Commissioner Of Income Tax v. M/S Aggarwal Sabha Maharaja Aggarsain Bhawan, Rohtak

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. C.M. No.20330-CII of 2010 in/andI.T.A. No.283 of 2010 (O&M) Date of decision: 27.8.2010 Commissioner of Income Tax. -----Appellant. Vs. M/s Aggarwal Sabha Maharaja Aggarsain Bhawan, Rohtak. -----Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Aman Bansal, Advocatefor the appellant. --- ADARSH KUMAR GOEL, J. C.M. No.20330-CII of 2010: Heard. Order dated 2.8.2010, dismissing the appeal in default is recalled. I.T.A. No.283 of 2010: 1. This appeal has been preferred by the assesseeunder Section 260-A of the Income Tax Act, 1961 (for short, “theAct”) against the order dated 29.5.2009 in I.T.A.No.5009/DEL/2007 passed by the Income Tax Appellate Tribunal,New Delhi, proposing to raise following substantial questions oflaw:- “i) Whether the Hon’ble Tribunal was justified indirecting the Commissioner of Income tax to grantregistration to the assessee society when theconditions as to registration of trust etc. as laid downunder Section 12A of the Income Tax Act (before itwas amended w.e.f. 1.6.2007) were not compliedwith?directing the Commissioner of Income tax to grantregistration to the assessee society when theconditions as to registration of trust etc. as laid downunder Section 12A of the Income Tax Act (before itwas amended w.e.f. 1.6.2007) were not compliedwith? ii)Whether the Hon’ble ITAT was justified in directingthe Commissioner of Income Tax to allowregistration when the requirements under Section12AA(1)(a) were not complied with by the applicantbefore the CIT?the Commissioner of Income Tax to allowregistration when the requirements under Section12AA(1)(a) were not complied with by the applicantbefore the CIT? iii) Whether the Hon’ble ITAT was right in restoring thematter of the condonation of delay to the file of theCIT when the applicant had made no such requestbefore the CIT before his passing order underSection 12 AA of the Income Tax Act?matter of the condonation of delay to the file of theCIT when the applicant had made no such requestbefore the CIT before his passing order underSection 12 AA of the Income Tax Act? iv)Whether the Hon’ble ITAT erred in law while holdingthat the society is existing solely for education andnot for the purposes of profit inspite of the fact that itwas having many objects at article 4(a), (b), (c), (d),(e), (f), (g) other than the minor object of openingand running educational institutions (vide article 4(d)land that it has been earning systematic profit yearto year under an express provision in Memorandumof Association for earning profit vide article 5(c)thereof?that the society is existing solely for education andnot for the purposes of profit inspite of the fact that itwas having many objects at article 4(a), (b), (c), (d),(e), (f), (g) other than the minor object of openingand running educational institutions (vide article 4(d)land that it has been earning systematic profit yearto year under an express provision in Memorandumof Association for earning profit vide article 5(c)thereof? v)Whether the Hon’ble Tribunal was justified indirecting to allow the registration when the society isnominally public but practically private concern forthe rich?directing to allow the registration when the society isnominally public but practically private concern forthe rich? v)Whether the Hon’ble Tribunal was justified indirecting to allow the registration when the society isnominally public but practically private concern forthe rich?directing to allow the registration when the society isnominally public but practically private concern forthe rich? 2. The assessee filed application under Section 12A(1)(a) of the Act seeking its registration under Section 12AA of theAct, as a charitable society. The Commissioner of Income Taxrejected the application on the ground that the same was filed 18years after its establishment and requisite audited accounts werenot filed; the society was established for benefit of only aparticular community; the society was earning profits and itsobjects included carrying on activity which may yield profit; levelof fee charged by it was high. On appeal, the Tribunal reversedthe view taken by the Commissioner and held that in assessmentorder dated 27.11.2008 for the assessment year 2006-07, incomeof the assessee was held to be exempted under Section 10(23C)(iiiad) of the Act. In support of the said decision, the AssessingOfficer held that the society was doing charitable activities. It wasrunning a Senior Secondary School affiliated to CBSE. It wasmaintaining accounts. In view of findings recorded by theAssessing officer which was duly accepted by the department, thefinding recorded by the Commissioner was contradictory. Merefact that the assessee had certain surplus income from of itscharitable activities, was not enough to hold that the society wasnot charitable. As regards the society being only for a particularcommunity, it was held that nonetheless the society was forobject of general public utility under Section 2(15) of the Actunder which the objects beneficial to a section of public were alsocovered. Reliance was placed on judgment of the Hon’ble Supreme Court inAhmedabad Rana Caste Associationv. CIT(1971) 82 ITR 704. It was further observed that there wasnothing to show that the objects of the society were not genuineand at the stage of registration, it could not be presumed that theincome will not be spent for charitable purposes. It was furtherheld that explanation of the assessee for condonation of delaywas required to be considered on merits, after giving opportunityof hearing to the assessee. For this purpose, the matter wasrestored back to the Commissioner. 3. We have heard learned counsel for the revenue. 4. It is clear from the findings recorded by the Tribunalthat for the earlier assessment year 2006-07, the society washeld to be exempted under Section 10(23C)(iiiad) afterconsidering the merits of the activities of the society. TheTribunal, after correctly appreciating the legal position, held thatactivities of the society were of general public utility under Section2(15) of the Act. This, finding is not shown in any manner to beerroneous. Once that is so, questions of law proposed cannot beheld to be substantial questions of law. 5. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE August 27, 2010MITTAL )ashwani ( AJAY KUMAR JUDGE