Consortium of Institution for Higher Learning (CIHL), Secunderabad V. Director of Income Tax (Exemptions), Hyderabad

ITA 972/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66358 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 20-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 972/HYD/2012 ASSESSMENT YEAR 2012-13 M/S. CONSORTIUM OF INSTITUTIONS FOR HIGHER LEARNING, HYDERABAD PAN: AADFC9303P VS. DIRECTOR OF INCOME-TAX (EXEMPTIONS) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI ANIL KUMAR RESPONDENT BY: SRI M.H. NAIK DATE OF HEARING: 04.10.2012 DATE OF PRONOUNCEMENT: 12.10.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) [DIT(E) FOR SHORT], HYDERABAD DATED 30.4.2012 FOR ASSESSMENT YEAR 2012- 13. 2. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE FILE D AN APPLICATION FOR REGISTRATION U/S. 12AA OF THE INCOM E-TAX ACT, 1961 IN FORM NO. 10A ON 4.10.2011. THE DIT(E) CALL ED FOR INFORMATION REGARDING THE ACTIVITIES OF THE ASSESSE E. ON EXAMINATION OF THE INFORMATION FILED BY THE ASSESSE E IT IS OBSERVED THAT THE CONSORTIUM OF INSTITUTIONS FOR HI GHER LEARNING (CIHL FOR SHORT) IS AN EDUCATIONAL INSTITU TION WHICH HAS BEEN REGISTERED UNDER AP SOCIETIES REGISTRATION ACT . HOWEVER, IN THIS CONTEXT, IT IS STATED THAT CIHL IS NOT AN INDE PENDENT EDUCATIONAL INSTITUTION, BUT A CONSORTIUM OF UNIVER SITIES NAMED AS SUCH I.E., CONSORTIUM OF INSTITUTIONS OF HIGHER LEARNING. THUS, AS MAY BE SEEN, THE ABOVE ORGANIZATION HAS BEEN CON STITUTED BY I.T.A. NO. 972/HYD/2012 M/S. CONSORTIUM OF INSTITUTIONS FOR HIGHER LEARNING ======================= 2 ASSOCIATING SEVERAL UNIVERSITIES, WHICH ARE CENTRES OF HIGHER LEARNING. CIHL HAS NO INDEPENDENT CAMPUS. IT IS OPERATING FROM THE PREMISES OF IIIT, GACHIBOWLI, HYDERABAD. A S ADMITTED BY THE SOCIETY, IT IS ORGANISING THE PROGRAMME OF M SIT, WHICH WAS EARLIER ORGANIZED BY APSCHE, FROM THE ACADEMIC YEAR 2003. 3. THE DIT(E) OBSERVED THAT SUCH PROGRAMME IS BEING ORGANISED BY CIHL IN ASSOCIATION WITH CARNEGIE MELL ON UNIVERSITY, USA (CMU) AND OTHER UNIVERSITIES IN AND HRA PRADESH. UNDER THESE CIRCUMSTANCES, THE SAID ORGANIZATION I. E., CIHL, THUS, CANNOT BE TREATED AS AN INDEPENDENT EDUCATIONAL INS TITUTION. FURTHER, AS ADMITTED IN THEIR SUBMISSIONS BEFORE TH E DIT(E), CIHL, AFTER CONDUCTING ADMISSION TESTS FOR THE PURP OSE OF IMPARTING SUCH COURSE, ALLOTS THE STUDENTS TO DIFFE RENT UNIVERSITIES FOR THE PURPOSE OF STUDY THERE. EVEN THOUGH, IT IS STATED THAT CIHL PROVIDES THE COURSE MATERIAL AND S UPERVISES THE ORGANIZATION OF THE COURSE AT SUCH LEARNING CENTRES , THE MSIT DEGREE IS AWARDED TO THE STUDENTS BY THOSE LEARNING CENTRES. UNDER THESE CIRCUMSTANCES, THUS IT CANNOT BE ACCEPT ED THAT CIHL IS AN INDEPENDENT EDUCATIONAL INSTITUTION. 4. FOR THE PURPOSE OF ORGANIZING SUCH MSIT COURSE, CIH L HAS ENTERED INTO MEMORANDUM OF UNDERSTANDING (MOU) WITH CMU ON 24 TH JUNE, 2009, A COPY OF WHICH HAS BEEN FILED DURING THE PROCEEDINGS. THE FIRST FIVE CLAUSES OF THE 'TERMS AND CONDITIONS' OF SUCH MOU ENTERED INTO BY CIHL WITH C MU ARE AS UNDER: (A) CMU AND CIHL AGREE TO CO-OPERATE WITH EACH OTHER IN RESEARCH AND OTHER ACTIVITIES FOR FURTHERANCE OF TH E MSIT PROGRAMME. (B) CMU WILL PROVIDE VISITING FACULTY AND WILL PARTICIP ATE IN I.T.A. NO. 972/HYD/2012 M/S. CONSORTIUM OF INSTITUTIONS FOR HIGHER LEARNING ======================= 3 THE EVALUATION AND QUALITY ASSURANCE PROCESS ON MUT UAL AGREED UPON BASIS. (C) CMU WILL PROVIDE ADVICE TO CIHL TO HELP CIHL BETTER ENSURE THAT, A. CIHL HAS ADEQUATE INFRASTRUCTURE AND FACILITIES B. THE ACADEMIC PROGRAM AND FACULTY HAVE NECESSARY STRENGTHS AND CAPABILITIES, AND C. ANY MSIT STUDENT ADMITTED TO A CMU PROGRAM WILL RECEIVE APPROPRIATE TRANSFER CREDITS. (D) PARTICIPATION BY THE PARTIES TO THIS MOU SHALL BE S UBJECT TO MUTUAL CONSENT, AVAILABILITY OF FUNDS AND APPROVAL OF EACH INSTITUTION ON A CASE-BY-CASE BASIS. (E) THE ROYALTY TO BE PAID TO CMU IS 10% OF THE FEE COL LECTED FROM EACH STUDENT, AND IS PAID TO SUPPORT THE UNIVE RSAL DIGITAL LIBRARY PROGRAM IN INDIA. 5. FROM THE ABOVE, IT MAY BE SEEN THAT CIHL I.E., THE SOCIETY IN THIS CASE, IS NOT CONDUCTING SUCH COURSE INDEPEN DENTLY, BUT, IN ASSOCIATION WITH THE SAID FOREIGN UNIVERSITY OF USA . SIMILARLY, FOR CONDUCTING SUCH COURSE IN DIFFERENT UNIVERSITIE S, CIHL HAS ENTERED INTO SEPARATE MOUS WITH SUCH UNIVERSITIES. IT HAS ENTERED INTO AN MOU WITH IIIT, GACHIBOWLI, HYDERABA D ON 30.04.2010. IN THE INTRODUCTORY PART OF THE SAID MO U, IT IS MENTIONED THAT, A SOCIETY FORMED FOR OFFERING MULTI -UNIVERSITY INTERDISCIPLINARY REGULAR POST GRADUATE PROGRAMMES SUCH AS MASTER OF SCIENCE IN INFORMATION TECHNOLOGY. FURTH ER, UNDER THE HEADING 'BACKGROUND', IN THAT MOU, IT IS MENTIONED THAT CIHL IS INVOLVED IN RUNNING AN INNOVATIVE INTER-DISCIPLINAR Y REGULAR POST- GRADUATE PROGRAMME IN INFORMATION TECHNOLOGY, CALLE D MIST IN CERTAIN UNIVERSITIES IN AP INCLUDING IIIT. WHILE ST IPULATING THE I.T.A. NO. 972/HYD/2012 M/S. CONSORTIUM OF INSTITUTIONS FOR HIGHER LEARNING ======================= 4 MODALITIES OF SELECTING STUDENTS FOR SUCH COURSE, W HO ARE TO STUDY AT IIIT, UNDER 'TERMS AND CONDITIONS' OF THAT MOU, IT IS FURTHER MENTIONED THAT COURSE FEES WILL BE COLLECTE D BY CIHL AT THE RATES AS DECIDED BY CIHL AND WILL REMIT SHARE O F FEES TO IIIT I.E., 25% OF THE FEES SO COLLECTED BY CIHL FROM EAC H STUDENT TO MEET THE ADMINISTRATIVE AND ACADEMIC EXPENDITURE BY IIIT IN RUNNING THE PROGRAMME AT IIIT. SIMILAR MOUS HAVE BE EN ENTERED INTO BY CIHL WITH OTHER UNIVERSITIES/INSTITUTIONS. 6. THE DIT(E) OBSERVED THAT IT MAY BE SEEN THAT CIHL I .E., THE ASSESSEE SOCIETY IN THIS CASE, IS NOT AN INDEPENDEN T EDUCATIONAL INSTITUTION CONDUCTING SUCH COURSE. IT IS NOT CARRY ING OUT SUCH EDUCATIONAL ACTIVITY INDEPENDENTLY. IT IS FURTHER P ERTINENT TO MENTION HERE THAT UNDER 'MAIN AIMS AND OBJECTIVES O F THE SOCIETY' GIVEN IN PARA 5, AT PAGE 4 OF THE MEMORAND UM OF ASSOCIATION OF THE ABOVE SOCIETY, IT IS MENTIONED T HAT 'THE MAIN AIMS AND OBJECTIVES OF THE SOCIETY SHALL BE TO ESTA BLISH, SET UP, RUN AND CARRY ON THE ADMINISTRATION AND MANAGEMENT OF C ONSORTIUM OF INSTITUTIONS OF HIGHER LEARNING ..... '. EVEN THOUGH, THE ASSESSEE SOCIETY IN THIS CASE CLAIMS THAT IT WAS CO NDUCTING SUCH EDUCATIONAL COURSE I.E., MSIT PROGRAMME FOR STUDENTS, SINCE THE MAIN OBJECTIVE OF THE SOCIETY IS TO ESTABLISH SUCH CONSORTIUM OF INSTITUTION OF HIGHER LEARNING AND TO MANAGE THE SA ME, THE DIT(E) OPINED THAT UNDER THAT CIRCUMSTANCE, IT CANN OT BE ALLOWED REGISTRATION U/S 12AA OF THE ACT. ACCORDINGLY, TH E DIT(E) REJECTED THE APPLICATION FILED BY THE ASSESSEE. AG AINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LEARNED AR SUBMITTED THAT THE ASSESSEE CARRYING ON THE ACTIVITIES IN ACCORDANCE WITH THE OBJECT CLAUSE S OF THE ASSESSEE TRUST WHICH ARE PURELY CHARITABLE ACTIVITI ES I.E., I.T.A. NO. 972/HYD/2012 M/S. CONSORTIUM OF INSTITUTIONS FOR HIGHER LEARNING ======================= 5 IMPARTING OF EDUCATION AND REGISTRATION SHOULD BE G RANTED U/S. 12AA OF THE ACT. 8. THE LEARNED DR RELIED ON THE ORDER OF THE DIT(E). 9. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. SECTION 12AA READS AS FOLLOWS: '12AA. (1) THE COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUT ION MADE UNDER CLAUSE (A) OF SECTION 12A SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDE R TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE 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 ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT: PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. (1A) ALL APPLICATIONS, PENDING BEFORE THE CHIEF COMMISSIONER ON WHICH NO ORDER HAS BEEN PASSED UNDER CLAUSE (B) OF SUB-SECTION (1) BEFORE THE 1 ST DAY OF JUNE, 1999, SHALL STAND TRANSFERRED ON THAT DAY TO THE COMMISSIONER AND THE 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 UNDER CLAUSE (B) OF SUB-SECTION (1) SHALL BE PASSED I.T.A. NO. 972/HYD/2012 M/S. CONSORTIUM OF INSTITUTIONS FOR HIGHER LEARNING ======================= 6 BEFORE THE EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION WAS RECEIVED UNDER CLAUSE (A) SECTION 12A. (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTE D REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AN D SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GEN UINE 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 REGISTRATION OF SUCH TRUST OR INSTITUTION: PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD:' 10. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT TH E DIT(E) ON SATISFYING HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES CARRIED ON BY THE ASSESSEE WITH REGARD TO CHARITABL E ACTIVITIES SHALL GRANT REGISTRATION. IN THE PRESENT CASE THER E IS NO DISPUTE THAT THE ASSESSEE IS INVOLVED IN IMPARTING EDUCATIO N AND IF IT IS IN THE NATURE OF CHARITABLE ACTIVITIES AS PRESCRIBE D U/S. 2(15) OF THE ACT, THE REGISTRATION HAS TO BE GRANTED. IF THE ASSESSEE CARRIED ON IMPARTING EDUCATION WITH THE ASSOCIATION OF SOME OTHER PERSON IT CANNOT BE A REASON FOR DENYING REGI STRATION. ACCORDINGLY, WE REMIT THE ENTIRE ISSUE TO THE DIT(E ) FOR FRESH CONSIDERATION WITH A DIRECTION TO THE ASSESSEE TO P ROVE HE GENUINENESS OF THE ACTIVITIES CARRIED ON BY IT. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2012. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 12 TH OCTOBER, 2012 TPRAO I.T.A. NO. 972/HYD/2012 M/S. CONSORTIUM OF INSTITUTIONS FOR HIGHER LEARNING ======================= 7 COPY FORWARDED TO: 1. M/S. CONSORTIUM OF INSTITUTIONS FOR HIGHER LEARN ING, C/O. M/S. M. ANANDAM & CO., CHARTERED ACCOUNTANTS, 7A, S URYA TOWERS, S.P. ROAD, SECUNDERABAD-500 003. 2. THE DIRECTOR OF INCOME-TAX (EXEMPTIONS), HYDERAB AD. 3. THE ADIT(E)-I, HYDERABAD. 4. THE DR A BENCH, ITAT, HYDERABAD