Case Law Details
Shiv Public School Managing Committee Vs. CIT (Exemptions) (ITAT Delhi)
1. Briefly stated the facts necessary for adjudication of the controversy at hand are : the application moved by the assessee society for registration under section 12AA of the Income-tax Act, 1961 and for according sanction u/s 80G(5)(vi) of the Act have been rejected by the ld. CIT (Exemptions) on the grounds inter alia that gross receipts in all the five years are far in excess of Rs. 1 crore and the assessee society has wrongly claimed exemption u/s 10(23C)(iiiad) of the Act; that assessee society have been charging fee from students under various different heads featuring in the income and expenditure statement and that the land in question on which the senior wing of the school is being run has been taken on lease from the founder members of the society while the junior wing of the school is being run on the land which was donated by M/s. Agarwal Sabha Sohna; that since the land in question on which the main school is running does not belong to the society, the property in question for charitable purpose also remains in question. Consequent upon rejection of registration u/s 12AA, the CIT (E) also rejected the application moved by the assessee society u/s 80G of the Act.
2. Feeling aggrieved, the assessee company has come up before the Tribunal by challenging the impugned orders passed by ld. CIT by way of filing the present appeals.
3. Undisputedly, assessee society being in existence since 21.08.1987 has been running a school under the name and style as Shiv Public School. It is also not in dispute that the amended memorandum of association of the assessee society has been registered with the Registrar of Societies in the month of 08.01.2014. It is also not in dispute that the assessee society has not been granted any kind of exemption since its inception for the last so many years. It is also not in dispute that assessee society has claimed exemption u/s 10(23C)(iiiad) of the Act since FY 2011-12 despite the fact that its total receipt during the FYs 2011- 12 to 2014-15 was more than Rs.1 crore.
4. Undisputedly, under the amended provisions of section 2(15) of the Act imparting education falls within the charitable purpose. No doubt, for providing registration u/s 12A of the Act, Commissioner is empowered to call for any information/ documents from the society to satisfy himself about the object of the society and the genuineness of its activities, but at the same time, CIT is not to sit over the application u/s 12A as an Assessing Officer for this purpose.
5. In the instant case, ld. CIT (E) perused the details of the corpus funds for the last five years and noticed that the assessee has claimed suo motu exemption u/s 10(23C)(iiiad) which were not admissible under law, its receipt being in excess of Rs. 1 crore. CIT also noticed from the detail of corpus fund for the last year that the school is collecting money from the students in the name of sports funds, maintenance fund, teachers welfare fund etc. which appears to have been excluded from the gross receipt.
6. However, we are of the considered view that when assessee society is admittedly into imparting education for the general public utility, the registration cannot be declined on the ground that the assessee society has been collecting money from the students in the name of various funds. More particularly when it is not the case of the CIT (E) that the activities being carried out by the assessee society are for profit making.
7. More so, in case quality education is to be provided funds for extra-curricular activities to enhance the overall profile of the students are required. In case collecting of such funds are found to be not in consonance with aims and objects of the society, the AO can disallow the same while making assessment on year to year basis. On the basis of the fact that the assessee society has wrongly claimed exemption u/s 10(23C)(iiiad), the registration cannot be declined.
8. The ld. CIT (E) has also expressed apprehension that building on which senior wing of the school is functioning has been taken on lease from the founder member of the society and there is a possibility of accretion being made to the school building may directly be beneficial to the founder member in the event of treatment of lease deed expiring but this apprehension is merely based upon surmises and conjectures. Again these facts can be examined on year to year basis by the AO at the time of
9. So, in these circumstances, we are of the considered view that the order passed by the ld. CIT (E) firstly declining registration u/s 12AA of the Act and consequently, declining the permission u/s 80G(5)(vi) of the Act is not sustainable in the eyes of law. Hence, CIT (E) is directed to grant registration to the assessee society forthwith also with consequent approval u/s 80G of the Act. Consequently, both the appeals filed by the assessee are allowed.
