IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 105 ITA-150-2019 Date of Decision :10.12 2019 Commissioner of Income Tax (Exemptions), Chandigarh Appellant Versus M/s S.D. Educational Society Respondent CORAM : HON'BLE MR.JUSTICE AJAY TEWARI : HON'BLE MR. JUSTICE VIVEK PURI Present : Mr. Denesh Goyal, Advocate for appellant. AJAY TEWARI, J. (Oral) 1. This appeal has been filed under Section 260A of Income Tax Act, 1961 (for short 'the Act') against order dated 5.9.2018 of Income Tax Appellate Tribunal, Chandigarh Benches 'B' Chandigarh in ITA No. 1676/CHD/2017 reversing that of Commissioner and thereby allowing application under Section 12AA of Act. appellant has raised following substantial questions of law :- 1. Whether on facts and circumstances of case and in case, Hon'ble ITAT is correct in directing registration to be accorded instead of reverting it back for re-examination in light of judgment of Hon'ble Allahabad High Court in appeal No. 112 of 2013 in case of CIT, Meerut Vs. M/s. A.R.Trust,Meerut, wherein it was held that Tribunal could have ordered for setting aside order of Registering Authority refusing registration but it 1 of 4ITA-150-2019 2 could not have directed for registration straight away in as much as there has to be satisfaction recorded by Registering Authority which was lacking ? 2. Whether on facts and circumstances of case and in law, Hon'ble ITAT is right in not adjudicating method adopted by assessee by which it has shown receipts under different heads in receipt and payment account in way to reduce actual receipts ? 3. Whether on facts and circumstances of case, Hon'ble ITAT is right in merely stating that over period of time claiming benefit u/s 10(23C)(iiiad) does not deter assessee from making application for registration u/s 12A whereas ignoring fact that no rational was provided for change in track too by society ? 4. Whether on facts and circumstances of case, Hon'ble ITAT is correct in upholding submissions of AR that this case has been dismissed arbitrarily on grounds of suspicious and presumptions by CIT, whereas CIT clearly established fact that assessee used netting method to reduce actual receipt ? 5. Whether on facts and circumstances of case and in law,the Hon'ble is right in placing reliance of case of CIT Vs. Appejay Education Society wherein core issue was related to misuse of income derived by charitable institution from its charitable activities whereas in this case issue is related to genuineness of activities as assessee produced incorrect accounts wherein using netting method with intention to reduce actual receipts under different heads in receipt and payment account ? 6. Whether on facts and circumstances of case, order of Appellate Tribunal is contrary to evidence and material on record of case and therefore, perverse ? 2. few facts necessary for adjudication of instant appeal 2 of 4 ::: Downloaded on - 14-12-2019 11:15:12 ::: ITA-150-2019 3 as narrated therein may be noticed. respondent was registered in year 2004. It started present school with effect from 1.4.2006 up to Class- Vth which was affiliated by Central Board of Secondary Education (CBSE) for Class 10th on 28.3.2008 and upgraded to Senior Secondary level on 25.3.2010. It had appointed total number of 26 staff members and had 266 students. It had collected sum of Rs. 51.33 lakhs and had paid salaries of Rs. 52.48 lakhs. It had given all details of fee which had been collected by it for different classes. 3. Commissioner however held that while getting benefit of Section 10(23C)(iiiad) of Act, respondent had shown its net receipts from use of school van Rs.3.20 lakhs but actually what had transpired was it had received sum of Rs.20 lakhs odd on account of school bus charges and had spent sum of Rs.17 lakhs odd on its running and had instead of reflecting this correctly, had reflected only Rs. 3.20 lakhs. On this basis, Commissioner held that activities of respondent were not genuine. Tribunal found that even if this anomaly was there in accounting yet this could be easily corrected and that provision of Section 10(23C)(iiiad) and 12AA of Act operate in different fields as held by this Court in case of CIT vs. Appejay Education Society 127 DTR 121. Tribunal further held that Commissioner had wrongly noticed that no details of fee being charged have been supplied whereas all details have been supplied. Tribunal also faulted Commission for coming to conclusion that salary structure which was put in place by respondent was not as per salary structure of CBSE and at such low salaries good education could not be given. Tribunal correctly held that this was 3 of 4 ::: Downloaded on - 14-12-2019 11:15:12 ::: ITA-150-2019 4 not job of Commissioner to comment on quality of education and found that in kind of area where school was located, and kind of fee it could generate, and salaries which were paid, were proportionate. We have also noticed that apart from this anomaly in accounting of money, Commissioner has not held that respondent was either diverting any money or was generating any cash income (beyond that which has been prescribed in prospectus) or any other thing which would impinge on its character as charitable institution. 4. In view of above, no fault can be found with findings of Tribunal. 5. Consequently, appeal is dismissed. 6. Since main case has been dismissed, pending application, if any, also stands dispose of. (AJAY TEWARI) JUDGE (VIVEK PURI) JUDGE 10.12.2019 anuradha Whether speaking/reasoned - Yes/No Whether reportable - Yes/No 4 of 4 Commissioner of Income-tax (Exemptions), Chandigarh v. S.D. Educational Society