SHRI PANCHAMURTI EDUCATION SOCIETY, NAGPUR V. COMMMISSIONER OF INCOME TAX (EXEMPTIONS), PUNE

ITA 383/NAG/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8860 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 08-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MISS ADIBA.H. CHIBTHANAWALA
• Keywords: Charitable institution; Maximum Marginal Rate
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S, JUDICIAL MEMBER ITANo.383/Nag./2017 Panchamurti Education Society N 62 Nagomali Layout Reshambagh Nagpur–440 009 PAN No: AAFTS2717R ............... Appellant v/s CIT(E) 3 rd floor, Room No. 332 PMT Building, Shankarshet Road, Swargate, Pune–411 037 ................... Respondent Assessee by : Miss Adiba.H. Chibthanawala, CA Revenue by : Shri Rajeev Benjwal, CIT Date of Hearing – 08.06.2022 Date of Order –09 .06.2022 O R D E R PER SHRI VIKRAM SINGH YADAV, A.M. This appeal filed by the assessee is directed against order of the learned Commissioner of Income Tax (Exemptions), Pune, dated 29.09.2017 wherein assessee’s application seeking registration under section. 12AA of the Act was rejected by the ld.CIT(E). 2. The ld.CIT(E) in his order dated 29.09.2017 stated that the application so filed by the assessee was carefully considered and 2 ITANo.383/Nag/2017 information/clarification were called for examining genuineness of its activities and in response, the ld. AR on behalf of the assessee appeared and made submission and explained the objects and activities of the assessees society. It was held by the ld.CIT(E) that on going through trust deed filed by the assessees society, it is seen that there is no Dissolution clause, which would indicate that fate of the trust on its dissolution, the affidavit signed by the Authorized Representative/Trustee/President and a letter to the effect that appropriate amendment shall be made in due course was however filed and to mitigate the deficiencies, the assessee was requested to file an application for amending the trust deed with the office of the Charity Commissioner and produce a copy of said application. However, the assessee has failed to furnish the same. Accordingly, basis the information available on record, the ld.CIT(E) held that though objects of the assessees society prima–facie appeared to the “charitable” in nature, but due to lack of clause on Dissolution and failure of the assessee society to produce a copy of the application for amending the trust deed to include the ‘Dissolution Clause’, the application for grant of registration under section. 12AA cannot be accepted and the same was rejected on technical grounds. Against the said findings and order of the ld.CIT(E), the assessee is in appeal before us. 3 ITANo.383/Nag/2017 3. During the course of hearing, the ld. AR submitted that the assessee society is a public charitable trust registered with the Charity Commissioner, Nagpur vide Registration No. F–742(N) on 11.05.1965. the assessee society is also registered under the Societies Registration Act vide registration certificate dated 11.05.1965. It was submitted that the assessee society approached the Charity Commissioner of Nagpur for framing of Scheme under section 50A of the Maharashtra Public Trust Act, as in the old bye–laws, there was no provision regarding the mode of succession of trustees, the tenure of trustees etc. and the Assistant Charity Commissioner, Nagpur by an order dated 30.09.2014 approved the scheme. 4. It was submitted that the said scheme contains the objects of the trust which are all educational in nature and the assessee society is currently running the following educational institutions namely Mount Everest Primary School, Pandit Nehru Higher Secondary School and Vasantrao Naik Polytechnic College. It was submitted that the said school and colleges are running since past ‘50’ years, wherein the primary and secondary schools are aided by the Government of Maharashtra, whereas the Polytechnic college is unaided. It was submitted that the assessee society has been regularly filing its income tax returns along with the audited financial statements and the returns of income & audited financial statements for the preceding three years 4 ITANo.383/Nag/2017 were also filed along with the application in Form 10A seeking exemption under section 12AA of the Act. 5. It was submitted that while considering the application for exemption under section 12AA of the Act, the ld.CIT(E) has to be satisfy himself on two grounds namely the objects of the society and genuineness of the activities undertaken by the assessee in pursuance of the stated objectives. It was submitted that on the perusal of the impugned order, it is very much evident that the ld. CIT(E) was satisfied about the objects, as well as activities carried out in pursuance of the stated objects being charitable in nature. However, the ld CIT(E) has rejected the application seeking registration merely on technical grounds as so stated by him that there was no dissolution clause in the trust deed. 6. In this regard, it was submitted that w.e.f. 01.06.2016, there has been an amendment in the Income tax Act, wherein Section 115TD(c) has been introduced, wherein upon dissolution of the trust, if the assets are not transferred to any other trust or educational institution within the period of 12 months from the end of the month, in which the dissolution takes place, then the accreted income of such specified person shall be charged at maximum marginal rate. It was submitted that there is an inbuilt provision under the Act in case of any such 5 ITANo.383/Nag/2017 eventuality, where on dissolution the assets are transferred to any other person other than specified person. Therefore, the apprehension expressed by the ld.CIT(E) has been duly taken care by the new inserted provisions in the Income tax Act itself, which apparently has skip the attention of ld.CIT(E). 7. It was further submitted that the absence of the clause of dissolution in the Trust Deed would be in no manner be an impediment in the operation of the statute as the Maharasthra Public Trust Act duly takes care of such contingency and in support reliance was placed on the Hon’ble Bombay High Court decision in case of CIT(E) v/s Tara Educational & Charitable Trust (ITA No. 247 of 2015 dated 31.07.2017), wherein at para 4 and 5, the Hon’ble High Court was pleased to held as under:– "4. The registration of the Trust has to be done on compliance of the provisions of Section 12AA of the Act. The authority is required to consider the genuineness of the activities of the Trust and the section does not lay down that unless and until the clause of dissolution of the Trust is incorporated in the Trust Deed, the Trust cannot be registered. 5. The statute takes care of the apprehension as is shown by the Director of Income Tax (Exemptions). The authority has observed 6 ITANo.383/Nag/2017 that in case the objects/activities of the trust cannot be carried out it has to be dissolved, the corpus and properties remain on the date of dissolution transferred. The absence of the clause of dissolution in , the Trust Deed would be in no manner an impediment in the operation of the statute. Section 55 of the Maharashtra Public Trust Act takes care of such contingency. The Tribunal in its order has considered the scope of Section 12A of the Act and rightly passed the order." 8. Further, reliance was placed on the decision of Hon’ble Rajasthan High Court in case of CIT(E) v/s Narsighji Ka Mandir 185 DTR 30 and the decision of the Hon’ble Punjab and Haryana High court in case of CIT v/s Ajit Educational & Public Welfare Society 2018 Tax Pub(DT) 6698. 9. It was further submitted that the assessee has since applied for the amendment in its by–laws through an application under section 50A of the Maharashtra Public Trust Act, 1950 for the incorporation of the dissolution clause in its bye–laws and the said application was allowed by the Deputy Charity Commissioner, Nagpur vide order dated 26.07.2018. It was accordingly submitted that application so filed by the assessee seeking registration under section 12AA may therefore be directed to be allowed. 7 ITANo.383/Nag/2017 10. Per contra, the ld. CIT/DR has relied on the order and findings of the ld. CIT(E). 11. We have heard the rival contentions and perused the material available on record. We find that no adverse findings have been recorded by the ld CIT(E) regarding the objects of the assessee society being charitable in nature and genuineness of the activities carried out by the assessee society in pursuit of the said objectives on or before filing the application seeking registration u/s 12AA of the Act. As far as dissolution clause in the trust deed is concerned, we find that once the assessee has submitted to the jurisdiction of the Charity Commissioner and there are inbuilt provisions contained in the Bombay Public Trust Act of 1950 and the scheme so applied and approved by the Charity Commissioner, there is no valid and justifiable reason to reject the application so filed by the assessee society seeking registration u/s 12AA of the Act. We find that the dicta laid down by the Hon’ble Jurisdictional High Court in case of CIT(E) v/s Tara Educational & Charitable Trust (Supra) squarely applies in the facts of the present case and respectfully following the same, the ld CIT(E) is hereby directed to grant registration to the assessee society under section 12AA of the Act. In the result, the appeal of the assessee society is allowed. 8 ITANo.383/Nag/2017 Order pronounced in the open Court on 09 .06.2022 Sd/– YOGESH KUMAR U.S JUDICIAL MEMBER Sd/– VIKRAM SINGH YADAV ACCOUNTANT MEMBER NAGPUR, DATED:09 .06.2022 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Nagpur City concerned; (5) The DR, ITAT, Nagpur; (6) Guard file. True Copy By Order KasarlaThirumalesh Sr. Private Secretary (A.R./Sr. P.S./P.S.) ITAT, Nagpur