Vishwantathrao Shamrao Patil Charitable Trust, Sangli V. Commissioner of Income-tax 1,

ITA 1045/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1756 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-12-2015
• Assessment Year: misc
• Appeal Filed On: 19-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S V DESHPANDE
• Keywords: Charitable institution; Condonation of delay
• Section: 80G; 12; 10; 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1045/PN/2014 VISHWANATHRAO SHAMRAO PATIL CHARITABLE TRUST, AT & POST : KAVALAPUR, TAL. MIRAJ, DIST. SANGLI 416410 PAN NO.AAAATV1165D . / APPELLANT V/S CIT-I, KOLHAPUR . / RESPONDENT / ASSESSEE BY : SHRI S.V. DESHPANDE / REVENUE BY : SHRI RAJEEV KUMAR / ORDER PER VIKAS AWASTHY, JM : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT-I, KOLHPUR DATED 07-02-2014 PASSED U/S.80G (5)(VI) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE APPEAL HAS BEEN FILED WITH THE DELAY OF 7 DAYS. TH E ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY SUPPORTED BY AN AFFIDAVIT. A PERUSAL OF THE AFFIDAVIT SHOWS T HAT THE DELAY WAS CAUSED DUE TO ILLNESS OF THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE). THE ASSESSEE HAS ALSO FILED MEDICAL CERTIFICATE IN SUPPORT OF HIS SUBMISSIONS. / DATE OF HEARING :23.05.2016 / DATE OF PRONOUNCEMENT:25.05.2016 2 ITA NO.1045/PN/2014 3. AFTER PERUSING THE SAME WE ARE SATISFIED THAT THE DELA Y IN FILING OF APPEAL WAS NOT DELIBERATE OR WILFULL. THE DELAY WAS D UE TO MEDICAL EXIGENCIES. IN THE FACTS OF THE CASE, THE DELAY IN FIL ING OF APPEAL IS CONDONED AND THE APPEAL IS ADMITTED TO BE HEAR D AND DISPOSED OFF ON MERITS. 4. THE ASSESSEE IS A CHARITABLE TRUST AND IS RUNNING A D ENTAL COLLEGE AND HOSPITAL IN DISTRICT SANGLI. THE ASSESSEE IS ENJO YING THE BENEFIT OF REGISTRATION U/S.12A OF THE I.T. ACT SINCE 08-06-1987. THE ASSESSEE WAS ALSO GRANTED APPROVAL U/ S.80G FOR THE FIRST TIME ON 25-09-1991 FROM 01-04-1991 TO 31-03-1 993. THEREAFTER, THE APPROVAL U/S.80G WAS RENEWED FROM TIME TO TIME. THE LAST APPROVAL GRANTED BY CIT-I, KOLHAPUR WAS FOR TH E PERIOD 01-04-2008 TO 31-03-2012 VIDE COMMUNICATION DATED 17-0 9- 2009. THE ASSESSEE VIDE APPLICATION DATED 09-05-2012 PR AYED FOR RENEWAL OF APPROVAL U/S.80G(5). THE CIT VIDE IMPUGNED ORDER REJECTED THE SAME. HENCE, THE PRESENT APPEAL BY THE ASSESSEE. 5. SHRI S.V. DESHPANDE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE CIT IN AN ARBITRARY AND UNJUSTIFIED MA NNER HAS REJECTED THE APPLICATION OF THE ASSESSEE FOR RENEWAL OF APPROVAL U/S.80G(5) OF THE ACT. THE ONLY REASON MENTIONED BY THE CIT IN THE IMPUGNED ORDER FOR REJECTING THE EXTENSION OF APPROVAL U/S.80G IS THAT THE MDS COURSES OFFERED IN THE DENTAL COLLE GE BEING RUN BY THE ASSESSEE IS NOT PART OF NORMAL SCHOOLING AND THUS HELD IT TO BE BUSINESS ACTIVITY. THE CIT HAS ERRED IN COMING TO THE CONCLUSION THAT THE ASSESSEE IS EARNING HUGE PRO FITS FROM THE MDS COURSE OFFERED TO THE STUDENTS. THE LD. AUTH ORISED REPRESENTATIVE SUBMITTED THAT THE CIT HAS GONE BEYOND HIS 3 ITA NO.1045/PN/2014 JURISDICTION WHILE DEALING WITH THE APPLICATION OF THE ASSESSE E FOR EXTENSION OF APPROVAL U/S.80G. THE CIT OUGHT TO HAVE CO NFINED HIS STUDY ONLY TO EXAMINE THAT THE OBJECTS CARRIED OUT BY THE ASSESSEE. AS IS EVIDENT FROM THE IMPUGNED ORDER THE CIT CALLED FOR AUDIT REPORT FOR F.YRS. 2008-09 TO 2010-11 AND FINANCIAL STATEMENTS FOR F.Y. 2012-13. THE ASSESSEE IS STILL ENJOYIN G THE BENEFIT OF REGISTRATION U/S.12A OF THE ACT. THIS ITSELF SHOWS THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE ARE CHARITABLE IN NATURE AND THE ASSESSEE HAS NOT VIOLATED THE PROVISIONS OF SECT ION 12A. THE LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT ONCE THE APPROVAL U/S.80G HAS BEEN GRANTED THE SAME CANNOT BE WITHDRAWN UNLESS REGISTRATION U/S.12A IS CANCELLED OR THE OBJECTS OF THE ASSESSEE CEASES TO BE CHARITABLE IN NATURE. IN SUPPORT OF HIS SUBMISSIONS THE LD. AUTHORISED REPRESENTATIVE PLACED R ELIANCE ON THE FOLLOWING DECISIONS : 1. N.N. DESAI CHARITABLE TRUST REPORTED AS 346 ITR 452 2. SONEPAT HINDU EDUCATION AND CHARITABLE SOCIETY V S. CIT REPORTED AS 278 ITR 262 3. SIKSHAN PRASARAK MANDALI VS. CIT REPORTED AS 117 TTJ 337 6. ON THE OTHER HAND SHRI RAJEEV KUMAR REPRESENTING T HE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF THE CIT IN REJECTING THE APPLICATION OF THE ASSESSEE FOR RENEWAL OF AP PROVAL U/S.80G. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT THE ASSESSEE IS CHARGING HUGE SUM FOR THE MDS DENTAL CO URSE OFFERED AS WELL AS FROM THE HOSPITAL. A PERUSAL OF RECORDS SHOW THAT NO STUDENT IS GIVEN ADMISSION FOR A CONCESSIONAL FEE. THE COLLEGE IS BEING RUN WITH A PROFIT MOTIVE AND THERE IS NO ELE MENT OF CHARITY INVOLVED IN THE ACTIVITIES OF THE ASSESSEE. THE LD . 4 ITA NO.1045/PN/2014 DEPARTMENTAL REPRESENTATIVE PRAYED FOR DISMISSING THE APP EAL OF THE ASSESSEE AND UPHOLDING THE FINDINGS OF THE CIT. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE IMPUG NED ORDER. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH TH E LD. AUTHORISED REPRESENTATIVE HAS PLACED RELIANCE. THE CIT H AS REJECTED THE APPLICATION OF THE ASSESSEE FOR EXTENSION OF APPROVAL U/S.80G(5)(VI) OF THE ACT ON THE GROUND THAT THE ASSESSEE IS EARNING HUGE PROFIT FROM THE MDS DENTAL COURSE OFFERED TO THE STUDENTS AS WELL AS FROM THE HOSPITAL ACTIVITIES. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS STILL ENJOYING THE RE GISTRATION U/S.12A OF THE ACT WHICH WAS GRANTED TO THE ASSESSEE W AY BACK IN THE YEAR 1987. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSEE WAS GRANTED APPROVAL U/S.80G FOR THE FIRST TIME IN 1991 AND T HE SAME HAS BEEN RENEWED FROM TIME TO TIME TILL 2012. IT IS IN TH E YEAR 2012 WHEN THE ASSESSEE MADE AN APPLICATION FOR EXTENSION OF APPROVAL U/S.80G THAT THE SAME WAS DENIED BY THE CIT. WE ARE OF THE CONSIDERED VIEW THAT FOR THE PURPOSE OF APPROVAL U/S.80G OF THE ACT IT IS IMPORTANT TO FIND OUT THE REAL PURPOSE OF ESTABLISHING THE TRUST. IF THE COMMISSIONER IS S ATISFIED THAT THE OBJECTS OF THE TRUST ARE CHARITABLE, APPROVAL U /S.80G SHOULD NOT BE DENIED. REGISTRATION U/S.12A GRANTED TO AN INSTITUTION IN ITSELF IS A SUFFICIENT PROOF THAT THE ASSESSEE IS CARRYING ON CHARITABLE ACTIVITIES. MERELY THAT THE ASSESS EE HAS EARNED SOME SURPLUS WHILE CARRYING OUT CHARITABLE ACTIVITIES WOULD NOT MAKE THE ASSESSEE INELIGIBLE FOR GRANT/EXTENSION OF APP ROVAL 5 ITA NO.1045/PN/2014 U/S.80G OF THE ACT, ESPECIALLY WHEN THE REGISTRATION GRANT ED U/S.12A IS INTACT. 8. THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF S HRI CHANDRABHAN ATHARE PATIL GRAM NAVODAYA TRUST VS. CIT R EPORTED AS 22 TAXMANN.COM 406 (PUNE) HAS HELD THAT THE SCOPE OF ENQUIRY BY COMMISSIONER WHILE DEALING WITH AN APPLICATION U/S.80G IS TO EXAMINE ITS ELIGIBILITY UNDER VARIOUS PROVISIONS OF THE ACT REFE RRED TO IN SUB-SECTION (5) TO ACT, NOT ACTUAL COMPUTATION OF INCO ME UNDER THE ACT, PARTICULARLY WHEN THE APPLICANT IS CLAIMING EXEMPTION U/S.11 AND 12. THE RELEVANT EXTRACT OF THE FIND INGS OF THE TRIBUNAL IS REPRODUCED HEREINUNDER : 8. AT THIS POINT OF TIME, IT WOULD BE APPROPRIATE TO EXAMINE AS TO WHETHER THE COMMISSIONER IS EMPOWERED TO EXAMINE SUCH SI TUATION WHILE CONDUCTING ENQUIRIES TO EVALUATE THE ASSESSEE'S APP LICATION FOR RENEWAL OF ITS RECOGNITION U/S.80G5(VI) OF THE ACT. T HE HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.N. DESAI CHARITAB LE TRUST (SUPRA) WHILE DELIBERATING UPON THE SCOPE OF ENQUIRY FOR THE PURPOSE OF GRANTING OF RECOGNITION U/S.80G OF THE ACT OPINED TH AT IT DOES NOT ENVISAGE THE COMMISSIONER TO ACT AS AN ASSESSING AUTHORITY BECAUSE THE ACTUAL ASSESSMENT OF INSTITUTION WOULD NOT ULTIMATEL Y EFFECT THE CLAIM FOR DEDUCTION U/S. 80G QUA THE DONORS. AS PER T HE HON'BLE HIGH COURT, ONCE IT IS ESTABLISHED THAT THE APPLICANT IS RE GISTERED U/S.12 A OF THE ACT THEN THE ENQUIRY QUA THE ELIGIBILITY OF EXEMPTION U/S. 11 AND 12 OF THE ACT CANNOT GO BEYOND THAT. TO THE SAME EFFECT IS ALSO THE JUDGMENT OF THE HON'BLE PUNJAB AND HARYANA HIGH COU RT IN THE CASE OF SONEPAT HINDU EDUCATIONAL AND CHARITABLE SOCIETY (SUPRA). AS PER THE HON'BLE PUNJAB AND HARYANA COURT REGISTRATION OF AN INSTITUTION U/S.12A OF THE ACT IS SUFFICIENT PROOF OF IT BEING EST ABLISHED FOR CHARITABLE PURPOSES. IT HAS BEEN FURTHER EXPLAINED BY THE HON'BLE HIGH COURT THAT THE SCOPE OF ENQUIRY BY THE COMMISSION ER, WHILE DEALING WITH AN APPLICATION U/S. 80G(5)(VI) OF THE A CT, IS TO EXAMINE ITS ELIGIBILITY UNDER VARIOUS PROVISIONS OF THE ACT REF ERRED IN THE SUB- SECTION BUT NOT ACTUAL COMPUTATION OF INCOME UNDER T HE ACT, PARTICULARLY WHEN THE APPLICANT IS CLAIMING EXEMPTIO N U/S. 11 AND 12 AND NOT U/S. 10 OF THE ACT. 9. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF N.N. DES AI CHARITABLE TRUST VS. CIT (SUPRA) HAS HELD THAT THE AUTHOR ITY EXAMINING THE QUESTION WHETHER A FUND OR INSTITUTION IS ELIGIB LE TO 6 ITA NO.1045/PN/2014 BE CERTIFIED FOR THE PURPOSE OF SECTION 80G IS NOT TO ACT AS AN ASSESSING OFFICER AND PRONOUNCE UPON THE PENDING ASSESSM ENTS. ONCE A TRUST IS REGISTERED U/S.12A, ITS INCOME FROM PROPER TY WHICH INCLUDES DONATIONS WHETHER COVERED U/S.11(1)(D) OR SEC TION 12 SUCH DONATIONS ARE DEEMED TO BE INCOME FROM PROPERT Y, IS NOT TO BE INCLUDED IN ITS TOTAL INCOME U/S.11 OR SECTION 12. T HE ENQUIRY U/S.80G CANNOT GO BEYOND THAT. SIMILAR VIEW HAS BEEN TAKEN BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SHIKSHAN PRASARAK MANDALI VS CIT (SUPRA). 10. IN THE PRESENT CASE WE FIND THAT THE CIT HAS ERRE D IN REJECTING THE APPLICATION FOR GRANT OF APPROVAL U/S.80G TO THE ASSESSEE BY ENLARGING THE SCOPE OF ENQUIRY UNDER THE PROVISIONS OF SECTION 80G AND SCRUTINISING THE FINANCIAL RESULTS OF THE ASS ESSEE TRUST. THERE IS NO FINDING OF THE CIT THAT THE OBJECTS O F THE ASSESSEE TRUST ARE NOT CHARITABLE OR CEASES TO BE CHA RITABLE IN NATURE. THUS, IN VIEW OF THE FACT THAT THE ASSESSEE WAS ALREADY ENJOYING APPROVAL U/S.80G FOR THE PAST SO MANY YEARS AN D THE DECISIONS DISCUSSED ABOVE, WE SET ASIDE THE IMPUGNED ORDE R AND DIRECT THE CIT TO GRANT APPROVAL TO THE ASSESSEE U/.80G OF THE ACT. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 25 TH DAY OF MAY, 2016. SD/- SD/- ( R.K. PANDA ) ( VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE ; DATED : 25 TH MAY, 2016. 7 ITA NO.1045/PN/2014 & '#)! *! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ) - I KOLHAPUR 4. 5. $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , $ ' //TRUE COPY // // TRUE COPY // // $ ' //TRUE C // /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE