M/s.Mar Gregorious Ashram, Ernakulam V. CIT, Cochin

ITA 459/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69043 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 18-11-2013
• Assessment Year: misc
• Appeal Filed On: 24-06-2013
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: V R PRABHU
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 459/COCH/2013 ASSESSMENT YEAR : N.A. M/S. MAR GREGORIOS ASHRAM, VEZHAMPARAMBU, KANDANADU, ERNAKULAM, KOCHI-682 305. [PAN: AABTM 4836H] VS. THE COMMISSIONER OF INCOME-TAX- I, KOCHI. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI V.R. PRABHU, FCA REVENUE BY SHRI M. ANIL KUMAR, CIT(DR) DATE OF HEARING 18/11/2013 DATE OF PRONOUNCEMENT 22/11/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 30-05-2013 PASSED BY THE LD. CIT-I, KOCHI REFUSING TO GRANT RE GISTRATION U/S. 12A OF THE ACT. 2. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE HEREIN FILED APPLICATION IN THE PRESCRIBED FORM WITH LD CIT ON 0 9-11-2012 SEEKING REGISTRATION U/S. 12A OF THE ACT. THE LD. CIT, HOWEVER, REJECTED THE APPLICATION WITH THE FOLLOWING OBSERVATIONS: 4. AS PER THE DETAILS VERIFIED, SUMS OF RS. 82,89, 890/-, RS. 92,71,709/- AND RS.72,50,922/- WERE RECEIVED BY THE TRUST AS DONATI ONS FROM THE USA AND CANADA DURING THE F.Y. 2009-10, 2010-11 AND 2011-12 . ACCORDING TO SECTION 11(1)(D) OF THE INCOME TAX ACT, 1961, TO CLAIM A DO NATION TO BE A CORPUS DONATION, IT IS NECESSARY THAT A WRITTEN DIRECTION FROM THE DONOR IS OBTAINED. IN THE ABSENCE OF A WRITTEN DIRECTION FROM THE DONOR, THE DONATION WOULD NOT BE TREATED AS CORPUS DONATION AND CONSEQUENTLY WILL FO RM PART OF THE INCOME OF THE ORGANIZATION. I.T.A. NO. 459/COCH/2013 2 5. ON VERIFICATION OF THE RECORDS, IT IS FOUND TH AT NO SPECIFIC DIRECTION OF THE DONOR IS SEEN OBTAINED AT THE TIME OF RECEIPT OF DO NATIONS FROM THE US AND CANADA DURING THE F.Y. 2009-10, 2010-1 AND 2011-12. REGARDING THIS, THE APPLICANT HAS SUBMITTED A LETTER DATED 27/05/2013 F ROM THE DONOR STATING THAT WE ARE REGULARLY MAKING VOLUNTARY CONTRIBUTION TO SR. SUSAN KURUVILLA, MANAGING TRUSTEE, MAR GREGORIOS ASHRAM, KANDANAD-682305, ERNA KULAM, KERALA, INDIA TOWARDS THE CORPUS FUND TO MEET CHARITABLE ACTIVITI ES OF THE TRUST SUCH AS RUNNING OF THE ORPHANAGE, OLD AGE HOME, PRAYER HALL AND MEDICAL AID INCLUDING RUNNING EXPENSES OF THE ASHRAM AND FUTURE DEVELOPME NTAL PROGRAMS AND PURPOSES OF THE ASHRAM. HOWEVER, THE APPLICANT COULD NOT FURNISH ANY EVIDEN CE REGARDING WRITTEN SPECIFIC DIRECTION RECEIVED AT TH E TIME OF RECEIVING THE DONATIONS WHICH WERE CREDITED BY IT AS CORPUS FUND. AS SUCH THE DONATIONS SHOULD HAVE BEEN TREATED AS INCOME OF THE TRUST FOR THE RELEVANT FINANCIAL YEARS. 6. FURTHER, ON VERIFYING THE RECORDS IT IS NOTICED THAT THE TRUST HAS PURCHASED CARS WORTH RS.19,45,045/- AND RS.2,91,000/- DURING THE F.Y. 2009-10 AND 2011- 12 RESPECTIVELY. HENCE THE DONATIONS WERE CONSIDER ED AS CORPUS FUND FOR THE PURPOSES MENTIONED IN THE ABOVE MENTIONED WORDINGS OF THE LETTER FROM THE DONOR, THE APPLICANT TRUST SHOULD NOT HAVE EXPENDED THE SAID AMOUNT OF DONATIONS RECEIVED FOR PURCHASE OF LUXURY CARS. TH E ACT OF SPENDING THE SAID AMOUNTS FOR PURPOSES OTHER THAN THOSE SPECIFIED IN THE LETTER POINTS OUT THE LACK OF GENUINENESS IN THE ACTIVITIES OF THE TRUST. 6. IT IS OBSERVED THAT THE TRUST HAS EXPENDED HUGE AMOUNTS, APPROXIMATELY 9- 11% OF THE TOTAL EXPENSES VIZ. RS.13,43,771/- RS.8, 02,326/- AND RS.13,77,992/- FOR THE FY 2009-10, 2010-11 AND 2011-12 RESPECTIVEL Y FOR CELEBRATING NATIONAL FESTIVALS. IN ANY CASE, CELEBRATING NATIONAL FESTI VALS CANNOT BE TREATED AS AN ACTIVITY OF CHARITABLE NATURE. THE APPLICANT TRUST FAILED TO EXPLAIN THE CHARITABLE PURPOSES, IF ANY, INVOLVED THEREIN. 7. UNDER THE ABOVE CIRCUMSTANCES, I AM NOT SATISFI ED WITH THE GENUINENESS OF THE ACTIVITIES OF MAR GREGORIOS ASHRAM AND HENCE TH E APPLICATION FILED FOR REGISTRATION U/S. 12AA OF THE INCOME TAX ACT, 1961 IN THE CASE STANDS REJECTED. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFOR E US. 3. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THE LD CIT CONDUCTED ENQUIRIES THROUGH AN INSPECTOR AND ON THE BASIS OF REPORT GIV EN BY THE INSPECTOR, THE LD CIT HAS GIVEN A FINDING THAT THE EXISTENCE OF THE TRUST IS FOUND TO BE GENUINE ON THE BASIS OF LOCAL ENQUIRIES AND BOOKS OF ACCOUNTS MAINTAINED AT THE PREMISES OF THE ASSESSEE. HE FURTHER SUBMITTED THAT THE LD CIT DID NOT MAKE ANY ADVERSE COMMENT EITHER ON THE I.T.A. NO. 459/COCH/2013 3 OBJECTS OF THE ASSESSEE TRUST OR ON ITS ACTIVITIES. HE FURTHER SUBMITTED THAT THE ASSESSEE HAD RECEIVED THE CARS AS DONATION IN KIND AND IT HA S DULY ACCOUNTED FOR THE SAME IN THE BOOKS OF ACCOUNT AND HENCE THE LD CIT WAS NOT CORRE CT IN PRESUMING THAT THE ASSESSEE HAS INVESTED ITS FUNDS IN PURCHASING THE CARS. HE FURTHER SUBMITTED THAT THE DONATIONS RECEIVED BY THE ASSESSEE ARE CORPUS DONATIONS, WHIC H FACT HAS BEEN CONFIRMED BY A SUBSEQUENT LETTER GIVEN BY THE DONORS. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS APPLIED FUNDS FOR THE OBJECTS OF THE TRUST ONLY. A CCORDINGLY HE SUBMITTED THAT THE LD CIT WAS NOT JUSTIFIED IN REJECTING THE APPLICATION FILED BY THE ASSESSEE. 4. ON THE OTHER HAND, THE LD D.R STRONGLY PLACE D RELIANCE ON THE ORDER PASSED BY LD CIT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. WE NOTICE THAT THE LD CIT HAS REJECTED THE APPLICATION FILED BY THE ASSESSEE ON THREE GROUNDS VIZ., (A) THERE IS NO PROOF TO SHOW THAT THE DONATIONS RECEIVED BY THE ASSESSEE ARE CORPUS DONATIONS. (B) THE TRUST HAS PURCHASED TWO CARS AND THE ASSE SSEE TRUST SHOULD NOT HAVE SPENT THE DONATIONS FOR PURCHASE OF LUXURY CARS. (C) THE TRUST HAS SPENT HUGE AMOUNTS FOR CELEBRA TING NATIONAL FESTIVALS, WHICH CANNOT BE CONSIDERED AS ACTIVITY OF CHARITABLE NATU RE. 5.1 THE PROVISIONS OF SEC. 12AA OF THE ACT PRE SCRIBE THE PROCEDURE FOR GRANTING REGISTRATION U/S 12A OF THE ACT. ACCORDING TO THE SAID SECTION, THE LD CIT HAS TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENU INENESS OF ITS ACTIVITIES. FROM A PERUSAL OF THE ORDER PASSED BY LD CIT, WE NOTICE TH AT THE LD CIT DID NOT MAKE ANY OBSERVATION ABOUT THE OBJECTS OF THE TRUST AND ALSO ABOUT THE GENUINENESS OF THE ACTIVITIES CARRIED ON BY IT. THE THREE POINTS OBSE RVED BY HIM, WHICH ARE DISCUSSED ABOVE, ARE NOT, IN OUR VIEW, RELATED TO THE OBJECTS OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES. ACCORDINGLY, WE ARE OF THE VIEW TH AT THE LD CIT HAS NOT EXAMINED THE APPLICATION FILED BY THE ASSESSEE IN TERMS OF THE P ROCEDURE PRESCRIBED U/S 12AA OF THE ACT. ACCORDINGLY, WE ARE OF THE VIEW THAT THE MATT ER REQUIRES FRESH EXAMINATION AT HIS I.T.A. NO. 459/COCH/2013 4 END. ACCORDINGLY, WE SET ASIDE HIS ORDER AND RESTO RE THE MATTER TO HIS FILED WITH THE DIRECTION TO EXAMINE THE APPLICATION FILED BY THE A SSESSEE AFRESH IN ACCORDANCE WITH THE LAW. THE ASSESSEE IS ALSO DIRECTED TO FURNISH ALL THE INFORMATION THAT MAY BE CALLED FOR BY THE LD CIT IN THIS REGARD. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS TREATED AS ALLOWED. PRONOUNCED ACCORDING LY ON 22-11-2013. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 22ND NOVEMBER, 2013 GJ COPY TO: 1. M/S. MAR GREGORIOS ASHRAM, VEZHAMPARAMBU, KANDAN ADU, ERNAKULAM, KOCHI-682 305. 2. THE COMMISSIONER OF INCOME-TAX-I, KOCHI. 3. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 4. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN