District 324 B-2 Lions Foundation, Salem V. ITO, Erode

ITA 1067/CHNY/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6997 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 10-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR I V IJAYAKUMAR IRS
• Assessee Lawyers: G BASKAR
• Keywords: Charitable institution
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER ITA NO.1067(MDS)/2011 DISTRICT 324 B-2 LIONS FOUNDATION, 33/9, CHINNAMUTHU STREET II, NATESAR MILL COMPOUND, PERUNDURAI ROAD, ERODE-638 011. PAN AABTD2502P. VS. THE INCOME-TAX OFFICER, WARD I(2), ERODE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G. BASKAR, ADVOCATE RESPONDENT BY : DR. I.VIJAY AKUMAR, IRS, CIT-DR. DATE OF HEARING : 14 TH SEPTEMBER, 2011 DATE OF PRONOUNCEMENT : 14 TH SEPTEMBER, 2011 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL IS FILED BY THE ASSESSEE. THE APPEAL IS FILED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX -II AT COIMBATORE, REJECTING THE APPLICATION FILED BY THE ASSESSEE FOR OBTAINING REGISTRATION UNDER SECTION 12A OF THE INC OME-TAX ACT, - - ITA NO.1067 OF 2011 2 1961. THE APPLICATION HAS BEEN REJECTED BY THE COM MISSIONER ON THE GROUND THAT THE TRUST HAS NOT STARTED ITS AC TIVITIES AND, THEREFORE, THE GENUINENESS OF ITS OBJECTIVES OR ITS ACTIVITIES CANNOT BE ASCERTAINED. IT IS AGAINST THE SAID ORDE R OF THE COMMISSIONER OF INCOME-TAX THAT THE PRESENT APPEAL IS FILED BEFORE US. 2. THE PRESENT TRUST IS ESTABLISHED BY LIONS CLUB AS DISTRICT 324 B-2 LIONS FOUNDATION. THERE IS NO DIS PUTE REGARDING THE NATURE OF THE CONSTITUTION OF THE ASSESSEE-TRUS T. IT IS A PUBLIC TRUST. THE OBJECTS OF THE TRUST ARE DEFINITELY CHA RITABLE IN NATURE. THE COMMISSIONER OF INCOME-TAX HAS NO CASE AGAINST THE ASSESSEE ON THIS GROUND. 3. THE APPLICATION FOR REGISTRATION WAS FILED BY T HE ASSESSEE BEFORE THE COMMISSIONER OF INCOME-TAX IMME DIATELY AFTER THE CREATION OF THE TRUST. IN FACT THAT IS P ERMISSIBLE UNDER LAW. REGISTRATION IS GRANTED EVEN IN CONTEMPLATION OF CHARITABLE OBJECTIVES. WHETHER CHARITABLE ACTIVITIES WERE CAR RIED OUT OR NOT, IS A QUESTION TO BE CONSIDERED IN THE COURSE OF THE ASSESSMENT. IF AN APPLICATION OF A CHARITABLE TRUST IS NOT ACCE PTED BY THE COMMISSIONER OF INCOME-TAX ON THE GROUND THAT THE T RUST HAS NOT - - ITA NO.1067 OF 2011 3 STARTED ITS ACTIVITIES, IT CREATES SUCH AN OBSCURE SITUATION THAT AN ASSESSEE HAS APPLIED FOR REGISTRATION ONLY AFTER ST ARTING ITS OPERATIONS AND FOR THE PERIOD IN WHICH THE OPERATIO NS WERE CARRIED OUT THE REVENUE WOULD SAY THAT THERE WAS NO REGISTRATION. LAW DOES NOT INTEND TO CREATE ANY SU CH ARTIFICIAL COMPLICATION. IF THE OBJECTS DECLARED IN THE TRUST DEED ARE CHARITABLE IN NATURE AND IF NO ADVERSE MATERIAL IS AVAILABLE ON RECORD AGAINST THE ASSESSEE TRUST, THE COMMISSIONER OF INCOME- TAX HAS TO GRANT REGISTRATION UNDER SECTION 12A. W HETHER THE ASSESSEE HAS CARRIED OUT CHARITABLE ACTIVITIES OR N OT, WILL THEREAFTER BE EXAMINED BY THE ASSESSING AUTHORITY I N THE COURSE OF SUCCESSIVE ASSESSMENT. 4. THIS IS A CASE WHERE THE COMMISSIONER OF INCOME - TAX SAYS THAT THE BABY BORN TODAY IS NOT RUNNING TO MORROW. IT IS TOO PREMATURE TO CONCLUDE AGAINST THE ASSESSEE. IN THE COURSE OF HEARING, WE ASKED THE LEARNED COUNSEL FOR THE AS SESSEE TO FURNISH DETAILS OF CERTAIN ACTIVITIES CARRIED OUT B Y THE ASSESSEE FOUNDATION AFTER ITS CREATION. THE ASSESSEE HAS FI LED THE DETAILS BEFORE US. THE ASSESSEE HAS DISBURSED FINANCIAL HEL P IN THE MONTH OF SEPTEMBER, 2010 TO 26 STUDENTS PURSUING DI FFERENT - - ITA NO.1067 OF 2011 4 COURSES IN MEDICINE, ENGINEERING, AGRICULTURE, ETC. THESE CHILDREN BELONG TO POOR FAMILIES AND THEY WERE SPON SORED BY THE RESPECTIVE LOCAL LIONS CLUBS. THE ASSESSEE HAS ALS O FILED BEFORE US A COPY OF ITS BANK STATEMENT SHOWING THE ACTUAL DISBURSEMENT OF FUNDS IN FAVOUR OF THOSE POOR STUDENTS. THEREFO RE, PRIMA FACIE, WE ARE SATISFIED THAT THE ASSESSEE IS CARRYING ON C HARITABLE ACTIVITIES. 5. THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME-TAX IS SET ASIDE. HE IS DIRECTED TO GRANT R EGISTRATION TO THE ASSESSEE UNDER SECTION 12A OF THE INCOME-TAX AC T, 1961. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON WEDNESDAY, THE 14 TH OF SEPTEMBER, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 14 TH SEPTEMBER, 2011. V.A.P. COPY TO: APPELLANT/RESPONDENT/CIT/DR/G F