SMT. SAVITRIDEVI SHRIKRIHNA KHANDELWAL CHARITABLE TRUST, Akola V. CIT- I, Nagpur

ITA 17/NAG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1281 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-06-2016
• Assessment Year: misc
• Appeal Filed On: 12-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Charitable institution; Principle of natural justice
• Section: 80G

Judgement Text

1 ITA NO. 17/NAG/2015 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER.. I.T.A. NO. 17/NAG/2015 SMT. SAVITRIDEVI SHRIKRISHNA COMMISSIONER OF INCOME TAX - KHANDELWAL CHARITABLE TRUST, VS. NAGPUR. AKOLA. APPELLANT. RESPONDENT. APPELLANT BY : SHRI KAPIL HIRANI. RESPONDENT BY : SHRI A.R. NINAWE. DATE OF HEARING : 25 - 11 - 2016 DATE OF PRONOUNCEMENT : 19 TH DEC., 2016 O R D E R. PER SHAMIM YAHYA , AM : THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX - I, NAGPU R PASSED U/S 80G OF THE INCOME - TAX ACT, 1961 DATED 12 - 11 - 2014. THE GROUNDS RAISED READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT - I ERRED IN REJECTING THE APPLICATION SUBMITTED BY THE APPELLANT FOR GRANT OF APPROVAL U/S 80G OF THE I.T. ACT, 1961 WHICH IS ILLEGAL, INVALID AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2. THE LEARNED CIT - I OUGHT TO HAVE GRANTED APPROVAL U/S 80G(5)(VI) TO THE APPELLANT AS IT HAS FULFILLED ALL THE CONDITIONS LAID DOWN IN CLAUSE (I) TO (V) OF SUB - SECTION (5) OF SECTION 80G OF THE I.T. ACT, 1961 IN THE INTEREST OF JUSTICE. 2. IN THIS CASE LEAR NED CIT REJECTED THE ASSESSEES APPLICATION SEEKING REGISTRATION U/S 80G VIDE HIS ORDER AS UNDER : IN THIS CASE, APPLICATION IN FORM NO. 10G SEEKING REGISTRATION U/S 80G OF THE IT ACT, 1961 WAS FILED BY THE ASSESSEE ON 05 - 06 - 2014. 2 ITA NO. 17/NAG/2015 THE APPLICATION FILED B Y THE TRUST WAS FIXED FOR HEARING ON 27/10/2014 TO EXAMINE ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. THE PROCEEDINGS WERE ATTENDED TO BY SHRI RAJESH KHANDELWAL, ADV. ON 10/11/2014. 2. ON EXAMINATION OF TRUST DEED, IT IS SEEN THAT THERE IS NO P ROVISION THEREIN AS REGARD THE DESTINATION OF SURPLUS FUNDS (ASSETS) IN THE CASE OF DISSOLUTION OF THE TRUST. THE ASSESSEE WAS ASKED TO SUBMIT EXPLANATION REGARDING THE DISTRIBUTION OF SURPLUS FUNDS (ASSETS) IN CASE THE TRUST IS DISSOLVED, AND THE CASE WAS ADJOURNED TO 12/11/2014. 3. ON 12/11/2014 THE ASSESSEE SUBMITTED EXPLANATION STATING THAT IT IS DECIDED UNANIMOUSLY BY ALL THE TRUSTEES THAT IF IN ANY CASE THE TRUST IS UNABLE TO RUN ITS ACTIVITY OR COMES TO THE DECISION FOR DISSOLUTION, THAN THE AMOUN TS STANDING WITH THE TRUST SHALL BE DONATED TO A TRUST, WHICH IS HAVING THE SAME OBJECT AND ALSO WORKING FOR MEDICAL HELP TO THE NEEDY AND POOR PEOPLE OF THE SOCIETY. THE FORMALITIES OF THE SAME SHALL BE COMPLETED SOON. THE EXPLANATION OF THE ASSESSEE I S NOT ACCEPTABLE SINCE, THE ABSENCE OF DISSOLUTION CLAUSE IN THE TRUST DEED GIVES POWER TO THE TRUSTEES TO DEAL WITH THE FUNDS OF THE TRUST AT THE TIME OF DISSOLUTION OF TRUST IN TH WAY THEY LIKE. THERE IS NO RESTRICTION IN THE TRUST DEED THAT, IN CASE OF DISSOLUTION OF THE TRUST, THE BALANCE FUND WILL BE UTILISED FOR ANY CHARITABLE OR RELIGIOUS PURPOSE AS DEFINED IN THE TRUST DEED. IN VIEW OF THESE FACTS, THE APPLICATION FILED BY THE TRUST SEEKING APPROVAL U/S 80G IS REJECTED. 3. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE LEARNED CIT HAS REJECT E D THE ASSESSEES REGISTRATION APPLICATION U/S 80G SOLELY ON THE GROUND THAT THE TRUST DEED DID NOT HAVE A DISSOLUTION CLAUSE. LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE HAS DULY AMENDED THE TRUST DEED WHICH NOW INCORPORATES THE DISSOLUTION CLAUSE. HE SUBMITTED THAT IN IDENTICAL CIRCUMSTANCES THE ITAT, AHMEDABAD BENCH IN THE CASE OF SHREE CHARGAM DASHA PORWAD MAHAMANDAL VS. DIT IN ITA NO. 337 3 ITA NO. 17/NAG/2015 &338/AHD/2013 VIDE ORDER DATED 08 - 05 - 2013 HAS DECIDED SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. 5. PER CONTRA LEARNED D.R. RELIED UPON THE ORDER OF THE CIT. 6. UPON CAREFUL CONSIDERATION WE FIND THAT T HE ITAT AHMEDABAD BENCH IN THE CASE OF SHREE CHARGAM DASHA PORWAD MAHAMANDAL VS. DIT (SUPRA) HAS HELD AS UNDER : W E HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY AND PERUSED THE ORDERS OF THE DIT(EXEMPTIONS) AS WELL AS THE DECISION OF THE ITAT DELHI I N THE CASE OF SHRI SAI SAMARPAN TRUST CO.(SUPRA). WE FIND THAT THE ONLY . REASON ADVANCED FOR REFUSING THE REGISTRATION U/S.12AA AND 80G(S) OF THE ACT BY THE DIT(EXEMPTIONS) IS THAT THERE IS NO DISSOLUTION CLAUSE IN THE TRUST - DEED AND TRUST DOES NOT HAVE ANY CLAUSE THAT THE TRUST WILL NOT BE DISSOLVED AND IT IS A PERPETUAL TRUST . THIS ISSUE OF REFUSING REGISTRATION IN THE ABSENCE OF DISSOLUTION CLAUSE IN THE TRUST - DEED IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF CO - ORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF SHRI SAI SAMARPAN TRUST CO.(SUPRA), WHEREIN IN PARAGRAPH NO.8 HELD THAT WHEN THE ASSESSEE - TRUST IS REGISTERED WITH THE SUB - REGISTRAR AS A CHARITABLE TRUST, IN THE EVENT OF FAILURE OF THE TR UST THE NET ASSETS/INCOME WOULD OBVIOUSLY BE TAKEN OVER BY THE CHARITY COMMISSIONER AND THE REJECTION OF REGISTRATION ON THIS GROUND WAS HELD NOT ON A SOUND FOOTING AND THE ORDERS OF THE DIT(EXEMPTIONS) WERE REVERSED . WE FIND THAT THE CASE OF THE ASSES SEE IS ON MORE SOUND FOOTING SINCE IT HAS ALREADY APPLIED TO THE CHARITY COMMISSIONER FOR AMENDMENT OF THE TRUST - DEED VIDE APPLICATION SUBMITTED ON 26/0212013, WHEREBY INSERTING THE DISSOLUTION CLAUSE PROVIDING THAT THE TRUST SHALL BE IRREVOCABLE AND I N THE MOST UNLIKELY SITUATION, IF TRUST PRACTICALLY STOPS FUNCTIONING, IT CAN ONLY BE MERGED/AMALGAMATED WITH OTHER ONE OR MORE PUBLIC CHARITABLE TRUSTS OR BODIES HAVING SIMILAR OBJECTS SUBJECT TO THE APPROVAL OF THE OFFICE OF THE PUBLIC CHARITY COMMISS IONER, ETC. NO OTHER MATERIAL HAS BEEN PRODUCED ON BEHALF OF THE REVENUE BEFORE US TO SUGGEST THAT THE AIMS AND OBJECTS OF THE TRUST ARE NOT CHARITABLE IN NATURE . IN THESE FACTS OF THE CASE, WE HOLD THAT THERE IS NO JUSTIFICATION FOR REFUSING THE REGIS TRATION U/S.12AA AND 80G(S) OF THE ACT TO THE ASSESSEE, WHICH IS ACCORDINGLY ALLOWED TO THE ASSESSEE AND THE ORDERS OF THE DIT(EXEMPTIONS) IN BOTH THE CASES ARE REVERSED AND WE DIRECT THE DIT(EXEMPTIONS) TO GRANT THE REGISTRATION U/S.12AA & 80G(S) OF TH E ACT TO THE ASSESSEE IN BOTH THE CASES AND THE GROUND(S) RAISED IN BOTH THE APPEALS ARE HEREBY ALLOWED / 4 ITA NO. 17/NAG/2015 7. SINCE THE FACTS ARE IDENTICAL AND LEARNED D.R. HAS NOT BEEN ABLE TO BRING ABOUT ANY DISTINCTION IN THE FACTS OF THIS CASE AND THE FACTS DECIDED BY THE TRIBUNAL AS ABOVE, WE ADHERE TO THE DOCTRIN E OF STAIR DECISIS . ACCORDINGLY AS NO OTHER MATERIAL HAS BEEN PRODUCED ON BEHALF OF THE REVENUE BEFORE US TO SUGGEST THAT THE AIMS AND OBJECTS OF THE TRUST ARE NOT CHARITABLE IN NATURE, WE HOLD THAT THERE IS NO JUSTIFICATION FOR REFUSING REGISTRATION U/S 80G(5) TO THE ASSESSEE WHICH IS ACCORDINGLY ALLOWED TO THE ASS ESSEE AND THE ORDER OF LEARNED CIT IS REVERSED. 8. IN THE RESULT THE ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF DEC., 2016. SD/ - SD/ - (RAM LAL NEGI) ( SHAMIM YAHYA) JUDICIAL MEMBER. ACOUNTANT MEMBER. NAGPUR, DATED: 19 TH DEC. , 2016. COPY FORWARDED TO : 1. SMT. SAVITRIDEVI SHRIKRISHNA KHANDELWAL CHARITABLE TRUST, KHANDELWAL IMAGING CENTRE, AMANKHAN PLOTS, AKOLA. 2. C.I.T. - I NAGPUR. 3. D.R., ITAT, NAGPUR. 4. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.