Swarna Jayanti Haryana Institute for Fiscal Management, Panchkula V. CIT(E), Chandigarh

ITA 1372/CHANDI/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5328 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-05-2021
• Assessment Year: misc
• Appeal Filed On: 18-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12A; 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH B, CHANDIGARH (VIRTUAL COURT) .., ! '# .. , $ %& BEFORE: SHRI. N.K.SAINI, VP & SHRI R.L. NEGI, JM ./ ITA NO. 1372/CHD/2019 / ASSESSMENT YEAR : SWARNA JAYANTI HARYANA INSTITUTE FOR FISCAL MANAGEMENT, BAYS NO. 21-28, YOJANA BHAWAN, SEC.-4, PANCHKULA-134112, HARYANA. THE COMMISSIONER OF INCOME TAX (EXEMPTION), CHANDIGARH. ./ PAN NO: AAYAS 7408 M / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI HARISH NAYYAR, C.A. # ! ' / REVENUE BY : SHRI SANDIP DAHIYA (CIT-DR) $ % ! &/ DATE OF HEARING : 04/05/2021 '()* ! &/ DATE OF PRONOUNCEMENT : 05/05/2021 %'/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 28/08/2019 OF LD. CIT(E), CHANDIGARH. THE ASSESSEE HAS RAISED FOL LOWING GROUNDS OF APPEAL: 1. THAT THE ORDERS OF CIT(EXEMPTIONS), CHANDIGARH HAVE B EEN PASSED IN HASTE AND HAVE IGNORED BASIC ASPECTS AND FACTS OF THE C ASE THUS CAUSING UNDUE HARDSHIP TO THE APPELLANT. 2. THAT THE CIT(EXEMPTIONS), CHANDIGARH HAS ERRED BOTH ON FACTS AND LAW IN REJECTING THE APPLICATION FILED UNDER SECTION 12A OF THE INCOME TAX ACT, 1961 AND DENYING TO THE APPELLANT ITS RI GHT TO SEEK REGISTRATION UNDER SECTION 12A OF THE INCOME TAX ACT. 3. THAT THE CIT(EXEMPTIONS), CHANDIGARH HAS ERRED BOTH ON FACTS AND LAW IN HOLDING THAT THE OBJECTIVES OF THE APPELLANT ARE NOT CHARITABLE 2 ITA 1372/CHD/2019_M/S SWARNA JAYANTI HARYANA INSTITUTE FOR FISCAL MANAGEMENT VS CIT(E) IN NATURE AS NO CHARITY IS INVOLVED IN IMPLEMENTATION OF WELFARE SCHEMES OF THE GOVERNMENT. 4. THAT THE CIT(EXEMPTIONS),CHANDIGARH HAS ERRED BOTH ON FACTS AND LAW IN HOLDING THAT THE OPERATION OF THE SOCIETY DO NOT G ET COVERED UNDER ANY OF THE LIMBS SPECIFIED UNDER SECTION 2(15) OF THE INCOME TAX ACT. 5. THAT THE APPELLANT CARVES TO ADD, DELETE, CONCEDE, M ODIFY ANY OR ALL THE GROUNDS OF APPEAL AT THE TIME OF HEARING OF APPEAL. 2. FROM THE AFORESAID GROUNDS, IT WOULD BE CLEAR TH AT THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO REJECTION OF APPLICATION MOVED FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS, THE ACT) BY PASSING THE IMPUGNED ORDER IN HASTE, IGNORI NG THE BASIC ASPECTS CAUSING HARDSHIP TO THE ASSESSEE. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FURNISHED AN APPLICATION IN FORM NO. 10A ON 25/02/2019 FOR REGISTRATION U/S 12A OF THE ACT BEFORE THE LD. CIT(E), WHO OBSERVED THAT THE MAIN OBJECTS OF THE A SSESSEE ARE TO ACT AS A FIRST POINT OF REFERENCE TO THE STATE GOVERNMENT FOR ECON OMIC ANALYSIS AND POLICY ADVICE, TO PROVIDE NECESSARY PHYSICAL INFRASTRUCTUR E AND MANAGERIAL RESOURCES, TO DEVELOP BEST PRACTICE ACROSS THE STATE IN THE AR EA OF SDG (SUSTAINABLE DEVELOPMENT GOALS) MANAGEMENT, FISCAL AND FINANCE, HELPING THE STATE GOVERNMENT TO IMPLEMENT ACCRUAL ACCOUNTING AS RECOM MENDED BY THE 12 TH FINANCE COMMISSION AND STRENGTHENING FINANCIAL MANA GEMENT IN THE STATE, TO ORGANIZE AND PROVIDE STRUCTURED TRAINING AND RESEAR CH PROGRAMME INCLUDING REFRESHER COURSE FOR GOVERNMENT OFFICERS/OFFICIALS IN THE AREA OF SDG STRATEGY AND ACTION PLANS, PUBLIC FINANCE, POLICY, FINANCIAL MAN AGEMENT AND FINANCIAL ADMINISTRATION WITH SPECIFIC FOCUS ON TAXATION, BUD GETING, FINANCIAL PLANNING, AUDIT AND ACCOUNT MANAGEMENT PROCEDURES AND POLICY ISSUES ETC. THE LD. CIT(E) ASKED THE ASSESSEE TO PROVIDE CERTAIN DOCUME NTS/CLARIFICATIONS WHICH 3 ITA 1372/CHD/2019_M/S SWARNA JAYANTI HARYANA INSTITUTE FOR FISCAL MANAGEMENT VS CIT(E) HAVE BEEN MENTIONED IN PARA 5 OF THE IMPUGNED ORDER , FOR THE COST OF REPETITION, THE SAME ARE NOT REPRODUCED HEREIN. 4. IN RESPONSE, THE ASSESSEE FURNISHED THE REPLY ON 21/05/2019 AND CLAIMED THAT ITS OPERATIONS FALL UNDER THE LIMB ADVANCEMEN T OF OTHER OBJECTS OF GENERAL PUBLIC UTILITY OF SECTION 2(15) OF THE ACT AND ALS O SUBMITTED THAT THE ASSESSEE SOCIETY WAS TO DEVELOP BEST PRACTICE IN THE STATE O F HARYANA AND TO PROVIDE NECESSARY INFRASTRUCTURE AND MANAGERIAL RESOURCES AND TO ALL OTHER ANCILLARY ACTIVITIES OF SDG AND THE ACTIVITIES OF THE ASSESSE E SOCIETY WERE ORIENTED TOWARDS ACHIEVEMENT OF ITS OBJECTS OF ALLEVIATION OF POVERT Y AND PRESERVATION OF ENVIRONMENT, THUS ITS OBJECTS WERE CHARITABLE IN NA TURE AS LAID DOWN U/S 2(15) OF THE ACT. 5. HOWEVER, THE LD. CIT(E) WAS OF THE VIEW THAT THE OPERATIONS OF THE ASSESSEE SOCIETY DID NOT DISSEMINATE ANY DIRECT BENEFITS ACC RUING TO THE PREDOMINANT SECTION AMONGST THE GENERAL PUBLIC. THUS, IT WAS NO T CONSTRUED IN A WAY THAT WOULD ENSURE TO THE BENEFIT OF GENERAL PUBLIC AT LA RGE. HE ALSO DISCUSSED THE MEMORANDUM OF AGREEMENT ENTERED INTO BY THE ASSESSE E WITH THE UNITED NATIONS DEVELOPMENT PROGRAMME (UNDP) FOR IMPLEMENTA TION OF A GOVERNMENT PROJECT IN HARYANA. 6. THE LD. CIT(E) HELD THAT THE ASSESSEE IS AN AGEN CY WHICH HAS OUTSOURCED A SPECIFIC PROJECT I.E. SDG VISION 2030 TO THE UNDP O N BEHALF OF THE HARYANA GOVERNMENT AND THERE WAS NO ACTIVITY WHICH WAS BEIN G DONE BY THE ASSESSEE SOCIETY. HE ALSO OBSERVED THAT UNDP WAS CHARGING FO R IMPLEMENTATION OF THE PROGRAMMES WHICH WERE FACILITATED BY IT TO THE ASSE SSEE SOCIETY AND THAT THE FUNDS RECEIVED BY THE ASSESSEE SOCIETY WERE OF THE GOVERNMENT WHICH WERE BEING SPENT TOWARDS A SPECIFIC PROJECT THROUGH A TH IRD PARTY (UNDP) AND THAT THE THIRD PARTY WAS CHARGING FOR THE PROJECT IMPLEM ENTATION, SO THERE WAS NO RATIONAL AS TO HOW THIS ARRANGEMENT COULD HAVE BEEN CALLED, COVERED UNDER 4 ITA 1372/CHD/2019_M/S SWARNA JAYANTI HARYANA INSTITUTE FOR FISCAL MANAGEMENT VS CIT(E) CHARITABLE PURPOSE AS PER THE INCOME TAX ACT. THE LD. CIT(E) ALSO ASKED THE ASSESSEE TO FURNISH DETAILS OF EXPENSES CLAIMED BY IT IN ITS INCOME & EXPENDITURE ACCOUNT. 7. IN RESPONSE, THE ASSESSEE SUBMITTED THAT THE EXP ENSES, UNDER THE HEAD PROFESSIONAL SERVICES COMPRISED OF THE PAYMENTS M ADE TO UNDP FOR ACHIEVEMENT OF SDG (SUSTAINABLE DEVELOPMENT GOALS) IN THE STATE OF HARYANA AND THE OTHER EXPENDITURES WERE ITS ROUTINE EXPENDI TURES. HOWEVER, THE LD. CIT(E) DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESS EE AND REJECTED THE APPLICATION MOVED BY THE ASSESSEE BY OBSERVING AS UNDER:] IT IS CLEAR FROM THE ABOVE THAT MAIN EXPENSE HAS BEEN IN CURRED ONLY FOR PROFESSIONAL SERVICES THAT DO NOT GET COVERED UNDER A NY LIMB OF SECTION 2(15) OF THE ACT. THERE IS NO EXPENSE THAT HAS BEEN SHOWN WHICH COU LD QUALIFY AS UTILIZATION FOR CHARITABLE PURPOSES SINCE THE INCEPTION OF THE SOC IETY. GIVEN THE ABOVE, IT IS SAFE TO CONCLUDE THAT THE SOCIETY IS NOT INVOLVED IN ANY CHARITABLE WORK. 10. MOREOVER, SOCIETY'S STATED OBJECTS ARE OF THE NA TURE OF AN IMPLEMENTING AGENCY FOR GOVERNMENT PROJECT THAT CANNOT BE ACCORDED THE VISAGE OF BEING CHARITABLE. SOME OF THE OBJECTS OF THE SOCIETY ARE ST ATED AS UNDER:- 1. TO ACT AS A FIRST POINT OF REFERENCE TO THE STATE G OVERNMENT FOR ECONOMIC ANALYSIS AND POLICY ADVICE; 2. TO HELP THE STATE GOVERNMENT TO IMPLEMENT ACCRUAL A CCOUNTING AS RECOMMENDED BY THE TWELFTH FINANCE COMMISSION AND STRENGTHENING FI NANCIAL MANAGEMENT IN THE STATE. 3. TO UNDERTAKE AND PROMOTE RESEARCH/CONSULTANCY STU DIES IN FIELD OF SDG TARGETS SET UNDER SDG VISION 2030, ACCOUNTING, AUDIT, FINANCIAL AND FISCAL MANAGEMENT AND RELATED SUBJECT FOR IMMEDIATE ADVANTAGE TO STATE. THE OBJECTS OF THE SOCIETY, AS PER ITS MEMORANDUM OF ASSOCIATION, INDICATE THAT THE SOCIETY HAS BEEN SETUP WITH A SPECIFIC MOTIVE TO ACT AS AN INTERMEDIARY BETWEEN THE GOVERNMENT AND THE CONSULTANT (THE UNDP IN THIS CASE) FOR COMPLETION OF SDG TARGETS OF SDG VISION 2030 SCHEME/PROJECT AND THERE ARE NO OBJECTS OF THE SOCIETY WHICH CAN BE CALLED CHARITABLE IN NATURE. MOREOV ER, THE ACTIVITIES OF THE SOCIETY ARE, AS AN IMPLEMENTING AGENCY OF THE STATE GOV ERNMENT, ON FUNDS EARMARKED AND DISBURSED BY THE GOVERNMENT. THERE IS NO C HARITY IN IMPLEMENTATION OF WELFARE SCHEMES OF THE GOVERNMENT, WIT H THE FUNDS OF THE STATE. 5 ITA 1372/CHD/2019_M/S SWARNA JAYANTI HARYANA INSTITUTE FOR FISCAL MANAGEMENT VS CIT(E) 11. KEEPING ALL THE ABOVE DISCUSSION IN VIEW, IT I S HELD THAT THE OPERATIONS OF THE SOCIETY DO NOT GET COVERED UNDER ANY OF THE LIMBS SPECI FIED U/S 2(15) OF THE INCOME TAX ACT AND THE STATED OBJECTS/ACTIVITIES CAN'T BE ACCORDED THE FACE OF BEING CHARITABLE. IN LIGHT OF THE ABOVE, I HAVE NO OPTIO N BUT TO DENY THE REGISTRATION TO THE APPLICANT U/S 12AA OF INCOME TAX AC T, 1961. 8. NOW THE ASSESSEE IS IN APPEAL. 9. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT THE LD. CIT(E) DID NOT APPRECIATE THE FACTS IN RIGHT PERSPECTIVE AND HAVE ALSO NOT GIVEN ANY OPPORTUNITY TO THE ASSESSEE TO C LEAR THE DOUBT, IF ANY, WHICH WERE THERE IN HIS MIND. IT WAS FURTHER SUBMITTED TH AT THE OBJECTS OF THE ASSESSEE SOCIETY WERE CHARITABLE IN NATURE AND THE ACTIVITIE S OF THE ASSESSEE SOCIETY WERE ORIENTED TOWARDS THE ACHIEVEMENT OF ITS OBJECTS OF ALLEVIATION OF POVERTY AND PRESERVATION OF ENVIRONMENT AND ITS OPERATIONS FALL UNDER THE LIMB ADVANCEMENT OF OTHER OBJECTS OF GENERAL PUBLIC UTI LITY U/S 2(15) OF THE ACT. IT WAS CONTENDED THAT THE LD. CIT(E) WITHOUT PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD AND WITHOUT APPRECIATING THE FACTS IN RIGHT PERSPECTIVE, WRONGLY REJECTED THE APPLICATION MOVED BY THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT. 10. IN HIS RIVAL SUBMISSIONS, THE LD. CIT-DR REITER ATED THE OBSERVATIONS MADE BY THE LD. CIT(E) AND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(E). 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOT H THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CA SE, IT APPEARS THAT THE LD. CIT(E) WHILE REJECTING THE APPLICATION MOVED BY THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT HELD THAT THERE WAS NO EXPENSE THAT HAS BEEN SHOWN BY THE ASSESSEE WHICH COULD QUALIFY AS UTILIZATION FOR CHA RITABLE PURPOSES. HOWEVER, HE HAD NOT ASKED THE EXPLANATION FROM THE ASSESSEE THA T HOW AND IN WHAT MANNER, ITS OBJECTS WERE NOT CHARITABLE IN NATURE. ON THE C ONTRARY, THE CLAIM OF THE 6 ITA 1372/CHD/2019_M/S SWARNA JAYANTI HARYANA INSTITUTE FOR FISCAL MANAGEMENT VS CIT(E) ASSESSEE WAS THAT ITS ACTIVITIES WERE CHARITABLE IN NATURE AND ITS OPERATIONS FALL UNDER THE LIMB ADVANCEMENT OF OTHER OBJECTS OF GEN ERAL PUBLIC UTILITY AS MENTIONED IN SECTION 2(15) OF THE ACT, THE SAID CON TENTION OF THE ASSESSEE WAS NOT CONSIDERED BY THE LD. CIT(E) IN RIGHT PERSPECTI VE. WE, THEREFORE, CONSIDERING THE TOTALITY OF FACTS, DEEM IT APPROPRIATE TO SET A SIDE THIS CASE BACK TO THE FILE OF THE LD. CIT(E) TO BE ADJUDICATED AFRESH, IN ACCORDA NCE WITH LAW, AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 05/05/2021) SD/- SD/- .. .. (R.L. NEGI) (N.K. SAINI ) $ %&/ JUDICIAL MEMBER ! / VICE PRESIDENT DATE: 05/05/2021 (+ ! ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ / / CIT 4. $ / ()/ THE CIT(A) 5. -23 4, & 4, 67839/ DR, ITAT, CHANDIGARH 6. 38 :%/ GUARD FILE