M/s Sushil Ansal Foundation, New Delhi V. DIT (E), New Delhi

ITA 3948/DEL/2011

• Counselvise Citation: 394820114 RSA 2011
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 25-06-2013
• Assessment Year: misc
• Appeal Filed On: 29-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHANDRA
• Assessee Lawyers: H MITTER
• Keywords: Charitable institution; Opportunity of being heard; Additional evidence
• Section: 80G; 12A; 12AA; 32; 12; 11

Judgement Text

I.T.A .NO.-3947 & 3948/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER AND SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO.-3947 & 3948/DEL/2011 M/S SUSHIL ANSAL FOUNDATION, 115-ANSAL BHAWAN, 16-K.G.MARG, NEW DELHI. P AN-AAPCS1285H (APPELLANT) VS DCIT(E), AAYAKAR BHAWAN, DISTT. CENTRE, LAXMI NAGAR, DELHI-92. (RESPONDENT) APPELLANT BY SH. H.MITTER, CA RESPONDENT BY SH. RAMESH CHANDRA, CIT DR ORDER PER DIVA SINGH, JM THESE ARE TWO APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 27.07.2011 OF DIT(E) U/S 12A(1)(B) R.W.S 12A OF THE INCOME TAX ACT, 1961 AND ORDER U/S 80G CONSEQUENT TO THE ORDER U/S 12A(1)(B) R.W.S 12A OF THE INCOME TAX ACT, 1961 ON THE FOLLOWING GROUNDS :- 1. THAT THE IMPUGNED ORDER PASSED BY THE LEARNED D IRECTOR OF INCOME-TAX (EXEMPTION) REFUSING REGISTRATION TO THE APPELLANT U/S 12AA OF THE INCOME-TAX ACT IS WHOLLY ERRONEOUS, ILL EGAL AND BASED ON IRRELEVANT AND FLIMSY GROUNDS. 2. THAT THE LEARNED D.I. (E) FAILED TO APPRECIATE THAT THE APPELLANT WAS A COMPANY REGISTERED U/S 25 OF THE COMPANIES ACT, 1956 UNDER A LICENCE GRANTED BY THE CENTRAL GOVERNMENT A FTER ITS SATISFACTION THAT: I) THE COMPANY WAS FORMED FOR PROMOTING ART, SCIENCE, RELIGION, CHARITY OR ANY OTHER USEFUL OBJECT, AND II) INTENDS TO APPLY ITS INCOME IN PROMOTING ITS O BJECTS AND TO PROHIBIT THE PAYMENT OF ANY DIVIDEND TO ITS MEMBERS , I.E. IT IS NOT A PROFIT MAKING COMPANY. THUS WITH THE GRANT OF REGISTRATION, THE FULFILLMEN T OF THE ABOVE I.T.A .NO.-3947 & 3948/DEL/2011 2 CONDITIONS IS OUTSIDE THE PLACE OF ANY CONTROVERSY. 3. THAT THE LEARNED D.I. (E) HAS NOT POINTED OUT AN Y OF ITS 'MAIN OBJECT' AS OF NOT CHARITABLE NATURE. 4. THAT THE LEARNED D.I. (E) WRONGLY OBSERVED THAT OBJECTS SPECIFIED AS INCIDENTAL TO WERE ALSO THE MAIN OBJECTS AND THA T THE MAIN OBJECTS WERE OF BUSINESS NATURE WITH PROFIT MOTIVE AND AGAINST THE PROVISIONS OF SECTION 2(15) OF THE INCOME-TAX A CT. HE ALSO FAILED TO APPRECIATE THE PROVISIONS OF SECTION 13(1 )(D) OF THE COMPANIES ACT, 1956 IN THIS BEHALF. 5. THAT THE IMPUGNED ORDER IS WHOLLY ILLEGAL AND UNSUS TAINABLE IN AS MUCH AS U/S 12AA OF THE INCOME-TAX ACT, AT THE S TAGE OF GRANTING REGISTRATION THE CIT OR D.I.(E) HAS ONLY T O SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES AND OBJECTS OF THE TRUST OR INSTITUTION. ISSUES CONCERNING THE APPLICA TION OF INCOME, UTILIZATION OF FUNDS AND SATISFACTION OF OTHER COND ITIONS SPECIFIED IN SECTIONS 11 AND 13 OF THE INCOME-TAX ACT ARE ALWAYS SUBJECT TO SCRUTINY WHILE ASSESSING THE INCOME OF THE TRUST FR OM YEAR TO YEAR. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED D.I. (E) HAS FURTHER ERRED IN OBSERVING THA T THE SOCIETY HAD NOT ORGANIZED ANY ACTIVITY EXCEPT GIVING TWO CH EQUES AGGREGATING TO RS.50 LACS TO ITS GROUP CONCERN ANSA L PROPERTIES & INFRASTRUCTURE LIMITED AND THAT THE PURPOSE OF THIS AMOUNT WAS NOT KNOWN. THE ABOVE OBSERVATIONS ARE TOTALLY C ONTRARY TO FACTS AND EVIDENCE ON RECORD AS EVIDENCED BY COPY O F THE AGREEMENT 27 TH DAY OF JANUARY,2011 FOR PURCHASE OF HIGHER EDUCATION PLOT OF LAND BY THE APPELLANT FOR ESTABLI SHING THE EDUCATIONAL INSTITUTE FILED AS PER REQUIREMENT OF T HE LEARNED D.I.(E)WHICH CLEARLY SHOWN THAT THE LAND HAS BEEN S PECIALLY ALLOTTED BY THE GROUP CONCERN ANSAL PROPERTIES & INFRASTRUCTURE LIMITED FOR ESTABLISHING HIGHER EDUCATION ANSAL INS TITUTE OF TECHNICAL & MANAGEMENT (AITM); AND THAT RS.50 LACS WERE PAID AS FIRST DEPOSIT TOWARDS THE COST OF THE LAND. HE FURTHER FAILED TO APPRECIATE THAT WITH THE STEP FOR PURCHAS E OF HIGHER EDUCATION PLOT AT A CONSIDERATION OF RS.12.60 CRORE S, THE FIRST ACTIVITY IN THE DIRECTION OF EDUCATION COMMENCED AN D IT CANNOT BE SAID THAT NO CHARITABLE ACTIVITY HAD BEEN DONE. 7. THAT EVEN OTHERWISE, INDEPENDENT OF AND WITHOUT PRE JUDICE TO THE FOREGOING GROUNDS, THE ORDER PASSED BY THE LEARNED D.I.(E) REFUSING REGISTRATION WAS WHOLLY ILLEGAL AND LIABLE TO BE QUASHED AS NO REASONABLE OPPORTUNITY HAD BEEN PROVIDED BY H IM TO THE I.T.A .NO.-3947 & 3948/DEL/2011 3 APPELLANT FOR MEETING AND SATISFYING THE OBJECTIONS IN HIS MIND. 8. THAT THE ORDER OF THE LEARNED D.I.(E) IS BAD IN LAW AND ON FACTS OF THE CASE. 9. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND OR FOREGO ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. THE APPEAL ARGUED BY SMT. RENUKA JAIN GUPTA, SR. DR WAS REFIXED FOR CLARIFICATION BY THE BENCH. ON THE NEXT DATE IT WA S ARGUED BY SH. RAMESH CHANDRA, CIT DR WHO STATED THAT AS PER THE DEPARTMENTAL INST RUCTIONS APPEALS ARISING OUT OF ORDERS U/S 12AA/12A HAVE TO BE NECESSARILY ARGUED B Y CIT DRS ONLY AND NOT BY SR. DR. IN THE PECULIAR AFOREMENTIONED FACTS AND CIRCU MSTANCES, BOTH THE SIDES WERE REQUIRED TO ADDRESS THE ISSUE AFRESH. ACCORDINGLY BOTH THE SIDES ARGUED, LD. AR, SH. H.MITTER, CA WAS REQUIRED TO ADDRESS THE SHORTCOMIN G POINTED OUT IN AS MUCH AS THE GROUNDS RAISED WERE ARGUMENTATIVE AND NOT AS PER TH E ITAT RULES. THE LD. AR RESPONDED THAT GROUND NO-1 WOULD COVER HIS GRIEVANC E AND ALL THE OTHER GROUNDS MAY BE TREATED AS ARGUMENTS IN SUPPORT OF THE SAID GROUND. HE WAS FURTHER REQUIRED TO ADDRESS GROUND NO-7 WHEREIN THE ASSESSEE HAS AGI TATED LACK OF OPPORTUNITY. IN RESPONSE THERETO INVITING ATTENTION TO THE IMPUGNED ORDER IT WAS HIS SUBMISSION THAT WHATEVER WAS REQUIRED TO BE FILED BY THE DIT(E) WAS FILED HOWEVER ON THE LEGAL OBJECTIONS WHICH WERE POSED BY THE DIT(E) IN DECIDI NG THE ISSUE AGAINST THE ASSESSEE IT WAS ARGUED THAT THEY WERE NOT CONFRONTE D TO THE ASSESSEE. IT WAS HIS ARGUMENT THAT HAD THE ASSESSEE BEEN CONFRONTED BY T HE OBJECTIONS WHICH WERE PREVAILING IN THE MIND OF THE DIT(E), THE ASSESSEE WOULD HAVE RESPONDED TO THEM. SINCE NO SUCH OPPORTUNITY WAS PROVIDED THE ASSESSEE HAD TO FILE ADDITIONAL EVIDENCE BEFORE THE TRIBUNAL TO SHOW THAT INCIDENTAL/ANCILLA RY OBJECTS WERE FOR PROMOTING THE MAIN OBJECTS. IT WAS HIS SUBMISSION THAT AT THE TI ME OF GRANT OF REGISTRATION WHAT IS NECESSARY TO BE CONSIDERED ARE THE OBJECTS AND THER E IS NO OCCASION TO CONSIDER THE APPLICABILITY OF SECTION 11, 12 & 13 WHICH IS A SET TLED LEGAL POSITION. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS REFERRED IN THE P APER BOOK :- I.T.A .NO.-3947 & 3948/DEL/2011 4 S.NO. PARTICULARS PAGE NO. 1) DECISION OF SUPREME COURT IN THE CASE OF ACIT 1 TO13 VS THANTHI TRUST REPORTED IN (2001) 115 TAXMAN 126 (SC) 2) DECISION IN THE CASE OF IILM FOUNDATION ACADEMY 14 TO 20 VS CIT REPORTED IN (2011) 44 SOT 37 (DEL) 3) DECISION OF HIGH COURT OF MADRAS IN THE CASE OF NEW 21 TO 25 LIFE IN CHRIST EVANGELISTIC ASSOCIATION (NLC) VS CIT REPORTED IN (2000) 111 TAXMAN 16 (MAD) 4) DECISION OF ALL INDIA TAX TRIBUNAL JUDGEMENTS IN TH E 26 TO 29 CASE OF AJIT EDUCATION TRUST VS CIT REPORTED IN (20 10) 134 TTJ (AHD) 483 5) DECISION OF ALL INDIA TAX TRIBUNAL JUDGEMENTS I N THE 30 TO 35 CASE OF BHAGWAN MAHAVIR PURUSHARTH PRERNA NIDHI NYAS VS CIT REPORTED IN (2012) 144 TTJ (JP) 379 6) DECISION OF ALL INDIA TAX TRIBUNAL JUDGEMENTS IN THE 36 TO 38 CASE OF MODERN DEFENCE SHIKSHAN SANSTHAN VS CIT REPORTED IN (2007) 108 TTJ (JD) 732 7) DECISION OF HIGH COURT OF MADRAS IN THE CASE OF 39 TO 54 DIRECTOR OF INCOME TAX (EXEMPTION) VS WILLINGTON CHARITABLE TRUST REPORTED IN (2011) 225 TAXATION 4 (MAD.). 