Bejo Sheetal Bio Science Foundation, Jalna V. Commissioner of Income-tax,

ITA 1473/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0312 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-10-2016
• Assessment Year: misc
• Appeal Filed On: 22-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Benefit of exemption
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , !' # ! $ , % & BEFORE SHRI R.P. TOLANI, JM AND SHRI ANIL CHATURVEDI, AM ' . / ITA NO. 1473/PUN/2014 & ' . / ITA NO. 1474/PUN/2014 BEJO SHEETAL BIO SCIENCE FOUNDATION, BIO TECHNOLOGY PARK, ADDITIONAL MIDC AREA, PHASE-II, AURANGABAD ROAD, JALNA, PIN-431203 PAN : AAECB2389N ....... APPELLANT / V/S. COMMISSIONER OF INCOME TAX, AURANGABAD, SOLAPUR / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK (CA) REVENUE BY : SHRI VINOD KUMAR, CIT DR / DATE OF HEARING .. : 19.12.2016 / DATE OF PRONOUNCEMENT IN OPEN COURT : 20.12.2016 ' / ORDER PER R.P TOLANI, JM THESE ARE TWO ASSESSEES APPEALS, ONE AGAINST REFUSAL O F REGISTRATION U/S 12A AND OTHER AGAINST CONSEQUENTIAL REG ISTRATION U/S 80G OF INCOME TAX ACT. 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN APPEAL NO. 1473/PUN/2014:- 2 ITA NO. 1473/PUN/2014 & ITA NO. 1474/PUN/2014 1. LD. CIT, AURANGABAD ERRED IN NOT GRANTING RECOGNIT ION U/S 80G OF THE INCOME TAX ACT,1961. 2. LD. CIT, AURANGABAD ERRED IN CONCLUDING THAT ALL THE OBJECTS OF TRUST ARE NOT WITHIN THE AMBIT OF CHARITABLE PURPOSE. IN APPEAL NO. 1474/PUN/2014 REFUSING REGISTRATION, FOLLOWING GROUNDS HAVE BEEN RAISED. 1. LD. CIT, AURANGABAD ERRED IN NOT GRANTING REGIST RATION U/S 12A OF THE INCOME TAX ACT, 1961. 2. LD. CIT ERRED IN CONCLUDING THAT ALL THE OBJECTS OF TRUST ARE NOT WITHIN THE AMBIT OF CHARITABLE PURPOSE AS DEFINED IN S ECTION 2(15) OF THE INCOME TAX ACT, 1961. 3. THE ASSESSEES COMPANY WAS REGISTERED U/S 25 OF TH E COMPANIES ACT, 1956 ON 09.10.2009. IT APPLIED FOR REGISTRATION U/S 12A OF THE ACT ON 26.12.2013 ALONG WITH AUDIT REPORT AND COPY OF MEMORAN DUM WHICH WAS FORWARDED BY LD. CIT TO ASSESSING OFFICER FOR HIS REPORT THEREON. THE ASSESSING OFFICER SUBMITS DETAILED REPORT TO THE EFFECT THAT GENUINENESS OF THE ASSESSEES ACTIVITIES COULD NOT BE ESTABLISHED. THE LD. CIT REJECTED THE ASSESSEES APPLICATION BY FOLLOWING OBSERVATIONS: 03. THE COMPANY WAS REGISTERED U/S25 OF THE COMPANIES ACT, 1956 ( 1 OF 1956) ON 09.10.2009. ON VERIFICATION OF THE OBJECTS OF THE APPLICANT COMPANY, IT IS OBSERVED THAT THE PREDOMINANT OBJECT OF THE COMPANY IS TO PROMOTE THE WORK OF RESEARCH AND DEVELOPMENT, AND TO IMPART TRAINING AS WE LL AS TECHNICAL EDUCATION FOR DEVELOPMENT OF TISSUE CULTURE WORK GENE TRANSFORMATION, MOLECULAR BIOLOGY ACTIVITIES AND BREEDING AND PRODUCTION OF TROPICAL CROPS. 04. IN SOLE TRUSTEE LOKA SHIKSHANA TRUST V/S. COMMISSIONER OF INCOME TAX, (1975), 101 ITR 234 (SC), TH E APEX COURT FOUND THAT ALL KIND OF ACQUIRING KNOWLEDGE WILL NOT COME WITHIN THE MEANING OF EDUCATION. WHAT EDUCAT ION CONNOTES IN THAT CLAUSE IS THE PROCESS OF TRAINING AND DEVELOPING THE KNOWLEDGE SKILL KIND AND CHARACTER OF STUDENTS BY NORMAL SCHOOLING. 4.1. FROM THE JUDGMENT OF THE APEX COURT IT WOULD BE A BUNDANTLY CLEAR THAT THERE SHOULD BE A SYSTEMATIC INSTRUCTION TO THE 3 ITA NO. 1473/PUN/2014 & ITA NO. 1474/PUN/2014 STUDENTS BY WAY OF NORMAL SCHOOLING. MERE THE SHORT T ERM COURSES CONDUCTED BY THE APPLICANT COMPANY MAY PROV IDE SOME KIND OF KNOWLEDGE TO THE STUDENTS, BUT THAT KIN D OF ACQUISITION OF KNOWLEDGE THROUGH THESE COURSES CANNO T FALL WITHIN THE MEANING OF EDUCATION AS PROVIDED IN SECT ION 2(15). AS THE APEX COURT OBSERVED, ONE MAY ACQUIRE KNOWLEDG E IN THE COURSE OF TRAVELLING, DURING THE COURSE OF READIN G NEWSPAPER, ETC. BUT THAT KIND OF KNOWLEDGE CANNOT FALL W ITHIN THE TERM EDUCATION AS PROVIDED IN SECTION 2(15). THER E SHOULD BE A NORMAL SCHOOLING BY WAY OF REGULAR AND SYSTEMATIC INSTRUCTION. 4.2. IN THE INSTANT CASE, ADMITTEDLY THE APPLICANT IS CONDUCTING SHORT TERM COURSE AS EXPLAINED ABOVE. THE REFORE, IT CANNOT BE TREATED AS A CHARITABLE INSTITUTION AS PRO VIDED IN SECTION 2(15) OF THE ACT. 05. AS PER PROVISO TO SECTION 2(15) THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVIT Y IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMM ERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATI ON IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF INCOME FROM SUCH ACTIVITY. ON PERUSAL OF THE INCOME A ND EXPENDITURE ACCOUNTS OF THE COMPANY FOR THE FY 2012 -13 IT IS SEEN THAT THE APPLICANT COMPANY HAS SHOWN RECEIPT F ROM SALE OF BANANA TISSUE CULTURE PLANT SALE, AND FEES FROM TR AINING COURSES. THE NATURE OF THESE RECEIPTS IS IN THE NATU RE OF TRADE, COMMERCE OR BUSINESS. THEREFORE, THE OBJECT OF THE AP PLICANT COMPANY DOES NOT FALL WITHIN THE AMBIT OF CHARITABLE PURPOSE AS DEFINED IN SECTION 2(15) OF THE I.T ACT. F URTHER, IT IS OBSERVED THAT THE APPLICANT COMPANY HAS NOT MAIN TAINED SEPARATE BOOKS OF ACCOUNTS IN RESPECT OF SALE OF BAN ANA TISSUE CULTURE PLANT, WHICH IS ALSO ONE OF THE BASIS CONDIT IONS STIPULATED UNDER SECTION 11(4A) OF THE I.T ACT. 06. IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPIN ION THAT THE APPLICANT COMPANY IS NOT ELIGIBLE FOR REGIST RATION U/S12A OF THE I.T ACT. THEREFORE, THE APPLICATION FILED BY THE APPLICANT IN FORM NO. 10A FOR REGISTRATION U/S 12A OF THE I.T ACT IS HEREBY REJECTED. SINCE REGISTRATION U/S 12A OF THE INCOME TAX ACT WAS DE NIED, CONSEQUENTLY, ASSESSEES APPLICATION U/S 80G WAS ALSO REJECTED . 4 ITA NO. 1473/PUN/2014 & ITA NO. 1474/PUN/2014 4. BEING AGGRIEVED, ASSESSEE IS IN APPEAL. LD. COUNSEL FOR TH E ASSESSEE CONTENDS THAT THE ASSESSEES APPLICATION IS NO T FOR BEING A CHARITABLE ORGANIZATION BUT AN ORGANIZATION OF GENERAL PUBLIC UTILITY. IT IS CONTENDED THAT MAIN OBJECT OF THE COMPANY IS OF GENER AL PUBLIC UTILITY IN TERMS OF PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT , LAYING DOWN THAT OBJECT OF GENERAL PUBLIC UTILITY NOT CARRIED OUT WITH C OMMERCIAL MOTIVE IS ELIGIBLE FOR REGISTRATION U/S 12A OF THE INCOME TAX ACT. IN THIS CASE, ASSESSEES ACTIVITIES I.E PROVIDING PRACTICAL TRAINING TO PERSONS FROM PUBLIC AT LARGE AMOUNT FOR BANANA CULTURE KNOWLEDGE IS AN OBJECT OF GENERAL PUBLIC UTILITY. THE ASSESSEE DOES NOT CLAIM TO BE EIT HER THE CHARITABLE ORGANIZATION OR EDUCATIONAL INSTITUTION. IT IS CON TENDED THAT LD. CIT FAILED TO APPRECIATE SUBMISSIONS AND DOCUMENTS SU BMITTED BY THE ASSESSEE AND IN SUPPORT OF IS CASE RELIANCE PLACED ON THE FOLLOWING JUDGMENTS: 1. DIT (EXAMPTION) V/S. SABARMATI ASHRAM GAUSHALA TRUST, 362 ITR 0539 (GUJ). 2. DIRECTOR OF INCOME TAX V/S. WOMENS INDIA TRUST, 60 TAXMANN.COM 55 (BOMBAY). 3. PUNJAB STATE SEED CERTIFICATION AUTHORITY, SCO 837 - 838, SECTOR 22-A, CHANDIGARH V/S. THE CIT-I, CHANDIGARH , ITA NO. 1314/CHD/2010 (UNDER SECTION 12AA (1) (B) (II) ) DATED 26.06.2013. IT IS FURTHER CONTENDED THAT THE GENUINENESS OF THE OBJ ECT CANNOT BE EXAMINED AT THE TIME OF REGISTRATION AND IT IS TO BE VE RIFIED AT THE TIME OF ASSESSMENT AND RELIANCE PLACED ON THE JUDGMENT REFERRED BELOW: - 1. AKHIL BHARATIYA GRAMEEN VIKAS SANSTHA, 1442, WAZIR NAGAR, KOTLA, MUBARAKAPUR, NEW DELHI V/S. DIT (EXEMPTIONS ) NEW DELHI. 5 ITA NO. 1473/PUN/2014 & ITA NO. 1474/PUN/2014 5. LD. D.R ON THE OTHER HAND VEHEMENTLY CONTENDS THA T THE ASSESSEES IMPARTING RND TRAINING TO SELECTED PARTICIPANTS DOES NOT AMOUNT TO ORBIT OF GENERAL PUBLIC UTILITY. FROM THE STATEM ENT OF ACCOUNTS ITSELF IT IS MANIFEST THAT ASSESSEE CO IS A TRADING ORGANIZAT ION FOR MARKETING OF ENGAGED IN SALE OF BANANA TISSUE CULTURE PLA NT TECHNOLOGY. PROFIT AND LOSS ACCOUNT PLACED AT PAGE NO. 39 FOR FINANCIAL YEAR 2012-2013 DEPICTS THAT THE ASSESSEE RECEIVED FOLLOWING INCOME : I INCOME : BANANA TISSUE CULTURE PLANT SALE 2530201.00 TRAINING & COURSES FEES 332000.00 AGAINST WHICH TRAINING PROGRAMME EXPENSES ARE 77746.00 WHICH ITSELF INDICATES PROFIT/COMMERCIAL MOTIVE. THE ASSESSEE IS CRE ATING A BRAND FOR BANANA PLANTS WITH NEW TISSUE CULTURE FOR WHICH A GLOBAL SUMMIT WAS ALSO ORGANIZED FOR HUGE SHOWCASING. ASSESSEE IS NEITHER AFFILIATED NOR ACCREDITED TO ANY CENTRAL, STATE OR LOCAL GO VERNMENT ORGANIZATION OR AGENCY IN THE FIELD OF RESEARCH. IN HIS SUB MISSION, ASSESSEE IS PURELY A BUSINESS ORGANIZATION AND FOR DUBIO USLY CLAIMING INCOME TAX EXEMPTION BENEFITS SOME COLORABLE ARRANGEMENT OF OBSCURE AND FRINGE TRAINING HAS BEEN DEVISED, WHICH IS APPARENT FROM THE FACTS THAT THE NAME, ADDRESSES OR IDENTITY OF PERSONS TRAINED HAS NOT BEEN PLACED ON RECORD. BESIDES THE ASSESSEE HAS FILED DOCUMENT S UP TO 31-3- 2013 WHEREAS BY KNOW ITS P & L A/C AND FINANCIAL STATEM ENT FOR AY 2016-17 MUST BE READY. THE ABSENCE OF DETAILS ABOUT TR AINED PERSONS, FINANCIAL ASPECTS AND THE MINISCULE ALLEGED TRAINING CANNOT EN TITLE THE ASSESSEE WITH BENEFITS OF SEC. 12, 80 G AND CONSEQUENT EXEMPTIONS. 6. THE ALLEGED TRAINING ACTIVITIES HAVE BEEN CARRIED OUT ON LY IN THE FINANCIAL YEAR 2012-2013 AND IN EARLIER YEARS THERE WERE NO SUCH 6 ITA NO. 1473/PUN/2014 & ITA NO. 1474/PUN/2014 ACTIVITIES. BESIDES, THREE MORE YEARS HAVE BEEN PASSED AN D ASSESSEE HAS NOT BROUGHT ON RECORD ANY FINANCIAL ASPECT IN THE SUBSEQ UENT THREE YEARS. MERELY BY DEVIOUSLY USING THE WORDS WITHOUT COM MERCIAL MOTIVE WILL NOT AUTOMATICALLY LEAD TO CONCLUDE THAT ASSESSEE CO IS A COMPLETE NON COMMERCIAL ORGANIZATION. SINCE ASSESSEE EVEN FAILED TO P ROVE THE MINISCULE AND OBSCURE OBJECT OF GENERAL PUBLIC UTILITY AND NO N COMMERCIAL MOTIVE LD. CIT HAS RIGHTLY REJECTED BOTH THE APPLICATIONS . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. IN OUR CONSIDERED VIEW, LD. CIT HAS POIGNANTLY RAISED PERTINENT REJOINDER TO ASSESSEES ASSERTIONS. HOWEVER T HE NATURE, GENUINENESS AND EXTENT OF ASSESSEES ALLEGED ACTIVITY OF SO CALLE D TRAINING PROGRAM UP TO THE REALM OF SCOPE OF GENERAL PUBLIC UTILITY AND IT IS DOMINANT PURPOSE BEING NON COMMERCIAL, NEEDS TO BE PROP ERLY EXAMINED. THE ASSESSEE HAS PRODUCED INCOMPLETE AND SKET CHY RECORD WHICH DOES NOT ENABLE US TO VERIFY THE RELEVANT FACTS IN PROPER MAN NER. 8. IN THE ENTITY AND FOR THE ENDS OF JUSTICE, BOTH THE A PPEALS OF THE ASSESSEE ARE SET ASIDE BACK TO THE FILE OF LD. CIT TO CO NSIDER THE ELIGIBILITY OF REGISTRATION DE-NOVO IN VIEW OF THE FOREGOING AND AFTER GIVING OPPORTUNITY TO THE ASSESSEE. 9. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED FOR STAT ISTICAL PURPOSE. SD/- SD/- ( # ! $ /ANIL CHATURVEDI) ( . / R.P TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; !' / DATED : 20 TH DECEMBER, 2016 SB 7 ITA NO. 1473/PUN/2014 & ITA NO. 1474/PUN/2014 '()*+,+- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT, AURANGABAD-431002 4. #$% &' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 5. %,- ./ / GUARD FILE. // TRUE COPY// (0 / BY ORDER, 1 &+ PRIVATE SECRETARY, ( &' , / ITAT,