Kadam Education & Charitable Trust, RAJKOT-GUJARAT V. The Commr. of Income Tax-1, RAJKOT-GUJARAT

ITA 27/RJT/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1301 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-04-2016
• Assessment Year: misc
• Appeal Filed On: 19-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Charitable institution; Wrong claim
• Section: 12AA; 11

Judgement Text

ITA NO. 27 / RJT/201 5 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (CONDUCTED THROUGH E - COURT AT AHMEDABAD) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ITA NO. 2 7 /RJT/201 5 KADAM EDUCATION & CHARITABLE TRUST VS. COMMI SSIONER OF INCOME TAX - I, AT PO SINDHAVADAR, RAJKOT. TA L : WANKANER, RAJKOT [PAN: AA BTK 8743 R ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MEHUL RANPURA, C.A. RESPONDENT BY : SHRI PRASOON KABRA , D.R. DATE OF HEARING : 0 7 .04.2016 DATE OF PRONOUNCEMENT : 22 .04.2016 O R D E R PER S.S. GODARA, J.M. BY WAY OF THIS APPEAL THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 14.11.2014 PASSED BY THE C IT , RAJKOT - 1 REJECTING REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE S SOLITARY SUBSTANTIVE GRIEVANCE PLEADED IN THE APPEAL CHALLENGE THE CIT S ACTION IN REFUSING IT SECTION 12AA REGISTRATION. WE FIND THAT THE ASSESSEE S TRUST DEED ELABORATES FOLLOWING OBJECTS : - (A) T O E STABLISH INSTITUTES FOR PRE - PRIMARY, PRIMARY SCHOOLS, COLLEGES AS WELL AS HIGHER AND RELIGIOUS, PROFESSIONAL, TECHNICAL, AGRICULTURAL EDUCATION WHO TEACHES LIFE BUILDING / DEVELOPING WITH A VIEW TO GIVE ALL KIND / TYPE OF EDUCATION TO CITIZENS. AS WELL AS TO START STUDY CIRCLES, LABORATORIES, LIBRARIES, EDUCATION CIRCLES AND WITH A VIEW TO SPREAD EDUCATION AND KNOWLEDGE TO PRINT AND PUBLISH NEWSPAPERS, MAGAZINES, BOOKS, BOOKLETS AND TO START AND MAINTAIN SUCH INSTITUTIONS. (B) TO GIVE AWARENESS AND TRAININ G TO THE PEOPLE FOR KHAADI OR COTTAGE INDUSTRIAL ACTIVITIES AND TO WORK IN PROFITABLE AND CONSTRUCTIVE ACTIVITIES. (C) TO ESTABLISH DOMESTIC AND INTERNATIONAL EDUCATIONAL INSTITUTES AND TO DO THE USEFUL SOCIAL ACTIVITIES. ITA NO. 27 / RJT/201 5 PAGE 2 OF 4 (D) T O PROVIDE SCHOLARSHIPS, PRIZ ES, BOOKS AND ECONOMIC HELP TO THE STUDENT FOR STUDY AND / OR TO CONTINUE ITS STUDY, AS WELL ALL NECESSARY FACILITIES TO THE TEACHERS TO TEACH. (E) TO START AND MAINTAIN HOSTELS / BOARDING AND MASSES FOR STUDENTS TO TEACH AND EDUCATE THEM AND FOR THE PURP OSE OF SPREADING OF KNOWLEDGE TO PLAN LECTURES, SEMINARS, CONFERENCES, TRAINING CAMPS AND TOURS RELATED THERETO AND TO MAKE EXPENSES THEREON AND IN SUCH PROGRAM, CAN PUBLISH AND DISTRIBUTE LITERATURE. (F) TO PLAN, START AND MAINTAIN DISPENSARIES, HEALTH C ENTERS, HOSPITALS AND LABORATORIES, DIAGNOSTIC CENTERS TO LOOK AFTER AND FOR MAINTAINING HEALTH OF STUDENTS, SCHOLARS, EXPERTS, AND PERSONS ENGAGED IN RESEARCH, L ITERATORS, EDUCATIONISTS AND GENERAL PUBLIC. TO PURCHASE AND SELL / DISTRIBUTE TEXT BOOKS AND NOTE BOOKS TO STUDENTS, AS ALSO CAN DISTRIBUTE FREE OF CHARGE. (G) FOR MEDICAL FIELD - CAN GIVE MEDICAL HELP IN CASH AND KIND. AS ALSO CAN OFFER FOOD AND MEDICINE AT REDUCED RATES OR FREE OF COST TO NEEDY PEOPLE. (H) WILL DO COOPERATIVE ACTIV ITIES AND ACCEPT DONATIONS / GIFTS TO MAINTAIN TRUST. (I) THE TRUST CAN MAINTAIN SCHOOLS, COLLEGES, PUBLIC SCHOOLS AND UNIVERSITIES IN GUJARATI, URDU, FARSI, ARABIC, HINDI AND ENGLISH LANGUAGES. (J) THE TRUST CAN MAINTAIN SCHOOLS, COLLEGES FOR DEAF AND DUMB AND ALSO CAN OPEN SHELTERS FOR ELDERS / OLD AGED PEOPLE AND DO THE ACTIVITIES PERTAINING / RELATED THERE TO, AS WELL AS CONDUCT MARRIAGE BUREAUS AND SOCIAL ACTIVITIES, AS ALSO CAN COLLECT THE DONATIONS FROM DONORS AND HELP THE NEEDIER AT THE TIME OF NATURAL CALAMITIES LIKE EARTH QUAKES, FLOODS, CYCLONES AND OTHER LIKE WISES. (K) TO PLAN AND MAINTAIN CAMPS FOR CITIZENS OF INDIA TO MAKE FREE FROM ADDICTION OF WINE, GAMBLING, TOBACCO AND CAN PRINT / PUBLISH BOOKLETS FOR AWARENESS OF THE SAME, A ND CAN COLLECT THE FUND FOR THE SAME AND MAKE EXPENSES IN THESE REGARDS. (I) TO TRAIN PEOPLE TO BE FAITHFUL TO THE COUNTRY / NATION IN LIGHT OF QURAN - E - SHARIF AND HASID - SHARIF AND TO DO THE WORK FOR WELFARE AND TO GIVE FULL COOPERATION IN CONSTRUCTIV E / PROGRESSIVE AND REFORMATIVE PROGRAMS / ACTIVITIES. (M) OVER AND ABOVE THE WORK / FUNCTIONS UNDER TITLE OF OBJECT HEREIN, TO DO SUCH WORK AND ACTIVITIES WHEREIN WELFARE / PROGRESS OF THE PEOPLE AT LARGE IS INVOLVED AND IT SHOULD NOT BE AGAINST CONS TITUTION OF INDIA. (N) TO DO WORKS FOR VILLAGE DEVELOPMENTS AS WELL HUMAN WELFARE AND TO DO THE ACTIVITIES RELATED THERETO. ITA NO. 27 / RJT/201 5 PAGE 3 OF 4 3. THE ASSESSEE FILED FOR THE IMPUGNED SECTION 12AA REGISTRATION ON 06.06.2014. THE CIT SOUGHT TO KNOW WHETHER IT S OBJECTS ARE CHARITABLE UNDER SECTION 2(15) AND A BRIEF NOTE ON ITS ACTIVITIES CARRIED OUT. THE ASSESSEE HIGHLIGHTS IN CONSEQUENTIAL PROCEEDINGS THAT IT S OBJECTS INCLUDED EDUCATIONAL, MEDICAL RELIEF TO THE POOR AND THAT OF RUNNING OF A SCHOOL. RELEVANT DOCUMENTS INCL UDING WRITTEN ACKNOWLEDGMENTS AND FINANCIAL ACCOUNT STATEMENTS WERE ALSO CALLED FOR THEREAFTER. THE CIT APPEARS TO HAVE NOTICED THE ASSESSEE TO HAVE BEEN FILING RETURNS UNDER SECTION 11 OF THE ACT WITHOUT EVEN GETTING THE IMPUGNED REGISTRATION. THEREAFTE R HE CAME TO ASSESSEE S RETURN FOR ASSESSMENT YEAR 2012 - 13 SHOWING VOLUNTARY CONTRIBUTION OF RS.8,65,000/ - . HE OBSERVES IN ORDER UNDER CHALLENGE THAT THE ASSESSEE HAS CAPITALISED THIS INCOME AS BUILDING CONSTRUCTION FUNDS BY CONSIDERING IT AS CONTRIBUTION TO CORPUS FUND WITH SPECIFIC INSTRUCTION AND CLAIMED SECTION 11 EXEMPTION. THE CIT TAKES VERY STRONG NOTE OF ALL THESE ASSESSEE S ACTS TO CONCLUDE THAT THESE WRONG CLAIMS OF EXEMPTION CAUSING NON - PAYMENT OF LEGITIMATE TAX LIABILITY RENDER THE ACTIVITIES IN QUESTION AS NON - GENUINE. THE SAME RESULTED IN REJECTION OF ASSESSEE S SECTION 12AA REGISTRATION IN QUESTION. 4. WE HAVE HEARD BOTH THE PARTIES. LEARNED R EPRESENTATIVES STRONGLY REITERATE THEIR RESPECTIVE STANDS DURING THE COURSE OF HEARING. THERE I S NO DISPUTE ABOUT THE ASSESSEE S OBJECTS TO BE MAINLY IN THE NATURE OF EDUCATION, MEDICAL RELIEF, INCLUDING SOME OF THE CLAUSES FALLING IN GENERAL PUBLIC UTILITY CATEGORY. HON BLE MADRAS HIGH C OURT IN THE CASE OF DIT(E) VS. .SEERVI SAMAJ TAMBARAM TRUST ( 2014) 362 ITR 199 HOLDS THAT NON - COMMENCEMENT OF CHARITABLE ACTIVITIES BY A TRUST DOES NOT FORM A GROUND FOR REJECTING IT S REGISTRATION SOUGHT UNDER SECTION 12AA OF THE ACT. THIS IS NOT THE REVENUE S CASE IN THE PRESENT INSTANCE THAT THE ABOVE STATED OBJ ECTS IN ANY CASE DO NOT FALL IN THE VARIOUS CATEGORIES ENUMERATED UNDER SECTION 2(15) OF THE ACT. THE CIT HAS GONE THROUGH ASSESSEE S ACTIVITIES CLAIMING SECTION 11 EXEMPTIONS AND UTILISING ITS CONTRIBUTIONS DESPITE ITA NO. 27 / RJT/201 5 PAGE 4 OF 4 NOT HAVING OBTAINED THE IMPUGNED REGIST RATION. HE IS OF THE VIEW THAT THESE REASONS HAVE TO ULTIMATELY RESULT IN ASSESSEE S NON REGISTRATION. WE DO NOT AGREE WITH THIS VIEW AS THE H ON BLE MADRAS H IGH C OURT HAS ALREADY OBSERVED THAT THESE ACTIVITIES OF THE ASSESSEE TRUST HAVE TO BE ADJUDICATED UPON IN APPROPRIATE EXEMPTION PROCEEDINGS AND NOT AT THE STAGE OF REGISTRATION. WE REJECT REVENUE S ARGUMENTS STRONGLY SUPPORTING CIT S COURSE OF ACTION UNDER CHALLENGE. THE ASSESSEE S SOLE SUBSTANTIVE GROUND RAISED IN THE INSTANT APPEAL SUCCEEDS. IT I S MADE CLEAR THAT OUR THIS ORDER SHALL NOT COME IN THE WAY OF A SSESSING AUTHORIT Y IN DECIDING ASSESSEE S EXEMPTION CASE AS PER LAW IN THE CORRESPONDING PROCEEDINGS. 5. THIS ASSESSEE S APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN C OURT TODAY ON TH E 22 ND DAY OF APRIL, 2016. SD/ - SD/ - ANIL CHATURVEDI S.S. GODARA (ACCOUNTANT MEMBER) (JUDICIAL MEMBER AHMEDABAD, THE 2 2 ND DAY OF APRIL , 2016 PBN/ * COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT