as well as 10(23C)(iiiad) of the Act. The assessee substantial .....

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n U/s 12AA of the Act but the ld Assessing Officer has to calculate the real income on the basis of material available with him and is duty bound to assess the correct income as per law. - ITA No. 61/JP/2015 - Dated:- 8-4-2016 - SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM For The Assessee : Shri Rajiv Pandey (CA) and Ms. Dakshayani Pandey (Adv) For The Revenue : Shri Raj Mehra (JCIT) ORDER PER: T.R. MEENA, AM This is an appeal filed by the appellant against the order dated 01/12/2014 passed b .....

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l Grant in building construction cost made by the State Government amounting to ₹ 1,23,90,976/- as income instead of capital grant; (iii) in not accepting the fact that the Society is fully financed by the State Government and further in not accepting that the gross receipt of the society is less than ₹ 1. Crore and that the society exists solely for educational purpose and not for purposes of profit. 2. The assessee is a charitable Trust running education institute in the name of Sh .....

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3,59,428/- was claimed U/s 11 of the Act by the assessee and net deficit of ₹ 15,00,416/- was shown. It was noticed by the Assessing Officer that the assessee had received ₹ 1,23,90,976/- from Government of Rajasthan as subsidy which had not been shown in the income and expenditure account and aggregate annual receipt after including such amount becomes more than ₹ 1.00 core. Therefore, the ld Assessing Officer gave reasonable opportunity of being heard on this issue. Further h .....

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s being carried out by society during the period relevant to the assessment year 2010-11. As the total income of society is much less than the prescribed limit of ₹ 1.00 crore, thus it is exempted U/s 10(23C)(iiiad) of the Act. The society under assessment was complying the conditions of the provisions of this Section. The society was qualified for the exemption under the provisions of the IT Act. During the year, the State Government reimbursed ₹ 1,23,90,976/- out of building expens .....

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ipts of the assessee is covered U/s 10(23C)(iiiad) of the Act. The claim made by the assessee U/s 11 is not applicable as the assessee did not have registration U/s 12AA of the Act at the relevant period. After considering the assessee s reply, the ld Assessing Officer has held that the assessee had claimed these expenses U/s 11 of the Act but it does not have registration U/s 12AA of the Act. The subsidy received by the assessee from the State Govt. is includable in total receipts. It is furthe .....

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re the ld CIT(A), who had dismissed the assessee s appeal by observing as under:- 4.5 I have perused the assessment order, remand report of the AO, submissions including judicial citations and cross reply of the appellant and find that an addition of ₹ 1,23,90,976/- has been made by the AO on account of receipts from Govt. of Rajasthan. These' receipts have been claimed as reimbursement of expenditure incurred by the appellant on construction of building. The appellant has also declare .....

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of the appellant for the period under consideration and assessment has been completed in the capacity of an AOP. 4.6 The appellant has stated that the receipts of ₹ 1,23,90,976 are in the nature of reimbursement of expenses incurred on construction of building and have been received from the Govt. of Rajasthan and therefore do not form part of the total receipts of the society. The other receipts of the society were less than ₹ 1 crore and therefore exemption u/s 11 of the IT Act was .....

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to apply and obtain registration u/s 12AA of the IT Act for the period under consideration. The receipts of ₹ 1,23,90,976 are forming part of the receipts of the society for the period under consideration and have been rightly considered by the AO as part of the total receipts of the society. The appellant has wrongly taken those receipts directly to the balance sheet and failed to show the receipts in the gross receipts in the Receipt and Payment Account. The appellant has also failed to .....

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be part of the receipts of the society or not. Therefore, it may be seen that the facts of the case are clearly distinguishable and would not be applicable to this case. 4.10 In view of the above facts, I hold that the AO was justified in holding that the appellant is not entitled for the claim of exemption u/s 11 of the IT Act and confirm the addition of ₹ 1,23,90,976 made by the AO on account of reimbursement of expenditure on building construction. I also confirm the addition of ₹ .....

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ion of total receipts for calculation of the exemption limit prescribed u/s 10(23C)(iiiad) of the Act by the lower authorities. The legislative intention is not to include capital subsidy grant but revenue receipt on account of tuition fee and other fee etc. The amount given by the State Govt. do not possess the Character of income earned by the society. The term Annual Receipt has not been defined in section 10(23C)(iiiad) nor in Rule 2BC(1) of the Income Tax Rules, 1962 (in short the Rules), H .....

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executive order of the District Collector of Dausa to construct Women s Polytechnic. As per balance sheet as on 31/3/2010, total assets were ₹ 63,66,607/-. Total grant given for building was at ₹ 1,23,90,976/- and society is substantially financed by the State Government and eligible for exemption U/s 10(23C)(iiiab) of the Act. The gross receipts of the society is less than ₹ 1.00 crore, therefore, it is covered U/s 10(23C)(iiiad) of the Act. He further relied on the following .....

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