M/s Shree Atmanand Jain Sabha, Chandigarh V. CIT(E), Chandigarh

ITA 1587/CHANDI/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0047 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-05-2019
• Assessment Year: 2017-2018
• Appeal Filed On: 22-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S PHANI KISHORE
• Keywords: Charitable institution; TDS
• Section: 12A; 12AA; 12; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER ./ ITA NO. 1587/CHD/2017 / ASSESSMENT YEAR : 2017-18 SHREE ATMANANAD JAIN SABHA, SECTOR 28, CHANDIGARH VS. THE CIT(EXEMPTIONS) CHANDIGARH ./PAN NO: AAFAS0977E /APPELLANT /RESPONDENT /ASSESSEE BY : SH. AJAY JAIN, CA ! / REVENUE BY : SH. G.S.PHANI KISHORE, CIT DR ' # $ /DATE OF HEARING : 21.05.2019 %&'( $ / DATE OF PRONOUNCEMENT : 23.05.2019 / ORDER PER N.K. SAINI, VICE PRESIDENT: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 29.09.2017 OF COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH . 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEA L RELATES TO THE REJECTION OF REGISTRATION SOUGHT BY THE ASSESSEE U/ S 12AA OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE MOVED AN APPLICATION IN FORM NO. 10A FOR SEEKING REGISTRATION U/S 12A OF TH E ACT. THE LD. CIT(E) ASKED THE ASSESSEE TO PRODUCE FOLLOWING DOCUMENTS / CLARIFICATIONS:- I. DETAILS OF PROPERTY VESTED IN THE SOCIETY, AS ENVIS AGED U/S 11 OF THE L.T. ACT, INCOME FROM WHICH WAS SOUGHT TO BE EXEMPTED. II. DETAILS OF VOLUNTARY CONTRIBUTIONS RECEIVED BY THE SOCIETY, AS ENVISAGED U/S 12 OF THE I.T. ACT AND WHETHER ANY SPECIFIC DIRECTI ONS HAD BEEN RECEIVED BY THE PERSONS MAKING VOLUNTARY CONTRIBUTIONS. III. THE ORIGINALS OF MOA / BYE-LAWS OF THE SOCIETY ALON G WITH THE REGISTRATION CERTIFICATE. IV. THE COPIES OF BUNK STATEMENTS THROUGH WHICH ACTIVIT IES WERE BEING PROPAGATED. 'THE RECEIPTS AND THE DIFFERENT ITEMS O F EXPENDITURE THAT WERE BEING CLAIMED. V. COMPLETE DETAILS OF THE DONATIONS RECEIVED OR INTEN DED TO BE RECEIVED AND DOCUMENTARY EVIDENCE AS REGARDS TO GRANTS RECEIVED. VI COPIES OF THE L.T. RETURNS FOR THE LAST THREE ASSESSMENT YEARS I.E. A.Y. 2014- 15 TO A.Y. 2016-17 ALONGWITH A NOTE REGARDING ANY KIND OF EXEMPTIONS UNDER L.T. ACT HAVING CLAIMED EARLIER DURING ANY OF THE PAST YEARS. VII. WHETHER THE APPLICATIONS FOR REGISTRATION WAS FILE D FOR THE FIRST TIME. THE FATE OF THE EARLIER APPLICATION ALONG WITH COPY OF THE ORDER (IF ANY). VIII. DONATION RECEIVED UNDER FCRA ALONGWITH RELEVANT DET AILS SUCH AS COPY OF THE RETURN FOR FCRA AND THE COPY OF SPECIFIED BANK ACCOUNT (IF ANY). IX. DETAILS OF CORPUS FUND AND WHETHER THE SAME WERE WI TH ANY WRITTEN SPECIFIC DIRECTIONS. X. DETAILS REGARDING CHARITABLE ACTIVITIES BEING CONDU CTED BY THE SOCIETY CLARIFYING AS TO WHICH SPECIFIC LIMB UNDER SECTION U/S 2(15) OF THE IT. ACT WAS BEING PURSUED. 3 XI. THE DETAILS OF SALARY PAID DURING THE LA ST THREE YEARS EXPLAINING WHETHER THE SAME ARE GUIDED BY TDS PROVISIONS OR NOT? XII. COPY OF FINANCIAL STATEMENTS FOR THE LAST FOUR FINANCIAL YEARS I.E. FROM F.Y. 2013-14 TO F.Y. 2016-17. XIII. DETAILS OF DONATION RECEIVED IN F.Y. 201 6-17 WITH NAME, ADDRESS, AMOUNTS AND RECEIPTS OF THE SAME. XIV. A NOTE ON ACTIVITIES OF THE SOCIETY. XV. DETAILS OF CASH DEPOSITS IN THE BANK ACCOUNT FROM 08.11.2016 TO 31.3.2017 4. THE ASSESSEE FURNISHED THE REQUISITE DETAILS. O N PERUSAL OF THE SAME THE LD. CIT(A) OBSERVED THAT THE ASSESSEE WAS A RE LIGIOUS INSTITUTION AND MANAGING JAIN TEMPLE AT SECTOR 28, CHANDIGARH BUT D ID NOT PROVIDE PROOF OF OWNERSHIP OF THE LAND AND RATIONALE BEHIND PREDOMIN ANT CREDITS IN THE BANK ACCOUNT THROUGH CASH AND THROUGH AUTO SWEEP. THE LD . CIT(A) AGAIN ASKED THE ASSESSEE TO FURNISH THE FOLLOWING DETAILS:- (I) THE COPY OF BANK STATEMENTS FOR THE ACCOUNTS IN SB OP AND HDFC BANKS. (II) RATIONALE BEHIND PREDOMINANT CREDITS IN THESE BANK ACCOUNTS THROUGH CASH AND THROUGH AUTOSWEEP. (III) DETAILS AND PROOF OF OWNERSHIP OF LAND. (IV) MAJOR EXPENDITURES HAVE BEEN INCURRED ON COLD AND S ILVER ORNAMENTS (RS. 16.945/-, RS. 55,91,826/- AND RS. 9, 66,200/- DURING F.Y 2013-14, 2014-15 AND 2016-17 RESPECTIVELY) AND PURCHASE OF MARBLES. THE RATIONALE, WHY SUCH EXPENDITURE SHOULD BE TREATED AS THE EXPENSE INCURRED FOR 'CHARITABLE PURPOSE' IN TH E LIGHT OF THE FACT THAT NONE OF THE OTHER MAIN OBJECTS HAVE SEEMINGLY BEEN PURSUED. 4 5. THE ASSESSEE FURNISHED THE REQUISITE DETAILS BUT THE LD. CIT (E) OBSERVED AS UNDER:- (I). THE APPLICANT HAS BEEN IN EXISTENCE SINCE 1977. THE RE IS NO RATIONALE BROUGHT OUT FOR SEEKING REGISTRATION AFTE R A LONG GAP OF 30 YEARS. MOREOVER, THE LAND FOR TEMPLE THAT IT CLAIMS TO MANAGE WAS ALLOTTED IN 1983. THE PAST AFFAIRS OF TH E SOCIETY AND THE TEMPLE CAN'T BE EXAMINED IN THE PRESENT. THERE IS NO RATIONALE FOR SEEKING EXEMPTION/REGISTRATION AT THIS STAGE AF TER HAVING CREATED LARGE ASSETS, HUGE CASH & BANK BALANCES AND ALSO CORPUS/CAPITAL FUNDS AFTER A LAPSE OF THIRTY YEARS WHEN A HUGE ASSET BASE TO THE TUNE OF 1.47 CRORES HAS SINCE BEE N CREATED. THE SUMMARY OF FIXED ASSETS AND THE CASH BALANCE IN BAN K IS TABULATED BELOW- F.Y FIXED ASSETS (US.) CASH AT BANK (RS.) FDR (RS.) 2013-14 59,62,626/- 22,14,422/- 34,43,7057- 2014-15 1,13,14,060/- 26,13,290/- 37,20,767/- 2015-16 1,47,90,429/- 8,86,546/- 40,17,678/- (II) IT IS ALSO THE CASE THAT THE APPLICANT HAS BEEN FIL ING RETURNS IN THE PAST ON A COMMERCIAL BASIS AND PAYING TAXES THE REUPON CONSTANTLY. IT HAS NOT BEEN BROUGHT OUT HOW A SOCIE TY OPERATING ON COMMERCIAL PRINCIPLES EARLIER SUDDENLY ASSUMES T HE CLOAK OF A CHARITABLE SOCIETY. (III) INCOME & EXPENDITURE ACCOUNTS REVEAL THAT DON ATIONS RECEIVED HAVE BEEN UTILIZED FOR THE CONSTRUCTION OF TEMPLE TREATI NG THE SAME AS CORPUS FUND. THE EVIDENCES OF CORPUS DONATIONS DON' T GIVE ANY OTHER DETAILS OTHER THAN THE NAME & ADDRESS OF THE DONORS. NO RECEIPTS & PAYMENT ACCOUNTS HAVE BEEN PROVIDED FOR C ORROBORATING INCOME FROM DONATIONS AND EXPENSES CLAIMED BY APPLICANT TOWARDS CHARILY. MOREOVER, THE CORPUS DONATION (MOSTLY IN F.Y 2015-16) HAS BEEN FOR CONST RUCTION /RENOVATION /REPAIR OF THE JAIN TEMPLE. THE CONFIR MATIONS IN RESPECT OF CORPUS DONATIONS ARE NOT ONLY IN SIMILAR , ONE OR TWO VARIANTS OF HANDWRITINGS BUT ALSO RECEIVED ON M ERELY TWO 5 DATES 01.05.2015 AND 03.09.2015. THIS MATTER SHALL BE EXAMINED SEPARATELY BY THE ASSESSING OFFICER. NOTWITHSTANDING THE CLAIMS THAT IT IS A VERY FAMOUS TEMPLE ACTIVITIES GEARED ONLY TOWARDS THE CONSTRUCTION/MAI NTENANCE AND ORNAMENTATION OF THE DEITY THEREIN, DO NOT QUAL IFY FOR BEING HELD CHARITABLE. 6. THE LD. CIT(E) HELD THAT THE ACTIVITY OF THE ASS ESSEE DID NOT FALL IN THE CATEGORY OF CHARITABLE PURPOSES AND ACCORDINGLY THE APPLICATION FOR GRANT OF REGISTRATION U/S 12A OF THE ACT WAS REJECTED. NOW THE ASSESSEE IS IN APPEAL. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INCOME OF THE ASSESSEE WAS MAINLY FROM THE INTEREST ON THE FIXED DEPOSITS WITH THE BANK AND THERE WAS NO COMMERCIAL BASIS AS ALLEGED BY THE LD. CIT (E). IT WAS FURTHER SUBMITTED THAT THE LD. CIT(E) REJECTED THE APPLICAT ION OF THE ASSESSEE FOR THE REASON THAT IT WAS A RELIGIOUS INSTITUTION BUT HE H AD NOT CONSIDERED THE OBJECTS OF THE ASSESSEE SOCIETY WHICH WERE CHARITABLE IN NA TURE FOR THE PUBLIC AT LARGE AND NOT FOR ANY PARTICULAR COMMUNITY. THEREFORE, TH E ACTION OF THE CIT(A) IN DENYING THE REGISTRATION U/S 12A OF THE ACT WAS NO T JUSTIFIED. 8, IN HIS RIVAL SUBMISSIONS, THE LD. CIT DR REITERA TED THE OBSERVATIONS MADE BY THE LD. CIT (E) AND STRONGLY SUPPORTED THE IMPUGNED ORDER. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. 10. IN THE PRESENT CASE, THE LD. CIT(E) IN PARA 8 (II) OF THE IMPUGNED ORDER MENTIONED THAT THE ASSESSEE WAS FILING THE RETURN IN PAST ON A COMMERCIAL BASIS AND PAYING TAXES THEREUPON. ON THE CONTRARY, THE CLAIM OF THE LD. 6 COUNSEL FOR THE ASSESSEE WAS THAT THERE WAS NO COMM ERCIAL BASIS AT ALL, AS THE INCOME WAS MAINLY FROM THE INTEREST ON FIXED DEPOSI TS. WE, THEREFORE, CONSIDERING THE CONTRARY STAND TAKEN BY BOTH THE PA RTIES AND IN THE ABSENCE OF CLEAR FACTS ON RECORD, DEEM IT APPROPRIATE TO SET A SIDE THIS CASE BACK TO THE FILE OF THE LD. CIT(E) TO BE DECIDED AFRESH IN ACCO RDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. IT IS RELEVANT TO POINT OUT THAT DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON CERTAIN JUDGMENTS A ND SUBMITTED THAT A RELIGIOUS SOCIETY ALSO CANNOT BE DENIED REGISTRATIO N U/S 12A OF THE ACT. THE LD. CIT(E) SHALL ALSO CONSIDER THOSE JUDGEMENTS REL IED BY THE LD. COUNSEL FOR THE ASSESSEE. 11. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. (ORDER PRONOUNCED IN THE COURT ON 23.5.2019) SD/- SD/- (SATBEER SINGH GODARA) ( N.K. SAINI ) JUDICIAL MEMBER VICE PRESIDENT DATED : 23.05.2019 .. &* +, -, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' . / CIT 4. ' . ( )/ THE CIT(A) 5. ,/0 1 , $ 1 , 23405 / DR, ITAT, CHANDIGARH 6. 04 6# / GUARD FILE &* ' / BY ORDER, 7 ! / ASSISTANT REGISTRAR 7