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Income Tax Appellate Tribunal, DELHI “E” BENCH: NEW DELHI
Before: SHRI R.K.PANDA & SHRI KUL BHARAT
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “E” BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING)
BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER
ITA No.6811/Del/2017 Assessment Year : 2012-13 ACIT(E), vs National Council of Hotel Circle-2(1), New Delhi Management & Catering Technology, A-34, Sector-62, Noida, Uttar Pradesh. PAN-AAATN4791M APPELLANT RESPONDENT Appellant by Sh. Gaurav Pundir, Sr.DR Respondent by Sh. K.P.Garg, CA Date of Hearing 15.09.2021 Date of Pronouncement 27.10.2021 ORDER PER KUL BHARAT, JM :
This appeal filed by the Revenue pertaining to assessment year 2012-13
is directed against the order of Ld. CIT(A)-I, Noida dated 30.03.2017.
The Revenue has raised following grounds of appeal:-
“On the facts and circumstances of the case and in law, Ld.CIT(A) has erred in law in deleting the addition of Rs.1,85,57,807/- and Rs.24,65,628/- made on account of provisions for gratuity and prior period expenses respectively. 2. On the facts and circumstances of the case and in law, Ld.CIT(A) has erred in allowing the exemptions u/s 11 & 12 even when assessee has not submitted Form 10B alongwith late filing of Income tax Return for A.Y.2012-13. 3. On the facts and circumstances of the case and in law, Ld.CIT(A) has erred in allowing the exemption u/s 10(23C)(vi) of the IT Act, 1961 while the assessee has claimed exemption u/s 11 & 12 as per Return of Income.
ITA No.6811/Del/2017 Assessment Year : 2012-13
The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing.”
Ground Nos. 1, 2 and 3 raised by the Revenue are inter-connected.
Ground No.1 raised by the Revenue is against the deletion of addition of
Rs.1,85,57,807/- and Rs.24,65,628/- made on account of provisions of
gratuity and prior period expenses respectively.
Facts giving rise to the present appeal are that in the case, assessment
u/s 143(3) of the Income Tax Act, 1961 (“the Act”) vide order dated 06.02.2015.
The assessee is a national body set up by Government of India, Ministry of
Tourism in 1982. The return of income was filed by the assessee on
31.03.2013 declaring NIL income. The case was selected under scrutiny
through CASS. The Assessing Officer during the assessment proceedings on
perusal of Audit Report of the assessee for Assessment Year 2012-13, noticed
that the assessee had claimed provision of gratuity and prior period expenses
of Rs.1,85,57,807/- and Rs.24,65,628/- respectively. The Assessing Officer
was of the view that since the assessee has been enjoying exemption
u/sections 10,11 or 12 of the Act since inception and the provisions and prior
period expenses can not be allowed to the assessee hence, the same were
added to the income of the assessee. The Assessing Officer observed that the
assessee has not claimed exemption u/s 10(23)(iiiab) of the Act and failed to
submit requisite Audit Report in form No.10B.
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ITA No.6811/Del/2017 Assessment Year : 2012-13
Aggrieved against this, the assessee preferred appeal before Ld.CIT(A)
wherein Ld.CIT(A) deleted the addition on the ground that the assessee council
was an educational institution existing solely for educational purposes and not
for the purpose of profit. Therefore, the income is not to be included in the
total income of the assessee, liable to tax.
Aggrieved against this, the Revenue is in appeal before this Tribunal.
Ld. Sr. DR vehemently argued that the deletion by Ld.CIT(A) is not
justified. He submitted that the assessee had not submitted Audit Report
alongwith the filing of income tax return for the year under consideration.
Further, Ld.CIT(A) grossly erred in allowing the exemption u/s 10(23C)(vi) of
the Act while the assessee had only claimed exemption u/s 11 & 12 of the Act
as per the return of income.
Ld. Counsel for the assessee reiterated the submissions as made in the
written synopsis and submitted that there is no illegality into the order of
Ld.CIT(A). He submitted that the submissions of the Revenue is grossly
contrary to the records as the assessee had filed its return of income claiming
exemption u/s 10(23C)(iiiab) of the Act. He drew our attention to pages 64 to
76 to buttress this contention.
We have heard the rival contentions and perused the material available
on records. The case of the Revenue is that Ld.CIT(A) failed to appreciate the
fact in right perspective as the assessee has not made its claim u/s 10(23C) of
the Act. Ld. Counsel for the assessee drew our attention to the Tax return 3 | P a g e
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enclosed with Paper Book demonstrating that the contention of the Revenue is
ex-facie incorrect. The Assessing Officer had denied the exemption on the
ground that the assessee failed to file requisite audit report in Form 10B.
From the records placed before us, the assessee was granted registration
u/s 10(23C) of the Act vide order dated 27.06.2005 for Assessment Years
1999-2000 to 2001-2002. It is seen from the record that the assessee was
granted registration u/s 10(23C)(vi) of the Act vide order dated 26.03.2015 for
the Assessment Year 2014-15 and onwards. During the course of hearing, Ld.
Counsel for the assessee drew our attention to page 65 of the Paper Book to
buttress the arguments that claim was made in the return of income.
We have heard the Ld. Counsel for the parties and perused the material
available on records. We find that the Assessing Officer had declined the claim
of the assessee by observing as under:-
“Assessee has shown total income of Rs.7,70,71,009/- and total expenditure of Rs.7,37,84,149/- and having surplus of Rs.32,86,860/-. Assessee in its return has claimed exemption u/s 12, and during the assessment proceedings assessee has claimed to be covered u/s 10(23) (iiiab) of the income tax Act, 1961. Firstly assessee has not claimed exemption u/s 10(23)(iiiab) in the return of income, hence its claim cannot be considered. Secondly, as per its income & expenditure account for F.Y. 2011-12, The grants received from government is NIL, hence it is not in receipt of regular grants for planned or unplanned expenditure from government therefore it is not substantially financed by the government. On perusal of the return of income submitted by the assessee it is noted that assessee has filed late return of income, which is not 4 | P a g e
ITA No.6811/Del/2017 Assessment Year : 2012-13
accompanied by form 10B. Thus the condition enumerated in section 12A(B) has not be complied. As per section 12A(b) filing of Form No. 10B duly signed by auditors is mandatory.
As per Section 12A(b)
"Where the total income of the trust or institutions as computed under this Act without giving effect to the provision of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous years], the accounts of the trust is institutions for that years have been audited by an accountant as defined in the donation below sub- section (2) of section 288 and the person inn receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed from duly singed and verified by such accountant and setting forth such particulars as may be prescribed."
As Per Rule 17B
The report of audit of the accounts of a trust or institution which is required to be furnished under clause (b) of section 12A, shall be in Form No. 10B.
Since the assessee has not complied with provision of section 12A(b) exemption under section 11 & 12 is denied and the income is computed as follows:-
Total Income As Per Income & Expenditure A/c Rs.7,70,71,009/- Total Expenditure As Per Income & Expenditure A/c Rs.7,37,84,149/- Surplus Rs. 32,86,860/- Addition on account of Provision for Gratuity & Prior period expenses (18557807 +2465628) Rs.2,10,23,435/- Net Taxable Income Rs.2,43,l0,295/- The assessment is completed u/s 143(3) of Rs.2,43,10,295/- to taxed as AOP against returned income of Rs.Nil. Charge interest u/s 234A, 234B & 234C as per law. Issue notice of demand and challan. Penalty initiated Separately u/s 271(1)(c) for concealment of income and issue separately.”
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ITA No.6811/Del/2017 Assessment Year : 2012-13
Hence, the claim of the assessee was rejected purely on the ground that
the assessee had filed its return of income without enclosing Form 10B hence,
failed to comply the mandate of section 12A(b) of the Act. But the Ld.CIT(A)
allowed the claim by observing as under:-
“As the appellant is the other educational institution existing solely for the educational purposes and not for the purposes of profit the income of the appellant which is not eligible for exemption from tax under section 11 and 12 of I.T. Act, 1961 is not to be included in the total income of the appellant of the previous year 2011-12 relevant for A.Y. 2012-13 and therefore, Rs.6,81,76,300/- being the income of the appellant is not to be included in the total income of the appellant liable to tax. The income of the appellant is to be treated as NIL though not for the reasons canvassed by the appellant nor in the light of the impugned assessment order but independent of both and in the light of the approval granted by the CBDT to the case of the appellant for the purposes of section 10(23C)(vi) of I.T. Act, 1961. 17. In view of the above the impugned assessment order is deleted as not sustainable in the eyes of the law though not for the grounds canvassed by the appellant. The appellant get relief to that extent and the appeal of the appellant is allowed for the reasons recorded above.”
However, the Ld.CIT(A) allowed the claim altogether different ground.
Ld.CIT(A) has recorded a finding that the assessee is an educational
institution and existing solely for education purpose and not for the purpose of
profit. It is noticed that the Assessing Officer has incorrectly stated that the
assessee had not made any claim u/s 10(23)(iiiab) of the Act. In fact, the
assessee had made claim u/s 10(23)(iiiab) of the Act. Therefore, we do not find 6 | P a g e
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any infirmity in treating the income at NIL by Ld.CIT(A). Thus, grounds raised
by the Revenue are dismissed.
In the result, the appeal of the Revenue is dismissed.
Above decision was pronounced on conclusion of Virtual Hearing in the
presence of both the parties on 27th October, 2021.
Sd/- Sd/- (R.K.PANDA) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER
*Amit Kumar* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI
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