SHERMAL SONA DEVI CHARITABLE TRUST, Jaipur V. CIT, Jaipur

ITA 1047/JPR/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3016 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-05-2012
• Assessment Year: 2011-2012
• Appeal Filed On: 01-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Keywords: Charitable institution
• Section: 80G; 12AA

Judgement Text

1 ITA 1047-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH : JAIPUR. BEFORE SHRI B.R. JAIN AND SHRI VIJAY PAL RAO ITA NO. 1047/JP/2011 ASSTT. YEAR : 2011-12 SHERMAL SONA DEVI CHARITABLE TRUST, VS. THE COMMIS SIONER OF INCOME-TAX-II, C-62, BARKAT NAGAR EXTENSION, JAIPUR. TONK PHATAK, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJEEV SOGANI RESPONDENT BY : SHRI SUBHASH CHANDRA DATE OF HEARING : 20.05.2013. DATE OF PRONOUNCEMENT : 21.05.2013. ORDER PER B.R. JAIN, A.M. THIS APPEAL BY ASSESSEE AGAINST THE ORDER DATED 17 .10.2011 OF LD. CIT-II, JAIPUR RAISES THE FOLLOWING SOLITARY GROUND AS UNDER :- IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT HAS ERRED IN NOT GRANTING THE APPROVAL U/S 80G(5)(VI) O F THE INCOME TAX ACT, 1961. THE ACTION OF THE LD. CIT IS ILLEGAL, UNJUSTI FIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DIRECTING THE LD. CIT TO GRANT THE APPROVAL U/S 80G(5)(VI) OF THE IT ACT, 1961. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE TRUST WA S CREATED ON 20.07.1993. IT WAS ALLOWED REGISTRATION UNDER SECTION 12AA AND APPROVA L UNDER SECTION 80G OF THE I.T. ACT, 1961. THE CERTIFICATE ALLOWING EXEMPTION UNDER SEC TION 80G OF THE IT ACT ISSUED ON 16.12.2004 WAS VALID UPTO 31.03.2007. THE ASSESSE E MADE AN APPLICATION FOR ISSUING A RENEWAL/FRESH EXEMPTION CERTIFICATE VIDE APPLICATIO N DATED 11.04.2011. THE LD. CIT-II, 2 JAIPUR FOUND THAT ONE OF THE OBJECTS OF THE TRUST I S TO GIVE DONATIONS/FINANCIAL ASSISTANCE TO RELIGIOUS INSTITUTIONS, TEMPLES, SOCIETIES OR OR GANIZATIONS FOR THE PROMOTION AND ADVANCEMENT OF RELIGION AND ENTERTAINED THE VIEW TH AT THE OBJECT CLAUSE 3(E) OF THE SAID TRUST DOES NOT ACCORD TO THE PROVISIONS CONTAINED U NDER SECTION 80G(5)(II) OF THE IT ACT. HE, THEREFORE, HELD THAT ONE OF THE OBJECTS BEING R ELIGIOUS, THE NECESSARY CONDITION GIVEN IN CLAUSE 80G(5)(III) FOR GRANT OF EXEMPTION UNDER SECTION 80G(5)(VI) HAS NOT BEEN FULFILLED. HE, THEREFORE, REJECTED THE APPLICATION SO MADE BY THE ASSESSEE. 3. ASSESSEES CASE HOWEVER IS THAT THE APPELLANT CO NTINUES TO REMAIN A CHARITABLE TRUST AS THE LD. CIT-II, JAIPUR HIMSELF HAS DROPPED THE PROCEEDINGS FOR WITHDRAWAL OF APPROVAL GRANTED UNDER SECTION 12AA OF THE ACT BY H IS ORDER DATED 13.12.2011, COPY PLACED AT ASSESSEES PAPER BOOK PAGE 9. A REFERENC E TO SECTION 80G(5B) OF THE ACT WILL SHOW THAT A CHARITABLE TRUST/INSTITUTION IS EMPOWER ED TO SPEND 5% OF ITS TOTAL INCOME ON ACTIVITIES OF RELIGIOUS NATURE. SUB SECTION 5B STAR TS WITH A NON OBSTANTE CLAUSE AND OVER RIDES THE CLAUSE (II) OF SUB SECTION (5) AND EXPLAN ATION 3OF SECTION 80G OF THE ACT. THESE PROVISIONS OF THE ACT, THEREFORE, HAVE TO BE CONSTR UED HARMONIOUSLY SO THAT BOTH THE PROVISIONS ARE MADE WORKABLE. RELIANCE HAS BEEN PL ACED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASES OF SHASHIKANT LAXMAN KAL E VS. UNION OF INDIA, 185 ITR 104 (SC) AND CIT VS. J.H. GOTLA, 156 ITR 323 (SC). IT H AS FURTHER BEEN CONTENDED THAT THE ASSESSEE HAS NOT MADE ANY EXPENDITURE FROM THE DATE OF ITS CREATION TO THE DATE OF DENIAL OF EXEMPTION UNDER SECTION 80G(5)(VI) OF THE ACT, B Y THE LD. CIT. RELIANCE HAS ALSO BEEN PLACED ON THE JUDGMENT BY HON'BLE PUNJAB & HAR YANA HIGH COURT DATED 02.05.2013 IN THE CASE OF CIT ROHTAK VS. O.P. JINDAL GLOBAL UN IVERSITY, SONEPAT IN ITA NO. 190 OF 2011 AND 285 OF 2012 WHERE IT WAS HELD THAT THE ISS UE HAS TO BE EXAMINED THAT AT THE STAGE 3 OF REGISTRATION AND FOR EXEMPTION UNDER SECTION 80G OF THE ACT, THE STATED OBJECT OF THE TRUST IS REQUIRED TO BE EXAMINED. WHETHER THE FUNDS ARE PROPERLY APPLIED OR NOT, CAN BE EXAMINED BY THE ASSESSING OFFICER AT THE TIME OF FR AMING THE ASSESSMENT ONLY. IN VIEW OF THE ABOVE MATTER, IT HAS BEEN CONTENDED THAT THE RE IS NO JUSTIFICATION IN DENYING THE EXEMPTION TO THE ASSESSEE ON THE SAME SET OF FACTS ON WHICH THE LD. CIT HAD ALLOWED REGISTRATION UNDER SECTION 12AA OF THE ACT AND ALSO GRANTED EXEMPTION UNDER SECTION 80G(5) OF THE ACT WHICH STOOD EXPIRED ON 31.3.2007. THERE BEING NO CHANGE IN THE FACTS AND CIRCUMSTANCES, THE EXEMPTION OUGHT TO HAVE BEEN GRANTED. THE LD. CIT, THEREFORE, REQUIRED TO BE DIRECTED TO GRANT EXEMPTION TO THE A SSESSEE. 4. THE LD. D/R PLACED RELIANCE ON THE FINDINGS AND CONCLUSION REACHED BY LD. CIT- II, JAIPUR AS THE ORDER SO MADE IS FOR VALID REASON S. 5. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECO RD. ADMITTEDLY, THE ASSESSEE TRUST OR FUND IS NOT EXPRESSED TO BE FOR THE BENEFIT OF A NY PARTICULAR RELIGIOUS COMMUNITY OR CASTE. CLAUSE (III) OF SUB SECTION (5) OF SECTION 80G OF THE ACT WAS, THEREFORE, NOT APPLICABLE. THE APPELLANT HAS ALSO NOT MADE ANY CO NTRIBUTION OR DONATION FOR ATTAINING ITS ONE OF THE OBJECTS AS CONTAINED IN OBJECT CLAUSE 3( E) NARRATED AS UNDER :- 3(E) TO GIVE DONATION, CONTRIBUTION, MONETARY OR FINANCIAL ASSISTANCE TO THE RELIGIOUS INSTITUTION, TEMPLES, AND SOCIETIE S OR ORGANIZATION FOR THE PROMOTION AND ADVANCEMENT OF RELIGION WHICH GIVES P EACE OF MIND AND OF INNER HEART OR TO CONSTRUCT TEMPLES, DHARAMSHALAS W HICH SHALL BE OPEN FOR ALL IRRESPECTIVE OF CASTE, CREED AND COMMUNITY. THE APPELLANT ADMITTEDLY IS A CHARITABLE TRUST HAVI NG VALID REGISTRATION AT THE RELEVANT TIME WHEN THE APPLICATION WAS MADE AND THE DECISION THER EON WAS TAKEN BY LD. CIT-II, JAIPUR. THE LD. CIT DOES NOT SAY THAT WHOLLY OR SUBSTANTIAL LY THE OBJECTS OF THE TRUST ARE RELIGIOUS IN NATURE. HE ONLY FOUND THAT OBJECTS OF THE TRUST ARE PARTIALLY RELIGIOUS. THE RELEVANT 4 CLAUSE (II) OF SUB SECTION 5 OF SECTION 80G OF THE ACT WHICH PERSUADED THE LD. CIT TO DENY EXEMPTION IS REPRODUCED AS UNDER :- (II) THE INSTRUMENT UNDER WHICH THE INSTITUTION OR FUND IS CONSTITUTED DOES NOT, OR THE RULES GOVERNING THE INSTITUTION OR FUND DO NOT, CONTAIN ANY PROVISION FOR THE TRANSFER OR APPLICATION AT ANY TI ME OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS OF THE INSTITUTION OR FUND FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOSE. THE LD. CIT, HOWEVER, TOOK DECISION WITHOUT CONSIDE RING THE OVER-RIDING PROVISION AS CONTAINED UNDER SUB SECTION 5B OF SECTION 80G OF TH E ACT WHICH ENABLES THE INSTITUTION/TRUST TO INCUR EXPENDITURE OF RELIGIOUS NATURE FOR AN AMOUNT NOT EXCEEDING 5% OF ITS TOTAL INCOME IN THE RELEVANT PREVIOUS YEAR S O AS TO DEEM IT AN INSTITUTION OR FUND TO WHICH THE PROVISIONS OF THIS SECTION APPLY. IN OTHE R WORDS, THE INSTITUTION WHICH DOES NOT INCUR EXPENDITURE OF AN AMOUNT MORE THAN 5% OF ITS TOTAL INCOME, SUCH INSTITUTION OR TRUST SHALL CONTINUE TO REMAIN AS A CHARITABLE INSTITUTIO N/TRUST FOR THE PURPOSE OF GRANT OF APPROVAL UNDER SECTION 80G(5)(VI) OF THE ACT. IN T HE PRESENT CASE IN APPEAL, THE LD. CIT ON THE SAME SET OF FACTS HAD ALLOWED EXEMPTION UNDE R SECTION 80G(5) OF THE ACT WHICH WAS VALID UPTO 31 ST MARCH, 2007. THERE BEING NO CHANGE IN FACT AND LAW , SUCH AN APPROVAL, THEREFORE, COULD NOT HAVE BEEN DENIED TO THE APPELLANT. WE, THEREFORE, SET ASIDE HIS ORDER AND DIRECT HIM TO GRANT APPROVAL TO THE A SSESSEE AS THE ASSESSEES OBJECTS HAVE BEEN CONSIDERED TO BE CHARITABLE IN NATURE BY THE L D. CIT HIMSELF. 6. IN THE RESULT, APPEAL BY ASSESSEE STANDS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 21.5.2013. SD/- SD/- ( VIJAY PAL RAO ) ( B. R. JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 21/05/2013. 5 D/- COPY FORWARDED TO :- SHERMAL SONA DEVI CHARITABLE TRUST, JAIPUR. THE CIT-II, JAIPUR THE CIT THE D/R GUARD FILE (ITA NO. 1047/JP/2011 BY ORDER, AR ITAT JAIPUR.