Shree Sagar Subhechhak Khata Jain Waga, Baroda V. The CIT-I, Baroda

ITA 1649/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0967 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-07-2016
• Assessment Year: misc
• Appeal Filed On: 30-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA.NO.1649/AHD/2012 SHREE SAGAR SUBHECHHAK KHATA JAIN WAGA, WADI SHERI NR. PANDYA SHERI DABHOI 391 110, DIST: BARODA. VS CIT - I, BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI SAMIR PARIKH, AR REVENUE BY : SHRI JAGDISH , CIT - DR / DATE OF HEARING : 25/07/2016 / DATE OF PRONOUNCEMENT: 01/08/2016 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST T HE ORDER OF THE LD.COMMISISONER OF INCOME-TAX-I, BARODA DATED 26.6. 2012 PASSED UNDER SECTION 12AA(1)(B) OF THE INCOME TAX ACT, 196 1. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THELD .CIT HAS ERRED IN REJECTING THE APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATION UNDER SECTION 12A(A) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D FILED AN APPLICATION FOR REGISTRATION UNDER SECTION 12A(A) OF THE ACT ON 27.12.2011. IT WAS ITA.NO.1649/AHD/2012 2 STATED THAT THE ASSESSEE-TRUST HAS BEEN CREATED ON 24.3.20153. IT WAS REGISTERED WITH BOMBAY CHARITY COMMISSIONER. IN OR DER TO GIVE A LOGICAL END TO THE PROCEEDINGS, THE LD.COMMISSIONER HAS CALLED FOR VARIOUS INFORMATION VIDE LETTER DATED 7.2.2012. TH E ASSESSEE HAS FILED DETAILS. THE LD.COMMISSIONER, THEREAFTER, CALLED F OR TO CLARIFY THE APPLICATION OF ITS INCOME ON THE OBJECTS OF THE TRU ST. AFTER ANALYSIS THE INCOME APPLICATION OF THE TRUST, THE LD.COMMISSIONE R HAS OBSERVED THAT THE ASSESSEE DID NOT APPLY ITS INCOME FOR ITS OBJEC TS, AND THEREFORE, DOES NOT ENTITLE FOR REGISTRATION UNDER SECTION 12A(A) O F THE ACT. WHILE IMPUGNING THE ORDER OF THE LD.CIT, IT WAS CONTENDED BY THE LD.COUNSEL FOR THE ASSESSEE THAT THOUGH THE ASSESSEE HAS INCUR RED EXPENDITURE ON THE OBJECTS OF THE TRUST, BUT SUCH EXPENDITURE HAVE BEE N SHOWN UNDER THE HEAD ESTABLISHMENT EXPENSES. HE TOOK US THROUGH PAGE NO.36 OF THE PAPER BOOK AND POINTED OUT TO SCHEDULE-A, WHICH CON TAINED DETAILS OF THE EXPENDITURE. HE SUBMITTED THAT THE ASSESSEE HA D INCURRED EXPENDITURE OF RS.2,890/- OF LADU PRABHAVNA EXPENSES. HE ALSO APPRISED THAT THERE ARE POOJA EXPENSES. THESE ARE FOR THE OBJECTS OF THE TRUST, BECAUSE, THE ASSESSEE IS CHARITABLE RELIGIOU S TRUST. ON THE STRENGTH OF THE HONBLE PUNJAB & HARYANA HIGH COURTS DECISI ON IN THE CASE OF CIT VS. SURYA EDUCATIONAL & CHARITABLE TRUST, 15 TA XMANN.COM 123, HE CONTENDED THAT APPLICATION OF INCOME OF A TRUST FOR CHARITABLE OR RELIGIOUS PURPOSE SHOULD ONLY BE SEEN AT THE TIME O F DETERMINATION OF TAXABLE INCOME. AT THE STAGE OF GRANT OF REGISTRAT ION, ONLY OBJECTS, AND THEIR GENUINENESS IS TO BE SEEN. THE LD.DR, ON THE OTHER HAND, CONTENDED THAT IN ORDER TO FIND GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE, THE LD.CIT HAS VERIFIED WHETHER THE ASSESSEE HAS INCURR ED ANY EXPENDITURE FOR ITS OBJECTS. IF IT FAILS TO INCUR THE EXPENDIT URE TOWARDS FULFILLMENT OF ITA.NO.1649/AHD/2012 3 ITS OBJECTS, THAT WILL CAST A SHADOW ON THE EXISTEN CE OF THE GENUINENESS OF ITS ACTIVITIES. NOT ONLY THIS YEAR, IN THE LAST TW O YEARS ALSO, ASSESSEE FAILED TO INCUR ANY EXPENDITURE FOR THE OBJECTS OF THE TRUST. 4. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. SECTION 12A PROVIDES MECHANISM F OR CONDUCTING INQUIRY AT THE END OF THE LD.COMMISSIONER BEFORE GR ANT OF REGISTRATION TO A CHARITABLE TRUST/INSTITUTION UNDER SECTION 12A OF THE INCOME TAX. THE RELEVANT PART OF THIS SECTION READS AS UNDER: 12AA. (1) THE PRINCIPAL COMMISSIONER OR COMMISSION ER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRU ST OR INSTITUTION MADE UNDER CLAUSE (A) [OR CLAUSE (AA) OF SUB-SECTI ON (1)] OF SECTION 12A, SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTI TUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THI S BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF T HE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDE R IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLI CANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNI TY OF BEING HEARD. [(1A) ALL APPLICATIONS, PENDING BEFORE THE [PRINCI PAL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER ON WHICH NO ORD ER HAS BEEN PASSED UNDER CLAUSE (B) OF SUB-SECTION (1) BEF ORE THE 1ST DAY OF JUNE, 1999, SHALL STAND TRANSFERRED ON THAT DAY TO THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER AND THE [ PRINCIPAL COMMISSIONER OR] COMMISSIONER MAY PROCEED WITH SUCH ITA.NO.1649/AHD/2012 4 APPLICATIONS UNDER THAT SUB-SECTION FROM THE STAGE AT WHICH THEY WERE ON THAT DAY.] (2) EVERY ORDER GRANTING OR REFUSING REGISTRATION U NDER CLAUSE (B) OF SUB-SECTION (1) SHALL BE PASSED BEFORE THE EXPIR Y OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION WAS RECEIVED UNDER CLAUSE (A) 4[OR CLAUSE (AA) OF SUB-SECTION (1 )] OF SECTION 12A.] 5. WHEN WE ASKED THE LD.COUNSEL FOR THE ASSESSEE TO SHOW US THE OBJECTS OF THE TRUST, THEN, THE LD.COUNSEL FOR THE ASSESSEE STATED THAT TRUST AS SUCH HAS NO WRITTEN DEED OR MOU. IN OTHER WORDS , THERE IS NO DOCUMENTARY EVIDENCE WITH THE ASSESSEE TO EXHIBIT I TS OBJECTS. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE IT WAS AN OLD TRUST, WHICH IS MANAGING A JAIN TEMPLE. IT WAS REGISTERED UNDER BOMBAY PUBLIC TRU ST ACT IN THE YEAR 1953 UNDER REGISTRATION NO.A/604/BA RODA. HE HAS SHOWN PHOTO-COPY OF SUCH REGISTRATION AND ALSO SHOW N PHOTO-COPY OF LEDGER WHERE IT IS ALLEGED THAT NAME OF THE ASSESSE E IS APPEARING. 6. A BARE PERUSAL OF THE SECTION 12AA WOULD INDICAT E THAT LD.COMMISSIONER WOULD CALL FOR DOCUMENTS, INFORMATI ON FROM THE TRUST, AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST. WE HAVE OUR DOUBTS ABO UT THE ALLEGED REGISTRATION CERTIFICATE OF THE ASSESSEE UNDER BOMB AY PUBLIC TRUST ACT, 1950. THESE ARE PHOTO-STATE COPIES OF MUTILATED PA GES OF ALLEGED REGISTRATION CERTIFICATE AND OF REGISTER WHERE THES E REGISTRATION ENTRIES WERE MADE. THE ONLY INFORMATION CONSIDERED BY THE L D.COMMISSIONER WHILE REJECTING THE APPLICATION OF THE ASSESSEE IS THE APPLICATION OF INCOME ON THE OBJECTS OF THE TRUST. BUT, FIRSTLY I T IS TO BE DETERMINED WHAT ARE THE OBJECTS OF THE ASSESSEE. THERE IS NO MATERIAL ON RECORD ITA.NO.1649/AHD/2012 5 EXHIBITING THE OBJECTS EXCEPT ORAL SUBMISSION OF TH E ASSESSEE AS A RELIGIOUS CHARITABLE TRUST. TEST FOR VERIFYING THE GENUINENESS OF THE ASSESSEE WITH THE HELP OF APPLICATION OF INCOME TOW ARDS ITS OBJECTS CAN BE ONE OF THE CORROBORATIVE TESTS AMONGST OTHER. I T IS NOT SUFFICIENT FOR GIVING A FINDING ABOUT THE NATURE/GENUINENESS OF OB JECTS. TO OUR MIND, COMPLETE MATERIAL IS NOT AVAILABLE ON RECORD, WHICH CAN DEMONSTRATE THAT ASSESSEE IS EXISTING AS RELIGIOUS CHARITABLE INSTIT UTION. WE ARE OF THE VIEW THAT A FURTHER INQUIRY IS REQUIRED IN THIS CAS E. THEREFORE, WE SET ASIDE THE ORDER OF THE LD.COMMISSIONER AND RESTORE THIS ISSUE TO THE FILE OF THE LD.CIT FOR RE-ADJUDICATION. THE ASSESSEE IS DIRECTED TO SUPPLY FURTHER MATERIAL FOR BUTTRESSING ITS CASE THAT IT I S A CHARITABLE RELIGIOUS INSTITUTION. WE ALLOW THE APPEAL OF THE ASSESSEE FO R STATISTICAL PURPOSE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 1 ST AUGUST, 2016 AT AHMEDABAD. SD/- SD/- ( ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/08/2016