Guru Nanak Dev Health & Education Society, Ludhiana V. ITO, Khanna

ITA 606/CHANDI/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5996 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 06-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Charitable institution
• Section: 143(3); 12A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, SMC, CHANDIGARH , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NOS. 605 & 606/CHD/2017 / ASSESSMENT YEARS : 2010-11 & 2011-12 GURU NANAK DEV HEALTH & EDUCATION SOCIETY, VPO JARG, TEHSIL PAYAL-141416 DISTRICT LUDHIANA VS THE ITO, WARD-1, KHANNA DISTT. LUDHIANA PAN NO. AAAAG7216R APPELLANT /RESPONDENT /ASSESSEE BY : SHRI PARIKSHIT AGGARWAL, CA / REVENUE BY : SH. MANJIT SINGH, CIT DR !' /DATE OF HEARING : 23.07.2019 #$%& !' / DATE OF PRONOUNCEMENT : 01.08. 2019 / ORDER THE CAPTIONED APPEALS HAVE BEEN PREFERRED BY THE A SSESSEE SOCIETY AGAINST THE SEPARATE ORDERS DATED 21.10.2016 OF THE COMMISSIONER OF INCOME TAX (APPEALS)-4, LUDHIANA [HEREINAFTER REF ERRED TO AS CIT(A)]. 2. THE COMMON ISSUE INVOLVED IN BOTH THE APPEALS IS REGARDING THE DENIAL OF EXEMPTION CLAIMED BY THE ASSESSEE U/S 10( 23C)(IIIAD) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). THE BRI EF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE SOCIETY IS RUNNING A SC HOOL IN THE NAME AND STYLE OF S.M.S. MEMORIAL PUBLIC SCHOOL. IT HAS BEEN CLAIMED THAT THE ITA NOS. 605 & 606-CHD-2017- GURU NANAK DEV HEALTH AND EDUCATION SOCIETY, LUDHI ANA 2 ASSESSEE SOCIETY IS REGISTERED U/S 12A OF THE ACT. HOWEVER, SINCE THE TOTAL RECEIPTS OF THE ASSESSEE DURING THE YEAR WAS LESS THAN RS. 1 CORES, HENCE, THE ASSESSEE SOCIETY CLAIMED EXEMPTION U/S 1 0(23C)(IIIAD) OF THE ACT. AFTER EXAMINING THE ACCOUNTS OF THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT ASSESSEE SOCIETY PAID EXCESSI VE REMUNERATION TO THE PRINCIPAL OF THE SCHOOL. HE WAS PROVIDED CAR A LONG WITH FUEL BY THE SCHOOL EVEN FOR PRIVATE / PERSONAL USAGE. THAT THE ASSESSEE SOCIETY DURING THE PREVIOUS YEAR HAD GIVEN A DONATION OF R S. 50,200/- TO ANOTHER SOCIETY, HOWEVER, THE ASSESSEE SOCIETY COUL D NOT PROVE THE OBJECT AND PURPOSE OF THE SAME. FURTHER, THE ASSESSEE SOCI ETY COULD NOT FURNISH THE PAN NUMBERS OF THE RECIPIENT SOCIETY. EVEN THE ASSESSEE SOCIETY COULD NOT FURNISH THE PAN NUMBERS OF SOME OF ITS ME MBERS. EVEN ONE OF THE OBJECTS OF THE ASSESSEE SOCIETY WAS NOT RELATED TO THE EDUCATION AS IT SPEAKS TO PROVIDE FREE MEDICAL SERVICES AND FREE FO OD ETC. TO THE NEEDY. THE ASSESSING OFFICER, THEREFORE, HELD THAT THE ASS ESSEE SOCIETY DID NOT SOLELY EXISTS FOR EDUCATIONAL PURPOSE AND FURTHER T HAT ITS FUNDS WERE NOT ENTIRELY USED FOR EDUCATIONAL PURPOSES AS THERE WAS A DIVERSION OF FUNDS IN THE SHAPE OF DONATION AND EXCESSIVE REMUNERATION INCLUDING THE EXPENDITURE ON CAR USED BY THE PRINCIPAL OF THE SCH OOL. FURTHER, THE CREDENTIALS OF THE MEMBERS COULD NOT BE ESTABLISHED BECAUSE THE PAN NUMBERS OF CERTAIN MEMBERS WERE NOT PROVIDED. HE, T HEREFORE, DENIED THE EXEMPTION TO THE ASSESSEE SOCIETY AND ASSESSED THE INCOME OF THE ASSESSEE UNDER THE NORMAL PROVISIONS IN THE ASSESSM ENT CARRIED OUT U/S 143(3) OF THE ACT. ITA NOS. 605 & 606-CHD-2017- GURU NANAK DEV HEALTH AND EDUCATION SOCIETY, LUDHI ANA 3 3. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITION S SO MADE BY THE ASSESSING OFFICER. 4. BEFORE THIS TRIBUNAL, THE LD. COUNSEL FOR THE AS SESSEE HAS SUBMITTED THAT THERE WAS NO EXCESSIVE REMUNERATION PAID TO THE PRINCIPAL AND THAT THE SAME WAS REASONABLE AS COMPARED TO THE REMUNERATION OF OTHER PERSONS IN THE SAME LINE OF PROFESSION. THAT THE TOTAL SALARY PER MONTH PAID TO THE PRINCIPAL WAS A SUM OF RS. 23,40 0/-, WHICH COULD BE SAID TO BE EXCESSIVE. THAT THE PRINCIPAL USED THE C AR FOR OFFICIAL PURPOSE AND THERE WAS NO DIVERSION OF THE FUNDS AS ALLEGED BY THE ASSESSING OFFICER. THAT THE DONATION OF RS. 50,200/- DURING THE ASSESSMENT YEAR 2010-11 WAS PAID TO ANOTHER CHARITABLE SOCIETY REG ISTERED U/S 12A OF THE ACT. FURTHER, THAT THE OBJECT OF MEDICAL SERVICES AND FREE FOOD WAS ALSO A CHARITABLE ACTIVITY. HOWEVER, DURING THE IMPUGN ED ASSESSMENT YEARS, THE ASSESSEE DID NOT CARRY SUCH AN ACTIVITY THOUG H THE ONE OF THE OBJECT OF THE ASSESSEE SOCIETY MENTIONED ABOUT FREE MEDIC AL AID AND FREE FOOD TO THE NEEDY. THE LD. COUNSEL HAS FURTHER POINTED O UT THAT IN SUBSEQUENT ASSESSMENT YEAR 2013-14, THE LD. CIT(A) CONSIDERIN G THE OBJECTS AND ACTIVITIES OF THE ASSESSEE HAS ADMITTED THE CLAIM O F THE ASSESSEE AND ALLOWED EXEMPTION U/S 10(23C)((IIIAD) OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER SUBMITTED THAT EVEN IT IS ASSUMED THAT THE ASSESSEE SOCIETY SOLELY DOES NOT EXIST FOR EDUCATIO NAL PURPOSES BUT THE OTHER OBJECTS OF THE ASSESSEE SOCIETY ARE DEFINITEL Y FOR CHARITABLE PURPOSES ONLY. SINCE THE ASSESSEE SOCIETY IS ALSO REGISTERED U/S 12A OF ITA NOS. 605 & 606-CHD-2017- GURU NANAK DEV HEALTH AND EDUCATION SOCIETY, LUDHI ANA 4 THE ACT, THE ASSESSING OFFICER SHOULD HAVE GRANTED THE EXEMPTION TO THE ASSESSEE CONSIDERING THE PROVISIONS OF SECTION 12A OF THE ACT INSTEAD OF MAKING THE IMPUGNED ADDITIONS. 5. THE LD. DR, ON THE OTHER HAND, HAS RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES. 6. IT HAS BEEN CLAIMED THAT THE ASSESSEE SOCIETY IS REGISTERED U/S 12A OF THE ACT ALSO AND FURTHER THAT THE ASSESSEE SOCIE TY HAS ALSO BEEN GRANTED EXEMPTION BY THE LD. CIT(A) U/S 10(23C)(I IIAD) FOR ASSESSMENT YEAR 2013-14. IT IS ALSO THE CLAIM OF THE ASSESSE E THAT THE DONATION WAS GIVEN FOR CHARITABLE PURPOSES ONLY TO A SOCIETY REG ISTERED U/S 12A OF THE ACT AND THAT THE FUNDS SO DONATED HAS BEEN USED FOR CHARITABLE PURPOSES. CONSIDERING THE ABOVE SUBMISSIONS, IN MY OPINION, T HE MATTER NEEDS TO BE EXAMINED AFRESH BY THE LD. CIT(A) FOR T HE ASSESSMENT YEARS UNDER CONSIDERATION IN THE LIGHT OF THE FINDINGS GI VEN BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2013-14. THE LD. COUNSEL HA S ALSO SUBMITTED THAT THE ASSESSEE SOCIETY WILL FURNISH THE PAN NUMB ERS OF ITS MEMBERS AND WILL ALSO FURNISH THE PAN NUMBER OF THE RECIPIE NT SOCIETY TO WHOM THE DONATION OF RS. 50,200/- WAS MADE. IN VIEW OF THIS, THE MATTER IN BOTH THE APPEALS IS RESTORED TO THE FILE OF THE CIT(A) FOR ADJUDICATION AFRESH. IT IS A LSO DIRECTED THAT IF THE ASSESSEE SOCIETY, UNDER THE CIRCUMSTANCES, IS FOUN D TO EXIST NOT SOLELY FOR EDUCATIONAL PURPOSES, THE LD. CIT(A) WILL ALSO CONSIDER THE CLAIM OF ITA NOS. 605 & 606-CHD-2017- GURU NANAK DEV HEALTH AND EDUCATION SOCIETY, LUDHI ANA 5 THE ASSESSEE FOR GRANT OF EXEMPTION U/S 12A OF THE ACT, IF THE ASSESSEE SOCIETY IS OTHERWISE FOUND ELIGIBLE FOR THIS AS PER THE RELEVANT PROVISIONS. WITH THE ABOVE OBSERVATION, THE APPEALS OF THE ASSE SSEE SOCIETY ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01.08.2019. SD/- ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 01.08.2019 '' ( ( ( $) *+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. - / CIT 4. - ( )/ THE CIT(A) 5. +./ 0 , ! 0 , 123/4 / DR, ITAT, CHANDIGARH 6. /3 5 / GUARD FILE $) / BY ORDER, 6 / ASSISTANT REGISTRAR