ACIT (E) CIRCLE-1(1) NEW DEHI, DELHI vs. JEEN FOUNDATION, DELHI

Since the issues are common and the appeals are connected, therefore, the same are heard together and being disposed off by this common order.

Brief facts of the case are, the assessee is a company incorporated u/s 25 of the Companies Act, 1956 and also registered u/s 12A/12AA as well as 80G of the Income Tax Act, 1961 (in short “Act”). It is engaged in activities of imparting education to the society and is running an educational institute under the name and style of Himalayan University. The assessee in its return of income claimed deduction u/s 11 of the Act with the classification of the activities as education, whereas during the assessment proceedings, the AO observed that the approval granted to the assessee u/s 12A on record as under the classification General Public Utility. He rejected the claim of the assessee and observed that for the purpose of GPU, the definition of section 2(15) of the Act makes the difference in claiming the exemption varies, accordingly asked for & 4118/DEL/2024 the various information vide notice u/s 142(1) of the Act. After analysing the financial statements, he came to the conclusion that the assessee is not eligible to claim the benefit u/s 11 and 12 of the Act. He after analysing the student fee receipts recorded in the books, he observed that the assessee had received 98% of the total receipts from the business as per the definition contained u/s 2(15) of the Act. Accordingly, he brought Rs.48,12,15,85/- to tax u/s 143(3) r.w.s 144B of the Act.

Aggrieved with the above order, the assessee preferred an appeal before NFAC, Delhi. The assessee filed detailed submissions which is reproduced at para 7.3, pages 7 to 31 of the impugned order. After considering the detailed submissions as stated above, Ld CIT(A) allowed the grounds raised by the assessee with the following observations: “7.8. On perusal of the assessment order, submissions of the Appellant and the facts on record, it is seen that the core issue is whether the activities of the Appellant are charitable in nature and whether provisions of section 13(8) r.w.s. 2(15) of the Act are violated. It is seen that the data analytics done by the Id. AO is prima facie incorrect for the reason that the activity of imparting of education which has been called as a 'sale of service' by the Id. AO has not been established on the basis of evidence. The ld.AO has merely done a data analytics to suggest that the Appellant had spent Rs.21 Crores out of the receipts of Rs.51.43 Crores. The ld.AO failed to give cognizance to the fact that it had set apart Rs.14.63 Crores for infrastructure development, the construction of which is evident from the records pertaining to the year under consideration as well as the preceding year. In totality, the Appellant has proved that the expenditures have been incurred towards the objects. On the other hand, ld. AO could not find any siphoning off of the fund for the purpose other than charitable activities carried out by the appellant. Ld. AO is not justified in not giving the benefit of the other expenses claimed by the appellant while calculating the income, despite not drawing any adverse inference. 7.9. Ld. CIT (Exemption) in his above-mentioned order u/s 12AB(4)(iii) of the Act has mentioned that the appellant assessee had & 4118/DEL/2024 filed form 10A on 11.08.2021 wherein object of the assessee have been provided as 'Education'. The same was accepted and registration u/s 12A (1)(ac) (i) dated 23.09.2021 was granted for the period from AY 2022- 23 to 2026-27. The registration dated 23.09.2021 has been accorded without any classification of specified limb of charitable purpose. From the information available on record, it is evident that the appellant has never been engaged in any other activities or business other that imparting education in north- ast India by establishing a private university in Arunachal Pradesh. The registration u/s 12A of the Act was granted to the appellant on 06.10.2016 when the appellant was engaged in the activity of imparting education only. Keeping the object, as envisaged under memorandum of association, into consideration, the Hon'ble CIT (Exemption), vide its order dated 06.10.2016, accorded the registration to the appellant company under "General Public Utility". Therefore. Ld. CIT (Exemption). while granting a registration had propounded the object of the appellant company as charitable in nature. 7.10. In view of the above legal and factual discussion about the present appeal. I am of the considered opinion that the activities of the Appellant being charitable in nature cannot be doubted and the Id. AO could not establish any violation of proviso to section 2(15) r.w. section 13(8) of the Act. Therefore, the disallowance of exemption claimed u/s 11 of the Act by the appellant is not justified. Ld. AO is directed to delete the addition Rs. 48,12,15,851/-. Accordingly the ground no.3, 4 and 5 of the appeal are allowed.”

Aggrieved with the above order, the Revenue is in appeal before us.

At the time of hearing, both the counsels representing the Revenue and the assessee had brought to our notice the relevant facts on record and made their respective submissions.

Considered the rival submissions and material placed on record. We observe that the assessee is a company registered under section 25 of the Companies Act and registered u/s 12A/12AA of the Income Tax Act, 1961. As per the registration certificate granted to the assessee, the category provided by the assessee in the Form 10A is only Education and accordingly approved by the Revenue. We do not know how the AO came up with the idea that the assessee & 4118/DEL/2024 was granted the registration only on the category of GPU. He also acknowledged that the assessee collects majority of the receipts from the student fees. He also misinterpreted the allocation of the income of the assessee and completely overlooked the allocation of funds for the infrastructure development. The relevant facts were properly appreciated by the Ld CIT(A) and gave a well-reasoned order in favour of the assessee by establishing the genuineness of the running of the educational institution under the current set up. After considering the detailed submissions of the assessee and the detailed findings of the Ld CIT(A), we do not see any reason to disturb the same. In the result, the grounds raised