New Delhi Young Men's Christian Association (YMCA), New Delhi V. ADIT (E), New Delhi

CO 103/DEL/2015

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3684 (ITAT-DELHI)
• Duration Of Justice: 3 year(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 27-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K SAMPATH SHRI RAJ KUMAR
• Assessee Lawyers: S R SENAPATI
• Keywords: Charitable institution; Maximum Marginal Rate; Benefit of exemption
• Section: 12A; 12AA; 11

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NOS.:- 4996, 4997/DEL/2014 ASSESSMENT YEARS: 2009-10, 2010-11 CO NO. 103/DEL/2015 (IN APPEAL NO. 4996/DEL/14 ASSESSMENT YEAR : 2009-10 NEW DELHI YOUNG MENS CHRISTIAN ASSOCIATION (YMCA) 1, JAI SINGH ROAD, NEW DELHI. PAN AAATN1200H VS. ADIT (E) INV. CIRCLE-II NEW DELHI. (APPELLANT) (RESPONDENT) ADIT(E) INV. CIRCLE-II, NEW DELHI 110 002 VS. NEW DELHI YOUNG MENS CHRISTIAN ASSOCIATION (YMCA) 1, JAI SINGH ROAD, NEW DELHI. PAN AAATN1200H (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI S.R. SENAPATI, SR. DR DEPARTMENT BY : SHRI K. SAMPATH, ADVOCATE SHRI RAJ KUMAR, ADVOCATE DATE OF HEARING 31/01/2018 DATE OF PRONOUNCEMENT 27/04/2018 2 O R D E R PER BENCH: ITA NO. 4996/DEL/2014 HAS BEEN PREFERRED BY THE DEPARTMENT AGAINST ORDER DATED 27.6.2014 PASSED BY THE LD. CIT (APPEALS) XXI, NEW DELHI FOR ASSESSMENT YEAR 2009-1 0 WHEREAS ITA NO. 4997/DEL/2014 IS THE DEPARTMENTS APPEAL FO R ASSESSMENT YEAR 2010-11 AND IS PREFERRED AGAINST OR DER DATED 27.6.2014 PASSED BY THE LD. CIT (APPEALS) XXI, NEW DELHI. CO. NO. 103/DEL/2005 IS THE CO FILED BY THE ASSESSEE FO R ASSESSMENT YEAR 2009-10. SINCE BOTH THE APPEALS AND THE CO INV OLVED IDENTICAL ISSUES THEY WERE HEARD TOGETHER AND ARE B EING DISPOSED OF BY THIS CONSOLIDATED ORDER. 2. THE LD. AR SUBMITTED THAT UNDER INSTRUCTION FROM THE ASSESSEE HE WAS NOT PRESSING THE ASSESSEES CO CAPT IONED 103/DEL/2015. ACCORDINGLY, THE ASSESSEES CO IS DIS MISSED AS NOT PRESSED. 3. THE LD. AR FURTHER SUBMITTED THAT GROUND N OS. 1 AND 2 IN BOTH THE APPEALS WERE IDENTICAL AND THEY WERE COVER ED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE BY THE ORDER OF ITAT DELHI BENCH FOR ASSESSMENT YEAR 2012-13 IN ITA NO. 4983/D EL/2015 3 WHEREIN VIDE ORDER DATED 20.11.2017 ITAT DELHI BENC H HAD HELD IN PARA 25, 26, AND 27 OF THE SAID ORDER THAT THE LD. CIT(A) HAD RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE ASSOCIATION BY DIRECTING GRANT OF RELIEF U/S 11 R.W.S 12AA OF THE INCOME TAX ACT, 1961 AND HAD DISMISSED THE DEPARTMENTS APPEAL. THE LD. AR ALSO SUBMITTED THAT THE DEPARTMENT HAD ACCEPTED THI S ORDER OF THE ITAT AND THE SAME HAD ATTAINED FINALITY AND, THEREF ORE, BOTH THE APPEALS OF THE DEPARTMENT NEEDED TO BE DISMISSED. 