Shri Dharanshala, Anand V. The CIT-II, Baroda

ITA 1230/AHD/2013

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5620 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-07-2017
• Assessment Year: misc
• Appeal Filed On: 02-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KISHAN VYAS
• Assessee Lawyers: M K PATEL
• Keywords: Charitable institution; Non compliance; Cancellation of registration; Set aside
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1230/AHD/2013 (ASSESSMENT YEAR : N.A) SHRI DHARMSHALA, ODE BHAVANDAS-NI-KHIDKI, ODE, ANAND. VS. THE CIT-II, BARODA. [PAN NO. AAATD 9643 A] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI M. K. PATEL, A.R. RESPONDENT BY : SHRI KISHAN VYAS, CIT-D.R. DATE OF HEARING 30/09/2019 DATE OF PRONOUNCEMENT 01/10/2019 O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX - II, BARODA (CIT FOR SHORT) DATED 27.02.2013. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED C.I.T IS NOT JUSTIFIED IN LAW IN HOLDING THAT THE ASSESSEE IS NOT ELIGIBLE FOR REGISTRATION IN THE LIGHT OF THE FACT THAT THE ASSESSEE TRUST DOES FULFILL THE REQUI REMENT OF BEING A CHARITABLE INSTITUTION AND DESERVES TO BE REGISTERED U/S.12A(A ) OF THE I.T. ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED C.I.T. IS NOT JUSTIFIED IN LAW IN NOT TAKING INTO CONSIDERATION THE SUBMISS ION, EXPLANATION AND DOCUMENTS MADE BY THE APPELLANT DURING THE COURSE OF HEARING AND CONSEQUENTLY ERRED ON LAW AS WELL AS ON FACTS IN REFUSING YOUR APPELLANT TO GRANT THE REGISTRATION. 3. YOUR APPELLANT REQUESTS FOR LEAVE TO ADD, TO AMEND, TO SUBSTITUTE ALL OR ANY OF THE GROUNDS OF APPEAL AT OR BEFORE THE FINAL HEARING OF THE APPEAL. - 2 - ITA NO.1230/AHD/2013 SHRI DHARMSHALA VS. CIT ASST.YEAR N.A. 4. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT ERRED ON LAW IN DISMISSING THE APPLICATION FOR REGISTRATION U/S 12A A OF THE INCOME TAX ACT, 1961 WITHOUT HAVING ANY COGENT MATERIAL ON RECORD AS TO THE NON COMPLIANCE BY APPELLANT OF THE REQUIREMENT OF THE PROVISIONS OF T HE I.T. ACT, 1961 IGNORING ALL MERITS OF THE CASE. 5. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT HAS ALSO WRONGLY CONCLUDED THAT THE 'AIMS' AND 'OBJECTS' OF THE TRUS T ARE NOT OF CHARITABLE NATURE. 6. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, T HE LEARNED C.I.T. ERRED ON LAW AS WELL AS ON FACTS THAT THE LD. CIT HAS ALSO WRONG LY CONCLUDED THAT THE AIMS & OBJECTS OF THE TRUST CANNOT BE PUT TO THE TEST OF G ENIUSES. 7. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, T HE LEARNED C.I.T. ERRED IN IGNORING THE FACT THAT THE APPELLANT TRUST DOES NOT EXISTS SOLELY FOR CHARITABLE PURPOSE AND EXISTS FOR THE PURPOSE OF PROFIT. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT HAS PASSED THE ORDER IN HASTE WITHOUT APPRECIATING IN PROPER PERSP ECTIVE THE FACTS AND CIRCUMSTANCES OF THE CASE AND EXPLANATION OFFERED A GAINST THE FACTS, LAW AND PROVISIONS OF THE INCOME TAX 1961 AND RULES MADE TH ERE UNDER. 9. THE APPELLANT TRUST CRAVES TO ADD, MODIFY, DELETE, AND WITHDRAW ANY FURTHER GROUND ON OR BEFORE THE DATE OF HEARING. 2. THE ONLY EFFECTIVE GROUND OF THIS APPEAL IS AGAI NST REJECTION OF APPLICATION FOR REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED AS TO THE ACT). 3. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE ASSESSEE SOUGHT REGISTRATION U/S 12A AND BY WAY OF AN APPLICATION DATED 09.08.20 12 THE LEARNED CIT OBSERVED THAT ONE OF THE OBJECTIVE OF THE TRUST WAS TO PROVIDE SH ELTER TO THE BY-PASSERS, SAINTS AND OTHERS IN DHARMASHALA TO GIVE ON RENT FOR MARRIAG ES, FOR RELIGIOUS PURPOSE AND FOR CONDOLENCE MEETINGS. FURTHER THE LEARNED CIT OBSERV ED THAT THE PUBLIC TRUST REGISTER (PTR) EXTRACT SUGGEST THAT THE TRUST WAS REGISTERED FOR THE CHARITABLE PURPOSES HOWEVER, - 3 - ITA NO.1230/AHD/2013 SHRI DHARMSHALA VS. CIT ASST.YEAR N.A. LOOKING TO THE ACCOUNTS INFORMATION RELATED TO THE DONOR IS MISSING, THEREFORE, WE REJECTED THE APPLICATION FILED BY THE ASSESSEE. AGGRIEVED BY THIS THE ASSESSEE IS IN PRESENT APPEAL. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI M. K. PATEL VEHEMENTLY ARGUED THAT LEARNED CIT WAS NOT JUSTIFIED IN REJECTING THE APPL ICATION ON THE BASIS THAT ONE OF THE OBJECTIVE IS FOR GIVING PROPERTY ON RENT AND THE LE ARNED CIT WAS NOT JUSTIFIED IN OBSERVING THAT THE ASSESSEE IS CARRYING OUT ITS ACT IVITY ON COMMERCIAL LINE IF IT IS LETTING OUT HALLS FOR MARRIAGE AND FOR OTHER PURPOSES. AS P ER LEARNED CIT THE ONLY ACTIVITY CARRIED OUT BY THE ASSESSEE AS PER ACCOUNTS WAS LET TING OUT ALL THE PROPERTY. THE LEARNED COUNSEL SUBMITTED THAT THERE CAN BE IRREGULARITY IN THE OBJECTS AND IRREGULARITY WOULD NOT RENDER IF SO FACTO REJECTION OF THE APPLICATION. TH E LEARNED COUNSEL PLACED RELIANCE ON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT RENDERED IN TAX APPEAL NO.1035 OF 2018 IN THE CASE OF CIT VS. PARAMOUNT CHARITY TRUST PER CONTRA THE LEARNED DR OPPOSED THE SUBMISSIONS AND SUBMITTED THAT THE APPLICATION OF T HE ASSESSEE HAS BEEN RIGHTLY REJECTED BY THE LEARNED CIT. HE HAS SUBMITTED THAT THE LEARN ED CIT HAS RIGHTLY ARRIVED AT THE CONCLUSION THAT THE ASSESSEES ACTIVITY IS COMMERCI AL. HE THUS, SUPPORTED THE IMPUGNED ORDER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE LEARNED CIT REJECTED THE APPLICATION MAINLY ON THE GROUND THAT THE ASSESSEE HAS ALSO PROVIDING ASSET OF THE TRUST FOR RENTAL PURPOSES. ANOTHER REASON OF THE LEARNED CIT IS THAT ONCE REGISTRATION IS GRANTED IS NOT SUBJECT TO REVOCATION. WE ARE UNABLE TO ACCEPT THESE REASONING OF THE LEARNED CIT AS THE PROVISION ARE CLEAR WHENEVER IF IT IS FOUND THA T THE TRUST IS NOT CARRYING OUT ITS ACTIVITY FOR CHARITABLE PURPOSES OR IN CONTRAVENTION OF THE PROVISION OF THE ACT. IT IS ALWAYS UPON THE REVENUE TO CANCEL SUCH REGISTRATION. FURTHER, T HE HONBLE GUJARAT HIGH COURT UNDER THE IDENTICAL FACTS IN THE CASE OF CIT VS. PARAMOUN T CHARITY TRUST HELD AS UNDER: - 4 - ITA NO.1230/AHD/2013 SHRI DHARMSHALA VS. CIT ASST.YEAR N.A. IN APPEAL, THE TRIBUNAL REVERSED THE CONTENTION OF THE COMMISSIONER. BY THE IMPUGNED JUDGMENT, TRIBUNAL WAS OF THE OPINION THAT NON COMMUNICATION OF THE AMENDMENT IN THE TRUST DEED WAS A MERE IRREGULARITY AND WOULD NOT BE A GROUND FOR CANCELLATION OF REGISTRATION ALREADY GRANTED. T HE TRIBUNAL DID NOT AGREE WITH THE COMMISSIONER THAT RUNNING OF A DIAGNOSTIC CENTE R WAS A COMMERCIAL VENTURE. THE TRIBUNAL ALSO HELD THAT THE EXISTING OBJECTS SU FFICIENTLY COVER THE PURPOSE ALSO. WE ARE IN BROAD AGREEMENT WITH THE VIEW OF THE TRIB UNAL. WE HAVE NOTED EXISTING OBJECTS AS WELL AS THOSE WHICH WERE ADDED BY AN AMENDMENT IN THE TRUST DEED. THE OBJECTS IN THE ORIGINAL TRUST DEED WERE S UFFICIENTLY WIDE AND COVER RANGE OF CHARITABLE ACTIVITIES RELATEABLE TO EDUCATION, M EDICAL AID AND HELP TO POOR IN TIMES OF CALAMITIES. THE EXISTING OBJECTS WOULD HAV E ENABLED THE TRUST TO SUPPORT THE DIAGNOSTIC CENTER AS LONG AS IT WAS DONE FOR CH ARITABLE PURPOSE. THE AMENDED OBJECTS CLARIFY THAT SUCH CENTER WOULD BE RUN ON NO CHARGE, OR AT ANY RATE ON NO PROFIT BASIS. IT IS DIFFICULT TO SEE HOW THE COMMIS SIONER THOUGHT SUCH CENTER WOULD BE A COMMERCIAL VENTURE. RESPECTFULLY, FOLLOWING THE SAME WE SET ASIDE THE O RDER OF THE LEARNED CIT AND RESTORE APPLICATION FOR REGISTRATION U/S 12A OF THE ACT TO HIM. LEARNED CIT WOULD DECIDE THE ISSUE OF REGISTRATION U/S 12A OF THE ACT AFRESH . NEEDLESS TO SAY AFTER PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.1230/AHD/2013 IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 01/10/2019 SD/- SD/- ( WASEEM AHMED ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 01/10/2019 PRITI YADAV, SR.PS - 5 - ITA NO.1230/AHD/2013 SHRI DHARMSHALA VS. CIT ASST.YEAR N.A. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-II, BARODA. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 30.09.2019 (COVERED CASE 3) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.09.2019 3. OTHER MEMBER. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 01.10.2019 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER