Guru Nanak Trust for Charitable , Mohali V. CIT Exemption, Chandigarh

ITA 169/CHANDI/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0801 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 14-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH (VIRTUAL COURT) BEFORE: SHRI. N.K.SAINI, VICE PRESIDENT AND SHRI R.L. NEGI, JUDICIAL MEMBER ITA NO. 169/CHD/2020 ASSESSMENT YEAR : GURU NANAK TRUST FOR CHARITABLE, 1595, PHASE 3B2, MOHALI PUNJAB THE CIT(E) CHANDIGARH ./ PAN NO. AACTG1450G / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI PARIKSHIT AGGARWAL, C.A. / REVENUE BY : SMT. C. CHANDRAKANTA, CIT ! ' # / DATE OF HEARING : 16/12/2020 $%&'() # / DATE OF PRONOUNCEMENT : 16/12/2020 / ORDER PER N.K. SAINI, VICE PRESIDENT: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT. 19/12/2019 OF LD. CIT(E), CHANDIGARH. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, THE WORTHY CIT(E) HAS ERRED IN PASSING ORDER IN CONTRAVENTION OF THE PROVISIONS OF S. 80G OF THE INCOME TAX ACT, 1961. 2. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, THE WORTHY CIT(E) HAS ERRED IN DENYING APPROVAL TO THE APPELLANT SOCI ETY U/S 80G OF THE ACT, EVEN WHEN THE APPELLANT IS ALREADY REGISTERED U/S 12AA, BY ERRONE OUSLY HOLDING THAT THE APPELLANT IS MANIPULATING ITS FINANCIAL STATEMENTS AND THEREFORE APPROVAL U/S 80G CANNOT BE GRANTED. 3. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, THE WORTHY CIT(E) HAS ERRED IN REJECTING THE APPLICATION OF THE APPEL LANT TRUST FOR APPROVAL U/S 80G OF THE ACT EVEN WHEN THE OBJECTS OF THE APPELLANT SOCIETY ARE CHARITABLE IN NATURE AND NO DEFECT IN SUCH OBJECTS OR ACTIVITIES WERE FOUND AND THE APPEL LANT DESERVED TO BE GRANTED REGISTRATION. 4. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION, D ELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 3. FROM THE AFORESAID GROUNDS IT WOULD BE CLEAR THAT ONLY GRIEVANCE OF THE ASSESSEE RELATES TO THE DENIAL OF APPROVAL UNDER SECTION 80G OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT). 2 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE HAD BEEN GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT ON 14/05/2019, THEREAFTER, AN APPLICATION IN FORM NO. 10G WAS FILED ON 26/06/2019. THE LD. CIT(E) ASKED THE ASSESSEE TO GIVE RESPONSE TO CERTAIN QUERIES WHICH ARE MENTIONED IN PARA 2 OF THE IMPUG NED ORDER, FOR THE COST OF REPETITION THE SAME ARE NOT REPRODUCED HEREIN. IN RESPONSE , THE ASSESSEE FURNISHED THE REPLY THROUGH ITBA. 4.1 LD. CIT(E) AGAIN RAISED SOME ADDITIONAL QUERIES O N 03/12/2019 AND ASKED THE ASSESSEE TO REPLY ON 06/12/2019. IN RESPONSE THE ASSES SEE ON 12/12/2019, FURNISHED THE REPLY TO THE ADDITIONAL QUERIES. THE LD. CIT(E) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAD MANIPULATED T HE FIXED ASSETS IN ITS REPLY DT. 12/12/2019 AND THAT THERE WAS NO BUILDING SHOWN IN THE FI XED ASSETS LIST IN FIRST REPLY BUT IN THE LATER REPLY THE BUILDING WAS SHOWN AT RS. 26,26,970/ -, THEREFORE, THE ASSESSEE WAS MANIPULATING WITH ITS FINANCIAL STATEMENTS. 4.2 LD. CIT(E) REJECTED THE APPLICATION MOVED BY THE ASSESSEE BY OBSERVING AS UNDER: 1. FURTHER, ON PERUSAL OF SCHEDULE OF CAPITAL ACCOU NTS FOR THE FINANCIAL YEAR ENDING 31.03.2018, IT IS NOTICED THAT THE APPLICANT HAS AD JUSTED THE LOSS OF RS. 12,67,468 ( DEFICIT AS SHOWN IN INCOME & EXPENDITURE ACCOUNT OF FY 2017-18 ) FROM ITS CORPUS FUNDS BALANCE. IT IS WORTHWHILE TO MENTION HERE THAT THE CORPUS WOULD IN CLUDE FUNDS OF A CAPITAL NATURE RECEIVED WITH SPECIFIC DIRECTION. ANY DONATION MADE FOR A CAPITAL PURPOSE OR WITH A DIRECTION THAT DONATION BE KEPT INTACT AND ONLY THE INTEREST RECEIVED ON THE INVESTMENT OF SUCH DONATION BE UTILIZED FOR THE OBJECTS OF THE TR UST, WOULD BE A DONATION TOWARDS THE CORPUS OF THE TRUST. CORPUS DONATIONS MAY NOT BE AP PLIED TO CHARITABLE PURPOSES AS VOLUNTARY CONTRIBUTION AND THESE MAY BE RETAINED AS FORMING PART OF THE CORPUS OF THE TRUST WITHOUT ATTRACTING ANY TAX LIABILITY IN THE MATTER. THE TRUSTEES MUST HOWEVER UTILIZE THE INCOME ACCRUING FROM THE CORPUS FOR CHARITABLE PURP OSES OF THE TRUST. THE FUNDS ARE NOT FREELY AVAILABLE TO THE ASSESSEE TRUST FOR UTILIZIN G ITS OBJECTIVES OTHER THAN ACQUIRING SPECIFIED ASSETS. THE ENTIRE AMOUNT RECEIVED FOR ACQUIRING TH E FIXED ASSETS WAS UTILIZED BY THE ASSESSEE AND THERE ARE NO SURPLUS FUNDS AVAILABLE T O THE ASSESSEE. THE FACT THAT THE AMOUNT WAS UTILIZED WAS EVIDENCED BY THE BALANCE SH EET, THUS THE FACTS OF THE CASE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF BANGALORE IN THE CASE OF VOKKALIGARA SANGHA, WHEREIN THE COORDINATE BENCH HE LD THAT CONTRIBUTIONS RECEIVED FOR SPECIFIC PURPOSE CANNOT BE REGARDED AS INCOME U/S 2 (24)(IIA) OF THE ACT. FURTHER, HON'BLE DELHI HIGH COURT IN THE CASE OF DI T VS. SOCIETY FOR DEVELOPMENT ALTERNATIVES RELIED UPON BY THE ASSESSEE HAS CONSIDERED THE DECI SION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF SUKHDEO CHARITY ESTATE V. CIT [149 I TR 470] AND UPHELD THE ORDER OF THE LD. CIT HOLDING THAT IF THE ASSESSEE FAILS TO UTILIZE T HE GRANTS FOR THE PURPOSE FOR WHICH IT WAS SANCTIONED, THE AMOUNTS SO UNUTILIZED REQUIRED TO B E BROUGHT TO TAX, IF IT IS NOT REFUNDED BACK TO THE FUNDING AGENCIES. 5. NOW THE ASSESSEE IS IN APPEAL. 3 6. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD . CIT(E) NEVER ASKED THE ASSESSEE FOR THE CLARIFICATION ON HIS DOUBTS, IF ANY, THEREFORE WITHOUT PROVIDING THE DUE AND REASONABLE OPPORTUNITY OF BEING HEARD THE REJECTIO N OF APPLICATION MOVED UNDER SECTION 80G OF THE ACT WAS NOT JUSTIFIED. 7. IN HER RIVAL SUBMISSIONS THE LD. CIT DR STRONGLY S UPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(E) AND REITERATED THE OBSERVATIO NS MADE IN THE IMPUGNED ORDER. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIE S AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE I T APPEARS THAT THE LD. CIT(E) DOUBTED THE DETAILS FURNISHED BY THE ASSESSEE IN ITS FI NANCIAL STATEMENT, HOWEVER HE NEVER ASKED THE ASSESSEE FOR THE CLARIFICATION, ON THE D OUBT, IF ANY, WAS THERE. WE THEREFORE BY KEEPING IN VIEW THE PRINCIPLES OF NATURAL J USTICE DEEM IT APPROPRIATE TO REMAND THIS CASE BACK TO THE FILE OF THE LD. CIT(E) TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABL E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED ON 16/12/2020. SD/- SD/- (R.L. NEGI) (N.K. SAINI) JUDICIAL MEMBER VICE PRESIDENT DATED : 16/12/2020 AG *% +,-. -( / COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. THE CIT(A) 5. DR, ITAT, CHANDIGARH 6. GUARD FILE