Praise and Worhsip Trust, CHENNAI V. ITO, CHENNAI

ITA 265/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81145 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-09-2014
• Assessment Year: misc
• Appeal Filed On: 18-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N RENGARAJ I R S
• Assessee Lawyers: S SRIDHAR
• Keywords: Opportunity of being heard
• Section: 12AA; 12

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . . ! , ' # BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER ./ I.T.A. NO.265/MDS/2013 M/S. PRAISE AND WORSHIP TRUST NO.4/1, VENKATACHALAPATHY NAGAR, MELAKKAI MAIN ROAD, THUVARIMAN, MADURAI. [PAN:AABTP7454Q] ( $% /APPELLANT) VS THE INCOME TAX OFFICER, WARD II (4), MADURAI. ( &'$% /RESPONDENT) / APPELLANT BY : SHRI. S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI. N. RENGARAJ, I.R.S. CIT. /DATE OF HEARING : 02.09.2014. /DATE OF PRONOUNCEMENT : 05.09.2014. ( / O R D E R PER S.S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL EMANATES FRO M ORDER DATED 30.11.2010 PASSED BY THE COMMISSIONER OF INCOME TAX -I, MADURAI IN I.T.A.NO.265/MDS/2013. :- 2 -: C.NO.464/73/CIT-I/2010-11 DECLINING REGISTRATION UN DER SECTION 12AA OF THE INCOME TAX ACT 1961 [IN SHORT THE ACT]. 2. IT EMANATES THAT THE PRESENT APPEAL IS BARRED BY 75 0 DAYS DELAY IN FILING. IN CONDONATION PETITION DATED 19.08.201 3, THE ASSESSEES CHARTERED ACCOUNTANT IS STATED TO HAVE SUFFERED FRO M ILLNESS AND ALSO MISPLACED THE ORDER UNDER CHALLENGE. THE REVENUE HAS NOT CONTESTED VERY SERIOUSLY THE AVERMENTS IN THE CONDONATION AF FIDAVIT. SO, WE CONDONE THE DELAY OF 750 DAYS IN FILING THE APPEAL AND PROCEED ON MERITS. 3. THE ASSESSEE IS A TRUST CREATED ON 23.06.2000 BY WAY OF A TRUST DEED. IT OBJECTS ARE AN ADMIXTURE OF BOTH RE LIGIOUS AND CHARITABLE NATURE. THE ASSESSEE HAD FILED FOR REGISTRATION O N 26.08.2010. THE CIT HAD REJECTED THE SAME AS UNDER:- 2 A PERUSAL OF THE TRUST DEED REVEALS THAT THE TRU ST WAS CREATED ON 23.06.2000 BY MR. D.N. RAJAN ALONG WITH TWO OTHERS. ON PERUSAL OF THE TRUST DEED, IT IS SEEN TH AT THE ACTIVITIES CARRIED OUT BY THE TRUST ARE ADMIXTURE O F BOTH RELIGIOUS AND CHARITABLE. IT IS OBSERVED FROM THE C OPIES OF ACCOUNTS LAST THREE YEARS FILED ALONGWITH THE APPLI CATION THAT THE APPLICANT HAS BEEN SHOWING RECEIPTS FROM OFFERINGS ONLY. HOWEVER, THE APPLICANT TRUST DID NO T PRODUCE ANY DONATION RECEIPT, LIST OF THE DONORS, E TC. FOR VERIFICATION. THEREFORE, THE GENUINENESS OF ITS REC EIPTS IS NOT ESTABLISHED AND AS SUCH THEY ARE NOT GENUINE. THEREFORE, THE APPLICANT TRUST DID NOT FULFILL THE CONDITIONS FOR GRANT OF REGISTRATION U/S . 12AA OF THE ACT. IT IS ALSO SEEN FROM THE STATEMENT OF ACCOUNTS FILED T HAT THE TRUST WAS NOT CARRIED OUT ANY WORTHWHILE CHARITABLE I.T.A.NO.265/MDS/2013. :- 3 -: ACTIVITIES. THE EXPENDITURES WERE IN THE NATURE OF ADMINISTRATIVE ONLY. IN THIS CONNECTION, IT IS PERTINENT TO NOTE THAT THE PROVISIONS OF SECTION L1(L)(A) & 13(1)(B) OF THE LJ / ACT SPECIFICALLY RESTRICTS THE SCOPE OF AVAILING TH E BENEFITS AVAILABLE UNDER THE ACT WHEN THE OBJECTS O F THE TRUST ARE ADMIXTURE OF BOTH RELIGIOUS AND CHARITABL E. THE HON'BLE SUP R EME COURT, IN THE CASE OF CIT VS. UPPER GANGES SUGAR MILLS LTD., (1997) [ 227 ITR 578 ] (SC). HELD THAT ESTABLISHMENT OF PUBLIC PLACES OF WORSHIP AND PRAYER HALLS WILL BE TREATED AS A RELIGIOUS PURPOSE . THE PRESENCE OF EVEN ONE RELIGIOUS PURPOSE IN THE DEED, WHETHER INCOME APPLIED FOR SUCH OBJECT OR NOT, WILL DISENTITLE THE TRUST FOR SUCH APPROVAL . IT WAS POINTED OUT TO THE AUTHORIZED REPRESENTATIVE THAT UNDER CLAUSE (B) OF SECTION 11(L)OF THE ACT, ANYTRUST WHOSE OBJECTS ARE PARTLY RELIGIOUS AND PARTLY CHARITABLE AND ITS INCOME WILL BE EXEMPT ONLY IF APPLIED IN INDIA AND IS SET-UP PR IOR TO 01 . 04.1962. THE TRUST HAVING BEEN SET UP IN APRIL, 201 0 AND HAVING BOTH RELIGIOUS AND CHARITABLE OBJECTS, T HE BENEFIT OF REGISTRATION CANNOT BE ALLOWED AS HAS BE EN HELD BY THE HON'BLE J & K HIGH COURT IN THE CASE OF GULAMMOHIDIN TRUST VS. CIT(01)[248 ITR 587] (JK) RELYING ON THE DECISION OF THE HON'BLE APEX COURT I N THE CASE OF STATE OF , KERALA VS. M.P. SANTHIVERMA JAIN (1998) (231 ITR 787). SINCE THIS TRUST HAS TW I N OBJECTIVES WHICH ARE BOTH CHARITABLE AND RELIGIOUS IN NATURE, FOLLOWING THIS JUDICIAL PRONOUNCEMENT, THE BENEFIT OF REGISTRATION CANNOT BE GRANTED TO THIS TRUST. 2.3 IN THIS REGARD, THE CIRCULAR NO.762 DATED 18. 2.1998 ISSUED BY THE CBDT, NEW DELHI ON THE ISSUE OF G RANT OF REGISTRATION IS EXTRACTED AS FOLLOWS: 19.2 HENCE THE FINANCE (NO.2) ACT, 1996, NOW PROVIDES FOR A PROCEDURE TO BE FOLLOWED FOR GRANT OF REGISTRATION TO A 'TRUST' OR INSTITUTION. ACCORDING TO THIS PROCEDURE, THE CHIEF COMMISSIONER OR COMMISSIONER SHALL CALL FOR DOCUMENTS AND INFORMATION AND CONDUCT ENQUIRIES TO SATISFY ABOUT THE GENUINENESS OF THE 'TRUST ' OR INSTITUTION. AFTER HE IS SATISFIED ABOUT THE CHARITABLE OR RELIGIOUS NATURE OF THE OBJECTS AND GENUINENESS OF THE ACTIVITIES OF THE 'TRUST' OR INSTITUTION , HE WILL I.T.A.NO.265/MDS/2013. :- 4 -: PASS AN ORDER GRANTING REGISTRATION. IF HE IS NOT SATISFIED, HE WILL PASS AN ORDER REFUSING REGISTRATION. HOWEVER, AN OPPORTUNITY OF BEING HEARD SHALL HAVE TO BE PROVIDED TO THE APPLICANT BEFORE AN ORDER OF REFUSAL TO GRANT REGISTRATION PAS S ED BY CHIE F COMMISSIONER OR THE COMMISSIONER. THE REASONS FOR REFUSAL OF REGISTRATION SHALL ALSO HAVE TO BE MENTIONED IN THAT ORDER. THE ORDER GRANTING OR REFUSING REGISTRATION HAS TO BE PASSED WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION FOR REGISTRATION IS RECEIVED BY THE CHIEF COMMISSIONER OR THE COMMISSIONER AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT. 19 . 3 IT HAS ALSO BEEN PROVIDED THAT THE GRANT OF REGISTRATION SHALL BE ONE OF THE CONDITIONS FOR GRANT OF INCOME TAX EXEMPTION. 19 . 4 THESE AMENDMENTS SHALL TAKE EFFECT FROM THE 1 ST DAY OF APRIL, 1997. ' 3. SINCE THE TWO PARAMETERS I . E. GENUINENESS OF THE TRUST AND ITS CHARITABLE ACTIVITIES BEING CARRIED OUT IN TERMS OF THE TRUST DEED HAVE NOT BEEN ESTABLISHED WITH DOCUMENTARY EVIDENCE BEFORE THE UNDERSIGNED IN SPIT E OF THE OPPORTUNITIES ALLOWED, THE BENEFIT OF REGISTRAT ION CANNOT BE ALLOWED TO THE TRUST IN TERMS OF THE PROV ISIONS OF SECTION 12 AA (L)(B)(II) OF THE INCOME TAX ACT, 1961 . THEREFORE, THE ASSESSEE IS IN APPEAL. 4. WE HAVE HEARD BOTH PARTIES AND PERUSED THE CASE FIL E. THE CIT QUOTES TWO GROUNDS FOR REFUSING REGISTRATION I. E. ASSESSEES OBJECTS ARE BOTH CHARITABLE AS WELL AS RELIGIOUS AND ALSO T HAT NO CHARITABLE ACTIVITIES HAVE BEEN CARRIED OUT. THE HONBLE JURI SDICTIONAL HIGH COURT I.T.A.NO.265/MDS/2013. :- 5 -: IN CASE LAW OF DIT (EXEMPTIONS) VS. M/S. SEERVI S AMAJ TAMBARAM TRUST TAX CASE (APPEAL) NO.579 OF 2013 DECIDED ON 2 7.01.2014 HAS HELD THAT REGISTRATION CANNOT BE REFUSED IN A TRUST DEED HAVING ADMIXTURE OF RELIGIOUS AND CHARITABLE OBJECTS AND F OR MERE NON CARRYING OUT OF CHARITABLE ACTIVITIES. THE REVENUE DOES NO T REFER TO ANY CASE LAW HOLDING OTHERWISE. THEREFORE, WE HOLD THAT THE CIT HAS ERRED IN REJECTING REGISTRATION U/S. 12AA OF THE ACT. THE ASSESSEES GROUNDS SEEKING REGISTRATION ARE ACCEPTED. 5. THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 5TH OF SEPTEMBER, 2014, AT CHENNAI. SD/- SD/- ( . ) (A.MOHAN ALANKAMONY) / ACCOUNTANT MEMBER ( . . ! ) (S.S. GODARA) ' / JUDICIAL MEMBER /DATED:05.09.2014. K.V ! '#$ %$ /COPY TO: 1. & APPELLANT 2. / RESPONDENT 3. ' ( )/CIT(A) 4. ' /CIT 5. $( ) ''*+ /DR 6. ) ,- . /GF.