M/s. Brahmanand Shiksha Parasar Samiti, Panipat V. CIT, Haryana

ITA 6567/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4135 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 04-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: K C ANEJA ITP
• Section: 40A(3); 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.6567/DEL/2014 ASSESSMENT YEAR : 2013-14 BRAHMANAND SHIKSHA PARASAR SAMITI, C/O GURU BRAHMANAND SR. SEC. SCHOOL, VILLAGE & P.O. UNTLA, TEHSIL MADLAUDA, DISTT. PANIPAT. VS. CIT, KARNAL, HARYANA. PAN : AABTB0240L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. C. ANEJA, ITP DEPARTMENT BY : SMT. APARNA KARAN, CIT(DR) DATE OF HEARING : 28-09-2017 DATE OF PRONOUNCEMENT : 12-10-2017 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 27.10.2014 OF THE COMMISSIONER OF INCOME TAX, KARNA L (IN SHORT THE CIT) REFUSING REGISTRATION U/S 12AA OF THE I.T. ACT, 196 1. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE M/S BRAHMANAND SHIKSHA PRASAR SAMITI WAS REGISTERED WITH THE REGISTRAR OF THE SOCIETIES ON 17.07.2002 WHICH GOT RENEWED UNDER THE HARYANA REGISTRATION & REGULATION OF SOCIETIES ACT, 2012 ON 06.11.2013 WITH THE DISTT. REGISTRAR, FIRMS & SOCIETIES, PANIPAT. 2 ITA NO.6567/DEL/2014 AN APPLICATION FOR REGISTRATION U/A 12AA WAS FILED BEFORE THE CIT IN FORM NO.10A ON 20.01.2014. DURING THE COURSE OF HEARING OF THE REGISTRATION, LD. CIT EXAMINED THE ACTIVITY OF THE ASSESSEE AS PER ITS ME MORANDUM OF ASSOCIATION. HE ALSO EXAMINED THE VARIOUS DETAILS FILED BY THE A SSESSEE SOCIETY FROM TIME TO TIME. FROM THE DETAILS FURNISHED BY THE ASSESSEE S OCIETY, LD CIT OBSERVED THAT THE MEMBERS OF THE ASSESSEE SOCIETY ARE DRAWING HIG HER SALARY AS COMPARED TO THE PREVALENT RATES, WHICH HAS NO JUSTIFICATION. O N PERUSAL OF THE MEMORANDUM OF ASSOCIATION, HE OBSERVED THAT THE OCCUPATION OF SMT. SUNITA AND SMT. SANGEETA BEING MEMBERS OF THE TRUST HAS BEEN SHOWN AS HOUSEWIFE WHEREAS SALARY HAS BEEN PAID TO THEM AS TEACHERS AS PER SAL ARY REGISTER. THEREFORE, HE CONCLUDED THAT THE ASSESSEE SOCIETY HAS FURNISHED I NACCURATE PARTICULARS OF INCOME OF THE TRUST AND THE SAME IS BEING USED FOR THE BENEFIT OF THE MEMBERS OF THE SOCIETY. ACCORDING TO HIM, AS PER THE PROVI SIONS OF SECTION 13(1)(C), A SOCIETY IS NOT ALLOWED TO GIVE ANY DIRECT OR INDIRE CT BENEFIT TO THE TRUSTEE/MEMBERS AS DEFINED IN SECTION 13(3) OF THE I.T. ACT. HE FURTHER OBSERVED THAT THE ASSESSING OFFICER IN HIS REPORT HAS REPORT ED THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY ARE NOT IN ACCORDANCE WITH THE OBJ ECTS AS PER THE AIMS AND OBJECTIVES IN THE MEMORANDUM OF ASSOCIATION. THE A SSESSING OFFICER HAD FURTHER NOTED THAT NUMEROUS PAYMENTS TO SINGLE PART Y IN CASH IN VIOLATION OF SECTION 40A(3) HAS BEEN GIVEN. THE ASSESSING OFFIC ER HAS STATED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2011-12 THAT THE 3 ITA NO.6567/DEL/2014 EXEMPTION CLAIMED BY THE ASSESSEE SOCIETY WAS REJEC TED AND INCOME CLAIMED AS EXEMPT U/S 11 OF THE I.T. ACT WAS TREATED AS INCOM E FROM BUSINESS AND PROFESSION. FURTHER, THE ASSESSEE TRUST HAS CLAIM ED CORPUS FUND DONATION TOWARDS CONSTRUCTION OF BUILDING AT RS.3,41,000/- W HEREAS ON VERIFICATION, THESE WERE FOUND TO BE REGULAR DONATIONS AND NOT CORPUS F UND DONATIONS, WHICH ACCORDING TO THE LD. CIT IS IN VIOLATION OF PROVISI ONS OF SECTION 13(1)(C). IN VIEW OF THE ABOVE, THE LD. CIT REJECTED THE APPLICA TION FOR REGISTRATION U/S 12AA ON THE GROUND THAT THE OBJECTS OF THE SOCIETY/TRUST AND THE GENUINENESS OF THE ACTIVITIES COULD NOT BE PROVED SATISFACTORILY BY TH E ASSESSEE. 3. AGGRIEVED WITH SUCH ORDER OF THE CIT, ASSESSEE I S IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS :- 1.) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF TH E CASE LEARNED CIT HAS ERRED IN REFUSING TO GRANT REGISTRATION U/S 12AA OF THE I.T. ACT, 1961. THE APPELLANT SOCIETY IS A GENUINE CHARITABLE SOCIETY LIABLE TO R EGISTRATION AS APPLIED FOR. 2.) THAT THE TRUSTEES HAVE NOT TAKEN UNDUE ADVANTA GE OR BENEFIT FROM THE SOCIETY. 3.) THAT THE SAMITI IS SOLELY EDUCATIONAL INSTITUTI ON AND IS DOING EDUCATIONAL CHARITABLE ACTIVITIES IN ACCORDANCE WITH THE RULES OF THE HARYANA GOVT. AS SUCH IS LIABLE TO REGISTRATION U/S 12AA OF THE IT A CT, 1961. 4.) THE SAMITI HAS APPLIED U/S 12AA OF THE ACT FOR FUTURE AS SUCH THE LEARNED CIT HAVING BASED HER OPINION ON PAST ACTIVITIES ERRED T O GRANT REGISTRATION WHICH IS WRONG. 4. LD. COUNSEL FOR THE ASSESSEE REFERRING TO PAGE 1 OF THE PAPER BOOK DREW THE ATTENTION OF THE BENCH TO THE CERTIFICATE ISSUE D BY THE DISTRICT REGISTRAR, FIRMS AND SOCIETY, PANIPAT. REFERRING TO THE ORDER PASSED BY THE OFFICE OF COMMISSIONER DIRECTOR GENERAL SCHOOL EDUCATION, HAR YANA, CHANDIGARH VIDE ORDER NO.17/37-07 PS(2) DATED 25.01.2008, COPY OF W HICH IS PLACED AT PAGE 3 4 ITA NO.6567/DEL/2014 4 OF THE PAPER BOOK, LD. COUNSEL FOR THE ASSESSEE D REW THE ATTENTION OF THE BENCH TO THE CIRCULAR ISSUED BY THE GOVERNMENT, ACCORDING TO WHICH SALARY OF RS.39,800/- HAS BEEN FIXED FOR PRINCIPAL, RS.31,240 /- FOR PGT AND RS.18,409/- FOR LIBRARIAN. REFERRING TO PAGE 7 OF THE PAPER BO OK, HE SUBMITTED THAT MS. SANGEETA IS M.A. IN HINDI AND B.ED. AND IS DRAWING SALARY OF RS.18,000/- PER MONTH, AT THE RELEVANT TIME WHEREAS SHE JOINED THE SCHOOL AS TEACHER ON 01.04.2004 WITH SALARY AT RS.7,000/- PER MONTH. SI MILARLY, MS. SUNITA, WHO IS THE PRINCIPAL OF THE SCHOOL AND IS M.COM AND B.ED I S DRAWING SALARY OF RS.20,000/- PER MONTH AT THE RELEVANT TIME WHEREAS SHE JOINED THE SCHOOL AS PRINCIPAL ON 01.04.2004 WITH SALARY OF RS.6,000/- P ER MONTH. REFERRING TO PAGE 9 OF THE PAPER BOOK, WHICH CONTAINS THE LIST OF PER SONS OR LIST OF STAFF WITH THEIR QUALIFICATION AND SALARY, HE SUBMITTED THAT MERELY BECAUSE THE OCCUPATION OF THE LADIES HAD BEEN SHOWN AS HOUSEWIFE AT THE TIME OF R EGISTRATION THE SAME CANNOT BE A GROUND TO DENY REGISTRATION ON BEING APPOINTED AS TEACHERS AND PAID SALARY COMMENSURATE WITH THEIR QUALIFICATION. HE SUBMITTE D THAT DENIAL OF REGISTRATION U/S 12AA BY LD. CIT UNDER THE FACTS AND CIRCUMSTANC ES OF THE CASE IS UNJUSTIFIED SINCE THE ASSESSEE TRUST IS IMPARTING EDUCATION AND THE OBJECTS OF THE SOCIETY HAS NOT BEEN PROVED TO BE NON-CHARITABLE IN NATURE. 5. LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE O RDER OF THE LD. CIT. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDER OF THE CIT AND THE PAPER BOOK FILED ON BE HALF OF THE ASSESSEE. WE 5 ITA NO.6567/DEL/2014 FIND FROM THE ORDER OF THE CIT THAT THE REASON ON W HICH REGISTRATION HAS BEEN DENIED IS DUE TO THE FACT THAT THE ASSESSEE SOCIETY USED THE FUNDS OF THE SOCIETY FOR THE BENEFIT OF THE MEMBERS. FURTHER, THE ASSES SING OFFICER HAD REPORTED THAT THE ACTIVITIES OF THE SOCIETY ARE NOT IN ACCORDANCE WITH THE OBJECTS AS PER THE AIMS AND OBJECTS OF THE MEMORANDUM OF ASSOCIATION. IT IS ALSO THE CASE OF THE ASSESSING OFFICER THAT THE SOCIETY HAD MADE NUMEROU S PAYMENTS TO A SINGLE PARTY IN CASH IN VIOLATION OF SECTION 40A(3). WE F IND FROM THE DETAILS FURNISHED BY THE ASSESSEE THAT ALTHOUGH THE TWO LADIES AS PER THE ORDER OF THE LD. CIT WERE HOUSEWIVES AT THE TIME OF FORMATION OF THE TRUST HO WEVER THEIR QUALIFICATION AND EXPERIENCE HAS NOT BEEN DOUBTED. FURTHER, THE SALA RY PAID TO THE TWO LADIES ARE MUCH LESS THAN THE SALARY PRESCRIBED BY THE GOVERNM ENT OF HARYANA. THEREFORE, IT CANNOT BE SAID THAT THE TRUST BY GIVING SALARY T O THE TWO LADIES, WHO ARE POST- GRADUATES AND B. ED. AND WHO HAVE BEEN PAID LESS SA LARY THAN THE AMOUNT PRESCRIBED BY THE GOVERNMENT, HAS USED THE FUNDS OF THE SOCIETY FOR THE BENEFIT OF THE MEMBERS OF THE SOCIETY. 7. SO FAR AS THE OBJECTION OF THE ASSESSING OFFICER THAT THE ASSESSEE TRUST HAS VIOLATED THE PROVISIONS OF SECTION 40A(3) IS CONCER NED, THE SAME IS IN OUR OPINION CAN BE TAKEN CARE AT THE TIME OF ASSESSMENT AND CANNOT BE A GROUND FOR DENYING THE REGISTRATION U/S 12AA OF THE I.T. ACT. SO FAR AS THE OBJECTION OF THE ASSESSING OFFICER IN HIS REPORT THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY ARE NOT IN ACCORDANCE WITH THE OBJECTS AS PER THE AIMS AND OBJECTS IN THE MEMORANDUM 6 ITA NO.6567/DEL/2014 OF ASSOCIATION IS CONCERNED, WE DO NOT FIND ANY ACT IVITY CARRIED OUT BY THE TRUST WHICH IS NOT IN ACCORDANCE WITH THE AIMS AND OBJECT S OF THE ASSESSEE TRUST. EVEN REPORT OF THE ASSESSING OFFICER THAT THE ASSESSEE H AS CLAIMED CORPUS FOR DONATION OF RS.3,41,000/- TOWARDS CONSTRUCTION OF BUILDING W HEREAS THE SAME WERE FOUND TO BE REGULAR DONATION AND, THEREFORE, THERE IS VIO LATION IN PROVISIONS OF SECTION 13(1)(C) IS CONCERNED, THE SAME ALSO IN OUR OPINION CAN BE CONSIDERED AT THE TIME OF ASSESSMENT AND CANNOT BE A GROUND FOR DENYING RE GISTRATION U/S 12AA. IN THIS VIEW OF THE MATTER, WE HOLD THAT THE LD. CIT WAS NO T JUSTIFIED IN REFUSING THE REGISTRATION TO THE ASSESSEE SOCIETY U/S 12AA OF TH E I.T. ACT, 1961. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF OCTOBER, 2017. SD/- SD/- (SUCHITRA KAMBLE) (R. K. P ANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12-10-2017. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI