Pr. Commissioner Of Income Tax (Central)-2 v. G.r. Goenka Education Society

$~32 IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 350/2022 PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2 versus G.R. GOENKA EDUCATION SOCIETY..... Respondent Through:None %Date of Decision: 22[nd]September, 2022 CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORAJ U D G M E N T MANMOHAN, J (Oral): 1.Present income tax appeal has been filed challenging the order dated7[th]September, 2021 passed by the Income Tax Appellate Tribunal (‘ITAT’)in ITA No. 3598/Del./2018 for the Assessment Year 2014-15. 2.Learned counsel for the Appellant states that the ITAT has erred inextending the benefit of exemption to the Respondent-Society underSection 11 of the Income Tax Act, 1961 (‘the Act’) even though theRespondent has violated the provisions of Section 13(1)(c) read withSection 13(3) of the Act by registering the trademark in the name of ShriAnjani Kumar Goenka - the chairman of the Society and not in the name ofthe Society itself, thereby indulging in diversion of the franchise ITA No.350/2022Page 1 of 3 income/royalty to another entity. 3.He also states that the ITAT has erred in not considering the fact thatRespondent does not qualify as a charitable institution under Section 11 ofthe Act as it was engaged in activities which were commercial in nature. 4.Admittedly, the questions of law urged in the present appeal arecovered by the judgement dated 30[th]October, 2017 of this Court inassessee’s own case in ITA 871/2017. The relevant portion of the aforesaidjudgement is reproduced herein below: “3. The Court is of the opinion that there is no merit in theRevenue’s appeal; objects for the respondent – assesseeremained unaltered. The extent of fees charged by it ipsofacto cannot be the basis to conclude that the purpose forwhich it was set up had changed.Revenue’s appeal; objects for the respondent – assesseeremained unaltered. The extent of fees charged by it ipsofacto cannot be the basis to conclude that the purpose forwhich it was set up had changed. 4. The other ground urged was that the goodwill andmonetary value of the trade mark, which arose in thecourse of the respondent’s activities, ought to have accruedto it rather than the owner. This, it is stated, amounted to adiversion under Section 13(3) of the Act. The Court is ofthe opinion that the ITAT’s reasoning on this aspect too ismerited. Besides, the use of a trade mark per se does notconfer an advantage upon the licensee or authorized user– under Section 40(2) of the Trade Marks Act, 1999 thebenefit of such use accrues to the owner. This aspect toohas been considered by a Division Bench of this Courtand later affirmed in Formula One World ChampionshipLtd. v. CIT, [2017] 390 ITR 199 (Delhi). For the abovereasons, there is no merit in this appeal; it is accordinglydismissed.”monetary value of the trade mark, which arose in thecourse of the respondent’s activities, ought to have accruedto it rather than the owner. This, it is stated, amounted to adiversion under Section 13(3) of the Act. The Court is ofthe opinion that the ITAT’s reasoning on this aspect too ismerited. Besides, the use of a trade mark per se does notconfer an advantage upon the licensee or authorized user– under Section 40(2) of the Trade Marks Act, 1999 thebenefit of such use accrues to the owner. This aspect toohas been considered by a Division Bench of this Courtand later affirmed in Formula One World ChampionshipLtd. v. CIT, [2017] 390 ITR 199 (Delhi). For the abovereasons, there is no merit in this appeal; it is accordinglydismissed.” (emphasis supplied) 5.Learned counsel for the Appellant states that the Revenue has notaccepted the aforesaid decision and has preferred an SLP bearing No.26056of 2018 against the same. ITA No.350/2022 6.Though the appeal in aforementioned case is pending adjudication,yet there is no stay of the said judgment till date. (emphasis supplied) 5.Learned counsel for the Appellant states that the Revenue has notaccepted the aforesaid decision and has preferred an SLP bearing No.26056of 2018 against the same. ITA No.350/2022 6.Though the appeal in aforementioned case is pending adjudication,yet there is no stay of the said judgment till date. 7.Consequently, in view of the judgments of the Supreme Courtin Kunhayammed and Others Vs. State of Kerala And Another, (2000) 6SCC 359 and Shree Chamundi Mopeds Ltd. Vs. Church of South IndiaTrust Association CSI Cinod Secretariat, Madras (1992) 3 SCC 1, thepresent appeal is covered by the judgment passed by the learnedpredecessor Division Bench. 8.Accordingly, no substantial question of law arises for consideration inthe present appeal and the same is dismissed. 9.However, it is clarified that the order passed in the present appealshall abide by the final decision of the Supreme Court in the aforesaid SLP. MANMOHAN, J SEPTEMBER 21, 2022KA MANMEET PRITAM SINGH ARORA, J ITA No.350/2022