Umalok Charitable Trust, Meerut V. ACIT, Meerut

ITA 2336/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1326 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 21-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARAMITA M BISWAS
• Keywords: Charitable institution
• Section: 153A; 153C; 10(23C); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE MS. SUSHMA CHOWLA, VICE PRESIDENT DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 2336/DEL/2015 :ASSTT. YEAR : 20 10-11 M/S UMALOCK CHARITABLE TRUST, C-111, SAMRAT PALACE, GARH ROAD, MEERUT VS ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, MEERUT (APPELLANT ) (RESPONDENT) PAN NO. AALCS4967Q ASSESSEE BY : SH. K. SAMPATH, ADV. REVENUE BY : MS. PARAMITA M. BISWAS, CIT DR 8 DATE OF HEARING: 04.03.2020 DATE OF PRONOUNCEMENT: 14.05.2020 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE LD. CIT(A), MEERUT DATED 16.02.20 15. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THE LD. CIT (A) WAS NOT JUSTIFIED BY DISMISSING THE APPEAL. 2. THE LD. CIT (A) HAS ERRED IN SUMMARILY REJECTING THE PLEA OF THE APPELLANT TRUST FOR EXEMPTION UNDER SEC TION 10(23C)(VI). 3. THE SEVERAL OBSERVATIONS AS MADE AND INFERENCES DRAWN ARE UNTENABLE, INCORRECT, UNWARRANTED. 3. THE ADDITIONAL GROUNDS TAKEN UP BY THE ASSESSEE WHILE LETTER DATED 04.10.2017 ARE NOT PRESSED. ITA NO.2336/DEL/2015 UMALOCK CHARITABLE TRUST 2 4. FACTS RELEVANT TO THE ADJUDICATION ARE THAT A SE ARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT, 19 61 WAS CONDUCTED IN M/S UMALOK CHARITABLE TRUST AND DR. AT UL KRISHAN GROUP OF CASES. INCRIMINATING DOCUMENTS RELATING TO THE ASSESSEE WERE FOUND AND SEIZED. ACCORDINGLY, ASSESS MENT PROCEEDINGS U/S 153C READ WITH SECTION 153A WERE IN ITIATED BY THE AO. THE ASSESSEE TRUST IS RUNNING TWO EDUCATION AL INSTITUTIONS NAMELY, UMALOK PARAMEDICAL COLLEGE AND UMALOK NURSING SCHOOL. THE TRUST HAS NOT BEEN GRANTED REGI STRATION U/S 12AA. THE ASSESSEE CLAIMED EXEMPTION U/S 10(23C) ON THE GROUNDS THAT IT IS ENGAGED IN RUNNING EDUCATIONAL I NSTITUTIONS AND ITS TOTAL RECEIPTS ARE BELOW RS. 1 CRORE. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO SHOW CAUSED AS TO WHY EXEMPTION CLAIMED U/S 10(23C) SHALL NOT BE DISALLOW ED SINCE THE TRUST HAS NOT BEEN ESTABLISHED SOLELY FOR EDUCATION AL PURPOSES. THE ASSESSEE STATED BEFORE THE AO THAT THE MAIN OBJ ECT OF THE TRUST IS TO RUN SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSES OF PROFIT AND THE ANNUAL AGGREGATE RECEIPT S OF THE TRUST DOES NOT EXCEED RS. 1 CRORE IN EACH AND EVERY YEAR. HOWEVER, THE AO DID NOT ACCEPT THE EXPLANATION GIVE N BY THE ASSESSEE AND CAME TO A CONCLUSION THAT THE ASSESSEE IS NOT FULFILLING THE CONDITIONS REQUIRED U/S 10(23C). 5. THE LD. CIT(A) CONFIRMED THE ADDITION HOLDING TH AT IN THE INCOME AND EXPENDITURE ACCOUNT, THE ASSESSEE HAS CL AIMED EXPENDITURE UNDER THE HEADS MEDICINE DISTRIBUTION, CLOTH DISTRIBUTION, FOOD DISTRIBUTION, DISABILITY CAMP BL OOD DONATION CAMP ETC. IT WAS HELD THAT THESE ACTIVITIES MAY BE CHARITABLE IN NATURE BUT THEY DO NOT HAVE ANY DIRECT OR INCIDENTA L CONNECTION WITH EDUCATION. THE LD. CIT (A) HAS ALSO HELD THAT DURING THE ITA NO.2336/DEL/2015 UMALOCK CHARITABLE TRUST 3 YEAR, THE TRUST HAS GIVEN VARIOUS INTEREST FREE ADV ANCES TO ITS TRUSTEES. 7. DURING THE ARGUMENTS BEFORE US, THE LD. AR ARGUE D THAT THE ASSESSEE IS RUNNING THREE EDUCATIONAL TRUST NAMELY, M/S UMALOCK NURSING SCHOOL, M/S UMALOCK PARAMEDICAL COL LEGE AND M/S UMALOCK HEALTH WORKERS TRAINING CENTRE. HE HAS FILED THE DETAILS OF CLOTH DISTRIBUTION, FOOD DISTRIBUTION, M EDICINE DISTRIBUTION AND EXPENSES OF BLOOD DONATION CAMP. I T WAS ARGUED THAT THAT ASSESSEE IS INTO IMPARTING EDUCATI ON OF NURSING AND TRAINING OF PARAMEDICAL STAFF. IN ORDER TO IMPA RT THE PRACTICAL TRAINING AND FIELD EXPOSURE, VARIOUS CAMP S ARE CONDUCTED AT RURAL AREAS IN AND AROUND MEERUT. DURI NG THE CAMPS, THE MEDICINES ARE DISTRIBUTED TO THE PATIENT S AND PROVISION OF FOOD AND CLOTHING IS BEING MADE TO THE PATIENTS, VOLUNTEERS AND THE PARTICIPANTS. IT WAS ARGUED THAT IT CANNOT BE CONSIDERED AS AN EXPENDITURE UNRELATED TO THE TYPE OF EDUCATIONAL ACTIVITIES AS IT IS PART OF EXPENDITURE RELATED TO ORGANIZING THE CAMP WHICH IS PART OF IMPARTING THE EDUCATION AND FIELD TRAINING. 8. THE LD. DR RELIED ON THE ORDERS OF THE AUTHORITI ES BELOW. 9. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. 10. WE FIND THAT THE ASSESSEE HAS DULY REGISTERED W ITH INDIAN NURSING COUNCIL (INC) AND ALSO WITH THE STATE NURSI NG COUNCIL AND GRANTED PERMISSION TO TRAIN AND IMPART EDUCATIO N OF 40 STUDENTS IN THE COURSE OF AUXILIARY NURSE & MIDWIFE (ANM). SIMILARLY, THE ASSESSEE IS ALSO PERMITTED TO TRAIN 60 STUDENTS FOR ITA NO.2336/DEL/2015 UMALOCK CHARITABLE TRUST 4 THE COURSE OF GENERAL NURSE & MIDWIFE (GNM). THESE ACTIVITIES INVOLVE THEORETICAL CLASSES, PRACTICAL TRAINING AND FIELD EXPOSURE. CONDUCTING OF CAMPS FOR A FIELD EXPOSURE TO THE STU DENTS IS A PART OF TRAINING ACTIVITIES WHICH WILL HELP THE STU DENTS TO COPE UP WITH THE FIELD REALITIES. DURING THE CAMPS, THE PATIENTS HAVE TO BE NECESSARILY TREATED, COUNSELED, GIVEN MEDICIN ES. DURING THE BLOOD DONATION CAMPS FOOD HAS TO BE DISTRIBUTED TO THE BLOOD DONORS. HENCE, THE EXPENDITURE INVOLVED IN CONDUCT OF THE CAMPS AND DISTRIBUTION OF MEDICINES, FOOD AND C LOTH FORMS AND AN INTEGRAL PART OF CONDUCTING OF FIELD CAMPS B Y THE ASSESSEE TRUST IN IMPARTING THE EDUCATION. THEY ARE DIRECTLY AND ALSO INTEGRALLY CONNECTED WITH THE TYPE OF EDUCATIO N IMPARTED BY THE ASSESSEE TRUST. HENCE, WE ARE UNABLE TO ACCEPT WITH THE FINDING OF THE LD. CIT (A). WE HAVE ALSO GONE THROU GH THE OBSERVATION OF THE LD. CIT (A) THAT THE ASSESSEE TR UST HAS GIVEN VARIOUS INTEREST FREE ADVANCES TO THE TRUSTEES AND FIND THAT THE ASSESSEE HAS GIVEN ONLY AN INDEMNITY BOND BUT NOT A NY LOANS TO THE TRUSTEES AS PER THE RECORD BEFORE US. HENCE, IT CAN BE HELD THAT THE ASSESSEE IS FOUND TO BE SOLELY IN THE ACTI VITY OF EDUCATION AND NO OTHER ACTIVITIES HAVE BEEN UNDERTA KEN BY THE ASSESSEE DURING THE YEAR. 11. THE PROVISIONS OF SECTION 10(23C) READ AS UNDER : SECTION 10(23C) (23C) ANY INCOME RECEIVED BY ANY PERSON ON BEHALF OF [(IIIAB) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION68 EXISTING68 SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT, AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT69; OR ITA NO.2336/DEL/2015 UMALOCK CHARITABLE TRUST 5 (IIIAC) ANY HOSPITAL OR OTHER INSTITUTION FOR THE RECEPTION AND TREATMENT OF PERSONS SUFFERING FROM ILLNESS OR MENTAL DEFECTIVENESS OR FOR THE RECEPTIO N AND TREATMENT OF PERSONS DURING CONVALESCENCE OR OF PERSONS REQUIRING MEDICAL ATTENTION OR REHABILITATI ON, EXISTING SOLELY FOR PHILANTHROPIC PURPOSES AND NOT FOR PURPOSES OF PROFIT, AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. [EXPLANATION.FOR THE PURPOSES OF SUB-CLAUSES (IIIAB) AND (IIIAC), ANY UNIVERSITY OR OTHER EDUCAT IONAL INSTITUTION, HOSPITAL OR OTHER INSTITUTION REFERRED THEREIN, SHALL BE CONSIDERED AS BEING SUBSTANTIALLY FINANCED BY THE GOVERNMENT FOR ANY PREVIOUS YEAR, I F THE GOVERNMENT GRANT TO SUCH UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION, HOSPITAL OR OTHER INSTITUT ION EXCEEDS SUCH PERCENTAGE OF THE TOTAL RECEIPTS INCLUDING ANY VOLUNTARY CONTRIBUTIONS, AS MAY BE PRESCRIBED, OF SUCH UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION, HOSPITAL OR OTHER INSTITUTION, AS THE CASE MAY BE, DURING THE RELEVANT PREVIOUS YEAR]; OR (IIIAD) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITU TION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FO R PURPOSES OF PROFIT IF THE AGGREGATE ANNUAL RECEIPTS OF SUCH UNIVERSITY OR EDUCATIONAL INSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRESCRIBED; OR 12. THE PRESCRIBED LIMIT FOR SECTION 10(23)(IIIAD) IS LESS THAN RS.1 CRORE. 13. HENCE, KEEPING IN VIEW THAT THE ANNUAL RECEIPT OF THE EDUCATION INSTITUTE IS LESS THAN RS.1 CRORE, THE ED UCATION INSTITUTE IS SOLELY INVOLVED IN THE EDUCATIONAL ACT IVITY AND SINCE THE OBJECTS CLAUSE OF THE TRUST DURING THE YEAR UND ER CONSIDERATION IS TO CARRY THE EDUCATIONAL ACTIVITIE S AND KEEPING IN VIEW THAT NO OTHER MATERIAL CONTRA HAS BEEN BROU GHT BY THE REVENUE. WE HEREBY HOLD THAT THE ASSESSEE IS ELIGIB LE FOR DEDUCTION U/S 10(23C) OF THE ACT. ITA NO.2336/DEL/2015 UMALOCK CHARITABLE TRUST 6 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/05/2020. SD/- SD/- (SUSHMA CHOWLA) (DR. B. R. R. KUMAR) VICE PRESIDENT ACCO UNTANT MEMBER DATED: 14/05/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR