Bradix Bharat Trust , Visakhapatnam V. Commissioner of Income Tax, (Exemptions), Hyderabad

ITA 114/Hyd/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7274 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 06-11-2019
• Assessment Year: misc
• Appeal Filed On: 31-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: PRADEEP KASTHALA
• Keywords: Charitable institution; Benefit of exemption
• Section: 12A; 12AA; 191; 12; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.114/HYD/2019 BRANDIX BHARAT TRUST, BIAC ADMINISTRATIVE BUILDING, NON PROCESSING ZONE, BRANDIX INDIA APPAREL CITY, BIAC SEZ, PUDIMADAKA ROAD, ATCHUTHAPURAM MANDAL, VISAKHAPATNAM, ANDHRA PRADESH 531011. PAN: AADTB 4069 M VS. COMMISSIONER OF INCOME TAX (EXEMPTIONS), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI PRADEEP KA S THALA REVENUE BY: SRI Y.V.S.T. SAI, CIT - DR DATE OF HEARING: 06/11/2019 DATE OF PRONOUNCEMENT: 31 /01/2020 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (EXEMPTIONS), HYDERABAD IN APPEAL F.NO. CIT (E)/HYD/36(05)12A/2018 - 19, DATED 30/11/2018 PASSED U/S. 12AA(1)(B)(II) OF THE ACT. 2 2. THE ASSESSEE TRUST HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD. CIT (E) HAS ERRED I N REFUSING TO GRANT REGISTRATION U/S. 12AA OF THE ACT ON THE PREMISE THAT THE ACTIVITIES CONDUCTED BY THE ASSESSEE DURING THE RELEVANT ASST. YEAR CANNOT BE CONSIDERED AS CHARITABLE IN NATURE. 3. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS A TRUST, FILED ITS APPLICATION IN FORM 10A SEEKING REGISTRATION U/S. 12AA OF THE ACT ON 31/5/2018. THE LD. CIT(E) AFTER EXAMINING THE STRUCTURE / SETTLERS OF THE ASSESSEES TRUST WAS OF THE VIEW THAT THE ASSESSEE TRUST WAS PROMOTING THE BRAND OF THE SETTLERS OF THE ASSESSEE TRUST AND THEREFORE, THE ASSESSEE WAS NOT INDULGING IN ANY CHARITABLE ACTIVITY. FOR THE ABOVE STATED REASONS, THE LD. CIT(E) REFUSED TO GRANT REGISTRATION TO THE ASSESSEE TRUST U/S. 12AA OF THE ACT. 4. THE LD. AR VEHEMENTLY ARGUED BEFORE US BY STATING THAT THE ACTIVITIES CONDUCTED BY THE ASSESSEE WERE FOR PROMOTION OF MEDICAL RELIEF TO THE NEEDY AND THEREFORE THE REGISTRATION U/S. 12AA OF THE ACT CANNOT BE DENIED. THE LD. AR FURTHER SUBMITTED THAT THE LD. CIT (E) WITHOUT EXAMINING THE MEMORANDUM OF ASSOCIATION (MOA) OF THE TRUST WHEREIN THE ACTIVITIES MENTIONED ARE CHARITABLE IN NATURE AND IN ACCORDANCE WITH SECTION 2(15) OF THE ACT , RE JECTED THE APPLICATION FILED BY THE ASSESSEE IN FORM 10A. IT WAS THEREFORE PLEADED THAT THE LD. CIT (E) MAY BE DIRECTED TO GRANT REGISTRATION TO THE ASSESSEE U/S. 12AA OF THE ACT. THE LD. DR 3 ON THE OTHER HAND RELIED ON THE ORDER OF THE LD. CIT (E) AND AR GUED BY STATING THAT THE ASSESSEES TRUST IS CONDUCTING ITS ACTIVITIES IN ORDER TO PROMOTE THE BRAND OF THE SETTLERS OF THE ASSESSEE TRUST AND HENCE , IT CANNOT BE CONSIDERED AS EXISTING FOR THE ADVANCEMENT OF CHARITABLE ACTIVITIES. 5. WE HAVE HEARD THE RI VAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. IT IS PERTINENT TO MENTION THAT WHILE GRANTING REGISTRATION U/S. 12AA OF THE ACT THE LD. CIT (E) OUGHT TO HAVE ONLY LOOKED AT THE ACTIVITIES MENTIONED IN THE MOA OF THE ASSESSEE TRUST. IF THE LD. CIT (E) IS SATISFIED THAT THE ACTIVITIES MENTIONED IN THE MOA OF THE ASSESSEE TRUST, IS FOR CHARITABLE PURPOSE IN ACCORDANCE WITH SECTION 2(15) OF THE ACT THEN, HE IS BOUND TO GRANT REGISTRATION TO THE ASSESSEE TRUST U/S. 12AA OF THE ACT. THEREAFTER, THE LD. AO AT THE TIME OF ASSESSMENT SHALL VERIFY THE ACTIVITIES CONDUCTED BY THE ASSESSEE AND THE COMPLIANCE OF THE OTHER PROVISIONS OF THE ACT AND IF IT IS NOT IN ACCORDANCE WITH THE ACTIVITY MENTIONED IN THE MOA OR FAILED TO COMPLY WITH ANY OTHER PROVISIONS OF THE ACT, HE MAY WITHDRAW THE BENEFIT OF SECTION 11 AND 12 OF THE ACT. THESE ASPECTS HAVE BEEN MADE CLEAR BY TH E DECISION S OF THE HONBLE HIGH COURT S CITED HEREIN BELOW: (A) FIFTH GENERATION EDUCATION SOCIEITY VS. CIT REPORTED IN 185 ITR 6344 (ALL): WHILE CONSIDERING THE ASSESSEES APPLICATION FOR GRANT OF REGISTRATION U/S. 12A OF THE ACT ALL THAT THE COMMISSIONER MAY 4 EXAMINE IS WHETHER THE APPLICATION IS MADE IN ACCORDANCE WITH THE REQUIREMENT OF THAT SECTION READ WITH RULE 17A, AND WHETHER FORM 10A HAS BEEN PROPERLY FILED UP. HE MAY ALSO SEE WHETHER THE OBJECTS OF THE TRUST ARE CHARITABLE OR NOT. AT THAT STAGE, IT IS NOT PROPER TO EXAMINE THE APPLICATION OF INCOME. (B) DIT VS. GARDEN CITY EDUCATIONAL TRUST REPOR TED IN 191 TAXMANN 238 (KAR.): SO LONG AS A TRUST HAS EDUCATION AS ONE OF ITS OBJECTS IT HAS TO BE ACCEPTED THAT TRUST IS HAVING A CHARITABLE PURPOSE AS ITS OBJECT AND MAY QUALIFY FOR CLAIMING EXEMPTION IN TERMS OF SECTION 11 AND 12 SUBJECT TO FULFILLING OF CONDITIONS ENUMERATED THEREIN; MANNER OF APPLICATION OF FUNDS AND AS TO WHETHER ASSESSEE CAN CLAIM BENEFIT OF EXEMPTION IN TERMS OF SECTION 11 AND 12 ARE QUESTIONS WHICH HAVE TO BE EXAMINED BY THE ASSESSING OFFICER AT STAGE WHEN SAME ARE URGED AND NOT B Y THE COMMISSIONER WHILE CONSIDERING APPLICATION FOR GRANT OF REGISTRATION U/S. 12A OF THE ACT. 6. THEREFORE, IN THE INTEREST OF JUSTICE, WE HEREBY REMIT THE MATTER BACK TO THE FILE OF LD. CIT (E) TO CONSIDER THE OBJECTS MENTIONED IN THE MOA OF THE ASSE SSEE TRUST AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH THE RATIO LAID DOWN BY THE HIGHER JUDICIARY MENTIONED HEREIN ABOVE. 5 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 3 1 ST JANUARY, 2020 . SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 31 ST JANUARY, 2020. OKK COPY TO: - 1) BRANDIX BHARAT TRUST, BIAC ADMINISTRATIVE BUILDING, NON PROCESSING ZONE, BRANDIX INDIA APPAREL CITY, BIAC SEZ, PUDIMADAKA ROAD, ATCHUTHAPURAM MANDAL, VISAKHAPATNAM, ANDHRA PRADESH 531011. 2) CIT (EXEMPTIONS), HYDERABAD , 2 ND FLOOR, AAYAKAR BHAVAN, BASHEER BAGH, HYDERABAD - 500 004. 3) THE ADDL. CIT (EXEMPTIONS), VIJAYAWADA. 4) THE ITO (E), VISAKHAPATNAM. 5 ) THE PR. CIT (EXEMPTIONS), HYDERABAD. 6 ) THE DR, ITAT, HYDERABAD 7 ) GUARD FILE