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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI KUL BHARAT & SHRI MANISH BORAD
Appellant by Shri Sumit Nema, Sr. A.R. with Shri Gagan Tiwari, A.R. Respondent by Shri R.S. Ambedkar, Sr.D.R. Date of Hearing: 11.11.2019 Date of Pronouncement: 17.12.2019 आदेश / O R D E R PER KUL BHARAT, J.M: This appeal by the assessee is directed against order of Ld. CIT(A)-2, Bhopal dated 22.2.2016 pertaining to the [ ] [M.P. Niji Vishwavidhyalaya Regulatory Commission, Bhopal] assessment year 2010-11. The assessee has raised following grounds of appeal:
1. That on the facts and circumstances of the case, the order of the Learned lower authorities is vitiated on several grounds, hence the same may kindly be quashed.
2. That the order passed is illegal, unlawful and opposed to provisions of law. 3. That the Learned Assessing Officer erred and was not justified in disallowing the claim of accumulation u/s 11(2) of Rs.16,74,668/- and the Learned CIT(A) erred and was not justified in upholding the action of the Learned A.O. 4. That the Learned Assessing Officer erred and was not justified in alternatively allowing exemption u/s 10(23C)(iiiad) of the Act, and the Learned CIT(A) erred and was not justified in upholding the action of the Learned A.O. The appellant craves leave to add, amend, alter, substitute modify any of the above grounds on or before the final hearing. 2. Briefly stated facts are that case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter called as ‘the Act’) was framed vide order dated 28.3.2013. The assessee society is duly registered u/s 12AA of the Act.
While framing the assessment, the A.O. observed that during the year under appeal, the assessee had declared income from other sources of Rs.20,20,000/- and claimed
[ ] [M.P. Niji Vishwavidhyalaya Regulatory Commission, Bhopal] application of money of Rs.42,332/-. The assessee also claimed Rs.3,03,000/- as the amount set out. The assessee claimed Rs.16,74,668/- as amount accumulated u/s 11(2) of the Act. The A.O. did not allow this claim and treated the same as income of the assessee. Aggrieved by this, the assessee preferred an appeal before Ld. CIT(A), who after considering the submissions, dismissed the appeal. Now the assessee is in appeal before this Tribunal.
Apropos to Ground Nos.1 & 2, no argument is made on behalf of the assessee, hence both the grounds are dismissed.
Ground No.3 is in respect of disallowing claim of accumulation of fund amounting to Rs.60,74,668/- and ground No.4 is disallowing the claim of exemption u/s 10(23C)(iiiad) of the Act.
[ ] [M.P. Niji Vishwavidhyalaya Regulatory Commission, Bhopal]
Apropos to both these grounds, Ld. Sr. Counsel Shri Sumit Nema on behalf of the assessee vehemently argued that the action of the authorities below is not justified and is contrary to the settled position of law. Ld. Counsel submitted that on both the grounds, authorities below have failed to appreciate the facts and law in right perspective.
Ld. Counsel submitted that even the assessee is entitled for exemption u/s 10(23C) of the Act. In support of this contention, Ld. Sr. Counsel for the assessee has relied upon the judgement of Hon'ble Delhi High Court rendered in the case of Council of Indian School Certificate Examination Vs. Director General of Income Tax to buttress the contention that the assessee is engaged wholly and exclusively for education purposes. Further, Ld. Counsel submitted that this being the legal issue ought to have been examined by the Ld. CIT(A).
[ ] [M.P. Niji Vishwavidhyalaya Regulatory Commission, Bhopal]
Further, Ld. Sr. Counsel submitted that claim is rejected purely on the basis that the assessee has not submitted form No.10 as per rule 17 of the Income Tax Rules, 1962. Ld. Sr. Counsel reiterated the submissions which were made before the Ld. CIT(A). It was contended that the assessee filed ITR 7 in which bifurcation of accumulated income has been shown. The main object and purpose of submitting form 10 is to provide information related to accumulation and purpose for utilization of accumulated income covered u/s 11(2) of the Act. But the assessee has not submitted form 10 and the same details which are required to be filled in form No.10 were duly available in the assessee’s ITR No.7. Merely non- submission of form No.10 does not mean that the accumulation of income is invalid u/s 11(2) of the relevant case laws. Ld. Counsel for the assessee placed reliance on the judgement of the Hon'ble Supreme Court rendered in the case of CIT Vs. Goetze (India) Ltd. (2006) 204 CTR (SC) 182. The reliance was also placed on the judgement of the Hon'ble Bombay High Court rendered in the case of CIT Vs. Nagpur Hotel Owners Association (1994) 209 ITR 441 (Bom.) The reliance was also placed upon the decision of [ ] [M.P. Niji Vishwavidhyalaya Regulatory Commission, Bhopal] Hon'ble Gujarat High Court rendered in the case of ACIT Vs. Stock Exchange Ahmedabad (Tax appeal No.207 to 213 of 2000).
Ld. D.R. opposed these submissions and supported the orders of the authorities below.
We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. Ld. CIT(A) rejected the claim of accumulation of fund u/s 11(2) of the Act by observing as under:
[ ] [M.P. Niji Vishwavidhyalaya Regulatory Commission, Bhopal]
The contention of the assessee is that merely
furnishing the requisite form belatedly should not be the reason for rejection of claim for accumulation of funds. In [ ] [M.P. Niji Vishwavidhyalaya Regulatory Commission, Bhopal] this regard, the assessee has relied upon the judgement of the Hon'ble Bombay High Court in the case of CIT Vs.
Nagpur Hotel Owners Association (supra), wherein the Hon'ble High Court has held as under:
[ ] [M.P. Niji Vishwavidhyalaya Regulatory Commission, Bhopal]
It is pertinent to note that as per section 11 of the Act, the assessee is required to exercise option for accumulation of funds in a prescribed format as prescribed under rule 17 of the Income Tax Rules (in short ‘the Rules’). The time limit prescribed under the rule 17 for exercising such option is the time limit as prescribed under sub-section 1 of section 139 of the Act for furnishing of return of income. Admittedly, the assessee failed to exercise this option as prescribed under the rule 17.
Moreover, the Ld. CIT(A) has pointed out serious discrepancies in the resolution of the society for setting apart of fund. Therefore, the judgement of the Hon'ble Bombay High Court rendered in the case of CIT Vs. Nagpur Hotel Owners Association, in our considered view would not be applicable as in this case, the foundation of exercising the option itself is found to be faulty. Therefore, we do not see any reason to interfere in this finding of the [ ] [M.P. Niji Vishwavidhyalaya Regulatory Commission, Bhopal] Ld. CIT(A). Same is hereby affirmed. Ground No.3 of the assessee’s appeal is rejected.
Ground No.4 of the assessee’s appeal is in respect of availability of exemption u/s 10(23C)(iiiad) of the Act.
Ld. Counsel for the assessee submitted that the Ld. CIT(A) ought to have allowed the claim of exemption u/s 10(23C) of the Act. In the light of the judgement of the Hon'ble Delhi High Court rendered in the case of Council of Indian School Certificate Examination Vs. Director General of Income Tax (2012) 20 Taxmann.com 505, Ld. Counsel for the assessee pointed that the facts are identical as were in the case of Council for Indian School Certificate Examination Vs. DGIT (supra).
On the contrary, Ld. D.R. opposed these submissions and submitted that the assessee is only conducting
[ ] [M.P. Niji Vishwavidhyalaya Regulatory Commission, Bhopal] examinations is not imparting education and is not for functioning wholly and exclusively for the education.
We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The Ld. CIT(A) has decided the issue in para 5.3 as under:
“5.3 Upon due consideration of the matter, it is held that besides the fact that no such claim was made in the return of income, exemption u/s 10(23C)(iiiad) is available only to “educational institutions” existing solely for the purpose of education and not for the purpose of profit. The appellant is not an “educational institution”. It is only a Regulatory Commission to regulate the operations of private universities in the state of Madhya Pradesh.
In view of the above, the grounds of appeal are dismissed.” 13. The assessee has placed reliance on the judgement of the Hon'ble Delhi High Court in the case of Council for Indian School Certificate Examination Vs. DGIT (supra), the Hon'ble Delhi High Court held as under:
[ ] [M.P. Niji Vishwavidhyalaya Regulatory Commission, Bhopal]
[ ] [M.P. Niji Vishwavidhyalaya Regulatory Commission, Bhopal]
Respectfully following the judgement of the Hon'ble Delhi High Court, we hereby direct the A.O. to grant exemption u/s 10(23C) of the Act and delete the addition.
In the result, appeal of the assessee is partly allowed.
Order was pronounced in the open court on 17.12.2019.