M/s Bhai Gurdas Educational Trust, Patiala v. CIT(E), Chandigarh

ITA 1081/CHANDI/2017 | 2017-2018
Pronouncement Date: 29-11-2017 | Result: Allowed

Appeal Details

RSA Number 108121514 RSA 2017
Assessee PAN AAATB8146N
Bench Chandigarh
Appeal Number ITA 1081/CHANDI/2017
Duration Of Justice 5 month(s) 1 day(s)
Appellant M/s Bhai Gurdas Educational Trust, Patiala
Respondent CIT(E), Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted A
Tribunal Order Date 29-11-2017
Last Hearing Date 09-11-2017
First Hearing Date 09-11-2017
Assessment Year 2017-2018
Appeal Filed On 27-06-2017
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHA CHANDIGARH BEFORE SHRI SANJAY GARG JUDICIAL MEMBER AND SHRI B.R.R. KUMAR ACCOUNTANT MEMBER ITA NO.1081/CHD/2017 ASSESSMENT YEAR: 2017-18 M/S BHAI GURDAS EDUCATIONAL TRUST VS. CIT(E) B-50 D.L. F COLONY SIRHIND ROAD CHANDIGARH PATIALA PAN NO. AAATB8146N (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAJIV SALDI REVENUE BY : SH. GULSHAN RAJ DATE OF HEARING : 27/11/2017 DATE OF PRONOUNCEMENT : 29/11/2017 ORDER PER DR. B.R.R. KUMAR A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(E)- CHANDIGARH DT. 31/05/2017. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT (EXEMPTIONS) IS ILLEGAL AS IT IS GROSSLY IN VIOLATION OF THE PROVISIONS OF SEC 80G (5) READ WITH 80G(2)(A )(IV). 2. THE LD. CIT (EXEMPTIONS) IN HIS ORDER HAS MADE NO R EFERENCE AS TO HOW THE TRUST DOES NOT COMPLY WITH ALL OR EVEN ANY OF T HE CONDITIONS REQUIRED FOR APPROVAL UNDER SECTION 80G AND HAS VAGUELY PASS ED THE ORDER. THE APPELLANT HAS ALREADY SUBMITTED AN APPLICATION DATED 15/05/2017 EXPLAINING IN DETAIL HOW ALL THE CONDITIONS ARE BEI NG FULFILLED BY IT. THE LD. CIT (EXEMPTIONS) HAS COMPLETELY IGNORED THE SAME. 3. THE LD. CIT (EXEMPTIONS) HAS MADE FRIVOLOUS OBJECTI ONS LIKE : A) THAT THE APPELLANT HAS AT ITS DISPOSAL INVESTIBLE B ALANCES AND THE RATIONALE FOR SEEKING DONATIONS IS NOT BROUGHT OUT IN THE CASE. B) THAT ALLOWING DONATIONS TO EDUCATIONAL INSTITUTIONS WOULD BE CONTRARIAN TO THE THUMBS DOWN GIVEN TO THE PRACTICE OF DONATIONS. C) THAT NO EVIDENCE HAS BEEN PROVIDED BY THE APPLICANT THAT COULD PROJECT SAFEGUARDS THAT MAY HAVE BEEN BUILT INTO TH E ADMINISTRATIVE AND FINANCIAL PRACTICES BEING FOLLOWED BY THE TRUST AND THE INSTITUTION BEING RUN UNDER ITS AEGIS. D) THAT NO PURPOSE HAS BEEN PROJECTED FOR DONATIONS AN D THERE IS NO HISTORY OF ANY RECEIPT OF DONATION EITHER. 2 THESE OBJECTIONS CANNOT BE REGARDED AS A GROUND FOR REJECTION OF APPLICATION U/S 80G. 4. THE APPLICATION FOR EXEMPTION U/S 80G HAS BEEN REJE CTED WITHOUT GIVING A REASONABLE OPPORTUNITY OF BEING HEARD BY T HE LD. CIT (EXEMPTIONS). 3. AN APPLICATION IN FORM 10G WAS FILED BY THE APPL ICANT ON 25.11.2016 IN THIS OFFICE FOR APPROVAL U/S 80G OF THE INCOME TAX ACT 1961. THE TRUST WAS CREATED ON 28.08.1998. THE REGISTRATION U/S 12A OF THE ACT WAS GRANTED TO THE APPLICANT BY THE ORDER OF THE COMMISSIONER OF INCOME TAX (EXE MPTIONS) CHANDIGARH VIDE ORDER DATED 17.10.2016 4. LETTER DATED 02.05.2017 WAS ISSUED BASED ON T HE INFORMATION AND DOCUMENTS SUBMITTED ALONG WITH THE APPLICATION FORM REQUESTING TO PRODUCE THE FOLLOWING DETAILS/ CLARIFICATIONS:- I. DETAILS OF PROPERLY VESTED IN THE TRUST AS ENVISAGED U/S 11 OF THE I.T. ACT INCOME FROM WHICH IS SOUGHT TO BE EXEMPTED II. DETAILS OF VOLUNTARY CONTRIBUTIONS RECEIVED BY THE TRUST AS ENVISAGED U/S 12 OF THE I.T. ACT AND WHETHER ANY SPECIFIC DIRECTIONS HA VE BEEN RECEIVED BY THE PERSONS MAKING VOLUNTARY CONTRIBUTIONS. III. THE ORIGINALS OF MOA/BYE-LAWS OF THE TRUST ALONG WITH THE REGISTRATION CERTIFICATE. IV. THE COPIES OF BANK STATEMENTS THROUGH WHICH ACTIVITIES ARE BEING PROPAGATED. V. THE COMPLETE DETAILS OF THE DONATIONS RECEIV ED OR INTENDED TO BE RECEIVED AND DOCUMENTARY EVIDENCE AS REGARDS TO GRANTS RECEI VED. VI. COPY OF I.T. RETURNS FOR THE A.Y. 2015-16 AN D 2016-17 HAS BEEN SUBMITTED. THE COPY OF THE I.T RETURNS FOR ASSESSMENT YEAR 2014-15 MAY BE FILED VII. IF ANY DONATION UNDER FCEA HAS BEEN RECEIV ED THE RELEVANT DETAILS MAY BE FURNISHED. THE COPY OF THE RETURN FOR FCRA AND THE COPY OF SPECIFIED BANK ACCOUNT MAY PLEASE BE FURNISHED. VIII. THERE IS HUGE SURPLUS IN BOOKS FOR A.Y.2014-1 5 2015-16 AND 2016-17 THEN WHAT IS NECESSITY OF REQUIREMENT OF MORE FUNDS AS DONATIONS EXPLANATION REGARDING THIS. IX. THE DETAILS OF CORPUS FUND AND WHETHER THE SAME ARE WITH ANY WRITTEN SPECIFIC DIRECTIONS. X. A NOTE ON ACTIVITIES SPECIFYING THE APPLICATION OF FUNDS FOR CHARITABLE ACTIVITIES SPECIFYING WHETHER THE ACTIVITIES FALL UNDER THE CA TEGORY OF RELIGIOUS OR CHARITABLE? XI. EXPLANATION OF SOURCE OF DONATIONS WITH NAME A DDRESS PAN AMOUNTS AND DONATION RECEIPTS. XII. FEE STRUCTURE CLASS WISE AND YEAR WISE FOR A.Y . 2014-15 2015-16 2016-17 CURRENT YEAR XIII. XIII. DETAILS OF SALARY PAID WITH NAME ADDRESS SOLE AMOUNTS PAID EDUCATION QUALIFICATION. 5. THE LD. CIT(E) HELD THAT THE PERUSAL OF THE DOCU MENTS SUBMITTED REVEALED THAT THE TRUST IS RUNNING A NURSING COLLEGE AND THE RE IS NO HISTORY OF ANY DONATION RECEIVED BY THE TRUST AS REVEALED BY THE D OCUMENTS ON RECORD WHICH IS ALSO STATED IN REPLY OF THE APPLICANT DATE D 15.05.2017. FINANCIAL STATEMENTS SUBMITTED BY THE APPLICANT FOR F.Y. 2013 -14 TO 2015-16 REVEAL THAT THE TRUST HAS RECEIVED INCOME UNDER THE HEAD 'FEE A ND OTHER RECEIPTS' AND 'BANK INTEREST' ONLY AND THE LARGEST EXPENDITURE DU RING F.Y 2013-14 IS UNDER THE 3 HEAD 'SALARY' WHICH IS 27% OF THE TOTAL RECEIPT AND DURING F.Y. 2014-15 & 2015- 16 IS UNDER HEAD 'UNIVERSITY EXPENSES' WHICH IS 12. 2% AND 12% OF THE TOTAL RECEIPTS RESPECTIVELY. THE SUMMARY OF THE FINANCIAL STATEMENTS FOR THE LAST THREE YEARS IS TABULATED BELOW: F.Y. GROSS RECEIPT NET SURPLUS (%) FIXED ASSETS CASH & BANK BALANCE 2013-14 1 76 18 629/- 39 29 596/- (22.3%) 3 21 29 573/- 1 35 26 480/- 2014-15 1 36 77 789/- (-) 2 35 308/- 3 16 16 624/- 86 18 926/- 2015-16 1 53 39 828/- 34 75 099/- (22.6%) 3 44 92 372/- 1 07 24 258/- 6. THE LD. CIT(E) HELD THAT THE APPLICANT HAS CLAIM ED APPROVAL ON THE BASIS OF 12AA GRANTED TO THE APPLICANT IN PURSUANCE TO ITAT' S ORDER. 12AA IS MERELY A NECESSARY CONDITION AND IN NO WAY A SUFFICIENT COND ITION FOR GRANT OF APPROVAL UNDER SECTION 80G. 7. THE LD. CIT(E) REJECTED THE APPLICATION OF THE A SSESSEE HOLDING AS UNDER : THE ACTIVITIES OF THE APPLICANT HAVE ALSO BEEN THO ROUGHLY LOOKED INTO. VIS-A-VIS ACTUAL ACTIVITIES IT IS CLEAR THAT THE APPLICANT HAS NOT PURSUED ITS MAI N PURPOSE OF ESTABLISHING A GURU NANAK MUSEUM AND A RESEARCH UNI VERSITY/ CENTRE TO STUDY ANCIENT LITERATURE. THE ONLY PURPOSE PURSUED PERTAI NS TO ONE OF THE STATED AIMS I.E. TO PROMOTE EDUCATION BY ESTABLISHING PROFESSIONAL C OLLEGES. THE ACTIVITIES OF THE APPLICANT TRUST REVEAL THAT IT IS RUNNING A NURSING COLLEGE ONLY. THE APPLICANT HAS RECEIVED INCOME BY INTEREST FROM FDRS AND TRANSFERRED THE SAME TO INVESTMENT AND OTHER FUNDS IN THE PRECEDING YEARS APART FROM COLLECTING FEE UNDER THE HEAD 'FEE & OTHER RECEIPTS' ETC. AND KEPT CLAIMING DEPRECIATION DOWN THE YEARS TO ACCUMULATE LARGE SURPLUSES. THE P URPOSE OF LEGISLATURE TO INCLUDE THIS SECTION IN THE ACT IS TO PROMOTE AND E NCOURAGE PEOPLE FOR MAKING DONATIONS TO THE SOCIETIES/TRUSTS WHICH OTHERWISE L ACK FUNDS FOR PERFORMING CHARITABLE ACTIVITIES. ON THE CONTRARY THE TRUST H AS ACCUMULATED LARGE FUNDS IN THE FORM OF FDR AND CASH THAT THE TRUST DOES NOT SE EM TO UTILIZE FOR EXPANSION. AS REVEALED BY THE SUBMISSIONS OF THE APPLICANT TH E CURRENT ACTIVITY VIS-A-VIS QUALIFICATION FOR 80G GETS IMPINGED BECAUSE THE ACT IVITIES OF THE TRUST ARE BASED ON A SUBSTANTIAL FEE STRUCTURE. FEES AND DONATIONS DO NOT GEL TOGETHER. MOREOVER THE APPLICANT HAS SUBSTANTIAL RETURNS FROM FEES THA T HAVE CONSISTENTLY BEEN REFLECTED AS CASH/ BANK BALANCES WHICH ALSO IS EVID ENCED IN THE TABLE ABOVE. FURTHER NO RATIONALE FOR DONATIONS HAS BEEN PUT FO RTH BY THE APPLICANT. NEITHER HAS THE SOURCE OF POSSIBLE DONATIONS HINTED AT IN I TS SUBMISSIONS. IT IS ALSO CLEAR FROM THE ACCOUNTS OF THE APPLICANT THAT NO DONATION HITHERTO HAS BEEN TAKEN BY THE APPLICANT. FURTHERMORE THE JUDICIAL AUTHORITIE S HAVE FROWNED UPON THE CONCEPT OF DONATIONS IN THE CASE OF INSTITUTIONS DE ALING WITH PROFESSIONAL DEGREES. IT IS REITERATED THAT THE APPLICANT IS RUNNING A NU RSING COLLEGE. ALL OF ABOVE CLEARLY LEADS ONE TO CONCLUDE THAT THE ENTITY HAS AT ITS DISPOSAL INVESTIBLE BALANCES AND THE RATIONALE FOR SEEKING D ONATIONS IS NOT BROUGHT OUT IN THE CASE. MOREOVER ALLOWING DONATIONS TO EDUCATION AL INSTITUTIONS WOULD BE CONTRARIAN TO THE THUMBS DOWN GIVEN TO THE PRACTICE OF DONATIONS. NO EVIDENCE HAS BEEN PROVIDED BY THE APPLICANT THAT COULD PROJE CT SAFEGUARDS THAT MAY HAVE BEEN BUILT INTO THE ADMINISTRATIVE AND FINANCI AL PRACTICES BEING FOLLOWED BY THE TRUST AND THE INSTITUTION BEING RUN UNDER ITS A EGIS. MOREOVER NO PURPOSE HAS BEEN PROJECTED FOR DONATIONS ALTHOUGH THERE IS NO H ISTORY OF ANY RECEIPT OF DONATIONS EITHER. THE APPLICATION FOR APPROVAL U/S 80G IS ACCORDINGLY REJECTED. 4 8. IN SHORT THE LD. CIT(E) REJECTED THE APPLICATION ON THESE GROUNDS: A) THAT THE APPELLANT HAS AT ITS DISPOSAL INVESTIBLE B ALANCES AND THE RATIONALE FOR SEEKING DONATIONS IS NOT BROUGHT OUT IN THE CASE. B) THAT ALLOWING DONATIONS TO EDUCATIONAL INSTITUTIONS WOULD BE CONTRARIAN TO THE THUMBS DOWN GIVEN TO THE PRACTICE OF DONATIONS. C) THAT NO EVIDENCE HAS BEEN PROVIDED BY THE APPLICANT THAT COULD PROJECT SAFEGUARDS THAT MAY HAVE BEEN BUILT INTO TH E ADMINISTRATIVE AND FINANCIAL PRACTICES BEING FOLLOWED BY THE TRUST AND THE INSTITUTION BEING RUN UNDER ITS AEGIS. D) THAT NO PURPOSE HAS BEEN PROJECTED FOR DONATIONS AN D THERE IS NO HISTORY OF ANY RECEIPT OF DONATION EITHER. 9. BEFORE US THE LD. AR SUBMITTED THAT THE ASSESSEE HAS MET ALL THE CONDITIONS RELEVANT FOR SECTION 80G READ WITH RULE 11AA. THE S UBMISSION OF THE ASSESSEE BY EACH PROVISION / CLAUSE IS AS UNDER: 5 10. LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD . CIT(E). 11. WE FIND THAT THE ISSUES HAVE NOT BEEN CONSIDERE D IN TOTO BY THE LD. CIT(E). HENCE THE CASE IS BEING SENT BACK TO THE FILE OF LD . CIT(E) TO RE-EXAMINE THE MATTER AFRESH AS PER THE PROVISIONS STIPULATED UNDE R SECTION 80G VIS--VIS THE ACTIVITIES OF THE ASSESSEE AND TO DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (B.R.R.KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29/11/2017 AG COPY TO: THE APPELLANT THE RESPONDENT THE CIT TH E CIT(A) THE DR