West Bengal Municipal, Kolkata V. CIT(EXEMPTIONS), KOLKATA, Kolkata

ITA 2265/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1691 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-06-2017
• Assessment Year: misc
• Appeal Filed On: 30-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K TIWARI
• Assessee Lawyers: A K TIBREWAL
• Section: 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI M.BA LAGANESH, AM] I.T.A NO. 2265/KOL/20 16 WEST BENGAL MUNICIPAL DEVELOPMENT -VS.- C.I. T.(EXEMPTIONS) FUND TRUST, KOLKATA KOLKATA [PAN : AAATW 1661 P] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI A.K.TIB REWAL, FCA FOR THE RESPONDENT : SHRI A.K.TIWARI, CIT DATE OF HEARING : 01.08.2017. DATE OF PRONOUNCEMENT : 18.08.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 16.09.2016 OF C.I.T.(EXEMPTIONS), KOLKATA REFUSING TO GRANT REGI STRATION TO THE ASSESSEE U/S 12AA OF THE INCOME TAX ACT, 1961 (ACT). 2. THE ASSESSEE IS A PUBLIC TRUST WHICH CAME IN TO EXISTENCE PURSUANT TO A DEED OF TRUST DATED 25.02.2008 EXECUTED BY THE GOVERNMENT O F WEST BENGAL THROUGH ITS AUTHORISED OFFICIAL SHRI SAMAR GHOSH, PRINCIPAL SEC RETARY. THE PRINCIPLE OBJECTIVE OF THE TRUST IS TO CONTRIBUTE TO THE PROVISION OF ADEQ UATE, EFFICIENT, AFFORDABLE, SUSTAINABLE AND MODERN URBAN INFRASTRUCTURE SERVICES TO THE PEO PLE OF WEST BENGAL THROUGH PUBLIC, PRIVATE AND COMMUNITY SECTOR INITIATIVES. 3. THE ASSESSEE FILED AN APPLICATION FOR GRANT O F REGISTRATION U/S 12AA OF THE ACT ON 22.03.2016. THE C.I.T.(EXEMPTIONS), KOLKATA DID NOT DISPUTE THE FACT THAT THE OBJECTS OF THE TRUST WERE CHARITABLE. UNDER SECTION 12AA OF TH E ACT THE CONDITIONS FOR GRANT OF REGISTRATION ARE THAT THE CIT(EXEMPTIONS) SHOULD BE SATISFIED ABOUT THE OBJECTS OF THE 2 ITA NO.2265/KOL/2016 WEST BENGAL MUNICIPAL DEVELOPMENT FUND TRUST 2 TRUST AND THE GENUINENESS OF ITS ACTIVITIES. AS ALR EADY STATED THE CIT(EXEMPTIONS) HAD NOT DISPUTED THE FACT THAT THE OBJECTS OF THE TRUST WERE CHARITABLE IN NATURE AS IS REQUIRED U/S 2(15) OF THE ACT. IT WAS ALSO STATED THAT THE G ENUINENESS OF ITS ACTIVIITES HAS BEEN MENTIONED IN THE IMPUGNED ORDER. THE ONLY OBJECTION OF THE CIT(EXEMPTIONS) FOR GRANTING REGISTRATION U/S 12AA OF THE ACT TO THE AS SESSEE WAS THAT THE DISSOLUTION CLAUSE OF THE SOCIETY WHICH IS AS UNDER:- 'IF ON THE WINDING UP OF THE TRUST ANY PROPERTY REM AINS AFTER THE SATISFACTION OF ALL ITS DEBTS AND LIABILITIES, THE SURPLUS FUND, ASSETS AND OTHER PROPERTIES OF THE TRUST SHALL BE TRANSFERRED TO ANOTHER TRUST HAVING SIMILA R OBJECTS OR SHALL VEST IN THE STATE GOVERNMENT. ALSO PROVIDES THAT IN THE EVENT OF DISSOLUTION OF T HE TRUST, THE PROPERTIES AND TRUST FUND WILL VEST WITH STATE GOVERNMENT. HE FOUND THAT IN A SIMILAR CASE OF JAMMU DEVELOPMENT AUTHORITY VS CIT, 52 SOT 153 HONBLE ITAT, AMRITSAR TOOK THE VIEW THAT HELD WHERE THE TRUST DEED PROVIDED THAT THE TR UST FUND ON DISSOLUTION WOULD VEST IN THE STATE GOVERNMENT THEN SUCH A TRUST CANNOT BE SA ID TO BE CHARITABLE. FOLLOWING THE SAID RULING, HE DENIED REGISTRATION TO THE ASSESSEE U/S.12AA OF THE ACT. 4. THE C.I.T.(EXEMPTION) ALSO REFERRED TO THE PR OVISION OF SECTION 13(2)(G) OF THE ACT WHICH LAYS DOWN THAT IF ANY INCOME OR PROPERTY OF T HE TRUST IS DIVERTED IN FAVOUR OF ANY PERSON WHO HAS SUBSTANTIAL INTEREST IN THE TRUST, T HEN THE TRUST WOULD NOT BE ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. WE MAY CLARIFY AT THIS STAGE ITSELF THAT THIS ASPECT IS IRRELEVANT AT THE TIME OF GRANT OF REGISTRATION U/S 12AA OF THE ACT. THIS ASPECT WILL BE RELEVANT ONLY WHEN THE RETURN OF INCOME FILED BY TH E ASSESSEE AND EXEMPTION U/S 11 OF THE ACT IS CLAIMED BY THE ASSESSEE. 5. THE ONLY ASPECT THAT NEEDS TO BE DECIDED IS A S TO WHETHER THE PROVISION IN THE TRUST DEED THAT IN THE EVENT OF WINDING UP OF THE TRUST T HE ASSETS AND SURPLUS FUNDS , ASSETS AND OTHER PROPERTIES OF THE TRUST SHALL BE TRANSFERRED TO ANOTHER TRUST HAVING SIMILAR OBJECTS OR 3 ITA NO.2265/KOL/2016 WEST BENGAL MUNICIPAL DEVELOPMENT FUND TRUST 3 SHALL VEST IN THE STATE GOVERNMENT, WOULD BE SUFFI CIENT TO REFUSE REGISTRATION U/S 12AA OF THE ACT. 6. WE HAVE PERUSED THE DECISION OF THE HONBLE ITA T, AMRITSAR IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY VS CIT (SUPRA) AND WE FIND TH AT IN THE AFORESAID DECISION THE TRUST DEED PROVIDED THAT IN THE EVENT OF DISSOLUTIO N OF SURPLUS FUNDS AND ASSETS OF THE TRUST SHALL VEST WITH THE GOVERNMENT. IN THE TRUST DEED OF THE ASSESSEE THERE IS NO SUCH BLANKET TRANSFER OR VESTING IN THE EVENT OF DISSOLU TION IN THE STATE GOVERNMENT. ON THE OTHER HAND, THE VESTING IS ONLY IN ANOTHER TRUST HA VING SIMILAR OBJECTS. IT IS ONLY BY WAY OF AN ALTERNATIVE THAT THE SURPLUS WILL VEST IN THE STATE GOVERNMENT IN THE EVENT OF DISSOLUTION. WE THEREFORE ARE OF THE VIEW THAT THE DECISION RELIED ON BY CIT(EXEMPTION) WILL NOT BE OF ANY ASSISTANCE TO THE PLEA OF THE RE VENUE. 7. ON A READING OF CLAUSE 8.9 WHICH PROVIDES FOR THE CONTINGENCY OF DISSOLUTION IT IS CLEAR THAT THE FIRST ALTERNATIVE SHALL HAVE PREFERE NCE OVER THE SECOND ALTERNATIVE. IN ANY CASE, IT WOULD BE A MATTER FOR CONSIDERATION AT A L ATER STAGE, IF AT ALL, THERE WOULD BE A WINDING UP AND NOT OTHERWISE. IT HAS BEEN SO HELD BY THE HON'BLE DELHI HIGH COURT IN AMERICAN SCHOOL OF BOMBAY EDUCATION TRUST AND OTHER S - VS. - UNION OF INDIA AND OTHERS [ (2015) 377 ITR 645 (DEL.) ], FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN QUEENS EDUCATIONAL SOCIETY - VS.- C.I.T. [(2015) 372 ITR 699 (SC) ]. 8. WE AGREE WITH THE AFORESAID SUBMISSIONS OF T HE ASSESSEE AND HOLD THAT THERE IS NO JUSTIFICATION FOR REFUSING GRANT OF REGISTRATION TO THE ASSESSEE. THE REGISTRATION IS ACCORDINGLY DIRECTED TO BE GRANTED AND THE APPEAL O F THE ASSESSEE IS ALLOWED. 4 ITA NO.2265/KOL/2016 WEST BENGAL MUNICIPAL DEVELOPMENT FUND TRUST 4 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 18.08.2017. SD/- SD/- [M.BALAGANESH] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18.08.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. WEST BENGAL MUNICIPAL DEVELOPMENT FUND TRUST, 1C DMC BUILDING (GR. FLOOR), CHANGE MANAGEMENT UNIT, ILGUS BHAWAN, HC BOCK, SECT OR-III, SALT LAKE CITY, KOLKATA-700106. 2. C.I.T. (EXEMPTIONS), KOLKATA. 3. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETAR Y HEAD OF OFFICE/ D.D.O., ITAT , KOLKATA BENCH ES