Progressive Education Society, Pune V. Deputy Commissioner of Income-tax,

ITA 1017/PUN/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0661 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 16-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Opportunity of cross examination
• Section: 80G; 12A; 12; 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 1017/PUN/2016 / ASSESSMENT YEAR : 2010-11 PROGRESSIVE EDUCATION SOCIETY, W.I.E. SPORTS COMPLEX, SHIVAJINAGAR, PUNE 411005 PAN : AAATP5481C . /APPELLANT VS. DCIT, CIRCLE- 4, PUNE . / RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE REVENUE BY : SHRI SHIVRAJ MOREY, CIT / DATE OF HEARING : 26.09.2018 / DATE OF PRONOUNCEMENT: 28.09.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER O F CIT(A)-10, PUNE, DATED 27-01-2016 INVOLVING ASSESSMENT YEAR 2010-11. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1. THE LEARNED CIT(A)-10, PUNE ERRED IN LAW AND ON FACTS IN UPHOLDING THE TAXABLE INCOME WORKED OUT BY THE LEARNED AO AT RS. 14,18,67,147/- AND CORRESPONDING TAX LIABILITY AMOUNTING TO RS. 6, 29,82,833/- ON THE APPELLANT. THE LEARNED CIT(A)-10 AND THE LEARNED AO OUGHT TO HAVE APPRECIATED THAT THE APPELLANT IS A BONAFIDE CHARIT ABLE TRUST SOLELY ENGAGED IN EDUCATION. 2. THE LEARNED CIT(A)-10, PUNE ERRED IN LAW AND ON FACTS IN UPHOLDING THE ORDER PASSED BY LEARNED AO WITHOUT PROVIDING AD EQUATE OPPORTUNITY OF BEING HEARD. 3. THE LEARNED CIT(A)-10, PUNE ERRED IN LAW AND ON FACTS IN UPHOLDING AO'S CONTENTION THAT THE APPELLANT IS NOT ELIGIBLE TO CLAIM EXEMPTION U/S. 11 OF THE ITA, 1961 IN THE ABSENCE OF 12A REGISTRATION CERTIFICATE. THE LEARNED CIT(A)-II, PUNE OUGHT TO HAVE CONSIDERED THE GENUIN E AND BONAFIDE CAUSE OF EDUCATION FOR WHICH THE APPELLANT EXISTS FOR PAST M ANY YEARS; AND; THE ITA NO. 1017/PUN/2016 PROGRESSIVE EDUCATION SOCIETY 2 PRESENCE OF 80G CERTIFICATES GRANTED TO THE APPELLA NT FOR THE PAST MANY YEARS TILL 31/03/2009. 4. WITHOUT PREJUDICE TO GROUND NO 3, THE LEARNED CI T(A)-10, PUNE ERRED IN LAW AND ON FACTS IN NOT GRATING BENEFIT OF SECTI ON 11 & 12 ON THE GROUND THAT APPELLANT IS NOT HAVING 12A REGISTRATION CERTI FICATE WITHOUT APPRECIATING THAT APPELLANT HAS BEEN GRANTED 12A RE GISTRATION FROM 1/04/2013 FOR CARRYING IDENTICAL OBJECTS & ACTIVITI ES AS FOR YEAR UNDER CONSIDERATION, HENCE, THERE IS NO FAILURE IN THIS R EGARD CONSIDERING THE AMENDMENT IN FINANCE ACT 2014. 5. THE LEARNED CIT(A)-10, PUNE ERRED IN HOLDING THA T THE APPELLANT HAS VIOLATED SECTION 11 (C)(D) OF THE ITA, 1961 BY ACCE PTING CORPUS DONATIONS FOR ADMISSIONS. THE LEARNED CIT(A)-II AND THE LEARN ED AO ERRED IN LAW AND ON FACTS IN HOLDING THAT DONATIONS HAVE BEEN RECEIV ED FOR MANAGEMENT QUOTA SEATS, AND, THAT SUCH DONATIONS ARE CAPITATIO N FEES, AND AGAINST THE PUBLIC POLICY. 6. THE LEARNED CIT(A)-10, PUNE ERRED IN LAW AND ON FACTS IN DENYING EXEMPTION U/S. 11 OF THE ITA, 1961 TO THE DONATIONS OF RS. 1,70,86,401/- RECEIVED BY THE TRUST ON THE ANALOGY THAT THE SAID DONATIONS ARE NOT IN KEEPING WITH THE LAW. 7. THE LEARNED CIT(A)-10, PUNE ERRED ON FACTS IN UP HOLDING ORDER PASSED BY LEARNED AO WITHOUT APPRECIATING THAT SAID ORDER WAS PASSED ONLY ON THE BASIS OF PAST YEARS & WITHOUT ANY INDEP ENDENT ENQUIRY MADE FOR THE YEAR UNDER CONSIDERATION. FURTHER, LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT ASSESSMENTS FOR EARLIER YEARS WERE ALSO BASED ON INADEQUATE ENQUIRY & WITHOUT PROVIDING OPPORTUNITY OF CROSS EXAMINATION, ETC, TO THE APPELLANT. 8. ALTERNATIVELY & WITHOUT PREJUDICE TO GROUNDS 1 T O 5, THE APPELLANT IS ENTITLED FOR EXEMPTION U/S.10(23C) (IIIAB) SINCE, T HE APPELLANT IS EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND SUBSTANTIALLY F INANCED BY THE GOVERNMENT. 9. THE APPELLANT CRAVES LEAVE TO ADD/MODIFY/ALTER/D ELETE ALL/ANY OF THE GROUNDS OF APPEAL. 3. THE ISSUE RAISED IN THIS APPEAL OF THE ASSESSEE RELATE S TO DENIAL OF BENEFITS U/S.11 OF THE ACT WHEN THE REGISTRATION CERTIFICATE U/S.12A IS NOT AVAILABLE ON RECORD QUA THE ORDER OF THE TRIBUNAL IN T HE ASSESSEES OWN CASE FOR THE A.YRS.2008-09 AND 2009-10. 4. RELEVANT FACTS OF THE ASSESSEE INCLUDE THAT THE ASSES SEE IS A TRUST REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT, 1950 AND SOCIETY REGISTRATION ACT, 1860. ASSESSEE IS ENGAGED MAINLY IN THE EDUCATIONAL AND TRAINING ACTIVITY. ASSESSEE OFFERS EDUCATION FROM THE N URSERY TO THE POST GRADUATE EDUCATION IN THE FIELD OF ARTS, COMMERCE, SCIE NCE, ENGINEERING AND HEALTH SCIENCES THROUGH MORE THAN 56 INS TITUTIONS IN ITA NO. 1017/PUN/2016 PROGRESSIVE EDUCATION SOCIETY 3 THE STATE OF MAHARASHTRA. ASSESSEE FILED THE RETURN O F INCOME FOR THE IMPUGNED ASSESSMENT YEAR DECLARING TOTAL NIL INCOME. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO PRODU CE THE CERTIFICATE OF REGISTRATION U/S.12A OF THE ACT. AT THE END OF THE ASS ESSMENT PROCEEDINGS, THE AO HELD THAT THE ACTIVITIES OF THE TRUST ARE NOT CHARITABLE IN NATURE AND AGAINST THE OBJECTS OF THE TRUST. EVENTU ALLY, THE AO DENIED THE EXEMPTION CLAIMED U/S.11 OF THE I.T. ACT IN THE ABSEN CE OF REGISTRATION U/S.12A OF THE ACT. 5. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) CONFIRMED THE DISALLOWANCE OF EXEMPTION U/S.11 OF THE ACT IN THE ABSENCE OF REGISTRATION U/S.12A OF THE ACT. THUS, THE CIT(A) APPROVED THE CONCLUSIONS OF THE ASSESSING OFFICER. 6. AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE IS IN A PPEAL BEFORE THE TRIBUNAL WITH THE GROUNDS MENTIONED ABOVE. 7. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS A CASE WHERE THE ASSESSEE TRUST HAS BEEN ENJOYING THE EXEMPTIONS U/S.11 READ WITH SECTION 80G OF THE ACT SINCE MANY DECADES. WH ILE THERE IS PROPER REGISTRATION U/S.12A OF THE ACT, W.E.F. 01-04-2013, T HE ASSESSEE FAILED TO FURNISH THE SAID CERTIFICATE OF REGISTRATION FOR THE YEARS PRIOR TO THE SAID DATE. REFERRING TO THE PROCEEDINGS BEFORE THE V ARIOUS AUTHORITIES FOR THE A.YRS. 2008-09 AND 2009-10, LD. COUNSEL SUBMITTED THAT THE MATTER RELATING TO REGISTRATION U/S.12A OF THE ACT IN THE ASSESSEES OWN CASE HAS REACHED THE TRIBUNAL. THE TRIBUNAL VIDE ITA NOS . 1166 AND 1167/PN/2014 DECIDED ON 15-04-2016 FOR THE A.YRS. 2008- 09 AND 2009- 10 HELD THAT THE ASSESSEE IS ENTITLED TO THE BENEFITS OF E XEMPTION U/S.11 OF THE ACT AND THE REGISTRATION WAS CONSIDERED GRANTED DESPITE NON- SUBMISSION OF THE DIRECT EVIDENCE IN SUPPORT OF REGISTRATION U/S.12A OF THE ACT. TRIBUNAL CONSIDERED THE FACT OF GRANT OF EXEMPTIO N OVER THE ITA NO. 1017/PUN/2016 PROGRESSIVE EDUCATION SOCIETY 4 YEARS WHILE GRANTING RELIEF TO THE ASSESSEE. RELYING ON T HE SAID FINDING OF THE TRIBUNAL, THE CIT(A) GRANTED REGISTRATION IN THE SUBSEQ UENT ASSESSMENT YEAR 2011-12 VIDE HIS ORDER DATED 16-12-20 17. IN THE PROCESS, THE CIT(A) RELIED ON THE TRIBUNALS ORDER DATED 1 5-04-2016, COPY OF WHICH IS PLACED AT PAGE NO.6 OF THE PAPER BOOK. HOWEVER, LD. COUNSEL FOR THE ASSESSEE THAT, FOR THE REASO N THAT THE SAID ORDER OF THE TRIBUNAL (SUPRA) IS NOT AVAILABLE AT THE T IME OF PASSING OF THE ORDERS BY THE AO/CIT(A) FOR THE A.Y. 2010-11, THE Y EAR UNDER CONSIDERATION, THE CIT(A) TOOK A DIFFERENT VIEW AND CONFIRMED THE DISALLOWANCE OF EXEMPTION U/S.11 OF THE ACT. 8. LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF THE AO AND THE CIT(A) DUTIFULLY. HOWEVER, LD. FAIRLY ADMITTED THAT THE ORDER OF THE TRIBUNAL FOR THE A.YRS. 2008-09 AND 2009-10 WAS NOT AVAILA BLE BEFORE THE LOWER AUTHORITIES DURING THE IMPUGNED YEAR. 9. WE HEARD BOTH THE PARTIES ON THIS ISSUE AND PERUSED THE ORDERS OF THE REVENUE AS WELL AS THE ORDER OF THE TRIBUNAL IN THE A SSESSEES OWN CASE FOR THE A.YRS. 2008-09 AND 2009-10 (SUPRA). WE FIND IT IS A DECIDED ISSUE THAT THE ASSESSEE IS ENTITLED TO RELIEF SO FAR AS CLA IM U/S.12A R.W.S. 11 OF THE ACT IS CONCERNED. ON PECULIAR FACTS OF THIS CASE , THE FAILURE TO FURNISH THE COPY OF REGISTRATION IS NOT SACROSANCT. CONT ENTS OF PARA NO.38 OF THE ORDER OF TRIBUNAL EVIDENCES THE SAME AND THE SAME IS EXTRACTED HERE AS UNDER : 38. SINCE IN THE INSTANT CASE NOTHING HAS BEEN BRO UGHT ON RECORD THAT THE CERTIFICATE U/S.80G WAS NOT GRANTED TO THE ASSE SSEE IN THE PAST AND SINCE REGISTRATION U/S.12A IS ONE OF THE PREREQUISI TE FOR GRANTING OF CERTIFICATE U/S.80G AND THE 80G CERTIFICATES PRODUC ED BY THE ASSESSEE FOR THE PAST SEVERAL YEARS ARE NOT FOUND TO BE FALSE OR UNTRUE, THEREFORE, IT HAS TO BE HELD UNDER THE FACTS OF THE INSTANT CASE THAT THERE IS REGISTRATION U/S.12A OF THE I.T. ACT. THE FIRST ISSUE ON WHICH T HE AO HAS DENIED THE BENEFIT OF SECTION 11 FOR NON SUBMISSION OF 12A REG ISTRATION CERTIFICATE IS ACCORDINGLY REJECTED. ITA NO. 1017/PUN/2016 PROGRESSIVE EDUCATION SOCIETY 5 9.1 WE HAVE ALSO PERUSED THE CONTENTS OF PARA NO.41 OF THE ORDER O F THE TRIBUNAL (SUPRA) AND FIND IT RELEVANT TO EXTRACT THE SAME HERE AS UNDER : 41. SINCE IN THE INSTANT CASE ALSO NOTHING HAS BEE N BROUGHT ON RECORD THAT THE DONATIONS RECEIVED FROM VARIOUS PERSONS HA S NOT BEEN ENTERED THE BOOKS OF THE ASSESSEE OR HAS BEEN UTILIZED BY ANY O F THE TRUSTEES OR THEIR RELATIVES OR HAS BEEN UTILIZED FOR PURPOSES OTHER T HAN EDUCATION AND SINCE NEITHER ANY OF THE DONOR NOR THE AO HAS LODGED ANY COMPLAINT BEFORE THE GOVERNMENT AUTHORITIES FOR VIOLATION OF THE ACT, TH EREFORE, THE REVENUE AUTHORITIES IN OUR OPINION ARE NOT JUSTIFIED IN DEN YING THE EXEMPTION U/S.11 OF THE I.T. ACT TO THE ASSESSEE ON THE GROUND OF VI OLATION OF PROVISIONS OF SECTION 11(1)(D) OF THE I.T. ACT. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM OF EXEMPTION U/S.11 OF THE I.T. ACT. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. CONSIDERING THE SETTLED NATURE OF THE ISSUE, WE ARE OF THE OPINION THAT THE ASSESSEE SUCCEEDS ON THE GROUNDS RAISED BEFORE US. ACCORDINGLY, THE ISSUE RAISED IN THE GROUNDS IS ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 28 TH SEPTEMBER, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 28 TH SEPTEMBER , 2018 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (APPEALS - 1 0 , PUNE. 4. THE PR. C C IT, PUNE. 5. , , B BENCH PUNE; 6. / GUARD FILE.