TMI Blog2018 (5) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... s as the total fees (cost to the students) could be reduced by as much, while still meeting the cost, which would only stabilize in future. All the receipts and expenses being accounted, with the accounts being audited, we find no basis for drawing any adverse inference from the deposit of cash in bank post 08.11.2016. The facts are required to be seen in perspective, which we find has not been by the competent authority. We only consider it proper that the matter is restored back to the file of ld. CIT(E). We have already noted two aspects on which we find the assessee to have not furnished a satisfactory explanation, and which impinge directly on the acceptance or otherwise - being germane to the parameters laid down for the purpose, of the assessee’s application u/s. 12A. The assessee, as assured by the ld. AR before us, shall clarify on those aspects before the ld. CIT(E), with a view to satisfy him thereon. It needs to be appreciated that it is, under law, the competent authority which is to be satisfied about the objects of the society as well as the genuineness of its’ activities. Assessee’s appeal is allowed for statistical purposes. - I.T.A. No. 422/(Asr)/2017 - - - Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3C)(vi), which reads as under, the assessee preferred instead to be registered u/s. 12AA: Incomes not included in total income. 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall no be included- ( 23C) any income received by any person on behalf of- ( vi) any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority ; or This did not meet the approval of the competent authority. The two, i.e., section 10(23C)(vi) and sections 11 and 12 (requiring, per section 12A, registration u/s. 12AA), represented different and separate codes under the Act. It was not permissible to change track mid-way, for which no rationale had been furnished. The financial statements of the assessee-society revealed it to have sources of income other than from the school, which had thus not been divulged. Clearly, therefore, the society had pursued activities, i.e., apart from school, which had not been disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is, as clarified by the ld. counsel for the assessee, Mr. Goyal, likely to witness an increase from year to year as the school, presently upto Class 7, would go up to class 12, with one class being added each year. All the other assets (other than furniture attached and forming part of the building) could be removed and relocated. The assessee-society s principal asset would under the circumstances not only be lost to it, but stand to be passed to persons who have founded the same. This, then, unwittingly perhaps, becomes a mechanism for the transfer of assets/wealth of the assessee-society thereto! The dissolution clauses, read out by Sh. Goyal, on being questioned in this respect, would not be of much assistance to the assessee-society as the school building, being fixed to the land, could not be transferred to any other society (with similar objects) either during the currency or even at the end of the lease period. We observe this to be a serious structural defect in the assessee s functioning, adversely impacting its functioning and, thus, the genuineness of its activities. The transfer of the property of the society to others likely to be persons having founded the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.18,89,331/- Rs. 1,21,32,430/- Rs. 3,01,057/- F.Y. Gross Receipt Net surplus Fixed Assets Cash Bank The Lords School, Village Ramnagar 2013-14 ₹ 46,81,533/- ₹ 4,24,749/- ₹ 36,73,929/- ₹ 2,69,833/- 2014-15 ₹ 52,54,142/- ₹ 12,97,093/- ₹ 29,66,200/- ₹ 6,67,279/- 2015-16 ₹ 87,54.528/- Rs, 29,04,932/- ₹ 64,69,972/- ₹ 2,54,412/- Apart from a minor gain for f.y. 2013-14 (being the excess of donation received - at ₹ 14.68 lacs, over the society expenses), the consolidated surplus is lower than that of the school. The ld. CIT(E) has clearly failed to observe this apparent fact. The donation aforesaid also explains the increase in the gross receipt of the society over that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted two aspects on which we find the assessee to have not furnished a satisfactory explanation, and which impinge directly on the acceptance or otherwise - being germane to the parameters laid down for the purpose, of the assessee s application u/s. 12A. The assessee, as assured by the ld. AR before us, shall clarify on those aspects before the ld. CIT(E), with a view to satisfy him thereon. It needs to be appreciated that it is, under law, the competent authority which is to be satisfied about the objects of the society as well as the genuineness of its activities. Further, we are conscious that the ld. CIT(E) has not commented adversely on either of these aspects. However, neither as he expressed satisfaction with regard thereto, so that the same stand apparently overlooked by him, even as have been found extremely relevant by us. Tax proceedings, it may be noted, are not adversarial proceedings, as clarified by the higher courts time and again; the purview of an appellate authority being the correct determination of the assessee s tax liability, and which would include the procedural aspects as well. We have, in deciding this appeal, followed the dictum by the Apex Court laid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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