Maha Avatar Trust, CHENNAI V. ITO, Coimbatore

ITA 262/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77265 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-04-2014
• Assessment Year: misc
• Appeal Filed On: 04-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAMOD NANGIA
• Assessee Lawyers: S SRIDHAR
• Section: 12A; 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , !' # , $ % BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 262/MDS/2014 M/S. MAHA AVATAR TRUST, INDSIL HOUSE, T.V.SWAMY ROAD (WEST) R.S.PURAM COIMBATORE-641 002. VS INCOME TAX OFFICER, COMPANY WARD-I, COIMBATORE. PAN:AADTM2232P ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR. PRAMOD NANGIA, CIT / DATE OF HEARING : 10 TH APRIL, 2014 /DATE OF PRONOUNCEMENT : 30 TH APRIL, 2014 & / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER OF THE COMMISSIONER OF INCOME TAX-I, COIMBATORE DATED 12.1 2.2013 REFUSING REGISTRATION UNDER SECTION 12AA OF THE ACT . 2. COUNSEL FOR THE ASSESSEE SUBMITS THAT COMMISSION ER OF INCOME TAX HAS NOT EXAMINED THE OBJECTS OF THE TRUS T WHETHER THEY ARE GENUINE OR NOT, WHETHER THE TRUST IS FORME D FOR CHARITY OR NOT AND THE COMMISSIONER OF INCOME TAX REFUSED ITA NO.262/MDS/2014 2 REGISTRATION ON THE GROUND THAT TRUST HAS EXPENDED TOWARDS ADVERTISEMENT AND HE WAS OF THE VIEW THAT TRUST IS DOING ORGANIZED BUSINESS ACTIVITY AND NOT CARRIED OUT AN Y OF THE STATED CHARITABLE OBJECTS. THE COMMISSIONER OF INC OME TAX WAS ALSO OF THE VIEW THAT DONORS HAVE GIVEN DONATIO NS DIRECTLY TO OTHER TRUSTS WITHOUT PASSING THROUGH APPLICANT T RUST. COMMISSIONER OF INCOME TAX WAS OF THE VIEW THAT IT IS PRE- MATURE TO REGISTER THE TRUST UNDER SECTION 12AA OF THE ACT. 3. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER OF THE COMMISSIONER OF INCOME TAX. 4. HEARD BOTH SIDES. PERUSED ORDER OF THE COMMISSIO NER OF INCOME TAX IN REFUSING REGISTRATION UNDER SECTIO N 12AA OF THE ACT . THE REASONS FOR WHICH REGISTRATION UNDER SECTION 12A WAS REFUSED APPEAR TO BE NOT GOOD REASONS. AT THE T IME OF REGISTRATION, ONE HAS TO LOOK INTO THE OBJECTS OF T HE TRUST WHICH THE COMMISSIONER OF INCOME TAX HAS COMPLETELY OMIT TED TO DO SO. THE REASONS GIVEN BY THE COMMISSIONER OF INC OME TAX ARE ONLY APPREHENSION THAT ASSESSEE IS NOT CARRYING OUT ANY ITA NO.262/MDS/2014 3 CHARITABLE ACTIVITIES AND HE WAS OF THE VIEW THAT I T IS PRE- MATURE TO REGISTER THE TRUST. 5. RECENTLY HONBLE MADRAS HIGH COURT IN THE CASE OF DIT VS. SEERVI SAMAJ TAMBARAM TRUST (362 ITR 199) HELD AS UNDER:- IN THE PRESENT CASE ALSO, THE REVENUE ONLY QUESTIO NS THE TRUST NOT HAVING COMMENCED ITS ACTIVITY FOR THE GRANT OF REGISTRATION. THE PROVISION UNDER SECTION 12AA O F THE INCOME-TAX ACT DOES NOT STIPULATE SUCH A CONDITION FOR GRANT OF REGISTRATION . ON THE OTHER HAND, SECTION 12AA(1) CONTEMPLATES SATISFACTION OF THE COMMISSIONER ABOUT THE OBJECTS OF THE T RU ST AND THE GENUINENESS OF THE ACTIVITIES AND MAKE SUCH ENQUIRY AS MAY BE NECESSARY FOR THE PURPOSE OF GRANT OF REGISTRATION. IN SO CONSIDERING THE APPLICATION, THE COMMISSIONER HAS TO GIVE AN OPPORT UNITY TO THE ASSESSEE AS PROVIDED FOR UNDER THE PROVISO TO SUB-SECTION (1) OF SECTION 12AA . UNDER SUB-SECTION(3) OF SECTION 12AA , THE COMMISSIONER IS GIVEN POWER TO CANCEL THE R EGISTRATION, IF HE IS SATISFIED THAT THE OBJECTS OF SUCH TRUST ARE NOT GENUINE OR ARE NOT BEING CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE TRUST . WHEN SUCH AN AUTHORITY IS VESTED WITH THE COMMISSIONER TO CANCEL THE R EGISTRATION IN THE EVENT OF THE TRUST NOT BEING CAR RIED ON IN ACCORDANCE WI TH THE OBJECTS OF THE TRUST, WE DO NOT FIND ANY GROUND TO SAY THAT MERELY O N THE DATE OF THE APPLICATION, THE ASSESSEE-TRUST HAD NOT COMMENCED I TS ACTIVITIES, HENCE, REGISTRATION COULD NOT BE GRANTE D. IT IS NOT DENIED BY THE ASSESSEE THAT ON THE DATE OF THE APPLICATION UNDER SECTION 12AA, IT WAS YET T O COMMENCE ITS OPERATION . BUT NEVERTHELESS THE GENUINENESS OF THE OBJECTS OF THE TRUST WERE NOT QUESTIONED BY THE COMMISSIONER . CONSIDERING THE FA CT THAT THE CONTINUANCE OF REGISTRATION IS FURTHER A SUBJECT MATTER OF SCRU TIN Y BY ITA NO.262/MDS/2014 4 THE COMMISSIONER AS CONTEMPLATED UNDER SECTION 12AA(3) OF THE INC OME-TAX ACT, WE DO NOT THINK THAT THE REVENUE WOULD BE JUSTIFIED IN REFU SI N G THE REGISTRATION AT THE THRESHOLD. THE TRIBUNAL HAD FOLLOWED THE DECISI ON OF THE GUJARAT HIGH COURT IN THE CASE OF CIT V. KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST REPORTED IN (2013) 29 TAXMAN.COM 228 (GUJ) ; (2014) 362 ITR 194 (GUJ). WE RESPECTFULLY AGREE WITH THE DECISION OF THE GUJARAT HIGH COURT. 6. AS COULD BE SEEN FROM THE ABOVE ORDER, HONBLE H IGH COURT HELD THAT COMMENCEMENT OF ACTIVITY IS NOT A P RE- CONDITION FOR GRANT OF REGISTRATION UNDER SECTION 1 2AA OF THE ACT, ONCE THE OBJECTS OF THE TRUST AND GENUINENESS OF THE ACTIVITIES OF THE TRUST ARE NOT QUESTIONED. IN ANY EVENT, COMMISSIONER OF INCOME TAX HAS NOT EXAMINED THE OBJ ECTS FOR WHICH TRUST HAS BEEN FORMED AND WHETHER OBJECTS ARE GENUINE AND ACTIVITIES OF THE TRUST ARE CHARITABLE OR NOT. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THIS MATTER HAS TO BE REEXAMINED BY THE COMMISSIONER OF INCOME TAX-I, COIMBATORE AFRESH. THEREFORE, WE REMAND THE MATTER BACK TO THE FILE OF THE COMMISSIONER OF INCOME TAX TO CONSI DER THE APPLICATION OF THE ASSESSEE AFRESH IN THE LIGHT OF OUR ABOVE OBSERVATIONS, AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. ITA NO.262/MDS/2014 5 7. APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICA L PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY, TH E 30 TH DAY OF APRIL, 2014 AT CHENNAI. SD/- SD/- ( A.MOHAN ALANKAMONY ) ( CHALLA NAGEN DRA PRASAD ) . ! ( '# $%& ' ) ACCOUNTANT MEMBER / '( JUDICIAL MEMBER/ % )'( '% /CHENNAI, *' /DATED, 30 TH APRIL, 2014 SOMU '+),-.- /COPY TO: 1. APPELLANT C/O. S.SRIDHAR, ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI-600 020. 2. /RESPONDENT 3. /01 /CIT(A) 4. / /CIT 5. -2 $))34 /DR 6. $ 567 /GF .