IILM Foundation Academy, Gurgaon V. DCIT, Gurgaon

ITA 6342/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4033 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 30-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI KANT GUPTA SENIOR
• Assessee Lawyers: PUNEET CHUGH
• Keywords: Business income; Capital receipt
• Section: 234B; 80G; 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.6342/DEL./2015 (ASSESSMENT YEAR : 2011-12) IILM FOUNDATION ACADEMY, VS. DCIT, CIRCLE 1 (1), PLOT NO.69, SECTOR 53, NEW DELHI. VILLAGE WAZIRABAD, GURGAON 122 001 (HARYANA). (PAN : AACCI0734J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PUNEET CHUGH, CA REVENUE BY : SHRI RAVI KANT GUPTA, SENIOR DR DATE OF HEARING : 02.01.2018 DATE OF ORDER : 25.01.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, IILM FOUNDATION ACADEMY (HEREINAFTE R REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 26.10.2015 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-1, GURGAON ON THE GROUNDS INTER ALIA THAT :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) [CIT(A)] CONFIRMING THE INCOME OF RS.5,01 ,03,290 / - U/S 143 (3) OF THE I TAX ACT, 1961 BY THE AO, IS BAD BOTH IN TH E EYE OF LAW AND ON FACTS. ITA NO.6342/DEL/2015 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE INCOME REJECTING THE CONTENTION OF THE ASSESSEE THA T ITAT HAS DIRECTED THAT APPELLANT IS ELIGIBLE U/S 11/12 OF TH E I TAX ACT AND CONSEQUENTLY SHALL BE GRANTED REGISTRATION UNDER SE CTION 12AA AND 80G OF THE I TAX ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THAT THE EXCESS OF I NCOME OVER EXPENDITURE OF RS.1,03,290/- AS BUSINESS INCOME AND CORPUS DONATION OF RS.5,00,00,000/- AS INCOME FROM OTHER S OURCES. THE AFORESAID ACTION IS ERRONEOUS AS LEARNED CIT (A) FA ILED TO APPRECIATE THAT PURSUANT TO BINDING DIRECTION OF TR IBUNAL, THE APPELLANT IS ELIGIBLE FOR EXEMPTION U/S 11/12 OF TH E I TAX ACT, NOTWITHSTANDING THE SPECIFIC REGISTRATION CERTIFICA TE TO THE ABOVE SAID ORDER HAS NOT BEEN ISSUED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) HAS FAILED TO APPRECIATE THAT CORPUS DONATI ON OF RS.5,00,00,000/- IS ANY CASE CAPITAL RECEIPT AND NO T LIABLE TO TAX UNDER THE PROVISIONS OF THE I TAX ACT. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN NOT P ASSING ANY ORDER OVER CHARGING OF INTEREST U/S 234B BY AO. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE : ASSESSEE IN ITS RETURN O F INCOME CLAIMED EXEMPTION UNDER SECTION 11 OF THE INCOME-TAX ACT, 1 961 ( FOR SHORT THE ACT) WHICH HAS BEEN DECLINED BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH REGI STRATION U/S 12A AND CONSEQUENTLY TREATED THE EXCESS INCOME OVER EXP ENDITURE AMOUNTING TO RS.1,03,290/- AS PROFITS FROM BUSINESS AND PROFESSION AND ASSESSED THE TOTAL INCOME AT RS.5,01,03,290/-. 3. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS DISMISSED THE APPEAL. FEELI NG AGGRIEVED, ITA NO.6342/DEL/2015 3 THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY CHA LLENGING THE IMPUGNED ORDER PASSED BY LD. CIT (A) . 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE INSTANT CASE IS HAVING PECULIAR FACTS IN WHI CH ASSESSEE COMPANY REGISTERED U/S 25 OF THE COMPANIES ACT MOVE D AN APPLICATION U/S 12A OF THE ACT AND THE REGISTRATION WAS DECLINED BY LD. CIT VIDE ORDER DATED 21.12.2009. THEN, ASSESSE E COMPANY APPROACHED THE TRIBUNAL AND FAVOURABLE ORDER HAS BE EN PASSED IN APPEAL NO.758 & 759/DEL/2010 VIDE ORDER DATED 31.08 .2010, AVAILABLE AT PAGES 26 TO 39 OF THE PAPER BOOK. ORD ER DATED 31.08.2010 PASSED BY THE TRIBUNAL WAS FURTHER CHALL ENGED BY THE REVENUE BEFORE THE HONBLE PUNJAB & HARYANA HIGH CO URT, CHANDIGARH AND VIDE ORDER DATED 16.09.2016, AVAILAB LE AT PAGES 40 TO 62 OF THE PAPER BOOK, APPEAL OF THE REVENUE WAS DISMISSED BY MAKING FOLLOWING OBSERVATIONS :- A PERUSAL OF THE ORDER OF THE COMMISSIONER SHOWS THAT HE DECLINED TO REGISTER THE COMPANY BY READING ITS ANC ILLARY OBJECTS AS ITS MAIN OBJECTS AS ALSO ON THE BASIS THAT IN TH E FUTURE)HE COMPANY MAY, UNDER ITS ANCILLARY/INCIDENTAL OBJECTS , INDULGE IN ACTIVITIES, WHICH WOULD BE OF NON-CHARITABLE CHARAC TER. AS OF TODAY, THERE IS NOTHING ON THE RECORD THAT THE COMP ANY IS INDULGING IN ANY ACTIVITY WHICH IS NOT IN THE NATUR E OF CHARITY. THUS, AT THIS STAGE, THE ORDER OF THE COMMISSIONER CAN ONLY BE ITA NO.6342/DEL/2015 4 TERMED AS PRESUMPTUOUS. THERE IS ALSO NOTHING ON RE CORD TO SHOW THAT THE COMPANY DOES NOT MEET ANY OF THE CONDITION S PRESCRIBED UNDER THE ACT FOR THE GRANT OF REGISTRATION TO MAKE IT ELIGIBLE FOR THE GRANT OF EXEMPTION UNDER SECTION 11 AND CONSEQU ENTLY UNDER SECTION 80-G OF THE ACT. THUS, WE FIND THAT THE ORD ER OF THE COMMISSIONER WAS RIGHTLY SET ASIDE BY THE TRIBUNAL IN THE ORDER IMPUGNED BEFORE US. IN VIEW OF THE ABOVE, WE ORDER DISMISSAL OF THE APP EAL. HOWEVER, WHILE GRANTING REGISTRATION, IT WOULD BE O PEN TO THE REGISTERING AUTHORITY TO GRANT THE SAME BY IMPOSING ANY CONDITION, WHICH WOULD BIND THE COMPANY TO INDULGE IN ONLY CHARITABLE ACTIVITIES. IT WILL ALSO BE SUBJECT TO A N AFFIDAVIT OR UNDERTAKING TO BE FILED BY THE COMPANY THAT IT WOUL D NOT BREACH ANY OF THE IMPOSED CONDITIONS AND FURTHER THAT SURP LUS FUNDS WOULD BE UTILIZED ONLY FOR EDUCATIONAL PURPOSES AND WOULD NOT BE DIVERTED TO ANY OTHER NON-EDUCATIONAL OBJECTIVES. 6. THEN ASSESSEE COMPANY MOVED AN APPLICATION DATED 24.05.2017 AND 06.07.2017 TO THE CONCERNED COMMISSI ONER OF INCOME-TAX (EXEMPTIONS) TO GRANT CERTIFICATE U/S 12 AA AND 80G(5)(VI) IN VIEW OF THE JUDGMENT DATED 16.09.2016 (SUPRA) PASSED BY THE HONBLE HIGH COURT. BUT STRANGELY EN OUGH ORDER DATED 31.08.2010 PASSED BY THE TRIBUNAL AND ORDER D ATED 16.09.2016 PASSED BY THE HONBLE HIGH COURT REMAINE D UNEXECUTED. 7. WHEN THE CASE OF THE ASSESSEE WAS PUT UNDER SCRU TINY THIS ISSUE WAS BROUGHT TO THE NOTICE OF AO WHO HAS ALSO NOT MADE ANY EFFORT TO CONVEY THE CONCERNED CIT (E) TO COMPLY WI TH THE ORDER PASSED BY THE TRIBUNAL AS WELL AS BY THE HONBLE HI GH COURT. IT IS NOT ONLY HIGH HANDEDNESS ON THE PART OF THE REVENUE AUTHORITIES BUT, IN OTHER WORDS, IT ALSO LEAD TO GENERATING THE UNNECESSARY ITA NO.6342/DEL/2015 5 LITIGATION TO BURDEN THE QUASI-JUDICIAL AND JUDICIA L FORUM. WITHOUT EXPRESSING ANY OPINION AS TO DISOBEDIENCE OF THE OR DER OF THE TRIBUNAL AS WELL AS HONBLE HIGH COURT BY THE LOWER REVENUE AUTHORITIES, WE HEREBY DIRECT THE CONCERNED CIT (EX EMPTIONS) TO ISSUE THE CERTIFICATE WITHIN A PERIOD OF ONE MONTH FROM THE DATE OF RECEIPT OF THE COPY OF THIS ORDER IN COMPLIANCE TO THE ORDER PASSED BY THE HONBLE HIGH COURT. LD. SENIOR DR AND LD. A R ARE DIRECTED TO PLACE COPY OF THIS ORDER BEFORE THE CONCERNED CI T (EXEMPTIONS) WITHIN ONE WEEK FROM THE DATE OF RECEIPT. 8. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WITHOU T ENTERING INTO THE MERITS OF THE CASE, IMPUGNED ORDER PASSED BY THE LD. CIT (A) AND AO ARE HEREBY SET ASIDE AND FILE IS RESTORE D TO THE AO TO DECIDE AFRESH ON RECEIPT OF REGISTRATION CERTIFICAT E TO BE ISSUED BY THE CONCERNED CIT (EXEMPTIONS). CONSEQUENTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF JANUARY, 2018. SD/- SD/- (B.P. JAIN) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 25 TH DAY OF JANUARY, 2018 TS ITA NO.6342/DEL/2015 6 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-1, GURGAON. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.