Income Tax Appellate Tribunal - Amritsar
Khatu Ji Para Medical Technology ... vs The Commissioner Of Income Tax ... on 31 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR
BEFORE SH. T.S. KAPOOR, ACCOUNTANT MEMBER AND
SH. N.K.CHOUDHRY, JUDICIAL MEMBER
I.T.A No.593(Asr)/2016
Assessment Year:...........
Khatu Ji Para Medical Vs. CIT (Exemption),
Technology Educational & Chandigarh.
Research Society, Muktsar
Road, Jalandhar (W),
Dist. Fazilika, (Punjab)
PAN:AABTK-4276F
(Appellant) (Respondent)
Appellant by: Sh. Subhash Jain (Ld. C.A)
Respondent by: Sh. Rahul Dhawan (Ld. D.R)
Date of hearing:17.08.2017
Date of pronouncement:31.08.2017
ORDER
PER N.K.CHOUDHRY:
The instant appeal has been filed by the assessee, by feeling aggrieved against the order dated 30th Sep., 2016 passed by the Ld. CIT (Exemption), u/s 12AA of the I. T. Act.
2. The assessee has raised the following grounds of appeal.
1. That order u/s 12AA of the Income-tax Act, 1961 is against law and facts on the file in as much as the Ld. Commissioner of Income Tax (Exemption), Chandigarh was not justified to arbitrarily hold that the appellant did not fulfill the conditions for grant of registration u/s 12A of the Income Tax Act,1961.
2 ITA No.593 (Asr)/20162. That order u/s 12AA of the Income-tax Act, 1961, is against law and facts on the file in as much as the rejection of application for registration is on the basis of grounds which are irrelevant and unfounded."
3. The assessee is an educational society registered on 19.09.2003 under the Societies Registration Act, 1860 and since 2003, has been running educational institutes solely for education and not for purpose of profit and the receipts of the appellant society from running of these educational institutes were less than Rs. One Crore, therefore, allowed exemption u/s 10(23C) (iiiad) of the I.T. Act., 1961, till the Asst. Year:
21015-16. However, for Asst. Year: 2016-17, its receipts crossed the threshold limit of Rs. One Crore which made the appellant society not eligible to claim exemption under the aforesaid section. Therefore, the appellant society applied for registration u/s 12A of the Act on 15.03.2016, however the same was declined by the Ld. CIT(E) on the grounds :-
(i) That the assessee society would have applied registration u/s 10(23C).
(ii) That the audit accounts reveal that over the period of time the emphasize of the society is mainly of the creation of assets rather than redeployment of funds towards education. The income and expenditure statements and balance sheet further indicate that during the Financial Year: 2014-15 and 2015-16, emphasized of the society has been mainly to add Car, Motorcycle and Scooter etc.
(iii) The salary structure is pitiable low which leads to conclude that the applicant is just providing low quality of education and further non-
providing details of gross receipts which were specifically called indicates that society must be charging some funds which if disclosed could question mark the charitable intents of society.
4. The assessee feeling aggrieved against the rejection of application u/s 12A of the Act preferred the instant appeal and in 3 ITA No.593 (Asr)/2016 support of its case , Ld. AR , submitted that society has been existing for the objects of providing education and it is not in controversy. Further the genuineness of the activities of the assessee can be gathered from the achievements of the assessee because the assessee running two educational institutes at Jalalabad and making for the skill development programmes of Govt. of India and the Ld. CIT(E) lost sight to the facts that the society has been filing return of income and claiming exemption u/s 10(23C)(iiiad) of the Act and the said exemption was given without any questions. Further, it was submitted by the Ld. AR that it is the prerogative of the assessee to file application either u/s 12A or u/s 10(23C)(vi) and further submitted that by giving less salary to the employees does not mean that quality of education has been compromised, therefore, the assessee is entitled to get registration u/s 12A of the Act.
5. On the contrary ,the Ld. DR submitted that order passed by the CIT(E) is a logical, reasonable and reasoned order and hence does not requires to be interfered with.
6. We have gone thorough with the facts and circumstances of the case and rival submissions of the parties as well as documents available on record and order passed by the Ld. CIT(E). In the instant case, object of the assessee is not in doubt. The observation of the assessee CIT(E) is not correct to the extent that the assessee would have applied u/s 10(23C) of the Act instead of Sec.12A of the Act because the Apex Court as well as jurisdictional High Court clearly held that where the assessee trust running hospital or school and if both the options available before it i.e., either to apply for exemption u/s 10(23C) or claim exemption u/s 12AA of the Act therefore it is not justified to decline exemption u/s 12AA on the ground that it should have claimed exemption u/s 10(23C).
4 ITA No.593 (Asr)/2016It is settled law that for the purpose of granting registration u/s 12A, scope of powers of the Ld. CIT(E) is limited to be being satisfied about the objects and the genuineness of the activities of the assessee and once the CIT having accepted that the main aim of the society is running of college and educational institutions and made no adverse observation regarding genuineness of the objects or the activities carried on by the society then registration u/s 12AA could not be denied on the ground that it was entitled exemption under any other provision. Further in the case of CIT vs. Bosotto Brothers Limited [(1940) 8 ITR 0041(Mad)], Hon'ble Madras High Court held that if a case appears to be governed by either of two provisions, it is clearly the right of the assessee to claim that he should be taxed under that one which leaves him with a lighter burden. Meaning thereby, if, exemption is available to the assessee in two or more sections then the choice is for the assessee under which section exemption has to be claimed.
With regard to the another objection of Ld. CIT(E), our attention was drawn by the Ld. AR to the audited balance sheet , where it is clearly shown that during the F.Y. 2015-16 value of car, motorcycle and scoter were 2.17 lakh and in 2015-16 it were 2.30 lakh and the society surplus amount was @ 5.52 % only. We are in agreement with the assessee that the surplus @ 5.52 % cannot be termed as higher and certainly to run an institute , the vehicles are required, therefore, the observation of the CIT(E) is not correct to the extent that the emphasized of the society has been mainly to add car, motorcycle and scooter. In fact total receipts had been shown at Rs.182,76,252/- during the F.Y. 2015-16, however, the value of the car, motorcycles and scooter were 2.30 lakh only, therefore, we are of the considered opinion that observation of the CIT(E) was not correct.
5 ITA No.593 (Asr)/2016Another observation of the CIT(E) was that the society is mainly emphasizing for creation of fixed assets rather than redeployment funds towards education.
The Ld. AR drawn our attention regarding the receipts, the average annual fee for the F.Y.2015-16 charged by the assessee was at Rs.16,525 per student for IIT B.Com students and Rs.4,559 per students for B.CA Courses. Average annual fee for the F.Y.2015-16 was Rs. 34,157 per students only and the fee being charged is quite reasonable and is less than the fees prescribed by the controlling Govt. Bodies. The Ld. AR also drew our attention that the Assessee's Institutes have also been approved/affiliated by/with Govt. Authorities on fulfillment of the norms and conditions and adherence thereto.
On the aforesaid consideration, we are of the considered opinion, that the apprehension and assumption of the CIT(E) that society must be charging some funds , just based on the assumption and surmises and have no logical reasoning.
Further observation with regard to salary structure and quality of education, we are of the view that lower salary cannot be made best to conclude that quality of education has been comprised and not in sync with the instruction issued by Maharaja Ranjit Singh State Technical University, Bathinda, while providing affiliation to an entity . On the aforesaid observation and conclusion, we are of the considered view that the assessee is entitled to get registration u/s 12A of the Act and hence, we direct the Ld. CIT(E) to grant registration to the assessee society.
6 ITA No.593 (Asr)/20167. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 31.08.2017.
Sd/- Sd/-
(T. S. KAPOOR) (N.K.CHOUDHRY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated:31.08.2017.
/PK/ Ps.
Copy of the order forwarded to:
(1) The Assessee:
(2) The
(3) The CIT(A),
(4) The CIT,
(5) The SR DR, I.T.A.T.,
True copy
By order