Aggarwal Shiksha Samiti, Mahendergarh V. CCIT (E), Chandigarh

ITA 6254/DEL/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5766 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: misc
• Appeal Filed On: 24-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR HRISHIKESH
• Keywords: Charitable institution; Set aside
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES C : DELHI BEFORE SHRI BHAVNESH SAINI, J.M. & SHRI O.P. KANT, A.M. ITA.NO.6254/DEL./2015 UNDER SECTION 10(23C)(VI) OF THE I.T. ACT, 1961. AGGARWAL SHIKSHA SAMITI, DULANA ROAD, MEHENDERGARH. DISTT. MAHENDERGARH. PAN AAAJA0478Q VS. CHIEF COMMISSIONER OF INCOME TAX (EXEMPTIONS), PANCHKULA, CHANDIGARH. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI SALIL AGGARWAL, ADVOCATE AND SHRI SHAILESH GUPTA, C.A. FOR REVENUE : SHRI KUMAR HRISHIKESH, CIT.D.R. DATE OF HEARING : 09.05.2019 DATE OF PRONOUNCEMENT : 10.05.2019 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CCIT, PANCHKULA, DATED 30.09.2015, UNDER SECTION 10(23C)(VI) OF THE I.T. ACT, 1961. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE FILED APPLICATION IN PRESCRIBED FORM REQUESTING FOR GRANT OF EXEMPTION/APPROVAL UNDER SECTION 10(23C)(VI) OF THE I.T. 2 ITA.NO.6254/DEL./2015 AGGARWAL SHIKSHA SAMITI, MAHENDERGARH. ACT, 1961, FOR A.Y. 2014-2015 ONWARDS. THE LEARNED CCIT CALLED FOR THE DETAILS OF THE ASSESSEE. THE LEARNED CCIT REPRODUCED THE AIMS AN OBJECTS OF THE ASSESSEE SOCIETY IN THE IMPUGNED ORDER WHICH REVEALED THAT ASSESSEE IS INVOLVED IN PROMOTING THE EDUCATION AND FOR OTHER OBJECTS AS WELL. THE LEARNED CCIT ON GOING THROUGH THE OBJECTS FOUND THAT ONLY THE AIMS AND OBJECTS AT SERIAL NO.(I) AND (V) CATER THE PURPOSE OF EDUCATION AND REST OTHERS ARE DIFFERENT PURPOSES THAN EDUCATION WHICH ARE NOT CHARITABLE IN NATURE AND CLEARLY INDICATES OTHER MOTIVES OF THE ASSESSEE SOCIETY. THE LEARNED CCIT, THEREFORE, CONCLUDED THAT ASSESSEE SOCIETY IS NOT SOLELY OPERATING FOR EDUCATIONAL PURPOSES. THE EXPLANATION OF ASSESSEE WAS CALLED FOR. THE ASSESSEE FILED THE SUBMISSIONS GIVING UNDERTAKING THEREIN THAT ASSESSEE DOING ONLY EDUCATIONAL WORK. HOWEVER, AIMS AND OBJECTS OF THE ASSESSEE SOCIETY ARE THE DOCUMENTS WHICH STATE GOVERNMENT AND DEPARTMENT OF REGISTRAR OF FIRMS AND SOCIETY PROVIDE FOR COMPULSORY PRINTING AND ASSESSEE DO THE SAME OTHERWISE THE ASSESSEE SOCIETY DOING ONLY EDUCATIONAL WORK I.E., RUNNING SCHOOL AND COLLEGE ONLY, WHICH IS FULLY 3 ITA.NO.6254/DEL./2015 AGGARWAL SHIKSHA SAMITI, MAHENDERGARH. VERIFIABLE FROM THE REGULAR BOOKS OF ACCOUNT AND AUDITED STATEMENTS OF ACCOUNTS WHICH WERE ALREADY PLACED ON RECORD. NOT EVEN A SINGLE WORK OTHER THAN EDUCATION WAS EVER DONE BY THE ASSESSEE SOCIETY. THE LEARNED CCIT NOTED THAT ASSESSEE HAS GIVEN AN UNDERTAKING TO AMEND THE BYE LAWS OF THE SOCIETY, BUT, THE SAME CANNOT BE ACCEPTED. THE APPLICATION WAS ACCORDINGLY REJECTED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE SOCIETY IS RUNNING ONLY EDUCATIONAL INSTITUTION AND ESTABLISHED ONLY FOR EDUCATIONAL PURPOSES. NO OTHER ACTIVITIES WERE EVER DONE BY THE ASSESSEE SOCIETY. THE ASSESSEE SOCIETY IS RUNNING THREE EDUCATIONAL INSTITUTIONS AND DID NOT DO ANY OTHER WORK. THUS THE AIMS AND OBJECTS OF THE ASSESSEE SOCIETY ARE SOLELY FOR EDUCATIONAL PURPOSES WHICH ARE CHARITABLE IN NATURE. HE HAS SUBMITTED THAT EVEN IF CERTAIN AIMS AND OBJECTS ARE MENTIONED WHICH ARE AS PER THE DOCUMENTS PROVIDED BY THE STATE GOVERNMENT AND REGISTRAR OF SOCIETIES WOULD NOT DISENTITLE THE ASSESSEE TO GRANT OF APPROVAL UNDER SECTION 10(23C)(VI) OF THE I.T. ACT. 4 ITA.NO.6254/DEL./2015 AGGARWAL SHIKSHA SAMITI, MAHENDERGARH. HE HAS SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARF CHARITABLE TRUST (REGD.) MALERKOTLA VS. CHIEF COMMISSIONER OF INCOME TAX AND ANOTHER [2015] 376 ITR 110 (P&H). 4. ON THE OTHER HAND, LD. D.R. RELIED UPON THE IMPUGNED ORDER AND SUBMITTED THAT ASSESSEE DID NOT APPEAR BEFORE THE LD. CCIT TO EXPLAIN THE ISSUE AND RELIED ON BOARD CIRCULAR NO.14/2015, DATED 17.08.2015. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE HONBLE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARF CHARITABLE TRUST (REGD.) MALERKOTLA VS. CHIEF COMMISSIONER OF INCOME TAX AND ANOTHER (SUPRA) HELD AS UNDER : HELD, ALLOWING THE PETITION, THAT THE SCHOOL RUN BY THE ASSESSEE AS SUCH WAS AFFILIATED WITH THE CENTRAL BOARD OF SECONDARY EDUCATION AND HAD ALSO BEEN GRANTED REGISTRATION UNDER SECTION 12A WITH EFFECT FROM JULY 15,1997. MERELY BECAUSE ONE 5 ITA.NO.6254/DEL./2015 AGGARWAL SHIKSHA SAMITI, MAHENDERGARH. OF THE CLAUSES OF THE TRUST DEED PROVIDED THAT THE TRUST WOULD CARRY ON OTHER BUSINESS AS DECIDED BY THE TRUSTEES THAT WOULD NOT PER SE DISENTITLE IT FROM BEING CONSIDERED FOR REGISTRATION UNDER SECTION 10(23C)(VI). THE REASONING THAT THE TRUST HAD INTENTION TO CARRY OUT THE BUSINESS AND THE INSTITUTION WAS NOT EXISTING SOLELY FOR EDUCATIONAL PURPOSES WOULD AMOUNT TO GIVING A VERY NARROW MEANING TO THE SECTION AND THE PREDOMINANT OBJECT TEST WAS TO BE APPLIED. IT WAS NOT THAT THE CHIEF COMMISSIONER CAME TO THE CONCLUSION THAT THE TRUST WAS DOING SOME OTHER BUSINESS AND THE BUSINESS WAS GENERATING SUBSTANTIAL AMOUNTS WHICH WOULD OVERRIDE THE MAIN OBJECTS OF THE TRUST WHICH PERTAIN MAINLY TO THE CAUSE OF EDUCATION. IN THE ABSENCE OF ANY SUCH FINDING THAT THE TRUST WAS DOING BUSINESS, THE APPLICATION COULD NOT HAVE BEEN REJECTED ONLY ON THIS GROUND THAT ONE OF THE CLAUSES IN THE OBJECTS PROVIDED SUCH RIGHT TO THE TRUST. THE PRESCRIBED AUTHORITY COULD HAVE MADE IT CON- 6 ITA.NO.6254/DEL./2015 AGGARWAL SHIKSHA SAMITI, MAHENDERGARH. DITIONAL BY HOLDING THAT IF ANY SUCH BUSINESS WAS CARRIED OUT, THE REGISTRATION GRANTED WAS LIABLE TO BE CANCELLED. THEREFORE, THE ORDER REFUSING TO GRANT APPROVAL OF EXEMPTION UNDER SECTION 10(23C)(VI) COULD NOT BE JUSTIFIED SOLELY ON THE GROUND THAT IN VIEW OF A CLAUSE WHICH PROVIDED THAT THE TRUST COULD RUN A BUSINESS, IT WOULD BE DEBARRED AS SUCH FROM REGISTRATION ON THE GROUND THAT IT WAS NOT EXISTING SOLELY FOR EDUCATIONAL PURPOSES. THAT MERELY A CONFERMENT OF POWER TO DO BUSINESS WOULD NOT DEBAR THE RIGHT OF CONSIDERATION OF THE TRUST WITHOUT ANY FINDING BEING RECORDED THAT THE PREDOMINANT OBJECT OF THE TRUST WAS TO DO BUSINESS. THUS, THE CHIEF COMMISSIONER MISDIRECTED HIMSELF IN REJECTING THE APPLICATION ON THIS GROUND WITHOUT COMING TO ANY CONCLUSION THAT THE TRUST WAS CARRYING ON ANY OTHER ACTIVITY UNDER CLAUSE (I). IT WAS ALSO A MATTER OF FACT NOW THAT THE TRUST HAD ALREADY ALSO DELETED THE OBJECTIONABLE CLAUSE FOR THE YEAR 2010-11. THE CHIEF 7 ITA.NO.6254/DEL./2015 AGGARWAL SHIKSHA SAMITI, MAHENDERGARH. COMMISSIONER WAS DIRECTED TO DECIDE THE ASSESSEE'S APPLICATION AFRESH. 5.1. IT IS NOT IN DISPUTE THAT THE AIMS AND OBJECTS OF THE ASSESSEE ARE TO PROMOTE EDUCATION AND ASSESSEE IN PURSUANCE OF AIMS AND OBJECTS ONLY CARRIED OUT THE EDUCATIONAL ACTIVITIES. THE ASSESSEE DID NOT DO ANY OTHER ACTIVITY, THEREFORE, MERELY MENTIONING SOME OTHER AIMS AND OBJECTS WOULD NOT DISENTITLE THE ASSESSEE FOR CLAIMING EXEMPTION/APPROVAL UNDER SECTION 10(223)(VI) OF THE I.T. ACT,. THE LEARNED CCIT DID NOT BRING ANY MATERIAL ON RECORD AS TO HOW ASSESSEE WAS DOING ANY OTHER ACTIVITY IN PURSUANCE TO AIMS AND OBJECTS OF ASSESSEE SOCIETY. MERELY BECAUSE THE ASSESSEE PRINTED CERTAIN AIMS AND OBJECTS AS PER THE REQUIREMENT OF REGISTRAR OF SOCIETIES WOULD NOT MAKE OUT A CASE FOR REJECTION OF THE APPLICATION OF ASSESSEE FOR APPROVAL UNDER THE ABOVE PROVISION. THE LD. D.R. ALSO REFERRED TO BOARD CIRCULAR NO.14 OF 2015, DATED 17.08.2015 IN WHICH IT WAS DIRECTED THAT WHILE GRANTING REGISTRATION / APPROVAL UNDER SECTION 10(23C)(VI) OF THE I.T. ACT, THE PRESCRIBED AUTHORITY HAS TO ENSURE THAT EDUCATIONAL 8 ITA.NO.6254/DEL./2015 AGGARWAL SHIKSHA SAMITI, MAHENDERGARH. INSTITUTION MUST EXIST SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. THE BOARD CIRCULAR WOULD NOT SUPPORT THE CASE OF THE REVENUE BECAUSE NOTHING HAS BEEN BROUGHT ON RECORD IF ASSESSEE EXIST FOR THE PURPOSE OF PROFIT. THE MATERIAL ON RECORD CLEARLY SUGGEST THAT ASSESSEE SOLELY EXIST FOR EDUCATIONAL PURPOSES ONLY. MERELY BECAUSE SOME OTHER AIMS AND OBJECTS HAVE BEEN MENTIONED OTHER THAN EDUCATION, WHICH HAVE ALSO NOT BEEN VERIFIED AT THIS STAGE WOULD CLEARLY SHOW THAT ASSESSEE IS ENTITLED FOR EXEMPTION / APPROVAL 10(23C)(VI) OF THE I.T. ACT. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARF CHARITABLE TRUST (REGD.) MALERKOTLA VS. CHIEF COMMISSIONER OF INCOME TAX AND ANOTHER (SUPRA). IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE THE ORDER OF THE LD. CCIT AND DIRECT THE LD. CCIT, PANCHKULA TO GRANT APPROVAL/EXEMPTION TO THE ASSESSEE UNDER THE ABOVE PROVISION AS PER LAW, WITHIN ONE MONTH FROM THE DATE OF THE ORDER. APPEAL OF ASSESSEE SOCIETY IS ALLOWED. 6. IN THE RESULT, APPEAL OF ASSESSEE SOCIETY ALLOWED. 9 ITA.NO.6254/DEL./2015 AGGARWAL SHIKSHA SAMITI, MAHENDERGARH. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (O.P.KANT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 10 TH MAY, 2019 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT C BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.