ADARSH EDUCATION TRUST,PANCHMAHAL vs. THE ACIT, PANCHMAHAL CIRCLE, GODHRA

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ITA 224/AHD/2015Status: DisposedITAT Ahmedabad23 October 2017AY 2011-123 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found merit in the assessee's claim for exemption under Section 10(23C)(iiiad), noting that the trust was engaged in educational activities and its gross receipts were below the prescribed limit. The matter was remitted to the Assessing Officer for fresh examination.

What were the facts?

The assessee, an educational trust, had a carried forward surplus of Rs. 7,97,204/-. The Assessing Officer treated this surplus as income because the trust lacked Section 12A/12AA registration in the relevant assessment year.

What were the issues?

Whether the assessee trust was eligible for exemption under Section 10(23C)(iiiad) despite lacking Section 12A/12AA registration for the relevant assessment year.

Which sections of the Income-tax Act were involved?

Section 10(23C),Section 12A,Section 12AA,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD ‘D’ BENCH, AHMEDABAD

Per Pramod Kumar AM:

1.

By way of this appeal, the assessee appellant has challenged correctness of the order dated 07.11.2014 passed by the CIT(A) for the assessment year 2011-12.

2.

Grievances raised by the assessee are as follows:-

“1. The Ld. CIT (A) erred on facts and in law in confirming action of Assessing Officer in determining total income at Rs.7,97,204/- without granting deduction for the expenditure incurred in accordance with the provisions of the Act. 2. The Ld. CIT(A) erred on facts and in law in holding that the appellant is not an Educational Institution.”

3.

During the course of assessment proceedings, the Assessing Officer noticed that the “assessee is an educational trust” and “is engaged n the educational activities”. He, however, treated carried forward surplus of Rs.7,97,204/- as income on the ground that

ITA No. 224/Ahd/2015 Adarsh Education Trust vs. ACIT A.Y. 2011-12 Page 2 of 3 the assessee did not have registration under Section 12A/12AA during the relevant year. The reasoning adopted by the Assessing Officer was as follows:-

“During the course of assessment proceedings, it is found that the assessee has carried-forward the surplus of Rs. 7,97,204/- received by way of donation in its audited balance sheet and after accumulation, the assessee has applied said fund to its entities as a loan. It is noted that assessee is registered u/s 12A/12AA on or after AY 2012-13 and in absence of registration, accumulation of income and application of surplus fund cannot be granted to the assessee for the relevant assessment year as per the IT Act, 1961. Hence, assessee is not eligible to accumulate the said surplus. In view of the above, accumulated amount of Rs. 7,97,204/- is added back to the income of the assessee. Penalty proceedings u/s 271(1)(c) are also initiated for furnishing inaccurate particulars of income and thereby concealing the particulars of income.”

4.

Aggrieved, assessee carried the matter in appeal before the CIT(A) and the assessee, inter alia, contended that the assessee is any way entitled to exemption under Section 10(23C)(iiiad). This plea was, however, brushed aside by the CIT(A) by observing that such exemption is “applicable to a University or an educational institution existing solely for educational purposes, and not for profit”. The assessee is aggrieved and is in further appeal before us.

5.

We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.

6.

We see merits in the plea of the learned counsel. We have noted that admittedly gross receipts of the assessee are well under Rs.1,00,00,000/- at Rs.86,47,790/- and the Assessing Officer himself notes that the assessee trust is engaged in educational activities. The provisions of Section 10(23C)(iii)(ad) are thus prima facie satisfied. In our considered view, this claim has been wrongly rejected in a summary manner. In this view of the matter, we deem it fit and proper to remit the matter to the file of the Assessing Officer for examining the matter, on merits, for eligibility of exemption under Section 10(23C) of the Act. While doing so, he will give a reasonable opportunity of hearing to the assessee. With these observations, the matter stands restored to the file of the Assessing Officer.

7.

In the result, the appeal is allowed for statistical purposes. Order pronounced in the open Court on this 23rd day of October, 2017.

Sd/- Sd/-

Mahavir Prasad Pramod Kumar (Judicial Member) (Accountant Member) Ahmedabad, the 23rd day of October, 2017 **bt*

ITA No. 224/Ahd/2015 Adarsh Education Trust vs. ACIT A.Y. 2011-12 Page 3 of 3

Copies to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad

1.

Date of taking dictation: .........- ..prepared as per one page manuscript of Hon’ble AM which is attached with this case file....23.10.2017..................... 2. Date of typing & draft order placed before the Dictating Member: .. 23.10.2017......................... 3. Date on which the approved draft comes to the Sr. P.S./P.S.: .... 23.10.2017............................ 4. Dt. on which the fair order is placed before the Dictating Member for Pronouncement: ... 23.10.2017........ 5. Date on which the file goes to the Bench Clerk: . 27.10.2017.......................... 6. Date on which the file goes to the Head Clerk: ..…………………... 7. The dt. on which the file goes to the Astt. Registrar for signature on the order: ......................... 8. Date of despatch of the Order: .........................

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