Ita/130/2013 Of Commissioner Of Income Tax I v. Global Education Society

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.130 of 2013 (O&M)Date of decision: 28.2.2014 Commissioner of Income Tax I, Ludhiana Vs, .....- Appe Global Educational Society, 34, 2[%!]floor, City Plaza Chauri Sarak,Ludhiana (PAN: ), ....mesponden CORAM: HON’BLE MR. JUSTICEK AJAY KUMAR MITTAHON’ BLE MR. JUSTICE AMOL RATTAN SINGH Present:Mr. Rajesh Katoch, Advocate for the appellant. Mr. Pankaj Jain, Sr. Advocate with Ms.Divya Suri &Mr. Devinder Kumar, Advocates for the respondent, Ajay Kumar Mittal,J, .This appeal has been preferred by the revenue under section260A of the Income Tax Act, 1961(in short, “the Act’) against the orderdated 27.11.2012, Annexure A.II, passed by the Income Tax AppellateTribunal, Chandigarh Bench ‘A’, Chandigarh (in short, “the Tribunal’) inITA No.646/CHD/2011, claiming following substantial questions of law:- *'1)Whether on the facts and in law, the Hon'ble Income TaAppellate Tribunal was justified in allowing registration underSection 12A to the assessee when all the objects except forObject No.(1) fall under any other object of public utility? 11)Whether on the facts and in law, the Hon'ble Income taxAppellate Tribunal was justified in allowing registration undersection 12A inspite of the fact that the CIT-1, Ludhiana has observed that some of the objects of the applicant society aredistributive 1n nature and not charitable? 111) Whether on the facts and in law, the Hon'ble Income TaxAppellate Tribunal was justified in holding that dissolutionclause has been met with by the assessee whereas as perdissolution clause, it has not been mentioned that aftermeeting the liabilities, the property left would be handed overto a charitable institution pursuing the same objects?” 2 A few facts relevant for the decision of the controversyinvolved, as narrated 1n the appeal, may be noticed. The appellant societyfiled an application under Section 12A of the Act in Form No.lOA on29.10.2010 for registration of the trust under section 12AA of the Act. Itwas established on 1.10.2009 and_ started polytechnic college, namelyLudhiana Polytechnic at Village and PO Kube, near Nillon Bridge,Ludhiana. The Commissioner of Income Tax, Ludhiana (CIT) issued showcause notice to the assessee. It was noticed that besides the objects ofeducation, some of the objects were distributive and were not related to theobjects of education. After considering the matter, the Commissioner ofIncome Tax-I, Ludhiana (CIT) refused to grant registration to the assesseetrust under Section 12AA(1)(b) (41) of the Act vide order dated 28.4.2011,Annexure A.1. Aggrieved by the order, the assessee filed appeal before theTribunal. Vide order dated 27.11.2012, Annexure A.II, the Tribunal allowedthe appeal and the CIT was directed to pass consequential order ofregistration under section 12AA of the Act to the assessee. Hence theinstant appeal by the revenue. 3 We have heard learned counsel for the parties and perused the ITA No.130 of 2013 (O&M) record. 4The solitary question that arises for consideration 1s whetherthe CIT had rightly declined registration under Section 12AA of the Act byholding that the objects of the assessee were not of education and thuscharitable in nature. It was urged that all the objects mentioned by theassessee 1n the trust deed were not of charitable nature|5S.The Tribunal while accepting the appeal of the assessee vide order dated 27.11.2012, Annexure A.II had noticed as under:- 3 We have heard learned counsel for the parties and perused the ITA No.130 of 2013 (O&M) record. 4The solitary question that arises for consideration 1s whetherthe CIT had rightly declined registration under Section 12AA of the Act byholding that the objects of the assessee were not of education and thuscharitable in nature. It was urged that all the objects mentioned by theassessee 1n the trust deed were not of charitable nature|5S.The Tribunal while accepting the appeal of the assessee vide order dated 27.11.2012, Annexure A.II had noticed as under:- “11. Applying the above said ratio to the facts of the presentcase we find that the assessee trust was registered on1.10.2009 and the certificate of registration of societies 1splaced at page 2 of the Paper Book. The copy ofMemorandum and Article of Association and Rules andRegulations of the society are placed at pages 24 to 29 of thePaper Book. As per clause 4(a) the first object of the assesseesociety 1s to promote dental education and as per clause 4(b)the assessee 1s to establish and to promote establishment of orto render aid to school, college, educational institutions, etc,1.e. Clauses 4(c) to 4(r) are ancillary to the main objects of theassessee trust. The same 1s evident from the perusal of theBalance Sheet placed at page 7 of the Paper Book for the yearending 31.3.2010 where the assessee had shown investment inland and building out of the funds raised by it. The assesseeapplied for registration under Section 12A of the Act in thefirst year of its formation. Admittedly, the assessee 1s carryingon the objects of providing education which 1s recognized ascharitable purpose under Section 2(15) of the Act. Theassessee claims that it 1s carrying on object of education byway of establishing dental college. In view of the above saidfacts we find no merit in the order of the Commissioner ofIncome Tax in rejecting the registration under Section 12AA of the Act observing that except for object No.(1), all otherobjects fall under any other object of public utility. In view ofthe ratio laid down by the Hon'ble Punjab and Haryana HighCourt 1nCll, Bhatinda v. Baba Deep Singh EducationalSociety, Bhatinda(supra) [ITA No.88l of 2010 dated13.10.2011], the power of the Commissioner of Income taxwhile granting registration is to look into the object of thesociety and come to a Satisfaction in respect of thegenuineness of the activities of the trust. In the facts of thepresent case where admittedly the assessee is running dentalcollege and activities were by way of constructing thebuilding for establishing the dental college to provideeducation and consequently the assessee is entitled to thegrant of registration under Section 12AA of the Act. In viewthereof, we hold that where the objects of the trust weregenuine i.e. of providing education and the activities|undertaken by it were also genuine as it had_ starteconstructing the building 1n which such dental college has tobe established, the claim of the assessee for grant ofregistration under Section 12AA of the Act for carrying on theobjects of running the educational institute is thus allowed.Further objection of dissolution clause has also been met withby the assessee. The Commissioner of Income tax shall thuspass consequential order of registration under Section 12ZAof the Act to the assessee society. The plea of the Revenue thatit was engaged in other objects being distributive and notcharitable 1s premature as no such objects carried on by theassessee had been brought to our notice. The grounds ofappeal raised by the assessee are allowed.” 6 The objects mentioned by the assessee were thoroughlyexamined by the Tribunal and 1t came to the conclusion that the same weregenuine 1.e of providing education. It was also noticed that the assessee was ITA No.130 of 2013 (O&M) 6 The objects mentioned by the assessee were thoroughlyexamined by the Tribunal and 1t came to the conclusion that the same weregenuine 1.e of providing education. It was also noticed that the assessee was ITA No.130 of 2013 (O&M) running Dental College and activities were by way of constructing thebuilding for establishing the Dental College. The said findings have notbeen shown to be perverse or erroneous 1n any manner. The CIT was, thus,not right in declining registration under Section IZ2AA of the Act to thasSsSseSss 6 In view of the above, no substantial question of law arises inthe appeal and the same is hereby dismissed. (Ajay Kumar Mittal)Judge February 28, 2014@?$< (Amol Rattan Singh)Judge