Malpani Institute of Technology, Sangamner V. CIT-I, Pune

ITA 2539/PUN/2012

• Counselvise Citation: 253924514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 24-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Keywords: Charitable institution; Opportunity of being heard; Question of law
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 2 5 39 / P N/ 20 1 2 ASSESSMENT YEAR : MALPANI INSTITUTE OF TECHNOLOGY, MALPANI HOUSE, INDIRA GANDHI MARG, SANGAMNER, DISTT. - AHMEDNAGAR VS. CIT - I, PUNE (APPELLANT) (RESPONDENT) PAN NO. AAHCM3264G APPELLANT BY: SHRI NIKHIL PATHAK RESPONDENT BY: SHRI A.K. MODI ORDER PER R.S . PADVEKAR , JM : - IN THIS APPEAL, THE A SSESSEE HAS CHALLENGED THE IMPUGNED O RDER OF THE LD. CIT - I, PUNE DATED 30 - 10 - 2012 PASSED U/S. 12AA(1)(B)(II) OF THE INCOME - TAX ACT, 1961 REJECTING THE APPLICATION OF THE ASSESSEE FOR GRANT OF THE REGISTRATION U/S. 12A A OF THE ACT. THE ASSESSEE HAS TAKEN T HE FOLLOWING GROUNDS IN THE APPEAL: 1. THE LEARNED CIT ERRED IN REJECTING THE APPLICATION OF THE ASSESSEE COMPANY U/S. 12A FOR REGISTRATION U/S. 12AA(1) OF THE ACT. 2. THE LEARNED CIT ERRED IN HOLDING THAT THE REGISTRATION U/S. 12AA CANNOT BE GRANTED TO THE AS SESSEE COMPANY SINCE THE ASSESSEE COULD NOT SATISFY THE GENUINENESS OF THE ACTIVITIES CARRIED OUT BY IT. 3. THE LEARNED CIT FAILED TO APPRECIATE THAT THE ASSESSEE WAS A CHARITABLE INSTITUTION AND AS ITS OBJECTS WERE CHARITABLE IN NATURE AND THEREFORE, THE RE GISTRATION U/S. 12AA(1) SHOULD HAVE BEEN GRANTED. 2 ITA NO. 2539/PN/2012, MALPANI INSTITUTE OF TECHNOLOGY, AHMEDNAGAR 4. THE LEARNED CIT WAS NOT JUSTIFIED IN HOLDING THAT IF THE INSTITUTION HAS NOT COMMENCED ITS CHARITABLE ACTIVITIES, THE REGISTRATION CANNOT BE GRANTED TO IT. 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE COMPANY IS INCORPORATED U/S. 25 OF THE COMPANIES ACT, 1956. THE ASSESSEE FILED THE APPLICATION TO THE LD. CIT - I, PUNE FOR GRANT OF REGISTRATION U/S. 12A OF THE INCOME - TAX ACT. AS NOTED IN THE IMPUGNED ORDER THE LD. CIT ASKED FOR C ERTAIN INFORMATION FROM THE ASSESSEE. THE LD. CIT HAS NOTED THAT THE ASSESSEE SUBMITTED A SIGNED COPY OF THE MEMORANDUM OF ASSOCIATION, COPY OF THE BALANCE - SHEET AS ON 31 - 03 - 2012 AND COPY OF A LETTER SUBMITTED TO THE ASSESSING OFFICER. IT APPEARS THAT TH E ASSESSEE DID NOT REMAIN PRESENT BEFORE THE LD. CIT AS HE HAS OBSERVED THAT THE ASSESSEE DID NOT AVAIL THE OPPORTUNITY OF BEING HEARD. THE LD. CIT HAS OBSERVED THAT THE ASSESSEE HAS NOT SUBMITTED ANY DETAILS OR EVIDENCES REGARDING THE ACTIVITIES CARRIED OUT BY IT SINCE INCEPTION. AS PER THE MEMORANDUM OF ASSOCIATION, THE MAIN OBJECTS OF THE ASSESSEE COMPANY INCLUDE THE ESTABLISHMENT, SETTING UP AND RUNNING OF SCIENCE AND TECHNOLOGY INSTITUTES AND TO UNDERTAKE ALLIED ACTIVITIES. AS NOTED BY THE LD. CIT N OTHING IS THERE TO INDICATE THAT ANY STEP HAS BEEN TAKEN SINCE INCEPTION TOWARDS THE ABOVE OBJECTS. IN SUM AND SUBSTANCE, IN THE OPINION OF THE LD. CIT AS THERE WAS NO PROOF IN RESPECT OF STARTING OF THE ACTIVITIES BY THE ASSESSEE AND HENCE, REGISTRATION CAN NOT BE GRANTED. THE OPERATIVE PART OF THE REASONS GIVEN BY THE LD. CIT IS AS UNDER: 3.1 IN ORDER THAT REGISTRATION U/S. 12A CAN BE GRANTED TO A TRUSTEE OR INSTITUTION, ONE OF THE PRE - REQUISITES IS THAT THE COMMISSIONER OF INCOME - TAX SHOULD BE SATISFI ED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE CONCERNED TRUST OR INSTITUTION. IN THE PRESENT CASE, IN THE ABSENCE OF ANY DETAILS, NO SUCH SATISFACTION CAN BE FORMED. THUS AN ESSENTIAL PRE - REQUISITE FOR GRANT OF REGISTRATION U/S. 12A IS NOT SATISFIED IN THIS CASE. IT IS ALSO SEEN FROM THE STATEMENT OF ACCOUNTS FOR THE YEAR - ENDED 31.03.2012 THAT IN A SHORT SPAN OF EIGHT MONTHS SINCE ITS INCEPTION, THE APPLICANT COLLECTED CORPUS DONATIONS OF 3 ITA NO. 2539/PN/2012, MALPANI INSTITUTE OF TECHNOLOGY, AHMEDNAGAR RS.1,05,11,605/ - WHICH WERE MOSTLY KEPT IN BANK DEPOSITS WITH MOR E THAN 12 MONTHS' MATURITY. IT IS NOT KNOWN AS TO WHY SUCH HUGE DONATIONS WERE COLLECTED WHEN EVEN THE PRIMARY STEPS IN THE DIRECTION OF THE SETTING UP AN EDUCATIONAL INSTITUTION WERE YET TO BE TAKEN. THE DURATION OF THE BANK DEPOSITS WOULD ALSO INDICATE A BSENCE OF ANY INTENTION TO CARRY OUT ANY ACTIVITY IN PURSUANCE OF THE OBJECTS IN THE SHORT RUN. IN THE CIRCUMSTANCES, I.E., AND PRIMARILY AS NO DEFINITE FINDING CAN BE GIVEN AS OF NOW AS REGARDS THE GENUINENESS OF THE APPLICANT'S ACTIVITIES, THE APPLICANT' S REQUEST FOR GRANT OF REGISTRATION U/S. 12AA CANNOT BE ACCEDED TO. REGISTRATION U/S. 12A IF GIVEN ON THE BASIS OF THE PRESENT APPLICATION WOULD ALSO NOT BE JUSTIFIED AS THE SAME WOULD HAVE BEARING ON THE COMPUTATION OF ITS INCOME FOR THE A.Y. 2012 - 13 WHER EAS THE APPLICANT DID NOT CARRY OUT ANY ACTIVITY WHATSOEVER DURING THE RELEVANT PREVIOUS YEAR. 4. FOR THE REASONS STATED HEREIN ABOVE, THE SUBJECT APPLICATION IN FORM NO. 10A SEEKING REGISTRATION U/S. 12A OF THE INCOME - TAX ACT, 1961 IS REJECTED. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE LD. COUNSEL SUBMITS THAT THE ONLY REASON FOR REJECTION OF THE APPLICATION OF THE ASSESSEE IS THAT THE ASSESSEE HAS NOT STARTED ITS ACTI VITIES. HE SUBMITS THAT EVEN IF THE ASSESSEE HAS NOT STARTED ITS ACTIVITIES THE LD. CIT HAS TO EXAMINE THE OBJECT OF THE ASSESSEE AND SHOULD GRANT THE REGISTRATION . H E REFERRED U/S. 12AA OF THE INCOME - TAX ACT. HE ALSO RELIED ON THE DECISION OF THE ITAT, A BENCH, PUNE IN THE CASE OF ADVIK FOUNDATION VS. CIT - V, PUNE ITA NOS. 1617 & 1618/PN/2011 ORDER DATED 24 - 06 - 2013 . IN T HE CONCLUDING PART OF HIS ARGUMENT , HE REFERRED TO THE COPY OF THE MEMORANDUM OF ASSOCIATION PLACED IN THE COMPILATION AND SUBMITS THAT THE LD. CIT HAS NOT DISPUTED THE GENUINENESS OF OBJECT S OF THE ASSESSEE BUT HAS GONE ONLY ON THE PREMISES FOR REJECTING THE APPLICATION THAT THE ASSESSEE HAS NOT STARTED ITS ACTIVITY. WE HAVE ALSO HEARD THE LD. DR. 4 ITA NO. 2539/PN/2012, MALPANI INSTITUTE OF TECHNOLOGY, AHMEDNAGAR 4. IN THE CASE OF ADVIK FOUNDATION (SU PRA) , THE ONE OF THE REASON S W AS THAT THE SAID TRUST HAD NOT C OMMENCED ITS ACTIVITY. THE TRIBUNAL ACCEPTED THE ARGUMENT OF THE CONTENTION OF THE ASSESSEE THAT AT THE TIME OF GRANT OF REGISTRATION U/S. 12AA THERE IS NO NECESSITY TO EXAMINE WHETHER THE ASSE SSEE HAS COMMENCED ITS ACTIVITY OR NOT. THE OPERATIVE PART OF THE TRIBUNAL IS AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDER OF THE CIT AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE TRUST WAS CREATED ON 24 - 02 - 2009 AND GOT THE REGISTRATION FROM THE CHARITY COMMISSIONER ON 02 - 02 - 2010. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSESSEE TR UST FILED FORM NO.10A ON 30 - 12 - 2010 AND AFTER POINTING OUT THE DEFECTS THEREIN THE ASSESSEE FILED THE COMPLETE DETAILS VIDE LETTER DATED 07 - 03 - 2011. WE FIND THE LD. CIT DENIED GRANT OF REGISTRATION U/S.12AA(1)(B)(II) OF THE I.T. ACT 1961 ON THE GROUND THA T ALTHOUGH SEVERAL CHARITABLE ACTIVITIES WERE INCLUDED IN THE OBJECTS OF THE TRUST THE ASSESSEE TRUST HAS NOT CARRIED ON ANY ACTIVITY TILL THE DATE OF APPLICATION AND EVEN TILL THE DATE OF HEARING. FOR THIS PROPOSAL, THE LD. CIT RELIED ON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY (SUPRA). IT IS THE CASE OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. ACCORDING TO THE LD. COUNSEL FOR THE ASSESS EE THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. FOUNDATION OF OPHTHALMIC & OPTOMETRY AND THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST AND THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF DIT (EXEMPTIONS) VS. MEENAKSHI AMMA ENDOWMENT TRUST ARE SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. 6.1 THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. FOUNDATION OF OPHTHALMIC & OPTOMETRY (SUPRA) AFTER CONSIDERING THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY AND FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF MEENAKSHI AMMA ENDOWMENT TRUST HAS HELD THAT THE CIT/DIRECTOR IS NOT REQUIRED TO EXAMINE THE QUESTION WHETHER THE TRUST HAS ACTUALLY COMMENCED AND HAS, INFACT, CARRIED 5 ITA NO. 2539/PN/2012, MALPANI INSTITUTE OF TECHNOLOGY, AHMEDNAGAR ON CHARITABLE ACTIVITIES. THE APPEAL FILED BY THE REVENUE WAS ACCORDINGLY DISMISSED. 6.2 SIMILARLY, THE HONBLE GUJARAT HIGH COURT IN THE CASE OF KUTCHI DASA OSWAL MOT O PARIWAR AMBAMA TRUST (SUPRA) HAS HELD AS UNDER : 4. UPON PERUSAL OF THE PROVISIONS OF SUB - SECTION (1) OF SECTION 12AA OF THE ACT, IT EMERGES THAT UPON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION UNDER SECTION 12A(1) (A) OF THE A CT, THE COMMISSIONER WOULD CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DE EM NECESSARY IN THIS BEHALF. AFTER SATISFYING HIMSELF ABOUT THE OBJECTIVES OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, THE COMMISSIONER WOULD PASS AN ORDER IN WRITING REGISTERING A TRUST OR INSTITUTION, AND IF HE IS NOT SATISFIED, WO ULD PASS AN ORDER IN WRITING REFUSING THE REGISTRATION OF THE TRUST OR INSTITUTION. 5. IT CAN THUS BE SEEN THAT UNDER SECTION 12AA OF THE ACT, THE COMMISSIONER HAS TO SATISFY HIMSELF ABOUT THE OBJECTIVES OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES. FOR SUCH PURPOSE, HE HAS THE POWER TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST AS HE THINK ARE NECESSARY. HOWEVER, THIS DOES NOT MEAN THAT IF THE ACTIVITIES OF THE TRUST HAVE NOT COMMENCED, THE COMMISSIONER HAS AUTHORITY TO REJECT ITS APPLICA TION FOR REGISTRATION ON THE GROUND THAT THE TRUST FAILED TO CONVINCE HIM ABOUT THE GENUINENESS OF THE ACTIVITIES. THAT IS WHAT UNFORTUNATELY THE COMMISSIONER DID IN THE PRESENT CASE. IN THAT VIEW OF THE MATTER, WE SEE NO ERROR IN THE TRIBUNALS IMPUGNED O RDER REVERSING THE ORDER OF THE COMMISSIONER. IT IS OF COURSE TRUE THAT EVEN IF THE ACTIVITIES OF THE TRUST HAVE NOT COMMENCED, IF THE COMMISSIONER HAS SUFFICIENT MATERIAL IN HIS COMMAND, HE MAY STILL COME TO THE CONCLUSION THAT HE IS NOT SATISFIED ABOUT T HE OBJECTIVES OF THE TRUST OR THE GENUINENESS OF ITS ACTIVITIES. WE UNDERSTAND THE DECISION OF THE TRIBUNAL ACCORDINGLY. 6 ITA NO. 2539/PN/2012, MALPANI INSTITUTE OF TECHNOLOGY, AHMEDNAGAR 6. IN THE PRESENT CASE, HOWEVER, MERELY ON THE GROUND THAT THE ACTIVITIES OF THE TRUST HAD NOT COMMENCED, THE COMMISSIONER WAS PERSUAD ED TO REJECT ITS APPLICATION FOR REGISTRATION, WHICH IN OUR OPINION, WAS NOT APPROPRIATE AND THEREFORE, RIGHTLY INTERFERED BY THE TRIBUNAL. 7. NO QUESTION OF LAW ARISES. TAX APPEAL IS, THEREFORE, DISMISSED. 7. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS W E ARE OF THE CONSIDERED OPINION THAT MERELY BECAUSE THE ASSESSEE TRUST HAS NOT CARRIED ON ANY ACTIVITY TILL THE TIME OF APPLICATION THE LD. CIT IN THE INSTANT CASE IS NOT JUSTIFIED IN DENYING REGISTRATION U/S.12AA OF THE ACT TO THE ASSESSEE TRUST SINCE NON E OF THE OBJECTS HAVE BEEN FOUND TO BE NON - CHARITABLE BY THE LD. CIT. IN THIS VIEW OF THE MATTER, WE SET - ASIDE THE ORDER OF THE LD. CIT AND DIRECT HIM TO GRANT REGISTRATION U/S.12AA OF THE I.T. ACT. 5. IN THE PRESENT CASE, THE ONLY REASON GIVEN BY THE L D. CIT - I, PUNE IS THAT THERE IS NO EVIDENCE TO ESTABLISH THAT THE ASSESSEE HAS STARTED ITS ACTIVITY AS PER THE OBJECTS MENTION ED IN THE MEMORANDUM OF ASSOCIATION. THE LD. CIT HAS NOT EXPRESSED ANY RESERVATION ON THE OBJECT S OF THE ASSESSEE THAT THOSE ARE NOT CHARITABLE IN NATURE . WE, THEREFORE, FOLLOWING THE DECISION OF THIS TRIBUNAL IN THE CASE OF ADVIK FOUNDATION (SUPRA) ALLOW THE APPEALS FILED BY THE ASSESSEE AND DIRECT THE CIT - I, PUNE TO GRANT THE REGISTRATION U/S. 12A OF THE ACT. 6. IN THE RESULT, T HE ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 12 - 05 - 2014 PRONOUNCED IN THE OPEN COURT ON - 05 - 2014 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 12 TH MAY, 20 1 4 7 ITA NO. 2539/PN/2012, MALPANI INSTITUTE OF TECHNOLOGY, AHMEDNAGAR COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT - I, PUNE 4 THE CIT, PUNE 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRI BUNAL PUNE