SHISHU NIKETAN PANCHKULA EDUCATION SOCIETY vs. COMMISSIONER OF INCOME TAX PANCHKULA

This appeal appeal has been preferred by the appellant under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 6.9.2013, Annexure A.6, passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A', Chandigarh, (in short, “the Tribunal”), in ITA No.1310/Chd/2012, claiming following substantial questions of law:- (i)Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal has fallen in error in upholding the order of the Commissioner of Income Tax without examining the aims and objects of the appellant society? (ii)Whether in facts and circumstances of the case, the GURBAX SINGH 2014.08.06 13:27 integrity of this document High Court Chandigarh Income Tax Appellate Tribunal is correct in law in holding that for the purpose of grant of registration under Section 12A the carrying on of the charitable activities is essential? (iii)Whether in facts and circumstances of the case, the order passed by the Income Tax Appellate Tribunal is contrary to the ratio of the juri ictional High Court in Civil Writ Petition No.6171 of 2010 - O.P.Jindal Globle University v. Chief Commissioner of Income Tax?”

A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The appellant was registered as a society under the Societies Registration Act, 1860 on 14.3.2012. The main objects of the society as per its Memorandum of Association, Anenxure A.1 are to provide advancement research and dissemination of education-literary, scientific and scholastic, to start, establish, run, manage and maintain schools with an object to provide sound pre-primary, primary, middle, secondary and higher education. On 23.4.2012, the society filed an application Annexure A.3 for registration before the Commissioner of Income Tax under Section 12A of the Act. The main object of the society was to take over Shishu Niketan Model School, Mansa Devi Complex (MDC) Panchkula which already stood registered under Section 12AA of the Act. The new society proposed to run the school on day to day basis. The school was also affiliated with the Central Board of Secondary Education (CBSE) and its students were appearing for examination under the CBSE curriculum. Vide letter dated 5.9.2012, Annexure A.4, the Commissioner of Income Tax was apprised of the above facts and a GURBAX SINGH 2014.08.06 13:27 integrity of this document High Court Chandigarh copy of the balance sheet and profit and loss account of the school for the years 2009-10 and 2010-11 was also enclosed alongwith the copy of the CBSE affiliation letter, land allotment letter and copy of registration of the existing school. Vide order dated 31.10.2012, Annexure A.5, the Commissioner of Income Tax, Panchkula rejected the application on the ground that as per the balance sheet and profit and loss account on 31.3.2012, a corpus fund of ` 5000/- was shown in the balance sheet but there were no receipts and only an expenditure of ` 1760/- was shown which was debited to the income and expenditure account. The Commissioner of Income Tax declined registration under Section 12AA of the Act on the ground that the society had not carried out the charitable activity as per its objects. Aggrieved by the order, the appellant filed appeal before the Tribunal pleading that at the stage of grant of registration under section 12AA of the Act, the scope of inquiry was limited to evaluation of the objects of the society and actual carrying on of activity was not essential for the purpose of grant of registration. Reliance was placed on decisions of Allahabad High Court in Fifth Generation Education Society v. CIT, (1990) 185 ITR 634 and Kerala High Court in Adarsha Vidhyanidhi Trust v. CIT, (2007) 292 ITR 465. The Tribunal by relying on its order dated 24.5.2013 passed in ITA No.1339/CHD/2012 in the case of Suchinta Education Society v. CIT upheld the order passed by the Commissioner of Income Tax and dismissed the appeal of the appellant. Hence the present appeal by the appellant. GURBAX SINGH 2014.08.06 13:27 integrity of this document High Court Chandigarh

We have heard learned counsel for the parties and perused the record.

Learned counsel for the appellant-assessee submitted that the Tribunal while deciding the appeal of the appellant had relied upon its decision dated 24.5.2013 in Suchinta Educational Society's case (supra). It was urged that the assessee in that case - M/s Suchinta Educational Society had challenged the order of the Tribunal by filing ITA No.263 of 2013 (Suchinta Educational Society v. Commissioner of Income Tax-I) in this Court which was allowed vide order dated 28.4.2014. Reliance was placed on following observations:- “Having heard learned counsel for the parties, we find that in the judgment referred to by learned counsel for the respondent, the Society in question had not done any charitable work. The activities carried on were found to be only for the purpose of generating income for its members. Therefore, it is not a case where the activities, which were yet to be started, were found to be in-genuine. It could not be disputed that running of a school falls within the scope of activities for which registration can be granted under Section 12AA of the Act. In fact, the similar activities carried out by Shishu Niketan Model School have been granted registration, which is running four institutions. The Society has been established to manage one of such schools. There cannot be any attempt of the assessee to evade tax liability, as Shishu Niketan Model School has been granted registration and availing the benefit of tax.”

Learned counsel for the respondent supported the order passed by the Tribunal.

After hearing learned counsel for the parties, we find that GURBAX SINGH 2014.08.06 13:27 integrity of this document High Court Chandigarh the issue stands concluded by the decision of this Court in Suchinta Educational Society's case (supra). Learned counsel for the respondent is unable to dispute the applicability of the said judgment to the present case.

In view of the above, the appeal is allowed and the substantial questions of law are answered accordingly in favour of the appellant. (Ajay Kumar Mittal) Judge July 01, 2014 (Jaspal Singh) 'gs' Judge GURBAX SINGH 2014.08.06 13:27 integrity of this document High Court Chandigarh