M/s. Sri Muthu Venkatasubramaniam Trust, Salem V. ITO, Salem

ITA 1633/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0931 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-02-2013
• Assessment Year: misc
• Appeal Filed On: 21-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BASHYAM IRS
• Assessee Lawyers: G BASKAR
• Keywords: Charitable institution

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A.NOS. 1632 &1633/MDS/2012 M/S. SRI MUTHU VENKATA- SUBRAMANIAM TRUST, NO.16-A, COURT ROAD, JOHNSONPET, SALEM. PAN AALTS0896F VS. THE INCOME-TAX OFFICER , WARD-I(4), SALEM-7. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G. BASKAR, ADVOCATE RESPONDENT BY : SHRI GURU BASHYAM, IRS, J CIT DATE OF HEARING : 4 TH FEBRUARY, 2013 DATE OF PRONOUNCEMENT : 4 TH FEBRUARY, 2013 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THESE APPEALS ARE FILED BY THE ASSESSEE. THE FIRST APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME-TAX, REJECTING THE APPLICATION FILED BY THE ASSESSEE FOR OBTAINING REGISTRATION UNDER SEC.12AA OF THE INCOME-TAX ACT, 1961. THE SECOND APPEAL IS FILED AGAINST THE ORDER OF THE COM MISSIONER OF ITA 1632 & 1633/12 :- 2 -: INCOME-TAX, REJECTING THE APPLICATION FILED BY THE ASSESSEE FOR GRANT OF APPROVAL UNDER SEC. 80G(VI) OF THE ACT. 2. WHEN THE ASSESSEE APPLIED FOR REGISTRATION UNDER SEC.12AA, THE COMMISSIONER OF INCOME-TAX CALLED FOR A NUMBER OF DETAILS FROM THE ASSESSEE AND ALSO FROM THE CONCERNED ASSES SING OFFICER. THE DETAILS CALLED FOR BY THE COMMISSIONE R OF INCOME-TAX RELATED TO THE BOOKS OF ACCOUNT, BANK ACCOUNTS, PER MANENT ACCOUNT NUMBER, CHARITABLE ACTIVITIES CARRIED ON BY THE ASSESSEE, ETC. IN FACT THE APPLICATION BY THE ASSESSEE WAS P UT IN ON 2.2.2012. THE TRUST WAS REGISTERED ON 14.11.2011. WITHIN THAT SHORT TIME THE ASSESSEE HAD NOT CARRIED ON ANY CHAR ITABLE ACTIVITIES, BUT IT WAS CONTEMPLATING CARRYING ON SU CH ACTIVITIES. 3. THE COMMISSIONER OF INCOME-TAX HELD THAT THE ASS ESSEE TRUST HAD FAILED TO DISCHARGE THE ONUS OF PROVING T HE CHARITABLE/RELIGIOUS NATURE OF THE OBJECTS OF THE T RUST AND GENUINENESS OF THE ACTIVITIES CARRIED OUT BY IT. H E ACCORDINGLY REJECTED THE APPLICATION FILED BY THE ASSESSEE FOR GRANTING REGISTRATION UNDER SEC.12AA AND DECLINED TO GRANT A PPROVAL TO THE ASSESSEE UNDER SEC.80G AS WELL. IT IS AGAINST THE ABOVE THAT THE ASSESSEE HAS COME IN APPEALS BEFORE US. ITA 1632 & 1633/12 :- 3 -: 4. WE HEARD BOTH SIDES IN DETAIL. 5. THE ASSESSEE IS A PUBLIC CHARITABLE TRUST REGIST ERED WITH JOINT SUB REGISTRAR-I AT SALEM(WEST). THE TRUST WA S ENDOWED INITIALLY WITH A SUM OF ` 10,000/- AND THE SAME WAS DEPOSITED IN A SCHEDULED BANK. THE TRUSTEES ARE MEMBERS OF THE SA ME FAMILY. THE OBJECTS OF THE TRUST ARE TO PROVIDE MONETARY BE NEFIT, SCHOLARSHIP, BOOKS ETC. TO POOR AND NEEDY STUDENTS; TO ARRANGE FREE MEDICAL TREATMENTS, MEDICAL CAMPS AND PROVIDE MEDICAL RELIEF TO POOR; TO PROVIDE FOOD FREE OF COST TO POO R PEOPLE AND TO CARRY ON SUCH PHILANTHROPIC ACTIVITIES FOR THE BENE FIT OF THE DOWNTRODDEN. 6. THE OBJECTS OF THE TRUST DEED ARE OF COURSE CHAR ITABLE IN NATURE. THE REASON POINTED OUT BY THE COMMISSIONER OF INCOME- TAX TO REJECT THE REGISTRATION IS THAT THE ASSESSEE HAS NOT SHOWN ANYTHING TO PROVE THAT IT HAD IN FACT CARRIED OUT A NY CHARITABLE ACTIVITY. WE ARE OF THE VIEW THAT THE FINDING OF T HE COMMISSIONER OF INCOME-TAX IS PREMATURE. THE TRUST DEED WAS EXE CUTED ON 14.11.2011 AND GOT REGISTERED ON 16.11.2011 WITH TH E JOINT SUB REGISTRAR. IMMEDIATELY AFTER TWO MONTHS, THE ASSES SEE HAS PUT IN AN APPLICATION FOR REGISTRATION IN FORM 10A ON 2.2. 2012. THE CASE ITA 1632 & 1633/12 :- 4 -: OF THE COMMISSIONER OF INCOME-TAX IS THAT THE ASSES SEE HAS NOT ACCOMPLISHED ITS OBJECTIVES WITHIN THE PERIOD OF TW O MONTHS. 7. THE CHARITY SHOULD COME AFTER SOME REASONABLE TI ME. WHAT WE GENERALLY CALL AS GESTATION PERIOD FOR ANY INSTI TUTION TO START FUNCTIONING, IS APPLICABLE TO A CHARITABLE INSTITUT ION AS WELL. A TRUST IS TO BE REGISTERED; THEREAFTER FUNDS HAVE TO BE CO LLECTED; THEREAFTER ACTIVITIES HAVE TO BE IDENTIFIED AND LIK E THERE ARE SO MANY STEPS TO BE FOLLOWED BEFORE FINALLY ACCOMPLISH ING THE OBJECTIVES OF A CHARITABLE TRUST. IT IS NOT POSSIB LE TO EXPECT THAT THE ASSESSEE TRUST SHOULD START CARRY ON ITS ACTIVITIES WITHIN THE PERIOD OF TWO MONTHS FROM THE DATE OF ITS REGISTRATION. A LL THESE ASPECTS OF FUTURE ACTIVITIES TO BE CARRIED ON BY THE ASSESS EE TRUST COULD WELL BE VERIFIED BY THE ASSESSING OFFICER AT THE TI ME OF ASSESSMENT. THE ASSESSING OFFICER SHOULD HAVE WAIT ED FOR SOMETIME TO VERIFY, WHETHER THE ASSESSEE HAS CARRIE D OUT CHARITABLE ACTIVITIES; WHETHER IT HAS VIOLATED ANY PROVISIONS OF LAW RELATING TO EXEMPTION PROVIDED UNDER SEC.11 ETC. T HE ASSESSING OFFICER MAY MAKE A REPORT TO THE COMMISSIONER OF IN COME-TAX THAT THE ASSESSEE HAS NOT CARRIED ON THE ACTIVITIES, SO THAT THE COMMISSIONER OF INCOME-TAX CAN CANCEL THE REGISTRAT ION ALREADY ITA 1632 & 1633/12 :- 5 -: GRANTED, OR ELSE THE ASSESSING OFFICER CAN DENY THE BENEFITS OF SEC.11. IN SPITE OF ALL THESE AVENUES OF REGULATION S, THE COMMISSIONER OF INCOME-TAX JUMPED INTO A PREMATURE CONCLUSION THAT THE ASSESSEE HAS NOT PROVED ANYTHING AND HE SU MMARILY REJECTED THE APPLICATION FILED BY THE ASSESSEE. WE FIND THAT HIS ORDER IS ARBITRARY AND IT CANNOT BE UPHELD. 8. AS WE HAVE ALREADY STATED, THE OBJECTIVES DECLAR ED BY THE ASSESSEE IN ITS TRUST DEED ARE CHARITABLE IN NATURE . THE ASSESSEE TRUST IS IN INFANCY. IT HAS TO START ITS ACTIVITIE S. THERE IS NO GROUND AT PRESENT TO SAY THAT THE ASSESSEE IS NOT GOING TO CARRY ON ITS OWN OBJECTIVES. THERE IS ALSO NO GROUND TO PRESUME THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF LAW. IN TH ESE CIRCUMSTANCES, WE FIND THAT THE ASSESSEE TRUST IS E NTITLED FOR REGISTRATION UNDER SEC.12AA. 9. THE COMMISSIONER OF INCOME-TAX IS, THEREFORE, DI RECTED TO GRANT REGISTRATION UNDER SEC.12AA TO THE ASSESSEE. THE ASSESSEE SHALL BE TREATED AS A RECOGNIZED CHARITABLE INSTITU TION SINCE THE DATE OF ITS INCEPTION. ITA 1632 & 1633/12 :- 6 -: 10. AS WE HAVE ALREADY GRANTED REGISTRATION UNDER S EC.12AA, THE COMMISSIONER OF INCOME-TAX WILL GRANT APPROVAL TO THE ASSESSEE UNDER SEC.80G AS WELL. 11. IN RESULT, THESE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDERS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON MONDAY, THE 4 TH OF FEBRUARY, 2013 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR.O.K.NAR AYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 4 TH FEBRUARY, 2013 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR