M/s Vikas Educational Society., Srikakulam v. The ACIT, Circle-4(1)., Visakhapatnam

ITA 301/VIZ/2008 | misc
Pronouncement Date: 18-05-2010 | Result: Allowed

Appeal Details

RSA Number 30125314 RSA 2008
Assessee PAN AAAAV3651M
Bench Visakhapatnam
Appeal Number ITA 301/VIZ/2008
Duration Of Justice 1 year(s) 11 month(s) 19 day(s)
Appellant M/s Vikas Educational Society., Srikakulam
Respondent The ACIT, Circle-4(1)., Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 18-05-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 18-05-2010
Date Of Final Hearing 05-05-2010
Next Hearing Date 05-05-2010
Assessment Year misc
Appeal Filed On 29-05-2008
Judgment Text
ITA NO.301/VIZAG/2008 VIKAS EDUCATIONAL SOCIETY VIZ AG PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.301/VIZAG/2008 ASSESSMENT YEAR: NA VIKAS EDUCATIONAL SOCIETY VISAKHAPATNAM ACIT CIRCLE-4(1) VISAKHAPATNAM (APPELLANT) PAN NO: AAAAV 3651 M VS. (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI CA RESPONDENT BY: SHRI SUBRATA SARKAR CIT(DR) ORDER PER SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE CIT ON A SOLITARY GROUND THAT THE CIT IS NOT JUSTIFIED IN REFUSING THE GRANT OF REGISTRATION U/S 12A OF THE INCOME-TAX ACT. 2. THE BRIEF FACTS EMERGED FROM THE ORDER OF THE CI T ARE THAT THE ASSESSEE SOCIETY STARTED ITS ACTIVITIES IN THE FINA NCIAL YEAR 1997-98 BY SETTING UP JR.COLLEGE WHICH STARTED RUNNING DURING 2002-03. SUBSEQUENTLY OTHER STREAMS WERE ALSO ADDED SUCH AS B-PHARMA AND D-PHAR MA ETC.. IT APPLIED FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT. FROM THE DETAILS FURNISHED BY THE ASSESSEE THE CIT HAS OBSERVED THAT MEMBERS O F THE WORKING COMMITTEE WHO WERE NOTED AT THE TIME OF REGISTRATIO N ARE DIFFERENT FROM THE MEMBERS OF THE GOVERNING BODY WHICH OBVIOUSLY CONT ROLS THE EDUCATIONAL INSTITUTION. HE FURTHER OBSERVED THAT THE DEED DOES NOT SPEAK AS TO HOW THESE MEMBERS OF THE GOVERNING BODY WERE SELECTED A ND NO RESOLUTION PASSED TO THIS EFFECT WAS PRODUCED. IT IS ALSO OBSER VED THAT ALL THE MEMBERS ITA NO.301/VIZAG/2008 VIKAS EDUCATIONAL SOCIETY VIZ AG PAGE 2 OF 4 OF THE GOVERNING BODY ARE FAMILY MEMBERS AND INTER RELATED. BEFORE DISALLOWING THE REGISTRATION THE CIT HAS ALSO OBSE RVED THAT THE ASSESSEE HAS NOT PROVIDED FREE EDUCATION TO THE ELIGIBLE STU DENTS WHEREAS THE ASSESSEE WAS REQUIRED TO PROVIDE FREE EDUCATION AS PER ITS ONE OF THE OBJECTIVE. ACCORDINGLY THE CIT REFUSED REGISTRATION U/S 12A OF THE ACT. 3. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND INVITED OUR ATTENTION TO THE DETAILED SUBMISSIONS F ILED BEFORE THE ACIT IN RESPONSE TO THE LETTER OF THE ACIT DURING THE COURS E OF REGISTRATION PROCEEDING. THE DETAILS OF ACCOUNTS ALONG WITH THE DETAILS OF GOVERNING BODY WERE FURNISHED BEFORE THE AUTHORITIES. A COPY OF THE RESOLUTION SUBMITTED TO THE REGISTRAR OF SOCIETIES WAS ALSO PL ACED BEFORE THE AO. THE LD COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THER E IS NO BAR THAT INTER RELATED PERSONS CANNOT BE A MEMBER OF THE GOVERNING BODY. WHENEVER CHANGES ARE EFFECTED IN THE GOVERNING BODY IT WAS IN ACCORDANCE WITH THE RULES AND BY WAY OF ELECTION IN THE GENERAL BODY ME ETING OF THE SOCIETY. THE LD COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT NO DOUBT ONE OF THE OBJECTIVES OF THE ASSESSEE SOCIETY IS TO PROVIDE FR EE EDUCATION TO PROSPECTIVE STUDENTS BUT IN CASE IT IS NOT PROVIDED THEN THE ACTIVITIES OF THE ASSESSEE SOCIETY CANNOT BE CALLED NON CHARITABLE OR NON RELIGIOUS IN THE LIGHT OF THE FACT THAT OTHER OBJECTIVES OF THE SOCIETY AR E ACHIEVED. 4. THE LD DR PLACED HEAVY RELIANCE UPON THE ORDER O F THE CIT. 5. HAVING CAREFULLY EXAMINED THE ORDER OF THE CIT A ND THE DOCUMENTS PLACED ON RECORD IN THE LIGHT OF THE RIVAL SUBMISSI ONS WE FIND THAT THE REGISTRATION WAS REFUSED BY THE CIT MAINLY ON 2 COU NTS. FIRST REASON IS THAT THE MEMBERS OF THE GOVERNING BODY AT THE TIME OF RE GISTRATION ARE DIFFERENT FROM THE MEMBERS OF THE GOVERNING BODY WHO FORMED T HE SOCIETY. THE SECOND REASON IS THAT THE ASSESSEE HAS NOT PROVIDED FREE EDUCATION TO THE PROSPECTIVE AND ELIGIBLE STUDENTS. IN THIS REGARD W E ARE OF THE VIEW THAT ITA NO.301/VIZAG/2008 VIKAS EDUCATIONAL SOCIETY VIZ AG PAGE 3 OF 4 MEMBERS OF THE GOVERNING BODY OF THE SOCIETY MAY NO T REMAIN THROUGHOUT THE LIFE OF THE SOCIETY. IT GENERALLY CHANGES DEPEND ING UPON VARIOUS CIRCUMSTANCES AND CHANGE OF THE MEMBERS OF THE GOVE RNING BODY CANNOT BE A VALID REASON FOR REFUSAL OF GRANT OF REGISTRATION . SO FAR ISSUE OF IMPARTING FREE EDUCATION TO PROSPECTIVE STUDENTS IS CONCERNED WE ARE OF THE VIEW THAT NO DOUBT THAT IT IS ONE OF THE OBJECTIVE OF THE SOC IETY. BUT IF IT IS NOT FULFILLED IT DOES NOT MEAN THAT THE SOCIETY IS NOT DOING ANY CHARITABLE ACTIVITIES. THE ASSESSEE SOCIETY IS IMPARTING EDUCATION AGAINST THE NOMINAL FEES. THE CIT ITSELF HAS ADMITTED IN HIS ORDER THAT THE ASSESSEE HAS BEEN PROVIDING EDUCATION ON COLLECTION OF TUITION FEE FROM THE STU DENTS BUT THERE IS NO EVIDENCE THAT THE FEE COLLECTED FROM THE STUDENTS W AS UTILIZED FOR THE PURPOSE OTHER THAN THE OBJECTS OF THE SOCIETY. THE CIT HAS ALSO OBSERVED THAT HEALTH EDUCATION AND SPREAD OF LIBRARY AND SU PPORT ACTIVITIES AMONG THE STUDENT ARE THE OBJECTIVES OF THE SOCIETY. ONCE CIT HAS ADMITTED THAT THE ASSESSEE HAS BEEN IMPARTING EDUCATION THOUGH A GAINST A NOMINAL TUITION FEE THE REGISTRATION CANNOT BE REFUSED ONL Y FOR THE REASON THAT FREE EDUCATION WAS NOT IMPARTED TO ANY OF THE STUDENTS U NLESS IT IS PROVED THAT FEE IS BEING UTILIZED FOR THE PURPOSE OTHER THAN TH E OBJECTS OF THE SOCIETY. 6. WE HAVE ALSO EXAMINED THE DEFINITION OF CHARITAB LE PURPOSE GIVEN IN SEC.2(15) OF THE ACT WHICH INCLUDES RELIEF FOR THE POOR EDUCATION MEDICAL RELIEF AND ADVANCEMENT OF ANY OTHER OBJECTS OF PUBL IC UTILITY. NOWHERE IT HAS BEEN MENTIONED THAT ONLY FREE EDUCATION IS CHARITAB LE ACTIVITY. IMPARTING OF EDUCATION AGAINST THE NOMINAL TUITION FEE IS ALSO A CHARITABLE ACTIVITY WHICH HAS BEEN ADMITTEDLY UNDERTAKEN BY THE ASSESSEE SOCI ETY. THEREFORE ONLY FOR THIS REASON THAT FREE EDUCATION WAS NEVER GIVEN TO ANY OF THE STUDENTS THE REGISTRATION U/S 12AA CANNOT BE REFUSED. WE HAV E ALSO EXAMINED THE OBJECTIVE OF THE SOCIETY AND WE FIND THAT THE OTHER OBJECTIVE OF THE SOCIETY ARE I.E. TO PAY SPECIAL ATTENTION BY PROVIDING EDUC ATION TO FEMALE STUDENTS PAY SPECIAL INTEREST BY IMPROVING PUBLIC HEALTH TO THE RURAL AREA PEOPLE AND ALSO BY ESTABLISHING LIBRARIES AND READING ROOM AND TO CREATE AWARENESS ON ITA NO.301/VIZAG/2008 VIKAS EDUCATIONAL SOCIETY VIZ AG PAGE 4 OF 4 GAMES SPORTS PHYSICAL EXERCISES ETC. BESIDES THE FREE EDUCATION TO PROSPECTIVE STUDENTS. CIT HIMSELF HAS OBSERVED IN H IS ORDER THAT OTHER ACTIVITIES ARE PERFORMED BY THE ASSESSEE SOCIETY. UNDER THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THERE IS NO M ERIT IN THE REFUSAL OF REGISTRATION. ACCORDINGLY WE DO NOT FIND OURSELVE S IN AGREEMENT WITH THE ORDER OF THE CIT AND WE SET ASIDE THE ORDER OF CIT AND GRANT THE REGISTRATION TO THE ASSESSEE SOCIETY U/S 12AA OF TH E ACT FROM THE 1 ST DAY OF THE FINANCIAL YEAR IN WHICH THE APPLICATION SEEKING REGISTRATION WAS FILED BEFORE LD. CIT. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. PRONOUNCED IN THE OPEN COURT ON 18.5.2010. SD/- SD/- (B R BASKARAN) (SUNIL KUMAR YADA V) ACCOUNTANT MEMBER JUDICIAL MEMBER PVV/SPS VISAKHAPATNAM DATE: 18 TH MAY 2010 COPY TO 1 VIKAS EDUCATIONAL SOCIETY SANA STREET SRIKAKULA M 2 THE ACIT CIRCLE-4(1) VISAKHAPATNAM 3 4. THE CIT II VISAKHAPATNAM THE CIT(A) VISAKHAPATNAM. 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM