JAGJIVAN FOUNDATION, MUMBAI V. DIT (E), MUMBAI

ITA 2358/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3126 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 10-02-2015
• Assessment Year: 2012-2013
• Appeal Filed On: 25-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY SINGH
• Assessee Lawyers: S C TIWARI MS RUTUJA PAWAR
• Keywords: Charitable institution; Question of law; Benefit of exemption
• Section: 12A; 12AA; 11

Judgement Text

1 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J , MUMBAI , , BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI ASHWANI TANEJA , ACCOUNTANT MEMBER ITA NO. : 2358 /MUM/201 3 (ASSESSMENT YEAR: 200 7 - 0 8 ) JAGJIVAN FOUNDATION , 4 TH FLOOR, SADHANA HOUSE, 570 - P B MARG, WORLI, MUMBAI - 400 018 .: PAN: AA CCJ 7867 M VS D IRECTOR OF INCOME TAX (EXEMPTIONS) PIRAMAL CHAMBERS, 6 TH FLOOR, PAREL, MUMBAI - 400 012 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S C TIWARI MS RUTUJA PAWAR RESPONDENT BY : SHRI SANJAY SINGH /DATE OF HEARING : 15 - 0 9 - 2015 / DATE OF PRONOUNCEMEN T : 30 - 09 - 2015 ORDER , : PER ASHWANI TANEJA , A M: PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE DIRECTOR OF INCOME TAX ( EXEMPTIONS ) , MUMBAI (HEREINAFTER CALLED AS LD. DIT) U/S 12AA (1)(B) D ATED 31.01.2013, REJECTING APPLICATION FILED BY THE ASSESSEE FOR GRANT OF REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS ALONG WITH THE APPEAL MEMO : - 2 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 1. THE LEARNED DIT(E) ERRED IN NOT GRANTING THE REGISTRATI ON U/S 12AA AND REJECTING THE APPLICATION FOR GRANT OF REGISTRATION. 2. YOUR APPELLANT SUBMITS THAT THE LEARNED DIT(E) HAS ERRED IN CONCLUDING THAT THE APPLICANT COMPANY HAS BOTH CHARITABLE AND NON - CHARITABLE/COMMERCIAL OBJECTS. 2.1 YOUR APPELLANT SUBMIT S THAT PRIMA FACIE A SECTION 25 COMPANY IS A NON - PROFIT /NON COMMERCIAL ORGANIZATION AND YOUR APPELLANT IS REGISTERED AS SECTION 25 COMPANY BY REGISTRAR OF COMPANIES, MAHARASHTRA. 2.2 THE LEARNED DIT(E) HAS THOUGH REPRODUCED THE MAIN OBJECT CLAUSE AT PARA 1 OF THE MEMORANDUM OF ASSOCIATION HOWEVER THE SECOND PARA OF THE SAME HAS NOT BEEN CONSIDERED WHICH IS REPRODUCED IN THE STATEMENT OF FACTS. 3. YOUR APPELLANT SUBMITS THAT ACTIVITY TO BE CARRIED OUT IS IN THE INITIAL PLANNING STAGE AND THUS THE PRESUMP TION ON THE PART OF LEARNED DIT(E) AS TO ACTIVITY WILL BE CARRIED OUT FOR OTHER THEN CHARITABLE OBJECTS IS PREMATURE AND MISCONCEIVED. 4. YOUR APPELLANT SUBMITS THAT POWER TO CANCEL THE REGISTRATION ARE PROVIDED UNDER SECTION IF LATTER ON IT IS FOUND THAT THE ACTIVITIES OF THE INSTITUTION ARE NOT IN ACCORDANCE WITH THE ITS OBJECT AND THEREFORE TO DENY THE REGISTRATION AB - INITIO IS BAD IN LAW. 3 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 5. YOUR APPELLANT THEREFORE SUBMITS THAT THE ORDER U/S 12AA OF THE DIT(E) IS AB - INITIO VOID AND NOT EQUITOUS AND B E RESCINDED . 5.1 YOUR APPELLANT SUBMIT THAT THE REGISTRATION U/S 12AA BE GRANTED TO THE COMPANY. 6. YOUR APPELLANT CRAVES, LEAVE TO ADD, AMEND, WITHDRAWAL ALL OR ANY OF THE GROUNDS OF APPEAL AS THE CIRCUMSTANCES OF THE APPEAL MAY REQUIRE. 2. DURING T HE COURSE OF HEARING , ARGUMENT S HAVE BEEN MADE BY SHRI S.C. TIWARI, ADVOCATE, LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE, WHEREAS CASE WAS ARGUED ON BEHALF OF THE DEPARTMENT BY MR. SANJAY SINGH CIT - DR. 3. THE SOLITARY ISSUE RAISED IN THIS APPEAL IS ABOUT THE REJECTION OF REGISTRATION BY LD. DIT U/S 12AA. DURING THE COURSE OF HEARING, LD. COUNSEL HAS SUBMITTED THAT LD. DIT HAS MISUNDERSTOOD THE FACTS OF THE CASE AND HAS WRONGLY OBSERVED IN ITS ORDER THAT THE OBJECTS OF THE ASSESSEE ARE NEITHER RELATED TO MEDICAL RELIEF, NOR THESE ARE CHARITABLE. IT HAS BEEN , FURTHER , WRONGLY HELD BY LD. DIT THAT ASSESSEE MAY CARRY OUT ITS OBJECTS ON COMMERCIAL BASIS. IT WAS SUBMITTED THAT THE APPREHENSIONS SHOWN BY THE LD. DIT ARE MISPLACED AND WITHOUT ANY BASIS. IT WA S ALSO WRONGLY HELD THAT NO ACTIVITIES HAVE BEEN CARRIED BY ASSESSEE SO FAR AND THEREFORE, ASSESSEE SHOULD NOT BE GRANTED REGISTRATION. IT WAS FURTHER SUBMITTED THAT DURING THE YEAR UNDER 4 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 CONSIDERATION THE ASSESSEE WAS STILL IN PLANNING AND PREPARATORY S TA GE E . AS PER LAW, THERE IS NO SUCH CONDITION THAT ASSESSEE SHOULD BE GRANTED REGISTRATION ONLY AFTER CARRYING OUT CHARITABLE ACTIVITIES. RATHER, THE ASSESSEE NEEDS THE REGISTRATION AT ITS VERY INCEPTION SO THAT IT CAN PURSUE ITS OBJECTS AND CHARITABLE ACTI VITIES, WITH THE BENEFITS OF REGISTRATION U/S 12A. LD. COUNSEL PLACED RELIANCE UPON FOLLOWING JUDGMENTS : SR. NO. PARTICULARS CITATOIN 1 CIT V B K K MEMORIAL TRUST (2012) 83 CCH 0226 (HC P&H) 2 HARDAYAL CHARITABLE & EDUCATION TRUST VS CIT - II (2013) 84 C HH 0194 (HC ALLAHABAD) 3 CIT V VIJAY VARGIYA VANI CHARITABLE TRUST (2014) 369 ITR 0360 (HS RAJASTHAN) 4 DIT (EXEMPTION) V JAPAN CHAMBER OF COMMERCE & INDUSTRY IN INDIA (2009) 308 ITR 0076 (HS DELHI) 5 DIT(EXEMPTION) V SEERVI SAMAJ TAMBARAM TRUST (20 14) 362 ITR 0199 (HS MADRAS) 6 SYNODICAL BOARD OF HEALTH SERVICES V DGIT (2012) 341 ITR 0459 (HC DELHI) 7 DIT (EXEMPTION) V THE AJAY G PIRAMAL FOUNDATION (2014) 90 CCH 0043 (HC DELHI) 8 DIT (EXEMPTION) V. R.J.B.V. VASUDEVAN (2014) 89 CCH 0215 (HC MADRA S) ON THE OTHER HAND LD. CIT DR HAS SUBMITTED THAT NEITHER THE OBJECTS OF THE ASSESSEE ARE MEDICAL NOR CHARITABLE. ACCORDING TO LD. DR THERE ARE CERTAIN OBJECTS WHOSE NATURE APPEAR TO BE NON - MEDICAL AND IT IS QUITE POSSIBLE THAT ASSESSEE WOULD CARRY OUT ITS OBJECTS ON COMMERCIAL BASIS. I N ADDITION TO IT , THE OBJECTS MENTIONED ARE VAGUE AND QUITE LARGE IN NUMBER. IT WAS ARGUED THAT ASSESSEE WAS NOT ELIGIBLE FOR THE BENEFIT OF REGISTRATION U/S 12A AND THEREFORE LD. DIT HAS RIGHTLY REJECTED THE SAME. 5 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 4. WE HAVE HEARD BOTH THE PARTIES AT LENGTH. WE HAVE ALSO GONE THROUGH ORDER PASSED BY LD. DIT AND OTHER MATERIAL PLACED BEFORE US. THE BRIEF FACTS ARE THAT THE ASSESSEE COMPANY HAS BEEN INCORPORATED U/S 2 5 OF THE COMPANIES ACT, 1956 ON 16.02.2012. THE ASSESS E E COMPANY HAD FILED AN APPLICATION FOR REGISTRATION U/S 12A IN THE PRESCRIBED FORM NO. 10A ON 30.07.2012. THE LD DIT ISSUED NOTICE TO THE ASSESSEE COMPANY FOR FURNISHING CERTAIN DETAILS AND DOCUMENTS. IN RESPONSE TO THE S A ME , REPRESENTATION WAS MADE BY THE A SSESSEE COMPANY BEFORE LD. DIT AND NECESSARY DETAILS AND DOCUMENT S WERE SUBMITTED FOR THE VERIFICATION , AS MENTIONED BY THE LD. DIT IN HIS ORDER. THE PERUSAL OF THE IMPUGNED ORDER REVEALS THAT THERE IS NO SUCH OBSERVATION IN THE IMPUGNED ORDER THAT ANY DE TAILS OR DOCUMENTS AS REQUIRED BY THE LD. DIT , WERE NOT SUBMITTED BY THE ASSESSEE. IN OTHER WORDS, IMPLIEDLY, IT CAN BE SAID THAT WHATEVER WAS ASKED BY THE LD. D IT, WAS SUBMITTED BY ASSESSEE. BEFORE WE PROCEED FURTHER , WE FIND IT APPROPRIATE TO EXAMINE THE OBJECTS OF THE ASSESSEE COMPANY, AND THE ACTIVITIES PROPOSED TO BE UNDERTAKEN BY IT. IT IS NOTED BY US THAT DURING THE COURSE OF PROCEEDINGS BEFORE THE LD . DIT, THE ASSESSEE HAD SUBMITTED BRIEF WRITE - UP ABOUT THE COMPANY AND ITS ACTIVITIES. 4 .1 A PERUSAL OF THIS WRITE - UP REVEALS THAT THE ASSESSEE COMPANY WAS REGISTERED ON 16 TH FEBRUARY, 2012, UNDER 6 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 SECTION 25 OF THE COMPANIES ACT, 1956. WITH THE FOLLOWING MAIN OBJECTS : OBJECTIVE : - THE MAIN OBJECT OF THE COMPANY : - TO CARRY ON THE BUSINESS OF ESTABLISH ING, CONSTRUCTING, SETTING, OWNING, RUNNING, ADMINISTERING, MAINTAINING, MANAGING, OPERATING HOSPITALS, CLINICS, DISPENSARIES, MATERNITY HOMES, RESEARCH CENTERS, DIAGNOSTIC CENTERS, BLOOD BANK SERVICE CENTERS, IMMUNIZATION CENTERS, PEDIATRIC CENTERS, MEDIC AL AND OTHER RESEARCH CENTERS, NURSING HOMES, CLINICS FOR INDOOR AND OUTDOOR PATIENTS AND FACILITIES FOR RECEPTION HEALTH CENTERS, REHABILITATION CENTERS, CLINICS, POLYCLINICS, AND TO APPLY OR PROVIDE UTILITY ACTIVITIES AND SERVICES TO THE PATIENTS, ATTEND ANCE AND OTHER AND TO PROVIDE AIDS TO MEDICAL PERSONNEL FOR RESEARCH AND DEVELOPMENT AND TO ACT AND WORK AS CONSULTANT IN MEDICAL PROFESSION IN INDIA AND ABROAD. 4.2 IN ADDITION TO THE ABOVE, THE ASSESSEE HAS ELABORATED IN THE ABOVEMENTIONED WRITE UP , VA RIOUS ACTIVITIES UNDERTAKEN BY THE ASSESSEE COMPANY, WHICH WERE IN THE PIPELINE AT THE TIME OF SEEKING REGISTRATION. . AS PER THIS WRITE UP, T HE ASSESSEE TRUST HAS UNDERTAKEN FOLLOWING PROJECTS : - ( I ) YMC TARA HOSPITAL UPGRADATION PROJECTS : - IT IS PROPOSED THA T THE ASSESSEE COMPANY SHALL UPGRADE CURATIVE SERVICES AT EXISTING HOSPITAL AT TARA AND 7 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 MAKE IT RUN FOR 24 HOURS, AND TO START VARIOUS MEDICAL SERVICES THERE ; ( II ) HOSPITAL AND HEALTH CARE PROJECTS AT MAO, MANIPUR (NORTH EAST) : - IN THIS REGARD MEDICAL PROJECT TEAM HAD VISITED MAO, MANIPUR ( N ORTH - E AST) FOR THE ANALYSIS OF HEATH CARE NEED S AND POSSIBILITIES OF SETTING UP HOSPITAL, HEALTH CARE SERVICES AND MEDICAL RELATED TRAINING INSTITUTES, IN COLLABORATION WITH LOCAL COMMUNITY DURING APRIL 2012 ; ( III ) TIE UP WITH AIILSG (ALL INDIA INSTITUTE OF LOCAL SELF GOVERNMENT) : - THE ASSESSEE IS WORKING OUT POSSIBILITIES OF STARTING SOME HEALTH RELATED RESEARCH WORK ON EMPLOYEES WORKING IN THE DECENTRALIZED INDUSTRIES ; ( IV ) URBAN HEALTH CARE PROJECTS IN MUMBAI AND THANE : - THE MED ICAL PROJECT TEAM OF THE ASSESSEE COMPANY HAD IDENTIFIED FOUR PROPERTIES IN MUMBAI AND THANE, TO SET UP URBAN HEALTH CARE UNIT SPECIALLY FOR PROVIDING MCH (MATERNAL AND CHILD CARE); ( V ) PROPOSED HOSPITAL PROJECTS AT MAHAD, RAIGARH : - PROJECT TEAM OF THE ASSESS EE COMPANY HAD VISITED THIS PLACE FOR SETTING UP A HOSPITAL IN ALLIANCE WITH LOKVIKAS SAMAJIK SANSTHA AND THAT SANSTHA HAS SHOWN INTEREST TO START A HOSPITAL IN JOINT VENTURE WITH JAGJIVAN FOUNDATION I.E. ASSESSEE COMPANY. 4.3 WE HAVE PERUSED THE MAIN OBJ ECTS AND OTHER OBJECTS AS PER MEMORANDUM OF ASSOCIATION ENCLOSED IN THE PAPER BOOK. WE HAVE ALSO GONE THROUGH THE PROPOSED ACTIVITIES 8 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 FOR PERUSING THE OBJECT S OF THE ASSESSEE COMPANY. WE FAIL TO UNDERSTAND ON WHAT BASIS THE DIT HAS REACHED ON THE CONCLUSIO N THAT MAIN OBJECT OF THE ASSESSEE TRUST WILL NOT BE COVERED UNDER MEDICAL RELIEF. WE HAVE ALSO GONE THROUGH THE OTHER OBJECTS GIVEN IN THE MEMORANDUM AND WE FIND THAT OTHER OBJECTS ARE INCIDENTAL OBJECTS FOR THE PURPOSE OF ATTAINING THE MAIN OBJECTS OF TH E ASSESSEE COMPANY. IF WE GO THROUGH THE DETAILS OF THE ACTIVITIES INITIATED BY THE ASSESSEE, WE FIND THAT THESE REVOLVE AROUND MEDICAL SERVICES ONLY. 4.4 IT IS NOTED THAT AS PER SECTION 12AA THE COMMISSIONER IS REQUIRED TO SATISFY HIMSELF ABOUT THE OBJE CTS OF THE INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES. AT THIS STAGE IT IS NEITHER POSSIBLE NOR DESIRABLE AS PER LAW, FOR THE COMMISSIONER TO GO BEYOND THAT. THE COMMISSIONER IS NEITHER EXPECTED NOR OBLIGED UNDER THE LAW , TO PREDICT THE FUTURE. O NCE IT IS FOUND BY THE COMMISSIONER AT THE STAGE OF SEEKING REGISTRATION U/S 12A BY THE ASSESSEE, THAT THE OBJECTS FALL WITHIN THE MEANING OF THE TERM CHARITABLE AS PER SECTION 2(15) OR IN GENERIC SENSE , THEN THE ASSESSEE WOULD BE ENTITLED FOR THE REGIST RATION SO LONG AS NOTHING ADVERSE IS NOTICED BY THE COMMISSIONER WITH REGARD TO GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST . IN THE PRESENT CASE, IN OUR CONSIDERED OPINION THE OBJECTS OF THE ASSESSEE TRUST . DO FALL WITHIN THE SCOPE OF THE EXPRESSIO N MEDICAL RELIEF USED IN THE CONTEXT OF SECTION 2(15). NOTHING HAS BEEN SHOWN , BY THE LD DIT IN THE IMPUGNED ORDER OR BY LD. 9 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 CIT DR BEFORE US , TO DOUBT THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST. THE DIT HAS MADE GENERAL AND CASUAL REMARKS I N THE IMPUGNED ORDER THAT ACTIVITIES ARE IN THE NATURE OF THE PROVISIONS OF PROFESSIONAL, MANAGERIAL AND CONSULTANCY SERVICES WHICH ARE ESSENTIALLY IN THE R EALM OF COMMERCIAL ACTIVITIES. WE FAIL TO UNDERSTAND ON WHAT BASIS LD. DIT HAS DRAWN THIS INFERENCE. IT IS SEEN FROM THE PROVISIONAL INCOME AND EXPENDITURE ACCOUNT OF THE ASSESSEE COMPANY FOR THE PERIOD ENDED 31.12.2012 (ENCLOSED AT PAGE 43 OF THE PAPER BOOK) THAT NO INCOME HAS BEEN RECEIVED BY THE ASSESSEE TRUST DURING THIS PERIOD. ONLY EXPENSES HA VE B EEN INCURRED ON CONSULTANCY AND TRAVELLING. IN THESE CIRCUMSTANCES THERE ARE NO BASIS TO HOLD THAT ACTIVITIES OF THE ASSESSEE TRUST ARE CARRIED OUT ON COMMERCIAL BASIS. THE LEGISLATURE HAS BUILT IN REQUISITE FRAME WORK TO ENSURE THAT ASSESSING OFFICER CAN DENY THE BENEFIT OF EXEMPTION IN CASE IT IS FOUND AT A LATER STAGE THAT ASSESSEE HAS CARRIED OUT ITS ACTIVITIES IN THE NATURE OF TRADE COMMERCE OR BUSINESS OR HAS MADE VIOLATION OF PROVISIONS WITH REGARD TO ELIGIBILITY FOR THE BENEFIT OF EXEMPTION U/S 11 A ND 1 2. REFERENCE IN THIS REGARD CAN BE MADE TO THE PROVISIONS OF FIRST PROVISO TO SECTION 2(15), 11(4A) AND 13 ETC. THE ASSESSING OFFICER IS AT HIS LIBERTY TO APPLY THESE PROVISIONS OR ANY OTHER APPLICABLE PROVISION , TO ENSURE THAT THE BENEFIT OF REGI STRATION IS NOT MISUSED BY THE ASSESSEE AND TO BRING TO TAX THE INCOME OF THE ASSESSEE 10 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 COMPANY IF IT IS NOT APPLIED FOR THE CHARITABLE PURPOSES , AS PER LAW. 4.5 IT HAS ALSO BEEN OBSERVED BY THE LD. DIT IN THE IMPUGNED ORDER THAT ASSESSEE HAS NOT SHOWN ANY INCOME OR RECEIPT FROM THE CARRYING OUT OF ITS PROJECTS OR ACTIVITIES . . IT HAS BEEN FURTHER ALLEGED THAT ASSESSEE HAS NOT BEEN ABLE TO SHOW WHAT CHARITABLE ACTIVITIES HAVE BEEN CARRIED OUT SO FAR. IN THIS REGARD WE FIND THAT THE ASSESSEE COMPANY WAS AT PR EPARATORY OR PLANNING STAGE AT THE TIME OF SEEKING OF REGISTRATION. THERE IS NO REQUIREMENT OF LAW THAT BEFORE SEEKING REGISTRATION THE ASSESSEE HAS TO FIRST CARRY OUT CHARITABLE ACTIVITIES. IN OUR VIEW IT IS LIKE PUTTING THE CART BEFORE THE HORSE. IT SHOU LD BE THE OTHER WAY ROUND. THE ASSESSEE SHOULD BE GRANTED THE BENEFIT OF REGISTRATION SO THAT THE ASSESSE E CAN PLAN ITS ACTIVITIES AND AFFAIRS VERY WELL AND CAN ACCORDINGLY CARRY OUT THE SAME IN PURSUIT OF ITS OBJECTS. THE CASE S RELIED UPON BY LD. COUNSEL ALSO SUPPORT OUR VIEW. REFERENCE CAN BE MADE TO THE JUDGMENT OF HONBLE PUNJAB AND HARYANA HIGH COURT IN TH E CASE OF CIT VS B.K.K. MEMORIAL TRUST, 83 CCH 0226 (P&H) FOLLOWING OBSERVATIONS ARE WORTH NOTING : - THEREFORE, THE OBJECT OF SECTION 12AA OF THE AC T, IS TO EXAMINE THE GENUINENESS OF THE OBJECTS OF THE TRUST, BUT NOT THE INCOME OF THE TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES. THE STAGE FOR APPLICATION OF INCOME IS YET TO ARRIVE I.E. WHEN SUCH TRUST OR INSTITUTION FILES ITS RETURN. THEREFORE , WE FIN D THAT THE JUDGMENTS REFERRED TO BY THE LEARNED COUNSEL FOR THE 11 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 APPELLANT ARE NOT APPLICABLE TO THE FACTS OF THE CASE ARISING OUT OF THE QUESTION OF REGISTRATION OF THE TRUST AND NOT OF ASSESSMENT. 4.6 FURTHER , FOLLOWING OBSERVATIONS OF HONBLE HIGH COUR T ARE ALSO WORTH NOTING : - ACCORDINGLY , IN VIEW OF THE AFORESAID PRONOUNCEMENTS OF THIS COURT WHICH ARE FULLY APPLICABLE IN THE PRESENT CASE, THE SUBMISSION OF THE COUNSEL FOR THE REVENUE THAT THE TRUST WAS NOT SET UP FOR CHARITABLE PURPOSES AND IT WAS UT ILIZING ITS INCOME NOT FOR THE SAID PURPOSE CANNOT BE EXAMINED AT THIS STAGE AS ONLY OBJECTS OF THE TRUST HAD TO BE CONSIDERED BY THE COMMISSIONER. THE TRUST WAS IN NASCENT STAGE AND WAS YET TO WORK TOWARDS ITS OBJECTS. NO ERROR COULD BE POINTED OUT IN THE ORDER OF THE TRIBUNAL WARRANTING INTERFERENCE BY THIS COURT. ACCORDINGLY, NO SUBSTANTIAL QUESTION OF LAW ARISES FOR DETERMINATION BY THIS COURT AND CONSEQUENTLY, THE APPEAL IS DISMISSED. 4.7 IN THE CASE OF DIT VS FOUNDATION OF OPHTHALMIC AND OPTOMETRY RESEARCH EDUCATION CENTRE 25 TAXMAN.COM( DELHI ), HONBLE DELHI COURT RULED THAT STATUTE DOES NOT PROHIBIT OR ENJOIN THE COMMISSIONER FROM REGISTERING A TRUST SOLELY ON ITS OBJECTS, WITHOUT ANY ACTIVITY. IN THE CASE OF A NEWLY REGISTERED TRUST THE STATUTE DO ES NOT PRESCRIBE A WAITING PERIOD TO QUALIFY FOR REGISTRATION. 12 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 4.8 IN DIT(E) VS MEENAKSHI AMMA ENDOWMENT TRUST, 50 DTR 243, HONBLE KARNATKA HIGH COURT HELD T HAT ACTIVITIES OF THE TRUST CAN NOT BE THE CRITERIA AT THE STAGE OF SEEKING REGISTRATION U/S 12A, SINCE IT IS YET TO COMMENCE ITS ACTIVITIES. 4.9 FINALLY , WE FIND IT APPROPRIATE TO REPRODUCE RELEVANT PARA CONTAINING USEFUL OBSERVATIONS OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF HARDAYAL CHARITABLE AND EDUCATIONAL TRUST VS CIT 214 TAXMAN 0655 IS RE PRODUCED HEREUNDER : 21. THE PREPONDERANCE OF THE JUDICIAL OPINION OF ALL THE HIGH COURT INCLUDING THIS COURT IS THAT AT THE TIME OF REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT, WHICH IS NECESSARY FOR CLAIMING EXEMPTION UNDER SECTION 11 AND 12 O F THE ACT, THE COMMISSIONER OF INCOME TAX IS NOT REQUIRED TO LOOK INTO THE ACTIVITIES, WHERE SUCH ACTIVITIES HAVE NOT OR ARE IN THE PROCESS OF ITS INITIATION. WHERE A TRUST, SET UP TO ACHIEVE ITS OBJECTS OF ESTABLISHING EDUCATIONAL IN STITUTION, IS IN THE P ROCESS OF ESTABLISHING SUCH INSTITUTIONS, AND RECEIVES DONATIONS, THE REGISTRATION UNDER SECTION 12AA CANNOT BE REFUSED, ON THE GROUND THAT THE TRUST HAS NOT YET COMMENCED THE CHARITABLE OR RELIGIOUS ACTIVITY. ANY ENQUIRY OF THE NATURE WOULD AMOUNT TO PUTT ING THE CART BEFORE THE HORSE. AT THIS STAGE ONLY THE GENUINENESS OF THE OBJECTS HAS TO BE TASTED AND NOT THE ACTIVITIES, WHICH HAVE NOT COMMENCED. THE 13 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 ENQUIRY OF THE COMMISSIONER OF INCOME TAX AT SUCH PRELIMINARY STAGE SHOULD BE RESTRICTED TO GENUINENESS OF THE OBJECTS AND NOT THE ACTIVITIES UNLESS SUCH ACTIVITIES HAVE COMMENCED. THE TRUST OR SOCIETY CANNOT CLAIM EXEMPTION, UNLESS IT IS REGISTERED UNDER SECTION 12AA OF THE ACT AND THUS AT THAT SUCH INITIAL STAGE THE TEST OF THE GENUINENESS OF THE ACTIVITY CANNOT BE A GROUND ON WHICH THE REGISTRATION MAY BE REFUSED. 4.10 .THUS , KEEPING IN VIEW THE POSITION OF LAW AS DISCUSSED ABOVE, AND FACTS AND CIRCUMSTANCES OF THE CASE AS BORNE OUT FROM THE MATERIAL PLACED AND THE SUBMISSIONS MADE BY BOTH THE PARTIES BEFORE US , WE FIND THAT ASSESSEE HAS FULFILLED REQUISITE CONDITIONS FOR THE PURPOSE OF REGISTRATION U/S 12A. THE LD. DIT CANNOT EXCEED THE JURISDICTION AND ENTER INTO THE DOMAIN OF OBLIGATIONS ASSIGNED BY THE LEGISLATURE TO THE ASSESSING OFFICER . W E DIREC T THE LD. DIT TO GRANT THE ASSESSEE , REGISTRATION U/S 12A. THE ASSESSING OFFICER SHALL BE AT HIS LIBERTY TO EXAMINE AT APPROPRIATE TIMES DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AS AND WHEN ARISING, THAT THE ASSESSEE HAS MADE COMPLIANCE OF PROVISION OF F IRST PROVISO TO SECTION 2(15), 11 TO 13 AND OTHER APPLICABLE PROVISIONS OF INCOME - TAX ACT AND CAN TAKE REQUISITE ACTIONS AS PER LAW , IF NEEDED. 14 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 4.11 WE FIND IT IMPERATIVE TO REPRODUCTION OBSERVATIONS OF HONBLE SUPREME COURT IN THE CASE OF QUEENS E DUCATIONAL SOCIETY VS CIT [372 ITR 699] : IN ADDITION, WE HASTEN TO ADD THAT THE 13TH PROVI SO TO SECTION 10(23C) IS OF GREAT IMPORTANCE IN THAT ASSESSING AUTHORITIES MUST CONTINUOUSLY MONITOR FROM ASSESSMENT YEAR TO ASSESSMENT YEAR WHETHER SUCH INSTITUTION S CONTINUE TO APPLY THEIR INCOME AND INVEST OR DEPOSIT THEIR FUN DS IN ACCORDANCE WITH THE LAW LAID DOWN. FURTHER, IT IS OF GREAT IMPORTANCE TH AT THE ACTIVITIES OF SUCH INSTITUTIONS BE LOOKED AT CAREFULLY. IF THEY ARE NOT GENUI NE, OR ARE NOT BEING CARRIED O UT IN ACCORDANCE WITH ALL OR ANY OF THE CONDITIONS SU BJECT TO WHICH APPROVAL HAS BEEN GIVEN, SUCH APPROVAL AND EXEMPTION MUST FOR THWITH BE WITHDRAWN. ALL THESE CASES ARE DISPOSED OF MAKING IT CLEAR THAT REVEN UE IS AT LIBERTY TO PASS FRESH ORDERS IF SUCH NE CESSITY IS FELT AFTER TAKING INTO CONS IDER ATION THE VARIOUS PROVISIONS OF LAW CONTAINED IN SECTION 10(23C) READ WITH SECTION 11 OF THE INCOME - TAX ACT . 4.12 WE FEEL THAT REVENUE AUTHORITIES MUST KEEP THIS OBSERVATIONS OF HONBLE SUPREME COURT IN MIND WHILE MAKING ASSESSMENTS OF THE ASSESSEES WHO ARE AVAILING BENEFITS OF EXEMPTIONS UNDER INCOME - TAX LAW. 5 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 15 JAGJIVAN FOUNDATION ITA 2358 /MUM/201 3 ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER , 2015. SD/ - SD/ - ( ) ( ) ( AMIT SHUKLA ) ( ASHWANI TANEJA ) JUDICIAL MEMBER ACCOUNTANT MEMBE R MUMBAI, DATE: 30 TH SEPTEMBER , 2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3 ) THE D IT ( E ) ___/CIT (A) CONCERNED_____ , MUMBAI. 4 ) THE CIT /DDIT(E) CONCERNED_____ , MUMBAI. 5 ) , , / THE D.R. J BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS