Addl.C.I.T., Range-1, Aligarh V. Muslim Social Uplift Society, Aligarh

ITA 3/AGR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0337 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-02-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 02-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AVAN KUMAR SINGH
• Keywords: Charitable institution
• Section: 12A; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NOS. 01, 02 & 03/AGRA/ 2012 ASSESSMENT YEARS 2004-05, 2005-06 & 2006-07 ADDL. COMMISSIONER OF INCOME TAX(A.O.) VS. MUSLI M SOCIAL UPLIFT RANGE-1, ALIGARH SOCIETY, SULTAN JAHAN MANZIL, DODHPUR, ALIGARH (PAN AAATM8291R) ITA NO. 501/AGRA/ 2012 ASSESSMENT YEAR 2009-10 DY. COMMISSIONER OF INCOME TAX(A.O.) VS. MUSLIM SOCIAL UPLIFT CIRCLE-1, ALIGARH SOCIETY, SULTAN JAHAN MANZIL DODHPUR, ALIGARH (APPELLANTS) (RESPONDENT-) REVENUE BY : SHRI WASEEM ARSHAD, SR. D.R. ASSESSEE BY : SHRI AVAN KUMAR SINGH, C.A. DATE OF HEARING : 21.02.2013 DATE OF PRONOUNCEMENT : 15.03.2013 ORDER PER A.L. GEHLOT,ACCOUNTANT MEMBER: ITA NOS. 01/AGRA/2012, 02/AGRA/2012 & 03/AGRA/2 012 HAVE BEEN FILED BY THE REVENUE AGAINST DIFFERENT OR DERS, ALL DATED ITA NOS.1,2,3,/AGRA/2012 & 501/AGRA/2012 A.YS.2004-05,2005-06 2006-07 &2009-10 2 21.10.2011, PASSED BY THE LEARNED CIT(A) GHAZIABAD FOR A.YS. 2004-05, 2005-06 & 2006-07 AND ITA NO.501/AGRA//2012 HAS BEE N FILED BY THE REVENUE AGAINST THE ORDER DATED 03.07.2012 PASSED B Y THE CIT(A) GHAZIABAD FOR THE A.Y. 2009-10. 2. THE LEARNED REPRESENTATIVES OF THE PARTIES SUBM ITTED THAT COMMON GROUNDS HAVE BEEN RAISED IN ALL THESE APPEAL S BASED ON IDENTICAL SET OF FACTS AND THEREFORE, THEY HAVE ARGUED THE APPEAL S ACCORDINGLY, CONSIDERING THE FACTS OF THE CASE FOR A.Y. 2004-05. TO KNOW THE EXACT GROUNDS, WE REPRODUCE THE GROUND FOR A.Y. 2004-05 AS UNDER:- 1. WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF T HE CASE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.11.29,682/-, RELYING ON THE FACT THAT ASSESSEE WAS REGISTERED U/ S 12A, IGNORING THE FACT THAT RUNNING COACHING CLASSES FOR VARIOUS COMP ETITIVE EXAMS AND CHARGING FEES AND SAME WAS NOT CHARITABLE ACTIVITIE S WITHIN THE MEANING OF SECTION2(15) OF THE IT ACT, 1961 AND IS NOT ENTITLED FOR EXEMPTION U/S 11 OF THE IT, ACT. 3. THE DETAILS OF DISPUTED ADDITIONS FOR DIFFERENT YEARS ARE AS UNDER:- ITA NOS.1,2,3,/AGRA/2012 & 501/AGRA/2012 A.YS.2004-05,2005-06 2006-07 &2009-10 3 ASSESSMENT YEARS DISPUTED ADDITION 2004-05 RS.11,29,682/- 2005-06 RS.13,18,590/- 2006-07 RS.19,68,840/- 2009-10 RS.26,97,880/- 4. THE BRIEF FACTS OF THE CASE ARE THAT THE CASE O F THE ASSESSEE FOR A.Y. 2006-07 WAS SELECTED FOR SCRUTINY. WHILE SCRUT INIZING THE ACTIVITIES OF THE ASSESSEE, IT CAME TO THE NOTICE OF THE A.O. THA T THE ASSESSEE WAS ENGAGED IN RUNNING OF COACHING CLASSES VARIOUS COMPETITIVE EXAMINATIONS. 5. THE CASE OF THE ASSESSEE WAS REOPENED FOR ISSUI NG NOTICE UNDER SECTION 148 OF ACT. THE A.O. WAS OF THE VIEW THAT T HE ACTIVITY OF THE ASSESSEE SOCIETY WAS NOT CHARITABLE AS PROVIDED UND ER SECTION 2(15) OR EDUCATION AS PER SECTION 10(23C) OF THE ACT. THE SO CIETY IS TO PROVIDE AND IMPART EDUCATIONAL ACTIVITIES TO THE STUDENTS WHO A RE UNDERGONE TO GIVE THE COMPETITIONS IN VARIOUS UNIVERSITIES, COLLEGES IN T HE FILED OF MEDICAL, ENGINEERING AND OTHER PROFESSIONAL COURSES UNDER TH E AEGIS OF ASSESSEE SOCIETY. THE ASSESSEE SOCIETY IS RUNNING COACHING C LASSES, AN ACTIVITY WHICH ITA NOS.1,2,3,/AGRA/2012 & 501/AGRA/2012 A.YS.2004-05,2005-06 2006-07 &2009-10 4 HAS BEEN HELD NEITHER CHARITABLE NOR EDUCATIONAL BY DIFFERENT COURTS OF LAW AS STATED BY THE A.O. IN HIS ORDER. THE CIT(A) DELETED THE ADDITION AS UNDER :- (PAGE NOS. 17 TO 21 FOR A.Y. 2004-05). 5. AFTER CAREFUL CONSIDERATION OF ALL THE FACTS ON RECORD AND RIVAL SUBMISSIONS AS CONTAINED IN ASSESSMENT ORDER AND IN APPELLANTS SUBMISSION AND PAPER BOOK, MY OBSERVATIONS/CONCLUSI ONS ARE AS UNDER :- 5.1 THE FIRST AND FOREMOST POINT IS THAT THE ASSES SEE HAS BEEN GRANTED REGISTRATION U/S 12A OF THE ACT. THIS IMPLI ES THAT THE ACTIVITIES AND THE OBJECTS OF THE SOCIETY AS SPECIF IED IN MEMORANDUM WERE FOUND CHARITABLE IN NATURE AS ENVIS AGED U/S2(15) OF THE ACT, BY THE CIT, WHO GRANTED SUCH R EGISTRATION U/S S12A OF THE ACT. THEREFORE, IN THE ASSESSMENT PROCE EDINGS, WHAT THE A.O. IS REQUIRED TO EXAMINE AND VERIFY IS WHETH ER THE ACTIVITIES BEING CARRIED OUT, ARE AS PER MEMORANDUM. IN OTHER WORDS, WHAT A.O. IS REQUIRED TO CHECK IS WHETHER THE AVOWED OBJ ECTIVES OF THE SOCIEITY/TRUST ARE BEING FULFILLED IN ACTUAL PRACTI CE. AS AGAINST IT, WHAT THE A.O. HAS DONE IN THIS CAS E TENTAMOUNTS TO DISOBEYING THE VIEW OF THE CIT WHO GRANTED REGIS TRATION BECAUSE ALTHOUGH THE CIT CONSIDERS THE OBJECTS AS CHARITABL E IN NATURE, THE AO HOLDS OTHERWISE. 5.2 I HAVE ALSO PERUSED THE RECORDS AND FIND THAT: - (A) THE APPELLANT IS AN AOP REGISTERED UNDER SOCIEI TY REGULATION ACT 1860. THE APPELLANT HAS OBTAINED REGISTRATION NO.678/1987-88 DT. 07.09.1987, FROM TH E REGISTRAR OF FIRMS & SOCIEITY, AGRA. LATER ON THE APPELLANT APPLIED FOR REGISTRATION U/S 12A BEFORE T HE CIT, AGRA AND SAID EXEMPTION WAS GRANTED VIDE F.NO. CITA (TECH)/120M-62)12A/ALIG/1999-2000/272DATED 22.12.99 . ITA NOS.1,2,3,/AGRA/2012 & 501/AGRA/2012 A.YS.2004-05,2005-06 2006-07 &2009-10 5 SINCE THEN THE APPELLANT BEING ASSESSED AS AOP AND CLAIMING EXEMPTION WHICH WAS GRANTED TO HIM YEAR AF TER YEAR. (B) FURTHER THE APPELLANT HAD OBTAINED AN ACCREDITA TION CERTIFICATE VIDE CERTIFICATE F.NO. 156/UEC/2004-05 DATED 23.09.2004. FROM NATIONAL COUNCIL FOR PROMOTION OF URDU LANGUAGE FROM MINISTRY OF HUMAN RESOURCES AND DEVELOPMENT, DEPTT. OF SECONDARY & HIGHER EDUCATION GOVT. OF INDIA FROM RUNNING 2 YEARS DIPLOMA ON FUNCTIONAL ARABIC, WHICH IS CLEAR FROM THE OBJECT O F THE SOCIETY THAT THE APPELLANT IS IMPARTING EDUCATIONAL TO UPLIFT THE WEAKER SECTION OF THE SOCIETY. THE SOCIE TY WAS CREATED WHOLLY AND EXCLUSIVELY FOR CHARITABLE PURPO SE AND NOT FOR EARNING ANY PROFIT. 5.3 IN ITS SUBMISSION REPRODUCED ABOVE, THE APPELLANT H AS CLAIMED TO CARRY OUT FOLLOWING ACTIVITIES:- I THE SOCIETY IS TO PROVIDE AND IMPART EDUCATIONAL ACTIVITIES TO THE STUDENTS WHO ARE UNDERGOING TO GIVE THE COMPETITIONS IN VARIOUS UNIVERSITIES, COLLEGES IN THE FILED OF MEDICAL, ENGINEERING AND OTHER PROFESSIONAL COURSES UNDER THE AEGIS OF THE SOCIETY. II SOCIETY IS ALSO ACCREDITED BY THE MINISTRY OF HUMAN RESOURCES DEVELOPMENT (DEPTT. OF SECONDARY AND HIGHER EDUCATION) GOVT. OF INDIA NEW DELHI FOR AWARDING DIPLOMA IN FUNCTIONAL ARABIC. III THAT SOCIETY IS HELPING POOR AND NEEDY STUDENT BY PROVIDING FINANCIAL ASSISTANCE. IV THE SOCIETY IS CONDUCTING REGULARLY THE TALENT SEARCH TEST AND OTHER WORKSHOP FOR PARENTS AND CHILDREN ETC. FOR THEIR ADVANCEMENT. V THAT SOCIETY ACTS AS AN AGENCY FOR VARIOUS ALUMNI ASSOCIATIONS AND SELECTS THE NEEDY AND ITA NOS.1,2,3,/AGRA/2012 & 501/AGRA/2012 A.YS.2004-05,2005-06 2006-07 &2009-10 6 POOR STUDENTS FOR PROVIDING DONATIONS/SCHOLARSHIPS. VI SECTION 11 OF THE INCOME TAX ACT, 1961 IS THE MAIN SECTION GOVERNING TAXATION OF INSTITUTIONS AND PROVIDES THAT AN INSTITUTION CAN CLAIM EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 WHEN IT APPLIES ITS INCOME FOR CHARITABLE PURPOSES AND WE ARE ENTITLED FOR CLAIMING EXEMPTION UNDER THE SAID SECTION. THE RECORDS AND DOCUMENTS FURNISHED BEFORE THE CORROBORATE AND SUPPORT SUCH CLAIM. I FIND THAT THE RE IS LOT OF CHARITY ELEMENT IN THE WORKS BEING CARRIED OUT BY T HE APPELLANT. EVEN THE FEE FOR COACHING CLASSES BEING RUN THE APP ELLANT SOCIETY IS MUCH LESS THAN THE FEE BEING CHARGED BY OTHER COACH ING INSTITUTIONS AND IS A VERY REASONABLE AMOUNT, NATURALLY WITH A V IEW TO HELP NEEDY STUDENTS. FURTHER, THERE ARE NUMBER OF NEEDY AND POOR STUDENTS WHOSE FEES IS BEING WAIVED. THESE STUDENTS COME FROM DIFFERENT SECTIONS OF THE SOCIETY. THEREFORE, I AM OF THE VIEW THAT APPELLANTS SOCI ETY IS CARRYING OUT ACTIVITY OF CHARITABLE NATURE I.E. REL IEF TO POOR, EDUCATION AND ADVANCEMENT OF OBJECT OF GENERAL PUBL IC UTILITY. 5.4 THE VITAL ERROR MADE BY A.O. IS THAT HE IS DEN YING EXEMPTION U/S 10(23C) TO THE APPELLANT SOCIETY ARGU ING THAT COACHING IS NOT EDUCATIONAL ACTIVITY. FIRSTLY, IT IS ON RECORD THAT THE APPELLANT SOCIETY IS NOT CLAIMING EXEMPTION U/S 10(23C) AND THEREFORE, A REL IANCE ON THE CASES BY A.O. ARE NOT OF MUCH HELP BECAUSE THOSE CA SES ARE ON THE ISSUE OF ELIGIBILITY FOR THE THEN RELEVANT SECTION 10(22) OF THE ACT. IN THE PRESENT CASE, THE APPELLANT IS ITSELF SAYING TH AT ITS OBJECTS ARE NOT SOLELY EDUCATIONAL BUT RATHER ITS OBJECTIVES IS RELIEF TO THE POOR AND ACTIVITIES TOWARDS GENERAL PUBLIC UTILITY. SECONDLY, THE A.O. HAS BY PASSED THE CRUCIAL POIN T AS TO HOW ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 11 W HICH IS ITA NOS.1,2,3,/AGRA/2012 & 501/AGRA/2012 A.YS.2004-05,2005-06 2006-07 &2009-10 7 PRINCIPALLY ALLOWABLE EVEN IF IT MAY NOT BE EXISTIN G SOLELY FOR EDUCATIONAL PURPOSES. AS MENTIONED ABOVE, THE APPEL LANTS CLAIM IS FOR EXEMPTION U/S 11 AND NOT SECTION 10(23C) OF THE ACT. ONCE THE APPELLANT SOCIETY IS FOUND TO BE CARRYING OUT ACTIV ITIES WHICH ARE AS PER THE OBJECTS STATED IN THE MEMORANDUM, FOR WHICH REGISTRATION WAS GRANTED U/S 12A; THERE IS NO REASON STATED BY A .O. WHICH CAN DISENTITLE THE APPELLANT SOCIETY FROM U/S11. AS I H AVE ALREADY HELD ABOVE, THE ASSESSEE SOCIETY IS FOUND TO BE CARRYIN G OUT THE AVOWED OBJECTS, FOR WHICH IT WAS GRANTED REGISTRATION U/S 12A. THIRDLY, EVEN THE COACHING ACTIVITY IS NOT THE ON LY ACTIVITY BEING CARRIED OUT BY THE APPELLANT SOCIETY. THERE A RE OTHER ACTIVITIES ALSO; LIKE GRANTING SCHOLARSHIP TO NEEDY STUDENTS, RUNNING DIPLOMA COURSES IN FUNCTIONAL ARABIC; ALSO CARRYING OUT TALENT TEST IN COLLABORATION WITH VARIOUS ALUMNI ASSOCIATIONS E TC. THUS, THERE IS SUBSTANTIAL FORCE IN APPELLANTS C LAIM THAT EVEN THE COACHING ACTIVITY IS A MEANS FOR ACHIEVI NG THE WIDER OBJECTS OF THE TRUST AND TO THAT EXTENT THE RATIO O F ALL CASE LAWS OF THANTHI TRUST 247 ITR 785(SC) & THIAGARAJ CHARITIES 92 TAXMAN 152 (SC) IS ALSO APPLICABLE FAVORABLY IN THE PRESENT CASE. 5.5. IN VIEW OF ABOVE DISCUSSION, I CONCLUDE THAT AO WAS NOT CORRECT IN DENYING EXEMPTION U/S 11, WHICH HAD BEEN CORRECTLY CLAIMED BY THE APPELLANT SOCIETY. THEREFO RE, THE SURPLUS INCOME BROUGHT TO TAX IS CANCELLED AND A.O. IS DIRE CTED TO ASSESS THE APPELLANT SOCIETY ON ITS NIL RETURNED INCOME. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF TH E PARTIES AND RECORDS PERUSED. WE NOTICE THAT THE ASSESSEES SOCI ETY HAS BEEN GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT DATED 22. 12.1999, SINCE THEN THE ASSESSEE IS BEING ASSESSED AS AOP AND CLAIMING EXEM PTION WHICH WAS GRANTED YEAR AFTER YEAR. BEFORE DELETING THE ADDITI ON, THE CIT(A) MADE A DETAILED DISCUSSION . CONSIDERING THE SUBMISSION OF THE ASSESSEE THAT THE ITA NOS.1,2,3,/AGRA/2012 & 501/AGRA/2012 A.YS.2004-05,2005-06 2006-07 &2009-10 8 ASSESSEE SOCIETY ENGAGED IN EDUCATIONAL ACTIVITIES THE ASSESSEE SOCIETY OBTAINED AN ACCREDITATION CERTIFICATE FROM NATIONAL COUNCIL FOR PROMOTION OF URDU LANGUAGE FROM MINISTRY OF HUMAN RESOURCES AND DEVELOPMENT, DEPARTMENT OF SECONDARY & HIGHER EDUCATION GOVT. OF INDIA FOR RUNNING TWO YEARS DIPLOMA ON FUNCTIONAL ARABIC. THE CIT(A) HAS EXAMINED THE ACTIVITIES OF THE ASSESSEE AND FOUND THAT THERE IS A LOT OF CHARITY ELEMENT IN THE WORKS BEING CARRIED OUT BY THE ASSESSEE. EVEN T HE FEE FOR COACHING CLASSES BEING RUN BY ASSESSEE SOCIETY IS MUCH LESS THAN THE FEE BEING CHARGED BY OTHER COACHING INSTITUTIONS. THE STUDENTS COME F ROM DIFFERENT SECTIONS OF THE SOCIETY. THE CIT(A) HAS ALSO DELETED THE ADDITI ON MADE BY THE A.O. REGARDING EXEMPTION UNDER SECTION 10(23C) OF THE AC T . THE CIT(A) HAS HELD THAT THE ASSESSEE IS NOT CLAIMING EXEMPTION U/ S 10(23C). THE CIT(A) HAS ALSO HELD THAT ONCE THE ASSESSEE SOCIETY IS FOU ND TO BE CARRYING OUT ACTIVITIES WHICH ARE AS PER THE OBJECTS STATED IN T HE MEMORANDUM, FOR WHICH REGISTRATION WAS GRANTED UNDER SECTION 12A; THERE I S NO REASON STATED BY A.O. WHICH CAN DISENTITLE THE ASSESSEE SOCIETY FROM EXEMPTION UNDER SECTION 11 OF THE ACT. ITA NOS.1,2,3,/AGRA/2012 & 501/AGRA/2012 A.YS.2004-05,2005-06 2006-07 &2009-10 9 7. THE REVENUE HAS FAILED TO POINT OUT ANY CONTRAR Y MATERIAL TO THE FINDING OF THE CIT(A). IN THE LIGHT OF THESE FACTS, THE ORDER OF THE CIT(A) IS CONFIRMED. 8. IN THE RESULT, ALL THE APPEALS OF REVENUE ARE DI SMISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTA NT MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY