M/s Nyingma Moinlam Chenmo International Foundation , Mysore V. Commissioner of Income Tax (Exemptions) , Bangalore

ITA 2221/BANG/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9919 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 18-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard; Set aside
• Section: 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI N.V VASUDEVAN, VICE PRE SIDENT AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.2221/BANG/2018 ASSESSMENT YEAR : 2018- 19 M/S NYINGMA MOINLAM CHENMO INTERNATIONAL FOUNDATION, GOLDEN TEMPLE COMPLEX, NYINGMA MONASTERY, CAMP NO.4, BYLAKUPPE, MYSORE DISTRICT. PAN AAATN 1338 G. VS. THE COMMISSIONER OF INCOME-TAX (EXEMPTIONS), BENGALURU. APPLICANT RESPONDENT APPLICANT BY : SHRI NINGOJI RAO, C.A RESPONDENT BY : SHRI C.H SUNDAR RAO, CIT DATE OF HEARING : 27.11.2018 DATE OF PRONOUNCEMENT : .12.2018 O R D E R PER SHRI N.V VASUDEVAN, VICE PRESIDENT : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 28.5.2018 OF CIT(EXEMPTION), BANGALORE, REJECTING A N APPLICATION FOR ITA NO.2221/B/18 2 GRANT OF RECOGNITION U/S.80G OF THE INCOME TAX ACT, 1961 (ACT) TO THE ASSESSEE. 2. THE APPELLANT IS A CHARITABLE TRUST. THE TRUST CAME TO EXISTENCE PURSUANT TO DEED OF TRUST DATED 3.5.1982 (WITH MODI FICATIONS TO THE TRUST DEED BY SUPPLEMENTARY DEEDS DATED 18.2.1983 A ND 24.2.2015). THE OBJECTS OF THE TRUST WAS MAINLY TO PROVIDE EDUC ATION. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS BEEN GRANTED REGISTRA TION U/S 12A OF THE ACT BY ORDER DATED 1.6.1982 AND ITS OBJECTS HAVE B EEN ACCEPTED AS CHARITABLE IN NATURE AND THAT ITS ACTIVITIES WERE G ENUINE. 3. THE ASSESSEE MADE AN APPLICATION FOR GRANT OF APPROVAL U/S.80G OF THE ACT VIDE APPLICATION DATED 15.11.2017. THE CIT( E) VIDE HIS LETTER DATED 9.5.2018 CALLED UPON THE ASSESSEE TO F URNISH DETAILS LIKE COPIES OF ASSESSMENT ORDERS U/S.143(3) OF THE ACT F OR THE PRECEDING YEARS, EXPLAIN AS TO WHETHER THERE WERE ANY TAX ARR EARS, EXPLAIN AS TO WHY APPROVAL SHOULD NOT BE DENIED BECAUSE AS PER TH E OBJECTS THE ASSESSEE CAN ESTABLISH AND RUN PLACES OF WORSHIP AN D EXPLAIN AS TO WHY ITS OBJECTS SHOULD NOT BE CONSIDERED AS COMMERC IAL IN NATURE IN SO FAR AS IT RELATES TO THE ACTIVITIES OF THE TRUST TO MAINTAIN TOURISTS CENTERS AND PROVIDE FACILITIES. 4. THE ASSESSEE VIDE ITS REPLY DATED 19.5.20 18 FILED ON 22.5.2018 BEFORE THE OFFICE OF CIT( E), BANGALORE, GIVING VAR IOUS DETAILS AND ANNEXURES. A COPY OF THE SAME IS AVAILABLE AT PAGE S 180 TO 197 OF THE ITA NO.2221/B/18 3 ASSESSEES PAPER BOOK. HOWEVER, THE APPLICATION FO R GRANT OF APPROVAL U/S 80G OF THE ACT, THE CIT(E) REJECTED TH E APPLICATION FOR THE FOLLOWING REASONS: HOWEVER, ON VERIFICATION OF FORM NO.10G AND OTHER SUBMISSION FILED BY THE APPLICANT TRUST IT IS NOTIC ED THAT MOST OF THE NENEFICIARY ARE FOR A SPECIFIC REL IGION AND THE ACTIVITIES ARE ALSO RELIGIOUS IN NATURE THEREFORE THE TRUST IS NOT ELIGIBLE FOR RECOGNITION . IN THE ABSENCE OF RELEVANT DETAILS, IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THE ACTIVITIES OF TRUST I N THIS CASE. 5. THE CIT(E) ALSO REFERRED TO THE DECISION OF THE HONBLE KARNTAKA HIGH COURT IN THE CASE OF M/S GANJAM NAGAPPA & SON TRUST VS. DIT, 269 ITR 59 (KAR) AND THE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS INSTITUTION VS. CIT 247 ITR 18 (KER) WHER EIN IT HAS BEEN HELD THAT CHARITABLE NATURE OF THE OBJECTS OF THE T RUST AND GENUINENESS OF ITS ACTIVITIES ARE REQUIRED TO BE SEEN FOR GRANT OF APPROVAL U/S.80G OF THE ACT. FOR THE ABOVE REASONS, THE CIT(E) REJECTED THE APPLICATION OF THE ASSESSEE FOR GRANT OF APPROVAL U/S 80(5)(VI) OF THE ACT. 6. AGGRIEVED BY THE ORDER OF THE CIT(E), THE A SSESSEE HAS PREFERRED PRESENT APPEAL BEFORE THE TRIBUNAL. 7. THE LD COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT IN THE REPLY TO THE SHOC CAUSE NOTICE OF THE CIT( E), BANG ALORE DATED 9.5.2018, THE ASSESSEE HAS EXPLAINED AS TO HOW ITS OBJECTS WERE CHARITABLE IN NATURE AND NOT COMMERCIAL OR RELIGIOU S VIDE ITS REPLY DATED 19.5.2018. HE POINTED OUT THAT NONE OF THOSE SUBMISSIONS WERE ITA NO.2221/B/18 4 CONSIDERED BY THE CIT( E), BANGALORE. HE POINTED OU T THAT IN THE IMPUGNED ORDER THAT THE CIT(E) HAS NOT SPELT OUT T HE CONDITIONS MENTIONED IN SEC. 80G(5) WHICH HAS NOT BEEN FULFILL ED BY THE ASSESSEE. HE POINTED OUT THAT THE ASSESSEE HAS BEEN HAS GRANT ED REGISTRATION U/S 12A OF THE ACT AND SUCH REGISTRATION IS IN FORCE WH ICH MEANS THAT THE OBJECTS OF THE TRUST WERE CHARITABLE AND THAT ITS A CTIVITIES WERE GENUINE. IN THESE CIRCUMSTANCES, HE SUBMITTED THAT THE CIT( E) OUGHT TO HAVE GRANTED THE APPROVAL U/S 80G OF THE ACT TO THE ASSE SSEE. 8. THE LD DR ON THE OTHER HAND POINTED OUT THA T IT WAS THE DUTY OF THE ASSESSEE TO SATISFY THE CIT(E) REGARDING EXIST ENCE OF CONDITIONS FOR GRANT OF APPROVAL U/S 80G OF THE ACT. HE PLACE D RELIANCE ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF GANJAN NAGAPPA & SON TRUST (SUPRA). HE ALSO POINTED OUT T HAT EXAMINATION OF THE ACTIVITIES OF THE TRUST WAS NECESSARY BEFORE APPROVAL CAN BE GRANTED U/S.80G OF THE ACT. 9. THE LD COUNSEL FOR THE ASSESSEE ON THE OT HER HAND SUBMITTED THAT THE DECISION IN THE CASE OF GANJAN NAGAPPA & SON TR UST (SUPRA) WAS NOT APPLICABLE TO THE PRESENT CASE FOR THE REASON T HAT IN THE AFORESAID CASE, IT WAS THE CASE OF GRANT OF RENEWAL OF RECOGN ITION U/S 80G. HE POINTED OUT THAT ON THE FACTS OF THE CASE SAID CAS E, THE CIT(E) FOUND THAT THE ASSESSEE HAD DONE SEVERAL ACTS WARRANTING NO RENEWAL LIKE WITHDRAWAL OF SUBSTANTIAL AMOUNT AND USE OF THE SAM E FOR NON CHARITABLE PURPOSES. HE POINTED OUT IN THE PRESENT CASE NO SUCH FACTS ITA NO.2221/B/18 5 WERE PRESENT AND IN THE CIRCUMSTANCES THE ACTION OF THE CIT(E) IN REFUSING GRANT OF REGISTRATION IS NOT JUSTIFIED. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS BEEN GRANTED REGIS TRATION U/S 12A OF THE ACT AND SUCH REGISTRATION CONTINUES TO REMAIN I N FORCE. THEREFORE IT CANNOT BE SAID THAT THE OBJECTS OF THE TRUST WER E NOT CHARITABLE AND THAT ITS ACTIVITIES WERE NOT GENUINE AS THESE ARE C ONDITIONS FOR GRANT OF REGISTRATION AND U/S.12A OF THE ACT AND FOR ITS CON TINUANCE. THE IMPUGNED ORDER IS SILENT ON THE REPLY OF THE ASSESS EE DATED 19.5.2018 TO THE CIT( E)S SHOW CAUSE NOTICE DATED 9.5.2018. TO THAT EXTENT THERE IS VIOLATION OF PRINCIPLES OF NATURE JUSTICE IN AS MUCH AS THE SUBMISSIONS OF THE ASSESSEE HAVE NOT BEEN CONSIDERE D AND DEALT WITH. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT IT WO ULD BE FIT AND PROPER TO SET ASIDE THE ORDER OF THE CIT ( E) AND R EMAND FOR FRESH CONSIDERATION BY HIM OF THE REPLY OF THE ASSESSEE D ATED 19.5.2018 AND ALSO AFFORD FURTHER OPPORTUNITY OF BEING HEARD AND FILE EVIDENCE TO SUBSTANTIATE ITS CASE FOR GRANT OF APPROVAL U/S.80G OF THE ACT. WE HOLD AND ORDER ACCORDINGLY. 11. IN THE RESULT, THE APPEAL BY THE ASSES SEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ITA NO.2221/B/18 6 ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DECEMBER, 2018 . SD/- SD/- (JASON P BOAZ) (N.V VASUDEVAN) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE DATED : 7/12/2018 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGI STRAR, ITAT, BANGALORE ITA NO.2221/B/18 7 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR. P. S... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT.. 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..