Saint Kabir Education Society, Hisar V. CIT(E), Chandigarh

ITA 6449/DEL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1700 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: misc
• Appeal Filed On: 24-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Charitable institution
• Section: 143(3); 12A; 12AA; 205; 12; 11

Judgement Text

1 ITA NO. 6449/DEL/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDIC IAL MEMBER ITA NO. 6449/ DEL/2017 M/S SAINT KABIR EDUCATION SOCIETY SECTOR-13P, DABRA ROAD, HISAR HARYANA AAFTS2436K (APPELLANT) VS COMMISSIONER OF INCOM E TAX (EXEMPTIONS) C. R. BUILDING, 5 TH FLOOR, SECTOR-17-E, CHANDIGARH- 160017 (RESPONDENT) APPELLANT BY SH. GAUTAM JAIN, ADV RESPONDENT BY SH. S. S. RANA, CIT(DR) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 31/08/2017 PASSED BY COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH VIDE ORDER DATED 31/8/2017 U/S 12AA OF THE INCOME TAX ACT, 196 1. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (E XEMPTIONS), CHANDIGARH HAS GROSSLY ERRED BOTH IN LAW AND ON FAC TS IN REJECTING THE APPLICATION FOR REGISTRATION OF THE ASSESSEE SOCIET Y U/S 12AA OF THE ACT. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (EXE MPTIONS) HAS FAILED TO APPRECIATE THE OBJECTS OF THE SOCIETY AND, HAS ARBI TRARILY ON MISCONCEIVED ASSUMPTIONS OF BOTH LAW AND FACTS CONCLUDED THAT TH E ASSESSEE WAS NOT DATE OF HEARING 06.05.2019 DATE OF PRONOUNCEMENT 13.06.2019 2 ITA NO. 6449/DEL/2019 PURSUING THE CHARITABLE OBJECTS OF EDUCATION. 3. THAT FINDING THAT OVER THE PERIOD OF TIME THE E MPHASIS OF THE SOCIETY IS MAINLY ON CREATION OF ASSETS THAT TOO MAINLY ON CAR S AND VEHICLES. MOREOVER THE SALARY AND FEE STRUCTURE OF THE SOCIETY IS NOT IN SYNC WITH THE INSTRUCTION ISSUED BY THE CBSE WHILE PROVIDING AFFILIATION TO A N ENTITY IS FACTUALLY INCORRECT AND LEGALLY MISCONCEIVED. 4. THAT FURTHER FINDING THAT SUCH FACILITIES CANNO T BE EXTENDED TO ENTITIES THAT HAVE MIS-UTILIZED THE PROVISIONS OF THE ACT THAT AC CORD SOMETHING AKIN TO AUTOMATIC APPROVAL TO ENTITIES PROFESSING TO EXIST SOLELY FOR EDUCATION AND NOT FOR PROFITS AND HAVE IN THE BARRAGING ACCORDED BENE FITS TO ITS MEMBERS IN THE SHAPE OF LUXURY ITEMS IS NOT BASED ON CORRECT APPR ECIATION OF FACTS, PROVISIONS OF LAW AND HENCE UNTENABLE. 5. THAT MERE HOLDING OF CARS BY CHARITABLE TRUST CA NNOT BE A GROUND TO DENY A REGISTRATION U/S 12AA OF THE ACT. 6. THAT THE LEARNED COMMISSIONER OF INCOME TAX (EXE MPTIONS) HAS ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING THE DENIAL OF EXE MPTION U/S 11 AND 12 OF THE ACT. 6.1THAT THE LEARNED COMMISSIONER OF INCOME TAX (EXE MPTIONS) HAS FAILED TO APPRECIATE THAT SECTION 13(L)(D) OF THE ACT HAS NO APPLICATION TO THE FACTS OF THE CASE OF THE APPELLANT SOCIETY 7. THAT THE VARIOUS ADVERSE FINDINGS AND OBSERVATIO NS RECORDED BY THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) ARE WITHOUT ANY BASIS AND, FURTHER BASED ON PURE SUBJECTIVE CONSIDERATIONS WHI CH ARE CONTRARY TO THE FACTS PLACED ON RECORD BY THE ASSESSEE SOCIETY. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEARN ED COMMISSIONER OF INCOME TAX (EXEMPTIONS) BE QUASHED AND, IT BE FURTHER DIRE CTED TO GRANT REGISTRATION TO THE ASSESSEE SOCIETY U/S 12AA OF THE ACT. 3. AN APPLICATION IN FORM NO. 10A WAS RECEIVED BY C OMMISSIONER OF INCOME TAX (EXEMPTIONS) ON 23/02/2017 SEEKING REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961. THE SOCIETY IS AN ONGOING ENTITY TH AT HAS BEEN IN OPERATION SINCE 26/04/1989. AN AIMS AND OBJECTS OF THE SOCIE TY ARE TO RUN AND MANAGE 3 ITA NO. 6449/DEL/2019 M/S SAINT KABIR EDUCATION SOCIETY, HISAR TO UTILIZE THE RESOURCES OF SOCIETY FOR PROPAGATION OF EDUCATION; TO ESTABLISH AND RUN EDUC ATION INSTITUTIONS FOR PROMOTION OF MODERN EDUCATION IN HARYANA; TO PREPAR E BUILDINGS, HOSTELS, SPORTS GROUND AND LIBRARY FOR INSTITUTES OF SOCIETY . THE CIT (EXEMPTION) REJECTED THE APPLICATION U/S 12A FOR GRANT OF REGIS TRATION ON THE GROUND THAT THERE IS NO GENUINENESS OF ACTIVITIES OF THE SOCIET Y WHICH CAN BE CORPORATE WITH THE AIMS AND OBJECTS OF THE SOCIETY. THE COMMISSION ER FURTHER OBSERVED THAT THE ACTIVITIES OF THE APPLICANT GOT SEVERELY COMPRO MISED WHEN A SOCIETY PROFESSING TO BE CHARITABLE IS SEEN TO UTILIZE ITS RECEIPT ON ASSETS OF LUXURY OF PERSONAL USE THAT IN NO MANNER CAN QUALIFY FOR THE BENEFIT OF GENERAL PUBLIC. 4. BEING AGGRIEVED BY THE ORDER DATED 31/08/2017, T HE ASSESSEE FILED APPEAL BEFORE US. 5. THE LD. AR SUBMITTED THAT THE ASSESSEE SOCIETY W AS CONSTITUTED UNDER A SOCIETY REGISTRATION ACT, 1860 ON 26/03/1989. REVIS ED CERTIFICATE OF REGISTRATION U/S 9(4) OF THE HARYANA REGISTRATION A ND REGULATION OF SOCIETIES ACT, 2012 WAS ISSUED ON 30/08/2013. ON 23/02/2017 A PPLICATION FOR REGISTRATION OF CHARITABLE OR RELIGIOUS TRUST U/S 1 2A (A) OF THE ACT IN FORM NO. 10A (1) WAS FILED. ON 18/07/2017, QUESTIONNAIRE WA S ISSUED BY COMMISSIONER OF INCOME TAX ACT (EXEMPTIONS) CHANDIGARH TO THE AP PLICANT SOCIETY. THE APPLICANT SOCIETY FILED REPLY ON 3/8/2017 AS WELL A S ON 11/8/2017. ON 3/8/2017 ORDER U/S 12AA REJECTING THE APPLICATION O F THE APPLICANT WAS PASSED BY THE COMMISSIONER OF INCOME TAX ACT (EXEMPTION). THE LD. AR SUBMITTED THAT IT IS UNDISPUTED FACT THAT THE ASSESSEE IS ENG AGED IN RUNNING SCHOOL AND PROVIDING EDUCATION. THE LD. AR FURTHER SUBMITTED THAT IN THE INSTANT CASE, THE COMMISSIONER OF INCOME TAX (EXEMPTION) HAS ALS O ADMITTED THAT SOCIETY HAS BEEN FORMED TO SET UP TO SCHOOL WHICH APPARENTL Y AND EVIDENTLY IS AN EDUCATIONAL ACTIVITY. THE PRESENT APPLICATION AND REGISTRATION IS ONLY APPLICABLE OF ASSESSMENT YEARS 2017-18 & 2018-19. THE LD. AR SUBMITTED THAT IN THE PRECEDING YEARS FROM ASSESSMENT YEAR 20 11-12 TO ASSESSMENT YEAR 4 ITA NO. 6449/DEL/2019 2016-17 THERE IS NO SURPLUS. HOWEVER, ORDERS HAVE BEEN MADE IN ASSESSMENT U/S 143(3) OF THE ACT FOR THE ASSESSMENT YEAR 1996- 97, 2003-04, 2004-05 & 2008-09 WHEREIN EXEMPTION U/S 10(22)/10(23C) (IIIAD ) HAS BEEN AVAILED BY THE APPLICANT. THE LD. AR FURTHER SUBMITTED THAT OBJEC TS OF THE SOCIETY ARE WHOLLY CHARITABLE IN AS MUCH AS MAIN OBJECT IS OF PROVIDIN G EDUCATION WHICH IS COVERED U/S 2(15) WHICH PROVIDES AN INCLUSIVE DEFIN ITION OF THE EXPRESSION CHARITABLE PURPOSE. THE LD. AR RELIED UPON THE FOLL OWING DECISIONS: 93 ITD 546 (DEL) ARYAN EDUCATIONAL SOCIETY VS. CIT 104 TTJ 127 (DEL) SHAVAK SHIKSHA SAMITI VS. CIT ITA NO. 5009/DEL/2007 M/S AGGARWAL SABHA MEHAM VS. CIT(A) 27 SOT 331 (DEL) SHRI KRISHNA EDUCATION AND WELFARE TRUST VS. CIT(A) 212 CTR 394 (ALL) CIT V. RED ROSE SCHOOL 330 ITR 480 (KAR) DIT V. GARDEN CITY EDUCATIONAL TR UST 340 ITR 322 (DEL) DDDIT V. SHANTI DEVI PROGRESSIVE EDUCATION SOCIETY 127 ITD 164 (DEL) O.P. JINDAL GLOBAL UNIVERSITY V. CIT 68 SOT 433 (DELHI) MERITTA WELFARE TRUST V. CIT 212 CTR 394 (ALL) CIT VS. RED ROSE SCHOOL 9 SOT 636 (BOM) ST. GEORGE EDUCATIONAL TRUST VS. DI T[E] 13 SOT 54 (DEL) (URO) ACHARYA SEWA NIYAS UTTARANCHAL VS. CIT ITA NO. 1089/09 IN THE CASE OF SHRI KRISHNA EDUCATION AND WELFARE TRUST VS. CIT 118 TTJ 823 (DEL) DHARMA SANSTHAPAK SINGH (NIYAS) V S. CIT ORDER OF HONBLE ITAT IN THE CASE OF M/S AGGARWAL S ABHA MEHAM VS. CIT IN ITA NO. 5009/D/2007 DATED 29.05.2009 APP ROVED BY HONBLE HIGH COURT OF PUNJAB & HARYANA DATED 27.08. 2010 117 ITR 284 (AP) GOVERNING BODY OF RANGARAYA MEDICA L COLLEGE 6. THE LD. AR FURTHER SUBMITTED THAT ACCORDING TO S ECTION 12AA (1)(B) OF THE 5 ITA NO. 6449/DEL/2019 ACT, THE COMMISSIONER OF INCOME TAX AT THE TIME OF REGISTRATION HAS TO RESTRICT TO TWO ASPECTS. FIRSTLY, TO SEE WHETHER OBJECTS OF THE SOCIETY AND SECONDLY GENUINENESS OF THE ACTIVITIES CARRIED OUT BY THE SO CIETY. THE LD. AR FURTHER SUBMITTED THAT THE COMMISSIONER OF INCOME TAX CANN OT GO INTO APPLICATION OF INCOME U/S 11 & 12 OF THE ACT AS THE SAME IS BEYOND THE SCOPE OF REGISTRATION U/S 12AA OF THE ACT AND ALSO ALLEGED INFRINGEMENT O F SECTION 13 ARE NOT TO BE EXAMINED AT THE TIME OF REGISTRATION. THE LD. AR RELIED UPON THE VARIOUS DECISIONS INCLUDING THE DECISION OF THE HON'BLE SUP REME COURT IN CASE OF ON QUEENS EDUCATIONAL SOCIETY VS. CIT 372 ITR 699 AND CCIT VS. ST. PETERS EDUCATIONAL SOCIETY 385 ITR 66. THE LD. AR FURTH ER SUBMITTED THAT FROM THE ACTIVITIES OF THE TRUST SOME SURPLUS IS GENERATED, THE SAME WILL NOT DISENTITLE THE TRUST FOR THE CLAIM OF EXEMPTION U/S 11 & 12 OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT SO LONG NO TRUSTEES IS ENTITLED TO B ENEFIT OF SURPLUS AND SURPLUS IS UTILIZED FOR PROMOTION OF OBJECTS OF THE TRUST. THEREFORE, EXEMPTION CANNOT BE DENIED. THE LD. AR SUBMITTED THAT BOTH DURING THE EXISTENCE OF SOCIETY AND ON DISSOLUTION OF THE SOCIETY, THE INCOME AND PROPERTY SHALL BE APPLIED TOWARDS THE OBJECT OF THE SOCIETY AND NO FUND SHALL BE DISTRIBU TED/TRANSFERRED DIRECTLY /INDIRECTLY TO THE MEMBER OF THE SOCIETY. THUS, TH E LD. AR SUBMITTED THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (EXEMPTIONS ) BE QUASHED AND DIRECT THE COMMISSIOENR TO GRANT REGISTRATION TO THE APPLI CANT SOCIETY U/S 12AA OF THE ACT. 7. THE LD. DR SUBMITTED THAT DESPITE GIVING ADEQUAT E OPPORTUNITY, THE APPLICANT DID NOT FURNISH DETAILS CALLED FOR BY THE CIT (E). NO DETAILS WERE FILED REGARDING COMPUTATION OF INCOME TO VERIFY ELIGIBILI TY OF ASSESSEE U/S 10(23C)(VI) OF THE ACT. IN PAST THREE YEARS, DESPITE TURNOVER BEING MORE THAN RS. 1 CRORE, THE APPLICANT CLAIMED DEDUCTION U/S 10(23C) (VI) OF THE ACT. THE SOCIETY HAS SHOWN CARS LIKE BMW & ENDEAVOUR IN ITS FINANCIAL ST ATEMENTS BUT THE CARS WERE FOUND TO BE REGISTERED IN THE NAME OF SHRI K. S. SAINI, DIRECTOR AND SH. UJJAL SINGH. THUS, IT IS A CLEAR VIOLATION OF PROV ISIONS TO SECTION 13(1) (C) (II). THE LD. DR RELIED UPON THE FOLLOWING DECISIONS: 6 ITA NO. 6449/DEL/2019 NAVODAYA EDUCATION TRUST VS. UNION OF INDIA 2018-TI OL-261-H.C- KAR-IT RAJAH SIR ANNAMALAI CHETTIAR FOUNDATION VS. DIT [20 11] 15 TAXMANN.COM 313 (CHENNAI)/[2011] 10 ITR (CHENNAI)/[ 2011] 48 SOT 502[CHENNAI] CIT VS. NATIONAL INSTITUTE OF AERONAUTICAL ENGINEER ING EDUCATIONAL SOCIETY [2009] 181 TAXMAN 205 (UTTARANCHAL) SELF EMPLOYERS SERVICE SOCIETY VS. CIT(A) [2000] 11 3 TAXMAN 703 (KERALA/[2001] 247 ITR 18 (KERALA)/[2000] 164 CTR 4 49 (KERALA) NAVODAYA EDUCATION TRUST VS. UNION OF INDIA (2018-T IOL-261- KAR-IT SHRI NATHJI EDUCATIONAL FOUNDATION VS. CIT(A) ITA N O. 809/LKW/2014 ISLAMIC ACADEMY OF EDUCATION VS. STATE OF KARNATAKA AND OTHERS 6SCC (697) KIRTI CHAND TARAWATI CH. TRUST VS. DIT [1999] 105 T AXMAN 686 (DELHI/[1998] 232 ITR 11 (DELHI)/[1999] 152 CTR 322 (DELHI) 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE LD. DRS SUBMISSION THAT NO DETAILS WE RE FILED REGARDING COMPUTATION OF INCOME TO VERIFY ELIGIBILITY OF ASSE SSEE U/S 10(23C)(VI) OF THE ACT. BUT THE REQUIREMENT OF SECTION 12AA REGISTRATION IS ONLY TO THE EXTENT THAT THE COMMISSIONER HAS TO SATISFY HIMSELF ABOUT THE OBJEC TS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES. FURTHER, IT IS OF GREAT IMPORTANCE THAT THE ACTIVITIES OF SUCH INSTITUTIONS BE LOOKED AT CAREFULLY WHETHER THE ACTIVITIES ARE GENUINE OR NOT. THE REVE NUE AUTHORITIES ALSO HAVE TO LOOK INTO THE SAID ACTIVITIES WHETHER THE SAME ARE CARRIED OUT IN ACCORDANCE WITH LAW OR NOT. IN THE PRESENT CASE, THE APPLICAN T SOCIETY IS NOT DEVIATING FROM ITS MAIN OBJECT TO UTILIZE THE RESOURCES OF SOCIETY FOR PROPAGATION OF EDUCATION, TO ESTABLISH AND RUN EDUCATION INSTITUTIONS FOR PRO MOTION OF MODERN EDUCATION 7 ITA NO. 6449/DEL/2019 IN HARYANA, TO PREPARE BUILDINGS, HOSTELS, SPORTS G ROUND AND LIBRARY FOR INSTITUTES OF SOCIETY. THE COMMISSIONER OF INCOME T AX, AT NO POINT OF TIME HAS POINTED OUT THAT THE APPLICANT SOCIETY IS NOT DOING THESE ACTIVITIES. THE CASE LAWS REFERRED BY THE LD. AR ARE APT IN THE PRESENT CASE. THUS, COMMISSIONER OF INCOME TAX HAS NOT FOLLOWED THE PROPER GUIDELINES G IVEN BY SECTION 12AA WHEN SHOULD BE APPLIED. THEREFORE, WE ARE OF THE OPINION THAT REGISTRATION SHOULD HAVE BEEN GRANTED U/S 12AA OF THE ACT TO THE APPLIC ANT SOCIETY AS THE OBJECTS ARE CHARITABLE IN NATURE AND AS THERE ARE NO VIOLAT IONS OF EITHER SEC. 11(5) OR SEC. 13 DURING THIS YEAR OR IN THE NEXT YEAR AND PO SSIBILITY OF THE APPLICANT SOCIETY CONTRAVENING THE PROVISIONS IS NOT A GROUND TO REJECT THE REGISTRATION. THEREFORE, WE DIRECT THE COMMISSIONER OF INCOME TAX (EXEMPTION) TO GRANT THE REGISTRATION TO THE APPLICANT SOCIETY U/S 12AA OF T HE ACT. HENCE, APPEAL OF THE APPLICANT SOCIETY IS ALLOWED. 9. IN RESULT, THE APPEAL OF THE ASSESSEE/APPELLANT IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JUNE, 2019 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 /06/2019 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 8 ITA NO. 6449/DEL/2019 DATE OF DICTATION 06.05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 07.05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 1 3 . 6 . 1 9 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 1 3 . 6 . 1 9 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 3 . 6 . 1 9 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 3 . 6 . 1 9 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 3 . 6 . 1 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER