M/s. Jagmohandas Charitable Trust, Dewas, Ujjain V. The C.I.T., Ujjain

ITA 174/IND/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2838 (ITAT-INDORE)
• Duration Of Justice: 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 06-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: M D SODANI
• Keywords: Charitable institution
• Section: 80G; 12A; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, SMC-I BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.174/IND/2010 JAGMOHANDAS CHARITABLE TRUST DEWAS PAN AAATJ-0776C APPELLANT VS COMMISSIONER OF INCOME TAX UJJAIN RESPONDENT APPELLANT BY : SHRI M.D. SODANI RESPONDENT BY : SMT. APARNA KARAN, SR. DR O R D E R PER JOGINDER SINGH, JM THIS APPEAL IS BY THE ASSESSEES AGAINST THE ORDER O F THE LEARNED CIT DATED 8.3.2010 ON THE GROUND THAT THE LEARNED C OMMISSIONER OF INCOME TAX HAS ERRED IN NOT GRANTING EXEMPTION U/S 80G(5) OF THE ACT ON THE VAGUE REASONS AND FURTHER ERRED IN REJECTING TH E SAME. 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH TH E MATERIAL AVAILABLE ON THE FILE. THE CRUX OF ARGUMENTS ON BEHALF OF TH E ASSESSEE IS THAT THE ASSESSEE TRUST WAS CREATED ON 2.1.1987 AND WAS GRAN TED REGISTRATION 2 UNDER SECTION 12A OF THE ACT ON 17.7.1990. IT WAS PLEADED THAT THE ASSESSEE IS MAKING CHARITY OUT OF INTEREST INCOME F OR WHICH MY ATTENTION WAS INVITED TO PAGES 68 AND 69 OF THE PAPER BOOK. A PLEA WAS ALSO RAISED THAT EARLIER THE ASSESSEE WAS GRANTED EXEMPT ION U/S 80G OF THE ACT VIDE ORDER DATED 9.3.1994 FOR WHICH MY ATTENTIO N WAS INVITED TO PAGE 23 OF THE PAPER BOOK BY FURTHER CONTENDING THAT THE ACTIVITIES OF THE ASSESSEE ARE GENUINE AND ARE OF GENERAL PUBLIC UTIL ITY. ON THE OTHER HAND, THE LEARNED SENIOR DEPARTMENTAL REPRESENTATI VE DEFENDED THE DENIAL OF EXEMPTION BY THE CIT ON THE GROUND THAT T HE ACTIVITY OF THE ASSESSEE IS NOT OF GENERAL PUBLIC UTILITY AS REPORT THROUGH THE INSPECTOR WAS SOUGHT BY THE LD. CIT IN REACHING TO A PARTICU LAR CONCLUSION. A FURTHER PLEA WAS RAISED THAT NO INFORMATION WAS FUR NISHED BY THE ASSESSEE AND NO PROOF OF PUBLICATION IN THE NEWSPAP ER WAS ADDUCED. IN REPLY, IT WAS EXPLAINED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE SAID PUBLICATION WAS MADE THROUGH PAMPHLETS WHICH WERE G IVEN TO THE NEWSPAPER VENDORS. THE COPY OF SUCH PAMPHLETS IS M ADE PART OF THE PAPER BOOK AVAILABLE AT PAGE 28. 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. R EPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT A TRUST DEED WAS CREATED ON 2.1.1987 AS PE R WHICH A PUBLIC CHARITABLE TRUST WAS CREATED WITH THE CONTRIBUTION OF RS.1,000/- BY THE SETTLER. ON 11 TH JUNE, 2009 A RESOLUTION WAS PASSED BY THE TRUSTEES AS 3 PER WHICH AN APPLICATION IN THE PRESCRIBED FORM WAS TO BE SUBMITTED TO ENABLE THE TRUST TO GET DONATIONS WHICH WILL BE DED UCTIBLE FROM THE INCOME OF THE DONORS IN TERMS OF SECTION 80G OF THE ACT SIMPLY TO INCREASE THE DONOR BASED DONATION TO THE TRUST AND TO EXPAND THE ACTIVITIES OF THE ASSESSEE TRUST. THE ASSESSEE TRUS T IS ALSO REGISTERED AS PUBLIC TRUST WITH THE REGISTRAR OF PUBLIC TRUSTS, I NDORE, VIDE CERTIFICATE AVAILABLE AT PAGE 21 OF THE PAPER BOOK. THE ASSESSE E WAS ALSO GRANTED REGISTRATION U/S 12A/12AA OF THE ACT VIDE ORDER DAT ED 17.7.1990 (PAGE 22 OF THE PAPER BOOK). THE ASSESSEE WAS ALSO GRANT ED EXEMPTION U/S 80G VIDE ORDER DATED 9.3.1994 FOR THE PERIOD W.E.F. 1.4.93 TO 31.3.1998. HOWEVER, THE SAID EXEMPTION WAS NOT RENEWED BY THE LEARNED CIT MAINLY ON THE PLEA THAT THE INSPECTOR REPORTED THAT THE TRUST NAME PLATE WAS NOT FOUND AT THE ADDRESS OF THE ASSESSEE TRUST, THEREFORE, THE GENERAL PUBLIC COULD NOT GET ANY INFORMATION. IT H AS ALSO BEEN MENTIONED THAT FOR MAKING APPLICATION FOR GETTING CHARITY, WI DE PUBLICATION WAS NOT MADE BY THE ASSESSEE AND DURING THE LAST THREE YEAR S ONLY FEW PERSONS FROM THE PUBLIC GOT THE BENEFIT. I HAVE FOUND THAT THE LEARNED CIT WHILE REFUSING RENEWAL HAS NOT DOUBTED THE CHARITABLE NAT URE OF THE ASSESSEE TRUST AND HAS SIMPLY MENTIONED THAT LIMITED PERSONS GOT THE BENEFIT OF THE CHARITY AND THE MAJOR CONTRIBUTION IS ONLY TO MP BL OOD WELFARE ASSOCIATION, UJJAIN, AND NARAYAN SEWA SANSTHAN, UDA IPUR. IT HAS BEEN FURTHER MENTIONED THAT BOTH THESE ORGANIZATIONS ARE REGISTERED U/S 4 80G(5) OF THE ACT. I FIND THAT ALL THE OBJECTIONS RAISED BY THE LEARNED SR.DR, DURING HEARING BEFORE ME, AND SUSPICION RAIS ED BY THE LEARNED CIT ARE NOT BASED ON MATERIAL ON RECORD, RATHER TH E LD. CIT IN HIS ORDER DATED 8.3.2010 HAS ADMITTED THAT LIMITED PERSONS GO T THE BENEFIT FROM THE CHARITY AND THE AFORESAID TWO ORGANIZATIONS ARE MAI NLY BENEFITED WHICH ARE ALSO REGISTERED U/S 80G(5) OF THE ACT, THEREFOR E, THE ASSESSEE IS HAVING A STRONG CASE IN ITS FAVOUR. I HAVE ALSO SEE N THE COPY OF THE ACTIVITIES BEING DONE BY THE ASSESSEE TRUST AND THE FUNDS HAD BEEN UTILISED TO ACHIEVE THE OBJECTS OF THE TRUST TOWARD S MEDICAL RELIEF, DONATIONS AND SCHOLARSHIP, ETC. (PAGE 29 OF THE PAP ER BOOK) WHICH CAN BE SUMMARIZED :- A.Y. DONATIONS (RS.) MEDICAL RELIEF SCHOLARSHIP FOR EDUCATION 2006-07 36,001 3,000 8,000 2007-08 2,630 2,000 59,400 2008-09 11,000 45,380 3,000 THE DENIAL BY THE LEARNED COMMISSIONER SEEMS TO BE ON THE GROUND THAT SMALL AMOUNT OF SCHOLARSHIP AND MEDICAL RELIEF HAS BEEN GIVEN BY THE ASSESSEE TRUST. I AM OF THE VIEW THAT IT DEPENDS U PON THE AVAILABILITY OF CHARITY FUNDS. THE ASSESSEE APPLIED FOR GRANT OF E XEMPTION U/S 80G(5) OF THE ACT SIMPLY TO ENHANCE THE FINANCIAL HEALTH O F THE ASSESSEE TRUST, SO AS TO MAKE MORE CHARITY TO THE GENERAL PUBLIC. IT IS NOT THE CASE THAT 5 THE FUNDS WERE MISUTILISED IN ANY MANNER OR UNDER T HE GARB OF THE TRUST EITHER THE ASSESSEE IS MAKING HUGE FUNDS OR HAVING SUFFICIENT FUNDS WHICH WERE NOT MADE AVAILABLE FOR CHARITY PURPOSES. AS PER THE BALANCE- SHEET AS ON 31 ST MARCH, 2009, THE TOTAL INCOME OF THE ASSESSEE IS RS.89,922/- AND THE SURPLUS CARRIED TO THE BALANCE- SHEET IS ONLY RS.542/- . AS I HAVE MENTIONED EARLIER, THE ASSESSEE IS DONA TING THE AMOUNT FOR THE PURPOSE OF CHARITY, WHICH IS MET OUT OF INTERES T INCOME FROM SAVING BONDS OR INTEREST, ETC. THE INQUIRY U/S 80G(5)(VI) BY THE LEARNED CIT RELATES TO WHETHER THE ASSESSEE IS REGISTERED U/S 1 2A, WHETHER THE TRUST IS CREATED WHOLLY FOR CHARITABLE/RELIGIOUS PURPOSES ALONG WITH OBJECTS AND ALSO WHETHER THE INCOME RECEIVED BY IT IS LIABL E TO BE CONSIDERED U/S 11 OF THE ACT, THEREFORE, THE ASSESSEE IS FORTIFIED BY THE DECISION FROM THE HONBLE GUJARAT HIGH COURT IN N.N. DESAI CHARITABLE TRUST V. CIT (246 ITR 452) (GUJ). THE PRESENT TRUST WAS EVEN FOUND EX EMPTION WORTHY BY THE LEARNED CIT HIMSELF IN EARLIER YEARS, THEREFORE , WITHOUT BRINGING ANY ADVERSE MATERIAL ON RECORD, THE LEARNED CIT IS NOT EXPECTED TO TAKE A REVERSE STAND FOR THE SUBSEQUENT PERIOD. I AM OF T HE CONSIDERED OPINION THAT A TRUST CANNOT BE USED AS A TOOL FOR FURTHERAN CE OF TRADE INTEREST FOR PROMOTING COMMERCIAL ACTIVITIES UNDER THE GUISE OF SECTION 80G OF THE ACT. WHERE THE AUTHORITY, GRANTING RECOGNITION, NOT ICES THAT THE AMOUNTS ARE USED IN FURTHERING THE INTEREST OF THE ASSESSEE CONTRARY TO THE OBJECTS OF THE TRUST THEN SUCH AUTHORITY WOULD BE JUSTIFIED IN REFUSING THE RENEWAL 6 OF RECOGNITION TO THE TRUST U/S 80G(5) OF THE ACT B UT NOT OTHERWISE. IN THE PRESENT APPEAL, SINCE NOTHING CONTRARY WAS FOUND, T HEREFORE, DIFFERENT YARD STICKS SHOULD NOT BE ADOPTED FOR RENEWAL ESPEC IALLY WHEN THE OBJECTS ARE IDENTICAL. THE ASSESSEE FURTHER FINDS S UPPORT FROM THE DECISION IN UMED CHARITABLE TRUST V. UNION OF INDIA (2008) 307 ITR 226 (RAJ), RATIO LAID DOWN IN GANJAM NAGAPPA & SONS TRU ST V. D.I. (EXEMPTION); 269 ITR 59 (KARN) AND TAX PRACTITIONER S BENEVOLENT FUNDS, A PUBLIC CHARITABLE TRUST V. CIT; 136 TAXMAN 282 (BOM) AND SHRI RAMKRISNA SEVA ASHRAM V. CIT; 252 ITR 171 (A.P.). I,THEREFORE, DIRECT THE LEARNED CIT TO GRANT EXEMPTION U/S 80G(5) TO TH E ASSESSEE TRUST FOR THE RELEVANT PERIOD. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 2 ND JUNE, 2010. SD/- (JOGINDER SINGH) JUDICIAL MEMBER JUNE 2 , 2010 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE *DN/