ICSI Registered Valuers Organization, New Delhi V. CIT(Exemption), New Delhi

ITA 8462/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6538 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2019-2020
• Appeal Filed On: 28-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wholly owned subsidiary
• Section: 12A; 12AA; 22; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.8462/DEL/2019 ASSESSMENT YEAR: 2019-20 ICSI REGISTERED VALUERS ORGANIZATION, FOURTH FLOOR, ICSI HOUSE, 22 INSTITUTIONAL AREA, LODI ROAD, NEW DELHI-110003 PAN: AAECI6882P VS THE CIT (EXEMPTIONS), DELHI ASSESSEE BY SH.RANJAN CHOPRA, ADVOCATE REVENUE BY MS.SUNITA SINGH, CIT. DR ORDER PER K. NARASIMHA CHARY, JM: AGGRIEVED BY THE ORDER DATED30.08.2019 UNDER SECTIO N 12AA(1)(B) R/W SECTION 12A OF THE INCOME TAX ACT, 1 961 BY THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION), NEW DELHI, (LD. CIT(E), THE ICSI REGISTERED VALUERS ORGANIZATION, N EW DELHI (THE ASSESSEE) FILED THIS APPEAL. 2. BRIEF FACTS OF CASE, AS COULD BE CULLED OUT FROM THE RECORD ARE DATE OF HEARING 09.09.2020 DATE OF PRONOUNCEMENT 10.09.2020 2 THAT THE ICSI REGISTERED VALUERS ORGANIZATION IS A COMPANY INCORPORATED ON 22.11.2017 AND REGISTERED UNDER SE CTION 8 OF THE COMPANIES ACT, 2013, WHOLLY OWNED SUBSIDIARY OF THE INSTITUTE OF COMPANY SECRETARIES OF INDIA AND REGISTERED WITH IN SOLVENCY AND BANKRUPTCY BOARD OF INDIA (IBBI) FRAMED WITH THE OB JECTIVE OF EDUCATING, REGULATING AND MONITORING THE DISCIPLINE OF REGISTERED VALUERS. 3. ON 21.02.2019 ASSESSEE FILED APPLICATIONS IN FOR MS NO. I0A SEEKING REGISTRATION UNDER SECTION 12AA OF THE INCO ME TAX ACT 1961 AND THE ASSESSEE CLAIMS TO HAVE FILED VARIOUS DOCUMENTS AS REQUIRED BY THE LD. CIT(E). LD. CIT(E), HOWEVER, RE JECTED THE REQUEST OF THE ASSESSEE FOR REGISTRATION UNDERSECTION 12AA OF THE IT ACT BY INVOKING PROVISIONS OF SECTION 12AA(1)(B) OF INCOME TAXACT BY HOLDING THAT THE ACTIVITIES OF ASSESSEE ORGANIZATIO N AS NON-GENUINE IN NATURE ON THE BASIS OF THE APPLICATION OF INCOME . 4. ASSESSEE IS THEREFORE, BEFORE US IN THIS APPEAL CONTENDING THAT THE ACTIVITIES OF THE ASSESSEE, INTER ALIA, IN CLUDES THE MAIN ACTIVITY OF 'PROVIDING VALUERS COURSE TO CREATE SK ILLED REGISTERED VALUERS IN THE COUNTRY AND IS DULY COVERED UNDER 'E DUCATION & 'ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AS PROVIDED IN SECTION 2(15) OF THE INCOME TAX ACT; TH AT THE FRUITS OF VARIOUS ACTIVITIES LIKE TRAININGS AND SEMINARS WOUL D BE AVAILABLE TO THE PUBLIC AT LARGE WITHOUT ANY PROFIT MOTIVE AND N OT FOR THE BENEFIT 3 OF SMALL GROUP OF INDIVIDUALS AS ASSESSEE IS A SECT ION 8 COMPANY; THAT THE LEARNED CIT(EXEMPTIONS) REJECTED THE APPLI CATION BY LOOKING INTO THE APPLICATION OF INCOME WHICH ARE TO BE EXAM INED AT THE TIME OF ASSESSMENT ONLY AND ON THE BASIS OF ASSUMPTIONS, PRESUMPTIONS AND APPREHENSIONS WITHOUT APPRECIATING THE FACTUAL, LEGAL AND STATUTORY POSITION FOR GRANT OF REGISTRATION. 5. HE FURTHER SUBMITTED THAT THERE ARE VARIOUS OTHE R ORGANIZATIONS LIKE ICAI REGISTERED VALUERS ORGANIZA TION, INDIAN INSTITUTE OF INSOLVENCY PROFESSIONALS OF ICAI, ICSI INSOLVENCY PROFESSIONAL AGENCY, PRACTISING VALUERS ASSOCIATION OF INDIA ETC. WITH SIMILAR OBJECTS AS THAT OF THE ASSESSEE AND SUCH OR GANIZATIONS ARE GRANTED REGISTRATION UNDER SECTION 12A WHEREAS SUCH REGISTRATION IS DENIED TO THE ASSESSEE UNJUSTLY. 6. PER CONTRA, LD. DR ARGUED THAT THE ACTIVITY OF T HE ASSESSEE IS ONLY CONDUCTING SOME SORT OF TRAINING WHICH DOES NO T INDICATE ANY CHARITABLE ACTIVITY OF EDUCATION AS CONTEMPLATED UN DER LAW. FURTHER, THE LD. CIT(E) BEING THE AUTHORITY AT THE THRESHOLD IS BOUND TO LOOK INTO THE ACTUAL CONDUCT OF ACTIVITIES VIS- -VIS THE OBJECTS OF THE ASSESSEE AND, THEREFORE, LD. CIT(E) IS JUSTIFIE D FROM DECLINING TO GRANT REGISTRATION FOR THE REASONS RECORDED BY HIM IN THE IMPUGNED ORDER. SHE PLACED RELIANCE ON THE OBSERVATIONS OF THE LD. CIT(E) IN PARAGRAPH NO 3 OF THE IMPUGNED ORDER. 4 7. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. IMPUGNED ORDER CL EARLY SHOWS THAT THE LD. CIT(E) BASED THE ACCOUNTS AND ACTIVITI ES UNDERTAKEN BY THE ASSESSEE FOR REJECTING THE REGISTRATION. THERE IS NO DISPUTE IN RESPECT OF THE OBJECTS OF THE ASSESSEE.LD. CIT(E) D ID NOT FIND ANY OF THE OBJECTS OF MOA TO BE IN THE NATURE OF TRADE OR BUSINESS OR COMMERCE. REVENUE ALSO DOES NOT DISPUTE THE SIMIL ARITY OF THE OBJECTS OF THE ASSESSEE AND THE OBJECTS OF OTHER IN STITUTIONS LIKE ICAI REGISTERED VALUERS ORGANIZATION, INDIAN INSTIT UTE OF INSOLVENCY PROFESSIONALS OF ICAI, ICSI INSOLVENCY PROFESSIONAL AGENCY, PRACTISING VALUERS ASSOCIATION OF INDIA ETC. OR THE CLAIM OF THE ASSESSEE THAT SUCH ORGANIZATIONS ARE GRANTED REGIST RATION. 8. IN THE CASE OF A SIMILARLY PLACED ORGANIZATION, NAMELY, M/S. ICAI REGISTERED VALUERS ORGANIZATION VS. LD. CIT(E) IN ITA.NO. 8158/DEL/2018 BY ORDER DATED 03.09.2019 A COORDINAT E BENCH OF THIS TRIBUNAL HELD THAT, - 3.4. LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITT ED THAT THERE ARE VARIOUS OTHER SIMILAR ORGANISATIONS I.E., INDIAN INSTITUTE OF INSOLVENCY PROFESSIONALS OF ICAI, INSOLVENCY PROFESS IONAL AGENCY OF INSTITUTE OF COST ACCOUNTANTS OF INDIA, PRACTICING V ALUERS ASSOCIATION OF INDIA, ICSI INSOLVENCY PROFESSIONALS AG ENCY ETC., WHICH HAVE BEEN GRANTED REGISTRATION UNDER SECTION 12 A WHICH ARE HAVING SIMILAR OBJECTS AS THAT OF THE ASSESSEE WHICH CAN ALSO BE VERIFIED FROM THE CHART SUBMITTED ON RECORD. HE HAS, THEREFORE, PRAYED THAT ASSESSEE MAY BE GRANTED REGISTRATION UN DER SECTION 12AA OF THE INCOME TAX ACT. 5 5. .. AT THE TIME OF GRANTING OF REGISTRATION UNDER SECTION 12AA OF THE INCOME-TAX ACT, THE LD. LD. CIT(E) IS R EQUIRED TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES. THE ASSESSEE HAS PROD UCED SUFFICIENT EVIDENCE ON RECORD THAT ASSESSEE-COMPANY IS INVOLVED IN CHARITABLE ACTIVITIES AND HAVE ALSO HELD SEMINARS AND TRAINING SESSIONS FOR TRAINING OF THE REGISTERED VALUERS. THE DECISIONS R ELIED UPON BY LEARNED COUNSEL FOR THE ASSESSEE SQUARELY APPLY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THE OBJECTS AS NOTED ABOV E HAVE NOT BEEN DISPUTED BY THE LD. LD. CIT(E). FURTHER, IN SI MILAR ASSESSEES HAVING THE SAME OBJECTS, REGISTRATION UNDER SECTION 12AA HAVE BEEN GRANTED IN THEIR FAVOUR. THESE FACTS, THEREFORE , SHOW THAT ASSESSEE HAS SATISFIED THE CONDITIONS OF SECTION 12AA OF THE INCOME TAX ACT, 1961. ACCORDINGLY, THERE WERE NO JUSTIFICAT ION FOR LD. LD. CIT(E) TO REJECT THE APPLICATION FOR REGISTRATION UNDE R SECTION 12A OF THE INCOME-TAX ACT. 9. FURTHER, IT IS THE SETTLED PRINCIPLE OF LAW THAT THE CERTIFI CATE OF REGISTRATION IS ONLY AN ENABLING PROVISION TO CLAIM EXEMPTION, AND BY MERELY GRANTING A CERTIFICATE, INCOME IS NOT EXEMPT ED. EVEN IF THE REGISTRATION IS GRANTED, THE EXEMPTION FROM THE PRO VISIONS OF THE INCOME TAX ACT IN PARTICULAR SECTIONS 11 AND 12 IS NOT AUTOMATIC AND IT IS ONLY WHEN THE ASSESSEE SATISFIES THE LEARNED ASSESSING OFFICER IN RESPECT OF THE RETURNS FILED EVERY YEAR, THE ASSESS EE WOULD BE ENTITLED TO THE EXEMPTION.IT IS ALWAYS OPEN FOR THE LEARNED ASSESSING OFFICER TO LOOK INTO THE APPLICATION OF INCOME AND ACTUAL ACTIVITIES OF THE ASSESSEE, AND IF NOT SATISFIED, THEN TO DENY TH E EXEMPTION BY RECORDING THE REASONS. IN THESE CIRCUMSTANCES, WE S ETASIDE THE 6 IMPUGNED ORDER AND DIRECT THELD. CIT(E) TO GRANTREG ISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT TO THEASSESSEE. 10. APPEAL OF THE ASSESSEE IS, ACCORDINGLY, ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 10. 09.2020. SD/- SD/- (B.R.R. KUMAR) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10.09.2020