M/S JABARCHAND RESHAMDEVI CHHAJED, DURG(CG) V. THE COMMISSIONER OF INCOME TAX, BHOPAL

ITA 20/BIL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4844 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 19-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Assessee Lawyers: DR S R RAO
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice
• Section: 12A; 12AA; 12

Judgement Text

1 ITA NO. 20/BIL/2016 IN THE INCOME TAX APPE LLATE TRIBUNAL RAIPUR BENCH: RAIPUR BEFORE SHRI R. K. PANDA, ACCOUNTANT ME MBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A . NO. 20/RPR/2016 JABARCHAND RESHAMDEVI CHHAJED DHARMARTH SEVA TRUST APAPURA, DRUG DURG (CG) AABTJ5474E (APPELLANT) VS COMMISSIONER OF INCOME TAX(EXEMPTION)AAYAKAR BHAWAN HOSHANGABAD ROAD, BHOPAL BHOPAL (RESPONDENT) APPELLANT BY DR. S. R. RAO, ADV RESPONDENT BY SH. P. K. MISHRA, CIT DR ORDER PER SUCHITRA KAMBLE, JM THE PRESENT APPEAL IS FILED BY THE APPELLANT TRUST AGAINST THE ORDER DATED 29/12/2015 PASSED BY COMMISSIONER OF INCOME TAX (E XEMPTION), BHOPAL. 2. THE GROUNDS OF APPEAL ARE AS UNDER: 1.THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (EXEMPTION) IS BAD IN LAW AND ON FACTS. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (EXEMPTION) IS NOT JUSTIFIED IN DENYING REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961 ON THE GROUND THAT THE APPELLA NT DID NOT PRODUCE REGISTRATION CERTIFICATE OF THE TRUST REGISTERED AS PUBLIC TRUST. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (EXEMPTION) IS NOT JUSTIFIED IN DENYING REGISTRATION ON THE GROUND THAT EVIDENCE/PROOF OF CHARITABLE ACTIVITIES SINCE INCEPTION OF THE TRUST WAS NOT DATE OF HEARING 14.08.2018 DATE OF PRONOUNCEMENT 24 .10.2018 2 ITA NO. 20/BIL/2016 PRODUCED. 3. THE APPELLANT TRUST APPLIED FOR REGISTRATION UND ER SECTION 12AA(1)(B)(I) OF THE INCOME TAX ACT, 1961 IN FORM NO. 10A WHICH WAS RECEIVED BY THE COMMISSIONER OF INCOME TAX (EXEMPTION), BHOPAL ON 2 9.06.2015. IN ORDER TO VERIFY THE OBJECTS AND ACTIVITIES OF THE APPELLANT TRUST AND TO ASCERTAIN THE FULFILLMENT OF THE CONDITIONS MENTIONED UNDER SECTI ON 12A, THE APPELLANT WAS GIVEN AN OPPORTUNITY OF BEING HEARD BY ISSUING NOTI CE DATED 19.11.2015 FIXING THE CASE FOR HEARING ON 07.12.2015 REQUESTING THERE IN TO PRODUCE CERTAIN DOCUMENTS. IN RESPONSE TO THE SAID NOTICE, NONE ATT ENDED THE PROCEEDINGS, HENCE LAST AND FINAL NOTICE DATED 08.12.2015 WAS IS SUED FIXING THE DATE OF HEARING ON 21.12.2015. THE APPELLANT TRUST FILED TH E LETTER DATED 08.12.2015 ALONG WITH THE RELEVANT DOCUMENTS BEFORE THE COMMIS SIONER OF INCOME TAX (EXEMPTION), BHOPAL WHICH WAS DULY TAKEN ON RECORD. THE COMMISSIONER OF INCOME TAX (EXEMPTION), BHOPAL OBSERVED THAT THE TR UST IS NOT REGISTERED AS PUBLIC TRUST AND NO PROOF OF EXPENSES CLAIMED TO BE CHARITABLE WAS PRODUCED BY THE APPELLANT. THE COMMISSIONER OF INCOME TAX (E XEMPTION), BHOPAL HELD THAT SINCE THE APPELLANT SOCIETY HAS NOT PRODUCED T HE REGISTRATION CERTIFICATE OF TRUST AND EVIDENCE/PROOF OF CHARITABLE ACTIVITIES, THEREFORE THE APPELLANT TRUST IS NOT ENTITLED FOR GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961. HENCE, THE COMMISSIONER OF INCOME TAX (EXEMPTION), BHOPAL REJECTED THE APPLICATION SEEKING REGISTRATION U/S 12AA OF THE AC T. 4. BEING AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME TAX (EXEMPTION), BHOPAL, THE APPELLANT TRUST FILED THE PRESENT APPEAL. 5. THE LD. AR SUBMITTED THAT THE APPELLANT TRUST VI DE LETTER DATED 08.12.2015 PRODUCED ALL THE REQUISITE DOCUMENTS ASK ED BY THE COMMISSIONER OF INCOME TAX (EXEMPTION), BHOPAL WHILE ISSUING NOT ICE TO THE TRUST. BUT AT THE TIME OF GRANTING THE REGISTRATION U/S 12AA OF THE A CT, THE COMMISSIONER OF 3 ITA NO. 20/BIL/2016 INCOME TAX (EXEMPTION), BHOPAL OVERLOOKED THESE DOC UMENTS. THE APPELLANT TRUST WAS ALSO NOT GIVEN ANY INTIMATION AS RELATES TO CERTAIN ALLEGED IRREGULARITIES SET OUT IN THE ORDER OF THE COMMISSI ONER OF INCOME TAX (EXEMPTION), BHOPAL. THE LD. AR RELIED UPON THE DEC ISION OF THE HONBLE KERALA HIGH COURT IN CASE OF SREE ANJANEY MEDICAL TRUST VS . CIT (2016) 382 ITR 399 WHEREIN IT IS HELD THAT NO EXAMINATION OF THE MODUS OF THE APPLICATION OF THE FUNDS OF THE TRUST OR AN EXAMINATION OF THE ETHICAL BACKGROUND OF ITS SETTLERS IS CALLED FOR WHILE CONSIDERING AN APPLICATION FOR REG ISTRATION. THE STAGE FOR CONSIDERATION OF THE RELEVANCE OF THE OBJECT OF THE TRUST AND THE APPLICATION OF ITS FUNDS ARISES AT THE TIME OF THE ASSESSMENT. 5. THE LD. DR RELIED UPON THE ORDER OF THE COMMISSI ONER OF INCOME TAX (EXEMPTION), BHOPAL AND SUBMITTED THAT THE TRUST IS NOT A PUBLIC TRUST AS IT IS ONLY FOR PARTICULAR COMMUNITY. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE RECORDS IT CAN BE SEE N THAT THE APPELLANT TRUST HAS PRODUCED ALL THE RELEVANT DOCUMENTS CALLED BY T HE COMMISSIONER OF INCOME TAX (EXEMPTION), BHOPAL DURING THE PROCEEDINGS AND AT NO POINT OF TIME DISPUTED THE ACTIVITIES OF THE APPELLANT TRUST AS N ON CHARITABLE. THE RELIANCE OF THE DECISION OF THE HONBLE KERALA HIGH COURT IN CA SE OF SREE ANJANEY MEDICAL TRUST (SUPRA) IS APT. THE HONBLE HIGH COURT HELD A S UNDER: 7. WE HAVE CONSIDERED THE ARGUMENTS RAISED ON EIT HER SIDE AS WELL AS THE MATERIALS ON RECORD PERTINENT TO NOTE THAT THE WORD ING IN SECTIONS 12A AND 12AA OF THE ACT DOES NOT MAKE ANY REFERENCE TO CHA RITY OR CHARITABLE PURPOSE. SECTION 2(15) OF THE ACT DEFINES CHARITA BLE PURPOSE'. AT THE RELEVANT TIME SECTION 2(15) READS AS FOLLOWS: '(15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE P OOR, EDUCATION, MEDICAL RELIEF , AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY.' 8. AS STATED EARLIER, IT HAS BEEN HELD THAT WHERE T HE PURPOSE OF THE TRUST IS ONE OF THE THREE DECLARED CHARITIES, NO QUESTION OF EXAMINATION OF PROFIT MOTIVE 4 ITA NO. 20/BIL/2016 IS REQUIRED. CIRCULAR NO. 11 OF 2008 DATED19.12.200 8 ISSUED BY THE DEPARTMENT ALSO PROVIDES THAT THE PROVISO TO SECTIO N 2(15) OF THE ACT NOT APPLY IN RESPECT OF THE FIRST THREE LIMBS OF SECTION 2(15 ). WHERE PURPOSE OF TRUST OR INSTITUTION IS RELIEF OF THE POOR, EDUCATION OR MED ICAL RELIEF, IT WILL CONSTITUTE CHARITABLE PURPOSE EVEN IF IT INCIDENTALLY INVOLVES CARRYING ON OF COMMERCIAL ACTIVITIES. THOUGH A CONTRA VIEW IS TAKEN BY A DIVI SION BENCH OF THIS COURT IN DAWN EDUCATIONAL CHARITABLE TRUST'S CASE (SUPRA) AS WELL AS THE UTTARKHAND HIGH COURT IN COMMISSIONER OF INCOME-TAX V. NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING EDUCATIONAL SOCIETY [(2009 )315 ITR 428], WE ARE OF THE VIEW THAT THE ACTUAL FUNCTIONING OF THE TRUST C AN BE A RELEVANT CONSIDERATION ONLY AT A LATER STAGE. . 10. IT IS CLEAR FROM A PLAIN READING OF SECTIONS 12 A AND 12AA OF THE ACT THAT WHAT IS INTENDED THERE:, IS ONLY A REGISTRATION SIM PLICITER OF THE ENTITY OF A TRUST. THIS HAS BEEN MADE A CONDITION PRECEDENT FOR THE CLAIMING OF BENEFITS UNDER THE OTHER PROVISIONS OF THE ACT REGARDING EXE MPTION OF INCOME CONTRIBUTION, ETC. NO EXAMINATION OF THE MODUS OF T HE APPLICATION OF THE FUNDS OF THE TRUST OR AN EXAMINATION OF THE ETHICAL BACKG ROUND OF ITS SETTLERS IS CALLED FOR WHILE CONSIDERING AN APPLICATION FOR REG ISTRATION. THE STAGE FOR CONSIDERATION OF THE RELEVANCE OF THE OBJECT OF THE TRUST AND THE APPLICATION OF ITS FUNDS ARISES AT THE TIME OF THE ASSESSMENT. WHE RE BENEFITS ARE CLAIMED BY ASSESSEES IN TERMS OF SECTIONS 11 AND 12 OF THE ACT , THE QUESTION AS TO THE NATURE OF SUCH CONTRIBUTION AND INCOME CAN BE LOOKE D INTO. AT THE TIME OF REGISTRATION OF THE TRUST, GOING BY THE BINDING JUD GMENTS OF THE APEX COURT WHAT IS TO BE LOOKED INTO IS WHETHER THE TRUST IS A GENUINE ONE AND WHETHER IT IS A SHAM INSTITUTE- FLOATED ONLY TO AVAIL THE BENE FITS OF EXEMPTION UNDER THE ACT. THERE IS NO SUCH FINDING IN THE IMPUGNED ORDER . 11. ON MERITS ALSO, IT IS CONTENDED THAT THE AMOUNT ALLEGEDLY COLLECTED AS CAPITATION FEE FROM FOUR PROSPECTIVE STUDENTS WAS A CTUALLY COLLECTED AS TUITION FEE ON THE BASIS OF THE VALID AGREEMENTS ENTERED IN TO BY THE TRUST UNDERTAKING TO RETURN THE SAME IN CASE ADMISSION UNDER THE NRI QUOTA COULD NOT BE MADE AVAILABLE TO THE CONCERNED STUDENTS. THE AMOUNT SO COLLECTED REPRESENTED ONLY A PORTION OF TUITION FEES WHICH THE GOVERNMENT HAD PERMITTED THE RECOGNIZED MEDICAL COLLEGES TO COLLECT DURING THE RELEVANT ACA DEMIC YEAR AND THE AGREEMENT SPECIFIED THAT THE AMOUNTS COULD BE ADJUS TED TOWARDS TUITION FEES PAYABLE BY THE STUDENTS UNDER THE NRI QUOTA. IT IS FURTHER STATED THAT EVEN WITH REGARD AMOUNTS COLLECTED FROM EMPLOYEES, THE S AME WERE VOLUNTARY DEPOSITS MADE BY EMPLOYEES AND ACTION HAD BEEN TAKE N BY ANY AUTHORITY 5 ITA NO. 20/BIL/2016 AGAINST. THE TRUST, SINCE THERE WAS NOT COMPULSION OR ILLEGALITY IN THE MATTER. 12. IT IS CLEAR THAT TAXING STATUTES ARE LIABLE TO BE INTERPRETED STRICTLY. THE COURT CANNOT SUPPLY OR DETRACT FROM THE PROVISIONS CONTAI NED IN THE STATUTE. WHERE THE PROVISIONS OF THE ACT ARE CLEAR, COURTS HAVE NO POWER TO EXAMINE THE PURPOSE BEHIND THE ENACTMENT. THE PROJECTED FUTILIT Y AND INCONVENIENCE THAT MAY ARISE OUT OF THE APPLICATION OF A PROVISION OF LAW CANNOT, IN A TAXING STATUTE, BE A GROUND TO DENY A BENEFIT WHICH IS EVI DENT FROM A PLAIN READING OF THE STATUTE. 13. GOING BY THE PROVISIONS OF SECTIONS 12A AND 12A A OF THE INCOME TAX ACT, WE HOLD THAT GROUNDS RAISED BY THE REGISTERING AUTH ORITY AND UPHELD BY THE APPELLATE AUTHORITY FOR REJECTION OF REGISTRATION T O THE APPELLANT TRUST CANNOT BE SUSTAINED. THE AUTHORITIES COULD HAVE EXAMINED ONLY FOR GENUINENESS OF THE TRUST AND ITS ACTIVITIES. THEY DID NOT HAVE MATERIA L TO HOLD THAT THE TRUST WAS EITHER NOT GENUINE OR ITS ACTIVITIES WERE NOT WHAT WAS PROFESSED IN THE DEED OF TRUST. RESULTANTLY, IN THE LIGHT OF THE ABOVE FINDINGS, TH E IMPUGNED ORDER IS SET ASIDE. THE RESPONDENT COMMISSIONER OF INCOME TAX IS DIRECTED TO GRANT REGISTRATION AS REQUESTED BY THE APPELLANT TRUST IN TERMS OF SECTION 12A OF THE ACT. IT IS MADE CLEAR THAT THE REVENUE IS AT LIBERT Y TO PASS APPROPRIATE ORDERS IN ACCORDANCE WITH LAW IN ASSESSMENT ON THE RETURNS TO BE FILED BY THE TRUST OR PERSONS MAKING CONTRIBUTIONS TO IT IN TERMS OF S ECTIONS 10, 11 AND 12 OF THE ACT. THE APPEAL IS ORDERED ACCORDINGLY. THUS, THE RELIANCE OF THE DECISION OF THE HONBLE K ERALA HIGH COURT IS APT IN THE PRESENT CASE AS THE APPELLANT TRUST VIDE LETTER DAT ED 08.12.2015 PRODUCED ALL THE REQUISITE DOCUMENTS ASKED BY THE COMMISSIONER O F INCOME TAX (EXEMPTION), BHOPAL WHILE ISSUING NOTICE TO THE TRU ST. BUT AT THE TIME OF GRANTING THE REGISTRATION U/S 12AA OF THE ACT, THE COMMISSIONER OF INCOME TAX (EXEMPTION), BHOPAL OVERLOOKED THESE DOCUMENTS. THE APPELLANT TRUST WAS ALSO NOT GIVEN ANY INTIMATION AS RELATES TO CERTAIN ALLE GED IRREGULARITIES SET OUT IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (EXEMPT ION), BHOPAL. THE COMMISSIONER OF INCOME TAX (EXEMPTION) HAS NEVER DO UBTED THE GENUINENESS OF THE TRUST AS WELL AS THERE IS NO FINDING TO THE EFFECT THAT THE TRUST WAS FLOATED ONLY TO AVAIL THE BENEFITS OF THE EXEMPTION. THEREF ORE, WE SET ASIDE THE ORDER OF 6 ITA NO. 20/BIL/2016 THE COMMISSIONER OF INCOME TAX (EXEMPTION) AND DIR ECT HIM TO RECONSIDER THE ISSUE RELATING TO GRANT OF REGISTRATION AS REQUESTE D BY THE APPELLANT TRUST IN TERMS OF SECTION 12A OF THE INCOME TAX ACT, 1961 BY TAKING COGNIZANCE OF ALL THE DOCUMENTS FILED BY THE APPELLANT TRUST AS WELL AS IN THE LIGHT OF THE DECISION OF THE HONBLE KERALA HIGH COURT IN CASE OF SREE AN JANEY MEDICAL TRUST (SUPRA). NEEDLESS TO SAY, THE APPELLANT TRUST BE GIVEN OPPOR TUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. 7. IN RESULT, APPEAL OF THE APPELLANT TRUST IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH OCTOBER, 2018 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 24/10/2018 *R.N COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT PRIVATE SECRETARY.. RAIPUR BENCH, RAIPUR. 7 ITA NO. 20/BIL/2016 DATE OF DICTATION 22.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 22.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS .10.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT .10.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .10.2018 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER