Income Tax Appellate Tribunal - Chandigarh
M/S Ik Gujral Punjab Technical ... vs Cit(E), Chandigarh on 5 February, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "ए ", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'A' , CHANDIGARH
ीमती दवा संह, याय!क सद"य एवं ीमती अ नपण
ू ा% ग'ु ता, लेखा सद"य
BEFORE SMT.DIVA SINGH, JUDICIAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.1646/Chd/2017
(Under Section 12AA(1)(b)(ii)
M/s I.K. Gujral Punjab बनाम The D.C.I.T.
Technical University, Circle -I
Kapurthala. (Exemption),
Chandigarh.
थायी लेखा सं./PAN NO: A A C C K 4 6 7 3 L
नधा रती क ओर से/Assessee by : S/Shri Ajay Vohra, Sr.Adv.
& Kunal Gokhale, Adv.
राज व क ओर से/ Revenue by : Shri Ashish Gupta, CIT (DR)
सन
ु वाई क तार ख/Date of Hearing : 27.11.2018
उदघोषणा क तार ख/Date of Pronouncement: 05.02.2019
आदे श/ORDER
Per Anna pur na Gupta, Account ant Member The present ap peal has been fi l ed by the as sessee agai nst the order of the Commi ssi oner of I ncome Ta x ( Exempti ons) , Chandi garh ( i n short 'CI T( E) ' dated 29.9.2017 denyi ng regi strati on as a chari tabl e trust u/s 12AA of the I ncome Ta x At, 1961 ( herei nafter referred to as 'Act') .
2. Bri ef facts rel ati ng to the case as fi nd menti on i n the order of the Ld.CI T( E) , are that the appl i cant/assessee had fi l ed an appl i cati on i n Form No.10A seeki ng regi strati on u/s 12AA of the Act, on 23.3.2017. As per the appl i cation, the Government of Punjab, through an Act enacted on 16.1.1997, consti tuted a uni versi t y wi th the name of Punjab 2 ITA No.1646/Chd/2017 U/s 12AA(1)(b)(iii) Techni cal Uni ver si t y, whi ch was l ater on chang ed to M/s I .K.Gujral Punjab Techni cal Uni versi t y w.e.f. 20.5.2015,the i mpugned assessee before us. The stated ai ms and objects of the appl i cant/assessee was the advancement of techni cal educati on and devel opment thereof i n the State of Punjab and matters connected thereto. The uni versi t y started i ts acti vi t y wi th ni n e engi neeri ng col l eges and fe w m anagement col l eges affi l i ated to i t. The appl i cati on for grant of regi strati on u/s 12AA was re jected by the Ld.CI T( E) vi de hi s i mpugned order dated 29.9.2017 for the reasons enumerated at para 5.2 to 7 of the order as under:
"5. 2 T he appl ic an t h as been rece iv ing gr an t f ro m Pun jab Govern me n t on an inf requent and in ter mi tten t b as i s. T he appl ic an t h ad sub mi tted dur ing the proc eed ings seek ing approv al unde r sec tion 10( 23C)( v i) th at Pun jab Govern men t h ad gr an ted l and me asur ing 78. 1 6 acre f or th e es tabl ish men t of the un ivers i ty- at the in i ti al s tag e as c ap i tal gr an ts in aid. T he state govern men t h as f urther gr an ted l and and bu il d i ng to the Pun jab T echnic al Un iver s ity f or setting up cons ti tuen t c ampuses in the en tire s tate of Pun jab. T he in i ti al al l o tme n t of l an d by th e Pun jab Govern men t h as been cons trued as subs tan ti al f in anc ing b y the Govern men t. T his cl ai m r igh t f ro m ince p tio n cl ai min g i tself to be subs tan ti al l y f in anced b y the Govern men t was inheren tl y wr ong.
6. 1 Reference at this point is also invited to the assessment made by the AO in December, 2016 for A.Y 2009-10 wherein due to the non-filing of the return the case was taken up u/s 148 of I.T.Act and the entire surplus was treated as taxable income in absence of any exemption available to the assessee. It is also to be noted that during the course of assessment proceedings the applicant had tried to establish itself as the "State" income of which is exempted u/s 289(1) of the Constitution of India. However the A.O. has rejected the claim and treated the applicant as the AOP. Reference on this point is taken to the decision of Hon'ble IT AT Chandigarh in I.T.A no. 880 & 881/CHD/2014 in case of M/s Baddi Barotiwala Nalagarh Development Authority, Baddi wherein the assessee engaged in development activity sponsored by H.P Government claimed itself to be the "State" and sought exemption from tax but Hon'ble ITAT has 3 ITA No.1646/Chd/2017 U/s 12AA(1)(b)(iii) den ied it as the au thor ity i ts elf had cl ai me d exe mp tion u/s 10 /11/12 of the Ac t.
6. 2 T his ac tion of the de p ar tme n t tr iggered an appl ic ation cl ai min g approv al under sec tio n 10( 23C)( v i). A t th at junc ture the cl ai ms h ad bee n th at the appl ic an t was a Un ivers i ty el ig ibl e f or the s aid approv al . In the ins tan t c ase , a we l l re asoned and s pe ak ing order was p assed v ide order d ate d
31. 03. 2017 re jec ting the appl ic ation f or approv al u/s 10( 23C)( v i) of the Ac t in the c ase of the appl ic an t ag ains t wh ich the asses see is in appe al . Des p ite the pen dency of the ap pe al the presen t appl ic ation h as been pressed ado p ting a co mpl e tel y d if f erent s tance and a d if f eren t code f or exe mp tions. In th e c ase of the app l ic an t th is is the th ird code th at i s be ing pressed f or getting the i r inco me exe mp t. It f irs t cl ai me d th at i t is wh ol l y or subs tan ti al l y f in anced b y the Go vern men t. L ater i t sh if ted tack to cl ai m th at i t is a U n ivers i ty ex is ting sol el y f or educati on and no t f or prof its. T he present appl ic ation i mp l ies th at i t is a trus t seek ing exe mp tion f or i ts inco me f rom pro per ty an d vol un tar y don ati ons. T his ac tion no t onl y mil i tate s ag ains t the sche me of the Ac t th at prov ides f or exe mp tion to d i ff erent c ategor ie s of assessees b ased on the ir s tatus and al so the source of rece ip ts bu t is al so taken as an atte mp t to subver t the process of l a w [ the ap pl ic an t h as no t rel inqu ished i ts c l a i m s f o r c o v e r a ge u n d e r s e c t i o n 1 0 ( 2 3C )( v i ) a n d i s i n a p p e a l a g ai n s t t h e o r d e r r e j e c ti n g t h a t c l a i m] .
7. N o t w i t h s t a n d i ng al l o f t h e a b o v e , i t i s r e i te r a t e d t h a t t h e a p pl i c a n t i s n e i t h e r a s o c i e t y r e g i s t e r e d u n d e r t h e S o c i e ty' s R e gi s t r a ti o n A c t , 1 8 6 0 o r a p u bl i c c h a ri t a bl e t r u s t r e gi s t e r e d as s uc h u n d e r t he r e l e v a n t T r u s t A c t o r a s e c t i o n 8 / section 25 company r e gi s t e r e d under the C o m p a n i e s A c t . T h e s e a r e t h e t h r e e c a te g o ri e s t h a t h a v e be e n ju d i c i al l y h e l d to q u al i f y f o r c l ai m i n g e x e m p ti o ns u n d e r s e c ti o n 1 1 a n d 1 2 a n d t he r e f o re b e i n g e l i gi b l e f o r r e gi s t r at i o n u n d e r s e c t i o n 1 2A A . C o ns i d e ri n g t he s e o bs e r v at i o ns t h e a p pl i c a n t i s he l d i n e l i gi b l e f o r c o v e r a ge u n d e r s e c t i o n 1 2 A A . It i s a l s o t h e c a s e t h a t t h e a p pl i c a ti o n u /s 1 0 ( 2 3C )( v i ) o f t h e A c t h a s b e e n r e j e c t e d v i d e o r d e r d a t e d 3 1. 0 3 . 2 0 1 7. h i l i g h t o f al l o f t h e a b o v e , I h a v e no o p ti o n b u t t o re je c t t h e a p pl i c a ti o n o f t h e a s s e s s e e s e e ki n g re gi s t r a ti o n u / s 1 2 A A o f I. T . A c t."
3. Agai nst the sam e the appl i cant/ assessee has co me up in appeal befor e us contesti ng the deni al of grant of 4 ITA No.1646/Chd/2017 U/s 12AA(1)(b)(iii) regi strati on u/s 12AA of the Act rai si ng the fol l o wi ng grounds:
1. T hat the order of the Co mmis s ion er of Inco me T ax ( Exe mp tions ) , Ch and ig arh is bad in l a w and is beyond al l the c annons of l a w and jus tice.
2. T hat the order of the Co mmis s ion er of Inco me T ax ( Exe mp tion s ), Ch and ig arh re jec tin g the appl ic ation f or reg is tr ation u/s 12 AA of the Inco me T ax Ac t, al tho ugh hol d ing th e appel l an t as Educ ation Ins ti tu tion be ing the cre ation of th e Govern men t of Pun jab under an Ac t merel y on th e b as is of prof its e arned b y the appel l an t is b ad i n l a w and needs to be se t as ide.
3. T hat the order of the Co mmis s ion er of Inco me T ax ( Exe mp tion s ), Ch and ig arh re jec tin g the appl ic ation f or reg is tr ation u/s 12AA wi tho u t apprec i ating the record and re pl y f il ed b y th e appel l an t merel y on the ground th at the appl ic ation f il ed by the appe l l an t f or approv al u/s 10( 23C)( v i) h as been re jec ted is b ad in l a w an d needs to be se t as ide.
4. T hat the order of the Co mmis s ion er of Inco me T ax ( Exe mp tions ), Ch and ig arh hol ding the appel l an t ne ither a soc ie ty nor a Publ ic Ch ar i tabl e T rust an d thereb y re jec ting the reg is tr ation u /s 12A is b ad in l a w and needs to be se t as ide.
5. T hat the appel l an t cr aves l e ave to add, al ter and del e te an y o f the grounds of appe al bef ore the f inal he ar ing of the appe al . "
4. Duri ng the course of heari ng before us, the Ld. co unsel for assessee pointed out that the pri mar y reason for the deni al of regi strati on was the fact that the assessee's appl i cati on for approval u/s 10( 23C) ( vi ) of the Act ,as a Uni versi t y or I nsti tuti on e xi sti ng sol el y for the purpose of educati on and not for the purpose of profi ts, was re jected by the Ld.CI T( E) , vi de hi s order dated 31.3.2017. It was poi nted out that thi s order was uphel d by the I.T.A. T. vi de thei r order date d 23.2.2018,i n a ppeal fi l ed by th e assessee i n I TA No.910/ Chd/2017. Copy of the order was pl aced 5 ITA No.1646/Chd/2017 U/s 12AA(1)(b)(iii) before us. I t was thereafter poi nted out that the I. T.A. T. had uphel d the order of the Ld.CI T( E) , on fi ndi ng that the assessee had ge nerated huge s urpl uses whi ch was being parked i n FDR's and not bei ng uti l i zed for i ts stated purpose and that i ts acti v i ti es were aki n to that of another uni versi t y i n the area, na mel y Lovel y Pr ofessi onal Uni versi t y whi ch was operati ng on commerci al l i nes and offeri ng i ts i ncome for ta xati on. I t was poi nted out that the I . T.A. T. had noted that no chari tabl e acti vi t y was bei ng carri ed out by the appl i cant/assessee. The Ld. counsel for assessee contended that these fi ndi ngs of the I . T.A. T. were based on factual submi ssi ons whi ch were made be fore the I . T.A. T. but stated that certai n materi al facts were not brought before the I . T.A. T. to count er these fi ndi ngs. I t was contended that the faul t and mi stake l a y enti rel y at the door of the assessee who had fai l ed t o produce materi al evi dences to s upport i ts stand that it was sol el y eng aged in the a cti vi ti es of i mparti ng educati on and was not for the purpose of generati ng profi ts. The Ld. counsel for assessee contended that the fact of the matter was that the appl i cant/assessee was pursui ng i ts stated object of i mparti ng education and had accumul ated surpl uses for uti l i zi ng i n i ts e xtensi ve e xpansi on programme. It was poi nted out that for bei ng gui ded i n the sa i d purpose i t h ad approached E duca ti onal Consul tants I ndia Li mi ted( i n shor t referred to as " EdCI L") ,an enterpri se of Mi ni str y of Human Resources Devel opment of the Government of I ndi a) for prepari ng a detai l ed pro ject report for suggesti ng academi c programmes and associ ated 6 ITA No.1646/Chd/2017 U/s 12AA(1)(b)(iii) i nfrastructure for starti ng academi c programmes from 2016-
17. I t was poi nted out that EdCIL was approached i n June, 2015 and the y h ad submi tted the i r detai l ed pro ject report on 1.6.2016. Accordi ngl y, an acti on pl an had been prepared by the appl i cant uni versi t y for starting academi c sessi on 2016- 17 keepi ng i n vie w the suggesti ons el aborated i n the draft Detai l ed Pro ject Report and prog rammes al ready run at the campus of the co l l eges. Copy of t he Acti on Pl an p repared by the appl i cant uni versi t y i n accordance wi th the Detai l ed Pro ject Report submi tted by EdCI L was pl aced before us at Paper Book pag e Nos. 83 to 1 26A. It was poi nted out therefrom that t he pl anned outl a y for the total p roject cost was Rs.2660 crores. Our attenti on was dra wn to Paper Book page No.70 whi ch contai ned the fi nanci al pl an enumerated by the detai l ed pro ject report su bmi tted by EdCI L. The Ld. counsel for assessee further contended that i t had al so i ncurred e xpenses on wel fare r el ated acti vi ti es, detai l s of whi ch were fi l ed at Paper Book page No.36 an d had al so offered free sc hol arshi p scheme to the stu dents from economi cal l y weaker secti on of the soci et y as wel l as students sufferi ng from di sabi l i t y. The detai l s of the same were pl aced at Paper Book pages 37 and 38. The Ld. counsel for assessee fur ther contended that a comparat i ve chart sho wi ng fees charged by the appl i cant soci et y and Lovel y Professi onal Uni versi t y for vari ous courses, had also been fi l ed sho wi ng that the fees charg ed by the appl i c ant soci et y was far l ess tha n that charged b y Lovel y Uni vers i t y and i ts acti vi ti es, therefore, coul d not be sai d to be akin to that 7 ITA No.1646/Chd/2017 U/s 12AA(1)(b)(iii) Lovel y Professi onal Uni versi t y, thus hol di ng it to be commerci al in nature. The Ld. counsel for assessee contended that these evi dences, the assessee for faul t of i ts o wn was unabl e to fi l e before the I TAT i n appeal rel ati ng to deni al of approval u/s 10( 23C) ( vi ) of the Act. It was contended that the y adequatel y addressed al l the shortcomi ngs poi nted out by the I TAT whi l e uph ol di ng the order of the Ld.CI T( E) i n the sai d proceedi ngs and were therefore no w b ei ng fi l ed before us to address th e fi ndi ngs i n that case based on whi ch regi strati on u/s 12AA had been deni ed to the assessee/appl i cant. I t was further poi nted out that these evi de nces coul d not b e fi l ed before th e LdCI T( E) i n the i mpugned proceedi ngs, si nce no opportuni t y was gi ven for doi ng so. An appl i cati on under Rul e 29 of the Income Ta x Rul es, 1963 was fi l ed for admi ssi on of the addi ti onal evi dences and rel i ance was pl aced on the deci sion of the Hon'bl e Del hi Hi gh Court in the case of CI T Vs. Te xt Hundred I ndi a Pvt. Ltd., 239 C TR 263 and i n the case of CI T Vs. Vi rgi n Secur i ti es & Credi ts Pvt. Ltd., 332 I TR 39 6 to state that the addi ti onal evi dences adduced by the appel l ant before the Tri bu nal i f cruci al to the di sposal of the appeal ought to be admi tted. Ld.Counsel for the assessee further contended that the Hon'bl e Supreme Court i n the case of Vi shvesvara ya Te chnol ogi cal Uni versi t y vs ACI T 3 84 I TR 37 ( SC) , had hel d that the deni al of approval u/s 10( 23C) ( vi ) of the Act al one cannot be taken to hol d that the assessee's acti vi ti es were not chari tabl e i n nature. The Ld. counsel for assessee stated that the Ld.CI T( E) has fai l ed to ta ke note of 8 ITA No.1646/Chd/2017 U/s 12AA(1)(b)(iii) thi s deci si on of the Hon'bl e Ape x Court al so. He, therefore, pl eaded that the addi ti onal evi dences be admi tted and the i ssue be restored back to the CI T( E) to be decided i n the l i ght of the addi ti onal evi dence fi l ed and judi ci al deci si ons rel i ed upon by the assessee i n thi s regard.
5. The Ld. DR, on t he other hand, v ehementl y objected to the admi ssi on of addi ti onal evi dences stati ng that the I . T.A. T. had uphel d the order of the Ld.CI T( E) denyi ng the approval u/s 10( 23C) ( vi ) of the Act for other reason al so besi des those poi nted out by the Ld. counsel for assessee as above. Dra wi ng our attenti on to para 12, 13 and 14 of the order the Ld. D R stated that th e I . T.A. T. had al so poi nted out that the appl i cant uni versi t y had del egated franchi sees i n respect of di stance educati on to pri vate pl a yers and had pai d huge amounts to them and had fai l ed to provi de the detai l s of servi ces offered by them, whi ch fact had been poi nted out by the audi tors i n thei r report al so. Ld.DR vehementl y objec ted therefore to t he admi ssi on of addi ti onal evi dences and the restorati on of the matter to the Ld.CI T( E) ,as pra yed for by the Ld.Counsel for the assessee.
6. We have heard the ri val contenti ons and perused the orders of the authori ti es bel o w and al so the deci sions to whi ch our attenti on was dra wn du ri ng the course o f heari ng. Admi ttedl y, the assessee has been deni ed regi stration pri mari l y for the reason that i t was deni ed approval u/s 10( 23C) ( vi ) of the Act. The approval had been deni ed on fi ndi ng that the assessee was generati ng huge surpluses, 9 ITA No.1646/Chd/2017 U/s 12AA(1)(b)(iii) parki ng i n i t FD Rs and not uti l i zi ng for i ts state d purpose and for not carr yi ng out acti vi ti es for the wel fare of students and al so for run ni ng i t on comme rci al l i nes as i n t he case of one M/s Lovel y Professi onal Uni versi t y . The Ld. counsel for assessee has c ontended and co nceded that on accoun t of fai l ure on the part of the ass essee to produc e materi al evi dences before the Ld.CI T( E) a nd even before t he I . T.A. T., the approval was deni ed to i t and has no w produced before us the addi ti onal evi dences to address the adverse fi ndi ngs of the I . T.A. T. whi l e affi rmi ng the order of the CI T( E) i n proceedi ngs u/s 10( 23C) ( vi ) of the AC T. The Ld. c ounsel for assessee has no w produced evi d ences sho wi ng t hat i t had approached EdCI L for a detai led pro ject report for the e xpansi on of i ts stated acti vi ti es i n the fi el d of educati on, whi ch had been submi tted i n the year 2016, i nvol vi ng outl a y of Rs.2660 cror es. The Ld. counsel for assessee has also adduced evidence to show that it was engaged in welfare related activities of the students and has also filed detail showing that fees charged by it was less than that charged by Lovely Professional University. Further we have also noted from the order of the CIT(E),that no show cause notice was issued to the applicant /assessee before rejecting its impugned application for the aforestated reasons. The Ld.DR was also unable to bring to our notice any such fact. Considering the entire facts and circumstances therefore, we agree that the evidences are material for deciding the issue of whether the assessee was carrying out charitable activities or not, and to address the adverse findings of the ITAT in appellate 10 ITA No.1646/Chd/2017 U/s 12AA(1)(b)(iii) proceedi ngs rel ati ng to grant of approval u/s 10( 23C) ( vi ) , whi ch has been the ba si s for denyi ng r egi strati on in the present case. We therefore admi t the addi ti onal evi dences fi l ed by the assessee. Further si nce these addi ti onal evi dences need to be e xami ned and veri fied, we consi der i t fi t to restore the i ssue of grant of regi strati on u/s 12A of the Act, back to the Ld.CI T( E) to deci de the same afresh after consi deri ng the addi ti onal evi dences fi l ed by the assessee and i n the l i ght of the judi ci al precedent and deci si ons i n thi s regard. We ma y di rect that the matter be di sposed off wi thi n the peri od of four months from the recei pt of our order.
7. I n the resul t, the appeal of the a ssessee i s al lo wed for stati sti cal purposes.
O r d e r p r on o u n c ed i n t h e O p e n Cou r t .
Sd/- Sd/-
दवा संह अ नपण
ू ा% ग'ु ता
(DIVA SINGH ) ANNAPURNA GUPTA)
याय!क सद"य/Judicial Member लेखा सद"य/Accountant Member
दनांक /Dated: 5th February, 2019
*रती*
आदे श क ' त(ल)प अ*े)षत/ Copy of the order forwarded to :
1. अपीलाथ+/ The Appellant
2. ',यथ+/ The Respondent
3. आयकर आय-
ु त/ CIT-
4. आयकर आय-
ु त (अपील)/ The CIT(A)
5. )वभागीय ' त न0ध, आयकर अपील य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar