DY. COMMISSIONER OF INCOME TAX, CENTRAL DELHI V. G R GOENKA EDUCATION SOCIETY, SOUTH DELHI

ITA 2701/DEL/2023

AI Insights

The case involves GR Goenka Education Society, a charitable society running G.D. Goenka Public School, which was under scrutiny for its compliance with sections 11 and 13 of the Income Tax Act, 1961. The primary issue was the registration of the trademark 'G.D. Goenka' by Shri Anjani Kumar Goenka, the chairman, in his own name rather than the society's, which the Assessing Officer (AO) viewed as a diversion of income and a violation of section 13(1)(c) read with section 13(3) of the Act. The CIT(A) and the Tribunal, however, found in favor of the society, referencing previous rulings that supported the society's position.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470208 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2020-2021
• Other Referred Cases: Aditanar Educational Institution v. Additional Commissioner of Income Tax, Queen's Educational Society v. CIT, Formula One World Championship Ltd. v. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: AMIT GOEL
• Keywords: Charitable institution; Cancellation of registration; Benefit of exemption
• Section: 143(3); 11; 12

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No. 2701/Del/2023 (Assessment Year:2020-21) DCIT, Central Circle, Delhi Vs. GR Goenka Education Society, Sector-B, Pocket 8&9, Vasant Kunj, New Delhi-110070 (Appellant) (Respondent) PAN:AAATG0617M Assessee by : Shri Amit Goel, CA Shri Pranav Yadav, Adv Revenue by: Shri Rajesh Kumar Dhanesta, Sr. DR Date of Hearing 13/01/2025 Date of pronouncement 29/01/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.387/Del/2021 for AY 2015-16, arise out of the order of the Commissioner of Income Tax (Appeals)-37, New Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. 37/10221/2018-19, A.Y. 2015-16 dated 22.09.2020 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 28.12.2017 by the Assessing Officer, DCIT, Circle-16 (2), New Delhi (hereinafter referred to as „ld. AO‟). 2. The revenue has raised the following grounds of appeal before us:- “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 3.66.31,108/- made by AO on account of dental of exemption u/s 11 of the Income Tax Act, 1961? ITA No. 2701/Del/2023 GR Goenka Education Society Page | 2 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in extending the benefit of exemption to the respondent society under section 11 of the Income Tax, 1961 even though the respondent has violated of the provisions of section 13(1)(c) read with section 13(3) of the Act, by registering the trademark in the name of Shri Anjanı Kumar Goenka- the chairman of the Society and not in the name of the Society itself thereby indulging in diversion of the franchise income/royalty to the other company? 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in not taking into consideration the fact that the respondent does not qualify as a charitable institution under section 11 of the Act as it was engaged in activities which were commercial in nature? 4 Whether on the facts and in the circumstances of the case and in law, the order of the Ld. CIT(A) 15 erroneous and not tenable in law and on facts 5. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.” 3. We have heard the rival submissions and perused the materials available on record. The assessee is a charitable society engaged in the charitable activity of running a school. The assessee society started a school under the name G.D. Goenka Public School in Vasant Kunj on 5- 10-1994. Shri Anjani Kumar Goenka has been the Chairman of G.R. Goenka Education Society since its inception. He has business interest in other fields also, but his only association with the field of education is in his capacity as Chairman of G.R. Goenka Education Society. G.D. Goenka Public School has carved out a niche for itself in the city because of its certain unique features, such as provision of air-conditioned buses and classrooms, bottled mineral water for children, presence of nanny and guards armed with mobile phones in all school buses. As a result of which, in the year 2000, Shri Anjani Kumar Goenka thought of exploiting the Goodwill of G.D. Goenka Public School by registering the trade name „G.D. Goenka‟ in the field of education (Class 41) in his own name. He therefore applied to this effect before the Registrar of Trademarks. ITA No. 2701/Del/2023 GR Goenka Education Society Page | 3 Besides, he also registered some more resembling trademarks either in Class 41 (educational field) or other classes (other than educational fields). However, the fact remains that only the trademark „G.D. Goenka‟ in Class 41 has market value and capable of being exploited commercially by issuing franchisee to public schools. After registration of trademark „G.D. Goenka‟, Shri Anjani Kumar Goenka has signed franchisee agreement through his company G.D. Goenka Limited and has been earning handsome income. 4. The Learned AO observed that assessee society has allowed Shri Anjani Kumar Goenka, who is a person specified under section 13(3) of the Act, to usurp its intellectual property rights by registering the trademark G.D. Goenka in his own name. Accordingly, he concluded that in terms of section 13(1)(c ) of the Act, the assessee society has allowed its intellectual property rights i.e. its Goodwill to be applied by Shri Anjani Kumar Goenka for his own benefit since registration of the trademark including in the current assessment year. Therefore, he concluded that the assessee is not entitled for exemption under section 11 and 12 for infringement of section 13(1)(c ) of the Act. 5. It is pertinent to note that similar observations were made by the Learned AO in assessment year 2009-10 also wherein the matter travelled up to the level of Tribunal in assessee s own case and Tribunal decided the issue in favour of the assessee. The further appeal preferred by the revenue against the Tribunal order before the Hon‟ble High Court was also dismissed. The Learned AO had mentioned in Para 6, Page 5 of his order that against the decision of Hon‟ble High Court, the revenue had preferred Special Leave Petition (SLP) before the Hon‟ble Supreme Court and the same is still pending. Hence, the issue had not attained finality and in order to keep the issue alive, the same ITA No. 2701/Del/2023 GR Goenka Education Society Page | 4 observations as were made in earlier assessment year were being made for this year also and accordingly, the excess of expenditure over income claimed by the assessee was not allowed to be carried forward. 6. The Learned CITA by placing reliance on the order of this Tribunal for assessment year 2009-10 which stood approved by the Hon‟ble Delhi High Court granted relief to the assessee and directed the Learned AO to grant exemption under section 11 of the Act. 7. It would be relevant to reproduce the order of Hon‟ble Jurisdictional High Court passed in assessee‟s own case for assessment year 2009-10 in ITA 871/2017 dated 30-10-2017:- “1. The Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal (ITAT) contending that its impugned order is erroneous. It firstly urges that the cancellation of registration under Section 2(15) of the Income Tax Act, 1961 (\"the Act\") by the Commissioner of Income Tax, was justified. Here it is urged that although the activity which the assessee was performing, broadly answers the description of \"education\", the further fact that it charges extremely high rates of fee which, in fact, amounts to commercialization of education, means that it is providing services of general public utility and therefore falls in the last category under Section 2(15) of the Act. 2. The findings of the Tribunal, we notice, are that the essential objects of the respondent - assessee continue to be the same i.e. providing education to schools. The Revenue's reliance on Aditanar Educational Institution v. Additional Commissioner of Income Tax, (1997) 224 ITR 310 (SC), is of no avail. The ITAT had considered that judgment and analyzed the facts of this case in the light of both the previous judgments as well as the later ruling in Queen's Educational Society v. CIT (2015) 372 ITR 699, 716 (SC). 3. The Court is of the opinion that there is no merit in the Revenue's appeal; objects for the respondent- assessee remained unaltered. The extent of fees charged by it ipso facto cannot be the basis to conclude that the purpose for which it was set up had changed. 4. The other ground urged was that the goodwill and monetary value of the trade mark, which arose in the course of the respondent's activities, ought to have accrued to it rather than the owner. This, it is stated, amounted to a diversion under Section 13(3) of the Act. The Court is of ITA No. 2701/Del/2023 GR Goenka Education Society Page | 5 the opinion that the ITAT's reasoning on this aspect too is merited. Besides, the use of a trade mark per se does not confer an advantage upon the licensee or authorized user under Section 40(2) of the Trade Marks Act, 1999 the benefit of such use accrues to the owner. This aspect too has been considered by a Division Bench of this Court and later affirmed in Formula One World Championship Ltd. v. CIT, [2017] 390 ITR 199 (Delhi). For the above reasons, there is no merit in this appeal; it is accordingly dismissed. S. RAVINDRA BHAT, J SANJEEV SACHDEVA, J OCTOBER 30, 2017 8. In view of the aforesaid decision of Hon‟ble Jurisdictional High Court for assessment year 2009-10 which was in turn followed by this Tribunal up to assessment years 2018-19, we do not find any merit in the grounds raised by the revenue. Accordingly, the grounds raised by the revenue are dismissed. 9. In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 29/01/2025. -Sd/- -Sd/- (YOGESH KUMAR U.S.) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 29/01/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi ITA No. 2701/Del/2023 GR Goenka Education Society Page | 6 1. Date of dictation of Tribunal Order....... 27.01.2025 2. Date on which the typed draft Tribunal Order is placed before the Dictation Member.. 27.01.2025 3. Date on which the typed draft Tribunal Order is placed before the other Member... 4 Date on which the approved draft Tribunal Order comes to the Sr. P.S./P.S. 5. Date on which the fair Tribunal Order is placed before the Dictating Member for pronouncement... 6. Date on which the signed order comes back to the Sr. P.S./P.S.... 7. Date on which the final Tribunal Order is uploaded by the Sr. P.S./P.S. on official website... 8. Date on which the file goes to the Bench Clerk alongwith Tribunal Order.... 9. Date of killing off the disposed of files on the judiSIS portal of ITAT by the Bench Clerks 10. Date on (Judicial) which the file goes to the Supervisor 11. The date on which the file goes to the Assistant Registrar for endorsement of the order.. 12. Date of Despatch of the Order. "