Jawaharlal Nehru Technological University, Hyderabad V. Commissioner of Income Tax(Exemption), Hyderabad

ITA 1769/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5802 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: misc
• Appeal Filed On: 06-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: G KALYAN DAS
• Keywords: Charitable institution; Wrong claim
• Section: 12A; 12AA; 139(1); 10(23C); 12; 11; 139

Judgement Text

ITA NO 1769 OF 2019 JNTU HYDERABAD PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.1769/HYD/2019 ASSESSMENT YEAR: 2019-20 JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY, HYDERABAD PAN:AAALJ0369B VS. COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI G.KALYANDAS & A HARISH REVENUE BY : SRI Y.V.S.T.SAI & RAJENDRA KUMAR, DR DATE OF HEARING: 06/04/2021 DATE OF PRONOUNCEMENT: 27/04/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE CIT (EXEMPTIONS), HYDERABAD, DATED 30.09.2019 REJECTIN G THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12A OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE UN IVERSITY FILED APPLICATION IN FORM 10A ON 30.03.2019 SEEKING REGISTRATION U/S 12A OF THE I.T. ACT. THE CIT (E) ISSUED A NOTIC E ON 14.8.2019 DIRECTING THE ASSESSEE TO APPEAR AND PRODUCE ITS OR IGINAL MEMORANDUM OF ASSOCIATION (MOA/TRUST DEED) AND ALSO TO FURNISH DETAILED REPLY ON SPECIFIC POINTS ON OR BEF ORE 6.9.2019. THE ASSESSEE APPEARED THROUGH ITS REPRESENTATIVE AN D FURNISHED THE REQUIRED DETAILS. IT WAS EXPLAINED THAT THE ASS ESSEE HAS NOT ITA NO 1769 OF 2019 JNTU HYDERABAD PAGE 2 OF 8 FILED THE RETURNS OF INCOME FOR THE A.YS 2014-15 & 2016-17 U/S 139(1) OF THE ACT AND THAT NOW THE SYSTEM DOES NOT ALLOW THE ASSESSEE TO FILE BELATED RETURNS. THE ASSESSEE ALSO EXPLAINED THAT THE RETURN OF INCOME FOR THE A.Y 2018-19 HAS NOT YE T BEEN FILED AND THEY WANT TO FILE THE RETURNS OF INCOME FOR THE A.YS 2015-16, 2016-17 AS WELL. THE ASSESSEE EXPLAINED THAT THE A UDITED REPORTS FOR A.YS 2015-16 AND 2016-17 HAVE BEEN SUBMITTED BE FORE THE ASSESSING OFFICER BELATEDLY IN THE YEAR 2019 AND TH AT THE GRANT RECEIVED FROM THE GOVERNMENT IS ONLY FOR SALARY AND THAT THE GRANT IS LESS THAN 50% OF ITS TOTAL RECEIPTS. 3. THE CIT (E), ON PERUSAL OF THE ACKNOWLEDGEMENT O F THE RETURN OF INCOME FOR THE A.Y 2017-18 DATED 23.9.201 9, OBSERVED THAT THE ASSESSEE HAS SHOWN SELF-ASSESSMENT TAX PAY MENT OF RS.50,00,000/- BUT HAS SHOWN TOTAL INCOME AT RS. N IL. HE ALSO OBSERVED FROM THE COMPUTATION OF INCOME FILED FOR T HE A.YS 2016- 17 TO 2018-19, THAT THE ASSESSEE HAS CLAIMED BENEFI T OF SECTION 11, EVEN THOUGH IT HAS NOT OBTAINED THE REGISTRATIO N U/S 12A OF THE ACT. WHEN ASKED TO EXPLAIN, THE LEARNED AR OF T HE ASSESSEE EXPLAINED BEFORE THE CIT (E) THAT SINCE THEY HAVE ALREADY MADE AN APPLICATION FOR REGISTRATION, THEY HAVE CLAIMED EXE MPTION U/S 11 OF THE ACT. WHEN THE ASSESSEE WAS ENQUIRED AS TO WH ETHER THEY HAVE ALREADY SUBMITTED FORM 10 BEFORE THE ASSESSING OFFICER FOR ACCUMULATION OF ITS INCOME, THE ASSESSEE SUBMITTED THAT THEY HAVE NOT FILED ANY FORM. 4. TAKING THE ABOVE FACTS INTO CONSIDERATION, CIT ( E) OBSERVED THAT: (I) THE ASSESSEE HAS FAILED TO FILE ITS AUDITED AC COUNTS AND FAILED TO FILE THE RETURN OF INCOME FOR THE EARLIER A.YS AND THUS, THE ASSESSEE HAS VIOLATED THE PROVISIONS OF ITA NO 1769 OF 2019 JNTU HYDERABAD PAGE 3 OF 8 THE I.T. ACT AND THEREFORE, IT IS NOT ELIGIBLE FOR REGISTRATION U/S 12A OF THE ACT. (II) THE ASSESSEE HAS TO APPLY ITS INCOME ONLY IN I NDIA, BUT HAS FAILED THIS CONDITION AS IT HAS SPENT RS.6,48,39,585/- OUTSIDE INDIA; AND (III) THE ASSESSEE IN ITS RETURN OF INCOME HAS MAD E A FALSE CLAIM OF BENEFIT U/S 11, EVEN THOUGH IT HAD NOT OBTAINED THE REGISTRATION U/S 12A OF THE ACT. 5. FOR ALL THESE REASONS, THE CIT (E) DENIED REGIST RATION U/S 12A OF THE ACT AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE ID CIT(EXEMPTION) IS CONTRARY TO THE LAW AND THE FACTS. 2. THE APPELLANT IS A CHARITABLE INSTITUTION CONSTI TUTED BY ENACTMENT OF THE GOVERNMENT OF ANDHRA PRADESH ON 18/08/2008 FOR IMPARTING HIGHER EDUCATION, RESEARCH , SCIENTIFIC AND TECHNICAL EDUCATION. 3. IN ACCORDANCE WITH THE DIRECTIONS OF UNIVERSITY AND CENTRAL GOVERNMENT, THE INSTITUTION IS IMPARTING AD VANCE TECHNOLOGY LEARNING ALONG WITH OTHER SUBJECTS. 4. THE APPELLANT HAD FILED APPLICATION IN FORM L0A FOR REGISTRATION U/S. 12AA OF THE IT ACT ON 30.03.2019 AND FILED ITS RETURN OF INCOME OF ITS FY 2018-19 ON 31. 10.2019 WITHIN THE EXTENDED TIME U/S. 139(1) OF THE ACT. 5. THE ID CIT ERRED IN HOLDING IN THE ABSENCE OF FI LING OF RETURN OF INCOME WITH THE APPLICATION, THE INSTITUT ION IS NOT ELIGIBLE FOR REGISTRATION U/S. 12AA OF THE ACT. 6. THE ID CIT FAILED TO NOTE THAT THE APPLICATION F OR REGISTRATION SINCE WAS MADE ON 30/03/2019, THE RETU RN COULD NOT BE FILED EARLIER AND THE SAME WAS FILED W ITHIN THE EXTENDED TIME AND ELIGIBLE FOR REGISTRATION. 7. THE ID CIT IS NOT CORRECT IN LAW REFUSING REGIST RATION U/S. 12AA OF THE ACT SUMMARILY WITHOUT CONSIDERING THE CHARITABLE OBJECTS OF THE INSTITUTION AND ON OTHER EXTRANEOUS GROUNDS THAT THERE IS A VIOLATION OF SEC 11 OF THE ACT. ITA NO 1769 OF 2019 JNTU HYDERABAD PAGE 4 OF 8 8. THE ID CIT OUGHT TO HAVE ALSO NOTED THAT REGISTR ATION U/S. 12A OF THE ACT UNDER LAW IS REQUIRED TO BE GRA NTED BASED UPON CHARITABLE OBJECTS CONTAINED IN THE INDE NTURE. 9. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED, REGISTRATION U/S. 12AA OF THE ACT BE GRANTED TO THE ASSESSEE INSTITUTION AND MITIGATE THE HARDSHIP. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THIS UNIVERSITY HAS BEEN CARVED OUT IN 2008 OUT OF THE EARLIER JNTU WHICH WAS FOUND IN 1972 AND IS FUNDED BY THE G OVT. HE SUBMITTED THAT THE ASSESSEE WAS EARLIER EXEMPT FROM TAX AS THE ASSESSEE IS ENGAGED ONLY IN IMPARTING EDUCATION WHI CH IS A CHARITABLE ACTIVITY AND WAS ALSO EXEMPT FROM FILING RETURNS OF INCOME. IT IS SUBMITTED THAT IT IS HEADED BY THE GO VERNOR OF THE STATE AS CHANCELLOR AND VICE-CHANCELLOR AND ALL OTH ER OFFICERS ENGAGED IN THE SERVICES ARE IAS OFFICERS APPOINTED BY THE STATE GOVT AND THE INSTITUTION IS CONTROLLED AND RUN UNDE R THE DIRECTIONS OF THE STATE GOVT. SPONSORING NUMBER OF COLLEGES AND IMPARTING EDUCATION TO SEVERAL LAKHS OF ENGINEERING STUDENTS. IT WAS SUBMITTED THAT THE ASSESSEE HAS MADE THE APPLIC ATION FOR REGISTRATION U/S 12A OF THE ACT PURSUANT TO NOTICE FROM THE IT DEPARTMENT IN THE FINANCIAL YEAR ENDING 31.3.2019. IT IS SUBMITTED THAT ALONG WITH FORM 10A, THE ASSESSEE HA S FILED ALL THE RELEVANT DOCUMENTS AND THE CIT (E) OUGHT TO HAVE CO NSIDERED AS TO WHETHER THE OBJECTS OF THE ASSESSEE WERE CHARITA BLE ACTIVITY OR NOT FOR GRANT OF REGISTRATION U/S 12A OF THE ACT. H E SUBMITTED THAT THE ASSESSEE IS CARRYING ON ITS ACTIVITIES STRICTLY IN ACCORDANCE WITH THE OBJECTIVES. AS REGARDS THE OBSERVATION OF THE C IT (E) THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 11, HE SUBMITTED THAT THERE IS NO VIOLATION, BECAUSE THE PAYMENT MAD E BY THE ASSESSEE TO THE FOREIGN UNIVERSITY IS NOT OUT OF IT S OWN FUNDS BUT WAS THE FEE COLLECTED BY IT FROM THE STUDENTS FOR T HEIR STUDY ITA NO 1769 OF 2019 JNTU HYDERABAD PAGE 5 OF 8 OUTSIDE INDIA I.E. BLEKINGE INSTITUTE OF TECHNOLOGY AT KARLSKRONA, SWEDEN IN TERMS OF THE MEMORANDUM OF COOPERATION DA TED 16.10.2010 ENTERED INTO BY INDIA WITH SWEDEN AND WA S REIMBURSED TO THE SAID UNIVERSITY. HE FURTHER SUBMI TTED THAT THE NON-FILING OF RETURNS OF INCOME FOR THE EARLIER YEA RS CANNOT BE CONSIDERED AS A GROUND FOR DENIAL OF REGISTRATION U /S 12A OF THE ACT. HE SUBMITTED THAT SUBSEQUENTLY, THE ASSESSEE H AD FILED ANOTHER FORM 10A ON 25.11.2019 SEEKING REGISTRATION U/S 12A OF THE ACT AND THE CIT (E) HAS GRANTED REGISTRATION VI DE ORDERS DATED 24.6.2020 AND MADE IT APPLICABLE FROM THE A.Y 2020- 21 ONWARDS. THEREFORE, THE ASSESSEE SOUGHT A DIRECTION TO THE C IT (E) TO GRANT REGISTRATION ALSO FOR THE A.Y 2019-20. IN SUPPORT O F HIS CONTENTIONS THAT IT IS ONLY THE OBJECTIVES OF THE T RUST WHICH ARE TO BE CONSIDERED WHILE GRANTING REGISTRATION U/S 12A O F THE ACT, HE PLACED RELIANCE UPON THE FOLLOWING DECISIONS. I) HARDAYAL CHARITABLE AND EDUCATIONAL TRUST VS. CI T REPORTED IN (2013) 355 ITR 534 (ALL.) II) ANANDA SOCIAL AND EDUCATIONAL TRUST VS. CIT AND ANOTHER IN 426 ITR 340 (SC) III) VANITA VISHRAM TRUST V. CIT REPORTED IN 327 IT R 121 (BOM). 7. IN SUPPORT OF HIS CONTENTIONS THAT EVEN IF THERE IS A PROFIT ELEMENT IN THE ACTIVITIES CARRIED ON BY THE ASSESSE E, SUCH A VIOLATION MAY NOT BE A GROUND FOR REFUSAL FOR GRANT OF REGIST RATION U/S 12A OF THE ACT, HE PLACED RELIANCE UPON THE DECISION OF THE LA RGER BENCH OF THE SUPREME COURT IN THE CASE OF T.M.A. PAI FOUNDATION VS STATE OF KARNATAKA ON 5 APRIL, 1994 AIR 2372, 1994 SCC (2) 7 34. HE THEREFORE, PRAYED FOR A DIRECTION TO THE CIT (E) TO GRANT EXEM PTION W.E.F. A.Y 2019- 20 ONWARDS. ITA NO 1769 OF 2019 JNTU HYDERABAD PAGE 6 OF 8 8. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE CIT (E) AND SUBMITTED THAT THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF THE ACT AND HAS VIOLATED THE PROVISIO NS OF THE I. T. ACT BY NOT FILING THE RETURNS OF INCOME INSPITE OF THE REQ UIREMENT AND THEREFORE, THE ASSESSEE HAS RIGHTLY BEEN DENIED REG ISTRATION U/S 12A OF THE ACT. 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS AN INSTITUTION WHICH IS CARRYING ON EDUCATIONAL ACTIVITIES AND THEREFORE, THE ACTIVITY IS UNDISPUTEDLY A CHARITABLE ACT. THE ASSESSEE WAS EARLIER KNOWN AS J AWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY WHICH HAS SUBSEQUENTLY BEE N DIVIDED INTO FOUR UNIVERSITIES AND THE ASSESSEE IS ONE OF THEM WHICH WAS FORMED IN 2008. SECTION 10(23C) (IIIAB) PROVIDED THAT THE INCOME OF ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR E DUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT, AND WHICH IS WHOLLY AND SUBSTANTIALLY FUNDED BY THE GOVT., ITS INCOME IS NOT TO BE INCLUD ED IN THE TOTAL INCOME. HOWEVER, SUB-SECTION (4C) AND SUB-CLAUSE (E ) THEREOF TO SECTION 139 OF THE ACT HAVE BEEN INSERTED BY THE FINANCE AC T OF 2002, TO MAKE THE INCOME OF SUCH UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION REFERRED TO IN SUB CLAUSE (IIIAB) OF SECTION 10(23) AS ASSES SABLE TO TAX ONLY IF THE TOTAL INCOME IN RESPECT OF SUCH INSTITUTION, WITHOU T GIVING THE EFFECT TO THE PROVISIONS OF SECTION 10, EXCEEDS THE MAXIMUM A MOUNT WHICH IS NOT CHARGEABLE TO INCOME TAX SUB-SECTION (4E) TO SE CTION 139 WAS INSERTED BY THE FINANCE ACT OF 2014 REQUIRING EVERY BUSINESS TRUST, WHICH IS NOT REQUIRED TO FURNISH ITS RETURN OF INCO ME OR LOSS UNDER ANY OTHER PROVISIONS OF THIS SECTION, TO FURNISH RETURN OF SUCH INCOME OF THE PREVIOUS YEAR IN THE PRESCRIBED FORM AND VERIFIED I N THE PRESCRIBED MANNER OR AS MAY BE PRESCRIBED AND ALL THE PROVISIO NS OF THIS ACT SHALL SO FAR AS MAY BE, APPLY AS IF IT WERE A RETURN TO B E FURNISHED UNDER SUB ITA NO 1769 OF 2019 JNTU HYDERABAD PAGE 7 OF 8 SECTION-1 OF SECTION 139 OF THE ACT. WE FIND THAT T HIS AMENDMENT WAS W.E.F. 1.4.2015. 10. WE ALSO FIND THAT RULE 2BBB HAS ALSO BEEN INTR ODUCED W.E.F. 12.12.2014 PRESCRIBING THE PERCENTAGE OF GOVT. GRAN T FOR CONSIDERING A UNIVERSITY, HOSPITAL, ETC., AS SUBSTANTIALLY FUNDED BY THE GOVT. FOR THE PURPOSES OF CLAUSE (23C) OF SECTION 10 AND IT PROVI DES THAT WHERE THE GOVT. GRANTS TO SUCH UNIVERSITY OR HOSPITAL EXCEEDS 50% OF THE TOTAL RECEIPTS INCLUDING ANY VOLUNTARY CONTRIBUTIONS OF S UCH UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION/HOSPITAL OR OTHER INS TITUTION DURING THE RELEVANT PREVIOUS YEAR, IT SHALL BE CONSIDERED AS S UBSTANTIALLY FUNDED BY THE GOVT. FOR SUCH PREVIOUS YEAR. THUS, IT CAN BE S EEN THAT THOUGH THE ASSESSEE UNIVERSITY WAS FORMED IN 2008, TILL THE A. Y 2014, IT WAS NOT REQUIRED TO FILE ANY RETURN OF INCOME AND THEREFORE , THE ASSESSEES CONTENTION THAT IT WAS NOT AWARE OF THE REQUIREMENT OF FILING RETURNS OF INCOME APPEARS TO BE BONAFIDE. FURTHER, THE ASSESSE E HAS MADE AN APPLICATION FOR REGISTRATION ONLY W.E.F. A.Y 2019-2 0 ONWARDS. IN SUCH CIRCUMSTANCES, THE REQUIREMENT OF LAW IS THAT THE C IT (E) HAS TO CONSIDER WHETHER THE OBJECTIVES OF THE ASSESSEE WER E CHARITABLE IN NATURE AND IF THE ACTIVITIES HAVE ALREADY BEGUN, TH EN WHETHER THE ASSESSEE IS CARRYING ON ITS ACTIVITIES IN ACCORDANC E WITH SUCH OBJECTIVES. THEREFORE, WE AGREE WITH THE LEARNED COUNSEL FOR TH E ASSESSEE THAT THE CIT (E) HAS NOT LOOKED INTO THE OBJECTIVES OF THIS UNIVERSITY WHILE CONSIDERING ITS APPLICATION FOR REGISTRATION U/S 12 A OF THE ACT. FURTHER, FROM THE VERY NEXT A.Y I.E. 2020-21 ONWARDS, THE AS SESSEE HAS BEEN GRANTED REGISTRATION U/S 12A OF THE ACT. THUS, IT I S EVIDENT THAT THE CIT (E) WHILE GRANTING THE REGISTRATION, WAS SATISFIED ABOUT THE CHARITABLE NATURE OF ASSESSEES ACTIVITIES. IN VIEW OF THE SAM E, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE CIT ( E) WITH A DIRECTION TO GRANT REGISTRATION U/S 12A IF THE OBJECTIVES AND AC TIVITIES OF THE ASSESSEE ITA NO 1769 OF 2019 JNTU HYDERABAD PAGE 8 OF 8 ARE THE SAME AS WERE CONSIDERED BY THE CIT (E) WHIL E GRANTING REGISTRATION U/S 12A OF THE ACT FOR THE A.Y 2020-21 ONWARDS. 11. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL, 2021. SD/- SD/- (LAXMI PRASAD SAHU) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 27 TH APRIL, 2021. VINODAN/SPS COPY TO: S.NO ADDRESSES 1 JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY, KPHB C OLONY, KUKATPALLY. HYDERABAD 500085 2 C.I.T (EXEMPTIONS) AAYAKAR BHAVAN, BASHEERBAGH, HY DERABAD 500004 3 ADD. CIT (EXEMPTIONS)- HYDERABAD 4 PR. CIT - HYDERABAD 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER