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TMI Blog2013 (9) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... ensure compliance in letter and spirit to the stated government policy necessarily ought to throb in the heart of each and every citizen. However, while adjudicating on the issues which arise for determination under the Income-tax Act which is a Central Act enshrined in “List I” of the Constitution of India the tax adjudicator/judge empowered by a Central Act cannot usurp the power and role of an authority which as per the Constitutional scheme has been entrusted upon the state Administration and in this case on the Department of Education, Government of National Capital Territory of Delhi. An authority constituted under the Central Act herein the Indian Income Tax Act cannot act on the basis of its own personal beliefs and philosophy however laudable, they may be as they have no role to play as the issues are to be decided and concluded on the basis of rules and provisions of the Income-tax Act, herein - section 2(15) of the Act. The decisions are not to be coloured or stained by personal whims and biases and are to be illuminated by the Income Tax Act. The DIT(E) in the facts of the peculiar case cannot cancel Registration in the facts of the present case for the reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 19-11-1998 keeping in view the aims and objects of the society. The society, as per record, was formed mainly to establish progressive schools or other educational institutions in Delhi or outside Delhi open to children of officers of All India and Central Services. The society at the relevant point of time was running a school by the name The Sanskriti School . 2.1 On 24-12-2010 a show cause notice u/s 12AA(3) was issued for cancellation of registration u/s 12A on the ground that the school had violated the conditions imposed at the time of allotment of land by the Ministry of Urban Development, Government of India, according to which the assessee should have admitted students belonging to the weaker sections to the extent of 25% and granted free-ship to them. The said authority was of the view that as per records the percentage of admission under the category of weaker sections and grant of freeships was much below the stipulated percentage. 2.2 In response to the show-cause notice the assessee gave its reply vide letter dated 18.01.2011. The submissions made are reproduced in Para 3 at Page 3 of the impugned order and the same are reproduced for ready reference:- Wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under:- i) Asstt. Year 2009-10 - Reserve fund and other funds. Rs.28,88,94,138/- ii) Asstt. Year 2010-11 - Reserve fund and other fund. Rs.32,32,31,050/- iii) Asstt. Year 2011-12 - Reserve Fund Rs.33,99,44,068/- 2.5 As a result it was concluded that prima facie it appears that the assessee had made a huge generation of surplus year after year which was primarily being invested in building an elitist educational institution and was not to support the cause of education among the weaker sections of the society. 2.6 It was also considered that the assessee was asked categorically to give concrete details of various steps taken by it to fill up 25% of the seats earmarked for students from the weaker sections of the society and the assessee is relying on the fact that information regarding availability of quota of students under the EWS category was being displayed on the Notice Board as per the circular of the Education Department and the fact that the school had not got sufficient applications for such seats despite display. As an evidence reliance was placed on a recent display on the notice dated 7.03.2011, which sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amounts of fees with five star facilities cannot be treated as charitable activity only on the ground that the business carried on by such institutions is the business of education .. It is to be seen that running educational institution or delivering medical services are not themselves the models of charitable activities. Those activities should also be in the nature of relief to the poor . The charitable purpose defined and manifested as including relief of the poor, education, medical relief, etc. is to protect the basic concept of charity. Presence of real charity cannot be diluted. Charity always means helping the needy, supporting the poor, working with compassion and dedication for society. Running of an institution without any of the above virtues cannot be considered as a charitable institution. 2.7 Referring to sec. 12AA(3) he was of the view that registration already granted under sec. 12A could be cancelled on non fulfillment of the following conditions:- 1) Activities of the trust or institution are not genuine. 2) Activities are not carried out in accordance with the objectives of the trust or institution. 2.8, In the present case taking not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has cancelled the Registration. 3.2 Inviting further attention to the impugned order it was submitted that the DIT(E) observed that the objects of the society are charitable but the activities are not so. In order to come to the said conclusion he took cognizance of the fact that the terms and conditions of land allotment by the Government in so far as not having the requisite number of students of EWS were not included as such they constituted violation of public policy consequently the activity was held to be not a charitable activity. 3.3 In the above background it was submitted that it is necessary to emphasis that the assessee is running an institution/School Sanskriti School in Chanakyapuri, New Delhi, upto Class XII and it is affiliated with CBSE, New Delhi. This School it was stated was constructed on land allotted by the Ministry of Urban Development of India, and the society was setup by the wives of the service members of All India and Allied Civil Services. This fact it was stated would be evident from the copy of the Memorandum of Association placed as Annexure-I. The said society it was submitted is duly registered under the Society Registration Act, vide certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30th Sep. 2012. Accordingly it was contended that since the said application was not disposed off nor rejected within the time granted by the legislature as such the said application deserves to be treated to have been accepted by the department and consequently the impugned order deserves to be quashed. 3.8 Even on merits, it was contended that the said authority has not considered the facts the figures and the arguments which have been placed on record, namely i. Letter dated 18.1.2011, copy placed at page nos. 21 to 24 of the paper book; ii. Letter dated 07.02.2011 alongwith status report of EWS, copy placed at pages 25 to 32 of the paper book; iii. Letter dated 10.03.2011 copy placed at pages 34 of the paper book; iv. Letter dated 15.12.2011, alongwith details of EWS students as per the list of Department of Education, copy placed at page 36 to 38 of the paper book; v. Letter dated 24.1.2012 alongwith copy of letter sent to the Department of Education displayed on notice board regarding status of admission in EWS categories for academic years 2010-11 and 2011-12, copy placed at pages 39 to 45 of the paper book; 3.9 Referring to the above letters alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Sanskriti School by such Department of Education or Ministry of Urban Development, Govt. of India, which had allotted the land to the society for the School. Based on the facts as stated above, the AO after detailed examination of society s case had duly granted the exemption as claimed vide orders passed u/s 143(3) of the I. T. Act dated 24/12/2010 and 17/11/2011 for the assessment years 2008-09 and 2009-10 respectively by accepting the fact that the appellant society was carrying out charitable activities. 3.12 Accordingly it was contended that there has been no change in the facts and circumstances of the case when compared to the earlier years in order to come to the conclusion that the Sanskriti School is being run on commercial lines. The said action it was contended was against the settled legal position as set out in the following judgements which have been referred to at Page 6 of the synopsis. The same are as under:- Aditanar Educational Institution Ors Vs. Addl. CIT Ors. (SC) Amirican Hotel and Lodging Association Educational Institute Vs. CBDT (SC) CIT vs. Kannada Education Society 246 ITR 731 (Del) CIT vs. Geetha Bhavan Trust 213 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 students in EWS category respectively. Referring to the facts it was submitted that Sanskriti School is in the Diplomatic Enclave, as such it was very difficult to find the children from the EWS background as such there is no instance of any refusal on the part of the assessee. It was urged that despite the best efforts of the assessee adequate nos. of student could not be found and when compared to similarly situated school as mentioned earlier, it was his stand that the assessee has been able to give admission to the highest nos. of EWS students, as the assessee has admitted 168 students when compared to 95 in the case of St. Columbus School, at 27 in the case of Convent of Jesus Mary School, 16 in the case of Vidya Public School, Bangla Sahib Marg, New Delhi, 98 in the case of Bhartiya Vidya Bhawan, 67 in the case of Mater Dei School, 56 in the case of Sardar Patel Vidyalaya, and 30 in the case of Carmel Convent School, 3.16 It was the vehement stand of ld. AR on behalf of the assessee school that the assessee has been regularly as per the requirements of the applicable Rules giving periodic report of the display in the notice board along with a photograph of the notice bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction of the composite school building and for no other purposes. (both a primary and a higher secondary school) with two hostels for the children. iv) No residential Unit except that for a caretaker or chowkidar shall allowed to be built on the land. The plinth area of the residential Unit under no circumstances should exceed 26 sq. mts. v) The Committee shall be required to complete the construction within a period of two years from the date sanction in conformity with the architectural surroundings of the area. vi)The construction plan shall be got approved from the local body DDA, D.U.A.C. and Land Development Office before undertaking any construction on the land. vii) The allotment of land has been made subject to change of land use by the DDA from Diplomatic Enclave to educational. viii) No person attending the school shall be required to take apart in any religious instructions or to attend any religious worship without his/her consent and no citizen shall be denied admission to the school on ground of religion, race, caste, language or any of them. ix) In the event of derecognisation of the school by any compet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Employment on the management committee of the school. xviii) 1. Lease will be governed under the Government Grant Act. 2. Acceptance of ground rent in the presence of breaches /misuse will not act as a waiver. 3. The institution shall execute the Memorandum of Agreement and lease at their own cost. 4. The land in question falls under the Jurisdiction of MCD. 3.18 Referring to Notification No. F/DE/15/ACT/2006/424 dated 25.01.2007 issued by the Education Department of Govt. of India attached as Annexure-II to the second synopsis also available to the Assessing Officer. Relevant part of Notification reads as under:- (To BE PUBLISHED IN PAR-IV OF THE DELHI GAZETTEORDINARY) GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI (EDUCATION DEPARTMENT) OLD SECRETARIAT, DELHI 110054. No. F/DE//15/ACT/2006/424 Dated: 25/1/07 NOTIFICATION No. F/DE/15/ACT/2006- In exercise of powers conferred by sub-section (1) of section 3 of the Delhi School Education Act, 1973 (18 of 1973) read with rule 43 of the Delhi School Education Rules, 1973, and in supersession of Order No. PS/DE/2004/10496-11595 dated 27th April, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Birth Certificate of the child. (Explanation: The parents of the student admitted against free seat shall submit a self declaration of annual income every year for continuation of free seat in the school) (2) The application along with the documents mentioned in sub-paragraph (1). shall be submitted to the concerned school and in case of refusal by the school, to the Deputy Director of Education of the concerned district, where such school is situated. (3) No registration fee, including charges of prospectus shall be charged from the parents/child applying against free seat. (4) Any parent, aggrieved by the action of the management, may file a complaint in writing to the freeship cell, addressed to the concerned Deputy Director. 5. Manner of admission against free seats. (1) The management shall display the number of total seats and the free seats available in each class, on the notice board in the school and shall also notify the same to the concerned Deputy Director of Education by the 31st December for entry level classes, and by the 15th March for other classes, for each academic session. (2) The manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the freeship cell, for further transmission to the concerned school. (3) The freeship cell shall maintain the database of such applications and such informations shall also be made available on the website of the Education Department. (4) On the request of management, the freeship cell may forward further applications for admission against free seats. (5) The freeship cell shall entertain the complaints of aggrieved persons with regard to free seats, in a time bound manner. (6) The concerned Deputy Director may inspect any school for ensuring the compliance of this Order as per sub-section (2) of section 24 of the Act. And in case any default is noticed, the matter be reported to the Director. (7) On receipt of report under sub- paragraph (5), the Director may, after giving a reasonable opportunity of being heard, take action under subsection (4) of section 24 of the Act and / or inform the concerned Government agency, which has allotted the land on concessional rates for taking action against the management for violation of terms and conditions of the lease, as the case may be. As per Synopsis, the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (2) of section 24 of the Act and in case any default is noticed, the matter be reported to the Director. 6(7) On receipt of report under sub-paragraph (5), the Director may, after giving a reasonable opportunity of being heard, take action under subsection (4) of section 24 of the Act and /or inform the concerned Government agency, which has allotted the land on concessional rates for taking action against the management for violation of terms and conditions of the lease, as the case may be. 3.19 These facts it was submitted had been ignored and not appreciated by the DIT (E) which was placed before the said authority vide letter dated 18.1.2011, 7.2.2011 and 15.1.2011 24.1.2012. Referring to the last letter it was submitted that the said letter was accompanied by a letter sent to the Department of Education displaying the facts in the Notice Board. In regard to the vacancy in EWS category these facts and figure, it was submitted have duly been provided necessarily as per Rules to the Education Officer against the freeship quota, in the format prescribed by the said authority. Similarly, the terms and conditions of the allotment letter dated 1.5.1995 for land and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, admittedly the DIT(E) has categorically concluded that the objects of the society are charitable. On the said issue the learned AR has also addressed in the course of his arguments at length that consistently over the years till the time of passing the present order, the assessments of the assessee have been concluded under section 143(3) proceedings and this finding consistently remains accepted by the Department. The DIT(E) in the impugned order has in his order under sec. 12AA(3) withdrawn the registration on the ground that on account of activities of the assessee it has (a) violated the conditions imposed by the Government; (b) promoted the high cost education institution excluding the students from the EWS category. In order to come to the said conclusion he has observed that the assessee has not fulfilled the requirements of the Directorate of Education as per which the assessee was required to admit 25% students belonging to the EWS category which the assessee institute had not done. This inability on the part of the assessee has been held to be an act of not being in conformity with the government policy. The ld. CIT DR has also heavily emphasized this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. cannot be taken to be the same. However, the fact remains that in regard to the admission in the EWS category students the school has a higher admission as compared to the named schools. In the course of hearing the learned AR has also addressed at length that there is no evidence on record to prove that any admission has been denied to any EWS category student which has not been disputed by the department. Accordingly, the plea has been advanced that on account of the peculiar situation of the assessee school in the diplomatic area adequate numbers of EWS category students do not approach the school, the school cannot be faulted with. There is no argument or evidence available on record to rebut the stand, the Department has attempted to contend that had the school made attempts in the nearby colonies of Sarojini Nagar, Netaji Nagar etc. it is just not possible that in the colonies where the houses are allotted to class-IV employees, students pertaining to EWS category would not have been found. The said argument based on ifs and buts amounts to conjecture the assessee school can be acted upon as per the requirements of law and not as per the whims of different people who wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 24 has been granted wherein the Deputy Director of Education after following the due process of law can either de-recognise the school and/or inform this fact to the allotting authority to take action against the said school for violating the terms and conditions of the lease. As we have reproduced in the earlier part of this order the land allotting authority can as per clause (ix), reproduced at page 19 of this order can act against the said school. For ready reference, the same is reproduced again for ready reference:- ix) In the event of derecognisation of the school by any competent authority, the lessees shall be required to pay premium for the land allotted at the market rate prevailing on the date of de-recognisation failing which the land with the superstructures, fixtures, fittings etc. shall revert to the Govt. on payment of compensation as may be decided by the Government. In the facts of the present case, there is no evidence on record that the Directorate of Education has taken any action against the assessee for not following/implementing the government policy and neither has it informed the land allotting authority to proceed against the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of use or application, or retention, of the income from such activity: [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is [twenty-five lakh rupees] or less in the previous year;] 6.3 There is sufficient evidence available on record which is uncontested that the objects of the society are charitable in nature and a finding to the said effect has been given in the impugned order itself. Regarding the shortfall in the requisite no. of students belonging to the EWS category students in the facts as they stand no evidence of non-compliance has been brought to our notice either in the arguments or in the impugned order. The reasons consistently advanced for the situation in regard to locational aspect in the face of the evidence to the contrary have to be accepted as where there is no alleged violation of any of the requirements either of the Urban Ministry or of the Directorate of Education the authorities under the Incometax Act cannot be said to presume to sit over in judgment for the implementation of the public policy on the judgement of the authorities empowered to implement the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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