M/s Vidya Bharti Uttar Kshetra, Kurukshetra V. CIT (Exemptions), Chandigarh

ITA 306/CHANDI/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1632 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 25-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: KULWANT RAI CHHABRA
• Keywords: Revenue expenditure
• Section: 143(3); 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.305/CHD/2015 (UNDER SECTION 80G(5)(VI) OF THE ACT) M/S BHARTIYA JAN SHIKSHA VS. THE C.I.T.(EXEMPTION), SEWA NYAS, SANSKRITI BHAWAN, CHANDIGARH. SALARPUR ROAD, KURUKSHETRA. PAN: AABTB2423K AND ITA NO.306/CHD/2015 (UNDER SECTION 80G(5)(VI) OF THE ACT) M/S VIDYA BHARTI UTTAR VS. THE C.I.T.(EXEMPTION), KSHETRA, NARAYAN BHAWAN, CHANDIGARH. SALARPUR ROAD, GITA NIKETAN PARISAR, KURUKSHETRA. PAN: AAATV4944Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KULWANT RAI CHHABRA RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 09.10.2015 DATE OF PRONOUNCEMENT : 27.10.2015 O R D E R PER RANO JAIN, A.M . : THESE TWO APPEALS FILED BY THE DIFFERENT ASSESSEES ARE DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIO NER OF INCOME TAX (EXEMPTION), CHANDIGARH DATED 4.2.2015. 2 ITA NO.305/CHD/2015 : 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED APPLICATION FOR GRANT OF APPROVAL UN DER SECTION 80G(5)(VI) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) IN FORM NO.10G BEFORE THE COMMISSIONER O F INCOME TAX(EXEMPTION). THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE SOCIETY REGISTRATION ACT AND W AS GRANTED THE REGISTRATION UNDER SECTION 12AA OF THE ACT BY THE COMMISSIONER OF INCOME TAX, KARNAL VIDE ORDER 12.5.2010. THE COMMISSIONER OF INCOME TAX(EXEMPTI ON) ON RECEIVING THE APPLICATION FOR APPROVAL UNDER SEC TION 80G CALLED FOR A REPORT FROM THE INCOME TAX OFFICE(EXEMPTION), AMBALA. THE ASSESSING OFFICER AS WELL AS THE JOINT COMMISSIONER OF INCOME TAX(EXEMPTION), RANGE-2, CHANDIGARH DID NOT RECOMMEND THE CASE FOR GRANT OF REGISTRATION UNDER SECTION 80G OF THE ACT. THE ASSESSING OFFICER IN HIS REPORT DATED 3.2.2015 STAT ED THAT THE ASSESSEE SOCIETY HAS NEITHER INCURRED 85% OF TH E CURRENT YEARS RECEIPTS TOWARDS REVENUE EXPENDITURE , NOR OPTED FOR ACCUMULATION UNDER SECTION 11(2) OF THE A CT FOR SHORTFALL IN EXPENDITURE FROM THE CURRENT INCOME. ON THIS BASIS, THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION) REJECTED THE APPLICATION OF THE ASSESS EE FOR APPROVAL UNDER SECTION 80G OF THE ACT. 3. AGGRIEVED BY THE SAID ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION), THE ASSESSE E HAS COME UP IN APPEAL BEFORE US. DURING THE COURSE OF 3 HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE INVIT ED OUR ATTENTION TO THE COPY OF ASSESSING OFFICERS ORDER UNDER SECTION 143(3) OF THE ACT FOR ASSESSMENT YEAR 2011- 12 DATED 27.1.2014, WHEREBY THE ASSESSING OFFICER NOTI CED AS UNDER : AFTER DISCUSSION, THE INCOME OF THE TRUST IS COMPUT ED AS UNDER: - GROSS RECEIPTS AS PER INCOME & EXPENDITURE A/C RS. 16,59,616/- APPLICATION OF FUNDS SHOULD BE 85% RS, 14,10,678/ - AMOUNT APPLIED AS PER INCOME & EXPENDITURE A/C (REVENUE EXP.) RS. 9,74,221/- AMOUNT SPENT LESS THAN 85% RS. 4,36,457/- AMOUNT SET APART FOR DONATION IN THE YEAR 2011-12 AS PER FORMNO.10 READ UNDER RULE 17 RS.4,50,000/- 4. THIS WAS SHOWN TO US TO EMPHASIZE THE FACTS THA T THE FINDING OF THE LEARNED COMMISSIONER OF INCOME T AX IS FACTUALLY INCORRECT. IN FACT, THE ASSESSEE HAS DU LY SET APART THE UNSPENT PORTION OF THE RECEIPTS IN FORM NO.10 U NDER RULE 17 OF THE INCOME TAX RULES. THEREFORE, IT WAS REQ UESTED THAT THE REJECTION OF APPROVAL UNDER SECTION 80G OF THE ACT MADE BY THE COMMISSIONER OF INCOME TAX(EXEMPTION) ON THIS B ASIS BE HELD AS NOT PER LAW. FURTHER, IT WAS STATED THAT THE REPORT OF THE ASSESSING OFFICER ON THE BASIS OF WHICH THE APP LICATION HAS BEEN REJECTED WAS NOT CONFRONTED TO THE ASSESSE E. 5. THE LEARNED D.R. RELIED UPON THE ORDER OF THE COMMISSIONER OF INCOME TAX(EXEMPTION). 4 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIE S BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. ON P ERUSAL OF THE ORDER OF THE COMMISSIONER OF INCOME TAX(EXEMPTI ON), CHANDIGARH, WE SEE THAT THE ONLY REASON FOR HIM TO REJECT THE APPLICATION FOR APPROVAL UNDER SECTION 80G OF THE A CT IS THE FACT THAT IN ASSESSMENT YEAR 2011-12, THE ASSESSEE HAS NOT APPLIED 85% OF GROSS RECEIPTS FOR CHARITABLE PURPOS ES AND IN CONSEQUENCE IT HAS ALSO NOT FURNISHED THE DECLARATI ON IN WRITING BEFORE THE ASSESSING OFFICER IN FORM NO.10 AS PER THE MANDATE OF SECTION 11(2) OF THE ACT. FROM THE PER USAL OF PAGE 67 OF THE PAPER BOOK FILED BY THE ASSESSEE, WE SEE THAT THE ASSESSING OFFICER IN HIS ORDER UNDER SECTION 143(3) OF THE ACT HAS REFERRED TO THIS FACT AT PARA 3 THAT THE ASSESS EE HAS MADE EXPENDITURE OF RS.9,74,221/- OUT OF GROSS RECEIPTS OF RS.16,59,616/- WHICH IS LESS THAN 85% OF SUCH GROSS RECEIPTS. FURTHER, IT HAS BEEN MENTIONED THAT THE AMOUNT OF RS.4,50,000/- IS SET APART FOR DONATION IN THE YEAR 2011-12 AS PER FORM NO.10 READ UNDER RULE 17 OF THE INCOME TAX RULES. FURTHER, THE ASSESSING OFFICER HAS NOT TAKEN ANY AD VERSE INFERENCE AGAINST THE ASSESSEE AND ASSESSED THE INC OME AT NIL. IN VIEW OF THIS, WE FIND THAT THE FINDING GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION) THAT NEITHER THE ASSESSEE HAD SPENT 85% OF GROSS RECEIPTS, NOR HAS I T MADE A DECLARATION IN FORM NO.10 IS FACTUALLY INCORRECT. IN THESE CIRCUMSTANCES, THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX (EXEMPTION) REJECTING THE APPLICATION UN DER SECTION 80G OF THE ACT IS NOT AS PER LAW. HOWEVER , THERE IS 5 ONE MORE SOUND REASON FOR QUASHING THE SAID ORDER O F THE COMMISSIONER OF INCOME TAX (EXEMPTION) REJECTING TH E APPLICATION FOR APPROVAL UNDER SECTION 80G OF THE A CT. THE PROVISIONS OF SECTION 11(2) ARE NOT RELEVANT FOR GR ANTING APPROVAL UNDER SECTION 80G OF THE ACT. THIS ASPECT OF GRANTING APPROVAL UNDER SECTION 80G OF THE ACT HAS BEEN VERY APTLY DISCUSSED IN THE ORDER OF THE CHANDIGARH BENC H OF THE I.T.A.T. IN THE CASE OF SHRI KRISHNA KIRPA GAUSHAL A SAMITI VS. CIT(E), ITA NO.103/CHD/2015 DATED 21.9.2015, WH ERE ON THE ISSUE OF ANONYMOUS DONATION AS APPEARING IN SEC TION 115BBC OF THE ACT, THE APPROVAL SOUGHT BY THE ASSES SEE UNDER SECTION 80G OF THE ACT WAS REJECTED. THE RELEVANT FINDINGS OF THE I.T.A.T. ARE AT PAGE 9 OF THE ORDER, WHICH READ S AS UNDER : 9. ON PERUSAL OF THE ABOVE RULES, IT IS QUITE CLEAR THAT WHILE GRANTING THE APPROVAL UNDER SECTION 80G, THE ONLY PROVISION AS PER THESE RULES IS THAT THE REJECTION CAN ONLY BE MADE IF ONE OR MORE CONDITION S AS LAID DOWN IN CLAUSES (I) TO (V) OF SUB-SECTION ( 5) OF SECTION 80G OF THE ACT ARE NOT FULFILLED. IT IS Q UITE CLEAR THAT THE RULES HAVE GIVEN THE INSTANCES OF REJECTION OF THE SAID APPLICATION IN THE FORM OF NO N- COMPLIANCE OF PROVISION OF SECTION 80G(5) CLAUSES ( I) TO (V). NOW, COMING BACK TO THE PROVISION OF SECTI ON 80G(5) OF THE ACT, WE SEE ON READING OF CLAUSES (I) TO (V), THERE IS NO CLAUSE WHICH SAYS THAT THE SAID APPROVAL BE REJECTED IF ANY INSTITUTION OR FUND ACC EPTS ANONYMOUS DONATION. IN THE PRESENT CASE, THIS WAS THE ONLY REASON GIVEN BY THE LEARNED COMMISSIONER O F INCOME TAX FOR REJECTION OF SAID REGISTRATION. T HE PROVISIONS OF SECTION 115BBC OF THE ACT ARE NOT RELEVANT FOR GRANTING APPROVAL UNDER SECTION 80G OF THE ACT. THERE IS NO MENTION OF THIS SECTION 115BB C OR EVEN OF ANONYMOUS DONATION IN ANY OF THE 6 PROVISION OF SECTION 80G OF THE ACT OR RULES MADE F OR THE PURPOSES OF THIS SECTION. THE TAXABILITY OF ANONYMOUS DONATIONS UNDER SECTION 115BBC OF THE ACT CAN ALWAYS BE TAKEN CARE AT THE TIME OF ASSESSMENT BY THE ASSESSING OFFICER AND ARE NOT RELEVANT FOR GRANTING REGISTRATION UNDER SECTION 80 G OF THE ACT. 7. IN THE PRESENT CASE ALSO, THE ONLY REASON GIVEN BY THE COMMISSIONER OF INCOME TAX(EXEMPTION) IS THE PR OVISION OF SECTION 11(2) OF THE ACT, WHICH IS NOT AT ALL RE LEVANT FOR THE SAID PURPOSE, WHICH OTHERWISE IS ALSO FACTUALLY INC ORRECT. IN VIEW OF THE ABOVE, WE DIRECT THE LEARNED COMMISSION ER OF INCOME TAX (EXEMPTION) TO GRANT THE ASSESSEE APPROV AL UNDER SECTION 80G OF THE ACT. ITA NO.305/CHD/2015 : 8. IT IS RELEVANT TO OBSERVE HERE THAT THE FACTS A ND CIRCUMSTANCES OF THIS CASE ARE SIMILAR TO THAT OF B HATIYA JAN SHIKSHA SEWA NYAS IN ITA NO.305/CHD/2015 AND THE FI NDINGS GIVEN IN ITA NO.305/CHD/2015 SHALL APPLY TO THIS CA SE ALSO WITH EQUAL FORCE. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF OCTOBER, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACOUNTANT MEMBER DATED : 27 TH OCTOBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 7