Eminent International School , Jaipur vs Department Of Income Tax

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 1089/JP/2011 fu/kZkj.k o"kZ@Assessment Year : 2008-09

The I.T.O.. cuke M/s Eminent International Ward 7(2), Jaipur. Vs. School, Siksha Samiti, 52/157, Pratap Nagar, Sanganer, Jaipur.

LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAATE 2475 R vihykFkhZ@Appellant izR;FkhZ@Respondent

jktLo dh vksj ls@ Revenue by : Mrs. Neena Jeph (JCIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri Manish Agarwal & Shri Javed Khan (Advocate)

lquokbZ dh rkjh[k@ Date of Hearing : 19/11/2014 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 13/02/2015

vkns'k@ ORDER

PER: R.P. TOLANI, J.M.

This is an appeal filed by the revenue against the order dated

12/09/2011 by the learned CIT(A)-III, Jaipur for A.Y. 2008-09.

Respective grounds of appeal are as under:

"On the facts and in the circumstances of the case, the learned CIT(A), has erred in:-

2 ITA 1089/JP/2011_ ITO Vs. M/s Eminent International School

i) The CIT(A) has passed a perverse order by ignoring the fact that the fees received was not correctly shown, as seen from the details filed viz a viz the details as per audit account.

ii) The CIT(A) has passed a perverse order due to exemption that the receipt had not exceeded Rs. 1 crore and there was no receipt from hostel as is in earlier year.

iii) The CIT(A) has passed a perverse order in accepting the plea that the entire hostel facilities had been converted in class room due to the increase admission, without there being any evidence brought on record by the assessee.

iv) Thus, the CIT(A) has erred in allowing the deduction under section 10(23C)(iiiad) and deleted the addition made A.O. on account of suppressed received in respect of hotel receipts.

v) The appellant craves leave to add, alter, amend, withdraw or insert any ground or grounds of appeal before or at the time of hearing of the appeal."

2. Various grounds are agitated, which in effect raise a concise issue

that the learned CIT(A) erred in allowing deduction U/s 10(23C)(iiiad)

and deleted the addition made by the Assessing Officer by holding that

the assessee's receipts were less than 1 crore. It is assumed by ld. AO

that assessee should have earned hostel fees as in preceding year.

3. Brief facts of the case are that the assessee is a educational

institution. The gross receipts for the impugned year are as under:-

3 ITA 1089/JP/2011_ ITO Vs. M/s Eminent International School

Particulars Amount (Rs.) Fees 9130237 Conveyance 797500 S.B. A/c Interest 2610 FDR Interest 33875 Total 9964222

During the course of assessment proceedings, the Assessing Officer

found that in earlier year a hostel was operated and in this year there

were no corresponding receipts. Question was asked as to why the

hostel fees and expenses related thereto were not reflected in the

accounts. The assessee replied as under:-

"In continuation of our earlier submission made regarding fall in hostel receipts it is further submitted that during the year under consideration the academic session was started from 1st July, 2007 and since the total number of students have increased thus the rooms which were used to prove hostel facility to the students in preceding academic year were converted into classrooms. We are enclosing herewith the copies of letter issued by the university wherein the students selected from B.Ed and STC courses were required to report at the institute by 16.07.2007. Further after conversion, the assessee society has procured furniture for the classrooms, for which the necessary details have already been submitted before your goodself.

Further as submitted earlier the assessee society maintain its books of accounts on receipt basis consistently since its

4 ITA 1089/JP/2011_ ITO Vs. M/s Eminent International School

inception, the hostel fee received was accounted for when the same was actually received. As the entire hostel fee for whole academic year 2006-07 was received in advance, the same was duly accounted for in F.Y. 2006-07 relevant to A.Y. 2007-08 since the management has decided to close the hostel in academic year 2007-08 thus no hostel fee was received in F.Y. 2007-08 and no fee whatsoever was received towards the hostel facility provided, if any, to the students for the period prior to 01/07/2007 falling under the previous year relevant to assessment year 2007-08."

The Assessing Officer, however rejected assessee's reply and notionally

adopted the figure of hostel fee of preceding year as to be earned by

the assessee in this year also. This resulted in increased receipts i.e.

above 1 crore, it was held that the assessee's case is not covered under

section 10(23C)(iiiad) as the necessary approval was not obtained by

following observations:

"Even if the conservative view is being adopted in the case, the receipts of accounts of Hostel fees could not be taken less than the Fees declared during the last year for the sum of Rs. 29,34,000/-. Thereby, the total receipts of the assessee exceed the sum of Rs. 1 crore. Therefore, falls under the ambit of the provisions of Sec. 10(23C)(vi) instead of the provisions of Section 10(23C)(iiiad) as claimed by the assessee. The Hostel receipts are not declared during the year, only in order to avoid the taxation as the assessee has not been granted the approval U/s 10(23C)(vi).

5 ITA 1089/JP/2011_ ITO Vs. M/s Eminent International School

Therefore, the relatable expenses have also been not debited in the books of accounts."

4. Aggrieved, the assessee preferred first appeal before the learned

CIT(A), who held that there being no hostel receipts, they cannot be

assumed on notional basis by the Assessing Officer consequently gross

receipts of the assessee were below one crore and was held allowable

for exemption U/s 10(23C)(iiiad) by following observations:-

"In view of the above deliberation, it is concluded that in the present case, the A.O. has not adduced any positive and cogent evidences towards his assumption, i.e. presuming the hostel receipts Rs. 26,34,000/- in the current year, whereas the appellant has claimed that such facilities was discontinued in the current year. Under the given facts and circumstances, it is held that the A.O's assumption, i.r.o, hostel receipts of the appellant in the current year, is devoid of any factual and legal merits, therefore, the same is hereby reversed. Accordingly, the appellant's gross receipts is to be considered as Rs. 99,64,222/- only, which is found supported with the audited books of accounts maintained in this regard. In view of the same, the A.O. is hereby directed to allow the benefit of Sec. 10(23C)(iiiad) of the Act to the appellant, as they are otherwise found fulfilling other conditions by the A.O.. Consequently, this ground of appeal is upheld.

4. The 3rd and 4th grounds of appeal are about commencement of penalty u/s 271(1)(c), levy of interest u/s 6 ITA 1089/JP/2011_ ITO Vs. M/s Eminent International School

234B of the Act. This being consequential in nature, therefore, the same is treated as dealt with and decided, in the light of the outcome of the earlier grounds of appeal."

5. Aggrieved, revenue is in appeal before. The learned Sr. D.R.

relied on the order of the Assessing Officer.

6. The learned counsels for the assessee took us through the P&L

account of the assessee and contended that in this year, the assessee

institution did not run the hostel facility due to increase in number of

students. The rooms earlier used as hostel were used in this year as

classrooms and no hostel facility was provided by the institution. The

learned Assessing Officer failed to appreciate this demonstrative

explanation. It was assumed that like preceding year there were hostel

receipts which were notionally adopted for impugned year without any

basis or reason. When no hostel is operated by the assessee or found

by AO, there can be no presumption on hypothecation. Therefore, the

order of the learned CIT(A) is perfectly justified.

7. We have heard the rival contentions of both the parties and

perused the material available on the record. We find merit in the

contentions of learned counsels for the assessee. The learned Assessing

Officer has failed to bring any material on record or prove that the

hostel facility was run by the assessee in the impugned year or any 7 ITA 1089/JP/2011_ ITO Vs. M/s Eminent International School

such amount was received and not accounted. The assessee's books of

account had not been rejected and the receipts of any hostel fee does

not emerge there from. In the absence of any cogent material or

reasoning such assumption is not tenable. In view thereof, we see no

infirmity in the order of the learned CIT(A), which is upheld.

8. In the result, revenue's appeal is dismissed.

Order pronounced in the open court on 13/02/2015.

Sd/- Sd/- ¼Vh-vkj-ehuk½ ¼vkj-ih-rksykuh½ (T.R. Meena) (R.P.Tolani) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member

Tk;iqj@Jaipur fnukad@Dated:- 13th February, 2015

*Ranjan

vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- The ITO, Ward 7(2), Jaipur.

2. izR;FkhZ@ The Respondent-M/s Eminent International School, Jaipur.

3. vk;dj vk;qDr¼vihy½@The CIT(A)-III,Jaipur.

4. vk;dj vk;qDr@ CIT, Jaipur

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 1089/JP/2011)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar