Billion Heart Beating Foundation, New Delhi V. DIT(E), New Delhi

ITA 3963/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58860 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-03-2012
• Assessment Year: misc
• Appeal Filed On: 01-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 11

Judgement Text

ITA 3963/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `A NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.3963/DEL/2011 ASSESSMENT YEAR : N.A. BILLION HEART BEATING FOUNDATION, VS DIT(EXE MPTIONS), D-1105, NEW FRIENDS COLONY, AAYAKAR BHAWAN, NEW DELHI-110065 DISTT. LAXMINAGAR, NEW DELHI-110092 (PAN AABTB7512K) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AJAY VOHRA & GAURAV JAIN RESPONDENT BY : SHRI ALOK SINGH, DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LD. DIT(E), NEW DELHI DATED 27.7.2011, REJECTING THE AP PLICATIONS OF THE ASSESSEE SEEKING REGISTRATION UNDER SECTION 12AA AN D FOR THE APPROVAL UNDER SECTION 80G OF THE INCOME TAX ACT, 1961 (HEREINAFTE R THE ACT). 2. THE GROUNDS OF APPEAL ARE REPRODUCED BELOW:- 1. THAT THE DIRECTOR OF INCOME TAX (EXEMPTION) [DIT(E)] ERRED ON FACTS AND IN LAW IN DENYING REGISTRATION/APPROVAL TO THE APPELLANT SOCIETY UNDE R SECTION 12A AND 80G OF THE INCOME TAX ACT, 1961 (T HE ACT) VIDE ORDER DATED 27.7.2011. ITA 3963/DEL/2011 2 2. THAT THE DIT(E) ERRED ON FACTS AND IN LAW IN REJECT ING THE APPLICATION FOR REGISTRATION/APPROVAL UNDER SECTION 12A/80G OF THE ACT ON THE GROUND THAT NO CHARITABLE ACTIVITY WAS CARRIED OUT BY THE APPELLANT DURING TH E YEAR. 3. BRIEFLY STATED, THE FACTS OF THE CASE THAT ADMIT TEDLY, THE ASSESSEE TRUST WAS CREATED ON 30.9.2010 THROUGH A REGISTERED TRUST DEED. IT MOVED TWO APPLICATIONS ON 27.1.2011 ON FORM NOS. 10A AND 10G FOR SEEKING REGISTRATION U/S 12A AND EXEMPTION U/S 80G OF THE A CT RESPECTIVELY. LD. DIT(E) ASKED THE ASSESSEE TO SUBMIT SOME DOCUMENTS AND EXPLANATIONS AND THESE WERE SUBMITTED BY THE REPRESENTATIVE OF THE A SSESSEE. 4. RELYING ON THE DECISION OF THE HONBLE KERALA HI GH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY VS CIT REPORTED I N (2001) 247 ITR 18 (KER), THE LD. DIT(E) REJECTED BOTH THE APPLICATIONS WITH THIS FINDING THAT THE TRUST HAS NOT STARTED ANY ACTIVITIES FOR GENERAL PU BLIC SO FAR AND IF SOCIETY WAS NOT ABLE TO DO ANY OF THE CHARITABLE ACTIVITIES, IT WOULD NOT QUALIFY FOR GRANTING REGISTRATION U/S 12A OF THE ACT. ACCORDIN GLY, BOTH THE APPLICATIONS WERE REJECTED BY THE IMPUGNED ORDER. HENCE THIS AP PEAL. 5. WE HAVE CAREFULLY CONSIDERED RIVAL ARGUMENTS OF BOTH THE PARTIES AND PERUSED ALL CITATIONS PLACED BEFORE US. IN THE CAS E OF SELF EMPLOYERS SERVICE SOCIETY VS CIT (KER.) (SUPRA), THE HONBLE KERALA H IGH COURT OBSERVED THAT:- ITA 3963/DEL/2011 3 ON THE ENQUIRY MADE BY THE COMMISSIONER IT WAS FOU ND THAT THE MEMBERS OF THE SOCIETY ARE MAINLY MERCHANT S. ITS ACTIVITY IS ACCEPTING RECURRING DEPOSITS FROM ITS M EMBERS AND FIXED DEPOSITS FROM THE PUBLIC. LOANS ARE BEIN G GIVEN TO ITS MEMBERS AT 21 PER CENT INTEREST. THE OFFICER FOUND THAT IN SPITE OF THE REFERENCE TO A LARGE NUM BER OF CHARITABLE OBJECTS IN ITS BYE-LAWS, THE ACTIVITY CA RRIED ON BY THE SOCIETY IS CONFINED TO ITS MEMBERS NUMBERING ABOUT 150. THE ACTIVITIES, AS MENTIONED ABOVE, CAN NOT BE TREATED AS CHARITABLE IN NATURE. IT WAS ON THIS BA SIS, THE COMMISSIONER CAME TO THE CONCLUSION THAT IT IS NOT ENTITLED TO REGISTRATION UNDER SECTION 12A. THEREFORE, THE CONCLUSION OF THE HONBLE KERALA HIG H COURT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE SAID CASE WAS THAT T HE ACTIVITIES OF THE SOCIETY WERE ONLY FOR THE PURPOSE OF GENERATING INCOME FOR ITS MEMBERS AND ACTIVITIES WERE NOT FOUND CHARITABLE IN NATURE. HE NCE, IT WAS HELD THAT REJECTION OF APPLICATIONS U/S 12A AND 80G OF THE AC T WAS JUSTIFIED. BUT IN THE CASE IN HAND, ADMITTEDLY, THE ASSESSEE TRUST WA S CREATED ON 30.9.2010 AND APPLIED FOR REGISTRATION ON 27.1.2011 I.E., AT THE END OF FOURTH MONTH OF CREATION. THE LD. DIT(E) DID NOT FIND ANY ACTIVITY OF THE TRUST GENERATING INCOME FOR ITS MEMBERS OR NOT CHARITABLE IN NATURE. THEREFORE, WE RESPECTFULLY HOLD THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE DIFFERENT AND DISTINGUISHABLE FROM THE CASE OF SELF EMPLOYERS SERVICE SOCIETY (SUPRA) RELIED UPON BY THE LD. DIT(E). ITA 3963/DEL/2011 4 6. WE FOUND THAT THE LD. DIT(E) HAS MADE AN OBSERVA TION IN PARA 3 OF THE IMPUGNED ORDER THAT THE ASSESSEE TRUST HAS NOT STAR TED ANY CHARITABLE ACTIVITY FOR THE GENERAL PUBLIC SO FAR, IT SEEMS TO BE A MAI N GROUND FOR REJECTION OF REGISTRATION AND EXEMPTION APPLICATIONS. 7. THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DE CISIONS:- 1. PUNJAB & HARYANA HIGH COURT IN THE CASE OF O.P. JIN DAL GLOBAL UNIVERSITY VS CCIT: CWP NO. 6171/2010 2. ALLAHABAD HIGH COURT IN THE CASE OF FIFTH GENERATIO N EDUCATION SOCIETY VS CIT: 1990 185 ITR 634 3. KARNATAK HIGH COURT IN THE CASE OF DIT(E) VS MEENAK SHI AMMA ENDOWMENT TRUST: 50 DTR 243 4. DELHI BENCH OF THE TRIBUNAL IN THE CASE OF DHARMA S ANSTHAPAK SANGH (NIYAS) VS CIT (2008) 118 TTJ 823 5. DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SARDARI LAL OBEROI MEMORABLE CHARITABLE TRUST VS ITO (2007) 106 TTJ 46 8 6. DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ACHARYA SEWA NIYAS VS CIT (2006) 105 TTJ 761 7. DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ASHUTOSH DAWAR TRUST VS DIT(E) (2002) 77 TTJ 976 ITA 3963/DEL/2011 5 8. JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF JASODA DEVI CHARITABLE TRUST VS CIT 48 SOT 162 8. IN RECENT JUDGMENT PASSED BY THE HONBLE PUNJAB & HARYANA COURT IN THE CASE OF O.P. JINDAL GLOBAL UNIVERSITY VS CCIT, PANCHKULA IN CWP NO. 6171/2010 DATED 11.11.2011, THE HONBLE HIGH COURT WAS PLEASED TO OBSERVE THAT WHILE DECIDING THE APPLICATION OF REGI STRATION U/S 12AA OF THE ACT, OBJECTIVES OF THE TRUST IS TO BE SEEN. 9. FURTHER, IT WAS HELD BY THE HONBLE ALLAHABAD HI GH COURT IN THE CASE OF FIFTH GENERATION EDUCATION SOCIETY VS CIT REPORT ED AS (1990) 185 ITR 634 THAT AT THE TIME OF REGISTRATION UNDER SECTION 12A OF THE ACT, PRE- CONDITION FOR AVAILING OF BENEFIT OF SECTIONS 11 AN D 12 OF THE ACT IS NOT REQUIRED TO EXAMINE APPLICATION OF INCOME OF THE TR UST. REGISTRATION AUTHORITY HAS TO SEE ONLY WHETHER THE OBJECTS OF TH E SOCIETY OR TRUST ARE CHARITABLE FOR GENERAL PUBLIC OR NOT. 10. THE HONBLE KARNATAKA HIGH COURT IN A RECENT JU DGEMENT PASSED IN THE CASE OF DIT(E) VS MEENAKSHI AMMA ENDOWMENT TRUS T IN ITA NO. 152/2010 DATED 10.11.2010 OBSERVED IN PARA 6 OF THE JUDGMENT THAT A TRUST COULD BE FORMED TODAY AND WITHIN A WEEK REGISTRATIO N U/S 12A OF THE ACT COULD BE SOUGHT, AS THERE IS NO PROHIBITION UNDER T HE ACT SEEKING SUCH REGISTRATION IMMEDIATELY AFTER CREATION OF THE TRUS T. ACTIVITIES OF THE TRUST ITA 3963/DEL/2011 6 HAVE TO BE CONSIDERED IF SUCH REGISTRATION IS SOUGH T MUCH LATER THAN THE FORMATION OF THE TRUST OR AFTER EXPIRY OF THE EARLI ER REGISTRATION GRANTED IN FAVOUR OF THE TRUST. 11. IN THE PRESENT CASE, WHERE THE TRUST HAS APPROA CHED FOR REGISTRATION TO THE AUTHORITIES WITHIN FOUR MONTHS OF ITS CREATION/ OR FORMATION, THE ABOVE MENTIONED CRITERIA, NAMELY, THE OBJECTS OF THE TRUS T, FOR WHICH IT WAS FORMED, WILL HAVE TO BE EXAMINED TO BE SATISFIED ABOUT ITS GENUINENESS, AND THE COMMENCEMENT OF THE ACTIVITIES OF THE TRUST CANNOT BE THE CRITERION, SINCE IT IS YET TO COMMENCE ITS ACTIVITIES. 12. THE SAME VIEW HAS TO BE TAKEN BY THE DELHI BENC H OF THE TRIBUNAL IN THE CASES OF ACHARYA SEWA NYAS VS CIT REPORTED IN ( 2006) 105 TTJ 761, SARDARILAL OBEROI MEMORABLE CHARITABLE TRUST VS ITO (2007) 106 TTJ 468 AND ASHUTOSH DAWAR TRUST VS DIT(E) (2002) 77 TTJ 97 6 THAT AT THE INITIAL STAGE OF REGISTRATION, OBJECTS ARE TO BE SEEN. REGI STRATION CANNOT BE DENIED MERELY ON THE GROUND THAT NO ACTIVITY HAS BEEN COMM ENCED. THE SAME VIEW WAS ALSO TAKEN BY THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF JASODA DEVI CHARITABLE TRUST VS CIT 48 SOT 162. 13. ACCORDINGLY, ON THE BASIS OF THE ABOVE DISCUSSI ONS, WE ARE OF THE OPINION THAT THE DIT(E) WAS NOT JUSTIFIED IN REJECT ING THE APPLICATION ON THE BASIS THAT THE ASSESSEE HAD NOT CARRIED OUT ANY CHA RITABLE ACTIVITIES WITHOUT ITA 3963/DEL/2011 7 APPRECIATING THAT IT WAS CREATED ON 30.9.2010 ONLY AND THIS IS NOT THE PRECONDITION THAT THE APPELLANT TRUST IS REQUIRED TO SHOW CHARITABLE ACTIVITIES FOR GETTING REGISTRATION U/S 12AA OF THE ACT. NO D OUBT HAS BEEN EXPRESSED ON THE CHARITABLE NATURE OF THE ACTIVITIES OF THE A PPELLANT TRUST. 14. WE, THUS, SETTING ASIDE THE IMPUGNED ORDER, DIR ECT THE LD. DIT(E) TO GRANT REGISTRATION UNDER SECTION 12AA OF THE ACT, A S SOUGHT FOR BY THE ASSESSEE BY ALLOWING ITS APPLICATION DATED 27.1.201 1 MADE IN THIS REGARD. THE LD. DIT(E) IS FURTHER DIRECTED TO VERIFY THE AP PLICATION OF THE APPELLANT- TRUST, SEEKING APPROVAL U/S 80G(5)(VI) OF THE ACT A ND, IF HE IS SATISFIED THAT THE CONDITIONS LAID DOWN THEREIN ARE FULFILLED BY T HE APPELLANT, ALLOW THE APPROVAL. 15. IN THE RESULT, THE APPEAL IS ALLOWED WITH AFORE MENTIONED DIRECTIONS TO THE LD. DIT(E). ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2012. SD/- SD/- (G.D. AGRAWAL) (CHANDRA MOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT.16TH MARCH, 2012 GS ITA 3963/DEL/2011 8 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR