Vidya Vikas Mandal, Aurangabad V. Commissioner of Income-tax, (Exemption), Pune

ITA 2139/PUN/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6974 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 12-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S B PRASAD
• Keywords: Charitable institution; Source of fund
• Section: 12A; 12AA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO, AM . / ITA NO.2139/PUN/2017 VIDYA VIKAS MANDAL, VIJAPUR, AURANGABAD. PAN : AACTV0892M . /APPELLANT VS. CIT (EXEMPTIONS), PUNE. . / RESPONDENT / APPELLANT BY : SHRI S. N. PURANIK / RESPONDENT BY : SHRI S. B. PRASAD, CIT / DATE OF HEARING : 20.02.2019 / DATE OF PRONOUNCEMENT: 01.03.2019 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (EXEMPTIONS), PUNE (IN SHORT THE CIT) DATED 28.07.2017 PASSED U/S 12AA OF THE ACT, 1961. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. COMMISSIONER OF INCOME TAX EXEMPTION, PUNE HAS ERRED BOTH ON FACTS AND LAW IN REJECTING THE REGISTRATION U/S 12AA UNDER THE INCOME TAX ACT, 1961. APPELLANT PRAYS TO ALLOW THE REGISTRATION. 2. COMMISSIONER (EXEMPTION) HAS ERRED IN OBSERVING THAT PRESENT ACTIVITIES OF THE APPLICANT LACKS CHARITABLE INTEND AND ARE NOT GENUINE TO THE EXTENT THAT THEY ARE BEING RUN AS A REGULAR ESTABLISHMENT/ INSTITUTION WITHOUT BENEFIT FOR WEAKER SECTIONS OF SOCIETY. APPELLANT PRAYS TO GRANT REGISTRATION AS MANDALS OBJECT AND ACTIVITIES OF THE MANDAL ARE WITHIN THE DEFINITION OF CHARITABLE PURPOSE U/S 2(15) OF THE ACT AND ARE ELIGIBLE U/S 11/10 (23C) ETC. ITA NO.2139/PUN/2017 2 3. APPELLANT PRAYS TO ADD, ALTER, AMEND, MODIFY OR WITHDRAW THE GROUNDS AS THE OCCASION DEMANDS. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE READ OUT THE ORDER OF THE CIT MADE U/S 12AA OF THE ACT DATED 28.07.2017 AND SUBMITTED THAT THE CIT REJECTED THE REQUEST FOR REGISTRATION STATING THE FOLLOWING (PARAS 5 TO 7 OF THE CITS ORDER) :- 5. AS PER THE QUESTIONNAIRE ISSUED TO THE APPLICANT WAS ASKED TO FURNISH DETAILS OF CHARITABLE ACTIVITIES CARRIED OUT DURING THE LAST 3 YEARS (QUESTION 6 OF THE QUESTIONNAIRE). ENQUIRIES WERE ALSO CAUSED TO BE MADE IN RESPECT OF THE ACTIVITIES THROUGH THE OFFICE OF THE JURISDICTIONAL ASSESSING OFFICER AT AURANGABAD. 5.1 THE INSPECTOR VISITED THE PREMISES AND SUBMITTED A FACTUAL REPORT. AS PER PARA 3 OF THE REPORT WHICH IS REPRODUCED BELOW :- THE TRUST PERSONNEL PRESENT, HAVE STATED THAT THE ONLY SOURCE OF FUNDS TO THE TRUST IS FEES FROM STUDENTS AND THEY ARE RUNNING A SCHOOL ARE A REASONABLE FEES. IT HAS FURTHER STATED BY THEM THAT THEY HAVE FUTURE PLANS TO PROVIDE EDUCATIONAL FACILITIES TO THE STUDENTS FROM WEAKER SECTION OF THE SOCIETY OF RURAL AREAS AT AN AFFORDABLE FEES . THE TRUST IS FOUND IN EXISTENCE AND ENGAGED IN NOBLE CAUSE . FROM THE ABOVE, IT IS SEEN THAT THE APPLICANT IS RUNNING A SCHOOL AND CHARGING FEES FROM THE STUDENTS. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE WEAKER SECTION OR UNDER-PRIVILEGED STUDENTS ARE BEING CHARGED CONCESSIONAL FEES OR GIVEN FREE EDUCATION. 6. THE PRESENT ACTIVITIES OF THE APPLICANT LACKS CHARITABLE INTENT, AND ARE NOT GENUINE TO THE EXTENT THAT THEY ARE BEING RUN AS A REGULAR ESTABLISHMENT/ INSTITUTION WITHOUT BENEFIT FOR THE WEAKER SECTIONS OF SOCIETY AS PER THE OBJECTS FOR WHICH IT HAD BEEN FORMED. 7. IN VIEW OF THE ABOVE FACTS, I AM NOT SATISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST, THEREFORE THE APPLICATION FOR GRANT OF REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 IS HEREBY REJECTED U/S 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961. 4. REFERRING TO THE ABOVE EXTRACTED PORTION OF THE IMPUGNED ORDER OF THE CIT, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT DID NOT FIND ANY MISTAKE WITH THE GENUINENESS OF THE OBJECTS OF THE ASSESSEE. HOWEVER, HE HELD THAT IN ABSENCE OF EVIDENCES THAT THE EDUCATIONAL PURPOSE IS MEANT FOR WEAKER SECTIONS/UNDER-PRIVILEGED STUDENTS WITH CONCESSIONAL FEES OR FREE EDUCATION, CIT REJECTED THE REQUEST FOR REGISTRATION U/S 12AA OF THE ACT. RELYING ON THE VARIOUS DECISIONS IN THIS REGARD, I.E. THE JUDGEMENT OF HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. IILM FOUNDATION ACADEMY (389 ITR 0148), LD. COUNSEL SUBMITTED THAT SO LONG AS ITA NO.2139/PUN/2017 3 OBJECTS AND ACTIVITIES OF THE ASSESSEE ARE BONA-FIDE AND THE REGISTRATION IS REQUIRED TO BE GRANTED TO THE ASSESSEE. FURTHER, HE BROUGHT OUR ATTENTION TO PAGE 2 OF THE PAPER BOOK AND SUBMITTED THAT THE TRUST IS ABIDED BY ITS OBJECTS AND, THEREFORE, THE REGISTRATION REJECTED BY THE CIT IS REQUIRED TO BE REVERSED. 5. ON THE OTHER HAND, LD. DR RELIED HEAVILY ON THE ORDER OF THE CIT AND THE HONBLE SUPREME COURTS JUDGEMENT IN THE CASE OF CIT VS. BABU RAM EDUCATION SOCIETY (257 TAXMAN 558) (SC). 6. ON HEARING BOTH THE SIDES ON THE ISSUE RAISED IN THE GROUNDS EXTRACTED ABOVE, WE FIND THE CIT DID NOT GIVE ANY CATEGORICAL FINDING ABOUT MALA-FIDE OF THE OBJECTS AND ACTIVITIES OF THE ASSESSEE QUA ITS OBJECTS. IN OUR VIEW, THE ABSENCE OF DATA RELATING TO THE WEAKER SECTIONS/UNDER-PRIVILEGED IS NO REASON TO REJECT THE REQUEST OF THE ASSESSEE. IN OUR VIEW, THIS IS NOT AN ADEQUATE REASON FOR REJECTION OF THE REGISTRATION U/S 12AA OF THE ACT. WE ALSO FIND THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF BABU RAM EDUCATION SOCIETY (SUPRA) RELIED ON BY THE LD. DR FOR THE REVENUE DOES NOT HELP THE REVENUE. THE ABOVE RATIO IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE SAID JUDGEMENT (SUPRA), THE HONBLE SUPREME COURT HELD AS UNDER :- REGISTRATION OF A TRUST DOES NOT INVOLVE ENQUIRY INTO ACTUAL ACTIVITIES OR APPLICATION OF FUNDS, ETC. AND AT THAT STAGE, ONLY ENQUIRY REQUIRED TO BE CONDUCTED IS WITH RESPECT TO OBJECT OF TRUST ALONE. 7. FURTHER, WE ALSO EXAMINED THE CITED JUDGEMENT IN THE CASE OF IILM FOUNDATION ACADEMY (SUPRA) AND FIND THE REGISTRATION IS REQUIRED TO BE GRANTED SO LONG AS THE PRIMARY OBJECTS OF THE TRUST ARE CHARITABLE. THE ENQUIRY CONDUCTED BY THE ITI SUPPORTS THE ASSESSEE IN STATING THAT THE TRUST ITA NO.2139/PUN/2017 4 EXISTS FOR CHARITABLE ACTIVITIES. THEREFORE, IN OUR VIEW, THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 01 ST DAY OF MARCH, 2019 SD/- SD/- (SUSHMA CHOWLA) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 01 ST MARCH, 2019. SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT (EXEMPTIONS), PUNE; 4. , , / DR A, ITAT, PUNE; 5. / GUARD FILE. // TRUE COPY // / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE