JITO Chennai Chapter, CHENNAI V. DIT(Exemptions), CHENNAI

ITA 1468/CHNY/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1138 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-02-2011
• Assessment Year: misc
• Appeal Filed On: 08-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI (BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER) ..... I.T.A. NOS. 1468 & 1469 / MDS/2010 JITO CHENNAI CHAPTER, 1-7, VCI ESTATE, ERUKANCHERY HIGH ROAD, VYASARPADI, CHENNAI - 600 034. PAN : AABTJ0327N (APPELLANT) V. WARD ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTIONS), CHENNAI - 600 034. (RESPONDENT) APPELLANT BY : SHRI G. BASKAR RESPONDENT BY : SHRI SHAJI P. JACOB O R D E R PER BENCH : THESE APPEALS FILED BY THE ASSESSEE AGAINST THE CO MMON ORDER PASSED BY THE DIRECTOR OF INCOME TAX (EXEMPTIONS), CHENNAI, DATED 28.05.2010 REJECTING THE APPLICATIONS FILED BY THE ASSESSEE FOR REGISTRATION UNDER SECTION 12AA AND IN FORM 10G FOR EXEMPTION UNDER SECTION 80G OF THE INCOME-TAX ACT, 1961 (HEREINAFTE R CALLED AS THE ACT) I.T.A. NO. 1464/MDS/10 2 2. THE FACTS PERTAINING TO THE ISSUE ARE THAT THE A SSESSEE IS A SOCIETY REGISTERED UNDER THE TAMIL NADU REGISTRATIO N ACT, 1975. IT FILED AN APPLICATION IN FORM 10A FOR REGISTRATION U NDER SECTION 12AA OF THE ACT AND ANOTHER APPLICATION IN FORM 10G FOR GRA NT OF APPROVAL UNDER SECTION 80G OF THE ACT. THE CLARIFICATIONS S OUGHT BY THE DEPARTMENT WERE FURNISHED BY THE ASSESSEE-SOCIETY V IDE THEIR REPLY ON 11.06.2010 ALONG WITH THE SOCIETYS RULES AND RE GULATIONS. AFTER EXAMINING THE SAME, THE DIT (EXEMPTIONS) VIDE HIS O RDER DATED 28.5.10 REJECTED STATING AS FOLLOWS:- (A) THE OBJECT CLAUSE 3(B) HAS BEEN DELETED AND PROOF O F SUBMISSION WITH THE REGISTRAR OF SOCIETIES HAS NOT BEEN FILED. (B) CLAUSE 3(A) STATES THAT THE SOCIETY WILL ACT FOR EX PANSION OF PRODUCTION OF GOODS AND SERVICES FOR DOMESTIC AN D OVERSEAS MARKETS. (C) CLAUSE 3(F) STATES TO PROVIDE ARBITRATION IN RESPEC T OF SETTLEMENT OF DISPUTES ARISING IN THE COURSE OF TRA DE, SERVICES, VACATIONS INDUSTRY OR OTHER BUSINESS MATT ERS OF COMMUNITY. CONSIDERING THE ABOVE ACTIVITIES OF THE ASSESSEE-TR UST AS NON- CHARITABLE AND WOULD NOT FALL WITHIN THE AMBIT OF S ECTION 2(15) OF THE ACT, THE DIT(EXEMPTIONS) REJECTED GRANT OF REGISTRA TION UNDER SECTION 12AA OF THE ACT CONSEQUENT EXEMPTION UNDER SECTION 80G OF THE ACT. I.T.A. NO. 1464/MDS/10 3 AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS OF APPEAL:- (1) THE COMMISSIONER OF INCOME TAX ERRED IN FACTS AND I N LAW IN LODGING THE APPLICATION FOR REGISTRATION UNDER SECT ION 12AA OF THE INCOME-TAX ACT. (2) THE COMMISSIONER OF INCOME TAX HAVING NOT DISPOSED OF THE APPLICATION WITHIN THE PERIOD PRESCRIBED REGISTRATI ON IS DEEMED TO HAVE BEEN GRANTED. (3) THE COMMISSIONER OF INCOME TAX WENT WRONG IN DISPOS ING THE APPLICATION IN HASTE WITHOUT ADVERTING TO THE MATER IAL ON RECORD, ON FLIMSY REASONS. (4) THE COMMISSIONER OF INCOME TAX OUGHT TO HAVE SEEN T HAT THE APPLICATION FILED IN DEC 2009 WAS TAKEN UP FOR ENQU IRY IN MAY 2010 JUST TO BEAT THE LIMITATION. (5) THE COMMISSIONER OF INCOME TAX ERRED IN MAKING OBSE RVATIONS THAT SOME OF THE ACTIVITIES OF THE SOCIETY ARE NOT CHARITABLE WITHOUT APPLYING HIS MIND TO THE NATURE OF THE ACTI VITIES OF THE SOCIETY IN THE PROPER VIEWPOINT. DOCUMENTARY EVIDE NCE ABOUT THE ACTIVITIES OF THE TRUST HAD BEEN IGNORED. (6) IN ANY EVENT THE CONCLUSION OF THE COMMISSIONER OF INCOME TAX IS HYPER TECHNICAL AND SUPERFLUOUS. THE APPLICATIO N IS LIABLE TO BE ALLOWED AND REGISTRATION UNDER SECTION 12A GRANT ED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THE PAPER-BOOK PLACED ON RECORD BY THE LEARNED COUN SEL FOR THE ASSESSEE. WE FIND THAT THE ASSESSEE WHICH IS SOUGH T TO BE REGISTERED IS A LOCAL BRANCH OF JAIN ADMINISTRATIVE TRAINING F OUNDATION (JATF), APEX BODY AND IS TO FACILITATE AND STRENGTHEN THE P ROCESS OF PREPARING YOUTH FOR JOINING PUBLIC SERVICES TO ACHIEVE ECONOM IC, SOCIAL AND POLITICAL EMPOWERMENT FOR THE NATION. JATF IS PROV IDING ABSOLUTE FREE I.T.A. NO. 1464/MDS/10 4 TRAINING FOR CIVIL SERVICE STUDENTS BY GIVING FREE COUNSELING AND COACHING FACILITIES. THE CHENNAI CHAPTER HAS REGIS TERED SEPARATELY WITH THE SAME OBJECTS. SOME OF THE OBJECTS WHICH A RE CONSIDERED NOT PERMISSIBLE HAVE ALREADY BEEN DELETED BY THE TRUST. WE FIND THAT THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE AND T HE CIT WAS WRONG IN REJECTING THE REGISTRATION ON SOME FRIVOLOUS ISSUES INSTEAD OF EXAMINING THE GENUINENESS OF THE TRUST, ACTIVITIES OF THE TRUST AND TO MAKE NECESSARY ENQUIRIES WHICH HE MAY DEEM NECESSAR Y IN HIS BEHALF. 4. FROM THE READING OF SECTION 12AA, WE NOTE THAT T HE ONLY DUTY OF THE CIT WAS TO SATISFY HIMSELF ABOUT THE GENUINENES S OF THE ACTIVITIES OF THE TRUST. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF NEW LIFE IN CHRIST EVANGELISTIC ASSOCIATION V. CIT AND ANOTH ER (2000) 246 ITR 532 (MAD) HAS HELD THAT AT THE STAGE OF GRANT OF CE RTIFICATE UNDER SECTION 12A OF THE ACT, THE ONLY ENQUIRY WHICH COUL D POSSIBLY BE MADE WOULD BE WHETHER THE SOCIETY HAS ACTUALLY MADE AN A PPLICATION IN TIME AND WHETHER THE ACCOUNTS OF THE SOCIETY ARE MAINTAI NED IN THE MANNER AS SUGGESTED BY THE SAID SECTION AND BEYOND THAT TH E SCOPE OF ENQUIRY WOULD NOT GO. EVEN THOUGH IT IS RENDERED U NDER SECTION 12A WHEN PROCEDURAL SECTION 12AA WAS NOT AVAILABLE IN T HE STATUTE BOOK, I.T.A. NO. 1464/MDS/10 5 WE FEEL THAT THE RATIO IS EQUALLY APPLICABLE EVEN A FTER INSERTION OF SECTION 12AA ALSO BECAUSE IT IS ONLY A PROCEDURAL S ECTION. IN OUR VIEW, CIT HAS GONE INTO UNNECESSARY DETAILS INSTEAD OF LOOKING INTO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST WITH REFERENCE TO DOCUMENTS CALLED FOR BY HIM. IN OTHER WORDS, THE D IT (EXEMPTIONS) HAS GONE ASTRAY FROM THE NORMS SPECIFIED IN SECTION 12AA. IN THIS VIEW OF THE MATTER, WE DIRECT DIT (EXEMPTIONS) TO G RANT REGISTRATION UNDER SECTION 12AA AND APPROVAL UNDER SECTION 80G O F THE ACT TO THE ASSESSEE-TRUST. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON THE EIGHTH DAY OF FEBRUARY, 2011. SD/- SD/- (HARI OM MARATHA) (B . RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 8 TH FEBRUARY, 2011. KRI. COPY TO: APPELLANT/RESPONDENT/DIT (EXEMPTIONS)/D.R. /GUARD FILE