Mayo College Old Boys Association, New Delhi V. DIT(E), New Delhi

ITA 2010/DEL/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6679 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 10-11-2010
• Assessment Year: misc
• Appeal Filed On: 03-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Assessee Lawyers: R S ADLAKHA
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 12; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.2010/DEL/2010 ASSESSMENT YEAR : - MAYO COLLEGE OLD BOYS ASSOCIATION, 39, NEETI BAGH, NEW DELHI. PAN : AABTM0234B VS. DIT (E), 3 RD FLOOR, AAYAKAR BHAWAN, LAXMI NAGAR, DISTRICT CENTRE, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.S. ADLAKHA, ADVOCATE REVENUE BY : SHRI N.K. CHAND, SR.DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIRECTED A GAINST THE ORDER DATED 24 TH FEBRUARY, 2010 PASSED BY THE DIRECTOR OF INCOME-TAX (EXEMPTIONS), DELHI U/S 80 G (5) (VI) OF THE IT ACT, 1961 READ WITH RULE 11AA OF INCOME-TAX RULES, 1962. THE GROUNDS OF APPEA L READ AS UNDER:- 1. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF TH E CASE THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION), D ELHI HAS ERRED IN LAW AND FACTS IN REJECTING THE APPLICATION FILED BY THE ASSOCIATION FOR RENEWAL OF EXEMPTION U/S 80G OF THE INCOME TAX ACT, 1961 FOR THE YEAR W.E.F. 1 ST APRIL, 2009. 2. THAT THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION), DELHI HAS NOT APPRECIATED THE MAIN OBJECTS OF THE MAYO COLLEGE OLD BOYS ASSOCIATION, BEING A VERY OLD AND ESTABLISHED ASSOCIATION FORMED FOR CHARITABLE PURPOSE AND CARRYING OUT VARIOUS ACTIVITIES IN THE FIELD OF EDUCATIO N, ETC. ITA NO.2010/DEL/2010 2 3. THAT THE LEARNED DIRECTOR OF INCOME TAX (E) HAS RE JECTED THE APPLICATION WITHOUT UNDERSTANDING THE ESSENCE/LOGIC O F SEC 2 (15) OF THE INCOME TAX ACT, 1961 AND CONCLUDED HIS FINDING WITHOUT VERIFYING THE COMPLETE FACTS OF THE CASE. 2. THE ASSESSEE IN THE PRESENT CASE IS A SOCIETY REGISTERED WITH REGISTRAR OF SOCIETIES, DELHI ADMINISTRATION, DELHI VI DE SL. NO.10776 OF 1980 W.E.F. 8 TH DAY OF FEBRUARY, 1980. COPY OF CERTIFICATE IS FILE D AT PAGE 5 OF THE PAPER BOOK. THE ASSESSEE IS ALSO REGISTERED AS A CHARITABLE INSTITUTION BY THE DIRECTOR OF INCOME-TAX (EXEMPTIONS), NEW DELHI VIDE ORDER PASSED U/S 12A READ WITH SECTION 12AA (1) (B) OF THE INCOME-TAX ACT, 1961 DATED 15 TH SEPTEMBER, 2000 W.E.F. 1.4.1999 (COPY OF CERTIFICATE PLACED AT PAGE 6 OF THE PAPER BOOK). IT ALSO WAS GRANTED EXEMPTION U/S 80G INITIALLY FROM 27 TH MARCH, 2000 TO 31 ST MARCH, 2002 VIDE LETTER DATED 15 TH SEPTEMBER, 2000, COPY OF SUCH LETTER IS PLACED AT PAGE 7 OF THE PAPER BOOK. THE SA ID EXEMPTION U/S 80G WAS RENEWED FOR THE PERIOD FROM 16 TH APRIL, 2003 TO 31 ST MARCH, 2006 VIDE LETTER DATED 14 TH OCTOBER, 2003, COPY OF SUCH LETTER IS FILED AT PAGE 8 OF THE PAPER BOOK. FURTHER, RENEWAL U/S 80G WAS MADE VIDE LETTER DATED 31 ST OCTOBER, 2006 FOR THE PERIOD FROM 1.4.2006 TO 31 ST MARCH, 2009 AND COPY OF SUCH LETTER IS PLACED AT PAGE 9 OF THE PAPER BOOK. AGAIN, RENEWAL APPLICATION WAS FILED ON 15 TH SEPTEMBER, 2009 WHEREIN THE ASSESSEE HAS SOUGHT THE EXEMPTION U/S 80G IN R ESPONSE TO WHICH LD. DIRECTOR OF INCOME-TAX (EXEMPTION) HAS DEN IED THE CLAIM OF THE ASSESSEE FOR RENEWAL OF EXEMPTION U/S 80G. THE REASO N FOR DECLINING SUCH REQUEST IS THAT THE ASSESSEE HAS RECEIVED IN COME UNDER THE HEAD ADVERTISEMENTS AND GOLF TOURNAMENTS INCOME AND IT HAS ALSO INCURRED SUBSTANTIAL EXPENDITURE ON THIS ACTIVITY ONLY. THE DIRECTOR OF EXEMPTION HAS ALSO OBSERVED THAT IN EARLIE R YEARS ALSO THE ASSESSEE HAD BEEN CARRYING OUT SUCH ACTIVITY ONLY. ACCO RDING TO LD. DIT (E), THE ASSESSEE THUS, IS ENGAGED IN THE ACTIVITY OF COMMERCIAL NATURE AND ACTIVITY OF THE ASSESSEE IS NOT COVERED BY SE CTION 2(15), ITA NO.2010/DEL/2010 3 HENCE, IT WAS NOT A CHARITABLE ACTIVITY AND EVEN IF IT IS HELD THAT THE ASSESSEE IS ENGAGED IN THE ACTIVITY OF GENERAL PUBLIC UT ILITY, THEN ALSO, THE SAID ACTIVITY DOES NOT FALL WITHIN THE AMBIT OF S ECTION 2 (15) AND, IN THE CIRCUMSTANCES, HE HAS HELD THAT ACTIVITIES OF THE SO CIETY NO LONGER FALLS UNDER CHARITABLE HEAD, THEREFORE, THE INCOME O F THE ASSESSEE IS NOT EXEMPTED FROM ASSESSMENT YEAR 2009-10 ONWARDS AND, I N THIS MANNER, THE CLAIM OF THE ASSESSEE FOR RENEWAL OF EXEMPT ION U/S 80G WAS DENIED. 3. AFTER NARRATING THE FACTS, IT WAS SUBMITTED BY LD. AR THAT MAIN OBJECT OF THE ASSESSEE SOCIETY IS TO ENCOURAGE EDUCATION IN A BROADER SENSE. REFERENCE WAS MADE TO THE DECISION OF HONBLE D ELHI HIGH COURT IN THE CASE OF ICAI ACCOUNTING RESEARCH FOUNDAT ION VS. DIRECTOR GENERAL OF INCOME-TAX (EXEMPTION) 321 ITR 73 AND RE FERENCE WAS MADE TO THE FOLLOWING OBSERVATIONS:- BOTH THE ABOVE MENTIONED CONTRIBUTIONS/RECEIPTS RECEIVED BY THE ASSOCIATION ARE OF INCIDENTAL ACTIVITY CARRIED OUT. AFTER ENACTMENT OF PROVISO TO SECTION (15) IT IS HELD IN THE CA SE OF ICAI BY THE HONOURABLE HIGH COURT OF DELHI 321 ITR 73 (DEL HI) THAT IT IS HARDLY POSSIBLE FOR A CHARITABLE TRUST TO WORK WITH N O SOURCE OF INCOME AS LONG AS THE USER OF THAT MONEY IS CHARITAB LE, THEN THE EXEMPTION HAS TO BE GRANTED MERELY BECAUSE SOME REMUNERATION WAS TAKEN BY THE PETITIONER FOUNDATION FOR UNDERTAKING THESE PROJECTS WOULD NOT ALTER THE CHARACTER O F THESE PROJECTS. THE AMENDED DEFINITIONS OF CHARITABLE PURPOSE WOULD NOT ALTER THESE POSITIONS. 4. HE CONTENDED THAT THE ACTIVITY CARRIED ON BY THE ASSESSEE FALL WITHIN THE DEFINITION OF SECTION 2 (15) AND HE ALSO RELIED UPON THE CIRCULAR NO.395 DATED 24 TH SEPTEMBER, 1984 TO CONTEND THAT THE OBJECT OF GENERAL PUBLIC UTILITY ALSO FALLS WITHIN THE AMBIT OF CHARITABLE PURPOSE AND, THEREFORE, THE ASSOCIATIONS OR INSTITUTIONS ENGAGED IN THE PROMOTION OF SPORTS AND GAMES AND CLAIM EXEMPTION U/S 1 1 OF THE ACT, EVEN IF IT IS NOT APPROVED U/S 10 (23) RELATING TO EX EMPTION FROM TAX OF ITA NO.2010/DEL/2010 4 SPORTS ASSOCIATIONS AND INSTITUTIONS HAVING THEIR OBJECT A S, THE PROMOTION, CONTROL AND REGULATION AND ENGAGEMENT OF SPECIFIED SPORTS AND GAMES. IN THE ALTERNATIVE, IT WAS PLEADED BY LD. AR THAT GRANT OF RENEWAL OF EXEMPTION U/S 80G, DURING THE SUBSISTENCE OF 12AA CANNOT BE DENIED ON THE GROUND THAT THE ASSESSEE DOES NOT CARRY ON ANY CHARITABLE ACTIVITY. FOR THIS PURPOSE, HE HAS PLACED RELIANCE ON THE FOLLOWING DECISIONS:- NN DESAI CHARITABLE TRUST VS. CIT 246 ITR 452 (GUJ) : AUTHORITY EXAMINING THE QUESTION WHETHER A FUND OR INSTITUTE IS ELI GIBLE TO BE CERTIFIED FOR THE PURPOSE OF SECTION 80G IS NOT TO AC T AS AN A.O.; ONCE THE APPLICANT WAS REGISTERED U/S 12A AND WA S GRANTED APPROVAL U/S 80G (5) AND ALSO A RENEWAL THEREAFTER, C IT WAS NOT JUSTIFIED IN REFUSING FURTHER RENEWAL OF APPROVAL ON THE GROUND THAT THE INCOME OF THE APPLICANT TRUST WAS LIKELY TO BE INC LUDED IN THE TAXABLE INCOME FOR NOT COMPLYING WITH THE REQUIREMEN T OF SECTION 11. SONEPAT HINDU EDUCATIONAL CHARITABLE TRUST VS. CIT 278 ITR 262 (P & H): IT WAS HELD THAT WHILE DEALING WITH THE APPLIC ATION U/S 80G(5), THE SCOPE OF ENQUIRY BY CIT EXTENDS TO ELIGIBI LITY OF THE APPLICANT TO EXEMPTION UNDER VARIOUS PROVISIONS REFERR ED TO IN THAT SUBSECTION BUT NOT TO ACTUAL COMPUTATION UNDER THE ACT, REGISTRATION OF AN INSTITUTION U/S 12AA BY ITSELF IS A SU FFICIENT PROOF THAT THE INSTITUTION IS CREATED OR ESTABLISHED FOR CHARITABLE/RELIGIOUS PURPOSES. GAUR BRAHMAN VIDYA PRACHARINI SABHA VS. CIT (2010) 129 TTJ (DELHI) 627 : IT WAS HELD THAT WHEN THE ASSESSEE TRUST W AS GRANTED REGISTRATION U/S 12AA, IT IS TESTIMONY TO THE FACT TH AT THE TRUST IS ESTABLISHED FOR CHARITABLE PURPOSES. ASSESSEE SOCIETY FORMED FOR THE PURPOSE OF ESTABLISHIN G EDUCATIONAL INSTITUTION, NOT FOR ANY PARTICULAR COMMUNITY OR COST, HAVING BEEN GRANTED REGISTRATION UNDER SECTION 12 AA AN D ALL THE CONDITIONS LAID DOWN IN CLAUSES (I) TO (V) OF SUBSECTI ON 5 OF SECTION 80G HAVING BEEN FULFILLED ASSESSEES SOCIETY IS ELIGIBLE FOR REGISTRATION UNDER SECTION 80G(5)(VI) NOT WITHSTANDIN G THE FACT THAT IT IS CHARGING THE FEE FOR EDUCATION. IT WAS ALSO HELD THAT SCOPE OF ENQUIRY UNDER SECTION 80 G EXTENDS TO ELIGIBILITY OF INCOME AND NOT TO ACTUAL COMPUTATION OF INCOME UNDER THE ACT. ITA NO.2010/DEL/2010 5 5. HE ALSO CONTENDED THAT EVEN OTHERWISE THE ASSESSEE HAS MADE DONATION OF ` 3,50,000/- WHICH CLEARLY FALLS WITHIN THE MAIN OBJECTS OF THE ASSESSEE AND THE DONATION IS GIVEN FOR THE PURPOSE OF EDUCATION ONLY. HE CONTENDED THAT THE SAID DONATION OF ` 3,50 ,000/- WAS ADVANCED TO THE FOLLOWING PARTIES AND VIDE LETTER DA TED 9 TH FEBRUARY, 2010 IT WAS INFORMED TO LD. DIT (E) AND COPY OF SUCH LETTER IS PLACED AT PAGE 11 AND 12 OF THE PAPER BOOK. SL.NO. BENEFICIARY CHQ. NO. AMOUNT (IN `) 1. MAYO COLLEGE AJMER-305008 434287 1,00,000 2. SISTERS OF THE PEOPLE, LAJPAT 434280 1,00,000 BHAWAN, LAJPAT NAGAR 434284 1,00,000 NEW DELHI 110 024. 3. CHAUDHARI TRUST, 434286 50,000 29, HANUMAN ROAD, N DELHI. TOTAL 3,50,000 6. THUS, HE PLEADED THAT THE CLAIM OF THE ASSESSEE HAS WR ONGLY BEEN REJECTED BY DIT (E). 7. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY DIT (EXEMPTION). HE SUBMITTED THAT THE ASSESSEE DID NOT CAR RY OUT ANY CHARITABLE ACTIVITY, HENCE, HIS CLAIM FOR RENEWAL U /S 80G WAS RIGHTLY REJECTED BY THE DIT (E). 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE CERTIFICATE GRAN TED TO THE ASSESSEE U/S 12A TREATING IT AS CHARITABLE INSTITUTION IS SUBSISTIN G AND HAS NOT BEEN SHOWN TO HAVE BEEN WITHDRAWN TILL DATE. IF IT IS SO, THEN, IN OUR CONSIDERED OPINION, RENEWAL OF EXEMPTION U/S 80G(5) C OULD NOT BE DENIED TO THE ASSESSEE AND THE CASE RELIED UPON BY LD. A R AND ITA NO.2010/DEL/2010 6 REPRODUCED IN THE ABOVE PART OF THIS ORDER FULLY SUPP ORTS SUCH CONCLUSION. THEREFORE, WE FIND NO JUSTIFICATION IN R EJECTION OF THE CLAIM OF THE ASSESSEE UNLESS IT IS SHOWN THAT THE CHARITABLE STATU S GRANTED TO THE ASSESSEE BY THE CERTIFICATE ISSUED U/S 12A HAS BEEN WIT HDRAWN. THEREFORE, WE DIRECT LD. DIT (E) TO GRANT THE RENEW AL TO THE ASSESSEE U/S 80G. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALL OWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 19.11.20 10. SD/- SD/- [K.G. BANSAL] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 19.11.2010. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES