M/S Rural society of Jharkhand Health & Education, Ranchi V. CIT EXEMPTION, Patna

ITA 346/RAN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1952 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 16-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12; 12AA; 43; 20

Judgement Text

1 ITA NO. 346 /RAN/20 1 6 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S.SAINI , ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO. 346 / RAN/20 1 6 ASSESSMENT YEAR : 20 1 6 - 20 1 7 M/S RURAL SOCIETY OF JHARKHAND HEALTH AND EDUCATION , PLOT N O.B PART, RANCHI - KHUNTI MAIN ROAD, TUPUDANA, RANCHI - 834003 V S CIT(E), PATNA - 800001 PAN NO. : A ACAR 1534 R (APPELLANT ) .. RESPONDENT ASSESSEE BY : SHRI P.C.PAUL, CA REVENUE BY : SHRI INDERJIT SINGH , CIT(SR. DR) DATE OF H EARING : 19 . 11 .201 8 DATE OF PRONOUNCEMENT : 20 . 11 .201 8 O R D E R PER PAVAN KUMAR GADALE, JM : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDER OF CIT(E), PATNA, DATED 23.09.2016 IN REJECTING THE GRANT OF REGIS TRATION U/S.12AA OF THE ACT. 2. THE ASSESSEE FILED AN APPLICATION IN FORM 10A ON 22.04.2016 SEEKING REGISTRATION U/S.12AA OF THE ACT, AND WAS REJECTED BY THE CIT(E), PATNA ON THE GROUND OF DOUBTFULNESS ON THE GENUINENESS OF THE SOCIETY ACTIVITIES . 3. AGGR IEVED BY THE ORDER OF CIT(E), THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. 2 ITA NO. 346 /RAN/20 1 6 4. BEFORE US, LD. AR SUBMITTED THAT ALL THE DOCUMENTS AS REQUIRED BY THE CIT(E) FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT WERE SUPPLIED BY THE ASSESSEE, AND THE ACTIVITIES OF THE SOCIETY ARE CHARITABLE IN NATURE, THEREFORE, PRAYED FOR ALLOWING THE APPEAL. LD. AR ALSO RELIED ON THE FOLLOWING JUDICIAL DECISIONS : - A) ITO VS. LATA MANGESHKAR MEDICAL FOUNDATION (2016) 180 TTJ 0321 B) FIFTH GENERATION EDUCATION SOCIETY VS. CIT, (1990) 185 ITR 0634; C) CIT VS. SURYA EDUCATIONAL & CHARITABLE TRUST, 355 ITR 280 5. CONTRA, LD. DR RELIED ON THE ORDER OF CIT(E). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE BEFORE US AS ENVISAGED BY THE LD AR REGARDING THE REJECTION OF REGISTRATION U/S.12AA OF THE ACT. WE FIND THAT THE CIT(E) REJECTED THE APPLICATION OF THE ASSESSEE - SOCIETY FOR REGISTRATION U/S.12AA OF THE ACT BY OBSERVING THAT THE ACTIVITIES OF THE SOCIETY ARE NOT GENUINE . LD. AR BEFORE US SUBMITTED THAT ONE MORE OPPORTUNITY BE PROVIDED TO THE ASSESSEE TO PRESENT ITS CASE . 7 . WE FIND THAT HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT, ( VARANASI ) VS VARANASI WELFARE TRUST IN ITA NO.22 OF 2014 ORDER DATED 2.11.2014 HAS HELD THAT THE PREPONDERANCE OF THE JUDICIAL OPINION OF ALL THE HIGH COURTS INCLUDING THIS COURT IS THAT AT THE TIME OF REGISTRATION U/S.12AA OF THE ACT, WHICH IS NECESSARY FOR CLAIMING EXEMPTION U/S.11 & 12 OF THE ACT THAT THE CIT IS NOT REQUIRED TO LO OK INTO THE ACTIVITIES , WHERE SUCH ACTIVITIES HAVE NOT OR ARE IN THE PROCESS OF IN ITS INITIATION. WHERE A TRUST , SET UP TO ACHIEVE ITS OBJECTIVES OF ENABLING EDUCATIONAL INSTITUTION, IS IN THE PROCESS 3 ITA NO. 346 /RAN/20 1 6 OF ESTABLISHING SUCH INSTITUTION AND RECEIVES DONATIONS, THE R EGISTRATION U/S.12A CANNOT BE REFUSED ON THE GROUND THAT THE TRUST HAS NOT YET COMMENCED, THE CHARITABLE OR RELIGIOUS ACTIVITIES. ANY ENQUIRY OF THE NATURE WOULD AMOUNT TO PUTTING THE CART BEFORE THE HORSE. AT THIS STAGE, ONLY THE GENUINENESS OF THE OBJE CTS HAS TO BE TESTED AND NOT THE ACTIVITIES WHICH HAVE NOT YET CO MMENCED. THE ENQUIRY OF THE CIT AT SUCH PRELIMINARY STAGE SHOULD BE RESTRICTED TO GENUINENESS OF THE OBJECTS AND NOT OF THE ACTIVITIES UNLESS SUCH ACTIVITIES HAVE COMMENCED. THE RUST OR SOC IETY CANNOT CLAIM EXEMPTION, UNLESS IT IS REGISTERED U/S.12AA OF THE ACT AND AT THAT SUCH INITIAL STAGE, THE TEST OF GENUINENESS OF THE ACTIVITIES CANNOT BE A GROUND ON WHICH THE REGISTRATION MAY BE REFUSED. 8 . FURTHER, THE DELHI BENCHES OF THE TRIBUNAL IN THE CASE OF SAI ASHISH CHARITABLE TRUST VS DIT (E) IN ITA NO.5591/DEL/012 HELD THAT THE DIT (E) HAS NOT POINTED OUT ANY DEFECT OR DOUBT ABOUT THE CHARITABLE OBJECTS OF THE ASSESSEE TRUST. FROM THE IMPUGNED ORDER, WE CLEARLY OBSERVE THAT THE DIT(E) HAS RE JECTED THE APPLICATION OF THE ASSESSEE TRUST FOR GRANT OF REGISTRATION U/S.12A OF THE ACT BY HOLDING THAT IN ABSENCE OF ANY CHARITABLE ACTIVITY, THE GENUINENESS OF THE ACTIVITIES CANNOT BE HELD TO BE ESTABLISHED. AT THE SAME TIME, WE OBSERVE THAT AS PER R ATIO OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT(E) VS FOUNDATION OF OPHTHALMIC AND OPTOMETRY RESEARCH EDUCATION CENTRE, REGISTRATION U/S.12A IS NOT DEPENDENT ON COMMENCEMENT OF CHARITABLE ACTIVITY. THE REGISTRATION GRANTING AU THORITY IS NOT REQUIRED TO EXAMINE THE QUESTION WHETHER THE TRUST 4 ITA NO. 346 /RAN/20 1 6 HAS ACTUALLY COMMENCED AND CARRIED ON ITS CHARITABLE ACTIVITIES. WE ALSO TAKE COGNIZANCE OF DECISION OF HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE OF R.S.BAJAJ SOCIETY, AS RELIED BY THE AS SESSEE, WHEREIN, THEIR LORDSHIPS HELD THAT AT THE TIME OF REGISTRATION, ONLY GENUINENESS OF THE OBJECTS WAS TO BE TESTED AND NOT THE ACTIVITIES WHICH WERE NOT COMMENCED AT THAT TIME. 9. THE HONBLE MADRAS HIGH COURT IN THE CASE OF DIT(E) VS. SEERVI SAMAJ TAMBARAM TRUST, [2014] 43 TAXMANN.COM 142 (MADRAS) HAS HELD AS UNDER: - IT IS NOT DENIED BY THE ASSESSEE THAT ON THE DATE OF THE APPLICATION UNDER SECTION 12AA, IT WAS YET TO COMMENCE ITS OPERATION. BUT NEVERTHELESS THE GENUINENESS OF THE OBJECTS OF THE TR UST WERE NOT QUESTIONED BY THE COMMISSIONER. CONSIDERING THE FACT THAT THE CONTINUANCE OF REGISTRATION IS FURTHER A SUBJECT MATTER OF SCRUTINY BY THE COMMISSIONER AS CONTEMPLATED UNDER SECTION 12AA(3), THE REVENUE WOULD NOT BE JUSTIFIED IN REFUSING THE REG ISTRATION AT THE THRESHOLD. [PARA 9] 10 . IN THE INSTANT CASE, WE FIND THAT THE CIT(E) HAS REFUSED REGISTRATION ON THE GROUND THAT THE ASSESSEE FILED TO ESTABLISH THAT ACTIVITIES OF THE ASSESSEE ARE GENUINE , WHEREAS THE CIT(E) HAS NOT RAISED ANY DOUBT OR OBJECTION ABOUT THE CHARITABLE OBJECTS OF THE ASSESSEE SOCIETY, THEREFORE, REGISTRATION U/S. 12AA OF THE ACT CANNOT BE DENIED ON THE GROUND THAT THE GENUINENESS OF THE CHARITABLE ACTIVITIES CANNOT BE HELD TO BE ESTABLISHED IN ABSENCE OF ANY G ENUINE CHARITABLE ACTIVITY. WE, THEREFORE, RESTORE THE ENTIRE DISPUTED MATTER TO THE FILE OF CIT(E) FOR FRESH ADJUDICATION CONSIDERING OUR ABOVE OBSERVATIONS AND CIT(E) SHALL PROVIDE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE AND FURTHER THE ASSESSEE SHALL COOPERATE IN SUBMITTING THE DOCUMENTS AND OTHER INFORMATION FOR EARLY DISPOSAL OF THE 5 ITA NO. 346 /RAN/20 1 6 CASE. ACCORDINGLY, GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 11 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOS ES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 / 11 /2018 SD/ - SD/ - (N.S.SAINI) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER J UDICIAL MEMBER RANCHI , DATED 20 / 11 /2018 PRAKASH KUMAR MISHRA , SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, // TRUE COPY// SR.PS, ITAT, RANCHI 1. THE APPELLANT M/S RURAL SOCIETY OF J HARKHAND HEALTH AND EDUCATION, PLOT NO.B PART, RANCHI - KHUNTI MAIN ROAD, TUPUDANA, RANCHI - 834003 2. THE RESPONDENT CIT(E), PATNA - 800001 3. THE CIT(A) CONCERNED 4. CIT , CONCERNED 5. DR, ITAT, RANCHI 6. GUARD FILE.