Sikhya O Pragati Charitable Trust, Balasore V. CIT, Cuttack

ITA 139/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65089 (ITAT-CUTTACK)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 08-08-2012
• Assessment Year: misc
• Appeal Filed On: 13-02-2012
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: P K MISHRA
• Keywords: Charitable institution
• Section: 80G

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 139/CTK/2012 AND ITA NO.140/CTK/2012 SIKHYA O PRAGATI CHARITABLE TRUST, AT: NUASAHI CHHAK, P.O.BALIA, DIST.BALASORE, PIN 756 021 PAN: AAITS 5736 M - - - VERSUS - COMMISSIONER OF INCOME - TAX, CITY/DIST.CUTTACK. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI P.K.M IS HRA, AR / FOR THE RESPONDENT: / SHRI . A.BHATTACHARJEE, DR / DATE OF HEARING : 08.08.2012 / DATE OF PRONOUNCEMENT: 14.08.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THESE APPEALS HAS BEEN FILED BELATEDLY BY 39 DAYS BY THE ASSESSEE ON THE ORDER U/S.12AA OF THE I.T.ACT,1961 BY THE LEARNED CIT REJECTING THE ASSESSEES APPLICATION FOR GRANT OF REGISTRATION /S.12AA. A CONDONATION PETITION HAS BEEN FILED BY ASSESSEE BEING A CHARITABLE TRUST INDICATING THAT THE WIFE OF THE MANAGING TRUSTEE WHO WAS SUFFERING FROM CANCER COULD NOT TAKE ACTION ON THE IMPUGNED ORDER RECEIVED BY IT ON 4.11.2011. SHE WAS SHIFTED TO BASAVAARAKAM INDO - AMERICAN CANCER HOSPITAL & RESEARCH INSTITUTE, HYDERABAD FOR TREATMENT WHEN THE OTHER TRUSTEES BEING ILLITERATE WERE NOT AWARE OF THE I.T. LIMITATION FOR F ILING THE APPEAL. THE CONDONATION PETITION HAS BEEN BROUGHT ON RECORD AGAINST WHICH THE LEARNED DR HAS NO OBJECTION IS THEREFORE CONDONED AND THE APPEAL IS ADMITTED FOR HEARING. I.T.A.NO.139/CTK/2012 2 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT A PERUSAL OF THE LEARNE D CITS ORDER REJECTING GRANT OF REGISTRATION U/S.12A, WOULD INDICATE THAT THE LEARNED CIT HAVING SATISFIED HIMSELF THAT THE OBJECTS OF THE ASSESSEE TRUST WERE CHARITABLE IMPARTING TRAINING ON THE TECHNICAL SIDE WAS FOR THE GENERAL PUBLIC UTILITY WAS EVEN PATRONIZED BY THE GOVERNMENT AUTHORITIES COULD NOT BE HELD OTHERWISE MERELY ON THE PERUSAL OF THE FINANCIAL STATEMENTS FILED ALONG WITH THE APPLICATION AS A MANDATORY REQUIREMENT. THE ASSESSEE HAD FILED APPLICATION FOR GRANT OF REGISTRATION IN FORM 10A AND 10G INSOFAR AS THE ASSESSEE WAS IMPARTING TRAINING TO STUDENTS FREE OF COST BELONGING TO THE SOCIAL DOWN TRODDEN PEOPLE INSOFAR AS THE LEARNED CIT HAS EQUATED THE RECEIPTS OF FEES BY SPREADING THE NUMBER OF STUDENTS UNDERGOING TRAINING WITH THE COMMERCIAL ACTIVITIES FOR IMPARTING EDUCATION. H E POINTED OUT THAT THE LEARNED C IT WAS TO VERIFY THE MAIN OBJECT AS PER THE MEMORANDUM OF ASSOCIATION OF THE TRUST PLACED ON RECORD TO COMMENSURATE WITH CARRYING OUT THE CHARITABLE ACTIVITIES INCURRED FOR TRAINING BEIN G PAYMENTS MADE TO FACULTIES AND INCURRING EXPENDITURE ON THE LATHES AND PROTOTYPES AND OTHER INFRASTRUCTURE MAINTAINED FOR IMPARTING TRAINING AS IS AVAILABLE TO STUDENTS IN ANY COLLEGE OR UNIVERSITY AS PART OF A LIBRARY OR LABORATORY. THE LEARNED CIT THER EFORE ERRED IN FINDING SURPLUS ON THE TOTAL RECEIPTS BEING 21,76,536 AND 19,14,189 FOR THE AYS 2009 - 10 AND 2010 - 11 AT 2,8,333 ANDRS.81,354 RESPECTIVELY. THE LEARNED CIT THEREFORE PROCEEDED TO ANALYZE THESE SURPLUS IN THE LINE OF ADDRESSING THE PROVISION S OF SECTION 2(15) OF THE I.T.ACT THE CHARITABLE PURPOSES WHETHER COULD BE LINKED TO THE SURPLUS HAS NOT BEEN ADDRESSED BY THE LEARNED CIT IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT SECTIONS 11 AND 13. HE POINTED OUT THAT IT WAS NOT THE CASE FOR THE CIT TO PASS THE ASSESSMENT PRIOR TO GRANTING OF REGISTRATION I.T.A.NO.139/CTK/2012 3 INSOFAR AS HE REJECTED THE APPLICATION FOR GRANT OF REGISTRATION WITHOUT INDICATING THAT THE EXPENDITURE CLAIMED WAS FOR THE CHARITABLE ACTIVITIES BEING IMPARTING EDUCATION WAS ACCEPTABLE TO HIM BUT WITHOUT ANY CONTROVERTING MATERIAL POINTED OUT BY HIM. HE PRAYED THAT THE APPLICATION SO FILED SEEKING APPROVAL CANNOT BE SUBSEQUENT TO FINDING OF MISINTERPRETED FACTS INSOFAR AS THE ASSESSEE WAS REGISTERED AS A TRUST IN 2006 WHEN THE PURPORTED CHARITA BLE OBJECT WAS BEING FULFILLED BY THE TRUSTEES AND VARIOUS GOVERNMENT AGENCIES HAVE APPRECIATED THE INDUSTRIAL TRAINING IMPARTED BY THE TRUST AS INDUSTRIAL TRAINING CENTRE IN THE NAME OF BALASORE INSTITUTE OF TECHNICAL STUDIES FUNCTIONING CANNOT BE ARBITR ARILY HELD AS NOT IMPARTING TRAINING FOR THE GENERAL PUBLIC UTILITY AS PER REQUIREMENT OF SECTION 2(15). FOR THIS PROPOSITION THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE ITAT, DELHI BENCH DECISION IN THE CASE OF ARYAN EDUCATIONAL SO CIETY V.CIT (93 ITD 546) WHEN IT HAS BEEN HELD THAT GRANT OF REGISTRATION U/S.12AA IS A PROCEDURAL PROVISION AND ON THE OMISSION OF SECTION 10(22 ) FOR THE PURPOSE OF FINDING CHARITABLE ACTIVITIES TO THE GENERAL PUBLIC U/S.2(15 ) CANNOT BE INTERLINKED INSOFA R AS THE DEFICIT OR SURPLUS IS TO BE CONSIDERED IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 11 AND 13. THE FEES STRUCTURE ETC., WOULD DEPEND ON THE FACTS OF THE INDIVIDUAL CASE LEAD TO THE FINDING THAT THE ASSESSEE CARRIED OUT THE ACTIVITIES FOR CHARITAB LE PURPOSE IN TERMS OF SECTION 2(15) OF THE ACT AND CONSEQUENTLY, THE LEARNED CIT WAS NOT JUSTIFIED IN REFUSING REGISTRATION/S.12A WHEN ON THE BASIS OF FACT FINDING BY THE TRIBUNAL, THE TRIBUNAL DIRECTED THE CIT TO GRANT REGISTRATION U/S.12A OF THE ACT. 3. THE LEARNED DR SUPPORTED THE ORDER OF THE LEARNED CIT. HE SUBMITTED THAT BY NO STRETCH OF IMAGINATION THE IMPARTING INDUSTRIAL TRAINING TO I.T.A.NO.139/CTK/2012 4 STUDENTS COULD BE CONSIDERED CHARITABLE FOR THE PURPOSE OF GENERAL PUBLIC UTILITY AS CONTEMPLATED IN SECTION 2(15) H AS NOT BEEN ESTABLISHED BY THE ASSESSEE TRUST. THE SURPLUS WAS THEREFORE PROPERLY DEALT WITH BY THE LEARNED CIT PLACING RELIANCE ON THE DECISION OF HONBLE HIGH COURT OF UTTARAKHAND IN THE CASE OF CIT V. M/S.QUEENS EDUCATIONAL SOCIETY AND DECISION OF ITAT , HYDERABAD RULING IN THE CASE OF VODITHALA EDUCATIONAL SOCIETY (20 SOT 0353) THAT IF A SURPLUS IS RENDERED BY AN EDUCATION SOCIETY THE SAME CANNOT BE HELD AS SURPLUS FROM CHARITABLE ACTIVITIES WAS ACCORDINGLY DEALT WITH BY THE LEARNED CIT FOR REJECTING TH E APPLICATION SEEKING APPROVAL FOR GRANT OF REGISTRATION U/S.12A. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. ON CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE C ASE, WE ARE INCLINED TO HOLD THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS JUSTIFIED INSOFAR AS THE LEARNED CIT HAS NOT BEEN ABLE TO LINK THE SURPLUS RENDERED TO THE BASIC REQUIREMENT OF LAW FOR COMPLIANCE TO SECTION 2(15) THAT THE CHARITABLE A CTIVITIES HAS TO BE MADE IN ACCORDANCE WITH SECTIONS 11 AND 1 3 OF THE ACT. WITH THE AMOUNT RECEIVED, NOTED BY THE LEARNED CIT , IT WAS NOT THE CASE OF THE LEARNED CIT THAT A SURPLUS COULD REMAIN FOR THE TWO AYS WHICH WAS ON THE BASIS OF IMPARTING EDUCATION TO A STUDENT WHO HAD ALSO NOT PAID ANY FEES AND AS PER THE PATRONIZATION OF THE GOVERNMENT IT COULD NOT BE SAID THAT THE FEES WAS CHARGED MORE THAN AS REQUIRED TO REMAIN SURPLUS AS PROFIT BEING A COMMERCIAL ACTIVITY . THE LEARNED CIT THEREFORE SHIFTED AWAY FROM THE REQUIREMENT OF LAW THAT BEING SATISFIED TO THE OBJECTS BEING CARRIED TO SEEK APPROVAL FOR GRANTING REGISTRATION THE SURPLUS WOULD BE IMMATERIAL . INCOME OF THE TRUST INSTITUTION IMPARTING EDUCATION WOULD ONLY BE FINANCED I.T.A.NO.139/CTK/2012 5 BY SUBSIDY OR GRANT FROM GO VERNMENT OR VOLUNTARY CONTRIBUTION FROM PUBLIC. STUDENTS ARE NOT CONSUMER FOR THE PURPOSE OF RECEIVING EDUCATION OR TRAINING. THE INFRASTRUCTURE MAINTAINED BY THE TRUST REQUIRES EXPENDITURE TO BE INCURRED WHICH WAS BOR N E BY THE TRUST IS REIMBURSED BY THE S TUDENTS ALONG WITH THE STUDENTS WHO ARE ENROLLED ON THE DIRECTION OF THE GOVERNMENT ALONG WITH FREE TRAINEES. THE WORDS NOT INVOLVING THE CARRYING ON ANY ACTIVITIES FOR PROFIT THEREFORE HAS NOT BEEN ESTABLISHED BY THE LEARNED CIT WHO HAS REJECTED THE APP ROVAL JUST BECAUSE THE ASSESSEE HAD SURPLUS AND THAT EXACTLY WAS THE REASON FOR SEEKING REGISTRATION/S.80G AS WELL. A CONSEQUENT REGISTRATION U/S.80G WOULD INVITE PEOPLE TO CONTRIBUTE MORE SO THAT THE ASSESSEES TRAINING SPREADS OVER FURTHER ONCE THE SATIS FACTION OF HAVING TRAINED PEOPLE AS A PART OF CHARITY BEING THE MAIN OBJECT OF THE TRUST HAD TO BE FULFILLED. WE FIND THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE APPROPRIATE TO THE EXTENT THAT THE ASSESSMENT CANNOT P RECEDE GRANTING OF REGISTRATI ON . THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE APPLICATIONS FILED BY THE ASSESSEE SEEKING REGISTRATION U/S.12A AND U/S.80G WHICH HAS BEEN REJECTED BY THE LEARNED CIT ON MISINTERPRETATION OF FACTS AS W ELL AS LAW. WE, THEREFORE, SET ASIDE THE ORDER OF TH E LEARNED CIT AND DIRECT HIM TO GRANT REGISTRATION AS SOUGHT FOR BY THE ASSESSEE U/S.12A AND SECTION 80G OF THE I.T.ACT,1961. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - ( . . . ) , (K.S.S.PRASA D RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 14.08.2012 ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO.139/CTK/2012 6 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : SIKHYA O PRAGATI CHARITABLE TRUST, AT: NUASAHI CHHAK, P.O.BALIA, DIST.BALASORE, PIN 756 021 2 / THE RESPONDENT: COMMISSIONER OF INCOME - TAX, CITY/DIST.CUTTACK. 3 . / T HE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 10 ,08.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER 13.. .08.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 14.08.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.08.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..