SHANTABEN MAGANLAL VASANT CHARITABLE TRUST, MUMBAI V. DIT (E), MUMBAI

ITA 2674/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49422 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 21-06-2011
• Assessment Year: misc
• Appeal Filed On: 07-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Charitable institution; Principle of natural justice
• Section: 80G; 12A

Judgement Text

1 ITA NO. 2674/MUM/2010 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI PRAMOD KUMAR, AM & SHRI VIJAY PAL RAO, JM ITA NO. 2674/MUM/2010 SHANTABEN MAGANLAL VASANT CHARITABLE TRUST 503 PURSHOTTAM 21 J PROAD, ANDHERI (W) MUMBAI VS THE INCOME TAX OFFICER (HQ)(E) MUMBAI (APPELLANT) (RESPONDENT) PAN NO.AAATA9699R A SSESSEE BY SHRI VIJAY MEHTA REVENUE BY SHRI S K SINGH PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16.2.2010 PASSED BY THE DIRECTOR OF INCOME TAX (EXEMPTION), M UMBAI UNDER SECTION 80G OF THE I T ACT. 2 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: I) THE LD DIT(E) MUMBAI HAS ERRED IN LAW AND IN FACT S IN PASSING THE IMPUGNED ORDER WHICH IS IN VALID AND BAD IN LAW II) THE LD DIT(E) HAS ERRED IN LAW AND IN FACTS IN PASSING THE IMPUGNED ORDER WITHOUT GIVING PROPER OPPORTUNITY OF HEARING AND WITH OUT FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. III) THE LD DIT(E) HAS ERRED IN LAW AND IN FACTS IN DECLINING TO GRANT REGISTERING U/ 80G OF THE ACT TO THE APPELLANT. 3 THE ASSESSEE TRUST HAS FILED AN APPLICATION DATED 13.1.2009 FOR GRANT OF REGISTRATION U/S 80G OF THE I T ACT. THE ASSESSEE HAS ALSO BEEN GRANTED REGISTRATION U/S 12A OF THE I T ACT VIDE ORDER DATED 9.12.2005. THE DIT (E) OBSERVED THAT THE TRUST HAS EXPENDED A SUM OF RS. 4500/- DURING THE FINANCI AL YEAR 2005-06 UNDER THE HEAD 2 ITA NO. 2674/MUM/2010 RELIGIOUS. THEREFORE, IN VIEW OF THE FACT THAT TH E EXPENDITURE ON RELIGIOUS ACTIVITIES HAS EXCEEDED THE PRESCRIBED MONETARY LIMIT OF 5% OF THE TOTAL INCOME, WHICH IS IN CONTRAVENTION TO THE PROVISIONS OF SEC. 80G(5B) OF THE I T ACT. ACCORDINGLY, THE GRANT OF REGISTRATION U/S 80G WAS REJECTED VIDE THE IMPU GNED ORDER. 4 BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITTE D THAT THE DIT(E), WHILE DECIDING THE APPLICATION OF THE ASSESSEE DID NOT CO NSIDER AND APPRECIATE THE FACT CORRECTLY. HE HAS REFERRED THE STATEMENT OF INCOME AND EXPENDITURE FOR THE YEAR ENDING 31.3.2006 AND SUBMITTED THAT THERE WAS A MIS TAKE/BONAFIDE ERROR OF MENTIONING THE EXPENDITURE OF RS. 4500/- AGAINST TH E ITEM RELIGIOUS WHEREAS THE SAID EXPENDITURE HAS BEEN INCURRED TO THE EXTENT OF RS. 3500/- ON MEDICAL EXPENSES AND THE BALANCE AMOUNT OF RS. 1000/- ON OTHER CHARI TABLE PURPOSES FOR CAREER GUIDANCE PROGRAMME OF BOMBAY FILM ROTARY TRUST. HE HAS THEN SUBMITTED THAT THE DIT(E) HAS MISUNDERSTOOD THE ACTUAL NATURE OF THE E XPENDITURE, WHICH WAS FOR THE CHARITABLE PURPOSES. HE HAS FILED THE DETAILS OF T HE EXPENDITURE IN SUPPORT OF HIS CONTENTION. 4.1 ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE ACCOUNT OF THE ASSESSEES TRUST WERE DULY AUDITED AND WHEN THE AUD ITOR HAS CERTIFICATED THESE EXPENDITURE UNDER THE HEAD RELIGIOUS THEN THE RE JECTION OF THE APPLICATION BY THE DIT(E) IS JUSTIFIED. HE HAS RELIED UPON THE ORDER O F THE DIT(E). 5 WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERUS ED THE RELEVANT MATERIAL ON RECORD. THE LD DIT(E) WHILE REJECTING THE APPLI CATION HAS NOT LOOKED INTO THE 3 ITA NO. 2674/MUM/2010 RELEVANT MATERIAL OR DETAILS OF THE EXPENDITURE BUT TOOK THE NOMENCLATURE OF EXPENDITURE AS MENTIONED IN THE STATEMENT OF INCOM E AND EXPENDITURE UNDER THE MAIN HEAD EXPENDITURE ON OBJECTS OF THE TRUST. UNDER THE HEAD OBJECTS OF THE TRUST VARIOUS SUB HEAD ARE GIVEN, WHICH ARE AS UND ER: EXPENDITURE ON OBJECTS OF THE TRUST: A) RELIGIOUS RS. 4500/- B) EDUCATIONAL C) MEDICAL RELIEF D) OTHER CHARITABLE OBJECTS. THE EXPENDITURE OF RS. 4500/- HAS BEEN SHOWN AT THE TOP OF THE EXPENDITURE ON OBJECTS OF THE TRUST AND THEREFORE, AT THE FIRST SI GHT, IT APPEARS TO BE FOR RELIGIOUS PURPOSES. SINCE THE DETAILS OF THE EXPENDITURE FI LED BY THE LD AR OF THE ASSESSEE CLEARLY SHOW THAT THESE EXPENSES ARE; (I) FOR MEDI CAL EXPENSES (DIALYSIS OF SUDAMA YADAV) THROUGH HITVARDHAK MANDAL, KANDIVALI RS.2500 /-, (II) CAREER GUIDANCE PROGRAMME OF BOMBAY FILM ROTARY TRUST RS. 1000/- AN D (III) MEDICAL EXPENSES OF SHARDHA RAVAL OF RS. 1000/. THUS, WHILE DECIDING TH E APPLICATION, THE APPROPRIATE AUTHORITY HAS TO CONSIDER THE ACTUAL PURPOSE AND NA TURE OF THE EXPENSES AND IS NOT SUPPOSED TO SIMPLY GUIDED BY THE NOMENCLATURE THAT MENTIONED IN THE INCOME AND EXPENDITURE ACCOUNT. THE DIT(E), BEFORE REJECTING THE APPLICATION SHOULD HAVE VERIFIED THE NATURE OF THE EXPENDITURE AND THE EXPL ANATION FURNISHED BY THE ASSESSEE. WHEN THE ASSESSEE, IN THE LETTER DATED 1 1.2.2010, POINTED OUT THE MISTAKE IN TYPING OF RS. 4500/- AGAINST RELIGIOUS EXPENDITU RE AND THE BREAKUP OF THE EXPENDITURE WAS EXPLAINED, THEN THE SAME WAS REQUI RED TO BE VERIFIED TO BRING OUT THE ACTUAL STATE OF AFFAIRS. 4 ITA NO. 2674/MUM/2010 5.1 FROM THE DETAILS OF BIFURCATED EXPENDITURE ALON G WITH THE FACTS OF THE CASE OF THE ASSESSEE, IT IS CLEAR THAT WHILE DECIDING THE APPLICATION OF THE ASSESSEE TRUST THE DIT(E) HAS NOT EXAMINED THE FACTS OF THE CASE PROPE RLY. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE DIT(E) AND REMAND THE MATTER TO TH E FILE OF THE DIT(E) TO TAKE INTO CONSIDERATION ALL THE FACTS AND CIRCUMSTANCES , PA RTICULARLY THE TRUE NATURE OF THE EXPENDITURE AND THEN DECIDE THE APPLICATION OF THE ASSESSEE AFRESH. WE HOLD AND DIRECT ACCORDINGLY. 6 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 6TH JULY 2011. SD/- SD/- ( PRAMOD KUMAR ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 6 TH JULY 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI