SHRI JAIN SWETAMBER TAPAGCHCH SANGH, AJMER V. COMMISSIONER OF INCOME TAX - EXEMPTION, JAIPUR

ITA 34/JPR/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6115 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 10-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLI AGARWAL
• Keywords: Charitable institution
• Section: 12A; 12AA; 12; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 34/JP/2018 SHRI JAIN SWETAMBER TAPAGACHCH SANGH, C/O SHRI RIKHAB CHAND SACHETI, SACHETI HOUSE, LAKHAN KOTRI, AJMER- 305001. CUKE VS. THE CIT (EXEMPTION), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAJTS 7477 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI SANJEEV JAIN (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROLI AGARWAL (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 03/05/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 21/05/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(E)-2, JAIPUR DATED 14.112017 WHEREIN THE ASSESS EE HAS CHALLENGED THE REJECTION OF ITS APPLICATION SEEKING REGISTRATI ON U/S 12AA OF THE I.T. ACT. 2. BRIEFLY STATED, THE ASSESSEE MOVED AN APPLICATIO N BEFORE THE LD. CIT(E) ON 22.05.2017 SEEKING REGISTRATION U/S 12AA OF THE I.T. ACT IN THE REQUISITE FORM 10A ALONG WITH THE COPY OF ITS T RUST DEED STATING THE OBJECTS OF THE ASSESSEES SOCIETY. THE LD. CIT(E) R EFERRING TO THE OBJECT ITA NO. 34/JP/2018 SHRI JAIN SWETAMBER TAPAGACHCH SANGH VS. CIT(E) 2 CLAUSE OF THE ASSESSEES TRUST DEED STATED THAT THE SAMITI/TRUST HAS BEEN CREATED FOR THE BENEFIT OF A PARTICULAR RELIGIOUS C OMMUNITY I.E. JAIN DHARM. AS THE SAMITI IS WORKING FOR THE BENEFIT OF A PARTICULAR COMMUNITY, IT VIOLATES THE PROVISIONS OF SECTION 13 (1)(B) OF THE ACT AND A CHARITABLE ORGANIZATION WILL LOSE THE EXEMPTION U /S 11 IF THE INCOME OF UTILIZED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOU S COMMUNITY. IT WAS FURTHER HELD BY THE LD. CIT(E) THAT AFTER INTRODUCT ION OF SECTION 12AA OF SUB-SECTION (4), IT IS IMPERATIVE TO EXAMINED U/S 1 3(1)(B) OF THE ACT AT THE STAGE OF REGISTRATION ITSELF. IT WAS OBSERVED BY THE LD. CIT(E) THAT 12AA(4) OF THE ACT HAS BEEN INTRODUCED TO AVOID MIS USE OF THE PROVISIONS OF SECTION 13(1) OF THE ACT ON LONG TERM BASIS. IN THE CASE OF PRESENT ASSESSEE, THE BENEFIT TO A PARTICULAR COMMU NITY IS IMBIBED IN THE OBJECTS ITSELF, WHICH IS PERMANENT DOCUMENT OF THE TRUST AND THEREFORE, THE BENEFIT TO A PARTICULAR RELIGIOUS CO MMUNITY IS NOT AN ISSUE ON YEAR TO YEAR BASIS RATHER IT IS A PERMANENT FEAT URE IN THE CASE OF THE APPLICANT. THE LD. CIT(E) HAS REFERRED TO THE DECIS ION OF HONBLE SUPREME COURT IN CASE OF CIT VS. PALGHAT SHADI MAHA L TRUST 254 ITR 212 WHERE SECTION 13(1) WAS HELD APPLICABLE WHERE T HE TRUST WAS CREATED FOR CONSTRUCTION OF A SHADI MAHAL AND ESTAB LISHING OTHER INSTITUTIONS FOR EDUCATIONAL, SOCIAL AND ECONOMIC A DVANCEMENT OF MUSLIM COMMUNITY. THE LD. CIT(E) FURTHER REFERRED TO THE D ECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE SHREE MULTAN JAIN SHWETAMBER SABHA VS. CIT(E) (ITA NO. 1060/JP/2016 ORDER DATED 30.05.2017) WHERE THE DENIAL OF REGISTRATION U/S 12AA WAS CON FIRMED AS THE DOMINANT OBJECT OF THE ASSESSEE WAS FOR THE PURPOSE OF SAFEGUARDING AND BENEFITING THE INTEREST OF THE JAI N COMMUNITY. IT WAS ACCORDINGLY HELD BY THE LD. CIT(E) THAT THE OBJECTS OF THE ASSESSEE ITA NO. 34/JP/2018 SHRI JAIN SWETAMBER TAPAGACHCH SANGH VS. CIT(E) 3 SOCIETY ARE FOR THE BENEFIT OF A PARTICULAR RELIGIO US COMMUNITY, WHICH IS A VERY LIMITED AND SMALL GROUP AND NOT PUBLIC AT LA RGE, AND REFERRING TO THE PROVISIONS OF SECTION 2(15) AND IN PARTICULAR, CLAUSE RELATING TO ADVANCEMENT OF GENERAL PUBLIC UTILITY, IT WAS HEL D BY THE LD. CIT(E) THAT THE SAID CLAUSE IS INTENDED TO SERVE PUBLIC A T CHARITABLE FALLING UNDER THE HEAD ADVANCEMENT OF ANY OTHER GENERAL PU BLIC UTILITY WHICH IS TOTALLY MISSING IN THE CASE OF APPLICANT SOCIETY . IN LIGHT OF ABOVE, GIVEN THAT THE OBJECT OF THE ASSESSEE TRUST/SOCIETY IS FOR THE BENEFIT OF PARTICULAR COMMUNITY AND TAKING INTO CONSIDERATION, THE PROVISIONS OF SECTION 12AA(4) OF THE ACT, THE APPLICATION OF THE ASSESSEE SOCIETY FOR SEEKING REGISTRATION U/S 12AA WAS REJECTED. 3. BEING AGGRIEVED THE ASSESSEE IS AS APPEAL BEFORE US. DURING THE COURSE OF HEARING, THE LD. AR REFERRED TO THE OBJEC T CLAUSE OF THE ASSESSEE TRUST AND ADMITTED THAT THE OBJECTS OF THE ASSESSEE SOCIETY ARE PURELY RELIGIOUS IN NATURE AND THERE IS NO DENIAL O F THE SAID FACT. FURTHER, OUR REFERENCE WAS DRAWN TO THE PROVISIONS OF SECTIO N 13(1)(B) OF THE ACT WHICH HAS BEEN INVOKED BY THE LD. CIT(E) AND IT WAS SUBMITTED BY THE LD AR THAT THE SAID PROVISIONS READS AS UNDER: NOTHING CONTAINED IN SECTION 11 OR 12 OF THE ACT S HALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF- (A) (B) (C) IN CASE OF A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTITUTION CREATED OR ESTABLISHED AFTER THE COMMENCEMENT OF TH IS ACT, ANY INCOME ITA NO. 34/JP/2018 SHRI JAIN SWETAMBER TAPAGACHCH SANGH VS. CIT(E) 4 THEREOF IF THE TRUST OR INSTITUTION IS CREATED OR E STABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE. 4. IT WAS SUBMITTED BY THE LD AR THAT THE SAID CLAU SE IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE TRUST AS THE ASSESSEE TRUST IS NOT A CREATED FOR CHARITABLE PURPOSE BUT IT IS PURELY R ELIGIOUS TRUST AND THUS, THE LD CIT(A) WAS WRONG IN INVOKING THE SAID PROVIS IONS IN THE INSTANT CASE. 5. FURTHER, THE LD AR REFERRED TO THE PROVISIONS OF SECTION 11(1)(A) OF THE ACT AND SUBMITTED THAT THE SAID SECTION PROV IDES THAT INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR C HARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT TO WHICH SUCH INCOME IS APP LIED TO SUCH PURPOSES IN INDIA. FURTHER, HE REFERRED TO RULE 17A WHICH PROVIDES THAT AN APPLICATION UNDER CLAUSE (AA) OF SUB-SECTION (1) OF SECTION 12A FOR REGISTRATION OF A CHARITABLE OR RELIGIOUS TRUST OR INSTITUTION SHALL BE MADE IN FORM 10A AND DRAWING REFERENCE TO THE SAME, IT W AS SUBMITTED THAT SECTION 12A THEREFORE, EMPHASIS REGISTRATION OF NOT JUST A CHARITABLE TRUST BUT ALSO A TRUST WHICH IS WHOLLY RELIGIOUS IN NATURE. 6. AS FAR AS THE DEFINITION OF CHARITABLE PURPOSE A S DEFINED IN SECTION 2(15) OF THE ACT IS CONCERNED, THE LD. AR ADMITTED THAT IT IS NOT A CLAIM OF THE ASSESSEE SOCIETY THAT IT IS CARRYING OUT ANY CHARITABLE ACTIVITY. ACCORDINGLY, THERE IS BASIS FOR THE LD. CIT(E) TO R EFER TO THE PROVISIONS OF SECTION 2(15) AND IN A PARTICULAR TO THE CLAUSE REL ATING TO ADVANCEMENT OF ANY OBJECT OF GENERAL PUBLIC UTILITY. ITA NO. 34/JP/2018 SHRI JAIN SWETAMBER TAPAGACHCH SANGH VS. CIT(E) 5 7. FURTHER, REFERRING TO THE DECISION OF THE COORDI NATE BENCH OF THE TRIBUNAL, WHICH HAS BEEN RELIED UPON BY THE LD CIT( E), IN CASE OF SHREE MULTAN JAIN SHWETAMBER SABHA (SUPRA) WHEREIN THE RE JECTION OF REGISTRATION U/S 12AA WAS CONFIRMED, THE LD. AR SUB MITTED THAT THE HONBLE RAJASTHAN HIGH COURT VIDE ITS DECISION IN D .B. ITA NO. 219/2017 DATED 05.12.2017 HAS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE AND HAS REMITTED THE MATTER BACK TO THE APPROVING AUTHO RITY FOR PASSING A FRESH ORDER TAKING INTO CONSIDERATION THE LEGAL PRO POSITION SO LAID DOWN BY THE HONBLE HIGH COURT. 8. THE LD. DR IS HEARD WHO HAS RELIED ON THE FINDIN GS AND THE ORDER OF THE LD. CIT(E). 9. WE FIND THAT AN EXACTLY IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE THE HONBLE RAJASTHAN HIGH COURT IN CASE OF SHREE MULTAN JAIN SHWETAMBER SABHA VS. CIT(E) (SUPRA) WHEREIN THE HONBLE HIGH COURT REFERRING TO THE CATENA OF DECISIONS RIG HT FROM THE HONBLE SUPREME COURT DECISION IN CASE OF CIT VS DAWOODI BO HARA JAMAT 364 ITR 31 (SC) IN CASE OF TRUST WITH COMPOSITE OBJECTS FOR BOTH RELIGIOUS AND CHARITABLE AND NON-APPLICABILITY OF SECTION 13( 1)(B), EARLIER DECISIONS OF THE HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS JSB SHIKSHAN SANSTHAN (DB APPEAL NO. 172/JP/2017 DATED 7.11.2017) WHERE IT WAS HELD THAT 12AA(4) SHALL COME INTO OPERATION AFTER T HE REGISTRATION IS CARRIED OUT IN CONSONANCE WITH THE OBJECTS OF THE T RUST AND NOT AT THE TIME OF REGISTRATION, DECISION OF THE HONBLE RAJA STHAN HIGH COURT IN CASE OF CIT VS SHRI DIGAMBER JAIN MANDIR (DB APPEAL NO. 21/JP/2017 DATED 14.02.2017) WHERE THE ORDER OF THE TRIBUNAL W AS CONFIRMED IN ITA NO. 34/JP/2018 SHRI JAIN SWETAMBER TAPAGACHCH SANGH VS. CIT(E) 6 DIRECTING GRANT OF REGISTRATION UNDER SECTION 12AA DESPITE VIOLATION OF SECTION 13(1)(B) OF THE ACT AND OTHER DECISIONS, IT WAS HELD AS UNDER: 8. IN OUR CONSIDERED OPINION, WE REMIT MATTER BAC K TO THE AUTHORITY TO CONSIDER THE LAW ON SUBJECT AND WILL R ECONSIDER INDEPENDENTLY, IN VIEW OF OBSERVATION MADE BY US, W ILL INDEPENDENTLY CONSIDER THE LAW DECLARED BY THE SUP REME COURT AND ALSO WHILE REMITTING MATTER BACK, WE RESTRAINED FROM PASSING ORDER OF REGISTRATION, KEEPING THE POWER OF AUTHORI TY INTACT THEIR INDEPENDENT POWER TO GRANT REGISTRATION. WE ARE REM ITTING BACK THE MATTER TO THE AUTHORITY. 10. IN THE INSTANT CASE, WHERE THE ASSESSEE SOCIETY HAS CHALLENGED THE VERY APPLICABILITY OF SECTION 13(1)(B) BEING A PURELY RELIGIOUS SOCIETY, IN LIGHT OF THE ABOVE DECISION OF THE HONBLE RAJAS THAN HIGH COURT, WE DEEM IT APPROPRIATE TO REMAND THE MATTER BACK TO TH E FILE OF THE LD. CIT(E) WHO SHALL DECIDE THE MATTER AFRESH AFTER TAK ING INTO CONSIDERATION THE AFORESAID DECISION OF THE HONBLE RAJASTHAN HIGH COURT. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21/05/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21/05/2018. ITA NO. 34/JP/2018 SHRI JAIN SWETAMBER TAPAGACHCH SANGH VS. CIT(E) 7 *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI JAIN SWETAMBER TAPAGACHCH SANGH , AJMER. 2. IZR;FKHZ@ THE RESPONDENT- CIT(E), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 34/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR