Miss Hill Education Society, Hathras V. CIT, Gwalior

ITA 465/AGR/2009

• Counselvise Citation: 46520314 RSA 2009
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-08-2011
• Assessment Year: misc
• Appeal Filed On: 08-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: ALOK FARSAIYA
• Keywords: Charitable institution; Corroborative evidences
• Section: 12A; 12AA; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.465/AGR/2009 MISS HILL EDUCATIONAL SOCIETY, VS. COMMISSIONER OF INCOME TAX, LAXMI BAI COLONY, GWALIOR RANGE, GWALIOR. LASHKAR, GWALIOR. (PAN : AAATM 8693 D). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ALOK FARSAIYA, C.A. RESPONDENT BY : SHRI A.K. SHARMA, JR. D.R. ORDER PER BENCH : THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE IMPUGNED ORDER DATED 16.09.2009 PASSED BY THE LD. CIT, GWALIOR, WHEREIN, THE LD. CIT, GWALIOR HAS REFUSED TO GRANT REGISTRATION TO THE ASSESSEE SOCIE TY UNDER SECTION 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER). 2. THE ASSESSEE SOCIETY HAS FILED APPLICATION IN FO RM NO.10A SEEKING REGISTRATION UNDER SECTION 12AA OF THE ACT ON 10.10 .2006 WHICH WAS REJECTED BY THE LD. CIT, GWALIOR ON 26.04.2007. AGGRIEVED BY T HE SAME, THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE IT S ORDER DATED 14.03.2008 SET ASIDE THE ORDER OF LD. CIT, GWALIOR DATED 26.04.200 7 AND REMITTED THE MATTER TO 2 THE LD. CIT FOR AFRESH CONSIDERATION IN ACCORDANCE WITH LAW. THE TRIBUNAL ALSO DIRECTED THE LD. CIT, GWALIOR THAT WHILE DECIDING T HE APPLICATION UNDER SECTION 12AA OF THE ACT HE HAS TO SATISFY HIMSELF ABOUT THE CHARITABLE NATURE OF THE OBJECT OF THE TRUST AND GENUINENESS OF ITS ACTIVITIES. TH E TRIBUNAL FURTHER HELD THAT THE CIT HAS DISCRETION EITHER TO GRANT REGISTRATION FROM TH E DATE OF CREATION OF THE TRUST OR FROM THE DATE OF APPLICATION. IN COMPLIANCE OF THE DIRECTION GIVEN BY THE TRIBUNAL DATED 14 TH MARCH, 2008, THE LD. CIT CALLED REPORT FROM THE CO NCERNED ASSESSING OFFICER. THE ASSESSING OFFICER SUBMITTED REPORT DA TED 02.06.2009 THROUGH THE ADDL. CIT, RANGE-III, GWALIOR. IN HIS REPORT, THE ASSESSING OFFICER REPORTED THAT THE TRUST IS RUNNING TO ACHIEVE ITS OBJECTS AND REC OMMEND FOR GRANT OF REGISTRATION TO THE SOCIETY UNDER SECTION 12AA OF THE ACT BUT, O N THE OTHER HAND, THE ADDL. CIT, RANGE-III, GWALIOR VIDE HIS REPORT DATED 02.07.2009 HAS REPORTED THAT THE ASSESSEE IS HAVING GROSS RECEIPTS OF MORE THAN ` 1 CORE FOR ALL THE YEARS. AS THE ASSESSEE IS NOT REGISTERED UNDER SECTION 12AA OF THE ACT, IT CA NNOT CLAIM EXEMPTION UNDER SECTION 12A OF THE ACT. MOREOVER, THE ASSESSEE HAS NOT BEEN GRANTED EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT. IN VIEW OF T HESE FACTS, THE INCOME OF THE ASSESSEE IS TAXABLE FOR ALL THE EARLIER YEARS AND H E DIRECTED THE ASSESSING OFFICER TO EXAMINE IF ACTION UNDER SECTION 148 OF THE ACT CAN BE TAKEN IN THESE YEARS. HE FURTHER OBSERVED THAT THE ASSESSEE SHOWING PAYMENT OF SALARY OF ` 1,34,59,017/- AGAINST RECEIPTS OF FEES OF ` 1,41,67,600/- FOR THE FINANCIAL YEAR 2007-08 WHICH APPEARS TO BE EXCESSIVE. LASTLY, THE ADDL. CIT HAS ALSO OPINED THAT THE ACCOUNT 3 SUBMITTED BY THE ASSESSEE DO NOT APPEAR TO BE GENUI NE AND IN VIEW OF THE ABOVE SAID FACTS, HE HAS NOT RECOMMENDED FOR THE GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. 3. THE LD. CIT, GWALIOR HAS GIVEN OPPORTUNITY OF HE ARING TO THE ASSESSEE AND THE ASSESSEE ALSO FILED ITS WRITTEN SUBMISSION ALON GWITH EVIDENCE REGARDING SALARY PAID TO THE EMPLOYEES, GENUINENESS OF THE PAYMENT O F SALARY TO THE EMPLOYEES, SOURCE OF PAYMENT OF SALARY. THE MAIN CONTENTION O F THE ASSESSEE SOCIETY BEFORE THE LD. CIT, GWALIOR WAS THAT THE SCHOOL RUN BY THE SOCIETY IS GOVERNMENT AIDED SCHOOL, BUT THE STATE OF MADHYA PRADESH HAS STOPPED THE GRANTS-IN AID TO THE RECOGNIZED STAFF OF THE SCHOOL SINCE JANUARY, 2003 AND THE SALARIES TO THESE RECOGNIZED STAFF WERE BEING PAID BY THE SOCIETY. A WRIT PETITION HAS ALSO BEEN FILED BY THE RECOGNIZED STAFF BEFORE THE HONBLE HI GH COURT OF MADHYA PRADESH BENCH AT GWALIOR AGAINST THE STATE OF MADHYA PRADES H AND THE SOCIETY FOR RELEASE OF GRANT IN AID AND THE HONBLE HIGH COURT DIRECTED THE STATE GOVERNMENT AND THE DISTRICT EDUCATION OFFICER TO INSPECT THE INSTITUTI ON IN QUESTION AND TO FORWARD A REPORT IMMEDIATELY TO THE CHIEF EXECUTIVE OFFICER, JILA PANCHAYAT, GWALIOR ENABLING HIM TO PASS APPROPRIATE ORDERS IN RESPECT OF RELEASE OF GRANT-IN-AID WITHIN A PERIOD OF 60 DAYS FROM THE DATE OF RECEIPT OF A C ERTIFIED COPY OF THE ORDER OF THE HONBLE HIGH COURT. IN COMPLIANCE OF THE SAME, THE DISTRICT EDUCATION OFFICER, GWALIOR RECOMMENDED FOR RELEASE OF THE AMOUNT OF GR ANT-IN-AID TO THE SOCIETY 4 WHICH HAS LASTLY BEEN RELEASED BY THE GOVERNMENT TO THE SOCIETY. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT, GWALIOR HAS REJECTED THE APPLICATION FOR GRANT OF REGISTRATION TO THE SOCIETY VIDE IMPUGNED ORDER DATED 16.09.2009 BY HOLDING THAT THE SOCIETY HAS NO T GIVEN PROPER REPLY FOR HEAVY SALARY PAID TO THE EMPLOYEES AND HAS ALSO NOT GIVEN RECONCILIATION AND MODE4 OR SOURCE FROM WHICH ADVANCE GIVEN TO THE SCHOOL IS AD JUSTED. THE LD. CIT, GWALIOR ALSO HELD THAT IN ABSENCE OF SUPPORTING EVIDENCES A ND AS GROSS RECEIPTS OF THE SOCIETY ARE MORE THAN ` 1 CRORE, THE SOCIETY HAS NOT BEEN GRANTED EXEMPTIO N UNDER SECTION 10(23C)(VI) OF THE ACT. SINCE THE ASSESSEE SOCIETY HAS NOT FULFILLED THE CONDITIONS NECESSARY FOR GRANT OF REGISTRATION, THE REFORE, SHE REJECTED THE APPLICATION FILED BY THE ASSESSEE BY PASSING THE IM PUGNED ORDER. AGGRIEVED BY THE SAME, THE ASSESSEE SOCIETY FILED APPEAL BEFORE THIS TRIBUNAL WHICH CAME UP FOR HEARING FINALLY ON 11.8.2011. 4. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE STATED THE FACTS OF THE CASE WHICH WE HAVE STATED IN THE AFORESAID PARAGRAP HS. HE FURTHER STATED THAT THE OBJECT OF THE SOCIETY IS PURELY CHARITABLE BECAUSE THE SOCIETY IS RUNNING EDUCATIONAL INSTITUTION AND PROVIDING HIGHLY QUALITATIVE EDUCAT ION TO THE CHILDREN SINCE ITS FOUNDATION. HE FURTHER ARGUED THAT THE ASSESSEE SO CIETY HAS PRODUCED ALL THE NECESSARY EVIDENCES ESTABLISHING THAT THE ASSESSEE IS A CHARITABLE INSTITUTION AND PROVIDING EDUCATION TO THE POOR PEOPLE. THEREFORE, THE ASSESSEE HAS FULFILLED ALL THE 5 CONDITIONS FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. IN SUPPORT OF HIS ARGUMENT, HE FILED PAPER BOOK CONTAINING PAGE N OS.1 TO 110 IN WHICH HE HAS ATTACHED COPY OF ORDER U/S 12AA MADE BY CIT ON 26.0 4.2007, COPY OF ORDER OF I.T.A.T. DATED 14.03.2008 RESTORING BACK THE MATTER TO CIT, COPY OF LETTER DATED 21.07.2009 SUBMITTED BEFORE CIT, COPY OF CONSTITUTI ON OF THE SOCIETY FILED BEFORE CIT, COY OF REPLY FILED BEFORE CIT ON 29.07.2009, C OPY OF ANNEXURE TO REPLY FILED BEFORE CIT ON 29.07.2009 EXPLAINING THE ADVANCE TO SCHOOL, COPY OF BALANCE SHEET OF SOCIETY FILED BEFORE CIT ON 29.07.2009, EXTRACT OF MINUTES OF MANAGING COMMITTEE MEETING OF THE SOCIETY HELD ON 26.07.2009 DISCUSSING THE PROPOSAL TO WRITE OFF THE AMOUNT IN BALANCE SHEET SHOWN AS ADVA NCE TO SCHOOL, COPY OF BOOK ON MISS AGNES GALE HILL EXPLAINING THE HISTORY ABOU T STARTING THE SCHOOL, COPY OF LETTERS OF EDUCATION DEPARTMENT OF GOVERNMENT OF M. P. AS REGARDS TO RELEASE OF REGULAR GRANT, COPY OF LETTERS FROM SECRETARY, GOVE RNMENT OF U.P. DATED 05.10.56 WITH REGARD TO RELEASES OF GRANT OF FUNDS FOR CONST RUCTION OF BUILDING FOR SCHOOL, COPY OF LETTERS FROM SECRETARY GOVERNMENT OF U.P. D ATED 08.03.58 WITH REGARD TO RELEASES OF GRANT OF FUNDS FOR CONSTRUCTION OF BUIL DING FOR SCHOOL, COPY OF LETTER DATED 30.12.1957 FROM MUNICIPAL CORPORATION, GWALIO R ABOUT ALLOTMENT OF LAND FOR SCHOOL FREE OF COST, COPY OF AFFIDAVIT FILED BY SCH OOL TEACHES BEFORE THE HIGH COURT, COPY OF ORDER OF HIGH COURT IN WRIT PETITION FILED BY TEACHERS TO RELEASE THE GRANT IN AID AFTER CONDUCTING THE ENQUIRY, COPY OF LETTER DATED 29.05.2010 SENT BY BASIC SIKSHA ADHIKARI RECOMMENDING THE RELEASE OF G RANT TO SCHOOL, COPY OF 6 AUDITED BALANCE SHEET WITH AUDIT REPORT FOR F.Y. 20 03-04 FILED BEFORE CIT ALONG WITH APPLICATION ON FORM 10A, COPY OF AUDITED BALAN CE SHEET WITH AUDIT REPORT FOR F.Y. 2004-05 FILED BEFORE CIT ALONG WITH APPLIC ATION ON FORM 10A, COPY OF AUDITED BALANCE SHEET WITH AUDIT REPORT FOR F.Y. 20 05-06 FILED BEFORE CIT ALONG WITH APPLICATION ON FORM 10A, COPY OF AUDITED BALAN CE SHEET WITH AUDIT REPORT FOR F.Y. 2006-07 BEING FILED AS PER DIRECTIONS ON PREVI OUS HEARING, LIST OF OFFICE BEARERS FROM 18.02.2002 TILL 05.12.2008 BEING FILED AS PER DIRECTIONS ON PREVIOUS HEARING, LIST OF OFFICE BEARERS W.E.F. 05.12.2008 T ILL DATE BEING FILED AS PER DIRECTION ON PREVIOUS HEARING, AFFIDAVIT OF SECRETARY OF THE SOCIETY EXPLAINING FACTS ABOUT THE BALANCE SHEET. IN ADDITION TO THE AFORESAID DO CUMENTS, HE HAS ALSO FILED A COPY OF RELEASE OF GRANT BY DISTRICT EDUCATION OFFICER, GWALIOR TO THE ASSESSEE SOCIETY ON 29.05.2010 AND THE RECONCILIATION OF THE SOCIETY SC HOOL WITH THE MADHYA PRADESH STATE GOVERNMENT FROM TIME TO TIME. 5. ON THE CONTRARY, THE LD. AUTHORISED REPRESENTATI VE RELIED UPON THE ORDER PASSED BY THE LD. CIT. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDER PASSED BY THE LD. CIT, GWALIOR ALONG WITH OTHER RELEVANT EVIDENCES PRODUCE D BY THE ASSESSEE IN THE SHAPE OF PAPER BOOK CONTAINING PAGE NOS.1 TO 110. IT IS A MATTER OF FACT THAT THE ASSESSEE SOCIETYS APPLICATION DATED 10.10.2006 REJECTED BY THE LD. CIT. GWALIOR ON 7 26.04.2007 HAS BEEN CHALLENGED BY THE ASSESSEE SOCI ETY BEFORE THE TRIBUNAL IN WHICH THE TRIBUNAL HAS SET ASIDE THE ORDER DATED 26 .04.2007 WITH DIRECTION TO DECIDE THE ISSUE IN DISPUTE AFRESH UNDER LAW. IN C OMPLIANCE OF THE SAME, THE LD. CIT, GWALIOR, AFTER AFFORDING OPPORTUNITY TO THE AS SESSEE SOCIETY, AGAIN REJECTED THE APPLICATION OF THE ASSESSEE SOCIETY FOR GRANTING TH E REGISTRATION UNDER SECTION 12AA OF THE ACT. THE MAIN OBJECTION OF THE LD. CIT, GWA LIOR IN THE IMPUGNED ORDER IS REGARDING GENUINENESS OF EXCESSIVE SALARIES PAID TO THE EMPLOYEES OF THE ASSESSEE SOCIETY AND ADVANCE GIVEN TO THE SCHOOL AMOUNTING T O ` 3,06,87,339/- FOR WHICH NO PROVISION HAS BEEN MADE IN ACCOUNTS. WE HAVE PERUS ED THE COPY OF BALANCE SHEET WITH AUDITED REPORT FOR THE FINANCIAL YEARS 2003 TO 2007 WHICH THE ASSESSEE SOCIETY HAS FILED BEFORE THE LD. CIT ALONG WITH APPLICATION IN FORM NO.10A SEEKING REGISTRATION UNDER SECTION 12AA OF THE ACT ON 10.10 .2006. WE HAVE ALSO PERUSED THE AIMS AND AMENDED CONSTITUTION OF THE ASSESSEE S OCIETY, ESPECIALLY THE OBJECT FOR WHICH THE SOCIETY IS ESTABLISHED, AND FOUND THAT TH E ASSESSEE SOCIETY HAS BEEN ESTABLISHED TO PROVIDE FACILITIES OF EDUCATION PRIM ARILY FOR GIRLS WITH LIMITED ACCOMMODATION FOR BOYS. TO PROVE THE SAME, THE ASS TT. CIT, RANGE-III, GWALIOR HAS ALSO SUBMITTED A REPORT DATED 02.06.2009 THROUG H THE ADDL. CIT, RANGE-III, GWALIOR AND SUBMITTED THAT THE TRUST IS RUINING TO ACHIEVE ITS OBJECTS AND RECOMMEND FOR GRANT OF REGISTRATION TO THE SOCIETY UNDER SECTION 12AA OF THE ACT. WE HAVE ALSO PERUSED THE ORDER PASSED BY THE HONBL E HIGH COURT OF JABALPUR, BENCH GWALIOR WHICH IS FILED BY THE TEACHERS OF THE ASSESSEE SOCIETY. THEY 8 CONTENDED BEFORE THE HONBLE HIGH COURT THAT THE AS SESSEE SOCIETY WAS RECEIVING GRANT-IN-AID FROM THE STATE GOVERNMENT FROM TIME TO TIME BUT DUE TO SOME CIRCUMSTANCES, GRANT-IN-AID WAS STOPPED BY THE STAT E GOVERNMENT. THEY REQUESTED BEFORE HONBLE HIGH COURT FOR ISSUANCE OF APPROPRIA TE WRIT, ORDER OR DIRECTION, DIRECTING THE RESPONDENT/DISTRICT EDUCATION OFFICER TO TAKE APPROPRIATE STEPS IN THE MATTER. THE HONBLE HIGH COURT VIDE ITS ORDER DATE D 19.11.2009 DISPOSED THE WRIT PETITION FILED BY THE TEACHERS OF THE ASSESSEE SOCI ETY WITH DIRECTION TO THE RESPONDENT/DISTRICT EDUCATION OFFICER TO INSPECT TH E INSTITUTION IN QUESTION AND TO FORWARD A REPORT IMMEDIATELY TO THE CHIEF EXECUTIVE OFFICER, JILA PANCHAYAT, GWALIOR ENABLING HIM TO PASS APPROPRIATE ORDERS IN RESPECT OF RELEASE OF GRANT-IN- AID WITHIN A PERIOD OF 60 DAYS FROM THE DATE OF REC EIPT OF A CERTIFIED COPY OF THE ORDER OF THE HONBLE HIGH COURT. IN COMPLIANCE OF THE SAME, THE DISTRICT EDUCATION OFFICER RECOMMEND FOR RELEASE OF GRANT-IN -AID TO THE ASSESSEE SOCIETY. THE LD. COUNSEL FOR THE ASSESSEE PRODUCED A COY OF LETTER DATED 29.05.2010 IN WHICH THE GRANT-IN-AID AMOUNT HAS BEEN RELEASED TO THE ASSESSEE SOCIETY. THE ASSESSEE SOCIETY IS ALSO RECOGNISED WITH THE DISTRI CT EDUCATION OFFICER, GWALIOR FROM TIME TO TIME. KEEPING IN VIEW OF THE FACTS AN D CIRCUMSTANCES EXPLAINED ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE AS SESSEE SOCIETY IS RUNNING A GOVERNMENT AIDED SCHOOL WHICH IS PROVIDING FACILITI ES OF HIGH CLASS EDUCATIONAL INSTITUTION PRIMARILY FOR GIRLS WITH LIMITED ACCOMM ODATION FOR BOYS, TO COMMEMORATE THE MEMORY OF MISS A G HILL, MONROVIA, CALIFORNIA, THE FOUNDER OF 9 MISS HILLS SCHOOL, GWALIOR. AT THE TIME OF HEARIN G, THE LD. COUNSEL FOR THE ASSESSEE ALSO STATED THAT THE ASSESSEE SOCIETY IS N OT GETTING ANY DONATION FROM THE PUBLIC AND THEY ARE APPLYING THE MONEY FOR CHARITAB LE PURPOSE, ESPECIALLY IN RUNNING EDUCATIONAL INSTITUTIONS. KEEPING IN VIEW OF THE AFORESAID DISCUSSIONS, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE SOC IETY IS FULFILLING THE CONDITIONS NECESSARY FOR GRANT OF REGISTRATION UNDER SECTION 1 2AA(1)(B)(II) OF THE ACT. THEREFORE, WE DIRECT THE LD. CIT, GWALIOR TO GRANT REGISTRATION TO THE ASSESSEE SOCIETY W.E.F. 01.04.2006. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 12.08.20 11). SD/- SD/- (K.G. BANSAL) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: AGRA DATE: 12 TH AUGUST, 2011 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT(APPEALS) CO NCERNED/D.R., ITAT, AGRA BENCH, AGRA/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY