Christian Women's Association, Thiruvalla V. CIT, Kottayam

ITA 389/COCH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81358 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 15-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: K I ABRAHAM
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

1 ITA NO.389/COCH/2014 AIN 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. 389/COCH/2014 CHRISTIAN WOMENS ASSOCIATION VS CIT, KOTTAYAM CHIRAYIL HOUSE, MUTHOOR PO THIRUVALLA PAN : AABTC5274D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.I. ABRAHAM RESPONDENT BY : SHRI M ANIL KUMAR, CIT DATE OF HEARING : 28-10-2014 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 DATED 31-07-2014 REJECT ING THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT. 2. SHRI K.I. ABRAHAM, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE TRUST WAS FORMED BY MEANS OF A RE GISTERED TRUST DEED DATED 06-07-2013. THE TRUST FILED APPLICATION BEFO RE THE COMMISSIONER OF INCOME-TAX FOR REGISTRATION AS CHARITABLE TRUST U/S 12AA OF THE ACT. 2 ITA NO.389/COCH/2014 ACCORDING TO THE LD.REPRESENTATIVE, THE OBJECT OF T HE TRUST IS TO SERVE THE PEOPLE IRRESPECTIVE OF CASTE, CREED AND COMMUNITY. THE TRUST ALSO INTENDED TO ORGANIZE, FACILITATE, CONDUCT AND ASSIS T IN ORGANIZING, FACILITATING AND CONDUCTING LECTURES, SEMINARS, SYMPOSIUM, CONVE NTIONS, CONFERENCES, CONSULTATIONS, WORKSHOPS, LITERACY PROGRAMMES AND R ETREATS FOR TRAINING SO AS TO EMPOWER THE WOMEN. THE OTHER OBJECT OF THE T RUST IS TO PROVIDE TRAINING, INSTITUTE STUDENTSHIPS, SCHOLARSHIPS, STI PENDS, MEDALS, PRIZES ETC AND TO HELP AND ENCOURAGE DESERVING STUDENTS AND TO PROVIDE MONETARY AID TO STUDENTS FOR PURSUING HIGHER EDUCATION. ANO THER OBJECT OF THE ASSESSEE TRUST IS TO EXTEND HELP TO THE VICTIMS OF NATURAL CALAMITIES, COMMUNAL RIOTS, RELIGIOUS OUTBURSTS, TERRORIST ACTI VITIES, SECTARIAN IN-FIGHTS AND UNFORESEEN CIRCUMSTANCES. HOWEVER, THE COMMISS IONER OF INCOME- TAX REJECTED THE APPLICATION OF THE ASSESSEE FOR RE GISTRATION U/S 12AA ON THE GROUND THAT CHARITABLE ACTIVITY CARRIED ON BY T HE ASSESSEE TRUST IS VERY LIMITED AND FUNDS AVAILABLE IS SEEMINGLY LESS. ACC ORDING TO THE LD.REPRESENTATIVE, THE TRUST ITSELF WAS FORMED ON 0 6-07-2013. THE ASSESSEE TRUST HAS SPENT AROUND RS.1,16,977 DURING THE FIRST SEVEN MONTHS OF ITS SERVICE. 3. PLACING RELIANCE ON THE DECISION OF THE DELHI BE NCH OF THIS TRIBUNAL IN SOHAM FOR KIDS EDUCATION SOCIETY CENTRE VS DIT (EXE MPTIONS) REPORTED IN (2014) 31 ITR (TRIB) 170, THE LD.REPRESENTATIVE SUB MITTED THAT THE INTENTION 3 ITA NO.389/COCH/2014 AND ACTIVITY OF THE TRUST WAS NOT GERMANE AT THE TI ME OF GRANT OF REGISTRATION U/S 12AA OF THE ACT. MERELY BECAUSE THE ASSESSEE T RUST HAS NOT CARRIED OUT THE CHARITABLE ACTIVITY VIGOROUSLY THAT CANNOT BE A REASON PER SE FOR REFUSING THE REGISTRATION U/S 12AA OF THE ACT. IN THIS CASE, ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE CARRIED OUT THE CHA RITABLE ACTIVITY IN A LIMITED WAY WITHIN A SHORT SPAN OF 7 MONTHS OF ITS EXISTENCE. THE LD.REPRESENTATIVE HAS ALSO PLACED RELIANCE ON THE J UDGMENT OF THE KARNATAKA HIGH COURT IN DIT (EXEMPTIONS) VS MEENAKS HI AMMA ENDOWMENT TRUST 354 ITR 219 (KAR) AND SUBMITTED THA T NO ONE COULD EXPECT TO DO ACTIVITY OF CHARITY IMMEDIATELY AFTER THE ESTABLISHMENT OF THE TRUST. THEREFORE, THE OBJECT OF THE TRUST HAS TO B E TAKEN INTO CONSIDERATION BY THE AUTHORITY AND THE OBJECT OF THE TRUST COULD BE READ FROM THE TRUST DEED ITSELF. THE LD.REPRESENTATIVE HAS ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF THE DELHI HIGH COURT IN DIT VS FOUNDATI ON OF OPTHALMIC AND OPTOMETRY RESEARCH EDUCATION CENTRE REPORTED IN 355 ITR 361 (DEL) AND THE DECISION OF THE HYDERABAD BENCH OF THIS TRIBUNA L REPORTED IN (2014) 35 ITR (TRIB) 267 AND THE JUDGMENT OF THE MADRAS HIGH COURT IN DIT VS SEERVI SAMAJ TAMBARAM TRUST 362 ITR 199 (MAD) AND SUBMITTE D THAT FOR GRANT OF REGISTRATION OF THE TRUST COMMENCEMENT OF ACTIVITY OF THE TRUST IS NOT NECESSARY. THEREFORE, ACCORDING TO THE LD.REPRESEN TATIVE, THE ASSESSEE IS ENTITLED FOR REGISTRATION. 4 ITA NO.389/COCH/2014 4. ON THE CONTRARY, SHRI M ANIL KUMAR, THE LD.DR SU BMITTED THAT THE ASSESSEE TRUST WAS ESTABLISHED ON 06-07-2013. ON E XAMINATION OF THE ACTIVITY REPORT SAID TO BE FILED BY THE ASSESSEE, T HE COMMISSIONER FOUND THAT THE ASSESSEE HAS UNDERTAKEN VERY LIMITED ACTIV ITIES AND FUNDS AVAILABLE WITH THE ASSESSEE IS ALSO VERY LESS. THE ASSESSEE HAS NO IDEA WITH REGARD TO CHARITABLE ACTIVITY TO BE UNDERTAKEN IN FUTURE. IN THE ABSENCE OF ANY CLEAR-CUT ACTIVITY UNDERTAKEN BY THE ASSESSE E, ACCORDING TO THE LD.DR, THE COMMISSIONER HAS RIGHTLY REJECTED THE RE GISTRATION U/S 12AA OF THE ACT. 5. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE LOWER AUTHORITIES IN THE LIGHT OF SUBMISSIONS MADE BY BOTH, THE REPRESEN TATIVES FOR THE ASSESSEE AND THE REVENUE. IT IS NOT IN DISPUTE THA T THE ASSESSEE TRUST WAS ESTABLISHED BY MEANS OF REGISTERED SALE DEED DATED 06-07-2013. THE COMMISSIONER OF INCOME-TAX REJECTED THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12AA ON THE GROUND THAT THE ASSESS EE HAS UNDERTAKEN VERY LIMITED CHARITABLE ACTIVITIES AND THE FUNDS AVAILAB LE WITH THE ASSESSEE WAS ALSO VERY LESS. THE CONTENTION OF THE ASSESSEE BEFO RE THIS TRIBUNAL IS THAT IT MAY NOT BE NECESSARY TO DO ANY ACTIVITY FOR THE PUR POSE OF REGISTRATION U/S 12AA OF THE ACT AND THAT WHAT IS REQUIRED TO BE EXA MINED IS THE OBJECT OF THE TRUST. 5 ITA NO.389/COCH/2014 6. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 12AA OF THE ACT. SECTION 12AA OF THE ACT PROVIDES FOR PROC EDURE FOR REGISTRATION OF THE TRUST. THE COMMISSIONER ON RECEIPT OF THE APPL ICATION FOR REGISTRATION U/S 12AA SHALL CALL FOR DOCUMENTS AND INFORMATION F ROM THE TRUST IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVI TIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH ENQUIRY AS HE DE EM NECESSARY BEFORE GRANTING REGISTRATION. AFTER COMPLETING THE ENQUIR Y HE HAS TO PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION OR REFUSING TO REGISTER THE TRUST OR INSTITUTION. THEREFORE, THE QUESTION ARISES FOR CONSIDERATION IS WHETHER THE ASSESSEE TRUST HAS TO COMMENCE ITS ACTIVITY AT THE TIME OF REGISTRATION U/S 12AA OF THE ACT OR NOT? THE LD.REPRESENTATIVE PLACED HIS RELIANCE ON VARIOUS JUDGMENT OF THE HIGH COURTS AND TRIBUNALS I NCLUDING THE JUDGMENT OF KARNATAKA HIGH COURT IN MEENAKSHI AMMA ENDOWMENT TRUST (SUPRA); MADRAS HIGH COURT IN SEERVI SAMAJ TAMBARAM TRUST (S UPRA). THE JUDGMENT CITED BY THE LD.REPRESENTATIVE FOR THE ASS ESSEE CLEARLY SAYS THAT THE ACTIVITY OF THE TRUST IS NOT A CRITERION FOR GR ANT OF REGISTRATION. WHAT IS TO BE EXAMINED IS THE OBJECT OF THE TRUST FOR WHICH IT WAS FORMED. HOWEVER, WE FIND THAT THE KERALA HIGH COURT IN SELF EMPLOYEE S SERVICE SOCIETY VS CIT (2001) 247 ITR 18 (KER) HAD AN OCCASION TO CONS IDER THE PROVISIONS OF SECTION 12AA OF THE ACT. A SIMILAR CONTENTION WAS RAISED BEFORE THE KERALA HIGH COURT THAT IN ORDER TO GRANT REGISTRATION U/S 12AA THE DEPARTMENT CANNOT INSIST THAT THE SOCIETY HAS DONE CHARITABLE WORK DURING THE FIRST YEAR 6 ITA NO.389/COCH/2014 OF ITS OPERATION. AFTER EXAMINING THE PROVISIONS O F SECTION 12AA OF THE ACT, THE DIVISION BENCH OF THE KERALA HIGH COURT SPEAKIN G THROUGH 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 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 7 ITA NO.389/COCH/2014 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. 7. IN VIEW OF THE JUDGMENT OF THE JURISDICTIONAL HI GH COURT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE JUDGMENT OF T HE KARNATAKA HIGH COURT IN THE CASE OF MEENAKSHI AMMA ENDOWMENT TRUST (SUPR A) AND SEERVI SAMAJ TAMBARAM TRUST (SUPRA) MAY NOT BE RELEVANT FO R THE PURPOSE OF THIS CASE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION T HAT THE JUDGMENT OF THE KERALA HIGH COURT BEING A JURISDICTIONAL HIGH COURT IS BINDING ON THIS TRIBUNAL. 8. IN THE CASE ON OUR HAND, IT IS NOT THE CASE OF T HE DEPARTMENT THAT NO ACTIVITY WAS UNDERTAKEN. THE COMMISSIONER CLAIMS T HAT THE ASSESSEE TRUST HAS UNDERTAKEN VERY LIMITED ACTIVITY. THEREFORE, I T MAY NOT BE PROPER TO SAY THAT NO ACTIVITY WAS UNDERTAKEN BY THE ASSESSEE TRU ST. THE ACTIVITY REPORT SAID TO BE FILED BEFORE THE COMMISSIONER IS NOT AVA ILABLE ON THE FILE OF THIS TRIBUNAL. THEREFORE, THIS TRIBUNAL IS UNABLE TO AP PRECIATE THE ACTIVITY SAID TO BE CARRIED ON BY THE ASSESSEE. SINCE THE ASSESS EE CLAIMS THAT THEY HAVE DONE LITTLE ACTIVITY ABOUT THE CHARITY IN THE FIRST YEAR OF ITS ESTABLISHMENT, THIS TRIBUNAL IS OF THE CONSIDERED O PINION THAT IT IS NOT A CASE THAT NO CHARITABLE ACTIVITY WAS CARRIED ON. H OWEVER, AS OBSERVED EARLIER, IN THE ABSENCE OF THE ACTIVITY REPORT, THI S TRIBUNAL IS UNABLE TO 8 ITA NO.389/COCH/2014 APPRECIATE THE ACTIVITIES CARRIED ON BY THE ASSESSE E. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE- EXAMINED BY THE COMMISSIONER IN THE LIGHT OF THE JU DGMENT OF THE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYEES SERVICE SO CIETY (SUPRA). ACCORDINGLY, THE ORDER OF THE LOWER AUTHORITY IS SE T ASIDE AND THE ISSUE OF REGISTRATION IS REMITTED BACK TO THE FILE OF THE CO MMISSIONER. THE COMMISSIONER SHALL RE-EXAMINE THE MATTER IN THE LIG HT OF THE OBJECT OF THE ASSESSEE TRUST AND ITS ACTIVITY AND THEREAFTER DECI DE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY OF HEARING TO THE ASSESSEE. IT IS MADE CLEAR THAT THE TRUST CANNOT B E USED AS A VEHICLE / INSTRUMENT FOR COLLECTING ANY MONEY COMPULSORILY FR OM PUBLIC. THOUGH THE ASSESSEE COULD RECEIVE VOLUNTARY DONATION, THE COMM ISSIONER SHALL ENSURE THAT NO MONEY IS COLLECTED COMPULSORILY IN THE NAME OF THE TRUST. 9. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE A SSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 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/- 9 ITA NO.389/COCH/2014 COPY TO: 1. CHRISTIAN WOMENS ASSOCIATION, CHIRAYIL HOUSE, M UTHOOR P.O., THIRUVALLA 689 107 2. THE CIT, KOTTAYAM 3. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH