Shri Nathji Goverdhan Nathji Charitable Trust, Kolkata V. CIT(Exemption), Kolkata , Kolkata

ITA 2283/KOL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1210 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 07-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MD USMAN
• Assessee Lawyers: S M SURANA
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 12

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.2283-2284/KOL/2017 SHRI NATHJI GOVERDHAN NATHJI CHARITQABLE TRUST, 32, HARISH MUKHERJEE ROAD, P.O.& P.S.BHOWANIPORE, KOLKATA-700 025 [ PAN NO.AARTS 9070 K ] / V/S . COMMISSIONER OF INCOME TAX (EXEMPTION), 10B, MIDDLETON ROW, 6 TH FLOOR,KOLKATA-71 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI S.M.SURANA, ADVOCATE ! /BY REVENUE MD. USMAN, CIT-DR /DATE OF HEARING 26-03-2018 /DATE OF PRONOUNCEMENT 28-03-2018 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE DIFFERENT ORDER OF COMMISSIONER OF INCOME TAX (EXEMPTIONS), KOLKATA OF EVEN DATE I.E. 14.09.2017 REJECTING THE APPLICATION FOR THE GRANT OF REGISTRA TION MADE BY THE ASSESSEE U/S 12AA OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) AND REJECTING THE APPLICATION FOR GRANT OF APPROVAL OF THE ASSESSEE U /S 80G(5)(VI) OF THE ACT. SHRI S.M. SURANA, LD. ADVOCATE APPEARED ON BEHALF O F ASSESSEE AND MD. USMAN, LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF R EVENUE. ITA NO.2283-84/KOL/2017 SHRI NATHJI GOVERDHAN NATHJI CHARITABLE TRUST V S. CIT(EX) KOL. PAGE 2 2. BOTH APPEALS PREFERRED BY THE ASSESSEE ARE AGAIN ST THE SEPARATE ORDERS OF LD. CIT(E), KOLKATA DATED 14.09.2017 AND SINCE BOTH THE SE APPEALS HAVE BEEN HEARD TOGETHER, THEY ARE BEING DISPOSED OF BY THIS COMMON ORDER. 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.228 3/KOL/2017 ARE AS UNDER:- 1. FOR THAT THE ORDER OF THE LD. CIT(EXEMPTION) IS ARBITRARY, AND IS NOT IN ACCORDANCE WITH LAW. 2. FOR THAT THE ORDER OF THE LD. COMMISSIONER OF IN COME TAX (EXEMPTION) ERRED IN REFUSING TO GRANT REGISTRATION U/S. 12AA ON THE GROUND THAT THE APPELLANT HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITIES IN SPITE OF THE FACT THAT THE APPELLANT IS A NEW TRUST. 3. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. COMMISSIONER OF INCOME TAX (EXEMPTION) MAY BE DIRECTED TO GRANT REG ISTRATION U/S.12AA OF THE IT ACT,1961. 4. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (EXEMPTION) BE MODIFIED AND THE ASSESSEE BE GIVEN THE RELIEF PRAYED FOR. 5. FOR THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND BEFORE OR AT THE TIME OF HEARING. 4. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN ITA NO.2284/KOL/2017:- 1. FOR THAT THE ORDER O THE LD. CIT(EXEMPTION) IS ARBITRARY, AND IS NOT IN ACCORDANCE WITH LAW. 2. FOR THAT THE ORDER OF THE LD. COMMISSIONER OF IN COME TAX (EXEMPTION) ERRED IN REFUSING TO GRANT REGISTRATION U/S. 80G(5)(VI) O N THE GROUND THAT THE APPELLANT HAS NOT CARRIED OUT ANY CHARITABLE ACTIVI TIES IN SPITE OF THE FACT THAT THE APPELLANT IS A NEW TRUST. 3. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. COMMISSIONER OF INCOME TAX(EXEMPTION) MAY BE DIRECTED TO GRANT REGI STRATION U/S. 80G(5)(VI) OF THE IT ACT, 1961. 4. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (EXEMPTION) BE MODIFIED AND THE ASSESSEE BE GIVEN THE RELIEF PRAYED FOR. ITA NO.2283-84/KOL/2017 SHRI NATHJI GOVERDHAN NATHJI CHARITABLE TRUST V S. CIT(EX) KOL. PAGE 3 5. FOR THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND BEFORE OR AT THE TIME OF HEARING. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A TRUST WHICH WAS FORMED VIDE TRUST DEED DATED 27.09.2016. THE TRUST FILED A N APPLICATION IN FORM 10A FOR REGISTRATION U/S 12A OF THE ACT AND FORM 10G FOR GR ANTING APPROVAL U/S 80G OF THE ACT ON 31.03.2017 BEFORE THE LD. CIT (EXEMPTIONS), KOLK ATA. 6. THE LD. CIT(E) REJECTED THE APPLICATION FOR REGI STRATION U/S 12A AND 80G BY SEPARATE ORDER DATED 14-09-2017. THE REASON FOR THE CANCELLATION WAS EXPLAINED THAT THE TRUST HAS NOT STARTED ITS ACTIVITIES AND THEREF ORE IT WAS NOT POSSIBLE FOR HIM TO SATISFY ABOUT THE OBJECTS AND GENUINENESS OF ACTIVITIES BEF ORE GRANTING THE REGISTRATION IN PURSUANCE TO THE PROVISIONS OF SECTION 12AA OF THE ACT. AS SUCH IN THE EVENT OF NO ACTIVITY BY THE TRUST, THE SATISFACTION WAS NOT DER IVED BY THE LD. CIT(E) AS REQUIRED UNDER THE PROVISIONS OF SECTION 12AA(1)(A) OF THE A CT. THEREFORE THE LD. CIT(E) DECLINED TO GRANT REGISTRATION U/S 12A OF THE ACT. 7. SIMILARLY, THE APPLICATION FOR APPROVAL U/S 80G( 5)(VI) WAS ALSO DENIED ON THE SAME DATE IN CONSEQUENCE OF REJECTION OF THE APPLIC ATION IN FORM NO. 10A FOR REGISTRATION U/S 80G OF THE ACT. THE LD. CIT(E) IN REJECTION THE AFORESAID APPLICATI ON HAS RELIED ON THE JUDGMENT OF HONBLE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY VS. CIT [2001] REPORTED IN 247 ITR 18 [2000] 113 TAXMAN 703 (KER). BEING AGGRIEVED BY THE ORDER OF LD CIT(EX), ASSESSE E IS IN APPEAL BEFORE US. 8. BEFORE US, LD. COUNSEL FOR THE ASSESSEE STATED T HAT THE POWERS OF LD. CIT(EX) IN CONNECTION WITH THE REGISTRATION APPLICATION U/S 12 AA OF THE ACT ARE VERY LIMITED SPECIALLY WHEN THE TRUST AT THE COMMENCEMENT STAGE. AT THAT RELEVANT TIME THE LD. CIT (E) SHALL ENSURE WHETHER OR NOT THE OBJECTS OF TRUS T ARE CHARITABLE IN NATURE. THE LD. AR ACCORDINGLY BEFORE US FURTHER SUBMITTED THAT THA T THE OBJECTS OF THE TRUST WERE NOT DOUBTED/ DISPUTED BY THE LD CIT(E) IN HIS IMPUGNED ORDER PASSED UNDER SECTION 12AA OF THE ACT. FURTHER, IT WAS SUBMITTED BY THE LD. AR THAT SO LONG AS THERE IS NO DISPUTE ITA NO.2283-84/KOL/2017 SHRI NATHJI GOVERDHAN NATHJI CHARITABLE TRUST V S. CIT(EX) KOL. PAGE 4 AS TO THE OBJECTS OF THE TRUST, THE LD. CIT(E) CANN OT REFUSE TO REGISTER THE TRUST U/S 12AA OF THE ACT. THE LD. AR IN THIS REGARD PLACED HIS RELIANCE ON TH E DECISIONS IN ASANSOL DURGAPUR DEVELOPMENT AUTHORITY VS CIT ITA 756/KOL/2010, DATED 24.6.2016 AND M/S BROADWAY CHARITABLE TRUST VS CIT ITA NO 647/KOL/201 3 DATED 29.4.2016. HE ALSO RELIED IN A DECISION RENDERED BY A COORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF DHARMA SANSTHAPAK SANGH (NIVAS) -VS.- CIT (2008) 118 TTJ (DEL.) 823, IT WAS HELD AS FOLLOWS: '10. THE LAW IS NOW WELL-SETTLED THAT WHILE GRANTIN G THE REGISTRATION TO THE CHARITABLE INSTITUTION OR TRUST, IF IT IS AT THE CO MMENCEMENT STAGE, THE POWERS OF CIT, WITH WHOM THE APPLICATION IS FILED BY SUCH TRU ST/INSTITUTION, ARE LIMITED TO THE ASPECT OF EXAMINING THAT WHETHER OR NOT THE OBJ ECTS OF TRUST ARE CHARITABLE IN NATURE AND THIS WELL ESTABLISHED LAW IS SUPPORTE D BY THE DECISIONS RELIED UPON THE LEARNED AUTHORIZED REPRESENTATIVE AND REFE RRED TO IN THE EARLIER PART OF THE ORDER. IT HAS ALREADY BEEN OBSERVED THAT OBJ ECTS OF TRUST, WHICH ARE RELIGIOUS, ARE CHARITABLE IN NATURE. THUS, ASSESSEE ALSO FULFILS SUCH CONDITION. THE CARRYING OF CHARITABLE ACTIVITY AT THE STAGE OF COMMENCEMENT OF INSTITUTION IS NOT RELEVANT TO DECIDE THAT WHETHER SUCH TRUST/ INSTITUTION IS ENTITLED FOR REGISTRATION. SO LONG THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE, REGISTRATION CANNOT BE REFUSED, IF THE TRUST IS GEN UINE. THEREFORE, WE FIND NO MATERIAL ON RECORD TO JUSTIFY THE ACTION OF THE CIT VIDE WHICH THE ASSESSEE TRUST HAS BEEN REFUSED FOR GRANT OF REGISTRATION. WE DIRE CT CIT TO GRANT REGISTRATION TO THE CIT (SIC-ASSESSEE-TRUST). THE APPEAL FILED B Y THE ASSESSEE IS ALLOWED.'[EMPHASIS SUPPLIED] WHILE DECIDING THE APP EAL IN THE ABOVE CASE, THE TRIBUNAL TOOK INTO CONSIDERATION THE DECISIONS OF T RIBUNAL IN THE CASES OF ACHARYA SEWA NIYAS UTTARANCHAL VS. CIT [(2006) 1 05 TTJ (DEL) 761] AND MODERN DEFENCE SHIKSHAN SANSTHAN VS. C.I.T . [(2007) 108 TTJ (JD) 732].' LD. AR FOR THE ASSESSEE ALSO SUBMITTED THAT THE ISS UE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH OF THIS TRIBUNAL I N THE CASE OF BADU RURAL WELFARE SOCIETY VS. CIT(EX) IN ITA NOS. 95 & 95/KOL/2016 DATED 30.09.2016, WHEREIN THE TRIBUNAL VIDE PARA 6 HAS HELD AS UNDER: '6. IN THE DECISIONS RENDERED BY COORDINATE BENCHES IN THE CASE OF VIVEKANANDA WELFARE TRUST -VS.- DIT(E) IN ITA NOS. 2095/KOL/2008 AND 27/KOL/2009, ORDER DATED 23.01.2009, M/S GINIA DEVI TODI CHARITABLE TRUST, KOLKATA VS DIRECTOR OF INCOME TAX ITA 738/KOL/2010, DATED 1.6.2011, BANI MITTRA CHARITABLE TRUST, KOLKATA VS. DIRECTOR OF IN COME TAX ITA 1154 &1155/KOL/2009, DATED 25.8.2009 THE SAME CONCLUSION WAS REACHED BY FOLLOWING THE EARLIER DECISION OF ITAT, DELHI IN TH E CASE OF DHARMA SANSTHAPAK ITA NO.2283-84/KOL/2017 SHRI NATHJI GOVERDHAN NATHJI CHARITABLE TRUST V S. CIT(EX) KOL. PAGE 5 SANGH (NIVAS ) (SUPRA). THE FACTS OF THIS CASE ARE SQUARELY COVERED BY THE DECISION CITED ABOVE. RESPECTFULLY FOLLOWING THE JU DICIAL REASONING, WE DIRECT THE LD. CIT(E) TO GRANT REGISTRATION TO THE ASSESSE E-TRUST UNDER SECTION 12AA OF THE ACT AND ALSO TO GRANT EXEMPTION CERTIFIED UNDER SECTION 80G OF THE ACT. ON THE OTHER HAND, THE LD. DR VEHEMENTLY RELIED ON THE ORDER OF THE LD. CIT(E). 9. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS IN THE CASE ON HAND ARE NOT IN DISPUTE THEREFORE WE ARE INCLINED NOT TO REPEAT THE SAME FOR THE SAKE OF BREVITY. THE UND ISPUTED FACT IS THAT THE OBJECTS OF THE TRUST HAVE NOT BEEN DOUBTED BY THE LEARNED CIT(EX). THE ALLEGATION OF THE LD CIT(EX) IS THAT THE TRUST HAS NOT STARTED ANY ACTIVITY AND THEREFORE IT WAS NOT POSSIBLE FOR HIM TO SATISFY ABOUT THE OBJECTS AND GENUINENESS OF ACTIVI TIES BEFORE GRANTING THE REGISTRATION IN PURSUANCE TO THE PROVISIONS OF SECTION 12AA OF T HE ACT. THE LAW IS NOW WELL- SETTLED THAT IF THE ACTIVITIES OF THE TRUST ARE AT THE COMMENCEMENT STAGE THEN THE LD CIT(EX) CANNOT REFUSE THE REGISTRATION U/S 12AA OF THE ACT WITHOUT FINDING OUT ANY DEFECT IN THE OBJECTS OF THE TRUST. THE POWERS OF L D.CIT(EX) ARE LIMITED TO THE ASPECT OF EXAMINING WHETHER THE OBJECTS OF TRUST ARE CHARI TABLE IN NATURE OR NOT. IT SHOULD BE KEPT IN MIND THAT AT THE STAGE OF COMMENCEMENT OF I NSTITUTION/ ASSESSEE TRUST, IT IS NOT RELEVANT TO DECIDE WHETHER THE TRUST HAS ACTUALLY C ARRIED OUT THE CHARITABLE ACTIVITIES BECAUSE IN THIS CASE IT IS AT THE INFANT STAGE ONLY I.E. WITHIN 6 MONTHS OF ITS INCORPORATION THE RELEVANT APPLICATIONS WERE MOVED BY THE APPELLANT. WE FIND THAT THE FACTS OF THIS CASE ARE SQUARELY COVERED BY THE DECI SION CITED SUPRA AND THE ASSESSEE'S CASE NEEDS TO BE GRANTED REGISTRATION AS PRAYED FOR . 9.1 WE ALSO NOTE THAT THE HONBLE ALLAHABAD HIGH CO URT AFTER DISTINGUISHING THE JUDGMENT OF HONBLE KERALA HIGH COURT IN THE CASE O F SELF EMPLOYERS SERVICES SOCIETY (SUPRA) IN THE CASE OF CIT(EXEMPTION) VS SM CHARITABLE TRUS T IN IT APPEAL NO. 63 OF 2016 DATED 1.8.2017 HAS HELD AS UNDER:- 3. THE LEARNED COUNSEL APPEARING ON BEHALF OF THE REVENUE HAS ALSO RELIED UPON A JUDGMENT OF THE KERALA HIGH CURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY V. CIT: [201] 247 ITR 18/[2000] 113 TAXMAN 703. THE FACTS IN THAT CASE ARE CLEARLY DISTINGUISHABLE. THE PROPOSAL TO S TART A TECHNICAL EDUCATIONAL INSTITUTION WAS MADE ONLY AFTER THE REJECTION OF TH E APPLICATION BY THE COMMISSIONER. MOREOVER, IT WAS HELD BY THE KERALA H IGH COURT THAT THE SOCIETY ITA NO.2283-84/KOL/2017 SHRI NATHJI GOVERDHAN NATHJI CHARITABLE TRUST V S. CIT(EX) KOL. PAGE 6 HAD NOT DONE ANY CHARITABLE WORK AND ITS ACTIVITIES ON THE CONTRARY HAD BEEN CARRIED OUT ONLY FOR THE PURPOSE OF GENERATING INCO MES. IN VIEW OF ABOVE, WE ARE INCLINED TO DIRECT THE LD. CIT(E) TO CONSIDER THE APPLICATIONS FOR REGISTRATION U/S 12AA OF THE ACT AND U/S 80G OF THE ACT AFRESH AND IN THE LIGHT OF ABOVE STATED DISCUSSION. HENCE, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED. 10. IN THE RESULT, BOTH THE APPEAL OF ASSESSEE STAND AL LOWED. ORDER PRONOUNCED IN OPEN COURT ON 28/03/2018 SD/- SD/- ( ( !) ( !) (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S * - 28/03/2018 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-SHRI NATHJI GOVERDHANA NATHJI CHARITABLE TRUST, 32, HARISH MUKHERJEE ROAD, P .O.& P.S. BHOWANIPAORE, KOLKATA-25 2. ! /REVENUE-CIT(E), 10B, MIDDLETON ROW, 6 TH FLOOR, KOLKATA-71 3. - . / CONCERNED CIT 4. . - / CIT (A) 5. / ((- , - / DR, ITAT, KOLKATA 6. 3 / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY HEAD OF OFFICE/DDO -,