Gautam Budh Trust, Noida V. CIT, Ghaziabad

ITA 3239/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52600 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 15-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: V INEET GARG
• Keywords: Charitable institution
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL ITA NO. 3239 & 3240(DEL)/2011 ASSESSMENT YEAR: N.A GAUTAM BUDH TRUST, COM MISSIONER OF INCOME-TAX, C-35, SECTOR-50, NOIDA. VS. GHAZIA BAD. PAN-AABTG4867G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINEET GARG, ADVOCAT E RESPONDENT BY : SHRI SALIL MISHRA, SR. DR ORDER PER K.G. BANSAL : AM THESE TWO APPEALS OF THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY THE COMMISSIONER OF INCO ME-TAX, GHAZIABAD, ON 29.04.2011 AND 20.05.2011 UNDER SECTIONS 12AA A ND 80G RESPECTIVELY OF THE INCOME-TAX ACT, 1961 (THE ACT). WE PROCEED WITH THE APPEAL AGAINST ORDER U/S 12AA AT THE FIRST INSTANCE. 1.1 THE ASSESSEE HAS TAKEN UP FOUR GROUNDS IN T HE APPEAL, THE GIST OF WHICH IS THAT THE LD. CIT ERRED ON FACTS AND IN LAW IN REFUSING TO REGISTER THE ASSESSEE-TRUST U/S 12AA OF THE ACT. IT IS MENTIONED THAT THE ITA NOS. 3239 & 3240(DEL)/2011 2 APPLICATION FOR REGISTRATION WAS FILED ON 20.1 0.2010 SOON AFTER THE FORMATION OF THE TRUST ON 12.08.2010 AND, THERE FORE, HE HAD ONLY TO CONSIDER THE OBJECTS AND NOT THE ACTIVITIES. 2. IN THE ORDER OF THE LD. CIT, IT IS MENTIONED TH AT THE APPLICATION IN FORM 10A WAS FILED ON 20.10.2010. THE ADDITIONA L COMMISSIONER OF INCOME-TAX WAS ASKED TO SUBMIT A REPORT IN THE MAT TER. SHE REPORTED THAT THE ASSESSEE WAS REQUIRED TO FILE THE COPY OF TRUST DEED AND PRODUCE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS IN SUPPORT OF THE A PPLICATION. THE ASSESSEE WAS ALSO ASKED TO FURNISH THE PROOF OF ACTIVITIES ACTUALLY UNDERTAKEN. IT WAS FOUND THAT THE ASSESSEE HAD PURCHASED LAND A DMEASURING 1500 SQ. MTS. IN NOIDA BY PAYING PREMIUM OF RS. 1,23,55,200/-. THE AMOUNT WAS PAID OUT OF DONATIONS OF RS. 57,94,000/- FROM 67 PART IES AND UNSECURED LOANS OF RS. 20.00 LAKH. NO EVIDENCE COULD BE SUBMITTED I N RESPECT OF GENUINENESS OF THE DONATION AND THE LOAN. THEREAFTER, A NOT ICE WAS SERVED ON THE ASSESSEE BY THE LD. CIT AND THE MATTER DISCUSSED WI TH THE REPRESENTATIVE OF THE ASSESSEE. AFTER GOING THROUGH ALL THE MATERI AL, IT HAS BEEN MENTIONED THAT THE GENUINENESS OF ACTIVITIES COULD NOT BE EXAMINED DUE TO LACK OF ANY DETAILS FURNISHED IN THIS MATTER. THEREFORE, THE REGISTRATION WAS REFUSED. ITA NOS. 3239 & 3240(DEL)/2011 3 3. BEFORE US, THE LD. COUNSEL SUBMITTED THAT THE TRUST WAS CREATED BY WAY OF A REGISTERED DEED ON 12.08.2010. IT F ILED APPLICATION FOR REGISTRATION UNDER THE ACT ON 20.10.2010. THE AS SESSEE HAD COLLECTED DONATIONS AND ALSO RAISED LOANS, WHICH WERE UTILI ZED FOR OBTAINING LONG- TERM LEASE DEED IN RESPECT OF THE PLOT OF LAND IN NOIDA. A COPY OF THE LEASE DEED HAS BEEN PLACED IN THE PAPER BOOK ON PA GE NOS. 2 TO 44. THE POSSESSION OF THE LAND WAS TAKEN ON 17.2.2011. THE POSSESSION LETTER HAS BEEN PLACED ON PAGE NO. 1 OF THE PAPER BOOK. TH E LD. COUNSEL DREW OUR ATTENTION TOWARDS THE TRUST DEED, WHICH CONTAINS 52 OBJECTS. THE LEASE DEED MENTIONS IN THE RECITAL THAT THE LESSOR HAS AGREED TO DEMISE AND THE LESSEE HAS AGREED TO TAKE ON LEASE THE D EMISED PLOT ON THE TERMS AND CONDITIONS HEREINAFTER APPEARING FOR THE PURPOS E OF CONSTRUCTION AND SETTING UP OF A CHARITABLE RELIGIOUS CENTER (GAUTA M BUDH TRUST) ACCORDING TO THE BYE-LAWS AND BUILDING PLANS APPROVED BY THE LESSOR ON THE TERMS AND CONDITIONS HEREAFTER CONTAINED. IT MAY BE MENTION ED HERE THAT THE LESSOR IS NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY, C ONSTITUTED AS A CORPORATE BODY U/S 3 OF U.P. INDUSTRIAL AREA DE VELOPMENT ACT, 1976. IT IS FURTHER SUBMITTED THAT THE LAND HAS BEEN TAKEN ON LEASE FROM NOIDA FOR ITA NOS. 3239 & 3240(DEL)/2011 4 ULTIMATELY CONSTRUCTING A SCHOOL BUILDING. TH E ACTIVITY OF CONSTRUCTION IS YET TO START. ON THESE FACTS, THE CASE OF THE LD. COUNSEL IS THAT THE ASSESSEE IS A CHARITABLE TRUST FORMED PRIMARILY FOR RUNNING A SCHOOL. SINCE ALL THE OBJECTS ARE CHARITABLE IN NATURE AND A PLOT OF LAND HAS ALREADY BEEN ACQUIRED FOR SETTING UP THE SCHOOL, BOTH THE CO NDITIONS FOR GRANT OF REGISTRATION, NAMELY, THAT OBJECTS ARE CHARITABL E IN NATURE AND ACTIVITIES ARE GENUINE STAND SATISFIED IN THIS CASE. IN VI EW OF THIS, THE LD. CIT OUGHT TO HAVE GRANTED REGISTRATION TO THE ASSESSEE. 3.1 IN REPLY, THE LD. DR SUBMITTED THAT THE A SSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT THE LOANS AND DONATIONS ARE G ENUINE. THEREFORE, THE GENUINENESS OF ACTIVITIES HAS NOT BEEN ESTABLI SHED BY THE ASSESSEE, WHICH IS ONE OF THE CONDITIONS FOR GRANT OF REGISTRATI ON. IT IS FURTHER SUBMITTED THAT LEASE DEED CLEARLY SHOWS THAT THE LAND HAS BEEN ACQUIRED FOR ESTABLISHING CHARITABLE RELIGIOUS CENTER. THEREFOR E, IT IS NOT CLEAR AS TO WHETHER IT IS A CHARITABLE TRUST, RELIGIOUS TRUS T OR CHARITABLE-CUM-RELIGIOUS TRUST. OUR ATTENTION HAS BEEN DRAWN TO OBJECT NO. 32, WHICH IS REGARDING COMPILATION, PRINTING AND PUBLICATION OF-(A) SIMPL E PRAYERS FOR DAILY PRAYERS FOR SPIRITUAL AND PSYCHOLOGICAL UPLIFT OF PEOPLE GENERALLY; (B) SIMPLE BOOKLETS EXPLAINING THE BASIC MORALS AND VALUES OF HUMAN LIFE AND ITA NOS. 3239 & 3240(DEL)/2011 5 FOR MORAL UPLIFTMENT; (C) BOOKS SUITABLE FOR MORA L AND SPIRITUAL INSTRUCTIONS TO SCHOOL GOING CHILDREN, CONTAINING SIMPLE SCIENC E, STORIES FROM EPICS DEPICTING THE LIFE OF IDEAL PERSONS, SAGES AND OTH ER RENOWNED PERSONALITIES. THIS OBJECT IS BOTH CHARITABLE AND RELIGIOUS. ACC ORDINGLY, IT IS ARGUED THAT IN VIEW OF CONFLICT IN THE CONTENTS OF LEASE DEED AND THE OBJECT CLAUSE IN THE TRUST, AS AFORESAID, THE ACTIVITY OF THE AS SESSEE REGARDING LEASE OF PLOT CANNOT BE SAID TO BE IN CONFORMITY WITH THE OBJE CTS OF THE TRUST. ACCORDINGLY, IT IS ARGUED THAT THE LD. CIT RIGHTL Y REJECTED THE APPLICATION. 3.2 IN THE REJOINDER, THE LD. COUNSEL SUBMITTE D THAT THE LIST OF DONORS IN TERMS OF NAME AND ADDRESS HAD BEEN FILED BEFOR E THE LD. CIT, WHICH ARE PLACED IN THE PAPER BOOK. THE PROFIT AND LOSS A CCOUNT FOR THE YEAR ENDED ON 31.03.2011 SHOWS THE ASSETS OF LAND AND FU RNITURE AT RS. 35,77,970/- AND RS. 28,900/- RESPECTIVELY. THIS SHOWS THAT T HE ACTIVITY OF CONSTRUCTION OF SCHOOL HAS BEEN STARTED. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSIONS MADE BEFORE US. THE PRE-CONDITIONS FOR GRANT OF REGIST RATION U/S 12AA ARE THAT THE(I) OBJECTS OF THE TRUST ARE CHARITABLE OR RE LIGIOUS IN NATURE, AND (II) ACTIVITIES OF THE TRUST ARE GENUINE. THE LD. CI T HAS NOT FOUND ANY ITA NOS. 3239 & 3240(DEL)/2011 6 OBJECTION WITH THE OBJECTS OF THE TRUST. EVEN IF OBJECT NO. 32 IS TAKEN TO BE RELIGIOUS IN NATURE, IT DOES NOT COME IN THE WAY OF GIVING A FINDING THAT THE OBJECTS ARE RELIGIOUS OR CHARITABLE IN NA TURE. COMING TO THE GENUINENESS OF ACTIVITIES, THE ASSESSEE HAS TAK EN LAND ON LEASE AND A SUM OF RS. 35,77,970/- HAS BEEN PAID TO THE NOIDA AS ON 31.03.2011. THE LEASE OF LAND IS IN FURTHERANCE OF CONSTRUCTING A BUILDING, STATEDLY FOR THE PURPOSE OF ESTABLISHING A CHARITABLE RELIGIOUS CENTER AS PER LEASE DEED. THEREFORE, IT CAN BE SAID THAT THE ACTIVITIES HAVE STARTED WHICH MAY BE IN THE NATURE OF CHARITABLE, RELIGIOUS OR BOTH ACTI VITIES. IT MAY BE MENTIONED THAT THE ACTIVITIES ARE IN PURSUANCE OF THE OBJE CTS AND IT CANNOT BE SAID THAT FAILURE TO PROVE GENUINENESS OF THE DONATIONS O R LOANS CAN LEAD TO INFERENCE OF ACTIVITIES BEING NON-GENUINE. THI S IS A MATTER TO BE LOOKED INTO WHILE ASSESSING THE INCOME FOR ASSESSMENT YEA R IN WHICH THE LOAN OR THE DONATION WAS OBTAINED. ACCORDINGLY, WE ARE NOT A BLE TO UPHOLD THE FINDING THAT NO CHARITABLE ACTIVITY HAS BEEN UNDERTAKE N BY THE ASSESSEE. ACCORDINGLY, THE LD. COMMISSIONER OF INCOME-TAX IS DIRECTED TO GRANT REGISTRATION TO THE ASSESSEE. 5. COMING TO APPROVED U/S 80G, THE LD. CIT REF ERRED TO HIS FINDING ON APPLICATION OF THE ASSESSEE MADE U/S 12AA OF THE ACT. IT HAS BEEN ITA NOS. 3239 & 3240(DEL)/2011 7 MENTIONED THAT THIS APPLICATION HAS BEEN REJECTED . THEREFORE, A FINDING HAS BEEN RECORDED THAT THIS IS NOT A FIT CASE FOR GRANT OF APPROVAL U/S 80G OF THE ACT. 5.1 THE CASE OF THE LD. COUNSEL IS THAT THE MATTER REGARDING REGISTRATION U/S 12AA IS PENDING BEFORE THE TRIBUNAL AND, THER EFORE, THE FINDING OF THE LD. CIT WILL HAVE TO BE JUDGED IN THE LIGHT OF TH E FINDING OF THE TRIBUNAL IN REGARD TO REGISTRATION. THEREFORE, IT IS SUBMI TTED THAT IF REGISTRATION IS GRANTED TO THE ASSESSEE, THE MATTER REGARDING AP PROVAL U/S 80G MAY BE RESTORED TO THE FILE OF THE LD. CIT FOR FRESH AD JUDICATION TO BE MADE IN THE LIGHT OF THE FINDING OF THE TRIBUNAL. IN REPLY, T HE LD. DR RELIED ON THE ORDER OF THE LD. CIT. 6. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE GRANT OF APPROVAL U/S 80G HINGE S CRUCIALLY ON TWO FACTS, WHETHER-(I) THE TRUST IS ESTABLISHED IN INDIA ONL Y FOR A CHARITABLE PURPOSE; AND (II) IT HAS BEEN REGISTERED U/S 12AA? WE HAV E ALREADY GRANTED REGISTRATION TO THE ASSESSEE-TRUST, THEREFORE, THE SECOND CONDITION STAND SATISFIED. THE LD. CIT HAS NOT GIVEN ANY FINDING WHETHER THE TRUST HAS ITA NOS. 3239 & 3240(DEL)/2011 8 BEEN ESTABLISHED ONLY FOR CHARITABLE ACTIVITIE S. THEREFORE, THE MATTER IS RESTORED TO HIS FILE FOR RE-ADJUDICATING THE MATTE R AFTER HEARING THE ASSESSEE. 7. IN THE RESULT, ITA NO. 3239(DEL)/2011 REGARDI NG REGISTRATION IS ALLOWED, AND ITA NO. 3240(DEL)/2011 REGARDING AP PROVAL U/S 80G IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 2 6 AUGUST, 2011. SD/- SD/- (C.L. SETHI)) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 26.08.2011. SP SATIA COPY OF THE ORDER FORWARDED TO:- GAUTAM BUDH TRUST, NOIDA. AO CIT, GHAZIABAD. THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.