Nithyananda Educational and charitable Trust, Kannur V. CIT, Calicut

ITA 38/COCH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81369 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-11-2014
• Assessment Year: 2014-2015
• Appeal Filed On: 03-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Keywords: Charitable institution
• Section: 12A; 12AA; 12

Judgement Text

1 ITA NO.38/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO. 38/COCH/2014 (ASSESSMENT YEAR 2014-15) NITHYANANDA EDUCATIONAL AND VS CIT, KOZHIKODE CHARITABLE TRUST, CHIRAKKAL KANNUR DISTRICT PAN : AABTN8790K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ARUN RAJ S RESPONDENT BY : SHRI M ANIL KUMAR, CIT DATE OF HEARING : 12-11-2014 DATE OF PRONOUNCEMENT : 14-11-2014 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE ADMINISTRATIVE COMMISSIONER, KOZHIKODE DATED 23-12- 2013 REJECTING THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12 AA OF THE ACT. IN FACT, THIS APPEAL WAS DISPOSED OF EARLIER BY AN ORDER DAT ED 19-06-2014. HOWEVER, ON THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IN M.A. NO.88/COCH/2014, THIS TRIBUNAL BY AN ORDER DATED 10 -10-2014 RESTORED THE APPEAL ON FILE. ACCORDINGLY, THE APPEAL WAS POSTED FOR HEARING FOR FINAL DISPOSAL. 2 ITA NO.38/COCH/2014 2. SHRI ARUN RAJ S, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADMINISTRATIVE COMMISSIONER REJECTED THE CLAIM OF R EGISTRATION U/S 12AA ON THE GROUND THAT THE ASSESSEE HAS NOT STARTED ANY CH ARITABLE ACTIVITY. REFERRING TO THE IMPUGNED ORDER, THE LD.COUNSEL SUB MITTED THAT THE COMMISSIONER HIMSELF ADMITS THAT THE ASSESSEE INTEN DS TO START THE SCHOOL. THE LD.COUNSEL FURTHER SUBMITTED THAT IT IS NOT BE NECESSARY TO START THE CHARITABLE ACTIVITY FOR THE PURPOSE OF REGISTRATION U/S 12AA OF THE ACT. THE LD.COUNSEL PLACED HIS RELIANCE ON VARIOUS JUDGMENTS OF HIGH COURTS INCLUDING THE ONE IN DIT VS FOUNATION OF OPTHALMIC AND OPTOMETRY RESEARCH EDUCATION CENTRE (2013) 355 ITR 361 (DEL). THE LD.COUNSEL SUBMITTED THAT THE DELHI HIGH COURT SPECIFICALLY RE FERRING TO THE JUDGMENT OF THE KERALA HIGH COURT IN SELF EMPLOYEES SERVICE SOC IETY VS CIT (2001) 247 ITR 18 (KER) FOUND THAT THE ASSESSEE CARRYING O N ITS ACTIVITY FOR MORE THAN THREE YEARS AND AFTER SOME DISCREPANCIES FOUND BY THE REVENUE FILED APPLICATION FOR REGISTRATION. IN THOSE CIRCUMSTANC ES, THE COURT FOUND THAT SUBSTANTIAL AMOUNTS WERE COLLECTED AND KEPT IN BANK IN THE FIXED DEPOSIT AND THERE WAS NO CHARITABLE ACTIVITY. IN VIEW OF T HE OBSERVATIONS MADE BY THE DELHI HIGH COURT IN FOUNDATION OF OPTHALMIC AND OPTOMETRY RESEARCH EDUCATION CENTRE (SUPRA), THE JUDGMENT OF THE KERAL A HIGH COURT IN SELF EMPLOYEES SERVICE SOCIETY (SUPRA) MAY NOT BE APPLIC ABLE TO THE FACTS OF THE CASE. 3 ITA NO.38/COCH/2014 3. WE HEARD SHRI M ANIL KUMAR, THE LD.DR ALSO. 4. IT IS AN ADMITTED FACT THAT THE ASSESSEE TRUST H AS NOT CARRIED OUT ANY ACTIVITY OF CHARITY SO FAR. THE ADMINISTRATIVE COM MISSIONER FOUND THAT THOUGH THE INTENTION OF THE TRUST WAS TO START A SC HOOL NO APPLICATION WAS MADE TO THE STATE GOVERNMENT / CENTRAL GOVERNMENT A UTHORITIES TO START THE SCHOOL. THE QUESTION ARISES FOR CONSIDERATION IS W HETHER, IN THE ABSENCE OF ANY CHARITABLE ACTIVITY CARRIED ON, THE ASSESSEE IS ENTITLED FOR REGISTRATION U/S 12AA OF THE ACT. THIS ISSUE WAS CONSIDERED BY THE KERALA HIGH COURT IN SELF EMPLOYEES SERVICE SOCIETY (SUPRA). THE DIV ISION BENCH OF THE KERALA HIGH COURT FOUND THAT THE SOCIETY HAS NOT DO NE ANY CHARITABLE WORK AT THE RELEVANT PERIOD; ON THE OTHER HAND, THE ACTI VITY THEY CARRIED ON DURING THE PERIOD WAS ONLY FOR THE PURPOSE OF GENERATING I NCOME FOR ITS MEMBERS. NO MATERIAL IS AVAILABLE BEFORE THE ADMINISTRATIVE COMMISSIONER TO SATISFY THE GENUINENESS OF THE ACTIVITY OF THE TRUST OR INS TITUTION. IN FACT, THE DIVISION BENCH OF THE KERALA HIGH COURT SPEAKING TH ROUGH JUSTICE K.K. USHA HAS OBSERVED AS FOLLOWS: A REFERENCE TO THE BYE-LAWS OF THE SOCIETY, A COP Y OF WHICH IS PRODUCED AS EXHIBIT P1, WOULD SHOW THAT SE VERAL CHARITABLE ACTIVITIES ARE INCLUDED IN THE OBJECTS O F THE SOCIETY, BUT EVEN ACCORDING TO THE PETITIONER SOCIETY IT HAS NOT BEEN ABLE TO DO ANY OF SUCH CHARITABLE ACTIVITIES DURING THE FIRST YEAR 4 ITA NO.38/COCH/2014 OF ITS FUNCTIONING. THE PROPOSAL TO START A TECHNI CAL EDUCATIONAL INSTITUTION ITSELF WAS TAKEN ONLY ON JUNE 14, 1999, THAT IS MUCH AFTER EXHIBIT P5 ORDER. WHEN THE COMMISSIONER EXER CISES HIS JURISDICTION UNDER SECTION 12AA WHILE CONSIDERING A N APPLICATION FOR REGISTRATION UNDER SECTION 12A HE H AS TO BE SATISFIED OF THE CHARITABLE AND RELIGIOUS NATURE OF THE OBJECTS AND GENUINENESS OF THE ACTIVITIES OF THE TRUST OR I NSTITUTION. IN THE PRESENT CASE, ADMITTEDLY, THE SOCIETY HAS NOT D ONE ANY CHARITABLE WORK DURING THE RELEVANT PERIOD, ON THE OTHER HAND, THE ACTIVITIES WHICH THEY HAVE CARRIED ON DURING TH E PERIOD WERE ONLY FOR THE PURPOSE OF GENERATING INCOME FOR ITS MEMBERS. THERE WERE NO MATERIALS BEFORE THE COMMIS SIONER TO BE SATISFIED OF THE GENUINENESS OF THE ACTIVITIE S OF THE TRUST OR INSTITUTION. UNDER THESE CIRCUMSTANCES, REJECTI ON OF THE APPLICATION UNDER EXHIBIT P5 CANNOT BE TERMED AS IL LEGAL OR ARBITRARY. BUT THE LEARNED SINGLE JUDGE HAS GIVEN AN OPPORTUNITY TO THE SOCIETY TO FILE A FRESH APPLICAT ION WHEN THEY ACTUALLY START DOING CHARITABLE WORK AND THE COMMIS SIONER HAS BEEN DIRECTED TO CONSIDER SUCH APPLICATION ON THE M ERITS UNTRAMMELED BY THE VIEW TAKEN IN EXHIBIT P5. ACCOR DING TO US, NO BETTER RELIEF COULD BE GRANTED TO THE SOCIETY IN THIS CASE. 5. THE DIVISION BENCH HAS ALSO CONFIRMED THE ORDER OF THE LD.SINGLE JUDGE IN WHICH A LIBERTY WAS GIVEN TO THE SOCIETY T O FILE A FRESH APPLICATION WHEN THEY ACTUALLY START DOING CHARITABLE WORK. TH EREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE IN THE PRESENT CASE MAY ALSO MAKE A FRESH APPLICATION BEFORE THE ADMINISTRATIVE COMMISSIONER ONCE 5 ITA NO.38/COCH/2014 THEY ACTUALLY START DOING THE CHARITABLE ACTIVITY. IF SUCH AN APPLICATION IS FILED, THE ADMINISTRATIVE COMMISSIONER SHALL CONSID ER THE SAME IN ACCORDANCE WITH LAW ON MERIT. 6. WITH THE ABOVE OBSERVATIONS, THE ORDER OF THE AD MINISTRATIVE COMMISSIONER IS CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH NOVEMBER, 2014. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 14 TH NOVEMBER, 2014 PK/- COPY TO: 1. NITHYANANDA EDUCATIONAL & CHARITABLE TRUST, CHIR AKKAL PO, KANNUR DIST 2. THE CIT, KOZHIKODE 3. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH