Calorx Teachers'University, Ahmedabad V. The DIT(Exemp.), Ahmedabad

ITA 1955/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0536 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-09-2016
• Assessment Year: misc
• Appeal Filed On: 18-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS VIBHA BHALLA
• Assessee Lawyers: S N SOPARKARSR
• Keywords: Charitable institution; Opportunity of being heard
• Section: 80G; 12A; 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD . . , ! ' , ! # ! $ BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER 1. ./I.T.A. NO.1955/AHD/2013 2. ./I.T.A. NO.1956/AHD/2013 ( % / ASSESSMENT YEARS : - ) CALORX TEACHERS UNIVERSITY NR. GREENWOOD LAKE RESORT VAISHNO DEVI CIRCLE SG HIGHWAY, AHMEDABAD / VS. DIRECTOR OF INCOME TAX (EXEMPTION) 2 ND FLOOR, VASANT NATURE VIEW BLDG. AHMEDABAD-380 009 ./ ./PAN/GIR NO. : AAAJC 0739 N ( /APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S.N. SOPARKAR, SR.COUNSEL / RESPONDENT BY : MRS. VIBHA BHALLA, CIT-DR / DATE OF HEARING 09/09/2016 / DATE OF PRONOUNCEMENT 19/09/2016 ! / O R D E R PER SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER : BOTH THESE APPEALS FILED BY THE ASSESSEE ARE DIREC TED AGAINST THE SEPARATE ORDERS OF THE DIRECTOR OF INCOME TAX (EXEM PTIONS) [DIT(E) IN SHORT], AHMEDABAD DATED 17/05/2013 AND 15/05/2013. SINCE THE ISSUES ARE INTER-CONNECTED, THESE APPEALS WERE HEARD TOGET HER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE ASSESSEES APPEAL IN ITA N O.1956/AHD/2013 FOR ADJUDICATION. 2 ITA NOS.1955 & 1956/AHD/2013 CALORX TEACHERS UNIVERSITY VS. DIT(E) 2.1. THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER DATED 15/05/2013 PASSED BY THE DIRECTOR OF INCOME TAX (EX EMPTIONS), AHMEDABAD U/S.12AA(I)(B) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS 'THE ACT') R.W.S. 12A OF THE ACT. THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED BY THE ASSESSEE:- 1. LD. DIT (EXEMPTION) ERRED IN LAW AND ON FACT S IN REFUSING TO GRANT REGISTRATION U/S 12AA OF THE ACT TO THE APPELLAN T UNIVERSITY. LD. DIT (EXEMPTION) OUGHT TO HAVE GRANTED REGISTRATION I N LIGHT OF THE FACT THAT ALL THE REQUISITE FORMALITIES UNDER THE P ROVISIONS OF THE ACT WERE COMPLIED WITH BY THE APPELLANT UNIVERSITY. IT BE SO HELD NOW. 2. LD. DIT (EXEMPTION) ERRED IN LAW AND ON FACT S IN NOT APPRECIATING THE FACT THAT A PRIVATE UNIVERSITY APP ROVED, SANCTIONED AND DECLARED IN SCHEDULE BY THE STATE CABINET UNDER 'GUJARAT PRIVATE UNIVERSITIES ACT, 2009' IS DEEMED TO BE AN 'ARTIFICIA L JUDICIAL PERSON' GOVERNED BY THE PROVISIONS OF THIS ACT THAT ELABORAT ES OBJECTS FOR WHICH SUCH UNIVERSITIES SHALL FUNCTION. LD. DIT (EXE MPTION) OUGHT TO HAVE GRANTED REGISTRATION TO THE APPELLANT UNIVERSI TY WHOSE INCORPORATION, REGULATION AND WINDING UP ARE ALL GO VERNED BY THE STATE ACT. IT BE SO HELD NOW. 3. LD. DIT (EXEMPTION) ERRED IN LAW AND ON FACT S IN HOLDING THAT NO SEPARATE REGISTRATION U/S 12AA OF THE ACT TO BE GRA NTED TO THE APPELLANT UNIVERSITY AS FOUNDATION HAVING BEEN ALRE ADY REGISTERED U/S 12AA OF THE ACT IGNORING SUBMISSIONS THAT BOTH ENT ITIES BEING INDEPENDENT AND SEPARATE OUGHT TO BE GRANTED REGIST RATION U/S 12AA OF THE ACT INDEPENDENTLY. IT BE SO HELD NOW. 4. LD. DIT (EXEMPTION) ERRED IN LAW AND ON FACT S IN REFUSING TO GRANT CLAIM OF THE APPELLANT ON BASELESS OBSERVATIO NS WITH RESPECT TO GENUINENESS OF THE ACTIVITIES OF THE APPELLANT UNIV ERSITY IGNORING THAT IT IS GOVERNED BY RULES AND REGULATIONS OF THE STAT E LEGISLATURE. LTD. DIT(EXEMPTIONS) OUGHT NOT TO HAVE REFUSED REGISTRAT ION IN ABSENCE OF HAVING BROUGHT ON RECORD ANY PROFIT MOTIVE IN ESTABLISHING PRIVATE UNIVERSITY BY THE APPELLANT. THE ORDER OF LD. DIT(EXEMPTION) BE SET ASIDE AND REGISTRATION BE GRANTED. 3 ITA NOS.1955 & 1956/AHD/2013 CALORX TEACHERS UNIVERSITY VS. DIT(E) 5. LD.DIT(EXEMPTION) ERRED IN LAW AND FACTS IN REFU SING TO GRANT REGISTRATION U/S.12AA OF THE ACT ON UNTENABLE AND INC ORRECT GROUNDS. IT BE SO HELD NOW. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WAS CONSTITUTED AS A UNIVERSITY ON 24/07/2009 UNDER GUJARAT PRIVATE UNIVERSITIES AC T 2009 ( GPUA FOR SHORT) WHEREBY THE ASSESSEE WAS NOTIFIED AS AN UNIV ERSITY UNDER THE ACT. THE ASSESSEE MOVED AN APPLICATION IN FORM NO.10A ON 13/12/2012 FOR OBTAINING REGISTRATION U/S.12AA OF THE INCOME TAX A CT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT'). SIMILARLY APPLICATIONS WERE ALSO MOVED TO AVAIL EXEMPTION U/S.80G(5) OF THE ACT. THE DIRECTOR OF IN COME TAX (EXEMPTION) [ DIT(E) FOR BREVITY] HOWEVER DECLINED THE REGISTRATION U/S.12A/ 12AA OF THE ACT AND ALSO DECLINED TO ENTER TAIN ANOTHER APPLICATION SEEKING REGISTRATION U/S.80G(5) OF THE ACT. THE DIT(E) REFERRED TO SEVERAL CLAUSES OF GUJARAT PRIVATE UNIV ERSITIES ACT AND MADE AVERMENTS TO THE EFFECT THAT THE IMPUGNED ASSESSEE (UNIVERSITY) IS TOTALLY CONTROLLED BY THE SPONSORING BODY, NAMELY CALORX F OUNDATION WHICH IS ALREADY APPROVED U/S.12A/12AA OF THE ACT AND, THERE FORE, WHEN THE SPONSORING BODY IS EXERCISING ABSOLUTE CONTROL OVER THE ASSESSEE, IN THAT EVENT, NO SEPARATE APPROVAL IS NECESSARY. THE DIT(E ) NEXT OBSERVED THAT THE ASSESSEE (UNIVERSITY) AND THE SPONSORING BODY ARE IN EFFECT NO DIFFERENT FROM EACH OTHER IN VIEW OF THE TOTAL CONT ROL OF THE SPONSORING BODY OVER THE ASSESSEE. THE DIT(E) WENT ON TO OBSER VE THAT IN TERMS OF STATE ENACTMENT FOR UNIVERSITIES, ALL THE ASSETS OF THE ASSESSEE WILL VEST WITH THE SPONSORING BODY IN THE EVENT OF ITS DISSOL UTION. THE UNIVERSITY IS THUS NOT INDEPENDENT BODY IN THE REAL SENSE. IN SUC H A SITUATION, IT IS THE SPONSORING BODY WHICH REQUIRES REGISTRATION AND NOT THE ASSESSEE (UNIVERSITY). THE DIT(E) ALSO NOTED THAT THE ASSES SEE HAS NOT PRODUCED ITS OWN CONSTITUTION OR TRUST-DEED OR ARTICLES OF A SSOCIATION (AOA) OR 4 ITA NOS.1955 & 1956/AHD/2013 CALORX TEACHERS UNIVERSITY VS. DIT(E) MEMORANDUM OF ASSOCIATION (MOA) OR SIMILAR LEGAL DO CUMENTATION TO DEMONSTRATE ITS OWN CHARTER. THE ASSESSEE IS PRIMAR ILY RELIED UPON THE STATE ENACTMENT FOR ITS EXISTENCE AND OPERATIONS. T HE GPUA HAS PROVIDED FOR APPROVING THE FIRST STATUTE OF THE UNIVERSITY LIKE MOA OF THE UNIVERSITY. IT WAS ALLEGED THAT THE FIRST STATUE HAS NOT YET BEEN APPROVED FROM THE GOVERNMENT OF GUJARAT. THE DRAFT OF THE FIRST STATUTE SUBMITTED TO THE GOVERNMENT DOES NOT ADDRE SS ON THE POINT AS TO WHAT WILL HAPPEN TO THE ASSETS OF THE UNIVERSITY UP ON DISSOLUTION. THE DIT(E) THEREAFTER NOTED THAT A CHARITABLE TRUST IS GOVERNED BY THE PROVISIONS OF BOMBAY PUBLIC TRUST ACT WHICH DOES NO T ALLOW A TRUST TO BE REVOKED AND NO PROPERTY OF THE TRUST CAN BE PARTED AWAY WITHOUT THE PERMISSION OF THE CHARITY COMMISSIONER. IN THE PRE SENT CASE, CONTRARY HAS BEEN PROVIDED BY THE ACT WHEREBY ALL THE ASSETS CAN GO TO THE SPONSORING BODY. THE DIT(E) NOTED WITH REFERENCE T O CLAUSE 36 OF THE ACT THAT SPONSORING BODY SHALL ESTABLISH AN ENDOWME NT FUND FOR THE UNIVERSITY AND IN THE SAME VAIN REITERATED THAT ALL THE ASSETS OF THE UNIVERSITY WILL VEST WITH THE SPONSORING BODY. THIS MEANS THE ENDOWMENT FUND UPON DISSOLUTION GOES BACK TO THE SE TTLER. THE DIT (E) ALSO NOTED ON FACTS THAT THE LAND AND BUILDING OF T HE UNIVERSITY IS IN THE NAME OF SPONSORING BODY, WHEREAS OTHER ASSETS LIKE FIXTURES AND FURNITURES ETC. ARE IN THE NAME OF UNIVERSITY. 4. THE DIT(E) THEREAFTER SUMMED UP IN PARA-10 OF IT S ORDER THAT REGISTRATION CANNOT BE GRANTED FOR THE FOLLOWING RE ASONS:- 10. IN VIEW OF THE DISCUSSION IN PARA 9 ABOVE, IT IS CLEAR THAT REGISTRATION CANNOT BE GRANTED FOR THE FOLLOWING RE ASONS:- I) AS STATED ABOVE, THE SCHEDULE OF THE NOTIFICATION OF THE GOVERNMENT OF GUJARAT NOTIFYING THE UNIVERSITY SHOW N THAT THE 5 ITA NOS.1955 & 1956/AHD/2013 CALORX TEACHERS UNIVERSITY VS. DIT(E) ASSESSEE APPEARS TO HAVE BEEN REGISTERED U/S.25 OF THE COMPANIES ACT BUT NO SUCH REGISTRATION FROM ROC HAS BEEN GIVE N. THERE IS NO MOA OR AOA AND HENCE THE OBJECTS OF THE UNIVERSI TY, MODE OF DISSOLUTION AND WHETHER THE ACTIVITY WOULD BE IN A CHARITABLE MANNER OR NOT CANNOT BE VERIFIED. THERE IS NOTHING TO ENSURE THAT THE UNIVERSITY WOULD PERFORM ITS ACTIVITIES IN A CH ARITABLE MANNER. II) THE ASSESSEE HAS PREPARED A DRAFT, FIRST STATUTE RE PORT WHICH IS NOT YET APPROVED BY THE GOVERNMENT OR GUJARAT. EVE N THE DRAFT OF FIRST STATUTE IS NOT COMPLETE IN THE SENSE IT AL SO DOES NOT ENSURE THAT THE UNIVERSITY WOULD BE RUN IN A CHARIT ABLE MANNER. IT DOES NOT ENSURE AS TO WHAT WILL HAPPEN TO THE AS SETS UPON DISSOLUTION. III) AS STATED ABOVE, THE UNIVERSITY IS NOT AT ALL AN IN DEPENDENT BODY EVEN THOUGH IT IS NOTIFIED BY THE GOVERNMENT UNDER THE GUJARAT PRIVATE UNIVERSITIES ACT. THE SPONSORING BODY NAM ELY CALORX FOUNDATION IS CONTROLLING THE UNIVERSITY NOT ONLY IN APPOINTING THE PRESIDENT OF THE UNIVERSITY BUT ALSO IN APPOINT ING THE GOVERNING BODY OF THE UNIVERSITY AS WELL AS BOARD O F MANAGEMENT OF THE UNIVERSITY. ALMOST ENTIRE MEMBER SHIP OF THE GOVERNING BODY AS DISCUSSED IN DETAIL ABOVE AND ALS O ALMOST ENTIRE MEMBERSHIP OF THE BOARD OF MANAGEMENT CONSIS TS OF PEOPLE DIRECTLY OR INDIRECTLY APPOINTED BY THE SPON SORING BODY AND HENCE THE UNIVERSITY IS NOT AN INDEPENDENT BODY BUT SORT OF BRANCH OR DIVISION OF THE SPONSORING BODY AND HENCE CANNOT BE STATED TO BE A BODY WHICH IS INDEPENDENT AND HENCE REGISTRATION CANNOT BE GIVEN. IV) AS DISCUSSED ABOVE, A CHARITABLE TRUST OR INSTITUTI ON IS GOVERNED BY VERY STRICT PROVISIONS BECAUSE IT ENJOYS NOT ONL Y INCOME-TAX EXEMPTION BUT EXEMPTIONS UNDER VARIOUS ACTS. IT IS ALLOWED TO OBTAIN DONATIONS AND ISSUE RECEIPTS U/S.80G GIVING TAX BENEFITS TO THE DONORS. IT IS ALLOWED TO RECEIVE GRANTS ETC. THIS SHOWS THAT THE ENTIRE PROPERTY OF CHARITABLE TRUST OR INSTITUT ION HAS PUBLIC CHARACTER AND HENCE NO AMOUNT OF ASSET CAN BE ALLOW ED TO GO BACK TO THE DONOR OR SETTLER OR THE TRUSTEE OR THE CONTROLLING BODIES. CONTRARY TO THIS, IN THE PRESENT CASE, THE SPONSORING BODY HAS FULL AND FINAL CONTROL ON NOT ONLY DISSOLV ING ITSELF BUT FOR DISSOLVING THE UNIVERSITY ALSO. AS STATED ABOVE, U PON DISSOLUTION, THE ASSETS WILL VEST IN THE SPONSORING BODY, WHICH IS SETTLER. V) AS STATED ABOVE, U/S.36(1) PROVIDES FOR ESTABLISHIN G AN ENDOWMENT FUND BY THE SPONSORING BODY. THE LANGUAG E OF 6 ITA NOS.1955 & 1956/AHD/2013 CALORX TEACHERS UNIVERSITY VS. DIT(E) SECTION 36 SHOWS THAT SPONSORING BODY IS SORT OF SE TTLING A PARTICULAR AMOUNT IN THE FORM OF ENDOWMENT FUND. H OWEVER, AS PER SECTION 42(2), ALL THE ASSETS AND LIABILITIES O F UNIVERSITY SHALL VEST IN THE SPONSORING BODY. THIS MEANS THAT THE S ETTLEMENT OF ENDOWMENT FUND IS NOT FINAL AND THE SAME WOULD GO B ACK TO THE SETTLER SPONSORING BODY UPON DISSOLUTION. THIS CAN NOT BE PERMITTED IN RESPECT OF PUBLIC FUNDS. IF THE UNIVE RSITY IS GRANTED REGISTRATION U/S.12A/12AA, ALL ITS FUND BECOME PUBL IC AND DO NOT RETAIN PRIVATE CHARACTER. UNDER NO CIRCUMSTANCES, THEY CAN BE ALLOWED TO GO BACK TO THE SETTLER. VI) IN THE ABSENCE OF THE CONSTITUTION OF THE UNIVERSIT Y OR MEMORANDUM OF ASSOCIATION OR ARTICLE OF ASSOCIATION OR TRUST DEED, IT IS IMPOSSIBLE TO KNOW HOW THE UNIVERSITY I S RUNNING ITS AFFAIRS. IT IS NOT POSSIBLE TO KNOW WHETHER THE AC TIVITIES OF THE UNIVERSITY WOULD BE OF CHARITABLE CHARACTER AND HEN CE NO REGISTRATION CAN BE GIVEN. 5. THE DIT(E) ACCORDINGLY CONCLUDED THAT HE IS NOT SATISFIED ABOUT THE OBJECTS OF THE UNIVERSITY AND GENUINENESS OF ITS AC TIVITIES TO BE OF CHARITABLE NATURE IN CONSONANCE WITH PROVISIONS OF SECTION 12A/12AA OF THE ACT AND ACCORDINGLY REFUSED TO GRANT REGISTRATI ON SOUGHT U/S.12A/12AA OF THE ACT. 6. AGGRIEVED BY THE ORDER OF DIT(E), THE ASSESSEE I S IN APPEAL BEFORE THE TRIBUNAL. 7. THE LD. COUNSEL MR. S.N. SOPARKAR, SENIOR ADVOCA TE APPEARING FOR THE ASSESSEE, AT THE OUTSET, ADVERTED OUR ATTENTION TOWARDS THE GUJARAT GOVERNMENT GAZETTE BEARING NOTIFICATION AND SCHEDUL E THERETO WHEREIN THE ASSESSEE, NAMELY CALORX TEACHERS UNIVERSITY , AHMEDABAD FIGURES AT THIRD ROW OF THE SCHEDULE. AS PER THE AFORESAID SCHEDULE, THE STATE GOVERNMENT HAS GRANTED REQUISITE PERMISSION OR APP ROVAL TO SET UP PRIVATE UNIVERSITY IN TERMS OF THE PROVISIONS OF TH E GPUA WITH EFFECT 7 ITA NOS.1955 & 1956/AHD/2013 CALORX TEACHERS UNIVERSITY VS. DIT(E) FROM 24/07/2009. THE LD. SENIOR COUNSEL SUBMITTED T HAT AS PER THE THIRD COLUMN OF THE SCHEDULE, A REGISTRATION NUMBER HAS B EEN MENTIONED WHICH IS MISUNDERSTOOD BY THE DIT(E) TO BE REGISTR ATION NUMBER OF THE ASSESSEE. THE LD. COUNSEL SUBMITTED THAT THE AFORES AID REGISTRATION NUMBER RELATES TO THE SPONSORING BODY, NAMELY CALOR X FOUNDATION WHICH IS A REGISTERED COMPANY U/S.25 OF THE COMPANIES ACT , 1956. THE COUNSEL VEHEMENTLY EXHORTED THAT THE DIT(E) HAS MISUNDERSTO OD THE FACTS AND ARRIVED AT A FINDING OF FACT THAT ASSESSEE APPEARS TO HAVE BEEN REGISTERED U/S.25 OF THE COMPANIES ACT WHICH IS OBVIOUSLY NOT TRUE. THE LD. COUNSEL STRENUOUSLY URGED THAT THAT ASSESSEE (UNIVE RSITY) IS AN INDEPENDENT LEGAL ENTITY CREATED AND ESTABLISHED BY A STATE ACTION AND HAS ITS OWN INDEPENDENT LEGAL IDENTITY AND EXISTENCE. H E ASSERTED THAT REQUISITE FORMALITIES UNDER THE PROVISIONS OF THE S TATE ACT HAS BEEN DULY COMPLIED WITH BY THE ASSESSEE WHILE SETTING UP THE UNIVERSITY. HE EMPHASIZED THAT THE ASSESSEE IS A PRIVATE UNIVERSIT Y APPROVED, SANCTIONED AND DECLARED IN SCHEDULE BY THE STATE CABINET UNDER GUJARAT PRIVATE UNIVERSITIES ACT, 2009 [GPUA] AND IS DEEMED TO BE AN ARTIFICIAL JURIDICAL PERSON GOVERNED BY THE PROVISIONS OF THE INCOME TAX ACT AND THE OBJECTS OF THE UNIVERSITY ARE GOVERNED BY GPUA. HE THUS CLAIMED THAT DIT(E) HAS MISDIRECTED HIMSELF IN LAW IN DRAW ING ADVERSE INFERENCE AGAINST THE ASSESSEE AND IN REFUSING TO ENTERTAIN T HE APPLICATION FOR REGISTRATION TO THE ASSESSEE-COMPANY WHOSE INCORPOR ATION, REGULATION AND WINDING UP ARE ALL GOVERNED BY THE STATE ACT. THE LD. SENIOR COUNSEL FURTHER CONTENDED THAT ASSESSEE (UNIVERSITY) IS ENT ITLED IN LAW FOR INDEPENDENT REGISTRATION U/S.12AA OF THE ACT REGAR DLESS OF THE REGISTRATION ALREADY AVAILABLE TO THE SPONSORING BO DY AS THE SPONSORING BODY AND THE ASSESSEE ARE DIFFERENT BODIES AND ARE SEPARATE LEGAL ENTITIES. THERE IS NOTHING ON RECORD TO ENTERTAIN ANY DOUBT O N ALLEGED PROFIT MOTIVE 8 ITA NOS.1955 & 1956/AHD/2013 CALORX TEACHERS UNIVERSITY VS. DIT(E) IN ESTABLISHING THE PRIVATE UNIVERSITY BY THE ASSES SEE. HE THEREFORE PLEADED THAT THE REFUSAL ORDER OF THE DIT(E) IS REQ UIRED TO BE SET ASIDE AND DIT(E) BE DIRECTED TO GRANT REGISTRATION IN TERMS O F THE APPLICATION PLACED BEFORE HIM. HE RELIED ON THE DECISION IN THE CASE OF CIT VS. O.P. JINDAL GLOBAL UNIVERSITY REPORTED AT (2013) 38 TAXMANN.COM 366 (P&H) AND CO- ORDINATE BENCH OF ITAT DELHI BENCH G IN THE CASE OF SOHAM FOR KIDS EDUCATION SOCIETY CENTRE VS. DIT (EXEMPTIONS) [COPY PLACED IN FILE] TO SUPPORT HIS CASE FOR REGISTRATION. THE LD. SENIOR C OUNSEL THEREAFTER INVITED OUR ATTENTION TO APPEAL NO. ITA NO.1955/AHD /20133 WHEREIN SIMILAR APPLICATION U/S.80G(5) OF THE ACT PLACED BE FORE THE DIT(E) WAS ALSO CONSEQUENTLY DENIED ALBEIT WRONGLY ON THE SIMI LAR GROUNDS. HE THUS ALSO SOUGHT REVERSAL OF THE ORDER U/S.80G(5) DATED 15/05/2013 ON SIMILAR FOOTINGS. 8. THE LD. CIT-DR MS.VIBHA BHALLA, ON THE OTHER HAN D, RELIED UPON THE ORDER OF DIT(E) AND SUBMITTED THAT DIT(E) HAS G IVEN ELABORATE REASONINGS WHILE COMING TO A CONCLUSION ADVERSE TO THE ASSESSEE. HENCE, IT WAS URGED THAT NO INTERFERENCE IS CALLED FOR. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECISIONS RELIED UPON BY THE LD. COU NSEL FOR THE ASSESSEE. THE ASSESSEE IN ITS APPEALS HAS ASSAILED THE ACTION OF THE DIT(E) IN REFUSING TO ENTERTAIN THE APPLICATION OF THE ASSESS EE SEEKING REGISTRATION UNDER S. 12A/12AA AND EXEMPTION UNDER S. 80G OF THE ACT. 9.1 AS SUBMITTED TO US, THE ASSESSEE NAMELY CALORX TEACHERS UNIVERSITY IS ESTABLISHED UNDER THE GPUA WHICH WAS ENACTED TO PROVIDE 9 ITA NOS.1955 & 1956/AHD/2013 CALORX TEACHERS UNIVERSITY VS. DIT(E) FOR ESTABLISHMENT AND INCORPORATION OF PRIVATE UNIV ERSITIES IN THE STATE OF GUJARAT WITH AN EMPHASIS TO PROVIDE FOR QUALITATIVE AND INDUSTRY RELEVANT HIGHER EDUCATION AND TO REGULATE THEIR FUNCTIONS AN D FOR THE MATTERS CONNECTED THEREWITH OR INCIDENTAL THERETO AS DETAIL ED THEREIN. THE ASSESSEE THUS IS A PRIVATE UNIVERSITY WHICH CAME INTO EXISTE NCE BY THE ACT OF STATE ASSEMBLY UNDER THE AEGIS OF 'GUJARAT PRIVATE UNIVERSITIES AC T, 2009'. THE ASSESSEE HEREIN CLAIMS TO BE AN 'ARTIFICIAL JURIDIC AL PERSON' REGULATED BY THE PROVISIONS OF INCOME TAX ACT, 1961. THE SPONSORING BODY OF THE IMPUGNED UNIVERSITY AS STIPULATED IN THE IMPUGNED S TATE ACT IS M/S. CALORX FOUNDATION. THE ASSESSEE APPLIED FOR REGIS TRATION U/S.12A AS PER PROCEDURE LAID DOWN UNDER S. 12AA OF THE ACT FOR TH E UNIVERSITY SET UP UNDER THE STATE ACT. SIMULTANEOUSLY, THE ASSESSEE A LSO MOVED SEPARATE APPLICATION FOR EXEMPTION U/S.80G OF THE ACT. 9.2 A READING OF THE ORDER APPEALED AGAINST SHOWS T HAT THE REFUSAL TO ENTERTAIN THE APPLICATIONS OF THE ASSESSEE BY THE D IT(E) IS FOUNDED PRIMARILY ON TWO GROUNDS; 9.3 FIRSTLY, DIT(E) NOTICED THAT THAT THE SPONSORIN G BODY IS ALREADY REGISTERED U/S.12AA OF THE ACT AND THEREFORE SEPARA TE REGISTRATION IS NOT REQUIRED IN THE FACTS OF THE CASE. THE DIT(E) JUSTI FIED HIS ACTION ON THE PREMISE THAT THE ENTIRE MANAGEMENT AND CONTROL OF T HE UNIVERSITY IS IN EFFECT VESTED WITH THE SPONSORING BODY. THE GOVERN ING BODY OF THE PRIVATE UNIVERSITY IS ALSO MANNED BY THE PEOPLE ON BEHEST OF THE SPONSORING BODY. THE DIT(E) FURTHER NOTED THAT THE ASSETS AND LIABILITIES OF THE ASSESSEE (UNIVERSITY) WILL VEST WITH THE SPO NSORING BODY IN THE EVENT OF DISSOLUTION OF THE UNIVERSITY. THUS, THE A SSESSEE (UNIVERSITY) IS DE FACTO CONTROLLED AND RUN BY THE SPONSORING BODY WHICH ALR EADY ENJOYS 10 ITA NOS.1955 & 1956/AHD/2013 CALORX TEACHERS UNIVERSITY VS. DIT(E) REGISTRATION UNDER SECTION 12AA OF THE ACT. HE CLAI MED THAT THE SPONSORING BODY AND THE ASSESSEE ARE, IN EFFECT, NO DIFFERENT AND THUS SEPARATE APPROVAL IS NOT JUSTIFIED. THE DIT(E) ALS O NOTED THAT THE ASSESSEE HAS NOT FURNISHED ANY TRUST-DEED OR MOA OR AOA OR A NY LEGAL DOCUMENT BINDING IT WITH VARIOUS OBLIGATIONS. IN REBUTTAL, THE MAIN PLANK OF ARGUMENT ON BEHALF OF THE ASSESSEE IS THAT IT IS GO VERNED BY PROVISIONS OF THE STATUTE I.E. GUJARAT PRIVATE UNIVERSITIES ACT, 2009 AND THUS NO SEPARATE CHARTER IS REQUIRED. 9.4 SECONDLY, THE DIT(E) ALSO OBSERVED THAT ASSESSE E APPEARS TO BE REGISTERED U/S.25 OF THE COMPANIES ACT, 1956 AND IN THE ABSENCE OF ANY LEGAL DOCUMENTS TO BRING OUT THE SPIRIT BEHIND THE SETTING UP OF THE UNIVERSITY, IT IS NOT POSSIBLE TO ASCERTAIN WHETHER THE ASSESSEE UNIVERSITY IS SET UP TO PURSUE CHARITABLE OBJECTIVES OR IS SET UP WITH PROFIT MOTIVES. THE DIT(E) NOTED THAT THERE IS NOTHING ON RECORD TO ENS URE THAT THE UNIVERSITY WILL PERFORM ITS OBJECTS IN A CHARITABLE MANNER. H E MADE REFERENCE TO BOMBAY PUBLIC TRUST TO MAKE OUT A CASE THAT PRIMARY ONUS LIES ON THE ASSESSEE THAT ASSESSEE WILL ADVANCE CHARITABLE CAUS ES FOR THE BENEFIT OF GENERAL PUBLIC. THE DIT(E) CONTENDED THAT THE PROVI SIONS OF GUJARAT PRIVATE UNIVERSITY ACT, 2009, CAN APPLY TO AN INSTI TUTION WHICH MAY BE RUNNING THE UNIVERSITY EITHER ON A PRIVATE PROFIT B ASIS OR ON A CHARITABLE BASIS. A CHARITABLE TRUST OR AN INSTITUTION IS GOV ERNED BY VERY STRICT PROVISIONS BECAUSE IT ENJOYS NOT ONLY INCOME-TAX EX EMPTION BUT EXEMPTION UNDER VARIOUS ACTS. IT IS ALLOWED TO REC EIVE GRANT AND DONATIONS ETC. THUS ENTIRE PROPERTY OF THE CHARITA BLE TRUST OR INSTITUTION ACQUIRES A PUBLIC CHARACTER AND HENCE NO AMOUNT OF ASSETS CAN BE ALLOWED TO GO BACK TO THE DONOR OR SETTLER OR THE TRUSTEE O R THE CONTROLLING BODIES. THE DIT(E) DECLINED TO GRANT REGISTRATION ON THE GR OUND THAT IT IS NOT 11 ITA NOS.1955 & 1956/AHD/2013 CALORX TEACHERS UNIVERSITY VS. DIT(E) DISCERNIBLE FROM THE RECORD AS TO WHETHER THE ACTIV ITIES OF THE UNIVERSITY IS OR CHARITABLE CHARACTER OR NOT. 9.5 ON PERUSAL OF THE VARIOUS OBSERVATIONS OF THE D IT(E), WE NOTE THAT THE DIT(E) HAS FAILED TO TAKE NOTE OF THE SCHEME FO R CREATION OF PRIVATE UNIVERSITIES IN PERSPECTIVE WHILE HOLDING THAT THE SPONSORING BODY AND THE ASSESSEE (UNIVERSITY) ARE ONE AND THE SAME. ON CARE FUL PERUSAL OF THE GUJARAT PRIVATE UNIVERSITIES ACT, 2009 PLACED BEFOR E US, WE FIND THAT THE STATE LEGISLATURE ITSELF CONTEMPLATES FOR ESTABLISH MENT OF PRIVATE UNIVERSITY BY A SPONSORING BODY. THE SPONSORING BOD Y IS ALSO ENTITLED UNDER AFORESAID STATE ENACTMENT TO APPOINT VARIOUS PERSONS TO ADMINISTER AND MANAGE THE UNIVERSITIES AS APPROVED BY IT. THER EFORE, OBJECTION OF THE REVENUE THAT THE ASSESSEE AND THE SPONSORING BODY A RE NOT INDEPENDENT RUNS COUNTER TO THE VERY SCHEME OF ESTABLISHMENT OF THE PRIVATE UNIVERSITIES AND IS THUS A DAMP SQUIB. WE ALSO TAKE NOTE OF ANOTHER ERROR COMMITTED BY THE DIT(E) IN HOLDING THAT ASSESSEE UN IVERSITY IS REGISTERED UNDER S. 25 OF THE COMPANIES ACT 1956 AND AS A SEQU EL THERETO IN HOLDING THAT REGISTRATION CERTIFICATE WAS NOT PRODUCED. WE FIND OURSELVES IN AGREEMENT WITH THE DEMONSTRATION MADE ON BEHALF OF THE ASSESSEE THAT IT IS THE SPONSORING BODY WHICH IS REGISTERED UNDER SECTI ON 25 OF THE ACT, 1956 AND NOT THE ASSESSEE PER SE . THE ASSESSEE IS NOT A COMPANY REGISTERED UNDER COMPANIES ACT BUT A BODY WHICH WAS BORNE BY T HE STATE ACTION. THUS, IN THE TOTALITY OF CIRCUMSTANCES, WE ARE OF T HE VIEW THAT MERE DEPENDENCE OF THE ASSESSEE ON THE SPONSORING BODY F OR CARRYING OUT ITS OBJECTS IN SYNC WITH THE STATE ENACTMENT WILL NOT D EPRIVE IT OF BENEFIT OF REGISTRATION AND EXEMPTION AS PER APPLICATION MOVED BEFORE REVENUE IN THIS REGARD. 12 ITA NOS.1955 & 1956/AHD/2013 CALORX TEACHERS UNIVERSITY VS. DIT(E) 9.6 HAVING NOTED AFORESAID, WE NOW ADVERT TO THE SE COND OBJECTION OF THE REVENUE THAT THE ASSESSEE HAS NOT BROUGHT ANY M ATERIAL ON RECORD TO ESTABLISH THAT THE ACTIVITY OF THE APPLICANT-ASSESS EE WOULD BE CARRIED OUT WITH SOLEMN OBJECTS OF CHARITABLE NATURE AND THE UN IVERSITY WOULD NOT BE RUN IN A COMMERCIAL SPIRIT AS A BUSINESS OR A PROFI T VENTURE. IN THIS REGARD, WE DO NOT FIND ANYTHING IN THE GUJARAT PRIVATE UNIV ERSITIES ACT, 2009 WHICH COMPELS THE UNIVERSITY TO RUN IN A CHARITABLE MANNER ALONE. THE STATE ENACTMENT MERELY PROVIDES THE MANNER IN WHICH THE CONSTITUENT UNIVERSITIES WOULD FUNCTION TO CARRY OUT THE OBJECT S AS SPECIFIED IN THE ACT ON THEIR APPROVAL AND SANCTION. THEREFORE, THER E IS NOTHING IN THE STATE ENACTMENT WHICH IMPLIES THAT A UNIVERSITY ENACTED U NDER ITS AEGIS WOULD BE BOUND TO RUN IN A CHARITABLE MANNER. THE MERE SA NCTION AND APPROVAL OF AN UNIVERSITY UNDER THE GPUA WOULD NOT IPSO FACTO TANTAMOUNT TO CARRYING OUT OF THE EDUCATIONAL ACTIVITIES WITH CHA RITABLE OBJECTIVES. NO SUCH PROVISION HAS BEEN BROUGHT TO OUR NOTICE EITHE R. WE ALSO DO NOT FIND REFERENCE TO ANY OTHER LEGAL DOCUMENT WHICH BINDS T HE ASSESSEE TO RUN THE UNIVERSITY IN A CHARITABLE MANNER. THUS, IT CAN NOT BE DENIED THAT A UNIVERSITY WOULD BE AT LIBERTY TO EXPLOIT THE PERMI SSION TO SET UP THE UNIVERSITY ON COMMERCIAL CONSIDERATIONS. THE PROVIS IONS OF SECTION 12AA OF THE ACT STIPULATE THAT THE OBJECTS OF THE ASSESS EE SHOULD BE OF CHARITABLE NATURE TO AVAIL REGISTRATION U/S.12A OF THE ACT. T HEREFORE, IN OUR VIEW IT IS INCUMBENT UPON THE ASSESSEE TO AT LEAST PRIMA-FACIE ESTABLISH THAT THE ASSESSEE (UNIVERSITY) HAS BEEN FORMED WITH THE AIMS AND OBJECTS WHICH ARE CHARITABLE IN NATURE. WE ARE ALIVE TO THE FACT THAT ASSESSEE IS AN EDUCATIONAL INSTITUTION WHICH CONCERNS LARGER PUBLI C ENGAGEMENT. CONSEQUENTLY, IT WOULD BE IN FITNESS OF THINGS TO G RANT ONE MORE OPPORTUNITY TO THE ASSESSEE TO PLACE RELEVANT MATER IAL ON RECORD OF THE 13 ITA NOS.1955 & 1956/AHD/2013 CALORX TEACHERS UNIVERSITY VS. DIT(E) REVENUE TO DEMONSTRATE THE BONAFIDES OF CHARITABLE OBJECTS IT SEEKS TO PROPOUND. 9.7 IN THE LIGHT OF AFORESAID DISCUSSION, WE DEEM I T APPROPRIATE TO REMIT THE MATTER BACK TO THE FILE OF DIT(E) ON A LIMITED GROUND TO ASCERTAIN THE CHARITABLE INTENT AND PURPOSES IN CARRYING OUT ITS OBJECTS. NEEDLESS TO SAY, IT SHALL BE OPEN TO THE ASSESSEE TO ESTABLISH THIS FACT WITH RELEVANT MATERIAL AND DOCUMENTARY EVIDENCES BEFORE THE COMPETENT AUTH ORITY. FOR THIS PURPOSE, THE ASSESSEE SHALL BE GRANTED REASONABLE O PPORTUNITY OF BEING HEARD. ON BEING SATISFIED OF THE COMPLIANCE, THE DI T(E) SHALL GRANT REGISTRATION U/S.12AA OF THE ACT AS SOUGHT IN ACCOR DANCE WITH LAW. SIMILARLY, APPLICATION FOR EXEMPTION U/S.80G SHALL ALSO BE DEALT WITH IN THE SAME MANNER IN TERMS OF AFORESAID DIRECTIONS. 10. THUS, APPEAL OF THE ASSESSEE IN ITA NO.1956/A HD/2013 IS ALLOWED FOR STATISTICAL PURPOSES. 11. IN ITA NO.1955/AHD/2013, THE ASSESSEE HAS AGITA TED THE DENIAL OF EXEMPTION SOUGHT UNDER S. 80G OF THE ACT. THE REVEN UE HAS REFUSED THE EXEMPTION IN THE WAKE OF REFUSAL OF REGISTRATION UN DER 12AA TO THE ASSESSEE UNIVERSITY. IN THE WAKE OF OUR OBSERVATION S IN ITA NO. 1956/AHD/ 2013 SEEKING GRANT OF REGISTRATION UNDER S. 12A/ S. 12AA OF THE ACT, WE RESTORE THIS APPEAL ALSO BACK TO THE FI LE OF THE DIT(E) WITH A DIRECTION TO THE REVENUE TO REVIEW THE MATTER AFRES H IN ACCORDANCE WITH LAW AFTER GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 12. THUS, THE APPEAL OF THE ASSESSEE IN ITA NO.1955 /AHD/2013 IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 14 ITA NOS.1955 & 1956/AHD/2013 CALORX TEACHERS UNIVERSITY VS. DIT(E) 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 19 /09/2016 SD/- SD/- . . ! ' ( ) ( ) ( R.P. TOLANI ) ( PR ADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 19/ 09 /2016 & ! ' ( ) ! % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. '#$ % / CONCERNED CIT 4. % ( ) / THE CIT(A)-CONCERNED/DI (EXEMPTIONS), AHD. 5. #& ' ###$ , #$ , () ' / DR, ITAT, AHMEDABAD 6. ' * + , / GUARD FILE. ! / BY ORDER, * //TRUE COPY// - / ( ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 9.9.16 (DICTATION-PAD 30- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.9.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.19.9.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 19.9.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER