SWARNA JAYANTI HARYANA INSTITUTE FOR FISCAL MANAGEMENT,PANCHKULA vs. CIT(E), CHANDIGARH

From the aforesaid grounds, it would be clear that the only grievance of the assessee in this appeal relates to rejection of application moved for registration U/s 12AA of the Income Tax Act, 1961 (hereinafter referred to as, the Act) by passing the impugned order in haste, ignoring the basic aspects causing hardship to the assessee.

Facts of the case in brief are that the assessee furnished an application in Form No. 10A on 25/02/2019 for registration U/s 12A of the Act before the ld. CIT(E), who observed that the main objects of the assessee are to act as a first point of reference to the State Government for economic analysis and policy advice, to provide necessary physical infrastructure and managerial resources, to develop best practice across the State in the area of G (Sustainable Development Goals) management, fiscal and finance, helping the State Government to implement accrual accounting as recommended by the 12th Finance Commission and strengthening financial management in the State, to organize and provide structured training and research programme including refresher course for government officers/officials in the area of G strategy and action plans, public finance, policy, financial management and financial administration with specific focus on taxation, budgeting, financial planning, audit and account management procedures and policy issues etc. The ld. CIT(E) asked the assessee to provide certain documents/clarifications which 3 ITA 1372/Chd/2019_M/s Swarna Jayanti

In response, the assessee furnished the reply on 21/05/2019 and claimed that its operations fall under the limb “advancement of other objects of general public utility” of Section 2(15) of the Act and also submitted that the assessee society was to develop best practice in the State of Haryana and to provide necessary infrastructure and managerial resources and to all other ancillary activities of G and the activities of the assessee society were oriented towards achievement of its objects of alleviation of poverty and preservation of environment, thus its objects were charitable in nature as laid down U/s 2(15) of the Act.

However, the ld. CIT(E) was of the view that the operations of the assessee society did not disseminate any direct benefits accruing to the predominant section amongst the general public. Thus, it was not construed in a way that would ensure to the benefit of general public at large. He also discussed the memorandum of agreement entered into by the assessee with the United Nations Development Programme (UNDP) for implementation of a government project in Haryana.

The ld. CIT(E) held that the assessee is an agency which has outsourced a specific project i.e. G Vision 2030 to the UNDP on behalf of the Haryana Government and there was no activity which was being done by the assessee society. He also observed that UNDP was charging for implementation of the programmes which were facilitated by it to the assessee society and that the funds received by the assessee society were of the government which were being spent towards a specific project through a third party (UNDP) and that the third party was charging for the project implementation, so there was no rational as to how this arrangement could have been called, covered under 4 ITA 1372/Chd/2019_M/s Swarna Jayanti “charitable purpose” as per the Income Tax Act. The ld. CIT(E) also asked the assessee to furnish details of expenses claimed by it in its income & expenditure account.

In response, the assessee submitted that the expenses, under the head ‘Professional Services’ comprised of the payments made to UNDP for achievement of G (Sustainable Development Goals) in the State of Haryana and the other expenditures were its routine expenditures. However, the ld. CIT(E) did not find merit in the submissions of the assessee and rejected the application moved by the assessee by observing as under:]

Moreover, society's stated objects are of the nature of an implementing agency for government project that cannot be accorded the visage of being charitable. Some of the objects of the society are stated as under:- 1. to act as a first point of reference to the state government for economic analysis and policy advice; 2. to help the state government to implement accrual accounting as recommended by the twelfth finance commission and strengthening financial management in the state. 3. to undertake and promote research/consultancy studies in field of G targets set under G VISION 2030, accounting, audit, financial and fiscal management and related subject for immediate advantage to state. The objects of the society, as per its Memorandum of Association, indicate that the society has been setup with a specific motive to act as an intermediary between the Government and the consultant (the UNDP in this case) for completion of G targets of G VISION 2030 scheme/project and there are no objects of the society which can be called charitable in nature. Moreover, the activities of the society are, as an implementing agency of the State Government, on funds earmarked and disbursed by the Government. There is no charity in implementation of welfare schemes of the Government, with the funds of the state.

Keeping all the above discussion in view, it is held that the operations of the society do not get covered under any of the limbs specified u/s 2(15) of the Income Tax Act and the stated objects/activities can't be accorded the face of being charitable. In light of the above, I have no option but to deny the registration to the applicant u/s 12AA of Income Tax Act, 1961.”

Now the assessee is in appeal.

During the course of hearing, the ld. Counsel for the assessee submitted that the ld. CIT(E) did not appreciate the facts in right perspective and have also not given any opportunity to the assessee to clear the doubt, if any, which were there in his mind. It was further submitted that the objects of the assessee society were charitable in nature and the activities of the assessee society were oriented towards the achievement of its objects of alleviation of poverty and preservation of environment and its operations fall under the limb “advancement of other objects of general public utility” U/s 2(15) of the Act. It was contended that the ld. CIT(E) without providing due and reasonable opportunity of being heard and without appreciating the facts in right perspective, wrongly rejected the application moved by the assessee for registration U/s 12AA of the Act.

In his rival submissions, the ld. CIT-DR reiterated the observations made by the ld. CIT(E) and strongly supported the impugned order passed by the ld. CIT(E).

We have considered the rival submissions of both the parties and perused the material available on record. In the present case, it appears that the ld. CIT(E) while rejecting the application moved by the assessee for registration U/s 12AA of the Act held that there was no expense that has been shown by the assessee which could qualify as utilization for charitable purposes. However, he had not asked the explanation from the assessee that how and in what manner, its objects were not charitable in nature. On the contrary, the claim of the 6 ITA 1372/Chd/2019_M/s Swarna Jayanti Haryana Institute for Fiscal Management Vs CIT(E) assessee was that its activities were charitable in nature and its operations fall under the limb “advancement of other objects of general public utility” as mentioned in Section 2(15) of the Act, the said contention of the assessee was not considered by the ld. CIT(E) in right perspective. We, therefore, considering the totality of facts, deem it appropriate to set aside this case back to the file of the ld. CIT(E) to be adjudicated afresh, in accordance with law, after providing due and reasonable opportunity of being heard to the assessee.

In the result, the appeal of the assessee is allowed for statistical purposes.

""यथ"/ The Respondent 3. आयकर आयु"त/ CIT 4. आयकर आयु"त (अपील)/ The CIT(A)

"वभागीय ""त"न"ध, आयकर अपील"य आ"धकरण, च"डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड" फाईल/ Guard File