Shri Dhanraj Ganga Devi Mundra Sevarth Trust, UDAIPUR V. CIT, UDAIPUR

ITA 450/JODH/2013

• Counselvise Citation: 45023314 RSA 2013
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 05-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGAL
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 450 & 458/JODH/2013 (U/S 12AA & 80 G) SHRI DHANRAJ GANGA DEVI MUNDRA VS. CIT, UDAIPUR RANGE, SEVARTH TRUST, C/O BALDI & ASSOCIATES, 16, MOOMAL TOWER, 54, II ND FLOOR, INDRAPRASTHA COMPLEX, SAHELI MARG, UDAIPU R. O/S DELHIGATE, OPP. GURUNANAK SCHOOL, SHASTRI CIRCLE, UDAIPUR. PAN NO. AALTS 7899 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SARVESH BALDI DEPARTMENT BY : DR. DEEPAK SEHGAL- D.R. DATE OF HEARING : 13/11/2013. DATE OF PRONOUNCEMENT : 19/11/2013. O R D E R PER N.K.SAINI, A.M THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST THE COMMON ORDER DATED 24/06/2013 OF LD. CIT, UDAIPUR. THE FO LLOWING COMMON GROUND HAS BEEN RAISED IN THESE APPEALS: 2 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN THE LAW, THE LD. COMMISSIONER OF INCOME TAX, UDAIPUR RANGE, UDAIPUR GROSSLY ERRED IN DENYING/REFUSING OF THE REGISTRATION CLAIM ED U/S. 12A (A) & 80G OF THE IT ACT BY THE IMPUGNED ORDER UNDER APPEA L ON THE ALLEGED GROUND THAT THE APPELLANT FAILS TO PRODUCE BOOKS OF ACCOUNTS AND IT RETURN ACKNOWLEDGEMENTS IGNORING THE FACT THAT TRUS T CAME INTO EXISTENCE ON DT. 15/06/2012 AND APPLICATION IN FORM 10A AND 10G MADE ON 24/12/2012 (FIRST YEAR OF TRUST). IN AS MUC H AS THE REFUSAL OF THE TRUST FOR REGISTRATION U/S 12AA AND 80G OF THE INCOME TAX ACT 1961 IS CONTRARY TO LAW SETTLED BY NUMBER OF DECISI ONS FIFTH GENERATION EDUCATION SOCIETY (185 ITR 634) (ALL. HI GH COURT), SURYA EDUCATIONAL AND CHARITABLE TRUST (355 ITR 280 ) (P & H) WHEREIN THE COMMISSIONER HAS TO SATISFY ABOUT THE O BJECTS AND GENUINENESS OF THE TRUST. THEREFORE THE CIT IS TO BE DIRECTED TO GRANT REGISTRATION U/S 12AA AND 80G OF THE I.T. ACT, 1961 . 2. THE APPELLANT RESERVES HIS RIGHT TO ADD, TO ALTE R OR TO MODIFY OR TO SUBSTITUTE ANY GROUNDS OF APPEAL ON OR BEFORE HEARI NG OF APPEAL. 2. FROM THE ABOVE GROUNDS, IT IS GATHERED THAT THE GR IEVANCE OF THE ASSESSEE RELATES TO THE REFUSAL OF REGISTRATION CLA IMED UNDER SECTION 12AA AND 80G OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE APPLICATIONS IN FORM 10A & 10G ON 24/12/2012 FOR RE GISTRATION UNDER SECTION 12AA AND EXEMPTION UNDER SECTION 80G OF THE ACT. LEARNED CIT ASKED REPORT FROM THE ASSESSING OFFICER AND THE JCI T, WHO STATED THAT THE ASSESSEE-TRUST HAD NOT DONE ANY KIND OF CHARITABLE ACTIVITY DURING THE 3 YEAR AND HAD NOT PROVIDED INCOME AND EXPENDITURE AC COUNT, FROM WHICH IT WAS EVIDENT THAT THE TRUST HAD BEEN CREATED FOR NAME SAKE ONLY AND NOT WITH THE MOTTO OF CHARITABLE ACTIVITY. LEARNED CIT ASKED THE ASSESSEE TO FURNISH COPIES OF ACKNOWLEDGMENT OF INCOME TAX RETU RNS FOR THE LAST 03 YEARS AND NOTES ON THE ACTIVITIES AS PER THE OBJECT S. IN RESPONSE TO THAT, THE ASSESSEE SUBMITTED THAT THIS WAS FIRST YEAR OF INCEPTION OF ASSESSEE TRUST AND NO MAJOR ACTIVITY HAD BEEN CARRIED OUT AN D NO INCOME TAX RETURN HAS BEEN FILED. LEARNED CIT AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE OBSERVED THAT TO GET REGISTRATION UNDER SECTION 12A A & EXEMPTION UNDER SECTION 80G OF THE ACT, THE ACTIVITIES OF THE TRUST MUST BE GENUINE AND THOSE SHOULD BE CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. HE FURTHER OBSERVED THAT IN THE ABSENCE OF FURNISHI NG OF DETAILS WITH THE EVIDENCES AND DOCUMENTS BY THE ASSESSEE-TRUST AS AS KED FOR IN ORDER TO VERIFY WHETHER APPLICATION OF INCOME BY THE TRUST A ND ACTIVITIES OF THE TRUST WERE CARRIED OUT AS PER THE OBJECTS, IT COULD NOT BE SAID THAT ACTIVITIES WERE CARRIED OUT AS PER OBJECTS OF THE A SSESSEE-TRUST. HE, THEREFORE, REJECTED THE APPLICATIONS FILED BY THE A SSESSEE FOR REGISTRATION UNDER SECTION 12AA AND EXEMPTION UNDER SECTION 80G OF THE ACT. NOW THE ASSESSEE IS IN APPEAL. 4 4. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E ASSESSEE-TRUST WAS DULY REGISTERED WITH THE REGISTRAR, UDAIPUR AND ITS OBJECTS ARE CHARITABLE IN NATURE, BUT THE REGISTRATION UNDER SE CTION 12A AND APPROVAL FOR EXEMPTION UNDER SECTION 80G OF THE ACT HAVE BEE N DENIED BY THE LEARNED CIT ONLY FOR THIS REASON THAT INCOME OF T HE TRUST WAS NOT APPLIED FOR THE ACTIVITIES CARRIED OUT AS PER THE OBJECTS. IT WAS STATED THAT LEARNED CIT DID NOT STATE THAT THE OBJECTS OF THE A SSESSEE WERE NOT CHARITABLE, SO REJECTION OF THE APPLICATIONS BY THE LEARNED CIT WAS NOT JUSTIFIED. RELIANCE WAS PLACED ON THE FOLLOWING CA SE LAWS:- 1. FIFTH GENERATION VS. CIT [185 ITR 634 (ALLAHABAD HIGH COURT)] 2. CIT VS. SURYA EDUCATIONAL AND CHARITABLE TRUST [ 355 ITR 280(P & H HIGH COURT)] 3. DIRECTOR OF INCOME-TAX VS. PANNA LALBHAI FOUNDAT ION (GUJARAT HIGH COURT) 4. DIRECTOR OF INCOME-TAX VS. MEENAKSHI AMMA ENDOWM ENT TRUST [354 ITR 219 (KARNATA HIGH COURT)] 5. CIT VS. KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA [2 12 TAXMAN 435 (GAJARAT HIGH COURT)] 6. CIT, ROHTAK VS. B.K.K. MEMORIAL TRUST [213 TAXMA N 1, 256 CTR 424 (P & H HIGH COURT)] 7. DIRECTOR OF INCOME-TAX VS. FOUNDATION OF OPHTHAL MIC & OPTOMETRY RESEARCH EDUCATION CENTRE [210 TAXMAN 36, 254 CTR 1 33 (DELHI HIGH COURT)] 5 5. IN HIS RIVAL SUBMISSIONS, LEARNED CIT D.R. SUPPORT ED THE IMPUGNED ORDER PASSED BY THE LEARNED CIT. 6 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE-TRUS T WAS CONSTITUTED DURING THE YEAR UNDER CONSIDERATION AND IT WAS ITS FIRST Y EAR OF INCEPTION. FROM THE COPY OF TRUST DEED PLACED AT PAGES NO. 1 TO 6 O F THE ASSESSEES COMPILATION, IT IS NOTICED THAT THE TRUST WAS CREAT ED FOR CHARITABLE PURPOSES MAINLY FOR WELFARE OF POOR, WIDOWS, DISABL ED PERSONS AND FOR EDUCATION TO THE CHILDREN BELONGING TO POOR FAMILIE S AND TO GIVE DONATIONS TO THE SCHOOLS DHARMASALA, TEMPLES ETC. FROM TIME T O TIME. ON THE BARE READING OF THE ABOVE OBJECTS, IT CANNOT BE SAID THA T THE SAID OBJECTS WERE NOT CHARITABLE IN NATURE. IN OUR OPINION, LEARNED CIT WAS NOT JUSTIFIED IN REJECTING THE APPLICATIONS OF THE ASSESSEE MAINLY O N THIS BASIS THAT THE APPLICATION OF INCOME OF THE ASSESSEE-TRUST REMAINE D UNVERIFIED. ON A SIMILAR ISSUE, THE HON'BLE PUNJAB & HARYANA HIGH CO URT IN THE CASE OF CIT VS. SURYA EDUCATION & CHARITABLE TRUST (SUPRA) HAS HELD UNDER:- THE PRINCIPLES LAID DOWN FOR EXCLUDING THE INCOME FROM CONSIDERATION UNDER SECTION 10(22) NOW 10(23C) OR SECTION 11 AND 12 OF THE INCOME- TAX ACT, 1961, ARE NOT APPLICABLE WHILE CONSIDERING THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA. THE APPLICATION F OR REGISTRATION IS 6 REQUIRED TO BE MADE WITHIN ONE YEAR LF THE CREATION OF THE TRUST. SECTION 12AA REQUIRES SATISFACTION IN RESPECT OF TH E GENUINENESS OF THE ACTIVITIES OF THE TRUST, WHICH INCLUDES THE ACTIVIT IES WHICH THE TRUST IS UNDERTAKING AT PRESENT AND ALSO WHICH IT MAY CONTEM PLATE OR UNDERTAKE. THE INSERTION OF SUB-SECTION (3) OF SEC TION 12AA CLARIFIES THE FACT, WHEN IT EMPOWERS THE COMMISSIONER TO CANCEL T HE REGISTRATION IF THE ACTIVITIES OF THE TRUST ARE NOT CARRIED OUT IN ACCORDANCE WITH SUCH OBJECTS. THEREFORE, THE OBJECT OF SECTION 12AA IS TO EXAMINE THE GENUINENESS OF THE OBJECTS OF THE TRUST, BUT NOT TH E APPLICATION OF INCOME OF THE TRUST FOR CHARITABLE OR RELIGIOUS PUR POSES. THE STAGE FOR APPLICATION OF INCOME IS YET TO ARRIVE, I.E., WHEN SUCH TRUST OR INSTITUTION FILES ITS RETURN. 7. FROM THE RATIO LAID DOWN IN THE AFORESAID REFERRED TO CASE, IT IS CRYSTAL CLEAR THAT THE OBJECTS OF 12AA IS TO EXAMIN E THE GENUINENESS OF THE OBJECTS OF THE TRUST, BUT NOT APPLICATION OF IN COME OF THE TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES AND THAT STAGE FOR APPLICATION OF INCOME WAS YET TO ARRIVE AND THAT THE INSERTION OF SUB-SEC TION (3) OF SECTION 12AA OF THE ACT CLARIFIES THIS FACT AND IT EMPOWERS THE COMMISSIONER TO CANCEL THE REGISTRATION IF THE ACTIVITIES OF THE TRUST ARE NOT CARRIED OUT IN ACCORDANCE WITH SUCH OBJECTS. WE, THEREFORE, ARE O F THE VIEW THAT THE LEARNED CIT WITHOUT BRINGING THE MATERIAL ON RECORD THAT THE OBJECTS OF THE TRUST WERE NOT IN CHARITABLE NATURE, WAS NOT JU STIFIED IN REJECTING THE APPLICATIONS MOVED BY THE ASSESSEE. IN THAT VIEW O F THE MATTER, THE IMPUGNED ORDER PASSED BY THE LEARNED CIT IS SET ASI DE AND IT IS DIRECTED 7 THAT THE REGISTRATION UNDER SECTION12A AND APPROVAL FOR EXEMPTION UNDER SECTION 80G OF THE ACT ARE TO BE GIVEN TO THE ASSES SEE. 8. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 19 TH NOVEMBER, 2013). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 19 TH NOVEMBER , 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.