TMI Blog2018 (6) TMI 1316X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has correctly held that the facility of the credit card is a facility like that of a bank. The credit card has been used to incur expenses for and on behalf of the assessee society. We are in agreement with the CIT(A) that the objects of the assessee Society are educational in nature and hence, they fall within the meaning of 'charitable purpose' under Section 2(15) of the Act. The assessee is a Society registered under Section 12A of the Act - the assessee is eligible for exemption under Section 11 - decided in favour of assessee. - ITA No.:- 4444/Del/2015 - - - Dated:- 25-6-2018 - G.D. AGRAWAL, HON BLE PRESIDENT AND SHRI AMIT SHUKLA, JUDICIAL MEMBER For The Appellant : Shri Amit Jain, Sr. DR For The Respondent : Shri Ved Jain, Advocate, Shri Ashish Chadha, CA ORDER PER AMIT SHUKLA, J.M. The aforesaid appeal has been filed by the revenue against impugned order dated 15.4.2015, passed by Ld. CIT (Appeals)-40, New Delhi for the quantum of assessment passed u/s 143(3) for the assessment year 2011-12. In the grounds of appeal the revenue has raised following grounds:- 1.On the facts and in the circumstances of the case and in law, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide order dated 28.2.2012, but still assessee continues to enjoy the benefit of section 11 in view of the registration u/s 12AA. The main object and the activities of the society is to run educational institutions in the field of management and marketing studies and to undertake research activities in these fields. Ld. AO has denied the exemption u/s 11 after invoking the provision of section 13(3). In the impugned assessment order, AO has denied the exemption u/s 11 and taxed surplus as per the profit and loss account. He has also drawn adverse inference, on account of personal use of cars by the office bearers/staff/faculty, personal use of components, training expenses, etc. on the ground that no log book or any documentary evidence for the use of cars for various specified persons has been produced. The point wise rebuttal of the assessee on the query raised by the AO has been dealt with the assessment order has been made. However, the AO has denied the exemption on the ground that there is violation of section 13(3). 3. Ld. CIT(A) held that, since this precise issue had come up for consideration before the Tribunal in assessment year 2009-10, wherein the Tribunal after det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts being admitted in excess of the norms prescribed by the AICTE. But the fact remains that these are educational activities falling within the meaning of the object of the society and also falling within the meaning of 'charitable purposes' under Section 2(15) of the Act. From the facts we notice that the AO has not appreciated the facts regarding the allegation of violation of the guidelines of AICTE. The allegation of the AO was that the number of students was in excess of the students allowed by the AICTE. The AICTE has regularized this by charging a fee for the same, which means, that the stand of the assessee stood rectified by the AICTE. The second allegation was regarding running a triple degree programme in the same campus of the Institute despite there being guidelines by AICTE that no other programme could be run on the same campus. We are of the view that this cannot be a ground for denying exemption under Section 11 read with Section 2(15) of the Act. Both the allegations are regarding educational programmes being conducted by the assessee. Such activities of the society will fall within the meaning of 'charitable purpose' under Section 2(15) of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awing adverse inference on these grounds. 5.9 Furthermore it is noticed from the statement of Dr. Gaganjit Singh recorded during the course of the survey, specific questions were raised on these issues and he has answered and clarified all the queries. 5.10 On the issue of election of office bearers and the other members of the governing council in the AGM, it has been clarified that last AGM was conducted in October, 2009. He has further clarified that the secretarial record has been stolen by the disgruntled employees and all the documents including the list of governing council members starting from 1969 till 2007 has been filed with the Registrar of Societies. Further in response to the another question he has submitted copies of Memorandum of Association, rules and regulations as amended upto 21st Aug. 2004 and September, 2009. The AO has not controverted the facts in the assessment order. 9. The AO has not appreciated the functioning of the society and the requirement of the law in the right perspective. The AO has observed that people who are related through blood cannot be functionaries of the society. This interpretation of the law by the AO is not corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. This issue has been dealt with by the CIT(A) in para 5.11 as under:- 5.11 The next issue is the allegation of violation of provisions of section 13(3) of the Income Tax Act. These allegations have to be read with the specific clauses of this section 13(3). In fact section 13(3) talks about only the persons who have obligation under section 13(1) and 13(2). Thus the issue is whether those specified persons have violated any of the provisions of section 13(1) or 13(2). In this regard the first allegation of the AO is that the office bearers of the society are related to each other and as such they have direct impact on the democratic working of the society. This allegation nowhere contradicts or violates the provisions of section 13. 11. As per the provisions of Section 13, there are certain conditions which, if violated, would lead to denial of the benefit under Section 11, if some advantage or benefit has been taken by the persons who are in the governance of the institution. However, there is no condition specified, that the persons in governance should not be relatives. The functioning of the institution cannot be considered to be undemocratic, if two re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of the survey nothing adverse on this account has been found. In the absence of any evidence the allegation of the AO cannot be sustained. The AO has just made the allegation and has not given any basis, material or information on the basis of which such allegation is being made. On the contrary, the assessee has given explanation which has not been controverted. 13. Similarly, the allegation of the Assessing Officer regarding a floor of the premises of the society being occupied by its Executive President does not violate the provisions of Section 13. The CIT(A) has considered this issue in para 5.13 of the impugned order in the following manner:- 5.13 The AO further alleged that the Executive President and the Director General have been staying on the 4th and 5th floor of the building of the Institute. In this regard the society has clarified that they have been occupying this in their capacity as the Executive President of the Society. In items of provisions of Section 13(2)(c) salary allowance or otherwise can be paid to such person for services rendered by such person. The only condition is that the amount so paid should not be in excess of what may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h expenses comes to ₹ 6,04,872/- only. Further the total payments made by the assessee through credit card is of ₹ 16, 19,243/-. Accordingly based on this figure the AO is not correct in considering that entire training expenses of ₹ 99,21,943/- is through credit card and 60% of the same is personal in nature. The appellant-society has stated that these expenses are not personal in nature and these are required to be incurred. The explanation of the assessee that these have been incurred for the seminars/conferences being organized by it for the various course being run by it whereby it is required to make presentation to the honorary faculty. The AO however could not bring any material that these expenses are personal. He has gone by the nomenclature of the expense assuming that the governing council members have bought these items for their personal use. In the absence of any evidence particularly keeping in view the fact that the survey was carried out and nothing incriminating on this aspect was found during the survey I am of the view that the allegation of the AO do not have any merit. 18. The society is an educational institution. It has made p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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