Shree Aradhana Bhawan Trust, Madurai V. CIT, Madurai

ITA 1988/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58079 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-03-2012
• Assessment Year: misc
• Appeal Filed On: 22-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R SRINIVASAN
• Keywords: Charitable institution; Competent authority
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NOS. 1985 & 1988/(MDS)/2010 SHREE ARADHANA BHAWAN TRUST 7, SPG CHURCH LANE, SOUTH AVANI MOOLA STREET, MADURAI 625 001. PAN AAGTS 7971 J VS. THE COMMISSIONER OF INCOME-TAX-I, MADURAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. SRINIVASAN, ADVOCATE RESPONDENT BY : SHRI SHAJI P. JACOB, IRS, ADDL. COMMISSIONER OF INCOME-TAX DATE OF HEARING : 12 TH MARCH, 2012 DATE OF PRONOUNCEMENT : 20 TH MARCH, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THESE TWO APPEALS ARE FILED BY THE ASSESSEE. T HE APPEALS ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TAX-I, MADURAI DATED 03.09.2010. THE APPEALS ARISE OUT O F THE ORDERS OF THE COMMISSIONER OF INCOME-TAX REJECTING THE APPLIC ATION MADE BY ITA 1985 & 1988/10 :- 2 -: THE ASSESSEE FOR GRANT OF REGISTRATION UNDER SEC.12 AA AND ALSO AN APPLICATION FILED FOR APPROVAL UNDER SEC.80G OF THE INCOME-TAX ACT, 1961. 2. THE OBJECTS STATED BY THE ASSESSEE-TRUST ARE T O PROVIDE FOOD AND SUPPORT FOR POOR PEOPLE. THE ASSESSEE HAD COLL ECTED DONATIONS OF ` 6,33,005/- FROM VARIOUS PERSONS IN THE FINANCIAL YEAR 2008-09 AND THOSE DONATIONS WERE IMPRESSED IN THE CORPUS FU ND OF THE ASSESSEE-TRUST. THE COMMISSIONER OF INCOME-TAX OBS ERVED THAT NO WRITTEN CONSENT OR PERMISSION FROM THE DONORS ARE F OUND TO IMPRESS THE DONATIONS AS CORPUS DONATIONS AND, AS SUCH, IT IS NOT POSSIBLE TO HOLD THAT THE ASSESSEE HAS EXPENDED THE DONATIONS T OWARDS CHARITABLE ACTIVITIES PROPOUNDED BY THE ASSESSEE-TR UST. THE COMMISSIONER FURTHER HELD THAT EVEN THOUGH THE ASSE SSEE HAS FORMED A PUBLIC CHARITABLE TRUST, IT WAS ALSO ENGAG ED IN RELIGIOUS ACTIVITIES LIKE CONDUCTING PRAYERS, BHAJANS AND DIS COURSES AND, THEREFORE, THE REAL ACTIVITIES CARRIED ON BY THE AS SESSEE-TRUST ITSELF ARE NOT CLEAR. THE COMMISSIONER HAS ALSO CONSIDER ED IN HIS ORDER THE REPORTS RECEIVED FROM THE LOWER AUTHORITIES WHE REIN IT WAS HELD THAT THE ASSESSEE WAS NOT IN FACT CARRYING ON ANY C HARITABLE ITA 1985 & 1988/10 :- 3 -: ACTIVITIES. THE COMMISSIONER HAS STATED THAT HE HA D ALSO RELIED ON THE ADVERSE REPORTS FILED BY THE LOWER AUTHORITIES. THE COMMISSIONER HAS MADE AN OBSERVATION THAT THE ASSE SSEE IS NOT CARRYING ON ANY CHARITABLE ACTIVITIES. RELYING ON THE ABOVE OBSERVATION, THE APPLICATION PUT IN BY THE ASSESSEE FOR REGISTRATION WAS REJECTED BY THE COMMISSIONER. 3. THE PETITION FILED BY THE ASSESSEE FOR APPROVAL UNDER SEC.80G WAS ALSO REJECTED BY THE COMMISSIONER AS A CONSEQUE NCE OF HIS ORDER WITH REFERENCE TO SEC.12AA APPLICATION. 4. IT IS AGAINST THE ABOVE ORDERS THAT THE ASSESSEE HAS COME IN APPEALS BEFORE US. 5. WE HEARD SHRI R. SRINIVASAN, THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE AND SHRI SHAJI P. JACOB, THE LEARN ED COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENUE. 6. ON GOING THROUGH THE FACTS OF THE CASE, WE FIND THAT THE APPLICATION PUT IN BY THE ASSESSEE HAS BEEN REJECTE D BY THE COMMISSIONER ON SOME VAGUE OBSERVATIONS AND CONSEQU ENTIAL PRESUMPTIONS ARRIVED AT BY HIM. ITA 1985 & 1988/10 :- 4 -: 7. EVEN IF FOR THE SAKE OF ARGUMENT, THE OBSERVATIO N OF THE COMMISSIONER THAT THE ASSESSEE IS CARRYING ONLY REL IGIOUS ACTIVITIES, IS TAKEN INTO CONSIDERATION, ONE MUST READ FROM THE LAW THAT CHARITABLE INSTITUTIONS AS WELL AS RELIGIOUS INSTIT UTIONS BOTH ARE ENTITLED FOR EXEMPTION UNDER SEC.11. THEREFORE, TH E APPLICATION FOR REGISTRATION PUT IN BY THE ASSESSE, CANNOT BE REJEC TED ON THE GROUND THAT THE ASSESSEE IS IN FACT CARRYING ON RELIGIOUS ACTIVITIES. SEC. 11 TAKES CARE OF SUCH ACTIVITIES AS WELL. THEREFORE, THE ATTEMPTS MADE BY THE COMMISSIONER TO DIFFERENTIATE THE FUNCTIONS STATED TO BE CARRIED OUT BY THE ASSESSEE, ARE NOT SUFFICIENT TO REJECT THE APPLICATION OF THE ASSESSEE UNDER SEC.12AA. 8. WHILE DEALING WITH CHARITY AND RELIGION, ONE HAS TO REMEMBER THAT WORLD OVER THE DISTINCTION BETWEEN RELIGIOUS A ND CHARITABLE ACTIVITIES IS VERY THIN. IF THE CONCEPT OF CHARITY IS DRAINED OUT OF RELIGION, IT LOOSES ITS IMPACT, INFLUENCE AND MORAL . EVERY RELIGION IS BASICALLY FOUNDED ON THE ESSENCE OF CHARITY, ESPECI ALLY IN INDIA, WHERE IT IS A PLACE OF DIFFERENT AND DEEP FAITHS. FREE FEEDING IS CARRIED OUT IN TEMPLES, CHURCHES AND MOSQUES FOR TH E POOR PEOPLE ITA 1985 & 1988/10 :- 5 -: OF THE SOCIETY. IS IT POSSIBLE TO BRAND SUCH ACTIV ITIES AS RELIGIOUS AND NOT CHARITABLE? WHETHER AN ACTIVITY WOULD CEASE TO BE A CHARITABLE ACTIVITY ONLY FOR THE REASON THAT THE ACTIVITY IS C ARRIED OUT BY A RELIGIOUS INSTITUTION? 9. IN THE PRESENT CASE, EVEN THOUGH A MAJOR PORTION OF THE DONATIONS RECEIVED HAVE BEEN TRANSFERRED TO CORPUS FUND, THERE IS NO CASE THAT THE ASSESSEE-TRUST HAS UTILIZED THAT MONE Y FOR ANY PURPOSE OTHER THAN CHARITABLE OR RELIGIOUS. IT IS ALSO TO BE SEEN THAT THE ASSESSEE HAD INCURRED EXPENDITURE IN OFFERING F REE FOOD FOR POOR PEOPLE. AT THE TIME OF GRANTING REGISTRATION, IT IS NOT POSSIBLE FOR THE ASSESSEE TO SHOW THAT IT HAS ALREADY CARRIED OUT IT S OBJECTIVES. THE REGISTRATION FROM THE COMPETENT AUTHORITY IS SOUGHT FOR AT THE THRESHOLD OF ITS FORMATION ITSELF, SO THAT AN ASSE SSEE CAN CARRY OUT ITS CHARITABLE ACTIVITIES IN A MORE ECONOMIC WAY. WHET HER THE ASSESSEEE HAS CARRIED OUT CHARITABLE ACTIVITIES OR NOT, IS A MATTER IN FACT, TO BE EXAMINED IN THE COURSE OF ASSESSMENT. IF IN THE COURSE OF ASSESSMENT PROCEEDINGS OR ON THE BASIS OF ANY OTHER INFORMATION, IT IS FOUND THAT AN ASSESSEE HAS NOT CARRIED OUT THE O BJECTIVES, FOR WHICH IT IS ESTABLISHED, IT IS OPEN FOR THE COMMISS IONER TO INITIATE ACTION TO CANCEL THE REGISTRATION. THEREFORE, IT I S NOT FAIR ON THE PART ITA 1985 & 1988/10 :- 6 -: OF THE AUTHORITY TO DEMAND THE PROOF OR PERFORMANCE OF THE OBJECTIVES AT THE THRESHOLD ITSELF. LET THE INSTITUTION CARRY OUT ITS WORK. THE LAW DOES COMPEL AN ASSESSEE TO DO WHAT IS NOT POSSIBLE TO DO. 10. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE COMMISSIONER OF INCOME-TAX TO GRANT REGISTRATION TO THE ASSESSEE UNDER SEC.12AA. 11. IN THE LIGHT OF THE ABOVE ORDER, THE CASE RELAT ING TO APPROVAL UNDER SEC.80G IS REMITTED BACK TO THE COMMISSIONER OF INCOME-TAX. THIS IS BECAUSE THERE IS A RIDER IN SEC.80G(5B) THA T THE ASSESSEE WHICH INCURS EXPENDITURE, DURING ANY PREVIOUS YEAR, WHICH IS OF A RELIGIOUS NATURE FOR AN AMOUNT EXCEEDING 5% OF ITS TOTAL INCOME SHALL NOT BE ENTITLED FOR THE BENEFITS OF SEC.80G. THIS TECHNICAL MATTER MAY BE LOOKED INTO BY THE COMMISSIONER AND PASS AN APPROPRIATE ORDER IN ACCORDANCE WITH LAW. 12. IN RESULT, THE APPEAL IN ITA NO.1985/MDS/2010 F ILED BY THE ASSESSEE IS ALLOWED AND THE APPEAL FILED BY THE ASS ESSEE IN ITA NO.1988/MDS/2010 IS TREATED AS ALLOWED FOR STATISTI CAL PURPOSES. ITA 1985 & 1988/10 :- 7 -: ORDER PRONOUNCED ON TUESDAY, THE 20 TH OF MARCH, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 20 TH MARCH, 2012. MPO* COPY TO: (1) PETITIONE R (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.