Adesh welfare Society (Regd.), Muktsar V. The Commissioner of Income Tax (Exemption), Chandigarh

ITA 102/ASR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7782 (ITAT-AMRITSAR)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-07-2017
• Assessment Year: misc
• Appeal Filed On: 20-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Charitable institution
• Section: 143(3); 80G; 12AA; 12; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER I.T.A NO. 102/(ASR)/2017 PAN: AAATA5812E ADESH WELFARE SOCIETY (REGD.) KOTKAURA ROAD, MUKTSAR. VS. THE C. I. T. (EXEMPTIONS) CHANDIGARH. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P. N. ARORA ( ADV.) RESPONDENT BY: SH. RAHUL DHAWAN (D. R.) DATE OF HEARING: 09.08.2017 DATE OF PRONOUNCEMENT: 26.09.201 7 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LD. CIT(E), CHANDIGARH DATED 31.01.2017. 2. THE ASSESSEE HAS TAKEN VARIOUS GROUNDS OF APPEAL ; HOWEVER, THE CRUX OF GROUNDS OF APPEAL IS THE ACTION OF LD. CIT( E) BY WHICH HE HAS REJECTED THE APPLICATION OF ASSESSEE U/S 80G OF THE ACT. 3. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE ASS ESSEE SOCIETY IS DULY REGISTERED U/S 12AA WITH COMMISSIONER OF INCOM E TAX BATHINDA, AND IT WAS SET UP TO RUN VARIOUS EDUCATIONAL INSTIT UTIONS. IT WAS SUBMITTED THAT 12AA REGISTRATION IS STILL INTACT AN D HAS NOT BEEN WITHDRAWN. HE FURTHER SUBMITTED THAT ASSESSEE WAS A LREADY AVAILING BENEFIT OF REGISTRATION U/S 80G OF THE ACT, A COPY WHICH WAS PLACED AT ITA NO. 102(ASR)/2017 2 P.B. PAGE 11 AND WHICH EXPIRED ON 31.03.2009. THERE FORE IT WAS SUBMITTED THAT THE APPLICATION FOR REGISTRATION U/S 80G WHICH WAS FILED ON 28.07.2016 WAS IN FACT AN APPLICATION FOR RENEWA L OF REGISTRATION U/S 80G WHICH WAS EARLIER GRANTED BY DEPARTMENT. THE LD . AR SUBMITTED THAT AS PER CIRCULAR NO. 7/2010 DATED 27.10.2010 ON THE BASIS OF WHICH THE CONTINUITY OF EXEMPTION U/S 80G IS AVAILABLE IS ALSO APPLICABLE TO THE ASSESSEE AS THE ASSESSEE WAS ALREADY HAVING REGISTR ATION WHICH EXPIRED ON 31.03.2009. HE SUBMITTED THAT LD. CIT(E) DID NOT CONSIDER THIS ASPECT AS IN HIS OPINION, THE CIRCULAR WAS APPLICABLE ON E XISTING APPROVAL EXPIRING ON OR AFTER 4 TH OCT. 2009. 4. THE LD. AR FURTHER SUBMITTED THAT ASSESSMENTS OF THE ASSESSEE SOCIETY FOR ASSESSMENT YEAR 2012-13 WAS COMPLETED U /S 143(3) OF THE ACT AND ASSESSEE WAS ASSESSED AS CHARITABLE SOCIETY AND ITS NET PROFIT WAS ALLOWED AS EXEMPT U/S 11 OF THE ACT. THE LD. AR IN THIS RESPECT INVITED OUR ATTENTION TO P.B. PAGE 13 TO 14 WHERE A COPY OF ASSESSMENT ORDER FOR ASSESSMENT YEAR 2012-13 WAS PLACED. AS REGARDS THE ASSESSMENTS FOR THE ASSESSMENT YEAR S 2013-14 TO 2016-17, THE LD. AR SUBMITTED THAT DURING THESE YEA RS, THE ASSESSEE HAD UTILIZED 100% OF GROSS RECEIPTS FOR CHARITABLE PURP OSES AND THEREFORE DURING THESE YEARS ALSO THE INCOME OF THE ASSESSEE WAS EXEMPT U/S 11 OF THE ACT. IN THIS RESPECT OUR ATTENTION WAS INVITED TO P.B. PAGE 29 TO 199 WHERE COPIES OF AUDITED BALANCE SHEET AND INCOME AN D EXPENDITURE ACCOUNTS FOR THE ASSESSMENT YEAR 2013-14 TO 2016-17 WAS PLACED. ITA NO. 102(ASR)/2017 3 IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE LD. AR SUBMITTED THAT THE DECISION OF LD. CIT(E) TO REJECT APPLICATI ON FOR REGISTRATION U/S 80G IS CONTRARY TO THE LAW AND FACTS AND CIRCUMSTAN CES OF THE CASE. THE LD. AR COMMENTING UPON THE OBJECTIONS RAISED BY LD. CIT(E) SUBMITTED THAT THE SETTLED PRINCIPLES OF LAW ARE THAT AT THE TIME OF GRANTING APPROVAL U/S 80G OF THE ACT, THE OBJECTS OF THE APPLICANT AR E TO BE CONSIDERED AND SO FAR AS THE OTHER ASPECTS ARE CONCERNED, THEY CAN BE EXAMINED BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS. RE LIANCE IN THIS RESPECT WAS PLACED ON AN ORDER OF HON'BLE GUJARAT H IGH COURT IN THE CASE OF CIT, RAJKOT-1 VS. ARVINDBHAI MANIAR CHARITABLE F OUNDATION REPORTED IN 53 TAXMAN.COM PAGE 295. FURTHER RELIANCE WAS PLA CED ON AN ORDER OF HIGH COURT OF GUJARAT IN THE CASE OF COMMISSIONER O F INCOME TAX, RAJKOT-III VS. VIPASSANA TRUST REPORTED IN 55 TAXMA N.COM PAGE 57. 5. THE LD. AR FURTHER RELIED ON THE JUDGMENT OF HON 'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SONEPAT HINDU EDU CATIONAL VS. CIT REPORTED IN 147 TAXMAN PAGE 1 AND ON THE JUDGMENT O F GUJARAT HIGH COURT IN THE CASE OF HIRALAL BHAGWATI VS. CIT 246 I TR 0188, FOR THE PROPOSITION THAT REGISTRATION OF THE INSTITUTION U/ S 12AA IS SUFFICIENT PROOF OF THE FACT THAT THE INSTITUTION IS ESTABLISH ED FOR CHARITABLE PURPOSES. AS REGARDS THE OTHER OBJECTIONS OF LD. CIT(E) REGAR DING NO DONATION WAS RECEIVED DURING IN LAST 3 YEARS, THE LD. AR SUB MITTED THAT IT WAS SUBMITTED TO LD. CIT(E) THAT ASSESSEE WAS IN THE PR OCESS OF ESTABLISHING ITA NO. 102(ASR)/2017 4 ONE MEDICAL COLLEGE AT VILLAGE MORHI DISTT. KURUKSH ETRA FOR WHICH CERTIFICATE HAS BEEN ISSUED BY STATE GOVT. OF HARYA NA AND MOREOVER, THE MEDICAL COLLEGE OF INDIA HAD ALSO GRANTED ITS APPRO VAL FOR ADMISSION OF 150 STUDENTS FOR M.B.B.S. WITHOUT PREJUDICE THE LD. AR SUBMITTED THAT THE CONDITIONS LAID DOWN IN CLAUSE (I) TO (V) OF SE CTION 80G(5B) AND RULE 11AA DOES NOT INDICATE THAT THE DONATIONS WOULD BE RELEVANT FOR GRANTING APPROVAL U/S 80G(5B) OF THE ACT. AS REGARDS OBJECTION OF LD. CIT(E) THAT THE ASSESS EE WAS GENERATING LARGE SCALE SURPLUSES AND WAS GETTING ITS FUNDS IN THE SHAPE OF FDRS, THE LD. AR SUBMITTED THAT FDRS MENTIONED BY LD. CIT(E) WERE IN FACT FIXED DEPOSITS WHICH WERE SECURITIES WITH BABA FARID UNIV ERSITY OF HEALTH SCIENCES AND OTHER DEPARTMENTS AND WERE NOT AVAILAB LE WITH THE APPELLANT SOCIETY WHICH COULD BE INVESTED. THE LD. AR SUBMITTED THAT THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF GULAB DEVI MEMORIAL CHARITABLE TRUST 77 TAXMANN.COM 10 HAS HEL D THAT EVEN IF SUBSTANTIAL SURPLUS ARE GENERATED AND THE SAME ARE PLOUGHED BACK INTO THE INSTITUTIONS THEN IT WOULD NOT LOOSE ITS CHARIT ABLE CHARACTER. THE LD. AR FURTHER RELIED ON A RECENT JUDGMENT OF AMRITSAR BENCH IN THE CASE OF M/S SANT GIRDHAR ANAND PARMHANS SANT ASHRAM VS. CIT (E) CHANDIGARH WHEREIN VIDE ORDER DATED 11.08.2017, THE HON'BLE AM RITSAR BENCH WAS PLEASED TO GRANT EXEMPTION U/S 80G OF THE ACT, IN V IEW OF THE REGISTRATION OF SOCIETY U/S 12AA OF THE ACT. ITA NO. 102(ASR)/2017 5 6. THE LD. DR ON THE OTHER HAND HEAVILY PLACED HIS RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THOUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IT IS AN UNDISPUTED FACT THAT ASSESSEE IS REGISTERED U/S 12AA OF THE ACT, A COPY OF WHICH IS PLACED AT P.B. PAGE 10. THIS IS ALSO AN UNDISPUTED FACT THAT THE SAID REGIS TRATION HAS NOT YET BEEN WITHDRAWN. WE FURTHER FIND THAT ASSESSEE WAS EARLIE R GIVEN REGISTRATION U/S 80G OF THE ACT WHICH EXPIRED ON 31.03.2009, A C OPY OF WHICH IS PLACED ON P.B. PAGE 11. THE ASSESSMENT OF THE ASSES SEE FOR ASSESSMENT YEAR 2012-13 WAS COMPLETED U/S 143(3) OF THE ACT WH EREIN THE BENEFIT U/S 11 WAS ALLOWED TO THE ASSESSEE. A COPY OF THE A SSESSMENTS ORDER IS PLACED AT P.B. PAGE 13 AND 14. WE FURTHER FIND THAT ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2016-17 ON 08.10.2016 AND HAS CLAIMED EXEMPTION U/S 11 FOR WHOLE OF THE INCOM E AND HAS FILED ITS INCOME AT NIL. 8. THE LD. DR WAS NOT ABLE TO DEMONSTRATE THAT THE RETURNS FILED BY ASSESSEE FOR ASSESSMENT YEAR 2013-14 AND 2016-17 WA S NOT ACCEPTED BY THE DEPARTMENT. IN VIEW OF THE FACTS AND CIRCUMSTANCES, WE FIND TH AT THERE IS NO VIOLATION ON THE PART OF ASSESSEE WHICH COULD LEAD TO THE WITHDRAWAL OF REGISTRATION U/S 12AA OF THE ACT. ONCE THE FACT THA T ASSESSEE WAS CHARITABLE INSTITUTION IS ESTABLISHED THE REVENUE A UTHORITIES AT THE TIME OF GRANTING REGISTRATION U/S 80G OF THE ACT CAN NOT DENY REGISTRATION U/S ITA NO. 102(ASR)/2017 6 80G OF THE ACT, IN VIEW OF THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SONEPAT HINDU EDUCATIONAL VS. CIT REPORTED IN 147 TAXMAN PAGE 1, WHEREIN THE HON'BLE COURT HAS HE LD THAT REGISTRATION OF THE INSTITUTION U/S 12AA WAS ITSELF A SUFFICIENT PROOF OF THE FACT THAT THE INSTITUTION IS ESTABLISHED FOR CHARITABLE PURPO SE. THE RELEVANT FINDINGS OF THE HON'BLE COURT ARE REPRODUCED AS UND ER: UNDER SECTION 80G, A DONOR CAN CLAIM DEDUCTION IN COMPUTING, HIS TOTAL INCOME IN RESPECT OF DONATIONS MADE BY HIM TO VARIO US FUNDS OR INSTITUTIONS MENTIONED IN SUB-SECTION (2) OF THE SA ID SECTION. IT IS SECTION 80G, WHICH ENVISAGES DEDUCTION IN RESPECT OF THE DO NATIONS MADE BY A PERSON WHO, BUT FOR THE PROVISIONS, CANNOT CLAIM AN Y SUCH DEDUCTION BECAUSE THE DONATIONS ARE NOT CONSIDERED TO BE EXPE NSES INCURRED FOR THE PURPOSE OF EARNING INCOME. IN THE LIST OF FUNDS OR INSTITUTIONS, DONATIONS OF WHICH COULD QUALIFY FOR DEDUCTION FROM THE INCOME O F A DONOR IS INCLUDED A SUBSIDIARY CLAUSE IN THE FORM OF CLAUSE (A) (IV) OF SUB-SECTION (2) OF SECTION 80G, WHICH TALKS OF 'ANY OTHER FUND OR ANY INSTITUT ION IN WHICH SECTION 80G APPLIES'. [PARA 11] FROM THE READING OF PROVISIONS OF SECTION 80G(5), I T IS EVIDENT THAT THE FIRST AND FOREMOST REQUIREMENT WHICH THE INSTITUTION OR F UND HAS TO SATISFY IS THAT IT IS ESTABLISHED IN INDIA FOR A CHARITABLE PU RPOSE. THE CONDITIONS CONTEMPLATED BY CLAUSES F\) TO (VI) OF SECTION 80G( 5) ARE THE CONDITIONS WHICH THE INSTITUTION OR THE FUND MUST ADDITIONALLY FULFIL SO AS TO BE ENTITLED TO THE APPROVAL OF THE COMMISSIONER. IT IS WELL-SET TLED THAT FOR THE PURPOSE OF CONSTRUING THE PURPOSE OF A TRUST, IT IS NOT NEC ESSARY THAT ONE REMAINS CONFINED TO THE OBJECTS OF THE SOCIETY OR THE TRUST , AS SET OUT IN THE MEMORANDUM OF ASSOCIATION OR THE TRUST DEED, AS THE CASE MAY BE. WHAT IS REQUIRED TO BE FOUND IS THE REAL PURPOSE OF ESTABLI SHMENT OF THE TRUST. THERE CAN BE NO QUARREL WITH THE PROPOSITION THAT THE COM MISSIONER, CONFERRED WITH THE POWER TO GRANT EXEMPTION, IS FULLY COMPETE NT TO FIND OUT THE REAL PURPOSE, AS DISTINGUISHED FROM THE OSTENSIBLE PURPO SE OF ESTABLISHMENT OF THE SOCIETY OR THE TRUST. IF THE COMMISSIONER IS CO NVINCED THAT THE PURPOSE OF THE SOCIETY OR THE TRUST IS NOT CHARITABLE, NOTH ING DEBARS HIM FROM DENYING THE APPROVAL, BUT, AT THE SAME TIME, IF HE IS SATISFIED THAT THE OBJECTS OF THE TRUST, AS SET OUT IN THE DEED OF DEC LARATION, ARE CHARITABLE, THEN HAVING REGARD TO THE OBJECT OF THE PROVISION, THE APPROVAL SHOULD NOT BE DENIED ON MERE TECHNICALITIES. AS A MATTER OF FA CT, THE POWER TO GRANT OR NEGATE THE CLAIM FOR APPROVAL IS COUPLED WITH A DUT Y. [PARA 14] ITA NO. 102(ASR)/2017 7 IN THE INSTANT CASE, THE COMMISSIONER HAD NOT FOUND THAT THE OBJECTS OF THE ASSESSEE, ESTABLISHED IN INDIA, AS SET OUT IN ITS M EMORANDUM OF ASSOCIATION, WERE NOT FOR A CHARITABLE PURPOSE OR T HAT THE SOCIETY WAS NOT CARRYING ON ITS ACTIVITIES IN FURTHERANCE OF ITS OB JECTS. AS A MATTER OF FACT, REGISTRATION OF AN INSTITUTION UNDER SECTION 12 A(A ) BY ITSELF IS A SUFFICIENT PROOF OF THE FACT THAT THE TRUST OR THE INSTITUTION CONCERNED IS CREATED OR ESTABLISHED FOR CHARITABLE OR RELIGIOUS PURPOSES. [PARA 15] IN VIEW OF THE FACT THAT THE ASSESSEE HAD ENJOYED A PPROVAL UNDER SECTION 80G FROM THE YEAR 1991 TO 31-3-1999, I.E., EVEN AFTER THE AMENDMENT OF ITS OBJECTS ON 17-9-1989 AND AFTER THE INSERTION OF CLA USE (VI) IN SECTION 80G(5), WITH EFFECT FROM 1-10-1991, THE COMMISSIONE R WAS NOT JUSTIFIED IN HOLDING THAT EITHER FRESH REGISTRATION UNDER SECTIO N 12A(A) WAS REQUIRED OR THE MEMORANDUM SHOULD HAVE BEEN AMENDED AS PER THE PROCEDURE LAID DOWN IN SECTION 92 OF CODE OF CIVIL PROCEDURE. [PARA 16] FURTHER WE FIND THAT HON'BLE AMRITSAR BENCH IN THE CASE OF M/S SANT GIRDHAR ANAND PARMHANS SANT ASHRAM VS. CIT(E) CHANDIGARH VIDE ORDER DATED 11.08.2017 HAS ALLOWED REGISTRATION U/S 80G OF THE ACT, IN VIEW OF THE EXISTING REGISTRATION OF SOCIETY U/S 12 AA OF THE ACT. ABOVE ALL ASSESSEE WAS ALREADY ENJOYING REGISTRATI ON U/S 80G OF THE ACT WHICH EXPIRED ON 31.03.2009 AND AS PER CIRCULAR NO. 7/2010 DATED 27.10.2010, THE REGISTRATION WAS DEEMED TO HAVE BEE N EXTENDED IN PERPETUITY (UNLESS WITHDRAWN) HAD THE REGISTRATION EXPIRED ON OR AFTER 1 ST OCT. 2009. THEREFORE IT IS ONLY A TECHNICAL REASON DUE TO WHICH THE REGISTRATION WAS NOT DEEMED TO HAVE BEEN EXTENDED. THEREFORE IN VIEW OF THE JUDICIAL PRECEDENTS AND F ACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT LD. CIT(E) TO ALLOW THE ASSESSEE REGISTRATION U/S 80G OF THE ACT WITH EFFECT FROM DA TE OF APPLICATION. ITA NO. 102(ASR)/2017 8 8. IN VIEW OF THE ABOVE, THE APPEAL FILED BY ASSESS EE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 09.2017 SD/- SD/- (N. K. CHOUDHRY) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26.09.2017. /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER