M/s Vinayaka Vidyanikethan, Nelamangala V. CIT, Bangalore

ITA 1227/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8694 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-01-2016
• Assessment Year: misc
• Appeal Filed On: 16-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR JHA
• Assessee Lawyers: S VENKATESAN
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO S . 1227 & 1228/ BANG/20 15 M/S VINAYAKA VIDYA N IKETAN, INDIRANAGA , NELAMANGALA - 562 123 VS. APPELLANT COMMISSIONER OF INCOME - TA X(E XEMPTIONS ), BANGALORE - 560 001 RESPONDENT APPELLANT BY : SHRI S.VENKATESAN. RESPONDENT BY : SHRI RAJESH KUMAR JHA, C IT(DR) DATE OF HEARING : 06/01/2016 DATE OF PRONOUNCEMENT : 2 0 /01/2016 O R D E R PER I NTURI RAMA RAO, AM : THIS APPEAL IS FILED BY THE APPELLANT - TRUST DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX(EXEMPTIONS) [ CIT(E) FOR SHORT] DATED 31 / 07 / 2015 DENYING GRANT OF REGISTRATION U/S 12A OF TH E IT ACT, AND RECOGNITION U/S 80G OF THE IT ACT, 1961. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE APPELLANT - TRUST WAS FORMED ON 24 / 07 / 1991 AND IT WAS DULY REGISTERED WITH THE ITA NO S . 1227 & 1228 /BANG/201 5 PAGE 2 OF 8 SUB - REGISTRAR, BANGALORE. THE APPELLANT TRUST WAS FOR MED WITH THE FOLL OWING OBJECTS: 1. TO ADVANCE THE CAUSE OF EDUCATION AND DIFFUSION OF KNOWLEDGE WITHOUT DISTINCTION OF CASTE, CREED, SEX OR LANGUAGE. 2. TO PROVIDE ESTABLISH, ENDOW, MAINTAIN, CONTROL AND MANAGE SCHOOLS AND OTHER EDUCATIONAL INSTITUTIONS AND TO DO ALL THE ACTS AND THINGS NECESSARY FOR OR CONDUCIVE O THE PROMOTION OF SCHOOLS OF THE MONTESSORI AND KINDERGARTEN TYPES PRIMARY, SECONDARY, HIGHER COMMERCIAL, TECHNICAL AND INDUSTRIAL EDUCATION AT NELAMANGALA OR ELSEWHERE AND FOR THIS PURPOSE TO START, ESTABLISH CONDUCT , MAINTAIN, MANAGE, READING ROOMS, LIBRARIES, LABORATORIES, GYMNASIUMS, WORKSHOPS, PUBLISHING HOUSES, HOSTEL RESIDENTIAL QUARTERS AND THE LIKE. 3. TO DISSEMINATE KNOWLEDGE BY PUBLISHING BOOKS, PAMPHLETS AND THROUGH LECTURES ON GANDHIAN PRINCIPLES OF TRUTH NO N - VIOLENCE AND UNIVERSAL BROTHERHOOD. 4. TO RUN NIGHT SCHOOLS OR TO ARRANGE TO HOLD ADULT EDUCATION CLASS OR PHYSICAL TRAINING CLASSES ON SUCH TIMES OR AT SUCH CENTRES OR AT SUCH TIME OF THE YEAR AS MAY BE FOUND CONVENIENT TO THE TRUST AND TO TAKE UP THE SOC IAL WORK. 5. TO ARRANGE TO HOLD TRAINING CLASSES OR SEMINARS ON SUBJECTS LIKE CO - OPERATION, EDUCATION, AGRICULTURE, INDUSTRY, BANKING AND COMMERCE ETC. FOR THE STUDENTS STUDYING IN ITS INSTITUTIONS. 6. TO SPONSOR ESTABLISH AND MAINTAIN CONSUMER COOPERATIVE SO CIETIES FOR THE BENEFIT OF THE STAFF AND THE STUDENTS OF THE INSTITUTIONS. 7. TO INSTITUTE RESEARCH SCHOLARSHIPS IN THE FIELD OF EDUCATION SMALL SCALE INDUSTRIES AND SOCIAL ACTIVITIES. 8. TO PRINT AND PUBLISH AND/OR TO EXHIBIT ANY BOOKS, PAMPHLETS OR POSTERS T HAT MAY BE CONSIDERED DESIRABLE FOR THE PROMOTION OF THE OBJECTS OF THE TRUST. 9. TO START AND CONDUCT MAGAZINES, PERIODICALS AND NEWSPAPERS AND ISSUE PAMPHLETS TO CARRY ON ITA NO S . 1227 & 1228 /BANG/201 5 PAGE 3 OF 8 EDUCATIONAL PROPAGANDA AND IN FURTHERANCE OF THE AIMS AND OBJECTS OF THE TRUST BE MEA NS OF LECTURES. 10. TO DO ALL SUCH OTHER LAWFUL ACTS, DEEDS OR OTHER TINGS AS ARE INCIDENTALS OR CONDUCIVE TO THE ATTAINMENT OF THE ABOVE OBJECTS. 11. AND GENERALLY ON SUCH OBJECTS OF CHARITY AND PUBLIC GOOD AS THE TRUSTEES MAY THINK PROPER AND THOSE WHICH ARE COVERED BY THE DEFINITIONS OF CHARITABLE PURPOSE AS 2(15) OF THE IT ACT, 1961 WITH ALL STATUTORY DEFICIATION S AND REPLACEMENTS THEREOF IN FUTURE. 3. THUS, THE APPELLANT - TRUST WAS FORMED WITH THE OBJECT OF ADVANCING THE CAUSE OF EDUCATION, DIFFUSION OF KNOWLEDGE ENVIRONMENT, TO ESTABLISH RUN SCHOOLS ETC. THE ASSESSEE SOCIE TY MADE AN APPLICATION IN FORM N O.10A DATED 18/12/2014 TO THE CIT(E ) BANGALORE FOR REGISTRATION OF THE TRUST U/S 12A OF THE IT ACT, 1961 AND FOR APPROVAL U/S 80G OF THE IT ACT, 1961 I N F ORM N O.10G VIDE APPLICATION DATED 28/01/2014 FOR GRANT OF APPROVAL U/S 80G OF THE IT ACT, 1961. THE LD. CIT(E ) VIDE HIS LETTER S DATED 16/04/2015 , 29/06/2015 AND 15/07/2015 SOUGHT CERTAIN INFORMATION WHICH HAS BEEN DULY COMPLIED WITH BY THE APPELLANT - T RUST VIDE ITS LETTER S DATED 28/04/2015, 24/06/2015, 06/07/2015 AND 15/07/2015 . AFTER PERUSING THE INFORMATION FILED BY THE APPELLANT - TRUST, THE CIT(E) , VIDE HIS IMPUGNED ORDER S DATED 31 / 07 / 2015 HAD DENIED THE REGISTRATION U/S 12A AND APPROVAL U/S 80G OF T HE ACT BY HOLDING THAT THE APPELLANT - TRUST DID NOT EXPLAIN THE DETAILS OF RECEIPT OF RENTAL INCOME OF RS.47,420/ - FOR CONDUCTING THE TUITIONS . THE LD.CIT(E) FURTHER HELD THAT THE ITA NO S . 1227 & 1228 /BANG/201 5 PAGE 4 OF 8 APPELLANT - TRUST WAS NOT INTERESTED IN PROSECUTION OF THE APPLICATIONS AND THE REFORE DISMISSED THE APPLICATIONS INVOKING THE DOCTRINE OF VIGILANTUS NON DORMANTIBUS JURA SUBVENIUNT . 4. BEING AGGRIEVED , THE APPELLANT - TRUST IS BEFORE US WITH THE PRESENT APPEALS. 5. THE LD.AR CONTENDED THAT THE APPELLANT - TRUST HAD COMPLI ED WITH ALL THE QUERIES RAISED BY THE LD.CIT(E) AND FURNISHED ALL THE DETAILS. IN THIS CONNECTION, HE HAS DRAWN OUR ATTENTION TO THE PAPER BOOK WHEREIN THE COPIES OF LETTERS OF CORRESPONDENCE WITH THE LD.CIT(E) ARE PLACED. HE FURTHER SUBMITTED THAT MERE R ECEIPT OF NOMINAL RENTAL INCOME FROM THE TEACHERS WHO CONDUCTED THE TUITIONS FOR STUDENTS DOES NOT RENDER THE OBJECTS NON - CH A RITABLE. 6. ON THE OTHER HAND, L D. CIT (DR) RELIED ON THE ORDERS OF THE CIT(E ) . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. 8. IN THE PRESENT APPEAL S , THE ONLY ISSUE TO BE ADJUDICATED IS WHETHER THE CIT(E ) IS JUSTIFIED IN DENYING THE REGISTRATION U/S 12A OF THE ACT AND APPROVAL U/S 80G OF THE IT ACT, 1961. THE LD. CIT(E ) DENIED THE R EGISTRATION ONLY ON THE GROUND THAT THE APPELLANT - TRUST HAD NOT FURNISHED THE CLARIFICATION AS TO RECEIPT OF RENTAL INCOME FOR CONDUCTING TUITIONS AND THE APPELLANT - TRUST WAS ITA NO S . 1227 & 1228 /BANG/201 5 PAGE 5 OF 8 NOT SERIOUS IN PROSECUTING THE APPLICATIONS. IN OUR CONSIDERED OPINION, THE CONT ENTIONS OF THE LD.CIT(E ) ARE NOT TENABLE IN THE FACTS OF THE PRESENT CASE AS THE APPELLANT - TRUST HAD DULY COMPLIED WITH ALL THE LETTERS ISSUED BY HIM AND THEREFORE, THE LD.CIT(E) SHOULD NOT HAVE HELD THAT THE APPELLANT - TRUST WAS NOT SERIOUS IN PROSECUTING THE APPLICATIONS. T HE RECEIPT OF RENTAL INCOME BY THE APPELLANT - TRUST CAN BE EXAMINED ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER AFTER GRANT OF REGISTRATION. IT WAS SO HELD BY THE HON BLE JURISDICTI ONAL HIGH COURT IN THE CA SES OF SRI GURURAJA SEVA SAMITHI . THE HON BLE JURISDICTIONAL HIGH COURT IN TH IS CASE HAD CLEARLY HELD THAT THE QUESTION OF VERIFYING THE ACTIVITIES OF THE TRUST CAN BE CONSIDERED ONLY AFTER IT IS REGISTERED AND CARRIES ON ACTIVITIES SUBSEQUENTLY. THE HON BLE HIGH COURT AFTER REFERRING TO ITS EARLIER DECISION IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS DIT(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 THE INCOME. THE QUESTION OF VERIFYING THE GENUINENESS OF THE ACTIVITIES OF A TRUST CAN BE CONSIDERED ONLY AFTER IT IS REGISTERED AND CARRIES ON THE ACTIVITIES. IT IS SETTLED LAW THAT IN THE FIRST YEAR WHE N THE TRUST IS SOUGHT TO BE REGISTERED, IT COULD NOT HAVE CARRIED OUT ANY ACTIVITY, THUS THE QUESTION OF VERIFYING THE GENUINENESS OF SUCH ACTIVITIES CANNOT BE CONSIDERED. THE REFUSAL TO REGISTER THE TRUST ON SUCH GROUND BY THE DIT(EXPTN.) COULD NOT BE JU STIFIED. THE TRIBUNAL HAS RELIED ON THE DIVISION BENCH JUDGMENT OF THIS COURT IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS DIT(EXPTN.) 285 ITR 327, WHEREIN IT HAS BEEN HELD THAT FOR ARRIVING AT THE SATISFACTION FOR GENUINENESS OF THE S OCIETY OR TRUST, THE CIT HAS TO ITA NO S . 1227 & 1228 /BANG/201 5 PAGE 6 OF 8 LOOK AT THE OBJECTS OF THE TRUST AND IT IS NOT AUTHORIZED TO GO INTO THE NATURE OF THE ACTIVITY BY WHICH THE INCOME IS DERIVED BY THE TRUST. 5. IN THE PRESENT CASE, THE QUESTION IS WITH REGARD TO THE REGISTRATION OF THE TR UST IN QUESTION WHEREIN 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 ACTIVITIES. AT THE TIME OF INITIAL REGISTRATION, THE SAME CANNOT BE A QUESTION TO BE CONSIDERED. IN OUR VIEW, THE TRIBUNAL HAS RIGHTLY ALLOWED THE APPEAL AND DIRECTED THE DIT(E XEMPTION ) 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 TRIB UNAL ( H ON BLE AM IS THE AUTHOR) IN THE CASE OF PARAMOUNT PUBLIC SCHOOL VS CIT, ROHTAK IN ITA NO.5712 / DEL. / 2013 DATED 28 / 10 / 2015 AFTER REFERRING TO THE DECISION OF THE HON BLE HIGH COURT OF KARNATAKA IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS DIT(EXE MPTION ) 285 ITR 327 (KAR.) , HON BLE P&H HIGH COURT 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 GENERATION EDUCATION SOCIETY VS CIT 185 ITR 634 (ALL. ) HELD AS FOLLOWS VIDE PARA - 7 OF THE JUDGMENT. 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 INSTITUTIONS ARE FOUND TO BE CHARITABLE, THE COMMISSIONER HAS NO OPTION, 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 F AILED TO COMPLY WITH THE DIRECTION OF THE COMMISSIONER OF INCOME, ROHTAK TO FILE THE DETAILS OF DONORS OF CORPUS FUNDS AND THE INSTITUTION WAS COLLECTING THE FEES FROM THE STUDENTS ITA NO S . 1227 & 1228 /BANG/201 5 PAGE 7 OF 8 ARE NOT RELEVANT 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 GRANT 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 ALLOW ED IN FULL. 9. THEREFORE, THE PROPOSITION S LAID DOWN IN THE AFORESAID CASES ARE THAT GENUINENESS OF THE ACTIVITIES OF THE TRUST AND NATURE OF RECEIPT OF ANY SUM OF MONEY CANNOT 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 FOLLOWING THE RATIO LAID DOWN IN THE CASES CITED SUPRA, WE DIRECT THE LD.CIT(E ) TO GRANT REG ISTRATION U/S 12A OF THE IT ACT. THUS, THE APPEAL FILED BY THE TRUST IS ALLOWED. ITA NO.1228 /BANG/ 2015 : 10. SINCE WE HAVE DIRECTED THE LD.CIT(E ) TO GRANT THE REGISTRATION OF THE TRUST UNDER THE PROVISION O F SEC.12A OF THE ACT, IN THE APPEAL NO . 12 27/BANG/ 2015, THEREFORE, THE ISSUE OF APPROVAL U/S 80G IS ONLY CONSEQUENTIAL IN NATURE AND THEREFORE, WE DIRECT THE LD.CIT(E) TO GRANT APPROVAL U/S 80G OF THE IT ACT. ITA NO S . 1227 & 1228 /BANG/201 5 PAGE 8 OF 8 1 1 . IN THE RESULT, THE APPEALS FILED BY T HE ASSESSEE - TRUST ARE AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF JANUARY, 2016 SD/ - ( VIJAY PAL RAO ) SD/ - (INTURI RAMA RAO ) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE : BANGALORE D A T E D : 20 /01/2016 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE