MESERS NISHAN E SIKHI INSTITUTE OF SCIENCE & TRAINING , , TARN TARAN V. COMMISSIONER OF INCOME TAX(EXEMPTIONS), CHANDIGARH

ITA 537/ASR/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7523 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Appeal Filed On: 05-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Principle of natural justice
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 537/Asr/2018 Assessment Year: NA M/s Nishan E Sikhi Institute of Science & Training, Khadur Sahib, Distt. Tarn Taran, Punjab-143117 [PAN: AACTN 7826P] Vs. CIT (Exemptions), Chandigarh (Appellant) (Respondent) Appellant by : Sh. J. P. Singh, CA Respondent by: Anupam Kant Garg, CIT DR Date of Hearing: 19.05.2022 Date of Pronouncement: 14.07.2022 ORDER Per Dr. M. L. Meena, AM: The appeal has been filed by the assessee against the impugned order dated 28.09.2018 passed by the Ld. Commissioner of Income Tax (Exemptions), Chandigarh rejecting the registration u/s 12AA of the Income tax Act, 1961. 2. The assessee has raised the following grounds of appeal: ITA No. 537/Asr/2018 Nishan E Sikhi Inst. of Science & Training v. CIT 2 “1. That the learned Commissioner of Income Tax (Exemptions) has wrongly mentioned in para 7 page 6 of his Order that the applicant is simply involved in the collecting fees from the students and passing it off to the IMPACT for coaching and there is no activity per se being carried out by the applicant and has on this basis wrongly denied us the registration u/s 12AA of the Income tax Act, 1961. 2. That the learned Commissioner of Income Tax (Exemptions) has wrongly stated in para 9 page 6 his Order that the applicant (s carrying on commercial activities and has wrongly denied us the registration on this basis. 3. That the learned Commissioner of Income Tax (Exemptions) has wrongly held in para 11 page 7 of his Order that the stated objects and activities are not charitable and do not fall within the limbs of Section 2(15) of the Income Tax Act, 1961 and has thus wrongly denied us the registration u/s 12AA of the Income tax Act, 1961. 4. That the learned Commissioner of Income Tax (Exemptions) has wrongly held in para 11 page 7 of his Order that coaching in any form even at a subsidized cost is non charitable and has thus wrongly denied us the registration on this basis. 5. That without prejudice to the facts that we are not carrying any commercial activities, there is no provision in the law to deny the registration to an Institution having objects of general public utility along with carrying of commercial activities. 6. That the order of the learned Commissioner of Income Tax (exemptions) is bad on law and on the facts. 7. That the appellant craves leave to amend, alter, add or delete any of the above grounds of appeal.” 3. The appellant society has filed an application in form number 10A in the office of the Commissioner of income tax (in short “the CIT exemption”) on 29.03.2018 for seeking registration under section 12A of the income tax act 1961. The learned CIT exemption observed that the applicant itself is ITA No. 537/Asr/2018 Nishan E Sikhi Inst. of Science & Training v. CIT 3 not doing any coaching and just acting as an intermediary between the IMPACT and the students and thus, the applicant is simply involved in collecting fees from the students and passing it, to IMPACT for coaching. Thus, there is no activity per se being carried out by the applicant and that even if one of the objects turns out to be non-charitable, case for the registration does not exist. The CIT exemption has held that in the appellant assessee’s case the stated objects and activities are not charitable and did not fall within any of the limb of the section 2(15) as coaching in any form even if at a subsidized cost has been held to be non- charitable. Accordingly, he has rejected the application under section12AA for grant of registration. 4. The Ld. AR submitted that the facts mentioned by the learned CIT(Exemption) in para 7 page 6 of his Order that the applicant is simply involved in the collecting fees from the students and passing it off to the IMPACT for coaching and therefore, no activity per se being carried out by the applicant is factually incorrect and thus, he has wrongly denied registration to the appellant, u/s 12AA of the Income tax Act, 1961. The AR argued that the students are studying at the appellant society’s premises which is providing entire infrastructure including water, electricity, security and other services like sports grounds etc. and that the coaching is provided to the students by way of taking the services of a specialized group of teachers called IMPACT. The Counsel has objected to the observation of the CIT exemption regarding no activity per se being carried out by the applicant and submitted that the applicant society had made arrangements with ‘Maharaja Ranjit Singh Armed Forces preparatory Institute’ and using the merit list for the selection of the students and also ITA No. 537/Asr/2018 Nishan E Sikhi Inst. of Science & Training v. CIT 4 taking their personal interview (APB page 22); that the society has engaged Management Head and other volunteers for providing training to the students and that it has bank account for collection of his own the students with facility of GST number four other formalities. The counsel has objected to the order of the CIT exemption that he has nowhere pointed out that society has been working for profit and engaged in doing any business instead of charity by ignoring the facts narrated in the submissions APB page 4 to 12 and 12 to 21. 5. We have heard the rival contentions and perused the material on record. The main issue involved in the present appeal is grant of registration under section 12AA of the Act. It is not disputed that the assessee trust has carried out coaching activities during the financial year under consideration, but the complete details were lacking. The issue before us is whether the activities of the trust were charitable in nature and in consonance to the objects of the trust. 5.1 It is evident from the facts of the case as per record that the main objects of the Trust are providing coaching and training to the students as an intermediatory between the IMPACT and the students and thus, the PCIT observed that the applicant is simply involved in collecting fees from the students and passing it, to IMPACT for coaching. Thus, there was no activity per se being carried out by the appellant and that even if one of the objects turns out to be non-charitable, case for the registration does not exist. The Ld. AR argued that the appellant Institute is providing entire infrastructure including water, electricity, security and other services like sports grounds etc. and that the coaching and training is provided to the students by way of taking the services of a specialized group of teachers ITA No. 537/Asr/2018 Nishan E Sikhi Inst. of Science & Training v. CIT 5 called IMPACT. The Ld. Counsel has objected to the order of the CIT exemption that he has nowhere pointed out that society has been working for profit and engaged in doing any business instead of charity by ignoring the facts narrated in the submissions APB page 4 to 12 and 12 to 21. 5.2 The contention of the Ld. AR that the action of Ld. CIT in rejecting the registration under section 12AA(1)(b)(ii) is bad in law and against the facts and circumstances of the case and is contrary to the principles of natural justice as the impugned order has been passed without granting adequate opportunity of hearing, and ignoring the submissions filed by the assessee (APB pg. 4 to 12 and 12 to 21) by recording incorrect facts and findings. Considering the principles of natural justice, we are of the opinion that the assessee trust may be given one more opportunity to produce all the documentary evidences in support of genuineness of the activities being carried out for charitable purpose in consonance to the objects of the trust. Ld. CIT(DR) also has no objection in restoring of the matter to the CIT(E) for afresh examination of the application of the assessee for grant of registration. Considering the ld. AR contention that the assessee was prevented in making submission before the lad CIT(Exemption) in absence of sufficient opportunity of being heard to produce the necessary documents as per principles of natural justice as above, we find it deem fit to restore the matter back to the file of the CIT(Exemption) to examine the issue of grant of registration u/s 12AA of the act, afresh after taking into consideration the material evidence after affording sufficient opportunity of being heard to the assessee trust, as per principles of natural justice. Accordingly, the case is restored to the CIT, for afresh consideration and examination of the application of assessee under section 12A(a), with the following observation: ITA No. 537/Asr/2018 Nishan E Sikhi Inst. of Science & Training v. CIT 6 I. Verify that whether the objectives of the assessee trust are charitable in nature and activities carried out are genuine during the year for which the registration is sought for by the Appellant institute in the light of evidences prima facie relevant, for the year under consideration for the purpose of grant of registration u/s 12AA of the Act in the light of of “Ananda Social & Education Trust Vs. CIT”, [2020] 114 taxmann.com 693 (SC). II. Assessee shall cooperate in the proceedings, before the CIT(E). III. All pleas available under the law shall remain so available to the assessee in the fresh proceedings before the Ld. CIT. 6. In result, the appeal is treated allowed for statistical purposes. Order pronounced in the open court on 14.07.2022. Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member Date: 14.07.2022 *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order