Regional Education Development Welfare Society, Gurgaon V. CIT, Faridabad

ITA 6513/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4156 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: misc
• Appeal Filed On: 01-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 143(3); 12A; 12AA; 12; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.6513 /DEL /2014 ASSESSMENT YEAR: ---- REGIONAL EDUCATION DEVELOPMENT AND WELFARE SOCIETY, RAJPAL CHAUHAN, PRESIDENT, C/O KUMAR VIJAY GUPTA & CO., 301, 3 RD FLOOR, APNA BAZAR, GURGAON-122001 VS CIT, NEW CGO COMPLEX, B-BLOCK, NH-IV, FARIDABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KAPIL GOEL, ADV. RESPONDENT BY: SHRI ATIQ AHMAD, SR. DR DATE OF HEARING : 11.09.2017 DATE OF PRONOUNCEMENT: 04.10.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE SOCIETY CHALLENGING REJECTION OF APPLICATION FOR RE GISTRATION U/S 12AA OF THE INCOME TAX ACT,1961 (HEREINAFTER CALLED THE ACT) VIDE ORDER DATED 24.09.2014 PASSED BY THE LD. CIT-F ARIDABAD. 2. GROUNDS OF APPEAL ARE REPRODUCED BELOW: 2 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE AND IN THE LAW, THE LD. COMMISSIONER OF INCOME TAX HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTING THE APPLICATI ON FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE INCO ME TAX ACT, 1961. 2. THAT THE CIT HAS WRONGLY DISMISSED THE APPLICAT ION FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961, WITHOUT GIVING APPROPRIATE FOR SUBMITTING THE CASE AND IGNORING ALL MERITS OF THE CASE. 3. THAT THE ID. CIT HAS ALSO WRONGLY CONCLUDED THA T AIMS & OBJECT OF THE SOCIETY ARE VAGUE AND UNSPECIFIC. 4. THAT THE ID. CIT HAS PASSED THE ORDER IN HASTE AND IS AGAINST THE FACTS, LAW AND PROVISIONS OF THE INCOME TAX ACT, 1961 AND RULES MADE THERE UNDER. 5. THAT THE ID. CIT HAD WRONGLY IGNORED THE FACT T HAT THE APPELLANT TRUST EXISTS SOLELY FOR EDUCATIONAL AND C HARITABLE PURPOSE AND NOT FOR THE PURPOSE OF PROFIT. 6. THE APPELLANT TRUST CRAVES TO ADD, MODIFY DELET E, AND WITHDRAW ANY FURTHER GROUND ON OR BEFORE THE DATE O F HEARING. 3. THE REASONS MENTIONED BY THE LD. CIT FOR REJECTI NG ASSESSEES APPLICATION U/S 12AA ARE AS UNDER: ON PERUSAL OF DOCUMENTS ON RECORD, IT WAS NOTICED THAT THERE ARE VARIOUS OBJECTS OF THE SOCIETY, LIKE (I) TO DEV ELOP FORMER & VOCATIONAL EDUCATION, (II) MANAGE & RUN INSTITUTION S TO PROVIDE QUALITATIVE EDUCATION, (III) TO PROMPT WOMAN CRAFT AGE, (IV) TO PROMPT TAILORING, (V) TO PROMPT CHILD-NURSING, (VI) TO PROMPT EMBROIDERY, (VII) TO PROMPT TO RAISE HEALTH STANDAR D, ETC. ACTUALLY, THERE ARE THIRTEEN AIMS AND OBJECTIVES OF THE SOCIETY. HOWEVER, DURING THE PROCEEDING, IT WAS SEEN THAT TH E SOCIETY 3 IS ONLY RUNNING A SCHOOL IN THE NAME & STYLE OF SAR ASWATI HIGH SCHOOL, VILLAGE: BEGAMPUR KHATOLA, VPO: KHANDS A, GURGAON. DURING THE HEARING, IT WAS CONFIRMED BY TH E AUTHORIZED REPRESENTATIVES OF THE APPLICANT SOCIETY THAT THE SOCIETY HAS NOT DONE ANY ACTIVITIES REGARDING THE O THER AIMS AND OBJECTIVE. ALSO, VIDE LETTER DATED 15/17.09.201 4, THE SOCIETY WAS ASKED TO FURNISH OBJECTIVE-WISE DETAILS OF ACTIVITIES UNDERTAKEN BY THE APPLICANT SOCIETY. HOW EVER, THE SAME WERE NOT PROVIDED. THEREFORE, THE AIMS & OBJEC TS MENTIONED IN THE MEMORANDUM OF ASSOCIATION APPEAR T O EXIST ON PAPER ONLY. IT WAS SO HELD IN CIT V. G.D. NAIDU INDUSTRIAL EDUCATIONAL TRUST (1942) 10 ITR 358 (MAD) THAT THE MERE PROPOSAL TO BRING TO EXISTENCE AN INSTITUTION MAY N OT BE SUFFICIENT COMPLIANCE. KEEPING IN VIEW THE AFORESAID FACTS AND CIRCUMSTANC ES, IT IS CLEAR THAT THE APPLICANT SOCIETY FAILED TO DISCHARG E ITS ONUS IN TERMS OF PRODUCING MATERIAL TO SUBSTANTIATE ITS CLA IM THAT SOCIETYS AIMS/OBJECTS AND TERMS OF MEMORANDUM ARE OF THE CHARITABLE NATURE AND THE SAME ARE BEING FOLLOWED. ALSO THE APPLICANT SOCIETY FAILED TO DISCHARGE ITS ONUS PROD UCE CONCRETE EVIDENCE TO SHOW THE GENUINENESS OF THE REQUEST OF THE APPLICANT SOCIETY FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT CANNOT BE ACCEDED TO AND THE APPLICATION IN FOR M 10A IS, THEREFORE, REJECTED ACCORDINGLY U/S 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 4. THE LD AR SUBMITTED THAT AS PER PARA 2.3 OF IMPU GNED ORDER IT IS NOTED BY THE LD CIT THAT ONE OF THE OBJ ECTS OF SOCIETY IS TO RUN INSTITUTION/S TO PROVIDE QUALITATIVE EDUCATI ON WHICH IPSO FACTO QUALIFIES AS ELIGIBLE CHARITABLE OBJECT DEFINED U/S 2(15) OF THE ACT. HE FURTHER SUBMITTED THAT THE LD. CIT HAS FURT HER NOTED IN SAME PARA THAT THE SOCIETY IS ONLY RUNNING A SCHOOL IN THE NAME AND STYLE OF SARASWATI HIGH SCHOOL, VILLAGE BEGAMPU R KHATOLA, VPO KHANDSA GURGAON WHICH AMPLY DEMONSTRATES THAT T HE REAL 4 PURPOSE OF THE SOCIETY IS EDUCATION. THE LD. AR SUB MITTED THAT THIS WAS FURTHER HIGHLIGHTED WITH REFERENCE TO SAME PARA ABOUT THE FACTUM OF NOT CARRYING OF ANY OTHER ACTIVITIES AS MENTIONE D IN OTHER OBJECTS WHICH FURTHER PROVES THE GENUINENESS OF THE OBJECTS OF THE ASSESSEE SOCIETY BEING LIMITED TO EDUCATION. THE LD. AR ALSO REFERRED TO THE PAPER BOOK AND SUBMITTED THAT FOR THREE CONSECUTIVE YEARS, IN ASSESSEES OWN CASE, THE REVE NUE HAS, U/S 143(3) ASSESSMENTS, FOR ASSESSMENT YEARS 2012-13, 2 013-14 AND 2014-15, ACCEPTED THAT THE ASSESSEE SOCIETY IS MEAN T FOR EDUCATION ONLY AND IS DOING ONLY EDUCATION ACTIVITY . IT WAS SUBMITTED THAT NO EXCEPTION IS DRAWN IN THESE ORDER S TO THE EXEMPTION CLAIMED/ALLOWED U/S 10(23C)(IIIAD) OF THE ACT. 4.1 THE LD. AR ALSO REFERRED TO THE IMPUGNED ORDER AND SUBMITTED THAT THE GROUNDS RELIED UPON BY THE LD. C IT FOR REJECTING THE APPLICATION U/S 12AA ARE ALIEN AND EX TRANEOUS TO THE PARAMETERS LAID DOWN BY THE VARIOUS COURTS. IT WAS SUBMITTED THAT THE COURTS HAVE HELD FROM TIME TO TIME THAT TH E APPROACH TO BE ADOPTED AT THE TIME OF GRANTING OF REGISTRATION SHOULD BE LIMITED TO VERIFYING THE REAL PURPOSE OF THE SOCIET Y ETC AND THE GENUINENESS OF ITS OBJECTS WHICH IN PRESENT CASE IS ADMITTEDLY FULFILLED. 5 4.2 THE LD. AR PLACED RELIANCE ON THE JUDGMENT OF T HE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE C ASE OF SONEPAT HINDU EDUCATIONAL SOCIETY REPORTED IN 278 I TR 262 (P&H). THE LD. AR ALSO RELIED ON THE FOLLOWING JUDI CIAL PRECEDENTS- I. HONBLE PUNJAB & HARYANA HIGH COURT DECISION IN CASE OF IILM FOUNDATION ACADEMY, ORDER DATED 26.09.2016 (ITA NO. 198/2011) II. HONBLE KERALA HIGH COURT DECISION IN CASE OF SREE ANJANEYA MEDICAL TRUST REPORTED IN 382 ITR 399 III. HONBLE SUPREME COURTS DECISION IN THE CASE OF DAWOODI BOHARA JAMAT REPORTED IN 364 ITR 31. IV. HONBLE KARNATAKA HIGH COURT DECISION IN CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST (285 ITR 327) V. HONBLE ALLAHABAD HIGH COURT DECISION IN CASE OF FIFTH GENERATION EDUCATION SOCIETY (158 ITR 634) VI. HONBLE KARNATAKA HIGH COURT DECISION IN CASE OF GARDEN CITY EDUCATION TRUST (191 TAXMAN 238) 6 VII. HONBLE PUNJAB & HARYANA HIGH COURT DECISION IN CASE OF SURYA EDUCATIONAL & CHARITABLE TRUST (355 ITR 280)(203 TAXMAN 53) VIII. HONBLE ALLAHABAD HIGH COURT DECISION IN CASE OF RED ROSE SCHOOL (212 CTR 394) IX. HONBLE ALLAHABAD HIGH COURT DECISION IN CASE OF LUCKNOW EDUCATIONAL AND SOCIAL WELFARE SOCIETY (340 ITR 86) X. HONBLE PUNJAB & HARYANA HIGH COURT DECISION IN CASE OF BKK MEMORIAL TRUST (256 CTR 424) XI. HONBLE SUPREME COURT DECISION IN CASE OF QUEENS EDUCATIONAL SOCIETY (372 TR 699) XII. HONBLE PUNJAB & HARYANA HIGH COURT DECISION IN CASE OF BABA KARTAR SINGH DUKKI EDUCATIONAL TRUST (221 TAXMAN 493) XIII. HONBLE AHMEDABAD ITAT BENCH DECISION IN CASE OF M/S SM BADAT EDUCATION & WELFARE TRUST, ORDER DATED 15.07.2016 (ITA NO. 477/AHD./2015). 5. THE LD. DR RELIED ON THE ORDER OF THE LD. CIT. 7 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL ON RECORD. IT IS AN ADMITTED FACT THAT THE ASSESSEE SOCIETY EXISTS FOR EDUCATION PURPOSE ONLY WHICH HAS BEEN DULY RECORDED IN PARA 2.3 OF IMPUGNED ORDER. FURTHER, TH REE CONSECUTIVE ORDERS PASSED U/S143(3) OF THE INCOME T AX ACT HAVE ACCEPTED ASSESSEES CLAIM OF EXEMPTION U/S 10(23C)( IIIAD). THUS, THERE REMAINS NO DOUBT THAT THE OBJECTIVE OF THE AS SESSEE SOCIETY IS EDUCATION. THE HONBLE PUNJAB & HARYANA HIGH C OURT MADE THE FOLLOWING OBSERVATIONS IN THE CASE OF SONEPAT E DUCATION SOCIETY (SUPRA): .IT IS WELL-SETTLED THAT FOR THE PURPOSE OF CONST RUING THE PURPOSE OF A TRUST, IT IS NOT NECESSARY THAT ONE RE MAINS CONFINED TO THE OBJECTS OF THE SOCIETY OR THE TRUST , AS SET OUT IN THE MEMORANDUM OF ASSOCIATION OR THE TRUST DEED, AS THE CASE MAY BE. WHAT IS REQUIRED TO BE FOUND IS THE REAL PU RPOSE OF ESTABLISHMENT OF THE TRUST. THERE CAN BE NO QUARREL WITH THE PROPOSITION THAT THE CIT, CONFERRED WITH THE POWER TO GRANT EXEMPTION, IS FULLY COMPETENT TO FIND OUT THE REAL PURPOSE, AS DISTINGUISHED FROM, THE OSTENSIBLE PURPOSE OF ESTAB LISHMENT OF THE SOCIETY OR THE TRUST. IF THE CIT IS CONVINCE D THAT THE PURPOSE OF THE SOCIETY OR THE TRUST IS NOT CHARITAB LE, NOTHING DEBARS HIM FROM DENYING THE APPROVAL BUT, AT THE SA ME TIME, IF HE IS SATISFIED THAT THE OBJECTS OF THE TRUST, A S SET OUT IN THE DEED OF DECLARATION, WERE CHARITABLE, THEN HAVING R EGARD TO THE OBJECT OF THE PROVISION, THE APPROVAL SHOULD NO T BE DENIED ON MERE TECHNICALITIES. AS A MATTER OF FACT, THE PO WER TO GRANT OR NEGATIVE THE CLAIM FOR APPROVAL IS COUPLED WITH A DUTY 8 7. SIMILARLY, THE HONBLE KERALA HIGH COURT IN CASE OF SREE ANJANEYA MEDICAL TRUST REPORTED IN 382 ITR 399 (KER ) OBSERVED AS UNDER- IT IS CLEAR FROM A PLAIN READING OF SECTIONS 12A A ND 12AA OF THE ACT THAT WHAT IS INTENDED THEREBY IS ONLY A REG ISTRATION SIMPLICITOR OF THE ENTITY OF A TRUST. THIS HAS BEEN MADE A CONDITION PRECEDENT FOR CLAIMING THE BENEFITS OF EX EMPTION. NO EXAMINATION OF THE MODUS OF THE APPLICATION OF THE FUNDS OF THE ASSESSEE OR AN EXAMINATION OF THE ETHICAL BACKG ROUND OF ITS SETTLORS IS CALLED FOR, WHILE CONSIDERING AN AP PLICATION FOR REGISTRATION. THE STAGE FOR CONSIDERATION OF THE RE LEVANCE OF THE OBJECT OF THE ASSESSEE AND THE APPLICATION OF I TS FUNDS ARISES AT THE TIME OF THE ASSESSMENT. WHERE BENEFIT S ARE CLAIMED BY ASSESSES IN TERMS OF SECTIONS 11 AND 12 OF THE ACT, THE QUESTION AS TO THE NATURE OF SUCH CONTRIBU TION AND INCOME CAN BE LOOKED INTO. AT THE TIME OF REGISTRAT ION OF THE ASSESSEE WHAT IS TO BE LOOKED INTO IS WHETHER THE A SSESSEE IS A GENUINE ONE OR WHETHER IT IS A SHAM INSTITUTION F LOATED ONLY TO AVAIL OF THE BENEFITS OF EXEMPTION UNDER THE ACT . 8. COMING TO THE FACTS OF THE PRESENT APPEAL, THE O BSERVATIONS OF THE LD. CIT IN THE IMPUGNED ORDER ARE CONTRADICT ORY. THE LD. CIT, ON THE ONE HAND, MENTIONS THAT THE ASSESSEE SO CIETY HAS BEEN RUNNING A SCHOOL AND ON THE OTHER HAND HE MENT IONS THAT THE OBJECTS APPEAR TO EXIST ONLY ON PAPER. THIS COU PLED WITH THE FACT THAT THE DEPARTMENT HAS ALSO ACCEPTED THE ASSE SSEES CLAIM OF EXEMPTION U/S 1023C (IIIAD) FOR THREE CONSECUTIV E YEARS LEAVES NO DOUBT ABOUT THE GENUINENESS OF THE OBJECTS OF TH E SOCIETY. WE ALSO FIND SUPPORT FROM THE OBSERVATIONS OF THE HON BLE PUNJAB AND HARYANA HIGH COURT AND THE HONBLE KERALA HIGH COURT AS 9 REPRODUCED ABOVE. ACCORDINGLY, WE REVERSE THE ORDER PASSED BY THE LD. CIT AND DIRECT HIM TO GRANT REGISTRATION TO THE ASSESSEE SOCIETY. 9. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 4 TH OCTOBER, 2017. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 4 TH OCTOBER, 2017 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR