ANAND MEDICAL & EDUCATIONAL FOUNDATION, Ahmednagar V. ITO, Pune

ITA 1570/PUN/2013

• Counselvise Citation: 157024514 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-12-2014
• Assessment Year: misc
• Appeal Filed On: 12-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Section: 80G; 12A; 12AA; 12; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S.PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1570/PN/2013 ANAND MEDICAL & EDUCATIONAL FOUNDATION, A/P. & TAL : PARNER, DIST : AHMEDNAGAR PAN NO. AACTA6352K .. APPELLANT VS. ITO, (TECH-I), PUNE .. RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : SHRI A.K. MODI DATE OF HEARING : 04-12-2014 DATE OF PRONOUNCEMENT : 18-12-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 18-06-2013 PASSED BY THE CIT-I, PUNE REFUSING GRANT OF APPROVAL U/S.80G(5) OF THE INCOME TAX ACT. 2.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE SOCIETY FILED AN APPLICATION IN FORM NO.10G FOR GRANT OF APPROVAL U/S.80G(5) BEFORE CIT-I, PUNE ON 04-09-2012. THE ASSESSEE SOC IETY IS REGISTERED UNDER THE BOMBAY TRUST ACT, 1950 VIDE NO TIFICATION DATED 29-03-1997. IT IS ALSO GRANTED APPROVAL U/S. 12A OF THE I.T. ACT, 1961 VIDE ORDER DATED 04-07-2012 WHICH WAS PAS SED IN CONSEQUENCE OF AN EARLIER ORDER DATED 25-04-2012 OF THE ITAT, PUNE A BENCH. THE ASSESSEE APPLIED IN FORM NO. 1 0G AFTER THE 2 APPROVAL U/S.12A WAS GRANTED. SINCE THE APPLICATIO N FILED BY THE ASSESSEE WAS INCOMPLETE A LETTER WAS ADDRESSED TO T HE ASSESSEE ON 01-01-2013 REQUESTING IT TO REMOVE THE OMISSIONS/DE FICIENCIES. 3. THE LD. CIT OBSERVED THAT VIRTUALLY BLANK AUDIT FORMS HAVE BEEN FILED FOR THE YEAR ENDING 31-03-2010, 31-03-20 11 AND 31-03- 2012. TILL THE DATE OF HEARING, CORRECT AND COMPLE TE AUDIT REPORTS IN FORM NO.10B HAVE NOT BEEN FURNISHED. HE FURTHER NO TED THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE DURING THE 3 YEARS WERE NOT IN ACCORDANCE WITH THE OBJECTS. THE LD.CIT FURTHER OBS ERVED THAT ALTHOUGH THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE , HOWEVER, THE ACTIVITIES CARRIED OUT BY THE ASSESSEE TRUST AR E DIFFERENT FROM ITS MAIN OBJECTS. HE OBSERVED THAT THE ACTIVITIES OF T HE TRUST MAINLY CONSISTED OF DISTRIBUTION OF SCHOOL UNIFORMS TO STU DENTS, CONDUCTING HEALTH CHECK UP AND OTHER MEDICAL CAMPS, BLOOD GROU P IDENTIFICATION CAMPS ETC. WHEREAS THE OBJECTS AS PE R THE MEMORANDUM OF ASSOCIATION ARE TO START, MANAGE AND CONTROL EDUCATIONAL INSTITUTIONS, TO START PHYSICAL EDUCATI ONAL INSTITUTIONS, GYMNASIUMS, HOSTELS AND TO PROVIDE RESEARCH FACILIT IES IN MEDICAL AND OTHER FIELDS OF KNOWLEDGE. IN VIEW OF THE ABOV E, HE ASKED THE ASSESSEE TO EXPLAIN AS TO WHY ITS REQUEST FOR APPRO VAL U/S.80G(5) SHOULD NOT BE REJECTED FOR THIS REASON. 3.1 IT WAS SUBMITTED THAT SINCE IT HAS ALREADY BEE N REGISTERED U/S.12A AND HAS NOT FAILED TO COMPLY WITH THE REQUI REMENTS FOR GRANT OF APPROVAL U/S.80G, THEREFORE, IT IS ENTITLE D TO SUCH APPROVAL. THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF GYM EDUCATIONAL SOCIETY VS. CIT REPORTED IN 6 ITR (TRIB UNAL) 350 WAS 3 RELIED UPON. SUBSEQUENTLY, IN A FURTHER SUBMISSION MADE ON 18.06.2013 THE ASSESSEE ARGUED THAT ONCE THE OBJECT S OF A TRUST OR INSTITUTION ARE CHARITABLE IN NATURE, IT SHOULD BE LEFT TO THE ASSESSEE AS TO HOW THESE OBJECTS ARE TO BE ACHIEVED. IT WAS ALSO ARGUED THAT TRUSTS AND INSTITUTIONS HAVING SIMILAR OBJECTS AS T HAT OF THE ASSESSEE HAVE BEEN HELD AS CHARITABLE. THE DECISION OF THE I TAT, CHENNAI BENCH IN THE CASE OF SOCIAL PEDIA KNOWLEDGE FOUNDAT ION V. DIT, REPORTED IN (2013) 87 DTR (CHENNAI) 412 WAS REFERRE D TO. ALONGWITH THESE SUBMISSIONS, COPIES OF CASH VOUCHER S IN RESPECT OF THE EDUCATIONAL AND MEDICAL EXPENSES INCURRED DURIN G THE PRECEDING THREE YEARS WERE FURNISHED. 4. HOWEVER, THE LD.CIT WAS NOT SATISFIED WITH THE E XPLANATION GIVEN BY THE ASSESSEE AND REJECTED THE APPLICATION U/S.80G(5) BY OBSERVING AS UNDER : 3. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE APPLICANT FROM TIME TO TIME WHEREUPON ITS APPLICATIO N IN FORM NO.10G IS DECIDED ON MERITS AS UNDER. 3.1 THE FIRST THING WHICH NEEDS TO BE NOTED IS THAT T HE APPLICANT IS YET TO FURNISH COMPLETE AND CORRECT AUDIT REPORTS I N FORM NO. 1013 FOR THE YEARS-ENDED 31.03.2010 AND 31.03.2011 EVEN THOUGH THE SAME HAD BEEN SPECIFICALLY CALLED FOR. AS ALREADY POINTED OUT, IT IS ONLY ON 08.05.2013 THAT CORRECT AND COMPLETE FORM NO.10B WAS FILED FOR THE YEAR-ENDED 31.03.2012 RELEVANT TO THE A.Y. 2012-13. THUS IN SO FAR AS THE PRECEDING YEARS ARE CONCERNED, TH E APPLICANT IS YET TO COMPLY WITH THE REQUIREMENTS LAID DOWN IN RUL E 11AA. AS A RESULT, THE SUBJECT APPLICATION IN FORM NO.10G CANNOT BE TREATED AS VALID EVEN NOW. 3.2 WITHOUT PREJUDICE TO THE ABOVE, IT ALSO NEEDS TO BE MENTIONED THAT EVEN THOUGH TOTAL MISMATCH BETWEEN 'O BJECTS' AND 'ACTIVITIES' HAD BEEN BROUGHT TO THE NOTICE OF THE A PPLICANT, IT HAS NOT SUBMITTED ANY EXPLANATION, LET ALONE ANY COGENT EXPLANATION, IN RESPECT THEREOF. AS ALREADY NOTED, IN THE SUBMISSION MA DE ON 18.06.2013 IT HAS BEEN MERELY STATED THAT TRUSTS HAVING SIMILAR OBJECTS HAVE BEEN HELD TO BE CHARITABLE. NO DOUBT, T HE APPLICANT'S OBJECTS ARE CHARITABLE. IT HAS ALSO BEEN GRANTED REGIST RATION U/S.12A. HOWEVER, A TRUST OR INSTITUTION IS REQUIRED TO STRICT LY ABIDE.' BY AND CARRY OUT THE MANDATE GIVEN TO IT AS PER THE TRUST DE ED OR THE MEMORANDUM OF ASSOCIATION. THE ACTIVITIES MUST BE IN PU RSUANCE OF SUCH MANDATE. A TRUST OR INSTITUTION CAN BY NO MEANS T RAVERSE 4 BEYOND THE SAID MANDATE. IN THE APPLICANTS CASE, WHIL E THE OBJECTS ARE TO START EDUCATIONAL INSTITUTIONS AND TO PREPARE RESEARCH FACILITIES IN MEDICAL AND OTHER FIELDS OF KNOWLEDGE B Y CONDUCTING SHORT-TERM AND LONG-TERM COURSES, LECTURES AND SEMINARS, THE ACTIVITIES ARE TOTALLY DIFFERENT VIZ. OF DISTRIBUTING UNIFORMS, HOLDING MEDICAL CAMPS ETC. IN FACT, IN THE CONTEXT OF SUCH A MISMATCH BETWEEN OBJECTS AND ACTIVITIES, EVEN THE VERY REGISTRA TION U/S.12A IS LIABLE TO BE CANCELLED. THIS BEING THE CASE, MISMATCH BETWEEN OBJECTS AND ACTIVITIES CANNOT BE GIVEN A GO-BY AND, I NSTEAD, MUST BE TAKEN INTO ACCOUNT, WHILE CONSIDERING APPROVAL U/S.80 G AS WELL. FOR, APPROVAL U/S.80G IS MAINLY INTENDED TO ENABLE THE TRU ST OR INSTITUTION TO SECURE DONATIONS FROM THE DONORS, WHICH IN TURN WOULD BE USED FOR PURSUING THE OBJECTS SET OUT IN THE TRUST DEED OR IN THE MEMORANDUM OF ASSOCIATION. APPROVAL U/S.80G IS N OT MEANT TO ENABLE COLLECTION OF DONATIONS FOR UTILIZATION ON ACTIVITIES OUTSIDE THE AMBIT OF THE OBJECTS. THEREFORE, THE APPLICANT'S ARGUMENT THAT SINCE IT HAS BEEN REGISTERED U/S,12A, IT IS ENTITLED TO APPROVAL U/S..80G CANNOT BE ACCEPTED. WHERE A TRUST OR INSTITUT ION IS REGISTERED U/S.12A WHICH IS STILL IN FORCE, APPROVAL U/ S.80G SHOULD BE ORDINARILY GIVEN IF THERE IS COMPLIANCE WITH THE OTHER CONDITIONS LAID DOWN IN SECTION 80G. UNDERLYING THESE OTHER COND ITIONS IS THE BASIC PREMISE THAT THE TRUST OR INSTITUTION MUST BE CARR YING OUT CHARITABLE ACTIVITIES IN INDIA IN FURTHERANCE OF ITS OBJECTS. IN FACT, IF THE ACTIVITIES ARE NOT IN ACCORDANCE WITH THE OBJEC TS, THE INCOME RESULTING FROM SUCH ACTIVITIES CANNOT FIT INTO THE MEC HANISM PROVIDED IN SECTIONS 11 & 12 IN WHICH EVENT THE CONDI TION PRESCRIBED IN CLAUSE (I) OF SUB-SECTION (5) OF SECTION 8 0G SHALL NOT BE FULFILLED. THIS IN ITSELF WILL RENDER THE CONCERNED T RUST OR INSTITUTION INELIGIBLE FOR APPROVAL U/S.80G. THE APPLICANT'S CASE PRECISELY FALLS IN THIS CATEGORY. AS A RESULT, THE APPLICANT MUST BE HE LD TO BE INELIGIBLE FOR APPROVAL U/S.80G IN VIEW OF THE FACT THAT ITS ACTIVITIES ARE NOT IN ACCORDANCE WITH THE OBJECTS SET OUT IN ITS MEMORANDUM OF ASSOCIATION. 4. FOR THE DETAILED REASONS STATED HEREINABOVE, THE A PPLICANT'S REQUEST FOR GRANT OF APPROVAL U/S.80G(5) OF THE INCOM E-TAX ACT, 1961 CANNOT BE ACCEDED TO. CONSEQUENTLY, THE SUBJECT APPLI CATION IN FORM NO. 10G IS HEREBY REJECTED. 5. AGGRIEVED WITH SUCH ORDER OF THE LD.CIT THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE A SSESSEE-TRUST SUBMITTED FOR APPROVAL U/S 80G(5) OF THE ACT THOUGH E VERY COMPLIANCE WAS MADE AS REQUIRED BY LAW. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT WAS NOT JUSTIFIED THAT THE APPELLANT-TRUST WAS NOT CARR YING OUT ITS ACTIVITIES AS PER THE OBJECT OF THE TRUST. THE REGISTRA TION GRANTED TO THE TRUST UNDER S. 12AA STILL CONTINUES. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE APPELLANT TRUST IS STRICTLY FOLLOWING AND CARRYING THE ACTIVITIES STRICTLY WITHIN THE AMBIT OF ITS OBJECTS. THE APPROVA L UNDER S. 80G(5) HAVING REJECTED BY LD. CIT TREATING THE APPL ICATION IN F. NO. 10G AS INVALID. THE APPROVAL BE GRANTED TO THE TRUST. 5 4) THE APPELLANT CRAVES/LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE OBJECTS OF THE ASSESSEE SOCIETY ARE CHARITABLE IN NATURE. REG ISTRATION U/S.12A HAS ALREADY BEEN GRANTED. THEREFORE, THERE WAS NO JUSTIFICATION ON THE PART OF THE LD.CIT TO DENY GRANT OF APPROVAL U/ S.80G(5) OF THE I.T. ACT. HE ACCORDINGLY SUBMITTED THAT APPROVAL U /S.80G(5) OF THE ACT SHOULD BE GRANTED. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND STRONGLY SUPPORTED THE ORDER OF THE CIT. HE SUBMIT TED THAT THE LD. CIT HAS GIVEN THE REASONS AS TO WHY THE ASSESSEE IS NOT ELIGIBLE FOR GRANT OF APPROVAL U/S.80G(5). HE ACCORDINGLY SUBMI TTED THAT THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE DISMISSED. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES. THERE IS NO DISPUTE TO THE FACT THAT REGIST RATION U/S.12A OF THE I.T. ACT HAS BEEN GRANTED TO THE ASSESSEE VIDE ORDE R DATED 04-07- 2012. FURTHER, AS OBSERVED BY THE LD. CIT, SOME OF THE OBJECTS ARE ALSO CHARITABLE IN NATURE. HOWEVER, HE HAS ALSO NO TED THAT THE ASSESSEE DID NOT FURNISH COMPLETE AND CORRECT AUDIT REPORTS IN FORM NO.10B FOR THE YEARS ENDED 31-03-2010 AND 31-03-201 1 EVEN THOUGH THE SAME HAD BEEN SPECIFICALLY CALLED FOR. HE HAD FURTHER NOTED THAT THERE IS MISMATCH BETWEEN OBJECTS AND AC TIVITIES OF THE SOCIETY. ALTHOUGH THE SAME WAS BROUGHT TO THE NOTI CE OF THE ASSESSEE SOCIETY, NO EXPLANATION WAS SUBMITTED IN T HIS REGARD. 6 8.1 THE APPROVAL OF REGISTRATION U/S.80G IS GOVERNE D BY THE PROVISIONS OF 80G R.W. RULE 11AA OF THE I.T. RULES. GRANTING OF REGISTRATION U/S.12A IS ONE OF THE PRE-REQUISITE FO R GRANT OF APPROVAL U/S.80G(5) OF THE ACT. HOWEVER, THE ASSESSEE HAS T O COMPLY WITH THE OTHER REQUIREMENTS MENTIONED IN THE ACT AND RUL ES FOR GETTING APPROVAL U/S.80G(5) OF THE I.T. ACT. IN VIEW OF TH E ABOVE, THE LD. CIT REJECTED THE REQUEST OF THE ASSESSEE FOR GRANT OF APPROVAL U/S.80G(5) OF THE I.T. ACT. ALTHOUGH THE LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT HE HAS FILED ALL THE DETAIL S BEFORE THE LD.CIT, HOWEVER, IN ABSENCE OF ANY PAPER BOOK FILED BY THE ASSESSEE SOCIETY SUBSTANTIATING THE FILING OF THESE DETAILS, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THA T THE REQUISITE DETAILS AND DOCUMENTS WERE FILED BEFORE THE LD.CIT. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE IN TEREST OF JUSTICE, WE DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE LD.CIT WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSES SEE TO FILE THE REQUISITE DETAILS BEFORE HIM FOR GRANT OF APPROVAL U/S.80G(5) OF THE I.T. ACT. WE HOLD AND DIRECT ACCORDINGLY. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PU RPOSES. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 18-12-2014. SD/- SD/- (R.S.PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEM BER PUNE DATED: 18 TH DECEMBER, 2014 SATISH 7 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT-I, PUNE 4. THE D.R, B PUNE BENCH 5. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE