Income Tax Appellate Tribunal - Amritsar
Income Tax Officer (Exemptions), ... vs St. Francis Convent School,, Jalandhar on 21 February, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR
(CAMP AT JALANDHAR)
BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND
SH. T.S. KAPOOR, ACCOUNTANT MEMBER
I.T.A Nos.203, 204, 205 (Asr)/2016
Assessment Years: 2010-11
ITO (Exemptions), Vs. St. Francis Convent School,
Ward Jalandhar. Taran Taran,
H.O.-Bishop House, Civil Lines,
Jalandhar.
PAN: AAFTS-5346E
(Appellant) (Respondent)
I.T.A No.206 (Asr)/2016
Assessment Years: 2010-11
ITO (Exemptions), Vs. St. Christ the King Convent
Ward Jalandhar. School, Pathankot,
H.O.-Bishop House, Civil Lines,
Jalandhar.
PAN: AAEFC-0236G
(Appellant) (Respondent)
I.T.A No.209 (Asr)/2016
Assessment Years: 2010-11
ITO (Exemptions), Vs. St. Judes Convent School,
Ward Jalandhar. Nakodar
H.O.-Bishop House, Civil Lines,
Jalandhar.
PAN: AAETS-3007J
(Appellant) (Respondent)
Appellant by: Smt. Balwinder Kaur (DR.)
Respondent by: Sh. G.S.Syal (Adv.)
Date of hearing: 23.01.2017
Date of pronouncement: 21.02.2017
2 ITA No.203 to 206 & 209(Asr)/2016
Asst. Year: 2010-11
ORDER
PER T. S. KAPOOR (AM):
This is a bunch of five appeals filed by Revenue against the separate orders of Ld. CIT(A), Jalandhar, all dated 01.12.2015, for Asst.
Year:2010-11.
2. The Revenue has taken identical grounds in these appeals, wherein it is aggrieved with the action of Ld. CIT(A), by which he had deleted the penalty imposed by Assessing Officer u/s 271(1)(c) of the Act.
3. At the outset, the Ld. DR submitted that there was a delay in filing of these two appeals by 25 days and the reasons of delay was stated to be that in the month of March, 2016 there were a number of time barring matters and therefore, Assessing Officer could not file the appeals within prescribed period. The Ld. DR in this respect invited our attention to a copy of affidavit placed on record duly singed by Assessing Officer.
4. The Ld. AR had no objection, if the delay was condoned, therefore, we condoned the delay and Ld. DR was directed to proceed with her argument.
5. The Ld. DR submitted that assessee society was claiming exemption u/s 10(23C) (vii) but during the year under consideration no such claim was made as the expenditure during the year under consideration was more than receipts. It was submitted that application of assessee for grant of approval u/s 10(23C)(vi) has been withdrawn by 3 ITA No.203 to 206 & 209(Asr)/2016 Asst. Year: 2010-11 the Worthy Chief Commissioner of Income Tax, Ludihana, vide order dated 13.12.2012 and therefore, also the assessee was not eligible for exemption.
The Ld. DR further submitted that in Civil Writ Petition filed by St. Francis Convent School, Jandiala Guru, under similar facts and circumstances it was decided by the Hon'ble Jurisdictional High Court in favour of Revenue. It was submitted that assessee company had been regularly paying substantial amount of money under the head of Education Extension Services to another society namely Diocese of Jalandhar, which had some objects religious in nature. Therefore, those objects cannot be considered solely for educational purposes and therefore, the authorities below had rightly held that payment by the assessee to Dioces of Jalandhar was not solely for educational purposes and therefore, Assessing Officer made the addition for such payment and passed penalty orders u/s 271(1)(c) of the Act.
6. The Ld. AR, on the other hand submitted that the Hon'ble Punjab & Haryana High Court in the case of Missionaries of Jesus another group company has held that payment of Education Extension Services to Diocese of Jalandhar is an allowable expenses and therefore he argued that issue being highly debatable and the Ld. CIT(A) has rightly allowed the appeals of assessee.
The Ld. AR further submitted that Hon'ble Tribunal vide order dated 26.09.2016 in bunch of appeals has held that amount paid to 4 ITA No.203 to 206 & 209(Asr)/2016 Asst. Year: 2010-11 Diocese of Jalandhar is to be allowed as application of income and has also held the registration u/s 12A to be applicable retrospectively.
7. We have heard the rival parties and have gone through the material placed on record. We find that the assessee has been enjoying exemption u/s 10(23C)(vii) of the Act., however, for the year under consideration the said exemption was withdrawn. The assessee was also not granted exemption u/s 12A of the Act. It is also observed from the order of Ld. CIT(A) that in the case of Missionaries of Jesus, another group of society, the Hon'ble Punjab & Haryana High Court has held the payment of Education Extension Services to Diocese of Jalandhar was an allowable expense and whereas in the case of St francis Convent School such expenditure has been held to be not allowable. Therefore, the Ld. CIT(A) has rightly held that issue was a highly contentious, debatable issue and therefore, he rightly held that assessee has not concealed or filed inaccurate particulars of income.
We further find that in a bunch of appeals the Hon'ble Tribunal vide order dated 26.09.2016 has granted registration to various schools u/s 12A retrospectively and has also held the payment to Diocese of Jalandhar as an allowable expenses.
For the sake of convenience the relevant para of the Hon'ble Tribunal order is reproduced here in below.
"32. Now, apropos the merits, the question is whether payment of Education Extension Services to the Diocese of Jalandhar, notified U/s 10 5 ITA No.203 to 206 & 209(Asr)/2016 Asst. Year: 2010-11 (23C)(vi), as well as registered U/s 12A of the Act and persuing the object of prompting education through running various schools, can be regarded as application of income.
33. Here, it is not in dispute that the Diocese of Jalandhar is not only registered U/s 12A of the Act, it is also notified U/s 10(23C)(vi) of the Act.
Besides, for A.Ys. 2007-08 to 2013-14, vide orders passed U/s 143(3) of the Act (copies on record), its stands taken note of that the Diocese of Jalandhar is running various schools and that exemption U/ss 11 and 12 of the Act has been allowed with regard to its income. Therefore, it has wrongly been held in the impugned order that the payment of education extension services made by the assessee to the Diocese of Jalandhar out of the current year income, as is also available from the income and expenditure account of the relevant financial years, is not allowable as application of income.
34. In this regard, in 'CIT Vs. Sarladevi Sarabhai Trust (No. 2)', 172 ITR 698 (Guj), it has been held that when a charitable Trust donates its income to another Trust having similar objects, the provisions of Section 11(1)(a) can be said to have been met by such donor Trust. For this proposition, the assessee has correctly relied on the following decisions too:
(i) CIT Vs. Thanthi Trust 239 ITR 502 (SC)
(ii) CIT Vs. Hindustan Charity Trust 139 ITR 913 (Cal.)
(iii) CIT Vs. Shri Ram Memorial Foundation 269 ITR 35 (Del.)
(iv) CIT Vs. Nirmala Bakubhai Foundation 226 ITR 394 (Guj).
Yet again, these decisions have remained uncontroverted.
35. Then, Section 11(3)(d) of the Act, which was brought in by the Finance Act, 2002, w.e.f. 01.04.2003, bars donation by a charitable Trust to another charitable Trust, out of accumulated income, from being considered as application of income. However, as is patent on record, the payment of Education Extension Services made by the assessee to the Diocese of Jalandhar is out of its current year's income and not out of any accumulated income.
36. In this regard, in 'DIT(E) Vs. Bagri Foundation', 344 ITR 193 (Del), it has been held that the restriction/embargo in donation by one charitable Trust to another is only restricted to accumulations made in excess of 15% of income of the Trust, as referred to in Section 11(2) of the Act; and that the said prohibition does not apply to current year income, or even to accumulations up to 155% U/s 11(1)(a) of the act.
37. Other than the above, the Assessing Officer has observed that the Diocese of Jalandhar was also having some religious objects. This, however, is not at all detrimental to the claim of the assessee. It may be reiterated that the Diocese of Jalandhar stands notified U/s 10(23C)(vi) of the Act. This provision, it may be noted, is applicable to universities and educational institutions, which exist solely for educational purposes and not for purposes of profit. Neither the assessment order/s of the assessee/s, nor the assessment order/s of the Diocese of Jalandhar, carry any finding of the Diocese of Jalandhar pursuing religious objects. Merely having religious 6 ITA No.203 to 206 & 209(Asr)/2016 Asst. Year: 2010-11 objects does not amount to pursuing religious objects. It is the actual objects perused and the actual activities undertaken, which are of consequence so far as regards our present purposes. The decisions in 'Harf Charitable, Trust Vs. CCIT', 376 ITR 110 (P&H) and 'Digember Jain Society for Child Welfare Vs. DGIT(E)', 185 Taxmann 255 (Del.) are eloquent decisions on this matter, in favour of the assessee.
38. Therefore, it cannot be denied that the Diocese of Jalandhar is engaged solely in pursuing the object of education. It runs various schools. Hence, it is but charitable institution pursuing objects which are similar to those of the assessee. That being so, the amount paid to the Diocese of Jalandhar being out of the current year income and not out of accumulated income, such payment of education extension services to the Diocese of Jalandhar is to be allowed as application of the income. It is so ordered.
39. In view of the above discussion, we hold that (1) the subsequent grant of registration in all the cases respectively operates retrospectively for all the years under consideration; and (2) payment of education extension services to the Diocese of Jalandhar is application of income, duly satisfying the provisions of Sections 11(1) and 11(3)(d) of the Act."
In view of the above facts and judicial precedents, we do not find any infirmity in the order of Ld. CIT(A), therefore, we dismiss the appeals of the Revenue.
8. In the result, the appeals filed by Revenue are dismissed.
Order pronounced in the open Court on 21.02. 2017.
Sd/- Sd/-
(A.D. JAIN) (T. S. KAPOOR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 21.02.2017.
/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