Pujya Shri Jalarambapa Ane Matushri Virbaima Charitable Trust, Visavadar, RAJKOT-GUJARAT V. The Commissioner of Income Tax-III, RAJKOT-GUJARAT

ITA 249/RJT/2014

• Counselvise Citation: 24924914 RSA 2014
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-05-2014
• Assessment Year: misc
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L MEENA
• Assessee Lawyers: DR ADHIA
• Keywords: Charitable institution
• Section: 10; 11; 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 249/RJT/2014 PUJYA SHRI JALARAMBAPA ANE MATUSHRI VIRBAIMA CHARITABLE TRUST, C/O. SHANTILAL D. GANATRA, STATION ROAD, AT. VISAVADAR, DIST. JUNAGADH PAN : AACTP 0635 L ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX RAJKOT-III, RAJKOT / RESPONDENT / ASSESSEE BY SHRI D R ADHIA, AR / REVENUE BY SHRI M L MEENA, DR / DATE OF HEARING 27.05.2014 !'# / DATE OF PRONOUNCEMENT 30.05.2014 / ORDER THIS APPEAL BY THE ASSESSEE-TRUST IS AGAINST THE OR DER DATED 14.03.2014 OF COMMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT REJE CTING THE APPLICATION MADE BY THE ASSESSEE-TRUST SEEKING RECOGNITION U/S 80G(5) OF TH E INCOME-TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-TRUST WAS CREATED ON 14.07.2002 BY EXECUTING TRUST DEED AND IT WAS REGISTERED WITH ASS ISTANT CHARITY COMMISSIONER, JUNAGADH UNDER BPT ACT ON 29.10.2002. THE MAIN OBJE CTS OF THE TRUST, AS PER TRUST DEED, ARE TO CARRY OUT CHARITABLE, EDUCATIONAL AS W ELL AS SOCIAL WELFARE ACTIVITIES. THE ASSESSEE-TRUST MADE AN APPLICATION FOR RECOGNITION U/S 80G(5) OF THE INCOME-TAX ACT ON 13.09.2013 IN THE PRESCRIBED FORMAT. A REPORT F ROM THE FIELD OFFICE IN THIS MATTER WAS CALLED FOR BY THE OFFICE OF COMMISSIONER OF INC OME-TAX, RAJKOT-III, RAJKOT AND, AS PER THE REPORT SUBMITTED BY THE AO, IT WAS NOTICED THAT THE ASSESSEE-TRUST HAS NOT SPENT 85% OF THE EXPENDITURE IN F.YS. 2010-11, 2011 -12 & 2012-13. THEREFORE, THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT VIDE IMPUGNED ORDER DATED 14.03.2014 REJECTED THE APPLICATION OF THE ASSESSEE -TRUST SEEKING RECOGNITION U/S 80G(5) OF THE ACT FOR THE DETAILED REASON GIVEN IN PARAGRAPH NOS.4-6 OF THE IMPUGNED ORDER, WHICH READ AS UNDER:- 4. IN VIEW OF THE ABOVE FACTS, VIDE TL.LS OFFICE L ETTER DATED 23.01.2014, THE ASSESSEE TRUST WAS REQUESTED TO FURNISH CERTAIN DET AILS/DOCUMENTS SO AS TO EXPLAIN THE MATTER AND THUS THE CASE WAS FIXED ON 2 8.02.2014. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE TRUST VIDE LETTER DT . 25.02.2014 RECEIVED IN THIS 2 249-RJT-2014 - PUJYA SHRI JALRAMBAPA ANE MATUSHRI-80G(5)-(SMC) OFFICE ON 26.02.2014 HAS REQUESTED TO ADJOURN THE C ASE. ACCORDINGLY, THE CASE WAS ADJOURNED AND THE NEXT DATE OF HEARING WAS FIXE D ON 10.03.2014. ON THE DATE OF HEARING SHRI NITESH GEDIYA, ADVOCATE AND A. R. OF THE ASSESSEE TRUST ATTENDED AND REQUESTED FOR EXTENSION OF TIME. ACCO RDINGLY, THE HEARING WAS ADJOURNED TO 14.03.2014. ON THE DATE OF HEARING, TH E A.R. OF THE ASSESSEE TRUST HAS FILED WRITTEN SUBMISSION. HOWEVER, NO DOC UMENTARY EVIDENCES SUCH AS BOOKS OF ACCOUNTS, DONATION RECEIPTS BOOKS, LEDG ER ACCOUNT OF EXPENSES ETE. HAVE BEEN PRODUCED F VERIFICATION. FURTHER, IN RESPECT OF NON-UTILIZATION OF 85% OF INCOME TOWARDS THE OBJECTS OF THE TRUST, THE ASSESSEE TRUST HAS SUBMITTED THAT THE TRUST WANTS TO BUILD THE ANNKSH ETRA AT VISAVADAR, SO THE TRUST ACCUMULATED MONEY A INVESTED/DEPOSITED IN BAN K. THE ASSESSEE TRUST FURTHER SUBMITTED THAT THE INCOME, EXPENSES AND ACC UMULATED AMOUNTS AND SMALL IN NATURE. HOWEVER, IN FUTURE, THE TRUST WILL TAKE CARE OF THE PROVISIONS OF THE ACT. THUS, IT IS SEEN THAT THE ASSESSEE TRUST H AS NOT GIVEN ANY CONVINCING REASONS FOR NON-UTILISATION OF 85% OF TRUSTS INCOM E TOWARDS OBJECTS OF THE TRUST. 5. AS PER SEC. 11 (2) OF THE ACT, WHERE 85% OF INC OME REFERRED TO IN CLAUSE (A) OR CLAUSE (B) OF SUB-SECTION (1) READ WI TH EXPLANATION TO THAT SUB- SECTION IS NOT APPLIED, OR IS NOT DEEMED TO HAVE BE EN APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES IN INDIA, DURING THE PREVIOUS YE AR BUT IS ACCUMULATED OR SET APART, EITHER IN WHOLE OR IN PART, FOR APPLICATION TO SUCH PURPOSES IN INDIA, SUCH INCOME SO ACCUMULATED OR APART SHALL NOT BE INCLUDE D IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOM E, PROVIDED THE FOLLOWING CONDITIONS ARE COMPLIED WITH, NAMELY; (A) SUCH PERSON SPECIFIES, BY NOTICE IN WRITING GIV EN TO THE ASSESSING OFFICE IN THE PRESCRIBED (FORM NO. 10) MANNER, THE PURPOSE FOR WHICH THE INCOME IS BEING ACCUMULATED OR SET APART AND THE PE RIOD FOR WHICH THE INCOME IS TO BE ACCUMULATED OR SET PART, WHICH SHALL IN NO CASE EXCEED TEN YEARS; B) THE MONEY SO ACCUMULATED OR SET APART IS INVESTE D OR DEPOSITED IN THE FORMS OR MODES SPECIFIED IN SUB SECTION (5). 6. IN VIEW OF THE ABOVE FACTS, IT IS DEAR THAT THE ASSESSEE TRUST HAS NOT GIVEN ANY CONVINCING REASONS FOR NON-UTILISATION OF 85% OF TRUST'S INCOME TOWARDS OBJECT OF THE TRUST. FURTHER, ON GOING THR OUGH THE APPLICATION AND THE AO'S REPORT, IT IS SEEN THAT THE TRUST HAS NOT FILE D COPIES OF FORM NO. 10 AS PER SEC. 11(2) OF THE ACT. ACCORDINGLY, THE APPLICATIO N OF THE ASSESSEE TRUST FOR RECOGNITION U/S 80G(5) OF THE I.T.ACT, 1961 IS HERE BY REJECTED. AGGRIEVED WITH THE ORDER OF LD COMMISSIONER OF INC OME-TAX, RAJKOT-III, RAJKOT, THE ASSESSEE-TRUST IS NOW IN APPEAL BEFORE THIS TRI BUNAL, ON THE FOLLOWING GROUNDS:- 1. THE LD. COMMISSIONER OF INCOME-TAX HAS ERRED IN LAW AND FACTS IN REJECTING TO GRANT APPROVAL U/S 80G(5) OF THE INCOM E-TAX ACT, 1961. THE TRUST DESERVES APPROVAL U/S 80G(5). 2. THE LD. C.I.T. HAS ERRED IN COMING TO THE CONCLU SION THAT APPELLANT IS NOT FULFILLING THE CONDITION FOR APPROVAL OF THE PR OVISIONS OF SECTION 11(2) OF THE IT ACT. THE TRUST DESERVES APPROVAL U/S. 80G(5). 3. THE LD. C.I.T. HAS ERRED IN COMING TO THE CONCLU SION THAT APPELLANT HAS VIOLATED THE CONDITIONS LAID DOWN IN SECTION 80G(5) AND IS NOT FULFILLING THE CONDITION FOR APPROVAL OF THE PROVISIONS OF SECTION 11AA OF THE IT ACT. THE TRUST DESERVES APPROVAL U/S 80G(5). 3 249-RJT-2014 - PUJYA SHRI JALRAMBAPA ANE MATUSHRI-80G(5)-(SMC) 4. THE LD. C.I.T. HAS ERRED IN COMING TO THE CONCLU SION BASED ON IRRELEVANT ASPECT THAT THE TRUST HAS VIOLATED THE CONDITIONS L AID DOWN IN SECTION 80G(5)(VI) AND HENCE NOT ENTITLE FOR APPROVAL U/S 80G(5). THE TRUST DESERVES APPROVAL U/S 80G(5). 5. THE LD. C.I.T. HAS ERRED IN NOT CONSIDERING THE REAL ASPECT OF THE PROVISIONS OF SECTION 80G(5) OF THE IT ACT, 1961. T HE TRUST DESERVES APPROVAL U/S 80G(5). 6. THE LD. C.I.T. HAS ERRED IN NOT CONSIDERING THE REAL ASPECT OF THE PROVISIONS THAT TRUST HAS ALREADY BEEN REGISTERED U /S. 12AA OF SECTION 80G(5) OF THE IT ACT, 1961. THE TRUST DESERVES APPROVAL U/ S 80G(5). 7. TAKING INTO CONSIDERING THE LEGAL, FACTUAL AND S TATUTORY ASPECT OF THE OBJECT OF THE TRUST, THE LD. C.I.T. OUGHT TO HAVE G RANTED APPROVAL U/S 80G(5)AS APPLIED FOR. IT IS THEREFORE PRAYED THAT THE ORDER PASSED BY THE LD. C.I.T. REJECTING TO GRANT APPROVAL U/S 80G(5) MAY KINDLY B E CANCELLED AND HE MAY BE DIRECTED TO GRANT APPROVAL U/S 80G(5) TO THE APPELL ANT AS APPLIED FOR. 8. WITHOUT PREJUDICE, THE LD.CIT HAS ERRED IN NOT G RANTING ADEQUATE AND REASONABLE OPPORTUNITY. THE ORDER PASSED BY THE LD. CIT NEEDS CANCELLATION / RESTORATION TO CONSIDER AFRESH THAT THE TRUST DESER VES APPROVAL U/S 80G(5). 9. WITHOUT PREJUDICE, THE ORDER PASSED U/S 80G(5) I S BAD IN LAW DESERVES CANCELLATION. 10. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND A ND/OR SUBSTITUTE ANY OR ALL GROUNDS OF APPEAL BEFORE THE ACTUAL HEARING TAK ES PLACE. 3. AT THE TIME OF HEARING, ON BEHALF OF ASSESSEE-TR UST, SHRI D R ADHIA, AUTHORIZED REPRESENTATIVE, APPEARED AND CONTENDED THAT AT THE TIME OF GRANTING APPROVAL FOR EXEMPTION U/S 80G, ONLY OBJECT OF THE TRUST IS REQU IRED TO BE EXAMINED AND APPLICATION OF FUNDS CAN BE EXAMINED BY ASSESSING O FFICER AT THE TIME FRAMING ASSESSMENT. IN SUPPORT OF THIS, THE AUTHORIZED REP RESENTATIVE FOR THE ASSESSEE-TRUST RELIED UPON THE JUDGMENT OF THE HONBLE PUNJAB & HA RYANA HIGH COURT IN ITS JUDGMENT DELIVERED ON 02.05.2013 IN THE CASE OF CIT V. O.P. JINDAL GLOBAL UNIVERSITY, REPORTED IN (2013) 38 TAXMANN.COM 366 (P&H). THE LD. AUTHORI ZED REPRESENTATIVE OF THE ASSESSEE-TRUST ALSO RELIED UPON THE DECISIONS OF IT AT, SMC BENCH, RAJKOT IN THE CASE OF SHREE GOVINDBHAI JETHALAL NATHVANI CHARITAB LE TRUST IN ITA NO.402/RJT/2013 AND ALSO IN THE CASE OF UNITY EDUCATION AND CHARITA BLE TRUST IN ITA NO.657/RJT/2012, WHEREIN THE TRIBUNAL HAS FOLLOWED THE JUDGMENT OF H ONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF O.P. JINDAL GLOBAL UNIVERSITY (SUPRA). CITING ALL AFORESAID DECISIONS, THE AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE-TRUST PLEADED THAT THE LD. COMMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT BE D IRECTED TO GRANT THE RECOGNITION U/S 80G(5) OF THE INCOME-TAX ACT, 1961 AS SOUGHT BY THE ASSESSEE-TRUST. 4 249-RJT-2014 - PUJYA SHRI JALRAMBAPA ANE MATUSHRI-80G(5)-(SMC) 4. AS AGAINST THE AFORESAID SUBMISSION; SHRI M L ME ENA, DR, APPEARED ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF L D. COMMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT. HE SUBMITTED THAT SINCE THE AS SESSEE-TRUST FAILED TO APPLY THE APPLICATION OF INCOME TO THE EXTENT OF 85% IN ALL T HE THREE FYS - STARTING FOR FY 2010- 11 TO FY 2012-13, THE VIEW TAKEN BY THE LD COMMISSI ONER OF INCOME-TAX, RAJKOT-III, RAJKOT REJECTING THE APPLICATION U/S 80G(5) OF THE INCOME-TAX ACT BE UPHELD. 5. RIVAL SUBMISSIONS WERE CONSIDERED. THE HONBLE P UNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. O.P. JINDAL GLOBAL UNIV ERSITY (SUPRA) HELD THAT AT THE TIME OF GRANTING APPROVAL FOR EXEMPTION U/S 80G, OBJECT OF THE TRUST IS REQUIRED TO BE EXAMINED AND APPLICATION OF FUNDS CAN BE EXAMINED B Y ASSESSING OFFICER AT THE TIME OF FRAMING ASSESSMENT. THE RELEVANT PORTION OF THE AFORESAID JUDGMENT IN THE CASE OF O.P. JINDAL GLOBAL UNIVERSITY (SUPRA) IS AS UNDER:- 13. IN ITANO.701 OF 2010 TITLED CIT V. SURYA EDUCA TIONAL & CHARITABLE TRUST [2011] 203 TAXMAN 53/15 TAXMANN.COM 123 (PUNJ & HAR.) IT HAS BEEN HELD BY THIS COURT THAT AT THE STAGE OF REGISTRATIO N UNDER SECTION 12AA OF THE ACT, THE EXTENT AND NATURE OF ACTIVITIES ARE NOT RE QUIRED TO BE EXAMINED. THAT QUESTION IS REQUIRED TO BE EXAMINED IN ASSESSMENT P ROCEEDINGS. THE COURT OBSERVED AS UNDER: 'THEREFORE, THE OBJECT OF SECTION 12AA OF THE ACT, IS TO EXAMINE THE GENUINENESS OF THE OBJECTS OF THE TRUST, BUT NOT TH E 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 INSTITUTIO N FILES ITS RETURN. THEREFORE, WE FIND THAT THE JUDGMENTS REFERRED TO B Y THE LEARNED COUNSEL FOR THE APPELLANT ARE NOT APPLICABLE TO THE FACTS O F THE PRESENT CASE ARISING OUT OF THE QUESTION OF REGISTRATION OF THE TRUST AND NOT OF ASSESSMENT.' 14. THE ISSUE HAS BEEN EXAMINED THAT AT THE STAGE O F REGISTRATION AND FOR EXEMPTION UNDER SECTION 80G OF THE ACT, THE STATED OBJECT OF THE TRUST IS REQUIRED TO BE EXAMINED. WHETHER THE FUNDS ARE PROP ERLY APPLIED OR NOT, CAN BE EXAMINED BY THE ASSESSING OFFICER AT THE TIME OF FRAMING THE ASSESSMENT. IN THE CASE ON HAND, THE ONLY REASON GIVEN BY THE LD. COMMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT IN THE IMPUGNED ORDE R FOR REJECTING THE APPLICATION OF THE ASSESSEE-TRUST FOR RECOGNITION U/S 80G(5) IS TH AT THE ASSESSEE-TRUST HAS FAILED IN MAKING EXPENDITURE TO THE EXTENT OF 85% OF ITS INCO ME. THEREFORE, KEEPING IN VIEW THE RATIO OF JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. O.P. 5 249-RJT-2014 - PUJYA SHRI JALRAMBAPA ANE MATUSHRI-80G(5)-(SMC) JINDAL GLOBAL UNIVERSITY (SUPRA), THE RECOGNITION U /S 80G(5) CANNOT BE REFUSED ON THIS GROUND. I, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF LD COMMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT AND DIRECT HIM TO GRANT THE RECO GNITION U/S 80G(5) OF THE INCOME-TAX ACT, 1961 TO THE ASSESSEE-TRUST. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 30.05.2014 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- PUJYA SHRI JALARAMBAPA ANE MATUSHRI V IRBAIMA CHARITABLE TRUST, AT. VISAVADAR, JUNAGADH 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX, RAJK OT-III, RAJKOT 3. ,0,1 * * 2 / CONCERNED CIT-I, JUNAGADH 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT