Medha Learning Foundation , Lucknow V. Commissioner of Income Tax-II, Lucknow

ITA 416/LKW/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87731 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-12-2014
• Assessment Year: misc
• Appeal Filed On: 26-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K AGRAWAL
• Assessee Lawyers: S K GARG; P K KAPOOR
• Keywords: Principle of natural justice; Additional evidence
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.416/LKW/2012 MEDHA LEARNING FOUNDATION 264, 6 TH FLOOR, B BLOCK GULMOHAR APARTMENT 18, MADAN MOHAN MALVIYA MARG LUCKNOW V. CIT-II LUCKNOW TAN/PAN:AAGCN3187E (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. S. K. GARG, ADVOCATE & SHRI. P. K. KAPOOR C.A. RESPONDENT BY: SHRI. A. K. AGRAWAL, CIT (DR) DATE OF HEARING: 17 12 2014 DATE OF PRONOUNCEMENT: 08 01 2015 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX DENYING REGISTRATION UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT'), INTER ALIA, ON VARIOUS GROUNDS, WHICH ARE AS UNDER:- 1. BECAUSE THE 'APPELLANT', HAD CAME INTO EXISTENCE VIDE CERTIFICATE OF INCORPORATION DATED 11.07.2011 GRANTED BY THE CENTRAL GOVERNMENT (REGISTRAR OF COMPANIES UTTAR PRADESH AND UTTARAKHAND), TO CARRY ON EDUCATIONAL ACTIVITIES AND THE ACTIVITIES RELATED THERETO AND THE VIEW TO THE CONTRARY AS HAS BEEN TAKEN BY THE 'CIT' IS WHOLLY ERRONEOUS AND REJECTION OF APPELLANT'S CLAIM FOR REGISTRATION UNDER SECTION 12AA OF THE 'ACT' IS NOT TENABLE EITHER ON FACTS OR IN LAW. :- 2 -: 2. BECAUSE THE IMPUGNED ORDER, AS IS BASED ON THE OBSERVATIONS TO THE EFFECT THAT; (I) CARRYING OUT STUDIES IN REMOVING SHORTCOMINGS IN THE CURRICULUM OF EDUCATIONAL ACTIVITIES DO NOT FALL WITHIN THE DEFINITION OF 'EDUCATION' AS GIVEN IN SECTION 2(15) OF THE ACT; (II) THE ACTIVITIES CARRIED ON BY THE APPELLANT COMPANY NOT BEING RELATED TO EDUCATIONAL ACTIVITIES CONDUCTED THROUGH 'NORMAL SCHOOLING', THE SAME CANNOT BE SAID TO BE RELATED TO EDUCATION; (III) THE ACTIVITIES AS ARE PROPOSED TO BE CARRIED OUT BY THE 'APPELLANT', ARE IN THE 'NATURE OF CARRYING OUT COACHING FOR ASSISTING THE PARTICIPANTS IN PREPARING FOR TAKING EXAMINATION FOR OBTAINING DEGREE(S); (IV) VARIOUS CLAUSES AS ARE CONTAINED IN THE MEMORANDUM OF ASSOCIATION, GO TO SUGGEST THAT IT IS BEING RUN ON COMMERCIAL LINES BY OPENING THE OFFICES IN INDIA AND ABROAD; IS WHOLLY VITIATED AS THE SAME IS INCONSISTENT WITH THE MATERIAL AND INFORMATION ON RECORD AS ALSO THE LAW APPLICABLE THERETO. 3. BECAUSE THE ACTIVITIES CARRIED ON BY THE APPELLANT COMPANY AS ALSO THE ACTIVITIES PROPOSED TO BE CARRIED OUT BY IT, ARE IN THE NATURE OF 'EDUCATIONAL ACTIVITIES' IN A HOLISTIC SENSE, AS ARE UNDERSTOOD IN THE PRESENT DAY CONTEXT AND NEED OF THE SOCIETY, AND THE 'CIT' WENT WHOLLY WRONG IN HOLDING THAT THE OBJECTS OF THE APPELLANT COMPANY ARE NOT RELATED TO 'EDUCATIONAL ACTIVITIES'. 4. BECAUSE THE 'CIT' HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT 'THE COMPANY NEITHER ENGAGED IN CHARITABLE ACTIVITIES NOR DOES IT :- 3 -: PROPOSE TO DO SO IN FUTURE' AND IN REJECTING THE APPLICATION SUBMITTED BY THE APPELLANT COMPANY FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. 5. BECAUSE THERE BEING RESTRICTIONS ON DEALING WITH 'INCOME AND PROPERTY' AS ALSO ON DISTRIBUTION OF THE 'SURPLUS' OF APPELLANT COMPANY AND WELL LAID SYSTEM FOR DEVOLUTION OF ITS ASSETS, IN THE EVENT OF ITS BEING WOUND UP, AS LAID DOWN BY THE CENTRAL GOVERNMENT BEFORE GRANTING LICENCE, IT CANNOT BE SAID THAT THE APPELLANT COMPANY HAS BEEN EXISTING ON COMMERCIAL LINES AND NOT FOR 'CHARITABLE PURPOSES' AS ENVISAGED IN SECTION 2(15) OF THE 'ACT'. 6. BECAUSE IN ANY CASE, THE OBJECTS WITH WHICH THE APPELLANT COMPANY HAD BEEN SET UP AND FOR WHICH LICENCE HAD BEEN GRANTED TO IT BY THE CENTRAL GOVERNMENT UNDER SECTION 25 OF THE COMPANIES ACT, WERE THE OBJECT FALLING IN THE CATEGORY OF 'CHARITABLE PURPOSES' AS DEFINED IN SECTION 2(15) OF THE ACT WHICH INCLUDE NOT ONLY 'EDUCATION' BUT OTHER LAUDABLE OBJECTS ALSO QUALIFYING FOR REGISTRATION UNDER SECTION 12AA READ WITH SECTION 2(15) OF THE ACT, AND ON A DUE CONSIDERATION OF THIS ASPECTS OF THE MATTER, THE APPELLANT'S CLAIM FOR REGISTRATION UNDER SECTION 12AA WAS LIABLE TO BE ALLOWED. 7. BECAUSE VARIOUS CASE LAWS AS HAVE BEEN REFERRED TO AND RELIED UPON BY THE 'CIT', WHILE REJECTING THE APPELLANT'S CLAIM FOR REGISTRATION UNDER SECTION 12AA, ARE DISTINGUISHABLE ON FACTS AND RELIANCE ON THE SAME, FOR THE PURPOSES OF REJECTION OF THE APPELLANT'S CLAIM FOR REGISTRATION UNDER SECTION 12AA IS WHOLLY MISPLACED. 8. BECAUSE IN ANY CASE THE ISSUE OF REGISTRATION UNDER SECTION 12AA HAS BEEN DECIDED BY THE 'CIT' ON WRONGFUL AND EXTRANEOUS CONSIDERATIONS, AND THE SAME DESERVES TO BE QUASHED, SO AS TO GRANT REGISTRATION UNDER SECTION 12AA OF THE 'ACT'. :- 4 -: 9. BECAUSE IN SUPPORT OF VARIOUS GROUNDS TAKEN HEREINFORE, THE APPELLANT BEGS TO REFER AND RELY UPON THE STATEMENT OF FACTS AS GIVEN IN ANNEXURE-I TO THE GROUNDS OF APPEAL. 10. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE LD. COMMISSIONER OF INCOME-TAX HAS DENIED REGISTRATION HAVING CONCLUDED THAT THE ACTIVITIES OF THE ASSESSEE-COMPANY ARE NOT CHARITABLE IN NATURE. THE COMPANY WAS FORMED ON 11.7.2011 TO CARRY ON EDUCATIONAL ACTIVITIES AND THE ACTIVITIES ARE RELATED THERETO. DURING THE COURSE OF PROCEEDINGS BEFORE THE LD. CIT, THE BALANCE SHEET OF THE ASSESSEE-COMPANY WAS NOT FINALIZED IN ORDER TO ESTABLISH THE ACTIVITIES OF THE ASSESSEE-COMPANY. THE LD. COUNSEL FOR THE ASSESSEE HAS MOVED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE IN THE FORM OF STATEMENT OF ACCOUNT FOR THE PERIOD ENDING ON 31.3.2012 WHICH COULD NOT BE PRODUCED BEFORE THE LD. COMMISSIONER OF INCOME-TAX. ACCORDINGLY, A SUPPLEMENTARY PAPER BOOK WAS FILED WITH A REQUEST FOR ITS ADMISSION. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT IN THE INTEREST OF JUSTICE, THE MATTER MAY BE RESTORED BACK TO THE LD. COMMISSIONER OF INCOME-TAX FOR RE- ADJUDICATION OF THE ISSUE OF GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT IN THE LIGHT OF EVIDENCE FILED BEFORE THE TRIBUNAL, TO WHICH THE REVENUE HAS NO OBJECTION. 3. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE STATEMENT OF ACCOUNT ENDING ON 313..2012 WAS NOT AVAILABLE WHILE ADJUDICATING THE ISSUE OF GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT BY THE LD. COMMISSIONER OF INCOME-TAX, AS IT COULD NOT BE COMPILED OR AUDITED BY 29.3.2012. NOW THE SAME HAS BEEN FILED BEFORE US, :- 5 -: WHICH IS AVAILABLE AT PAGES 70 TO 81 OF THE SUPPLEMENTARY PAPER BOOK. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE-COMPANY WAS FORMED ON 11.7.2011 AND THIS WAS THE FIRST YEAR OF ACCOUNT. NOW WHEN THE ACCOUNTS ARE FINALIZED AND ARE AVAILABLE WITH THE ASSESSEE AND THE SAME CAN BE LOOKED INTO BY THE LD. COMMISSIONER OF INCOME-TAX IN ORDER TO CONCLUDE THE NATURE OF ACTIVITIES UNDERTAKEN BY THE ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX AND RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO RE-ADJUDICATE THE ISSUE OF GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT IN THE LIGHT OF THE DOCUMENTS FILED BEFORE THE TRIBUNAL. NEEDLESS TO MENTION HERE THAT REASONABLE OPPORTUNITY MAY BE AFFORDED TO THE ASSESSEE TO REPRESENT ITS CASE. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH JANUARY, 2015 JJ:1712 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR