AIC- RNTU Foundation, Raisen V. CIT Exemption, Bhopal

ITA 940/Ind/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3424 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 13-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: S S DESHPANDE
• Keywords: Charitable institution; Opportunity of being heard; Reasonable cause; Competent authority; Set aside
• Section: 12A; 12AA; 13; 12; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.940/IND/2019 ASSESSMENT YEAR:2019-20 AIC - RNTU FOUNDATION BLOCK NO.5 RABINDRANATH TAGORE UNIVERSITY CHIKLOD ROAD, RAISEN / VS. CIT ( EXEMPTION ) BHOPAL ( APPELLANT ) ( REVENUE ) P.A. NO. AARCA0316M APPELLANT BY SHRI S. S . DESHPANDE , C A REVENUE BY SMT. ASHIMA GUPTA , CIT - DR DATE OF HEARING: 08.09.2020 DATE OF PRONOUNCEMENT: 14.10.2020 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (EXEMPTION)(IN SHORT LD . CIT(E), BHOPAL DATED 30.09.2019 PERTAINING TO ASSESSMENT YE AR 2019-20. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEA L: THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE AIC-RNTU FOUNDATION /ITANO.940/2019 2 ASSESSEE THE LD. CIT(E), BHOPAL WAS NOT JUSTIFIED I N HOLDING THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT IN THE NATUR E OF CHARITABLE ACTIVITIES BUT COMMERCIAL IN NATURE. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE OF THE ASSESSEE THE LD. CIT(E), BHOPAL WAS NOT JUSTIFIED I N MENTIONING THAT THE ASSESSEE HAS NOT FURNISHED THE COPY OF ACC OUNTS SINCE ITS INCEPTION. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE OF THE ASSESSEE THE LD. CIT(E), BHOPAL WAS NOT JUSTIFIED T HE REJECTING THE CLAIM OF THE ASSESSEE FOR REGISTRATION 12A OF T HE INCOME TAX ACT. 4. THE ASSESSEE CRAVES LEAVE TO ADD, ALTER AMEND OR WITHDRAW ANY GROUND OF APPEAL ON OR BEFORE THE TIME HEARING. 2. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE ASSESSEE IS A COMPANY DULY REGISTERED UNDER THE COMPANIES ACT 2013 APPLIED FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT 1961(HEREIN AFTER REFERRED AS THE ACT) IN THE PRESCRIBED FORM NO.10A ON 06.03.2019. THE APPLICATION SO FILED WAS REJECTED BY THE LD. CIT(E). T HE BASIS OF REJECTION OF APPLICATION BY THE LD. CIT(E) WAS THAT IN HIS VIEW THE COMPANY WAS NOT DOING ANY CHARITABLE WOR K PERSE, BUT CARRYING OUT THE WORK ON BEHALF OF GOVERNM ENT OF INDIA AS PER THE TERMS AND CONDITIONS LAID DOWN IN T HE AIC-RNTU FOUNDATION /ITANO.940/2019 3 SANCTION ORDER AND MOA AND PURELY ACTING AS A SERVICE PROVIDER. 3. AGGRIEVED AGAINST THIS THE ASSESSEE PREFERRED AN APPE AL BEFORE US. 4. THE ONLY EFFECTIVE GROUND IS AGAINST REJECTION OF APPLICATION MADE U/S 12AA OF THE ACT. LD. COUNSEL FOR THE ASSESSEE, SHRI S.S. DESHPANDE, VEHEMENTLY ARGUED THAT THE LD. CIT(E) IS NOT JUSTIFIED IN REJECTING THE APPLICAT ION FILED FOR REGISTRATION U/S 12AA OF THE ACT. HE DREW OUR ATT ENTION TO THE PAPER BOOK PAGES AT 62 TO 96 WHEREIN COPY OF MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION AR E FILED. FURTHER, HE POINTED OUT THAT THE COMPANY IS REGISTERED U/S (8) OF THE COMPANIES ACT 2013, THEREF ORE, THE COMPANY IS EXISTING FOR NON-PROFIT AND THE OBJECT OF THE ASSESSEE COMPANY ARE CHARITABLE IN NATURE, HENCE, ELIGIBL E FOR REGISTRATION U/S 12AA OF THE ACT. AIC-RNTU FOUNDATION /ITANO.940/2019 4 5. FURTHER, LD. COUNSEL FOR THE ASSESSEE REITERATED T HE SUBMISSIONS AS MADE IN THE WRITTEN SYNOPSIS. LD. COU NSEL SUBMITTED THAT UNDER THE IDENTICAL FACTS OF COORDINATE BENCH OF THIS TRIBUNAL HAS TAKEN A VIEW IN FAVOUR OF THE ASSESSEE IN THE CASE OF KIIT TECHNOLOGY BUSINESS V. CIT (E) ITANO.114/CTK/2017 AND DIRECTED THE LD. CIT(E) TO GRANT REGISTRATION U/S 12AA OF THE ACT. 6. ON THE CONTRARY, LD. CIT-DR OPPOSED THE SUBMISSIO N AND SUPPORTED THE ORDER OF THE LD. CIT(E). LD. CIT-D R SMT. ASHIMA GUPTA, SUBMITTED THAT THE FACTS ARE DISTINGUISHABLE. THE ASSESSEE IS BEING A PURELY SERVI CE PROVIDER AND THE ACTIVITY OF ASSESSEE COMPANY DOES NOT FALL IN THE CATEGORY OF CHARITABLE, THEREFORE, APPLICATION IS RIGHTLY REJECTED. LD. CIT-DR THUS, SUPPORTED THE I MPUGNED ORDER. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORDS. THE GRIEVANCE OF THE ASSES SEE IS AGAINST REJECTION OF HIS APPLICATION FOR REGISTRATION U/S AIC-RNTU FOUNDATION /ITANO.940/2019 5 12AA OF THE ACT BEFORE ADVERTING TO THE RIVAL SUBMISS IONS, WE DEEM IT PROPER TO REPRODUCE THE RELEVANT PROVISIO N OF SECTION 12AA WHICH PROVIDES PROCEDURE FOR REGISTRATI ON: 12AA. (1) THE 2 [***] 2A [ PRINCIPAL COMMISSIONER OR ] COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REG ISTRATION OF A TRUST OR INSTITUTION MADE UNDER CLAUSE (A) 99 [OR CLAUSE (AA) OF SUB-SECTION (1)] OF SECTION 12A , SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSA RY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF T HE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDE R IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLI CANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSE D UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OP PORTUNITY OF BEING HEARD. 3 [(1A) ALL APPLICATIONS, PENDING BEFORE THE 2A [ PRINCIPAL CHIEF COMMISSIONER OR ] CHIEF COMMISSIONER ON WHICH NO ORDER HAS BEEN PASSED UNDER CLAUSE (B) OF SUB-SECTION (1) BEF ORE THE 1ST DAY OF JUNE, 1999, SHALL STAND TRANSFERRED ON THAT DAY TO THE 2A [ PRINCIPAL COMMISSIONER OR ] COMMISSIONER AND THE 2A [ PRINCIPAL COMMISSIONER OR ] COMMISSIONER MAY PROCEED WITH SUCH APPLICATIONS UNDER THAT SUB-SECTION FROM THE STAGE AT WHICH THEY WERE ON THAT DAY.] (2) EVERY ORDER GRANTING OR REFUSING REGISTRATION U NDER CLAUSE (B) OF SUB-SECTION (1) SHALL BE PASSED BEFORE THE EXPIR Y OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLI CATION WAS RECEIVED UNDER CLAUSE (A) 4 [OR CLAUSE (AA) OF SUB-SECTION (1)] OF SECTION 12A .] AIC-RNTU FOUNDATION /ITANO.940/2019 6 5 [(3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANT ED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) 6 [OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT, 1996 (33 OF 1 996)]] AND SUBSEQUENTLY THE 6A [ PRINCIPAL COMMISSIONER OR ] COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INST ITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MA Y BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATIO N OF SUCH TRUST OR INSTITUTION: PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASS ED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A R EASONABLE OPPORTUNITY OF BEING HEARD.] 6B [ (4) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (3), WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED RE GISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT, 1996 (33 OF 1996)] AND SUBSEQUENTLY IT IS NOTICED THAT THE ACTIVITIES OF THE TRUST OR T HE INSTITUTION ARE BEING CARRIED OUT IN A MANNER THAT THE PROVISIONS O F SECTIONS 11 AND 12 DO NOT APPLY TO EXCLUDE EITHER WHOLE OR ANY PART O F THE INCOME OF SUCH TRUST OR INSTITUTION DUE TO OPER ATION OF SUB- SECTION (1) OF SECTION 13 , THEN, THE PRINCIPAL COMMISSIONER OR THE COMMISSIONER MAY BY AN ORDER IN WRITING CANCEL THE REGISTRATION OF SUCH TRUST OR INSTITUTION: PROVIDED THAT THE REGISTRATION SHALL NOT BE CANCELLED UNDER THIS SUB-SECTION, IF THE TRUST OR INSTITUTION PROVES THA T THERE WAS A REASONABLE CAUSE FOR THE ACTIVITIES TO BE CARRIED O UT IN THE SAID MANNER. ] 8. FROM THE ABOVE SAID PROVISION, IT IS CLEAR THAT THE PR. CIT ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER CLAUSE (A) [OR CLAUSE (AA) OF SUB - AIC-RNTU FOUNDATION /ITANO.940/2019 7 SECTION (1)] OF SECTION 12A, SHALL CALL FOR SUCH DOC UMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINK S NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUIN ENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND THE COM PLIANCE OF SUCH REQUIREMENTS OF ANY OTHER LAW FOR THE TIME BEING IN FORCE BY THE TRUST OR INSTITUTION AS ARE MATERIAL FOR T HE PURPOSE OF ACHIEVING ITS OBJECTS AND AFTER SATISFYING H IMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES UNDER ITEM (A) AND COMP LIANCE OF THE REQUIREMENTS UNDER ITEM (B) OF SUB-CLAUSE (I). HE IS EMPOWERED TO PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION, IF HE IS NOT SO SATISFIED IN THAT EVE NT HE SHALL PASS AN ORDER IN WRITING REFUSING THE REGISTERING TRU ST OR INSTITUTION AND COPY OF SUCH ORDER IS REQUIRED TO BE SUPPLIED TO THE APPLICANT. HOWEVER, THE LD. PR. CIT I S UNDER OUR OBLIGATION TO PROVIDE REASONABLE OPPORTUNITY OF B EING HEARD BEFORE PASSING ORDER OF REJECTION OF APPLICATION. IN AIC-RNTU FOUNDATION /ITANO.940/2019 8 THE PRESENT CASE THE LD. PR. CIT HAS REJECTED APPLICAT ION BY OBSERVING AS UNDER: 4. THE APPLICANT IS ESTABLISHED BY RABINDRA NATH T AGORE UNIVERSITY AS A SPECIAL PURPOSE VEHICLE (SPV) UNDER COMPANIES ACT WITH REGISTERED OFFICE AT VILLAGE MENDUA, POST BHOJPUR, BHOPAL FOR ESTABLISHMENT AND OPERATING ATAL INCUBAT ION CENTRE (AIC) UNDER ATAL INNOVATION MISSION (AIM) BY NITI A YOG, GOVT. OF INDIA. ON PERUSAL OF THE OBJECTS OF THE COMPANY, IT IS SEEN THAT THE OBJECTS OF THE COMPANY ARE COMMERCIAL IN NATURE AND FOR THE BENEFIT OF ITS MEMBERS, SOME OF WHICH ARE MENTIONED AS UNDER: I) TO ACCUMULATE CAPITAL AND RAISE FUNDS BY MEANS O F DONATIONS, SUBSCRIPTIONS FEES OR BY ANY OTHER MEANS FROM MEMBE RS AND OTHERS AND TO ACCEPT DONATIONS, CONTRIBUTION GRANTS EITHER IN CAST: OR IN KIND FROM ANY PERSON, PERSONS, COMPANIE S, CORPORATIONS, INSTITUTIONS ON SUCH TERMS AND FOR SU CH OBJECTS WHICH ARE IN CONFORMITY WITH THE OBJECTS AND ON CON DITIONS, INCLUDING THE CONDITIONS OF ASSOCIATING THE NAME OF SUCH PERSON, OR PERSONS AND SUCH PURPOSE OR PURPOSES ARE IN CONFORMITY WITH THE OBJECT OF THE COMPANY. II) TO PROVIDE AND PROMOTE, INCUBATE, ASSSIT AND S UPPORT SUSTAINABLE AND SCALABLE START-UP ENTREPRENEURIAL V ENTURES AND SMALL AND MEDIUM ENTERPRISES ACROSS VARIOUS SECTORS BY PROVIDING INCUBATION AND CONSULTING SERVICES. ADMINISTRATIVE AND BUSINESS SUPPORT SERVICES, TECHN ICAL ASSISTANCE, TRAINING AND MENTORING SUPPORT IN OPERA TION, STRATEGY, MARKETING, LEGAL, TALENT, BUSINESS DEVELO PMENT, SALES. SUPPLY CHAIN MANAGEMENT, INFORMATION TECHNOL OGY, PUBLIC RELATIONS AND LEADERSHIP TO ENTREPRENEURS FO R THEIR GHOLISTIC DEVELOPMENT AND ENGAGED IN OTHER CAPACITY BUILDING ACTIVITIES FOR THE DEVELOPMENT OF ENTREPRE NEURIAL ECOSYSTEM IN BHOPAL. III) TO PROVIDE AND PROMOTE SYNERGIES AMONG INTERESTED/RELEVANT ENTREPRENEURS, INDUSTRIAL ESTABLISHMENTS, START-UP COMPANIES, RESOURCE PROVID ERS, RESEARCH AND DEVELOPMENT INSTITUTES, EDUCATIONAL AN D SERVICE INSTITUTIONS, INDIVIDUAL/S OR INCUBATION OR INNOVATOR AIC-RNTU FOUNDATION /ITANO.940/2019 9 GROUPS TO FUNCTION IN PARTNERSHIP AND/OR COLLABORATIVE MODE. IV. TO PROVIDE AND ENGAGED IN SUCH ACTIVITIES TO MA KE THE ORGANIZATION AND THE ENTREPRENEURIAL VENTURES SCALA BLE AND SELF-SUSTAINABLE, INCLUDING THROUGH RAISING APPROPR IATE AND ALL FORMS OF CAPITAL AND INVESTMENTS IN COMPLIANCE WITH APPLICABLE LAWS AND PROVIDING AND CREATING NEW RESO URCES THROUGH BUILDING AN IMMUNITY OR ADVISORS AND WELL W ISHES IN INDIA AND ABROAD. V. TO PROPAGATE NEW SCIENTIFIC AND TECHNOLOGIES DEVELOPMENT AND INNOVATION FROM IDEA STAGE TO FULL SCALE COMMERCIAL PRODUCTION OR ANY PART OF THIS CHAIN. FO R THE ABOVE PURPOSE TO ASSIST, COOPERATE OR COLLABORATE W ITH ANY ESTABLISHMENT, LABORATORY, TECHNOLOGY BUSINESS, INC UBATORS CENTRE, ORGANIZATION OR INSTITUTION IN INDIA OR ABR OAD. VI. TO ACQUIRED ADVANCED TELECOMMUNICATION TECHNOLO GY, E- MAIL, INTERNET FAX AND EXCHANGE SERVICES, AND PROVI DE BOTH PROJECT AND BUREAU SERVICES ASSOCIATED WITH THIS TECHNOLOGY, PROJECT SERVICES INCLUDE FEASIBILITY ST UDIES, CONSULTATION PROJECT IMPLEMENTATION, MARKET DEVELOP MENT, IMPORT SERVICES, MAINTENANCE COMPUTE SOFTWARE CUSTOMIZATION, OPTIMIZATION AND SYSTEM INTEGRATION, AND TO SET UP A COUNTRY WIDE NETWORK FOR VALUE ADDED COMMUNICATION SERVICES, PROCURE EQUIPMENT AND ARRAN GE ITS MANAGEMENT, OPERATION AND MAINTENANCE. VII) TO PURCHASE AND SELL COPYRIGHTS. AND OTHER IN TELLECTUAL PROPERTY ASSETS, RIGHTS. CAUSE PUBLICATION. SALE AN D DISTRIBUTION OF BOOKS. PAMPHLETS, ARTICLES. MAGAZIN ES AND TO GIVE PRIZES AND AWARDS. VIII) TO PROCURE THE COMPANY TO BE REGISTERED OR R ECOGNIZED IN OR UNDER THE LAWS OF ANY PLACE OUTSIDE INDIA AND TO DO ALL ACT NECESSARY FOR FURTHERING THE OBJECTIVES OF THE COMPANY AND CARRYING ON IN ANY FOREIGN COUNTRY FOR THE BUSI NESS OR FURTHERING THE OBJECTIVES OF THE COMPANY. IX) TO ACQUIRE. INVEST IN BOTH MOVABLE AND IMMOVABLE INCLUDING SECURITIES. BANK DEPOSITS. BONDS BY WAY O F INVESTMENT OR WITH A VIEW TO RESALE OR OTHERWISE AN D IN PARTICULAR IN FREEHOLD. LEASEHOLDS. SECURITIES. BON DS AND OTHER INVESTABLE SOURCES. AS PERMITTED BY LAW. X) TO APPOINT AGENTS. SUB-AGENT. DEALERS. MANAGERS AIC-RNTU FOUNDATION /ITANO.940/2019 10 CANVASSERS. SALES. REPRESENTATIVES OR SALESMEN FOR TRANSACTING ALL OR ANY KIND OF THE MAIN BUSINESS OF WHICH THIS COMPANY IS AUTHORIZED TO CARRY ON AND TO CONST ITUTE AGENCIES OF THE COMPANY IN INDIA OR IN ANY OTHER CO UNTRY TO CARRY OUT ANY ACTIVITIES FOR FURTHERING THE OBJE CTIVES OF THE COMPANY AND ESTABLISH DEPOTS AND AGENCIES IN DIFFERENT PARTS OF THE WORLD. 5. A PLAIN READING OF THE ABOVE OBJECT OF THE COMPANY SHOWS THAT THE OBJECTS ARE NOT COVERED AS CHARITABLE OR F ALL UNDER THE DEFINITION OF CHARITABLE PURPOSE AS ENSHRINED IN SE CTION 2(15) OF THE INCOME TAX ACT, 1961, WHICH READS AS UNDER: I. ACCORDING TO SECTION. 2(15) OF THE ACT, CHARITAB LE PURPOSE INCLUDED RELIEF OF THE POOR EDUCATION, YOGA, MEDICA L RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATER SHEDS FORESTS AND WILD LIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST AND ADVANCEMENT OF AN Y OTHER OBJECT OF GENERAL PUBLIC UTILITY. TRUST/INSTITUTION COVERED UNDER ADVANCEMENT OF AN Y OTHER OBJECT OF GENERAL PUBLIC UTILITY CAN DO COMMERCIAL ACTIVITIES UPTO 20% OF ITS TOTAL RECEIPTS (PROVISO TO SECTION 2(15) . THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBL IC UTILITY SHALL NOT BE CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BU SINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION T O ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHE R CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OF APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY, UNLESS - A) SUCH ACTIVITY IS UNDERTAKEN IN THE COURSE OF ACTUAL CARRYING OUT OF SUCH ADVANCEMENT OF ANY OTHER OBJECT OF GENE RAL PUBLIC UTILITY. B) THE AGGREGATE RECEIPTS FROM SUCH ACTIVITY OR ACT IVITIES, DURING THE PREVIOUS YEAR, DO NOT EXCEED 20% OF THE TOTAL RECEIPTS, OF THE TRUST OR INSTITUTION UNDERTAKING SUCH ACTIVITY OR ACTIVITIES, FOR THE PREVIOUS YEAR. 6. THE ACTIVITIES OF THE COMPANY IS THAT OF A SERVI CE PROVIDER OF NITI AAYOG WITH WHOM THE COMPANY ENTERED INTO AGREE MENT BY WAY OF MOU FOR SETTING UP OF A INCUBATION CENTRE. T HE COMPANY IS BEING PAID BY WAY OF GOVERNMENT GRANT FOR PROVID ING THE REQUISITE SERVICE. AS PER THE SANCTION LETTER DATED 24TH AIC-RNTU FOUNDATION /ITANO.940/2019 11 SEPTEMBER, 2018, NITI AYOG, SANCTIONED RS.904,OO,OO O/- AS GRANTIN-AID TO THE APPLICANT COMPANY AS A SPV (SPEC IAL PURPOSE VEHICLE) UNDER THE COMPANIES ACT ESTABLISHMENT FOR OPERATION OF ATAL INCUBATION CENTRE. OUT OF HIS SANCTION AMOUNT RS.397,OO,OOO/- HAS ALREADY BEEN DISBURSED TO THE C OMPANY AS 1 ST INSTALLMENT. IT IS ALSO SEEN FROM THE MOA DATED 31 .8.2018 BETWEEN THE COMPANY AND NITI AYOG, GOVERNMENT OF IN DIA, THAT THE PURPOSE OF GRANT-IN-AID IS TO SET UP INCUBATION FACILITIES WITH SUITABLE INFRASTRUCTURE. THE AIC SET UP BY THE SPV SHOULD HAVE INCUBATION FACILITIES SUCH AS COMPETENT TEAM MEMBER S WHO UNDERSTAND THE INCUBATION AND STARTUP ECOSYSTEM AND HAVE THE ABILITY TO SUCCESSFULLY GUIDE THE INCUBATE STARTUPS , INFRASTRUCTURE SUCH AS INCUBATION SPACE, MEETING RO OMS, CONFERENCING SPACE AND FACILITIES; TECH SUPPORT SUC H AS SECTOR SPECIFIC LABS AND WORKSHOPS THAT HAVE TOOLS AND EQU IPMENT; SEED FUNDING SUPPORT; OTHER SUPPORT SERVICES SUCH A S IPR, REGULATORY, LEGAL MARKET RESEARCH, ETC. THE AIC SHO ULD ALSO CONDUCT OUTREACH INITIATIVES, BUILD A NETWORK OF ME NTORS, SUBJECT MATTER EXPERTS AND INVESTORS, DEVISE TRAINING PROGR AMMES AND/OR OTHER INCUBATION RELATED EVENTS, BUILDING TH E ENTREPRENEURSHIP ECOSYSTEM, FOR INCUBATE STARTUPS. 6.1 THE ABOVE SHOWS THAT THE COMPANY IS NOT DOING A NY CHARITABLE WORK PERSE, BUT CARRYING OUT THE WORK ON BEHALF OF GOVERNMENT OF INDIA AS PER THE TERMS AND CONDITIONS LAID DOWN IN THE SANCTION ORDER AND MOA AND PURELY ACTING AS A SERVICE PROVIDER. THE MOA BY THE SPV WITH NITI AYOG' HAVE A LL THE INGREDIENTS OF A CONTRACT I.E. DETAILS PROJECT, AMO UNT, TERMS & CONDITIONS, DURATION OF PROJECTS ETC. APART FROM TH E GRANT IN AID FOR ESTABLISHMENT AND OPERATION OF ATAL INCUMATION CENTRE, THE SPV' IS ALSO GIVEN SANCTION OF SEED FUND TO ENABLE THE SPV TO INVEST IN THE EQUITY OF INCUBATEE COMPANY AND TO MA KE FUNDING AVAILABLE TO THE INCUBATEE COMPANIES. THE COMPANY I S BEING FULLY SANCTION BY WAY OF GRANT-IN-AID FOR FACILITAT ING AND PROVIDING SERVICES TO THE NEW ENTREPRENEUR TO START ANY NEW BUSINESS/STARTUPS. SERVICE PROVIDED AGAINST ANY CON SIDERATION OR GRANT IS IN THE NATURE OF COMMERCIAL ACTIVITY AN D PROVISO TO SECTION 2(15) IS APPLICABLE. 6.2 IT IS STATED FROM ABOVE FACTS THAT, THE ACTIVIT IES OF THE SOCIETY CANNOT SAID TO BE IN THE NATURE OF CHARITABLE ACTIV ITIES FOR PUBLIC AIC-RNTU FOUNDATION /ITANO.940/2019 12 AT LARGE, BUT COMMERCIAL IN NATURE AND ALSO THE ACT IVITIES ARE OF A SERVICE PROVIDER/FACILITATOR FOR WHICH FUNDS BY W AY OF GRANT IN AID ARE PROVIDED BY NITI AYOG. GOVT. OF INDIA. THE SOCIETYS MEMORANDUM ALSO SPECIFIES ITS ACTIVITIES OUTSIDE IN DIA AND ALSO THE SOCIETY HAS NOT FURNISHED THE COPY OF ACCOUNTS SINCE ITS INCEPTION, WHICH IS A PREREQUISITE FOR APPROVAL U/S 12AA OF THE ACT. THEREFORE, THE CLAIM FOR REGISTRATION U/S 12A CANNOT BE CONSIDERED. 7. THUS THE SOCIETY IS NOT ENTITLED FOR REGISTRATI ON U/S.12M OF THE INCOME TAX ACT, 1961. ACCORDINGLY THE APPLICATI ON IN FORM NO. 10A, RECEIVED IN THIS OFFICE ON 06.3.2019 SEEKI NG REGISTRATION U/S 12AA IS HEREBY REJECTED/REFUSED. 9. THUS, THE LD. CIT(E) REJECTED THE APPLICATION ON T HE GROUND THAT THE ACTIVITIES OF THE SOCIETY CANNOT SAID T O BE IN THE NATURE OF CHARITABLE ACTIVITIES FOR PUBLIC AT LARGE B UT ARE COMMERCIAL IN NATURE AND ALSO THE ACTIVITIES ARE OF SERVI CE PROVIDER FOR WHICH FUNDS BY WAY OF GRANT IN AID IS P ROVIDED BY THE NITI AYOG, GOVERNMENT OF INDIA. THE ASSESSEE H AS PLACED HEAVY RELIANCE ON DECISION OF THE COORDINATE BEN CH RENDERED IN THE CASE OF KIIT TECHNOLOGY BUSINESS VS. CIT(E) ITANO.114/CTK/2017 WHEREIN THE COORDINATE BENCH HAS HELD AS UNDER: ON A PERUSAL OF THE ABOVE ORDER OF CIT(E), IT IS OB SERVE D THAT THERE IS NO FINDING BY HIM THAT THE OBJECTS OF THE TRUST ARE EITHER AIC-RNTU FOUNDATION /ITANO.940/2019 13 NOT CHARITABLE OR THE ACTIVITIES OF THE TRUST ARE N OT GENUINE. WE FIND '' HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. GOPI RAM GOYAL CHARITABLE TRUST, TAXMANN.COM 403 (RAJAST HAN) HAS HELD THAT WHILE GRANTING REGISTRATION U/S.L2AA OF T HE ACT TO THE ASSESSEE THE CIT HAS TO ENQUIRE ABOUT THE OBJECTS O F THE TRUST ARE CHARITABLE AND GENUINENESS OF ITS ACTIVITIES AN D THAT HE CANNOT ENQUIRE ABOUT THE APPLICATION OF INCOME OF T RUST FOR CHARITABLE. FURTHER, THE MUMBAI (E) BENCH OF THE TR IBUNAL IN CASE OF TARA EDUCATIONAL AND CHARITABLE VS. DIT(E), IN ITA NU.1247/MUM/:L013 FOR ASSESSMENT YEAR 2012-2013 HAS HELD THAT THE SCOPE OF ENQUIRY CONTEMPLATED U/S 12AA OF THE ACT, THUS, IS LIMITED TO THE ITA NO.114/2017 EXTENT OF C OMMISSIONER GETTING HIMSELF SATISFIED ABOUT OBJECT OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES SO AS TO GRANT OR REF USE THE REGISTRATION U/S 12A OF THE ACT. A PERUSAL OF THE I MPUGNED ORDER OF THE LD. DIT (EXEMPTIONS), HOWEVER, SHOWS THAT HE HAS NOT RECORDED ANY ADVERSE COMMENT OR DIS-SATISFACTION AB OUT THE OBJECT OF THE TRUST OR GENUINENESS OF THE TRUST ACT IVITIES. HE HAS REFUSED TO GRANT THE REGISTRATION U/S 12A OF THE ACT ON THE GROUND THAT ITS TRUST DEED DOES NOT CONTAIN 'DISSOL UTION CLAUSE'. IN OUR OPINION, THE LD. DIT (EXEMPTIONS) THUS HAS C LEARLY GONE BEYOND THE SCOPE OF ENQUIRY CONTEMPLATED U/S 12A OF THE ACT AND HAS REFUSED TO GRANT THE REGISTRATION U/S 12A OF THE ACT TO THE ASSESSEE TRUST ON A TOTALLY IRRELEVANT GROUND W ITHOUT POINTING OUT AS TO HOW HE WAS NOT SATISFIED EITHER ABOUT THE OBJECT OF THE TRUST OR THE GENUINENESS OF ITS ACTIV ITIES. WE THEREFORE SET ASIDE THE IMPUGNED ORDER OF THE LD. D IT (EXEMPTIONS) AND DIRECT THAT THE REGISTRATION U/S 1 2A OF THE ACT AS APPLIED BY THE ASSESSEE TRUST BE GRANTED. THEREF ORE, IN OUR CONSIDERED VIEW, AS THE CIT(E) HAS NOT GIVEN ANY FI NDING IN HIS ORDER THAT EITHER THE OBJECTS OF THE ASSESSEE COMPA NY ARE NOT CHARITABLE OR ITS ACTIVITIES ARE NOT GENUINE, HENCE , HE WAS NOT JUSTIFIED IN REFUSING TO GRANT REGISTRATION U/S.L2A A OF THE ACT AND APPROVAL U/S.80G OF THE ACT TO THE ASSESSEE COMPANY . WE, THEREFORE, SET ASIDE THE ORDER OF CIT(E) AND DIRECT HIM TO GRANT REGISTRATION U] S.L2AA OF THE ACT TO THE ASSESSEE C OMPANY AS WELL AS APPROVAL U/S.80G OF THE ACT SINCE ITS INCEP TION AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. AIC-RNTU FOUNDATION /ITANO.940/2019 14 10. FURTHER, OUR ATTENTION WAS DRAWN TO THE ORDER OF THE NITI AAYOG DATED 24 SEPTEMBER, 2018 WHEREIN CERTAIN CONDITIONS RELATED TO GRANT IN AID PROVIDED TO THE AS SESSEE COMPANY ARE MENTIONED. THE RELEVANT CONDITIONS ARE REPRODUCED AS UNDER FOR THE SAKE OF CLARITY. 7. THE AMOUNT OF GRANT-IN-AID RELEASED SHOULD BE SPENT EXCLUSIVELY ON THE SPECIFIED PURPOSE FOR WHICH IT HAS BEEN SANCTIONED WITHIN THE STIPULATED TIME FRAME AND AS PER THE BREAK -UP SUGGESTED FOR FUND UTILIZATION. 8. AFTER RECEIPT OF THIS SANCTION LETTER. THE SPY IS REQUIRED TO IMMEDIATELY START THE PROCESS FOR ESTABLISHMENT OF FACILITIES FOR THE ATAL INCUBATION CENTRE (AIC). INCLUDING 'PHYSICAL I NFRASTRUCTURE AND HUMAN RESOURCES FOR THE ALC 9. THE SPY SHALL PUT IN PLACE ALL THE REQUISITE SYSTEMS, PROCESSESS AND TOOLS REQUIRED TO ACHIEVE THE TARGETS ARRIVED A T MUTUALLY BETWEEN AIM, NITI AAYOGAND THE SPV!PROMOTER/HOST INSTITUTION. WHICH WOULD FORM THE BASIS FOR EVALUATION OF THE PERFORMANCE OF THE AIC. 10. IT IS MANDATORY FOR THE SPY/ALC TO ATTEND ALL WORKSHOPS AND MEETINGS CONDUCTED BY AIM, NITL AAYOG WITHREGARD TO INCUBATION CENTRES. INTIMATION FOR SUCH EVENTS WILL BE PROVIDED AT LEAST A WEEK IN ADVANCE, AND RECUSAL IF REQUIRED. SHOULD BE OBTAINED BY THE SPY/ALE IN WRITING [ROM AIM. NITI AAYOG,. 11. AS PART OF THE GRANT-IN-AID SUPPORT FOR-ESTABLISHMENT OF ALE, IT IS MANDATORY FOR THE SPV/AIC TO ABIDE BY THE AIC MONITORING, SYSTEM, DETAILS OF WHICH WILL BE COMMUNICATED IN DUE COURSE OF TIME, AIM, NITI AAYOG WILL HAVE THE RIGHT TO EVALUATE AND MONITOR THE WORKING OF THE AIC TO ENSURE THAT IT IS IN ALIGNMENT WITH THE VISION OF AIM. NITI AAYOG. THE WEBSITE LINK FOR UPLOADING ALC UPDATES AND RELATED INSTRUCTIONS WILL BE COMMUNICATED SEPARATELY. 12. THE PROMOTER/HOST INSTITUTION SHALL NOMINATE MEMBERS/GUARANTORS/DIRECTORS IN THE SI)Y. ANY CHANGE IN THE STRUCTURE AIC-RNTU FOUNDATION /ITANO.940/2019 15 OR INCLUSIONS/EXCLUSIONS OF ANY MEMBERS/GUARANTORS/ DIRECTORS IN THE SPV SHALL BE WITH THE PRIOR APPROVAL OF ALM. NLTI AAYOG. 13. ALL PAYMENTS EXPENDITURE AND ADVANCES FOR ESTABLISHMENT OF THE GRANT SHALL BE MADE BY THE ALE THROUGH EAT (EXPENDITURE, ADVANCE AND TRANSFER) MODULE OF PFMS (PUBLIC FINANCIAL MANAGEME NT SYSTEM). THE ALE SHALL DOWNLOAD ALL THE VOLUMES OF TILE USER MANUAL ON EAT MODULE FROM PFMS PORTAL AND READ THEM CAREFULLY BEFORE STARTING PAYMENT TO VENDOR ETC. 14. AU INTERESTS OR OTHER EARNINGS AGAINST GRANTS IN AID OF ADVANCES (OTHER THAN REIMBURSEMENT) RELEASED TO ANY GRANTEE INSTITUTION SHALT BE MANDATORILY REMITTED TO THE CONSOLIDATED FUND OF IN DIA IMMEDIATELY AFTER FINALISATION OF THE ACCOUNTS. SUCH ADVANCES S HALL NOT BE ALLOWED TO BE ADJUSTED AGAINST FUTURE RELEASES IN TERMS. OF RU LE 230 (8) OF GENERAL FINANCIAL RULES. 2011. 15. THE SPV JOINTLY WITH PROMOTER/HOST INSTITUTION WILL BE REQU IRED TO SUBMIT UTILISATION CERTIFICATES (DES) AS PER FORMAT IN ANNEX I, FOR THE GRANT-IN-AID AT THE END OF EACH FINANCIAL YEAR, AS WELL AS AT THE TIME OF SEEKING FURTHER INSTALLMENT OF THE GRAM-HI-AID, IF ANY. UNSPENT BALANCES ALONGWITH INTEREST EARNED BY THE SPY ON THE INSTALLMENT RECEIVED BY THE SPY SHALL BE ADJUSTED IN THE NEXT INSTALLMENTS, ARTY UNSPENT BALANCE OUT OF THE AMOUNT SANCTIONED AT THE END OF THE PROJECT PERIOD. WOULD HAVE TO THE REFUNDED TO THE GOVERNMENT OF INDIA BY MEANS OF AN ACCOUNT PAYEE DEMAND DRAFF DRAWN IN FAVOUR OF DRAWING AND DISBURSING OFFICER, NITJ AAYOG, PAYABLE AT NEW DELHI 16. AU THE ASSETS ACQUIRED OR CREATED OUT OF THE GR ANT-IN-AID SHOULD NOT BE DISPOSED OF OR ENCUMBERED OR UTILISED FOR THE PURPOSE OTHER THAN THOSE FOR WHICH THE GRANT-IN-AID BAS BEEN SANCTIONED WITHOUT THE PRIOR WRITTEN PERMISSION OF THE AIM. NTI AAYOG. 17. AIM, NITI AAYOG RESERVES THE RIGHT TO TERMINATE SUPPORT TO THE AIC AT ANY STAGE, IF IT IS CONVINCED THAT THE GRANT-IN-AID IS NOT BEING UTILISED FOR THE IDENTIFIED PURPOSE OR THAT APPROPRIATE PROGRESS IS NOT BEING MADE. 18. IN CASE A SPY/ALC WISHES TO WIND UP ITS ACTIVITIES, THE SPY JOINTLY WITH PROMOTER/HOST INSTITUTION SHALL GIVE A NOTICE OF AT LEAST THREE MONTHS TO AIM, N1TI ASYOG BEFORE THE CLOSURE, AND DESIGN A ND IMPLEMENT A CLOSURE/SUCCESSION PLAN IN CONSULTATION WITH AIM~ NITI AAYOG AS PER THE ESTABLISHED PROCEDURES! REGULATIONS FOR WINDING UP 19. IN THE EVENT OF BREACH OR VIOLATION OF THE MOA TERMS AND CONDITIONS . AIC-RNTU FOUNDATION /ITANO.940/2019 16 THE SPY JOINTLY WITH PROMOTER/HOST INSTITUTION WILL BE REQU IRED TO REFUND TO THE GOVERNMENT ON DEMAND, THE ENTIRE AMOUNT OR SUCH PART THEREOF AS MAY BE DETERMINED BY THE COMPETENT AUTHORITY AND MENTIONED IN THE DEMAND NOTICE ISSUED BY THE GOVERNMENT, ALONG WITH INTEREST THEREON AT THE RATE OF 1 1.50% (OR AS APPLICABLE UN DER THE GFR-20 17) COMPOUNDED ANNUALLY FROM THE DATE OF THE RECEIPT OF T HE GRANT-IN-AID TO THE DATE OF REFUND. 20. RELEASE OF FIRST INSTALLMENT DOES NOT IN ANY WA Y BIND AIM NITI AAYOG, GOVERNMENT OF INDIA TO RELEASE THE FUTURE IN STALLMENTS AND AIM NITI AAYOG SINCE THE RELEASE OF FUTURE INSTALLMENT WILL BE REGULATED AS PARA 5 ABOVE. GOVERNMENT OF INDIA SHALL NOT BE RESPON SIBLE FOR ANY LOSS INCURRED BY SPV/PROMOTER/HOST INSTITUTION OR ANY CO MMITMENT MADE BY THEM TO ANY THIRD PARTY/AGENCY. 21. AS PER RULE 211(1) OF GFR, THE ACCOUNTS OF THE S PV SHALL BE OPEN TO INSPECTION BY THE SANCTIONING AUTHORITY/AUDIT BY TH E C & AG AND THE INSTITUTION SHALL PROVIDE ALL THE NECESSARY SUPPORT TO CARRY OUT THE INSPECTION/AUDIT. 22. PROVISIONS CONTAINED IN RULE 233 OF THE GFR, 20 17 MAY BE KEPT IN MIND BY THE GRANT IN-AID RECEIVING ORGANIZATION. EX TRACTS OF RULE 233 OF THE GFR,2017 IS GIVEN IN ANNEXURE-II 11. FROM THE ABOVE ORDER OF THE NITI AAYOG, IT IS CLEAR THAT THE ASSESSEE WAS REQUIRED TO ACT IN ACCORDANCE WITH THE DIRECTION OF NITI AAYOG. THE MONEY SO GIVEN WAS TO B E SPENT IN ACCORDANCE WITH THE CONDITION LAID IN THE ORDER OF THE NITI AAYOG. THEREFORE, ENTIRE ACTIVITIES OF THE ASSES SEE WAS REGULATED AND THE GOVERNED BY THE NITI AYOG. NOW QUES TION ARISES WHETHER THE ACTIVITIES OF THE ASSESSEE WOULD FAL L UNDER THE CHARITABLE ACTIVITIES. REVENUE HAS NOT REBUT TED AIC-RNTU FOUNDATION /ITANO.940/2019 17 THE FACT THAT THE COMPANY IS REGISTERED UNDER SECTION 8 OF THE COMPANIES ACT. THE LD. CIT(E) HAS TREATED THE ASSES SEE AS MERELY A SERVICE PROVIDER TO NITI AAYOG. HOWEVER, LOOKING TO THE FUNCTIONS OF THE ASSESSEE COMPANY IT C AN EASILY BE INFERRED THAT THE FUNCTIONS WOULD FALL WITHI N THE TERM PUBLIC UTILITY IN VIEW OF THE EXPENDING ECONOM IC ACTIVITIES. THEREFORE, IN OUR CONSIDERED VIEW TERM P UBLIC UTILITY CANNOT BE CONFINED MERELY TO THE INFRASTRUCT URE AND OTHER SOVEREIGN ACTS. HENCE, IN THE LIGHT OF THE DEC ISION OF THE COORDINATE BENCH, WE ARE OF THE VIEW THAT THE ASSE SSEE OUGHT TO HAVE BEEN GRANTED REGISTRATION U/S 12AA IF AT ANY STAGE REVENUE FINDS THAT THE ASSESSEE IS ENGAGED IN COMMERCIAL ACTIVITIES AND HAS UTILIZED ITS FUNDS FOR T HE PURPOSES OTHER THAN PURPOSE AS MENTIONED IN THE MEMORANDUM OF THE ASSESSEE IN THAT EVENT THE REGISTRATI ON GRANTED U/S 12AA OF THE ACT COULD BE WITHDRAWN. THIS POWER CAN BE EXERCISED EVEN POST REGISTRATION U/S 12A A OF AIC-RNTU FOUNDATION /ITANO.940/2019 18 THE ACT. WE, THEREFORE, DIRECT THE LD. CIT(E) TO GR ANT REGISTRATION U/S 12AA OF THE ACT TO THE ASSESSEE COMP ANY. THE GROUNDS RAISED IN THIS APPEAL ARE ALLOWED. 12. IN RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER WAS PRONOUNCED IN THE OPEN COURT ON 14.10.2020 . SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED : 14/10/2020 PATEL/PS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE