Dismissed

The Commissioner of Income Tax -Exemption v. Sarv Hitkari Educational Society

Delhi HC1 Jul 2024ITA/640/2019

Case brief

AI extract

What is this about?

Commissioner appealed Tribunal's grant of Sections 11 and 12 exemption to an educational society despite sham land sale deeds used to secure AICTE approval. The High Court noted the Tribunal's finding that the society ran a genuine educational institution in accordance with its objects and dismissed the appeal.

What the court decided

AI extract

The Commissioner of Income Tax -Exemption Vs Sarv Hitkari… — Income Tax | Delhi HC (2024)

¶1

$~ 4

¶2

IN THE HIGH COURT OF DELHI AT NEW DELHI

¶3

- ITA 640/2019

¶4

THE COMMISSIONER OF INCOME TAX

¶5

EXEMPTION ..... Appellant

¶6

Through: Mr. Ruchir Bhatia, SSC with Mr. Anant Mann, Adv.

¶7

versus

¶8

SARV HITKARI EDUCATIONAL SOCIETY .... Respondent

¶9

Through: Mr. Akarsh Garg, Mr. Subham Shankar, Advs.

¶10

CORAM:

¶11

HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE RAVINDER DUDEJA

¶12

O R D E R % 01.07.2024

¶13

The Principal Commissioner impugns the order of the Income Tax Appellate Tribunal [“ Tribunal ”] dated 30 November 2018 and proposes the following question of law for our consideration:-

¶14

“A. Whether on the facts and circumstances of the case ld. ITAT erred in allowing the benefit of exemption under section 11 & 12 of the Income Tax Act, 1961 to the Assessee, despite the fact that the assessee was found to be undisputedly indulged in 'sham activities' to get the approval of AICTE for setting up a polytechnic college?”

¶15

We note that insofar as the issue of sham transaction is concerned, the Tribunal has in paragraphs 13 and 14 of its order observed as follows:-

¶16

“13. When the assessee society has not become the owner of the land in question by virtue of sale deed dated 24.07.2006, the same

¶17

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 00:38:33

¶18

being without consideration, there is no question of violating the terms and conditions laid down by the ld. CIT (E) for transferring the land of the assessee society without his permission. Moreover, when it is also undisputed fact that possession of land remained throughout with Darshan Singh, it shows the statements of Darshan Singh and Rakesh Chand Bajaj recorded by the AO during remand proceedings that the land in question has merely shown to have been transferred to satisfy the conditions laid down by the AICTE to start a polytechnic college are true and correct and as such, no malafide can be attributed. Rather it was a mutual arrangement between them.

¶19

In view of what has been discussed above, we are of the considered view that when the assessee society has not become the owner of the land in question, there is no question of indulging in into ingenuine activities or that the activities of assessee society are not being carried out in accordance with the object of the Trust. Moreover, it is nowhere the case of then CIT(E) that the assessee society is not running in accordance with its aims and objects, No doubt, assessee society has entered into a sham transaction by virtue of the sale deeds dated 24.07.2006 and 26.09.2007 qua the land in question in order to misrepresent AICTE to get the approval for setting up a polytechnic college, but this fact has not proved in any manner that the activities of the assessee trust are not genuine or are not being carried out in accordance with its aims and objects, Rather in the remand report it is recorded by the AO that assessee society is running an educational institution having 1000 students on its roll with huge teaching staff and no complaint has been received as to its activities.”

¶20

We take note of the categorical findings and conclusions which have come to be rendered by the Tribunal to the effect that the society was running in accordance with its aims and objectives. It is further pertinently observed that the appellants had failed to establish or prove that activities of the trust were not been carried forward in accordance with its aims and objectives. It is perhaps in the aforesaid context that it has taken the view that the alleged misrepresentation would not have any impact on the claim for exemption under Sections 11 and 12 of the Income Tax Act, 1961 [“ Act ”].

¶21

In light of the aforesaid, we find no ground to interfere with the order of the Tribunal.

¶22

¶23

The appeal fails and shall stand dismissed.

¶24

YASHWANT VARMA, J.

¶25

RAVINDER DUDEJA, J.

¶26

JULY 01, 2024/ neha

¶27

The Commissioner of Income Tax -Exemption v. Sarv Hitkari Educational Society

Case brief

What is this about?

What the court decided

The Commissioner of Income Tax -Exemption v. Sarv Hitkari Educational Society

Case brief

What is this about?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Smt. Babita Vs Govt. of NCT of Delhi & Anr.

M/S Om Gems and Jewellery Vs Principal Commissioner, Directorate of International Customs, Free Trade Agreements (Fta) Cell New

Pinki Tour and Travels Ltd. Vs Income Tax Department

Pr. Commissioner of Income Tax -7 Vs Shawnotel India Pvt. Ltd.

Commissioner of Income Tax International TAXATION-1, New Delhi Vs Goto Technologies Ireland Unlimited Company (Earlier Known as Logmein Ireland Unlimited Company)