Maruti Centre for Excellence, New Delhi V. DIT (Exemption), New Delhi

ITA 3048/DEL/2011

• Counselvise Citation: 304820114 RSA 2011
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 19-01-2012
• Assessment Year: misc
• Appeal Filed On: 09-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Assessment record; Cancellation of registration
• Section: 133(6); 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 3048/DEL/2011 ASSESSMENT YEAR: - - MARUTI CENTRE FOR EXCELLENCE, VS. DIRECTOR OF INC OME-TAX (EXEM), PLOT NO.1, NELSON MANDELA ROAD, DELHI. VASANT KUNJ, NEW DELHI. (PAN: AAATM7499K) (APPELLANT) (RESPONDENT) APPELLANT BY: S/S. AJAY VOH RA, ADV. & ROHIT JAIN & MS. SHIKHA, CAS RESPONDENT BY: SHRI RS NEGI, SE NIOR DR DATE OF HEARING : 13.01.2012 DATE OF PRONOUNCEMENT : 17.02.2012 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION), NEW DELHI PASSE D UNDER SECTION 12AA(3) READ WITH SECTION 12A OF THE INCOME-TAX ACT , 1961. THE GROUNDS OF APPEALS TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITAT'S RULES, THEY ARE DESCRIPTIVE AND ARGUMENTATIV E IN NATURE. IN BRIEF, THE GRIEVANCE OF THE ASSESSEE IS THAT LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) HAS ERRED IN CANCELING THE REGISTRATION GRANTED UND ER SEC. 12A OF THE ACT. 2. THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE S OCIETIES REGISTRATION ACT, 1860 W.E.F. 24.6.2002. IT HAS APP LIED FOR GRANT OF 2 REGISTRATION UNDER SEC. 12AA WHICH WAS GRANTED TO T HE ASSESSEE VIDE ORDER NO.1601 DATED 25.2.2003. IN THE MEMORANDUM OF ASSOC IATION, THE ASSESSEE HAS PROVIDED A LARGE NUMBER OF AIMS AND OBJECTS CON TAINED IN CLAUSE 3 SUB- CLAUSE (A) TO (J) OF THE MEMORANDUM OF ASSOCIATION. THE MAIN OBJECTS OF THE SOCIETY ARE TO PROPAGATE AMONGST ORGANIZATION U P-GRADATION IN TERMS OF QUALITY, COST AND TECHNOLOGY ORIENTATION THROUGH TR AINING, CONSULTANCY AND OTHER SUPPORTING SERVICES, HELP ORGANIZATION TO REA CH WORLD CLASS LEVELS OF PERFORMANCE AND TO GAIN WORLD VIDE RESPECT FOR PROF ESSIONAL COMPETENCY IN THE FIELD OF QUALITY MANAGEMENT, TO HELP ORGANIZATI ON THROUGH TRAINING CONSULTANCY AND SUPPORTIVE SERVICES TO ACHIEVE TOTA L QUALITY MANAGEMENT, TO ORGANIZE SHORT TERM AND CERTIFICATION TRAINING COUR SE IN THE FIELD OF QUALITY MANAGEMENT. LEARNED DIRECTOR OF INCOME-TAX (EXEMPTI ON) ON PERUSAL OF THE ASSESSMENT RECORD FORMED AN OPINION THAT IT CAME TO THE NOTICE OF THE ASSESSING OFFICER WHILE FRAMING ASSESSMENT ORDER FO R ASSESSMENT YEAR 2005- 06 THAT THE DONATIONS IN CORPUS WERE RECEIVED FROM VENDOR/CONTRACTORS/SUPPLIERS WHO WERE DIRECTLY ASSO CIATION WITH M/S. MARUTI UDYOG LTD. SPECIFIC QUERIES WERE RAISED UNDER SEC. 133(6) FROM THE DONORS AND THE PURPOSE OF THE DONATION TO THE SOCIETY WAS SOUGHT. IN THE REPLY, IT WAS STATED BY THE DONOR THAT MARUTI CENTRE FOR EXCE LLENCE, A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, XX I, 1860, ACCEPTED OUR 3 DONATION WITH A SPECIFIC DIRECTION THAT THE SAID MO NEY SHALL FORM A PART OF CORPUS OF THE INSTITUTE TO PROVIDE US QUALITY UP-GR ADATION, PRODUCTIVITY IMPROVEMENT, REDUCTION IN DELIVERY FAILURES, TRAIN ING OF MANPOWER, IMPROVEMENT IN CUSTOMER SATISFACTION, IMPLEMENT OF MARUTI PRODUCTION SYSTEM AND SUPPORT TO TIER-2 SUPPLIERS TO UPGRADE T HEM TO ACHIEVE CLASS STANDARDS. 3. ON THE STRENGTH OF ABOVE INFORMATION, LEARNED DI RECTOR OF INCOME-TAX (EXEMPTION) OBSERVED THAT THE PURPOSE TO ESTABLISH SOCIETY WAS NOT FOR THE PURPOSE OF GENERAL PUBLIC BUT FOR ASSOCIATES OF MUL . LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) FURTHER OBSERVED THAT TO REC OGNIZE AS A CHARITABLE INSTITUTE A PUBLIC CHARITABLE INSTITUTION MUST NECE SSARILY MAINTAIN PUBLIC CHARACTER IN ITS ACTIVITIES IN ACCORDANCE WITH THEI R AIMS AND OBJECTS. IN THIS WAY, LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) WAS OF THE OPINION THAT THE ASSESSEE HAS CREATED THE PRESENT INSTITUTION FOR MU TUAL BENEFIT OF BOTH THE PARTIES I.E. MUL AND THE ASSESSEE SOCIETY. A SHOW-C AUSE NOTICE UNDER SEC. 12AA(3) OF THE INCOME-TAX ACT, 1961 WAS ISSUED TO T HE ASSESSEE INVITING ITS EXPLANATION AS TO WHY REGISTRATION GRANTED UNDER SE C. 12AA BE NOT CANCELLED. THIS SHOW-CAUSE NOTICE WAS DULY SERVED UPON THE ASS ESSEE AND IN RESPONSE TO THE SHOW-CAUSE NOTICE, THE ASSESSEE HAS FILED RE PLY DATED 21 ST SEPTEMBER, 4 2010, 20 TH OCTOBER, 2010. LEARNED DIRECTOR OF INCOME-TAX (EXE MPTION) ON AN ANALYSIS OF THE REPLY GIVEN BY THE ASSESSEE ARRI VED AT A CONCLUSION THAT THE BENEFIT OF CHARITABLE ACTIVITIES WERE CONFINED TO T HE MEMBERS OF THE ASSESSEE SOCIETY OR ITS BUSINESS ASSOCIATES AND NOT FOR GENE RAL PUBLIC AT LARGE WHICH VIOLATES THE VERY FUNDAMENTALS OF SECTION 2(15) OF THE ACT. LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION), IN THIS CONNECTION, MADE REFERENCE TO THE REPORT PUBLISHED IN JUST AUTO, A MAGAZINE AND A NEWS ITE M IN THE TIMES OF INDIA. HE ALSO MADE REFERENCE TO THE LETTER WRITTEN BY THE MUL TO BOMBAY STOCK EXCHANGE AND ULTIMATELY CANCELLED THE REGISTR ATION. 4. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE IMPUG NING THE ORDER OF THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) TOOK US THROUGH THE REPLY OF THE ASSESSEE DATED 20.10.2010 AVAILABLE ON PAGE 35 OF T HE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE HAS IMPARTED TRAINING T O THE GENERAL PUBLIC AND ITS ACTIVITIES ARE NOT CONFINED TO THE BENEFIT OF ITS M EMBERS OR ITS BUSINESS ASSOCIATES. HE ALSO DREW OUR ATTENTION TOWARDS THE DETAILS EXHIBITING VARIOUS CLASS UNDERTAKEN BY THE ASSESSEE. HE PLACED ON RECO RD, A REPORT FROM SAE INDIA FOUNDATION. HE ALSO POINTED OUT THAT THE ASSE SSEE HAS BEEN PROVIDING SHORT TRAINING COURSE TO VARIOUS UNDER-GRADUATE IN THE ENGINEERING WHO WERE SPONSORED FROM DIFFERENT EDUCATIONAL INSTITUTIONS. ON THE OTHER HAND, 5 LEARNED DR RELIED UPON THE ORDER OF THE DIRECTOR OF INCOME-TAX (EXEMPTION). 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. LEARNED DIRECTOR OF INCOME-TAX (E XEMPTION) IS OF THE OPINION THAT THE ASSESSEE IS WORKING EXCLUSIVELY FO R THE BENEFIT OF ITS MEMBERS OR BUSINESS ASSOCIATES OF MUL. ITS ACTIVITI ES ARE NOT OPEN FOR THE PUBLIC AT LARGE. HOWEVER, DURING THE COURSE OF HEAR ING, LEARNED COUNSEL FOR THE ASSESSEE APPRAISED US WITH MATERIAL WHICH DEMON STRATES THAT CERTAIN INDIVIDUALS WHO ARE NOT THE MEMBERS OF ASSESSEE SOC IETY OR NOT ASSOCIATED WITH THE BUSINESS ASSOCIATE HAVE UNDERGONE TRAINING WITH THE ASSESSEE. WE CONFRONTED THE LEARNED COUNSEL FOR THE ASSESSEE TO DEMONSTRATE THAT THESE TRAININGS WERE GIVEN BY THE ASSESSEE FROM THE VERY BEGINNING AND NOT STARTED AFTER THE ISSUE OF SHOW-CAUSE NOTICE BY THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) FOR CANCELLATION OF REGISTRATION. HE WA S UNABLE TO REFER ANY MATERIAL FROM THE PAPER BOOK. WE FURTHER FINE THAT THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) HAS MADE REFERENCE TO A REPO RT APPEARED IN THE MAGAZINE JUST AUTO OR IN THE TIMES OF INDIA. HE F AILED TO TAKE COGNIZANCE OF THE MATERIAL ENCLOSED WITH THE REPLY DATED 20.10 .2010. NEITHER THERE IS A REFERENCE TO THE MATERIAL ANNEXED WITH THIS REPLY N OR THERE IS ANY CATEGORICAL 6 FINDING. WE HAVE ALSO CONFRONTED THE LEARNED COUNSE L FOR THE ASSESSEE TO SHOW US ANY ADVERTISEMENT PUT UP BY THE ASSESSEE IN VITING APPLICATION FROM THE PUBLIC AT LARGE FOR PARTICIPATING IN THE TRAINI NG PROGRAM IMPARTED BY IT BUT NO SUCH MATERIAL WAS BROUGHT TO OUR NOTICE. THE REG ISTRATION HAS ALREADY BEEN GRANTED TO THE ASSESSEE. LEARNED DIRECTOR OF INCOME -TAX (EXEMPTION) CANCELLED IT ON THE GROUND THAT THE BENEFIT OF THE SOCIETY WERE CONFINED TO ITS MEMBERS OR THE BUSINESS ASSOCIATES. THESE BENEFITS ARE NOT OPEN FOR THE GENERAL PUBLIC. TO OUR MIND, NEITHER THE ASSESSEE A BLE TO BRING CONCLUSIVE EVIDENCE ON THE RECORD EXHIBITING THAT ITS ACTIVITI ES WERE OPEN FOR THE PUBLIC AT LARGE, IT HAS INVITED APPLICATION IN THE PAST F OR PARTICIPATING IN THE TRAINING PROGRAM FROM THE PUBLIC NOR THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) REFERRED ANY SUCH MATERIAL. THE MATERIAL RELIED BY THE ASSESSEE AS WELL AS CONSIDERED BY THE LEARNED DIRECTOR OF INCOME-TAX (E XEMPTION) ARE OF PERIPHERAL IN NATURE, THEREFORE, WE DEEM IT APPROPR IATE TO SET ASIDE THE ORDER OF THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) F OR FURTHER INQUIRY IN THIS CONNECTION. LEARNED DIRECTOR OF INCOME-TAX (EXEMPTI ON) SHALL READJUDICATE THE ISSUE AFTER PROVIDING DUE OPPORTUNITY OF HEARIN G TO THE ASSESSEE. THE ASSESSEE WILL BE AT LIBERTY TO PRODUCE ANY MATERIAL IN SUPPORT OF ITS EXPLANATION/DEFENCE. IT IS NEEDLESS TO SAY THAT THE OBSERVATIONS MADE BY US 7 WILL NOT IMPAIR OR INJURE THE CASE OF REVENUE OR NO PREJUDICE WILL BE CAUSED TO THE DEFENCE/EXPLANATION OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 17.02.20 12 SD/- SD/- ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17/02/2012 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR