THE BANGAL FOUNDATION, MUMBAI V. DIT (E), MUMBAI

ITA 1546/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3121 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 08-04-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 25-02-2013
• Court: TRIBUNAL
• Assessee Lawyers: KIRIT S SANGHAVI
• Keywords: Charitable institution
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI RAJENDRA , ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 15 4 6 /MUM./ 2013 ( ASSESSMENT YEAR : 20 10 11 ) THE BENGAL FOUNDATION 14, NIRMAL KUNJ CHS PLOT NO.70, ROAD NO.29 SION (EAST), MUMBAI 400 022 PAN AACTT0897N .. APPELLANT V/S DIRECTOR OF INCOME TAX (EXEMPTION) PRATYAKSHA KAR BHAVAN C 10, 2 ND FLOOR BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 .... RESPONDENT ASSESSEE BY : SHRI KIRIT S. S ANGHAVI REVENUE BY : DATE OF HEARING 2 3 .09.2015 DATE OF ORDER 30.09.2015 O R D E R PER SAKTIJIT DEY, J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE BEING AGGRIEVED WITH THE ORDER DATED 21 ST DECEMBER 2012, PASSED BY THE LEARN ED DIRECTOR OF INCOME TAX (EXEMPTION) [FOR SHORT THE DIT(E) ], MUMBAI, REJECTING ASSESSEES APPLICATION FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). THE BENGAL FOUNDATION 2 2. BRIEFLY THE FACTS ARE, THE ASSESSEE, A TRUST, IS CREATE D VIDE TRUST DEED EXECUTED ON 12 TH JANUARY 2012. THE TRUST IS ALSO REGISTERED UNDER THE BOMBAY PUBLIC TRUST REGULATION. CLAIMING ITSELF AS A PUBLIC CHARITABLE TRUST, THE ASSESSEE FILED AN APPLICATION IN THE PRESCRIBED MANNER ON 4 TH JUNE 2012, BEFORE THE LE ARNED DIT(E) SEEKING REGISTRATION UNDER SECTION 12A OF THE ACT. THE LEARNED DIT(E), AFTER CALLING FOR CERTAIN INFORMATION AND VERIFYING THE SAME AS WELL AS ON GOING THROUGH THE OBJECTS MENTIONED IN THE TRUST DEED WAS OF THE VIEW THAT SOME OF THE OBJECTS AS MENTIONED UNDER CLAUSE E , F , H , M , N , S , AG , AND AJ ARE OF NON CHARITABLE / BUSINESS NATURE. HE, THEREFORE, WAS OF THE VIEW THAT THE ASSESSEE IS HAVING BOTH CHARITABLE AS WELL AS NON CHARITABLE OBJECTS. FURTHER, HE OPINED THAT CLAUSE 4 OF THE TRUST DEED EMPOWERS THE TRUSTEES TO APPLY THE INCOME OR ANY PART OF THE CORPUS OF THE TRUST FUND FOR ALL OR ANY OF THE OBJECTS AS PER THEIR DISCRETION WHICH, ACCORDING TO THE LEARNED DIT(E), LEAVES A SCOPE T O THE TRUSTEES TO APPLY THE INCOME FOR NON CH ARITABLE PURPOSES ALSO. HE, THEREFORE, RELYING UPON CERTAIN JUDICIAL PRECEDENTS, OPINED THE CONDITION PRECEDENT FOR GRANT OF REGISTRATION IS NOT SATISFIED . HE FURTHER OBSERVED, AS THE TRUST HAS NOT YET STARTED ANY OF ITS ACTIVITIES, IT IS DIFFICULT TO ASCE RTAIN THE GENUINENESS OF THE ACTIVITIES UNDERTAKEN BY THE TRUST. WITH THE AFORESAID OBSERVATIONS, HE ULTIMATELY REJECTED THE BENGAL FOUNDATION 3 ASSESSEES APPLICATION FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE A CT. 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE TRUST HAS BEEN CREATED WITH PURELY CHARITABLE OBJECTS AND ITS ACTIVITIES ARE ALSO GENUINE, HENCE, THE CONDITIONS ENUMERATED UNDER SECTION 12A OF THE ACT, FOR GRANT OF REGISTRATION ARE SATISFIED. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED TH E OBJECTS WHICH THE LEARNED DIT(E) CONSIDERS TO BE OF NON CHARITABLE / BUSINESS NATURE ARE ACTUALLY CHARITABLE OBJECTS, HENCE, THE VERY FOUNDATION OF LEARNED DIT(E)S ORDER IS WITHOUT BASIS. HE SUBMITTED THAT THE TRIBUNAL, MUMBAI BENCH, IN CASE OF ANOTHER TRUST / INSTITUTION HAVING VERY SAME OBJECTS WHICH WERE CONSIDERED TO BE OF NON CHARITABLE NATURE BY THE LEARNED DIT(E) WHILE RE FUSING GRANT OF REGISTRATION , HAS HELD THAT SUCH OBJECTS CANNOT BE CONSIDERED TO BE NON CHARITABLE AND ALLOWED ASSESSEES REGIST RATION UNDER SECTION 12A OF THE ACT. IN THIS CONTEXT, HE REFERRED TO THE DECISION OF THE TRIBUNAL, MUMBAI BENCH, IN KANAKIA ART FOUNDATION V/S DIT(E), MUMBAI, ITA NO.1547/MUM./2013, ORDER DATED 21 ST JANUARY 2015. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE, O N THE OTHER HAND, RELIED UPON THE REASONING GIVEN BY THE LEARNED DIT(E). THE BENGAL FOUNDATION 4 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNED DIT(E) HAS REFUSED TO GRANT REGISTRATION TO THE ASSESSEE UNDER SECTION 12A OF THE ACT BASICALLY FOR THE FOLLOWING REASONS: I) THE ASSESSEE HAS MIXED OBJECTS OF BOTH CHARITABLE' AND NON CHARITABLE NATURE; II) THE TRUST DEED AUTHORISES THE TRUSTEES TO APPLY INCOME / FUND / TRUST EVEN FOR NON CHARITABLE OBJECTS; AND III) A CTIVITIES OF THE TRUST WAS NOT YET STARTED. AS FAR AS THE ALLEGATION THAT SOME OF THE OBJECTS ARE OF NON CHARITABLE NATURE, IT IS TO BE NOTED, THE TRIBUNAL, MUMBAI BENCH, IN KANAKIA ART FOUNDATION (SUPRA), HELD THE VERY SAME OR ALMOST SIMILAR OBJECTS TO BE OF CHARITAB LE NATURE AND ALLOWED ASSESSEES CLAIM OF REGISTRATION UNDER SECTION 1 2 A . THAT BEING THE CASE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO ORDINATE BENCH OF THE TRIBUNAL CITED SUPRA, WE HOLD THAT THE LEARNED DIT(E)S FINDING THAT THE ASSESSEE TRUST IS HA VING NON CHARITABLE / BUSINESS OBJECT CANNOT BE ACCEPTED. AS FAR AS THE ALLEGATION OF THE LEARNED DIT(E) THAT THE ASSESSEE HAS NOT YET STARTED ITS ACTIVITIES, HENCE, THE GENUINENESS OF THE ACTIVITIES CANNOT BE ASCERTAINED, WE MUST OBSERVE THAT THE CONTENTI ON OF THE THE BENGAL FOUNDATION 5 ASSESSEE THAT UNLESS REGISTRATION IS GRANTED, IT IS DIFFICULT TO RECEIVE FUNDS AND START THE ACTIVITIES IN ACCORDANCE WITH THE OBJECTS MERITS CONSIDERATION. UNLESS REGISTRATION IS GRANTED TO THE ASSESSEE UNDER SECTION 12A OF THE ACT, IT IS DIFFIC ULT ON ITS PART TO GET DONATIONS AND VOLUNTARY CONTRIBUTION, HENCE, IT CANNOT START ITS ACTIVITIES. MOREOVER, GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT DOES NOT MAKE THE TRUST / INSTITUTION IMMUNE FROM FURTHER INVESTIGATION. THERE ARE ENOUGH SAFEG UARDS GIVEN UNDER THE STATUTE TO CANCEL THE REGISTRATION OF TRUST OR INSTITUTION IF SUBSEQUENTLY IT IS FOUND THAT THE OBJECTS OF THE TRUST OR INSTITUTION ARE NOT CHARITABLE OR THE ACTIVITIES OF THE TRUST ARE NOT GENUINE OR NOT IN ACCORDANCE WITH THE OBJECT S OF THE TRUST. THIS IS CLEAR FROM THE PROVISIONS CONTAINED UNDER SECTION 12AA(3) OF THE ACT. FURTHER, GRANT OF REGISTRATION UNDER SECTION 12A DOES NOT AUTOMATICALLY ENTITLE THE ASSESSEE TO AVAIL EXEMPTION UNDER SECTION 11 UNLESS HE SATISFIES THE CONDITION S OF SECTIONS 11, 12 AND 13 OF THE ACT. AT THE STAGE OF ASSESSMENT ALSO, THE ASSESSING OFFICER CAN VERIFY THE GENUINENESS OF THE ACTIVITIES OF THE TRUST AND THE APPLICATION OF INCOME BY THE ASSESSEE. THEREFORE, CONSIDERING THE AFORESAID ASPECTS, WE ARE OF THE VIEW THAT THE IMPUGNED ORDER PASSED BY THE LEARNED DIT(E) REFUSING TO GRANT REGISTRATION TO THE ASSESSEE CANNOT BE SUSTAINED. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED THE BENGAL FOUNDATION 6 DIT(E) AND DIRECT HIM TO GRANT REGISTRATION UNDER SECTION 1 2A A OF THE ACT TO THE ASSESSEE. THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT O N 30.09.2015 SD/ - RAJENDRA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, D ATED : 30.09.2015 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI