Dy.C.I.T., Circle-2, Farrukhabad V. Suditi Global Acatemy, Mainpuri

ITA 63/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0699 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 2 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-07-2013
• Assessment Year: misc
• Appeal Filed On: 28-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Benefit of exemption; Capital expenditure; Set aside
• Section: 12A; 12AA; 68; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.63/AGRA/2013 ASSESSMENT YEAR: 2009-10 DY. COMMISSIONER OF INCOME TAX (A.O.) VS. SUDITI GL OBAL ACADEMY, FARRUKHABAD. DEVI BY PASS ROAD, NAGARIA, MAINPURI. (PAN: AADAS 8365 C). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.L. MAURYA, SR. D.R. RESPONDENT BY : SHRI NAVIN GARGH, ADVOCATE DATE OF HEARING : 10.07.2013 DATE OF PRONOUNCEMENT : 12.07.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 04.12.2012 PASSED BY THE LD. CIT(A), GHAZIABAD FOR THE A.Y. 20 09-10. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LD. CIT(A) ERRED IN TREATING ASSESSEE AS CHARITABLE EDUCATION INSTITUTE AND ALLOWING EXEMPTION U/S 10(2 3(C) EVEN WHEN A NUMBER OF OTHER OBJECTS ARE INCLUDED IN ITS OBJECTS CLAUSE AND EVEN REGISTRATION U/S 12A WAS NOT AVAILABLE FOR A.Y. 200 9-10. 2. THE CIT(A) ERRED IN TREATING ALL DONATIONS AS EX PLAINED AND FOR CORPUS WHEN IN CASE OF 1246 DONATIONS AMOUNTING TO RS.45,42,223/- EVEN IDENTITY OF DONORS WERE NOT ESTABLISHED. ITA NO.63/AGRA/2013 A.Y. 2009-10 2 3. APPELLANT CRAVES LEAVE TO AMEND, ALTER, ADD OR M ODIFY ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A SOCIETY REGISTERED WITH REGISTRAR OF SOCIETIES UTTAR PRADESH VIDE REGISTRAT ION CERTIFICATE NO.2477/2004-05 DATED 19.03.2005 WHICH WAS RENEWED ON 03.01.2010 FO R A FURTHER PERIOD OF FIVE YEARS. DURING THE YEAR, THE ASSESSEE WAS ENGAGED I N CONSTRUCTION OF SCHOOL IN THE NAME OF SUDIT GLOBAL ACADEMY, DEVI BYE PASS ROAD, N AGARIYA, MAINPURI. THE ASSESSEE SOCIETY IS REGISTERED UNDER SECTION 12A OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) CLAIMING UNDER SECTION 10(23C) OF THE ACT BEING A CHARITABLE EDUCATIONAL INSTITUTION. HOWEVER, THE REGISTRATION CERTIFICATE ISSUED UNDER SECTION 12AA DATED 16.06.2010 WAS ALLOWED W.E.F. 01.04.2009 . THE A.O. NOTICED THAT THE ASSESSEE WAS NOT REGISTERED UNDER SECTION 12A FOR T HE PERIOD RELEVANT TO A.Y. 2009- 10. THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 1 0(23C) OF THE ACT BEING CHARITABLE EDUCATIONAL INSTITUTION. THE A.O. WAS O F THE VIEW THAT EXEMPTION UNDER SECTION 10(23C) IS NOT AVAILABLE TO THE ASSESSEE TR UST AS THE ASSESSEE TRUST HAVING VARIOUS CLAUSES OF OBJECTS IN ADDITION TO EDUCATION . THUS, THE ASSESSEE SOCIETY DOES NOT FULFILL THE MANDATE OF SECTION 10(23C) OF THE A CT BECAUSE IT DOES NOT EXIST SOLELY FOR THE PURPOSE OF EDUCATION. THE A.O. FURT HER NOTICED THAT THE ASSESSEE TRUST HAS SHOWN DIRECTLY IN THE BALANCE SHEET RS.48,66,92 5/- BY MENTIONING AS DONATION EARMARKED FOR CAPITAL EXPENDITURE. THE ASSESSEE TR UST FILED A LIST CONTAINING NAMES ITA NO.63/AGRA/2013 A.Y. 2009-10 3 OF 1283 NOS. OF DONORS ALONG WITH AMOUNT OF DONATIO N, PLACE AND RECEIPT NUMBERS ISSUED BY THE ASSESSEE. HOWEVER, THE A.O. NOTICED THAT THE SAID LIST DOES NOT GIVE THE REQUISITE DETAIL OF INFORMATION AS WAS ASKED FR OM THE ASSESSEE. THE ASSESSEE FILED DOCUMENTS ONLY IN RESPECT OF 32 CASES OUT OF 1283 NOS. OF DONORS. THE TOTAL AMOUNT COVERED IN THESE 37 NOS. OF CASES IS ONLY OF RS.3,24,702/-. THE A.O. CAME TO THE CONCLUSION THAT OUT OF RS.48,66,925/- THERE IS NO DETAILS IN RESPECT OF IDENTITY AND THE ADDRESSES OF THE DONORS AS WELL AS THE CONF IRMATIONS OF THE BALANCE AMOUNT OF RS.45,42,223/-. THE A.O. NOTED THAT THE ASSESSE E HAS FAILED TO FURNISH DOCUMENTS SHOWING IDENTITY AND ADDRESSES AND THE CO NFIRMATIONS AND ALSO THERE IS NO DIRECTION REGARDING THESE AMOUNTS BEING CORPUS I N NATURE. THERE IS NO EVIDENCE OF CREDITWORTHINESS FOR AMOUNT OF RS.45,42,223/-. IN THE ABSENCE OF SUCH DETAILS, THE A.O. MADE ADDITION OF RS.48,66,925/- UNDER SECT ION 68 OF THE ACT.. 4. THE CIT(A) DID NOT AGREE WITH THE FINDING OF THE A.O. THAT THE ASSESSEE TRUST WAS NOT EXISTING FOR EDUCATIONAL PURPOSES. THE REL EVANT FINDING OF CIT(A) IS REPRODUCED AS UNDER :- (PARAGRAPH NO.7.4, PAGE NOS. 26 & 27) 7.4 I HAVE EXAMINED THE DONATION RECEIPT ISSUED BY THE SOCIETY AND FIND THAT THESE CLEARLY MENTION THAT THE DONATION I S GIVEN BY THE DONOR FOR THE CONSTRUCTION OF THE BUILDING. HOWEVER, PRO VISIONS OF SECTION 11 AND 12 ARE APPLICABLE ONLY IF THE REGISTRATION I S GRANTED UNDER SECTION 12AA OF THE ACT. BUT I FIND THAT EXEMPTION U/S 10(23C)(IIIAD) IS REQUIRED TO BE CONSIDERED, INDEPENDENT OF ANY SU CH BENEFIT U/S 11 & 12, WHETHER AVAILABLE TO ASSESSEE OR NOT. ITA NO.63/AGRA/2013 A.Y. 2009-10 4 ON THE ISSUE OF ELIGIBILITY FOR EXEMPTION U/S 10(23 C)(IIIAD), I FIND THAT THE ASSESSEE SOCIETY UNDISPUTEDLY EXISTS SOLELY FOR EDUCATIONAL PURPOSES. THE TWO CLAUSES (S) AND (X), REFERRED TO, BY THE A.O., ARE JUST INCIDENTAL TO THE MAIN CLAUSES WHICH ARE OF PURELY EDUCATIONAL NATURE. MOREOVER, I HAVE ALSO NOTED TH AT THE AR HAS FILED A CERTIFIED COPY OF THE RESOLUTION DATED 2 ND JANUARY, 2012 WHEREBY THE ALLEGED CLAUSE (S) AND (X) WERE DROPPED FROM THE ME MORANDUM OF THE SOCIETY. THE SOCIETY HAS ALSO GIVEN IN WRITING THA T THE SOCIETY HAS NOT USED ANY PART OF THE BUILDING AND/OR FUNDS OF THE S OCIETY ON THE ACTIVITIES AS ENUMERATED IN CLAUSE (S) AND (X) OF T HE MEMORANDUM OF ASSOCIATION AND THE SOCIETY IS DEVOTED EXCLUSIVELY TO THE EDUCATIONAL ACTIVITIES. ACCORDINGLY I AM OF THE FIRM VIEW THAT WITHOUT PREJUDICE TO THE RESOLUTION PASSED ON 02.01.2012 THE FEARS EXPRE SSED BY THE AO THAT THE SOCIETY DOES NOT EXISTS FOR EDUCATIONAL PU RPOSES HAS NO FORCE. 5. THE CIT(A) HAS ALSO FOUND THAT ON EVERY RECEIPT IT IS CLEARLY STATED THAT THE DONOR HAS GIVEN DONATION TO THE SOCIETY FOR VIDYAL AYA BHAWAN NIRMAN. THE CIT(A) FOUND THAT THE SOCIETY HAD BEEN GIVEN A CLE AR MANDATE IN RESPECT OF DONATIONS TO THE CORPUS FUND AS PROVIDED UNDER SECT ION 11(1)(D) OF THE ACT AND THUS THERE IS NO INFRINGEMENT TO THE PROVISIONS OF THE A CT. THE CIT(A) FURTHER NOTICED THAT THE ASSESSEE TRUST HAS FILED COY OF RATION CAR D OF THE DONORS ALONG WITH CONFIRMATIONS WHICH GOES TO PROVE THAT THE SOCIETY HAS COMPLETE RECORD OF THE DONORS WITH THEIR NAMES, ADDRESSES, AND THE AMOUNT OF DONATION RECEIVED. THE CIT(A) HELD THAT THE OBSERVATION OF THE A.O. THAT T HE DONATIONS ARE ANONYMOUS HAS NO FORCE. THE CIT(A) HAS ALSO EXAMINED THE ISSUE F ROM ANOTHER ANGLE THAT THE CASE OF THE ASSESSEE SOCIETY IS COVERED BY PROVISIONS OF SECTION 10(23C)(IIIAD) OF THE ITA NO.63/AGRA/2013 A.Y. 2009-10 5 ACT. THE CIT(A) BEFORE GIVING HIS CONCLUSION CONSI DERED THE FOLLOWING DECISIONS CITED BY THE ASSESSEE :- 1) CIT VS. GEETHA BHAVAN TRUST, 231 ITR 296. 2) DY. DIRECTOR OF INCOME TAX VS. SHANTI DEVI PROGR ESSIVE EDUCATION SOCIETY, 340 ITR 320. 3) R.R.M. EDUCATIONAL SOCIETY VS. CHIEF COMMISSIONE R OF INCOME TAX, 208 TAXMANN 81. 4) O.P. JINDAL GLOBAL UNIVERSITY VS. CHIEF COMMISSI ONER OF INCOME TAX (EXEMPTION), 208 TAXMANN 288. 5) SIKKIM MANIPAL UNIVERSITY VS. ACIT, 126 TAX REF ERENCER 415 6) SARDAR VALLABH BHAI EDUCATION SOCIETY, 138 ITD 245 6. AFTER CONSIDERING ALL THE DECISIONS AND SUBMISSI ON OF THE ASSESSEE, THE CIT(A) HELD THAT THE ASSESSEE IS ELIGIBLE FOR EXEMP TION UNDER SECTION 10(23C)(IIIAD) OF THE ACT AS UNDER :- (PARAGRAPH NO .7.10, PAGE NO.35) 7.10 I AGREE WITH THE CONTENTING OF THE AR THAT RATIOS OF ABOVE JUDGEMENTS ARE HELPFUL TO IT AND I HAVE COME TO THE FIRM CONCLUSION THAT THE SOCIETY IS ENTITLED TO THE BENEFIT OF EXEM PTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT SINCE THE SOCIETY HAS MAI NTAINED COMPLETE RECORD OF THE DONATIONS IN ITS BOOKS OF ACCOUNT AND A DETAILED LIST HAS BEEN FILED ON RECORD, THE CONFIRMATIONS FILED BY TH E SOCIETY INCORPORATED THE ID-PROOF OF THE DONORS AND THUS TH E DONATIONS RECEIVED BY THE SOCIETY ARE NOT ANONYMOUS DONATION AS ALLEGED BY THE AO, THE SOCIETY RECEIVED FULL MANDATE THAT DONATION GIVEN TO THE SOCIETY ARE TOWARDS THE CORPUS FUND OF THE SOCIETY, THE DONATION RECEIVED BY THE SOCIETY WERE USED IN THE CONSTRUCTI ON OF THE SCHOOL BUILDING AS HAS BEEN CLEARLY RECORDED BY THE AO IN PARAGRAPH 3 AT PAGE 5 OF THE ORDER, THE FURTHER DONATION RECEIVED TO MEET THE EXPENSES OF THE SOCIETY WERE ONLY TO THE TUNE OF RS .1,00,000/- AND ITA NO.63/AGRA/2013 A.Y. 2009-10 6 EVEN IF THE TOTAL DONATION RECEIVED ARE TREATED AS INCOME OF THE SOCIETY, THE SAME CONTINUES TO BE LESS THAN RS.1 CR ORE. THUS, ASSESSEE GETS BENEFIT OF EXEMPTION U/S 10(23C )(IIIAD), AND, THUS, ITS INCOME IS EXEMPT FROM TAX. THE ADDI TION MADE OF RS.48,66,925/- STANDS DELETED. 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE REVENUE HAS CHALLENGED THE ORDER OF CIT(A) ON T WO GROUNDS, FIRST ONE IS THAT THE CIT(A) HAS ERRED IN ALLOWING EXEMPTION UNDER SE CTION 10(23C) EVEN WHEN A NUMBER OF OTHER OBJECTS ARE INCLUDED IN IT OBJECT C LAUSE AND SECTION 12A WAS NOT AVAILABLE FOR A.Y. 2009-10. THE CIT(A) AFTER CONSI DERING THE MATERIAL FOUND THAT THE ASSESSEE SOCIETY EXISTS SOLELY FOR EDUCATION PU RPOSES. HE FURTHER NOTICED THAT OTHER CLAUSES ARE JUST INCIDENTAL TO THE MAIN CLAUS E WHICH IS EDUCATION IN NATURE. THE CIT(A) HAS ALSO CONSIDERED A RESOLUTION DATED 0 2.01.2012 PASSED BY THE ASSESSEE TRUST WHEREIN THE ALLEGED CLAUSE (S) AND ( X) WERE DROPPED FROM THE MEMORANDUM OF SOCIETY. THE SOCIETY HAS ALSO GIVEN IN WRITING THAT SOCIETY HAS NOT USED ANY PART OF THE BUILDING AND/OR FUNDS OF THE S OCIETY ON THE ACTIVITIES AS ENUMERATED IN CLAUSE (S) AND (X) OF THE MEMORANDUMS OF ASSOCIATION. THE CIT(A) CATEGORICALLY HELD THAT THE ASSESSEE SOCIETY EXISTS FOR EDUCATIONAL ACTIVITIES. THE REVENUE HAS FAILED TO POINT OUT ANY CONTRARY MATERI AL TO THE FINDING OF THE CIT(A). SINCE THE OTHER CONDITIONS FOR EXEMPTION UNDER SECT ION 10(23C) HAVE BEEN COMPLIED WITH BY THE ASSESSEE TRUST, IN THE LIGHT O F THE FACT, WE DO NOT FIND ANY INFORMALITY IN THE ORDER OF CIT(A). ITA NO.63/AGRA/2013 A.Y. 2009-10 7 8. AS REGARDS THE SECOND GROUND OF APPEAL OF THE RE VENUE, EVEN IF WE CONSIDER THAT THE AMOUNT OF RS.45,42,223/- IS NOT LIABLE TO BE ADDED IN THE TOTAL INCOME UNDER SECTION 68 OR UNDER SECTION 115BBC OF THE ACT , THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 10(23C) AS HELD BY THE I.T. A.T., AGRA BENCH IN THE CASE OF SMT. VIDYAWATI EDUCATIONAL SOCIETY VS. ITO IN IT A NO.383/AGRA/2012, ORDER DATED 08.03.2013. THE RELEVANT FINDING OF I.T.A.T . IS REPRODUCED AS UNDER :- 19. NOW COMING TO GROUNDS NOS.2 & 3, THE CASE OF T HE ASSESSEE IS THAT EVEN IF ADDITION IS SUSTAINED, THE ASSESSEE IS ENTITLED TO BENEFIT OF SECTION 11 OR UNDER SECTION 10(23C) OF THE ACT. TH E CIT(A) BY RELYING UPON A JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF ORRISA STATE WAREHOUSING CORPORATION VS. CIT, 237 I TR 589 (SC) AND ORDER OF I.T.A.T. HYDERABAD BENCH IN THE CASE OF DCIT VS. SMT. SOEDA EDUCATIONAL SOCIETY, ITA NO. 237 & 238/H/2010, ORDE R DATED 21.04.2011, REJECTED THE ASSESSEES CONTENTION. ON THE OTHER HAND, THE ASSESSEE RELIED UPON A JUDGMENT OF HONBLE DEL HI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. RAUNAQ EDUCA TION FOUNDATION, 294 ITR 76 (DELHI) WHERE AFTER CONSIDERING THE JUDG MENT OF THE APEX COURT IN THE CASE OF ORISSA STATE WAREHOUSING CORPO RATION VS. CIT, 237 ITR 589 (SC), IT HAS BEEN HELD AS UNDER :- THE WORDS DERIVED FROM (OR SOME OTHER SIMILAR WO RDS) DO NOT OCCUR IN SECTION 10(22) OF THE INCOME-TAX ACT, 1961, AND, THEREFORE, THE WORD INCOME AS OCCURRING IN SECTIO N 10(22) CANNOT BE GIVEN A RESTRICTIVE MEANING AND MUST BE G IVEN ITS NATURAL MEANING OR THE MEANING ASCRIBED TO IT IN SE CTION 2(24). HENCE, AN ASSESSEE WHO IS ENTITLED TO EXEMPTION UND ER SECTION 10(22) CAN CLAIM THE BENEFIT THEREOF FOR THE PURPOS E OF INCOME DEEMED TO BE CHARGEABLE TO TAX UNDER SECTION 68. 20. IN THE LIGHT OF JUDGMENT OF HONBLE DELHI HIGH COURT, THE ORDER OF I.T.A.T. HYDERABAD BENCH CITED ABOVE DOES NOT HE LP THE REVENUE. WE FOLLOW THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. RAUNAQ EDUCATION FOUNDAT ION, 294 ITR 76 (DELHI). WE SET ASIDE THE ORDERS OF REVENUE AUT HORITIES AND ITA NO.63/AGRA/2013 A.Y. 2009-10 8 CONTENTION OF THE ASSESSEE IS ALLOWED THAT IF ANY A DDITION IS SUSTAINED, THE ASSESSEE IS ENTITLED TO BENEFIT OF SECTION 11/1 0(23C) OF THE ACT. THE A.O. IS DIRECTED ACCORDINGLY. 9. THE ORDER OF CIT(A) IN THE CASE UNDER CONSIDERAT ION IS IN CONSONANCE WITH THE ABOVE ORDER OF I.T.A.T. AGRA BENCH. IN THE LIG HT OF THE FACT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). ORDER OF THE CIT (A) IS CONFIRMED. 10. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTA NT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY