The Commissioner Of Income Tax (Exemptions), Chandigarh v. M/S Beant College Of Engineering & Technology, Bariar, Gurdaspur

ITA-269-2018 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-269-2018 Date of Decision: 5.4.2019 The Commissioner of Income Tax (Exemptions), Chandigarh ....Appellant. Versus M/s Beant College of Engineering & Technology, Bariar, Gurdaspur ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MRS. JUSTICE MANJARI NEHRU KAUL. PRESENT: Mr. Denesh Goyal, Senior Standing Counsel for the appellant. *** AJAY KUMAR MITTAL, J. 1.This appeal has been filed by the revenue under Section 260Aof the Income Tax Act, 1961 (in short “the Act”) against the order dated5.12.2017 (Annexure A-2) passed by the Income Tax Appellate Tribunal,Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITANo. 592/(Asr)/2016, claiming the following substantial questions of law:- (i)Whether on the facts and circumstances of thecase, the ITAT has erred in directing theregistration to be accorded instead of reverting itback for re-examination in the light of judgment ofThe Hon'ble Allahabad High Court in appeal No.112 of 2013 in the case of CIT, Meerut Vs. M/sA.R. Trust, Meerut, wherein it was held that theTribunal could have ordered for setting aside theorder of Registering Authority refusing registrationcase, the ITAT has erred in directing theregistration to be accorded instead of reverting itback for re-examination in the light of judgment ofThe Hon'ble Allahabad High Court in appeal No.112 of 2013 in the case of CIT, Meerut Vs. M/sA.R. Trust, Meerut, wherein it was held that theTribunal could have ordered for setting aside theorder of Registering Authority refusing registration (ii) (iii) (iv) (v) but it could not have directed for registrationstraight away inasmuch as there has to besatisfaction recorded by the Registering Authoritywhich was lacking? Whether on the facts and circumstances of thecase, the Hon'ble ITAT has erred in ignoring thefinding that the applicant society has consistentlyavailed benefit u/s 10(23C)(iiiad) of the Act andthat the natural progression entails and entitles theeducational societies to go for 10(23C)(vi)? Whether on the facts and circumstances of thecase, the Hon'ble ITAT has erred in allowing thatthe applicant is free to change exemption codes inbetween even as the alternatives available are to beexercised in the beginning as intended by thelegislature? Whether the provisions of the Act allow foravailing exemption u/s 10(23C)(iiiab) for asubstantial number of years and then abruptlyseeking registration u/s 12AA instead of approvalu/s 10(23C)(vi)? Whether on the facts and circumstances of thecase, the Hon'ble ITAT has disregarded the factsthat the applicant society after being declared as anautonomous body by the Technical Educationdepartment, should have revised its MoA/Bye-law ITA-269-2018 -3- and should have filed the same with the Registrarof Firms and Societies?of Firms and Societies? (vi)Whether on the facts and circumstances of thecase, the Hon'ble ITAT has erred in not upholdingthe facts that the applicant society had not adducedany evidence in regards to its changed MoA/Bye-laws?case, the Hon'ble ITAT has erred in not upholdingthe facts that the applicant society had not adducedany evidence in regards to its changed MoA/Bye-laws? (vii) Whether on the facts and circumstances of thecase, the order of the Appellate Tribunal iscontrary to the evidence and material on the recordof the case and, therefore, not perverse?case, the order of the Appellate Tribunal iscontrary to the evidence and material on the recordof the case and, therefore, not perverse? 2.A few facts necessary for adjudication of the instant appeal as (vi)Whether on the facts and circumstances of thecase, the Hon'ble ITAT has erred in not upholdingthe facts that the applicant society had not adducedany evidence in regards to its changed MoA/Bye-laws?case, the Hon'ble ITAT has erred in not upholdingthe facts that the applicant society had not adducedany evidence in regards to its changed MoA/Bye-laws? (vii) Whether on the facts and circumstances of thecase, the order of the Appellate Tribunal iscontrary to the evidence and material on the recordof the case and, therefore, not perverse?case, the order of the Appellate Tribunal iscontrary to the evidence and material on the recordof the case and, therefore, not perverse? 2.A few facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee filed an application dated23.3.2016 in Form 10A for registration under Section 12AA of the Act. TheCommissioner of Income Tax (Exemptions) [for brevity “the CIT(E)”] videorder dated 30.9.2016 (Annexure A-1) rejected the said application. Feelingaggrieved, the assessee filed an appeal before the Tribunal. The Tribunalvide order dated 5.12.2017 (Annexure A-2) allowed the appeal and directedthe CIT(E) to grant registration under Section 12AA of the Act to theassessee. Hence, the present appeal. 3.After hearing learned counsel for the appellant, we do not findany merit in the appeal. 4.The Tribunal while dealing with the objection of the CIT(E)that the assessee had been claiming exemption under Section 10(23C)(iiiad)of the Act and, therefore, should not have filed the application underSection 12AA of the Act, had noticed that the assessee was free to avail ITA-269-2018 -4- registration under any alternative provision if more than one alternativeswere available and the assessee was eligible for registration under Section12AA of the Act for which it had applied. Regarding the second objectionthat the assessee when declared as autonomous body should have changedthe objects and memorandum of Association, has no force as the facts andcircumstances of society and constitution of members remained the sameand objects of the society also remained the same and the only purpose ofdeclaring the society as autonomous body was that it should be run as anautonomous body with the rules laid down by the All India Council ofTechnical Education. The amendment in the byelaws of the society hadnothing to do with the objects of the society which undoubtedly werecharitable in nature. The Tribunal while dealing with the objection of theCIT(E) that the assessee was running a school which has not been reflectedin the byelaws, had mentioned that the objects of the society as contained inthe Memorandum of Association is to provide for instruction and researchin such branches of Engineering and Technology as the college may thinkfit and for the advancement of learning and dissemination of knowledge insuch branches. Even the Government of Punjab vide notification dated12.2.2009 had accorded its sanction to establish new multi disciplinaryacademy and such academies were also required to provide 10+2 course tothe students and, therefore, the school was also set up to provide educationupto 10+2 level in accordance with the instructions of the PunjabGovernment and such school was also registered with Punjab SchoolEducation Board. Non-mentioning of all schools and colleges in theMemorandum of Association does not disentitle the assessee for gettingregistration under Section 12AA of the Act. Further, at the time of ITA-269-2018 -5- registration of a society under Section 12AA of the Act, the onlyrequirement was that the CIT(E) should be satisfied about the objects andgenuineness of the activities of the society. In the present case, the CIT(E)has not doubted the objects and genuineness of the activities of the societywhich were charitable in nature. The findings recorded by the Tribunal readthus:- ITA-269-2018 -5- registration of a society under Section 12AA of the Act, the onlyrequirement was that the CIT(E) should be satisfied about the objects andgenuineness of the activities of the society. In the present case, the CIT(E)has not doubted the objects and genuineness of the activities of the societywhich were charitable in nature. The findings recorded by the Tribunal readthus:- “6. We have heard the rival parties and have gonethough the material placed on record. We find that theobjections raised by Ld. CIT(E) for refusing to registerthe society u/s 12AA of the Act are not relevant forconsidering the registration under that section. Theobjections of Ld. CIT(E) that assessee had been claimingexemption u/s 10(23)(iiiab) and therefore he should nothave filed the application u/s 12AA of the Act has noforce as the assessee is free to avail registration underany alternative provisions if more than one alternativesare available and if in accordance with the provisions oflaw, the assessee is eligible for registration u/s 12AA ofthe Act which it had applied, the Ld. CIT(E) should nothave raised this objection and should have examined thecontentions for grant of registration. The secondobjection of Ld. CIT(E) that assessee when declared asautonomous body should have changed the objects andMemorandum of Association also do not have any forceas the facts and circumstances of society andconstitutions of members remained same and objects of the society also remained same and the only purpose ofdeclaring the society as autonomous body was that itshould be run as an autonomous body in line with therules laid down by All India Council of TechnicalEducation. The amendment in the byelaws of society hasnothing to do with the objects of society whichundoubtedly are charitable in nature. The objects of thesociety as contained in the original Memorandum ofAssociation as placed in P.B. page 6 and as contained inamended Memorandum of Association as placed in P.B.page 113 are similar except the fact that society hadenlarged its operations to include education up to 10+2level also. Moreover the assessee has already amendedits byelaws to match with the rules and regulations laiddown by All India Council of Technical Education andcopy of amended byelaws is placed in P.B. page 112 to128. As regards the objection of Ld. CIT(E) thatassessee was running a school which has not beenmentioned in the byelaws, we find that the objects of thesociety as contained in the Memorandum of Associationplaced at P.B. page 6 to 10 are to provide for instructionand research in such branches of Engineering andTechnology as the College may think fit and for theadvancement of learning and dissemination of knowledgein such branches. The object clause noted above is for providing education which includes running of schoolalso. In fact in accordance with the instructions ofDirector of Technical Education and Industrial Training,Govt. of Punjab vide notification dated 12.02.2009 hadaccorded its sanction to establish new multi disciplinaryacademy and such multi disciplinary academies were alsorequired to provide 10+2 course to the students also andtherefore in accordance with the instructions of PunjabGovernment, the school was also set up to provideeducation up to 10+2 level and such school was alsoregistered with Punjab School Education Board. Merenon mentioning of all schools and colleges in theMemorandum of Association does not disentitle theassessee for getting registration u/s 12AA of the Act. Thecopy of the notification as placed in P.B. page 132 hasbeen made part of this order. The above said notification list includes theassessee also which is indicated at column no. 1 andtherefore the objections of Ld. CIT(E) is not relevant.Moreover we find that under similar facts andcircumstances, another assessee at Ferozepur by thename of SBS College of Engineering and Technologyhas been granted registration vide order dated 19.09.2016placed at P.B. page 156 to 157. The name of saidassessee is appearing at column no. 2. Therefore undersame facts and circumstances the Ld. CIT(E) should have granted registration to the society. It has been held by various courts including byHon'ble Supreme Court of India that at the time ofregistration of a society u/s 12AA of the Act, the onlyrequirement is that Ld. CIT(E) should be satisfied aboutthe objects of society and should be satisfied with thegenuineness of activities of the society with respect toobjects of the society. In the present case the Ld. CIT(E)has not doubted the objects of the society whichundoubtedly are charitable in nature and genuineness ofactivities of the society has also not been doubted.” 5.In view of the above, no illegality or perversity could bepointed out by learned counsel for the revenue in the findings recorded bythe Tribunal which may warrant interference by this Court. No substantialquestion of law arises in the appeal. Consequently, finding no merit in theappeal, the same is hereby dismissed. Needless to say, it shall be open forthe revenue to initiate action under sub-section (3) to Section 12AA of theAct for withdrawal/cancellation of the registration granted hereinabove, incase it comes to the notice of the revenue that the activities undertaken bythe assessee are not genuine or are not being carried out in accordance withthe objects of the trust or Institution or are not charitable in nature in termsof the provisions of the Act. (AJAY KUMAR MITTAL) JUDGE April 5, 2019(MANJARI NEHRU KAUL)gbsJUDGE GURBACHAN SINGHWhether Speaking/ReasonedYes2019.04.24 10:44I attest to the accuracy andWhether ReportableYesintegrity of this document