Make the future of Country Educational Society, Rohtak V. CIT, Rohtak

ITA 5060/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58699 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 18-01-2012
• Assessment Year: misc
• Appeal Filed On: 14-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI SENIOR
• Section: 12A; 12AA; 10B; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 5060/DEL/2011 ASSESSMENT YEAR: - - MAKE THE FUTURE OF COUNTRY VS. LEARNED COMMISSION ER OF IT, EDUCATIONAL SOCIETY, ROHTAK (HARYANA) 933/32, SHIVAJI COLONY, ROHTAK (HARYANA) (PAN: AAAA1187M) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI NAVIN GUPT A, ADV. RESPONDENT BY: SHRI RS NEGI, SEN IOR DR DATE OF HEARING : 18.01.2012 DATE OF PRONOUNCEMENT : 17.02.2012 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF ASSESSEE AGAINST THE ORDER OF LEARNED COMMISSIONER DATED 22.09.2011 PASS ED UNDER SECTION 12AA(1)(B)(II) OF THE INCOME-TAX ACT, 1961. THE ASS ESSEE HAS PLEADED THAT LEARNED COMMISSIONER HAS ERRED IN REJECTING ITS APP LICATION FOR REGISTRATION UNDER SEC. 12A. THE BRIEF FACTS OF THE CASE ARE THA T THE ASSESSEE EARLIER KNOWN AS LITERACY REMOVAL EDUCATIONAL SOCIETY IS A REGISTERED SOCIETY UNDER THE SOCIETIES REGISTRATION ACT, 1860 VIDE REG ISTRATION NO.144 DATED 27.9.2007. THE BASIC AIMS AND OBJECTS OF THE SOCIET Y IS TO PROVIDE ELEMENTARY EDUCATION TO THE STREET CHILDREN AND THE CHILDREN L IVING IN SLUM. AT PRESENT, IT 2 IS RUNNING TWO MOTIVATIONAL CENTRES FOR ELEMENTARY EDUCATION AT 2094/31, GREEN PARK COLONY, KANHELI ROAD NEAR STORM WATER DI SPOSAL, ROHTAK AND PALIKA COLONY NEAR BHIWANI ROAD FLYOVER, ROHTAK. IT HAS APPLIED FOR GRANT OF REGISTRATION UNDER SEC. 12A OF THE ACT. THE APPL ICATION IN FORM NO.10A WAS RECEIVED BY THE OFFICE OF THE COMMISSIONER ON 2 8.3.2011. ALONGWITH APPLICATION, ASSESSEE HAS APPENDED COPY OF MEMORAND UM OF ASSOCIATION, RULES AND REGULATIONS OF THE SOCIETY, PROFIT AND LO SS ACCOUNT, COPY OF INCOME AND EXPENDITURE ACCOUNT, AUDIT REPORT WITH FORM NO. 10B FOR ASSESSMENT YEAR 2007-08, 2008-09 AND 2009-10 ETC. LEARNED COMMISSIO NER IN ORDER TO VERIFY THE CLAIM OF ASSESSEE FOR ITS CHARITABLE ACTIVITIES AND THE OBJECTS POINTED OUT IN THE MEMORANDUM OF ASSOCIATION ISSUED A NOTICE TO THE ASSESSEE AND CALLED FOR VARIOUS DETAILS. THE ASSESSEE HAS SUBMITTED ALL THE REQUISITE DETAILS AND THE COPY OF THE REPLY DATED 14 TH OF SEPTEMBER 2007 HAS BEEN PLACED ON PAGES 90 TO 92 OF THE PAPER BOOK. LEARNED COMMISSIONER CA LLED FOR A REPORT FROM THE ITO AND THEREAFTER REJECTED THE APPLICATION OF THE ASSESSEE. THE FINDINGS RECORDED BY THE LEARNED COMMISSIONER READS AS UNDER : 6. A REPORT WAS CALLED FOR FROM THE ASSESSING OFFI CER CONCERNED AS TO WHETHER THE APPLICANT FULFILLED THE CONDITIONS R EQUISITE FOR THE GRANT OF REGISTRATION APPLIED FOR AND THE REPORT WAS RECE IVED VIDE HER OFFICE LETTER F. NO. RTK RANGE/12A/2011-12/987 DATED 20/21 .09.2011. THE 3 JOINT CIT/ASSESSING OFFICER DID NOT CLEARLY RECOMME ND THE CASE FOR THE REGISTRATION AND LEFT THE MATTER TO BE DECIDED ON MERITS. THE JOINT CIT VIDE HER REPORT DATED 20.09.2011 REPORTED THAT THE TRUST/SOCIETY WAS REGISTERED WITH THE DISTRICT REGISTRAR VIDE REG ISTRATION NO.144 DATED 27.09.2007 IN THE NAME OF M/S. ILLETERACY REM OVAL EDUCATIONAL SOCIETY, 933/32, SHIVAJI COLONY, ROHTAK. ON 08.05.2 009 THE SOCIETYS NAME WAS CHANGED AS MAKE THE FUTURE OF COUNTRY EDU CATIONAL SOCIETY AND WAS REGISTERED WITH THE DISTRICT REGIST RAR, ROHTAK. THE A.O. HAS REPORTED THAT THE SOCIETY/TRUST HAS FILED ITS INCOME & EXPENDITURE STATEMENTS FOR THE ASSESSMENT YEAR 2008 -09, 2009-10 AND 2010-11 UNDER WHICH MORE THAN 85% OF RECEIPT EXPENS ES HAVE BEEN SHOWN EXCEPT IN THE YEAR 2007-08 RELEVANT TO THE AS SESSMENT YEAR 2008-09. FOR THE ASSESSMENT YEAR 2008-9, THE SOCIET Y HAS SHOWN 21.04% SURPLUS OVER THE GROSS RECEIPTS. THUS, THE J OINT CIT/A.O. DID NOT CLEARLY RECOMMEND THE CASE FOR REGISTRATION U/S . 12AA OF THE INCOME-TAX ACT. KEEPING IN VIEW THE AFORESAID FACTS AND CIRCUMSTANC ES, NEITHER AIMS/OBJECTS AND TERMS OF MEMORANDUM ARE OF THE CHA RITABLE NATURE, NOR ARE THERE ANY ACTIVITIES WHICH MAY BE PUT TO A TEST OF GENUINENESS. CONSEQUENTLY, THE REQUEST OF THE APPLICANT SOCIETY FOR REGISTRATION U/S. 12AA OF THE INCOME-TAX ACT CANNOT BE ACCEDED TO AND THE APPLICATION IN FORM 10A IS, THEREFORE, REJECTED ACCORDINGLY U/S . 12AA(1)(B)(II) OF THE INCOME-TAX ACT, 1961 2. WHILE IMPUGNING THE ORDER OF THE LEARNED COMMISS IONER, LEARNED COUNSEL FOR THE ASSESSEE TOOK US THROUGH THE AIMS A ND OBJECTS ENUMERATED IN 4 MEMORANDUM OF ASSOCIATION AVAILABLE ON PAGE NOS. 3 AND 4 OF THE PAPER BOOK. HE POINTED OUT THAT ALL THE OBJECTS MENTIONED IN THE MEMORANDUM OF ASSOCIATION ARE OF CHARITABLE NATURE. LEARNED COMMI SSIONER HAS MADE A REFERENCE TO THE ASSESSING OFFICER IN ORDER TO VERI FY THE ACTIVITIES OF THE ASSESSEE. LEARNED ASSESSING OFFICER HAS CALLED FOR INCOME AND EXPENDITURE ACCOUNT AND VERIFIED THE ACTIVITIES OF THE ASSESSEE . LEARNED ACIT, ROHTAK HAS RECOMMENDED THE CASE OF ASSESSEE FOR GRANT OF R EGISTRATION. HE TOOK US THROUGH THE LETTER OF LEARNED ACIT DATED 13.2.2011 AVAILABLE ON PAGE NOS. 13 AND 14 OF THE PAPER BOOK. THE RELEVANT OBSERVATI ONS OF THE LEARNED ACIT READS AS UNDER: THE ITI OF THE OFFICE WAS DEPUTED TO CONDUCT INQU IRIES ON SPOT REGARDING ACTIVITIES AND AIMS & OBJECTIVES OF THE I NSTITUTION. THE ITI HAS REPORTED THAT ABOUT 150 CHILDREN WHO WERE BELOW POVERTY LINE AND LIVING IN POOR HUTS ARE STUDYING IN INSTITUTION. TH E INSTITUTION HAS ALSO SUBMITTED THAT SOCIETY IS RUNNING TWO MOTIVATIONAL CENTRE FOR ELEMENTARY EDUCATION AT 2094/31, GREEN PARK COLONY, KANHELI ROAD NEAR STORM WATER DISPOSAL, ROHTAK AND PALIKA COLONY NEAR BHIWANI ROAD FLYOVER, ROHTAK, GIVING ELEMENTARY EDUCATION T O THE STREET CHILDREN AND CHILDREN LIVING IN SLUMS ETC. FOR CHAR ITABLE ACTIVITIES DONE IN LAST THREE YEARS, THE SOCIETY HAS SUBMITTED APPR ECIATION CERTIFICATE ISSUED BY VARIOUS DIGNITIES AND SOCIAL AND CHARITAB LE ORGANIZATIONS AND COPIES OF CUTTINGS OF NEWS PAPERS. 5 KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES AS NARR ATED ABOVE, THE REGISTRATION U/S. 12AA OF THE INCOME-TAX ACT, 1 961 OF THE SOCIETY IS RECOMMENDED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE THEREAFTER TOOK US THROUGH THE LETTER OF THE JOINT COMMISSIONER DATED 20.9.2011 AV AILABLE ON PAGE 15 OF THE PAPER BOOK. HE POINTED OUT THAT LEARNED JOINT COMMI SSIONER THOUGH DID NOT RECOMMEND THE CASE OF THE ASSESSEE SPECIFICALLY FO R GRANT OF REGISTRATION BUT ALSO DID NOT MAKE ANY OBSERVATION AGAINST THE ASSES SEE. HE LEFT IT FOR THE LEARNED COMMISSIONER FOR DECIDING THE APPLICATION O F THE ASSESSEE ON MERIT. THE LEARNED JOINT COMMISSIONER DID NOT POINT OUT AN Y DEFECT EITHER IN THE OBJECTS OF THE ASSESSEE OR IN ITS ACTIVITIES. THE O NLY CIRCUMSTANCE POINTED OUT BY THE LEARNED COMMISSIONER IS THAT FOR ASSESSMENT YEAR 2008-09, THE SOCIETY HAS SHOWN 21.4% SURPLUS OVER THE GROSS RECE IPTS. HE TOOK US THROUGH THE LETTER OF THE LEARNED COMMISSIONER DATED 30.9.2 011 AND POINTED OUT THAT FOR ASSESSMENT YEAR 2008-09, ANNUAL RECEIPTS ARE RS .91,010. THE EXPENDITURE IS RS.71,862 AND THE NET SURPLUS IS ONLY RS.19,148. THIS SMALL AMOUNT HAS BEEN CONSIDERED BY THE LEARNED COMMISSIONER AS EXCE SS SURPLUS WITH THE ASSESSEE, WHICH CREATES THE DOUBT IN THE GENUINENES S OF ITS ACTIVITIES. THE LEARNED COUNSEL FOR THE ASSESSEE THEREAFTER POINTED OUT THAT ASSESSEE HAS FILED A PAPER BOOK RUNNING TO 352 PAGES, FROM PAGE NUMBER S 45 TILL 352, ASSESSEE 6 HAS PLACED ON RECORD COPIES OF VARIOUS APPRECIATION LETTERS, NEWSPAPER CUTTING AND THE SCHEDULE OF PROGRAM IT HAS UNDERTAK EN FOR IMPARTING ELEMENTARY EDUCATION TO THE STREET CHILDREN. HE SUB MITTED THAT ASSESSEE HAS PLACED ON RECORD SUFFICIENT MATERIAL IN SUPPORT OF ITS CLAIM AND NONE OF THIS MATERIAL HAS BEEN DOUBTED BY THE LEARNED COMMISSION ER. LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE LEARNED COMMISSIONER. 4. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. SECTION 12AA(1)(A) PROVIDES THAT THE LEARNED COMMISSIONER ON RECEIPT OF AN APPLICATION FOR REGIS TRATION OF A TRUST OR INSTITUTION MADE UNDER CLAUSES (A) OR (AA) OF SUB-S ECTION (1) OF SECTION 12A SHALL: A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRU ST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSA RY IN THIS BEHALF; B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE T RUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE 7 I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUS T OR INSTITUTION; II) SHALL, IF HE IS NOT SATISFIED, PASS AN ORDER IN WRI TING REFUSING TO REGISTER THE TRUST OR INSTITUTION. 5. FROM PERUSAL OF THE ORDER PASSED BY THE LEARNED CIT, EXTRACTED SUPRA, IT NOWHERE REVEALS THAT WHICH OBJECT IS NOT CHARITA BLE AND HOW IT IS NOT CHARITABLE. SIMILARLY, IT IS NOT ASCERTAINABLE AS T O HOW THE ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE. THE ACIT HAS RECOMMENDED FOR GRANT OF REGISTRATION TO THE ASSESSEE. THE ONLY REASON ASSIG NED BY THE LEARNED JCIT IN HIS REPORT IS THAT IN ASSESSMENT YEAR 2008-09, SOCI ETY HAS SHOWN SURPLUS AT 21.4% OVER THE GROSS RECEIPTS. A MARGINAL SURPLUS W OULD NOT ESTABLISH AS TO HOW THE ACTIVITIES OF THE ASSESSEE COULD NOT BE PUT TO A TEST OF GENUINENESS, IF THERE IS SURPLUS FROM THE ACTIVITIES OF A TRUST WHO IS ENJOYING BENEFIT UNDER SEC. 12A THEN THAT WILL BE EXAMINED AT THE TIME OF ASSESSMENT PROCEEDINGS AND IF ANY BENEFIT COULD BE GRANTED UNDER SEC. 11 A ND 12 THEN SUCH RECEIPTS WOULD BE TAXABLE. MERELY SOME SURPLUS IS THERE IN O NE OF THE YEARS MAY NOT BE A CONSIDERATION FOR REJECTING THE APPLICATION FO R GRANT OF REGISTRATION UNDER SEC. 12A OF THE ACT. THE ASSESSEE HAS PLACED THE DE TAILS OF PROGRAM IT HAS UNDERTAKEN. ALL THESE DETAILS WERE PRODUCED BEFORE THE LEARNED CIT ALSO BUT HE DID NOT BOTHER TO EVEN MAKE A REFERENCE OF THE E VIDENCE PUT ON THE RECORD. 8 THE APPLICATION OF THE ASSESSEE HAS BEEN REJECTED S UMMARILY. AFTER TAKING INTO CONSIDERATION ALL THE MATERIAL ON RECORD, WE A RE SATISFIED THAT ACTIVITIES OF THE SOCIETY ARE GENUINE AND IT DESERVES TO BE GR ANTED REGISTRATION UNDER SEC. 12A OF THE ACT. WE ALLOW THE APPEAL OF ASSESSE E AND DIRECT THE LEARNED CIT TO ISSUE REGISTRATION CERTIFICATE IN ACCORDANCE WITH LAW. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 17.02.201 2 SD/- SD/- ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17/02/2012 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR