M/s Vijayalakshmi Educational Society, Vatluru V. The ITO Ward-2 Eluru, Eluru

ITA 233/VIZ/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7397 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 month(s) 27 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: 27-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TH LUCAS PETER
• Keywords: Charitable institution
• Section: 12A; 12AA; 10; 11

Judgement Text

ITA NO 233 OF 2011 VIJAYALAKSHMI EDN SOCIETY VATLUR U PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.233/VIZAG/2011 ASSESSMENT YEAR: NA VIJAYALAKSHMI EDUCATIONAL SOCIETY, VATLURU VS. ITO WARD-2, ELURU (APPELLANT) PAN NO:AAAAV 7083 P (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 9 TH MAY, 2011 PASSED BY LEARNED CIT, RAJAHMUNDRY. THE A SSESSEE 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 WITH THE MAIN OBJECTIVE OF IMPARTING AND PROMOTING EDUCA TION BY RUNNING EDUCATIONAL INSTITUTIONS AND TO WORK FOR THE CAUSE OF EDUCATION. IT FILED AN APPLICATION BEFORE LEARNED CIT IN THE PRESCRIBED FO RM ON 3 RD NOVEMBER, 2010 SEEKING REGISTRATION UNDER SECTION 12AA OF THE ACT AS A CHARITABLE INSTITUTION. THE LEARNED CIT REJECTED THE APPLICAT ION OF THE ASSESSEE ON THE FOLLOWING TWO GROUNDS: (A) THE ASSESSEE SOCIETY IS NOT REGISTERED UNDER S ECTION 43(1) OF A.P. CHARITABLE AND HINDU RELIGIOUS INSTITUTIONS AN D ENDOWMENTS ACT, 1987. ITA NO 233 OF 2011 VIJAYALAKSHMI EDN SOCIETY VATLUR U PAGE 2 OF 6 (B) THERE IS NO EXIGENCY FOR REGISTRATION UNDER SEC TION 12AA OF THE ACT, WHEN THE ASSESSEE IS CLAIMING EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. AS STATED EARLIER, THE LEARNED CIT HAS REJECTED THE APPLICATION OF THE ASSESSEE ON TWO GROUNDS, FIRST, THE LEARNED CIT HAS TAKEN THE VIEW THAT THE ASSESSEE SOCIETY SHOULD GET ITSELF REGISTERED UNDER SECTION 43(1) OF THE A.P. CHARITABLE AND HINDU RELIGIOUS INSTITUTIONS AND END OWMENTS ACT, 1987 (A.P. ACT 30/87) FIRST, BEFORE SEEKING REGISTRATION UNDER SECTION 12AA OF THE ACT. ACCORDINGLY THE LEARNED CIT HELD THAT THE ASSESSEE- SOCIETY MAY RE-SUBMIT ITS APPLICATION AFTER REGISTERING WITH THE AUTHORIT IES UNDER THE A.P. ACT 30 OF 1987. IN ARRIVING AT THIS DECISION, THE LEARNED CI T HAS RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL A.P HIGH COURT I N THE CASE OF NEW NOBLE EDUCATIONAL SOCIETY VS. CCIT, HYDERABAD (2011) (334 ITR 303)(AP). THE LEARNED CIT ALSO EXTRACTED THE FOLLOWING OBSERVATIO NS MADE BY THE 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 HEREINAB OVE, 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. ACT 30/87, T HE CHIEF COMMISSIONER IS NOT ABSOLVED OF HIS STATUTORY DUTY TO VERIFY THE STATUTORILY PRESCRIBED DOCUMENTS AND TO SATISFY HIMSELF THAT THE APPLICANT-SOCIETY IS NOT ONLY A CHARITABLE INSTITUTION BUT ALSO THAT ITS CHARITABLE OBJECTS ARE EXCLUSIVEL Y FOR EDUCATIONAL PURPOSES AND FOR NO OTHER. SINCE THE ST ATUTORY ITA NO 233 OF 2011 VIJAYALAKSHMI EDN SOCIETY VATLUR U PAGE 3 OF 6 PROVISIONS OF THE INCOME TAX ACT REFERRED TO HEREIN ABOVE, PRESCRIBE THIS AS A THRESHOLD EXAMINATION REQUIREME NT, SATISFACTION OF WHICH ALONE WOULD REQUIRE THE CHIEF COMMISSIONER TO GRANT APPROVAL IN CASES WHERE THE C HIEF COMMISSIONER IS SATISFIED, AFTER EXAMINATION OF THE RECORDS, THAT THE APPLICANT EXISTS SOLELY FOR EDUCATIONAL PU RPOSES AND NOT FOR THE PURPOSES OF PROFIT AND THE APPLICATION IS MADE IN THE STIPULATED FORM ACCOMPANIED BY ALL THE DOCUMENT S SPECIFIED UNDER THE ACT AND RULES, HE WOULD NOT BE JUSTIFIED IN DENYING APPROVAL MERELY ON THE GROUND THAT THE APPL ICANTS DID NOT REGISTER THEMSELVES AS CHARITABLE INSTITUTI ONS UNDER A.P. ACT 30/87. AS NOTED HEREINABOVE, WHETHER OR NO T A CHARITABLE INSTITUTION IS REGISTERED UNDER THE SAID ACT, THE PROVISIONS OF A.P. ACT 30 OF 1987 ARE APPLICABLE TO ALL PUBLIC CHARITABLE INSTITUTIONS IN THE STATE OF A.P. FURTHE R, WHILE FAILURE TO REGISTER THEMSELVES UNDER A.P. ACT 30 OF 1987 MAY ATTRACT THE PENAL PROVISIONS THEREIN, THE SAID ACT DOES NOT PROHIBIT THE PUBLIC CHARITABLE INSTITUTIONS FROM CA RRYING ON THEIR ACTIVITIES EVEN THOUGH THEY ARE NOT REGISTERE D 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 ITA NO 233 OF 2011 VIJAYALAKSHMI EDN SOCIETY VATLUR U PAGE 4 OF 6 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 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. ITA NO 233 OF 2011 VIJAYALAKSHMI EDN SOCIETY VATLUR U PAGE 5 OF 6 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 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. 7. NEXT, THE LEARNED CIT HAS TAKEN THE VIEW THA T THERE IS NO NECESSITY TO THE ASSESSEE SOCIETY TO SEEK REGISTRATION UNDER SEC TION 12AA OF THE ACT, WHEN IT IS ALREADY CLAIMING EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT. IN THIS REGARD, THE LEARNED AUTHORISED REPRES ENTATIVE CONTENDED THAT THE EXEMPTION PROVIDED UNDER THE ACT UNDER SECTION 10(23C) AND SECTION 11 ARE INDEPENDENT OF EACH OTHER AND THE ASSESSEE IS N OT PRECLUDED FROM AVAILING EXEMPTION UNDER EITHER OF THE SECTIONS. CO NSEQUENTLY, THE ASSESSEE IS VERY MUCH ENTITLED TO SEEK REGISTRATION UNDER BO TH THE SECTIONS, AS THE ACT DOES NOT PROHIBIT SUCH AN ACTION OF THE ASSESSE E. IN THIS REGARD, THE LEARNED A.R TOOK SUPPORT FROM THE ORDER DATED 03-09 -2009 PASSED BY THIS BENCH IN THE CASE OF MALINENI PERUMALLU EDUCATIONAL SOCIETY IN ITA NOS. 541 & 542/VIZAG/ 2008). WE HAVE GONE THROUGH THE ABOV E SAID ORDER OF THE TRIBUNAL, WHERE IN IT WAS HELD THAT THE EXEMPTION C AN BE CLAIMED U/S 11 OF THE ACT OF SECTION 10(23C) OF THE ACT. SIMILAR VIEW S HAS BEEN EXPRESSED BY THE HYDERABAD BENCH OF ITAT IN THE CASE OF RAJASTHA N SHIKSHA SAMITHI (ITA ITA NO 233 OF 2011 VIJAYALAKSHMI EDN SOCIETY VATLUR U PAGE 6 OF 6 NO. 80 & 81/HYD/08) AND DDIT VS. SAINT TERESA CONVE NT SOCIETY )ITA NO.233/HYD/07). IN VIEW OF THE ABOVE DISCUSSIONS, WE ARE OF THE VIEW THAT THE LEARNED CIT IS NOT JUSTIFIED IN OBSERVING THAT THERE IS NO EXIGENCY FOR THE ASSESSEE TO SEEK REGISTRATION UNDER SECTION 12A A OF THE ACT. 8. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER OF LEARNED CIT AND RESTORE THE SAME TO HIS FILE WITH A DIRECTION TO PR OCESS THE APPLICATION OF THE ASSESSEE IN ACCORDANCE WITH THE LAW. 9. 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 VIJAYALAKSHMI EDUCATIONAL SOCIETY, VIDYA KOKILA, VATLURU, PEDAPADU MANDAL, ELURU, WEST GODAVARI 2 THE ITO WARD-2, ELURU 3 THE CIT RAJAHMUNDRY 4 THE ADDL.COMMISSIONER OF INCOME TAX, ELURU RANGE, ELURU 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM