Maharaoshri Madansinhji Saheb Benevolent Trust, RAJKOT-GUJARAT V. The Commr. of Income Tax - 1, RAJKOT-GUJARAT

ITA 332/RJT/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8582 (ITAT-RAJKOT)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-12-2014
• Assessment Year: misc
• Appeal Filed On: 21-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L MEENA
• Keywords: Charitable institution
• Section: 80G; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: RAJKOT BENCH, RAJKOT (BEFOR E SHRI ANIL CHATURVEDI , A.M. & SHRI KUL BHARAT, J.M. ) I. T. A. NO. 332 / RJT / 20 1 4 (A SSESSMENT YEAR: N.A.) MAHARAOSHRI MADANSINHJI SAHEB BENEVOLENT TRUST C/O. SARDA & SARDA 1 ST FLOOR, SAKAR DR. RADHAKRISHNA MARG, BESIDE KATHIAWAR GYMKHANA, RAJK OT - 360001 V/S THE CIT RAJKOT - I, RAJKOT (APPELLANT) (RESPONDENT) ITA NO. 333/RJT/2014 (ASSESSMENT YEAR: N.A.) KUTCH NAVPALLAV EDUCATION & MEDICAL CHARITABLE TRUST BHUMI ARCADE COMPLEXNR. BUS STATION, JUNAVA S, MADHAPUR, BHUJ - KUTCH. V/S THE CIT RAJKOT - I, RAJKOT (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIMAL DESAI, C.A. RESPONDENT BY : SHRI M.L. MEENA, D.R. ( )/ ORDER DATE OF HEARING : 3 - 12 - 2014 DATE OF PRONOUNCEMENT : 05 - 12 - 2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE 2 APPEALS OF TWO DIFFERENT ASSESSEES ARE DIRECTED AGAINST THE ORDERS OF THE CIT - I, RAJKOT DATED 26.03.2014 & 21.03.2014 RESPECTIVELY . ITA NO 332 & 333/RJT/2014 . A.Y. N.A. 2 2. BEFORE US, LD. A.R. AT THE OUTSET SUBMITTED THAT THOUGH THE APPEALS ARE OF TWO DIFFERENT ASSESSEES BUT THE FACTS AND CIRCUMSTANCES OF BOTH THE CASES ARE IDENTICAL AND HE HAS COMMON SUBMISSIONS AND THEREFORE BOTH THE APPEALS CAN B E HEARD TOGETHER. SINCE THE ISSUE INVOLVED IN BOTH THE APPEA LS ARE SIMILAR, THE APPEALS ARE TAKEN UP TOGETHER AND ARE BEING DISPOSED OF BY WAY OF A CONSOLIDATED ORDER F OR THE SAKE OF CONVENIENCE . W E PROCEED WITH THE FACTS IN THE CASE OF KUTCH NAVPALLAV ED UCATION & MEDICAL CHARITABLE TRUST IN ITA NO. 333 /RJT/2014 BEING THE LEAD CASE . 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE TRUST MADE AN APPLICATION FOR APPROVAL U/S 80G(5) OF THE INCOME TAX ACT, 196 1 IN THE PRESCRIBED FORM WHICH WAS REJECTED BY THE LD. C IT. 4. THE ASSESSEE FEELING AGGRIEVED BY THE ORDER OF CIT IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS: - 1. THE ORDER U/S 80G(5)(VI) IS BAD IN LAW. 2. THE LD.CIT HAS ERRED IN LAW AS WELL AS ON FACTS IN REJECTING THE APPLICATION FOR APPROVAL U /S 80G(5) OF THE APPELLANT TRUST. 3. THE LD. CIT HAS ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT THE TRUST DID NOT SATISFY THE CONDITIONS FOR APPROVAL U/S 80G(5) OF THE ACT. 5. BEFORE US, AT THE OUTSET L D. A.R . SUBMITTED THE ASSESSEE S APPLICATION WAS R EJECTED BECAUSE ASSESSEE HAD FAILED TO APPLY FULLY THE REQUIRED INCOME TOWARDS THE OBJECTS OF THE TRUST. HE FURTHER SUBMITTED THAT THE ISSUE IN THE PRESENT CASE IS SQUARELY COVERED IN ASSESSEE S FAVOUR BY THE DECISION OF BY THE HON BLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF CIT VS. SHREE GOVINDBHAI JETHALAL NATHAVANI CHARITABLE TRUST (2014) 49 TAXMANN.COM 171. HE ALSO PLACED ON RECORD THE COPY OF THE DECISION. ON THE CONTRARY LD. D.R SUPPORTED THE ORDER OF CIT. ITA NO 332 & 333/RJT/2014 . A.Y. N.A. 3 6. WE HAVE HEARD THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT HAS REJECTED THE APPLICATION BY OBSERVING AS UNDER: - 4. THE SUBMISSIONS OF THE TRUST IS DULY CONSIDERED BUT THE SAME IS NOT FOUND TENABLE. ON GOING THROUGH THE AUDITED FINAL ACCOUNTS STATEMENT FO R F.Y. 2012 - 13 AS PRODUCED BY THE TRUST, IT IS SEEN THAT THE TOTAL INCOME WAS RS. 402577/ - . THE ASSESSEE TRUST HAD APPLIED RS. 1,91,161/ - TOWARDS ITS OBJECTS, DURING THE RELEVANT PERIOD. THUS, THE INCOME TO THE EXTENT OF RS. 1,91,161/ - IS EXEMPT FROM THE T AX. CONSIDERING THE TOTAL INCOME OF RS. 402577/ - , THE ASSESSEE WAS REQUIRED TO MAKE EXPENDITURE AT LEAST OF RS. 3,01,933/ - TOWARDS ITS OBJECTS. 5. AS PER THE PROVISIONS OF SECTION 11 OF THE ACT, INCOME OF A TRUST SHALL NOT BE INCLUDED IN ITS TOTAL INCOME TO THE EXTENT, THE SAME APPLIED OR DEEMED TO BE APPLIED TOWARDS ITS PURPOSE. BESIDES THE TRUST IS ELIGIBLE TO ACCUMULATE AND SET APART MAXIMUM 15% OF THE INCOME OF F.Y. 2012 - 13 TOWARDS THE OBJECT TO THE EXTENT OF PRESCRIBED LIMITS, AND THEREFORE ITS TOTAL INCOME OF THE TRUST FOR THE RELEVANT A.Y. 2013 - 14 WAS INCLUSIVE OF RS. 1,51,030/ - AS PER THE PROVISIONS OF SECTION 11 OF THE ACT. 6.ASPER THE PROVISIONS OF SECTION80G(5)(I) OF THE ACT, IT IS NECESSARY FOR ANY TRUST THAT ITS TOTAL INCOME SHOULD NOT BE INCL USIVE OF ANY INCOME CHARGEABLE U/S. 11 OF THE ACT. AS DISCUSSED ABOVE, TOTAL INCOME OF THE TRUST FOR F.Y. 2012 - 13 RELEVANT TO THE A.Y. 2013 - 14 WAS INCLUSIVE OF INCOME CHARGEABLE U/S. 11 OF THE ACT. IT IS THUS CLEAR THAT THE TRUST HAS FAILED IN COMPLYING WI TH THE REQUIREMENTS FOR APPROVAL AS LAID DOWN IN SECTION 80G(5(I) OF THE ACT. 7. THE TRUST SUBMITTED THAT IT DID NOT AVAIL BENEFITS OF SECTION 80G(5) OF THE ACT IN F.Y. 2012 - 13, THEREFORE, THE FINANCIAL RESULTS OF THAT F.Y. SHOULD NOT BE CONSIDERED NOW. B ESIDES, THE TRUSTEES FURTHER UNDERTAKE THAT IN FUTURE THEY WOULD STRICTLY OBSERVED THE PROVISIONS OF SECTION 80G(5) OF THE ACT. THIS PLEA IS ALSO NOT TENABLE . AS PER THE UNAMBIGUOUS PROVISIONS OF CLAUSE (I) OF SECTION 80G(5) OF THE ACT THAT TOTAL INCOME OF THE TRUST SHOULD NOT BE INCLUSIVE INCOME CHARGEABLE U/S. 11 OF THE ACT. THEREFORE, PRESENTLY THE TRUST DID NOT SATI SFY THE PRESCRIBED CONDITIONS FOR APPROVAL U/S. 80G(5) OF THE ACT. 8. KEEPING IN VIEW THE ABOVE DISCUSSED FACTS AND CIRCUMSTANCES, IT IS C LEAR THAT THE TRUST IS NOT SATISFYING THE CONDITIONS AS PRESCRIBED IN CLAUSE (I) AND (III) OF SECTION 80G(5) OF THE ACT IS HEREBY REJECTED. 7. WE FIND FORCE INTO CONTENTION OF THE LD. A.R. THAT AT THE TIME OF GRANTING APPROVAL U/S 80G ONLY OBJECT OF THE TRU ST REQUIRES TO BE EXAMINED . THIS VIEW IS FURTHER FORTIFIED BY THE JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHREE GOVINDBHAI JETHALAL NATHAVANI CHARITABLE TRUST (SUPRA) WHEREIN THE HON BLE HIGH COURT AFTER EXAMINING THE PR OVISIONS OF SECTION 11 & 12 & 12AA OF THE ACT AFFIRMED THE VIEW OF THE TRIBUNAL THAT AT THE TIME OF GRANTING THE APPROVAL OF EXEMPTION U/S 80G OF THE ACT , O NLY OBJECT OF THE TRUST IS REQUIRED TO BE EXAMINED AND APPLICATION CANNOT BE REJECTED FOR ITS FAILU RE TO INCUR EXPENDITURE TO THE EXTENT OF 85% OF THE INCOME. BEFORE US, REVENUE HAS NOT BROUGHT ANY BINDING CONTRARY DECISION IN ITS SUPPORT. WE T HEREFORE RESPECTFULLY FOLLOWING THE JUDGMENT OF HON BLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF CIT VS. SHREE GOVINDBHAI JETHALAL NATHAVANI CHA RITABLE TRUST (SUPRA) DIRECT THE LD. CIT TO GRANT APPROVAL TO THE ASSESSEE AS PRAYED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ITA NO 332 & 333/RJT/2014 . A.Y. N.A. 4 ITA NO. 332 /RJT/2014 (MAHARAOSHRI MADANSINHJI SAHEB BENEVOLENT TRUST ) 9. BEFORE US, SINCE BOTH THE PARTIES HAVE SUBMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE IDEN TICAL TO THAT OF IN ITA NO. 333 / RJT/2014 WE THEREFORE FOR THE SIMILAR REASONS STATED HEREINABOVE WHILE DECIDING THE APPEAL OF THE ASSESSEE IN IT A NO. 333/RJT/2014 AND FOR SIMILAR REASONS ALSO ALLOW THE PRESENT GROUND OF ASSESSEE. 10. IN THE RESULT, BOTH THE APPEALS OF ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 05 - 12 - 201 4 . SD/ - SD/ - (KUL BHARAT ) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT . TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT