KIIT-Technology Business Incubator (KIIT-TBI), Bhubaneswar V. CIT(Exemption), Hyderabad

ITA 114/CTK/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4324 (ITAT-CUTTACK)
• Duration Of Justice: 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 20-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAAD KIDWAI
• Assessee Lawyers: P R MOHANTY R L JENA
• Keywords: Charitable institution
• Section: 12AA; 12

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 114 / CTK /20 1 7 ( / ASSESSMENT YEAR : NA ) KIIT - TECHNOLOGY BUSINESS INC UBATOR (KIIT - TBI) AT: - CAMPUS - II, KIIT UNIVERSITY, BHUBANESWAR VS. CIT (EXEMPTION), HYDERABAD ./ PAN NO. : AA ECK 0052 D ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI P.R.MOHANTY /R.L.JENA , AR /REVENUE BY : SHRI SAAD KIDWAI , CITDR / DATE OF HEARING : 14 / 0 2 /201 8 / DATE OF PRONOUNCEMENT 26 / 0 2 /201 8 / O R D E R PER SHRI N.S.SAINI , A M : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT( E ), HYDERABAD DATED 30.01.2017 . 2 . THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE CIT(EXEMPTIONS), HYDERABAD WAS NOT JUSTIFIED IN REFUSING TO GRANT REGISTRATION U/S.12AA OF THE ACT TO THE ASSESSEE COMPANY. 3. BRIEF FACTS OF THE C ASE ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED U/S.25 OF THE COMPANIES ACT, 1956. IT FILED APPLICATION IN FORM NO. 10A AND IN FORM NO. 10G ON 20.07.2016 SEEKING REGISTRATION U/S.12AA OF THE INCOME TAX ACT, 1961 AND APPROVAL U/S.80G OF THE ACT. THE CIT(E ) REFUSED TO GRANT REGISTRATION U/S.12AA AND APPROVAL U/S.80G OF THE ACT BY OBSERVING AS UNDER : - ITA NO.114/2017 2 II, I HAVE G ONE THROUGH THE INFORMATION FILED BY THE APPLICANT COMPANY. SOME OF THE OBJECTIVE CLAUSES OF THE MOA ARE AS UNDER: 1 ) 'TO ESTABLISH, HELP ESTABLISH AND / OR MANAGE LABORATORIES, COMMON FACILITY CENTRE PROTOTYPE DEVELOPMENT CENTERS, PILOT PLANT PRODUCTION FACILITIES, APPLIED RESEARCH CENTRE, SOFTWARE DEVELOPMENT FACILITIES, TRAINING AND HUMAN RESOURCE DEVELOPMENT CENTRE AND OTHER ALLIED SUBJECTS TO PRO PAGATE NEW SCIENTIFIC AND TECHNOLOGIES DEVELOPMENT AND INNOVATION FROM IDEA STAGE TO FULL SCALE COMMERCIAL PRODUCTION OR ANY PART OF THIS CHAIN. FOR THE ABOVE PURPOSES TO ASSIST, CO - OPERATE OR COLLABORATES WITH ANY ESTABLISHMENT, LABORATORY, TECHNOLOGY BUS INESS INCUBATORS CENTRE, ORGANISATION OR INSTITUTION IN INDIA OR ABROAD. AS SEEN FROM THE ABOVE OBJECTIVE CLAUSE, IT IS APPARENT THAT THE APPLICANT INTENDED TO EXTEND ITS OPERATIONS ABROAD WHICH VIOLATES THE PROVISIONS OF SECTION 11(1)(A) OF THE ACT. 2 ) TO PR OPAGATE THE RESULTS OF RESEARCH OR STUDIES CONDUCTED AT THE KIIT UNIVERSITY AND TO ACT AS INTERFACE BETWEEN KIIT UNIVERSITY AND OTHER EDUCATIONAL INSTITUTIONS AND PUBLIC AT LARGE FOR THE BENEFICIAL EXPLOITATION OF THE INNOVATIONS CARRIED OUT AND THE HUMAN POTENTIAL EXISTING AT THE KIIT UNIVERSITY AND TO INSTITUTE FELLOWSHIP FOR LEADING INDIAN SCHOLARS / PROFESSIONALS TO CARRY OUT STUDIES ON DEVELOPMENT PROJECTS OF THEIR OWN CHOICE BUT IN THE AREAS OF INTEREST TO THE SOCIETY 81 KIIT UNIVERSITY,' THE ABOVE O BJECTIVE CLAUSE INDICATES THAT THE APPLICANT INSTITUTION AIDES 'INDIAN SCHOLARS / PROFESSIONALS TO CARRY OUT STUDIES ON DEVELOPMENT PROJECTS OF THEIR OWN CHOICE BUT IN THE AREAS OF INTEREST TO THE SOCIETY & KIIT UNIVERSITY' WITHOUT SPECIFYING THE NATURE OF ACTIVITY & HOW IT QUALIFIES U/S,2(15) OF I.T.ACT AND HENCE IT IS GENERAL IN NATURE. 3,) 'TO UNDERTAKE, PROMOTE FOSTER CARRY ON, DEVELOP AND MARKET PROJECTS REQUIRING HIGH TECHNOLOGIES INPUTS AND TRANSLATION OF NEW TECHNOLOGIES FROM LABORATORY SCALE TO PI LOT PLANT SCALE AND OR COMMERCIAL SCALE, MANUFACTURE OF PROTOTYPES, MANUFACTURE OF A ITA NO.114/2017 3 CERTAIN BATCH OF PRODUCTS FOR MARKET TESTING, DEVELOPMENT OF SOFTWARE AND RELATED PRODUCTS, TRAINING AND HUMAN RESOURCE DEVELOPMENT ACTIVITIES, SCIENTIFIC WORK RESEARCH IN ALL RELATED FIELDS' THE ABOVE OBJECT CLAUSE IS NOT SPECIFYING THE PROJECTS FOR WHICH HIGH TECHNOLOGIES ARE REQUIRED AND HOW THE SAME ARE TRANSLATED AND USEFUL FOR THE GENERAL PUBLIC AT LARGE. FURTHER, THE OBJECTIVE CLAUSE IS NOT SPECIFYING THE PROJECTS W HICH IT WANTS TO UNDERTAKE FOR THE GENERAL PUBLIC AS CLAIMED IN ITS OBJECT AND IS OF GENERAL IN NATURE. III. IN VIEW OF THE ABOVE, I AM OF THE OPINION THAT THE OBJECTIVE CLAUSES AS MENTIONED ABOVE ARE NOT SPECIFIC AND ARE GENERAL IN NATURE AND HENCE IT IS NOT FIT FOR GRANT OF REGISTRATION U/S,12AA OF THE ACT, HENCE, THE APPLICATION IN FORM NO,1 0 A FILED BY THE ABOVE COMPANY IS REJECTED. AS SUCH, THE OTHER APPLICATION IN FORM NO. 10 G FILED IS ALSO REJECTED. 4. BEING AGGRIEVED BY THE SAID ORDER OF THE CIT( E ), THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE AR OF THE ASSESSEE ARGUING BEFORE US SUBMITTED THAT THE COMPANY WAS ESTABLISHED AT THE BEHEST AND DIRECTION OF GOVERNMENT OF INDIA, DEPARTMENT OF SCIENCE & TECHNOLOGY, NEW DELHI. IN SUPPORT OF HIS CONTENTION, HE FILED COPY OF LETTER DATED 20.02.2009 BEARING NO. 22/06/09 - NEB, WHICH READS AS UNDER : - BASED ON THE RECOMMENDATIONS OF NATIONAL ADVISORY COMMITTEE ON STEPS/TBI VIDE MEETING DATED 28 TH NOVEMBER, 2008 AT INSA, NEW DELHI. THE HOST INSTITUTE, KIIT SCHOOL O F BIOTECHNOLOGY, BHUBANESWAR IS REQUESTED TO INITIATE THE PROCESS OF REGISTERING THE TBI AS NOT FOR PROFIT REGISTERED SOCIETY UNDER 1860 ACT/SECTION 25 COMPANY. ON COMPLETION OF THE ABOVE FORMALITIES, A COPY OF REGISTRATION MAY BE SENT TO THE DEPARTMENT TO INITIATE FURTHER ACTION RELATED TO ESTABLISHMENT OF TBI AS PER THE DST GUIDELINES. ITA NO.114/2017 4 6. HE ALSO FILED COPY OF MINUTES OF THE MEETING OF THE NATIONAL ADVISORY COMMITTEE ON SCIENCE AND TECHNOLOGY ENTREPRENEURSHIP PARKS AND TECHNOLOGY BUSINESS INCUBATOR (ST EP/TBI) HELD ON 28 TH NOVEMBER, 2008 AT INSA, NEW DELHI AND REFERRING TO ITEM NO. 4 POINTED OUT THAT THE COMMITTEE DISCUSSED THE PROPOSAL FOR SETTING UP TECHNOLOGY BUSINESS INCUBATOR (TBI) IN ODISHA AND SELECTED KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY (KI IT) UNIVERSITY, BHUBANESWAR FOR THIS PURPOSE WHICH RESULTED IN THE INCORPORATION OF THE ASSESSEE COMPANY AS A NON - PROFIT MAKING COMPANY U/S.25 OF THE COMPANIES ACT, 1956. THE SAID MINUTES OF MEETING READS AS UNDER : - ITEM NO.4 : CONSIDERATION & DISCUSSION ON NEW PROPOSALS FOR ESTABLISHMENT OF TBIS 3. KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY (KIIT) UNIVERSITY, BHUBANESWAR. THE COMMITTEE DISCUSSED THE PROPOSAL AND TOOK A NOTE OF THE COMMITMENT AND CONTRIBUTION OF THE KIIT MANAGEMENT FOR MAKING THE PROPO SED TBI A SUCCESS. SINCE THE REGION LACKS THE INSTITUTIONAL MECHANISMS FOR SUPPORTING TECHNOLOGY BASED VENTURES, AND THE PROPOSED TBI IS TO BE FIRST OF ITS KIND IN ORISSA, THE NAC RECOMMENDED ESTABLISHMENT OF TBI IN KIIT, BHUBANESWAR AND RESTRICTED THE INI TIAL CONTRIBUTION FOR THE DEPARTMENT TO RS.1.00 CRORES ON CAPITAL FOR THE FIRST PHASE OF THE TBI SPANNING TWO YEARS. SUBSEQUENTLY, THE TECHNICAL COMMITTEE RECOMMENDED SETTING UP OF A TBI AT KIIT, BHUBANESWAR IN THE AREA OF ICT AND GREEN BIOTECHNOLOGY. THE COMMITTEE ALSO RECOMMENDED THE FOLLOWING BUDGET DETAILS FOR THE FIRST PHASE OF THE TBI SPANNING TWO YEARS. TOTAL COST : RS.266.45 LAKHS TOTAL DST CONTRIBUTION : RS.132.95 LAKHS WHICH INCLUDES RS.92.50 LAKHS ON CAPITAL AND RS.40.45 LAKHS ON RECURRING ACCOUN T. ITA NO.114/2017 5 THE COMMITTEE ALSO RECOMMENDED THAT THE OVERALL PERFORMANCE OF THE TBI WILL BE REVIEWED AFTER TWO YEARS. 7. HE FURTHER SUBMITTED THAT ALL THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM OF ASSOCIATION ARE PEOPLE OF HIGH REPUTE AND INTEGRITY AND ARE NA MELY, ACHYUTANANDA, MRUTYUNJAY SUAR, ARINDAM DUTTA AND DHARMENDRA NARAYAN DWIVEDY . HE FURTHER SUBMITTED THAT THIS WAS THE T ECHNICAL B USINESS INCUBATOR OF ITS FIRST KIND IN ODISHA AND WAS ESTABLISHED AS INSTITUTIONAL MECHANISMS FOR SUPPORTING TECHNOLOGY BAS ED VENTURES IN ODISHA. THE FUNDS WERE ALSO RECEIVED FROM THE DEPARTMENT OF SCIENCE AND TECHNOLOGY, GOVERNMENT OF INDIA, NEW DELHI. 8. FURTHER HE FILED A COPY OF SERVICE TAX NOTIFICATION NO. 32 OF 2012, DT.20 TH JUNE, 2012, WHICH READS AS UNDER : - IN EXERC ISE OF THE POWERS CONFERRED BY SUB - SECTION (1) OF SECTION 93 OF THE FINANCE ACT, 1994 (32 OF 1994) AND IN SUPERSESSION OF THE GOVERNMENT OF INDIA IN THE MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) NOTIFICATION NUMBER 9/2007 - ST, DATED THE 1 ST MARCH,2007, PU BLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, VIDE NUMBER G.S.R. 163 (E), DATED THE 1 ST MARCH,2007, EXCEPT AS RESPECTS THINGS DONE OR OMITTED TO BE DONE BEFORE SUCH SUPERSESSION, THE CENTRAL GOVERNMENT, ON BEING SATISFIED THAT IT IS NECESSARY IN THE PUBL IC INTEREST SO TO DO, HEREBY EXEMPTS TAXABLE SERVICES, PROVIDED OR TO BE PROVIDED, BY A TECHNOLOGY BUSINESS INCUBATOR (TBI) OR A SCIENCE AND TECHNOLOGY ENTREPRENEURSHIP PARK (STEP) RECOGNIZED BY THE NATIONAL SCIENCE AND TECHNOLOGY ENTREPRENEURSHIP DEVELOPM ENT BOARD (NSTEDB) OF THE DEPARTMENT OF SCIENCE AND TECHNOLOGY, GOVERNMENT OF INDIA, FROM THE WHOLE OF THE SERVICE TAX LEVIABLE THEREON UNDER SECTION 66B OF THE SAID FINANCE ACT, SUBJECT TO FOLLOWING CONDITIONS, NAMELY: - ITA NO.114/2017 6 1. THAT THE STEP OR THE TB I, WHO INTENDS TO AVAIL THE EXEMPTION, SHALL FURNISH THE REQUISITE INFORMATION IN FORMAT I BELOW CONTAINING THE DETAILS OF THE INCUBATOR ALONG WITH THE INFORMATION IN FORMAT II BELOW RECEIVED FROM EACH INCUBATEE TO THE CONCERNED ASSISTANT COMMISSIONER OR T HE DEPUTY COMMISSIONER OF CENTRAL EXCISE, AS THE CASE MAY BE, BEFORE AVAILING THE EXEMPTION; AND 2. THAT THE STEP OR THE TBI SHALL FURNISH THE INFORMATION IN THE SAID FORMAT I AND FORMAT II IN THE SAME MANNER BEFORE THE 30TH DAY OF JUNE OF EACH FI NANCIAL YEAR. 9. FURTHER, HE FILED GAZETTE NOTIFICA TION PUBLISHED IN THE ODISHA GAZ ETTE EXTRAORDINARY OF THE FINANCE DEPARTMENT NO. 1144, CUTTACK ON THURSDAY, JUNE 29, 2017 , WHICH READS AS UNDER : - SL. NO. CHAPTER, SECTION, HEADING GROUP OR SERVICE CODE (T ARIFF) DESCRIPTION OF SERVICES RATE (PERCENT) CONDITION (1) (2) (3) (4) (5) 48 HEADING 9983 OR ANY OTHER HEADING OF CHAPTER 99 TAXABLE SERVICES, PROVIDED OR TO BE PROVIDED, BY A TECHNOLOGY BUSINESS INCUBATOR OR A SCIENCE AND TECHNOLOGY ENTREPRENEURSHIP P ARK RECOGNIZED BY THE NATIONAL SCIENCE AND TECHNOLOGY ENTREPRENEURSHIP DEVELOPMENT BOARD OF THE DEPARTMENT OF SCIENCE AND TECHNOLOGY, GOVERNMENT OF INDIA OR BIO - INCUBATORS RECOGNIZED BY THE BIOTECHNOLOGY INDUSTRY RESEARCH BIOTECHNOLOGY INDUSTRY RESEARCH AS SISTANCE COUNCIL, UNDER THE DEPARTMENT OF BIOTECHNOLOGY, GOVERNMENT OF INDIA NIL NIL 10. IT WAS HIS SUBMISSION THAT IN VIEW OF THE ABOVE ABUNDANT EVIDENCES, WHICH ARE FILED BEFORE THE TRIBUNAL AND WHICH WERE ALSO FILED BEFORE THE CIT(E) , THE CIT(E) WAS N OT JUSTIFIED IN OVERLOOKING THE SAME AND REFUSING ITA NO.114/2017 7 TO GRANT REGISTRATION U/S.12AA OF THE ACT ON WHIM SICAL GROUNDS. HENCE, HE PRAYED THAT THE ORDER OF THE CIT(E) SHOULD BE STRUCK DOWN AND HE BE DIRECTED TO GRANT REGISTRATION U/S.12AA OF THE ACT TO THE ASSESS EE. 11. ON THE OTHER HAND, THE DEPARTMENT REPRESENTATIVE VEHEMENTLY ARGUED IN SUPPORT OF THE ORDER OF CIT(E). 12. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS IN THE INS TANT CASE ARE THAT THE ASSESSEE A SECTION 25 COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 APPLIED FOR REGISTRATION U/S. 12AA OF THE ACT AND APPROVAL U/S.80G OF THE ACT IN THE PRESCRIBED FORMS ON 20.07.2016. THE CIT(E) REFUSED TO GRANT REGISTRATION AND APPROVAL AS APPLIED FOR BY THE ASSESSEE FOR THE REASONS QUOTED ABOVE IN THIS ORDER. ON A PERUSAL OF THE ABOVE ORDER OF CIT(E) , IT IS OBSERVE D THAT THERE IS NO FINDING BY HIM THAT THE OBJECTS OF THE TRUST ARE EITHER NOT CHARITABLE OR THE ACTIVITIES OF THE TRUST ARE NOT GENUINE. WE FIND THAT THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. GOPI RAM GOYAL CHARITABLE TRUST, (2016) TAXMANN.COM 403 (RAJASTHAN) HAS HELD THAT WHILE GRANTING REGISTRATION U/S.12AA OF THE ACT TO THE ASSESSEE THE CIT HAS TO EN QUIRE ABOUT THE OBJECTS OF THE TRUST ARE CHARITABLE AND GENUINENESS OF ITS ACTIVITIES AND THAT HE CANNOT ENQUIRE ABOUT THE APPLICATION OF INCOME OF TRUST FOR CHARITABLE TRUST. FURTHER, THE MUMBAI (E) BENCH OF THE TRIBUNAL IN CASE OF TARA EDUCATIONAL AND CH ARITABLE TRUST VS. DIT(E), IN ITA NO. 1247/MUM/2013 FOR ASSESSMENT YEAR 2012 - 2013 HAS HELD THAT THE SCOPE OF ENQUIRY CONTEMPLATED U/S 12AA OF THE ACT, THUS, IS LIMITED TO THE ITA NO.114/2017 8 EXTENT OF COMMISSIONER GETTING HIMSELF SATISFIED ABOUT OBJECT OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES SO AS TO GRANT OR REFUSE THE REGISTRATION U/S 12 A OF THE ACT . A PERUSAL OF THE IMPUGNED ORDER OF THE LD. DIT (EXEMPTIONS), HOWEVER, SHOWS THAT HE HAS NOT RECORDED ANY ADVE RSE COMMENT OR DIS - SATISFACTION ABOUT THE OBJECT OF THE TRUST OR GENUINENESS OF THE TRUST ACTIVITIES. HE HAS REFUSED TO GRANT THE REGISTRATION U/S 12 A OF THE ACT ON THE GROUND THAT ITS TRUST DEED DOES N OT CONTAIN 'DISSOLUTION CLAUSE'. IN OUR OPINION, THE LD. DIT (EXEMPTIONS) THUS HAS CLEARLY GONE BEYOND THE SCOPE OF ENQUIRY CONTEMPLATED U/S 12 A OF THE ACT AND HAS REFUSED TO GRANT THE REGISTRATION U/S 12 A OF THE ACT TO THE ASSESSEE TRUST ON A TOTALLY IRRELEVANT GROUND WITHOUT POINTING OUT AS TO HOW HE WAS NOT SATISFIED EITHER ABOUT THE OBJECT OF THE TRUST OR THE GENUINENESS OF ITS ACTIVITIES. WE THER EFORE SET ASIDE THE IMPUGNED ORDER OF THE LD. DIT (EXEMPTIONS) AND DIRECT THAT THE REGISTRATION U/S 12 A OF THE ACT AS APPLIED BY THE ASSESSEE TRUST BE GRANTED. THEREFORE, IN OUR CONSIDERED VIEW, AS THE CIT(E) HAS NOT GIVEN ANY FINDING IN HIS ORDER THAT EITHER THE OBJECTS OF THE ASSESSEE COMPANY ARE NOT CHARITABLE OR ITS ACTIVITIES ARE NOT GENUINE, HENCE, HE WAS NOT JUSTIFIED IN REFUSING TO GRANT REGISTRATION U/S.12AA OF THE ACT AND APPROVAL U/S.80G OF TH E ACT TO THE ASSESSEE COMPANY. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(E) AND DIRECT HIM TO GRANT REGISTRATION U/S.12AA OF THE ACT TO THE ASSESSEE COMPANY AS WELL AS APPROVAL U/S.80G OF THE ACT SINCE ITS INCEPTION AND ALLOW THE GROUNDS OF APPEAL OF THE A SSESSEE. ITA NO.114/2017 9 13 . IN THE RESULT, APPEAL FILED OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON MONDAY THE 26 TH DAY OF FEBRUARY, 2018 AT CUTTACK. SD/ - ( PAVAN KUMAR GADALE ) SD/ - (N. S. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 26 / 02 /201 8 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - KIIT - TECH NOLOGY BUSINESS INCUBATOR (KIIT - TBI) AT: - CAMPUS - II, KIIT UNIVERSITY, BHUBANESWAR 2. / THE RESPONDENT - CIT (EXEMPTION), HYDERABAD 3. ( ) / THE CIT(A), 4. / CIT 5. , , / D R, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//