M/s Neeranjeya Vidya Parishad, Visakhapatnam V. The CIT-II Visakhapatnam, Visakhapatnam

ITA 248/VIZ/2011

• Counselvise Citation: 24825314 RSA 2011
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-02-2014
• Assessment Year: misc
• Appeal Filed On: 27-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI J.SUDHAKAR REDDY, AM AND SHRI SAKTIJIT DEY, JM ITA NO.248/VIZAG/2011 M/S.NEERANJANEYA VIDYA PARISHAD MAIN ROAD, KANCHARAPALEM VISAKHAPATNAM. PAN : AAAAN4022G. VS. THE COMMISSIONER OF INCOME-TAX-II VISAKHAPATNAM. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.V.N.HARI RESPONDENT BY : SHRI K.V.N.CHARYA, CIT DATE OF HEARING : 25.02.2014 DATE OF PRONOUNCEMENT : 25.02.2014 O R D E R PER J.SUDHAKAR REDDY (AM) : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX-II, VISAKHAPATNAM , DATED 16 TH JUNE, 2011, REJECTING THE GRANT OF REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961. 2. THE FACTS OF THE CASE BROUGHT OUT AT PARA 1 OF T HE ORDER OF THE LEARNED CIT, ARE EXTRACTED BELOW FOR READY REFERENC E :- THE ASSESSEE SOCIETY HAS BEEN REGISTERED WITH THE REGISTRAR OF SOCIETIES, VISAKHAPATNAM VIDE NO.28/20 01 DATED 08.01.2001. ORIGINALLY IT FILED ITS APPLICATI ON IN FORM NO.10A SEEKING REGISTRATION U/S 12AA OF THE I. T. ACT (HEREINAFTER REFERRED TO AS ACT) AS A PUBLIC CHAR ITABLE INSTITUTION. THE THEN COMMISSIONER OF INCOMETAX-II , VISAKHAPATNAM, AFTER AFFORDING OPPORTUNITY TO THE ASSESSEE SOCIETY AND CONSIDERING ITS APPLICATION ON MERIT, REJECTED THE SAME. ON AN APPEAL TO THE HONBLE ITAT , ITA NO.248/VIZAG/2011. M/S.NEERANJANEYA VIDYA PARISHAD. 2 VISAKHAPATNAM BENCH, IT SET ASIDE THE REJECTION ORD ER OF THE COMMISSIONER AND RESTORED THE MATTER BACK TO HI M WITH A DIRECTION TO RE-EXAMINE THE APPLICATION OF T HE ASSESSEE SOCIETY WITH REFERENCE TO ITS OBJECTS AND GENUINENESS OF ITS ACTIVITIES AND, IF SATISFIED, GR ANT REGISTRATION. 3. THE CIT REJECTED THE APPLICATION ONCE AGAIN BY O BSERVING THAT (A) THE OBJECTS OF THE ASSESSEE-SOCIETY INCLUDES CO NSTRUCTION OF A TEMPLE, AND (B) THE ASSESSEE-SOCIETY HAD RECEIVED D ONATIONS FROM STUDENTS AND HENCE NOT ELIGIBLE FOR REGISTRATION U/ S 12AA. 4. WE HAVE HEARD SHRI G.V.N.HARI, THE LEARNED COUNSE L FOR THE ASSESSEE AND SHRI K.V.N.CHARYA, THE LEARNED CIT-DR ON BEHALF OF THE REVENUE. 5. DURING THE FIRST ROUND OF ASSESSMENT PROCEEDINGS , THIS BENCH OF THE TRIBUNAL HAS HELD AS FOLLOWS:- WE HAVE HEARD THE RIVAL CONTENTIONS. ON A CAREFUL PERUSAL OF PROVISIONS OF SEC.11 TO 13, WE NOTICE TH AT THE REGISTRATION UNDER SECTION 12AA OF THE ACT HAS BEEN GRANTED FOR TRUST HAVING RELIGIOUS PURPOSES ALSO. H ENCE WE DO NOT FIND MERIT ON THE FIRST POINT MENTIONED A BOVE. WITH REGARD TO THE SECOND POINT, WE NOTICE THAT THE LEARNED CIT HAS OBSERVED THAT THE COLLECTION BY WAY OF VOLUNTARY CONTRIBUTIONS MADE BY THE ASSESSEE SOCIET Y FROM ITS STUDENTS IS IN VIOLATION OF THE AIMS AND O BJECTIVES OF THE ASSESSEE SOCIETY, HOWEVER, THE LEARNED CIT D ID NOT BRING OUT HOW THEY ARE VIOLATED BY THE SAID ACTIVIT IES OF THE ASSESSEE SOCIETY. HENCE, IN OUR VIEW, BOTH THE REASONS CITED BY THE LEARNED CIT DID NOT WARRANT REJECTION OF THE ITA NO.248/VIZAG/2011. M/S.NEERANJANEYA VIDYA PARISHAD. 3 APPLICATION FILED BY THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LEARNED CIT AND RESTORE THE MATTER BACK WITH A DIRECTION TO PROCESS THE APPLICA TION OF THE ASSESSEE IN ACCORDANCE WITH THE LAW AND IF HE I S SATISFIED WITH THE OBJECTS OF THE TRUST AND THE GEN UINENESS OF ITS ACTIVITIES, THEN GRANT REGISTRATION. (EMPHASIS) 6. THESE FINDINGS HAVE NOT BEEN CHALLENGED BY THE R EVENUE IN APPEAL. WHILE SO THE CIT ONCE AGAIN REJECTS THE APPL ICATION FOR GRANT OF REGISTRATION U/S 12AA BY HOLDING THAT THE OBJECT TO CONSTRUCT TEMPLE, COMES IN THE WAY OF GRANT OF REGISTRATION U /S 12AA AS CHARITABLE PURPOSES IS MIXED WITH RELIGIOUS PURPOSE S AND ALSO THAT COLLECTION OF DONATIONS FROM THE STUDENTS IS EXTRA COLLECTION WHICH IS NOT VOLUNTARILY AND WHICH IS MADE UNDER DURESS, WHI CH LEADS TO FORFEITURE OF THE CLAIM OF THE ASSESSEE BEING A CHA RITABLE INSTITUTION. 7. IN OUR VIEW, THE SAID ORDER OF THE CIT REJECTING THE APPLICATION IS AGAINST THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.394/VIZAG/2010, ORDER DATED 10 TH FEBRUARY, 2011, WHERE THE LEGAL POSITION HAS BEEN EXPLAINED. THE CIT HAD NO OTHER C HOICES BUT TO FOLLOW THE BINDING ORDER OF THE TRIBUNAL, AS FAR AS THESE TWO ASPECTS ARE CONCERNED. THE CIT, IN OUR VIEW, IS NOT CORRECT IN DENYING THE REGISTRATION ON THE VERY SAME GROUNDS, WHICH THE TR IBUNAL HAS HELD, AS GROUNDS WHICH CANNOT BE MADE A BASIS FOR REJECTION OF APPLICATION FOR REGISTRATION U/S 12AA. 8. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON T HE DECISION OF THE ITAT MADRAS `A BENCH IN THE CASE OF ACIT V. BALAJI EDUCATIONAL ITA NO.248/VIZAG/2011. M/S.NEERANJANEYA VIDYA PARISHAD. 4 AND CHARITABLE PUBLIC TRUST [(2011) 11 ITR (TRIB.) 179 (MAD.)] , WHERE IN IT HELD AS FOLLOWS:- CHARITABLE PURPOSE EXEMPTION TRUST RUNNING EDUCATIONAL INSTITUTIONS DONATIONS RECEIVED FROM STUDENTS ACCOUNTED FOR AND UTILIZED FOR PURPOSES OF TRUST NO MATERIAL TO SHOW ASSESSEE RECEIVED CAPITATION FEES DONATIONS NOT TAXABLE CASH RECOVERED FROM RESIDEN CE OF CHAIRMAN OF TRUST NO MATERIAL TO SHOW CASH USED F OR PERSONAL PURPOSES OF CHAIRMAN NOT A CASE OF VIOLA TION OF SECTION 13(1)(D) TRUST ENTITLED TO EXEMPTION INCOME-TAX ACT, 1961, SS. 11, 12, 13(1)(D). 9. HE ALSO RELIED ON THE DECISION OF THE VISAKAPATN AM BENCH OF THE TRIBUNAL IN THE CASE OF M/S.SIDDHARTHA EDUCATIONAL SOCIETY V. ACIT, CIRCLE-1, ELURU IN ITA NOS.349/VIZAG/2007, 99/VIZAG /2008, 202/VIZAG/2009 & CO NO.41/VIZAG/2010, ORDER DATED 9 TH MAY, 2011 AND THE DECISION OF THE HONBLE KARNATAKA HIGH COUR T IN THE CASE OF DIRECTOR OF INCOME-TAX (EXEMPTION) AND ANR. V. SRI BELIMATHA MAHASAMSTHANA SOCIO CULTURAL AND EDUCATIONAL TRUST [(2011) 336 ITR 694 (KARN)] , WHEREIN THE HONBLE COURT HELD AS UNDER:- THAT MERELY BECAUSE THE ASSESSEE IS AN INSTITUTION WHICH IS RUNNING PROFESSIONAL COURSES, THE ASSESSING OFFI CER COULD NOT HAVE PRESUMED THAT THE AMOUNT WHICH WERE RECEIVED AS DONATIONS WERE ATTRIBUTABLE TO THE ALLO TMENT OF SEATS IN THE RELEVANT ASSESSMENT YEARS. IN THE A BSENCE OF THERE BEING ANY FOUNDATION FOR SUCH A CONTENTION , THE DONATIONS RECEIVED DURING THE PERIOD WAS NOT IN VIO LATION OF THE KARNATAKA EDUCATIONAL INSTITUTIONS (PROHIBIT ION OF CAPITATION FEE) ACT, 1984, AND THE ASSESSEE HAD NOT ACTED OPPOSED TO PUBLIC POLICY. 10. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW THIS APPEAL OF THE ASSESSEE AND DIRECT THE CIT TO GRANT REGISTRATION U /S 12AA OF THE ACT. ITA NO.248/VIZAG/2011. M/S.NEERANJANEYA VIDYA PARISHAD. 5 11. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 25 TH DAY OF FEBRUARY, 2014. SD/- SD/- (SAKTIJIT DEY) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM ; DATED : 25 TH FEBRUARY, 2014. DEVDAS* COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, VISAKHAPATNAM. 4. CIT(A) VISAKHAPATNAM. 5. DR, ITAT, VISAKHAPATNAM. 6. GUARD FILE. BY ORDER, //TRUE COPY// (SENIOR PRIVATE SECRETARY) ITAT, VISAKHAPATNAM