Shiv Raj Sharma Shiksha Samiti, Gautam Budh Nagar V. Commissioner of Income Tax (Exemptions), Lucknow

ITA 78/LKW/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0213 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 27-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 05-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MADHUK
• Assessee Lawyers: JAGDISH
• Keywords: Charitable institution; Set aside
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI. A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 78/LKW/2018 ASSESSMENT YEAR: N.A. SHIV RAJ SHARMA SHIKSHA SAMITI BILASPUR, TEHSIL SADAR GREAT ER NOIDA GAUTAM BUDH NAGAR V. CIT (EXEMPTIONS) LUCKNOW T AN /PAN : AAEAS1186J (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI JAGDISH, ADVOCATE RESPONDENT BY: SHRI S. K. MADHUK, CIT (DR) DATE OF HEARING: 16 0 5 201 9 DATE OF PRONOUNCEMENT: 16 0 5 201 9 O R D E R PER A. D. JAIN, V.P . : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE LD. CIT(A) DATED 11/12/2017, REFUSING TO GRANT APPROVAL UNDER SECTION 80G(5) OF THE INCOME - TAX ACT, 1961. 2 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED AN APPLICATIO N FOR APPROVAL UNDER SECTION 80G(5) OF THE ACT ON 7/6/2017 WITH THE CIT (EXEMPTIONS), LUCKNOW. THE LD. CIT (EXEMPTIONS), REJECTED THE APPLICATION AND DISMISSED THE APPEAL OF THE ASSESSEE , OBSERVING , AS BELOW : 3. I HAVE CONSIDERED T HE MATERIAL AVAILABLE ON RECORD. IT IS IMPORTANT TO NOTE THAT AS P ER NORMS MANDATED BY LAW MERE SUBMISSION OF DOCUMENTS IS NOT THE S O LE CRITERIA FOR APPROVAL U/S 80G(5) OF THE INCOME TAX ACT, 1961 . THE APPROVAL U/S 8 0G(5) IS NOT A MECHANICA L PROCESS WHEREIN THE AC COR DI NG OF RE GISTRAT ION OF U/S 1 2AA/1 0 (23C) OF THE INCOME TAX ACT, 1961 AND FILING OF DOCUMENTS AT ONE END WOULD RESULT IN THE ISSUANCE OF APPROVAL U/S 80G(5) AT THE OTHER . IT IS IMPORTANT THAT THE ITA NO.78/LKW/2018 PAGE 2 OF 5 APPLICATION AND THE SUPPORTING DOCUMENTS DULY PASS THE TEST AS MANDATED BY LAW FOR ACCORDING THE RECOGNITION U/S 80G(5) . IT APPEARS FROM THE MATE RIAL AVAILABLE ON RECORD THAT THE APPLICANT I S UNDER MISAPPREHENSION THAT MERE FILING OF DOCUMENTS INCLUDING THOSE THAT ARE COMPLETELY IRRELEVANT TO THE PRESENT PROCEEDINGS, SOMEHOW PROVES HIS CLAIM . THIS IS NOT WHAT IS LAID DOWN BY THE LAW AND THE RELEVANT MATERIAL NEEDS TO BE EXAMINED IN THE LIGHT OF THE PROVISIONS OF THE ACT . 3 . THE SUBMISSION OF THE LD. A.R. OF THE ASSESSEE BEFORE US WA S THAT , FIRST THE HEADING OF THE ORDER PASSED BY THE LD. CIT (EXEMPTIONS) IS NOT CORRECT, AS WHILE DECIDING THE APPLICATION MOVED BY THE ASSESSEE FOR APPROVAL UNDER SECTION 80G OF THE ACT, THE HEADING OF THE ORDER HAS BEEN MENTIONED AS ORDER UNDER SECTION 12AA(1)(B)(II) OF THE ACT. THEREFORE, THERE WAS NO APPLICATION OF MIND BY THE LD. CIT(E) WHILE DECIDING THE APPLICATION MOVED BY THE ASSESSEE FOR APPROVAL UNDER SECTION 80G OF THE ACT. IT WAS FURTHER CONTENDED BY THE LD. A.R. OF THE ASSESSEE THAT THE ASSESSEE IS A SOCIETY PROVIDING RELIEF TO THE P OOR BY WAY OF PROVIDING FREE EDUCATION, ETC., WHICH FALLS UNDER THE PROVISIONS OF SECTION 2(15) OF THE ACT; THAT THE ASSESSEE SOCIETY IS ALSO RUNNING EDUCATIONAL INSTITUTIONS AND PROVIDING EDUCATION IN DIFFERENT FIELDS; THAT THE ASSESSEE FILED APPLICATION FOR APPROVAL UNDER SECTION 80G(5)(VI) OF THE ACT IN FORM NO.10G AS REQUIRED UNDER RULE 11AA OF THE I.T. RULES ALONG THE COP IES OF THE OBJECTS OF THE INSTITUTION/FUND AND THE NAMES AND ADDRESSES OF THE OFFICE BEARERS; THAT IT WAS ALSO MENTIONED THEREIN THA T THE ASSESSEE SOCIETY HAS BEEN GRANTED REGISTRATION UNDER SECTION 12AA(1)(B)(I) OF THE ACT BY THE LD. CIT(E), LUCKNOW AND THE SAME IS STILL CONTINUING; THAT THE ASSESSEE SOCIETY HAD FILED REPLY IN RESPONSE TO THE QUERIES RAISED BY THE LD. CIT(E) VIDE LETT ER DATED 25/10/2017; AND THAT THE LD. CIT(E) REJECTED THE APPLICATION CONCLUDING THAT THE ASSESSEE SOCIETY IS NOT ENGAGED IN ANY CHARITABLE PURPOSE, WHICH IS NOT CORRECT. THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THE REASONS GIVEN BY THE LD. CIT(E) FOR REJECTING THE APPLICATION OF THE ASSESSEE SOCIETY, ARE NOT ITA NO.78/LKW/2018 PAGE 3 OF 5 CORRECT AND JUSTIFIABLE AND IS BASED ON SURMISES AND CONJECTURES. THEREFORE, THE ORDER OF THE LD. CIT(E) MAY BE QUASHED AND HE MAY BE DIRECTED TO GRANT APPROVAL TO THE ASSESSEE SOCIETY UNDER SECTI ON 80G(5)(VI) OF THE ACT. THE LD. A.R. OF THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS: ( I ) KALYANAM KAROTI VS. CIT [2009] 124 TTJ 825 (LKO) ( II ) HIRALAL BHAGWATI VS. CIT [2000] 246 ITR 188 (GUJ) ( III ) ACIT VS. SURAT CITY GYMKHANA [2008] 300 ITR 214 4 . THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(E). 5 . HEARD. WE FIND THAT THE LD. CIT (E) HAD REJECTED THE APPLICATION FILED BY THE ASSESSEE FOR APPROVAL UNDER SECTION 80G(5)(VI) OF THE ACT, OBSERVING THAT THE ASSESSEE SOC IETY IS NOT ENGAGED IN ANY CHARITABLE ACTIVITY ; AND THAT THE DOCUMENTS FURNISHED BY THE ASSESSEE SOCIETY SHOWS T HAT THE ASSESSEE SOCIETY HAS NOT WORKED TOWARDS THE PERFORMANCE OF THE OBJECTS SET OUT IN THE MEMORANDUM OF THE SOCIETY . THEREFORE , THE ASSESSE E SOCIETY HAS FAILED TO ACCOMPLISH THE GOALS SET BY THE LAW FOR ACCORDING THE APPROVAL. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SECTION 12AA(1)(B)(I) OF THE ACT BY THE LD. CIT(E), LUCKNOW AND THE SAME IS STILL CONTIN UING . T HE REGISTRATION SO GRANTED TO THE ASSESSEE SOCIETY UNDER SECTION 12AA OF THE ACT IS STILL CONTINUING SHOWS THAT THE ACTIVITIES BEING CARRIED OUT BY THE ASSESSEE SOCIETY ARE CHARITABLE IN NATURE AND ONCE THE ASSESSEE SOCIETY IS IN POSSESSION OF REGI STRATION UNDER SECTION 12AA OF THE ACT, GRANTING OF APPROVAL UNDER SECTION 80G(5)(VI) OF THE ACT, IN OUR OPINION, IS CONSEQUENTIAL. 6 . IT IS WELL SETTLED POSITION OF LAW THAT AT THE TIME OF GRANTING APPROVAL UNDER SECTION 80G OF THE ACT, WHAT IS TO BE EXAMINE D IS THE OBJECT OF THE TRUST AND SO FAR AS THE ASPECT OF INCOME IS CONCERNED, THE SAME CAN BE VERY WELL EXAMINED BY THE AO AT THE TIME OF FRAMING ITA NO.78/LKW/2018 PAGE 4 OF 5 ASSESSMENT. WE NOTE THAT AT THE TIME OF GRANTING APPROVAL U/S 80G OF THE ACT , ONLY THE OBJECT OF TRUST IS REQ UIRED TO BE EXAMINED AND, THEREFORE, ASSESSEE'S APPLICATION SEEKING APPROVAL U/S. 80G(5) OF THE ACT COULD NOT BE REJECTED ON GROUND THAT THE ASSESSEE SOCIETY IS NOT ENGAGED IN CHARITABLE ACTIVITIES. 7 . IN HIRALAL BHAGWATI VS. CIT (SUPRA) , THE HON'BLE GUJARA T HIGH COURT HAS HELD THAT ONCE THE REGISTRATION UNDER SECTION 12A(1) OF THE ACT WAS GRANTED, THE INCOME TAX OFFICER WAS NOT JUSTIFIED IN REFUSING THE BENEFITS ON THE GROUND THAT IT WAS NOT FOR THE BENEFIT OF THE PUBLIC AT LARGE. 8 . IN ACIT VS. SURAT CITY GY MKHANA (SUPRA), THE HON'BLE SUPREME COURT HELD THAT THE REGISTRATION OF A TRUST UNDER SECTION 12A OF THE INCOME - TAX ACT, 1961, ONCE DONE IS A FAIT ACCOMPLI AND THE A.O CANNOT THEREAFTER MAKE FURTHER PROBE INTO THE OBJECTS OF THE TRUST. 9 . IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX AND RESTORE THE MATTER TO HIS FILE FOR RE - ADJUDICATION OF THE REQUEST OF THE ASSESSEE FOR APPROVAL UNDER SECTION 80G(5) OF THE ACT , AS PER LAW. 10 . IN THE RESULT, FOR STATISTICAL PURPOSE S, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 / 0 5 /201 9 . SD/ - SD/ - [ T. S. KAPOOR ] [ A. D. JAIN ] ACCOUNTANT MEMBER VICE PRESIDENT DATED: 16 /0 5 / 201 9 JJ: 1605 ITA NO.78/LKW/2018 PAGE 5 OF 5 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR BY ORDER ASSISTANT REGISTRAR