KVT Educational Trust, Madurai V. CIT - I, Madurai

ITA 2543/CHNY/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4918 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 31-01-2018
• Assessment Year: misc
• Appeal Filed On: 31-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D PRABHU MUKUNTH ARUNKUMAR JR
• Assessee Lawyers: T BANUSEKAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! ' . #$ , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NOS.2543 & 2544/MDS/2016 M/S. KVT EDUCATIONAL TRUST, WARD NO.42, DOOR NO.33, KAJA STREET, KRISHNA BOUNDARY, M.K. PURAM, MADURAI 625 011. VS THE COMMISSIONER OF INCOME TAX - I, MADURAI PAN: AABTK3731D ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI T. BANUSEKAR, CA /RESPONDENT BY : SHRI D. PRABHU MUKUNTH ARUNKUMAR, JR. STANDING COUNSEL /DATE OF HEARING : 31.01.2018 /DATE OF PRONOUNCEMENT : 05.02.2018 / O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER: THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LD. COMMISSIONER OF INCOME TAX-I, MAD URAI BOTH DATED 30.10.2014 U/S.12AA AND 80G(5) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS WITH RES PECT TO ITS APPEALS TOWARDS REJECTION OF REGISTRATION U/S.12AA OF THE ACT, HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT HAS ERRED IN NOT GRANTING REGISTRATION U/S.12AA OF THE ACT. 2 ITA NOS.2543 & 2544/MDS/2016 3. SIMILARLY THE ASSESSEE HAS RAISED SEVERAL GROUND S WITH RESPECT TO ITS APPEAL TOWARDS DENYING THE APPROVAL OF THE T RUST U/S.80G(5) OF THE ACT, HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT HAS ERRED IN NOT GRANTING THE CERTIFICATE OF APPROVAL U/S.80G(5) OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A TRUST REGISTERED WITH THE SUB-REGISTRAR NO.IV, MADURAI HA VING ITS OBJECTS TO ESTABLISH EDUCATIONAL INSTITUTIONS, SPREAD EDUCATIO N, TO PROMOTE HEALTH CAMPS AND TO PROMOTE LITERACY DRIVES AND SIMILAR AN CILLARY ACTIVITIES. THE ASSESSEE TRUST FILED ITS APPLICATION IN FORM 10 A ON 16.06.2014 FOR OBTAINING REGISTRATION U/S.12AA OF THE ACT. THE LD. CIT ON SCRUTINY OBSERVED THAT THE ASSESSEE TRUST HAD INDULGED IN CO LLECTING FEES IN ADVANCE AND HAD FURTHER AVAILED LOAN OF RS.1.2 CROR ES FOR WHICH NO DETAILS WAS AVAILABLE IN RECORDS AND ALSO HAD SPENT HUGE AMOUNT ON ADVERTISEMENTS. THEREFORE THE LD.CIT OPINED THAT TH E ASSESSEE TRUST WAS NOT ENGAGED IN CHARITY ACTIVITIES BUT WAS OPERA TING ON COMMERCIAL BASIS. THEREAFTER RELYING IN THE DECISION OF THE HO NBLE UTTARAKHAND HIGH COURT IN THE CASE NATIONAL INSTITUTE OF AERONA UTICAL ENGINEERING EDUCATIONAL SOCIETY REPORTED IN 315 ITR 428 REJECTE D THE APPLICATION FILED FOR GRANTING REGISTRATION U/S.12AA OF THE ACT . CONSEQUENTIALLY THE LD.CIT REFUSED TO GRANT CERTIFICATE OF APPROVAL U/S ., 80G(5) OF THE ACT. 3 ITA NOS.2543 & 2544/MDS/2016 5. AT THE OUTSET THE LD.AR SUBMITTED BEFORE US THAT THE LD.CIT WITHOUT LOOKING INTO THE OBJECTS MENTIONED IN THE T RUST DEED HAS SIMPLY REFUSED TO GRANT REGISTRATION U/S.12AA OF TH E ACT AND CERTIFICATE OF APPROVAL U/S., 80G(5) OF THE ACT. THE LD.AR FURT HER SUBMITTED THAT THE ASSESSEE TRUST WAS CARRYING ON CHARITABLE OBJEC TIVES DURING THE PAST FEW YEARS INCURRING DEFICIT BALANCE AND ONLY D URING TO THE CURRENT YEAR THERE WAS SOME SURPLUS FROM THE OPERATION OF T HE TRUST AND HENCE HAD APPLIED FOR GRANTING REGISTRATION U/S.12A A OF THE ACT. HE FURTHER RELIED IN THE DECISION OF THE HONBLE APEX COURT IN THE CASE QUEENS EDUCATIONAL SOCIETY VS. CIT REPORTED IN 372 ITR 699. THE LD.DR ON THE OTHER HAND STRONGLY ARGUED IN SUPPORT OF THE ORDER OF THE LD.CIT AND PLEADED FOR CONFIRMING THE SAME. 6. AT THE OUTSET WE FIND MERIT IN THE SUBMISSION OF THE LD.AR. AT THE TIME OF GRANTING REGISTRATION U/S.12AA OF THE ACT O NLY THE OBJECTS OF THE TRUST NEEDS TO BE PERUSED AT AND IF FOUND TO BE CHA RITABLE IN NATURE AS PER THE PROVISIONS OF SECTION 2(15) OF THE ACT, THE REVENUE IS BOUND TO GRANT REGISTRATION. FURTHER IF THE ASSESSEE SEEK CE RTIFICATE OF APPROVAL U/S. 80G(5) OF THE ACT, SUCH APPROVAL SHALL BE GRAN TED IF THERE IS NO VIOLATION OF THE PROVISIONS OF SECTION 80G(5) OF TH E ACT. IT APPEARS IN THE CASE OF THE ASSESSEE, THE LD.CIT WITHOUT LOOKIN G INTO THESE ASPECTS HAD SIMPLY REFUSED TO GRANT REGISTRATION U/ S.12AA AND ISSUE CERTIFICATE OF APPROVAL U/S., 80G(5) OF THE ACT CIT ING FLIMSY REASONS BY 4 ITA NOS.2543 & 2544/MDS/2016 STATING THAT THE ASSESSEE HAS BEEN COLLECTING FEES IN ADVANCE, INCURRED EXPENDITURE TOWARDS ADVERTISEMENT AND HAD NOT FURNI SHED DETAILS OF THE LOAN AVAILED. THEREFORE IN THE INTEREST OF JUST ICE, WE HEREBY REMIT BACK BOTH THE APPEALS OF THE ASSESSEE TO THE FILE O F LD.CIT WITH A DIRECTION TO EXAMINE THE OBJECTS OF THE ASSESSEE TR UST AND IF FOUND TO BE CHARITABLE AS PER THE PROVISIONS OF SECTION 2(15 ) OF THE ACT GRANT REGISTRATION U/S.12AA OF THE ACT AND ALSO TO EXAMIN E THE COMPLIANCE U/S.80G(5) OF THE ACT AND IF FOUND TO BE IN ORDER G RANT CERTIFICATE OF APPROVAL UNDER THE PROVISIONS OF SECTION 80G(5) OF THE ACT. WE ALSO MAKE IT CLEAR THAT WHILE DOING SO THE RATIO SET BY THE HONBLE APEX COURT IN THE DECISION OF THE CASE QUEENS EDUCATION AL SOCIETY VS. CIT REPORTED IN 372 ITR 699 SHALL BE STRICTLY FOLLOWED. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED ON 5 TH FEBRUARY, 2018 AT CHENNAI. SD/- SD/- ( ! ' . #$ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) !' /JUDICIAL MEMBER !' / ACCOUNTANT MEMBER # /CHENNAI, $! /DATED 5 TH FEBRUARY, 2018 RSR ! &' (' /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. + ( )/CIT(A) 4. + /CIT 5. ', - ./ /DR 6. - 01 /GF