International Business School, Faridabad V. CIT, Faridabad

ITA 1802/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0087 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 17-03-2011
• Assessment Year: misc
• Appeal Filed On: 20-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY PURI
• Keywords: Charitable institution; Retrospective amendment
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH NEW DELHI, BENCH NEW DELHI, BENCH NEW DELHI, BENCH C CC C BEFORE SHRI I. P. BANSAL, JUDICIAL MEMBER AND SHRI A K GARODIA, ACCOUTANT MEMBER ITA NO. 1802/DEL/2010 (ASSESSMENT YEAR ) INTERNATIONAL BUSINESS SCHOOL, VS. CIT, FARIDABAD, 12/1, MATHURA ROAD, HARYANA FARIDABAD (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AAATI6137Q APPELLANT BY: SMT. INDRA BANSAL, C.A. RESPONDENT BY: SHRI SANJAY PURI, CIT DR ORDER ORDER ORDER ORDER PER A. K. GARODIA, AM: PER A. K. GARODIA, AM: PER A. K. GARODIA, AM: PER A. K. GARODIA, AM: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT, FARIDABAD DATED 24.02.2010 PASSED BY HIM U /S 12AA OF THE ACT. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UND ER: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, CIT FARIDABAD HAS ERRED IN REJECTING THE APPLICATION FI LED BY THE APPELLANT FOR GRANT OF REGISTRATION UNDER SECTION 1 2A OF I. T. ACT, 1961. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, CIT, FARIDABAD HAS ERRED IN HOLDING THAT SOME OF THE OBJ ECT CLAUSES OF THE TRUST DEED OF THE APPLICANT TRUST ARE NOT CH ARITABLE IN NATURE AS THEY DO NOT FALL WITHIN THE MEANING OF SE CTION 2(15) OF IN COME TAX ACT READ WITH PROVISO AND THEREBY RE FUSING TO REGISTER THE TRUST UNDER SECTION 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961.S 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, CIT FARIDABAD HAD ERRED IN HOLDING THAT THE SUPPLEMENTA RY TRUST DEED DATED 3 RD AUGUST, 2009 EXECUTED BY THE APPELLANT TO AMEND CLAUSE NO.4 & 5 OF ITS TRUST DEED IS NOT IN A CCORDANCE WITH THE PROVISIONS OF LAW AND JUDICIAL DECISION AN D THEREBY REFUSING TO REGISTER THE TRUST UNDER SECTION 12AA(1 )(B)(II) OF THE INCOME TAX ACT, 1961. 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, CIT, FARIDABAD HAS ERRED IN HOLDING THAT PROVISIONS OF C LAUSE 22(VI) OF THE TRUST DEED OF THE APPELLANT TRUST IS REPUGNA NT TO SECTION 11(5) OF INCOME TAX ACT, 1961 AND THEREBY FORFEITIN G THE APPELLANTS CLAIM FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961. I.T.A.NO. 1802/DEL/2010 2 2. AT THE VERY OUTSET, LD. A.R. FOR THE ASSESSEE EX PLAINED BEFORE US THE BRIEF HISTORY OF THIS CASE. IT IS SUBMITTED BY HER THAT THE TRUST WAS ESTABLISHED ON 03.10.2007 AND APPLICATION FOR I TS REGISTRATION WAS MADE ON 28.11.2007. IT IS ALSO SUBMITTED THAT THE APPLICATION OF THE ASSESSEE WAS REJECTED AGAINST WHICH THE ASSE SSEE PREFERRED APPEAL BEFORE THE TRIBUNAL AND THIS APPEAL OF THE A SSESSEE WAS DISPOSED OF BY THE TRIBUNAL ON 05.06.2009 IN I.T.A. NO. 2487/DEL/2008. IT IS SUBMITTED THAT A COPY OF THIS TRIBUNAL ORDER IS AVAILABLE ON PAGES 33-36 OF THE PAPER BOOK IT IS POINTED OUT BY HER THAT IT WAS HELD BY THE TRIBUNAL THAT CLAUSE NO.4 O F THE ASSESSEES TRUST DEED PERMITS TO CONFER BENEFIT ON THE SETTLER AS WELL AS THE TRUSTEES WITHOUT ANY LET OR HINDRANCE AND SIMILARLY THE FUNDS OF THE ASSESSEE TRUSTS CAN BE UTILIZED/APPLIED FOR THE BEN EFIT OF ANY PERSONS OR PERSON OR INSTITUTIONS ETC. TO BE DECIDED SOLELY IN THE DISCRETION OF THE TRUSTEES. ON THIS BASIS, THE TRIBUNAL HAS REFU SED TO INTERFERE IN THE ORDER OF CIT AS PER WHICH, HE REFUSED TO GRANT REGISTRATION TO THE ASSESSEE TRUST. IT IS SUBMITTED BY HER THAT SUBSEQ UENTLY ON 03.08.2009, THE ASSESSEE TRUST EXECUTED SUPPLEMENTA RY DEED OF TRUST IN WHICH, CLAUSES 4 & 5 OF THE ORIGINAL TRUST DEED WERE AMENDED AND REPLACED WITH RETROSPECTIVE EFFECT FROM THE DATE OF ORIGINAL TRUST DEED DATED 03.10.2007. HE SUBMITTED THAT THE COPY OF THE ORIGINAL TRUST DEED DATED 03.10.2007 IS AVAILAB LE ON PAGES 1-11 OF THE PAPER BOOK AND THE COPY OF SUPPLEMENTARY TRU ST DEED DATED 03.08.2009 IS AVAILABLE ON PAGES 12-13 OF THE PAPER BOOK. IT IS ALSO SUBMITTED BY HER THAT THEREAFTER, THE ASSESSEE TRUS T AGAIN APPLIED FOR REGISTRATION U/S 12AA VIDE APPLICATION FILED ON 03.09.2009 COPY OF WHICH IS AVAILABLE ON PAGE 32 OF THE PAPER BOOK. S HE SUBMITTED THAT AGAINST THIS FRESH APPLICATION ALSO, LD. CIT F ARIDABAD WAS NOT SATISFIED AND HE AGAIN REFUSED TO GRANT REGISTRATIO N TO THE ASSESSEE TRUST U/S 12AA AS PER THE IMPUGNED ORDER DATED 24.0 2.2010 AND AGAINST THIS ORDER OF CIT FARIDABAD, THIS APPEAL HA S BEEN FILED BY THE ASSESSEE TRUST. 3. IT IS SUBMITTED BY HER IN THE COURSE OF ARGUMENT S BEFORE US THAT AS PER THE AMENDED CLAUSE 4 & 5 OF THE TRUST D EED AS PER SUPPLEMENTARY DEED OF THE TRUST EXECUTED ON 03.08.2 009, THE I.T.A.NO. 1802/DEL/2010 3 OBJECTION OF THE TRIBUNAL HAD BEEN REMOVED. IT IS ALSO SUBMITTED THAT LD. CIT FARIDABAD HAS REJECTED THE APPLICATION OF THE ASSESSEE FOR REGISTRATION ON THE BASIS THAT THERE IS AMPLE S COPE TO PURSUE ACTIVITIES WHICH ARE NOT CHARITABLE AND FOR THIS RE ASON, THE ASSESSEES CLAIM FOR REGISTRATION U/S 12AA CANNOT B E ACCEPTED. IT IS SUBMITTED BY HER THAT IT IS CLEAR FROM THE OBJECTS OF THE ASSESSEE TRUSTS THAT THESE OBJECTS ARE FOR IMPARTING EDUCATI ON WHICH IS WITHIN THE DEFINITION OF CHARITABLE PURPOSE AS PER SECTION 2(15) OF THE INCOME TAX ACT, 1961 AND HENCE, THE ORDER OF CIT FA RIDABAD SHOULD BE REVERSED AND REGISTRATION SHOULD BE GRANTED TO T HE ASSESSEE TRUST. 4. AS AGAINST THIS, LD. D.R. FOR THE REVENUE SUBMIT TED THAT OLD AND NEW CLAUSES NO. 4 & 5 ARE NOT MATERIALLY DIFFER ENT AND HENCE, THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE T RIBUNAL DECISION IN ASSESSEES OWN CASES. HE ALSO SUPPORTED THE ORDER OF CIT FARIDABAD AND DRAWN OUR ATTENTION TO PARA 8 & 9 OF THE ORDER OF CIT WHEREAS HE HAS MADE OBSERVATIONS REGARDING CLAUSE 6(P) AND 6(Q) OF THE TRUST DEED. IT IS SUBMITTED BY HER THAT AS PER PRO VISO TO SECTION 2(15) OF THE INCOME TAX ACT, 1961, WHEN AN ACTIVITY IS DONE FOR A CESS OR FEE OR FOR ANY OTHER CONSIDERATION, SUCH AN ACTIVITY CANNOT BE CONSIDERED AS CHARITABLE PURPOSE. IT IS POINTED OU T BY HER THAT AS PER CLAUSE 6(Q) OF THE TRUST DEED, THE ASSESSEE TRU ST RECEIVES CONSIDERATION FOR PROVIDING TECHNICAL, EDUCATIONAL, ACADEMIC AND OTHER SERVICES AND HENCE, THE ASSESSEE TRUST IS NOT ELIGIBLE FOR REGISTRATION U/S 12AA AS HAS BEEN HELD BY THE CIT F ARIDABAD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, GONE T HROUGH THE MATERIAL PLACED ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. WE FIND THAT CIT FARIDABAD HAS CONSIDERED CLAUSE 6( Q) OF THE TRUST DEED IN PARA 9 OF HIS ORDER. THIS CLAUSE OF TRUSTS DEED I.E. 6(Q) IS AVAILABLE ON PAGE 4 OF THE PAPER BOOK WHICH READS A S UNDER: TO RECEIVE CONSIDERATION FOR PROVIDING TECHNICAL, EDUCATIONAL, ACADEMIC AND OTHER SERVICES TO EDUCATI ONAL INSTITUTIONS/SOCIETIES/OTHER ENTITIES. I.T.A.NO. 1802/DEL/2010 4 6. IT HAS BEEN HELD BY THE CIT IN PARA 9.1 OF HIS O RDER THAT THIS CLAUSE IS CLEARLY AIMED AT GARNERING FUNDS AND ACCU MULATING INCOME. EDUCATION IS ONE OF THE CHARITABLE PURPOSE S. BUT IN THE PRESENT CASE, AS PER CLAUSE 6(Q) AS REPRODUCED ABOV E, THE ASSESSEE HAS OBJECT OF RECEIVING CONSIDERATION FOR PROVIDING TECHNICAL, EDUCATIONAL, ACADEMIC AND OTHER SERVICES TO EDUCATIONAL INSTITUTIONS/SOCIETIES/OTHER ENTITIES. PROVIDING EDUCATION TO STUDENTS IS A CHARITABLE PURPOSE BUT P ROVIDING TECHNICAL, EDUCATIONAL, ACADEMIC AND OTHER SERVICES TO EDUCATIONAL INSTITUTIONS/SOCIETIES/OTHER ENTITIES T HAT TOO AGAINST CONSIDERATION CANNOT BE EQUATED WITH PROVIDING EDUC ATION. IT IS PROVING OF SERVICES WHICH MAY BE RELATED TO EDUCATI ON FIELD BUT NOT PROVIDING OF EDUCATION ITSELF AS IT IS CLEAR FR OM THIS THAT THESE SERVICES ARE TO BE PROVIDED TO SUCH INSTITUTIONS O R ENTITLES AND NOT TO ANY INDIVIDUAL OR INDIVIDUALS. IN OUR CONS IDERED OPINION, IT IS PURELY A BUSINESS ACTIVITY AND HENCE THE ASSESSE E TRUST IS NOT ELIGIBLE FOR REGISTRATION U/S 12AA. PROVIDING TECH NICAL AND OTHER SERVICE TO EDUCATIONAL INSTITUTIONS/SOCIETIES/OTHER ENTITIES CANNOT BE HELD TO BE EQUAL TO PROVIDING EDUCATION AND HENC E, IT IS NOT A CHARITABLE PURPOSE. WE, THEREFORE, DECLINE TO IN TERFERE IN THE ORDER OF CIT FARIDABAD. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. 7. PRONOUNCED IN THE OPEN COURT ON 25 TH MARCH, 2011. SD./- SD./- ( I. P. BANSAL) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:25 TH MAR., 2011 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI