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Income Tax Appellate Tribunal, DELHI BENCH ‘C’ : NEW DELHI
Before: SHRI ANIL CHATURVEDI & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
Appellant, DCIT, Central Circle 15, New Delhi (hereinafter
referred to as ‘the Revenue’) by filing the present appeal sought to
set aside the impugned order dated 22.02.2018 passed by the
Commissioner of Income-tax (Appeals)-40, New Delhi qua the
assessment year 2014-15 on the grounds inter alia that :-
“1. On the facts & circumstances of the case the CIT (A) has erred in deleting the addition of Rs.4,22,76,205/- made by AO on account of denial of exemption u/s 11 of the Income Tax Act, 1961.
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On the facts & circumstances of the case the CIT (A) has erred in allowing depreciation of Rs.2,83,16,001/-.”
Briefly stated the facts necessary for adjudication of the
controversy at hand are : M/s. G.R. Goenka Education Society
(hereinafter referred to as ‘assessee society’) being a society
registered under section 12A of the Income-tax Act, 1961 (for short
‘the Act’) with main object to run education institution in order to
provide education upto higher secondary standard, it runs a school
in the name of G.D. Goenka Public School at Vasant Kunj in
Delhi. Assessee society is also having approval u/s 80G(5)(vi) of
the Act. For the year under assessment, assessee society filed
return of income claiming exemption u/s 11 of the Act which has
been declined by the AO on the ground that, “though objects of the
assessee society may be charitable but the activities are
commercial in nature which do not satisfy the definition of section
2(15) of the Act.” Consequently, assessment has been framed at
the total income of Rs.4,22,76,205/- u/s 143 (3) of the Act.
Assessee carried the matter before the ld. CIT (A) by way of
filing appeal who has deleted the addition by partly allowing the
appeal. Feeling aggrieved, the Revenue has come up before the
Tribunal by way of filing the present appeal.
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We have heard the ld. Authorized Representatives of the
parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the
facts and circumstances of the case.
Ld. DR for the Revenue challenging the impugned order
relied upon the assessment order passed by the AO and contended
inter alia that there is an infringement of section 13(1)(c) of the Act
by allowing Shri Anjani Kumar Goenka to register the trademark
“G.D. Goenka” in his name in Class 41 in the file of education,
however, ld. CIT (A) has erred in condoning the violation of
provisions of section 13(1)(c) read with section 13(3) of the Act in
respect of registration of trademark in the name of Shri Anjani Kumar Goenka; that assessee society even does not maintain the
depreciation reserve fund which is a prerequisite for collection of
development fee; that ld. CIT (A) has ignored the facts that
assessee society was engaged in the activities which were
commercial in nature and against the public policy.
However, on the other hand, to repel the arguments
addressed by the ld. DR for the Revenue, ld. AR for the assessee
society relying upon the order passed by the ld. CIT (A) contended
inter alia that the issue in controversy has been consistently
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decided by the coordinate Bench of the Tribunal in favour of
the assessee society since AY 2009-10 in ITA No.3572/Del/2013 order dated 02.02.2017, which has been confirmed by the
Hon’ble Delhi High Court vide order dated 30.10.2017 passed in ITA 821/2017, copies are available at pages 1 to 22 and 23 to 25
of the paper book respectively; that findings return by the AO are
factually incorrect that assessee is into the activities which are
commercial in nature and profit earning purpose because assessee
has been employing his income for charitable purposes in
furtherance of its object; and that the amount of obligation for
charitable purposes is more than the income. Ld. AR for the
assessee society also filed the orders passed in its own
favour in assessee’s own case by the coordinate Bench of the
Tribunal for AYs 2005-06, 2010-11 & 2011-12 in ITA Nos.4133,
4134 & 4135/Del/2015 order dated 04.07.2081 and AY 2012-13 in ITA No.5043/Del/2015 order dated 23.03.2018, available at
pages 33 to 37 and 26 to 29 of the paper book respectively.
In the light of the contentions raised by the ld. DR for the
Revenue and ld.AR for the assessee society, we have perused the order passed by the coordinate Bench of the Tribunal in assessee’s own case for AY 2009-10 (supra) which has dealt with
all the issues taken by the AO during the year under assessment
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inter alia that there is violation of provisions of section 13(1)(c) of
the Act while using trademark “G.D. Goenka” by Shri Anjani
Kumar Goenka; that the activities of the assessee society are
commercial in nature; and that there is excess income over
expenditure; that assessee is not entitled for depreciation as
claimed. However, ld. DR for the Revenue has failed to point out
any distinguishing facts in the year under assessment vis-à-vis the
earlier years decided in favour of the assessee nor it is the case of
the Revenue that order passed by the Tribunal and confirmed by
Hon’ble Delhi High Court has been overturned by the Hon’ble
Supreme Court.
So far as question of using the trademark ‘G.D. Goenka”
having goodwill and monetary value of the trademark which has
been built up in the course of the assessee society’s activities is
concerned, this issue has already been examined by the Hon’ble
Delhi High Court in assessee’s own case vide order dated
30.10.2017 (supra) by returning following findings :-
“4. The other ground urged was that the goodwill and monetary value of the trade mark, which arose in the course of the respondent's activities, ought to have accrued to it rather than the owner. This, it is stated, amounted to a diversion under Section 13(3) of the Act. The Court is of the opinion that the IT AT's reasoning on this aspect too is merited. Besides, the use of a trade mark per se does not confer an advantage upon the licensee or authorized user - under Section 40(2) of the Trade Marks Act, 1999 the benefit of such use accrues to the owner. This aspect too has been considered by a Division Bench of this
6 ITA No.3598/Del./2018
Court and later affirmed In Formula One World Championship Ltd. vs. CIT [2017) 390 ITR 199-(Delhi).”
Coordinate Bench of the Tribunal decided the identical
issue in favour of the assessee vide order dated 02.02.2017 for
AY 2009-10 (supra) by returning following findings :-
“11. On careful consideration of above rival submissions and careful perusal of the record before the Tribunal, inter alia, impugned order, assessment order t paper book of the assessee spread over 13 pages and respectful consideration of the ratio of .the decision cited at bar by the parties, we are of the view that undisputedly the registration granted to the assessee u/s 12A of the Act has not been cancelled or withdrawn by the OIT (E) or any other competent authority thus it is In force tilt date. 12. We further point out that the Division Bench of Hon’ble High Court of Delhi in the order dated 29.5.2009 has vacated that stay order granted by the Ld. Single Judge and PERMITTED Goenka Institute of Education and research to use the name "Goenka Pubic School” with respect to the schools during pendency of the suit subject to directions in para 28 of said judgment. 13. On specific queries from the bench neither the Ld. AR nor the Ld DR could assist the Tribunal about the final decision in this case of Trade Mark dispute between the Goenka Institute of Education and Research and Shri Anjani Kumar Goenka (A. K. Goenka) thus we safely presume that the final verdicts in this case is stilt awaited and in absence of any other final verdict, the Ld. CIT (A) was correct in holding that Mr. A.K. Goenka is the owner of the Trade Mark "G.D. Goenka" and thus there is no violation of section 13(1)(c) and 13(3) of the Act. 13. Before we part with this Issue we observe that in the assessment dated 29.5.2009 para 31 the Hon'ble High Court permitted to use the name "Goenka Public School" to the appellant i. e. Goenka Institute of Education & Research but there is no whisper about Trade Mark “G.D. Goenka" as alleged by the AO for holding violation of section 13(1) or 13(3) of the Act. We also note that even the AO has in para 5.0(l) of the assessment order, has noted that the G.D Goenka is the Trade Mark owned by Shri Anjani Kumar Goenka then giving franchisee by him on the same name to other entities or institutors, who in turn give royalty cannot be taken
7 ITA No.3598/Del./2018
as valid basis for alleging violation of sections 13(1) or 13(3) of the Act against the assessee.
We have also noted that the AO has allowed exemption u/s 11 of the Act to assessee for AY 2007-08 & 2008-09 in the assessment orders passed u/s 143(3) of the Act thus without any sustainable allegations regarding profit motive and violation of Section 13(3) of the Act. We further observe that the AO/Ld. DR could not controverted the fact that the application of income by the assessee by way of expenditure as per Income & Expenditure and capital expenditure for purchase of fixed assets is more than the amount of income and if depreciation is excluded from expenditure then the surplus available will be Rs.13,66,460/- which is very less than due amount of Rs.3,04,55,325/- being 15% of total receipts thus allegation of profit motive cannot be alleged against the assessee for denying benefit of exemption of section 11 of the Act. 15. At this Juncture, we may also point out that the CBDT Circular No.11/2008 dated 19.12.2008 has manifested that the relief of the poor education and medical relief will not be hit by the newly inserted proviso to section 2(15) of the Act. We, therefore. are of the opinion that on the above noted factual matrix of the extant case regarding financial activities and application of income/funds by the assessee we decline to accept contention of the AO that the activities of the assessee are commercial in nature and with profit motive. Our above noted conclusion also gets strong support from the decisions of Hon'ble Supreme Court In the cases of Adjantar Educational Institution vs ACIT (Supra) and Queens' Educational Society vs. CIT (Supra). The AO also alleged that the Interest free advances to the parent society of school i.e. G.R. Goenka Education Society as at the same time it had an outstanding liability of Rs. 6.33 crores in the shape of Bank loan taken @ of 12.5% per annum Interest and it created a deficit In the accounts to create a scenario for charging high fee from the students. On this allegation we are of the view that when these funds have finally reached to Shree Balkrishna Education and Social Welfare Society for construction of school building wherein 600 students of the assessee standing in the rooms constructed as temporary structure on the area intended for playground were to be shifted. We also observe that beside above noted fact that the AO and Ld. DR could not controvert the fact that the parent society transferred the funds to Shri Balkrishna Society which was merged with the assessee society on 26.4.2011 vide order no.RFS/S-2494/68 by the order of the Registrar of societies. In the above given situation, the interest free funds transferred to Shri Balkrishna Society (thought the parents society) having similar charitable objects cannot be taken as valid basis for alleging violation of section 13(3) of the Act and for denying exemption u/s 11 of the Act to the assessee. The ratio of decision of Hon'ble High Court of Delhi In the case of ACME (supra) also gives strong support to the claim of the assessee.
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On the basis of foregoing discussion we reach to the logical conclusion that the denial of exemption u/s 11 of the Act by the AO was merely based on the wrong and incorrect appreciation of facts thus the same was rightly demolished by the CIT (A). The first appellate authority granted relief to the assessee by taking into consideration right aspects of the case and which is also supported by ratio of the decision of Hon'ble Supreme Court and CBDT Circular No.11/2008 (supra). We are unable to see any ambiguity or perversity or any other valid reason to interfere with the same. Accordingly, ground nos. 1 to 4 of the appellant-Revenue being devoid of merits are dismissed.”
In view of what has been discussed above, we are of the
considered view that ld. CIT (A) has decided the issue in favour of
the assessee by following the decisions rendered by Hon’ble Delhi
High Court and coordinate Bench of the Tribunal in assessee’s own
case for preceding years. Ld. CIT (A) has allowed the depreciation
on fixed assets by following the decision rendered by Hon’ble
Supreme Court in case of CIT-III, Pune vs. Rajasthan &
Gujarati Charitable Foundation Poona (2018) 89 taxman.com
127 (SC). Since no distinguishing facts qua the year under
assessment vis-à-vis preceding years have come on record, we find
no infirmity or illegality in the impugned order passed by the ld.
CIT (A), hence present appeal filed by the Revenue is hereby
dismissed. Order pronounced in open court on this 7th day of September, 2021.
Sd/- sd/- (ANIL CHATURVEDI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated the 7th day of September, 2021 TS
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