3. APART FROM THAT RELIANCE WAS FURTHER PLACED UPON THE FOLLOWING ORDERS:- 1. AGGARWAL MITRA MANDAL TRUST VS. DIT(EXEMPTION) (200 7) 293 ITR AT 259 (DEL); 2. MAHATMA GANDHI CHARITABLE SOCIETY VS CIT (2013) 142 ITD 568 (COCH-TRIB); 3. NEW LIFE IN CHRIST EVANGELISTIC SOCIETY (NLC) VS. C IT (2000) 111 TAXMAN 16 (MAD); 4. BHAGWAN MAHAVIR PURUSHARTH PRERNA NIDHI VYAS VS CIT (2012) 144 TTJ (JAI) 379; 5. AJIT EDUCATION TRUST VS CIT (2010) 134 TTJ (AHD.) 4 83; AND 6. MODERN DEFENCE SHIKSHAN SANSTHAN VSCIT (2007) 108 T TJ (JD) 732. 3.1. IT WAS SUBMITTED THAT HAD THE OPPORTUNITY BEEN GRANTED THE ASSESSEE WOULD HAVE BEEN ABLE TO ADDRESS THE DISTINCTION WHICH SHO ULD HAVE BEEN CONSIDERED BETWEEN THE MAIN OBJECTS AND THE OBJECTS INCIDENTAL TO THE MAIN OBJECTS AS CONSIDERED IN IILM FOUNDATION ACADEMY VS CIT (2011) 44 SOT 37 (DEL.); DHARMA I.T.A .NO.-3947 & 3948/DEL/2011 5 DEEPTI VS CIT (1978) 114 ITR 454 (SC); SOCIAL PEDIA KNOWLEDGE FOUNDATION VS DIT (EXEMPTION) (2013) 22 ITR (TRIB) 236 (CHENNAI). 3.2. REFERRING TO THE FACTS IT WAS HIS SUBMISSION T HAT THE SOCIETY WAS REGISTERED U/S 25 OF THE COMPANIES ACT, 1956 WHICH MANDATES THAT T HE INCOME AND PROPERTY OF THE COMPANY WHENSOEVER DERIVED, SHALL BE APPLIED SOLELY FOR THE PROMOTION OF THE OBJECTS AS STATED QUA THE MEMORANDUM OF ASSOCIATION AND THAT NO PORTION THEREOF SHALL BE PAID OR TRANSFERRED DIRECTLY OR INDIRECTLY BY WAY OF DIVIDEND BONUS OR OTHERWISE BY WAY OF PROFIT TO PERSONS WHO HAD ANY T IME OR HAVE BEEN MEMBERS OF THE SAID COMPANY OR TO ANY PERSONS CLAIMING THROUGH THEM. CLAUSE 7 OF THE LICENCE FURTHER PROVIDES THAT NO ALTERNATION SHALL BE MADE TO THE MEMORANDUM OF ASSOCIATION IN FORCE UNLESS THE ALTERATION HAS BEEN SUBMITTED TO AND APPROVED BY THE CENTRAL GOVERNMENT. 3.3. IT WAS STATED THAT THE COPY OF THE REGISTRATIO N U/S 25 OF THE COMPANIES ACT, 1956 IS PLACED AT PAPER BOOK PAGE 10 AND THE MEMORA NDUM OF ASSOCIATION OF COMPANY IS PLACED AT PAGES 1 TO 8. 4. THE LD. CIT DR INVITING ATTENTION TO THE IMPUGNE D ORDER SUBMITTED THAT AS FAR AS THE IMPUGNED ORDER IS CONCERNED, THE DIT(E) HAS SPECIFICALLY ADDRESSED THE REASONS ON THE BASIS OF WHICH REGISTRATION HAS BEEN DENIED TO THE ASSESSEE ON WHICH HE WOULD PLACE RELIANCE. IT WAS ALSO HIS STAND THA T IF THE BENCH IS INCLINED TO AGREE WITH THE LD. ARS SUBMISSIONS THAT SPECIFIC OPPORTU NITIES TO ADDRESS THE OBJECTIONS TAKEN INTO CONSIDERATION FOR DENIAL OF RELIEF WAS N OT CONFRONTED TO THE ASSESSEE THEN IT WAS HIS VEHEMENT PLEA THAT THE ISSUE MAY BE RESTORE D TO THE DIT(E) INSTEAD OF DECIDING THE ISSUE IN THE PRESENT FORUM AS THESE AR GUMENTS AND ADDITIONAL EVIDENCE NOW SOUGHT TO BE RELIED UPON IN ITS FAVOUR BY THE A SSESSEE WAS NEVER MADE AVAILABLE TO THE DIT(E). A PERUSAL OF THE RECORD ALSO SHOWS THAT THE CO-ORDINATE BENCH ON 28.02.2012 HAD ADMITTED ADDITIONAL EVIDENCE WHICH C ONSISTED OF THE FOLLOWING DOCUMENTS AND EVIDENCES:- I.T.A .NO.-3947 & 3948/DEL/2011 6 S.NO. PARTICULARS PAGE NO. OF PAPER BOOK 1) COPY OF THE AUDITED BALANCE SHEET AND INCOME & 1TO 12 EXPENDITURE ACCOUNT DATED 4 TH AUGUST, 2011 OF THE APPELLANT COMPANY FOR THE YEAR ENDED 31.3.2011 2) COPY OF THE REGISTERED SALE DEED DATED 27.4.2011 1 3 TO 30 EXECUTED BY ANSAL PROPERTIES & INFRASTRUCTURE LIMIT ED IN RESPECT OF SALE OF EDUCATIONAL PLOT TO THE APPEL LANT 3) COPY OF LICNECE GRANTED BY THE CENTRAL GOVERNMENT U /S 31 TO 32 25 OF THE COMPANIES ACT, 1956. 5. IN THE AFORE-MENTIONED PECULIAR FACTS AND CIRCUM STANCES, WE DEEM IT APPROPRIATE TO RESTORE THE ISSUE BACK TO THE DIT(E) . ONCE ADDITIONAL EVIDENCE HAS BEEN ADMITTED BY A CO-ORDINATE BENCH JUDICIAL PROPR IETY DEMANDS THAT THE SAME SHOULD BE MADE AVAILABLE TO THE AUTHORITY BEFORE WH OM IT OUGHT TO HAVE BEEN FILED AND IN THE CIRCUMSTANCES IT WOULD NOT BE APPROPRIAT E TO GIVE ANY FINDING EITHER LEGALLY OR FACTUALLY AS THE VERACITY OF THE FACTS A ND ARGUMENTS BASED THEREON NEED TO BE TAKEN INTO CONSIDERATION BEFORE DECIDING THE ISS UE. SINCE THE OUTCOME IN ITA NO- 3948/DEL/2011 IS DEPENDENT UPON THE FINDING ARRIVED AT IN ITA NO.-3947/DEL/2011 ACCORDINGLY THE SAME IS ALSO RESTORED TO THE FILE O F THE DIT(E) WHO SHALL DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESS EE A REASONABLE OPPORTUNITY OF BEING HEARD BY WAY OF A SPEAKING ORDER. 6. IN THE RESULT, ITA NO-3947 & 3948/DEL/2011 ARE A LLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 14 TH NOVEMBER, 2013. SD/- SD/- (S.V.MEHROTRA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14/11/2013 *AMIT KUMAR* I.T.A .NO.-3947 & 3948/DEL/2011 7 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI