Shree Umiya Charitable Trust, At : Kaneri, Taluka : Keshod, RAJKOT-GUJARAT V. The Commissioner of Income Tax-III, RAJKOT-GUJARAT

ITA 291/RJT/2014

• Counselvise Citation: 29124914 RSA 2014
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-06-2014
• Assessment Year: misc
• Appeal Filed On: 29-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B D GARSAR
• Assessee Lawyers: DR ADHIA
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 291/RJT/2014 SHREE UMIYA CHARITABLE TRUST, C/O. RAMESHBHAI POLABHAI HINGRAJIYA, AT: KANERI, TAL: KESHOD, DIST: JUNAGADH PAN : AAATU 3633 R ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX RAJKOT-III RAJKOT / RESPONDENT / ASSESSEE BY SHRI D.R. ADHIA, AR / REVENUE BY SHRI B.D. GARSAR, DR / DATE OF HEARING 12.06.2014 !'# / DATE OF PRONOUNCEMENT 30.06.2014 / ORDER THIS APPEAL BY THE ASSESSEE-INSTITUTION/ASSOCIATION IS AGAINST THE ORDER DATED 07.04.2014 OF COMMISSIONER OF INCOME-TAX, RAJKOT-II I, RAJKOT REJECTING THE APPLICATION FOR REGISTRATION U/S 12AA OF THE INCOME -TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-INSTI TUTION/ASSOCIATION NAMELY SHREE UMIYA CHARITABLE TRUST CAME INTO EXISTENCE THROUGH A TRUST DEED ON 24.12.2008 AND IS DULY REGISTERED UNDER BPT ACT 1951 WITH ASSTT. C HARITY COMMISSIONER VIDE CERTIFICATE DATED 26.03.2009. THE MAIN OBJECTS OF THE TRUST ARE CHARITABLE AND PUBLIC WELFARE. THE ASSESSEE-INSTITUTION/ASSOCIATION FILED AN APPLICATION FOR REGISTRATION U/S 12AA OF THE INCOME-TAX ACT ON 29.10.2013, WHICH WAS REJECTED BY LD.CIT,RAJKOT-III, RAJKOT VIDE ORDER DATED 07.04.2014. THE REASON FOR REJECTING THE APPLICATION OF ASSESSEE-INSTITUTION/ASSOCIATION IS GIVEN BY THE LD . CIT IN PARAGRAPH NOS. 5 & 6 OF THE IMPUGNED ORDER WHICH READ AS UNDER:- 5. ON THE DATE OF HEARING, SHRI RAMESHBHAI POLABHA I HINGRAJIYA, PRESIDENT OF THE ASSESSEE TRUST HAS ATTENDED AND FU RNISHED WRITTEN SUBMISSION. HOWEVER, THE ASSESSEE TRUST HAS NOT FUR NISHED THE PROOF OF EXPENSES SUCH AS BILLS/VOUCHERS INCURRED TOWARDS TH E OBJECTS OF THE TRUST. THE ASSESSEE TRUST ALSO FAILED TO FURNISH THE LEDGER AC COUNT OF EXPENSES FOR VERIFICATION. FURTHER, WITH REGARD TO DISSOLUTION CLAUSE, THE ASSESSEE TRUST IN ITS SUBMISSION AT ANS. NO.22 STATED THAT THERE IS N O DISSOLUTION CLAUSE AS PER THE GUIDELINES OF THE INCOME-TAX DEPARTMENT. THE AS SESSEE TRUST FURTHER SUBMITTED THAT THE IRREVOCABLE TRUST AND ALSO SUBMI TTED THAT THE PROVISION REGARDING IRREVOCABILITY OF THE TRUST IS MENTIONED IN PARA NO.17 OF ARTICLES OF ASSOCIATION. ON PERUSAL OF THE ARTICLE OF ASSOCIAT ION IN PARA NO.17, IT IS MENTIONED THAT IN EXTRA ORDINARY CIRCUMSTANCES, THE TRUST WILL FIRST SETTLE ITS ASSETS AND OTHER PROPERTIES, AND THEREAFTER TRUST S HALL BE CLOSED. THUS, IT IS SEEN THAT IT IS NOT AN IRREVOCABLE INSTITUTION. IT IS ALSO MENTIONED IN PARA NO.18 2 291-RJT-2014 SHREE UMIYA CHARITABLE TRUST- 12AA- (SMC) THAT THERE IS NO PERSONAL RESPONSIBILITIES IN LIEU OF ANY ACTIVITY CARRIED OUT BY WAY OF THE TRUSTEES ON BEHALF OF THE TRUST. IN ABSE NCE OF THE REQUISITE DETAILS, THE GENUINENESS OF THE INSTITUTION AND THE ACTIVITI ES CARRIED OUT BY THE TRUST ARE ALSO NOT VERIFIABLE. IN ABSENCE OF COMPLETE DETAILS OF INCOME AND EXPENDITURE, THE GENUINENESS OF INCOME RECEIVED BY IT AND ITS UT ILIZATION FOR CHARITABLE PURPOSES ALSO CAN NOT BE VERIFIED. FURTHER, THE INS TITUTION WAS ALLOWED AN OPPORTUNITY TO PRODUCE ALL THE RELEVANT DETAILS REL ATING TO INCOME EARNED AS WELL AS THE EXPENSES INCURRED FOR CHARITABLE ACTIVITIES FOR VERIFICATION. HOWEVER, THIS OPPORTUNITY WAS NOT AVAILED OF BY THE TRUST. ALSO, THERE IS NO DISSOLUTION/WINDING UP CLAUSE IN THE TRUST DEED A ND HAS NOT MADE ANY ARRANGEMENT OF CESSATION OF LIABILITY AND ASSETS AT THE TIME OF DISSOLUTION OF THE TRUST. THUS, THE TRUST DEED IS DEFECTIVE TO THAT EX TENT ALSO. FURTHER, THE WARD INSPECTOR HAS ALSO REPORTED THAT DURING THE SPOT VI SIT FROM WHERE THE ACTIVITIES ARE CLAIMED TO HAVE BEEN CARRIED OUT BY THE ASSESSE E TRUST, NOTHING WAS FOUND WHICH AFFIRMS THE EXISTENCE OF THE TRUST AND ITS AC TIVITIES. 6. IN VIEW OF ABOVE FACTS, IT IS HELD THAT THE ASSE SSEE TRUST DOES NOT QUALIFY FOR REGISTRATION U/S 12AA OF THE ACT. ACCORDINGLY, THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT IS HEREBY REJECTED . AGGRIEVED WITH THE ORDER OF LD. CIT, THE ASSESSEE-I NSTITUTION/ASSOCIATION IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 3. AT THE TIME OF HEARING BEFORE THE TRIBUNAL, ON B EHALF OF THE ASSESSEE- INSTITUTION/ASSOCIATION, SHRI D.R. ADHIA, AR, APPEA RED AND RELIED UPON THE FOLLOWING DECISIONS OF THE TRIBUNAL WITH RESPECT TO THAT THE TRUST DEED DOES NOT CONTAIN DISSOLUTION CLAUSE:- I. ITAT, DELHI BENCHES IN THE CASE OF SHRI SAI SAMA RPAN TRUST, 23 DTR 125 II. ITAT, DELHI BENCHES IN THE CASE OF DHARMA SANST HAPAK SANGH, 118 TTJ 823 III. ITAT, RAJKOT BENCH IN THE CASE OF CHORWADI MAT AJI MANDIR TRUST IN ITA NO.458/RJT/2013, ORDER DATED 28.03.2014 THE LD. AR OF THE ASSESSEE FURTHER RELIED UPON THE DECISION OF CO-ORDINATE BENCH (ITAT B BENCH AHMEDABAD) IN THE CASE OF SHR EE CHARGAM DASHA PORWAD MAHAMANDAL V. DIT (EXEMPTION) BEARING ITA NOS. 337 & 338/AHD/2013, DATED 08.05.2013, WHEREIN IT WAS HELD THAT WHEN THE ASSE SSEE-TRUST IS REGISTERED WITH THE SUB-REGISTRAR AS A CHARITABLE TRUST, IN THE EVENT O F FAILURE OF THE TRUST THE NET ASSETS/INCOME WOULD OBVIOUSLY BE TAKEN OVER BY THE CHARITY COMMISSIONER AND THE REJECTION OF REGISTRATION ON THIS GROUND WAS HELD N OT ON A SOUND FOOTING. 3.1 THE LD. AR OF THE ASSESSEE-INSTITUTION/ASSOCIAT ION CONTENDED THAT AT THE TIME OF GRANTING APPROVAL FOR EXEMPTION U/S 80G, ONLY OBJEC T OF THE TRUST IS REQUIRED TO BE EXAMINED AND APPLICATION OF FUNDS CAN BE EXAMINED B Y ASSESSING OFFICER AT THE TIME 3 291-RJT-2014 SHREE UMIYA CHARITABLE TRUST- 12AA- (SMC) FRAMING ASSESSMENT. IN SUPPORT OF THIS, THE AUTHOR IZED REPRESENTATIVE FOR THE ASSESSEE-INSTITUTION/ASSOCIATION RELIED UPON THE JU DGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN ITS JUDGMENT DELIVERED ON 02. 05.2013 IN THE CASE OF CIT V. O.P. JINDAL GLOBAL UNIVERSITY, REPORTED IN (2013) 3 8 TAXMANN.COM 366 (P&H). HE FURTHER RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST (2013) 29 TAXM AN.COM 228, WHEREIN IT WAS HELD THAT ABSENCE OF ANY ACTIVITY OF A TRUST AT THE TIME OF REGISTRATION IS NOT A GROUNDS TO QUESTION GENUINENESS OF OBJECTIVES AND ACTIVITIE S REGISTRATION FOR TRUST CANNOT BE DENIED ON THE SOLE GROUND OF NON-COMMENCEMENT OF AC TIVITY AND SUCH ABSENCE OF ACTIVITY DOES NOT EMPOWER COMMISSIONER TO INFER ABS ENCE OF GENUINENESS. BY THE AFORESAID SUBMISSIONS, THE LD. COUNSEL OF T HE ASSESSEE- INSTITUTION/ASSOCIATION PLEADED THAT THE LD. CIT, R AJKOT-III, RAJKOT BE DIRECTED TO GRANT THE REGISTRATION U/S 12AA OF THE ACT TO THE ASSESSE E-INSTITUTION/ASSOCIATION. 4. ON THE OTHER HAND, SHRI B.D. GARSAR, LD. DEPART MENTAL REPRESENTATIVE, APPEARED ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPO RTED THE ORDER OF THE LD. CIT, RAJKOT-III, RAJKOT. HE POINTED OUT THAT THE ASSESS EE-INSTITUTION/ASSOCIATION FAILED TO PRODUCE THE REQUISITE DETAILS AS ASKED BY THE LD. C IT SO AS TO VERIFY THE GENUINENESS OF THE ACTIVITIES OF ASSESSEE-INSTITUTION/ASSOCIATI ON, INCOME RECEIVED BY THE ASSESSEE AND ITS UTILIZATION FOR CHARITABLE PURPOSE ETC.. HE ALSO POINTED OUT THAT THE TRUST DEED IS DEFECTIVE AS POINTED OUT BY THE LD. CIT SINCE THE S AME DOES NOT HAVE ANY DISSOLUTION CLAUSE IN CASE OF ITS DISSOLUTION. THE LD. DR, POIN TING OUT THE AFORESAID FACTS, FURTHER ARGUED THAT THE ACTION OF LD. CIT, RAJKOT-III, RAJK OT REJECTING THE APPLICATION OF THE ASSESSEE-INSTITUTION/ASSOCIATION U/S 12AA OF THE AC T BE UPHELD. 5. HAVING HEARD BOTH THE SIDES, I HAVE CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE ORDERS AS RELIED UPON BY THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE-INSTITUTION/ASSOCIATION. THE MAIN GROUND RAISED BY THE LD. CIT IN REJECTING ASSESSEE-INSTITUTION/ASSOCIATIONS APPLIC ATION FOR REGISTRATION U/S 12A IS THAT NO EVIDENCES/PROOF HAD BEEN PRODUCED BY THE ASSESSE E-INSTITUTION/ASSOCIATION BEFORE THE LD. CIT REGARDING THE ACTIVITIES THEY WE RE BEING PURSUED AS THEY COULD NOT FURNISH PROOF OF EXPENSES SUCH AS BILLS/VOUCHERS IN CURRED TOWARDS THE OBJECTS OF THE 4 291-RJT-2014 SHREE UMIYA CHARITABLE TRUST- 12AA- (SMC) TRUST. THE OBSERVATION MADE BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST, [2013] 29 TAX MANN.COM 228, IS RELEVANT IN THIS REGARD, WHEREIN THE GUJARAT HIGH COURT HELD T HAT AT ABSENCE OF ANY ACTIVITY OF A TRUST AT THE TIME OF REGISTRATION IS NOT A GROUND T O QUESTION GENUINENESS OF OBJECTIVES AND ACTIVITIES; REGISTRATION FOR TRUST CANNOT BE DE NIED ON THE SOLE GROUND OF NON- COMMENCEMENT OF ACTIVITY AND SUCH ABSENCE OF ACTIVI TY DOES NOT EMPOWER COMMISSIONER TO INFER ABSENCE OF GENUINENESS. 5.1 THE DECISION OF THE HONBLE PUNJAB & HARYANA HI GH COURT IN ITS JUDGMENT DELIVERED ON 02.05.2013 IN THE CASE OF CIT V. O.P. JINDAL GLOBAL UNIVERSITY, REPORTED IN (2013) 38 TAXMANN.COM 366 (P&H) IS ALSO RELEVANT IN THIS CASE. THE RELEVANT OBSERVATION MADE BY THE THE HONBLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF O.P. JINDAL GLOBAL UNIVERSITY (SUPRA) IS AS UNDER:- 13. IN ITANO.701 OF 2010 TITLED CIT V. SURYA EDUCA TIONAL & CHARITABLE TRUST [2011] 203 TAXMAN 53/15 TAXMANN.COM 123 (PUNJ & HAR.) IT HAS BEEN HELD BY THIS COURT THAT AT THE STAGE OF REGISTRATIO N UNDER SECTION 12AA OF THE ACT, THE EXTENT AND NATURE OF ACTIVITIES ARE NOT RE QUIRED TO BE EXAMINED. THAT QUESTION IS REQUIRED TO BE EXAMINED IN ASSESSMENT P ROCEEDINGS. THE COURT OBSERVED AS UNDER:- 'THEREFORE, THE OBJECT OF SECTION 12AA OF THE ACT, IS TO EXAMINE THE GENUINENESS OF THE OBJECTS OF THE TRUST, BUT NOT TH E INCOME OF THE TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES. THE STAGE FOR APPLICATION OF INCOME IS YET TO ARRIVE I.E. WHEN SUCH TRUST OR INSTITUTIO N FILES ITS RETURN. THEREFORE, WE FIND THAT THE JUDGMENTS REFERRED TO B Y THE LEARNED COUNSEL FOR THE APPELLANT ARE NOT APPLICABLE TO THE FACTS O F THE PRESENT CASE ARISING OUT OF THE QUESTION OF REGISTRATION OF THE TRUST AND NOT OF ASSESSMENT.' 14. THE ISSUE HAS BEEN EXAMINED THAT AT THE STAGE O F REGISTRATION AND FOR EXEMPTION UNDER SECTION 80G OF THE ACT, THE STATED OBJECT OF THE TRUST IS REQUIRED TO BE EXAMINED. WHETHER THE FUNDS ARE PROP ERLY APPLIED OR NOT, CAN BE EXAMINED BY THE ASSESSING OFFICER AT THE TIME OF FRAMING THE ASSESSMENT. 5.2 THE LAST GROUND OF REJECTION POINTED OUT BY THE LD. CIT IS THAT THE TRUST DEED OF THE TRUST DOES NOT CONTAIN THE DISSOLUTION CLAUSE I N THE EVENT OF ITS DISSOLUTION. THIS ISSUE HAS ALREADY BEEN COVERED IN FAVOUR OF ASSESSE E-INSTITUTION/ASSOCIATION BY THE DECISION OF ITAT AHMEDABAD C BENCH IN THE CASE OF SITARAM KUTIR CHARITABLE TRUST V. CIT IN ITA NO.71/AHD/2013, DECIDED ON 17.05.2013 ; WHEREIN IT WAS HELD THAT IN CASE THE TRUST REGISTERED WITH THE SUB-REGISTRAR AS A CHARITABLE TRUST AND THE TRUST BEING AN IRREVOCABLE TRUST, THE OBVIOUS POSITION SH ALL BE THAT THE CHARITY 5 291-RJT-2014 SHREE UMIYA CHARITABLE TRUST- 12AA- (SMC) COMMISSIONER SHOULD TAKE OVER THE ASSETS ON DISSOLU TION; HENCE REJECTION OF REGISTRATION BY THE LD COMMISSIONER ON THE GROUND T HAT THERE WAS NO SPECIFIC CLAUSE IN THE INSTRUMENT IN REGARD TO THE TREATMENT TO BE GIVEN IN THE EVENT OF DISSOLUTION WAS NOT ON A SOUND FOOTING. IN VIEW OF THE FOREGOING, I AM OF THE VIEW THAT THE REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961, AS SOUGHT BY THE ASSESSEE-INS TITUTION/ASSOCIATION, CANNOT BE REFUSED AND I, THEREFORE, DIRECT THE LD. CIT, RAJKO T-III, RAJKOT TO GRANT THE REGISTRATION U/S 12AA TO THE ASSESSEE-INSTITUTION/ASSOCIATION. 6. IN THE RESULT, APPEAL OF THE ASSESSEE-INSTITUTIO N/ASSOCIATION IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 30.06.2014 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- SHREE UMIYA CHARITABLE TRUST, C/O. RA MESHBHAI POLABHAI HINGRAJIYA, AT: KANERI, TAL: KESHOD, DIST: JUN AGADH 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX, RAJK OT-III, RAJKOT 3. ,0,1 * * 2 / CONCERNED JT. CIT, RANGE 1, JUNAGADH 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT