Rupantaran Society, Dehradun vs Assessee

BEFORE Smt. DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. No. 6184/Del/2013 Assessment year : Rupantaran Society, Vs. CIT, 13-A, Subhash Road, Through its Chairman Aayakar Bhawan, Dehradun Mr. Asher H Wasker, 120/77, Dakpatti, Rajpur, Dehradun GIR / PAN:AABTR1412J (Appellant) (Respondent)

Appellant by : Shri Ashwani Kumar, CA Respondent by : Shri Vivek Wadekar, CIT DR

Date of hearing : 05.03.2015 Date of pronouncement : 11.03.2015

ORDER

PER T.S. KAPOOR, AM:

This is an appeal filed by assessee against the order of CIT dated 19.09.2013 u/s 12AA(1)(b)(ii) of the I. T. Act, 1961. The CIT Dehradun vide this order had rejected the application filed by society for registration u/s 12A(a) of the Act. The CIT wanted the assessee to furnish the details as mentioned on page 1 of his order in response to which the assessee filed written submissions. However, from the submissions filed by assessee, the CIT held that assessee was engaged in earning from education and printing of stationery and books whereas the main objective of the assessee was to impart education therefore, he denied registration by holding as under:

2 ITA No.6184/Del/2013 "3. A perusal of the above material, however, brings out that the trust is apparently a commercial institute, engaged in sale of education, sale and printing or stationery and books and the business is expanding year after year. There is an increase in capital expenditure also which Shows that the society is engaged in expansion and earning more receipt rather than concentrating on the objective of imparting education. The activities or the society, are commercial in character and not charitable precisely as concluded by the Hon'ble High Court of Uttarakhand on similar facts in the case of CIT Vs. Queens Education Society reported in 177 Taxman 321.

4. Further, in the ease of National institute or Aeronautical Engineering Educational Society vs. CIT(2009) -184 Taxman 264(Uttarakhand) it was observed that in the expression "charitable purpose", 'charity' is the soul of the expression, Mere trade or commerce in the name of education cannot be said to be a charitable purpose, The Hon'ble High Court held that the CIT was correct in rejecting the Section 12AA as the society was charging substantial fees from the students and making huge profits, To quote the Hon'ble High Court "The expression 'not involving carrying on of any activity for profit' cannot be rend with expression 'education', but that does not make every kind of pure commercial activity in the name of education 'a charitable one. Therefore, assessee's case is a clear case of sale of education, and therefore, it could not be considered as a charitable institution u/s 2(15) because the purpose of the organization as a whole is to make profit.

5. Keeping in view the above facts & discussion, the application filed by the society for registration u/s 12A (a) is rejected."

2. Ld. A.R. at the outset submitted that the assessee is a duly registered society under Societies Registration Act and was incorporated to promote transformational development of communities and individuals, irrespective of caste and creed and it had been engaged for the purpose of achieving its objectives. The assessee was engaged in various activities which included child and adult education, women empowerment, medical camps etc. It was submitted that all details as required by CIT were filed by assessee and Ld. 3 ITA No.6184/Del/2013

CIT without giving the findings on the objects clause of association and without providing an opportunity of being heard, decided the issue against the assessee. It was submitted that at the time of registration, the objects as listed in the trust deed, ought to have been considered by Ld. CIT which in any case are charitable and which fact has been ignored by Ld. CIT.

3. Ld. D.R. supported the order passed by CIT.

4. We have heard rival parties and have gone through the material placed on record. We find that Section 12AA gives the procedure for registration as a charitable society. The procedure for registration as enumerated in Section 12AA is reproduced as under:

"S.12AA. (1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) of sub-section (1) of section 12A, shall:

(a) Call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and

(b) After satisfying himself about the objects of the trust or institution and the genuineness of its activities, he-

(i) Shall pass an order in writing registering the trust of institution;

(ii) Shall, if he is not so satisfied, pass an order in writing refusing to register the trust of institution, and a copy of such order shall be sent to the applicant:

Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard."

5. From the above provisions of Section 12AA, we find that before granting registration/refusing registration, the CIT has to satisfy himself about the objects of the trusts / institution and also has to satisfy that the activities of the trust or institution are genuine. Further, if CIT is not 4 ITA No.6184/Del/2013

satisfied with the genuineness of the activities or objects of the trust, then before refusing to register under this section, he has to give reasonable opportunity to the assessee of being heard, which the Commissioner has not provided. In view of above facts, we deem it appropriate to set aside the issue to the office of CIT, Dehradun who shall pass speaking order after providing appropriate opportunity to the assessee of being heard and will decide the matter in accordance with law. Ld. CIT will make endeavor to pass such order within a period of three months from the date of receipt of this order. The assessee is also directed to cooperate and attend the proceedings before CIT so that application can be disposed off within reasonable period of three months.

6. In view of above, appeal filed by assessee is allowed for statistical purposes.

7. Order as pronounced orally in the open court on the conclusion of hearing is pronounced in writing on this 11th March, 2015.

Sd./- Sd./- ( DIVA SINGH) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER th Date: 11 March, 2015 Sp Copy forwarded to:- 1. The appellant 2. The respondent 3. The CIT 4. The CIT (A)-, New Delhi.

5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi. True copy.

By Order

(ITAT, New Delhi).

5 ITA No.6184/Del/2013 S.No. Details Date Initials Designation 1 Draft dictated on 5/3 Sr. PS/PS 2 Draft placed before author 5,9,9, Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement Sr. PS/PS 7 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to Head 8 Clerk 9 Date on which file goes to A.R. 10 Date of Dispatch of order