Reham Foundation, Lucknow V. Commissioner of Income Tax (Exemptions), Lucknow

ITA 119/LKW/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1134 (ITAT-LUCKNOW)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 19-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K SINGH
• Assessee Lawyers: Ashish Kapoor
• Keywords: Charitable institution
• Section: 12; 80G; 12A; 12AA

Judgement Text

I.T.A. NO.119/LKW/2018 ASSESSMENT YEAR:N.A. 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.119/LKW/2018 ASSESSMENT YEAR: N.A. M/S REHAN FOUNDATION, 153, KANDHARI LANE, BEHIND ISLAMIA COLLEGE, LALBAGH, LUCKNOW. PAN:AACTR 7194 J VS. CIT (EXEMPTIONS), LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LEARNED CIT (EXEMPTIONS), LUCKNOW DATED 16/01/2000. 2. AT THE OUTSET, LEARNED A. R. SUBMITTED THAT ASSE SSEE WAS HAVING REGISTRATION U/S 12AA OF THE ACT, HOWEVER, ITS APPL ICATION FOR GRANT OF APPROVAL U/S 80G HAS BEEN REJECTED BY LEARNED CIT ( EXEMPTIONS) BY HOLDING THAT NO EVIDENCE OF ANY CHARITABLE ACTIVITY COULD B E SHOWN BY THE ASSESSEE. OUR ATTENTION WAS INVITED TO COPY OF ORDER PASSED U /S 12A OF THE ACT PLACED AT PAGES 115 TO 116 OF THE PAPER BOOK. LEARNED A. R. ARGUED THAT ONCE THE REGISTRATION U/S 12A WAS GRANTED TO THE ASSESSEE, T HE ACTION OF LEARNED CIT (EXEMPTIONS) IN REJECTING THE APPLICATION U/S 80G W AS NOT JUSTIFIED AS APPELLANT BY SHRI ASHISH KAPOOR, C. A. RESPONDENT BY SHRI C. K. SINGH, D.R. DATE OF HEARING 29/11/2018 DATE OF PRONOUNCEMENT 30 / 11 /201 8 I.T.A. NO.119/LKW/2018 ASSESSMENT YEAR:N.A. 2 VARIOUS BENCHES OF THE TRIBUNAL HAVE HELD THAT ONCE THE REGISTRATION U/S 12A IS AVAILABLE TO THE ASSESSEE, THE ASSESSEE CANNOT B E DENIED THE BENEFIT OF SECTION 80G OF THE ACT. RELIANCE IN THIS RESPECT W AS PLACED ON THE FOLLOWING CASE LAWS: (I) I.T.A.T. LUCKNOW BENCH ORDER IN THE CASE OF REHAN FOUNDATION VS. CIT (EXEMPTIONS) IN I.T.A. NO.576 & 575/LKW/2016, ORDER DATED 30/01/2017 (II) I.T.A.T., LUCKNOW BENCH ORDER IN THE CASE OF KALYAN AM KAROTI VS. CIT [2010] 123 ITD 317 (LUCKNOW) (III) I.T.A.T. INDORE BENCH ORDER IN THE CASE OF EDUCATIO N PARK SOCIETY VS. CIT [2011] 10 TAXMANN.COM 281 (INDORE) (IV) I.T.A.T., JAIPUR BENCH ORDER IN THE CASE OF HEMDHA MEDI RESOURCES (P.) LTD. VS. CIT [2016] 71 TAXMANN.COM 2 05 (JAIPUR-TRIB) (V) I.T.A.T., JAIPUR BENCH ORDER IN THE CASE OF ANAND I NCUBATION CENTRE VS. CIT [2017] 86 TAXMANN.COM 250 (JAIPUR-TR IB)] (VI) I.T.A.T. LUCKNOW BENCH ORDER IN THE CASE OFSHRI NAT HJI EDUCATION FOUNDATION VS. CIT IN I.T.A. NO.809 AND 815/LKW/2014, ORDER DATED 26/02/2015 OUR SPECIFIC ATTENTION WAS INVITED TO ORDER OF HON' BLE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF KALYANAM KAROTI (SUPRA). I N VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT WAS ARGUED THAT THE ASSESSEE BE GRANTED APPROVAL U/S 80G OF THE ACT. 3. LEARNED D. R., ON THE OTHER HAND, SUPPORTED THE ORDER OF LEARNED CIT (EXEMPTIONS). 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE WAS REQUIRE D TO FILE CERTAIN CLARIFICATIONS AGAINST HIS APPLICATION FILED U/S 80 G AND THE DATE OF COMPLIANCE WAS FIXED FOR 16/01/2018. ON 16/01/2018 LEARNED CO UNSEL FOR THE ASSESSEE FILED A REPLY ALONG WITH THE ANNEXURES, A COPY OF W HICH IS PLACED AT PAGES 27 I.T.A. NO.119/LKW/2018 ASSESSMENT YEAR:N.A. 3 TO 37 OF THE PAPER BOOK. THE SUBMISSIONS/EXPLANATI ONS FILED BY THE ASSESSEE ON 16/01/2018 INCLUDED VARIOUS DOCUMENTS W HICH THE ASSESSEE WAS REQUIRED TO FILE. THE LEARNED CIT (EXEMPTIONS) ON THE SAME DAY PASSED THE ORDER REJECTING THE APPLICATION OF THE ASSESSEE BY HOLDING THAT THE APPROVAL U/S 80G(5) IS NOT A MECHANICAL PROCESS WHE REIN THE ACCORDING OF REGISTRATION U/S 12AA OF THE ACT AND FILING OF DOCU MENTS AT ONE END WOULD RESULT IN THE ISSUANCE OF APPROVAL U/S 80G(5) OF TH E ACT. THE LEARNED CIT (EXEMPTIONS) HELD THAT THE APPLICATION AND THE SUPP ORTING DOCUMENTS SHOULD DULY PASS THE TEST AS MANDATED BY LAW FOR ACCORDING THE RECOGNITION U/S 80G(5) OF THE ACT. HE FURTHER HELD THAT APPLICANT HAD FAILED TO PROVIDE ANY COGENT PROOF THAT COULD VERIFY THAT THE APPLICANT I S ACTUALLY CARRYING OUT ACTIVITIES IN PURSUANCE OF THE OBJECTS SET FORTH IN THE MEMORANDUM OF THE TRUST. HOWEVER, FROM THE VARIOUS JUDGMENTS OF VARI OUS BENCHES OF THE TRIBUNAL, AS RELIED ON BY THE ASSESSEE, WE FIND THA T FOR GETTING APPROVAL U/S 80G OF THE ACT, THE LEARNED CIT (EXEMPTIONS) IS REQ UIRED TO SEE AS TO WHETHER CONDITIONS LAID DOWN UNDER CLAUSE (I) TO (V ) OF SECTION 80G(5) ARE FULFILLED OR NOT. FOR THE SAKE OF CONVENIENCE, THE CONDITIONS AS LAID DOWN IN SECTION 80G(5) ARE REPRODUCED BELOW: (5) THIS SECTION APPLIES TO DONATIONS TO ANY INSTI TUTION OR FUND REFERRED TO IN SUB-CLAUSE (IV) OF CLAUSE (A) OF SUB -SECTION (2), ONLY IF IT IS ESTABLISHED IN INDIA FOR A CHARITABLE PURPOSE AND IF IT FULFILS THE FOLLOWING CONDITIONS, NAMELY:-- (I) WHERE THE INSTITUTION OR FUND DERIVES ANY INCOM E, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOM E UNDER THE PROVISIONS OF SECTIONS 11 AND 12 OR CLAUSE (23AA) O R CLAUSE (23C) OF SECTION 10: PROVIDED THAT WHERE AN INSTITUTION OR FUND DERIVES ANY INCOME, BEING PROFITS AND GAINS OF BUSINESS, THE CONDITION THAT SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOM E UNDER THE PROVISIONS OF SECTION 11 SHALL NOT APPLY IN RELATIO N TO SUCH INCOME, IF,--(A) THE INSTITUTION OR FUND MAINTAINS SEPARATE BOOKS OF ACCOUNT IN RESPECT OF SUCH BUSINESS;(B) THE DONATIONS MADE TO THE I.T.A. NO.119/LKW/2018 ASSESSMENT YEAR:N.A. 4 INSTITUTION OR FUND ARE NOT USED BY IT, DIRECTLY OR INDIRECTLY, FOR THE PURPOSES OF SUCH BUSINESS; AND(C) THE INSTITUTION O R FUND ISSUES TO A PERSON MAKING THE DONATION A CERTIFICATE TO THE E FFECT THAT IT MAINTAINS SEPARATE BOOKS OF ACCOUNT IN RESPECT OF S UCH BUSINESS AND THAT THE DONATIONS RECEIVED BY IT WILL NOT BE U SED, DIRECTLY OR INDIRECTLY, FOR THE PURPOSES OF SUCH BUSINESS; (II) THE INSTRUMENT UNDER WHICH THE INSTITUTION OR FUND IS CONSTITUTED DOES NOT, OR THE RULES GOVERNING THE INSTITUTION OR FUND DO NOT, CONTAIN ANY PROVISION FOR THE TRANSFER OR APPLICATI ON AT ANY TIME OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS OF TH E INSTITUTION OR FUND FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOS E; (III) THE INSTITUTION OR FUND IS NOT EXPRESSED TO B E FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE; (IV) THE INSTITUTION OR FUND MAINTAINS REGULAR ACCO UNTS OF ITS RECEIPTS AND EXPENDITURE; (V) THE INSTITUTION OR FUND IS EITHER CONSTITUTED A S A PUBLIC CHARITABLE TRUST OR IS REGISTERED UNDER THE SOCIETIES REGISTRA TION ACT, 1860 (21 OF 1860), OR UNDER ANY LAW CORRESPONDING TO THAT AC T IN FORCE IN ANY PART OF INDIA OR UNDER SECTION 25 OF THE COMPANIES A CT, 1956 (1 OF 1956), OR IS A UNIVERSITY ESTABLISHED BY LAW, OR IS ANY OTHER EDUCATIONAL INSTITUTION RECOGNISED BY THE GOVERNMEN T OR BY A UNIVERSITY ESTABLISHED BY LAW, OR AFFILIATED TO ANY UNIVERSITY ESTABLISHED BY LAW, OR IS AN INSTITUTION FINANCED W HOLLY OR IN PART BY THE GOVERNMENT OR A LOCAL AUTHORITY; WE FIND THAT LEARNED CIT (EXEMPTIONS) HAS NOT MADE ANY OBSERVATION REGARDING VIOLATION OF ANY CONDITION LAID DOWN UNDE R CLAUSE (I) TO (V) OF SECTION 80G(5) OF THE ACT. FURTHER WE FIND THAT ON A REPLY FILED BY THE ASSESSEE ON 16/01/2018, WITHOUT GIVING ANY OPPORTUN ITY TO THE ASSESSEE FOR REBUTTAL, THE LEARNED CIT (EXEMPTIONS) HAS PASSED O RDER AGAINST THE ASSESSEE WHICH IS AGAINST THE RULES OF NATURAL JUST ICE ALSO. THEREFORE, WE DEEM IT APPROPRIATE TO REMIT THE ISSUE BACK TO THE FILE OF LEARNED CIT (EXEMPTIONS) WHO SHOULD CONSIDER THE APPLICATION OF THE ASSESSEE U/S 80G AFRESH KEEPING IN VIEW THE DECISION OF VARIOUS BENC HES OF THE TRIBUNAL AND ALSO KEEPING IN VIEW THE SPIRIT OF CONDITIONS LAID DOWN IN CLAUSES (I) TO (V) OF I.T.A. NO.119/LKW/2018 ASSESSMENT YEAR:N.A. 5 SECTION 80G OF THE ACT. NEEDLESS TO SAY, THE ASSES SEE WILL BE AFFORDED REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEAR D. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/2018) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:30/11/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSISTANT REGISTRAR