M/s Maharaja Agrasen Samarak Trust, V. Commissioner of Income Tax (Exemption), Lucknow

ITA 215/LKW/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2030 (ITAT-LUCKNOW)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-08-2015
• Assessment Year: 2015-2016
• Appeal Filed On: 13-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PREM PRAKASH
• Keywords: Charitable institution
• Section: 12; 12AA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.215/LKW/2015 ASSESSMENT YEAR:2015-2016 M/S MAHARAJA AGRESEN SAMARK TRUST, 46/21 KAMBAL WALA BAGH MUZAFFARNAGAR 251001 PAN AADTM 4544 J VS. CIT (EXEMPTION) LUCKNOW (APPELLANT) (RESPONDENT) A SSESSEE BY SHRI PREM PRAKASH, ADVOCATE RE VENUE BY SHRI A.K. SINGH, CIT,DR DATE OF HEARING 1 1 /0 8 /201 5 DATE OF PRONOUNCEMENT 3 1 / 0 8 / 2 0 1 5 O R D E R PER SUDHANSHU SRIVASTAVA , J.M. : THIS IS ASSESSEES APPEAL, FILED AGAINST THE ORDER OF THE CIT(EXEMPTIONS), LUCKNOW REFUSING TO GRANT REGISTR ATION U/S 12AA OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) THROUGH AN ORDER DATED 24.03.2015. 2. THE BRIEF FACTS, BORNE OUT FROM THE RECORDS, ARE T HAT THE ASSESSEE TRUST FILED AN APPLICATION IN FORM 10A ON 30/09/2014 , SE EKING GRANT OF REGISTRATION U/S 12AA OF THE ACT. THE ASSESSEE TRUST WAS CREATED ON 24.04.2013 AND DURING THE YEAR ENDED ON 31.03.2014, THE ASSESSEE H AD PURCHASED LAND FOR CONSTRUCTION OF A DHARAMSHALA. NO OTHER ACTIVITY AP ART FROM THE PURCHASE OF LAND WAS CARRIED OUT DURING THE YEAR. 2 3. DURING THE PROCEEDINGS BEFORE THE LD. COMMISSION ER OF INCOME TAX (EXEMPTIONS) LUCKNOW, THE ASSESSEE WAS ASKED TO DEM ONSTRATE WHAT CHARITABLE ACTIVITIES HAD BEEN CARRIED OUT BY THE T RUST AND THE LD. CIT(EXEMPTIONS) HAS NOTED THAT DURING YEAR CONSIDER ATION, ASSESSEE TRUST HAD NOT CARRIED OUT ANY CHARITABLE ACTIVITY. THE LD. CI T(EXEMPTIONS) HAS ALSO NOTED THAT AS PER THE PROVISIONS OF THE TRUST DEED ONLY PERSONS BELONGING TO THE AGARWAL COMMUNITY/CASTE COULD BECOME MEMBERS OF THE TRUST. BASED ON THESE FINDINGS, THE TRUST WAS REFUSED REGISTRATION U/S 12AA OF THE ACT. THE LD. CIT(EXEMPTIONS) ALSO RELIED ON ONE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KIRTI CHANDRA TARAWATI CHARITABLE SO CIETY VS. DIT(EXEMPTION) REPORTED IN 232 ITR 11, AND TWO JUDGMENTS OF THE HO N'BLE KERELA HIGH COURT IN THE CASES OF SELF EMPLOYERS SERVICE SOCIETY VS. CIT REPORTED IN 247 ITR 18 (KER.) AND DAWN EDUCATIONAL CHARITABLE TRUST VS. CI T REPORTED IN 370 ITR 724 (KER.) WHILE REFUSING THE GRANT OF REGISTRATION. 4. IN THE APPEAL BEFORE US, THE LD. AR OF THE ASS ESSEE HAS SUBMITTED THAT ALTHOUGH NO ACTIVITY WAS CARRIED OUT DURING THE YEA R, THE ASSESSEE TRUST HAD IN FACT PURCHASED LAND FOR CONSTRUCTION OF DHARMSHALA AND ON WHICH NOW THE CONSTRUCTION WAS UNDER WAY. HE DREW OUR ATTENTION T O THE COPIES OF 'BAINAMAS' RELATING TO THE SAID PURCHASE ON PAGES 2 8 TO 49 OF THE PAPER BOOK FILED. THE LD. AR FURTHER CONTENDED THAT THE CONSTR UCTION OF DHARMSHALA FALLS WELL WITHIN THE MEANING OF CHARITABLE ACTIVITY AND THE BENEFIT OF REGISTRATION CANNOT BE DENIED TO THE ASSESSEE TRUST SIMPLY BECAU SE NO OTHER CHARITABLE ACTIVITY WAS CARRIED OUT DURING THE YEAR. COUNTERIN G THE ARGUMENT OF THE DEPARTMENT REGARDING THE ASSESSEE TRUST CATERING ON LY TO THE AGRAWAL COMMUNITY/CASTE, THE LD. AR OF THE ASSESSEE PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF A HMEDABAD RANA CASTE ASSOCIATION VS. CIT REPORTED IN 82 ITR 0704. LD. AR OF THE ASSESSEE FURTHER RELIED ON THE JUDGMENT OF THE HONBLE ALLAHABAD HI GH COURT IN THE CASE OF CIT VS. SURJI DEVI KUNJI LAL JAIPURIA CHARITABLE TRUST REPORTED IN 186 ITR 728. 3 5. LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF THE LD. CIT(EXEMPTIONS) AND SUBMITTED THAT THE GRANT OF REG ISTRATION TO THE ASSESSEE TRUST WAS RIGHTFULLY REFUSED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN FROM THE COPY OF TR UST DEED FILED ON PAGES 11 TO 27 OF THE PAPER BOOK THAT THE TRUST CAME INTO EXIST ENCE ON 24.04.2013. FURTHER ON 07.07.2013, THE ASSESSEE TRUST HAS PURCH ASED A PLOT MEASURING 498.17 SQ.MTR. IN AREA AND ANOTHER PLOT MEASURING 3 51.30 SQ.MTR. IN AREA ON 30.07.2013 ON WHICH THE DHARMSHALA WAS PROPOSED TO BE BUILT. THIS PURCHASE OF LAND AMOUNTING TO RS.23,02,540/- IS ALSO DULY RE FLECTED IN THE BALANCE SHEET OF THE ASSESSEE TRUST DRAWN ON 31.03.2014 AND IS AV AILABLE ON PAGE 51 OF THE PAPER BOOK. 7. IT WILL ALSO BE WORTHWHILE TO REPRODUCE SECTION 12AA OF THE ACT AT THIS JUNCTURE: 12.AA (1) THE COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER C LAUSE (A) [OR CLAUSE (AA) OF SUB-SECTION (1)] OF SECTION 12A, SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTI ON AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEH ALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF T HE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE - (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDE R IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLI CANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY O F BEING HEARD. 4 8. IT IS SEEN THAT SECTION 12AA CONFERS POWER ON TH E CIT, WHILE CONSIDERING THE APPLICATION FOR REGISTRATION OF TRU ST OR INSTITUTION, TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INS TITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GEN UINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND ALSO TO MAKE SUCH ENQU IRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF AND AFTER SATISFYING HIMSE LF ABOUT OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIE S HE SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION. IF HE IS NOT SATISFIED, HE WOULD REFUSE THE REGISTRATION. IN OUR VIEW, WHILE CONSIDE RING THE ISSUE OF REGISTRATION UNDER SECTION 12AA, THE SCOPE OF ENQUIRY OF THE COM MSSIONER WOULD BE LIMITED TO THE AFORESAID EXTENT. ON THE FACTS OF TH E CASE, IT IS SEEN THAT THIS IS THE FIRST YEAR OF THE ASSESSEE TRUST AND AT THE TIM E OF FILING OF APPLICATION FOR REGISTRATION THERE WERE NO SUBSTANTIAL ACTIVITIES. THE LD. CIT(EXEMPTIONS) DREW ADVERSE INFERENCE ON INACTIVITY WHICH WAS NOT GERMANE AT THE TIME OF FILING OF APPLICATION FOR REGISTRATION OF TRUST U/S 12AA. IN OUR CONSIDERED OPINION, MERE NOT CARRYING OF VIGOROUS ACTIVITIES OF THE TRUST AT THE TIME OF REGISTRATION PER SE CANNOT BE DETRIMENTAL FOR REGIS TRATION OF THE TRUST U/S 12AA WHERE THE OBJECTS ARE CHARITABLE. IT IS SEEN FROM T HE ORDER U/S 12AA OF THE ACT THAT THE CIT(EXEMPTIONS) HAS DENIED THE BENEFIT OF REGISTRATION ON THE GROUND THAT DURING THE YEAR NO CHARITABLE ACTIVITIES WERE CARRIED OUT BY THE ASSESSEE TRUST. HOWEVER, NO INFERENCE ABOUT THE OBJECTS BEIN G NON-CHARITABLE IN NATURE WAS DRAWN. REFERENCE CAN BE MADE TO THE DECISION O F THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF HARDAYAL CHARITABLE & EDU CATIONAL TRUST VS. COMMISSIONER OF INCOME TAX REPORTED IN 355 ITR 534 (ALL) WHEREIN THE HONBLE HIGH COURT HAS HELD AS UNDER: AT THE TIME OF REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT, WHICH IS NECESSARY FOR CLAIMING EXEMPTION UNDE R SECTION 11 AND 12 OF THE ACT, THE COMMISSIONER OF INCOME TAX I S NOT REQUIRED TO LOOK INTO THE ACTIVITIES, WHERE SUCH ACTIVITIES HAVE NOT OR ARE IN THE PROCESS OF ITS INITIATION. WHERE A TRUST, SET U P TO ACHIEVE ITS OBJECTS OF ESTABLISHING EDUCATIONAL INSTITUTION, IS IN THE PROCESS OF ESTABLISHING SUCH INSTITUTIONS, AND RECEIVES DONATI ONS, THE 5 REGISTRATION UNDER SECTION 12AA CANNOT BE REFUSED, ON THE GROUND THAT THE TRUST HAS NOT YET COMMENCED THE CHARITABLE OR RELIGIOUS ACTIVITY. ANY ENQUIRY OF THE NATURE WOULD AMOUNT TO PUTTING THE CART BEFORE THE HORSE. AT THIS STAGE ONLY THE GENUI NENESS OF THE OBJECTS HAS TO BE TESTED AND NOT THE ACTIVITIES, WH ICH HAVE NOT COMMENCED. THE ENQUIRY OF THE COMMISSIONER OF INCOM E TAX AT SUCH PRELIMINARY STAGE SHOULD BE RESTRICTED TO GENU INENESS OF THE OBJECTS AND NOT THE ACTIVITIES UNLESS SUCH ACTIVITI ES HAVE COMMENCED. THE TRUST OR SOCIETY CANNOT CLAIM EXEMPT ION, UNLESS IT IS REGISTERED UNDER SECTION 12AA OF THE ACT AND THUS AT THAT SUCH INITIAL STAGE THE TEST OF THE GENUINENESS OF THE AC TIVITY CANNOT BE A GROUND ON WHICH THE REGISTRATION MAY BE REFUSED. 9. FURTHER ANOTHER GROUND FOR REFUSING THE REGISTRA TION WAS THAT THE ASSESSEE TRUST CATERED TO A PARTICULAR COMMUNITY OR CASTE NAMELY AGARWAL COMMUNITY OR THE FOLLOWERS OF MAHARAJA AGRASEN. IN OUR CONSIDERED OPINION, FOLLOWING THE RATIO OF THE JUDGMENT OF THE HONBLE APEX COURT IN AHMEDABAD RANA CASTE ASSOCIATION VS. CIT (SUPRA), THE REGISTR ATION U/S 12AA CANNOT BE RIGHTLY REFUSED. IN THIS CASE, THE HON'BLE APEX COU RT HAS HELD THAT THE OBJECT BENEFICIAL TO A SECTION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILITY. TO SERVE A CHARITABLE PURPOSE IT IS NOT NECESSARY THAT THE OBJECT SHOULD BE TO BENEFIT THE WHOLE OF MANKIND OR ALL PERSONS IN A PA RTICULAR COUNTRY OR STATE. IT IS SUFFICIENT IF THE INTENTION TO BENEFIT A SECTION OF THE PUBLIC AS DISTINGUISHED FROM A SPECIFIED INDIVIDUAL IS PRESENT. SIMILARLY, THE HON'BLE ALLAHABAD HIGH COURT HAS HELD IN THE CASE OF CIT VS. SURJI DEVI KU NJI LAL JAIPURIA CHARITABLE TRUST (SUPRA) THAT TO MAKE A PURPOSE CHARITABLE, I T IS NOT NECESSARY THAT IT SHOULD BE BENEFICIAL TO THE POOR ONLY AND WHAT IS R EQUIRED IS BENEFIT TO A SECTION OF THE PUBLIC AS DISTINGUISHED FROM SPECIFI ED INDIVIDUALS. TRUST CREATED FOR GIVING MEDICAL AID, SOCIAL WELFARE, UPLIFTING O F POOR MEMBERS OF THE COMMUNITY AND FOR GIVING FINANCIAL AND OTHER HELP O N THE OCCASION OF THE MARRIAGE OF THE MEMBERS OF THIS COMMUNITY IS FOR RE LIGIOUS AND CHARITABLE PURPOSES. RESPECTFULLY FOLLOWING THESE TWO JUDGMENT S AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE ASSESSE E TRUST IS ENTITLED TO GRANT OF REGISTRATION U/S 12AA OF THE ACT. THE CASE LAWS RELIED UPON BY THE LD. CIT 6 (EXEMPTIONS) ARE ON DIFFERENT SET OF FACTS AND WILL NOT APPLY TO THE FACTS OF THE PRESENT CASE. 10. AS A RESULT, WE ALLOW THE APPEAL OF THE ASSESSE E AND DIRECT THE CIT(EXEMPTION) TO GRANT REGISTRATION U/S 12AA OF TH E ACT. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED ON THE CAPTION PAGE) SD/- SD/- ( A. K. GARODIA ) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIA L MEMBER AKS DATED:31/08/2015 COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. R EGISTRAR