The Sonepat Hindu Educational And Charitable Society, Sonepat V. CIT, Rohtak

ITA 1928/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3877 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 14-01-2011
• Assessment Year: misc
• Appeal Filed On: 29-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHORE B
• Keywords: Charitable institution
• Section: 80G; 12A; 246; 12; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 1928(DEL)/2010 ASSESSMENT YEAR: N.A THE SONEPAT HINDU EDUCATIONAL & COMMI SSIONER OF INCOME-TAX, CHARITABLE SOCIETY, HINDU COLLEGE VS. ROHTA K. OF ENDINEERING INDL. AREA, SONEPAT. PAN-AAATT7504J (APPELLANT) (RESPOND ENT) APPELLANT BY : SHRI GURJEET SINGH, C.A. RESPONDENT BY : SHRI KISHORE B., SR. DR ORDER PER K.G. BANSAL : AM THE ONLY GROUND TAKEN BY THE ASSESSEE IN THIS APPEAL IS TO THE EFFECT THAT THE LD. CIT(APPEALS) ERRED IN NOT GRANTING APPROVAL TO THE ASSESSEE-SOCIETY U/S 80G(5)(VI) OF THE INCOME-TAX ACT, 1961 (THE ACT). 2. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IS REGISTERED U/S 12A OF THE ACT. THE ASSESSEE HAS ALSO OBTAINED APPROV AL U/S 10(23C)(VI) OF THE ACT. THE ASSESSEE HAD BEEN GRANTED APPROVAL U/ S 80G IN THE PAST. HOWEVER, THE INSTANT APPLICATION HAS BEEN REJECTE D ON THE GROUND THAT THE ITA NO.1928(DEL)/2010 2 ASSESSEE HAS BEEN GENERATING SURPLUS FROM YEAR TO YEAR. WHILE DOING SO, RELIANCE HAS BEEN PLACED ON THE DECISION OF HONB LE UTTRANCHAL HIGH COURT (NAINITAL BENCH) IN THE CASE OF CIT, HALDW ANI VS. QUEENS EDUCATIONAL SOCIETY & ST. PAULS SENIOR SECONDERY SC HOOL. THE SUBMISSION OF THE ASSESSEE IS QUITE BRIEF TO THE EFFECT T HAT THE ASSESSEE IS AN EDUCATIONAL SOCIETY. IT HAS BEEN REGISTERED UND ER SECTION 12A, WHICH IS IN BNFORCE. THEREFORE, APPROVAL UNDER SECTION 80G(5) CANNOT BE DENIED. ON THE OTHER HAND, THE LD.DR RELIED ON THE ORDER OF T HE COMMISSIONER OF INCOME-TAX, ROHTAK. 3. THE ISSUE STANDS COVERED BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF N.N. DESAI CHARITABLE TRUST V S. CIT, (2000) 246 ITR 452, ON WHICH RELIANCE HAS BEEN PLACED BY THE L D. COUNSEL FOR THE ASSESSEE. THE GIST OF THE JUDGMENT IS THAT ONCE AN ASSESSEE HAS BEEN REGISTERED UNDER SECTION 12A, THE SCOPE OF ENQUIR Y U/S 80G(5) DOES NOT EXTENT TO ACTUAL COMPUTATION OF INCOME. THE ONLY E NQUIRY WHICH CAN BE MADE IS WHETHER INCOME RECEIVED IS LIABLE TO BE CONSIDERED FOR DEDUCTION U/S 11, BUT IT DOES NOT GO BEYOND THAT TO EXAMIN E AS AN ASSESSING OFFICER WHETHER THE INCOME RECEIVED BY IT AT CLOSE OF ANY PARTICULAR YEAR WAS OR ITA NO.1928(DEL)/2010 3 WAS NOT ACTUALLY INCLUDED IN THE TAXABLE INCOME. FOR THE SAKE OF READY REFERENCE, THE RELEVANT PORTION OF THE JUDGMENT IS REPRODUCED BELOW:- THE APPLICATION FOR APPROVAL IN RESPECT OF ANY SUCH INSTITUTION, IF IT FALLS WITHIN CLAUSE (IV) OF SUB -SECTION (2) OF SECTION 80G, AN ENQUIRY BY THE COMMISSIONER COUL D ONLY EXTENT TO FIND OUT WHETHER THE ASSOCIATION OR I NSTITUTION IS SO NOTIFIED UNDER SECTION 10(23). IT CANNOT BY ITSELF EXAMINE THE VALIDITY OR CORRECTNESS OF THE NOTIFICATION NO R CAN IT GRANT APPROVAL EVEN IF HE CONCLUDES THAT SUCH INSTIT UTION EXISTS FOR THE PURPOSES MENTIONED IN CLAUSE (23), IF NOTIFI CATION BY THE CENTRAL GOVERNMENT IS NOT ISSUED IN THAT REGARD. THAT IS DEMONSTRATIVE OF THE SCOPE OF ENQUIRY BY THE COMMI SSIONER WHILE ENQUIRING THE EXISTENCE OF CONDITION UNDER SECTION 80G(5)(I). THAT EXTENDS TO ELIGIBILITY OF EXEMPT ION UNDER VARIOUS PROVISIONS OF THE INCOME-TAX ACT REFERRED TO IN THAT SUB-SECTION, BUT NOT TO ACTUAL ASSESSMENT WHICH DEPENDS ON FULFILLMENT OF FURTHER CONDITIONS BY THE ELIGIBL E INSTITUTIONS, TRUSTS OR FUNDS. IN NONE OF THESE CASES INQUIR Y OF THE COMMISSIONER UNDER SECTION 80G(5)(VI) EXTENDS T O THE ACTUAL COMPUTATION OF INCOME UNDER THE ASSESSMENT THAT IS LIKELY TO BE FRAMED. WE SEE NO REASON THAT SUCH EXERCISE CAN BE TAKEN IN RESPECT OF A TRUST WHICH IS CLAIMIN G EXEMPTION NOT UNDER SECTION 10 BUT UNDER SECTIONS 11 AND 12 OF THE ACT, ONCE THE COMMISSIONER FINDS THAT THE PERSON WHO IS CLAIMING APPROVAL IS THE ASSESSEE WHO CLAIMED HIS INCOME NOT LIABLE TO BE INCLUDED IN THE TAXABLE INCOME UNDER SECTION 11 OR 12. THE ENQUIRY RELATES TO WHETHER IT IS REGISTERED UNDE R SECTION 12A, WHETHER IT IS A TRUST WHOLLY FOR CHARITABLE PUR POSES OR RELIGIOUS PURPOSES, AND WHETHER INCOME RECEIVED B Y IT IS LIABLE TO BE CONSIDERED UNDER SECTION 11, BUT IT DOES NOT GO BEYOND THAT TO EXAMINE AS AN ASSESSING OFFI CER WHETHER THE INCOME RECEIVED BY IT AT THE CLOSE OF ANY PARTICULAR YEAR OR YEARS WAS OR WAS NOT ACTUALLY INCLUDED IN TH E TAXABLE INCOME IN THE PAST. THIS CONSIDERATION MUST BE WH ETHER THE INCOME RECEIVABLE BY IT WILL OR WILL NOT BE LIAB LE TO BE CONSIDERED FOR EXCLUSION UNDER SECTION 11. SUC H ENQUIRY ITA NO.1928(DEL)/2010 4 OBVIOUSLY CANNOT INCLUDE AN ENQUIRY WHETHER AT T HE CLOSE OF THE PREVIOUS YEAR THE DONEE WILL ACTUALLY BE A BLE TO SUSTAIN SUCH CLAIM BECAUSE OF NON-FULFILMENT OF SOME COND ITIONS BY HIM AS TO THE APPLICABILITY OR ACCUMULATION OF INCOME, AS IT IS NOT POSSIBLE TO PREDICATE THAT IN PRAESENTI WHEN DONATION IS MADE. AS WE HAVE NOTICED ABOVE, THAT QUESTION WO ULD DEPEND UPON THE FACTS EXISTING AT THE CLOSE OF THE ASSESSMENT YEAR AND AT THE TIME OF CONSIDERING THE APPLICATION IT CANNOT BE EXAMINED IN THE LIGHT OF THAT IS GOING TO HAPPEN IN PENDING ASSESSMENTS IN RESPECT OF WHICH APPROVAL CERTIF ICATE WAS ALREADY EXISTING AND THE ASSESSMENT OF WHICH C OULD NOT AFFECT THE DONATIONS MADE TO THE TRUST DURING THAT YEAR. VIEWED FROM ANY ANGLE, WE ARE OF VIEW THAT TH E ORDER OF THE COMMISSIONER REFUSING APPROVAL IS FOUNDED ON WHOL LY IRRELEVANT CONSIDERATIONS BY TRENCHING UPON THE F IELD OF THE ASSESSING OFFICER BY PRONOUNCING ON THE TAXAB ILITY OR NON- TAXABILITY OF ANY INCOME IN RESPECT OF THE ASSES SMENTS FOR THE PAST YEAR WHICH ARE YET TO BE COMPLETED, AND DOE S NOT RELATE TO A PERIOD FOR WHICH APPROVAL, IF ACCORDED, IS TO OPERATE. AS A RESULT, WE ALLOW THIS SPECIAL CIVIL APPLI CATION, QUASH THE IMPUGNED ORDER AND DIRECT THE COMMISSIONER OF IN COME-TAX TO MAKE A FRESH ORDER IN ACCORDANCE WITH LAW. 3.1 COMING TO THE DECISION IN THE CASE OF QUEEN S EDUCATIONAL SOCIETY (SUPRA), THE HONBLE COURT HELD THAT THE SOCIE TY DOES NOT EXIST PURELY FOR EDUCATIONAL PURPOSES AS ENVISAGED U/S 10( 23C)(VI), BUT ALSO FOR PROFIT AS SURPLUS WAS GENERATED FROM YEAR TO YE AR. HOWEVER, AS PER THE IMPUGNED ORDER, THE JURISDICTIONAL HIGH COURT HAS HELD THAT THE COMMISSIONER OF INCOME-TAX IS EMPOWERED TO MAKE ENQUIRY AS TO WHETHER THE INCOME RECEIVED BY IT IS LIABLE TO BE CONSIDERED U/S 11 OF THE ITA NO.1928(DEL)/2010 5 ACT. SAME IS THE JUDGMENT IN THE CASE OF N.N. D ESAI CHARITABLE TRUST (SUPRA). AS HELD IN THIS CASE, THIS EXERCISE H AS TO BE CARRIED OUT BY THE AO WHILE MAKING ASSESSMENT AND NOT BY THE LD. CIT (APPEALS) AT THE TIME OF GRANT OF REGISTRATION U/S 12A OR APPROVAL U/S 80G(5). RELYING ON THIS DECISION, IT IS HELD THAT THE ASSESSEE IS ENTITLE D TO APPROVAL U/S 80G(5). THE MATER CAN BE REVIEWED ONLY IF THE REGISTRATIO N GRANTED TO THE ASSESSEE IS WITHDRAWN. SUCH IS NOT THE FACT HERE. ACCOR DINGLY, THE LD. COMMISSIONER OF INCOME-TAX IS DIRECTED TO GRANT AP PROVAL TO THE ASSESSEE. 4. IN THE RESULT, THE APPEAL IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 2 7 MAY, 2011. SD/- SD/- (RAJPAL YADAV) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 27TH MAY, 2011. SP SATIA COPY OF THE ORDER FORWARDED TO:- THE SONEPAT HINDU EDUCATIONAL &CHARITABLE SOCIETY, SONEPAT. AO. CIT, ROHTAK. CIT(A) THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR .