SHRI MAHASHRAMAN FOUNDATION, Mumbai V. CIT (EXEMPTION), Mumbai

ITA 3184/MUM/2022

AI Insights

The case involves Shri Mahashraman Foundation appealing against the decisions of the Commissioner of Income-tax (Exemptions), which had rejected their applications for registration under Section 12AA and Section 80G of the Income-tax Act, 1961. The primary issue was the interpretation of Clause 28 in the trust's objectives, which the CIT(E) believed could lead to the misuse of trust properties. The tribunal allowed the appeals, noting that the trust would amend the clause to prevent any potential misuse and directed the CIT(E) to reconsider the applications afresh.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123349 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 02-07-2023
• Assessment Year: 2022-2023
• Appeal Filed On: 15-12-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation; Reasonable cause; Time period of passing order
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA Nos. 3183 & 3184/MUM/2022 Assessment Year: 2022-23 Shri Mahashraman Foundation, 210, 2 nd floor, Sanghavi Square, M.G. Road, Opp. Bank of Baroda Ghatkopar West, Mumba-400086. Vs. Commissioner of Income-tax (Exemptions), Room No. 601, 6 th floor, Cumballa Hill, MTNL TE Building Pedder Road, Dr. Gopalrao Deshmukh Marg, Cumballa Hill, Mumbai-400026. PAN NO. ABBTS 5396 K Appellant Respondent Assessee by : Mr. Shashank Mehta Revenue by : Smt. Riddhi Mishra, CIT-DR Date of Hearing : 03/07/2023 Date of pronouncement : 06/07/2023 ORDER PER OM PRAKASH KANT, AM These appeals by the assessee are directed against orders dated 27.09.2022 and 25.09.2022 passed by the Ld. Commissioner of Income-tax (Exemption), Mumbai, in relation to applications of the assessee for Registration of Trust u/s 12AA of the Income-tax Act, 1961( in short the Act) and section 80G of the Act respectively. 2. Both these appeals being connected with the same assessee, same were heard together and disposed off by way of this consolidated order for convenience. 3. The ground raised by the asses 3183/Mum/2022 reproduced as under: 1. In the facts and circumstances of the case and in law, the learned Commissioner of Income tax (Exemptions) has erred in passing an order /s 12AB of the Act, rejecting the approval sought by the appellant trust, in violation of principles of natural justice, without considering the documentary evidences and the explanations furnished by the appellant. 3.1 The ground raised by the assessee in ITA No. 3184/Mum/2022 reprod 1. In the facts and circumstances of the case and in law, the learned Commissioner of Income tax (Exemptions) has erred in passing an Order u/s 80G(5)(vi) of the Act, arbitrarily rejecting the approval sought by the appellant u/s 80G of the without considering the documentary evidences and the relevant details furnished by the appellant. 2. In the facts and circumstances of the case and in law, the learned Commissioner of Income tax (Exemptions) has erred in passing a non violating the principles of natural justice, merely stating the application to be incomplete, without pointing out the specific defects in this regard. 4. Before us, the Ld. Counsel of the assessee submitted that there was a delay of 18 days in filing the appeal drawn out attention to the affidavit by the trustee Nathulal Tater and submitted that he was out of the town due to Shri Mahashraman Foundation ITA No. 3183 & 3184/Mum/2022 Both these appeals being connected with the same assessee, same were heard together and disposed off by way of this consolidated order for convenience. The ground raised by the assessee in ITA No. 3183/Mum/2022 reproduced as under: 1. In the facts and circumstances of the case and in law, the learned Commissioner of Income tax (Exemptions) has erred in passing an order /s 12AB of the Act, rejecting the approval sought by the appellant for its registration as a charitable trust, in violation of principles of natural justice, without considering the documentary evidences and the explanations furnished by the appellant. The ground raised by the assessee in ITA No. 3184/Mum/2022 reproduced as under: 1. In the facts and circumstances of the case and in law, the learned Commissioner of Income tax (Exemptions) has erred in passing an Order u/s 80G(5)(vi) of the Act, arbitrarily rejecting the approval sought by the appellant u/s 80G of the without considering the documentary evidences and the relevant details furnished by the appellant. 2. In the facts and circumstances of the case and in law, the learned Commissioner of Income tax (Exemptions) has erred in passing a non-speaking order us 80G(5) (vi) of the Act, violating the principles of natural justice, merely stating the application to be incomplete, without pointing out the specific defects in this regard. Before us, the Ld. Counsel of the assessee submitted that y of 18 days in filing the appeals. The Ld. Counsel drawn out attention to the affidavit by the trustee Nathulal Tater and submitted that he was out of the town due to Shri Mahashraman Foundation . 2 3183 & 3184/Mum/2022 Both these appeals being connected with the same assessee, same were heard together and disposed off by way of this see in ITA No. 1. In the facts and circumstances of the case and in law, the learned Commissioner of Income tax (Exemptions) has erred in passing an order /s 12AB of the Act, rejecting the approval for its registration as a charitable trust, in violation of principles of natural justice, without considering the documentary evidences and the explanations The ground raised by the assessee in ITA No. 1. In the facts and circumstances of the case and in law, the learned Commissioner of Income tax (Exemptions) has erred in passing an Order u/s 80G(5)(vi) of the Act, arbitrarily rejecting the approval sought by the appellant u/s 80G of the Act, without considering the documentary evidences and the 2. In the facts and circumstances of the case and in law, the learned Commissioner of Income tax (Exemptions) has erred in us 80G(5) (vi) of the Act, violating the principles of natural justice, merely stating the application to be incomplete, without pointing out the specific Before us, the Ld. Counsel of the assessee submitted that . The Ld. Counsel drawn out attention to the affidavit by the trustee Shri Madanlal Nathulal Tater and submitted that he was out of the town due to unavoidable personal reasons and therefore he could not seek professional guidance. The Ld. Departmental Representative (DR) did not object for condoning the delay in filing the appeal. We are of the opinion that there is sufficient and reasonable cause for not complying in limitation period for filing the appeal and accordingly we condoned the delay and admit 5. We have heard rival submission of the parties and perused the relevant material on record. As far as appeal in relation to rejection of registration u/s 12AA of the Act is concerned, we Ld. CIT(E) has rejected the registration in view of object clause No. 28 which is having scope of the trust for the benefit of the members. The relevant finding of the Ld. CIT(E) is reproduced as unde “4. The submissions of the assessee has been carefully considered. As per the submissions the intention of the assessee is to grant the premises of the trust to its members to organize camps, seminars, events or similar activity etc. on temporary basis as decided by the managing committee of the trust. However, if one goes through language of the clause, it gives an entirely different meaning. Temporary permission to use the premises for an activity is entirely different from what clause 28 i.e. "to give occupation of the premises constructed by the foundation at anytime ...." In my considered view, the above clause is liable for a probable/potential misuse in alienating property held by the trust. It is a settled law that premises or property of a public charitable trust cannot be alienated or given occupation to any members/category of members which may result in a potential abuse of the property. While the Shri Mahashraman Foundation ITA No. 3183 & 3184/Mum/2022 unavoidable personal reasons and therefore he could not seek guidance. The Ld. Departmental Representative (DR) did not object for condoning the delay in filing the appeal. We are of the opinion that there is sufficient and reasonable cause for not complying in limitation period for filing the appeal and accordingly we condoned the delay and admitted the appeals for adjudication. We have heard rival submission of the parties and perused the relevant material on record. As far as appeal in relation to rejection of registration u/s 12AA of the Act is concerned, we Ld. CIT(E) has rejected the registration in view of object clause No. scope of of miss-utilization of the properties of the trust for the benefit of the members. The relevant finding of the Ld. CIT(E) is reproduced as under: 4. The submissions of the assessee has been carefully considered. As per the submissions the intention of the assessee is to grant the premises of the trust to its members to organize camps, seminars, events or similar activity etc. on temporary basis against fees or charges as decided by the managing committee of the trust. However, if one goes through language of the clause, it gives an entirely different meaning. Temporary permission to use the premises for an activity is entirely different from what has been mentioned in the object clause 28 i.e. "to give occupation of the premises constructed by the foundation at anytime ...." In my considered view, the above clause is liable for a probable/potential misuse in alienating property held by It is a settled law that premises or property of a public charitable trust cannot be alienated or given occupation to any members/category of members which may result in a potential abuse of the property. While the Shri Mahashraman Foundation . 3 3183 & 3184/Mum/2022 unavoidable personal reasons and therefore he could not seek guidance. The Ld. Departmental Representative (DR) did not object for condoning the delay in filing the appeal. We are of the opinion that there is sufficient and reasonable cause for not complying in limitation period for filing the appeal and accordingly, the appeals for adjudication. We have heard rival submission of the parties and perused the relevant material on record. As far as appeal in relation to rejection of registration u/s 12AA of the Act is concerned, we find that the Ld. CIT(E) has rejected the registration in view of object clause No. utilization of the properties of the trust for the benefit of the members. The relevant finding of the 4. The submissions of the assessee has been carefully considered. As per the submissions the intention of the assessee is to grant the premises of the trust to its members to organize camps, seminars, events or similar against fees or charges as decided by the managing committee of the trust. However, if one goes through language of the clause, it gives an entirely different meaning. Temporary permission to use the premises for an activity is entirely has been mentioned in the object clause 28 i.e. "to give occupation of the premises constructed by the foundation at anytime ...." In my considered view, the above clause is liable for a probable/potential misuse in alienating property held by It is a settled law that premises or property of a public charitable trust cannot be alienated or given occupation to any members/category of members which may result in a potential abuse of the property. While the intention of the managing trustee vide th submissions may be honorable, it would not be desirable to have such an object in the objects clause of the trust deed which is potentially hazardous.Under the circumstances, I am not in a position to accede to the applicant's request for grant of 12AB of the Act. 5.1 Before us, the Ld. Counsel of the assessee has filed an affidavit by the trustee which reads that said clause No. 28 will not be acted upon and that the said clause should be considered to be never been the part of the Memorandum of Association. The Ld. Counsel of the assessee accordingly submitted that matter may be restored back to the file of the Ld. CIT(E) and before him the assessee will file revised/modified Memorandum of Association after removing the clause 28. In our opinion, the the clause 28 and the assessee has willingly agreed for removing the said clause from memorandum of association it appropriate to restore the matter of grant registration u/s 12AA of the Act to the file of the Ld. CIT(E) for deciding afresh in accordance with law. 5.2 Since, the registration of the trust u/s 80G of the Act is consequent to the Registration u/s 12AA of the Act and therefore, the appeal of the assessee against Registration of u/s 80G of the Act is also restored back to the file afresh in accordance with law. Shri Mahashraman Foundation ITA No. 3183 & 3184/Mum/2022 intention of the managing trustee vide the above submissions may be honorable, it would not be desirable to have such an object in the objects clause of the trust deed which is potentially hazardous.Under the circumstances, I am not in a position to accede to the applicant's request for grant of registration under Section 12AB of the Act.” Before us, the Ld. Counsel of the assessee has filed an affidavit by the trustee which reads that said clause No. 28 will not upon and that the said clause should be considered to be part of the Memorandum of Association. The Ld. Counsel of the assessee accordingly submitted that matter may be restored back to the file of the Ld. CIT(E) and before him the assessee will file revised/modified Memorandum of Association after clause 28. In our opinion, the bone of contention was the clause 28 and the assessee has willingly agreed for removing from memorandum of association. Therefore, we feel it appropriate to restore the matter of grant registration u/s 12AA of the Act to the file of the Ld. CIT(E) for deciding afresh in accordance Since, the registration of the trust u/s 80G of the Act is Registration u/s 12AA of the Act and therefore, the appeal of the assessee against Registration of u/s 80G of the is also restored back to the file of the Ld. CIT(E) for deciding afresh in accordance with law. Shri Mahashraman Foundation . 4 3183 & 3184/Mum/2022 e above submissions may be honorable, it would not be desirable to have such an object in the objects clause of the trust deed which is potentially hazardous.Under the circumstances, I am not in a position to accede to the registration under Section Before us, the Ld. Counsel of the assessee has filed an affidavit by the trustee which reads that said clause No. 28 will not upon and that the said clause should be considered to be part of the Memorandum of Association. The Ld. Counsel of the assessee accordingly submitted that matter may be restored back to the file of the Ld. CIT(E) and before him the assessee will file revised/modified Memorandum of Association after bone of contention was the clause 28 and the assessee has willingly agreed for removing . Therefore, we feel it appropriate to restore the matter of grant registration u/s 12AA of the Act to the file of the Ld. CIT(E) for deciding afresh in accordance Since, the registration of the trust u/s 80G of the Act is Registration u/s 12AA of the Act and therefore, the appeal of the assessee against Registration of u/s 80G of the of the Ld. CIT(E) for deciding 6. In the result, both the appeal statistical purposes. Order pronounced in the open Court on Sd/ (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 06/07/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Shri Mahashraman Foundation ITA No. 3183 & 3184/Mum/2022 In the result, both the appeals of the assessee are allowed for nounced in the open Court on 06/0 Sd/- Sd/ SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Shri Mahashraman Foundation . 5 3183 & 3184/Mum/2022 assessee are allowed for /07/2023. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai