Shri Jain Swetamber Murtipujak Tapgachha Derasar, V. The Commissioner of Income Tax, JAMNAGAR

ITA 442/RJT/2013

• Counselvise Citation: 44224914 RSA 2013
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-05-2014
• Assessment Year: misc
• Appeal Filed On: 15-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L MEENA
• Assessee Lawyers: J C RANPURA
• Keywords: Charitable institution; Bonafide belief
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 442/RJT/2013 SHRI JAIN SWETAMBER MURTIPUJAK TAPGACHHA DERASAR, VILLAGE: JAM WANTHALI, DIST: JAMNAGAR PAN : AAATS 9851 M ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX JAMNAGAR / RESPONDENT / ASSESSEE BY SHRI J.C. RANPURA, CA / REVENUE BY SHRI M.L. MEENA, DR / DATE OF HEARING 22.05.2014 !'# / DATE OF PRONOUNCEMENT 30.05.2014 / ORDER THIS APPEAL BY THE ASSESSEE-TRUST IS AGAINST THE OR DER DATED 16.09.2013 OF COMMISSIONER OF INCOME-TAX, JAMNAGAR REJECTING THE APPLICATION OF ASSESSEE-TRUST FOR REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 19 61. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-TRUST WAS CREATED ON 30.03.1962 TO CARRY OUT CHARITABLE/RELIGIOUS ACTIVITIES. THE ASSE SSEE-TRUST WAS REGISTERED UNDER BPT ACT WITH THE ASSTT. CHARITY COMMISSIONER, JAMNAGAR VIDE REGISTRATION NO.A/135/JAMNAGAR DATED 30.03.1962. THE ASSESSEE-TR UST MADE AN APPLICATION FOR REGISTRATION U/S 12A(A) OF THE INCOME-TAX ACT ON 26 .03.2013. THE LD COMMISSIONER OF INCOME-TAX, JAMNAGAR, ON VERIFICATION OF THE TRUST DEED, OBSERVED THAT THE TRUST DEED DOES NOT CONTAIN PROVISIONS IN THE EVENT OF ITS DIS SOLUTION TO THE EFFECT THAT UPON THE DISSOLUTION, IF ANY PROPERTY REMAIN AFTER SATISFACT ION OF ITS DEBTS AND LIABILITIES, THE SAME SHALL BE TRANSFERRED TO THE TRUST HAVING SIMIL AR OBJECTS. AGAINST THE DISCREPANCIES AS POINTED OUT BY THE LD. COMMISSIONE R OF INCOME-TAX, JAMNAGAR, THE ASSESSEE-TRUST VIDE ITS LETTER DATED 03.09.2013 SUB MITTED THAT THE TRUST IS GOVERNED BY THE CONSTITUTION OF THE TRUST AS WELL AS BY THE PROVISIONS OF THE BOMBAY PUBLIC TRUST ACT, 1950 AND LATER OVERRIDES THE FORMER IF T HERE IS ANY CONTRAVENING CLAUSES IN THE CONSTITUTION OF THE TRUST. ALL THE PROVISIONS O F THE BOMBAY PUBLIC TRUST ACT, 1950 ARE APPLICABLE TO THE TRUST. NO REVOCABLE TRUST CAN BE REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT, 1950. THE AFORESAID SUBMISSION W AS NOT ACCEPTABLE TO THE LD. COMMISSIONER OF INCOME-TAX, JAMNAGAR AND HE ACCORDI NGLY REFUSED THE REGISTRATION 2 442-RJT-2013 - SHRI JAIN SWETAMBER MURTIPUJAK TAPGACHHA DERASAR -SEC12AA (SMC) TO THE ASSESSEE-TRUST U/S 12AA OF THE INCOME-TAX AC T, BEING THE REASON THAT INADEQUATE WINDING UP/DISSOLUTION CLAUSE IN THE TRU ST DEED IN CASE OF DISSOLUTION OF TRUST. AGGRIEVED WITH THE ORDER OF LD COMMISSIONER OF INCO ME-TAX, JAMNAGAR REJECTING THE APPLICATION OF THE ASSESSEE-TRUST U/S 12AA OF THE INCOME-TAX ACT, THE ASSESSEE-TRUST IS NOW IN APPEAL BEFORE THIS TRIBUNA L. 3. BEFORE THE TRIBUNAL, ON BEHALF OF THE ASSESSEE, SHRI J.C. RANPURA, CA APPEARED AND FILED A PAPER BOOK CONTAINING 32 PAGES , WHICH INTER-ALIA INCLUDE THE COPY OF TRUST DEED WITH ENGLISH TRANSLATION, COPY O F REGISTRATION CERTIFICATE WITH THE PUBLIC TRUST REGISTRATION OFFICE, RAJKOT DATED 30.0 31.1962, COPY OF APPLICATION FOR ISSUING DUPLICATE/FRESH CERTIFICATE OF REGISTRATION U/S 12A(A) DATED 25.03.2013, COPY OF LETTER FROM THE OFFICE OF THE CIT, JAMNAGAR DATED 2 2.084.2013, COPY OF REPLY OF THE ASSESSEE-TRUST DATED 03.09.2013 ETC THE COUNSEL OF THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE-TRUST IS A VERY OLD TRUST CAME IN TO EXISTENCE ON 30.03.1962 AND IS DULY REGISTERED UNDER THE BPT ACT, 1950 VIDE REGIST RATION NO.A/135/JAMNAGAR ON 30.03.1962. HE ALSO SUBMITTED THAT THE TRUST IS A RELIGIOUS TRUST AND THE TRUSTEES ARE UNDER BONAFIDE BELIEF THAT THE TRUST IS DULY REGIST ERED UNDER SECTION 12A(A) OF THE INCOME-TAX ACT, 1961. THE TRUST IS REGULARLY FILIN G ITS RETURN OF INCOME SINCE ITS INCEPTION MENTIONING IN ITS COMPUTATION OF INCOME T HAT THE TRUST IS DULY REGISTERED UNDER SECTION 12A OF THE ACT; HOWEVER, THE ASSESSEE -TRUST IS NOT HAVING ANY INFORMATION READILY AVAILABLE ON HAND IN RESPECT OF REGISTRATION CERTIFICATE OF THE TRUST U/S 12A(A) DUE TO CESSATION OF THE OFFICE OF THE EA RLIER TAX CONSULTANT AND AUDITORS NAMELY M/S. PUNJANI & CO., JAMNAGAR. THE CORRESPOND ENCE WITH THE DEPARTMENT, AS CONTAINED IN THE PAPER-BOOK, CLEARLY INDICATES THAT THE ASSESSEE-TRUST MADE AN APPLICATION FOR REGISTRATION U/S 12AA EARLIER ALSO BUT THE ASSESSEE-TRUST COULD NOT TRACE THE EARLIER REGISTRATION CERTIFICATE DUE TO T HE CESSATION OF OFFICE OF ITS EARLIER TAX CONSULTANT AND AUDITORS NAMELY M/S. PUNJANI & CO. THEREFORE, THE ASSESSEE-TRUST MADE AN APPLICATION AGAIN ON 26.03.2013, REQUESTING EITHER TO ISSUE DUPLICATE OR FRESH CERTIFICATE OF REGISTRATION U/S 12A(A) OF THE INCOME-TAX ACT, 1961, WHICH WAS 3 442-RJT-2013 - SHRI JAIN SWETAMBER MURTIPUJAK TAPGACHHA DERASAR -SEC12AA (SMC) REFUSED BY LD. COMMISSIONER OF INCOME-TAX, JAMNAGAR DUE TO THE REASON THAT THE TRUST DEED DOES NOT CONTAIN PROVISIONS IN THE EVENT OF ITS DISSOLUTION TO THE EFFECT THAT UPON THE DISSOLUTION, IF ANY PROPERTY REMAINS AFTER SATISFACTION OF ITS DEBTS AND LIABILITIES, THE SAME SHALL BE TRANSFERRED TO THE T RUST HAVING SIMILAR OBJECTS. THE LD. COUNSEL OF THE ASSESSEE FURTHER POINTED OUT THAT TH E ASSESSEE-TRUST VIDE ITS LETTER DATED SUBMITTED THAT THE TRUST IS GOVERNED BY THE CONSTITUTION OF THE TRUST AS WELL AS BY THE PROVISIONS OF THE BOMBAY PUBLIC TRUST ACT, 1 950 AND LATER OVERRIDES THE FORMER IF THERE IS ANY CONTRAVENING CLAUSES IN THE CONSTIT UTION OF THE TRUST. ALL THE PROVISIONS OF THE BOMBAY PUBLIC TRUST ACT, 1950 ARE APPLICABLE TO THE TRUST. NO REVOCABLE TRUST CAN BE REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT , 1950. THE LD. AR OF THE ASSESSEE FURTHER RELIED UPON THE DECISION OF CO-ORD INATE BENCH (ITAT B BENCH AHMEDABAD) IN THE CASE OF SHREE CHARGAM DASHA PORWA D MAHAMANDAL V. DIT (EXEMPTION) BEARING ITA NOS. 337 & 338/AHD/2013, DA TED 08.05.2013, WHEREIN IT WAS HELD THAT WHEN THE ASSESSEE-TRUST IS REGISTERED WITH THE SUB-REGISTRAR AS A CHARITABLE TRUST, IN THE EVENT OF FAILURE OF THE TR UST THE NET ASSETS/INCOME WOULD OBVIOUSLY BE TAKEN OVER BY THE CHARITY COMMISSIONER AND THE REJECTION OF REGISTRATION ON THIS GROUND WAS HELD NOT ON A SOUND FOOTING. TH E LD. AR OF THE ASSESSEE ALSO RELIED UPON THE DECISION OF ITAT RAJKOT SMC BENCH I N THE CASE OF CHORWADI MATAJI MANDIR TRUST V. CIT IN ITA NO.458/RJT/2013, WHEREIN ALSO THE LD. CIT WAS DIRECTED TO GRANT THE REGISTRATION U/S 12AA OF THE INCOME-TAX A CT, 1961 TO THE ASSESSEE, FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH, ITAT B BEN CH, AHMEDABAD IN THE CASE OF SHREE CHARGAM DASHA PORWAD MAHAMANDAL V. DIT (SUPRA ). 4. ON THE OTHER HAND, SHRI M.L. MEENA, LD. DEPARTME NTAL REPRESENTATIVE, APPEARED ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPO RTED THE ORDER OF LD. CIT AND ARGUED THAT IN THE CASE OF DISSOLUTION, THE ASSETS MUST NOT BE TRANSFERRED FOR ANY OTHER PURPOSES, BUT FOR THE OBJECTS OF THE CHARITY, AND BECAUSE THIS CLAUSE WAS NOT PROVIDED IN THE TRUST DEED, THEREFORE, THE TRUST WA S NOT A GENUINE TRUST, AND HENCE REGISTRATION WAS RIGHTLY DENIED. 5. RIVAL SUBMISSIONS WERE CONSIDERED. IT IS PERTINE NT TO NOTE THAT THE TRUST IN QUESTION CAME INTO EXISTENCE ON 30.03.1962 AND IS D ULY REGISTERED UNDER THE BPT 4 442-RJT-2013 - SHRI JAIN SWETAMBER MURTIPUJAK TAPGACHHA DERASAR -SEC12AA (SMC) ACT, 1950. IT IS ALSO PERTINENT TO NOTE THAT THE A SSESSEE-TRUST IS REGULARLY FILING ITS RETURN OF INCOME SINCE ITS INCEPTION. THIS PRIMA-FA CIE INDICATES THAT FILE OF THE ASSESSEE-TRUST IS AVAILABLE WITH THE LD. CIT, JAMNA GAR. HERE, IN THE CASE ON HAND, THE LD. COMMISSIONER OF INCOME-TAX, JAMNAGAR REFUS ED TO GRANT THE REGISTRATION TO THE ASSESSEE-TRUST U/S 12AA OF THE INCOME-TAX ACT O N THE SOLE GROUND THAT THE TRUST DEED DOES NOT CONTAIN PROPER DISSOLUTION/WINDING UP CLAUSE. CONSIDERING THE FACTS OF THE CASE ON HAND, I AM OF THE VIEW THAT THE ISSUE O F 'DISSOLUTION CLAUSE' NOW STOOD COVERED BY THE DECISION OF CO-ORDINATE BENCH, ITAT B BENCH, AHMEDABAD IN THE CASE OF SHREE CHARGAM DASHA PORWARD MAHAMANDAL VS. DIT (EXEMPTIONS), VIDE ITA NO.337 AND 338/AHD/2013 ORDER DATED 8.5.2013, WHERE IN IT WAS HELD AS UNDER: '3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND PERUSED THE ORDERS OF THE DIT(EXEMPTIONS) AS WELL AS THE DECISION OF T HE ITAT DELHI IN THE CASE OF SHRI SAI SAMARPAN TRUST CO.(SUPRA). WE FIND THAT TH E ONLY REASON ADVANCED FOR REFUSING THE REGISTRATION U/S.12AA AND 80G(5) O F THE ACT BY THE DIT(EXEMPTIONS) IS THAT THERE IS NO DISSOLUTION CLA USE IN THE TRUST-DEED AND TRUST DOES NOT HAVE ANY CLAUSE THAT THE TRUST WILL NOT BE DISSOLVED AND IT IS A PERPETUAL TRUST. THIS ISSUE OF REFUSING REGISTRATIO N IN THE ABSENCE OF DISSOLUTION CLAUSE IN THE TRUST-DEED IS COVERED IN FAVOUR OF TH E ASSESSEE WITH THE DECISION OF CO-ORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF SHRI SAI SAMARPAN TRUST CO.(SUPRA), WHEREIN IN PARAGRAPH NO.8 HELD THAT WHE N THE ASSESSEE- TRUST IS REGISTERED WITH THE SUB-REGISTRAR AS A CHARITABLE T RUST, IN THE EVENT OF FAILURE OF THE TRUST THE NET ASSETS/INCOME WOULD OBVIOUSLY BE TAKEN OVER BY THE CHARITY COMMISSIONER AND THE REJECTION OF REGISTRATION ON T HIS GROUND WAS HELD NOT ON A SOUND FOOTING AND THE ORDERS OF THE DIT(EXEMPTION S) WERE REVERSED. WE FIND THAT THE CASE OF THE ASSESSEE IS ON MORE SOUND FOOT ING SINCE IT HAS ALREADY APPLIED TO THE CHARITY COMMISSIONER FOR AMENDMENT O F THE TRUST-DEED VIDE APPLICATION SUBMITTED ON 26/02/2013, WHEREBY INSERT ING THE DISSOLUTION CLAUSE PROVIDING THAT THE TRUST SHALL BE IRREVOCABLE AND I N THE MOST UNLIKELY SITUATION, IF TRUST PRACTICALLY STOPS FUNCTIONING, IT CAN ONLY BE MERGED/AMALGAMATED WITH OTHER ONE OR MORE PUBLIC CHARITABLE TRUSTS OR BODIE S HAVING SIMILAR OBJECTS SUBJECT TO THE APPROVAL OF THE OFFICE OF THE PUBLIC CHARITY COMMISSIONER, ETC. NO OTHER MATERIAL HAS BEEN PRODUCED ON BEHALF OF TH E REVENUE BEFORE US TO SUGGEST THAT THE AIMS AND OBJECTS OF THE TRUST ARE NOT CHARITABLE IN NATURE. IN THESE FACTS OF THE CASE, WE HOLD THAT THERE IS NO J USTIFICATION FOR REFUSING THE REGISTRATION U/S.12AA AND 80G(5) OF THE ACT TO THE ASSESSEE, WHICH IS ACCORDINGLY ALLOWED TO THE ASSESSEE AND THE ORDERS OF THE DIT(EXEMPTIONS) IN BOTH THE CASES ARE REVERSED AND WE DIRECT THE DIT(E XEMPTIONS) TO GRANT THE REGISTRATION U/S.12AA & 80G(5) OF THE ACT TO THE AS SESSEE IN BOTH THE CASES AND THE GROUND(S) RAISED IN BOTH THE APPEALS ARE HE REBY ALLOWED.' SINCE THE FACTS OF THE CASE OF THE ASSESSEE-TRUST A RE IDENTICAL TO THAT OF SHREE CHARGAM DASHA PORWAD MAHAMANDAL (SUPRA); I, FOR SIM ILAR REASONS GIVEN IN ITA 5 442-RJT-2013 - SHRI JAIN SWETAMBER MURTIPUJAK TAPGACHHA DERASAR -SEC12AA (SMC) NOS. 337 & 338/AHD/2013, ALLOW THE APPEAL OF THE AS SESSEE AND DIRECT THE LD. COMMISSIONER OF INCOME-TAX, JAMNAGAR TO GRANT REGIS TRATION U/S. 12AA OF THE INCOME-TAX ACT 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/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 30.05.2014 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- SHRI JAIN SWETAMBER MURTIPUJAK TAPGAC HHA DERASAR, JAMNAGAR 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX, JAMN AGAR 3. ,0,1 * * 2 / CONCERNED JT. CIT, RANGE 3, JAMNAGAR 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT