Building a better Tomorrow Foundation , Bangalore V. Commissioner of Income Tax (Exemptions) , Bangalore

ITA 3364/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8143 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 21-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Set aside
• Section: 80G; 12A; 12AA; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 3364 /BANG/201 8 ASSESSMENT YEAR : 20 18 - 1 9 M/S. BUILDING A BETTER TOMORROW FOUNDATION, LEVEL 3, COMCORDE BLOCK, UB CITY, NO.24, VITTAL MALLYA ROAD, BENGALURU. PAN : AADTB 3451 H VS. COMMISSIONER OF INCOME TAX (EXEMPTIONS), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. NARENDRA KUMAR JAIN, ADVOCATE REVENUE BY : MS. NEERA MALHOTRA, CIT-DR DATE OF HEARING : 27 . 0 6 .201 9 DATE OF PRONOUNCEMENT : 19 . 0 7 .201 9 O R D E R PER JASON P. BOAZ, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(EXEMPTIONS), BENGALURU, DATED 26.10.2018 REJECTING THE ASSESSEES APPLICATION FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER:- ITA NO. 3364/BANG/2018 PAGE 2 OF 7 2.1 THE ASSESSEE IS A CHARITABLE TRUST CONSTITUTED VIDE TRUST DEED DATED 09.01.2018. THE ASSESSEE FILED AN APPLICATION IN FORM 10A SEEKING REGISTRATION UNDER SECTION 12AA OF THE ACT, ON 21.03.2018, AND AFTER EXAMINATION THEREOF, REGISTRATION THEREUNDER WAS GRANTED BY CIT(EXEMPTIONS) VIDE ORDER ITBA/EXM/S/12AA/2018-19/10/2625978(1) DATED 27.07.2018. ON 24.04.2018, THE ASSESSEE FILED FORM 10G BEFORE THE CIT(EXEMPTIONS) SEEKING GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT. THE SAME WAS REJECTED VIDE ORDER UNDER SECTION 80G(5)(VI) OF THE ACT DATED 26.10.2018 ON THE GROUND THAT SINCE THE ASSESSEE HAS NOT CARRIED OUT SUFFICIENT ACTIVITIES, IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THE OBJECTS AND ACTIVITIES OF THE TRUST. 3.1 AGGRIEVED BY THE ORDER OF THE CIT(EXEMPTIONS), BENGALURU, DATED 26.10.2018 REJECTING ITS APPLICATION FOR RECOGNITION UNDER SECTION 80G OF THE ACT, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL, WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS:- 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTIONS), BENGALURU REFUSING GRANT OF RECOGNITION U/S 80(G)(5)(VI) OF THE INCOME-TAX ACT, 1961 FOR THE APPELLANT TRUST IS BAD IN LAW AND ON FACTS OF THE CASE. THE ORDER IS PASSED WITHOUT FULLY APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE SETTLED LEGAL POSITION IN THIS REGARD. THE ORDER PASSED, THEREFORE, IS LIABLE TO BE QUASHED AND IT IS REQUESTED THAT RECOGNITION U/S 80(G)(5)(VI) OF THE INCOME-TAX ACT, 1961 BE GRANTED TO THE APPELLANT TRUST. 2. WITHOUT PREJUDICE TO AFORESAID GROUND NO. 1 ON FACTS IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTIONS), BENGALURU HAS GROSSLY ERRED, IN LAW AND ON FACTS, STATING IN HIS ORDER THAT THE APPELLANT TRUST 'IS STILL IN INFANCY STAGE AND HAS NOT CARRIED OUT NOTICEABLE ACTIVITIES TO GRANT EXEMPTION U/S 80G OF THE I. T ACT' WHEN THE FACTS WERE OTHERWISE ON RECORD WHICH WERE AVAILABLE TO HIM AT THE TIME OF PROCEEDINGS AND FOR THAT REASON NOT JUSTIFIED IN REFUSING GRANT OF RECOGNITION U/S 80(G)(5)(VI) OF THE INCOME-TAX ACT, 1961. THEREFORE, THE ORDER PASSED IS BAD IN LAW AND LIABLE TO BE QUASHED ITA NO. 3364/BANG/2018 PAGE 3 OF 7 AND IT IS REQUESTED THAT RECOGNITION U/S 80(G)(5)(VI) OF THE INCOME-TAX ACT, 1961 BE GRANTED TO THE APPELLANT TRUST. 3. WITHOUT PREJUDICE TO GROUNDS ABOVE, THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTIONS), BENGALURU, IN LAW AND ON FACTS, NOT JUSTIFIED IN NOT SATISFYING THE GENUINENESS OF THE ACTIVITIES OF THE APPELLANT TRUST FOR GRANTING RECOGNITION U/S 80(G)(5)(VI) OF THE INCOME-TAX ACT, 1961 WHEN HE WAS SATISFIED WITH THE GENUINENESS OF THE ACTIVITIES OF THE TRUST WHILE GRANTING REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961 JUST A MONTH BEFORE THE DATE OF REFUSING RECOGNITION U/S 80(G)(5)(VI) OF THE INCOME-TAX ACT, 1961 WHEN THERE WERE NO CONTRARY MATERIAL AVAILABLE WITH HIM BETWEEN THE DATE OF REGISTRATION U/S 12AA AND REFUSAL OF RECOGNITION U/S 80G(5)(VI) OF THE ACT. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTION), BENGALURU, THEREFORE, IS ERRONEOUS, UNREASONABLE AND ARBITRARY AND LIABLE TO BE QUASHED IT IS REQUESTED THAT RECOGNITION U/S 80(G)(5)(VI) OF THE INCOME-TAX ACT, 1961 BE GRANTED TO THE APPELLANT TRUST. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTIONS), BENGALURU HAS NOT DENIED THE COMPLIANCE OF ANY OF THE FIVE BASIC CONDITION STATED IN SUB SECTION (I) TO (V) OF SECTION 80G(5) OF THE INCOME TAX ACT, 1961 READ WITH RULE 11AA OF THE INCOME TAX RULES, 1962 BY THE APPELLANT TRUST FOR GRANT OF REGISTRATION UNDER SECTION 80G OF THE INCOME-TAX ACT, 1961. IN THE CIRCUMSTANCES, HE HAS ERRED IN DENYING GRANT OF RECOGNITION U/S 80G(5)(VI) OF THE ACT TO THE APPELLANT TRUST AND THE ORDER PASSED LIABLE TO BE QUASHED AND IT IS REQUESTED THAT RECOGNITION U/S 80(G)(5)(VI) OF THE INCOME-TAX ACT, 1961 BE GRANTED TO THE APPELLANT TRUST. 5. FOR THESE AND OTHER REASONS THAT MAY BE URGED AT THE TIME OF THE HEARING IT IS REQUESTED THAT ITS CLAIM FOR GRANT OF RECOGNITION UNDER SECTION 80G(5)(VI) OF THE ACT BE GRANTED. IN SUPPORT OF THE GROUNDS (SUPRA), THE ASSESSEE HAS FILED A PAPER BOOK (PAGES 1 TO 39) AND COPIES OF JUDICIAL PRONOUNCEMENTS RELIED UPON. 3.2.1 THE LEARNED AR FOR THE ASSESSEE WAS HEAD IN SUPPORT OF THE GROUNDS RAISED (SUPRA). ACCORDING TO THE LEARNED AR, THE CIT(E) IN THE IMPUGNED ORDER HAS NOT SPELT OUT THE CONDITIONS MENTIONED IN SECTION 80G(5) OF ITA NO. 3364/BANG/2018 PAGE 4 OF 7 THE ACT WHICH HAS NOT BEEN FULFILLED BY THE ASSESSEE. THE LEARNED AR DREW OUR ATTENTION TO THE FACT THAT THE CIT(E) HIMSELF HAD GRANTED THE ASSESSEE REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 27.09.2018 AND THEREFORE IT IS EVIDENT THE CIT(A) WAS SATISFIED THAT THE OBJECTS OF THE ASSESSEE TRUST WERE CHARITABLE AND ITS ACTIVITIES WERE GENUINE. IN THESE CIRCUMSTANCES, THE CIT(E) OUGHT TO HAVE GRANTED THE ASSESSEE RECOGNITION UNDER SECTION 80G OF THE ACT. THE LEARNED AR SUBMITTED THAT IN SIMILAR CIRCUMSTANCES, AS IN THE CASE ON HAND, A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF OLA FOUNDATION ECONOMIC LAWS PRACTICE VS. CIT(E), BENGALURU FOLLOWING THE DECISION OF THE ITAT JAIPUR BENCH IN THE CASE OF ANAND INCUBATION CENTRE VS. CIT(E), JAIPUR IN 86 TAXMANN.COM 250 (JAIPUR TRIB.) DIRECTED GRANT OF APPROVAL UNDER SECTION 80G OF THE ACT. THE LEARNED AR ALSO DREW THE ATTENTION OF THE BENCH TO THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ALL PEOPLE CHARITABLE TRUST VS. CIT(E) IN ITA NOS.1216 AND 1217/BANG/2015 DATED 30.12.2015 WHICH FOLLOWED THE PRINCIPLES LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF DIT(E) VS. MEENAKSHI AMMA ENDOWMENT TRUST IN 354 ITR 219 (KAR), IN THE CONTEXT OF GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT. 3.2 THE LEARNED AR SUBMITTED THAT THE ASSESSEE TRUST WAS CONSTITUTED VIDE TRUST DEED DATED 09.01.2018 AND APPLICATION FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT AND RECOGNITION UNDER SECTION 80G OF THE ACT WERE FILED ON 21.03.2018 AND 20.04.2018 RESPECTIVELY. IT IS SUBMITTED THAT THE CIT(E), OBVIOUSLY BEING SATISFIED WITH CHARITABLE NATURE OF ITS OBJECTS AND GENUINENESS OF ACTIVITIES THEREOF HAD GRANTED THE ASSESSEE REGISTRATION UNDER SECTION 12AA OF THE ACT ON 27.09.2018. HOWEVER, STRANGELY, A MONTH LATER VIDE ORDER DATED 26.10.2018, THE SAME CIT(E) REJECTS THE ASSESSEES APPLICATION FOR RECOGNITION UNDER SECTION 80G OF THE ACT ON THE GROUND THAT SINCE THE ASSESSEE HAS NOT CARRIED OUT SUFFICIENT / NOTICEABLE ACTIVITIES, IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THE OBJECTS AND ACTIVITIES OF THE ASSESSEE TRUST. IT IS CONTENDED ITA NO. 3364/BANG/2018 PAGE 5 OF 7 THAT IN VIEW OF THE ABOVE FACTUAL SITUATION IN THE CASE ON HAND AND THE JUDICIAL PRONOUNCEMENTS CITED, THE ACTION OF THE CIT(E) IN NOT GRANTING RECOGNITION UNDER SECTION 80G OF THE ACT IS NOT JUSTIFIED AND THEREFORE PRAYED THAT THE ORDER OF THE CIT(E) BE SET ASIDE. 3.3 PER CONTRA, THE LEARNED CIT-DR VEHEMENTLY SUPPORTED THE IMPUGNED ORDER OF CIT(E) IN REJECTING THE ASSESSEES APPLICATION FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT. 3.4.1 WE HAVE CONSIDERED THE RIVAL CONTENTIONS / SUBMISSIONS AND CAREFULLY PERUSED THE MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE CIT(E) HIMSELF GRANTED THE ASSESSEE REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 27.09.2018 AND THEREFORE IT IS OBVIOUS THAT THE CIT(E) WAS SATISFIED THAT THE OBJECTS OF THE ASSESSEE TRUST WERE CHARITABLE AND THAT ITS ACTIVITIES WERE GENUINE AS THIS IS SINE QUA NON FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. RULE 11AA(5) OF THE INCOME TAX RULES, 1962 MAKES IT INCUMBENT ON THE PART OF THE CIT(E) TO SPELL OUT THE CONDITIONS IN SECTION 80G(5) OF THE ACT THAT HAVE NOT BEEN FULFILLED BY THE ASSESSEE. ON A PERUSAL OF THE IMPUGNED ORDER, WE FIND THAT THE ONLY REASON ASSIGNED BY THE CIT(E) FOR REJECTION OF ASSESSEES APPLICATION FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT VIDE ORDER DATED 26.10.2018, A MONTH LATER, IS THE ABSENCE OF SUFFICIENT ACTIVITIES OF THE TRUST. WE FIND THAT IN SIMILAR FACTUAL CIRCUMSTANCES, A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF OLA FOUNDATION ECONOMIC LAWS PRACTICE VS. CIT(E) IN ITS ORDER IN ITA NO.215/BANG/2018 DATED 27.10.2018 CONSIDERED THE SAME ISSUE AND DIRECTED THE GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT HOLDING AS UNDER AT PARA 10 THEREOF:- 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT THE CIT(E) HIMSELF HAS GRANTED REGISTRATION TO ITA NO. 3364/BANG/2018 PAGE 6 OF 7 THE ASSESSEE U/S 12A OF THE ACT AND THEREFORE, THE CIT(E) WAS SATISFIED THAT THE OBJECTS OF THE TRUST WERE CHARITABLE AND THAT ITS ACTIVITIES WERE GENUINE AS THIS IS A CONDITION FOR GRANT OF REGISTRATION U/S.12A OF THE ACT. AS PER THE REQUIREMENTS OF RULE 11AA(5) OF THE RULES, IT IS INCUMBENT ON THE PART OF THE CIT(E) TO SPELL OUT THE CONDITIONS MENTIONED IN SEC. 80G(5) WHICH HAS NOT BEEN FULFILLED BY THE ASSESSEE. THEREFORE IT CAN BE SAFELY CONCLUDED THAT THE ONLY REASON ASSIGNED BY THE CIT(E) FOR NOT GRANTING APPROVAL U/S.80G OF THE ACT IS THE ABSENCE OF ACTIVITIES OF THE TRUST FROM THE DATE OF COMING INTO EXISTENCE OF THE TRUST. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF DIT(E) VS. MEENAKSHI AMMA ENDOWMENT TRUST, 354 ITR 219 (KAR), WHEREIN THE HON'BLE KARNATAKA HIGH COURT IN THE CONTEXT OF GRANT OF APPROVAL 12A OF THE ACT MADE AN OBSERVATION THAT WHERE TRUST HAS APPROACHED THE AUTHORITY FOR REGISTRATION U/S 12A WITHIN SPAN OF 8 MONTH AFTER ITS FORMATION, OBJECTS OF THE TRUST HAVE TO BE EXAMINED AND THE AUTHORITIES CANNOT INSIST ON PROOF OF ACTIVITIES OF THE TRUST AS TRUST WAS YET TO COMMENCE ITS ACTIVITIES. ITAT, BANGALORE BENCH IN THE CASE OF ALL PEOPLE CHARITABLE TRUST VS. CIT(E) IN ITA NOS. 1216 AND 1217/BANG/2015 ORDER DATED 30/12/2015 HAS APPLIED THE PRINCIPLES LAID DOWN IN THE CASE OF MEENAKSHI AMMA ENDOWMENT TRUST (SUPRA) IN THE CONTEXT OF GRANT OF REGISTRATION U/S 80G OF THE ACT. IN THE PRESENT CASE THE TRUST WAS FORMED ON 14/12/2016 AND APPLICATION FOR GRANT OF REGISTRATION AND APPROVAL U/S 12A AND 80G RESPECTIVELY WAS MADE ON 16/5/2017. THEREFORE THE CIT(E) WAS NOT JUSTIFIED IN BASING HIS CONCLUSION FOR REJECTING APPROVAL U/S.80G OF THE ACT ON THE GROUND OF ABSENCE OF ACTIVITIES OF THE TRUST. ITAT, JAIPUR IN THE CASE OF ANAND INCUBATION CENTRE VS. CIT(E), JAIPUR 86 TAXMANN.COM 250 (JAIPUR TRIB), ON IDENTICAL FACTS AS THE CASE OF THE ASSESSEE, THE TRIBUNAL HELD THAT REJECTION OF GRANT OF APPROVAL U/S 80G WAS NOT JUSTIFIED. KEEPING IN MIND THE AFORESAID DECISIONS AND THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE CIT(E) OUGHT TO HAVE GRANTED THE APPROVAL U/S.80G(5) OF THE ACT. WE ACCORDINGLY DIRECT THAT THE APPROVAL U/S.80G OF THE ACT BE GRANTED TO THE ASSESSEE. ITA NO. 3364/BANG/2018 PAGE 7 OF 7 3.4.2 RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF OLA FOUNDATION ECONOMIC LAW PRACTICE (SUPRA), WE DIRECT THAT RECOGNITION UNDER SECTION 80G OF THE ACT BE GRANTED TO THE ASSESSEE. 4. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2018-19 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF JULY, 2019. SD/- SD / - SD/ - (PAVAN KUMAR GADALE) JUDICIAL MEMBER (JASON P BOAZ) ACCOUNTANT MEMBER BANGALORE. DATED: 19 TH JULY, 2019. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.