TMI Blog2018 (12) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is confirmed. Withdrawal of exemption under section 11, 12 and 13 - surplus Land which is excess of income over expenses for the year - Held that:- Additional conditions for non-applicability of section 11 are provided under section 13 of the income tax act. The cash payment of the salary which has not been proved by the assessee is already held to be covered under section 13 (1) (a) and disallowed. One of the authorities on whom the powers of the verification of the genuineness of the activities are vested is Commissioner of income tax, who grants registration under section 12 A of the income tax act. In view of the continuation of the registration under section 12 A of the income tax act of the trust we do not find any reason to not to grant the benefit of section 11 and 12 of the income tax act to the appellant trust. Accordingly, we allow ground number 2 of the appeal and direct the learned assessing officer to grant exemption under section 11 and 12. Disallowance of depreciation on fixed assets - Held that:- Issue is squarely covered in favour of the assessee by the decision of the honourable Supreme Court in case of Commissioner of income tax vs Rajasthan Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided the claim of depreciation in favor of assessee. vi. That the CIT (A) erred on facts and in law in not giving any reasons on submissions made by the appellant in view of the insertion of section 11(6) inserted by the Finance Act, 2014 w.e.f. 1.4.2015 stipulating that in section 11 where any income is required to be applied or accumulated or set apart for application, then, for such purposes the income shall be determined without any deduction or allowance by w ay of depreciation in respect of any asset, acquisition of which has been claimed as an application of income u/s 11 in the same or any other previous year and thus, even effective from AY 2015-16, depreciation on assets only w here acquisition of asset has been claimed as application shall not be allowed. vii. That the CIT (A) has erred in not passing a speaking order and not giving reasons for rejecting various contentions raised by the appellant before him. viii. That the CIT (A) has erred in not following various judgments relied upon by the appellant. Order pronounced in the open court on /11/2018. 2. The brief facts of the case are that assessee is a society formed on 25/2/1994. Initially it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which is incomprehensible. Therefore, he issued a show cause notice to the assessee that why the above expenditure incurred in cash should not be added back to the income of the society being bogus expenditure. The assessee explained that assessee society is running school and college which require teaching staff for providing better educational facilities to the student and hence major expenditure is incurred on paying salary to the staff. It was further stated that expenditure on salary is 48% of the total receipt whereas according to the government order it can spend 75% to 80% of the total receipt in paying salary to the staff. With respect to the enquiry letter sent under section 133 (six) it was stated that eight notices were returned unserved with postal remark about the incomplete address and persons not known. It was stated that assessee has submitted the complete address of the employees the assessee also submitted the attendance register of such stop along with salary registers duly acknowledged by the staff about the payment of the salary. With respect to the confirmation received from three employees, he stated that one employee has stated that society has paid him m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y proof of the teachers and the tax deduction at source made thereon. When these details were not forthcoming from the assessee, AO proceeded to make further investigation and found that there is discrepancy in the salary recorded by the assessee in its books of accounts and other records compared to what is confirmed by those employees. He further stated that the learned assessing officer has not disallowed the complete salary but has disallowed the part of the salary from every employee, which has been paid in cash. He further held that though there is no restriction of payment by cash of salaries however such payment should have been substantiated with the adequate evidence of the payment to the employees and those employees should have confirmed this payments. He further held that those were acknowledged the payment have submitted that they have received lesser amount from the appellant. These findings of the learned assessing officer have not been controverted by the appellant with supporting details and evidences. He further submitted that the assessee has chosen to remain silent on the finding of the learned assessing officer where no responses are received from employees or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r adequate details of those employees before the revenue authorities. It should not be forgotten that assessee is a charitable trust and is a property of public at large, therefore higher duties are cast on charitable trusts. On reading of the order of the learned assessing officer and the learned Commissioner of income tax appeals with respect to this addition, we do not find any infirmity in their findings. In view of this the addition of ₹ 1569560 which is part of the salary paid by the assessee in cash to the teachers whose identity and genuineness of the payment could not be established by the assessee is confirmed. Accordingly, ground number 1 of the appeal is dismissed. 10. The second GROUND of appeal is with respect to withdrawal of exemption under section 11, 12 and 13 of The Income Tax Act on surplus of ₹ 2330808/-. The learned AO has denied the exemption under section 11/12/13 of the income tax act holding that due to the unawareness of the assessee for claiming bogus salary expenses in order to siphon money from the society by the management and non-maintenance of correct records Re: teachers and other salaried staff, the benefit of these sections have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uine. For the reason that assessee has paid salary in cash to the employees which could not be proved to the satisfaction of the learned lower authorities as genuine payment. It is an admitted fact that registration granted to assessee under section 12AA of the income tax act has not been withdrawn nor such proposal has been sent by the AO to the Commissioner of income tax. Conditions for applicability of section 11 and 12 of the income tax act as provided under section 12 A of the income tax act. Further, additional conditions for nonapplicability of section 11 are provided under section 13 of the income tax act. The cash payment of the salary which has not been proved by the assessee is already held to be covered under section 13 (1) (a) and disallowed. One of the authorities on whom the powers of the verification of the genuineness of the activities are vested is Commissioner of income tax, who grants registration under section 12 A of the income tax act. In view of the continuation of the registration under section 12 A of the income tax act of the trust we do not find any reason to not to grant the benefit of section 11 and 12 of the income tax act to the appellant trust. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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