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Income Tax Appellate Tribunal, JABALPUR BENCH ‘DB’, JABALPUR
Before: Dr. B. R. R. KumarSh. Yogesh Kumar US
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by Revenue against the orders of ld. CIT(A)-1, Jabalpur dated 08.07.2020.
The Revenue has raised the following grounds of appeal are as under:-
1. Whether on the facts and in the circumstances of the case, the Ld CIT(A) erred in deleting the addition of Rs 2,46,00,672/- made by the Assessing Officer on account of disallowance of deduction claimed u/s 57 of the IT Act.
2. Whether on the fact and in the circumstance of the case the Ld CIT(A) was justified in deleting the addition of Rs 2.46 crores u/s 57, when the assessee was carrying on business and profession, was required to claim expenses as per provision of section 28 to 43B. 3. The brief facts of the case are that the assessee society is not registered under section 12A of the Income Tax Act, 1961 and engaged in providing skill training courses to students. The 2 Shri Sidhivinayak Education Society the assessee filed return of income declaring an amount of Rs. 48,300/-. As the society could not establish the genuineness/ veracity of the claim of expenditure the Aessing Officer disallowed the entire amount of expenditure. Rs.2,46,00,672/-.
4. Aggrieved the assessee filed before the ld. CIT(A) who deleted the disallowances made by the Assessing Office .
5. Aggrieved with the order of the ld. CIT(A), the Revenue filed appeal before the ITAT.
6. Heard the arguments of both the parties and perused the material available on record. During the hearings the ld. DR relied upon the order of the Assessing Officer and the ld. AR supported the order of the ld. CIT(A).
7. Before us, the ld. DR argued that the ld. CIT(A) erred in accepting the evidences and also accepted the fact that amount of Rs. 21,60,000/- has been paid to a family members of the assessable entity. S.No Name of Designation Salary Amount Total Employee in society paid in the Paid in amount paid post Rs. in F.Y 2016- 17 1. Shri Suresh President President 30,000/- 3,60,000/- Gupta S/o p.m Shri Babulal Gupta 2. Smt. Vice Vice 30,000/- 3,60,000/- Manorama President President p.m Gupta w/o Suresh Gupta 3. Smt. Sweta Member Member 30,000/- 3,60,000/- Gupta w/o p.m Shri Pankaj Gupta 4. Shri Neeraj Treasurer Treasurer 30,000/- 3,60,000/-
3 Shri Sidhivinayak Education Society Gupta s/o p.m Suresh Gupta 5. Shri Vicky Secretary Secretary 30,000/- 3,60,000/- Gupta s/o p.m Shri Suresh Gupta 6. Shri Swapnil HR HR 30,000/- 3,60,000/- Gupta p.m Total 21,60,000/-
On the other hand the ld. DR has also argued that the assessee society has shown its income in status AOP/BOI by filing its return of income in ITR -7 on 13/07/2017 declaring total income Rs. 2,68,300/- for the A.Y. 2017-18. Further the Society has revised its return of income in ITR-5 for the A.Y. 2017-18 declaring total income Rs, 48,300/- in status AOP/BOl. In the revised ITR filed total receipts of Rs. 2,46,48,972/- were shown in Schedule OS Income from other sources (Col.1(9)) and expenses/deductions of Rs.2,46,00,6721 were shown in (Col. 1(h) Deduction under section 57 of the Income-tax Act, 1961 and net income from other sources has been shown Rs. 48,300/- and hence the assessee has wrongly filed ITR in a different form and hence the disallowances have been rightly made by the Assessing Officer.
The snippets of the written submission filed by the assesese before the ld. CIT(A)which have been relied upon by the ld. AR before us is as under:-
The society entered into agreement with 3 concerns who were affiliated from NSDC Government Body and was responsible to provide skill training courses to students strictly adhering to NSDC norms. The amount was used at 30 centers of society to provide skill training courses to students free of cost. That AO in assessment order was of the opinion that office bearers of society has received benefits inform of salary and rent etc. ie all funds collected from the students in the form of educational course 4 Shri Sidhivinayak Education Society fee was utilized for the benefited to the society members only in form of salary and rent. This fact is proved wrong from page 4 of assessment order as salary to the concern persons or office bearers of society was found to be of Rs. 21,60,000/ - and rent paid to office bearer was found to be of Rs. 1,80,000/ - only. These payments were on account of professional services for which office bearers were fully qualified and experienced and the total of same was less than 10 percent of total expenditure. The AO on page 8 of assessment order has wrongly mentioned that assessee society has filed return of income in ITR 5 which is meant for assessee declaring income under the head income from business and Profession only. The assessee as has filed return in ITR 5 in past as also filed return in ITR 5 for the assessment year 2017- 18 also claiming receipts under the head income from other sources and expenditure under section 57. All the receipts and expenditure were examined by the AO in detail and no ambiguity was found therein. The AO has not found any mistake in genuinely of expenditures of society. The only contention of the AO was that the assessee society has wrongly filed return in ITR 5 under the head in come from other sources and has claimed expenditures under section 57 instead of under the head income from business and profession. Accordingly, AO disallowed expenditure claimed under section 57 of Rs. 2,46,00,672/- out of total receipt of Rs. 2,46,48,97 2/-.
The assessee is imparting training as per NSDC norms. For imparting the training, the appellant have to incur the expenditure. The appellant is maintaining books of accounts. It was held that the AO has not pointed out any defect in the books of accounts and hence the AO is not justified in disallowing the expenditure mainly on the ground that the same were not claimed u/s 28 to 43C and claimed u/s 57 of the Income Tax Act, 1961. The ld. CIT(A) held that the AO disallowed the expenditure on the ground that the appellant has filed the return in ITR-5 which cannot be accepted. We find that the assessee has paid Rs. 57,20,400/- to three franchisers namely Possit Skill Organization, Indus Edutrain P. Ltd. & ADS Skills P. Ltd. The salaries paid to the members of the society has been examined. The members are post graduates in technology , sciences and other subjects. The salary of Rs.
5 Shri Sidhivinayak Education Society 30,000/- can be considered as less on par with market averages. Hence, no benefit has been passed on to the members of the society. With regard to the rent paid, no excess benefit can be attributed to the members of the society. Hence, the Assessing Officer has faulted in disallowing the expenditure. We find that the ld. CIT(A) has gone in detail in examining the expenditure. No part of the expenditure has been found to be bogus or ungenuine. The ld. CIT(A) has also rightly held that the filing of the return in the wrong form do not disentitle the assessee from claiming the rightful expenditure. Hence, keeping in view the entire facts of the case, we decline to interfere with the order of the ld. CIT(A).
In the result, the appeal of the Revenue is hereby dismissed. Order Pronounced in the Open Court on 23/11/2023.