3.1 THE LD. AR FURTHER SUBMITTED THAT GROUND N OS. 3 AND 4 IN ITA NO. 4996/DEL/2014 AND GROUND NOS. 3,4,5,6 AND I TA NO. 4997/DEL/2014 HAVE BEEN INCORRECTLY RAISED BY THE D EPARTMENT AS THESE GROUNDS WERE NOT THE SUBJECT MATTER OF APP EAL/S BY THE ASSESSEE BEFORE THE LD. CIT (A). IT WAS SUBMITTED T HAT THESE GROUNDS WERE NOT ARISING OUT OF THE IMPUGNED ORDERS AND HENCE THEY WERE LIABLE TO BE DISMISSED AS BEING INFRUCTUO US. 4. THE LD. SR. DR VEHEMENTLY SUPPORTED THE O RDER/S OF ASSESSMENT AND POINTED OUT THAT THE AO HAD CORRECTL Y APPLIED THE RELEVANT PROVISIONS OF THE ACT IN TERMS OF THE FACT S OF THE CASE. IT WAS ARGUED THAT THERE WAS HUGE GENERATION OF SURPLU S YEAR AFTER YEAR WHICH PROVED BEYOND DOUBT THAT THE ACTIVITIES OF THE ASSOCIATION WERE COMMERCIAL AND NOT CHARITABLE IN N ATURE. THE 4 LD. SR. DR QUOTED EXTENSIVELY FROM THE ASSESSMENT O RDER/S AND SUBMITTED THAT THE AO HAD CORRECTLY BROUGHT TO TAX THE SURPLUS FOR TAXATION AT THE MAXIMUM MARGINAL RATE AS PROVID ED IN LAW. THE LD. SR. DR PRAYED THAT THE ORDERS OF THE LD. CI T (A) IN BOTH THE YEARS UNDER CONSIDERATION SHOULD BE REVERSED AN D THE ORDERS OF THE AO BE RESTORED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAV E PERUSED THE RECORD. THE FACTS IN THIS CASE ARE UNDISPUTED. THE ASSESSEE IS AN ASSOCIATION REGISTERED UNDER THE SOCIETIES REGISTRA TION ACT, 1860 AND ALSO U/S 12AA (1) OF THE INCOME TAX ACT, 1961 ( THE ACT) SINCE JULY 1974 AND HAS THE BASIC OBJECTIVES AS PRO MOTION OF SPIRITUAL, INTELLECTUAL AND PHYSICAL AND SOCIAL INT EREST OF PEOPLE SPECIALLY THE YOUTH WITHIN THE TERRITORIAL JURISDIC TION OF THE ASSOCIATION IRRESPECTIVE OF THEIR CASTE COLOUR AND CREED. THE ASSOCIATION IS AUTHORISED TO COOPERATE AND/OR ASSOC IATE WITH ANY OTHER ASSOCIATION OR BODY OF PERSONS HAVING SIMILAR OBJECTS. THE INCOME AND PROPERTY OF THE ASSOCIATION IS REQUIRED TO BE APPLIED SOLELY TOWARDS THE OBJECTS OF THE ASSOCIATION AND N O PORTION THEREOF CAN BE PAID DIRECTLY OR INDIRECTLY BY WAY O F DIVIDEND, BONUS OR OTHERWISE. DURING THE YEAR UNDER CONSIDERA TION, THE ASSESSEE ASSOCIATION WAS ENGAGED IN THE ACTIVITIES OF COMMUNITY 5 DEVELOPMENT, RUNNING OF SPECIAL SCHOOLS AND PROVIDI NG HOME TRAINING PROGRAMMES. THE ASSOCIATION ALSO HAD REFUG EE ASSISTANCE PROGRAMMES, RURAL DEVELOPMENT CENTRES, EDUCATION AN D HEALTH ASSISTANCE PROGRAMMES AND ALSO PROVIDED HOSTEL SERV ICES. 5.1 IT IS UNDISPUTED THAT THE ASSESSEE HAS BEE N ENJOYING EXEMPTION U/S 11 OF THE ACT FOR MANY YEARS AND IN S OME ASSESSMENT YEARS WHEN THE EXEMPTION WAS DENIED BY T HE LOWER AUTHORITIES, THE MATTER TRAVELLED UP TO THE ITAT AN D THE ITAT ALSO RETURNED A FINDING IN FAVOUR OF THE ASSESSEE E.G. I N ASSESSMENT YEARS 1988-89, 1990-91, 1991-92, 2010-11, 2011-12 A ND 2012- 13. IT IS SEEN, DURING BOTH THE YEARS UNDER CONSIDE RATION, THE AO HAS DENIED EXEMPTION MAINLY ON THE GROUND THAT THE ASSESSEE IS HAVING SURPLUS AND IS ALSO INVOLVED IN COMMERCIAL A CTIVITIES LIKE OPERATING HOSTELS. THE AO HAS NOTED THAT POST AMEND MENT TO SECTION 2 (15) OF THE ACT, A CHARITABLE TRUST, WITH THE OBJECT OF GENERAL PUBLIC UTILITY, WAS REQUIRED TO ESCHEW ANY ACTIVITY WHICH WAS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR RENDERING OF ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE, OR BUSINESS TO REMAIN CHARITABLE SO AS TO ENJOY THE BENEFIT OF REG ISTRATION U/S 12A OF THE ACT. THE AO CONCLUDED THAT THE ACTIVITIE S OF THE ASSOCIATION INCLUDED HOSTEL SERVICES, MISCELLANEOU S INCOME ETC. 6 WHICH INDICATED THAT THE ACTIVITIES OF THE ASSESSEE WERE COMMERCIAL IN NATURE AND, THEREFORE, THE ASSOCIATIO N WAS NOT WHOLLY OR SOLELY WORKING FOR THE PURPOSE OF CHARITY . HOWEVER, WHEN THE MATTER REACHED THE LD. CIT (APPEALS), THE LD. CIT (A) HELD THAT THE ASSESSEE IS A CHARITABLE AND NON-PROF IT ORGANISATION AND FURTHER THAT HE DID NOT FIND THAT ANY OF THE AC TIVITIES OF THE ASSESSEE FELL WITHIN THE REALM OF TRADE, COMMERCE O R BUSINESS. THE LD. CIT (A) DIRECTED THE AO TO ALLOW THE BENEFIT OF EXEMPTION U/S 11 (1) OF THE ACT. 5.2 ALTHOUGH THE LD. SR. DR HAS VEHEMENTLY AR GUED AGAINST THE ORDER OF LD. CIT (A) IN DIRECTING THE AO TO ALL OW THE BENEFIT OF EXEMPTION TO THE ASSESSEE WITH ALL THE CONSEQUENTIA L BENEFITS, WE FIND THAT THE CASE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR ASSESS MENT YEAR 2012-13 WHEREIN A SIMILAR DIRECTION BY THE LD. CIT (A) WAS UPHELD BY THE COORDINATE BENCH OF THIS TRIBUNAL. WE ALSO FIND THAT THE ASSESSEE HAS BEEN ALLOWED THE BENEFIT OF EXEMPT ION BY THE TRIBUNAL IN ASSESSMENT YEARS 1989-90, 1990-91, 1991 -92, 1992- 93, 1993-94, 1997-98, 2010-11 AND 2012-13. ALTHOUGH , THE DEPARTMENT HAS ARGUED VEHEMENTLY AGAINST THE ACTION OF THE LD. CIT (A) IN DIRECTING THE ALLOWANCE OF EXEMPTION, NO MATERIAL 7 EVIDENCE DISTINGUISHING THE FACTS FROM THE EARLIER YEARS OR ANY FACTUAL OR LEGAL INFIRMITY IN THE ORDER OF THE LD. CIT (A) COULD BE POINTED OUT BEFORE US. PARA 26-27 OF THE ITATS ORD ER FOR ASSESSMENT YEAR 2012-13 IN ITA NO. 4983/DEL/2015 A RE RELEVANT AND THE SAME ARE BEING REPRODUCED FOR A READY REFE RENCE :- 26. WE NOTICE THAT IN THE PAST SIMILAR OBJECTIO NS HAVE BEEN TAKEN IN ASSESSMENT BY THE RESPECTIVE ASSESSIN G OFFICERS. IN AY 1989-90 THE TRIBUNAL IN THE ASSESSE E'S OWN CASE DISMISSED THE DEPARTMENTAL GROUND OF APPEA L WHERE IT WAS ALLEGED THAT THE CIT (A) HAD ERRED IN HOLDING THAT THE ASSESSEE WAS ENTITLED TO BENEFIT U /S 11 (1) OF THE ACT READ WITH SECTION 2(15) OF THE ACT. IN THE AY 1990-91 THE DEPARTMENTAL APPEAL WAS AGAIN DISMISSED BY THE TRIBUNAL WHERE THE GROUND RAISED W AS THAT THE CIT (A) HAD ERRED IN ALLOWING THE BENEFIT OF SECTION 11 OF THE ACT BY HOLDING THAT THE ACTIVITIE S OF THE SOCIETY WERE CHARITABLE THOUGH THE ASSESSING OFFICE R HAD RIGHTLY APPLIED THE PROVISIONS OF SECTION 11 (4 )(A) OF THE ACT BY HOLDING THE SAME AS BUSINESS ACTIVITY. I N AY 1993-94 ONCE AGAIN THE DEPARTMENTAL APPEAL WAS DISMISSED BY THE TRIBUNAL. WHERE THE POINT IN ISSUE WAS THAT THE CIT(A) ERRED IN ALLOWING THE BENEFIT U/S 1 1 OF THE ACT BY HOLDING THAT THE ACTIVITIES OF THE SOCIE TY WERE CHARGEABLE(SIC) ALTHOUGH THE ASSESSING OFFICER HAD RIGHTLY APPLIED THE PROVISIONS OF SECTION 11 (4)(A) OF THE ACT BY HOLDING THE SAME AS BUSINESS ACTIVITY. IT SE EMS 8 THAT THE CIT(A)'S FIRST APPEAL ORDER IN AY 1992-93 BECAME FINAL WHERE IT WAS HELD BY THE CIT(A) THAT T HE APPELLANT WAS ENTITLED TO EXEMPTION U/S 11 0F THE A CT AND THE PROVISIONS OF SECTION 11 (4)(A) OF THE ACT WERE NOT APPLICABLE TO THE CASE. THERE-AFTER IN AY 1997- 98 THE ASSESSING OFFICER HIMSELF IN THE ASSESSMENT ORDER D ATED 11.01.2000 CONFERRED CHARITABLE STATUS TO THE ASSES SEE BY APPLYING SECTION 11 OF THE ACT. WHILE FEES MAY B E CHARGED AND THERE MAY EVEN TO BE A SURPLUS OUT OF CHARITABLE ACTIVITIES, THE PRINCIPLE THAT SO LONG A S THE SURPLUS FUNDS ARE REDEPLOYED IN CHARITABLE ACTIVITI ES NO OBJECTION CAN BE TAKEN AS TO THE CHARITABLE PURSUIT S IS INEXCEPTIONABLE. THIS HAS BEEN SO HELD BY THE APEX COURT IN THIAGARAJAR CHARITIES VS. ADDL CIT (1997) 225 IT R 1010 (SC). 27. FURTHER THE HON'BLE DELHI HIGH COURT HAS RULED THAT THE EXPRESSION CHARITABLE PURPOSE AS DEFINED IN SEC TION 2(15) OF THE ACT COULD NOT BE CONSTRUED LITERALLY A ND IN ABSOLUTE TERMS. THE EXPRESSION WOULD TAKE ITS COLOU R AND HAD TO BE CONSIDERED IN THE CONTEXT OF SECTION 10(23C)(IV) OF THE ACT. THE COURT HELD THAT IF IN T ERMS OF THE DOMINANT AND PRIMARY OBJECTIVES OF THE INSTITUT ION THERE WAS NO DESIRE TO GAIN PROFITS AND THE OBJECT WAS TO PROMOTE TRADE AND COMMERCE NOT FOR ITSELF BUT FOR T HE NATION WAS TO BE CONSTRUED AS A CHARITABLE PURPOSE. THUS, ON A CAREFUL CONSIDERATION OF THE ENTIRETY OF THE FACTS AND THE MATERIAL ON RECORD AND BASED ON THE HISTORY OF THE CASE AND THE EXISTING PRECEDENTS ON THIS 9 POINT, WE HAVE NO HESITATION IN HOLDING THAT THE CI T (A) HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSE SSEE ASSOCIATION BY DIRECTING RELIEF U/S 11 READ WITH SE CTION 12AA OF THE ACT. RESULTANTLY THE APPEAL FILED BY TH E DEPARTMENT IS DISMISSED. 5.3 ACCORDINGLY, ON IDENTICAL FACTS, RESPECTFU LLY FOLLOWING THE ORDER OF THE COORDINATE BENCH IN ASSESSEES OWN CAS E FOR ASSESSMENT YEAR 2012-13, WE FIND NO REASON TO INTER FERE WITH THE FINDINGS AND DIRECTIONS OF THE LD. CIT (A) IN BOTH THE YEARS UNDER CONSIDERATION. 5.4 WE ALSO AGREE WITH THE AVERMENTS OF THE LD . AR THAT GROUND NOS. 3 & 4 IN ITA NO. 4996/DEL/2014 AND GROU ND NOS. 3,4,5 AND 6 IN ITA NO. 4997/DEL/2014 DO NOT ARISE O UT OF THE ORDER OF THE LD. CIT(A). ACCORDINGLY THESE GROUNDS ARE DISMISSED AS UN-MAINTAINABLE AND IN FRUCTUOUS . 6. IN THE RESULT, BOTH THE APPEALS OF THE DEPARTMEN T AS WELL AS THE CO OF THE ASSESSEE STAND DISMISSED. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL, 2018. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SR IVASTAVA) HONBLE PRESIDENT JUDICIAL MEMBER DATED: 27/04/2018 10 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI