M/s. Swami Janki Saran Public School Society, Lucknow V. Commissioner of Income Tax-1, Lucknow

ITA 286/LKW/2013

• Counselvise Citation: 28623714 RSA 2013
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-05-2013
• Assessment Year: misc
• Appeal Filed On: 23-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: K R RASTOGI
• Keywords: Charitable institution; Condonation of delay
• Section: 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B : LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A. NO. 286 /LKW/ 2013 ASSESSMENT YEAR: N.A. SWAMI JANKI SARAN PUBLIC VS. C.I.T. - 1, SCHOOL SOCIETY, LUCKNOW. CP - 1205/2, SECTOR - 12 , INDIRA NAGAR EXTENSION, LUCKNOW. PAN:AADAS0656A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. R. RASTOGI, C. A. RESPONDENT BY : SMT. RANU BISWAS, D. R. DATE OF HEARING : 30 /0 5 /201 3 DATE OF PRONOUN CEMENT :07/08/2013 ORDER PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT DENYING THE REGISTRATION U/S 12AA OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS AN ACT). 2. DURING THE COURSE OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE HAS MOVED AN APPLICATION FOR CONDONATION OF DELAY OF APPROXIMATELY 168 DAYS ON THE GROUND THAT ON THE ADVICE OF THE THEN COUNSEL IT WAS THOUGHT THAT THE ORDER OF CIT IS NOT APPEALABLE ORDER. AS PER THE COUNSELS ADVICE 2 THE ASSESSE E MOVED FRESH APPLICATION FOR REGISTRATION AND DURING THE COURSE OF SUBSEQUENT PROCEEDINGS IT WAS REALIZED THAT THE APPEAL SHOULD HAVE BEEN FILED BEFORE THE TRIBUNAL AGAINST THE ORDER OF CIT REJECTING THE REGISTRATION. THEREFORE, THE DELAY IN FILING THE A PPEAL MAY BE CONDONED. FINDING FORCE IN THE CONTENTION OF THE ASSESSEE, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 3. THE FACTS, IN BRIEF, BORNE OUT FROM THE RECORD, ARE THAT THE ASSESSEE HAS FILED AN APPLICATION FOR GRANT OF REGISTRATION U/S 12A OF THE ACT WHICH WAS REJECTED BY THE CIT AFTER HAVING OBSERVED THAT THE ACTIVITIES OF THE SOCIETY WERE NOT GENUINE. WHILE DENYING THE REGISTRATION, THE CIT HAS TAKEN INTO ACCOUNT THE VALUATION OF THE COST OF CONSTRUCTION OF THE SCHOOL BUILDING AND ON ACCOUNT OF DIFFERENCE IN THE VALUATION DECLARED BY THE ASSESSEE AND ESTIMATED BY THE D.V.O., THE CIT HAS DENIED THE REGISTRATION. 4. AGGRIEVED, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSIONS THAT WHILE GRANTING THE REGISTRA TION U/S 12A, THE CIT IS REQUIRED TO EXAMINE THE OBJECT AND NATURE OF THE ACTIVITIES OF THE ASSESSEE SOCIETY. THE OBJECT OF THE SOCIETY IS OF CHARITABLE NATURE AS THE SOCIETY WAS FORMED TO IMPART EDUCATION. THE CORRECTNESS OF THE COST OF CONSTRUCTION IN THE SCHOOL BUILDING, DECLARED BY THE ASSESSEE, CAN ONLY BE EXAMINED WHILE FRAMING REGULAR ASSESSMENT BY THE ASSESSING OFFICER. IT IS BEYOND THE SCOPE OF ENQUIRY WHILE GRANTING REGISTRATION U/S 12A OF THE ACT. IN SUPPORT OF HIS CONTENTION, THE LEARNED COU NSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE JUDGMENT OF JURISDICTION AL HIGH COURT IN THE CASE OF CIT VS. RED ROSE SCHOOL 212 CTR 394 AND THE ORDERS OF THE TRIBUNAL LUCKNOW BENCH IN THE CASE OF M/S KANCHAN SINGH BHULI DEVI SHIKSHA PRASAR SAMITI VS. CIT - I, KANPUR IN I.T.A. NO.706 & 707/LKW/10 AND NAVYUG 3 SOCIETY VS. CIT - I, KANPUR IN ITA NO. 279/LKW/2012 IN WHICH IT HAS BEEN HELD THAT WHILE GRANTING REGISTRATION U/S 12A OF THE ACT THE LEARNED CIT IS REQUIRED ONLY TO SEE THE GENUINENESS OF THE TRUST O R INSTITUTION AND ITS OBJECT S . 5. THE LEARNED D.R., ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE CIT. 6. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE RECORDS, WE FIND THAT CIT HIMSELF HAS ADMITTED IN HIS ORDER THAT THE ASSESSEE IS ENGAGED IN THE EDUCATIONAL ACTIVITIES AND HAS MADE THE INVESTMENT IN SCHOOL BUILDING AND DY.CIT HAS MADE A REFERENCE TO THE D.V.O. FOR ESTIMATING THE INVESTMENT IN SCHOOL BUILDING. THE CIT HAS DENIED THE REGISTRATION ONLY FOR THE REASON T HAT THERE IS DIFFERENCE BETWEEN THE COST OF INVESTMENT IN THE SCHOOL BUILDING DECLARED BY THE ASSESSEE AND ESTIMATED BY THE D.V.O. THE NATURE AND ACTIVITIES OF THE ASSESSEE WERE NOT DISPUTED BY THE CIT. THE ASSESSEE HAS ALSO FILED COPIES OF BYE - LAWS AND THE RECOGNITION OF THE SCHOOL FOR RUNNING CLASSES FOR 9 TH , 10 TH , 11 TH AND 12 TH BESIDES THE STRENGTH OF THE STUDENTS OF THE SCHOOL AND THE DETAILS OF TEACHING STAFF. THE STATEMENT OF PARTICULARS WITH REGARD TO APPLICATION OF INCOME AND BALANCE SHEET ETC. W ERE ALSO PLACED ON RECORD. UNDISPUTEDLY, THE ASSESSEE WAS ENGAGED IN RUNNING THE SCHOOLS, THEREFORE, THE ACTIVITIES OF THE ASSESSEE CANNOT BE CALLED TO BE OF NON CHARITABLE NATURE. SO FAR AS THE ISSUE OF INVESTMENT IN THE SCHOOL BUILDING IS CONCERNED, IT CAN ONLY BE EXAMINED BY THE ASSESSING OFFICER WHILE ADJUDICATING THE ISSUE OF EXEMPTION OF INCOME U/S 11 OF THE ACT. 4 7. THE SCOPE OF ENQUIRY BY THE CIT WHILE GRANTING REGISTRATION WAS EXAMINED BY US IN THE CASE OF NAVYUG SOCIETY VS. CIT - I, KANPUR IN ITA NO. 279/LKW/2012 IN WHICH THE TRIBUNAL HAS HELD AS UNDER: 9. NOW THE QUESTION ARISES WITH REGARD TO THE POWERS OF THE LD. COMMISSIONER OF INCOME - TAX WHILE GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT. AS PER PROVISIONS OF SECTION 12AA OF THE ACT WHILE GRANTING REGISTRATION THE LD. COMMISSIONER OF INCOME - TAX IS REQUIRED TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR IN STITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF. WHILE GRANTING REGISTRATION, THE LD. COMMISSIONER OF INCOME - TAX IS REQUIRED TO EXAMINE THE OBJECTS OF THE SOCIETY OR TRUST. HE CANNOT BECOME AN ASSESSING OFFICER WHILE GR ANTING REGISTRATION UNDER SECTION 12AA OF THE ACT. SUB - SECTION (3) OF SECTION 12AA OF THE ACT FURTHER EMPOWERS THE LD. COMMISSIONER OF INCOME - TAX TO REVIEW HIS DECISION OF GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT. IF THE LD. COMMISSIONER OF IN COME - TAX IS SUBSEQUENTLY NOT SATISFIED WITH THE ACTIVITIES OF THE TRUST OR INSTITUTION THAT THEY ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING SUCH REGISTRATION OF THE TRUST OR INSTITUTION. MEANING THEREBY THAT AT THE TIME OF GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT, THE LD. COMMISSIONER OF INCOME - TAX IS ONLY REQUIRED TO EXAMINE THE OBJECTS OF THE SOCIETY OR TRUST. IF IT I S CHARITABLE AND NO OTHER ACTIVITY IS NOTICED WHEREFROM AN INFERENCE CAN BE DRAWN THAT THE ASSESSEE IS ENGAGED IN ANY OTHER ACTIVITY EXCEPT CHARITABLE, REGISTRATION UNDER SECTION 12AA OF THE ACT SHOULD NOT BE DENIED. THIS ASPECT WAS EXAMINED BY THE HON'BL E PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. B.K.K. MEMORIAL TRUST (SUPRA) IN WHICH THEIR LORDSHIPS HAVE CATEGORICALLY HELD THAT SECTION 12AA OF THE ACT REQUIRES SATISFACTION IN RESPECT OF GENUINENESS OF THE ACTIVITIES OF THE TRUST WHICH INCLUDES T HE ACTIVITIES WHICH THE TRUST IS UNDERTAKING AT PRESENT AND ALSO WHICH IT MAY CONTEMPLATE TO UNDERTAKE. THE INSERTION OF SUB - SECTION (3) TO SECTION 12AA OF THE ACT, CLARIFIES THE SAID FACT, WHEN IT EMPOWERS THE LD. COMMISSIONER OF INCOME - 5 TAX TO CANCEL THE REGISTRATION IF THE ACTIVITIES OF THE TRUST ARE NOT CARRIED OUT IN ACCORDANCE WITH SUCH OBJECTS. IT WAS FURTHER HELD THAT THE CONTENTION THAT THE TRUST WAS NOT SET UP FOR CHARITABLE PURPOSE AND IT WAS UTILIZING ITS INCOME NOT FOR THE SAID PURPOSE CANNOT BE EXAMINED AT THIS STAGE AS ONLY OBJECTS OF THE TRUST HAD TO BE CONSIDERED BY THE LD. COMMISSIONER OF INCOME - TAX WHILE GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT. 10. IN THE CASE OF CIT VS. KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST (SUPRA), THE IR LORDSHIPS OF THE HON'BLE GUJARAT HIGH COURT HAVE HELD THAT UNDER SECTION 12AA OF THE ACT, THE LD. COMMISSIONER OF INCOME - TAX HAS TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF THE ACTIVITIES. FOR SUCH PURPOSE, HE HAS THE POWER TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST AS HE THINK ARE NECESSARY. HOWEVER, THIS DOES NOT MEAN THAT IF THE ACTIVITIES OF THE TRUST HAVE NOT COMMENCED, THE LD. COMMISSIONER OF INCOME - TAX HAS AUTHORITY TO REJECT ITS APPLICATION FOR REGISTR ATION ON THE GROUND THAT THE TRUST FAILED TO CONVINCE HIM ABOUT THE GENUINENESS OF THE ACTIVITIES. THAT IS WHAT UNFORTUNATELY THE LD. COMMISSIONER OF INCOME - TAX DID IN THE PRESENT CASE. THE HON'BLE HIGH COURT ACCORDINGLY APPROVED THE ORDER OF THE TRIBUNA L DIRECTING THE LD. COMMISSIONER OF INCOME - TAX TO GRANT REGISTRATION UNDER SECTION 12AA OF THE ACT. 11. IN THE CASE OF CIT VS. SHRI. ADVAIT ASHRAM SOCIETY (SUPRA), THEIR LORDSHIPS OF THE HON'BLE ALLAHABAD HIGH COURT HAVE HELD THAT THE ONLY ENQUIRY WHICH TH E LD. COMMISSIONER OF INCOME - TAX CAN MAKE WHILE GRANTING REGISTRATION IS REGARDING GENUINENESS OF THE TRUST AND AS TO WHETHER THE OBJECTS AS MENTIONED IN THE TRUST DEED ARE FOR CHARITABLE PURPOSE OR NOT. 12. THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF KANSARA BABULAL VS. DIRECTOR OF INCOME TAX KARSANDAS PUBLIC CHARITABLE TRUST, AHMEDABAD (SUPRA) HAD EXPRESSED THE SAME VIEW IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS AND HELD THAT WHILE GRANTING REGISTRATION SATISFACTION AND GENUINENESS OF ACTIVIT Y IS NOT CONDITION PRECEDENT. THE GENUINENESS OF THE ACTIVITIES CAN BE EXAMINED BY THE LD. COMMISSIONER OF INCOME - TAX UNDER SECTION 12AA(3) OF THE ACT AND IF HE IS SATISFIED THAT THE 6 ACTIVITIES OF THE TRUST OR SOCIETY ARE NOT GENUINE, HE CAN CANCEL THE RE GISTRATION. 13. TURNING TO THE FACTS OF THE CASE IN HAND, WE FIND THAT THE ASSESSEE HAS DECLARED ALL FACTS IN ITS APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT ALONG WITH RELEVANT DOCUMENTS. IT HAS BEEN CATEGORICALLY STATED IN THE APPLICATION THAT FORMALITIES FOR SETTING UP EDUCATIONAL INSTITUTION ARE IN PROGRESS AND THERE HAS BEEN NO MAJOR ACTIVITIES. THE BALANCE SHEET AND INCOME & EXPENDITURE ACCOUNT WERE ALSO FILED ALONG WITH OBJECTS OF THE ASSESSEE - SOCIETY WHEREFROM IT IS CLEAR THAT THE A SSESSEE HAS NOT UNDERTAKEN ANY MAJOR ACTIVITY FOR IMPARTING EDUCATION. IMPARTING OF EDUCATION IS NOT POSSIBLE WITHOUT A PROPER BUILDING AND THE ASSESSEE - SOCIETY WAS IN THE PROCESS OF CONSTRUCTING A BUILDING AFTER ACQUIRING LAND IN NODIA. THESE FACTS ARE SUFFICIENT TO ESTABLISH THE INTENTION OF THE ASSESSEE - SOCIETY AND THERE IS NO MATERIAL AVAILABLE WITH THE LD. COMMISSIONER OF INCOME - TAX FOR HOLDING THAT THE ASSESSEE - SOCIETY IS NOT ENGAGED IN CHARITABLE ACTIVITIES. 14. IN THE LIGHT OF THESE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE LD. COMMISSIONER OF INCOME - TAX HAS WRONGLY DENIED REGISTRATION UNDER SECTION 12AA OF THE ACT TO THE ASSESSEE - SOCIETY. AT THE TIME OF GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT, T HE LD. COMMISSIONER OF INCOME - TAX IS NOT REQUIRED TO VERIFY THE GENUINENESS OF THE ACTIVITIES, IT CAN BE VERIFIED ONCE THE ASSESSEE STARTS ITS ACTIVITIES AND IF THE LD. COMMISSIONER OF INCOME - TAX IS SATISFIED THAT THE ASSESSEE IS NOT ENGAGED IN THE CHARITA BLE ACTIVITIES, HE MAY CANCEL THE REGISTRATION. BUT THE REGISTRATION CANNOT BE DENIED FOR THE REASON THAT IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THE ACTIVITIES CARRIED OUT AND/OR PROPOSED TO BE CARRIED OUT BY THE ASSESSEE. THEREFORE, WE SET ASID E THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX AND DIRECT HIM TO GRANT REGISTRATION TO THE ASSESSEE - SOCIETY UNDER SECTION 12AA OF THE ACT. 8. TURNING TO THE FACTS OF THE CASE IN HAND, WE FIND THAT THE CIT HAS DENIED REGISTRATION WITHOUT POINTING OUT A NY ACTIVITY WHICH IS NOT OF CHARITABLE NATURE. UNDISPUTEDLY, THE ASSESSEE IS ENGAGED IN IMPARTING 7 EDUCATION BY RUNNING A SCHOOL UPTO 12 TH STANDARD. THE REGISTRATION WAS DENIED ONLY FOR THE REASON THAT THERE WAS DIFFERENCE IN THE COST OF CONSTRUCTION OF T HE SCHOOL BUILDING SHOWN BY THE ASSESSEE AND ESTIMATED BY THE D.V.O. IN THE LIGHT OF THE LEGAL PROPOSITION PROPOUNDED IN THE FOREGOING PARAS, WE ARE OF THE VIEW THAT WHILE ADJUDICATING THE ISSUE OF GRANTING REGISTRATION U/S 12A, THE CIT IS ONLY REQUIRED T O EXAMINE THE OBJECT OF THE TRUST/SOCIETY AND ITS ACTIVITIES . SINCE NOTHING HAS BEEN PLACED ON RECORD BY THE CIT THAT THE ASSESSEE IS ENGAGED IN ANY ACTIVITY OTHER THAN THE CHARITABLE NATURE, THE REGISTRATION U/S 12A CANNOT BE DENIED. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT AND DIRECT HIM TO GRANT REGISTRATION TO THE ASSESSEE SOCIETY U/S 12A OF THE ACT. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 07/08/2013 ) SD/. SD/. ( PRAMOD KUMAR) ( SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07/08/2013 *SINGH COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR