Umar Alisha Grandha Mandali, Pithapuram V. THE CIT, Rajahmundry

ITA 454/VIZ/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1150 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 14-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S N MURTHY
• Assessee Lawyers: ANANTA PADMANABHA RAO
• Keywords: Charitable institution
• Section: 12AA; 12; 11

Judgement Text

ITA NO.454/VIZAG/2014 SRI UMAR ALISHA GRANDHA MANDALI, PITHAPURAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.454/VIZAG/2014 ( / ASSESSMENT YEAR: NA) UMAR ALISHA GRANDHA MANDALI PITHAPURAM VS. CIT, RAJAHMUNDRY [PAN: AALTS6437L ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI ANANTA PADMANABHA RAO, AR / RESPONDENT BY : SHRI T.S.N. MURTHY, DR / DATE OF HEARING : 22.04.2016 / DATE OF PRONOUNCEMENT : 31.05.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE COMMISSIONER OF INCOMETAX, RAJAHMUND RY, DATED 27-06-2014 REJECTING THE REGISTRATION UNDER SEC. 12 AA OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT). ITA NO.454/VIZAG/2014 SRI UMAR ALISHA GRANDHA MANDALI, PITHAPURAM 2 2. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS A PUBLIC CHARITABLE TRUST EVIDENCED BY A REGISTERED TRUST DE ED DATED 25-08-2012, WITH THE MAIN OBJECTS OF RELIGIOUS, PHILOSOPHICAL, SPIRITUAL AND PERSONALITY DEVELOPMENT ETC. THE ASSESSEE TRUST HAS FILED APPLI CATION IN FORM. NO. 10A, SEEKING GRANT OF REGISTRATION U/S 12AA OF THE ACT. THE TRUST HAS THE FOLLOWING OBJECTS: (I) TO PUBLISH BOOKS AND RESEARCH PAPERS IN PRINT MEDIA AS WELL AS COMPUTER MEDIA I.E., HARDWARE, CD, DVD OR SUCH OTHE R MEDIA AS TRUSTEES MAY DEEM EXPEDIENT IN RESPECT OF ALL ABOVE ACTIVITI ES ON THE SUBJECTS OF PHILOSOPHY, RELIGIOUS HARMONY, SCIENCE, SCIENTIFIC TEMPER HUMAN RELATIONS AND UNIVERSAL BROTHERHOOD IN ACCORDANCE WITH THE TE NETS OF THE SRI VISWA VIZNANA VIDYA AADHYATMIKA PEETHAM. (II) TO RUN A LIBRARY WITH THE FACILITIES OF HARD REFERE NCE BOOKS INCLUDING THE LIBRARY AS WELL AS SOFTWARE LIBRARY FOR SOFT SK ILLS AND DATA ACROSS THE INTERNET AND THE WEB FOR THE BENEFIT OF THE PUBLIC. (III) TO ORGANIZE CONSTRUCT DEVELOP ADULT EDUCATION CENTE RS, MAHILA EDUCATION CENTERS WITH EMPHASIS ON EDUCATING RURAL FOLK BY ADOPTING VILLAGES FOR THE PURPOSE AS THE TR USTEES MAY DEEM EXPEDIENT. (IV) TO CONDUCT NATIONAL / INTERNATIONAL CONFERENCES OF AUTHORS OF BOOKS IN VARIOUS LANGUAGES IN INDIA AND AWARD GI FTS, HONORARIUM TO SUCH AUTHORS. (V) TO INTEGRATE KNOWLEDGE THROUGH THE MEDIUM OF PUBLIC ATIONS FOR NATIONAL INTEGRATION. (VI) TO DO ALL SUCH OTHER LAWFUL THINGS INCIDENTAL TO OR CONDUCIVE TO THE ATTAINMENT OF THE ABOVE OBJECTS AN D GENERALLY DO OR PERFORM ALL SUCH ACTS DEEDS AND THINGS WHICH ARE OF GENERAL PUBLIC UTILITY, NOT INVOLVING ANY ACTIVITY FOR PROFITS. 3. THE ASSESSEE CAME IN TO EXISTENCE BY VIRTUE OF A REGISTERED DEED DATED 25-08-2012. AS PER THE TRUST DEED, THE OBJECT S OF THE TRUST ARE AS ITA NO.454/VIZAG/2014 SRI UMAR ALISHA GRANDHA MANDALI, PITHAPURAM 3 MENTIONED IN THE PREAMBLE ARE RELIGIOUS, PHILOSOPHI CAL, SPIRITUAL AND PERSONALITY DEVELOPMENT ETC. IN ADDITION TO THIS, O NE OF ITS MAIN OBJECTS IS TO PUBLISH BOOKS AND RESEARCH PAPERS IN PRINT ME DIA AS WELL AS COMPUTER MEDIA I.E. HARDWARE, CD, DVD OR SUCH OTHER MEDIA ON PHILOSOPHY, SCIENTIFIC TEMPER, SCIENCE, HUMAN RELAT IONS AND UNIVERSAL BROTHERHOOD IN ACCORDANCE WITH THE TENETS OF THE SR I VISWA VIZNANA VIDYA AADHYATMIKA PEETHAM. 4. IN THE PROCEEDINGS BEFORE THE CIT, THE ASSESSEE FURNISHED TRUST DEED, LIST OF TRUSTEES, COPY OF BANK STATEMENT AND COPY OF INCOME TAX RETURN FILED FOR THE A.Y. 2013-14. THE CIT, REJECTE D THE REGISTRATION UNDER SEC. 12AA OF THE ACT, FOR THE REASON RECORDED IN HIS ORDER DATED 27-06-2014. THE CIT REJECTED THE REGISTRATION FOR T HE REASON THAT THE ASSESSEE IS HAVING MIXED OBJECTS OF RELIGIOUS AND C HARITABLE IN NATURE. THE CIT FURTHER OBSERVED THAT THOUGH HAVING MANY OB JECTS, EXCEPT PUBLISHING CERTAIN RELIGIOUS BOOKS, HAD NOT CARRIED OUT ANY OTHER CHARITABLE OBJECTS IN ACCORDANCE WITH THE AIMS AND OBJECTS OF THE TRUST. THE CIT FURTHER OBSERVED THAT THE ASSESSEE HAD FILE D AN APPLICATION IN FORM NO. 10A ON 16-11-2012 FOR GRANT OF REGISTRATIO N, WHICH WAS REJECTED BY THE CIT, RAJAHMUNDRY VIDE ORDER DATED 3 0-04-2013 ON THE GROUNDS THAT THE ASSESSEE HAS NOT CARRIED OUT ANY O THER OBJECTS, EXCEPT PUBLISHING CERTAIN BOOKS WRITTEN BY EARLIER PEETADI PATHIS. THERE IS NO ITA NO.454/VIZAG/2014 SRI UMAR ALISHA GRANDHA MANDALI, PITHAPURAM 4 CHANGE IN THE OBJECTS OF THE TRUST SUBSEQUENT TO TH E REJECTION OF THE APPLICATION ON EARLIER OCCASION. AGGRIEVED BY THE C IT ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. A.R. FOR THE ASSESSEE SUBMITTED THAT THE CIT, ERRED IN IGNORING THE FACT THAT PUBLISHING BOOKS AND RESEARC H PAPERS FOR THE PURPOSE OF PROPAGATION OF KNOWLEDGE AND UNIVERSAL B ROTHERHOOD WHICH IS USEFUL FOR THE SOCIETY AT LARGE AND ALSO AS PER THE TENETS OF ORDERLY AND SYSTEMATIC HUMAN DEVELOPMENT AS WELL AS RELIGIOUS B LENDING BASED ON SUFISIM AKIN TO DIN ILAHI OF AKBAR THE MOGUL KING I S CHARITABLE ACTIVITIES. THE A.R. FURTHER SUBMITTED THAT THE DISTRIBUTION OF BOOKS TO PUBLIC LIBRARIES AND THE ACT OF RUNNING A PUBLIC LIBRARY F OR THE BENEFITS OF THE PUBLIC AT LARGE IS AKIN TO IMPARTING EDUCATION. TH E A.R. FURTHER SUBMITTED THAT TO GRANT REGISTRATION WHAT IS REQUIR ED TO BE SEEN IS THE OBJECTS AND ACTIVITIES OF THE TRUST AND IF THE OBJE CTS ARE CHARITABLE IN NATURE AND ACTIVITIES ARE GENUINE, THEN THE COMMISS IONER CANNOT GO BEYOND TO SEE OTHER ASPECTS AT THE POINT OF REGISTR ATION UNDER SEC. 12AA OF THE ACT. THE A.R. FURTHER SUBMITTED THAT THE TOU CHSTONE FOR EXAMINATION IS AS TO WHETHER THE BENEFITS OF THE TR UST ARE PROVIDED TO COMMUNITIES AND FOR SOCIETY AT LARGE WITHOUT ANY DI SCRIMINATION. SECTION 11 OF THE INCOME TAX ACT, SHELTERS SUCH TRUSTS WITH MIXED OBJECTS TO CLAIM EXEMPTION FROM TAX AS A CHARITABLE AND RELIGI OUS TRUST SUBJECT TO ITA NO.454/VIZAG/2014 SRI UMAR ALISHA GRANDHA MANDALI, PITHAPURAM 5 THE PROVISIONS OF SEC. 13 OF THE ACT. IN SUPPORT OF HIS ARGUMENTS, RELIED UPON THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF CIT VS. DAWOODI BOHARA JAMAT (2014) 364 ITR 0031(SC). THE L D. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF CIT. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS ON RECORD AND GONE THROUGH THE ORDERS AUTHORITIES BELOW. THE CIT DENIED THE REGISTRATION UNDER SEC. 12AA OF THE ACT, BY HOLDING THAT THE ASSESSEE OBJECTS ARE MIXED I.E. CHARITABLE AND RELIGIOUS AND ALSO THE ASSESSEE HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITY, OTHER THAN PUBLISHING CERTAIN RELIGIOUS BOOKS WRITTEN BY THE EARLIER PEETADIPATHI S OF SRI VISWA VIZNANA VIDYA AADHYATMIKA PEETHAM. THE CIT FURTHER WAS OF T HE OPINION THAT ON PERUSAL OF STOCK SUMMARY ENCLOSED TO THE RETURN OF INCOME REVELS THAT THE LITERATURE IS PREDOMINANTLY RELIGIOUS IN NATURE . IT WAS FURTHER HELD THAT THE APPLICATION FILED BY THE ASSESSEE IN EARLI ER OCCASION WAS REJECTED BY THE CIT, RAJAHMUNDRY VIDE ORDER DATED 30-04-2013 , ON THE GROUNDS THAT THE ASSESSEE HAS NOT CARRIED OUT ANY OTHER OBJ ECTS, EXCEPT PUBLISHING CERTAIN BOOKS WRITTEN BY EARLIER PEETADI PATHIS. THERE IS NO CHANGE IN THE OBJECTS OF THE TRUST SUBSEQUENT TO TH E REJECTION OF THE APPLICATION ON EARLIER OCCASION AND HENCE, NO VIEW CAN BE TAKEN AS ON DATE. THE CIT FURTHER HELD THAT IT IS WELL SETTLED THAT IN ORDER TO AVAIL THE BENEFIT OF REGISTRATION U/S 12AA OF THE ACT, BOTH T HE OBJECTS AND ACTIVITY ITA NO.454/VIZAG/2014 SRI UMAR ALISHA GRANDHA MANDALI, PITHAPURAM 6 OF THE TRUST SHOULD BE EITHER WHOLLY CHARITABLE OR RELIGIOUS IN NATURE AND INSTITUTIONS WITH MIXED OBJECTS ARE VULNERABLE INAS MUCH AS THEY ARE LIABLE TO BE DISQUALIFIED ON THE GROUND THAT THE PR OVISIONS OF SEC. 11 OF THE ACT REQUIRE THAT A TRUST EITHER WHOLLY CHARITAB LE OR RELIGIOUS IN NATURE AND THERE IS NO SCOPE FOR ANY CONJUNCTIVE ACTIVITIE S. THE CIT RELIED UPON CERTAIN JUDICIAL PRECEDENTS TO COME TO THE ABOVE CO NCLUSION. IT IS THE CONTENTION OF THE ASSESSEE THAT IT IS SOLELY EXISTE D FOR CHARITABLE PURPOSE AND PUBLISHING BOOKS AND RESEARCH PAPERS IN THE FIE LD OF PHILOSOPHY, SCIENTIFIC TEMPER, SCIENCE, HUMAN RELATIONS AND UNI VERSAL BROTHERHOOD FOR THE PURPOSE OF PROPAGATION OF KNOWLEDGE AND UNI VERSAL BROTHERHOOD WHICH IS USEFUL FOR THE SOCIETY AND AS PER THE TENE TS OF ORDERLY AND SYSTEMATIC HUMUN DEVELOPMENT DOES NOT AMOUNT TO REL IGIOUS ACTIVITY. THE TOUCHSTONE FOR EXAMINATION IS AS TO WHETHER THE BENEFITS OF THE TRUST ARE PROVIDED TO COMMUNITIES AND FOR SOCIETY AT LARG E WITHOUT ANY DISCRIMINATION. THE OBJECTS OF THE TRUST ARE CHARIT ABLE IN NATURE AND THE ACTIVITY OF THE TRUST IS GENUINE. THE CIT WITHOUT P OINTING OUT ANY IRREGULARITIES SIMPLY, REJECTED THE REGISTRATION BY HOLDING THAT THE TRUST IS HAVING MIXED OBJECTS. 7. THE QUESTION BEFORE US IS WHETHER THE OBJECTS O F THE TRUST ARE MIXED OBJECTS I.E. CHARITABLE AND RELIGIOUS IN NATU RE, WHICH RENDER THE TRUST INELIGIBLE FOR REGISTRATION UNDER SEC. 12AA O F THE ACT. ADMITTEDLY, TO ITA NO.454/VIZAG/2014 SRI UMAR ALISHA GRANDHA MANDALI, PITHAPURAM 7 BE QUALIFY FOR EXEMPTION UNDER SEC. 11 OF THE ACT, THE OBJECTS OF THE TRUST SHOULD BE EITHER CHARITABLE OR RELIGIOUS IN N ATURE AND THE TRUST HAVING MIXED OBJECTS ARE INELIGIBLE FOR EXEMPTION. HOWEVER, THE HONBLE SUPREME COURT, IN THE CASE OF CIT VS. DAWOODI BOHAR A JAMAT (2014) 364 ITR 0031(SC), HELD THAT TRUSTS HAVING MIXED OBJ ECTS DOES NOT BENEFIT ANY SPECIFIC RELIGIOUS COMMUNITY IS ELIGIBL E FOR EXEMPTION UNDER SEC. 11 OF THE ACT. SUCH TRUSTS WITH COMPOSITE OBJE CTS WOULD NOT BE EXPELLED OUT OF THE PURVIEW OF SECTION 13(1)(B) PER SE. THE SECTION REQUIRES IT TO BE ESTABLISHED THAT SUCH CHARITABLE PURPOSE IS NOT FOR THE BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY OR CAST E. THAT IS TO SAY, IT NEEDS TO BE EXAMINED WHETHER SUCH RELIGIOUS-CHARITA BLE ACTIVITY CARRIED ON BY THE TRUST ONLY BENEFITS A CERTAIN PARTICULAR RELIGIOUS COMMUNITY OR CLASS OR SERVES ACROSS THE COMMUNITIES AND FOR SOCI ETY AT LARGE. THE SECTION OF COMMUNITY SOUGHT TO BE BENEFITED MUST BE EITHER SUFFICIENTLY DEFINED OR IDENTIFIABLE BY A COMMON QUALITY OF A PU BLIC OR IMPERSONAL NATURE. THEREFORE, WE ARE OF THE VIEW THAT THE CIT IS ERRED IN HOLDING THAT TRUSTS HAVING MIXED OBJECTS ARE INELIGIBLE FOR EXEMPTION UNDER SEC. 11 OF THE INCOME TAX ACT, 1961. 8. HAVING SAID THAT LET US EXAMINE, WHETHER ASSESSE E TRUST IS ELIGIBLE FOR REGISTRATION UNDER SEC. 12AA OF THE ACT. THE AS SESSEE TRUST CAME IN TO EXISTENCE WITH THE MAIN AIMS AND OBJECTS OF PUBL ISH BOOKS AND ITA NO.454/VIZAG/2014 SRI UMAR ALISHA GRANDHA MANDALI, PITHAPURAM 8 RESEARCH PAPERS AND ESTABLISH PUBLIC LIBRARIES IN T HE FIELD OF PHILOSOPHY, RELIGIOUS HARMONY, SCIENCE, SCIENTIFIC TEMPER HUMAN RELATIONS AND UNIVERSAL BROTHERHOOD FOR THE PURPOSE OF PROPAGATIO N OF KNOWLEDGE WHICH IS USEFUL FOR THE SOCIETY AT LARGE WITHOUT AN Y CASTE AND CREED. THE TRUST HAS CARRIED OUT ITS ACTIVITIES IN ACCORDANCE WITH ITS MAIN OBJECTS WHICH IS EVIDENT FROM ITS CONDUCT THAT IT HAS PUBLI SHED CERTAIN BOOKS AND DISTRIBUTED TO GENERAL PUBLIC FREE OF COST OR SOLD BY CHARGING RS. 1/- PER BOOK. IT IS AN ADMITTED FACT THAT THE CIT HAS ACCEP TED THAT THE TRUST HAS PURSUED ITS OBJECTS OF PUBLISHING AND DISTRIBUTION OF BOOKS TO GENERAL PUBLIC, HOWEVER, OF THE OPINION THAT THE LITERATURE PUBLISHED BY THE TRUST IS PREDOMINANTLY RELIGIOUS IN NATURE, THEREFORE OPI NED THAT IT IS PURSUING MIXED OBJECTS OF CHARITY AND RELIGIOUS AND HENCE, N OT ELIGIBLE FOR REGISTRATION. WE DO NOT SEE ANY MERITS IN THE OPINIO N OF THE CIT, FOR THE SIMPLE REASON THAT PUBLISHING OF BOOKS IN THE FIELD OF PHILOSOPHY, RELIGIOUS HARMONY, SCIENCE, SCIENTIFIC TEMPER HUMAN RELATIONS AND UNIVERSAL BROTHERHOOD, MEANT FOR ENHANCING THE KNOW LEDGE OF GENERAL PUBLIC, IRRESPECTIVE OF COMMUNITY, CAST AND CREED C ANNOT BE HELD AS RELIGIOUS ACTIVITY, AS LONG AS ITS BENEFITS GOES TO GENERAL PUBLIC AT LARGE. THEREFORE, WE ARE OF THE VIEW THAT THE CIT WAS ERRE D IN HOLDING THAT THE TRUST IS PURSUING MIXED ACTIVITIES. ITA NO.454/VIZAG/2014 SRI UMAR ALISHA GRANDHA MANDALI, PITHAPURAM 9 9. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE F ACTS WE FIND THAT THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE. FURTHER, THE TRUST IS CARRIED OUT ITS ACTIVITIES IN ACCORDANCE WITH THE O BJECTS OF THE TRUST. THE ACTIVITIES ARE GENUINE AND THE CIT HAS NOT POINTED OUT ANY IRREGULARITIES OR VIOLATIONS SO AS TO REJECT THE REGISTRATION. WHEN , OBJECTS ARE CHARITABLE IN NATURE AND ITS ACTIVITIES ARE GENUINE, THE CIT C ANNOT DENY THE REGISTRATION, BECAUSE THE TRUST HAS NOT CARRIED OUT ANY OTHER CHARITABLE OBJECTS, EXCEPT PUBLISHING BOOKS. WHEN, THE MAIN OBJ ECT OF THE TRUST IS PUBLISHING AND DISTRIBUTION OF BOOKS FOR GENERAL PU BLIC AND IT CONTINUED TO PURSUE ITS OBJECTS, THE CIT WAS NOT JUSTIFIED IN REJECTION OF REGISTRATION UNDER SEC. 12AA. FOR THE PURPOSE OF REGISTRATION U/ S 12AA, WHAT THE AUTHORITIES HAVE TO SATISFY IS THE GENUINENESS OF T HE ACTIVITIES OF THE TRUST AND HOW THE INCOME DERIVED FROM THE PROPERTY IS APP LIED TO CHARITABLE OR RELIGIOUS PURPOSE AND NOT THE NATURE OF THE ACTIVIT Y BY WHICH THE INCOME IS DERIVED BY THE TRUST, AS HELD BY THE HONBLE KAR NATAKA HIGH COURT, IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS. DIRECTOR OF INCOME TAX (EXEMPTIONS) (2006) 285 ITR 327. 10. CONSIDERING FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO RESPECTIVELY FOLLOWING THE DECISION OF HONBLE SUPR EME COURT, IN THE CASE OF CIT VS. DAWOODI BOHARA JAMAT (2014) 364 ITR 0031 (SC), AND ALSO HONBLE KARNATAKA HIGH COURT, IN THE CASE OF SANJEE VAMMA HANUMANTHE ITA NO.454/VIZAG/2014 SRI UMAR ALISHA GRANDHA MANDALI, PITHAPURAM 10 GOWDA CHARITABLE TRUST VS. DIRECTOR OF INCOME TAX ( EXEMPTIONS) (2006) 285 ITR 327, WE ARE OF THE VIEW THAT THE TRUST IS E LIGIBLE FOR REGISTRATION UNDER SEC. 12AA OF THE ACT. THEREFORE, WE DIRECT TH E CIT TO GRANT REGISTRATION U/S 12AA OF THE ACT. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 31 ST MAY16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 31.05.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT UMAR ALISHA GRANDHA MANDALI, 11- 3-42, MAIN ROAD, PITHAPURAM 2. / THE RESPONDENT THE CIT, RAJAHMUNDRY 3. + ( ) / THE PRINCIPAL CIT-2, VISAKHAPATNAM 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM