Shishu Suchinta Educational Society, Mohali V. CIT II, Chandigarh

ITA 1326/CHANDI/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77179 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-07-2014
• Assessment Year: misc
• Appeal Filed On: 21-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H C NEGI
• Keywords: Question of law
• Section: 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1326 /CHD/2012 UNDER SECTION 12AA SHISHU SUCHINTA EDUCATIONAL SOCIETY, VS. THE C.I. T-II, HOUSE NO.16, PHASE 2, CHANDIGARH. MOHALI. PAN: AALTS5161R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI H.C.NEGI, DR DATE OF HEARING : 01.07.2014 DATE OF PRONOUNCEMENT : 15.07.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX-II, CHANDIGARH DATED 29. 10.2012 AGAINST THE ORDER PASSED UNDER SECTION 12AA OF INCOME TAX A CT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL : 1. THAT THE LD. COMMISSIONER OF INCOME TAX HAS ERR ED IN LAW AS WELL AS ON FACTS IN REJECTING REGISTRATION UNDER SECTION 12 AA OF THE ACT WHICH IS ARBITRARY & UNJUSTIFIED. 2. THAT THE LD. COMMISSIONER OF INCOME TAX HAS ERRE D IN OBSERVING THAT THE ASSESSEE SOCIETY HAS NOT CARRIED OUT/STARTED AN Y ACTIVITY WHICH IS UNFOUNDED, WITHOUT ANY BASIS AND AS SUCH THE ORDER IS ARBITRARY AND UNJUSTIFIED. 3. THAT THE REGISTRATION HAS BEEN REFUSED ONLY ON T HE BASIS OF SUSPICION, CONJECTURES AND SURMISES WHICH IS NOT PERMITTED UND ER THE LAW AND AS SUCH THE ORDER REFUSING REGISTRATION IS ILLEGAL, AR BITRARY AND UNJUSTIFIED. 2 3. THE LEARNED A.R. FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE IN THE PRESENT APPEAL IS COVERED BY THE ORDER OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SISTER C ONCERN AND THE ISSUE BEING IDENTICAL, THE ASSESSEE IS ENTITLED TO THE CL AIM OF REGISTRATION UNDER SECTION 12A OF THE ACT. 4. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE COMMISSIONER OF INCOME TAX-II, CHANDIGARH. 5. THE BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESS EE HAD FILED APPLICATION FOR REGISTRATION UNDER SECTION 12A OF T HE ACT ON 24.4.2012. THE ASSESSEE SOCIETY WAS REGISTERED UNDER THE SOCIE TIES REGISTRATION ACT, 1860 WITH THE ADDITIONAL REGISTRAR OF SOCIETIE S, SAS NAGAR,, MOHALI VIDE CERTIFICATION DATED 22..2.2012. THE BASIC OBJECTIVE OF THE SOCIETY WAS TO IMPART EDUCATION TO ALL AS MENTIONED IN THE MEMORANDUM OF ASSOCIATION. THE CIT NOTED THAT THE SHISHU NIKE TAN MODEL SCHOOL, AN EXISTING SOCIETY ALREADY REGISTERED UNDER SECTIO N 12AA SINCE 1968 HAD BEEN RUNNING FOUR SCHOOLS, TWO IN CHANDIGARH, O NE IN MOHALI AND ONE IN PANCHKULA. THE NEW SOCIETY (THE ASSESSEE) PROPOSED TO TAKE ON LEASE THE MANAGEMENT OF EXISTING SCHOOL AT MOHALI T O BE RUN ON DAY TO DAY BASIS. THE ASSESSEE DID NOT FURNISH ANY ACCOU NT BUT HAD FURNISHED BALANCE SHEET AND INCOME AND EXPENDITURE OF THE EXI STING SHISHU NIKETAN SCHOOL, MOHALI ALONGWITH RETURN SUBMISSIONS BEFORE THE CIT. THE CIT VIDE PARA 3.2 OBSERVED AS UNDER: 3.2. FROM THE NOTE ON ACTIVITIES FURNISHED, IT IS N OTED THAT THE APPLICANT SOCIETY WOULD TAKE ON LEASE THE EXISTING SCHOOL AT MOHALI BEING R UN BY SHISHU NIKETAN SCHOOL SOCIETY. THE APPLICANT SOCIETY HAS NOT YET TAKEN OVER THE SC HOOL ON LEASE MEANING THEREBY THAT NO ACTIVITIES HAVE YET BEEN CARRIED OUT. WHEN CONFR ONTED, THE COUNSEL OF THE SOCIETY FILED ANOTHER REPLY ON 19.10.2012 STATING THAT THE APPLICANT SOCIETY IS TAKING EVENING CLASSES FOR POOR AND WEAK STUDENTS IN THE PREMISES OF SHISHU NIKETAN SCHOOL, MOHALI. BALANCE SHEET AND INCOME & EXPENDITURE ACCOUNT FOR THE YEAR ENDING 31.03.2012 HAVE 3 ALSO BEEN FILED. PERUSAL OF BALANCE SHEET AND INCOM E & EXPENDITURE ACCOUNT SHOWS THAT CORPUS FUND OF RS.5000/- HAS BEEN SHOWN IN THE BALANCE SHEET. NO RECEIPTS HAVE BEEN SHOWN AND AN EXPENDITURE OF RS. 1520/- HAS BEE N DEBITED IN THE INCOME & EXPENDITURE ACCOUNT. NO PROOF, HOWEVER, WITH REGARD TO THE CLAIM REGARDING RUNNING OF EVENING CLASSES AND EXPENSES DEBITED TO THE INCOME & EXPENDITURE ACCOUNT HAS BEEN FURNISHED. 6. THE CIT DENIED THE REGISTRATION TO THE ASSESSEE UNDER SECTION 12AA OF THE ACT OBSERVING AS UNDER: 4.1 FROM THE WRITTEN SUBMISSION AND DOCUMENTS FURN ISHED BY THE COUNSEL OF THE APPLICANT SOCIETY, IT IS SEEN TH AT THE SOCIETY IS ONLY IN THE PRELIMINARY STAGE OF MAKING AN APPLICAT ION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT AND IS Y ET TO REACH THE SECONDARY STAGE OF HAVING STARTED CHARITABLE AC TIVITIES SO AS TO ENABLE THE COMMISSIONER TO COME TO THE CONCLUSIO N THAT THE ACTIVITIES CARRIED OUT BY IT ARE GENUINE AND IN ACC ORDANCE WITH ITS OBJECTIVES. THE HONBLE KERALA HIGH COURT, IN I TS DECISION IN SELF EMPLOYERS SERVICE SOCIETY VS COMMISSIONER OF I NCOME TAX, 247 ITR 18 HAS HELD THAT TO GRANT REGISTRATION UND ER SECTION 12AA, THE CIT SHOULD INSIST THAT THE SOCIETY HAS DO NE CHARITABLE WORK DURING THE FIRST YEAR OF ITS OPERATION ITSELF. WHEN THE CIT EXERCISES HAS JURISDICTION UNDER SECTION 12AA WHILE CONSIDERING AN APPLICATION FOR REGISTRATION UNDER SECTION 12AA, HE HAS TO BE SATISFIED OF THE CHARITABLE AND RELIGIOUS NATURE OF THE OBJECTS AND GENUINENESS OF THE ACTIVITIES OF THE TRUST OR I NSTITUTION. IN THE PRESENT CASE, ADMITTEDLY, THE SOCIETY HAS NOT D ONE ANY CHARITABLE WORK DURING THE RELEVANT PERIOD. THERE W ERE NO MATERIALS BEFORE THE COMMISSIONER TO BE SATISFIED O F THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTI TUTION. 4.2. IT IS SEEN THAT THE SOCIETY HAS BEEN FORMED BU T NO ACTIVITY HAS BEEN STARTED EVEN UPTO THE DATE OF CLOSURE OF P RESENT PROCEEDINGS. IN THE ABSENCE OF ANY ACTIVITIES, THER E IS NO MATERIAL BEFORE THE UNDERSIGNED TO VERIFY THE GENUI NENESS OF OBJECTS AND ACTIVITIES OF THE SOCIETY. IN VIEW OF T HE FACTS DISCUSSED ABOVE, THE APPLICANT SOCIETY IS NOT ELIGI BLE AT THE STAGE FOR GRANT OF REGISTRATION UNDER SECTION 12AA ACT BEING NO ACTIVITY IN THE NATURE OF CHARITABLE ACTIVITY HAVIN G BEEN CARRIED OUT SINCE ITS INCEPTION. THE APPLICATION OF THE SOC IETY FOR REGISTRATION UNDER SECTION 12AA OF THE ACT IS, THER EFORE, REJECTED. THE SOCIETY MAY HOWEVER, APPLY AGAIN AFTE R CARRYING OUT CHARITABLE ACTIVITIES TO MEET OUT ITS OBJECTIVE S . 7. WE FIND THAT SIMILAR ISSUE OF GRANT OF REGISTRAT ION UNDER SECTION 12AA OF THE ACT TO SISTER CONCERN I.E. SUCHINTA EDU CATION SOCIETY WHERE THE SAID SOCIETY PROPOSED TO TAKE OVER ONE OF THE S CHOOL BEING RUN BY SHISHU NIKETAN MODEL SCHOOL, AROSE BEFORE THE TRIBU NAL IN ITA 4 NO.1339/CHD/2012 AND VIDE ORDER DATED 24.5.2013, TH E SAME WAS REFUSED TO THE ASSESSEE. HOWEVER, THE HON'BLE PUN JAB & HARYANA HIGH COURT IN ITA NO 263 OF 2013 VIDE DECISION DATED 28. 4.2014 HELD AS UNDER: HAVING HEARD LEARNED COUNSEL FOR THE PANICS, WE FI ND THAT IN THE JUDGMENT REFERRED TO BY LEARNED COUNSEL FOR THE RESPONDENT, THE SOCIETY IN QUESTION HAD NOT DONE ANY CHARITABLE WORK. THE ACTIVITIES CARRIED ON WERE FOUND TO BE ONLY FOR THE PURPOSE OF GENERATING INCOME FOR ITS MEMBERS. THERE FORE, IT IS NOT A CASE WHERE THE ACTIVITIES, WHICH WERE YET TO BE STARTED, WERE FOUND TO BE IN-GENUINE. IT COULD NOT BE DISPUTED THAT RUNNING OF A SCHOOL FALLS WITH IN THE SCOPE OF ACTIVITIES FOR WHICH REGISTRATION CAN BE GRANTED UNDER SECTION 12A A OF THE ACT. IN FACT, THE SIMILAR ACTIVITIES CARRIED OUT BY SHISHU NIKETAN MO DEL SCHOOL HAVE BEEN GRANTED REGISTRATION, WHICH IS RUNNING FOUR INSTITUTIONS. T HE SOCIETY HAS BEEN ESTABLISHED TO MANAGE ONE OF SUCH SCHOOLS. THERE CANNOT BE ANY ATTEMPT OF THE ASSESSEE TO EVADE TAX LIABILITY, AS SHISHU NIKTAN MODEL SCHOOL HAS BEEN GRANTED REGISTRATION AND AVAILING THE BENEFIT OF TAX. IN VIEW OF THE ABOVE, WE FIND THAT THE ORDERS OF THE COMMISSIONER OF INCOME TAX AND THAT OF THE TRIBUNAL IN DECLINING TH E REGISTRATION TO THE APPELLANT ARE NOT SUSTAINABLE IN LAW. CONSEQUENTLY, WHILE ANSWERING THE SUBSTANTIAL QUESTION OF LAW IN FAVOUR OF THE APPELL ANT, THE PRESENT APPEAL IS ALLOWED. 8. THE ISSUE ARISING BEFORE US IS IDENTICAL TO THE ISSUE BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT AND FOLLOWING T HE RATIO LAID DOWN BY THE HON'BLE HIGH COURT WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE REGISTRATION UNDER SECTION 12AA OF THE ACT. THE GR OUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JULY, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 15 TH JULY, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH