The Commissioner Of Income Tax (Exemptions), Chandigarh v. M/S Vishwayatan Yogashram

ITA-342-2018 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-342-2018 Date of Decision: 3.4.2019 The Commissioner of Income Tax (Exemptions), Chandigarh ....Appellant. Versus M/s Vishwayatan Yogashram ...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.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 dated13.12.2017 (Annexure A-2) passed by the Income Tax Appellate Tribunal,Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITANo. 428/(Asr)/2016, claiming the following substantial questions of law:- (i)Whether on the facts and circumstances of thecase, the Hon'ble 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 Hon'ble 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 but it could not have directed for registrationstraight away inasmuch as there has to besatisfaction recorded by the Registering Authoritywhich was lacking? (ii)Whether on the facts and circumstances of the caseand in law, the Hon'ble ITAT is right indisregarding the fact that the applicant society didnot show any expenditure attributable topropagation of Yoga in the financial statementwhich had clearly established that no effect hadbeen made in the field of yoga? (iii)Whether on the facts and circumstances of thecase, the Hon'ble ITAT was correct inextrapolating uncorroborative expenses (on salary,bhandara, gaushala etc.) as being incurred foryoga?case, the Hon'ble ITAT was correct inextrapolating uncorroborative expenses (on salary,bhandara, gaushala etc.) as being incurred foryoga? (iv)Whether on the facts and circumstances of thecase, the order of the ITAT is not perverse inholding that non filing of return of income for A.Y.2013-14 and not furnishing of evidences in supportof claims made for the A.Y. 2013-14 to 2015-16 isnot a valid ground to deny registration u/s 12AA ofthe I.T. Act, 1961 when the CIT is fullyempowered u/s 12AA(1)(a) to call for suchdocuments to satisfy himself about the geuninenessof the activities of the applicant?case, the order of the ITAT is not perverse inholding that non filing of return of income for A.Y.2013-14 and not furnishing of evidences in supportof claims made for the A.Y. 2013-14 to 2015-16 isnot a valid ground to deny registration u/s 12AA ofthe I.T. Act, 1961 when the CIT is fullyempowered u/s 12AA(1)(a) to call for suchdocuments to satisfy himself about the geuninenessof the activities of the applicant? ITA-342-2018 ITA-342-2018 (v)Whether on the facts and circumstances of the caseand in law, the ITAT is not perverse in holding thatno charitable activity is not a valid ground to denyregistration u/s 12AA of the I.T.Act, 1961 whenthe CIT(E) is fully empowered to satisfy himselfabout the genuineness of the activities of theapplicant which was formed in 1997?and in law, the ITAT is not perverse in holding thatno charitable activity is not a valid ground to denyregistration u/s 12AA of the I.T.Act, 1961 whenthe CIT(E) is fully empowered to satisfy himselfabout the genuineness of the activities of theapplicant which was formed in 1997? (vi)Whether on the facts and circumstances of the caseand in law, the Hon'ble ITAT is right in ignoringthe facts that the non-disclosure of land in thebalance sheet has a bearing on 'income fromproperty' that is sought to be exempt not gettingclarified by the applicant and to that extent gettingprecluded from distribution to other societies/trustsin the event of dissolution?and in law, the Hon'ble ITAT is right in ignoringthe facts that the non-disclosure of land in thebalance sheet has a bearing on 'income fromproperty' that is sought to be exempt not gettingclarified by the applicant and to that extent gettingprecluded from distribution to other societies/trustsin the event of dissolution? (vii) Whether on the facts and circumstances of the caseand in law, the Hon'ble ITAT has ignored the factsthat as per the statute both objects and genuinenessof activities need to be examined the latter cannotbe done in the absence of ascertaining theactivities?and in law, the Hon'ble ITAT has ignored the factsthat as per the statute both objects and genuinenessof activities need to be examined the latter cannotbe done in the absence of ascertaining theactivities? (viii) 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? Put shortly, the facts necessary for adjudication of the instant ITA-342-2018 appeal as narrated therein may be noticed. The assessee is a society createdon 21.4.1997 and is registered with the Registrar of Societies, J&KGovernment. The assessee filed an application in Form 10A for registrationunder Section 12AA of the Act. The Commissioner of Income Tax(Exemptions) [for brevity “the CIT(E)”] vide order dated 30.7.2016(Annexure A-1) rejected the said application. It was held by the CIT(E)that there were no expenses attributable to propagation of Yoga in financialstatements, no return relating to the assessment year 2013-14 had been filed,details regarding ownership of land was not provided and that the saidproperty was not reflected by the assessee in the balance sheet. Feelingaggrieved by the order, Annexure A-1, the assessee filed an appeal beforethe Tribunal. The Tribunal vide order dated 13.12.2017 (Annexure A-2)allowed the appeal and directed the CIT(E) to grant registration underSection 12AA of the Act to the assessee. Hence, the present appeal. 3.After hearing learned counsel for the appellant, we do not findany merit in the appeal. 3.After hearing learned counsel for the appellant, we do not findany merit in the appeal. 4.Admittedly, the assessee is registered under the Societies Actand the aims and objections are charitable in nature. Finance Act, 2015 (inshort “the 2015 Act”) with effect from 01.04.2016 had amended Section 2(15) of the Act and Yoga has been included in the definition of charitablepurposes. The CIT(E) on receipt of an application for registration of trust orinstitution under Section 12AA of the Act is required to call for suchdocuments or information as he thinks necessary in order to satisfy himselfabout the genuineness of the activities of the trust or institution and tosatisfy himself about the objects of the trust or institution and if he issatisfied with the objects and genuineness of the activities of the trust or ITA-342-2018 -5- institution, he passes an order in writing registering the said trust orinstitution. Examining the finding of the CIT(E) that there were noexpenses attributable to propagation of Yoga in financial statements, it maybe noticed that the salary to main Yoga Teachers was not paid as they wererendering the services without any salary as depicted in the details of salarypaid. The salaries mentioned against the names of Swami Suryana, SwamiYogana and Swami Kumari in the three years was NIL whereas salary hadbeen shown to be paid to the Assistant Yoga Teacher Sandeep Sharma inthe financial year 2014-15. The plea of the revenue that kitchen expenseswere incurred for Bhandara for public would show that the activities of thetrust were not genuine. In this regard, it is recorded that the said expenseswere incurred for all students or teachers of the Society and sometimes forpublic which was a plausible explanation and it cannot be brushed aside tohold that the activities of the assessee were not genuine. The holding ofBhandara cannot be a ground to reject the registration unless it was provedthat it was for any non-charitable activity or was exorbitant. 5.So far as non-filing of return for the assessment year 2013-14was concerned, we find that in this year, the assessee had incurred a loss of` 5 lakhs and if the assessee had not filed the return for the said assessmentyear being loss, it could not be inferred that the activities of the assesseewere not genuine. Further, the issue relating to the details of ownership ofland, the assessee had filed a copy of judgment in which High Court ofJammu and Kashmir had held that the assessee was the owner of the landand was imparting education in yoga and spiritualism which was a publicpurpose. Even the CIT(E) had held that the assessee was owner of the landGURBACHAN SINGHmeasuring 51 kanals and the rest of the land was in the name of other2019.04.30 12:32I attest to the accuracy andintegrity of this document ITA-342-2018 -6- ITA-342-2018 -6- persons. The said land was sufficient for imparting Yoga training. TheTribunal had held that while considering registration under Section 12AA ofthe Act, the CIT(E) was required only to determine the objects of the societywhich undoubtedly were charitable in nature. Still further, the assesseeduring the proceedings had filed sufficient evidence regarding Yogaactivities being carried out and had filed supporting evidence vide letterdated 14.7.2016 but the CIT(E) had failed to appreciate the same.Accordingly, the Tribunal had rightly directed the CIT(E) to grantexemption under Section 12AA of the Act to the assessee.6.No error could be pointed out by learned counsel for therevenue in the findings recorded by the Tribunal warranting interference bythis Court. No question of law, much less, substantial question of law arisesin the appeal. Consequently, finding no merit in the appeal, the same ishereby dismissed. Needless to say, it shall be open for the revenue toinitiate action under sub-section (3) to Section 12AA of the Act forwithdrawal/cancellation of the registration granted hereinabove, in case itcomes to the notice of the revenue that the activities undertaken by theassessee are not genuine or are not being carried out in accordance with theobjects of the trust or Institution or are not charitable in nature in terms ofthe provisions of the Act. (AJAY KUMAR MITTAL) JUDGE April 3, 2019(MANJARI NEHRU KAUL)gbsJUDGE Whether Speaking/ReasonedYesWhether ReportableYes