Shri Guru Ram Dass Ji Educational Trust v. Chief Commissioner Of Income Tax, Amritsar

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : C. W. P. No. 14010 of 2016Pronounced On : September 28, 2016 Shri Guru Ram Dass Ji Educational Trust ....Petitioner vs. Chief Commissioner of Income Tax, Amritsar .... Respondent CORAM : HON'BLE MR. JUSTICE S. J. VAZIFDAR, CHIEF JUSTICE.HON'BLE MR. JUSTICE DEEPAK SIBAL. * * * Present :Mr. Sandeep Goyal, Advocate for the appellant. Mr. Denesh Goyal, Advocatefor the respondent. * * * DEEPAK SIBAL, J. : Through the present petition, the petitioner seeks quashing oforder dated 03.03.2015 passed by the Chief Commissioner of Income Tax,Amritsar (for short – the Chief Commissioner), through which, itsapplication for grant of exemption made under Section 10 (23C) of theIncome Tax Act, 1961 (for short – the Act) has been rejected. The petitioner Trust is stated to have been constituted with the purpose of facilitating the Charitable, Social, Cultural, Educational,Vocational and Economic Development of the Society. It was registered on16.08.2007 under the provisions of Societies Registration Act, 1860. Since in the Financial Year 2013-14 (Assessment Year 2014-15), its receiptsexceeded ` 1 crore, through an application dated 25.03.2014, it applied tothe Chief Commissioner seeking exemption under Section 10(23C)(vi) ofthe Act. As required, Form No. 56-D, prescribed under Rule 2CA of theIncome Tax Rules, 1962 (for short – the Rules), was also filed. In pursuance to the said application, through letter dated16.04.2014, the respondent-Department sought from the petitioner certaininformation including its accounts for the year ending 31.03.2014, objectsof the petitioner and returns of income filed earlier. The requiredinformation along with Audit Reports including the Balance Sheets, Profitand Loss Accounts, Student Activity Fund, Student Development Fund,Fixed Assets, Capital Accounts, Income and Expenditure Accounts,particulars with regard to cash in the Bank, Secured and Unsecured Loansetc., for the year ending 31.03.2014, were supplied. Thereafter, the petitioner received notice for grant ofopportunity of hearing, which was granted on 24.02.2015, during the courseof which, it was pointed out that the petitioner had prematurely filed theapplication on 24.03.2014 and that the same could only have been filed afterthe expiry of Financial Year 2013-14 and before 30.09.2014. The petitionerfiled a written response to the same explaining therein that as soon as thereceipts of the petitioner exceeded ` 1 crore, the application was filed andthat, as per the 14[th] Proviso to Section 10(23C), such application could beMonikafiled anytime before 30[th] September of the Assessment Year, in relation2016.09.30 13:56I attest to the accuracy andauthenticity of this document to which the exemption was sought. The petitioner's plea did not receive afavourable response as the same was rejected through the order impugnedbefore us on the ground that such application could have been filed onlybetween 1[st] April and 30[th] September of the relevant Assessment Year.Columns No. 11 to 19 of Form No. 56-D were also referred to say that therequired information under the columns would be available only after 1[st]April of the relevant Assessment Year. It is in this background that thepresent petition has been filed for the afore-referred reliefs. Sections 10(23C)(iiiab), 10(23C)(iiiad), 10(23C)(vi) along withits 1[st] and 14[th] proviso, which are relevant for adjudicating upon the presentpetition, are reproduced below for reference :- “Section 10(23C) - any income received by anyperson on behalf of - xx xx xx xx(iiiab)any university or other educationalinstitution existing solely for educationalpurposes and not for purposes of profit,and which is wholly or substantiallyfinanced by the Government ; orinstitution existing solely for educationalpurposes and not for purposes of profit,and which is wholly or substantiallyfinanced by the Government ; or xxxxxxxx Sections 10(23C)(iiiab), 10(23C)(iiiad), 10(23C)(vi) along withits 1[st] and 14[th] proviso, which are relevant for adjudicating upon the presentpetition, are reproduced below for reference :- “Section 10(23C) - any income received by anyperson on behalf of - xx xx xx xx(iiiab)any university or other educationalinstitution existing solely for educationalpurposes and not for purposes of profit,and which is wholly or substantiallyfinanced by the Government ; orinstitution existing solely for educationalpurposes and not for purposes of profit,and which is wholly or substantiallyfinanced by the Government ; or xxxxxxxx (iiiad)any university or other educationalinstitution existing solely for educationalpurposes and not for purposes of profit ifthe aggregate annual receipts of suchuniversity or educational institution donot exceed the amount of annual receiptsas may be prescribed ; orinstitution existing solely for educationalpurposes and not for purposes of profit ifthe aggregate annual receipts of suchuniversity or educational institution donot exceed the amount of annual receiptsas may be prescribed ; or (vi) xxxxxxxxany university or other educationalinstitution existing solely for educationalpurposes and not for purposes of profit,other than those mentioned in sub-clause(iiiab) or sub-clause (iiiad) and whichmay be approved by the prescribedauthority, or xxxxxxxxProvided that the fund or trust orinstitution [or any university or othereducational institution or any hospital orother medical institution] referred to insub-clause (iv) or sub-clause (v) [or sub-clause (vi) or sub-clause (via) shall makean application in the prescribed form andmanner to the prescribed authority for thepurpose of grant of the exemption, orcontinuance thereof, under sub-clause (iv)or sub-clause (v) [or sub-clause (vi) orsub-clause (via)] : xxxxxxxxProvided also that in case the fund ortrust or institution or any university orother educational institution or anyhospital or other medical institutionreferred to in the first proviso makes anapplication on or after the 1[st] day of June,2006 for the purposes of grant ofexemption or continuance thereof, suchapplication shall be [made on or before the 30[th] day of September of the relevantassessment year] from which theexemption is sought : Under Section 10(23C)(iiiad) read with Section 10(23C)(vi)and the 1[st] proviso to Section 10(23C), an institution, which is not wholly orsubstantially funded by the Government, solely set up for the purpose ofeducation and not for the purpose of profit, whose receipts exceed ` 1 crore,to claim exemption under Section 10(23C), is required to make anapplication in the prescribed manner to the prescribed Authority. Thus, assoon as the receipts of such institution exceed ` 1 crore, an application forgrant of exemption can be made. A plain reading of the 14[th] proviso to Section 10(23C), asreproduced above, leaves no doubt in our minds that an application underthe same can be filed on or before 30[th] September of the relevantAssessment Year, from which the exemption is sought. The said provisosimply gives an outer date for making the application, which is 30[th]September of the Assessment Year, for which the exemption is sought. Theproviso does not say that the application is to be made between 1[st] April and30[th] September of the Assessment Year, for which the exemption is sought.The plain and simple meaning, as made out on reading the proviso, isunambiguous. No external aid is necessary. If the stand of the respondentis to be accepted, then we would have to necessarily add to the 14[th] provisoa condition that the application shall be made after 1[st] April and before 30[th]Monika2016.09.30 13:56I attest to the accuracy andSeptember of the relevant Assessment Year, from which the exemption isauthenticity of this document sought. We find no necessity to do so. sought. We find no necessity to do so. The view that we have taken causes the respondent noprejudice. A Trust may know or have reason to believe prior to 1[st] Aprilthat its receipts are likely to exceed ` 1 crore. There is no reason why suchan institution ought not to be permitted to make the application even beforethe 1[st] day of April of the relevant year. If, for any reason, the receipts donot exceed ` 1 crore, the application would not be processed further.Neither the Revenue nor the assessee would be prejudiced. If theapplication is moved prior to 1[st] April of the Assessment Year, from whichthe exemption is sought, during the pendency of such application, if anyrelevant information is required, the Authorities are well within their rightsto ask for the same before taking a final decision on the application. In fact,in the case in hand, the accounts for the year ending 31.03.2014 were askedfor by the Authorities and the same, along with the audit report, were dulysupplied by the petitioner. Prior to the year 2009, applications under the 14[th] proviso toSection 10(23C) were required to be filed before 31[st] March of the FinancialYear, for which the exemption was being sought. As per the amendmentbrought about in the year 2009, which came into effect from 01.04.2009, the14[th] proviso was amended to what it reads presently. As per the Notes ofClauses, the amendment was being made to allow filing of applications onor before 30[th] September of the relevant Assessment Year, from which theMonikaexemptions were being claimed. Had the Legislature intended to fix a date,2016.09.30 13:56I attest to the accuracy andauthenticity of this document only after which such an application could be made, it would have specifiedthe same. To reject the application of the petitioner, the ChiefCommissioner also relied upon Clauses 11 to 19 of Form No. 56-D.According to him, the information sought for under these clauses would notbe available by the end of Financial Year, for which the exemption issought. Clauses 11 to 19 of Form No.56-D, along with the attached Notes,read as under :- “FORM NO. 56D [See Rule 2CA] xx xx xx xx11.Amount of income referred toabove that has been ordeemed to have been utilizedwholly and exclusively forthe objects of the universityorothereducationalinstitution or hospital orother medical institutionreferred to in serial number1 (income deemed to havebeen utilized shall have themeaning assigned to in sub-sections (1) and (1A) ofsection 11)11.Amount of income referred toabove that has been ordeemed to have been utilizedwholly and exclusively forthe objects of the universityorothereducationalinstitution or hospital orother medical institutionreferred to in serial number1 (income deemed to havebeen utilized shall have themeaning assigned to in sub-sections (1) and (1A) ofsection 11) 12.Amount accumulated for theobjects mentioned in column3 above.objects mentioned in column3 above. 13.(i)Details of modes inwhich the funds of theuniversityorothereducational institution orhospital or other medicalwhich the funds of theuniversityorothereducational institution orhospital or other medical institution referred to inserial number 1 are investedor deposited showing thenature, value and incomefrom the investment. (ii)Details of funds notinvested in the modesspecified in section 11 (5) : 14.(i)Is the university orother educational institutionor hospital or other medicalinstitution referred to inserial number 1 carrying onany business (give details) ?other educational institutionor hospital or other medicalinstitution referred to inserial number 1 carrying onany business (give details) ? (ii)Isthebusinessincidental to the attainmentof its objects ? institution referred to inserial number 1 are investedor deposited showing thenature, value and incomefrom the investment. (ii)Details of funds notinvested in the modesspecified in section 11 (5) : 14.(i)Is the university orother educational institutionor hospital or other medicalinstitution referred to inserial number 1 carrying onany business (give details) ?other educational institutionor hospital or other medicalinstitution referred to inserial number 1 carrying onany business (give details) ? (ii)Isthebusinessincidental to the attainmentof its objects ? 15.Details of nature, quantityand value of contributions(other than cash) and themanner in which suchcontributions have beenutilized.and value of contributions(other than cash) and themanner in which suchcontributions have beenutilized. 16.Details of shares, securitiesor other property purchasedby or on behalf of theuniversityorothereducational institution orhospital or other medicalinstitution referred to inserial number 1 from anyinterestedpersonasspecified in sub-section (2)or other property purchasedby or on behalf of theuniversityorothereducational institution orhospital or other medicalinstitution referred to inserial number 1 from anyinterestedpersonasspecified in sub-section (2) of section 13. 17.Whether any part of theincome or any property ofthe university or othereducational institution orhospital or other medicalinstitution referred to inserial number 1 was used orapplied, in a manner whichresults directly or indirectlyin conferring any benefit,amenityorperquisite(whether converted intomoney or not), on anyinterestedpersonasspecified in sub-section (3)of section 13 ? If so, detailsthereof.income or any property ofthe university or othereducational institution orhospital or other medicalinstitution referred to inserial number 1 was used orapplied, in a manner whichresults directly or indirectlyin conferring any benefit,amenityorperquisite(whether converted intomoney or not), on anyinterestedpersonasspecified in sub-section (3)of section 13 ? If so, detailsthereof. 18.Amount deemed to be incomeof the university or othereducational institution orhospital or other medicalinstitution referred to inserial number 1 if sub-section (3) of section 11 ismade applicable.of the university or othereducational institution orhospital or other medicalinstitution referred to inserial number 1 if sub-section (3) of section 11 ismade applicable. 19.The income that would havebeen assessable if theuniversityorothereducational institution orhospital or other medicalinstitution referred to inserial number 1 had notenjoyed the benefit of section10(23C)(vi) or (via).been assessable if theuniversityorothereducational institution orhospital or other medicalinstitution referred to inserial number 1 had notenjoyed the benefit of section10(23C)(vi) or (via). Notes : 1.The application form, - (a)filed before the specified date, should be sent to the ChiefCommissioner or Director Generalwhom the Central Board of DirectCommissioner or Director Generalwhom the Central Board of Direct Taxes may authorize to act asprescribed authority, for thepurposes of sub-clause (vi) or sub-clause (via) of clause (23C)of section10, through the Commissioner ofIncome-tax or Director of Income-tax (Exemptions) having jurisdictionover the university or othereducational institution or hospital orother medical institution referred toin serial number 1 of this Form ;(b)filed on or after the specified date,should be sent to the PrincipalCommissioner or the Commissionerwhom the Central Board of DirectTaxes may authorize to act asprescribed authority for the purposesof sub-clause (vi) or sub-clause (via)of clause (23C) of section 10. Four copies of the application formalong with the enclosures should besent. Taxes may authorize to act asprescribed authority, for thepurposes of sub-clause (vi) or sub-clause (via) of clause (23C)of section10, through the Commissioner ofIncome-tax or Director of Income-tax (Exemptions) having jurisdictionover the university or othereducational institution or hospital orother medical institution referred toin serial number 1 of this Form ;(b)filed on or after the specified date,should be sent to the PrincipalCommissioner or the Commissionerwhom the Central Board of DirectTaxes may authorize to act asprescribed authority for the purposesof sub-clause (vi) or sub-clause (via)of clause (23C) of section 10. Four copies of the application formalong with the enclosures should besent. 2.Copies of the following documents shouldbe annexed :- (i)Deed of trust/memorandum andarticlesofassociation/otherdocuments evidencing legal status ofthe enterprise;articlesofassociation/otherdocuments evidencing legal status ofthe enterprise; (ii)a list of major office bearersincluding settlor/members of theGoverning body;including settlor/members of theGoverning body; (iii)a photocopy of the latest certificateunder section 80G issued by theCommissioner of Income-tax, if any;under section 80G issued by theCommissioner of Income-tax, if any;(iv)true copies of the assessment orderspassed for the last three years, ifany;passed for the last three years, ifany;(v)photocopy of communication fromthe Commissioner of Income-taxwith reference to the application ofthe trust/institution for a registrationunder section 12A, if any.the Commissioner of Income-taxwith reference to the application ofthe trust/institution for a registrationunder section 12A, if any. 3. The applicant shall furnish any other documents or information as required bythe Chief Commissioner or DirectorGeneral or Principal Commissioner orCommissioner or any authority authorisedby the Chief Commissioner or DirectorGeneral or Principal Commissioner orCommissioner, as the case may be.” It is the unrebutted case of the petitioner that the above quotedcolumns were the same even prior to the above said amendment made in theyear 2009. At that time, applications for seeking exemption could be madeonly prior to 31[st] March of the relevant Financial Year, for which theexemption was being sought. The information supplied by the applicantagainst these columns at that time was considered adequate by theDepartment. Even otherwise, if an application under the 14[th] proviso, as itstands today, is filed prior to 1[st] April of the relevant Assessment Year, forwhich exemption is sought for and after the filing thereof, any furtherinformation is still needed by the respondent Authorities, before taking afinal decision thereupon, that information can be sought for from theapplicant. As observed earlier, this was done in the case in hand, in whichall the accounts for the year ending 31.03.2014, when asked for, were dulyprovided by the petitioner much before the passing of the order impugnedbefore us. information as required by the Chief Commissioner or any other Authorityauthorised by the Chief Commissioner, as the case may be. These Notesclearly indicate that the application can be filed even prior to 1[st] April of therelevant Assessment Year, from which the exemption is sought. In view of the above, the impugned order dated 03.03.2015passed by the Chief Commissioner is set aside with a direction to the ChiefCommissioner to consider the application filed by the petitioner for grant ofexemption under Section 10 (23C) of the Act, on merits. Whether speaking/reasoned ? Whether reportable ? Yes/No. Yes/No. ( S. J. VAZIFDAR ) CHIEF JUSTICE September 28, 2016monika ( DEEPAK SIBAL )JUDGE