Shri Digamber Jain, Bhopal V. CIT Exemption, Bhopal

ITA 289/Ind/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0117 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 28-09-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule of consistency; Cancellation of registration; Set aside
• Section: 80G; 12A; 12AA

Judgement Text

आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING ITA No.287 & 289/Ind/2020 Assessment Year: Shri Digamber Jain Sidhashetrabawan Gajaji, Bawangajaji PAN No.AAGTS0248E : Appellant V/s CIT(E) Bhopal : Respondent Appellant by Shri Ashish Goyal & N.D. Patwa. ARs Respondent by Shri P.K. Mitra, CIT-DR Date of Hearing 23.11.2021 Date of Pronouncement 17.01.2022 O R D E R PER MANISH BORAD, A.M.: The above captioned appeals filed at the instance of the Assessee are directed against the order u/s 12AA of the Act of Ld. Commissioner of Income Tax(Exemption) (in short ‘Ld. CIT] Bhopal Digamber Jain ITA No.287 & 289/Ind/2020 2 dated 20.03.2020 and out of the order u/s 80G of the Income Tax Act 1961(In short the ‘Act’) dated 02.05.2017. The Assessee has raised following grounds of appeal in ITANo.287/Ind/2020: On the facts and the circumstances of the case:- 1.The order appealed against is bad-in-Iaw, void-ab-initio, barred by limitation, against the principles of natural justice and fair play, illegal and therefore liable to be quashed. 2.The Id CIT(E) erred in applying section 12A(1)(ab), in the present case; moreover when the section was inserted from 01.04.2018 by the Finance Act, 2017, whereas the objects were amended in F.Y. 2016-17. 3. The Id CIT(E) erred in cancelling the registration u/s. 12AA(3). 4.The Id CIT(E) erred in holding that the amendment in the objects was not in conformity with the conditions of registration; whereas the amendment in objects was only to make the existing objects more precise; and there were no new objects added while amending the same. The appellant carves leave to add, amend or modify any of the grounds of appeal The assessee has raised following grounds of appeal in ITANo.289/Ind/2020 On the facts and the circumstances of the case:- 1.The order appealed against is bad-in-Iaw, void-ab-initio, barred by limitation, against the principles of natural justice and fair play, illegal and therefore liable to be quashed. 2. Ld. CIT(E) erred in rejecting the registration u/s 80G(5) 3. Ld. CIT€ erred in not complying the direction of the Hon’ble ITAT in the set aside proceedings. The appellant carves leave to add, amend or modify any of the grounds of Digamber Jain ITA No.287 & 289/Ind/2020 3 appeal 2. From perusal of the grounds we note that the grievance of the assessee is twofold firstly challenging the order of Ld. Pr. CIT(E) firstly cancelling the registration u/s 12A of the Act and secondly for not granting approval u/s 80G(5) of the Act. 3. Brief facts of the case as culled out from the records are that the assessee is a charitable and religious trust granted registration u/s 12A of the Act vide registration No.41/90-91 dated 13.12.1990. As the 12A registration certificate was misplaced, the assessee applied for a copy of the certificate through letter dated 21.04.2006. Then the office of the ld CIT vide letter dated 25.04.2006, confirmed that the trust has been granted registration u/s 12A. The application for registration u/s 80G in form no 10G was filed on 15.12.2016, but the application was declined stating that the precondition for granting exemption u/s 80G is registration certificate u/s 12AA and it was not furnished. The rejection of the application was appealed before This Tribunal and vide order ITA no. 495/Ind/2017 dated 25.09.2018, Tribunal restored the application of the assessee to the file of the ld CIT(Exemption) to decide afresh after verifying the contention and the contents of the letter dated 25.04.2006 issued by the Income Tax officer (Tech) for commissioner of Income Tax, Bhopal. After receiving the order, the assessee trust vide letter dated Digamber Jain ITA No.287 & 289/Ind/2020 4 01.02.2019 and 10.09.2019 requested the CIT(Exemption) to grant the registration u/s 80G and also annexed the letter dated 25.04.2006. Various documents were submitted vide above letters and the assessee trust through AR attended the hearing and case was discussed. It was found that the objects of the society were changed during F.Y. 2016-17 and application for new registration u/s 12AA of the Act which purportedly was required to be filed was not filed. The assessee trust was granted opportunity to show cause that why registration u/s 12AA should not be cancelled and accordingly registration u/s 80G(vi) of the act should be refused as the objects of the society were changed during FY 2016-17 and till date application for new registration u/s 12AA has not been filed as per clause (ab) of section 12A(1) of income tax act read with Rule 17A of the Act. As per the ld CIT(A), the assessee trust has violated the conditions mentioned in section 12A(1)(ab) of the act and rule 17A of Income Tax Rules, hence registration granted u/s 12A of the Act vide registration No. 41/90-91 dated 31.12.90 was hereby cancelled and withdrawn vide Order dated 20.03.2020. Similarly vide order dated 20.03.2020, the application u/s 80G(5)(vi) of the Act was rejected and registration sought was refused as the registration no 41/90-91 dated 31.12.1990 was withdrawn vide order dated 20.03.2020. 4. Aggrieved assessee is now in appeal before this Tribunal challenging the cancellation of registration u/s 12A of the Act and Digamber Jain ITA No.287 & 289/Ind/2020 5 rejection of application of approval u/s 80G(5)(vi) of the Act. Ld. counsel for the assessee vehemently argued referring to the written submission and paper book containing 70 pages and summarized the fact stating that the activities of the trust are charitable in nature. It enjoys registration 12A of the act since 13.12.1990. There were some amendments in the clause but the provisions of intimating such changes to the Income Tax Department came into effect from F.Y. 2016-17. But same was not applicable on the assessee as the changes were made prior to the amendment. He also submitted that some of the original objects were not deleted but were slightly modified to bring more clarity to the main objects. Further it was also submitted that the objects of the assessee trust are for the benefit of public at large. 5. Reliance was placed on following decisions: 1.Mehta Jiveraj Makandas & Parekh Trust, ITAT, Mumbai ITA No.2212/Mum/2010 2. CIT Vs Surat City Gymkhana(2008) 216 CTR 23(SC) 3. Income tax Officer, (E) 1 (1), Mumbai v. Bhansali Trust [2015] 63 taxmann.com 56 (Mumbai-Trib.) 4. Deccan Gymkhana (Oldesty Trust) v. CIT [2003] 262 ITR 459/131 Taxman 279 (Bom) 6. Per contra, ld. DR vehemently argued supporting the order of Ld. CIT(E). Digamber Jain ITA No.287 & 289/Ind/2020 6 7. We have heard rival contentions and perused the records placed before us. Through these two appeals assessee has challenged the finding of Ld. CIT(E) cancelling registration 12A of the Act and not granting approval u/s 80G(5)(vi) of the Act. 8. We note that the trust was registered under section 12A of the Act since 13.12.1990 vide registration no.90-91. Till the insertion of Sec 12A(1)(ab) by Finance Act 2017, there was no statutory requirement of intimating the changes to the Income-tax Department. The objects were amended in F.Y. 2016-17, when this provision was not applicable. It was only after Finance Act, 2017 that if the trust has adopted or undertaken modifications of the objects which do not conform to the conditions of registration; then it has to apply in the prescribed form within a period of 30 days to the Pr. CIT. 9. We notice that ld. CIT(E) has alleged that the assessee has deleted the original objects for which registration u/s 12A was granted and has added new objects for which no intimation was given. However on perusal of the old and new objects we find that object no.3.4 of the old object was regarding providing of services in the field of education and Digamber Jain ITA No.287 & 289/Ind/2020 7 medical for public at large. Further on perusal of para 3.5 of the new clause inserted in the Amended trust deed we find that the objects numerated in clause 3.4 of the old trust deed have been elaborated in new clause 3.5 by including libraries, hostel, clinics and providing various other facilities in the field of education and medicines by way of establishing engineering colleges, medical college, employment trading centers etc. We, are therefore satisfied that the main objects mentioned in the old trust deed for which assessee was granted registration u/s 12A of the Act are not deleted rather they have been expanded to include many more of such activities which are charitable in nature and available to public at large. We, thus, note that the inserted amended objects are not detrimental to the old objects. 10. We observe that Mehta Jiveraj Makandas & Parekh Trust, ITAT, Mumbai ITA No.2212/Mum/2010 (PB 65-70) wherein it was held that “The requirement of intimation is mentioned only in the Form No. 10A and even in the Form No. 10A there is no time limit prescribed. The assessee had already intimated the changes to the department though later and, therefore, technically there was no Digamber Jain ITA No.287 & 289/Ind/2020 8 violation on the part of the assessee because of no time limit being prescribed. Moreover, there being no statutory requirement of intimating changes, registration could not be cancelled or the trust could not be declared invalid only on the ground that changes were not intimated.”. It is submitted that in this judgment it was stated that at the time of registration, when Form 10A is filled, it is only at that time we have to intimate the amendments in the objects taken place till that time, from the date of original trust deed. There is no requirement to intimate any subsequent change. 11. Further, the judgment of Hon'ble Supreme Court in case of CIT Vs Surat City Gymkhana(2008) 216 CTR 23(SC) also supports the case of the assessee in which it was held that “the registration under section 12A was a fait accompli to hold back the AO from further probe into the objects of the trust. The original objects continue to exist and the amended objects remain charitable and the trust continues to be eligible for registration under section 12A. Principle of consistency is also in favour of the assessee as based on the amended objects renewal of approval under section 80G has already been granted and factual and legal position remaining the Digamber Jain ITA No.287 & 289/Ind/2020 9 same, we see no justification for rejecting the application for renewal under section 80G”. 12. Further the Ld. CIT(A) cannot insist on a clause in the Trust Deed which provides that any amendment in Trust Deed shall be subject to prior approval of CIT. In the case Income tax Officer, (E) 1 (1), Mumbai v. Bhansali Trust [2015] 63 taxmann.com 56 (Mumbai- Trib.) (PB58-64) it was held that mere non-intimation of amendments in trust deed to department cannot ipso facto lead to cancellation of registration under section 12AA(3) because the statutory requirement of cancellation of registration contained in section 12AA(3) prescribes that the cancellation of registration cannot be effectuated unless a case is made out that the new objects do not fit in with the existing objects, i.e., new objects are ‘non-charitable’ in nature or that the activities are not genuine. In other words, any legitimate amendment in the Trust deed does not result in any reason for cancellation on the part of the Ld. Commissioner of Income Tax(Exemption) unless such amendment results in violation of the conditions of section 12AA read with section 11. It is important to ensure that there is no change in the tone and tenor of the objects pursued by the assessee in a real Digamber Jain ITA No.287 & 289/Ind/2020 10 sense. The amendments should not result in major changes in objects. They can be enabling clauses which provide only 'means' or 'power' to achieve objects in the Trust Deed. The Hon'ble Bombay High Court in the case of Deccan Gymkhana (Oldesty Trust) v. CIT [2003] 262 ITR 459/131 Taxman 279 (Bom) as well as the judgment of Hon'ble Supreme Court in the case of CIT v. Federation of India Chamber of Commerce & Industry [1981] 130 ITR 186/6 Taxman 7 has laid down that a distinction has to be made between the 'purpose' of a Trust and the 'powers' conferred upon the Trustees as being incidental to accomplish the purpose of the Trust. The amendments should only enable the Trustees to carry out activities for accomplishing the purpose of the Trust, which is for a 'charitable purpose' as per original Trust deed. Such amendments will not signify that the registration granted to the assessee under section 12A of the Act is rendered nugatory. 13. We, therefore, under the given facts and circumstances of the care are of the considered view that Ld. CIT(E) erred in cancelling the registration u/s 12A of the Act granted to the assessee since 1990 and further erred in not granting approval u/s 80G(5) of the Act as nothing material has been Digamber Jain ITA No.287 & 289/Ind/2020 11 found or noticed by the revenue authorities which could prove that the objects of assessee society are not charitable in nature or the activities undertaken are not charitable n nature or not in consonance to its main objects. We, therefore, allow grounds of appeal raised by the assessee and direct Ld. CIT(E) to restore the registration u/s 12A of the Act and also to grant approval u/s 80G(5)(vi) of the Act. 14. In the result, Assessee’s appeal ITANo.287 & 289/Ind/2020 are allowed. The order pronounced as per Rule 34 of ITAT Rules, 1963 on 17.01.2022. Sd/- Sd/- (MAHAVIR PRASAD) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER दनांक /Dated :17.01.2022 Patel/PS Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file. By Order, Asstt.Registrar, I.T.A.T., Indore