M/s Bandanthamma Mathu Kalamma Trust , Mysore V. Income Tax Officer Ward-1(4), Mysore

ITA 1763/BANG/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 5319 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 24-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEERA MALHOTRA II
• Assessee Lawyers: RAVISHANKAR S
• Keywords: Opportunity of being heard
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 1763/BANG/2017 ASSESSMENT YEAR : N.A. URBAN DEVELOPMENT AUTHORITY BIDAR, UDGIR ROAD, NAUBAD, BIDAR 585 401. PAN: AAALU 0421F VS. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), BENGALURU. APP ELL ANT RESPONDENT APPELLANT BY : SHRI RAVISHANKAR, S., ADVOCATE RESPONDENT BY : MS. NEERA MALHOTRA, CIT(DR - II), ITAT, BENGALURU. DATE OF HEARI NG : 01.10 .201 8 DATE OF PRONOUNCEMENT : 01.10 .201 8 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER OF THE CIT(EXEMPTIONS), BENGALURU DATED 28.06.2017 REJECTI NG AN APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATION U/S. 12AA OF THE INCOME-TAX ACT, 1961 [THE ACT]. 2. THE ASSESSEE IS AN AUTHORITY CONSTITUTED BY TH E WAY OF NOTIFICATION NO.181 TTP 88 DATED 15.04.1988 UNDER THE KARNATAKA URBAN DEVELOPMENT AUTHORITY ACT, 1987. THE ASSESSEE FIL ED AN APPLICATION FOR ITA NO.1763/BANG/2017 PAGE 2 OF 7 REGISTRATION UNDER SECTION 12A (A) OF THE ACT VIDE APPLICATION DATED 05.12.2016 IN FORM 10A BY ENCLOSING THE DOCUMENT OF CERTIFIED COPY OF THE INSTRUMENT UNDER WHICH THE AUTHORITY WAS CREATED I. E., NOTIFICATION NO.HUD 181 TTP 88, DATED 15.04.1988. THE ASSESSEE ALSO SUB MITTED THE OBJECTS OF THE AUTHORITY AND ACTIVITIES OF THE AUTHORITY. THE OBJECT OF THE AUTHORITY IS PRESCRIBED UNDER SECTION 14 OF THE KARNATAKA URBAN DEVELOPMENT AUTHORITIES ACT, 1987. THE SAME IS AS FOLLOWS:- OBJECTS OF THE AUTHORITY: THE OBJECTS OF THE AUTH ORITY SHALL BE PLANNING AND PROMOTING AND SECURING THE DEVELOPMENT OF THE URBAN AREA AND FOR THESE PURPOSES THE AUTHORITY SHALL HAV E THE POWER TO ACQUIRE, HOLD, MANAGE AND DISPOSE OF MOVABLE AND IM MOVABLE PROPERTY, WHETHER WITHIN OR OUTSIDE THE URBAN AREA UNDER ITS JURISDICTIONS, TO CARRY OUT BUILDING, ENGINEERING A ND OTHER OPERATIONS AND GENERALLY TO DO ALL THINGS NECESSARY OR EXPEDIENT FOR THE PURPOSE OF SUCH DEVELOPMENT AND FOR THE PURPOSE S INCIDENTAL THERETO.' 3. THE ITO TAX OFFICER (EXEMPTIONS) GULBARGA ON BEH ALF OF THE CIT (EXEMPTIONS) ISSUED THE NOTICE VIDE DATED 09.02.201 7 AND CALLED FOR THE DETAILS I.E., INFORMATION / CLARIFICATIONS. THE AS SESSEE IN RESPONSE TO THE ABOVE NOTICE FILED A DETAILED REPLY BY ENCLOSING TH E VARIOUS DETAILS CALLED FOR STATING AS FOLLOWS:- (A) THERE ARE NO DONATIONS UNDER THE HEAD CORPUS F UND. (B) THE URBAN DEVELOPMENT AUTHORITY IS INCORPORATE D UNDER 'THE KARNATAKA URBAN DEVELOPMENT AUTHORITIES ACT, 1 987' THE KARNATAKA ACT NO.34 OF 1987 BY THE GOVERNMENT OF KA RNATAKA. IT IS NOT A SOCIETY OR A TRUST, WHICH IS REQUIRED TO B E REGISTERED UNDER THE SOCIETY OR A TRUST WHICH IS REQUIRED TO BE REGI STERED UNDER SOCIETY ACT OR TRUST ACT WHICH HAVE ITS OWN BYE-LAW S. IN FACT IT IS A LOCAL AUTHORITY INCORPORATED BY AN ACT OF GOVERNM ENT. THEREFORE, AS THERE IS NO SEPARATE BYE-LAWS OF THE AUTHORITY, THE INCLUSION OF THE SAID CLAUSES IN THE BYE LAWS IS NOT APPLICABLE. ITA NO.1763/BANG/2017 PAGE 3 OF 7 (C) THE URBAN DEVELOPMENT AUTHORITY IS MEANT FOR THE PROPER DEVELOPMENT OF THE CITY AND ITS FUNDS ARE TO BE UTI LIZED FOR THE PURPOSE OF THE DEVELOPMENT/CHARITABLE PURPOSE. AS D EVELOPMENT IS ALSO INCLUDED IN THE DEFINITION OF 'CHARITABLE ACTI VITY' UNDER THE ACT. THE APPELLANT HAS APPLIED FOR GRANT OF REGISTR ATION UNDER SECTION 12A OF THE ACT. FURTHER THE ASSESSEE FILED VARIOUS DETAILS CALLED F OR BY THE CIT (EXEMPTIONS). 4. THE CIT(EXEMPTIONS) FURTHER ISSUED A LETTER DATE D 06.06.2017 REQUIRING THE ASSESSEE TO FURNISH FURTHER DETAILS. THE ASSESSEE IN RESPONSE TO THE ABOVE LETTER FILED A DETAILED REPLY VIDE LET TER DATED 14.06.2017 CATEGORICALLY STATING THAT 'THE URBAN DEVELOPMENT A UTHORITY IS INCORPORATED UNDER 'THE KARNATAKA URBAN DEVELOPMENT AUTHORITIES ACT, 1987 THE KARNATAKA ACT NO.34 OF 1987 BY THE GOVERNMENT OF KA RNATAKA. IT IS NOT A SOCIETY OR A TRUST WHICH IS REQUIRED TO BE REGISTER ED UNDER THE SOCIETY ACT OR UNDER TRUST ACT WHICH HAVE ITS OWN BYE-LAWS. IN FAC T IT IS A LOCAL AUTHORITY INCORPORATED BY AN ACT OF GOVERNMENT. THEREFORE, AS THERE IS NO SEPARATE BYE-LAWS OF THE AUTHORITY, THE INCLUSION OF THE SAI D CLAUSES IN THE BYE-LAWS IS NOT APPLICABLE. IT IS INCORPORATED UNDER AN ACT OF STATE LEGISLATURE. THE INCORPORATED ACT ITSELF TAKE CARE THE CLAUSES OF PU BLIC INTEREST LIKE INVESTMENT OF FUND, APPLICABILITY TO ALL PERSONS IR RESPECTIVE OF CASTE, CREED, AUDIT, IRREVOCABLE (AS AN ACT FORMED CANNOT BE REVO KED), AND ON DISSOLUTION TO BE CONSIDERED AS GOVERNMENT PROPERTY AND OTHER A PPLICABLE CLAUSES.' THE ASSESSEE IN THE SAID LETTER FURTHER MADE SUBMIS SIONS AND FILED THE DETAILS. 5. THE ASSESSEE FURTHER FILED A LETTER DATED 20.06. 2017 QUOTING THE VARIOUS DECISIONS IN SUPPORT OF THE CONTENTION THAT THE ASSESSEE IS ENTITLED FOR REGISTRATION UNDER SECTION 12A(A) OF THE ACT. ITA NO.1763/BANG/2017 PAGE 4 OF 7 6. THE CIT (EXEMPTIONS) WITHOUT CONDUCTING THE HEAR ING OF THE ASSESSEE PASSED THE ORDER UNDER SECTION 12AA(1)(B)( II) BY OBSERVING AS UNDER:- ' THE APPLICANT TRUST FILED AN APPLICATION FOR REGI STRATION U/S 12AA ON 14.12.2016. A LETTER DATED 06.06.2017 WAS ISSUED TO THE TRUST CALLING FOR INFORMATION/CALLING FOR DETAILS, SUCH A S (I) TRUST DEED COPY DOES NOT CONTAIN MANDATORY CLAUSES OF THE IT A CT, SUCH AS, A) INVESTMENT CLAUSE, (B) ACCOUNT CLAUSE C) AMENDMENT CLAUSE, D) DISSOLUTION CLAUSE, E) IRREVOCABILITY CLAUSE, F) BE NEFICIARY CLAUSE & G) UTILISATION CLAUSE INCORPORATE THE SAME BY WAY O F AMENDMENT TO THE TRUST DEED. HENCE, IN THE ABSENCE OF THE AMENDE D DEED FOR THE ABOVE CLAUSES, THE GENUINENESS OF THE ACTIVITIES CA NNOT BE VERIFIABLE. IN THE INSTANT CASE, IT IS NOT POSSIBL E TO VERIFY THE GENUINENESS OF THE TRUST OR ITS ACTIVITIES. 2. AT THE STAGE OF REGISTRATION U/S 12AA, THE COMM ISSIONER IN RECEIPT OF AN APPLICATION FOR REGISTRATION HAS TO B E SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND T HE GENUINENESS OF THE TRUST AND ITS ACTIVITIES. IN THIS CONNECTION, T HE RELIANCE IS PLACED ON THE DECISION OF THE HONORABLE HIGH COURT OF KERA LA IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY VS. CIT (247 ITR 18). 3. AT THE STAGE OF REGISTRATION U/S.12AA, THE COMM ISSIONER IN RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRU ST OR INSTITUTION HAS TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRU ST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES. 4. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, THE APPLICATION FOR REGISTRATION U /S 12AA IS HEREBY REJECTED. 7. AGGRIEVED BY THE AFORESAID ORDER OF THE CIT(EXEM PTIONS), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. WE HAV E HEARD THE RIVAL SUBMISSIONS. THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE FINDINGS OF THE CIT (EXEMPTIONS) ARE CONTRARY TO THE FACTS O F THE ASSESSEES CASE AND IS PERVERSE. IT WAS SUBMITTED THAT THE ASSESSEE DOES NOT HAVE TRUST DEED, YET CIT(EXEMPTIONS) HAS OBSERVED THAT THE TRU ST DEED COPY DOES NOT CONTAIN MANDATORY CLAUSES. IT WAS SUBMITTED THAT WHEN THE ASSESSEE HAS ITA NO.1763/BANG/2017 PAGE 5 OF 7 NOT FILED TRUST DEED AT ALL, THERE IS NO QUESTION O F HOLDING THAT THE ASSESSEE TRUST DEED DOES NOT CONTAIN THE MANDATORY CLAUSES. THUS, THE ORDER PASSED IS TOTALLY ON NON APPLICATION OF MIND AND CONSEQUEN TLY THE SAID ORDER IS LIABLE TO BE QUASHED. 8. IT WAS SUBMITTED THAT THE CIT(EXEMPTIONS) ERRED IN OBSERVING IN THE IMPUGNED ORDER THAT IT IS NOT POSSIBLE TO VERIFY TH E GENUINENESS OF THE TRUST OR ACTIVITIES WHEN THE ASSESSEE IS THE AUTHORITY CR EATED UNDER THE STATE ACT AND IT HAS FILED ITS OBJECTS AND ACTIVITIES BEFORE THE CIT. IT WAS SUBMITTED THAT THE CASE LAWS RELIED BY THE CIT(E) IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY VS. CIT (2001) 247 ITR 18 (KER) IS NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. FURTHER RELIA NCE WAS PLACED ON THE FOLLOWING DECISIONS WHEREIN ON THE SIMILAR TYPE OF ACTIVITY OF THE ASSESSEE WERE HELD TO BE CHARITABLE IN NATURE. (A) JAIPUR DEVELOPMENT AUTHORITY VS. CIT (2014) 52 TAXMANN.COM 25 (JAIPUR-TRIB). (B) HARIDWAR DEVELOPMENT AUTHORITY VS. CIT (2015) 57 TAXMANN.COM 6 (DELHI-TRIB). (C) CIT VS. LUCKNOW DEVELOPMENT AUTHORITY (2013) 3 8 TAXMANN.COM 246 (ALLAHABAD). 9. THE LD. DR RELIED ON THE ORDER OF THE CIT(EXEMPT IONS). 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT I S CLEAR THAT THE REPLY DATED 06.06.2017 FILED BY THE ASSESSEE BEFORE THE C IT(E) THAT THE ASSESSEE IS AN AUTHORITY INCORPORATED UNDER THE KAR NATAKA URBAN DEVELOPMENT AUTHORITIES ACT, 1987 AND WAS NEITHER A TRUST OR SOCIETY. FURTHER IN ITS LETTER DATED 20.6.2017, THE ASSESSEE HAS ALSO CITED DECISIONS RENDERED BY JUDICIAL FORUMS AS TO HOW THE ASSESSEES WHO ARE CARRYING ON ACTIVITIES SIMILAR TO THAT OF THE ASSESSEE IN THE P RESENT CASE WERE HELD TO BE INSTITUTIONS ENTITLED TO REGISTRATION U/S. 12AA OF THE ACT. NONE OF THESE ITA NO.1763/BANG/2017 PAGE 6 OF 7 SUBMISSIONS WERE CONSIDERED BY THE CIT(EXEMPTIONS). HE HAS PROCEEDED ON THE BASIS THAT THE ASSESSEE IS A TRUST CONSTITUT ED UNDER A TRUST DEED. THEREFORE THE ARGUMENT THAT THERE WAS NON-APPLICATI ON OF MIND BY THE CIT(E) TO THE CONTENTIONS OF THE ASSESSEE IS CORREC T. WE ARE THEREFORE OF THE VIEW THAT THE IMPUGNED ORDER SHOULD BE SET ASID E AND THE ISSUE WITH REGARD TO GRANT OF REGISTRATION U/S. 12AA OF THE AC T SHOULD BE REMANDED TO THE CIT(EXEMPTIONS) FOR CONSIDERATION DE NOVO IN THE LIGHT OF THE FACTS AS BROUGHT OUT BY THE ASSESSEE IN ITS REPLIES DATED 06 .06.2017 AND 20.6.2017. THE ASSESSEE WILL ALSO BE AT LIBERTY TO FILE FURTHE R EVIDENCE TO SUBSTANTIATE ITS CASE FOR GRANT OF REGISTRATION U/S. 12AA OF THE ACT. THE CIT(E) IS DIRECTED TO DECIDE THE APPLICATION FOR GRANT OF REG ISTRATION U/S. 12AA OF THE ACT OF THE ASSESSEE AFRESH, AFTER AFFORDING ASSESSE E OPPORTUNITY OF BEING HEARD. 11. FOR STATISTICAL PURPOSES, THE APPEAL BY THE ASS ESSEE IS TREATED AS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 1 ST DAY OF OCTOBER, 2018. SD/- SD/- ( INTURI RAMA RAO ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 1 ST OCTOBER, 2018. / D ESAI S MURTHY / ITA NO.1763/BANG/2017 PAGE 7 OF 7 COPY TO: 1. APP ELL ANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GU ARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.