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TMI Blog2025 (4) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... emption u/s 80G of the Act vide order dated December 22, 2009. The assessee has filed the return of income on September 29, 2013 for AY 2013-14 declaring a total income of Rs. NIL. The Appellant's case was selected for scrutiny and notices under section 143(2) and 142(1) of the Act were issued and duly served on the Appellant. In response to the said notices, the Appellant had filed all the necessary details and explanations asked by the Assessing Officer (AO). The assessment was completed u/s. 143(3) of the Act and the AO passed an order dated February 23, 2016 assessing the total income at Rs. NIL. However, exemption u/s. 11 of the Act has been denied to the Appellant on the alleged ground that no educational activities has been carried out by the Appellant and receipts of consultancy charges, seminar fees sponsorship are in the nature of services provided to trade and commerce. 3. As per Memorandum of Association the sole activity of the Appellant is to promote the development and dissemination of knowledge, understanding, Information and skills in all matters connected with the establishment, operation and transformation of human settlement, including engaging in providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at generating surplus and had clear components of activities that would qualify as trade, business or commerce, irrespective of how the surplus from these activities is utilized? 6. We have heard Ld. AR and Ld. DR and examined the record. It is argued on behalf of assessee that the income earned and sought to be exempted u/s 11 of the Act has been earned by the assessee from the activities which are incidental to the main object of the assessee. It is further argued that the assessee has been granted registration u/s 12AA of the Act which is valid and subsisting, therefore the Ld. AO has no locus standi to probe into the approved objects of the institution and all the activities carried out by the assessee are charitable in nature. The Ld. AR further stated that the Ld. CIT(E) has rightly granted the relief to the assessee because the case of assessee and the judgment of Ld. CIT(E) is supported by the judgment of Hon'ble Bombay High Court in the case of DIT(E) v. Gemological Institute of India (2019) 105 taxmann.com 170 (Bom). Ld. AR further submitted that the reliance by the revnue on the judgment of Hon'ble Apex Court in the case of CIT vs. Ahmadabad Urban Development Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in AUDA (supra) has no role to play while deciding the present appeal." 7. It is therefore argued that the impugned order is based on legally sound reasoning and correct appreciation of provision of the Act and therefore the appeal of the revenue lacks merits and is liable to be dismissed. 8. Ld. DR on the other hand submitted that order passed by Ld. AO was legally justified and Ld. CIT(E) has failed to appreciate facts correctly and has not considered the law laid down by the Hon'ble Apex Court in the case of AUDA (supra). The extracts of page 5 of the written submission of the Ld. DR are relevant and reproduced as under:- "The nature of activities undertaken by the Assessee as described during the course of Appellate proceedings are as follows: Income from Consultancy Services Rs. 1,10,20,985/-: Consultancy Charges have been received from various parties which are Government entities, NGOs, Town Planning and Development authorities and the United Nations etc. which are connected with urban planning environment and development, disaster management, transport development policy, each contributing in the field of human settlements and well-being and not engaged in any bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration" received for commercial activities indicates a profit motive and, therefore, falls outside the ambit of charitable purposes and is hit by the proviso to section 2(15) resulting in denial of exemption under section 11 of the Act. The Revenue also places its reliance on the decision of the Hon'ble Chennai Tribunal in the case of FRP Institute v. ITO (Exemptions) [(2017) 88 taxmann.com 835 (Chennai - Trib.)], wherein the Hon'ble Tribunal denied exemption to a professional organization conducting paid workshops, observing that such activities were inherently commercial." 9. It is therefore argued by Ld. DR that the impugned order be set aside and the order of the AO be restored. 10. We have considered these submissions and also examined the record. To proceed further, we deem it necessary to examine the relevant observation of the AO which are extracted below:- "4. The assessee has claimed exemption u/s.11 of the IT. Act, which has been examined. It is seen that though the assessee is claimed to be an educational institution, no such courses have been conducted during the year and the only receipts are in the nature of consultancy charges, seminar fees, spo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO assessed total income as NIL. 6.1 The appellant has argued that the since the appellant is approved u/s 12AA by the Commissioner of Income Tax and since the registration has not been cancelled, denying exemption u/s 11 is wrong and that the order is ab initio invalid. 6.2 The Hon. Supreme Court in Surat City Gymkhana [2008] 170 Taxman 612 (SC) held that that registration under section 12A was a fait accompli to hold the Assessing Officer back from further probe into the objects of the trust. In this case the Supreme Court endorsed the findings of Hiralal Bhagwati Vs. CIT [2000] 246 ITR 188 (Gujarat). The High Court held as under: Once the registration under section 12A(a) was granted, the grant of benefit could not be denied. The ITO was not justified in refusing the benefits which would otherwise accrue under the registration. If there was no registration, as contemplated under section 12A(a) read with rule 17A, the revenue would have been justified in making a submission that the benefit could not be granted, but where the application for registration was submitted and the registration had been granted, the benefit could not be denied on the ground that the scheme was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceed further, we deem it necessary to know the main objects of the assessee's company as find mentioned in Article-1 of the Memorandum of Association:- "1. The name of the Company is INDIAN INSTITUTE FOR HUMAN SETTLEMENTS ("the Company") II. The registered office of the Company will be situated in the State of "Karnataka. III. The objects for which the Company is established are: [A] The Main Objects of the Company to be pursued by the Company on its incorporation are: (1) To Promote the development and dissemination of knowledge, understanding, information and skills in all matters connected with the establishment, operation and transformation of human settlements, including engaging in providing education and training and undertaking research, consultancy and advocacy, and taking any action in furtherance of these purposes. No object of the Company shall be carried out without permission of competent authorities whomsoever and no objects of the Company shall be carried out on commercial basis. [B] Objects incidental or ancillary to the attainment of the main object:- Knowledge Development & Dissemination (1) To establish branches or to establish any deemed un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide information and education in matters related to the establishment, operation and transformation of human settlements or any aspect thereof through print, information technology, mass media and telephony enabled distance learning. (8) To conduct research and investigations in all matters related to the establishment, operation and transformation of human settlements and to disseminate the findings. (9) To provide design, consultancy and advisory services to any person or organization on matters related to the establishment, operation and transformation of human settlements. (10) To print, publish and distribute studies, reports and other publications and journals and establish libraries and information systems for the processing, publishing and selling and dissemination of education, technological and research products in furtherance of the objects of the Company." 13. We have noticed that the alleged income has been earned by the assessee from consultancy services, consultancy charges from various parties which are government entities, NGO, town planning and development authority and the United nations, etc which are connected with urban planning and development, di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) of the Act was not examined by the Tribunal. This in view of the decision of the Apex Court in Asstt. CIT v. Surat City Gymkhana [2008] 170 Taxman 612/300 ITR 214 to the effect that once registration is granted a trust under Section 12A of the Act then it is not open to the Assessing Officer while examining compliance with Section 11 of the Act to revisit objects of the respondent-assessee and to hold contrary to the registration granted. Thus the nature of activity in terms of Section 2(15) of the Act was not verified nor considered by the Tribunal. 4. In the above view, question (a) as posed does not arise out of the order of the Tribunal and thus, it is not entertained. 5. So far as question (b) is concerned, the impugned order of the Tribunal has followed the decision of the Supreme Court in Surat City Gymkhana (supra) wherein it has been held that once the trust has received registration under Section 12A of the Act and that registration is subsisting then it is not open to the Assessing Officer to re-examine the objects of the trust to take a view contrary to the view taken while granting registration under Section 12A of the Act. The Tribunal observed that the only ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the grounds in the present appeal, it is to be noticed that only ground no. 1 pertains to the matter decided by Ld. CIT(E) and the ground no. 2 and 3 pertains to applicability of section 2(15) of the Act and the said aspect has not been decided by the Ld. CIT(E) because the AO has exceeded his authority in denying exemption u/s 11 and therefore the question of applicability of section 2(15) in the case of assessee was left open being academic as there was no need to decide the said question on merit. We do not find any illegality in the impugned order passed by Ld. CIT(E) which may warrant interference by this Tribunal. 16. We respectfully follow the decision of Hon'ble Jurisdictional High Court in Director of income Tax (Exemption) Mumbai vs. Gemological Institute of India (2019) 105 taxmann.com 179 (Bom) (supra) and we have noticed that there is no illegality or perversity in the impugned order and the Ld. CIT(E) has decided the issue with well reasoned appreciation of facts and has meticulously followed the relevant legal precedents applicable to the controversy before him. For these reason, we find no merit in this appeal and the ground no. 1 raised by the revenue is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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