TaxTMI 
TaxTMI 
2017 (10) TMI 828
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....y observing that activities of the society are not in the nature of charitable and has further erred in relying upon the assessment order passed u/s 143(3) in assessee's own case for AY 2008-09. 2. That Ld. CIT has erred in law and on facts in cancelling the registration u/s 12A by making the following observations:- (a) In the assessment order passed u/s 143(3), it has been established that income of the assessee society is not eligible for exemption u/ 11 & 12 of the IT Act, 1961. (b) Income of the assessee is from fee and other related levies etc. which cannot constitute the income falling within the ambit of classes as defined in section 11 & 12. (c) The receipts of the society in the form of fee and other charges do not qualify for the exemption u/s 11 & 12 of the IT Act, 1961. (d) The assessee's activities are commercial in nature and there is no element of charity. 3. That in any view of the matter and in any case, action of Ld CIT in canceling the registration under section 12AA is bad in law and against the facts and circumstances of the case and is contrary to the principles of natural justice as the impugned order has been passed without granting adequa....
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....n 31/10/ 2010, Therefore, the surplus shown by the Society of Rs. 5 79743/- is neither eligible for exemption under section 11 and 12 or under section 10 (23C) of the act. He made several other addition for that particular year. Proceedings before Ld CIT 5. In view of the above assessment order, the Ld. Commissioner of income tax issued show cause notice to the assessee that why it's registration under section 12 A of the income tax act, 1961 may not be cancelled. In response to this notice the assessee filed certain written submissions on various dates and relied upon certain decisions. However, the Ld. CIT rejected the contentions of the assessee and held that as per order under section 143 (3) of the income tax act, 1961 passed by the assessing officer for assessment year 2008 - 09, it has been established that the income of the assessee society is not eligible or exemption under section 11 and 12 of the income tax act. The main reasons given by him in his order, are as under:- a. that the income derived by the assessee is from fees collected from the students and is not income derived from property held under trust. b. The fees received from the students is not a voluntary....
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....oordinate bench in case of the assessee for assessment year 2005 - 06 and 2008 - 09 dated 27/11/2013 wherein the issue was considered and the coordinate bench has held that the approach of Department regarding charging of the fees holding against the assessee was not approved. Therefore he submitted that the assessee trust, society should have been granted and continued to have been granted the registration under section 12 AA of the income tax act. Arguments of the revenue 8. The Ld. departmental representative relied upon the order of the Ld. CIT. Reason and Decision 9. We have carefully considered the rival contentions and carefully perused the order of the Ld. CIT passed under section 12 A A cancelling the registration of the trust w.e.f. 01/04/2007. Hon'ble Supreme Court recently in Queen's education society versus CIT 372 ITR 699, has held that where a surplus is made by an educational institute which is also ploughed back for educational purpose, the said institution was to be held existed solely for educational purposes and not for the purposes of the profit. The Hon'ble Supreme Court further held that:- "11. Thus, the law common to Section 10(23C) (iiiad) and (vi) may ....
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....n the earlier appeals) has enabled the appellant to acquire its own property, acquire computers, library books, sports equipments etc. for the benefit of the students. And more importantly the members of the society have not utilized any part of the surplus for their own benefit. The AO wrongly interpreted the resultant surplus as the main objective of the assessee trust. As held above, profit is only incidental to the main object of spreading education. If there is no surplus out of the difference between receipts and outgoings, the trust will not be able to achieve the objectives. Any education institution cannot be run in rented premises for all the times and without necessary equipment and without paying to the staff engaged in imparting education. The assessee is not getting any financial aid/assistance from the Government or other philanthropic agency and, therefore, to achieve the objective, it has to raise its own funds. But such surplus would not come within the ambit of denying exemption u/s 10(23C) (iiiad) of the Act.' 13. Having set out the ITAT order, the Uttarakhand High Court held: "Thus, in view of the established fact relating to earned profit, we do not ....
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....ess is carried on in the premises within the meaning of sub-section (5)?' 17. In answering question one, the Court held that School Education would only come within an exemption if it involved public benefit. Having so held, the Court stated: '78. The rulings arising out of Income Tax Act may not be of great help because in the Income Tax Act "charitable purpose" includes the relief of the poor, education, medical relief and the advancement of any other object of general public utility. The advancement of any other object of general public utility is not found under the Delhi Municipal Corporation Act. In other words, the definition is narrower in scope. This is our answer to question No. 1.' 18. Secondly, the extracted portion from the said judgment in the judgment of the Uttarakhand High Court concerned itself with question two, namely, whether the educational society is supported wholly or in part by voluntary contributions. It is part of paragraph 80 of the said judgment. If the sentences after the quoted portion are also set out, it becomes clear that the passage relied upon by the High Court has absolutely nothing to do with the present case. The entirety....
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....sessee, however, is entitled to claim the benefit of Section 11(1)(a). In the present case, the assessee has applied Rs. 8 lakhs for charitable purposes in India by purchasing a building which is to be utilised as a hospital. This income, therefore, is entitled to an exemption under Section 11(1). In addition, under Section 11(1)(a), the assessee can accumulate 25% of its total income pertaining to the relevant assessment year and claim exemption in respect thereof. Section 11(1)(a) does not require investment of this limited accumulation in government securities. The balance income of Rs. 1,64,210.03 constitutes less than 25% of the income for Assessment Year 1970-71. Therefore, the assessee is entitled to accumulate this income and claim exemption from income tax under Section 11(1)(a)." We set aside the judgment of the Uttarakhand High Court dated 24th September, 2007. The reasoning of the ITAT (set aside by the High Court) is more in consonance with the law laid down by this Court, and we approve its decision" 10. Therefore in view of the above decision of the Hon'ble Supreme Court, we do not find that assessee is not engaged in the educational activities as merely chargin....
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....on'ble Supreme Court stated above. In the result ITA No. 4554/del/2012 filed by the assessee is allowed. ITA no 4555 / Del/2012 for AY 2006-07 14. This appeal is filed by the assessee against the order of the ld CIT(A)-II, Dehradun dated 02.07.2012 for the Assessment Year 2006-07. 15. The assessee has raised the following grounds of appeal in ITA No. 4555/Del/2012 for Assessment Year 2006-07 :- "1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order and that too without complying the mandatory conditions of section 147 to 151 of the Income Tax Act, 1961 and reopening of the case and framing the impugned assessment order is bad in law and beyond the jurisdiction of the Ld. A.O. 2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs. 23,71,886/- out of salary claimed and that too relying upon the assessee's case for AY 2008-09 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts ....
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....ing of the assessment is concerned, no arguments were advanced before us by the Ld. authorized representative. Therefore ground No. 1 of the appeal of the assessee is dismissed. 20. Regarding the ground No. 2 and ground No. 3 of the appeal of the assessee. We have carefully perused the order of the coordinate bench where the identical issue was considered in paragraph No. 2, where the salary was disallowed. On the ground that employees Provident fund has not been paid as well as the denial of deduction under section 11 and 12 of the income tax act were considered. The coordinate bench has set aside the whole issue back to the file of the Ld. assessing officer vide para No. 3 of that order. In view of this we also set aside ground No. 2 and 3 of the appeal of the assessee back to the file of the Ld. assessing officer with similar direction as contained in that paragraph No. 3 of the order of the coordinate bench. In the result ground No. 2 and 3 of the appeal of the assessee is allowed with about direction. 21. In the result ITA No. 4555/del/2012 filed by the assessee for assessment year 2006 - 07 is partly allowed for statistical purposes. ITA No. 4556/del/2012/assessment year 2....