R.S. PUBLIC SCHOOL,AGRA vs. CIT EXMP., LUCKNOW

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ITA 459/AGR/2017Status: DisposedITAT Agra10 July 2018AY 2017-1811 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(Exemptions) erred in rejecting the application based on issues related to the application of income and potential violations of Section 13, which are matters for the Assessing Officer. The Tribunal found that the objects of the society were charitable and that the revised application with correct details was not properly considered.

What were the facts?

The assessee applied for registration under Section 12AA. The CIT(Exemptions) rejected the application citing discrepancies in names and PANs between the school and the society, and failure to produce books of accounts and vouchers. The CIT also raised concerns about potential violations of Section 13(1)(c).

What were the issues?

Whether the CIT(Exemptions) can reject a 12AA registration application based on the application of income or potential violations of Section 13, and whether discrepancies in the name of the applicant and PAN are grounds for rejection when charitable objects are established.

Which sections of the Income-tax Act were involved?

Section 12AA,Section 13(1)(c),Section 13(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, AGRA BENCH, AGRA

Before: SHRI A.D. JAIN & DR. MITHA LAL MEENA

For Appellant: Shri Deependra Mohan, CA
Hearing: 18/06/2018Pronounced: 10/07/2018

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA

BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER

ITA No. 459/AGR/2017 (Assessment Year 2017-18) M/s Shri R.S. Public School, Vs. CIT(Exemptions) Bainpur Road, Sikandra, Vibhuti Khand, Gomti Agra, (U.P.) Nagar, Lucknow PAN AAGTS 6694 C

Appellant by: Shri Deependra Mohan, CA Respondent by: ShriInderjeet Singh, CIT, DR

Date of hearing: 18/06/2018 Date of Pronouncement: 10/07/2018

ORDER Per:Dr.Mitha Lal Meena, AM:

The appeal is directed by the assessee against the order of Ld.

CIT (Exemptions), Lucknow dated 21.09.2017 passedu/s 12AA(1)(b)(ii) of the Income Tax Act, 1961rejecting assessee’s

application for registration u/s 12AA of the Act.

2.

The assessee trust has filed an applicationdated08/03/2017

under section 12A(a) of the Act, in the office of Commissioner of

Income Tax (Exemptions), Lucknow for grant of registration u/s 12AA of the Act. The CIT(E) rejected the assessee’s application for

stating that the assessee trust has failed to produce its books of

ITA No. 459/Agr/2017 2

accounts, Bank statement and vouchers to substantiate its eligibility

for grant of registration u/s 12AA. The CIT(E)noted that the

assessee has filed the form No. 10 along with documents for

registration of trust u/s 12AA in the name of Shri R.S school with

one PAN Number whereas the object of charitable purpose, the

education was filed in the name of Shri R.S. Sikchhan Sansthan

Society with different PAN Number. Thus, the application filed by

the assessee in form 10 has no details in respect of the object of the

society so as to examine its charitable purpose, one of the dominant

factor to decide the grant of registration u/s 12AA of the Act.

3.

The CIT(E) further stated that the applicant has failed to

provide any details of the persons to whom salary is being paidin

clear violation of Section 13(1)(c) read with sub-section (3) of the

Income Tax Act, 1961. Section 13(1)(c) of the I.T. Act, 1961

provides that where a part of income of charitable and religious trust

or institutions is used or applied directly or indirectly for the benefit

of the persons specified in section 13(3), thensuch trust or

institutions forfeits the exemptions u/s 11 even if only a small portion

of money is utilized or used or applied for benefit of persons

mentioned in section 13(3) and accordingly the trust is denied the

ITA No. 459/Agr/2017 3

exemption, except as per provisions section 13(4) of the Act. He placed reliance on ‘CIT vs. Jamunalal Bajaj Seva Trust’ (1988) 171 ITR 568. The above-mentioned facts clearly established that the

applicant society instead of pursuing the objects set forth in the memorandum is working towards the benefit of persons referred to in Section 13(3) of the Act. By this very act, it has committed clear violation of Section 13(1)(c) wherein a part of the income has been

applied to the benefit of the interested persons during the previous year, and thus the assessee society has failed to fulfil the norms mandated by law for considering the application for according the

said registration.

4.

Ld. CIT(Exemptions) has also mentioned in his order that he

has perused the details available on records. The assessee trust has neither filed any details nor produced books of accounts, Bank statement and vouchers for verification of activities of the trust. The

CIT(Exemptions) has mentioned that assessee society is not carrying out any charitable activities. Due to noncompliance of assessee, the genuineness of activities could not be verified. As per provisions of section 12AA (1) of the Act, two factors namely the

objects of charitable purpose and the genuineness of activities have

ITA No. 459/Agr/2017 4

to be proved before granting the registration. However, the

assessee failed to prove the same and accordingly, the application

for grant of registration under Section 12AA(1)(b) was rejected.

5.

The ld. Counsel for the appellant society submitted a synopsis

as under:

The learned CIT(Exemption) rejected our application for

registration u/s 12AA only on the pretext that the society was

not doing any charitable activity. The fact of the case is that

the assessee filed application for registration u/s 12AA in the

name of Shri R S Public School having PAN AAGTS6694C

along with Memorandum of Articles were of the society i.e.

Shri R S Jan Kalyan Shiksha Samiti and the audited Balance

Sheet, Income & Expenditure Account, copies of Income-tax

return etc. were filed and thereafter during the course of

hearing before the learned CIT(Exemption) an application

dated 21.09.2017 (Copy Enclosed) was filed wherein it was

mentioned that the application be considered in the name of

Shri R S Jan Kalyan Shiksha Samiti having PAN

AATTS9399H. This application dated 21.09.2017 was filed

along with revised Form 10B in the name of Shri R S Jan

ITA No. 459/Agr/2017 5

Kalyan Shiksha Samiti. The original application filed on

08.03.2017 was in the name of Shri R S Public School

wherein all the documents i.e. Memorandum of Articles were

of the society i.e. Shri R S Jan Kalyan Shiksha Samiti and the

audited Balance Sheet, Income & Expenditure Account,

copies of Income-tax return etc. were filed. The return filed for

A.Y. 2017-18 is in the name of Shri R S Jan Kalyan Shiksha

Samiti. The learned CIT(Exemption) has also mentioned in his

order that the society i.e. Shri R S Jan Kalyan Shiksha Samiti

is primarily engaged in education but has rejected our

application merely stating that the genuineness of the

activities could not be established. We would like to state that

under the society i.e. Shri R S Jan Kalyan Shiksha Samiti a

school is being run i.e. R S Public School which is duly

affiliated Central Board of Secondary Education (CBSE) (copy

of certificate attached) herewith and providing education. The

objects of the society are all for charitable purposes which has

not been doubted or controverted by the learned CIT

(Exemption) in his order.

ITA No. 459/Agr/2017 6

Thus, in the light of the above facts when the revised Form 10B has been filed in the name of society Shri R S Jan Kalyan Shiksha Samiti having PAN AATTS9399H before the learned

CIT(Exemption) on 21.09.2017 which has been taken cognizance of and the objects are charitable in nature as the school is being run for education purpose and there is no infringement of section 13. Hence, we request your honour to

kindly grant the registration u/s 12AA to the society in the name and style of Shri R S Jan Kalyan Shiksha Samiti.

6.

The Ld. DR relied on the order of the CIT(E).

7.

Heard. Admittedly, the objectives of the society are charitable

in nature.

The ld. CIT(E) has rejected the assessee society’s application 8.

for registration u/s 12AA only on the pretext that the society was not doing any charitable activity under section 12AA of the Act, in the name of Shri R S Public School having PAN AAGTS6694C. The ld.

Counsel for the assessee contended that the assessee has filed an application for registration u/s 12AA in the name of Shri R S Public School having PAN AAGTS6694C along with Memorandum of Articles, the audited Balance Sheet, Income & Expenditure Account,

ITA No. 459/Agr/2017 7

copies of Income-tax return etc. of the society i.e. Shri R S Jan Kalyan Shiksha Samiti. The counsel further contended thatduring hearing before the learned CIT(E), an application dated 21.09.2017

(Copy placed on record) was filed wherein it was mentioned that the application be considered in the name of Shri R S Jan Kalyan Shiksha Samiti having PAN AATTS9399Halong with revised Form 10B in the name of Shri R S Jan Kalyan Shiksha Samiti. This

contention of the assessee was found correct.

9.

We find that the Ld. CIT(E) has mentioned the factum of the

original application filed on 08.03.2017 which was in the name of Shri R S Public School and the Memorandum of Articles was in the name of the society i.e. Shri R S Jan Kalyan Shiksha Samiti

however, he has not mentioned the factum of the application dated 21.09.2017 filed during the course of hearing before him, (APB, Pg. 3-4) wherein it was mentioned that the application be considered in

revised Form 10B, in the name of Shri R S Jan Kalyan Shiksha Samiti along with PAN No. AATTS9399H, audited Balance Sheet, Income & Expenditure Account, copies of Income-tax return etc.

assessee’s 10. The learned CIT(Exemption) has rejected application merely stating that the genuineness of the activities

ITA No. 459/Agr/2017 8

could not be established although he has mentioned in his order that the assessee society is registered in the name of Shri R S Jan Kalyan Shiksha Samiti which is primarily engaged in education and is running the Shri R S Public School.It is also seen that the ShriR S Public School is duly affiliated by Central Board of Secondary Education (CBSE), copy of certificate is filed, (APB, Pg.6) and providing education. The objects of the society are all for charitable purposes which has not been controverted by the ld CIT (E) in the impugned order and the ld. CIT (DR).

13.

In the case of ‘Orrisa Cricket Association Vs. CIT(E)’, in ITA No.335/CTK/2017 (AY: 1997-1998), dtd. 20/12/2017, ITAT, Cuttack Bench in its Order (APB,72-102) held that:

“The violation of provisions of Section 13(1)(c) of the Act is a matter which is to ITA No.335/CTK/2017 & ITA No.210/CTK/2016 be looked into by the Assessing Officer while making assessment after grant of registration u/s.12AA of the Act and the Assessing Officer has to act as per the provisions of law.”

14.

The ld. CIT(E) has referred to section 13(3) of the Act, on page 2, running para 2 of the impugned order. The ITAT, Delhi Bench, in the case of ‘Choudary Bisambar Singh Education society

ITA No. 459/Agr/2017 9

Vs. CIT’, (2014) 150 ITD 607, has held that verification of violation of section 13(3) is not the relevant factor for registration of trust u/s 12AA of the Act asit is to be examined by the AO.

Again, the ld. CIT(E)’s observation on page 3, para 6 of the 15. impugned order that Books of account, bank statements and vouchers in respect of expenses claimed were not produced cannot be a reason for refusal of registration to the assessee trust u/s.12AA of the Act.

16.

The ITAT, Delhi Bench, in the case of VidyadayaniSikha Samiti Vs. CIT(E), Lucknow, ITA No 309/Del/2016, (2018), (APB, 50-55) held vide para16 allowed the claim of registration by holding that –

“------------------------ at this stage on granting registration u/s 12A the ld. CIT is required to see the objects of the society and not required to examine the application of income which will have to be undertaken by the Assessing Officer on a year to year basis after the assessee files the return of income claiming exemption u/s 11 of the I.T. Act.”

ITA No. 459/Agr/2017 10

17.

In the above view, We, hold that the impugned order is

unsustainable on facts and inlaw and as such, it is reversed. The

CIT(E) is directed to grant registration u/s.12AA of the Act, to the

assessee in the name of Shri R S Jan Kalyan Shiksha Samiti,

forthwith.

18.

In the result, the appeal of the assessee is allowed.

(Order pronounced in the open court on 10/07/2018)

Sd/- Sd/- (A. D. JAIN) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated:10/07/2018 Aks Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR

ITA No. 459/Agr/2017 11

Date 1. Draft dictated (DNS) 02.07.2018 PS 2. Draft placed before author 07.07.2018 PS 3. Draft proposed & placed before the second member JM/AM 4. Draft discussed/approved by Second Member. JM/AM 5. Approved Draft comes to the Sr.PS/PS PS/PS 6. Kept for pronouncement on PS 7. File sent to the Bench Clerk PS 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order.

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