The case number ITA 1600/DEL/2019 involves the appellant, Maharishi Markandeshwar University Trust, Ambala Cantt, and the respondent, Principal Commissioner of Income Tax (Pr. CIT), Central, Gurgaon. The case pertains to the assessment year 2015-16. The final tribunal order was pronounced on 2019-08-19 by the Income Tax Appellate Tribunal, Delhi Benches ‘G’, New Delhi, before Sh. H. S. Sidhu, Judicial Member, and Dr. B. R. R. Kumar, Accountant Member.
The Maharishi Markandeshwar University Trust (MMUT) is a charitable trust engaged in running educational institutions. For the assessment year 2015-16, the Principal Commissioner of Income Tax (Pr. CIT), Central, Gurgaon, exercised revisionary powers under section 263 of the Income Tax Act, alleging that the assessment order passed by the Assessing Officer (AO) was erroneous and prejudicial to the interests of the revenue.
The appellant raised several grounds of appeal against the order passed by the Pr. CIT under section 263, which included:
The assessment order under section 143(3) read with section 153A(1)(b) was passed by the AO on 30.12.2016, allowing the benefit of deduction under section 11(1)(a) and deduction on account of fixed assets considered as applied towards income from properties held for charitable purposes during the year.
The appellant contended that the Pr. CIT’s order was illegal and bad in law as it was based on suspicion, surmises, and conjectures without any independent inquiry. The appellant also argued that the issues raised in the section 263 show cause notice had already been examined in detail by the AO during the assessment proceedings.
One of the key issues raised by the Pr. CIT was the admission of students under the NRI quota. The Pr. CIT held that substantial amounts had been received by the trust from parents of students seeking admission under the NRI quota in violation of MCI guidelines and Haryana Government notifications. However, the appellant provided complete details pertaining to the NRI quota, including FIRC, affidavits of parents, students, and norms of MCI, which were filed before the AO and Pr. CIT.
The Pr. CIT alleged that the trust reimbursed payments for vehicles purchased in the name of trustees, thereby violating section 13 of the Income Tax Act. The appellant argued that the vehicles were used for official purposes of the trust and the cost of the vehicles was debited in the block of fixed assets of the trust, with depreciation claimed accordingly.
The Pr. CIT held that the AO did not conduct proper inquiries regarding the payment of salaries to teachers. The appellant provided detailed explanations, affidavits, and evidence of the teachers’ employment, including their PAN, qualifications, Form 16, attendance records, and income tax returns, which were submitted to the revenue authorities.
The Pr. CIT alleged that the trustees derived personal benefits from the trust, such as employing servants at their residences. The appellant provided affidavits and statements confirming that the salaries of these servants were paid by the trustees personally and not by the trust.
The tribunal considered the arguments of both parties and the material available on record. It was found that the AO had duly examined the issues raised by the Pr. CIT during the assessment proceedings. The tribunal held that there was no prima facie evidence of unaccounted income or tax evasion by the trust. The tribunal also noted that the MCI guidelines allowed the wards of NRIs to be admitted under the NRI quota and there was no adverse finding by any regulatory authority regarding the admissions.
The tribunal concluded that the order passed by the Pr. CIT under section 263 of the Income Tax Act could not be upheld on the grounds mentioned. The assessment order was neither erroneous nor prejudicial to the interests of the revenue. The appellant’s appeal was allowed, and the revisionary order under section 263 was set aside.
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