S.M.D.R.S.D COLLEGIATE SENIOR SECONDARY SCHOOL ( RUN),PATHANKOT vs. COMMISSIONER OF INCOME T6AX ( EXEMPTIONS), CHANDIGARH

Per Dr. M. L. Meena, AM:

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.

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.

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

3 I.T.A. Nos. 135 & 136/Asr/2020 S.M.D.R.S.D. College of Education v. CIT ongoing entity in operation since 20.04.1979 and registered under

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

4 I.T.A. Nos. 135 & 136/Asr/2020 S.M.D.R.S.D. College of Education v. CIT CIT(E) in the Order rejecting the applications for approval under section 10(23C)(vi) of the Income Tax Act, 1961.”

“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:

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.”

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

5 I.T.A. Nos. 135 & 136/Asr/2020 S.M.D.R.S.D. College of Education v. CIT PAN numbers in both the cases 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-

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.

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 I.T.A. Nos. 135 & 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.

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.

7 I.T.A. Nos. 135 & 136/Asr/2020 S.M.D.R.S.D. College of Education v. CIT 7. It is evident from the above, that the Ld. PCIT had denied the

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.

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-

Collegiate Senior Secondary School running under the management of the

8 I.T.A. Nos. 135 & 136/Asr/2020 S.M.D.R.S.D. College of Education v. CIT S.M.D.R.S.D. College Society, Pathankot and using its PAN, and hence

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.

statistical purposes.

Order pronounced in the open court on 17.05.2023

Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr./P.S.* Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order