Shree Govindbhai Charitable Trust, RAJKOT-GUJARAT V. The Commissioner of Income Tax-I, RAJKOT-GUJARAT

ITA 402/RJT/2013

• Counselvise Citation: 40224914 RSA 2013
• Duration Of Justice: 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-11-2013
• Assessment Year: misc
• Appeal Filed On: 28-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M L MEENA
• Assessee Lawyers: DR ADHIA
• Keywords: Charitable institution
• Section: 11; 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 402/RJT/2013 SHREE GOVINDBHAI JETHALAL NATHVANI CHARITABLE TRUST, SHRI SITARAM, KOTECHA CHOWK, STREET NO.6, BLOCK NO.72, KALAWAD RD., RAJKOT PAN : AAKTS 8122 R ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX-I RAJKOT / RESPONDENT / ASSESSEE BY SHRI D R ADHIA, AR / REVENUE BY DR M L MEENA, DR / DATE OF HEARING 20.11.2013 !'# / DATE OF PRONOUNCEMENT 22.11.2013 / ORDER THIS APPEAL BY THE ASSESSEE-TRUST IS AGAINST THE OR DER DATED 23.09.2013 OF COMMISSIONER OF INCOME-TAX, RAJKOT-I, RAJKOT REJECT ING THE APPLICATION MADE BY THE ASSESSEE SEEKING APPROVAL U/S 80G(5) OF THE INCOME- TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-TRUST MADE AN APPLICATION IN FORM NO.10G FOR GRANT APPROVAL U/S 80G(5) OF THE INCOME- TAX ACT ON 06.02.2013. THIS APPLICATION WAS SUBMITTED BY THE ASSESSEE-TRUST ALO NGWITH XEROX COPY OF THE TRUST DEED AND REGISTRATION CERTIFICATE DATED 18.08.2011. THE MAIN OBJECTS OF THE TRUST AS PER THE TRUST DEED ARE EDUCATIONAL, SOCIAL ACTIVITI ES, MEDICAL, ETC. 3. IN THE IMPUGNED ORDER DATED 23.09.2013, THE LD C OMMISSIONER OF INCOME-TAX, RAJKOT-I REJECTED THE APPLICATION OF THE ASSESSEE-T RUST SEEKING APPROVAL U/S 80G(5) FOR THE DETAILED REASON GIVEN IN PARAGRAPH 3 OF THE IMPUGNED ORDER, WHICH READS AS UNDER:- 3. PERUSAL OF THE BOOKS OF ACCOUNTS FOR FY 2011-12 , IT IS SEEN THAT THE TRUST FAILED IN MAKING EXPENDITURE TO THE EXTENT OF 85% O F ITS INCOME. AS PER THE PROVISIONS OF SEC 80G(5) OF THE ACT, IT IS NECESSAR Y FOR ANY TRUST THAT ITS INCOME WOULD NOT BE INCLUSIVE OF ANY INCOME CHARGEABLE U/S 11 OF THE ACT. AS DISCUSSED ABOVE, TOTAL INCOME OF THE TRUST FOR AY 2 012-13 IS INCLUSIVE OF INCOME U/S 11 OF THE ACT. IT IS THUS CLEAR THAT THE TRUST HAS FAILED IN COMPLYING WITH THE REQUIREMENTS FOR APPROVAL U/S 80G AS LAID DOWN UNDER SECTION 80G(5) OF THE ACT AND RULE 11AA OF THE I.T. RULES, 1962. T HE APPLICATION MADE BY THE ASSESSEE SEEKING APPROVAL U/S 80G(5) IS THEREFORE R EJECTED. 2 402-RJT-2013 - SHREE GOVINDBHAI JETHALAL NATHVANI CHARITABLE TRUST(SMC) AGGRIEVED WITH THE ORDER OF LD COMMISSIONER OF INC OME-TAX, RAJKOT-I, THE ASSESSEE-TRUST IS NOW IN APPEAL BEFORE THIS TRIBUNA L, ON THE FOLLOWING GROUNDS:- 1. THE LD. COMMISSIONER OF INCOME-TAX HAS ERRED IN LAW AND FACTS IN REFUSING TO GRANT APPROVAL U/S 80G(5) OF THE INCOME -TAX ACT, 1961. THE TRUST DESERVES RECOGNITION U/S 80G(5). 2. THE LD. COMMISSIONER OF INCOME-TAX HAS ERRED IN LAW AND FACTS IN FORMING AN OPINION AGAINST THE APPELLANT O THE EFFE CT THAT TRUST FAILED IN MAKING EXPENDITURE TO THE EXTENT OF 85% OF ITS INCOME. TH E TRUST DESERVES RECOGNITION U/S 80G(5). 3. THE LD. COMMISSIONER OF INCOME-TAX HAS ERRED IN LAW AND FACTS IN FORMING AN OPINION AGAINST THE APPELLANT TO THE EFF ECT THAT TOTAL INCOME OF THE TRUST FOR A.Y. 2012-13 IS INCLUSIVE OF INCOME U/S 1 1 OF THE ACT. THE TRUST DESERVES RECOGNITION U/S 80G(5). 4. THE LD. C.I.T. HAS ERRED IN COMING TO THE CONCLU SION THAT APPELLANT IS NOT FULFILLING THE CONDITION FOR APPROVAL OF THE PR OVISIONS OF SECTION 80G(5) OF THE IT ACT. THE TRUST DESERVES RECOGNITION U/S 80G(5). 5. THE LD. C.I.T. HAS ERRED IN NOT CONSIDERING THE REAL ASPECT OF THE PROVISIONS OF SECTION 80G(5) OF THE IT ACT, 1961. T HE TRUST DESERVES RECOGNITION U/S 80G(5). 6. THE LD. C.I.T. HAS ERRED IN NOT CONSIDERING THE REAL ASPECT OF THE PROVISIONS OF SECTION 80G(5) OF THE IT ACT, 1961 TH OUGH THE TRUST WAS GRANTED REGISTRATION U/S 12A VIDE ORDER DATED 26.10.2012. T HE TRUST DESERVES RECOGNITION U/S 80G(5). 7. TAKING INTO CONSIDERING THE LEGAL, FACTUAL AND S TATUTORY ASPECT OF THE OBJECT OF THE TRUST, THE LD. C.I.T. OUGHT TO HAVE G RANTED RECOGNITION U/S 80G(5)AS APPLIED FOR. IT IS THEREFORE PRAYED THAT T HE ORDER PASSED BY THE LD. C.I.T. REFUSING TO GRANT RECOGNITION U/S 80G(5) MAY KINDLY BE CANCELLED AND HE MAY BE DIRECTED TO GRANT RECOGNITION U/S 80G(5) TO THE APPELLANT AS APPLIED FOR. 8. WITHOUT PREJUDICE, THE LD.CIT HAS ERRED IN NOT G RANTING ADEQUATE AND REASONABLE OPPORTUNITY. THE ORDER PASSED BY THE LD. CIT NEEDS CANCELLATION / RESTORATION TO CONSIDER AFRESH THAT THE TRUST DESER VES RECOGNITION U/S 80G(5). 9. WITHOUT PREJUDICE, THE ORDER PASSED U/S 80G(5) I S BAD IN LAW DESERVES CANCELLATION. 10. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND A ND/OR SUBSTITUTE ANY OR ALL GROUNDS OF APPEAL BEFORE THE ACTUAL HEARING TAK ES PLACE. 4. AT THE TIME OF HEARING, ON BEHALF OF ASSESSEE-TR UST, SHRI D R ADHIA, AUTHORIZED REPRESENTATIVE, APPEARED AND CONTENDED THAT AT THE TIME OF GRANTING APPROVAL FOR EXEMPTION U/S 80G, ONLY OBJECT OF THE TRUST IS REQU IRED TO BE EXAMINED AND APPLICATION OF FUNDS CAN BE EXAMINED BY ASSESSING O FFICER AT THE TIME FRAMING ASSESSMENT. IN SUPPORT OF THIS, THE AUTHORIZED REP RESENTATIVE FOR THE ASSESSEE-TRUST RELIED UPON THE JUDGMENT OF THE HONBLE PUNJAB & HA RYANA HIGH COURT IN ITS JUDGMENT DELIVERED ON 02.05.2013 IN THE CASE OF CIT V. O.P. JINDAL GLOBAL UNIVERSITY, REPORTED 3 402-RJT-2013 - SHREE GOVINDBHAI JETHALAL NATHVANI CHARITABLE TRUST(SMC) IN (2013) 38 TAXMANN.COM 366 (P&H). AS AGAINST THIS , DR. M L MEENA, DR, APPEARED ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF LD. COMMISSIONER OF INCOME-TAX, RAJKOT-I. HE SUBMITTED THAT SINCE THE ASSESSEE FAILED TO APPLY THE APPLICATION OF INCOME TO THE EXTENT OF 85% IN THE F Y 2011-12, THE VIEW TAKEN BY THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I REJECTING T HE APPLICATION U/S 80G(5) OF THE INCOME-TAX ACT BE UPHELD. IN REJOINDER, THE AUTHORI ZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT DURING THE YEAR THE ASSES SEE-TRUST RECEIVED DONATION OF RS.8,927/- OUT OF WHICH IT WAS REQUIRED TO SPENT 85 %, I.E. RS.7,587/-. AGAINST THIS, IT HAS SPENT RS.7,298/- AND THEREFORE THERE IS SHORT F ALL OF RS.289/- ONLY. THUS THE ASSESSEE-TRUST SPENT 82% ONLY IN THAT RELEVANT YEAR . CONTINUING HIS ARGUMENTS, THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT IN THE IMM EDIATE SUBSEQUENT YEAR I.E. THE YEAR ENDING 31.03.2013, THE TRUST RECEIVED DONATION O RS.78,619/- AND WAS REQUIRED TO SPENT RS.66,826/- BEING 85%. AGAINST THIS, THE A SSESSEE-TRUST SPENT RS.71,489/-. THUS IT IS EXCESS BY RS.4,663/- WHICH COVERS THE DE FICIT OF RS.289/- OF EARLIER YEAR AS MENTIONED ABOVE. THE AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE-TRUST ALSO RELIED UPON THE FOLLOWING DECISIONS, WHEREIN IT WAS HELD T HAT WHEN SHORT FALL IS MET WITH IN IMMEDIATE SUCCEEDING YEAR, THE TRUST IS ENTITLED FO R REGISTRATION. A. 211 ITR 293 (GUJ.) CIT V. SHRI PLOT SWETAMBER MURTI PUKAK JAIN MANDAL B. 21 TTJ (CHD) 435 ITAT CHANDIGADH 1008 MAHARA J BRAHM SAGAR GARIB DASIA POORAN SINGH TRUST TO SUM-UP, THE AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE-TRUST PLEADED THAT THE LD. COMMISSIONER OF INCOME-TAX, RAJKOT-I BE DIR ECTED TO GRANT THE REGISTRATION U/S 80G(5) OF THE INCOME-TAX ACT, 1961 AS SOUGHT BY THE ASSESSEE-TRUST. 5. RIVAL SUBMISSIONS WERE CONSIDERED. THE HONBLE P UNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. O.P. JINDAL GLOBAL UNIV ERSITY (SUPRA) HELD THAT AT THE TIME OF GRANTING APPROVAL FOR EXEMPTION U/S 80G, OBJECT OF THE TRUST IS REQUIRED TO BE EXAMINED AND APPLICATION OF FUNDS CAN BE EXAMINED B Y ASSESSING OFFICER AT THE TIME OF FRAMING ASSESSMENT. THE ONLY REASON GIVEN BY TH E ASSESSING OFFICER IN THE IMPUGNED ORDER FOR REJECTING THE APPLICATION OF THE ASSESSEE-TRUST U/S 80G(5) IS THAT THE ASSESSEE-TRUST HAS FAILED IN MAKING EXPENDITURE TO THE EXTENT OF 85% OF ITS 4 402-RJT-2013 - SHREE GOVINDBHAI JETHALAL NATHVANI CHARITABLE TRUST(SMC) INCOME. KEEPING IN VIEW THE RATIO OF JUDGMENT OF HO NBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. O.P. JINDAL GLOBAL UNIV ERSITY (SUPRA), THE RECOGNITION U/S 80G(5) CANNOT BE REFUSED ON THIS GROUND. I, THEREFO RE, SET ASIDE THE IMPUGNED ORDER OF LD COMMISSIONER OF INCOME-TAX, RAJKOT-I AND DIRE CT HIM TO GRANT THE RECOGNITION U/S 80G(5) OF THE INCOME-TAX ACT, 1961 TO THE ASSESSEE- TRUST. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 22.11.2013 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- SHREE GOVINDBHAI JETHALAL NATHVANI CH ARITABLE TRUST, SHRI SITARAM, KOTECHA CHOWK,STREET NO. 6, BLOCK NO.72, KALAWAD RD., RAJKOT 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX, RAJK OT-I, RAJKOT 3. ,0,1 * * 2 / CONCERNED CIT-I, RAJKOT 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT