ITO (E), New Delhi V. J.D. Tyler School Society, New Delhi

ITA 152/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91345 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 03-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Assessee Lawyers: MANISH KUMAR; S S H R K MEHRA
• Keywords: Charitable institution; Benefit of exemption
• Section: 12; 11; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: SMC NEW DELHI BEFORE SHRI G.C. GUPTA, VICE PRESIDENT ITA NO . 152 /DEL/201 4 ASSESSMENT YEAR: 2009 - 10 INCOME TAX OFFICER (E) VS. J.D. TYTLER SCHOOL SOCIETY, TRUST WARD - IV, PRATYAKSH 869, EAST PARK ROAD, KAR BHAWAN, CIVIC CENTRE, KAROL BAGH, NEW DELHI NEW DELHI. (PAN: AAATJ0755F ) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. K.K. JAISWAL, SR. DR RESPOND ENT BY : S /S H. R.K. MEHRA, FCA & MANISH KUMAR, ADV. DATE OF HEARING: 03.06.2015 DATE OF PRONOUNCEMENT : 03.07.2015 O R D E R PER G.C. GUPTA, VICE PRESIDENT THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 2009 - 10 IS DIRECTED AGAINST THE ORDER O F LEARNED CIT(A). 2. THE GROUNDS OF APPEAL OF THE REVENUE ARE AS UNDER: I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN EXCLUDING THE DEVELOPMENT FEES OF RS. 79,03,655/ - OUT OF THE GROSS RECEIPTS AS CO MPUTED BY THE A.O. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE BENEFIT OF EXEMPTION U/S 11 & 12 OF THE ACT, 1961 IGNORING THE FACTS THAT THE SOCIETY W AS INVOLVED IN VIOLATING THE RULES/GUIDELINES FRAMES IN THIS MATTER 2 ITA NOS. 152 /DEL/2014 2 III. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE BENEFIT OF EXEMPTION U/S 11 & 12 IGNORING THE FACT THAT THE ASSESSEE DOES NOT SATISFY THE FIRST AND MAIN PRE - CONDITION I.E. CHARITABLE PURPOSES INASMUCH AS CONCERNED THE OBJECTS AS DEFINED IN THE MOA OF THE SOCIETY. IV. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE BENEFIT OF EXEMPTIO N U/S 11 & 12 IGNORING THE FACT THAT THE SOCIETY WAS IMPARTING EDUCATION ON COMMERCIAL PRINCIPLE WITH HAVING PROFIT MOTTO. 3. THE LEARNED DR SUBMITTED THAT THE REPORT OF COMPTROLLER & AUDITOR GENERAL OF INDIA WAS AGAINST THE ASSESSEE AND THE ADDITION WAS MADE ON ACCOUNT OF CHARGING OF DEVELOPMENT FEES BY THE ASSESSE E . HE SUBMITTED THAT THE ACTIVITIES OF THE ASSESSEE WERE NOT CHARITABLE IN NATURE AND THEREFORE NOT IN CONFORMITY WITH THE PROVISIONS OF SECTION 2(15) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) AND THEREFORE , THE BENEFIT OF SECTIONS 11 & 12 WAS DENIED TO THE ASSESSEE SOCIETY FOR THE RELEVANT ASSESSMENT YEAR 2009 - 10. HE SUBMITTED THAT THE PROPOSAL FOR WITHDRAWAL OF REGISTRATION UNDER SECTION 12AA OF THE ACT WAS ALSO SENT SEPARATELY BY THE AS SESSING OFFICER TO THE DIT (EXEMPTION). HE REFERRED TO THE RELEVANT PORTION OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. HE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 4. LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED DR. HE SUBMITTED THAT THE CAG S R EPORT WAS NOT AGAINST THE ASSESSEE AND REFERRED TO PAGE NO. 39 OF THE COMPILATION FILED BY THE ASSESSEE BEFORE THE TRIBUNAL WHEREIN THE SENIOR DEPUTY ACCOUNTANT GENERAL (COMMERCIAL) OF THE 3 ITA NOS. 152 /DEL/2014 3 CAG S OFFICE HAS CERT IFIED THAT THE GENERAL CONDITION OF THE ACCOUNTS OF THE ASSESSEE SOCIETY FOR THE PERIOD 2006 - 09 WAS FOUND TO BE SATISFACTORY SUBJECT T O THE OBSERVATIONS MADE IN THE INSPECTION REPORT. HE SUBMITTED THAT THE AMOUNT OF THE DEVELOPMENT FUND WAS TAKEN AS PER TH E NORMS FIXED UNDER THE DELHI EDUCATION ACT AND THERE WAS NO VIOLATION OF STATUTORY PROVISIONS IN THIS REGARD AND THE FEES WERE CHARGED ONLY UPTO THE LIMIT S ALLOWED, AS PER THE APPLICABLE PROVISIONS OF LAW. HE SUBMITTED THAT THE REGISTRATION GRANTED BY THE CIT/DIT (EXEMPTION) UNDER SECTION 12AA OF THE ACT HOLDING THE ASSESSEE SOCIETY AS CHARITABLE HAS NOT BEEN CANCELLED TILL DATE AND THE ASSESSEE SOCIETY HAS NOT RECEIVED ANY NOTICE IN THIS REGARD. HE SUBMITTED THAT THE ISSUE OF DEVELOPMENT FUND IS COVERED I N FAVOUR OF THE ASSESSEE WITH THE DECISION OF DELHI TRIBUNAL IN THE ASSESSEE S OWN CASE FOR THE IMMEDIATE PRECEDING ASSESSMENT YEAR I.E. 2008 - 09 IN ITA NO. 4476/DEL/2011, DT. 08.01.2014, WHEREIN IT WAS HELD THAT THE SCHOOL IS ENTITLED TO COLLECT DEVELOPMEN T FEES FOR THE PURPOSES OF SUPPLEMENTING THE RESOURCES FOR PURCHASE, UPGRADATION AND REPLACEMENT OF FURNITURE, FIXTURE AND EQUIPMENTS AND THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE ON THE ISSUE OF DEVELOPMENT FUND WAS CONFIRMED BY THE TRIBUNAL. THE REVENUE FILED AN APPEAL BEFORE THE HON BLE DELHI HIGH COURT AGAINST THE ORDER OF TRIBUNAL DATED 08.01.2014 AND THE HON BLE JURISDICTIONAL HIGH COURT IN ITA NO. 424/2014 VIDE ORDER DATED 08.04.2015, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE TRIBUNAL. 4 ITA NOS. 152 /DEL/2014 4 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE PERUSED THE ORDER S OF THE ASSESSING OFFICER AND THE CIT(A). I FIND THAT THE ASSESSEE HAS CLAIMED THAT IT HAS CHARGED DEVELOPMENT FEES WITHIN THE LIMITS AND NORM S PRESCRIBED UNDER THE DELHI EDUCATION ACT AND THIS STAND OF THE ASSESSEE HAS NOT BEEN CONTROVERTED BY THE REVENUE. LEARNED COUNSEL FOR THE ASSESSEE HAS STATED AT THE BAR THAT THE REGISTRATION GRANTED TO THE ASSESSEE SOCIETY UNDER SECTION 12AA OF THE ACT H AS NOT BEEN CANCELLED TILL DATE NOR ANY NOTICE WAS ISSUED IN THIS REGARD BY THE REVENUE . MOREOVER, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR THE IMMEDIATE PRECEDING YEAR I.E. ASSESSMENT YEAR 2008 - 09 VIDE ORDER DATED 08.01.2014 WHEREIN THE ORDER OF LEARNED CIT(A) DELETING THE ADDITION ON ACCOUNT OF DEVELOPMENT FUND OF RS. 66.25 LAKHS WAS CONFIRMED BY THE TRIBUNAL AND IT WAS HELD THAT AS PER THE DIRECTION ISSUED BY THE DIRECTOR OF EDUCATION , THE SCHOOL IS ENTITLED TO COLLECT THE DEVELOPMENT FEES FOR THE PU RPOSES OF SUPPLEMENTING THE RESOURCES FOR PURCHASE, UPGRADATION AND REPLACEMENT OF FURNITURE, FIXTURE AND EQUIPMENTS. THE HON BLE JURISDICTIONAL HIGH COURT , VIDE ITS ORDER DATED 08.04.2015, HAS NOT INTERFERED WITH THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2008 - 09 DATED 08.01.2014 (SUPRA). IN THESE FACTS OF THE CASE, I AM OF THE CO NSIDERED VIEW THAT AS THE ASSESSEE HAS CHARGED DEVELOPMENT FEES WITH IN THE LIMITS AND NORMS PRESCRIBED UN DER THE DELHI EDUCATION ACT AND THE ISSUE OF TAXABILITY OF DEVELOPMENT FUND BEING COVERED IN FAVOUR OF THE 5 ITA NOS. 152 /DEL/2014 5 ASSESSEE WITH THE DECISIONS OF THE TRIBUNAL AND THE JURISDICTIONAL HIGH COURT IN THE ASSESSEE S OWN CASE FOR THE IMMEDIATE PRECEDING ASSESSMENT YEAR I.E. 2008 - 09 (SUPRA) AND THE REGISTRATION GRANTED UNDER SECTION 12AA HA S NOT BEEN CANCELLED TILL DATE, IT COULD NOT BE SAID THAT THE ASSESSEE SOCIETY WAS NOT CHARITABLE IN N ATURE OR WAS NOT ENTITLE TO EXEMPTION UNDER SECTIONS 11 & 12 OF THE ACT AND THAT TH E AMOUNT OF DEVELOPMENT FUND WAS TAXABLE. IN THIS VIEW OF THE MATTER, THE ORDER OF THE LEARNED CIT(A) IS CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 7 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCE D IN THE OPEN COURT ON 03.07 . 2 0 15 . SD/ - ( G.C. GUPTA ) VICE PRESIDENT DATED: 03.07 . 2015 *RK/ - COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR