M/S SACRED HEART EDUCAIONAL AND WELFARE SOCEITY,BARNALA vs. ITO, (E), WARD, CHANDIARH

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘B’, CHANDIGARH

BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA Nos.290 & 291/Chd/2018 (Assessment Years: 2012-13 & 2014-15) M/s Sacred Heart Educa- Vs. The Income Tax Officer(Exemptions), tional & Welfare Society, Ward Chandigarh. Dhanaula Road, Barnala. PAN: AAAABTT2083M (Appellant) (Respondent)

Appellant by : Shri Tej Mohan Singh, Adv. Respondent by : Shri Manjit Singh, Sr.DR Date of hearing : 19.06.2018 Date of Pronouncement : 04.07.2018

ORDER PER ANNAPURNA GUPTA, A.M.:

Both the above appeals have been preferred by the

same assessee against the separate orders of learned

Commissioner of Income Tax(Appeals), Patiala both dated

1.1.2018 relating to assessment years 2012-13 and 2014-

15.

identical, they were heard together and are disposed off by

this common order.

treatment of the assessee society as AOP and taxing the

surplus of income over expenditure for the year, for the

reason and on account of the fact that its application for

approval within the meaning of section 10(23C)(vi) of the

ITA No.290 & 291/Chd/2018 2 AYs. 2012-13 & 2014-15

Income Tax Act, 1961 (in short ‘the Act’) was rejected by the

prescribed authority i.e. CCIT, Chandigarh.

running by the name of Sacred Heart Educational and

Welfare Society, having two educational institutions under

it’s aegis i.e. Sacred Heart International College of Education

at Barnala and Barnala Polytechnic College. The said

society claimed itself to be existing solely for educational

purposes and not for the purpose of profit and, therefore,

claimed exemption under the provisions of section

10(23C)(vi) of the Act, thereby filing nil return of income for

the impugned assessment years. However, since the assessee

society’s application for approval, within the meaning of

section 10(23C)(vi) of the Act, was rejected by the

prescribed authority i.e. CCIT, Chandigarh (vide

F No.CC/10(23C)/2011-12/2143; dated 24.07.2012), the AO,

while scrutinizing the aforesaid nil returns of income, held

the assessee society to be an AOP and thereafter proceeded

to tax the surplus of income over expenditure for the periods

under consideration in its order passed u/s 143(3) of the

Act.

Ld.CIT(Appeals) who upheld the order of the Assessing

Officer observing that the assessee society had filed a civil

petition in the High Court, under Article 226/227 of the

Constitution, for issuance of writ in the nature of certiorari

ITA No.290 & 291/Chd/2018 3 AYs. 2012-13 & 2014-15

against the order passed by the CCIT, rejecting assessee’s

application for grant of approval u/s 10(23C)(vi) of the Act

and the High Court had allowed the writ setting aside the

order of the CCIT for deciding afresh in the light of various

judicial pronouncements. The CIT(A) noted that the

remanded matter had not yet been decided and , therefore,

held that for all purposes, the assessee society was not an

approved society for the purpose of claiming exemption. The

Ld.CIT(Appeals), however, added that if the prescribed

authority approved the assessee society for the said

exemption, there shall be no incidence of tax. Therefore,

subject to the outcome of the approval pending before the

CIT(E), the Ld.CIT(Appeals) dismissed the assessee’s appeal.

appeal before us raising following grounds:

“1. That the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the finding of the Assessing Officer that the assessee is an AOP for taxation purposes and is not an approved society for claiming of exemption u/s 10(23C)(vi) which is arbitrary and unjustified and as such the assessment merits annulment. 2 That the Ld. Commissioner of Income Tax (Appeals) has erred in law in upholding the assessment framed by the Assessing Officer thereby treating the excess of surplus of Rs.74,85,7507- over expenditure to be taxable resulting in an addition of Rs.74,85,750/- which is arbitrary and unjustified. 3. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the addition of Rs.1,37,690/- on account of alleged difference in the interest on FDRs which is arbitrary and unjustified.

ITA No.290 & 291/Chd/2018 4 AYs. 2012-13 & 2014-15

for assessee stated that the assessee had been granted

approval u/s 10(23C)(vi) of the Act for the impugned years

vide order of the CIT(E), Chandigarh dated 26.4.2018. Copy

of the order was placed before us and it was pointed out

therefrom that the approval had been granted from

assessment year 2012-13 onwards. The Ld. counsel for

assessee stated, therefore, that in the light of the aforesaid

facts and in view of the order of the Ld.CIT(Appeals) passed

subject to approval granted by the CIT(E) u/s 10(23C)(vi) of

the Act, the assessee’s income is entitled for exemption u/s

10(23C)(vi) of the Act and the excess of income over

expenditure subject to tax by the Assessing Officer,

therefore, be deleted.

Assessing Officer to pass afresh order after considering the

fact of the approval having been granted to the assessee u/s

10(23C)(vi) of the Act as canvassed by it.

issue, in both the appeals before us, back to the file of the

Assessing Officer to pass order afresh after considering the

approval granted by the CIT(E) to the assessee u/s

10(23C)(vi) of the Act..

ITA No.290 & 291/Chd/2018 5 AYs. 2012-13 & 2014-15

are allowed for statistical purposes.

Order pronounced in the open court.

Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 4th July, 2018 *Rati*

Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR

Assistant Registrar, ITAT, Chandigarh