Miles Bronson Education Society, Guwahati V. Commissioner of Income Tax, Guwahati

ITA 43/GTY/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1272 (ITAT-GUWAHATI)
• Duration Of Justice: 5 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 06-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H R SINGH
• Keywords: Charitable institution; Retrospective amendment; Set aside
• Section: 12A; 12AA

Judgement Text

1 ITA NO.43/GAU/2014 MILES BRONSON EDUCATIONAL SOCIETY, IN THE INCOME TAX APPELLATE TRIBUNAL GUWAH ATI BENCH, E COURT AT KOLKATA ( ) . . , . , ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 43/GAU/2014 ASSESSMENT YEAR: MILES BRONSON EDUCATIONAL SOCIETY, GUWAHATI (PAN: AAAAM4217E) VS. COMMISSIONER OF INCOME-TAX-II, GUWAHATI APPELLANT RESPONDENT DATE OF HEARING 17.05.2019 DATE OF PRONOUNCEMENT 04.06.2019 FOR THE APPELLANT SHRI SOMNATH GHOSH, ADVOCATE FOR THE RESPONDENT SHRI H. R. SINGH, JCIT ORDER PER A.T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE SOCIETY AGAINST THE ACTION OF COMMISSIONER OF INCOME TAX, GUWAHATI-II, GUWAHATI D ATED 01.12.2010 PASSED U/S. 12AA(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER RE FERRED TO AS THE ACT). 2. THE MAIN GRIEVANCE OF THE LD. AR REPRESENTING TH E ASSESSEE SOCIETY IS THAT BY THE IMPUGNED ORDER DATED 01.12.2010 THE LD. CIT HAS CAN CELLED THE REGISTRATION GRANTED TO THE ASSESSEE SOCIETY DATED 20.09.2001 WHICH WAS COMMUNI CATED VIDE MEMO NO. CIT/GHY/TECH/12A/64/2000-01/1442-44 DATED 20.09.200 1. ACCORDING TO LD. AR, THE 12A REGISTRATION WAS GRANTED TO THE ASSESSEE SOCIET Y AS PER THE ORDER DATED 20.09.2001 W.E.F. 01.04.2000 WHICH IS DISCERNIBLE FROM THE COPY OF TH E REGISTRATION GRANTED BY THE LD. CIT-I, GUWAHATI DATED 20.09.2001 PLACED AT PAGE 13 OF THE PAPER BOOK. THEREFORE, THE MAIN CONTENTION OF THE LD. AR IS THAT THE REGISTRATION U /S. 12A WAS GRANTED TO THE ASSESSEE SOCIETY PRIOR TO THE INSERTION OF THE PROVISION OF SECTION 12AA(3) OF THE ACT ON THE STATUTE. ACCORDING TO LD. COUNSEL, SINCE THE REGISTRATION FO R THE SOCIETY WAS ALREADY GRANTED U/S. 12A, THEN THE COMMISSIONER OF INCOME-TAX DOES NOT H AVE JURISDICTION TO CANCEL THE 2 ITA NO.43/GAU/2014 MILES BRONSON EDUCATIONAL SOCIETY, REGISTRATION WITH THE AID OF SECTION 12AA(3) OF THE ACT WHICH WAS INSERTED LATER BY FINANCE NO. 2 ACT, 2004 W.E.F. 01.10.2004. ACCORDING TO LD . COUNSEL, ONLY AFTER THE INSERTION OF FINANCE ACT, 2010 W.E.F. 01.06.2010, THE COMMISSIO NER OF INCOME-TAX WAS EMPOWERED TO CANCEL THE REGISTRATION GRANTED U/S. 12A OF THE ACT . THE LD. COUNSEL THEREAFTER DREW OUR ATTENTION TO THE CIRCULAR NO. 1 OF 2011 OF THE CENT RAL BOARD OF DIRECT TAXES WHEREIN PARAGRAPH 7.4 THEREOF STATES WITH REGARD TO THE SAI D AMENDMENT AS FOLLOWS: 7.4 APPLICABILITY THIS AMENDMENT HAS BEEN MADE A PPLICABLE W.E.F. 01.06.2010 AND SHALL ACCORDINGLY APPLY FOR AY 2011-12 AND SUBSEQUE NT ASSESSMENT YEARS. 3. ACCORDING TO LD. COUNSEL, THE LD. CIT INFLUENCED BY THE SURVEY REPORT WHICH WAS ONE SIDED VERSION OF THE DEPARTMENT BASED ON IRRELE VANT CONSIDERATION HAS PASSED THE IMPUGNED ORDER WITHOUT DUE APPLICATION OF MIND AND NOT GRANTING PROPER OPPORTUNITY TO THE ASSESSEE SOCIETY. ACCORDING TO LD. COUNSEL, THE LD . CIT SHOULD HAVE RECORDED A SATISFACTION TO THE EFFECT THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE OR THAT THE ACTIVITIES ARE NOT BEING CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE TR UST. THEREFORE, ACCORDING TO LD. COUNSEL, IN THE ABSENCE OF SUCH A FINDING, REGISTRATION GRAN TED U/S. 12A OF THE ACT CANNOT BE CANCELLED, ACCORDING TO LD. COUNSEL, WHEN THE REGI STRATION WAS GRANTED U/S. 12A OF THE ACT IN 2001 W.E.F. 01.04.2000 THE COMMISSIONER THEN HAD GRANTED THE REGISTRATION AFTER VERIFYING THE OBJECTS OF THE INSTITUTION AND GENUINENESS OF T HE ACTIVITIES MEANING THEREBY THAT THE LD. CIT, GUWAHATI-1 HAD SATISFIED HIMSELF THAT THE OBJE CTS OF THE SOCIETY WERE CHARITABLE IN NATURE AND ACTIVITIES BEING CARRIED ON ARE GENUINE MEANING THEREBY THAT THEY ARE INCONSONANCE FOR ACHIEVING OF CHARITABLE OBJECTS AN D NOTHING ELSE. ACCORDING TO LD. COUNSEL, THE OBJECTIVE OF THE SOCIETY IS IMPARTING EDUCATION TO THE STUDENTS BY ESTABLISHING AND MAINTAINING EDUCATIONAL INSTITUTION, TECHNICAL AND VOCATIONAL TRAINING CUM PRODUCTION CENTERS, CONVENTS, CENTERS AND FACULTIES FOR PROMOT ION OF STUDIES AND RESEARCH IN SPORTS, SCIENCE, TECHNOLOGY, RELIGION, AGRICULTURE, HORTICU LTURE ETC. THE LD. COUNSEL POINTED OUT THAT THE ESSENCE IN WHICH THE WORD EDUCATION HAS BEEN USED IN SEC. 2(15) OF THE ACT IS A SYSTEMATIC INSTRUCTION, SCHOOLING OR TRAINING GIVEN TO THE YOUNG IN PREPARATION FOR THE WORK OF LIFE. THUS, ACCORDING TO LD. COUNSEL, ASSESSEE IS ENGAGED IN EDUCATIONAL ACTIVITY WHICH FALLS UNDER CHARITABLE PURPOSES AS PER SECTION 2(15 ) OF THE ACT. ACCORDING TO LD. COUNSEL, NO REASONED ORDER HAS BEEN PASSED BY THE LD. CIT TO SHOW THAT THE ASSESSEES ACTIVITIES ARE 3 ITA NO.43/GAU/2014 MILES BRONSON EDUCATIONAL SOCIETY, NOT FALLING IN THE EXPRESSION CHARITABLE PURPOSES A S DEFINED IN SEC. 2(15) OF THE ACT. ACCORDING TO LD. COUNSEL, CANCELLATION OF REGISTRAT ION WHICH WAS GRANTED ON 2001 W.E.F. 01.04.2000 U/S. 12A OF THE ACT CANNOT BE RESORTED T O BY THE COMMISSIONER WITH RETROSPECTIVE EFFECT BY AN ORDER PASSED ON 01.12.20 10 WHICH POWER HE DOES NOT ENJOY. MOREOVER, THE ORDER IS NOT A REASONED ORDER AND NO PROPER OPPORTUNITY HAS BEEN GRANTED TO THE ASSESSEE SOCIETY. ACCORDING TO LD. COUNSEL, TH E LD. CIT HAS NOT CONSIDERED THE FOLLOWING JUDGMENTS PASSED BY THE HONBLE DELHI HIG H COURT IN THE CASE OF DIRECTOR OF INCOME-TAX (EXEMPTIONS) VS. MOOL CHAND KHAIRATI RAM TRUST (2011 199 TAXMAN 1 (DEL.), CIT VS. MANAV VIKAS AVAM SEWA SANSTHAN (2012) 20 TA XMANN.COM 560 (ALL.) AND OXFORD ACADEMY FOR CAREER DEVELOPMENT VS. CHIEF COMMISSION ER OF INCOME-TAX (2009) 315 ITR 382 (ALL). THE LD. AR ALSO CITED THE HONBLE CALCU TTA HIGH COURTS DECISION IN ITAT 333 OF 2017, GA 3543 OF 2017 DATED 11.03.2019 IN THE CA SE OF CIT (EXEMPTION), KOLKATA VS. MUKESH BHANSALI CHARITABLE TRUST. ACCORDING TO LD. COUNSEL, SINCE NO PROPER OPPORTUNITY HAS BEEN GRANTED TO THE ASSESSEE SOCIETY AND NO SPE AKING ORDER HAS BEEN PASSED BY THE LD. CIT THE IMPUGNED ORDER NEEDS TO BE SET ASIDE BACK T O THE FILE OF THE LD. CIT FOR FRESH ADJUDICATION. 4. ON THE OTHER HAND, THE LD. DR VEHEMENTLY OPPOSED THE PRAYER OF THE LD. AR. ACCORDING TO LD. DR, THE COMMISSIONER OF INCOME TAX -1 HAD BEEN EMPOWERED BY THE STATUTE WHICH INSERTED BY FINANCE ACT, 2010 W.E.F. 01.06.2010 WHEREIN THE LD. CIT HAS BEEN EMPOWERED TO CANCEL THE REGISTRATION OF TRUST OR IN STITUTION WHICH HAS OBTAINED REGISTRATION AT ANY TIME U/S. 12A OF THE ACT, IF HE IS SATISFIED TH AT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACC ORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE AND, THEREFORE, THE LD. DR VEHEMENTLY OPPOSED THE PRAYER OF THE LD. AR TO REMIT THE MATTER BACK TO THE LD. CIT FOR FRESH CONSIDERATION. 5. HAVING HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, WE NOTE THAT SECTION 12A REGISTRATION WAS GRA NTED TO THE ASSESSEE SOCIETY BY ORDER DATED 20.09.2001 W.E.F 01.04.2000. THE ASSESSEE SO CIETY HAS BEEN GRANTED REGISTRATION U/S. 12A(A) OF THE ACT. THE IMPUGNED ORDER WAS PASSED U /S. 12AA(3) OF THE ACT WHICH WAS INSERTED BY THE FINANCE ACT NO. 2 ACT, 2004 W.E.F. 01.10.2004. WE ALSO NOTE THAT THE LD. CIT HAD POWER TO ONLY CANCEL REGISTRATION GRANTED U NDER CLAUSE (B) OF SUB-SECTION (1) OF SEC. 4 ITA NO.43/GAU/2014 MILES BRONSON EDUCATIONAL SOCIETY, 12AA OF THE ACT ONLY. HOWEVER, BY INSERTION OF FIN ANCE ACT, 2010 W.E.F. 01.06.2010 THE LD. CIT HAS BEEN EMPOWERED TO LOOK INTO THE CASES O F ASSESSEE WHICH HAVE BEEN REGISTERED U/S. 12A OF THE ACT. VARIOUS CASE LAWS HAVE BEEN RE LIED ON BY THE ASSESSEE BEFORE US TO SHOW THAT THE LD. CIT DID NOT HAD POWER TO CANCEL THE RE GISTRATION GRANTED U/S. 12A RETROSPECTIVELY WHICH HAS NOT BEEN CONSIDERED BY TH E LD. CIT BEFORE PASSING THE IMPUGNED ORDER. ACCORDING TO LD. COUNSEL, THE LD. CIT HAS B EEN SWAYED AWAY BY THE SURVEY REPORT AND HAS NOT TAKEN INTO CONSIDERATION THE FACTS AND THE LAW GOVERNING THE SUBJECT WHICH WAS BROUGHT TO THE NOTICE OF THE LD. CIT BUT HAS NOT BE EN REFERRED TO WHILE PASSING THE IMPUGNED ORDER. WE ARE OF THE OPINION THAT SINCE THE LD. CIT IN THE YEAR 2001 HAS GRANTED REGISTRATION U/S. 12A OF THE ACT TO THE SOCIETY AFTER GOING THRO UGH THE OBJECTS OF THE ASSESSEE SOCIETY AND AFTER VERIFYING THE OBJECTS OF THE INSTITUTION AND GENUINENESS OF THE ACTIVITIES MEANING THEREBY THAT HE WAS SATISFIED THAT THE OBJECTIVES A RE CHARITABLE IN NATURE AND ACTIVITIES BEING CARRIED ON OR TO BE CARRIED OUT ARE GENUINE MEANING THEREBY THAT THEY ARE INCONSONANCE FOR ACHIEVING THE CHARITABLE OBJECT AND NOTHING ELSE MU ST HAVE GRANTED THE REGISTRATION. SO, PROPER OPPORTUNITY OUGHT TO HAVE BEEN GRANTED TO TH E ASSESSEE SOCIETY BEFORE THE IMPUGNED ORDER WAS PASSED. TAKING INTO CONSIDERATION OF THE AFORESAID DISCUSSION, WE SET ASIDE THE ORDER OF THE LD. CIT AND RESTORE THE MATTER BACK T O THE FILE OF LD. CIT TO DE NOVO PASS THE ORDER AFTER HEARING THE LD. AR OF THE ASSESSEE AND THE JUDICIAL PRECEDENCE ON THE ISSUE I N HAND AND THEREAFTER TO PASS A SPEAKING ORDER. 6. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4TH JUNE, 20 19. SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 4TH JUNE, 2019 JD.(SR.P.S.) 5 ITA NO.43/GAU/2014 MILES BRONSON EDUCATIONAL SOCIETY, COPY OF THE ORDER FORWARDED TO: 1. APPELLANT MILES BRONSON EDUCATIONAL SOCIETY, S TPI ROAD, BORJHAR, KAHIKUCHI, GUWAHATI-781015. 2 RESPONDENT .COMMISSIONER OF INCOME-TAX, GUWAHATI -II, GUWAHATI, AAYAKAR BHAWAN, 2 ND FLOOR, G.S. ROAD, GUWAHATI-5. 3. ITO, TECHNICAL, GUWAHATI 4. DR, ITAT, GUWAHATI BENCH, GUWAHATI / TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY