Sheth Purshottam Mulji Chandarana & Others, Baradi Lohana Vidhyarthi Bhavan, RAJKOT-GUJARAT V. The Commr. of Income Tax, JAMNAGAR

ITA 261/RJT/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8569 (ITAT-RAJKOT)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-12-2014
• Assessment Year: misc
• Appeal Filed On: 11-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L MEENA
• Assessee Lawyers: DARSHAK M THAKKAR
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12AA; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBULAL, RAJKOT BENCH: RAJKOT , !' # $ , # % BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER &./ I.T.A. NO.261/RJT/2014 ( / ASSESSMENT YEAR : - ) SHETH PURSHOTTAM MULJI CHANDARANA AND OTHERS C/O.M.M. THAKKAR & CO. 1, GALAXY COMM.CENTRE JAWAHAR ROAD RAJKOT 360 001 / VS. THE COMMISSIONER OF INCOME TAX JAMNAGAR #) !' & ./ * & ./ PAN/GIR NO. : AAKTS 3937 N ( )+ / APPELLANT ) .. ( ,-)+ / RESPONDENT ) )+ . ! / APPELLANT BY : SHRI DARSHAK M. THAKKAR, CA ,-)+ / . ! / RESPONDENT BY : SHRI M.L. MEENA, CIT-DR 0 / ' / DATE OF HEARING 04/12/2014 12 / ' / DATE OF PRONOUNCEMENT 05/12/2014 !3 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX-JAMNAGAR (CIT IN SHORT) DATED 24/03/2014. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX, JAMNAGAR, HAS ERRED IN LAW AND ON FACTS IN REFUSING TO GRANT REGISTRATION U/S.12AA OF THE INCOME TAX ACT, 1961 READ WITH RULE 17A OF THE INCOME TAX RUYLES, 1962. ITA NO.261/RJT/2014 SHETH PURSHOTTAM MULJI CHANDARANA & ORS. VS. THE CIT-JAMNAGAR - 2 - 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX, JAMNAGAR, OUGHT TO HAVE GRANTED REGISTRATION U/S.12AA OF THE INCOME TAX ACT, 1961 LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT THERE IS NO REQUIREMENT IN THE INCOME TAX ACT, 1961 AND THE INCOME TAX RULES, 1962, TO HAVE STIPULATION OF DISSOLUTION CLAUSE IN THE DEED OF TRUST. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX, JAMNAGAR HAS NOT APPRECIATED THE ORDER PASSED BY HON.ITAT, RAJKOT FOR PROVIDING THE BENEFIT AS STIPULATED IN THE CASE OF SHREE VANCHHARA TIRTHADHIPATI CHINTANMANI PARSWAPRWABHU TRUST, BHAVNAGAR. 5. THE APPELLANT CRAVES LEAVE TO ADD AND/OR TO AMEND AND/OR TO DELETE THE GROUND OF APPEAL UPTO AND AT THE TIME OF HEARING OF APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE-TRUS T HAD MADE AN APPLICATION FOR SEEKING REGISTRATION U/S.12A(A) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) ON 28/03/2013. THE SAID APPLICATION WAS REJECTED BY THE LD.CIT VIDE HIS ORD ER DATED 24.03.2014. THE ASSESSEE PREFERRED AN APPEAL, AGAINST THE ORDER OF THE LD.CIT(A), BEFORE THE ITAT RAJKOT BENCH, RAJKOT AND THE TRIBU NAL IN ITA NO.447/RJT/2013 VIDE ORDER DATED 07/01/2014 RESTORE D THE APPLICATION TO THE FILE OF LD.CIT FOR DECISION AFRESH, AFTER AFFOR DING EFFECTIVE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE LD.CIT, ONCE A GAIN, REJECTED THE ASSESSEES APPLICATION. NOW, THE ASSESSEE IS IN AP PEAL BEFORE US. 3. DURING THE COURSE OF HEARING BEFORE US, THE LD .COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH (ITAT BENCH C AHMEDABAD) IN ITA NO.71/AHD/2013 RENDERED IN THE CASE OF SITARAM KUTI R CHARITABLE TRUST VS. CIT, DATED 17/05/2013. HE RELIED ON THE DECIS ION OF THE COORDINATE BENCH (ITAT E BENCH MUMBAI) IN ITA NO.1247/MUM/20 13 RENDERED ITA NO.261/RJT/2014 SHETH PURSHOTTAM MULJI CHANDARANA & ORS. VS. THE CIT-JAMNAGAR - 3 - IN THE CASE OF TARA EDUCATIONAL AND CHARITABLE TRUS T VS. DIRECTOR OF INCOME TAX (EXEMPTIONS), DATED 18 TH JULY-2014. 4. ON THE CONTRARY, LD.CIT-DR SUPPORTED THE ORDER OF THE LD.CIT AND PLACED RELIANCE ON THE DECISION OF THE COORDINATE B ENCH (ITAT RAJKOT) RENDERED IN THE CASE OF MOHANLAL KANJIBHAI PANSARA EDUCATION & CHARITABLE TRUST VS. CIT-JAMNAGAR REPORTED AT (2013 ) 36 TAXMANN.COM 338 (RAJKOT-TRIB.) 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDER OF T HE LD.CIT AS WELL AS THE DECISIONS OF THE COORDINATE BENCHES RELIED UPON BY THE PARTIES. THE UNDISPUTED FACT REMAINS THAT THE APPLICATION OF THE ASSESSEE WAS REJECTED ON THE BASIS THAT TRUST-DEED DOES NOT HAVE THE DISS OLUTION CLAUSE. UNDER THE IDENTICAL FACTS, THE COORDINATE BENCH OF ITAT A HMEDABAD IN THE CASE OF SITARAM KUTIR CHARITABLE TRUST VS. CIT (SUPRA), BY FOLLOWING THE JUDGEMENT OF HONBLE DELHI HIGH COURT RENDERED IN T HE CASE OF SHRI SAI SAMARPAN TRUST CO. VS. CIT (2009) 23 DTR 125 (DELHI ) HAS HELD THAT THE REASONING GIVEN BY THE LD.CIT FOR REJECTION OF REGI STRATION U/S.12AA OF THE ACT WAS NOT AS PER THE LAW. FURTHER, RELIANCE HAS BEEN PLACED BY THE LD.COUNSEL FOR THE ASSESSEE ON THE DECISION OF THE MUMBAI TRIBUNAL RENDERED IN THE CASE OF TARA EDUCATIONAL AND CHARIT ABLE TRUST VS. DIRECTOR OF INCOME TAX (EXEMPTIONS)[SUPRA], WHEREIN VIDE PARA-4 OF ITS ORDER, THE HONBLE COORDINATE BENCH HAS HELD AS UND ER:- 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE APPLICATION FILED BY THE ASSESSEE U/S.12A OF THE ACT HAS BEEN REJECTED BY THE LD.DIT (EXEMPTIONS) MAINLY ON THE GROUND ITA NO.261/RJT/2014 SHETH PURSHOTTAM MULJI CHANDARANA & ORS. VS. THE CIT-JAMNAGAR - 4 - THAT THE RELEVANT TRUST DEED DOES NOT CONTAIN THE S O-CALLED DISSOLUTION CLAUSE. AS PER THE PROVISIONS OF SEC TION 11 & 12 OF THE ACT, INCOME DERIVED FROM PROPERTY HELD FOR CHAR ITABLE OR RELIGIOUS PURPOSES AND INCOME OF TRUSTS OR INSTITUT IONS FROM CONTRIBUTIONS ARE EXEMPT FROM TAX PROVIDED SUCH TRU STS OR INSTITUTIONS ARE REGISTERED U/S.12A OF THE ACT. TH E PROCEDURE FOR REGISTRATION U/S.12A IS PRESCRIBED IN SECTION 12AA OF THE ACT WHICH PROVIDES THAT THE COMMISSIONER, ON THE RECEIPT OF A N APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE U/S .12A, SHALL CALL FOR SUCH INFORMATION FROM THE TRUST/INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GEN UINENESS OF ACTIVITIES OF THE TRUST/INSTITUTION AND MAY ALSO MA KE SUCH INQUIRIES AS DEEMED NECESSARY ON THIS BEHALF. IT FURTHER PRO VIDES THAT AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST/I NSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, THE COMMISSIONER SHA LL PASS AN ORDER IN WRITING REGISTERING THE TRUST/INSTITUTION U/S.12 A AND IF HE IS NOT SO SATISFIED, HE SHALL PASS AN ORDER IN WRITING REF USING TO REGISTER THE TRUST/INSTITUTION. THE SCOPE OF ENQUIRY CONTEM PLATED U/S.12AA OF THE ACT THUS IS LIMITED TO THE EXTENT OF COMMISS IONER GETTING HIMSELF SATISFIED ABOUT OBJECT OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES SO AS TO GRANT OR REFUSE THE REGISTR ATION U/S.12A OF THE ACT. A PERUSAL OF THE IMPUGNED ORDER OF THE LD.DIT (EXEMPTIONS), HOWEVER, SHOWS THAT HE HAS NOT RECORDED ANY ADVERSE COMMENT OR DISSATISFACTION ABOUT THE OBJECT OF THE TRUST OR GE NUINENESS OF THE TRUST ACTIVITIES. HE HAS REFUSED TO GRANT THE REGI STRATION U/S.12A OF THE ACT ON THE GROUND THAT ITS TRUST DEED DOES NOT CONTAIN DISSOLUTION CLAUSE. IN OUR OPINION, THE LD.DIT(E XEMPTIONS) THUS HAS CLEARLY GONE BEYOND THE SCOPE OF ENQUIRY CONTEM PLATED U/S.12A OF THE ACT AND HAS REFUSED TO GRANT THE REG ISTRATION U/S.12A OF THE ACT TO THE ASSESSEE TRUST ON A TOTALLY IRREL EVANT GROUND WITHOUT POINTING OUT AS TO HOW HE WAS NOT SATISFIED EITHER ABOUT THE OBJECT OF THE TRUST OR THE GENUINENESS OF ITS ACTIV ITIES. WE THEREFORE SET ASIDE THE IMPUGNED ORDER OF THE LD.DI T (EXEMPTIONS) AND DIRECT THAT THE REGISTRATION U/S.12A OF THE ACT AS APPLIED BY THE ASSESSEE TRUST BE GRANTED. 5.1. THEREFORE, WE DO NOT HAVE ANY CONTRARY VIEW TH AN TAKEN BY THE COORDINATE BENCH RENDERED IN THE CASE OF TARA EDUCA TIONAL AND ITA NO.261/RJT/2014 SHETH PURSHOTTAM MULJI CHANDARANA & ORS. VS. THE CIT-JAMNAGAR - 5 - CHARITABLE TRUST VS. DIRECTOR OF INCOME TAX (EXEMPT IONS)[SUPRA], WE HEREBY SET ASIDE THE ORDER OF THE LD.CIT AND DIRECT HIM TO GRANT REGISTRATION TO THE ASSESSEE-TRUST. THUS, ALL THE GROUNDS RAISED IN ASSESSEES APPEAL ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 5 TH DAY OF DECEMBER, 2014 AT RAJKOT. SD/- SD/- ( ) ( $ ) !' # # ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT; DATED 05 / 12 /2014 .. , .../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,-)+ / THE RESPONDENT. 3. &6& 7 / THE CIT-JAMNAGAR 4. 7 ( ) / THE CIT(A)-CONCERNED 5. 9$ : , , , /DR,ITAT, RAJKOT 6. : EF G 0 / GUARD FILE. / BY ORDER, - 9 , //TRUE COPY// !/ '# $% ( DY./ASSTT.REGISTRAR) # %&# ' , / ITAT, RAJKOT 1. DATE OF DICTATION .. 04.12.2014(DICTATION-PAD 5 -PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 4.12.14 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BAC K TO THE SR.P.S./P.S. 5.12.14 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 5.12.14 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK.. . 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER