Sukarm Charitable Trust, Gurgaon V. CIT, Gurgaon

ITA 4537/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4083 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 10-05-2010
• Assessment Year: 2010-2011
• Appeal Filed On: 02-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIKHAL CHOUDHARY
• Keywords: Charitable institution; Corroborative evidences
• Section: 80G; 12A; 12AA; 12; 11; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : G NEW DELHI) BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.4537/DEL./2009 (ASSESSMENT YEAR : 2010-11) SUKARM CHARITABLE TRUST, VS. CIT, FARIDABAD, SUKRITI, J-9/10, DLF CITY-II, HARYANA GURGAON-122002, (PAN/GIR NO.AAATS3363C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANIL KUMAR GUPTA, AR. REVENUE BY : SHRI NIKHAL CHOUDHARY, SR.DR ORDER PER A.K. GARODIA: THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF CIT, FARIDABAD DATED 21.10.2009 AND THE ORDER WAS PASSED BY HIM U/S 80G OF THE I.T. ACT READ WITH RULE 11AA(5) OF THE I.T. RULES, 1962. THE GROUNDS RAISE D BY THE ASSESSEE READ AS UNDER: THE COMMISSIONER OF INCOME TAX, FARIDABAD (HEREINA FTER REFERRED TO AS LD.CIT) AS WELL AS THE INCOME TAX OFFICER, HQ (TECH), FARID ABAD (HEREINAFTER REFERRED TO AS LD.ITO) BOTH HAVE ABSOLUTELY ERRED IN LAW READ WITH THE RELEVANT/PERTINENT RULINGS OF THE COMPETENT COURTS WITH REGARD THERETO VIS--VIS THE FACTS & FEATURES OF THE CASE OF THE ASSESSEE-TRUST/APPELLANT WHILE DENYING RENEWAL OF EXEMPTION U/S 80G(5) FOR DONATIONS-RECEIPTS W.E.F. 01.04.2009 VIDE ORDER U/S 80G DATED 21.10.2009 (SERVED ON 27.10.2009 TO THE ASSESSEE-TRUST/APPELLANT) AND WHI LE SO DOING THE LD.CIT & ITO HAVE APPLIED THE INAPPLICABLE PARAMETERS OF APPROVA L/REGISTRATION U/S 12AA AND THE LD.CIT(DID NOT AFFORD OPPORTUNITY OF ANY HEARING, D ESPITE THE FACTS (WHICH ARE VERIFIABLE BY PAPER BOOK) THAT THE APPELLANT/ASSESS EE-TRUST 1) IS DULY APPROVED & REGISTERED U/S 12AA VIDE ORDE R DATED 11.1.1987; 2) HAS BEEN GRANTED EXEMPTION U/S 80G DURING ALL PR ECEDING YEARS UP TO 31.03.2009; 3) HAD FURNISHED ALL THE NECESSARY INFORMATION AND DOCUMENTS, AS WERE REQUIRED AND ASKED FOR THE LD. CIT & LD. ITO; 4) FULLY SATISFIES ALL THE STIPULATED CONDITIONS LA ID DOWN U/S 80G(5) FOR SUCH APPROVAL/EXEMPTION; ITA NO.4537/DEL./2009 (AY : 2010-11) 2 2. IT IS SUBMITTED BY THE LD.AR OF THE ASSESSEE THA T AS PER THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT I.E. THE JURISD ICTIONAL HIGH COURT IN THE PRESENT CASE, RENDERED IN THE CASE OF SONEPAT HINDU EDUCATI ONAL VS. CIT AS REPORTED IN 278 ITR 262, IF REGISTRATION IS GRANTED U/S 12A, EXEMPTION U/S 80G CANNOT BE DENIED. IT IS SUBMITTED THAT IN THE PRESENT CASE ALSO, REGISTRATI ON WAS ALLOWED TO THE ASSESSEE TRUST U/S 12A ON 11.11.1987 WHICH IS NOT WITHDRAWN TILL DATE AND HENCE CIT WAS NOT JUSTIFIED IN REJECTING THE REQUEST OF THE ASSESSEE FOR RENEWAL O F REGISTRATION U/S 80G OF THE ACT. IT IS SUBMITTED THAT FOR THE PERIOD FROM 1.4.2006 TO 31.3 .2009, REGISTRATION U/S 80G WAS GRANTED TO THE ASSESSEE AS PER THE ORDER DATED 24/2 6.5.2006, COPY OF WHICH IS AVAILABLE ON PAGES 9 & 10 OF THE PAPER BOOK. LD.DR OF THE REVEN UE SUPPORTED THE ORDER OF THE CIT. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. WE FIND THAT IN THE PRESENT CASE, REGISTRATION WAS ALLOWED TO THE ASSESSEE U/S 12A ON 11.11.1987 AND UP TO 31.3.2009, THE ASSESSEE WAS AP PROVED U/S 80G ALSO. WHEN THE ASSESSEE APPLIED FOR RENEWAL OF SUCH APPROVAL U/S 8 0G THE SAME WAS REJECTED BY LD.CIT ON THE BASIS OF THE CERTAIN CLAUSES OF TRUST DEED, AS PER WHICH, THE PRESIDENT OF THE TRUST IS HAVING VETO POWER AND A CASTING VOTE TO BE UTILILS ED FOR ENHANCING THE SPIRIT AND THE AIMS AND OBJECTS OF THE TRUST. ONE MORE OBJECTION IS NO TED BY CIT IS THAT THE TRUST DEED DOES NOT CONTAIN ANY DISSOLUTION CLAUSE AND MAINLY FOR T HESE OBJECTIONS, HE HAS REJECTED THIS REQUEST OF THE ASSESSEE FOR RENEWAL OF REGISTRATION U/S 80G OF THE ACT. WE FIND THAT THE ISSUE BEFORE US IS COVERED IN FAVOUR OF THE ASSESSE E BY THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THEN CASE OF SONEPAT HINDU EDUCATIONAL (SUPRA). RELEVANT PARA OF THIS JUDGMENT I.E. PARAS 14 TO 17 ARE REPRODUCED BELOW: 14. FROM THE AFORE-EXTRACTED PROVISIONS, IT IS EVI DENT THAT THE FIRST AND FOREMOST REQUIREMENT WHICH THE INSTITUTION OR FUND HAS TO SA TISFY IS THAT IT IS ESTABLISHED IN INDIA FOR A CHARITABLE PURPOSE. THE CONDITIONS CONT EMPLATED BY CLAUSES ( I ) TO ( VI ) OF SECTION 80G(5) ARE THE CONDITIONS WHICH THE INST ITUTION OR THE FUND MUST ADDITIONALLY FULFILL SO AS TO BE ENTITLED TO THE AP PROVAL OF THE COMMISSIONER. IT IS WELL-SETTLED THAT FOR THE PURPOSE OF CONSTRUING THE PURPOSE OF A TRUST, IT IS NOT NECESSARY THAT ONE REMAINS CONFINED TO THE OBJECTS OF THE SOCIETY OR THE TRUST, AS SET OUT IN THE MEMORANDUM OF ASSOCIATION OR THE TRUST D EED, AS THE CASE MAY BE. WHAT IS REQUIRED TO BE FOUND IS THE REAL PURPOSE O F ESTABLISHMENT OF THE TRUST. THERE CAN BE NO QUARREL WITH THE PROPOSITION THAT T HE COMMISSIONER, CONFERRED WITH THE POWER TO GRANT EXEMPTION, IS FULLY COMPETE NT TO FIND OUT THE REAL PURPOSE, AS DISTINGUISHED FROM THE OSTENSIBLE PURPOSE OF EST ABLISHMENT OF THE SOCIETY OR THE ITA NO.4537/DEL./2009 (AY : 2010-11) 3 TRUST. IF THE COMMISSIONER IS CONVINCED THAT THE PU RPOSE OF THE SOCIETY OR THE TRUST IS NOT CHARITABLE, NOTHING DEBARS HIM FROM DENYING THE APPROVAL BUT, AT THE SAME TIME, IF HE IS SATISFIED THAT THE OBJECTS OF THE TR UST, AS SET OUT IN THE DEED OF DECLARATION, WERE CHARITABLE, THEN HAVING REGARD TO THE OBJECT OF THE PROVISION, THE APPROVAL SHOULD NOT BE DENIED ON MERE TECHNICALITIE S. AS A MATTER OF FACT, THE POWER TO GRANT OR NEGATIVE THE CLAIM FOR APPROVAL I S COUPLED WITH A DUTY. 15. WE MAY NOW EXAMINE THE CASE IN HAND ON THE TOUC H-STONE OF THE AFORENOTED BROAD PRINCIPLES. IN THE INSTANT CASE, THE COMMISSI ONER HAS NOT FOUND THAT THE OBJECTS OF THE PETITIONER-SOCIETY, ESTABLISHED IN I NDIA, AS SET OUT IN ITS MEMORANDUM OF ASSOCIATION, ARE NOT FOR A CHARITABLE PURPOSE OR THAT THE SOCIETY IS NOT CARRYING ON ITS ACTIVITIES IN FURTHERANCE OF IT S OBJECTS. AS A MATTER OF FACT, REGISTRATION OF AN INSTITUTION UNDER SECTION 12A( A ) OF THE ACT BY ITSELF IS A SUFFICIENT PROOF OF THE FACTS THAT THE TRUST OR THE INSTITUTION CONCERNED IS CREATED OR ESTABLISHED FOR CHARITABLE OR RELIGIOUS PURPOSES. F URTHERMORE, AS NOTED ABOVE, THE GROUNDS WHICH HAVE WEIGHED WITH THE COMMISSIONER TO NEGATIVE PETITIONERS CLAIM IS THAT IT SHOULD HAVE APPLIED FOR FRESH REGI STRATION UNDER SECTION 12A( A ) OF THE ACT BECAUSE OF CHANGE IN ITS OBJECTS ON 17-9-19 89, ITS MEMORANDUM SHOULD HAVE BEEN GOT AMENDED AS PER THE PROCEDURE PRESCRIB ED IN SECTION 92 OF THE CODE OF CIVIL PROCEDURE, PETITIONERS INSTITUTION HAS NO T BEEN NOTIFIED UNDER SECTION 10(23C) OF THE ACT FOR THE ASSESSMENT YEAR 2000-01, SEPARATE BOOKS OF ACCOUNT SHOULD HAVE BEEN MAINTAINED FOR PURCHASE AND SALE O F BOOKS AND IT HAD SPENT SUBSTANTIAL AMOUNTS AS ENTERTAINMENT EXPENDITURE ON VISITORS AND EXAMINERS, BUT NO SUPPORTING EVIDENCE HAD BEEN PRODUCED. 16. WE ARE OF THE OPINION THAT IN VIEW OF THE FACT THAT THE PETITIONER HAD ENJOYED APPROVAL UNDER SECTION 80G OF THE ACT FROM THE YEAR 1991 TO 31-3-1999, I.E., EVEN AFTER THE AMENDMENT OF ITS OBJECTS ON 17-9-1989 AND AFTER THE INSERTION OF CLAUSE ( VI ) W.E.F. 1-10-1991, THE COMMISSIONER WAS NOT JUSTIF IED IN HOLDING THAT EITHER FRESH REGISTRATION UNDER SECTION 12A( A ) OF THE ACT WAS REQUIRED OR THE MEMORANDUM SHOULD HAVE BEEN AMENDED AS PER THE PROC EDURE LAID DOWN IN SECTION 92 OF THE CODE OF CIVIL PROCEDURE. IN RADHASOAMI SATSANG V. CIT [1992] 193 ITR 321, THEIR LORDSHIPS OF THE SUPREME COURT, INTER ALIA, OBSERVED THAT THOUGH STRICTLY SPEAKING, RES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS, BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH T HE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND P ARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORD ER, IT WOULD NOT BE, AT ALL, APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. WE FEEL THAT THESE OBSERVATIONS ARE QUITE APPOSITE IN THE PRESEN T CASE. THE RATIO OF THE DECISION OF THE APEX COURT IN NIZAMS CASE ( SUPRA ) IS NOT ATTRACTED IN THIS CASE. 17. AS REGARDS THE QUESTION WHETHER PETITIONERS IN COME WOULD BE LIABLE TO BE INCLUDED IN ITS TOTAL INCOME UNDER THE PROVISIONS O F SECTIONS 11 AND 12 OF THE ACT, A BARE PERUSAL OF THE SAID PROVISIONS WOULD SHOW TH AT THERE ARE VARIOUS FACTORS, LIKE THE NATURE OF CONTRIBUTIONS; THE QUANTUM OF IN COME SET APART AND ACCUMULATED FOR APPLICATION IN FUTURE FOR SPECIFIED PURPOSES WO ULD REQUIRE CONSIDERATION TO DETERMINE WHETHER THE INCOME DERIVED BY SUCH TRUST OR SOCIETY WOULD BE LIABLE TO BE INCLUDED IN THE TOTAL INCOME. IT WILL THUS, BE N OT POSSIBLE TO DETERMINE ON THE DATE WHEN A DONATION IS MADE FOR DEDUCTION UNDER SE CTION 80G, AS TO WHAT WILL BE ITA NO.4537/DEL./2009 (AY : 2010-11) 4 THE POSITION AS ON THE END OF THE RELEVANT PREVIOUS YEAR OF THE SOCIETY OR THE TRUST, WHO HAD SOUGHT APPROVAL UNDER SECTION 80G OF THE AC T. WE HAVE NO HESITATION IN HOLDING THAT THE SCOPE OF ENQUIRY BY THE COMMISSION ER, WHILE DEALING WITH THE APPLICATION UNDER SECTION 80G( VI ) OF THE ACT, EXTENDS TO ELIGIBILITY TO EXEMPTION UNDER VARIOUS PROVISIONS OF THE ACT, REFERRED TO IN THAT SUB-SECTION, BUT NOT TO ACTUAL COMPUTATION OF INCOME UNDER THE ACT, PARTICU LARLY WHEN A SOCIETY OR A TRUST IS CLAIMING EXEMPTIONS UNDER SECTIONS 11 AND 12 AND NOT UNDER SECTION 10 OF THE ACT. IT NEEDS LITTLE EMPHASIS THAT THE ENQUIRY FOR THE SAID PURPOSE RELATES TO WHETHER THE APPELLANT IS REGISTERED UNDER SECTION 1 2A, WHETHER IT IS A TRUST WHOLLY FOR CHARITABLE PURPOSES AND WHETHER THE INCOME RECE IVED BY IT IS LIABLE TO BE CONSIDERED UNDER SECTION 11 OF THE ACT. THE ENQUIRY WHETHER AT THE END OF THE PREVIOUS YEAR, THE DONOR WILL BE ABLE TO SUSTAIN A CLAIM BECAUSE OF NON-FULFILMENT OF SOME CONDITIONS BY HIM WOULD DEPEND AT THE CLOSE OF THE RELEVANT PREVIOUS YEAR, AS IT IS NOT POSSIBLE TO PREDICATE THESE COND ITIONS IN PRAESENTI WHEN THE DONATION IS MADE. 6. WE FIND THAT THE OBJECTIONS OF LD.CIT ARE ABOUT CERTAIN CLAUSES OF TRUST DEED, WHICH WERE SAME WHEN REGISTRATION WAS GRANTED U/S 1 2A ON 11.11.1987 AND ALSO WHEN 80G REGISTRATION WAS ALLOWED FOR THE PERIOD FORM 1. 4.2006 TO 31.3.2009. THERE IS NO CHANGE IN THE TRUST DEED. OTHER OBJECTION IS THAT THERE ARE CERTAIN DEFECTS IN FORM NO.10B FOR THE YEARS ENDED 31.3.2006 TO 31.3.2009. ALL TH ESE OBJECTIONS DO NOT SHOW THAT THE OBJECTS OF THE TRUST ARE NOT CHARITABLE AND THAT TH E INCOME OF THE TRUST IS NOT LIABLE TO BE CONSIDERED UNDER SECTION 11 OF THE I.T. ACT. SINCE THE TRUST HAS BEEN GRANTED REGISTRATION U/S 12A, IT IS ESTABLISHED THAT THE TRUST IS CREATE D FOR CHARITABLE PURPOSES. NOW, BECUASE OF SOME DEFECTS IN FORM NO.10 B, THE ASSESSEE MAY OR M AY NOT GET ACTUAL EXEMPTION U/S 11 BUT STILL IT CANNOT BE SAID THAT THE INCOME OF TRUS T IS NOT TO BE CONSIDERED U/S 11 OF I.T. ACT. HENCE, BY RESPECTFULLY FOLLOWING THIS JUDGMENT OF H ONBLE JURISDICTIONAL HIGH COURT WE FEEL THAT THE ASSESSEE TRUSTS REQUEST FOR RENEWAL OF REGISTRATION U/S 80G SHOULD BE ALLOWED. WE ORDER ACCORDINGLY. 7. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS AL LOWED. 8. ORDER PRONOUNCED IN OPEN COURT ON THE DATE OF HE ARING I.E. ON 12.05.2010. SD/- SD/- (A.D.JAIN) (A.K. GARODIA) JUDICIAL MEMBER. ACCOUNTANT MEMBER DATED, MAY 12, 2010. *SKB* ITA NO.4537/DEL./2009 (AY : 2010-11) 5 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT, FARIDABAD. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. BY ORDER (ITAT, NEW DELHI).