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The Income Tax Officer (E) , Mumbai Versus Chetna

2016 (8) TMI 76 - ITAT MUMBAI

Exemption u/s 11 and u/s 10(23C) (vi) - Held that:- Notwithstanding the breach/es, if any, by the assessee, as alleged by the Revenue, its’ entire income would continue to be exempt u/s.10(23C)(vi) of the Act for the current year. The ld. DR, on being queried thus in the matter during the hearing by the Bench, could not furnish any satisfactory answer. There is, thus, in our view, no merit in bringing the income of the assessee partially to tax by denying/disallowing exemption u/s. 10(23C)(vi) q .....

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rm part of the total income as defined u/s. 2(45) of the Act. There is accordingly no question of considering its’ application towards charitable purposes and allowing deduction in its respect on that basis. To this extent we are in agreement with the Revenue’s plea, which is against the allowance of both, the capital expenditure, as well as the depreciation thereon, in computing the assessee’s income under the Act. The assessee’s ‘income’ would thus stand to be arrived at on the basis of princi .....

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. - ITA No. 6762/ Mum/ 2011, C. O. No.180/Mum/2015, ITA No. 2451/ Mum/ 2013 - Dated:- 29-7-2016 - Sri Mahavir Singh, JM And Sri Sanjay Arora, AM Revenue by : Shri Premand J, DR Assessee by : Shri V. V. Mehandule Shri S. S. Phadker, ARs ORDER Per Bench The appeal by the Revenue and the Cross Objection by the assessee are arising out of the order of the CIT (A)-I, Mumbai passed in appeal No.CIT (A)-I/IT/E- I(196)/10-11 dated 26-07-2011. Assessment was framed by the Additional DIT (E), Range-I, Mum .....

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isallowance of exemption in respect of rental income in its Cross Objection. 3. Briefly stated facts are that the assessee is a Public Charitable Trust engaged in educational activities. The assessee is running the following Institutes:- S. No. Name of Institutions Courses 1 Chetana s H. S. College of Commerce & Economics & Smt. Kusumatai Chaudhari College of Arts. 2 Chetana College of Management Studies (B.M.S.) 3 Chetana s Junior college of Commerce & Arts 4 Chetana Junior College .....

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of the Act. The learned Counsel for the assessee made a statement at the Bar that neither registration granted u/s 10(23C) (vi) by the CCIT has been withdrawn till date nor the registration granted u/s 12A and 80G of the Act are withdrawn. The AO during the course of assessment proceedings noted that the assessee is doing the following activities:- a) Chetana Unique Academy b) Giving Hall on rent for functions like marriages etc. c) Coaching classes for students. Accordingly, the AO relying on .....

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of PGDBM,PGDCM, PGDBA and PGPRM. According to the AO, the assessee has also violated the terms of land allotted by the Government and for this penalty was levied by AICTE on the institution amounting to ₹ 63 lacs. According to the AO, profiteering is the main motive of the assessee as it has earned a fee of ₹ 1.75 crores for the above mentioned courses, which are unrecognized. He also noted that the assessee s expenditure on Amrut Mahotsav on the 75th Birth Day of the Founder Trustee .....

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6,247/- 2) Depreciation(as claimed) 11,75,831/- 2,86,92,078/- 15,02,97,911/- Less: 1) Expenditure on education 10,13,20,546/- 2) Capital disallowed (as discussed) - 10,13,20,546/- 4,89,77,365/- Add: 1) Penalty levied by the AICTE for conducting unapproved courses 63,00,000/- 2) Amrut Mahotsav expenditure not for the purpose of activity 2,06,048/- 65,06,048/- Total Income 5,54,83,413/- 4. Aggrieved, the assessee preferred before the CIT (A), who allowed the benefit of exemption u/s 11 and 10(23C) .....

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f the CIT (A), the Revenue challenged the allowance of exemption u/s 11 and Section 10(23C) (vi) of the Act on deficit arising out of the expenditure out of the income of which exemption has already been claimed and allowed set off of deficit of earlier years against the income of the current year. The assessee has challenged the order of the CIT (A) on the issue of confirmation of addition by disallowing exemption of rental income and addition of penalty levied by ACITE, New Delhi amounting to .....

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assessee is also granted exemption u/s 10 (23C) (vi) of the Act by the CCIT, Mumbai vide Order dated 08-05- 2009 for and from the assessment year 2008-09. The AO recorded these facts in the assessment order at page which read as under:- 2. The assessee trust is registered with the Charity Commissioner and also u/s. 12/A of the I. T. Act. Certificate u/s 80G of the I.T. Act has also been granted to the Trust by the D. I. T.(E), Mumbai. Chetana is a Society and is registered under Society s Regist .....

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estment as per the provisions of Section10 (23C) (vii) of the Act. In respect of the disallowance of ₹ 2,06,048/- the learned Counsel for the assessee stated that the assessee celebrated Amrut Mahotshav on account of completion of 75 years of age of its Founder, Shri Madhukar Rao Choudhary, in the assessment year 2003-04 and the expenditure incurred was debited in the account of Chetana Institute of Management (Computer Division). The balance of ₹ 3,00,000/- out of the advance given .....

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urred during the year under consideration. In respect to the observation of the AO that payment of ₹ 63,00,000/- to the AICTE was in violation of AICTE Rules and the courses were also not approved by the AICTE, the learned Counsel for the assessee submitted that the PGDBM, PGDCM, PGDBA and PGPRM courses were approved by the ACITE and that this amount was to be paid by the assessee to AICTE on account of enrollment of students beyond the strength of students approved by the AICTE and hence, .....

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preciation, the learned Counsel for the assessee submitted that the AO was not justified in disallowing the same relying on the decision of the Hon ble Supreme Court in the case of J. K. Synthetics Ltd. Vs Union of India [192] 65 Taxman 420 (SC), since this decision of the Hon ble Supreme Court is in respect of computation of income under the head business and, therefore, the same is not applicable to the facts of the assessee s case. 8. We find from the facts of the case that the assessee is al .....

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CIT w.e.f A.Y. 2008-09, i.e., the current year, and which obtains. There is no material on record, nay, not even a charge in its respect, i.e., of the withdrawal of the said approval by the competent authority, even as the same was confirmed before us by the ld. Counsel by making a statement at bar to that effect. That being the case, in our view, notwithstanding the breach/es, if any, by the assessee, as alleged by the Revenue, its entire income would continue to be exempt u/s.10(23C)(vi) of th .....

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