M/S PEOPLES WELFARE TRUST, JAMMU AND KASHMIR V. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH

ITA 168/ASR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4972 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-05-2019
• Assessment Year: 2018-2019
• Appeal Filed On: 27-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: PADAM BAHL
• Keywords: Revenue expenditure; Capital expenditure; Set aside
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N. S. SAINI, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER ITA NO. 168/ASR./2018 : ASSTT. YEAR : 2018-19 M/S PEOPLES WELFARE TRUST, DARUL HUDA COMPLEX, OPPOSITE DISTT. HOSPITAL, PULWAMA, JAMMU & KASHMIR-192301 VS COMMISSIONER OF INCOME TAX(EXEMPTIONS), CHANDIGARH (APPELLANT) (RESPONDENT) PAN NO. AADTP3456E ASSESSEE BY : SH. PADAM BAHL, CA REVENUE BY : SM T. PARWINDER KAUR, DR DATE OF HEARING : 15 .05 .201 9 DATE OF PRONOUNCE MENT : 20 .05 .201 9 ORDER PER N. S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(EXEMPTIONS), CHANDIGA RH DATED 29.01.2018. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT THE COMMISSIONER OF INCOME TAX (EXEMPTION), CHANDIGARH HAS GROSSLY ERRED IN REJECTING THE APPLICATION FOR REGISTRATION FILED BY THE ASSESSEE U/S 12A OF THE INCOME TAX ACT, 1961. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION) CHANDIGARH HAS REJECTED THE APPLICATION ON THE GROUND THAT PARA (V)(E) OF THE TRUST DEED PROVIDED THAT IN THE EVENT OF DISSOLUTIO N OF THE TRUST, THE TRUST PROPERTY SHALL BE DONATED T O A REPUTED DEENI PARTY (RELIGIOUS GROUP) IGNORING THE FACT THAT THIS CLAUSE HAD BEEN RECTIFIED BY ITA NO. 168/ ASR./2018 PEOPLES WELFARE TRUST 2 SUPPLEMENTARY DEED DATED 22.01.2018 DULY REGISTERED & FILED BEFORE HIM. 3. THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION), CHANDIGARH HAS ALSO HELD THAT SINCE NO EXPENDITURE WAS INCURRED ON THE AIMS AND THE OBJECT OF TRUST, THE GENUINENESS OF THE ACTIVITY IF THE TRUST COULD NOT BE ASCERTAINED. THE TRUST HAS INCURRED A CAPITAL EXPENDITURE OF RS. 83,39,127/- O N PURCHASE OF MACHINERY TILL 13 TH JANUARY, 2018, IN ADDITION TO THE REVENUE EXPENDITURE OF RS. 258,463.72. THE RELEVANT LEDGERS ALONGWITH THE BILL S WERE DULY PRODUCED BEFORE AND VERIFIED BY LD. ITO EXEMPTIONS JAMMU. 4. THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION), CHANDIGARH HAS ALSO HELD THAT THE QUERIES REGARDING CORPUS DONATIONS AND ADVANCE FOR MACHINERY REMAINED UNANSWERED. IN RESPECT OF CORPUS DONATIONS, THE ASSESSEE HAS RECEIVED WRITTEN DIRECTIONS FROM DONORS THAT THE SAME BE TREATED AS CORPUS DONATIONS TO BE UTILIZED FOR THE PURCHASE OF MACHINERY FOR THE POLYCLINIC. THE ORIGINAL WRITTEN DIRECTIONS DULY SIGNED BY THE DONORS WERE PRODUCED BEFORE THE LD. ITO EXEMPTIONS JAMMU. FURTHER THE LEDGERS OF PARTIES TO WHOM ADVANCE HAS BEEN PAID ALONG WITH THE BILLS IN ORIGINAL WERE ALSO PRODUCED BEFORE LD. ITO EXEMPTIONS JAMMU. 5. THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (EXEMPTION), CHANDIGARH DENYING THE REGISTRATION U/S 12A MAY KINDLY BE SET-ASIDE. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D APPLICATION IN FORM NO. 10A ON 05.07.2017 SEEKING R EGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961. 4. THE COMMISSIONER OF INCOME TAX(EXEMPTIONS) OBSER VED THAT A REPORT WAS CALLED FROM THE JURISDICTIONAL AS SESSING OFFICER REGARDING THE GENUINENESS OF THE APPLICANT TRUST AND ITS ACTIVITIES. THE ASSESSEE WAS ALLOWED OPPORTUNITY TO PRODUCE ITA NO. 168/ ASR./2018 PEOPLES WELFARE TRUST 3 THE ORIGINAL COPY OF TRUST DEED TO THE ITO(EXEMPTIO NS), JAMMU FOR CONVENIENCE. AS PER THE REPORT RECEIVED FROM IT O(E), JAMMU, THE DATE OF INCORPORATION OF THE TRUST WAS N OT MENTIONED IN THE ORIGINAL RETURN DEED. HE FURTHER O BSERVED THAT FROM THE PHOTOCOPY OF THE TRUST DEED FILED WIT H HIM, IT IS OBSERVED THAT DATE OF INCORPORATION WAS ENDORSED BY PEN IN HANDWRITTEN FORM. HE ALSO NOTED THAT THE DISSOLUTIO N CLAUSE OF THE APPLICANT TRUST WAS RESTRICTIVE IN NATURE. HE O BSERVED THAT PARA (V)(C) OF THE TRUST DEED PROVIDES THAT IN THE EVENT OF DEFUNCTION OF THE TRUST, THE TRUST PROPERTY WITH AL L ITS ESTABLISHMENTS SHALL BE DONATED TO A REPUTED RELIGI OUS GROUP WORKING IN THE J&K STATE. HE FURTHER OBSERVED THAT THE ASSESSEE CONCEDED THAT THE TRUST HAD NOT STARTED IT S ACTIVITY BUT WAS IN THE PROCESS OF ESTABLISHING POLY-CLINIC. HE OBSERVED THAT THE APPLICANT TRUST SUPPLIED A COPY OF SUPPLEM ENTARY TRUST DEED DATED 22.01.2018 AMENDING THE DISSOLUTION CLAU SE. THE SUPPLEMENTARY TRUST DEED IS NOT REGISTERED FROM THE OFFICE OF REGISTRAR OF TRUST. THE APPLICANT TRUST DID NOT SUB MIT ANY EVIDENCE IN SUPPORT OF THE PERMISSIONS GRANTED FOR OPENING A POLY-CLINIC. THE QUERY REGARDING CORPUS DONATION AN D TRANSACTIONS IN RESPECT OF ADVANCE FOR MACHINERY RE MAINED UN- REPLIED. HE FURTHER OBSERVED THAT THE HEADS OF EXPE NSES AS SHOWN IN THE INCOME AND EXPENDITURE ACCOUNT FOR THE PERIOD 04.04.2017 TO 31.07.2017 INCLUDE ONLY LEGAL EXPENSE S, BANK CHARGES AND TRAVELLING & CONVEYANCE. NO EXPENDITURE SUPPORTING THE AIMS & OBJECTS OF THE APPLICANT TRUS T AS CLAIMED. THEREFORE, HE REJECTED THE APPLICATION FOR REGISTRATION FILED BY THE ASSESSEE. ITA NO. 168/ ASR./2018 PEOPLES WELFARE TRUST 4 5. BEFORE US, THE ARGUMENT OF THE AUTHORIZED REPRES ENTATIVE OF THE ASSESSEE IS THAT THE UNREGISTERED RECTIFICAT ION DEED DATED 22.01.2018 FILED WITH THE COMMISSIONER OF INC OME TAX(EXEMPTIONS) STANDS REGISTERED WITH SUB-REGISTRA R ON 22.02.2018 I.E. AFTER THE ORDER OF COMMISSIONER OF INCOME TAX. THE CORPUS DONATION LETTERS FILED WITH THE ASSESSIN G OFFICER AND COMMISSIONER OF INCOME TAX DURING THE PROCEEDINGS. ADVANCE FOR MACHINERY DETAILS WERE FILED WITH THE ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX DURING PROCEEDINGS. BANK STATEMENTS WERE FILED WITH THE ASSESSING OFFICER AN D COMMISSIONER OF INCOME TAX. PERMISSION FOR POLYCLIN IC HAS BEEN GRANTED NOW. 6. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE , IT WAS PRAYED THAT THE MATTER SHOULD BE RESTORE BACK TO TH E FILE OF THE COMMISSIONER OF INCOME TAX(EXEMPTIONS) TO RECONSIDE R FOR GRANT OF REGISTRATION TO THE ASSESSEE TRUST AFRESH IN LIGHT OF THESE FURTHER EVIDENCES AVAILABLE WITH THE ASSESSEE . 7. THE DEPARTMENTAL REPRESENTATIVE HAD NO OBJECTION TO THE SUBMISSION OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. 8. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE CONSIDERED VIEW THAT IN ORDER TO RENDER SUBS TANTIAL JUSTICE TO THE ASSESSEE, THE MATTER SHOULD BE REMAN D BACK TO THE FILE OF COMMISSIONER OF INCOME TAX(EXEMPTIONS) FOR CONSIDERING THE APPLICATION OF THE ASSESSEE FOR GRA NT OF REGISTRATION U/S 12AA OF THE ACT AFRESH. WE, THEREF ORE, SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX(EXEMPTIONS) AND RESTORE THE MATTER BACK TO HIS FILE TO RE- ADJUDICATE THE ISSUE OF GRANT REGISTRATION U/S 12AA OF THE ACT ITA NO. 168/ ASR./2018 PEOPLES WELFARE TRUST 5 AFRESH AFTER ALLOWING REASONABLE AND PROPER OPPORTU NITY OF HEARING TO THE ASSESSEE AND AFTER CONSIDERING THE R EGISTERED RECTIFICATION DEED DATED 22.02.2018, CORPUS DONATIO N LETTERS AND DETAILS OF ADVANCE FOR MACHINERY PERMISSION OF ESTABLISHING POLYCLINIC AND BANK STATEMENT OF THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FILE THE ABOVE STATED DOCUMENTS WI TH THE COMMISSIONER OF INCOME TAX(EXEMPTIONS) AS AND WHEN CALLED UPON TO DO SO. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE COURT ON 20 TH DAY OF MAY 2019 AT AMRITSAR) SD/- SD/- (N. K. CHOUDHRY) (N. S. SAINI) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 20/05/2019 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR