Aashray Maze Ghar, Jalgaon V. Commissioner of Income-tax, (Exemption), Pune

ITA 1641/PUN/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 4269 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-02-2021
• Assessment Year: misc
• Appeal Filed On: 25-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MRS DEEPA KHARE
• Keywords: Charitable institution; Opportunity of being heard; Question of law; Set aside
• Section: 12AA; 48; 13; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E (THROUGH VIRTUAL COURT) BEFORE SHRI WASEEM AHMED, AM AND SHRI S. S. VISWANETHRA RAVI, JM . / ITA NO.1641/PUN/2019 AASHRAY MAZE GHAR, ....... / APPELLANT C/O. AMIT SURESH PATHAK, PLOT NO.18, NAGESHWAR COLONY, JALGAON 425001, MAHARASHTRA. PAN : AAGTA3053M. / V/S. THE COMMISSIONER OF INCOME TAX, (EXEMPTION), PUNE. / RESPONDENT ASSESSEE BY : MRS. DEEPA KHARE. REVENUE BY : SHRI DEEPAK GARG. / DATE OF HEARING : 12.02.2021 / DATE OF PRONOUNCEMENT : 15.02.2021 / ORDER PER WASEEM AHMED, AM: IN THE INSTANT CASE, THE APPEAL WAS FILED BY THE ASSESSE E AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS), PUNE DATED 31.08.2019 REJECTING THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD.CIT ERRED IN LAW AND ON FACTS IN REJECTI NG THE REGISTRATION U/S 12AA(1)(B)(II) TO THE APPELLANT TRUST WITHOUT GIVIN G ANY OPPORTUNITY OF BEING HEARD. 2 2. THE LD.CIT ERRED IN LAW AND ON FACTS IN HOLDING THAT GENUINENESS OF ACTIVITIES IS NOT ESTABLISHED. 3. THE ASSESSEE, A TRUST REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT, 1950, ESTABLISHED ON 10-03-2016 BEARING NO. F-18232/JALG AON, FILED AN ONLINE APPLICATION FOR REGISTRATION UNDER SECTION 12AA(1)(B)(II) O F THE ACT ON 12-02-2019 WITH THE LD. CIT (EXEMPTIONS). THE LD. CIT (EXEMP TIONS) ISSUED A LETTER TO THE ASSESSEE CALLING FOR CERTAIN QUERIES REGARDIN G ITS APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE LETTER DA TED 06-03-2019 WHICH WAS NOT COMPLIED IN FULL BY THE ASSESSEE. PRECISELY, THE NEC ESSARY DETAILS WERE NOT FURNISHED BY THE ASSESSEE AS GIVEN HERE UNDER: POINT NO. 15: YOUR DEED / MEMORANDUM OF ASSOCIATION DOES NOT HAVE A CLAUSE THAT THE BENEFICIAR I ES ARE A SECT I ON OF THE PUBLIC AND NOT S P ECIFIC I NDIVIDUAL S . PLEASE I NCLUDE TH I S CLAUSE I N YOUR TRUST DEED / MEMORANDUM OF ASSOCIATION AND FILE A CERTIF IED COPY OF THE AMENDED TRUST DEED / MEMORANDUM OF ASSOCIATION . POINT NO. 16 : Y OUR T R UST DE E D / M E MORANDU M OF ASSOC I ATION DOES NOT HAVE ANY CLAUSE PROV I DING THAT IN THE EVENT OF DISSOLUTION OF TRUST / SOCIETY / NON PROFIT COMPANY, THE FUNDS/ASSETS OF THE TRUST / SOCIETY / NON PROFIT COMPANY WILL BE TRANSFERRED ONLY TO SOME OTHER TRUST / SOC I ETY / NON PROFI T COMPANY HAV I NG S I MILAR OBJE CTIVES . PL E ASE INCLUDE THIS CLAUSE IN YOUR TRUST D E ED / MEMORANDUM OF ASSOCIATION AND FILE A CERTIFIED COPY OF THE AME NDED TRUST D E ED / MEMO R ANDUM OF ASSOC I ATION . 4. IN VIEW OF THE ABOVE, THE LD. CIT (EXEMPTION) REJECTED T HE APPLICATION MOVED BY THE ASSESSEE FOR REGISTRATION UNDER SECTION 12 AA OF THE ACT BY OBSERVING THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT CHARITABLE. 5. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT (EXEMPTIONS ), THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED AR BEFORE US FILED A PAPER BOOK RUNNING FRO M PAGES 1 TO 97 AND SUBMITTED THAT THE BENEFICIARIES OF THE TRUST ARE A S ECTION OF THE PUBLIC AND NOT THE SPECIFIC INDIVIDUALS AS ALLEGED BY THE LD. CIT (EX EMPTIONS). THE LEARNED AR IN SUPPORT OF HER CONTENTION DREW OUR ATTENT ION ON THE BACK SIDE 3 OF PAGE 11 OF THE PAPER BOOK WHERE CLAUSE 18 OF THE TRU ST WAS EXHIBITING THE BENEFICIARIES. HOWEVER, THE LEARNED AR AT THE TIME OF HEARIN G FAIRLY AGREED THAT THE ASSESSEE IN THE LETTER DATED 03.04.2019 TO THE LD. CIT (EXEMPTIONS) HAS WRONGLY MENTIONED CLAUSE 2 OF THE MEMORANDUM OF ASS OCIATION SHOWING THE BENEFICIARIES. AS SUCH, BENEFICIARIES ARE APPEARING IN CLAUS E 18 OF THE TRUST DEED WHEREIN IT WAS CLEARLY MENTIONED THAT THE FUN DS AND THE PROPERTIES OF THE TRUST SHALL BE USED TOWARDS THE FULFILLMENT OF THE OB JECTS OF THE TRUST. AS PER THE LEARNED AR IT WAS THE TYPOGRAPHICAL ERROR WHICH SHOULD HAVE BEEN IGNORED AND THE ENTIRE TRUST DEED SHOULD HAVE BEEN CON SIDERED BY THE LD. CIT (EXEMPTIONS) WHILE SEEING THE APPLICATION FOR REGISTRATION UND ER SECTION 12 AA OF THE ACT. 7. THE LEARNED AR FURTHER CONTENDED THAT IN THE EVENT OF WINDING UP OF THE ACTIVITIES OF THE TRUST, THE PROPERTIES OF THE TRUST CAN B E DONATED TO OTHER TRUST AS PER CLAUSE 26 OF THE MEMORANDUM OF ASSOCIATION. THE LEA RNED AR IN SUPPORT OF HER CONTENTION DREW OUR ATTENTION ON THE BA CK SIDE OF PAGE 12 OF THE PAPER BOOK WHERE CLAUSE 26 WAS CONTAINING SUCH INFOR MATION. HOWEVER, THE LEARNED AR AT THE TIME OF HEARING FURTHER FAIRLY AGREED THAT THE ASSESSEE IN THE LETTER DATED 03.04.2019 TO THE LD. CIT (EXEMPTIONS) HA S WRONGLY MENTIONED CLAUSE 2 OF THE TRUST DEED SHOWING THE WINDING UP CLAUSE. AS SUCH, WINDING UP CLAUSE IS APPEARING IN CLAUSE 26 OF THE TR UST DEED WHEREIN IT WAS CLEARLY MENTIONED THAT THE PROPERTIES OF THE TRUST CAN BE DONATED TO OTHER TRUST IN PURSUANCE TO THE PROCEDURE FOR WINDING UP AS P ER SECTIONS 13 AND 14 OF THE SOCIETIES REGISTRATION ACT, 1860. AS PER THE LEARNE D AR, IT WAS THE TYPOGRAPHICAL ERROR WHICH SHOULD HAVE BEEN IGNORED AND T HE ENTIRE TRUST DEED SHOULD HAVE BEEN CONSIDERED BY THE LD. CIT (EXEMPTIONS) W HILE SEEING THE APPLICATION FOR REGISTRATION UNDER SECTION 12 AA OF THE ACT. 8. THE LEARNED AR WITHOUT PREJUDICE TO THE ABOVE ALSO C ONTENDED THAT THE LD. CIT (EXEMPTIONS) CANNOT REJECT THE APPLICATION IN THE A BSENCE OF WINDING 4 UP CLAUSE IN THE DEED OF TRUST AS THERE IS NO SUCH REQU IREMENT UNDER THE PROVISIONS OF SECTION 12AA OF THE ACT. THE LEARNED AR IN S UPPORT OF HER CONTENTION RELIED ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT (EXEMPTIONS) VS. SETCO FOUNDATION IN INCOME TAX APP EAL NO. 926 OF 2016 DATED 21.01.2019. 9. THE LEARNED AR FURTHER BROUGHT TO OUR NOTICE THAT T HE NECESSARY CHANGES AS SUGGESTED BY THE LD. CIT (EXEMPTIONS), THOUGH NOT REQUIRED, HAVE BEEN MADE IN THE TRUST DEED AND ACCORDINGLY, FILED THE CH ANGED MEMORANDUM WHICH ARE PLACED ON PAGES 48 TO 89 OF THE PAPER BOOK. 10. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT THE ASSESSEE IN ITS LETTER DATED 03.04.2019 TO THE LD. CIT (EXEMPTIONS) HAS M ENTIONED THAT THAT THE ASSESSEE IS THE EDUCATIONAL AND CHARITABLE TRUST AND RUNNING PRIMARY, HIGH SCHOOL AND COLLEGE WHEREAS THE ASSESSEE IN THE SUBM ISSION TO THE TRIBUNAL VIDE LETTER DATED 12.02.2020 HAS SUBMITTED THAT IT IS PROVIDING EDUCATION TO THE CHILDREN WHO ARE NOT INTELLECTUALLY CAPAB LE AND MENTALLY HANDICAPPED. ACCORDINGLY, THE LEARNED AR SUBMITTED THAT THERE IS A MISMATCH IN THE SUBMISSION OF THE ASSESSEE BEFORE THE ITA T VIS-A-VIS BEFORE THE LEARNED LD. CIT (EXEMPTIONS). THEREFORE, THE SAME REQU IRES VERIFICATION BY THE LEARNED CIT (EXEMPTIONS). ACCORDINGLY, THE LEARNED AR PLEADED BEFORE US TO RESTORE THE MATTER TO THE LD. CIT (EXEMPTIONS) FOR THE VERIFICATION . 11. THE LEARNED DR ALSO SUBMITTED THAT THE ASSESSEE HA S FILED THE AMENDED MEMORANDUM OF ASSOCIATION OF THE SOCIETY AFTER MAKING TH E NECESSARY CHANGES WHICH REQUIRES TO BE EXAMINED BY THE LD. CIT (EXE MPTIONS). ACCORDINGLY, IT WAS PRAYED BY THE LEARNED DR TO SET ASID E THE ISSUE TO THE FILE OF THE LD. CIT (EXEMPTIONS). 12. THE LEARNED AR IN HER REJOINDER SUBMITTED THAT ALL TH E NECESSARY DETAILS ARE ALREADY APPEARING IN THE TRUST DEED AND THEREFORE, T HE SAME SHOULD NOT BE 5 SET ASIDE TO THE FILE OF LD. CIT (EXEMPTIONS). HOWEVER, IN THE EVENT, THE BENCH SET ASIDES THE ISSUE TO THE FILE OF THE LD. CIT (EXEMPTIONS) THEN SOME DIRECTION FOR COMPLETING THE FORMALITIES WITHIN THE SPECIFIED TIME CAN BE GIVEN TO THE LD. CIT (EXEMPTIONS). 13. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PE RUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE PRECEDING DISCUSSION , WE FIND THAT THE LD. CIT (EXEMPTIONS) HAD NOT DOUBTED ON THE OBJECTS OF TH E SOCIETY WHETHER THE SOCIETY WAS FORMED TO UNDERTAKE CHARITABLE ACTIVITIES OR NOT. 14. MOVING FURTHER, WE NOTE THAT THE LD.CIT (EXEMPTIONS) H AS REJECTED THE APPLICATION UNDER SECTION 12AA OF THE ACT DUE TO TWO REA SONS. FIRSTLY, THERE WAS NO CLAUSE IN THE TRUST DEED / MEMORANDUM OF ASSOCIA TION THAT THE BENEFICIARIES ARE THE CLASS / SECTION OF PUBLIC AND NOT THE SPECIFIC INDIVIDUALS. SECONDLY, THERE WAS NO SPECIFIC CLAUSE IN THE TRUST DEED /MEMORANDUM OF ASSOCIATION THAT THE PROPERTIES OF THE TRUST SHALL BE TRA NSFERRED TO ANOTHER TRUST HAVING SIMILAR OBJECTIVES IN THE EVENT OF WINDING UP OF ITS ACTIVITIES . 15. REGARDING THE SPECIFIC CLAUSE OF THE BENEFICIARIES IN THE TRUST DEED / MEMORANDUM OF ASSOCIATION, WE FIND IMPORTANT TO REFER THE OBJECTS OF THE TRUST AS MENTIONED IN CLAUSE 18 WHICH READS AS UNDER: 18. FUND PROPERTY OF THE TRUST: THE FUND OF TRUST CAN BE RAISED BY ACCEPTING AND COLLECTING GOVERNMENT AND SEMI GOVERN MENT GRANTS. THE FUNDS AND PROPERTIES OF TRUST SHALL BE USED TOWARDS FULFILLMENT OF OBJECT OF TRUST. 16. ON PERUSAL OF THE OBJECTS OF THE TRUST, IT IS TRANSP IRED THAT THE ACTIVITIES OF THE TRUST ARE FOR THE PURPOSE OF THE EDUCATION WHICH COMES WITHIN THE DEFINITION OF CHARITABLE ACTIVITY AS PROVIDED UNDER SECTION 2 (15) OF THE ACT. FURTHERMORE, THE ACTIVITIES /OBJECTS OF THE SOCIETY HAVE NOWHERE BEEN DOUBTED BY THE LD. CIT (EXEMPTIONS) WHICH ARE APPEARING IN CLAUSE 3 OF THE TRUST DEED. 6 THUS, FROM THE CUMULATIVE READING OF THE OBJECTS OF THE T RUST AND FUND PROPERTY OF THE TRUST AS APPEARING IN CLAUSES 3 AND 18 OF THE TRUST DEED, IT IS TRANSPIRED THAT THE BENEFICIARIES ARE NOT THE SPECIFIC INDIVID UALS RATHER THAN THE BENEFICIARIES REPRESENT A SECTION OF PEOPLE. 17. WE ALSO FIND THAT THERE WAS SPECIFIC CLAUSE IN THE MEMO RANDUM OF ASSOCIATION SPECIFYING THAT IN THE EVENT OF WINDING UP OF TH E ACTIVITIES OF THE TRUST, THE PROPERTIES HELD BY THE TRUST SHALL BE TRANSFER RED TO OTHER TRUST HAVING SIMILAR OBJECTS. THE RELEVANT CLAUSE 26 OF THE TRUS T DEED READS AS UNDER: 26. WINDING UP: RESOLUTION BY 3/5 TH MAJORITY IN ANNUAL GENERAL MEETING SHALL BE NECESSARY FOR WINDING OF WORK OF T RUST. THE PROPERTY OF TRUST CAN BE DONATED TO OTHER TRUST. IT IS NECE SSARY TO COMPLY WITH THE PROCEDURE FOR WINDING UP AS PER SECTION 13 AND 14 OF SOCIETY REGISTRATION ACT, 1860. 18. THUS, WHAT IS TRANSPIRED THAT NECESSARY CLAUSES ARE VERY MUCH APPEARING IN THE MEMORANDUM OF ASSOCIATION AS HIGHLIGHTED B Y THE LD. CIT (EXEMPTIONS) IN HIS ORDER. THUS, IT CAN BE INFERRED THAT ALL THE COMPLIANCES AS REQUIRED BY THE LD. CIT (EXEMPTIONS) HAVE BEEN DULY C OMPLIED BY THE ASSESSEE. 19. A QUESTION/ASPECT ALSO ARISES WHETHER THE LD. CIT (E XEMPTIONS) HAS VERIFIED THE CLAUSES AS DISCUSSED ABOVE. FROM THE FINDING OF THE LD. CIT (EXEMPTIONS), IT IS TRANSPIRED THAT HE HAS NOT VERIFIED THE ABOVE CLAUSES. HOWEVER, WE FIND THAT THE ASSESSEE HAS MADE THE REPLY TO THE QUERIES REFERRED BY THE LD. CIT (EXEMPTIONS) VIDE LETTER DATED 03.04.2019 WH ICH IS PLACED ON RECORD. IT IS ALSO IMPORTANT TO NOTE THAT THE LD. CIT (EXE MPTIONS) IN HIS ORDER HAS ALSO MADE REFERENCE TO SUCH LETTER OF THE ASSESSEE DATED 03.04.2019 WHICH CAN BE VERIFIED FROM THE ORDER OF THE LD. CIT (EXEMPTI ONS). FOR BETTER UNDERSTANDING, THE SAME IS REPRODUCED AS UNDER: 7 5.2 IN R E SPONSE TO T HE ABOVE , THE APPL I CANT HAS NOT UPLOADED A N Y COPY O F CHANGE REPORT OF THE AMENDED TRUST DEED / MOA W I TH A PROOF OF SUBMISSION OF THE SAME TO THE CHARITY COMMISSION E R TILL DATE . HOWEVER , AS PER L E TT E R DATED 03/04/2019 FROM TH E ASS E SSE E , TH E LA T TE R WRONGL Y STATED THAT THE IR R EVOCA B LE , B ENE F I CIARY AND DISSOL U TION C L AUSE AR E P RE S E NT IN CLAUSE 2 OF THE MOA . 20. THUS, IT CANNOT BE SAID THAT THE ASSESSEE FAILED TO FU RNISH THE DETAILS AS DESIRED BY THE ASSESSEE DURING THE PROCEEDINGS BEFORE H IM. ACCORDINGLY, WE ARE OF THE VIEW THAT INACTION BY THE REVENUE ON THE DET AILS FURNISHED BY THE ASSESSEE SHOULD NOT CAUSE ANY PREJUDICE TO THE ASSESSEE. 21. IN ADDITION TO THE ABOVE, WE ALSO NOTE THAT THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT (EXEMPTIONS) VS. SETCO FOUNDAT ION (SUPRA) HAS HELD THAT IT IS NOT NECESSARY TO HAVE THE WINDING UP CLAUSE IN THE TRUST DEED. THE RELEVANT EXTRACT OF THE ORDER READS AS UNDER : 4 . THE IMPUGNED ORDER OF THE TRIBUNAL ALLOWED THE RE SPONDENT'S ASSESSEE'S APPEAL BY INTERALIA HOLDING THAT THE ABSENCE OF DIS SOLUTION CLAUSE IN THE TRUST DEED WOULD NOT BAR THE REGISTRATION OF THE TRUST UN DER SECTION 12AA OF THE ACT. THE ISSUE TO BE CONSIDERED FOR REGISTRATION IS THE OBJECT OF THE TRUST AND GENUINENESS OF ITS ACTIVITIES. THE IMPUGNED ORDER A LSO MAKES REFERENCE TO SECTION 55 OF THE BOMBAY PUBLIC TRUST ACT 1950 WHIC H PROVIDES FOR THE CONTINGENCY OF ABSENCE OF DISSOLUTION CLAUSE IN THE TRUST DEED. 5. MR . KOTANGALE, THE LEARNED COUNSEL FOR THE REVENUE VERY FAIRLY STATES THAT THE IDENTICAL ISSUE HAD ARISEN BEFORE THIS COURT IN INC OME TAX APPEAL NO. 247 OF 2015 (CIT 2 OF 3 8. OS ITXA 926-16.DOC [EXEMPTIONS]) VS. TARA EDUCAT IONAL 8 CHARITABLE TRUST. THE SAID APPEAL WAS DISMISSED AS NOT GIVING RISE TO ANY SUBSTANTIAL QUESTION OF LAW. 6. IN THE ABOVE VIEW, FOR THE REASONS INDICATED IN OUR ORDER IN TARA EDUCATIONAL & CHARITABLE TRUST (SUPRA), THE PROPOSED QUESTION DOE S NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW . THUS, NOT ENTERTAINED. THE APPEAL IS DISMISSED. 22. IN VIEW OF THE ABOVE, WE FIND THAT THE FINDING OF THE LD. C IT (EXEMPTIONS) IS CONTRARY TO THE FACTS AVAILABLE ON RECORD. ACCORDINGLY, IT IS INFERRED THAT THE ASSESSEE HAS COMPLIED THE CONDITIONS IMPOSED UNDER THE PROVISIONS OF SECTION 12AA OF THE ACT FOR GRANTING THE REGISTRATION. ACCORDINGLY , IN VIEW OF THE ABOVE AND AFTER CONSIDERING THE FACTS IN TOTALITY, WE SET ASIDE TH E ISSUE TO THE FILE OF THE LD. CIT (EXEMPTIONS) WITH THE DIRECTION TO GRANT REGIS TRATION TO THE 8 ASSESSEE UNDER SECTION 12AA OF THE ACT AS PER THE PRO VISIONS OF LAW. HENCE, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED FOR THE STATISTICAL P URPOSES. 23. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWE D FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS THE 15 TH DAY OF FEBRUARY, 2021. SD/- SD/- (S. S. VISWANETHRA RAVI) (WASEEM AHMED) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 15 TH FEBRUARY, 2021. DRAGON / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(EXEMPTIONS), PUNE. 4. THE ADDL/JCIT, EXEMPTION RANGE, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. ! / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.