Chorwadi Mataji Mandir Trust, At : Chorwad, Dist : junagadh, RAJKOT-GUJARAT V. The Commissioner of Income Tax-III, RAJKOT-GUJARAT

ITA 458/RJT/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76445 (ITAT-RAJKOT)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-03-2014
• Assessment Year: misc
• Appeal Filed On: 27-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M L MEENA
• Assessee Lawyers: DR ADHIA
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 458/RJT/2013 CHORWADI MATAJI MANDIR TRUST, AT. CHORVAD, TAL. MALIYA HATINA, DIST. JUNAGADH PAN : AABTC 4746 N ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX RAJKOT-III RAJKOT / RESPONDENT / ASSESSEE BY SHRI D R ADHIA, AR / REVENUE BY DR M L MEENA, DR / DATE OF HEARING 06.03.2014 !'# / DATE OF PRONOUNCEMENT 28.03.2014 / ORDER THIS APPEAL BY THE ASSESSEE-TRUST IS AGAINST THE OR DER DATED 27.09.2013 OF COMMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT REFU SING TO GRANT THE REGISTRATION SOUGHT BY THE ASSESSEE-TRUST U/S 12AA OF THE INCOME -TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-TRUST CAME INTO EXISTENCE BY A TRUST DEED ON 09.07.1969 AND THE SAME IS REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT WITH THE ASST. CHARITY COMMISSIONER VIDE CERTIFICAT E DATED 09.07.1969. THE ASSESSEE-TRUST HAS MADE AN APPLICATION FOR REGISTRA TION U/S 12AA OF THE INCOME-TAX ACT ON 25.03.2013 ALONGWITH (I) FORM NO.10A, (II) C ERTIFIED COPY OF THE TRUST REGISTRATION CERTIFICATE ISSUED BY THE ASSTT. CHARI TY COMMISSIONER, RAJKOT, (III) CERTIFIED COPY OF TRUST DEED, (IV) COPIES OF AUDITE D ACCOUNTS FOR THE YEARS 2009-10, 2010-11 & 2011-12, (V) COPY OF BANK PASS BOOK AND ( VI) APPLICATION FOR PAN. ON VERIFICATION OF THE TRUST DEED, THE LD COMMISSIONER OF INCOME-TAX-III, RAJKOT OBSERVED THAT THE MAIN OBJECTS OF THE TRUST IS TO DO RELIGIO US ACTIVITIES SUCH AS MAINTAIN TEMPLE AND OTHER RELIGIOUS ACTIVITIES LIKE DHARMADA ETC. T HEREFORE, A REPORT FROM THE FIELD OFFICE IN THIS MATTER WAS CALLED FOR VIDE HIS OFFIC E LETTER DATED 26.03.2013. IN COMPLIANCE THERETO, THE A.O. AND THE JT. CIT, RANGE -1, JUNAGADH RECOMMENDED THE ASSESSEE-TRUST FOR REGISTRATION U/S 12AA OF THE ACT . HOWEVER, ON VERIFICATION OF THE CHECK LIST PREPARED BY THE ASSESSING OFFICER, THE L D. COMMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT OBSERVED THAT THE TRUST DEED DOE S NOT CONTAIN THE CLAUSE OF REVOCABILITY/IRREVOCABILITY OF TRUST AND THE DISSOL UTION/WINDING UP CLAUSE IN THE TRUST 2 458-RJT-2013 CHORWADI MATAJI MANDIR TRUST (SMC) DEED, IN CASE OF DISSOLUTION. HE ALSO OBSERVED THA T THE ASSESSEE-TRUST FAILED TO PRODUCE THE BOOKS OF ACCOUNTS, LEDGER ACCOUNTS OF E XPENSES, DONATION RECEIPTS BOOKS, LEDGER ACCOUNT OF EXPENSES ETC. HE, THEREFO RE, REFUSED TO GRANT THE REGISTRATION U/S 12AA OF THE INCOME-TAX ACT FOR THE DETAILED REASON GIVEN IN PARAGRAPH NOS. 5 AND 6 OF THE IMPUGNED ORDER, WHICH READ AS UNDER:- 5. MEANWHILE, THE ASSESSEE TRUST HAS FILED WRITTEN SUBMISSION WHICH WAS RECEIVED IN THIS OFFICE ONLY ON THE DATE OF HEARING I.E. 27.09.2013. IN WRITTEN SUBMISSION THE ASSESSEE TRUST HAS SUBMITTED THAT TH E TRUST IS A REVOCABLE TRUST. FURTHER, THE ASSESSEE TRUST HAS SUBMITTED TH AT THE TRUST DEED DOES NOT INCLUDE ANY DISSOLUTION CLAUSE AS PER TRUST DEED. H OWEVER, THE APPLICATION FOR THE SAME HAS BEEN MADE TO THE CHARITY COMMISSIONER. THE TRUST DEED OF THE TRUST IS INCOMPLETE SO FAR AS NO CLAUSE REGARDING I TS ASSETS AFTER MEETING ALL LIABILITIES, IN CASE OF DISSOLUTION, IS INCORPORATE D. IN ABSENCE OF ADEQUATE WINDING UP CLAUSE IN CASE OF DISSOLUTION OF TRUST, THE ARRANGEMENT OF DISPOSAL OF NET ASSETS AFTER MEETING ITS ALL LIABILITIES ARE NOT SPECIFIED IN TRUST DEED. FURTHER, THE ASSESSEE TRUST FAILED TO PRODUCE THE B OOKS OF ACCOUNTS, LEDGER ACCOUNTS OF EXPENSES, DONATION RECEIPTS BOOKS, LEDG ER ACCOUNT OF EXPENSES ETC. IN ABSENCE OF THIS, THE ACTIVITIES OF THE ASSE SSEE INSTITUTION CAN NOT BE VERIFIED. 6. IN VIEW OF THE ABOVE FACTS, THE ASSESSEE TRUST D OES NOT QUALIFY FOR REGISTRATION U/S 12AA OF THE ACT. ACCORDINGLY, ASSE SSEES APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT IS HEREBY REJECTED . AGGRIEVED WITH THE ORDER OF LD. COMMISSIONER OF IN COME-TAX, RAJKOT-III, RAJKOT THE ASSESSEE-TRUST IS NOW IN APPEAL BEFORE THIS TRI BUNAL, ON THE FOLLOWING GROUNDS:- 1. THE LD. C.I.T. HAS ERRED IN LAW AND FACTS IN RE JECTING APPLICATION FOR REGISTRATION U/S 12A FILED BY THE APPELLANT. THE AP PELLANT DESERVES REGISTRATION. 2. THE LD. C.I.T. HAS ERRED IN LAW AND FACTS IN REJ ECTING THE APPLICATION MADE FOR REGISTRATION U/S 12A ON THE IRRELEVANT GRO UNDS. THE APPELLANT DESERVES REGISTRATION. 3. THE LD. C.I.T. HAS ERRED IN LAW AND FACTS IN REJ ECTING THE APPLICATION MADE FOR REGISTRATION U/S 12A ON THE IRRELEVANT GRO UNDS. THE APPELLANT DESERVES REGISTRATION. 4. THE LD. C.I.T. HAS ERRED IN LAW IN NOT APPRECIAT ING THAT AS PER LEGAL AND STATUTORY POSITION, THE APPELLANT WAS DESERVING REG ISTRATION. THE APPELLANT DESERVES REGISTRATION. 5. THE LD. C.I.T. HAS ERRED IN NOT GRANTING REGISTR ATION WITHOUT APPRECIATING THE FACTUAL AND LEGAL POSITION THAT TH E APPELLANT DESERVES REGISTRATION FORM THE FIRST DAY OF F.Y. IN WITH APP LICATION IS MADE, I.E. 01.04.2012. THE APPELLANT DESERVES REGISTRATION. 6. WITHOUT PREJUDICE THE LD. C.I.T. HAS ERRED IN NO T PROVIDING REASONABLE TIME AND ADEQUATE OPPORTUNITY. THE TRUST DESERVES R EGISTRATION. 3 458-RJT-2013 CHORWADI MATAJI MANDIR TRUST (SMC) 7. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND AN D / OR ANY OR ALL THE GROUNDS OF APPEAL BEFORE THE ACTUAL HEARING TAKE PL ACE. 3. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E-TRUST, SHRI D.R. ADHIA, AR, APPEARED AND RELIED UPON THE ORDER OF THE CO-ORDINA TE BENCH (ITAT B AHMEDABAD) IN THE CASE OF SHREE CHARGAM DASHA PORWAD MAHAMANDA L V. DIT (EXEMPTION) BEARING I.T.A. NOS. 337 & 338/AHD/2013, DATED 08.05 .2013, WHEREIN THE TRIBUNAL HAS ALLOWED THE APPEALS OF THE ASSESSEE BY OBSERVIN G AS UNDER:- 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREF ULLY AND PERUSED THE ORDERS OF THE DIT (EXEMPTIONS) AS WELL AS THE DECIS ION OF THE ITAT DELHI IN THE CASE OF SHRI SAI SAMARPAN TRUST CO. (SUPRA). WE FIND THAT THE ONLY REASON ADVANCED FOR REFUSING THE REGISTRATION U/S 1 2AA AND 80G(5) OF THE ACT BY THE DIT (EXEMPTIONS) IS THAT THERE IS NO DISSOLU TION CLAUSE IN THE TRUST- DEED AND TRUST DOES NOT HAVE ANY CLAUSE THAT THE TR UST WILL NOT BE DISSOLVED AND IT IS A PERPETUAL TRUST. THIS ISSUE OF REFUSING REGISTRATION IN THE ABSENCE OF DISSOLUTION CLAUSE IN THE TRUST-DEED IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF CO-ORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF SHRI SAI SAMARPAN TRUST CO. (SUPRA), WHEREIN IN PARAGRAPH NO .8 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 OBVIOUSLY BE TAKEN OVER BY THE CHARITY COMMISSIONER AND THE REJECTION OF REGISTRATION ON THIS GROUND WAS HELD NOT ON A SOUND FOOTING AND THE ORDE RS OF THE DIT (EXEMPTIONS) WERE REVERSED. WE FIND THAT THE CASE O F THE ASSESSEE IS ON MORE SOUND FOOTING SINCE IT HAS ALREADY APPLIED TO THE CHARITY COMMISSIONER FOR AMENDMENT OF THE TRUST-DEED VIDE APPLICATION SU BMITTED ON 26.02.2013, WHEREBY INSERTING THE DISSOLUTION CLAUSE PROVIDING THAT THE TRUST SHALL BE IRREVOCABLE AND IN THE MOST UNLIKELY SITUATION, IF TRUST PRACTICALLY STOPS FUNCTIONING, IT CAN ONLY BE MERGED / AMALGAMATED WI TH OTHER ONE OR MORE PUBLIC CHARITABLE TRUSTS OR BODIES HAVING SIMILAR O BJECTS SUBJECT TO THE APPROVAL OF THE OFFICE OF THE PUBLIC CHARITY COMMIS SIONER, ETC. NO OTHER MATERIAL HAS BEEN PRODUCED ON BEHALF OF THE REVENUE BEFORE US TO SUGGEST THAT THE AIMS AND OBJECTS OF THE TRUST ARE NOT CHAR ITABLE IN NATURE. IN THESE FACTS OF THE CASE, WE HOLD THAT THERE IS NO JUSTIFI CATION FOR REFUSING THE REGISTRATION U/S 12AA AND 80G(5) OF THE ACT TO THE ASSESSEE, WHICH IS ACCORDINGLY ALLOWED TO THE ASSESSEE AND THE ORDERS OF THE DIT (EXEMPTIONS) IN BOTH THE CASES ARE REVERSED AND WE DIRECT THE DI T(EXEMPTIONS) TO GRANT THE REGISTRATION U/S 12AA & 80G(5) OF THE ACT TO TH E ASSESSEE IN BOTH THE CASES AND THE GROUND(S) RAISED IN BOTH THE APPEALS ARE HEREBY ALLOWED. 4. DR. M.L. MEENA, LD. DEPARTMENTAL REPRESENTATIVE , APPEARED FOR THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT . HE HAS NOT CONTROVERTED THE SUBMISSIONS MADE BY THE LD. AR. 5. HAVING HEARD BOTH THE SIDES, I HAVE CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE ORDER OF THE CO-OR DINATE BENCH (ITAT B BENCH, AHMEDABAD) IN THE CASE OF SHREE CHARGAM DASHA PORWA D MAHAMANDAL V. DIT (EXEMPTION) BEARING I.T.A. NOS. 337 & 338/AHD/2013, DATED 08.05.2013; WHEREIN IT 4 458-RJT-2013 CHORWADI MATAJI MANDIR TRUST (SMC) WAS HELD THAT WHEN THE ASSESSEE-TRUST IS REGISTERED WITH THE SUB-REGISTRAR AS A CHARITABLE TRUST, IN THE EVENT OF FAILURE OF THE TR UST THE NET ASSETS/INCOME WOULD OBVIOUSLY BE TAKEN OVER BY THE CHARITY COMMISSIONER AND THE REJECTION OF REGISTRATION ON THIS GROUND WAS HELD NOT ON A SOUND FOOTING. THE BOOKS OF ACCOUNTS CAN BE EXAMINED AT THE TIME OF ASSESSMENT. I, THER EFORE, FOLLOWING THE DECISION OF CO-ORDINATE BENCH (ITAT B BENCH, AHMEDABAD) IN TH E CASE OF SHREE CHARGAM DASHA PORWAD MAHAMANDAL V. DIT (EXEMPTION) (SUPRA), ALLOW THE APPEAL OF THE ASSESSEE AND DIRECT THE LD. COMMISSIONER OF INCOME- TAX, RAJKOT-III, RAJKOT TO GRANT THE REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 19 61. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 28.03.2014 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- CHORWADI MATAJI MANDIR TRUST, AT. CHO RVAD, TAL. MALIYA HATINA, 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 PRIVATE SECRETARY, ITAT, RAJKOT