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M/s Sushil Ansal Foundation, 115-Ansal Bhawan, 16-K.G.Marg, New Delhi. vs DCIT(E), Aayakar Bhawan, Distt. Centre, Laxmi Nagar, Delhi-92.
November, 18th 2013
                                          1                I.T.A .No.-3947 & 3948/Del/2011

                     DELHI BENCH: `G' NEW DELHI


                        I.T.A .No.-3947 & 3948/Del/2011

  M/s Sushil Ansal Foundation,                DCIT(E),
  115-Ansal Bhawan, 16-K.G.Marg,              Aayakar Bhawan, Distt. Centre,
  New Delhi.                             vs   Laxmi Nagar,
  PAN-AAPCS1285H                              Delhi-92.
  (APPELLANT)                                 (RESPONDENT)

             Appellant by       Sh. H.Mitter, CA
             Respondent by      Sh. Ramesh Chandra, CIT DR


      These are two appeal filed by the assessee against the order dated 27.07.2011
of DIT(E) u/s 12A(1)(b) r.w.s 12A of the Income Tax Act, 1961 and order u/s 80G
consequent to the order u/s 12A(1)(b) r.w.s 12A of the Income Tax Act, 1961 on the
following grounds :-
      "1.    That the impugned order passed by the learned Director of
             Income-tax (Exemption) refusing registration to the appellant u/s
             12AA of the Income-tax Act is wholly erroneous, illegal and
             based on irrelevant and flimsy grounds.
      2.     That the learned D.I. (E) failed to appreciate that the appellant
             was a company registered u/s 25 of the Companies Act, 1956
             under a licence granted by the Central Government after its
             satisfaction that:
             i)     the company was formed for promoting art, science,
                    religion, charity or any other useful object, and
             ii)    intends to apply its income in promoting its objects and to
                    prohibit the payment of any dividend to its members, i.e. it
                    is not a profit making company.
             Thus with the grant of registration, the fulfillment of the above
                                  2                I.T.A .No.-3947 & 3948/Del/2011

     conditions is outside the place of any controversy.
3.   That the learned D.I. (E) has not pointed out any of its 'Main
     Object' as of not charitable nature.
4.   That the learned D.I. (E) wrongly observed that objects specified
     as incidental to were also the main objects and that the Main
     Objects were of business nature with profit motive and against
     the provisions of Section 2(15) of the Income-tax Act. He also
     failed to appreciate the provisions of section 13(1)(d) of the
     Companies Act, 1956 in this behalf.
5.   That the impugned order is wholly illegal and unsustainable in
     as much as u/s 12AA of the Income-tax Act, at the stage of
     granting registration the CIT or D.I.(E) has only to satisfy
     himself about the genuineness of the activities and objects of the
     trust or institution. Issues concerning the application of income,
     utilization of funds and satisfaction of other conditions specified
     in sections 11 and 13 of the Income-tax Act are always subject to
     scrutiny while assessing the income of the trust from year to
6.   That on the facts and in the circumstances of the case, the
     learned D.I. (E) has further erred in observing that the society
     had not organized any activity except giving two cheques
     aggregating to Rs.50 lacs to its group concern Ansal Properties
     & Infrastructure Limited and that the purpose of this amount
     was not known. The above observations are totally contrary to
     facts and evidence on record as evidenced by copy of the
     agreement 27th day of January,2011 for purchase of Higher
     Education plot of land by the Appellant for establishing the
     Educational Institute filed as per requirement of the learned
     D.I.(E)which clearly shown that the land has been specially
     allotted by the group concern Ansal Properties & Infrastructure
     Limited for establishing higher education Ansal Institute of
     Technical & Management (AITM); and that Rs.50 lacs were
     paid as first deposit towards the cost of the land. He further
     failed to appreciate that with the step for purchase of higher
     education plot at a consideration of Rs.12.60 crores, the first
     activity in the direction of education commenced and it cannot be
     said that no charitable activity had been done.
7.   That even otherwise, independent of and without prejudice to the
     foregoing grounds, the order passed by the learned D.I.(E)
     refusing registration was wholly illegal and liable to be quashed
     as no reasonable opportunity had been provided by him to the
                                          3               I.T.A .No.-3947 & 3948/Del/2011

            appellant for meeting and satisfying the objections in his mind.
      8.    That the order of the learned D.I.(E) is bad in law and on facts of
            the case.
      9.    That the Appellant craves leave to add, alter or amend or forego
            any grounds of appeal at the time of hearing."

2.    The appeal argued by Smt. Renuka Jain Gupta, Sr. DR was refixed for
clarification by the Bench. On the next date it was argued by Sh. Ramesh Chandra,
CIT DR who stated that as per the Departmental instructions appeals arising out of
orders u/s 12AA/12A have to be necessarily argued by CIT DR's only and not by Sr.
DR. In the peculiar aforementioned facts and circumstances, both the sides were
required to address the issue afresh. Accordingly both the sides argued, Ld. AR, Sh.
H.Mitter, CA was required to address the shortcoming pointed out in as much as the
grounds raised were argumentative and not as per the ITAT Rules. The LD. AR
responded that Ground No-1 would cover his grievance and all the other grounds
may be treated as arguments in support of the said ground. He was further required
to address Ground No-7 wherein the assessee has agitated lack of opportunity. In
response thereto inviting attention to the impugned order it was his submission that
whatever was required to be filed by the DIT(E) was filed however on the legal
objections which were posed by the DIT(E) in deciding the issue against the
assessee it was argued that they were not confronted to the assessee.        It was his
argument that had the assessee been confronted by the objections which were
prevailing in the mind of the DIT(E), the assessee would have responded to them.
Since no such opportunity was provided the assessee had to file additional evidence
before the Tribunal to show that incidental/ancillary objects were for promoting the
main objects. It was his submission that at the time of grant of Registration what is
necessary to be considered are the objects and there is no occasion to consider the
applicability of section 11, 12 & 13 which is a settled legal position. Reliance was
placed on the following decisions referred in the paper Book :-
                                          4               I.T.A .No.-3947 & 3948/Del/2011

       S.No. Particulars                                                Page No.
       1)    Decision of Supreme Court in the case of ACIT               1 to13
             vs Thanthi Trust reported in (2001) 115 Taxman 126 (SC)
       2)    Decision in the case of IILM Foundation Academy           14 to 20
             vs CIT reported in (2011) 44 SOT 37 (Del)
       3)    Decision of High Court of Madras in the case of New       21 to 25
             Life in Christ Evangelistic Association (NLC) vs CIT
             Reported in (2000) 111 Taxman 16 (Mad)
       4)    Decision of All India Tax Tribunal Judgements in the      26 to 29
             Case of Ajit Education Trust vs CIT reported in (2010)
             134 TTJ (Ahd) 483
       5)    Decision of All India Tax Tribunal Judgements in the      30 to 35
             Case of Bhagwan Mahavir Purusharth Prerna Nidhi
             Nyas vs CIT reported in (2012) 144 TTJ (Jp) 379
       6)    Decision of All India Tax tribunal Judgements in the      36 to 38
             case of Modern Defence Shikshan Sansthan vs CIT
             reported in (2007) 108 TTJ (Jd) 732
       7)    Decision of High Court of Madras in the case of           39 to 54
             Director of Income Tax (Exemption) vs Willington
             Charitable Trust reported in (2011) 225 Taxation 4 (Mad.)."

3.     Apart from that reliance was further placed upon the following orders:-
       1.    Aggarwal Mitra Mandal Trust vs. DIT(Exemption) (2007) 293
             ITR AT 259 (Del);
       2.    Mahatma Gandhi Charitable Society vs CIT (2013) 142 ITD 568
       3.    New Life in Christ Evangelistic Society (NLC) vs. CIT (2000) 111
             Taxman 16 (Mad);
       4.    Bhagwan mahavir Purusharth Prerna Nidhi Vyas vs CIT (2012)
             144 TTJ (Jai) 379;
       5.    Ajit Education Trust vs CIT (2010) 134 TTJ (Ahd.) 483; and
       6.    Modern Defence Shikshan Sansthan vsCIT (2007) 108 TTJ (Jd)

3.1.   It was submitted that had the opportunity been granted the assessee would
have been able to address the distinction which should have been considered
between the main objects and the objects incidental to the main objects as
considered in IILM Foundation Academy vs CIT (2011) 44 SOT 37 (Del.); Dharma
                                           5                I.T.A .No.-3947 & 3948/Del/2011

Deepti vs CIT (1978) 114 ITR 454 (SC); Social Pedia Knowledge Foundation vs
DIT (Exemption) (2013) 22 ITR (Trib) 236 (Chennai).
3.2.   Referring to the facts it was his submission that the society was Registered u/s
25 of the Companies Act, 1956 which mandates that the income and property of the
company whensoever derived, shall be applied solely for the promotion of the
objects as stated qua the Memorandum of Association and that no portion thereof
shall be paid or transferred directly or indirectly by way of dividend bonus or
otherwise by way of profit to persons who had any time or have been members of
the said company or to any persons claiming through them. Clause 7 of the licence
further provides that no alternation shall be made to the Memorandum of
Association in force unless the alteration has been submitted to and approved by the
Central Government.
3.3.   It was stated that the copy of the Registration u/s 25 of the Companies Act,
1956 is placed at paper book page 10 and the Memorandum of Association of
company is placed at pages 1 to 8.
4.     The Ld. CIT DR inviting attention to the impugned order submitted that as far
as the impugned order is concerned, the DIT(E) has specifically addressed the
reasons on the basis of which Registration has been denied to the assessee on which
he would place reliance. It was also his stand that if the Bench is inclined to agree
with the Ld. AR's submissions that specific opportunities to address the objections
taken into consideration for denial of relief was not confronted to the assessee then it
was his vehement plea that the issue may be restored to the DIT(E) instead of
deciding the issue in the present forum as these arguments and additional evidence
now sought to be relied upon in its favour by the assessee was never made available
to the DIT(E). A perusal of the record also shows that the Co-ordinate Bench on
28.02.2012 had admitted additional evidence which consisted of the following
documents and evidences:-
                                           6              I.T.A .No.-3947 & 3948/Del/2011

       "S.No. PARTICULARS                                           Page No. of
                                                                    Paper Book
       1)      Copy of the Audited Balance Sheet and Income &           1to 12
               Expenditure Account dated 4th August, 2011 of the
               Appellant Company for the year ended 31.3.2011
       2)      Copy of the Registered Sale Deed dated 27.4.2011        13 to 30
               Executed by Ansal Properties & Infrastructure Limited
               In respect of sale of educational plot to the appellant
       3)      Copy of licnece granted by the Central Government u/s 31 to 32
               25 of the Companies Act, 1956."

5.     In the afore-mentioned peculiar facts and circumstances, we deem it
appropriate to restore the issue back to the DIT(E). Once additional evidence has
been admitted by a Co-ordinate Bench judicial propriety demands that the same
should be made available to the authority before whom it ought to have been filed
and in the circumstances it would not be appropriate to give any finding either
legally or factually as the veracity of the facts and arguments based thereon need to
be taken into consideration before deciding the issue. Since the outcome in ITA No-
3948/Del/2011 is dependent upon the finding arrived at in ITA No.-3947/Del/2011
accordingly the same is also restored to the file of the DIT(E) who shall decide the
same in accordance with law after giving the assessee a reasonable opportunity of
being heard by way of a speaking order.
6.     In the result, ITA No-3947 & 3948/Del/2011 are allowed for statistical
       The order is pronounced in the open Court on 14th November, 2013.

     Sd/-                                                                Sd/-
(S.V.MEHROTRA)                                                    (DIVA SINGH)
ACCOUNTANT MEMBER                                            JUDICIAL MEMBER

Dated: 14/11/2013
*Amit Kumar*
                     7    I.T.A .No.-3947 & 3948/Del/2011

Copy forwarded to:
1.   Appellant
2.   Respondent
3.   CIT
4.   CIT(Appeals)
5.   DR: ITAT
                         ASSISTANT REGISTRAR
                               ITAT NEW DELHI
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