Cancer Awarenesss Forum, Ambala City V. Commssioner of Income Tax, Chandigarh

ITA 339/CHANDI/2015

• Counselvise Citation: [2015] 128 COUNSELVISE.COM (IT) 9790 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-10-2015
• Assessment Year: 2015-2016
• Appeal Filed On: 08-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Question of law
• Section: 12; 11; 12A; 12AA; 22; 10(23C)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 339/CHD/2015 ASSESSMENT YEAR: 2015-16 CANCER AWARENESS FORUM, VS. THE CIT (EXEMPTIONS), AMBALA CITY CHANDIGARH PAN NO. AACAC0799H (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ROHIT GOYAL RESPONDENT BY : SMT. RAJINDER KAUR DATE OF HEARING : 07.10.2015 DATE OF PRONOUNCEMENT : 16.11.2015 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 22.01.2015 OF CIT (EXEMPTIONS), CHANDIGARH PASSED U /S 12AA OF THE INCOME- TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT L D. COMMISSIONER OF INCOME TAX (EXEMPTIONS) CHANDIGARH VIDE HIS ORDER DATED 22 .01.2015 DECLINED TO GRANT REGISTRATION U/S 12A / 12AA OF THE ACT TO THE ASSES SEE. THE ASSESSEE SUBMITTED AN APPLICATION U/S 12A ON 10.7.2014 TO THE COMMISSI ONER OF INCOME TAX, PANCHKULA. THE ASSESSEE SOCIETY WAS REGISTERED ON 23RD DECEMBER 2013 UNDER 2 THE HARYANA REGISTRATION AND REGULATION OF SOCIETIE S ACT, 2012 (HARYANA ACT NO. 1 OF 2012). THE AIMS AND OBJECTS OF THE SOCIETY ARE AS UNDER:- A) TO DISTRIBUTE THE BOOKS IN THE STUDENTS OF BPL F AMILIES. B) TO RUN SHORT TERMS COURSES LIKE TAILORING, BEAUT ICIAN ETC. FOR GIRLS AND WOMAN C) TO TRY THE REMOVE OF VILLAGES PROBLEMS LIKE STRE ET, WATER ELECTRICITY ETC. D) PROMOTION OF ARTS, EDUCATION, COMPUTER EDUCATION , HEALTH & PARAMEDICAL EDUCATION, SCIENCE, LITERATURE, PHILO SOPHY, RELIGION, INDUSTRIES, SKILL DEVELOPMENT, FIND ART S ETC. INSTRUCTION AND DIFFUSION OF ANY USEFUL KNOWLEDGE. F) TO WORK FOR THE CAUSE OF ENFORCEMENT OF PROHIBIT ION AND INITIATE PEOPLES MOVEMENT AGAINST SMOKING ALCOHO LISM AND DRUG ABUSE G) TO CREATE AWARENESS AND ADDRESSING SOME OF THE S OCIAL EVILS SUCH AS FEMALE FETICIDE, DOWRY, EXTRAVAGANT, EXPEN DITURE ON SOCIAL FUNCTIONS LIKE MARRIAGE, EMPOWERMENT OF WOMEN IN DECISION MAKING ETC. H) ESTABLISHMENT OR MAINTENANCE OF LIBRARIES OF REA DING ROOMS I) TO RAISE OR ACQUIRE FUNDS OR PROPERTY FORM CENTR AL GOVERNMENT, STATE GOVERNMENT, NON-GOVERNMENT AGEN CIES, CHARITABLE TRUST BY WAY OF DONATION OR GRAN TS OR CONTRIBUTION OR BY TAKING LOAN FROM PUBLIC AND PRIVATE FINANCIAL INTUITIONS. THE FUNDS, PROPERTIES, ASSET S AND ALL OTHER RESOURCES, PRESENT AND FUTURE OF THE SOCIET Y SHALL BE UTILIZED FOR WAY OR ALL THE PURPOSE OR OBJECTS. 3. THE LD. COMMISSIONER DECLINED TO GRANT REGISTRAT ION TO THE ASSESSEE SOCIETY, OBSERVING AS UNDER:- 4. THE SOCIETY HAS FILED THE INCOME AND EXPE NDITURE ACCOUNT AS ON 31.03.2014. ON PERUSAL OF THE SAME, ONE CAN M AKE OUT THAT 3 NO CHARITABLE WORK WORTH THE NAME HAS BEEN CARRIED OUT. IN FACT, NO ACTIVITY OF CHARITY AS HAS BEEN ENVISAGE D IN THE BYE LAWS OF THE SOCIETY IS POSSIBLE WITH SUCH A MEAGER AMOUN T OF DONATION ( RS. 19,500/-). THE SOCIETY HAS NEITHER OBTAINED PAN NO. NOR HAS FILED ANY RETURN OF INCOME. . 5. CONSIDERING THE TOTALITY OF FACTS AND CI RCUMSTANCES THEREFORE, I AM OF THE OPINION THAT THE SOCIETY IS YET TO MAKE A BEGINNING AND CAN HARDLY BE SAID TO BE ENGAGED IN A NY OF THE CHARITABLE ACTIVITIES IN TERMS OF SECTION 2(15) OF THE ACT. THE REGISTRATION U/S 12A OF THE IT ACT IS THUS DECLINED . 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN THE INST ANT CASE, THE ONLY CONTENTION OF THE COMMISSIONER IN REFUSING TO GRANT REGISTRATION TO THE SOCIETY U/S 12A OF THE ACT IS THAT THE SOCIETY HAD NOT CARR IED OUT CHARITABLE ACTIVITIES AND, THEREFORE, IT WAS NOT ENTITLED FOR GRANT OF RE GISTRATION. SHRI ROHIT GOYAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE APPLICA TION FOR REGISTRATION IS REQUIRED TO BE MADE WITHIN ONE YEAR OF CREATION OF THE TRUST OR SOCIETY AND THERE IS NO REQUIREMENT THAT THE TRUST OR SOCIETY SHOULD HAVE STARTED ALL ITS ENVISAGED ACTIVITIES IN THE FIRST YEAR ITSELF . ACCORDING TO LD. COUNSEL FOR THE ASSESSEE U/S 12 A / 12AA OF THE ACT, SATISFACTION REGARDING GENU INENESS OF THE ACTIVITIES OF THE TRUST / SOCIETY IS TO BE SEEN AND THE STAGE FOR APPLICATION OF INCOME IS YET TO ARRIVE I.E. WHEN THE TRUST OR SOCIETY FILES ITS RET URN. RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V B.K.K. MEMORIAL TRUST (2013) 29 TAXMANN. COM 286 (P&H), WH EREIN ON SIMILAR FACTS THE HON'BLE HIGH COURT HAS HELD AS UNDER:- 6. A PERUSAL OF THE FACTS DEPICTS THAT THE TRUST WAS CREATED ON 23.6.2010 AND APPLICATION UNDER SECTION 12A(1) (AA) OF THE ACT WAS MOVED ON 19.7.2010 AND THE SAME WAS REJECTED ON 26.11.2010. THIS COURT IN ITA NO.710 OF 2010-COMMIS SIONER OF INCOME TAX-II, CHANDIGARH VS. M/S SURYA EDUCATIONAL & CHARITABLE TRUST, DECIDED ON 5.10.2011 HAS HELD THA T THE 4 APPLICATION FOR REGISTRATION IS REQUIRED TO BE MADE WITHIN ONE YEAR OF THE CREATION OF THE TRUST AND THERE IS NO R EQUIREMENT THAT THE TRUST OR THE INSTITUTION SHOULD HAVE STARTED AL L ITS ENVISAGED ACTIVITIES IN THE FIRST YEAR ITSELF. UNDER SECTION 12AA OF THE ACT SATISFACTION REGARDING THE GENUINENESS OF THE ACTIV ITIES OF THE TRUST IS TO BE SEEN AND THE STAGE FOR APPLICATION O F INCOME IS YET TO ARRIVE I.E. WHEN SUCH TRUST OR INSTITUTION FILES ITS RETURN. RELEVANT PORTION OF THE JUDGMENT READS AS UNDER:- WE HAVE HEARD LEARNED COUNSEL FOR THE APPELLANT, BUT FIND NO MERIT IN THE PRESENT APPEALS. AS PER SECTIO N 12AA OF THE ACT, AN APPLICATION FOR REGISTRATION OF THE TRUST AND INSTITUTION IS REQUIRED TO BE MADE WITHIN ONE YEAR FROM THE DATE OF CREATION OF THE TRUST OR THE ESTABLISHMENT OF SUCH INSTITUTION. THE PROCEDURE FOR REGISTRATION OF THE TRUST OR INSTITUTION IS PRESCRIBED UNDER SECTION 12AA OF THE ACT. IN TERMS OF CLAUSE (A) OF SECTION 12AA OF THE ACT, THE COMMISSIONER IS TO SATISFY HIMSELF ABOUT THE GENUIN ENESS OF THE ACTIVITIES OF THE TRUST ON SUCH INQUIRIES AS HE MAY DEEM NECESSARY. SUB-SECTION (1A) AND (2) OF SECTION 12AA OF THE ACT, ARE PROCEDURAL IN NATURE, WHEREAS SUB-S ECTION (3) OF SECTION 12AA OF THE ACT, EMPOWERS THE COMMISSIONER TO CANCEL THE REGISTRATION OF THE TRUS T OR INSTITUTION, IF HE IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT CAR RIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INST ITUTION. SECTION 11 OF THE ACT CONTEMPLATES THAT THE INCOME AS SPECIFIED THEREIN SHALL NOT BE INCLUDED IN THE TOTA L INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF TH E INCOME DERIVED FROM THE PROPERTY HELD UNDER THE TRUST WHOL LY FOR CHARITABLE OR RELIGIOUS PURPOSES, WHEREAS SECTION 1 2 OF THE ACT, DEALS WITH THE CONTRIBUTIONS RECEIVED BY THE T RUST OR AN INSTITUTION, ESTABLISHED FOR CHARITABLE AND RELI GIOUS PURPOSES, RECEIVING CONTRIBUTION, SHALL NOT BE AN I NCOME IN TERMS OF SECTION 11 OF THE ACT. THE BENEFIT OF SECT IONS 11 AND 12 OF THE ACT, ARE AVAILABLE ONLY IF SUCH TRUST OR INSTITUTION IS REGISTERED UNDER SECTION 12AA OF THE ACT. ON THE OTHER HAND, SECTION 10(23C) OF THE ACT ARE T HE PROVISIONS OF THE ACT IN SUBSTITUTION OF THE EARLIE R PROVISIONS OF SECTION 10(22) OF THE ACT AS TO WHICH INCOME SHALL NOT BE INCLUDED IN COMPUTING THE TOTAL INCOME OF ANY PERSON. THEREFORE, THE PROVISIONS OF SECTIONS 11, 1 2 OR SECTION 10(23C) OF THE ACT, DEAL WITH THE INCOME OF A TRUST OR OF THE INSTITUTION AND THE CIRCUMSTANCES AS TO W HEN SUCH 5 INCOME IS TO BE EXCLUDED FOR COMPUTING THE TOTAL IN COME, BUT THE BASIS OF SUCH BENEFIT IS THE REGISTRATION U NDER SECTION 12AA OF THE ACT. UNLESS A TRUST OR INSTITUT ION IS REGISTERED UNDER SECTION 12AA OF THE ACT, SUCH TRUS T OR INSTITUTION SHALL NOT BE ENTITLED TO EXCLUDE FROM I TS TOTAL INCOME, DEDUCTIONS OR CONTRIBUTIONS OR FROM OTHER S OURCES. THEREFORE, THE PRINCIPLES LAID DOWN FOR EXCLUDING T HE INCOME FROM CONSIDERATION UNDER SECTION 10(22) NOW 10(23)(C) OR SECTIONS 11 AND 12 ARE NOT APPLICABLE WHILE CONSIDERING THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. THE APPLICATION FOR REGISTRATION I S REQUIRED TO BE MADE WITHIN ONE YEAR OF THE CREATION OF THE TRUST. SECTION 12AA OF THE ACT, REQUIRES SATISFACTI ON IN RESPECT OF THE GENUINENESS OF THE ACTIVITIES OF THE TRUST, WHICH INCLUDES THE ACTIVITIES WHICH THE TRUST IS UNDERTAKING AT PRESENT AND ALSO WHICH IT MAY CONTEM PLATE TO UNDERTAKE. THE INSERTION OF SUBSECTION (3) TO SE CTION 12AA OF THE ACT, CLARIFIES THE SAID FACT, WHEN IT E MPOWERS THE COMMISSIONER TO CANCEL THE REGISTRATION IF THE ACTIVITIES OF THE TRUST ARE NOT CARRIED OUT IN ACCO RDANCE WITH SUCH OBJECTS. THEREFORE, THE OBJECT OF SECTION 12AA OF THE ACT, IS TO EXAMINE THE GENUINENESS OF THE OBJECTS OF THE TRUST , BUT NOT THE INCOME OF THE TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES. THE STAGE FOR APPLICATION OF INCOME IS YE T TO ARRIVE I.E. WHEN SUCH TRUST OR INSTITUTION FILES IT S RETURN. THEREFORE, WE FIND THAT THE JUDGMENTS REFERRED TO B Y THE LEARNED COUNSEL FOR THE APPELLANT ARE NOT APPLICABL E TO THE FACTS OF THE PRESENT CASE ARISING OUT OF THE QUESTI ON OF REGISTRATION OF THE TRUST AND NOT OF ASSESSMENT. IN VIEW OF THE ABOVE, WE DO NOT FIND THAT ANY SUBST ANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION IN THE PRE SENT APPEALS. HENCE, THE SAME ARE DISMISSED. 7. THE SAID VIEW HAS BEEN FOLLOWED BY THIS COURT I N ITA NO.881 OF 2010 THE COMMISSIONER OF INCOME-TAX, BATHINDA VS. M /S BABA DEEP SINGH EDUCATIONAL SOCIETY, SCF 23, BHARAT NAGAR, BA THINDA DECIDED ON 13.10.2011 WHEREIN IT WAS HELD AS UNDER:- IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, IT WOULD BE CLEAR THAT RESPONDENT-SOCIETY WHICH WAS ADMITTEDLY RUNNING A POLYTECHNIC COLLEGE AND THE ACTIVITIES WE RE INTERWOVEN FOR FURTHERING THE PROJECTS AND ACTIVITI ES 6 PERTAINING TO EDUCATION, THE TRIBUNAL RIGHTLY DIREC TED THAT REGISTRATION SHOULD BE GRANTED TO THE RESPONDENT-SO CIETY WITH THE RIDER THAT THE SAME COULD ALWAYS BE CANCEL LED IF IT CAME TO THE NOTICE OF THE CIT THAT THE SOCIETY WAS NOT CARRYING ON THE ACTIVITIES AS PER ITS OBJECTS. THE COMMISSIONER WHILE PROCESSING THE APPLICATION UNDER SECTION 12AA OF THE ACT WAS NOT TO ACT AS AN ASSESS ING AUTHORITY AND THUS, THE TRIBUNAL HAS RIGHTLY ALLOWE D THE APPEAL FILED BY THE SOCIETY IN THE FACTS AND CIRCUM STANCES OF THE PRESENT CASE. 8. ACCORDINGLY, IN VIEW OF THE AFORESAID PRONOUNCE MENTS OF THIS COURT WHICH ARE FULLY APPLICABLE IN THE PRESENT CAS E, THE SUBMISSION OF THE COUNSEL FOR THE REVENUE THAT THE TRUST WAS N OT SET UP FOR CHARITABLE PURPOSES AND IT WAS UTILIZING ITS INCOME NOT FOR THE SAID PURPOSE CANNOT BE EXAMINED AT THIS STAGE AS ONLY OB JECTS OF THE TRUST HAD TO BE CONSIDERED BY THE COMMISSIONER. THE TRUST WAS IN NASCENT STAGE AND WAS YET TO WORK TOWARDS ITS OBJEC TS. NO ERROR COULD BE POINTED OUT IN THE ORDER OF THE TRIBUNAL W ARRANTING INTERFERENCE BY THIS COURT. ACCORDINGLY, NO SUBSTAN TIAL QUESTION OF LAW ARISES FOR DETERMINATION BY THIS COURT AND CONS EQUENTLY, THE APPEAL IS DISMISSED. 5. FROM THE ABOVE, IT IS CLEAR THAT THE OBJECTS OF SECTION 12AA IS TO EXAMINE THE GENUINENESS OF THE OBJECTS OF THE TRUST OR SOCI ETY, BUT NOT THE TOTAL INCOME OR THE TRUST OR SOCIETY AVAILABLE FOR CHARITABLE PU RPOSES. APPLICATION OF INCOME HAS TO BE SEEN AT THE STAGE OF ASSESSMENT WHEN THE TRUST OR SOCIETY FILES ITS RETURN OF INCOME. IT IS NOT THE CASE OF LD. CIT THA T THE OBJECTS OF SOCIETY ARE NOT CHARITABLE. FURTHERMORE, IN THE INSTANT CASE T HE SOCIETY WAS IN NASCENT STAGE AND IT IS NOT REQUIRED UNDER LAW THAT THE SOCIETY S HOULD HAVE STARTED ALL ITS ENVISAGED ACTIVITIES IN THE FIRST YEAR ITSELF. HOWE VER, IT IS CLAIMED THAT THE ASSESSEE HAS STARTED TO WORK TOWARDS ITS OBJECTS. I N OUR CONSIDERED VIEW, THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT R EFERRED TO ABOVE IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. RESPEC TFULLY, FOLLOWING THE 7 JUDGEMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V B.K.K. MEMORIAL TRUST (SUPRA), WE DIRECT THE COMMISSIONER OF INCOME TAX TO GRANT REGISTRATION U/S 12A / 12AA OF THE ACT TO THE ASSE SSEE SOCIETY. 6. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.11.2015 SD/- SD/- (RANO JAIN) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 16 TH NOVEMBER, 2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR