Manav Rachna Education Society, V. CIT Central Circle,

ITA 158/DEL/2008

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5559 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-02-2010
• Assessment Year: 2008-2009
• Appeal Filed On: 17-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: IPS BINDRA
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Charitable institution; Competent authority
• Section: 80G; 12AA; 132; 12; 11

Judgement Text

ITA NOS. 158/DEL/08 & 244/CHD./08 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NOS. 158/DEL/2008 & 244/CHD/2008 M/S MANAV RACHNA EDUCATION SOCIETY VS. COMMISSIONE R OF INCOME TAX, C/O RAKESH RAJ & ASSOCIATES, CENTRAL, LUDHIANA 565, SECTOR-7-B, FARIDABAD AND ALSO AT :- C/O RAKESH RAJ & ASSOCIATES, D-28, SOUTH EXTENSION, PART-I, NEW DELHI 110 049 [PAN : AAATM9177E] (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. RAKESH GUPTA, CA DEPARTMENT BY : SHRI IPS BINDRA, SR. DR. O R D E R PER SHAMIM YAHYA, AM : THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (CENTRAL), LU DHIANA WHEREIN APPROVAL FOR THE PURPOSE OF EXEMPTION UNDER SECTIO N 80G WAS DECLINED AND ALSO ASSESSEE WAS DENIED REGISTRATION UNDER SECTION 12AA OF THE IT ACT. THESE APPEALS WERE HEARD TOGETH ER AND ARE DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE. ITA NOS. 158/DEL/08 & 244/CHD./08 2 2. IN THIS CASE THE ASSESSEE IS A TRUST WHICH RUNS SEVERAL EDUCATIONAL INSTITUTIONS. A SEARCH OPERATION UN DER SECTION 132 WAS CONDUCTED IN THE OFFICES OF THE ASSESSEE TRUST AS WELL AS THE RESIDENTIAL PREMISES OF DR. OP BHALLA, THE FOUNDER AND PRESIDENT OF THE SAID TRUST. DURING THE COURSE OF SEARCH UNEXPL AINED ASSETS AS WELL AS INCRIMINATING DOCUMENTS WERE SEIZED LEADIN G TO THE CONCLUSION THAT ACTIVITIES OF THE TRUST WERE NOT B EING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS FOR WHICH IT WAS SETUP. UNDER THESE CIRCUMSTANCES, PROCEEDING UNDER SECTION 12AA(3) WER E INITIATED. IN HIS ORDER UNDER SECTION 12AA(3) OF THE IT ACT, LD. CIT NARRATED THE FINDINGS IN SEARCH AND AOS ORDER AND CONCLUDED AS UNDER:- 7. ON THE BASIS OF THE ABOVE FACTS AND CIRCUMSTANC ES OF THE CASE AND THE FINDINGS GIVEN BY THE AO IN HIS ASSESSMENT ORDER FOR ASSESSMENT YEAR 2006-07, IT I S NOT POSSIBLE TO ACCEPT THE ASSESSEES CONTENTION TH AT IT IS ENGAGED IN GENUINE CHARITABLE ACTIVITIES IN TERMS OF SECTION 2(15) OF THE IT ACT. REGISTRATION UNDER SECTION 12AA IS GRANTED TO AN INSTITUTE WITH A VIEW TO ENTITLING HIM FOR THE BENEFITS OF TAX EXEMPTION AVAILABLE U/S 11 AND 12. SUCH BENEFITS SHOULD ACCRUE TO THE TRUST ONLY IF IT IS ENGAGED IN GENUIN E CHARITABLE ACTIVITIES LIKE EDUCATION ETC. 8. FROM THE FOREGOING DISCUSSION, IT IS CLEAR THAT THE ASSESSEE TRUST HAS CORRUPTED BY ITS PRESIDENT AND OTHER MEMBERS OF THE GOVERNING BODY WHO APPROPRIATE THE BENEFITS ACCRUING TO IT FROM CRASH COMMERCIALIZATION OF EDUCATION. THEREFORE, I AM SATISFIED THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE AND IS NOT CARRIED ON IN ACCORDANCE WITH TH E OBJECTS OF CHARITY. ITA NOS. 158/DEL/08 & 244/CHD./08 3 3. ON THE BASIS OF HIS FINDINGS ON THE SAME SEARCH AND AOS ORDER, LD. CIT IN HIS ORDER PASSED UNDER SECTION 8 0G(5)(VI) OF THE IT ACT HELD THAT THERE WAS NO SATISFACTION THAT ACTIVI TIES OF THE TRUST WERE CARRIED ON FOR CHARITABLE PURPOSES AND THEREFO RE HE DECLINED TO GIVE APPROVAL TO IT FOR THE PURPOSE OF EXEMPTION U /S 80G. 4. AGAINST THESE ORDERS THE ASSESSEE IS IN APPEAL B EFORE US. 5. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. LD. COUNSEL OF THE ASSESSEE PRODUCED BEFORE US THE ORDE R OF THE CIT(A) FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 FOR TH E ASSESSEE. IN THESE ORDERS CIT(A) HAS HELD THAT HE HAS DELETED T HE ADDITION MADE BY THE AO SO THE BASIS ON WHICH EXEMPTION HAS BEEN DENIED DOES NOT SURVIVE. THEREFORE, THE AO IS DIRECTED TO GIVE EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT AS THE SOCIETY IS DULY REGISTERED BY THE COMPETENT AUTHORITY UNDER SECTION 12AA OF THE ACT. 6. IN LIGHT OF THE APPELLATE ORDER OF CIT(A) FOR A SSESSMENT YEAR 2005-06 AND 2006-07 LD. COUNSEL OF THE ASSESSEE PLE ADED THAT THE ISSUE OF REGISTRATION UNDER SECTION 12AA OF THE IT ACT AND DENIAL OF EXEMPTION UNDER SECTION 80G OF THE ACT BE REMITTED TO THE FILES OF THE CIT TO CONSIDER THE ISSUE AFRESH, AS THE BASIS OF ADDITION BY THE LD. CIT DOES NOT SURVIVE. IN LIGHT OF THE APPELLA TE ORDERS OF THE CIT(A) FOR ASSESSMENT 2005-06 AND 2006-07, LD. DR FAIRLY AGREED TO THIS PROPOSITION. ACCORDINGLY, UPON CAREFUL C ONSIDERATION, WE REMIT THE ISSUE TO THE FILES OF THE CIT TO CONSIDER THE SAME AFRESH IN ITA NOS. 158/DEL/08 & 244/CHD./08 4 LIGHT OF THE APPELLATE ORDER OF THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2005-06 AND 2006-07. 7. IN THE RESULT BOTH THE APPEALS BY THE ASSESSEE A RE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15/02/2010 U PON CONCLUSION OF THE HEARING. SD/- SD/- [C.L. SETHI] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15/02/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES