Vestal Educational society, Vizianagaram V. THE CIT (EXAMPTIONS), Hyderabad

ITA 16/VIZ/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8745 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 20-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEBA K SONAWAL
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 1 6 / VIZ /201 6 VESTAL EDUCATIONAL SOCIETY, 382/2, NEAR KORUKONDA SINIK SCHOOL, KORUKONDA, VIZIANAGARAM . V S . CIT (EXEMPTIONS) , HYDERABAD . PAN NO. AAAAV 5760 D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI DEBA K. SONAWAL CIT DR DATE OF HEARING : 06 / 02 /201 8 . DATE OF PRONOUNCEMENT : 23 / 02 /201 8 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (EXEMPTIONS) , HYDERABAD , DATED 28 /0 9 /201 5 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE - SOCIETY HAS FILE D AN APPLICATION ON 31/03/2015 IN FORM NO. 10 A FOR REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') WITH THE FOLLOWING OBJECTS: - 2 ITA NO. 16/VIZ/2016 ( VESTAL EDUCATIONAL SOCIETY ) (I) TO IMPART AND PROMOTE HIGHER EDUCATION , GENERAL TECHNICAL AND TECHNOLOGICAL TO BOYS AND GIRLS IRRESPECTIVE OF CASTE OR CREED. (II) TO ESTABLISH COLLEGE OR COLLEGES AND INSTITUTIONS FOR THE SAID PURPOSE. (III) TO RUN, DEVELOP OR I MPROVE ANY SCHOOL , COLLEGE, MANAGEMENT, INSTITUTE, TECHNICAL INSTITUTE INCLUDIN G VOCATIONAL EDUCATION O R ANY OTHER EDUCATIONAL INSTITUTION OR SOC I E T Y OR ADOPT ASS IST OR HELP ANY EXISTING EDUCATIONAL INSTITUTION WITHOUT PROFIT MOTIVE FOR THE BENEFIT OF THE PUBLIC IN INDIA IN GENERAL AND MORE PARTICULARLY FOR THE BENEFIT OF SCHEDULED CASTES AND SCHEDULED TRIBES. (IV) TO ORGANIZE, STA RT , RUN OR ASSIST ANY PROGRAMME EITHER BY I T SELF OR BY ASSISTING OR COORDIN ATING WITH OTHER ED UCATIONAL OR OT HER INSTITUTIONS FOR (V) COACHING, GUIDANCE AND COUNSELING, VOCATIONAL TRAINING OR TRAINING FOR PREPARATION FOR ANY ENTRANCE OR COMPETITIVE TESTS FOR RECRUITMENT FOR JOBS INCLUDING ALL INDIA AND STATE SERVICE EXAMINATION OR FOR AD MI SS I ON O R PROFESSIONAL OR OTHER EDUCATIONAL INSTIT UTIONS. (VI) TO START, RUN OR ASSIST PROGRAMMES FOR THE SCHEDULED CASTES AND SCHEDULED TRIBES, BACKWARD CLASSES, WOMEN, CHILDREN, BONDED LABOUR AND OTHER SECTIONS OF THE SOCIETY FOR THE PROMOTION OF LEGAL ASSISTANCE , LEGAL AWARENESS, TRAINING OF PARA LEGA L , HUMAN R I GHTS, C IVIL RIGHTS AND OTHER M ATTERS CONCERNED WITH OVERALL DE VELOPMENT OF THESE SECTIONS OF SO CI ETY. (VII) (VII) TO RUN, WORKSHOP, PROGRAM M E, SEMINARS ETC FOR THE EDUCATED UNEMPLOYED AND THE RURAL YOUTH IN CO - ORDINATION WITH OTHER ORGANIZATIONS. (VIII) TO RUN COMPUTER TRAINING CENTRES. (IX) TO ENCOURAGE AND START RESEARCH AND STUDY ON MODERN EDUCATION WITH SCIENTIFIC METHODS. (X) TO PROMOTE AND FOSTER EDUCATION AMONG POOR AND DESERV IN G STUDENTS WHETHER OF PRIMARY, SECONDA RY, GRADUATE, POST GRADUATE OR VOCATIONAL COURTS BY ALL MEANS AND MAKE SUCH EDUCATION AVA IL AB L E TO WEA K ER SECTIONS OF THE COMMUNITY . (XI) TO GIVE DONATIONS TO EDUCATIONAL INSTITUTIONS WHICH ARE RUNNING NON - PROF I T BAS I S SUBJECT TO SUCH CONDITIONS CONSISTENT WITH OBJECTS OF THE MANAGING 3 ITA NO. 16/VIZ/2016 ( VESTAL EDUCATIONAL SOCIETY ) COMMITTEE. (XII) TO CONSTITUTE SCHOLARSHIPS TO POOR AND DESERVING STUDENTS ENABLING THEM TO CONTINUE THEIR STUDIES AND TO GIVE GRANTS FOR FEES AND OTHER CHARGES OR RE I MBURSEMENT FOR COSTS O F BO OKS INSTRUMENTS AND OTHER ED UCATIONA L AIDS FOR THEIR EDUCATIONA L PURSUITS . (XIII) TO HELP ESTABLISHMENT O F STUDENTS HOSTEL OR TO GIVE OTHER ASSISTANCE FOR POOR AND DESERVING STUDENTS TO FIND INEXPENSIVE LIVING ACCOMMODATION TO E NABLE THEM TO PROSECUTE THE IR STUDI ES (XIV) TO CONSTITUTE PRIZES FOR OUT STANDING ACHIEVEMENTS OF STUDENTS IN EDUCATIONAL INSTITUTIONS E I THER IN THE EXAMINATIONS, SPORTS , GENERA L KNOWLEDGE OR SUCH OT H ER PROFICIENCIES. (XV) TO GIVE LOANS AT NIT OR SUBSIDIZED LOW RATE OF INTEREST TO STUDENTS TO ENABLE THEM TO PROSECUTE HIGHER STUDIES. (XVI) TO UNDERTAKE OTHER INCIDENTAL ACTIVITIES WITHOUT PROFIT M OTIVE WHICH ARE CONSISTENT WITH THE ABOVE OBJECTS AND ARE NOT INCONSISTENT WITH THE OBJECT OF THE MANAGING COMMITTEE BEING PR OMOTION OF EDUCATION . 3 . THE L D. CIT(E) AFTER CONSIDERING THE OBJECTS OF THE ASSESSEE SOCIETY , OBSERVED THAT DURING THE COURSE OF PROCEEDINGS, THE APPLICANT WAS A SK ED TO EXPLAIN THE SOURCE OF CASH DEPOSITS APPEARING THE BANK STATEMENT, H OWEVER, ASSESSEE DID NOT SUBMIT THE DETAILS OF CASH DEPOSITS . THEREFORE, T HE LD. CIT(E) DENIED REGISTRATION UNDER SECTION 12AA OF THE ACT. 4 . ON APPEAL, LD. C OUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ASSESSEE IS AN EDUCATIONAL INSTITUTION CARRYING ON ITS ACTIVITIES ARE ONLY RELATED TO EDUCATION AND THEREFORE, THE LD. CIT(E) HAS TO GONE THROUGH THE OBJECTS AND TO GRANT REGIST RATION . U NLESS THE LD.CIT(E) CAME TO A CON C LUSION THAT THE ASSESSEE - SOCIETY IS NOT A 4 ITA NO. 16/VIZ/2016 ( VESTAL EDUCATIONAL SOCIETY ) GENUINE , HE HAS TO GRANT REGISTRATION UNDER SECTION 12AA OF THE ACT. HE RELIED ON THE DECISION OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF S REE ANJANEYA MEDICAL TRUST VS. CIT [ 382 ITR 399 (KER.) . ] 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT ASSESSEE FAILED TO EXPLAIN THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT. 6 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDER OF THE LD. CIT(E). 7 . THE ASSESSEE - SOCIETY IS RUNNING AN EDUCATIONAL INSTITUTION AND AS PER THE OBJECTS OF THE SOCIETY, IT IS SOLELY EXISTED FOR THE PURPOSE OF EDUCATION. THE LD. CIT(E) HAS NOT DOUBTED THE ACTIVITIES CARRIED ON BY THE ASSESSEE - SOCIETY. HE DENIED THE REGISTRATION IS ONLY ON THE GROUND THAT SOURCE OF CASH DEPOSITS WERE NOT EXPLAINED. WE FIND THAT AT THE STAGE OF GRANTING REGISTRATION, THE LD. CIT(E) HAS TO SEE WHETHER THE OBJECTS OF THE ASSESSEE - SOCIETY ARE CHARITABLE IN NATURE OR NOT. ONCE, OBJECTS ARE CHARITABLE IN NATURE, GENUINENESS OF THE SOCIETY IS NOT DOUBTED , LD. CIT(E) HAS NO OPTION BUT TO GRANT REGISTRA TION UNDER SECTION 12AA OF THE ACT. IN THE PRESENT CASE, NO DOUBT, THE OBJECTS ARE CHARI T ABLE OBJECTS, THE GENUINENESS IS NOT DOUBTED, 5 ITA NO. 16/VIZ/2016 ( VESTAL EDUCATIONAL SOCIETY ) THEREFORE, IN OUR OPINION, THE ASSESSEE IS ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. 8. UNDER SIMILAR C IRCUMSTANCES , THE HON'BLE KERALA HIGH COURT IN THE CASE OF SREE ANJANEYA MEDICAL TRUST (SUPRA) HAS OBSERVED THAT IT IS VERY CLEAR FROM A PLAIN READING OF SECTION 12A & 12AA OF THE ACT THAT WH AT IS INTENDED THEREBY IS ONLY A REGISTRATION SIMPLICITER OF THE ENTITY OF A TRUST. THIS HAS BEEN MADE A CONDITION PRECEDENT FOR THE CLAIMING OF BENEFITS UNDER THE OTHER PROVISIONS OF THE ACT REGARDING EXEMPTION OF INCOME, CONTRIBUTION ETC. NO EXAMINATION OF THE MODUS OF THE APPLICATION OF THE FUNDS OF THE TRUST OR AN EXAMINATION OF THE ETHICAL BACKGROUND OF ITS SETTLERS IS CALLED FOR WHILE CONSIDERING AN APPLICATION FOR REGISTRATION. THE STAGE FOR CONSIDERATION OF THE RELEVANCE OF THE OBJECT OF THE TRUST AND THE APPLICATION OF ITS FUNDS ARISES AT THE TIME OF THE ASSESSMENT. WHERE BENEFITS ARE CLAIMED BY THE ASSESSEES IN TERMS OF SECTION 11 & 12 OF THE ACT, THE QUESTION AS TO THE NATURE OF SUCH CONTRIBUTION AND INCOME CAN BE LOOKED INTO. A T THE TIME OF R EGISTRATION OF THE TRUST, GOING BY THE BINDING JUDGMENTS OF THE APEX COURT, WHAT IS TO BE LOOKED INTO IS WHETHER THE TRUST IS A GENUINE ONE AND WHETHER IT IS A SHAM INSTITUTION FLOATED ONLY TO AVAIL THE BENEFITS OF EXEMPTION UNDER THE ACT. 6 ITA NO. 16/VIZ/2016 ( VESTAL EDUCATIONAL SOCIETY ) 9 . KEEPING IN VIEW OF THE ABOVE REFERRED TO JU DG MENT OF THE HON'BLE KERALA HIGH COURT , WE HOLD THAT ASSESSEE IS ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. ACCORDINGLY, WE DIRECT THE LD. CIT(E) TO GRANT REGISTRATION AS REQUIRED BY THE TRUST IN T ERMS OF SECTION 12AA OF THE ACT. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 3 R D DAY OF FEB . , 201 8 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 3 R D FEBRUARY , 201 8 . VR/ - COPY TO: 1. THE ASSESSEE - VESTAL EDUCATIONAL SOCIETY, 382/2, NEAR KORUKONDA SINIK SCHOOL, KORUKONDA, VIZIANAGARAM. 2. THE REVENUE CIT (EXEMPTIONS), HYDERABAD. 3. THE D.R . , VISAKHAPATNAM. 4. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.