- (1.) The present appeal has been filed by the appellant-department under Section 260-A of the Income-tax Act, 1961, against the judgment and order dated 07.07.2005, passed by the Income Tax Appellate Tribunal, Lucknow, in I.T.A. No.303/Luc/05, for the assessment year 2000-01. On 09.12.2005, a Coordinate Bench has admitted the appeal on the following substantial questions of law:- 1. Whether the Assessing Authority ought to have assessed only the income which according to him was not used for educational purposes or the entire income could have been assessed? 2. Whether on the facts and circumstances of the case the learned ITAT was justified in holding that the income of the assessee society is entitled for exemption under section 11 of the Income Tax Act, 1961 ?
(2.) The brief facts of the case are that the assessee is a society registered under the Societies Registration Act, 1860 vide certificate dated 13.08.1997. As the object of the assessee society is charitable in nature and as such the Society was granted registration under Section 12-A of the Income Tax Act. During the assessment year under consideration, the A.O. opined that the President of the Society namely Sri Akhilesh Das & his wife Smt. Alka Das has incurred expenditure of Rs.6,79,409/- on account of foreign tour and the same has been claimed out of the account of the assessee society. It has also been observed by the A.O. that a sum of Rs.4,69,383/- was claimed under the head of telephone and mobile expenses. Further, Rs.14,000/- was spent for obtaining the membership of Indian Habitat World Centre. So, the A.O. observed that the expenses were not incurred in the interest of the Society or related to the business. He further observed that the same reflects to the misuse of the exemption granted to the assessee. He also opined that the income of the assessee had been diverted in favour of the trustees namely, Dr. Akhilesh Das Gupta and Vice-President, Smt. Alka Das who is also the founder member of the Society. This is a violation of Section 13, therefore, exemption under Section 11 of the Income-tax Act was denied to the Society for the assessment year under consideration. In appeal, the CIT(A) has confirmed the same, but the Tribunal has allowed the claim of the assessee. Being aggrieved, the department has filed the present appeal.
(3.) With this background, learned counsel for the department has justified the order of the A.O. He submits that in the relevant assessment year, the assessee-Society was engaged in running an educational institution in the name of Babu Banarsi Das National Institute of Technology and Management, (hereinafter known as the Institution) Lucknow, which was affiliated with Dr. B.R.Ambedkar University, Agra. He also submits that Dr. Akhilesh Das Gupta and his wife Smt. Alka Das are the Chairman and Vice-Chairman of the Institute respectively. He further submits that the couple went alongwith their children by the ship "Legend of the Seas" through Royal Carribbean Cruise Lines from Barcelona, Spain on 29.05.1999 to various countries. It was a pleasure trip. The said expenses were incurred for the personal purposes. He also submits that the family members were first flown from Delhi to Barcelona and from there they took the sea journey. So, it is the misuse of the Society's fund for personal purposes. Similarly, he submits that the personal expenses were incurred for electricity bill, telephone, security etc. and same can not be claimed from the society. Further, Chairman, Dr. Akhilesh Das Gupta has obtained the membership of Indian Habitat World Centre by paying a sum of Rs.14,000/- i.e. in personal capacity and the same can not be treated as business expenses. Lastly, he justified the addition made by the A.O.;