Shree Amreli Modh Vanik Community property, Amreli V. The CIT-(Exemption), Ahmedabad

ITA 141/RJT/2019

AI Insights

The case revolves around the Amreli Modh Vanik Community Property's appeal against the CIT-(Exemption), Ahmedabad's decision to deny them registration under section 12AA of the Income Tax Act, 1961. The trust applied for registration to qualify for tax exemptions, asserting that it conducted various charitable activities, including maintaining a community hall for social events. However, the CIT(E) found that the trust primarily served the 'Amreli Modh Vanik' community and lacked sufficient documentary evidence to prove its activities were open to the general public. The Tribunal, referencing a Supreme Court judgment, supported the CIT(E)'s decision, emphasizing the need for the trust's activities to align with its stated objects to qualify for registration under section 12AA.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 138172 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-03-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 24-06-2019
• Other Referred Cases: Commissioner of Income-tax, Ujjain Vs Dawoodi Bohara Jamat Civil Appeal No. 2492 of 2014, Shree Gamara Samajik Seva Mandal in ITA No. 223/Rjt/2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Charitable institution; Set aside
• Section: 11; 12A; 12AA; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted Through Virtual Court) Before: Ms. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Amreli Modh Vanik Community Property, Nr. Rajkamal Chowk, Tal. Amreli PAN No: AAGTA8104R (Appellant) Vs The CIT-(Exemption), Ahmedabad (Respondent) Assessee Represented: Written Submission Revenue Represented: Shri Shramdeep Sinha, CIT-DR Date of hearing : 13-03-2023 Date of pronouncement : 22-03-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the order dated 27.05.2019 passed by the Commissioner of Income Tax (Exemption), Ahmedabad denying Registration under section 12AA of the Income Tax Act, 1961. 2. The assessee filed its application for registration of Trust under section 12AA of the Income Tax Act, 1961 (hereinafter referred to as ITA No. 141/Rjt/2019 Assessment Year: N.A. I.T.A No. 141/Rjt/2019 A.Y. N.A. Page No Amreli Modh Vanik Community Property vs. CIT(E) 2 ‘the Act’) on 17.11.2018 in Form No. 10A. The assessee was called upon to furnish detailed note on the activities actually carried out by it with details and documents thereon. As per Section 12AA of the Act, the Ld. CIT(E) shall after satisfying himself about the objects of the trust or institution and the genuineness of the activities before granting registration. The assessee has not replied to the above notice, after two reminders, the assessee submitted the details stating that the Trust is maintaining and providing property prominently known as “MODH MAHAJAN VADI” to the modh mahajan and other communities people on various occasions of Marriage, Social gathering, Social events, Lecturers etc., along with other charitable activities for general benefits of community and public at large and regularly complying all the provisions of the Bombay Public Trust Act, 1950, including filing audit reports and giving charity contribution to the charity commissioner regularly. 2.1. The above reply of the assessee was considered by Ld. CIT(E) but the same was not found acceptable as the assessee has not furnished the documentary evidences to prove that the Common Purpose Hall was available for use of general public. Further on verification of self-certified copy of Public Trust Register (PTR), it is revealed from the objects of the trust are restricted to particular community namely “Amreli Modh Vanik” and “Sole Cast Dinner”. However the assessee has not filed any documentary evidences related to change in the objects made before the Charity Commissioner. Thus, it is clear the trust is created for the benefit of a particular community namely “Amreli Modh Vanik”. I.T.A No. 141/Rjt/2019 A.Y. N.A. Page No Amreli Modh Vanik Community Property vs. CIT(E) 3 2.2. The objects of the trust as mentioned in the Public Trust Register as “Sole Caste Dinner”. The objects of the trust show that the trust is established for the benefit of a particular community i.e. "Amreli Modh Vanik" and not for general public. Therefore, it transpires that the trust is created for the benefit of a particular community i.e. "Amreli Modh Vanik" which does not endure for the benefit of the public, and thus, provisions of Section 13(1)(b) of the I.T. Act, 1961 are fully applicable in this case. In view of the above said the applicant does not satisfy the conditions for grant of approval as sought. Hence, it is not a case fit enough for granting registration u/s. 12AA of the I.T. Act, 1961. 2.3. The Ld. CIT(E) further held that the applicant has not furnished the documentary evidences to change in the object trust till date as mentioned in its reply. The main object of the trust mentioned in self certified copy of PTR [Public Trust Register] is "Sole Caste Dinner". In view of the above fact it is very clear that the objects mention in PTR and activities of the trust cannot be termed as charitable within the meaning of section 2(15) of the LT. Act, 1961. This clearly indicates that the applicant does not have intention even to start charitable/religious activities Section 12AA makes it very clear that before granting registration under this section, the Commissioner has to satisfy himself about the genuineness of the activities of the trust or institution and also he has to verify that these activities are in consonance with the objects of the trust or institution. Reliance in this regard is placed on judgment delivered by the Hon'ble Supreme Court in the case of I.T.A No. 141/Rjt/2019 A.Y. N.A. Page No Amreli Modh Vanik Community Property vs. CIT(E) 4 Commissioner of Income-tax, Ujjain Vs Dawoodi Bohara Jamat Civil Appeal No. 2492 of 2014. The facts considered in Para 14 of the judgment by the Hon'ble Apex Court are reproduced for sake of convenience: "Section 12AA lays down the procedure to be followed by the Commissioner for grant or refusal of application for registration made under Section 12A According to procedure so laid down, the Commissioner shall call for documents and information and conduct an enquiry to satisfy himself of the genuineness of the trust and upon reaching satisfaction of the charitable or religious nature of the objects and the authenticity of the activities of the trust, he would grant registration if he is not satisfied of the aforesaid, the request made in the application may be declined" As discussed above, the applicant has failed to file documentary evidences to enable me to satisfy about the genuineness of its activities and to verify these activities are in consonance with its objects.” 2.4. Thus the Ld. CIT(E) that is not satisfied with the genuineness of the activities of the trust. Hence the application filed in Form No. 10A for approval under section 12AA of the Act was rejected. 3. Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal: 1. The Ld. C.I.T. has erred in law and facts in rejecting application for registration U/s. 12A filed by the appellant. The appellant deserves registration. 2. The Ld. C.I.T. has erred in law and facts in rejecting the application made for registration U/s. 12A on the irrelevant grounds. The appellant deserves registration. 3. The Ld. C.I.T. has erred in law and facts in rejecting the application made for registration U/s.12A on the irrelevant considerations. The appellant deserves registration. 4. The Ld. C.I.T. has erred in law in not appreciating that as per legal and statutory position, the appellant was deserving registration. The appellant deserves registration. I.T.A No. 141/Rjt/2019 A.Y. N.A. Page No Amreli Modh Vanik Community Property vs. CIT(E) 5 5. The Ld. C.I.T. has erred in not granting registration without appreciating the factual and legal position that the appellant deserves registration form the first day of F.Y. in with application is made, i.e. 01-04-2018. The appellant deserves registration. 6. Without prejudice, the Ld. C.I.T. has erred in not providing adequate and reasonable opportunity. The order passed by him deserves to be set aside with direction to consider a fresh matter giving reasonable time. 7. The appellant craves leave to add/alter/amend and/or any or all the grounds of appeal before the actual hearing take place. 3.1. None appeared on behalf of the assesse but a written submissions filed by Mr. D.R. Adhia. The Crux of the submission of the assessee are as follows: “...3 Since all the information and detail call for are also almost available in the trust deed filed along with application and rest is either not relevant or the Ld. PCIT has not carried out any inquiry nor has specify in his order as to which particular items comes in the way of consideration and grant of registration Us. 12AA. 4. The assessee therefore humbly submitted at the time of granting primary registration it is considered by almost all Hon. Benches of ITAT on all over India. The assessee humbly submit the following for kind consideration. 1. The Hon. Karnataka High Court 45(1)/ITCL/44 has been please to hold that when the evidence by the trust deed and also other documents filed before the department are genuine--and the object of the trust as per trust deed is not considered as not coming out of within the definition of the charitable purpose, the Hon. ITAT was held justify in directing to grant registration. 2. Registration U/s. 12A cannot be denied though there was genuine object if there was any violation of Sec. 11 and 13 the same would be examined at the time of exemption, 78/DDR jodhpur ITAT. 3. Even if the application is part of religious activity per ac will nor render the trust as not entitle for registration. 45(II) ITCL 57 Chennai ITAT. 4. Where original trust deed as well as copy thereof along with income and expenditure account is already furnished. The rejection of 12A application will not approve. 27 SOT 423 Delhi ITAT. I.T.A No. 141/Rjt/2019 A.Y. N.A. Page No Amreli Modh Vanik Community Property vs. CIT(E) 6 5. Even if there is some suspicion regarding income as well as resources rejection was not approve by the Hon. P&H HIGH COURT 221 TAXMAN. 6. When refusal of registration without making any adverse comment of the genuine activity and the charitable nature of the object registration was directed to grant 174 TTJ 20 ITAT Jodhpur. 7. When charitable character was no where question without bringing any material on record that the activities of the assessee was not genuine registration was directed to be granted 1561TD 117 Chandigarh ITAT. 6.1 Now it is apparent from the order of rejection of application clearly shows that no inquiry nor any report has been called for showing anything against assessee the action of the Ld. CIT to rejects application of the assessee is unlawful and needs to be cancelled with direction to established independently with the relevant evidences that trust is not entitle to registration, he may kindly be directed to grant registration as prayed for by the assessee.” 4. Per contra, Ld. CIT-DR Shri Shramdeep Sinha brought to our notice the assessee was given opportunity to explain its case. In response, the assessee made reply in part on 20.04.2019 and again final opportunity was given on 25.04.2019. In response, the assessee filed its reply through ITBA Portal on 29.04.2019 and also filed set of the documents on 10.05.2019, the same details were submitted by e-mail on 14.05.2019 & 20.05.2019. Based on the above materials, the Ld. CIT(E) found that the object of the Trust is meant for particular community namely “Amreli Modh Vanik” and the trust cannot be termed as charitable within the meaning of section 2(15) of the Act and against the provisions of Section 13(1)(b) of the Act. The assessee has not produced any documentary evidences in support of its claim and the case was relied upon by the assessee namely Shree Gamara Samajik Seva Mandal in ITA No. 223/Rjt/2017 is a case were delay in filing the I.T.A No. 141/Rjt/2019 A.Y. N.A. Page No Amreli Modh Vanik Community Property vs. CIT(E) 7 appeal by 568 days. Therefore looking into the facts of the present case, the Ld. CIT(E) denying the registration under section 12AA of the Act and the appeal filed by the assessee is liable to be dismissed. 5. We have given our thoughtful consideration and perused the materials available on record. The assessee has not produced before us copies of the activities carried out by the assessee Trust, there is nothing on record before us that the activities carried out by the trust is open to “Amreli Modh Vanik” other than common public. 5.1. In the absence of the same, the provisions of Section 13(1)(b) is clearly attracted, which provision reads as follows: 13.(1) Nothing contained in section 11 [for section 12] shall operate so as to exclude from the total income of the previous year of the person in receipt thereof- (a) any part of the income from the property held under a trust for private religious purposes which does not enure for the benefit of the public; (b) in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste; 6. In the absence of any details by the assessee before the Lower Authorities as well as before us to prove that the objects of the Trust is for General Public, and hit by section 13(1)(b) of the Act. We have no hesitation in confirming the order passed by Ld. CIT(E) denying registration under section 12AA of the Act. Thus the Ld. CIT(E) denied the benefit of registration under section 12AA of the I.T.A No. 141/Rjt/2019 A.Y. N.A. Page No Amreli Modh Vanik Community Property vs. CIT(E) 8 Act, which is legally justifiable and does not require any interference by the Tribunal. In the result, the grounds raised by the assessee are found devoid of merits and the same is hereby rejected. 7. In the result, the appeal filed by the Assessee is dismissed. Order pronounced in the open court on 22-03-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 22/03/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, राजकोट