M/s J.S.Sundaram & Co,CA,., Kakinada V. THE CIT, Rajahmundry., Rajahmundry

ITA 250/VIZ/2012

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9923 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-11-2015
• Assessment Year: misc
• Appeal Filed On: 12-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G GURUSAMY
• Section: 12AA; 12

Judgement Text

ITA NO.250/VIZAG/2012 DR. MOTURU BHANU PRASAD MEMORIAL TRUST, KAKINADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.250/VIZAG/2012 ( / ASSESSMENT YEAR: NA) DR. MOTURU BHANU PRASAD MEMORIAL TRUST, KAKINADA VS. CIT, RAJAHMUNDRY [PAN: AABTD 2020Q ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI G. GURUSAMY, DR / DATE OF HEARING : 17.08.2016 / DATE OF PRONOUNCEMENT : 26.08.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT, RAJAHMUNDRY DATED 10.4.2012. 2. THE ASSESSEE NAMELY, DR. MOTURU BHANU PRASAD ME MORIAL TRUST, RANGARAYA MEDICAL COLLEGE, KAKINADA, EAST GODAVARI DISTRICT IS EXISTED ITA NO.250/VIZAG/2012 DR. MOTURU BHANU PRASAD MEMORIAL TRUST, KAKINADA 2 BY A TRUST DEED DATED 28.11.1995. THE TRUST WAS RE GISTERED WITH JOINT REGISTRAR, KAKINADA. THE TRUST HAD FILED AN APPLIC ATION IN FORM NO.10A DATED 21.6.2011 ON 24.10.2011 FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') ALO NG WITH ALL RELEVANT DETAILS. ACCORDING TO THE TRUST DEED DATED 28.11.1 995, THE ASSESSEE IS EXISTED WITH AIMS AND OBJECTS MAINLY TO PROVIDE MED ICAL TEXTS, JOURNALS AND PERIODICALS TO THE LIBRARY AND ESSENTIAL EQUIPM ENT FOR THE LABORATORIES IN RAJGARAYA MEDICAL COLLEGE AND DEVEL OPMENT OF M. BHANU SANKAR PRASAD MEMORIAL AUDITORIUM, RANGARAYA MEDICA L COLLEGE CAMPUS, KAKINADA. THE LD. COMMISSIONER HAS CALLED THE ASSESSEE TO EXPLAIN THE REASONS FOR GRANTING OF REGISTRATION U/ S 12AA OF THE ACT. THE ASSESSEE HAS SUBMITTED A DETAILED REPRESENTATION AN D SUBMITTED THAT ASSESSEE IS EXISTED SOLELY FOR THE PURPOSE OF CHARI TY AND THEREFORE, REGISTRATION U/S 12AA OF THE ACT MAY BE GRANTED. T HE LD. COMMISSIONER AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, HE HAS OBSERVED AS FOLLOWS: THOUGH THE TRUST WAS ESTABLISHED ON 28.11.1995 FOR THE SET OF OBJECTS AS MENTIONED IN ITS DEED OF TRUST, IT HAS FILED APPLIC ATION IN FORM NO.10A FOR REGISTRATION U/S 12AA OF THE I.T. ACT FOR THE FIRST TIME AFTER LONG GAP OF 16 YEARS. THE TRUST HAS NOT GIVEN ANY REASON FOR NON- FILING OF APPLICATION FOR REGISTRATION U/S 12AA OF THE I.T. ACT. THE TRUST I S NOT DOING ANY WORTHWHILE CHARITABLE ACTIVITIES EXCEPT PROVIDING M EDICAL BOOKS/JOURNALS FOR THE USE OF STUDENTS IN THE LIBRARY OF RANGARAYA MEDICAL COLLEGE AND ALSO PROVIDED EQUIPMENT IN LABORATORY OF THE COLLEG E. THE TRUST HAS COLLECTED DONATIONS FROM THE SOLE DONOR FROM USA AN D MADE FIXED DEPOSITS. INTEREST INCOME EARNED ON SUCH DEPOSITS A RE BEING SPENT FOR THE ITA NO.250/VIZAG/2012 DR. MOTURU BHANU PRASAD MEMORIAL TRUST, KAKINADA 3 ABOVE OBJECTS. THOUGH ONE OF THE OBJECTS OF THE TR UST IS DEVELOPING THE M. BHANU SANKAR PRASAD MEMORIAL AUDITORIUM, RMC CAM PUS, KAKINADA, ITS INCOME EARNED ON LETTING OUT OF AUDITORIUM IS BEING CONSIDERED AS INCOME OF THE RMC, A GOVERNMENT ORGANIZATION AND NOT THE T RUST. IT IS SEEN FROM THE NOTE BOOK MAINTAINED FOR THE PERIOD FROM 5.11.1 999 TO TILL DATE WHICH CONTAIN ONLY THE RECEIPT OF FUNDS, ACCRUAL OF INTER EST AND PURCHASE OF BOOKS SHOWS THAT THE INSTITUTION HAS EXTENDED DONAT IONS TO RAMCOSA (ANOTHER SOCIETY) IN VIOLATION OF BASIC OBJECTS OF THE TRUST. THE ASSESSEE DID NOT ESTABLISH ITS CONTENTION THAT THE MONEY BOR ROWED FROM RAMCOSA ON 23.11.1995 (BEFORE FORMATIN OF ASSESSEE-TRUST) A ND REPAYMENT THEREOF. THE ASSESSEE ALSO DID NOT ESTABLISH ITS FURTHER CON TENTION THAT ` 53,000/- PAID ON 6.4.2000 TO RAMCOSA IS ON ACCOUNT OF REPAYM ENT OF LOAN AND NOT DONATION AS APPEARING IN THE TRIAL BALANCE. INTERES TINGLY, THE NOTE BOOK PRODUCED DURING THESE PROCEEDINGS IS WRITTEN FROM 5 .11.1999 ONLY AND THE CLAIM OF BORROWAL OF FUNDS CANNOT BE ESTABLISHED FR OM THIS NOTE BOOK. THEREFORE, IT IS CLEAR THAT THE MONEY OF THE ASSESS EE-TRUST WAS NOT USED FOR ITS AIMS AND OBJECTS. 6. FOR GRANTING REGISTRATION U/S 12AA, THE OBJECTS OF THE TRUST AS WELL AS GENUINENESS OF THE ACTIVITIES HAVE TO BE CONSIDE RED. THE TRUST DID NOT CONDUCT ANY CHARITABLE ACTIVITIES EXCEPT PROVIDING MEDICAL BOOKS/JOURNALS FOR THE USE OF STUDENTS IN THE LIBRARY OF RANGARAYA MEDICAL COLLEGE AND PROVIDING EQUIPMENT IN LABORATORY OF THE COLLEGE AN D USED FOR GIVING DONATIONS TO RAMCOSA, WHICH IS NOT IN ACCORDANCE WI TH THE OBJECTS OF THE TRUST. THEREFORE, THE APPLICATION IN FORM NO.10A D ATED 21.6.2011 FILED ON 24.10.2011 FOR REGISTRATION U/S 12AA OF THE I.T. ACT IS, HEREBY, REJECTED. 3. ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN A PPEAL BEFORE THE TRIBUNAL. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT THE MAIN OBJECT OF THE TRUST IS TO PROVIDE MEDICAL TEXTS, JO URNALS AND PERIODICALS TO THE RANGARAYA MEDICAL COLLEGE LIBRARY AND DEVELO PMENT OF M. BHANU SANKAR PRASAD MEMORIAL AUDITORIUM. AS PER THE OBJE CTS, ASSESSEE HAS ALREADY CARRIED ITS ACTIVITIES AND THEREFORE, THE A SSESSEE IS ENTITLED FOR REGISTRATION U/S 12AA OF THE ACT. HE FURTHER SUBMI TTED THAT THE LD. COMMISSIONER REJECTED THE REGISTRATION U/S 12AA OF THE ACT ON THE ITA NO.250/VIZAG/2012 DR. MOTURU BHANU PRASAD MEMORIAL TRUST, KAKINADA 4 GROUND THAT WHEN THE TRUST IS EXISTED IN 1995, WHY THE REGISTRATION FOR REGISTRATION U/S 12AA OF THE ACT WAS FILED IN THE Y EAR 2011 WITH SUCH A DELAY AND THEREFORE, REJECTED THE REGISTRATION U/S 12AA OF THE ACT, WHICH IS NOT JUSTIFIED. 5. ON THE OTHER HAND, THE LD. D.R. RELIED ON THE OR DER PASSED BY THE LD. COMMISSIONER. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE TRUST IS EXISTED THROUGH A TRUST DEED DATE D 28.11.1995. THE ASSESSEE FILED AN APPLICATION IN FORM NO.10A ALONG WITH ALL THE DETAILS BEFORE THE LD. COMMISSIONER FOR REGISTRATION U/S 12 AA OF THE ACT ON 24.10.2011. THE MAIN OBJECTS OF THE ASSESSEE TRUST IS TO PROVIDE MEDICAL TEXTS, JOURNALS AND PERIODICALS TO THE LIBR ARY AND ESSENTIAL EQUIPMENT FOR THE LABORATORIES IN RANGARAYA MEDICAL COLLEGE AND DEVELOPMENT OF M. BHANU SANKAR PRASAD MEMORIAL AUDI TORIUM. WE HAVE GONE THROUGH THE PAPER BOOK FILED BY THE ASSESSEE. ASSESSEE TRUST IS CARRYING ITS ACTIVITIES ACCORDING TO ITS OBJECTS FO R WHICH IT IS EXISTED. THE LD. COMMISSIONER IS OF THE VIEW THAT THE ASSESSEE F ILED AN APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT FIRST TIME AFTER A LONG GAP OF 16 YEARS. WE DO NOT FIND IT A REASON FOR REJECTION U/S 12AA OF THE ACT. LD. CIT ITA NO.250/VIZAG/2012 DR. MOTURU BHANU PRASAD MEMORIAL TRUST, KAKINADA 5 ALSO OBSERVED THAT THE TRUST HAS NOT CONDUCTED ANY CHARITABLE ACTIVITIES EXCEPT PROVIDING MEDICAL BOOKS AND JOURNALS, WHEREA S THE TRUST IS MAINLY EXISTED FOR PROVIDING MEDICAL BOOKS, JOURNAL S AND OTHER EQUIPMENT. WE FIND THAT THE ASSESSEE IS ALREADY CAR RYING ITS ACTIVITIES. THE LD. COMMISSIONER WITHOUT CONSIDERING THE OBJECT S OF THE TRUST AND THE ACTIVITIES CARRIED ON BY THE ASSESSEE, SIMPLY R EJECTED THE REGISTRATION U/S 12AA OF THE ACT WITHOUT ANY BASIS. WE ARE OF T HE OPINION THAT THE ORDER PASSED BY THE LD. COMMISSIONER IS HYPER TECHN ICAL WHICH IS NOT IN ACCORDANCE WITH THE ACT. WE THEREFORE, SET ASIDE T HE ORDER PASSED BY THE LD. COMMISSIONER AND WE GRANT REGISTRATION U/S 12AA OF THE ACT TO THE ASSESSEE. ORDERED ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 26 TH AUG16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER # /VISAKHAPATNAM: ' /DATED : 26.08.2016 VG/SPS ITA NO.250/VIZAG/2012 DR. MOTURU BHANU PRASAD MEMORIAL TRUST, KAKINADA 6 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT DR. MOOTURU BHANU PRASAD MEMORIA L TRUST, C/O S. SUNDARAM & CO., C.A., DR.NO.10-4-56/2, RAMARAOPETA, SESHAGIRIRAO STREET, KAKINADA-4. 2. / THE RESPONDENT THE CIT, RAJAHMUNDRY 3. / THE RESPONDENT THE PRINCIPAL CIT02, VISAKHAPAT NAM 4. + ( ) / THE CIT (A), RAJAHMUNDRY 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM