Teach a Child Foundation, Chandigarh V. CIT I, Chandigarh

ITA 220/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80842 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-07-2014
• Assessment Year: misc
• Appeal Filed On: 05-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS JYOTI KUMARI
• Assessee Lawyers: N K SAINI
• Keywords: Question of law
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.220/CHD/2014 ORDER UNDER SECTION 12AA(1)(B)(II) TEACH A CHILD FOUNDATION, VS THE COMMISSIONER OF INCOME TAX, H.NO. 15, CHANDIGARH. SHIVALIK ENCLAVE, . MANI MAJRA, CHANDIGARH. PAN : AAECT4599C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.SAINI RESPONDENT BY : MRS. JYOTI KUMARI DATE OF HEARING : 08.07.2014 DATE OF PRONOUNCEMENT : 05.08.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX-I, CHANDIGARH DATED 30.0 1.2014 AGAINST THE ORDER PASSED UNDER SECTION 12AA(1)(B)(II) OF THE IN COME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INC OME TAX -I CHANDIGARH IS CONTRARY TO LAW & FACTS OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX -I CHANDIGAR H HAS ERRED IN REJECTING THE REGISTRATION OF ASSESSEE AS A CHARITABLE INSTIT UTE UNDER SECTION 12AA(L)(B)(II) OF IT ACT 1961. 3. THE LEARNED COMMISSIONER OF INCOME TAX -I CHANDIGAR H HAS ERRED IN REJECTING THE REGISTRATION OF ASSESSEE AS A CHARITABLE INSTIT UTE ON THE GROUND THAT ASSESSEE HAS NOT DONE ANY ACTIVITY WHICH CAN BE STATED AS CHARIT ABLE WITHOUT ELABORATING WHICH OF ITS OBJECTS IS NOT A CHARITABLE WITHIN THE MEANI NG OF SECTION 2(15) OF IT ACT 1961. ASSESSEE IS A COMPANY REGISTERED UNDER SECTION 25 O F COMPANIES ACT 1956. 2 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T DENIAL OF REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX A CT TO THE ASSESSEE SOCIETY. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SOCIETY WAS FORMED ON 25.10.2012 AND THE ASSESSEE FURNISHED THE APPLIC ATION FOR REGISTRATION UNDER SECTION 12A OF THE ACT ON 05.08.2013. THE AS SESSEE WAS ASKED TO GIVE COMPLETE DETAILS OF THE CHARITABLE ACTIVITIES ALONGWITH EXPENSES MADE DURING FINANCIAL YEAR 2010-11, 2011-12 AND 201 2-13 AND WAS ALSO ASKED TO JUSTIFY THE INCOME APPLIED FOR CHARITABLE ACTIVITIES, IN ADDITION TO VARIOUS OTHER DETAILS REQUISITIONED BY THE COMMI SSIONER OF INCOME TAX AS ENLISTED UNDER PARA 2 AT PAGE 1 OF THE ORDER PASSED UNDER SECTION 12AA OF THE ACT. THE ASSESSING OFFICER NOTED FROM THE INCOME & EXPENDITURE ACCOUNT FOR THE PERIOD 01.04.2013 TO 14 .01.2014 THAT THE TOTAL INCOME OF THE SOCIETY WAS RS. 2,14,253/- AGAI NST WHICH ADMINISTRATIVE EXPENSES OF RS. 1,86,543/- WERE BOOK ED. 5. THE COMMISSIONER OF INCOME TAX OBSERVED THAT THE REGISTRATION UNDER SECTION 12AA OF THE ACT WOULD BE GIVEN ONLY O N BEING SATISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES CARRIED OUT AND THE FACT THAT THE SAME HAS BEEN CARRIED OUT IN ACCORDANCE WITH OBJECT S OF THE TRUST. THE COMMISSIONER OF INCOME TAX WAS OF THE VIEW THAT THE TRUST MUST HAVE CARRIED OUT SOME ACTIVITIES. TO JUSTIFY ITS GENUIN ENESS, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HON'BLE KERALA HIGH COURT IN SELF EMPLOYEES SERVICE SOCIETY VS CIT 247 ITR 18 (KER) W HEREIN IT HAS BEEN LAID DOWN THAT WHERE THE COMMISSIONER EXERCISES HIS JURISDICTION UNDER SECTION 12AA, HE HAS TO BE SATISFIED OF THE CHARITA BLE AND RELIGIOUS NATURE OF OBJECTS AND GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION. IN THE FACTS OF THE CASE BEFORE THE H ON'BLE HIGH COURT, THE ASSESSEE SOCIETY HAD NOT CARRIED OUT ANY CHARITABLE WORK AND 3 CONSEQUENTLY, THE REJECTION OF REGISTRATION UNDER S ECTION 12A OF THE ACT WAS UPHELD. THE COMMISSIONER OF INCOME TAX-I CHAND IGARH FOLLOWING THE SAID PRINCIPLE REFUSED THE REGISTRATION TO THE PRESENT ASSESSEE UNDER SECTION 12AA OF THE ACT. 6. THE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDER OF THE COMMISSIONER OF INCOME TAX AND HAS POINTED OUT THAT AT THE TIME OF GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT , THE COMMISSIONER OF INCOME TAX IS ONLY TO LOOK INTO THE OBJECTS OF THE TRUST AND THE GENUINENESS OF THE ACTIVITIES. 7. THE LD. DR FOR THE REVENUE ON THE OTHER HAND, PO INTED OUT THAT THE OBJECTS OF THE ASSESSEE SOCIETY WERE NOT CHARITABLE . FIRST OBJECTION WAS TO OBJECT NO. 1 AND IT WAS POINTED OUT THAT IF EDUC ATION WAS THE OBJECT AND THE SAME HAS TO BE FORMAL AS LAID DOWN BY THE H ON'BLE SUPREME COURT IN SOLE TRUSTEE, LOKA SHIKSHANA TRUST VS CIT 101 ITR 234 (S.C). IN RESPECT OF OBJECT NO. 2 ALSO, THE LD. DR FOR THE REVENUE RAISED OBJECTION. FURTHER IN RESPECT OF OBJECT NO. 6 I.E. TO WORK TOWARDS DEVELOPMENT OF ENTREPRENEURSHIP IN THE COUNTRY BY O RGANIZING VARIOUS CONCERTS, SEMINARS, SUMMITS ETC., THE LD. DR FOR TH E REVENUE STRESSED THAT THE SAID OBJECT COULD NOT BE CHARITABLE. 8. FURTHER CONTENTION OF THE LD. DR FOR THE REVENUE WAS THAT THE OBJECTS WERE DIVERSED WHEREAS IN ORDER TO GRANT REG ISTRATION, THE OBJECTS SHOULD BE SPECIFIC. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE BEFORE US HAS CLAIMED FOR REGISTRATION UND ER SECTION 12A OF THE ACT. THE ASSESSEE WAS REGISTERED WITH THE REGISTRA R OF COMPANIES VIDE CERTIFICATE DATED 25.10.2012. THE ASSESSEE HAD COM E INTO EXISTENCE DURING THE FINANCIAL YEAR 2012-13. NO ACTIVITIES W ERE UNDERTAKEN BY THE 4 ASSESSEE AND THROUGH RESOLUTION DATED 01.04.2013, T HE ASSESSEE DECIDED TO INITIATE ITS OPERATION W.E.F. 01.04.2013 AND THA T CLAIM OF THE ASSESSEE THUS, WAS THAT THE ACTIVITIES HAD ACTUALLY STARTED DURING THE FINANCIAL YEAR 2013-14 I.E. FROM APRIL, 2013. THE APPLICATION BEF ORE THE COMMISSIONER OF INCOME TAX WAS FILED IN FORM NO. 10A ON 05.08.20 13. THE COMMISSIONER OF INCOME TAX WHILE GRANTING REGISTRAT ION UNDER SECTION 12AA OF THE ACT IS TO LOOK INTO THE OBJECTS OF THE TRUST AND ALSO THE GENUINENESS OF THE ACTIVITIES IN ORDER TO GRANT REG ISTRATION TO THE TRUST. THE COMMISSIONER OF INCOME TAX-I CHANDIGARH IN THE PRESENT CASE HAS DENIED REGISTRATION TO THE ASSESSEE AS THE ASSESSEE HAS FAILED TO START ITS ACTIVITIES. 10. WE FIND THAT SIMILAR ISSUE OF GRANT OF REGISTRA TION UNDER SECTION 12AA OF THE ACT TO A TRUST WHICH HAD NOT STARTED IT S CHARITABLE ACTIVITIES, AROSE BEFORE THE HON'BLE PUNJAB & HARYA NA HIGH COURT IN SUCHINTA EDUCATION SOCIETY WHERE THE SAID SOCIETY P ROPOSED TO TAKE OVER ONE OF THE SCHOOL BEING RUN BY SHISHU NIKETAN MODEL SCHOOL. THE TRIBUNAL IN ITA NO.1339/CHD/2012, VIDE ORDER DA TED 24.5.2013, HAD REFUSED REGISTRATION TO THE ASSESSEE. HOWEVER , THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ITA NO 263 OF 2013 VIDE DEC ISION DATED 28.4.2014 AGAINST THE ORDER OF TRIBUNAL AGAINST THE ORDER OF TRIBUNAL, HELD AS UNDER: HAVING HEARD LEARNED COUNSEL FOR THE PARTIES, WE F IND THAT IN THE JUDGMENT REFERRED TO BY LEARNED COUNSEL FOR THE RESPONDENT, THE SOCIETY IN QUESTION HAD NOT DONE ANY CHARITABLE WORK. THE ACTIVITIES CARRIE D ON WERE FOUND TO BE ONLY FOR THE PURPOSE OF GENERATING INCOME FOR ITS MEMBER S. THEREFORE, IT IS NOT A CASE WHERE THE ACTIVITIES, WHICH WERE YET TO BE STA RTED, WERE FOUND TO BE IN- GENUINE. IT COULD NOT BE DISPUTED THAT RUNNING OF A SCHOOL FALLS WITHIN THE SCOPE OF ACTIVITIES FOR WHICH REGISTRATION CAN BE G RANTED UNDER SECTION 12AA OF THE ACT. IN FACT, THE SIMILAR ACTIVITIES CARRIED OUT BY SHISHU NIKETAN MODEL SCHOOL HAVE BEEN GRANTED REGISTRATION, WHICH IS RUN NING FOUR INSTITUTIONS. THE SOCIETY HAS BEEN ESTABLISHED TO MANAGE ONE OF SUCH SCHOOLS. THERE CANNOT BE ANY ATTEMPT OF THE ASSESSEE TO EVADE TAX LIABILITY, AS SHISHU NIKTAN MODEL SCHOOL HAS BEEN GRANTED REGISTRATION AND AVAILING THE BENE FIT OF TAX. 5 IN VIEW OF THE ABOVE, WE FIND THAT THE ORDERS OF THE COMMISSIONER OF INCOME TAX AND THAT OF THE TRIBUNAL IN DECLINING THE REGISTRATION TO THE APPELLANT ARE NOT SUSTAINABLE IN LAW. CONSEQUENTLY, WHILE ANSWERING THE SUBSTANTIAL QUESTION OF LAW IN FAVOUR OF THE APPELL ANT, THE PRESENT APPEAL IS ALLOWED. 11. IN VIEW THEREOF, NON START OF THE CHARITABL E OBJECTS WOULD NOT AFFECT THE GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. HOWEVER, BEFORE GRANTING THE REGISTRATION UNDER SECTION 12AA OF THE ACT, THE COMMISSIONER OF INCOME TAX HAS TO LOOK INTO THE OBJ ECTS OF THE TRUST. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE OB JECTS WERE CHARITABLE IN NATURE WHEREAS THE CASE OF THE REVENUE WAS THAT THE SAID OBJECTS WERE DIVERSED AND WERE NOT SPECIFIC. WE FIND THAT THE C OMMISSIONER OF INCOME TAX-I CHANDIGARH BEFORE REFUSING THE REGISTR ATION UNDER SECTION 12AA OF THE ACT HAS FAILED TO CONSIDER THE OBJECTS OF THE ASSESSEE TRUST AND IN THE INTEREST OF JUSTICE, WE DEEM IT FIT TO R ESTORE THE ISSUE BACK TO THE FILE OF COMMISSIONER OF INCOME TAX TO CONSIDER THE OBJECTS OF THE ASSESSEE TRUST AND DECIDE THE ISSUE OF GRANT OF REG ISTRATION UNDER SECTION 12AA OF THE ACT. REASONABLE OPPORTUNITY OF HEARING SHALL BE PROVIDED TO THE ASSESSEE. THE GROUNDS OF APPEAL RAISED BY T HE ASSESSEE ARE THUS, ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH AUGUST,2014. -SD/- -SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED: 5 TH AUGUST,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR ITAT/CHD