Chamber of Commerce Trust, Rajahmundry V. THE CIT, Rajahmundry

ITA 176/VIZ/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6559 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 28-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G GURUSWAMY
• Section: 12AA; 12

Judgement Text

ITA NO.176.VIZAG/2014 CHAMBER OF COMMERCE TRUST, RAJAHMUNDRY 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.176/VIZAG/2014 ( / ASSESSMENT YEAR: NA) CHAMBER OF COMMERCE TRUST RAJAHMUNDRY VS. CIT, RAJAHMUNDRY [PAN: AAATC8302M ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI G. GURUSWAMY, DR / DATE OF HEARING : 29.11.2016 / DATE OF PRONOUNCEMENT : 20.01.2017 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE CIT, RAJAHMUNDRY DATED 2.12.2013. ITA NO.176.VIZAG/2014 CHAMBER OF COMMERCE TRUST, RAJAHMUNDRY 2 2. THE ASSESSEE TRUST WAS GRANTED REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE AC T') DATED 24.8.2005 BY CONSIDERING THE FOLLOWING OBJECTS: A) TO CONSTRUCT AND MAINTAIN A FUNCTION HALL ON THE BA NKS OF RIVER GODAVARI IN THE LAND ALLOTTED BY THE MANDAL REVENUE INSPECTOR TO CHAMBER OF COMMERCE, RAJAHMUNDRY. B) TO CONDUCT MASS MARRIAGE CEREMONIES. C) TO PROVIDE VOCATIONAL FACILITIES FOR THE UNDER-PREV ILEGED FREE-OF-COST. D) TO IMPART VOCATIONAL EDUCATION AND TRAINING TO WOME N AND PHYSICALLY HANDICAPPED PEOPLE OF THE SOCIETY. E) TO PUBLISH LITERATURE ON ALL ASPECTS OF TRADE AND C OMMERCE AND OTHER ALLIED SUBJECTS ON NO-PROFIT BASIS. AND ALSO TO RU N A LIBRARY FOR THE BENEFIT OF THE BUSINESS CLASS. F) TO CONDUCT ON A PERIODIC BASIS, VARIOUS FREE MEDICA L CAMPS WHEREIN THE UNDERPRIVILEGED WILL GET AN OPPORTUNITY TO GET TREATED BY TRAINED PROFESSIONALS. G) TO CONDUCT GENERAL AWARENESS CAMPS ON SOCIAL TOPICS LIKE AIDS, RENEWABLE ENERGY, POLLUTION AND ITS CONTROL ETC. H) IT IS HEREBY MADE CLEAR THAT THE BENEFITS OF THIS TR UST SHALL ENSURE TO ALL SECTIONS OF THE PUBLIC IN INDIA WITHOUT ANY DISTINC TION OF RELIGION, CASTE, CREED, GENDER OR SUCH OTHER CONSIDERATIONS. 3. THE COMMISSIONER HAD ISSUED A SHOW CAUSE NOTICE ON 27.8.2013 ON THE GROUND THAT THE ASSESSEE HAD INCURRED SUCH A N EXPENDITURE WHICH IS CONTRARY TO THE OBJECTS OF THE TRUST AND C ALLED THE ASSESSEE TO EXPLAIN WHY REGISTRATION GRANTED U/S 12AA OF THE AC T CANNOT BE CANCELLED. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE LD. COMMISSIONER THAT THE DONATION GIVEN TO THE GOWTHAM I GHAT ADHYATMIKA SAMSTHALA SAMAKHYA IS A SPIRITUAL ORGANI ZATION LOCATED IN GOWTHAMI GHAT, RAJAHMUNDRY AND DONATION WAS PAID TO SRI DHARMA ITA NO.176.VIZAG/2014 CHAMBER OF COMMERCE TRUST, RAJAHMUNDRY 3 SAMSTHA ADHYATMIKA KENDRAM. IT IS ALSO A SPIRITUAL ORGANIZATION, WHICH IS PROMOTING VEDADHYANAM AND ISSUE OF SCHOLARSHIPS TO POOR STUDENTS WHO ARE LEARNING VEDAS AND VEDIC CULTURE. IT IS AL SO REGISTERED U/S 12AA OF THE ACT. IT IS FURTHER SUBMITTED BY THE ASSESSE E BEFORE THE LD. COMMISSIONER THAT THE ASSESSEE TRUST HAS CONSTRUCTE D A FUNCTION HALL WHICH IS GIVEN TO THE GENERAL PUBLIC FOR FREE OF CO ST FOR CONDUCTING MARRIAGES AND OTHER SOCIAL FUNCTIONS, SUCH AS BIRTH DAYS, DEATH ANNIVERSARIES, ETC. WITH FREE OF COST. IT IS ALSO SUBMITTED BEFORE THE LD. COMMISSIONER THAT THE ASSESSEE TRUST IS CONDUCTING MASS MARRIAGES AND BEAR TALI BOTTU (MANGAL SUTRAM) FOR FREE OF COST. THE LD. CIT AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, HE IS OF THE OPINION THAT THE TRUST HAS GIVEN DONATIONS TO TWO OF THE ORGANIZATIO NS, WHICH ARE CONTRARY TO ITS OBJECTS AND ALSO OF THE OPINION THAT THE ASS ESSEE IS NOT CARRYING ITS ACTIVITIES IN ACCORDANCE WITH LAW. THEREFORE, HE I S OF THE OPINION THAT THE ASSESSEE TRUST HAS VIOLATED THE PROVISIONS OF S ECTION 12AA(3) OF THE ACT AND CANCELLED THE REGISTRATION U/S 12AA OF THE ACT. 4. ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE TRI BUNAL. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS CONSTRUCTED A FUNCTION HALL AS PER THE OBJECTS OF T HE TRUST RUNNING WITH A CHARITABLE INTENTION. THE FUNCTION HALL IS GIVEN T O THE GENERAL PUBLIC ITA NO.176.VIZAG/2014 CHAMBER OF COMMERCE TRUST, RAJAHMUNDRY 4 WITHOUT COLLECTING ANY CHARGES AND THEREFORE THE AS SESSEE TRUST IS CARRYING ITS ACTIVITIES IN ACCORDANCE WITH ITS OBJE CTS OF THE TRUST. THE LD. A.R. FURTHER SUBMITTED THAT THE REGISTRATION U/S 12 AA OF THE ACT SO GRANTED TO THE ASSESSEE CANNOT BE CANCELLED, WHICH IS CONTRARY TO LAW. 6. ON THE OTHER HAND, THE LD. D.R. HAS SUPPORTED TH E ORDER PASSED BY THE LD. COMMISSIONER. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE TRUST HAS GRANTED A REGISTRATION U/S 12AA OF THE ACT ON 27.8.2005. ON 27.8.2013, THE LD. CIT HAS ISSUED A SHOW CAUSE NOTICE ON THE GROUND THAT ASSESSEE HAS DONATED SOME AMOUNT TO GOWTHAMI GHAT AND ALSO TO SRI DHARMA SAMSTHA ADHYATMIKA KEND RAM, WHICH IS CONTRARY TO THE OBJECTS OF THE TRUST DEED. THE ASS ESSEE HAS EXPLAINED THAT THE ABOVE AMOUNT OF ` 1 LAKH IS GIVEN NOT AS A DONATION BUT IT IS A CONTRIBUTION TOWARDS THE CONSTRUCTION OF THE ROADS FOR THE MUTUAL BENEFIT OF THE ASSESSEE AS WELL AS THE GOWTHAMI GHAT ADHYAT MIKA SAMSHTLA SAMAKHYA. ANOTHER ` 50,000/- HAS BEEN GIVEN TO DHARMA SAMSHTA ADHYATMIKA KENDRAM, WHICH IS ALREADY ENJOYING THE R EGISTRATION U/S 12AA OF THE ACT. THE ASSESSEE TRUST FURTHER SUBMIT TED THAT THE TRUST HAS CONSTRUCTED A FUNCTION HALL, WHICH IS USED BY THE G ENERAL PUBLIC FREE OF ITA NO.176.VIZAG/2014 CHAMBER OF COMMERCE TRUST, RAJAHMUNDRY 5 COST AND ALSO SUBMITTED THAT THE ASSESSEE TRUST IS CONDUCTING THE MASS MARRIAGES AND PROVIDE TALI BOTTU (MANGAL SUTRAM), F REE OF COST. THE LD. COMMISSIONER AFTER CONSIDERING THE EXPLANATION OF T HE ASSESSEE, HE CAME TO THE CONCLUSION THAT THE ASSESSEE IS NOT CAR RYING ITS ACTIVITIES ACCORDING TO THE OBJECTS OF THE TRUST AND BY INVOKI NG THE PROVISIONS OF SECTION 12AA(3) OF THE ACT, CANCELLED THE REGISTRAT ION, WHICH IS GRANTED TO THE ASSESSEE. WE FIND THAT THE LD. COMMISSIONER HAS NOT CONSIDERED THE EXPLANATION GIVEN BY THE ASSESSEE IN RESPECT OF DONATIONS GIVEN TO GOWTHAMI GHAT ADHYATMIKA SAMSTHALA SAMAKHYA AND ALS O DHARMA SAMSHTA ADHYATMIKA KENDRAM. SO FAR AS UTILIZATION OF MARRIAGE HALL IS CONCERNED, THE EXPLANATION OF THE ASSESSEE IS THAT THE ASSESSEE IS GIVING ITS FUNCTION HALL TO GENERAL PUBLIC FOR VARIOUS PUR POSES SUCH AS BIRTHDAYS, DEATH ANNIVERSARIES AND FOR MARRIAGES AND THE TRUST IS SUPPLYING FREE TALI BOTTU IN CASE OF MASS MARRIAGES. THE LD. COMMISSIO NER HAS NOT VERIFIED WHETHER THE FUNCTION HALL IS USED ONLY FOR GENERAL PUBLIC OR A PARTICULAR SECTION OF PEOPLE. WHETHER THE ASSESSEE IS COLLECTI NG ANY RENT OR NOT ALSO NOT PROPERLY EXAMINED. HOWEVER, THE LD. COMMI SSIONER HAS OBSERVED THAT AFTER MARRIAGE, THE ASSESSEE IS COLLE CTING SOME MONEY, WHICH IS ACCORDING TO THE ASSESSEE IS A DONATION. THE LD. COMMISSIONER HAS NOT BELIEVED THE EXPLANATION GIVEN BY THE ASSESSEE. IN OUR OPINION, IT NEEDS DETAILED EXAMINATION IN RE SPECT OF DONATIONS ITA NO.176.VIZAG/2014 CHAMBER OF COMMERCE TRUST, RAJAHMUNDRY 6 WHICH ARE RECEIVED AND ALSO IN RESPECT OF UTILIZATI ON OF FUNCTION HALL. THEREFORE, WE SET ASIDE THE ORDER PASSED BY THE LD. COMMISSIONER AND DIRECT HIM TO MAKE A DETAILED ENQUIRY IN RESPECT OF UTILIZATION OF THE MARRIAGE HALL AND ALSO IN RESPECT OF DONATIONS COLL ECTED BY THE ASSESSEE AND PASS AN ORDER IN ACCORDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20 TH JAN17. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 20.01.2017 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT CHAMBER OF COMMERCE TRUST, D.NO. 5-01-44, GOWTHAMI GHAT, RAJAHMUNDRY. 2. / THE RESPONDENT THE CIT, RAJAHMUNDRY 3. ) ( ) / THE CIT(A), RAJAHMUNDRY 4. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM