Shanthi Sadan Charitable Society, Hyderabad V. Director of Income-tax, (Exemptions), Hyderabad

ITA 1600/HYD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69902 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 19-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: CHENNUBOTLU
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1600/HYD/2012 ASSESSMENT YEAR 2012-13 M/S. SHANTHI SADAN CHARITABLE SOCIETY, HYDERABAD PAN: AAHAS4430L VS. THE DIRECTOR OF INCOME - TAX (EXEMPTIONS) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI CHENNUBOTLU RESPONDENT BY: SRI D. SUDHAKAR RAO DATE OF HEARING: 0 7 .11.2013 DATE OF PRONOUNCEMENT: 07 .11.2013 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) [DIT(E)], H YDERABAD DATED 25.9.20121 FOR A.Y. 2012-13. 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WIT H REGARD TO NON-GRANTING OF REGISTRATION SOUGHT U/S. 12AA OF INC OME-TAX ACT, 1961. THE ASSESSEE APPLIED FOR REGISTRATION U/S. 1 2AA OF THE ACT IN FORM NO. 10A ON 9.3.2012 AND THE SAME WAS REJECTED B Y THE DIT(E) ON THE FOLLOWING REASONS: I) MEMORANDUM OF TRUST DEED OF THE SOCIETY CONTAINS OBJECTS IN DESCRIPTIVE NATURE WITHOUT EMPHASISING ON ANY SPECIFIC DOMINANT OBJECT. II) THE SOCIETY HAS GOT RELIGIOUS OBJECT IN ADDITION TO CHARITABLE OBJECT. III) ASSESSEE SOCIETY HAS NOT COMMENCED ANY ACTIVITY SO AS TO CARRY ON THE OBJECTS FOR WHICH IT WAS ESTABLISHED. ITA NO. 1600/HYD/2012 M/S. SHANTHI SADAN CHARITABLE SOCIETY ============================= 2 BEING AGGRIEVED BY THE ORDER OF THE DIT(E), THE ASS ESSEE FILED THE PRESENT APPEAL. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE OBJECTS MENTIONED IN THE MEMORANDUM OF TRUST DEED OF THE ASSESSEE. THE OBJECTS OF THE ASSESSEE CANNOT BE SAID DESCRIPTIVE AND THE OBJECTS MENTIONED IN THE TRUST DEED ARE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 2(15) OF THE ACT AND THERE IS NO ALLEGATION BY THE DIT(E) THA T THE OBJECTS MENTIONED THEREIN ARE NOT CHARITABLE NATURE AND IT CANNOT BE SAID THAT THE OBJECTS MENTIONED IN CLAUSES 1 AND 2 CANNO T BE SAID THAT THEY ARE OF NON-CHARITABLE IN NATURE. BEING SO, IN OUR OPINION, THIS REASONS ADVANCED BY THE DIT(E) ARE NOT PROPER TO DE NY THE REGISTRATION U/S. 12AA OF THE ACT. FOR THIS PURPOSE, WE PLACE RELIANCE ON THE JUDGEMENT OF ALLAHABAD HIGH COURT IN THE CASE OF FIFTH GENERATION EDUCATION SOCIETY VS. CIT (185 ITR 634) WHEREIN IT WAS HELD THAT ' THE ORDER IMPUGNED DOES NOT SAY THAT THE OBJECTS OF THE SOCIETY ARE NOT CHARITABLE IN NATURE; IT MERELY SAYS THAT THEY ARE GENERAL IN NATURE. JUST BECAUSE THEY ARE GENERAL, THEY DO NOT CEASE TO BE CHARITABLE. THE COMMISSIONER HAS ALSO OBSERV ED THAT NO ACTIVITY HAS BEEN CARRIED ON BY THE SOCIETY. IT IS ALSO NOT THE REQUIREMENT OF SECTION 12A OF THE ACT. NOR HAS SECTI ON 80G ANY RELEVANCE AT THIS STAGE. THE IMPUGNED ORDER CANNOT , THEREFORE, BE SUSTAINED AND IT IS QUASHED. ', WE VACATE THE FINDINGS OF THE DIT(E) ON THIS ISSUE. 4. THE NEXT REASON IS THAT THE ASSESSEE'S OBJECTS ARE MIXED IN NATURE I.E., BOTH CHARITABLE AND RELIGIOUS. IN OUR OPINION, REQUIREMENT OF THE PROVISION TO GRANT REGISTRATION U/S. 12AA IS THAT THE SOCIETY'S OBJECT CLAUSE SHOULD NOT CONTAIN ANY NON CHARITABLE ACTIVITIES AND THERE IS NO RESTRICTION IN CARRYING ON RELIGIOUS OBJECTS ALONG WITH CHARITABLE OBJECTS THE ASSESSEE HAS LIB ERTY TO CARRY ON RELIGIOUS ACTIVITIES ALONG WITH CHARITABLE ACTIVITI ES. THIS ISSUE CAME ITA NO. 1600/HYD/2012 M/S. SHANTHI SADAN CHARITABLE SOCIETY ============================= 3 FOR CONSIDERATION IN THE FOLLOWING CASES AND THE CO URTS HELD THAT THE ASSESSEE CAN CARRY ON CHARITABLE ACTIVITIES ALONG W ITH RELIGIOUS ACTIVITIES: 1) CIT V. JAIPUR CHARITABLE TRUST (81 ITR 1) (DEL). 2) ZENITH TIN WORKS CHARITABLE TRUST V. ITO (102 ITR 1 19) (BOM). 3) CIT V. AHMEDABAD RANA CASTE ASSOCIATION (88 IATR 35 4) (GUJ.) 4) CIT V. CHANDRA CHARITABLE TRUST (294 AITR 896) (GUJ ). 5) ADDL. CIT V. AA BIBIJIWALA TRUST (100 ITR 516) (GUJ ). 6) ACIT V. BARKATE SAIFIYAH SOCIETY (213 ITR 492) (GUJ ). 7) GULAM MOIHIUDDIN TRUST V. CIT (248 IATR 587) (J&K). 8) CALICUT ISLAMIC CULTURAL SOCIETY V. ACIT (28 SOT 14 8). 5. FURTHER, RECENTLY THE HYDERABAD BENCH OF THE TRIBUN AL IN THE CASE OF REHOBOTH MISSION V. DIT(E) IN ITA NO. 352/HY D/2010 ORDER DATED 26.5.2010 HELD AS FOLLOWS: '6. WE HAVE GONE THROUGH THE PROVISIONS OF SEC. 13(1)(B) OF THE ACT. THERE IS NOTHING IN THE LANGUA GE OF THIS PROVISION TO SUGGEST THAT AN INSTITUTION OF MI XED OBJECTS IS PRECLUDED FROM GETTING REGISTRATION U/S 12AA OF THE ACT. IT IS ALSO SEEN FROM THE OBJECTS OF THE TRUST IN QUESTION THAT THE ASSESSEE IS CARRYING ON NO NON- CHARITABLE OR NON-RELIGIOUS ACTIVITIES. WE PLACE RE LIANCE ON THE JUDGEMENT OF ACIT V. BARKATE SAIFIYAH SOCIETY 213 ITR 492 (GUJ) AND CIT V. CHANDRA CHARITABLE TRU ST 294 AITR 86 ( GUJ), WHEREIN IT WAS HELD THAT A TRUS T CAN EITHER BE FOR RELIGIOUS PURPOSES OR FOR CHARITABLE PURPOSES OR IT CAN BE FOR BOTH. ONLY A TRUST WHICH IS FOR RELIGIOUS PURPOSE IS EXCLUDED AND DEBARRED FROM REGISTRATION U/S 12AA OF THE ACT. A TRUST WHOSE OBJEC T IS CHARITABLE AS WELL AS RELIGIOUS IS NOT DEBARRED FRO M REGISTRATION. FURTHER, IN THE CASE OF NEW LIFE IN C HRIST EVANGELISTIC ASSOCIATION V. CIT & OTHERS 246 ITR 532 (MAD), WHEREIN IT WAS HELD THAT FOR GRANTING OR REF USING REGISTRATION U/S 12A IN RELATION TO SUCH TRUST, THE ONLY CONDITION PRECEDENT IS THAT AN APPLICATION FOR REGISTRATION SHOULD BE MADE IN TIME AND THE ACCOUNT S OF THE INSTITUTE SHOULD BE AUDITED. NO ENQUIRY ABOUT OBJECTS OF THE TRUST CAN BE MADE U/S 12A OF THE ACT. WE HAVE GONE THROUGH ALL THE JUDGEMENTS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THE FACTS OF THE CASE IN THE CASE CONSIDERED BY THE GUJARAT HIGH COURT SQUARELY APPLY TO THE FACTS OF THE CASE ON HAND. TH E DEPARTMENT HAS NOT BROUGHT ANY CONTRARY DECISION TO OUR NOTICE. IN OUR OPINION, IN THE CIRCUMSTANCES UN DER ITA NO. 1600/HYD/2012 M/S. SHANTHI SADAN CHARITABLE SOCIETY ============================= 4 CONSIDERATION, THE DIT(E) SHOULD NOT HAVE REJECTED THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12 AA OF THE ACT ON THIS REASON. COMMENTING ON THE HONOURABLE GUJARAT HIGH COURT DECISION, THE DIT(E) HAS OBSERVE D THAT THE HONBLE HIGH COURT HAS INTRODUCED A NEW CONCEPT KNOWN AS CHARITABLE RELIGIOUS TRUST. ACCORDING TO HIM, TRUST HAS TO BE EITHER WHOLLY RELI GIOUS OR WHOLLY CHARITABLE. OTHERWISE, IT IS NOT ENTITLED FOR REGISTRATION AND THE HONBLE GUJARAT HIGH COURT DID NOT CONSIDER THE WORD OR WHICH HAS BEEN EMPLOYED U/S 11(1)(A) AND SEC. 12 OF THE ACT AND THE HONBLE HIGH COURT HAS INTERPRETED SEC. 13(1)(B) OF THE ACT. WE ARE UNABLE TO AGREE WITH THE DIT(E) AS TO HOW AND WHY T HE JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THERE IS NO SUCH BAR SINCE THERE IS NO JURISDICTIONAL HIGH COUR TS JUDGEMENT ON THIS ISSUE, TO THE CONTRARY AND THIS OBSERVATION OF THE DIT(E) IS UNWARRANTED. CONSEQUENTLY, WE DIRECT THE DIT(E) TO GRANT REGISTRATION TO THE ASSESSEE SOCIETY SUBJECT TO FUL FILMENT OF OTHER CONDITIONS, IF ANY.' 6. CONSIDERING THE ABOVE FINDINGS OF THE TRIBUNAL ON E ARLIER OCCASION, WE DO NOT FIND ANY MERIT IN THE REASON GI VEN BY THE DIT(E) TO REJECT THE REGISTRATION ON THIS COUNT. 7. THE LAST REASON GIVEN BY THE DIT(E) FOR REJECTING T HE REGISTRATION IS THAT THE ASSESSEE HAS NOT COMMENCED ANY ACTIVITIES AT THE TIME OF APPLYING FOR REGISTRATION. IT WAS SUBM ITTED BY THE AR BEFORE US THAT THE ASSESSEE SOCIETY WAS REGISTERED WITH THE STATE AUTHORITIES ON 16 TH FEBRUARY, 2012 AND FIELD APPLICATION FOR REGISTRATION U/S. 12AA OF THE ACT ON 9 TH MARCH, 2012, I.E., WITHIN 21 DAYS OF REGISTERING THE SOCIETY WITH THE STATE AUTHO RITIES. IN THE MEANWHILE THE ASSESSEE HAS NOT CARRIED ON ANY ACTIV ITIES. BUT THIS REASON ITSELF DOES NOT DISENTITLE THE ASSESSEE IN S EEKING REGISTRATION U/S. 12AA OF THE ACT. IN THE CASE OF SOCIETY OF SIST ERS OF ST. ANNE, PHIRANGIPURAM VS. DIT(E) (ITA NO. 345/HYD/2012 DATED 27.9.2012) THE TRIBUNAL HELD THAT THAT THE ASSESSEE NEED NOT C OMMENCE THE ACTIVITIES BEFORE SEEKING REGISTRATION. THE SAME V IEW WAS ALSO TAKEN IN THE CASE OF FIFTH GENERATION EDUCATION SOCIETY ( CITED SUPRA). ITA NO. 1600/HYD/2012 M/S. SHANTHI SADAN CHARITABLE SOCIETY ============================= 5 BEING SO, ON THIS COUNT ALSO REGISTRATION CANNOT BE DENIED. ACCORDINGLY, WE DIRECT THE DIT(E) TO GRANT REGISTRAT ION U/S. 12AA OF THE ACT. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH NOVEMBER, 2013 SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 7 TH NOVEMBER, 2013 TPRAO COPY FORWARDED TO: 1. M/S. SHANTHI SADAN CHARITABLE SOCIETY, H. NO. 3 - 2 - 55, ST. ANN'S CONVENT, MALLAPUR, HYDERABAD-500 072. 2. THE DIRECTOR OF INCOME - TAX (EXEMPTIONS), 3 RD FLOOR, AAYAKAR BHAVAN, HYDERABAD. 3. THE AD IT( E ) - I , HYDERABAD . 4 . THE DR ' B ' BENCH, ITAT, HYDERABAD