M/s. MDN Educational Society, Rohtak V. ACIT, Rohtak

ITA 2000/DEL/2014

• Counselvise Citation: 200020114 RSA 2014
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 04-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 12AA; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E , NEW DELHI) BEFORE SHRI G. C. GUPTA, HONBLE VICE PRESIDENT AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.2000 /DEL/2014 ASSESSMENT YEAR : 2009-10 M/S. MDN EDUCATIONAL SOCIETY VS. ACIT, ROHTAK CIR CLE, C/O MDN PUBLIC SCHOOL, ROHTAK, HARYANA DELHI ROAD, NORTHERN BYE PASS, ROHTAK, HARYANA GIR / PAN:AAATM5922D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANOJ KUMAR MITTAL, CA RESPONDENT BY : SHRI P DAM KANUNJHA, SR. DR DATE OF HEARING : 16.03.2015 DATE OF PRONOUNCEMENT : 25.03.2015 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE OR DER OF LD. CIT(A) DATED 10.02.2014. THE ASSESSEE HAS TAKEN 7 GROUNDS OF APPEAL BY WHICH IT HAS CHALLENGED THE ACTION OF LD. CIT(A) BY WHICH HE HAD CONFIRMED THE DISALLOWANCE OF EXEMPTION U/S 10(23C(VI) OF THE I. T. ACT, 1961. VIDE GROUND NOS.3 & 4, THE ASSESSEE HAS ALSO CHALLENGED THE ACTION OF LD. CIT(A) BY WHICH HE HAD WITHDRAWN EXEMPTION GRANTED U/S 10( 23C)(VI) FROM ASSESSMENT YEAR 2007-08 TO ASSESSMENT YEAR 2009-10. 2. AT THE OUTSET, LD. A.R. SUBMITTED THAT THE A.O. HAD DENIED CLAIM OF EXEMPTION U/S 10(23C)(VI) IN VIEW OF CCIT, PANCHKUL A ORDER DATED 25.03.2011 BY WHICH HE HAD WITHDRAWN THE EXEMPTION GRANTED U/S 10(23C)(VI) OF THE ACT. THE ASSESSEE HAD FILED APP EAL AGAINST THE SAME. HOWEVER, LD. CIT(A) DISMISSED THE APPEAL OF ASSESSE E AND ALSO HELD THAT THE ITA NO.2000/DEL/2014 2 ORDER DENYING EXEMPTION MEANS THAT EARLIER EXEMPTIO N ALLOWED TO ASSESSEE STAND WITHDRAWN. LD. A.R. SUBMITTED THAT AGAINST T HE ORDER OF CCIT, THE ASSESSEE HAS ALREADY FILED APPEAL IN PUNJAB & HARYA NA HIGH COURT. CHANDIGARH AND, THEREFORE, THE MATTER REGARDING DEN IAL OF EXEMPTION IS SUB- JUDICE. HOWEVER, HE ARGUED THAT LD. CIT(A) CANNOT WITHDRAW THE EXEMPTION GRANTED BY CCIT FOR THE EARLIER YEARS AND THEREFORE , HE PRAYED THAT GROUND NOS. 3 & 4 OF THE APPEAL MAY BE ADJUDICATED. 3. LD. D.R. ON THE OTHER HAND HEAVILY RELIED UPON T HE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ASSESSEE HAD BEEN GRAN TED EXEMPTION U/S 10(23C)(VI) OF THE I. T. ACT, 1961 FOR THE ASSESSME NT YEARS 2007-08 TO 2009-10 AND, THEREFORE, THE SAID EXEMPTION WAS DULY GRANTED TO THE ASSESSEE. HOWEVER, IN ASSESSMENT YEAR 2010-2011, I.E. THE PRE SENT YEAR, WHEN ASSESSEE FILED APPLICATION FOR RENEWAL OF EXEMPTION , LD. CCIT DENIED THE EXEMPTION AND ON APPEAL BEFORE LD. CIT(A), HE NOT O NLY DENIED THE EXEMPTION FOR THE YEAR UNDER CONSIDERATION BUT ALSO HELD THAT EXEMPTION IN EARLIER YEARS ALSO STANDS WITHDRAWN. THE RELEVANT FINDING OF LD. CIT(A) AS CONTAINED IN PARA 4 ARE REPRODUCED BELOW: 4. I HAVE EXAMINED THE SUBMISSIONS MADE BY THE AP PELLANT AND THE FACTS ON RECORD. THE ASSESSEE HAS RELIED ON A CIRCU LAR NO.7 /2010 WHICH STATES THAT APPROVALS UNDER SUB CLAUSE (VI) A ND (VIA) OF SECTION 10 (23C) ISSUED ON OR AFTER 1.12.2006 WOULD ALSO BE A ONETIME APPROVAL WHICH WOULD BE VALID TILL IT IS WITHDRAWN. THE OPERATIVE WORD IN THIS CASE IS 'WITHDRAWN'. THE LD. CCIT, PAN CHKULA, VIDE HIS ORDER IN F.NO. CC/ 10(23C)(VI)/2010-2011 DATED 25.3 .2011 HAD REJECTED THE APPLICATION OF EXEMPTION ON THE GROUND THAT THE BASIC AND PRIMARY CONDITIONS U/S 10(23C)(VI) OF THE ACT WERE NOT SATISFIED. THE PREVIOUS APPROVAL HAD BEEN GRANTED. VIDE AN ORDER D ATED 26.3.2008 FOR THE AY 2007-08 TO 2009-10. IN MY OPINION, THE O RDER OF THE LD. ITA NO.2000/DEL/2014 3 CCIT, PANCHKULA DATED 25.3.2011 REJECTING THE APPLI CATION FOR EXEMPTION IS 'WITHDRAWAL: EVEN IF THERE IS NO MENTI ON OF THE SAME. EVEN IF, THE PREVIOUS ORDER WAS TO BE CONSIDERED TO BE GRANTED IN PERPETUITY. THE FACT THAT THERE IS AN ORDER DENYING EXEMPTION MEANS THAT THE EARLIER EXEMPTION STANDS WITHDRAWN. THE AS SESSEE SOCIETY HAS ALSO NOT REGISTERED UNDER SEC. 12AA AND IN VIEW OF THE FACTS AS OUTLINED ABOVE, THE AO WAS CORRECT IN ASSESSING THE INCOME OF THE ASSESSEE AT RS 16,33,877/-. THE GROUNDS RELATED TO THIS ADDITION ARE DISMISSED. 5. AGAINST THE ORDER OF CCIT FOR DENIAL OF EXEMPTIO N U/S 10(23C)(VI) OF THE ACT, THE ASSESSEE IS ALREADY IN APPEAL BEFORE H ON'BLE HIGH COURT AND THE MATTER IS PENDING THERE. THEREFORE, WITHOUT COMMEN TING ON THE MERITS FOR ASSESSMENT YEAR 2010-11, REGARDING APPLICABILITY OF EXEMPTION TO ASSESSEE, WE HOLD THAT LD. CIT(A)S ACTION IN HOLDING THAT EA RLIER YEARS EXEMPTION STAND WITHDRAWN IS NOT JUSTIFIED. AS PER CIRCULAR NO.7/2010 DATED 27.10.2010, EXEMPTION ONCE GRATED WOULD REMAIN VALI D TILL IT IS WITHDRAWN. ADMITTEDLY THE EXEMPTION U/S 20(23C)(VI) OF THE ACT HAS BEEN WITHDRAWN VIDE ORDER DATED 25.03.2011 AND IT APPLIES TO ASSES SMENT YEAR 2010-11 AND ONWARDS AND NOT FOR EARLIER YEARS. FOR THE SAKE OF CONVENIENCE, PARA 9 OF THE SAID ORDER IS REPRODUCED BELOW: 9. IN THE LIGHT OF ABOVE REASONS & THE HUGE SURPLU S GENERATED AS DISCUSSED IN PARA- 5 ABOVE, THE BASIC & PRIMARY CON DITIONS U/ S 10(23C)(VI) OF THE INCOME TAX ACT OF EXISTING SOLEL Y FOR EDUCATION & 'NOT FOR PROFIT' IS NOT SATISFIED BY THE ABOVE REFE RRED EDUCATIONAL INSTITUTION NAMELY M. D. N. PUBLIC SCHOOL, ROHTAK. REFERENCE TO VARIOUS PROVISOS OF SECTION 10(23C)(VI) COME INTO P LAY ONLY IF THE PRIMARY CONDITION IN THE SUBSTANTIVE CLAUSE 10(23C) (VI) IS SATISFIED & THEREFORE, IS OF NO ASSISTANCE TO THE APPLICANT IN THE LIGHT OF THE RATIO OF THE APEX COURT. THE APPLICATION U/S 10(23C)(VI) OF THE INCOME TAX ACT, 1961 FOR THE A Y 2010- 11 AND ONWARDS IS THERE FORE, NOT MAINTAINABLE & ACCORDINGLY APPROVAL TO THE ABOVE RE FERRED ITA NO.2000/DEL/2014 4 EDUCATIONAL INSTITUTION VIZ. M. D. N. PUBLIC SCHOOL , ROHTAK CANNOT BE ALLOWED FOR AY 2010-11 AND ONWARDS & IS THEREFORE, REJECTED. 6. FROM THE ABOVE FINDINGS, WE FIND THAT LD. CCIT H AS DENIED THE EXEMPTION ONLY FOR ASSESSMENT YEAR 2010-2011 AND ON WARDS AND, THEREFORE, ACTION OF LD. CIT(A) IN HOLDING THAT EXEMPTION FOR EARLIER YEARS ALSO STANDS WITHDRAWN, IS NOT JUSTIFIED. 7. IN VIEW OF ABOVE, WE ALLOW GROUNDS NO.3 AND 4 OF APPEAL. 8. SINCE THE ISSUE OF DENIAL OF EXEMPTION FOR ASSES SMENT YEAR 2010- 2011 IS PENDING WITH HON'BLE HIGH COURT, WE ARE NOT ADJUDICATING ON THE ABOVE. 9. IN VIEW OF ABOVE, APPEAL FILED BY ASSESSEE IS PA RTLY ALLOWED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MARCH, 2015. SD./- SD./- ( G. C. GUPTA) (T.S. KAPOO R) VICE PRESIDENT ACCOUNTANT MEMBER DATE: 25 TH MARCH, 2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.2000/DEL/2014 5 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 25/3 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 25/3 SR. PS/PS 7 FILE SENT TO BENCH CLERK 25/3 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER