Kamalakar Memorial Charitable Trust, Hyderabad V. DIT, Hyderabad

ITA 1145/HYD/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5913 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-02-2010
• Assessment Year: misc
• Appeal Filed On: 03-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Assessee Lawyers: K VASANT KUMAR
• Keywords: Charitable institution

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMEBR ITA NO.1145/HYD/09 M/S. KAMALAKAR MEMORIAL CHARITABLE TRUST, HYDERABAD ( PAN AAATK 1495 M) V/S. DIRECTOR OF INCOME TAX (EXEMPTIONS) HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.VASANT KUMAR RESPONDENT BY : SHRI K.V.N.CHARYA O R D E R PER G.C.GUPTA, VICE PRESIDENT: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF DIRECTOR OF INCOME-TAX (EXEMPTIONS), HYDERABAD. 2. GROUNDS OF APPEAL OF THE ASSESSEE CENTRE AROUND THE I SSUE OF NON-RENEWAL OF APPROVAL UNDER S.80G OF THE INCOME -TAX ACT 1961. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE-TRUST IS RUNNING A SCHOOL AND A COMPUTER CENTRE AND IS ALSO RUNNING AN OLD-AGE HOME. HE SUBMITTED THAT THE DIRE CTOR(EXEMPTION) HAS REFUSED RENEWAL OF APPROVAL UNDER S.80G OF THE AC T MAINLY ON THE GROUND THAT RUNNING OF OLD-AGE HOME IS IN THE NATUR E OF TRADE AS THE INMATES OF THE OLD-AGE HOME HAVE CONTRIBUTED AMOUNT S BY WAY OF FEE TO THE ASSESSEE-TRUST. THE OTHER OBJECTION TAKEN BY THE DIRECTOR ITA NO.1145/HYD/09 M/S. KAMALAKAR MEMORIAL CHARITABLE TRUST, HYDERABAD 2 (EXEMPTIONS) IS THAT THE ASSESSEE TRUST IS NOT REGISTERED UN DER THE A.P. CHARITABLE AND HINDU RELIGIOUS INSTITUTIONS AND ENDOWM ENT ACT, 1987, AND THEREFORE, THE ASSESSEE HAS VIOLATED THE LAW OF THE LAND. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT RUNNING O F OLD-AGE HOME IS NOT AN ACTIVITY IN THE NATURE OF TRADE. HE SUB MITTED THAT FIVE INMATES OUT OF TOTAL OF SEVENTEEN PERSONS IN THE OLD A GE HOME WERE 'FREE' AND FROM THE REST OF THE PERSONS, ONLY NOMINAL AMOUNT WAS CHARGED FOR THE SERVICES RENDERED. HE REFERRED TO THE PROFIT & LOSS ACCOUNT OF THE OLD AGE HOME, WHICH SHOWS THAT THERE WAS EXCESS OF EXPENDITURE OVER INCOME BY RS.60,923 FOR THE YEAR END ING 31.3.2007. HE SUBMITTED THAT IT IS NOT NECESSARY TO GET THE ASSESSEE TR UST REGISTERED UNDER THE A.P. CHARITABLE & HINDU RELIGIOU S INSTITUTIONS ENDOWMENT ACT, 1987 AND THE ISSUE IS COVERED WITH THE DECISION OF THE NAGPUR BENCH OF THE TRIBUNAL IN THE CASE OF AGRICUL TURAL PRODUCE &MARKET COMMITTEE TELHARA & ORS. V/S. CIT (97 TTJ 165 (NAG). 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT THE RUNNING OF OLD AGE HOME IS NOT PART OF THE TRUST DEED AS THE INMATES OF THE OLD AGE HOME H AVE CONTRIBUTED BY WAY OF FEES TO THE TRUST AND THEREFORE, THE ASSESSEE' S CASE IS COVERED BY THE PROVISO TO S.2(15) OF THE INCOME-TAX ACT . HE SUBMITTED THAT THERE IS CLEAR VIOLATION OF THE LAW OF THE LAND, AS THE ASSESSEE TRUST WAS NOT REGISTERED UNDER THE A.P. CHARITABL E & HINDU RELIGIOUS INSTITUTIONS ENDOWMENT ACT, 1987, AND THE ASS ESSEE COULD NOT GIVE ANY VALID REASON FOR ITS NON-REGISTRATION UND ER THE PROVISIONS OF THE SAID ACT. HE RELIED ON THE IMPUGNED ORDER OF T HE DIRECTOR(EXEMPTIONS). ITA NO.1145/HYD/09 M/S. KAMALAKAR MEMORIAL CHARITABLE TRUST, HYDERABAD 3 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. W E FIND THAT IN RECENT TIMES, THE SOCIAL FABRIC OF THE SOCI ETY HAS UNDERGONE A CHANGE AND IN THE CHANGED SCENARIO RUNNING OF AN OLD AGE HOME WITH NO PROFIT MOTIVE, COULD NOT BE SAID TO BE AN ACTIVITY IN THE NATURE OF TRADE. IT IS THE INTENTION OF THE PER SONS RESPONSIBLE FOR MAINTAINING AN OLD AGE HOME, WHICH IS RELEVANT IN ORD ER TO DECIDE WHETHER THE OLD AGE HOME, IN A GIVEN CASE, IS MAINTAIN ED AS A PHILANTHROPIC ACTIVITY OR AS AN ACTIVITY IN THE NATUR E OF TRADE. FACTS AND CIRCUMSTANCES OF EACH CASE HAVE, THEREFORE, TO BE EXAM INED IN ORDER TO DETERMINE WHETHER A PARTICULAR TRUST IS RUN NING AN OLD AGE HOME FOR PROFIT AND THEREFORE, ITS ACTIVITIES ARE IN THE NATURE OF TRADE OR THE OLD AGE HOME IS MAINTAINED WITH NO PROFIT MO TIVE AND FOR CHARITABLE PURPOSES. WE HAVE EXAMINED THE DETAILS OF FEE CHARGED FROM VARIOUS INMATES OF THE OLD AGE HOME IN THE INSTAN T CASE, DURING THE RELEVANT PERIOD AND FIND THAT SOME OF THE INMATE S HAVE BEEN ADMITTED IN THE OLD AGE HOME FREELY, I.E. WITHOUT CH ARGING ANY AMOUNT. THE DETAILS OF AMOUNTS CHARGED FROM OTHER INMATES BY W AY OF FEES FOR RENDERING SERVICES TO THEM RANGE FROM RS.6,000 TO RS.18, 000 IN THE WHOLE YEAR. THESE NOMINAL AMOUNTS CHARGED ONLY PARTIA LLY REIMBURSE THE ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE TRUST ON T HE INMATES AND BY NO MEANS IT COULD BE SAID TO BE AN ACTIVITY WIT H A MOTIVE TO EARN PROFIT THEREFROM. IN THIS VIEW OF THE MATTER, WE HOLD THAT THE ASSESSEE TRUST IS A CHARITABLE TRUST. WITH REGARD TO THE O THER ISSUE OF NON-REGISTRATION UNDER THE A.P. CHARITABLE & HINDU RE LIGIOUS INSTITUTIONS ENDOWMENT ACT, 1987, WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE NAGPUR BENCH DECISION OF THE TRIBUNAL IN THE CASE OF AGRICULTURAL PRODUCE &MARKET COMMITTEE TELHARA & ORS. (SUPRA) AND THE MERE FACT THAT THE ASSESSEE TRUST IS NOT RE GISTERED ITA NO.1145/HYD/09 M/S. KAMALAKAR MEMORIAL CHARITABLE TRUST, HYDERABAD 4 UNDER THE PROVISIONS OF THE SAID ACT, SHALL NOT RENDER T HE ASSESSEE TRUST AS A NON-CHARITABLE ONE. WITH THESE OBSERVATIONS, WE SET ASIDE THE ORDER OF THE DIRECTOR(EXEMPTIONS) AND RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO PASS A DE-NOVO ORDER ON THE APPLICATION OF THE ASSESSEE IN FORM NO.10G SEEKING RENEWAL OF APPROVAL UNDE R S.80G OF THE ACT, IN THE LIGHT OF OUR OBSERVATIONS HEREINABOVE , AND AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSE SSEE. ASSESSEE IS DIRECTED TO COOPERATE WITH THE DEPARTMENT IN THE MA TTER OF DISPOSAL OF ITS APPLICATION FOR RENEWAL OF APPROVAL UNDER S.8 0G, AND THE DIRECTOR(EXEMPTIONS) IS FURTHER DIRECTED TO DISPOSE OFF THE APPLICATION SEEKING RENEWAL OF APPROVAL UNDER S.80G OF THE ACT, WITHIN A PERIOD OF THREE MONTHS FROM THE DATE OF RECEIPT OF THIS ORDER. WE DIRECT ACCORDINGLY. 6. IN THE RESULT, ASSESSEE'S APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 5.3.2010 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 5TH MARCH, 2010 COPY FORWARDED TO: 1. M/S. KAMALAKAR MEORIAL CHARITABLE TRUST, C/O. M/S. K.VASANT KUMAR, A.V.RAGHU RAM & B.PEDDI RA JULU, ADVOCATES, 403 MANISHA TOWERS, D.NO.10=-1-18/31, SHYAM NAGAR, HYDERABAD 500 004. ITA NO.1145/HYD/09 M/S. KAMALAKAR MEMORIAL CHARITABLE TRUST, HYDERABAD 5 2. DIRECTOR OF INCOME-TAX(EXEMPTIONS), HYDERABAD. 3. DDIT(E), HYDERABAD 4. THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. . B.V.S.