Agriculture Based Enterpreneurs Development Trust, CHENNAI V. ITO, Coimbatore

ITA 1172/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61062 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-04-2012
• Assessment Year: misc
• Appeal Filed On: 22-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOBADDL
• Assessee Lawyers: S SRIDHAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI (BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ) .. I.T.A. NO. 1172/MDS/2011 M/S.AGRICULTURE BASED ENTREPRENEURS DEVELOPMETN TRUST, A.G.K.COMPLEX, CHINNASAMY ROAD, NEW SIDHAPUDUR, COIMBATORE 641 044. PAN : AACTA 7239 H (APPELLANT) V. THE INCOME TAX OFFICER, COMPANY WARD I, COIMBATORE. (RESPONDENT) APPELLANT BY : SHRI S.SRIDHAR,ADVOCATE RESPONDENT BY : SHRI SHAJI P. JACOB,ADDL. C.I.T DR DATE OF HEARING : 25.04.12 DATE OF PRONOUNCEMENT : 30.04.12 O R D E R PER N.S.SAINI, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX-I, COIMBATORE DATED 31.0 5.2011. ITA NO. 1172/MDS/11 2 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPE AL IS THAT LD. COMMISSIONER OF INCOME TAX ERRED IN REJECTING THE A PPLICATION FILED BY THE ASSESSEE FOR APPROVAL U/S.80G OF THE ACT WIT HOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE-TRUST FILED AN APPLICATION ON 12.11.10 SEEKING APPROVAL U/S.80G OF THE ACT. FROM THE DETAILS FILED BY THE ASSESSEE, THE LD. COMMISSI ONER OF INCOME TAX FOUND THAT THE TRUST COMPRISES OF A GROUP OF IN DIVIDUALS, WHO HAVE COME TOGETHER TO PURSUE AN AVOCATION OF PROFIT FOR SELF-BENEFIT. HE ALSO OBSERVED THAT THE MANAGING TRUSTEE HAS RAISED CASH LOANS OF ` 2,45,000/-, IN THE RANGE OF ` 30,000 TO ` 75000 FROM FIVE INDIVIDUALS. THE TRUST HAS UTILIZED THE DONATION OF ` 1,43,000/- FOR DIFFERENT ACTIVITIES, INCLUSIVE OF INVESTMENT IN CERTAIN FIXE D ASSETS. LD. COMMISSIONER OF INCOME TAX OBSERVED THAT THE TRUST INTENDS TO CREATE A COMMERCIAL ESTABLISHMENT FOR ITSELF WITHOU T INCIDENCE OF TAX AND THROUGH DONATIONS SOUGHT TO BE RECEIVED U/S.80G OF THE ACT. AND TRAINING OF INDIVIDUALS, AFTER COLLECTING FEE FROM THEM, DOES NOT INVOLVE ANY CHARITY. IT IS LIKE ANY OTHER COMMERCIAL ESTABL ISHMENT INTENDED TO ITA NO. 1172/MDS/11 3 EARN PROFIT BY PROVIDING FOR NEEDS OF CONSUMERS. H ENCE, HE REJECTED THE CLAIM FOR APPROVAL U/S.80G OF THE ACT. 4. LD. AR OF THE ASSESSEE SUBMITTED THAT LD. COMMI SSIONER OF INCOME TAX WAS NOT JUSTIFIED IN REJECTING THE CLAIM FOR APPROVAL U/S.80G OF THE ACT, WHEN THE ASSESSEE WAS ENJOYING THE SAME ALL ALONG THE EARLIER YEARS. HE SUBMITTED THAT REGISTR ATION U/S.12A OF THE ACT WAS GRANTED TO THE ASSESSEE WITH EFFECT FROM 01 .04.2009 AND THE SAME HAS NOT BEEN WITHDRAWN OR CANCELLED. THEREFOR E, LD. COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN NOT GRANTING THE APPROVAL U/S.80G OF THE ACT. EVEN IF SOME COMMER CIAL ACTIVITY WAS CARRIED OUT BY THE ASSESSEE, THEN IT WOULD MAKE THE ASSESSEE LIABLE TO TAX BY DISALLOWING DEDUCTION U/S.11 TO 13 OF THE ACT. HE FURTHER SUBMITTED THAT SINCE LD. COMMISSIONER OF INCOME TAX HAS NOT PASSED SPEAKING ORDER GIVING REASONS FOR REJECTING THE APPROVAL U/S.80G OF THE ACT, THE MATTER MAY BE REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION OF THE ISSUE. ITA NO. 1172/MDS/11 4 5. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDER O F THE LD. COMMISSIONER OF INCOME TAX. HE ALSO RELIED ON THE DECISION OF CHENNAI BENCH OF TRIBUNAL IN THE CASE OF RAJA SIR A NNAMALAI CHETTIYAR FOUNDATION VS. DIT(E) AND SUBMITTED THAT TRIBUNAL IN THAT CASE HAS HELD THAT THE OBJECT OF THE ASSESSEE-TRUST WAS TO ESTABLISH A NUMBER OF EDUCATIONAL INSTITUTION IN A BRAND NAME A ND RAN THEM ON COMMERCIAL LINE, WHICH COULD NOT BE A CHARITABLE AC TIVITY AND THEREFORE, THE DIT(E) HAD RIGHTLY REJECTED THE APPL ICATION FILED BY THE ASSESSEE FOR REGISTRATION U/S.12A OF THE INCOME TAX ACT, 1961. HE SUBMITTED THAT SIMILAR IS THE CASE IN THE PRESENT A PPEAL AND THEREFORE FOLLOWING THE SAME, THE ORDER OF LD.CIT MAY BE CON FIRMED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, IT IS NO T IN DISPUTE THAT THE ASSESSEE-TRUST WAS GRANTED REGISTRATION U/S.12A OF THE ACT WITH EFFECT FROM 01.04.09 VIDE ORDER DATED 21.07.2010. THUS, THE REGISTRATION WAS GRANTED TO THE ASSESSEE AFTER CONSIDERING THE O BJECTS OF THE TRUST AND THE SAME IS STILL IN FORCE. THEREAFTER, LD.C.I .T. HAS REFUSED THE APPROVAL U/S.80G(5)(VI) OF THE ACT TO THE ASSESSEE FOR THE REASON THAT ITA NO. 1172/MDS/11 5 IT IS A COMMERCIAL ESTABLISHMENT INTENDED TO EARN P ROFIT BY PROVIDING FOR NEEDS OF CONSUMERS. WHILE DOING SO, LD. C.I.T. ALSO ADMITS THAT SOME OF THE ACTIVITIES HAVE BEEN CARRIED OUT IN PUR SUANCE OF THE OBJECT OF THE TRUST FOR WHICH IT WAS ESTABLISHED. IN HIS ORDER, LD. C.I.T. STATES THAT MANAGING TRUSTEE HAS RAISED CASH LOANS OF ` 2,45,000/- AND TOGETHER WITH THAT THE DONATION OF ` 1,43,000/- RECEIVED FROM VARIOUS PERSONS WAS UTILIZED FOR INVESTMENT IN CERT AIN FIXED ASSETS. WE FIND THAT NOWHERE IN THE ORDER, LD. C.I.T. HAS G IVEN ANY DETAILS AS TO WHICH OF THE ACTIVITIES UNDERTAKEN BY THE ASSESS EE ARE COMMERCIAL IN NATURE AND WHICH ARE CHARITABLE AND PERCENTAGE T HEREOF. FURTHER, WHETHER THE FIXED ASSETS CREATED BY INVESTING DONAT IONS ARE UTILIZED FOR CHARITABLE ACTIVITIES OR NOT IS ALSO NOT STATED . THEREFORE, THE ISSUE CANNOT BE ADJUDICATED BY US. THE LD. DR HAS RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF RAJA SIR ANNAMALAI C HETTIYAR FOUNDATION (SUPRA) WHICH HAS NOT ALSO BEEN CONSIDER ED BY THE COMMISSIONER OF INCOME TAX WHILE ADJUDICATING THE I SSUE. THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS PRAYE D FOR REMANDING THE MATTER BACK TO THE COMMISSIONER OF INCOME TAX F OR ADJUDICATING THE ISSUE AFRESH BY PASSING A REASONED ORDER. THE LD. DR DID NOT ITA NO. 1172/MDS/11 6 OBJECT TO THE SAME. WE THEREFORE, SET ASIDE THE OR DER OF LD. COMMISSIONER OF INCOME TAX AND REMAND THE MATTER BA CK TO HIS FILE TO RE-ADJUDICATE THE ISSUE OF GRANTING OF APPROVAL U/S.80G(5)(VI) OF THE ACT AFRESH IN THE LIGHT OF THE DISCUSSIONS MADE HER EIN ABOVE AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE A SSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 30 TH APRIL, 2012 SD/- SD/- (VIKAS AWASTHY) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 30 TH APRIL , 2012. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE