MSR Vignan Educational Trust, Bangalore V. DIT(Exemptions), Bangalore

ITA 1043/BANG/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5405 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 12-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASON P BOAZ
• Assessee Lawyers: M SRIDHAR REDDY
• Keywords: Charitable institution; Opportunity of being heard
• Section: 80G; 12A; 12AA

Judgement Text

PAGE 1 OF 4 ITA NO.1043/B /09 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1043/BANG/2009 MSR VIGNAN EDUCATIONAL TRUST, NO.726, 3RD MAIN, 3RD CROSS, 'D' BLOCK, RAJAJINAGAR 3ND STAGE, BANGALORE-10. - APPELLANT VS, THE DY. COMMISSIONER OF INCOME-TAX (EXEMPTION), BANGALORE. - RESPONDENT APPELLANT BY : SHRI M SRIDHAR REDDY RESPONDENT BY : SHRI JASON P BOAZ O R D E R PER GEORGE GEORGE K : THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED DIRECTOR OF INCOME TAX (EXEMPT IONS), BANGALORE DATED 1.9.2009, REFUSING TO GRANT REGISTRATION U/S 12AA OF THE I T ACT. 2. THE GROUNDS RAISED IN THE APPEAL ARE AS FOLLOWS : I) THE LEARNED HON'BLE COMMISSIONER IS NOT JUSTIFIED IN REJECTING THE APPLICATION FOR REGISTRATION U/S 1 2A OF THE I T ACT, 1961. II) THE LEARNED HON'BLE COMMISSIONER HAS ERRED IN STATING THAT IN THE ABSENCE OF ACTIVITIES, IT WAS N OT POSSIBLE TO VERIFY THE GENUINENESS OF THE OBJECTS O F THE TRUST AND ITS ACTIVITIES. PAGE 2 OF 4 ITA NO.1043/B /09 2 III) IT IS PRAYED THAT THE APPELLANT BE GRANTED REGISTRATION U/S 12A OF THE I T ACT, 1961. 3. BRIEF FACTS IN REGARD TO THE ABOVE GROUNDS ARE AS FOLLOWS. THE ASSESSEE TRUST WAS FORMED ON 9.5.2008. IT FI LED AN APPLICATION FOR REGISTRATION U/S 12A ON 16.3.2009. A CALL-MEMO DATED 15.5.2009 WAS ISSUED CALLING FOR THE DETAILS. IN R ESPONSE, THE ASSESSEE TRUST FILED THE DETAILS VIDE ITS LETTER DATED 9.6.2 009, WHEREIN THE TRUST SUBMITTED ITS INTENT TO START AN EDUCATIONAL INSTIT UTION. THE DIT(EXEMPTIONS) PASSED ORDER U/S 12AA REJECTING THE APPLICATION FILED BY ASSESSEE BY HOLDING THUS :- IN THE ABSENCE OF ACTIVITIES, IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THE OBJECTS OF THE TRUST AND ITS ACTIVITIES AS IS REQUIRED U/S 12AA(1)(B) OF THE ACT, 1961. FURTHER, IN THE ABSENCE OF ANY ACTIVITIES, IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THE OBJECTS OF THE TRUST AND ITS ACTIVITIES AS HELD BY THE HON'BLE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY V CIT (247 ITR 18). 4. THE LEARNED AR SUBMITTED THAT NO OPPORTUNITY OF BEING HEARD WAS GIVEN BY THE DIT(E) BEFORE DENYING THE BE NEFIT OF REGISTRATION. HE STATED THAT CERTAIN DETAILS WERE CALLED FOR BY THE DIT(EXEMPTIONS) AND THE ASSESSEE FILED REPLY VIDE L ETTER DATED 9.6.2009. THE IMPUGNED ORDER WAS PASSED WITHOUT CA LLING FOR ANY EXPLANATION ON THE DETAILS FILED. IT WAS FURTHER CONTENDED BY THE PAGE 3 OF 4 ITA NO.1043/B /09 3 LEARNED AR, IF THE ACTIVITY HAD NOT COMMENCED, NECE SSARILY DIT(EXEMPTIONS) OUGHT TO HAVE PERUSED THE AIMS AND OBJECTS OF THE TRUST TO COME TO CONCLUSION WHETHER THE TRUST IS GE NUINE OR NOT. IT WAS SUBMITTED, THE DIT(EXEMPTIONS) IS NOT TO LOOK INTO SOURCE OF INCOME BUT ONLY TO SEE AS TO HOW THE INCOME IS APPLIED. I F THE SAME IS APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSE, THEN THE TRUST IS TO BE ALLOWED REGISTRATION. IT WAS SUBMITTED; MANY OF THE RELIGI OUS AND CHARITABLE TRUSTS COMMENCE THEIR ACTIVITY ON RECEIPT OF DONATI ONS. FOR RECEIVING DONATIONS, 80G APPROVAL IS REQUIRED AND 12AA REGIST RATION IS A CONDITION PRECEDENT FOR 80G APPROVAL. HE RELIED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SANJEE VAMMA HANUMANTHE GOWDA CHARITABLE TRUST V DIRECTOR OF INC OME TAX (EXEMPTIONS) (2006) (285 ITR 327) (KAR) AND PUNJAB AND HARYANA HIGH COURT IN THE CASE OF SONEPAT HINDU EDUCATIONAL & CHARITABLE SOCIETY V CIT & ANOTHER (2005) (278 ITR 262) FOR TH E PROPOSITION THAT AT THE TIME OF REGISTRATION, DIT(EXEMPTIONS) NEED T O EXAMINE THE AIMS AND OBJECTS OF THE TRUST WHEN ITS ACTIVITIES HAD NO T COMMENCED. 5. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED TH E FINDINGS OF THE DIT(EXEMPTIONS) AND ALSO RELIED ON THE DECISION OF THE KERALA HIGH COURT IN THE CASE OF SELF EMPLOY ERS SERVICE SOCIETY V CIT (2001)(247 ITR 18). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, WE ARE OF THE VI EW THAT THE DIT(EXEMPTIONS) HAS NOT GRANTED THE ASSESSEE AN OPP ORTUNITY OF BEING HEARD. THE TRUST WAS FORMED ON 9.5.2008. THE DI T(EXEMPTIONS) PAGE 4 OF 4 ITA NO.1043/B /09 4 HAD ISSUED A CALL-MEMO REQUIRING CERTAIN DETAILS. TO THIS, ASSESSEE HAD FILED DETAILS AND ON RECEIPT OF THESE DETAILS FROM THE ASSESSEE, THE DIT(EXEMPTIONS) PASSED AN ORDER REFUSING TO GRANT R EGISTRATION U/S 12A WITHOUT GIVING THE ASSESSEE AN OPPORTUNITY OF B EING HEARD. THEREFORE, IN THE INTEREST OF JUSTICE, WE ARE OF TH E VIEW THAT THE MATTER HAS TO BE RE-EXAMINED BY THE DIT(EXEMPTIONS) AFRESH AFTER GRANTING ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. THE DI T(EXEMPTIONS) WHILE PASSING FRESH ORDER SHALL KEEP IN MIND THE DI CTUM LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF SANJEE VAMMA HANUMANTHE GOWDA CHARITABLE TRUST V DIRECTOR OF INC OME TAX (EXEMPTIONS) 285 ITR 327. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THE ORDER IS PRONOUNCED ON ..12TH......APRIL, 2010. SD/- SD/- (A. MOHAN ALANKAMONY) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL M EMBER COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF 7. GF, ITAT, NEW DELHI. BY ORDER MSP/6/4/ ASST. REGISTRAR, ITAT, BANGALORE.