ACIT, Faridabad V. M/s Uthan Educational Society, Faridabad

ITA 2657/DEL/2010

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7066 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH GUPTA SH SOMIL AGARWAL
• Section: 143(3); 80G; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. G.D. AGRAWAL, PRESIDENT AND SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.2657/DEL/2010 (ASSESSMENT YEAR: 2010-11) ACIT CIRCLE-II FARIDABAD VS. UTHAN EDUCATIONAL SOCIETY, 5E/1A B.P. N.I.T FARIDABAD PAN : AAATU1248C PAN : (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAKESH GUPTA, SH. SOMIL AGARWAL, ADV. REVENUE BY : SH. AMIT JAIN, SR.DR DATE OF HEARING : 24.04.2018 DATE OF PRONOUNCEMENT : 18.07.2018 O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE DEPARTMENT AGAINST ORDE R DATED 15.04.2010 PASSED BY THE LD. CIT (APPEALS), FARIDAB AD FOR ASSESSMENT YEAR 2007-08. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A SOCIETY REGISTERED U/S 12AA OF THE INCOME TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) VIDE ORDER DATED 30.09.20 04. THE SOCIETY, 2 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) DURING THE YEAR UNDER CONSIDERATION, WAS RUNNING AN EDUCATIONAL INSTITUTE BY THE NAME OF MANAV RACHNA COLLEGE OF E NGINEERING. FOR THE YEAR UNDER CONSIDERATION, THE RETURN OF INC OME WAS FILED AT NIL. THE CASE WAS SELECTED FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO PROCEEDED TO EXAMINE THE ASSESSEES CLAIM OF EXEMPTION U/S 11 OF THE ACT. TH E AO EXAMINED THE AIMS AND OBJECTS OF THE SOCIETY AND MADE INQUIR IES WITH RESPECT TO TWO DIFFERENT SETS OF MEMORANDUM OF ASSOCIATION/ RULES. THE AO ALSO CARRIED OUT VERIFICATION OF INCOME AND EXPENDI TURE ACCOUNT AND INVESTMENT IN FIXED ASSETS FOR THE IMMEDIATELY PREC EDING FOUR ASSESSMENT YEARS AND CAME TO THE CONCLUSION THAT TH E ACTIVITIES OF THE SOCIETY WERE NOT IN ACCORDANCE WITH THE PROVISI ONS OF SECTIONS 2(15), 11, 12 AND 13 OF THE ACT. THE AO OPINED THAT THE ACTIVITIES OF THE SOCIETY WERE THAT OF BUSINESS OF EDUCATION UN DER THE GARB OF CHARITABLE ACTIVITY. THE AO DETERMINED THE TOTAL TA XABLE INCOME AT RS. 4,39,10,330/- IN THE STATUS OF AOP. THIS ENTAIL ED DISALLOWANCE OF CORPUS AMOUNTING TO RS. 3,46,46,000/-, DISALLOWA NCE OF RS. 90,67,879/- OUT OF INTEREST AND DISALLOWANCE OF EXC ESS OF INCOME OVER EXPENDITURE AT RS. 1,96,455/-. 3 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) 2.1 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. CIT (APPEALS) WHO ALLOWED THE ASSESSEES APPEAL AND DIRECTED THE AO T O ACCEPT THE RETURNED INCOME AT NIL. 2.2 NOW, THE DEPARTMENT HAS APPROACHED THE ITAT AN D HAS CHALLENGED THE ACTION OF THE LD. CIT (APPEALS) BY R AISING THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE SOCIETY IS LEGITIMATELY ELIGIBLE U/S 11 TO 13 OF TH E INCOME TAX ACT, 1961 EVEN THOUGH THE SOCIETY WAS CARRYING ON T HE BUSINESS OF EDUCATION AS EDUCATION FOR THE SOCIETY WAS ONLY COMMERCIAL ACTIVITY AND NOT THE CORE ACTIVITY OF CH ARITY SO AS TO DISENTITLE IT UNDER CHAPTER III OF THE INCOME TA X ACT, 1961 AND DESERVE IT TO BE ASSESSEE UNDER CHAPTER IV-D OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING TH E ADDITION OF RS. 3,46,46,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CORPUS DONATION AS GENERAL DONATION DISREGARDING THE FACT THAT IT WAS DONATION AND NOT CORPUS DONATION WITH NO SPECIFIC PURPOSE, NEITHER THE RECE IPTS SAYING ANYTHING REGARDING VOLUNTARY CONTRIBUTIONS, THERE WAS ONLY ONE RECEIPT BOOK BEING MAINTAINED FOR THE PURPOSE OF DONATION AS WELL AS CORPUS WITH NO DISTINCTIVE R ECEIPT 4 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) BOOK NUMBER FOR THE CORPUS DONATION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING TH E ADDITION OF RS. 90,67,879/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST EXPENSES DISREGARDING THE FACT THAT THE ASSETS HAD NOT BEEN PUT TO USE IN RESPECT OF WHICH INTEREST OF RS. 90,67,879/- WAS PAID. 3. THE LD. SR. DEPARTMENTAL REPRESENTATIVE PLACED E XTENSIVE RELIANCE ON THE FINDINGS AND OBSERVATIONS OF THE AS SESSING OFFICER AND SUBMITTED THAT THE AIMS AND OBJECTS OF THE ASSE SSEE SOCIETY WERE ON PAPER ONLY AND THAT THE DAY TO DAY ACTIVITI ES WERE NOT GUIDED BY THE AIMS AND OBJECTS OF THE SOCIETY. THE LD. SR. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSEE HAD VIOLATED PROVISIONS OF SECTION 2(15), 11, 12 AND 13 OF THE ACT AS IT WAS CHARGING FEES FROM THE STUDENTS. THE LD. SR. DE PARTMENTAL REPRESENTATIVE READ OUT EXTENSIVELY FROM THE ASSESS MENT ORDER AND SUBMITTED THAT IN VIEW OF FINDINGS OF THE AO, THE O RDER OF THE LD. CIT (APPEALS) SHOULD BE SET ASIDE AND THAT OF THE AO RE STORED. THE LD. SR. DEPARTMENTAL REPRESENTATIVE ALSO SUBMITTED THAT THE DEPARTMENT HAS FILED ADDITIONAL GROUND OF APPEAL WH ICH READS AS UNDER:- 5 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN HOLDIN G THAT THE SOCIETY IS LEGITIMATELY ELIGIBLE U/S 11 OF THE INCO ME TAX ACT, IGNORING THE FACT THAT REGISTRATION U/S 12AA WAS G RANTED BY THE CIT, FARIDABAD ON 30.09.2004 W.E.F. 09.06.2004, AND THEREAFTER, THE ASSESSEE AMENDED ITS MEMORANDUM OF ASSOCIATION ON 24.03.2007, BUT NO FRESH APPLICATIO N WAS MADE FOR 12AA REGISTRATION. UNDER THESE CIRCUMSTAN CES, SINCE THE 12AA REGISTRATION DATED 30.09.2004 WOULD NOT APPLY AFTER 24.03.2007, AND NO FRESH REGISTRATION WAS OBTAINED FOLLOWING THE AMENDMENT, THE CLAIMS UNDER SECTION 11-13 OF THE ACT, FOR THE YEAR UNDER CONSIDERATION ARE NOT ADMISSIBLE AT ALL. 3.1 THE LD. SR. DR SUBMITTED THAT THE REGISTRATION U/S 12AA WAS GRANTED TO THE ASSESSEE WITH EFFECT FROM 09.06.2004 AND, THEREAFTER, THE ASSESSEE HAD AMENDED ITS MEMORANDUM OF ASSOCIAT ION ON 20.04.2007 BUT NO FRESH APPLICATION WAS MADE FOR 12 AA REGISTRATION. THE LD. SR. DR SUBMITTED THAT SINCE, SUBSEQUENT TO THE AMENDMENT IN THE MEMORANDUM OF ASSOCIATION, NO FRES H REGISTRATION WAS OBTAINED, THE ASSESSEES CLAIM U/S 11, 12 AND 13 WERE NOT ADMISSIBLE AT ALL. 6 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) 4. IN RESPONSE, THE LD. AUTHORISED REPRESENTATIVE, AT THE OUTSET, SUBMITTED THAT THE ADDITIONAL GROUND BEING RAISED B Y THE DEPARTMENT DID NOT HAVE THE NECESSARY APPROVAL OF T HE HIGHER AUTHORITIES AND SUBMITTED THAT IT WAS FILED BY THE AO ON HIS OWN BEHALF. OUR ATTENTION WAS DRAWN TO THE COVERING LET TER AS WELL AS THE ADDITIONAL GROUND FILED ON BEHALF OF THE DEPARTMENT AND IT WAS SUBMITTED THAT THE ADDITIONAL GROUND DID NOT HAVE T HE NECESSARY APPROVAL. THE LD. AUTHORISED REPRESENTATIVE ALSO SU BMITTED THAT THE AMENDED MEMORANDUM HAD BEEN DULY CONSIDERED BY THE LD. CIT (APPEALS) AND WAS DISCUSSED AND PAGES 14,15 AND 16 OF THE IMPUGNED ORDER. 4.1 COMING TO THE MERITS OF THE DEPARTMENTS APPEAL , THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE BENEFI T OF EXEMPTION UNDER SECTION 11 HAD BEEN ALLOWED TO THE ASSESSEES SOCIETY IN ASSESSMENT YEARS 2005-06, 2006-07 AND FROM ASSESSME NT YEAR 2009-10 TO ASSESSMENT YEAR 2014-15. THE LD. AUTHORI SED REPRESENTATIVE FURTHER SUBMITTED THAT THE BENEFIT W AS DENIED ONLY IN ASSESSMENT YEAR 2007-08, THAT IS THE PRESENT APP EAL, AND ASSESSMENT YEAR 2008-09. IT WAS FURTHER SUBMITTED T HAT THE ASSESSEES APPEAL IN ASSESSMENT YEAR 2008-09 WAS AL LOWED BY THE 7 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) LD. CIT (A) AND THE DEPARTMENT HAD NOT FILED ANY AP PEAL AGAINST THE ORDER OF THE LD. CIT (A) BEFORE THE ITAT AND, THUS, THIS WAS THE ONLY YEAR IN WHICH THE DEPARTMENT WAS IN APPEAL BEFORE T HE ITAT. THE LD. AUTHORISED REPRESENTATIVE ALSO FURNISHED A CHAR T DEPICTING THE POSITION OF ASSESSMENTS FOR THE DIFFERENT ASSESSMEN T YEARS. THE CHART IS REPRODUCED BELOW FOR A READY REFERENCE:- CHART SHOWING BENEFIT ALLOWED FOR EARLIER & SUBSEQU ENT YEARS. IN THE CASE OF M/S. UTHAN EDUCATIONAL SOCIETY FOR A Y 2007-08 AY ASSESSMENT U/S BENEFIT ALLWED APPEAL TO CIT(A) APPEAL IN ITAT DATE OF ORDER 2005-06 143(3) ALLOWED 13.08.2007 2006-07 143(3) ALLOWED 28.11.2008 2007-08 143(3) NOT ALLOWED APPEAL DISMISSED PENDING 30.12.2009 2008-09 143(3) NOT ALLOWED APPEAL ALLOWED NO APPEAL 31.12.2010 2009-10 143(3) ALLOWED 21.12.2011 2010-11 143(3) ALLOWED 15.05.2012 2011-12 143(3) ALLOWED 04.06.2013 2012-13 143(3) ALLOWED 2008-09 153A(1)(B) ALLOWED 29.03.2016 2009-10 153A(1)(B) ALLOWED 29.03.2016 2010-11 153A(1)(B) ALLOWED 29.03.2016 2011-12 153A(1)(B) ALLOWED 29.03.2016 2012-13 153A(1)(B) ALLOWED 29.03.2016 8 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) 2013-14 153A(1)(B) ALLOWED 29.03.2016 2014-15 153B(1)(B)/143(3) ALLOWED 29.03.2016 4.2 THE LD. AUTHORISED REPRESENTATIVE PLACED EXTENS IVE RELIANCE ON THE FINDINGS RECORDED BY THE LD. CIT (A) WHILE G IVING RELIEF TO THE ASSESSEE AND SUBMITTED THAT THE LD. CIT (A) HAD GIV EN RELIEF TO THE ASSESSEE AFTER DUE CONSIDERATION OF THE FACTS AND P ROPER ANALYSIS OF THE SETTLED JUDICIAL PRECEDENTS, ESPECIALLY THE JUD GMENT OF THE HONBLE APEX COURT IN THE CASE OF QUEENS EDUCATION AL SOCIETY VS. CIT REPORTED IN 372 ITR 699 (SC). THE LD. AUTHORISE D REPRESENTATIVE ALSO SUBMITTED THAT IN VIEW OF THE P RINCIPLE OF CONSISTENCY AND THERE BEING NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS AVAILABLE ON RECORD FR OM ASSESSMENT YEAR 2005-06 TO ASSESSMENT YEAR 2014-15, THE BENEFI T OF EXEMPTION SHOULD CONTINUE TO BE GRANTED TO THE ASSESSEE SOCIE TY. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL ON RECORD. AS FAR AS THE ADMISSIBILITY OF THE ADDITIONAL GROUND RAISED BY THE DEPARTMENT IS CONCERNED, WE AG REE WITH THE CONTENTIONS OF THE LD. AR THAT THE ADDITIONAL GROUN D HAS BEEN FILED 9 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) WITHOUT PROPER AUTHORIZATION FROM THE COMPETENT AUT HORITY. ACCORDINGLY, WE DISMISS THE ADDITIONAL GROUND AS UN -ADMITTED. 5.1 COMING TO THE MERITS OF THE ISSUE, IT IS UNDISP UTED THAT THE SOCIETY IS PRIMARILY AN EDUCATIONAL INSTITUTION WIT H THE AIMS AND OBJECTS RELATING TO EDUCATION. FURTHER, IT ALSO HAS VARIOUS OTHER AIMS AND OBJECTS BUT THE SAME ALSO RELATE TO EDUCATION. THE MAIN OBJECTION OF THE AO AGAINST THE ASSESSEE SOCIETY IS THAT THE ACTIVITIES OF THE SOCIETY ARE IN THE NATURE OF BUSINESS ACTIVI TY. THE AO HAS REFERRED TO CLAUSE 4(VIII) OF THE OBJECTS CLAUSE WH ICH AUTHORIZE THE SOCIETY TO PURCHASE, TAKE ON LEASE OR EXCHANGE, OR HIRE PROPERTIES - MOVABLE AND IMMOVABLE FOR THE PURPOSE OF THE SOCIET Y AND TO IMPROVE, DEVELOP, MANAGE, SELL, LEASE, MORTGAGE OR DISPOSE OF ANY PART OF THE PROPERTY OF THE SOCIETY. IT IS THE OPIN ION OF THE AO THAT LEASING, HIRING, SELLING AND MORTGAGING ETC. IS NOT AN ALLOWABLE ACTIVITY IN TERMS OF SECTIONS 11 TO 13 OF THE ACT A S THEY WERE COMMERCIAL ACTIVITIES. SIMILARLY, THE AO HAS REFERR ED TO CLAUSES 4(III), (IX), (X) WHICH PROVIDE FOR PROVIDING ALL T YPES OF CONSULTANCY AND ACCREDITATION SERVICES. THE AO HAS ALSO REFERRE D TO OBJECT CLAUSE 4(XXV) REGARDING PUBLISHING OF BOOKS, MAGAZINES, NE WSPAPERS ETC. WHICH, AS PER THE AO, IS NOT A CHARITABLE ACTIVITY AND IS A BUSINESS 10 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) ACTIVITY. THE AO HAS ALSO REFERRED TO OBJECT CLAUSE 4(XL) WHICH PROVIDES FOR DONATING OR CONTRIBUTING CORPUS FUNDS OR GIVING LOANS IN THE FORM OF CASH/ MOVABLE PROPERTY/IMMOVABLE PRO PERTY TO ANY OTHER PERSONS, INDIVIDUALS, TRUSTS, SOCIETIES, AOP ETC. INVOLVED IN SIMILAR OBJECTS. THE AO WAS OF THE OPINION THAT SUC H KIND OF POWERS CAN BE GIVEN ONLY ON THE OCCASION OF DISSOLUTION OF TRUST AND NOT BEFORE THAT. THE AO HAS ALSO NOTED THAT THE SOCIET Y WAS MAKING SYSTEMATIC PROFIT YEAR AFTER YEAR AND WAS INVOLVED IN EXPANSION OF ITS PRESENT STRENGTH. THE AO WAS OF THE VIEW THAT I N VIEW OF THE ACTIVITIES OF THE SOCIETY VIS A VIS THE AIMS AND OBJECTS, THE PROVISIONS OF SECTION 2(15), 11, 12 AND 13 OF THE ACT WERE CLE ARLY VIOLATED. 5.2 A PERUSAL OF THE ORDER OF THE LD. CIT (A) SHOWS THAT THE LD. CIT (A) HAS NOTED THE ASSESSEE SOCIETY WAS GRANTED CERT IFICATE FOR DEDUCTION U/S 80G OF THE ACT INITIALLY ON 16.12.200 4 AND SUBSEQUENTLY ON 14.05.2007 THUS, UNDERLYING THE FAC T THAT THE ISSUE OF CHARITABLE NATURE OF ACTIVITY HAD BEEN DUL Y DELIBERATED UPON BY A SUPERIOR AUTHORITY OF THE AO FOR THE PERI OD 01.04.2007 TO 31.03.2010 AND, THUS, THE SAME WAS APPLICABLE FOR A SSESSMENT YEAR 2007-08, THAT IS YEAR UNDER REFERENCE ALSO. THE LD. CIT (A) HAS ALSO NOTED THAT THE ASSESSEE WAS ENJOYING REGISTRATION U /S 12AA OF THE 11 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) ACT SINCE 2004 AND THE ISSUE OF GENUINENESS OF THE OBJECTS OF THE ASSESSEE SOCIETY HAD BEEN CONSIDERED BY THE AOS SU PERIOR AT THE TIME OF GRANT OF REGISTRATION U/S 12AA. THE LD. CIT (A) HAS ALSO NOTED THAT THE AO, IN THE PRESENT CASE, HAD NO JURI SDICTION TO EITHER ADJUDICATE OR REVIEW THE ORDERS OF THE HIGHER AUTHO RITIES AS PER THE ADMINISTRATIVE DECORUM OF PROPRIETY AS ENVISAGED IN SECTIONS 116 TO 119 OF THE ACT. THE LD. CIT (A) HAS NOTED THAT THE AO HAS MISLED HERSELF IN PRECEDING TO EXAMINE THE EXEMPTION U/S 1 1 OF THE ACT AND HAS NOTED IT AS BEING PREPOSTEROUS AND UNWARRANTED SPECIALLY BECAUSE THE AO WAS NOT ABLE TO PLACE ANY MATERIAL O N RECORD SO AS TO ESTABLISH THAT THE SOCIETY WAS CARRYING ON THE B USINESS OF EDUCATION SO AS TO DISENTITLES IT UNDER CHAPTER 3 ( IV) OF THE ACT AND MAKE IT LIABLE TO BE ASSESSED UNDER CHAPTER IV D OF THE ACT. THE LD. CIT (A) HAS NOTED THAT THE AOS OPINION THAT EDUCAT ION FOR THE SOCIETY WAS A COMMERCIAL ACTIVITY WAS ENTIRELY UNFO UNDED AND MISDIRECTED WITHOUT THERE BEING ANY SUPPORTIVE EVID ENCES BEING BROUGHT ON RECORD FOR ARRIVING AT SUCH A CONCLUSION . THE LD. SR. DR APPEARING ON BEHALF OF THE DEPARTMENT COULD NOT POI NT OUT ANY FACTUAL OR LEGAL INFIRMITY IN THIS FINDING OF THE L D. CIT (A) EVEN DURING THE COURSE OF PROCEEDINGS BEFORE US. 12 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) 5.3 WE FURTHER NOTE THAT FROM ASSESSMENT YEAR 2005- 06 TO ASSESSMENT YEAR 2014-15, THE DEPARTMENT HAS NOT ACC EPTED THE CLAIM OF EXEMPTION U/S 11 ONLY ON TWO OCCASIONS VIZ . A.Y. 2007-08 WHICH IS THE SUBJECT MATTER OF APPEAL BEFORE US AND ASSESSMENT YEAR 2008-09 IN WHICH THE LD. CIT (A) HAD ALLOWED T HE ASSESSEES APPEAL AND THE DEPARTMENT HAD NOT PREFERRED ANY APP EAL BEFORE THE ITAT. WE NOTE THAT IN ALL OTHER ASSESSMENT YEARS, T HE ASSESSMENTS HAVE EITHER BEEN COMPLETED U/S 143(3) OF THE ACT OR U/S 153 OF THE ACT AND IN ALL THE YEARS THE DEPARTMENT HAS ALLOWED THE CLAIM OF EXEMPTION U/S 11 TO THE ASSESSEE. ALTHOUGH THE LD. SR. DR HAS ARGUED VEHEMENTLY AGAINST THE ACTION OF LD. CIT (A) IN ALLOWING EXEMPTION TO THE ASSESSEE, HE COULD NOT POINT OUT A NY MATERIAL DIFFERENCE IN THE FACTS PERTAINING TO THIS YEAR UND ER APPEAL AS COMPARED TO OTHER ASSESSMENT YEARS FALLING WITHIN T HE PERIOD AY 2005-06 TO ASSESSMENT YEAR 2014-15. ALTHOUGH THE PR INCIPLE OF RES JUDICATA IS SAID TO NOT APPLY IN INCOME TAX PROCEEDINGS, TH E HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DALMIA PROMOTERS DEVELOPERS (P) LTD REPORTED IN 281 ITR 346 (DEL) HAS HELD THAT FOR REJECTING THE VIEW TAKEN IN EARLIER ASSESSMENT YEAR S, THERE MUST BE MATERIAL CHANGE IN THE FACT, SITUATION OR IN LAW. I N RADHASOAMI 13 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) SATSANG'S CASE REPORTED IN 193 ITR 321 (SC), THE H ONBLE APEX COURT DECLARED THAT ALTHOUGH THE PRINCIPLES OF RES JUDICATA DO NOT APPLY TO INCOME-TAX PROCEEDINGS, EACH ASSESSMENT YE AR BEING A UNIT BY ITSELF, YET IN CASES, WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND A S A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSI TION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT MAY NOT BE APPROPRIATE TO ALLOW THAT POSITION TO BE CHANGED IN A SUBSEQUENT Y EAR. THEIR LORDSHIPS EXTRACTED WITH APPROVAL THE FOLLOWING PAS SAGE FROM HOYSTEAD V. COMMISSIONER OF TAXATION [1926] AC 155 (PC): PARTIES ARE NOT PERMITTED TO BEGIN FRESH LITIGATIO NS BECAUSE OF THE VIEW THEY MAY ENTERTAIN OF THE LAW OF THE CASE, OR NEW VERSIONS WHICH THEY PRESENT AS TO WHAT SHOULD BE A PROPER APPREHENSION BY THE COURT OF THE LEGAL RESULT EITHE R OF THE CONSTRUCTION OF THE DOCUMENTS OR THE WEIGHT OF CERT AIN CIRCUMSTANCES. IF THIS WERE PERMITTED LITIGATION WO ULD HAVE NO END, EXCEPT WHEN LEGAL INGENUITY IS EXHAUSTED. IT I S A PRINCIPLE OF LAW THAT THIS CANNOT BE PERMITTED, AND THERE IS ABUNDANT AUTHORITY REITERATING THAT PRINCIPLE. 14 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) 5.4 THE HONBLE APEX COURT IN RADHASOAMI SATSANG (SUPRA) REITERATED THE FOLLOWING OBSERVATION MADE BY IT IN PARASHURAM POTTERY WORKS CO. LTD. V. ITO REPORTED IN (1977) SCR (2) 92: AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINALITY IN AL L LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTI VATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDU CE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROV ERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. 5.5 FOLLOWING THE ABOVE DECISIONS, THE HONBLE DEL HI HIGH COURT HAS IN A.R.J. SECURITY PRINTERS' CASE REPORTED IN 2 64 ITR 276 (DEL) AND COMMISSIONER OF INCOME-TAX V. NEO POLY PACK P. LTD . REPORTED IN 245 ITR 492 (DEL), HELD THAT EVEN WHEN THE DOCTR INE OF RES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS, WHERE AN ISSUE HAS BEEN DECIDED CONSISTENTLY IN A PARTICULAR MANNE R FOR EARLIER ASSESSMENT YEARS, THE SAME VIEW SHOULD PREVAIL EVEN DURING THE SUBSEQUENT YEARS UNLESS THERE IS A MATERIAL CHANGE IN THE FACTS. THE LAW IS THEREFORE FAIRLY WELL SETTLED. FOR REJECTING THE VIEW TAKEN FOR THE EARLIER ASSESSMENT YEARS, THERE MUST BE A MATER IAL CHANGE IN THE FACT SITUATION. THERE IS NO GAINSAYING THAT THE PREVIOUS VIEW WILL 15 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) HAVE NO APPLICATION EVEN IN CASES WHERE THE LAW ITS ELF HAS UNDERGONE A CHANGE BUT BEFORE AN EARLIER VIEW CAN B E UPSET OR DIGRESSED FROM ONE OF THE TWO MUST BE DEMONSTRATED NAMELY A CHANGE IN THE FACT SITUATION OR A MATERIAL CHANGE I N LAW WHETHER ENACTED OR DECLARED BY THE HONBLE SUPREME COURT. T HEREFORE, ON THE FACTS OF THE ASSESSEES CASE, IN THE ABSENCE OF A CHANGE IN FACTS OR ANY ADDITIONAL INPUT THERE WAS NO COMPELLING REA SON FOR TAKING A DIFFERENT VIEW AND THE VIEW TAKEN FOR THE EARLIER A SSESSMENT YEARS CONTINUES TO BE APPLICABLE EVEN FOR THE YEAR UNDER CONSIDERATION. HENCE, IT IS OUR CONSIDERED OPINION THAT THE ASSESS ING OFFICER'S ACTION WAS NOT JUSTIFIED FROM THIS ANGLE AND WE ALS O HOLD THAT THE LD. CIT (A) WAS PATENTLY CORRECT IN REJECTING THE V IEW TAKEN BY THE AO. 5.6 WE ALSO FIND THAT THE ASSESSING OFFICER, WHILE DISALLOWING THE ASSESSEES CLAIM OF EXEMPTION U/S 11, HAD PLACED RE LIANCE ON THE JUDGMENT OF THE HONBLE HIGH COURT OF UTTARAKHAND I N THE CASE OF QUEENS EDUCATION SOCIETY VS. CIT AND HAD DRAWN SUPP ORT FROM THIS JUDGMENT FOR THE PROPOSITION THAT CONTINUED GENERAT ION OF SURPLUS OVER THE YEARS WOULD INDICATE THAT THERE WAS A PROF IT MOTIVE AND 16 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) THAT THE ACTIVITIES OF THE SOCIETY WERE NOT CHARITA BLE. HOWEVER, THIS JUDGMENT OF THE HONBLE UTTARAKHAND HIGH COURT WAS RENDERED WITH REFERENCE TO PROVISION OF SECTION 10 (23C) OF THE A CT AND NOT WITH REFERENCE TO SECTIONS 11 TO 13 OF THE INCOME TAX AC T. IT IS ALSO TO BE NOTED THAT THIS JUDGMENT OF THE UTTARAKHAND HIGH CO URT WAS SUBSEQUENTLY OVER-TURNED BY THE HONBLE APEX COURT IN QUEENS EDUCATION SOCIETY VS. CIT REPORTED IN 327 ITR 699 ( SC). THE RELEVANT OBSERVATIONS OF THE HONBLE APEX COURT ARE AS UNDER:- (1) WHERE AN EDUCATIONAL INSTITUTION CARRIES ON TH E ACTIVITY OF EDUCATION PRIMARILY FOR EDUCATING PERSONS, THE FACT THAT IT MAKES A SURPLUS DOES NOT LEAD TO THE CONCLUSION THAT IT C EASES TO EXIST SOLELY FOR EDUCATIONAL PURPOSES AND BECOMES AN INST ITUTION FOR THE PURPOSE OF MAKING PROFIT. (2) THE PREDOMINANT OBJECT TEST MUST BE APPLIED T HE PURPOSE OF EDUCATION SHOULD NOT BE SUBMERGED BY A PROFIT MAKIN G MOTIVE. (3) A DISTINCTION MUST BE DRAWN BETWEEN THE MAKING OF A SURPLUS AND AN INSTITUTION BEING CARRIED ON FOR PR OFIT.NO INFERENCE ARISES THAT MERELY BECAUSE IMPARTING EDUC ATION RESULTS IN MAKING A PROFIT, IT BECOMES AN ACTIVITY FOR PROFIT. 17 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) (4) IF AFTER MEETING EXPENDITURE, A SURPLUS ARISES INCIDENTALLY FROM THE ACTIVITY CARRIED ON BY THE EDUCATIONAL INS TITUTION, IT WILL NOT BE CEASE TO BE ONE EXISTING SOLELY FOR EDUCATIO NAL PURPOSES. (5) THE ULTIMATE TEST IS WHETHER ON AN OVERALL VIEW OF THE MATTER IN THE CONCERNED ASSESSMENT YEAR THE OBJECT IS TO M AKE PROFIT AS OPPOSED TO EDUCATING PERSONS. (6) THE CORRECT TESTS WHICH HAVE BEEN CULLED OUT IN THE THREE SUPREME COURT JUDGMENTS, NAMELY, SURAT ART SILK CLOTH 121 ITR 1 (SC), ADITANAR 224 ITR 310 (SC), AND AMERICAN HOTEL AND LODGING , WOULD ALL APPLY TO DETERMINE WHETHER AN EDUCATIONAL INSTITUTION EXISTS SOLELY FOR EDUCATION AL PURPOSES AND NOT FOR PURPOSES OF PROFIT. (7) IN ADDITION, WE HASTEN TO ADD THAT THE 13TH PRO VISO TO SECTION 10(23C) IS OF GREAT IMPORTANCE IN THAT ASSESSING AU THORITIES MUST CONTINUOUSLY MONITOR FROM ASSESSMENT YEAR TO A SSESSMENT YEAR WHETHER SUCH INSTITUTIONS CONTINUE TO APPLY TH EIR INCOME AND INVEST OR DEPOSIT THEIR FUNDS IN ACCORDANCE WIT H THE LAW LAID DOWN. FURTHER, IT IS OF GREAT IMPORTANCE THAT THE ACTIVITIES OF SUCH INSTITUTIONS BE LOOKED AT CAREFULLY. IF THEY A RE NOT GENUINE, OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ALL OR ANY OF THE CONDITIONS SUBJECT TO WHICH APPROVAL HAS BEEN GIVEN , SUCH APPROVAL AND EXEMPTION MUST FORTHWITH BE WITHDRAWN. ALL THESE CASES ARE DISPOSED OF MAKING IT CLEAR THAT REVENUE IS AT LIBERTY TO PASS FRESH ORDERS IF SUCH NECESSITY IS FELT AFTE R TAKING INTO 18 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) CONSIDERATION THE VARIOUS PROVISIONS OF LAW CONTAIN ED IN SECTION 10(23C) READ WITH SECTION 11 OF THE INCOME TAX ACT. 5.7 THUS, CONSIDERING THE OVERALL FACTUAL MATRIX OF THE CASE AS WELL AS THE SETTLED JUDICIAL PRECEDENT IN THIS REGA RD AND DULY NOTING THE FACT THAT THE AO COULD NOT DEMONSTRATE BY COGEN T EVIDENCE THAT THE ASSESSEE SOCIETY WAS CARRYING OUT ACTIVITIES WH ICH WERE COMMERCIAL IN NATURE AND ALSO AFTER DULY CONSIDERIN G THE FACT THAT THE ASSESSEE HAS BEEN CONTINUOUSLY ENJOYING THE BEN EFIT OF EXEMPTION U/S 11 OF THE ACT FROM ASSESSMENT YEAR 20 05-06 TO ASSESSMENT YEAR 2014-15 BARRING THE PRESENT YEAR UN DER APPEAL, WE HAVE NO HESITATION IN HOLDING THAT THE LD. CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE IN FAVOUR OF THE ASSESSEE. AC CORDINGLY, WE DISMISS THE GROUNDS RAISED BY THE DEPARTMENT. 6. IN THE FINAL RESULT, THE APPEAL OF THE DEPARTMEN T STANDS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JULY, 2018). SD/- SD/- (G.D.AGARWAL) (SUDHANSHU SRIVASTAVA ) PRESIDENT JUDICIAL MEMBER 19 ITA NO.2657/DEL/2010 (UTHAN EDUCATIONAL SOCIETY) DATE: 18.07.2018 BINITA COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 5) THE DR, I.T.A.T., NEW DELHI; TRUE COPY BY ORDER ITAT, NEW DELHI