M/s. Arshad Memorial Charitable Trust, Kashmir V. The Commissioner of Income tax, Jammu

ITA 425/ASR/2013

• Counselvise Citation: 42520914 RSA 2013
• Duration Of Justice: 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-01-2014
• Assessment Year: misc
• Appeal Filed On: 17-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 425 (ASR)/2013 ASSESSMENT YEAR: NIL PAN: AADTA6680R M/S ARSHAD MEMORIAL CHARITABLE VS. COMMISSIONER OF INCOME TRUST, SRINAGAR TAX, J&K, JAMMU (APPELLANT) (RESPONDENT) ASSESSEE BY: WRITTEN SUBMISSION DEPARTMENT BY: SH. MAHAVIR SINGH, SR.DR DATE OF HEARING: 01.01.2014 DATE OF PRONOUNCEMENT: 03.01.2014 ORDER PER BENCH 1. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 23.05.2013 PASSED UNDER SECTION 12AA(B)(II) OF THE INCOME-TAX ACT, 1961, BY COMMISSIONER OF INCOME TAX (J&K), JAMMU, O N THE FOLLOWING GROUNDS: I. ON LAW AND FACTS OF THE CASE, THE HON'BLE CIT WAS N OT JUSTIFIED IN REFUSING REGISTRATION TO THE APPELLANT TRUST. II. ON LAW AND FACTS OF THE CASE, THE HON'BLE CIT WAS N OT JUSTIFIED IN HOLDING THAT THE APPELLANT TRUST HAS NOT PERFORMED ANY CHARITABLE ACTIVITY IN THE GIVEN PERIOD. III. ON LAW AND FACTS OF THE CASE, THE HON'BLE CIT WAS N OT JUSTIFIED IN HOLDING THAT THE MERE INTENTION OF THE APPELLANT TR UST IS NOT ENOUGH TO QUALIFY IT FOR REGISTRATION. 2 IV. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR SUBSTITUTE ANY OTHER GROUND NECESSARY TO MEET ENDS OF JUSTICE. 2. THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE T HAT THE ASSESSEE FILED AN APPLICATION IN FORM NO. 10-A ON 20.05.2013 FOR REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT (IN SHORT THE ACT). THE COMMISSIONER OF INCOME TAX FORWARDED THE SAID APPLI CATION TO THE CONCERNED ASSESSING OFFICER FOR A REPORT, WHO AFTER MAKING NECESSARY INQUIRIES, CHECKING BOOKS OF ACCOUNTS AND ALL OTHER RECORDS, SUBMITTED THE SAME TO WORTHY CIT. THE SAID REPORT WAS IN FAVOUR O F THE ASSESSEE. ON 23.05.2013, THE ASSESSEE WAS AGAIN ASKED TO EXPLAIN HIS CASE BEFORE THE WORTHY COMMISSIONER OF INCOME TAX, WHO TOOK THE VIE W THAT SINCE THE ASSESSEE-TRUST HAD NOT CARRIED OUT ANY SUBSTANTIAL ACTIVITY AS IS CLEAR FROM THE EXPENDITURE INCURRED FROM AUDITED ACCOUNTS, IT IS NOT ENTITLED TO REGISTRATION AND HE REFUSED TO GRANT REGISTRATION T O THE ASSESSEE UNDER SECTION 12AA OF THE ACT VIDE IMPUGNED ORDER DATED 2 3.05.2013. 3. LEARNED COUNSEL FOR THE ASSESSEE FILED HIS WRITT EN SUBMISSION AS WELL AS SOME DOCUMENTARY EVIDENCE. IN THE WRITTEN S UBMISSION, HE HAS ADVANCED THE FOLLOWING ARGUMENTS: 1. APPARENTLY THIS FINDING OF THE WORTHY CIT IS INFLUENCED BY THE LOW QUANTUM OF EXPENDITURE SPENT BY THE APPELLANT D URING THE PRECEDING 3 YEAR WHICH, THOUGH A FACT, CANNOT FORM THE BASIS OF REFUSING REGISTRATION TO THE TRUST. 2. THE CONTENTION OF WORTHY CIT THAT THE APPLICAN T TRUST HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITY DURING THE PREV IOUS YEAR IS FAR FROM TRUTH. HE HAS CLEARLY MISSED THE AMOUNT OF RS. 3400 /- HAVING BEEN SPENT ON FINANCIAL AID TO STUDENTS WHICH FORMS AROUND 37. 77% OF THE TOTAL DONATIONS. (A COPY OF AUDITED ACCOUNTS AS SUBMITTED TO WORTH CIT IS ENCLOSED AS ANNEXURE A). 3) THE APPELLANT ASSESSEE ALSO SUBMITS THAT SECTI ON 12AA WHICH GRANTS THE POWER OF REGISTRATION ON CIT ONLY REQUIR ES HIM TO SATISFY HIMSELF ONLY ABOUT THE OBJECTS OF THE TRUST & GENUI NENESS OF ITS ACTIVITIES. IT DOES NOT REQUIRE HIM TO VERIFY THE APPLICATION O F INCOME OR THE QUANTUM OF AMOUNT SPENT ON SUCH ACTIVITIES. HENCE AMOUNT SP ENT ON SUCH ACTIVITIES MAY BE LOW BUT HE HAS ONLY TO ENSURE THAT SUCH AMOU NT HAS BEEN PROPERLY & GENUINELY SPENT IN FURTHERANCE OF THE OBJECTS OF THE TRUST (AJIT EDUCATION TRUST V. CIT(2010) 42 SOT 415 AHD-COPY EN CLOSED AS ANNEXURE B) 4. FINALLY, IF THE LOGIC OF NO OR LOW EXPENDITU RE AS PROPOUNDED BY WORTHY CIT IS ACCEPTED THEN IT WILL MEAN THAT NO TRUST IS ELIGIBLE FOR REGISTRATION IMMEDIATELY UPON ITS BIRTH BUT HAS TO WAIT TILL A BIG EXPENDITURE IS INCURRED ON ITS ACTIVITIES. IT IS RE SPECTFULLY SUBMITTED THAT THIS NOT THE CORRECT INTERPRETATION OF LAW ON SUBJE CT. IN FACT SECTION 12A REQUIRES AN APPLICANT TO LODGE AN APPLICATION FOR R EGISTRATION BEFORE THE EXPIRY OF ONE YEAR FROM THE DATE OF CREATION OF TRU ST. THIS MEANS THE LAW REQUIRES REGISTRATION APPLICATION TO BE FILED AS EA RLY AS POSSIBLE WHICH CLEARLY NEGATES THE BIG EXPENDITURE THEORY. 4. ON THE CONTRARY, LEARNED DR RELIED UPON THE ORDE R PASSED BY LEARNED CIT (J&K), JAMMU. 5. AFTER GOING THROUGH THE WRITTEN SUBMISSION FILED BY THE ASSESSEE ALONG WITH THE IMPUGNED ORDER, WE ARE OF THE VIEW T HAT LEARNED CIT (J&K), JAMMU, ASKED THE ASSESSING OFFICER TO CONDUC T AN INQUIRY AND 4 FURNISH HIS REPORT, WHICH HE SUBMITTED ON 13.05.201 3. AFTER CONSIDERING THE SAID REPORT, LEARNED CIT (J&K), JAMMU, HAS PASS ED THE IMPUGNED ORDER. THE RELEVANT PORTION OF THE IMPUGNED ORDER I .E. PARA NO. 3 AT PAGE 2, IS REPRODUCED AS UNDER: 3. A NOTICE DATED 14.05.2013 WAS SENT TO THE FOUN DER TRUSTEE OF THE INSTITUTION/TRUST CALLING FOR BOOK OF ACCOUNT, DETA ILS OF ACTIVITIES, PROOF OF FILING OF RETURN OF INCOME TAX, REGISTER OF MEMBER OF THE TRUST, MINUTES BOOK AND OTHER RELATED DOCUMENTS. THE CASE WAS FIXE D FOR HEARING 16.05.2013 AT 11:30 AM AT JAMMU. HOWEVER ON 16.05.2 013 THERE WAS NO COMPLIANCE FROM THE APPLICANT. ON 23.05.2013 SHRI A BDUL MAJID ZARGAR CA OF THE APPLICANT ALONG WITH SHRI MOHD AMIN ACCOU NT OF THE TRUST ATTENDED THE PROCEEDINGS AND FILED THE DESIRED DETA ILS. 4. WHILE GOING THROUGH THE DETAILS FILED BY THE A PPLICANT, IT HAS BEEN OBSERVED THAT THE APPLICANT TRUST ALTHOUGH CRE ATED WITH EFFECT FROM 8 TH OF JUNE, 2012 HAS NOT PERFORMED ANY CHARITABLE ACT IVITY AS LAID DOWN IN ITS AIMS AND OBJECTIVES. THE MERE INTENTION TO P ERFORM THE CHARITABLE ACTIVITIES DOES NOT QUALIFY THE APPLICANT FOR GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 5. KEEPING IN VIEW THE ABOVE DISCUSSION, I HEREBY REFUSE TO REGISTER THE TRUST/INSTITUTION IN TERMS OF THE PROV ISIONS OF SECTION 12AA(B)(II) OF THE INCOME TAX ACT, 1961. 6. AFTER THOROUGHLY GOING THROUGH THE IMPUGNED ORD ER PASSED BY CIT(J&K), JAMMU, AS WELL AS THE WRITTEN SUBMISSION FILED BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE IMPUGNED ORDE R HAS BEEN PASSED WITHOUT DISCUSSING THE INQUIRY REPORT OF THE ASSESS ING OFFICER, DATED 13.05.2013 AND EVEN THE AVERMENTS OF THE ASSESSEE H AS ALSO NOT BEEN DISCUSSED IN DETAIL BY LEARNED CIT (J&K), JAMMU, ME ANING THEREBY, THE 5 IMPUGNED ORDER IS NON-SPEAKING, WHICH IS NOT SUSTAI NABLE IN THE EYE OF LAW. THEREFORE, WE CANCEL THE IMPUGNED ORDER DATED 23.05.2013 AND SET ASIDE THE ISSUE IN DISPUTE TO THE FILE OF LEARNED C IT (J&K), JAMMU, WITH THE DIRECTION TO DECIDE THE SAME AFRESH UNDER THE L AW, AFTER GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE AND FURTHER DI RECTED TO PASS A DETAILED AND SPEAKING ORDER. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JANUARY, 2014 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3 RD JANUARY, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S ARSHAD MEMORIAL CHARITABLE TRUST , SRINAGAR 2. THE COMMISSIONER OF INCOME TAX, J&K, JAMMU 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.