M/s. Husain Foundation Charitable Trust, Meerut V. CIT, Meerut

ITA 3073/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6289 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 19-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARAT BHUSAN GARG
• Assessee Lawyers: VINOD KUMAR GOYAL
• Keywords: Charitable institution; Principle of natural justice
• Section: 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCHES, NEW DELHI (CIRCUIT BENCH AT MEERUT) BEFORE : SHRI . I.C. SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITANO. 3073/DEL/2014 HUSSAIN FOUNDATION CHARITABLE TRUST, C/O. VINOD KUMAR GOEL, 282, BOUNDARY ROAD, CIVIL LINES, MEERUT PAN:AABTH1472Q VS. CIT, AAYAKARBHAVAN, BHAINSALI GROUND, MEERUT (APPELLANT) (RESPONDENT) DATE OF HEARING 18 /12/2015 DATE OF PRONOUNCEMENT 15 / 03 /2016 ASSESSEE BY: SH. VINOD KUMAR GOYAL, ADV REVENUE BY: SH. BHARAT BHUSAN GARG, SR. DR O R D E R PER PRASHANT MAHARISHI, A. M. 1 . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 13 . 05.2014 OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - MEERUT. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THAT LD. ACIT, CIRCLE - 1, MEERUT ISSUED A LETTER TO THE ASSESSEE DATED 09 - 05 - 2014 FIXING THE DATE OF HEARING ON 23 - 05 - 2014. HOWEVER, LD. CIT, MEERUT PASSED ORDER ON 13 - 05 - 2014, IN WHICH HE REJECT THE APPLICATION U/S 12A OF I.T. ACT. THEREFORE, ORDER PASSED BY LD. CIT, MEERUT IS IRREGULARITY AND AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 2. THAT LD. CIT, MEERUT HAS INCORRECT FACTS A CHARITABLE ACTIVITY WAS GOING ON TO GIVE THE SHAPE AS CHARITABLE TRUST. THE ASSESSEE HAS MAKE APPLICATION TO REGISTER THE TRUST TO THE REGISTRAR OF DOCUMENTS ON 31 - 03 - 2013 AND WAS REGISTERED ON 04 - 04 - 2013 AND APPLIED BY THE ASSESSEE FOR REGISTRATION TO CIT, ON 19 - 11 - 2013 AND ANY ACTIVITIES DOES NOT SHOW ANY IRREGULARITY AS MENTIONED BY CIT, ME ERUT IN HIS ORDER DATED 13 - 05 - 2014. PAGE 2 OF 4 3. THAT THE CHARITABLE ACTIVITIES MENTIONED IN THE TRUST DEED WAS EVIDENCE BY ASSESSEE BY FILING VARIOUS DOCUMENTS TO THE CIT, MEERUT. THEREFORE, LD. CIT IS IN ERROR IN STATING THAT THE TRUST WAS NOT RUNNING ANY CHARI TABLE ACTIVITIES AS MENTIONED IN THE OBJECTS OF THE TRUST. 3 . THE BRIEF FACTS OF THE CASE ARE THAT APPELLANT TRUST FILED AN APPLICATION BEFORE COMMISSIONER OF INCOME TAX ON 19/11/2013 FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961. THE TRUST IS FORME D ON 04/04/2013 FOR THE PURPOSE OF CONSTRUCTION OF MASJID, MADRASAS HOSPITALS, SCHOOLS, ORPHANAGES AND GUESTHOUSES FOR THE BENEFIT OF PUBLIC AND SPECIFICALLY FOR MUSLIMS. IT HAS ANOTHER OBJECT OF RELIEF TO POVERTY AND HELPING FOR MARRIAGE OF POOR PERSONS, PROVIDE EMPLOYMENT TO THE UNEMPLOYED. CIT DID NOT GRANT THIS TRUST REGISTRATION AS IT IS NOT CLEAR WHETHER THE PREMISES FROM WHICH THE TRUSTEE IS CARRYING ON WITH SECURITIES IS OWNED BY IT OR RENTED PREMISES. FURTHER, IT IS INCURRED NEITHER EXPENSES TOW ARDS ITS OBJECTS. HE ALSO HELD THAT TRUST IS INVOLVED IN IMPARTING EDUCATION TO THE POOR. HOWEVER, THE DUTIES CARRIED ON BY THIS TRUST CANNOT BE SAID TO BE EDUCATIONAL ACTIVITIES. REGARDING THE OBJECT OF RELIEF TO POOR, HE WAS OF THE VIEW THAT IT CANNOT BE FOR THE RELIEF OF A PARTICULAR INDIVIDUAL OR BODY OF INDIVIDUALS, BUT SHOULD HAVE PUBLIC CHARACTER. HE WAS ALSO OF THE VIEW THAT TRUSTED DOES NOT HAVE SUBSTANTIAL FONTS TO UNDERTAKE ITS STATED OBJECTIVES. HOWEVER, TRUST IS ONLY INVOLVED IN STRAIGHT A CTIVITIES. THEREFORE, HE WAS OF THE VIEW THAT A GENE WINE TRUST WITH GENUINE OBJECTIVES HAS NOT COME INTO EXISTENCE AND THEREFORE REGISTRATION WAS REFUSED. AGAINST THIS ORDER, THIS APPEAL IS FILED. 4 . LD. AUTHORIZED REPRESENTATIVE FILED THE PAPER BOOK BEFO RE US CONTAINING 28 PAGES, WHEREIN, FORM NO. 10 A, ALONG WITH TRUST DEED, BANK STATEMENT, INCOME AND EXPENDITURE ACCOUNT AND DETAILS OF DONATION RECEIVED. HE SUBMITTED THAT THAT THE OBJECT OF THE SOCIETYS CHARITABLE AND THE ACTIVITIES OF THE TRUST ARE CA RRIED ON IN RENTED PREMISES FOR WHICH NO RENT HAS BEEN PAID OR PAYABLE, BUT THAT IS NOT THE VIOLATION OF THE PROVISIONS OF SECTION 2 (15) OF THE INCOME TAX ACT. HE FURTHER SUBMITTED THAT MERELY MEAGRE PAGE 3 OF 4 EXPENDITURE AND MEAGRE DONATION COULD NOT MAKE THE OBJ ECT OF THE TRUST AND ACTIVITIES CARRIED ON IN ACCORDANCE THERE WITH NOT GENUINE. THEREFORE, HE SUBMITTED THAT REGISTRATION MAY BE ALLOWED TO THE TRUST. LD. D. R. RELIED ON THE ORDERS OF CIT AND SUBMITTED THAT TRUSTED DOES NOT HAVE MUCH OF THE ACTIVITIE S AND HENCE THE REGISTRATION IS DENIED. 5 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION. WE HAVE ALSO PRODUCED THE OBJECT OF THE TRUST, AND ACCORDING TO US, THE OBJECT OF THE TRUST ARE CHARITABLE IN NATURE. IT IS ALSO ADMITTED THAT THE TRUST IS AN OBJE CT OF CONSTRUCTION OF HOSPITALS, SCHOOLS, ETC. IT IS ALSO THE OBJECT OF RELIEF TO POVERTY. IN ACCORDANCE WITH THESE OBJECTS ACCORDING TO INCOME AND EXPENDITURE ACCOUNT ASSESSEE HAS SPENT RS. 59800/ - TOWARDS MARRIAGE OF POOR PERSONS AND RS. 5 625/ - ON EDUC ATION OF POOR PEOPLE. THIS AMOUNT HAS BEEN SPENT BY ASSESSEE TRUST OUT OF GROSS RECEIPTS OF RS. 6 5675/ - . THE NATURE OF THIS EXPENDITURE SHOWS THAT THEY ARE CHARITABLE IN NATURE. MERELY BECAUSE THE OPERATION OF THE TRUST IS ON SCANTY FUND AND THEREFORE THE EXPENDITURE ON THE OBJECT OF THE TRUST IS SCANTY CANNOT BE THE SOLE GROUND FOR REJECTION OF APPLICATION FOR REGISTRATION. FROM THE ORDER OF COMMISSIONER OF INCOME TAX, WE DID NOT FIND ANY REASONS. HOW THE ACTIVITIES CARRIED ON BY THE TRUST ARE NOT GE NUINE. FURTHER, THE OBSERVATION OF COMMISSIONER THAT THE DUTIES OF THE TRUST ARE NOT IN STRUCTURED FORM, BUT STRAY ACTIVITIES CANNOT ALSO BE THE REASON FOR THE REJECTION OF APPLICATION FOR REGISTRATION. UNLESS THE TRUST IS GRANTED REGISTRATION, IT MAY NOT GET DONATIONS AND THEREFORE CANNOT CARRY ON ITS ACTIVITIES AS PER THE OBJECT OF THE TRUST. THE INCOME TAX ACT, 1961, HAS BESTOWED UPON THE REGISTERING AUTHORITY ENOUGH POWERS UNDER SECTION 12 AA OF THE ACT. IF AT ANY TIME AFTER GRANTING THE REGISTRATION OF THE TRUST IF IT IS FOUND THAT IT IS NOT CARRY ACTIVITIES, ACCORDING TO THE OBJECT OF THE TRUST TO CANCEL THE REGISTRATION. THEREFORE, THE PROVISIONS OF THE REGISTRATION OF CHARITABLE TRUST CONTAINED THE PROVISION OF MONITORING AND REGULATING CONSTANTLY OF THEM. TH EREFORE IN OUR VIEW, NONE OF THE OBJECTS OF THE TRUST ARE NOT OTHER THAN CHARITABLE IN PAGE 4 OF 4 NATURE AND THE ACTIVITIES OF THE TRUST ARE CANNOT BE SAID TO BE NOT GENUINE. THEREFORE, WE REVERSE THE FINDING OF COMMISSIONER AND RECONSIDER THE APPLICATION OF APPELLA NT TRUST AND IF FOUND IN ACCORDANCE WITH THE LAW GRANT REGISTRATION TO IT. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE TRUST IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 5 . 03 .2016 . - S D / - - S D / - ( I.C. SUDHIR ) ( PRASHANT MAHARISHI ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED: 1 5 . 03.2016 * AJAY KUMAR KEOT COPY OF ORDER FORWARDED 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 DELHI BENCHES, NEW DELHI