Raja Bhadur Venkat Rama Reddy Society, Husnabad V. DIT, Hyderabad

ITA 1154/HYD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66205 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-08-2011
• Assessment Year: 2009-2010
• Appeal Filed On: 04-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: T S AJAY GANDHI
• Keywords: Charitable institution
• Section: 80G; 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1154/HYD/2009 ASSESSMENT YEAR: 2009-10 RAJA BAHADUR VENKAT RAMA REDDY SOCIETY, APPELLANT NIZAMABAD. (PAN AAATR20986R) VS. DIRECT OF INCOME-TAX(EXEMPTION), RESPON DENT HYDERABAD APPELLANT BY : SHRI T.S. AJAY GANDHI RESPONDENT BY : SMT. NIVEDITA BISWAS DATE OF HEARING : 09/07/2012 DATE OF PRONOUNCEMENT : 31/08/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL IS DIRECTED AGAINST THE ORDER OF DIT(E ), HYDERABAD DATED 30/09/2009. 2. THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE A .P. (TELENGANA AREA) PUBLIC SOCIETIES REGISTRATION ACT, 1350 FASLI. 3. BY ORDER DATED 20/09/2007, THE INSTITUTION WAS ACCORDED APPROVAL U/S 80G W.E.F. 01/04/2007 TO 31/03/2009. AN APPLICATION U/S 80G OF THE ACT WAS F ILED ON 15/04/2009 FOR RENEWAL OF EXEMPTION BEFORE THE DIT( E). ITA NO. 1154/HYD/09 RAJA BAHADUR VENKAT RAMA REDDY SOCIETY 2 4. BEFORE THE DIT(E), THE AR OF THE ASSESSEE SUBMIT TED THAT SOCIETY IS RUNNING THE SCHOOL AND ALSO OLD AGE HOME. 5. THE DIT(E) OBSERVED IN HIS ORDER THAT THE ASSESS EE SOCIETY HAD VIOLATED THE PROVISIONS OF AP EDUCATION AL INSTITUTION (REGULATION OF ADMISSION AND PROHIBITIO N OF CAPITATION FEE) ACT, 1983, SINCE THE ASSESSEE HAD V IOLATED THE G.O. ISSUED WITH RESPECT TO CHARGING OF FEE. TH E DIT(E) ALSO OBSERVED THAT SOCIETY IS RUNNING OLD AGE HOME ON COMMERCIAL LINES AND, THEREFORE, THE ACTIVITIES OF THE INSTITUTION ARE COVERED BY THE PROVISO TO SECTION 2 (15) OF THE IT ACT. THE DIT(E) HELD THAT ACTIVITIES OF THE INST ITUTION ARE NOT CHARITABLE IN NATURE AND NOT COVERED BY THE PRO VISIONS OF SECTION 2(15) AND, THEREFORE, THE BENEFIT OF SECTIO N 80G CANNOT BE AVAILED BY THE ASSESSEE IN VIEW OF THE AM ENDED PROVISIONS WITH EFFECT FROM 01/04/2009. HENCE, THE APPLICATION FILED BY THE INSTITUTION WAS REJECTED B Y THE DIT(E). 6. AGGRIEVED BY THE ORDER OF DIT(E), THE ASSESSEE I S IN APPEAL BEFORE US. 7. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS: I) N.N. DESAI CHARITABLE TRUST VS. CIT, 242 ITR 442 (GUJ.) II) SONEPAT HINDU EDUCATIONAL & CHARITABLE SOCIETY VS. CIT, 278 ITR 262 (P&H) III) CIT VS. GAUR BRAHMIN VIDYA PRACHARINI SABHA, 2 03 TAXMAN 226 (P&H) IV) CIT VS. SHRI RAM MEMORIAL FOUNDATION, 269 ITR 3 5 (DEL.) V) DIT(E) VS. BAGRI FOUNDATION, 233 CTR (DEL.) 538 ITA NO. 1154/HYD/09 RAJA BAHADUR VENKAT RAMA REDDY SOCIETY 3 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AN D PERUSED THE RECORD. IN THIS CASE, THE DIT(E) HELD THAT ACTIVITIES OF THE INSTITUTION ARE NOT CHARITABLE IN NATURE AND NOT COVERED BY THE PROVISIONS OF SECTION 2(15) AND, THEREFORE, THE BENEFIT OF SECTION 80G CANNOT BE AVA ILED BY THE ASSESSEE IN VIEW OF THE AMENDED PROVISIONS WITH EFFECT FROM 01/04/2009. 9. IN THIS CONNECTION, WE REFER TO THE FOLLOWING DE CISIONS: 10. IN THE CASE OF SONEPAT HINDU EDUCATIONAL & CHAR ITABLE SOCIETY V. CIT [2005] 278 ITR 262 /147 TAXMAN 1 HEL D AS UNDER:- 'IN CONSTRUING THE PURPOSE OF A TRUST, FOR THE PURP OSES OF APPROVAL UNDER SECTION 80G OF THE INCOME-TAX ACT , 1961, IT IS IMPORTANT TO FIND OUT THE REAL PURPOSE OF ESTABLISHING THE TRUST RATHER THAN JUST RELYING ON THE OBJECTS, MEMORANDUM AND ARTICLES OR THE TRUST DEED OF THE TRUST. IF THE COMMISSIONER IS SATISFIED THAT TH E OBJECTS OF THE TRUST ARE CHARITABLE, APPROVAL SHOUL D NOT BE DENIED ON MERE TECHNICALITIES. REGISTRATION OF AN INSTITUTION UNDER SECTION 12A OF THE ACT IS SUFFICIENT PROOF OF IT BEING ESTABLISHED FOR CHARITABLE PURPOSES. IT IS NOT POSSIBLE TO DETERMINE, ON THE DATE ON WHI CH THE DONATION IS MADE UNDER SECTION 80G, IF THE TRUS T, WHICH HAS SOUGHT APPROVAL UNDER THE SAID SECTION, H AS FULFILLED ITS CONDITIONS AT THE CLOSE OF THE RELEVA NT PREVIOUS YEAR. RES JUDICATA CAN BE APPLIED IN INCOME-TAX PROCEEDIN GS WHEN A FUNDAMENTAL ASPECT HAS PREVAILED THROUGH DIFFERENT ASSESSMENT YEARS WITHOUT BEING CHALLENGED ONE WAY OR THE OTHER. IN SUCH CASES IT IS NOT APPROPRIATE TO CHANGE THE POSITION IN A SUBSEQUENT YEAR.' ITA NO. 1154/HYD/09 RAJA BAHADUR VENKAT RAMA REDDY SOCIETY 4 11. IN THE PRESENT CASE, THE ASSESSEE HAS ALREADY G OT EXEMPTION U/S 80G FOR THE PERIOD FROM 01/04/2007 TO 31/03/2009 AND, HENCE, THE RATIO OF THE DECISION IN THE CASE OF SONEPAT (SUPRA), WOULD IN OUR OPINION APPLY TO T HE CASE BEFORE US. 12. FURTHER, THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.N. DESAI CHARITABLE TRUST V. CIT [2000] 246 ITR 4 52 / 123 TAXMAN 866 HELD THAT IN RESPECT OF REGISTRATION UND ER SECTION 80G, THE SCOPE OF ENQUIRY WILL BE CONFINED TO FINDING OUT IF THE INSTITUTION SATISFIES PRESCRIBED CONDITI ON STATED IN SUB-CLAUSES (I) TO (V) OF SECTION 80G. IT DOES NOT EXTEND TO ACTUAL ASSESSMENT OF INSTITUTION. THE PHRASE USED I N SUB- CLAUSE (I) OF SUB-SECTION (5) OF SECTION 80G IS THA T 'WHERE THE INSTITUTION OR FUND DERIVES ANY INCOME, SUCH IN COME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOM E'. THUS WHAT IS TO BE SEEN IS WHETHER ANY INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME AND NOT WHETHER BE CAUSE OF CERTAIN DEFAULTS PRESCRIBED IN SECTION 11 OR 13, TH E TRUST IS NOT ACTUALLY HELD ELIGIBLE FOR EXEMPTION UNDER SECT IONS 11 & 12 OF THE ACT. ONCE THE CONDITION LAID DOWN IN RULE 11AA AS ALSO IN SUB-CLAUSES (I) TO (V) OF SUB-SECTION (5) O F SECTION 80G ARE COMPLIED WITH, THE TRUST IS, ELIGIBLE FOR R EGISTRATION UNDER SECTION 80G(5)(VI) OF THE ACT. 13. HENCE, THE DECISION OF GUJARAT HIGH COURT IS AP PLICABLE TO THE ASSESSEES CASE. 14. IN THE CASE OF P.R. CHELLARAM IN ITA NO 565/HYD/2012 ORDER DATED 18/07/2012 AND IN THE CASE OF HEAL A CHILD FOUNDATION VS. DIT(E)-II IN IT APPEAL NO. 1343 (HY D.) OF 2011 DATED FEBRUARY 2, 2102, THE COORDINATE BENCH O F HYDERABAD ITA NO. 1154/HYD/09 RAJA BAHADUR VENKAT RAMA REDDY SOCIETY 5 TRIBUNAL HAS HELD THAT IN RESPECT OF REGISTRATION U NDER SECTION 80G, THE SCOPE OF ENQUIRY WILL BE CONFINED TO FINDI NG OUT IF THE INSTITUTION SATISFIES PRESCRIBED CONDITION STAT ED IN SUB- CLAUSES (I) TO (V) OF SECTION 80G AND DOES NOT EXTE ND TO ACTUAL ASSESSMENT OF INSTITUTION. 15. IN VIEW OF THE ABOVE DISCUSSION, WE REMIT THE I SSUE TO THE FILE OF THE DIT(E) TO GRANT EXEMPTION U/S 80G A FTER GOING THROUGH THE VARIOUS DECISIONS DISCUSSED BY US ON TH IS ISSUE. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 31 ST AUGUST, 2012. KV COPY TO:- 1) RAJA BAHADUR VENKAT RAMA REDDY SOCIETY C/O GANDHI & GANDHI, CHARTERED ACCOUNTANTS, 1002, PAIGAH PLAZA, BASHEERBAGH, HYDERABAD 500 063 2) DIT(E) HYDERABAD 3) DDIT(E)-III, HYDERABAD 4) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.