M/s Infant Jesus Education Society, Chandigarh V. Pr. Chief Commissioner of Income Tax, Chandigarh

ITA 777/CHANDI/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0100 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 18-03-2016
• Assessment Year: 2014-2015
• Appeal Filed On: 08-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Non compliance

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.777/CHD/2015 ASSESSMENT YEAR:2014-15 M/S INFANT JESUS EDUCATION SOCIETY, VS. PR. CHIEF C IT, C/O ST. STEPHENS PREPARATORY SCHOOL, CHANDIGARH SECTOR 46A, CHANDIGARH PAN NO. AAAAI0119D (APPELLANT) (RESPONDENT) APPELLANT BY : SH. TEJ MOHAN SINGH RESPONDENT BY : SH. MANOJ MISHRA DATE OF HEARING : 07/04/2016 DATE OF PRONOUNCEMENT : 26/04/2016 ORDER PER ANNAPURNA GUPTA, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX , N.W. REGION, CHA NDIGARH DT. 30/09/2015 , REJECTING THE APPLICATION OF THE ASSESSEE FOR GRANT OF APPROVAL UNDER SECTION 10(23C)(VI) OF THE INCOME TAX ACT, 1961. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS A SOCIETY REGISTERED UNDER THE SOCIETY REGISTRATION ACT AND I S RUNNING A PREPARATORY SCHOOL IN THE NAME OF ST. STEPHENS PREPARATORY SCH OOL, SECTOR 46A , CHANDIGARH SINCE 2006 FOR STUDENT FROM PLAY TO KG. DURING THE YEAR THE ASSESSEE SOCIETY APPLIED FOR GRANT OF EXEMPTION UNDER SECTIO N 10(23C)(VI) OF THE ACT VIDE APPLICATION DT. 22/09/2014 IN FORM NO. 56D. THE PRI NCIPAL CHIEF COMMISSIONER OF INCOME TAX ISSUED A LETTER TO THE SOCIETY CALLING F OR INFORMATION INCLUDING INFORMATION ABOUT COMPLIANCE MADE TO RIGHT OF CHILD REN TO FREE AND COMPULSORY EDUCATION ACT, 2009, RTE ACT, REGARDING ENROLMENT OF STUDENTS 2 RELATED TO EWS CATEGORY IN ALL CLASSES PARTICULARLY AT ENTRY LEVEL. THE ASSESSEE VIDE ITS LETTER DT. 21/09/2015 STATED THAT THE RIGH T TO EDUCATION ACT WAS NOT APPLICABLE TO IT BECAUSE THE SAID ACT WAS APPLICABL E FROM CLASS 1 ST ONWARDS AND TO CHILDREN OF AGE OF 6 TO 14 YEARS. THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX CONFRONTED THE ASSESSEE THAT UNDER THE RIGHT OF CHILDREN TO FREE AND COMPULSORY EDUCATION ACT, 2009 THE PROVISIONS ARE A PPLICABLE FOR ADMISSION TO PRE SCHOOL EDUCATION ALSO REFERRING TO PROVISION OF SECTION 2(N) AND SECTION 12(1)(C) OF THE RTE ACT. THEREAFTER THE PRINCIPAL C HIEF COMMISSIONER OF INCOME TAX, HELD THAT FOR THE PURPOSE OF SECTION 10(23C)(V I) APPROVAL IS GRANTED FOR EDUCATIONAL INSTITUTIONS EXISTING SOLELY FOR EDUCA TIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT, AND AN INSTITUTION EXISTING SO LELY FOR EDUCATION MUST COMPLY WITH THE PROVISION OF RTE ACT. THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, FURTHER HELD THAT ANY INSTITUTION NOT IN COMPLIANCE WITH THE SAME CANNOT CLAIM THAT IT IS NOT FOR THE PURPOSES OF PROFIT. HE THERE FORE REJECTED THE APPLICATION OF THE ASSESSEE FOR APRPROVAL UNDER SECTION10(23C)(VI) OF THE ACT . 3. AGGRIEVED BY THE SAME THE ASSESSEE FILED THE PRE SENT APPEAL BEFORE US AND RAISED THE FOLLOWING GROUNDS: 1. THAT THE LD. PRINCIPAL CHIEF COMMISSIONER OF INC OME TAX HAS ERRED IN LAW AS WELL AS ON FACTS IN REJECTING THE APPLICATION FI LED FOR REGISTRATION U/S 10(23C)(VI) IN A SUMMARY MANNER WHICH IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 2. THAT THE REGISTRATION HAS BEEN REFUSED ON A MISP LACED APPRECIATION OF THE RIGHT TO EDUCATION ACT WHICH IS NOT APPLICABLE TO T HE INSTANT SOCIETY AND AS SUCH REJECTION OF REGISTRATION ON MISINTERPRETATION OF T HE LEGAL POSITION IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 3. THAT THE REGISTRATION HAS BEEN REFUSED ONLY ON T HE BASIS OF SUSPICION, CONJECTURES AND SURMISES WHICH IS NOT PERMITTED UND ER THE LAW AND AS SUCH THE ORDER REFUSING REGISTRATION IS ILLEGAL ARBITRARY AN D UNJUSTIFIED. 4. BEFORE US LD. COUNSEL FOR THE ASSESSEE STATED TH AT IN THE FIRST PLACE THE PROVISION OF THE RTE ACT WERE NOT ATTRACTED ON THE ASSESSEE. REFERRING TO THE PROVISION OF SECTION 2(N) OF THE RTE ACT. LD. COUNS EL STATED THAT THE RTE ACT APPLIED TO SCHOOLS IMPARTING ELEMENTARY EDUCATION ONLY WHICH HAS BEEN 3 DEFINED UNDER SECTION 2(F) TO MEAN EDUCATION FROM F IRST CLASS TO EIGHTH CLASS. LD. COUNSEL STATED THAT SINCE THE ASSESSEE SOCIETY WAS NOT IMPARTING EDUCATION FROM CLASS ONE TO CLASS EIGHTH IT COULD NOT BE SAID TO BE IMPARTING ELEMENTARY EDUCATION AND THEREFORE IS NOT COVERED UNDER THE DE FINITION OF SCHOOLS GIVEN UNDER THE RTE ACT. THUS THE LD. COUNSEL STATED THAT THE ASSESSEE SOCIETY WAS NOT COVERED UNDER THE RTE ACT AND WAS THUS NOT REQUIRED TO COMPLY WITH THE PROVISIONS OF THE SAME ALSO. REFERRING TO THE PROVI SION OF SECTION 12(1)(C)OF THE RTE ACT. LD. COUNSEL STATED THAT THE SECTION STATED THAT SCHOOLS AS DEFINED UNDER THE RTE ACT IMPARTING ELEMENTARY EDUCATION WH ICH ALSO IMPART PRE SCHOOL EDUCATION, THE PROVISIONS OF RTE ACT WOULD APPLY TO SUCH PRE SCHOOL EDUCATION ALSO. LD. COUNSEL STATED THAT SINCE THE SCHOOL RUN BY THE ASSESSEE SOCIETY WAS NOT IMPARTING ELEMENTARY EDUCATION THE QUESTION OF BEING COVERED BY THE PROVISION OF SECTION 12(1)(C) DOES NOT ARISE AT ALL . LD. COUNSEL FOR THE ASSESSEE THEREFORE STATED THAT SINCE THE RTE ACT WAS NOT APPLICABLE TO THE ASSESSEE THE DENIAL OF EXEMPTION UNDER SECTION 10(23C)(VI)BY THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX WAS BAD IN LAW. ALTERNATIVELY LD. COUNSEL FOR THE ASSESSEE PLEADED THAT THE CHANDIGAR H BENCH OF THE ITAT HELD IN THE CASE OF M/S KIDS R-KIDS INTERNATIONAL VS. THE PR. C.C.I.T IN ITA NO. 781/CHD/2015 THAT NON COMPLIANCE WITH THE PROVISION S OF THE RTE ACT COULD NOT BE THE BASIS FOR REJECTING GRANT OF APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT. 5. THE LD. DR ON THE OTHER HAND RELIED UPON THE ORD ER OF THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX AND STATED THAT SINCE TH E ASSESSEE SOCIETY HAD NOT COMPLIED WITH PROVISION OF RTE ACT IT COULD NOT BE SAID TO BE EXISTING SOLELY FOR THE PURPOSE OF IMPARTING EDUCATION AND WAS FOR THE PURPOSE OF PROFIT AND THEREFORE HAD BEEN RIGHTLY DENIED APPROVAL UNDER SE CTION 10(23C)(VI) OF THE ACT. 4 6. WE HAVE HEARD RIVAL SUBMISSION AND PERUSED THE O RDERS OF THE AUTHORITIES BELOW AND ALSO THE DOCUMENTS PLACED BEFORE US. 7. WE HOLD THAT THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX HAD ERRED IN DENYING APPROVAL TO THE ASSESSEE SOCIETY UNDER S ECTION 10(23C)(VI) FOR NOT COMPLYING WITH THE PROVISION OF THE RTE ACT. 8. WE FIND THAT IN THE FIRST PLACE THE ASSESSEE SOC IETY IS NOT COVERED UNDER THE PROVISIONS OF THE RTE ACT. FOR THE PURPOSE OF C LARITY THE RELEVANT PROVISION OF THE RTE ACT ARE BEING REPRODUCED HERE UNDER: SECTION 2 (F) ELEMENTARY EDUCATION MEANS THE EDUCATION FROM FI RST CLASS TO EIGHTH CLASS; SECTION 2 (N) SCHOOL MEANS ANY RECOGNIZED SCHOOL IMPARTING ELE MENTARY EDUCATION AND INCLUDES- (I) A SCHOOL ESTABLISHED, OWNED OR CONTROLLED BY THE AP PROPRIATE GOVERNMENT OR A LOCAL AUTHORITY; (II) AN AIDED SCHOOL RECEIVING AID OR GRANTS TO MEET WHO LE OR PART OF ITS EXPENSES FROM THE APPROPRIATE GOVERNMENT OR THE LOCAL AUTHORITY. (III) A SCHOOL BELONGING TO SPECIFIED CATEGORY; AND (IV) AN UNAIDED SCHOOL NOT RECEIVING ANY KIND OF AID OR GRANTS TO MEET ITS EXPENSES FROM THE APPROPRIATE GOVERNMENT OR THE LOCAL AUTHOR ITY; SECTION 12(1) FOR THE PURPOSES OF THIS ACT, A SCHOOL, - (A) (B) (C) SPECIFIED IN SUB-CLAUSES(III) AND (IV) OF CLAUS E (N) OF SECTION 2 SHALL ADMIT IN CLASS I, TO THE EXTENT OF AT LEAST TWENTY-FIVE PER CENT. OF THE STRENGTH OF THAT CLASS, CHILDREN BELONGING TO WEAKER SECTION AND DISADVANTA GED GROUP IN THE NEIGHBORHOOD AND PROVIDE FREE AND COMPULSORY ELEMEN TARY EDUCATION TILL ITS COMPLETION: PROVIDED FURTHER THAT WHERE A SCHOOL SPECIFIED IN C LAUSE(N) OF SECTION 2 IMPARTS PRE-SCHOOL EDUCATION, THE PROVISIONS OF CLAUSES (A) TO (C) SHALL APPLY FOR ADMISSION TO SUCH PRE-SCHOOL EDUCATION. A BARE PERUSAL OF THE PROVISIONS OF SECTION 2(N) RE AD WITH SECTION 2(F) WOULD REVEAL THAT THE SCHOOLS WHICH ARE COVERED BY THE PR OVISIONS OF RTE ACT ARE THOSE WHICH IMPART ELEMENTARY EDUCATION, MEANING EDUCATIO N FROM CLASS 1 TO CLASS 8. IN THE PRESENT CASE IT IS AN UNDISPUTED FACT THAT T HE SCHOOL RUN BY THE ASSESSEE SOCIETY IS IMPARTING EDUCATION BELOW CLASS 1. CLEAR LY THE ASESSEE SOCIETY IS NOT A SCHOOL AS PER THE DEFINITION GIVEN IN THE RTE ACT I N SECTION 2(N) AND IS THEREFORE NOT COVERED BY THE PROVISIONS OF THE RTE ACT. FURTH ER THE PROVISIONS OF SECTION 5 12(1)(C) READ ALONGWITH THE PROVISO REVEALS THAT TH E WHERE SCHOOLS IMPARTING ELEMENTARY EDUCATION ARE ALSO IMPARTING PRE SCHOOL EDUCATION, THE PROVISION OF COMPULSORY ADMISSION TO 25% STUDENTS BELONGING TO T HE WEAKER SECTION OF THE SOCIETY, SHALL APPLY TO THE PRE SCHOOL EDUCATION AD MISSION ALSO. IN THE PRESENT CASE THE SCHOOL RUN BY THE ASSESSEE SOCIETY IS NOT IMPARTING ELEMENTARY EDUCATION IN THE FIRST PLACE THEREFORE THE QUESTION OF ATTRACTING THE PROVISION OF SECTION 12(1)(C) AND THE PROVISO THERETO DOES NOT A RISE AT ALL. THEREFORE IN OUR CONSIDERED OPINION THE SCHOOL IS NOT GOVERNED BY TH E PROVISION OF RTE ACT AT ALL AND THE BASIC PREMISE OF THE LD. PRINCIPAL CHIEF CO MMISSIONER OF INCOME TAX FOR DENYING APPROVAL OF THE ASSESSEE SOCIETY THEREFORE FAILS. IN ANY CASE WE FIND THAT THE CHANDIGARH BENCH OF THE ITAT IN THE CASE OF KID S R- KIDS INTERNATIONAL HAS HELD THAT BY NOT COMPLYING WITH THE PROVISION OF TH E RTE ACT , IT CANNOT BE SAID THAT THE ASSESSEE SOCIETY IS NOT DOING ANY GENUINE EDUCATIONAL ACTIVITY AND APPROVAL UNDER SECTION 10(23C)(VI) CANNOT BE DENIED FOR THIS REASON. THE HONBLE BENCH HELD AS FOLLOWS: 11. AS REGARDS THE GENUINENESS OF THE ACTIVITIES B Y NOT COMPLYING THE CONDITIONS PRESCRIBED UNDER ANY OF THE ACT OTHER THAN INCOME T AX ACT, IN OUR VIEW CANNOT BE A GROUND FOR NOT GRANTING APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT. THE INCOME TAX ACT IS SELF-CONTAINED ACT AND A CODE IN ITSELF. THE AUTHORITIES ACTING UNDER THE DICTATE OF THE INCOME TAX ACT HAS TO REST RAIN THEMSELVES WITHIN THE PROVISIONS OF THE INCOME TAX ACT ONLY. NOWHERE IN T HE PROVISIONS OF THE ACT IT HAS BEEN PRESCRIBED THAT NONCOMPLIANCE OF ANY PROVISION S OF ANY OTHER ACT WOULD LEAD TO DENIAL OF REGISTRATION UNDER THIS ACT. THIS VIEW HAS BEEN SUBSCRIBED BY THE DELHI BENCH OF THE I.T.A.T. IN THE CASE OF CIVIL SE RVICES SOCIETY VS. DIT (EXEMPTION) 93 DTR 314 (DEL) IN THE FOLLOWING TERM : 6.2 NO DOUBT TO HAVE A SOCIAL CONSCIENCE IS A LAUD ABLE HUMAN DESIRE AND THE DESIRE TO ENSURE COMPLIANCE IN 9 LETTER AND SPIRIT TO THE STATED GOVERNMENT POLICY NECESSARILY OUGHT TO THROB IN THE HEART OF EACH AND EVERY CITIZEN. HOWEVER, WHILE ADJUDICATING ON THE ISSUES WHICH ARISE FOR DETERMIN ATION UNDER THE INCOME-TAX ACT WHICH IS A CENTRAL ACT ENSHRINED IN 'LIST I' OF THE CONSTITUTION OF INDIA THE TAX ADJUDICATOR/JUDGE EMPOWERED BY A CENTRAL ACT CANNOT USURP THE POWER AND ROLE OF AN AUTHORITY WHICH AS PER THE CONSTITUTIONA L SCHEME HAS BEEN ENTRUSTED UPON THE STATE ADMINISTRATION AND IN THIS CASE ON T HE DEPARTMENT OF EDUCATION, GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI. AN AUTHORITY CONSTITUTED UNDER THE CENTRAL ACT HEREIN THE INDIAN INCOME TAX ACT CA NNOT ACT ON THE BASIS OF ITS OWN PERSONAL BELIEFS AND PHILOSOPHY HOWEVER LAUDABL E, THEY MAY BE AS THEY HAVE NO ROLE TO PLAY AS THE ISSUES ARE TO BE DECIDE D AND CONCLUDED ON THE BASIS OF RULES AND PROVISIONS OF THE INCOME-TAX ACT, HERE IN - SECTION 2(15) OF THE ACT. THE DECISIONS ARE NOT TO BE COLOURED OR STAINED BY PERS ONAL WHIMS AND BIASES AND ARE TO BE ILLUMINATED BY THE INCOME TAX ACT SECTION 2(15) OF THE INCOME TAX ACT. 6 12. THE PROVISIONS OF SECTION 10(23C)(VI) OF THE AC T IS QUITE CLEAR TO THE FACT THAT THE ONLY REASON FOR DENIAL OF SAID EXEMPTION CAN BE THE CASE WHERE THE OFFICER IS NOT SATISFIED AS TO THE GENUINENESS OF THE ACTIVITI ES OF THE ASSESSEE. BY NOT APPLYING THE PROVISIONS OF THE RIGHT TO EDUCATION A CT, IT CANNOT BE SAID THAT THE ASSESSEE IS NOT DOING ANY GENUINE EDUCATIONAL ACTIV ITIES. FOR NON-COMPLIANCE OF RIGHT TO EDUCATION ACT, THERE IS A SPECIFIC APPROPR IATE AUTHORITY WHICH MAY TAKE ACTION AGAINST THE ASSESSEE. OTHERWISE ALSO, AS STA TED BY US EARLIER, THE RTE PROVISIONS ARE NOT APPLICABLE TO THE ASSESSEE BEING AN UNAIDED SOCIETY. IT IS NOT OPEN TO THE INCOME TAX DEPARTMENT TO TAKE ANY SUCH STEP. THERE MAY BE SOME PROVISIONS IN THE 10 RELEVANT ACT FOR THE CONSEQUEN CES OF SUCH NON-COMPLIANCE BUT IT CAN CERTAINLY NOT BE IN THE FORM OF NOT GRAN TING APPROVAL TO THE ASSESSEE UNDER THE INCOME TAX ACT. 13. SINCE THE PRINCIPAL CHIEF COMMISSIONER OF INCOM E TAX HAS NOT DOUBTED THE GENUINENESS OF THE ACTIVITIES OF THE SOCIETY, WE HE REBY DIRECT HIM TO GRANT REGISTRATION UNDER SECTION 10(23C) OF THE ACT.. RESPECTFULLY FOLLOWING THE ABOVE DECISION AND IN VI EW OF THE FACT THAT THE SCHOOL IS NOT COVERED UNDER THE RTE ACT, WE SET ASIDE THE ORDER OF THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX AND DIRECT HIM TO GRANT REGISTRATION TO THE ASSESSEE SOCIETY UNDER 10(23C)(VI). 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26/04/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR