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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
Both the appeals have been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Exemptions), Chandigarh dated 18.05.2020 where the assessees have raised the following identical grounds of appeal:
“1. That on facts and the circumstances of the case and the provisions of law, rejecting the application of the assessee society for grant of registration under section 10(23C)(vi) of the Income Tax Act, 1961 is incorrect and unjustified.
2. The appellant craves permission to raise additional grounds and to amend or alter the foregoing ground before the appeal is finally decided.”
2. Since, both the appellants have raised the sole issue on identical facts for grant of registration under section 10(23C)(vi) of the Income Tax Act, 1961 and hence, these appeals were heard together and disposed of by this consolidated order for the sake of brevity.
At the outset, the Ld. Counsel for the appellant submitted that an application in form No. 56D was filed separately for M/s SMDRSD College of Education & M/s SMDRSD Collegiate Senior Secondary School on 31.03.2019. The applicant society - M/s SMDRSD college society is an Societies Registration Act, 1860(21 of 1860. He contended that on facts and in the circumstances of the case and the provisions of law, rejecting the application of the assessee society for grant of registration under section 10(23C)(vi) of the Income Tax Act, 1961 is incorrect and unjustified.
He pleaded that the matter may be remanded back to the Ld. PCIT for one more opportunity on the issue of grant of registration under section 10(23C)(vi) of the Income Tax Act, 1961 with the support of additional evidence admitted UNDER RULE 29 OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963 which reads as under:
THE APPELLANT MOST RESPECTFULLY SUBMITS THAT:
The applicant Educational Institutions applied for approval under section 10(23C)(vi) of the Income Tax Act, 1961 before the Worthy Commissioner of Income Tax (Exemptions), Chandigarh.
The Assessee Society asked to submit requisite information, which was submitted vide letters dated 21/01/2020 & 03/02/2020.
The application for approval under section 10(23C)(vi) of the Income Tax Act, 1961 was disposed by the Worthy Commissioner of Income Tax (Exemptions), Chandigarh on 18/05/2020 citing certain objections on the Bye-laws of the Assessee Society. No opportunity was provided to the assessee to submit explanation on the observations of the Worthy CIT(E) on the basis of which applications for approval were rejected.
The appellants therefore pray before the Hon'ble bench to allow submission of additional evidence to clarify and respond to the objections raised by the Worthy
“THE APPELLANT MOST RESPECTFULLY SUBMITS THAT:
S.M.D.R.S.D. College Society, Pathankot was registered under the Societies Registration Act, 1860 in 1979 vide Registration No.34 of 1979-80. The College, i.e. S.M.D.R.S.D. College has been working since 1953-54 which was founded on land given by Chaudhary KeshoDass an eminent philanthropist of his region. The Society has ever since engaged in the field of education imparting knowledge to pupils of all strata of the society. S.M.D.R.S.D. College Society took into its fold, the activities of SMDRSD College Pathankot which is an aided institution financed substantially by the Government of Punjab.
With passage of time, the society started two new institutions namely:
SMDRSD College of Education, affiliated with Guru Nanak Dev University, Amritsar started in 1998.
SMDRSD Collegiate Senior Secondary School affiliated with CBSE, New Delhi and started in 2007/08.
College of Education imparts training in B.ED course & Elementary Teachers Training and has an approved strength of 300 Students. The number of students enrolled for session 2017-18 was 202 and 2018-19 was 274.
CBSE School has 654 students registered on roll for the session 2017-18 & 661 students for 2018-19. Over the Years, the institutions have provided financial help to students by way of concession in fee.”
Per contra, the Ld DR supported the impugned order, and contended that the appellant assessee activities are not in consonance to its objectives and are not in the interest or benefit of the public at large. He further contended that the appellant assessee do not have independent S.M.D.R.S.D. College Society, Pathankot which was registered under the Societies Registration Act, 1860 in 1979 vide Registration No.34 of 1979-
80. Thereby, these M/s S.M.D.R.S.D. College Education and M/s SMDRSD Collegiate Senior Secondary School running under the management of the S.M.D.R.S.D. College Society, Pathankot and using its PAN cannot be treated as an independent entity for the purpose of registration u/s10(23C)(vi) of the Income Tax Act, 1961. However, He has no objection in restoring the matter to the PCIT for one more opportunity to the appellants.
We have heard rival contentions, perused the material on record, impugned order, written submission filed before us. The PCIT discussed that on perusal of the submissions of the applicant, it was noticed that the rights/proprietorship of institutes & properties are restricted to the family itself and not for enduring benefit to the general public and as the properties and rights to run the institutes would be restricted to the members of the family and there would be no transfer of the assets to the society as per the dissolution clause advised by the Societies Act, as per the terms and conditions of the Bye Laws which reads as under:-
6 & 136/Asr/2020 S.M.D.R.S.D. College of Education v. CIT “4. The members of the Governing body individually or collectively, shall have no right to handover or transfer the management or proprietorship of the college or any other Institution under its control, to the Government suo-moto takes possession of the college, under any statutory law, ChKeshoDass, or in the event of his demise or his male successors will have the right to claim full and adequate compensation from the Government or such other body . The amount of Compensation will include the market value of land and buildings of the college, furniture and fitting all other equipment in the premise of the college.
5. In the event of the closure of the Institution for some reasons or the others in case of disaffiliation the property of the college will automatically revert to ChKeshoDass or to his successor in the event of his demise."
The PCIT has noted that even though the applicant in its response did try to project that the society is a public charitable society but the same is not borne from the facts of the case. Relying on the Hon’ble ITAT Amritsar in the case of G.D. Kavita Singla Charitable Trust Vs. CIT-II Amritsar (ITA No 594 (ASR) 2013), he held that the benefit of registration under section 12AA of the Act, cannot be granted to a trust controlled by a single family. The powers of keeping the society properties and rights in own hands of the family invite the coverage of the aforementioned decision.
Accordingly, he held that the societies were not for the benefit of general public and denied the registration to the applicant u/s 12AA of Income Tax Act, 1961, although the appellants sought for registration u/s 10(23C)(vi) of the Income Tax Act, 1961. registration to the applicants u/s 12AA of Income Tax Act, 1961, although the appellants sought for registration u/s10(23C)(vi) of the Income Tax Act, 1961. Meaning thereby, there was a fundamental error in the impugned order of the Ld. PCIT, as the material issue of grant of registration u/s10(23C)(vi) of the Income Tax Act, 1961 is remained unaddressed in the case of both the appellant assesses.
In the above view, we consider it deem fit to restore back the matter to the file of the Ld. CIT(A) to adjudicate the captioned appeals afresh on the issue of grant of registration u/s10(23C)(vi) of the Income Tax Act, 1961, after considering the written submission and evidences filed on record and may be filed before him during the fresh proceedings after granting sufficient opportunity of being heard to the assessee. The PCIT is further directed to consider the fact that both the appellant assessee do not have independent PAN numbers and are using the PAN of the S.M.D.R.S.D. College Society, Pathankot which was registered under the Societies Registration Act, 1860 in 1979 vide Registration No.34 of 1979-
Since, these M/s S.M.D.R.S.D. College Education and M/s SMDRSD Collegiate Senior Secondary School running under the management of the whether the appellant assesses can be treated as an independent entity for the purpose of registration u/s10(23C)(vi) of the Income Tax Act, 1961, in the absence of PAN number. No doubt, the appellant assessees shall cooperate in the fresh proceeding before the Ld. PCIT registration u/s10(23C)(vi) of the Income Tax Act, 1961.
In the result, both the appeals filed by the assessees are allowed for statistical purposes.
Order pronounced in the open court on 17.05.2023