Thiagarajar Crafts Foundation, Madurai V. CIT, CHENNAI

ITA 1696/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9770 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 29-02-2016
• Assessment Year: misc
• Appeal Filed On: 23-07-2015
• Court: TRIBUNAL
• Assessee Lawyers: R SRINIVASAN
• Keywords: Charitable institution
• Section: 2(14); 12AA; 12; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1696/MDS/2015 / ASSESSMENT YEAR : N.A THIAGARAJAR CRAFTS FOUNDATION THIAGARAJAR MILLS PREMISES KAPPALUR MADURAI 625 008 VS. THE COMMISSIONER OF INCO ME - TAX(EXEMPTIONS) CHENNAI [PAN AACTT 3202 B ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI R.SRINIVASAN, ADVOCATE /RESPONDENT BY : SMT. VIJAYALAKSHMI, CIT / DATE OF HEARING : 29 - 02 - 2016 ! / DATE OF PRONOUNCEMENT : 01 - 04 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (EXEMPTIONS), CHENN AI, DATED 20.6.2015 REJECTING THE APPLICATION OF THE ASSESSE E FOR REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961. 2. SHRI R.SRINIVASAN, LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ASSESSEE-TRUST WAS ESTABLISHED BY A TRUST DEED DATED 16.9.2013. THE OBJECT OF THE TRUST IS TO HELP THE POOR, NEEDY, INDIGENT CRAFTSMAN ITA NO.1696 /15 :- 2 -: TO MEET THEIR NEEDS AND OBLIGATIONS IN LIFE INCLUDI NG THE HEALTH OF THE CRAFTSMAN. THE ASSESSEE ALSO HAS ONE OF ITS OB JECTS TO ESTABLISH AND ADMINISTER EDUCATIONAL INSTITUTIONS. ACCORDING TO T HE LD. COUNSEL, THE ASSESSEE FILED AN APPLICATION FOR REGISTRATION ON 1 2.9.2014. THE APPLICATION WAS NOT DISPOSED OF WITHIN A PERIOD OF SIX MONTHS. SUBSEQUENTLY, THE CIT(E) FOUND THAT THE ASSESSEE H AS NOT FURNISHED ANY PROOF OF THE ACTIVITIES CARRIED ON, THEREFORE, HE FOUND THAT IT WAS NOT POSSIBLE FOR HIM TO PROCESS THE APPLICATION. A CCORDING TO THE LD. COUNSEL, THE TRUST ITSELF WAS ESTABLISHED ON 16.9.2 013 AND THE APPLICATION FOR REGISTRATION WAS FILED ON 12.9.2014 . THEREFORE, WHAT IS TO BE SEEN U/S 12AA OF THE ACT IS THE OBJECTS OF THE TRUST. THE CIT(E) WITHOUT CONSIDERING THE OBJECTS OF THE TRUST, SIMPL Y FOUND THAT THE ASSESSEE COULD NOT FURNISH ANY DETAILS. ACCORDING TO THE LD. COUNSEL, THE ACTIVITIES OF THE TRUST HAVE TO BE EXAMINED D URING THE COURSE OF ASSESSMENT PROCEEDINGS. THE REGISTRATION U/S 12AA DOES NOT AUTOMATICALLY EXEMPT THE INCOME OF THE ASSESSEE U /S 11 OF THE ACT. REGISTRATION U/S 12AA IS ONLY TO IDENTIFY THE TRUS T AS A CHARITABLE INSTITUTION. THE INCOME OF THE TRUST IS ELIGIBLE F OR EXEMPTION U/S 11 SUBJECT TO FURTHER EXAMINATION BY THE ASSESSING OFF ICER IN THE LIGHT OF THE PROVISIONS OF SECTIONS 12 & 13 OF THE ACT. THE REFORE, REJECTION OF THE APPLICATION BY THE CIT(E) IS NOT JUSTIFIED. PL ACING RELIANCE ON THE UNREPORTED JUDGMENT OF THE APEX COURT IN THE CASE O F CIT VS SOCIETY ITA NO.1696 /15 :- 3 -: FOR THE PROMOTION OF EDUCATION, CIVIL APPEAL NO.14 78 OF 2015, DATED 16.2.2016, THE LD. COUNSEL SUBMITTED THAT SINCE THE ORDER WAS NOT PASSED BY THE CIT(E) WITHIN A PERIOD OF SIX MONTHS, THE ASSESSEE IS ENTITLED FOR REGISTRATION. 3. ON THE CONTRARY, SMT. VIJAYALAKSHMI, LD. DEPARTMENT AL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE-TRUST W AS ESTABLISHED ON 16.9.2013 AND FILED ITS APPLICATION FOR REGISTRATIO N ON 12.9.2014. THE ASSESSEE HAS NOT FILED ANY MATERIAL TO PROVE ITS AC TIVITY BEFORE THE CIT(E). IN THE ABSENCE OF ANY DETAILS, THE CIT(E) FOUND THAT IT IS NOT POSSIBLE TO PROCESS THE APPLICATION OF THE ASSESSE E, THEREFORE, HE REJECTED THE APPLICATION FOR REGISTRATION. ACCORDI NG TO THE LD. DR, UNLESS THE ASSESSEE HAS FILED THE DETAILS OF ITS A CTIVITIES, IT IS NOT POSSIBLE FOR THE CIT(E) TO EXAMINE THE SAME. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADM ITTEDLY, THE TRUST WAS ESTABLISHED ON 16.9.3013 AND THE APPLICATION FO R REGISTRATION U/S 12AA OF THE ACT WAS FILED ON 12.9.2014. SEC. 12AA CLEARLY SAYS THAT THE CIT MAY CALL FOR SUCH DOCUMENTS OR INFORMATION TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUS T OR THE INSTITUTION. THE CIT CAN ALSO MAKE SUCH ENQUIRY TO FIND OUT THE ACTUAL OBJECT OF THE TRUST. IN THE CASE BEFORE US, IT IS NOT IN DIS PUTE THAT THE COPY OF ITA NO.1696 /15 :- 4 -: THE TRUST DEED WAS FILED BEFORE THE CIT(E). THE OB JECT OF THE ASSESSEE-TRUST IS AVAILABLE AT CLAUSE (3) OF THE TR UST DEED. A PERUSAL OF THE OBJECT CLEARLY SHOWS THAT IT IS MEANT FOR ESTAB LISHING EDUCATIONAL INSTITUTION AND TO PROVIDE SCHOLARSHIP ASSISTANCE T O THE POOR STUDENTS, RESEARCHERS, SCHOLARS AND EMINENT PERSONS. THEREFO RE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE OBJECT OF THE TR UST CLEARLY FALLS WITHIN THE PROVISIONS OF SEC. 2(14) OF THE ACT. HENCE, THE CIT(E) IS NOT CORRECT IN SAYING THAT THE APPLICATION OF THE ASSESSEE CAN NOT BE PROCESSED. FURTHERMORE, WHEN THE ASSESSEE FILED THE APPLICATI ON ON 12.9.2014, IT IS FOR THE CIT(E) TO DISPOSE OF THE SAME WITHIN A P ERIOD OF SIX MONTHS. ON IDENTICAL SET OF FACTS, THE APEX COURT IN THE CA SE OF SOCIETY FOR THE PROMOTION OF EDUCATION(SUPRA) HAS CONFIRMED THE ORD ER OF THE ALLAHABAD HIGH COURT AND FOUND THAT THE REGISTRATIO N SHALL TAKE EFFECT ON THE EXPIRY OF SIX MONTHS PERIOD. IN FACT, THE A PEX COURT OBSERVED AS FOLLOWS: 4. THE LEARNED ADDITIONAL SOLICITOR GENERAL APPEARI NG FOR APPELLANTS, HAS RAISED AN APPREHENSION THAT IN THE CASE OF THE RESPONDENT, SINCE THE DATE OF APPLICATION WAS OF 24.02. 2003, AT THE WORST, THE SAME WOULD OPERATE ONLY AFTER SIX MONTHS FROM THE DATE OF THE APPLICATION. 5. WE SEE NO BASIS FOR SUCH AN APPREHENSION SINCE TH AT IS THE ONLY LOGICAL SENSE IN WHICH THE JUDGMENT COULD BE U NDERSTOOD. THEREFORE, IN ORDER TO DISABUSE ANY APPREHENSION, W E MAKE IT CLEAR THAT THE REGISTRATION OF THE APPLICATION UNDE R SECTION 12AA OF THE INCOME-TAX ACT IN THE CASE OF THE RESPOND ENT SHALL TAKE EFFECT FROM 24.8.2003. ITA NO.1696 /15 :- 5 -: 5. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT THE REGISTRATION U/S 12AA HAS TO BE G RANTED TO THE ASSESSEE WITH EFFECT FROM 11.3.2015. ACCORDINGLY, THE CIT(E) IS DIRECTED TO GRANT REGISTRATION U/S 12AA WITH EFFEC T FROM 11.3.2015. IT IS MADE CLEAR THAT IF THE ASSESSEE FAILS TO CARRY OUT THE ACTIVITIES IN ACCORDANCE WITH THE OBJECTS OF THE TRUST, IT IS OPE N TO THE CIT(E) TO CANCEL THE REGISTRATION BY EXERCISING HIS POWER U/ S 12AA(3) OF THE ACT NOTWITHSTANDING THE FACT THAT THE REGISTRATION WAS DIRECTED BY THIS TRIBUNAL. IN OTHER WORDS, THE CIT(E) IS AT LIBERTY TO EXAMINE THE ACTIVITIES OF THE TRUST AND IF HE IS SATISFIED THAT THE ACTIVITIES OF THE TRUST ARE NOT CARRIED ON IN ACCORDANCE WITH THE OBJECTS O F THE ASSESSEE- TRUST, IT IS OPEN TO HIM TO CANCEL THE REGISTRATION . 6. WITH THE ABOVE OBSERVATION, THE APPEAL OF THE ASSE SSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST APRIL, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 1 ST APRIL, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF