Shri Nachiketa Education & Charitable Trust, V. The Commissioner of Income Tax-1, RAJKOT-GUJARAT

ITA 208/RJT/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6750 (ITAT-RAJKOT)
• Duration Of Justice: 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-04-2014
• Assessment Year: misc
• Appeal Filed On: 24-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L MEENA
• Assessee Lawyers: VANRAJ J MARU
• Keywords: Gift; Charitable institution
• Section: 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 208/RJT/2014 SHREE NACHIKETA EDUCATION & CHARITABLE TRUST, THANA GALOL, TAL-JETPUR, DIST. RAJKOT PAN : AABTN 0455 F ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX, RAJKOT-I RAJKOT / RESPONDENT / ASSESSEE BY SHRI VANRAJ J. MARU, CA / REVENUE BY SHRI M. L. MEENA, DR / DATE OF HEARING 10.04.2014 !'# / DATE OF PRONOUNCEMENT 11.04.2014 / ORDER THIS APPEAL BY THE ASSESSEE-TRUST IS AGAINST THE OR DER DATED 23.01.2014 OF COMMISSIONER OF INCOME-TAX, RAJKOT-I, RAJKOT U/S 12 AA(1)(B)(II) OF THE INCOME-TAX ACT REJECTING THE APPLICATION OF THE ASSESSEE-TRUST FOR REGISTRATION U/S 12A OF THE INCOME- TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-TRUST NAMELY SHREE NACHIKETA EDUCATION & CHARITABLE TRUST MADE AN APPLICATION FO R REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961 ON 02.07.2013 IN FORM NO.10A. THIS APPLICATION WAS REJECTED BY THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I VIDE HIS ORDER DATED 23.01.2014 ON THE GROUND THAT NO ONE APPEARED BEFORE HIM ON BEHAL F OF THE ASSESSEE-TRUST AT TIME OF HEARING, WHICH WAS FIXED ON 16.01.2014, TO PRODU CE NECESSARY EVIDENCE IN SUPPORT OF ITS EXPLANATION ALONGWITH BOOKS OF ACCOUNTS, DON ATION RECEIPT BOOK AND INVOICES FOR EXPENSES ETC... THE DETAILED REASON GIVEN BY HIM IN PARAGRAPHS 4-8 OF THE IMPUGNED ORDER, WHICH READ AS UNDER:- 4. PUBLISHING OF NEWSPAPER, MAGAZINE AND BOOKS IS NOT A CHARITABLE PURPOSE. BESIDES RUNNING BILL COLLECTION CENTRES FO R ELECTRICITY PROVIDING COMPANIES IS ALSO A COMMERCIAL ACTIVITY. IT IS NOWH ERE PROVIDED IN THE TRUST DEED THAT ITS ACTIVITIES SHALL BE WITHOUT PROFIT MO TIVE. HENCE THE AFORESAID OBJECTS CANNOT BE TERMED AS CHARITABLE PURPOSE AS T HESE PURPOSE ARE NOT FOR ADVANCEMENT OF GENERAL PUBLIC UTILITY OR ANY PURPOS E AS SPECIFIED IN SEC. 2(15) OF THE ACT. 5. IT IS FURTHER NOTICED FROM THE TRUST DEED THAT T HE TRUST CAN APPLY ITS INCOME FOR RENOVATION OF RELIGIOUS PLACES, PURCHASE OF RELIGIOUS PLACES AND CAN 2 208-RJT-2014 SHREE NACHIKETA EDUCATION & CHARITABLE TRUST (SMC) RUN, SUPERVISE AND MANAGE THE RELIGIOUS PLACES. IT IS FURTHER SEEN THAT THE TRUSTEES HAVE BEEN EMPOWERED TO GIFT IMMOVABLE PROP ERTIES TO ANY PERSON. 6. FREE ENGLISH VERSION OF THE RELEVANT CLAUSE OF T HE TRUST DEED IS AS UNDER:- I) CLAUSE 10 AUTHORITIES AND DUTIES OF SECRETARY- .. (6) RENOVATE RELIGIOUS PLACES AND MANAGE THEM II) CLAUSE 17 AUTHORITIES & DUTIES OF TRUSTEES (1) TRUSTEES MAY ACCEPT OR MAKE ARRANGEMENT FOR ACC EPTANCE OF DONATION. THEY MAY GET RENT FROM TRUST PROPERTIES. AFTER ADMINISTRATIVE EXP., THE FUND SHALL BE APPLIED TOWA RDS OBJECTS. THEY RENOVATE RELIGIOUS PLACES AND MANAGE THEM. (2) THE BOARD OF TRUSTEES CAN PURCHASE LAND, CONSTR UCT NEW BUILDING CAN TAKE OR GIVE BUILDING ON RENT, LEASE, MORTGAGE OR CAN EXCHANGE BUILDINGS OR CAN ACCEPT OR ALLOW THE S AME IN GIFT THE SAME. THE BOARD OF TRUSTEES CAN PURCHASE O R ACCEPT AS GIFT OR DONATIONS THE RELIGIOUS PLACES OR DHARMS HALA, OR THEY CAN RENOVATE ADMINISTER TO MANAGER SUCH PLACES . THEY CAN SELL LAND OR BUILDING AFTER OBTAINING APPROVAL OF THE CHARITY COMMISSIONER. THE TRUSTEES SHALL MANAGE AND USE THE PROPERTIES AS PER THE PREVAILING LAW. 7. PROVISIONS OF THE ABOVE CLAUSES EMPOWERS THE TRU STEES THAT THEY CAN APPLY INCOME OF THE TRUST FOR THE PURPOSE, WHICH HA S NOT BEEN PRESCRIBED IN THE OBJECTS FOR WHICH THE TRUST HAS BEEN CREATED. SUCH PROVISIONS OF THE TRUST DEED EVEN INCLUDES THE POWER GIVEN TO THE TRUSTEES THAT THEY CAN ALLOW IMMOVABLE PROPERTIES AS GIVE. IT IS NOT PRESCRIBED IN THE REL EVANT CLAUSE THAT TO WHOM SUCH GIFTS CAN BE ALLOWED. THIS OPENS FOR THE TRUSTEES T O ALLOW SUCH GIFTS TO ANY PERSON EVEN WITHOUT HAVING RELEVANCE FOR ITS OBJECT S. THUS THE OBJECTS OF THE TRUST DEED ARE NOT FOUND TO BE CHARITABLE PURPOSE. 3. AS PER THE PROVISIONS OF THE I.T. ACT, 1961, THE COMMISSIONER SHALL SATISFY HIMSELF WITH REGARD TO: I) OBJECTS OF THE TRUST/INSTITUTION AND II) GENUINENESS OF ITS ACTIVITIES IN VIEW OF THE ABOVE DISCUSSED FACTS, IT TRANSPIRES THAT THE OBJECTS OF THE TRUST WERE NOT FOUND TO BE OF CHARITABLE NATURE. TH US, THE TRUST IS NOT FULFILLING THE CONDITIONS LAID DOWN FOR REGISTRATION U/S 12AA OF THE I.T. ACT, 1961 AND RULE 17A OF THE I.T. RULES, 1962. I THEREFORE, REJE CT THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12A OF THE IT ACT. AGGRIEVED WITH THE ORDER OF LD COMMISSIONER OF INC OME-TAX, RAJKOT-I, THE ASSESSEE-TRUST IS NOW IN APPEAL BEFORE THIS TRIBUNA L ON THE FOLLOWING GROUNDS:- 1. ON GOING THROUGH COPY OF THE TRUST DEED AND DET AILED ANALYSIS BY CIT, IT IS SEEN THAT SOME OF THE OBJECTS PRESCRIBED IN THE TRUST DEED WERE OF NOT CHARITABLE, AS DEFINED IN SEC. 2(15) OF THE ACT, WI DE A SHOW CAUSE NOTICE BEARING NO.A-A RAJ.1/TAK/R.R.-1/12A/21/2013-14 DATE D 31.12.2013 FIXING THE HEARING ON 16.01.2014 ASKING TO GIVE EXPLANATION WI TH NECESSARY EVIDENCES IN SUPPORT OF ITS EXPLANATION ALONGWITH BOOKS OF ACCOU NTS, DONATION RECEIPT BOOK AND INVOICES FOR EXPENSES. THE NOTICE WAS SERVED AN D ON RECORD OF CIT, BUT THERE IS NOT ANY ADJOURNMENT GRANTED AND NO ANYBODY EXPLAINED SAME. THE APPLICATION IS, THEREFORE, DECIDED ON MERITS, CONSI DERING THE MATERIAL AVAILABLE ON RECORD. 3 208-RJT-2014 SHREE NACHIKETA EDUCATION & CHARITABLE TRUST (SMC) 2. IN VIEW OF THE DISCUSSED FACTORS IN ORDER, IT TR ANSPIRES BY CIT THAT THE OBJECTS OF THE TRUST WERE NOT FOUND TO BE CHARITABL E IN NATURE. THUS THE TRUST IS NOT FULFILLING THE CONDITIONS LAID DOWN FOR REGISTR ATION U/S 12AA OF THE INCOME TAX ACT, 1961 AND RULE 17A OF THE I.T. RULES, 1962. CIT, THEREFORE, REJECT THE APPLICATION FOR REGISTRATION U/S 12AA OF THE INCOME -TAX ACT, 1961. 3. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E-TRUST, SHRI VANRAJ J MARU, CA, APPEARED AND CONTENDED THAT HE COULD NOT PUT AN APP EARANCE BEFORE THE LD. CIT TO FURNISH NECESSARY EVIDENCES/DETAILS AS REQUIRED ON THE DATE OF HEARING I.E. 16.01.2014 AS HE WAS ILL. HE ACCORDINGLY SUBMITTED THAT, IN THE INTEREST OF JUSTICE, ONE MORE OPPORTUNITY BE ALLOWED TO HIM TO PRODUCE THE R EQUISITE DETAILS/DOCUMENTS BEFORE THE LD. CIT. 4. SHRI M.L. MEENA, DR, APPEARED FOR THE REVENUE, S ERIOUSLY OBJECTED THIS PLEA OF THE LD. COUNSEL OF THE ASSESSEE. HE SUBMITTED TH AT THE IF THE LD. COUNSEL WAS ILL, HE SHOULD HAVE FILED AN APPLICATION FOR ADJOURNMENT AN D SINCE THIS WAS NOT DONE, THE ORDER OF LD. CIT REJECTING THE APPLICATION U/S 12A OF THE ASSESSEE-TRUST BE UPHELD. 5. HAVING HEARD BOTH THE SIDES, I HAVE CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ONLY ONE OPPORTUNITY WAS ALLOWED BY THE LD. CIT, ON WHICH DATE NO COMPLIANCE WAS MADE AS THE LD. COUNSEL OF THE ASSES SEE-TRUST WAS NOT FEELING WELL. I AM, THEREFORE, OF THE VIEW THAT IT WILL MEET THE EN DS OF JUSTICE IF ONE MORE OPPORTUNITY IS ALLOWED TO THE ASSESSEE-TRUST TO FURNISH THE REQ UISITE DETAILS/DOCUMENTS/EVIDENCES BEFORE THE LD. CIT. I, THEREFORE, SET ASIDE THE IMP UGNED ORDER OF LD. CIT AND DIRECT HIM TO RECONSIDER THE APPLICATION OF THE ASSESSEE-TRUST AFRESH IN ACCORDANCE WITH LAW. THE ASSESSEE IS A CHARITABLE TRUST AND ISSUANCE OF REGI STRATION U/S 12AA IS A PRIMARY CONDITION FOR THE START OF THE CHARITABLE ACTIVITY OF THE TRUST, THEREFORE ITS CASE HAS TO BE DECIDED ON PRIORITY BASIS. I, THEREFORE, DIRECT THE ASSESSEE-TRUST TO SUO MOTO APPEAR BEFORE THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I, RAJKOT WITHIN 15 DAYS ON RECEIPT OF THIS ORDER OF THE TRIBUNAL WITHOUT WAITING FOR A NY NOTICE FROM THE REVENUE DEPARTMENT AND SUBMIT ALL THE NECESSARY DETAILS/DOC UMENTS WHICH ARE REQUIRED BY THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I, RAJKOT . THEN AFTER THE LD COMMISSIONER OF INCOME-TAX SHALL PASS AN APPROPRIATE ORDER AS PE R LAW AS DEEMED FIT WITHIN A 4 208-RJT-2014 SHREE NACHIKETA EDUCATION & CHARITABLE TRUST (SMC) REASONABLE TIME. WITH THESE DIRECTIONS, ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 11.04.2014 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- SHREE NACHIKETA EDUCATION & CHARITABL E TRUST, THANA GALOL, TAL-JETPUR, DIST. RAJKOT 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX, RAJK OT-I, RAJKOT 3. ,0,1 * * 2 / CONCERNED CIT, RAJKOT 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT