INFORMATION SYSTEMS AUDIT AND CONTROL ASSOCIATON, MUMBAI V. DIT (E), MUMBAI

ITA 1276/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83612 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 03-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 23-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Assessee Lawyers: SUNIL NAHATA
• Keywords: Business income; Charitable institution; Cancellation of registration
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 1276/MUM/2012 ASSESSMENT YEAR: 2009-10 M/S. INFORMATION SYSTEMS AUDIT AND CONTROL ASSOCIATION C/O. PRIN. L.N WELINGKAR INSTITUTE OF MANAGEMENT, R. NO. 317, 3 RD FLOOR, OPP. MATUNGA GYMKHANA, L. NAPOO ROAD, MUMBAI- 400 022 PAN: AAATI 1100 R VS. DCIT (EXEMPTION) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNIL NAHATA REVENUE BY : SHRI A.C. TEJPAL DATE OF HEARING : 03.07.2014 DATE OF PRONOUNCEMENT : 27.08.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.DIT (EXEMPTION), MUMBAI DATED 16.12.2011 CANCELLING THE REGISTRATION U/S 12AA(3) OF THE INCOME-TAX ACT 1961. 2. BRIEFLY STATED, THE ASSESSEE IS A CHARITABLE TRU ST FORMED TO PROMOTE EDUCATION IN THE FIELD OF INFORMATION SYSTEM/INFORMATION TECH NOLOGY AUDIT, SECURITY & CONTROL AND IT HAS BEEN GRANTED APPROVAL BY THE CIT U/S 12A A OF THE INCOME TAX ACT ON 30.07.1999. IT IS ALSO REGISTERED WITH SOCIETIES RE GISTRATION ACT 1860, AS AN EDUCATIONAL TRUST. THE LD.DIT (EXEMPTION) RECEIVED A PROPOSAL FROM THE ADIT(E)- (II) (1) MUMBAI FOR CANCELLATION OF REGISTRATION TO THE ASSESSEE U/S 12A ON THE GROUND THAT THE ASSESSEE HAS BEEN CARRYING ON ACTIV ITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS ETC, AND GROSS RECEIPTS THERE FROM ARE IN EXCESS OF RS. 10 LAKHS. ACCORDINGLY, THE LD.DIT(E) HAD SENT A SHOW C AUSE NOTICE TO THE ASSESSEE AS TO WHY REGISTRATION AS GRANTED TO IT SHOULD NOT BE WIT HDRAWN BY INVOKING THE PROVISION OF SECTION 12AA(3) OF THE ACT. THE SHOW CAUSE CONTA INED THE ACTIVITIES AS CARRIED OUT BY THE ASSESSEE WHICH WERE ALLEGED TO BE IN THE NAT URE OF TRADE, COMMERCE, ITA NO. 1276/MUM/2012 M/S. INFORMATION SYSTEMS AUDIT AND CONTROL ASSOCIATION ASSESSMENT YEAR: 2009-10 2 BUSINESS ETC. DURING THE A.Y. 2009-10. THE LD.DIT(E ) FURTHER MENTIONED IN THE JOTICE THAT THE DETAILS OF INCOME IN INCOME & EXPENDITURE ACCOUNT SHOWS THAT THE ASSESSEE HAD EARNED INCOME FROM CONFERENCE AT RS.54,13,940/- AND COURSE FEES AT RS.19,94,000/-. IN THE SHOW CAUSE, ASSESSEES ATTEN TION WAS DRAWN TOWARDS THE NEWLY INSERTED PROVISO TO SECTION 2(15) OF THE I.T. ACT, WHICH IS APPLICABLE FROM A.Y. 2009-10 ONWARDS. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE IN ITS SUBMISSION SUBMITTED THAT AFTER PLAIN READING OF THE PROVISO T O SECTION 2(15) IT IS NOT HIT BY SAID PROVISO AS THERE IS NO TRADE OR BUSINESS ACTIVITY P ERSUADED BY THE ASSOCIATION. IT FURTHER SUBMITTED THAT THE ENTIRE RECEIPTS ARE IN P URSUANCE OF ITS MAIN OBJECT OF HOLDING CONFERENCE, SEMINARS AND CURSES, AND THEREF ORE, THE PROVISO WHICH IS ADDED TO SECTION 2(15) IS NOT ATTRACTED IN ITS CASE. MERE LY BECAUSE IT RAISE FUNDS FROM CONFERENCE AND SEMINARS FROM MEMBERS AND VARIOUS OT HER ENTITIES WHO PARTICIPATED IN THESE CONFERENCES/ SEMINARS DOES NOT MEAN THAT I T IS CARRYING ON BUSINESS. IN ITS SUBMISSION, ASSESSEE HAD ALSO QUOTED THE CONTENTS O F THE CIRCULAR NO. 11/2008 DATED 19.12.2008 ISSUED BY THE CBDT. HOWEVER, HAVIN G NOT SATISFIED WITH THE REPLY OF THE ASSESSEE THE LD.DIT(E) HELD THAT THE ASSESSE E TRUST HAS BECOME NOT GENUINE FOR THE PURPOSE OF SECTION 11 OF THE ACT AND THUS T HE CANCELLED THE REGISTRATION GRANTED TO THE TRUST BY HAVING A RECOURSE TO SECTIO N 2(15) OF THE INCOME-TAX ACT. AGGRIEVED BY THE IMPUGNED DECISION, THE ASSESSEE IS IN APPEAL BEFORE US. 3. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, THE BASIC ISSUE TO BE DECIDED BY US IS WHETHER THE LD.DIT(E) IS RIGHT IN TAKING INTO CONSIDERATION OF THE AMENDMENT MADE TO SECTION 2(15 ) FOR THE PURPOSE OF CANCELLING THE REGISTRATION U/S 12AA OF THE ACT. IN THIS CONNE CTION, IT IS RELEVANT TO STATE THAT IT CAN BE SEEN FROM THE DEFINITION IN SECTION 2(15), T HE PROVISION IS ONLY WITH REFERENCE TO CARRYING ON ANY ACTIVITIES IN THE NATURE OF TRAD E, COMMERCE OR BUSINESS WITH REFERENCE TO ADVANCEMENT ANY OTHER OBJECT OF GENER AL PUBLIC UTILITY, WHEREAS RELIEF OF THE POOR EDUCATIONAL, MEDICAL RELIEF ARE SPECIFI CALLY STATED IN THE DEFINITION WHICH ARE NOT INCLUDED IN THE EXPRESSION ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. SINCE THE PROVISO DOES NOT APPLY T O THE ACTIVITIES OF EDUCATION, THE RELIANCE BY THE DIT(E) ON THE ABOVE AMENDMENT DOES NOT SUPPORT THE CASE OF THE DIT(E), FOR THE REASON THAT PRIMARY PURPOSE OF THE SOCIETY IS TO PROMOTE THE PROFESSION AND EDUCATION RELATING TO THE PROVISION IN THE FIELD OF IT GOVERNANCE, ITA NO. 1276/MUM/2012 M/S. INFORMATION SYSTEMS AUDIT AND CONTROL ASSOCIATION ASSESSMENT YEAR: 2009-10 3 INFORMATION SYSTEM/ INFORMATION TECHNOLOGY AUDIT, S ECURITY AND CONTROL. THE SAID PRIMARY OBJECT IN OUR VIEW FALLS WITH THE EXPRESSIO N EDUCATION AS APPEARING IN THE DEFINITION OF CHARITABLE PURPOSE U/S 2(15). THE ACT IVITIES UNDERTAKEN BY THE ASSESSEE, NAMELY, THE COLLECTION OF CHARGES IS FOR CONDUCTING THE CONFERENCES, SEMINAR, MEMBERSHIP FEES, CERTIFICATION FEES, FOR THE PURPOS E OF ADVANCEMENT OF THE OBJECTS OF THE ASSESSEES ASSOCIATION, WHICH IN OUR VIEW, C ANNOT BE VIEWED AS CONSIDERATION FOR SERVICES RENDERED IN NATURE OF TRADE COMMERCE O R BUSINESS. MOREOVER, THE REGISTRATION GRANTED OF THE SECTION 12AA CAN ONLY B E WITHDRAWN WHEN THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF TH E TRUST/INSTITUTION ARE NOT GENUINE OR THE ACTIVITIES OF THE ASSESSEE ARE NOT BEING CARRIE D OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR THE INSTITUTION. THERE CANN OT BE ANY OTHER LEGALLY SUSTAINABLE REASONS FOR CANCELLING OR WITHDRAWING THE REGISTRAT ION GRANTED U/S 12AA. BY NO STRETCH OF LOGIC, THE ACTIVITIES OF THE ASSESSEE CO ULD BE SAID TO BE NOT GENUINE AS THE ASSESSEE IS ADMITTEDLY PURSUING THE OBJECTS FOR WHI CH THE INSTITUTION HAS BEEN ESTABLISHED. WHEN THE ASSESSEE IS ENGAGED IN BONA F IDE ACTIVITIES WITHIN THE FRAMEWORK OF ITS MEMORANDUM OF ASSOCIATION TO PURSU E ITS OBJECTS, IT CANNOT BE SAID THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE . IT IS ALSO RELEVANT THAT THE LD.DIT (E) HAS NOT BROUGHT ON RECORD ANY MATERIAL TO DEMON STRATE THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT BEING CARRIED OUT IN ACCORDANCE WI TH THE OBJECTS OF THE TRUST. AS REGARDS THE ALLEGATION OF THE LD.DIT(E) THAT THE AS SESSEE IS RECEIVING INCOME IN RESPECT OF COMMERCIAL EXPLOITATION OF THE PROPERTY IN A SYSTEMATIC MANNER WHICH IS NOTHING BUT A BUSINESS INCOME, IT IS RELEVANT TO ST ATE THAT THE SAID FINDING, IN OUR VIEW, IS NOT CORRECT AS THE BALANCE SHEET OF THE AS SESSEE AVAILABLE AT PAGE NO. 21 OF THE PAPER BOOK REVEALS THAT THE ASSESSEES TRUST DO ES NOT POSSESS ANY IMMOVABLE PROPERTY. CONSIDERING THE ENTIRETY OF FACTS, THE WI THDRAWAL OF THE REGISTRATION GRANTED U/S 12AA CANNOT BE SUSTAINED AND HENCE THE SAID ORD ER OF THE LD.DIT(E) STANDS QUASHED. 3. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF AUGUST, 2014. SD/- SD/- (N.K. BILLAIYA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA NO. 1276/MUM/2012 M/S. INFORMATION SYSTEMS AUDIT AND CONTROL ASSOCIATION ASSESSMENT YEAR: 2009-10 4 MUMBAI, DATED: 27.08.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR I BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.