Electronics & Computer Software Export Promotion Council, New Delhi V. DIT (Exemptions), New Delhi

ITA 4567/DEL/2012

• Counselvise Citation: 456720114 RSA 2012
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-04-2014
• Assessment Year: misc
• Appeal Filed On: 27-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SUDHA KUMARI
• Assessee Lawyers: ROHIT JAIN
• Keywords: Charitable institution
• Section: 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI G.D. AGARWAL, VICE PRESIDENT AND SHRI I.C. SUDHIR, JUDICIAL MEMBER ITA NO. 4567/DEL/2012 ASSESSMENT YEAR: NIL ELECTRONICS & COMPUTER SOFTWARE EXPORT PROMOTION COUNCIL, PHD HOUSE, 3 RD FLOOR, OPP. ASAID VILLAGE, NEW DELHI. AAATE0022C VS. DIT(EXEMPTIONS), AAYAKAR BHAWAN, DISTT. CENTRE, LAXMI NAGAR, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ROHIT JAIN, CA RESPONDENT BY : DR. SUDHA KUMARI, CIT(DR) O R D E R PER I.C. SUDHIR, J.M. THE ASSESSEE HAS QUESTIONED THE ORDER OF THE LD. D IT(E), WHEREBY THE LD. DIT(E) HAS REJECTED THE APPLICATION OF THE ASSESSEE FILED U/S 80G(5)(VI) OF THE ACT. 2. HAVING HEARD AND CONSIDERED THE ARGUMENTS ADVANC ED BY THE PARTIES, WE FIND THAT THE APPLICATION FILED U/S 80G OF THE ACT HAS BEEN REJECTED BY THE LD. DIT(E) MAINLY ON THE BASIS THAT THE BENEFIT OF THE ACTIVITIES OF THE ASSESSEE GOES TO THE MEMBERS OF T HE ASSESSEES COUNCIL ONLY AND GENERAL PUBLIC AT LARGE IS NOT THE BENEFIC IARY IN ANY MANNER. THE LD. DIT(E) KEEPING IN VIEW THE VOLUME OF INCOME/REC EIPT SHOWN/EARNED FROM EVENTS AND PROGRAMMES, HAS HELD THAT THE ACTIVITIES CANNOT BE CALLED AS CHARITABLE IN NATURE AND THUS, THE APPLICANT DID NO T QUALIFY THE BENEFIT U/S ITA NO. 4567/D/2012 ELECTRONICS & COMPUT ER SOFTWARE EXPORT PROMOTION COUNCIL 2 80G AS IT IS ENGAGED IN A COMMERCIAL ACTIVITY FOR T HE MUTUAL BENEFIT OF ITS MEMBERS. 2.1 IT APPEARS FROM THE ORDER IMPUGNED THAT THE ASS ESSEE WAS FORMED WITH THE MAIN OBJECT TO SUPPORT AND PROMOTE THE EXP ORTS OF ELECTRONIC GOODS, COMPUTER SOFTWARE AND RELATED SERVICES AND P ROMOTE AND DEVELOP USE OF ELECTRONICS IN OTHER PRODUCTS BY SUCH METHOD S WHICH INCLUDES UNDERTAKING, SPONSORING MARKETING STUDIES IN INDIVI DUAL FOREIGN COUNTRY AND SENDING OUT STUDY TEAMS TO FOREIGN COUNTRIES CONDUC TING PUBLICITY CAMPAIGNS FOR THE PROMOTION OF ELECTRONICS AND COMP UTER SOFTWARE PRODUCTS MADE IN INDIA. 2.2 IN SUPPORT OF THE ISSUE RAISED IN THE GROUNDS Q UESTIONING THE VALIDITY OF THE ACTION OF THE LD. DIT(E) IN REJECTING THE AP PLICATION FILED U/S 80G OF THE ACT, THE LD. AR SUBMITTED THAT THE ACTIVITIES OF TH E ASSESSEE COUNCIL ARE PROMOTION OF EXPORTS OF THE COUNTRY IN THE FIELD OF ELECTRONICS AND SOFTWARE IS AN OBJECT OF GENERAL PUBLIC UTILITY AS THESE ARE NOT ONLY FOR THE TRADING CLASS BUT FOR THE WHOLE COUNTRY. HE SUBMITTED THAT THE ASSESSEE IS DULY REGISTERED U/S 12A(A) SINCE IN 1986 AND HAS BEEN TH US REGULARLY ASSESSED AS CHARITABLE ORGANIZATION SINCE LONG. HE POINTED OUT THAT THE ASSESSEE WAS ALREADY HAVING EXEMPTION U/S 80G SINCE LONG AND THE LAST ORDER OF THE EXEMPTION WAS VALID UPTO 31/03/2008. THE LD. AR RE FERRED PAGE 32 OF THE PAPER BOOK, WHERE OBJECT AND ACTIVITIES OF THE ASSE SSEE HAVE BEEN MENTIONED. HE SUBMITTED THAT THE ASSESSEE IS AN AU TONOMOUS ORGANIZATION UNDER DEPARTMENT OF INFORMATION & TECHNOLOGY, MINIS TRY OF COMMUNICATIONS & INFORMATION TECHNOLOGY, GOVERNMENT OF INDIA. IT HAS EMERGED AS A PREMIER ORGANIZATION OF THE COUNTRY TO PROMOTE INDIAS INFORMATION TECHNOLOGY AND ELECTRONICS EXPORT. HE SUBMITTED THAT THE ASSESSEE WAS REGISTERED AT A SOCIETY UNDER SOCIETIE S REGISTRATION ACT, 1860 W.E.F. 10/10/1986 AND IS AN AUTONOMOUS BODY SP ONSORED BY MINISTRY OF COMMERCE. IT IS A NON-PROFIT ORGANIZATION AS PE R THE EXPORT-IMPORT ITA NO. 4567/D/2012 ELECTRONICS & COMPUT ER SOFTWARE EXPORT PROMOTION COUNCIL 3 (EXIM) POLICY OF GOVT. OF INDIA SUPPORTED BY THE F INANCIAL ASSISTANCE FROM THE CENTRAL GOVERNMENT. THE ASSESSEES COUNCIL WAS SET UP BY THE GOVERNMENT FOR A NATIONAL CAUSE MAINLY TO PROMOTE E XPORT FROM THE COUNTRY IN THE FIELD OF ELECTRONIC AND SOFTWARE, WHICH THE COUNCIL HAS SO FAR BEEN FULLY ABLE TO PERUSE AS IS CLEAR FROM THE FACT THAT THE COUNTRYS EXPORT WHICH WAS JUST RS. 520 CRORES DURING 1988-99 ROSE TO RS. 2,59,060 CRORES DURING 2008-09 AND FURTHER INCREASING IN SUBSEQUENT YEARS. THE LD. AR SUBMITTED THAT OUT OF THE TOTAL EXPORT OF ELECTRONICS HARDWAR E, COMPUTER SOFTWARE, SERVICES AND ITES THE MAJOR EXPORT IS TO NORTH AMER ICA AND EUROPE. FOR THIS PURPOSE THE ASSESSEE COUNCIL ORGANIZES AND PAR TICIPATES IN VARIOUS COUNCIL AND SEMINARS, WORKSHOPS, TRADE FAIR WITHIN AND OUTSIDE INDIA. IT ALSO PUBLISHES REPORTS, MEMBERS DIRECTORY AND NEWS LETTER, ETC. GIVING VAST INFORMATION AND LATEST DEVELOPMENT IN THE FIELD OF ELECTRONICS AND SOFTWARE FOR THE KNOWLEDGE OF EXPORTERS AND TO BOOST EXPORT FROM THE COUNTRY. HE REFERRED TO PAGES 1-6 OF THE PAPER BOOK WHICH ARE C OPIES OF ASSESSMENT ORDER PASSED IN THE CASE OF ASSESSEE FOR THE A.Y. 2 011-12 AND THE RELEVANT EXTRACTS FROM THE WEB SITE OF DEPARTMENT OF ELECTRO NICS AND INFORMATION TECHNOLOGY. HE ALSO PLACED RELIANCE ON THE FOLLOWI NG DECISIONS IN SUPPORT OF HIS CONTENTION THAT REGISTRATION OF AN INSTITUTI ON U/S 12A BY ITSELF IS A SUFFICIENT PROOF OF THE FACT THAT THE TRUST OR INST ITUTION CONCERNED IS CREATED OR ESTABLISHED FOR CHARITABLE OR RELIGIOUS PURPOSE: SONEPAT HINDU EDUCATIONAL VS. CIT, 147 TAXMAN 1 (P &H); N.N. DESAI CHARITABLE TRUST VS. CIT, 123 TAXMAN 86 6 (GUJ.); BENGAL HOSIERY MANUFACTURERS ASSOCIATION VS. DIT(E ), 33 TAXMANN.COM 561 (CAL.); MEHTA JIVRAJ MAKANDAS & PAREKH GOVINDAJI KALYANJI MODH VANIK VIDYARTHI PUBLIC TRUST VS. DIT(E), 131 ITD 462 (MUM .); NELLAI TUTICORIN NADAR VS. DIT(E), 47 SOT 244 (CHE N.); ITA NO. 4567/D/2012 ELECTRONICS & COMPUT ER SOFTWARE EXPORT PROMOTION COUNCIL 4 SHRI CHANDRABHAN ATHARE PATIL GRAM NAVODAYA TRUST VS. CIT, 53 SOT 132 (PUNE); NSHM ACADEMY VS. CIT, 134 ITD 304 (CAL.); SHIKSHA SANKALP SOCIETY VS. CIT, 53 SOT 26 (AGRA). 3. AGAINST THE APPLICATION OF PROVISO TO SECTION 2( 15) OF THE ACT THE LD. AR SUBMITTED THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE WERE NOT WITH THE OBJECT OF PROFIT MOTIVE, AND RELIED UPON THE FO LLOWING DECISIONS: PHD CHAMBER OF COMMERCE & INDUSTRY VS. DIT(E), 357 ITR 296 (DEL) BUREAU OF INDIAN STANDARD VS. DGIT(E), 212 TAXMAN 210 (DEL) GSI INDIA VS. DGIT(E), 262 CTR 585 (DEL) DIT(E) VS. COMMERCE TEACHERS ASSOCIATION, 203 TAXM AN 171 (DEL) 4. THE LD. CIT(DR) ON THE OTHER HAND, TRIED TO JUST IFY THE ORDER IMPUGNED WITH THE SUBMISSION THAT ASSESSMENT ORDER FOR THE A SSESSMENT YEAR IS NOT BINDING ON THE LD. DIT(E) FOR RENEWAL OF BENEFIT PR OVIDED U/S 80G OF THE ACT. SHE SUBMITTED THAT PROCEEDINGS U/S 12A AND 80G ARE SEPARATE AND REQUIREMENTS THEREIN ARE TO BE EXAMINED SEPARATELY. SHE SUBMITTED THAT THE DECISIONS CITED BY THE LD. AR ARE OF THE YEAR P RIOR TO THE A.Y. 2009-10. SHE CITED FOLLOWING DECISIONS IN SUPPORT: 1. ECONOMICS PLACEMENT CELL VS. DIT(E), 23 ITR-TRIB .-121 (DEL.) 2. KIRTI CHAND TARAWATI TRUST VS. DIT(E), 232 ITR 1 1 (1998) (DEL.) 3. PEARLS EDUCATIONAL INSTITUTE VS. CIT, 7 ITR-TRIB . 804 (DEL) 4. D R RANKA CHARITABLE TRUST VS. DIT(E), 3 ITR-TRI B. 151 (BANG.) 5. THE LD. AR REJOINED WITH THE SUBMISSION THAT THE OBJECTS FOR THE PURPOSE OF GRANTING REGISTRATION U/S 12A AND BENEFI T U/S 80G ARE SAME FOR THE CONSIDERATION. HE SUBMITTED THAT THE LD. DIT(E ) HAS DOUBTED THE SAME OBJECTS AND ACTIVITIES ON WHICH IN OTHER YEARS THE CLAIMED BENEFIT U/S 80G WAS ALLOWED. THE LD. AR SUBMITTED THAT DECISION OF CALCUTTA BENCH OF THE TRIBUNAL IN THE CASE OF BENGAL HOSIERY MANUFACTURER S ASSOCIATION VS. DIT(E) (SUPRA) IS FOR THE A.Y. 2010-11 DATED 28/02/ 2011 WHICH IS AFTER THE ITA NO. 4567/D/2012 ELECTRONICS & COMPUT ER SOFTWARE EXPORT PROMOTION COUNCIL 5 AMENDMENT AND AFTER COMING INTO OPERATION OF THE PR OVISO TO SECTION 2(15) OF THE ACT. HE ALSO POINTED OUT THAT THE DECISION DATED 18/05/2012 IN THE CASE OF SHIKSHA SANKALP SOCIETY VS. CIT (SUPRA) HOL DING THAT THE REASONS GIVEN BY THE ITO (TECH) FOR REFUSAL TO RENEW THE AP PROVAL U/S 80G(5)(VI) WERE NOT VALID IN THE EYES OF LAW AND SINCE THE ASS ESSEE ENJOYED REGISTRATION U/S 12A(A) CONTINUOUSLY AND ALSO COMPL IED WITH THE PROVISIONS OF SECTION 80G(5), THEREFORE, RENEWAL OF APPROVAL S HOULD NOT HAVE BEEN REJECTED. THE LD. AR SUBMITTED THAT THE DECISIONS CITED BY THE LD. CIT(DR) HAVING DIFFERENT FACTS ARE NOT RELEVANT IN THE PRES ENT CASE. 6. HAVING GONE THROUGH THE ABOVE CITED DECISIONS, W E FIND THAT THE RATIO LAID DOWN THEREIN SUPPORTS THE CONTENTION OF THE AS SESSEE THAT REGISTRATION OF AN INSTITUTION U/S 12A BY ITSELF IS A SUFFICIENT PROOF OF FACT THAT TRUST OR INSTITUTION CONCERNED IS CREATED OR ESTABLISHED FOR CHARITABLE/GENERAL PUBLIC UTILITY PURPOSES AND IT IS ELIGIBLE FOR RENEWAL OF APPROVAL U/S 80G ENJOYED IN EARLIER YEARS. THE ADMITTED FACTS IN THE CASE OF P RESENT ASSESSEE ARE THAT IT WAS REGISTERED U/S 12A OF THE ACT AND WAS ENJOYING THE SAME WHEN IT MOVED THE PRESENT APPLICATION FOR RENEWAL OF APPROV AL U/S 80G ENJOYED EARLIER. IT IS ALSO AN UNDISPUTED FACT THAT THERE WERE NO NEW FACTS DURING THE YEAR UNDER CONSIDERATION IN COMPARISON TO THE FACTS OF THE OTHER YEARS WHEN THE ASSESSEE WAS GRANTED BENEFIT OF SECTION 80 G OF THE ACT. THE DECISION OF CALCUTTA BENCH OF THE TRIBUNAL IN THE C ASE OF BENGAL HOSIERY MANUFACTURERS ASSOCIATION VS. DIT(E) (SUPRA) IS DAT ED 28/02/2011 FOR THE A.Y. 2010-11 WHEN THE PROVISO TO SECTION 2(15) WAS IN OPERATION. IN THAT CASE ALSO THE LD. DIT(E) HAD REJECTED THE APPLICATI ON MADE BY THE ASSESSEE FOR RENEWAL OF APPROVAL U/S 80G(5)(VI) OF THE ACT O N THE BASIS THAT THE ACTIVITIES OF THE ASSESSEE ARE BENEFICIARY TO MANUF ACTURERS ONLY AND THE SAME WILL NOT BE COVERED U/S 2(15) OF THE ACT UNDER PUBLIC UTILITY. THE TRIBUNAL AFTER DISCUSSING THE OBJECTS OF THE ASSESS EE ASSOCIATION AND THE FACT THAT THE ASSESSEE HAS BEEN ENJOYING REGISTRATI ON U/S 12A AND BENEFIT ITA NO. 4567/D/2012 ELECTRONICS & COMPUT ER SOFTWARE EXPORT PROMOTION COUNCIL 6 U/S 80G(5)(VI) OF THE ACT HAS HELD THAT THE REGISTR ATION OF AN INSTITUTION U/S 12A BY ITSELF IS A SUFFICIENT PROOF OF THE FACT THA T THE TRUST OR THE INSTITUTION IS CREATED OR ESTABLISHED FOR CHARITABLE/GENERAL PUBLI C UTILITY PURPOSE ELIGIBLE FOR THE BENEFIT PROVIDED U/S 80G OF THE ACT. IN TH IS REGARD SUPPORT HAS BEEN TAKEN FROM THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SONEPAT HINDU EDUCATIONAL AND CHARITABLE SO CIETY VS. CIT (SUPRA), WHEREIN THEIR LORDSHIPS APPLYING THE RATIO OF THE D ECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RADHA SWAMI SATSANG VS . CIT, 193 ITR 321 (SC) HAS HELD THAT RESJUDICATA CAN BE APPLIED IN INCOME TAX PROCEEDINGS WHEN A FUNDAMENTAL ASPECT HAS PREVAILED THROUGH DIF FERENT ASSESSMENT YEARS WITHOUT BEING CHALLENGED ONE WAY OR THE OTHER . IN SUCH CASES IT IS NOT APPROPRIATE TO CHANGE THE POSITION IN A SUBSEQU ENT YEAR. THE TRIBUNAL THUS, HELD THAT WHEN ON THE SAME SET OF FACTS AND C IRCUMSTANCES OF THE CASE, RENEWAL OF APPROVAL U/S 80G(5)(VI) HAS BEEN G RANTED FOR EARLIER YEARS AND THERE BEING NO CHANGE IN THE FACTS AND CIRCUMST ANCES IN THE YEARS FOR WHICH RENEWAL IS SOUGHT FOR, THERE IS NO JUSTIFICAT ION TO REJECT THE ASSESSEES APPLICATION FOR RENEWAL OF EXEMPTION CERTIFICATE U/ S 80G(5)(VI) FOR THE A.Y. 2010-11 ONWARDS. THE HONBLE DELHI HIGH COURT IN T HE CASE OF SONEPAT HINDU EDUCATIONAL VS. CIT (SUPRA) HAS BEEN PLEASED TO HOLD THAT REGISTRATION OF AN INSTITUTION U/S 12A(A) BY ITSELF IS SUFFICIENT PROOF OF FACT THAT TRUST OR INSTITUTION CONCERNED IS CREATED OR ESTABL ISHED FOR CHARITABLE/RELIGIOUS PURPOSE. THE HONBLE DELHI HI GH COURT IN THE CASE OF PHD CHAMBER OF COMMERCE & INDUSTRY VS. DIT(E) (SUPR A) DATED 19/10/2012 HAS HELD THAT THERE CAN BE DOUBT THAT TH E ACTIVITIES OF THE NATURE PRESCRIBED IN THE CASE OF THE ASSESSEE WHICH IS A T RADE ASSOCIATION I.E. CHAMBER OF COMMERCE & INDUSTRY ESTABLISHED TO PROTE CT THE INTEREST AND TRADE AND INDUSTRY IN PUNJAB, HARYANA & DELHI WERE ACTIVITIES WHICH ARE INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS OF THE CHAMBER BUT THE DOMINANT PURPOSE TEST WAS APPLIED TO HOLD THAT TH E ACTIVITIES TO EARN ITA NO. 4567/D/2012 ELECTRONICS & COMPUT ER SOFTWARE EXPORT PROMOTION COUNCIL 7 INCOME WERE NOT DRIVEN WITH THE MOTIVE OF PROFIT MA KING. IN THAT CASE THE TRIBUNAL OBSERVED THAT THE RECEIPTS WERE EARNED BY REPETITIVE ACTIVITIES, WHICH CAN BE TERMED AS BUSINESS. THE HONBLE HIGH COURT HELD THAT IT WAS NOT PROPER TO CHARACTERIZE THE ACTIVITIES OF THE AS SESSEE AS ACTIVITIES AMOUNTING TO A BUSINESS IN THE GENERALLY UNDERSTOOD SENSE OF THE WORD, THE MOST IMPORTANT FEATURE OF BUSINESS BEING PROFIT MOT IVE. IT WAS HELD THAT IT HAD NOT BEEN SUGGESTED BY THE INCOME TAX AUTHORITIE S THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE WERE PROPELLED BY ANY P ROFIT MOTIVE, THEREFORE, THE PROVISIONS OF SECTION 11(4)(A) WERE NOT ATTRACT ED. UNDER THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE LD. DIT(E) WAS NOT JUSTIFIED IN DENYING THE RENEWAL OF APPROVAL U/S 80G(5)(VI) OF THE ACT T O THE ASSESSEE. WE THUS, WHILE SETTING ASIDE THE ORDER IMPUGNED, DIRECT THE LD. DIT(E) TO GRANT RENEWAL OF APPROVAL U/S 80G(5)(VI) OF THE ACT AS AP PLIED FOR BY THE ASSESSEE. THE GROUNDS ARE THUS, ALLOWED IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 31/10/2014 SD/- SD/- (G.D. AGARWAL) VICE PRESIDENT (I.C. SUDHIR) JUDICIAL MEMBER DATED: 31/10/2014 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR