KANAKIA ART FOUNDATION, MUMBAI V. DIT (E), MUMBAI

ITA 1547/MUM/2013

• Counselvise Citation: 154719914 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-12-2014
• Assessment Year: 2012-2013
• Appeal Filed On: 25-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA
• Keywords: Charitable institution
• Section: 6

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ITA N O. 1547 / MUM/20 1 3 ( ASSESSMENT YEAR : 20 12 - 201 3 ) KANAKIA ART FOUNDATION, 215, ATRIUM, 10 TH FLOOR, CTS NO.215, ANDHERI - KURLA ROAD, MUMBAI - 400 053 VS. DIT(E), MUMBAI PAN/GIR NO. : A A BTK 9657 Q ( APPEL LANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI KIRIT SANGHVI /REVENUE BY : SMT. S.PADMAJA DATE OF HEARING : 2 ND DECEMBER , 201 4 DATE OF PRONOUNCEMENT 21 ST JANUARY, 2 015 O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF DIT(E) DATED 21 - 12 - 2012 FOR THE ASSESSMENT YEAR 2012 - 2013 , IN THE MATTER OF ORDER PASSED U/S. 12AA(1)(B)(II) R.W.S.12A OF THE ACT , DECLINING TH E REGISTRATION U/S.12A OF THE ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE ASSESSEE TRUST HAS FILED AN APPLICATION FOR REGISTRATION ULS. 1 2A OF THE I T. ACT, 1961 IN THE PRESCRIBED FORM NO. 10 A ON 04.06.2012. THE TRUST HAS BEEN CONSTITUTE D BY A DEED OF TRUST DATED 10.09.2011. IT HAS BEEN REGISTERED WITH THE CHARITY COMMISSIONER, MUMBAI ON 15.02.2012 WHILE DECIDING REGISTRATION U/S.12AA . THE DIT(E) OBSERVED AS UNDER : - ITA NO. 1547 / 1 3 2 3. AS PER THE PROVISIONS OF SECTION 12AA(L )(B), A TRUST IS TO BE GRANT ED REGISTRATION IF THE COMMISSIONER IS SATISFIED ABOUT THE OBJECTS OF T HE TRUST AND THE GENUINENESS OF ITS ACTIVITIES. BOTH THESE REQUIREMENTS ARE CUMULATIVE AND NOT ALTERNATIVE. IF EITHER OF THESE CONDITIONS IS NOT SATISFIED, THE APPLICANT WILL NOT BE ENT ITLED TO REGISTRATION. A PERUSAL OF THE TRUST DEED REVEALS THAT THE APPLICANT TRUST HAS CHARITABLE AS WELL AS NON - CHARITABLE/ BUSINESS OBJECTS SUCH AS THE FOLLOWING : - E TO CREATE A CULTURE AMONG THE ELITE CLASS OF THE SOCIETY FOR CONSIDERING WORK OF AR T AN ASSET THAT CAN BE PASSED ON TO THE NEXT GENERATION WITH PRIDE AND PRESTIGE. F. TO CONVERT PLAYS INTO .. EPISODES ON TV H. TO CONDUCT CLASSES OR COURSES FOR THE DEVELOPMENT OF DRAMATIC ARTS, INCLUDING ACTING, STAGE SETTINGS AND DECORATIONS, FACE PA INTING AND MAKE UP. M. TO PRODUCE DOCUMENTARY FILMS ON SOCIAL AND CULTURAL SUBJECTS AND TO EXHIBIT THEM THROUGH T.V. OR. N. TO ESTABLISH A MINI ACADEMY TO CARRY OUT ANY ONE OR MORE OF THE ABOVE MENTIONED OBJECTS. S. TO OPEN, ESTABLISH, MAINTAIN . INDUSTR IAL HOMES AND INSTITUTIONS.. AG TO ESTABLISH, MAINTAIN . PUBLIC HALL OR GALLERY FOR .MEANS OF PUBLIC RECREATION. AJ TO ENCOURAGE PROMOTION OF . SPORTS, GAMES AND HEALTH SCIENCE BY ESTABLISHING, MAINTAINING .GYMNASIUMS .RECREATION CENTRES.. HEALTH C ENTRES. FURTHER, AS PER CLAUSE 4 AT PAGE - 4 OF THE TRUST DEED, THE TRUSTEES SHALL APPLY THE INCOME OR ANY PART OF THE CORPUS OF THE TRUST FUND FOR ALL OR ANY OF THE OBJECTS AS THEY MAY IN THEIR ABSOLUTE DISCRETION THINK - FIT FROM TIME TO TIME. - IN OTHER WORDS, THE TRUSTEES ENJOY FULL DISCRETION TO APPLY THE INCOME OF THE TRUST TOWARDS ATTAINMENT OF ANYONE OR MORE OF ITS OBJECTS INCLUDING NON CHARITABLE ONES AND THERE IS NO BINDING LEGAL OBLIGATION ON THEM TO APPLY SUCH INCOME / TRUST FUNDS SOLELY FOR CHA RITABLE PURPOSES. IN THIS CONNECTION, THE APPLICANT VIDE LETTER DATED 16.11.2012 SUBMITTED THAT THERE WAS NO ELEMENT OF COMMERCE INVOLVED IN THE ABOVE OBJECTS AND THAT THE BENEFICIARIES OF ALL THE ABOVE ACTIVITIES WERE GENERAL PUB LIC WITHOUT ANY DISTINCTIO N OF RELIGION, COLOUR, CLASS OR CREED. IT IS ARGUED THAT IF THESE OBJECTS WERE COMMERCIAL IN NATURE, THE CHARITY COMMISSIONER WOULD HAVE ASKED THE APPLICANT TO DELETE THE SAME. IT IS SUBMITTED THAT IN FACT TRUSTEES WILL HAVE TO SPEND THE TIME AND MONEY ON THE ACTIVITIES TO ACHIEVE THE OBJECTS OF THE TRUST RATHER THAN CARRY OUT ANY COMMERCIAL A CTIVITIES. 3 . ACCORDINGLY, ASSESSEES CLAIM OF REGISTRATION WAS DECLINED. AGAINST THE ABOVE ORDER OF DIT(E), ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4 . WE HA VE C ONSIDERED RIVAL CONTENTIONS, CAREFUL LY GONE THROUGH THE ORDER OF THE DIT(E) AND FOUND THAT REGISTRATION WAS DECLINED ON THE PLEA ITA NO. 1547 / 1 3 3 THAT THE TRUSTEES ENJOY FULL DISCRETION TO APPLY THE INCOME OF THE TRUST TOWARDS ATTAINMENT OF ANYONE OR MORE OF ITS OBJECTS IN CLUDING NON CHARITABLE ONES AND THERE IS NO BINDING LEGAL OBLIGATION ON THEM TO APPLY SUCH INCOME / TRUST FUNDS SOLELY FOR CHARITABLE PURPOSES. WE HAD CAREFULLY GONE THROUGH THE VARIOUS OBJECT CLAUSE IN THE TRUSTEE DEED AND ESPECIALLY THE OBJECT CLAUSE HIG HLIGHTED BY THE DIT(E) AT PAGE 1 OF HIS ORDER, HOWEVER, NOWHERE WE FOUND THAT ANY OF THE OBJECT OF THE TRUST WAS FOR NON - CHARITABLE ONE. THE DECISIONS CITED BY THE LD. DR ARE DISTINGUISHABLE ON FACTS, INSOFAR AS ALL THE OBJECTS OF THE TRUST WAS CHARITABLE IN NATURE, GENUINENESS OF ITS ACTIVITIES WERE NOT IN DOUBT. IT IS ALSO PERTINENT TO MENTION HERE THAT AT THE TIME OF REGISTRATION U/S.12A, THE CIT IS REQUIRED TO VERIFY THE OBJECTS OF THE TRUST AND GENUINENESS OF ITS ACTIVITIES. IF THE OBJECTS OF TRUST IS CHARITABLE AND ITS ACTIVITIES ARE GENUINE, THE REGISTRATION IS TO BE GRANTED. IF SUBSEQUENTLY IT IS FOUND THAT ASSESSEE IS NOT FOLLOWING ITS OBJECT OR THAT OBJECTS ARE NOT CHARITABLE OR ITS ACTIVITIES ARE NOT GENUINE THEN DURING THE COURSE OF ASSESSMENT, T HE AO HAS ALL THE POWERS TO TAX SUCH RECEIPTS OF THE TRUST WHICH ARE NON - CHARITABLE OR COMMERCIAL IN NATURE OR TO APPLY THE PROVISIONS OF SECTION 13 OF THE ACT SO AS TO EXCLUDE INFORM FROM PROPERTIES HELD UNDER A TRUST FOR PRIVATE RELIGIOUS PURPOSES WHICH DOES NOT ENURE FOR THE BENEFIT OF THE PUBLIC. DURING THE COURSE OF ASSESSMENT, THE AO IS ALSO EMPOWER ED TO EXCLUDE SUCH RECEIPTS/INCOME OF THE TRUST IF HE FINDS THAT ANY FUNDS OF THE TRUST OR INSTITUTION ARE INVESTED OR DEPOSITED IN ANY FORM OR MODE SPECI FIED IN SUB - SECTION (5) OF SECTION 11. THE AO IS ALSO EMPOWER ED TO EXCLUDE INCOME OF SUCH TRUST FROM THE PROVISIONS OF EXEMPTION IF HE FINDS THAT SUCH FUNDS WERE UTILIZED FOR BENEFIT ITA NO. 1547 / 1 3 4 OF ANY OF THE PERSONS, WHO MADE SUBSTANTIAL CONTRIBUTION TO THE TRUST OR INSTITUTION, ANY TRUSTEE OF THE TRUST OR MANAGER OF THE INSTITUTION OR ANY CONCERN, IN WHICH ANY OF THE PERSONS REFERRED IN CLAUSE (A), (B), (C) AND (D) OF THE SUB - SECTION 3, AS SUBSTANTIAL INTEREST. FURTHERMORE, VARIOUS CLAUSE S IN THE TRUST DEED WITH REGA RD TO PROMOTE EDUCATION, MEDICAL RELIEF IN NO WAY AMOUNTS TO CARRY ON ANY BUSINESS SO AS TO DENY THE CLAIM OF REGISTRATION U/S.12AA. 5 . IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE ORDER PASSED BY THE DIT(E) DECLINING THE CLAIM OF REGISTRATION U/S .12A. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21/01/2015 . 21/01/2015 SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 21/01 /201 5 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//