TMI Blog2022 (11) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... year the issue was accepted, and the turnover was assessed by the ld. AO without making any addition in the assessment u/s 143(3). In assessee's case while interpreting the treatment of advance fees as current liability or revenue receipt. The AO has taken one view in allowing the current liability on the submissions of the assessee of various judicial pronouncements rendered in the context, whereas the CIT is not in agreement with the view of the ld. AO. The decision of the AO to allow / accept the advance fees as current liability cannot be stated as unsustainable in law as he has taken a possible view based on application of mind. CIT(E) has not brought any material on record to show that the view taken is contrary to law - we are of the considered view that the CIT is not justified in setting aside the order of the ld. AO. Accordingly, the directions of the PCIT are quashed. Appeal of assessee allowed. - I.T.A. No.76/Asr/2022 And I.T.A. No.77/Asr/2022 - - - Dated:- 11-11-2022 - Dr. M. L. Meena, Accountant Member And Sh. Anikesh Banerjee, Judicial Member For the Appellant : Sh. Sudhir Sehgal, Adv. For the Respondent : Sh. Rohit Mehra, CIT. DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n law. 5. That without prejudice to the above, even otherwise also the Ld. Commissioner of Income Tax (Exemptions), Chandigarh has erred in holding that the appellant is not entitled for exemption U/s 10(23C) (iiiad) of the Act and has also erred in holding that fees and funds etc. received in advance for next academic session forms part of annual receipts / aggregate annual receipts as per provisions of section U/s 10(23C) (iiiad) of the Act.. 6. That without prejudice to the above, even otherwise also the directions given by the Ld. Commissioner of Income Tax (Exemptions), Chandigarh to the Id. Assessing Officer for the purpose of framing assessment a fresh by the Ld. Assessing Officer are against the law and facts and accordingly the same are liable to be quashed. 7. That the replies submitted to the Ld. Commissioner of Income Tax (Exemptions), Chandigarh have not been considered properly and the finding of the Ld. Commissioner of Income Tax (Exemptions) are not in accordance with the law and facts of the case and the same are arbitrary in nature. 8. That the Appellant craves leave to add, amend, alter, substitute, modify, rectify, or delete the grounds of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en actually received by you. Under the extant and applicable principles of accountancy when considered alongside the definition of Income of an exempt institution under the Act, these amounts will need to be held as receipts that are to be characterized as your Income . This would be the correct position u/s 10(23C)(iiiad) r.w.s. 2(15) r.w.s. 11 r.w.s. 2(24) of the Act. In view of the same and the provisions of the Act as mentioned above, you are ineligible for claiming exemption u/s 10(23C)(iiiad) of the Act, since total receipts being Income exceeds Rs. 1 Crore. It is also pertinent to mention here that mercantile system of accounting (Viz. which applies to trade/commerce/business) is not applicable in the computing of total income/total receipts of exempt institutions under the Income Tax Act, 1961. 5. In view of the facts stated above, it appears that the assessment framed u/s 143(3) of the Act on 10.12.2019 is erroneous as well as prejudicial to the interest of the revenue in terms of provisions of section 263 of the Act including Explanation 2 inserted by the Finance Act, 2015 w.e.f. 01.06.2015. You are, therefore, requested to show cause as to why order u/s. 263 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexed and the system of accounting policy is confirmed in page no. 7 of APB . During the assessment proceeding the details query was made by the ld. AO and the details advance fee was produced before the ld. AO in a letter dated 10.12.2019. The specific letters with the lists are annexed from page nos. 9 to 21of APB . After accepting the details of the advance fees the assessing authority had completed assessment accordingly. The assessing authority had not found any lacuna in the process of accounting and the fees as advance was not in a dispute in the assessment proceeding. 4.4 During revision the proceeding, initiated u/s 263, the notice was issued and the same issue was duly replied by the assessee before the authority by a letter dated 17.01.2021 which was also annexed in page nos. 26 to 38 APB . The ld. Counsel for the assessee clearly depicted the explanation in section 10(23C) related to aggregate annual receipts and the analysis of the annual receipts and the total receipts. 4.5 According to the ld. Counsel analyse the issue during the hearing. Assessee s synopsis para 17, 18 and 19 is reproduced as under: 17. The wording is only annual receipts , annual rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally financed by the Government for any previous year, if the Government grant to such university or other educational institution, hospital or other institution exceeds fifty per cent of the total receipts including any voluntary contributions, of such university or other educational institution, hospital or other institution, as the case may be, during the relevant previous year. 19. Thus on perusal of the aforesaid provisions of the law, your good self will find that the legislature has specifically used the word Total Receipts whereas in the provisions of section 10(23C)(iiiad) and section 10(23C)(iiiac) of the Act, the legislature has specifically used the word Annual Receipts . The words total receipts and annual receipts are not one and the same thing. 5. The ld. CIT DR vehemently argued and relied on the order of ld. CIT(E). The ld. CIT DR had not able to produce any contrary fact or explanation against the asssessee s submission. 6. We heard the rival submission relied on the documents available in the record. During the year of appeal, the assessee received the fees from students. The assessee during accounting treatment divide fees in two ways 1) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner having a different opinion. We are of the view that the findings of facts arrived at by the Tribunal do not warrant interference of this Court. That being the position, the present case would not be one of lack of inquiry ‟ and, even if the inquiry was termed as inadequate, following the decision in M/s Sunbeam Auto Ltd (supra), that would not by itself give occasion to the Commissioner to pass orders under Section 263 of the said Act, merely because he has a different opinion in the matter. No substantial question of law arises for our consideration. Consequently, the appeal is dismissed. 6.1 The advance fees when it is taken as an annual receipt of the assessee, the annual turnover is going up above Rs.1 crore and the assessee was unable to utilize the benefit for contravening section 10(23C). The entire issue is discernible in order of the ld. assessing authority. Further, the same issue was explained before the ld. revisional authority. There are two plausible views related advance fees from student. The revisional authority is treating it as turn over during the year of receipt. But the ld. AO is accepting the advance fees as current liability al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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