M/s. Gorontla Ramalingaiah Lakshmikanthamma, Bangalore V. The Director of Income Tax (Exemption), Bangalore

ITA 1225/BANG/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51303 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-10-2011
• Assessment Year: misc
• Appeal Filed On: 11-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ETWA MUNDA CITIII
• Assessee Lawyers: H V GOWTHAMA
• Keywords: Charitable institution; Opportunity of being heard
• Section: 80G; 12A; 12AA

Judgement Text

PAGE 1 OF 5 ITA NO.1225/BANG/201 0 1 INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BEFORE SHRI N K SAINI, ACCOUNANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.1225/BANG/2010 M/S GORONTLA RAMALINGAIAH LAKSHMIKANTHAMMA CHARITABLE TRUST, #512, 10 TH B MAIN ROAD, 1 ST BLOCK, JAYANAGAR, BANGALORE-11. - APPELLANT PAN : AABTG3642B VS THE DIRECTOR OF INCOME TAX (EXEMPTIONS), 3 RD FLOOR, C R BLDGS., QUEENS ROAD, BANGALORE-1. - RESPONDENT DATE OF HEARING : 10/10/2011 DATE OF PRONOUNCEMENT : 14/10/2011 APPELLANT BY : SHRI H V GOWTHAMA, C.A. RESPONDENT BY : SHRI ETWA MUNDA, CIT-III O R D E R PER GEORGE GEORGE K : THIS APPEAL INSTITUTED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) [D IT(E) IN SHORT], BANGALORE DATED 21/09/2010, REFUSING TO GRANT REGIS TRATION U/S 12AA OF THE INCOME-TAX ACT, 1961. 2. THE GROUNDS RAISED IN THIS APPEAL READS AS FOLL OWS:- PAGE 2 OF 5 ITA NO.1225/BANG/201 0 2 I) THE LEARNED DIT(E) ERRED IN REJECTING GRANTING OF REGISTRATION U/S 12A OF THE INCOME TAX ACT ON THE GROUND THAT THE APPELLANT TRUST HAS NOT CARRIED OUT ANY ACTIVITY TO PROVE THE GENUINENESS OF THE OBJECT OF T HE TRUST. II) THE LEARNED DIT(E) ERRED IN STATING THAT THE EVIDEN CE FURNISHED BY THE MANAGING TRUSTEE IN RESPECT OF ACTIVITIES CARRIED ON RELATES TO PERSONAL EXPENSES OF THE MANAGING TRUSTEE AND NOT TOWARDS ACTIVITIES OF THE TRUST. III) THE APPELLANT SUBMITS THAT BOTH THE CASE LAWS I.E. SELF EMPLOYERS SOCIETY V CIT REPORTED IN 247 ITR 18 (KERAL A) AND GANJAM NAGAPPA & SONS TRUST V DIT(E) REPORTED I N 269 ITR 59 (KARNATAKA) ARE DISTINGUISHABLE AND CANN OT BE MADE APPLICABLE FOR SUPPORTING DENIAL OF REGISTR ATION U/S 12A OF INCOME TAX ACT, BY THE DIT(E). IV) FURTHER, THE APPELLANT SUBMITS THAT SINCE THE REGISTRATION OF THE TRUST WAS DONE ONLY ON 23.10.200 9, WHICH WAS FOLLOWED BY REGISTRATION OF SUPPLEMENTARY DEED DT.6.4.2010, THEREFORE THERE WAS NOT MUCH OF T IME FOR UNDERTAKING DIFFERENT ACTIVITIES OF THE TRUST A S PER THE OBJECT OF THE TRUST DETAILED IN THE TRUST DEED. HOWEVER, THE EVIDENCE FURNISHED BY THE APPELLANT IS A PART OF THE ACTIVITIES WITHIN THE AMBIT OF OBJECTS OF THE TRUST, FOR WHICH THE MANAGING TRUSTEE OF THE TRUST REPRESENTED THE TRUST FOR UNDERTAKING NOTE BOOK PRO JECT, IN WHICH NOTE BOOKS WERE DONATED TO RURAL AREA SCHO OLS AND ALSO CONTRIBUTION OF BUILDING MATERIALS TO VISH RANTI NILAYAM, A HOME FOR MENTALLY CHALLENGED PEOPLE. 3. BRIEFLY STATED THE FACTS ARE AS FOLLOWS:- THE ASSESSEE IS A REGISTERED CHARITABLE TRUST. T HE TRUST DEED WAS EXECUTED ON 23.10.2009. THE ASSESSEE FILED AN APPLICATION FOR REGISTRATION U/S 12A OF THE ACT ON 23.4.2010. A CO PY OF THE TRUST DEED WAS ENCLOSED TO THE APPLICATION. THE ITO (EXEMPTIONS)- 1 ISSUED A LETTER DATED PAGE 3 OF 5 ITA NO.1225/BANG/201 0 3 1/9/2010 ON BEHALF OF THE DIT(E) CALLING FOR VARIOU S DETAILS FROM THE ASSESSEE. THE ASSESSEE FILED REPLY VIDE LETTER DATE D 13/9/2010. THE DIT(E), RELYING ON THE JUDGEMENT OF THE HONBLE KERA LA HIGH COURT IN THE CASE OF SELF EMPLOYERS SOCIETY V CIT 247 ITR 18, PASS ED AN ORDER U/S 12AA REJECTING THE APPLICATION FILED BY THE ASSESSEE. T HE RELEVANT FINDING OF THE DIT(E) READS AS FOLLOWS:- AS THE TRUST HAS NOT COMMENCED ITS ACTIVITIES, THE GENUINENESS OF THE TRUST, AS ALSO OF ITS OBJECTS CA NNOT BE VERIFIED. THEREFORE, THE APPLICATION FILED FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961 IS HEREBY REJECTED. 4. AGGRIEVED BY THE ORDER OF THE DIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 5. THE LEARNED AR SUBMITTED THAT NO OPPORTUNITY OF BEING HEARD WAS GIVEN BY THE DIT(E) BEFORE DENYING THE BENEFIT OF REGISTRATION. HE STATED THAT CERTAIN DETAILS WERE CALLED FOR BY THE I TO ON BEHALF OF THE DIT(E) AND THE ASSESSEE FILED REPLY VIDE LETTER DATE D 13.9.2010. THE IMPUGNED ORDER WAS PASSED WITHOUT CALLING FOR ANY EX PLANATION ON THE DETAILS FILED. IT WAS FURTHER CONTENDED BY THE LEARNED AR, IF THE ACTIVITY HAD NOT COMMENCED, NECESSARILY DIT(E) OUGHT TO HAVE PERUSED THE AIMS AND OBJECTS OF THE TRUST TO COME TO CONCLUSION WHETHER THE TRUS T IS GENUINE OR NOT. IT WAS SUBMITTED THAT THE DIT(E) IS NOT TO LOOK INTO S OURCE OF INCOME BUT ONLY TO SEE AS TO HOW THE INCOME IS APPLIED. IF THE SAM E IS APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSE, THEN THE TRUST IS TO BE ALLOW ED REGISTRATION. IT WAS SUBMITTED, MANY OF THE RELIGIOUS AND CHARITABLE TRUS TS COMMENCE THEIR PAGE 4 OF 5 ITA NO.1225/BANG/201 0 4 ACTIVITY ON RECEIPT OF DONATIONS. FOR RECEIVING DON ATIONS, 80G APPROVAL IS REQUIRED AND 12AA REGISTRATION IS A CONDITION PRECE DENT FOR 80G APPROVAL. HE RELIED ON THE DECISION OF THE JURISDICTIONAL HIG H COURT IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST V DIR ECTOR OF INCOME-TAX (EXEMPTIONS) (2006) (285 ITR 327) (KAR) AND PUNJAB & HARYANA HIG H COURT IN THE CASE OF SONEPAT HINDU EDUCATIONAL & CHARITABLE SOCIETY V CIT & ANOTHER (2005) (278 ITR 262) FOR THE PROPOSITION THAT AT T HE TIME OF REGISTRATION, DIT(E) NEED TO EXAMINE THE AIMS AND O BJECTS OF THE TRUST WHEN ITS ACTIVITIES HAD NOT COMMENCED. 6. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED TH E FINDINGS OF THE DIT(E) AND ALSO RELIED ON THE DECISION OF THE K ERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY V CIT (2001) ( 247 ITR 18). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, WE ARE OF THE VIEW THAT T HE DIT(E) HAS NOT GRANTED THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. THE TRU ST WAS FORMED ON 23.10.2009. THE ITO (EXEMPTIONS) ATTACHED TO THE O FFICE OF THE DIT(E) HAD ISSUED A LETTER REQUIRING CERTAIN DETAILS. TO THIS, THE ASSESSEE HAD FILED DETAILS AND ON RECEIPT OF THESE DETAILS FROM THE AS SESSEE, THE DIT(E) PASSED AN ORDER REFUSING TO GRANT REGISTRATION U/S 12AA WI THOUT GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. THEREFORE, IN THE IN TEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE MATTER HAS TO BE RE-EXAMINED B Y THE DIT(E) AFRESH AFTER GRANTING ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. THE DIT(E) WHILE PASSING FRESH ORDER SHALL KEEP IN MIND THE DI CTUM LAID DOWN BY THE PAGE 5 OF 5 ITA NO.1225/BANG/201 0 5 JURISDICTIONAL HIGH COURT IN THE CASE OF SANJEEVAMMA HAMUNANTHE GOWDE CHARITABLE TRUST (SUPRA). 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DAY OF OCTOBER, 2011 SD/- SD/- (N K SAINI) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO:- 1.THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCE RNED 4. THE CIT(A) CONCERNED 5. THE DR 6. GF MSP/- BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.