Kuncham Mohan Raj and Manjula Charitable Trust , Bangalore V. Commissioner of Income Tax (Exemptions) , Bangalore

ITA 2560/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1094 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Appeal Filed On: 11-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D S VIVEK
• Keywords: Charitable institution; Opportunity of being heard; Set aside
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER IT A NO. 2560 /BANG/201 8 ASSESSMENT YEAR : 20 1 8 - 1 9 M/S. KUNCHAM MOHAN RAJ AND MANJULA CHARITABLE TRUST, NO.697, SRI HARI NILAYAM 10 TH A MAIN ROAD, 33 RD CROSS, JAYANAGAR 4 TH BLOCK, BENGALURU 560 011. PAN : AA DTK 0233 G VS. THE COMMISSIONER OF INCOME TAX (EXEMPTION), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. D. S. VIVEK, CA REVENUE BY : SHRI. PRADEEP KUMAR , CIT DATE OF HEARING : 19 . 0 3 .201 9 DATE OF PRONOUNCEMENT : 22 . 03 .201 9 O R D E R PER JASON P. BOAZ, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(EXEMPTION), BANGALORE, DATED 25.07.2018 REJECTING THE ASSESSEES APPLICATION FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE FACTS RELEVANT FOR DISPOSAL OF THIS APPEAL ARE AS UNDER:- ITA NO.2560/BANG/2018 PAGE 2 OF 7 2.1 THE ASSESSEE TRUST, ESTABLISHED BY TRUST DEED DATED 21.12.2016, FILED APPLICATIONS FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT AND FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT SIMULTANEOUSLY ON 16.01.2018. LETTERS DATED 24.04.2018 AND 27.06.2018 WERE ISSUED BY THE CIT(E) TO THE ASSESSEE CALLING FOR DETAILS / CLARIFICATIONS THEREON. IN THIS REGARD, THE ASSESSEE SUBMITTED REPLIES. THE CIT(E), AFTER CONSIDERING THE DETAILS FILED, REJECTED THE ASSESSEES APPLICATION SEEKING GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT VIDE THE IMPUGNED ORDER DATED 25.07.2018 ON THE GROUNDS THAT THE ACTIVITIES OF THE TRUST ARE NOT CHARITABLE IN NATURE AND THAT IT HAD NOT CARRIED OUT ANY NOTICEABLE CHARITABLE ACTIVITIES. 2.2 HOWEVER, AS FAR AS THE ASSESSEES APPLICATION FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT, THE CIT(E) BY ORDER OF EVEN DATE, AS THE IMPUGNED ORDER, I.E., DATED 25.07.2018 HAS GRANTED THE ASSESSEE REGISTRATION; COPY OF WHICH HAS BEEN PLACED AT PAGES 51 AND 52 OF PAPER BOOK FILED BY THE ASSESSEE. 3.0 AGGRIEVED BY THE ORDER OF CIT(E), BENGALURU, DATED 25.07.2018 REJECTING THE ASSESSEES APPLICATION FOR RECOGNITION UNDER SECTION 80G, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL; WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS:- 1. HAVING REGARD TO FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS)(CIT-E) HAS ERRED IN REJECTING THE APPLICATION FOR GRANT OF APPROVAL UNDER SECTION 80G OF THE INCOME TAX ACT, 1961. ITA NO.2560/BANG/2018 PAGE 3 OF 7 2. CIT(E) HAS ERRED TO RELY ON THE KERALA HC DECISION IN THE CASE OF SELF EMPLOYERS INSTITUTION VS. CIT TO REJECT THE APPLICATION U/S 80G(5)(VI) AND HAS ALSO ERRED IN NOT PASSING A SPEAKING ORDER AS TO WHY THE REASONS STATED BY THE APPELLANT DIFFERENTIATING THE SAID DECISION WAS NOT CONSIDERED. 3. WITHOUT PREJUDICE TO THE ABOVE, IF CIT-E IS SATISFIED ABOUT REGISTRATION U/S 12AA, THEN THE REJECTION OF REGISTRATION U/S 80G IS NOT JUSTIFIED. 4. THE APPELLANT RESERVES THE RIGHT TO ADD ADDITIONAL GROUNDS TO, OR ELABORATE ON THE ABOVE GROUNDS DURING THE APPEAL HEARING AS LONG AS IT IS IN RELATION TO THE ABOVE SUBJECT MATTER UNDER DISPUTE. 4.1 BEFORE US, THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT ITS APPLICATIONS FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT AND FOR RECOGNITION UNDER SECTION 80G OF THE ACT WERE BOTH FILED BEFORE THE CIT(E) ON16.01.2018. DETAILS AND CLARIFICATIONS THEREON WERE CALLED FOR JOINTLY BY THE CIT(E) VIDE LETTERS DATED 24.04.2018 AND 27.06.2018 AND THE ASSESSEE ALSO FILED ITS REPLY IN THIS REGARD VIDE LETTERS DATED 21.06.2018 AND 13.07.2018. IT IS SUBMITTED THAT WHILE THE CIT(E) DISMISSED THE ASSESSEES APPLICATION FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT VIDE THE IMPUGNED ORDER DATED 25.07.2018, THE CIT(E) HOWEVER WENT ON TO GRANT THE ASSESSEE RECOGNITION UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 25.07.2018 I.E., ON THE SAME DATE THAT HE PASSED THE IMPUGNED ORDER. IT WAS SUBMITTED THAT THE CIT HAS REJECTED ITA NO.2560/BANG/2018 PAGE 4 OF 7 THE ASSESSSEES APPLICATION FOR REGISTRATION PRIMARILY ON THE GROUND THAT THE ASSESSEE TRUST HAS NOT CARRIED OUT ANY NOTICEABLE ACTIVITIES TILL THE FORMATION OF THE TRUST AND ITS ACTIVITIES ARE NOT CHARITABLE. ACCORDING TO THE LEARNED AR, THERE IS NO REQUIREMENT IN LAW THAT THE ASSESSEE MUST START DOING CHARITABLE ACTIVITIES ON A LARGE SCALE BEFORE APPLYING FOR GRANT OF REGISTRATION UNDER SECTION 80G OF THE ACT. IT WAS CONTENDED THAT SINCE THE CIT(E) HAS GRANTED THE ASSESSEE TRUST REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 25.07.2018, IT SHOWS THAT THE CIT(E) HAS ALREADY VERIFIED ITS OBJECTS AND ITS ESTABLISHMENT FOR CHARITABLE PURPOSES WHILE GRANTING REGISTRATION AND THEREFORE THE CIT(E) BE DIRECTED TO GRANT THE ASSESSEE RECOGNITION UNDER SECTION 80G OF THE ACT. IN SUPPORT OF THIS PROPOSITION, THE LEARNED AR, INTER ALIA, PLACED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF INDIC SCIENCE RESEARCH TRUST VS. CIT (EXEMPTION), BENGALURU, IN ITA NO.1077/BANG/2018 DATED 20.07.2018. 4.2 PER CONTRA, THE LEARNED DR FOR REVENUE, IN WRITTEN SUBMISSIONS FILED, SUPPORTED THE ORDER OF THE CIT(E) REJECTING THE ASSESSEES APPLICATION FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT. ITA NO.2560/BANG/2018 PAGE 5 OF 7 4.3.1 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED / RELIED UPON. THE UNDISPUTED FACTS, AS EMERGE FROM A PERUSAL OF THE RECORD BEFORE US, IS THAT THE ASSESSEE TRUST ESTABLISHED VIDE TRUST DEED DATED 21.12.2016, SIMULTANEOUSLY FILED APPLICATIONS FOR GRANT OF REGISTRATION UNDER SECTION 12AA AND GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT ON 16.01.2018. CLARIFICATIONS / DETAILS WERE CALLED FOR THEREON JOINTLY VIDE CIT(E)S LETTERS DATED 24.04.2018 AND 27.06.2018 AND THE ASSESSEES REPLY FOR BOTH GRANT OF REGISTRATION UNDER SECTION 12AA AND RECOGNITION UNDER SECTION 80G OF THE ACT WAS FILED VIDE LETTERS DATED 21.06.2018 AND 13.07.2018. FROM THE IMPUGNED ORDER, WE FIND THAT THE MAIN OBJECTION BY THE CIT(E) TO GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT WAS THAT THE ASSESSEE TRUST HAS NOT CARRIED OUT ANY NOTICEABLE ACTIVITY TILL FORMATION OF THE TRUST; AND THEREFORE, IT WAS NOT A FIT CASE FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT. IN OUR VIEW, WHAT IS SIGNIFICANT / NOTICEABLE ACTIVITY IS VERY SUBJECTIVE AND CANNOT BE THE BASIS FOR REJECTION OF THE ASSESSEES APPLICATION. IT IS FOR THE ASSESSEE TO DETERMINE WHICH OF ITS ACTIVITIES IN FURTHERANCE OF ITS OBJECTS ARE TO BE TAKEN UP INITIALLY. GRANT OF APPROVAL / RECOGNITION UNDER SECTION 80G OF THE ACT CAN ACT AS A CATALYST TO ENCOURAGE PROSPECTIVE DONORS TO LOOK AT ITA NO.2560/BANG/2018 PAGE 6 OF 7 THE INTENDED ACTIVITIES / OBJECTS AND POSSIBLY PROVIDE FINANCIAL SUPPORT THROUGH DONATIONS / CONTRIBUTIONS. STRANGELY, IN THE CASE ON HAND, ON THE VERY SAME DAY I.E., 25.07.2018 WHEN HE REJECTED THE ASSESSEES APPLICATION FOR RECOGNITION UNDER SECTION 80G OF THE ACT, THE CIT(E) HAS GRANTED THE ASSESSEE-TRUST REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 25.07.2018; OSTENSIBLY, AFTER EXAMINATION OF THE ASSESSEES OBJECTS, ETC., WHICH THE CIT HAS CATEGORIZED AS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. 4.3.2 IN THIS FACTUAL MATRIX OF THE CASE, AS DISCUSSED ABOVE AND FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF INDIC SCIENCE RESEARCH TRUST (SUPRA), WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER OF THE CIT(E) DATED 25.07.2018 PASSED UNDER SECTION 80G(5)(IV) OF THE ACT AND RESTORE THE MATTER TO THE FILE OF THE CIT(E) TO EXAMINE THE MATTER AFRESH IN THE LIGHT OF HIS ORDER DATED 25.07.2018 GRANTING THE ASSESSEE REGISTRATION UNDER SECTION 12AA OF THE ACT AND OUR OBSERVATIONS HEREINABOVE. NEEDLESS TO ADD, THE CIT(E) IS DIRECTED TO AFFORD THE ASSESSEE REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER AND TO FILE DETAILS / SUBMISSIONS REQUIRED THAT SHALL BE CONSIDERED BEFORE DECIDING THE ISSUE. ITA NO.2560/BANG/2018 PAGE 7 OF 7 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2019. SD/- SD/- ( PAVAN KUMAR GADALE ) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE. DATED: 22 ND MARCH, 2019. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.