Shri Samast Gurjar Sagar Gnati, Bhavnath, RAJKOT-GUJARAT V. The Comissioner of Income Tax-III, RAJKOT-GUJARAT

ITA 108/RJT/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80087 (ITAT-RAJKOT)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-06-2014
• Assessment Year: misc
• Appeal Filed On: 03-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B D GARSAR
• Assessee Lawyers: DR ADHIA
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 108/RJT/2014 SHRI SAMASTA GURJAR SAGAR GNATI, C/O. MANSUKHBHAI B. AJANI, AT. BHAVNATH, DIST. JUNAGADH PAN : AAJTS 8815 J ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX RAJKOT-III RAJKOT / RESPONDENT / ASSESSEE BY SHRI D.R. ADHIA, AR / REVENUE BY SHRI B. D. GARSAR, DR / DATE OF HEARING 12.06.2014 !'# / DATE OF PRONOUNCEMENT 19.06.2014 / ORDER THIS APPEAL BY THE ASSESSEE-INSTITUTION/ASSOCIATION IS AGAINST THE ORDER DATED 25.09.2012 OF COMMISSIONER OF INCOME-TAX, RAJKOT-II I, RAJKOT REJECTING THE APPLICATION OF ASSESSEE-INSTITUTION/ASSOCIATION FOR REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-INSTI TUTION/ASSOCIATION NAMELY SHRI SAMASTA GURJAR SAGAR GNATI CAME INTO EXISTENCE BY A MEMORANDUM OF ASSOCIATION ON 25.05.2009 AND THE SAME HAS BEEN REGISTERED UNDE R THE BPT ACT 1951 VIDE CERTIFICATE DATED 28.07.2009. THE ASSESSEE-INSTITU TION/ASSOCIATION FILED AN APPLICATION FOR REGISTRATION U/S 12AA OF THE INCOME -TAX ACT, 1961 WITH LD. CIT-III, RAJKOT ON 29.03.2012 ALONGWITH FOLLOWING DOCUMENTS/ DETAILS:- I. FORM NO.10A II. XEROX COPY OF TRUST DEED III. COPY OF REGISTRATION CERTIFICATE WITH CHARITY COMMISSIONER IV. NAME AND ADDRESS OF TRUSTEES V. COPY OF LAST YEAR AUDITED ACCOUNTS VI. COPY OF BANK PASSBOOK VII. COPY OF ACTIVITIES OF THE TRUST AND PHOTOGRAPH S FOR GENUINENESS OF THE TRUST VIII. COPY OF PAN APPLICATION IX. LETTER OF AUTHORITY THE AFORESAID APPLICATION WAS REJECTED BY THE LD CO MMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT VIDE HIS ORDER DATED 25.09.2012 PASSED U/S 12AA OF THE INCOME-TAX 2 108-RJT-2014 - SHRI SAMASTA GURJAR SAGAR GNATI-12AA (SMC) ACT. THE REASON FOR REJECTING THE SAID APPLICATION IS GIVEN BY HIM IN PARAGRAPH NOS 6.1 & 7 OF THE IMPUGNED ORDER, WHICH READ AS UNDER: - 6.1 REGARDING CHARITABLE ACTIVITIES CARRIED OUT BY THE TRUST THE WRITTEN SUBMISSION OF THE ASSESSEE IS NOT ACCEPTABLE ON THE FACT THAT AS PER THE AUDITED ACCOUNTS FOR THE FY 2009-10 TO 2011-12 SUBM ITTED BY THE ASSESSEE IT IS OBSERVED THAT THE ASSESSEE HAS NOT CARRIED OUT A NY CHARITABLE ACTIVITIES AS PER ITS OBJECTS SINCE ITS INCEPTION. THE TRUST, SIN CE ITS INCEPTION, HAS GENERATED INCOME FROM LETTING OUT ITS PROPERTY I.E. COMMUNITY HALL AND ALL THE EXPENDITURES, INCURRED, ARE RELATED TO LETTER OUT T HE COMMUNITY HALL. THE ASSESSEE TRUST HAS NOT SPENT ANY INCOME TOWARDS ANY OBJECTS AS PRESCRIBED IN THE TRUST DEED. THEREFORE THE UTILIZATION OF THE FU ND BY THE ASSESSEE TRUST SINCE ITS INCEPTION DOES NOT CONCLUDE ANY CHARITABLE ACTI VITY. 7. CONSIDERING THE ABOVE FACTS, IT IS HELD THAT THE TRUST HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITY TOWARDS THE OBJECTS OF THE TRUST. THEREFORE THE TRUST IS NOT ENTITLED FOR REGISTRATION U/S 12AA OF THE I.T. ACT 1961. ACCORDINGLY, ASSESSEES APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT IS HEREBY REJECTED. AGGRIEVED WITH THE ORDER OF LD COMMISSIONER OF INC OME-TAX, RAJKOT-III, RAJKOT, THE ASSESSEE-INSTITUTION/ASSOCIATION IS NOW IN APPE AL BEFORE THIS TRIBUNAL. 3. BEFORE THE TRIBUNAL, ON BEHALF OF THE ASSESSEE-I NSTITUTION/ASSOCIATION, SHRI D.R. ADHIA, AR, APPEARED AND RELIED UPON THE FOLLOW ING DECISIONS:- A. ITA NO.653/RJT/2012 IN THE CASE OF SANT SHRI NIR ANJANBAPU EDUCATION AND CHARITABLE TRUST ORDER DATED 31.01.2014 B. TTJ (AHD) (UO) 118, IN THEC ASE OF JUPITER MEDIC AL RESEARCH CENTRE TRUST THE LD COUNSEL OF THE ASSESSEE-INSTITUTION/ASSOCIAT ION ALSO RELIED UPON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE O F KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST, [2013] 29 TAXMANN.COM 228, WHEREIN IT IS OBSERVED BY THE HONBLE HIGH COURT THAT THE ABSENCE OF ANY ACTIVITY OF A TR UST AT THE TIME OF REGISTRATION IS NOT A GROUND TO QUESTION GENUINENESS OF OBJECTIVES AND AC TIVITIES; REGISTRATION FOR TRUST CANNOT BE DENIED ON THE SOLE GROUND OF NON-COMMENCE MENT OF ACTIVITY AND SUCH ABSENCE OF ACTIVITY DOES NOT EMPOWER COMMISSIONER T O INFER ABSENCE OF GENUINENESS AND A COPY OF AFORESAID JUDGMENT IS PLA CED ON RECORD. 3.1 THE LD. COUNSEL OF THE ASSESSEE-INSTITUTION/ASS OCIATION ALSO RELIED UPON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CAS E OF FIFTH GENERATION EDUCATION SOCIETY V. CIT, REPORTED IN (1990) 185 ITR 634 (ALL ), WHEREIN IT WAS HELD THAT AT THE 3 108-RJT-2014 - SHRI SAMASTA GURJAR SAGAR GNATI-12AA (SMC) STAGE OF REGISTRATION, ALL THAT CIT MAY EXAMINE IS WHETHER THE APPLICATION IS MADE IN ACCORDANCE WITH THE REQUIREMENTS OF S. 12A R/W R. 1 7A AND WHETHER FORM 10A HAS BEEN PROPERLY FILLED UP HE MAY ALSO SEE WHETHER T HE OBJECTS OF THE TRUST ARE CHARITABLE OR NOT AT THIS STAGE, IT IS NOT PROPER TO EXAMINE THE APPLICATION OF INCOME OBSERVATION OF CIT THAT OBJECTS OF SOCIETY ARE GE NERAL IN NATURE CANNOT BE A GROUND OF REJECTION OBJECTS DO NOT CEASE TO BE CHARITABL E FURTHER, OBSERVATION THAT NO ACTIVITY HAS BEEN CARRIED OUT BY THE SOCIETY IS ALS O NOT PROPER AS THAT IS NOT THE REQUIREMENT OF S. 12A. CONTINUING HIS ARGUMENT, LD. COUNSEL OF THE ASSESS EE-INSTITUTION/ASSOCIATION SUBMITTED THAT THE IMPUGNED ORDER OF LD. COMMISSION ER OF INCOME-TAX BE SET ASIDE AND HE MAY BE DIRECTED TO GRANT REGISTRATION U/S 12 AA OF THE INCOME-TAX ACT, 1961 TO THE ASSESSEE-INSTITUTION/ASSOCIATION. 4. THE LD. COUNSEL OF THE ASSESSEE, SHRI B.D. GARSA R, DR, APPEARED ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LD. C IT. 5. AFTER HEARING BOTH SIDES, I HAVE CAREFULLY GONE THROUGH THE IMPUGNED ORDER OF LD COMMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT A ND THE DECISIONS RELIED UPON BY THE ASSESSEE-INSTITUTION/ASSOCIATION. THE MAIN GROU ND RAISED BY THE LD. CIT IN REJECTING ASSESSEE-INSTITUTION/ASSOCIATIONS APPLIC ATION FOR REGISTRATION U/S 12A IS THAT NO EVIDENCES HAD BEEN PRODUCED BY THE ASSESSEE-TRUS T BEFORE THE LD. CIT REGARDING THE ACTIVITIES THEY WERE BEING PURSUED. THE OBSERV ATION MADE BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF KUTCHI DASA OSWAL MOTO PA RIWAR AMBAMA TRUST, [2013] 29 TAXMANN.COM 228, IS RELEVANT IN THIS REGARD, WHEREI N THE GUJARAT HIGH COURT HELD THAT AT ABSENCE OF ANY ACTIVITY OF A TRUST AT THE TIME OF REGISTRATION IS NOT A GROUND TO QUESTION GENUINENESS OF OBJECTIVES AND ACTIVITIES; REGISTRATION FOR TRUST CANNOT BE DENIED ON THE SOLE GROUND OF NON-COMMENCEMENT OF AC TIVITY AND SUCH ABSENCE OF ACTIVITY DOES NOT EMPOWER COMMISSIONER TO INFER ABS ENCE OF GENUINENESS. THEREFORE, FOLLOWING THE RATIO OF JUDGMENT OF HONB LE GUJARAT HIGH COURT IN THE CASE OF KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST (SUPRA) , I SET ASIDE THE IMPUGNED ORDER DATED 25.09.2012 PASSED BY THE LD COMMISSIONE R OF INCOME-TAX, RAJKOT-III U/S 4 108-RJT-2014 - SHRI SAMASTA GURJAR SAGAR GNATI-12AA (SMC) 12AA OF THE INCOME-TAX ACT AND DIRECT HIM TO RECONS IDER THE APPLICATION OF ASSESSEE- INSTITUTION/ASSOCIATION FOR REGISTRATION UNDER SECT ION 12A OF THE INCOME-TAX ACT AFRESH KEEPING IN VIEW THE AFORESAID JUDGMENT OF HONBLE H IGH COURT, AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 19.06.2014 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- SHRI SAMASTA GURJAR SAGAR GNATI, C/O. MANSUKHBHAI B. AJANI, AT. BHAVNATH, DIST. JUNAGADH 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX, RAJK OT-III, RAJKOT 3. ,0,1 * * 2 / CONCERNED JT. CIT, JUNAGADH 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT