ITO, Nashik V. Progressive Education Society, Nashik

ITA 962/PUN/2012

• Counselvise Citation: 96224514 RSA 2012
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 6; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NO.962/PN/2012 (ASSESSMENT YEAR 2009-10) ITO, WARD-1(4), NASHIK .. APPELLANT VS. PROGRESSIVE EDUCATION SOCIETY, OPP : NEW CURRENCY NOTE PRESS, JAIL ROAD, NASHIK ROAD-422101 .. RESPONDENT PAN NO.AAATP3809J ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI P.L. PATHADE DATE OF HEARING : 19-03-2014 DATE OF PRONOUNCEMENT : 21-03-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 09-03-2012 OF THE CIT(A)-I, PUNE RELATING TO ASSESS MENT YEAR 2009-10. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN AOP AND IS ENGAGED IN RUNNING SCHOOLS. THE ASSESSEE IS REGISTE RED UNDER THE SOCIETIES REGISTRATION ACT, 1860 AND IS CONSTITUTED AS A PUBLIC CHARITABLE TRUST. THE OBJECT OF THE TRUST IS TO IMPART EDUCAT ION UPTO 10 TH STANDARD. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING T OTAL INCOME OF RS.NIL ON 06-09-2010. THE ASSESSING OFFICER SCRUTINISED T HE RETURN OF INCOME. HE NOTED THAT THE CHIEF COMMISSIONER OF INCOME TAX, NASHIK HAS REJECTED THE APPLICATION OF THE ASSESSEE FOR EXEMPT ION U/S.10(23C) (IIIAD) OF THE ACT ON THE GROUND THAT THE TRUST, WHICH IS R UNNING SCHOOLS, HAS 2 RECEIVED DONATIONS FROM VARIOUS STUDENTS, WHICH IS IN THE NATURE OF CAPITATION FEES. THE ASSESSING OFFICER, THEREFORE, WAS OF THE VIEW THAT THE ASSESSEE TRUST CANNOT BE SAID TO BE EXISTING SO LELY FOR EDUCATIONAL PURPOSE. AS SUCH THE ASSESSEE WAS NOT FOUND TO BE ELIGIBLE FOR ACCUMULATION OF INCOME AND THE INCOME OF THE TRUST WAS NOT LIABLE FOR DEDUCTION/EXEMPTION U/S.11 OF THE ACT. THE SURPLUS OF RS.57,34,777/- OF THE ASSESSEE WAS ACCORDINGLY ASSESSED AS THE TOTAL INCOME OF THE ASSESSEE. 3. BEFORE CIT(A) IT WAS ARGUED THAT THE ASSESSEE TR UST IS REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT, 1950. IT IS ALS O REGISTERED WITH THE CIT, NASHIK AND THE ASSESSEE TRUST HAS BEEN GRANTED THE CERTIFICATE OF REGISTRATION U/S.12AA BEARING NO. NSK/TECH/12A/89-9 0/4 DATED 24-04- 1989. THE TRUST HAS BEEN GRANTED THE CERTIFICATE OF EXEMPTION U/S.80G SINCE INCEPTION OF THE TRUST AND THE LATEST CERTIFI CATE OF EXEMPTION ISSUED BY THE CIT, NASHIK IS FROM 01-04-2009. THE TRUST H AS BEEN FILING RETURNS OF INCOME REGULARLY AND THE OBJECT OF THE TRUST IS TO IMPART EDUCATION UPTO 10 TH STANDARD BY CONDUCTING THE SCHOOLS AS PER THE NORM S LAID DOWN BY THE GOVERNMENT OF MAHARASHTRA. IT WAS ARGUED THAT THE ASSESSEE SOCIETY IS AN EDUCATIONAL SOCIETY WITH THE SOLE OBJECT OF I MPARTING EDUCATION AND NOT FOR THE PURPOSE OF PROFIT. IT WAS ARGUED THAT THE TRUST HAS BEEN CLAIMING EXEMPTION U/S.11 FOR ALL THE YEARS SINCE A .Y. 1989-90 TO 2011- 2012 AND THE CLAIM OF EXEMPTION U/S.11 HAS BEEN ACC EPTED UPTO 2008-09. 3.1 IT WAS ARGUED THAT THE OBSERVATION OF THE ASSES SING OFFICER THAT THE TRUST IS COLLECTING CAPITATION FEE FROM THE STUDENT S IS NOT CORRECT. IT WAS SUBMITTED THAT THE ASSESSEE HAS RECEIVED DONATION F ROM GENERAL PUBLIC AND THE ASSESSING OFFICER HAS DISTORTED THE SAME BY OBSERVING THAT THEY 3 ARE DONATIONS FROM THE STUDENTS IN THE NATURE OF CA PITATION FEE. THE ASSESSEE FURTHER ARGUED THAT AT THE TIME OF FRAMING THE ASSESSMENT FOR A.Y. 2009-10 THE CERTIFICATE OF REGISTRATION U/S.12 A WAS IN FORCE AND TILL TODAY IT IS IN FORCE. WHEN THE TRUST HOLDS THE CERT IFICATE OF REGISTRATION U/S.12A IT IS ENTITLED TO GET THE EXEMPTION U/S.11 IRRESPECTIVE OF THE FACT THAT WHETHER IT IS THE EDUCATION TRUST OR OTHERWISE . RELYING ON VARIOUS DECISIONS IT WAS ARGUED THAT THE DISALLOWANCE OF RS .57,34,777/- MADE BY THE ASSESSING OFFICER SHOULD BE DELETED. 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : 5.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE , THE ASSESSMENT ORDER AND THE RIVAL CONTENTIONS. ON PERUSAL IT IS NOT ICED THAT THE APPELLANT IS REGISTERED UNDER THE SOCIETIES REGISTRATION ACT 1860 AND IS CONSTITUTED AS PUBLIC CHARITABLE TRUST. THE OBJECT OF THE TRUST IS TO IMPART THE EDUCATION UPTO 10 TH STANDARD. THE APPELLANT HAS OBTAINED CERTIFICATE OF REGISTRATION U/S 12A AS A CHARITABLE TRUST VIDE LETTER NO.NSK/TECH./12A/4/89-90/1167 DATED 24/04/1989 AND THE SAME WAS OPERATIVE DURING THE PREVIOUS YEAR RELEVANT TO THIS A SSESSMENT YEAR. A COPY THEREOF HAS BEEN PLACED BEFORE ME AND FILED. DU RING THE COURSE OF SCRUTINY ASSESSMENT IT WAS NOTICED THAT THE CHIEF COMMISS IONER OF INCOME TAX, NASHIK REJECTED THE APPLICATION OF THE A PPELLANT FOR EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT AS IT WAS NOTI CED BY HIM THAT THE TRUST WHICH IS RUNNING SCHOOLS HAS RECEIVED DONATIONS FR OM VARIOUS STUDENTS, WHICH IS IN THE NATURE OF CAPITATION FEES. TH E AO THEREFORE DISALLOWED THE SURPLUS OF RS.57,34,777/- AND ASSESSED THE T OTAL INCOME OF THE APPELLANT AT RS.57,34,777/-. 5.2.1 THE APPELLANT IS A TRUST REGISTERED U/S 12AA AND GOT CERTIFICATE OF EXEMPTION U/S 80G VIDE ORDER NO.NSK/CIT-I/80G(5) DAT ED 15/06/2010 W.E.F. 01/04/2009. IT IS AN EDUCATIONAL INSTITUTION W ITH THE SOLE OBJECT OF IMPARTING EDUCATION NOT FOR THE PURPOSE OF PROFIT AN D FILING SHE RETURNS OF INCOME REGULARLY AND CLAIMING EXEMPTION U/S 11 AND T HE SAME HAS BEEN ACCEPTED PRIOR TO NOT GRANTING THE CERTIFICATE OF E XEMPTION U/S 10(23C)(VI). IN MY CONSIDERED VIEWS REJECTION OF THE APPLICATION FOR SEEKING THE EXEMPTION U/S 10(23C)(VI) BY THE CHIEF CO MMISSIONER OF INCOME TAX, NASHIK DOES NOT HAMPER ANY APPLICABILITY OF THE PROVISIONS OF SECTION 11 WHEN THE TRUST IS REGISTERED U/S 12A AND THE OBJECT OF THE TRUST IS CHARITABLE IN NATURE AND NOT FOR THE PURPOSE OF THE PROFIT. THIS VIEW IS FORTIFIED BY THE ALLAHABAD HIGH COURT IN THE CASE OF BAR COUNCIL OF 4 UTTAR PRADESH VS. COMMISSIONER OF INCOME TAX (SUPRA) WHE REIN IT WAS HELD THAT SECTION 10(23A) AND SECTION 11 ARE NOT MU TUALLY EXCLUSIVE AND CAN OPERATED SIMULTANEOUSLY. THE APPELLANT IS A PROFE SSIONAL ASSOCIATION AND ALSO AN INSTITUTION FOR CHARITABLE PURPOSE AND IS E LIGIBLE TO CLAIM EXEMPTION BOTH UNDER S. 10(23A) AND S. 11. 5.2.2 IN VIEW OF THE ABOVE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT THE REJECTION OF T HE APPLICATION U/S 10(23C) OF THE APPELLANT BY THE CCIT, NASHIK DOES NOT IN ANY WAY DISENTITLE THE DEDUCTION U/S 11 AS SECTIONS 11 AND SECTIO N 12AA AND SECTION 10(23C) ARE INDEPENDENT OF EACH OTHER. THERE FORE, THE IMPUGNED DISALLOWANCE OF SURPLUS OF RS.57,34,777/- MADE BY THE AO UNJUSTIFIED AND IS DIRECTED TO BE DELETED. BOTH THE SUBSTANTIVE GROUND S OF APPEAL ARE, THEREFORE, ALLOWED. 6. IN THE RESULT, THE APPEAL IS ALLOWED. 4.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REV ENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PE R LAW, WHETHER THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.57,34,777/- ON ACCOUNT OF SURPLUS TAXED AS INCOME IN THE ASSESSMENT YEAR? . 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW, WHETHER THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE SECTIONS 1 1, SECTION 12AA & SECTION 10(23C) ARE INDEPENDENT & THE ASSESSEE IS ENTIT LED FOR THE DEDUCTION U/S.11, INSPITE OF THE FACT THAT IT IS ESTABL ISHED IN THE ASSESSMENT PROCEEDINGS THAT THE ASSESSEE TRUST BY ACCEPTING D ONATIONS FROM THE STUDENTS WHICH ARE IN THE NATURE OF CAPITATI ONS FEES AND IT IS ALSO NOT ITS SOLE OBJECT, CANNOT BE SAID TO BE EXISTING SOLEL Y FOR EDUCATIONAL/CHARITABLE PURPOSE & THEREBY NOT ELIGIBL E FOR DEDUCTION/EXEMPTION U/S.11 OF THE I.T. ACT. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASS ESSEE IN THE INSTANT CASE HAS OBTAINED THE CERTIFICATE OF REGISTRATION U/S.12 A AS A CHARITABLE TRUST VIDE LR.NO. NSK/TECH/12A/89-90/4 DATED 24-04-1989. WE FIND THE ASSESSING OFFICER DISALLOWED THE SURPLUS OF RS.57, 34,777/- ON THE 5 GROUND THAT THE CCIT, NASHIK HAS REJECTED THE APPLI CATION OF THE ASSESSEE FOR EXEMPTION U/S.10(23C) (IIIAD) OF THE ACT ON THE GROUND THAT THE TRUST, WHICH IS RUNNING SCHOOLS, HAS RECEIVED DONATIONS FR OM VARIOUS STUDENTS WHICH IS IN THE NATURE OF CAPITAL FEE. THE ASSESSE E TRUST IN THE INSTANT CASE HAS GOT THE CERTIFICATE OF EXEMPTION U/S.80G VIDE O RDER NO. NSK/CIT- I/80G(5) DATED 15/06/2010. THE REGISTRATION GRANTE D U/S.12A IS IN FORCE FOR THE IMPUGNED ASSESSMENT YEAR AND THE SAME HAS NOT B EEN CANCELLED. THEREFORE, MERELY BECAUSE THE APPLICATION FILED BEF ORE THE CHIEF COMMISSIONER U/S.10(23C) WAS REJECTED THE ASSESSING OFFICER IN OUR OPINION CANNOT DENY THE BENEFIT OF DEDUCTION U/S.11 R.W.S. 12AA AS LONG AS THE REGISTRATION GRANTED EARLIER TO THE TRUST U/ S.12A IS IN FORCE. SINCE IN THE INSTANT CASE THERE IS NO DISPUTE TO THE FACT TH AT THE ASSESSEE TRUST IS IMPARTING EDUCATION, AND THE REGISTRATION GRANTED E ARLIER U/S.12A IS CONTINUING, AND IN FORCE FOR THE IMPUGNED ASSESSMEN T YEAR, AND THE ASSESSEE HAS ALSO BEEN GRANTED EXEMPTION U/S.80G, T HEREFORE, THE ASSESSING OFFICER IN OUR OPINION IN THE INSTANT CAS E IS NOT JUSTIFIED IN REJECTING THE CLAIM OF DEDUCTION U/S.11. IN THIS V IEW OF THE MATTER AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE LD.CIT( A) WE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY, THE SAME IS U PHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21-03-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 21 ST MARCH 2014 6 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, PUNE 4. THE CIT-I, PUNE 5. THE DR A BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE