M/s. Deshpande Educational Trust, Hubli V. Asst Commissioner Of Income Tax, Hubli

ITA 1422/BANG/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9344 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 10-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: TSHERING ONGDA
• Assessee Lawyers: H N KHINCHA
• Keywords: Condonation of delay
• Section: 80G; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SMT ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1422 & 1423 (BANG) 2016 (ASSESSMENT YEAR : 2011-12 & 2012-13) DESHPANDE EDUCATION TRUST, BVBCET CAMPUS, VIDYANAGAR, HUBLI - 580031 PAN: AABTD4450G APPELLANT VS THE ACIT, CIRCLE 1(1), HUBLI RESPONDENT ASSESSEE BY : SHRI H. N. KHINCHA , C. A. REVENUE BY : SHRI TSHERING ONGDA, JCIT DATE OF HEARING : 26-09-2016 DATE OF PRONOUNCEMENT: : 13-10-2016 O R D E R PER SHRI A.K.GARODIA, AM BOTH THESE ARE APPEALS ARE FILED BY THE ASSESSEE AN D THESE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LEARNED CIT (A), HUBLI DATED 08.02.2016 FOR A. Y. 2011 12 AND DATED 31.303.201 6 FOR A.Y. 2012 13. BOTH WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. IT(TP)A NO.1422 & 1423(B)2016 2 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN BOT H YEARS BUT THE MAIN GRIEVANCE IN BOTH YEARS IS ABOUT NON GRANTING OF EXEMPTION U/S 11. SECOND GRIEVANCE IN BOTH YEARS IS ABOUT CHARGING OF INTEREST AND THE THIRD GRIEVANCE WHICH IS A. Y. 2012 13 ONLY IS AB OUT NON ALLOWING OF CREDIT OF TDS IN PART. 3. THE APPEAL FOR A. Y. 2011 12 IS FILED LATE BY THE ASSESSEE AND THE DELAY IS OF 16 DAYS. THE ASSESSEE HAS MADE AN APPLI CATION FOR CONDONATION OF DELAY AND IT IS STATED IN THIS THAT THE ASSESSEE IS BASED AT HUBLI AND CONSIDERABLE TIME ELAPSED IN IDENTIFYING THE CHARTERED ACCOUNTANT IN BANGALORE FOR PREPARATION AND FILING OF THE APPEAL. IN VIEW OF THESE FACTS, WE CONDONE THE DELAY AND ADMIT THIS APPEAL. 4. IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSE SSEE THAT THE OBJECTION OF THE A.O. AND OF LEARNED CIT (A) IS THI S THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT EDUCATION AND RELIEF TO POOR. IN THIS REGARD, HE SUBMITTED THAT THE ACTIVITY REPORT OF THE ASSESSEE IS AVAILABLE ON PAGES 36 TO 38 OF THE PAPER BOOK, AS PER WHICH, THE ASSES SEE IS CONDUCTING VARIOUS EDUCATION PROGRAMS. HE ALSO SUBMITTED THAT THE COPY OF SUBMISSIONS MADE BEFORE THE A.O. IS AVAILABLE ON PA GES 229 TO 232 OF THE PAPER BOOK AND THE SAME SHOULD ALSO BE CONSIDER ED. THEREAFTER, HE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCE MENTS IN SUPPORT OF THIS CONTENTION THAT THE ACTIVITIES OF THE ASSESSEE ARE EDUCATION:- A) DIT (E) VS. GROUP VOCATIONAL TRAINING CENTRE TRU ST IN ITA NO. 199/2015 DATED 23.02.2016 (KAR.) PB PAGES 262 T O 271. B) ECUMENICAL CHRISTIAN CENTRE VS. CIT, 8 TAXMAN 17 5 (KAR.) IT(TP)A NO.1422 & 1423(B)2016 3 C) CCIT VS. ST. PETERS EDUCATION SOCIETY, 70 TAXMA N.COM171 (SC) AT PAGES 278 TO 289 OF PB. D) CIT VS. RED ROSE SCHOOL, 163 TAXMAN 19 (ALL.) 4.1 HE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PR ONOUNCEMENTS ALSO IN SUPPORT OF THIS CONTENTION THAT EVEN IF IT IS HE LD THAT THE ACTIVITIES OF THE ASSESSEE IS NOT EDUCATION BUT OBJECT OF GENERAL PUBLIC UTILITY THEN ALSO PROVISO TO SECTION 2 (15) IS NOT APPLICABLE:- E) SOCIETY FOR PARTICIPATORY RESEARCH IN ASIA VS. I TO, 71 TAXMAN.COM321 (ITAT, DELHI) AT PAGES 478 TO 492 OF PB. F) DIT VS. WOMENS INDIA TRUST, 60 TAXMAN.COM55 (BO MBAY) AT PAGES 495 TO 498 OF PB. G) INDIA TRADE PROMOTION ORGANIZATION VS. DGIT (E), 53 TAXMAN.COM404 (DELHI) AT PAGES 499 TO 528 OF PB. 5. HE ALSO SUBMITTED THAT RELEVANT EXTRACT FROM BUD GET SPEECH, MEMORANDUM EXPLAINING PROVISIONS OF FINANCE BILL 20 08 AND FMS REPLY TO THE DEBATE ON FINANCE BILL, 2008 ARE AVAILABLE O N PAGES 493 TO 494 OF THE PAPER BOOK AND THESE SHOULD ALSO BE CONSIDERED. LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BEL OW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT A CATEGORICAL FINDING IS GIVEN BY THE A.O. ON PAGE 7 OF THE ASSESSMENT ORDER THAT THE ASSESSEES MAIN ACTIVITY FOR THE YEAR UNDE R CONSIDERATION IS TO IT(TP)A NO.1422 & 1423(B)2016 4 RUN COACHING CLASSES BY COLLECTING HEFTY FEES FOR E VERY KIND OF SERVICES. EVEN BEFORE CIT (A), THE ASSESSEE HAS FILED NOTHING TO CONTROVERT THESE FINDINGS OF THE A.O. THE SUBMISSIONS OF THE ASSESSE E BEFORE CIT (A) ARE AVAILABLE ON PAGES 233 TO 261 OF THE PAPER BOOK AS PER WHICH, THE ASSESSEE HAS FILED COPY OF REGISTRATION CERTIFICATE U/S 12AA, COPY OF TRUST DEED AND FINANCIAL STATEMENTS FOR F Y 2010 11. BEFORE US ALSO, NO EVIDENCE IS FILED TO CONTROVERT THIS FINDING OF THE A.O. THE ACTIVITY REPORT ON PAGES 36 TO 38 OF THE PAPER BOOK IS A REP ORT ABOUT WHICH, EVEN THIS IS NOT KNOWN AS TO WHO PREPARED THIS REPORT AN D ON WHAT DATE OR IN WHICH YEAR. SUCH A VAGUE REPORT HAS NO EVIDENTIARY VALUE. HENCE, WE PROCEED ON THIS BASIS THAT THE ASSESSEE HAS NOTHING TO SAY ABOUT THIS FINDING OF THE A.O. THAT THE ASSESSEES MAIN ACTIV ITY FOR THE YEAR UNDER CONSIDERATION IS TO RUN COACHING CLASSES BY COLLECT ING HEFTY FEES FOR EVERY KIND OF SERVICES. WE EXAMINE THE APPLICABILITY OF THE VARIOUS JUDICIAL PRONOUNCEMENTS IN VIEW OF THIS FACTUAL POSITION. 7. THE FIRST JUDGMENT CITED IS THE JUDGMENT OF HON BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF DIT (E) VS. GROU P VOCATIONAL TRAINING CENTRE TRUST (SUPRA). IN THIS CASE, THE ISSUE IN DI SPUTE WAS ABOUT GRANTING OF REGISTRATION U/S 12AA. MERE GRANTING OF REGISTRATION DOES NOT ENTITLE FOR EXEMPTION U/S 11 AND THE A.O. IS ENTITL ED TO EXAMINE AS TO WHETHER THE ACTIVITIES ARE CHARITABLE OR NOT. IN TH E PRESENT CASE, REGISTRATION U/S 12AA IS ALREADY GRANTED AND THE IS SUE IN DISPUTE IS ABOUT ELIGIBILITY OF EXEMPTION U/S 11 AND THE FINDI NG OF THE A.O. THAT THE IT(TP)A NO.1422 & 1423(B)2016 5 ASSESSEE IS NOT IMPARTING EDUCATION OR RELIEF TO PO OR COULD NOT BE CONTROVERTED BY THE ASSESSEE. HENCE THIS JUDGMENT R ENDERS NO HELP TO THE ASSESSEE IN THE PRESENT CASE. 8. THE SECOND JUDGMENT CITED IS ALSO A JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF ECUMEN ICAL CHRISTIAN CENTRE VS. CIT (SUPRA). IN THIS CASE, THE ISSUE IN DISPUTE WAS GRANTING APPROVAL U/S 80G, WHICH WAS GRANTED UP TO 31.12.197 3 BUT WAS REFUSED BY THE CIT FOR SUBSEQUENT PERIOD AND CIT REFUSED TO CONSIDER THE EARLIER ORDER AND ALLIED EVIDENCE PRODUCED BY THE ASSESSEE BEFORE HIM AND UNDER THESE FACTS, IT WAS HELD THAT THE CIT WAS NOT JUSTIFIED IN REFUSING APPROVAL U/S 80G FOR SUBSEQUENT PERIOD. THIS IS ALS O NOTED BY HONBLE KARNATAKA HIGH COURT IN PENULTIMATE PARA THAT NO FE ES WAS BEING CHARGES AND SCHOLARSHIPS WERE BEING GIVEN TO COVER UP EXPENSES REGARDING FOOD, ACCOMMODATION ETC. WHEREAS THE ASSE SSING IS EARNING INCOME. SINCE THE FACTS ARE DIFFERENT, THIS JUDGMEN T ALSO RENDERS NO HELP TO THE ASSESSEE IN THE PRESENT CASE. 9. THE NEXT JUDGMENT CITED IS A JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CCIT VS. ST. PETERS EDUCAT ION SOCIETY (SUPRA). IN THIS CASE, THE ISSUE IN DISPUTE WAS NOT THIS THAT T HE ASSESSEE IS NOT IMPARTING EDUCATION. THE OBJECTION OF THE REVENUE W AS THIS THAT IT EXISTS FOR PROFIT AND THIS IS THE JUDGMENT THAT IF AN INST ITUTION MAKES PROFIT, IT DOES NOT NECESSARILY MEAN THAT IT EXISTS FOR PROFIT . IN THE PRESENT CASE, THE OBJECTION IS THIS THAT IT IS NOT IMPARTING EDUC ATION. HENCE, THIS JUDGMENT ALSO RENDERS NO HELP TO THE ASSESSEE IN TH E PRESENT CASE. IT(TP)A NO.1422 & 1423(B)2016 6 10. THE NEXT JUDGMENT CITED IS A JUDGMENT OF HONBL E ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CIT VS. RED ROSE SCHO OL (SUPRA). IN THIS CASE, THE ISSUE IN DISPUTE WAS ABOUT GRANTING OF RE GISTRATION U/S 12AA AND HENCE, FOR THE SAME REASONS AS GIVEN IN PARA 7 ABOVE IN RESPECT OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDER ED IN THE CASE OF DIT (E) VS. GROUP VOCATIONAL TRAINING CENTRE TRUST (SUPRA) IT IS HELD THAT THIS JUDGMENT ALSO RENDERS NO HELP TO THE ASSESSEE IN THE PRESENT CASE. 11. THE NEXT JUDGMENT CITED IS A TRIBUNAL ORDER REN DERED IN THE CASE OF SOCIETY FOR PARTICIPATORY RESEARCH IN ASIA VS. ITO (SUPRA). IN THIS CASE, THE TRIBUNAL NOTED IN PARA 4.3 THAT IN A. Y. 2004 05 TO 2008 0-9, THE ASSESSMENTS WERE COMPLETED U/S 143 (3) AND EXEMPTIO N U/S 11 WAS ALLOWED. THIS WAS ALSO NOTED THAT AS PER THE SUBMIS SION OF THE ASSESSEE, THE ACTIVITIES OF THE ASSESSEE WERE IN THE NATURE O F EDUCATION WHICH HAS BEEN ACCEPTED IN PRECEDING AND SUBSEQUENT YEARS. AN D IN PARA 5.6 OF THE ORDER, THE TRIBUNAL HAS GIVEN A FINDING THAT THE AS SESSEE WAS ENGAGED IN EDUCATION WHICH HAS BEEN ACCEPTED IN PRECEDING AND SUBSEQUENT YEARS. THE OBJECTION IN THAT CASE THIS THAT OUT OF TOTAL R ECEIPTS OF RS. 21.46 CRORES, ONLY RS. 20.65 LACS WAS FROM EDUCATIONAL AC TIVITIES. THE TRIBUNAL NOTED IN PARA 6.1 THAT OTHER RECEIPTS WERE MAINLY O N ACCOUNT OF RESEARCH & TRAINING GRANTS RS. 1591.42 LACS, CONTRIBUTION RS . 418.69 LACS AND OTHER INCOME RS. 136.27 LACS. THEREAFTER IN PARA 6. 5, THE TRIBUNAL NOTED THAT THE ACTIVITIES OF THE ASSESSEE ARE IN THE NATU RE OF PARTICIPATORY RESEARCH AND IN THE ASSESSMENT ORDER FOR A. Y. 1983 84, THE A.O. NOTED THAT THE PARTICIPATORY RESEARCH IS A NEW DEVELOPMEN T OF THE LAST DECADE IT(TP)A NO.1422 & 1423(B)2016 7 AND IT CAN BE UTILIZED DEPENDING UPON THE NEEDS OF THE POOR AND DEPRIVED. UNDER THESE FACTS, IT WAS HELD THAT INVOC ATION OF PROVISO TO SECTION 2 (15) TO DENY CLAIM OF EXEMPTION U/S 11 IS NOT JUSTIFIED. SINCE, THE FACTS IN THE PRESENT CASE ARE MATERIALLY DIFFER ENT, WE HOLD THAT THIS JUDGMENT ALSO RENDERS NO HELP TO THE ASSESSEE IN TH E PRESENT CASE. 12. THE NEXT JUDGMENT CITED IS A JUDGMENT OF HONBL E BOMBAY HIGH COURT RENDERED IN THE CASE OF DIT VS. WOMENS INDIA TRUST (SUPRA). IN THIS CASE, THE ISSUE IN DISPUTE WAS SIMILAR AS TO W HETHER THE PROVISO TO SECTION 2 (15) IS REQUIRED TO BE INVOKED BUT THE FA CTS WERE DIFFERENT. IN THAT CASE, IT IS NOTED BY HONBLE BOMBAY HIGH COURT IN PARA 6 THAT THE ASSESSEE RECEIVED DONATION OF RS. 36.88 LACS AND RS . 4.46 LACS AS FEES OF NURSING SCHOOL. THIS WAS ALSO NOTED THAT NURSING TR AINING PROVIDED AT PANVEL CENTRE IS FREE OF COSTS AND CHARGE IS LEVIED FOR THE MESS BUT THE ACCOMMODATION AND OTHER FACILITIES ARE FREE OF COST . THIS WAS ALSO NOTED THAT COMMUNITY DEVELOPMENT PROGRAMME BY TRAINING TH E LADIES TO EARN WHILE LEARNING IN THE FIELD OF CATERING, STITCHING, TOY MAKING ETC. SOME FINISHED PRODUCTS SUCH AS PICKLES, JAM ETC. ARE PRO DUCED IN THE PROCESS WHICH ARE SOLD BY THE ASSESSEE THROUGH SHOPS, EXHIB ITIONS AND PERSONAL CONTACTS. THIS IS ALSO NOTED THAT THE MOTIVE IS NOT GENERATION OF PROFIT BUT TO PROVIDE TRAINING TO THE NEEDY WOMEN IN ORDER TO EQUIP THEM IN THESE FIELDS AND MAKE THEM SELF RELIANT. THIS IS ALSO NOT ED THAT THERE IS DEFICIT BECAUSE FEES COLLECTED IS ONLY FOR PROVING FOOD ITE MS. IN THE PRESENT CASE, FELLOWSHIP FEES COLLECTED IS RS. 11.32 LACS AND EXP ENSES ARE ONLY RS. 6.68 LACS WITH A SURPLUS OF RS. 6.19 LACS. MERE SUR PLUS IS NOT A DECIDING IT(TP)A NO.1422 & 1423(B)2016 8 FACTOR BUT IN VIEW OF OVERALL FACTS THAT ONLY COACH ING IS PROVIDED WITHOUT ANY FORMAL EDUCATION, THE ACTIVITY IS IN LINE WITH SO MANY COACHING INSTITUTIONS BEING RUN ON COMMERCIAL LINE AND IN AB SENCE OF ANY EVIDENCE THAT SUCH COACHING IS PROVIDED AT FREE OF COST OR A T SUBSIDIZED PRICE TO NEEDY OR POOR, AS IN THAT CASE, IT HAS TO BE ACCEPT ED THAT THIS ACTIVITY OF PROVIDING COACHING IS A COMMERCIAL ACTIVITY AND THI S JUDGMENT ALSO RENDERS NO HELP TO THE ASSESSEE BECAUSE IN THE FACT S OF THAT CASE, NURSING TRAINING WAS BEING PROVIDED FREE OF COST AN D FOR THIS REASON, IT WAS HELD THAT IT IS NOT AN ACTIVITY IN NATURE OF TR ADE, COMMERCE OR BUSINESS ETC. AND FACTS IN THE PRESENT CASE ARE DIF FERENT. 13. THE NEXT JUDGMENT CITED IS A JUDGMENT OF HONBL E DELHI HIGH COURT RENDERED IN THE CASE OF INDIA TRADE PROMOTION ORGAN IZATION VS. DGIT (E) (SUPRA). THE FACTS OF THIS CASE ARE THAT PRAGATI MA IDAN COMPLEX WAS ALLOTTED BY THE GOVT. OF INDIA TO THE ASSESSEE AT A NOMINAL GROUND RENT OF RE 1 PER ANUMN FOR INITIAL 5 YEARS AND THEREAFTE R RS. 6 LACS PER ANUMN FOR AN AREA OF 123.50 ACRES AND BECAUSE OF THIS, IN SPITE OF THIS THAT THE ASSESSEE PROVIDED SPACE FOR EXHIBITION SPACE TO TRA DE AND INDUSTRY AT MUCH LOWER RATE THAN THE PREVAILING MARKET RATES AN D STILL GENERATED SURPLUS, WHICH WAS FOR MAJOR INFRASTRUCTURAL ADDITI ONS AND IMPROVEMENTS IN PRAGATI MAIDAN. UNDER THESE FACTS, IT WAS HELD THAT THIS INSTITUTION IS NOT DRIVEN PRIMARILY BY A DESIR E OR MOTIVE TO EARN PROFIT AND THEREFORE, PROVISO TO SECTION 2 (15) IS NOT APP LICABLE. IN THE PRESENT CASE, THIS IS NOT ESTABLISHED BY THE ASSESSEE THAT THE RATES CHARGED BY IT IT(TP)A NO.1422 & 1423(B)2016 9 ARE MUCH LOWER THAN MARKET RATE OF SIMILAR SERVICES AND THEREFORE, THIS JUDGMENT ALSO RENDERS NO HELP TO THE ASSESSEE IN TH E PRESENT CASE. 14. AS PER ABOVE DISCUSSION, WE FIND THAT NONE OF T HE JUDGMENTS CITED BY THE LEARNED AR OF THE ASSESSEE IS RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE AND IN THE FACTS OF THE PRESENT CASE, THE PROVISO TO SECTION 2 (15) GETS ATTRACTED. WE, THEREFORE, FIND NO REASON TO INTERFERE IN THE ORDER OF CIT (A) IN ANY YEAR. 15. IN THE RESULT, BOTH THE APPEALS OF THE ASSESS EE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/ - (SMT ASHA VIJAYARAGHAVAN SD/ - (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE: D A T E D : 13.10.2016 AKG/DS / COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - II BANGALO RE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE