M/s.Progressive Educational & Cahritable Trust, Malappuram V. The CIT, Calicut

ITA 447/COCH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81423 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 13-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: M V VENUGOPAL
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

1 ITA NO. 447/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO. 447/COCH/2014 PROGRESSIVE EDUCATIONAL & CHARITABLE VS THE CIT, K OZHIKODE TRUST, WARD NO.21, MELE VATTAPPARA VALANCHERY, KARIPOL P.O MALAPPURAM 676 552 PAN : AACTP6156A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.V. VENUGOPAL RESPONDENT BY : SHRI M ANIL KUMAR, CIT DATE OF HEARING : 04-12-2014 DATE OF PRONOUNCEMENT : 12-12-2014 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE ADMINISTRATIVE COMMISSIONER DATED 30-04-2014 REJECT ING THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT. 2. SHRI M.V. VENUGOPAL, THE LD.REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE TRUST WAS FORMED BY MEA NS OF A REGISTERED DEED EXECUTED ON 24-04-2013. THE OBJECT OF THE TRU ST IS TO ESTABLISH AND ADMINISTER EDUCATIONAL INSTITUTIONS. ACCORDING TO THE LD.REPRESENTATIVE, THE 2 ITA NO. 447/COCH/2014 APPLICATION FOR REGISTRATION U/S 12AA WAS FILED IMM EDIATELY ON ESTABLISHMENT OF THE TRUST. ON A QUERY FROM THE BE NCH WHETHER THE CHARITABLE ACTIVITY, VIZ. EDUCATIONAL INSTITUTION W AS STARTED BY THE ASSESSEE AS OF NOW, THE LD.REPRESENTATIVE CLARIFIED THAT THE ASSESSEE COULD NOT START THE EDUCATION SO FAR. THE LD.REPRESENTATIVE HAS AL SO CLARIFIED THAT THE ASSESSEE IS CONSTRUCTING BUILDING FOR EDUCATIONAL I NSTITUTION. AFTER COMPLETION OF THE CONSTRUCTION ONLY THE ASSESSEE CO ULD APPLY TO THE CONCERNED AUTHORITIES FOR NECESSARY PERMISSION / AP PROVAL TO COMMENCE THE EDUCATIONAL INSTITUTION. THE LD.REPRESENTATIVE CLARIFIED THAT AS ON TODAY NO ACTIVITY WAS CARRIED ON. 3. ON THE CONTRARY, SHRI M. ANIL KUMAR, THE LD.DR S UBMITTED THAT SINCE THE ASSESSEE HAS NOT COMMENCED ANY OF THE CHARITABL E ACTIVITIES AS ENUMERATED IN THE TRUST DEED, ACCORDING TO THE LD.D R, THE ASSESSEE IS NOT ENTITLED FOR REGISTRATION AS OF NOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS AT T HE PRELIMINARY STAGE FOR CARRYING OUT THE CHARITABLE OBJECT. THE ASSESSEE C LAIMS THAT BUILDINGS WERE UNDER CONSTRUCTION FOR STARTING THE EDUCATIONA L INSTITUTION. HOWEVER, NO MATERIAL IS AVAILABLE ON RECORD TO SHOW THAT THE ASSESSEE HAS STARTED THE CONSTRUCTION OF THE BUILDING. THE FACT REMAINS IS THAT THE ASSESSEE HAS 3 ITA NO. 447/COCH/2014 NOT APPLIED FOR PERMISSION / APPROVAL FROM THE CONC ERNED AUTHORITY FOR STARTING THE EDUCATIONAL INSTITUTION. THEREFORE, A S OF NOW NO CHARITABLE ACTIVITY IS CARRIED ON. THE KERALA HIGH COURT IN T HE CASE OF SELF EMPLOYERS SERVICE SOCIETY VS CIT (2001) 247 ITR 18 (KER) 247 ITR 18 HAD AN OCCASION TO CONSIDER REGISTRATION U/S 12AA ON IDENT ICAL CIRCUMSTANCES. THE KERALA HIGH COURT FOUND THAT THE SOCIETY HAS NO T DONE ANY CHARITABLE WORK DURING THE RELEVANT PERIOD. THEREFORE, IT DOE S NOT ENTITLE FOR REGISTRATION U/S 12AA OF THE ACT. THE DIVISION BEN CH OF THE KERALA HIGH COURT CONFIRMED THE LIBERTY GIVEN BY THE LD.SINGLE JUDGE FOR FILING A FRESH APPLICATION IMMEDIATELY AFTER STARTING THE CHARITAB LE WORK. IN FACT, THE KERALA HIGH COURT OBSERVED AS FOLLOWS AT PAGE 21 OF THE ITR: A REFERENCE TO THE BYE-LAWS OF THE SOCIETY, A COP Y OF WHICH IS PRODUCED AS EXHIBIT P1, WOULD SHOW THAT SE VERAL CHARITABLE ACTIVITIES ARE INCLUDED IN THE OBJECTS O F THE SOCIETY, BUT EVEN ACCORDING TO THE PETITIONER SOCIETY IT HAS NOT BEEN ABLE TO DO ANY OF SUCH CHARITABLE ACTIVITIES DURING THE FIRST YEAR OF ITS FUNCTIONING. THE PROPOSAL TO START A TECHNI CAL EDUCATIONAL INSTITUTION ITSELF WAS TAKEN ONLY ON JUNE 14, 1999, THAT IS MUCH AFTER EXHIBIT P5 ORDER. WHEN THE COMMISSIONER EXER CISES HIS JURISDICTION UNDER SECTION 12AA WHILE CONSIDERING A N APPLICATION FOR REGISTRATION UNDER SECTION 12A HE H AS TO BE SATISFIED OF THE CHARITABLE AND RELIGIOUS NATURE OF THE OBJECTS AND GENUINENESS OF THE ACTIVITIES OF THE TRUST OR I NSTITUTION. IN THE PRESENT CASE, ADMITTEDLY, THE SOCIETY HAS NOT D ONE ANY 4 ITA NO. 447/COCH/2014 CHARITABLE WORK DURING THE RELEVANT PERIOD, ON THE OTHER HAND, THE ACTIVITIES WHICH THEY HAVE CARRIED ON DURING TH E PERIOD WERE ONLY FOR THE PURPOSE OF GENERATING INCOME FOR ITS MEMBERS. THERE WERE NO MATERIALS BEFORE THE COMMIS SIONER TO BE SATISFIED OF THE GENUINENESS OF THE ACTIVITIE S OF THE TRUST OR INSTITUTION. UNDER THESE CIRCUMSTANCES, REJECTI ON OF THE APPLICATION UNDER EXHIBIT P5 CANNOT BE TERMED AS IL LEGAL OR ARBITRARY. BUT THE LEARNED SINGLE JUDGE HAS GIVEN AN OPPORTUNITY TO THE SOCIETY TO FILE A FRESH APPLICAT ION WHEN THEY ACTUALLY START DOING CHARITABLE WORK AND THE COMMIS SIONER HAS BEEN DIRECTED TO CONSIDER SUCH APPLICATION ON THE M ERITS UNTRAMMELED BY THE VIEW TAKEN IN EXHIBIT P5. ACCOR DING TO US, NO BETTER RELIEF COULD BE GRANTED TO THE SOCIETY IN THIS CASE. 5. IN VIEW OF THE ABOVE JUDGMENT OF THE KERALA HIGH COURT IN SELF EMPLOYERS SERVICE SOCIETY (SUPRA), THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE IS NOT ENTITLED FOR REGIS TRATION SINCE NO CHARITABLE ACTIVITY WAS CARRIED OUT. HOWEVER, IT IS MADE CLEA R THAT THE ASSESSEE WILL BE AT LIBERTY TO FILE FRESH APPLICATION BEFORE THE COMMISSIONER AS SOON AS THE CHARITABLE ACTIVITY, VIZ. THE EDUCATIONAL INSTI TUTION STARTS FUNCTIONING. IF SUCH AN APPLICATION IS FILED, AS OBSERVED BY THE KE RALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY (SUPRA), THE COMMISSIONER SHALL CONSIDER THE SAME ON MERIT. 5 ITA NO. 447/COCH/2014 6. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE A SSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DECEMBER, 2014. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 12 TH DECEMBER, 2014 PK/- COPY TO: 1. PROGRESSIVE EDUCATIONAL & CHARITABLE TRUST, WARD NO.21, MELE VATTAPPARA, VALANCHERY, KARIPOL PO, MALAPPURAM 676 552 2. THE CIT, KOZHIKODE 3. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH