Insight Educational Society, Hyderabad v. Director of Income Tax (Exemptions), Hyderabad

ITA 1577/HYD/2013 | 2012-2013
Pronouncement Date: 30-04-2015 | Result: Allowed

Appeal Details

RSA Number 157722514 RSA 2013
Assessee PAN AAAAI5616H
Bench Hyderabad
Appeal Number ITA 1577/HYD/2013
Duration Of Justice 1 year(s) 5 month(s) 3 day(s)
Appellant Insight Educational Society, Hyderabad
Respondent Director of Income Tax (Exemptions), Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-04-2015
Date Of Final Hearing 27-04-2015
Next Hearing Date 27-04-2015
Assessment Year 2012-2013
Appeal Filed On 26-11-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI P.M. JAGTAP ACCOUNTANT MEMBER ITA.NO.1577/HYD/2013 ASSESSMENT YEAR 2012-2013 INSIGHT EDUCATIONAL SOCIETY HYDERABAD 500 059 PAN AAAAI5616H VS. DIRECTOR OF INCOME TAX (EXEMPTIONS) HYDERABAD 500 001 (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. AJAY GANDHI FOR REVENUE : MR. D. SUDHAKAR RAO DATE OF HEARING : 27.04.2015 DATE OF PRONOUNCEMENT : 30.04.2015 ORDER PER P.M. JAGTAP A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) HYDERABAD DATED 25.09.2013 WHEREBY HE REJECTED THE APPLICATION FILED BY THE ASSESSEE FOR REGISTRATION UNDER SECTION 12A OF THE ACT. 2. THE ASSESSEE IN THE PRESENT CASE IS A SOCIETY. AN APPLICATION IN FORM 10A WAS FILED BY IT ON 23.02.20 13 SEEKING REGISTRATION UNDER SECTION 12A OF THE ACT. IN ORDER TO DISPOSE OF THE SAID APPLICATION THE ASSESSEE SOCIETY WAS CALL ED UPON BY THE LEARNED DIT (E) TO PRODUCE ORIGINAL MEMORANDUM OF ASSOCIATION FURNISH DETAILED REPLY ON SPECIFIC POI NTS RAISED BY HIM AND ALSO TO PRODUCE BOOKS OF ACCOUNTS ETC. FOR VERIFICATION. AFTER SEEKING SOME ADJUSTMENTS INITIA LLY THE ASSESSEE SOCIETY FINALLY COMPLIED WITH ALL THESE RE QUIREMENTS OF THE LEARNED DIT(E). THEREAFTER FURTHER INFORMATION REQUIRED BY 2 ITA.NO.1577/HYD/2013 INSIGHT EDUCATIONAL SOCIETY HYDERABAD. LEARNED DIT(E) SUCH AS COPIES OF BANK ACCOUNT APPR OVAL ORDER FROM DEO HYDERABAD FOR RUNNING THE PRIMARY SCHOOL NOTE ON ACTIVITIES SCHOOL FEE STRUCTURE DETAILS OF CREDIT IN BANK ACCOUNTS DETAILS OF CORPUS DONATIONS CONFIRMATION OF LOANS AND CORPUS DONATIONS ETC. WAS ALSO FURNISHED BY TH E ASSESSEE SOCIETY FROM TIME TO TIME. 3. ON VERIFICATION OF THE INFORMATION AND DOCUMENT S FURNISHED BY THE ASSESSEE THE LEARNED DIT(E) RECOR DED THE FOLLOWING ADVERSE FINDINGS/OBSERVATIONS IN HIS IMPU GNED ORDER: 2. ON VERIFICATION OF THE OBJECTS OF THE SOCIETY IT IS FOUND THAT ONE OF THE OBJECT IS TO PROVIDE COACHING FOR COMPETITION EXAMINATIONS WHICH CANNOT BE TREATED AS A CHARITABLE PURPOSE WITHIN THE MEANING OF SECTION 2(15) OF THE I.T. ACT 1961. 3. ON VERIFICATION OF THE DETAILS FURNISHED IT IS FOUND THAT THE SOCIETY RECEIVED DIFFERENT AMOUNTS ON VARIOUS DATES TOTALLING TO RS.36 00 000/- FROM HIKMAH EDUCATIONAL SERVICES (P) LTD. FURTHER THE SOCIETY FURNISHED CONFIRMATION LETTER FROM HIKMAH EDUCATIONAL SERVICES (P) LTD. WHEREIN NO WHERE IT WAS MENTIONED THAT THESE AMOUNTS WERE REPAID BY THE SOCIETY. HOWEVER ON VERIFICATION OF PROVISIONAL ACCOUNTS FOR THE YEARS ENDING 31/3/2012 AND 31/3/2013 NOWHERE THESE AMOUNTS ARE SHOWN AS LIABILITY. AS PER PROVISIONAL ACCOUNTS FOR THE FINANCIAL YEAR 2012- 13 IT IS SEEN THAT AN AMOUNT OF RS.27 25 000/- IS SHOWN AS DEPOSIT HELD WITH HIKMAH EDUCATIONAL SERVICE (P) LTD AS ON 31/3/2013. WHEN HIKMAH EDUCATIONAL SERVICE HAS ADVANCED LOAN TO THE SOCIETY IT IS NOT CLEAR HOW THE AMOUNT OF RS.27 25 000/- IS SHOWN AS DEPOSIT IN THE BOOKS OF ASSESSEE SOCIETY. HENCE THE BOOKS OF A/CS CANNOT BE RELIED UPON. 4. WHEN THE MAIN AIM OF THE SOCIETY IS TO PROVIDE QUALITY EDUCATION AND SCHOLARSHIPS IT IS NOT 3 ITA.NO.1577/HYD/2013 INSIGHT EDUCATIONAL SOCIETY HYDERABAD. CLEAR AS TO WHY SUCH A HUGE AMOUNT IS KEPT AS DEPOSIT WITH HIKMAH EDUCATIONAL SERVICE (P) LTD. THIS TRANSACTION WITH HIKMAH EDUCATIONAL SERVICE (P) LTD IS CLEARLY NOT IN FURTHERANCE OF THE OBJECTS OF THE SOCIETY. 5. AS PER THE INFORMATION FURNISHED BY THE ASSESSEE THE CORPUS DONATION RECEIVED BY THE SOCIETY IS RS.13 00 000/- DURING THE FINANCIAL YEAR 2011-12 AND RS.62 75 000/- DURING THE FINANCIAL YEAR 2012-13. HOWEVER THE ASSESSEE SOCIETY FURNISHED CONFIRMATIONS F OR RS.15 00 000/- THE DETAILS OF WHICH ARE AS UNDER: 5.1. FROM THE ABOVE IT IS CLEAR THAT THE ASSESSEE SOCIETY HAS NOT FURNISHED THE ENTIRE CONFIRMATIONS AS FAR AS CORPUS DONATIONS ARE CONCERNED. HENCE THE GENUINENESS OF THE BALANCE CORPUS DONATIONS COULD NOT BE ESTABLISHED. 6. IT IS SEEN FROM THE INFORMATION THAT THE ASSESSE E SOCIETY HAS RECEIVED INCOME IN ADVANCE OF RS.2 02 000/- AND RS.7 82 726/- FOR THE FINANCIAL YEARS 2011-12 & 2012-13 RESPECTIVELY. WHEN THE MAIN OBJECT OF THE SOCIETY IS TO PROVIDE SCHOLARSHIPS TO THE NEEDY AND DESERVING STUDENTS COLLECTION OF FEE IN ADVANCE IS NOT A CHARITABLE ACTIVITY AND IS NOT IN ACCORDANCE WITH THE AIMS AND OBJECTS OF THE SOCIETY. UNDER THESE CIRCUMSTANCES THE ASSESSEE SOCIETY CANNOT BE GRANTED REGISTRATION U/S.12AA OF THE ACT. 7. IT IS ALSO OBSERVED FROM THE PROVISIONAL INCOME & EXPENDITURE ACCOUNT FOR THE PERIOD ENDING 31/3/2013 THAT THE ASSESSEE SOCIETY PAID RS.1 79 790/- AS COMMISSION ON ADMISSIONS RS.3 92 500/- AS ROYALTY AND RS.26 69 000/- AS INFRA EXPENSES. THIS SHOWS THAT THE ASSESSEE SOCIETY IS RUNNING THE EDUCATIONAL INSTITUTION ON COMMERCIAL BASIS AND NOT FOR CHARITABLE PURPOSES. FURTHER THE ASSESSEE HAS SO FAR NOT FURNISHED RETURNS OF INCOME FOR THE ASST. YEARS 2011-12 & 2012-13. 4 ITA.NO.1577/HYD/2013 INSIGHT EDUCATIONAL SOCIETY HYDERABAD. 8. FURTHER THE RULES & REGULATIONS IN DOCUMENT NO.2 DOES NOT PROVIDE THAT (I) NO ADDITION ALTERATION AND AMENDMENT IN THE OBJECTS SHALL BE MADE WITHOUT APPROVAL OF THE DIT(EXEMPTIONS) (II) IN CASE OF DISSOLUTION THE TRUST PROPERTY SHALL BE TRANSFERRED/ HANDED OVER TO A TRUST/SOCIETY HAVING SIMILAR AIMS AND OBJECTS AND ALSO REGISTERED U/S.12A OF THE ACT. 4. ON THE BASIS OF THE ABOVE ADVERSE FINDINGS/ OBSERVATIONS RECORDED BY HIM THE LEARNED DIT(E) HE LD THAT ASSESSEE SOCIETY WAS NOT ELIGIBLE FOR REGISTRATION UNDER SECTION 12A AND ACCORDINGLY THE APPLICATION FILED BY IT FO R SUCH REGISTRATION WAS REJECTED BY HIM VIDE HIS ORDER PAS SED UNDER SECTION 12AA OF THE ACT. AGGRIEVED BY THE SAID ORDE R OF THE LEARNED DIT(E) THE ASSESSEE HAS PREFERRED THIS APP EAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ALL THE RELEVANT INFORMATION AS REQUIRED BY THE LEARNED DIT(E) IN OR DER TO ENABLE HIM TO DISPOSE OF THE APPLICATION FILED BY T HE ASSESSEE FOR REGISTRATION UNDER SECTION 12A OF THE ACT WAS F URNISHED BY THE ASSESSEE AS CALLED FOR BY HIM FROM TIME TO TIME . HE SUBMITTED THAT THE LEARNED DIT(E) HOWEVER DID NOT P OINT OUT ANY DEFECT OR DEFICIENCY IN THE INFORMATION FURNISH ED BY THE ASSESSEE AND PROCEEDED TO REJECT THE APPLICATION FI LED BY THE ASSESSEE SOCIETY FOR REGISTRATION UNDER SECTION 12A ON THE BASIS OF CERTAIN ADVERSE FINDINGS/OBSERVATIONS RECORDED B Y HIM WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE TO O FFER ITS EXPLANATION IN THIS MATTER. HE SUBMITTED THAT THE A SSESSEE HAS A VALID AND CONVINCING EXPLANATION TO OFFER ON ALL THE OBJECTIONS RAISED BY THE LEARNED DIT(E) AND HAD AN OPPORTUNITY BEEN GIVEN BY HIM THE ASSESSEE WOULD HAVE OFFERED SUCH 5 ITA.NO.1577/HYD/2013 INSIGHT EDUCATIONAL SOCIETY HYDERABAD. EXPLANATION IN RESPECT OF EACH AND EVERY POINT TO M EET THE OBJECTIONS RAISED BY THE LEARNED DIT(E). HE HAS CON TENDED THAT THE LEARNED DIT(E) THUS HAS REJECTED THE APPLICATIO N OF THE ASSESSEE FOR REGISTRATION UNDER SECTION 12A WITHOUT GIVING PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE ESPECIALLY ON SPECIFIC POINTS OR OBJECTION S RAISED BY HIM AND THIS POSITION CLEARLY EVIDENT FROM THE RECO RD AVAILABLE BEFORE US IS NOT DISPUTED EVEN BY THE LEARNED D.R. WE THEREFORE CONSIDER IT FAIR AND PROPER AND IN THE I NTEREST OF JUSTICE TO SET ASIDE THE IMPUGNED ORDER OF THE LEAR NED DIT(E) AND REMIT THE MATTER BACK TO HIM FOR DISPOSING OF T HE APPLICATION OF THE ASSESSEE FOR REGISTRATION UNDER SECTION 12A AFRESH AFTER GIVING PROPER AND SUFFICIENT OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30.04.2 015. SD/- SD/- (G.C. GUPTA) (P.M. JAGTAP) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD DATED 30 TH APRIL 2015 VBP/- COPY TO 1. INSIGHT EDUCATIONAL SOCIETY 16-1-14/7 SAIDABAD HYDERABAD.C/O. GANDHI & GANDHI CHARTERED ACCOUNTANTS 1002 PAIGAH PLAZA BASHEERBAGH HYDERABAD 500 063. 2. DIRECTOR OF INCOME TAX (EXEMPTIONS) 3 RD FLOOR AAYAKAR BHAVAN BASHEERBAGH HYDERABAD 500 001 3. THE DDIT (E)-II HYDERABAD 4. D.R. ITAT B BENCH HYDERABAD. 5. GUARD FILE