The DCIT, Gandhinagar Circle, Gandhinagar V. Gujarat State Tribal Development Residential Education Institute Soc., Gandhinagar

ITA 126/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8625 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 12-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Benefit of exemption
• Section: 12AA; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.126/AHD/2015 ( / ASSESSMENT YEAR : 2011-12) THE DCIT GANDHINAGAR CIRCLE GANDHINAGAR / VS. GUJARAT STATE TRIBAL RESI.EDU.INST. SOC. BLOCK NO.4 1 ST FLOOR DR.JIVRAJ MEHTA BHAVAN GANDHINAGAR-382 011 # ./ ./ PAN/GIR NO. : AAAAT 3689 H ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) #%' / APPELLANT BY : SHRI K.MADHUSUDAN, SR.DR &#%(' / RESPONDENT BY : -NONE- )*(+ / DATE OF HEARING 17/08/2017 ,-./(+ / DATE OF PRONOUNCEMENT 04/09/2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED BY THE ASSESS ING OFFICER ASSESSING OFFICER (AO) ASSAILING THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-GANDHINAGAR [CIT(A) IN SHORT] DATED 10/10/2014 FOR THE ASSESSMENT YEAR (AY) 2011-12 TOWARDS ALLOW ING THE EXEMPTION ITA NO.126/AHD/ 2015 DCIT VS. GUJ STATE TRIBA RESI EDU INST SOC. ASST.YEAR 2011-12 - 2 - CLAIMED BY THE ASSESSEE UNDER S.10(23C)(IIIAB) OF T HE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT'). 2. THE ASSESSEE IS CONSTITUTED BY THE GOVERNMENT O F GUJARAT TO ESTABLISH, MAINTAIN, MANAGE AND CONTROL RESIDENTIA L SCHOOLS FOR EDUCATION OF CHILDREN BELONGING TO SCHEDULED TRIBES AND OTHER S RESIDING IN TRIBAL AREA OF GUJARAT STATE. THE ASSESSEE IS REGISTERED UNDER S.12A OF THE ACT. AS PER MEMORANDUM OF ASSOCIATION, THE MAIN OBJECT OF T HE TRUST IS TO ESTABLISH, MAINTAIN, CONTROL AND MANAGE TRIBAL DEVE LOPMENT SCHOOLS WITHIN THE STATE OF GUJARAT AND TO DO ALL SUCH ACTS AND THINGS NECESSARY FOR OR CONDUCTIVE TO PROMOTION OF SUCH SCHOOLS. IT IS THE CASE OF THE ASSESSEE THAT THE SOCIETY IS AN INSTITUTION ESTABLISHED FOR EDUCATIONAL PURPOSES MORE PARTICULARLY TOWARDS DEVELOPMENT OF EDUCATION IN THE TRIBAL AREAS OF THE STATE OF GUJARAT. THE SOCIETY IS EXCLUSIVELY D EPENDENT UPON GOVERNMENT GRANTS AND AS SUCH IT IS ELIGIBLE FOR EX EMPTION FROM TAXATION UNDER S.10(23C)(IIIAB) OF THE ACT. THE AO DENIED A FORESAID CLAIM OF THE ASSESSEE ON THE GROUND THAT ASSESSEE DOES NOT PER SE IMPARTS FORMAL EDUCATION IN AN ORGANIZED AND SYSTEMATIC MANNER AND THEREFORE DOES NOT GIVE UNDER THE EXPRESSION OTHER EDUCATIONAL INSTIT UTION. IT WAS OBSERVED BY THE AO THAT THE ASSESSEE DOES NOT RUN A NY COMPOSITE OR INTEGRATED COURSE OR ORGANIZED AND SYSTEMATIC TRAIN ING AND IS NOT AFFILIATED OR REGISTERED WITH ANY AUTHORITY. IT WA S THUS CONCLUDED BY THE AO THAT THE ASSESSEE IS NOT ENTITLED UNDER S.10(23C )(IIIAB) OF THE ACT. ITA NO.126/AHD/ 2015 DCIT VS. GUJ STATE TRIBA RESI EDU INST SOC. ASST.YEAR 2011-12 - 3 - 3. AGGRIEVED BY THE DENIAL OF EXEMPTION, THE ASSES SEE PREFERRED APPEAL BEFORE THE CIT(A), THE CIT(A) RELIED UPON TH E DECISION OF THE COORDINATE BENCH OF TRIBUNAL AND GRANTED RELIEF . THE RELEVANT PARAS CONCERNING WITH THE ISSUE ARE EXTRACTED FROM THE OR DER OF THE CIT(A) AS UNDER:- 5. DURING THE COURSE OF APPELLATE PROCEEDING S, THE APPELLANT HAS SUBMITTED THE FOLLOWING IN ITS CONTENTION: 1. THE APPELLANT, GSTDREIS HAS BEEN CONSTITUTED B Y THE GOVERNMENT OF GUJARAT TO ESTABLISH, MAINTAIN, CONTROL AND MANAGE RESIDENTIAL SCHOOLS FOR EDUCATION OF CHILDREN BELONGING TO SCHEDULE TRIBES AND OTHERS RESIDING IN THE PREDOMINANTLY TRIBAL AREAS OF STATE OF GUJARAT. ACCORDINGLY, GSTR EIS WAS ESTABLISHED AS PER MEMORANDUM OF ASSOCIATION, RULES AND REGULATIONS AN D BY-LAWS AND WAS REGISTERED AS A SOCIETY UNDER THE SOCIETIES REGISTRATION ACT, 1860 WITH THE ASSISTANT REGISTRAR OF SOCIETIES, AHMEDABAD AT REGISTRATION NO..GUJ/719/GA NDHINAGAR, IT WAS ALSO REGISTERED AS A CHARITABLE TRUST UNDER THE BOMBAY P UBLIC TRUST ACT, 1950 WITH THE DEPUTY CHARITY COMMISSIONER, AHMEDABAD REGION, AHME DABAD AT REGISTRATION NO.F/676/GANDHINAGAR. THE APPELLANT, GSTDREIS WAS A LSO GRANTED REGISTRATION UNDER SECTION 12AA OF THE 1.1. ACT, CERTIFICATE NO. CIT/GNR/12AA/GN. 18/2000-2001 DATED 17.10.2000. COPIES OF THESE CERTIFICATES AS W ELL AS OF THE MEMORANDUM OF ASSOCIATION, RULES AND REGULATIONS AND BY-LAWS ARE ENCLOSED HEREWITH. (PLEASE SEE PAGES NO.4 TO 26). 2. IT IS SUBMITTED THAT AS PER THE OBJECT OF GSTDRE IS, IT IS RUNNING SCHOOLS FROM PRIMARY UP TO HIGHER SECONDARY LEVEL FOR EDUCATION OF CHILDREN OF SCHEDULE TRIBES AND OTHERS RESIDING IN TRIBAL AREAS OF GUJARAT STAT E. THE APPELLANT, GSTDREIS IS ACCORDINGLY RUNNING, MAINTAINING AND CONTROLLING 18 EKLAVYA MODEL RESIDENTIAL SCHOOLS (EMRS) FOR 6TH TO 12TH STANDARD, 12 MODEL S CHOOLS (RESIDENTIAL) FOR 6TH TO 12TH STANDARD AND 36 GIRLS RESIDENTIAL SCHOOLS (EGR S) AS WELL AS 12 OTHER SCHOOLS OF EKLAVYA MODEL SCHOOLS (MS) IN TRIBAL DISTRICTS O F GUJARAT STATE. 3. THE APPELLANT, GSTDREIS SUBMITS THAT ALL THESE E DUCATIONAL INSTITUTIONS (SCHOOLS) ARE BEING RUN IN ACCORDANCE WITH THE TRIBAL DEVELOP MENT SCHEMES OF GOVT OF INDIA AND GOVT. OF GUJARAT. AS SUCH, GOVT. OF INDIA AND G OVT. OF GUJARAT PROVIDES GRANTS TO THE APPELLANT GSTDREIS FOR MAINTENANCE OF ALL THESE SCHOOLS. FURTHER, IT IS TO BE ITA NO.126/AHD/ 2015 DCIT VS. GUJ STATE TRIBA RESI EDU INST SOC. ASST.YEAR 2011-12 - 4 - NOTED THAT ALL THESE SCHOOLS PROVIDE FREE EDUCATION . MOREOVER, STUDENTS ARE ALSO PROVIDED RESIDENTIAL FACILITY, MEALS, STUDY MATERIA LS LIKE BOOKS, NOTES ETC. AND UNIFORM FREE OF COST. 4. THE APPELLANT, THEREFORE, STRONGLY CLAIMS THAT, UNDER THE ABOVE STATED FACTS, IT IS CLEAR THAT THE EDUCATIONAL INSTITUTIONS (SCHOOLS), ESTABLISHED, MAINTAINED, CONTROLLED AND MANAGED BY GSTDREIS ARE FULLY FINANCED BY GRANT S RECEIVED FROM GOVT. OF INDIA AND GOVT. OF GUJARAT UNDER THEIR TRIBAL DEVELOPMENT SCHEMES, AND THEREFORE, THE APPELLANT, GSTDREIS SUBMITS THAT IT IS AN EDUCATION AL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSES OF PR OFIT AND IT IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT, AND HENCE , THE ENTIRE INCOME OF THE APPELLANT GSTDREIS IS FULLY EXEMPT UNDER THE PROVIS IONS OF SECTION 10(23C)(IIIAB) OF THE I.T. ACT, 1961. COPIES OF ACCOUNTS FOR NON-RECU RRING GRANT, RECURRING GRANT (EMRS), RECURRING GRANT (EGRS), NON-RECURRING GRANT UTILIZED FUND ALONG WITH COPIES OF GRANT LETTERS ARE ENCLOSED HEREWITH. (PLE ASE SEE PAGES NO.69 TO 92). 5. THE APPELLANT, GSTDREIS SUBMITS THAT ITS CLAIM F OR EXEMPTION OF ENTIRE INCOME U/S.LO(23C)(IIIAB) HAS BEEN CONFIRMED BY FOLLOWING DECISIONS IN CASE OF THE APPELLANT GSTDREIS ITSELF: (I) ORDER OF ITAT 'A' BENCH, AHMEDABAD IN ITA NO.2313/AHD/2009 FOR ASST YEAR 2006-07, (II) ORDER OF ITAT 'A' BENCH, AHMEDABAD IN ITA NO.2 300/AHD/2012 FOR ASST. YEAR 2008-09, (III) ORDER OF THE CIT(A), GANDHINAGAR IN A PPEAL NO.CIT(A)/GNR/152/2008-09 FOR ASST. YEAR 2006-07. (IV) ORDER OF THE CIT(A), GANDHINAGAR IN APPEAL N O.CIT(A)/GNR/199/2012-13 FOR ASST. YEAR 2010-11. (V) ORDER OF THE CIT(A), GANDHINAGAR IN APPEAL NO.C IT(A)/GNR/326/2010-11 FOR ASST. YEAR 2008-09. COPIES OF ABOVE ORDERS ARE ENCLOSED HEREWITH FOR RE ADY REFERENCE (PLEASE SEE PAGES NO.LL2TOL48). 6. THE APPELLANT GSTDREIS WAS ESTABLISHED W.E.F. 17 /10/2000 AND IT HAS FILED ITS RETURN OF INCOME, DECLARING RS.NIL INCOME AFTER CLA IMING .BENEFIT OF DEDUCTIONS AVAILABLE U/S.11 OF THE I.T.ACT,1961, AS IT IS DULY REGISTERED U/S 12AA OF THE I.T.ACT,1961. ACCORDINGLY, FOR THE YEAR UNDER CONSI DERATION I.E. A.Y.2011-12, THE APPELLANT, GSTDREIS HAS FILED ITS RETURN OF INCOME DECLARING 'NIL' INCOME AFTER AVAILING BENEFITS OF DEDUCTIONS U/S.11 ALONG WITH C OPIES OF AUDITED ACCOUNTS AND AUDIT ITA NO.126/AHD/ 2015 DCIT VS. GUJ STATE TRIBA RESI EDU INST SOC. ASST.YEAR 2011-12 - 5 - REPORT. (PLEASE SEE PAGES NO.41 TO 54). HOWEVER, IN VIEW OF THE ABOVE FACTS OF ITS CASE, THE APPELLANT GSTDREIS IS ALSO ENTITLED TO CL AIM EXEMPTION IN RESPECT OF ITS ENTIRE INCOME U/S.10(23C)(IIIAB) OF THE I.T.ACT, 19 61. 7. THE APPELLANT GSTDREIS SUBMITS THAT IT WAS REGIS TERED AS A SOCIETY/TRUST AS STATED ABOVE, AS A SEPARATE BODY/ENTITY BY THE GOVE RNMENT OF GUJARAT FOR IMPLEMENTING TRIBAL DEVELOPMENT SCHEMES OF GOVT. OF INDIA AND GOVT. OF GUJARAT BY ESTABLISHING EDUCATIONAL INSTITUTIONS/SCHOOLS IN TR IBAL AREAS. FURTHER, THE APPELLANT IS RECEIVING GRANTS FROM THE GOVERNMENT OF GUJARAT AND THE CENTRAL GOVERNMENT FOR THE PURPOSE OF CARRYING OUT ITS OBJECTS OF EDUCATING CH ILDREN OF SCHEDULE TRIBES AND OTHERS RESIDING IN TRIBAL AREAS OF GUJARAT STATE. I T CAN BE SEEN THAT SUCH GRANTS FROM THE STATE AND CENTRAL GOVERNMENTS CONSTITUTES VERY SUBSTANTIAL PART OF THE FUNDS OF THE APPELLANT. THEREFORE, IT IS ABSOLUTELY CLEAR TH AT THE APPELLANT IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT (PLEASE SE E PAGES NO.27 TO 30 AND 69 TO 92). 8. THE APPELLANT, THEREFORE, SUBMITS THAT IN VIEW O F ABOVE FACTS, IT IS DEAR THAT THE APPELLANT IS AN EDUCATIONAL INSTITUTION EXISTING SO LELY FOR EDUCATION PURPOSES AND IT IS ALSO WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERN MENT. FURTHER, THE APPELLANT BEING INSTITUTION FUNCTIONING UNDER THE CONTROL AND SUPERVISION OF THE GOVERNMENT OF GUJARAT, IT IS BUT OBVIOUS THAT IT IS NOT AT ALL FU NCTIONING FOR THE PURPOSES OF PROFIT. THEREFORE, IT IS SUBMITTED THAT THE APPELLANT IS DI RECTLY COVERED UNDER THE PROVISIONS OF SECTION 10(23C)(IIIAB) OF THE INCOME TAX ACT,196 1 AND INCOME OF THE APPELLANT IS WHOLLY EXEMPT U/S 10(23C)(IIIAB) OF THE INCOME TAX ACT,1961. 9. THE APPELLANT GSTDREIS SUBMITS THAT THOUGH ITS E NTIRE INCOME IS ELIGIBLE TO BE FULLY EXEMPT U/S 10(23C)(IIIAB) OF THE I.T. ACT,196 1, AS EXPLAINED EARLIER ABOVE, THE APPELLANT IS FILING ITS RETURNS OF INCOME CLAIMING BENEFIT OF DEDUCTION U/S 11 OF THE I.T. ACT, 1961 AS IT IS DULY REGISTERED U/S 12AA OF THE I.T. ACT/1961 AND THE APPELLANT HAS ALSO FILED ITS RETURN OF INCOME FOR A.Y.2011-12 ACCORDINGLY. THE APPELLANT GSTDREIS HAS HOWEVER, DURING THE COURSE OF ASSESSME NT PROCEEDINGS STRONGLY CLAIMED THAT IN VIEW OF THE FACTS OF THE CASE AND F AVORABLE JUDGMENTS OF THE APPELLATE AUTHORITIES AS MENTIONED HEREIN ABOVE, IN CASE OF T HE APPELLANT ITSELF, ENTIRE INCOME OF THE APPELLANT IS RIGHTLY AND VALIDLY ELIGIBLE TO BE FULLY EXEMPT U/S 10(23C)(IIIAB) OF THE I.T.ACT,1961. 10. THE APPELLANT SUBMITS THAT CONSIDERING T HE ABOVE STATED FACTS OF THE CASE AS WELL AS SUBMISSIONS IN THAT REGARD, THE BENEFIT OF EXEMPTION U/S 10(23C)(IIIAB) WAS VALIDLY AND RIGHTLY ALLOWABLE TO THE APPELLANT AND THE SAME MAY KINDLY BE HELD TO BE ALLOWABLE. ITA NO.126/AHD/ 2015 DCIT VS. GUJ STATE TRIBA RESI EDU INST SOC. ASST.YEAR 2011-12 - 6 - YOUR HONOUR IS THEREFORE REQUESTED IT AT CONSIDERIN G THE ACTS AND CIRCUMSTANCES OF THE CASE WELL AS ABOVE SUBMISSIONS, ASSESSMENT MA DE BY THE LD, ASSESSING OFFICER MAY KINDLY BE QUASHED AND INCOME OF THE APPELLANT B E HELD AS FULLY EXEMPT U/S 10(23C)(IIIAB) OF THE I.T. ACT, 1961.' 7.2 I HAVE GONE THROUGH THE ASSESSMENT ORDER, THE F ACTS OF THE CASE AND THE CONTENTIONS OF THE APPELLANT. FROM THE DETAILS FILE D BEFORE ME I FIND THAT THE CONTENTION OF THE APPELLANT IS THAT IT IS ELIGIBLE FOR EXEMPTION U/S. 20(23)(IIB) ON THE INCOME EARNED WHICH HAS BEEN DENIED BY THE AO. 1 FIND THAT MY PREDECESSORS ON IDENTICAL FACTS HAV E DISCUSSED THE ISSUE AT LENGTH IN THE EARLIER YEARS' ORDERS DATED 18/5/2009 FOR AY 20 06-07 AND AGAIN IN ORDER DATED 30/7/2012 FOR AY 2008-09 AND ALSO BY ME FOR AY 2010 -11 DID 27/09/2013, WHEREIN IT WAS HELD THAT THE APPELLANT'S CASE IS COVERED BY THE CONDITIONS LAID DOWN IN SECTION 10(23)(IIIB) OF THE ACT AND THEREFORE, THE INCOME I F ANY, IS CONSEQUENTIALLY EXEMPT. THE ISSUE HAS ALSO BEEN SETTLED BY THE HON'BLE IT A T, 'A' BENCH, AHMEDABAD IN FAVOUR OF THE APPELLANT BY DISMISSING THE APPEAL OF THE RE VENUE VIDE ITS ORDER DATED 25/11/2011 IN UA NO.2313/AHD/2009 WHEREIN IT WAS OB SERVED AND HELD THAT THE APPELLANT IS RUNNING EDUCATIONAL INSTITUTIONS LIKE SCHOOLS, ETC. IMPARTING FORMAL EDUCATION AS PRESCRIBED UNDER THE ACT. THE APPELLAN T HAS DULY BEEN GRANTED REGISTRATION U/S. 12AA OF THE IT ACT. THEREFORE, ON MERITS ALSO THE APPELLANT IS HELD TO BE ELIGIBLE FOR DEDUCTION U/S. 11 & 12 OF THE IT AC T. IN VIEW OF THE JUDICIAL PRONOUNCEMENT BY THE HON'BLE HAT (SUPRA) IN APPELLA NT'S OWN CASE AND THE DECISION TAKEN BY MY PREDECESSORS AND ALSO BE ME FOR PRECEDI NG ASSESSMENT YEAR, I FIND NO REASON TO DIFFER FROM THE DECISION TAKEN AFTER ELAB ORATE DISCUSSION AND THE AO IS DIRECTED TO ALLOW THE CLAIM OF THE APPELLANT, ACCOR DINGLY. HENCE, THE APPEAL OF THE APPELLANT IS ALLOWED. 4. THE LD.DR RELIED UPON THE ORDER OF THE AO. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE. 6. ON PERUSAL, WE FIND OURSELVES IN AGREEMENT WITH THE ORDER OF THE CIT(A). WE DO NOT FIND ANY APPARENT REASON TO IN TERFERE WITH THE ORDER ITA NO.126/AHD/ 2015 DCIT VS. GUJ STATE TRIBA RESI EDU INST SOC. ASST.YEAR 2011-12 - 7 - OF THE CIT(A). THE ISSUE IS NO LONGER RES INTEGRA AND THEREFORE DOES NOT REQUIRE ANY REPETITION. ACCORDINGLY, WE UPHOLD TH E ORDER OF THE CIT(A). 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 04 / 0 9 /201 7 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 04 / 09 /2017 3..),.)../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT 4. 7+ ( ) / THE CIT(A)-GANDHINAGAR 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<* / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 18.8.17DICTATION-PAD 7- P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18.8.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.5.9.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 5.9.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER