Shri Krishna Kirpa Gaushala Samiti, Pehowa V. CIT (Exemptions), Chandigarh

ITA 103/CHANDI/2015

• Counselvise Citation: 10321514 RSA 2015
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-09-2015
• Assessment Year: misc
• Appeal Filed On: 29-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SIDHU
• Assessee Lawyers: AJAY KUMAR JAIN
• Keywords: Charitable institution
• Section: 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.103/CHD/2015 (UNDER SECTION 80 (G) OF THE ACT) SHRI KRISHNA KIRPA VS. THE C.I.T.(EXEMPTION), GAUSHALA SAMITI CHANDIGARH. PEHOWA. PAN: AAMTS9203P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY KUMARJAIN RESPONDENT BY : SHRI D.S. SIDHU, DR DATE OF HEARING : 10.09.2015 DATE OF PRONOUNCEMENT : 21.09.2015 O R D E R PER RANO JAIN, A.M . : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION), CHANDIGARH DATED 24.12.2014, WHEREBY A N APPLICATION UNDER SECTION 80G (5)(VI) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FILED BY THE ASSESSE E WAS REJECTED BY THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL : 2 1. THE LD. CIT(E) HAS GROSSLY ERRED IN REJECTING TH E APPLICATION U/S 80G(5) MERELY ON THE BASIS OF FRIVOLOUS GROUNDS OF NOT SHOWING THE SALE OF MILK, WHEN THERE IS NO SALEABLE MILK WITH THE SOC IETY. 2. THE LD. CIT(E) HAS FURTHER ERRED IN LAW BY OBSERVI NG THAT SECTION 115BBC APPLIES TO ANONYMOUS DONATION WHEN TH E SOCIETY IS FOR RELIGIOUS AND CHARITABLE PURPOSES. 3. THE APPLICANT CRAVES FOR PERMISSION TO ADD, ALTE R OR DELETE ANY OR ALL THE GROUNDS OF APPEAL. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SOCIETY REGISTERED UNDER SECTION 12A OF THE ACT. IT FILED AN APPLICATION UNDER SECTION 80G(5)(VI) OF THE ACT BEF ORE THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION), FA RIDABAD AS ON 24.6.2014, WHICH WAS TRANSFERRED TO COMMISSIO NER OF INCOME TAX (EXEMPTION), CHANDIGARH ON CHANGE OF JURISDICTION. THE LEARNED COMMISSIONER OF INCOME T AX (EXEMPTION), CHANDIGARH REJECTED THE SAID APPLICATI ON OF THE ASSESSEE BY HIS ORDER DATED 24.12.2014 OBSERVING AS FOLLOWS : 3. THE SOCIETY IS ALLEGED TO RUN A GAUSHALA IN W HICH THERE ARE MORE THAN 1,100 COWS AS PER THE DETAILS SUBMITTED. PERUSAL OF THE INCOME AND EXPENDITURE ACCOUNT FILED FOR THE ENDING 31.3.2014, 31.3.2013 AND 31.3. 2012 SHOWS INCOME OF RS.4,65,570/-, RS. 1,17,000/- AND RS. 62,570/- RESPECTIVELY ON SAL E OF MANURE. IT IS HOWEVER, QUITE ASTONISHING TO SEE THAT THERE IS NO INCOME SHOWN ON SALE OF MILK AND OTHER MILK PRODUCTS IN ANY OF THESE YEARS EVEN THOUGH A MASSIV E HERD OF 1,100 COWS IS HOUSED IN THE GAUSHALA. ANOTHER STRIKING FEATURE OF THE INCOM E AND EXPENDITURE ACCOUNTS FILED FOR ALL THESE YEARS IS THAT ALMOST ALL THE DONATIONS HA VE BEEN SHOWN TO BE RECEIVED FROM ANONYMOUS DONORS. THE FOLLOWING CHART WOULD APTLY D ESCRIBE THE FINANCIAL AFFAIRS OF THE SOCIETY; F.Y. TOTAL DONATIONS ANONYMOUS DONATIONS (IN RS.) 2013-14 87,79,376 81,64,376 3 2012-13 44,95,560 43,95,560 2011-12 34,36,600 31,56,600 AS ACTIVITIES OF TRUST CAN BE SAID TO BE COVERED IN 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' THE ANONYMOUS DONATIONS RECEIVED ARE LIABL E TO BE ASSESSED TO TAX U/S 115 BBC OF THE ACT. IN THE BACK GROUND OF THESE FACTS, THERE APPEARS TO BE NO GROUND FOR ANY APPROVAL U/S 80G OF THE ACT. THE APPLICATION FI LED U/S 80G (5)(VI) IS THUS LIABLE TO BE REJECTED. 4. NOW, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US AGAINST THE SAID ORDER OF THE COMMISSIONER OF INCOM E TAX (EXEMPTION). THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ONLY REASON ON WHICH THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION) HAS REJECTE D THE APPLICATION UNDER SECTION 80G(5)(VI) OF THE ACT IS THAT THE ASSESSEE HAS RECEIVED ANONYMOUS DONATIONS, WHICH CA NNOT BE A VALID REASON FOR REJECTING THE APPLICATION UNDER SECTION 80G(5)(VI) OF THE ACT IN VIEW OF THE FACT THAT THE ASSESSEE IS ALREADY REGISTERED UNDER SECTION 12A OF THE ACT. R ELIANCE WAS PLACED ON A JUDGMENT OF LUCKNOW BENCH OF THE ITAT I N THE CASE OF KALYANAM KAROTI VS. CIT IN ITA NO.682/LUCK /2008 DATED 7.11.2008. IT WAS ALSO SUBMITTED THAT IN THI S CASE, IT HAS BEEN HELD THAT THE LEARNED COMMISSIONER OF INCO ME TAX (EXEMPTION) CANNOT REFUSE TO GRANT REGISTRATION UND ER SECTION 80G OF THE ACT ONLY ON THE PRETEXT THAT THE PARTICU LARS OF THE DONORS ARE NOT PROVIDED BY IT. THE PROVISIONS OF SECTION 115BBC OF THE ACT ARE NOT RELEVANT FOR DECIDING WHE THER CONTINUATION OF RECOGNITION UNDER SECTION 80G IS TO BE GRANTED OR NOT. IN VIEW OF THE SAME, IT WAS PRAYED THAT TH E ORDER OF 4 THE COMMISSIONER OF INCOME TAX (EXEMPTION) BE SET A SIDE AND THE APPROVAL UNDER SECTION 80G BE GRANTED. 5. THE LEARNED D.R. RELIED UPON THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION) AND SUBMITTED THAT THE ASSESSEE IS NOT ELIGIBLE FOR GRA NT OF REGISTRATION UNDER SECTION 80G OF THE ACT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON PERUSAL OF THE O RDER OF THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION) REJ ECTING THE APPLICATION OF THE ASSESSEE MADE UNDER SECTION 80G, WE FIND THAT THE ONLY REASON FOR WHICH THE LEARNED COM MISSIONER OF INCOME TAX HAD NOT GRANTED THE APPROVAL TO THE ASSESSEE IS THAT THE DONATIONS SHOWN TO HAVE BEEN RECEIVED BY T HE ASSESSEE ARE ALL ANONYMOUS DONATIONS. ACCORDING T O HIM, SINCE THE ANONYMOUS DONATIONS RECEIVED ARE LIABLE T O BE ASSESSED TO TAX UNDER SECTION 115BBC, THERE APPEARS TO BE NO GROUND OF APPROVAL UNDER SECTION 80G OF THE ACT. H OWEVER, WE DO NOT FIND OURSELVES IN AGREEMENT WITH THIS LOGIC OF THE LEARNED COMMISSIONER OF INCOME TAX. 7. THE CLAIM OF REGISTRATION UNDER SECTION 80G OF THE ACT TO ANY INSTITUTION OR FUNDS IS PROVIDED UNDER S ECTION 80G(5)(VI) OF THE ACT WHICH READS AS UNDER : SECTION 80G(5) THIS SECTION APPLIES TO DONATIONS TO ANY INSTITUTION OR FUND REFERRED TO IN SUB- CLAUSE (IV) OF CLAUSE (A) OF SUB- SE CTION (2), ONLY IF IT IS ESTABLISHED IN INDIA FOR A CHARITABLE PUR POSE AND IF IT FULFILS THE FOLLOWING CONDITIONS, NAMELY:-- 5 ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- (VI) IN RELATION TO DONATIONS MADE AFTER THE 31ST DAY O F MARCH, 1992, THE INSTITUTION OR FUND IS FOR THE TIME BEING AP PROVED BY THE COMMISSIONER IN ACCORDANCE WITH THE RULES 3 MADE IN THI S BEHALF. 8. AS PER THIS PROVISION, THE APPROVAL OF THE COMMISSIONER HAS TO BE MADE IN ACCORDANCE WITH THE RULES MADE IN THIS REGARD. THE RULES REFERRED IN THIS SE CTION ARE PROVIDED UNDER RULE 11AA OF THE INCOME TAX RULES. SUB-RULE (1) OF RULE 11AA PRESCRIBES FORM NO.10G TO BE FILED IN TRIPLICATE IN THIS REGARD. SUB-RULE (2) PROVIDES T HE DOCUMENTS TO BE FILED WITH THE SAID APPLICATION. SUB-RULE (3 ) PROVIDES FOR FURTHER DOCUMENTS OR INFORMATION AS ASKED FOR BY TH E COMMISSIONER. SUB-RULES (4) AND (5) WHICH ARE REL EVANT FOR OUR CONSIDERATION READS AS UNDER : (4) WHERE THE COMMISSIONER IS SATISFIED THAT ALL T HE CONDITIONS LAID DOWN IN CLAUSES (I) TO (V) OF SUB-SECTION (5) OF SECTION 80 G ARE FULFILLED BY THE INSTITUTION OR FUND, HE SHALL RECORD SUCH SATISFACTION IN WRITI NG AND GRANT APPROVAL TO THE INSTITUTION OR FUND SPECIFYING THE ASSESSMENT YEAR OR YEARS FOR WHICH THE APPROVAL IS VALID. (5) WHERE THE COMMISSIONER IS SATISFIED THAT ONE OR MORE OF THE CONDITIONS LAID DOWN IN CLAUSES (I) TO (V) OF SUB-SECTION (5) OF SE CTION 80G ARE NOT FULFILLED, HE SHALL REJECT THE APPLICATION FOR APPROVAL, AFTER RE CORDING THE REASONS FOR SUCH REJECTION IN WRITING: 9. ON PERUSAL OF THE ABOVE RULES, IT IS QUITE CLEA R THAT WHILE GRANTING THE APPROVAL UNDER SECTION 80G, THE ONLY 6 PROVISION AS PER THESE RULES IS THAT THE REJECTION CAN ONLY BE MADE IF ONE OR MORE CONDITIONS AS LAID DOWN IN CLAU SES (I) TO (V) OF SUB-SECTION (5) OF SECTION 80G OF THE ACT AR E NOT FULFILLED. IT IS QUITE CLEAR THAT THE RULES HAVE GIVEN THE INSTANCES OF REJECTION OF THE SAID APPLICATION IN T HE FORM OF NON-COMPLIANCE OF PROVISION OF SECTION 80G(5) CLAUS ES (I) TO (V). NOW, COMING BACK TO THE PROVISION OF SECTION 80G(5) OF THE ACT, WE SEE ON READING OF CLAUSES (I) TO (V), T HERE IS NO CLAUSE WHICH SAYS THAT THE SAID APPROVAL BE REJECTE D IF ANY INSTITUTION OR FUND ACCEPTS ANONYMOUS DONATION. IN THE PRESENT CASE, THIS WAS THE ONLY REASON GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX FOR REJECTION OF SAID R EGISTRATION. THE PROVISIONS OF SECTION 115BBC OF THE ACT ARE NOT RELEVANT FOR GRANTING APPROVAL UNDER SECTION 80G OF THE ACT. THERE IS NO MENTION OF THIS SECTION 115BBC OR EVEN OF ANONYM OUS DONATION IN ANY OF THE PROVISION OF SECTION 80G OF THE ACT OR RULES MADE FOR THE PURPOSES OF THIS SECTION. THE TAXABILITY OF ANONYMOUS DONATIONS UNDER SECTION 115BBC OF THE ACT CAN ALWAYS BE TAKEN CARE AT THE TIME OF ASSESSMENT BY T HE ASSESSING OFFICER AND ARE NOT RELEVANT FOR GRANTING REGISTRATION UNDER SECTION 80G OF THE ACT. 10. RELIANCE PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ON THE ORDER OF THE LUCKNOW BENCH OF THE I TAT IN THE CASE OF KALYANAM KAROTI (SUPRA) IS NOT OUT OF PLAC E. IN THIS CASE ALSO, THE REGISTRATION UNDER SECTION 80G OF TH E ACT WAS REJECTED ON THE SAME GROUNDS. AFTER ANALYZING IN D ETAIL THE 7 RELEVANT SECTIONS AND RULES, THE COORDINATE BENCH O F THE ITAT OBSERVED AS UNDER : FOR GRANTING RECOGNITION UNDER S. 80G(5) OR CONTINUAT ION THEREOF, IT IS ONLY TO BE SEEN WHETHER THE CONDITIONS LAID DOWN UNDER CLS. (I) TO (V) OF S. 80G(5) ARE FULFILLED OR NOT. FURTHER, R. 11AA ALSO DOES NOT INDICATE THAT NATURE OR TYPE OF DONATION REC EIVED BY THE FUND OR INSTITUTION WOULD BE RELEVANT FOR GRANTING RE COGNITION UNDER S. 80G(5) OR CONTINUATION THEREOF. RULE 11AA PROVIDES POWER TO CIT TO CARRY OUT ENQUIRIES AS HE CONSIDERS NECESSARY AND CALL FOR DOCUMENTS OR INFORMATION FROM THE INSTITUTION/FUND FOR SATISFYING HIMSELF ABOUT THE G ENUINENESS OF ITS ACTIVITIES. FURTHER, CL. (5) OF R. 11AA AUTHORI ZES CIT TO REFUSE RECOGNITION OR CONTINUATION THEREOF ONLY WHEN THE C ONDITIONS LAID DOWN IN CLS. (I) TO (V) OF SUB-S. (5) OF S. 80G ARE NOT FULFILLED. THUS NEITHER IN THE MAIN SUB-S. (5) OF RULES MADE THEREUN DER, THERE IS ANY PROVISION TO REFUSE RECOGNITION OR CONTINUATION THEREOF ONLY OR THE GROUND THAT THE PARTICULARS OF DONORS ARE NOT PROVIDED BY INSTITUTION OR FUND. NON-AVAILABILITY OF PARTICULARS MAY EMPOWER THE AO TO INVOKE S. 115BBC R/W S. 13(7) WHICH ARE E FFECTIVE FROM IST APRIL, 2007 WHILE MAKING THE ASSESSMENT OF T HE SOCIETY BUT SO FAR AS RECOGNITION UNDER S. 80G(5)IS CONCERNED, THEY HAVE NO ROLE TO PLAY. THE PROVISIONS OF S. 115BBC AND S. 13(7) ARE APPLICABLE FOR THE PURPOSES OF CONSIDERING THE ANON YMOUS DONATIONS AS INCOME OF THE ASSESSEE WHILE MAKING TH E ASSESSMENT. BUT SUCH ANONYMOUS DONATIONS ARE NOT RE LEVANT FOR DECIDING WHETHER CONTINUATION OF RECOGNITION UNDER S. 80G(5) IS TO BE GRANTED OR NOT UNLESS THERE IS OTHER MATERIAL TO JUSTIFY THAT THE ASSESSEE SOCIETY IS ENGAGED IN THE ACTIVITIES WHICH ARE N OT CHARITABLE ACTIVITIES AND ARE ONLY A CAMOUFLAGE AND SUCH ANONYMOUS/VOLUNTARY DONATIONS ARE A CONSEQUENCE OF SUCH UNCHARITABLE ACTIVITIES OR ACTIVITIES WHICH ARE NOT GE NUINE. THE ONLY EFFECT OF NOT FURNISHING PARTICULARS BY THE ANONY MOUS DONORS OR IN CASE OF DONORS WHO DO NOT FURNISH FULL PARTICU LARS INCLUDING PAN IS THAT CERTIFICATE UNDER S. 80G MAY NOT ISSUED TO THEM AND HENCE DEDUCTION UNDER S. 80G CANNOT BE GIVEN TO THEM IN THEIR OWN ASSESSMENT. BUT IN RESPECT OF OTHER DONORS WHO ARE 8 FURNISHING THEIR PARTICULARS INCLUDING PAN/ CERTIFIC ATE AND HENCE, DEDUCTION UNDER S. 80G COULD NOT BE DENIED BY NOT G IVING RECOGNITION TO THE SOCIETY UNDER S. 80G(5) OR CONTINU ATION THEREOF. IN ANY CASE, THERE IS NO CHANGE IN THE FACTS AND CIRCUM STANCES OF THE CASE AS IN THE EARLIER YEARS AND THERE IS NO COGEN T MATERIAL REASON FOR REFUSING CONTINUATION OF RECOGNITION. RADHA SOAMI SATSANG VS. CIT (1991) IOC CTR (SC) 267 : (1992) 19 3 ITR 321 (SC) APPLIED. 11. RESPECTFULLY FOLLOWING THE ORDER OF THE COORDI NATE BENCH OF THE ITAT, WE DIRECT THE LEARNED COMMISSION ER OF INCOME TAX TO GRANT REGISTRATION TO THE SOCIETY UND ER SECTION 80G OF THE ACT. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF SEPTEMBER, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACOUNTANT MEMBER DATED : 21 ST SEPTEMBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 9