SHARADABEN NAVANITLAL SHAH TRUST, PUNE V. COMMISSIONER OF INCOME TAX (EXEMPTION), PUNE

ITA 140/PUN/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2299 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2019-2020
• Appeal Filed On: 28-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment
• Section: 12AA; 12; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO.140/PUN/2020 SHARDABEN NAVANITLAL SHAH TRUST, E-104, SR.NO.587, HYDE PARK, MARKET YARD, PUNE 411037. PAN : AATTS5613A. ....... / APPELLANT / V/S. CIT (EXEMPTION), PUNE. / RESPONDENT ASSESSEE BY : NONE. REVENUE BY : SHRI DEEPAK GARG. / DATE OF HEARING : 02.12.2020 / DATE OF PRONOUNCEMENT : 02.12.2020 / ORDER PER INTURI RAMA RAO, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE TRUST DIRECTED AG AINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION), PUNE DATED 18.03.2019 PASSED UNDER SEC.12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) DENYING THE GRANT OF REGISTRATION UNDER SEC.12AA OF THE ACT. 2. THE APPELLANT TRUST RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LEARNED CIT ERRED IN NOT GRANTING THE REGISTRAT ION U/S 12AA TO THE APPELLANT TRUST . 2. THE LEARNED CIT ERRED IN HOLDING THAT BECAUSE TH E APPELLANT TRUST HAD RECEIVED CORPUS DONATIONS IN F.Y . 2018 - 19, THE APPELLANT WAS INDULGING IN PROFIT MAKING ACTIVITIES AND THE CHARITABLE OBJECTS WERE NOT PROVED AND HENCE, THE APPELLANT TRUST IS NOT ENTITLED TO REGIS TRATION U/S 12AA . 2 ITA NO.140/PUN/2020 3. THE LEARNED CIT FAILED TO APPRECIATE THAT - A. THE OBJECTS OF THE APPELLANT TRUST ARE CHARITABLE I N NATURE AS PER SECTION 2(15) OF THE ACT AND THEREFORE, REGISTRATIO N U/S 12AA OUGHT TO HAVE BEEN GRANTED TO THE TRUST. B. THE APPELLANT HAD NOT CARRIED OUT ANY NON CHARITABL E ACTIVITY. C. THE APPELLANT HAD ALREADY APPLIED FOR REGISTRATION ON 17.09.2018 AND THE REGISTRATION WAS NOT GRANTED AS THE APPELLA NT HAD NOT SUBMITTED CERTAIN DETAILS. D. IN VIEW OF THE FACT THAT THE APPELLANT HAD FILED TH E FIRST APPLICATION FOR REGISTRATION ON 17 . 09.2018, REGISTRATION U/S 12AA OUGHT TO HAVE BEEN GRANTED W.E . F. F.Y. 2018 - 19 ONWARDS. E. WITHOUT PREJUDICE, THE SECOND APPLICATION HAVING BE EN MADE ON 03.05.2019, REGISTRATION U/S 12AA OUGHT TO HAVE BEE N GRANTED W . E . F. F.Y. 2019 - 20. 4. THE LEARNED CIT WAS NOT JUSTIFIED IN HOLDING THAT S IMPLY BECAUSE THE APPELLANT TRUST HAD RECEIVED CORPUS DONATIONS IN TH E EARLIER YEAR, THE OBJECTS OF THE TRUST WERE NOT CHARITABLE. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR D ELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER :- THE APPELLANT IS A TRUST REGISTERED UNDER THE PROVISIONS OF BOMBAY PUBLIC TRUST ACT, 1950 ON 15.12.2017. THE APPLICANT TRUST MADE AN APPLICATION IN FORM NO.10A FOR GRANT OF REGISTRATION UNDER SEC.12AA OF TH E INCOME TAX ACT ON 23.05.2019. THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS) CALLED U PON THE ASSESSEE TO FILE CERTAIN DETAILS ON 23.05.2019 WHICH WAS DUL Y COMPLIED WITH BY THE APPELLANT TRUST. THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS) ON PERUSAL OF THE INFORMATION FILED BY THE APPELLANT TRUST HAD C ONCLUDED THAT THE RECEIPT OF RS.52,00,000/- DURING THE FINANCIAL YEAR 2018 -1 9 TOWARDS TRUST FUNDS OR CORPUS FUND IS NOTHING BUT A VOLUNTARY DONAT ION WHICH FORMS PART OF THE INCOME AS PER SEC.2(24)(IIA) OF I.T. ACT. ACCORDING TO THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS), ON ACCOUNT OF TH E CONDUCT OF APPELLANT TRUST IN NOT SHOWING SAID RECEIPT AS PART OF VOLU NTARY DONATION ESCAPED THE ASSESSMENT OF THE INCOME TO TAX AND GAVE A FINDING THE APPELLANT 3 ITA NO.140/PUN/2020 TRUST HAD INDULGED IN ACTIVITIES FROM WHICH HUGE RECEIPTS HAVE BEEN GENERATED. ACCORDINGLY, THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS ), CONCLUDED THAT THE GENUINENESS OF THE CHARITABLE NATURE OF THE ACTIVITIES OF THE TRUST ARE NOT ESTABLISHED AND THEREFORE DENIED THE REGISTRATION UNDER S EC.12AA OF THE ACT VIDE IMPUGNED ORDER. 4. BEING AGGRIEVED BY THE ABOVE ORDER OF LD. COMMISSIONE R OF INCOME TAX (EXEMPTIONS), DENYING THE REGISTRATION UNDER SEC.12AA OF T HE ACT, THE APPELLANT TRUST IS BEFORE US IN THE PRESENT APPEAL. 5. BEFORE US, WHEN THE MATTER WAS CALLED UPON, NONE APPE ARED ON BEHALF OF THE ASSESSEE / APPELLANT TRUST. ON THE OTHER HAND, LD. CIT-DR HAD RELIED ON THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS). 6. WE HEARD THE LD. CIT-DR AND PERUSED THE MATERIAL ON RECORD. ON PERUSAL OF THE IMPUGNED ORDER, IT IS CRYSTAL CLEAR THAT IT IS NOT THE CASE OF LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS), THE OBJECTS OF THE APPELLANT TRUST ARE NOT CHARITABLE IN NATURE. THE LD. COMMISSIONER OF INCO ME TAX (EXEMPTIONS) HAD DENIED THE REGISTRATION UNDER SEC.12AA OF THE ACT BY MERELY RE-CHARACTERIZING THE DONATIONS RECEIVED TOWARDS CORPU S FUND OF THE TRUST AS A VOLUNTARY DONATIONS FALLING WITHIN THE AMBIT OF PROVISIONS OF SEC.2(24)(IIA) OF THE ACT. IN OUR CONSIDERED OPINION, THIS IS AN ITEM FOR EXA MINATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF THE TRUST AND NO RE-CHARAC TERIZATION OF ANY RECEIPT IS PERMISSIBLE DURING THE COURSE OF PROCEEDINGS FOR GRANT OF THE REGISTRATION UNDER SEC.12AA OF THE ACT. IT IS A TRITE LAW THAT WHEN THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS) FOUND THAT THE OB JECTS OF THE TRUST ARE CHARITABLE IN NATURE, THE DENIAL OF REGISTRATION UNDER SEC.12AA OF THE ACT IS 4 ITA NO.140/PUN/2020 IMPROPER. FURTHERMORE, THERE IS NO MATERIAL BROUGHT ON R ECORD BY THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS) WHICH SUGGESTS THA T GENUINENESS OF ACTIVITIES ARE IN DOUBT. THE FINDING OF THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS) THAT THE GENUINENESS OF THE ACTIVITIES IS NOT ESTABLISHED IS MERE BALD FINDING WITHOUT ANY MATERIAL ON RECORD. IN THE CIRCUMS TANCES, THE FINDINGS OF LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS) CANNOT BE SUSTAINED UNDER LAW. THEREFORE, WE DIRECT LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS), PUNE TO GRANT THE REGISTRATION FROM THE DATE OF THE APPLICATION I.E., 23.0 5.2019. 7. THE GROUNDS OF APPEAL RAISED BY THE APPELLANT SEEKING GRANT OF REGISTRATION EARLIER TO DATE OF APPLICATION CANNOT BE ALLOWED FOR THE REASON THAT W.E.F 1 ST DAY OF JUNE, 2007, IT IS CLEARLY PROVIDED VIDE SUB-SECTIO N (2) OF SEC.12A OF THE INCOME TAX ACT THAT THE PROVISIONS OF SEC .11 AND 12 SHALL APPLY IN RELATION TO INCOME OF THE TRUST FROM THE ASSESSMENT YE AR IMMEDIATELY FOLLOWING THE FINANCIAL YEAR IN WHICH THE APPLICATION FOR GRANT OF REGISTRATION IS MADE. IMPLIEDLY, THE LD. COMMISSIONER OF INCOME TAX (EXEMPT IONS) IS NOT EMPOWERED TO GRANT THE REGISTRATION WITH RETROSPECTIVE EFFECT, THERE ARE NO PROVISIONS PROVIDING EXCEPTIONS TO THE SUB-SECTION (2) OF SE C.12A UNDER THE STATUTE. IN THE LIGHT OF THIS DISCUSSION, THESE GROUNDS OF APPEAL ARE D ISMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 2 ND DAY OF DECEMBER, 2020. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (INTURI RAMA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 2 ND DECEMBER, 2020. YAMINI 5 ITA NO.140/PUN/2020 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (EXEMPTION), PUNE. 4 . , , , / DR, ITAT, B BENCH, PUNE. 5. ! / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.