Institute of Driving and Traffic Research, Gurgaon V. CIT, Faridabad

ITA 4401/DEL/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0554 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-02-2011
• Assessment Year: misc
• Appeal Filed On: 18-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ROHIT JAIN; SHIKHA
• Keywords: Charitable institution
• Section: 12A; 12AA; 11

Judgement Text

ITA NO. 4401/DEL/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 4401/DEL/2009 A.Y. : - THE INSTITUTE OF DRIVING AND TRAFFIC RESEARCH, HARYANA, MARUTI SUZUKI INDIA LTD., HUMAN RESOURCE DIVISION, PALAM GURGAON ROAD, GURGAON (PAN/GIR NO. : -) VS. COMMISSIONER OF INCOME TAX, FARIDABAD, HARYANA (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. AJAY VOHRA, ADVOCATE AND SHRI ROHIT JAIN, A.R. AND SMT. SHIKHA DEPARTMENT BY : SH. R.K. GUPTA, C.I.T.(D.R.) ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX, FARIDABAD DENYING THE REGISTRATION TO THE ASSESSEE SOCIETY U/S 12AA OF THE IT ACT VIDE ORDER DATED 21.7.2009. 2. THE ASSESSEE IS A SOCIETY REGISTERED U/S. 1860 VIDE CERTIFICATE DATED 9.4.2007 FOR PURSUING THE MAIN OBJECT OF ESTAB LISHING, RUNNING AND MANAGING MOTOR DRIVING SCHOOLS WITHIN THE STATE O F HARYANA. THE ASSESSEE FILED AN APPLICATION IN FORM 10A ON 18.3.20 09 BEFORE THE C.I.T., FARIDABAD SEEKING APPROVAL/REGISTRATION U/S. 12A OF THE INCOME TAX ACT, 1961. THE C.I.T., FARIDABAD REJECTED THE A SSESSEES APPLICATION PRIMARILY HELD THAT SOME OF THE OBJECTS MENTIONED IN THE ITA NO. 4401/DEL/2009 2 MEMORANDUM OF ASSOCIATION VIZ. OBJECTS NOS. PARA 4.7 TO 4.17 ARE IN THE NATURE OF OBJECTS WHICH ARE NOT CHARITABLE IN N ATURE AND, THEREFORE, ASSESSEE IS NOT ENTITLED TO GRANT OF REGISTRATION U /S 12AA OF THE ACT. 3. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. IT WILL BE WORT HWHILE HERE TO NOTE THE MAIN OBJECTS AND INCIDENTAL OBJECTS OF THE S OCIETY AS NOTED IN THE C.I.T.S ORDER WERE AS UNDER:- 4. AIMS AND OBJECTS THE AIMS AND OBJECTS FOR WHICH THE SOCIETY IS ESTABL ISHED ARE AS UNDER:- MAIN OBJECTS 4.1 TO ESTABLISH, RUN AND MANAGE MOTOR DRIVING TRAIN ING SCHOOLS AT DIFFERENT LOCATIONS WITHIN THE STATE OF HARYANA FOR THE WELFARE OF MEMBERS OF GENERAL PUBLIC. 4.2 TO RUN AND MANAGE MOTOR DRIVING TRAINING SCHOOL S AS A RESOURCE SUPPORT INSTITUTION FOR POLICY PLANNING AN D OTHER SUPPORT TO THE DEPARTMENT OF TRANSPORT, HARYANA. 4.3 TO IMPART PRACTICAL TRAINING IN DRIVING OF AUTOM OBILES TO MEMBERS OF GENERAL PUBLIC WITH THE OBJECTS OF THE INCULCATING SOUND DIVING HABITS AND ADEQUATE TRAFFI C SENSE SO THAT THE TRAINED PERSONS BECOME COMPETENT MOTOR VEHICLE DRIVERS. ITA NO. 4401/DEL/2009 3 4.4 TO ASSIST, ADVICE AND SUPPORT THE AGENCIES OF T HE GOVERNMENT OF HARYANA FOR ANY ACTIVITIES AND / OR ASSIGNMENTS WHICH CONTRIBUTE TO SAFETY ON ROADS AND HELP IN IMPROVING THE OVERALL TRANSPORT SYSTEM IN THE STATE OF HARYANA. 4.5 TO UNDERTAKE EXTENSIVE STUDY OR RESEARCH ON REA SONS FOR OCCURRENCE OF ROAD ACCIDENTS AND SUGGEST WAYS AND MEANS TO REDUCE OR AVOID THE SAME. 4.6 TO ENDEAVOR TO PRESERVE THE ENVIRONMENT AND RED UCE POLLUTION IN STATE OF HARYANA AND CONSERVE FUEL BY ENCOURAGING PEOPLE TO ADOPT MORE ENVIRONMENT FRIEND LY TECHNOLOGIES WHICH USE ALTERNATE FUELS LIKE PROPANE , CNG, ETC. 4.7 TO ASSOCIATE WITH INLAND AND / OR OVERSEAS INST ITUTIONS ENGAGED IN SIMILAR AND RELATED ACTIVITIES. 4.8 TO SET UP, RUN, MAINTAIN, ASSIST, FINANCE, SUPPO RT AND / OR AID IN THE SETTING UP OR MAINTAINING OR RUNNING OF HOS PITALS, BOARDING HOUSES, LIBRARIES, READING ROOMS, GYMNASIUM S, AND OTHER TRAINING AND VOCATIONAL INSTITUTES. 4.9 TO DO ALL OTHER ACTS, DEEDS AND THINGS WHICH AR E HELPFUL FOR THE PROMOTION, DEVELOPMENT OF ENHANCEMENT OF THE AIM S AND OBJECTS OF THE SOCIETY. INCIDENTAL OBJECTS 4.10 TO ACCEPT DONATIONS, CONTRIBUTIONS, GRANTS, AI DS, SUBSCRIPTIONS AND THE DONATIONS IN CASH OR IN KIND FROM ITA NO. 4401/DEL/2009 4 SUBSCRIPTIONS AND THE DONATIONS IN CASH OR IN KIND FROM INDIVIDUALS, COMPANIES, FIRMS, TRUSTS AND FOUNDATION S, STATE AND CENTRAL GOVERNMENTS AND ANY OTHER BODIES, NATION AL AND INTERNATIONAL FOR DEFRAYING THE CAPITAL AND REV ENUE EXPENSES OF THE SOCIETY AS WELL AS TO INCUR EXPENSE S TO ACHIEVE THE MAIN OBJECTIVES OF THE SOCIETY. 4.11 TO TAKE ON LEASE OR OTHERWISE, THE LAND FROM T HE GOVERNMENT, SEMI GOVERNMENT AND / OR ANY OTHER PRIVA TE AGENCY/ ORGANIZATION FOR THE ESTABLISHMENT OF BUILD ING FOR INSTITUTE / OR MOTORE DRIVING TRAINING SCHOOL ETC. REGARDING THE PROMOTION AND DEVELOPMENT OF AIMS AND OBJECTS OF TH E SOCIETY. 4.12 TO MEET TRAVELLING, BOARDING AND LODGING EXPEN SES FOR PERSONS WITHIN OR COMING TO INDIA OR GOING ABROAD FO R STUDY/ RESEARCH IN AREAS OF INTEREST TO THE SOCIETY. 4.13 TO PUBLISH AND MARKET AND / OR ASSIST IN THE PU BLICATION AND MARKETING OF BOOKS, PAMPHLETS, PERIODICALS, NEWSPAPER S FOR THE SPREAD AND ADVANCEMENTS AND MARKETING OF EDUCATIO N AND CULTURE AND FOR THE ADVANCEMENT OF THE OBJECTS O F THE SOCIETY. 4.14 TO PROMOTE ORGANIZE, ADMINISTER, ESTABLISH, SUPP ORT, MAINTAIN AND / OR GRANT AID TO ANY INSTITUTION OR SO CIETY OR ORGANIZATION WHATSOEVER HAVING ITS OBJECTS CHARITAB LE PURPOSES OR THE PUBLIC WELFARE AND TO INCUR EXPEND ITURE IN CONNECTION THEREWITH. ITA NO. 4401/DEL/2009 5 4.15 TO GIVE PUBLICITY TO THE OBJECTIVES AND WORK OF THE SOCIETY BY MEANS OF ADVERTISEMENTS IN THE PRESS, PAMPHLETS, HANDBILLS, CIRCULARS, CINEMA SLIDES OR BY PUBLICAT ION OF BOOKS, PAMPHLETS, CATALOGUES, INSTRUCTION BOOK, TECH NICAL ARTICLES, PERIODICALS AND EXHIBITION OF WORKS OF AR T BY GRANTING REWARDS, PRIZES AND DONATIONS OR BY PARTIC IPATING IN FAIRS, TECHNICAL CONFERENCES, SYMPOSIA OR IN ANY SU CH OTHER SUITABLE MANNER OF ALL KINDS. 4.16 TO COLLABORATE, ASSOCIATE OR MERGE WITH OTHER ENTITIES HAVING SIMILAR OBJECTIVES. 4.17 ALL THE INCOMES, EARNINGS, MOVABLE AND IMMOVABLE PROPERTIES OF THE SOCIETY SHALL BE UTILIZED AND AP PLIED TOWARDS THE PROMOTION OF ITS AIMS AND OBJECTS ONLY SET FORTH IN THE MEMORANDUM OF ASSOCIATION AND NO PORTION THE REOF SHALL BE PAID OR TRANSFERRED DIRECTLY OR INDIRECTLY , BY WAY OF DIVIDENDS, BONUS, PROFITS OR IN ANY MANNER WHATSOEV ER, TO THE PRESENT OR PART MEMBERS OF THE SOCIETY OR TO ANY PERSON CLAIMING THROUGH ANY ONE OR MORE THE PRESENT OR PAST MEMBERS. NO MEMBER OF THE SOCIETY SHALL HAVE ANY PERSONAL CLAIM ON ANY MOVABLE OR IMMOVABLE PROPERTIE S OF THE SOCIETY OR MAKE ANY PROFITS WHATSOEVER BY VIRTU E OF THIS MEMBERSHIP. 4.1 ASSESSEES SUBMISSIONS IN THIS REGARD READ AS UN DER:- SECTION II OF THE ACT EXEMPTS INCOME OF A 'PERSON' DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURP OSE. IN ORDER TO CLAIM ITA NO. 4401/DEL/2009 6 EXEMPTION UNDER THE SAID SECTION, THE ASSESSEE HAS TO GET ITSELF REGISTERED UNDER SECTION 12A BY FOLLOWING THE PROCEDURE PRESCRIBED I N SECTION 12AA OF THE ACT. THE RELEVANT PROVISIONS OF SECTION 11 (1) OF THE AC T READ AS UNDER: '11. INCOME FROM PROPERTY HELD FOR CHARITABLE OR RE LIGIOUS PURPOSES. (1) SUBJECT TO THE PROVISIONS OF SECTIONS 60 TO 63, THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEA R OF THE PERSON IN RECEIPT OF THE INCOME- (A) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST W HOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT TO WHICH SUCH INC OME IS APPLIED TO SUCH PURPOSES IN INDIA; AND, WHERE ANY SUCH INCOME IS AC CUMULATED OR SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA, TO THE EXTEN T TO WHICH THE INCOME SO ACCUMULATED OR SET APART IS NOT IN EXCESS OF FIFTEE N PER CENT OF THE INCOME FROM SUCH PROPERTY; .. (C) INCOME DERIVED FROM THE PROPERTY HELD UNDER TRU ST- (I) CREATED ON OR AFTER THE 1ST DAY OF APRIL, 1952, FOR A CHARITABLE PURPOSE WHICH TENDS TO PROMOTE INTERNATIONAL WELFARE IN WHICH IND IA IS INTERESTED, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES OU TSIDE INDIA, AND .. (D) INCOME IN THE FORM OF VOLUNTARY CONTRIBUTIONS M ADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUS T OR INSTITUTION. ' ITA NO. 4401/DEL/2009 7 - ON PERUSAL OF THE AFORESAID, IT WILL KINDLY BE NOTI CED THAT THE PREREQUISITE CONDITIONS FOR GETTING REGISTRATION UNDER SECTIONS 12AI12AA IN ORDER TO CLAIM EXEMPTION UNDER SECTION 11 OF THE ACT ARE AS UNDER: (A) THE ASSESSEE MUST BE A 'PERSON' HOLDING PROPE RTY UNDER TRUST; AND (B) SUCH PROPERTY MUST BE HELD WHOLLY FOR CHARITA BLE OR RELIGIOUS PURPOSES; AND (C) INCOME DERIVED FROM SUCH PROPERTY MUST BE APP LIED FOR CHARITABLE PURPOSES. - THE EXPRESSION 'CHARITABLE PURPOSE' HAS BEEN DEFINE D IN SECTION 2( 15) OF THE ACT, WHICH READS AS UNDER: '(15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE P OOR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF A RTISTIC OR HISTORIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING O N OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHE R CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY:] [PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS TEN LAKH RUPEES OR LESS IN THE PREVIOUS YEAR;] ................. ' (EMPHASIS SUPPLIED) ITA NO. 4401/DEL/2009 8 - ON PERUSAL OF THE AFORESAID, IT IS, THUS, PATENTLY CLEAR THAT 'EDUCATION', PER SE, IS ONE OF THE CHARITABLE PURPOSES AS SPECIFICALLY DEFI NED IN SECTION 2( 15) FOR THE PURPOSES OF THE ACT, INCLUDING SECTIONS 11 AND 12. - IN THE PRESENT CASE, IT IS RESPECTFULLY SUBMITTED T HAT ALL THE AFORESAID CONDITIONS ARE FULLY SATISFIED IN THE CASE OF THE APPELLANT IN ASMUCH AS THE APPELLANT HAS BEEN REGISTERED AS A SOCIETY WITH THE OBJECT OF HOLDING PROPERTY AND INCOME DERIVED THEREFROM UNDER TRUST FOR PURSUING EDUCATIONAL ACTI VITIES, WHICH IS A CHARITABLE PURPOSE, AS IS EVIDENT FROM THE MAIN OBJECTS OF THE APPELLANT AS PER ITS MEMORANDUM OF ASSOCIATION ('MOA'), WHICH ARE REPROD UCED HEREUNDER:- 'A. THE MAIN OBJECTS TO BE PURSUED BY THE COMPANY O N ITS INCORPORATION ARE:- 4.1 TO ESTABLISH, RUN AND MANAGE MOTOR DRIVING TR AINING SCHOOLS AT DIFFERENT LOCATIONS WITHIN THE STATE OF HARYANA FOR THE WELFA RE OF MEMBERS OF GENERAL PUBLIC. 4.2 TO RUN AND MANAGE MOTOR DRIVING TRAINING SCHO OLS AS A RESOURCES SUPPORT INSTITUTION FOR POLICY PLANNING AND OTHER SUPPORT T O THE DEPARTMENT OF TRANSPORT, HARYANA. 4.3 TO IMPART PRACTICAL TRAINING IN DRIVING OF AU TOMOBILES TO MEMBERS OF GENERAL PUBLIC WITH THE OBJECTS OF THE INCULCATING SOUND DRIVING HABITS AND ADEQUATE TRAFFIC SENSE SO THAT THE TRAINED PERSONS BECOME CO MPETENT MOTOR VEHICLE DRIVERS. 4.4 TO ASSIST, ADVICE AND SUPPORT THE AGENCIES OF THE GOVERNMENT OF HARYANA FOR ANY ACTIVITIES AND/OR ASSIGNMENTS WHICH CONTRIB UTE TO SAFETY ON ROADS AND HELD IN IMPROVING THE OVERALL TRANSPORT SYSTEM IN THE STATE OF HARYANA. 4.5 TO UNDERTAKE EXTENSIVE STUDY OF RESEARCH ON RE ASONS FOR OCCURRENCE OF ROAD ACCIDENTS AND SUGGEST WAYS AND MEANS TO REDUCE OR AVOID THE SAME. ITA NO. 4401/DEL/2009 9 4.6 TO ENDEAVOR TO PRESERVE THE ENVIRONMENT AND R EDUCE POLLUTION IN STATE OF HARYANA AND CONSERVE FUEL BY ENCOURAGING PEOPLE TO ADOPT MORE ENVIRONMENT FRIENDLY TECHNOLOGIES WHICH USE ALTERNATE FUELS LIKE PROPANE, CNG ETC. 4.7 TO ASSOCIATE WITH INLAND AND/OR OVERSEAS INST ITUTIONS ENGAGED IN SIMILAR AND RELATED ACTIVITIES. 4.8 TO SET UP, RUN, MAINTAIN, ASSIST, FINANCE, SU PPORT AND /OR IN THE SETTING UP OR MAINTAINING OR RUNNING OF HOSPITALS, BOARDING HO USES, LIBRARIES, READING ROOMS, GYMNASIUMS AND OTHER TRAINING AND VOCATIONAL INSTIT UTES. 4.9 TO DO ALL OTHER ACTS, DEEDS AND THINGS WHICH ARE HELPFUL FOR THE PROMOTION DEVELOPMENT OF ENHANCEMENT OF THE AIMS AND OBJECTS OF THE SOCIETY .' (EMPHASIS SUPPLIED) ON PERUSAL OF THE AFORESAID OBJECTIVES, IT WILL KIND LY BE NOTICED THAT THE PREDOMINANT OBJECT OF THE APPELLANT IS TO SET UP AN D MANGE MOTOR DRIVING TRAINING SCHOOLS TO IMPART EDUCATION RELATED TO SAFE DRIVING , MOTOR DRIVING AND TECHNICAL TRAINING TO CONTRIBUTE TO SAFETY ON ROADS AND FACILITATE IMP ROVING THE TRANSPORT SYSTEM AND ALSO PRESERVATION OF ENVIRONMENT. - AS PER CLAUSE 4.17 OF THE MOA (REFER PAGE 22 OF THE PAPER BOOK), THE ENTIRE FUNDS OF THE APPELLANT CAN ONLY BE UTILIZED TO PURSUE THE EDUCATIONAL ACTIVITIES AND FOR NO OTHER PURPOSE. THE SAID CLAUSE, WHICH CLEARLY PR OVIDES THE MODE AND MANNER IN WHICH THE FUNDS OF THE APPELLANT COULD BE APPLIE D, IS BASICALLY TO PROVIDE AND PROMOTE EDUCATIONAL ACTIVITIES ONLY. THE SAID CLAUS E IS REPRODUCED AS UNDER:- '4.17 ALL THE INCOMES. EARNINE:S. MOVEABLE AND IMMO VEABLE PROPERTIES OF THE SOCIETY SHALL BE UTILIZED AND APPLIED TOWARDS THE P ROMOTION OF ITS AIMS AND ITA NO. 4401/DEL/2009 10 OBJECTS ONLY AS SET FORTH IN MEMORANDUM OF ASSOCIAT ION AND NO PORTION THEREOF SHALL BE PAID OR TRANSFERRED DIRECTLY OR INDIRECTLY BY WAY OF DIVIDENDS. BONUS. PROFITS OR IN ANY MANNER WHATSOEVER. TO THE PRESENT OR PAST MEMBERS OF THE SOCIETY OR TO ANY PERSON CLAIMING THROUGH ANY ONE O R MORE OF THE PRESENT OR PAST MEMBERS. NO MEMBER OF THE SOCIETY SHALL HAVE ANY PE RSONAL CLAIM ON ANY MOVEABLE OR IMMOVEABLE PROPERTIES OF THE SOCIETY OR PAST MEMBERS. NO MEMBER OF THE SOCIETY SHALL HAVE ANY PERSONAL CLAIM ON ANY MOVEABLE OR IMMOVEABLE PROPERTIES OF THE SOCIETY OR MAKE ANY PRO FITS WHATSOEVER BY VIRTUE OF THIS MEMBERSHIP.' (EMPHASIS SUPPLIED) - FURTHER, IN TERMS OF CLAUSES 5, 6 AND 7 OF THE MOA (REFER PAGE 23 OF THE PAPER BOOK) NO PART OF THE INCOME/FUNDS OF THE APPELLANT C AN BE DISTRIBUTED AMONGST ITS MEMBERS AS PROFIT AND IN THE EVENT OF DISSOLUTI ON OF THE APPELLANT, ANY SURPLUS SHALL VEST IN ANY OTHER INSTITUTION AND/OR SOCIETY HAVING SIMILAR OBJECTS AS THAT OF THE APPELLANT AS PER THE MOA. THE SAID CLAUSE IS RE PRODUCED HEREUNDER: '5. NO MEMBER OF THE SOCIETY SHALL HAVE ANY PERSONA L CLAIM ON ANY MOVABLE OR IMMOVABLE PROPERTIES OF THE SOCIETY OR MAKE ANY PROF ITS, WHATSOEVER, OR CLAIM ANY REMUNERATION BY VIRTUE OF THIS MEMBERSHIP. 6. NO MEMBER OF THE SOCIETY SHALL BE APPOINTED TO A NY SALARIED OFFICE OF THE SOCIETY, OR TO ANY OFFICE OF THE SOCIETY PAID BY FE ES. NO REMUNERATION SHALL BE GIVEN BY THE SOCIETY TO ANY MEMBER EXCEPT REPAYMENT OF OUT OF POCKET EXPENSES AND INTEREST ON MONEY LENT OR RENT FOR PREMISES TO THE SOCIETY. 7. IF UPON WINDING UP OR DISSOLUTION OF THE SOCIETY THERE REMAINS, AFTER THE SATISFACTION OF ALL THE DEBTS AND LIABILITIES, AND PROPERTY WHATSOEVER, THE SAME SHALL NOT BE PAID TO OR DISTRIBUTED AMONG THE MEMBE RS OF THE SOCIETY BUT SHALL BE GIVEN OR TRANSFERRED TO SOME OTHER INSTITUTION AND/ OR SOCIETY AND/OR ORGANIZATION ITA NO. 4401/DEL/2009 11 HAVING OBJECTS SIMILAR TO THE OBJECTS OF THE SOCIET Y TO BE DETERMINED BY THE MEMBERS OF THE SOCIETY AT OR BEFORE THE TIME OF DIS SOLUTION.' - ON PERUSAL OF THE AFORESAID, IT WILL, THUS, KINDLY BE APPRECIATED THAT THE APPELLANT SATISFIED ALL THE CONDITIONS NECESSARY FOR SEEKING REGISTRATION UNDER SECTIONS 12A/12AA OF THE ACT INASMUCH AS; (A) THE APPELLANT HAD BEEN CONSTITUTED FOR EDUCAT IONAL PURPOSES, WHICH IS CLEARLY A CHARITABLE PURPOSE AS DEFINED IN SECTION 2(15) OF THE ACT; (B) THE ENTIRE FUNDS OF THE APPELLANT ARE UNDER A LEGAL OBLIGATION HELD TO BE APPLIED SOLELY FOR THE PRIMARY OBJECTS AS SPECIFIED AND FOR NO OTHER PURPOSE, THEREBY CREATING A TRUST HOLDING PROPERTIES SOLELY FOR CHAR ITABLE PURPOSES. - THE CIT, IT IS RESPECTFULLY SUBMITTED, FAILED TO AP PRECIATE THE AFORESAID AND TOTALLY MISCONSTRUED THE OBJECTS OF THE APPELLANT. THE CIT, IT IS SUBMITTED FAILED TO APPRECIATE THE DISTINCTION BETWEEN THE OBJECTS AND THE ANCILLARY OBJECTS/ ENABLING POWERS GIVEN IN THE MOA TO ACHIEVE THE SOLE OBJECT OF 'EDUCATION' WHILE DENYING REGISTRATION/ APPROVAL TO THE APPELLANT. - BEFORE DEALING WITH THE SPECIFIC OBJECTIONS OF THE CIT, FOR THE SAKE OF COMPLETENESS, IT MAY BE PERTINENT TO BRIEFLY SET OU T/ EXPLAIN THE EXACT NATURE OF ACTIVITIES THAT ARE BEING AND SHALL BE UNDERTAKEN BY THE APPELLANT AS UNDER: - THE ASSESSEE SOCIETY, AS STATED ABOVE, HAS BEEN SET UP WITH THE PRIMARY OBJECT OF IMPARTING EDUCATION IN THE FIELD OF MOTOR DRIVING A ND TECHNICAL TRAINING IN AUTOMOBILES TO THE MEMBERS OF GENERAL PUBLIC IN THE STATE OF HARYANA. IN ORDER TO PURSUE THE SAID OBJECTIVE, FOLLOWING ACTIVITIES WOU LD BE UNDERTAKEN BY THE ASSESSEE: ITA NO. 4401/DEL/2009 12 IMPARTING THEORETICAL EDUCATION ABOUT VARIOUS TRAF FIC RULES AND REGULATIONS BY WAY OF CLASSROOM TEACHING, BY PROVIDING BOOKLETS AND TEACHING MATERIAL, ETC. PROVIDING PRACTICAL MOTOR DRIVING TRAINING TO IMPRO VE UPON THE TECHNICAL SKILLS OF THE STUDENTS. FOR THAT PURPOSE, THE ASSESSEE SOCIETY WOULD SET UP / DEVELOP AND MANAGE THE MOTOR DRIVING TRAINING SCHOOLS BY UTILIZING THE NECESSARY INFRASTRUCTURE OF THE STATE GOVT. RECRUIT NECESSARY FACULTIES, EMPLOYEES, ETC. NECESS ARY FOR RUNNING OF THE INSTITUTE. THE STUDENTS WOULD BE PROVIDED CERTIFICATE OF TRAIN ING AT THE END OF THE TRAINING. - THE ASSESSEE WOULD, IT WILL THUS KINDLY BE APPRECIA TED, BE CARRYING OUT FORMAL THEORETICAL AND PRACTICAL TRAINING AT THE MOTOR DRI VING SCHOOLS IN A SYSTEMATIC MANNER ABOUT DRIVING ON ROADS IN A SAFE MANNER, FOL LOWING TRAFFIC RULES AND REGULATIONS FOR PROMOTING ROAD SAFETY, WHICH WOULD ENHANCE THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF THE STUDENTS. - IT IS RESPECTFULLY SUBMITTED THAT IN IDENTICAL FA CTS REGISTRATION HAS BEEN GRANTED TO THE FOLLOWING CHARITABLE INSTITUTIONS UNDER SECTION 12AA OF THE ACT: 4.2 FURTHER, ASSESSEE SUBMITTED THAT C.I.T., DEHRADUN HAS, ON IDENTICAL OBJECTS OF THE INSTITUTE OF DRIVING AND TRA FFIC RESEARCH, UTTARAKHAND GRANTED REGISTRATION U/S. 12AA OF THE A CT VIDE ORDER DATED 29.3.2010. ITA NO. 4401/DEL/2009 13 4.3 IT HAS BEEN FURTHER CLAIMED THAT DIT(EXEMPTION) , AHMEDABAD HAS ON IDENTICAL OBJECTS OF ALL GUJARAT INSTITUTE OF DRI VING AND TECHNICAL TRAINING AND RESEARCH GRANTED REGISTRATION U/S. 12A A VIDE ORDER DATED 10.7.2008. 4.4 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT THERE IS CONSIDERABLE COGENCY IN THE ASSESSEES SUBMISSIO NS. A READING OF THE OBJECTS OF THE ASSOCIATION CLEARLY REVEAL THAT ASSESSEE IS PURSUING CHARITABLE OBJECTS PARTICULARLY IN THE REALM OF PURS UING EDUCATIONAL ACTIVITIES. THE MAIN OBJECTS WHERE LD.CIT HAS FOUND FAULT ARE 4.7 TO 4.17, WHERE WE NOTE THAT 4.7 TO 4.9 ARE THE MAIN OBJE CT AND 4.10 TO 4.17 ARE INCIDENTAL TO THE ATTAINMENT OF MAIN OBJECTS . THE PREDOMINANT OBJECTS OF THE SOCIETY IS TO SET UP AND MA NAGE MOTOR DRIVING TRAINING SCHOOL TO IMPART EDUCATION RELATED TO SAFE AND BETTER DRIVING WHICH CONTRIBUTE TO SAFETY OF ROADS. FURTH ER, THE ENTIRE FUNDS OF THE ASSESSEE CAN ONLY BE UTILIZED TO PURSUE THE EDU CATIONAL ACTIVITIES AND FOR NO OTHER PURPOSE. THIS HAS BEEN CLEARLY DEMONSTRATED IN CLAUSE NO. 4.17 AS ABOVE. FURTHER, AS PER CLAUSE 5, 6, & 7 OF THE MEMORANDUM OF ASSOCIATION, NO PART OF THE INCOME/FUNDS CAN BE DISTRIBUTED AMONG ITS MEMBERS AS PROVIDED IN THE EVENT OF DISSOLUTION OF THE ASSESSEE. ANY SURPLUS SHALL VEST IN OTHER IN STITUTION AND / OR SOCIETY HAVING SIMILAR OBJECTS AS THAT OF SOCIETY F ROM THE MEMORANDUM OF ASSOCIATION. THUS, WE FIND THAT ASSESSEE HAS BEEN CONSTITUTED FOR EDUCATIONAL PURPOSES WHICH IS CLEAR LY OF CHARITABLE PURPOSES AS DEFINED IN SECTION 2(15) OF THE ACT. T HE ENTIRE FUNDS OF THE ASSESSEE ARE UNDER THE LEGAL OBLIGATION HELD TO BE APPLIED SOLELY FOR THE PRIMARY OBJECTS AS SPECIFIED AND FOR NO OTHER PUR POSE. IN THESE CIRCUMSTANCES, WE FIND THAT ASSESSEES SUBMISSIONS AR E COGENT ENOUGH AND C.I.T.S OBJECTION IN THIS REGARD ARE NOT SUST AINABLE. ACCORDINGLY, ITA NO. 4401/DEL/2009 14 IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX AND DIRECT THAT THE ASSESSEE BE GRANTED REGISTRATION U/S 12AA OF THE I. T. ACT. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4/02/2011. SD/- SD/- [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER DATE 4/02/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES