M/s. Spring Bird Educational Society, Sonepat V. CIT, Rohtak

ITA 4612/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97604 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 21-10-2015
• Assessment Year: misc
• Appeal Filed On: 21-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNITA KEJRIWAL
• Keywords: Opportunity of being heard
• Section: 12AA; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI N.K. SAINI: ACCOUNTANT MEMBER AND SHRI C.M. GARG : JUDICIAL MEMBER ITA NO.4612 /DEL/2014 U/S 12AA(1)(B)(II) SPRING BIRD EDUCATIONAL SOCIETY, VS. COMMISSIONER OF INCOME-TAX, 103, INDIRA COLONY, SONEPAT. ROHTAK. PAN: AADAS 1262 N ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI TARUN ROHTAGI CA RESPONDENT BY : SMT. SUNITA KEJRIWAL CIT(DR) DATE OF HEARING : 23/10/2015. DATE OF ORDER : 28/10/2015. O R D E R PER N.K. SAINI, A.M. : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 24-6-2014 OF LD. COMMISSIONER OF INCOME-TAX, ROHTAK. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED AS MANY A S 6 GROUNDS, BUT THE ONLY GRIEVANCE RELATES TO THE REJECTION OF APPLICAT ION MOVED BY THE ASSESSEE FOR GRANT OF REGISTRATION U/S 12A(1)(AA) OF THE INC OME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSEE SOCIETY MOVED AN APPLICATION U/S 12A(1)(AA) OF THE ACT. LD. CIT CALL ED REPORT FROM THE 2 ITA 4612/DEL/2017 M/S SPRING BIRD EDUCTIONAL SOCIETY SONEPAT. CONCERNED AO AS TO WHETHER THE ASSESSEE HAD FULFIL LED THE CONDITIONS REQUIRED FOR THE GRANT OF REGISTRATION APPLIED FOR AND THE REPORT WAS RECEIVED THROUGH JOINT CIT, SONEPAT. LD. CIT OBSERVED THAT T HE AO AS WELL AS JCIT HAD NOT CLEARLY RECOMMENDED THE CASE FOR REGISTRATI ON AND LEFT THE MATTER TO BE DECIDED ON MERITS. LD. CIT MENTIONED THAT THE RE PLY OF THE ASSESSEE DID NOT SATISFY THE VERY ESSENCE OF CHARITY, WHICH WAS NECESSARY FOR EARNING THE STATUS OF BEING CHARITABLE AS REQUIRED U/S 2(15) RE AD WITH SECTION 12AA OF THE ACT. LD. CIT HELD THAT MERE IMPARTING EDUCATION FOR PRIMARY PURPOSE OF EARNING PROFIT COULD NOT BE SAID TO BE A CHARITABL E ACTIVITY AND REJECTED THE APPLICATION BY OBSERVING AS UNDER: ON PERUSAL OF THE INCOME AND EXPENDITURE ACCOUNT S UPPLIED BY THE ASSESSEE FOR THE FINANCIAL YEAR 2012-13 & 2011- 12 IT IS NOTICED THAT THE INSTITUTION HAS MADE EXPENDITURE O N ADVERTISEMENT AMOUNTING TO RS. 47,650/- & RS. 66,70 4/- RESPECTIVELY AND THIS EXPENDITURE IS CERTAINLY NOT FOR THE PURPOSE OF EDUCATION & THE EXPENDITURE HAS BEEN INC URRED TO PROCURE MORE ADMISSION WITH THE SOLE MOTIVE OF EARN ING MORE PROFITS AND HENCE THE CONDITION THAT THE EXPENDITUR E SHOULD BE INCURRED SOLELY FOR THE PURPOSE OF EDUCATION IS ALS O NOT SATISFIED. THUS, THE ASSESSEE SOCIETY IS PROFIT ORI ENTED BUSINESS ENTITY AND NOT A CHARITY INSTITUTE. KEEPING IN VIEW OF THE ABOVE, THE APPLICATION OF THE ASSESSEE TRUST DOES NOT DESE RVE FOR REGISTRATION. 3 ITA 4612/DEL/2017 M/S SPRING BIRD EDUCTIONAL SOCIETY SONEPAT. 4. RELIANCE WAS PLACED ON THE RATIO OF DECISION OF HONBLE UTTRAKHAND HIGH COURT IN THE CASE OF CIT VS. NATIONAL INSTITU TE OF AERONAUTICAL ENGINEERING & EDUCATIONAL SOCIETY (2009) 226 CTR 82 . 5. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL. 6. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT TH E ASSESSEE WAS RUNNING A SCHOOL, WHICH WAS RECOGNIZED BY HARYANA STATE EDUCA TION BOARD AND THE ASSESSEE CHARGED THE FEE WHICH WAS NOT EXCESSIVE AN D EVEN FREE EDUCATION WAS GIVEN TO THE POOR STUDENTS. REFERENCE WAS MADE TO PAGE 15 OF THE ASSESSEES PAPER BOOK. IT WAS FURTHER STATED THAT T HE PROFIT, IF ANY, EARNED BY THE ASSESSEE WAS NOT FOR THE BENEFIT OF THE ASSESSE E TRUST OR ITS TRUSTEES. IT WAS FURTHER STATED THAT THE DECISION OF THE HONBLE UTT RAKHAND HIGH COURT, RELIED UPON BY LD. CIT WAS CONSIDERED BY THE SAME HIGH COU RT IN SUBSEQUENT DECISION IN THE CASE OF CIT V. HIGHLANDERS EDUCATIO NAL ACADEMY [ITA NO. 142 OF 2007 DATED 27-11-2012]. IT WAS FURTHER STATE D THAT THE LD. CIT WAS REQUIRED TO SEE THE GENUINENESS OF THE OBJECTS, WHI CH WERE CHARITABLE IN NATURE AND OUGHT TO HAVE GRANTED THE REGISTRATION. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - ADITANAR EDUCATIONAL INSTITUTION VS. ADDL. CIT 224 ITR 310 (SC); - QUEENS EDUCATIONAL SOCIETY VS. CIT 372 ITR 699 (SC ) - FIFTH GENERATION EDUCATION SOCIETY VS. CIT 185 ITR 634 (ALL.); 4 ITA 4612/DEL/2017 M/S SPRING BIRD EDUCTIONAL SOCIETY SONEPAT. - DIT V. GARDEN CITY EDUCATIONAL TRUST [2010] 191 TAX MAN 238 (KAR); - SASWAT CHETNA EDUCATIONAL SOCIAL DEVELOPMENT RESEAR CH SOCIETY V. CIT (ROHTAK) [ ITAT DELHI BENCH G IN ITA NO. 5376 /DEL/2012 DATED 4-4-2014. - SHRI GIAN GANGA VOCATIONAL & EDUCATIONAL SOCIETY V. CIT, ROHTAK [2013] 143 ITD 297 (DEL). - MERITTA WELFARE TRUST VS. CIT, DEHRADUN [2015] 68 S OT 433 (DEL.). - DAKSH EDUCATION TRUST VS. CIT [ITAT DELHI BENCH B IN ITA NO. 3512/DEL/2012 DATED 21-9-2012.] 7. IN HER RIVAL SUBMISSIONS, THE LD. CIT(DR) STRONG LY SUPPORTED THE ORDER OF THE LD. CIT AND FURTHER SUBMITTED THAT THE EAR NING OF PROFIT IS NOT A CHARITABLE ACTIVITY. THEREFORE, THE LD. CIT RIGHTLY REJECTED THE APPLICATION MOVED BY THE ASSESSEE FOR REGISTRATION U/S 12A. IT WAS FURTHER STATED THAT THE ASSESSEE HAD NOT APPLIED THE CORPUS FUNDS FOR THE P URPOSE OF EDUCATION AND THE EXPENDITURE WAS MADE MAINLY ON ADVERTISEMENT DU RING FINANCIAL YEARS 2011-12 AND 2012-13, WHICH COULD NOT BE SAID TO BE CHARITABLE IN NATURE AND FOR THE PURPOSE OF EDUCATION. THEREFORE, LD. CIT RI GHTLY REJECTED THE APPLICATION MOVED BY THE ASSESSEE. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE LD. CIT ACTED UPON THE RECOMMENDAT ION OF THE AO AS WELL AS THE JCIT AND REJECTED THE APPLICATION MOVED BY T HE ASSESSEE BY FOLLOWING THE JUDGMENT OF THE HONBLE UTTRAKHAND HIGH COURT I N THE CASE OF NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING & EDUCATIONAL SOCIETY (SUPRA), WHICH 5 ITA 4612/DEL/2017 M/S SPRING BIRD EDUCTIONAL SOCIETY SONEPAT. WAS LATER ON CONSIDERED IN ANOTHER DECISION IN THE CASE OF HIGHLANDERS EDUCATIONAL ACADEMY (SUPRA). IN THE PRESENT CASE TH E LD. CIT HAS NOT COMMENTED AS TO HOW AND IN WHAT MANNER THE OBJECTS OF THE ASSESSEE WERE NOT CHARITABLE IN NATURE AND HOW THE ASSESSEE DID N OT SATISFY THE CONDITION FOR REGISTRATION U/S 12A. HE HAS ALSO NOT DISCUSSED THE OBJECTS OF THE SOCIETY. WE, THEREFORE, IN THE ABSENCE OF CLEAR FACTS ON REC ORD, DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE TO THE FILE OF CIT, TO BE ADJU DICATED AFRESH EXPEDITIOUSLY, IN ACCORDANCE WITH LAW, PROVIDING DUE AND REASONABL E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, PREFERABLY WITHIN SIX MONTHS FROM THE RECEIPT OF THIS ORDER. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 28/10/2015. SD/- SD/- (C.M. GARG) (N.K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28/10/2015. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. 6 ITA 4612/DEL/2017 M/S SPRING BIRD EDUCTIONAL SOCIETY SONEPAT. -+ DATE INITIAL 1. DRAFT DICTATED ON 26-10.2015 PS 2. DRAFT PLACED BEFORE AUTHOR 27.10.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.