M/S ADESH FOUNDATION (REGD.), MUKATSAR V. THE COMMISSIONER OF INCOME TAX ,(EXAMPTION), CHANDIGARH

ITA 665/ASR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3337 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 20-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-01-2019
• Assessment Year: misc
• Appeal Filed On: 16-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Charitable institution; Competent authority
• Section: 80G; 12AA; 201; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 665/ASR/2017 ASSESSMENT YEAR: ADESH FOUNDATION (REGD.), KOTKAURA ROAD, MUKTSAR, PUNJAB- 152026 [PAN: AAATA 5811H] VS. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P. N. ARORA (ADV.) RESPONDENT BY: SH. ALOK KUMAR (D.R.) DATE OF HEARING: 17.01.2019 DATE OF PRONOUNCEMENT: 18.03.201 9 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE-SOCIETY AGITATING THE DENIAL OF THE APPROVAL UNDER SECTION 80G(5)(VI) OF THE INCOME TAX ACT, 196 1 (THE ACT HEREINAFTER) BY THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDI GARH (CIT(E) FOR SHORT) VIDE HIS ORDER DATED 31.8.2017. 2. THE RESPECTIVE CASES 2.1 THE ASSESSEES CASE IS THAT IT, A SOCIETY REGIS TERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 ON 16.4.1995 (PB PG. 1), AS WELL AS A CHARITABLE INSTITUTION U/S. 12AA OF THE ACT (ON 27.6.2003/ PB PG. 2), COUL D NOT BE DENIED APPROVAL U/S. 80G(5)(VI) BY THE COMPETENT AUTHORITY IN VIEW OF IT S CONTINUED REGISTRATION U/S. 12AA. ITS INCOME, RIGHT UP TO THE LATEST YEAR, HAS BEEN CLAIMED FULLY EXEMPT U/S. 11 OF THE ACT AND, IN FACT, ALLOWED SO FOR THE YEAR S FOR WHICH ITS RETURNS OF INCOME ITA NO. 665/ASR/2017 ADESH FOUNDATION (REGD.) V. CIT(E) 2 HAVE BEEN SUBJECT TO THE VERIFICATION PROCEDURE UND ER THE ACT, AS FOR AYS. 2009-10, 2010-11 AND 2012-13 (PB PG. 253-260). THE COMPETENT AUTHORITY HAS, IN NOT ALLOWING APPROVAL U/S. 80G(5)(VI), TRAVELED OUTSIDE HIS PURVIEW IN-AS-MUCH HE HAS QUESTIONED THE NEED OF THE ASSESSEE TO SEEK DONATIO NS, I.E., IN VIEW OF ITS HUGE SURPLUS AND CASH RESERVES. AS LONG AS THE ASSESSEE S OBJECTS ARE CHARITABLE AND ITS ACTIVITIES NOT FOUND NOT GENUINE, THE ONUS FOR WHIC H IS ON THE REVENUE, APPROVAL U/S. 80G(5)(VI) COULD NOT BE DENIED. A MERE APPREHE NSION THAT THE DONATIONS SHALL BE MISUSED IS NO GROUND FOR DENYING THE SAID APPROV AL. AS CLARIFIED BY THE HONBLE JURISDICTIONAL HIGH COURT IN CIT V. SANT GIRDHAR PARAMHANS SANT ASHRAM (IN ITA NO. 50 OF 2018, DATED 16.5.2018 / PB PGS. 320-324), THE REVENUE IS AT LIBERTY TO WITHDRAW REGISTRATION U/S. 12AA AS WELL AS APPROVAL U/S. 80G(5)(VI) IN CASE IT DISCOVERS SUCH A MISUSE, I.E., DONATIONS SOLICITED TO SECURE ADMISSION TO VARIOUS PROFESSIONAL, I.E., MEDICAL, PARAMEDICAL AND ENGINE ERING, ETC., COLLEGES BEING RUN BY THE ASSESSEE-SOCIETY. THERE IS NOTHING ON RECORD, O R IN ITS CONDUCT, TO DOUBT THE ASSESSEES INTENT OR APPREHEND MISUSE OF DONATION S, WHICH IS THEREFORE UNFOUNDED. THE TRIBUNAL, IN FACT, IN THE CASE OF AN OTHER SOCIETY, I.E., ADESH WELFARE SOCIETY (REGD.) , DIRECTED FOR ALLOWANCE OF APPROVAL U/S. 80G(5)(VI ) WHICH HAD BEEN SIMILARLY DENIED TO IT BY THE COMPETENT AUTHORITY ( IN ITA NO. 102/ASR/2017, DATED 26.9.2017/PB PGS. 264-271). 2.2 THE REVENUES CASE, ON THE OTHER HAND, TOWARD W HICH PASSIONATE SUBMISSIONS WERE MADE BY THE LD. CIT-DR, SH. ALOK K UMAR, IS THAT THE TRIBUNAL CANNOT BE OBLIVIOUS TO THE GROUND REALITIES. THE AC CEPTANCE OF CAPITATION FEE FOR ACQUIRING ADMISSIONS, CAMOUFLAGED AS DONATIONS, DEE MED ILLEGAL BY THE HONBLE APEX COURT IN MODERN DENTAL COLLEGE AND RESEARCH CENTER & OTHERS V. STATE OF MADHYA PRADESH (IN CIVIL APPEAL NO. 4060 OF 2009), PER A FIVE JUD GE BENCH CONSTITUTION, IS A BANE TO THE SOCIETY. THE DONATIO NS HAVING BEEN SINCE HELD ITA NO. 665/ASR/2017 ADESH FOUNDATION (REGD.) V. CIT(E) 3 IMPERMISSIBLE, ARE ROUTED THROUGH UN-RELATED (TO TH E STUDENTS SEEKING ADMISSION) PERSONS, DESIROUS OF CLAIMING TAX REBATE ON DONATI ONS BY PROVIDING AN ACCOMMODATION ENTRY. WHERE, ONE MAY ASK, IN VIEW OF CONTINUING SURPLUSES, BEING AT NEARLY RS.90 CRORE FOR AY 2015-16 (PB PG. 135), IS THE NEED FOR DONATIONS, WHICH HAS NOT BEEN DEMONSTRATED IN SPITE OF BEING C ALLED UPON TO DO SO BY THE COMPETENT AUTHORITY? EVEN THE LIST OF THE PROSPECTI VE DONORS, CALLED FOR, COULD NOT BE SUPPLIED. DONATION TO ANY CHARITABLE INSTITUTION WOULD IN THE NORMAL COURSE OF AFFAIRS ENSUE ONLY TO ENABLE IT TO MEET ITS REQUIR EMENTS, I.E., WHERE IT IS NOT ABLE TO GENERATE SUFFICIENT FUNDS (THROUGH ITS REGULAR OPE RATIONS) TO MEET ITS REGULAR ACTIVITIES. IN THE PRESENT CASE, ON THE CONTRARY, T HE ASSESSEE-SOCIETY IS ON AN ASSET CREATION SPREE, EVEN ASSUMING LOANS FOR THE PURPOSE ; THE FIXED ASSET PORTFOLIO HAVING SWELLED TO ABOUT RS. 140 CR. AS ON 31/3/2016 , BESIDES INVESTMENT AT RS. NEARLY RS. 10 CR. (PB PG. 193). ALL THIS GIVES A ST RONG BASIS AND CREDENCE TO SUSPECT THE BONA FIDES FOR SEEKING SECTION 80G BENEFIT, IMPLYING, IN EFFE CT, AN INCENTIVE IN THE FORM OF A TAX BREAK FOR THE DONORS. ALLOWING TH E APPROVAL U/S. 80G(5)(VI), WHICH UNDER THE PRESENT SCHEME IS TO BE IN PERPETUI TY, I.E., UNLESS SPECIALLY WITHDRAWN, WOULD UNDER THE CIRCUMSTANCES AMOUNT TO GIVING FILLIP TO SUCH ACTIVITIES. THE SAME, THE CAPITATION FEE, IS MASQUE RADED AS DONATIONS OR VOLUNTARY CONTRIBUTIONS TO THE CORPUS FUNDS (OR O THERWISE) AND, THEREFORE, IT IS NOT IN THE ORDINARY COURSE POSSIBLE TO SIFT THE CHAFF F ROM THE STRAW, I.E., DISTINGUISH BETWEEN THE ACTUAL VOLUNTARY CONTRIBUTIONS FROM SUC H SOLICITED AND CONTRIVED ONES. IT THEREFORE BECOMES INCUMBENT ON A HIGHER APPELLAT E BODY, AS THE TRIBUNAL, TO, INSTEAD OF ALLOWING THE MENANCE TO PROSPER, STRENGT H THE MEASURES TO CHECK IT, AS BY DENYING APPROVAL U/S. 80G. IT IS NOT BEYOND THE PAL E OF THE TAX JURISPRUDENCE TO DO SO; RATHER, IT IS THE BOUNDEN DUTY OF THE TRIBUNAL TO DO SO. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. ITA NO. 665/ASR/2017 ADESH FOUNDATION (REGD.) V. CIT(E) 4 3.1 TO BEGIN WITH, IT MAY BE CLARIFIED THAT REGISTR ATION U/S. 12AA PER SE CANNOT BE REGARDED AS DETERMINATIVE OF THE APPROVAL U/S. 8 0G(5)(VI). THAT IS, THE REGISTRATION U/S. 12AA SHALL NOT IPSO FACTO RESULT IN GRANT OF APPROVAL U/S. 80G(5)(VI), WHICH WOULD RATHER MAKE THE LATTER PROV ISION OTIOSE. THIS STANDS CLARIFIED BY THE HONBLE JURISDICTIONAL HIGH COURT IN SONEPAT HINDU EDUCATIONAL & CHARITABLE SOCIETY V. CIT [2005] 278 ITR 262 (P&H), RELIED UPON BY THE ASSES SEE (PB PGS. 15-20), PARA 14 OF WHICH, ALSO READ OUT DU RING HEARING, READS AS UNDER: 14. FROM THE AFORE-EXTRACTED PROVISIONS, IT IS EVI DENT THAT THE FIRST AND FOREMOST REQUIREMENT WHICH THE INSTITUTION OR FUND HAS TO SATISFY IS THA T IT IS ESTABLISHED IN INDIA FOR A CHARITABLE PURPOSE. THE CONDITIONS CONTEMPLATED BY CLS. (I) TO (VI) OF S. 80G(5) ARE THE CONDITIONS WHICH THE INSTITUTION OR THE FUND MUST ADDITIONALLY FULFILL SO AS TO BE ENTITLED TO T HE APPROVAL OF THE CIT . IT IS WELL-SETTLED THAT FOR THE PURPOSE OF CONSTR UING THE PURPOSE OF A TRUST, IT IS NOT NECESSARY THAT ONE REMAINS 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 PURPOSE OF ESTABLISHMENT OF THE T RUST . THERE CAN BE NO QUARREL WITH THE PROPOSITION THAT THE COMMISSIONER, CONFERRED WITH T HE POWER TO GRANT EXEMPTION, IS FULLY COMPETENT TO FIND OUT THE REAL PURPOSE, AS DISTINGUISHED FROM TH E OSTENSIBLE PURPOSE OF ESTABLISHMENT OF THE SOCIETY OR THE TRUST. IF THE C OMMISSIONER IS CONVINCED THAT THE PURPOSE OF THE SOCIETY OR THE TRUST IS NOT CHARITABLE, NOTHING DEBARS HIM FROM DENYING THE APPROVAL BUT, AT THE SAME TIME, IF HE IS SATISFIED THAT THE OBJECTS OF THE TRUST, AS SET OUT IN THE DEED OF DECLARATION, WERE CHARITABLE, THEN HAVING REGARD TO THE OBJECT OF THE PROVISION, THE APPROVAL SHOULD NOT BE DENIED ON MERE TECHNICALITIES. AS A M ATTER OF FACT, THE POWER TO GRANT OR NEGATIVE THE CLAIM FOR APPROVAL IS COUPLED WITH A D UTY. [EMPHASIS, SUPPLIE D] WHY, REGISTRATION IN A PARTICULAR CASE MAY HAVE BEE N GRANTED EVEN WITHOUT COMMENCEMENT OF ANY ACTIVITIES. AN EXAMINATION OF T HESE ACTIVITIES, COMMENCED SUBSEQUENTLY, AND A FINDING AS TO THEY BEING GENUIN E, IS, ON THE OTHER HAND, A PRE- REQUISITE FOR AN APPROVAL U/S. 80G(5)(VI) READ WITH RULE 11AA(3). TO THIS EXTENT WE ARE IN AGREEMENT WITH THE REVENUE. WE MAY THOUGH HA STEN TO ADD THAT THE ONUS TO SHOW AS TO WHY, IN SPITE OF REGISTRATION U/S. 12AA, OR WITHOUT INITIATING STEPS FOR ITS WITHDRAWAL, IF NOT ACTUALLY WITHDRAWING IT, IT YET CONSIDERS IT AS NOT A FIT CASE FOR GRANT APPROVAL U/S. 80G, IS ON THE REVENUE. ITA NO. 665/ASR/2017 ADESH FOUNDATION (REGD.) V. CIT(E) 5 3.2 THE COMPETENT AUTHORITY, WHILE CONSIDERING AN A PPLICATION FOR APPROVAL U/S. 80G(5)(VI), IS TO EXAMINE IT FROM THE STANDPOINT OF RULE 11AA R/W S. 80G(5) IN-AS- MUCH AS ONLY A POSITIVE SATISFACTION OF THE CONDITI ONS STIPULATED THEREIN WOULD QUALIFY FOR THE SAID APPROVAL. WE OBSERVE NO ADVERS E COMMENT ON ANY OF PRESCRIBED CONDITIONS, EVEN AS FAIRLY CONCEDED TO B Y SH. KUMAR BEFORE US, EXCEPT THE GENUINENESS OF THE ACTIVITIES UNDER RULE 11AA(3 ). THE SAME, VEHEMENTLY ARGUED BEFORE US, WOULD THEREFORE FORM THE SUBJECT MATTER OF THE ENSUING DISCUSSION. 3.3 THE ONLY BASIS CITED IS THE ABSENCE OF ANY DEMO NSTRATED NEED FOR DONATIONS, WHICH THE ASSESSEE-SOCIETY SHALL HAVE A BETTER ACCE SS TO IN VIEW OF A TAX ADVANTAGE FOR THE DONORS ON BEING GRANTED APPROVAL U/S. 80G(5 )(VI), AND THE CONCOMITANT POSSIBILITY OF ITS MISUSE. THE GENUINENESS OF THE ACTIVITIES IS ESSENTIALLY A MATTER OF FACT . THE SAME NO DOUBT HAS TO BE REGARDED IN A BROADER PERSPECTIVE, HAVING REGARD TO THE SOCIO-ECONOMIC CONTEXT AND CONDITIONS IN WHICH THE ASSESSEE-SOCIETY OPERATES. WE ARE ALSO CONSCIOUS THAT BOTH THE REGIS TRATION U/S. 12AA AS WELL AS APPROVAL U/S. 80G(5)(VI) ARE A PART OF THE REGULATO RY FRAMEWORK INSTITUTED TO SCREEN APPLICATIONS, AND ACCORD SANCTION. A LARGER PLAY IN THE JOINTS, WHICH IS ALSO A CHARACTERISTIC OF THE INTERPRETATION OF FISCAL STAT UTES, PARTICULARLY WHERE LAYING DOWN CONDITIONALITIES, IS ACCORDINGLY TO BE ALLOWED (REF ER: JAIN BROTHERS V. UNION OF INDIA [1970] 77 ITR 107 (SC)). HOWEVER, GENUINENESS OF ACTIVITIES SHOULD ORDINARILY IMPLY ACTIVITIES AS UNDERTAKEN AND NOT T HAT MAY POSSIBLY BE IN FUTURE. YES, THE SAME MAY BE INCLUDED UNDER THE UMBRELLA WH ERE FALLING WITHIN THE OBJECTS AND PROJECTED TO BE UNDERTAKEN. HOWEVER, WHETHER TH E SAME COULD INCLUDE THOSE VEHEMENTLY DENIED TO THE PURSUED, BUT COULD POSSIBL Y BE, IS THE QUESTION. WE ARE NOT SUGGESTING THAT THE COMPETENT AUTHORITY IS NOT EMPOWERED TO ENQUIRE ABOUT THE NEED FOR DONATIONS BY THE ASSESSEE-SOCIETY, CONSIDE RING THE DELUGE OF FUNDS IT FINDS ITA NO. 665/ASR/2017 ADESH FOUNDATION (REGD.) V. CIT(E) 6 ITSELF IN, AND WHICH ASPECT IT HAS MISERABLY FAILED TO EXPLAIN, INCLUDING THE LIST OF THE PROSPECTIVE DONORS, WHO IT CONSIDERS AS ESPOUSI NG ITS CAUSE OR OTHERWISE WILLING TO DONATE, I.E., BUT FOR THE SECTION 80G BE NEFIT, OR WOULD BE MORE LIKELY TO IN CASE THE SAME ENURES. HOWEVER, FIRSTLY, DONATIONS WOULD MEAN JUST THAT, I.E., WITHOUT ANY QUID PRO QUO, OR ANY VALUE PARTED WITH IN EXCHANGE, WHILE WHAT THE COMPETENT AUTHORITY APPREHENDS IS NOT DONATION PER SE , BUT PAYMENTS IN THE GUISE OF DONATIONS, BEING CONSIDERATION FOR GRANT OF ADMI SSION TO VARIOUS PROFESSIONAL COURSES BEING PROVIDED BY THE SCHOOLS/COLLEGES BEIN G RUN AND MANAGED BY THE ASSESSEE-SOCIETY. TWO, THE ENQUIRY HAS ITS LIMITATI ONS. WHAT, IF THE STATED DONATIONS DO NOT FOLLOW? WHAT, IF THE STATED PROJECT, I.E., W HERE SO, DOES NOT MATERIALIZE? IN EITHER SITUATION, THE SECTION 80G APPROVAL CANNOT B E WITHDRAWN. AGAIN, IT IS NOT IMPERMISSIBLE FOR THE COMPETENT AUTHORITY TO PLACE THE ASSESSEES ACTIVITIES IN THE FIELD OF HIGHER EDUCATION IN THE SOCIO-ECONOMIC CON TEXT IN WHICH IT OPERATES, AND FACTOR IN THE SAME IN HIS FINDINGS. GRANTING ADMISS ION, PARTICULARLY TO MEDICAL COURSES TO CANDIDATES IN LIEU OF MONEY (OR MONEYS W ORTH), IS A FACT OF PUBLIC LIFE IN INDIA, A SCOURGE. HOWEVER, ALLUDING THERETO, WITHOU T IN ANY MANNER CORROBORATING IT WITH THE ASSESSEES CONDUCT, OR WITH THAT OF THE PE RSONS MANAGING IT, IN THE PAST, WOULD RENDER IT AS NO MORE THAN A SURMISE, A CONJEC TURE, LIABLE TO BE STRUCK DOWN AS ARBITRARY. IT IS IN THIS CONTEXT THAT THE DENIAL OF ANY SUCH INTENT, MADE EQUALLY VEHEMENTLY BY THE LD. COUNSEL FOR THE ASSESSEE, SH. ARORA, BEFORE US, BECOMES RELEVANT. IN OTHER WORDS, THOUGH THERE IS POSSIBILI TY OF A MISUSE OF THE SECTION 80G BENEFIT, UNLESS THERE IS A FIRM BASIS TO REGARD IT AS A DISTINCT POSSIBILITY, IN WHICH CASE IT WOULD FALL WITHIN THE SCOPE OF THE TERM GE NUINENESS OF ACTIVITIES, ENQUIRY INTO WHICH AND A POSITIVE SATISFACTION QUA WHICH, IS A PRECONDITION FOR AN APPROVAL U/S. 80G. IT MAY HERE BE PERTINENT TO DRAW ATTENTIO N TO THE OBSERVATIONS OF THE HONBLE JURISDICTIONAL HIGH COURT IN SONEPAT HINDU EDUCATIONAL & CHARITABLE SOCIETY (SUPRA), REQUIRING THE COMPETENT AUTHORITY TO ENQU IRE INTO THE REAL PURPOSE ITA NO. 665/ASR/2017 ADESH FOUNDATION (REGD.) V. CIT(E) 7 OF THE APPLICANT, I.E., DISTINCT AND APART FROM THA T STATED IN THE MEMORANDUM OF OBJECTS, AS WELL AS THAT IN SANT GIRDHAR PARAMHANS SANT ASHRAM (SUPRA), ALSO READ OUT DURING HEARING, THAT A MERE POSSIBILITY OF MISU SE CANNOT RESULT IN DENIAL OF APPROVAL. THE NEED TO ASCERTAIN THE REAL PURPOSE, AS AGAINST THE OSTENSIBLE PURPOSE, WHILE GRANTING APPROVAL U/S. 80-G(5)(VI) BY THE COMPETENT AUTHORITY, IS THEREFORE TO BE WEIGHED AGAINST, AND OUGHT NOT TO D ENIGRATE TO OUSTING APPLICATIONS ON A MERE POSSIBILITY OF MISUSE. THAT IS, WHILE THE REVENUE IS EMPOWERED TO, NAY, DUTY BOUND TO, ASCERTAIN THE REAL PURPOSE, AS OPP OSED TO AN OSTENSIBLE PURPOSE, A MERE POSSIBILITY OF MISUSE (OF DONATIONS) CANNOT HA VE THE SANCTION OF LAW. STATED DIFFERENTLY, THE SAID POSSIBILITY, FOR THE SAME TO RESULT IN A VALID DENIAL OF APPROVAL IN LAW, MUST BE SOMETHING MORE, WHAT WE HAVE REFERR ED TO AS A DISTINCT POSSIBILITY. THE SAME WOULD BE A FINDING OF FACT, OPEN TO CHALLENGE, AND WHERE FOUND AS BASED NOT ON A SURMISE, BUT THE SURROUNDIN G FACTS AND CIRCUMSTANCES, OF WHICH THE ASSESSEES CONDUCT IS AN INTEGRAL PART, I N OUR VIEW, LIABLE TO BE UPHELD. 4. CONCLUSION THE REVENUES REAL OBJECTION, AS WE DISCERN, IS ES SENTIALLY THE COMMERCIALIZATION, WHICH HAS OVER TIME ENGULFED THE EDUCATIONAL SYSTEM IN OUR COUNTRY, EATING INTO ITS VERY VITALS. THE RIGHT TO EDUCATION IS A INTEGRAL PART OF THE RIGHT TO LIFE, A FUNDAMENTAL RIGHT GUARANTEED BY OU R CONSTITUTION. YET, ACCESS TO QUALITY EDUCATION IS A DISTANT REALITY FOR WANT OF PURCHASING POWER, WITH THE REACH AND QUALITY OF PUBLIC SCHOOLS ALSO BEING WANTING BY FAR. THE POSITION IS MORE ACUTE FOR HIGHER EDUCATION. IT IS THIS SUPPLY DEMAND GAP THAT IS SOUGHT TO BE CAPITALIZED BY THE MUSHROOMING EDUCATIONAL INSTITUTES, PARTICUL ARLY IN THE FIELD OF PROFESSIONAL EDUCATION, I.E., QUA WHICH THERE IS AN ACTUAL OR PERCEIVED DEMAND IN TH E JOB MARKET. CHARGED FOR IN FULL, COST OR THE ABILITY TO PAY, BE COMES A CRITERION ON WHICH, THEN, ADMISSION TO SUCH INSTITUTES BECOMES AVAILABLE, MAK ING A TRAVESTY OF THE ITA NO. 665/ASR/2017 ADESH FOUNDATION (REGD.) V. CIT(E) 8 EDUCATIONAL IDEALS, SYMBOLIZED BY GURUKULS OF OUR A NCIENT LAND WHERE STUDENTS WERE TAUGHT IN THEIR NATURAL SETTING UNDER SHADY TREES AND THE GLORIES OF THE SKY. OR EVEN THE TECHNICAL INSTITUTIONS OF EXCELLENCE (V IZ. THE IITS AND IIMS) AS WELL AS THE MISSIONARY SCHOOLS, RUN ON NO PROFIT NO LOSS BASIS, WITH MISSIONARY ZEAL BY EDUCATIONISTS, THAT CAME INTO BEING POST INDEPENDEN CE. EDUCATION, NEVERTHELESS, IN KEEPING WITH THE HIGH VALUE PLACED ON IT IN NATION BUILDING, NAY, SOCIETY BUILDING, HAS BEEN CHARACTERIZED AS A CHARITABLE PURPOSE U/ S. 2(15), INCOME FROM PURSUING WHICH OBJECT IS THEREFORE EXEMPT U/S. 11 OF THE ACT , I.E., IS NOT LIABLE TO TAX. THIS IS IRRESPECTIVE OF THE QUALITY AND CONTENT OF EDUCATIO N, TO WHOM, HOW, AND FOR WHAT CONSIDERATION, IT IS PROVIDED. THESE FACTORS ARE IN FACT MATTERS OF EDUCATIONAL POLICY WHICH THE ACT IS HARDLY GEARED TO CONTROL/INFLUENCE , WITH IN FACT THE SAME HAVING MUCH TO DO WITH THE MORAL STANDARDS AND FIBRE OF TH E SOCIETY, WHICH ITSELF HAS WITNESSED AN ALL ROUND DECADENCE AND IN EVERY SPH ERE OF PUBLIC LIFE. THE REQUIREMENT OF REGISTRATION AS A CHARITABLE INSTIT UTION, AS INDEED THAT OF APPROVAL U/S. 80G, ARE A PART OF THE REGULATORY MECHANISM WI TH A VIEW TO FILTER OUT CASES WHICH DO NOT MEET THE PRESCRIBED CRITERION. A REGUL ATORY PROVISION IS TO BE NECESSARILY FORWARD LOOKING, I.E., FUTURE ORIENTED. THIS IS AS WHAT IT SEEKS TO REGULATE CONCERNS WHAT IS PLANNED FOR OR LIKELY TO BE UNDERTAKEN? ENQUIRY INTO THE NEED FOR DONATIONS, THE VERY PURPOSE FOR WHICH THEY ARE TO BE GIVEN, AND THE PERSONS FROM WHOM THEY ARE EXPECTED TO ARISE IN-AS- MUCH AS A BETTER ACCESS TO DONATIONS IS AN ADDITIONAL BENEFIT THAT ACCRUES TO A CHARITABLE INSTITUTION UPON APPROVAL U/S. 80G (5), IS NOT PRECLUDED, PARTICULAR LY CONSIDERING THE APPLICANT TO BE FLUSH WITH FUNDS, AND THE FACT THAT DONATIONS NORMA LLY ARISE TO A CHARITABLE INSTITUTION TO SUPPORT ITS ACTIVITIES, I.E., TO ME ET THE DEFICIENCY IN ITS FUNDING. A NON-SATISFACTORY OR AN EVASIVE ANSWER, AS IN THE PR ESENT CASE BY THE ASSESSEE- SOCIETY, AGAIN, DOES NOT HELP ITS CAUSE. HOWEVER, THAT WOULD NOT TRANSLATE INTO AN INFERENCE AS TO THE DONATIONS BEING SOUGHT FOR AN U LTERIOR PURPOSE AS IMMINENT, ITA NO. 665/ASR/2017 ADESH FOUNDATION (REGD.) V. CIT(E) 9 PARTICULARLY CONSIDERING THAT THE ASSESSEE-SOCIETY HAS IN THE PAST NOT BEEN SHOWN TO UNDERTAKE ANY ILLEGAL ACTIVITY, I.E., EVEN WHEN IT HAD S. 80G APPROVAL (UP TO 31.3.2009), AS WELL AS THE FACT THAT GIVING AN ADMI SSION IN LIEU OF CONSIDERATION IS ILLEGAL. TRUE, IT IS NOT EASY TO IDENTIFY THE SAME, AS, IT IS IN PRACTICE OBTAINED FROM OTHERS, WHILE IN EFFECT ARE FOR AND ON BEHALF OF THE PERSON SEEKING ADMISSION. WHY, UNACCOUNTED MONEY RECEIVED IN LIEU OF ADMISSIO NS COULD BE ROUTED IN BOOKS IN THE GUISE OF DONATIONS. ALL THIS IS NOT IMAGINAT ION, BUT A PART OF REALITY OF OUR PUBLIC LIFE IN THIS SPHERE, WHICH ONE CANNOT BE OBL IVIOUS OF. THIS WOULD, HOWEVER, NOT HOWEVER DETRACT FROM THE ASSESSEES CASE. THIS IS AS IT IS ONLY IN THE REALM OF POSSIBILITY, WHICH CANNOT OUST AN OTHERWISE MERITO RIOUS CASE. IT IS THESE OPPOSING CONSIDERATIONS THAT HAVE LED US TO OPINE OF IT BEIN G A DISTINCT POSSIBILITY TO BE TAKEN NOTICE OF OR GIVEN COGNIZANCE TO. THIS SHALL ALSO BALANCE THE PLAY IN THE JOINTS REFERRED TO EARLIER, AND THE NEED FOR AN EF FECTIVE REGULATORY MEASURE, WITH THE JUDICIAL REQUIREMENT OF IT FALLING WITHIN THE PARAM ETERS LAID DOWN BY LAW, AND THE NEED TO MAINTAIN OBJECTIVITY, LEST IT BE REGARDED A S ARBITRARY. IN THE FACTS OF THE CASE, THE LD. CIT(E) HAS BASED HIS DECISION OF THE DONATIONS BEING LIABLE TO BE MISUSED WHOLLY ON THE BASIS OF THE ASSESSEE-SOCIETY BEING PROSPEROUS AND, CONSEQUENTLY, IN NO APPARENT, OR SHOWN, NEED FOR DONATIONS TO SUPPORT ITS ACTIVITIES. WHILE THAT MAY INVITE A CHARGE OF THE PROMOTERS BEING OVER-ZEALOUS OR OVER AMBITIOUS, IT SURELY DOES NOT LEAD TO THE INFERENCE OF SEEKING DONATION FOR ADMISSION, I.E., OF THE APPROVAL U/S. 80G(5)(VI) BEING LIABLE TO BE MISUSED A DISTINCT POSSIBILITY. THIS IS PARTICULARL Y SO AS THE SAME IS IN FACT ILLEGAL, IN VIEW OF THE DECISION BY THE APEX COURT AS IN TMA PAI FOUNDATION V. STATE OF KARNATAKA (AIR 2003 SC 355), REFERRED TO DURING HEARING, EMP HASIZING THAT THE ADMISSION IS IN ANY CASE IS TO BE MERIT BASED, AND MODERN DENTAL COLLEGE AND RESEARCH CENTER (SUPRA). WHY SHOULD A MANAGEMENT, IN NO DEARTH OF FUNDS, RISK ITS REPUTATION AND, RATHER, EVEN THE FUTURE OF ITS INSTITUTION, BY ASKING FOR SUCH ILL ITA NO. 665/ASR/2017 ADESH FOUNDATION (REGD.) V. CIT(E) 10 GOTTEN MONEY? CLEARLY, WE ARE UNABLE TO REGARD THE PRESENT CASE AS ONE OF DISTINCT POSSIBILITY I.E., THE TEST OR THE THRESHOLD WHICH, IN OUR VIEW, MUST CHARACTERIZE THE IMPUGNED TRANSACTIONS OF DONATIONS WHICH THE APPLIC ANT-APPELLANT TARGETS WHILE SEEKING BENEFIT U/S. 80G(5), SO AS TO OUST ITS CAS E FOR BEING A ELIGIBLE FOR APPROVAL THEREUNDER. IN OUR VIEW, THEREFORE, THE ASSESSEE CANNOT BE DENI ED APPROVAL U/S. 80G. WE, ACCORDINGLY, SETTING ASIDE THE IMPUGNED ORDER, DIRE CT THE COMPETENT AUTHORITY TO GRANT THE SAID APPROVAL. THE ASSESSEE SHALL, HOWEVE R, GIVE A LEGAL UNDERTAKING TO THE REVENUE THAT IT SHALL NOT SEEK CONTRIBUTIONS, D IRECTLY OR INDIRECTLY, FROM PERSONS WHO (OR WHOSE WARDS SEEK ADMISSION) TO VARIOUS EDUC ATIONAL OR TRAINING INSTITUTIONS RUN, OR MAY BE RUN, BY THE ASSESSEE-SO CIETY. THE ORDER BY THE TRIBUNAL IN ADESH WELFARE SOCIETY (REGD.) (SUPRA), RELIED UPON, WE ARE CONSCIOUS, DOES NOT SPEAK OF ANY SUCH STIPULATION. THE SAID ORDER, AS I TS READING WOULD SHOW, DOES NOT CONSIDER THE ASPECT OF THE POSSIBLE MISUSE OF DONAT IONS, I.E., AS LIABLE TO MISUSE, GIVEN THE DOMINANT POSITION THE INSTITUTIONS OFFERI NG PROFESSIONAL COURSES ENJOY VIS--VIS THOSE SEEKING ADMISSION THERETO, WHICH WE PERCEIVE AS THE PRINCIPAL, NAY, THE ONLY ISSUE ARISING IN THE PRESENT CASE. AND WHICH WE HAVE FOUND IN PRINCIPLE TO BE A RELEVANT CONSIDERATION , THOUGH HAS TO BE BASED ON A FIRM FOOTING. THE ASS ESSEE SOCIETY HAS IN FACT THROUGH ITS COUNSEL STRONGLY D ENIED ANY SUCH INTENTION, CLAIMING OF IT BEING AN UNFOUNDED APPREHENSION BEING ENTERTA INED BY THE COMPETENT AUTHORITY. IT COULD NOT ACCORDINGLY HAVE ANY POSSIB LE OBJECTION IN BINDING ITSELF TO WHAT IT CLAIMS BEFORE US. WE DECIDE ACCORDINGLY. ITA NO. 665/ASR/2017 ADESH FOUNDATION (REGD.) V. CIT(E) 11 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED ON THE AFORESAID TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 18, 201 9 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 18.03.2019 /GP/SR PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: ADESH FOUNDATION (REGD.), KO TKAURA ROAD, MUKTSAR, PUNJAB- 152026 (2) THE RESPONDENT: THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH (3) THE CIT CONCERNED (4) THE CIT-DR, I.T.A.T. TRUE COPY BY ORDER