Deputy Commissioner Of Income Tax (Exemption) vs. All India Society For Electronics And Computer Technology Bhopal

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ITA/192/2023HC Madhya Pradesh11 September 2024Bench: HON'BLE SHRI JUSTICE VIVEK RUSIA5 pages
For Petitioner: Siddharth Sharma
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, holding that the ITAT had rightly dismissed the Revenue's appeal. The Court noted that the appellant (Revenue) had conveniently avoided answering the observations made by the CIT and ITAT regarding the finality of assessments for AYs 2011-12, 2015-16, and 2016-17. The Revenue failed to distinguish the facts of the present case from those proceedings. The Court agreed with the ITAT that no different yardstick can be applied to the assessee for different assessment years, especially when the Department had not preferred any appeal in those years where similar issues were considered. All other issues had already been considered in the assessment proceedings for AYs 2011-12, 2015-16, and 2016-17, where no appeal was filed by the Department. Therefore, no grounds were found to admit the appeal.

What were the facts?

The assessee, All India Society for Electronics and Computer Technology Bhopal, filed an Income Tax Return for AY 2013-14 declaring Nil income. The Assessing Officer (AO) made additions of Rs. 7,43,91,421/- for disallowing Section 11 benefits on development fees and Rs. 2,93,49,953/- for excess income over expenditure. The AO held that the assessee's training activities were not charitable under Section 2(15) and violated Section 13(2)(c). The CIT(A) allowed the appeal, noting that similar activities were considered in public interest, without profit motive, and not treated as business in preceding/subsequent years. The ITAT dismissed the Revenue's appeal, finding AO's observations general and unsupported, and noting similar controversies were settled for AY 2013-14 and 2014-15. The ITAT also observed that assessments for AYs 2011-12, 2015-16, and 2016-17 did not disallow similar payments under Section 13.

What were the issues?

1. Whether, on the facts and in law, the ITAT was justified in treating payments for data processing, book purchase, center usage, and salary to persons under Section 13(3) as not excessive, without considering the AO's findings that such payments violated Section 13(1)(c) by providing benefits to specified persons. 2. Whether, on the facts and in law, the ITAT was justified in allowing exemption under Sections 11 and 12 by deleting additions of Rs. 2,93,49,953/- (surplus) and Rs. 7,43,91,421/- (development fees), ignoring the AO's findings that the society violated Section 2(15) and Section 13(1)(c), rendering it ineligible for exemption. Assessee's arguments: Not recorded. Revenue's arguments: The Revenue contended that the ITAT erred in allowing exemption under Sections 11 and 12 and deleting additions, as the assessee violated Section 2(15) and Section 13(1)(c) by making excessive payments to persons covered under Section 13(3).

Which sections of the Income-tax Act were involved?

Section 260A,Section 11,Section 12,Section 13(1)(c),Section 13(2)(c),Section 13(3),Section 2(15),Section 143(3)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BEFORE HON'BLE SHRI JUSTICE VIVEK RUSIA & HON'BLE SHRI JUSTICE AVANINDRA KUMAR SINGH ON THE 11th OF SEPTEMBER, 2024 INCOME TAX APPEAL No. 192 of 2023 DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTION) Versus ALL INDIA SOCIETY FOR ELECTRONICS AND COMPUTER TECHNOLOGY BHOPAL Appearance: Shri Siddharth Sharma, learned counsel for the appellant. ORDER Per: Justice Vivek Rusia Heard on the question of admission. The Deputy Commissioner of Income Tax, Bhopal has filed the present Income Tax Appeal under Section 260A of the Income Tax Act, 1961 being aggrieved by the order dated 31.01.2023 passed by Income Tax Appellate Tribunal whereby the order dated 16.08.2019 passed by Commissioner of Income -Tax (Appeals)-2 has been affirmed. Facts of the case in short are as under;- 2. The respondent being assessee submitted ITR for AY 2013- 1 ITA-192-2023 NEUTRAL CITATION NO. 2024:MPHC-JBP:47319 Signed by: PRAVEEN Signing time: 20-09- 2024 19:12:03 Signature Not Verified

14 declaring total income of 'Rs. Nil'. The case was taken up for the scrutiny assessment through CASS. The Assessment Officer vide order dated 31.03.2016 made additions of Rs.7,43,91,421/- on account of disallowance of the benefit of Section 11 of the Income Tax Act,1961 to assessee for receipts in respect of development fees from students and Rs.2,93,49,953/- on account of addition of excess of income over expenditure. The Assessment Officer has held that the assessee involved in the business of training of insurance agents which is not a charitable activity within the meaning of Section 2(15) of the Income Tax Act, 1961, hence not entitled for benefit of Section 11 of the Income Tax Act, 1961 upon violation of Section 13 (2) (c) of Income Tax Act, 1961. 3. Being aggrieved by the aforesaid assessment order dated 31.03.2016, the assessee preferred an Appeal befor the CIT (A). The CIT (A), vide order dated 16.08.2019 considering the facts that the activities carried out by the appellant were planned by the Government of India/RBI in public interest basically for development of rural India, the assessee did not have any profit motive. The learned CIT has also observed that in the preceding year and subsequent year i.e. A.Ys. 2011-12, 2015-16 & 2016-17 also the same activities have not been treated as business in the course of assessment proceedings by the Assessment Officer, therefore, on the 2 ITA-192-2023 NEUTRAL CITATION NO. 2024:MPHC-JBP:47319 Signed by: PRAVEEN Signing time: 20-09- 2024 19:12:03 Signature Not Verified

same set of facts, different stand cannot be permitted to be taken and according allowed the appeal and set aside the order of assessment. 4. Being aggrieved by the order passed by CIT(A), the Revenue preferred an Income Tax Appeal No.927/Ind/2019 (AY- 2013-14). Vide order dated 31.01.2023, the Income Tax Appellate Tribunal has dismissed the appeal by observing that the learned Assessment Officer has made a list of payments made by the assessee to specified persons under Section 13(3) and given his observations in the assessment order which are general in nature and not supported by any cogent basis and the similar controversy has been put to rest in AY 2013-14 and 2014-15 by Co-ordinate Bench of ITAT in the relevant assessment years. It has also been observed that the assessments of the assessee for AY 2011-12, 2015-16 and 2016-17 have been completed under Section 143(3) of the Act and no disallowance under Section 13 have been made in any of the assessments qua similar payments. Now the appellant has filed the present appeal before this Court proposing following substantial question of law;- ''3. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is justified in treating the payment for data processing, book purchase, charges for use of centers and salary etc. to persons covered under Section 13(3) of the Income Tax Act as not 3 ITA-192-2023 NEUTRAL CITATION NO. 2024:MPHC-JBP:47319 Signed by: PRAVEEN Signing time: 20-09- 2024 19:12:03 Signature Not Verified

excessive without considering the findings of the AO that such payments are made to provide benefits to the persons covered under Section 13(3) of the Income Tax Act which violates the provision of section 13 (1) (c) of the Act. 4. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is justified in allowing exemption under Section 11 and 12 of the Act to the assessee deleting the addition of Rs.2,93,49,953/- being the amount of surplus and Rs.7,43,91,421/- being the amount of development fees not included in total receipts, ignoring the findings of the AO that the society has violated the provisions under Section 2(15) as well as section 13(1) (c) of the Act and assessee is not eligible for exemption under Section 11 and 12 of the Act.'' I have heard Shri Siddharth Sharma, learned counsel for the appellant and perused the record. 5. The appellant in this appeal has conveniently avoided to answer the observation made by CIT as well as ITAT regarding finality of assessment of the assessee for the year 2011-12, 2015-16 and 2016-17 under Section 143(3) of the Act. The appellant has failed to distinguish the facts of the case from the proceedings of the year 2011-12, 2015-16 and 2016-17, therefore, the learned ITAT has rightly held that no different yardstick can be applied in case of 4 ITA-192-2023 NEUTRAL CITATION NO. 2024:MPHC-JBP:47319 Signed by: PRAVEEN Signing time: 20-09- 2024 19:12:03 Signature Not Verified

(VIVEK RUSIA) JUDGE (AVANINDRA KUMAR SINGH JUDGE assessee for the different assessment years. All other issues have already been considered in the assessment proceedings of the year 2011-12, 2015-16 and 2016-17 in which no Income Tax Appeal has been preferred by the Department. 6. In view of above, we do not find any ground to admit this Income Tax Appeal. Accordingly, admission of Income Tax Appeal is declined and Income Tax Appeal is hereby dismissed. Praveen

5 ITA-192-2023 NEUTRAL CITATION NO. 2024:MPHC-JBP:47319 Signed by: PRAVEEN Signing time: 20-09- 2024 19:12:03 Signature Not Verified

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