Rajiv Gandhi National University of Law, Patiala V. CIT(E), Chandigarh

ITA 1/CHANDI/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8904 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-07-2019
• Assessment Year: misc
• Appeal Filed On: 01-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S PHANI KISHORE CIT DR
• Keywords: Charitable institution; Opportunity of being heard
• Section: 80G; 12AA; 12; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BEN CH B, CHANDIGARH .., ! '# #$ %, & '( BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, JM ITA NO. 1/CHD/2019 ASSESSMENT YEAR : UNDER SECTION 250(6) RAJIV GANDHI NATIONAL UNIVERSITY OF LAW SIDHUWAL BHADSON ROAD PATIALA, PUNJAB THE CIT(E) EXEMPTION CHANDIGARH PAN NO: AAAJR0714Q APPELLANT RESPONDENT !' ASSESSEE BY : SHRI GURJEET SINGH, CA #!' REVENUE BY : SHRI G.S. PHANI KISHORE, CIT DR $ %! & DATE OF HEARING : 08/07/2019 '()*! & DATE OF PRONOUNCEMENT : 09/07/2019 ')/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT. 29/11/2018 OF THE LD. CIT(E), CHANDIGARH. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEA L RELATES TO THE REFUSAL FOR APPROVAL UNDER SECTION 80G OF THE INCOME TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS ACT), EVEN WHEN THE ASSESSEE WAS REGISTERED UN DER SECTION 12AA OF THE ACT. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED AN APPLICATION ON 28/05/2018 FOR APPROVAL UNDER SECTION 80G OF THE AC T, THE ASSESSEE ALSO FURNISHED COPY OF THE ORDER DT. 30/11/2017 UNDER SE CTION 12AA OF THE ACT, PASSED BY THE CIT(E) CHANDIGARH. THE LD. CIT(A) ASK ED THE ASSESSEE TO PRODUCE THE FOLLOWING DETAILS / CLARIFICATIONS : I. A CERTIFIED LEGIBLE COPY OF BYE-LAWS/MEMORANDUM OF ASSOCIATION OF SOCIETY/TRUST/COMPANY ALONG WITH SUPPLEMENTARY/AMEN DED DEED (IF ANY), IN ENGLISH, MAY BE FURNISHED. II. DETAILS OF NAMES AND ADDRESSES OF THE SETTLER, TRUS TEES, MEMBERS OF THE TRUST/SOCIETY/COMPANY WITH THEIR PANS & EMAIL ADDRE SS, RELATIONSHIP AMONGST THEM AND THEIR PROFESSION, BE FURNISHED. III. AN AFFIDAVIT GIVING CLEAR UNDERTAKING THAT NO FEES CHARGES ETC WILL BE COLLECTED FOR ANY SERVICES REFERRED FROM THE BENEFI CIARIES IN VIOLATION OF PROVISIONS OF SECTION 2(15) OF THE INCOME TAX ACT. IV. COPIES OF THE AUDITED BALANCE SHEET, INCOME & E XPENDITURE ACCOUNT ALONG WITH COMPLETE ANNEXURE FOR THE LAST 3 YEARS O R SINCE THE BEGINNING OF THE TRUST ALONGWITH THE RECEIPTS AND PAYMENT ACCOUNTS F OR THE RELEVANT YEARS. PLEASE 2 NOTE THAT THE FINANCIAL STATEMENTS RELATED TO INDIV IDUAL INSTITUTE(S) AND ALSO, THE CONSOLIDATED IN RESPECT OF SOCIETY/TRUST MAY BE SUB MITTED. V. A COMPREHENSIVE NOTE ON ACTIVITIES SPECIFYING TH E SECTION 2(15) OF I.T. ACT UNDER WHICH THE OBJECTS OF THE TRUST GET COVERED AN D QUALIFY FOR BEING CONSIDERED CHARITABLE MAY BE FURNISHED ALONGWITH DE TAILS HOW THE ACTIVITIES PROJECTED ARE CHARITABLE IN NATURE SPECIFYING THE S PECIFIC LIMB U/S 2(15) OF THE ACT. VI. JUSTIFICATION ABOUT THE CLAIM OF EXEMPTIONS U/S 11/12 OF 1.1. ACT ALONGWITH A DETAILED NOTE IN THE MATTER. VII. DETAILS OF PROPERTY VESTED IN THE SOCIETY, AS ENVISAGED U/S 11 OF THE I.T. ACT, INCOME FROM WHICH SOUGHT TO BE EXEMPTED. VIII. DETAILS OF VOLUNTARY CONTRIBUTIONS RECEIVED B Y THE SOCIETY, AS ENVISAGED U/S 12 OF THE I.T. ACT AND WHETHER ANY SPECIFIC DIR ECTIONS HAVE BEEN RECEIVED BY THE PERSONS MAKING VOLUNTARY CONTRIBUTIONS. IX. DETAILS OF LAND AND BUILDING PURCHASED DURING L AST THREE YEAR ALONG WITH THE COPIES OF REGISTRATION OF THE SAME IN THE NAME OF THE SOCIETY. X. PROOF OF OWNERSHIP OF LAND AND BUILDING/FIXED AS SETS OWNED BY THE TRUST/SOCIETY MAY BE FURNISHED. XI. DETAILS OF DONATIONS RECEIVED ALONG WITH DOCUME NTARY EVIDENCE. XII. THE COPIES OF THE I.T RETURNS ALONGWITH COMPUT ATION OF INCOME (IF ANY), MAY BE FILED FOR THE LAST 03 YEARS. XIII. DETAILS OF CORPUS FUND AND WHETHER THE SAME A RE WITH ANY SPECIFIC WRITTEN DIRECTIONS. XIV. COPY OF RECEIPTS AND PAYMENT ACCOUNTS OF THE E NTITY FOR THE LAST THREE YEARS CORROBORATING THE SAME THROUGH BANK ENTRIES. XV. IN CASE THE TRUST/SOCIETY IS RUNNING AN EDUCATI ONAL INSTITUTE, COPY OF AFFILIATION LETTER DULY CERTIFIED BY THE MEMBER/TRU STEE OF THE SOCIETY/TRUST BE FURNISHED. THE COMPLETE NAME AND ADDRESS (ES) OF TH E INSTITUTE MAY ALSO BE PROVIDED. XVI. THE COPIES OF THE STATEMENTS OF ALL BANK ACCOU NTS MAINTAINED BY THE TRUST/SOCIETY OR BY THE TRUSTEES FOR LAST 3 YEARS O R SINCE THE BEGINNING OF THE TRUST. XVII. COPY OF REGISTRATION GRANTED UNDER FOREIGN CO NTRIBUTION REGULATION ACT (FCRA). XVIII. WHETHER THE APPLICATION FOR REGISTRATION HAS BEEN FILED FOR THE FIRST TIME? IF NO THE OUTCOME OF EARLIER APPLICATION WITH COPY OF THE ORDER MAY BE INTIMATED. XIX. DETAILS OF ANY SEARCH & SEIZURE OR SURVEY U/S 133-A OF THE INCOME TAX ACT, 1961 CARRIED OUT IN THE CASE OF THE SOCIETY. XX. COPIES OF ALL THE BANK STATEMENT FROM 08.11.201 6 TO 31.12.2016 HIGHLIGHTING THE CASH DEPOSITS ALONGWITH THE SOURCE, WITH DOCUME NTARY EVIDENCE, AS A SEPARATE ANNEXURE. XXI. AN AFFIDAVIT GIVING THE DETAILS OF ALL THE BANK ACC OUNTS MAINTAINED BY THE SOCIETY/ TRUST DEPOSED IN IT THAT NO OTHER BANK ACC OUNT IS MAINTAINED EXCEPT THOSE DISCLOSED BEFORE THE DEPARTMENT. XXII. STATUS OF EXEMPTION CLAIMED IN THE EARLIER YE ARS ALONGWITH THE EVIDENCE. XXIII. THE DETAILS OF THE TRUSTEES/MEMBERS BEING TR USTEE/MEMBER/DIRECTOR IN DIFFERENT SOCIETY/TRUST/COMPANY. XXIV. THE DESIRED E-MAIL FOR ONLINE COMMUNICATION I N RESPECT OF THE PRESENT MATTER. 3.1 IN RESPONSE THE ASSESSEE SUBMITTED THAT IT IS A N EDUCATIONAL INSTITUTION SUBSTANTIALLY FUNDED BY THE PUNJAB GOVERNMENT AND T HE MAJOR SOURCE OF INCOME WAS EITHER INTEREST INCOME, RECEIPTS FROM ST UDENT, COLLECTION OF RENT ETC 3 FROM STAFF OR OTHERS UTILIZING ASSETS OF UNIVERSITY , RECEIPTS FROM THE PUNJAB GOVERNMENT AND UNIVERSITY GRANT COMMISSION(UGC). TH E ASSESSEE HAS ALSO FURNISHED ITS FINANCIAL STATEMENTS FOR THE LAST THR EE ASSESSMENT YEARS AS UNDER: F.Y. TOTAL RECEIPTS SURPLUS FIXED ASSETS INVESTMENTS FROM ENDOWMENT/EARMARKED FUNDS INVESTMENT OTHERS 2015 - 16 RS. 15,31,08,402/ - RS. 12,68,15,741/ - RS. 21,39,10,331/ - ----------- RS. 26,95,72,379/ - 2016 - 17 RS. 25,41,82,441/ - RS. ( - ) 3,03,14,765/ - RS. 1,51,39,29,692/ - RS. 32,83,86,776/ - RS. 4,69,18,103/ - 2017 - 18 RS. 24,93,38,484/ - RS. 5,53,02,239/ - RS. 1,51,10,51,614/ - RS. 39,90,22,849/ - RS. 7,91,65,278/ - 4. THE LD. CIT(E) ASKED THE ASSESSEE TO FURNISH FOL LOWING ADDITIONAL INFORMATIONS:- (I) RATIONALE FOR SEEKING APPROVAL U/S 80G BE ING AN EDUCATIONAL BODY AND HAVING HUGE FIXED ASSETS, INVESTMENTS & CURRENT ASS ETS. (II) COPY OF BANK STATEMENT FOR THE LAST THREE YEARS. (III) ITR COMPUTATION FOR A.Y. 2018-19. ( IV ) RATIONALE FOR SEEKING APPROVAL U/S 80G, WHEN YOU ARE GETTING GRANT FROM UGC AND YOU LIAVE SUFFICIENT DESIGNATED/EARMARKED F UND IN YOUR BALANCE SHEET. 4.1. THE LD. CIT(E) OBSERVED THAT THE FINANCES OF T HE ASSESSEE REFLECTED NO PALPABLE FINANCIAL STRESS SINCE IT WAS IN RECEIPT O F EXCESS OF RS. 15/- CRORES AND THE MAIN FOCUS OF THE ASSESSEE WAS ON MAINTAINING T HE INVESTMENTS. THE LD. CIT(E) CONCLUDED THAT THE ASSESSEE HAD AT ITS DISPO SAL HUGE INVESTMENT AND THE RATIONALE FOR SEEKING DONATIONS WAS NOT BROUGHT OUT IN THIS CASE. HE THEREFORE, REJECTED THE APPLICATION MOVED BY THE ASSESSEE FOR APPROVAL UNDER SECTION 80G(5)(VI) OF THE ACT. 5. NOW THE ASSESSEE IS IN APPEAL. 6. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT, AND ITS OBJECTS ARE CHARITABLE IN NATURE THEREFORE MERELY ON THIS BASIS THAT THERE WA S SURPLUS WITH THE ASSESSEE, THE REGISTRATION UNDER SECTION 80G COULD NOT HAVE BEEN DENIED. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: CIT VS. RAJMALA EDUCATIONAL SOCIETY (2012) 65 DTR 0 307 (P&H) CIT VS. VINOD KUMAR SOMANI CHARITABLE TRUST (2018) 102 CCH 0123 PHHC (P&H) S.J.A ALUMNI ASSOCIATION VS. CIT (2016) 47 ITR(TRIB ) 0274 (DELHI) 7. IN HIS RIVAL SUBMISSIONS THE LD. CIT DR STRONGLY SUPPORTED THE IMPUGNED ORDERS OF THE LD. CIT(E) AND FURTHER SUBMITTED THAT THE LD. CIT(E) SPECIFICALLY ASKED THE ASSESSEE TO FURNISH THE RATIONALE FOR SEE KING APPROVAL WHEN IT WAS 4 GETTING GRANT FROM UGC AND WAS HAVING SUFFICIENT DE SIGNATED / EARMARKED FUNDS IN ITS BALANCE SHEET. HE ALSO ASKED THE ASSES SEE TO FURNISH BANK STATEMENT FOR THE LAST THREE YEARS AND ITRS, COMPUTATION FOR THE A.Y. 2018-19 BUT NO SUCH INFORMATION WAS PROVIDED BY THE ASSESSEE. THEREFORE THE APPLICATION MOVED FOR APPROVAL UNDER SECTION 80G(5)(VI) OF THE ACT WAS RI GHTLY REJECTED BY THE LD. CIT(E). 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE IT IS AN ADMITTED FACT THAT THE ASSESSEE IS HAVING REGISTRAT ION UNDER SECTION 12AA OF THE ACT BUT IT DID NOT PROVIDE THE REQUISITE INFORMATIO N ASKED BY THE LD. CIT(E). IT IS ALSO NOTICED THAT SUFFICIENT TIME WAS NOT GRANTED B Y THE LD. CIT(E) TO THE ASSESSEE TO PROVIDE SUCH INFORMATION WHICH IS EVIDE NT FROM PARA 4 OF THE IMPUGNED ORDER WHEREIN THE LD. CIT(E) HIMSELF STATE D THAT QUERIES WERE RAISED ON 24/11/2018 AND THE ASSESSEE WAS ASKED TO FILE RE PLY ON 27/11/2018. WE THEREFORE CONSIDERING THE TOTALITY OF THE FACTS DEE M IT APPROPRIATE TO REMAND THIS CASE BACK TO THE FILE OF THE LD. CIT(E) TO BE DECID ED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 09/07/2019 ) SD/- SD/- #$ % .., (SANJAY GARG ) ( N.K. SAI NI) & '(/ JUDICIAL MEMBER ! / VICE PRESIDENT AG DATE: 09/07/2019 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE