BAI HEMKOREBAI DEVIDAS & DEVIDAS PURBHOODAS CHARITIES, MUMBAI V. DIT (E), MUMBAI

ITA 2102/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3658 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 29-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN VARMA
• Keywords: Competent authority; Capital receipt
• Section: 12AA

Judgement Text

ITA NO.2102/MUM/2012 BAI HEMKOREBAI DEVIDAS & DEVIDAS PURPHOODAS CHARITIES 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, AM AND DR. S.T.M. PAVAL AN, JM ./ I.T.A. NO. 2102 /MUM/2012 ( / / / / ASSESSMENT YEAR :2012-13 BAI HEMKOREBAI DEVIDAS & DEVIDAS PURPHOODAS CHARITIES 1103 STOCK EXCHANGE TOWER, DALAL STREET, FORT, MUMBAI-40001 / VS. DIT (E) 6 TH FLOOR, PIRAMAL CHAMBERS, PAREL MUMBAI-400012 ! '# ./ PAN : AAATB4217G ( !$ / / / / APPELLANT ) .. ( %&!$ / RESPONDENT ) !$ ' ( ' / APPELLANT BY : SHRI NIRAJ SETH %&!$ ' ( ' / RESPONDENT BY : SHRI PRAVIN VARMA. ' )# / // / DATE OF HEARING : 10.04.2013 *+ ' )# / DATE OF PRONOUNCEMENT : 19.04.2013 ,'- / O R D E R PER B. RAMAKOTAIAH, A.M . : THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST T HE ORDER OF THE DIRECTOR OF INCOME TAX (EXEMPTION) DATED 28.02.2012, WHEREIN TH E DIT REJECTED THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE IT ACT. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. DIRECTOR OF INCOME TAX (EXEMPTION) ERRED IN REJECTI NG THE APPELLANTS APPLICATION FOR APPROVAL OF THE INSTITUTION UNDER SECTION 12AAO F THE INCOME TAX ACT 1961 ON THE GROUND THAT THE APPELLANT HAS NOT CARRIED OUT ACTIV ITIES. 2. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION) FAIL ED TO APPRECIATE THE FACT THAT REGISTRATION TO THE INSTITUTION COULD NOT HAVE BEEN DENIED WITHOUT RECORDING DISSATISFACTION ABOUT THE GENUINENESS OF ACTIVITIES OF THE APPELLANT INSTITUTION OR ABOUT THE ACTIVITIES OF THE INSTITUT ION. 3. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT SUBMI TS THAT THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION) AT THE STAGE OF GRANTING REGISTRATION, IS NOT TO EXAMINE THE APPLICATION OF INCOME. BUT TO EX AMINE ONLY IF THE ITA NO.2102/MUM/2012 BAI HEMKOREBAI DEVIDAS & DEVIDAS PURPHOODAS CHARITIES 2 ACTIVITIES OF THE TRUST WERE NOT GENUINE OR WERE NO T BEEN CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF TRUST. 2. BRIEFLY STATED, THE ASSESSEE MADE AN APPLICATIO N FOR REGISTRATION IN FORM 20 A ON 28.08.2011 FOR REGISTRATION UNDER SECTION 12AA OF T HE IT ACT, WHICH THE LD. DIT REJECTED HOLDING THAT THE TRUST HAS NOT CARRIED OUT ANY ACTI VITY BY WHICH IT WOULD ENABLE THE COMPETENT AUTHORITY TO LOOK INTO THE ACTIVITIES AS GENUINE OR NOT. ASSESSEE IS AGGRIEVED. 3. LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE CAME INTO EXISTENCE CONSEQUENT TO THE ORDERS OF THE HONBLE HIGH COURT OF JUDICATURE AT BOMBAY IN SUIT NO. 3360 OF 1947 VIDE ORDER DATED 29 TH JULY.1948. HE PLACED ON RECORD THE COPY OF THE OR DER OF THE HONBLE HIGH COURT, WHICH ESTABLISHED THE TRUST FOR ADMINIS TERING THE PROPERTY ALONG WITH ITS OBJECTS AND HOW THE TRUST SHOULD CONDUCT. IT WAS SU BMITTED THAT THIS TRUST CAME INTO EXISTENCE MORE THAN 65 YEARS BACK AND WAS APPLYING THE INCOME FOR THE TRUST OBJECTS WHICH HAS SPECIFIED VIDE PARA 17, 18 & 19. IT WAS F URTHER SUBMITTED THAT OWING TO SMALL INCOME ON PROPERTY BY WAY OF RENTAL, THERE IS NO OC CASION TO APPLY FOR ANY REGISTRATION UNDER THE IT ACT AS THERE WAS NO TAXABLE INCOME. IT WAS FURTHER SUBMITTED THAT THE SMALL AMOUNT RECEIVED WAS BEING APPLIED TOWARDS THE OBJEC TS WHICH WAS MAINLY FOR HELPING THE MEDICALLY NEEDY PEOPLE. IN AY 2010 THE TRUST PROPER TY WAS SOLD AND ASSESSEE HAD SUBSTANTIAL CAPITAL RECEIPTS AND THEREFORE, THE TRU ST HAS TO MAKE APPLICATION FOR REGISTRATION SO THAT IT CAN ENJOY THE BENEFIT OF EX EMPTION. IT WAS THE SUBMISSION OF THE LEARNED COUNSEL THAT THE DIT DID NOT EXAMINE THE OB JECTS WHICH IS NECESSARY FOR REGISTRATION OF THE TRUST. IT IS ALSO SUBMITTED THA T ASSESSEE HAD PROVIDED ALL ACCOUNTS AND DETAILS BEFORE THE DIT AND THERE IS NO QUESTION ABO UT EITHER THE PAST ACTIVITIES OR ABOUT THE APPLICATION OF THE MONEY TOWARDS THE OBJECTS OF THE TRUST. THE LEARNED COUNSEL RELIED ON THE DECISION OF THE ITAT AMRITSAR BENCH IN THE CASE OF DREAM LAND EDUCATIONAL TRUST VS. CIT REPORTED IN 166 TAXMAN 27 (ASR). THE LEARNE D COUNSEL ALSO FURTHER RELIED ON THE DECISION OF THE ITAT, DELHI BENCH IN THE CASE OF AC HARYA SEWA NIWAS UTTARANCHAL VS. CIT 13 SOT 54 DELHI (URO). IT WAS THE SUBMISSION TH AT SINCE THE DIT DID NOT EXAMINE THE TRUST OBJECTS AND ITS ACTIVITIES AND WITHOUT EX AMINING REJECTED THE REGISTRATION. ITA NO.2102/MUM/2012 BAI HEMKOREBAI DEVIDAS & DEVIDAS PURPHOODAS CHARITIES 3 4. THE LEARNED DR HOWEVER SUBMITTED THAT DIT AT PAR A 8 & 9 HAS HELD THAT THE TRUST IS NOT GENUINE AND THEREFORE THE ORDER IS TO BE UPHELD . 5. WE HAVE CONSIDERED THE ISSUE AND THE RIVAL CONTE NTIONS. THE DIT REJECTED THE REGISTRATION HOLDING THAT THE TRUST HAS NOT CARRIED OUT ANY ACTIVITY WHICH WOULD ENABLE THE COMPETENT AUTHORITY TO LOOK INTO THE ACTIVITIES OF THE TRUST. HOWEVER, AS SEEN FROM THE CONSTITUTION OF THE TRUST, IT CAME INTO EXISTENCE B Y WAY OF THE ORDER OF THE HON'BLE HIGH COURT WAY BACK IN 1948 AND THE SAME IS ALSO REGISTE RED WITH THE CHARITY COMMISSIONER ON 14.07.1953. IT IS ALSO A FACT THAT THE RENTAL IN COME RECEIVED BEING SMALL DOES NOT REQUIRE TO BE REGISTERED SO AS TO CLAIM ANY EXEMPTI ON AND IT WAS SUBMITTED THAT WHATEVER THE MEAGER INCOMES RECEIVED, THESE HAVE BEEN UTIL IZED FOR THE OBJECTS OF THE TRUST. IN OUR OPINION, THE LEARNED DIT DID NOT EXAMINE THE OB JECTS OF THE TRUST SO AS TO CONSIDER THE SAME FOR REGISTRATION UNDER SECTION 12AA. 6. THE ITAT AMRITSAR BENCH IN THE CASE OF DREAM LA ND EDUCATIONAL TRUST VS. CIT HELD THAT:- SECTION 12AA PRESCRIBES THE PROCEDURE FOR REGISTRAT ION OF A TRUST. AS PER THIS SECTION, THE COMMISSIONER, ON RECEIPT OF AN APPLICA TION FOR REGISTRATION, SHALL CALL FOR SUCH DOCUMENTS OR INFORMATION FOR THE TRUST AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE TRUST AND MAY ALSO MAKE SUCH ENQUIRY AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND THAT A FTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF ITS ACT IVITIES, HE SHALL PASS AN ORDER IN WRITING, REGISTERING THE TRUST. THEREFORE IN ACCORD ANCE WITH SECTION 12AA, THE COMMISSIONER WAS REQUIRED TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES. IN THE INSTANT CASE, THE COMMISSIONER HAD NOT RECORDED ANY DISSATISFACTION ON EITHER OF THESE TWO ASPECTS. 7. FURTHER IN THE CASE OF ACHARYA SEWA NIWAS UTTARA NCHAL VS. CIT 13 SOT 54 ITAT HELD THAT:- UNDER SECTION 12AA THE JURISDICTION OF THE COMMISSI ONER IS CONFINED TO SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST A ND THE GENUINENESS OF THE ACTIVITIES AND FOR THIS PURPOSE, HE IS AUTHORIZED T O MAKE SUCH ENQUIRIES AS HE MAY DEEM FIT. THE COMMISSIONER, IN THE INSTANT CASE, HA D NOT TAKEN ANY OBJECTION TO THE CHARITABLE NATURE OF THE TRUST. IN FACT, THE OB JECTS OF THE TRUST AS DECLARED IN THE TRUST DEED, WERE ALL CHARITABLE OBJECTS AND THERE W AS NO FINDING RECORDED BY THE COMMISSIONER TO THE CONTRARY. THE REAL OBJECTION OF THE COMMISSIONER APPEARED TO BE THAT THE INITIAL CONTRIBUTION OF RS.500/- MAD E BY THE FOUNDER OF THE TRUST AND ITA NO.2102/MUM/2012 BAI HEMKOREBAI DEVIDAS & DEVIDAS PURPHOODAS CHARITIES 4 DEDICATED TO THE OBJECTS OF THE TRUST WAS HARDLY SU FFICIENT TO CARRY OUT THE CHARITABLE ACTIVITIES OF THE TRUST. THE SUFFICIENCY OR OTHERWISE OF THE INITIAL CONTRIBUTION MADE BY THE FOUNDER TO THE TRUST FUND IS NOT A RELEVANT FACTOR WHILE DEALING WITH AN APPLICATION FOR REGISTRATION UNDER SECTION 12AA. THE SECTION IN TERMS DID NOT MAKE IT A CONSIDERATION FOR THE GRANT OF REGISTRATION. 8. KEEPING IN VIEW THE PRINCIPLES LAID DOWN BY THE COORDINATE BENCHES AND ALSO PERUSING THE ORDER OF THE DIT EXEMPTION, WE HAVE NO HESITATION IN HOLDING THAT THE DIT DID NOT CONSIDER THE ISSUE OF REGISTRATION IN ITS C ORRECT PERSPECTIVE. IN ORDER TO ENABLE HIM TO EXAMINE AND DO THE NEEDFUL, WE SET ASIDE THE ORD ER DATED 28.02.2004 AND RESTORE THE ISSUE TO THE FILE OF THE DIT FOR FRESH EXAMINATION OF THE ASSESSEES TRUST OBJECTS AND ACTIVITIES FOR THE PURPOSE OF GRANTING REGISTRATION . ASSESSEE IS DIRECTED TO PLACE THE RELEVANT DETAILS BEFORE THE DIT FOR THE PURPOSE OF EXAMINATION. ACCORDINGLY, THE GROUNDS ARE CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19.04.2013 . ,'- ' *+ # ' .,/ 19.04.2013 + ' 6 SD/- SD/- ( DR. S.T.M. PAVALAN) ( B.RAMAKOTAIAH) , / JUDICIAL MEMBER '# , / ACCOUNTANT MEMBER MUMBAI ; ., DATED 19.04.2013 ... / ASHISH PS ,'- ' %)HI J'I) ,'- ' %)HI J'I) ,'- ' %)HI J'I) ,'- ' %)HI J'I)/ COPY OF THE ORDER FORWARDED TO : 1. !$ / THE APPELLANT 2. %&!$ / THE RESPONDENT. 3. K ( ) / THE CIT(A)-, MUMBAI 4. K / CIT , MUMBAI 5. IM6 %) , , / DR, ITAT, MUMBAI B 6. 6O P / GUARD FILE. ,'- ,'- ,'- ,'- / BY ORDER, &I) %) //TRUE COPY// Q QQ Q/ // /R S R S R S R S ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI