ADIT, New Delhi V. Vivekanand Shiksha Samiti, Delhi

ITA 5590/DEL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69475 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 29-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 05-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAMEER SHARMA
• Keywords: Charitable institution; Rule of consistency; Competent authority; Benefit of exemption; Capital expenditure
• Section: 143(3); 12A; 12AA; 6; 12; 11

Judgement Text

ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.5590/DEL/2012 ASSESSMENT YEAR : 2009-10 ASSTT.DIRECTOR OF INCOME TAX, VS VIVEKANA ND SHIKSHA SAMITI, TRUST CIRCLE-IV, NEW DELHI. VIVEK ANAND PUBLIC SCHOOL, D-BLOCK, ANAND VIHAR, DELHI-110092 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SATISH AGARWAL RESPONDENT BY : SHRI SAMEER SHARMA, SR. DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX(A)-XXI, NEW DELHI DATED 30.08.2012 IN APPEAL NO. 357/2011-12 FOR THE AY 2009-10. 2. GROUND NO. 4 OF THE REVENUE IS GENERAL IN NATU RE WHICH NEEDS NO ADJUDICATION. REMAINING GROUNDS READ AS UNDER:- '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A.) HAS ERRED IN ALLOW ING THE EXEMPTION U/S 11 & 12 OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT(A.) HAS FAILED TO APPRECIAT E THE FACT THAT ASSESSEE ADMITTEDLY NOT RECORDED THE TRANSACTI ONS IN ITS BOOKS OF ACCOUNTS PERTAINING TO 'PICNIC' THEREB Y ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 2 VIOLATED ONE OF THE CONDITIONS LAID DOWN FOR REGIST RATION U/S 12A OF THE ACT. FURTHER THE PRINCIPLE OF RES JU DICATA IS NOT APPLICABLE ON THE INCOME TAX PROCEEDINGS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT TH AT THE ASSESSEE HAS VIOLATED THE CONDITIONS FOR REGISTRATI ON U/S 12A OF THE ACT BY VIOLATING THE PROVISIONS OF SECTI ON 13(1)( C) AND FAILED TO MAINTAIN EWS QUOTA AND, THEREFORE, WAS NOT ELIGIBLE FOR BENEFIT OF EXEMPTION U/S 11 AND 12 OF THE ACT ON CAPITAL EXPENDITURE OF RS.3,00,71,924/-. GROUND NO. 1 & 3 3. APROPOS THESE GROUNDS, THE LD. DR SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAS VIOLATED THE PRE-CONDITIONS FOR GRANT OF REGISTRATI ON U/S 12A OF THE INCOME TAX ACT 1961 BY VIOLATING THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT AND ALSO THE ASSESSEE FAILED TO MAINTAIN AND FULFILL EC ONOMICALLY WEAKER SECTION (EWS) QUOTA AND, THEREFORE, THE ASSESSEE WAS NOT EL IGIBLE FOR BENEFIT OF EXEMPTION U/S 11 AND 12 OF THE ACT ON CAPITAL EXPEN DITURE MADE DURING THE YEAR UNDER CONSIDERATION. THE DR ALSO CONTENDED TH AT THE ASSESSEE SAMITI IS DUTY BOUND TO FULFILL AND MAINTAIN EWS STUDENTS QUO TA FOR GETTING THE BENEFIT OF EXEMPTION U/S 11 AND 12 OF THE ACT AND ALSO TO M EET THE OBJECTS OF THE ASSESSEE SAMITI. THE DR FINALLY SUBMITTED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE ASSESSING OFFICE R IN THIS REGARD. ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 3 4. REPLYING TO THE ABOVE, LD. ASSESSEES REPRESENTA TIVE SUBMITTED A COPY OF ASSESSMENT ORDER OF THE ASSESSEE FOR THE AY 2010 -11 AND SUBMITTED THAT THE TAX AUTHORITIES HAVE GRANTED BENEFIT OF EXEMPTI ON US/ 11 OF THE ACT FOR THE SUBSEQUENT YEAR TO THE YEAR UNDER CONSIDERATION AND THERE IS NO VALID REASON FOR DENIAL OF EXEMPTION, THEREFORE, THE COMM ISSIONER OF INCOME TAX(A) RIGHTLY ALLOWED RELIEF TO THE ASSESSEE. THE AR APPEARING FOR THE ASSESSEE ALSO SUBMITTED A COPY OF THE JUDGMENT OF ITAT DELHI H BENCH IN THE CASE OF THE CIVIL SERVICES SOCIETY VS DIRECT OR OF INCOME TAX(EXEMPTION) (2013) 93 DTR (DELHI) (TRIBUNAL) 314 AND SUBMITTED THAT THE DIRECTOR OF INCOME TAX (EXEMPTION) COULD N OT CANCEL THE ASSESSEES REGISTRATION ON THE GROUND THAT THE ASSESSEE HAS VI OLATED THE CONDITIONS IMPOSED BY THE GOVERNMENT AND PROMOTED HIGH COST ED UCATIONAL INSTITUTION EXCLUDING THE STUDENTS FROM THE EWS CATEGORY. THE AR FURTHER CONTENDED THAT THE TAX AUTHORITIES CAN TAKE COGNIZANCE ONLY W HEN AN INSTANCE OF VIOLATION OF TERMS AND CONDITIONS IS POINTED BY THE DIRECTORATE OF EDUCATION OR THE URBAN DEVELOPMENT MINISTRY. THE AR SUBMITTE D THAT THERE IS AN OCCASION OF DERECOGNITION OF THE ASSESSEES APPEAL BECAUSE THE ASSESSEE SAMITI IS OFFERING ADMISSION TO THE STUDENTS OF EWS CATEGORY ON FREESHIP BASIS. ON BEHALF OF THE ASSESSEE, IT IS ALSO POINT ED OUT THAT ONCE THE ASSESSEE IS FULFILLING REQUIREMENT OF SECTION 2(15) OF THE A CT, THE ORDER OF WITHDRAWAL ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 4 OF REGISTRATION CANNOT BE UPHELD AND THE COMMISSION ER OF INCOME TAX(A) WAS RIGHT IN ALLOWING THE APPEAL OF THE ASSESSEE IN THIS REGARD. 5. AFTER CAREFUL CONSIDERATION OF RIVAL SUBMISSIONS , CONTENTIONS AND CITATIONS RELIED BY BOTH THE PARTIES, AT THE OUTSET , WE OBSERVE THAT ADMITTEDLY, THE ASSESSING OFFICER GRANTED BENEFIT OF EXEMPTION TO THE ASSESSEE SAMITI U/S 11 OF THE ACT IN THE SUBSEQUENT YEAR TO THE YEAR UN DER CONSIDERATION IN THIS APPEAL I.E. AY 2010-11. 6. FROM CAREFUL READING OF THE JUDGMENT OF ITAT H BENCH IN THE CASE OF CIVIL SERVICES SOCIETY VS DIT(E) (SUPRA), WE OBS ERVE THAT THE TRIBUNAL HAS DECIDED IDENTICAL ISSUE IN FAVOUR OF THE ASSESS EE BY OBSERVING AS UNDER:- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE FACTS OF THE P RESENT CASE, ADMITTEDLY THE DIT(E) HAS CATEGORICALLY CONCL UDED THAT THE OBJECTS OF THE SOCIETY ARE CHARITABLE. ON THE SAID ISSUE THE LEARNED AR HAS ALSO ADDRESSED IN THE COUR SE OF HIS ARGUMENTS AT LENGTH THAT CONSISTENTLY OVER THE YEARS TILL THE TIME OF PASSING THE PRESENT ORDER, THE ASSESSME NTS OF THE ASSESSEE HAVE BEEN CONCLUDED UNDER SECTION 143( 3) PROCEEDINGS AND THIS FINDING CONSISTENTLY REMAINS A CCEPTED BY THE DEPARTMENT. THE DIT(E) IN THE IMPUGNED ORDER HAS IN HIS ORDER UNDER SEC. 12AA(3) WITHDRAWN THE REGIS TRATION ON THE GROUND THAT ON ACCOUNT OF ACTIVITIES OF THE ASSESSEE IT HAS (A) VIOLATED THE CONDITIONS IMPOSED BY THE GOVERNMENT; & (B) PROMOTED THE HIGH COST EDUCATION INSTITUTION EXCLUDING THE STUDENTS FROM THE EWS CAT EGORY. IN ORDER TO COME TO THE SAID CONCLUSION HE HAS OBSE RVED THAT THE ASSESSEE HAS NOT FULFILLED THE REQUIREMENT S OF THE DIRECTORATE OF EDUCATION AS PER WHICH THE ASSESSEE WAS REQUIRED TO ADMIT 25% STUDENTS BELONGING TO THE EWS CATEGORY WHICH THE ASSESSEE INSTITUTE HAD NOT DONE. THIS ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 5 INABILITY ON THE PART OF THE ASSESSEE HAS BEEN HELD TO BE AN ACT OF NOT BEING IN CONFORMITY WITH THE GOVERNMENT POLICY. THE LD. CIT DR HAS ALSO HEAVILY EMPHASIZED THIS FAC T. THE LD. AR, ON THE OTHER HAND, TO RECAPITULATE HAS NOT DISPUTED THE FACT THAT THE REQUIREMENT OF 25% STUDENTS BELON GING TO EWS CATEGORY STUDENTS HAS NOT BEEN MET. HOWEVER, HE HAS ARGUED THAT (A) THE SCHOOL HAS NOT DENIED ADMISSION TO ANY STUDENT SEEKING ADMISSION BELONGING TO EWS CATEGORY , AND (B) IN FACT DUE TO THE PECULIAR LOCATION THE APPLIC ATIONS BY EWS CATEGORY STUDENTS IS FAR BELOW THE MANDATED QUO TA, IN THE CIRCUMSTANCES THE ASSESSEE CANNOT BE FAULTED WI TH. THE LD. A.R HAS ALSO ALL ALONG PLEADED THAT THE ADMISSI ON TO THE EWS CATEGORY STUDENTS IS MONITORED BY THE DIRECTORA TE OF EDUCATION AND THE ASSESSEE HAS BEEN PERIODICALLY IN THE PRESCRIBED FORMATTED COMMUNICATION HAS DULY KEPT TH E SAID AUTHORITY AS PER RULES INFORMED OF THE SITUATION AN D MADE NECESSARY DISPLAY ON ITS NOTICE BOARD AND THE MONIT ORING AUTHORITY HAS NOT FAULTED THE ASSESSEE FOR NOT FOLL OWING THE GOVERNMENTAL POLICY AS SUCH THE ACTION OF THE DEPAR TMENT IS CONTRARY TO LAW AND FACTS. IN ORDER TO SUPPORT T HE SAID ASSERTIONS, THE LEARNED AR, IN THE COURSE OF HIS AR GUMENTS, WHICH HAVE BEEN ADDRESSED AT LENGTH IN THE EARLIER PART OF THIS ORDER HAS INVITED OUR ATTENTION TO VARIOUS COMMUNICATIONS ENTERED INTO WITH THE DIRECTORATE OF EDUCATION WHO WAS THE MONITORING AUTHORITY. ATTENTI ON IN THE COURSE OF ARGUMENTS HAS ALSO BEEN INVITED TO TH E DISPLAY MADE ON THE NOTICE BOARD OF THE POSITION IN REGARD TO THE VACANCIES UNDER THE EWS CATEGORY IN VARIOUS CLASSES WHICH SUBMISSION HAS BEEN ADVANCED BEFORE T HE DIT(E) ALSO. WHEREAS THE DIT(E) IN HIS ORDER HAS HE LD THAT THE SCHOOL DOES NOT HAVE PROPER RECORD MANAGEMENT SYSTEM TO KEEP TAB ON THE APPLICATIONS FILED UNDER EWS CATEGORY, THE LEARNED AR HAS ADDRESSED AT LENGTH TH AT IN THE COMMUNICATION WHICH THE SCHOOL IS REQUIRED NECESSARILY TO BE MADE PERIODICALLY TO THE DIRECTOR ATE OF EDUCATION WHICH IS THE MONITORING AUTHORITY, NO SHO RT COMING HAS BEEN POINTED OUT BY THEM IN REGARD TO TH E COMPLIANCES WHICH THE ASSESSEE SCHOOL IS REQUIRED T O MAKE. THE LEARNED AR HAS ALSO ADDRESSED ARGUMENTS A T LENGTH WHILE ATTEMPTING TO COMPARE OTHER ELITE SCH OOLS ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 6 SO AS TO SHOW THAT THE STUDENTS ADMITTED IN THE EWS CATEGORY ARE HIGHER IN NUMBER VIS-A-VIS THE SCHOOLS STATED TO BE SIMILARLY SITUATED. IN THE CONTEXT OF THE SAI D ARGUMENT, WE ARE IN AGREEMENT WITH THE LD. CIT DR O N THE LIMITED ASPECT THAT LOCATIONAL ASPECT OF THE ASSESS EE SCHOOL AND ST.COLUMBUS, MATEL DIE ETC. CANNOT BE TAKEN TO BE THE SAME. HOWEVER, THE FACT REMAINS THAT IN REGARD TO T HE ADMISSION IN THE EWS CATEGORY STUDENTS THE SCHOOL H AS A HIGHER ADMISSION AS COMPARED TO THE NAMED SCHOOLS. IN THE COURSE OF HEARING THE LEARNED AR HAS ALSO ADDRESSED AT LENGTH THAT THERE IS NO EVIDENCE ON RECORD TO PROVE THAT ANY ADMISSION HAS BEEN DENIED TO ANY EWS CATEGORY STUDE NT WHICH HAS NOT BEEN DISPUTED BY THE DEPARTMENT. ACCORDINGLY, THE PLEA HAS BEEN ADVANCED THAT ON ACC OUNT OF THE PECULIAR SITUATION OF THE ASSESSEE SCHOOL IN THE DIPLOMATIC AREA ADEQUATE NUMBERS OF EWS CATEGORY STUDENTS DO NOT APPROACH THE SCHOOL, THE SCHOOL CAN NOT BE FAULTED WITH. THERE IS NO ARGUMENT OR EVIDENCE AVAI LABLE ON RECORD TO REBUT THE STAND, THE DEPARTMENT HAS AT TEMPTED TO CONTEND THAT HAD THE SCHOOL MADE ATTEMPTS IN THE NEARBY COLONIES OF SAROJINI NAGAR, NETAJI NAGAR ETC. IT IS JUST NOT POSSIBLE THAT IN THE COLONIES WHERE THE HOUSES ARE ALLOTTED TO CLASS-IV EMPLOYEES, STUDENTS PERTAINING TO EWS CATEGORY WOULD NOT HAVE BEEN FOUND. THE SAID ARGUME NT BASED ON IFS AND BUTS AMOUNTS TO CONJECTURE THE ASS ESSEE SCHOOL CAN BE ACTED UPON AS PER THE REQUIREMENTS OF LAW AND NOT AS PER THE WHIMS OF DIFFERENT PEOPLE WHO WO ULD WANT TO SUPPLEMENT THE RULES AND NOTIFICATIONS OF T HE DIRECTORATE OF EDUCATION AS TO HOW BEST IN THEIR WI SDOM THE TARGETS OUGHT TO HAVE BEEN MET WHICH IS PRESUMI NG THAT THE CHILDREN OF GOVERNMENTAL EMPLOYEES WOULD MEET E WS CATEGORY CRITERIA. THUS, INSTEAD OF SITTING IN THE CHAIR OF THE DIRECTORATE OF EDUCATION AND/OR THE ASSESSEE SCHOOL WITH THE BENEFIT OF HINDSIGHT AND ENGAGING IN ACADEMIC PROBABILITIES IT IS NECESSARY NOT TO LOOSE SIGHT OF THE ADMITTED FACT ON RECORD, NAMELY THAT THERE IS NOT A SINGLE EVIDENCE OF DENIAL TO ANY STUDENT SEEKING ADMISSION BELONGING TO THE EWS CATEGORY. IN THE AFOREMENTIONE D BACKGROUND, WHEREIN THE ARGUMENTS ADVANCED ON EITHE R SIDE HAVE BEEN RECAPITULATED WE ARE INCLINED TO AGR EE WITH ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 7 THE SUBMISSIONS ADVANCED ON BEHALF OF THE ASSESSEE SCHOOL BY THE LEARNED AR INASMUCH AS IN THE FACTS OF THE P RESENT CASE DESPITE THE ISSUE HAVING TRAVELLED UPTO THE TR IBUNAL, THERE IS NOT A SINGLE INSTANCE OR IOTA OF EVIDENCE THAT THE ASSESSEE SCHOOL HAS DENIED ADMISSION TO ANY STUDENT BELONGING TO THE EWS CATEGORY. WE HAVE IN THE EARLI ER PART OF THIS ORDER REPRODUCED THE TERMS AND CONDITIONS I MPOSED BY THE URBAN ESTATE DEPARTMENT AT THE TIME OF ALLOT MENT OF LAND, A PERUSAL OF WHICH SHOWS THAT STRINGENT CONDI TIONS HAVE BEEN IMPOSED UPON THE ASSESSEE SCHOOL IN REGAR D TO THE TERMS AND CONDITIONS WHICH IT IS TO ABIDE BY. W E HAVE ALSO SEEN THAT THE MONITORING AUTHORITY I.E. THE DI RECTORATE OF EDUCATION AS PER THE NOTIFICATION DATED 25.1.200 7 REPRODUCED IN THE EARLIER PART OF THE ORDER IN PARA 3.18 HAS LAID DOWN AN ELABORATE PROCEDURE FOR IMPLEMENTING T HE GOVERNMENT POLICY WHEREAS RULE 3(2) OF THE SAME MANDATES THAT THE FREESHIP QUOTA SHALL NOT CONSTITU TE AN EXCLUSIVE SHIFT FOR EWS CATEGORY STUDENTS; RULE 4 T HEREOF LAYS DOWN AN ELABORATE PROCEDURE FOR APPLICATION AG AINST THE FREE SEAT, SUB RULE 4) OF RULE 4 PERMITS COMPLA INTS BY AGGRIEVED PARENTS TO BE MADE IN THE FREE-SHIP CELL ADDRESSED TO THE DEPUTY DIRECTOR; RULE 5 LAYS DOWN THE MANNER IN WHICH ADMISSION AGAINST FREE SEATS IS TO BE GIVEN WHEREIN AT EACH STEP THE ACTION OF THE SCHOOL IS MONITORED WHERE POSSIBILITIES OF LESS APPLICANTS AN D/ OR MORE APPLICANTS HAVE BOTH BEEN CONSIDERED. AS PER R ULE 6 OF THE SAID NOTIFICATION, THE FREE-SHIP CELL ENTERT AINS COMPLAINTS OF DENIAL OF ADMISSION, THE RIGHT TO INS PECTION OF THE SCHOOL AND POWERS TO TAKE ACTION AGAINST THE SAID SCHOOL UNDER SUB-SECTION 7) OF SECTION 24 HAS BEEN GRANTED WHEREIN THE DEPUTY DIRECTOR OF EDUCATION AFTER FOLL OWING THE DUE PROCESS OF LAW CAN EITHER DE-RECOGNISE THE SCHOOL AND/OR INFORM THIS FACT TO THE ALLOTTING AUTHORITY TO TAKE ACTION AGAINST THE SAID SCHOOL FOR VIOLATING THE TE RMS AND CONDITIONS OF THE LEASE. AS WE HAVE REPRODUCED IN T HE EARLIER PART OF THIS ORDER THE LAND ALLOTTING AUTHO RITY CAN AS PER CLAUSE (IX), REPRODUCED AT PAGE 19 OF THIS ORDE R CAN ACT AGAINST THE SAID SCHOOL. FOR READY REFERENCE, THE S AME IS REPRODUCED AGAIN FOR READY REFERENCE:- ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 8 IX) IN THE EVENT OF DERECOGNISATION OF THE SCHOOL B Y ANY COMPETENT AUTHORITY, THE LESSEES SHALL BE REQUIRED TO PAY PREMIUM FOR THE LAND ALLOTTED AT THE MARKET RATE PR EVAILING ON THE DATE OF DE-RECOGNISATION FAILING WHICH THE L AND WITH THE SUPERSTRUCTURES, FIXTURES, FITTINGS ETC. SHALL REVERT TO THE GOVT. ON PAYMENT OF COMPENSATION AS MAY BE DECIDED BY THE GOVERNMENT. IN THE FACTS OF THE PRESENT CASE, THERE IS NO EVIDE NCE ON RECORD THAT THE DIRECTORATE OF EDUCATION HAS TAKEN ANY ACTION AGAINST THE ASSESSEE FOR NOT FOLLOWING/IMPLE MENTING THE GOVERNMENT POLICY AND NEITHER HAS IT INFORMED T HE LAND ALLOTTING AUTHORITY TO PROCEED AGAINST THE ASSESSEE SCHOOL FOR VIOLATION OF THE TERMS OF THE LAND LEASE AGREEM ENT. 6.1 ON THE FACTS OF THE PRESENT CASE IT IS SEEN THA T THERE IS NO WHISPER OF ALLEGATION BY THE REVENUE IN REGARD T O ANY VIOLATION OF THE TERMS AND CONDITIONS SET OUT EITHE R IN THE ALLOTMENT LETTER ISSUED BY MINISTRY OF URBAN DEVELO PMENT AND NOR BY THE MONITORING AUTHORITY IN REGARD TO TH E GOVERNMENT POLICY NAMELY BY THE DEPARTMENT OF EDUCATION, GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI. 6.2 NO DOUBT TO HAVE A SOCIAL CONSCIENCE IS A LAUDA BLE HUMAN DESIRE AND THE DESIRE TO ENSURE COMPLIANCE IN LETTER AND SPIRIT TO THE STATED GOVERNMENT POLICY NECESSAR ILY OUGHT TO THROB IN THE HEART OF EACH AND EVERY CITIZ EN. HOWEVER, WHILE ADJUDICATING ON THE ISSUES WHICH ARI SE FOR DETERMINATION UNDER THE INCOME-TAX ACT WHICH IS A C ENTRAL ACT ENSHRINED IN LIST I OF THE CONSTITUTION OF IN DIA THE TAX ADJUDICATOR/JUDGE EMPOWERED BY A CENTRAL ACT C ANNOT USURP THE POWER AND ROLE OF AN AUTHORITY WHICH AS P ER THE CONSTITUTIONAL SCHEME HAS BEEN ENTRUSTED UPON THE S TATE ADMINISTRATION AND IN THIS CASE ON THE DEPARTMENT O F EDUCATION, GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI. AN AUTHORITY CONSTITUTED UNDER THE CENTRAL A CT HEREIN THE INDIAN INCOME TAX ACT CANNOT ACT ON THE BASIS OF ITS OWN PERSONAL BELIEFS AND PHILOSOPHY HOWEVER LAUDABLE, THEY MAY BE AS THEY HAVE NO ROLE TO PLAY AS THE ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 9 ISSUES ARE TO BE DECIDED AND CONCLUDED ON THE BASIS OF RULES AND PROVISIONS OF THE INCOME-TAX ACT, HEREIN - SECTION 2(15) OF THE ACT. THE DECISIONS ARE NOT TO BE COLOU RED OR STAINED BY PERSONAL WHIMS AND BIASES AND ARE TO BE ILLUMINATED BY THE INCOME TAX ACT. SECTION 2(15) OF THE INCOME TAX ACT READS AS UNDER:- SECTION 2(15): CHARITABLE PURPOSE (15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE PO OR, EDUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT(INCLUDING WATERSHEDS, FORESTS AND WILDL IFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: 7. FROM THE IMPUGNED ORDER, WE OBSERVE THAT THE COM MISSIONER OF INCOME TAX(A) HAS DECIDED THE ISSUE IN FAVOUR OF TH E ASSESSEE WITH FOLLOWING OBSERVATIONS:- 6. GROUND NO. 3 TO 6 ARE TAKEN TOGETHER AS THESE ARE INTERLINKED AND THEY HAVE BEEN TAKEN AGAINST THE AC TION OF THE ASSESSING OFFICER, WHEREIN, HE HAS TREATED THAT ASSESSEE IS NOT FOLLOWING THE DIRECTORATE OF EDUCATIONS GUI DELINES AND NOT FULFILLING THE EWS QUOTA. IN THIS REGARD, DURING THE COURSE OF APPELLATE PROCEEDINGS, LD. AR OF THE APPELLANT HAS PRODUCED ONE REVISED LIST OF SCHOOLS WHICH HAVE FULFILLED 15% FREESHIP QUOTA FOR THE ACADEMIC YEAR 2009-10 AND APPELLANTS CASE IS APPEARING AT SR.NO. 50 OF THE LIST. SO THIS IS THE FINDING OF THE FACT THAT APPELLANTS IS FOLLOWING THE QUOTA FOR THE EWS CATEGORY. SO GROUN D NO.5 OF THE APPELLANT DESERVES TO BE ALLOWED. 8. FROM BARE READING OF THE IMPUGNED ORDER, WE OBSE RVE THAT THE COMMISSIONER OF INCOME TAX(A) HAS CONSIDERED THE RE VISED LIST OF THE SCHOOLS WHICH HAVE FULFILLED FREESHIP QUOTA FOR THE ACADEMIC YEAR 2009-10 ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 10 WHEREIN THE ASSESSEES NAME EXISTED AT SL.NO.50 OF THE LIST. ACCORDINGLY, THE COMMISSIONER OF INCOME TAX(A) HELD THAT THE ASSESSE E IS FOLLOWING AND FULFILLING THE QUTOA FOR THE EWS STUDENTS. THESE F INDINGS ARE ALSO SUPPORTED BY THE ASSESSMENT ORDER DATED 25.3.13 FOR AY 2010-1 1 WHICH IS RELATED TO THE ACADEMIC YEAR 2009-10. 9. AT THIS STAGE, WE ALSO FIND IT APPROPRIATE TO TA KE COGNIZANCE OF THE JUDGMENT OF ITAT DELHI H BENCH IN THE CASE OF THE CIVIL SERVICES SOCIETY VS DIRECTOR OF IT(EXEMPTION) WHEREIN IT HAS BEEN CO NCLUDED THAT THE DIRECTOR OF INCOME TAX(EXEMPTION) COULD NOT CANCEL REGISTRATION GRANTED U/S 12AA OF THE ACT TO THE ASSESSEE SOCIETY RUNNING A S CHOOL ON THE GROUND THAT THE ASSESSEE SOCIETY HAS NOT FULFILLED THE REQUIREM ENT OF THE CIRCULARS OR ORDERS OF THE DIRECTORATE OF EDUCATION AS PER WHICH THE ASSESSEE SOCIETY WAS REQUIRED TO ADMIT 25% STUDENTS BELONGING TO THE EWS CATEGORY SPECIALLY IN A SITUATION WHEN THE DIRECTOR OF EDUCATION HAS NOT TA KEN ANY ACTION AGAINST THE ASSESSEE SOCIETY AND THERE IS NOT A SINGLE INSTANCE WHERE THE SCHOOL HAS DENIED ADMISSION TO ANY STUDENT BELONGING TO THE EW S CATEGORY. ACCORDINGLY, WE HOLD THAT THE COMMISSIONER OF INCOM E TAX(A) RIGHTLY HELD THAT THE ASSESSEE SAMITI IS NOT ENTITLED FOR BENEFI T OF EXEMPTION U/S 11 AND 12 OF THE ACT AND THE COMMISSIONER OF INCOME TAX(A) WA S JUSTIFIED IN SETTING ASIDE THE ASSESSMENT ORDER AND RESTORING THE REGIST RATION OF THE ASSESSEE U/S ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 11 12AA OF THE ACT. IN VIEW OF ABOVE, WE HAVE NO REAS ON TO INTERFERE WITH THE FINDINGS OF THE COMMISSIONER OF INCOME TAX(A) AND W E UPHOLD THE SAME BY DISMISSING GROUND NO. 1 AND 3 OF THE REVENUE. GROUND NO.2 10. APROPOS GROUND NO.2, LD. DR SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) HAS FAILED TO APPRECIATE THE FACT THA T THE ASSESSEE HAS ADMITTEDLY NOT RECORDED THE TRANSACTIONS IN ITS BOO KS OF ACCOUNTS PERTAINING TO PICNIC OF STUDENTS. THE DR FURTHER SUBMITTED TH AT THE ASSESSEE VIOLATED ONE OF THE CONDITIONS LAID DOWN FOR REGISTRATION U/ S 12AA OF THE ACT. THE DR ALSO SUBMITTED THAT THE PRINCIPLE OF RES JUDICAT A IS NOT APPLICABLE ON THE INCOME TAX PROCEEDINGS, THEREFORE, THE IMPUGNED ORD ER MAY BE SET ASIDE BY RESTORING THAT OF THE ASSESSING OFFICER. 11. REPLYING TO THE ABOVE, LD. AR SUBMITTED THAT TH E ASSESSEE HAS CONSISTENTLY BEEN MAINTAINING THE MEMORANDUM OF ACC OUNTS OF OUTSTATION PICNIC RECEIPTS AND EXPENDITURES AND NOT RECORDING THE SAME IN ITS BOOKS OF ACCOUNTS AS IT WAS NEITHER EARNING ANY INCOME NOR I NCURRING ANY EXPENDITURE ON THIS ACCOUNT. THE AR FURTHER SUBMITTED THAT THE ASSESSEE SOCIETY WAS MERELY ACTING AS A FACILITATOR AND TRUSTEE FOR THE STUDENTS WHO WENT FOR A PICNIC AND THE AMOUNT COLLECTED FROM THE STUDENTS O N THIS ACCOUNT WAS FULLY SPENT FOR THE PURPOSE OF PICNIC ONLY AND THERE WAS NO EXPENDITURE OR INCOME ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 12 FOR THE ASSESSEE OUT OF THIS ACTIVITY. THE DR POIN TED OUT SUBMISSIONS OF THE ASSESSEE SUBMITTED BEFORE THE COMMISSIONER OF INCOM E TAX(A) FROM PAGE 5 TO 8 OF THE IMPUGNED ORDER AND SUBMITTED THAT THE T RANSACTIONS WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS BECAUSE THE PICNI C ACTIVITIES HAVE BEEN CONDUCTED BY TEACHERS AND STUDENTS THEMSELVES AND T HE ASSESSEE SOCIETY HAS NOTHING TO DO WITH THAT. 12. ON CAREFUL CONSIDERATION OF ABOVE CONTENTIONS, WE OBSERVE THAT THE DR HAS NOT DISPUTED THIS POINT THAT THE ASSESSEE SO CIETY HAS NOT EARNED ANY AMOUNT FROM THE PICNIC OR THE STUDENTS. FURTHER, F ROM THE IMPUGNED ORDER, WE OBSERVE THAT THE COMMISSIONER OF INCOME TAX(A) H AS DECIDED THE ISSUE WITH FOLLOWING OBSERVATIONS AND FINDINGS:- 6.1 WITH REGARD TO PICNIC EXPENSES, AO HAS MENTION ED THAT EXPENSES PERTAINING TO OUTSTATION PICNIC ARE N OT ACCOUNTED IN THE BOOKS OF ACCOUNT. IN THIS VIDE REJ OINDER LETTER DATED 22.8.2012 IT HAS BEEN ARGUED THAT SOCI ETY WAS ACTING AS A TRUSTEE FOR THE STUDENTS WHO WENT ON PI CNIC AND THE AMOUNT COLLECTED FROM THEM ON THIS ACCOUNT WAS FULLY SPENT AND THIS ACCOUNTING PRINCIPLE IS BEING ADOPTED FROM YEAR TO YEAR AND NO ADDITION HAS BEEN MADE IN THE PAST. BUT THIS YEAR ADDITION HAD BEEN MADE ABRUPTLY . IN THIS REGARD, LD. AR OF THE APPELLANT HAS RELIED ON VARIOUS CASE LAWS ON THE RULE OF CONSISTENCY VIZ. (1)CIT VS NARENDRA DOSHI[2002] 254 ITR 606,(2)UOI VS SATISH PANALAL SHAH REPORTED IN [2001] 249 ITR 221 & (3) U OI VS KAUMUDINI NARAYAN DALAL [2001] 249 ITR 219 . 6.2 I HAVE ALSO GONE THROUGH THE COPY OF ASSESSME NT ORDER FOR A.Y.2006-07, 2007-08 & 2008-09 WHICH WAS PRODUCED WITH THE PAPER BOOK AND IN ALL THE THREE Y EARS ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 13 SCRUTINY WAS MADE U/S.143(3) OF THE IT ACT BUT NO ADDITION HAS BEEN MADE ON THIS ACCOUNT AND THEE IS NOT CHANGE IN THE PATTERN OF MAINTENANCE OF BOOKS OF ACCOUNTS AND APPELLANT WAS MAINTAINING BOOKS OF ACCOUNTS IN A MANNER FROM WHICH CORRECT INCOME COUL D BE DEDUCED. IN THIS YEAR ALSO SAME PRACTICE HAS BEE N ADOPTED AS IT IS FOUND THAT APPELLANT WAS KEEPING B OOKS OF ACCOUNTS BY KEEPING MEMORANDUM ACCOUNT OF OUTSTATION PICNIC RECEIPTS AND EXPENSES HAD BEEN ACCEPTED BECAUSE IT WAS NEITHER EARNED NOR INCURRED ANY EXPENDITURE ON THIS ACCOUNT. SO ACTION OF AO WITH R EGARD TO HIS OBSERVATION OF NON MAINTENANCE OF BOOKS OF ACCOUNT DO NOT DESERVE ANY MERIT AND APPELLANT IS ENTITLED FOR EXEMPTION U/S. 11 AND 12 OF THE IT ACT . ACCORDINGLY, GROUND NO.3, 4 AND 6 ARE ALLOWED. 13. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS A ND FINDINGS OF THE COMMISSIONER OF INCOME TAX(A) AS REPRODUCED HEREINA BOVE, WE OBSERVE THAT THE COMMISSIONER OF INCOME TAX(A) HAS RELIED O N THE PRACTICE ACCEPTED BY THE REVENUE IN EARLIER THREE YEARS TO THE YEAR U NDER CONSIDERATION WHERE IN ALL THE THREE YEARS, SCRUTINY WAS MADE U/S 143(3) O F THE ACT BUT NO ADDITION HAS BEEN MADE ON THIS ACCOUNT AND THERE IS NO CHANG E IN THE PATTERN OF MAINTENANCE OF BOOKS OF ACCOUNTS DURING THE YEAR UN DER CONSIDERATION. THE DR HAS ALSO NOT DISPUTED THIS POINT THAT THE ASSESS EE WAS MAINTAINING BOOKS OF ACCOUNTS IN A MANNER FROM WHICH CORRECT INCOME C OULD BE DEDUCTED AND THE SAME PRACTICE WAS ADOPTED DURING THE YEAR UNDER CONSIDERATION. UNDER THESE CIRCUMSTANCES, THE COMMISSIONER OF INCOME TAX (A) RIGHTLY HELD THAT THE ASSESSEE WAS KEEPING BOOKS OF ACCOUNTS BY KEEPI NG MEMORANDUM OF ITA NO.5590/DEL/2012 ASSTT.YEAR: 2009-10 14 ACCOUNT OF OUTSTANDING PICNIC RECEIPT AND EXPENSES HAD BEEN ACCEPTED BECAUSE IT HAS NEITHER BROUGHT ANY INCOME FOR THE A SSESSEE NOR LEVIED ANY LIABILITY OF INCURRING ANY EXPENDITURE ON THIS ACC OUNT. ACCORDINGLY, WE HOLD THAT THE ACTION OF THE ASSESSING OFFICER IN THIS RE GARD THAT THE ASSESSEE HAS NOT MAINTAINED PROPER BOOKS OF ACCOUNTS DOES NOT DE SERVE ANY MERIT AS THE COMMISSIONER OF INCOME TAX(A) RIGHTLY HELD THAT THE BENEFIT OF EXEMPTION U/S 11 AND 12 CANNOT BE DENIED ON THIS BASIS. WE A RE UNABLE TO SEE ANY INFIRMITY, AMBIGUITY OR PERVERSITY IN THE IMPUGNED ORDER, THEREFORE, WE DECLINE TO INTERFERE WITH THE SAME. AS PER DISCUSS IONS MADE HEREINABOVE, WE ALSO DISMISS GROUND NO. 2 OF THE REVENUE. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8.11.2013. SD/- SD/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 8TH NOVEMBER 2013 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR