SIKSHA NIKETAN H.S. SCHOOL,AGARTALA vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - AGARTALA, AGARTALA

It transpires at the outset that the instant “lis” is second round of proceedings before us. The assessee preferred earlier appeals against the

We have given our thoughtful consideration to rival contentions. This tribunal’s earlier order appears to have restored assessee’s first round lis back to CIT(A) with the direction to decide as to whether its income in question was exempt u/s10(23C)(iiiad) of the Act. The CIT(A)’s consequential lower appellate order in all six assessment year(s) holds that the assessee’s receipts cross threshold limit of Rs.1 crore and therefore, it is not entitled for the impugned exemption. There is hardly any dispute that he has simply reiterated his same findings in first round of lower appellate order invoking sec. 68 of the Act. All this clinching facts have gone unrebutted from the Revenue side.

Mr. Loyi vehemently contends during the course of hearing that CIT(A)’s order has been passed in compliance to the tribunal’s remand directions in letter and spirit after taking into consideration all the relevant facts and circumstances. He fails to dispute the crucial fact that CIT(A) has himself accepted genuineness of the assessee’s former two receipts in the nature of sale of books as well as transportation fees to be genuine so as to conclude that the same cross threshold limit(s) u/s 10(23C) of the Act. We conclude in

Next comes u/s 40(A)(2) disallowance made by the lower authorities in case of remuneration paid to Smt. N. Chatterjee. We find from a perusal of the CIT(A)’s order that neither of the lower authority has drawn any comparison of the impugned payments to market rates comprising a case of identical services rendered. We wish to make it clear that the impugned statutory provision envisages disallowance of excessive or unreasonable element of the payment in issue compared to market rate as follows:- “7. Ground No.4 This ground is directed against disallowance of Rs.9,.39,000/- which represents remuneration paid to Smt. Neera Chatterjee. 7.1 AO dealt with this issue at Para (9) of his order. On being questioned regarding the remuneration paid to Smt. Neera Chatterjee, the assessee stated before the AO that as per decision of the Managing Committee of the school, it was agreed that remuneration of Rs.35,000/- p.m. was to be paid to Smt. Neera Chatterjee. It was stated that the minute book containing decisions of Managing Committee was misplaced. It was also stated before the AO that the honorarium was paid to Smt. Neera Chatterjee considering the voluminous service re4ndered by her towards the Trust and School and also provided her own landed property for the purpose of the said school. The AO stated that no documentary proof of Managing Committee authorizing the payment of honorarium was produced. He also stated that as per statement of the Vice Chairman of Managing Committee, the honorarium paid was utilized for construction of a school in Kolkata. Since AO was not satisfied with explanation given, he disallowed the sum of Rs.9,39,000/- that was paid to Smt. Neera Chatterjee. 7.2 I have carefully considered the issue. Smt. Neera Chatterjee was President of the Managing Committee of the school. During the course of assessment proceedings, Sri Gopal Chakraborty, Vice President of the Managing Committee was summoned by the AO u/s 131 of the Act. It was stated buy Sri Chakraborty that Smt. Neera Chaterjee was involved in running a school named Oxford House in Kolkata. She was also engaged in setting up a new school named G.N.Chatterjee Siksha Niketan in Kolkata. It was also stated that honorarium receive by her was utilized for funding the new school being set up. Statement of auditor of accounts of appellant was also taken and from that statement, it is seen that the payment made to Smt. Neera Chatterjee was initially shown as advances. The account was revised subsequently and the payment was later on shown as honorarium. Undoubted facts

There is further no issue raised by any of the lower authorities that Smt. Chatterjee / the payee herein has not rendered any services at all. We therefore direct the Assessing Officer to delete the impugned corresponding disallowance in all these assessment years.

We all now left on assessee’s last substantive grievance that both the lower authorities have erred in disallowance its depreciation claim(s) regarding school building. We are taken to CIT(A)’s identical findings in ground No.5 which reading as under:- “8. Ground NO.5 This ground is directed against disallowance of depreciation amounting to Rs.5,20,829/-. 8.1 Assessee was claiming depreciation on school building. When AO asked why the depreciation should be allowed, it was stated that school construction was started by Sri (Late) G.N.Chattterjee, h/o Smt. Neera Chatterjee. The school construction kept on increasing. The land was afterwards given on lease to Siksha Niketanm for 90 years. It was also stated that construction was done from the fund of the school only. AO examined the land deed and property documents and he noticed that the property was in the name of Smt.Neerea Chatterjee. He also found that the lease claimed by appellant was agreed upon only on 29.11.2014. Since assessee was not the owner of the property nor was the lessee at the material time, AO disallowed the claim of depreciation. 8.2 Before me also, appellant was unable to give any evidence to show that the property belonged to it or was holder of lease at the relevant time. In absence of any evidence, assessee cannot claim depreciation.”