The Mattapalli Chalamayya Charitable Trust, Visakhapatnam V. The CIT(Appeals)-1, Guntur

ITA 234/VIZ/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6500 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 25-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C S NAIK
• Assessee Lawyers: C R HEMANTH KUMAR
• Keywords: Charitable institution
• Section: 80G; 12AA; 12

Judgement Text

ITA NO.234/VIZAG/2017 MATTAPALLI CHALAMAYYA CHARITABLE TRUST, VISAKHAPATN AM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . # % , ' BEFORE SHRI D. MANMOHAN, VICE PRESIDENT & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.234/VIZAG/2017 ( / ASSESSMENT YEAR: 2017-18) MATTAPALLI CHALAMAYYA CHARITABLE TRUST VISAKHAPATNAM CIT (EXEMPTIONS) , HYDERABAD [PAN NO. AAETM5260C ] ( ) / APPELLANT) ( *+) / RESPONDENT) / APPELLANT BY : SHRI C.R. HEMANTH KUMAR, AR / RESPONDENT BY : SHRI B.C.S. NAIK, DR / DATE OF HEARING : 04.12.2017 / DATE OF PRONOUNCEMENT : 06. 12.2017 / O R D E R PER D. MANMOHAN, VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE TRUST IS DIRECTED AGAI NST ORDER OF THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), WHEREIN TH E APPROVAL CLAIMED U/S 80G(5) OF THE INCOME TAX ACT, 1961 (HER EINAFTER CALLED AS 'THE ACT') WAS NOT ACCORDED ON THE GROUND THAT THE ASSESSEE HAS NOT ITA NO.234/VIZAG/2017 MATTAPALLI CHALAMAYYA CHARITABLE TRUST, VISAKHAPATN AM 2 UNDERTAKEN MUCH ACTIVITY IN ACCORDANCE WITH THE OBJ ECTS. THE PRECISE REASON GIVEN BY THE LD. COMMISSIONER READS AS UNDER : SINCE THE TRUST HAS NOT UNDERTAKEN MUCH ACTIVITIES IN ACCORDANCE WITH THE OBJECTS AND HAS RECENTLY STARTED OPERATION S, IT IS NOT ELIGIBLE FOR APPROVAL U/S 80G(5)(VI) OF THE ACT, HAVING REGARD T O THE PROVISIONS OF SUB- RULE (2) TO RULE 11AA OF INCOME TAX RULES, 1962. TH US, IT CANNOT BE GRANTED APPROVAL U/S 80G(5)(VI) OF THE ACT. HENCE, THE SAID APPLICATION IN FORM 10G FILED BY THE APPLICANT IS REJECTED. 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED TWO PAPER BOOKS CONSISTING OF COPY OF TRUST DEED AND INCOME & EXPENDITURE STAT EMENT, DECLARATIONS FILED U/S 13(1) & 11(5) OF THE ACT, ETC. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE TR UST HAD COME INTO EXISTENCE BY VIRTUE OF A TRUST DEED DATED 13 TH DAY OF APRIL, 2016 AND IT WAS AIMED AT CARRYING ON CHARITABLE ACTIVITIES SUCH AS PROVIDING MEDICAL AID, TO IMPART EDUCATION, PROVIDE FOOD AND SHELTER TO THE POOR & NEEDY. IT HAS FILED AN APPLICATION FOR REGISTRATION U/S 12 AA OF THE ACT AND ALSO SEEKING APPROVAL U/S 80G OF THE ACT ALONG WITH RELE VANT DECLARATIONS. THE LD. COMMISSIONER GRANTED REGISTRATION U/S 12AA OF THE ACT. HOWEVER, WITH REGARD TO THE GRANT OF APPROVAL U/S 8 0G OF THE ACT, HE OBSERVED THAT THE ASSESSEE DID NOT CARRY MUCH OF IT S ACTIVITY SINCE INCEPTION. IN FACT, THE APPLICATION FOR APPROVAL W AS MADE 3 MONTHS AFTER ITS INCEPTION AND IT CANNOT EXPECT MIRACLE IN CARRY ING OUT ITS ACTIVITY WITHIN SUCH A SHORT SPAN. ASSESSEE RELIED UPON A D ECISION OF THE ITAT, KOLKATA TRIBUNAL REPORTED IN 53 ITR 629 (TRIB.), WH EREIN THE BENCH ITA NO.234/VIZAG/2017 MATTAPALLI CHALAMAYYA CHARITABLE TRUST, VISAKHAPATN AM 3 OBSERVED THAT SO LONG AS THE OBJECTS ARE CHARITABLE IN NATURE, REGISTRATION U/S 12AA OF THE ACT CANNOT BE REFUSED AND CARRYING OUT OF CHARITABLE ACTIVITY AT THE STAGE OF COMMENCEMENT OF INSTITUTION WAS NOT RELEVANT. 4. ON THE OTHER HAND, THE LD. D.R. SUBMITTED THAT T HERE SHOULD BE A GAP BETWEEN SEEKING APPROVAL U/S 12AA OF THE ACT AN D FOR SEEKING APPROVAL U/S 80G OF THE ACT AS PER ITAT LUCKNOW BEN CH ORDER REPORTED IN 2015 TAX PUB (DT) 5082 (LUCK-TRIB) AS OTHERWISE CLAIM OF APPROVAL U/S 80G OF THE ACT CAN BE REJECTED. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S AND PERUSED THE RECORDS. THE DECISION OF THE ITAT, LUCKNOW BEN CH IS NOT APPLICABLE TO THE CASE ON HAND SINCE, IN THE AFOREMENTIONED CA SE, THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE TRIBUNAL ON THE GROUND THAT FOR GRANT OF APPROVAL, COPY OF REGISTRATION GRANTED U/S 12AA OF THE ACT HAS TO BE ANNEXED AND FOR SUCH PURPOSE, REGISTRATION ON AN EA RLIER DATE IS OBLIGATORY. HOWEVER, IN THE INSTANT CASE, THE LD. COMMISSIONER HAS ALREADY GRANTED REGISTRATION U/S 12AA OF THE ACT AN D APPROVAL U/S 80G WAS NOT REJECTED ON THE GROUND OF NOT OBTAINING REG ISTRATION U/S 12AA OF THE ACT BUT ONLY ON THE LIMITED GROUND THAT NO ACTI VITY HAS BEEN CARRIED OUT. THE DECISION OF THE ITAT KOLKATA BENCH, AS RI GHTLY BEEN POINTED OUT BY THE LD. COUNSEL, SUPPORTS THE STAND OF ASSES SEE THAT IF THE ITA NO.234/VIZAG/2017 MATTAPALLI CHALAMAYYA CHARITABLE TRUST, VISAKHAPATN AM 4 ACTIVITIES OF THE TRUST ARE GENUINE, AT THE STAGE O F COMMENCEMENT OF INSTITUTION, REGISTRATION HAS TO BE GRANTED AUTOMAT ICALLY AND CLAIM U/S 80G OF THE ACT CAN BE FOLLOWED WITH GRANT OF REGIST RATION. LD. COMMISSIONER (EXEMPTIONS) DID NOT REJECT THE REQUES T OF THE ASSESSEE FOR APPROVAL U/S 80G OF THE ACT ON THE GROUND OF NO T ANNEXING THE REGISTRATION CERTIFICATE U/S 12AA OF THE ACT BUT ON THE LIMITED GROUND THAT IT HAS NOT UNDERTAKEN MUCH ACTIVITY. AT THE INCEPT ION OF THE INSTITUTION, ONE CANNOT EXPECT SERIOUS ACTIVITIES, SINCE IT NEED S FUNDS AND TO OBTAIN FUNDS, THE TRUST NEEDS APPROVAL U/S 80G OF THE ACT. THUS, THE ACTIVITIES ARE INTERLINKED WITH OBTAINING APPROVAL. HENCE, ME RE FACT THAT THE ASSESSEE COULD NOT UNDERTAKE MUCH ACTIVITY WITHIN T HE SHORT SPAN OF 3 MONTHS, THE COMMISSIONER (EXEMPTIONS) SHOULD NOT HA VE REFUSED THE CLAIM OF APPROVAL U/S 80G(5) OF THE ACT. UNDER THE PECULIAR CIRCUMSTANCES, WE DIRECT THE LD. COMMISSIONER TO CO NSIDER THE ISSUE PRAGMATICALLY AND GRANT APPROVAL U/S 80G(5) OF THE ACT, IF ALL OTHER CONDITIONS ARE FULFILLED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE TRUST IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 6 TH DEC17. SD/- SD/- ( . . # % ) ( . ) (D.S. SUNDER SINGH) (D. MANMOHAN) ' /ACCOUNTANT MEMBER /VICE PRESIDENT ITA NO.234/VIZAG/2017 MATTAPALLI CHALAMAYYA CHARITABLE TRUST, VISAKHAPATN AM 5 $ /VISAKHAPATNAM: ( /DATED : 06.12.2017 VG/SPS *$ +$ /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE MATTAPALLI CHALAMAYYA CHARIT ABLE TRUST, 37A, PANDURANGAPURAM, VISAKHAPATNAM 2. / THE RESPONDENT THE CIT (EXEMPTIONS), HYDERABAD 3. , ( ) / THE CIT (A), VISAKHAPATNAM 4. $ / , / , $ / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM