ITO, Wd-1(1), Pune, Pune V. Bharati Vidyapeeth Pune, Pune

ITA 537/PUN/2012

• Counselvise Citation: 53724514 RSA 2012
• Duration Of Justice: 2 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 15-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Charitable institution; Retrospective amendment; Benefit of exemption; Cancellation of registration
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NO.537/PN/2012 (ASSESSMENT YEAR 2008-09) ITO, WARD-1(1), PUNE .. APPELLANT VS. BHARATI VIDYAPEETH, BHARATI VIDYAPEETH BHAVAN, L.B.S. ROAD, PUNE 411030 PAN NO.AAATB1836D .. RESPONDENT ASSESSEE BY : SHRI SUNIL PATHAK REVENUE BY : SHRI MUKESH VERMA, CIT DATE OF HEARING : 20-02-2014 DATE OF PRONOUNCEMENT : 21-03-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 24-11-2011 OF THE CIT(A) CENTRAL, PUNE RELATI NG TO ASSESSMENT YEAR 2008-09. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE M/S. BHARATI VIDYAPEETH, PUNE ( IN SHORT BVP) WAS FOUNDED THRO UGH A DEED OF TRUST ON 10-05-1964 TO PROPAGATE EDUCATION IN VARIO US FIELDS IN MODERN INDIA IN GENERAL AND IN MAHARASHTRA IN PARTICULAR A ND OBTAINED THE CERTIFICATE OF REGISTRATION U/S.12A FROM COMMISSION ER OF INCOME-TAX, PUNE ON 13-09-1973 VIDE REGISTRATION NO.CH/P/PNA/86 /73-74 ISSUED VIDE NO.P165/REGISTRATION OF TRUST (86)/73-74/13-9- 1973. NUMEROUS EDUCATIONAL AND ALLIED INSTITUTIONS IN DIVERSE FIEL DS, INCLUDING MEDICAL COLLEGES, ENGINEERING COLLEGES, MANAGEMENT INSTITUT ES, SCHOOLS ETC. AND 2 BHARATI VIDYAPEETH UNIVERSITY (DEEMED) HAVE BEEN OP ENED AND ARE BEING RUN UNDER THE AEGIS OF THIS TRUST SINCE THE G RANTING OF REGISTRATION IN 1973. BVP HAS ENJOYED ALMOST SINCE THEN THE EXE MPTION FROM PAYMENT OF TAXES ON INCOME EARNED BY THEM U/S.11 AN D 12 OF THE I.T. ACT. FOR THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE TRUST FILED RETURN OF INCOME ON 11-05-2010 SHOWING TAXABLE INCOME OF NIL. THE RETURN WAS FILED IN RESPONSE TO NOTICE U/S.142(1). 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE TRUST IS MANAGED BY A BOARD OF TRUSTEE S CONSISTING OF FOLLOWING THREE MEMBERS. SR.NO. NAME OF THE TRUSTEES I) DR. PATANGRAO SHRIPATRAO KADAM II) DR. SHIVAJIRAO SHRIPATRAO KADAM III) SHRI ANANDRAO B PATIL 2.2 HE OBSERVED THAT IN THIS CASE, THE REGISTRATION OF THE TRUST HAS BEEN CANCELLED BY THE CIT(C), PUNE, U/S.12AA(3) VID E ORDER DATED 08/11/2007. SINCE THE REGISTRATION HAS BEEN CANCELL ED THE AO WAS OF THE OPINION THAT THE ASSESSEE IS TO BE TREATED LIKE ANY OTHER ASSESSEE AND CANNOT HIDE BEHIND THE SHIELD OF SECTIONS 11 & 12. HE OBSERVED THAT ON THE BASIS OF THIS FINDING THE ASSESSMENT OF THE ASS ESSEE FOR THE A.Y. 2006-07 AS WELL AS A.Y. 2007-08 HAS BEEN FINALIZED TREATING THE STATUS OF THE TRUST AS AN AOP. 2.3 KEEPING IN VIEW OF THE ABOVE POSITION, THE AO I SSUED A SHOW CAUSE NOTICE DATED 6/12/2010 TO THE ASSESSEE CALLIN G FOR THE EXPLANATION AS TO WHY SIMILAR VIEW AS TAKEN IN THE EARLIER YEAR SHOULD NOT BE TAKEN FOR THIS YEAR AND THE ASSESSMENT FOR THE YEAR BE NO T COMPLETED TREATING 3 THE STATUS AS AN AOP. REJECTING THE VARIOUS EXPLAN ATIONS OF THE ASSESSEE AND OBSERVING THAT THE ASSESSEE'S REGISTRA TION U/S. 12AA HAS BEEN CANCELLED BY THE CIT(C), PUNE VIDE ITS ORDER D ATED 08.11.2007, THE AO TREATED THE STATUS OF THE TRUST AS A.O.P. ACCORD ING TO THE AO FOR CLAIMING THE EXEMPTION U/S. 11 & 12, THE TRUST SHAL L FIRSTLY BE REGISTERED U/S. 12A AS A CHARITABLE TRUST. SINCE THE REGISTRA TION HAS BEEN CANCELLED BY THE CIT, THE AO DENIED THE EXEMPTION U/S.11 OF T HE INCOME TAX ACT, 1961 TO THE ASSESSEE. 3. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE CANC ELLATION OF REGISTRATION BY THE CIT(CENTRAL), PUNE WAS CHALLENG ED BEFORE HONBLE ITAT PUNE AND THE TRIBUNAL HAS CANCELLED THE ORDER OF CIT AND RESTORED THE REGISTRATION U/S.12A. IT WAS ACCORDIN GLY ARGUED THAT THE EXEMPTION U/S.11 HAS TO BE ALLOWED SINCE THE REGIST RATION HAS BEEN RESTORED BY THE TRIBUNAL. IT WAS FURTHER SUBMITTED THAT THE A.O. HAS ERRED IN IGNORING THE ORDER OF THE TRIBUNAL AND REJ ECTING THE CLAIM OF EXEMPTION U/S.11. IT WAS SUBMITTED THAT ONCE THE O RDER OF CIT(C) WAS CANCELLED BY ITAT, QUESTION OF DENYING THE EXEMPTIO N U/S.11 DID NOT ARISE. IT WAS FURTHER ARGUED THAT THE A.O. DID NOT POINT OUT ANY VIOLATION OF SECTION 13 ON THE PART OF THE ASSESSEE AND HENCE QUESTION OF DENIAL OF DEDUCTION ON THIS COUNT WAS ALSO NOT JUSTIFIED. 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED I N DENYING BENEFIT OF DEDUCTION U/S.11 AND 12 OF THE INCOME TAX TO THE AS SESSEE. THE RELEVANT OBSERVATION OF THE CIT(A) READS AS UNDER : 4 5.5 I HAVE GONE THROUGH THE SUBMISSION OF THE APPELL ANT AS WELL AS THE RELEVANT OBSERVATIONS OF THE A.O. IN VIEW OF ORDE R OF HON'BLE ITAT RESTORING REGISTRATION TO THE APPELLANT, THE APPELLAN T HAS TO BE TREATED AS REGISTERED U/S.12A OF I.T. ACT. THEREFORE, THE A.O. WAS NOT JUSTIFIED IN DENYING REGISTRATION U/S.12A TO THE APPELLANT. ALSO, T HE A.O. IS NOT CORRECT IN DENYING THE EXEMPTION U/S 11, WHEN THERE ARE NO FINDINGS ABOUT VIOLATION OF ANY CONDITIONS STIPULATED IN SEC 1 1,12 OR13 OF THE ACT FOR THIS YEAR. HERE, IT MAY NOT BE OUT OF PLACE TO M ENTION THAT THE EXEMPTION U/S. 11 & 12 WAS DENIED TO THE APPELLANT FO R ALL THE EARLIER YEARS NOT JUST BECAUSE OF CANCELLATION OF REGISTRATION U/S. 12AA(3) BUT ALSO ON THE VARIOUS OTHER GROUNDS LIKE VIOLATION U/S. 1 3(1)(C) AS WELL AS 13(1)(D) AND ALSO FOR NOT FILING THE FORM NO. 10 ALO NGWITH RETURN OF INCOME ETC. FOR BEING ELIGIBLE FOR EXEMPTION U/S.11 OF IT. ACT, THE REGISTRATION U/S.12A IS A PRE-REQUIREMENT, WITHOUT WHI CH NEITHER THE APPELLANT CAN CLAIM EXEMPTION NOR THE AO CAN CONSIDE R IT. NOW, IT IS A FACT THAT AT THE TIME WHEN THE ASSESSMENT ORDER FOR A.Y . 2008 - 09 WAS PASSED, CANCELLATION OF REGISTRATION WAS SET ASIDE BY IT AT. THOUGH DEPARTMENT HAS GONE IN APPEAL AGAINST THE ORDER OF IT AT SETTING ASIDE THE ORDER OF CIT(CENTRAL) CANCELLING THE REGISTRATIO N, HOWEVER, THE FACT REMAINS THAT THE APPELLANT, AS ON DATE, IS REGISTERED U/S.12A OF IT. ACT. THEREFORE, THE A.O. WAS NOT JUSTIFIED IN DENYING EXEM PTION U/S 11 ON THIS GROUND. GRANT OF EXEMPTION IS OPEN FOR EXAMINATI ON BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN RESPECT OF EACH ASSESSMENT YEAR SEPARATELY. HOWEVER, ON GOING THROUGH TH E ASSESSMENT ORDER FOR A.Y. 2008-09, IT IS SEEN THAT THE A.O. HAS N OT POINTED OUT ANY VIOLATION OF CONDITIONS STIPULATED IN SEC 11,12 OR 13 WHICH LEADS TO DENIAL OF THE EXEMPTION U/S. 11 & 12. THE BENEFIT U/ S. 11 & 12 IS SAID TO HAVE BEEN DENIED ONLY ON THE GROUND OF CANCELLATION OF REGISTRATION BY THE CIT (C), PUNE U/S. 12AA(3). AS STATED ABOVE, REGI STRATION WAS AVAILABLE TO THE APPELLANT IN VIEW OF ORDER OF HON' BLE ITAT. THEREFORE, EXEMPTION U/S.11 AND 12 OF I.T. ACT CANNOT BE DENIED WITHOUT SPECIFICALLY POINTING OUT VIOLATION OF CONDITIONS MEN TIONED IN SECTION 11, 12 AND 13 WHICH MAKE THE TRUST INELIGIBLE FOR EX EMPTION U/S. 11/12. ACCORDINGLY, THE EXEMPTION U/S. 11 IS ALLOWABLE TO T HE APPELLANT AS REGISTRATION IS AVAILABLE TO IT AND NO VIOLATION OF A NY PROVISIONS WHICH MAKES THE APPELLANT INELIGIBLE FOR THIS EXEMPTION HAS BEEN BROUGHT ON RECORD. THEREFORE, THESE GROUNDS OF APPEAL ARE ALLOW ED. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN CANCELLING THE ORDER U/S 12AA(3) ON THE TECHNICAL GR OUND THAT SECTION 12AA(3) IS NOT APPLICABLE TO THE ASSESSEE OVERLOOKING TH E ILLEGAL ACTIVITIES OF THE ASSESSEE AND THE DAMAGE WHICH HAS BEEN CAUSED TO T HE PUBLIC GOOD BY COLLECTION OF CAPITATION FEES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D.CIT(A) GROSSLY ERRED IN NOT TAKING INTO ACCOUNT THE INTENTION OF T HE LEGISLATURE IN INTRODUCING SECTION 12AA(3) WHICH IS TO REGULATE THE ACTIVITIES OF TRUSTS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D.CIT(A) GROSSLY ERRED IN NOT CONSIDERING THE FACT THAT THE ORDERS REL IED UPON BY THE ASSESSEE WERE THOSE WHICH WERE PRONOUNCED PRIOR TO 01/10 /2001 I.E. THE 5 DATE WITH EFFECT FROM WHICH SECTION 12AA(3) WAS INTRO DUCED AND HAS, THEREFORE ,NO APPLICATION IN ASSESSEE'S CASE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D.CIT(A) GROSSLY ERRED IN NOT CONSIDERING THE PRINCIPLES FOR INTERPRET ATION OF LEGAL PROVISIONS, ACCORDING TO WHICH THE CONSTRUCTION TO BE ADOPTED IS THAT WHICH SHALL SUPPRESS THE MISCHIEF AND ADVANCE THE REMEDY . 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS FAILED TO APPRECIATED THE FACT THAT SECTION 12AA(3) IS A PROCED URAL SECTION AND HAS RETROSPECTIVE EFFECT. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D.CIT(A) GROSSLY ERRED IN NOT CONSIDERING THE FACT THAT THE ORDERS REL IED UPON BY THE ASSESSEE WERE THOSE WHICH WERE PRONOUNCED PRIOR TO 01/10 /2001 I.E. THE DATE WITH EFFECT FROM WHICH SECTION 12AA(3) WAS INTRO DUCED AND HAS, THEREFORE ,NO APPLICATION IN ASSESSEE'S CASE. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D.CIT(A) HAS ERRED IN ALLOWING THE ASSESSEE'S APPEAL ON THE BASIS OF THE ORDER OF THE HON'BLE TRIBUNAL IN THE ASSESSEE'S OWN CASE WHERE THE DEPARTMENT5 APPEAL FILED BEFORE THE HON'BLE BOMBAY HIGH COURT IS STILL PENDING . 8. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF APPELLAT E PROCEEDINGS BEFORE THE HON'BLE TRIBUNAL. 6. AT THE OUTSET OF HEARING THE LD. COUNSEL FOR THE ASSESSEE FILED A CONSOLIDATED COPY OF THE ORDER OF THE TRIBUNAL IN A SSESSEES OWN CASE VIDE ITA NO.923/PN/2010 & ITA NO.1034/PN/2010FOR A. Y. 2006-07 AND ITA NO.340/PN/2011 FOR A.Y. 2007-08 ORDER DATED 27-11-2013 AND SUBMITTED THAT THE TRIBUNAL HAS RESTORED THE RE GISTRATION OF THE ASSESSEE TRUST U/S.12A/12AA AND FURTHER HELD THAT T HE ASSESSEE HAS NOT VIOLATED ANY OF THE PROVISIONS OF SECTION 11(5) R.W .S. 13(1)(D) NOR HAS VIOLATED ANY OF THE PROVISIONS OF SECTION 13(1)(C) OF THE I.T. ACT AND HENCE THE ASSESSEE IS ENTITLED TO BENEFIT OF EXEMPT ION AS CLAIMED BY IT U/S.11 AND 12 OF THE ACT FOR A.Y. 2006-07 AND 2007- 08. HE ACCORDINGLY SUBMITTED THAT THIS BEING A COVERED MAT TER THE ORDER OF THE CIT(A) BE UPHELD AND THE GROUNDS RAISED BY THE REVE NUE BE DISMISSED. 6 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND WHILE FAIRLY CONCEDING THAT THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN THE 2 PRECEDING ASSESSMENT YEARS SUBMIT TED THAT THE REVENUE HAS FILED AN APPEAL BEFORE THE HONBLE HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL RESTORING THE REGISTRATION U/ S.12A AND THE MATTER IS PENDING BEFORE THE HONBLE HIGH COURT. THEREFORE, TO KEEP THE MATTER ALIVE THE REVENUE HAS FILED THIS APPEAL. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. IT IS AN UNDISPUTED FACT THAT THE REGISTRATION U/S.12AA CANCELLED BY THE CIT (CEN TRAL), PUNE VIDE HIS ORDER DATED 08-11-2007 HAS BEEN RESTORED BY THE TRI BUNAL VIDE ITA NO.1793/PN/2008 ORDER DATED 19-09-2008. WE FIND FO LLOWING THE ABOVE ORDER OF THE TRIBUNAL THE TRIBUNAL IN ASSESSE ES OWN CASE FOR A.YRS. 2006-07 AND 2007-08 AT PARA 60 OF THE ORDER HAS OBSERVED AS UNDER : 60. WHILE DECIDING THE ASSESSEES APPEAL FOR THE A.Y. 2 006-07, WE HAVE HELD THAT THE ASSESSEE HAS NOT VIOLATED THE PROVISIONS OF SEC. 11(5) R.W.S. 13(1)(D) OF THE ACT. WE HAVE ALSO HELD THAT THE REGI STRATION OF THE ASSESSEE U/S. 12A HAS BEEN RESTORED BY THE TRIBUNAL, HENCE , THE ASSESSEE IS ENTITLED FOR BENEFIT OF THE EXEMPTION TO IT S INCOME BY TREATING IT AS A TRUST U/S. 11 OF THE INCOME-TAX ACT . THE ASSESSING OFFICER HAS RELIED ON AND REFERRED TO THE ASSESSMENT ORDER FOR T HE A.Y. 2006-07. WE FIND THERE ARE PRECISELY TWO ISSUES WHICH ARE ARISING FROM THE GROUNDS TAKEN BY THE ASSESSEE. THE FIRST ISSUE IS THE CANCE LLATION OF REGISTRATION BY THE LD. CIT, PUNE BY EXERCISING HIS PO WERS U/S. 12AA(3) VIDE ORDER DATED 08-11-2007 BUT THE SAID ORDER HAS BE EN CANCELLED BY THE TRIBUNAL AND THE ASSESSEES REGISTRATION IS RESTORED A ND HENCE, THE FIRST DISQUALIFICATION FOR GETTING THE BENEFIT OF SEC . 11 OF THE ACT HAS BEEN REMOVED. IN OTHER WORDS, THE ASSESSEE TRUST HAS CROSSED FIR ST BARRIER BY GETTING THE RESTORATION OF ITS REGISTRATION U/S. 12A O F THE ACT WHICH IS ONE OF THE CONDITION FOR AVAILING THE BENEFIT OF EX EMPTION AS A TRUST OR INSTITUTION U/S. 11 OF THE ACT. 7 8.1 SIMILARLY, THE TRIBUNAL IN SUBSEQUENT PARAGRAPH S HAS HELD THAT THE ASSESSEE TRUST HAS NOT VIOLATED ANY OF THE PROVISIO NS OF SECTION 11(5) R.W.S. 13(1)(D) NOR HAS VIOLATED ANY OF THE PROVISI ONS OF SECTION 13(1)(C) OF THE ACT AND ACCORDINGLY HELD THAT THE ASSESSEE I S ENTITLED FOR BENEFIT OF EXEMPTION AS CLAIMED BY IT U/S.11 AND 12 OF THE ACT IN A.Y. 2006-07 AND 2007-08. THE RELEVANT OBSERVATION OF THE TRIBU NAL IN THE LAST PAGE OF THE ORDER READS AS UNDER : . . . . . . . . . .TO SUM UP WE HOLD THAT A) THE REGISTRATION OF THE ASSESSEE U/S. 12A/12AA HAS BEE N RESTORED BY THE TRIBUNAL AND B) THE ASSESSEE HAS NOT VIOLATED THE PROVISIONS OF SEC. 11 (5) R.W.S. 13(1)(D) NOR HAS VIOLATED ANY OF THE PROVISIONS OF SEC . 13(1)(C) OF THE ACT HENCE, THE ASSESSEE IS ENTITLED FOR BENEFIT OF EXEMP TION AS CLAIMED BY IT U/S. 11 & 12 OF THE ACT IN A.Y. 2006-07 & A.Y. 2007- 08. 67. IN THE RESULT, THE ASSESSEES APPEAL FOR THE A.Y. 200 7-08 IS ALLOWED. 8.2 SINCE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A .Y. 2006-07 AND 2007-08 HAS ALLOWED THE BENEFIT OF EXEMPTION U/S.11 AND 12 OF THE ACT BY HOLDING THAT THE ASSESSEE TRUST HAS NOT VIOLATED ANY OF THE PROVISIONS OF SECTION 11(5) R.W.S. 13(1)(D) OR SECTION 13(1)(C ) AND SINCE THE REGISTRATION EARLIER CANCELLED BY THE CIT HAS BEEN RESTORED BY THE TRIBUNAL AND NOTHING CONTRARY WAS BROUGHT TO OUR NO TICE REVERSING THE ORDER OF THE TRIBUNAL ON THIS ISSUE, THEREFORE, RES PECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR TH E 2 PRECEDING ASSESSMENT YEARS AND IN VIEW OF THE DETAILED REASON ING GIVEN BY THE LD.CIT(A), WE FIND NO INFIRMITY IN HIS ORDER IN HOL DING THAT EXEMPTION U/S.11 IS ALLOWABLE TO THE ASSESSEE. WE ACCORDINGL Y UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED PRONOUNCED IN THE OPEN COURT ON 21-03-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 21 ST MARCH 2014 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A) CENTRAL, PUNE 4. THE CIT CENTRAL, PUNE 5. THE DR A BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE