Forum for Advancement of Solar Thermal, Gurgaon V. DIT(E), New Delhi

ITA 3952/DEL/2011

• Counselvise Citation: 395220114 RSA 2011
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-09-2012
• Assessment Year: misc
• Appeal Filed On: 29-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER AND SHRI KULBHARAT, JUDICIAL MEMBER I.T.A .NO.- 3952/DEL/2011 (ASSESSMENT YEAR- ----------) FORUM FOR ADVANCEMENT OF SOLAR THERMAL VS DIT(E) 1101, 11 TH FLOOR, TOWER-B, PLOT NO.15, 3 RD FLOOR, MILLENNIUM PLAZA, SECTOR-27, AAYAKAR BHAWAN, SUSHANT LOK-I, LAXMI NAGAR, DISTT. CENTRE, GURGAON. NEW DELHI-92. PAN-AABCF4487A (A PPELLANT) (RESPONDENT ) APPELLANT BY: SH. RAJESH ARORA, CA RESPONDENT BY: MS. MEETA SINHA, SR . DR APPEAL HEARD ON-05.09.2012 ORDER PRONOUNCED ON-14.09.2012 ORDER PER KULBHARAT, JM THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF DIRECTOR OF INCOME TAX (EXEMPTION) DATED 04.05.2011 WHEREBY TH E LD. DIT(E) HAS REJECTED THE APPLICATION FOR GRANT OF REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFER TO AS THE ACT). 2. THE ASSESSEE IN THIS APPEAL HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. THE LD/- DIRECTOR OF INCOME TAX (EXEMPTION), DELHI HAS ERRED IN LAW BY ARBITRARILY REJECTING THE APPLICATI ON FILED BY ASSESSEE COMPANY IN FORM 10A SEEKING REGISTRATION U /S 12A OF THE INCOME TAX ACT, 1961 ON THE BASIS THAT APPLI CANT I.T.A .NO.- 3952/DEL/2011 2 COMPANY IS NOT ABLE TO JUSTIFY WITH DOCUMENTARY EVI DENCE THE GENUINENESS OF ITS CHARITABLE ACTIVITIES AND FURTHE R ERRED TO APPRECIATE THE FACT THAT ACTIVITIES CARRIED OUT BY THE COMPANY IN RENEWABLE ENERGY IN GENERAL & SOLAR ENERGY IN PA RTICULAR SQUARELY FALLS WITHIN FORTH LIMB OF SEC. 2(15) DEFI NING THE CHARITABLE ACTIVITIES AS PREVENTION OF ENVIRONMENT. 2. THE LD/- DIT(E) HAS ERRED IN FAILING TO APPRECIATE THE FACT THAT WHILE CONSIDERING APPLICATION OF TRUST OR INST ITUTION FOR REGISTRATION U/S 12AA, ONLY GENUINENESS OF ITS ACTI VITIES & ITS CONSONANCE WITH ITS OBJECTS ARE TO BE SEEN AS HELD IN CASE OF COMMISSIONER OF INCOME TAX V/S RED ROSE SCHOOL BY HON'BLE HIGH COURT OF ALLAHABAD, LUCKNOW BENCH. 3. THE LD/- DIT(E) HAS ERRED IN NOT PROVIDING REASONABLE/SUFFICIENT OPPORTUNITY FOR BEING HEARD B EFORE REJECTING THE APPLICATION FOR GRANT OF REGISTRATION U/S 12A. 4. THE LD/- DIT(E) FAILED TO APPRECIATE THAT ALL CONDI TIONS OF SEC. 12AA FOR REGISTRATION OF INSTITUTION WERE SATI SFIED, THEREFORE ANY REJECTION & THUS DEPRIVING THE INSTIT UTION FOR REGISTRATION BY ORDER U/S 12AA(1)(B) IS UNCALLED FO R. 5. THE APPELLANT CRAVES LEAVE TO AMEND, ALTER OR DELET E ANY OF THE ABOVE GROUNDS OF APPEAL. GROUND NOS. 1,2 AND 4 ARE INTERCONNECTED SO, THEREF ORE, THEY ARE BEING DISPOSED OFF TOGETHER. 3. THE FACTS IN BRIEF IS THAT THE ASSESSEE FILED AN APPLICATION ON 03.11.2010 IN FORM 10A SEEKING REGISTRATION U/S 12A OF THE INC OME TAX ACT. THE DIRECTOR OF INCOME TAX(EXEMPTION) [DIT(E)], DELHI REJECTED T HE APPLICATION ON THE GROUND THAT THE APPLICANT COMPANY COULD NOT JUSTIFY THE GENUINENESS OF ITS CHARITABLE ACTIVITIES AGAINST THE FINDING OF LD. DI T(E), THE ASSESSEE IS IN APPEAL BEFORE US. 4. LD. AR OF THE ASSESSEE COMPANY SUBMITTED THAT TH E ASSESSEE COMPANY IS FORMED U/S 25 OF THE COMPANIES ACT, 1956, HAVING IT S MAIN OBJECT TO PROMOTE I.T.A .NO.- 3952/DEL/2011 3 RENEWABLE ENERGY IN GENERAL AND SOLAR THERMAL ENERG Y IN PARTICULAR BY PROVIDING A PLATFORM FOR STAKEHOLDERS ENGAGED IN DEVELOPMENT AND PROMOTION OF SUCH ENERGY AND TO INTERACT. HE SUBMITTED THAT THE DOCU MENTS AS ASKED BY THE DIT(E) WERE SUBMITTED VIDE SUBMISSIONS DATED 27.12.2010 EN CLOSED IN PAPER BOOK AT PAGE 69-70 AND SUBMISSION DATED 09.02.2011 ENCLOSED AT PAPER BOOK AT PAGE 71-72. HE SUBMITTED THAT THE ASSESSEE COMPANY HAS BEEN REGISTERED AS SECTION 25 COMPANY VIDE CERTIFICATE DATED 06.11.2010 ISSUED BY THE DEPUTY REGISTRAR OF COMPANY, NATIONAL CAPITAL TERRITORY OF DELHI, DELHI AND HE ALSO SUBMITTED THAT IT IS EVIDENT FROM THE MEMORANDUM OF ASSOCIATIONS O F THE COMPANY THAT THE MAIN OBJECTIVE OF THE ASSESSEE COMPANY, INTER ALIA, INCLUDES TO PROMOTE RENEWABLE ENERGY IN GENERAL AND SOLAR THERMAL ENERG Y IN PARTICULAR BY PROVIDING A PLATFORM ENGAGED IN DEVELOPMENT & PROMOTION AND T O INTERACT , SHARE KNOWLEDGE AND TO TAKE UNDERTAKE ACTIVITIES COLLECTI VELY ON BEHALF OF ITS MEMBERS AND STAKE HOLDERS, NOT WITH THE PROFIT MOTI VE. HE SUBMITTED THAT IT IS ALSO MENTIONED IN HIS OBJECTS THAT NO OBJECTS OF TH E ASSESSEE COMPANY WILL BE CARRIED OUT WITHOUT OBTAINING THE PRIOR APPROVAL/NO OBJECTION FROM THE CONCERNED AUTHORITY, WHEREVER NECESSARY, IF ANY, AN D NONE OF THE OBJECTS WILL BE CARRIED OUT ON COMMERCIAL BASIS. APART FROM THESE MAIN OBJECTS, THERE ARE OBJECTS INCIDENTAL OR ANCILLARY TO THE ACHIEVEMENT OF THE ABOVE MAIN OBJECTS. HE SUBMITTED THAT THE AFOREMENTIONED OBJECTS OF THE AS SESSEE COMPANY SQUARELY FALLS UNDER THE PROVISIONS OF SECTION 2(15) OF THE ACT, DEFINING THE MEANING OF I.T.A .NO.- 3952/DEL/2011 4 WORD CHARITABLE PURPOSES. HE SUBMITTED THAT TO T HIS EFFECT, AN AFFIDAVIT BEFORE THE DIT(E) WAS ALSO FILED. HE SUBMITTED THAT THE BASIS OF THE DIT(E) FOR DECLINING THE REGISTRATION U/S 12A WAS THAT SINCE T HE APPLICANT COMPANY IS NEITHER DOING ANY CHARITABLE WORK OUT OF ITS OWN RE SOURCES NOR ANY CHARITABLE WORK INDEPENDENTLY, WHATEVER WORK HAS DONE ONLY A C ONTRACTUAL WORK AND IN THE ABSENCE OF THE CONTRACT, THE APPLICANT WAS NOT IN A POSITION TO EXECUTE THE SAME. HENCE, IT CANNOT CLAIM THAT THE ASSIGNED WORK IS IT S CHARITABLE WORK. HE SUBMITTED THAT ON THE PERUSAL OF THE DETAILS/DOCUME NTS FURNISHED BY THE ASSESSEE, LD. DIT(E) OBSERVED THAT THE ASSESSEE HAV E BEEN AWARDED A GRANT OF RS. 13 LAKH FROM ONE M/S SHAKTI SUSTAINABLE ENERGY FOUNDATION FOR THE DEVELOPMENT OF AN INTERACTIVE WEBSITE OF SOLAR THE RMAL FOR THE USE OF STAKE HOLDERS. FROM THE ABOVE, LD. DIT(E) CONCLUDED THAT THE APPLICANT COMPANY IS DOING THE WORK AS CONTRACTUAL OBLIGATION AND INTERA CT TO CHARITABLE WORK IS BEING DONE ON BEHALF OF THE FUNDING AGENCY AND NOT BY THE APPLICANT ONLY WHICH IS HIGHLY UNJUSTIFIED AND ARBITRARY. HE SUBMITTED THA T LD. DIT(E) FAILED TO APPRECIATE THE FACTS IN RIGHT PERSPECTIVE, SINCE TH E OBJECTIVE OF THE APPELLANT COMPANY IS TO DEVELOP AN INTERACTIVE WEBSITE FOR T HE USE OF GOVERNMENT AND OTHER PRIVATE ENTERPRISE AS ITS IDENTIFIED THAT THE RE IS NO READY AVAILABLE OF AN INTERACTIVE AND A COMPREHENSIVE FACT FILLED DATA BA SE FOR THE USER OF SOLAR ENERGY IN THE COUNTRY. THE ASSESSEE COMPANY INTENDS TO EN TER INTO TIE UP WITH THE SIMILAR INTERNATIONAL ORGANIZATION IN ORDER TO CREA TE EXCHANGE FORUMS AND BLOGS I.T.A .NO.- 3952/DEL/2011 5 ON THE MATTER OF COMMON INTEREST TO PRIVATE AS WELL AS POLICY MAKERS OF THE COUNTRY. HE SUBMITTED FOR THIS KIND OF THE ACTIVIT IES, THE ASSESSEE COMPANIES NEEDS FUNDS AND SUCH FUND HAVE BEEN RECEIVED FROM M /S SHAKTI SUSTAINABLE ENERGY FOUNDATION BY DOING THEIR PROJECTS IN THE CO NCERNED FIELDS. HE FURTHER SUBMITTED THAT SECTION 12A CONTEMPLATES THAT THE TR UST OR INSTITUTION WHICH IS IN RECEIPT OF INCOME OR VOLUNTARY CONTRIBUTION FOR CHA RITABLE PURPOSE HAS TO MAKE AN APPLICATION TO THE CIT FOR THE REGISTRATION OF I NSTITUTION. HE SUBMITTED THAT VOLUNTARY CONTRIBUTIONS RECEIVED BY A TRUST CREDITE D WHOLLY OR PARTLY FOR CHARITABLE OR RELIGIOUS PURPOSES FALLS WITHIN THE S WEEP OF SECTION 2(24) WHICH DEFINES THE INCOME. HE FURTHER SUBMITTED AT THE ST AGE OF REGISTRATION THE AUTHORITIES HAVE TO FIND OUT THAT THE OBJECTS OF TH E TRUST ARE FOR THE CHARITABLE NATURE OR NOT. 5. LD. AR RELIED UPON THE JUDGEMENT OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS RED ROSE SCHOOL 212 CTR 394, IN SUPPORT OF HIS CONTENTION THAT WHILE CONSIDERING THE APPLICATION F OR REGISTRATION FILED BY A CHARITABLE TRUST THE CIT COULD ONLY SEE THAT THE OB JECTS OF THE TRUST WERE GENUINE AND NO AGAINST PUBLIC POLICY AND ACTIVITIES OF THE TRUST WERE GENUINE. AT THAT STAGE, THE CIT COULD NOT LOOK ANY OTHER ASPECT IN C ASE WHERE, THERE WAS ANY MISUSE OF FUNDS, THIS CAN BE LOOKED INTO BY THE ASS ESSING OFFICER WHEN THE TRUST FILED ITS RETURN. LD. COUNSEL SUBMITTED THAT THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT HAS BEEN FOLLOWED BY THE HON 'BLE DELHI HIGH COURT IN I.T.A .NO.- 3952/DEL/2011 6 DIT VS FOUNDATION OF OPTHALMIC & OPTOMETRY RESEARCH EDUCATION CENTRE (ITA NO.-1687/2010). HE SUBMITTED THAT IN DIT(E) V S. PRADAN PROPERTY HOLDING TRUST (ITA NO. 361/2007), IT WAS HELD THAT IF FACT THAT THE ASSESSEE DOES NOT CARRY ANY INDEPENDENT CHARITABLE ACTIVITY WILL HAVE TO BE CONSIDERED AT THE TIME OF ASSESSMENT BY THE ASSESSING OFFICER. H E SUBMITTED THAT IN THE CASE OF AUSTRALIAN INDIAN RURAL VS DIT(EXEMPTION) (ITA N O. 2026 & 2027/DEL/2011), THE HONBLE ITAT, DELHI HAS HELD TH AT THE REJECTION OF REGISTRATION ON THE GROUND THAT THERE IS ABSENCE OF CHARITABLE ACTIVITY, IS NOT A GOOD GROUND FOR REJECTION OF REGISTRATION U/S 12A. HE ALSO RELIED ON THE DECISION OF THE HONBLE CO-ORDINATE BENCH RENDERED IN THE CA SE OF DIT(E) VS THE GURU HARKISHAN MEDICAL TRUST 18 DTR 218 AND ALSO IN THE CASE OF DHARMA SANSTHAPAK SANGH (NIYAS) VS CIT 118 TTJ 823, IN SUP PORT OF THE CONTENTION THAT WHILE GRANTING REGISTRATION TO A CHARITABLE TR UST OR INSTITUTION, THE POWER OF THE CIT IS LIMITED TO EXAMINE AS TO WHETHER OR NOT THE OBJECTS OF THE TRUST ARE GENUINE IN NATURE. HE ALSO RELIED ON THE DECISION OF THE HONBLE ITAT RENDERED IN THE CASE OF DREAM LAND EDUCATIONAL TRUST VS CIT (2007) 109 TTJ 850, IN SUPPORT OF THIS CONTENTION THAT U/S 12AA, THE CIT O NLY REQUIRE TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST AND GENUINENESS OF T HE ACTIVITIES. HE ALSO RELIED UPON THE DECISION OF THE HONBLE ITAT, BANGLORE BEN CH IN SUPPORT OF THE CONTENTION THAT WHAT IS REQUIRED TO SATISFY HIMSELF WHILE CONSIDERING THE APPLICATION U/S 12A OF THE ACT AS TO WHETHER THERE IS AN APPLICATION AND THE TRUST I.T.A .NO.- 3952/DEL/2011 7 IS FORMED BY A VALID DOCUMENTS AND THAT ITS OBJECTS ARE RELIGIOUS AND CHARITABLE AND ARE GENUINE IN NATURE. 6. ON THE CONTRARY, LD. DR STRONGLY RELIED UPON THE DECISION OF THE LD. DIT(E). HE SUBMITTED THAT THE DIT(E) WAS NOT SATIS FIED WITH THE GENUINENESS OF THE ACTIVITIES BEING CHARITABLE. THEREFORE, HE HAS RIGHTLY REJECTED THE APPLICATION OF THE ASSESSEE COMPANY. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED MATE RIAL AVAILABLE ON RECORD AND THE JUDGEMENTS CITED. WE FIND THAT LD. DIT(E) HAS REJECTED THE APPLICATION ON THE GROUND THAT FROM THE PERUSAL OF DETAILS/DOCU MENTS FURNISH REVEALED THAT APPLICANT ASSESSEE HAD BEEN AWARDED A GRANT OF RS. 13 LAKHS FROM M/S SHAKTI SUSTAINABLE ENERGY FOUNDATION FOR THE DEVELOPMENT O F AN INTERACTIVE WEBSITE ON SOLAR THERMAL ENERGY FOR THE USE OF STAKE HOLDER S AND APPLICANT COMPANY OUT OF THE ABOVE AMOUNT OF RS. 5.77 LAKHS HAD UTILIZED FOR THE ASSIGNED WORK OF THE FUNDING AGENCY. HE HAS FURTHER OBSERVED THAT ON GO ING THROUGH THE LETTER OF GRANT, IT IS SEEN THAT SAME WAS GIVEN CONDITIONALLY TO DEVELOP AN INTERACTIVE WEBSITE ON SOLAR THERMAL ENERGY FOR USE OF GUARANTE E AS WELL AS OTHER STAKEHOLDERS AND THE APPLICANT COMPANY IS DOING THE ABOVE WORK AND ACTUALLY THE CHARITABLE WORK HAS BEEN DONE ON BEHALF OF THE FUNDING AGENCY AND NOT BY THE APPLICANT COMPANY. MOREOVER, THE WEBSITE WORK HAS TO BE COMPLETED IN ACCORDANCE WITH THE DIRECTION ISSUED BY THE GRANTEE AND APPLICANT COMPANY IS BOUND TO DO THE SAME. SINCE, APPLICANT COMPANY IS NEITHER DOING ANY I.T.A .NO.- 3952/DEL/2011 8 CHARITABLE WORK OUT OF ITS OWN RESOURCES NOR ANY CH ARITABLE WORK INDEPENDENTLY, WHATEVER WORK IS BEING DONE BY IT IS ONLY A CONTRAC TUAL WORK AND IN THE ABSENCE OF THIS CONTRACT, THE APPLICANT COMPANY WAS NOT IN A POSITION TO EXECUTE THE SAME. 8. FROM THE JUDICIAL PRONOUNCEMENTS AS RELIED BY TH E LD. COUNSEL FOR THE ASSESSEE AS WELL AS FROM THE PROVISIONS U/S 12AA OF THE ACT, IT IS CLEAR THAT AT THE STAGE OF REGISTRATION, LD. DIT(E) IS REQUIRED T O SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINE NESS OF ITS ACTIVITIES AND HE MAY CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRU ST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GEN UINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF. FROM THE ORDER OF LD. DIT(E) IT IS TRA NSPIRED THAT HE HAS FORMED OPINION IN RESPECT OF GENUINENESS OF THE ACTIVITIES ON THE SOLE BASIS THAT THE CHARITABLE ACTIVITIES ARE UNDERTAKEN BY THE ASSESSE E COMPANY WAS AT THE BEHEST OF ONE M/S SHAKTI SUSTAINABLE ENERGY FOUNDATION. H OWEVER, NO FURTHER INQUIRY WAS MADE IN THIS BEHALF. IN THIS VIEW OF THE MATTER, IT WOULD BE IN THE INTE RESTS OF JUSTICE THAT THIS ISSUE IS REMITTED BACK TO THE FILE OF LD. DIT(E) FO R FRESH DECISION. 9. NEXT GROUND OF THE APPEAL IS AGAINST NOT PROVIDI NG SUFFICIENT OPPORTUNITY TO THE ASSESSEE COMPANY BEFORE REJECTING THE APPLIC ATION FOR GRANT OF REGISTRATION U/S 12A. LD. AR SUBMITTED THAT THE LD. DIT(E) DID NOT AFFORD SUFFICIENT I.T.A .NO.- 3952/DEL/2011 9 OPPORTUNITY FOR EXPLAINING THE DETAILS AS FURNISHED . LD. DR RELIED UPON THE ORDER OF LD. DIT(E), WE HAVE HEARD THE RIVAL SUBMIS SIONS AND PERUSED THE MATERIAL AVAILABLE SINCE THE EFFECTIVE GROUND HAS BEEN REMITTED BACK TO THE FILE OF LD. DIT(E). THIS GROUND IS ALSO DISPOSED OF WIT H A DIRECTION THAT LD. DIT(E), SHALL GIVE SUFFICIENT OPPORTUNITY AS PER LA W TO THE APPELLANT COMPANY AND DECIDE GRANT OF REGISTRATION IN THE LIGHT OF TH E JUDICIAL PRONOUNCEMENTS ON THE SUBJECT MATTER AND RELIED UPON BY THE ASSESSEE COMPANY. LD. DIT(E) MAY DISPOSE OF THE APPLICATION OF THE ASSESSEE COMPANY AFRESH AFTER GIVING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE AND PASS A S PEAKING ORDER AS EXPEDITIOUSLY AS POSSIBLE. THE ASSESSEE IS DIRECTE D TO APPEAR SUO MOTTO BEFORE LD. DIT(E) AFTER RECEIPT OF THIS ORDER. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14.09.2012. SD/- SD/- (S.V.MEHROTRA) (KULBHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14/09/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI I.T.A .NO.- 3952/DEL/2011 10