Shri Sukhsagar Education & Charitable Trust, RAJKOT-GUJARAT V. The Commissioner of Income Tax-II, RAJKOT-GUJARAT

ITA 368/RJT/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7362 (ITAT-RAJKOT)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-12-2011
• Assessment Year: misc
• Appeal Filed On: 26-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH PANDE
• Assessee Lawyers: D M RINDANI DATE PF HEARING
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA (JM) AND SHRI A. L. GEHL OT AM). ITA NO. 368/RJT/2011. SHRI SUKHSAGAR EDUCATION & VS THE C.I.T.-I I, CHARITABLE TRUST, RAJKOT. RAJKOT. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI YOGESH PANDE, D. R. ASSESSEE BY : SHRI D. M. RINDANI. DATE PF HEARING : 12-12-2011. DATE OF PRONOUNCEMENT : 22-12-2011. O R D E R. PER A. L. GEHLOT (A.M.) : THIS APPEAL BY ASSESSEE IS FILED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, R AJKOT DATED 15-09-2011. 2. THE GROUND RAISE IN THE APPEAL IS IN RESPECT OF REJECTION OF APPLICATION FOR REGISTRATION U/S.12AA OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT SHRI SUKHSA GAR EDUCATION & CHARITABLE TRUST CAME INTO EXISTENCE ON 15-02-2008. THE ASSES SEE-TRUST FILED APPLICATION IN FORM NO.10A FOR GRANTING REGISTRATION U/S.12AA OF T HE ACT ON 09-03-2011. THE CUT(A) CALLED THE REPORT FROM THE AO WHO HAS REPORT ED THAT THE TRUST HAS NOT CARRIED OUT ANY ACTIVITIES TOWARDS THE OBJECTS OF T HE TRUST. THEREFORE, HIS APPLICATION IS LIABLE TO BE REJECTED. THE CIT(A) DI D NOT ACCEPT A DECISION OF ITAT, RAJKOT IN THE CASE OF SURAJBEN MEHTA PUBLIC CHARITA BLE TRUST, ITA NO.1333/RJT/2010 ORDER DATED 11-02-2011 ON THE GROU ND THAT THE DECISION OF THE TRIBUNAL HAS NOT ACCEPTED BY THE DEPARTMENT SAND TH E SAME HAS BEEN CHALLENGED BEFORE THE HIGH COURT U/S.260A OF THE AC T. THE CIT(A) RELIED UPON A JUDGMENT OF KERALA HIGH COURT IN THE CASE OF SELF E MPLOYEES SERVING SOCIETY VS. CIT 247 IT 18 (KER.) WHEREIN, IT HAS BEEN HELD THAT WHEN THE CHARITABLE WOK DID ITA 368-RJT-2011. 2 NOT CARRIED OUT, THE ASSESSEE-TRUST IS NOT ENTITLED FOR REGISTRATION U/S.12AA OF THE ACT. THE CIT(A) HELD THAT THE GENUINENESS OF THE A CTIVITIES THEREFORE NOT VERIFIABLE. THE REGISTRATION APPLICATION FILED BY THE TRUST IS PREMATURE. HOWEVER, THE CIT(A) STATED THAT AS AND WHEN THE TRUST STARTS ITS ACTIVITIES, APPLICATION MAY BE FILED FOR RECONSIDERATION. 4. THE LD. A. R. SUBMITTED THAT ON IDENTICAL SET OF FACTS, THE ITAT IN THE CASE OF SURAJBEN MEHTA PUBLIC CHARITABLE TRUST (SUPRA) D IRECTED THE CIT(A) TO GRANT REGISTRATION U/S.12AA OF THE ACT. THE LD. A.R. SUB MITTED THAT DURING FINANCIAL YEAR 2011, TRUST HAS DEPOSITED PREMIUM AMOUNT OF RS.39,5 8,644/- IN THE TREASURY OFFICE TOWARDS ALLOTMENT OF A PIECE OF LAND NEAR RA JKOT. THE SAID AMOUNT IS DULY REFLECTED IN AUDITED ACCOUNTS FOR THE YEAR ENDED 31 -03-2011. HE FURTHER SUBMITTED THAT THE TRUST HAS ALREADY COMMENCED RAIS ING OF FUNDS AND SPENDING THE SAME ON THE OBJECTS. DURING THE FINANCIAL YEAR 2010-11, THE ASSESSEE-TRUST RECEIVED RS.18,500/- AND HAVE INCURRED EXPENDITURE OF RS.17,980/- ON THE OBJECTS. IT IS ALSO SUBMITTED BY THE LD. A.R. THAT THE LAW DOES NOT REQUIRE COMMENCEMENT OF ACTIVITIES PRIOR TO SEEKING OF REGI STRATION U/S.12A OF THE ACT. ON THE CONTRARY, IT IS ONLY AFTER REGISTRATION U/S. 12A THAT ANY CHARITABLE INSTITUTE WOULD BE ABLE TO RAISE FUNDS BY WAY OF DONATION BEC AUSE UNTIL THEN IT CANNOT GRANT ANY ASSURANCE OR BENEFIT OF DEDUCTION TO THEE DONOR U/S.80G OF THE ACT TO THE DONORS. THEE LD. D.R. ON THE OTHER HAND, RELIE D UPON THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES, RECORD PERUSED. WE FIND THAT THE SOLE REASON FOR NOT ACCEPTING ASSE SSEES APPLICATION FOR REGISTRATION I/S.12A IS THAT NO ACTIVITIES HAVE BEE N STARTED. THE CIT(A) ELIDE UPON A JUDGMENT OF KERALA HIGH COURT IN THE CASE OF SELF EMPLOYEES SERVING SOCIETY VS. CIT (SUPRA) AND DID NOT ACCEPT THE DECISION OF ITAT, RAJKOT BENCH IN THE CASE OF SURAJBEN MEHTA PUBLIC CHARITABLE TRUST (SUPRA) M ERELY ON THE GROUND THAT THE DEPARTMENT HAS NOT ACCEPTED THE SAID ORDER AND APPE AL HAS BEEN FILED BEFORE THE HIGH COURT. IT IS AN ADMITTED FACT THAT THERE ARE TWO POSSIBLE VIEWS ON THE ISSUE. TO MAINTAIN CONSISTENCY, WE FOLLOW FOLLOWING FINDIN G OF ITAT IN THE CASE OF SURAJBEN MEHTA PUBLIC CHARITABLE TRUST ITA NO.1333/ RJT/2010 ORDER DATED 11-02- 2011:- ITA 368-RJT-2011. 3 ON PERUSAL OF THE ABOVE OBJECT CLAUSE I FIND THAT THE OBJECTS OF THE TRUST RELATING TO EDUCATION AND MEDICAL RELIEF ARE PRIMA FACIE CHARITABLE ACTIVITIES. THE COMMISSIONER COULD NOT POINT OUT ANY MATERIAL IN HI S ORDER NR THE SAME IS AVAILABLE ON RECORD BASED ON WHICH IT CAN BE SAID T HAT THE OBJECT OF THE TRUST WAS NOT CHARITABLE. SECTION 12AA DOES NOT SPEAK ANYWHE RE THAT THE COMMISSIONER, WHILE CONSIDERING THE APPLICATION FOR REGISTRATION SHALL SEE THAT THE INCOME DERIVED BY THE TRUST HAS NOT BEEN SPENT FOR CHARITABLE PURP OSE OR SUCH INSTITUTION IS EARNING PROFIT OR MISUSING THE INCOME DERIVED BY SU CH CHARITABLE INSTITUTION FROM ITS CHARITABLE ACTIVITIES THOUGH MAY BE A GROUND FO R REFUSING EXEMPTION ONLY WITH RESPECT TO THAT PART OF THE INCOME BUT IN MY VIEW, IT CANNOT BE CONSIDERED TO BE SYNONYM TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. ON PERUSAL OF THE ORDER OF THE COMMISSIONER I FIND THAT THE COMMISSIONER WA S OF THE VIEW THAT SINCE THERE WERE NO ACTIVITIES, THE ASSESSEE DID NOT SATI SFY THE CONDITION ABOUT THE GENUINENESS OF THE ACTIVITIES, WHICH, IN MY VIEW, I S NOT CORRECT. WHEN THERE ARE NO ACTIVITIES AT ALL, THEN THERE IS NO QUESTION OF HOLDING THAT THE ACTIVITIES WERE NON GENUINE. THE GENUINENESS OF THE ACTIVITIES ONL Y CAN BE VERIFIED WHEN THERE IS SOME ACTIVITY. THIS VIEW OF MINE IS FORTIFIED B Y VARIOUS DECISIONS CITED BY THE LD.AR WHICH ARE AS UNDER: 212 CTR (ALL) 394 CIT VS RED ROSE SCHOOL 118 TTJ (DEL) 823 DHARMA SANSTHAPAK SANGH (NIYAS) VS CIT 3 SOT 229 (DEL) SARDARI LAL OBERAI MEMORIAL CHARIT ABLE TRUST VS ITO 104 TTJ (CHEN)(TM) 467 PEOPLE EDUCATION & ECONOMIC DEVELOPMENT SOCIETY (PEEDS) VS ITO. IN THE LIGHT OF ABOVE DISCUSSION, WE FIND THAT THE TRUST HAS SATISFIED THE CONDITIONS AS REGARDS THE OBJECTS AND GENUINENESS O F THE ACTIVITIES. THEREFORE, THE ASSESSEE TRUST IS ENTITLED FOR REGISTRATION U/S 12A OF THE ACT. WE DIRECT THE COMMISSIONER TO ALLOW THE REGISTRATION TO THE TRUST U/S 12A OF THE ACT. 6. IN THE LIGHT OF ABOVE ORDER, CIT(A) IS DIRECTED TO ALLOW REGISTRATION U/S.12A OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 22-12-2011. SD/- SD/- ( T. K. SHARMA ), ( A. L. GEHLOT ), JUDICIAL MEMBER. ACCOUNTANT MEMBER. RAJKOT. DATED:22-12-2011. NVA/ ITA 368-RJT-2011. 4 COPY TO:- 1.SHRI SUKHSAGAAR EDUCATION & CHARITABLE TRUST, RAJ KOT.. 2.THE C.I.T.-II, RAJJKOT. 3.THE C.I.T.(A)-II, RAJKOT. 4.THE C.I.T., RAJKOT. 5.THE D.R., ITAT, RAJKOT. TRUE COPY. BY ORDER, ASSTT. REGISTRAR, ITAT,RAJKOT.