M/s Kids-R-Kids International Educational & Social Welfare Trust, Chandigarh V. Pr. Chief Commissioner of Income Tax, Chandigarh

ITA 781/CHANDI/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8426 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 21-12-2015
• Assessment Year: 2014-2015
• Appeal Filed On: 13-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 12AA; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.781/CHD/2015 (ASSESSMENT YEAR : 2014-15) M/S KIDS-R-KIDS INTERNATIONAL VS. THE PR.C.C.I.T., EDUCATIONAL & SOCIAL WELFARE TRUST, N.W. REGION, SECTOR 42-C, AAYAKAR BHAWAN, CHANDIGARH. SECTOR 17-E, CHANDIGARH. PAN: AAATK4520H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL BATRA RESPONDENT BY : SHRI MANOJ MISHRA, CIT DR DATE OF HEARING : 19.01.2016 DATE OF PRONOUNCEMENT : 10.03.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED PRINCIPAL CHIEF COMMIS SIONER OF INCOME TAX, CHANDIGARH DATED 30.9.2015 FOR ASSESSMENT YEAR 2014-15, REJECTING THE APPLICATION OF THE ASSESSEE FOR APPROVAL UNDER SECTION 10(23C)(VI) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SOCIETY RUNNING AN EDUCATIONAL INSTIT UTION IN THE NAME OF KIDS-R-KIDS IN SECTOR 42, CHANDIGARH, WHICH IS FROM PLAY WAYS TO CLASS VIII LEVEL. IT IS A REG ISTERED TRUST, WHEREBY THE TRUST DEED WAS REGISTERED BY SUB REGISTRAR, CHANDIGARH ON 29.11.2000. IT IS ALSO RE GISTERED UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) BY CIT-II, CHANDIGARH VIDE HIS ORDER DAT ED 28..12.2012. DURING THE YEAR, THE ASSESSEE TRUST A PPLIED FOR GRANT OF EXEMPTION UNDER SECTION 10(23C), CLAUS E (VI) OF THE ACT VIDE APPLICATION DATED 24.9.2014 IN FORM NO.56D. THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX ISSUED A LETTER TO THE SOCIETY CALLING FOR CERTAIN INFORMATION INCLUDING INFORMATION ABOUT THE COMPLIA NCE MADE TO RIGHT OF CHILDREN TO FREE & COMPULSORY EDUCATION ACT, 2009 (RTE ACT) REGARDING ENROLMENT OF STUDENTS RELATED TO EWS CATEGORY IN ALL CLASSES, PARTICULARLY AT ENTRY LEVEL. THE ASSESSEE VIDE ITS LETTER DATED 21.9.2015 STATED THAT IT IS A SCHOOL RECOGNIZ ED BY EDUCATION DEPARTMENT, CHANDIGARH ADMINISTRATION AND IS NOT COVERED UNDER EWS CATEGORY BECAUSE OF EXEMPTION GIVEN TO THE UNAIDED MINORITY SCHOOLS. THE PRINCIP AL CHIEF COMMISSIONER OF INCOME TAX CONFRONTED THE ASS ESSEE THAT UNDER THE RIGHT OF CHILDREN TO FREE & COMPULSO RY EDUCATION ACT, 2009, THERE IS NO EXCEPTION MADE FOR UNAIDED MINORITY SCHOOLS. THE ASSESSEE COULD NOT B RING ANY EXCEPTION PROVIDED TO MINORITY INSTITUTIONS UND ER THE ACT. IN THIS WAY, THE PRINCIPAL CHIEF COMMISSIONER OF 3 INCOME TAX HELD THAT EVEN AN UNAIDED SCHOOL IS RE QUIRED TO COMPLY WITH THE PROVISIONS OF RIGHT OF CHILDREN TO FREE & COMPULSORY EDUCATION ACT, 2009 AND IN THIS WAY, H E REJECTED THE APPLICATION OF THE ASSESSEE FOR APPROV AL UNDER SECTION 20(23C)(VI) OF THE ACT. 3. AGGRIEVED BY THIS, THE ASSESSEE HAS COME UP IN APPEAL, RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE ORDER OF THE LD. PR. CHIEF COMMISSIONER OF INCOME TAX IS ILLEGAL BAD, AND AGAINST FACTS & LAW. 2. THAT THE LD. PR. CHIEF COMMISSIONER OF INCOME TAX, CONTRARANY TO THE FACTS AVAILABLE ON RECORD, HAS ERR ED IN CONCLUDING THAT THE TRUST/ APPELLANT IS NOT EXISTING SOLELY FOR EDUCATIONAL PURPOSES, AND HENCE NOT ENTITLED TO THE EXEMPTION AVAILABLE U/S 10(23C) (VI) OF THE INCOME TAX ACT, 1961. THE TRUST BE GRANTED THE EXEMPTION UNDER THE SAID SECTION. 3. THE LD. PR. CHIEF COMMISSIONER OF INCOME TAX, BY RELAYING EXCLUSIVELY ON THE PROVISION OF THE RIGHT OF CHILDREN TO FREE AND COMPULSORY EDUCATION ACT, 2009 , FOR DENYING THE EXEMPTION U/S 10(23C)(VI) OF THE IN COME TAX ACT, NOT ONLY HAS ACTED CONTRARY TO PROVISION O F THE INCOME TAX ACT, 1961 BUT HAS GRAVELY ERRED IS INVOKING AND ASSUMING AUTHORITY UNDER A ALIEN ACT. THE TRUST BE GRANTED EXEMPTION UNDER THE SAID SECTIO N. 4. THAT BOTH THE INCOME TAX ACT, 1961 & THE RIGHT OF CHILDREN TO FREE AND COMPULSORY EDUCATION ACT, 2009 ' ARE MUTUALLY EXCLUSIVE. DENIAL OF EXEMPTION U/S 10 (23 C) (VI) OF THE INCOME TAX ACT, 1961 FOR VIOLATION OF PROVISION OF ANOTHER ACT. VIZ THE RIGHT OF CHILD REN TO FREE AND COMPULSORY EDUCATION ACT,2009, IS ARBITRARY , UNFAIR & UNJUST. THE APPELLANT BE GRANTED EXEMPTION 4 U/S 10 (23 C) (VI) OF THE INCOME TAX ACT, 1961. 5. THE TRUST HAD MOVED APPLICATION FOR GRANT OF REGISTRATION U/S 10 (23C) (VI) OF THE ACT FOR THE A.Y . 2014-15 ON 24-09-2014, WHICH WAS TAKEN UP FOR CONSIDERATION ON 29 TH SEPTEMBER 2015 AT 3:30 PM. THE LD. PR. CHIEF COMMISSIONER OF INCOME TAX, BY CONFRONTING THE ASSESSEE WITH THE RTE ON THE LAST MOMENT, HAS DEPRIVED THE ASSESSEE OF REASONABL E OPPORTUNITY AND HAS PASSED ON ORDER IN TOTAL VIOLATI ON OF THE PRINCIPLES OF NATURAL JUSTICE. THE ORDER OF THE LD. PR. CHIEF COMMISSIONER OF INCOME TAX BEING ARBI TRARY, AGAINST THE PRINCIPLES OF NATURAL JUSTICE BE ANNULL ED. 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR DELETE ANY OF THE GROUND OF APPEAL BEFORE THE SAME IS TAKEN UP FOR FINAL DISPOSAL. 4. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE ARGU ING BEFORE US, ACCEPTED THE FACT THAT EVEN THE UNAIDED SCHOOLS WERE REQUIRED TO COMPLY WITH THE PROVISIONS OF RIGHT OF CHILDREN TO FREE & COMPULSORY EDUCATION AS PER THE JUDGMENT OF HON'BLE SUPREME COURT, THREE JUDGES BENCH IN THE CASE OF S OCIETY FOR UN-AIDED PRIVATE SCHOOLS OF RAJASTHAN VS. UOI & ANR ., WP NO.95 OF 2010, DATED 12.4.2014 HOWEVER, AS PER A LATEST JUDGMENT OF THE HON'BLE SUPREME COURT, FIVE JUDGES BENCH IN THE CASE OF PRAMATI EDUCATIONAL & CULTURAL TRUST & ORS. VS. UOI & ANR., WP NO.152 OF 2013, DATED 6.5.2014, IT HAS BEEN HE LD THAT RTE CANNOT BE ENFORCED AGAINST THE UNAIDED SCHOOLS BOTH MINORITY AS WELL AS NON-MINORITY. THE CONTENTION OF THE LEAR NED COUNSEL FOR THE ASSESSEE WAS THAT EVEN IF IT HAS NOT CO MPLIED WITH THE PROVISIONS OF RIGHT TO EDUCATION ACT, IT HAS NOT YET BEEN DE-RECOGNIZED BY THE APPROPRIATE AUTHORITY. IT HAS BEEN 5 GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT AND HAS BEEN RUNNING EDUCATIONAL INSTITUTION IN THE NAM E OF KIDS-R-KIDS INTERNATIONAL EDUCATIONAL & SOCIAL WELF ARE TRUST. IT WAS STATED THAT THE APPROVAL UNDER SECTI ON 10(23C)(VI) OF THE ACT SHOULD NOT BE DENIED TO THE ASSESSEE ONLY BECAUSE IT HAS NOT COMPLIED WITH ONE OF THE CONDITIONS OF RIGHT TO EDUCATION ACT. THE PRINCIPA L CHIEF COMMISSIONER OF INCOME TAX HAS NOT COMMENTED ON THE ACTIVITIES OF THE SOCIETY AND JUST ON THIS BASIS HA S REJECTED THE APPLICATION OF THE ASSESSEE. 5. THE LEARNED D.R. RELIED ON THE ORDER OF THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX AND FURT HER STATED THAT THE SCHOOL WAS BEING RUN IN CONTRAVENTI ON TO THE PROVISIONS OF THE RIGHT TO EDUCATION ACT. THER EFORE, NO APPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT SH OULD BE GIVEN TO IT. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSES SEE IS RUNNING AN UNAIDED SCHOOL AND IS ALSO NOT COMPLYING WITH ONE OF THE CONDITIONS OF THE RIGHT TO EDUCATION ACT . ONLY ON THIS BASIS, THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX HAS DENIED IT THE APPROVAL UNDER SECTION 10(23C )(VI) OF THE ACT. 6 7. THE PROVISIONS OF SECTION 10(23C)(VI) OF THE AC T READS AS UNDER : ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXIS TING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PRO FIT, OTHER THAN THOSE MENTIONED IN SUB-CLAUSE (IIIAB) OR SUB -CLAUS E (IIIAD) AND WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY. 8. THE RECOGNITION UNDER THIS SECTION IS GIVEN TO AN INSTITUTION WHICH EXISTS SOLELY FOR EDUCATIONAL PUR POSE AND THE CONDITION IS THAT THIS IS NOT RUNNING FOR T HE PURPOSE OF PROFITS. ANOTHER CONDITION IS THAT IT H AS TO BE APPROVED BY THE PRESCRIBED AUTHORITY. THE PRESCRIB ED AUTHORITY IS DEFINED UNDER RULE 2CA OF THE INCOME T AX RULES. SINCE THE PRESENT ISSUE DOES NOT INVOLVE TH E SAME, WE ARE NOT GOING INTO THAT. THERE ARE TWO PROVISO ATTACHED TO SECTION 10(23C) OF THE ACT WHICH ARE RELEVANT TO DECIDE THE ISSUE IN QUESTION. THE PROVISIONS READ AS UNDE R : PROVIDED THAT THE FUND OR TRUST OR INSTITUTION [OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION] REFERRED TO IN SUB-CLAUSE (IV) OR SUB-CLAUSE (V) [OR SUB- CLAUSE (IV) OR SUB-CLAUSE (VIA) SHALL MAKE AN APPLICATION IN THE PRESCRIBED FORM AND MANNER TO THE PRESCRIBED AUTHORITY FOR THE PURPOSE OF GRANT OF THE EXEMPTION, OR CONTINUANCE THEREOF, UNDER SUB-CLAUSE (IV) OR SUB-CLAUSE (V) [OR SUB-CLAUSE (VI) OR SUB-CLAUSE (VIA)]. PROVIDED FURTHER THAT THE PRESCRIBED AUTHORITY, BEFORE APPROVING ANY FUND OR TRUST OR INSTITUTION OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL 7 INSTITUTION, UNDER SUB-CLAUSE (IV) OR SUB-CLAUSE (V ) OR SUB-CLAUSE(VI) OR SUB CLAUSE (VIA), MAY CALL FOR SUCH DOCUMENTS (INCLUDING AUDITED ANNUAL ACCOUNTS) OR INFORMATION FROM THE FUND OR TRUST OR INSTITUTION OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION, AS THE CASE MAY BE, AS IT THINKS NECESSARY IN ORDER TO SATISFY ITSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF SUCH FUND OR TRUST OR INSTITUTION OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION, AS THE CASE MAY BE, AND THE PRESCRIBED AUTHORITY MAY ALSO MAKE SUCH INQUIRIES AS T DEEMS NECESSARY IN THIS BEHALF. 9. AS PER THESE, THE ASSESSEE WHO WANTS TO GET APPROVED UNDER SECTION 10(23C)(VI) OF THE ACT HAS T O MAKE AN APPLICATION TO THE PRESCRIBED AUTHORITY IN THE PRESCRIBED FORM, WHICH IS FORM NO.56. AFTER RECEIV ING THE SAID FORM THE PRESCRIBED AUTHORITY HAS TO GIVE APPR OVAL TO THE ASSESSEE AND FOR GRANTING APPROVAL THE AUTHORIT Y IS GIVEN POWERS TO CALL FOR ANY EVIDENCE OR RECORD WHI CH HE THINKS NECESSARY BEFORE ACCORDING THE SAID APPROVAL . THE LANGUAGE OF SECOND PROVISO IS VERY CLEAR AND UNAMBI GUOUS TO THE EFFECT THAT THIS INFORMATION, THE PRESCRIBED AUTHORITY CAN ASK FOR SHOULD BE IN ORDER TO SATISF Y ITSELF ABOUT THE GENUINENESS OF THE ACTIVITIES. IN VIEW OF THIS, WE UNDERSTAND THAT THE ONLY REQUIREMENT FOR GRANTIN G REGISTRATION UNDER THIS SECTION IS SSATISFACTION OF THE PRESCRIBED AUTHORITY WITH REGARD TO THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE. VERY CONVENIENTLY, WE CAN CONCLUDE THAT FOR GRANTING REGISTRATION, THE PRESCR IBED 8 AUTHORITY HAS TO DO WHATEVER HE THINKS FIT IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVI TIES OF THE TRUST. 10. NOW IN THIS BACKGROUND WE WILL ANALYSIS THE FACTS OF THE PRESENT CASE. THERE IS NO DOUBT TO TH E FACT THAT THE ASSESSEE IS A TRUST REGISTERED UNDER SECTI ON 12AA OF THE ACT WHICH MAKES IT QUITE CLEAR THAT THE ASSE SSEE IS PURSUING CHARITABLE ACTIVITIES, OTHERWISE ALSO, NO DOUBT HAS BEEN CAST ON THE FACT THAT THE ASSESSEE IS CARR YING ON EDUCATIONAL ACTIVITIES AND THE EDUCATION PER-SE IS A CHARITABLE ACTIVITY. 11. AS REGARDS THE GENUINENESS OF THE ACTIVITIES B Y NOT COMPLYING THE CONDITIONS PRESCRIBED UNDER ANY O F THE ACT OTHER THAN INCOME TAX ACT, IN OUR VIEW CANNOT B E A GROUND FOR NOT GRANTING APPROVAL UNDER SECTION 10(2 3C)(VI) OF THE ACT. THE INCOME TAX ACT IS SELF-CONTAINED A CT AND A CODE IN ITSELF. THE AUTHORITIES ACTING UNDER THE D ICTATE OF THE INCOME TAX ACT HAS TO RESTRAIN THEMSELVES WITHI N THE PROVISIONS OF THE INCOME TAX ACT ONLY. NOWHERE IN THE PROVISIONS OF THE ACT IT HAS BEEN PRESCRIBED THAT N ON- COMPLIANCE OF ANY PROVISIONS OF ANY OTHER ACT WOULD LEAD TO DENIAL OF REGISTRATION UNDER THIS ACT. THIS VIE W HAS BEEN SUBSCRIBED BY THE DELHI BENCH OF THE I.T.A.T. IN THE CASE OF CIVIL SERVICES SOCIETY VS. DIT (EXEMPTION) 93 DTR 314 (DEL) IN THE FOLLOWING TERM : 6.2 NO DOUBT TO HAVE A SOCIAL CONSCIENCE IS A LAUDAB LE 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 DETERMINATION 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 CONSTITUTIONAL SCHEME HAS BEEN ENTRUSTED UPON THE STATE ADMINISTRATION AND IN THIS CASE ON THE DEPARTMENT OF EDUCATION, GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI. AN AUTHORITY CONSTITUTED UNDER THE CENTRAL ACT HEREIN THE INDIAN INCOME TAX ACT CANNOT ACT ON THE BASIS OF ITS OWN PERSONAL BELIEFS AND PHILOSOPHY HOWEVER LAUDABLE, THEY MAY BE AS THEY HAVE NO ROLE TO PLAY AS THE ISSUES AR E TO BE DECIDED AND CONCLUDED ON THE BASIS OF RULES AND PROVISIONS OF THE INCOME-TAX ACT, HEREIN - SECTION 2(1 5) OF THE ACT. THE DECISIONS ARE NOT TO BE COLOURED OR STAI NED BY PERSONAL WHIMS AND BIASES AND ARE TO BE ILLUMINATED BY THE INCOME TAX ACT SECTION 2(15) OF THE INCOME TAX ACT. 12. THE PROVISIONS OF SECTION 10(23C)(VI) OF THE A CT IS QUITE CLEAR TO THE FACT THAT THE ONLY REASON FOR DENIAL O F SAID EXEMPTION CAN BE THE CASE WHERE THE OFFICER IS NOT SATISFIED AS T O THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE. BY NOT APPLYING TH E PROVISIONS OF THE RIGHT TO EDUCATION ACT, IT CANNOT BE SAID THAT THE ASSESSEE IS NOT DOING ANY GENUINE EDUCATIONAL ACTIVITIES. FOR NON-COMPLI ANCE OF RIGHT TO EDUCATION ACT, THERE IS A SPECIFIC APPROPRIATE AUTH ORITY WHICH MAY TAKE ACTION AGAINST THE ASSESSEE. OTHERWISE ALSO, AS STATED BY US EARLIER, THE RTE PROVISIONS ARE NOT APPLICABLE TO T HE ASSESSEE BEING AN UNAIDED SOCIETY. IT IS NOT OPEN TO THE INCOME TAX DEPARTMENT TO TAKE ANY SUCH STEP. THERE MAY BE SOME PROVISIO NS IN THE 10 RELEVANT ACT FOR THE CONSEQUENCES OF SUCH NON-COMPL IANCE 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 INCOME TAX HAS NOT DOUBTED THE GENUINENESS OF THE ACTIVITIES OF THE SOCIETY, WE HEREBY DIRECT HIM TO GRANT REGISTRATION UNDER SECTION 10(23C) OF THE ACT. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF FEBRUARY, 2016. SD/- SD/- (BHAVNESH SAINI) (RANO JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10 TH MARCH, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH