Shabad Foundation, Faridabad V. CIT (Exemptions), Chandigarh

ITA 1074/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3200 (ITAT-DELHI)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 01-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KR YADAV
• Assessee Lawyers: A S NAGPA L; KUNAL NAGPAL
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice; Reasonable cause
• Section: 12A; 12AA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1074/DEL/2016 A.Y. : ------- SHABAD FOUNDATION, C/O A.S. NAGPAL & CO., 5E-50, BP, NIT FARIDABAD 121001 (HARYANA) PAN: AANTS8842B) VS . CIT(EXEMPTIONS) CHANDIGARH (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. A.S. NAGPAL, ADV. & SH. KUNAL NAGPAL, ADV. DEPARTMENT BY : SH. ARUN KR. YADAV, SR. DR ORDER PER H.S. SIDHU : JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDI GARH DATED 23.12.2015. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(E), CHANDIGARH, HAS ERRED IN LAW AND ON FACTS IN REJECTING THE APPLICATION FOR REGISTRAT ION OF THE APPELLANT BY HOLDING THAT THE OBJECTS OF THE APPELLANT TRUST DONT LEND TO THE MEANING OF CHARIT ABLE PURPOSES. 2 2. THAT IN ANY VIEW OF THE MATTER AND IN ANY CASE, ACTION OF REJECTING THE APPLICATION FOR REGISTRATION IS BA D IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE . 3. THAT IN ANY VIEW OF THE MATTER AND IN ANY CASE, THE ORDER OF THE LD. CIT(E), CHANDIGARH, IS BAD IN LAW , ARBITRARY AND DEVOID OF NATURAL JUSTICE AND FAIR PL AY. 4. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, AMEN D, MODIFY, DELETE ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE SO CIETY HAS FILED AN APPLICATION IN FORM NO. 10A ON 08.6.2015 SEEKING RE GISTRATION U/S. 12A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS T HE ACT). THE ASSESSEE IS A TRUST WHICH HAS BEEN REGISTERED ON 11.03.2014 IN THE OFFICE OF SUB- REGISTRAR, FARIDABAD. THE MAIN OBJECTS OF THE TRU ST HAVE BEEN MENTIONED IN TWENTY POINTS WHICH ARE MORE OR LESS G ENERAL IN NATURE. THE MAIN OBJECT OF THE TRUST THAT HAS BEEN MENTIONED IS TO PROMOTE AWARENESS OF UNIVERSAL TEACHING OF OF SGGS (SHRI GU RU GRANTH SAHIB) AND OTHER RELIGIOUS GRANTHS AMONG THE GENERAL PUBLIC AND IN THE YOUNGER GENERATION. LD. CIT(E) OBSERVED THAT IT HAS BEEN C LAIMED THAT THE SAME IS AN EDUCATIONAL AND SOCIAL WELFARE TRUST IN THE W RITE UP SUBMITTED DURING THE COURSE OF HEARING BEFORE HIM. THIS IS IN CONTRA CT TO THE CONTENTS OF THE TRUST DEED WHERE IT HAS BEEN CLAIMED TO BE A RE LIGIOUS TRUST. LD. CIT(E) FURTHER OBSERVED THAT IN RESPECT OF STATUS A S MENTIONED ABOVE, THE ACTIVITIES OF THE TRUST WERE EXAMINED AND IT WAS FO UND THAT THE TRUST 3 FUNCTIONS FROM THE ADDRESS T-40, 503, LAKE VIEW, ZI ON APARTMENT FARIDABAD, WHICH APPARENTLY IS THE RESIDENCE OF PR ESIDENT AND TREASURER OF THE TRUST. MOST OF THE CAPITAL INVESTMENT DONE I N THE CASE IS AT THE RESIDENTIAL PREMISES. THIS FACT CORROBORATES THE PO SSIBILITY THAT THE TRUSTEES MAY BE DERIVING BENEFIT FROM THE PROPERTY OF THE TRUST DIRECTLY OR INDIRECTLY. A WRITE UP WAS SUBMITTED WHEREIN IT WA S MENTIONED THAT THE TEACHING OF SHRI GURU GRANTH SAHIB ARE PROPAGATED T HROUGH E-MAIL, FACEBOOK AND OTHER ONLINE SOCIAL NETWORKS. THE PROO FS OF ONLINE PROPAGATIONS HAVE ALSO BEEN SUBMITTED. THE BALANCE SHEET OF THE TRUST FOR 31.03.2014 AS WELL AS FOR 31.03.2015 HAS BEEN F ILED BY THE ASSESSEE. FROM THE PERUSAL OF DETAILS, LD. CIT(E) NOTED THAT SOME AMOUNT OF DONATIONS AND SUBSCRIPTIONS HAVE BEEN RECEIVED WHIC H HAVE BEEN UTILIZED FOR DAY TO DAY EXPENSES. THE COPIES OF THE BANK ACC OUNT FURNISHED BY THE APPLICANT HAS ALSO BEEN PERUSED BY HIM AND IT TRANS PIRED THAT THE PAYMENTS HAVE BEEN MADE MOSTLY FOR SALARIES, STATIO NERY, RE- IMBURSEMENT AND PAYMENT TO THE CHARTED ACCOUNTANT F OR PREPARATION OF THE ACCOUNTS. LD. CIT(E) FURTHER OBSERVED THAT THER E IS HARDLY ANY CHARITABLE EXPENSES THAT ARE EVIDENT IN THE ACCOUNT S. SOME CORPUS DONATIONS HAVE BEEN RECEIVED WHICH HAVE BEEN ACCUMU LATED. NO EVIDENCE HAS BEEN FURNISHED ABOUT ANY SPECIFIC INSTRUCTION F ROM THE DONORS ABOUT THE CORPUS DONATIONS BEING USED ONLY FOR SPECIFIC C HARITABLE PURPOSES. FURTHER, APART FROM CORPUS DONATIONS MOST OF THE OT HER RECEIPTS ARE IN CASH. THE DONATIONS SO RECEIVED HAVE BEEN INVESTED IN FDRS REFLECTED IN THE BALANCE SHEET. IN THE ABSENCE OF ANY EXPRESSED INTENT TO REDEPLOY THE 4 INTEREST EARNED ON CHARITABLE WORK, ONE WOULD TEND TO BELIEVE THAT THE INTENT OTHERWISE IS TO EARN INTEREST INCOME FROM DO NATIONS RECEIVED. LD. CIT(E) FURTHER NOTED THAT FROM THE ACTIVITIES NARR ATED AND NOTE ON ACTIVITIES FILED, IT IS CLEAR THAT THE APPLICANT TR UST IS A WHOLLY TRUST WHICH PROPOSES TO PROPAGATE THE TEACHING OF 'SHRI GURU GR ANTH SAHIB'. THE FACT THAT THE TEACHINGS ARE SOUGHT TO BE PROPAGATED ONLI NE CONVEY A SENSE THAT THE FACILITIES ARE NOT OPEN TO GENERAL PUBLIC BUT TO A SELECT FEW WHO HAVE INTERNET/COMPUTER FACILITIES. IN NO WAY THE AC TIVITIES OF THE TRUST MAY BE COVERED UNDER ANY OF THE LIMBS OF SECTION 2(15) OF I.T. ACT. THESE ACTIVITIES ALSO NOT PARTAKE THE MEANING OF EDUCATIO N AS HAS BEEN ENUNCIATED IN THE CASE OF CIT VS SOLE TRUSTEE LOK S HIKSHAN TRUST (1975) 101 ITR 234 (SUPREME COURT). LD. CIT(E) FURTHER OBS ERVED THAT THE ACTIVITIES OF THE TRUST DONT LEND THEMSELVES TO GE NERAL PUBLIC UTILITY AS WELL. THE ALTRUISTIC INTENT OF THE TRUST GETS FURTH ER DILUTED BY IT BEING OPEN THE CHARGING SUBSCRIBERS FOR THE SERVICES. IN LIGHT OF THE ABOVE, LD. CTI(E) WAS OF THE VIEW THAT THE OBJECTS OF THE TRUST DO NT LEND THEMSELVES TO THE MEANING OF CHARITABLE PURPOSES. AS SUCH, HE DEC LINED THE REQUEST TO GRANT THE REGISTRATION U/S. 12AA OF THE I.T. ACT TO THE APPLICANT VIDE ORDER DATED 23.12.2015 PASSED U/S. 12AA OF THE I.T. ACT, 1961. 4. AGGRIEVED WITH THE AFORESAID IMPUGNED ORDER DATE D 23.12.2015 ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. DURING THE HEARING, LD. COUNSEL OF THE ASSESSE E HAS STATED THAT ONLY ISSUE INVOLVED IN THIS CASE IS RELATING TO GRANTING THE REGISTRATION U/S. 12A OF THE ACT WHICH HAS BEEN REJECTED BY THE LD. CIT(E ), CHANDIGARH BY 5 OBSERVING THAT THE CONTENTS OF THE TRUST DEED CLAIM S THE TRUST TO BE AS ONLY A RELIGIOUS TRUST AND NOT THE EDUCATIONAL TRU ST OR SOCIAL WELFARE TRUST AS SHOWN BY THE ASSESSEE IN ITS SUBMISSIONS DURING THE HEARING. HOWEVER, ON THE CONTRARY, LD. COUNSEL OF THE ASSESS EE STATED THAT THE 2 ND PAGE OF THE TRUST DEED AS SUBMITTED BY THE ASSESSEE CLEARLY AND SPECIFICALLY MENTIONS THAT THE TRUST SHALL BE STYLE D AS RELIGIOUS AND EDUCATIONAL TRUST. HE STATED THAT LD. CIT(E) HAS TA KEN A VERY NARROW APPROACH OF EDUCATION AS THE TERM IN ITSELF HAS A V ERY WIDE AND BROAD MEANING. EDUCATION DOES NOT ONLY RESTRICT TO THE TE ACHINGS IN SCHOOLS, COLLEGES AND INSTITUTIONS. TEACHING TO GENERAL PUB LIC WITHOUT ANY DISCRIMINATION AS TO RELIGION, CAST CREED OR GENDER AND MAKING PEOPLE AT LARGE TO UNDERSTAND THE CONTENTS IN OUR RELIGIOUS G RANTHS ALSO COMES WITHIN THE AMBIT OF EDUCATION AS HAS BEEN WELL EXPL AINED IN THE WRITE UP ON ACTIVITIES UNDERTAKEN BY THE TRUST. THE AIMS AND OBJECTS AS MENTIONED IN THE TRUST DEED ITSELF SPEAKS OF THE FACT THAT TH E SAME CAN ONLY BE ACHIEVED BY THE MODE OF EDUCATING THE GENERAL PUBLI C. IN VIEW OF THE ABOVE, HE REQUESTED THAT THE ISSUE IN DISPUTE MAY B E DECIDED IN FAVOR OF THE ASSESSEE AND APPEAL FILED BY THE ASSESSEE MAY BE ALLOWED BY ALLOWING REGISTRATION U/S. 12AA OF THE ACT TO THE A SSESSEE. 5.1 ON THE CONTRARY, DR RELIED UPON THE ORDERS OF THE LD. CIT(E) AND ALSO RELIED UPON THE CASE LAWS AS MENTIONED IN THE IMPUGNED ORDER. FURTHER, HE STRONGLY OBJECTED THE REQUEST OF THE LD . COUNSEL OF THE ASSESSEE AND STATED THAT ASESSEE DID NOT FILE ANY D OCUMENTARY EVIDENCE 6 FOR SUBSTANTIATING ITS CLAIM BEFORE THE LD. CIT(E), HENCE, HE REQUESTED THAT APPEAL OF THE ASSESSEE MAY BE DISMISSED. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED AND CON SIDERED THE RELEVANT RECORDS AVAILABLE WITH US ESPECIALLY THE IMPUGNED O RDER PASSED BY THE LD. CIT(E), THE PAPER BOOKS FILED BY THE ASSESSEE S COUNSEL I.E. CONTAINING PAGES 1 TO 71 IN WHICH HE HAS ATTACHED T HE COPY OF SUBMISSION DATED 08.11.2017; COPY OF APPLICATION IN FORM 10A F OR REGISTRATION ALONGWITH ENCLOSURES; COPY OF REGISTERED DEED CREA TING THE ASSESSEE TRUST NAMED SHABAD FOUNDATION DATED 11.3.2014; COPIES O F NO OBJECTION CERTIFICATE AND OWNERSHIP PAPERS IN THE NAME OF MRS . AJIT KAUR, WHO HAS PROVIDED THE SPACE FOR OFFICE OF THE TRUST FREE OF COST; ITR, COMPUTATION, AUDIT REPORT AND BALANCE SHEET FOR AY 2014-15 AND 2 015-16; LIST OF OFFICE BEARERS/ TRUSTEES ALONGWITH ADDRESS, PAN AND DESIGNATION; COPY OF NOTICE AND REPLY D LETTER -1 DATED 0.12.2015 FILED BEFORE THE ASSTT. CIT(E), CHANDIGARH; COPY OF REPORT ON ACTIVITIES AND SOME O NLINE TEACHINGS OF THE TRUST SUBMITTED TO THE AO WITH RELY LETTER -1; COPY OF NOTICE AND REPLY LETTER -2 DATED 9.12.2015 FILED BEFORE ASSTT. CIT(E ), CHANDIGARH AND THE COPY OF BANK STATEMENT OF THE TRUST SUBMITTED TO TH E AO WITH REPLY LETTER. 6.1 AFTER PERUSING THE AFORESAID DOCUMENTS, WE FIN D THAT SOLITARY ISSUE INVOLVED IN THIS CASE IS RELATING TO REGISTRATION U /S. 12A OF THE ACT WHICH WAS REJECTED BY THE LD. CIT(E), CHANDIGARH BY OBSER VING THAT THE CONTENTS OF THE TRUST DEED CLAIMS THE TRUST TO BE A S ONLY A RELIGIOUS TRUST AND NOT THE EDUCATIONAL TRUST OR SOCIAL WELFARE TRU ST AS SHOWN BY THE 7 ASSESSEE IN THE PAPER BOOK. WE FIND THAT TRUST IS NOT ONLY TEACHING THROUGH EMAILS/ ONLINE WHERE ONE WOULD REQUIRE INTE RNET / COMPUTER FACILITY BUT ALSO THROUGH DISTRIBUTING PAMPHLETS, P OSTERS, MAGAZINES, EXHIBITIONS, WRITE UPS ETC. AND THE WORKING GOES ON AS PRESCRIBED IN THE AIMS AND OBJECTS OF THE TRUST AND IS VERY WELL EXPL AINED IN THE ACTIVITY REPORT SUBMITTED WITH THE LD.CIT(E) WHICH HAS NOT B EEN READ THOROUGHLY BEFORE PASSING THE IMPUGNED ORDER. SECONDLY, THE TRUST DEED AT PARA NO. 14 ALSO SPECIFICALLY MENTIONS THAT THE BENEFIT OF T HE ACTIVITIES OF THE TRUST SHALL BE OPEN TO ALL, IRRESPECTIVE OF ANY CAST, CRE ED OR RELIGION AND NOT ONLY TO ONE SEGMENT AS HAS BEEN JUDGED BY THE LD. CIT(E ). WE FURTHER NOTE THAT LD.CIT(E) IN HIS IMPUGNED ORDER VIDE PARA NO. 2 HAS MENTIONED THAT THE MAIN OBJECT OF THE TRUST THAT HAS BEEN MENTIONE D IS TO PROMOTE AWARENESS OF UNIVERSAL TEACHING OF SGGS (SHRI GURU GRABNTH SAHIB) AND OTHER RELIGIOUS GRANTHS AMONG THE GENERAL PUBLIC AND THE YOUNGER GENERATION, BUT LD. CIT(E) HAS OBSERVED THAT THAT ASSESSEE IS AN EDUCATIONAL AND SOCIAL WELFARE TRUST ACCORDING TO T HE WRITE UP SUBMITTED DURING THE COURSE OF HEARING. HENCE, THE LD. CIT(E) OBSERVED THAT THIS IS IN CONTRAST TO THE CONTENTS OF THE TRUST DEED WHERE IT HAS BEEN CLAIMED TO BE A RELIGIOUS TRUST. HOWEVER, WE NOTE FROM PARA NO. 2 OF THE TRUST DEED AS SUBMITTED BY THE ASSESSEE CLEARLY AND SPECIFICAL LY MENTIONS THAT THE TRUST SHALL BE STYLED AS RELIGIOUS AND EDUCATIONAL TRUST. THE OBJECTS OF THE TRUST ARE AS UNDER:- (A) TO PROMOTE AWARENESS OF 'UNIVERSAL TEACHINGS OF SGGS (SHRI GURU GRANTH SAHIB)' & OTHER RELIGIOUS 8 GRANTHS AMONGST THE GENERAL PUBLIC AND IN PARTICULA R THE YOUNGER GENERATION; (B) TO CONDUCT OR SPONSOR ANY TYPE OF EXHIBITIONS, SYMPOSIUMS ETC. IN THE FIELD OF RELIGIOUS ACTIVITIE S; (C) TO PROVIDE FACILITIES TO PROMOTE AWARENESS AND FACILITATE ATTAINMENT OF EXPERTISE IN RELIGIOUS EDU CATION; (D) TO PROVIDE LOW COST/FREE FACILITIES TO THE WEAK ER SECTION TO LEARN THE MEANINGS OF RELIGIOUS GRANTHS; (E) TO PRINT AND PUBLISH LITERATURE, DEVELOP AND CR EATE AUDIO VISUAL MATERIALS OF IMPORTANCE TO THE PUBLIC ; (F) TO ESTABLISH, MAINTAIN, IMPROVE OR MANAGE AND R UN EXISTING OR NEW COLLEGE(S) FOR THE TRAINING OF TEAC HERS. (G) TO ASSOCIATE WITH ANY OTHER ALLIED INSTITUTION / GROUPS THAT THE TRUSTEES MAY DEEM FIT; (H) TO ARRANGE AND PROMOTE THE STUDY OF THEORY AND PRACTICE OF RELIGIOUS GRANTHS IN ALL ITS FORMS AND VARIETY' FOR KNOWLEDGE AND EDUCATIONAL PURPOSES; I) TO ARRANGE FOR THE WRITING, TAPE RECORDING, MAK ING OF RECORDS BY ANY PROCESS WHATSOEVER CONTAINING LESSON S, EVERY DESCRIPTION ON CASSETTES/ CDS OR OTHERWISE;. (J) TO IMPORT, EXPORT, BUY, SELL ALL BOOKS, MAGAZI NES FOR LEARNING / ADOPTING RELIGIOUS GRANTHS AND TO DO ALL OTHER THINGS WHICH ARE INCIDENTAL, ANCILLARY OR CON DUCTIVE THERETO; (K) FOR THE FURTHERANCE OF THE OBJECTS ENUMERATED ABOVE, TO UNDERTAKE, ORGANIZE AND FACILITATE CONFERENCES, SEMINARS, STUDY COURSES, TRAINING 9 PROGRAMS, LECTURES AND WORKSHOPS AND SIMILAR OTHER ACTIVITIES; (L) FOR THE FURTHERANCE OF THE OBJECTS ENUMERATED ABOVE, TO MAINTAIN LIAISON WITH PROFESSIONAL INSTIT UTIONS AND EDUCATIONAL AND TRAINING BODIES IN VARIOUS PART S OF THE WORLD. (M) TO ACT IN COLLABORATION WITH CENTRAL AND STATE GOVERNMENTS AND OTHER APPROPRIATE AGENCIES FOR FORMULATION AND EXECUTION OF PROJECTS WHICH WOULD FURTHER THE OBJECTS AS SET OUT ABOVE AND TO ACCEPT ANY GRANTS OR FUNDS AND DONATIONS FOR THE SAID PURPOSE ; (N) TO ACT AS A CLEARING HOUSE OF INFORMATION FOR V ARIOUS INDIVIDUALS, INSTITUTIONS OR OTHER PERSONS INTEREST ED IN THE ACTIVITIES LISTED ABOVE; (0) TO PROVIDE CONSULTANCY SERVICES UNDER ITS AUSPI CES OR THROUGH ITS FACULTY TO PUBLIC OR PRIVATE INSTITU TIONS TO FURTHER THE CAUSE OF THE OBJECTS ENUMERATED ABOVE; (P) TO ENDEAVOR TO ESTABLISH AND MAINTAIN LIAISON WITH OTHER ASSOCIATIONS OR ORGANIZED BODIES IN INDIA OR ABROAD WHOSE OBJECTS ARE IN KEEPING WITH THE OBJECT S OF THIS TRUST; (Q) TO PURCHASE, TAKE ON LEASE OR IN EXCHANGE OR OTHERWISE ACQUIRE, HOLD, POSSESS AND DISPOSE OF ANY MOVABLE OR IMMOVABLE PROPERTY WHICH MAY BE DEEMED NECESSARY, EXPEDIENT OR DESIRABLE FOR ANY OF THE OB JECTS OF THIS TRUST; (R) TO ENTER INTO ARRANGEMENTS, AMALGAMATION WITH A NY OTHER ASSOCIATION. INSTITUTIONS, SOCIETIES OR TRUST S HAVING SIMILAR OBJECTS OF THIS TRUST; 10 (S) TO BORROW MONEY OR TO RECEIVE DEPOSITS UPON SUC H TERMS AND CONDITIONS AS THE BOARD SHALL DEEM NECESS ARY OR EXPEDIENT FOR ACHIEVING THE OBJECTS OF THE TRUST ; (T) TO MAINTAIN AND RUN LIBRARIES PARTICULARLY WITH RESPECT TO BOOKS ON RELIGION. 6.2 WE FURTHER FIND THAT IN THE LAST 3-4 LINES OF PARAGRAPH-3 OF THE ORDER DATED 23-12-2015, THE LD. CIT(E) HAS MENTIONE D THAT 'MOST OF THE CAPITAL INVESTMENT DONE IN THE CASE IS AT THE RESID ENTIAL PREMISES. THIS FACT CORROBORATES THE POSSIBILITY THAT THE TRUSTEES MAY BE DERIVING BENEFIT FROM THE PROPERTY OF THE TRUST DIRECTLY OR INDIRECT LY. HOWEVER, THE TRUST HAS NOT PURCHASED ANY IMMOVABLE PROPERTY, HENCE THE CHANCE OR ANY POSSIBILITY OF TRUSTEES MAY BE DRIVING BENEFITS FRO M THE PROPERTY OF THE TRUST DIRECTLY OR INDIRECTLY CAN'T ARISE AT ALL. RA THER THE BUILDING IN QUESTION WAS PURCHASED BY MRS. AJIT KAUR (ONE OF THE TRUSTEE S) LONG BACK OF THE DATE OF CREATION OF THE ASSESSEE TRUST AND SHE HAS VOLUNTARILY PROVIDED. OFFICE SPACE FREE OF COST TO THE TRUST FOR ITS ACTI VITIES. CERTIFIED COPIES OF THE OWNERSHIP PAPERS OF THE BUILDING / NOC, WHICH W ERE SUBMITTED BY THE ASSESSEE ALONG-WITH FORM-10A, ARE ENCLOSED AT PAGE NOS. 10 TO 12 OF THE PAPER BOOK. 6.3 WE FURTHER NOTE THAT IN THE 11TH TO 14TH LINES OF PARAGRAPH-4 OF THE ORDER DATED 23-12-2015, THE LD. CIT(E) HAS MENTIONE D 'SOME CORPUS DONATIONS HAVE BEEN RECEIVED WHICH HAVE BEEN ACCUMU LATED. NO EVIDENCE HAS BEEN FURNISHED ABOUT ANY SPECIFIC INSTRUCTION F ROM THE DONORS ABOUT THE CORPUS DONATIONS BEING USED ONLY FOR SPECIFIC C HARITABLE PURPOSE. 11 HOWEVER, THE LD. CIT(E) CHECKED / VERIFIED THE ENTI RE BOOKS OF ACCOUNTS FOR THE FINANCIAL YEARS 2013-14 & 2014-15 AS PRODUC ED BY THE ASSESSEE TRUST AND THE LD. CIT(E) PARTICULARLY CHECKED THE R ECEIPT NOS. 1, 2, 11, 44, 52, 53 & 54 THROUGH WHICH THE ASSESSEE TRUST RECEIV ED THE CORPUS FUNDS AND APPROPRIATELY ACCOUNTED FOR. 6.4 WE FURTHER NOTE THAT IN THE LAST 3RD & 4TH LINE S OF PARAGRAPH-4 OF THE ORDER DATED 23-12-2015, THE LD. CIT(E) HAS MENT IONED IN THE ABSENCE OF ANY EXPRESSED INTENT TO REDEPLOY THE INTEREST EA RNED ON CHARITABLE WORK, ONE WOULD TEND TO BELIEVE THAT THE INTENT OTH ERWISE IS TO EARN INTEREST INCOME FROM DONATIONS RECEIVED. HOWEVER, I N THE TRUST DEED'S PARAGRAPH NO. 10 ITSELF MENTIONS THAT THE TRUST FOR MED IS IRREVOCABLE AND PARAGRAPH NO. 11 OF THE TRUST DEED MENTIONS THAT TH E FUNDS / INCOME OF THE TRUST SHALL BE SOLELY UTILIZED FOR ACHIEVING TH E OBJECTS OF THE TRUST AND NO PORTION OF IT SHALL BE ENTITLED TO FOR THE BENEF ITS OF THE TRUSTEES BY WAY OF INTEREST, BONUS, DIVIDEND, PROFIT, ETC. CERTIFIE D COPY OF THE TRUST DEED ATTACHED WITH THE PAPER BOOK. 6.5 WE FURTHER NOTE THAT IN THE 3 RD TO 5 TH LINES OF PARAGRAPH-5 OF THE ORDER DATED 23-12-2015, THE LD. CIT(E) HAS MENTIONE D THAT IN FACT THAT THE TEACHINGS ARE SOUGHT TO BE PROPAGATED ON LINE C ONVEY A SENSE THAT THE FACILITIES ARE NOT OPEN TO THE GENERAL PUBLIC B UT TO A SELECT FEW WHO HAVE INTERNET / COMPUTER FACILITIES. HOWEVER, THE L D. CIT(E) IS NEITHER CORRECT IN THIS REGARD AND HAS IGNORED THE PARA 14 OF THE TRUST DEED WHICH SPECIFICALLY MENTIONS THAT THE BENEFITS OF THE TRU ST SHALL BE OPEN TO ALL, IRRESPECTIVE OF ANY CAST, CREED OR RELIGION. 12 6.6 IT IS GERMANE TO REFER HERE THE PROVISIONS FOR GRANTING REGISTRATION UNDER THE INCOME TAX ACT-1961, WHICH ARE REPRODUCED HEREUNDER:- SECTION: 12AA:-PROCEDURE FOR REGISTRATION:- (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR IN STITUTION MADE UNDER CLAUSE (A) OR CLAUSE (AA) OF SUB-SECTION (1) OF SECTION I2A, SHALL- (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NEC ESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF T HE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE- (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDE R IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT: PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OP PORTUNITY OF BEING HEARD. 13 (IA) ALL APPLICATIONS, PENDING BEFORE THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER ON WHICH NO ORDE R HAS BEEN PASSED UNDER CLAUSE (B) OF SUB-SECTION (1) BEF ORE THE. 1ST DAY OF JUNE, 1999, SHALL STAND TRANSFERRED ON T HAT DAY TO THE PRINCIPAL COMMISSIONER OR COMMISSIONER AND THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY PROCEED WITH SUCH APPLICATIONS UNDER THAT SUB-SECTION FROM THE STAGE AT WHICH THEY WERE ON THAT DAY. (2) EVERY ORDER GRANTING OR REFUSING REGISTRATION U NDER CLAUSE (B) OF SUB-SECTION (1) SHALL BE PASSED BEFORE THE E XPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLI CATION WAS RECEIVED UNDER CLAUSE (A) OR CLAUSE (AA) OF SUB -SECTION (1)] OF SECTION I2A. (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTE D REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION I2A AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO.2) ACT, 199 6 (33 OF 1996) AND SUBSEQUENTLY THE PRINCIPAL COMMISSIONER O R COMMISSIONER] IS SATISFIED THAT THE ACTIVITIES OF S UCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIE D OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITU TION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANC ELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION: 14 PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A R EASONABLE OPPORTUNITY OF BEING HEARD. (4) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (3), WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED RE GISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A AS IT ST OOD BEFORE ITS AMENDMENT BY THE FINANCE (NO.2) ACT, 1996 (33 O F 1996) AND SUBSEQUENTLY IT IS NOTICED THAT THE ACTIVITIES OF THE TRUST OR THE INSTITUTION ARE BEING CARRIED OUT IN A MANNER T HAT THE PROVISIONS OF SECTIONS 11 AND 12 DO NOT APPLY TO EX CLUDE EITHER WHOLE OR ANY PART OF THE INCOME OF SUCH TRUS T OR INSTITUTION DUE TO OPERATION OF SUB-SECTION (1) OF SECTION 13, THEN, THE PRINCIPAL COMMISSIONER OR THE COMMISSIONE R MAY BY AN ORDER IN WRITING CANCEL THE REGISTRATION OF SUCH TRUST OR INSTITUTION: PROVIDED THAT THE REGISTRATION SHALL NOT BE CANCELL ED UNDER THIS SUB-SECTION, IF THE TRUST OR INSTITUTION PROVES THA T THERE WAS A REASONABLE CAUSE FOR THE ACTIVITIES TO BE CARRIED O UT IN THE SAID MANNER. SECTION 2(15):- 'CHARITABLE PURPOSE' INCLUDES RELIE F OF THE POOR, EDUCATION, YOGA, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILD LIFE) AND 15 PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF A RTISTIC OR HISTORIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, I F IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TR ADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIV E OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY: PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT A PPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS TWENTY-FIVE LAKH RUPEES OR LESS IN THE P REVIOUS YEAR. 6.7 WE FIND THAT THE EXPRESSION 'GENERAL PUBLIC UTI LITY' HAS BEEN WELL ESTABLISHED FROM AUTHORITATIVE PRONOUNCEMENTS FROM THE HONBLE SUPREME COURT. THE HONBLE SUPREME COURT IN ITS SIGNIFICANT DECISIONS IN THE CASE OF AHMEDABAD RANA CASTE ASSOCIATION VS CIT 82 ITR 704 SC & CIT VS ANDHRA CHAMBER OF COMMERCE 55 ITR 722 SC HAS HELD T HAT AN OBJECT BENEFICIAL TO A SECTION OF PUBLIC IS AN OBJECT OF G ENERAL PUBLIC UTILITY. IT WOULD BE PERTINENT TO QUOTE THE FOLLOWING FROM THE SAID DECISIONS OF HONBLE SUPREME COURT: 16 'THAT THE EXPRESSION 'OBJECT OF GENERAL PUBLIC UTIL ITY' WAS NOT RESTRICTED TO OBJECTS BENEFICIAL TO THE WHO LE OF MANKIND. AN OBJECT BENEFICIAL TO A SECTION OF THE P UBLIC WAS A N OBJECT OF GENERAL PUBLIC UTILITY. TO SERVE AS A CHARITABLE PURPOSE, IT WAS NOT NECESSARY THAT THE O BJECT SHOULD BE TO BENEFIT THE WHOLE OF MANKIND OR EVEN A LL PERSONS LIVING IN A PARTICULAR COUNTRY OR PROVINCE. IT WAS SUFFICIENT IF THE INTENTION WAS TO BENEFIT A SECTIO N OF THE PUBLIC AS DISTINGUISHED FROM SPECIFIED INDIVIDUALS ', 6.8 WE FURTHER NOTE THAT THE HONBLE HIGH COURT OF DELHI IN THE CASE OF HAMDARD LABORATORIES INDIA V. ASSISTANT DIRECTOR OF INCOME-TAX (EXEMPTION) REPORTED IN [2015] 61 TAXMANN.COM 262 ( DELHI) HAS HELD THAT GRANTING SCHOLARSHIP TO STUDENTS IS 'EDUCATION ', AND NOT 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY; TRUST CANNOT BE D ENIED EXEMPTION BY INVOKING THE FIRST PROVISO TO SECTION 2(15) WHERE I TS ACTIVITIES IN FACT FALL WITHIN THE HEADS 'EDUCATION', 'MEDICAL RELIEF AND ' RELIEF OF THE POOR' EVEN IF ITS OBJECTS ALLOW IT TO CARRY ON ANY ACTIVITY FOR ' ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. HOWEVER IN THE I NSTANT CASE THE APPELLANT TRUST IN ITSELF IS DOING THE ACTIVITIES WHICH COME UNDER THE SCOPE AND AMBIT OF EDUCATION, WHEREIN ITS ONE OF THE ACTIVITIES IS TO EDUCATE THE PUBLIC IN GENERAL ABOUT THE 'WORD' OR WE MAY CALL IT A 'SHABA D' FROM OUR RELIGIOUS GRANTHS. 17 6.9 WE FURTHER NOTE THAT THE HONBLE PUNJAB & HARY ANA HIGH COURT IN THE CASE OF SHISHU NIKETAN PANCHKULA EDUCATIONAL SO CIETY V. COMMISSIONER OF INCOME-TAX, PANCHKULA REPORTED IN [ 2015] 53 TAXMANN.COM 311 (PUNJAB & HARYANA) HAS HELD THAT A PPLICATION FOR REGISTRATION UNDER SECTION 12A CANNOT BE REJECTED O N GROUND THAT ASSESSEE HAD NOT YET CARRIED ON ANY CHARITABLE ACTI VITY. HOWEVER, IN THE INSTANT CASE THE ASSESSEE TRUST IS SPREADING EDUCAT ION AS MENTIONED ABOVE AND THAT TOO WITHOUT CHARGING ANY FIXED AMOUN T FROM THE BENEFICIARIES OR OTHERWISE, WHICH SHOWS THE COMMENC EMENT OF CHARITABLE ACTIVITIES AS PER THE REPORT PROVIDED. 6.10 WE FURTHER FIND THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF AGGARWAL MTRA MANDAI TUST V. DIT (EXEMPTION) [2007 ] 293 ITR (AT) 259 (DELHI) HAS OBSERVED THAT WHILE GRANTING REGISTRAT ION ULS 12A/12AA OF THE ACT, THE CIT IS TO SATISFY HIMSELF ABOUT THE GENUIN ENESS OF THE ACTIVITIES AND OBJECTS OF THE TRUST AND AS SUCH, THE SCOPE OF HIS POWERS WAS LIMITED IN THIS REGARD TO MAKE SUCH ENQUIRIES AS HE DEEMED TO, IN RESPECT OF THESE TWO ASPECTS. FROM THE ABOVE CITED CASES AND SECTIO N(S) 12AA(3) & 12AA(4) IT IS VERY MUCH CLEAR THAT AT THE TIME OF G RANTING REGISTRATION ELIGIBILITY IN TERMS OF SECTIONS 10, 11 & 12 CAN'T BE VERIFIED AS TO WHETHER OR NOT WHAT WAS PRACTICED WAS INDEED IN DEED OF TRU ST OR NOT AND ASKING FOR ACTIVITIES REPORT AT THE TIME OF GRANTING REGIS TRATION IS NOT WARRANTED. THESE CAN BE VERIFIED ONLY AT THE TIME OF ASSESSMEN T PROCEEDINGS AS PER SECTION(S) 12AA(3) & 12AA(4) AFTER THE REGISTRATION HAS BEEN GRANTED AND IF THE LD. CIT(E) IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACC ORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MA Y BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUC H TRUST OR INSTITUTION. BUT IN THE INSTANT CASE EVEN THE REGISTRATION ITSELF HA S NOT BEEN GRANTED 18 DESPITE OF PROVIDING ALL THE NECESSARY DOCUMENTS PR OVE THE GENUINENESS OF ACTIVITIES ACTUALLY BEING UNDERTAKEN IN ACCORDAN CE WITH THE AIMS AND OBJECTS OF THE TRUST AS PER THE DEED. 6.11 WE FURTHER NOTE THAT THE HONBLE HIGH COURT O F PUNJAB & HARYANA IN THE CASE OF CIT VS. BABA KARTAR SINGH DUKKI EDUC ATIONAL TRUST (2014) 221 TAXMAN 493 (P&H) HAS HELD THAT THE OBJECT OF S ECTION 12AA OF THE ACT IS TO EXAMINE THE GENUINENESS OF THE OBJECTS O F THE TRUST AND THOUGH WHILE EXAMINING GENUINENESS, THE INCOME AS WELL AS RESOURCES OF THE TRUST MAY BE TAKEN INTO CONSIDERATION BUT ANY SUSPI CION AS TO THESE FACTS CANNOT BE THE SOLE CRITERIA FOR REJECTING AN APPLI CATION UNDER SECTION 12A OF THE ACT. HOWEVER, IN THE PRESENT CASE THE LD. C IT(E) HAS NOT PROPERLY APPRECIATED THE AIMS AND OBJECTS OF THE TRUST ESPE CIALLY THE OBJECT I.E. TO PROMOTE AWARENESS OF UNIVERSAL TEACHING OF SGGS (SH RI GURU GRANTH SAHIB) AND OTHER RELIGIOUS GRANTHS AMONG THE GENE RAL PUBLIC AND IN THE YOUNGER GENERATION AND MORE THE REGISTRATION ITSEL F HAS NOT BEEN GRANTED DESPITE OF PROVIDING ALL THE NECESSARY DOCUMENTS TO PROVE THE GENUINENESS OF ACTIVITIES ACTUALLY BEING UNDERTAKEN IN ACCORDANCE WITH THE AIMS AND OBJECTS OF THE TRUST AS PER THE DEED. 7. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES A S EXPLAINED ABOVE AS WELL AS THE CASE LAWS DISCUSSED IN THE PRECEDING PARAGRAPHS, WE ARE OF THE CONSIDERED VIEW THAT AFTER RECEIVING THE APPLIC ATION FOR GRANT OF REGISTRATION U/S. 12AA OF THE ACT IN THE PRESCRIBED FORM, FROM THE ASSESSEE/TRUST, THE LD. CIT(E) HAS NOT PROVED WITH THE EVIDENCES THAT THE ASSESSEE/TRUST IS NOT GENUINE AND IS NOT DOING ANY CHARITABLE ACTIVITY TO ACHIEVE ITS OBJECTS. AT THE TIME OF GRANTING THE REGISTRATION U/S. 12AA OF THE INCOME TAX ACT, 1961 THE AUTHORITY HAS TO SEE O R EXAMINE THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTI TUTION. IN OUR VIEW THE ASSESSEE HAS ESTABLISHED THAT ASSESSEE IS DOING THE GENUINE CHARITABLE ACTIVITIES TO ACHIEVE THE OBJECT OF THE TRUST BY M AKING EVERY POSSIBLE EFFORTS EVEN BY GIVING OWN RENT FREE ACCOMMODATION TO THE TRUST. IN OUR VIEW THE ASSESSEE IS DOING THE CHARITABLE WORK TO P ROMOTE THE AWARENESS 19 OF UNIVERSAL TEACHING OF SGGS (SHRI GURU GRANTH SA HIB) AND OTHER RELIGIOUS GRANTHS AMONG THE GENERAL PUBLIC AND IN THE YOUNGER GENERATION, WHICH IS VERY MUCH ESSENTIAL IN THESE D AYS FOR THE BETTERMENT OF THE YOUNG GENERATION. WE FURTHER NOTE THAT ASSESSEE HAS FILED SUFFICIENT EVIDENCES BEFORE THE LD. CIT(E) AN D BEFORE US FOR ESTABLISHING THE GENUINENESS OF THE ACTIVITY OF THE TRUST. THEREFORE, WE ARE OF THE VIEW THAT THE IMPUGNED ORDER PASSED BY THE L D. CIT(E), CHANDIGARH FOR NOT GRANTING REGISTRATION U/S. 12AA OF THE I.T. ACT, 1961 IS NOT SUSTAINABLE IN THE EYES OF LAW AND, HENCE, WE CANCEL THE IMPUGNED ORDER WITH THE DIRECTIONS TO THE LD. CIT(E), CHANDI GARH TO GRANT THE REGISTRATION U/S. 12AA OF THE ACT, 1961 TO THE ASSE SSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON 01/03/2018. SD/- SD/- [L.P. SAHU] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 01/03/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES