KDDL Ethos Foundation, Chandigarh V. CIT(Exemption), Chandigarh

ITA 209/CHANDI/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7826 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 30-08-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 37; 10; 12A; 12AA; 192; 13; 22

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ I N T H E I N C O M E T A X A P P E L L A T E T R I B U N A L D I V I S I O N B E N C H , “ S M C ” , C H A N D I G A R H B E F OR E SH R I N . K . SA I N I , V I C E P R E SI D E N T & S H R I S U D H A N S HU SR I V A S T A V A , J U D I C I A L M E M B E R आयकर अपील सं./ ITA No. 209/C H D / 2 0 2 1 (u/s 12AA) Kddl Ethos Foundation, SCO 88-89, Sector 8-C, Chandigarh बनाम The Commissioner of Income Tax (Exemptions), Chandigarh थायी लेखा सं./PAN NO: AACTK7915Q अपीलाथ /Appellant यथ /Respondent Hearing though video Conferencing नधा रती क ओर से/Assessee by : Sh. Tej Mohan Singh, Advocate राज व क ओर से/ Revenue by : Sh. Vivek Nangia, CIT DR स ु नवाई क तार"ख/Date of Hearing : 16.12.2021 उदघोषणा क तार"ख/Date of Pronouncement : 28.02.2022 आदेश/Order P er S u d h an sh u S ri va s ta va , J u d i c i a l M e mb e r : T hi s a p pe al is pr e f er re d b y t h e as s e s s ee ag a i ns t t he o r de r d a te d 11 . 0 6. 2 02 1 p as s e d by t h e Ld . Co m mi s s i on e r o f Inc o m e Ta x (E x e mp t i o ns ) , C ha n di g ar h [h er e i n a ft er r e f er r e d t o as ‘C IT ( E) ’ ]. 2. T he br ie f fa ct s o f t h e c a s e a re t h a t t he a s s es s ee i s a T r us t an d h ad a pp l i ed fo r R e g i s tr a t i on u/ s 1 2A o f t h e I n c o me T ax A c t, 1 96 1 (h e r e i n a ft er c a l l e d 't he A c t ') T h e L d. CI T( E ) r e j ec t e d th e as s e s s ee ’s a pp l i ca ti on for r e g is t r a t io n v i d e o r d e r 2 4. 0 8. 2 01 7 . A ggr i e v e d, t he a s s es s e e pr e f er re d an a pp e a l a g ai ns t t h e s a i d r e j e ct i o n be f o re t h is ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 2 T ri bu na l . T he C ha n di g a r h Be nc h o f t he Tr i b u na l r es to r e d t he is s u e t o t h e fi l e o f th e L d. C IT w i th a di re c t i on to pa s s a s p e ak i n g o rd e r i n a cc or d a n ce w i t h l aw a ft e r g i vi ng a re a so n a b l e o pp ort un i t y o f b ei ng he a rd. T h i s or d e r o f t he T r i b un a l w a s pa s s ed o n 20.0 4. 20 18 i n I TA N o. 14 48/ C hd/ 2 0 1 7. P ur su a n t t o t h e d i r e c t i o n o f t hi s T ri bu na l , th e a s s es s e e w as i s s ue d a qu es t i o nn a i re b y t h e o f fi ce o f th e L d. C I T( E) a nd t h e a s s es s e e fi l e d de t a i l e d re s p o ns e b e for e t h e L d. C IT(A ). H o w e ve r, i t w as t he op in i on o f t he L d. CI T ( E ) t h at s i nc e t h e a s s es se e tr us t ha d b e e n e s ta b l i s h ed i n o rde r t o me e t C or po ra t e S oc i al R e s pons i b i l i t y ( CS R ) o f t he p ar e n t co mp a ny K D D L Lt d a n d fur th e r s i nc e t h e as s es s e e ha d ro ut ed t he fu nds re c e i ve d f ro m t he p ar e n t c o mp a n y t o t h e co rp u s fu n ds w i t h ou t a ny sp ec i fi c di re c t i o n, t he a s s es s e e ha d v i o l a te d th e p ro v is i ons o f s e ct i on 11 ( 1 )( d ) o f t he I nc o me Ta x A ct , 196 1. T h e L d. CIT ( E ) a l s o no t e d t ha t t h e a s s es s e e t ru s t h a d me r e l y d o na t ed fun ds re c e i v e d fro m th e pa r e n t c o m p an y i n ord er t o d is c h a r ge o bl ig at i o n o f th e p ar e n t c o mpa ny , a lt ho ug h, gi vi ng d ona t i o ns w a s no t one o f t he o b j e ct s de fi n e d i n t h e t rus t de e d. It w as f ur t he r h e l d t h a t t he a ss e s s e e tr u s t w a s me r e l y a ve h i c l e for di s ch ar gi n g t he l e g a l o bl i gat i o n o f t h e pa re n t c o m p a n y a n d t ha t it h a d no t un d e rt a k en a n y pr oj e c t i m pl e m en t a tion . T he L d. C I T ( E ) pr o c e e d e d to r e j e ct t he a pp li c at i o n fo r re g i s tr at i on o nc e ag a i n. 2. 1 N ow , th e a s s e s se e ha s a ga i n a ppr o a c he d t h i s Tr ib un a l a n d has c ha ll e n ge d t he a c ti on o f t h e L d. CI T ( E ) i n re fu s in g th e re g i s t r a ti on t o ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 3 t he a s s es s e e ’s tr us t u /s 12A A of t he A c t by r ai s i n g fol l ow in g gro u n ds o f a pp e a l : - 1. That the Ld. Commissioner of Income Tax (Exemptions) has erred in law as well as on facts in rejecting registration under section 12AA of the Act which is arbitrary & unjustified. 2. That the registration has been refused only on the basis of suspicion, conjectures and surmises as is evident from the various unfounded findings as enumerated in the body of the order which is not permitted under the Law and as such the order refusing registration is illegal, arbitrary and unjustified. 3. That the Ld. Commissioner of Income Tax (Exemptions) has erred in rejecting the application only on the basis that the assessee has been giving donations to other entities as a vehicle for disbursing the legal obligation of the parent Company which is based on no evidence and as such rejecting the application for registration is arbitrary, illegal and unjustified. 3. That the Ld. Commissioner of Income Tax has further erred in passing the order refusing registration without considering the replies and evidence filed by the assessee which is arbitrary and unjustified. 4. That the order of the Ld. Commissioner of Income Tax is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable. 3. 0 T h e L d . A R s u b mi t te d t ha t t ha t t he a s s es s e e h ad f ur n is h e d vo l u m i n o us do c u m en ts be for e t he L d . CI T( A ) t o d e mons t r at e t ha t i t w as c ar ry i n g ou t c h a r i ta b l e a ct i v i ti e s, al be i t, a l s o i n th e for m o f CS R a ct i v i t i e s for i t s p a re n t c o m p an y K D D L L td . H e d r ew o ur a t t e nt i on t o t he r e s po n s e da te d 05. 02 . 2 02 1 w hi c h ha d b ee n s ub m i tt e d be for e t h e Ld . CI T(E ), w he r ei n, t h e a s s es s e e ha d fi l e d a c h a r t for fi n a n c i al y ea rs 20 17 - ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 4 18 t o 20 19 - 2 0 ou t l in i n g t h e r e l ev an t c la us e s und e r w hi c h th e a s s es s e e t rus t h a d i n c ur r e d ex pe n d i t u r e t ow a rds c ha r i t a b l e act i vi ti e s . O ur a tt e n t i o n w a s dr a w n t o l is t o f d on a ti on s ma de d ur i ng F . Y . 2 017 - 18 w hi ch w a s e n c l o se d a t p a g e 17 1 o nw a r ds o f t he p a p e r bo o k. S i mi l ar l i s t o f do n a t i ons a nd a ct i vi ti e s ca rr i e d o u t i n as s e s s men t ye a r s 20 18 -1 9 a nd 20 19- 2 0 w e r e al s o f il e d a n d o ur a t t e nt i o n w a s dr a w n t o t he va ri ous e vi de n c e s fi l e d i n t hi s re ga r d a nd f or m i n g p a rt o f t h e p ap e r bo o k fr o m pa g e s 17 2 t o 2 20 . T he L d. A R s ub mi t t e d t h a t i t is no t t h e c a s e o f t he L d. CI T(E ) t ha t t he o bj ec t s o f t h e a s s es s e e w e re n ot ch ar i t a b l e i n na tu r e a nd fu r t h e r t h a t it w a s an i n co rre c t o bs e r va t i o n o f t he L d. CI T (E ) t ha t t he a s s es s e e t ru s t w a s i n- h o us e ca pt i v e t ru s t of i t s p ar e n t c o m pa ny a s t h e a s s es s e e t ru s t h a d al s o c ar ri ed ac t iv it i es b e yo nd th e CS R o b j e c t i v e s o f i ts pa r e n t c o mp an y . T he Ld . A R v eh e m e nt l y ar g u e d t ha t t he L d. CI T ( E ) ha s no t a t a l l c o n s i de r e d t he a ct i vi t i e s of t he as se s s ee t ru st a n d t h e e vi de n c e s w hi c h ha ve b e e n f i l e d b y t h e a s s es s e e i n t hi s r e ga rd a n d t h a t he h ad o nl y m a d e s o me o b s er va t i ons and dr aw n e r r o ne o us con cl us i o ns fr o m t he ba n k a c c o u nt s o f th e a s s es se e t r us t . T h e Ld . A R al s o p la c ed re l ia nc e o n t h e fo ll ow i n g j ud i c ia l pre c e de nt s : - 1. R o un d gl as s Fou nd a t i o n V s . CI T (E ) r ep or t ed i n [ 20 2 0] 77 IT R (T r i b) 22 8 (C h a n di g ar h ). 2. Na n a k C ha nd J ai n Ch ar it ab le T r us t v CIT ( E ), Ch a n di gar h [2 01 8] 1 69 IT A D 5 34 (D e l h i- T r ib ) 3. CI T V s. J . K . Cha r it a b l e T r us t [ 199 1] 19 6 I T R 31 (A l la ha ba d) 4. D i re c to r o f I nc om e -t a x ( E x em pt i ons ) v B a gr i Fo u n da ti on [ 20 1 0] 192 T a xm an 3 09 (D e l hi ) ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 5 3. 1 T he L d. A R w h il e r el y i n g o n th e a b ov e me nt i o ne d j u di ci a l pr e c e d e n ts v e h e m e nt l y a r g u ed th a t t he r e i s no f in ding b y t h e L d . CI T(E ) t ha t t he as s e s s ee t r u s t w a s no t ac t i n g i n a cc or d a n ce w i t h t h e ob j e c t i ve s o f t he T rus t o r t ha t i t s a c t i vi t i e s w e re n o t g e nui ne . I t w as t he a r g u me nt o f t h e Ld. A R t ha t a t t h e ti me o f g r a nti ng o f re g i s tr at i on u/ s 1 2A A o f t he A ct , th e Ld. CI T ( E ) n e e d n ot g o b e yo nd tw o pa r a me t er s v iz . t he ob j e c t s be in g ch a ri t a b l e i n n a tur e a nd t h e a ct i v i t i e s b e i n g ge n ui n e . It w a s su b mi t te d t h at th e obs e r v a t i o ns m a d e by th e L d. CI T( E ) re ga r d i n g v io l a t i on o f pr ov is i o n s o f s e c ti o n 11 ( 1) ( d ) o f t h e A c t w e re no t r e l e va n t for t he p u r pos e o f g r an t o f re g i s t r a ti on a n d t h a t t h e y w e re to b e e x a mi n e d b y th e A s se ss i ng o f fi c e r d u ri ng t h e c o ur se o f as s e s sme nt pr oc e e d i n gs. T h e L d. A R ha r p e d on t he s et t l e d j u di ci a l pr ec e d e n t t h a t t he cha r i t a bl e p ur po s e m a y b e s e r v ed i n m o re t ha n one w a y . O n e w a y c ou l d be t o d i r e c t l y c on t r i b ut e fo r t he p ro m o t i o n o f i t s ca us e , a nd t he o t h e r w o ul d b e t o c on t r i b ut e mo n e y t o a no th er c h ar i t ab l e o r g an iz a ti on w h i c h a d va nc es t he c a us e o f f urt h e ra nc e o f i ts o bj e c t s th a t fu r t her in ab s en c e o f a ll e g a t i o n o f a ny m a l a fi d e , t he a c t iv it i es o f t he tr us t w ou l d r e m ai n c ha ri ta bl e i n na t ur e . 4. 0 P e r c o n t r a, t h e Ld . CI T D R v e h e me n t l y s up po rt e d th e o rd e rs o f t h e Ld. C I T ( E ) an d s u b m i t t e d t h a t t he a s s es s e e tr us t ha d n o t a pp l i ed i t s i nc o me a s pe r t he o b j e c ti v e s o f th e t r us t an d do n at i o n t o ot h e r t r us t w as n ot a n o b j e c t o f t he a s s ess e e t ru st. T he L d. CI T D R ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 6 a ls o p l a c e d re l i a nc e on t h e or d er o f t h e A m ri ts a r B en c h o f t he I T A T i n t he c as e o f G oe n ka Ch a r i t ab l e T rus t V s . CI T ( E ) Cha nd i g a r h re p o r t e d i n [ 2 01 8 ] 89 t a x ma n. c o m 3 1 (A mri ts a r - T ri b.) , w he r e i n, th e L d. CI T( E ) r e f us e d r eg i s t ra ti on u/ s 1 2A A of t h e A ct b y hol di ng t h e a s s es s e e t o be c a pt i v e i n- ho us e t r u st . The Ld . CI T D R su b mi t t ed t ha t t he L d. C IT (A ) ha d r ig ht ly r e j e c t ed t he a s s e ss e e ’ s a p pl i ca t i o n fo r re g i s t r a ti on u /s 12 A A of th e A ct 5. 0 We ha ve h ea rd th e ri va l co n te nt i o ns a nd h a v e als o pe ru se d t he ma t e r i a l on re c or d. We h av e a l s o go n e t h r ou g h th e d e t a i l e d no t e w hi ch h a d b e e n p re p a r e d b y t he as s e s s ee o n th e a c t iv i t i e s o f t h e a s s es s e e’ s t rus t f or th e per i o d f ro m 3. 2. 2 01 6 t o 3 1. 3 . 2 0 2 0. Thi s n ot e i s pl a c e d a t pa g es 129 o f t he pa p e r boo k and i s a ls o p ar t o f t h e A nne xu r e 8 o f th e s ub m is s i on s fi l e d be fo r e t h e L d. CI T( E ). F or a re a dy r e fe re nc e, w e a re re p ro du c i n g t h i s no te he re -i n u nd e r :- Initially the Trust has contributed Rs 4,75,000/- as donation to the IIMPACT, a charitable L- initiative started by the alumni of Indian Institute of Management, Ahmedabad for the Education of Girl Child across various locations in India by sponsoring Five Learning Centers @ 95000/- per learning center per year (Educating 30 Girls per Learning Centre) Thus educating 150 girl child in a year. The IIMPACT is located at M-2/3, Ground Floor, DLF Phase-2, Gurgaon 122002 and Its Website is www.iimpact.net for further details. (Section 2(15)- Education Promotion) ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 7 Than the Trust Contributed Rs 2,50,000/- to Youth Technical Training Society (YTTS) a Society registered with Mission to help the underprivileged for promoting education, including special education and employment enhancing vocation training skills specially among children, women elderly and disabled persons on long term basis by executing a Agreement for the above purpose. The donation was given vide cheque no. 292572 dated 11.07.2016 drawn on IDBI Bank with payees account endorsement only (Section 2(15)-Education Promotion) Then the Trust contributed Rs 1,00,000/- (Cheque No. 292573 dated 11.08.2016) to Heart to Heart Service Society of Inner wheel Club of Chandigarh for the poor and needy patients in the PGI/General Hospitals Sector - 16/Other Govt Hospitals through the distributions of costly medicines required in the major ailments as recommended by the Doctors. (Section 2(15)-Medicai Relief) Then the Trust contributed Rs 30,000/- (Cheque No. 292574 dated 07.09.2016) to Multiple Sclerosis Society of India for supporting the eradication of Sclerosis disease from India and helping the underprivileged children to fight with the life-threatening disease. Multiple sclerosis is disabling disease of the central nervous system that disrupt the flow of information within the brain and between the brain and body. (Section 2(15)-Medical Relief) Then the KDDL Ethos Foundation contributed Rs 90,000/- ( Cheque No. 029576 dated 11.01.2017) for installing the Three Automatic Electric sanitary Napkin incinerator and sanitary Napkins Vending Machines installed in Government Model Senior Secondary Schol!,Sector-18, Sector 20 and Sector 35 Chandigarh for the Girl Child students for cleanliness drive under Swatch Bharat India ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 8 Program of the Prime Minister. (Section 2(15)-Relief to the Poor& medical Relief) 5. 1 T he ob j e ct s o f th e tr us t , a s ha ve be e n r ep ro du ce d b y th e Ld. CI T(E ) i n t he i mp ug ne d o r d e r ar e a ls o w o r t h r e pr od uc in g he r ei n un der ;- 1. Eradicating hunger, poverty and malnutrition, promoting healthcare including preventive health care and sanitation including contribution to the Swachh Bharat Kosh set up by the Central Government for the promotion of sanitation and making available safe drinking water; 2. Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects; 3. Promoting gender equality , empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups; 4. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro forestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the clean Ganga Fund set up by the Central Government for the rejuvenation of river Ganga; 5. Protection of national heritage, art and culture including restoration of buildings, and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts. ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 9 6. Measures for the benefit of armed forces veteran, war widows and their dependents; 7. Training to promote rural sports nationally recognized sports and olympic sports; 8. Contribution to the Prime Minister's National Relief Fund or any other fund set up by the central Government for socio-economic development and relief and welfare of the scheduled castes, the Scheduled Tribes, other backward Classes, minorities and women; 9. Contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government; 10.Rural development projects; 11.Slum area development. 5. 2 A per us a l o f th e a c t i v i t i es w hi c h ha v e be e n ca rr i e d o ut by t he a ss e s s e e t r us t s in c e i t s i n c e p t i on a s w e ll a s th e ob j e c t i v e s o f t he t rus t w h i c h h ave be en r ep ro d u ce d a b ov e ha ve n o t be en do ubt ed by t h e L d. C I T( E) a nd t he o nl y o b j e c t io n o f t h e L d . CI T ( E ) for r e f us i n g t h e re g i s t r a ti on u/ s 1 2 A A of t he A ct t o t h is tr us t i s , a pp a re nt l y , t h a t t he a s s es s e e t rus t i s in -h ou s e c ap t i ve t r u s t o f i t s pare nt c o m pa ny M /s K D D L L td . a nd fur t h e r t he a s s es s e e ha s n ot s pe nt mo n e y i n a cc or d a n ce w i th t h e ob je c ti ve s o f t h e t ru s t. I t i s a ls o t h e vi e w o f th e L d. CI T( E ) t h a t m ak i n g d o na t i o n t o a no th e r t rus t w oul d no t c o m e un der ch a ri t a b l e ac t iv it i es . We h av e g i ve n a t h ou gh t fu l c ons i d e r a t i o n t o th e e n t ir e i ss u e a t ha nd a nd w e no t e a t t h e c o s t o f r ep e t i t i on t ha t i t ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 10 i s no t t he c as e o f t h e L d. CI T ( E ) th a t t h e o bj e c t i ves o f t he a s s es s e e t rus t a re no t c h ar it a bl e i n n a t u r e. I t i s a ls o no t t he c a s e o f t he Ld . CI T(A ) t h at t h e a ct i v i t i e s un de r t a k e n b y t h e a s s ess e e w e re n o t ge n ui ne . A s fa r a s t he is s u e o f b e in g i n- h o us e capt i ve tr us t i s c on c e r n e d, i t is s e en t ha t t he L d. CI T (E ) ha s n ot ed t h a t t he pa r en t c o mp a n y i . e M / s K D D L L t d. i s cl os e l y li nk e d t o t h e a s s ess e e t ru s t a nd f ur t h e r S hri R a j en d e r S a b o o an d M r. Y a s hova rd han S a bo o w e r e t he s et t le rs o f t h e a s s es s e e t r us t w h o w e r e al s o di r e c to rs o f t h e K D D L L td . I t i s ob s er ve d by t h e L d . C I T( E) th at , t her e f o re , t h e a s s es s e e t rus t w a s a fa mi ly t ru s t. We fi n d t h a t i dent ic a l i s s ue w as e ar li e r de al t b y t h e I TA T D e l hi B e n c h i n t h e c a s e of N a na k C ha nd J a in Ch a ri ta bl e T r u s t v C I T (E ), ( s upr a ). L at e r on , a n i d e nt i ca l i s su e w as de c id ed b y Co or di n a t e Be n c h o f t h e T r i b un a l (ITA T – Ch a n d ig ar h Be nc h) i n t he c a s e o f R ou nd gl a s s F ou nd a ti o n V s. CI T( E) (s u pr a ), w he r ei n, i t h as be e n h e l d t h a t m er el y b e c a us e th e as s es s e e t rus t h a d b ee n fou nd by a no t h e r co m pa n y fo r co mp l y in g w i t h CS R re q u i r e m e nt s , it ca nn ot b e de ni ed r e g i s t ra ti on u /s 12A A o f t he A c t un l e s s t he g en ui ne n es s o f t h e a c t i v it i e s of t he a ss e ss e e ’s t ru s t o r i ts c ha ri ta bl e o bj e ct s a re d o ub t e d. We a l so n o te th a t I TA T D el hi B en c h i n t he ca s e o f N a n ak Cha nd J a i n Ch a ri t ab le Tr us t v C I T (E ), ( s u pra ) c ons i de re d t h e o bj e ct i o n o f th e L d. CI T ( E ) in t h at c a se t h a t t he a ct i v i t i e s o f t h e a s s e ss ee tr us t w e re no t i n c o n s o na n c e w it h t h e pr o vi s i o ns o f C o mp an ie s A c t 19 56. Th e D e l h i B en c h w en t o ut t o ho l d t h a t t her e w a s no r eq ui re me nt t o s ee w he th er t h e a c t i v i t i e s o f ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 11 t he as s e s s ee t r us t w er e i n s y n c w i t h t he C o m pa n ie s A ct or no t . Th e L d. C I T( A ), i n t h e p re s e n t a p pe a l , has a ls o m ad e s imi l a r o bs er v a t i o ns a nd w e a re o f th e v ie w t h a t th e f ac t s i n t hi s a pp ea l a re i d e nt ic a l t o t he f ac t s i n t he c as e o f N a n a k C ha nd J a in Ch ar it a b l e Tr u s t v CI T( E) , (s u pr a ) as w e l l as i n t h e ca s e o f R o u nd g la s s F ou n da t i on V s. CI T( E ) (s u pr a ) 5. 3 A t t h i s j u nc tu re , i t w il l b e r el e v an t t o e xt rac t t he o p e r a t i v e po r t i o n f ro m t he o r de r o f t h e I T A T , C h an di ga r h B en ch i n t h e c a s e o f Ro u n dg l a s s F o und a t i o n V s . C IT( E) (s u pr a ) , w hi c h re ad s a s und er :- “ 6. A p e r us al o f t he i m pug ne d or d er o f th e L d . C IT (E ) r e ve a l s t ha t t he L d . CIT (E) n ow he re i n t he i m p ug n ed or de r ha s p oi nt ed ou t t h at th e a pp e ll a n t c om pa n y h as n ot b e e n ac t in g as p e r i ts o b j e c t iv e s o r t h at th e a c t i v i t y of t h e ap pel l a nt c o m p an y w as n o t g en u i n e vi s a v i s i t s o bj ec t s . T h e m ai n p l e a ta k e n b y th e L d . CIT (E ) i s t h at t h e s ai d c o m p any i s a n a r m of a n o t he r c om pa n y nam e ly M/s R o u nd G l as s We l l b i n g Pr i va t e L im i t ed f or t h e p ur po s e o f c ar r yi ng ou t t he ir CS R l ia bi l i t y. T h at o t h e r wi s e t he m ai n c on t r ol o ve r t h e ap pel l a nt c o m p a ny is of M/ s R ou n d G l as s We l lb i n g P ri va t e L i m i t ed . H o we v er , t her e is n o a l l eg at io n or o bs e r vat i on b y t he L d. CIT ( E ) ab o ut t he ch ar i t ab le n at ur e o f i t s o b j e c ts an d ac t iv i t i e s t he re of . So f ar as th e gr a nt o f r egi s t r at i o n t o a c om p an y w ho i s de em e d t o b e u nd e r th e c on t r ol of a no t he r c om p an y an d wh o h as f or m e d su c h c om pa n y f or c om pl y in g t he ir CS R r eq u ir e d un d er t he c om pa n y’ s A c t, t h e i s sue h as be e n s et t le d by t h e Co or di nat e D e l h i B en c h o f t he Tr ib u na l i n t he ‘ N an a k C h an d Ch a r it ab le T r us t v s CI T ( E x. ) ’ ( 20 18 ) 9 1 t r ax m a n n. c om 1 97 dat ed 9 . 2 . 2 0 18 , w he r ei n, it has bee n he l d t ha t m e r el y b e c au s e th e a s se s s e e t r us t / c om p an y h as b e e n f or m ed by a not h e r co m p an y f or co m p ly i n g t he CS R r e qui r em e nt s , i t c an n o t b e d en ie d r eg is t r a t i on u/ s 1 2 A A un l e s s t he g e n ui ne ne s s of t h e ac t i vi t i es o f as s es se e tr u s t or ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 12 i ts c h ar i t a b l e obj e c t s i s dou b t f u l . T he r e l e v a nt par t o f t h e or d er o f t he H o n' b le D el hi B e n c h o f t h e T r i b un al (sup ra ) i s r e pr odu ce d as un d e r : - “9. We have heard both the parties and perused the material available on record. It is pertinent to note that the reasons (i) and (ii) given by the CIT (exemption) is that the main aim appears to be forming a trust merely for complying to CSR requirements. When a trust is created for the purpose of carrying out CSR activities, the registration under section 12AA of the Income Tax Act, 1961 cannot be denied. Vide notifications dated 27/02/2014 the ministry of Corporate affairs in the rules framed for the purpose of CSR has implicitly provided for forming the dedicated trust under sub rule 2 to rule 4. It has been stated as under: "(2) The board of a company may decide to undertake it is CSR activities provide by the CSR committee, through the registered trust or a registered society or a company established by the company or its holding or subsidiary or associate under section 8 of the Act or otherwise." Even Companies Act provide for compliance of CSR provision through" a dedicated trust or society. Just because the trust has been formed for complying CSR requirements it cannot per se be the reasons for denying registration under Section 12AA of the Income Tax Act. As regards the reasons (iii) given by the CIT (exemption) that the object of trust are to be noted whereby apart from the CSR activities, the Activities in the nature of eradicating hunger and poverty, promotion of education, promoting gender equality etc. are also provided. These activities are in the nature of public charity. Further, the CSR Activities itself are in the nature of public charitable activities. As regards the reasons (iv) given by the CIT (exemption), no activities in sync with the requirement of the Companies Act has taken place in the trust so far. For the purpose of granting registration under Section 12AA only two factors are to be seen by the CIT (E) which are the objects of the trust being charitable in nature and the genuineness of activities. There is no requirement to see where the activities are in sync with Companies Act or not. Reasons (v) given by the CIT ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 13 (exemption) that the activities so far further show that the trust is relinquished its function as the primary implementation agency and undertaking its own programs to impact direct beneficiary by the transferring its funds to other society. Even the funds given to another charitable society for the purpose of charity are considered as application of income for the purpose of exemption under Section 11 of the Income Tax Act, 1961. At the time of granting the registration under Section 12AA of the Income Tax Act, 1961, the CIT (exemption) need not go beyond two parameters that the object being charitable in nature and activities being genuine. All other activities are the matters to be taken care ol by the Assessing Officer at the time of assessment for granted exemption under section 11 of the Act. Reasons (vi) given by the CIT (exemption) that it also militates against the legal principal that social enterprises cannot be a direct recipients of money from corporate as it is a profit making Company. This reasons by the CIT (exemption) is not in conformity with any of the provisions of the Income Tax Act. A profit making Company can grant certain donation to the charitable trust, how can the activities of the trust become not charitable with this act. The fact that the CSR expenditure are not allowable expenditure under section 37 of the Act is relevant only for the taxability of the company incurring such expenditure. From the perception of the assessee trust the amount received as donation whether will be eligible for exemption under section 11 depends on the application of such fund for the charitable activities by the trust only. The CIT is empowered to satisfy himself only about two factors i.e. the objects of the trust and the genuineness of the activities of the trust or institution and such powers does not extend to the eligibility of the trust/ institution for exemption u/s 11 r.w.s 13 of the Income Tax Act, 1961 which falls in the domain of the AO. Once the CIT has not doubted about the genuineness of the activities of the assessee nor doubted its charitable object, his powers under section 12AA end. The case laws relied by the Ld. AR are applicable in the present case. The case laws relied by the Ld. DR are not applicable as the factual malrix in those cases are totally different. Thus, the order passed u/s 12AA and u/s 80G(5)(vi) of the Income Tax Act, 1961 are set aside. We direct the CIT to grant the registration u/s 12AA of the Act and also the approval u/s 80G(5)(vi) of the Act to the assessee. ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 14 10. In result, both the appeals of the assessee are allowed. 7. Id e n t i c a l i s s ue h a s be en f ur t he r de ci d e d b y an othe r Co o r di nat e D e l h i B en ch o f t he T ri b u n al i n f av o u r o f t h e as s e s s ee t r us t i n t h e c as e of t he ‘ E s co r ts S ki l l D ev el op m e nt , F ar i d ab a d v s CI T (E xe m p t i o n )’ i n I T A Nos . 52 7 & 52 8/ D e l hi /2 0 1 7 v i d e or d er da t e d 26 . 4 . 2 0 19 . 8. T he L d . D R h as not br ou g h t t o o u r k now l e dge an y di s t i n g ui s h i n g f ac t or ca s e l a ws co n tr a r y t o t he find in gs gi v en i n t h e a bo v e r e fe r r e d t o d e c i s i ons o f t h e C o or di na t e B en c h e s o f th e T r i bu n al . H en ce , r e s p ec t fu ll y f ol l o win g t h e s am e an d fo r t h e s ak e of c o ns is t e n c y, th is is s u e i s de c i d e d i n f av our of t he as s es s e e . T he im pu gn e d or de r o f t h e CI T ( E ) i s , t he r e f or e , s et a s id e a n d t he L d. C IT ( E ) i s d ir e ct ed t o g r ant e xe m p t i o n u / s 1 2A o f t h e Ac t t o t h e as s es s e e c om pa ny . In th e r e su lt , t h e ap pe al o f t he as s ess e e s t an ds al l ow e d. 5. 4 D uri n g t h e co u rs e o f pr oc e e di ng s b e f ore u s , t he L d. CIT D R, a lt ho ug h ha s v e h e me nt l y s u p p or t e d t he or de rs o f t h e Ld . CIT (E ), has no t b ro u g ht a n y j u di c i a l p re c ed e n t t o our n o ti c e w hic h is co nt r ar y t o t he a bo ve s t a te d j u di c ia l p ro n o un c e me nt s . H e ha s onl y r e l i e d on a n or d e r o f I T A T , A mr i t s a r Be nc h i n t he ca s e o f G o en k a C ha r it a b l e T rus t V s . CIT (E ) Ch a n di g a r h (s u pr a) . H o w e ve r, w i th d ue r e s pe ct , i t i s our co ns i d e r ed o pi n i o n th at t he v i e w t a ken by t he I T A T A mr i ts a r Be a c h i n t he ca s e o f G o e n ka Cha ri ta bl e T r us t V s . CIT (E ) Ch a n di g a r h (s u pr a ) d o es n ot ha ve t h e b i n di ng f o rc e for us a s it w a s re n d e re d i n a n e a r l ie r d at e i . e. 2 0 18 , w her ea s , t he or d e r o f t he I TA T Ch a n di g a r h Be nc h i n t h e c as e o f Ro un dg l a ss F oun da t i o n V s . C I T(E) w as pr o no u n c e d i n 2 0 2 0 i . e . at a l a te r da t e . F urt h e r, w e a ls o no t e t ha t ITA No. 209-Chd-2021 KDDL Ehtos Foundation, Chandigarh 15 t he IT A T Ch an d i g a r h B e n c h i s t h e ju r i s di c t i on a l Bench o f t h e I T A T fo r t he a ss e s s e e a nd , th e r e fo re , fo r th a t re a s on a ls o , t he ord e r re n d e re d i n t h a t c a s e w i ll ha ve t o be a pp li e d i n t he c a s e o f t h e a s s es s e e. The re fo r e, in o ve r a l l v i e w of th e fa ct s o f t he c as e a nd c ons i de ri ng t he ve r y i m p or ta nt fa c t t h a t t h e Ld. C IT( E) ha s ne it he r di s pu t e d t h e c ha r i t a bl e na t u re o f t h e ob j e c t s o f t he a s s es s e e t r us t , nor ha s d ou b t e d t h e g e nu in en e s s o f t h e a c t i v i t i e s c a r rie d ou t b y th e a s s es s e e t rus t , t he a s s es s e e t rus t d es e rv es to be g ra nt e d re g i s tr at i on u/ s 1 2A A o f t he A ct . A cc or d in gl y, w e s e t as i de t he o r de r o f th e Ld . CI T(E ) a n d di r e c t h i m t o g ra n t r e g is t ra t io n to t he as s e s s e e t rus t . 6. 0 In th e fi n a l r es u lt , t h e a p pe al o f t he a s se s s e e s t an ds al l ow e d . O rde r p ro no un c e d o n 28. 02 . 2 02 2 . Sd/- Sd/- ( N. K. SAINI) (SUDHANSHU SRIVASTAVA) Vice President Judicial Member Dated : 28.02.2022 “आर.के .” आदेशक त+ल,पअ-े,षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकरआय ु .त/ CIT 4. आयकरआय ु .त (अपील)/ The CIT(A) 5. ,वभागीय त न1ध, आयकरअपील"यआ1धकरण, च3डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar