DCIT, CENTRAL CIRCLE- 15, NEW DELHI V. G R GOENKA EDUCATION SOCIETY, NEW DELHI

ITA 3598/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6964 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 14-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA BARNWAL SENIOR
• Assessee Lawyers: AMIT GOEL
• Keywords: Depreciation; Charitable institution; Competent authority; Benefit of exemption; Capital expenditure; Set aside
• Section: 143(3); 12A; 13; 22; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.3598/DEL./2018 (ASSESSMENT YEAR : 2014-15) DCIT, CENTRAL CIRCLE 15, VS. M/S. G.R. GOENKA EDUCA TION SOCIETY, NEW DELHI. SECTOR B, POCKETS 8 & 9, VASANT KUNJ, NEW DELHI-110 070. (PAN : AAATG0617M) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT GOEL, CA REVENUE BY : MS. ANIMA BARNWAL, SENIOR DR DATE OF HEARING : 18.08.2021 DATE OF ORDER : 07.09.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, DCIT, CENTRAL CIRCLE 15, NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 22.02.2018 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-40, NEW DELHI QUA THE ASSESSMENT YEAR 2014-15 ON THE GROUNDS INTER ALIA T HAT :- 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE CI T (A) HAS ERRED IN DELETING THE ADDITION OF RS.4,22,76,205/- MADE BY AO ON ACCOUNT OF DENIAL OF EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961. ITA NO.3598/DEL./2018 2 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE CIT (A) HAS ERRED IN ALLOWING DEPRECIATION OF RS.2,83,16,001/-. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : M/S. G.R. GOENKA EDUCATIO N SOCIETY (HEREINAFTER REFERRED TO AS ASSESSEE SOCIETY) BEI NG A SOCIETY REGISTERED UNDER SECTION 12A OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) WITH MAIN OBJECT TO RUN EDUCATION INSTI TUTION IN ORDER TO PROVIDE EDUCATION UPTO HIGHER SECONDARY STANDARD, I T RUNS A SCHOOL IN THE NAME OF G.D. GOENKA PUBLIC SCHOOL AT VASANT KUNJ IN DELHI. ASSESSEE SOCIETY IS ALSO HAVING APPROVAL U/ S 80G(5)(VI) OF THE ACT. FOR THE YEAR UNDER ASSESSMENT, ASSESSEE S OCIETY FILED RETURN OF INCOME CLAIMING EXEMPTION U/S 11 OF THE A CT WHICH HAS BEEN DECLINED BY THE AO ON THE GROUND THAT, THOUGH OBJECTS OF THE ASSESSEE SOCIETY MAY BE CHARITABLE BUT THE ACTIVITI ES ARE COMMERCIAL IN NATURE WHICH DO NOT SATISFY THE DEFIN ITION OF SECTION 2(15) OF THE ACT. CONSEQUENTLY, ASSESSMENT HAS BEEN FRAMED AT THE TOTAL INCOME OF RS.4,22,76,205/- U/S 143 (3) OF THE ACT. 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING APPEAL WHO HAS DELETED THE ADDITION BY PARTL Y ALLOWING THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. ITA NO.3598/DEL./2018 3 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. LD. DR FOR THE REVENUE CHALLENGING THE IMPUGNED ORDER RELIED UPON THE ASSESSMENT ORDER PASSED BY THE AO A ND CONTENDED INTER ALIA THAT THERE IS AN INFRINGEMENT OF SECTION 13(1)(C) OF THE ACT BY ALLOWING SHRI ANJANI KUMAR GOENKA TO REGISTER TH E TRADEMARK G.D. GOENKA IN HIS NAME IN CLASS 41 IN THE FILE O F EDUCATION, HOWEVER, LD. CIT (A) HAS ERRED IN CONDONING THE VIO LATION OF PROVISIONS OF SECTION 13(1)(C) READ WITH SECTION 13 (3) OF THE ACT IN RESPECT OF REGISTRATION OF TRADEMARK IN THE NAME OF SHRI ANJANI KUMAR GOENKA; THAT ASSESSEE SOCIETY EVEN DOES NOT M AINTAIN THE DEPRECIATION RESERVE FUND WHICH IS A PREREQUISITE F OR COLLECTION OF DEVELOPMENT FEE; THAT LD. CIT (A) HAS IGNORED THE F ACTS THAT ASSESSEE SOCIETY WAS ENGAGED IN THE ACTIVITIES WHIC H WERE COMMERCIAL IN NATURE AND AGAINST THE PUBLIC POLICY. 6. HOWEVER, ON THE OTHER HAND, TO REPEL THE ARGUMEN TS ADDRESSED BY THE LD. DR FOR THE REVENUE, LD. AR FOR THE ASSESSEE SOCIETY RELYING UPON THE ORDER PASSED BY THE LD. CI T (A) CONTENDED INTER ALIA THAT THE ISSUE IN CONTROVERSY HAS BEEN C ONSISTENTLY ITA NO.3598/DEL./2018 4 DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE SOCIETY SINCE AY 2009-10 IN ITA NO.357 2/DEL/2013 ORDER DATED 02.02.2017 , WHICH HAS BEEN CONFIRMED BY THE HONBLE DELHI HIGH COURT VIDE ORDER DATED 30.10.201 7 PASSED IN ITA 821/2017 , COPIES ARE AVAILABLE AT PAGES 1 TO 22 AND 23 TO 2 5 OF THE PAPER BOOK RESPECTIVELY; THAT FINDINGS RETUR N BY THE AO ARE FACTUALLY INCORRECT THAT ASSESSEE IS INTO THE ACTIV ITIES WHICH ARE COMMERCIAL IN NATURE AND PROFIT EARNING PURPOSE BEC AUSE ASSESSEE HAS BEEN EMPLOYING HIS INCOME FOR CHARITABLE PURPOS ES IN FURTHERANCE OF ITS OBJECT; AND THAT THE AMOUNT OF O BLIGATION FOR CHARITABLE PURPOSES IS MORE THAN THE INCOME. LD. AR FOR THE ASSESSEE SOCIETY ALSO FILED THE ORDERS PASSED IN ITS OWN FAVOUR IN ASSESSEES OWN CASE BY THE COORDINATE BENCH OF THE TRIBUNAL FOR AYS 2005-06, 2010-11 & 2011-12 IN ITA NOS.4133, 4134 & 4135/DEL/2015 ORDER DATED 04.07.2081 AND AY 2012-13 IN ITA NO.5043/DEL/2015 ORDER DATED 23.03.2018 , AVAILABLE AT PAGES 33 TO 37 AND 26 TO 29 OF THE PAPER BOOK RESPE CTIVELY. 7. IN THE LIGHT OF THE CONTENTIONS RAISED BY THE LD . DR FOR THE REVENUE AND LD.AR FOR THE ASSESSEE SOCIETY, WE HAVE PERUSED THE ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2009-10 (SUPRA) WHICH HAS DEALT WITH ALL THE ISSUES TAKEN BY THE AO DURING THE YEAR UNDE R ASSESSMENT ITA NO.3598/DEL./2018 5 INTER ALIA THAT THERE IS VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT WHILE USING TRADEMARK G.D. GOENKA BY SHRI ANJANI KUMAR GOENKA; THAT THE ACTIVITIES OF THE ASSESSEE S OCIETY ARE COMMERCIAL IN NATURE; AND THAT THERE IS EXCESS INCO ME OVER EXPENDITURE; THAT ASSESSEE IS NOT ENTITLED FOR DEPR ECIATION AS CLAIMED. HOWEVER, LD. DR FOR THE REVENUE HAS FAILE D TO POINT OUT ANY DISTINGUISHING FACTS IN THE YEAR UNDER ASSESSME NT VIS--VIS THE EARLIER YEARS DECIDED IN FAVOUR OF THE ASSESSEE NOR IT IS THE CASE OF THE REVENUE THAT ORDER PASSED BY THE TRIBUNAL AND C ONFIRMED BY HONBLE DELHI HIGH COURT HAS BEEN OVERTURNED BY THE HONBLE SUPREME COURT. 8. SO FAR AS QUESTION OF USING THE TRADEMARK G.D. GOENKA HAVING GOODWILL AND MONETARY VALUE OF THE TRADEMARK WHICH HAS BEEN BUILT UP IN THE COURSE OF THE ASSESSEE SOCIETY S ACTIVITIES IS CONCERNED, THIS ISSUE HAS ALREADY BEEN EXAMINED BY THE HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE VIDE ORDER DATED 30.10.2017 (SUPRA) BY RETURNING FOLLOWING FINDINGS :- 4. THE OTHER GROUND URGED WAS THAT THE GOODWILL A ND MONETARY VALUE OF THE TRADE MARK, WHICH AROSE IN TH E COURSE OF THE RESPONDENT'S ACTIVITIES, OUGHT TO HAVE ACCRUED TO IT RATHER THAN THE OWNER. THIS, IT IS STATED, AMOUNTED TO A D IVERSION UNDER SECTION 13(3) OF THE ACT. THE COURT IS OF THE OPIN ION THAT THE IT AT'S REASONING ON THIS ASPECT TOO IS MERITED. BESID ES, THE USE OF A TRADE MARK PER SE DOES NOT CONFER AN ADVANTAGE UP ON THE LICENSEE OR AUTHORIZED USER - UNDER SECTION 40(2) O F THE TRADE MARKS ACT, 1999 THE BENEFIT OF SUCH USE ACCRUES TO THE OWNER. THIS ASPECT TOO HAS BEEN CONSIDERED BY A DIVISION B ENCH OF THIS ITA NO.3598/DEL./2018 6 COURT AND LATER AFFIRMED IN FORMULA ONE WORLD CHAMP IONSHIP LTD. VS. CIT [2017) 390 ITR 199-(DELHI). 9. COORDINATE BENCH OF THE TRIBUNAL DECIDED THE IDENTI CAL ISSUE IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 02 .02.2017 FOR AY 2009-10 (SUPRA) BY RETURNING FOLLOWING FINDINGS :- 11. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMIS SIONS AND CAREFUL PERUSAL OF THE RECORD BEFORE THE TRIBUNAL, INTER ALIA, IMPUGNED ORDER, ASSESSMENT ORDER T PAPER BOOK OF TH E ASSESSEE SPREAD OVER 13 PAGES AND RESPECTFUL CONSIDERATION O F THE RATIO OF .THE DECISION CITED AT BAR BY THE PARTIES, WE ARE O F THE VIEW THAT UNDISPUTEDLY THE REGISTRATION GRANTED TO THE ASSESS EE U/S 12A OF THE ACT HAS NOT BEEN CANCELLED OR WITHDRAWN BY THE OIT (E) OR ANY OTHER COMPETENT AUTHORITY THUS IT IS IN FORCE TILT DATE. 12. WE FURTHER POINT OUT THAT THE DIVISION BENCH O F HONBLE HIGH COURT OF DELHI IN THE ORDER DATED 29.5.2009 HA S VACATED THAT STAY ORDER GRANTED BY THE LD. SINGLE JUDGE AND PERM ITTED GOENKA INSTITUTE OF EDUCATION AND RESEARCH TO USE T HE NAME 'GOENKA PUBIC SCHOOL WITH RESPECT TO THE SCHOOLS DURING PENDENCY OF THE SUIT SUBJECT TO DIRECTIONS IN PARA 28 OF SAID JUDGMENT. 13. ON SPECIFIC QUERIES FROM THE BENCH NEITHER THE LD. AR NOR THE LD DR COULD ASSIST THE TRIBUNAL ABOUT THE FINAL DECISION IN THIS CASE OF TRADE MARK DISPUTE BETWEEN THE GOENKA INSTI TUTE OF EDUCATION AND RESEARCH AND SHRI ANJANI KUMAR GOENKA (A. K. GOENKA) THUS WE SAFELY PRESUME THAT THE FINAL VERDI CTS IN THIS CASE IS STILT AWAITED AND IN ABSENCE OF ANY OTHER FINAL VER DICT, THE LD. CIT (A) WAS CORRECT IN HOLDING THAT MR. A.K. GOENKA IS THE OWNER OF THE TRADE MARK 'G.D. GOENKA' AND THUS THERE IS NO VIOLA TION OF SECTION 13(1)(C) AND 13(3) OF THE ACT. 13. BEFORE WE PART WITH THIS ISSUE WE OBSERVE THAT IN THE ASSESSMENT DATED 29.5.2009 PARA 31 THE HON'BLE HIGH COURT PERMITTED TO USE THE NAME 'GOENKA PUBLIC SCHOOL' TO THE APPELLANT I. E. GOENKA INSTITUTE OF EDUCATION & RESEARCH BUT THERE IS NO WHISPER ABOUT TRADE MARK G.D. GOENKA' AS ALLEGED BY THE AO FOR HOLDING VIOLATION OF SECTION 13(1) OR 13(3) OF THE ACT. WE ALSO NOTE THAT EVEN THE AO HAS IN PARA 5.0(L) OF THE ASSESSME NT ORDER, HAS NOTED THAT THE G.D GOENKA IS THE TRADE MARK OWNED B Y SHRI ANJANI KUMAR GOENKA THEN GIVING FRANCHISEE BY HIM ON THE S AME NAME TO OTHER ENTITIES OR INSTITUTORS, WHO IN TURN GIVE ROY ALTY CANNOT BE TAKEN ITA NO.3598/DEL./2018 7 AS VALID BASIS FOR ALLEGING VIOLATION OF SECTIONS 1 3(1) OR 13(3) OF THE ACT AGAINST THE ASSESSEE. 14. WE HAVE ALSO NOTED THAT THE AO HAS ALLOWED EXEM PTION U/S 11 OF THE ACT TO ASSESSEE FOR AY 2007-08 & 2008-09 IN THE ASSESSMENT ORDERS PASSED U/S 143(3) OF THE ACT THUS WITHOUT ANY SUSTAINABLE ALLEGATIONS REGARDING PROFIT MOTIVE AND VIOLATION OF SECTION 13(3) OF THE ACT. WE FURTHER OBSERVE THAT THE AO/LD. DR COULD NOT CONTROVERTED THE FACT THAT THE APPLICATIO N OF INCOME BY THE ASSESSEE BY WAY OF EXPENDITURE AS PER INCOME & EXPE NDITURE AND CAPITAL EXPENDITURE FOR PURCHASE OF FIXED ASSETS IS MORE THAN THE AMOUNT OF INCOME AND IF DEPRECIATION IS EXCLUDED FR OM EXPENDITURE THEN THE SURPLUS AVAILABLE WILL BE RS.13,66,460/- W HICH IS VERY LESS THAN DUE AMOUNT OF RS.3,04,55,325/- BEING 15% OF T OTAL RECEIPTS THUS ALLEGATION OF PROFIT MOTIVE CANNOT BE ALLEGED AGAINST THE ASSESSEE FOR DENYING BENEFIT OF EXEMPTION OF SECTIO N 11 OF THE ACT. 15. AT THIS JUNCTURE, WE MAY ALSO POINT OUT THAT T HE CBDT CIRCULAR NO.11/2008 DATED 19.12.2008 HAS MANIFESTED THAT THE RELIEF OF THE POOR EDUCATION AND MEDICAL RELIEF WILL NOT B E HIT BY THE NEWLY INSERTED PROVISO TO SECTION 2(15) OF THE ACT. WE, T HEREFORE. ARE OF THE OPINION THAT ON THE ABOVE NOTED FACTUAL MATRIX OF T HE EXTANT CASE REGARDING FINANCIAL ACTIVITIES AND APPLICATION OF I NCOME/FUNDS BY THE ASSESSEE WE DECLINE TO ACCEPT CONTENTION OF THE AO THAT THE ACTIVITIES OF THE ASSESSEE ARE COMMERCIAL IN NATURE AND WITH PROFIT MOTIVE. OUR ABOVE NOTED CONCLUSION ALSO GETS STRONG SUPPORT FROM THE DECISIONS OF HON'BLE SUPREME COURT IN THE CASES OF ADJANTAR EDUCATIONAL INSTITUTION VS ACIT (SUPRA) AND QUEENS' EDUCATIONAL SOCIETY VS. CIT (SUPRA). THE AO ALSO ALLEGED THAT T HE INTEREST FREE ADVANCES TO THE PARENT SOCIETY OF SCHOOL I.E. G.R. GOENKA EDUCATION SOCIETY AS AT THE SAME TIME IT HAD AN OUTSTANDING L IABILITY OF RS. 6.33 CRORES IN THE SHAPE OF BANK LOAN TAKEN @ OF 12.5% P ER ANNUM INTEREST AND IT CREATED A DEFICIT IN THE ACCOUNTS T O CREATE A SCENARIO FOR CHARGING HIGH FEE FROM THE STUDENTS. ON THIS AL LEGATION WE ARE OF THE VIEW THAT WHEN THESE FUNDS HAVE FINALLY REACHED TO SHREE BALKRISHNA EDUCATION AND SOCIAL WELFARE SOCIETY FOR CONSTRUCTION OF SCHOOL BUILDING WHEREIN 600 STUDENTS OF THE ASSE SSEE STANDING IN THE ROOMS CONSTRUCTED AS TEMPORARY STRUCTURE ON THE AREA INTENDED FOR PLAYGROUND WERE TO BE SHIFTED. WE ALSO OBSERVE THAT BESIDE ABOVE NOTED FACT THAT THE AO AND LD. DR COULD NOT CONTROV ERT THE FACT THAT THE PARENT SOCIETY TRANSFERRED THE FUNDS TO SHRI BA LKRISHNA SOCIETY WHICH WAS MERGED WITH THE ASSESSEE SOCIETY ON 26.4. 2011 VIDE ORDER NO.RFS/S-2494/68 BY THE ORDER OF THE REGISTRAR OF S OCIETIES. IN THE ABOVE GIVEN SITUATION, THE INTEREST FREE FUNDS TRAN SFERRED TO SHRI BALKRISHNA SOCIETY (THOUGHT THE PARENTS SOCIETY) HA VING SIMILAR CHARITABLE OBJECTS CANNOT BE TAKEN AS VALID BASIS F OR ALLEGING VIOLATION OF SECTION 13(3) OF THE ACT AND FOR DENYI NG EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE. THE RATIO OF DECISIO N OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF ACME (SUPRA) ALSO GIV ES STRONG SUPPORT TO THE CLAIM OF THE ASSESSEE. ITA NO.3598/DEL./2018 8 16. ON THE BASIS OF FOREGOING DISCUSSION WE REACH TO THE LOGICAL CONCLUSION THAT THE DENIAL OF EXEMPTION U/S 11 OF T HE ACT BY THE AO WAS MERELY BASED ON THE WRONG AND INCORRECT APPRECIATIO N OF FACTS THUS THE SAME WAS RIGHTLY DEMOLISHED BY THE CIT (A). THE FIR ST APPELLATE AUTHORITY GRANTED RELIEF TO THE ASSESSEE BY TAKING INTO CONSI DERATION RIGHT ASPECTS OF THE CASE AND WHICH IS ALSO SUPPORTED BY RATIO OF TH E DECISION OF HON'BLE SUPREME COURT AND CBDT CIRCULAR NO.11/2008 (SUPRA). WE ARE UNABLE TO SEE ANY AMBIGUITY OR PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE SAME. ACCORDINGLY, GROUND NOS. 1 TO 4 OF THE AP PELLANT-REVENUE BEING DEVOID OF MERITS ARE DISMISSED. 10. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS DECIDED THE IS SUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISIONS RENDERED BY HONBLE DELHI HIGH COURT AND COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR PRECEDING YEARS. LD. CIT (A) HAS ALLOWED THE DEPRECIATION ON FIXED ASSETS BY FOLLOWING THE DECISION RENDERED BY HONBLE SUPREME COURT IN CASE OF CIT-III, PUNE VS. RAJASTHA N & GUJARATI CHARITABLE FOUNDATION POONA (2018) 89 TAXM AN.COM 127 (SC) . SINCE NO DISTINGUISHING FACTS QUA THE YEAR UNDER ASSESSMENT VIS--VIS PRECEDING YEARS HAVE COME ON R ECORD, WE FIND NO INFIRMITY OR ILLEGALITY IN THE IMPUGNED ORDER PA SSED BY THE LD. CIT (A), HENCE PRESENT APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 7 TH DAY OF SEPTEMBER, 2021. SD/- SD/- (ANIL CHATURVEDI) (KULDIP SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 7 TH DAY OF SEPTEMBER, 2021 TS ITA NO.3598/DEL./2018 9 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-40, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.