M/s Koteshwara Cultural and Sports Foundation , Bangalore V. The Commissioner of Income Tax (E) , Bangalore

ITA 3213/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1823 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Appeal Filed On: 30-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H V GOWTHAMA
• Keywords: Charitable institution; Opportunity of being heard; Set aside
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, BENGALURU BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 3213 /BANG/201 8 (ASSESSMENT YEAR: 2018-19) M/S.KOTESHWARA CULTURAL AND SPORTS FOUNDATION, NO.3/8, NEXT TO MEGHA OPTICALS, PUTTENAHALLI CIRCLE, JP NAGAR 6 TH PHASE, BANGALORE-560078. PAN:AADTK 4610 K VS. APPELLANT COMMISSIONER OF INCOME-TAX(EXEMPTION) BENGALURU. RESPONDENT APPELLANT BY : SHRI H.V.GOWTHAMA, CA. RESPONDENT BY : SHRI PRADEEP KUMAR, CIT(DR) DATE OF HEARING: 17/06/2019 DATE OF PRONOUNCEMENT: 17/06/2019 O R D E R PER PAVAN KUMAR GADALE, JM: THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (EXEMPTION) [CIT(E)] , BENGALURU, PASSED U/S 80G(5)(VI) OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT]. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO.3213/BANG/2018 PAGE 2 OF 6 1. THE LEARNED COMMISSIONER OF INCOME TAX(E) ERRED IN REJECTING THE APPLICATION MADE BY THE APPELLANT TRUST FOR GRANTING EXEMPTION U/S.80G(5)(VI) OF INCOME TAX, 1961. 2. THE LEARNED COMMISSIONER OF INCOME TAX (E) ERRED IN STATING THAT ' THE APPELLANT TRUST HAS NOT CARRI ED ON ANY NOTICEABLE CHARITABLE ACTIVITIES. IN ABSENCE OF CHARITABLE ACTIVITIES, IT WILL BE DIFFICULT TO ASCERTAIN THE INTENT, NATURE AND GENUINENESS OF THE TRUST. 3. THE APPELLANT SUBMITS THAT SOME OF THE SOCIAL AND SPORT ACTIVITIES HAVE BEEN CARRIED OUT BY THE TRUST AND RELEVANT DOCUMENTS AND PHOTOGRAPHS HAVE BEEN SUBMITTED B Y THE TRUST AND THEREFORE THE LEARNED CIT(E) WAS WRONG IN STATING THAT NO NOTICEABLE ACTIVITIES HAVE BEEN CARRIED OUT. 4. THE APPELLANT FURTHER SUBMITS THAT THE ACTIVITIES O F THE TRUST IS MAINLY CULTURAL & SPORTS CTIVITEIS, WHICH IS A PART OF ACTIVITIES DETAILED U/S.2(15) OF INCOME TAX ACT AND HENCE THE RECOGNITION U/S.80G (5)(VI) OF INCOME TAX ACT, 1961, SHOULD HAVE BEEN GRANTED. 5. FOR THE ABOVE AND ANY OTHER GROUNDS THAT MAY BE ADVANCED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT, APPEAL BE ALLOWED DIRECTING THE LEARNED COMMISSIONER OF INCOME TAX TO GRANT REGISTRATION U/S. 80G(5)(VI) OF INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS FILED AN APPLICATION FOR RECOGNITION U/S 80G OF THE ACT. TH E CIT(E) CONSIDERING FORM 10G FOUND THAT THE ASSESSEE HAS NO T CARRIED ON NOTICEABLE CHARITABLE ACTIVITIES. THEREFORE, T HE CIT(A) HAS REJECTED RECOGNITION U/S 80G OF THE ACT. BEING AGG RIEVED, THE ASSESSEE HAS FILED THE APPEAL BEFORE THE TRIBUNAL. ITA NO.3213/BANG/2018 PAGE 3 OF 6 4. THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS A PPLIED FOR REGISTRATION U/S 12AA OF THE ACT AND RECOGNITIO N U/S 80G OF THE ACT ON 9/03/2018 AND COMPLIED WITH THE CONDITIO NS. FURTHER THE LEARNED AR SUBMITTED THAT REGISTRATION U/S 12AA OF THE ACT WAS GRANTED TO THE ASSESSEE ON 27/09/201 8 WHEREAS RECOGNITION U/S 80G WAS REJECTED. THEREFOR E, THE LEARNED AR PRAYED THAT CONSIDERING THE INFORMATION AND THE ACTIVITIES OF THE ASSESSEE, THE RECOGNITION U/S 80G MAY BE GRANTED AND PRAYED FOR ALLOWING THE APPEAL. CONTRA , LEARNED DR RELIED ON THE ORDER OF THE CIT(E). 5. WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. PRIMA FACIE, THE CIT(E) HAS REJECTED THE R ECOGNITION U/S 80G BY MENTIONING THAT CHARITABLE ACTIVITIES AR E NOT CARRIED OUT BY THE ASSESSEE. WE FOUND THAT THE CIT (E) HAS GRANTED REGISTRATION U/S 12AA OF THE ACT TO THE ASS ESSEE AND THE LD.R HAS FURNISHED COPY OF REGISTRATION U/S 12A A OF THE ACT DATED27/09/2018. WE FOUND THAT WHEN THE REGISTRATI ON U/S 12AA OF THE ACT WAS GRANTED BY THE CIT(E) AFTER VER IFYING AND SATISFYING REQUISITE CONDITIONS COMPLIED BY THE ASS ESSEE WHICH IS NOT DISPUTED BY THE REVENUE AND THEREFORE, THE A SSESSEE IS ELIGIBLE FOR RECOGNITION U/S 80G OF THE ACT. WE SU PPORT OUR VIEW WITH THE DECISION OF THE CO-ORDINATE BENCH OF TRIBUNAL IN ITA NO.2560/BANG/2018 DATED 22/03/2019 IN THE CASE OF ITA NO.3213/BANG/2018 PAGE 4 OF 6 M/S.KUNCHAM MOHAN RAJ & MANJULA CHARITABLE TRUST WHERE SIMILAR ISSUE WAS CONSIDERED AND THE OBSERVATIONS O F THE TRIBUNAL AT PAGE..PARA.4.3.1 READ AS UNDER: 4.3.1 WE HAVE CONSIDERED THE RIVAL CONTENTIO NS AND PERUSED THE MATERIAL ON RECORD; INCLUDING THE JUDIC IAL PRONOUNCEMENTS CITED / RELIED UPON. THE UNDISPUTED FACTS, AS EMERGE FROM A PERUSAL OF THE RECORD BEFOR E US, IS THAT THE ASSESSEE TRUST ESTABLISHED VIDE TRUST DEED DATED 21.12.2016, SIMULTANEOUSLY FILED APPLICATIONS FOR GRANT OF REGISTRATION UNDER SECTION 12AA AND GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT ON 16.01.2018. CLARIFICATIONS / DETAILS WERE CALLED FO R THEREON JOINTLY VIDE CIT(E)'S LETTERS DATED 24.04.2 018 AND 27.06.2018 AND THE ASSESSEE'S REPLY FOR BOTH GR ANT OF REGISTRATION UNDER SECTION 12AA AND RECOGNITION UNDER SECTION 80G OF THE ACT WAS FILED VIDE LETTERS DATED 21.06.2018 AND 13.07.2018. FROM THE IMPUGNED ORDER, WE FIND THAT THE MAIN OBJECTION BY THE CIT(E ) TO GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT W AS THAT THE ASSESSEE TRUST HAS NOT CARRIED OUT ANY NOTICEABLE ACTIVITY TILL FORMATION OF THE TRUST; AN D THEREFORE, IT WAS NOT A FIT CASE FOR GRANT OF RECOG NITION UNDER SECTION 80G OF THE ACT. IN OUR VIEW, WHAT IS SIGNIFICANT / NOTICEABLE ACTIVITY IS VERY SUBJECTIV E AND CANNOT BE THE BASIS FOR REJECTION OF THE ASSESSEE'S APPLICATION. IT IS FOR THE ASSESSEE TO DETERMINE WH ICH OF ITS ACTIVITIES IN FURTHERANCE OF ITS OBJECTS ARE TO BE TAKEN UP INITIALLY. GRANT OF APPROVAL / RECOGNITION UNDER ITA NO.3213/BANG/2018 PAGE 5 OF 6 SECTION 80G OF THE ACT CAN ACT AS A CATALYST TO ENCOURAGE PROSPECTIVE DONORS TO LOOK AT THE INTENDED ACTIVITIES / OBJECTS AND POSSIBLY PROVIDE FINANCIAL SUPPORT THROUGH DONATIONS / CONTRIBUTIONS. STRANGEL Y, IN THE CASE ON HAND, ON THE VERY SAME DAY I.E., 25.07.2018 WHEN HE REJECTED THE ASSESSEE'S APPLICAT ION FOR RECOGNITION UNDER SECTION 80G OF THE ACT, THE CIT(E) HAS GRANTED THE ASSESSEE-TRUST REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 25.07.2018; OSTENSIBLY, AFTER EXAMINATION OF THE ASSESSEE'S OBJECTS, ETC., WHICH THE CIT HAS CATEGOR IZED AS 'ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBL IC UTILITY'. 4.3.2 IN THIS FACTUAL MATRIX OF THE CASE, AS DIS CUSSED ABOVE AND FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF INDIC SCIENCE RESEARCH TRUST (SUPRA), WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDE R OF THE CIT(E) DATED 25.07.2018 PASSED UNDER SECTION 80G(5)(IV) OF THE ACT AND RESTORE THE MATTER TO THE FILE OF THE CIT(E) TO EXAMINE THE MATTER AFRESH IN THE L IGHT OF HIS ORDER DATED 25.07.2018 GRANTING THE ASSESSEE REGISTRATION UNDER SECTION 12AA OF THE ACT AND OUR OBSERVATIONS HEREINABOVE. NEEDLESS TO ADD, THE CIT( E) IS DIRECTED TO AFFORD THE ASSESSEE REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER AND TO FIL E DETAILS / SUBMISSIONS REQUIRED THAT SHALL BE CONSID ERED BEFORE DECIDING THE ISSUE. ITA NO.3213/BANG/2018 PAGE 6 OF 6 ACCORDINGLY WE, FOLLOWING THE RATIO OF THE DECISION RESTORE THIS DISPUTED ISSUE TO THE FILE OF THE CIT(E) TO ADJUDIC ATE AFRESH GRANTING OF RECOGNITION U/S 80G OF THE ACTIN THE LI GHT OF GRANT OF REGISTRATION U/S 12AA AND FURTHER THE ASSESSEE S HOULD ALSO BE PROVIDED AN ADEQUATE OPPORTUNITY OF HEARING AND SHALL CO- OPERATE IN SUBMITTING INFORMATION FOR EARLY DISPOSA L OF THE APPLICATION FILED FOR RECOGNITION U/S 80G OF THE AC T AND ALLOW THE GROUNDS OF APPEAL FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE, 2019. SD/- SD/- (JASON P BOAZ ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BENGALURU D A T E : 17/06/2019 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)- 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE