The Neotia University, Kolkata V. CIT(Exemption) Kolkata, Kolkata

ITA 32/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1646 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 09-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: S K TULSIYAN
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 12; 11

Judgement Text

ITA NOS.32& 33/KOL/2017-THE NEOTIA UNIVERSITY A.Y.2 016-17 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C KOL KATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & SHRI S.S.VISWANETHRA RAVI, JM ] ITA NOS.32 & 33/KOL/2017 ASSESSMENT YEAR : 2016-17 THE NEOTIA UNIVERSITY -VERSUS- C.I.T. (EXEMP TIONS) KOLKATA KOLKATA (PAN: AAAJT 2617 E) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.K.TULSIYAN, ADVOCATE FOR THE RESPONDENT: SHRI G.MALLIKARJUNA, CIT(DR) DATE OF HEARING : 03.08.2017. DATE OF PRONOUNCEMENT : 23.08.2017. ORDER PER J.SUDHAKAR REDDY, AM: THESE APPEALS ARE FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-(EXEMPTIONS), KOLKATA DATED 31.10.2016 REJECTING THE REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 ( ACT) TO THE ASSESSEE AND CONSEQUENTLY ITS APPLICATION FOR APPROVAL U/S 80G O F THE ACT. 2. THE ASSESSEE IS AN UNIVERSITY WHICH HAD COME INTO EXISTENCE BY WAY OF LAW ENACTED BY WEST BENGAL ASSEMBLY VIDE NEOTIA UNIVERS ITY ACT, 2014 (WEST BENGAL ACT XXIII OF 2014) AND THE ACT WAS PUBLISHED IN THE KOLKATA GAZETTE ON 4 TH FEBRUARY, 2015. THE ASSESSEE UNIVERSITY FILED AN AP PLICATION IN FORM 10A FOR REGISTRATION U/S 12A OF THE ACT AND FOR ITS APPROVA L U/S 80G OF THE INCOME TAX ACT, 1961 (ACT) ON 18.04.2016. THE LD. CIT(EXEMPTIONS), KOLKATA STATED THAT IF THE DISSOLUTION OF THE UNIVERSITY AS ENUMERATED UNDER S ECTION 45 OF THE NEOTIA UNIVERSITY ACT, 2014 WAS NOT PROPER FOR THE REASON THAT THE UN IVERSITY DECIDES TO DISSOLVE ITSELF, THEN THE STATE GOVERNMENT WILL HAVE FULL DISCRETION TO DECIDE HOW AND TO WHOM THE ACCUMULATION OF INCOME/FUNDS ARE TO BE DISTRIBUTED. HE HELD THAT REGISTRATION U/S 12AA OF THE ACT CANNOT BE GRANTED WITH SUCH DISSOLUTION CLAUSE. HE FURTHER RELIED ON THE SECTION 115TD(1)(C) OF THE ACT AND HELD THAT DISSOL UTION CLAUSE IN THE ASSESSEES CONSTITUTION IS IN CONTRADICTION TO THIS SECTION. T HEREAFTER HE RELIED ON THE DECISION OF ITA NOS.32& 33/KOL/2017-THE NEOTIA UNIVERSITY A.Y.2 016-17 2 HONBLE JAMMU & KASHMIR HIGH COURT IN THE CASE OF J AMMU DEVELOPMENT AUTHORITY VS CIT ORDER DATED 07.11.2013 IN ITA NO.264 OF 2012 , FOR THE PROPOSITION THAT EVEN ON DISSOLUTION OR WINDING UP BY NOT HAVING ANY REST RICTION ON APPLICATION OF ASSET FOR CHARITABLE PURPOSE, THE OBJECTS OF THE ASSESSEE CAN NOT BE SAID TO BE CHARITABLE IN NATURE. THUS HE REJECTED THE APPLICATIONS FOR REG ISTRATION U/S 12AA OF THE ACT AND CONSEQUENTLY REQUEST FOR RECOGNITION U/S 80G OF THE ACT. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESEE SHRI S.K.TUL SIYAN SUBMITTED THAT THE OBJECTS OF THE ASSESSEE UNIVERSITY ARE CHARITABLE IN NATURE AN D THIS FACT IS NOT DISPUTED BY THE LD. CIT(EXEMPTIONS), KOLKATA. HE REFERRED TO SECTION 12 AA OF THE ACT AND SUBMITTED THAT THE REQUIREMENTS OF REGISTRATION OF A CHARITABLE IN STITUTION DOES NOT REFER TO A DISSOLUTION PROVISION. HE POINTED OUT THAT THE PROC EDURE REQUIRED FOR REGISTRATION IS THAT THE PRINCIPAL COMMISSIONER OR COMMISSIONER CAL LED FOR DOCUMENTS AND INFORMATION TO EXAMINE THE CHARITABLE NATURE OF THE OBJECTS AND THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND AFTER BE ING SATISFIED ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND GENUINENESS OF THE ACTIVIT IES PASS ORDERS IN WRITING REGISTERING THE TRUST OR INSTITUTION OR OTHERWISE. HENCE HE CON TENDS THAT THE VERY GROUND ON WHICH THE REGISTRATION HAS BEEN REJECTED IN THIS CASE IS WRONG IN LAW. HE RELIED ON THE FOLLOWING CASE LAWS :- A) TAR EDUCATIONAL AND CHARITABLE TRUST VS DIT (EXEMPT IONS) IN ITA NO.1247/MUM/2013 ORDER DATED 18.07.2014 B) GEETA LALWANI FOUNDATION IN ITA NO.3566/MUM/2013 OR DER DATED 02.01.2015 C) RAMA RASHMI CHHANGANLAL WAGHWALA CHARITABLE TRUST V S DIT(E) IN ITA NO.4509/MUM/2013) DATED 22.04.2015 4. ALTERNATIVELY WITHOUT PREJUDICE HE SUBMITTED THAT THE LD. CIT(EXEMPTIONS), KOLKATA HAS TOTALLY MISUNDERSTOOD SECTION 45 OF THE UNIVERSITY ACT FOR THE REASON THAT, IT PROVIDES THAT IT SHALL NOT BE PERMITTED TO SERVE NOTICE FOR WINDING UP WITHIN A PERIOD OF 10 YEARS FROM THE DATE OF COMMENCEMENT. EVEN IN THE EVENT OF DISSOLUTION, AN ADMINISTRATOR IS TO BE APPOINTED BY THE STATE GOVE RNMENT FOR THE PROCESS OF WINDING ITA NOS.32& 33/KOL/2017-THE NEOTIA UNIVERSITY A.Y.2 016-17 3 UP AND USE OF THE ENDOWMENT FUND IN SUCH A MANNER AS MAY BE PRESCRIBED. HE SUBMITTED THAT IN THE EVENTUALITY OF DISSOLUTION, T HE GOVERNMENT OF WEST BENGAL WILL ACT IN GOOD FAITH AND IT CANNOT BE CONCLUDED OTHERW ISE. HE FURTHER SUBMITTED THAT CONSEQUENT TO THE INTRODUCTION OF SECTION 115TD(1) (A) OF THE ACT, THE INTEREST OF THE REVENUE IS PROTECTED AS IT IS A CHARGING PROVISION WHICH WILL BE ATTRACTED WHEN A TRUST OR A SOCIETY IS CONVERTED TO NON CHARITABLE ORGANIS ATION OR GETS MERGED WITH A NON CHARITABLE ORGANISATION OR ON TRANSFER OF ASSETS OF A CHARITABLE ORGANISATION ON ITS DISSOLUTION TO A NON CHARITABLE ORGANISATION. 5. ON THE SCOPE OF THE POWERS OF THE LD. CIT(EX EMPTIONS) FOR REGISTRATION HE RELIED ON THE FOLLOWING CASE LAWS : A) ALLAHABAD HIGH COURT IN THE CASE OF FIFTH GENERATIO N EDUCATION SOCIETY VS CIT 185 ITR 634 B) HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SURYA EDUCATION AND CHARITABLE TRUST (2013) 355 ITR 280 (P&H) C) SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS DI RECTOR OF INCOME TAX (EXEMPTION) (2006) 285 ITR 327 (KARN.) HE DISTINGUISHED THE DECISION OF THE HONBLE JAMMU AND KASHMIR HIGH COURT IN THE CASE OR JAMMU DEVELOPMENT AUTHORITY VS CIT (SUPRA) AND SUBMITTED THAT THE LD. CIT(EXEMPTIONS) HAS WRONGLY PLACED RELIANCE ON THE SAME. 6. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER OF LD. CIT(EXEMPTION), KOLKATA AND SUBMITTED THAT THE ASSESSEE UNIVERSITY ON DISSOLUTION HAS NOT LAID DOWN THE PROCEDURE OF DISTRIBUTION OR TRANSFER OF ITS AS SETS. HE REFERRED TO SECTION 12AA OF THE ACT AND SUBMITTED THAT THE LD. CIT(EXEMPTION) H AS TO BE SATISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE INSTITUTION AN D THEN ONLY GRANT REGISTRATION. HE POINTED OUT THAT WHEN THE MODE OF DISTRIBUTION OF A SSETS FOR DISSOLUTION IS NOT LAID DOWN IN THE CONSTITUTION, THE INCOME AND ASSETS MA Y BE UTILISED FOR NON CHARITABLE PURPOSES. HE RELIED ON THE ORDER OF CIT(EXEMPTIONS) . HE POINTED OUT THAT THE STATE GOVERNMENT CAN PRESCRIBE THAT THE INCOME AND ASSETS OF THE INSTITUTION ON DISSOLUTION CAN NECESSARILY BE GIVEN TO ANOTHER SIMILAR INSTITU TION REGISTERED U/S 12AA OF THE ACT AND CONSEQUENT TO SUCH FRAMING OF SUCH RULES, THE I NSTITUTION CAN APPROACH THE LD. ITA NOS.32& 33/KOL/2017-THE NEOTIA UNIVERSITY A.Y.2 016-17 4 CIT(EXEMPTIONS) FOR REGISTRATION. HE PRAYED FOR UPH OLD OF THE ORDER OF CIT(EXEMPTION). 7. AFTER HEARING THE RIVAL CONTENTIONS AND PER USAL OF THE PAPERS ON RECORD WE HOLD AS FOLLOWS :- SECTION 12AA READS AS FOLLOWS : 12AA (1) THE PRINCIPAL COMMISSION OR COMMISSIONER, ON R ECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUT ION MADE UNDER CLAUSE (A) OR CLAUSE (AA) OF SUB-SECTION (1)] OF SECTION 12A, SHA LL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRU ST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GEN UINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRI ES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE T RUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE (I) SHALL PASS AN ORDER IN WRITING REGIS TERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, P ASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLI CANT : THE SCOPE OF THIS SECTION HAS BEEN EXAMINED BY VARI OUS COURT AND IT IS HELD AS FOLLOWS :- THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF FIF TH GENERATION EDUCATION SOCIETY VS CIT (SUPRA HELD AS FOLLOWS :- '2. A READING OF THE SECTION SHOWS THAT THE REGISTR ATION UNDER SECTION 12A IS A PRECONDITION FOR AVAILING THE BENEFIT UNDER SECTION S 11 AND 12 OF THE ACT. SECTION 11 PROVIDES FOR EXEMPTION OF INCOME WHICH IS APPLIE D FOR CHARITABLE PURPOSES. SECTION 12 IS IN THE NATURE OF AN EXPLANATION TO SE CTION 11. BEFORE A PERSON CAN CLAIM THE BENEFITS OF SECTION 11 OR SECTION 12, AS THE CASE MAY BE, HE MUST OBTAIN REGISTRATION UNDER SECTION 12A. THE APPLICATION FOR REGISTRATION UNDER SECTION 12A HAS TO BE MADE IN FORM NO. 10A PRESCRIBED BY RU LE 17 A BEFORE EXPIRY OF ONE YEAR FROM THE DATE OF THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION, WHICHEVER IS LATER. IT HAS TO BE MADE BY THE PERSON IN RECEIPT OF THE INCOME OF THE TRUST. 3. IT IS EVIDENT THAT AT THIS STAGE, THE COMMISSION ER IS NOT TO EXAMINE THE APPLICATION OF INCOME. ALL THAT HE MAY EXAMINE IS W HETHER THE APPLICATION IS MADE IN ACCORDANCE WITH THE REQUIREMENTS OF SECTION 12A READ WITH RULE 17 A AND WHETHER FORM 10A HAS BEEN PROPERLY FILLED UP. H E MAY ALSO SEE WHETHER THE OBJECTS OF THE TRUST ARE CHARITABLE OR NOT AT THIS STAGE, IT IS NOT PROPER TO EXAMINE THE APPLICATION OF INCOME. ITA NOS.32& 33/KOL/2017-THE NEOTIA UNIVERSITY A.Y.2 016-17 5 8. SIMILARLY, THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE O/CIT VS. SURYA EDUCATION AND CHARITABLE TRUST, (2013) 355 ITR 280 (P&H) HELD AS FOLLOWS : ' THEREFORE, THE PROVISIONS OF SECTIONS 11, 12 OR S ECTION 10(23C) OF THE ACT, DEAL WITH THE INCOME OF A TRUST OR OF THE INSTITUTION AN D THE CIRCUMSTANCES AS TO WHEN SUCH INCOME IS TO BE EXCLUDED FOR COMPUTING THE TOT AL INCOME, BUT THE BASIS OF SUCH BENEFIT IS THE REGISTRATION UNDER SECTION 12AA OF THE ACT. UNLESS A TRUST OR INSTITUTION IS REGISTERED UNDER SECTION 12AA OF THE ACT, SUCH TRUST OR INSTITUTION SHALL NOT BE ENTITLED TO EXCLUDE FROM ITS TOTAL INC OME, DEDUCTIONS OR CONTRIBUTIONS OR FROM OTHER SOURCES. THEREFORE, THE PRINCIPLES LA ID DOWN FOR EXCLUDING THE INCOME FROM CONSIDERATION UNDER SECTION 10(22) NOW 10(23)(C) OR SECTIONS 11 AND 12 ARE NOT APPLICABLE WHILE CONSIDERING THE APP LICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. THE APPLICATION FOR REGISTRATION IS REQUIRED TO BE MADE WITHIN ONE YEAR OF THE CREATION OF THE TRUST. SECTION 12AA OF THE ACT, REQUIRES SATISFACTION IN RESPECT OF THE GENUINENESS OF THE ACTIVITIES OF THE TRUST, WHICH INCLUDES THE ACTIVITIES WHICH THE TRUST IS UN DERTAKING AT PRESENT AND ALSO WHICH IT MAY CONTEMPLATE TO UNDERTAKE. THE INSERTIO N OF SUB-SECTION (3) TO SECTION 12AA OF THE ACT, CLARIFIES THE SAID FACT, W HEN IT EMPOWERS THE COMMISSIONER TO CANCEL THE REGISTRATION IF THE ACTI VITIES OF THE TRUST ARE NOT CARRIED OUT IN ACCORDANCE WITH SUCH OBJECTS. 11. THEREFORE, THE OBJECT OF SECTION 12AA OF THE AC T, IS TO EXAMINE THE GENUINENESS OF THE OBJECTS OF THE TRUST, BUT NOT TH E INCOME OF THE TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES. THE STAGE FOR APP LICATION OF INCOME IS YET TO ARRIVE I.E. WHEN SUCH TRUST OR INSTITUTION FILES IT S RETURN. THEREFORE, WE FIND THAT THE JUDGMENTS REFERRED TO BY THE LEARNED COUNSEL FO R THE APPELLANT ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE ARISING OUT OF THE QUESTION OF REGISTRATION OF THE TRUST AND NOT OF ASSESSMENT.' 9. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS. DIRECTOR OF INCOME TAX ( EXEMPTION), (2006) 285 ITR 327 (KARN.) HELD AS FOLLOWS :- THE REGISTRATION OF INSTITUTION RELATES TO THE OBJ ECTS SO THAT THE ACTIVITIES BE CHARITABLE, WHICH SHOULD BE CONSIDERED AS GENUINE T RUST. IF THE ACTIVITIES OF THE INSTITUTION ARE TAXABLE FOR ANY REASON THE MATTER T O BE CONSIDERED AT THE TIME OF ASSESSMENT. THE SOURCE OF INCOME CANNOT BE QUESTION ED AT THE TIME OF GRANTING THE REGISTRATION UNDER SECTION 12AA OF THE ACT 10. THE PROPOSITIONS OF LAW LAID DOWN IN THE A BOVE CASE LAWS DEMONSTRATE THAT THE LD. CIT(EXEMPTIONS) CAN REFUSE THE REGISTRATION OF A TRUST OF INSTITUTION U/S 12AA OF THE ACT ONLY WHEN (A) HE SHOULD BE SATISFIED THAT T HE OBJECTS OF THE TRUST OR INSTITUTION ARE NOT CHARITABLE IN NATURE OR HE FINDS THAT THE ACTIVITIES OF THE TRUST OF INSTITUTION ARE ITA NOS.32& 33/KOL/2017-THE NEOTIA UNIVERSITY A.Y.2 016-17 6 NOT GENUINE. IN OUR VIEW REGISTRATION CANNOT BE DE NIED ON THE GROUND THAT THERE IS NO CLAUSE PRESCRIBING THAT AS DISSOLUTION OF THE INST ITUTION, THE INCOME AND ASSETS OF THE ASSESSEE SHALL BE TRANSFERRED TO ANOTHER SIMILAR IN STITUTION WHICH IS REGISTERED UNDER SECTION 12AA OF THE ACT. 11. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON TH E DECISION OF ITAT MUMBAI E BENCH OF THE TRIBUNAL IN THE CASE OF TARA EDUCATIO NAL AND CHARITABLE TRUST VS DIT(EXEMPTIONS) IN ITA NO.1247/MUM/2013 DATED 14.07 .2014 WHERE IN AT PARA 4 IT IS HELD AS FOLLOWS :- 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT T HE APPLICATION FILED BY THE ASSESSEE U/S 12A OF THE ACT HAS BEEN REJECTED BY TH E ID. DIT (EXEMPTIONS) MAINLY ON THE GROUND THAT THE RELEVANT TRUST DEED DOES NOT CONTAIN THE SO-CALLED 'DISSOLUTION CLAUSE'. AS PER THE PROVISIONS OF SECT ION 11 & 12 OF THE ACT, INCOME DERIVED FROM PROPERTY HELD FOR CHARITABLE OR RELIGI OUS PURPOSES AND INCOME OF TRUSTS OR INSTITUTIONS FROM CONTRIBUTIONS ARE EXEMP T FROM TAX PROVIDED SUCH TRUSTS OR INSTITUTIONS ARE REGISTERED U/S 12A OF TH E ACT. THE PROCEDURE FOR REGISTRATION U/S 12A IS PRESCRIBED IN SECTION 12AA OF THE ACT WHICH PROVIDES THAT THE COMMISSIONER, ON THE RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE U/S 12A, SHALL CALL FOR SUCH INFOR MATION FROM THE TRUST/INSTITUTION AS HE THINKS NECESSARY IN ORDER T O SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST/INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS DEEMED NECESSARY ON THIS BEHALF. IT FU RTHER PROVIDES THAT AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST/I NSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, THE COMMISSIONER SHALL PASS AN ORDE R IN WRITING REGISTERING THE TRUST/INSTITUTION U/S 12A AND IF HE IS NOT SO SATIS FIED, HE SHALL PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST/INSTITUTION. THE SCOPE OF ENQUIRY CONTEMPLATED U/S 12AA OF THE ACT THUS IS LIMITED TO THE EXTENT OF COMMISSIONER GETTING HIMSELF SATISFIED ABOUT OBJECT OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES SO AS TO GRANT OR REFUSE THE REGISTRATIO N U/S 12A OF THE ACT. A PERUSAL OF THE IMPUGNED ORDER OF THE ID. DIT (EXEMPTIONS), HOW EVER, SHOWS THAT HE HAS NOT RECORDED ANY ADVERSE COMMENT OR DIS-SATISFACTION AB OUT THE OBJECT OF THE 4 ITA 1247/M/13 TRUST OR GENUINENESS OF THE TRUST ACTIVIT IES. HE HAS REFUSED TO GRANT THE REGISTRATION U/S 12A OF THE ACT ON THE GROUND T HAT ITS TRUST DEED DOES NOT CONTAIN 'DISSOLUTION CLAUSE'. IN OUR OPINION, THE I D. DIT (EXEMPTIONS) THUS HAS CLEARLY GONE BEYOND THE SCOPE OF ENQUIRY CONTEMPLAT ED U/S 12A OF THE ACT AND HAS REFUSED TO GRANT THE REGISTRATION U/S 12A OF TH E ACT TO THE ASSESSEE TRUST ON A TOTALLY IRRELEVANT GROUND WITHOUT POINTING OUT AS T O HOW HE WAS NOT SATISFIED EITHER ABOUT THE OBJECT OF THE TRUST OR THE GENUINE NESS OF ITS' ACTIVITIES. WE THEREFORE SET ASIDE THE IMPUGNED ORDER OF THE ID. D IT (EXEMPTIONS) AND DIRECT ITA NOS.32& 33/KOL/2017-THE NEOTIA UNIVERSITY A.Y.2 016-17 7 THAT THE REGISTRATION U/S 12A OF THE ACT AS APPLIED BY THE ASSESSEE TRUST BE GRANTED. 12. SIMILAR IS THE DECISION IN THE CASE OF GEETA LALWANI FOUNDATION VS DIT (EXEMPTIONS), KOLKATA IN ITA NO.3566/M/2013 ORDER D ATED 02.01.2015 WHEREIN IT IS HELD AS FOLLOWS :- REGARDING THE DISSOLUTION CLAUSE NOTING IS BROU GHT ON RECORD EVEN BEFORE US THAT THE BOMBAY PUBLIC TRUSTS ACT, 1950 MANDATES FO R INCORPORATION OF MANDATORY CLAUSE OF DISSOLUTION OF ANY IRREVOCABLE TRUST. THEREFORE, IN OUR OPINION, THE DECISION OF THE DIT(E) REJECTING THE R EGISTRATION U/S 12A IS REQUIRED TO BE REVERSED. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. NO CONTRARY DECISION WAS BROUGHT TO OUR NOTICE BY T HE LD. DR. 13. RESPECTFULLY FOLLOWING THE PROPOSITION OF L AW LAID DOWN BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASES REFERRED TO ABOV E WE HOLD THAT THE ORDER OF LD. CIT(EXEMPTIONS) WAS AN ERROR IN REJECTING THE APPLI CATION OF THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT. 14. COMING TO THE DECISION OF THE ITAT, AMRITSAR IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY 52 SOT 153 WHICH WAS UPHELD B Y THE HONBLE JAMMU AND KASHMIR HIGH COURT , WE FIND THAT THE DECISION FOR REJECTING THE REGISTRATION WAS BASED ON THE REASON THAT, THE AUTHORITY WAS ESTABLISHED WITH A PROFIT MOTIVE AND HENCE HIT BY SECTION 2(15) OF THE ACT READ WITH THE FIRST AND SE COND PROVISO. THE PROPOSITION AT PARAS 7.6 AND 7.7 OF THE ORDER ARE AS FOLLOWS :- '7.6. ALSO, AT THE SAME TIME, SECTION IO(20A) WHICH RELATED TO INCOME OF AND AUTHORITY CONSTITUTED IN INDIA BY OR UNDER ANY LAW ENACTED FOR THE PURPOSE OF DEALING WITH AND SATISFYING THE NEED FOR HOUSING AC COMMODATION OR FOR THE PURPOSE OF PLANNING, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VILLAGES WHICH BEFORE THE AMENDMENT WAS NOT INCLUDED IN COMP UTING THE TOTAL INCOME, WAS OMITTED. CONSEQUENTLY, THE BENEFIT CONFERRED BY CLAUSE (20A) ON SUCH AN AUTHORITY WAS TAKEN AWAY. THUS, IN VIEW OF THE FACT THAT SECTION 10(20A) WAS OMITTED AND AN EXPLANATION WAS ADDED TO SECTION 10( 20) OF THE ACT, ENUMERATING THE 'LOCAL AUTHORITIES' CONTEMPLATED BY SECTION 10( 20), THE ASSESSEE COULD NOT CLAIM ANY BENEFIT UNDER THOSE PROVISIONS AFTER APRI L 1, 2003. THE ASSESSEE SUBSEQUENTLY CLAIMED THAT ITS OBJECTS FALLS UNDER T HE PROVISIONS OF SECTION 2(15) OF THE ACT AND HAS COMPLIED WITH ALL THE ELIGIBILITY C RITERIA FOR GRANT OF REGISTRATION UNDER SECTION I2A OF THE ACT, WHICH WAS ALLOWED VID E ORDER DATED 30.09.2009. IT IS AT THIS JUNCTURE THAT THE FIRST PROVISO AND S ECOND PROVISO WERE ADDED BY THE FINANCE ACT, 2008 W.E.F. 01.04.2009, AS MENTIONED H EREINABOVE. THEREFORE, AFTER ITA NOS.32& 33/KOL/2017-THE NEOTIA UNIVERSITY A.Y.2 016-17 8 INSERTION OF THE SAID PROVISO, ANY INSTITUTION CARR YING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS ETC. AS MENTI ONED HEREINABOVE, SHALL NOT BE A CHARITABLE PURPOSE. AS PER OBJECTS OF THE ASSESSEE, IT IS OBSERVED THAT THE MAIN OBJECT OF THE ASSESSEE IS TO PROMOTE AND SECURE THE DEVELOPMENT OF LOCAL A REA AND THERE IS NO CHARITABLE PURPOSE OR ANY ACTIVITY FOR GENERAL PUBLIC UTILITY. THE ACTIVITIES OF THE ASSESSEE ARE AIMED AT EARNING PROFIT AS IT IS CARRYING ON ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS. FURTHER PROFIT MAKING BY THE ASSESSEE IS NOT MERE I NCIDENTAL OR BY PRODUCT O(THE ASSESSEE. THERE IS NO REAL OBJECT OF THE ASSESSEE A ND THERE IS NO SPENDING OF THE INCOME EXCLUSIVELY {OR THE PURPOSE OF CHARITABLE AC TIVITIES AND PROFITS OF THE ASSESSEE ARE NOT USED {OR CHARITABLE PURPOSE UNDER THE TERMS OF THE OBJECT AND THERE IS NO OBLIGATION ON THE PART O(THE ASSESSE TO SPEND ON 'CHARITABLE PURPOSE' ONLY. ALSO AS PER CLAUSE 53 OF THE JAMMU & KASHMIR DEVELO PMENT ACT, ON DISSOLUTION OF ALL PROPERTIES AND FUNDS TO VEST IN THE GOVERNME NT AND FOR THE PURPOSE OF REALIZING PROPERTIES, THE FUNCTION OF THE AUTHORITY SHALL BE DISCHARGED BY THE GOVERNMENT. WE CONCUR WITH THE VIEWS OF THE LD. CIT ON TRANSFER OF THE PROPERTIES, FUNDS AND DUES AND LIABILITIES ETC. WIL L VEST IN THE GOVT. THERE IS NO RESTRICTION, HOW THE SAME ARE TO BE UTILIZED BY THE GOVERNMENT. THERE ARE OTHER OBJECTS LIKE SALE AND PURCHASE, WHICH MAKES THE AUT HORITY A COMMERCIAL ORGANIZATION. THEREFORE, IN THE FACTS AND CIRCUMSTA NCES OF THE CASE, EVEN ON DISSOLUTION OR WINDING UP BY NOT HAVING ANY RESTRIC TION ON APPLICATION OF ASSET FOR CHARITABLE PURPOSE, THE OBJECTS PURSUED BY THE ASSESSEE CANNOT BE SAID TO BE A CHARITABLE IN NATURE. 7.7 AS REGARDS THE RELIANCE ON THE DECISIONS OF VARIOUS COURTS OF LAW BY THE LD. CIT, MOST OF THE DECISIONS HAVE BEEN DEALT BY THE T RIBUNAL IN THE CASE OF M/S. JALANDHAR DEVELOPMENT AUTHORITY VS. ITO (SUPRA). IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE CONCUR WITH THE VIEWS OF TH E ID. CIT THAT JAMMU DEVELOPMENT AUTHORITY IS AN AUTHORITY ESTABLISHED W ITH THE MOTIVE OF PROFIT CONSTITUTED UNDER THE JAMMU & KASHMIR DEVELOPMENT A CT, 1970 AND THAT THE ACTIVITIES OF SUCH AUTHORITY ARE HIT BY SECTION 2(1 5) OF THE ACT READ WITH FIRST AND SECOND PROVISO AND ARE NOT IN LINE WITH THE OBJECTS OF THE AUTHORITYLTRUST SO FAR AS THE ACTIVITIES RELATING TO PURCHASE AND SALE OF PROPERTIES, AS MENTIONED HEREINABOVE. HENCE, THE ACTIVITIES ARE NOT GENUINE TO THE EXTENT , MENTIONED HEREINABOVE AND THE LD. CIT, JAMMU, HAS RIGHTLY BEING SATISFIED HEL D THAT THE JAMMU DEVELOPMENT AUTHORITY IS NOT ENTITLED TO REGISTRATION AND ACCOR DINGLY CANCELLED THE REGISTRATION SO GRANTED. WE FIND NO INFIRMITY IN TH E ORDER OF THE LD. CIT, JAMMU ITA NOS.32& 33/KOL/2017-THE NEOTIA UNIVERSITY A.Y.2 016-17 9 AND THE SAME IS UPHELD. THUS, ALL THE GROUNDS OF TH E ASSESSEE ARE DISMISSED.(EMPHASIS OURS) A PLAIN READING OF THE SAME DEMONSTRATES THAT PROPO SITIONS OF LAW LAID DOWN IN THIS JUDGMENT IS NOT APPLICABLE TO THE FACTS AND CIRCUMS TANCES OF THE CASE ON HAND. 15. WE ARE ALSO CONVINCED WITH THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT SECTION 115TD(1)(A) OF THE ACT PROTECTS THE IN TEREST OF THE REVENUE AND THE FINDINGS OF THE LD. CIT(EXEMPTIONS) ON THIS ISSUE I S NOT CORRECT. 16. IN VIEW OF THE ABOVE DISCUSSION WE DIRECT TH E LD. CIT(E) TO GRANT REGISTRATION TO THE ASSESSEE U/S 12AA OF THE ACT. CONSEQUENTLY WE A LSO DIRECT THE LD. CIT(E) TO GRANT APPROVAL U/S 80G OF THE ACT TO THE ASSESSEE UNIVERS ITY. 17. IN THE RESULT BOTH THE APPEALS OF THE ASSE SSEE ARE ALLOWED. O RDER PRONOUNCED IN THE COURT ON 23.08.2017. SD/- SD/- [S.S.VISWANETHRA RAVI] [ J.SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23.08.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.THE NEOTIA UNIVERSITY, VISWAKARMA, 86C, TOPSIA RO AD (SOUTH), KOLKATA-700046. 2. C.I.T. (EXEMPTIONS), KOLKATA. 3.CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES