Inder Mohini Bhasin Charitable Foundation, Baroda V. The CIT-I, Baroda

ITA 1266/AHD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1079 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 24-06-2016
• Assessment Year: misc
• Appeal Filed On: 29-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12A; 12AA; 12; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD .., , !' BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.1266/AHD/2014 INDER MOHINI BHASIN CHARITABLE FOUNDATION HERO HOUSE NR.VIKRAM SOCIETY GOTRI ROAD VADODARA 390 002 / VS. THE COMMISSIONER OF INCOME TAX-I AAYAKAR BHAVAN VADODARA $ ./ ./ PAN/GIR NO. : AABTI 0515 P ( $' / APPELLANT ) .. ( ()$' / RESPONDENT ) $'* / APPELLANT BY : SHRI MUKUND BAKSHI, AR ()$'+* / RESPONDENT BY : SHRI SANJAY KUMAR, SR.DR ,+ / DATE OF HEARING 24/06/2016 -./+ / DATE OF PRONOUNCEMENT 18/07/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX-I, BARODA, DATED 31/03/2 014 PASSED U/S.12AA(1)(B)(II) R.W.S. 12A(A) OF THE I.T.ACT, 19 61. ITA NO.1266/AHD /2014 INDER MOHINI BHASIN CHARITABLE FOUNDATION VS. CIT - 2 - 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: 2.1. ASSESSEE IS A TRUST STATED TO HAVE BEEN CREAT ED ON 5.4.2013. IT FILED APPLICATION FOR REGISTRATION OF TRUST U/S 12A(A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') ON 12. 9.2013 BEFORE CIT-I. THE APPLICATION OF REGISTRATION WAS REJECTED BY CIT VIDE ORDER DATED 31.3.2014 INTER-ALIA FOR THE REASONS THAT CIT NOTED THAT:- (I) ASSESSEE HAD GIVEN DONATION OF RS 6000 TO THREE ENT ITIES. ACCORDING TO CIT, THE DONATIONS CAN BE CONSIDERED A S AN APPLICATION OF INCOME ONLY IN CASE OF REGISTERED TR UST BUT ASSESSEE WAS NOT REGISTERED U/S 12A OF THE ACT. (II) AS PER THE TRUST DEED, ALL THE TRUSTEES ARE FROM TH E SAME FAMILY AND AS PER THE TRUST DEED IN FUTURE ALSO ONLY FAMIL Y MEMBERS OF THE SETTLER WILL BE THE TRUSTEES. ACCORDING TO CIT IN VIEW OF THE AFORESAID, HE WAS OF THE VIEW THAT FOR ALL TIMES TO COME, THE TRUST WILL BE UNDER THE CONTROL OF THE FAMILY AND S INCE THE TRUSTEES HAVE THE POWER TO SELL ALL OR ANY PORTION OR PART OF THE TRUST PROPERTY, THE BLANKET POWER DID NOT INSPIRE T HE CONFIDENCE (III) THOUGH THE TRUST DEED STATES THAT THE TRUST WAS IRR EVOCABLE BUT AS PER CIT IT WAS NOT IRREVOCABLE BECAUSE THE TRUSTEES ARE FROM THE SAME FAMILY AND THEY COULD UNANIMOUSLY DECIDE DISSO LVE THE TRUST. 3. AGGRIEVED BY THE ORDER OF CIT, ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. CIT-I, BARODA HAS ERRED IN LAW AND IN FA CTS IN THE FINDING THAT GIVING DONATIONS TO OTHER CHARITABLE TRUSTS / INSTITUTIONS ENGAGED IN ACTIVITIES SIMILAR TO THE ACTIVITIES OF THE APPE LLANT TRUST DOES NOT ITA NO.1266/AHD /2014 INDER MOHINI BHASIN CHARITABLE FOUNDATION VS. CIT - 3 - AMOUNT TO CARRYING OUT CHARITABLE ACTIVITIES AND SA ME IS NOT BE HELD AS NOT GENUINE TO DENY REGISTRATION U/S. 12AA. 2. THE LD. CIT-I, BARODA HAS ERRED IN LAW AND IN FACTS IN THE FINDING THAT THE TRUST BEING IN THE CONTROL OF THE CLOSE KN IT FAMILY WITH THE POWERS TO DISPOSE OF THE ASSETS OF THE TRUST AMOUNT S TO THE ACTIVITIES OF THE TRUST BEING NOT GENUINE SO AS TO DENY REGISTRAT ION U/S. 12AA. 3. THE LD. CIT-I, BARODA HAS FURTHER ERRED IN TH E FINDING THAT THE TRUST WOULD NOT BE IRREVOCABLE BECAUSE THE TRUSTEES BEING MEMBERS OF THE CLOSE KNIT FAMILY COULD DISSOLVE THE TRUST WITH THE PERMISSION UNDER BOMBAY PUBLIC TRUST ACT AND THIS PROVISION WOULD ME AN THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE SO AS TO DE NY REGISTRATION U/S. 12AA. 4. THE LD. CIT-I, BARODA HAS ERRED IN LAW AND IN FACTS IN DENYING TO THE APPELLANT THE REGISTRATION U/S. 12AA OF THE ACT . THE APPELLANT TRUST HAVING OBJECTS OF CHARITABLE ACTIVITIES AND CONDUCT ING SUCH ACTIVITIES GENUINELY OUGHT TO HAVE BEEN GRANTED THE REGISTRATI ON AS APPLIED. 5. THE APPELLANT CRAVES LIBERTY TO ADD, ALTER, A MEND, SUBSTITUTE OR WITHDRAW ANY OF THE GROUNDS OF APPEAL HEREIN ABOVE CONTAINED BEFORE OR AT THE TIME OF HEARING OF APPEAL. 4. BEFORE US, LD.AR SUBMITTED THAT THE SOLITARY ISSUE IS WITH RESPECT TO DENIAL OF REGISTRATION OF TRUST U/S.12A OF THE ACT. BEFORE US, LD.AR SUBMITTED THAT S. 12AA HAS ONLY LAID DOWN THE PROCE DURE OF REGISTRATION. CIT CANNOT LOOK INTO THE PROCEDURE OF EARNING OF IN COME AND THE SOURCES FROM WHERE THE RECEIPTS WERE DERIVED AND AT THE STA GE OF GRANTING REGISTRATION, HE IS SUPPOSED TO CONFINE HIMSELF TO THE PROCEDURE OF REGISTRATION. HE FURTHER SUBMITTED THAT THE INQUIRY OF THE UTILIZATION OF FUNDS AS PER THE OBJECT OF THE TRUST HAS TO BE DONE AT THE TIME OF ITA NO.1266/AHD /2014 INDER MOHINI BHASIN CHARITABLE FOUNDATION VS. CIT - 4 - ASSESSMENT AND IF AMOUNT HAVE NOT BEEN UTILIZED AT THE MANDATE OF THE ACT, NECESSARY ADDITIONS CAN BE MADE AT THE TIME OF ASSESSMENT. HE FURTHER SUBMITTED THAT MERELY BECAUSE THE TRUST HAS NOT COMMENCED ACTIVITIES, CIT CANNOT REJECT THE APPLICATION FOR R EGISTRATION U/S 12AA OF THE ACT AND FOR THIS PROPOSITION HE RELIED ON THE D ECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF DIT(E) VS. PANNA LALBHAI FOUNDATION REPORTED IN (2013) 35 TAXMANN.COM 104 (GUJ). HE ALS O PLACED RELIANCE ON VARIOUS DECISIONS, THE COMPILATION OF WHICH WAS SUB MITTED AND ARE PLACED ON RECORD. HE FURTHER SUBMITTED THAT LD.CIT HAS PA SSED AN EX-PARTE ORDER WITHOUT HEARING THE ASSESSEE AND REJECTED THE APPL ICATION OF ASSESSEE ONLY ON THE BASIS OF MATERIAL ON RECORD. HE SUBMIT TED THAT ASSESSEE BE GRANTED ONE MORE OPPORTUNITY OF HEARING BEFORE LD. CIT. LD.SR.DR ON THE OTHER HAND SUPPORTED THE ORDER OF CIT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPE CT TO DENIAL OF REGISTRATION OF THE TRUST U/.S 12AA OF THE ACT. WE FIND THAT IN THE PRESENT CASE, CIT HAS DENIED THE REGISTRATION MAINLY FOR TH REE REASONS NAMELY THAT THE DONATION CAN BE CONSIDERED AS APPLICATION OF IN COME ONLY IN CASE OF REGISTERED TRUST, THAT THE TRUSTEES OF THE TRUST A RE FAMILY MEMBERS AND THEY HAVE THE RIGHT TO DISPOSE OF THE PROPERTY AND IN SU CH A SITUATION THE TRUST CANNOT BE SAID TO BE A CHARITABLE TRUST AND THAT TH E TRUST WAS NOT IRRECOVERABLE. ITA NO.1266/AHD /2014 INDER MOHINI BHASIN CHARITABLE FOUNDATION VS. CIT - 5 - 5.1. IT IS A SETTLED LAW THAT AT THE TIME OF REGI STRATION U/S 12AA, WHICH IS NECESSARY FOR CLAIMING EXEMPTION U/S.11 AND 12, THE COMMISSIONER IS NOT REQUIRED TO LOOK INTO THE ACTIVITIES, WHERE SUCH AC TIVITIES HAVE NOT OR ARE IN THE PROCESS OF ITS INITIATION. IF THE CLAUSES/OB JECTS OF THE TRUST ARE CHARITABLE IN NATURE THEN IN SO FAR AS GRANT OF REG ISTRATION IS CONCERNED, IT NEEDS TO BE GRANTED BUT IF AT ALL THE COMMISSIONER SUBSEQUENTLY NOTICES THAT THE TRUST/SOCIETY/INSTITUTION AS THE CASE MAY BE, HAVE NOT COME UP TO EXPECTATION AND DO NOT RENDER SERVICES FOR WHICH IT WAS CREATED I.E. OF CHARITABLE WORK THEN, THE COMMISSIONER HAS POWER TO CANCEL THE REGISTRATION SO GRANTED. AT THE THRESHOLD OF CREAT ION OF A TRUST/MOVING OF AN APPLICATION U/SEC. 12AA ONE IS NOT REQUIRED P ROVE CHARITABLE ACTIVITIES. WE FURTHER FIND THAT THE HONBLE K ERALA HIGH COURT IN THE CASE OF SREE ANJANEYA MEDICAL TRUST VS CIT (2016) 3 82 ITR 399 (KER) ON THE ISSUE OF GRANTING OF REGISTRATION, HAS OBSER VED AS UNDER: 10. IT IS CLEAR FROM A PLAIN READING OF SECTION S 12A AND 12AA OF THE ACT THAT WHAT IS INTENDED THEREBY IS ONLY A REG ISTRATION SIMPLICITER OF THE ENTITY OF A TRUST. THIS HAS BEEN MADE A CONDITION PRECEDENT FOR THE CLAIMING OF BENEFITS UNDER THE OT HER PROVISIONS OF THE ACT REGARDING EXEMPTION OF INCOME, CONTRIBUTION , ETC. NO EXAMINATION OF THE MODUS OF THE APPLICATION OF THE FUNDS OF THE TRUST OR AN EXAMINATION OF THE ETHICAL BACKGROUND O F ITS SETTLERS IS CALLED FOR WHILE CONSIDERING AN APPLICATION FOR REG ISTRATION. THE STAGE FOR CONSIDERATION OF THE RELEVANCE OF THE OBJ ECT OF THE TRUST AND THE APPLICATION OF ITS FUNDS ARISES AT THE TIME OF THE ITA NO.1266/AHD /2014 INDER MOHINI BHASIN CHARITABLE FOUNDATION VS. CIT - 6 - ASSESSMENT. WHERE BENEFITS ARE CLAIMED BY ASSESSEES IN TERMS OF SECTIONS 11 AND 12 OF THE ACT, THE QUESTION AS TO T HE NATURE OF SUCH CONTRIBUTION AND INCOME CAN BE LOOKED INTO. AT THE TIME OF REGISTRATION OF THE TRUST, GOING BY THE BINDING JUD GMENTS 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 FL OATED ONLY TO AVAIL THE BENEFITS OF EXEMPTION UNDER THE ACT. THER E IS NO SUCH FINDING IN THE IMPUGNED ORDER. 6.2. WE FURTHER FIND THAT IN THE PRESENT CASE, C IT HAS DECIDED THE ISSUE ON THE BASIS OF DOCUMENTS AVAILABLE ON RECORD AND EX-PARTE ORDER HAS BEEN PASSED BY CIT AND FURTHER THERE IS NO FINDING OF CIT THAT THE OBJECTS OF THE TRUST ARE NOT GENUINE. IN VIEW OF THE AFORES AID FACTS, THE DECISION CITED HEREIN, WE ARE OF THE VIEW THAT IT SHALL BE I N THE INTEREST OF JUSTICE IF ASSESSEE IS PROVIDED ONE MORE OPPORTUNITY TO PROVE ITS CASE REGARDING GENUINENESS OF ITS ACTIVITIES CARRIED OUT BY THE TR UST IN ACCORDANCE WITH ITS OBJECTS. ACCORDINGLY THE ORDER OF THE CIT IS RESTOR ED BACK TO HIS FILE TO PROVIDE ONE MORE OPPORTUNITY TO THE ASSESSEE TO PRO VE ITS CASE REGARDING GENUINENESS OF THE ACTIVITIES CARRIED OUT BY THE TR UST IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. THE ASSESSEE IS ALSO DIR ECTED TO COOPERATE WITH THE REVENUE AUTHORITIES IN THE MATTER OF ITS APPLIC ATION FOR REGISTRATION U/S 12AA OF THE ACT BY PROMPTLY FURNISHING ALL THE REQUIRED DETAILS CALLED FOR. WE THUS DIRECT ACCORDINGLY. THUS THE GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1266/AHD /2014 INDER MOHINI BHASIN CHARITABLE FOUNDATION VS. CIT - 7 - 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 18/07/2016 SD/- SD/- .. () () ( R.P. TOLANI ) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 18/ 07 /2016 3..,.../ T.C. NAIR, SR. PS !'!# / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ()$' / THE RESPONDENT. 3. 456 7 / CONCERNED CIT-I, BARODA 4. 7 ( ) - 5. 89:(56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<=, / GUARD FILE. / BY ORDER, )8( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. (WORD PROCESSED BY HONBLE AM IN HIS COMPUTER) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 8.7.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 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.18.7.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 18.7.16 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