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Madhya Pradesh High Court · body

2009 DIGILAW 349 (MP)

Dy. CIT v. M. P. Madhyam

2009-03-19

DIPAK MISRA, R.K.GUPTA

body2009
ORDER 1. The present appeal preferred under Section 260A of the Income Tax Act, 1961 (for brevity the Act) was admitted on the following substantial questions of law: (i) Whether the Tribunal was justified in holding that assessee is entitled for the exemption under Section 11 of the Act ? (ii) Whether the Tribunal was justified in holding that grant of certificate under Section 12A of the Act is conclusive and debars the assessing officer to take any-contrary view ? 2. The factual matrix which is required to be exposited for the purpose of adjudication of this appeal, in essentiality, is that the respondent assessee is a society registered under the Madhya Pradesh Societies Registration Act, 1973. The initial registration was on 1-10-1983 in the name of Madhya Pradesh Prakashan Sansthan and on 16-4-1984, the name was changed to Madhya Pradesh Madhyam. 3. The society got registered with the CIT, Bhopal under Section 12(a) of the Act and a certificate was issued in its favour on 29-1-1986. The objects of the society are: (i) publication of a weekly namely Rozgar and Nirman; (ii) Supplementary publication and production and distribution of other materials for the public welfare activities of Government of Madhya Pradesh and its undertakings; (iii) All other works which are necessary, desirable and helpful in achievement of above mentioned objects. 4. The assessee was assessed to income-tax by the assessing officer who treated it as a charitable institution keeping in view its activities right from its inception i.e. 1984-85. However, for the assessment year 1994-95, the assessing officer treated it as a non-charitable institution on the foundation that the activities were not charitable in nature. 5. The assessing officer noted that other activities of the assessee included production of documentary films,- T.V. reports, news capsules for the State Government Departments and undertakings and it was charging from the State Government Departments and undertakings. He also noticed that the society was functioning as service agents of various Government Departments and undertakings in respect of their advertisements on which the society earned commission. The assessing officer referred to para 14 of the constitution of the society and observed that profits and gains of business activities carried on by the assessee accrued to the creator of the institution indirectly. 6. The assessing officer referred to para 14 of the constitution of the society and observed that profits and gains of business activities carried on by the assessee accrued to the creator of the institution indirectly. 6. Be it noted, the assessing officer had observed that State of Madhya Pradesh is the creator of the institution and had right over its movable and immovable properties. 7. On the basis of the aforesaid, an inference was drawn that profits and gains had accrued in favour of the creator. Being of this view, the assessing officer negatived the claim of the assessee seeking exemption under Section 11(1) of the Act and added a sum of Rs. 88,79,523 and proceeded to assess the same. 8. Being dissatisfied with the order passed by the assessing officer, an appeal was carried by the assessee before Commissioner (Appeals) who concurred with the finding recorded by the assessing officer and held that he was justified in denying the benefit to the assessee. 9. The aforesaid concurrence by the first appellate authority led the assessee to prefer an appeal before the Income Tax Appellate Tribunal, (for short, the Tribunal). Before the Tribunal, it was contended that society is entrusted with certain activities of general public utility and is in fact, helping in aiding the Government for filling of the vacancies and further it is engaged in promoting the welfare schemes and activities of various departments of the State Government. It was also contended that Chief Minister of the State is the ex officio chairman of the society and the activities are for the upliftment of the society at large and also to promote the welfare activities provided by the State Government. To bolster the aforesaid submissions he had relied upon the decisions rendered in: (i) Fifth Generation Education Society v. CIT (1990) 185 ITR 634 (All), (ii) CIT v. Gwalior Rayon Silk Manufacturing Co. Ltd. (1992) 196 ITR 149 (SC), (iii) CIT v. Hindustan Motors Ltd. (1991) 192 ITR 619 (Col), (iv) Addl. CIT v. Hamdard Dawakhana (Wakf) (1986) 157 ITR 639 (Del), (v) Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC) and (vi) CIT v. Andhra Chamber of Commerce (1981) 130 ITR 184 (SC). 10. Ltd. (1992) 196 ITR 149 (SC), (iii) CIT v. Hindustan Motors Ltd. (1991) 192 ITR 619 (Col), (iv) Addl. CIT v. Hamdard Dawakhana (Wakf) (1986) 157 ITR 639 (Del), (v) Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC) and (vi) CIT v. Andhra Chamber of Commerce (1981) 130 ITR 184 (SC). 10. In hhalf of the revenue, it was put forth that the certificate granted under Section 12A of the Act is a pre-condition for claiming exemption under Section 11 and mere issue of certificate would not entitle the assessee to be exempted from payment of tax unless it satisfies the assessing officer that it is involved in charitable activities. It was urged that the assessee acted as a contractor in respect of various Government Departments; and that the assessee is fundamentally a profit making institution and, therefore, was not entitled to exemption as envisaged under Section 11 of the Act; and the objects of the institution are not, in toto, for charitable purpose and hence it can be compartmented for charitable and non-charitable purposes. 11. The Tribunal considering the rival submissions raised before it came to hold that the CIT had granted the certificate being satisfied with regard to the activities; that there is material on record that the assessee is not permitted to take advertisements or have any other income from private parties; that it is not allowed to incur any expenditure on behalf of anyone other than the Government of Madhya Pradesh; and that the activities of the assessee is for advancement of object of general public utility. Thereafter, the Tribunal proceeded to state the admitted position before the controversy arose for the assessment year 1994-95. We think it apposite to reproduce the same: 14. It is an admitted position that since assessment year 1985-86 the assessee institution has been held to be a public charitable institution and it is only for the assessment year 1994-95 that a different view has been taken by the revenue. In the case of CIT v. Shree Ram Memorial Foundation (1986) 158 ITR 3 (Del), their Lordships observed that when a particular charitable institution has been recognized as such for several years and is carrying on the same objects and there is no change in the relevant law, it is not for the court to reopen the same point from time to time. Once the assessee institution has been held to be a public charitable institution. In CIT v. Hindustan Motors Ltd. (1991) 192 1TR 619 (Cal) their Lordships have held that it is true that there is no res judicata in income-tax matters but there must be some substantial ground for one assessing officer to differ from the view taken by the another assessing officer in an earlier assessment year. In the case before us, there was absolutely no change in the facts of the assessees case in assessment year 1994-95 as compared to the preceding assessment years. Therefore, there was absolutely no justification for taking a different view specially when nothing has been brought on record to show that there was change in the facts in any manner in assessment year 1994-95 from those of the preceding years. In the case of Radhasoami Satsang v. CIT (SC) their Lordships have observed that where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order it would not be at all appropriate to allow the position to be changed in a subsequent year. 12. After so holding, in para 15, the Tribunal has expressed the view as follows: 15. From what has been stated above, we may conclude that where an application filed under Section 12A an institution is registered as charitable, registration itself is a sufficient proof of the fact that the institution is established for charitable purposes. In such a case, it would not be possible for the assessing officer, in the course of the assessment proceedings, to come to a different finding that the institution is not one for charitable purposes. However, the assessing officer would be entitled to forfeit the exemption to the institution for non-fulfilment of any other statutory requirement and /or contravention of any other provision of law. We, therefore, set aside the orders of the authorities below and direct the assessing officer to frame the assessment afresh in the light of our observations above. 13. The submission of Mr. We, therefore, set aside the orders of the authorities below and direct the assessing officer to frame the assessment afresh in the light of our observations above. 13. The submission of Mr. Sanjay Lal, learned Counsel for the revenue is that the Tribunal has erred in holding that once the institution is registered under Section 12A of the Act as a charitable institution and registration certificate is granted, that would be sufficient proof of the fact that the institution is established for the charitable purposes and it is not open to the assessing officer to come to a different conclusion. 14. Resisting the aforesaid stance it is put forth by Mr. Nema that the Tribunal has really meant to say that the certificate granted under Section 12A by the competent authority cannot be construed to mean by the assessing officer to be for a different purpose other than charitable purposes but the assessing officer is at liberty especially under Section 11 to assess the institution keeping in view the activities carried on by it. In essence, proponment of Mr. Nema is that the assessing officer cannot comment on the status of the institution but can proceed with the assessment in a different manner to deny it the benefit. 15. In our considered opinion, only on the basis of conferral of status by the CIT under Section 12A, the assessee is not entitled to get the benefit but that does not mean that assessing officer can come to hold that institution could not have been established for charitable purposes, more so, after the certificate has been granted. In fact, as we understand, the Tribunal in the last para has clarified the position. 16. The analysis made by the Tribunal in various paras and especially in para 14 of the decision, we are of the considered opinion that the Tribunal has rightly unsettled the findings of the forums below by holding that activities that have been carried out by the institution from 1985-86 are the same and when there has been no change, there was no justification to record a different finding and proceed for assessment. Mr. Lal could not point out how the said finding is perverse. 17. In view of the aforesaid, we are of the considered opinion that no substantial question of law emerges as contemplated under Section 260A of the Act. Mr. Lal could not point out how the said finding is perverse. 17. In view of the aforesaid, we are of the considered opinion that no substantial question of law emerges as contemplated under Section 260A of the Act. Accordingly we perceive no merit in this appeal and the same is dismissed. There shall be no order as to costs.