Prerna Prakashan Trust, Valsad V. The CIT., Valsad

ITA 1513/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0202 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-09-2009
• Assessment Year: misc
• Appeal Filed On: 13-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Keywords: Business income; Depreciation; Charitable institution
• Section: 80G; 12A; 12AA; 32; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI P.K.BANSAL, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1513/AHD/2009 DATE OF HEARING:8.9.09 DRAFTED:15.10.09 PRERNA PRAKASHAN TRUST, SHANTIDHAM, AT POST TITHAL, DIST. & TALUKA, VALSAD PIN. 396 006 PAN NO.AAKFP3541R V/S . COMMISSIONER OF INCOME TAX, VALSAD (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI TUSHAR P HEMANI, AR RESPONDENT BY:- SMT. NEETA SHAH, DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX, VALSAD VIDE ORDER NO. CIT/VLS/12A/PPT/2 008-09/5592 DATED 18-03- 2009 U/S. 12A OF THE INCOME-TAX ACT, 1961 (HEREINAF TER REFERRED TO AS THE ACT) REJECTING THE REGISTRATION APPLICATION OF THE ASSES SEE-TRUST. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THIS AP PEAL BY WAY OF GROUND NO.1- 6 IS AS REGARDS TO REFUSING OF REGISTRATION TO THE A SSESSEE-TRUST U/S.12AA OF THE ACT. THE FOLLOWING ARE THE GROUNDS:- 1) THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN LAW AND ON FACTS IN REFUSING REGISTRATION TO THE APPELLANT U/S.12AA OF THE INCOME TAX ACT 1961 (THE ACT) INSPITE OF THE FACT THAT THE APPELLANT TR UST IS FORMED TO PURSUE PUBLIC CHARITABLE OBJECTS AND IS SO REGISTERED AS PUBLIC C HARITABLE TRUST WITH THE ASSISTANT CHARITY COMMISSIONER OF VALSAD FOR THE RE ASONS STATED IN THE GROUNDS OF APPEAL HEREINAFTER MENTIONED. 2) THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN LAW AND ON FACTS IN REFUSING REGISTRATION TO THE APPELLANT U/S.122AA OF THE TAX ACT ON THE GROUND ITA NO.1513/AHD./2009 PRERNA PRAKASHAN TRUST, VLS V. CIT, VSL PAGE 2 THAT EXPENDITURE OF RS.59,330/- INCURRED BY THE APP ELLANT ON COMPACTABLE DISC (CD) CONTAINING VARIOUS CONTAINING VARIOUS PHI LOSOPHICAL LECTURES IS NOT AN EXPENDITURE OF CHARITABLE NATURE AND ACCORDINGLY IS NOT INCURRED ON THE OBJECTS OF THE TRUEST. 3) THAT THE LEARNED COMMISSIONER OF INCOME TAX ERRE D IN LAW AND ON FACTS IN REFUSING REGISTRATION TO THE APPELLANT U/S. 12AA OF THE ACT ON THE GROUND THAT FOOD EXPENSE OF RS.6,000/- INCURRED BY THE APPELLAN T WHILE CONDUCTING SARASWATI SADHANA SHIVIR IS NOT AN EXPENDITURE OF CHARITABLE NATURE AND ACCORDINGLY IS NOT INCURRED ON THE OBJECTS OF THE T RUST. 4) THAT THE LEARNED COMMISSIONER OF INCOME TAX ERRE D IN LAW AND ON FACTS IN REFUSING REGISTRATION TO THE APPELLANT U/S.12AA OF THE ACT ON THE GROUND THAT RELIGIOUS EXPENDITURE OF RS.52,541/- INCURRED BY TH E APPELLANT ON POOJA ACCESSORIES, EXPENSES ON MONKS AND ON PHOTOGRAPH OF DEITIES IS NOT AN EXPENDITURE OF CHARITABLE NATURE AND ACCORDINGLY IS NOT INCURRED ON THE OBJECTS OF THE TRUST. 5) THAT THE LEARNED COMMISSIONER OF INCOME TAX ERRE D IN LAW AND ON FACTS IN CONSIDERING DONATIONS RECEIVED FROM VARIOUS PARTICI PANTS OF SARASWATI SADHANA SHIVIR AS FEES CHARGED BY THE APPELLANT WHI LE REFUSING REGISTRATION TO THE APPELLANT U/S.12AA OF THE ACT. 6) THAT THE LEARNED COMMISSIONER OF INCOME TAX ERRE D IN LAW AND ON FACTS IN REFUSING REGISTRATION TO THE APPELLANT U/S./12AA OF THE ACT ON THE GROUND THAT NO SPECIFIC DIRECTIONS FOR THE CORPUS DONATIONS ARE PRINTED ON THE RECEIPT BOOK, EVEN THOUGH THE APPELLANT HAD PRODUCED LETTER S FROM INDIVIDUAL DONORS GIVING SPECIFIC DIRECTIONS TO CREDIT THE DONATION R ECEIPTS TO THE CORPUS OF THE TRUST AND TO SPEND ONLY THE INCOME ACCRUED THEREON ON THE OBJECTS OF THE TRUST. 3. WE FIND THAT THE ASSESSEE WAS PROVIDED OPPORTUNI TY BY THE CIT VIDE LETTER DATED 02-02-2009 REQUESTING THE FOLLOWING DETAILS:- (A) NATURE & PROOF OF ACTIVITIES DONE TILL DATE IN DETAIL (B) COPY OF ACCOUNTS TILL THE DATE CERTIFIED COPIES OF TRUST DEED & REGISTRATION WIT H CHARITY COMMISSIONER AND EXPLAIN AS TO WHY ITS APPLICATION FOR REGISTRATION U/S.12A MAY NOT BE REJECTED, ON OR BEFORE 18.2.2009. 4. IN VIEW OF THE ABOVE DETAILS, THE CIT VALSAD, RE JECTED THE CLAIM OF THE ASSESSEE AS REGARDS TO REGISTRATION OF TRUST BY GIV ING FOLLOWING FINDINGS IN PARA-4 OF HIS ORDER:- 4. IN RESPONSE TO THE ABOVE, SHRI M.J. SHROFF, ADV OCATE OF THE ASSESSEE FROM TIME TO TIME, FILED WRITTEN SUBMISSION AND DISCUSSE D THE CASE. ON VERIFICATION OF SUBMISSION AND DURING THE DISCUSSION WITH SHRI M .J. SHROFF, IT IS SEEN THAT THE DETAILS OF EXPENDITURE SHOWN BY THE ASSESSEE IS RS.59330/- ON EDUCATION ITA NO.1513/AHD./2009 PRERNA PRAKASHAN TRUST, VLS V. CIT, VSL PAGE 3 AND 52541/- ON RELIGIOUS SUBJECTS. HOWEVER, WHEN TH E VOUCHERS AND BILLS OF EXPENDITURE WERE VERIFIED, IT IS FOUND THAT THE REL IGIOUS EXPENDITURE COMPRISES OF PUJA ACCESSORIES, EXPENSES ON MONKS ETC. WHEREAS EDUCATION EXPENSES INCLUDES FOOD EXPENSES ON SHIBIR AND C.D. EXPENSES. THE SHIBIR WERE ATTENDED BY THE PERSONS BY GIVING A CHARGE. FURTHER , THE VERIFICATION OF RECEIPT BOOKS OF DONATIONS RECEIVED BY THE TRUST SHOWS THAT NO SPECIFIC DIRECTIONS ARE PRINTED ON THE RECEIPT BOOKS FOR TAKING THE AMOUNT TO CORPUS DONATION. 5. THE LD. COUNSEL FOR THE ASSESSEE BEFORE US STATE D THAT THE TRIBUNAL IN EXACTLY SIMILAR CIRCUMSTANCES, IN ITA NO.363/AHD/2009 DATED 29-04-2009 IN THE CASE OF NAVSARI CANCER CARE FOUNDATION V. CIT VALSAD HAS HELD IN PARA-4 AND 5 AS UNDER:- 4. THE BRIEFLY STATED FACTS ARE THAT THE ASSESSEE- TRUST IS A PUBLIC CHARITABLE TRUST REGISTERED WITH CHARITY COMMISSIONER, VALSAD, UNDER RULE 29 OF 1950 BOMBAY UNDER PROVISIONS OF PUBLIC TRUST ACT, 1950. THE REGISTRATION NUMBER OF THE ASSESSEE-TRUST IS VALSAD-E-1798 DATED 25-03- 1998/E-1050-NAVSARI DATED 01-01-2001. THE ASSESSEE IS ALSO REGISTERED U/S.12A OF THE ACT VIDE LETTER DATED 20-07-1998 NO.SRT/CIT(A)/SIB/110-084-N /98-99. THE ASSESSEE GOT APPROVAL WITH EFFECT FROM 01-05-1998 U/S.80G(5) (VI) OF THE ACT SINCE 30- 10-1998 VIDE REGN. CERTI NO.SRT/CIT(A)/104/261/98-9 9. THE ASSESSEE IS HAVING ITS ACTIVITY AND OBJECTS OF PROVIDING FACILI TIES FOR DETECTION, DIAGNOSIS AND TREATMENT AND CURE OF DISEASE OF CANCER AND T O WORK FOR THE RELIEF OF POOR CANCER PATIENTS. THE ASSESSEE-TRUST IS AT PRE SENT CARRYING OUT ITS ACTIVITY FROM ITS PREMISES AT 5 TH FLOOR, ADITYA COMPLEX, NEAR FUWARA TELEPHONE EXCHANGE, NAVSARI AND PROVIDING SERVICES TO CANCER PATIENTS THROUGH MEMOGRAPHY MACHINE INSTALLED AT THE ABOVE PREMISES AND FROZEN SECTION MACHINE INSTALLED AT THE ABOVE PREMISES. THE ACCOU NTS OF THE ASSESSEE ARE AUDITED AS PER PROVISIONS OF THE TRUST ACT AS WELL AS OF THE ACT. THE ASSESSEE HAS IDENTIFIED AND TAKEN UP A NEW PROJECT OF ESTABL ISHING A STATE OF ART ONCOLOGY WING AT THE CIVIL HOSPITAL CAMPUS, NAVSARI FOR WHICH THE GOVERNMENT OF GUJARAT HAD IDENTIFIED AND ALLOTTED P IECE OF LAND AND HAS JOINED HANDS TO PROMOTE A ERECT A STATE-OF-THE ART HOSPITA L, THE CONSTRUCTION WORK OF WHICH IS IN PROGRESS AT PRESENT. THE PROJECT OF THE ASSESSEE IS APPROVED BY THE NATIONAL COMMITTEE FOR PROMOTION OF SOCIAL AND ECONOMIC WELFARE VIDE NOTIFICATION NO.466(E) DATED 29-03-2007, U/S.35AC O F THE ACT FOR WHICH THE ASSESSEE-TRUST HAS BEEN RAISING FUNDS FOR THIS NOBL E CAUSE OF SOCIAL AND PUBLIC CHARITABLE OBJECT. SINCE THE APPROVAL U/S.80G(5) H AD EXPIRED ON 31-03-2008, THE ASSESSEE VIDE ITS APPLICATION DATED 25-04-2008 APPLIED FOR RENEWAL OF THE APPROVAL BEFORE THE CIT, VALSAD IN PRESCRIBED FORM AFTER ENCLOSING THE DETAILS REQUIRED COPIES OF THE AUDITED ACCOUNTS ETC., THE CIT, VALSAD HAS REJECTED THE APPLICATION OF THE ASSESSEE-TRUST VIDE HIS ORDE R LETTER DATED 26-12-2008 NO. CIT/VLS/TECH/80G/NCCF/08-09 ON THE GROUND, THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SEC.11 OF THE ACT AND NO T EXPENDED 85% OF ITS INCOME ON THE OBJECTIVE OF THE TRUST. SINCE THE ASS ESSEE-TRUST HAD NOT CARRIED OUT ANY ACTIVITY OTHER THAN THE OBJECT FOR WHICH IT HAS BEEN FORMED, THE ASSESSEE IS AGGRIEVED BY THE AFORESAID ORDER OF CIT AND HAS PREFERRED AN APPEAL BEFORE US. THE ASSESSEE IS OF THE FIRM VIEW THAT THE CIT, VALSAD DID NOT APPRECIATE THE FACTS OF THE ASSESSEES CASE AND HAS REJECTED THE APPLICATION FOR RENEWAL OF 80G PERMISSION WITHOUT A NY BASIS OR WITHOUT ITA NO.1513/AHD./2009 PRERNA PRAKASHAN TRUST, VLS V. CIT, VSL PAGE 4 CONDUCTING A REASONABLE INQUIRY TO CHECK THE ACTUAL NOBLE ACTIVITIES BEING CARRIED OUT BY THE ASSESSEE-TRUST IN RELIEF OF THE POOR CANCER PATIENTS. THE CIT DID NOT EVEN APPRECIATE THAT THE PROJECT OF THE ASS ESSEE-TRUST IS APPROVED BY THE NATIONAL COMMITTEE FOR PROMOTION OF SOCIAL AND ECONOMIC WELFARE VIDE NOTIFICATION NO.466(E) DATED 29-03-2007 AND THE PER MISSION U/S.35AC HAS BEEN ACCORDED TO THE ASSESSEE BEING A PROJECT ELIGI BLE FOR THE AFORESAID PROVISIONS. 5. WE FURTHER FIND THAT THE CIT, VALSAD BY GIVING T HE FINDING ONLY ON THE ASPECT THAT THE ASSESSEE-TRUST HAS VIOLATED THE PRO VISION OF SECTION-11 AS UNDER:- 6. IN RESPONSE TO THIS NOTICE, SHRI NILESH PATEL, CA OF THE ASSESSEE ATTENDED AND FILED DETAILS. SHRI NILESH PATEL, CA OF THE TRU ST WAS FURTHER REQUESTED TO SUBMIT CERTIFICATE U/S.35AC, BILLS OF MEMOGRAPHY MA CHINE, FROZEN INCOME DETAIL, INSURANCE CLAIM OF MEMOGRAPHY MACHINE AND D ETAILS OF CHARITABLE ACTIVITIES DONE ON 26.12.2008. ON THE SAID DATE SHR I NILESH PATEL, C.A. ATTENDED AND FILED THE ABOVEMENTIONED DETAILS. ON V ERIFICATION OF ACCOUNTS FOR F.Y. 2006-07 IT IS SEEN THAT OUT OF THE TOTAL INCOM E OF RS.7,49,634/- EARNED DURING THE YEAR THE TRUST HAS EXPENDED RS.5,D62,642 /- ONLY. THIS INCLUDES REPAIR OF MEMOGRPHY MACHINE EXPENDITURE OF RS.3,82, 400/-. THE TRUST HAS ALSO CLAIMED DEPRECIATION OF RS.337850/-, WHICH IS ONLY ALLOWABLE TO AN ASSESSEE RUNNING A BUSINESS AS SECTION 32 RELATES T O BUSINESS INCOME. FROM THE ABOVE, IT IS SEEN THAT THE TRUST HAS VIOLATED T HE PROVISIONS OF SECTION 11 OF THE I.T. ACT BY NOT EXPENDING 85% OF ITS INCOME ON OBJECTIVES OF THE TRUST. THEREFORE, IN VIEW OF THE ABOVE, THE ASSESSEES APP LICATION U/S.80G IS HEREBY REJECTED. THE LD. COUNSEL FOR THE ASSESSEE BEFORE US STATED T HAT IN VIEW OF THE PROVISION OF SECTION 12AA OF THE ACT SUB-SECTION 3, THE 80G OF THE ACT AS WELL AS REGISTRATION CAN BE REFUSED ONLY ON THE GROUND T HAT THE CIT IS SATISFIED THAT THE ACTIVITY OF SUCH TRUST OR INSTITUTION ARE NOT G ENUINE OR NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INST ITUTION AS THE CASE MAY BE. BUT IN THE PRESENT CASE, SUCH IS NOT THE CASE AND I N CASE, THAT THERE A VIOLATION OF PROVISION OF SECTION 11 OF THE ACT BY NOT EXPEND ING 85% OF ITS INCOME OF THE TRUST, THE OBJECTION OF THE TRUST CANNOT BE DEFEATE D. IN CASE THE TRUST HAS VIOLATED THE PROVISION OF SEC. 11 AND NOT EXPENDED 85% OF ITS INCOME, THE SAME CAN BE ADDED IN THE TOTAL INCOME AND CANNOT BE REFUSED REGISTRATION U/S.80G OF THE ACT. LD. COUNSEL FOR THE ASSESSEE B EFORE US CATEGORICALLY STATED THAT NO ASSESSMENT HA BEEN TAKEN UP YET. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE REGISTRATION U/S.80G OF THE ACT CANNOT BE DENIED. ACCORDINGLY, WE DIRECT T HE CIT, VALSAD TO ALLOW THE APPLICATION FILED BY THE ASSESSEE U/S. 80G OF THE A CT FOR REGISTRATION AND THIS APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE FIND FROM THE RECORDS THAT THE ASSESSEE-TRUST IS A CHARITABLE TRUST CREATED UN DER THE TRUST DEED DATED 12-04- 2008 AND IS REGISTERED WITH THE OFFICE OF THE ASSIS TANT CHARITY COMMISSIONER, VALSAD ITA NO.1513/AHD./2009 PRERNA PRAKASHAN TRUST, VLS V. CIT, VSL PAGE 5 VIDE REGISTRATION CERTIFICATE DATED 07-08-2008. TH E ASSESSEE-TRUST ON 17-09-2009 FILED APPLICATION IN FORM NO.10A FOR REGISTRATION U /S.12A(A) OF THE ACT. THE CIT VIDE ITS LETTER NO. CIT/VLS/12A/PPT/2008-09/4632 DATED 0 2-02-2009 CALLED FOR CERTAIN FURTHER INFORMATION BEFORE GRANTING REGISTRATION U/ S.12A(A) OF THE ACT. WE FIND FROM THE ENCLOSURE-I OF THE LETTER DATED 24-02-2009 THAT OUT OF TOTAL EDUCATIONAL EXPENSES OF RS.59,330/- A SUM OF RS.53,330/- REPRESENT EXPEN DITURE ON VARIOUS CD CONTAINING PHILOSOPHICAL LECTURES DELIVERED BY MUNI JINCHANDRA VIJAYJI ON FOLLOWING SUBJECTS:- EDUCATION A) SARASWATI SADHANA SHIBIR FOOOD EXPENSES 31.12.08 TO 23.12.08. B) LECTURES CD 24.12.08 6,000 THESE LECTURES INCLUDE FOLLOWING SUBJECTS:- I) SUKHI JEEVAN KE NAV-SUTRAS II) JEEVAN JINE KI KALA III) BHARTIYA RISHIYOGKI JEEVAN DRASHTI IV) SANSKRUTI AND CHAR PURUSHARTH DHARMA KI PARIBHA SHASUKH KI KHOJ V) SATSANG KE PRAKAR B/L NO. 2/03.01.09 4,697 SPECIMEN CDS ARE PRODUCED FOR YOUR INFORMATION B/L NO.3/03.01.09 3,120 PAYMENTS TO PRIME VISION 3, AMAR B/L N O.11/09.01.09 22,400 CHAMBERS, STATION, VALSAD B/L. NO.15/12.01.09 20,520 B/L NO.22/19.01.09 7,036 B/L NO.26/22.01.09 580 B/L NO.30/29.01.09 977 ------------------- 59,330 WE FURTHER FIND THAT THE SPECIMENS OF THE THESE CDS WERE PRODUCED BEFORE THE CIT AND THE BALANCE EXPENDITURE OF RS.6,000/- REPRESENT COST OF FOOD ON SARASWATI SADHANA SHIBIR. THE CIT HAS NOWHERE DISPUTED THE F ACT THAT THE SAID EXPENDITURE OF RS.59,330/- IS NOT AN EXPENDITURE ON EDUCATION AND FURTHER CONSIDERED THE DONATION ITA NO.1513/AHD./2009 PRERNA PRAKASHAN TRUST, VLS V. CIT, VSL PAGE 6 RECEIVED FROM PARTICIPANTS OF SARASWATI SADHNA SHIB IR AS FEES CHARGED BY THE ASSESSEE-TRUST TO THE PARTICIPANTS. THUS THE CIT WI THOUT DISPUTING THE EDUCATIONAL NATURE OF CAPTIONED EXPENSES HAS ERRONEOUSLY CONCLU DED THAT THE SAID EXPENDITURE IS NOT OF CHARITABLE NATURE. FURTHER THE CIT HAS ACKNO WLEDGED EXPENDITURE ON POOJA ACCESSORIES AND EXPENDITURE OF MONKS AND PHOTOGRAPH S OF DEITIES AS AN EXPENDITURE ON RELIGIOUS OBJECTS, BUT REFUSED THE REGISTRATION WITHOUT ASSIGNING ANY REASONS. THE CORPUS DONATIONS NEED NOT TO BE PRE-PRINTED ON THE RECEIPT BOOKS AS SUCH AND RECEIPTS ARE CASUAL AND NON-RECURRING IN NATURE. FU RTHER THESE CORPUS DONATIONS ARE ADEQUATELY SUPPORTED BY THE SPECIFIC DIRECTIONS GIV EN BY THE DONORS IN WRITING TO THE EFFECT THAT SUCH CORPUS DONATIONS BE CREDITED TO CO RPUS FUND AND IT IS ONLY THE INCOME RECEIVED, BE SPENT ON THE OBJECTS OF THE ASSESSEE-T RUST. ACCORDINGLY, WE ARE OF THE VIEW THAT THE OBJECTS OF THE ASSESSEE-TRUST ARE FUL FILLED. RESPECTFULLY, FOLLOWING THE CASE LAW OF THIS TRIBUNAL IN THE CASE OF NAVSARI CANCER CARE FOUNDATION (SUPRA), WE ALLOW THE REGISTRATION U/S. 12A(A) OF THE ACT TO TH E ASSESSEE-TRUST. THE CIT IS DIRECTED TO ALLOW THE REGISTRATION ACCORDINGLY. THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30/10/2009 SD/- SD/- (P.K.BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 30/10/2009 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT-VALSAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD