VIPS Educational Society, Hyderabad V. DIT (Exemptions), Hyderabad

ITA 1332/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74759 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 04-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: A V RAGHURAM
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1332/HYD/2013 ASSESSMENT YEAR 2013-14. VIPS EDUCATIONAL SOCIETY, -V- DIT (EX EMPTIONS), HYDERABAD. HYDERABAD. HYDERABAD. PAN:AAAAV9144K (APPELLANT) (RESPONDENT) APPELLANT BY SHRI A.V. RAGHU RA M RESPONDENT BY SHRI P. SOMASEKHAR R EDDY DATE OF HEARING 12-02-2014 DATE OF PRONOUNCEMENT 21-03-2014 ORDER PER SAKTIJIT DEY, J.M: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31-7-2013 PASSED BY THE DIT (E), HYDERABAD REJECT ING ASSESSEES APPLICATION FOR GRANT OF REGISTRATION U/S 12A O F THE ACT. 2. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A SOCIETY CREATED ON 23-2-2001 AND REGISTERED UNDER THE AP SOCI ETIES REGISTRATION ACT, 2001 WITH EFFECT FROM 26-8-2004. A S PER THE BYE LAW OF THE SOCIETY IT WAS CREATED WITH THE MAIN OB JECT OF 2 ITA NO.1332 OF 2013 VI PS EDUCATIONAL SOCIETY, HYD. IMPARTING EDUCATION TO NEEDY CHILDREN. FOR THIS PURPO SE, THE SOCIETY HAS ESTABLISHED TWO SCHOOLS, ONE AT SHAHEEN NAGAR AND ANOTHER AT SAIDABAD. THE SOCIETY APPLIED IN THE PRESCR IBED MANNER BEFORE THE DIT (E) FOR GRANT OF REGISTRATION U/S 12A OF THE ACT ON 18-1-2013. IN COURSE OF PROCEEDING BEFORE T HE DIT (E), THE SOCIETY FURNISHED INFORMATION AND DOCUMENTS AS CA LLED UPON BY HIM. THE DIT (E) AFTER EXAMINING THE DOCUME NTS AND INFORMATION SUBMITTED BY THE SOCIETY REFUSED TO GRANT REGISTRATION DUE TO THE FOLLOWING REASONS:- 1. THE DATE OF CREATION OF THE SOCIETY AS MENTIONED IN COL. 4 OF APPLICATION IN FORM NO.10A IS 23-2-2011, WHEREAS AS PER THE CERTIFICATE OF REGISTRATION UNDER A.P. SOCIETIES REGISTRATION ACT, 2001 IT IS 26-8- 2004. THEREFORE, ACTUAL DATE AND YEAR OF CREATION OF SOCIETY IS NEITHER KNOWN NOR VERIFIABLE. 2. IN THE BALANCE SHEET AS AT 31-3-2012 OF SHAHEEN NAGAR SCHOOL AN AMOUNT OF RS.40,76,000/- IS SHOWN AS REFUNDABLE ADVANCE FROM STUDENTS UNDER CURRENT LIABILITIES. FROM THE BREAKUP OF THE SAME, IT WAS NOTICED THAT OPENING BALANCE UNDER THAT HEAD AS ON 1-4-2011, WAS SHOWN AT RS.26.90 LAKHS. THE SOCIETY RECEIVED AN AMOUNT OF RS.16.66 LAKHS DURING THE FINANCIAL YEAR 2011 AND AN AMOUNT OF RS.2.80 LAKHS WAS REFUNDED TO STUDENTS DURING SAME FINANCIAL YEAR LEAVING THE CLOSING BALANCE OF RS.46.76 LAKHS. 3. THE AMOUNT OF RS.4,24,700 ADVANCED TO MRS. UNNISHA KHAN STATED TO BE FOR MEETING THE OPERATIONAL EXPENSES OF CHARMINAR SCHOOL IS A LOAN GIVEN OUT OF THE PROFIT EARNED BY THE SOCIETY FROM VIPS INTERNATIONAL SCHOOL, SINCE CHARMINAR SCHOOL WAS RUN BY A DIFFERENT ORGANISATION AND ENTITY AT THE RELEVANT TIME. 3 ITA NO.1332 OF 2013 VI PS EDUCATIONAL SOCIETY, HYD. 4. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES, PERUSED THE MATERIALS ON RECORD. SO FAR AS THE FIRST REASON FO R REJECTING APPLICATION FOR REGISTRATION IS CONCERNED, IN OUR VIEW, IT IS TOTALLY IRRELEVANT. IN THE MEMORANDUM AND BYE LAW OF THE SOCI ETY, A COPY OF WHICH IS AT PAGE 5 OF THE PAPER BOOK, THE DATE OF CREATION OF THE TRUST IS CLEARLY MENTIONED AS 23-2-200 1. THE CONCERNED RECORD PRODUCED BY THE LEARNED DR AT THE TIME OF HEARING ALSO REVEALS THAT IN THE ORIGINAL APPLICATION FILED IN FORM 10A BEFORE THE DIT (E) THE DATE OF CREATION OF TRUST IS MENTIONED AS 23-2-2001 (WRONGLY MENTIONED BY DIT (E ) AS 23-2-2011 AS ACKNOWLEDGED BY LEARNED DR). THE CERTIFI CATE OF REGISTRATION WAS ISSUED BY THE REGISTRAR OF SOCIETIES, RA NGA REDDY DISTRICT ON 26-8-2004. WE DO NOT FIND ANY AMBI GUITY OR DOUBT WITH REGARD TO DATE AND YEAR OF CREATION OF TH E SOCIETY. THEREFORE, THIS CANNOT BE A GROUND TO REJECT THE APPLI CATION FOR REGISTRATION. 5. THE SECOND GROUND ON WHICH THE DIT (E) HAS REFUSED TO GRANT REGISTRATION IS, THE ASSESSEE HAS COLLECTED HUGE AMO UNT OF MONEY FROM STUDENTS AT THE TIME OF ADMISSION. THE LEAR NED AR HAS CONTENDED BEFORE US THAT ONLY FOR THE PURPOSE OF HE LPING THE PARENTS OF NEEDY CHILDREN THE SOCIETY HAS INTRODUCED A SCHEME UNDER WHICH A REFUNDABLE ADVANCE WAS KEPT FROM T HE STUDENTS WHICH IS REFUNDED BACK TO THEM WHEN THEY LEA VE THE SCHOOL AFTER COMPLETING THEIR STUDIES OR OTHERWISE. IT W AS SUBMITTED THAT WHAT THE SOCIETY ACTUALLY EARNS AS INCOME I S INTEREST ON SUCH REFUNDABLE ADVANCE, EVEN WHICH IN ANY E VENT WILL NOT EXCEED ABOUT RS.12,000 TO RS.15,000 A YEAR. THE LEARNED AR SUBMITTED THAT THIS IS PURELY IN KEEPING WITH THE 4 ITA NO.1332 OF 2013 VI PS EDUCATIONAL SOCIETY, HYD. ASSESSEES OBJECT OF IMPARTING EDUCATION TO NEEDY CHILDREN. TO SUBSTANTIATE HIS CLAIM LEARNED AR HAS ALSO SUBMITTED COPY O F THE LEDGER ACCOUNT SHOWING REFUND OF ADVANCES TO STUDENTS. HAVING HEARD THE PARTIES VIS-A-VIS THE MATERIALS ON RECOR D WE ARE OF THE VIEW THAT DIT (E) HAS FORMED AN OPINION W ITHOUT PROPERLY EXAMINING THE CONTENTIONS OF THE ASSESSEE AS WELL AS MATERIALS PLACED BEFORE HIM. THE DIT (E) HAS HIMSELF N OTED THAT THE ASSESSEE HAS SHOWN THE ADVANCE AS CURRENT LIABILIT Y IN THE BALANCE-SHEET. THE DIT (E) ALSO DOES NOT DISPUTE T HAT THE PRIMARY OBJECT OF THE ASSESSEE IS IMPARTING EDUCATION TO N EEDY CHILDREN. SUCH OBJECT CERTAINLY COMES WITHIN THE MEANIN G OF CHARITABLE PURPOSE AS CONTAINED IN SEC. 2(15) OF THE ACT . ASSESSEE, ALL ALONG HAS BEEN CLAIMING THAT MONEY COLLECTED IS REFUNDED BACK TO THE STUDENTS WHEN THEY LEAVE THE SCHOOL . IF THAT IS THE CASE, THEN IT CANNOT BE SAID THAT THE SOCIETY IS COLLECTING HUGE MONEY FROM THE STUDENTS AT THE TIME OF ADMISSION IN VIOLATION OF ITS PRIMARY OBJECT. THEREF ORE, WE DIRECT THE DIT (E) TO VERIFY WHETHER ACTUALLY THE AMO UNT COLLECTED FROM THE STUDENTS WERE REFUNDED TO THE STUDENT S WHEN THEY LEAVE THE SCHOOL AFTER COMPLETING THEIR STUD IES OR OTHERWISE. IF ON VERIFICATION THE CLAIM IS FOUND TO BE CORRECT, REGISTRATION CANNOT BE REFUSED TO THE SOCIETY FOR COLLECT ING THE REFUNDABLE ADVANCE. 6. SO FAR AS THE THIRD ISSUE OF ADVANCING OF AN AMOUNT OF RS.4,24,700 TO MRS. UNNISSA KHAN FOR MEETING OPERATIONA L EXPENSES OF CHARMINAR SCHOOL IS CONCERNED, IT IS CONTENTION OF THE LEARNED AR THAT THE SOCIETY HAS TAKEN OVER THAT SCHO OL. WE THEREFORE DIRECT THE DIT (E) TO VERIFY THIS FACT AND I F THE CLAIM 5 ITA NO.1332 OF 2013 VI PS EDUCATIONAL SOCIETY, HYD. IS FOUND TO BE CORRECT THEN IT CANNOT BE CONSIDERED TO B E A GROUND FOR REJECTING THE APPLICATION FOR REGISTRATION U/S 12A OF THE ACT. WE THEREFORE REMIT THE ISSUE BACK TO THE FILE OF DIT (E) TO DECIDE AFRESH IN TERMS WITH OUR DIRECTION HEREINABOV E. THE APPELLANT MUST BE GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER. 7. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 21-03-2014. SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER SD/- (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 21 ST MARCH, 2014. JMR* COPY FORWARDED TO: 1. C/OS/ SRI VASANTKUMAR, A.V. RAGHU RAM & P. VINOD, ADVOCATES, FLAT NO.610, 6 TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD. 2. DIT (EXEMPTIONS), HYDERABAD. 3. DR, INCOME-TAX APPELLATE TRIBUNAL, HYDERABAD. 6 ITA NO.1332 OF 2013 VI PS EDUCATIONAL SOCIETY, HYD. COPY TO:- 1) ITO, WARD-2, AAYAKAR BHAVAN, BEHIND KINNERASANI THEATRE, KHAMMAM. 7 ITA NO.1332 OF 2013 VI PS EDUCATIONAL SOCIETY, HYD. 2) SRI B. VENUGOPAL REDDY (HUF), DOOR NO.5-1- 13/2, KAIRAJ NAGAR, KHAMMAM. 3) CIT(A), VIJAYAWADA. 4) CIT, VIJAYAWADA. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.