M/s Waste Impact Trust, Bangalore V. CIT, Bangalore

ITA 1206/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8697 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 03-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R REDDY I
• Assessee Lawyers: H V GOWTHAMA
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH, BANGALORE BEFORE SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NOS.1206 & 1207(BNG)/2015 (ASSESSMENT YEAR : M/S WASTE IMPACT TRUST,, NO.A/41, 31 ST CROSS, JAYANAGAR, 7 TH BLOCK, BANGALORE-560 082 APPELLANT VS THE COMMISSIONER OF INCOME-TAX(E), QUEENS ROAD, BANGALORE-560 001 RESPONDENT ASSESSEE BY : SHRI H.V.GOWTHAMA, CA REVENUE BY : SHRI G.R.REDDY, CIT-DR-I DATE OF HEARING : 03-12-201 5 DATE OF PRONOUNCEMENT : 13-01-2016 O R D E R PER SHRI INTURI RAMA RAO, AM : THESE ARE THE APPEALS FILED BY THE ASSESSEE - TRUST DIRECTED AGAINST THE ORDERS OF CIT, (EXPTN.) DATED 31-07-201 5 DENYING THE REGISTRATION U/S 12A OF THE IT ACT, AND RECOGNITION U/S 80G OF THE IT ACT, 1961. 2 ITA NOS.1206 & 1207(B)/15 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASS ESSEE-TRUST WAS FORMED ON 11-11-2014 AND IT WAS DULY REGISTERED WIT H THE SUB- REGISTRAR, JAYANAGAR, BANGALORE. THE ASSESSEE SOCI ETY WAS FORMED WITH THE FOLLOWING OBJECTS. I) TO PROVIDE SUSTAINABLE SERVICES IN ALL AREAS AFFECTING THE TOTAL QUALITY OF ENVIRONMENT, GROUND, WATER AND AIR. II) TO PROVIDE SUSTAINABLE ALTERNATIVES TO DUMPING SOLID WASTE ACROSS INDIA; III) TO REDUCE WASTE DUMPED INTO LANDFILLS; IV) TO IDENTIFY AND PROMOTE BEST PRACTICES IN THE WASTE MANAGEMENT SECTOR; V) TO DO RESEARCH AND FEASIBILITY STUDIES TO EXPLO RE NEW METHODS OF MANAGING WASTE; VI)TO WORK TOWARDS IMPROVING WASTE PICKER LIVELIHOODS AND WORKING CONDITIONS; VII) TO INCREASE TRANSPARENCY IN THE WASTE MANAGEMENT SECTOR; VIII) TO CO-OPERATE AND WORK IN PARTNERSHIP WITH OTHER ORGANIZATIONS IN THE WASTE MANAGEMENT SECTOR TO OPTIMIZE PERFORMANCE AND IMPACT, ON THE ENVIRONMENT ; 3 ITA NOS.1206 & 1207(B)/15 IX) TO SUPPORT HIGH POTENTIAL INITIATIVES, HELPING THEM BUILD OPERATIONAL CAPACITY FOR GROWTH AND PREPARE F OR SCALE; XII) TO SUPPORT BUILDING OF INSTITUTIONS AND TRAINI NG PROGRAMMES FOR CREATING WORLD CLASS PROFESSIONALS T O WORK IN THE ENVIRONMENT AND WASTE MANAGEMENT SECTOR; XI) GENERALLY TO DO SUCH ACTS, DEEDS AND OTHER THINGS WHICH ARE INCIDENTAL AND CONDUCTIVE TO THE ATTAINMENT OF ALL OR ANY OF THE ABOVE OBJECTS. 3. THUS, THE ASSESSEE-SOCIETY WAS FORMED WITH THE O BJECT OF THE IMPROVING THE QUALITY OF ENVIRONMENT, WATER AND AIR . THE ASSESSEE SOCIETY MADE AN APPLICATION IN FORM NO.10A DATED 8- 01-2015 TO THE CIT(EXPTN.) BANGALORE FOR REGISTRATION OF THE TRUST U/S 12A OF THE ACT, 1961 AND FOR APPROVAL U/S 80G OF THE IT ACT, 1961 I N FORM NO.10G VIDE APPLICATION DATED 23-01-2015 FOR GRANT OF APPROVAL U/S 80G OF THE IT ACT, 1961. THE LD. CIT(EXPTN.) VIDE HIS LETTER DAT ED 06-043-2015 SOUGHT CERTAIN INFORMATION WHICH HAS BEEN DULY COMPLIED B Y THE ASSESSEE- SOCIETY VIDE LETTER DATED 19-06-2015. AFTER PERUS ING THE INFORMATION FILED BY THE ASSESEE-SOCIETY THE CIT VIDE HIS IMPUG NED ORDER DATED 31- 4 ITA NOS.1206 & 1207(B)/15 07-2015 HAD DENIED THE REGISTRATION U/S 12A AND APP ROVAL U/S 80G OF THE ACT, VIDE IMPUGNED ORDER DATED 31-07-2015 BY H OLDING THAT THE ASSESSEE SOCIETY HAD NOT CARRIED OUT ANY ACTIVITIES OF THE OBJECTS ENUMERATED IN THE TRUST DEED AND THEREFORE, INFERRE D THAT THE ASSESEE- SOCIETY HAD NOT FURNISHED ANY DOCUMENTARY EVIDENCE TO SHOW THE GENUINENESS OF THE TRUST. 4. BEING AGGRIEVED THE ASSESSEE-SOCIETY IS BEFORE W ITH THE PRESENT APPEALS. 5. THE LD.AR CONTENDED THAT THE REGISTRATION CANNOT BE DENIED ON THE GROUND THAT NO ACTIVITIES HAVE BEEN CARRIED OUT . IN THIS CONNECTION, HE RELIED ON THE DECISION OF THE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS SRI GURURAJA SEVA SAMITHI IN ITA NO.411/2009 AND ALSO IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRU ST VS DIT(EXEMPTIONS) 285 ITR 327. 5 ITA NOS.1206 & 1207(B)/15 6. ON THE OTHER HAND, LEARNED CIT, DR RELIED ON THE ORDERS OF THE CIT(EXEPTN.) . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. 8. IN THE PRESENT APPEAL, THE ONLY ISSUE TO BE ADJ UDICATED IS WHETHER THE CIT(EXEPTN.) IS JUSTIFIED IN DENYING TH E REGISTRATION U/S 12A OF THE ACT AND APPROVAL U/S 80G OF THE IT ACT, 1961 . THE LD. CIT(EXEPTN.) DENIED THE REGISTRATION ONLY ON THE GR OUND THAT THE ASSESSEE- TRUST HAD NOT COMMENCED THE ACTIVITIES. T HEREFORE, HE INFERRED THAT THE GENUINENESS OF THE TRUST ACTIVITIES WAS NO T ESTABLISHED BY THE ASSESSEE-SOCIETY. IN OUR CONSIDERED OPINION, THE AP PROACH OF THE LD.CIT(EXEPTN.) IS TOTALLY ERRONEOUS AND CANNOT STA ND THE TEST OF THE LAW LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASES REFERRED BY THE LEARNED AR(SUPRA). THE HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF SRI GURURAJA SEVA SAMITHI HAD CLEARLY HELD THAT THE QUESTION OF VERIFYING THE ACTIVITIES OF THE TRUST CAN BE CONSID ERED ONLY AFTER IT IS 6 ITA NOS.1206 & 1207(B)/15 REGISTERED AND CARRIES ON ACTIVITIES SUBSEQUENTLY. THE HONBLE HIGH COURT AFTER REFERRING TO THE ITS EARLIER DECISION I N THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS DI T(EXEPTN.) HELD AS FOLLOWS; 4. IT IS AN UNDISPUTED FACT THAT AT THE TIME OF APPLICATION FOR REGISTRATION THE RESPONDENT SOCIETY HAD NOT COMMENCED ITS ACTIVITIES AND HAD NOT RECEIVED T HE INCOME. THE QUESTION OF VERIFYING THE GENUINENESS OF THE ACTIVITIES OF A TRUST CAN BE CONSIDERED ONLY AF TER IT IS REGISTERED AND CARRIES ON THE ACTIVITIES. IT IS SE TTLED LAW THAT IN THE FIRST YEAR WHEN THE TRUST IS SOUGHT TO BE REGISTERED, IT COULD NOT HAVE CARRIED OUT ANY ACTIV ITY, THUS THE QUESTION OF VERIFYING THE GENUINENESS OF S UCH ACTIVITIES CANNOT BE CONSIDERED. THE REFUSAL TO RE GISTER THE TRUST ON SUCH GROUND BY THE DIT(EXPTN.) COULD N OT BE JUSTIFIED. THE TRIBUNAL HAS RELIED ON THE DIVI SION BENCH JUDGMENT OF THIS COURT IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS DIT(EXPTN.) 285 ITR 327, WHEREIN IT HAS BEEN HEL D THAT FOR ARRIVING AT THE SATISFACTION FOR GENUINENE SS OF THE SOCIETY OR TRUST, THE CIT HAS TO LOOK AT THE OB JECTS OF THE TRUST AND IT IS NOT AUTHORIZED TO GO INTO THE N ATURE OF THE ACTIVITY BY WHICH THE INCOME IS DERIVED BY THE TRUST. 7 ITA NOS.1206 & 1207(B)/15 5. IN THE PRESENT CASE, THE QUESTION IS WITH REGAR D TO THE REGISTRATION OF THE TRUST IN QUESTION WHEREI N THE OBJECTS HAVE BEEN CLEARLY SPECIFIED. THE QUESTION OF ASSESSING THE ACTIVITIES OF THE TRUST WOULD ARISE ONLY AFTER THE TRUST IS REGISTERED AND CARRIES ON THE AC TIVITIES. AT THE TIME OF INITIAL REGISTRATION, THE SAME CANNO T BE A QUESTION TO BE CONSIDERED. IN OUR VIEW, THE TRIBUN AL HAS RIGHTLY ALLOWED THE APPEAL AND DIRECTED THE DIT(EXPTN.) TO REGISTER THE SOCIETY AS A RELIGIOUS TRUST U/S 12A OF THE ACT. IT MAY BE FURTHER ADDED THAT THE CO-ORDINATE BENCH OF THE DELHI TRIBUNAL (HONBLE AM IS THE AUTHOR) IN THE CASE OF PARAMOUNT PUBLIC SCHOOL VS CIT, ROHTAK IN ITA NO.5712(DEL.)2013 DATE D 28-10-2015 AFTER REFERRING TO THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRU ST VS DIT(EXEPTN.) 285 ITR 327 (KAR.) HONBLE P&H HIGH CO URT IN THE CASE OF CIT VS SURYA EDUCATION AND CHARITABLE TRUST (2013) 355 ITR 280(P&H) AND ALLAHABAD HIGH COURT IN THE CASE OF FIFTH GENER ATION EDUCATION SOCIETY VS CIT 185 ITR 634 (ALL.HC) HELD AS FOLLOWS VIDE PARA-7 OF THE JUDGMENT.. 8 ITA NOS.1206 & 1207(B)/15 . 7. THE RATIO THAT CAN BE CULLED OUT FROM THE ABOVE DECISIONS IS THAT THE COMMISSIONER IS ONLY ENTITLED TO EXAMINE WHETHER THE OBJECTS OF THE INSTITUTIONS ARE CHARITABLE OR NOT. ONCE THE OBJECTS OF THE INSTITUT IONS ARE FOUND TO BE CHARITABLE, THE COMMISSIONER HAS NO OPT ION, BUT TO GRANT REGISTRATION. IN THE PRESENT CASE THE COMMISSIONER HAS NOT FOUND THAT ANY OBJECTS OF THE TRUST ARE NOT CHARITABLE IN NATURE. THE OBJECTIONS RAISED BY THE CIT THAT THE APPELLANT HAD FAILED TO COMPLY WITH TH E DIRECTION OF THE COMMISSIONER OF INCOME, ROHTAK TO FILE THE DETAILS OF DONORS OF CORPUS FUNDS AND THE INSTI TUTION WAS COLLECTING THE FEES FROM THE STUDENTS ARE NOT R ELEVANT CONSIDERATIONS AT THE TIME OF GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. THESE ARE THE ISSUES TO BE EXAMINED DURING THE ASSESSMENT PROCEEDINGS AFTER GR ANT OF THE REGISTRATION UNDER SECTION 12AA OF THE ACT. THEREFORE, WE DIRECT THE COMMISSIONER OF INCOME TAX, ROHTAK, TO GRANT REGISTRATION TO THE APPELLANT SOCIETY WITHIN A PERIOD OF 30 DAYS FROM THE DATE OF RECEIPT OF THIS ORDER. ACCORDINGLY, THE GROUNDS OF APPEAL FILED BY THE APPELLANT SOCIETY ARE ALLOWED IN FULL. 9 ITA NOS.1206 & 1207(B)/15 9. THEREFORE, THE PROPOSITION LAID DOWN IN THE AFOR ESAID CASES ARE THAT GENUINENESS OF THE ACTIVITIES OF THE TRUST CAN NOT BE GONE INTO AT THE TIME OF REGISTRATION OF THE TRUST. IT IS ONLY AFT ER THE ACTIVITIES OF THE TRUST ARE COMMENCED THE GENUINENESS OF THE OBJECTS CAN BE EXAMINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AFTER THE GRANT OF REGISTRATION BY THE IT AUTHORITIES. RESPECTFULLY F OLLOWING THE RATIO LAID DOWN IN THE CASES CITED SUPRA, WE DIRECT THE LD.CIT (EXEPTN.) TO GRANT THE REGISTRATION U/S 12A OF THE IT ACT, AFTER SATISFYIN G HIMSELF THAT THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE. WI TH THIS DIRECTION, WE RESTORE THE MATTER TO THE FILE OF THE LD.CIT(EXEPTN .). THUS, THE APPEAL FILED BY THE TRUST IS PARTLY ALLOWED FOR STATISTICA L PURPOSE. ITA NO.1206(B)/2015 SINCE WE HAVE DIRECTED THE LD.CIT(EXEPTN.) TO GRANT THE REGISTRATION OF THE TRUST UNDER THE PROVISION OF SE C.12A OF THE ACT, AFTER SATISFYING HIMSELF THAT THE OBJECTS OF THE TRUST AR E CHARITABLE IN NATURE IN THE APPEAL NO1207(B)/2015, THEREFORE, THE ISSUE OF APPROVAL U/S 80G IS ONLY CONSEQUENTIAL IN NATURE AND THEREFORE, THIS ISSUE ALSO IS RESTORED TO THE FILE OF THE LD.CIT(EXEPTN.) WITH A DIRECTION THAT IF THE REGISTRATION 10 ITA NOS.1206 & 1207(B)/15 IS GRANTED U/S 12A OF THE ACT, TO GRANT APPROVAL U/ S 80G OF THE IT ACT, 1961. 10. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E-TRUST ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 13 TH JANUARY, 2016. SD/- (VIJAYPAL RAO) SD/- (INTURI RAMARAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE D A T E D : 13-01-2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR,ITAT, BANGALORE