IMC Of ITI Women Jhajjar at Gudha (Jhajjar), New Delhi V. CIT, Rohtak

ITA 4471/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65822 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 21-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AROOP SINGH
• Assessee Lawyers: BRIJESH AGARWAL
• Keywords: Charitable institution; Question of law
• Section: 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: C NEW DELHI BEFORE SHRI UBS BEDI, JM AND SHRI J.SUDHAKAR REDDY, A.M. ITA NO: 4471/DEL/2012 ASSESSMENT YEAR : - N.A. IMC OF ITI WOMEN JHAJJAR AT VS. CIT, AYAKAR BHAVA N GUDHA (JHAJJAR) SOCIETY DELHI ROAD, ROHTAK ITI WOMEN JHAJJAR, HARYANA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BRIJESH AGARWAL RESPONDENT BY : SHRI AROOP SINGH, SR.D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE LD.CIT, ROHTAK DATED 21.06.2012 U/S 12 AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 REFUSING GRANT OF REGISTRATION TO THE APPELLA NT SOCIETY. 2. FACTS IN BRIEF:- THE ASSESSEE IS A SOCIETY WHICH IS REGISTERED UNDER THE PROVISIONS OF THE SOCIETIES REGISTRATION ACT,1860 I N THE STATE OF HARYANA VIDE REGISTRATION CERTIFICATE BEARING NUMBER 06/15-B/117 7 DATED 17.12.2010. THE AIMS AND OBJECTS OF THE SOCIETY ARE AS UNDER:- AIMS AND OBJECTIVES:- A. AIMS OF THE SOCIETY:- I) THE MAIN AIM OF THE SOCIETY IS TO ASSIST IN IMPROVE MENT OF STANDARD OF VOCATIONAL TRAINING AND SKILL DEVELOPMENT IN THE CO UNTRY AS A WHOLE. 2 II) THE SOCIETY HAS BEEN FORMED WITH THE SPECIFIC AIM O F UPGRADATION OF THE ITI (WOMEN) JHAJJAR AT GUDHA (JHAJJAR) INTO A CENTR E OF EXCELLENCE IN SUCH A WAY THAT THE TRAINING PROVIDED IN THE IYI IS IMPROVED AND BECOMES DEMAND DRIVEN LEADING TO BETTER EMPLOYABILI TY OF THE PASSING OUT GRADUATES. III) IN GENERAL THE SOCIETY SHALL FUNCTION ON NO PROFIT NO LOSS PRINCIPLE. HOWEVER ITS AFFAIRS SHALL BE MANAGED IN SUCH A WAY THAT IT BECOMES SELF SUPPORTING IN DUE COURSE AND IS ABLE TO MEET A LL ITS EXPENSES AND LIABILITIES ON ITS OWN. B. THE MAIN OBJECTS TO BE PURSUED BY THE SOCIETY ARE: I) TO MANAGE THE AFFAIRS OF THE ITI (WOMEN) JHAJJAR AT GUDHA (JHAJJAR) ACCORDING TO THE TERMS AND CONDITIONS SET OUT IN A MEMORANDUM OF AGREEMENT TO BE SIGNED AMONG THE CENTRAL GOVERNMENT , STATE GOVERNMENT AND INDUSTRY PARTNER. THE REPRESENTATIV E OF THE INDUSTRY PARTNER SHALL SIGN THIS MEMORANDUM OF AGREEMENT ON BEHALF OF THE SOCIETY ALSO AS ITS CHAIRMAN. II) TO DEVELOP AN INSTITUTE DEVELOPMENT PLAN (IDP) FOR THE ITI (WOMEN) JHAJJAR AT GUDHA (JHAJJAR). THE IDP SHALL, INTER A LIA DEFINE LONG TERM GOALS OF THE INSTITUTE, THE ISSUES AND CHALLENGES F ACING THE INSTITUTE AND THE STRATEGIES FOR DEALING WITH THEM. IT SHALL SET TARGETS FOR INSTITUTIONAL IMPROVEMENT, KEY PERFORMANCE INDICATORS AND DETAIL THE INFRASTRUCTURAL AND FINANCIAL REQUIREMENTS WITH YEAR WISE BREAK UP TO MEET THE NEEDS. III) TO ASSESS EMERGING SKILL REQUIREMENTS IN THE REGION AND SUGGEST CHANGES IN THE TRAINING COURSES BEING RUN IN THE IY I. IV) TO OBTAIN SHORT TERM MEDIUM TERM AND LONG TERM REQU IREMENT OF SKILLED WORK FORCE AND TAKE STEPS TO PRODUCE GRADUATES IN T HE ITI ACCORDINGLY.ETC. 3. THE SOCIETY ENTERED INTO AGREEMENT UNDER A PUBLI C PRIVATE PARTNERSHIP (PPP), THROUGH THE MEMORANDUM OF AGREEMENT ON 29.12 .2010 UNDER THE POLICY OF THE GOVT. OF INDIA, THAT SKILLS IMPARTED BY I NDUSTRIAL TRAINING INSTITUTES (ITI), MUST KEEP PACE WITH THE QUALITATIVE AND TECH NOLOGICAL DEMAND OF THE INDUSTRY AND EXPANDING UNIVERSE OF INDIA. THE SOC IETY FILED AN APPLICATION U/S 10A OF THE INCOME TAX ACT, 1961 ON 23.12.2004 BEFOR E THE CIT,ROHTAK FOR GRANT OF REGISTRATION U/S 12A OF THE INCOME TAX ACT , 1961 WITH NECESSARY ENCLOSURES. THE COMMISSIONER CALLED FOR A REPORT FR OM THE JCIT, ROHTAK RANGE AND THE AO ON THE ISSUE WHETHER THE ASSESSEE FULFIL LED THE CONDITIONS REQUIRED 3 FOR GRANT OF REGISTRATION. REPORT OF THE JCIT, ROHT AK RANGE, ROHTAK WAS RECEIVED ON 14.06.2012. IN THIS REPORT, JCIT-ROHTA K REPORTED THAT THE SOCIETY HAS NOT PRODUCED BOOKS OF ACCOUNTS EXCEPT THE BALAN CE SHEET, INCOME AND EXPENDITURE STATEMENT FOR THE YEAR ENDED 31.03.2011 . IT WAS FURTHER STATED THAT THE ASSESSE HAS NOT PRODUCED SUBSTANTIAL MATER IAL/EVIDENCE, SO AS TO BE ABLE TO ASCERTAIN THE GENUINENESS OF THE CHARITABL E ACTIVITIES OF THE SOCIETY. THE AO SUBMITTED A SIMILAR REPORT. BASED ON THESE REPO RTS THE CIT-ROHTAK REFUSED REGISTRATION TO THE ASSESEES SOCIETY. AGGRIEVED, T HE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESEE MR. VIJESH AGGAR WAL FILED A PAPER BOOK RUNNING INTO 174 PAGES AS WELL AS A WRITTEN SUBMIS SION. HE SUBMITTED THAT THE AIMS AND OBJECTS OF THE SOCIETY SHOULD HAVE BEEN EX AMINED AND REGISTRATION GRANTED, AS WAS DONE BY THE COMMISSIONER, FARIDABAD UNDER SIMILAR CIRCUMSTANCES AND WHERE THE SOCIETY HAD SIMILAR OBJ ECTS IN THE CASE OF INDUSTRIAL TRAINING SOCIETY, ITI WOMEN, MEHRAULI RO AD, GURGOAN, HARYANA. 5. ON THE ISSUE OF NON PRODUCTION OF BOOKS, IT WAS SUBMITTED THAT THE SOCIETY HAS JUST BEEN FORMED AND A SMALL SUM OF RS. 674/- WAS INCURRED AS AN EXPENDITURE FOR THE PERIOD ENDED 31.03.2011 AND AUD ITED ACCOUNTS WERE SUBMITTED. ON THE ISSUE OF EVIDENCE REGARDING GENUI NENESS OF CHARITABLE ACTIVITIES, IT WAS PLEADED THAT THE ACTIVITIES OF T HE SOCIETY HAVE NOT COMMENCED BY 31.03.2011 AND HENCE THE QUESTION OF EXAMINING T HE ACTIVITIES DOES NOT ARISE. FURTHER SUBMITTED THAT DETAILED SUBMISSIONS WERE MADE BEFORE THE COMMISSIONER ON 09.05.2012 BY WHICH DATE CERTAIN AC TIVITIES WERE COMMENCED 4 AND IN THESE SUBMISSIONS FURTHER DETAILS WERE FURNI SHED AND THAT THESE WERE NOT CONSIDERED BY THE CIT. HE RELIED ON THE FOLLOWI NG CASE LAWS:- I. FOUNDATION OF OPHTHALMIC AND OPTOMETRY RESEARCH EDU CATION CENTRE, ITA NO.1687/2010 DT. 16.08.12 (DELHI HIGH COURT). II. MAHARASHTRA ACADEMY OF ENGINEERING AND EDUCATIONAL RESEARCH VS. CIT, ITAT PUNE A BENCH, ITA NO.1669/PUNE/2 007, 3 TAXMAN.COM 35. 6. THE LD. DR MR.AROOP SINGH ON THE OTHER HAND SUPP ORTED THE ORDER OF THE COMMISSIONER AND SUBMITTED THAT THE BOOKS OF ACCOUN TS AND GENUINENESS OF CHARITABLE ACTIVITIES WAS NOT DEMONSTRATED BY THE A SSSESSEE BEFORE THE AO AND THE JCIT. 7. RIVAL CONTENTIONS HEARD. ON A CAREFUL PERUSAL O F THE PAPERS ON RECORD AND CASE LAWS CITED, WE HOLD AS FOLLOWS:- 8. THE SCOPE OF ENQUIRY WHILE GRANTING REGISTRATION U/S12AA(1)(B) READ WITH S.12A OF THE INCOME TAX ACT, 1961 IS LIMITED TO EX AMINING THE OBJECTS OF THE SOCIETY AND WHETHER THE OBJECTS ARE CHARITABLE IN N ATURE OR NOT. THE QUESTION OF EXAMINATION OF THE ACTIVITIES OF THE SOCIETY OR CAL LING FOR THE BOOKS OF ACCOUNTS OF THE SOCIETY AT THE STAGE OF GRANTING THE REGIST RATION DOES NOT ARISE, SPECIALLY IN THE CASE OF NEWLY FORMED SOCIETY. IN THE CASE O N HAND, THE SOCIETY HAS NOT COMMENCED ACTIVITY. THE EXPENDITURE INCURRED BY TH E END OF 31.3.2011 WAS ONLY RS.674/-. COPY OF THE CASH BOOK WAS FILED BEF ORE THE COMMISSIONER. UNDER THE CIRCUMSTANCES THE REASON CITED BY THE ASS ESSING OFFICER AS WELL AS THE JCIT, WHICH IS ADOPTED BY THE CIT, ROHTAK, WIT HOUT INDEPENDENT APPLICATION OF MIND IS DEVOID OF MERIT. 5 9. IT IS NOT THE CASE OF THE ASSESSING OFFICER OR T HE JCIT OR THE CIT THAT THE OBJECTS OF THE SOCIETY ARE NOT CHARITABLE IN NATURE . THE SHORT GROUND IS THAT NO CHARITABLE ACTIVITY HAS BEEN CARRIED ON AND THE BOO KS OF ACCOUNTS HAVE NOT BEEN PRODUCED. ON THE FACTS AND CIRCUMSTANCES OF T HIS CASE THESE ARE NOT VALID GROUNDS FOR REJECTION OF REGISTRATION. 10. THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. FOUNDATION OF OPHTHALMIC AND OPTOMETRY RESEARCH EDUCATION CENTRE IN ITA 1687/2010 DECIDED ON 16.8.2012 AT PARA 10 AND 11 HELD AS FOLL OWS. THE SUBSTANTIAL QUESTION OF LAW FRAMED IN THIS CASE IS:- WHETHER THE ITAT WAS RIGHT IN HOLDING THAT WHILE E XAMINING THE APPLICATION UNDER SECTION 12AA(1)(B) READ WITH S.12A OF THE INC OME TAX ACT, 1961, THE CONCERNED COMMISSIONER/DIRECTOR IS NOT REQUIRED TO EXAMINE THE QUESTION WHETHER THE TRUST HAS ACTUALLY COMMENCED AND HAS, I N FACT, CARRIED ON CHARITABLE ACTIVITIES? 10. FACIALLY, THE ABOVE PROVISION WOULD SUGGESTS T HAT THERE ARE NO RESTRICTIONS OF THE KIND WHICH THE REVENUE IS READING INTO IN TH IS CASE. IN OTHER WORDS, THE STATUTE DOES NOT PROHIBIT OR ENJOIN THE COMMISSIONE R FROM REGISTERING TRUST SOLELY BASED ON ITS OBJECTS, WITHOUT ANY ACTIVITY, IN THE CASE OF A NEWLY REGISTERED TRUST. THE STATUTE DOES NOT PRESCRIBE A WAITING PERIOD, FO R A TRUST TO QUALIFY ITSELF FOR REGISTRATION. 11. IF THE REVENUES CONTENTIONS ARE CORRECT THEN, NECESSARILY, A CONDITION WOULD HAVE TO BE READ IN TO THE PROVISION THAT THE COMMISSIONER SHOULD BE SATISFIED THAT THE TRUST IS IN FACT ENGAGED IN CHAR ITABLE ACTIVITIES WHICH WOULD IN TURN INJECT CONSIDERABLE DEAL OF SUBJECTIVITY. IT IS QUITE POSSIBLE THAT IF SUCH FLEXIBILITY IS INTRODUCED, IT WOULD BE SUSCEPTIBLE TO VARIED INTERPRETATION BY THE DIFFERENT AUTHORITIES, IN THAT SOME WOULD BE SATISF IED WITH ACTIVITY OF FEW MONTHS, WHILE OTHERS MAY WISH TO EXAMINE THE ACTIVITIES OF THE ORGANIZATION FOR LONGER TIME. IN THIS VIEW OF THE MATTER, THIS COURT IS PE RSUADED TO FOLLOW THE INTERPRETATION GIVEN TO S.12AA BY THE KARNATAKA HIG H COURT IN DIT(E) VS. MEENAKSHI AMMA ENDOWMENT TRUST (SUPRA). 11. WE RESPECTFULLY FOLLOW THE DECISION OF THE HON BLE DELHI HIGH COURT. IN THE CASE OF DIT(EXEMPTIONS) VS. MEENAKSHI AMMA ENDO WMENT TRUST (2011)50 DTR (KAR) 243. THE HONBLE KARNATAKA HIGH COURT HE LD AS FOLLOWS. 6 4. THE TRIBUNAL TAKING INTO CONSIDERATION THE LAW LAID DOWN BY THE DIVISION BENCH OF THIS COURT IN SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS DIT(E) (2006) 203 CTR (KAR.) 533 2006) 285 ITR 327 (KAR) HELD THAT DEPENDING UPON THE FACTS AND CIRCUMSTANCES, THE CONCERNED AUT HORITY HAS TO LOOK TO THE OBJECTS AND ALSO THE ACTIVITIES OF THE TRUST IN ORD ER TO CONSIDER THE APPLICATION FOR REGISTRATION U/S12A OF THE INCOME TAX ACT, 1961 AND ACCORDINGLY ALLOWED THE APPEAL BY ORDER DT. 20 TH NOV.2009 AND DIRECTED THE DIT(E) TO GRANT RECOGNIT ION TO THE TRUST IF OTHER CONDITIONS ARE SATISFIED. 5. ON PERUSAL OF RECORDS WE NOTE THAT THE TRUST WAS FORMED ON 23 RD JAN.2008 AND WITHIN A PERIOD OF NINE MONTHS THEY HAD FILED A N APPLICATION U/S12A FOR ISSUANCE OF THE REGISTRATION CLAIMING EXEMPTION. T HE FACT THAT THE CORPUS OF THE TRUST IS NOTHING BUT THE CONTRIBUTION OF RS.1,000 B Y EACH OF THE TRUSTEES AS CORPUS FUND GOES TO SHOW THAT THE TRUSTEES WERE CONTRIBUTI NG THE FUNDS BY THEMSELVES IN A HUMBLE WAY AND WERE INTENDING TO COMMENCE CHARITA BLE ACTIVITIES. IT IS NOT EVEN THE CASE OF THE REVENUE THAT BY THE TIME THE A PPLICATION OF THE ASSESSEE CAME TO THE CONSIDERED BY THEM, THE ASSESSEE HAD CO LLECTED LOTS OF DONATIONS FOR THE ACTIVITIES OF THE TRUST. ON THE OTHER HAND THE GRIEVANCE OF THE CONCERNED AUTHORITIES SEEMS TO BE THAT THERE WAS NO ACTIVITY WHICH COULD BE TERMED AS CHARITABLE AS PER THE DETAILS FURNISHED BY THE ASSE SSEE, THEREFORE, SUCH REGISTRATION COULD NOT BE GRANTED. WHEN THE TRUST ITSELF WAS FORMED IN JANUARY, 2008 WITH THE MONEY AVAILABLE WITH THE TRUST, ONE C ANNOT EXPECT THEM TO DO ACTIVITY OF CHARITY IMMEDIATELY AND BECAUSE OF THAT SITUATION THE AUTHORITY CANNOT COME TO A CONCLUSION THAT TRUST WAS NOT INTENDING T O DO ANY ACTIVITY OF CHARITY. IN SUCH A SITUATION THE OBJECTS OF THE TRUST HAVE TO B E TAKEN INTO CONSIDERATION BY THE AUTHORITY AND THE OBJECTS OF THE TRUST COULD BE REA D FROM THE TRUST DEED ITSELF. IN THE SUBSEQUENT RETURNS FILED BY THE TRUST, IF THE R EVENUE COMES ACROSS THAT FACTUALLY TRUST HAS NOT CONDUCTED ANY CHARITABLE AC TIVITIES, IT IS ALWAYS OPEN TO THE AUTHORITIES CONCERNED TO WITHDRAW THE REGISTRAT ION ALREADY GRANTED OR CANCEL THE SAID REGISTRATION UNDER SECTION 12AA(3) OF THE INCOME TAX ACT, 1961. 7 12. RESPECTFULLY FOLLOWING THE SAME WE SET ASIDE T HE ORDER OF THE CIT, ROHTAK DT. 21.6.2012. WE ALLOW THE APPLICATION OF THE AS SESSEE FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX A CT, 1961, AS THE OBJECTS OF THE SOCIETY ARE CHARITABLE IN NATURE AS NONE OF THE REVENUE AUTHORITIES HAVE GIVEN A FINDING TO THE CONTRARY. 13. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2012. SD/- SD/- (UBSBEDI) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 31 ST OCT2012 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR 1. DATE OF DICTATION: 2. DRAFT PLACED BEFORE THE AUTHOR ON: 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON: 5. APPROVED DRAFT CAME TO SR.P.S. ON: 6. DATE OF PRONOUNCEMENT : 7. FILE SENT TO BENCH CLERK ON : 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON :