Case Law Details
Gossner Theological College Vs ITO (ITAT Kolkata)
ITAT Kolkata remanded the matter back to AO for the purpose of verification of documents and materials placed on record in respect of anonymous donations as well as the explanation for receipt of hall rent and accommodation so as to allow the claim of exemption u/s. 10(23C)(iiiad) of the Act.
Facts- The assessee was a society engaged in running a college in the name of Gossner Theological College affiliated to Serampore, Hooghly at West Bengal. IT filed its return of income reporting total income as “Nil” after claiming exemption u/s. 10(23C)(iiiad) of the Income Tax Act,1961. In the course of assessment, on examination of the income expenditure statement, AO noted that certain receipts as well as certain expenditure are not related to educational objectives of the assessee. AO thus diallowed the claim of assessee u/s. 10(23C)(iiiad) and assessed the income thereon.
Aggrieved, assessee went in appeal before CIT(A), who partly allowed the appeal of the assessee. Being aggrieved, the present appeal is filed.
Conclusion-We find it proper to remit the matter back to the file of ld. AO for the purpose of verification of documents and materials placed on record in respect of anonymous donations as well as the explanation for receipt of hall rent and accommodation so as to allow the claim of exemption u/s. 10(23C)(iiiad) of the Act. Assessee is directed to furnish all the relevant details and documents to substantiate its claim of exemption before the Ld. AO in respect of the above stated three components of the receipts. Ld. AO on verification and due satisfaction may consider the claim of the assessee in accordance with the provisions of law. Accordingly, grounds taken by the assessee allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide Order No. ITBA/NFAC/S/250/2022-23/1047906338(1) dated 09.12.2022 against the order of ITO, Exemption Ward, Ranchi u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 14.12.2018 for AY 2016-17.
2. Grounds of appeal raised by the assessee are reproduced as under:
“1. That the Assessment made is illegal, arbitrary and is made out of surmises and conjecture.
2. That the Ld. Assessing Officer is not justified in not granting blanket exemption u/s 10(23C)(iiiad) and the Ld. Commissioner of Income Tax (Appeals) National Faceless Appeal Centre, Delhi is not justified in upholding this action of the Ld. Assessing Officer.
3. That the Ld. Assessing Officer is not justified in taxing the rents as taxable and the Ld. Commissioner of Income Tax ( Appeals ), National Faceless Appeal Centre, Del is not justified in upholding the same.
4. That the Ld. Commissioner of Income Tax (Appeals ), National Faceless Appeal Centre, Delhi is not justified in applying the ratio of the judgment which is not a applicable to the case of the assessee.
5. That the Ld. Assessing Officer is not justified in treating the genuine and verifiable donations as anonymous donation and the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi is not justified in upholding the same.
6. That the Ld. Assessing Officer is not justified in not following the rule of consistency as the Incomes have been treated exempted in earlier and subsequent Assessment Years and the Ld. Commissioner of Income Tax (Appeals) National Faceless Appeal Centre Delhi is not justified in upholding the action of the Ld. Assessing Officer.
7. That the Ld. Assessing Officer is not justified in adding Income and subjecting to tax whereas the Net result as per Income & expenditure Account is a loss and the Commissioner of Income Tax ( Appeals ), National Faceless Appeal Centre, Delhi is not justified in upholding this action.
8. That the Ld. Assessing Officer is not justified properly calculating Interest u/s 234 and the Ld. Commissioner of Income Tax ( Appeals ), National Faceless Appeal Centre, Del is not justified in upholding the same.
9. That the other and further grounds shall be urged at the time of hearing.”
3. Brief facts of the case are that assessee is a society engaged in running a college in the name of Gossner Theological College affiliated to Serampore, Hooghly, West Bengal. It filed its return of income reporting total income as “Nil” after claiming exemption u/s. 10(23C)(iiiad) of the Act. In the course of assessment, on examination of the income expenditure statement, Ld. AO noted that certain receipts as well as certain expenditure are not related to educational objectives of the assessee, which are tabulated as under:
TABLE -A
3.1. In respect of the above tabulated details, Ld. AO sought an explanation along with supporting documents which were duly complied with by the assessee. However, Ld. AO did not find favour and observed that assessee has not fulfilled the conditions of Sec. 10(23C)(iiiad) of the Act for allowing the claim of exemption. He, thus, disallowed the claim of the assessee u/s. 10(23C)(iiiad) of Rs.30,28,969/- and assessed the income thereon. Aggrieved, assessee went in appeal before the Ld. CIT(A), who partly allowed the appeal of the assessee.
3.2. Before the Tribunal, assessee is in appeal mainly on the following three components of the receipts tabulated in Table “A” above in respect of Hall rent of Rs.16,95,739/-. Accommodation charges of Rs.19,657/- and anonymous donations of Rs.9,86,453/-, for the purpose of claiming exemption u/s. 10(23C)(iiiad).
3.3. Before us, Ld. Counsel for the assessee claimed that the receipts in respect of hall rent and accommodation are from the utilisation of the college premises for the purpose of seminar, convocation and other social functions and its receipts have been utilised in carrying out the activities relating to its educational objectives. Ld. Counsel emphasized on the fact that assessee is solely engaged in the education by running its college. The activity of utilising the hall during the times when there are vacations of the college is only incidental to carrying on of its educational activity.
3.4. In respect of anonymous donations, Ld. Counsel referred to the paper book containing donation receipts issued by the assessee and asserted that these receipts denotes records the name of the donor as well as their address and, therefore, cannot be tainted as anonymous donations. Ld. Sr. DR in this respect pointed out that the address mentioned are not specific so as to enable the Ld. AO to correspond with the donors to make any enquiry. Further, all these donations are in cash except for two amounts of Rs. 8000/- and 12,000/- which are received in cheque. Also, there are two donors whose addresses are mentioned as ‘Wisconsin, USA’.
4. In this respect, Ld. Counsel pleaded that assessee is in a position to furnish all the details of the donors to establish their identity for which an opportunity may be given by remanding the matter back to the file of the Ld. AO. In respect of the explanation on receipt of hall rent and accommodation charges also, Ld. Counsel for the assessee requested that it may be remitted back to the file of the AO where he would explain and substantiate how amounts were received and their utilisation for the purpose of educational activities of the assessee. On confrontation of this submission by the assessee to the Ld. Sr. DR, no objection was raised.
4.1. Accordingly, we find it proper to remit the matter back to the file of ld. AO for the purpose of verification of documents and materials placed on record in respect of anonymous donations as well as the explanation for receipt of hall rent and accommodation so as to allow the claim of exemption u/s. 10(23C)(iiiad) of the Act. Assessee is directed to furnish all the relevant details and documents to substantiate its claim of exemption before the Ld. AO in respect of the above stated three components of the receipts. Ld. AO on verification and due satisfaction may consider the claim of the assessee in accordance with the provisions of law. Accordingly, grounds taken by the assessee all allowed for statistical purposes.
5. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 16th May, 2023.
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