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Income Tax Appellate Tribunal, “B” BENCH KOLKATA
Before: Shri Sanjay Garg & Dr. Manish Borad
order : June 12, 2023 आदेश / ORDER संजय गग�, �या�यक सद�य �वारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 22.03.2021 of the Principal Commissioner of Income Tax (hereinafter referred to as the ‘PCIT’) exercising his revision jurisdiction u/s 263 of the Income Tax Act (hereinafter referred to as the ‘Act’).
The brief facts of the case are that the assessee society is involved in educational activity and is registered as a charitable institution u/s 12A of the Act and thus entitled to the deductions u/s 11 of the Act. The assessee filed its return of income declaring nil income for claiming deduction u/s 11 of the Act which was accepted by the Assessing Officer. Thereafter, the ld. PCIT exercising his revision jurisdiction u/s 263 of the Act observed from the assessment records that the development fund of Assessment year: 2016-17 Salt Lake Shiksha Sadan Rs. 31,05,450/- was transferred to Balance sheet directly without routing through I/E accounts and taken to the liability as corpus fund in the A.Y. 2016-17 only without having any reflection of the amount in the Income & Expenditure Account. Academic improvement fund of Rs. 36,00,600/- was charged under the current liability without routing through the I/E accounts. Admission fee of Rs.20,50,000/- was not routed through Income & Expenditure A/C and directly taken to corpus fund of the balance Sheet as liability. The ld. PCIT observed that the aforesaid receipts being revenue in nature, were required to be routed through I/E accounts. He therefore show-caused the assessee in this respect. The assessee replied that the aforesaid receipts were not regular revenue receipts, rather, the said receipts were capital in nature and weredirectly routed to the corpus fund of the assessee society which were to be used for the development purposes. The assessee society in this respect relied upon the decision of the ITAT Delhi in in the case of J.D. Tytler School dated 08.01.2014; Judgment of Hon'ble Rajasthan High Court in the case of Sukhdeo Charity Estate V. ITO[1991] 192 ITR 615, and Judgment of Hon'ble Delhi High Court in case of DIT (Exemption) v. National Association of Software & Services Co. [2012] 345 ITR 362. However, the ld. PCIT did not get satisfied with the above submissions given by the assessee and held that the admission fees, academic improvement fund and development fund collected by the assessee were not qualified under the corpus donation and could not be treated as capital receipt. He therefore held that the nature of these receipts being revenue in nature, the same were required to be routed through I/E account. He therefore held that the assessment order as erroneous and prejudicial to the interest of the revenue and set aside the issue to the file of the Assessing Officer to pass order considering the above positions.
Assessment year: 2016-17 Salt Lake Shiksha Sadan 3. The ld. counsel for the assessee has submitted that the exercise of revision jurisdiction by the ld. PCIT in this case is not justified because the issue being one is a debatable issue. The ld. counsel in this respect apart from relying on the decisions as mentioned above, has further relied upon the decision of ITAT, Kolkata in the case of Vidya Bharati Society For Education & Scientific Advancement vs. ACIT in dated 10.01.2020, Panchjanya Trust vs. ITO in ITA No.1841/Kol/2017 dated 01.10.2019 and the decision of Hon’ble Karnataka High Court in the case of DCIT vs. Children’s Education Society in ITA No.1078 of 2006 and Ors. to submit that in the aforesaid decisions the funds received for development purpose have been held to be originally treated towards corpus fund of the recipients and it has been held that the same were not the revenue receipt. The ld. counsel has further relied upon the decision of the Hon’ble Supreme Court in the case of CIT vs. Max India Ltd. reported in 295 ITR 282, wherein, it has been held that where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue, unless the view taken by the Income Tax Officer is unsustainable in law. The ld. counsel has further invited our attention to page 13 of the paper-book to submit that the funds collected by the assessee have been used for development purposes i.e. for purchase and development of land and extension and renovation of existing school at Salt Lake. The ld. counsel has invited our attention to page 14 of the paper-book which is the copy of the order dated 09.10.2021, whereby, the State Government has remitted 100% of stamp duty and 100% of registration fees in favour of the assessee i.e. Salt Lake Shiksha Sadan in respect of the aforesaid land purchased by the assessee. The undisputed facts of the case are that the aforesaid receipts by the assessee which Assessment year: 2016-17 Salt Lake Shiksha Sadan have been routed through corpus fund of the assessee have been used for the development purpose i.e. for purpose of land and extension of school land and building. Even the State Government has also exempted stamp duty and registration fees on the purchase deed of the land.
Considering the above peculiar facts of the case that the funds, otherwise, have been deployed for the development purposes and the issue being debatable, in our view, the exercise of revision jurisdiction in this case by the ld. PCIT u/s 263, under the circumstances, was not justified. Therefore, the impugned revision order passed by the PCIT is quashed.