M/s Sushiela Narendrajit Singh, Jammu V. The Commissioner of Income Tax (Exemption), Chandigarh

ITA 436/ASR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7738 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-07-2017
• Assessment Year: misc
• Appeal Filed On: 26-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL LD
• Keywords: Depreciation
• Section: 80G; 12A; 12AA; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A. NOS. 436(ASR)/2016 ASSESSMENT YEAR: M/S. SUSHIELA NARENDRAJIT SINGH, VIDYA MANDIR, SNS SCHOOL BUILDING, CAMP ROAD, TALAB, TILLO, JAMMU-180002. PAN: AACAS-4310A VS. CIT (EXEMPTION), CHANDIGARH. (APPELLANT) (RESPONDENT) I.T.A. NO. 437(ASR)/2016 ASSESSMENT YEAR: M/S DEWAN BARDINATH VIDYA MANDIR, AMARVILLA, 155, GARDEN AVENUE, P.O. VINAYAK BAZAR, TALAB TILLO, JAMMU-180016. PAN: AAATD-2070K VS. CIT (EXEMPTION), CHANDIGARH. (APPELLANT) (RESPONDENT) I.T.A. NO. 438(ASR)/2016 ASSESSMENT YEAR: M/S DEWAN BARDINATH VIDYA MANDIR, MUBARAK MANDI, DBN SCHOOL BUILDING, JAMMU-180001. PAN: AAAAD-3955G VS. CIT (EXEMPTION), CHANDIGARH. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SUDHIR SEHGAL RESPONDENT BY: SH. S.S. KANWAL (LD. DR.) DATE OF HEARING:05.10.2017 DATE OF PRO NOUNCEMENT: .10.2017 ORDER PER N. K. CHOUDHRY: THE INSTANT APPEALS HAVE BEEN PREFERRED BY THE DIFF ERENT ASSESSEES, ON FEELING AGGRIEVED AGAINST THE COMMON ORDER DATED 29 TH JULY, 2016, PASSED BY THE LD. CIT(EXEMPTION) CHANDIGARH, U/S 80G(5)(VI) O F THE I.T. ACT. ITA NOS.436 TO 438 (ASR)/2016 2 2. IN ALL THE THREE APPEALS, THE ASSESSEES RAISED THE SAME AND IDENTICAL ISSUE, THEREFORE, FOR THE SAKE OF CONVENIENCE A ND BREVITY, THE FACTS AND GROUNDS OF APPEAL IN ITA NO.436(ASR)/2016 HA VE BEEN TAKEN FOR CONSIDERATION AND RESULT OF THE SAME SHOULD ALSO BE A PPLICABLE TO THE OTHER APPEALS NO.437 & 438(ASR)/2016. 3. THE GROUNDS OF APPEAL IN ITA NO.436(ASR)/2016 ARE R EPRODUCED AS UNDER: 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX ( EXEMPTIONS), CHANDIGARH HAS ERRED IN REJECTING THE APPLICATION F OR GRANTING EXEMPTION U/S 80G(5)(VI) OF THE I.T. ACT TO THE ASS ESSEE. 2. THAT THE GROUND FOR REJECTION OF APPLICATION U/S 80G (5)(VI) IS AGAINST THE FACTS, LAW AND CIRCUMSTANCES OF THE CAS E AND NO CASE HAS BEEN MADE OUT BY THE WORTHY CIT (EXEMPTION), CHANDI GARH. 3. THAT THE ASSESSEE IS REGISTERED TRUST U/S 12AA O F THE I.T. ACT AND ALSO CLAIMING EXEMPTION US10(23C) (IIIAD) OF IN COME TAX ACT, 1961 AND AS SUCH, THE DENIAL OF EXEMPTION U/S 80G(5)(VI) IS ON FLIMSY GROUND AND DOES NOT CALL FOR ANY REJECTION. 4. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THAT IN THE INSTANT CASE, AN APPLICATION U/S 80G OF THE I.T. ACT, 1961 WAS FILED BY THE APPELLANT ON DATED 11.01.2 016 BEFORE THE LD. CIT(E) WHICH WAS DECLINED BY THE LD. CIT(E) O N THE GROUND THAT THE APPELLANT WAS GRANTED REGISTRATION U/S 12AA O F THE ACT VIDE ORDER DATED 30.11.2007 AND THE SOCIETY RECEIVED I NCOME BY INTEREST FROM FDR IN F.Y.2012-13 TO 2014-15 APART FR OM COLLECTING FEE SUCH AS TUITION FEE ANNUAL CHARGES ETC. AND KEPT CLAI MING DEPRECIATION DOWN THE YEARS TO ACCUMULATE A LARGE SURPLU S AND THERE IS NO EVIDENCE OF ANY DONATION COLLECTED TILL NOW . SECONDLY, IT IS ABUNDANTLY CLEAR FROM THE SUBMISSIONS (BROUGHT OUT BY THE FACT THAT OWNERSHIP PAPERS ARE WIT H THE HIGH COURT) THAT THE OWNERSHIP OF THE PROPERTY OF SOCIETY I S IN DISPUTE. ITA NOS.436 TO 438 (ASR)/2016 3 THERE IS NO GAIN SAYING THAT THE SOCIETIES HAVING INTER NAL DISPUTES DOES NOT ENTHUSE THE CONFIDENCE THAT IT IS ACTUAL SUITED TO UNDERTAKE ANY ACTIVITY OF GENERAL PUBLIC UTILITY. THIRDLY, NONE OF THE PAPERS SUBMITTED VIS--VIS ADDIT IONAL AFFILIATION BY THE J&K GOVERNMENT PROVIDES EVIDENCE F OR INCREASING INFRASTRUCTURAL AND OTHER EXPANSIONS (REASONS ESPOUSED BY THE SOCIETY FOR ITS APPLICATION). THE CASE OF THE APPLICANT IS FURTHER EXACERBATED BY THE LACK OF ANY ACTION TAKEN ON ITS PART TO EXPAND/IMPROVE (AS DISCUSSED ABOVE) EVEN WHEN IT HAD AMP LE RESOURCES AT ITS DISPOSAL. FURTHER THAT THE TRUST HAS ACCUMULATED A LARGE FUND I N THE FORM OF FDR AND CASH THAT THEY ARE NOT WILLING TO UT ILIZE FOR EXPANSION, WHICH CLEARLY LEADS ONE TO CONCLUDE THAT THE ENTITY HAVING HUGE AMOUNT OF SURPLUS AND HAVING FDRS AND NOT MAKING ANY INFRASTRUCTURAL DEVELOPMENTS FOR THE LAST SO MANY Y EARS DOESNT REQUIRE DONATIONS. 5. FEELING AGGRIEVED AGAINST THE ORDER U/S 80G OF THE ACT PASSED BY THE LD. CIT(E), THE APPELLANT PREFERRED THE INSTANT APPEAL AND IN SUPPORT OF ITS CASE SUBMITTED THAT THE OBJECTS OF THE INSTITUTION ARE NOT ALL DOUBTED BY THE CIT(E) AS THE INSTITUTION HAS BEEN RUN NING A SCHOOL AND CARRYING THE SAID ACTIVITY WHICH IS VERY MUCH CHARITABLE I N NATURE. THE WORTHY CIT(A) HAS NOT FOUND ANY DEFECT IN THE APPLIC ATION IN THE ASSESSEES INSTITUTION. THE ASSESSEE CASE FALLS U/S 80G (2)(IV) O F THE ACT WHICH IS AS FOLLOWS: ANY OTHER FUND OR INSTITUTION TO WHICH THIS SECTIO N APPLIES IT WAS FURTHER SUBMITTED BY LD. AR THAT THE APPLICATIO N U/S 80G OF THE ACT CANNOT BE REJECTED IF THE CONDITIONS AS LAID DOWN IN THE SECTION ARE DULY FULFILLED. IN THE INSTANT CASE THE APPELLANT SOCIETY IS REGISTERED U/S 12A OF THE INCOME TAX ACT VIDE ORDER DATED 03.11.2 007 AND SINCE ITA NOS.436 TO 438 (ASR)/2016 4 THE RECEIPT OF THE ASSESSEE INSTITUTION ARE LESS THAN 1, CR ORE, SO IT IS ELIGIBLE FOR GETTING EXEMPTION U/S 12(23C)(IIAD) OF THE ACT AND THE APPELLANT WAS NOT CARRYING ANY BUSINESS AND THE WORT HY CIT(E) HAS NOT GIVEN ADVERSE FINDING ABOUT THE BOOKS OF ACCOUNT AS THE SAME ARE DULY AUDITED AND NO ADVERSE COMMENTS ON THE SAME AND THERE I S NO CLAUSE IN THE RULES OF THE INSTITUTION REGARDING THE TRANSACTION AND WHOLE OR ANY PART OF THE INCOME AT ANY POINT OF TIME AND ALL FUND S ARE BEING UTILIZED FOR EDUCATIONAL PURPOSES. THE APPELLANT INSTITUTION IS N OT WORKING FOR THE BENEFIT OF PARTICULARS RELIGION OR CASTE RATHER IT IS R UNNING A SCHOOL WHICH IS OPEN FOR EVERY ONE IRRESPECTIVE CASTE AND RELIGION AN D THE WORTHY CIT(A) HAS NOT GIVEN ANY ADVERSE FINDING REGARDING T HE SAME. THE LD. AR FURTHER DRAWN OUR ATTENTION WITH REGARD TO THE R EASONING GIVEN BY THE LD. WORTHY CIT(E) WHILE DECLINING THE REGISTRATIO N U/S 80G OF THE ACT THAT THE I.T. ACT NOWHERE PUTS A BAR ON THE ASSESSEE THAT THE ASSESSEE REGISTERED U/S 12AA OF THE ACT CANNOT FILE RETURN U/S 10 (23C)(IIIAD) OF THE ACT. MOREOVER, THE SAID CONDITION WOULD NOT IN AN Y CASE AFFECT APPLICATION U/S 80G OF THE ACT. IT WAS FURTHER ARGUED T HAT COPIES OF THE AUDIT BALANCE HAVE DULY BEEN FILED WITH THE CIT(E) W HEREIN IT IS CLEAR THAT THE AUDIT HAS BEEN CONDUCTED AS PER PROVISIONS OF SECT ION 12AA OF THE ACT AND NO AUDIT REPORT FORM HAS BEEN PRESCRIBED F OR FILING THEIR AUDIT REPORT U/S 10(23C)(IIIAD) OF THE ACT. FURTHER, IT WAS ARGUED BY THE LD. AR THAT WORTHY CIT(E) HAS TOTALLY MADE EXEMPTION IN HOLDING THAT AS THERE IS NO DEVELOPMENT IN THE PAST SO THERE IS NO NE ED OF DONATION. THE WORTHY CIT AND THE ASSESSING OFFICER CANNOT REJECT THE APPLICATION BY MAKING ASSUMPTIONS. EVEN IF THE ASSESSEE HAS NOT MADE ANY DEVELOPMENT IN THE PAST WOULD NOT CONCLUDE THAT IT CANN OT BE MADE IN THE NEAR FUTURE. FINALLY SUBMITTED THAT CIT(E) CAN ANY TIME MONITOR TH E REGISTRATION GRANTED U/S 80G OF THE ACT AND CAN CANCEL TH E SAME IF THERE ARE DEFECTS, BUT HE CANNOT REJECT THE APPLICATION THE A PPELLANT BY MAKING EXEMPTION AND PRESUMPTIONS. ITA NOS.436 TO 438 (ASR)/2016 5 FURTHER, THE LD. AR RELIED UPON THE JUDGMENT PASSED B Y THE HONBLE ITAT, CHANDIGARH BENCH IN THE CASE OF CHRISTIAN MEDICAL COLLEGE, LUDHIANA SOCIETY IN ITA NO.620/CHD/2012 AND SUBMITTED THAT FACTS OF THE INSTANT CASE ARE SIMILAR TO THAT CASE AS IN THAT EXEMP TION GRANTED U/S 80G(5) OF THE ACT WAS WITHDRAWN AND THE HONBLE ITA T HELD THAT SINCE THE ACTIVITIES ARE CHARITABLE IN NATURE AND NO DEF ECTS HAVE BEEN POINTED OUT AND, AS SUCH, REGISTRATION U/S 80G CANNOT BE CANCELLED. THE LD. AR FURTHER RELIED UPON THE JUDGMENT PASSED IN THE CASE OF SAINT KABIR EDUCATION TRUST VS. CIT 41 DTR 27 (ASR. TRIB.), CIT VS. BABA DEEP SINGH EDUCATIONAL SOCIETY IN ITA NO.881 OF 2010, CIT VS. AMLIA EDUCATIONAL & RESEARCH SOCIETY IN ITA NO. 882 OF 2010 A ND CIT VS. SAINT KABIR EDUCATION TRUST IN ITA NO. 883 OF 2010 (P &H HIGH COURT). 6. THE LD. DR RELIED UPON THE ORDER OF AUTHORITIES BELO W. 7. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTA NCES OF THE CASE AS WE OBSERVED THAT IN THE INSTANT CASE, THE APPELLAN T WHICH IS RUNNING EDUCATIONAL INSTITUTE AND WHOSE AGGREGATE AN NUAL RECEIPT HAS BEEN GRADUALLY INCREASING YEAR AFTER YEAR HAS NEITHER RECEIVED ANY DONATIONS NOR ANY VOLUNTARY CONTRIBUTIONS HAVING SPECIF IC DIRECTIONS AND THE SURPLUS OF F.Y.2012-13 HAS BEEN REDEPLOYED CREATING THE FDR FOR F.Y. 2013-14 AND BY FILING THE SAME FOR F.Y. 2014-15 AND IT SEEMS THAT ALL SURPLUS ARISING FROM THE OPERATIONS OF THE SOCIETY H AVE BEEN REDEPLOYED INTO FDRS. FROM THE BALANCE SHEET, IT IS CLEA R THAT NO IMPROVEMENT IN THE SCHOOL INFRASTRUCTURE HAS BEEN UNDER TAKEN BY THE APPELLANT SOCIETY. SPECIFICALLY DURING THE LAST THREE Y EARS UNDER CONSIDERATION DESPITE GENERATING OF LAST SURPLUS AND INCOM E FROM INTEREST ON FDRS. ALTHOUGH, THE APPLICANT FOR GETTING APPROVAL U/S 80G OF THE ACT, TAKEN THE PLEA THAT AT PRESENT THE SCHOOL I S AFFILIATED BY J&K ITA NOS.436 TO 438 (ASR)/2016 6 BSE AND HAS APPLIED FOR SWITCHING OVER OF THE INSTITUTI ON FROM J&K BSE TO CBSE, HOWEVER, IT IS A FACT THAT NO EVIDENCE TO T HE EFFECT HAS EVER BEEN FILED EITHER BEFORE THE LD. CIT(E) OR BEFORE U S. EVEN OTHERWISE, THE APPELLANT HAS TAKEN THE PLEA THAT THE ORIGINAL T RUST DEED IS AVAILABLE IN THE HIGH COURT FILE WHERE THE DISPUTES BY AND OR A GAINST THE APPELLANT TRUST ARE PENDING FOR ESTABLISHING OWNERSHIP ON THE PRO PERTY AS WELL DUTIES AND POWER OF THE OFFICE BEARERS OF APPELLANT TR UST, HOWEVER, FROM THE ORDER IT REFLECTS THAT THE APPELLANT HAS NEITHER M ADE ANY EFFORT TO PRODUCE ORIGINAL TRUST DEED NOR FILE CERTIFIED COPY ISSUE D BY HONBLE COURT. NO DOUBT THE CIT(E) IS EMPOWERED TO MAKE APP ROPRIATE ENQUIRY IN ACCORDANCE WITH THE SEC.80G OF THE ACT , HOWEVER, WE R EALIZED THAT WHILE MAKING ENQUIRY ON THE APPLICATION OF THE ASSESSEE , THE LD. CIT(E) GONE FAR AWAY FROM THE SPRIT OF SEC.80G OF THE ACT. T HE APPELLANT RELIED UPON THE CASES OF CHRISTIAN MEDICAL COLLEGE, LUDHIANA SO CIETY (SUPRA), SAINT KABIR EDUCATIONAL TRUST VS. CIT , BABA DEEP SING H EDUCATIONAL AND M/S. SANT GIRDHAR ANAND, WE ARE OF THE CONSIDERED VIEW THAT THE CASES RELIED UPON BY THE APPELLANT ARE NOT DIRECTLY APPLICA BLE TO THE FACTS OF THE INSTANT CASE, HOWEVER, INDIRECTLY STRENGTHEN CASE OF THE ASSESSEE. IT IS CLARIFIED THAT IN THE CASE OF M/S SANT GIRDHAR ANAND VS. CIT(E) WE HAD REALIZED THAT LD. CIT(E) WITHOUT ANALYZING THE FACT S AND CIRCUMSTANCES OF THE CASE REJECTED THE APPLICATION U/S 80G OF THE ACT ON SINGLE GROUND THAT THE ASSESSEE WAS SPENDING MORE THAN 5% OF TOTAL RECEI PTS FOR RELIGIOUS PURPOSES AS PUJA EXPENSES AND TELECAST PURPOSES, W HICH WERE VIOLATIVE OF PROVISIONS OF SEC .80G(5)(B) OF THE ACT, HOWEVER, IN THE INSTANT CASE, THE CIT(E) HAS GONE INTO THE DETAIL OF TH E FACTS AND CIRCUMSTANCE AND THOROUGHLY CONSIDERED THE ASPECTS AND EVEN OTHERWISE THE APPELLANT HAS FAILED TO SUBMIT THE RELEVANT DOCUME NTS I.E., ORIGINAL TRUST DEED AND/OR ITS CERTIFIED COPY OF DOCUMENTS WITH RE GARD TO THE SWITCHING OVER FROM J&KBSE TO CBSE, WHICH ACCORDING TO U S REQUIRES TO BE PRODUCED BEFORE THE LD. CIT(E), HENCE THE APPELLAN T IS DIRECTED TO DO SO. ITA NOS.436 TO 438 (ASR)/2016 7 THEREFORE, WE FEEL IT APPROPRIATE TO REMAND BACK T HE CASE TO THE FILE OF CIT(E) TO RE-EXAMINE THE APPLICATION OF THE ASSESSEE UNDER THE RELEVANT PROVISIONS OF SEC.80G OF THE ACT AND PASS AN ORD ER AFRESH AFTER GIVING PROPER AND REASONABLE OPPORTUNITY OF BEING HE ARD. 7. IN THE RESULT, THE ABOVE APPEALS FILED BY THE ASSESSE E ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31.1 0.2017. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED:31.10.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER