Daksh Education Trust, Haridwar V. CIT, Dehradun

ITA 3512/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65471 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 04-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITHI LAL
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

ITA NO. 3512/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3512/DEL/2012 A.Y. : ----- DAKSH EDUCATION TRUST, C/O ANIL ASHOK & ASSOCIATES, CHARTERED ACCOUNTANTS, 1 ST FLOOR, VERMA SWEETS, ARYA NAGAR, JWALAPUR, HARIDWAR (UTTARAKHAND) VS. COMMISSIONER OF INCOME TAX, INCOME TAX DEPARTMENT, DEHRADUN (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. PIYUSH KAUSHIK, ADV. DEPARTMENT BY : SH. PRITHI LAL, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX, DEHRADUN DATED 21.4.20 12 PASSED U/S. 12AA OF THE I.T. ACT. 2. THE GROUNDS RAISED READ AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN THE LAW, THE C.I.T. HAS GROSSLY ERRED IN DEN YING REGISTRATION TO THE ASSESSEE TRUST U/S. 12A(A) OF T HE I.T. ACT, 1961. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LAW, THE C.I.T. HAS GROSSLY ERRED IN FAI LING TO ITA NO. 3512/DEL/2012 2 APPRECIATE THAT THE ASSESSEE TRUST HAS BEEN INCORPORATED ESSENTIALLY FOR THE PURPOSE OF PROVIDI NG EDUCATION WHICH IS PER SE A CHARITABLE PURPOSE ACCOMPANIED BY OTHER CHARITABLE OBJECTIVES, THAT THE USAGE OF TRUST FUND SHALL REMAIN DEDICATED TO THE OBJECTIVES OF THE TRUST AND THAT IN THE EVENT OF DISSOLUTION THE PROPERTY AND OTHER ASSETS OF THE T RUST SHALL BE TRANSFERRED ONLY TO ANOTHER TRUST HAVING SIMILAR AIMS AND OBJECTIVES CLEARLY ENTITLING THE ASSESSEE TRUST FOR REGISTRATION U/S. 12A(A) OF THE ACT. THAT THE APPELLANT CRAVES LEAVE TO ADD TO AND / OR AMEND, MODIFY OR WITHDRAW THE GROUNDS OUTLINED ABOVE BEFORE AT THE TIME OF HEARING OF THE APPEAL. 3. IN THIS CASE ASSESSEE FILED APPLICATION OF REGIS TRATION U/S. 12A(A) DATED 7.10.2011. THE ASSESSEE WAS REQUIRED TO FU RNISH CERTAIN SPECIFIC INFORMATION ON 02.11.2011. ASSESSEE FILED ITS REPLY ON 13.12.2011. LD. COMMISSIONER OF INCOME TAX NOTED T HAT AS PER THE DOCUMENTS / PAPERS SUBMITTED BY THE TRUST THAT IN TH E F.Y. ENDING 31.3.2009 THE TRUST HAS EARNED / RECEIVED AN AMOUNT OF ` 4,06,450/- FROM CONVEYANCE CHARGES, ` 2,23,300/- FROM THE DEV ELOPMENT FEE AND ` 1,52,500/- FROM MATERIAL FEE. IN THE YEAR E NDING 31.3.2010 THE TRUST RECEIVED AN AMOUNT OF ` 3,88,010/- FROM CONVEY ANCE CHARGES, ` 2,06,000/- FROM THE DEVELOPMENT FEE, AND ` 1,48,850 /- FROM MATERIAL FEE. IN THE YEAR ENDING 31.3.2011 THE TRUST RECEIV ED AN AMOUNT OF ` 446,450/- FROM CONVEYANCE CHARGES AND ` 268,000/- F ROM THE DEVELOPMENT FEE. ITA NO. 3512/DEL/2012 3 4. LD. COMMISSIONER OF INCOME TAX FURTHER NOTED THAT IN ASSESSMENT YEAR 2011-12 THE TRUST HAS OBTAINED A SU RPLUS OF 62%, IN A.Y. 2010-11 SURPLUS OF 61% AND IN A.Y. 2009-10 SUR PLUS OF 57%. LD. COMMISSIONER OF INCOME TAX NOTED THAT ALL THE SURPL USES WERE USED IN FURTHER EXPANSION IN THE SAME OR SUBSEQUENT YEARS. FROM THIS LD. COMMISSIONER OF INCOME TAX INFERRED THAT THE ABOVE FEATURES CONCLUSIVELY SHOW THAT THE ASSESSEE TRUST IS BEING RUN FOR COMMERCIAL PURPOSES AND NOT FOR CHARITABLE PURPOSES. LD. CO MMISSIONER OF INCOME TAX FURTHER OBSERVED THAT ON PERUSAL OF THE ACCOUNTS INCLUDING RECEIPTS WOULD FURTHER SHOW THAT ASPIRANTS ARE PAYI NG FOR THEIR COST OF LEARNING. LD. COMMISSIONER OF INCOME TAX HAS HELD THAT THE TRUST WAS THUS TO BE SEEN TO BE WORKING OR COMMERCIAL PURP OSE AND IT DOES NOT FALL IN THE DEFINITION OF CHARITABLE PURPOSE A S DEFINED IN CLAUSE (15) OF SECTION 2 OF THE I.T. ACT, 1961. FROM THE ABOV E, LD. COMMISSIONER OF INCOME TAX (A) OBSERVED THAT THERE IS NO SINGLE R EASON, THAT WOULD SUPPORT ISSUANCE OF REGISTRATION TO THE TRUST. TH EREFORE, APPLICATION DATED 10.10.2011 FILED BY THE TRUST FOR REGISTRATI ON U/S. 12A(A) WAS REJECTED. 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT NO CASE HAS BEEN FOUND OUT THAT ASSESSE E HAS BEEN USING THE FUNDS FOR THE PURPOSE OTHER THAN THAT MENTIONE D UNDER THE TRUST DEED. USES OF THE SURPLUSES FOR FURTHERANCE OF THE EXPANSION OF THE SAME, CANNOT BE HELD TO BE NOT FOR CHARITABLE PURPO SES. HENCE, WE FIND THAT LD. COMMISSIONER OF INCOME TAX (A) HAS ITA NO. 3512/DEL/2012 4 MISDIRECTED HIMSELF BY HOLDING THAT ASSESSEE IS NO T ELIGIBLE FOR ISSUANCE OF REGISTRATION U/S. 12A(A) OF THE I.T. AC T. 6.1 IN THIS REGARD, WE REFER TO THE DECISION OF TH E HONBLE APEX COURT IN 224 ITR 310 IN THE CASE OF ADITANAR EDUCATIONAL SOCIETY VS. ACIT. IN THIS CASE THE HONBLE APEX COURT HAS HELD THAT AFTE R MEETING THE EXPENDITURE, IF ANY SURPLUS RESULTS INCIDENTALLY FR OM THE ACTIVITY LAWFULLY CARRIED ON BY THE EDUCATIONAL INSTITUTION , IT WILL NOT CEASE TO BE ONE EXISTING SOLELY FOR EDUCATIONAL PURPOSES, SINCE THE OBJECT IS NOT ONE TO MAKE PROFIT. 6.2 WE FURTHER FIND THAT IN THE CASE OF ACIT VS. V ATSALYA SENIOR SECONDARY SCHOOL, ITAT, INDORE BENCH, IN I.T.A. NO. 353/IND/2009 FOR A.Y. 2005-06 VIDE ORDER DATED 31.3.2010, HAS HELD T HAT THE INCOME GENERATED FROM SCHOOL HAS BEEN UTILIZED EXCLUSIVELY FOR EDUCATIONAL ACTIVITIES AND NOT FOR THE PERSONAL GAIN. IT IS N OT THE CASE THAT THE ASSESSEE HAS ACCUMULATED OF HUGE PROFIT OR HAS MIS- UTILIZED THE FUNDS IN ANY MANNER AGAINST THE OBJECTS OF THE ASSESSEE. HENCE, ASSESSEE WAS ELIGIBLE FOR EXEMPTION U/S. 10(23C)(IIIAD). 7. WE FIND THAT THE RATIO FROM THE ABOVE CITED CASE LAWS ARE SQUARELY APPLICABLE ON THE FACTS OF THE CASE. THER EFORE, THE ASSESSEE IS ENGAGED IN THE EDUCATIONAL FIELD AND IF ANY SURPLUS RESULTS, ITA NO. 3512/DEL/2012 5 INCIDENTALLY FROM THE ACTIVITY LAWFULLY CARRIED O N BY THE EDUCATIONAL INSTITUTION, IT WILL NOT CEASE TO BE ONE EXISTING S OLELY FOR EDUCATIONAL PURPOSES. MOREOVER, USE OF THE SURPLUS IN FURTHE R EXPANSION OF THE SAME OBJECTS CANNOT BE SAID TO BE PROVING THAT THE RE IS AN OBJECT TO MAKE THE PROFIT BY THE TRUST. IN THESE CIRCUMSTANCE S, IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDEN TS, WE FIND THAT ASSESSEE SHOULD BE GRANTED REGISTRATION IN THIS REG ARD. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LD. COMMISSIONER OF INC OME TAX AND DIRECT THE LD. COMMISSIONER OF INCOME TAX TO GRANT ASSESSE E THE REGISTRATION. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/9/2012. SD/- SD/- [ [[ [JOGINDER SINGH JOGINDER SINGH JOGINDER SINGH JOGINDER SINGH] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 21/9/2012 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ITA NO. 3512/DEL/2012 6 ASSISTANT REGISTRAR, ITAT, DELHI BENCHES