Janki Ji Education Society, Yamunanagar V. CIT, Panchkula

ITA 1103/CHANDI/2009

• Counselvise Citation: 110321514 RSA 2009
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-01-2012
• Assessment Year: misc
• Appeal Filed On: 23-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: VINEET KRISHAN
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.1103/CHD/2009 (UNDER SECTION 12AA(B) JANKI JI EDUCATION SOCIETY, VS. THE C.I.T., 1039, NEAR VISHWAKARMA MANDIR, PANCHKULA. RADAUR ROAD, YAMUNA NAGAR. PAN: AAATJ8109K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINEET KRISHAN RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 12.01.2012 DATE OF PRONOUNCEMENT : 20.01.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX, PANCHKULA DATED 29.09.2 009. 2. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE ORDER OF COMMISSIONER OF INCOME TAX FOR NOT GRANTING REGISTR ATION UNDER SECTION 12A OF THE INCOME TAX ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SOCIETY WAS REGISTERED WITH THE REGISTRAR OF SOCIETY, YAMUNA NA GAR ON 16.07.2004 AND HAD APPLIED FOR REGISTRATION UNDER SECTION 12A( 1)(AA) OF INCOME TAX ACT, 1961 IN FORM NO.10A ON 23.3.2009. THE ASSESSEE HAD SUBMITTED COPIES OF AUDITED ACCOUNT FOR THE YEAR ENDING ON 31 .3.2006, 31.3.2007 AND 31.3.2008. IN THE EARLIER YEARS THE ASSESSEE H AD CLAIMED ITS INCOME AS EXEMPT UNDER SECTION 10(23C) AS ITS RECEIPTS WER E LESS THAN RS.1 CRORE FOR THE SAID YEARS. THE SAID DEDUCTION WAS ALLOWED TO THE ASSESSEE FROM YEAR TO YEAR. HOWEVER, DURING THE YEAR UNDER CONSI DERATION, THE TOTAL 2 RECEIPTS HAD EXCEEDED RS.1 CRORE AND THE ASSESSEE H AD APPLIED FOR REGISTRATION UNDER SECTION 12A OF THE INCOME TAX AC T. 4. THE COMMISSIONER OF INCOME TAX IN ITS ORDER DAT ED 29.9.2009 VIDE PARA 2 OBSERVED THAT THE SOCIETY IS RUNNING AN EDUCATIONAL INSTITUTE OFFERING COURSES IN B.ED., JBT AND MBA. FOR JBT CL ASSES, IT IS AFFILIATED TO STATE COUNCIL OF EDUCATION, RESEARCH AND TRAINING AND FOR B.ED. & MBA, IT IS AFFILIATED TO KURUKSHETRA UNIVER SITY, KURUKSHETRA. THE COMMISSIONER OF INCOME TAX WAS OF THE VIEW THAT IT WAS RUNNING EDUCATIONAL INSTITUTE AS COMMERCIAL VENTURE, BUT WA S STILL CLAIMING IT AS A CHARITABLE ORGANIZATION. THE COMMISSIONER OF INC OME TAX ADMITS THAT THOUGH EDUCATION IS COVERED UNDER THE DEFINITION OF CHARITABLE PURPOSE AS DEFINED UNDER SECTION 2(15) OF THE ACT BUT WHERE THE INSTITUTE IS RUN WITH A VIEW TO MAKE PROFIT, IT COULD NOT BE CALLED AS CHARITABLE. RELYING ON THE RATIO LAID DOWN IN ADDL.CIT VS. SURAT ART SI LK CLOTH ASSOCIATION [121 ITR 1(SC)], THE HON'BLE SUPREME COURT OBSERVED , WHERE AN ACTIVITY IS CARRIED ON AS A MATTER OF ADVANCEMENT O F CHARITABLE PURPOSE OR FOR THE PURPOSE OF CARRYING OUT THE CHARITABLE P URPOSE, IT WOULD NOT BE INCORRECT TO SAY AS A MATTER OF PLAIN ENGLISH GR AMMAR THAT THE CHARITABLE PURPOSE INVOLVES THE CARRYING ON OF SUCH ACTIVITY BUT THE PREDOMINANT OBJECT OF SUCH ACTIVITY MUST BE TO SUB- SERVE THE CHARITABLE PURPOSE AND NOT TO EARN THE PROFIT. THE CHARITABLE PURPOSE SHOULD NOT BE SUB-MERGED BY THE PROFIT MAKING MOTIVE, THE LATT ER SHOULD NOT MASQUERADE UNDER THE GUISE OF THE FORMER. THUS, WHERE THE PRE- DOMINANT OBJECT IS TO SUB-SERVE CHARITABLE PURPOSE AND NOT TO EARN PROFIT, IT WOULD BE A CHARITABLE PURPOSE. THE COMMISSIONER OF INCOME TAX PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'B LE SUPREME COURT IN MUNICIPAL CORPORATION OF DELHI VS. CHILDREN BOOK TR UST, (1991) SCALE (2) 491 (SC). THE COMMISSIONER OF INCOME TAX HELD THAT THE ACTIVITY OF 3 THE SOCIETY COULD NOT BE SAID TO BE CHARITABLE. AC CORDINGLY, THE BENEFIT OF REGISTRATION UNDER SECTION 12AA OF THE ACT WAS N OT ALLOWED TO THE ASSESSEE. IT WAS FURTHER OBSERVED BY THE COMMISSIO NER OF INCOME TAX THAT AS PER CLAUSE (VIII) THE SOCIETY IS FREE TO INVEST ITS FUNDS IN ANY MANNER ITS MANAGING COMMITTEE MAY DEEM FIT. THUS, THE INVESTMENT CLAUSES IS ALSO NOT IN CONFORMITY WITH THE PROVISIO NS OF SECTION 11(5) OF THE INCOME TAX ACT, 1961. 5. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF C OMMISSIONER OF INCOME TAX AND IT WAS POINTED OUT BY THE ASSESSEE T HAT THE ISSUE IN THE PRESENT CASE STANDS COVERED BY THE RATIO LAID DOWN BY THE CHANDIGARH BENCH OF TRIBUNAL IN SURYA EDUCATIONAL & CHARITABLE TRUST VS. CIT-II, CHANDIGARH IN ITA NO.223/CHD/2009. THE LEARNED A.R . FOR THE ASSESSEE POINTED OUT THAT SECOND ISSUE RAISED BY THE COMMISS IONER OF INCOME TAX IN RESPECT OF INVESTMENT CLAUSE CANNOT BE THE BASIS FOR REJECTING THE REGISTRATION UNDER SECTION 12AA OF THE ACT. 6. THE LEARNED D.R. FOR THE REVENUE FAIRLY SUBMITTE D THAT THE SAID INVESTMENT CLAUSE COULD NOT BE THE ISSUE OF REJECTI ON OF REGISTRATION TO THE ASSESSEE. THE LEARNED D.R. FOR THE REVENUE ALS O ADMITTED THE ASSESSEE TO HAVE BEEN CARRYING ON EDUCATIONAL INSTI TUTE FOR THE PAST SEVERAL YEARS BUT RELIANCE WAS PLACED ON THE ORDER OF COMMISSIONER OF INCOME TAX FOR REJECTING THE CLAIM OF REGISTRATION UNDER SECTION 12AA OF THE ACT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE FIND THAT IDENTICAL ISSUE AROSE BEFORE THE TRIBUNAL IN SURYA EDUCATIONAL & CHARITABLE TRUST VS. CIT-II, CHANDIGARH IN ITA NO .223/CHD/2009, WHEREIN IN AN APPEAL FILED AGAINST THE ORDER PASSED UNDER SECTION 12AA OF THE ACT, THE TRIBUNAL HELD THAT WHERE THE OBJECT OF THE TRUST WAS TO 4 ESTABLISH EDUCATION INSTITUTION, WHICH HAS BEEN ACC EPTED BY THE COMMISSIONER OF INCOME TAX AND ONLY THE GENUINENESS OF THE ACTIVITIES HAVE TO BE LOOKED INTO IN ORDER TO VERIFY THE CLAIM OF REGISTRATION UNDER SECTION 12AA OF THE ACT. WHERE THE ASSESSEE IS CAR RYING ON THE ACTIVITIES IN LINE WITH ITS OBJECTS, THE GENUINENES S OF THE SOCIETY COULD NOT BE QUESTIONED. WE FIND THAT WHILE GRANTING THE REGISTRATION UNDER SECTION 12AA OF THE ACT, THE SCOPE OF COMMISSIONER OF INCOME TAX IS LIMITED AND ALLOWANCE UNDER SECTION 11/12 OF THE AC T IS TO BE LOOKED INTO BY THE ASSESSING OFFICER DURING THE COURSE OF ASSES SMENT PROCEEDINGS. THE TRIBUNAL FURTHER HELD THAT SECONDLY AT THE LEVEL OF GRANTING REGISTRATION BY THE COMMISSIONER OF INCOME TAX, THE ABSENCE OR PRESENCE OF THE SURPLUS IS NOT RELEVANT. WE FIND THAT THE I SSUE RAISED IN THE PRESENT APPEAL IS IDENTICAL TO THE ISSUE CONSIDERED BY THE TRIBUNAL IN SURYA EDUCATIONAL & CHARITABLE TRUST (SUPRA) VIDE O RDER DATED 30.11.2009. FOLLOWING THE SAID RATIO LAID DOWN BY THE TRIBUNAL WE DIRECT THE COMMISSIONER OF INCOME TAX TO GRANT REGI STRATION UNDER SECTION 12AA OF THE INCOME TAX ACT TO THE ASSESSEE SOCIETY FOR CARRYING ON THE OBJECTS OF RUNNING THE EDUCATIONAL INSTITUTI ON. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. THE REG ISTRY IS DIRECTED TO ANNEX THE COPY OF THE ORDER IN ITA NO. 223/CHD/2009 FOR READY REFERENCE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DAY OF JANUARY, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 TH JANUARY, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH