NARAYAN ATMARAM PATKAR MEMORIAL TRUST, DOMBIVALI V. CIT CIR I, THANE

ITA 2499/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2520 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 11-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Assessee Lawyers: H N MOTIWALA PIYUSH CHHAJED
• Keywords: Charitable institution
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.2499/MUM/2014 M/S. NARAYAN ATMARAM PATKAR MEMORIAL TRUST, 1 ST FLOOR PATKAR BLDG., ABOVE CANARA BANK, NR. RAILWAY STATION, DOMBIBILI (E) 421 201 PAN:AAATN9612M ...... APPELLANT VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE -3, KALYAN. .... RE SPONDENT APPELLANT BY : S/SHRI H.N.MOTIWALA/ PIYUSH CHHAJED RESPONDENT BY : SHRI N.P.SINGH DATE OF HEARING : 18/10/2016 DATE OF PRONOUNCEMENT : 21/10/2016 ORDER PER G.S.PANNU,A.M: THE CAPTIONED APPEAL FILED BY THE ASSESSEE IS D IRECTED AGAINST AN ORDER PASSED BY COMMISSIONER OF INCOME TAX-1, THANE DATE D 29/01/2014, PASSED UNDER SECTION 12AA(1) OF THE INCOME TAX ACT, 196 1 (IN SHORT THE ACT). 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWIN G REVISED GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED COMMISSIONER OF INCOME TAX ERRED IN PASSING AN ORDER UNDER SECTION. 12AA(1 ) OF THE I.T.ACT ON 29.1.2014, 2 ITA NO.2499/MUM/2014 PARTICULARLY WHEN THE APPELLANT TRUST HAD FILED AN APPLICATION ON 13.3.2013 SEEKING REGISTRATION UNDER SECTION 12A I.E. AFTER SIX MONTH S FROM THE END OF MONTH IN WHICH THE APPLICATION WAS MADE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX ERRED IN REJECTING THE APPLICATION FOR REGISTRATION WITHOUT ESTABLISHING THAT THE ACTIVITIES OF THE TRUST AS WELL AS OBJECTS OF THE T RUST ARE NOT GENUINE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX ERRED IN REJECTING THE APPLICATION OF REGISTRATION WITHOUT APPRECIATING THAT THE TRUST HAS STARTED ITS ACTIVITIES IN SUBSEQUENT YEARS AS P ER THE OBJECTS OF THE TRUST. 3. ALTHOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUND S OF APPEAL, BUT THE PERTINENT DISPUTE IS THAT THE CIT(A) HAS ERRED IN D ENYING REGISTRATION TO THE ASSESSEE UNDER SECTION 12A OF THE ACT. IN THIS REG ARD, BRIEF FACTS ARE THAT APPELLANT IS A TRUST FORMED ON 20/02/1975 AND ITS O BJECTS INCLUDE PROMOTION OF SOCIAL WELFARE, TO WORK FOR THE SPREAD OF EDUCATION AND LITERACY, TO RENDER MEDICAL AID AND RELIEF TO THE POOR, TO AID CULTURAL , LITERARY AND OTHER SOCIAL ACTIVITY, ETC. THE ASSESSEE TRUST FILED AN APPLI CATION ON 13/03/2013 WITH THE COMMISSIONER SEEKING REGISTRATION UNDER SECTION 12A OF THE ACT, WHICH HAS SINCE BEEN REJECTED. AS PER THE COMMISSIONER, HE W AS NOT SATISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST AND, THE REFORE, HE HAS DENIED REGISTRATION. AGAINST SUCH A DECISION OF THE COMMI SSIONER, ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESS EE VEHEMENTLY POINTED OUT THAT THE COMMISSIONER HAS REJECTED THE APPLICAT ION OF THE ASSESSEE ON INSUFFICIENT REASONS AND POINTED OUT THAT THERE IS NO JUSTIFICATION TO REJECT THE GENUINENESS OF THE ASSESSEE TRUST. IT WAS POINTED OUT THAT THE OBJECTIVES OF THE TRUST ARE CHARITABLE IN NATURE AND THE SAME IS ALSO NOT DISPUTED BY THE COMMISSIONER. A REFERENCE HAS ALSO BEEN MADE TO TH E DOCUMENTS SUBMITTED BEFORE THE COMMISSIONER, WHICH, INTER-ALIA, INCLUDE BALANCE SHEETS AND INCOME & EXPENDITURE ACCOUNTS FOR THE VARIOUS YEARS, WHICH CLEARLY DEMONSTRATE THAT 3 ITA NO.2499/MUM/2014 THERE WAS NO ACTIVITY WHICH COULD BE SAID TO BE IN VIOLATION OF THE OBJECTS OR INGENUINE. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE HAS REITERATED THE OBSERVATIONS OF THE COMMISSIONER IN SUPPORT OF THE CASE OF THE REVENUE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. SECTION 12AA(1)(B) OF THE ACT EMPOWERS THE COMMISSIONER TO SATISFY HIM SELF ABOUT THE OBJECTS OF THE TRUST AND GENUINENESS OF ITS ACTIVITIES BEFORE GRANTING REGISTRATION UNDER SECTION 12A OF THE ACT. IN THE PRESENT CASE, THE A SSESSEE IS A PUBLIC CHARITABLE TRUST FORMED ON 20/02/1975 AND ITS OBJECTS, AS EMER GING FROM THE TRUST DEED, ARE AS FOLLOWS:- 2. THE OBJECTS OF THE TRUST SHALL BE:- (A) TO PROMOTE SOCIAL WELFARE, (B) TO WORK FOR THE SPREAD OF EDUCATION AND LITERACY (C) TO RENDER MEDICAL AID AND RELIEF TO THE POOR AND NE EDY AND FOR THAT PURPOSE TO OPEN UP HOSPITAL, DISPENSARIES, FIRST-AID CENTRES, (D) TO AID CULTURAL, LITERACY CHARITABLE AND OTHER SOCI AL ACTIVITIES, (E) TO START SCHEMES WITH A VIEW TO PROVIDING NOURISHME NT TO UNDER NOURISHED CHILDREN; (F) TO WORK FOR THE UP-LIFT OF VILLAGES AND WOMEN (G) AND TO UNDERTAKE ANY OTHER ACTIVITIES CALCULATED TO ADVANCE THE WELFARE OF SOCIETY. 6.1 THE COMMISSIONER HAS ALSO NOTICED THE OBJECTS O F THE TRUST AND NOTHING ADVERSE HAS BEEN COMMENTED BY HIM. THEREFORE, IN S O FAR AS THE OBJECTS OF THE TRUST ARE CONCERNED, WE FIND NO OBJECTION ON THE PA RT OF THE COMMISSIONER. THE ONLY OBJECTION RAISED BY THE COMMISSIONER IS WI TH REGARD TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. IN THI S CONTEXT, AS PER COMMISSIONER, ASSESSEE WAS HOLDING A PROPERTY IN THE TRUST SINCE 1995, WHICH HAS BEEN SOLD IN 4 ITA NO.2499/MUM/2014 THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2 010-11 AND MONEY SO RECEIVED HAVE BEEN INVESTED IN FIXED DEPOSITS, WHIC H HAVE YIELDED INTEREST INCOME. ACCORDING TO THE COMMISSIONER, THE INCOMES SO EARNED BY THE ASSESSEE TRUST HAVE NOT BEEN UTILIZED FOR THE OBJEC TS OF THE TRUST AND, THEREFORE, HE WAS NOT SATISFIED ABOUT THE GENUINENE SS OF THE ACTIVITIES OF THE TRUST. WE HAVE CAREFULLY CONSIDERED THE AFORESAID OBJECTION AND FIND THAT THE SAME IS NOT SUFFICIENT TO REJECT ASSESSEES PLEA FOR REGISTRATION. QUITE CLEARLY, THERE IS NO FINDING BY THE COMMISSIONER THAT ANY OF THE INCOMES EARNED BY THE ASSESSEE TRUST HAVE BEEN UTILIZED FOR ANY ACTIVITY OTHER THAN THE OBJECTS OF THE TRUST. IN FACT, THE RELEVANT BALANCE SHEETS AND IN COME AND EXPENDITURE ACCOUNT FOR VARIOUS YEARS ARE PLACED IN THE PAPER B OOK AND IT IS QUITE EVIDENT THAT THE OUTGOINGS ARE ONLY TOWARDS SALARY, AUDIT F EE AND OTHER SMALL EXPENSES. THE LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN FACT, ASSESSEE HAS NOT STARTED ITS MAIN CHARITABLE ACTIVITIES AT ALL A ND, THEREFORE, THERE CANNOT BE ANY DOUBT ON ITS GENUINENESS. IT HAS BEEN EXPLAINED THAT THE ASSESSEE-TRUST IS NOW ENGAGED IN THE PROCESS OF STARING ITS ACTIVITIE S TOWARDS ATTAINMENT OF ITS OBJECTS. HAVING REGARD TO THE MATERIAL ON RECORD, T HERE IS NOTHING TO ESTABLISH THAT THE ACTIVITIES OF THE TRUST ARE EITHER INGENU INE OR IT HAS CARRIED OUT ANY ACTIVITIES, WHICH ARE NOT PROFESSED IN THE TRUST DE ED. THE STAND OF THE COMMISSIONER THAT THE INCOME EARNED HAS NOT BEEN UT ILIZED FOR THE OBJECTS OF THE TRUST DOES NOT DEFEAT ITS GENUINENESS BECAUSE T HERE IS NO MATERIAL TO SUGGEST THAT THE INCOME EARNED HAS BEEN OTHERWISE E XPENDED ON ANY ACTIVITY OTHER THAN THE OBJECTS OF THE TRUST. CONSIDERING T HE ENTIRETY OF CIRCUMSTANCES, IN OUR VIEW, THERE WAS NO JUSTIFICATION FOR THE COM MISSIONER TO DOUBT THE GENUINENESS OF THE TRUST AND, THEREFORE, WE UPHOL D THE PLEA OF THE ASSESSEE FOR REGISTRATION UNDER SECTION 12A OF THE ACT . AS A CONSEQUENCE, THE 5 ITA NO.2499/MUM/2014 IMPUGNED ORDER OF THE COMMISSIONER IS SET-ASIDE AND IT IS DIRECTED THAT REGISTRATION BE ALLOWED IN TERMS OF THE APPLICATION MADE BY THE ASSESSEE ON 13/3/2013. 7. IN VIEW OF THE AFORESAID DECISION, GROUND OF APP EAL NO.1, RAISED BY THE ASSESSEE BECOME ACADEMIC IN NATURE IS NOT BEING ADD RESSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED , AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 21/10/2016 SD/- SD/- (AMARJIT SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 21/10/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI 6 ITA NO.2499/MUM/2014 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 18/10/2016 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 19 /10/2016 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/A M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER