Shree Talavana Jain Mahajan, Mandvi, RAJKOT-GUJARAT V. The Commissioner of Income Tax-I, RAJKOT-GUJARAT

ITA 117/RJT/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8577 (ITAT-RAJKOT)
• Duration Of Justice: 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-12-2014
• Assessment Year: misc
• Appeal Filed On: 07-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L MEENA
• Keywords: Charitable institution
• Section: 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: RAJKOT BENCH, RAJKOT (BEFOR E SHRI ANIL CHATURVEDI , A.M. & SHRI KUL BHARAT, J.M. ) I. T. A. NO. 117 / RAJ / 20 1 4 (A SSESSMENT YEAR: N.A. ) SHREE TALAVANA JAIN MAHAJAN. MANDVI - KACHCHH CHARTERED ACCOUNTANTS 411, COSMO COMPLEX MAHILA COLLEGE CIRCLE, RAJKOT 360001 V/S THE CIT - I, R AJKOT (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KALPESH DOSHI, C.A. RESPONDENT BY : SHRI M.L. MEENA, D.R. ( )/ ORDER DATE OF HEARING : 3 - 12 - 2014 DATE OF PRONOUNCEMENT : 05 - 12 - 2014 PER SH RI ANIL CHATURVEDI,A.M. 1. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT, RAJKOT - 1, DATED 29.01.2014. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE MADE AN APPLICATION FOR REGISTRATION U/S 12A OF THE INCOME TAX ACT ON 29.07.2013. THE SAID APP LICATION WAS REJECTED BY THE COMMISSIONER VIDE IMPUGNED ORDER. THE ASSESSEE FEELING AGGRIEVED BY THE ORDER HAS FILED THE PRESENT APPEAL BEFORE US. 3. BEFORE US, L D. A.R. SUBMITTED THAT THE APPLICATION WAS REJECTED ON THE GROUND THAT THE TRUST IS ESTABLISHE D ONLY FOR BENEFIT OF A PARTICULAR COMMUNITY NAMELY JAINS. ITA NO 117/RJT/2014 . A.Y. N.A. 2 THEREFORE BY APPLYING THE PROVISIONS OF SECTION 13(1 )( B) OF THE ACT CIT REJECTED THE APPLICATION . LD. A.R. SUBMITTED THAT IN THE PRESENT CASE, THE PROVISIONS OF SECTION 13(1B) OF THE ACT ARE NOT AP PLICABLE A S THE TRUST WAS ESTABLISHED ON 22.01.1962 I.E. PRIOR TO THE DATE WHEN THE PRESENT A CT CAME INTO FORCE. HE SUBMITTED THAT A BARE READING OF THE SECTION 13(1)(B) OF THE ACT WOULD MAKE IT CLEAR THAT THE PROVISIONS ARE NOT APPLICABLE TO THE TRUST WHI CH WERE ESTABLISHED PRIOR TO COMING INTO FORCE OF THE ACT OF 1961. HE FURTHER SUBMITTED THAT PRIOR TO THE COMING INTO FORCE OF TH E ACT OF 1961, THERE WAS NO PROHIBITION UNDER THE LAW FOR THE TRUST TO BE FOR THE BENEFIT OF A PARTICULAR COMMUNITY HE FURTHE R SUBMITTED THAT UNDER THE IDENTICAL FACTS, THE ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE BY THE HON BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. ARYA VYSYA KALYANA NILAYA SANGAM 15 9 ITR 324 (A.P). ON THE OTHER HAND, THE LD. D.R. SUPPORTED THE ORDER AND SUBMITTED THAT THERE IS NO ILLEGALITY IN THE ORDER OF CIT. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS MADE APPLICATION UNDER THE PRESENT LAW, THEREFORE THE PROVISIONS OF THE PRESENT LAW WOULD APPLY. HE FURTHER PLACED RELIANCE ON THE DECISION IN T HE CASE OF ALEXENDRA SCHOOL VS. CIT (2014) 44 TAXMAN. COM. 139 (AMRITSAR). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT HAS REJECTED THE APPLICATION FOR REJECTION U/S 12A BY OBSERVING AS UNDER: - 5 PERUSAL OF THE ABOVE SHOWS THAT OBJECTS AS PAR CLAUSES 3.1, 3.2 AND 3.4 CLEARLY PROVIDES THAT THE TRUST IS CREATED AND ESTABLISHED FOR BENEFIT OF JAIN COMMUNITY ESPECIALLY FOR THE JAINS, ORIGINATING FROM TALVANA, A SMALL VILLAGE IN KUTCH REGION. THE PROVISIONS OF SECTION 13(1)(B) OF THE I.T. ACT CLARIFY THAT THE EXEMPTION OF INCOME U/S. 11 OR 12 SHOULD NOT BE GIVEN TO SUCH TRUST WHICH IS CREATED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY. THE OBJECTS OF THIS TRUST ARE FOR THE BENEFIT OF JAIN COMMUNITY A T TALAVANA. THE OBJECTS DO NOT STATE THAT THE BENEFITS ARE FOR POOR OR NEEDY PERSONS. THEREFORE OBJECTS CANNOT BE CHARITABLE. 5. BEFORE ADVERTING TO THE RIVAL CONTENTIO NS, IT WOULD BE APPROPRIATE TO CONSIDER THE RELEVANT PROVISIONS OF SECTION 13(1 )( B) WHICH READS AS UNDER: - 13(1) NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF - (A) ITA NO 117/RJT/2014 . A.Y. N.A. 3 (B) IN THE CASE OF A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INS TITUTION CRATED OR ESTABLISHED AFTER THE COMMENCEMENT OF THIS ACT, ANY INCOME THEREOF IF THE TRUST OR INSTITUTION IS CREATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE. 6. BEFORE US REVENUE HAS NOT DISPUTED THE FACT THAT TH E ASSESSEE TRUST WAS ESTABLISHED ON 22.01.1962 I.E. PRIOR TO THE COMMENCEMENT OF THE PRESENT ACT WHICH CAME INTO FORCE ON 1 ST APRIL, 1962 . 7. WE FIND THAT HON BLE ANDHRA PRADESH HIGH COURT IN; THE CASE OF ARYA VYSYA KALYANA NILAYA SANGAM (SUPRA) HAS HELD THA T BAR OF SECTION 13(1)(B) WOULD NOT APPLY TO TRUST WHICH CAME INTO EXISTENCE BEFORE 1.04.1962. THE RELEVANT HEAD NOTES READ AS UNDER: - CHARITABLE TRUST - EXEMPTION UNDER S. 11 - BAR UNDER S. 13(1)(B) - TRUST CREATED BY A WILL DATED 20 TH OCT., 1918 FOR BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY - TRUSTEES DULY APPOINTED, OBJECTS SPECIFIED AND LEGAL OBLIGATION IMPOSED UNDER THE WILL TO HOLD PROPERTIES FOR PURPOSES SPECIFIED IN THE WILL - OBJECTS FOR WHICH THE TRUST WAS CREATED OR OBJECTS SUBSEQUENTLY ADDED BY TRUS TEES ADMITTEDLY CHARITABLE IN CHARACTER - ITO YET BRINGING THE TRUST S INCOME TO TAX IN THE RELEVANT ASSESSMENT YEAR FOR THE FIRST TIME ON THE GROUND THAT TRUST HAVING BEEN GRANTED REGISTRATION UNDER THE SOCIETIES REGISTRATION ACT ON 5 TH DEC., 1967, IT COULD BE SAID TO HAVE COME INTO EXISTENCE ONLY ON THAT DATE AND, WAS THEREFORE, GOVERNED BY S. 13(1)(B) NOT JUSTIFIED - NO REQUIREMENT UNDER THE LAW THAT A TRUST SHOULD BE REGISTERED UNDER THE SOCIETIES REGISTRATION ACT TO BE RECOGNIZED AS A CHARITABLE INSTITU TION - INSTRUMENT EVIDENCING CREATION OF A TRUST BEING IN EXISTENCE AS FAR BACK AS 20 TH OCT., 1918, TRUST COULD BE SAID TO BE IN EXISTENCE PRIOR TO 1 ST APRIL, 1962 AND, THEREFORE ITS INCOME WOULD QUALIFY FOR EXEMPTION EVEN IF ENSURED FOR A PARTICULAR COMMUN ITY - LETTING OUT OF A PROPERTY BY SUCH A PUBLIC CHARITABLE TRUST ALSO DOES NOT INVOLVE ANY ACTIVITY FOR PROFIT SO AS TO BE ASSESSED. 8. BEFORE US, REVENUE HAS NOT BROUGHT ANY DISTINGUISHING FEATURE OF THE CASE LAW RELIED BY ASSESSEE NOR HAS BROUGHT ANY CO NTRARY BINDING DECIS ION IN ITS SUPPORT. F URTHER THE DECISION RELIED BY REVENUE IS NOT APPLICABLE TO THE PRESENT FACTS. RESPECTFULLY FOLLOWING THE RATIO OF THE HON BLE ANDHRA PRADESH HIGH COURT , WE ARE OF THE VIEW THAT TH E LD. CIT WAS NOT JUSTIFIED IN REJE CTING THE APPLICATION AND THEREFORE THE LD. CIT IS HEREBY DIRECTED TO REGISTER THE APPLICATION OF THE ACT AND THUS THE ORDER OF THE LD. CIT IS HEREBY SET ASIDE. ITA NO 117/RJT/2014 . A.Y. N.A. 4 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 05 - 12 - 201 4 . SD/ - SD/ - (KUL BHARAT ) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCO UNTANT MEMBER RAJKOT . TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GU ARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT