Appeal details
Counselvise Citation
40725314 RSA 2012
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 8 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-07-2014
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Assessment Year
misc
Appeal Filed On
01-11-2012
Judgement Text
ITA NOS.406&407/VIZAG/2012 VASAVI CHARITABLE TRUST, TUNI IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO S . 406&407 /VIZAG/ 2012 ASSESSMENT YEARS : NA VASAVI CHARITABLE TRUST TUNI VS. CIT RAJAHMUNDRY (APPELLANT) (RESPONDENT) PAN NO.AABTV 2369Q ASSESSEE BY: SHRI G.V.N. HARI, ADVOCATE REVENUE BY: SHRI K.V.N. CHARYA, CIT(DR) DATE OF HEARING : 08.07.2014 DATE OF PRONOUNCEMENT : 08.07.2014 ORDER PER BENCH:- ITA NO.407/VIZAG/2012: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 18.9.2012 PASSED BY THE CIT RAJAHMUNDRY REJECTING A SSESSEES APPLICATION FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT. 2. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A TRUST C REATED VIDE REGISTERED TRUST DEED DATED 29.10.2009. CLAIMING ITSELF TO BE A CHARITABLE TRUST, THE ASSESSEE HAD INITIALLY MADE AN APPLICATION IN THE P RESCRIBED MANNER BEFORE THE CIT FOR GRANT OF REGISTRATION U/S 12A OF THE AC T WHICH WAS REJECTED BY THE COMMISSIONER OF INCOME-TAX VIDE ORDER DATED 10.5.20 10 SOLELY FOR THE REASON THAT TRUST IS NOT REGISTERED U/S 43(1) OF THE A.P. CHARITABLE AND HINDU RELIGIOUS INSTITUTIONS AND ENDOWMENTS ACT, 1987. TH E ASSESSEE CHALLENGED THE SAID ORDER OF REJECTION BEFORE THE ITAT. ITAT, VIZAG BENCH VIDE ORDER DATED 11.8.2010 SET ASIDE THE ORDER OF THE CIT(A) A ND DIRECTED HIM TO RECONSIDER THE ASSESSEES APPLICATION FOR REGISTRAT ION AFRESH. IN PURSUANCE TO THE DIRECTION OF THE TRIBUNAL, THE ASSESSEE RESUBMI TTED THE APPLICATION FOR REGISTRATION ON 27.3.2012 BEFORE THE CIT. THE CIT COMPLYING TO THE DIRECTION OF THE ITAT TOOK UP THE PROCEEDING AGAIN BY ISSUING A NOTICE TO THE ASSESSEE TO PRODUCE ITS BOOKS OF ACCOUNTS AND OTHER DETAILS. IN COMPLIANCE TO THE ITA NOS.406&407/VIZAG/2012 VASAVI CHARITABLE TRUST, TUNI 2 NOTICE, THE ASSESSEE PRODUCED ITS BOOKS OF ACCOUNTS FOR THE FINANCIAL YEAR 2009-10, 2010-11 & 2011-12 ALONG WITH VOUCHERS AND OTHER DOCUMENTS. IT ALSO SUBMITTED A NOTE EXPLAINING ITS OBJECTS AND AC TIVITIES AND REQUESTED FOR GRANT OF REGISTRATION U/S 12A OF THE ACT AS WELL AS APPROVAL U/S 80G OF THE ACT. THE CIT AFTER EXAMINING THE BOOKS OF ACCOUNTS , OTHER DOCUMENTS AS WELL AS SUBMISSIONS OF THE ASSESSEE, HOWEVER REJECTED TH E APPLICATION FOR REGISTRATION FOR THE REASON THAT THE ASSESSEE HAS N OT COMMENCED ITS ACTIVITIES AS PER ITS OBJECT EXCEPT CONSTRUCTING A BUILDING FO R HOSTEL AND OFFICE. HE FURTHER NOTED THAT ONE BANK ACCOUNT WAS OPENED IN T HE NAME OF 3 PERSONS ON 19.11.2008 AND THERE WERE TRANSACTIONS UP TO 16.12. 2010 IN THAT ACCOUNT ON WHICH DATE THE AMOUNT WAS TRANSFERRED TO THE TRUST. THEREFORE, INFERRING THAT THE ASSESSEE HAS NOT YET COMMENCED ITS ACTIVITIES I N ACCORDANCE WITH THE OBJECTS IN TRUST DEED, IT CANNOT BE GRANTED REGISTR ATION U/S 12A OF THE ACT. 3. THE LD. A.R. SUBMITTED BEFORE US THAT FINDING OF THE CIT THAT ASSESSEE HAS NOT COMMENCED ANY ACTIVITY IS CONTRARY TO THE M ATERIALS ON RECORD AND NOT CORRECT. IT WAS SUBMITTED THAT IN ACCORDANCE WI TH THE OBJECT OF THE SOCIETY, THE ASSESSEE HAS ALREADY COMMENCED THE ACT IVITY BY CONSTRUCTING A HOSTEL BUILDING FOR PROVIDING ACCOMMODATION TO POOR STUDENTS. HE SUBMITTED THAT EVEN ASSUMING THAT IT HAS NOT YET COMMENCED AC TIVITIES STILL THEN THE ASSESSEE CANNOT BE DENIED REGISTRATION U/S 12A OF T HE ACT SOLELY ON THAT BASIS. IN SUPPORT OF SUCH CONTENTION, HE RELIED ON THE FOLLOWING DECISIONS: A) DIT VS. FOUNDATION OF OPHTHALMIC AND OPTOMETRY RESE ARCH FOUNDATION CENTRE (2013) 355 ITR 361 (DEL) B) HARDAYAL CHARITABLE AND EDUCATIONAL TRUST VS. CIT ( 2013) 355 ITR 534 (ALL) C) CIT-I VS. KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRU ST (2013) 89 DTR (GUJ) 293 4. SO FAR AS THE ALLEGATION OF THE CIT THAT THE BAN K ACCOUNT WAS OPERATED IN THE NAME OF INDIVIDUAL WHICH WAS TRANSFERRED TO THE ACCOUNT OF THE TRUST ONLY IN 2010, THE LD. A.R. SUBMITTED THAT THE ACCOU NT WAS OPENED PRIOR TO THE CREATION OF THE TRUST AS THE TRUSTEES WERE INTENDIN G TO CARRY ON CHARITABLE ACTIVITY. AFTER THE TRUST WAS CREATED AND REGISTER ED THE ENTIRE FUND ROUTED THROUGH THE BANK ACCOUNT WERE ACCOUNTED IN THE BOOK S OF ACCOUNTS OF THE TRUST AND THE FINAL BALANCE OF RS.95,910/- WAS TRAN SFERRED TO THE BANK ITA NOS.406&407/VIZAG/2012 VASAVI CHARITABLE TRUST, TUNI 3 ACCOUNT OF THE TRUST. THEREFORE, THERE CANNOT BE A NY PREJUDICE CAUSED TO THE TRUST ON ACCOUNT OF THIS RATHER SOME CORPUS FUND WA S CREATED BY THE TRUSTEES FOR THE TRUST BY THE TIME THE TRUST FORMALLY CAME I NTO EXISTENCE. IT WAS SUBMITTED THAT THE BANK ACCOUNT WAS DULY REFLECTED IN THE BOOKS OF ACCOUNTS REGULARLY MAINTAINED BY THE ASSESSEE TRUST AND ALSO INCORPORATED IN THE FINANCIAL STATEMENTS OF THE ASSESSEE TRUST BASED ON WHICH THE RETURN OF INCOME WAS FILED. IT WAS THEREFORE SUBMITTED THAT T HE GROUND ON WHICH THE CIT REJECTED THE APPLICATION FOR REGISTRATION NOT B EING VALID GROUND THE ORDER OF THE CIT NEEDS TO BE SET ASIDE. 5. LD. D.R. ON THE OTHER HAND RELIED ON THE ORDER O F THE CIT. 6. WE HAVE HEARD THE PARTIES AND PERUSED THE IMPUGN ED ORDER OF THE CIT AS WELL AS OTHER MATERIALS ON RECORD. IT IS VERY M UCH EVIDENT FROM THE ORDER OF THE CIT THAT IN CASE OF THE PROCEEDING, THE ASSE SSEE HAS PRODUCED NECESSARY DOCUMENTARY EVIDENCE TO SHOW THAT IT HAS STARTED ACTIVITIES AS PER ITS OBJECTS BY CONSTRUCTING A HOSPITAL FOR POOR STU DENTS AND HAS INVESTED MORE THAN RS.12 LAKHS FOR THE PURPOSE. IN FACT, THE CIT HAS ALSO ACKNOWLEDGED THIS FACT WHICH IS EVIDENT FROM PARA 9 OF HIS ORDER . IT IS ALSO A FACT THAT THE CIT HAS ACCEPTED THAT THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE. IN THE AFORESAID CIRCUMSTANCES, THE FINDING OF THE CIT THA T THE ASSESSEE HAS NOT COMMENCED ITS ACTIVITIES HENCE, REGISTRATION CANNOT BE GRANTED TO HIM IS CONTRARY TO THE FACTS AND MATERIALS ON RECORD AND W ITHOUT ANY BASIS. THEREFORE, THE ORDER PASSED BY HIM CANNOT BE SUSTAI NED. EVEN OTHERWISE ALSO AS WOULD BE EVIDENT FROM THE ORDER, HE HAS REJ ECTED THE APPLICATION FOR GRANT OF REGISTRATION SOLELY ON THE GROUND THAT THE ASSESSEE HAS NOT COMMENCED ANY ACTIVITIES. EVEN ASSUMING THAT FACT TO BE CORRECT, THE SAME IS NOT AT ALL A VALID GROUND FOR REFUSING REGISTRATION . LAW IS WELL SETTLED THAT REGISTRATION CANNOT BE REFUSED TO A TRUST/INSTITUTI ON ONLY FOR THE REASON OF NON-COMMENCEMENT OF ITS ACTIVITIES. THE DECISIONS RELIED UPON BY THE LD. A.R. EXPRESS SUCH VIEW. SO FAR AS THE OTHER ALLEGA TION OF THE CIT THAT BANK ACCOUNT WAS OPENED IN THE NAME OF 3 INDIVIDUAL TRUS TEES THE SAME IN OUR VIEW IS TOTALLY IRRELEVANT SINCE SUCH ACCOUNT WAS O PENED PRIOR TO THE CREATION OF THE TRUST AND IT IS ALSO A FACT ON RECORD THAT A FTER CREATION OF THE TRUST, THE ITA NOS.406&407/VIZAG/2012 VASAVI CHARITABLE TRUST, TUNI 4 ENTIRE AMOUNTS STANDING IN THE BANK ACCOUNT OF THE INDIVIDUAL TRUSTEES WAS TRANSFERRED TO THE TRUSTS ACCOUNT AND REFLECTED IN THE BOOKS OF ACCOUNTS ALSO. THEREFORE, CONSIDERING THE TOTALITY OF FACTS AND CI RCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT SINCE THE OBJECTS OF THE SOCIE TY ARE CHARITABLE IN NATURE, IT IS ELIGIBLE FOR REGISTRATION U/S 12A OF THE ACT. A CCORDINGLY, WE DIRECT THE CIT TO GRANT REGISTRATION TO THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ITA 406/VIZAG/2012 8. THIS IS AN APPEAL AGAINST THE ORDER DATED 17.9.2 012 OF THE CIT RAJAHMUNDRY REJECTING ASSESSEES APPLICATION FOR GR ANT OF APPROVAL U/S 80G OF THE ACT. AS WOULD BE EVIDENT FROM THE IMPUGNED ORD ER OF THE CIT, HE REFUSED TO GRANT APPROVAL U/S 80G(5) OF THE ACT SINCE THE A SSESSEES APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT WAS REJECTED BY HI M. SINCE, WHILE DECIDING ITA NO.405/VIZAG/2012, WE HAVE DIRECTED THE CIT TO GRANT REGISTRATION U/S 12A OF THE ACT TO THE ASSESSEE, WE SET ASIDE THE IM PUGNED ORDER OF THE CIT AND DIRECT HIM TO CONSIDER ASSESSEES APPLICATION F OR GRANT OF APPROVAL U/S 80G(5) OF THE ACT SUBJECT TO FULFILLMENT OF CONDITI ONS UNDER CLAUSE (I) TO (V) OF 80G(5) OF THE ACT. 9. IN THE RESULT, ASSESSEES APPEAL IS CONSIDERED TO BE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 8 TH JULY14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBE R VG/SPS VISAKHAPATNAM, DATED 8 TH JULY, 2014 ITA NOS.406&407/VIZAG/2012 VASAVI CHARITABLE TRUST, TUNI 5 COPY TO 1 VASAVI CHARITABLE TRUST, CHAKKA SURYANARAYANA AVO GA BUILDING, BALAJI STREET, TUNI, EAST GODAVARI DISTRICT. 2 CIT, RAJAHMUNDRY 3 THE CIT(A), RAJAHMUNDRY. 4 THE DR, ITAT, VISAKHAPATNAM. 5 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM
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