Chimmaveer Trust, New Delhi V. CIT (Exemptions), Chandigarh

ITA 5821/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3244 (ITAT-DELHI)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 15-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Opportunity of being heard; Additional evidence
• Section: 80G; 12AA

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH B, NEW DELHI BEFORE : SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NOS. 5821 & 5822/DEL/2016 CHIMMAVEER TRUST, C/O DR. RAVI GUPTA, ADVOCATE, E-6, KAILASH COLONY, NEW DELHI. PAN: AABTC7008F (APPELLANT) VS. C.I.T. (EXEMPTION) , CHANDIGARH. (RESPONDENT) APPELLANT BY SH. P.C. YADAV, ADVOCATE RESPONDENT BY MS. NIDHI SRIVASTAVA, CIT/DR ORDER PER O.P. KANT, A.M. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST TWO SEPARATE ORDERS BOTH DATED 27/09/2016 PASSED BY THE LD. COMM ISSIONER OF INCOME-TAX (EXEMPTIONS), CHANDIGARH [IN SHORT THE LD. CIT(E)], REJECTING APPLICATION OF THE ASSESSEE FOR REGISTRATION OF ASSESSEE TRUST UND ER SECTION 12AA OF THE INCOME TAX ACT, 1961 (IN SHORT OF THE ACT) AND APPL ICATION UNDER SECTION 80G OF THE ACT RESPECTIVELY. BOTH THE APPEALS BEING CON NECTED WITH THE ISSUE OF REGISTRATION OF THE ASSESSEE TRUST, SAME WERE HEARD TOGETHER AND DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER FOR CONVENIENCE. DATE OF HEARING 17.10.2019 DATE OF PRONOUNCEMENT 15.11.2019 ITA NOS. 5821 & 5822/DEL/20916 2 2. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE CAME INTO EXISTENCE ON 31/10/2014 BY WAY OF DONATION OF RS.21,000/- AS COR PUS OF THE TRUST BY THE SETTLER SH. MAHABIR PRASAD. IN THE TRUST DEED DAT ED 31/10/2014, THE MAIN OBJECTIVE OF TRUST WAS STATED AS ESTABLISHING, OPEN , AND RUN THE EDUCATIONAL INSTITUTE. IN FURTHERANCE OF THE MAIN OBJECT, THE A SSESSEE STARTED THE PROCESS OF OPENING THE SCHOOL UNDER THE TRADE NAME MOUNT LITE RA ZEE SCHOOL WHICH WAS USED UNDER THE ACADEMIC ALLIANCE AGREEMENT ENTE RED BETWEEN THE ZEE LITERA LTD (ZLL) AND THE ASSESSEE TRUST. THE ASSE SSEE PURCHASED LAND AND BEGAN CONSTRUCTING THE SCHOOL BUILDING. THE FIRST A CADEMIC SESSION WAS CLAIMED TO BE STARTED WITH EFFECT FROM 01/04/2016, HOWEVER ADMISSIONS OF THE STUDENTS WERE STARTED IN THE MONTH OF FEBRUARY 2016. 3. THE ASSESSEE APPLIED FOR A GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT AND FOR APPROVAL UNDER SECTION 80G (5)(VI) OF THE ACT ON 31/03/2016 BEFORE THE LD. CIT(E). THE LD. CIT(E) AFTER EXAMINA TION OF THE OBJECT OF THE TRUST AND AFTER CARRYING OUT NECESSARY INQUIRIES AS TO THE ACTIVITY OF THE ASSESSEE TRUST, REJECTED THE APPLICATION OF THE ASS ESSEE FOR REGISTRATION UNDER SECTION 12AA OF THE TRUST AS WELL AS APPROVAL UNDER SECTION 80G OF THE ACT. THE OBSERVATIONS OF THE LD. CIT(E) ARE SUMMARIZED AS UN DER : ITA NOS. 5821 & 5822/DEL/20916 3 (I). THE MAIN AIMS AND OBJECTIVES OF THE TRUST HAS BEEN TO ESTABLISH, OPEN AND RUN THE EDUCATIONAL INSTITUTE. THE OTHER O BJECTS STATED IN THE TRUST DEED REMAINED MERELY OSTENSIBLE OBJECTS. (II). FROM SETUP OF THE TRUST ON 31/10/2014 TILL TH E DATE OF APPLICATION ONLY ACTIVITIES PREPARATORY TO THE OBJECTS HAVE BEE N DONE LIKE CLU OF LAND, AFFILIATION WITH THE DEPARTMENT OF EDUCATION, CONSTRUCTION OF BUILDING ETC. (III). THERE WAS NO PERMANENT RECOGNITION TO THE SC HOOL AND THE RECOGNITION GRANTED WAS SUBJECT TO REVIEW AND FULFI LLMENT OF A SPECIFIC CONDITIONS LAID DOWN BY THE DIRECTORATE OF EDUCATIO N, HARYANA. (IV). THE ACTIVITY OF THE RUNNING OF THE SCHOOL WAS NOT REFLECTED FROM THE ACCOUNTS FOR THE PERIOD ENDING ON 31/03/2016 FI LED ALONG WITH APPLICATIONS. NEITHER FEE RECEIVED FROM THE STUDENT S NOR EXPENSES TOWARDS DAY-TO-DAY RUNNING OF THE SCHOOL WAS REFLEC TED IN THE ACCOUNTS EXCEPT ADVANCE FEE OF RS.21,52,500/-SHOWN IN THE BA LANCE SHEET. A PAYMENT OF RS.19.20 LAKHS WAS SHOWN AS PAID TO ZLL AS A RETAINER FEE. COPY OF BANK STATEMENT WHERE ADMISSION FEES AND TUI TION FEES WOULD HAVE BEEN CREDITED PRIOR TO COMMENCEMENT OF THE ACA DEMIC SESSION WERE NOT PROVIDED TO THE LD. CIT(E). (V). NO CONFIRMATION OR DETAILS OF PAN ETC. WERE PR OVIDED IN CASE OF UNSECURED LOAN OF RS.1,54,00,000/-. (VI). THE SECURED LOANS FROM M/S RELIGARE FINNEST L TD., M/S ICICI BANK LTD. AND HDFC LTD. ETC TAKEN NOT BY MORTGAGING PROP ERTY OF THE TRUST BUT PERSONAL GUARANTEE OF THE TRUSTEES. (VII). FEE STRUCTURE OF THE TRUST WAS NOT CLEARLY M ENTIONED AND QUALITY OF THE EDUCATION BEING PURSUED HAD NOT BEEN PROJECTED CLEARLY. ITA NOS. 5821 & 5822/DEL/20916 4 4. IN VIEW OF THE ABOVE OBSERVATIONS, THE LD CIT(E) CONCLUDED THAT THE TRUST ACTIVITY TILL DATE HAD NOT BEEN PROJECTED TRA NSPARENTLY AND THE CHARITABLE INTENT HAD NOT BEEN BROUGHT OUT, ACCORDINGLY, HE RE JECTED THE APPLICATION OF REGISTRATION UNDER SECTION 12AA OF THE ACT. AS THE REGISTRATION WAS REJECTED, HE ALSO REJECTED THE APPROVAL REQUIRED UNDER SECTION 8 0G OF THE ACT. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE FILED A PAPER BOOK CONTAINING PAGES 1 TO 47 AND SUBMITTED THAT THE ASSESSEE TRUS T HAS BEEN ESTABLISHED WITH THE MAIN OBJECT OF PROVIDING EDUCATION, WHICH IS A CHARITABLE ACTIVITY IN TERMS OF SECTION 2(15) OF THE ACT. HE SUBMITTED THA T THE LD CIT(E) HAS NOT DISPUTED THIS REQUIREMENT OF GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT . REGARDING THE SECOND REQUIREMENT OF GENUINENE SS OF THE ACTIVITIES OF THE ASSESSEE TRUST, HE SUBMITTED THAT ALL THE ACTIVITIE S ARE GENUINE AND THE VIEW OF THE CIT(E) THAT THOSE ACTIVITIES NOT PROJECTED TRAN SPARENTLY, CANNOT HOLD THE ACTIVITIES AS NON-GENUINE . HE REFERRED TO THE GENU INENESS CERTIFICATE ISSUED BY THE DEPUTY COMMISSIONER OF THE DISTRICT, WHICH WAS FILED ON PAGE 8 OF THE PAPER BOOK. HE FURTHER FILED AN ADDITIONAL EVIDENCE IN THE FORM OF AFFILIATION GRANTED BY THE CENTRAL BOARD OF SECONDARY EDUCATION FOR RUNNING CLASSES OF SENIOR SECONDARY LEVEL. HE SUBMITTED THAT THE PERMI SSION WAS RECEIVED ITA NOS. 5821 & 5822/DEL/20916 5 SUBSEQUENT TO THE REJECTION OF THE REGISTRATION BY THE LD. CIT(E). HE SUBMITTED THAT THOUGH ACTIVITIES OF THE ASSESSEE ARE GENUINE, IF REQUIRED SO THE MATTER MAY BE RESTORED BACK FOR DECIDING THE ISSUE OF REGI STRATION UNDER SECTION 12AA OF THE ACT AND SUBSEQUENT APPROVAL UNDER SECTI ON 80G OF THE ACT AFRESH IN THE LIGHT OF THE ADDITIONAL EVIDENCES SUBMITTED EVIDENCING THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST. 6. THE LD DR ON THE OTHER HAND RELIED ON THE ORDER OF THE LD. CIT(E ) AND OBJECTED FOR RESTORING THE MATTER BACK TO HIM. 7. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON THE ISSUE IN DISPUTE AND PERUSED THE RELEVANT MATERIAL ON RECORD INCLUDI NG THE IMPUGNED ORDERS AND THE PAPERBOOK FILED BY THE ASSESSEE. AS FAR AS GRANTING OF REGISTRATION UNDER SECTION 12AA OF THE ACT IS CONCERNED, THE LD. CIT(E) IS REQUIRED TO GRANT OR REJECT THE REGISTRATION AFTER SATISFYING HIMSELF - - ABOUT THE OBJECT OF THE SOCIETY AND - THE GENUINENESS OF ITS ACTIVITIES 8. AS FAR AS OBJECT OF THE SOCIETY IS CONCERNED, TH E LD CIT(E) HAS NOT DISPUTED THE OBJECT OF PROVIDING EDUCATION. REGARDI NG THE GENUINENESS OF THE ACTIVITY OF THE ASSESSEE ALSO, HE HAS CONCLUDED THA T TILL DATE THOSE ACTIVITIES HAD NOT BEEN PROJECTED TRANSPARENTLY. IN OUR OPINION, T HE OBSERVATION MADE BY THE LD CIT(E), WHICH WE HAVE SUMMARISED ABOVE, DO NOT I NDICATE THAT ACTIVITIES OF ITA NOS. 5821 & 5822/DEL/20916 6 THE TRUST ARE NOT GENUINE. ALL THE ACTIVITIES OF CH ANGE OF LAND USE (CLU), CONSTRUCTION OF THE BUILDING, GETTING FRANCHISEE OF ESTABLISHED ORGANISATION, OBTAINING SECURED AND UNSECURED LOAN ETC. ARE IN FU RTHERANCE OF THE OBJECT OF PROVIDING EDUCATION BY WAY OF RUNNING THE SCHOOLS. THE INFORMATION REGARDING PAN, DETAILS OF UNSECURED LOAN PROVIDER ETC CAN BE OBTAINED, AND SAME CANNOT BE GROUND FOR HOLDING THAT THE ACTIVITY IS NOT TRAN SPARENT. SIMILARLY THE ACTIVITIES CANNOT BE HELD AS NON-TRANSPARENT DUE TO GIVING PERSONAL GUARANTEE BY THE TRUSTEES FOR GETTING SECURED LOAN. SIMILARLY , PROJECTION OF QUALITY OF EDUCATION NOT CLEAR OR METHOD OF RECRUITMENT OF TEA CHERS OR THEIR QUALIFICATIONS ETC NOT CLEAR , CAN NOT BE BASIS FOR HOLDING THE ACTIVITIES AS NON GENUINE. NOWHERE THE LD. CIT(E), HAS BROUGHT ON REC ORD ANY NON-GENUINE ACTIVITY CARRIED BY THE ASSESSEE. IF ANY FURTHER IN FORMATION WAS REQUIRED IN THE CASE, HE COULD HAVE CARRIED FURTHER ENQUIRIES BUT R EJECTION OF REGISTRATION ON PRESUMPTION IS NOT JUSTIFIED. IN OUR OPINION, THE L D. CIT(E) HAS NOT EXAMINED THE ACTIVITIES OF THE ASSESSEE IN THE RIGHT PERSPEC TIVE. AS THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE BEFORE US INCLUDING THE AFFILIA TION GRANTED BY THE CENTRAL BOARD OF EDUCATION, WE FEEL IT APPROPRIATE TO SET A SIDE THE ORDER OF THE LD. CIT(E) AND RESTORE THE MATTER BACK FOR DECIDING TH E APPLICATION OF REGISTRATION UNDER SECTION 12AA OF THE ACT AS WELL AS THE APPLIC ATION FOR APPROVAL UNDER ITA NOS. 5821 & 5822/DEL/20916 7 SECTION 80G OF THE ACT AFRESH, IN ACCORDANCE WITH L AW. THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD. BOTH APPEALS OF THE ASSESSEE ARE ACCORDINGLY ALLOWE D FOR STATISTICAL PURPOSES. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15/11/2019 SD/- SD/- (SUDHANSHU SRIVASTAVA) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15 TH NOV., 2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI