Ken Crest Educational Society, Karimnagar V. DIT (Exemptions), Hyderabad

ITA 708/HYD/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2677 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-01-2018
• Assessment Year: misc
• Appeal Filed On: 10-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Assessee Lawyers: S RAMA RAO
• Keywords: Charitable institution
• Section: 12A; 12AA; 11

Judgement Text

ITA NO 708 OF 2013 KEN CREST EDU CATIONAL SOCIETY KARIMNAGAR. PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.708/HYD/2013 (ASSESSMENT YEAR: N.A) KEN CREST EDUCATIONAL SOCIETY, KARIMNAGAR PAN : AAAKJ 0911 E VS DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SHRI J. SIRI KUMAR, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS) DATED 27.03.201 3 REJECTING THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12A A OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SOCIETY FORMED ON 21.7.1998 AS PER THE CERTIFICATE OF REGIS TRATION ISSUED BY THE REGISTRAR OF THE SOCIETIES. IT FILED APPLICA TION IN FORM NO.10A ON 27.09.2012 SEEKING REGISTRATION U/S 12AA OF THE ACT. IN ORDER TO CONSIDER THE MERITS OF THE SAID APPLICA TION, THE DIT (E) ISSUED A QUESTIONNAIRE VIDE LETTER DATED 26.12.2012 REQUIRING THE ASSESSEE TO PRODUCE THE ORIGINAL DOCUMENT OF MEMORA NDUM OF ASSOCIATION, DETAILS ON SPECIFIC POINTS AND ALSO TO PRODUCE BOOKS DATE OF HEARING: 23.01.2018 DATE OF PRONOUNCEMENT: 2 5 . 0 1 .2018 ITA NO 708 OF 2013 KEN CREST EDU CATIONAL SOCIETY KARIMNAGAR. PAGE 2 OF 7 OF ACCOUNT, BILLS AND VOUCHERS ETC., FOR VERIFICATI ON. THE ASSESSEE FILED THE RELEVANT INFORMATION. 3. THE DIT (E) OBSERVED THAT THE ASSESSEE SOCIETY H AS CLAIMED TO BE RUNNING TWO EDUCATIONAL INSTITUTIONS I.E. KEN-CREST INTERNATIONAL SCHOOL AND KEN CREST GLOBAL SCHOOL IN KARIMNAGAR DIST. HE CONSIDER THE CONTENTIONS OF THE ASSESSEE T HAT THE KEN- CREST GLOBAL SCHOOL WAS COMMENCED IN THE YEAR 1998- 99 AND IS SITUATED AT JYOTHINAGAR, KARIMNAGAR, WHEREAS THE KE N-CREST INTERNATIONAL SCHOOL WAS STARTED IN THE YEAR 2011-1 2 SITUATED IN RANGARAOPALLE VILLAGE, GANDADHARA MANDAL, KARIMNAGA R DISTT. HE OBSERVED THAT THE DISTRICT EDUCATIONAL OFFICER, KAR IMNAGAR DISTRICT AND REGIONAL JT. DIRECTOR OF SCHOOL EDUCAT ION, WARANGAL VIDE THEIR SEPARATE PROCEEDINGS HAVE ACCORDED RECOG NITION TO SUCH EDUCATIONAL INSTITUTIONS. HE PERUSED THE COPIES OF SUCH PROCEEDINGS DATED 18.3.2013 AND 12.1.2008 RESPECTIV ELY AND NOTICED THAT THE SAID AUTHORITIES HAVE GRANTED RECO GNITIONS TO THE SCHOOL IN THE NAME OF KEN-CREST PRE-PRIMARY, UPS, J YOTHINAGAR AND IN THE NAME OF KEN-CREST PRIMARY SCHOOL EM, KUR IKYAL VILLAGE, RAMARAOPALLY, GANGADHARA MANDAL FOR THE YE AR 2012-13 TO 2016-17 FOR CLASS-I TO VIII. FURTHER, HE ALSO NO TICED THAT VIDE ANOTHER PROCEEDINGS DATED 23.07.2012, THE REGIONAL JT. DIRECTOR OF SCHOOL EDUCATION, WARANGAL HAS GRANTED RECOGNITI ON TO KEN- CREST HIGH SCHOOL (V), KURIKYAL VILLAGE FOR A PERIO D OF 10 YEARS FROM 2012-13 TO 2021-22. FROM SUCH PROCEEDINGS, THE DIT (E) OBSERVED THAT THESE GOVT. AUTHORITIES HAVE GRANTED RECOGNITION TO THE SCHOOLS IN THE NAME OF KEN-CREST PRE-PRIMARY, U PPER PRIMARY AND HIGH SCHOOL AT THOSE LOCATIONS AND THAT THERE I S NO REFERENCE TO ANY WORD GLOBAL OR INTERNATIONAL IN THE NAME OF THE SCHOOLS ITA NO 708 OF 2013 KEN CREST EDU CATIONAL SOCIETY KARIMNAGAR. PAGE 3 OF 7 IN THE PROCEEDINGS ISSUED BY THOSE AUTHORITIES. THE REFORE, THE DIT (E) HAD HELD THAT THE SOCIETY IS RUNNING SCHOOLS IN THE NAMES OTHER THAN THAT FOR WHICH RECOGNITION HAS BEEN GRAN TED BY THE CONCERNED GOVT. AUTHORITIES AND THEREFORE, THE ASSE SSEE HAS VIOLATED THE RECOGNITIONS GRANTED BY THE AUTHORITIE S AND THEREFORE, THE ASSESSEE WOULD NOT BE ELIGIBLE FOR GRANT OF REG ISTRATION U/S 12AA OF THE ACT. 4. FURTHER, DIT (E) ALSO OBSERVED THAT THE ASSESSEE HAS APPLIED FOR AFFILIATION FROM UNIVERSITY OF CAMBRIDG E, UK AND HAS PAID GBP 4000 (GREAT BRITAIN PONDS) IN NOVEMBER, 20 12 TOWARDS REGISTRATION CHARGES ETC., IN THAT REGARD. SINCE TH E EXPENDITURE HAS BEEN INCURRED OUT OF THE INCOME OF THE SOCIETY OUTSIDE INDIA, HE HELD THAT SINCE THE INCOME OF THE SOCIETY HAS NO T BEEN APPLIED ONLY IN INDIA, THE ASSESSEE IS NOT ELIGIBLE FOR REG ISTRATION U/S 12AA OF THE ACT. HE THEREFORE, REJECTED THE ASSESSEES A PPLICATION U/S 12AA OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN APPE AL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED DIRECTOR OF INCOME- TAX (EXEMPTIONS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTIONS) ERRED IN REFUSING REGISTRATION U/S 12AA OF THE INCOME-TAX ACT TO THE APPELLANT. 3. THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTIONS) OUGHT TO HAVE SEEN THAT THE APPELLANT IS CARRYING THE CHARITABLE ACTIVITIES IN ACCORDANCE WITH THE OBJECTS OF THE SOCIETY. 4. THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTIONS) OUGHT TO HAVE CONSIDERED THE ITA NO 708 OF 2013 KEN CREST EDU CATIONAL SOCIETY KARIMNAGAR. PAGE 4 OF 7 DETAILED EXPLANATIONS SUBMITTED BEFORE HIM AND GRANTED REGISTRATION U/S 12AA OF THE I.T. ACT . 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE IS A SOCIETY WHICH IS RUNNING EDUCATIO NAL INSTITUTIONS AND THEREFORE, THE OBJECTS OF THE ASSESSEE ARE CLEA RLY CHARITABLE IN NATURE. HE SUBMITTED THAT THE DIT (E) HAS NOT HELD THE OBJECTS OF THE SOCIETY TO BE NOT CHARITABLE. HE ALSO DREW OUR ATTENTION TO THE PROCEEDINGS OF THE EDUCATION OFFICERS WHICH ARE PLA CED AT PAGES 111 AND 112 OF THE PAPER BOOK TO DEMONSTRATE THAT T HERE IS A REFERENCE IS TO THE KEN CREST INTERNATIONAL SCHOOL ,KURIKIYAL VILLAGE AND ALSO TO KEN-CREST GLOBAL HIGH SCHOOL, KARIMNAGAR IN THE BODY OF THE SAID PROCEEDINGS. HE SUBMITTED THAT THE DIT (E) HAS GONE BY ONLY THE REFERENCE TO THE SCHOOL IN THE SUBJECT PORTION OF THE LETTER AND NOT TO THE CONTENTS OF THE PROCEE DINGS. FURTHER, HE SUBMITTED THAT THE REGISTRATION IS TO BE GRANTED TO THE SOCIETY AND NOT TO THE INDIVIDUAL SCHOOLS AND SINCE THE SOC IETY IS CARRYING ON THE CHARITABLE ACTIVITIES, IT IS ELIGIBLE FOR RE GISTRATION U/S 12AA OF THE ACT. HE ALSO DREW OUR ATTENTION TO THE PROCE EDINGS DATED 27.09.2013 GRANTING REGISTRATION U/S 10(23)(C) OF T HE I.T. ACT. HE SUBMITTED THAT THIS GOES TO PROVE THAT THE ASSESSEE IS CARRYING ON THE EDUCATIONAL ACTIVITIES ALONE AND THE DEPARTMENT ITSELF HAS ACCEPTED THAT THE ASSESSEES ACTIVITIES ARE CHARITA BLE AND WHOLLY FOR THE PURPOSE OF EDUCATION. THEREFORE, THE LEARNE D COUNSEL PRAYED THAT THE ASSESSEE SHOULD BE GRANTED REGISTRA TION U/S 12AA OF THE ACT. 6. FURTHER, AS REGARDS THE 2 ND GROUND ON WHICH THE DIT (E) HAS REJECTED THE APPLICATION, THE LEARNED COUNS EL FOR THE ITA NO 708 OF 2013 KEN CREST EDU CATIONAL SOCIETY KARIMNAGAR. PAGE 5 OF 7 ASSESSEE DREW OUR ATTENTION TO THE PROVISIONS OF SE CTION 12AA OF THE ACT TO DEMONSTRATE THAT THERE IS NO REFERENCE T O THE APPLICATION OF INCOME IN INDIA IN THE SAID SECTION. HE SUBMITTED THAT THERE IS A REFERENCE TO THE APPLICATION OF INC OME IN INDIA IN SECTION 11 OF THE ACT AND THEREFORE, AFTER GRANTING OF REGISTRATION U/S 12AA OF THE ACT, THE AO IS REQUIRED TO EXAMINE THE BOOKS OF ACCOUNT FOR ALLOWING EXEMPTION U/S 11 OF THE ACT AN D THE APPLICATION OF INCOME WOULD BE RELEVANT AT THAT STA GE. EVEN OTHERWISE, HE SUBMITTED THAT THE PAYMENT MADE BY TH E ASSESSEE TO THE UNIVERSITY OF CAMBRIDGE, UK IS FOR THE BENEF IT OF THE STUDENTS IN INDIA AND THEREFORE, THE BENEFICIARIES ARE IN INDIA AND HENCE THE ASSESSEE CANNOT BE DENIED REGISTRATION U/ S 12AA OF THE ACT. 7. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS COMMENCED ITS ACTIVITIES IN 1998 ITSELF AND THE REFORE, THE DIT (E) WAS REQUIRED TO GO INTO THE ACTIVITIES CARRIED ON BY THE ASSESSEE AND THE DIT (E) HAS THEREFORE, FOUND THAT THE ASSES SEE IS VIOLATING THE PERMISSION GRANTED BY THE EDUCATIONAL OFFICERS BY RUNNING THE SCHOOL IN THE NAMES DIFFERENT FROM THE NAMES IN THE APPROVALS. FURTHER, HE ALSO ARGUED THAT INCOME OF T HE ASSESSEE SHOULD BE APPLIED IN INDIA AND FOR THE BENEFIT OF T HE PERSONS IN INDIA. THEREFORE, ACCORDING TO HIM, THE ASSESSEE HA S NOT FULFILLED CONDITIONS FOR GRANTING OF REGISTRATION U/S 12AA OF THE ACT. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT ADMITTEDLY THE ASSESSEE IS AN INSTITUTION ITA NO 708 OF 2013 KEN CREST EDU CATIONAL SOCIETY KARIMNAGAR. PAGE 6 OF 7 CARRYING ON EDUCATIONAL ACTIVITIES AND THEREFORE, I T IS A CHARITABLE INSTITUTION. THOUGH IT HAS STARTED ITS ACTIVITIES I N THE YEAR 1998, IT HAS FILED THE APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT ONLY ON 27.09.2012. WE HAVE GONE THROUGH THE APPROVALS O F THE EDUCATIONAL OFFICERS AND WE FIND THAT IN THE SUBJEC T PORTION REFERRED TO THE PROCEEDINGS, THE NAME OF THE ASSESS EE IS MENTIONED AS KEN-CREST HIGH SCHOOL, WHEREAS IN TH E BODY OF THE LETTER, THE NAME IS REFERRED TO AS KEN-CREST GLOBA L HIGH SCHOOL, KARIMNAGAR. FURTHER, IN THE PROCEEDINGS DATED 17.12 .2011, IN THE SUBJECT PORTION ITSELF, THE SCHOOL IS REFERRED TO A S KEN-CREST INTERNATIONAL SCHOOL. THEREFORE, THERE IS NO DIFFER ENCE IN THE SCHOOLS, WHICH HAVE BEEN APPROVED AND THE SCHOOLS R UN BY THE ASSESSEE. FURTHER, THE CCIT, HYDERABAD-3, VIDE ORDE R DATED 27.09.2013, HAS GRANTED THE ASSESSEE; THE REGISTRAT ION U/S 10(23)(C)(VI) OF THE I.T. ACT, WHICH GOES TO PROVE THAT THE REVENUE IS SATISFIED ABOUT THE ASSESSEE CARRYING ON THE ACT IVITIES EXCLUSIVELY FOR EDUCATIONAL PURPOSES WHICH IS A CHA RITABLE ACTIVITY. THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSEE IS ELIGIBLE FOR REGISTRATION U/S 12AA OF THE ACT AND THE REASONS ME NTIONED BY THE DIT (E) ARE NOT SUSTAINABLE. 9. AS REGARDS THE CONDITION THAT THE ASSESSEE SHOUL D APPLY ITS INCOME ONLY IN INDIA, WE FIND THAT SUCH A CONDITION IS EXISTING ONLY U/S 11 AND THE AO IS REQUIRED TO CONS IDER THE APPLICATION OF INCOME WHILE ALLOWING THE EXEMPTION U/S 11 OF THE ACT. THEREFORE, THE REJECTION OF THE APPLICATION FO R REJECTION ON THE SAID GROUND ALSO IS NOT SUSTAINABLE. ITA NO 708 OF 2013 KEN CREST EDU CATIONAL SOCIETY KARIMNAGAR. PAGE 7 OF 7 10. IN THE RESULT, WE ALLOW THE ASSESSEES APPEAL A ND DIRECT THE DIT (E) TO GRANT REGISTRATION U/S 12AA OF THE A CT. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JANUARY, 2018. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 25 TH JANUARY 2018. VINODAN/SPS COPY TO: 1 SHRI S.RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYA'S ELEGANCE, 3-6- 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 2 DIRECTOR OF INCOME TAX (EXEMPTION), AAYAKAR BHAVA N, BASHEERBAGH, HYDERABAD 3 ADIT (E), HYDERABAD 4 THE DR, ITAT HYDERABAD 5 GUARD FILE BY ORDER