Dynamic Educational Society, Hyderabad V. Director of Income-Tax (Exemptions), Hyderabad

ITA 1706/HYD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6415 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 06-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: S RAMA RAO
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE S/SHRI CHANDRA POOJARI, A.M. & SAKTIJIT DEY, J.M. ITA.NO.1706/HYD/2013 DYNAMIC EDUCATIONAL SOCIETY, NALGONDA PAN AABTD 1811-B VS. DIT(E) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. S. RAMA RAO FOR REVENUE : MR. D. SUDHAKAR RAO DATE OF HEARING : 02.04.2014 DATE OF PRONOUNCEMENT : 23 .04.2014 ORDER PER SAKTIJIT DEY, J.M. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25-9-2013 OF THE DIT (E), HYDERABAD REJECTING THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12A OF THE ACT. 2. BRIEFLY THE FACTS ARE, THE ASSESSEE A SOCIETY RE GISTERED UNDER THE AP SOCIETIES REGISTRATION ACT MADE AN APPLICATI ON IN FORM NO.10A ON 30-3-2013 BEFORE THE DIT (E), HYDERABAD SEEKING REGISTRATION U/S 12AA OF THE ACT. THE DIT (E), HYD ERABAD ISSUED A QUESTIONNAIRE TO THE ASSESSEE CALLING UPON TO FURNI SH MEMORANDUM OF ASSOCIATION AND BYELAWS AS WELL AS CE RTAIN OTHER INFORMATION. THE DIT (E) WAS ALSO ASKED THE ASSESSE E TO PRODUCE BOOKS OF ACCOUNTS FOR VERIFICATION. IN COMPLIANCE T O THE QUERY MADE BY THE DIT (E), THE ASSESSEE PRODUCED BOOKS OF ACCOUNTS AND OTHER INFORMATION CALLED FOR BY THE DIT (E). AFTER VERIFICATION OF THE INFORMATION FURNISHED AND EXAMI NING THE BOOKS OF ACCOUNTS, THE DIT (E) FOUND THAT THE ASSESSEE SO CIETY IS RUNNING 2 ITA.NO.1706/HYD/2013 DYNAMIC EDUCATIONAL SOCIETY, HYDERABAD. A SCHOOL IN THE NAME OF NALGONDA PUBLIC SCHOOL. HE FURTHER NOTICED THAT THE SAID SCHOOL IS COLLECTING FUNDS TO WARDS SCHOOL BUILDING DEVELOPMENT FUND FOR CONSTRUCTION OF SCHO OL BUILDING. HE ALSO NOTICED THAT SCHOOL FUND RECEIVED BY THE SOCIE TY IN DIFFERENT FINANCIAL YEARS IS AS UNDER:- F.Y.2012-13 RS. 6,19,000/- F.Y. 2011-12 RS.43,71,500/- F.Y.2011-12 RS.39,07,100/- WHEN THE DIT (E) CALLED FOR EXPLANATION FROM THE AS SESSEE ON COLLECTION OF SCHOOL DEVELOPMENT FUND, THE ASSESSEE EXPLAINED THAT AN AMOUNT OF RS.5000/- IS COLLECTED FOR FRESH ADMIS SION OF LPP STUDENTS PER YEAR TO MEET ALL SORTS OF BASIC INFRAS TRUCTURE REQUIRED FOR THE LPP STUDENTS. IT WAS SUBMITTED THAT SUCH F EE WILL BE COLLECTED EVERY YEAR FROM THE NEWLY ADMITTED STUDEN TS OF LPP CLASSES AND THESE FEES WERE COLLECTED IN A SMALL WA Y FROM 2004 ONWARDS. SIMILARLY, AMOUNTS OF RS.3200 AND RS.3500 /- WERE CONTRIBUTED VOLUNTARILY BY THE PARENTS OF 1ST TO 10 TH STANDARD CLASSES PER YEAR IN THREE YEARLY INSTALLMENTS DURIN G 2010-11 AND 2011-12 RESPECTIVELY TOWARDS SCHOOL BUILDING DEVELO PMENT FUND. IT WAS CONTENDED THAT SUCH AMOUNT WAS PROPOSED ONLY WHEN NEW SCHOOL BUILDING WAS GOING TO BE CONSTRUCTED IN A BI G WAY AND ONLY DURING THE FINANCIAL YEARS 2010-11 AND 2011-12, THE SOCIETY RECEIVED CONTRIBUTIONS FROM PARENTS VOLUNTARILY THO UGH THE CONSTRUCTION ACTIVITY WAS GOING ON ALL ALONG. IT WAS SUBMITTED THAT DURING THE YEAR 2012-13 THE SOCIETY CONSTRUCTE D ADDITIONAL SCHOOL BUILDING, THE COST OF WHICH HAS ESTIMATED AT RS.1 CRORE. THE DIT (E) AFTER CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE AND VERIFYING THE DETAILS WAS OF THE VIEW THAT THE SCHO OL DEVELOPMENT FUND COLLECTED BY THE ASSESSEE SOCIETY FROM THE PAR ENTS ARE NOT VOLUNTARY CONTRIBUTIONS BUT ARE COMPULSORILY RECEIV ED FROM THE STUDENTS. THE DIT (E) BY RELYING UPON CERTAIN JUDI CIAL PRECEDENTS 3 ITA.NO.1706/HYD/2013 DYNAMIC EDUCATIONAL SOCIETY, HYDERABAD. NOTED THAT WHEN THE ASSESSEE IS COLLECTING DONATION S COMPULSORILY FOR ADMISSION OF STUDENTS OVER AND ABOVE THE PRESC RIBED FEES THEN THE ASSESSEE WOULD NOT BE ELIGIBLE FOR EXEMPTION E ITHER U/S 10(23C) OR U/S 11 OF THE ACT. ACCORDINGLY, THE DIT (E) HELD THAT THE ASSESSEE CANNOT BE GRANTED REGISTRATION U/S 12A OF THE ACT. 3. THE LEARNED AR SUBMITTED BEFORE US THAT THE DIT (E) HAS NOT FOUND ANY IRREGULARITY/DEFICIENCY SO FAR AS THE CHARITABLE OBJECT OF THE ASSESSEE IS CONCERNED. ONLY BECAUSE THE ASS ESSEE HAS COLLECTED CERTAIN AMOUNTS TOWARDS SCHOOL DEVELOPMEN T FUND ETC., REGISTRATION U/S 12AA OF THE ACT CANNOT BE DENIED T O THE ASSESSEE WHEN THE OBJECT OF THE ASSESSEE REMAINS TO BE CHARI TABLE AS PROVIDED UNDER SECTION 2(15) OF THE ACT. THE LEARNE D AR SUBMITTED THAT THE OBSERVATION OF THE DIT (E) THAT THE ASSESS EE HAS COLLECTED FEES FROM THE STUDENTS OVER AND ABOVE THE PRESCRIBE D FEE IS ALSO NOT CORRECT AS THE EDUCATIONAL INSTITUTION IS ONLY A SCHOOL AND THERE IS NO SUCH PRESCRIBED FEES FOR SUCH INSTITUTION. TH E LEARNED AR SUBMITTED THAT AT THE TIME OF GRANT OF REGISTRATION , THE DIT (E) IS ONLY REQUIRED TO LOOK INTO THE OBJECT OF THE SOCIET Y. IF THE OBJECTS OF THE SOCIETY ARE GENUINE AND FOR CHARITABLE PURPO SE, THEN DENIAL OF REGISTRATION U/S 12A OF THE ACT IS NOT JUSTIFIED . SO FAR AS ELIGIBILITY FOR EXEMPTION U/S 11 OF THE ACT IS CONC ERNED, THE DIT(E) MAY NOT GO INTO THAT ASPECT AT THE STAGE OF GRANTIN G REGISTRATION U/S 12A OF THE ACT AS THOSE MATTERS CAN ONLY BE LOO KED INTO BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDING S. IN SUPPORT OF SUCH CONTENTION, THE LEARNED AR RELIED ON THE FO LLOWING DECISIONS:-ABID RASOOL KHAN CHARITABLE I) ABID RASOOL KHAN CHARITABLE &EDUCATIONAL TRUST, HYDERABAD VS. DIT (ITA NO.1368/HYD/2012) DT. 28- 6-2013. II) GOWRI SANKARA SATHRA VS. ASST. DIRECTOR OF IT ( ITA NO.1121/HYD/12) DT. 7 TH JUNE, 2013. 4 ITA.NO.1706/HYD/2013 DYNAMIC EDUCATIONAL SOCIETY, HYDERABAD. III) GOWRI SANKARA VS.ADIT (M.A NO.112/HYD/2012) DT . 22-11-2013. IV) INSTITUTE & ELECTRONICS ENGINEERS INC. VS. DIT (E, HYDERABAD (38 TAXMAN . COM 211) V) CIT VS. LUDHINA VS. BABA KARTAR SINGH DUKKI EDUCATIONAL TRUST (42 TAXMANN.COM.17( P & H) VI) SAIVANI EDUCATIONAL SOCIETY VS. DIT (E) (32 TAXMANN.COM.131) 4. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE DIT (E). 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. WE HAVE ALSO CAREFULLY APPLIED OUR MIND TO THE DECISIONS RELIED UPON BY THE LEARNED AR. ON PERUSAL OF THE I MPUGNED ORDER PASSED BY THE DIT (E), IT IS VERY MUCH CLEAR THAT H E HAS REJECTED THE APPLICATION FOR REGISTRATION U/S 12A OF THE A CT ON THE ALLEGATION THAT THE ASSESSEE HAS COMPULSORILY COLLE CTED AMOUNTS OVER AND ABOVE THE PRESCRIBED FEE FOR WHICH THE ASS ESSEE WILL NOT BE ELIGIBLE FOR EXEMPTION EITHER U/S 10(23C) OR U/ S 11 OF THE ACT. HOWEVER, IN OUR VIEW THIS CANNOT BE A GROUND FOR RE FUSING REGISTRATION U/S 12A OF THE ACT. FROM THE ORDER OF THE DIT (E) IT IS VERY MUCH CLEAR THAT HE HAS NOT FOUND ANYTHING CONT RARY TO INDICATE THAT OBJECT OF THE SOCIETY IS NOT FOR CHAR ITABLE PURPOSE. AT LEAST THERE IS NO SUCH ALLEGATION BY THE DIT(E) IN THE ORDER PASSED. THEREFORE, WHEN THE OBJECTS OF THE SOCIETY ARE FOUN D TO BE GENUINE AND CHARITABLE IN NATURE, THE DIT (E) CANNOT GO INT O THE ASPECT WHETHER THE ASSESSEE WILL BE ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT OR NOT. THAT ASPECT CAN ONLY BE EXAMINED BY TH E ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS. THE DIT (E) CERTAINLY CANNOT STEP INTO THE SHOES OF THE ASSESSI NG OFFICER WHILE CONSIDERING THE ISSUE OF GRANT OF REGISTRATION U/S 12A OF THE ACT. IT HAS TO BE BORNE IN MIND THAT GRANT OF REGISTRATION U/S 12AA AND 5 ITA.NO.1706/HYD/2013 DYNAMIC EDUCATIONAL SOCIETY, HYDERABAD. ADMISSIBILITY OF EXEMPTION U/S 11 OF THE ACT ALTOGE THER ARE TWO DIFFERENT ISSUES. GRANT OF REGISTRATION U/S 12A OF THE ACT DOES NOT AUTOMATICALLY ENTITLE THE ASSESSEE TO AVAIL EXEMPTI ON U/S 11 OF THE ACT. FOR AVAILING EXEMPTION U/S 11, THE ASSESSEE HAS TO COMPLY WITH THE CONDITIONS LAID DOWN U/S 11 TO 13 OF THE ACT. THOSE ASPECTS CAN BE LOOKED INTO BY THE ASSESSING OFFICER IN COURSE OF ASSESSMENT PROCEEDINGS AND EXEMPTION U/S 11 CAN BE DENIED TO AN ASSESSEE IF THERE IS ANY VIOLATION TO THE CONDI TIONS LAID DOWN UNDER THE PROVISIONS OF SECTIONS 11 TO 13 OF THE AC T. IN THE AFORESAID CIRCUMSTANCES, THE GROUND OF REJECTION OF APPLICATION FOR REGISTRATION, IN OUR VIEW, IS LEGALLY UNSUSTAINABLE . THE DECISION RELIED UPON BY THE ASSESSEE ALSO EXPRESSES SUCH VIE W BY HOLDING THAT AT THE TIME OF GRANT OF REGISTRATION U/S 12AA OF THE ACT, THE AUTHORITY CONCERNED HAS ONLY TO LOOK INTO THE GENUI NENESS OF THE OBJECTS OF THE TRUST. IN THE AFORESAID VIEW OF THE MATTER, THE GROUND ON WHICH THE DIT (E) HAS REFUSED TO GRANT RE GISTRATION TO THE ASSESSEE, IN OUR OPINION, IS NOT A VALID GROUND . ACCORDINGLY WE SET ASIDE THE ORDER OF THE DIT (E) AND DIRECT HIM T O GRANT REGISTRATION TO THE ASSESSEE U/S 12AA OF THE ACT. 6. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 .04.2014 . SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIA L MEMBER HYDERABAD, DATED 23 RD APRIL, 2014 JMR* 6 ITA.NO.1706/HYD/2013 DYNAMIC EDUCATIONAL SOCIETY, HYDERABAD. COPY TO : 1. DYNAMIC EDUCATIONAL SOCIETY, D.NO.6 - 2 - 907, MEERBAGH COLONY, NALGONDA, A.P. 508 002. C/O. MR. S. RAMA RAO ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, H.NO. 3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 029. 2. DIRECTOR OF INCOME TAX ( EXEMPTIONS), HYDERABAD. 3. AD IT( E ) - I I , HYDERABAD 4. D.R. ITAT, B BENCH, HYDERABAD. 7 ITA.NO.1706/HYD/2013 DYNAMIC EDUCATIONAL SOCIETY, HYDERABAD. SL. NO. DESCRIPTION DATE INITIALS 1. DATE OF DICTATION BY THE AUTHOR ON COMPUTER SR.PS 2. DRAFT PLACED BEFORE THE DICTATING MEMBER SR.PS 3. DRAFT PLACED BEFORE THE SECOND MEMBER J.M. 4. DRAFT APPROVED BY THE SECOND MEMBER A.M. 5. DATE OF APPROVED ORDER COMES TO THE SR. PS SR.PS 6. DATE OF PRONOUNCEMENT OF ORDER SR.PS 7. DATE OF FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILES GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER