MADRASA-E-MOHAMEDIA, MUMBAI V. DIT (EXEMPTIONS), MUMBAI

ITA 4492/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0979 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-07-2015
• Assessment Year: 2012-2013
• Appeal Filed On: 04-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR YOGESH KAMATDR
• Assessee Lawyers: DHIRAJLAL J PATEL
• Section: 12A; 12AA

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.4492/MUM/2013 MADARSA-E-MOHAMMEDA MANDSAUR, R. NO.13 , 1 ST FLOOR BIBIJAN STREET, FIDA MANSION, MUMBAI-400051 / VS. DIRECTOR OF INCOME TAX (EXEMPTIONS), PIRAMAL CHAMBER, 1 ST FLOOR, LALBAUG, MUMBAI ( ! ' /ASSESSEE) ( # / REVENUE) P.A. NO. AIQPK1373A ! ' / ASSESSEE BY SHRI DHIRAJLAL J. PATEL # / REVENUE BY DR. YOGESH KAMAT-DR $ #% & ' ' / DATE OF HEARING : 02/07/2015 & ' ' / DATE OF ORDER: 04/08/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 23/04/2013 OF THE LD. DIT(E), MUMBAI. THE ASSESSEE IS BROADLY AGGRIEVED IN REJECTING THE REGISTRATION U/S 12AA R.W.S 12A OF THE INCOME TAX ACT, 1961(HEREINAFTER T HE ACT). MADARSA-E-MOHAMMEDIA MANDSAUR. ITA NO.4492/MUM/2013 2 2. THE CRUX OF ARGUMENT ADVANCED BY SHRIT DHIRAJLA L J. PATEL, LD. COUNSEL FOR THE ASSESSEE IS THAT THE LD. DIT(E) WAS NOT JUSTIFIED IN REJECTING THE APPLICATION ON T HE PLEA THAT IN THE ABSENCE OF DISSOLUTION OR WINDING UP CL AUSE, IN THE TRUST DEED, THERE WAS ALWAYS A POSSIBILITY THAT THE TRUST MAY DIVIDE OR DISTRIBUTE THE ASSET AMONG THE TRUSTE ES. RELIANCE WAS PLACED UPON THE DECISION OF THE TRIBUN AL IN THE CASE OF GETA LALWANI FOUNDATION VS DIT(E) ((ITA NO.3566/M/2013) ORDER DATED 02/02/2015 AND ALSO THE DECISION FROM HONBLE APEX COURT IN THIAGARAJAR CHA RITIES VS ADLL. CIT (225 ITR 1010) (SC). ON THE OTHER HAN D, THE LD. DR, DR. YOGESH KAMAT DEFENDED THE CONCLUSION AR RIVED AT BY THE LD. DIT(E) BY CONTENDING THAT THE DISSOLUTION/WINDING UP CLAUSE IS A BASIC NECESSITY IN THE TRUST DEED, OTHERWISE, THERE IS ALL POSSIBILITY THA T AT THE LATER STAGE, THE ASSET OF THE TRUST MAY BE DISTRIBU TED AMONG THE TRUSTEES. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE APPLICATION DATED 08/10/2012, FILED BY THE ASSESSEE , FOR GETTING REGISTRATION U/S 12A WAS REJECTED BY THE LD . DIT(E) ON 23/04/2013 VIDE ORDER U/S 12AA(1)(B)(II) READ WI TH SECTION 12A OF THE ACT. THE MAJOR GROUND FOR DENYI NG REGISTRATION IS THAT THERE WAS NO DISSOLUTION CLAUS E IN THE TRUST DEED. THE CONCLUDING OBSERVATION, CONTAINED IN THE IMPUGNED ORDER ARE REPRODUCED HEREUNDER FOR ANALYSI S:- MADARSA-E-MOHAMMEDIA MANDSAUR. ITA NO.4492/MUM/2013 3 AT THIS STAGE, NO OPINION IS BEING EXPRESSES ABOUT THE CHARITABLE NATURE OF THE OBJECT OF THE APPLICANT TR UST OR THE GENUINENESS OF ITS ACTIVITIES, WHICH WILL BE EXAMIN ED AS AND WHEN THE APPLICANT MAKES A FRESH APPLICATION FOR RE GISTRATION AFTER INCLUSION OF A SUITABLE CLAUSE TO THE ABOVE E FFECT IN ITS TRUST DEED. IF THE OBSERVATION CONTAINED IN THE IMPUGNED ORDER IS ANALYSED WITH RESPECT TO JUDICIAL PRONOUNCEMENT, AV AILABLE ON RECORD AND ALSO IN OTHER CASES, THE TRIBUNAL IN THE CASE OF GEETA LALWANI FOUNDATION VS DIT(E) CLEARLY HELD THA T THE BOMBAY PUBLIC TRUST ACT 1950 DOES NOT MANDATE LIKE OBJECT CLAUSE I.E. THE INCORPORATION OF DISSOLUTION CLAUSE IS NOT MANDATORY. LIKEWISE, THE HONBLE APEX COURT IN THI AGARAJAR CHARITIES VS ADLL. CIT (225 ITR 1010) (SC) HELD THA T THERE IS A BASIC DIFFERENCE BETWEEN OBJECTS OF THE TRUST, CO RPUS AND POWER OF THE TRUSTEE. THE LD. DIT(E) WHILE DELIBER ATING UPON THE ISSUE, NOWHERE MENTIONED THAT THE MAIN INTENTIO N OF THE ASSESSEE IS TO CARRY ON BUSINESS WITH A PROFIT MOTI VE, THUS, THE APPROACH OF THE LD. DIT(E), DENYING REGISTRATIO N TO THE ASSESSEE TRUST IS NOT WITHIN THE ENSHRINED PARAMETE RS OF THE ACT. WHILE GRANTING REGISTRATION TO THE APPLICANT, IT IS THE DUTY OF THE AUTHORITY TO EXAMINE THE OBJECTS OF TH E TRUST AND ALSO WHETHER SUCH OBJECTS ARE FOR THE BENEFIT OF TH E PUBLIC AT LARGE. EVEN OTHERWISE, REGISTRATION U/S 12AA DOES NOT NECESSARILY ENTITLE THE ASSESSEE TO GET THE INCOME EXCLUDED FROM THE INCOME OF THE PREVIOUS YEAR FOR THE PURPOS ES OF DETERMINATION OF TAX LIABILITY, BUT IT ONLY ENTITLE S THE ASSESSEE TO CLAIM SUCH EXEMPTION, WHICH OTHERWISE C OULD MADARSA-E-MOHAMMEDIA MANDSAUR. ITA NO.4492/MUM/2013 4 NOT BE CLAIM IN THE ABSENCE OF REGISTRATION. OUR V IEW IS FORTIFIED BY THE DECISION IN CIT VS RED ROSE SCHOOL 163 TAXMAN 19 (ALL.). FOR THE PURPOSES OF REGISTRATION U/S 12AA, WHAT AUTHORITIES HAVE TO SATISFY THEMSELVES ABOUT I TS GENUINENESS OF ACTIVITIES OF TRUST OR INSTITUTION A ND HOW INCOME DERIVED FROM TRUST PROPERTY IS APPLIED TO CH ARITABLE OR RELIGIOUS PURPOSE. OUR VIEW IS FORTIFIED BY THE DECISION FROM HONBLE KARNATKA HIGH COURT IN S.H. GOWDA CHAR ITABLE TRUST VS DIT(E) (2006) 155 TAXMAN 466 (KAR.) AND TH E RATIO LAID DOWN IN CIT VS SPRINGDALE EDUCATIONAL SOCIETY (2012) 204 TAXMAN (MAG.) (P&H) AND ALSO BY DELHI HIGH COUR T IN DIT VS FOUNDATION OF OPHTHALMIC & OPTOMTERY RESEARC H EDUCATION CENTRE 254 CTR 133 (DEL.). IN VIEW OF TH E CLEAR FACTS, AND THE JUDICIAL PRONOUNCEMENTS, DISCUSSED HEREINABOVE, WE ARE OF THE VIEW, THAT THE ASSESSEE DESERVES TO BE GRANTED REGISTRATION U/S 12A/12AA OF THE ACT. WE DIRECT ACCORDINGLY. THUS, THE APPEAL OF THE ASSESS EE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 02/07/2015. SD/ - (RAJENDRA) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ( DATED : 04/08/2015 F{X~{T? P.S/. . . MADARSA-E-MOHAMMEDIA MANDSAUR. ITA NO.4492/MUM/2013 5 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 $ 1' ( *+ ) / THE CIT, MUMBAI. 4. 0 0 $ 1' / CIT(A)- , MUMBAI 5. 3#4 .' , 0 *+' * 5 , $ % / DR, ITAT, MUMBAI 6. 6 7% / GUARD FILE. / BY ORDER, /3+' .' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI