Mohinder Gupta Charitable Trust, New Delhi V. DIT (Exemptions), New Delhi

ITA 4306/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53231 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 08-12-2011
• Assessment Year: misc
• Appeal Filed On: 28-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: ASHWANI KUMAR F
• Keywords: Charitable institution
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH E DELHI ] BEFORE SHRI I. P. BANSAL, JM & SHRI K. D. RANJAN, AM I. T. APPEAL NO. 4306 (DEL) OF 2011. ASSESSMENT YEAR : ----. MOHINDER GUPTA CHARITABLE TRUST, DY. DIREC TOR OF INCOME-TAX, D324, ANAND VIHAR, VS. [ EXEMPTI ON ]; D E L H I 110 092. D E L H I. PAN / GIR NO. AAC TM 7759 E. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI ASHWANI KUMAR, F. C. A.; DEPARTMENT BY : SHRI R. S. NEGI, SR. D. R.; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST RE FUSAL OF REGISTRATION UNDER SECTION 12-A OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED T O AS THE ACT]. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER :- 1. THAT ORDER PASSED UNDER SECTION 12-AA(1)(B ) R.W.S. 12-A OF THE INCOME TAX ACT, 1961 BY THE LD. DIRECTOR OF INCOME TAX (EXEMPT ION), DELHI IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH HE WAS NOT JUSTIFI ED IN HOLDING THAT THE TRUST WAS NOT ELIGIBLE FOR REGISTRATION UNDER SECTION 12-A OF THE INCOME TAX ACT, 1961; 2. THAT THE LD. DIRECTOR OF INCOME TAX (EXE MPTION) FAILED TO APPRECIATE THAT FOR GRANTING REGISTRATION, SATISFACTION OF THE OBJECTS AND ITS GENUINENESS SHOULD BE THE CRITERIA AND NOT THAT THE TRUST SHOUL D START THE ACTIVITY FOR APPLYING FOR REGISTRATION. 3. THE ONLY ISSUE FOR CONSIDERATION RELATES TO REJE CTION OF ASSESSEES APPLICATION FOR GRANT OF REGISTRATION UNDER SECTION 12-A OF THE ACT. THE FA CTS OF THE CASE STATED IN BRIEF ARE THAT THE 2 I. T. APPEAL NO. 4306 (DEL) OF 2011. ASSESSEE FILED APPLICATION ON 25 TH MARCH, 2011 IN FORM NO. 10 FOR SEEKING REGISTRATIO N UNDER SECTION 12-A. THE LD. DIRECTOR OF INCOME TAX [EXEM PTION] REQUIRED THE ASSESSEE TO FURNISH CERTAIN INFORMATION WITH REFERENCE TO GRANT OF REGI STRATION. THE LD. DIT (EXEMPTION) ON EXAMINATION OF DETAILS FOUND THAT THE ASSESSEE HAD NEITHER RECEIVED ANY DONATION NOR INCURRED ANY EXPENDITURE ON CHARITABLE ACTIVITIES EXCEPT GIVING DONATIONS. ON THE BASIS OF THIS FACT THE LD. DIT (EXEMPTION) CAME TO THE CONCLUSION THAT THE ASSESSE E HAD NOT CARRIED OUT ANY CHARITABLE ACTIVITY EXCEPT GIVING DONATIONS. MERE GIVING DONATIONS IN ITSELF IS NOT A CHARITABLE ACTIVITY. THE LD. DIT (EXEMPTION) ALSO NOTED THAT THE ASSESSEE HAD NOT SU BMITTED ANY CONCRETE EVIDENCE BY WAY OF WHICH IT COULD BE PROVED THAT THE ACTUAL CHARITABLE ACTIVITIES HAD BEEN CARRIED OUT. THE ASSESSEE ALSO FAILED TO FILE INCOME AND EXPENDITURE ACCOUNT IN SUPPORT OF THE ACTIVITIES. THE DIT (EXEMPTION) HAS ALSO NOTED THAT AS PER RULE 17-A OF THE INCOME TAX RULES, 1962 THE ASSESSEE IS REQUIRED TO PRODUCE THE ORIGINAL MOA AND REGISTRATI ON CERTIFICATE. IN VIEW OF THE ABOVE FACTS THE LD. DIT (EXEMPTION) REJECTED THE APPLICATION FOR RE GISTRATION UNDER SECTION 12-A OF THE ACT. 4. BEFORE US THE LD. AR OF THE ASSESSEE PRODUCED TH E ORIGINAL COPY OF TRUST DEED DATED 15 TH NOVEMBER, 2010. IT WAS SUBMITTED THAT THE SETTLER OF THE TRUST, SHRI M. P. GUPTA HAS SETTLED A SUM OF RS.15 LAKHS AND INTEREST THEREFROM IS TO BE UTIL IZED FOR THE CHARITABLE OBJECTS OF THE ASSESSEE. THE LD. DIT (EXEMPTION) HAS REJECTED THE APPLICATIO N FOR REGISTRATION U/S 12A MAINLY ON TWO GROUNDS THAT THE ORIGINAL TRUST DEED WAS NOT FILED AND NO CHARITABLE ACTIVITIES WERE CARRIED OUT. THE LD. AR OF THE ASSESSEE HAD DRAWN OUR ATTENTION TOWARDS HIS LETTER DATED 16/05/2011 GIVING THE DETAILS OF DONATIONS TO FOUR CHARITABLE ENTITIE S. ALL THE ENTITIES WERE REGISTERED WITH THE INCOME/TAX AUTHORITIES AS GENUINE CHARITABLE ORGANI ZATIONS. HE ALSO SUBMITTED THAT THE CHARITABLE OBJECTS OF THE TRUST HAVE NOT BEEN DOUBTED BY THE L D. DIT (EXEMPTION). THE LD. AR OF THE ASSESSEE ALSO FILED COPY OF BANK ACCOUNT WITH PUNJA B NATIONAL BANK WHEREIN RS.15 LAKHS WERE TRANSFERRED BY THE SETTLER TO THE ACCOUNT OF THE AS SESSEE TRUST AND FIXED DEPOSITS WERE MADE OUT OF THE FUNDS SO DEPOSITED. OUT OF INTEREST INCOME, WH ICH IS CREDITED IN THE BANK ACCOUNT, THE ASSESSEE HAD PAID DONATIONS OF RS.5,100/- EACH TO F OUR CHARITABLE INSTITUTIONS. HE, THEREFORE, SUBMITTED THAT THE ASSESSEE IS ELIGIBLE FOR REGISTR ATION UNDER SECTION 12-A OF THE ACT AS THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE AND THE ASSES SEE HAD CARRIED OUT THE CHARITABLE ACTIVITIES BY 3 I. T. APPEAL NO. 4306 (DEL) OF 2011. GIVING DONATIONS TO OTHER TRUSTS / INSTITUTIONS HAV ING CHARITABLE OBJECTS. ON THE OTHER HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE LD. DIT (EXEMPTIO N). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE ORDER DATED 6/09/2011 REJECTING THE REGISTRATION UNDER SECTION 12-A OF THE ACT. THE LD . DIT (EXEMPTION) HAS DENIED THE EXEMPTION ONLY ON TWO GROUNDS THAT THE ORIGINAL TRUST DEED WA S NOT FILED AND CHARITABLE ACTIVITIES WERE NOT CARRIED OUT. WE HAVE GONE THROUGH THE BANK STATEME NT IN THE NAME OF THE ASSESSEE TRUST WITH STATE BANK OF INDIA, BEARING NO. 3980000100122444 0100122444, D-BLOCK, DDA MARKET, ANAND VIHAR, DELHI 92. FROM THE PERUSAL OF THE B ANK STATEMENT WE FIND THAT THE ASSESSEE HAS RECEIVED INTEREST UPTO 28 TH MARCH, 2011 AT RS.27,972/- OUT OF WHICH THE ASSESS EE HAD MADE PAYMENTS TOWARDS DONATIONS OF RS.5,1000/- EACH TO F OUR INSTITUTIONS, NAMELY, (I) HANDICAPPED CHILDREN REHABILITATION ASSOCIATION, GREATER KAILAS H; (II) VIVEKANAND MANAV SEWA SOCIETY, KALKA; (III) LOK KALYAN SAMITI; AND (IV) RAMA KRISH NA MATH, BARANAGAR, KOLKATTA. IT IS SETTLED LAW THAT INCOME A CHARITABLE INSTITUTION CAN BE APP LIED BY WAY OF DONATIONS. THEREFORE, IT IS INCORRECT ON THE PART OF THE LD. DIT (EXEMPTION) TH AT NO CHARITABLE ACTIVITIES HAD BEEN CARRIED OUT BY THE ASSESSEE TRUST. WE, THEREFORE, DO NOT FIND ANY SUBSTANCE IN THIS CONTENTION OF THE LD. DIT (EXEMPTION). AS REGARDS THE ORIGINAL TRUST DEED, T HE LD. AR OF THE ASSESSEE HAS FILED THE ORIGINAL COPY OF THE TRUST DEED BEFORE US. WE HAVE VERIFIED THE CONTENTS OF THE SAME WITH THE PHOTO COPY OF THE TRUST DEED FILED BEFORE THE LD. DIT (EXEMPTI ON). WE FIND THAT THE TRUST WAS CREATED ON 25 TH NOVEMBER, 2010 BY SHRI M. P. GUPTA, SON OF LATE SHR I MADAN GOPAL. AT THE TIME OF REGISTRATION, WHAT IS TO BE SEEN IS THAT THE OBJECT S OF THE TRUST, AS PER THE TRUST DEED, AS TO WHETHE R THEY ARE CHARITABLE IN CHARACTER. FROM THE OBJECTS CLAUSE, WE FIND THAT THE TRUST HAD BEEN CREATED FOR THE CHARITABLE PURPOSES WITHIN THE MEANING OF S ECTION 2(15) OF THE ACT. THEREFORE, IN OUR CONSIDERED OPINION, THE LD. DIT (EXEMPTION) IS NOT CORRECT IN DENYING THE REGISTRATION UNDER SECTION 12-A. 6. HOWEVER, ON PERUSAL OF THE TRUST DEED, WE FIND T HAT IN THE TRUST DEED THE SETTLER HAD NOT INCLUDED A CLAUSE DEBARRING THE SETTLER OR TRUSTEE AND THEIR RELATIVES FOR USE OF THE TRUST PROPERTY AND INCOME FOR THEIR PERSONAL BENEFIT. WE ALSO FIN D THAT THERE IS NO CLAUSE IN THE TRUST DEED AS TO WHAT WILL HAPPEN TO THE ASSETS OF THE TRUST ON DETE RMINATION OF TRUST OR DISSOLUTION OF THE TRUST. IN 4 I. T. APPEAL NO. 4306 (DEL) OF 2011. CASE OF CHARITABLE INSTITUTION, IT IS NECESSARY THA T THE TRUST DEED SHOULD HAVE A PROVISION THAT ON DISSOLUTION OF THE TRUST, THE ASSETS AND LIABILITIE S WILL BE TRANSFERRED TO ANOTHER TRUST OR SOCIETY HAVING SIMILAR OBJECTS. WE, THEREFORE, DIRECT THE ASSESSEE TO GET THE TRUST DEED AMENDED BY INCLUDING A CLAUSE DEBARRING THE TRUSTEES, THE SETT LER AND THEIR RELATIVES FROM USE OF TRUST PROPERTY FOR THEIR PERSONAL BENEFITS. ANOTHER CLAUSE SHOULD BE INSERTED IN THE TRUST DEED BY WAY OF AMENDMENT STATING THAT ON DISSOLUTION OF THE TRUST, THE ASSETS AND LIABILITIES OF THE TRUST SHALL BE TRANSFERRED TO ANOTHER TRUST OR SOCIETY HAVING CHAR ITABLE OBJECTS. THE ASSESSEE IS, THEREFORE, DIRECTED THAT AFTER AMENDMENT OF THE TRUST DEED, AS SUGGESTED ABOVE, THE ASSESSEE TRUST WILL FILE AMENDED COPY OF THE TRUST DEED BEFORE THE LD. DIT ( EXEMPTION) WHO WILL CONSIDER TO GRANT REGISTRATION TO THE ASSESSEE TRUST WITH EFFECT FROM THE YEAR IN WHICH THE APPLICATION FOR REGISTRATION UNDER SECTION 12-A OF THE ACT WAS FILED BEFORE HIM. WE ORDER ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 08 TH DECEMBER, 2011. SD/- SD/- [ I. P. BANSAL ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 08 TH DECEMBER, 2011 . * MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. SR. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.