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Before: SHRI R. S. SYAL & MS SUCHITRA KAMBLE
This appeal has been filed by the assessee against the order dated 6/8/2012 passed by CIT(A)-Rohtak for the Assessment Year 2009-10.
The grounds of appeal
are as under:-
1. That the addition of Rs. 59,51,645/- made by the Ld. A.O. and denial of benefits u/s 10(23C)(vi) of the Income Tax Act is untenable, given the facts of the case.
2. The Ld. A.O. and the CIT(A) have wrongly denied the exemption u/s 10(23C)(vi) of the Income Tax Act, 1961 without giving appropriate opportunity and ignoring all merits of the case.
3. That application for approval of exemption has been wrongly denied by the Ld. CCIT, Panchkula despite the same having been allowed by the Honorable High Court of Punjab & Haryana, vide its order dated 17/08/2010. The appellant society has re-filed a Civil Writs petition with the honorable High Court, the decision in which case remains pending as on date. The Ld. A.O. and the CIT(A) have erred in law by not giving due consideration to the above situation.
4. That on facts of the case the Ld. A.O. has erred in assuming that the amount of Rs. 24,60,600/- transferred to building and building maintenance Fund being claimed as expenses is tantamount to furnishing inaccurate particulars. In this regard we would like to point out the following:-
a. The appellant society has treated the same as expenses considering the same as “income received on behalf of’, as the same was set aside for a pre specified purpose ab initio. b. Further, full and accurate details of the same have been provided in the Income & Expenditure account, and the return has been filed along with the audit report prepared in the prescribed format. This makes it amply clear that, nor was there any malafide intention on part of assessee in making such claim, and neither any information furnished by the asseessee was found to be incorrect. It was only, if at all, an erroneous claim which undoubtedly does not fall into the definition of inaccurate particulars.
That the receipts of Rs. 24,60,600/- have been claimed as capital receipts as the same have been received for the purpose of construction of building. However, even if on a later stage, the Ld. A.O. does not accept this view of the appellant society, he can by no means consider the same as a case of furnishing inaccurate particulars.
The Ld. Assessing Officer has wrongly charged interest u/s 234B on the excess demand created.
7. The Ld. AO has erred in initiating penalty proceedings u/s 271 (1) (c) as there is no case of furnishing of inaccurate particulars. 8. The Ld. A.O. and the CIT(A) have passed the order in haste, against the facts, law and provisions of The Income tax Act, 1961 and Rules made there under. 9. The appellant trust wishes to file detailed arguments/ produce documents at the time of hearing of appeal and craves to add/ modify/
delete/ withdraw the grounds of appeal on or before the date of hearing.
The Ld. AR filed an adjournment application on the ground that the writ petition is pending before the Hon’ble Punjab and Haryana High Court in respect of the issue of rejection of registration. The same is rejected by us and taking the matter for hearing.
The assessee society derives income from running of educational institution in the name and style of Vaish Model Primary School. The assessee declared Nil total income after claiming excess of income over expenditure of Rs. 34,91,045/- as exempt under Section 10(23C) (vi) of the Income Tax Act, 1961. The Assessing Officer noted that the annual aggregate receipts of the assessee exceeded Rs. 1.00 Crore (Rs. 1,13,52,721/-) but the assessee failed to submit the copy of approval by CCIT for claiming exemption u/s. 10(23C)(vi) of the Act. Therefore, the Assessing Officer added the entire surplus of Rs. 34,91,045/- to the income of the assessee and the Building Fund & Building Maintenance Fund of Rs.24,60,600/-.
5. Aggrieved by the same the assessee filed appeal before the CIT(A). The CIT(A) held that the assessee society has not received the requisite approvals from CCIT. Therefore, the action of the AO in bringing the surplus to tax was upheld by the CIT(A).
6. The Ld. AR submitted that the assessee society is an educational institution and claimed exemption u/s 10(23C) (iiiad) of the Act since its receipts were below Rs.1.00 crore. As per provisions of the Act, after its receipts crossed 1.00 Crore rupees, the assessee society had claimed deduction u/s 10(23C) (vi) of Income Tax Act, 1961. As per provisions of Income Tax Act, 1961 the society is required to take approval from CCIT for claiming exemption u/s 10(23C) (iv). The CCIT, Panchkula had rejected the approval in the case of the assessee on flimsy grounds. The matter was referred to the Hon’ble Punjab & Haryana High Court in a writ petition, who after hearing both the parties and in the light of judgment of “Pine Grove International Charitable Trust & Ors Vs. Union of India & Ors” had referred back the matter to CCIT for re consideration afresh. The CCIT again rejected the approval on the casual grounds, against which the appellant society for the 2nd time filed Writ Petition before Hon’ble Punjab & Haryana High Court against the impugned order of rejection of approval u/s 10(23C) (iv). There is a direct nexus between the approval for claiming deduction u/s 10(23C) (iv) and appeal filed against the order of ITO Ward-1, Bhiwani disallowing the exemption u/s 10(23C) (iv). The CIT(A) also followed the order of A.O. and thus the matter is before the aforementioned Hon’ble ITAT Bench. The Ld. AR submitted that the appellant society is fully entitled to exemption u/s 10(23C) (iv). The Assessing Officer had determined the total income of the appellant society at Rs. 59,51,645/- vide order dated 22/12/2011 after disallowing exemption claimed u/s 10(23C) (iv) of the tax demand vide four number of challans.
The Ld. DR relied upon the orders of the Assessing Officer and the CIT(A).
We have heard both the parties. It is pertinent to note that as on today the assessee has not received the requisite approvals from the Chief Commissioner of Income Tax (CCIT), Panchkula. When there is not approval which is statutory requirement for claiming exemption under Section 10(23C)(vi) of the Act, the Assessing Officer has rightly made an addition. The CIT(A)has also as per the law upheld the said order. Merely because the issue is pending before the Hon’ble High Court does not allow assessee to pray for ignoring the requisite approval from the CCIT which is mandatory while claiming exemption under section 10(23C)(vi) of the Act. Therefore, in light of this the orders of the Assessing Officer and CIT(A) are upheld.
In result, the appeal of the assessee is dismissed.
Order pronounced in the Open Court on 28th April, 2017.