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Summary and Review of Case Laws Decided by Income Tax Appellate Tribunals
Tuesday, 22 March 2016 13:49

Refusal to Grant Registration u/s 80G - Exemption u/s 11 and 12 cannot be denied merely because the activities of the Assessee Trust have resulted in profit or surplus - Delhi Tribunal

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Section 80G, 145(3) - Refusal to Grant Recognition Section 80G, 145(3) - Refusal to Grant Recognition

Registration u/s 80G

Exemption u/s 11 and 12 cannot be denied merely because the activities of the Assessee Trust have resulted in profit or surplus specifically when the registration u/s 12 continues and when Sec.11 exemption was granted

Facts

1. The assessee “Maharaji Educational Trust” is registered u/s 12A of the Act vide order no.DIT(E)2(213)/94-95 dt. 31.01.1995 issued by DIT (Exemptions) Madras and also u/s 80G of the Income Tax Act, 1961

2. Subsequently, the assessee Trust has also been allowed exemption u/s 10(23)(C)(vi) of the Act by DG (Exemptions), New Delhi vide order dt. 27.3.2009 vide F.No.DGIT(E)/10(23)(C)(vi)/2008- 09/1766

3. The registration u/s 12A of the Act continues and has not been withdrawn till date. The Trust has been claiming and was allowed the benefit of exemption u/s 11 of the Act for the A.Y. 2002-03 in an order passed u/s 143(3) of the Act on 28.3.2005

4. Also for the A.Y. 2008-09 and 2009-10, the assessee’s claim for exemption u/s 11 was accepted by the A.O. vide his orders of assessment u/s 143(3) of the Act dt. 21.12.2010 and 13.12.2010 respectively

5. The Trust is running medical college and para-medical courses at Ghaziabad and Chennai

6. A survey was conducted on the assessee Trust and u/s 133A of the Act on 10.8.2006 at its premises at Ghaziabad. During the course of survey certain loose papers, receipt books and other relevant records were found containing the transactions relevant to the receipt of admission fee, incurring of an expenditure etc. which were confronted to the Chairman of the Trust Dr.P.Mahalingam

7. Statement of the Chairman was recorded an oath on 21.8.2006 and 25.8.2006 respectively. Statement of Shri Kamal Kannan, Accounts Officer was recorded on the date of survey itself i.e. 10.8.2006. Mr.Kamal Kannan stated that he was not an authorised person. To further questions he stated that the fee structure of students of management quota and government quota was the same

8. It is contended by the assessee, that its Chairman, in order to keep mental peace and avoid unnecessary harassment and also without going into the authenticity of the documents found in several and on advise of the officials of Income Tax Department had declared additional income of Rs.3 crores for the F.Y. 2006- 07 relevant to the A.Y. 2007-08 and has paid taxes thereon

9. Thereafter the assessments for all these A.Ys were taken up and completed

10. Assessee moved to CIT(A) who granted relief to the Assessee

11. Aggrieved by the order Revenue moved to ITAT

12. ITAT dismissed the appeal and decided it in favour of the Assessee 

Adjudication

Applying the propositions laid down in these case laws to the facts of the case, we find no infirmity in the order of the Ld.CIT(A) in granting exemption u/s 11 of the Act to the assessee and also in deleting the addition made on inferences, specifically when the registration u/s 12 continues and when Sec.11 exemption was granted both in earlier as well as later years.

After hearing rival submissions, we find that the registration granted u/s 12A and u/s 10(23)(C)(vi) continue. There is no dispute during the year about the correctness of the income declared by the assessee. When the objections of the assessee is to provide “education”, it does not fall under the Proviso to S.2(15) of the Act. Under these circumstances we have to uphold the order of the First Appellate Authority that the assessee is entitled to exemption u/s 11 of the Act. 

Even otherwise, exemption u/s 11 and 12 cannot be denied merely because the activities of the Assessee Trust have resulted in profit or surplus. The principles of law in this regard have been laid down by the Hon’ble Supreme Court in the case of ACIT vs. Surat Art Silk Cloth Manufacturers Association, 121 ITR 01 (SC).

In our view there is no ground made out by the A.O. for denying benefit of exemption u/s 11 to the assessee for this A.Y. Admittedly the objects of the Trust are charitable and there is no allegation that the activities of the Trust are not in accordance with its objects. No violation of Sec.13 is made out.

Cases referred to

1. DIT(E) vs. Raunaq Education Foundation 294 ITR 76 (Del)

2. DDIT vs. Shanti Devi Progressive Education Society 340 ITR 320 (Del)

3. CIT vs. Geetanjali Education Society 174 Taxman 440 (Raj.)

4. Gagan Education Society vs. ACIT 131 ITD 442 (Agra)

5. CIT vs. Khalsa Rural Hospital & Nursing Training Institute 173 Taxman 180 (P&H)

6. ACIT vs. Balaji Educational & Charitable Public Trust 48 SOT 281 (Mad.)(2011) 11 ITR 179 (Mad.)

7. CIT vs. Mool Chand Sharbati Devi Hospital Trust 190 Taxman 338 (All.)

8. Chief CIT vs. Geetanjali University Trust 352 ITR 433(Raj.)

9. ACIT vs. Surat Art Silk Cloth Manufacturers Association, 121 ITR 01 (SC)

10. St.Lawrence Educational Society (Regd.) vs. CIT (2013) 353 ITR 320 (Del)

Additional Info

Read 3304 times Last modified on Wednesday, 04 May 2016 12:00
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A practicing Chartered Accountant Anil B. acquired CA, CS and LL.B degrees with over 12 years of rich and diverse management experience across Banking & Financial Services, Insurance and the Logistics industry spanning various markets and geographies globally.

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