SRI SAI EDUCATIONAL TRUST,CHITAMANI vs. THE INCOME TAX OFFICER(EXEMPTION) WARD-3, BANGALORE

This appeal is preferred by the assessee against the order of the CIT(A), inter alia, on following grounds:

3. The learned Commissioner of Income Tax (Appeals) having held that the Assessing Authority has correctly proceeded with the appellant's claim u/s 11 of the Act ought

to have directed the learned Assessing Authority to consider the investments on capital assets and repayments of loans as application of funds towards objects of trust.

5. The learned Commissioner of Income Tax (Appeals) has failed to adjudicate the appellant's ground with regard to levy of interest charged u/s 234 A and 234 B of the Act.

6. The order of learned Commissioner of Income Tax (Appeals) is not sustainable either in law or on facts.

The appellant craves for leave of Hon'ble Tribunal to add or delete ground or grounds at the time of hearing

2. During the course of hearing, the learned counsel for the assessee invited my attention to the order of the AO. Though the assessee has got the Registration under section 12A of the Income Tax Act, it claimed exemption under section 10(23C)(IIIad) but the AO has not examined the claim in the light of the provisions of section 10(23C)(IIIad) of the Act. He rather examined the claim of exemption under section 11 of the Act and added back the depreciation claimed on vehicles and other assets after denying the benefit of exemption under section 11 of the Act. The assessee preferred any appeal before the CIT(A) and the CIT(A) did not appreciate the facts and has confirmed the order of the AO having observed that the educational operations were commercial in nature. Now the assessee is before us with the submission that no doubt the assessee was granted registration under section 12A of the Act but in the impugned assessment year it claimed exemption under section 10(23C)(IIIad) of the Act but this aspect was not examined by the AO and he disallowed the claim under section 11 of the Act. Besides, depreciation on assets and vehicles were also disallowed. Even the CIT(A) did not appreciate the fact that assessee has filed the return of income and claimed deduction under section 10(23C)(IIIad) of the Act and he confirmed the disallowance after concluding that the educational operations were commercial in nature.

The learned DR placed reliance upon the order of the CIT(A).

4. Before the CIT(A), though the assessee has raised the claim, the deductions were claimed under section 10(23C)(IIIad) of the Act, but the CIT(A) has confirmed the disallowance without verifying the facts whether the deduction was claimed under section 10(23C)(IIIad) of the Act or under section 11 of the Act. He summarily confirmed the disallowance having observed that educational operations were commercial in nature. During the course of hearing, the learned counsel for the assessee invited my attention to the balance sheets and the computation of income. He has also filed a copy of receipts and payments account and income and expenditure accounts for the year ended 31.03.2012 in support of his contentions that there was no profit motive of the assessee in running the educational institutions and whatever excess receipt was there, it was applied for the educational purposes.

Pronounced in the open court on 26th February, 2018.