SHRI RAM MANDIR BAL KHANDI BABA COMMITTEE, BILASPUR(CG) V. THE COMMISSIONER OF INCOME TAX, BILASPUR(CG)

ITA 19/BIL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2424 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 01-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H M MOHARANA
• Assessee Lawyers: G S AGARWAQL
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

, RA IPUR IN THE INCOME TA X A PPELLA TE TRIBUNA L, RA IPUR BEFORE S/SHRI MUKUL SHRAW AT ( JM) SHAMIM YAH Y A (AM) , , ./ I.T.A. NO. 19/BLPR/2013 RAM MANDIR BAL KHANDI BABA COMMITTEE, NEAR SHYAM TALKIES, BILASPUR / VS. CIT, AAYAKAR BHAWAN, VYAPAR VIHAR, BILASPUR ./ ./ PAN/GIR NO. : AAITS 5215 M ( / AP PELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI G.S.AGARWAQL / RESPONDENT BY : SHRI H.,M.MOHARANA / DATE OF HEARING : 1 6 - 02 - 2016 / DATE OF PRONOUNCEMENT : 17 - 02 - 2016 / O R D E R PER MUKUL SHRAWAT, JM THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM AN ORDER UNDER SECTION 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 OF THE LD CIT, BILASPUR, WHEREIN, THE LD CIT HAS REJECTED THE APPLICATION OF THE ASSESSEE FOR REGISTRAT ION U/S.12AA OF THE INCOME TAX ACT, 1961. 2. FACTS OF THE CASE ARE THAT ON PERUSAL OF THE TRUST DEED, THE LD CIT OBSERVED THAT THE DEED DOES NOT CONTAIN ANY WINDING UP OR DISSOLUTION CLAUSE TO DESCRIBE AS TO WHAT WILL HAPPEN TO THE ASSETS REMAINING AT THE TIME OF ITS 2 I.T.A. NO. 19/ BLPR/2013 DISSOLUTION. L ACK OF SUCH CLAUSE SHOWS THAT THE OBJECTIVES OF THE TRUST ARE NOT CLEAR. O N BEING ASKED, THE ASSESSEE SUBMITTED THAT IT IS A PUBLIC TRUST WHERE CUSTODI AN IS COLLECTOR, BILASPUR AND IN ANY CIRCUMSTANCE , IF PROBLEM IN TRUST ARIS ES THEN COLLECTOR WILL DECIDE THE MODE OF CONTINUATION. T HE LD CIT WAS NOT CONVINCED WITH THE SUBMISSION OF THE ASSESSEE AND HELD THAT UNDER THIS CONDITION THE ASSETS OF THE TRUEST CAN BE DISPOSED OFF AT THE WILL OF COLLECTOR, WHICH DISQUALIFIES THE APPLI CANT FROM THE GRANT OF REGISTRATION U/S.12AA OF THE I.T.ACT, 196 1. I T WAS IN THIS BACKDROP, THE LD CIT REJECTED THE CLAIM FOR GRANT OF REGISTRATION U/S. 2AA OF THE ACT. B EING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. FROM THE SIDE OF THE ASSESSE E, SHRI G.S.AGARWAL, LD A.R. APPEARED AND FROM THE SIDE OF THE REVENUE, SHRI H.M.MOHARA, LD D.R. APPEARED. 4. THE FUNDAMENTA L QUESTION IS THAT THE SCOPE OF PROVISIONS OF SECTION 12AA ARE THAT OF AN APPLICATION FOR REGISTRATION OF A TRUST, THE LD COMMISSIO NER OF INCOME TAX SHALL CALL FOR THE DOCUMENTS OR THE INFORMATION ABOUT THE TRUST IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. CONSEQUENTLY, THE LD CIT SHALL ALSO RECORD HIS SATISFACTION ABOUT THE OBJECTS OF THE TRUST AS WELL AS THE GENUINENESS OF THE ACTIVITIES. T HEREFORE, UNDER THIS SECTION, BASICALLY TWO AREAS ARE REQUIRED TO BE EXAMINED BY THE LD CIT, NAMELY, GENUINENESS OF THE ACTIVITIES AND OBJECTS OF THE TRUST.. F OR THIS REASON, THE COMMISSIONER IS GENERALLY EX AMINING THE TRUST DEED THROUGH WHICH THE TRUST IS 3 I.T.A. NO. 19/ BLPR/2013 CREATED SO THAT THE OBJECTS OF THE TRUST FOR WHICH IT IS CREATED CAN BE ASCERTAINED. FURTHER, THE COMMISSIONER WHILE DEALING W ITH THE APPLICATION U/S.12AA IS ALSO EXAMINING THE OTHER RECORDS AS WELL AS ACC OUNTS SO AS TO ASCERTAIN THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. I N A NUMBER OF DECISIONS, THE SCOPE OF THE PROVISIONS OF SECTION 123AA HAVE BEEN DISCUSSED, FOR EXAMPLE : - I) SITARAM KUTIR CHARITABLE TRUST, MEHSANA VS CIT, GANDHINAGAR (ITA NO.71/ A HD/2013 DT.17.5.2013 . II) SHRI SAISAMARPAN TRUST CO VS. CIT, ROHTAK (ITGA NO.3114/DELHI) OF 2007 (2009) 27 SOT 423 (DELHI). 5. ON THIS ISSUE, A VIEW HAS BEEN TAKEN BY THE ITAT C BENCH, AHMEDABAD IN THE CASE OF SITARAM KUTIR CHARITABLE TRUST (SUPRA),W HEREIN, IT HAS BEEN HELD AS UNDER: - WE H AVE HEARD BOTH THE SIDES. WE H AVE ALSO PERUSED THE RELEVANT ORDERS. AS FA R AS THE ARGUMENT OF LD.DR IS CONCERNED, WE MAY LIKE TO APPRECIATE THE SAME THAT A TRUST - DEED CAN INCORPORATE A CLAUSE IN RESPECT OF V ESTING O F ASSETS OF A TRUST IN CASE OF D ISSOLUTION, BUT WE CANNOT APPROVE ANY APPREHENSION TO BE CONCEIVED AT THE INITIAL STAGE OF REGISTRATION OF A T RUST. THE REVENUE DEPARTMENT HAS OTHER WAYS AND MEAN TO OVERCOME SUCH AN APPREHENSION NOW RAISED BY THE LD.DR MR.D .K.SINGH. IN OUR HUMBLE UNDERSTANDING THE PROCEDURE FOR REGISTRATION AS INCORPORATED BY THE IT ACT U/S.12AA IS THAT A COMMISSIONER ON RECEIPT OF A N APPLICATION FOR REGISTRATION OF A T RUST SHALL CALL FO R SUCH DOCUMENTS OR INFORMATION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST AND AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST AS ALSO THE GENUINENESS OF ITS ACTIVITIES, HE SHALL PASS AN ORDER REGISTERING THE TRUST. SO, AT THE TIME OF R EGISTRATIO N, THE REQUIREMENT OF T HE STATUTE IS TO INVESTIGATE ABOUT THE GENUINENESS OF T HE ACTIVITIES AND THE OBJECTS OF T HE TRUSTS. AS PER SECTION 12AA, THERE IS NO SUCH REQUIREMENT THAT THE LD.COMMISSIONER IS AUTHORIZED TO GO BEYOND THE CLAUSES AND SCOPE OF T HIS S ECTION. 5.1. WE H AVE EXAMINED A CITED PRECEDENT VIZ. SHRI SAI SAMARPAN TRUST CO.VS. CIT (2009) 23 DT R 125 (DELHI), WHEREIN THE CIT(A) HAD REJECTED THE REGISTRATION ON THE GROUND THAT THE TRUST - DEED DID NOT CONTAIN THE PROVISION OF A SSETS TREATMENTS ON DIS SOLUTION. THE OBSERVATION OF THE HONBLE COURT IS THAT THE TRUST BEING REGISTERED WITH THE SUB - REGISTRAR AS A CHARITABLE TRUST AND THE TRUST BEING AN IRREVOCABLE TRUST THE OBVIOUS POSITION SHALL BE THAT THE CHARITY COMMISSIONER SHOULD TAKE OVER THE ASSETS ON DISSOLUTION, HENCE REJECTION OF R EGISTRATION BY THE LD.COMMISSIONER ON THE GROUND THAT THERE WAS NO 4 I.T.A. NO. 19/ BLPR/2013 SPECIFIC CLAUSE IN THE INSTRUMENT IN REGARD TO THE TREATMENT TO BE GIVEN IN THE EVENT OF DISSOLUTION WAS NOT ON A SOUND FOOTING. THE HONBLE COURT HAS FI NALLY HELD THAT CONSIDERING THE CLAUSES OF THE TRUST - DEED AND OTHER ACTIVITIES THE TRUST WAS GENUINE AND ENTITLED FOR REGISTRATION U/S.12AA OF IT ACT. RESPECTFULLY FOLLOWING THIS DECISION AND THE RATIO LAID DOWN IN OTHER CITED DECISIONS, WE H EREBY HOLD THA T THE REASON GIVEN BY THE LD.COMMISSIONER FOR REJECTION OF RE GISTRATION U/S.12AA WAS NOT AS PER LAW, HENCE DISMISSED. HOWEVER, WE HAVE ALSO NOTED THAT THE LD.COMMISSIONER HAS NOT EXAMINED OTHER ASPECTS AS PRESCRIBED IN THIS SECTION, AS DISCUSSED SUPRA, THE REFORE WE R ESTORE THIS ISSUE BACK TO THE FILE OF LD.COMMISSIONER TO EXAMINE THE OBJECT OF T HE TRUST AND THE ACTIVITIES CARRIED ON BY THE TRUST AND IF FIND GENUINE, GRANT THE REGISTRATION AS PER THE PROVISIONS OF LAW . SINCE THE ISSUANCE OF REGISTRATION IS A PRIMARY CONDITION FOR THE START OF THE CHARITABLE ACTIVITY OF T HE TRUST, THEREFORE HAS TO BE DECIDED URGENTLY RATHER ON PRIORITY. WE T HEREFORE DIRECT THE APPELLANT TO SUO MOTU APPEAR BEFORE THE LD. COMMISSIONER WITHIN 15 DAYS ON RECEIPT OF THIS ORDER OF T HE TRIBUNAL WITHOUT WAITING FOR ANY NOTICE FROM THE REVENUE DEPARTMENT AND SUBMIT ALL THE NECESSARY INFORMATIONS AS ALSO DOCUMENTS, SO THAT THE LD.COMMISSIONER SHALL PASS AN APPROPRIATE ORDER AS PER LAW AS DEEMED FIT WITHIN A REASONABLE TIME. WI TH THESE DI RECTIONS, THIS GROUND OF T HE ASSESSEE MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. IN ADDITION TO THE ABOVE CASE LAW, OUR ATTENTION HAS ALSO BEEN DRAWN ON THE CLAUSE OF THE TRUST DEED TO CLARIFY THAT VIDE CLAUSE 13, IT HAS ALREADY BEEN PROVIDE D THAT IN NO CIRCUMSTANCES, THE TRUST SHALL NOT BE DISSOLVED. W E, THEREFORE, HOLD THAT ALMOST IN IDENTICAL SITUATION A VIEW HAS BEEN EXPRESSED BY THE RESPECTIVE CO - ORDINATE BENCH, AS REPRODUCED ABOVE, HENCE, RESPECTFULLY FOLLOWING THE SAID VIEW, WE HEREBY RESTORE THIS BACK TO THE FILE OF THE LD CIT TO EXAMINE AFRESH THE OBJECTS AND ACTIVITIES OF THE TRUST IN THE LIGHT OF TRUST DEED AS WELL THE ACCOUNTS AS PRESCRIBED UNDER THE PROVISIONS OF SECTI ON 12AA OF THE I.T.,A CT. S INCE WE HAVE RESTORED THE ISSUE FOR DENOVO CONSIDERATION AS PER THE DIRECTION , HENCE, THIS GROUND OF THE ASSESSEE MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES. 5 I.T.A. NO. 19/ BLPR/2013 7. IN THE RESULT, APPEAL FILED BY THE APPELLANT IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 /02/2016 . SD/ - SD/ - ( , ) ( , ) S HAMIM Y AHY A , ACCOUNT ANT MEMBER MUKUL SHRA WA T , JUDICIAL M EM BER RAIPUR , DATED 17 / 02 /20 1 6 . . ./ PARIDA , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT : RAM MANDIR BAL KHANDI BABA COMMITTEE, NEAR SHYAM TALKIES, BILASPUR 2. / THE RESPONDENT : CIT, BILASPUR 3. ( ) / THE CIT(A) - BILASPUR 4. / CIT 5. , , / DR, ITAT , RAIPUR 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SR. PS, ITAT, CAMP: RAIPUR