ARYABHATTA WELFARE ORGANISATION, Ajmer V. COMMISSIONER OF INCOME TAX (EXEMPTION), JAIPUR

ITA 65/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6398 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 18-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA CIT DHK
• Section: 80G; 12AA; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH HKKXPUN ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NOS. 66 & 65/JP/2018 ARYABHATTA WELFARE ORGANISATION PLOT NO. 41-B, JAI HANUMAN COLONY, GHOOGHRA, AJMER. CUKE VS. COMMISSIONER OF INCOME-TAX (EXEMPTION), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAOCA 1980 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SANJEEV JAIN (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03.05.2018. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 11/07/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST TWO SEPARATE ORDERS OF LD. CIT (EXEMPTIONS), JAIPUR BOTH DATED 22.09.2 017 PASSED UNDER SECTION 12AA(1)(B) AND 80G(5)(VI) OF THE I.T. ACT RESPECTIV ELY. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- ITA NO. 66/JP/2018 1. THE LD. CIT (EXEMPTIONS) HAS ERRED IN LAW AS W ELL AS ON FACTS OF THE CASE BY REJECTING APPLICATION SEEKING REGISTRAT ION U/S 12AA OF THE I.T. ACT, 1961. 2 ITA NOS. 66 & 65/JP/2018 M/S. ARYABHATTA WELFARE ORGANIZATION, AJMER. 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, DELETE OR MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. THE ASSESSEE IS A COMPANY REGISTERED UNDER SECTI ON 8 OF THE COMPANIES ACT, 2013. THUS THE ASSESSEE WAS REGISTERED AS A CHARIT ABLE COMPANY AS PER THE CERTIFICATE ISSUED BY THE REGISTRAR OF COMPANIES AS WELL AS MEMORANDUM OF ASSOCIATION OF THE COMPANY. THE ASSESSEE APPLIED F OR REGISTRATION UNDER SECTION 12A(A) OF THE IT ACT THROUGH ON LINE APPLICATION DA TED 31.03.2017 IN FORM NO. 10A. THE LD. CIT (EXEMPTIONS) ASKED THE ASSESSEE TO SUBM IT CERTAIN DOCUMENTS/EXPLANATION AND ALSO TO PRODUCE ORIGINAL TRUST DEED/MEMORANDUM OF ASSOCIATION FOR VERIFICATION. THE ASSESSEE FILED T HE RELEVANT DETAILS AND REPLY TO THE NOTICE ISSUED BY THE LD. CIT (E). THE LD. CIT (E) DENIED THE REGISTRATION UNDER SECTION 12AA ON THE GROUND THAT THE ASSESSEE IS NOT IMPARTING ANY EDUCATION BUT PROVIDING ONLY COACHING CLASSES AND VOCATIONAL TRAI NING ETC. THUS ON EXAMINATION OF THE OBJECTS OF THE ASSESSEE COMPANY, THE LD. CIT (E ) CAME TO THE CONCLUSION THAT THE OBJECT CLAUSE CONTAINS THE COMPUTER TRAINING, COACH ING CLASSES, VOCATIONAL TRAINING ETC. WHICH CANNOT BE TERMED AS SYSTEMATIC EDUCATION AS CONTEMPLATED UNDER THE HEAD EDUCATION IN SECTION 2(15) OF THE IT ACT. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS REFER RED TO THE OBJECTS CLAUSES OF THE ASSESSEE AND SUBMITTED THAT THE COMPUTER TRAINI NG AND VOCATIONAL TRAINING AS WELL AS COACHING IS ONLY ONE CLAUSE OUT OF THE 7 CL AUSES OF OBJECTS OF THE ASSESSEE AND FURTHER IT IS PART OF THE ACTIVITIES OF SKILLED DEVELOPMENT. THEREFORE, BY SELECTING ONE OBJECT CLAUSE OF THE ASSESSEE THE LD. CIT (E) H AS DENIED THE REGISTRATION IGNORING THE OVER-ALL OBJECTS OF THE ASSESSEE COMPANY WHICH ARE CHARITABLE IN NATURE. HE HAS 3 ITA NOS. 66 & 65/JP/2018 M/S. ARYABHATTA WELFARE ORGANIZATION, AJMER. ALSO RELIED UPON THE CERTIFICATE ISSUED BY THE STAT E GOVERNMENT AND SUBMITTED THAT THE ASSESSEE COMPANY IS INVOLVED IN FORMAL EDUCATIO N AS APPROVED BY THE RAJASTHAN KNOWLEDGE CORPORATION LTD. THE ASSESSEE IS PROVIDI NG THE EDUCATION AT A VERY NOMINAL AND CONCESSIONAL RATE OF RS. 1200/- PER STU DENT. HE HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. GUJARAT MARITIME BOARD, 295 ITR 561 (SC) AND SUBMITTED THAT THE OBJECT OF G ENERAL PUBLIC UTILITY AS PER SECTION 2(15) OF THE ACT INCLUDES ALL THE OBJECTS W HICH PROMOTE THE WELFARE OF THE GENERAL PUBLIC. THE LD. A/R HAS ALSO RELIED UPON T HE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BAR COUNCIL OF MAHARASTRA VS. CIT, 126 ITR 27 (BOM.) WHEREIN THE HONBLE HIGH COURT HAS DEVOLVED UPON TH E TERM ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND HELD THAT STATE BAR COU NCIL IS CONSTITUTED FOR GENERAL PUBLIC UTILITY AND THE ENTIRE INCOME OF SUCH BODY IS ENTIT LED TO EXEMPTION UNDER SECTION 11 OF THE IT ACT. SIMILARLY, THE HONBLE SUPREME COUR T IN THE CASE OF CIT VS. ANDHRA CHAMBER OF COMMERCE, 55 ITR 722 (SC) HAS HELD THAT ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHOULD BE CONSTRUED TO INCLUDE FOR P ROMOTION, PROTECTION, AIDING AND STIMULATING TRADE AND COMMERCE AND INDUSTRIES. TH E HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. JODHPUR CHARTERED ACCOUNTA NTS SOCIETY, 258 ITR 548 (RAJ.) ALSO HELD THAT TO ORGANIZE SEMINARS, CONFERENCES AN D WORKSHOPS TO EDUCATE PEOPLE ON COMMERCIAL LAWS, TAX LAWS, ETC. ARE OBJECTS OF G ENERAL PUBLIC UTILITY. HENCE, THE LD. A/R HAS SUBMITTED THAT THE LD. CIT (E) HAS CONFINED HIS FINDING ONLY ON THE TERM EDUCATION AS PER SECTION 2(15) OF THE ACT WITHOUT CONSIDERING ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY. 4 ITA NOS. 66 & 65/JP/2018 M/S. ARYABHATTA WELFARE ORGANIZATION, AJMER. 3.1. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON THE IMPUGNED ORDER OF THE LD. CIT (A) AND SUBMITTED THAT THE MAIN ACTIVITY OF THE ASSESSEE IS ONLY COACHING ACTIVITY WHICH CANNOT BE CONSIDERED AS A SYSTEMATIC IMPARTIN G OF EDUCATION AS PROVIDED UNDER SECTION 2(15) OR AS ANY OTHER OBJECTS OF GEN ERAL PUBLIC UTILITY. HENCE THE APPLICATION SEEKING REGISTRATION WAS RIGHTLY REJECT ED BY THE LD. CIT (E). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE LD. CIT (EXEMPTIONS) WHILE REJECTING T HE APPLICATION HAS CONSIDERED THE OBJECT NO. 3 IN THE OBJECTS CLAUSES OF THE MEMORAND UM OF ASSOCIATION IN PARA 4 OF THE IMPUGNED ORDER AS UNDER :- OBJECT NO. DESCRIPTION 3. TO PROMOTE INFORMAL EDUCATION, COACHING CLASSES, GI VING VOCATIONAL TRAINING, FACULTY TRAINING, SKILL DEVELO PMENT AND TO RUN MANAGEMENT AND COMPUTER TRAINING INSTITUTIONS. WHEREAS THE MEMORANDUM OF ASSOCIATION OF THE ASSESS EE CONTAINS AS MANY AS 7 OBJECTS AS UNDER :- 1. TO SET UP HOSPITALS, MEDICAL COLLEGES, NURSING HOMES AND HEALTHCARE CENTRES AND PROVIDE, ENCOURAGE, INITIATE OR PROMOTE FACILITIES FOR THE DISCOVERY, IMPROVEMENT OR DEVELO PMENT OF NEW METHODS OF DIAGNOSIS, UNDERSTANDING AND PREVENTION AND TREATMENT OF DISEASES. 2. TO PROMOTE FORMAL EDUCATION, TO SET UP AND CARRY ON EDUCATIONAL INSTITUTION LIKE SCHOOL, COLLEGE, UNIVE RSITY AND TO CARRY ON COURSES IN ALL SUBJECTS OR BRANCHES OF ENG INEERING, SCIENCE MEDICAL, COMMERCE, INDUSTRIAL, COMMERCIAL, ARTS, MANAGEMENT AND ANY OTHER FACULTY OF EDUCATION. 3. TO PROMOTE INFORMAL EDUCATION, COACHING CLASSES, GIVING VOCATIONAL TRAINING, FACULTY TRAINING, SKILL DEVELO PMENT AND TO RUN MANAGEMENT AND COMPUTER TRAINING INSTITUTIONS. 5 ITA NOS. 66 & 65/JP/2018 M/S. ARYABHATTA WELFARE ORGANIZATION, AJMER. 4. TO PROMOTE COMMERCE, ARTS, SCIENCE, SPORTS, EDUC ATION, RESEARCH, SOCIAL WELFARE, CHARITY. 5. TO REHABILITATE VICTIMS OF NATURAL DISASTER, TO ASSIST PHYSICALLY AND MENTALLY DISABLED PERSONS, OLD AGED PEOPLES, CH ILDREN, WOMEN, PERSONS FROM ECONOMICALLY WEAKER SECTIONS OF THE SOCIETY, WITHOUT ANY DISTINCTION OF RELIGION, CASTE AND CREED. 6. TO ACHIEVE FINANCIAL SUSTAINABILITY, VIABILITY A ND SELF RELIANCE THROUGH ITS OWN ACTIVITIES. 7. TO REINVEST ANY INCIDENTAL SURPLUS INTO GROWTH A ND STRENGTHENING OF ITS SOCIAL AND HUMANITARIAN PROJECTS, THROUGH IT SELF OR BY TRANSFER TO ANY OTHER NON-PROFIT ORGANIZATION, INST ITUTION, ASSOCIATION, COMPANY, TRUST ETC. SITUATED IN INDIA OR OUTSIDE INDIA. THUS IT IS MANIFEST FROM THE OBJECTS OF THE ASSESSE E COMPANY THAT THE PRE-DOMINANT OBJECTS ARE TO SET UP HOSPITALS, MEDICAL COLLEGES, NURSING HOMES, HEALTH CENTRES ETC. FURTHER TO PROMOTE FORMAL EDUCATION AND TO SET UP A ND CARRY ON EDUCATIONAL INSTITUTIONS LIKE SCHOOL, COLLEGES, UNIVERSITY ETC. THE LD. CIT (E) HAS PICKED UP ONLY OBJECT NO. 3 FOR REJECTING THE APPLICATION OF THE A SSESSEE WITHOUT CONSIDERING THE OTHER OBJECTS OF THE ASSESSEE. WE ALSO FIND MERIT AND SUBSTANCE IN THE CONTENTION OF THE LD. A/R OF THE ASSESSEE THAT EVEN IF THE SAID C LAUSE OF THE OBJECT MAY NOT BE FALLING IN THE TERM EDUCATION, THE LD. CIT (E) HA S NOT CONSIDERED THE SAME WHETHER IT IS FALLING IN THE TERM ANY OTHER OBJECTS OF GEN ERAL PUBLIC UTILITY AS PER THE PROVISIONS OF SECTION 2(15) OF THE IT ACT. HENCE W E FIND THAT THE IMPUGNED ORDER OF LD. CIT (E) IS PASSED BY CONSIDERING ONLY ONE CLAUS E OUT OF THE 7 OBJECTS OF THE ASSESSEE. FURTHER, IT IS ALSO REQUIRED TO BE CONSI DERED AS TO WHAT ACTIVITIES ARE BEING CARRIED OUT BY THE ASSESSEE ALL THROUGH THESE YEARS AND, THEREFORE, IF THE ASSESSEE HAS RESTRICTED ONLY A FEW ACTIVITIES AND NOT COVERI NG ALL THE OBJECTS AS PER THE OBJECT 6 ITA NOS. 66 & 65/JP/2018 M/S. ARYABHATTA WELFARE ORGANIZATION, AJMER. CLAUSES THEN THE APPLICATION OF THE ASSESSEE HAS TO BE DECIDED IN THE LIGHT OF THE ALTERNATIVE PLEA OF THE ASSESSEE THAT THE SAME CAN BE CONSIDERED AS ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY. THE ASSESSEE HA S PLACED RELIANCE ON VARIOUS DECISIONS WHICH ARE RELEVANT ON THE POINT. ACCORDIN GLY, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE IMP UGNED ORDER OF LD. CIT (E) AND REMIT THE MATTER BACK TO THE RECORD OF THE LD. CIT (E) FOR DECIDING THE SAME AFRESH AFTER GIVING A PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE AND IN THE LIGHT OF THE ABOVE OBSERVATIONS OF THE TRIBUNAL. ITA NO. 65/JP/2018 : 5. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL :- 1. THE LD. CIT (EXEMPTIONS) HAS ERRED IN LAW AS W ELL AS ON FACTS OF THE CASE BY REJECTING APPLICATION SEEKING EXEMPTION U/S 80G(5)(VI) OF THE I.T. ACT, 1961. 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, DELETE OR MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 6 THE LD. CIT (E) HAS DECLINED TO GRANT APPROVAL UN DER SECTION 80G IN VIEW OF THE REJECTION OF THE APPLICATION FOR REGISTRATION U NDER SECTION 12A(A). THEREFORE, THE IMPUGNED ORDER PASSED BY THE LD. CIT (E) IS CONSEQU ENTIAL TO THE ORDER OF DENYING THE REGISTRATION UNDER SECTION 12AA. WE HAVE SET A SIDE THE MATTER TO THE RECORD OF LD. CIT (E) FOR FRESH ADJUDICATION IN THE CASE OF R EGISTRATION UNDER SECTION 12AA. ACCORDINGLY, THE ISSUE OF APPROVAL UNDER SECTION 80 G IS ALSO SET ASIDE TO THE RECORD OF THE LD. CIT (E) BEING CONSEQUENTIAL IN NATURE. 7 ITA NOS. 66 & 65/JP/2018 M/S. ARYABHATTA WELFARE ORGANIZATION, AJMER. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11/07/2018. SD/- SD/- HKKXPUN FOT; IKY JKWO (BHAGCHAND) ( VIJAY PAL RAO ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11/07/2018. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ARYABHATTA WELFARE ORGANIZATION, AJM ER. 2. IZR;FKHZ@ THE RESPONDENT-THE CIT (EXEMPTIONS), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 66 & 65/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR