Gopilal Mitthulal Agrawal Trust, Bhopal V. The CIT, Bhopal

ITA 432/IND/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1500 (ITAT-INDORE)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 07-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: PRADEEP GUPTA
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 12; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NOS. 431 & 432/IND/2012 GOPILAL MITTHULAL AGARWAL TRUST BHOPAL PAN AABTG 4434H :: APPELLANT VS COMMISSIONER OF INCOME TAX BHOPAL :: RESPONDENT APPELLANT BY SHRI PRADEEP GUPTA RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 11.02.2013 DATE OF PRONOUNCEMENT 11.02.2013 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 28 TH MAY, 2012 PASSED BY THE LEARNED CIT, BHOPAL, DENYIN G REGISTRATION U/S 12AA OF THE ACT AND ALSO U/S 80G O F THE ACT. 2. DURING HEARING, WE HAVE HEARD SHRI PRADEEP GUPTA , LEARNED COUNSEL FOR THE ASSESSEE, AND SHRI R.A. VERMA, LEAR NED SENIOR DR 2 ON THE ISSUE OF DENIAL OF REGISTRATION U/S 12A OF T HE ACT. THE CRUX OF ARGUMENT ON BEHALF OF THE ASSESSEE IS THAT AN APPLICATION FOR GETTING REGISTRATION WAS FILED ON 2.11.201 BY T HE ASSESSEE. HOWEVER, ON FLIMSY GROUNDS, WITHOUT ANALYSING THE O BJECTS AND ACTIVITIES OF THE ASSESSEE TRUST, REGISTRATION WAS DENIED. IT WAS ALSO PLEADED THAT THE ASSESSEE IS A PUBLIC TRUST, R EGISTERED WITH THE, REGISTRAR OF PUBLIC TRUST, BHOPAL, SINCE 1984 AND IS ONLY RUNNING A DHARAMSHALA WHICH IS PROVIDED FOR MARRIAG E PURPOSES, ETC. AT A VERY NOMINAL RATE TO THE PUBLIC AT LARGE. IT WAS ALSO PLEADED THAT THE DHARAMSHALA IS VERY OLD ONE AND NE EDS TO BE RECONSTRUCTED. ON THE OTHER HAND, MR. VERMA, LEARN ED SENIOR DR, STRONGLY DEFENDED DENIAL OF REGISTRATION TO THE ASSESSEE BY CLAIMING THAT THE ASSESSEE TRUST IS GENERATING INCO ME AND THERE ARE MORE THAN 50% OF THE TOTAL RECEIPTS WHICH HAVE NOT BEEN UTILISED AGAINST THE APPLICATION OF 85% OF THE INCO ME, WHICH THE ASSESSEE WAS TO APPLY. IT WAS ALSO ASSERTED THAT T HE ASSESSEE DID NOT FULFIL THE REQUIRED CONDITIONS OF SECTION 12A O F THE ACT. 2.1 WE HAVE CONSIDERED THE ASSERTIONS MADE BY THE L EARNED RESPECTIVE COUNSEL AND PERUSED THE MATERIAL AVAILAB LE ON RECORD. THE ASSESSEE CLAIMED THAT THE ASSESSEE TRUST WAS RE GISTERED WITH 3 THE REGISTRAR OF PUBLIC TRUSTS THROUGH REGISTRATION NUMBER 8/B13/SDO72-73 SINCE 1984. THE TRUST IS RUNNING A DHARAMSHALA, LOCATED AT DAYANAND CHOWK, JUMERATI GA TE, BHOPAL. THE CLAIM OF THE ASSESSEE IS THAT HIRING A PALACE/MARRIAGE GARDEN FOR MARRIAGE PURPOSES IS HIG HLY EXPENSIVE, THEREFORE, THE ASSESSEE IS PROVIDING THE SPACE IN THE DHARAMSHALA FOR MARRIAGE PURPOSES AT CHEAPER RATES. IT WAS PLEADED THAT SINCE THE DHARAMSHALA IS VERY OLD ONE, IT REQUIRES RECONSTRUCTION AND THUS THE FUNDS ARE NEEDED FROM T HE PUBLIC TO REBUILD THE SAME. WITHOUT GOING INTO MUCH DELIBERA TION, WE FIND THAT REGISTRATION WAS DENIED TO THE ASSESSEE ON THE GROUND THAT THE ASSESSEE TRUST IS GENERATING SURPLUS INCOME OVE R EXPENDITURE AND THE FUNDS HAVE NOT BEEN APPLIED UP TO THE STIPU LATED LIMIT OF 85% FOR CHARITABLE PURPOSES. ON A QUERY BY THE BENC H REGARDING NON-APPLICATION OF INCOME, IT WAS EXPLAINED THAT TH E ASSESSEE IS PAYING TAX ON THE SURPLUS FUNDS. FOR GRANTING REGI STRATION U/S 12A, THE LD. CIT MAY EXAMINE WHETHER THE APPLICATIO N IS MADE IN ACCORDANCE WITH REQUIREMENT OF THAT SECTION READ WI TH RULE 17A AND ALSO WHETHER FROM NO. 10A HAS BEEN PROPERLY FIL LED UP ALONG WITH THE CHARITABLE NATURE OF THE OBJECTS. AT THAT STAGE, IT IS NOT 4 PROPER TO EXAMINE APPLICATION OF INCOME. THE DECIS IONS IN FIFTH GENERATION EDUCATION SOCIETY VS. CIT; 185 ITR 364 ( ALL) AND DIT VS. GARDEN CITY EDUCATIONAL TRUST (2010) 191 TAXMAN 238 (KARN.) SUPPORT THE PLEA OF THE ASSESSEE. THE BASIS ON WHICH REGISTRATION HAS BEEN DENIED, THE REASON IS NOT CON VINCING. FOR THE PURPOSES OF REGISTRATION U/S 12AA, WHAT THE AUT HORITIES HAVE TO SATISFY THEMSELVES ABOUT ITS GENUINENESS OF ACTI VITIES AND ITS OBJECTS. EVEN OTHERWISE, MERE REGISTRATION U/S 12A A WOULD NOT, IN ITSELF, BE A GROUND, MUCH LESS A CONCLUSIVE PROO F, FOR EXCLUDING SUCH INCOME DESCRIBED IN SECTIONS 11 & 12 FROM THE TOTAL INCOME OF THE PERSON/ASSESSEE OR TRUST FROM INCOME OF THE PREVIOUS YEAR. IF THE TRUST OR THE INSTITUTION IS NOT REGISTERED U /S 12AA, IT WOULD NOT BE ABLE TO CLAIM ANY EXEMPTION OR EXCLUSION OF ITS INCOME FROM THE TOTAL INCOME OF THE PREVIOUS YEAR EVEN IF SUCH INCOME IS OTHERWISE LIABLE TO BE EXCLUDED UNDER ANY OF THE CL AUSES OF SECTION 11 OR SECTION 12. A BARE READING OF PROVIS IONS OF SUB- CLAUSES (A) AND (B) OF SECTION 12AA MAKES IT CLEAR THAT THE LEARNED CIT HAS TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND ALSO ABOUT ITS OBJE CTS. ON BEING SATISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES O F THE TRUST AND 5 OF ITS OBJECTS, THE CIT SHOULD GRANT THE CERTIFICAT E OF REGISTRATION. OUR VIEW IS SUPPORTED BY THE DECISION FROM HONBLE ALLAHABAD HIGH COURT IN CIT VS. RED ROSE SCHOOL; 163 TAXMAN 1 9 (ALL). THEREFORE, KEEPING IN VIEW THE TOTALITY OF FACTS AN D THE JUDICIAL PRONOUNCEMENTS, WE REMAND THIS APPEAL TO THE FILE O F THE CIT TO EXAMINE THE CLAIM OF THE ASSESSEE AFRESH AND AFTER PROVIDING DUE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD, DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSES ONLY. 2.2 THROUGH ITA NO. 432/IND/2010, THE ASSESSEE IS A GAIN AGGRIEVED FOR DENIAL OF REGISTRATION U/S 80G OF THE ACT. SINCE THE REASONS OF DENIAL ARE ALSO NOT CONVINCING, THEREFOR E, KEEPING IN VIEW THE SCOPE OF INQUIRY BY THE LEARNED CIT U/S 80 G(5)(VI) OF THE ACT, THIS APPEAL IS ALSO REMANDED BACK TO THE FILE OF THE LEARNED CIT(A) FOR FRESH ADJUDICATION IN ACCORDANCE WITH LA W FOR WHICH DUE OPPORTUNITY BE PROVIDED TO THE ASSESSEE. FINALLY, BOTH THE APPEALS ARE ALLOWED FOR STATIS TICAL PURPOSES ONLY 6 THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 11.2.2013. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 11.2.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-1112