M/s SJF Philanthropic Organisation , Bangalore V. Commissioner of Income Tax (EXemptions) , Bangalore

ITA 2283/BANG/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1301 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Appeal Filed On: 30-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR BENGALURU
• Assessee Lawyers: SOWMYA
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ITA NO.2283/BANG/2018 ASSESSMENT YEAR: 2018-19 SJF PHILANTHROPIC ORGANISATION, CORPORATE AFFAIRS, ADMIN BLOCK, 1 ST FLOOR, JINDAL NAGAR, TUMKUR ROAD, BENGALURU 560 073. PAN: AAZCS 4958G VS. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SMT. SOWMYA, ADVOCATE RESPONDENT BY : SHRI PRADEEP KUMAR, CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 04.12.2019 DATE OF PRONOUNCEMENT : 05.12.2019 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 0407.2018 OF THE COMMISSIONER OF INCOME-TAX (EXEMPTIONS) [CIT(E) ], BANGALORE REJECTING THE APPLICATION FOR GRANT OF APPROVAL U/S . 80G(V)(VI) OF THE INCOME- TAX ACT, 1961 [THE ACT] TO THE ASSESSEE. ITA NO.2283/B/18 PAGE 2 OF 6 2. THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 2013. THE MAIN OBJECTIVES OF THE ASSESSEE WAS ESTAB LISHING AND RUNNING EDUCATIONAL INSTITUTIONS, HOSPITALS AND SANATORIUMS , ETC. THE ASSESSEE WAS INCORPORATED ON 21.11.2017. IT MADE AN APPLICA TION FOR GRANT OF APPROVAL U/S. 80G OF THE ACT ON 3.1.2018. EVEN PRI OR TO THIS, THE ASSESSEE HAS MADE AN APPLICATION FOR GRANT OF REGISTRATION U /S. 12A OF THE ACT ON 8.2.2017. THE CIT(E) BY HIS ORDER DATED 17.5.2018 GRANTED REGISTRATION TO THE ASSESSEE AS AN ORGANIZATION WHICH HAS, AS ITS O BJECTS, ACTIVITIES WHICH ARE CHARITABLE IN NATURE WITHIN THE MEANING OF SECT ION 2(15) OF THE ACT. 3. INSOFAR AS THE APPLICATION OF ASSESSEE FOR GRANT OF APPROVAL U/S. 80G OF THE ACT IS CONCERNED, THE CIT(E) BY HIS LETTER D ATED 4.4.2018 CALLED FOR DETAILS OF ASSESSEE AND ASSESSEE SENT A DETAILED RE PLY TO THE AFORESAID LETTER, WHICH IS PLACED AT PAGE 3 OF THE ASSESSEES PB AND GIVES EACH OF THE DETAILS ASKED FOR BY THE CIT(E). THE SAME IS AS F OLLOWS:- ITA NO.2283/B/18 PAGE 3 OF 6 4. THE CIT(E) BY THE IMPUGNED ORDER REJECTED THE R EQUEST OF ASSESSEE FOR GRANT OF APPROVAL U/S. 80G OF THE ACT ON THE GR OUND THAT EVIDENCE FILED BY THE ASSESSEE SHOWED THAT NO CHARITABLE ACTIVITY WAS CARRIED ON BY THE TRUST AND IN THIS REGARD RELIED ON THE FINANCIAL ST ATEMENTS AND BANK ACCOUNT OF THE TRUST. HE WAS OF THE VIEW THAT IN THE ABSEN CE OF CHARITABLE ACTIVITIES, IT WAS DIFFICULT TO GRANT RECOGNITION U/S. 80G OF T HE ACT. ACCORDINGLY THE REQUEST OF ASSESSEE FOR GRANT OF APPROVAL U/S. 80G OF THE ACT WAS REJECTED BY THE CIT(E). AGGRIEVED BY THE AFORESAID ORDER, T HE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT ON IDENTICAL REASONING GIVEN BY THE CIT(E) FOR NOT GRANTING APPROVAL U/S. 80G OF THE ACT, THIS TRIBUNAL IN THE CASE OF BHIMA FOUNDATION V. CIT, ITA NO.946/BANG/2018 BY ORDER DATED 20.9.20 19 , GRANTED APPROVAL. IN THE AFORESAID ORDER, THE TRIBUNAL CAME TO THE CO NCLUSION THAT THE ASSESSEE TRUST IS NEWLY SET UP AND WHEN THE APPROV AL U/S. 80G IS SOUGHT FOR AND WHEN THE PERIOD BETWEEN THE FORMATION OF TR UST AND EXAMINATION OF APPLICATION OF THE ASSESSEE FOR GRANT OF APPROVAL U /S. 80G OF THE ACT WAS ONLY A PERIOD OF 5 MONTHS, IT IS NOT POSSIBLE FOR S UCH ORGANIZATION TO DEMONSTRATE THE ACTUAL CARRYING OF ITS ACTIVITIES. THE TRIBUNAL PLACED RELIANCE ON THE DECISION OF THE HON'BLE KARNATAKA H IGH COURT IN THE CASE OF DIT(E) V. MEENAKSHI AMMA ENDOWMENT TRUST, 354 ITR 2 19 (KAR) AND CAME TO THE CONCLUSION THAT FOR WANT OF PROOF OF AC TIVITIES OF A TRUST, WHEN THE TRUST WAS YET TO COMMENCE ITS ACTIVITIES, AN AP PLICATION FOR GRANT OF REGISTRATION U/S.12A CANNOT BE REJECTED. THE TRIBU NAL ALSO PLACED RELIANCE ON THE DECISION OF ITAT JAIPUR BENCH IN THE CASE OF ANAND INCUBATION CENTRE V. CIT(E), 86 TAXMANN.COM 250 (JAIPUR TRIB) WHEREIN ON IDENTICAL FACTS, APPROVAL U/S. 80G WAS DIRECTED TO BE GRANTED . THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE TRIBUNAL:- ITA NO.2283/B/18 PAGE 4 OF 6 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT THE APPELLANT IS A PUBLIC CHARITABLE TRUST WHICH HAS BEEN NEWLY CONSTI TUTED VIDE TRUST DEED DATED 16.03.2017 AND IT IS THEREFORE NOT A CASE OF EXISTING CHARITABLE TRUST WHICH HAS BEEN IN EXISTEN CE FOR PAST MANY YEARS. FURTHER, AS FAR AS THE OBJECTS OF THE A PPELLANT TRUST ARE CONCERNED, GIVEN THE FACT THAT THE APPELLANT HAS BE EN GRANTED REGISTRATION UNDER SECTION 12AA, THE OBJECTS BEING ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY IN N ATURE HAVE BEEN VERIFIED BY THE LEARNED CIT(E) WHILE GRANTING THE R EGISTRATION UNDER SECTION 12AA OF THE ACT AND ARE THUS NOT IN D ISPUTE. AS FAR AS THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSE E TRUST IS CONCERNED, IN OUR VIEW, THE SAID REQUIREMENT HAS TO BE SEEN IN THE CONTEXT OF THE ESTABLISHMENT OF THE TRUST. WHERE TH E TRUST HAS BEEN SET UP IN THE PAST AND HAS BEEN CARRYING OUT ITS AC TIVITIES AT THE TIME OF MOVING THE APPLICATION, THEN IT IS NO DOUBT TRUE THAT WHILE GRANTING THE REGISTRATION UNDER SECTION 80G, THE LE ARNED CIT(E) IS WITHIN HIS POWERS AND JURISDICTION TO EXAMINE THE G ENUINENESS OF THE ACTIVITIES AND HOW SUCH ACTIVITIES ARE CONNECTE D WITH THE ACHIEVEMENTS OF THE OBJECTS FOR WHICH THE ASSESSEE TRUST HAS BEEN SET UP. HOWEVER, IN A SCENARIO WHERE THE ASSESSEE T RUST HAS BEEN NEWLY SET UP, AS IN THE INSTANT CASE, AND WITHIN A PERIOD OF FIVE MONTHS OF ITS SETTING UP, IT HAS APPLIED FOR APPROV AL UNDER SECTION 80G, PRACTICALLY, IT WOULD TAKE SOME TIME TO MOBILI ZE THE RESOURCES AND THERE MAY NOT BE AN OCCASION FOR THE ASSESSEE TRUST TO DEMONSTRATE THE ACTUAL CARRYING ON OF ITS ACTIVI TIES AT THE TIME OF MOVING THE APPLICATION. THEREFORE, THE QUESTION OF GENUINENESS OF SUCH ACTIVITIES AND EXAMINATION THEREOF BY THE L EARNED CIT(E) IS PREMATURE TO OUR MIND AT THE TIME OF GRANT OF AP PROVAL. IN OUR VIEW, THE OBJECT OF GRANT OF RECOGNITION UNDER SECT ION 80G OF THE ACT IS TO PROMOTE CHARITABLE ACTIVITIES AND TO MOBI LIZE RESOURCES WHICH CAN BE GENERATED BY THE ASSESSEE TRUST FROM T HE POTENTIAL DONORS AS WELL AS PUBLIC AT LARGE. THEREFORE, DENIA L OF RECOGNITION UNDER SECTION 80G MERELY FOR THE FACT THAT THE ACTI VITIES HAVE NOT BEEN CARRIED OUT BY THE ASSESSEE TRUST AND THUS CAN NOT BE VERIFIED IS NOT APPROPRIATE. FURTHER, THE LD CIT(E) HAS NOT SPELT OUT NON- FULFILLMENT OF ANY OF THE CONDITIONS SPECIFIED UNDE R SECTION 80G(5) OF THE ACT, THEREFORE, IT IS NOT A CASE WHER E ANY OF THE CONDITIONS SPECIFIED FOR GRANT OF APPROVAL HAVE NOT BEEN FULFILLED BY THE ASSESSEE TRUST. A SIMILAR VIEW HAS BEEN TAKE N BY THE CO- ORDINATE BENCH IN THE CASE OF OLA FOUNDATION VS CIT (E) (ITA ITA NO.2283/B/18 PAGE 5 OF 6 NO.215/BANG/2018 DATED 26.10.2018) WHEREIN IT WAS H ELD AS UNDER: 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. IT IS NOT IN DISPUTE THAT THE CIT(E) HIMSELF HAS GRANT ED REGISTRATION TO THE ASSESSEE U/S 12A OF THE ACT AND THEREFORE, THE CIT(E) WAS SATISFIED THAT THE OBJECT S OF THE TRUST WERE CHARITABLE AND THAT ITS ACTIVITIES WERE GENUINE AS THIS IS A CONDITION FOR GRANT OF REGISTRATION U/ S.12A OF THE ACT. AS PER THE REQUIREMENTS OF RULE 11AA(5) OF TH E RULES, IT IS INCUMBENT ON THE PART OF THE CIT(E) TO SPELL OUT THE CONDITIONS MENTIONED IN SEC. 80G(5) WHICH H AS NOT BEEN FULFILLED BY THE ASSESSEE. THEREFORE IT CA N BE SAFELY CONCLUDED THAT THE ONLY REASON ASSIGNED BY T HE CIT(E) FOR NOT GRANTING APPROVAL U/S.80G OF THE ACT IS THE ABSENCE OF ACTIVITIES OF THE TRUST FROM THE DATE OF COMING INTO EXISTENCE OF THE TRUST. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF DIT(E) VS. MEENAKSHI AMMA ENDOWMENT TRUST, 354 ITR 219 (KAR), WHEREIN THE HON'BLE KARNATAKA HIGH COURT IN THE CONTEXT OF GRAN T OF APPROVAL U/S 12A OF THE ACT MADE AN OBSERVATION THAT WHERE TRUST HAS APPROACHED THE AUTHORITY FOR REGIST RATION U/S 12A WITHIN SPAN OF 8 MONTH AFTER ITS FORMATION, OBJECTS OF THE TRUST HAVE TO BE EXAMINED AND THE AUTHORITIES CANNOT INSIST ON PROOF OF ACTIVITIES OF THE TRUST AS TRUST WAS YET TO COMMENCE ITS ACTIVITIES. ITAT, BANGALORE BENCH IN THE CASE OF ALL PEOPLE CHARITABLE TRUST VS. CIT(E) IN ITA NOS. 1216 AND 1217/BANG/2015 ORDER DATED 30/12/2015 HAS APPLIED THE PRINCIPLES LAID DO WN IN THE CASE OF MEENAKSHI AMMA ENDOWMENT TRUST TRUST (SUPRA) IN THE CONTEXT OF GRANT OF REGISTRATION U/S 80G OF THE ACT. IN THE PRESENT CASE THE TRUST WAS FORMED ON 14/12/2016 AND APPLICATION FOR GRANT OF REGISTRATIO N AND APPROVAL U/S 12A AND 80G RESPECTIVELY WAS MADE ON 16/5/2017. THEREFORE THE CIT(E) WAS NOT JUSTIFIED I N BASING HIS CONCLUSION FOR REJECTING APPROVAL U/S.80 G OF THE ACT ON THE GROUND OF ABSENCE OF ACTIVITIES OF TH E TRUST. ITAT, JAIPUR IN THE CASE OF ANAND INCUBATION CENTRE V S. CIT(E), JAIPUR 86 TAXMANN.COM 250 (JAIPUR - TRIB), ON IDENTICAL FACTS AS THE CASE OF THE ASSESSEE, THE TR IBUNAL HELD THAT REJECTION OF GRANT OF APPROVAL U/S 80G WA S NOT JUSTIFIED. KEEPING IN MIND THE AFORESAID DECISIONS AND THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE CIT(E) OUGHT TO HAVE GRANTED THE APPROVAL U/S.80G(5 ) OF ITA NO.2283/B/18 PAGE 6 OF 6 THE ACT. WE ACCORDINGLY DIRECT THAT THE APPROVAL U/S .80G OF THE ACT BE GRANTED TO THE ASSESSEE. 7. IN LIGHT OF ABOVE DISCUSSION AND RESPECTFULLY F OLLOWING THE AFORESAID DECISION OF THE COORDINATE BENCH WHICH HA S FOLLOWED THE LEGAL PROPOSITION LAID DOWN BY THE HONBLE KARN ATAKA HIGH COURT, WE HEREBY DIRECT THE LEARNED CIT(E) TO GRANT THE REGISTRATION TO THE ASSESSEE TRUST UNDER SECTION 80 G OF THE ACT. 6. THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE DECIDED BY THE TRIBUNAL REFERRED TO ABOVE. FOLLOWING THE AFORESAI D DECISION OF THE TRIBUNAL, WE DIRECT THE CIT(E) TO GRANT REGISTRATIO N TO THE ASSESSEE U/S. 80G OF THE ACT. 7. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF DECEMBER, 2019. SD/- SD/- ( D S SUNDER SINGH ) ( N V VASUDEVA N ) ACCOUNTANT MEMBER VICE PRE SIDENT BANGALORE, DATED, THE 5 TH DECEMBER, 2019. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(E) 5. DR, ITAT, BANGALORE. 6. GUARD FIL E BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.