ITO (E), New Delhi V. M/s Delhi Music Society, New Delhi

ITA 3470/DEL/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69547 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: RAJIV CHOPRA
• Keywords: Charitable institution
• Section: 143(3); 12A; 147; 12; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B : NEW DELHI BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOU NTANT MEMBER ITA NO. 3470, 3469/DEL/2013 ASSESSMENT YEAR: 2004-05, 2009-10 INCOME TAX OFFICER (E), VS. D ELHI MUSIC SOCIETY, TRUST WARD-III, E-2 BLOCK, 8-NYAYA MARG, CHANAKYAPURI, PRATYAKSH KAR BHAWAN, NEW DELHI 110 021. CIVIC CENTRE, NEW DELHI 110 002. (APPELLANT) (RESPONDENT) APPELLANT BY : MS. NIDHI SRIVA STAVA, SR. DR RESPONDENT BY : SHRI RAJIV CHO PRA, FCA ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE REVENUE HAS QUESTIONED FIRST APPELL ATE ORDER ON THE COMMON GROUND THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE A CTIVITIES OF THE ASSESSEE SOCIETY ARE CHARITABLE IN NATURE WITHIN THE MEANING OF SECT ION 2 (15) OF THE INCOME TAX ACT 1961 PARTICULARLY WHEN THE SOCIETY IS ENGAGED I N THE ACTIVITIES OF PROMOTING, TEACHING AND PROPOGATING WESTERN CLASSICAL MUSIC AS HAS BEEN SET OUT IN ITS MAIN OBJECTS AND THUS, THE AO HAS RIGHTLY CONCLUDED THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE FALL OUTSIDE THE PURVIEW OF CHARITABLE PURPOSE AS PER DEFINITION CONTAINED IN SECTION 2 (15) OF THE INCOME TAX ACT. ITA NOS. 3470, 3469/DEL/2013 2 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENT S ADVANCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL A VAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE REG ISTERED UNDER THE SOCIEITIES REGISTRATION ACT IN THE YEAR 1953 HAS BEEN RUNNING THE MUSIC SCHOOL DELHI SCHOOL OF MUSIC SINCE 1966. THE ASSESSEE APPLIED F OR REGISTRATION WITH THE INCOME TAX DEPARTMENT BY PREFERRING A PETITION FOR EXEMPTION OF ITS INCOME U/S 11 & 12 IN THE YEAR 1968-69 AND ONWARDS AND ALSO AP PLIED FOR REGISTRATION UNDER THE THEN SECTION 88 (NOW SECTION 80G). IT WAS DULY ACCORDED THE REGISTRATION. THE SOCIETY WAS BEING ALLOWED EXEMPTION OF INCOME U NDER SECTION 10(22) OF THE ACT AND THE AMENDED SECTION 10(23C)(IIIAD) ACCEPTIN G THAT THE INCOME WAS BEING EARNED FROM RUNNING OF AN EDUCATIONAL INSTITUTION. THE INCOME TAX RETURN OF THE SOCIETY FOR THE ASSESSMENT YEAR 2009-10 WAS FILED O N 7 TH SEPTEMBER, 2009 VIDE ACKNOWLEDGEMENT NO. 1583 WITH THE DEPARTMENT ALONGW ITH ORIGINAL AUDITED BALANCE SHEET/ORIGINAL TDS CERTIFICATES AS WELL AS THE OTHER RELEVANT DOCUMENTS/SUPPORTS. IN THE SAID RETURN, INCOME OF R S. 26,44,997/- WAS DECLARED CLAIMING THE SAME AS EXEMPT U/S 10(23C) SHOWING THE TAXABLE INCOME AT NIL. A REFUND OF RS. 51,121/- WAS ALSO CLAIMED. DURING THE FINANCIAL YEAR 2008-09 THE TOTAL RECEIPT OF THE SOCIETY EXCEEDED THE PRESCRIBE D THRESHOLD LIMIT OF RS. ONE CRORE. HENCE THE ASSESSEE HAD APPLIED FOR NOTIFICAT ION/REGISTRATION FOR EXEMPTION U/S 10(23C)(VI) IN FORM 56D WHICH WAS RECEIVED AND ACKNOWLEDGED ON 7.9.2009. ITA NOS. 3470, 3469/DEL/2013 3 THE SAID RETURN WAS ACCEPTED AND REFUND OF RS. 56,2 30/- (INCLUDING INTEREST) WAS ALLOWED ON 13.11.2010 BY THE DEPARTMENT. THE SOCIET YS APPLICATION FOR GRANT OF EXEMPTION U/S 10(23C)(VI) HOWEVER WAS REJECTED BY T HE DIRECTOR GENERAL OF INCOME TAX (EXEMPTION) VIDE HIS ORDER DATED 27.9.201 0 STATING THAT THE ACTIVITIES OF IMPARTING WESTERN EDUCATION CANNOT BE CONSIDERED AS EDUCATION FOR CHARITABLE PURPOSES U/S 2(15) OF THE ACT. THE ASSES SMENT WAS THEREFORE SELECTED FOR SCRUTINY AND FOLLOWING THE OBSERVATION OF THE D GIT(E) CONCLUDED THAT ACTIVITIES CARRIED ON BY THE ASSESSEE SOCIETY FALL OUTSIDE THE PREVIEW OF CHARITABLE PURPOSE AS PER ITS DEFINITION CONTAINED IN SECTION 2(!5) OF THE ACT. THE AO ACCORDINGLY HELD THE RETURNED INCOME OF RS. 26,44,9 97/- AS TAXABLE INCOME. MEANWHILE THE WRIT PETITION FILED BY THE ASSESSEE A GAINST THE ORDER DATED 27.9.2010 OF THE DGIT(E) WAS DISPOSED OFF BY THE HON BLE DELHI HIGH COURT ON 16.12.2011 WHEREIN THE ORDER DATED 27.9.2010 OF THE DGIT(E) IMPUGNED WAS QUASHED WITH THIS FINDING THAT ASSESSEE SOCIETY MEE TS THE REQUIREMENT OF EDUCATIONAL INSTITUTION WITHIN THE MEANING OF SECTI ON 10(23C)(VI) OF THE ACT. FOLLOWING THIS DECISION OF HONBLE DELHI HIGH COURT , THE LD. CIT(A) IN THE PRESENT APPEALS HAS ALLOWED THE APPEALS IN FAVOUR OF THE AS SESSEE. THE REVENUE HAS QUESTIONED THIS ACTION OF THE FIRST APPELLATE AUTHO RITY IN THE PRESENT APPEALS. 4. IN SUPPORT OF THE GROUND THE LD. SR. DR HAS PLACED RELIANCE ON THE ASSESSMENT ORDER. SHE REITERATED THE CONTENTS OF TH E ASSESSMENT ORDER WITH THIS SPECIFIC CONTENTION THAT THE ASSESSEE WAS NOT REGIS TERED U/S 12A OF THE ACT NOR ITA NOS. 3470, 3469/DEL/2013 4 WAS IT NOTIFIED U/S 10(23C) OF THE ACT. HENCE THE A O WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO THE BENEFIT OF EXE MPTION. THE AO HAD ACCORDINGLY EXAMINED THE ACTIVITIES OF THE ASSESSEE AND HELD TH E DECLARED INCOME AS CHARGEABLE TO TAX. ON QUERY RAISED BY THE BENCH THE LD. AR POINTED OUT THAT THE ASSESSEE WAS HAVING NO OCCASION TO APPRISE THE AO W ITH THE DECISION DATED 6.12.2011 OF HONBLE DELHI HIGH COURT IN WP(C) NO. 4726/2011 PREFERRED AGAINST THE ORDER DATED 27.9.2010 OF DGIT(E), WHEREBY APPLIC ATION OF GRANT OF EXEMPTION U/S 10(23C)(VI) WAS REJECTED. HE INFORMED FURTHER THAT AGAINST THE DECISION DATED 16.12.2011 OF THE HONBLE HIGH COURT THE REVENUE HAD PREFERRED A SPECIAL LEAVE PETITION (SLP) BEFORE THE HONBLE SUP REME COURT WHICH HAS ALSO BEEN REJECTED ON 30.7.2013 IN SLP(CIVIL) CC 20908/2 012. A COPY OF THIS ORDER HAS BEEN MADE AVAILABLE. THE LD. AR FURTHER INFORMED TH AT THE DGIT(E) HAS GIVEN APPROVAL U/S 10(23C)(VI) FOR THE ASSESSMENT YEAR 20 13-14 ONWARDS. 5. CONSIDERING THE ABOVE SUBMISSION WE FIN D THAT ADMITTEDLY THE AO HAD DENIED THE CLAIMED EXEMPTION OF INCOME FROM CHARGAB ILITY OF TAX DURING THE ASSESSMENT YEARS 2004-05 AND 2009-10 UNDER CONSIDER ATION KEEPING IN VIEW THAT THE ASSESSEE SOCIETY WAS NOT NOTIFIED U/S 10(23C) O F THE ACT. THE ASSESSMENT U/S 143(3) WAS FRAMED IN THE ASSESSMENT YEAR 2009-10 RE JECTING THE CLAIMED EXEMPTION KEEPING IN MIND THAT IT IS NOT NOTIFIED U /S 10(23C) OF THE ACT. THIS ASSESSMENT ORDER HAS BEEN FRAMED ON 14.12.2011. THE ASSESSMENT FOR THE ASSESSMENT YEAR 2004-05 HAS BEEN FRAMED U/S 143(3)/ 147 OF THE ACT ON ITA NOS. 3470, 3469/DEL/2013 5 22.12.2011 AND CLAIMED EXEMPTION HAS BEEN DENIED ON THE SAME BASIS THAT THE ASSESSEE SOCIETY IS NOT NOTIFIED U/S 10(23C) OF THE ACT. THE DGIT(E) HAD REJECTED THE APPLICATION OF THE ASSESSEE FOR GRANT OF EXEMPT ION MOVED U/S 10(23C) (VI) OF THE ACT VIDE HIS ORDER DATED 27.9.2010 WHICH WAS AV AILABLE WITH THE AO WHILE FRAMING THE ASSESSMENT FOR THE ASSESSMENT YEARS UN DER CONSIDERATION. SINCE THE MATTER WAS HEARD EARLIER AND RESERVED FOR ORDER BY THE AO AND DECISION DATED 16.12.2011 OF THE HONBLE HIGH COURT IN THE CIVIL W RIT PETITION PREFERRED BY THE ASSESSEE AGAINST THE SAID ORDER OF THE DGIT(E), QUAS HING THE SAID REJECTION OF APPLICATION (FOR GRANT OF EXEMPTION HOLDING THE ASS ESSEE AS ELIGIBLE FOR THE CLAIMED EXEMPTION BEING FALLING IN THE AMBIT OF EDU CATION IN THE CONTEXT OF THE PROVISIONS OF SECTION 2(15) OF THE ACT) WAS NOT AVA ILABLE DURING THE HEARING OF THE ASSESSMENT BEFORE THE AO, THE AO WAS NOT AWARE OF THE DEVELOPMENT OCCURRED IN BETWEEN. THE LD. CIT(A) TAKING NOTE OF THE SAID DECISION DATED 16.12.2011 OF THE HONBLE HIGH COURT, IN OUR VIEW H AS RIGHTLY COME TO THE CONCLUSION THAT ACTIVITIES OF THE ASSESSEE ARE IN T HE NATURE OF PROVIDING EDUCATION WHICH IS THE SECOND LIMB OF SECTION 2 (15), THUS NE WLY INSERTED PROVISION OF SECTION 2(15) EFFECTIVE FROM ASSTT. YEAR 2009-10 IS NOT ATTRACTED ON THE FACTS OF THE CASE. 19. FOR THE ABOVE REASONS, WE ARE SAT ISFIED THAT THE PETITIONER MEETS THE REQUIREMENTS OF AN EDUCATIONAL INSTITUTION WITH IN THE MEANING OF SECTION 10(23C)(VI) OF THE ACT. THE PRESCRIBED AUTHORITY, I N OUR VIEW, HAS NOT TAKEN INTO CONSIDERATION THE RELEVANT FACTORS IN COMING TO THE CONCLUSION THAT THE PETITIONER IS NOT ENTITLED TO THE APPROVAL AS EDUCATIONAL INS TITUTION. HIS UNDERSTANDING OF ITA NOS. 3470, 3469/DEL/2013 6 THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF LO KA SHIKSHANA TRUST VS. CIT(SUPRA) SEEMS TO US TO BE FLAWED. IT ALSO APPEAR S TO US THAT THE PRESCRIBED AUTHORITY HAS NOT EXAMINED AND APPRECIATED PROPERLY THE NATURE OF ACTIVITIES OF THE PETITIONER-SCHOOL AND THE RULES AND REGULATIONS GOVERNING THOSE ACTIVITIES. 20. WE ACCORDINGLY, QUASH THE ORDER DAT ED 27 TH SEPTEMBER, 2010 PASSED BY THE PRESCRIBED AUTHORITY. THE PRESCRIBED AUTHORI TY WILL NOW DEAL WITH THE ASSESSEES APPLICATION FOR APPROVAL AFRESH IN ACCOR DANCE WITH LAW IN THE LIGHT OF THE OBSERVATIONS MADE BY US ABOVE. THE WRIT PETITIO N IS ACCORDINGLY ALLOWED WITH NO ORDER AS TO COSTS. 6. WE THUS DO NOT FIND INFIRMITY IN THE FI RST APPELLATE ORDER. THE SAME IS UPHELD. THE GROUND IS ACCORDINGLY REJECTED. 7. IN THE RESULT APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER, 2013. SD/- SD/- (SHAMIM YAHYA) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 29 TH NOVEMBER, 2013 VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT