M/s.Kochi Biennala Foundation, Cochin V. The CIT, Cochin

ITA 206/COCH/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7721 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 18-08-2016
• Assessment Year: misc
• Appeal Filed On: 27-04-2016
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: A JOHN MORIS
• Keywords: Charitable institution; Opportunity of being heard
• Section: 143(3); 12A; 12AA

Judgement Text

ITA NO.206/COCH/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL , COCHIN BENCH, COCHIN , , BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE.K, JM ./ I.TA NO.206/COCH/2016 (ASST YEAR : -) M/S. KOCHI BIENNALE FOUNDATION, 1/903, KUNNUMPURAM, FORT KOCHI P.O., PIN-682 001 VS THE COMMISSIONER OF INCOME-TAX- 1, COCHIN. ( !' /ASSESSEE APPELLANT) ( #$ !' /REVENUE -RESPONDENT) PAN NO. AABTK 7340Q % & /ASSESSEE BY SHRI A . JOHN MORIS, CA #$ ! % & / REVENUE BY SHRI A. DHANARAJ, SR. DR () % *+ /DATE OF HEARING 18/08/2016 ,- % *+ /DATE OF PRONOUNCEMENT 18/08/2016 . /ORDER PER B.P. JAIN, AM: THIS APPEAL AT THE INSTANCE OF THE ASSESSEE- TRUST IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), KOCHI DATED 29/06/2012 PASSED U/ S. 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961. 2. AT THE OUTSET, THE ASSESSEE HAS FILED THE APPE AL BELATEDLY BY 1337 DAYS. THE ASSESSEE HAS FILED CONDONATION PETITION FOR CONDONI NG THE DELAY AND ALSO ITA NO.206/COCH/2016 2 AFFIDAVIT BY THE AUTHORIZED SIGNATORY OF M/S. KOCHI BIENNALE FOUNDATION, KOCHI THE REASONS STATED IN THE AFFIDAVIT READS AS FOLLOW S: THE APPELLANT WAS REGISTERED WITH INCOME TAX U/S. 1 2AA ORDER DATED 25/07/2014. THE APPELLANT DID NOT FILE APPEAL AGAIN ST THE ORDER DATED 29/06/2012 ON CONFUSION OVER TAXABILITY AND ON CONF USION LED TO NON FILING OF THE APPEAL. NOW THE APPELLANT HAS BEEN SERVED AN ORDER U/S. 143(3) FOR AY 13-14, WHERE DONATIONS, CONTRIBUTIONS, EXPENSES AGGREGATIN G TO RS.1,41,57,733/- WERE ADDED TO THE INCOME OF THE APPELLANT AND PENALTY U/ S. 271(1)(C) WAS INITIATED. AS THE APPELLANT IS NOW BEING SLAPPED WITH PENALTY PROCEEDINGS BECAUSE OF THE FACT FOR AY 13-14 IT IS NOT REGISTERED U/S. 12AA IS NOW COMPELLED TO FILE THE APPEAL AGAINST THE REJECTION OF 12AA ORDER DATED 29 /06/2012. AS THE ORDER DATED 29/06/2012 HAS BEEN DECIDED AGAINST THE APPEL LANT AND HAD NOT GONE ON APPEAL DUE TO WRONG UNDERSTANDING OF LAW AND ON RECEIPT OF ORDER FOR AY 13-14 U/S. 143(3), WITH ADDITIONS AND INITIATION OF PENALTY, FORCED THE APPELLANT TO FILE APPEAL AND THIS LED TO DELAY IN FILING THE APP EAL. THE APPELLANT HUMBLY SUBMITS THAT SUBSTANTIVE ISSUES OF LAW AND FACTS AR E INVOLVED IN THE APPEAL AGAINST THE REJECTION OF REGISTRATION U/S. 12AA. T HE DELAY IN FILING THE APPEAL WAS NOT INTENTIONAL AND THAT THERE IS NO UNDUE BENE FIT TO THE APPELLANT IN DELAY IN FILING THE APPEAL BY 1337 DAYS. 3. THE LD. DR OPPOSED THE CONDONATION PETITION. ITA NO.206/COCH/2016 3 4. ON PERUSAL OF THE AFFIDAVIT BY THE AUTHORIZED S IGNATORY OF THE ASSESSEE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS SUFFICIENT CA USE FOR FILING THE APPEAL BELATEDLY AND ACCORDINGLY, WE CONDONE THE DELAY IN FILING THE APPEAL AND PROCEED TO DISPOSE OF THE SAME ON MERITS. 5. THE GROUNDS RAISED BY THE ASSESSEE READ AS FOL LOWS: 1. THE ORDER DATED 29/06/2012 OF THE LD. CIT-I, KOCHI IN FILE NO. CIT/CHN/TECH/12A/66/2011-12 IS CONTRARY TO LAW, FAC TS AND CIRCUMSTANCE AND OPPOSED TO LAW AND MERITS OF THE CASE. 1.1THE LD. CIT HAS ERRED IN PASSING THE ORDER AFTER THE TIME SPECIFIED IN SUB SECTION 2 TO 12AA OF THE INCOME TAX ACT. 2. THE LD. CIT GROSSLY ERRED IN STATING THAT THE AC TIVITY AND THE OBJECTS OF THE TRUST ARE NOT CHARITABLE IN NATURE. 2.1 THE LD. CIT GROSSLY ERRED IN STATING THAT WORD BIENNALE IS EXPLANATION IS TOO FARFETCHED TO BE ACCEPTED AS CHARITABLE WORK. 2.2 THE LD. CIT FURTHER ERRED IN STATING THAT THE TRUSTEES RECEIVE REMUNERATION FROM THE TRUST AND THEY HAVE INCURRED HUGE AMOUNTS TOWARDS FLIGHT CHARGES WHICH WERE CLAIMED AS EXPENSES OF THE TRUST. 2.3 THE LD. CIT OUGHT TO HAVE GRANTED THE APPROVAL U/S . 12AA OF THE I.T. ACT AS THE OBJECTS OF THE APPELLANT INSTITUTION IS ASSE SSEE FAILS WITHIN THE DEFINITION OF CHARITABLE PURPOSE U/S. 2(15). 3. THE LD. CIT GROSSLY ERRED IN NOT CONSIDERING THE OB JECTS OF APPELLANT, GOVERNING THE REGISTRATION OF THE APPELLANT TRUST U /S. 12AA. FOR THESE AND AMONG OTHER GROUNDS THAT MAY BE ALLOW ED TO BE ADDUCED LATER, THE APPELLANT HUMBLY AND RESPECTFULLY PRAYS THAT THE APPEAL BE ALLOWED AND THAT THE ORDER BY THE LEARNED CIT-1 BE DELETED. ITA NO.206/COCH/2016 4 FURTHER THE RESPONDENT PRAYS THAT THERE IS A DELAY OF 1337 DAYS IN FILING THE APPEAL AND THERE IS NO WILLFUL INTENT TO DELAY IN F ILING THE APPEAL AND THAT SINCE SUBSTANTIAL ISSUES OF LAW AND FACTS ARE INVOL VED IT IS PRAYED THAT THE HONBLE BENCH MAY BE PLEASED TO CONDONE THE DELAY O F 1337 DAYS IN FILING THE APPEAL AND ADJUDICATE THE APPEAL ON MERIT. 6. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE HAD FILED AN APPLICATION ON 25/12/2011 FOR REGISTRATION U/S. 12A OF THE INCOME TAX ACT, 1961 IN THE PRESCRIBED FORM. T HE APPLICATION WAS REJECTED BY THE LD. CIT FOR THE FOLLOWING REASONS: 1. ON VERIFYING THE DETAILS, IT IS NOTICED THAT THE TR UST HAS RECEIVED RS.1 CRORE, BEING 1 ST INSTALMENT OF RS.5 CRORE SANCTIONED BY THE GOVERNM ENT OF KERALA FOR CONDUCTING A VISUAL ART FESTIVAL AS PART OF MUSIRIS HERITAGE PROJECT BY THE DEPARTMENT OF TOURISM. AS PER THE COPY OF LETTER N O.P#-21473/2010 DATED 17/02/2011 OF THE DEPARTMENT OF TOURISM, THE AMOUNT WAS GIVEN ON THE BASIS OF A MOU IN THIS REGARD. FURTHER, IT HAS BEEN INFO RMED AT THE TIME OF HEARING THAT CERTAIN MEMBERS ARE NOMINEES OF THE GOVERNMENT OF KERALA. THIS INFORMATION HAS BEEN CONFIRMED BY THE ADMINISTRATOR OF THE TRUST. 2. AS PER THE TRUST DEED EXECUTED ON 04/08/2010, THERE IS NO PROVISION FOR NOMINATING MEMBERS BY THE GOVERNMENT. AS SUCH, IT IS OBSERVED THAT THE TRUST HAS ACTED BEYOND THE POWERS GIVEN BY THE TRUS T DEED. ITA NO.206/COCH/2016 5 3. APART FROM THE ABOVE, IT IS NOTICED THAT THE MAIN O BJECT OF THE TRUST IS TO ORGANIZE, SPONSOR AND PROMOTE ART EXHIBITIONS. CON DUCTING OR ORGANIZING EXHIBITIONS CANNOT BE CONSIDERED AS CHARITABLE PURP OSE WITHIN THE MEANING OF SECTION 2(15) OF THE INCOME TAX ACT, 1961. AS P ER THE DETAILS SUBMITTED AND VERIFIED THE TRUST HAS NOT YET CONDUCTED ANY AC TIVITY WHICH ARE PUBLIC CHARITABLE IN NATURE. AT THE TIME OF HEARING ON 28 /06/2012, SHRI BONY THOMAS, REVEALED THAT THE BIENNALE WHICH IS PROPOSED TO BE CONDUCTED BY THE INSTITUTION ON 12/12/2012 IS EXPECTED TO RESULT IN OPENING NEW OPPORTUNITIES FOR ARTISTS, AS WELL AS ART WORKS. BUT THE SAID EX PLANATION IS TOO FARFETCHED TO BE ACCEPTED AS CHARITABLE WORK. 4. AS PER THE COPIES OF BOOKS OF ACCOUNT, THE TRUSTEE S RECEIVE REMUNERATION FROM THE TRUST AND THEY HAVE INCURRED HUGE AMOUNTS TOWARDS FLIGHT CHARGES WHICH WERE CLAIMED AS EXPENSES OF THE TRUST. 5. ON THE BASIS OF THE ABOVE DETAILS AND AS PER THE CI RCUMSTANCES OF THE CASE, IT IS OBSERVED THAT THE ASSESSEE TRUST COULD NOT PROVE THAT ITS OBJECTS/ACTIVITIES ARE CHARITABLE IN NATURE. FOR T HE ABOVE REASON, THE APPLICATION FILED BY THE TRUST FOR REGISTRATION AS PUBLIC CHARITABLE TRUST U/S. 12AA OF THE INCOME TAX ACT, 1961 STANDS REJECTED. ITA NO.206/COCH/2016 6 7.WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE MATERIAL ON RECORD. IN THE INSTANT CASE, WE NOTICE THAT FOR THE SAME OBJEC TS ON A SUBSEQUENT APPLICATION FOR REGISTRATION, THE ASSESSEE-TRUST WA S GRANTED REGISTRATION VIDE ORDER OF THE LD. CIT, KOCHI DATED 25/07/2014. WHEN FOR THE VERY SAME OBJECTS AND ACTIVITIES OF THE TRUST, THE ASSESSEE-TRUST WAS GRANTED REGISTRATION, WE SEE NO REASON WHY THE APPLICATION FOR REGISTRATION WAS DISMISSED. MOREOVER, WE FIND THAT THE DEFINITION OF CHARITABLE PURPOSE U/S. 2(15) OF THE I.T. ACT IS OF WIDE IMPORT AND INCLUDES OBJECTS OF ARTISTIC OR HISTORIC INTEREST. IN THE INSTANT CASE, THE ASSESSEE-TRUST HAS BEEN CREATED BY THE GOVERNME NT OF KERALA TO CONDUCT ART FESTIVAL WHICH ATTRACTS ARTISTS, FILMSTARS, HIS TORIANS, ART TEACHERS AND STUDENTS ALIKE AS MENTIONED EARLIER, WHEN FOR THE SAME OBECT S, THE ASSESSEE-TRUST HAS BEEN GRANTED REGISTRATION U/S. 12AA OF THE ACT, VID E ORDER OF THE LD. CIT, KOCHI DATED 25/07/2014, THEREFORE, THE INTEREST OF JUSTIC E AND EQUITY, WE ARE OF THE VIEW THAT THE MATTER NEEDS RECONSIDERATION BY THE L D. CIT. ACCORDINGLY, WE RESTORE THE ISSUE BACK TO THE FILE OF THE LD. CIT W HO SHALL TAKE NOTE OF THE SUBSEQUENT ORDER OF THE REGISTRATION AND AFFORD REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND SHALL DISPOSE OF TH E MATTER AS EXPEDITIOUSLY AS POSSIBLE. IT IS ORDERED ACCORDINGLY. ITA NO.206/COCH/2016 7 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18-08-2016. SD/- SD/- ( . ) (GEORGE GEORGE K.) ( . . ) (B. P. JAIN) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / /DATED: 18 TH AUGUST, 2016 GJ COPY TO: 1. M/S. KOCHI BIENNALE FOUNDATION, 1/903, KUNNUMPU RAM, FORT KOCHI P.O., PIN-682 001 2. THE COMMISSIONER OF INCOME-TAX-I, KOCHI. 3. THE DR/ITAT, COCHIN BENCH. 4. GUARD FILE. BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN ITA NO.206/COCH/2016 8 1.DATE OF DICTATION : 18/08/2016 2.DATE ON WHICH THE TYPED DRAFT IS PLACED 18/08/2016 BEFORE THE DICTATING MEMBER OTHER MEMBER: 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . PS/PS: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER : 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. PS/PS : 6. DATE ON WHICH THE FILE GOES TO BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO HEAD CLERK: 8. DATE ON WHICH THE FILE GOES TO ASSISTANT REGISTR AR 9. DATE OF DISPATCH OF THE ORDER: