Shree Purushottam Lalji Gau Seva Trust, V. The Commissioner of Income Tax-III, RAJKOT-GUJARAT

ITA 448/RJT/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6855 (ITAT-RAJKOT)
• Duration Of Justice: 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-07-2014
• Assessment Year: misc
• Appeal Filed On: 21-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L MEENA
• Assessee Lawyers: J C RANPURA
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 448/RJT/2014 SHREE PURUSHOTTAM LALJI GAU SEVA TRUST C/O. CHIMANLAL NARANBHAI MARADIA, AT. THANIAYANA, TAL. MANAVADAR, DIST: JUNAGADH PAN : AANTS 1849 N ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX RAJKOT-III RAJKOT / RESPONDENT / ASSESSEE BY SHRI J.C. RANPURA, CA / REVENUE BY SHRI M.L. MEENA, DR / DATE OF HEARING 28.07.2014 !'# / DATE OF PRONOUNCEMENT 31.07.2014 / ORDER THIS APPEAL BY THE ASSESSEE-INSTITUTION/ASSOCIATION IS AGAINST THE ORDER DATED 23.06.2014 OF COMMISSIONER OF INCOME-TAX, RAJKOT-II I, RAJKOT REJECTING THE APPLICATION OF THE ASSESSEE-INSTITUTION/ASSOCIATION FOR REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-INSTI TUTION/ASSOCIATION NAMELY SHREE PURUSHOTTAM LALJI GAU SEVA TRUST CAME INTO EXISTENC E BY A TRUST DEED ON 05.07.2011 AND THE SAME HAS BEEN REGISTERED UNDER BPT ACT WIT H ASSTT. CHARITY COMMISSIONER VIDE CERTIFICATE DATED 25.08.2011. THE MAIN OBJECT OF THE TRUST IS GAUSEVA. THE ASSESSEE-INSTITUTION/ASSOCIATION FILED AN APPLICATI ON IN FORM NO.10A FOR REGISTRATION U/S 12AA OF THE INCOME-TAX ACT ON 12.12.2013 ALONGW ITH REQUISITE DETAILS/DOCUMENTS VIZ. (I) COPY OF TRUST DEED, (II) COPY OF REGISTRAT ION CERTIFICATE UNDER BPT ACT, 1950, (III) LIST OF NAME AND ADDRESS OF TRUSTEES, (IV) COPY OF PAN CARD, (V) COPY OF BANK STATEMENT AND (VI) COPY OF AUDITED ACCOUNT FOR THE FY 2012-13; HOWEVER, THE SAID APPLICATION WAS REJECTED BY LD.CIT, RAJKOT-III, RAJ KOT VIDE ORDER DATED 23.06.2014. THE REASON FOR REJECTING THE APPLICATION OF ASSESSE E-INSTITUTION/ASSOCIATION IS GIVEN BY THE LD. CIT IN PARAGRAPH NOS. 6 & 7 OF THE IMPUGNED ORDER WHICH READ AS UNDER:- 6. ON THE DATE OF HEARING SHRI RAJESHBHAI DAVE, TA X ASSISTANT FROM C. JAVIA & CO., CAS, DULY AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, ATTENDED AND FURNISHED THE DETAILS AS CALLED FOR VIDE LETTER DATED 09.06.2014. ON VERIFICATION OF SUBMISSION WITH REGARD TO DISSOLUTI ON CLAUSE, IT IS NOTICED THAT THE ASSESSEE TRUST HAS APPLIED FOR AMENDMENT IN DIS SOLUTION CLAUSE IN THE OFFICE OF THE CHARITY COMMISSIONER. IT MEANS THAT T HE ASSESSEE TRUST HAS NOT MADE ANY ARRANGEMENT OF CESSATION OF ITS LIABILITY AND ASSETS AT THE TIME OF 2 448-RJT-2014 - SHREE PURUSHOTTAM LALJI GAU SEVA TRUST- 12AA- (SMC) DISSOLUTION. THEREFORE, THE TRUST DEED IS DEFECTIVE TO THAT EXTENT. THE TRUST DEED OF THE TRUST IS INCOMPLETE SO FAR AS NO CLAUSE IS I NCORPORATED REGARDING ITS ASSETS AFTER MEETING ALL LIABILITIES, IN CASE OF DI SSOLUTION. IN ABSENCE OF ADEQUATE WINDING UP CLAUSE IN CASE OF DISSOLUTION O F TRUST, THE ARRANGEMENT OF DISPOSAL OF NET ASSETS AFTER MEETING ITS ALL LIABIL ITIES IS NOT SPECIFIED IN TRUST DEED. FURTHER, THE LOWER AUTHORITIES HAVE ALSO NOT RECOMMENDED THE CASE OF THE ASSESSEE INSTITUTION FOR REGISTRATION U/S 12AA FOR THE SAME REASON. UNDER THESE CIRCUMSTANCES, NO REGISTRATION U/S 12AA OF TH E IT ACT 1961 CAN BE GRANTED TO THE APPLICANT INSTITUTION. 6. IN VIEW OF ABOVE FACTS, IT IS HELD THAT THE ASSE SSEE TRUST DOES NOT QUALIFY FOR REGISTRATION U/S 12AA OF THE ACT. ACCORDINGLY, ASSESSEES APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT IS HEREBY REJECTED . AGGRIEVED WITH THE ORDER OF LD. CIT, THE ASSESSEE-I NSTITUTION/ASSOCIATION IS NOW IN APPEAL BEFORE THIS TRIBUNAL, ON THE FOLLOWING GR OUNDS:- 1. THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE W ITHOUT PREJUDICE TO ONE ANOTHER. 2. THE LEARNED COMMISSIONER OF INCOME TAX, RAJKOT-I II [HEREINAFTER REFERRED TO AS THE CIT] ERRED ON FACTS AS ALSO IN LAW IN REJECTING THE APPLICATION FOR REGISTRATION/S 12AA OF THE ACT ON THE ALLEGED G ROUND THAT THE TRUST DEED DOES NOT CONTAIN ANY CLAUSE REGARDING PROVISIONS IN THE EVENT OF ITS DISSOLUTION TO THE EFFECT THAT UPON THE DISSOLUTION, IF ANY PRO PERTY/ASSETS REMAINS AFTER SATISFACTION OF ITS DEBTS AND LIABILITIES. 2.1 THAT ON FACTS THE LD. CIT FAILED TO APPRECIATE THAT THE APPELLANT TRUST DEED DOES CONTAIN RELEVANT PROVISION AT CLAUSE 17 O F THE TRUST DEED AND THEREFORE, HE OUGHT TO HAVE GRANTED REGISTRATION. T HE LD. CIT BE DIRECTED TO GRANT REGISTRATION. 3.0 YOUR HONOURS APPELLANT CRAVES LEAVE TO ADD, TO AMEND, ALTER, OR WITHDRAW ANY OR MORE GROUND OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 3. AT THE TIME OF HEARING BEFORE THE TRIBUNAL, ON B EHALF OF THE ASSESSEE- INSTITUTION/ASSOCIATION, SHRI J.C. RANPURA, CA, APP EARED AND POINTED OUT THAT THE REFUSAL OF THE APPLICATION U/S 12AA(1)(B)(II) OF TH E ACT ON THE ALLEGED GROUND THAT THE ASSESSEE-INSTITUTION/ASSOCIATIONS INCORPORATION DO CUMENT DOES NOT CONTAIN A SPECIFIC CLAUSE REGARDING THE EVENT OF ITS DISSOLUTION IS TO TALLY BASELESS IN AS MUCH AS THERE IS SPECIFIC CLAUSE NO.17 TO THE EFFECT THAT UPON THE D ISSOLUTION, FIRST OF ALL ITS ASSETS AND LIABILITIES ARE DISPOSED OFF IN THE MANNER PRESCRIB ED UNDER THE BOMBAY PUBLIC TRUST ACT, 1950 AND THEREAFTER THE SAME SHALL STAND DECLA RED AS WOUND UP (COPY OF FREE ENGLISH TRANSLATION OF RELEVANT CLAUSE OF THE TRUST DEED TO ABOVE EFFECT IS PRODUCED AT PAGE NO.3 OF THE PAPER-BOOK SUBMITTED BEFORE THE TR IBUNAL). WITHOUT PREJUDICE TO ABOVE, WITH RESPECT TO THE TR UST DEED DOES NOT CONTAIN THE SPECIFIC DISSOLUTION CLAUSE; THE LD. COUNSEL OF THE ASSESSEE-INSTITUTION/ASSOCIATION HAS 3 448-RJT-2014 - SHREE PURUSHOTTAM LALJI GAU SEVA TRUST- 12AA- (SMC) RELIED UPON THE FOLLOWING DECISIONS OF ITAT, SMC BE NCH RAJKOT , WHEREIN THE TRIBUNAL HAS RELIED UPON THE DECISION OF CO-ORDINATE BENCH ( ITAT B BENCH AHMEDABAD) IN THE CASE OF SHREE CHARGAM DASHA PORWAD MAHAMANDAL V . DIT (EXEMPTION) BEARING ITA NOS. 337 & 338/AHD/2013, DATED 08.05.2013. IN THE CASE OF SHREE CHARGAM DASHA PORWAD MAHAMANDAL V. DIT (EXEMPTION) (SUPRA) , 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 TRUST THE NET ASSETS/INCOME WOULD OB VIOUSLY BE TAKEN OVER BY THE CHARITY COMMISSIONER AND THE REJECTION OF REGISTRAT ION ON THIS GROUND WAS HELD NOT ON A SOUND FOOTING. 4. ON THE OTHER HAND, SHRI M.L. MEENA, LD. DEPARTM ENTAL REPRESENTATIVE, APPEARED ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPO RTED THE ORDER OF THE LD. CIT, RAJKOT-III, RAJKOT. HE ALSO POINTED OUT THAT THE T RUST DEED IS DEFECTIVE AS POINTED OUT BY THE LD. CIT SINCE THE TRUST DEED OF THE TRUST IS INCOMPLETE SO FAR AS NO CLAUSE IS INCORPORATED REGARDING ITS ASSETS AFTER MEETING ALL LIABILITIES, IN CASE OF DISSOLUTION. THEREFORE, HE ARGUED THAT THE ACTION OF LD. CIT, RA JKOT-III, RAJKOT REJECTING THE APPLICATION OF THE ASSESSEE-INSTITUTION/ASSOCIATION U/S 12AA OF THE ACT BE UPHELD. 5. HAVING HEARD BOTH THE SIDES, I HAVE CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE ORDERS AS RELIED UPON BY THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE-INSTITUTION/ASSOCIATION. THE ASSES SEE-INSTITUTION/ASSOCIATION IS A RELIGIOUS TRUST ESTABLISHED SINCE 2011 TO CARRY OUT RELIGIOUS ACTIVITIES. IT IS ALSO REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT, 1950 WITH ASSTT. CHARITY COMMISSIONER VIDE CERTIFICATE DATED 25.08.2011. THE SOLE GROUND RAISED BY THE LD. CIT IN REJECTING ASSESSEE-INSTITUTION/ASSOCIATIONS APPLICATION FOR REGISTRATION U/S 12AA IS THAT THE TRUST DEED OF THE ASSESSEE-TRUST D OES NOT CONTAIN THE SPECIFIC DISSOLUTION CLAUSE IN THE EVENT OF ITS DISSOLUTION. THIS ISSUE HAS ALREADY BEEN COVERED IN FAVOUR OF ASSESSEE-INSTITUTION/ASSOCIATI ON BY THE DECISIONS OF CO-ORDINATE BENCH [(I) ITAT B BENCH, AHMEDABAD IN THE CASE O F SHREE CHARGAM DASHA PORWARD MAHAMANDAL VS. DIT (EXEMPTIONS), VIDE ITA N O.337 AND 338/AHD/2013 ORDER DATED 8.5.2013 AND (II) ITAT AHMEDABAD C BE NCH IN THE CASE OF SITARAM KUTIR CHARITABLE TRUST V. CIT IN ITA NO.71/AHD/2013, DECI DED ON 17.05.2013)]; WHEREIN IT WAS HELD THAT IN CASE THE TRUST REGISTERED WITH THE SUB-REGISTRAR AS A CHARITABLE TRUST 4 448-RJT-2014 - SHREE PURUSHOTTAM LALJI GAU SEVA TRUST- 12AA- (SMC) AND THE TRUST BEING AN IRREVOCABLE TRUST, THE OBVIO US POSITION SHALL BE THAT THE CHARITY COMMISSIONER SHOULD TAKE OVER THE ASSETS ON DISSOLU TION; HENCE REJECTION OF REGISTRATION BY THE LD COMMISSIONER ON THE GROUND T HAT THERE WAS NO SPECIFIC CLAUSE IN THE INSTRUMENT IN REGARD TO THE TREATMENT TO BE GIVEN IN THE EVENT OF DISSOLUTION WAS NOT ON A SOUND FOOTING. IN VIEW OF THE FOREGOING, I AM OF THE VIEW THAT THE REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961, AS SOUGHT BY THE ASSESSEE-INS TITUTION/ASSOCIATION, CANNOT BE REFUSED AND I, THEREFORE, DIRECT THE LD. CIT, RAJKO T-III, RAJKOT TO GRANT THE REGISTRATION U/S 12AA TO THE ASSESSEE-INSTITUTION/ASSOCIATION. 6. IN THE RESULT, APPEAL OF THE ASSESSEE-INSTITUTIO N/ASSOCIATION IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 31.07.2014 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- SHREE PURUSHOTTAM LALJI GAU SEVA TRUS T, C/O. CHIMANLAL NARANBHAI MARADIA, AT. THANIAYANA, TAL. MANAVAD AR, DIST: JUNAGADH 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX, RAJK OT-III, RAJKOT 3. ,0,1 * * 2 / CONCERNED JT. CIT, RANGE 1, JUNAGADH 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT