Rogi Kalyan Samiti, Dhoraji V. The Commissioner of Income Tax, Rajkot-II, RAJKOT-GUJARAT

ITA 25/RJT/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72653 (ITAT-RAJKOT)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-11-2013
• Assessment Year: misc
• Appeal Filed On: 28-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M L MEENA
• Assessee Lawyers: J C RANPURA
• Keywords: Charitable institution
• Section: 10; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 25/RJT/2013 ROGI KALYAN SAMITI, GOVERNMENT HOSPITAL, DHORAJI PAN : AABTR 2098 G ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX-II RAJKOT / RESPONDENT / ASSESSEE BY SHRI J C RANPURA, CA / REVENUE BY DR M L MEENA, DR / DATE OF HEARING 29.11.2013 !'# / DATE OF PRONOUNCEMENT 13.12.2013 / ORDER THIS APPEAL BY THE ASSESSEE-TRUST IS AGAINST THE OR DER DATED 31.10.2012 OF COMMISSIONER OF INCOME-TAX, RAJKOT-II, RAJKOT REJEC TING THE APPLICATION OF THE ASSESSEE-TRUST FOR REGISTRATION U/S 12A(AA) OF THE INCOME-TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-TRUST CAME INTO EXISTENCE ON 28.02.2006 BY EXECUTING TRUST DEED. THE ASSESSEE-TR UST MADE AN APPLICATION TO THE LD. COMMISSIONER OF INCOME-TAX-II, RAJKOT IN FORM N O.10A FOR SEEKING REGISTRATION U/S 12A(AA) OF THE INCOME-TAX ACT ON 19.04.2012. THIS A PPLICATION WAS SUBMITTED BY THE ASSESSEE-TRUST ALONGWITH COPY OF THE PAN CARD, COPY OF REGISTRATION OF TRUST UNDER THE BPT ACT, COPY OF TRUST DEED ETC.. THE ASSESSING OFFICER I.E. THE ITO, WARD-2(1), RAJKOT VIDE HIS LETTER BEARING NO.ITO/2(1)/12A(AA)/ RKS/2012-13 DATED 05.10.2012 REPORTED THAT THE ASSESSEE-TRUST HAS EXPENDED LESS THAN 85% OF ITS INCOME DURING THE LAST TWO YEARS AND CONSIDERING THIS ASPECT, THE ASSESSING OFFICER HAS NOT RECOMMENDED THE REGISTRATION U/S 12A(AA) OF THE IN COME-TAX TO THE ASSESSEE-TRUST. CONSIDERING THIS ASPECT OF THE CASE, ONE MORE OPPOR TUNITY OF BEING HEARD WAS GIVEN TO THE ASSESSEE TRUST BY THE LD. COMMISSIONER OF IN COME-TAX, RAJKOT-II VIDE ITS LETTER DATED 19.10.2012 ASKING THE ASSESSEE-TRUST TO FURNI SH THE REASON OF ACCUMULATIONS AND EXPENDITURE LESS THAN STATUTORY LIMIT. IN RESPO NSE TO THE AFORESAID LETTER, NEITHER THE ASSESSEE-TRUST NOR ANY AUTHORIZED PERSON ATTEND ED BEFORE THE LD. COMMISSIONER OF INCOME-TAX, RAJKOT-II TO CLARIFY THE ISSUE OF AC CUMULATION AND PREVIOUS EXPENDITURES OF THE ASSESSEE-TRUST. THEREFORE, LD. COMMISSIONER OF INCOME-TAX, 2 25-RJT-2013 ROGI KALYAN SAMITI (SMC) RAJKOT-II HAS REJECTED THE APPLICATION OF THE ASSES SEE-TRUST. AGGRIEVED WITH THE ORDER OF LD COMMISSIONER OF INCOME-TAX, RAJKOT-II, THE ASSESSEE-TRUST IS NOW IN APPEAL BEFORE THIS TRIBUNAL, ON THE FOLLOWING GROUN DS:- THE LEARNED COMMISSIONER OF INCOME-TAX-II, RAJKOT [HEREINAFTER REFERRED TO AS THE CIT] ERRED ON FACTS AS ALSO IN LAW REJECTING THE APPLICATION FOR REGISTRATION U/S 12A(A) OF THE ACT ALLEGING THAT THE APPELLANT F AILED TO EXPEND 85% OF ITS INCOME DURING THE LAST TWO YEARS. THE LD. CIT MAY K INDLY BE DIRECTED TO GRANT REGISTRATION U/S 12(A)(A) OF THE ACT. 4. AT THE TIME OF HEARING, ON BEHALF OF ASSESSEE-TR UST, SHRI J. C. RANPURA, CA, APPEARED AND FILED A PAPER-BOOK CONTAINING 41 PAGES , WHICH INTER-ALIA INCLUDING COPY OF MEMORANDUM AND ARTICLE OF ASSOCIATION, COPY OF R EGISTRATION CERTIFICATE UNDER BPC ACT, COPY OF REGISTRATION CERTIFICATE UNDER SOCIETI ES REGISTRATION ACT, COPY OF APPLICATION FOR REGISTRATION U/S 12A DATED 21.12.20 12 ALONGWITH COPY OF FORM NO.10A ETC THE LD. COUNSEL OF THE ASSESSEE-TRUST CONTENDED T HAT THE ASSESSEE-TRUST IS ESTABLISHED MAINLY TO IMPLEMENT THE GOVERNMENT POLI CIES RELATING TO MEDICAL RELIEF TO GENERAL PUBLIC WHICH IS ALSO ACCEPTED BY THE LD. CI T IN HIS ORDER DATED 31.10.2013. HE ALSO POINTED OUT THAT AS PER GR OF THE HEALTH AN D FAMILY WELFARE DEPARTMENT OF THE STATE GOVERNMENT, THE BOARD OF TRUSTEES (SAMITI ) SHALL COMPRISE OF SENIOR MEDICAL OFFICER, MLA FROM THE CONSTITUENCY AND OTHERS. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE MAIN SOURCE OF INCOME OF THE ASS ESSEE-TRUST IS GRANT FROM GOVERNMENT AND THE ASSESSEE BEING A TRUST FOR OBJEC TS OF MEDICAL RELIEF TO GENERAL PUBLIC, ITS INCOME IS ELIGIBLE FOR EXEMPTION U/S 10 (23C)(IIIAC/AE) OF THE ACT. HE ALSO SUBMITTED THAT THE SECTION 12AA DOES NOT SPEAK ANYW HERE THAT THE LD. CIT, WHILE CONSIDERING THE APPLICATION FOR REGISTRATION, SHALL ALSO SEE THAT THE INCOME DERIVED BY THE TRUST OR INSTITUTION IS EITHER NOT BEING SPENT FOR CHARITABLE PURPOSES OR SUCH INSTITUTION IS EARNING PROFIT; LD. CIT WAS NOT JUST IFIED IN REFUSING REGISTRATION U/S 12AA OF THE INCOME-TAX ACT TO THE ASSESSEE EDUCATIONAL SOCI ETY. IN THIS CONNECTION, THE LD. COUNSEL OF THE ASSESSEE-TRUST PLACED RELIANCE ON TH E DECISION OF HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS. RED ROSE SCHOOL , 212 CTR (ALL) 394. THE LD. COUNSEL OF THE ASSESSEE-TRUST RELIED UPON FOLLOWING DECISIONS IN SUPPORT OF HIS AFORESAID CLAIM:- A. HIGH COURT OF ALLAHABAD IN THE CASE OF HARDAYAL CHARTITABLE & EDUCATION TRUST VS. CIT (2013) 84 CCH 194 ALL HC; 3 25-RJT-2013 ROGI KALYAN SAMITI (SMC) B. ITAT, CHENNAI B BENCH IN THE CASE OF ST. MARY S CHRISTIAN CHARITABLE TRUST VS. ITO IN ITA NO.1269/MAD/2009 (2011) 11 ITR (TRIB ) 205 (CHENNAI); C. ITAT AMRITSAR BENCH IN THE CASE OF SAINT KABIR E DUCATIONAL TRUST VS. CIT IN ITA NO.488/ASR/2009 (2010) 41 DTR (ASR) (TRIB) 267; D. HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CI T VS. SURYA EDUCATIONAL & CHARITABLE TRUST (2011) 203 TAXMAN 53 (P&H); E. ITAT AGRA BENCH IN THE CASE OF BABU RAM EDUCATIO N SOCIETY VS. CIT IN ITA NOS. 78 & 79 (AGRA) OF 2013 [ 2013] 38 TAXMANN.COM 295 (AGRA-TRIB); F. ITAT LUCKNOW B BENCH IN THE CASE OF KANCHAN SI NGH BHULI DEVI SHIKSHA PRASAR SAMITI IN ITA NOS. 706 & 707 (LUCK) OF 2010 [2013] 33 TAMANN.COM 113 (LUCKNOW-TRIB); G. ITAT CHANDIGARH A BENCH IN THE CASE OF BABA GA NDHA SINGH EDUCATION TRUST VS. CIT IN ITA NOS. 803/CHD/2009 & 357/CHD/20 10 (2011) 138 TTJ (CHD)(UO) 1. TO SUM-UP, THE LD. COUNSEL OF THE ASSESSEE-TRUST PL EADED THAT THE LD. COMMISSIONER OF INCOME-TAX, RAJKOT-II BE DIRECTED T O GRANT THE REGISTRATION U/S 12A(A) OF THE INCOME-TAX ACT, 1961 AS SOUGHT BY THE ASSESS EE-TRUST. 5. ON THE OTHER HAND, DR. M.L. MEENA, DR, APPEARED ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LD. COMMISSIONER OF INCOME-TAX, RAJKOT-II. 6. RIVAL SUBMISSIONS WERE CONSIDERED. I HAVE CAREFU LLY GONE THROUGH THE IMPUGNED ORDER OF THE LD COMMISSIONER OF INCOME-TAX . IT APPEARS THAT LD COMMISSIONER OF INCOME-TAX, RAJKOT-II REJECTED THE APPLICATION OF THE ASSESSEE-TRUST FOR REGISTRATION U/S 12A(A) OF THE INCOME-TAX ACT V IDE ITS ORDER NO.CIT-II/TECH /12AA/RKS/2012-13 DATED 31.10.2012 ALLEGING THAT AS SESSEE-TRUST HAS FAILED IN MAKING EXPENDITURE TO THE EXTENT OF 85% OF ITS INCO ME DURING THE LAST TWO YEARS. KEEPING IN VIEW THE RATIO OF JUDGMENT OF HONBLE HI GH COURT OF ALLAHABAD IN THE CASE OF CIT VS. RED ROSE SCHOOL, 212 CTR (ALL) 394, THE APPLICATION OF THE ASSESSEE-TRUST FOR REGISTRATION U/S 12AA CANNOT BE REJECTED ON THI S GROUND AS THE SECTION 12AA DOES NOT SPEAK ANYWHERE THAT THE CIT, WHILE CONSIDERING THE APPLICATION FOR REGISTRATION, SHALL ALSO SEE THAT THE INCOME DERIVED BY THE TRUST OR THE INSTITUTION IS EITHER NOT BEING SPENT FOR CHARITABLE PURPOSE OR SUCH INSTITUTION IS EARNING PROFIT, AS OBSERVED BY THE HONBLE HIGH COURT OF ALLAHABAD. THE RELEVANT PORTI ON OF JUDGMENT OF HON HONBLE 4 25-RJT-2013 ROGI KALYAN SAMITI (SMC) HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS. RED ROSE SCHOOL IS REPRODUCED HEREUNDER:- 20. IN REGARD TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION, WHOSE OBJECTS DO NOT RUN CONTRARY TO PUBLIC POLICY AND ARE, IN FACT, RELATED TO CHARITABLE PURPOSES, THE CIT IS AGAIN EMPOWERED TO MAKE ENQUIRIES AS HE THINKS FIT. IN CASE THE ACTIVITIES ARE NOT GENUINE AND THEY ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST/SOC IETY OR THE INSTITUTION, OF COURSE, THE REGISTRATION CAN AGAIN BE REFUSED. BUT ON MERE PRESUMPTIONS AND ON SURMISES THAT INCOME DERIVED BY THE TRUST OR THE INSTITUTION IS BEING MISUSED OR THAT THERE IS SOME APPREHENSION THAT THE SAME WO ULD NOT BE USED IN THE PROPER MANNER AND FOR THE PURPOSES RELATING TO ANY CHARITABLE PURPOSE, REJECTION CANNOT BE MADE. 21. SECTION 12AA, WHICH LAYS DOWN THE PROCEDURE FOR REGISTRATION, DOES NOT SPEAK ANYWHERE THAT THE CIT, WHILE CONSIDERING THE APPLICATION FOR REGISTRATION, SHALL ALSO SEE THAT THE INCOME DERIVED BY THE TRUST OR THE INSTITUTION IS EITHER NOT BEING SPENT FOR CHARITABLE PURPOSE OR SUCH INSTITUT ION IS EARNING PROFIT. THE LANGUAGE USED IN THE SECTION ONLY REQUIRES THAT ACT IVITIES OF THE TRUST OR THE INSTITUTION MUST BE GENUINE, WHICH ACCORDINGLY WOUL D MEAN, THEY ARE IN CONSONANCE WITH THE OBJECTS OF THE TRUST/ INSTITUTI ON, AND ARE NOT MERE CAMOUFLAGE BUT ARE REAL, PURE AND SINCERE, NOR AGAI NST THE PROPOSED OBJECTS. THE PROFIT EARNING OR MISUSE OF THE INCOME DERIVED BY CHARITABLE INSTITUTION FROM ITS CHARITABLE ACTIVITIES, MAY BE A GROUND FOR REFUSING EXEMPTION ONLY WITH RESPECT TO THAT PART OF THE INCOME BUT CANNOT BE TA KEN TO BE A SYNONYM TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE I NSTITUTION THE LD. COMMISSIONER OF INCOME-TAX, RAJKOT-II HIMSE LF STATED IN THE IMPUGNED ORDER THAT THE ASSESSEE-TRUST HAD CARRIED OUT THE A CTIVITIES IN ACCORDANCE WITH ITS OBJECTS AND IN ACCORDANCE WITH THE PROVISIONS OF SE CTION 2(15) OF THE INCOME-TAX ACT. FOR FAILURE BY A CHARITABLE TRUST IN MAKING EXPENDI TURE TO THE EXTENT OF 85% OF ITS INCOME, THE REGISTRATION U/S 12AA CANNOT BE REJECTE D AS HELD BY THE HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS. RED ROSE SCHOOL (SUPRA). I, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF LD COMMISSIONER OF INCO ME-TAX, RAJKOT-II AND DIRECT HIM TO GRANT THE REGISTRATION U/S 12AA OF THE INCOME-TA X ACT TO THE ASSESSEE-TRUST. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 13.12.2013 !$ /RAJKOT *BT 5 25-RJT-2013 ROGI KALYAN SAMITI (SMC) / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- ROGI KALYAN SAMITI, GOVERNMENT HOSPIT AL, DHORAJI 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX, RAJK OT-II, RAJKOT 3. ,0,1 * * 2 / CONCERNED ADDL.CIT, RANGE-2, RAJKOT 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT