Shri Samast Kachhi Sathwara Samaj Education and Medical Trust, RAJKOT-GUJARAT V. The Commissioner of Income Tax, Rajkot-1, RAJKOT-GUJARAT

ITA 362/RJT/2013

• Counselvise Citation: 36224914 RSA 2013
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-11-2013
• Assessment Year: misc
• Appeal Filed On: 03-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M L MEENA
• Assessee Lawyers: KALPESH DOSHI
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 362/RJT/2013 SHRI SAMAST KACHCHHI SATHWARA SAMAJ EDUCATION AND MEDICAL TRUST, 21, VRUNDAVAN PARK, PLOT NO.20, WARD-9/A, GANDHIDHAM PAN : AAKTS 0742 D ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX RAJKOT-1, RAJKOT / RESPONDENT / ASSESSEE BY SHRI KALPESH DOSHI, CA / REVENUE BY DR M L MEENA, DR / DATE OF HEARING 19.11.2013 !'# / DATE OF PRONOUNCEMENT 22.11.2013 / ORDER THIS APPEAL BY THE ASSESSEE-TRUST IS AGAINST THE OR DER DATED 02.09.2013 OF COMMISSIONER OF INCOME-TAX, RAJKOT-I, RAJKOT REJECT ING THE APPLICATION SEEKING APPROVAL OF EXEMPTION U/S 80G(5) OF THE INCOME-TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-TRUST MADE AN APPLICATION IN FORM NO.10G FOR GRANT APPROVAL U/S 80G(5) OF THE INCOME- TAX ACT, 1961 ON 17.01.2013. THE MAIN OBJECTS OF THE TRUST ARE WELFARE OF EDUCAT IONAL, MEDICAL AND ENVIRONMENT ACTIVITIES ETC. THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I VIDE IMPUGNED ORDER DATED 02.09.2013 REJECTED THE APPLICATION OF THE AS SESSEE-TRUST SEEKING APPROVAL U/S 80G(5) OF THE INCOME-TAX ACT FOR THE DETAILED REASO N GIVEN IN PARAGRAPH NOS. 4 TO 6, WHICH READ AS UNDER:- 4. ON GOING THROUGH THE BOOKS OF ACCOUNTS AND THE DONATION RECEIPT BOOKS, IT IS SEEN THAT THE TRUST RECEIVED TOTAL DON ATIONS OF RS.8,78,366/- DURING THE FY 2011-12. AS PER THE DONATION RECEIPTS, ALL T HE SAID DONATIONS WERE RECEIVED AS A NORMAL DONATION. THE TRUST COULD NOT PRODUCE ANY EVIDENCE TO SHOW THAT SUCH DONATIONS WERE RECEIVED WITH A SPECI FIC DIRECTION FOR USE OF RESPECTIVE DONATIONS. IN ABSENCE OF SUCH DIRECTIONS BY THE DONER, THE RELEVANT DONATION CANNOT BE TERMED AS A CONTRIBUTION TOWARDS CORPUS OF THE TRUST. A COPY OF THE DONATION ACCOUNT AND RANDOMLY SELECTED DONATION RECEIPTS ARE TAKEN AND PLACED ON RECORD. IN VIEW OF THE ABOVE, T HE ABOVE DONATIONS OF RS.8,78,366/- ARE NOT ELIGIBLE FOR EXEMPTION U/S 11 (1)(D) OF THE ACT. 5. AS DISCUSSED ABOVE, THE TRUST RECEIVED DONATIONS OF RS.8,78,366/- DURING FY 2011-12. IN VIEW OF THE PROVISION OF SECT ION 2(24)(IIA) OF THE ACT, THE ABOVE DONATION IS INCOME OF THE TRUST. DURING FY 20 11-12, THE TRUST APPLIED INCOME OF RS.2,10,132/- ONLY TOWARDS ITS OBJECTS. T HUS THE REMAINING INCOME 2 362-RJT-2013 - SHRI SAMAST KACHCHHI SATHWARA SAMAJ EDUCATION & MEDICAL TRUST IS NOT EXEMPT FROM TAX AS PROVIDED IN SECTION 11 OF THE ACT. SINCE, DURING THE YEAR UNDER CONSIDERATION, APPLICATION OF INCOME TO ITS OBJECTS BY THE TRUST WAS NOT THE EXTENT OF 85% OF ITS INCOME, WHICH IS RS.7, 46,611/-. ACCORDINGLY, THE TAXABLE INCOME OF THE TRUST FOR AY 2012-13 IS RS.5, 36,479/-. 6. AS PER THE PROVISIONS OF SEC 80G(5) OF THE ACT, IT IS NECESSARY FOR ANY TRUST THAT IS INCOME WOULD NOT BE INCLUSIVE OF ANY INCOME CHARGEABLE U/S 11 OF THE ACT. AS DISCUSSED ABOVE, TOTAL INCOME OF THE TR UST FOR AY 2012-13 IS INCLUSIVE OF INCOME U/S 11 OF THE ACT. IT IS THUS C LEAR THAT THE TRUST HAS FAILED IN COMPLYING WITH THE REQUIREMENTS FOR APPROVAL U/S 80 G AS LAID DOWN UNDER SECTION 80G(5) OF THE ACT & RULE 11AA OF I.T. RULES , 1962. THE APPLICATION MADE BY THE ASSESSEE SEEKING APPROVAL U/S 80G(5) IS THEREFORE REJECTED. AGGRIEVED WITH THE ORDER OF LD COMMISSIONER OF INC OME-TAX, RAJKOT-I, THE ASSESSEE-TRUST IS NOW IN APPEAL BEFORE THIS TRIBUNA L, ON THE FOLLOWING GROUNDS:- 1. THAT, THE LEARNED CIT HAS NOT GRANTED THE PROPE R OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND HAS WRONGLY REJECTED THE APPLICATION OF APPROVAL OF EXEMPTION U/S 80G(5) OF THE I.T. ACT, 1961. 2. THAT, THE LEARNED CIT HAS WRONGLY REJECTED THE A PPLICATION OF APPROVAL OF EXEMPTION U/S 80G(5) OF THE I.T. ACT, 1961. 3. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E-TRUST, SHRI KALPESH DOSHI, CA APPEARED AND FILED A PAPER BOOK CONTAINING 53 PAGES , WHICH INTER-ALIA, INCLUDE COPY OF NOTICE ISSUED BY THE LD COMMISSIONER OF INCOME-T AX, RAJKOT-I CALLING FOR THE DETAILS FOR APPROVAL OF EXEMPTION U/S 80G(5) OF THE INCOME- TAX ACT, 1961. THIS LETTER IS CONTAINED ON PAGE NO.21 OF THE PAPER-BOOK. THE LD C OUNSEL OF THE ASSESSEE DREW OUR ATTENTION TO THIS PAGE AND CONTENDED THAT IN TH E SAID NOTICE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I HAS NOT CALLED FOR DETAILS OF CORPUS DONATION; WHEREAS, IN PARAGRAPH 4 OF THE IMPUGNED ORDER, HE HAS MENTIONED THAT THE ASSESSEE-TRUST COULD NOT PRODUCE ANY EVIDENCE TO SHOW THAT SUCH DONATION S WERE RECEIVED WITH A SPECIFIC DIRECTION FOR USE OF RESPECTIVE DONATIONS. THE LD C OUNSEL OF THE ASSESSEE POINTED OUT THAT THE DETAILS OF THESE DONATIONS WERE NEVER CALL ED FOR BY THE LD COMMISSIONER OF INCOME-TAX, THEREFORE THE REJECTION OF ASSESSEE-TRU STS APPLICATION FOR RECOGNITION U/S 80G(5) IS UNWARRANTED. HE FURTHER SUBMITTED THAT TH IS CLEARLY INDICATES THAT THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I HAS VIOLATED T HE PRINCIPLE OF NATURAL JUSTICE IN AS MUCH AS WITHOUT CALLING THE SPECIFIC DETAILS HE HAS DENIED THE RECOGNITION U/S 80G(5) OF THE INCOME-TAX ACT. WITH REGARD TO THE OB JECTION RAISED BY THE LD 3 362-RJT-2013 - SHRI SAMAST KACHCHHI SATHWARA SAMAJ EDUCATION & MEDICAL TRUST COMMISSIONER OF INCOME-TAX IN PARAGRAPH 5 OF THE IM PUGNED ORDER, THE LD COUNSEL OF THE ASSESSEE CONTENDED THAT AT THE TIME OF GRANTING OF EXEMPTION U/S 80G, THE OBJECT OF THE TRUST IS REQUIRED TO BE EXAMINED AND APPLICA TION OF FUNDS, CAN BE EXAMINED BY ASSESSING OFFICER AT TIME OF FRAMING ASSESSMENT. T HIS VIEW IS TAKEN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN ITS JUDGMENT DELIVER ED ON 02.05.2013 IN THE CASE OF CIT V. O.P. JINDAL GLOBAL UNIVERSITY. HE ACCORDINGL Y SUGGESTED THAT THE MATTER MAY BE REMANDED TO THE FILE OF THE LD COMMISSIONER OF I NCOME-TAX, RAJKOT-I SO THAT THE ASSESSEE-TRUST CAN FURNISH RELEVANT REQUIRED DETAIL S AND THEREAFTER THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I WILL RECONSIDE R THE APPLICATION OF THE ASSESSEE- TRUST FOR APPROVAL FOR EXEMPTION U/S 80G(5). 4. DR. M.L. MEENA, DR, APPEARED FOR THE REVENUE COU LD NOT CONTROVERT THE AFORESAID SUBMISSIONS MADE BY THE LD COUNSEL OF THE ASSESSEE-TRUST. 5. AFTER HEARING BOTH THE SIDES, I HAVE CAREFULLY G ONE THROUGH THE IMPUGNED ORDER OF LD COMMISSIONER OF INCOME-TAX, RAJKOT-I AS WELL AS THE NOTICE ISSUED BY HIM FOR SEEKING VARIOUS DETAILS FOR APPROVAL OF RECOGNITION U/S 80G(5) OF THE INCOME-TAX ACT, 1961. ADMITTEDLY, IN THE LETTER DATED 08.07.2013 IS SUED BY THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I CALLING FOR THE DETAILS FOR AP PROVAL U/S 80G(5), THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I NOWHERE ASKED THE ASSESSEE-TRUST TO FURNISH THE DETAILS OF CORPUS DONATION RECEIVED BY THE ASSE SSEE-TRUST DURING THE FY 2011-12 AND ALSO NOWHERE ASKED TO PRODUCE THE EVIDENCE TO S HOW THAT SUCH DONATIONS WERE RECEIVED WITH A SPECIFIC DIRECTION FOR USE OF RESPE CTIVE DONATIONS. WITH REGARD TO THE OBJECTION RAISED BY THE LD COMMISSIONER OF INCOME-T AX, RAJKOT-I IN PARAGRAPH 5 OF THE IMPUGNED ORDER, I AM ALSO OF THE VIEW THAT AT THE T IME OF GRANTING APPROVAL FOR EXEMPTION U/S 80G, THE OBJECT OF THE TRUST IS REQUI RED TO BE EXAMINED AND APPLICATION OF FUNDS, CAN BE EXAMINED BY ASSESSING OFFICER AT T IME OF FRAMING THE ASSESSMENT. THIS VIEW IS SUPPORTED BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. O.P. JINDAL GLOBAL UNIVERSITY (SUPRA). I, THEREFOR E, SET ASIDE THE IMPUGNED ORDER OF LD COMMISSIONER OF INCOME-TAX, RAJKOT-I AND DIRECT THE ASSESSEE-TRUST TO FURNISH THE COMPLETE DETAILS WHICH ARE MENTIONED IN THE IMPUGNE D ORDER. ON RECEIPT OF THESE 4 362-RJT-2013 - SHRI SAMAST KACHCHHI SATHWARA SAMAJ EDUCATION & MEDICAL TRUST REQUIRED INFORMATION, THE LD COMMISSIONER OF INCOME -TAX, RAJKOT-I WILL RECONSIDER THE APPLICATION OF THE ASSESSEE-TRUST FOR APPROVAL OF E XEMPTION U/S. 80G(5) OF INCOME-TAX ACT, 1961. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 22.11.2013 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- SHRI SAMAST KACHCHHI SATHWARA SAMAJ E DUCATION AND MEDICAL TRUST, 21, VRUNDAVAN PARK, PLOT NO.20, WARD -9/A, GANDHIDHAM 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX, RAJK OT-I, RAJKOT 3. ,0,1 * * 2 / CONCERNED CIT, GANDHIDHAM 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT