Smashan Fund Committee, Pune V. Commissioner of Income-tax: 1,

ITA 2093/PUN/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7205 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 21-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K SRINIVASAN
• Keywords: Charitable institution; Benefit of exemption
• Section: 12A; 12AA; 12; 11

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , ! ' , $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.2093/PUN/2014 ' ' / ASSESSMENT YEAR : 2014-15 SMASHAN FUND COMMITTEE, C/O.MR. Y.H. SANE, 406, NARAYAN PETH, OPP. BHANUVILAS THEATRE, LAXMI ROAD, PUNE 411 030. PAN : AANTS7192N. . / APPELLANT V/S COMMISSIONER OF INCOME TAX - I, PUNE, 1 ST FLOOR, PMT BUILDING, C WING, SHANKAR SHETH ROAD, SWARGATE, PUNE-37. . / RESPONDENT / APPELLANT BY : SHRI K. SRINIVASAN / RESPONDENT BY : SHRI RAJEEV KUMAR. ( / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX I, PUNE DT.26.09.2014. / DATE OF HEARING : 23.01.2017 / DATE OF PRONOUNCEMENT: 25 .01.2017 2 ITA NO.2093/PUN/2014 AY.NO.2014-15 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- 2.1 ASSESSEE IS STATED TO BE A TRUST SET UP VIDE TRUST DE ED DT.03.08.1916 AND IS REGISTERED UNDER THE BOMBAY PUBLIC TR USTS ACT, 1950 VIDE NOTIFICATION DT.03.08.1916 ISSUED BY DY. CHARIT Y COMMISSIONER, PUNE, REGION, PUNE. THE OBJECT OF THE TRUST INTER- ALIA IS TO PROVIDE MATERIAL FOR CREMATION CEREMONY AT MODERAT E COST OR TO PROVIDE IT FREE OF COST TO THE POOR AND DESOLATE M EMBERS OF HINDU COMMUNITY OF POONA CITY. ASSESSEE MADE APPLICATION IN FORM 10-A REQUESTING FOR GRANT OF REGISTRATION U/S 12A O F THE ACT. LD. CIT WAS OF THE VIEW THAT SINCE THE TRUST WAS FOR A PARTICULAR COMMUNITY, THE PROVISIONS OF SEC.13(1)(B) APPLIES TO THE ASSE SSEE TRUST AND THEREFORE THE TRUST CANNOT BE TREATED AS CHARITABLE TRUST. LD. CIT HAS FURTHER NOTED THAT ASSESSEE IN F.YS . 2010-11, 2011-12 AND 2012-13 HAD NOT CARRIED OUT ANY ACTIVITY A S PER THE STATED OBJECTS AND DURING FINANCIAL YEAR 2013-14 IT HAD S PENT A MEAGRE AMOUNT TOWARDS THE OBJECTS OF THE TRUST. HE THEREFORE CONCLUDED THAT THE OBJECTS OF THE TRUST WERE RELIGIOUS O BJECTS AND HAD NOT CARRIED OUT ANY ACTIVITIES DURING THE LAST THREE YEARS AND ACCORDINGLY THE APPLICATION FOR REGISTRATION U/S 12A WAS REJECTED. AGGRIEVED BY THE ORDER LD. CIT DT.26.09.2014 ASSESSEE IS N OW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER OF INCOME TAX I, PUNE HAS ERR ED IN NOT GRANTING THE REGISTRATION U/S 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961. IT IS THEREFORE SUBMITTED THAT BASE D ON THE FACTS AND MERIT OF THE CASE, THE APPROPRIATE DIRECT IONS MAY 3 ITA NO.2093/PUN/2014 AY.NO.2014-15 BE GIVEN TO THE LEARNED CIT FOR GRANTING THE REGIST RATION U/S 12AA91)(B)(II) OF THE I.T. ACT, 1961 W.E.F. 01/04/2 013. 2. THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEN D, ALTER, REVISE, MODIFY, SUBSTITUTE OR DELETE ANY OR ALL GRO UNDS OF APPEAL IF DEEMED NECESSARY AT THE TIME OF HEARING O F THE APPEAL. 3. BEFORE US LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE LD. CIT AND FURTHER SUBMITTED THAT SINCE THE TRUST WAS C REATED BEFORE THE COMMENCEMENT OF THE INCOME TAX ACT, 1961 AN D SINCE THE TRUST WAS REGISTERED ON 03.08.1916 THE PROVISIONS OF SEC.13 OF THE INCOME TAX ACT ARE NOT APPLICABLE AND THEREFORE THE QUESTION OF VIOLATION OF SEC.13(1)(B) DOES NOT ARISE. IT WAS FURTHER SUBM ITTED THAT LD. CIT HAS WRONGLY INTERPRETED THAT THE TRUST WAS FOR A PARTICULAR COMMUNITY WHEREAS ACCORDING TO LD.A.R THE OBJE CTS OF TRUST ARE NOT RESTRICTED FOR A PARTICULAR RELIGION OR COMM UNITY BUT IS FOR ALL THE MEMBERS OF THE POONA CITY. LD.A.R FURTHER SUB MITTED THAT AT THE TIME OF EXAMINING THE APPLICATION FOR REGISTRAT ION OF TRUST, THE LD. CIT IS NOT EMPOWERED TO EXAMINE THE APPLICA TION OF INCOME AND FURTHER THE PROVISIONS OF SEC.13(1)(B) COULD NOT B E INVOKED WHILE CONSIDERING THE APPLICATION FOR REGISTRATION U/ S 12A. HE THEREFORE SUBMITTED THAT THE ORDER OF LD. CIT BE SET ASIDE. LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF LD. CIT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DENIAL OF REQUEST FOR REGISTRATION OF THE TRUST U/S 12A OF THE ACT MAINLY FOR THE REASON THAT ASSESSEE HAD NOT INCURRED A NY EXPENDITURE ON THE OBJECTS OF THE TRUST AND SECONDLY BY INVOKING THE PROVISIONS OF SEC.13(1)(B) OF THE ACT. 4 ITA NO.2093/PUN/2014 AY.NO.2014-15 5. THE REGISTRATION U/S 12A OF THE ACT CAN BE SOUGHT EITHER BY A TRUST OR BY AN INSTITUTION. IN ORDER TO AV AIL OF THE BENEFIT OF EXEMPTION U/S 11 OR 12 OF THE ACT, THE ACTIVITIES OF THE TRUST OR THE INSTITUTION MUST BE CHARITABLE OR FOR RELIGIOU S PURPOSES. THE CONDITIONS FOR APPLICABILITY OF SEC.11 AND 12 ARE PROVIDED U/S 12-A AND ONE OF THE CONDITIONS IS THAT THE PERSON IN RECEIPT OF THE INCOME WHICH HE CLAIMS TO BE FOR CHARITABLE P URPOSES HAS TO MAKE AN APPLICATION FOR REGISTRATION OF THE TRUST O R THE INSTITUTION IN THE PRESCRIBED FORM AND IN THE PRESCRIBED MANNER TO THE COMMISSIONER WITHIN THE PERIOD STIPULATED THEREIN. THE PROCEDURE FOR REGISTRATION OF THE TRUST OR THE INSTITUTIO N BY THE COMMISSIONER IS PROVIDED U/S 12-AA OF THE ACT. SEC.12AA(1) REQUIRES THE COMMISSIONER TO WHOM AN APPLICATION IS MADE FO R THE REGISTRATION OF A TRUST OR INSTITUTION TO SATISFY HIMSELF AB OUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUT ION AS WELL AS THE OBJECTS OF THE TRUST OR INSTITUTION AND FOR THAT PURPOSE COMMISSIONER IS VESTED WITH POWER TO CALL FOR DOCUMENTS OR INFORMATION AND IS ALSO EMPOWERED TO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THAT BEHALF. THE COMMISSIONER IS THEREUPON EMPOWERED TO PASS AN ORDER IN WRITING EITHER REGISTERING AN INSTITUTION OR IF HE IS NOT SATISFIED ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND OF THE GENUINENESS OF ITS ACTIVITIES, TO P ASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITU TION. THUS IT CAN BE SEEN THAT AT THE TIME OF GRANT OF REGISTRATION, THE COMMISSIONER IS NOT EMPOWERED TO EXAMINE THE APPLICATION O F INCOME. THE STAGE FOR CONSIDERATION OF THE RELEVANCE OF TH E OBJECT OF THE TRUST AND THE APPLICATION OF ITS FUNDS ARISES AT TH E TIME OF 5 ITA NO.2093/PUN/2014 AY.NO.2014-15 ASSESSMENT. WE FURTHER FIND THAT HONBLE KERALA HIGH COU RT IN THE CASE OF SHRI ANJANEYA MEDICAL TRUST VS. CIT (2016) 382 ITR 399 (KER) ON THE ISSUE OF THE SCOPE OF INQUIRY BY CIT(A) FOR THE REGISTRATION U/S 12A AND 12AA HAS OBSERVED AS UNDER : IT IS CLEAR FROM A PLAIN READING OF SECTIONS 12A A ND 12AA OF THE ACT THAT WHAT IS INTENDED THEREBY IS ONLY A REG ISTRATION SIMPLICITER OF THE ENTITY OF A TRUST. THIS HAS BEE N MADE A CONDITION PRECEDENT FOR THE CLAIMING OF BENEFITS UND ER THE OTHER PROVISIONS OF THE ACT REGARDING EXEMPTION OF INCOME, CONTRIBUTION, ETC. NO EXAMINATION OF THE MODUS OF THE APPLICATION OF THE FUNDS OF THE TRUST OR AN EXAMINA TION OF THE ETHICAL BACKGROUND OF ITS SETTLERS IS CALLED FOR WH ILE CONSIDERING AN APPLICATION FOR REGISTRATION. THE S TAGE FOR CONSIDERATION OF THE RELEVANCE OF THE OBJECT OF THE TRUST AND THE APPLICATION OF ITS FUNDS ARISES AT THE TIME OF ASSESSMENT. WHERE BENEFITS ARE CLAIMED BY THE ASSESSEE IN TERMS OF SECTIONS 11 AND 12 OF THE ACT, THE QUESTION AS TO T HE NATURE OF SUCH CONTRIBUTION AND INCOME CAN BE LOOKED INTO. AT THE TIME OF REGISTRATION OF THE TRUST, GOING BY THE BIN DING JUDGMENTS OF THE APEX COURT, WHAT IS TO BE LOOKED I NTO IS WHETHER THE TRUST IS A GENUINE ONE AND WHETHER IT I S A SHAM INSTITUTION FLOATED ONLY TO AVAIL THE BENEFITS OF E XEMPTION UNDER THE ACT. THERE IS NO SUCH FINDING IN THE IMP UGNED ORDER. FURTHER, WE ARE OF THE VIEW THAT IN ORDER TO ASCERTAIN THE TRUE NATURE AND PURPOSE OF THE TRUST, THE OBJECTIVES ARE TO BE CONSIDERED AS A WHOLE AND NOT IN ISOLATION. IN THE PRESE NT CASE, SINCE THE ASSESSEE TRUST HAS BEEN CREATED IN THE YEAR 1916, I.E., BEFORE THE COMMENCEMENT OF THE INCOME-TAX ACT, 1961, WE ARE OF THE VIEW THAT THE PROVISIONS OF SEC.13 OF THE ACT ARE NO T APPLICABLE. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS AND AFTER RE LYING ON THE AFORESAID DECISION OF HONBLE KERALA HIGH COURT, WE ARE OF THE VIEW THAT THE REJECTION OF APPROVAL FOR REGISTRATION U/S 12A WAS NOT WARRANTED IN PRESENT CASE AND THEREFORE, WE SET ASIDE T HE IMPUGNED ORDER OF CIT AND THE CIT IS DIRECTED TO GRANT REGISTRATION 6 ITA NO.2093/PUN/2014 AY.NO.2014-15 IN TERMS OF SEC.12A OF THE ACT. THUS, THE GROUND OF ASSE SSEE IS ALLOWED. 6 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 25 TH DAY OF JANUARY, 2017. SD/- SD /- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE; ! DATED : 25 TH JANUARY, 2017. YAMINI ( ) *!+, -,! ' COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5 6. CIT- I, PUNE ADDL.CIT, RANGE 1, PUNE. #$% &&'() '() / DR, ITAT, A PUNE; %+,-' GUARD FILE. ( / BY ORDER, //// // TRUE COPY // T // // TRUE COPY // . /012 / ASSISTANT REGISTRAR, '( , / ITAT, PUNE.