The Society of Carmel, Kanyakumari V. CIT, Madurai

ITA 1881/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0950 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 25-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGIRI
• Assessee Lawyers: R VISWANATHAN
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 1881/MDS/2012 M/S THE SOCIETY OF CARMEL, NO.2-105, RAJAKKAMANGALAM ROAD, NAGERCOIL 629 004. KANYAKUMARI DISTRICT. PAN : AABTT 2314 B (APPELLANT) V. THE COMMISSIONER OF INCOME TAX-I, NO.2, V.P. RATHINASWAMY NADAR RD., BIBIKULAM, MADURAI 625 002. (RESPONDENT) APPELLANT BY : SHRI R. VISWANATHAN, CA RESPONDENT BY : SHRI T.N. BETGIRI , JCIT DATE OF HEARING : 22.01.2013 DATE OF PRONOUNCEMENT : 22.01.2013 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, IT IS AGGRI EVED THAT THE CIT DID NOT GRANT IT APPROVAL UNDER SECTION 80G(5) OF I NCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). I.T.A. NO. 1881/MDS/12 2 2. FACTS APROPOS ARE THAT ASSESSEE, ALREADY HAVING REGISTRATION UNDER SECTION 12AA OF THE ACT GRANTED ON 31.12.2007 , HAD FILED AN APPLICATION FOR APPROVAL UNDER SECTION 80G(5) OF TH E ACT, ON 18.1.2012. LD. CIT, AFTER PERUSING THE ACCOUNTS OF THE ASSESSEE- TRUST, REACHED AN OPINION THAT ASSESSEE HAD ADVANCE D HUGE SUMS FOR INDIVIDUAL PERSONS AND COULD NOT EXPLAIN FOR WH AT PURPOSE THE ADVANCES WERE MADE. AS PER CIT, IT WAS AN INDICATI ON OF DIVERSION OF FUNDS FOR NON-CHARITABLE ACTIVITIES. FURTHER, ASSE SSEE HAD CLAIMED TO HAVE BEEN SPENT A SUM OF ` 30,75,321/- UNDER THE HEAD INSTITUTE EXPENSES FOR ALCOHOLISM TREATMENT, BUT NO PROPER E VIDENCE WERE FILED IN SUPPORT. THUS, ACCORDING TO CIT, GENUINEN ESS OF THE ACTIVITIES COULD NOT BE VERIFIED. THERE IS ALSO A FINDING OF THE CIT THAT THE ASSESSEE WAS RUNNING A SCHOOL ON COMMERCIAL BASIS. HE THUS HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR APPROVAL UND ER SECTION 80G(5) OF THE ACT. 3. NOW BEFORE US, LEARNED A.R., STRONGLY ASSAILING THE ORDER OF CIT, SUBMITTED THAT ASSESSEE WAS ALREADY HAVING REG ISTRATION UNDER SECTION 12AA OF THE ACT. THE ADVANCES WERE GIVEN O NLY FOR CHARITABLE PURPOSES AND THERE WERE DOCUMENTARY EVID ENCE FOR THIS. EXPENSES OF ` 30,75,321/- WERE INCURRED FOR ALCOHOLISM TREATMENT . I.T.A. NO. 1881/MDS/12 3 ACCORDING TO LEARNED A.R., LD. CIT HAD NOT VERIFIED FINANCIAL STATEMENTS, WHICH WERE FILED ALONG WITH RETURN OF I NCOME AND WITHOUT GIVING ANY REASONS, HE CAME TO A CONCLUSION THAT TH E SCHOOL RUN BY THE SOCIETY WAS ON COMMERCIAL LINES. 4. PER CONTRA, LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF CIT. 5. WE HAVE PERUSED THE ORDER OF CIT AND HEARD THE RIVAL SUBMISSIONS. CIT HAS COME TO A CONCLUSION THAT HUG E SUMS WERE ADVANCED TO INDIVIDUAL PERSONS AND ASSESSEE COULD N OT EXPLAIN THE PURPOSE OF GIVING ADVANCE. AS PER THE ASSESSEE, IT WAS HAVING SUFFICIENT REASON FOR GIVING ADVANCES AND SUCH ADVA NCES WERE GIVEN ONLY FOR THE PURPOSE OF PURSUING ITS CHARITABLE OBJ ECTS. ASSESSEE ALSO STATES THAT IT HAD EVIDENCE FOR EXPENDITURE INCURRE D FOR ALCOHOLISM TREATMENT. WE ARE OF THE OPINION THAT THE CIT HAS TREATED THE APPLICATION CASUALLY AND CAME TO THE CONCLUSIONS WI THOUT GIVING SUFFICIENT REASONS. IT IS A MATTER OF FACT THAT AS SESSEE WAS ALREADY HAVING REGISTRATION UNDER SECTION 12AA. HOW SUCH R EGISTRATION WAS GIVEN, I.E. WHETHER CONSIDERING THE ASSESSEE TO BE A CHARITABLE SOCIETY OR A RELIGIOUS SOCIETY OR BOTH CHARITABLE A ND RELIGIOUS, IS NOT CLEAR FROM THE ORDER OF CIT. WE ARE, THEREFORE, OF THE OPINION THAT THE MATTER REQUIRES A FRESH LOOK BY THE CIT. ASSESSEE HAS TO PRODUCE I.T.A. NO. 1881/MDS/12 4 EVIDENCE IN SUPPORT OF EXPENSES INCURRED FOR ALCOHO LISM TREATMENT AND ALSO SHOULD SHOW THE PURPOSE OF ADVANCES MADE T O VARIOUS INDIVIDUAL PERSONS. JUST BECAUSE A SCHOOL IS RUN O N COMMERCIAL BASIS, IT COULD NOT BE STATED THAT ASSESSEE WAS NOT DOING ANY CHARITY. ALL THESE ASPECTS ARE TO BE VERIFIED BY THE CIT. W E THEREFORE SET ASIDE THE ORDER OF THE CIT AND REMIT THE MATTER BAC K TO THE FILE OF CIT TO CONSIDER AFRESH, IN ACCORDANCE WITH LAW. ASSESS EE SHALL BE GIVEN AN OPPORTUNITY TO PRESENT ITS CASE. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. THE ORDER WAS PRONOUNCED IN THE COURT ON TUESDAY, T HE 22 ND OF JANUARY, 2013, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 22 ND JANUARY, 2013. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT-I, MADURAI (4) D.R. (5) GUARD FILE