Income Tax Appellate Tribunal - Amritsar
Cyberstar Education Society, Ludhiana vs Commissioner Of Income ... on 21 June, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR
BEFORE SH. N.S.SAINI, ACCOUNTANT MEMBER AND
SH. N.K.CHOUDHRY, JUDICIAL MEMBER
ITA No.795(Asr)/2017
Assessment Year:2017-18
Cyberstar Educational Vs. The CIT (Exemptions),
Society, Chandigarh.
9-A, Main Road, Near Basti
Jodhewal, Sunder Nagar,
Ludhiana.
[PAN:AACAC-5675Q]
(Appellant) (Respondent)
Appellant by: Sh. Sudhir Sehgal, Ld. AR
Respondent by: Dr. Devender Singh (Ld. CIT-DR)
Date of hearing: 20.05.2019
Date of pronouncement: 21.06.2019
ORDER
PER N.K.CHOUDHRY, JM:
This appeal has been preferred by the Assessee Society against the order dated 25.10.2017 impugned herein, passed by the Ld. CIT(Exemptions), Chandigarh u/s 12AA of the I.T. Act, 1961 (hereinafter called as 'the Act'), whereby the Application for grant of registration u/s 12A of the Act was rejected.
2. The brief facts of the case are that the Applicant Society is an ongoing entity and is in operation since 03/07/2015 having following aims and objects.
To prescribe and conduct courses of study, education and research, to organize and provide knowledge and education in one or more aspects of development, to open, run and manage educational institutions for the 2 ITA No.795/Asr/2017 (A.Y.2017-18) Cyberstar Educational Society vs. CIT(E) development in any streams of education with assistance, to promote education, industrial training, medical relief, charitable objectives, to lay down standards of proficiency to be demonstrated before the award of degrees, to institute and award fellowships, scholarships, prizes and models, to hold seminars, conferences, workshops for dissemination of knowledge and education of commercial laws, tax laws for the benefit of the public, to frame rules and regulations and Bye laws for the conduct of affairs of the association and to add to amend or repeal from time to time, to deal with any property belonging to or vested in the association so as to suit its best interest, to purchase take on lease or otherwise acquire immovable or movable properties for the construction of the hospital building and its scientific latest equipment, to print and publish any newspapers, periodicals that the society may think desirable for the promotion of its objects and dissemination of knowledge and information, all the expenditure of the society shall be met from the donations of the members/pa Irons/Government grants and such other donors, to do all other lawful things as are incidental or conducive or may be necessary in the interests of the society or of the above objectives of the society directly or indirectly.
2.1 The applicant society had applied for registration u/s 12AA of the Act on dated 28/04/2017 before the Ld. CIT(E) who while fixing the date of hearing on 29/08/2017 requested the Applicant Society to file the details/clarifications on 12/09/2017 as mentioned in para No.5 of the impugned order. The reply was filed by the Applicant Society in response to the aforesaid show cause notice, thereafter additional queries have been raised vide e-mail dated 13/10/2017 which is mentioned in para No.6 thereafter the Ld. CIT(E) rejected the application filed by the applicant society u/s 12AA of the Act by holding as under:
"Neither any reply has been submitted to the query raised nor has any request been received for adjournment till the date of passing of the order. The onus entirely lies on the applicant, this being a beneficial clause for the applicant to submit the reply to 3 ITA No.795/Asr/2017 (A.Y.2017-18) Cyberstar Educational Society vs. CIT(E) the query raised in order to substantiate its claim. In absence of any reply to the query raised, the genuineness of the activities cannot be established. In view of the above the activities of the society cannot be termed to fall under the category of "charitable purpose"
but purely on commercial principles having profit motives by providing services in lieu of collection of fees. The application for grant of registration u/s 12AA is accordingly rejected."
3. Being aggrieved, the Appellant Society is in appeal before us.
4. Having heard the parties at length and perused the material available on record. The Ld. CIT(E) rejected the application mainly on the ground that neither any reply has been submitted to the query raised nor any request been received for adjournment till the date of passing of the order. The onus entirely lies on the applicant, this being a beneficial clause for the applicant to submit the reply to the query raised in order to substantiate its claim. In absence of any query, the genuineness of the activities cannot be established. It was further observed by the Ld. CIT(E) that in view of the above, the activities of the society cannot be termed to fall under the category of "charitable purposes" but purely on commercial principles having profit motives by providing services in lieu of collection of fees.
5. On the contrary, it was submitted by the Ld. AR Sh. Sudhir Sehgal that the Worthy CIT(E) raised the query vide questionnaire dated 13/10/2017 which was specifically replied by the Assesse society and on the basis of query raised the Ld. CIT(E) rejected the application but not otherwise. For the sake of brevity and completeness we are reproducing the further query raised by the Ld. CIT(E) and the response/replies submitted by the Applicant Society.
4 ITA No.795/Asr/2017 (A.Y.2017-18)Cyberstar Educational Society vs. CIT(E) Query Raised vide Reply of Appellant email dated 13/10/2017 i. Whether the The society has applied the registration for the first registration u/s 12AA time.
has been denied
earlier in the case ? A
copy of the order
denying the
registration may be
submitted.
ii. Copy of agreement We are an Authorized Training Partner of PMKVY-
with NSDC as it has NSDC. As Govt, is aggressively promoting Digital India,
been claimed that the so PMKVY team has either only provided few soft
entity is partner for copies of affiliation certificates or they have uploaded
training. our presence as 'Training Partner' on their Official
Portal/Website. So accordingly we are attaching the following with this mail as a proof of our affiliation with PMKVY-NSDC:
• Soft Copy of PMKVY-NSDC Affiliation Certificates at different locations/Sectors.
• Snapshot of the Official Portal of PMKVY-NSDC depicting our presence as 'Training Partner' Hope, this would prove to be an ample proof of' Cyberstar Educational Society' working as 'Training Partner' of the PMKVY-NSDC.
iii. Narration of entries in During the initial months for imparting education, the Bank Account in various expenses were required in form of purchase of excess of Rs.50,000/- furniture and fixtures and other administrative .Rational for payment expenses. So interest free advance was taken from Sh. to Sh. Umesh Sharma. Umesh Sharma, Secretary of the society to meet running expenses. As the society got its income, the same was returned back to him. The detailed chart showing receipt and payments of entries exceeding Rs.50000 is enclosed herewith for your kind pursuance.5 ITA No.795/Asr/2017 (A.Y.2017-18)
Cyberstar Educational Society vs. CIT(E) 5.1 On perusal of the reply of the assessee in response to first show cause notice dated 29/08/2017, from point no.18 it is clear that the applicant has specifically pleaded that the application for registration has been filed for the first time, therefore answer to query no (i) was available in record (refer page 5 of the PB).
From point No.15 of the aforesaid reply (page-15 and pages No.92 to 105 of the PB) it is clear that the Applicant Society has clearly mentioned the complete details qua NSDC and Appellant's association as training partners along with the Affiliation Certificate and therefore answer to query no (ii) was available in record. With regard to query No.3 qua narration of entries in the bank account in excess of Rs.50,000/-. Rational for payment to Sh. Umesh Sharma, the Applicant Society duly submitted copy of the bank statements and the details qua filing of the return, computation of income, audited balance sheets and its relevant annexures in the assessment years 2016-17 to 2018-19 and narration to each entry which is clear friom the statement itself.
5.2 We realize that the Ld. CIT(E) vide show cause notice dated 29/08/2017, requested the Applicant Society to file the details/clarifications on 12/09/2017 as mentioned in para No.5 of the impugned order and the Applicant Society in response to the aforesaid show cause notice, specifically filed the reply (refer page no 2-5 of the PB-1 of Applicant) and thereafter considering the reply of the Applicant , additional queries have been raised vide e-mail dated 13/10/2017, therefore observation of the Ld. CIT(E) to the effect that ' neither any reply has been submitted to the query raised nor any request been received for 6 ITA No.795/Asr/2017 (A.Y.2017-18) Cyberstar Educational Society vs. CIT(E) adjournment till the date of passing of the order' is contrary to the fact and material available on record.
It is a fact that the Ld. CIT(E) nowhere in the order has neither pointed out any defect in aims and objects of the society nor doubted the genuineness of the activity specifically. Therefore, we do not any hesitation to hold that the Applicant Society is carrying out its activity according to its aims and objects specified in the MOA. As it is settled law that before deciding application u/s 12AA of the Act, the Ld. CIT(E) is to evaluate two requirements (i) objects of the Applicant Society
(ii) genuineness of its activity which in the instant case are not in controversy, hence the Ld. CIT(E) is directed to grant the registration u/s 12AA of the Act to the Applicant Society. However, we clarify that the Ld. CIT(E) shall be at liberty to put condition if any found appropriate as per law and shall also be at liberty to withdraw/cancel the registration in the event of any discrepancy(s) and/or breach of any provisions of the Act in future.
6. In the result, the appeal filed by the assesse stands allowed.
Order pronounced in the open Court on 21.06.2019.
Sd/- Sd/-
(N.S.SAINI) (N.K.CHOUDHRY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 21.06.2019
/PK/ Ps.
Copy of the order forwarded to:
(1) Cyberstar Educational Society, 9-A, Main Road, Near Basti, Jodhewal, Sunder Nagar, Ludhiana.
(2) The CIT(Exemptions), Chandigarh.
(3) The SR DR, I.T.A.T., Amritsar True copy By order