Unnati Educational and Charitable Trust , Bangalore V. The Income Tax Officer (Exemptions) Ward-2 , Bangalore

ITA 2645/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1082 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 14-03-2019
• Assessment Year: 2017-2018
• Appeal Filed On: 24-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• 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 ITA NO.2 645 /BANG/201 8 ASSESSMENT Y EAR : 20 17 - 18 M/S. UNNATI EDUCATIONAL AND CHARITABLE TRUST, NO.113, SHOP 1, FIRST FLOOR, MAGADI MAIN ROAD, BENGALURU 560 023. PAN : AAATU 8220 A VS. THE INCOME-TAX OFFICER (EXEMPTIONS), WARD-2, BENGALURU, FOR COMMISSIONER OF INCOME TAX (EXEMPTIONS), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. H. N. KHINCHA , CA REVENUE BY : SHRI. PRADEEP KUMAR, CIT DATE OF HEARING : 1 4 . 0 3 .201 9 DATE OF PRONOUNCEMENT : 1 5 . 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 THE CIT(EXEMPTIONS), BENGALURU, DATED 20.08.2018 REJECTING, THE ASSESSEES APPLICATION FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEFLY STATED, THE FACTS OF THE CASES ARE AS UNDER: ITA NO. 2645/BANG/2018 PAGE 2 OF 7 2.1 THE ASSESSEE IS A TRUST, CONSTITUTED BY A TRUST DEED DATED 22.09.2017. THE ASSESSEE FILED APPLICATIONS FOR GRANT OF REGISTRATION UNDER SECTION 12AA AND GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT ON 02.02.2018. VIDE LETTER DATED 06.08.2018 (COPY PLACED AT PAGE 26 OF ASSESSEES PAPER BOOK). THE CIT(EXEMPTIONS), BANGALORE, CALLED FOR CERTAIN CLARIFICATIONS / DETAILS IN RESPECT OF BOTH ITS APPLICATIONS FOR REGISTRATION UNDER SECTION 12AA AND GRANT OF RECOGNITION UNDER SECTION 80(G) OF THE ACT. THE ASSESSEE TRUST FURNISHED THE DETAILS CALLED FOR VIDE LETTER DATED 16.08.2018 (COPY PLACED AT PAGES 27 AND 28 OF PAPER BOOK). THE CIT(E), AFTER CONSIDERING THE ASSESSEES REPLY DATED 16.08.2018, DISMISSED THE ASSESSEES APPLICATION FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT VIDE ORDER DATED 20.08.2016. 3. AGGRIEVED BY THE IMPUGNED ORDER OF THE CIT DATED 20.08.2018, THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE AFORESAID ORDER; WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) HAS ERRED IN PASSING THE IMPUGNED ORDER IN THE MANNER PASSED BY HIM. THE ORDER AS PASSED IS BAD IN LAW AND LIABLE TO BE QUASHED. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTIONS) HAS RELIED ON EXTRANEOUS FACTORS AND HAS NOT PROPERLY CONSIDERED THE EVIDENCE AVAILABLE ON RECORD, WHILE PASSING THE ORDER. THE IMPUGNED ORDER BEING ERRONEOUS IS LIABLE TO BE QUASHED. ITA NO. 2645/BANG/2018 PAGE 3 OF 7 3. THE APPELLANT HAS COMPLIED WITH ALL THE CONDITIONS ENABLING IT TO GET RECOGNITION U/S. 80G OF I.T. ACT, 1961 AND THE RECOGNITION IS TO BE ALLOWED TO THE APPELLANT. 4. THE APPELLANT HAS COMPLIED WITH THE CONDITION SPECIFIED IN SECTION 80G(5) OF I.T. ACT, 1961 AND THAT THE REJECTION OF APPLICATION FOR RECOGNITION BEING BAD IN LAW AND ON FACT IS TO BE CANCELLED AND THE APPELLANT IS TO BE GRANTED RECOGNITION U/S. 80G OF I.T. ACT, 1961. 5. IN VIEW OF THE ABOVE AND ON OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, IT IS REQUESTED THAT IMPUGNED ORDER BE QUASHED OR AT LEAST THE APPELLANT BE GRANTED RECOGNITION U/S. 80G OF I.T. ACT, 1961. 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) ON 02.02.2018. DETAILS AND CLARIFICATIONS THEREON WERE CALLED FOR JOINTLY BY THE CIT(E) VIDE LETTER 06.08.2018 AND THE ASSESSEE ALSO FILED ITS REPLY IN THIS REGARD VIDE LETTER DATED 16.08.2018. 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 20.08.2018, THE CIT(E) HOWEVER WENT ON TO GRANT THE ASSESSEE RECOGNITION UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 29.08.2018. IT WAS SUBMITTED THAT THE CIT HAS REJECTED 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. ACCORDING TO THE LEARNED AR, THERE ITA NO. 2645/BANG/2018 PAGE 4 OF 7 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 29.08.2018, 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 ITAT-JAIPUR BENCH IN THE CASE OF ANAND INCUBATION CENTRE VS. CIT(E), JAIPUR, REPORTED IN (2018) 168 ITD 202 (JAIPUR TRIB.) 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. 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 22.09.2017, ITA NO. 2645/BANG/2018 PAGE 5 OF 7 SIMULTANEOUSLY FILED APPLICATIONS FOR GRANT OF REGISTRATION UNDER SECTION 12AA AND GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT ON 02.02.2018. CLARIFICATIONS / DETAILS WERE CALLED FOR THEREON JOINTLY VIDE CIT(E)S LETTER DATED 06.08.2018 AND THE ASSESSEES REPLY FOR BOTH GRANT OF REGISTRATION UNDER SECTION 12AA AND RECOGNITION UNDER SECTION 80G OF THE ACT WAS FILED VIDE LETTER DATED 16.08.2018. 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 THE INTENDED ACTIVITIES / OBJECTS AND POSSIBLY PROVIDE FINANCIAL SUPPORT THROUGH DONATIONS / CONTRIBUTIONS. IN THE CASE ON HAND, THE CIT(E) HAS SUBSEQUENTLY GRANTED THE ASSESSEE-TRUST REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 29.08.2018; OSTENSIBLY, AFTER EXAMINATION OF THE ASSESSEES OBJECTS, ETC., WHICH THE CIT ITA NO. 2645/BANG/2018 PAGE 6 OF 7 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, WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER OF THE CIT(E) DATED 20.06.2018 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 SUBSEQUENT ORDER DATED 29.06.2018 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. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2019. SD/- SD/- (PAVAN KUMAR GADALE) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE. DATED: 15 TH MARCH, 2019. /NS/* ITA NO. 2645/BANG/2018 PAGE 7 OF 7 COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.