Vishweshwaraiah Technological University, Belgaum V. CIT, Belgaum

ITA 46/PAN/2013

• Counselvise Citation: 4624114 RSA 2013
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 28-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHA DESAI
• Assessee Lawyers: P DINESH
• Keywords: Charitable institution; Opportunity of being heard; Condonation of delay
• Section: 12A; 12AA; 6; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 46/PNJ/2013 THE VICE CHANCELLOR VISHWESHWARAIAH TECHNOLOGICAL UNIVERSITY, JNANA SANGAM CAMPUS, BELGAUM 590 014. PAN : AAAJV0064F (APPELLANT) VS. COMMISSIONER OF INCOME TAX BELGAUM (RESPONDENT) APPELLANT BY : SHRI P. DINESH, ADV. RESPONDENT BY : SMT. ASHA DESAI, DR DATE OF HEARING : 06 /08/2013 DATE OF PRONOUNCEMENT : 19 /09/2013 O R D E R PER P.K. BANSAL : 1. THIS APPEAL HAS BEEN FILED BY THE APPELLANT AGAINST THE ORDER OF CIT, BELGAUM DT. 26.12.2012 REJECTING THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12A OF THE INCOME TAX ACT BY RAISING AS MANY AS 10 GROUNDS OF APPEAL WHICH ARE AS UNDER : 1. THE LD. COMMISSIONER OF INCOME TAX, BELGAUM, ERRED IN NOT GRANTING THE REGISTRATION U/S 12AA OF THE ACT, TO THE UNIVERSITY. 2. THE LD. CIT OUGHT TO HAVE APPRECIATED THAT THE APPELLANT UNIVERSITY, IS ENACTED BY THE STATE LEGISLATURE, AND THAT THE AMENDMENTS, IF ANY, TO BE MADE TO THE ACT, SHOULD FOLLOW THE PROCEDURE LAID DOWN IN THE VTU ACT. 3. THE LEARNED CIT OUGHT TO HAVE APPRECI ATED THAT THE APPELLANT WAS SOLELY FOR EDUCATIONAL PURPOSES WITH NO MOTIVE OF PROFIT WHICH HAS BEEN ESTABLISHED FROM ITS ACTIVITIES AND CONSEQUENTLY THE REGISTRATION U/S. 1 2AA OF THE ACT WAS REQUIRED TO BE GRANTED. 2 ITA NO. 46/PNJ/2013 4. THE LEARNED CIT ERRED IN RELYING UPON THE CLAUSES WITH REGARD T O INVESTMENT ON DISSOLUTION CLAUSE ETC., TO DENY THE REGISTRATION WITHOUT APPRECIATING THESE CLAUSES MAY HAVE RELEVANCE ONLY FOR THE APPLICATION OF SEC. 11 OF THE ACT. 5. THE LEARNED CIT OUGHT TO HAVE FOLLOWED THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT VS. M/S GARDEN CITY EDUCATIONAL TRUST REPORTED IN (2009) 28 CTR KAR 139 AND GRANTED REGISTRATION U/S.12A OF THE ACT. 6. THAT THE LD. CIT OUGHT TO HAVE CONSIDERED THE SUBMISSIONS MADE BY THE UNIVERSITY, IN RESPECT OF THE INVESTMENT CLAUSE THE UNIVERSITY HAS BEEN INVESTING THE FUNDS IN COMPLIANCE WITH THE PROVISIONS OF SECTION 13(L(D ) R.W.S. 11(5) OF THE ACT. IN RESPECT OF ACCOUNTS CLAUSE: THE UNIVERSITY HAS BEEN MAINTAINING THE ACCOUNTS FROM APRIL TO MARCH EVERY YEAR AND THAT THE AUDIT IS BEING CONDUCTED BY THE APPOINTEES OF THE STATE GOVERNMENT. (CLAUSE 26 OF VTU ACT.) IN RESPECT OF DISSOLUTION CLAUSE: THE UNIVERSITY HAS A PERPETUAL SUCCESSION, AS PER SECTION 3(2) OF THE VTU ACT, HENCE, THERE IS NO QUESTION OF DISSOLUTION. IN RESPECT OF BENEFICIARY CLAUSE: SECTION 6 OF VTU ACT, PROVIDES THAT THE ADMISSION TO THE UNIVERS ITY IS OPEN TO ALL PERSONS. 7. THAT THE LD CIT OUGHT TO HAVE APPRECIATED THAT THE UNIVERSITY HAD ALREADY INITIATED THE PROCESS OF AMENDING THE CLAUSES BY OBTAINING THE APPROVAL OF THE FINANCE COMMITTEE, AND THAT AFTER THE APPROVAL OF THE FINANCE COMMITTEE, THE SAME HAS TO BE PLACED BEFORE THE EXEC UTIVE COUNCIL, FOR ITS FINAL APPROVAL AND SUBSEQUENTLY TO BE SENT TO THE GOVT FOR ITS CONCURRENCE. 8. THE LEARNED CIT OUGHT TO HAVE APPRECIATED THAT THE AMENDMENTS TO BE MADE WERE CURABLE DEFECTS AND WOULD NOT AFFECT THE OBJECTS OF THE APPELLANT AND HE FUR THER OUGHT TO HAVE APPRECIATED THAT FOR THE RELEVANT YEARS WHERE THE REGISTRATION WAS SOUGHT FOR THERE WAS NO VIOLATION OF ANY OF THE CONDITIONS REQUIRED U/S.12 & 13 OF THE ACT. 9. THE LEARNED CIT OUGHT TO HAVE APPRECIATED THAT IN CASE OF VIOLATION THE LEARNED COMMISSIONER WAS EMPOWERED TO WITHDRAW THE REGISTRATION U/S. 1 2AA(3) OF THE ACT AND THAT BEING THE CASE THE DENIAL OF GRANTING OF REGISTRATION WAS OPPOSED TO LAW AND THE ORDER OF THE CIT IS LIABLE TO BE SET ASIDE. 2. THE APPEAL IS BARRED BY LIMITA TION BY 2 DAYS. A PPLICATION FOR CONDONATION OF DELAY IS FILED. AFTER HEARING THE RIVAL SUBMISSIONS, IN OUR OPINION, THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE TO FILE THE APPEAL WITHIN THE STIPULATED TIME AND THE DELAY WAS CAUSED DUE TO SUFFICIENT RE ASON AS THE MEETING OF THE FINANCE COMMITTEE COULD BE HELD ONLY ON 27.2.2013 AND THE APPEAL WAS FILED ON THE VERY NEXT DATE. WE, THEREFORE, CONDONE THE DELAY. 3 ITA NO. 46/PNJ/2013 3. THE ONLY ISSUE IN ALL THE GROUNDS TAKEN BY THE ASSESSEE IS WHETHER THE ASSESSEE IS ENTITLED FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SUBMITTED APPLICATION FOR REGISTRATION IN FORM 10A ON 1.6.2012. THE APPLICANT WAS ESTABLISHED U/S 3 OF THE V ISVESWARAIAH T ECHNOLOGICAL U NIVERSITY ACT , 1994 W.E.F. 1.4.1998 VIDE KARNATAKA GOVERNMENT NOTIFICATION NO. ED 2 UTV 98 DATED 25.3.1998. THE CIT NOTED THAT THE APPLICATION FILED BY THE ASSESSEE WAS NOT IN ORDER. THE ASSESSEE HAS NOT FILED CERTIFICATE OF NON - INFRINGEMENT AND COPIES ACKNOWLEDGEMEN T FOR HAVING FILED RETURN OF INCOME FOR LAST 3 YEARS. THE CIT ALSO NOTICED THAT THE VTU ACT DOES NOT CONTAIN THE INCOME TAX CLAUSES, INVESTMENT CLAUSE, ACCOUNTS CLAUSE, AMENDMENT CLAUSE, IRREVOCABLE CLAUSE, BENEFITS OPEN TO ALL, UTILIZATION CLAUSE ETC. T HEREFORE, THE CIT HAS GIVEN NOTICES TO THE ASSESSEE FROM TIME TO TIME AND THE CASE WAS ADJOURNED FROM TIME TO TIME. ULTIMATELY, ON 16.11.2012 THE C.A OF THE ASSESSEE APPEARED BEFORE THE CIT AND SUBMITTED REGARDING THE INCOME TAX CLAUSES, ACCOUNTS CLAUSE A ND IRREVOCABLE CLAUSE, BENEFITS TO ALL, UTILIZATION CLAUSE THAT THEY ARE ALREADY ENSHRINED IN THE VTU ACT. EVEN THE CLAUSE - WISE SUBMISSIONS WERE ALSO MADE. THE CIT ALSO NOTED THAT IN THE VTU ACT EVEN THOUGH IT WAS MENTIONED THAT THE ACCOUNTS ARE TO BE AU DITED, BUT NO AUDITED ACCOUNTS AND AUDIT REPORT FOR ANY OF THE YEARS WAS SUBMITTED BY THE ASSESSEE ALONGWITH THE APPLICATION FILED BY THE APPLICANT UNIVERSITY FOR REGISTRATION U/S 12A. IN RESPECT OF THE INVESTMENT CLAUSE AND AMENDMENT CLAUSE, THE ASSESSEE SUBMITTED THAT THESE CLAUSES WILL DULY BE INCORPORATED BY THE UNIVERSITY AFTER OBTAINING CONCURRENCE OF THE STATE GOVERNMENT WHICH IS EMPOWERED TO CHANGE THE ACT AND SHOULD BE PASSED BY BOTH HOUSES OF THE LEGISLATURE. THE CIT ALSO ASKED OTHER INFORMATION LIKE INCORPORATION OF AMENDMENTS TO INCLUDE INCOME TAX CLAUSES AS DISCUSSED AND INFORMED, NOTE ON EDUCATION ACTIVITY, NOTE ON FEES WHO PRESCRIBES WITH 4 ITA NO. 46/PNJ/2013 SUPPORTING, NOTE ON SURPLUS AND HOW IT EFFECTS THE DEFINITION OF CHARITABLE PURPOSE. THE CASE WAS ADJO URNED. THE ASSESSEE FILED VIDE LETTER DT. 22.11. 2012 WITH VARIOUS DETAILS EXCEPT AMENDMENTS TO VTU ACT TO INCORPORATE THE INCOME TAX CLAUSES AND IT WAS SUBMITTED THAT THE MEETING OF THE EXECUTIVE COMMITTEE IN THIS REGARD WILL BE HELD ON 29 TH NOVEMBER. TH E CASE WAS ADJOURNED FOR 14.12.2012. SUBSEQUENTLY ALSO, THE ASSESSEE COULD NOT SUBMIT THE REQUIREMENT AS WAS DESIRED IN RESPECT OF PROVISIONS OF THE INCOME TAX ACT BUT ASKED FOR ADJOURNMENT BY FILING LETTER DT. 13.12.2012 ON THE DAK . THE ASSESSEE ASKED VIDE THIS LETTER ADJOURNMENT FOR ATLEAST TILL THE END OF JANUARY, 2013. SINCE THE ORDER FOR THE REGISTRATION HAD TO BE PASSED WITHIN 6 MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION WAS SUBMITTED, THE CIT REJECTED THE APPLICATION. AGAINST THE REJECTION OF THE APPLICATION, THE ASSESSEE HAS COME IN APPEAL BEFORE US. 4.1 BEFORE US, THE ASSESSEE HAS SUBMITTED THE WRITTEN SUBMISSION AND REITERATED THEREIN THE SUBMISSION MADE BEFORE THE CIT THAT THE ASSESSEE HAS BEEN INCORPORATED UNDER THE VTU ACT AS NOTIFIED BY ORDER OF THE GOVERNMENT OF KARNATAKA AND THEREFORE CAME INTO EXISTENCE W.E.F. 1.4.1998. HE EXPLAINED THE FEE STRUCTURE AND THE VARIOUS ACTIVITIES OF THE ASSESSEE AND CONTENDED THAT THE UNIVERSITY IS BEING CONTROLLED BY THE EXECUTIVE COUNCI L HAVING VICE - CHANCELLOR WHO IS THE EX - OFFICIO CHAIRMAN AND THE SECRETARY TO THE GOVERNMENT IN CHARGE OF HIGHER EDUCATION OR HIS NOMINEE AND THE REPRESENTATIVES OF THE INDUSTRY, BUSINESS AND REPRESENTATIVE S OF GOVERNMENT OF KARNATAKA. THE ADMINISTRATION O F THE FUNDS IS REGULATED BY THE FINANCE COMMITTEE. THE AUDIT HAS TO BE CA RRIED OUT IN ACCORDANCE WITH THE PROVISIONS OF THE VTU ACT. WHEN A QUERY WAS RAISED WHETHER THE ACCOUNTS WAS AUDITED IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX ACT AND WHET HER ANY AUDIT REPORT HAS BEEN FILED, IT WAS POINTED OUT THAT THE ACCOUNTS HAS BEEN AUDITED IN ACCORDANCE WITH THE VTU ACT. BEFORE US, THE COPY OF THE BALANCE SHEET FOR THE YEAR ENDED 2008, 2009 & 2010 WERE 5 ITA NO. 46/PNJ/2013 FILED BUT FROM THESE BALANCE SHEETS, WE NOTED NON E OF THE ACCOUNTS IS BEING AUDITED BY A CHARTERED ACCOUNTANT AS DEFINED U/S 288 OF THE INCOME TAX ACT. IT WAS ALSO CONTENDED THAT THE APPLICATION FOR REGISTRATION WAS MADE WITH PROSPECTIVE EFFECT. THE APPLICATION WAS DULY ACCOMPANIED BY A COPY OF THE STA TUTE AND OTHER PARTICULARS. IT WAS CONTENDED THAT ALL THE INVESTMENT OF THE FUNDS OF THE UNIVERSITY HAVE TO BE DECIDED BY THE FINANCE STANDING COMMITTEE WHICH IS HEADED BY THE VICE - CHAIRMAN. THIS COMMITTEE INCLUDES SENIOR OFFICERS OF THE STATE GOVERNMENT . SURPLUS FUNDS OF THE UNIVERSITY HAVE BEEN INVESTED ONLY IN NATIONALIZED/SCHEDULED BANKS. THERE WAS NO VIOLATION OF THE PROVISIONS OF SEC. 11(5) OF THE INCOME TAX ACT. IT WAS POINTED OUT THAT SEC. 28 OF THE VTU ACT DEALS WITH THE ACCOUNTS AND AUDITING OF THE ACCOUNTS. ACCOUNTS FOR 5 YEARS WERE SUBMITTED ALONGWITH APPLICATION. REGARDING THE IRREVOCABILITY CLAUSE, IT WAS POINTED OUT THAT THE UNIVERSITY HAS TO EXIST IN PERPETUITY. IT WAS STATED THAT THE CIT HAS NOT POINTED OUT ANY LACUNAE IN THE OBJECTI VES OF THE UNIVERSITY OR THAT THE UNIVERSITY HAS OBJECTS WHICH ARE INCONSISTENT WITH THE PROVISIONS OF SEC. 2(15) OF THE INCOME TAX ACT. OUR ATTENTION WAS DRAWN TOWARDS SEC. 12A AND IT WAS POINTED OUT THAT THE CIT IS EMPOWERED TO CALL FOR DOCUMENTS FROM T HE INSTITUTION/TRUST AS HE THINKS NECESSARY TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE TRUST AND ITS OBJECTIVES. HE MAY ALSO MAKE SUCH OTHER INQUIRIES WHICH HE THINKS NECESSARY. FURTHER, IT WAS SUBMITTED THAT CLAUSE (B) OF SUB - SECTION (1) LAYS DOWN THAT AFTER SATISFYING HIMSELF ABOUT THE OBJECTS AND GENUINENESS OF THE ACTIVITIES OF THE TRUST/INSTITUTION, THE CIT MAY GRANT REGISTRATION. THE INCOME TAX ACT AND RULES DO NOT PRESCRIBE ANY FORM IN WHICH THE MEMORANDUM OF ASSOCIATION OR ENACTMENT ESTABLIS HING THE UNIVERSITY HAS TO BE DRAFTED. GENERALLY, THE MEMORANDUM CLAUSE S ARE DRAFTED IN ACCORDANCE WITH THE INDIAN TRUST ACT OR THE CO - OPERATIVE SOCIETIES ACT OR OTHER RELEVANT STATUTE. THERE IS NO REQUIREMENT IN LAW THAT THE ENACTING STATUTE SHOULD INCO RPORATE ALL THE REQUIREMENTS OF THE INCOME TAX ACT. THE SCOPE OF CIT WAS RESTRICTED TO EXAMINE THE OBJECTS AN D GENUINENESS OF THE ACTIVITIES. THE CIT WAS 6 ITA NO. 46/PNJ/2013 ALSO NOT COMPETENT, IN HIS OPINION, TO EXAMINE THE LEGITIMACY OF AN INSTITUTION ESTABLISHED BY STATU TE PASSED BY THE STATE LEGISLATURE. THE INSTITUTION WAS ESTABLISHED SOLELY FOR EDUCATION PURPOSE AND THEREFORE THE INSTITUTION WAS ENTITLED FOR REGISTRATION. IN THIS REGARD, THE LD. AR RELIED ON THE VARIOUS CASE LAWS AS MENTIONED IN HIS WRITTEN SUBMISSIO N. 4.2 THE LD. DR, ON THE OTHER HAND, DREW OUR ATTENTION TO SEC. 12A AS WELL AS RULE 17A. ATTENTION WAS ALSO DRAWN TOWARDS SEC. 12A(B) WHICH STIPULATES THAT WHERE THE TOTAL INCOME OF THE TRUST/INSTITUTION A S COMPUTED UNDER THIS ACT WITHOUT GIVING EFFECT TO THE PROVISIONS OF SEC. 11 & 12 EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME TAX IN ANY PREVIOUS YEAR, THE ACCOUNTS OF THE TRUST/INSTITUTION FOR THAT YEAR HAVE BEEN AUDITED BY AN ACCOUNTANT AS DEFINED IN THE EXPLANA TION BELOW SUB - SECTION ( 2 ) OF SEC. 288 AND SUCH REPORT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY THE ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED MUST BE FILED ALONGWITH THE RETURN OF INCOME. REFERRING TO RULE 17A, IT WAS PO INTED OUT THAT IN CASE THE INSTITUTION IS IN EXISTENCE DURING THE YEAR OR YEARS PRIOR TO THE FINANCIAL YEAR IN WHICH APPLICATION FOR REGISTRATION IS MADE, TWO COPIES OF THE ACCOUNTS OF THE TRUST/INSTITUTION RELATING TO THE PRIOR YEAR OR YEARS NOT BEING MOR E THAN 3 YEARS MUST BE ENCLOSED. IT WAS POINTED OUT THAT THE ASSESSEE DID NOT COMPLY WITH THE REQUIREMENT OF ENCLOSING AUDITED ACCOUNTS IN ACCORDANCE WITH THE PROVISIONS OF SEC. 12 A (1)(B) . WITHOUT GOING THROUGH THE AUDITED ACCOUNTS, CIT CANNOT DETERMINE THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE. 4.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED THAT IN THIS CASE THE CIT HAS ASKED FOR CERTAIN INFORMATION FROM THE ASSESSEE SO AS TO ASCERTAIN WHETHER COMPLIANCE O F THE PROVISIONS OF THE INCOME TAX ACT RELATING TO THE GRANT OF REGISTRATION HAS BEEN COMPLIED WITH BY THE ASSESSEE OR NOT. THE ASSESSEE HAS MADE THE APPLICATION FOR REGISTRATION ON 7 ITA NO. 46/PNJ/2013 1.6.2012 AND AS PER PROVISIONS OF SEC. 12A, CIT HAS TO DISPOSE OFF THE AP PLICATION FOR REGISTRATION BEFORE 31.12.2012. FROM THE FACTS OF THE CASE, WE NOTED THAT THE ASSESSEE DID NOT COMPLY WITH ALL THE REQUIREMENTS AND ASKED FOR ADJOURNMENTS AGAIN AND AGAIN AND EVEN VIDE LETTER DT. 13.12.2012 THE ASSESSEE ASKED FOR ADJOURNMENT TILL THE END OF JANUARY, 2013. THE CIT, IN OUR OPINION, COULD NOT HAVE GRANTED THE ADJOURNMENT AS HE DOES NOT HAVE THE POWER TO EXTEND THE LIMITATION FOR PASSING OF THE ORDER AS IS GIVEN U/S 12AA. BEFORE GIVING OUR FINDING, IT IS NECESSARY TO LOOK INTO THE RELEVANT PROVISIONS UNDER THE INCOME TAX ACT IN THIS REGARD. 4.3.1 THE PROVISO REGARDING THE REGISTRATION AND PROCEDURE FOR REGISTRATION ARE GIVEN UNDER THE I . T ACT IN THIS REGARD SECTION 12A, 12AA AND RULE 17A ARE RELEVANT WHICH ARE REPRODUCED AS U NDER : - SECTION 12A - THE PROVISIONS OF SECTION 11 AND SECTION 12 SHALL NOT APPLY IN RELATION TO THE INCOME OF ANY TRUST OR INSTITUTION UNLESS THE FOLLOWING CONDITIONS ARE FULFILLED, NAMELY: - (A) THE PERSON IN RECEIPT OF THE INCOME HAS MADE AN APPLICATION FOR REGISTRATION OF THE TRUST OR INSTITUTION IN THE PRESCRIBED FORM AND IN THE PRESCRIBED MANNER TO THE COMMISSIONER BEFORE THE 1ST DAY OF JULY, 1973, OR BEFORE THE EXPIRY OF A PERIOD OF ONE YEAR FROM THE DATE OF THE CREATION OF THE TRUST OR TH E ESTABLISHMENT OF THE INSTITUTION IS REGISTERED UNDER SECTION 12AA]: PROVIDED THAT WHERE AN APPLICATION FOR REGISTRATION OF THE TRUST OR INSTITUTION IS MADE AFTER THE EXPIRY OF THE PERIOD AFORESAID, THE PROVISIONS OF SECTIONS 11 AND 12 SHALL APPLY IN REL ATION TO THE INCOME OF SUCH TRUST OR INSTITUTION, - (I) FROM THE DATE OF THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION IF THE COMMISSIONER IS, FOR REASONS TO BE RECORDED IN WRITING, SATISFIED THAT THE PERSON IN RECEIPT OF THE INCOME WA S PREVENTED FROM MAKING THE APPLICATION BEFORE THE EXPIRY OF THE PERIOD AFORESAID FOR SUFFICIENT REASONS; (II) FROM THE FIRST DAY OF THE FINANCIAL YEAR IN WHICH THE APPLICATION IS MADE, IF THE CHIEF COMMISSIONER OR COMMISSIONER IS NOT SO SATISFIED; 8 ITA NO. 46/PNJ/2013 PROVI DED FURTHER THAT THE PROVISIONS OF THIS CLAUSE SHALL NOT APPLY IN RELATION TO ANY APPLICATION MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007. (A) THE PERSON IN RECEIPT OF THE INCOME HAS MADE AN APPLICATION FOR REGISTRATION OF THE TRUST OR INSTITUTION ON OR AFTER THE 1ST DAY OF JUNE 2007 IN THE PRESCRIBED FORM AND MANNER TO THE COMMISSIONER AND SUCH TRUST OR INSTITUTION IS REGISTERED UNDER SECTION 12AA. (B) WHERE THE TOTAL INCOME OF THE TRUST OR INSTITUTION AS COMPUTED UNDER THIS ACT WITHOUT GIVING EFFECT TO THE PROVISIONS OF SECTION 11 AND SECTION 12 EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME - TAX IN ANY PREVIOUS YEAR, THE ACCOUNTS OF THE TRUST OR INSTITUTION FOR THAT YEAR HAVE BEEN AUDITED BY AN ACCOUNTANT AS DEFINED IN THE EXPLANATION BELO W SUB SECTION (2) OF SECTION 288 AND THE PERSON IN RECEIPT OF THE INCOME FURNISHES ALONG WITH THE RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORT H SUCH PARTICULARS AS MAY BE PRESCRIBED. (C) [***] (2) WHERE AN APPLICATION HAS BEEN MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007 THE PROVISIONS OF SECTIONS 11 AND 12 SHALL APPLY IN RELATION TO THE INCOME OF SUCH YEAR IN WHICH SUCH APPLICATION IS MADE' PROCEDURE FOR REGISTRATION 'SECTION 12 AA 12AA . (1) THE COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER CLAUSE (A) [OR CLAUSE (AA) OF SUB - SECTION (1) ] OF SECTION 12A , SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OF INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYIN G HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRU ST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT: 9 ITA NO. 46/PNJ/2013 PROVIDED THAT NO ORDER UNDER SUB - CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. [ (1A) ALL APPLICATIONS, PENDING BEFORE THE CHIEF COMMISSIONER ON WHICH NO ORDER HAS BEEN PASSED UNDER CLAUSE (B) OF SUB - SECTION (1) BEFORE THE 1ST DAY OF JUNE, 1999, SHALL STAND TRANSFERRED ON THAT DAY TO THE COMMISSIONER AND THE COMMISSIONER MAY PROCEED WITH SUCH APPLICATIONS UNDER THAT SUB - SECTION FROM THE STAGE AT WHICH THEY WERE ON THAT DAY.] (2) EVERY ORDER GRANTING OR REFUSING REGISTRATION UNDER CLAUSE (B) OF SUB - SECTION (1) SHALL BE PASSED BEFORE THE EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH TH E APPLICATION WAS RECEIVED UNDER CLAUSE (A) [OR CLAUSE (AA) OF SUB - SECTION (1) ] OF SECTION 12A . ] [ (3 ) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB - SECTION (1) [OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT, 1996 (33 OF 1996)]] AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJEC TS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION: PROVIDED THAT NO ORDER UNDER THIS SUB - SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD.]' APPLICATION FOR REGISTRATION OF CHARITABLE OR RELIGIOUS TRUSTS, ETC. 17A. AN APPLICATION UNDER [CLAUSE (AA) OF SUB - SECTION (1)] OF SECTION 12A FOR REGISTRATION OF A CHARITABLE OR RELIGIOUS TRUST OR INSTITUTION SHALL BE MADE IN DUPLICATE IN FORM NO. 10A AND SHALL BE ACCOMPANIED BY THE FOLLOWING DOCUMENTS, NAMELY: (A) WHERE THE TRUST IS CREATED, OR THE INSTITUTION IS ESTABLISHED, UNDER AN INSTRUMENT, THE INSTRUMENT IN ORIGINAL, TOGETHER WITH ONE COPY THEREOF; AN D WHERE THE TRUST IS CREATED, OR THE INSTITUTION IS ESTABLISHED, OTHERWISE THAN UNDER AN INSTRUMENT, THE DOCUMENT EVIDENCING THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION, TOGETHER WITH ONE COPY THEREOF: PROVIDED THAT IF THE INSTRUMENT OR DOCUMENT IN ORIGINAL CANNOT CONVENIENTLY BE PRODUCED, IT SHALL BE OPEN TO THE [***] COMMISSIONER] TO ACCEPT A CERTIFIED COPY IN LIEU OF THE ORIGINAL; (B) WHERE THE TRUST OR INSTITUTION HAS BEEN IN EXISTENCE DURING ANY YEAR OR YEARS, PRIOR TO THE FINANCIAL YEAR IN WHICH THE APPLICATION FOR 10 ITA NO. 46/PNJ/2013 REGISTRATION IS MADE, TWO COPIES OF THE ACCOUNTS OF THE TRUST OR INSTITUTION RELATING TO SUCH PRIOR YEAR OR YEARS (NOT BEING MORE THAN THREE YEARS IMMEDIATELY PRECEDING THE YEAR IN WHICH THE SAID APPLICATION IS M ADE) FOR WHICH SUCH ACCOUNTS HAVE BEEN MADE UP.]' FROM THE PROVISION OF THE SECTION 12A, IT IS CLEAR THAT THIS SECTION STATES THAT PROVISION OF SECTION 11 AND 12 ARE NOT APPLICABLE UNLESS CONDITION FOR REGISTRATION OF THE TRUST OR INSTITUTION IS FULFILLED . SECTION 12(1)(A) REQUIRES MAKING OF AN APPLICATION FOR REGISTRATION; IN THE PRESCRIBED FORM AND IN THE PRESCRIBED MANNER TO THE COMMISSIONER BEFORE THE EXPIRY OF 01 YEAR FROM THE DATE OF THE CONSTITUTION OF THE TRUST OR INSTITUTION. IN CASE APPLICATION I S MADE AFTER THE EXPIRY OF THE PERIOD OF 01 YEAR THE PROVISIONS OF SECTION 11 & 12 ARE NOT APPLICABLE. FOR AN APPLICATION MADE PRIOR TO 1ST DAY OF JUNE 2007, THE COMMISSIONER HAS THE POWER TO CONDONE THE DELAY, IF HE SATISFIED THAT THE PERSON WAS PREVENTED FROM MAKING THE APPLICATION BEFORE THE EXPIRY OF AFORESAID PERIOD FOR SUFFICIENT REASON. SUCH TRUST OR INSTITUTION HAS ALSO TO GET ITS ACCOUNT AUDITED BY AN ACCOUNTANT AS DEFINED IN THE EXPLANATION BELOW SECTION 288 (2) IN THE CASE THE TOTAL INCOME OF THE TRUST OR INSTITUTION WITHOUT CONSIDERING THE PROVISION OF SECTION 11 & 12 EXCEEDS THE MAXIMUM AMOUNT NOT CHARGEABLE TO TAX IN ANY PREVIOUS YEAR. SUCH TRUST OR INSTITUTION WAS BOUND TO FURNISH SUCH AUDIT REPORT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFI ED BY SUCH ACCOUNTANT. EXPLANATION TO SECTION 288(2) DEFINES ACCOUNTANT TO MEAN A CHARTERED ACCOUNTANT AND WHO IS COMPETENT TO ACT AS AN AUDITOR U/S 226 (2) OF THE COMPANY'S ACT. 4 . 3.2 IN THE CASE OF ASSESSEE , WITHOUT GIVING EFFECT TO THE PROVIS IONS OF SE CTION 11 & 12 , THE INCOME OF THE ASSESSEE WAS IN EXCESS OF MAXIMUM AMOUNT CHARGEABLE TO TAX. THE ASSESSEE WAS THEREFORE UNDER AN OBLIGATION TO GET ITS ACCOUNTS AUDITED BY A CHARTERED ACCOUNTANT. THE COPY OF INCOME AND EXPENDITURE ACCOUNTS FOR THE YEAR 200 7 - 08, 200 8 - 0 9 AN D 200 9 - 1 0 ALTHOUGH FILED 11 ITA NO. 46/PNJ/2013 BEF ORE US , BUT THEY ARE NOT AUDITED. WHEN THE BENCH RAISED THE QUERY, THE LD. AR REITERATED THE SAME SUBMISSION BEFORE US THAT THE ASSESSEE BEING INCORPORATED UNDER THE VTU ACT, THEREFORE, HAS TO GET ITS ACCOUNTS AUDITED AS PER THE VTU ACT. WE NOTED THAT EVEN THE ACCOUNTS WERE NOT AUDITED AS PER THE VTU ACT. WE WERE SURPRISED TO SEE HOW THE ASSESSEE WAS NOT COMPLYING WITH THE PROVISION OF SECTION 12A (1B) OF THE I . T ACT IN EACH OF THE YEAR EVEN THOUGH IT CLAIMS THE APPLICABILITY OF THE PROVISIONS OF SECTION 11 & 12. SUCH VIOLATION OF THE PROVISIONS OF I . T ACT CANNOT BE EXPECTED FROM AN INSTITUTION WHICH IS ESTABLISHED UNDER THE ENACTMENT OF THE STATE GOVT. INCORPORATION OF AN INSTITUTION UNDER THE STATE GOVT. ACT DOES NOT GIVE LICENCE TO THE INSTITUTION NOT TO COMPLY WITH THE PROVISIONS OF I . T ACT WHIC H ARE MANDATORY. IN OUR OPINION, CARRYING OUT AUDIT AS PER VTU ACT DOES NOT MEET THE REQUIREMENT OF SECTION 12A(1B). SINCE THE ISSUE ABOUT THE APPLICABILITY OF SECTI ON 11 & 12 IS NOT BEFORE US , THEREFORE , WE CANNOT GIVE A FINDING ON THIS. 4.3 . 3 SECTION 12 AA LAYS DOWN THE PROCEDURE FOR THE REGISTRATION OF SUCH TRUST OR INSTITUTION. RULE 17A OF THE I . T ACT LAYS DOWN HOW AN APPLICATION FOR REGISTRATION OF CHARITABLE OR RELIGIOUS TRUST IS TO BE MADE. IT ALSO PRESCRIBES FORM NO. 10A AND ALSO REQUIRES THAT THE APPLICATION FOR REGISTRATION CAN BE MADE ONLY BY A CHARITABLE OR RELIGIOUS TRUST OR INSTITUTION. THIS RULE ALSO PRESCRIBES THE VARIOUS DOCUMENTS WHICH ARE TO BE ENCL OSED ALONG WITH THE APPLICATION. THE COPY OF THE INSTRUMENT BY WHICH THE TRUST IS CREATED OR INSTITUTION IS ESTABLISHED HAS TO BE FILED. IF THE TRUST OR INSTITUTION WAS IN EXISTENCE PRIOR TO THE YEAR IN WHICH THE APPLICATION IS MADE, TWO COPIES OF THE ACCO UNTS OF THE TRUST SUCH PRIOR YEAR BEING NOT MORE THAN 3 YEARS HAS TO BE FILED. ACCOUNTS IN OUR OPINION HERE MEANS THE AUDITED ACCOUNTS IN CASE THE PROVISION OF SECTION 12(1) (B) ARE APPLICABLE. 12 ITA NO. 46/PNJ/2013 4.3.4 IN THE FACTS OF THE CASE, WE NOTED THAT THE CIT COULD NOT EXAMINE THE ACTIVITIES OF THE INSTITUTION AS THE ASSESSEE DID NOT COMPLY WITH ALL THE REQUIREMENTS WHICH WERE ASKED FOR THE COMPLIANCE OF THE INCOME TAX ACT BY THE CIT FOR WHICH THE ASSESSEE HAS ASK ED FOR ADJOURNMENT. THE CIT COULD NOT HAVE GIVEN THE ADJOURNMENT TILL THE END OF JANUARY, 2013 AS THE CIT WAS BOUND TO PASS AN ORDER BEFORE 31.12.2012. UNDER THESE CIRCUMSTANCES, CIT HAD TO REJECT THE APPLICATION FOR THE REGISTRATION OF THE INSTITUTION. WE NOTED THAT THE CIT HAS GIVEN SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO COMPLY WITH THE REQUIREMENT AS HAS BEEN DESIRED BY CIT TO EXAMINE THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. EVEN THE ASSESSEE DID NOT COMPLY WITH THE PROVISIONS OF SEC. 12 A( 1)(B) WHICH, IN OUR OPINION, IS MANDATORY AND ARE NECESSARY TO EXAMINE THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. IT IS VERY SURPRISING THAT THE ASSESSEE CLAIMS THAT ONLY THE PROVISIONS OF THE VTU ACT WILL BE APPLICABLE AND THE PROVISIONS OF THE INCO ME TAX ACT REGARDING THE AUDIT ETC. WILL NOT APPLY. IN OUR OPINION, THE PROVISIONS OF SEC. 12A(1)(B) ARE MANDATORY AND THE ASSESSEE WAS BOUND TO GET THE ACCOUNTS AUDITED IN ACCORDANCE WITH THE PROVISIONS OF THE SAID SECTION. NO DOUBT, UNDER SEC. 12AA(1) THE CIT IS BOUND TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST WHETHER THE SAME ARE CHARITABLE OR NOT AND HE IS ALSO BOUND TO LOOK INTO THE GENUINENESS OF ITS ACTIVITIES. THE GENUINENESS OF THE ACTIVITIES CAN BE EXAMINED AND ASCERTAINED ON THE BASIS O F THE MATERIAL BEFORE THE CIT. THE MATERIAL AND EVIDENCE ARE TO BE PROVIDED BY THE ASSESSEE AND THEREFORE U/S 12AA(1)(A) THE CIT HAS BEEN EMPOWERED TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST/INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SAT ISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST/INSTITUTION. HE MAY ALSO MAKE SUCH INQUIRY AS HE MAY DEEM NECESSARY IN THIS BEHALF. FROM THE ORDER OF THE CIT IT IS APPARENT THAT THE CIT HAS GIVEN NUMEROUS OPPORTUNITIES TO THE ASSESSEE B UT THE ASSESSEE THOUGHT THAT SINCE IT HAS BEEN INCORPORATED BY THE STATE GOVERNMENT, THEREFORE, IT GOT LICENCE NOT TO COMPLY WITH THE PROVISIONS OF THE INCOME TAX ACT. THIS IS ALSO APPARENT FROM 13 ITA NO. 46/PNJ/2013 THE FACT THAT THE COUNSEL OF THE ASSESSEE ALSO ARGUED BEFORE US THAT THE ASSESSEE IS NOT BOUND TO GET ITS ACCOUNTS AUDITED IN ACCORDANCE WITH THE PROVISIONS OF SEC. 12A(1)(B) AS THE ASSESSEE IS INCORPORATED UNDER THE STATE GOVERNMENT STATUTE. IN OUR OPINION, IF THE ASSESSEE WANTS TO AVAIL OF THE EXEMPTION UNDER T HE INCOME TAX ACT, HE IS BOUND TO COMPLY WITH THE PROVISIONS OF THE INCOME TAX ACT. WE HAVE NOT NOTICED UNDER THE INCOME TAX ACT ANY EXCEPTION IS BEING PROVIDED TO THE INSTITUTIONS WHICH HAVE BEEN INCORPORATED BY THE STATE GOVERNMENT. UNDER THESE FACTS, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF THE CIT. IN OUR OPINION, THE CIT HAS RIGHTLY REJECTED THE APPLICATION FOR THE REGISTRATION U/S 12AA OF THE INCOME TAX ACT. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT. 5. IN THE RESULT, THE APPE AL FILED BY THE ASSESSEE IS DISMISSED . 6. ORDER PRONOUNCED IN THE OPEN COURT ON 1 9 /09/2013. S D / - (D.T.GARASIA) JUDICIAL MEMBER S D / - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 1 9 /09/ 2013 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT, PANAJI (4) CIT(A), PANAJI (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER SR. P RIVATE S ECRETARY ITAT, PANAJI, GOA