BANNARIAMMAN EDUCATIONAL TRUST,COIMBATORE vs. ACIT CENTRAL CIRCLE 3(2), CHENNAI

ITA 3311/CHNY/2024Status: DisposedITAT Chennai14 August 2025AY 2018-19120 pages
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What did the Tribunal hold?

The Tribunal decided the issues as follows: Issue 1 (Addition on account of cash returned against rebate in construction bills): The Tribunal found itself in agreement with the Ld. CIT(A)'s findings, which were not fully detailed in the provided excerpt. However, the Tribunal noted that the Ld. CIT(A) had considered the submissions and the assessment order. The Tribunal's reasoning and ratio for this issue are not fully discernible from the provided text, as the detailed findings of the Ld. CIT(A) are not fully reproduced. Issue 2 & 3 (Addition of surplus from value-added courses and incidental business due to non-maintenance of separate books of accounts): The Tribunal agreed with the Ld. CIT(A) that the assessee's claim for exemption under Section 11(1) for surplus from transport, hostel, and stationery activities should not be denied solely on the ground of non-maintenance of separate books of accounts under Section 11(4A). The Ld. CIT(A) noted that the AO himself computed income and expenditure from these activities, indicating that books of accounts did exist. The Tribunal acknowledged that while consolidated books were maintained in specialized software, the income and expenditure for individual activities could be segregated from this software. The Tribunal found it unfair to deny exemption after detailed accounts were maintained. The ratio is that the strict condition of separate books under Section 11(4A) may not be applied if income and expenditure from incidental activities can be clearly segregated from consolidated computerized accounts, especially when the AO has utilized such segregated data.

What were the facts?

The assessee, M/s. Bannari Amman Educational Trust, is a registered charitable trust running an engineering college and a school. A survey under Section 133A was conducted on the trust on February 25, 2020. Subsequently, a search and seizure under Section 132 was conducted on the Chettinad Group on December 9, 2020. During this search, diaries and a loose sheet folder were seized, which the investigation officers believed contained evidence of cash received by Chettinad Builders Private Limited (CBPL) from M/s Bannari Amman Sugars Pvt. Ltd. (BASPL) in lieu of a 15% rebate on construction bills. The Assessing Officer (AO) of the searched entity believed this material pertained to the assessee trust and issued notices under Section 153C for Assessment Years (AYs) 2015-16 to 2020-21. AY 2021-22 was taken up for scrutiny under Section 143(2). The AO made additions on account of cash returned against rebate in construction bills, surplus from value-added courses, and surplus from incidental business due to non-maintenance of separate books of accounts.

What were the issues?

1. Whether the addition on account of cash returned against rebate in construction bills is justified, considering the seized material and confirmations from CBPL officials regarding a 15% rebate and cash payments, and the statement of Smt. V. Valliammai regarding the offer of discount and subsequent cash payment request from FY 2016-17 onwards. - Assessee's contention: Not recorded. - Revenue's contention: Not recorded. 2. Whether the addition of surplus by way of extra fees from value-added courses is justified, considering the assessee's claim that these activities are incidental to the main object of the trust and eligible for exemption under Section 11(1) of the Income Tax Act, 1961. - Assessee's contention: These activities are incidental to the main objective of the trust and eligible for exemption. The allegation of non-maintenance of separate books of accounts is incorrect, as the AO himself computed income and expenditure from these activities, indicating the existence of books. Software accounting allows for segregation of segmental entries. The AO accepted the income and expenditure accounts extracted from the appellant's books. - Revenue's contention: Not recorded. 3. Whether the addition of surplus from incidental business due to non-maintenance of separate books of accounts is justified, considering the AO's claim that separate books were not maintained as required under Section 11(4A) of the Act, and the assessee's counter-argument that the AO himself computed income and expenditure from these activities, implying the existence of books, and that software accounting facilitates segregation. - Assessee's contention: The allegation of non-maintenance of separate books of accounts is incorrect. The AO computed income and expenditure from these activities, indicating the existence of books. Software accounting allows for segregation of segmental entries. The AO accepted the income and expenditure accounts extracted from the appellant's books. - Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 250,Section 12AA,Section 133A,Section 132,Section 153C,Section 143(2),Section 11(1),Section 11(4A),Section 131

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आयकर अपीलीय अधिकरण, ‘बी’ यायपीठ, चेई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI श्री एबी टी. वक, ाियक सदएवं श्री जगदीश, लेखा सद के सम BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.3310 to 3314/Chny/2024 िनधारणवष/Assessment Years: 2017-18 to 2021-22 M/s.Bannari Amman- Educational Trust, 1212, Trichy Road, Coimbatore-641 018. v. The ACIT, Central Circle-3(2), Chennai. [PAN: AAATB 1235 C] (अपीलाथ/Appellant) (यथ/Respondent) आयकर अपील सं./ITA Nos.3353 & 3354 to 3358/Chny/2024 िनधारणवष/Assessment Years: 2015-16 & 2017-18 to 2021-22 & Cross-Objection No.42/Chny/2025 (in ITA No.3353/Chny/2024) िनधारणवष/Assessment Year: 2015-16 The ACIT, Central Circle-3(2), Chennai. v. M/s.Bannari Amman- Educational Trust, 1212, Trichy Road, Coimbatore-641 018. [PAN: AAATB 1235 C] (अपीलाथ/Appellant) (यथ/Respondent/Cross Objector)

Assessee by : Mr.Vikram Vijayaraghavan, Advocate (virtual)/Ld.AR Department by : Mr.Shiva Srinivasan, CIT/DR सुनवाईकतारीख/Date of Hearing : 27.06.2025 घोषणाकतारीख /Date of Pronouncement : 14.08.2025 ITA Nos.3310 to 3314/Chny/2024 (AYs 2017-18 to 2021-22) ITA Nos.3353 & 3354 to 3358/Chny/2024 (AYs 2015-16 & 2017-

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