Sahara Arts & Managment Academy , Lucknow V. Commissioner of Income Tax (Exemptions), Lucknow

ITA 178/LKW/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0208 (ITAT-LUCKNOW)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 08-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K BAR
• Assessee Lawyers: DEVASHISH MEHROTRA
• Keywords: Charitable institution; Opportunity of being heard
• Section: 11; 80G; 12AA

Judgement Text

I.T.A. NO.178/LKW/2018 ASSESSMENT YEAR:N.A. 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.178/LKW/2018 ASSESSMENT YEAR:N.A. M/S SAHARA ARTS AND MANAGEMENT ACADEMY, SAHARA INDIA BHAWAN, KAPOORTHALA COMPLEX, ALIGANJ, LUCKNOW. PAN:AACTS 1165 Q VS. CIT (EXEMPTIONS), LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E REJECTION OF APPLICATION OF ASSESSEE U/S 80G(5)(VI) OF THE I.T. ACT. 2. LEARNED A. R., AT THE OUTSET, SUBMITTED THAT ASS ESSEE WAS DULY REGISTERED U/S 12AA AND THEREFORE, ITS APPLICATION U/S 80G(5)(VI) OF THE ACT SHOULD HAVE BEEN ALLOWED BY LEARNED CIT (EXEMPTIONS ). IT WAS SUBMITTED THAT THE LEARNED CIT (EXEMPTIONS) HAS REJECTED THE APPLICATION OF THE ASSESSEE FOR THE REASON THAT ASSESSEE FAILED TO PRO VIDE ANY SATISFACTORY EXPLANATION REGARDING NEED FOR INCURRING HUGE SALAR Y EXPENSES. LEARNED A. R. SUBMITTED THAT AT THE TIME OF GRANTING APPROVAL U/S 80G(5)(VI) OF THE ACT, APPELLANT BY SHRI DEVASHISH MEHROTRA, ADVOCATE RESPONDENT BY SHRI A. K. BAR, CIT (D.R.) DATE OF HEARING 04 / 12 /201 8 DATE OF PRONOUNCEMENT 07 / 12 /201 8 I.T.A. NO.178/LKW/2018 ASSESSMENT YEAR:N.A. 2 LEARNED CIT (EXEMPTIONS) IS EMPOWERED TO EXAMINE TH E ELIGIBILITY OF THE ASSESSEE UNDER CLAUSE (1) TO (5) OF SECTION 80G(5) OF THE ACT. LEARNED A. R. IN THIS RESPECT RELIED ON AN ORDER OF LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF REHAN FOUNDATION VS. CIT (EXEMPTIONS) IN I. T.A. NO.119/LKW/2018 WHERE HON'BLE TRIBUNAL VIDE ORDER DATED 30/11/2018 HAS REMANDED THE ISSUE BACK TO THE OFFICE OF LEARNED CIT (EXEMPTIONS ) FOR FRESH ADJUDICATION. 3. LEARNED D. R., ON THE OTHER HAND, PLACED RELIANC E ON THE ORDER OF LEARNED CIT (EXEMPTIONS). 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IS AN UNDISPUTED FA CT THAT THE ASSESSEE WAS ENJOYING REGISTRATION U/S 12AA OF THE ACT. LEARNED CIT (EXEMPTIONS) REFUSED THE APPROVAL U/S 80G(5)(VI) OF THE ACT FOR THE REAS ON THAT THE ASSESSEE HAD INCURRED HUGE EXPENDITURE ON SALARIES AGAINST NEGLI GIBLE RECEIPTS. LEARNED CIT (EXEMPTIONS) HAS FURTHER HELD THAT ASSESSEE HAD FAILED TO PROVIDE DETAILS OF NUMBER OF STAFF EMPLOYED ETC. LEARNED CIT (EXEM PTIONS) HAS HELD THAT MERE FILING OF DOCUMENTS DOES NOT AUTOMATICALLY ENT ITLE THE ASSESSEE TO GET APPROVAL U/S 80G(5) OF THE ACT. WE FIND FROM THE R EADING OF SECTION 80G(5) AND VARIOUS JUDGMENTS OF VARIOUS BENCHES THAT LEARN ED CIT (EXEMPTIONS) AT THE TIME OF CONSIDERING THE APPLICATION U/S 80G(5) IS REQUIRED TO SEE AS TO WHETHER THE CONDITIONS LAID DOWN UNDER CLAUSE (1) T O (5) OF SECTION 80G(5) OF THE ACT ARE FULFILLED OR NOT. FOR THE SAKE OF C ONVENIENCE, THE CONDITIONS AS LAID DOWN IN SECTION 80G(5) ARE REPRODUCED BELOW: (5) THIS SECTION APPLIES TO DONATIONS TO ANY INSTI TUTION OR FUND REFERRED TO IN SUB-CLAUSE (IV) OF CLAUSE (A) OF SUB -SECTION (2), ONLY IF IT IS ESTABLISHED IN INDIA FOR A CHARITABLE PURPOSE AND IF IT FULFILS THE FOLLOWING CONDITIONS, NAMELY:-- (I) WHERE THE INSTITUTION OR FUND DERIVES ANY INCOM E, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOM E UNDER THE I.T.A. NO.178/LKW/2018 ASSESSMENT YEAR:N.A. 3 PROVISIONS OF SECTIONS 11 AND 12 OR CLAUSE (23AA) O R CLAUSE (23C) OF SECTION 10: PROVIDED THAT WHERE AN INSTITUTION OR FUND DERIVES ANY INCOME, BEING PROFITS AND GAINS OF BUSINESS, THE CONDITION THAT SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOM E UNDER THE PROVISIONS OF SECTION 11 SHALL NOT APPLY IN RELATIO N TO SUCH INCOME, IF,--(A) THE INSTITUTION OR FUND MAINTAINS SEPARATE BOOKS OF ACCOUNT IN RESPECT OF SUCH BUSINESS;(B) THE DONATIONS MADE TO THE INSTITUTION OR FUND ARE NOT USED BY IT, DIRECTLY OR INDIRECTLY, FOR THE PURPOSES OF SUCH BUSINESS; AND(C) THE INSTITUTION O R FUND ISSUES TO A PERSON MAKING THE DONATION A CERTIFICATE TO THE E FFECT THAT IT MAINTAINS SEPARATE BOOKS OF ACCOUNT IN RESPECT OF S UCH BUSINESS AND THAT THE DONATIONS RECEIVED BY IT WILL NOT BE U SED, DIRECTLY OR INDIRECTLY, FOR THE PURPOSES OF SUCH BUSINESS; (II) THE INSTRUMENT UNDER WHICH THE INSTITUTION OR FUND IS CONSTITUTED DOES NOT, OR THE RULES GOVERNING THE INSTITUTION OR FUND DO NOT, CONTAIN ANY PROVISION FOR THE TRANSFER OR APPLICATI ON AT ANY TIME OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS OF TH E INSTITUTION OR FUND FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOS E; (III) THE INSTITUTION OR FUND IS NOT EXPRESSED TO B E FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE; (IV) THE INSTITUTION OR FUND MAINTAINS REGULAR ACCO UNTS OF ITS RECEIPTS AND EXPENDITURE; (V) THE INSTITUTION OR FUND IS EITHER CONSTITUTED A S A PUBLIC CHARITABLE TRUST OR IS REGISTERED UNDER THE SOCIETIES REGISTRA TION ACT, 1860 (21 OF 1860), OR UNDER ANY LAW CORRESPONDING TO THAT AC T IN FORCE IN ANY PART OF INDIA OR UNDER SECTION 25 OF THE COMPANIES A CT, 1956 (1 OF 1956), OR IS A UNIVERSITY ESTABLISHED BY LAW, OR IS ANY OTHER EDUCATIONAL INSTITUTION RECOGNISED BY THE GOVERNMEN T OR BY A UNIVERSITY ESTABLISHED BY LAW, OR AFFILIATED TO ANY UNIVERSITY ESTABLISHED BY LAW, OR IS AN INSTITUTION FINANCED W HOLLY OR IN PART BY THE GOVERNMENT OR A LOCAL AUTHORITY; 5. WE FIND THAT LEARNED CIT (EXEMPTIONS) HAS NOT MA DE ANY OBSERVATION REGARDING VIOLATION OF ANY CONDITION LAID DOWN UNDE R CLAUSE (I) TO (V) OF SECTION 80G(5) OF THE ACT. THEREFORE, WE DEEM IT A PPROPRIATE TO REMIT THE ISSUE BACK TO THE FILE OF LEARNED CIT (EXEMPTIONS) WHO SHOULD CONSIDER THE APPLICATION OF THE ASSESSEE U/S 80G AFRESH KEEPING IN VIEW THE DECISION OF I.T.A. NO.178/LKW/2018 ASSESSMENT YEAR:N.A. 4 VARIOUS BENCHES OF THE TRIBUNAL AND ALSO KEEPING IN VIEW THE SPIRIT OF CONDITIONS LAID DOWN IN CLAUSES (I) TO (V) OF SECTI ON 80G OF THE ACT. NEEDLESS TO SAY, THE ASSESSEE WILL BE AFFORDED REASONABLE AN D SUFFICIENT OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 07/12/2018) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:07/12/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW