TMI Blog2017 (3) TMI 1471X X X X Extracts X X X X X X X X Extracts X X X X ..... re this issue to the file of the AO for verification and if found correct allow the same as the ratio laid down in the case of Ansal Land Mark Township P.Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT ] Disallowance out of kitchen expenses - Held that:- The assessee has claimed kitchen expenses of ₹ 5,75,486/- out of which ₹ 1,89,000/- were claimed as reimbursement to Imperial Academy and for balance of ₹ 2,86,484/- only ledger copy was filed. On spot inquiry, the Inspector found that no meal was provided to students, considering the genuineness, the AO disallowed ₹ 28,648/- being 10% of expenses of ₹ 2,86,480/- as income for non- education activity. - I.T.A. No. 194/Ind/2016 - - - Dated:- 28-2-2017 - SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER Appellant by : Shri S.N.Agrawal, C. A. Respondent by : Shri K. G. Goel, DR ORDER Per O. P. Meena, Accoutant Memebr This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)-22, holding concurrent jurisdiction of CIT(A), Indore-1 [hereinafter referred to as the CIT(A)] dated 08.12.2015. This appeal pertains to assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.12.2012 for assessment year 2004- 05 in appeal no. 129/09-10/455 held that the exemption u/s 10(23C)(iiiad) is not available as the conditions u/s 10(23C)(iiiad) is not satisfied. According to the CIT(A), the institution should not be for the purpose of profit and this condition is not satisfied as held in the assessment year 2004-05. Therefore, following the decision of assessment year 2004- 05, the ld. CIT(A) has upheld the order of the AO. 2.3 Being aggrieved, the assessee has filed this appeal before us. The Ld. Counsel for the assessee submitted that the assessee has not advanced loan to SESPL, Indore of ₹ 1,25,27,660/- but the entire amount was advanced for construction of school building, which was ultimately used by the assessee over running of school. The AO referred that the amount of ₹ 4,01,947/- was further advanced by the assessee, but from the balance sheet of the company, it is clear that the said amount was utilized for the purpose of repayment of liability and maintenance of school building and furniture. The contention of the AO that amount was given to M/s. SESPL was diversion of funds by the assessee society is not correct. The assessee on leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to as tenant above has deposit with the owner of the amount which has been mutually decided by both the parties by way of security deposit. Against this deposit, the interest shall not be charged by the party referred to as tenant (Jasleen Educational Service Society) above and the parties referred to as owner (SESPL) shall not be charged rent on said building. Thus, the amount received by SESPL was not used for personal purposes but used for construction of building. The ld. Authorized Representative of the assessee further submitted that surplus earning of the assessee in the year of appeal and also few previous year and subsequent years are as under :- S.No. Particulars 31.03.03 31.03.04 31.03.05 31.03.06 31.03.07 1. Gross Receipt 6632783 7646452 4866664 4414765 4439171 2. Net Income 3904546 2229702 262970 482906 670353 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing any rent. Further, the amount of ₹ 4,01,947/- paid was for the purpose of repayment of liability and maintenance of school building and furniture. Therefore, we do not find any diversion of funds as alleged by the AO. As the funds so advanced were used for the purpose of education only. In view of these facts, we are of the view that the assessee has properly utilized the entire income for the purpose of educational activities. We also find that the buses were used for pick up and drop of the students only for which fees were separately charged. Therefore, it cannot be said that the buses were used for running them on hire, as except pick and drop of student, these buses were used. Hence, it cannot be held that the assessee has derived any business profit from buses. However, for the purpose of allwoability, it was considered on running them on hire. We also note that the amount of ₹ 1.25 crore advanced to M/s. SESPL was for the purpose of construction of school building, as is evident from the facts that no interest thereon has been charged nor any rent of school building was given. This view is supported from the decision of Hon'ble Supreme Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iety is running the educational society for earning profit and not for charitable purpose . . The other case laws are relied and referred above in submission of ld. Authorized Representative of the assessee also support the case of the assessee society. 2.6.3 We find that a society can claim exemption u/s 10(23C)(iiiad) of the Act, if the condition enumerated therein are satisfied. We find that aggregate annual receipt of the society are at ₹ 48,66,663/- which does not exceed the amount of ₹ 1 crore for the assessment years under consideration. Therefore, the assessee is eligible for deduction u/s 10(23C)(iiiad) of the Act. The perusal of the assessment order shows that imparting of educational nature of activities carried on by the assessee has not been doubted by the AO. The provisions of Section 10(23C)(iiiad) of the Act reads as under :- (iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed; or 2.6.4 The perusal of the above provision sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case, the ld. CIT(A) erred in not allowing the claim of kitchen expenses as per 2nd proviso to Section 40(a)(ia) of the Act even when 2nd proviso having retrospective effect as per decision of the Hon'ble Delhi High Court in the case of Ansal Land Mark Township (P) Limited,( I.T.A.No. 160/161 of 2015) 3.1 The AO found that the assessee has claimed ₹ 4,75,486/- as kitchen expenses out of which ₹ 1,89,000/- were reimbursed to Sheetu Eductional Society for the kitchen work carried out by Imperial Academy. The AO was of the view that these expenses were paid fixed @ ₹ 1000/- per student for 189 students, hence, payment falls on services rendered under contract, on which, TDS was liable to be deducted u/s 194C of the Act. Since, no TDS was done, hence, payments were disallowed u/s 40(a)(ia) of the Act. 3.2 The ld. CIT(A) has observed that the payment has been made of round figure of ₹ 1000/- per annum per student, hence, it is not reimbursement of actual expenses but lump sum payment for services, hence TDS was required to be made. As regards reliance by assessee in the case of Ansal Land Mark Township (P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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