DDIT (E)-II(2), MUMBAI v. VIDYA VIKAS EDUCATION SOCIETY, MUMBAI

ITA 5775/MUM/2010 | 2007-2008
Pronouncement Date: 25-11-2011 | Result: Dismissed

Appeal Details

RSA Number 577519914 RSA 2010
Assessee PAN AAATV0329H
Bench Mumbai
Appeal Number ITA 5775/MUM/2010
Duration Of Justice 1 year(s) 4 month(s) 9 day(s)
Appellant DDIT (E)-II(2), MUMBAI
Respondent VIDYA VIKAS EDUCATION SOCIETY, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 25-11-2011
Assessment Year 2007-2008
Appeal Filed On 16-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER I.T.A. NO. 5775/MUM/2010 ASSESSMENT YEAR : 2007-08. DY. DIRECTOR OF INCOME TAX M/S VIDYA VIKAS EDUCATION SOCIETY (EXEMPTION)-II(2) MUMBAI. VS. 205/8251 KANNAMWAR NAGAR VIKHROLI (E) MUMBAI 400 08 3. PAN : AAATV0329H. APPELLANT. RESPONDENT APPELLANT BY : SHRI SHANTAM BOSE. RESPONDENT BY: SHRI ANIL SATHE. DATE OF HEARING : 15-11-2011. DATE OF PRONOUNCEMENT : 25-11-2011. O R D E R. PER P.M. JAGTAP A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LEARNED CIT(APPEALS)-1 MUMBAI DATED 31-03-2010 AND THE ONL Y GRIEVANCE RAISED BY THE REVENUE AS PROJECTED IN THE GROUNDS TAKEN THEREIN I S THAT THE LEARNED CIT(APPEALS) HAS ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION/BENEFIT U/S 11. 2. THE ASSESSEE IN THE PRESENT CASE IS A TRUST WHIC H IS ENGAGED IN RUNNING INSTITUTIONS FOR GIVING EDUCATION TO THE STUDENTS I N PRIMARY HIGHER SECONDARY AND UNIVERSITY STAGES AND ALSO ESTABLISHING BRANCHES TO RENDER EDUCATION IN MEDICINE COMMERCE AND OTHER BRANCHES OF EDUCATION. IT IS REG ISTERED AS A CHARITABLE ORGANIZATION U/S 12A AND ALSO WITH CHARITY COMMISSI ONER. IN ITS RETURN OF INCOME 2 ITA NO.5775/MUM/2010 ASSESSMENT YEAR:2007-08. FILED FOR THE YEAR UNDER CONSIDERATION THE ASSESSE E HAD CLAIMED BENEFIT AVAILABLE U/S 11 OF THE INCOME-TAX ACT 1961. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE AO THAT THE OBJECTS OF THE AS SESSEE AS SPECIFIED IN THE ORIGINAL TRUST DEED REGISTERED WITH CHARITY COMMISSIONER MU MBAI HAVE BEEN AMENDED VIDE ORDER OF CHARITY COMMISSIONER MUMBAI DATED 08 -01-2002. HE ALSO NOTICED THAT THE SAID CHANGE WAS NOT COMMUNICATED BY THE AS SESSEE TO DIRECTOR (EXEMPTION) MUMBAI AS UNDERTAKEN AT THE TIME OF AV AILING REGISTRATION U/S 12A OF THE I.T. ACT 1961. HE HELD THAT SINCE THE TERMS AN D CLAUSES OF THE TRUST DEED ON THE BASIS OF WHICH REGISTRATION U/S 12A WAS GRANTED TO THE ASSESSEE HAD BEEN ALTERED AFTER THE GRANT OF SUCH REGISTRATION THE VERY FOUN DATION OF THE SAID REGISTRATION GOT CHANGED AND THE REGISTRATION SO GRANTED THEREFORE NO MORE SURVIVED. ACCORDINGLY HE TREATED THE ASSESSEE TRUST AS NOT REGISTERED U/S 12A AND DENIED THE BENEFIT CLAIMED BY IT U/S 11 OF THE INCOME-TAX ACT 1961. T HE INCOME OF THE ASSESSEE THUS WAS DETERMINED BY HIM AT RS.64 00 778/- IN THE ASSE SSMENT COMPLETED U/S 143(3) VIDE AN ORDER DATED 24-12-2009 AS AGAINST THE LOSS OF RS.27 63 394/- RETURNED BY THE ASSESSEE. AGAINST THE ORDER PASSED BY THE AO U/ S 143(3) AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LEARNED CIT(AP PEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE H IM AS WELL AS THE MATERIAL AVAILABLE ON RECORD THE LEARNED CIT(APPEALS) GRANT ED THE BENEFITS AVAILABLE U/S 11 TO THE ASSESSEE FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 5.2 TO 5.4 OF HIS IMPUGNED ORDER : 5.2 I HAVE GONE THROUGH THE SUBMISSIONS OF THE APP ELLANT AND ORDER OF THE ASSESSING OFFICER AS WELL AS THE JUDICIAL DECISIONS REFERRED BY BOTH THE SIDES. IT IS NOT DISPUTED THAT THE APPELLANT TRUST IS A PU BLIC CHARITABLE TRUST REGISTERED WITH CHARITY COMMISSIONER REGISTRATION WAS GRANTED U/S 12AA OF I.T. ACT 1961 APPROVAL WAS GRANTED FOR PURPOSE OF SECTION 8 0G THE OBJECTS OF THE TRUST HAD ALWAYS BEEN CHARITABLE AND FUNDS HAD BEEN APPLIED OR ACCUMULATED 3 ITA NO.5775/MUM/2010 ASSESSMENT YEAR:2007-08. FOR CHARITABLE OBJECT. THERE IS NO PROVISION FOR RE REGISTRATION OF EXISTING TRUST EVEN WHEN THERE ARE CHANGES IN TERMS OF TRUST. 5.3 THE HONBLE ITAT MUMBAI HAS OBSERVED THAT ONCE THE ASSESSEE HAS BEEN RECOGNIZED AS A CHARITABLE TRUST AND HAS BEEN GRANTED REGISTRATION THEIR INCOME IS EXEMPT U/S 11 SUBJECT TO THE LIMITS OF UT ILIZATION PRESCRIBED AND RULES FOR ACCUMULATING UNUTILIZED INCOME. UNLESS AN D UNTIL THE ASSESSING OFFICER PROVES THAT THE INCOME ACCRUING OR ARISING TO THE TRUST IS NOT FROM THE PURSUIT OF CHARITABLE OBJECTS OF THE TRUST BUT IS FROM CARRYING OUT OF ANY ACTIVITY FOR THE PURPOSE OF EARNING PROFIT AND THE TRUST HAS NOT COMPLIED WITH THE REQUIREMENTS OF THE ACT FOR CLAIMING EXEMPTION U/S 11 HE CANNOT DENY EXEMPTION PERMITTED U/S 11 OF THE I.T. ACT 1961. I N ADDITION TO THIS MERELY ON THE BASIS OF FORM 10A THE AOS ACTION OF DENIAL OF EXEMPTION U/S 11A OF I.T. ACT WAS COMPLETELY AGAINST THE PROVISIONS OF L AW. THE APPELLANT TRUST HAS ADMITTEDLY INTIMATED THE CHARITY COMMISSIONER A BOUT THE CHANGE OF OBJECT OF TRUST U/S 50A(3) OF THE BOMBAY PUBLIC TRU ST ACT. DURING THE ASSESSMENT PROCEEDING THE APPELLANT HAS INTIMATED A LSO TO THE AO ABOUT THE CHANGE OF OBJECT TO THE TRUST DEED ONCE THEY CAME TO KNOW A BOUT THIS PROCEDURAL ASPECT. EVEN THE CHANGE TO THE OBJECT IS NOWHERE CONTRARY TO PRIMARY OBJECT OF ORIGINAL TRUST DEED. THE APPELLAN T TRUST HAS MERELY ADDED EDUCATION TO COMPUTER PRIMARILY TO THE NEW OBJECT OF THE TRUST WHICH MIGHT BE THE NEED OF PRESENT EDUCATION SYSTEM. THIS NON-INTIMATION IN TERMS OF FORM 10A WILL NOWHERE PERMIT THE AO TO DENY THE EXEMPTION U/S 11 OF THE I.T. ACT WHICH THE APPELLANT TRUST WAS AVAILED AS PER REGISTRATION GRANTED BY DIT(EXEMPTION) U/S 12A OF I.T. ACT. 5.4 IN VIEW OF ALL THESE FACTS ENUMERATED ABOVE AND ALSO TAKING NOTE OF HONBLE SUPREME COURT DECISION IN THE CASE OF SURAT CITY GYMKHANA (2008) REPORTED IN 300 ITR 214 (SC) I CONSIDER IT PROPER AND APPROPRIATE TO HOLD THAT THE AOS ACTION OF DENIAL OF EXEMPTION U/S 11 TO THE APPELLANT TRUST WAS NOT JUSTIFIED AND ALSO IT WAS CONTRARY TO THE PROVI SIONS OF LAW. ACCORDINGLY I DIRECT THE AO TO ALLOW THE EXEMPTION U/S 11 OF I.T. ACT TO THE APPELLANT TRUST. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEALS) THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS NOTED BY THE LEARNED CIT(APP EALS) THE CHANGE IN OBJECT 4 ITA NO.5775/MUM/2010 ASSESSMENT YEAR:2007-08. CLAUSE WAS DULY INTIMATED BY THE ASSESSEE TO THE CH ARITY COMMISSIONER AS PER THE RELEVANT PROVISIONS OF THE BOMBAY PUBLIC TRUST ACT. AS FURTHER NOTED BY HIM THE SAID CHANGE IN ANY CASE WAS NOT CONTRARY TO THE P RIMARY OBJECT OF THE ASSESSEE TRUST AS PER THE ORIGINAL TRUST DEED AND THE SAME W AS MADE BY ADDING EDUCATION TO COMPUTER IN THE PRIMARY OBJECT SO AS TO INCORPORAT E THE CHANGING NEED OF PRESENT EDUCATION SYSTEM. THERE WAS THUS NO JUSTIFICATION I N THE ACTION OF THE AO IN DENYING THE BENEFIT AVAILABLE U/S 11 OF THE I.T. AC T TO THE ASSESSEE TRUST MERELY ON THE BASIS OF THE SAID CHANGE IN THE OBJECT CLAUSE W HICH EVEN OTHERWISE WAS IN CONSONANCE WITH THE PRIMARY OBJECT OF THE ORIGINAL TRUST DEED ON THE BASIS OF WHICH REGISTRATION U/S 12A WAS GRANTED. MOREOVER THERE I S NO SPECIFIC PROVISION IN THE INCOME-TAX ACT 1961 WHICH AUTHORIZES THE AO TO DEN Y THE BENEFIT AVAILABLE U/S 11 TO THE TRUST BY TREATING IT AS NOT REGISTERED U/S 1 2A ON THE BASIS THAT CHANGE IN THE OBJECT WAS NOT COMMUNICATED BY THE ASSESSEE. AS SUC H CONSIDERING ALL THE FACTS OF THE CASE WE ARE OF THE VIEW THAT THE ACTION OF THE AO IN DENYING THE BENEFIT AVAILABLE U/S 11 TO THE ASSESSEE WAS NOT TENABLE IN LAW AND THE LEARNED CIT(APPEALS) WAS FULLY JUSTIFIED IN SETTING ASIDE T HE ORDER OF THE AO ON THIS ISSUE AND ALLOWING THE BENEFIT AVAILABLE U/S 11 TO THE AS SESSEE TRUST. THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) IS THEREFORE UPHELD A ND THIS APPEAL FILED BY THE REVENUE IS DISMISSED. 4. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF NOV. 2011. SD/- SD/ - (R.S.PADVEKAR) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED : 25 TH NOV. 2011. 5 ITA NO.5775/MUM/2010 ASSESSMENT YEAR:2007-08. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR F-BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR ITAT MUMBAI. WAKODE