M/s. Joy Rural Development Edcuational and CharitableTrust, Salem V. CIT, Salem

ITA 1919/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73792 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 26-02-2014
• Assessment Year: misc
• Appeal Filed On: 04-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOB ADDITIONAL LD
• Assessee Lawyers: SHRIT S LAKSHMI VENKATARAMAN
• Keywords: Charitable institution
• Section: 12AA; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , , !' # , $ % BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO.1919/MDS./2013 M/S.JOY RURAL DEVELOPMENT EDUCATIONAL AND CHARITABLE TRUST, 18/18 CHIDTHAN STREET, NEAR LAXMI NARAYANA KOVIL, SECOND AGRAHARAM, SALEM 636 001. VS. THE COMMISSIONER OF INCOME TAX , NO.3 GANDHI ROAD, SALEM-7. PAN AAATJ 9567 H ( &' / APPELLANT ) ( #(&' / RESPONDENT ) / APPELLANT BY : SHRIT.S.LAKSHMI VENKATARAMAN C.A. / RESPONDENT BY : SHRI SHAJI P JACOB ADDITIONAL. LD. CIT DR / DATE OF HEARING : 26.02.2014 /DATE OF PRONOUNCEMENT : 21.03.2014 ) / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX, SALEM DATED 28.08.2013 IN THE CASE ITA NO. 1919/MDS/13 2 NO. 9755(95)/2012-2013/CIT/SLM WHEREIN THE LD. CIT (A) HAD DENIED THE APPLICATION IN FORM 10A SEEKING REGISTRA TION UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LD. CIT HAS TAKEN UP SIX GROUNDS BEFORE US; HOWEVER, THE CRUX OF THE ISSUE IS THAT THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LD.CIT FO R NOT GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT BY REJEC TING THE APPLICATION MADE IN FORM NO.10A. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A TRUST, FORMED BY THE DEED DATED 16.03.2007 AND SUPPLEMENTA RY DEEDS DATED 01.04.2008, 30.11.2012 & 28.01.13. SUBSEQUEN TLY APPLICATION IN FORM NO.10A FOR REGISTRATION U/S. 12AA OF THE AC T WAS FILED BY THE ASSESSEE TRUST ON 04.01.2013. WHILE CONSIDERING TH E ISSUE FOR GRANTING REGISTRATION U/S. 12AA OF THE ACT, THE LD. CIT OBTAINED A REPORT FROM THE LD. ASSESSING OFFICER IN ORDER TO V ERIFY THE ACTIVITIES OF ITA NO. 1919/MDS/13 3 THE TRUST. THE LD. ASSESSING OFFICER IN HIS REPOR TS DATED 01.07.2013 AND 14.08.2013 MADE THE FOLLOWING OBSERVATIONS:- A. REPORT DATED:- 01/07/2013. ------- THE BOOKS OF ACCOUNTS WERE ASKED TO BE PRO DUCED AT OFFICE (BY PHONE CALL). THE TRUST SOUGHT TIME TILL 28.06.2013. AS THE TRUST NOT PRODUCED BOOKS OF ACCOUNTS, I VISITED THE TRUST OFF ICE TODAY. THE MANAGING TRUSTEE, SMT.C.M.VASANTHI WAS PRESENT IN THE TRUST OFFICE. THE BOOKS OF ACCOUNTS WERE NOT MAINTAINED. SHE HAS PRODUCED 3 SHEETS OF PAPER (COPY ENCLOSED) WHICH SHE KEPT FOR ACCOUNTING PURPOSE. SHE WAS NOT ABLE TO EXPLAIN THE EXPENDITURE MENTION ED AGAINST SUCH TRANSACTIONS. IN THE RECEIPTS & PAYMENTS ACCOUNT, THERE WAS AN EXPENDITURE CAPTIONED UNIFORM & NOTE BOOKS TO CHILDREN RS.20,2 97/- SHE HAS BEEN REQUESTED TO PRODUCE ANY BILL FOR PURCHASE OF CLOTH /DRESS AND NOTE BOOKS. SHE WAS NOT ABLE TO PRODUCE ANY BILLS FOR THE EXPEN DITURE. SHE HAS SHOWN ONLY SELF MADE VOUCHER THAT TOO FOR TOTAL AMO UNT. THE TRUST HAS RAISED LOAN THROUGH SELF HELP GROU P IN VARIOUS BANKS TO THE TUNE OF RS.54 LAKHS. THE SAME WAS NOT REFLECTE D IN RETURN OF INCOME. MOREOVER, THE TRUST IS DOING INSURANCE BUSINESS I N THE NAME JOY TRUST FROM 2009 ONWARDS. THE TRUST SHOWS THE INSURANCE I NCOME FOR THE YEAR ENDING 31.03.2012 AS RS.1,19,185/- BUT FAILED TO SH OW THE INSURANCE INCOME FOR THE PREVIOUS YEARS. AND ALSO NO SEPARAT E BOOK OF ACCOUNTS WAS MAINTAINED FOR THIS BUSINESS. MOROEVER, ALL TRUSTEES ARE CLOSE RELATIVES. THE M ANAGING TRUSTEE HAS SHOWN LOT OF PHOTOGRAPHS BUT WAS NOT ABLE TO PRODUC E ANY MATERIAL EVIDENCE FOR THE EXPENDITURE, LIST OF BENEFICIARIES OR ANY CONTEMPORANEOUS EVIDENCES. ITA NO. 1919/MDS/13 4 THE VOUCHERS ARE FED INTO TALLY SOFTWARE BY THE A UDITOR AND BOOKS OF ACCOUNTS WERE CREATED. THERE ARE NO GENUINE ACTIVIT IES CONDUCTED BY THE TRUST. A. REPORT DATED:- 14/08/2013. THE TRUST HAS BEEN REQUESTED TO PRODUCE THE BILLS AND VOUCHERS AND BOOKS OF ACCOUNTS ON 12.08.2013. THE MANAGING TRUST EE, SMT.C.VASANTHA APPEARED ON 13.08.2013 AND PRODUCED ONLY BOOKS OF ACCOUNTS FOR THE FINANCIAL YEARS 2010-11 & 2011-12 ALONG WITH TWO BILLS AND SELF MADE VOUCHERS. OUT OF THE TWO BILLS PRODU CED, ONE BILL NO.2821 DATED 30.04.2012 REFLECTS THE PURCHASE OF PERSONAL GARMENTS BUT SHOWN IN THE BOOKS FO ACCOUNTS AS PURCHASE OF CHILDREN DR ESS. THE AXIS BANK A/C 909010033061626 WAS TOTALLY OMIT TED TO ACCOUNT FOR IN THE BOOKS OF ACCOUNTS FOR THE F.Y. 2010-11. ALL WITHDRAWALS FROM THE BANK ARE ONLY CASH BY SELF & STAFF MEMBERS OF T HE TRUST. THIS CLEARLY IMPLIES THAT THE ACCOUNTS ARE CREATED TO SHOW AS IF THE PROGRAMMES HAVE BEEN CONDUCTED. THE MANAGING TRUSTEE FAILED TO FILE ANY MATERIAL EVIDENCE FOR THE EXPENDITURE, LIST OF BENEFICIARIES OR ANY CONTEMPOR ANEOUS EVIDENCES. THEREFORE, NO GENUINE ACTIVITIES CARRIED OUT BY THE TRUST. 4. SUBSEQUENTLY WHEN THE MATTER WAS POSTED FOR HE ARING BEFORE THE LD.CIT, NONE APPEARED, HOWEVER THE APPELLANT HA D FILED A LETTER SEEKING ADJOURNMENT FOR ONE MONTH. SINCE THE CASE WAS GETTING BARRED BY LIMITATION ON 31.08.2013, THE LD. CIT PROCEEDED WITH THE ITA NO. 1919/MDS/13 5 PROCEEDINGS AND ARRIVED AT THE CONCLUSION THAT THE APPELLANT TRUST HAD FAILED TO DISCHARGE THE ONUS OF THE PROVING THE OBJ ECTS OF THE TRUST TO BE OF CHARITABLE/RELIGIOUS IN NATURE AND THE ACTIVI TIES OF THE TRUST TO BE GENUINENESS AND THEREFORE, REJECTED THE APPLICATION FOR GRANTING REGISTRATION U/S.12AA OF THE ACT. 5. BEFORE US, LD. A.R. VEHEMENTLY ARGUED THAT FOR GRANTING REGISTRATION U/S. 12AA OF THE ACT, ONLY THE OBJECTS OF THE TRUST HAD TO BE LOOKED INTO AS HELD BY THE DECISION OF VARIOUS H IGHER JUDICIARIES. IT WAS THEREFORE PRAYED THAT THE MATTER MAY BE REMI TTED BACK TO THE FILE OF LD. CIT FOR DUE CONSIDERATION OF THE OBJE CTS OF THE TRUST FOR GRANTING REGISTRATION U/S. 12AA OF THE ACT. LD. D. R RELIED IN THE ORDER OF THE LD. CIT AND ARGUED IN SUPPORT OF THE SAME. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS APPARENT FRO M THE FACTS OF THE CASE THAT THE LD. CIT HAS ONLY EXAMINED THE AOS RE PORT WITH RESPECT TO THE ACTIVITIES CONDUCTED BY THE TRUST AND CAME T O THE CONCLUSION THAT THEY ARE NOT CHARITABLE IN NATURE. FURTHER, S INCE BILLS, VOUCHERS ITA NO. 1919/MDS/13 6 AND BOOKS OF ACCOUNTS WERE NOT PRODUCED BEFORE THE LD. ASSESSING OFFICER AND THERE WAS ALSO A FINDING BY THE LD. ASS ESSING OFFICER THAT CERTAIN BANK ACCOUNT MAINTAINED BY ASSESSEE TRUST W ERE NOT DISCLOSED, LD. CIT OPINED THAT THE ASSESSEE TRUST H AD FAILED TO DISCHARGE THE ONUS OF PROVING THE OBJECTS OF THE TR UST TO BE CHARITABLE/ RELIGIOUS IN NATURE. ONLY BASED ON THE ABOVE FACTS , THE LD. CIT ARRIVED AT THE CONCLUSION THAT THE ACTIVITIES CARRI ED OUT BY THE TRUST WAS NOT GENUINE, AND THEREFORE, REJECTED THE APPLICATIO N FILED IN FORM NO.10A BY THE ASSESSEE AND THUS DENIED REGISTRATION U/S. 12AA OF THE ACT. HOWEVER, ON PERUSING THE OBJECTS OF THE TR UST, WE FIND THEM TO BE AS FOLLOWS:- A. TO PROVIDE FOR AGRICULTURAL IMPROVEMENT, ANIM AL HUSBANDRY DEVELOPMENT AND COTTAGE AND SMALL SCALE INDUSTRIES GROWTH AMONG THE POOR AND THE NEEDY IN THE RURAL AREA. B. TO ESTABLISH AND MAINTAIN CATTLE, SHEEP AND POUL TRY FARMS TO IMPROVE THE QUALITY OF THE LIVESTOCK. C. TO WORK FOR THE ELIMINATION OF CHILD LABOUR. D. TO WORK FOR AND CAMPAIGN AGAINST FEMALE INFANTIC IDE AND ANY OTHER FORUMS OF DEHUMAN PRACTICES AGAINST WOMEN. ITA NO. 1919/MDS/13 7 E. TO PLAN AND IMPLEMENT PROJECTS THAT ARE AIMED AT ALL ALLEVIATING THE POVERTY OF DISADVANTAGED POPULATION. F. TO WORK FOR THE RIGHTS OF DISADVANTAGED AND VULN ERABLE POPULATION. G. TO EDUCATE AND TRAIN THE SMALL AND MARGINAL FARM ERS IN THE SCIENTIFIC METHODS OF AGRICULTURAL CULTIVATION AND IN THE USE OF MODERN IMPLEMENTS. H. TO ARRANGE POTABLE DRINKING WATER FACILITIES IN THE RURAL VILLAGES WHERE EVER THERE IS NEED THROUGH DEEP BORE WELLS AN D BY PROTECTED OPEN WELLS. I. TO IMPROVE AND PROVIDE DOMICILE FIRE PROOF DWEL LING HOUSES AND TENEMENTS TO THE POOREST OF THE POOR IN THE RURAL A REA IN TAMIL NADU. J. TO RUN MOBILE MEDICAL DISPENSARIES IN THE REMOTE RURAL VILLAGES THROUGHOUT TAMILNADU. K. TO REVEAL THE LOVE OF THE CREATOR AT THE TIME OF NATURAL CALAMITIES, MISERIES AND DISASTERS BY ORGANIZATION RELIEF ACTIV ITIES AS A CONDUIT BETWEEN THE CREATOR AND THE CREATED TO MAKE THEM FE EL ASSURED THAT THE CREATOR CARES FOR THEM. L. TO ORGANIZE FREE DISTRIBUTION OF CLOTHES AND DRE SSES TO NEEDY RURAL POOR AT THE TIME OF FESTIVALS. M. AND GENERALLY TO EXECUTE AND PERFORM SUCH ACTS, DEEDS AND THINGS THAT ARE INCIDENTAL OR CONDUCTIVE OR MAY BE DEEMED BY THE TRUST TO ITA NO. 1919/MDS/13 8 BE INCIDENTAL OR CONDUCTIVE TO THE ATTAINMENT OF TH E ABOVE OBJECTS OF THE TRUST OR ANY OF THEM. N. TO START SELF-HELP GROUP ALL OVER TAMIL NADU. 8. FROM THE ABOVE IT IS EVIDENT THAT SOME OF T HE OBJECTS OF THE TRUST ARE WITH RESPECT TO RELIEF TO THE POOR, MEDIC AL RELIEF AND THE OTHERS FOR ADVANCEMENT OF PUBLIC UTILITY WHICH ARE IN ACCORDANCE WITH SEC.2(15) OF THE ACT. IT IS A SETTLED ISSUE THAT W HILE GRANTING REGISTRATION UNDER 12AA OF THE ACT, THE REVENUE HAS TO EXAMINE THE OBJECTS OF THE TRUST AND DECIDE WHETHER THE SAME WO ULD FALL WITHIN THE AMBIT OF THE CHARITY AS PROVIDED U/S. 2(15) OF THE ACT. THEREAFTER IT IS LEFT OPEN TO THE LD. ASSESSING OFFICER, AT THE TIME OF ASSESSMENT PROCEEDINGS, TO DENY THE BENEFIT U/S. 11 OF THE ACT , IF ANY OF THE ACTIVITIES OF THE TRUST ARE CONDUCTED BEYOND THE SC OPE OF THE OBJECTS OF THE TRUST WHICH ARE NO OF CHARITABLE NATURE AS P ROVIDED U/S.2 (15) OF THE ACT. SINCE FROM THE FACTS OF THE CASE, IT IS AP PARENT THAT THE OBJECTS OF THE TRUST STATED IN THE TRUST DEED ARE C HARITABLE IN NATURE AND FALLS WITHIN THE SCOPE OF SEC.2 (15) OF THE ACT WE ARE OF THE CONSIDERED VIEW THAT LD. CIT HAD ERRED BY DENYING THE REGISTRATION TO ITA NO. 1919/MDS/13 9 THE ASSESSEE U/S. 12AA OF THE ACT. HENCE WE HEREB Y DIRECT THE LD. CIT TO GRANT REGISTRATION U/S. 12AA OF THE ACT TO THE ASSESSEE, HOWEVER, AFTER EXAMINING THE LEGALITY AND VALIDITY BEHIND THE SUPPLEMENTARY DEEDS EXECUTED BY THE TRUST ON 1.4.08 , 30.11.12 & 28.01.13. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED ON 21 ST MARCH, 2014 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD ) (A.MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 21 ST MARCH, 2014. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE