Principal Commissioner Of Income Tax vs. Rajiv Gandhi Proudyogiki Vishwavidyalaya

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ITA/109/2019HC Madhya Pradesh11 September 2019Bench: HON'BLE THE ACTING CHIEF JUSTICE2 pages
For Petitioner: Sanjay Lal
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial questions of law raised by the appellant (Revenue) were squarely covered by this court's previous decision in the case of Commissioner of Income Tax Vs. D.P.R. Charitable Trust (2011) 18 ITJ 245(MP). The Court noted that although the Revenue had filed a Special Leave Petition (SLP) before the Supreme Court in that matter, there was no interim order or stay granted by the Supreme Court, and the matter was pending. Therefore, following its own precedent in D.P.R. Charitable Trust, the High Court dismissed the present appeal. The dismissal was with liberty to the appellant to approach the Supreme Court. No specific finding was made by the High Court on the merits of the ITAT's order, as it was bound by its prior judgment.

What were the facts?

The Principal Commissioner of Income Tax (appellant) filed an appeal before the High Court of Madhya Pradesh against an order dated 08.02.2019 passed by the Income Tax Appellate Tribunal (ITAT), Indore. The ITAT's order was in appeal number I.T.A. No. 614/Ind/2018. The assessee is Rajiv Gandhi Proudyogiki Vishwavidyalaya. The appeal concerns the assessment year(s) not explicitly stated but relates to the ITAT's decision to restore an issue to the Commissioner of Income Tax (Exemptions) and direct the grant of registration under Section 12AA, despite the CIT(E)'s findings. The dispute revolves around whether the trust's activities are entirely charitable, whether it has a profit motive, accumulation of funds, and non-auditing of accounts.

What were the issues?

The High Court was asked to decide the following substantial questions of law: 1. Whether the ITAT was correct in restoring the issue to the CIT(E) and directing registration under Section 12AA, irrespective of the CIT(E)'s finding that the trust's activities are not entirely charitable for the public at large? 2. Whether the ITAT was correct in not considering the CIT(E)'s findings that the trust's objects exist for profit motive rather than charitable purposes? 3. Whether the ITAT was correct in not considering the CIT(E)'s findings that the trust accumulated huge liquid funds and increasing FDRs to earn interest, indicating a profit-making motive? 4. Whether the ITAT was correct in not considering the CIT(E)'s findings that the trust failed to get its books of accounts audited as required by Rule 17A(1)(e) and Section 12A of the Act? Assessee's Arguments: The judgment does not record any specific arguments made by the assessee (respondent). The respondent was represented by Shri Sumit Nema, Senior Counsel. Revenue's Arguments: The appellant (Revenue) argued that the ITAT erred in its findings on the above issues, particularly concerning the charitable nature of the trust, profit motive, accumulation of funds, and non-compliance with audit requirements. The appellant relied on the findings of the CIT(E).

Which sections of the Income-tax Act were involved?

Section 12AA,Section 12A

AI-generated summary — verify with the full judgment below

The High Court Of Madhya Pradesh ITA-109-2019 (PRINCIPAL COMMISSIONER OF INCOME TAX Vs RAJIV GANDHI PROUDYOGIKI VISHWAVIDYALAYA) Jabalpur, Dated : 11-09-2019 Shri Sanjay Lal, learned counsel for the appellant. Shri Sumit Nema, learned Senior Counsel with Shri Mukesh Agrawal, for the respondent. Heard. The appellant has filed this appeal being aggrieved by the order passed by the Income Tax Appellate Tribunal, Indore in I.T.A. No. 614/Ind/2018 dated 08.02.2019. In the present appeal the appellant raised the following substantial questions for adjudication:- "1. Whether, on the facts and circumstances of the case, ITAT is correct in restoring the issue to 1d. CIT(E) and directing to grant the registration u/s 12AA to to the Act irrespective of the findings by the CIT(E) that the activities of the trust is not entirely charitable for public at large ? 2. Whether on facts and in the circumstances of the case and in law, the ITAT is correct in not considering the findings of the 1d. CIT(E) that the trust objects exist not for charitable purpose but for the profit motive ? 3. Whether on facts and circumstances of the case and in law, the ITAT is correct in not considering the findings of the 1d. CIT(E) that trust has accumulated huge liquid funds and increasing FDRs to earn interest income which shows that the assessee objects exist to earn profit making and not for charitable purpose ? 4. Whether on facts and circumstances of the case and in law, the ITAT is correct in not considering the findnigs of the 1 ITA-109-2019 Digitally signed by MANVENDRA SINGH PARIHAR Date: 12/09/2019 12:33:15 (RAVI SHANKAR JHA) ACTING CHIEF JUSTICE (VISHAL DHAGAT) JUDGE 1d.CIT (E) that the trust is not getting his books of accounts audited as required by Rule 17A(1)(e) and section 12A of the Act ? 5. Any other ground that may be adduced at the time of hearing." It is not disputed that the said questions of law have been answered against the Revenue by this court in the case of Commissioner of Income Tax Vs. D.P.R. Charitable Trust (2011) 18 ITJ 245(MP). It is informed that though the Revenue has filed an S.L.P.(C) 7582/2012 before the Supreme Court, there is no interim order or stay of the order passed by this court by the Supreme Court and the matter is pending before the Supreme Court. In such circumstances, it is apparent that the issues raised by the appellant are squarely covered by the decision rendered in the case of D.P.R. Charitable Trust (supra), therefore, the present appeal is dismissed in terms of the order passed by this court in the case of D.P.R. Charitable Trust (supra) with liberty to the appellant to approach the Supreme Court. With the aforesaid liberty, the appeal filed by the appellant stands dismissed. MSP

2 ITA-109-2019 Digitally signed by MANVENDRA SINGH PARIHAR Date: 12/09/2019 12:33:15

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