Income Tax Appellate Tribunal - Amritsar
Prashant Educational Trust, Jammu vs Assessee on 2 July, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR.
BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER
AND SH. B.P.JAIN, ACCOUNTANT MEMBER
I.T.A. No.617 (Asr)/2011
Assessment year: Nil
PAN :AABTD5519N
M/s. D.N. Memorial Trust vs. The Commissioner of Income Tax,
Dina Nagar, Udhampur, Jammu. ( J & K ), Jammu.
( J & K ).
(Appellant) (Respondent)
I.T.A. No.618(Asr)/2011
Assessment year: Nil
PAN :AABYP9015B
M/s. Prashant Educational Trust vs. The Commissioner of Income Tax
Nagrota, Tehsil Udhampur, ( J & K ), Jammu.
(J & K ).
(Appellant) (Respondent)
Appellants by:Sh. P.N. Arora, Adv.
Respondent by:Sh. Tarsem Lal, DR
Date of hearing:02/07/2012
Date of pronouncement:11/07/2012
ORDER
PER BENCH ;
These two appeals of different assessees arise from two different orders of Commissioner of Income-tax, Jammu, each dated 16.08.2011 passed under section 12AA(b)(ii) of the Income tax Act, 1961. 2 ITA Nos. 617 & 618(Asr)/2011
2. The issues involved in the present appeals are identical and, therefore, both the appeals are being taken up together for the sake of convenience by this consolidated order. The assessee in the case of D.N. Memorial Trust, Dina Nagar, Udhampur has raised following grounds of appeal:
"1. That the order under section 12AA(b)(ii) of the Income-tax Act, 1961, passed by the Ld. CIT, Jammu, thereby refusing to register the Society is illegal, invalid and void ab-inito and the same is liable to be cancelled.
2. That no reasonable opportunity of being heard has been allowed before refusing to register the Society. The Ld. CIT either should have disclosed his mind or he should have allowed reasonable opportunity of being heard before refusing to register the society. As such the order of the Ld. CIT, is illegal and invalid and the same is liable to be cancelled.
3. That the ld. CIT did not appreciate that the conditions laid down u/s 12AA of the Income-tax Act, 1961 were duly fulfilled and as such the registration as claimed should have been allowed.
4. That the Ld. CIT did not appreciate that the conditions laid down under the law are fulfilled and as such there was no reason to refuse grant of registration to the Trust. As such, it is prayed that the registration may kindly be granted.
5. That the Ld. CIT did not appreciation that total income of the Trust during the year under consideration was incurred in the shape of expenditure and in the shape of fixed assets which is clear from the following facts & figures:-
Total income during the year 2010-2011
1. Fees from Students 1915950.00
2. Bank Interest 8051.00 Total: 1924001.00 3 ITA Nos. 617 & 618(Asr)/2011 Total Expenditure during the year 2010-2011
1. As per Income and Expenditure a/c 1564955.00
2. As per schedule of fixed assets 472939.00 Total: 2037894.00 That the Ld. CIT did not appreciate that the expenditure is more than the receipt and as such there was no reason to refuse grant of registration to the Trust. In view of these circumstances, the registration as claimed should have been allowed.
6. Any other ground of appeal that may be urged at the time of hearing of the appeal."
3. The assessee in the case of M/s. Prashant Educational Trust, Nagrota, has raised following grounds of appeal:
"1. That the order under section 12AA(1)(b)(ii) of the Income-tax Act, 1961, passed by the Ld. CIT, Jammu, thereby refusing to register the Society is illegal, invalid and void ab-inito and the same is liable to be cancelled.
2. That no reasonable opportunity of being heard has been allowed before refusing to register the Society. The Ld. CIT either should have disclosed his mind or he should have allowed reasonable opportunity of being heard before refusing to register the society. As such the order of the Ld. CIT, is illegal and invalid and the same is liable to be cancelled.
3. That the ld. CIT did not appreciate that the conditions laid down u/s 12A of the Income-tax Act, 1961 were duly fulfilled and as such the registration as claimed should have been allowed.
4. That the Ld. CIT did not appreciate that the conditions laid down under the law are fulfilled and as such there was no reason to refuse grant of registration to the Trust. As such, it is prayed that the registration may kindly be granted.4 ITA Nos. 617 & 618(Asr)/2011
5. That the Ld. CIT did not appreciation that total income of the Trust during the year under consideration was incurred in the shape of expenditure and in the shape of fixed assets which is clear from the following facts & figures:-
Total income during the year 2010-2011
1. Fees from Students 1915950.00
2. Bank Interest 9686.00 Total: 1925636.00 Total Expenditure during the year 2010-2011
1. As per Income and Expenditure a/c 1575200.00
2. As per schedule of fixed assets 349786.00 Total: 1926006.00 That the Ld. CIT did not appreciate that the expenditure is more than the receipt and as such there was no reason to refuse grant of registration to the Trust. In view of these circumstances, the registration as claimed should have been allowed.
6. Any other ground of appeal that may be urged at the time of hearing of the appeal."
4. First of all, we take up appeal in the case of M/s. D.N. Memorial Trust, Dina Nagar, Udhampur and our decision hereinbelow shall be applicable on M/s. Prashant Educational Trust, Nagrota, being identical issues as mentioned hereinabove.
5. The brief facts in M/s. D.N. Memorial Trust, are that the assessee- trust is running school under the name and style of Indian Institute of Teachers Training & Research. The Ld. CIT, Jammu observed that there is 5 ITA Nos. 617 & 618(Asr)/2011 excess of income over expenditure in excess of 15% for the first year ending on 31.03.2011. The assessee-trust was constituted on 28/06/2010 and filed application u/s 12A(a) of the Income-tax Act, 1961 on 28.02.2011. The Ld. CIT observed that that the assessee had total receipts of Rs.16,96,951/- against which the assessee made a surplus of Rs.2,96,499/- at 17.47% of the total receipts. The Ld. CIT by referring to provisions of section 12AA observed that there has to be satisfaction of the CIT regarding genuineness of the activities. Since the assessee is making and generating larger profit, the Ld.CIT was of the view that the assessee has not satisfied the CIT with the genuineness of its activities, as the surplus generated by the assessee is not with the intent and spirit of provisions of section 12AA and accordingly provisions of section 12AA(1)(b)(ii) of the Act are applicable and accordingly he refused to grant registration to the Trust.
6. The Ld. counsel for the assessee, Sh. P.N. Arora, Advocate, argued that there is nothing on record brought out by the Ld. CIT that there is an application for any personal purpose or any application of receipt for non- charitable purposes. Pointing out various pages of the balance sheet and receipt & expenditure, it was argued by the Ld. counsel for the assessee, Mr. P.N. Arora, that income has been applied for revenue and capital 6 ITA Nos. 617 & 618(Asr)/2011 expenditure only for charitable purposes and none of expenditure is there for any personal purposes or non-charitable purposes. The Ld. counsel for the assessee, relied upon the decision of the Hon'ble Allahabad High Court, in the case of City Montessori School (Regd) vs. Union of India reported in 315 ITR 48 and Hon'ble Punjab & Haryana High Court in the case of CIT vs. Manav Mangal Society (2010) 328 ITR 421.
7. The Ld. DCIT(DR), Mr. Tarsem Lal, on the other hand, argued that there has to be a rigorous test whether the Trusts are growing in the country for intent and purpose of profit under the garb of charitable institution and there should be a check on the same. The Ld. CIT has to examine the genuineness of its activities. The fees structure is so huge in the present case, then the purpose of education is forfeited in the first year. Therefore, he supported the order of the ld. CIT. Mr. Tarsem Lal, Ld. DCIT(DR)s, further argued with alternative plea that since the order of the ld. CIT is not a speaking order, it should be referred back to the Ld. CIT to discuss the fees structure.
8. We have heard the rival contentions and perused the facts of the case. There is nothing on record brought out by the Ld. CIT that fees structure is 7 ITA Nos. 617 & 618(Asr)/2011 in-genuine or against the accepted norms. Nothing has been brought on record by the Ld. CIT that the activities of the Trust are for non-charitable purpose or for personal purposes of the trustees etc. Rather whatever funds were acquired by the Trust have been utilized for the purpose of educational activities of the institution and in the absence of any adverse material brought on record by the ld. CIT, the application by the assessee can not be rejected. The decision of the Hon'ble Allahabad High Court in the case of City Montessori School (Regd.) vs Union of India and Others (supra) and decision of Hon'ble Punjab & Haryana High Court, in the case of CIT vs. Manav Mangal Society (supra), support our view. As regards arguments made by Ld. DCIT(DR) Mr. Tarsem Lal, nothing has been brought on record by him or by Ld. CIT about the falsity of the trust. Nothing further has been brought on record that fees structure was so huge to treat the motive of trust as profits-making or non-charitable. Therefore, the arguments of the Ld. DR Mr. Tarsem Lal are general arguments and without any basis and cannot support the revenue. In the facts and circumstances of the case, the Ld. CIT is directed to grant registration to the assessee as applied by the assessee. Thus, all the grounds of the assessee are allowed.
9. Now, we take up appeal of the assessee in the case of M/s. Prashant Educational Trust as under:
8 ITA Nos. 617 & 618(Asr)/2011
The issues as mentioned hereinabove, in the present appeal are identical to the issues in the appeal of M/s. D.N. Memorial Trust in ITA No.617(Asr)/2011 decided by us hereinabove. Therefore, the decision in the case of M/s. D.N. Memorial Trust is applicable in the present case being on identical issue and accordingly we direct the ld. CIT to grant registration as applied for by the assessee. Thus, all the grounds of the assessee are allowed.
10. In the result, both the appeals of the assessees in ITA Nos.617 & 618(Asr)/2011 are allowed.
Order pronounced in the open court on 11th July, 2012.
Sd/- Sd/-
(H.S. SIDHU) (B.P. JAIN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 11th July, 2012
/SKR/
Copy of the order forwarded to:
1. The Assessees (i) M/s. D.N. Memorial Trust, Udhampur (ii) M/s.
Prashant Educational Trust, Nagrota, Jammu
2. The CIT, Jammu.
3. The SR DR, ITAT, Amritsar.
True copy By order (Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar.