M/s Sri Saraswathi Educational Society, Amalapuram V. The ITO Ward-1 Amalapuram, Amalapuram

ITA 230/VIZ/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7395 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 16-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TH LUCAS PETER
• Keywords: Charitable institution
• Section: 12AA; 12; 10

Judgement Text

ITA NO 230 OF 2011 SRI SARASWATI EDN SOCIETY AMALAP URAM PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.230/VIZAG/2011 ASSESSMENT YEAR: NA SRI SARASWATI EDUCATIONAL SOCIETY, AMALAPURAM VS. ITO WARD-1, AMALAPURAM (APPELLANT) PAN NO:AAHTS 6401 N (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI TH. LUCAS PETER, CIT (DR) DATE OF HEARING: 22-08-2011 DATE OF PRONOUNCEMENT: 24-08-2011 ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 30.03.2011 PASSED BY LEARNED CIT, RAJAHMUNDRY. THE ASSESSEE IS ASSAILING THE DECISION OF LEARNED CIT IN REJECTING THE APPLIC ATION FILED BY IT SEEKING REGISTRATION UNDER SECTION 12AA OF THE ACT. 2. THE FACTS RELATING TO THE ISSUE ARE SET OUT IN BRIEF. THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE ANDHRA PRADESH SOCIETI ES REGISTRATION ACT ON 19-03-2008. IT FILED AN APPLICATION BEFORE LEARNED CIT IN THE PRESCRIBED FORM SEEKING REGISTRATION UNDER SECTION 12AA OF THE ACT AS A CHARITABLE INSTITUTION. THE SAID APPLICATION WAS REJECTED BY THE THEN LEARNED CIT ON 26-03-2010. WHEN THE ASSESSEE CHALLENGED THE SAID DECISION OF LEARNED CIT BEFORE THE ITAT, THE TRIBUNAL RESTORED THE ISSU E BACK TO THE FILE OF THE LEARNED CIT WITH A DIRECTION TO ADJUDICATE THE ISSU E BY PASSING A REASONED ORDER. IN THE SET ASIDE PROCEEDING, THE LEARNED CI T AGAIN REJECTED THE APPLICATION OF THE ASSESSEE AND HENCE THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO 230 OF 2011 SRI SARASWATI EDN SOCIETY AMALAP URAM PAGE 2 OF 5 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. WE NOTICE THAT THE LEARNED CIT HAS TAKEN THE VIEW T HAT THE ASSESSEE SOCIETY SHOULD GET ITSELF REGISTERED UNDER SECTION 43(1) OF THE A.P. CHARITABLE AND HINDU RELIGIOUS INSTITUTIONS AND ENDOWMENTS ACT, 19 87 (A.P. ACT 30/87) FIRST, BEFORE SEEKING REGISTRATION UNDER SECTION 12 AA OF THE ACT. ACCORDINGLY THE LEARNED CIT HELD THAT THE ASSESSEE-SOCIETY MAY RE-SUBMIT ITS APPLICATION AFTER REGISTERING WITH THE AUTHORITIES UNDER THE A. P. ACT 30 OF 1987. IN ARRIVING AT THIS DECISION, THE LEARNED CIT HAS RELI ED UPON THE DECISION OF HON'BLE JURISDICTIONAL A.P HIGH COURT IN THE CASE O F NEW NOBLE EDUCATIONAL SOCIETY VS. CCIT, HYDERABAD (2011) (334 ITR 303)(AP ). THE LEARNED CIT ALSO EXTRACTED THE FOLLOWING OBSERVATIONS MADE BY T HE HON'BLE HIGH COURT. THE QUESTION, WHICH NEXT REQUIRES EXAMINATION, IS WHETHER FAILURE TO SO REGISTER WOULD NECESSITATE REJECTION OF PETITIONERS APPLICATION, FOR APPROVAL UNDER SECTIO N 10(23- C)(VI), AT THE THRESHOLD OR WHETHER THE CHIEF COMMI SSIONER OUGHT TO HAVE GRANTED APPROVAL SUBJECT ALSO TO THE CONDITION THAT THE PETITIONERS REGISTER THEMSELVES AS A CHARI TABLE INSTITUTION UNDER A.P.ACT 30/87. AS NOTED HEREINABO VE, THE CHIEF COMMISSIONER IS STATUTORILY BOUND, UNDER SECT ION 10(23- C)(VI), THE FIRST AND SECOND PROVISOS THERE UNDER A ND RULE 2CA OF THE RULES, TO SATISFY HIMSELF THAT THE OBJEC TS OF THE SOCIETY ARE SUCH THAT THE EXISTENCE OF THE EDUCATIO NAL INSTITUTION IS SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. EVEN IN CASES WHERE A SOCIETY IS REGISTERED AS A CHARITABLE INSTITUTION UNDER A.P.AC T 30/87, THE CHIEF COMMISSIONER IS NOT ABSOLVED OF HI S STATUTORY DUTY TO VERIFY THE STATUTORILY PRESCRIBED DOCUMENTS AND TO SATISFY HIMSELF THAT THE APPLICANT - SOCIETY IS NOT ONLY A CHARITABLE INSTITUTION BUT AL SO THAT ITS CHARITABLE OBJECTS ARE EXCLUSIVELY FOR EDUCATIO NAL PURPOSES AND FOR NO OTHER. SINCE THE STATUTORY PROVISIONS OF THE INCOME TAX ACT REFERRED TO HEREINABOVE, PRES CRIBE THIS AS A THRESHOLD EXAMINATION REQUIREMENT, SATISFACTIO N OF WHICH ALONE WOULD REQUIRE THE CHIEF COMMISSIONER TO GRANT APPROVAL IN CASES WHERE THE CHIEF COMMISSIONER IS SATISFIED, AFTER EXAMINATION OF THE RECORDS, THAT THE APPLICANT EXIS TS SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSES OF PR OFIT AND THE APPLICATION IS MADE IN THE STIPULATED FORM ACCO MPANIED BY ALL THE DOCUMENTS SPECIFIED UNDER THE ACT AND RULES , HE WOULD NOT BE JUSTIFIED IN DENYING APPROVAL MERELY O N THE GROUND THAT THE APPLICANTS DID NOT REGISTER ITA NO 230 OF 2011 SRI SARASWATI EDN SOCIETY AMALAP URAM PAGE 3 OF 5 THEMSELVES AS CHARITABLE INSTITUTIONS UNDER A.P. AC T 30/87. AS NOTED HEREINABOVE, WHETHER OR NOT A CHARITABLE INSTITUTION IS REGISTERED UNDER THE SAID ACT, THE P ROVISIONS OF A.P. ACT 30 OF 1987 ARE APPLICABLE TO ALL PUBLIC CH ARITABLE INSTITUTIONS IN THE STATE OF A.P. FURTHER, WHILE FA ILURE TO REGISTER THEMSELVES UNDER A.P. ACT 30 OF 1987 MAY A TTRACT THE PENAL PROVISIONS THEREIN, THE SAID ACT DOES NOT PRO HIBIT THE PUBLIC CHARITABLE INSTITUTIONS FROM CARRYING ON THE IR ACTIVITIES EVEN THOUGH THEY ARE NOT REGISTERED UNDER THE ACT. CONSEQUENTLY, WHILE THE CHIEF COMMISSIONER IS BOUND TO SATISFY HIMSELF THAT THE APPLICANT IS A CHARITABLE INSTITUTION EXISTING SOLELY FOR THE PURPOSES OF EDUCATION, HE I S ALSO ENTITLED TO PRESCRIBE REGISTRATION, UNDER A.P. ACT 30/87, WITHIN A SPECIFIED PERIOD AS A CONDITION SUBJECT TO WHICH APPROVAL MAY BE GRANTED IN AS MUCH AS REGISTRATION, AS A CHA RITABLE INSTITUTION UNDER A.P. ACT 30 OF 1987 WOULD BE ONE OF THE FACTORS TO SHOW THAT THE SOCIETY CONCERNED EXISTS F OR THE CHARITABLE PURPOSE OF CARRYING ON EDUCATIONAL ACTIV ITIES. WE, ACCORDINGLY, HOLD THAT THE CERTIFICATE SIGNED B Y THE COMMISSIONER OF ENDOWMENTS, AS THE APPROPRIATE AUTH ORITY UNDER SECTION 43 OF A.P. ACT NO.30 OF 1987 IS BUT O NE OF THE FACTORS, AND NOT CONCLUSIVE PROOF, OF AN ASSESSEE U NDER THE INCOME-TAX BEING A CHARITABLE INSTITUTION EXISTING S OLELY FOR THE PURPOSES OF EDUCATION. EVEN IN CASE THE ASSESSE E PRODUCES A CERTIFICATE OF REGISTRATION UNDER SECTIO N 43 OF A.P. ACT NO.30 OF 1987, THE CHIEF COMMISSIONER HAS TO INDEPENDENTLY EXAMINE THE OBJECTS OF THE APPLICANT- SOCIETY, THEIR APPLICATION SEEKING APPROVAL UNDER SECTION 10 (23-C)(VI) AND THE PRESCRIBED DOCUMENTS ENCLOSED THERETO, AND SATISFY HIMSELF, IN THE LIGHT OF THE PROVISIONS OF SECTION 10(23-C)(VI), THE PROVISOS THERETO RULE 2(CA) AND FORM 56D, THAT THE EXISTENCE OF THE EDUCATIONAL INSTITUTION IS SOLELY FOR THE PURPOSES OF EDUCATION AND NOT FOR THE PURPOSE OF PR OFIT AND, ONLY IF HE IS SO SATISFIED, TO GRANT APPROVAL. REG ISTRATION UNDER SECTION 43 OF THE A.P. ACT 30 OF 1987 IS NOT A CONDITION PRECEDENT FOR SEEKING APPROVAL UNDER SECTION 10(23- C)(VI) OF THE ACT. THE CHIEF COMMISSIONER CAN, HOWEVER, PRESC RIBE REGISTRATION UNDER A.P. ACT 30 OF 1987 AS A CONDITI ON SUBJECT TO WHICH APPROVAL IS GRANTED UNDER SECTION 10(23-C) (VI) OF THE ACT. 4. HOWEVER, ON A CAREFUL PERUSAL OF THE ORDER O F HON'BLE A.P. HIGH COURT REFERRED (SUPRA), WE DO NOT FIND ANY SUCH OBSERVATI ON, AS UNDER STOOD BY LEARNED CIT, I.E., THE HON'BLE HIGH COURT HAS NO WH ERE SAID THAT THE ITA NO 230 OF 2011 SRI SARASWATI EDN SOCIETY AMALAP URAM PAGE 4 OF 5 REGISTRATION UNDER THE A.P. ACT 30 OF 1987 IS COMPU LSORY FOR GRANTING REGISTRATION UNDER SECTION 10(23C)(VI) OF THE ACT. INSTEAD, THE HON'BLE HIGH COURT HAS HELD IN CLEAR TERMS THAT THE CHIEF COMMIS SIONER HAS TO INDEPENDENTLY EXAMINE THE APPLICATION EVEN IF THE A SSESSEE PRODUCES A CERTIFICATE OF REGISTRATION UNDER SECTION 43 OF A.P . ACT NO.30 OF 1987. THE FOLLOWING OBSERVATIONS OF HON'BLE HIGH COURT MAKE T HIS POINT VERY CLEAR: EVEN IN CASE THE ASSESSEE PRODUCES A CERTIFICATE O F REGISTRATION UNDER SECTION 43 OF A.P. ACT NO.30 OF 1987, THE CHIEF COMMISSIONER HAS TO INDEPENDENTLY EXAMINE THE OBJECTS OF THE APPELLANTS-SOCIETY, THEIR APPLICATIO N SEEKING APPROVAL UNDER SECTION 10(23C)(VI) AND THE PRESCRIB ED DOCUMENTS ENCLOSED THERETO, AND SATISFY HIMSELF, IN THE LIGHT O THE PROVISIONS OF SECTION 10(23-C)(VI), THE PROVI SOS THERETO, RULE 2(CA) AND FORM 56D, THAT THE EXISTEN CE OF THE EDUCATIONAL INSTITUTION IS SOLELY FOR THE PURPOSES OF EDUCATION AND NOT FOR THE PURPOSE OF PROFIT AND, ONLY IF HE I S SO SATISFIED, TO GRANT APPROVAL. THE HON'BLE HIGH COURT HAS FURTHER HELD THAT, WHILE THE CHIEF COMMISSIONER IS BOUND TO SATISFY HIMSELF THAT THE APPLICANT IS A CHARITABLE INSTITUTION EXISTING SOLELY FOR THE PURPOSES OF EDUCATION, HE I S ALSO ENTITLED TO PRESCRIBE REGISTRATION, UNDER A.P. ACT 30/87, WITHIN A SPECIF IED PERIOD AS A CONDITION SUBJECT TO WHICH APPROVAL MAY BE GRANTED IN AS MUCH AS REGISTRATION, AS A CHARITABLE INSTITUTION, UNDER A.P. ACT 30 OF 1987 W OULD BE ONE OF THE FACTORS TO SHOW THAT THE SOCIETY CONCERNED EXISTS FOR THE C HARITABLE PURPOSES OF CARRYING ON EDUCATIONAL ACTIVITIES. 5. DURING THE COURSE OF HEARING, THE LEARNED A. R CONTENDED THAT THE DECISION OF HON'BLE A.P. HIGH COURT REFERRED (SUPRA ) HAS BEEN RENDERED IN THE CONTEXT OF SEC. 10(23C(VI) OF THE ACT AND THE S AME SHALL NOT APPLY TO THE FACTS OF THE INSTANT CASE, AS THE ASSESSEE HERE IN IS SEEKING REGISTRATION UNDER SECTION 12AA OF THE ACT. WE DO NOT FIND MUCH FORCE IN THE SAID CONTENTION. THE ISSUE HERE IS PROCESSING OF APPLIC ATION FILED BY THE ASSESSEE SEEKING REGISTRATION UNDER DIFFERENT SECTIONS OF TH E INCOME TAX ACT AND SUCH PROCESSING INVOLVES FOLLOWING OF IDENTICAL METHODOL OGIES WITH MINOR ITA NO 230 OF 2011 SRI SARASWATI EDN SOCIETY AMALAP URAM PAGE 5 OF 5 VARIATIONS. HENCE, IN OUR VIEW, THE LEARNED CIT CA N APPLY THE RATIO OF SAID DECISION FOR PROCESSING THE APPLICATION FILED FOR S EEKING REGISTRATION UNDER SECTION 12AA OF THE ACT ALSO. 6. THE FOREGOING DISCUSSIONS SHOW THAT THE LEAR NED CIT WOULD NOT BE JUSTIFIED IN DENYING REGISTRATION MERELY ON THE GRO UND THAT THE APPLICANT DID NOT REGISTER ITSELF AS CHARITABLE INSTITUTION UNDER A.P. ACT 30/87. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER OF LEA RNED CIT AND RESTORE THE SAME TO HIS FILE WITH A DIRECTION TO PROCESS TH E APPLICATION OF THE ASSESSEE IN ACCORDANCE WITH THE LAW. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE:24-08-2011 COPY TO 1 SRI SARASWATHI EDUCATIONAL SOCIETY, SAI SURYA RES IDENCY, FLAT NO.101, BHUPAYYA AGRAHARAM, AMALAPURAM 533 201 2 THE ITO WARD-1 AMALAPURAM 3 THE CIT RAJAHMUNDRY 4 THE ADDL.COMMISSIONER OF INCOME TAX, KAKINADA RAN GE, KAKINADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM