Case Law Details
Chandigarh Institute of Hotel Management Vs CIT (ITAT Chandigarh)
ITAT Chandigarh held that CIT(E) cannot grant registration to an institution as he deems fit. Here, CIT(E) has granted registration to the assessee as Charitable Institution involved in “advancement of other objects of public utility” instead of Charitable Institution engaged in education activity as applied by the assessee.
Facts- The assessee as a charitable institution engaged in the education activity and rather given the registration u/s 12A of the Income Tax Act, 1961 as Charitable Institution involved in the “advancement of other objects of general public utility”. Being aggrieved, the present appeal is filed.
Conclusion- Held that it is not the prerogative of the ld. CIT (E) to grant registration to an Institution, he deems fit without going into the merits of the case. The case of the assessee has been that it is involved in education activity and is entitled to grant of registration as charitable Institution involving educational activity, but ld. CIT (E) granted registration to the assessee as an Institution involved in “advancement of other objects of public utility”. The aforesaid cryptic order of the ld. CIT (E) is not sustainable in the eyes of law at all, especially when the ld. AO has allowed the application of the assessee for approval for grant of exemption u/s 10(23C)(iiiab) of the Act for assessment year 2013-14.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
The present appeal has been preferred by the assessee against the order dated 09.06.2020 of the Commissioner of Income Tax (Exemption), Chandigarh [in short ‘ld. CIT(E)’] pertaining to 2016-17 assessment year. This is the second round of litigation before this Tribunal.
2. The assessee in this appeal is aggrieved by the action of the ld. CIT(E) in not granting registration to the assessee as a charitable institution engaged in the education activity and rather given the registration u/s 12A of the Income Tax Act, 1961 (in short ‘the Act’) as Charitable Institution involved in the “advancement of other objects of general public utility”.
3. The brief facts of the case are that earlier the assessee filed an application for registration u/s 12A of the Act on the ground that the assessee was involved in the educational activity and hence, was eligible for registration as a Charitable Institution to claim deduction u/s 11 of the Act. The said application of the assessee was rejected by the ld. CIT(E).
4. Being aggrieved, the assessee preferred appeal before the Tribunal.
5. The said appeal of the assessee bearing ITA No. 1021/CHD/2016 was adjudicated alongwith the appeal of the assessee for assessment year 2013-14 bearing ITA No. 462/CHD/2017 agitated against the denial of exemption to the assessee claimed u/s 10(23C)(iiiab) of the Act. The Tribunal decided both the appeals of the assessee vide common order dated 21.08.2018. In its appeal against the denial of exemption u/s 10(23C)(iiiab) of the Act, the assessee had claimed that the assessee has been running an educational Institution in the name and style of Chandigarh Institute of Hotel Management& Catering Technology which was solely for the purpose of education and not for profit and that the said educational Institute was separate from the Hotel activity run by the assessee. That the hotel and Educational Institute were separate entities and separate books of account were being maintained. The Tribunal considering the above submissions of the assessee restored the matter to the file of the Assessing Officer (in short ‘the AO’) directing as under :
“9………. In view of this, the matter requires to be remanded back to the file of the Assessing Officer to correctly apply the provisions of section 10(23C)(iiiab) of the Act and to examine and verify whether the educational institution run by the assessee, irrespective of the other activity of running of the hotel of the assessee, is run solely for educational purposes and not for profit and whether the said institution is substantially financed by the Government. If the institute is found to qualify the above conditions of section 10(23C)(iiiab), the assessee will be entitled to claim exemption in respect of income received by it on behalf of such educational institution.”
6. The Tribunal further taking note of the above findings given in respect of the claim of exemption u/s 10(23C)(iiiab), restored the matter in relation to the registration u/s 12A of the Income Tax Act for the assessment year under consideration, directing as under :
“11. Both the Ld. representatives of the parties have submitted that since the findings of the Ld. CIT(E)) in this case was based on the findings of the Assessing officer holding that the assessee was running a hotel business along with an educational institute and since the matter has been restored to the file, of the Assessing officer, in respect of ITA No. 462/Chd/2017 (assessment year 201314), as observed above, the matter in this appeal is also be restored to the file of Ld. CIT(E) to examine afresh in accordance with law.
12. In view of the above submissions of both the Ld. Representatives of the parties, the matter in this appeal is restored to the file of Ld. CIT(E) for decision afresh in accordance with law.”
7. A perusal of the above directions given by the Tribunal vide order dated 21.08.2018 (supra) would reveal that for the assessment year under consideration i.e. assessment year 201617, the Tribunal has taken note of the fact that since the ld. CIT(A) in denying registration to the assessee u/s 12A of the Act as charitable Institute involved in the educational activity, has based his findings on the basis of the order of the AO denying exemption u/s 10(23C)(iiiab) and since the matter in relation to the grant of exemption u/s 10(23C)(iiiab) has been restored to the file of the AO, therefore, the Tribunal also restored this matter to the file of the ld. CIT(A) for deciding the application of the assessee for registration u/s 12A of the Act afresh. The ld. Counsel for the assessee, at this stage has further invited our attention to the order of the AO dated 29.12.2018, whereby, the AO in the set aside proceedings has accepted the contention of the assessee and allowed exemption to the assessee u/s 10(23C)(iiiab) of the Act holding the assessee as an Institute run solely for educational purposes and maintaining separate books of account and has also received the grants from the Government. However, the ld. CIT (E) in the impugned order in relation to the grant of registration u/s 12A of the Act, has not discussed at all regarding the contention of the assessee that it was involved in educational activity and was entitled to be registered as charitable institution involved in education activity. The ld. CIT (E) by way of a cryptic order and without any discussion has held, “Registration u/s 12AA is hereby granted to the applicant as a “Advancement of other objects of general public utility” on, inter alia, the following conditions, as an appeal effect to the order of Appellate Tribunal…”.
8. The ld. CIT (E) has totally and miserably failed to comply with the directions of the Tribunal and to decide the issue on merits. It is not the prerogative of the ld. CIT (E) to grant registration to an Institution, he deems fit without going into the merits of the case. The case of the assessee has been that it is involved in education activity and is entitled to grant of registration as charitable Institution involving educational activity, but ld. CIT (E) granted registration to the assessee as an Institution involved in “advancement of other objects of public utility”. The aforesaid cryptic order of the ld. CIT (E) is not sustainable in the eyes of law at all, especially when the ld. AO has allowed the application of the assessee for approval for grant of exemption u/s 10(23C)(iiiab) of the Act for assessment year 2013-14.
9. In view of this, impugned order of the ld. CIT (E) is hereby set aside and the matter is restored to the file of the ld. CIT (E) with a direction to decide the issue as per directions given by the Tribunal by way of a clear cut finding and by way of a speaking order regarding the claim of the assessee being a charitable Institution involved in the activity of imparting education. Needless to say that the assessee will be given proper and adequate opportunity to explain his case.
10. In the result, appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the Open Court on 21st July, 2023.
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