CYBERSTAR EDUCATION SOCIETY, LUDHIANA V. COMMISSIONER OF INCOME TAX(EXEMPTIONS), CHANDIGARH

ITA 795/ASR/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9322 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-05-2019
• Assessment Year: 2017-2018
• Appeal Filed On: 28-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR DEVENDER SING H LD
• Assessee Lawyers: SUDHIR SEH GAL LD
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N.S.SAINI, ACCOUNTANT MEM BER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.795(ASR)/2017 ASSESSMENT YEAR:20 17-18 CYBERSTAR EDUCATIONAL SOCIETY, 9-A, MAIN ROAD, NEAR BASTI JODHEWAL, SUNDER NAGAR, LUDHIANA. [PAN:AACAC-5675Q] VS. THE CIT (EXEMPTIONS), CHANDIGARH. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SUDHIR SEH GAL, LD. AR RESPONDENT BY: DR. DEVENDER SIN GH (LD. CIT-DR) DATE OF HEARING: 20.05.2019 DATE OF PRONOUNCEMENT: 21.06.2019 ORDER PER N.K.CHOUDHRY, JM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE SOCIETY AGAINST THE ORDER DATED 25.10.2017 IMPUGNED HEREIN, PASSED BY THE LD. CIT(EXEMPTIONS), CHANDIGARH U/S 12AA OF THE I .T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT), WHEREBY THE APPLICATION FOR GRANT OF REGISTRATION U/S 12A OF THE ACT WAS REJECTE D. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE APPLICANT SOCIE TY IS AN ONGOING ENTITY AND IS IN OPERATION SINCE 03/07/2015 HAVING FOLLOWING AIMS AND OBJECTS. TO PRESCRIBE AND CONDUCT COURSES OF STUDY, EDUCATIO N AND RESEARCH, TO ORGANIZE AND PROVIDE KNOWLEDGE AND EDUCATION IN ONE OR MORE ASPECTS OF DEVELOPMENT, TO OPEN, RUN AND MANAGE EDUCATIONAL INSTITUTIONS FOR T HE ITA NO.795/ASR/2017 (A.Y.2017-18) CYBERSTAR EDUCATIONAL SOCIET Y VS. CIT(E) 2 DEVELOPMENT IN ANY STREAMS OF EDUCATION WITH ASSISTANCE, TO PROMOTE EDUCATION, INDUSTRIAL TRAINI NG, MEDICAL RELIEF, CHARITABLE OBJECTIVES, TO LAY DOWN STANDARDS OF PROFICIENCY TO BE DEMONSTRATED BEFORE THE AWARD OF DEGREES, TO INSTITUTE AND AWARD FELLOWSHIP S, SCHOLARSHIPS, PRIZES AND MODELS, TO HOLD SEMINARS, CONFERENCES, WORKSHOPS FOR DISSEMINATION OF KNOWLED GE AND EDUCATION OF COMMERCIAL LAWS, TAX LAWS FOR THE BENEFIT OF THE PUBLIC, TO FRAME RULES AND REGULATIO NS AND BYE LAWS FOR THE CONDUCT OF AFFAIRS OF THE ASSOCIAT ION AND TO ADD TO AMEND OR REPEAL FROM TIME TO TIME, TO DEA L WITH ANY PROPERTY BELONGING TO OR VESTED IN THE ASSOCIAT ION SO AS TO SUIT ITS BEST INTEREST, TO PURCHASE TAKE ON L EASE OR OTHERWISE ACQUIRE IMMOVABLE OR MOVABLE PROPERTIES F OR THE CONSTRUCTION OF THE HOSPITAL BUILDING AND ITS S CIENTIFIC LATEST EQUIPMENT, TO PRINT AND PUBLISH ANY NEWSPAPE RS, PERIODICALS THAT THE SOCIETY MAY THINK DESIRABLE FO R THE PROMOTION OF ITS OBJECTS AND DISSEMINATION OF KNOWL EDGE AND INFORMATION, ALL THE EXPENDITURE OF THE SOCIETY SHALL BE MET FROM THE DONATIONS OF THE MEMBERS/PA IRONS/GOVERNMENT GRANTS AND SUCH OTHER DONORS, TO D O ALL OTHER LAWFUL THINGS AS ARE INCIDENTAL OR CONDUC IVE OR MAY BE NECESSARY IN THE INTERESTS OF THE SOCIETY OR OF THE ABOVE OBJECTIVES OF THE SOCIETY DIRECTLY OR INDIREC TLY. 2.1 THE APPLICANT SOCIETY HAD APPLIED FOR REGISTRATION U/S 12AA OF THE ACT ON DATED 28/04/2017 BEFORE THE LD. CIT(E) WHO WHILE FIXING THE DATE OF HEARING ON 29/08/2017 REQUESTED T HE APPLICANT SOCIETY TO FILE THE DETAILS/CLARIFICATIONS ON 12/09/20 17 AS MENTIONED IN PARA NO.5 OF THE IMPUGNED ORDER. THE R EPLY WAS FILED BY THE APPLICANT SOCIETY IN RESPONSE TO THE AFORE SAID SHOW CAUSE NOTICE, THEREAFTER ADDITIONAL QUERIES HAVE BEEN R AISED VIDE E-MAIL DATED 13/10/2017 WHICH IS MENTIONED IN PARA NO .6 THEREAFTER THE LD. CIT(E) REJECTED THE APPLICATION FI LED BY THE APPLICANT SOCIETY U/S 12AA OF THE ACT BY HOLDING AS UND ER: NEITHER ANY REPLY HAS BEEN SUBMITTED TO THE QUERY RAISED NOR HAS ANY REQUEST BEEN RECEIVED FOR ADJOURNMENT TILL THE DATE OF PASSING OF THE ORDER. THE ONUS ENTIRELY LIES ON THE APPLICANT, THIS BEING A BENEFICIAL CLAUSE FOR THE APPLICANT TO SUBMIT THE R EPLY TO ITA NO.795/ASR/2017 (A.Y.2017-18) CYBERSTAR EDUCATIONAL SOCIET Y VS. CIT(E) 3 THE QUERY RAISED IN ORDER TO SUBSTANTIATE ITS CLAIM . IN ABSENCE OF ANY REPLY TO THE QUERY RAISED, THE GENUINENESS OF THE ACTIVITIES CANNOT BE ESTABLISHED . IN VIEW OF THE ABOVE THE ACTIVITIES OF THE SOCIETY CAN NOT BE TERMED TO FALL UNDER THE CATEGORY OF CHARITABLE PU RPOSE BUT PURELY ON COMMERCIAL PRINCIPLES HAVING PROFIT MOTIVES BY PROVIDING SERVICES IN LIEU OF COLLECTION OF FEES. THE APPLICATION FOR GRANT OF REGISTRATION U/S 12AA IS ACCORDINGLY REJECTED. 3. BEING AGGRIEVED, THE APPELLANT SOCIETY IS IN APPEAL BEFORE US. 4. HAVING HEARD THE PARTIES AT LENGTH AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. CIT(E) REJECTE D THE APPLICATION MAINLY ON THE GROUND THAT NEITHER ANY RE PLY HAS BEEN SUBMITTED TO THE QUERY RAISED NOR ANY REQUEST BEEN RECE IVED FOR ADJOURNMENT TILL THE DATE OF PASSING OF THE ORDER. TH E ONUS ENTIRELY LIES ON THE APPLICANT, THIS BEING A BENEFICIAL CLAUSE FOR THE APPLICANT TO SUBMIT THE REPLY TO THE QUERY RAISED IN ORDER TO SUBSTANTIATE ITS CLAIM. IN ABSENCE OF ANY QUERY, THE GENU INENESS OF THE ACTIVITIES CANNOT BE ESTABLISHED. IT WAS FURTHER O BSERVED BY THE LD. CIT(E) THAT IN VIEW OF THE ABOVE, THE ACT IVITIES OF THE SOCIETY CANNOT BE TERMED TO FALL UNDER THE CATEGORY OF CHARITABLE PURPOSES BUT PURELY ON COMMERCIAL PRINCIPLES HAVING PROF IT MOTIVES BY PROVIDING SERVICES IN LIEU OF COLLECTION OF FE ES. 5. ON THE CONTRARY, IT WAS SUBMITTED BY THE LD. AR SH. SU DHIR SEHGAL THAT THE WORTHY CIT(E) RAISED THE QUERY VIDE QUESTIONNAIRE DATED 13/10/2017 WHICH WAS SPECIFICALLY REP LIED BY THE ASSESSE SOCIETY AND ON THE BASIS OF QUERY RAISED THE LD . CIT(E) REJECTED THE APPLICATION BUT NOT OTHERWISE. FO R THE SAKE OF BREVITY AND COMPLETENESS WE ARE REPRODUCING THE FURTHER QUERY RAISED BY THE LD. CIT(E) AND THE RESPONSE/REPLIES SUBMIT TED BY THE APPLICANT SOCIETY. ITA NO.795/ASR/2017 (A.Y.2017-18) CYBERSTAR EDUCATIONAL SOCIET Y VS. CIT(E) 4 QUERY RAISED VIDE EMAIL DATED 13/10/2017 REPLY OF APPELLANT I. WHETHER THE REGISTRATION U/S 12AA HAS BEEN DENIED EARLIER IN THE CASE ? A COPY OF THE ORDER DENYING THE REGISTRATION MAY BE SUBMITTED. THE SOCIETY HAS APPLIED THE REGISTRATION FOR THE FI RST TIME. II. COPY OF AGREEMENT WITH NSDC AS IT HAS BEEN CLAIMED THAT THE ENTITY IS PARTNER FOR TRAINING. WE ARE AN AUTHORIZED TRAI NING PARTNER OF PMKVY - NSDC. AS GOVT, IS AGGRESSIVELY PROMOTING DIGITAL IN DIA, SO PMKVY TEAM HAS EITHER ONLY PROVIDED FEW SOFT COPIES OF AFFILIATION CERTIFICATES OR THEY HAVE UPL OADED OUR PRESENCE AS 'TRAINING PARTNER' ON THEIR OFFICIA L PORTAL/WEBSITE. SO ACCORDINGLY WE ARE ATTACHING THE FOLLOWING WITH THIS MAIL AS A PROOF OF OUR AFFILIAT ION WITH PMKVY-NSDC: SOFT COPY OF PMKVY-NSDC AFFILIATION CERTIFICATES AT DIFFERENT LOCATIONS/SECTORS. SNAPSHOT OF THE OFFICIAL PORTAL OF PMKVY-NSDC DEPICTING OUR PRESENCE AS 'TRAINING PARTNER' HOPE, THIS WOULD PROVE TO BE AN AMPLE PROOF OF' CYBERSTAR EDUCATIONAL SOCIETY' WORKING AS 'TRAINING PARTNER' OF THE PMKVY-NSDC. III. NARRATION OF ENTRIES IN THE BANK ACCOUNT IN EXCESS OF RS.50,000/- .RATIONAL FOR PAYMENT TO SH. UMESH SHARMA. DURING THE INITIAL MONTHS FOR IMPARTING EDUCATION, VARIOUS EXPENSES WERE REQUIRED IN FORM OF PURCHASE OF FURNITURE AND FIXTURES AND OTHER ADMINISTRATIVE EXPENSES. SO INTEREST FREE ADVANCE WAS TAKEN FROM S H. UMESH SHARMA, SECRETARY OF THE SOCIETY TO MEET RUNNING EXPENSES. AS THE SOCIETY GOT ITS INCOME, TH E SAME WAS RETURNED BACK TO HIM. THE DETAILED CHART SHOWING RECEIPT AND PAYMENTS OF ENTRIES EXCEEDING RS.50000 IS ENCLOSED HEREWITH FOR YOUR KIND PURSUANCE. ITA NO.795/ASR/2017 (A.Y.2017-18) CYBERSTAR EDUCATIONAL SOCIET Y VS. CIT(E) 5 5.1 ON PERUSAL OF THE REPLY OF THE ASSESSEE IN RESPONSE TO FI RST SHOW CAUSE NOTICE DATED 29/08/2017, FROM POINT NO.18 IT IS CLEAR THAT THE APPLICANT HAS SPECIFICALLY PLEADED THAT THE AP PLICATION FOR REGISTRATION HAS BEEN FILED FOR THE FIRST TIME, THEREF ORE ANSWER TO QUERY NO (I) WAS AVAILABLE IN RECORD (REFER PAGE 5 OF THE PB). FROM POINT NO.15 OF THE AFORESAID REPLY (PAGE-15 AND PAGES NO.92 TO 105 OF THE PB) IT IS CLEAR THAT THE APPLICANT SOCIETY HAS CLEARLY MENTIONED THE COMPLETE DETAILS QUA NSDC AND APPELLANTS ASSOCIATION AS TRAINING PARTNERS ALONG WITH THE AFFILIATION CERTIFICATE AND THEREFORE ANSWER TO QUERY NO (II) WAS AVAILABLE IN RECORD. WITH REGARD TO QUERY NO.3 QUA N ARRATION OF ENTRIES IN THE BANK ACCOUNT IN EXCESS OF RS.50,000/-. RAT IONAL FOR PAYMENT TO SH. UMESH SHARMA, THE APPLICANT SOCIETY DU LY SUBMITTED COPY OF THE BANK STATEMENTS AND THE DETAILS QUA FILING OF THE RETURN, COMPUTATION OF INCOME, AUDITED BALANCE SHEETS AND ITS RELEVANT ANNEXURES IN THE ASSESSMENT YEARS 2016-17 TO 2018-19 AND NARRATION TO EACH ENTRY WHICH IS CLEAR FRI OM THE STATEMENT ITSELF. 5.2 WE REALIZE THAT THE LD. CIT(E) VIDE SHOW CAUSE NOTICE DATED 29/08/2017, REQUESTED THE APPLICANT SOCIETY TO FILE THE DETAILS/CLARIFICATIONS ON 12/09/2017 AS MENTIONED IN P ARA NO.5 OF THE IMPUGNED ORDER AND THE APPLICANT SOCIETY IN RESP ONSE TO THE AFORESAID SHOW CAUSE NOTICE, SPECIFICALLY FILED THE REPLY ( REFER PAGE NO 2-5 OF THE PB-1 OF APPLICANT) AND THEREAFTER CONSIDERING THE REPLY OF THE APPLICANT , ADDITIONAL QUERIES HAVE BEEN RAISED VIDE E-MAIL DATED 13/10/2017, THEREFORE OBSERVATION OF THE LD. CIT(E) TO THE EFFECT THAT ' NEITHER ANY REPLY HAS BEEN SUBMITTED TO THE QUERY RAISED NOR ANY REQUEST BEEN RECEIVED F OR ITA NO.795/ASR/2017 (A.Y.2017-18) CYBERSTAR EDUCATIONAL SOCIET Y VS. CIT(E) 6 ADJOURNMENT TILL THE DATE OF PASSING OF THE ORDER ' IS CONTRARY TO THE FACT AND MATERIAL AVAILABLE ON RECORD. IT IS A FACT THAT THE LD. CIT(E) NOWHERE IN THE ORDER HAS NEITHER POINTED OUT ANY DEFECT IN AIMS AND OBJECTS OF THE SOCIETY NOR DOUBTED THE GENUINENESS OF THE ACTIVITY SPECIFICALLY . THEREFORE, WE DO NOT ANY HESITATION TO HOLD THAT THE APPLICANT SOCIETY IS CARRYING OUT ITS ACTIVITY ACCORDING TO ITS AIMS AND OBJECTS SPECIFIED IN THE MOA. AS IT IS SETTLED LAW THAT B EFORE DECIDING APPLICATION U/S 12AA OF THE ACT, THE LD. CIT( E) IS TO EVALUATE TWO REQUIREMENTS (I) OBJECTS OF THE APPLICANT SOCIETY (II) GENUINENESS OF ITS ACTIVITY WHICH IN THE INSTANT CA SE ARE NOT IN CONTROVERSY, HENCE THE LD. CIT(E) IS DIRECTED TO GRAN T THE REGISTRATION U/S 12AA OF THE ACT TO THE APPLICANT SOCIET Y. HOWEVER, WE CLARIFY THAT THE LD. CIT(E) SHALL BE AT L IBERTY TO PUT CONDITION IF ANY FOUND APPROPRIATE AS PER LAW AND SHAL L ALSO BE AT LIBERTY TO WITHDRAW/CANCEL THE REGISTRATION IN THE EVE NT OF ANY DISCREPANCY(S) AND/OR BREACH OF ANY PROVISIONS OF THE ACT IN FUTURE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.06.2019. SD/- SD/- (N.S.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED: 21.06.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) CYBERSTAR EDUCATIONAL SOCIETY, 9-A, MAIN ROAD, NE AR BASTI, JODHEWAL, SUNDER NAGAR, LUDHIANA. (2) THE CIT(EXEMPTIONS), CHANDIGARH. (3) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER