The Commissioner Of Income Tax (Exemptions), Chandigarh v. M/S Ambala Public Educational Society, Ambala

ITA No.ti6 of ZUib (Warm 7GIN THE HIGH COURT OF PUNJAB AND HARYANA.AT CHANDIGARH ITA No.118 of 2016 (O&M)Decided on 29.10.2018 The Commissioner of Income Tax (Exemptions), Chandigarh Appellant Versus M/s Ambala Public Educational Society, Ambala respondent “ee CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTALHON'BLE MR. JUSTICE AVNEESH JHINGAN Present :Mr. Denesh Goyal, Sr. Standing Counsel for Revenue. Mrs. Radhika Suri, Sr. Advocate withMr. Manpreet Singh Kanda, Advocatefor the assessee-Society. AVNEESH JHINGAN, J. ~** The Revenue has filed the present appeal under Section260A of Income Tax Act, 1961 (for brevity ‘the Act) against the orderof Income Tax Appellate Tribunal, Chandigarh (for brevity ‘ITAT’)passed in ITA No. /748/Chd/2014, dated 21.05.2015, allowing theappeal of the assessee-society. .&The Revenue has claimed following substantial questions of law: (1)“Whether the ITAT was right in law while insisting thatthe Commissioner at the time of granting exemptions,should only look at the objects of the trust, thereby ineffect precluding the other statutory built in Section I12Athe Commissioner at the time of granting exemptions,should only look at the objects of the trust, thereby ineffect precluding the other statutory built in Section I12A ITA No.ti6 of ZUib (Warm 1.€. Satisfaction about genuineness ofactivities?(11)Whether the ITAT was right in law in allowing the appealof the assessee in spite of the fact that the school run bythe society is a family run school and where a miniscule20 pupils are being provided freeships which also 1s incontravention to the Right to Education Act?of the assessee in spite of the fact that the school run bythe society is a family run school and where a miniscule20 pupils are being provided freeships which also 1s incontravention to the Right to Education Act? (111)Whether on thefacts and circumstances of the case and inlaw, the Hon'ble ITAT 1s right in allowing appeal of theassessee despite the fact that the society 1s not registeredunder the new Haryana Registration & Regulation ofSocieties Registration Act, 20127law, the Hon'ble ITAT 1s right in allowing appeal of theassessee despite the fact that the society 1s not registeredunder the new Haryana Registration & Regulation ofSocieties Registration Act, 20127 (iv)Whether the Hon'ble Tribunal was right in law in passingthe impugned order which is contrary to/ignoring theirjurisdictional Tribunal/own earlier settled principals inthe cases of PUDA vs. CIT reported as (2006) 103 TTJCHD 9868, Jalandhar Development Authority Vs. CITreported as (2010) 35 SOT ASR 15 and JammuDevelopment Authority Vs. CIT reported as (2012) 52SOT ASR 153 (upheld by Hon'ble J&K High Court andHon'ble Supreme Court)?the impugned order which is contrary to/ignoring theirjurisdictional Tribunal/own earlier settled principals inthe cases of PUDA vs. CIT reported as (2006) 103 TTJCHD 9868, Jalandhar Development Authority Vs. CITreported as (2010) 35 SOT ASR 15 and JammuDevelopment Authority Vs. CIT reported as (2012) 52SOT ASR 153 (upheld by Hon'ble J&K High Court andHon'ble Supreme Court)? (v)Whether in the facts and circumstances of the case and inlaw the Hon'ble ITAT 1s right in granting registration tothe Society and setting aside the order of Commissioner,hence the impugnedjudgment is perverse?law the Hon'ble ITAT 1s right in granting registration tothe Society and setting aside the order of Commissioner,hence the impugnedjudgment is perverse? :&The assessee-Society is a Trust registered with theRegistrar of Societies, Haryana vide registration No. 322 dated18.05.1995. The assessee-Society was set up with various aims &objects including improvement in the standard of education of thebackward students of rural areas and was running a school. Theassessee-society made an application for registration under Section12A of the Act. The application was made on 25.03.2014. TheAssessing Officer vide his report dated 25.07.2014 reported the aims :&The assessee-Society is a Trust registered with theRegistrar of Societies, Haryana vide registration No. 322 dated18.05.1995. The assessee-Society was set up with various aims &objects including improvement in the standard of education of thebackward students of rural areas and was running a school. Theassessee-society made an application for registration under Section12A of the Act. The application was made on 25.03.2014. TheAssessing Officer vide his report dated 25.07.2014 reported the aims ITA No.ti6 of ZUib (Warm & objects of the assessee-Society to the Commissioner of IncomeTax (CIT). During the proceedings, the CIT was swayed by the factthat the Secretary of the assessee-Society was getting lease rent of43,60,000/- per annum and wife of the Secretary was getting salaryfrom the school. It was further stated that the assessee-Society wasnot registered under the New Haryana Registration & Regulation ofsocieties Registration Act, 2012 (hereinafter referred to as (2012 Act’).The application was rejected vide order dated 31.07.2014. The orderof the CIT was assailed in appeal before the ITAT by the assessee-society. The ITAT vide order dated 21.05.2015 allowed the appealand ordered granting registration under Section 12A of the Act to thesociety. Hence the present appeal by the Revenue,6&Heard learned counsel for the parties. 8&Learned counsel for the Revenue contended that the ITAThas erred in allowing the appeal in spite of the fact that the assessee-society was not registered under the 2012 Act. It was furthercontended that the school being run by the assessee-Society was afamily affair as the Secretary was getting the lease rent and his wifewas getting salary. | /&Learned counsel for the assessee-Society argued thatthere was no requirement under Section 12A of the Act that thesociety should be registered under 2012 Act. It was argued that wifeof the Secretary was qualified to be teacher and working in theschool. She was being paid a salary ot 420,/Q09/- per month. Learnedcounsel further relied upon the assessment order passed _ fassessment year 2010-11 In which the assessing authority held that ITA No.ti6 of ZUib (Warm the amount earned by the assessee-Society had been utilized foreducational purposes. It was submitted that the appeal filed by theRevenue Is without merits and deserves dismissal. 5&The contentions raised by learned counsel for the Revenuelacks merit. There is no requirement under Section 12A of the Actthat the assessee-Society is required to be registered under the 2012Act. Moreover, the assessee-Society explained before ITAT that Ithad applied for registration under the 2012 Act but due to back log,grant of registration was delayed. The certificate regarding registrationunder 2012 Act was produced before the ITAT. 7&The application under Section 12A of the Act cannot berejected merely on the ground that the Secretary of the Society wasgetting lease rent for the land given to the Society for running theschool or his wife who had requisite qualification was teaching in theSCnoo!l and was being paid the salary. It Is not the case set up by theRevenue tnat the exorbitant amounts nad been paid by the assessee-society to the Secretary or to his wife. No dispute has been raised tothe fact that the assessee-Society is running a school as per its aims& objects. The CIT while rejecting the application has not doubtedthe genuineness of aims and objectives of the assessee-Society. Onthe other hand the Assessing Officer while finalising the assessmentfor assessment year 2010-11 under Section 143(3) of the Act hasspecifically recorded the finding that the income earned by the Societyhas been utilized for educational purposes. 2&However, we may hasten to aad tnat In case,subsequently, the Revenue is satisfied that the activities of the ITA No.ti6 of ZUib (Warm assessee Trust are not for charitable purposes, department canalways initiate action for cancellation of registration under Subsection (3) of Section 12AA of the Act. 2&However, we may hasten to aad tnat In case,subsequently, the Revenue is satisfied that the activities of the ITA No.ti6 of ZUib (Warm assessee Trust are not for charitable purposes, department canalways initiate action for cancellation of registration under Subsection (3) of Section 12AA of the Act. 10..The order of the |ITAT warrants no interference. No errohas been pointed out in the findings recorded by the ITAT much lessshown to be perverse. No substantial question of law arises. 11&Tne appeal Is, accordingly, dismissed. (AJAY KUMAR MITTAL)JUDGE (AVNEESH JHINGAN)JUDGE