Itta/101/2021 Of Principal Commissioner Of Income Tax v. Jawaharlal Nehru Technological University

IN THE HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD I\,4ONDAY, THE SEVENTEENTH DAY oF JANUARYTWO THOUSAND AND TWENTY TWOTWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE SRI JUSTICE UJJAL BHUYANANDTHE HONOURABLE SRI JUSTICE A.VENKATESHWARA REDDY INCOME TAX TRIBUNAL APPEAL NO: 10'l OF 202'l lncome Tax Tribunal Appeal Under section 260 of the Income Tax Act, againstthe order of the lncome Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad inthe order of the lncome Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad inlrA.No.1769/Hyd/2019, for assessment year 2019-2020 dated 27.04.2021 preferredagainst the order of the commissioner of lncome Tax (Exemptions) Hyderabad,F.No.ClT (E)l Hydl215 (03)112N2018-19 dated 30.09.2019.against the order of the commissioner of lncome Tax (Exemptions) Hyderabad,F.No.ClT (E)l Hydl215 (03)112N2018-19 dated 30.09.2019. Between: Principal Commissioner of lncome Tax (Central), 7th Floor, Aayakar Bhavan,Basheerbagh, Hyderabad - 500 004.Basheerbagh, Hyderabad - 500 004. ,..APPELLANT AND Jawaharlal N_e-l'yq ]gclrologicat U niversity, KpHB Cotony, Kukatpaily,Hyderabad -500 085. (PAN . ) ...RESPONDENT Counsel for the Appellant: SRt B. NARASIMHA SARMACounsel for the Respondent: NONE APPEAREDCounsel for the Respondent: NONE APPEAREDThe Court delivered the following: JUDGMENT THE } ONOURABLE SRI JUSTICE LUJAL BHUYAN AND THE HON )URABLE SRI JUSTICE A. VENKATESTIWARA Rf,DDY I.T.T.A.No.l0l of 2021 JUDGMEN l: @er Hon'ble Sri Justice Ujjal Bhuyan) Heard Mr. B. Narasimha Sarma, learned senior StandingCounsel for . ncome Tax Department, for the appellant. 2. This a peal has been preferred by the revenue against the orderdated 27.04 2021 passed by the Income Tax App,:llate Tribunal,Hyderabad ' t' Bench, Hyderabad in I.T.A.No 1769fr)yd/2019 for theAssessment [' ]'ear 2019-20 3. Appel ant has proposed the following questions as, substantialquestions of aw, viz., "1. n t}te facts and rn the circumstances of the case,whethe the Hon'ble Tribunal (ITAT) rs correct m law indkectir 3 the Commissioner of Income Ta-r (Exemptions) to$ant [t ][gistration under ][Secuon ][12A ][of ][the ][Ilcome ][Tax Act,]1961, il the objectives and activities of the Respondent-assesseeate ttre rame as for the assessment year 2020-21? 2. n the fucts and in the circumstances of the case,whethe the Hon'ble Tribunal (ITAT) is conect in law ur notappreo .ting that as pet Secnon 12A of the Income Tax Act,1961 tl e Commissioner of Income Tax (Exemptions) has tosatrs$, Lrmself about the ger-ruineness of the actir.itres and thatthe Co nmissioner of Income 1'ax (Exemptrons) gave a clear \ finding that the activities of the tmst ate not in accotdance withthe provisions of the Income Ta-x Act, 196i? 3. In the facts and in the circumstances of the case,whether the Hon'ble Tnbunal (TAT) s coffect in law in notappreciaturg the fact that the tmst applied frrnds outside Indieand hence is not ehgrble for regrstration under Section 12A ofthe Incotne Tax Act. 1961? .1. In the facts ald rr the clrcumstances of the case,whether the Horr'ble ['I'ribunal ](ITAI) n correct in law indirecturg the Commissioner of Income ['I'ax ](Exemptions) togrant registratron under Sectron 12A of the Income Tax Act,1961 to the respondent-assessee though there is a clear findingby the Commissioner of Income Tax (Exemptions) that therespondent-assessee failed to get accounts audited within thespecified date and hence violated the provisions of Section 12Aof the Income Tax Act, 1961?" 4. We find that respondent / assessee had filed an applicationbefore the Comrnissioner of Income Tax (Exemptions), Hyderabadseeking registration under Section 12A of the Income Tax Act, 1961(briefly, 'the Act' hereinafter) on 30,03.2019 for the Assessment Year2019-20. Be it stated that the respondent is an educational institution(Technological University) situated at Hyderabad 4. We find that respondent / assessee had filed an applicationbefore the Comrnissioner of Income Tax (Exemptions), Hyderabadseeking registration under Section 12A of the Income Tax Act, 1961(briefly, 'the Act' hereinafter) on 30,03.2019 for the Assessment Year2019-20. Be it stated that the respondent is an educational institution(Technological University) situated at Hyderabad 5. Cornrnissioner of income Tax (Exemptions) passed order dated30.09.2019 under Section 12AA(1)(bXii) of the Act rejecting theapplication of the respondent / assessee, primarily on two groundsFirstly, it was noticed that respondent / assessee had not filed return ofincome, thus violating provisions of the Act. Therefore, respondent /assessee was not eligible for registration under Section l24 which is a beneficial [pro'ision. ][Secondly, ][Cotnmissioner otrserved ][that]/ [as;essee ][had ][earned ][income ][outside ][India ][Referring ][to]respondent Section 1l [of ][t re ][Act, ][Commissioner held that ][respondent ][r' assessee]had not obtaint [d permission ][from ][the Central ][Board ][of Direct ][Taxes]while earning [i ][rcome ][abroad' ][Thus, ][it ][had ][violated provisions ][of ][the]Act. On [this g ][ound ][also, ][its prayer ][for registration ][trnder Section ][12A]was declined 6. Responc ent / [assessee ][thereafter ][preferred ][appeal ][before ][the]Income Tax ;ppellate [Tribunal, ][Hyderabad ]['A' ][Bench' ][l{yderabad]T [re ][appeal ][was ][allowed ][by ][the ][Tribunal ][vide the ][order](Tribunal). daled2l .04,2( [21 ][in ][the ][following ][manner ][:] Having regard [to ][the ][rival ][contentions ][and ][the]materizl [, ][n ][record, ][we ][frnd ][that ][the ][assessee ][is ][zur ][institution ][which ][is]on [educationa.l ][activities ][and ][therefore' ][1l'lt ][itcllvrry ][is]carrying undisput,dly [a ][chantable ][act ][The ][assessee ][was ][earlier ][knorvn ][as]Jawaharl [l ][Nehru ][Technologrcal University ][which ][has ][subsequendy]been div [ded ][into four ][Universities ][and the ][assessee ][is ][one ][of ][d'rem]which w s [formed ][in 2008' ][Section ][10(23C) ][(iiiab) ][provided that ][the]income lf any [University ][of ][other ][Educational ][Institution ][exisung]solely fc : [educational ]PurPoses [and ][not ][for ][Purposes ][of ][profit' ][and]which i: wholly [and subsuntially funded ][by ][the ][Govemment' ][its]income s [not ][to ][be ][included ][in ][the total ][income' ][However' ][sub-]secuon 4C) [and sub-clause ][(e) ][thereof ][to ][Section ][139 ][of ][the ][Act ][have]been in [erted ][by ][the Finance ][Act ][ol ][2002' ][to ][male ][the ][incc'me ][oi]such un [versity ][or ][other ][educational ][institution ][refered to ][sub-clause](iiiab) o section [10(23) ][as ][assessable ][to ][ta'x ][onll ][if ][the ][total ][income ][tn]respect ri [such ][lnstitution, ][without ][glving the ][eitect ][to ][the ][prt'r'isions]of Sect rn [10, exceeds ][the ][ma-rimum amount whrch ][is ][not ][chargeable]to inco [ne ]tax [Sub-section ][('l ][tr-) ][t'-' ][Sccnon ][139 ][s'rs ][inscrted ][by ][tl,e]Financ, Act oi [2014 ][requiring evcry ][business ][trust' ][rvhich ][is ][not]require I to [furnish ][its ][return ][of ][income ][or ][lt''ss ][under any ][other] provisions of this section, to fumish return of such income of theprevious year in the prescribed Form and verified in the prescribedma-nner or as may be prescribed and a.ll the provisions of this Actshall so far as may be, apply as if it .rere a rehrm to be fumishedunder sub-section 1 of section 139 of the Act. We find that *risamendment was w.e.f. 1.4.2015.under sub-section 1 of section 139 of the Act. We find that *risamendment was w.e.f. 1.4.2015. provisions of this section, to fumish return of such income of theprevious year in the prescribed Form and verified in the prescribedma-nner or as may be prescribed and a.ll the provisions of this Actshall so far as may be, apply as if it .rere a rehrm to be fumishedunder sub-section 1 of section 139 of the Act. We find that *risamendment was w.e.f. 1.4.2015.under sub-section 1 of section 139 of the Act. We find that *risamendment was w.e.f. 1.4.2015. 10. We also find that Rule 2BBB has a.lso beenintroduced w.e.f .12.12.2014 prcscribing the percent€e of govt. grantibr considering a university, hospital, etc., as substantially funded bythe govt. lor the purposes oi clause (23C) of secton 10 and itprovides tlrat [p'here ]the govt. grants to such university or hosprtalexceeds 500,ir of the total receipts including any voluntarycontributions oi such universrty or other educational institution /hospital or other instirurion during the relevant previous year, it shailbe considered a^s substantially funded by the go1t. for such previousyear. Thus, it can be seen that though the assessee university wasformed in 2008, till the A.y. 2014, it was not required to file anyreturn of income and therefore, the assessee,s contention that it wasnot aware of the requirement of filing returirs of income appears tobe bona 6de. Furtirer, the assessee has made an zpplication forregistration only w.e.f. A.Y. 2019-20 onwafds. In suchcircumstances, the requirement of law is that the CIT@) has toconsider whether the objectives of the assessee were charitable innature and if the acttvities have already begun, then whether theassessee is carrying on rts acttvitres in accordance wrth suchobjectives. Therefore, we agree with the learned Counsel for theassessee that t}e CIT (E) has not looked into the objectrves of thisUniversity rvhile considering its applicatron for registration u/s "!2Aof the Act. Further, irom the very next A.y_ i.e.2020_Zl onwards,the assessee has becn granted regrstration u/s 12A of the Act. Thus,rt is evident that thc CIT (E) while granting rhe replstrarion, wassatisfied about the charitabie nature o[ asscssee,s activities. In vrervof the same, we deem it fit and proper to remand the issue to the fileof the CIT(E) w'ith a direction to grant registration u/s 12A if theobjectrves and activitjes of the assessee are tJ,te same as wereconsidered by the CIT@) while grantng registraron u/s 12A of theAct for the A.Y. 2020-21 onwards.,, ij 7. From t re above, we find that Tribunal had taken note ofthe factthat for the r Ext fusessment Year 2020-21 [respondent ]/ [assessee has]been granter. registration by the Commissioner of [Income ][Tax]@xemptions [under Section ][12A ][of ][the ][Act ][which ][woulcl ][imply ][that]the Commis iioner was satisfied about the charitable nature ofassessee's a( tivities. In view of above, Tribunal thought it fit andproper to rer rand the matter back to the file of the C,tmmissioner ofIncome Tax (Exemptions) with the direction to gr'rnt registrationunder Sectio r 12A of the Act if the ob.lectives and activities of therespondent / rssessee are found to be the same by the Commissionerof Income Tt x (Exemptions) while granting registration under Section12,A. for the I .ssessmentYear 2020-21 8. Thus, fribunal has only asked the Commissioner to examinethe claim of lhe respondent / assessee for the assessntent [year ]underconsideratior keeping in mind the factors which [prevaik:d ]upon theCommissionr r in acceding to such claim of the respondent / assesseefor the succe:ding assessment year on the principle of parity. Such adirection can rot be said to be il1egal. 9. In the ight of the above, we are of the view that no substantialquestion of aw arises from the order passed by the ['Iribunal ]asextracted ab( ve. Consequently, we decline to entertain this appealv,{xr'[is ][accr ][rdingly ][dismissed. No ][costs] 10. As a sequel, rniscelianeous applications [pending ]if any in this appeal, shall stand closed. SD/.K.SRINIVASA RAOJOINT REGISTRARq,SECTION OFFICER ,TRUE COPY// :To,I 8. Thus, fribunal has only asked the Commissioner to examinethe claim of lhe respondent / assessee for the assessntent [year ]underconsideratior keeping in mind the factors which [prevaik:d ]upon theCommissionr r in acceding to such claim of the respondent / assesseefor the succe:ding assessment year on the principle of parity. Such adirection can rot be said to be il1egal. 9. In the ight of the above, we are of the view that no substantialquestion of aw arises from the order passed by the ['Iribunal ]asextracted ab( ve. Consequently, we decline to entertain this appealv,{xr'[is ][accr ][rdingly ][dismissed. No ][costs] 10. As a sequel, rniscelianeous applications [pending ]if any in this appeal, shall stand closed. SD/.K.SRINIVASA RAOJOINT REGISTRARq,SECTION OFFICER ,TRUE COPY// :To,I 1. The lncome Tax Appellate Tribunal [Hyderabad ]['A' ][Bench' ][Hyderabad.] 2. The Commissioner of lncome [Tax (Exemptions), ][2nd ][Floor, ][Ayakar ][Bhawan,] Basheerbagh, Hyderabad. 3. One CC to Sri B. Narasimha Sarma, [Advocate ] 4. Two CD Copies5. One Spare Copysbr HIGH COURT DATED: 171611 t022 \c,*\<\a:r\,)ot)0 5 [itB ][E?2]i,,1t€ JUDGMENTlTTA.No.101 ol 2021 DISMISSING TI{E ITTAWITHOUT COSTSal 2ot [\]WITHOUT COSTSal 2ot [\]