TMI Blog2018 (4) TMI 1359X X X X Extracts X X X X X X X X Extracts X X X X ..... aking cannot in any way effect the genuineness of the activities carried out by the applicant/assessee. The aforesaid contention of the Ld.CIT(E) is, therefore, dismissed by us. No merit in the contention of the Ld.CIT(E) that in the absence of dissolution clause in the Memorandum of Association of the assessee, the provisions of section 13(1)(c) of the Act were attracted since the said dissolution clause had been amended way back in 2008 itself providing for the transfer of the assets and funds of the society to another society with similar aims and objects in the event of the dissolution of the applicant assessee. - Decided in favour of assessee. - ITA No.1262/Chd/2017 - - - Dated:- 9-4-2018 - SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER For The Appellant : Shri T.N. Singla, Adv. For The Respondent : Manu Malik, CIT DR ORDER PER ANNAPURNA GUPTA, A.M.: This appeal has been preferred by the assessee against the order of Ld. Commissioner of Income Tax (Exemptions), Chandigarh (hereinafter referred to as ( Ld.CIT(E) dated 28.7.2017,denying grant of registration u/s 12AA of the Act. 2. The grounds raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing officer. The response to the query regarding seeking registration under section 12A after a lapse of 39 years' of existence is perfunctory. Mere denial of claims under section 10(23C)(iiiab) does not provide ample grounds for a 12A registration. The undated response received in this office on 7lh July 2017, clearly exemplifies that the entity claims to be mainly financed by die Government. If that be so, the applicability of 10(23C)(iiiab) is more pertinent. Given the fact that self-confessedly the present application was triggered by rejection of claims u/s 10(23C)(iiiab) by the Assessing Officer, any decision at this stage shall amount to subverting the due process of law imbibed in the appellate procedure. 7.2. Seeking registration after lapse of 39 years is further anachronistic. Registration, as is commonly understood, entails die same at die initial stage or at its inception (Society has been in operation since 28.03.1978). 5. Vis- -vis the aforesaid findings of the Ld.CIT(E), the Ld. counsel for assessee pointed out that the assessee s claim of exemption u/s 10(23C(iiiab) pertaining to the assessment year 2013-14 referred to by the LD.CIT(E), had been al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 12A(1)(a) and after 1.6.2007 which is governed by the provisions of section 12A(1)(aa). The Ld. counsel for assessee contended that there was no merit therefore in this ground of Ld.CIT(E) for denying grant of registration to the assessee u/s 12AA of the Act. 7. The Ld. DR on the other hand, fairly agreed that the rejection of claim of exemption u/s 10(23C(iiiab) had been reversed by the I.T.A.T. holding that it is eligible for the same vide its order referred to above. Further the Ld. DR could not controvert the contention of the Ld. counsel for assessee that it could seek registration at any point of time and was not necessarily required to seek the same at the initial stage or at its inception only. 8. In view of the above, we reject the denial of registration by the Ld.CIT(E) to the assessee for the reason of denial of claim of exemption in earlier year u/s 10(23C(iiiab) and seeking registration after a lapse of 39 years, and hold the same as being immaterial and of no consequence for the purpose of grant of registration to the assessee u/s 12AA of the Act. 9. The Ld. counsel for assessee thereafter drew our attention to para 8 of the order and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he undertaking of training and study courses is carried out in a structured manner by conducting regular courses for imparting instruction and training on various subjects related to public administration. The activities undertaken therefore is in the nature of imparting education. The Hon ble Gujarat High Court dealt with an identical issue in the case of Gujarat State Co-operative Union vs CIT reported in195 ITR 279.In the said case also the assessee society was established with the object of spreading education relating to cooperative movement by conducting courses, training programmes, research and study of the subject, opening libraries and publishing periodicals and literature on the subject. The question before the Hon ble High court was whether the assessee had been rightly denied exemption u/s 10(22) of the Income Tax Act,1961,holding its activities to be not educational in view of the meaning given by the Supreme court in Sole Trustee, Loka Shikshana Trust vs CIT 101 ITR 234. The Hon ble High Court held that the objects of the assessee indicated that the society was established for diffusion of certain branch of knowledge and therefore was in the nature of imparting educa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... press. The activities carried on by the assessee-Co-operative Union have been briefly summarised at Annexure A' to the order of the CIT(A) dt. 22nd Nov., 1983 and the said list of activities is referred to in para 5 of the order of the CIT. The fact that these activities are carried on by the assessee-Co-operative Union has not been disputed. The list of activities at Annexure A' gives particulars of the courses conducted by the assessee-Cooperative Union and their duration. The assessee conducts Courses for Higher Diploma in Co-operation (condensed)-18 weeks, Diploma in Land Development Banking-12 weeks, Certificate Course in Co-op. Credit Banking-10 weeks, and Specialised short-term courses/Orientation Courses. The assessee also conducts Seminars. It also appears that the assessee has been running four co- operative training which conduct junior basic courses of 24 weeks duration for Diploma in Co-operation, Special Course for employees of Urban Co-op. Banks, Dist. Co-op. Banks and Market Class, and also Seminars. The assessee also conducts Co-operative Education Programme, Consumer Education Programmes (Project), Women Co-op. Education Programme, Special Traini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unning a printing press as enumerated in cl. (viii) has to be read in context of the object of publishing periodicals, books, pamphlets and literature. Therefore, so read, it becomes part of the educational activities of the assessee-Co-operative Union. The subsidiary objects such as printing and publishing books and literature on the relevant subjects are in our judgment ancilliary and do not detract from its exclusively educational character. The question whether an educational institution is existing solely for educational purposes or not can also be resolved with reference to the activities actually carried on by it and, as noted above, the list of activities of the assessee clearly indicates that it is existing solely for educational purposes. It cannot be doubted that the assessee was a society for diffusion of a certain branch of knowledge of the co- operative movement in various fields governing human life and the activities for the purposes were carried out in an organised and systematic manner by conducting regular courses for imparting instruction and training on various subjects included in the curricula as is reflected from the list of its activities. There is no dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as a result of travelling you acquire fresh knowledge....... But that is not the sense in which the word education' is used in cl. 15 of s. 2. What education' connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by normal schooling. The Supreme Court in the above observations by referring to the systematic instruction, schooling or training given to the young has only cited an instance in order to indicate as to what the word education' appearing in s. 2(15) of the Act which defines charitable purposes' is intended to mean. We are certain that these observations were not intended to keep out of the meaning of the word education', persons other then young'. The expression schooling' also means that schools, instructs or educates (The Oxford English Dictionary, Vol. IX 217). The Supreme Court has observed that the word education' also connotes the whole course of scholastic instruction which a person has received. This clearly indicates that the observations of the Supreme Court were not intended to give a narrow or pedantic sense to the word education'. By giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. counsel for assessee. 12. In view of the above, we hold that the contention of the Ld.CIT(E) that the assessee was not carrying out the activity of imparting education is without any merit and needs to be rejected. 13. The Ld. counsel for assessee thereafter drew our attention to para 9 of the order of the Ld.CIT(E) pointing out therefrom the next contention of the Ld.CIT(Exemptions) that the assessee was not eligible for grant of exemption u/s 12AA since its actions did not flow from an altruistic intent but were part of its statutory obligations. The relevant findings of the Ld.CIT(E) at para 9 10 to which our attention was invited are as under: 9. Further when the applicability of sections 11 12 is examined in the instant case it is evident that the government grants cannot be termed to be voluntary and are not free from encumbrances, It has been laid down in clause of the Memorandum of Association of the applicant society that the expenditure of grants would be subject to directions of the Government of Punjab emanating from time to time. Similarly, the society's functioning is hemmed in by the powers of the government to issue directions and the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry out charitable activities and, therefore, no adverse view could be taken vis- -vis either the objects of the applicant-assessee or vis -vis the genuineness of the activities carried out by it in pursuance of the stated objects on account of the aforestated observations of the Ld.CIT(E) regarding the independent functioning of the applicant-assessee. 15. The Ld. DR, on the other hand relied upon the findings of the Ld.CIT(E). 16. We have heard he contentions of both the parties in this regard. We find merit in the contention of the Ld. counsel for assessee. The fact that the activities carried out by the applicant /assessee are charitable in nature been confirmed by us in the earlier part of the order. Merely because the functioning of the applicant/assessee is guided by the directions given by the Government of Punjab, does not take away the charitable character of the objects of the assessee, nor do they effect the genuineness of the activities carried out by the applicant/assessee. Even if the applicant/assessee is working under the directions of the Government as long as the activities carried out by it are in sync with its stated objects, which have been held to be ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genda seeks the approval for insertion of dissolution clause in Memorandum of Association, Rules regulation of the Institute 2. The Institute had applied for registration u/s 12A of the Income Tax Act. 1961 to get exemption u/s 80G of the Income Tax Act. The Commissioner Income Tax has informed that it is presently not possible to process the case on merit unless appropriate dissolution clause in memorandum of association, rules regulation of the Institute is inserted that in the event of dissolution of this Society/ institute, assets and funds of the society would be transferred to another society with similar aims objectives. 3. Executive Committee may approve to insert the above dissolution clause in Memorandum of Association, Rules regulation of the Institute. This will be put up to the General Council for ratification later on. 19. The Ld. counsel for assessee stated that in view of the aforesaid amendment the contention of the Ld.CIT(E) did not survive. The Ld. DR could not controvert the same. 20. In view of the above, we find no merit in the contention of the Ld.CIT(E) that in the absence of dissolution clause in the Memorandum of Association of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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