Gadre Foundation, Ratnagiri V. Commissioner of Income-tax, (Exemption), Pune

ITA 1205/PUN/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1118 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 10-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Benefit of exemption
• Section: 12A; 12AA; 12; 11

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1205/PUN/2018 / ASSESSMENT YEAR : 2017-18 GADRE FOUNDATION, C/O. GADRE MARINE EXPORT PVT. LTD., PLOT NO.FP-1, MIDC, MIRJOLE BLOCK, DIST. RATNAGIRI 415639. PAN : AAGCG6884M. . / APPELLANT V/S THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), PUNE. . / RESPONDENT ASSESSEE BY : SHRI SUHAS BORA. REVENUE BY : MS. NANDITHA KANCHAN. PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF TH E ORDER OF COMMISSIONER OF INCOME TAX (EXEMPTIONS) PUNE DATED 28.05.2018 PASSED U/S 12AA(1)(B)(II) OF THE INCOME TAX ACT. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS STATED TO BE A PRIVATE COMPANY INCORPORAT ED UNDER THE COMPANIES ACT, 2013 ON 14.02.2017 AND STATED TO BEING FORMED TO CONTRIBUTE FOR THE WELFARE OF SOCIETY THROUGH EN GAGEMENT IN / DATE OF HEARING : 21.08.2019 / DATE OF PRONOUNCEMENT: 12.09.2019 2 CORPORATE SOCIAL RESPONSIBILITIES AND SUCH OTHER ACTIVITIES FO R RURAL DEVELOPMENT, PROMOTING EDUCATION, PROTECTION OF NATIONAL HER ITAGE ETC. ASSESSEE MADE AN APPLICATION FOR REGISTRATION U/S 12A OF THE ACT BEFORE ITO, EXEMPTIONS, KOLHAPUR ON 02.11.2017 ALONG WITH SUPPORTING DOCUMENTS. SUBSEQUENTLY, ASSESSEE IN REPLY TO THE LETTER FROM CIT, EXEMPTIONS, PUNE DATED 10.01.2018 SUBMITTED THE BILLS OF THE EXPENSES INCURRED / DONATIONS MADE ETC. FOR VERIFYIN G THE GENUINENESS OF ACTIVITIES OF THE ASSESSEE. THE APPLICATIO N OF THE ASSESSEE WAS REJECTED BY THE LD.CIT(E), PUNE ON THE GR OUND THAT THE GENUINENESS OF ACTIVITIES OF THE TRUST IS NOT VERIFIABLE AND THE ACTIVITIE S OF THE TRUST ARE NOT CHARITABLE. AGGRIEVED BY THE ORDER OF LD.CIT(E), PUNE ASSESSEE IS NOW BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. LD CIT ERRED IN NOT GRANTING AN APPROPRIATE OPP ORTUNITY OF HEARING AND HAS THUS VIOLATED THE LAWS OF NATURE JUSTICE. 2. THE LEARNED CIT ERRED IN REJECTING THE APPLICATION FOR REGISTRATION OF THE APPELLANT ON THE GROUND THAT ACTIVITIES OF THE TRUS T ARE NOT GENUINE AND OBJECT OF THE TRUST ARE NOT CHARITABLE. 3. THE LEARNED CIT WHILE REJECTING THE APPLICATION HAS ERRED IN HOLDING THAT THE APPLICATION CANNOT BE PROCESSED AS NO VERI FIABLE DETAILS/ PROOF HAVE BEEN FURNISHED BY THE APPELLANT IN RESPECT OF THE ACTIVITIES CLAIMED TO BE CARRIED OUT BY THE APPELLANT. 4. THE LEARNED CIT WHILE REJECTING THE APPLICATION FOR REGISTRATION HAS ERRED IN NOT APPRECIATING THE FOLLOWING IMPORTANT P OINTS THAT: A. THE FOUNDATION IS REGISTERED AS NGO U/S 8 OF THE CO MPANIES ACT,2013. B. THE OBJECTS OF THE TRUST MENTIONED IN THE MEMORANDU M OF ASSOCIATION ARE PURELY OF CHARITABLE NATURE. C. THE AUDITED BOOKS OF ACCOUNTS FOR THE YEAR ENDED 31 .03.2017 WERE' FURNISHED AND DETAILS ABOUT THE EXPENDITURE I NCURRED WERE SUBMITTED ALONG WITH THE ACTIVITIES CARRIED OUT WER E FURNISHED BEFORE THE ITO(EXEMPTIONS), KOLHAPUR FROM 30.10.201 7. D. THE SUBMISSIONS MADE BEFORE THE ITO AND INSPECTOR O F CIT EXEMPTIONS AT KOLHAPUR AS WELL AS PUNE HAVE NOT BEE N CONSIDERED BEFORE REJECTING THE APPLICATION. 3 3. BEFORE US, AT THE OUTSET, LD.A.R. SUBMITTED THAT THOUG H ASSESSEE TRUST HAS RAISED VARIOUS GROUNDS BUT THE ONL Y GRIEVANCE OF THE ASSESSEE IS ABOUT THE REFUSAL OF GRANTING REGISTRATION U/S 12AA OF THE ACT. 4. BEFORE US, LD.A.R. POINTED TO THE OBJECTS OF THE TRUST AND SUBMITTED THAT ALL THE OBJECTS ARE CHARITABLE AND THAT C IT(E) HAS REJECTED THE APPLICATION WITHOUT CONSIDERING THE SUBMISS IONS MADE BEFORE ITO, KOLHAPUR AND CIT(E), PUNE. HE FURTHER SUBMITT ED THAT IT IS A SETTLED LAW THAT AT THE TIME OF REGISTRATION, THE CIT(E ) IS ONLY REQUIRED TO LOOK AS TO WHETHER THE OBJECTS OF THE TRUS T ARE CHARITABLE OR NOT AND THE ACTIVITIES ARE GENUINE AND HE IS NOT REQ UIRED TO EXAMINE THE APPLICATION OF INCOME. HE FURTHER SUBMITTED THAT VARIO US REQUIREMENTS RAISED BY LD.CIT(E) WERE PROVIDED BY THE AS SESSEE. HE FURTHER SUBMITTED THAT WITHOUT ISSUING ANY SHOW CAUSE NO TICE AND ONLY ON THE BASIS OF ASSUMPTIONS, LD.CIT(E), REJECTED THE A PPLICATION FILED BY THE ASSESSEE. HE FURTHER SUBMITTED THAT THE CIT(E ) BE DIRECTED TO GRANT REGISTRATION TO THE ASSESSEE. LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPEC T TO DENIAL OF CLAIM OF REGISTRATION U/S 12A OF THE ACT. THE REGISTRATION U/S 12A OF THE ACT CAN BE SOUGHT EITHER BY A TRUST OR BY AN INS TITUTION. IN ORDER TO AVAIL OF THE BENEFIT OF EXEMPTION U/S 11 OR 12 OF THE AC T, THE ACTIVITIES OF THE TRUST OR THE INSTITUTION MUST BE CHARIT ABLE OR FOR RELIGIOUS PURPOSES. THE CONDITIONS FOR APPLICABILITY OF SEC.11 A ND 12 4 ARE PROVIDED U/S 12 A AND ONE OF THE CONDITIONS IS THAT THE PERSON IN RECEIPT OF THE INCOME WHICH HE CLAIMS TO BE FOR CHARITABLE P URPOSES HAS TO MAKE AN APPLICATION FOR REGISTRATION OF THE TRUST O R THE INSTITUTION IN THE PRESCRIBED FORM AND IN THE PRESCRIBED M ANNER TO THE COMMISSIONER WITHIN THE PERIOD STIPULATED THEREIN. THE PROC EDURE FOR REGISTRATION OF THE TRUST OR THE INSTITUTION BY THE COMM ISSIONER IS PROVIDED U/S 12AA OF THE ACT. SEC.12AA(1) REQUIRES THE COMMISSIONER TO WHOM AN APPLICATION IS MADE FOR THE REGISTRATION OF A TR UST OR INSTITUTION TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION AS WELL AS THE OBJECTS OF T HE TRUST OR INSTITUTION AND FOR THAT PURPOSE COMMISSIONER IS VESTED W ITH POWER TO CALL FOR DOCUMENTS OR INFORMATION AND IS ALSO EMPOWERED TO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THAT BEHALF. T HE COMMISSIONER IS THEREUPON EMPOWERED TO PASS AN ORDER I N WRITING EITHER REGISTERING AN INSTITUTION OR IF HE IS NOT SATISFIED AB OUT THE OBJECTS OF THE TRUST OR INSTITUTION AND OF THE GENUINENE SS OF ITS ACTIVITIES, TO PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION. THUS IT CAN BE SEEN THAT AT THE TIME OF G RANT OF REGISTRATION, THE COMMISSIONER IS NOT EMPOWERED TO EXAMINE THE APPLICATION OF INCOME. THE STAGE FOR CONSIDERATION OF THE RE LEVANCE OF THE OBJECT OF THE TRUST AND THE APPLICATION OF ITS FUNDS A RISES AT THE TIME OF ASSESSMENT. WE FURTHER FIND THAT HONBLE KERALA HIGH COURT IN THE CASE OF SHRI ANJANEYA MEDICAL TRUST VS. CIT (2016) 382 ITR 399 (KER) ON THE ISSUE OF THE SCOPE OF INQUIRY BY CIT(A) FOR THE REGISTRATION U/S 12A AND 12AA HAS OBSERVED AS UNDER : IT IS CLEAR FROM A PLAIN READING OF SECTIONS 12A A ND 12AA OF THE ACT THAT WHAT IS INTENDED THEREBY IS ONLY A REGISTRATIO N SIMPLICITER OF THE ENTITY OF A TRUST. THIS HAS BEEN MADE A CONDITION PRECEDENT FOR THE 5 CLAIMING OF BENEFITS UNDER THE OTHER PROVISIONS OF THE ACT REGARDING EXEMPTION OF INCOME, CONTRIBUTION, ETC. NO EXAMINA TION OF THE MODUS OF THE APPLICATION OF THE FUNDS OF THE TRUST OR AN EXAMINATION OF THE ETHICAL BACKGROUND OF ITS SETTLERS IS CALLED FOR WH ILE CONSIDERING AN APPLICATION FOR REGISTRATION. THE STAGE FOR CONSID ERATION OF THE RELEVANCE OF THE OBJECT OF THE TRUST AND THE APPLIC ATION OF ITS FUNDS ARISES AT THE TIME OF ASSESSMENT. WHERE BENEFITS A RE CLAIMED BY THE ASSESSEE IN TERMS OF SECTIONS 11 AND 12 OF THE ACT, THE QUESTION AS TO THE NATURE OF SUCH CONTRIBUTION AND INCOME CAN BE L OOKED INTO. AT THE TIME OF REGISTRATION OF THE TRUST, GOING BY THE BIN DING JUDGMENTS OF THE APEX COURT, WHAT IS TO BE LOOKED INTO IS WHETHER TH E TRUST IS A GENUINE ONE AND WHETHER IT IS A SHAM INSTITUTION FLOATED ON LY TO AVAIL THE BENEFITS OF EXEMPTION UNDER THE ACT. THERE IS NO S UCH FINDING IN THE IMPUGNED ORDER. 6. IN THE PRESENT CASE, WE FIND THAT THERE IS NO FINDING O F CIT(E) ON THE OBJECTS OF TRUST AS MANDATED BY THE PROVISIONS OF T HE ACT AS NOTED ABOVE. FURTHER IT IS ALSO NOT IN DISPUTE THAT ASSESSEE HAD MADE AN APPLICATION FOR REGISTRATION IN 02.11.2017. CONSIDERING THE TO TALITY OF THE AFORESAID FACTS, WE RESTORE THE ISSUE BACK TO CIT(E), P UNE TO DECIDE THE ISSUE OF REGISTRATION U/S 12AA OF THE ACT IN ACCORDAN CE WITH LAW AND AFTER GRANTING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THE GROUNDS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOS ES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 12 TH DAY OF SEPTEMBER, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; DATED : 12 TH SEPTEMBER, 2019. YAMINI 6 '#$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(EXEMPTIONS), PUNE. ADDL.CIT(EXEMP), PUNE. !'##$%, ' $% , / DR, ITAT, B PUNE; ')*+/ GUARD FILE. / BY ORDER // TRUE COPY // , -.#/$0 / SR. PRIVATE SECRETARY ' $% , / ITAT, PUNE.