M/s. D.N. Merorial Trust, Jammu V. The Commissioner of Income-tax, Jammu

ITA 617/ASR/2011

• Counselvise Citation: 61720914 RSA 2011
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-07-2012
• Assessment Year: misc
• Appeal Filed On: 22-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K JAMMU J
• Assessee Lawyers: P N ARORA ADV SH TARSEM LAL
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.617 (ASR)/2011 ASSESSMENT YEAR: NIL PAN :AABTD5519N M/S. D.N. MEMORIAL TRUST VS. THE COMMISSIONER OF IN COME TAX, DINA NAGAR, UDHAMPUR, JAMMU. ( J & K ), JAMMU. ( J & K ). (APPELLANT) (RESPONDENT) I.T.A. NO.618(ASR)/2011 ASSESSMENT YEAR: NIL PAN :AABYP9015B M/S. PRASHANT EDUCATIONAL TRUST VS. THE COMMISSI ONER OF INCOME TAX NAGROTA, TEHSIL UDHAMPUR, ( J & K ), JAMMU. (J & K ). (APPELLANT) (RESPONDENT) APPELLANTS BY:SH. P.N. ARORA, ADV. RESPONDENT BY:SH. TARSEM LAL, DR DATE OF HEARING:02/07/2012 DATE OF PRONOUNCEMENT:11/07/2012 ORDER PER BENCH ; THESE TWO APPEALS OF DIFFERENT ASSESSEES ARISE FRO M TWO DIFFERENT ORDERS OF COMMISSIONER OF INCOME-TAX, JAMMU, EACH D ATED 16.08.2011 PASSED UNDER SECTION 12AA(B)(II) OF THE INCOME TAX ACT, 1961. ITA NOS. 617 & 618(ASR)/2011 2 2. THE ISSUES INVOLVED IN THE PRESENT APPEALS ARE I DENTICAL AND, THEREFORE, BOTH THE APPEALS ARE BEING TAKEN UP TOGETHER FOR T HE SAKE OF CONVENIENCE BY THIS CONSOLIDATED ORDER. THE ASSESSEE IN THE CASE O F D.N. MEMORIAL TRUST, DINA NAGAR, UDHAMPUR HAS RAISED FOLLOWING GROUNDS O F APPEAL: 1. THAT THE ORDER UNDER SECTION 12AA(B)(II) OF THE INCOME-TAX ACT, 1961, PASSED BY THE LD. CIT, JAMMU, THEREBY REFUSIN G TO REGISTER THE SOCIETY IS ILLEGAL, INVALID AND VOID A B-INITO AND THE SAME IS LIABLE TO BE CANCELLED. 2. THAT NO REASONABLE OPPORTUNITY OF BEING HEARD HA S BEEN ALLOWED BEFORE REFUSING TO REGISTER THE SOCIETY. THE LD. CI T EITHER SHOULD HAVE DISCLOSED HIS MIND OR HE SHOULD HAVE AL LOWED REASONABLE OPPORTUNITY OF BEING HEARD BEFORE REFUSI NG TO REGISTER THE SOCIETY. AS SUCH THE ORDER OF THE LD. CIT, IS ILLEGAL AND INVALID AND THE SAME IS LIABLE TO BE CANCELLED. 3. THAT THE LD. CIT DID NOT APPRECIATE THAT THE CON DITIONS LAID DOWN U/S 12AA OF THE INCOME-TAX ACT, 1961 WERE DULY FULFILLED AND AS SUCH THE REGISTRATION AS CLAIMED SHOULD HAVE BEEN ALLOWED. 4. THAT THE LD. CIT DID NOT APPRECIATE THAT THE CON DITIONS LAID DOWN UNDER THE LAW ARE FULFILLED AND AS SUCH THERE WAS NO REASON TO REFUSE GRANT OF REGISTRATION TO THE TRUST . AS SUCH, IT IS PRAYED THAT THE REGISTRATION MAY KINDLY BE GRANTED. 5. THAT THE LD. CIT DID NOT APPRECIATION THAT TOTAL INCOME OF THE TRUST DURING THE YEAR UNDER CONSIDERATION WAS INCUR RED IN THE SHAPE OF EXPENDITURE AND IN THE SHAPE OF FIXED ASSE TS WHICH IS CLEAR FROM THE FOLLOWING FACTS & FIGURES:- TOTAL INCOME DURING THE YEAR 2010-2011 1. FEES FROM STUDENTS 1915950.00 2. BANK INTEREST 8051.00 TOTAL: 1924001.00 ITA NOS. 617 & 618(ASR)/2011 3 TOTAL EXPENDITURE DURING THE YEAR 2010-2011 1. AS PER INCOME AND EXPENDITURE A/C 1564955.00 2. AS PER SCHEDULE OF FIXED ASSETS 472939.00 TOTAL: 2037894.00 THAT THE LD. CIT DID NOT APPRECIATE THAT THE EXPEND ITURE IS MORE THAN THE RECEIPT AND AS SUCH THERE WAS NO REASON TO REFUSE GRANT OF REGISTRATION TO THE TRUST. IN VIEW OF THESE CIRC UMSTANCES, THE REGISTRATION AS CLAIMED SHOULD HAVE BEEN ALLOWED. 6. ANY OTHER GROUND OF APPEAL THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 3. THE ASSESSEE IN THE CASE OF M/S. PRASHANT EDUCA TIONAL TRUST, NAGROTA, HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER UNDER SECTION 12AA(1)(B)(II) OF THE INCOME-TAX ACT, 1961, PASSED BY THE LD. CIT, JAMMU, THEREBY RE FUSING TO REGISTER THE SOCIETY IS ILLEGAL, INVALID AND VOID A B-INITO AND THE SAME IS LIABLE TO BE CANCELLED. 2. THAT NO REASONABLE OPPORTUNITY OF BEING HEARD HA S BEEN ALLOWED BEFORE REFUSING TO REGISTER THE SOCIETY. THE LD. CI T EITHER SHOULD HAVE DISCLOSED HIS MIND OR HE SHOULD HAVE AL LOWED REASONABLE OPPORTUNITY OF BEING HEARD BEFORE REFUSI NG TO REGISTER THE SOCIETY. AS SUCH THE ORDER OF THE LD. CIT, IS ILLEGAL AND INVALID AND THE SAME IS LIABLE TO BE CANCELLED. 3. THAT THE LD. CIT DID NOT APPRECIATE THAT THE CON DITIONS LAID DOWN U/S 12A OF THE INCOME-TAX ACT, 1961 WERE DULY FULFILLED AND AS SUCH THE REGISTRATION AS CLAIMED SHOULD HAVE BEEN ALLOWED. 4. THAT THE LD. CIT DID NOT APPRECIATE THAT THE CON DITIONS LAID DOWN UNDER THE LAW ARE FULFILLED AND AS SUCH THERE WAS NO REASON TO REFUSE GRANT OF REGISTRATION TO THE TRUST . AS SUCH, IT IS PRAYED THAT THE REGISTRATION MAY KINDLY BE GRANTED. ITA NOS. 617 & 618(ASR)/2011 4 5. THAT THE LD. CIT DID NOT APPRECIATION THAT TOTAL INCOME OF THE TRUST DURING THE YEAR UNDER CONSIDERATION WAS INCUR RED IN THE SHAPE OF EXPENDITURE AND IN THE SHAPE OF FIXED ASSE TS WHICH IS CLEAR FROM THE FOLLOWING FACTS & FIGURES:- TOTAL INCOME DURING THE YEAR 2010-2011 1. FEES FROM STUDENTS 1915950.00 2. BANK INTEREST 9686.00 TOTAL: 1925636.00 TOTAL EXPENDITURE DURING THE YEAR 2010-2011 1. AS PER INCOME AND EXPENDITURE A/C 1575200.00 2. AS PER SCHEDULE OF FIXED ASSETS 349786.00 TOTAL: 1926006.00 THAT THE LD. CIT DID NOT APPRECIATE THAT THE EXPEND ITURE IS MORE THAN THE RECEIPT AND AS SUCH THERE WAS NO REASON TO REFUSE GRANT OF REGISTRATION TO THE TRUST. IN VIEW OF THESE CIRC UMSTANCES, THE REGISTRATION AS CLAIMED SHOULD HAVE BEEN ALLOWED. 6. ANY OTHER GROUND OF APPEAL THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 4. FIRST OF ALL, WE TAKE UP APPEAL IN THE CASE OF M /S. D.N. MEMORIAL TRUST, DINA NAGAR, UDHAMPUR AND OUR DECISION HEREIN BELOW SHALL BE APPLICABLE ON M/S. PRASHANT EDUCATIONAL TRUST, NAGR OTA, BEING IDENTICAL ISSUES AS MENTIONED HEREINABOVE. 5. THE BRIEF FACTS IN M/S. D.N. MEMORIAL TRUST, ARE THAT THE ASSESSEE- TRUST IS RUNNING SCHOOL UNDER THE NAME AND STYLE OF INDIAN INSTITUTE OF TEACHERS TRAINING & RESEARCH. THE LD. CIT, JAMMU O BSERVED THAT THERE IS ITA NOS. 617 & 618(ASR)/2011 5 EXCESS OF INCOME OVER EXPENDITURE IN EXCESS OF 15% FOR THE FIRST YEAR ENDING ON 31.03.2011. THE ASSESSEE-TRUST WAS CONSTI TUTED ON 28/06/2010 AND FILED APPLICATION U/S 12A(A) OF THE INCOME-TAX ACT, 1961 ON 28.02.2011. THE LD. CIT OBSERVED THAT THAT THE ASSESSEE HAD TOTAL RECEIPTS OF RS.16,96,951/- AGAINST WHICH THE ASSESSEE MADE A SURPLUS OF RS.2, 96,499/- AT 17.47% OF THE TOTAL RECEIPTS. THE LD. CIT BY REFERRING TO PROVISI ONS OF SECTION 12AA OBSERVED THAT THERE HAS TO BE SATISFACTION OF THE CIT REGARDING GENUINENESS OF THE ACTIVITIES. SINCE THE ASSESSEE IS MAKING AND GENERATING LARGER PROFIT, THE LD.CIT WAS OF THE VIEW THAT THE ASSESSEE HAS NO T SATISFIED THE CIT WITH THE GENUINENESS OF ITS ACTIVITIES, AS THE SURPLUS G ENERATED BY THE ASSESSEE IS NOT WITH THE INTENT AND SPIRIT OF PROVISIONS OF SE CTION 12AA AND ACCORDINGLY PROVISIONS OF SECTION 12AA(1)(B)(II) OF THE ACT ARE APPLICABLE AND ACCORDINGLY HE REFUSED TO GRANT REGISTRATION TO THE TRUST. 6. THE LD. COUNSEL FOR THE ASSESSEE, SH. P.N. ARORA , ADVOCATE, ARGUED THAT THERE IS NOTHING ON RECORD BROUGHT OUT BY THE LD. CIT THAT THERE IS AN APPLICATION FOR ANY PERSONAL PURPOSE OR ANY APPLICA TION OF RECEIPT FOR NON- CHARITABLE PURPOSES. POINTING OUT VARIOUS PAGES OF THE BALANCE SHEET AND RECEIPT & EXPENDITURE, IT WAS ARGUED BY THE LD. COU NSEL FOR THE ASSESSEE, MR. P.N. ARORA, THAT INCOME HAS BEEN APPLIED FOR REVENU E AND CAPITAL ITA NOS. 617 & 618(ASR)/2011 6 EXPENDITURE ONLY FOR CHARITABLE PURPOSES AND NONE OF EXPENDITURE IS THERE FOR ANY PERSONAL PURPOSES OR NON-CHARITABLE PURPOS ES. THE LD. COUNSEL FOR THE ASSESSEE, RELIED UPON THE DECISION OF THE HONB LE ALLAHABAD HIGH COURT, IN THE CASE OF CITY MONTESSORI SCHOOL (REGD) VS. U NION OF INDIA REPORTED IN 315 ITR 48 AND HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. MANAV MANGAL SOCIETY (2010) 328 ITR 421. 7. THE LD. DCIT(DR), MR. TARSEM LAL, ON THE OTHER H AND, ARGUED THAT THERE HAS TO BE A RIGOROUS TEST WHETHER THE TRUSTS ARE GROWING IN THE COUNTRY FOR INTENT AND PURPOSE OF PROFIT UNDER THE GARB OF CHARITABLE INSTITUTION AND THERE SHOULD BE A CHECK ON THE SAME. THE LD. CIT H AS TO EXAMINE THE GENUINENESS OF ITS ACTIVITIES. THE FEES STRUCTURE I S SO HUGE IN THE PRESENT CASE, THEN THE PURPOSE OF EDUCATION IS FORFEITED IN THE F IRST YEAR. THEREFORE, HE SUPPORTED THE ORDER OF THE LD. CIT. MR. TARSEM LAL , LD. DCIT(DR)S, FURTHER ARGUED WITH ALTERNATIVE PLEA THAT SINCE THE ORDER O F THE LD. CIT IS NOT A SPEAKING ORDER, IT SHOULD BE REFERRED BACK TO THE L D. CIT TO DISCUSS THE FEES STRUCTURE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NOTHING ON RECORD BROUGHT OUT BY THE LD. C IT THAT FEES STRUCTURE IS ITA NOS. 617 & 618(ASR)/2011 7 IN-GENUINE OR AGAINST THE ACCEPTED NORMS. NOTHING H AS BEEN BROUGHT ON RECORD BY THE LD. CIT THAT THE ACTIVITIES OF THE TR UST ARE FOR NON-CHARITABLE PURPOSE OR FOR PERSONAL PURPOSES OF THE TRUSTEES ET C. RATHER WHATEVER FUNDS WERE ACQUIRED BY THE TRUST HAVE BEEN UTILIZED FOR THE PURPOSE OF EDUCATIONAL ACTIVITIES OF THE INSTITUTION AND IN THE ABSENCE OF ANY ADVERSE MATERIAL BROUGHT ON RECORD BY THE LD. CIT, THE APPLICATION B Y THE ASSESSEE CAN NOT BE REJECTED. THE DECISION OF THE HONBLE ALLAHABAD HIG H COURT IN THE CASE OF CITY MONTESSORI SCHOOL (REGD.) VS UNION OF INDIA AN D OTHERS (SUPRA) AND DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF CIT VS. MANAV MANGAL SOCIETY (SUPRA), SUPPORT OUR VIEW. AS REGARDS ARGUMENTS MADE BY LD. DCIT(DR) MR. TARSEM LAL, NOTHING HAS BE EN BROUGHT ON RECORD BY HIM OR BY LD. CIT ABOUT THE FALSITY OF TH E TRUST. NOTHING FURTHER HAS BEEN BROUGHT ON RECORD THAT FEES STRUCTURE WAS SO HUGE TO TREAT THE MOTIVE OF TRUST AS PROFITS-MAKING OR NON-CHARITABLE . THEREFORE, THE ARGUMENTS OF THE LD. DR MR. TARSEM LAL ARE GENERAL ARGUMENTS AND WITHOUT ANY BASIS AND CANNOT SUPPORT THE REVENUE. IN THE FACTS AND C IRCUMSTANCES OF THE CASE, THE LD. CIT IS DIRECTED TO GRANT REGISTRATION TO TH E ASSESSEE AS APPLIED BY THE ASSESSEE. THUS, ALL THE GROUNDS OF THE ASSESSEE AR E ALLOWED. 9. NOW, WE TAKE UP APPEAL OF THE ASSESSEE IN THE CA SE OF M/S. PRASHANT EDUCATIONAL TRUST AS UNDER: ITA NOS. 617 & 618(ASR)/2011 8 THE ISSUES AS MENTIONED HEREINABOVE, IN THE PRESEN T APPEAL ARE IDENTICAL TO THE ISSUES IN THE APPEAL OF M/S. D.N. MEMORIAL TRUST IN ITA NO.617(ASR)/2011 DECIDED BY US HEREINABOVE. THEREFO RE, THE DECISION IN THE CASE OF M/S. D.N. MEMORIAL TRUST IS APPLICABLE IN T HE PRESENT CASE BEING ON IDENTICAL ISSUE AND ACCORDINGLY WE DIRECT THE LD. C IT TO GRANT REGISTRATION AS APPLIED FOR BY THE ASSESSEE. THUS, ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE S IN ITA NOS.617 & 618(ASR)/2011 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH JULY, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11TH JULY, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEES (I) M/S. D.N. MEMORIAL TRUST, UDHAMPU R (II) M/S. PRASHANT EDUCATIONAL TRUST, NAGROTA, JAMMU 2. THE CIT, JAMMU. 3. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.