Sanskruti Yuva Pratishthan Trust, Thane (West) V. Commissioner of Income Tax (Exemptions), Pune

ITA 264/PUN/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8065 (ITAT-PUNE)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 24-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESANG Y SHERPA
• Assessee Lawyers: ROHAN DEDHIA
• Keywords: Charitable institution; Principle of natural justice; Set aside
• Section: 12AA; 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY , JM . / I TA NO. 264 /PUN/20 20 SANSKRUTI YUVA PRATISHTHAN TRUST, C/O. PRATAP BABURAO SARNAIK, 202/203, SECOND FLOOR, SUNDERVAN PARK, SAMATA NAGAR - 400 6 06. PAN : AAITS5369J ....... / APPELLANT / V/S. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), PUNE. / RESPONDENT A SSESSEE BY : SHRI ROHAN DEDHIA REVENUE BY : SMT. KESANG Y. SHERPA / DATE OF HEARING : 25 .0 8 .2020 / DATE OF PRONOUNCEMENT : 25 .0 8 .2020 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(EXEMPTION), PUNE DATED 31.12.2019 PASSED U/S.12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AS PER THE FOLLOWING GROUNDS OF APPEAL ON RECORD. 2 ITA NO. 264 /PUN/20 20 SANSKRUTI YUVA PRATISHTHAN TRUST 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(E) HAS ERRED IN EXCEEDING THE JURISDICTION BESTOWED UPO N THE LD. CIT(E) IN AS MUCH AS THE LD. CIT(E) HAS SOUGHT DETAILS OF SOURCES OF I NCOME OF THE TRUST WHEREAS THE LD. CIT(E) IS TO MERELY LOOK INTO THE APPLICATION OF SUCH INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(E) HAS ERRED IN HOLDING THAT THE ACTIVITIES BUSINESS ORIENTED IN NATURE AND THEREBY REFUSING TO GRANT REGISTRAT ION U/S . 12AA . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(E) HAS FAILED TO APPRECIATE THAT THE TRUST IS PROVIDING PLATFORM TO THE INDIAN ARTISTS AND INDIGENOUS ARTISTS AND REVIVING INDIAN ART AND CULTURE AND IS CHARITABLE WITHIN THE MEANING OF 'CHARITABLE PURPOSES' AS DEFINED IN SEC. 2(15) OF THE INCOME TAX ACT, 1961. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, DELETE AND/OR VARY THE ABOVE GROUNDS OF APPEAL/RELIEF CLAIMED AT ANY TIME BEFORE THE DECISION OF THE APPEAL. 2. THOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL, T HE CRUX OF THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL BEFORE US IS REJECTION OF APPLICATION FOR GRANTING REGISTRATION U/S.12AA OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS MADE AN ONLINE APPLICATION IN FORM NO.10A FOR APPROVAL OF THE TRUST/INSTITUTION U/S.12AA OF THE ACT ON 29.06.2019 UNDER THE CATEGORY OF CHARITABLE TRUST/INSTITUTION. THE ASSESSEE IS REGISTERED UNDER BOMBAY PUBLIC TRUST ACT, 1950 WITH REGISTRATION NO.E - 4733/THANE DATED 10.07.2008. THE APPLICATION WAS CAREFULLY PERUSED AND CONSIDERED ALONG WITH ITS ANNEXURES. THEREAFTER, A LETTER WAS ISSUED THROUGH ITBA PORTAL TO THE APPLICANT ON 06.08.2019 REQUESTING TO UPLOAD CERTAIN OTHER INFORMATION/CLARIFICATION BY 23.08.2019 IN ORDER TO PROCESS THE APPLICATION. THE ASSESSEE SUBMITTED ITS COMPLIANCE ON ITBA PORTAL IN RESPONSE TO THE SAID NOTICE. THE ASSESSEE CONTENDED TO HAVE BEEN GRANTED REGISTRATION U/S.12AA OF THE ACT VIDE ORDER DATED 27.02.2019 UNDER THE CATEGORY OF RELIGIOUS TRUST AND NOW, IT CLAIMED TO HAVE CHANGED ITS OBJECTS AND HENCE, APPLIED FOR FRESH REGISTRATION UNDER THE CATEGORY OF CHARITABLE TRUST. 3 ITA NO. 264 /PUN/20 20 SANSKRUTI YUVA PRATISHTHAN TRUST 4. DURING THE FIRST APPELLATE PROCEEDINGS, THE LD. CIT(EXEMPTION) VIDE ORDER DATED 31.12.2019 HAD REJECT ED THE APPLICATION FOR REGISTRATION U/S.12AA OF THE ACT OF THE ASSESSEE TRUST/ INSTITUTION AS PER REASONS APPEARING IN HIS ORDER. 5. THE CONTENTIONS OF THE LD. AR OF THE ASSESSEE BEFORE US IS THAT AT THE TIME OF GRANTING REGISTRATION U/S.12AA OF THE ACT, THE JURISDICTION OF THE LD. CIT(EXEMPTION) DEMANDS TO EXAMINE THE CHARITABLE NATURE OF THE OBJECTS OF THE ASSESSEE TRUST/INSTITUTION AND ALSO TO EXAMINE THE GENUINENESS OF THE ACTIVITIES CONDUCTED BY THE ASSESSEE TRUST/INSTITUTION. IN THIS CASE, THE LD. C IT(EXEMPTION) HAD TAKEN ROLE OF A ASSESSING OFFICER WHILE REJECTING THE APPLICATION FOR REGISTRATION U/S.12AA OF THE ACT. 6. PER CONTRA, THE LD. DR PLACING RELIANCE ON THE ORDER OF THE LD. CIT(EXEMPTION) SUBMITTED THAT THE ASSESSEE TRUST HAS NOT PROVIDED ANY DETAILS OF THE ACTIVITIES CARRIED OUT, DETAILS OF INCOME AND EXPENSES AND OTHER RELEVANT DOCUMENTS WERE NOT FURNISHED AS CALLED FOR BY THE LD. CIT(EXEMPTION). THEREFORE, THE LD. CIT(EXEMPTION) WAS UNABLE TO EXAMINE THE GENUINENESS OF THE ACTIVITIES PER FORMED BY THE ASSESSEE TRUST/INSTITUTION AND ALSO WAS UNABLE TO EXAMINE THE CHARITABLE NATURE OF THE OBJECTS OF THE ASSESSEE TRUST/INSTITUTION. 7. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL CONTENTIONS. WHEN WE PERUSE THE ORDER OF THE LD. CIT(E XEMPTION) AT PARA 3.2, IT IS STATED THAT THE APPLICANT HAS NOT FURNISHED THE DONORS LIST FOR THE F.Y.S 2015 - 16 AND 2016 - 17 ALTHOUGH IT WAS SPECIFICALLY REQUESTED FOR VIDE POINT NO.9 OF THE NOTICE DATED 06.08.2019 AND SUBSEQUENT NOTICE DATED 25.11.2019 AN D 16.12.2019. 4 ITA NO. 264 /PUN/20 20 SANSKRUTI YUVA PRATISHTHAN TRUST THE APPLICANT HAS SUBMITTED A LEDGER ACCOUNT IN RESPECT OF DONATION OF RS.42.10 LACS DURING F.Y.2017 - 18 BUT HAS NOT GIVEN ANY ADDRESS OF THE DONORS. FROM THE NAMES OF DONORS, IT SEEMS THAT THEY WE RE REALITY SECTOR DONORS AND HENCE, THESE RECE IPTS ARE ALSO SEEMS TO BE IN THE NATURE OF SPONSORSHIP RECEIPTS. FURTHER, IN ABSENCE OF ANY LIST OF DONORS SUBMITTED FOR F.Y.2015 - 16 AND 2016 - 17, THE EXACT NATURE AND SOURCE OF SUCH DONATIONS WAS NOT SATISFACTOR ILY EXPLAINED AND THEY MAY ALSO BE IN THE NAT URE OF SPONSORSHIP INCOME ONLY. AT PARA 3.3 OF THE LD. CIT(EXEMPTION)S ORDER, IT IS OBSERVED THAT THE APPLICANT HAS CLAIMED HUGE EXPENDITURE ON ACCOUNT OF ACTIVITIES I.E. ORGANIZING OF ART FESTIVAL. THE EXPENDITURES WERE ON ACCOUNT OF ADVERTISEMENT EXPENSES, CATERING EXPENSES, MANDAP DECORATION AND LIGHTING EXPENSES, PERFORMANCE FEES, ARTIST FEES, INAUGURATION EXPENSES, GENERATOR RENT EXPENSES ETC. THERE FOUND TO BE HUGE FLUCTUATION IN THESE EXPENSES VIZ. THE EXPENDITURE ON GENERATOR RENT DURING F.Y.2018 - 19 WAS AT RS.25,000/ - AS AGAINST RS.11,74,244/ - DURING F.Y.2016 - 17 AND SIMILARLY, THE PERFORMANCE FEES DURING F.Y.2016 - 17 WAS AT RS.1.08 CRORES WHEREAS THE SAME WAS AT RS.45.80 LACS DURING F.Y.2017 - 18. FURTHER, THE APPLICANT HAS NOT FURNISHED ANY REASON FOR SUCH A FLUCTUATION. HOWEVER, THE OVERALL NATURE OF THE ENTIRE ACTIVITY CARRIED OUT BY THE APPLICANT WAS THUS, FOUND TO BE IN THE NATURE OF A BUSINESS OF EVENT MANAGEMENT. THE APPLICANT WAS GETTING HUGE INCOME FROM STALL RENT AND SPONSORSHIP AND MAKING EXPENDITURE ON ACCOUNT OF PERFORMANCE FEES, ARTIST FEES, GENERATOR AND MANDAP EXPENSES AND THE APPLICANT HAS NOT DEMONST RATED ANY CHARITABLE ACTIVITY AT ALL. THEREFORE, THE ACTIVITY IS FOUND TO BE IN THE NATURE OF A BUSINESS MODEL AND N OT CHARITABLE. 8. THE LD. CIT(EXEMPTION) IN HIS ENTIRE ORDER HAS NOT DEALT WITH THE EXAMINATION OF THE OBJECTS OF THE ASSESSEE TRUST/INSTITUTION AND HAS ALSO NOT 5 ITA NO. 264 /PUN/20 20 SANSKRUTI YUVA PRATISHTHAN TRUST GIVEN SPECIFIC FINDINGS ON THE GENUINENESS OF THE ACTIVITIES CARRIED ON BY THE TRUST VIS - - VIS FACTS AS WELL AS DOCUMENTS ON RECORDS. THIS IS MORE SO, BECAUSE THE ASSESSEE TRUST/INSTITUTION HAS NOT FURNISHED THE REQUISITE DETAILS AS CALLED FOR BY THE LD. CIT(EXEMPTION) AND THEREFORE, WE ARE OF CONSIDERED VIEW, IN THE INTEREST OF JUSTICE, THE LD. CIT(EXEMPTION) SHOUL D RE - ADJUDICATE THE MATTER ON EXAMINING FACTS VIZ. (I ) CHARITABLE NATURE OF THE OBJECTS OF THE ASSESSEE TRUST/INSTITUTION (II) GENUINENESS OF THE ACTIVITIES CARRIED ON BY THE ASSESSEE TRUST /INSTITUTION . THEREFORE, CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE LD. CIT(EXEMPTION) AND REMIT THE MATTER BACK TO HIS FILE FOR ADJUDICATING THE SAME AS PER DIRECTIONS MENTIONED AFORESAID FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. AT THE SAME TIME, THE ASSESSEE TRUST/INSTITUT ION IS DIRECTED TO FURNISH REQUISITE DETAILS AS CALLED FOR BY THE LD. CIT(EXEMPTION) FOR DETERMINING THE CASE ON MERITS. THE LD. CIT(EXEMPTION) SHOULD COME OUT WITH A SPEAKING ORDER. THE MATTER IS THEREFORE, RESTORED TO THE FILE OF THE LD. CIT(EXEMPTION). 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED ON 25 TH DAY OF AUGUST , 20 20 . SD/ - SD/ - R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 25 TH AUGUST , 2020. SB 6 ITA NO. 264 /PUN/20 20 SANSKRUTI YUVA PRATISHTHAN TRUST / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(EXEMPTIONS), PUNE. 4 . , , , / DR, ITAT, A BENCH, PUNE. 5 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 7 ITA NO. 264 /PUN/20 20 SANSKRUTI YUVA PRATISHTHAN TRUST DATE 1 DRAFT DICTATED ON 25 .0 8 .2020 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 25 .0 8 .2020 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER