Vidya Institute, V. CIT,

ITA 400/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2194 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 19-11-2009
• Assessment Year: misc
• Appeal Filed On: 03-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: R B MATHUR
• Keywords: Charitable institution
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : I NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMEBR AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A NO. 400/DEL./09 ASSESSMENT YEAR - VIDYA INSTITUTE 2M, N.I.T., FARIDABAD VS. COMMISSIONER OF INCOME TAX FARIDABAD (APPELLANT) (RESPONDENT) AND CO. NO. 24/DEL/09 (IN ITA NO. 400/DEL/09) COMMISSIONER OF INCOME TAX VS. VIDYA INSTITUTE FARIDABAD 2M, N.I.T. FARIDABAD APPELLANT BY : SHRI R.B. MATHUR, CA RESPONDENT BY : MS. ANUSHA KHURANA, DR ORDER PER RAJPAL YADAV, JM: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. COMMISSIONER DATED 1 ST JANUARY, 2009 WHEREBY HE REJECTED THE APPLICATION OF ASSESSEE FOR RENEWAL OF EXEMPTION U/S 80G FROM 1 ST APRIL, 2008. ITA NO. 400/DEL/09 AND CO NO. 24/DEL/09 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS ALLEGED ITSELF A CHARITABLE TRUST ESTABLISHED ON 12 TH JANUARY, 2006 FOR ATTAINING AIMS AND OBJECTS ENUME RATED IN CLAUSE 5 OF THE TRUST DEED WHICH ARE 27 IN NUMBER. THE ASSESSEE HAS APPLIED FOR GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX AC T AND SUCH REGISTRATION WAS GRANTED TO IT VIDE ORDER DATED 4 TH DECEMBER, 2006. SIMILARLY IT HAS APPLIED FOR GRANT OF EXEMPTION U/S 80G (5) OF THE INCOME TAX ACT. THE EX EMPTION WAS ALLOWED TO IT BY THE LD. COMMISSIONER VIDE ITS ORDER DATED 17 TH SEPTEMBER, 2007 FOR A PERIOD STARTING FROM 1 ST APRIL, 2007 UPTO 31 ST MARCH, 2008. THE ASSESSEE HAS APPLIED FOR RENEWAL OF EXEMPTION VIDE APPLICATION DATED 4 TH JULY, 2008. IT PLEADED THAT REGISTRATION WAS GRANTED U/S 12AA AS WELL AS EXEMPTION U/S 80G (5) U PTO 31 ST MARCH, 2008. COPIES OF BOTH THESE ORDERS WERE FILED BEFORE THE LD. COMMISS IONER. 3. THE LD. COMMISSIONER AFTER TAKING NOTE OF ALL TH E AIMS AND OBJECTS OF THE ASSESSEE WHICH ARE INCORPORATED IN CLAUSE V AND MOR E THAN 27 IN NUMBER ARRIVED AT A CONCLUSION THAT AIM AT SERIAL NO. E IS OF RELIGIO US NATURE WHICH IS REPUGNANT TO CLAUSE 3 TO SECTION 80 G. SIMILARLY AIMS AND OBJECT S AT (A) TO (D), (F), (H), (J) (N) TO (U) (W) & (AA) ARE OTHER OBJECTS AS PER SECTION 2 (15) OF THE ACT. THUS IN THE OPINION OF THE LD. COMMISSIONER CERTAIN OBJECTS ARE NOT FOR CH ARITABLE PURPOSES BECAUSE THEY INVOLVES ACTIVITIES IN THE NATURE OF TRADE, COMMERC E ETC. HE CALLED FOR THE EXPLANATION OF ASSESSEE AS TO WHY THE APPLICATION FOR RENEWAL O F EXEMPTION MAY NOT BE REJECTED. THE REASONS FOR REJECTION OF SUCH RENEWAL HAS BEEN NOTED BY LD. COMMISSIONER IN PARAGRAPH 4 OF THE IMPUGNED ORDER. ITA NO. 400/DEL/09 AND CO NO. 24/DEL/09 3 4. THE ASSESSEE IN RESPONSE TO THE QUERY OF LD. COM MISSIONER FILED WRITTEN SUBMISSION ON 24.12.2008 AND THE LD. COMMISSIONER H AS EXTRACTED THE RELEVANT PORTION OF THE WRITTEN SUBMISSION IN PARAGRAPH 5 OF THE IMPUGNED ORDER. ON A DETAILED ANALYSIS OF THE AIMS AND OBJECTS OF THE AS SESSEE COUPLED WITH ITS EXPLANATION IN THE LIGHT OF TWO DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST VS. CIT, 101 ITR 234 AND UPPER GANGES SUGAR MILLS LTD. VS. CIT 227 ITR 578, LD. C OMMISSIONER OBSERVED THAT MOST OF THE AIMS AND OBJECTS TAKEN BY THE ASSESSEE ARE HAVING SUCH WIDE AMPLITUDE WHICH CAN NOT BE SAID THAT THEY ARE FOR EDUCATIONAL PURPOSES. LD. CIT(A) FURTHER OBSERVED THAT AIMS AND OBJECTS AT SL. NO. (E) ARE F OR THE PURPOSE OF RELIGION IN NATURE. HENCE IT CANNOT CLAIM EXEMPTION. 5. THE LD. COUNSEL FOR THE ASSESSEE WHILE IMPUGNING THE ORDER OF COMMISSIONER RAISED TWO FOLD SUBMISSIONS. HE SUBMITTED THAT BY W AY OF FINANCE ACT NO. 2 THE PROVISO APPENDED TO 80G(5) (VI) HAS BEEN OMITTED AN D CLAUSE VII HAS BEEN INSERTED. THE OBJECT OF OMITTING THE PROVISO AND INSERTING TH E CLAUSE VII IN THE 80G (5) IS FOR THE PURPOSE TO REDUCE THE UNDUE HARDSHIP CAUSED TO BONA FIDE INSTITUTION AND ALSO TO ELIMINATE WASTAGE OF TIME AND RESOURCES OF THE TAX ADMINISTRATION IN RENEWING THE APPROVAL FROM TIME TO TIME. AFTER THE PASSING OF TH E FINANCE ACT 2 ONCE THE APPROVAL IS GRANTED THEN IT WILL BE DEEMED TO BE CONTINUED I N PERPETUITY UNLESS SPECIFICALLY WITHDRAWN. THIS CLAUSE VII CONTEMPLATES THAT IF AN EXEMPTION IS GRANTED TO AN INSTITUTION U/S 80G (5) ON 31 ST MARCH, 2008 THEN IT WOULD BE DEEMED THAT SUCH INSTITUTION WOULD BE ENJOYING SUCH EXEMPTION ;FROM 1 ST APRIL, 2008 UPTO 31 ST MARCH, 2009. THUS ACCORDING TO THE LD. COUNSEL THE CASE OF ASSESSEE IS COVERED BY THIS ITA NO. 400/DEL/09 AND CO NO. 24/DEL/09 4 CLAUSE AND THIS RENEWAL OF EXEMPTION APPLICATION CA N NOT BE REJECTED. IN HIS SECOND FOLD OF SUBMISSION HE POINTED OUT THAT THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OR IN THE AIMS AND OBJECTS, THE SAME OFFICER HAS GRANTED THE EXEMPTION TO THE ASSESSEE UPTO 31 ST MARCH, 2008 BUT REFUSE TO RENEW SUCH EXEMPTION. HE FURTHER CONTENDED THAT AFTER THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF UPPER GANGES SUGAR MILLS LTD. VS. CIT T HE ASSESSEE COULD SPEND 5% OF ITS DONATION ON RELIGIOUS PURPOSE BUT IN THE PRESEN T CASE ASSESSEE HAS NOT SPENT ANYTHING ON RELIGIOUS ACTIVITIES RATHER IT IS RUNNI NG AN INSTITUTE WHICH IS IMPARTING TRAINING TO THE GIRLS IN THE FIELD OF STITCHING , S EWING ETC. HE FURTHER SUBMITTED THAT ACCOUNTS OF THE ASSESSEE ARE DULY AUDITED. ITS AIMS AND OBJECTS ARE OF CHARITABLE NATURE. HENCE ITS APPLICATION OUGHT TO HAVE BEEN NO T REJECTED. 6. LD. DR ON THE OTHER HAND RELIED UPON THE O RDER OF LD. COMMISSIONER. SHE POINTED OUT THAT PROFIT AND LOSS ACCOUNT OF THE ASS ESSEE DOES NOT CORRELATE WITH ANY CHARITABLE OBJECTS MENTIONED BY THE ASSESSEE IN THE AIMS AND OBJECTS. SHE FURTHER POINTED OUT THAT CLAUSE VII OF SECTION 80G (5) IS N OT APPLICABLE IN THE CASE OF ASSESSEE RATHER IT IS INSERTED WITH A VIEW TO PROTE CT THE INTEREST OF BONAFIDE DONOR. THIS CLAUSE NOWHERE SUGGEST THAT DEDUCTION ADMISSIB LE TO THE DONORS WOULD AUTOMATICALLY RENEW THE APPROVAL OF EXEMPTION U/S 8 0G OF THE ACT. 7. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. AS FAR AS THE LEGAL ARGUMENTS RAISED BY THE ASSESSEE IS CONCERNED WE HAVE SPECIFICALLY CONSIDERED THE PROVISO APPENDED T O CLAUSE VI WHICH HAS BEEN OMITTED BY FINANCE ACT NO. 2 AND CLAUSE VII INSERTE D IN SECTION 80G (5). THESE ITA NO. 400/DEL/09 AND CO NO. 24/DEL/09 5 CLAUSES HAVE BEEN INSERTED KEEPING IN VIEW THE AMEN DMENT CARRIED OUT IN THE DEFINITION OF CHARITABLE PURPOSE IN SECTION 2(15). THE SECTION 2 (15) PROVIDING DEFINITION OF EXPRESSION CHARITABLE PURPOSE HAS BEEN AMENDED W.E.F. 1 ST APRIL, 2009 SO AS TO EXCLUDE FROM THE DEFINITION OF CHARITABLE PURPOSE ALL THOSE OTHER OBJECTS OF GENERAL PUBLIC UTILITY WHICH INVOLVES , CARRYING ON THE ACTIVITY IN THE NATURE OF TRADE , COMMERCE OR BUSINESS OR CARRYING ON ANY ACTIVITY OF RENDERING ANY SERVICES IN RELATION TO TRADE, COMMERCE OR BUSINESS FOR FEE, CE SS, OR ANY OTHER CONSIDERATION. DUE TO THE AMENDED DEFINITION OF EXPRESSION CHARI TABLE PURPOSE MANY INSTITUTIONS WOULD CEASED TO BE A CHARITABLE INSTITUTION. IF THA T BE HELD THEN DONATIONS MADE TO THEM WERE NOT ELIGIBLE FOR DEDUCTION U/S 80G IN ASS TT. YEAR 2009-10. TO SAFEGUARD THE INTEREST OF BONAFIDE DONORS IT HAS BEEN PROVIDE D IN CLAUSE VII OF 80G THAT IF ANY INSTITUTION HAS BEEN ALLOWED EXEMPTION U/S 80G (5) (VI) UPTO 31 ST MARCH, 2008 THEN SAME WILL BE DEEMED TO BE RENEWED FOR THE F.Y. 2008 -2009 I.E ASSTT. YEAR 2009-2010 ANY DONATION MADE TO SUCH INSTITUTION BY DONORS IN F.Y. 2008-2009 SHALL BE ELIGIBLE FOR DEDUCTION FROM TOTAL INCOME. IT DOES NOT CANVAS THAT DEEMED APPROVAL TO THE ASSESSEE WOULD FLOW AUTOMATICALLY. THE CASE OF THE ASSESSEE FOR GRANT OF EXEMPTION U/S 80-G HAS TO BE DECIDED INDEPENDENTLY WHICH WOUL D CONTINUE IN PERPETUITY AND NO FURTHER RENEWAL WOULD REQUIRE AFTER THIS AMENDME NT . THEREFORE WE DO NOT FIND ANY FORCE IN THE FIRST FOLD OF SUBMISSION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE. 8. WITH THE ASSISTANCE OF LD. REPRESENTATIVE WE HAV E GONE THROUGH THE AIMS AND OBJECTS EXTRACTED BY LD. COMMISSIONER ON PAGE 2 5 OF THE IMPUGNED ORDER. WE HAVE CONFRONTED THE LD. COUNSEL TO SHOW US ANY E VIDENCE DEMONSTRATING THAT ITS INSTITUTE HAS ANY APPROVAL FROM THE GOVT. OF IN DIA, STATE GOVT. OR IT IS AFFILIATED WITH ANY INSTITUTE, UNIVERSITY. THE LD. COUNSEL WAS UNAB LE TO GIVE ANY FORMAL RECOGNITION ITA NO. 400/DEL/09 AND CO NO. 24/DEL/09 6 FROM ANY UNIVERSITY OR GOVT. DEPARTMENT. WE ALSO CO NFRONTED THE LD. COUNSEL TO DEMONSTRATE WHICH TYPE OF CERTIFICATE YOUR INSTITUT E IS ISSUING AND HOW THOSE CERTIFICATES HAVE ANY ACCEPTABILITY FOR AVAILING TH E JOBS. HE COULD NOT PRODUCE ANY SUCH EVIDENCE. IN THE ACCOUNTS ALSO ASSESSEE HAS DE BITED A SUM OF RS. 1,78,920/- UNDER THE HEAD SALARIES UPTO 31 ST MARCH, 2007 AND TO WHOM THE SALARY WAS PAID NO EVIDENCE HAS BEEN PLACED ON RECORD, HOW THESE PERSO NS ARE QUALIFIED FOR IMPARTING THE EDUCATION IN THE FIELD CLAIMED BY ASSESSEE I.E TRAINING TO THE GIRLS FOR STITCHING, KNITTING ETC. IN THE SCHEDULE OF FIXED ASSETS WHICH ASSESSEE HAS SHOWN SEWING MACHINE OF RS. 3,328/- ONLY. FOR SUCH A SMALL QUANT ITY OF SEWING MACHINES WHAT SORT OF EDUCATION ASSESSEE IS IMPARTING NOT DISCERNABLE . TAKING INTO CONSIDERATION THE OVERALL DETAILS AVAILABLE ON THE RECORD, IT SEEMS T HAT LD. DR HAS RIGHTLY POINTED OUT THAT ACCOUNTS OF THE ASSESSEE DO NOT CORRELATE WITH ANY CHARITABLE ACTION. IT HAS TAKEN ALL POSSIBLE CHARITABLE ACTIVITIES IN ITS AIM S AND OBJECTS BUT NOT CARRYING OUT ANY SINGLE ONE IN PRACTICAL. AS FAR AS THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT EXEMPTION U/S 80G WAS GRANTED BY THE LD. COMMI SSIONER UPTO 31 ST MARCH, 2008 AND NO CHARGES HAS TAKEN PLACE, THEREFORE IT SHOULD HAVE NOT BEEN DENIED THE RENEWAL IS CONCERNED, WE HAVE GONE THROUGH THE ORDE R OF DATED 17 TH SEPTEMBER, 2007. THIS APPROVAL IS ON A CYCLOSTYLED PROFORMA. W ITHOUT TOUCHING A SINGLE OBJECT OF ASSESSEE WE ARE AT A LOSS TO UNDERSTAND WHAT OBJECT S AND AIMS WERE CONSIDERED WHEN THIS APPROVAL WAS GRANTED. BUT IN THE ORDER IM PUGNED BEFORE US LD. COMMISSIONER HAS CONSIDERED ALL ASPECTS AND THEREAF TER REJECTED THE RENEWAL OF ASSESSEES APPLICATION FOR EXEMPTION. TAKING INTO C ONSIDERATION ALL THESE ASPECTS AND THE DETAILED ORDER OF LD. COMMISSIONER WE DO NOT SE E ANY REASON TO INTERFERE IN IT. ITA NO. 400/DEL/09 AND CO NO. 24/DEL/09 7 9. AS FAR AS CROSS OBJECTION IS CONCERNED, IT IS DIREC TED AT THE INSTANCE OF ASSESSEE ITSELF IN ITS APPEAL WHICH IS NOT MAINTAIN ABLE. AS PER SECTION 253(4) CROSS OBJECTION CAN BE FILED BY THE RESPONDENT ON RECEIPT OF NOTICE IN AN APPEAL IF SUCH RESPONDENT IS AGGRIEVED WITH ANY PORTION OF THE ORD ER IMPUGNED IN THE APPEAL. 10. IN THE RESULT, APPEAL OF THE ASSESSEE AND CROSS OBJECTION ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.12.20 09 [K.G. BANSAL] [RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R VEENA DATED : 18.12.2009 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY R EGISTRAR, ITAT