Vivekanand Rural Development Institute, RAJKOT-GUJARAT V. The Commissioner of Income Tax, Rajkot-1, RAJKOT-GUJARAT

ITA 461/RJT/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6755 (ITAT-RAJKOT)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-04-2014
• Assessment Year: misc
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L MEENA
• Keywords: Charitable institution
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO.461/RJT/2013 VIVEKANAND RURAL DEVELOPMENT INSTITUTE MANDVI-KUTCH PAN : AABTV 6138 P ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX, RAJKOT-I RAJKOT / RESPONDENT / ASSESSEE BY SHRI VIMAL DESAI, CA / REVENUE BY SHRI M L MEENA, D.R. / DATE OF HEARING 09.04.2014 !'# / DATE OF PRONOUNCEMENT 11.04.2014 / ORDER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 30.09.2013 OF COMMISSIONER OF INCOME-TAX, RAJKOT-I, RAJKOT REJECT ING THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE NAMEL Y VIVEKANAND RURAL DEVELOPMENT INSTITUTE MADE AN APPLICATION FOR REGISTRATION U/S 12A OF THE INCOME- TAX ACT ON 19.03.2013 IN FORM NO.10A. IN ORDER TO V ERIFY THE APPLICATION U/S 12A OF THE ACT AND GENUINENESS OF ITS ACTIVITIES, THE OFFI CE OF THE CIT ISSUED NOTICE DATED 10.09.2013 TO THE ASSESSEE ASKING TO PRODUCE NECESS ARY EVIDENCES IN SUPPORT OF ITS APPLICATION ALONGWITH BOOKS OF ACCOUNTS, DONATION R ECEIPT BOOK AND INVOICES FOR EXPENSES ETC.. ON EXAMINATION OF THESE DETAILS AND DOCUMENTS, THE LD. CIT OBSERVED THAT THE MAIN ACTIVITY OF THE ASSESSEE IS RUNNING A TRAINING INSTITUTE FOR STITCHING AND EMBROIDERY FOR WOMEN. ACCORDING TO THE LD. CIT, GI VING TRAINING OF STITCHING ETC. IS AN OCCUPATIONAL TRAINING WHICH CANNOT BE TERMED AS EDU CATIONAL TRAINING. THE LD. CIT ACCORDINGLY HELD THAT AS PER PROVISIONS OF SECTION 2(15) OF THE ACT, THE ACTIVITY BEING CARRIED OUT BY THE ASSESSEE ARE COMMERCIAL ACTIVITY WHICH ARE NOT OF CHARITABLE NATURE; THEREFORE HE REJECTED THE APPLICATION OF TH E ASSESSEE FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961. AGGRIEVED WITH THE OR DER OF LD. CIT, THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 3. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E-TRUST, SHRI VIMAL DESAI, CA, APPEARED AND FILED A PAPER-BOOK CONTAINING 80 PAGES . HE POINTED OUT THAT THE LD. CIT 2 461-RJT-2013 VIVEKANAND RURAL DEVELOPMENT INSTITUTE (SMC) FAILED TO APPRECIATE THAT THE OBJECT OF THE TRUST I S TO CARRY OUT WELFARE ACTIVITIES SUCH AS EDUCATIONAL, MEDICAL, ASSISTANCE TO PEOPLE IN RURAL AREAS, PROVIDING ECONOMIC HELP TO MAKE THEM SKILLED AND COMPETENT AND SUCH OTHER SOCI AL ACTIVITIES. HE FURTHER DREW MY ATTENTION TO THE OBJECT OF THE TRUST AND AS PER ENTRY NO.4 OF OBJECTS IN MEMORANDUM OF ASSOCIATION OF THE TRUST, THE OBJECT OF THE TRUST INCLUDES PROVIDING TRAINING TO ARTISANS IN ORDER TO BE SELF-DEPENDENT. THE TRAINING CLASSES FOR SEWING WHICH WERE HELD AT RAMANIA, TAL. MUNDRA-KUTCH FOR W OMEN IN RURAL AREAS WAS ONE SUCH ACTIVITY. THE ASSESSEE-TRUST HAS ALSO PROVIDED RAW MATERIALS LIKE CLOTH, THREADS AND OTHER ITEMS FREE OF CHARGE TO ALL 80 MAHILAS WH O PARTICIPATED IN THIS PROJECT. FOR PROVING GENUINENESS OF ACTIVITIES, ASSESSEE-TRUST H AS FURNISHED THE COPIES OF REPORTS, VOUCHERS OF EXPENSES AND PHOTOGRAPHS OF THE ACTIVIT IES HELD. 4. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT D ESPITE THESE AFORESAID CLEAR OBJECTS, THE LD. CIT REJECTED THE APPLICATION OF TH E ASSESSEE-TRUST FOR REGISTRATION U/S 12A OF THE ACT SOLELY ON THE GROUND THAT THE ACTIVI TY OF TRAINING FOR STITCHING GIVEN BY THE ASSESSEE-TRUST IS AN OCCUPATIONAL TRAINING AND CANNOT BE TERMED AS EDUCATIONAL ACTIVITY. THE LD. COUNSEL OF THE ASSESSEE SUBMITTE D THAT THE ASSESSEE-TRUST HAS PROVIDED STIPEND TO POOR AND NEEDY BENEFICIARIES. H E FURTHER DREW MY ATTENTION TO THE INCOME AND EXPENDITURE ACCOUNT WHEREIN THE STITCHIN G TRAINING INCOME IS RS.192668/- WHEREAS EXPENSES FOR THESE ACTIVITIES ARE OF RS.231 756/- I.E. THERE IS A DEFICIT OF RS.39088/-. 5. CONTINUING HIS ARGUMENTS, THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT THE AFORESAID ACTIVITIES OF THE ASSESSEE-TRUST FALL UNDER THE DEFINITION OF CHARITABLE PURPOSE GIVEN IN SECTION 2(15) OF THE ACT BEING AD VANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. IN SUPPORT OF THIS, HE DREW MY ATTENTION TO SECTION 2(15) OF THE ACT WHICH READS AS UNDER:- 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF A RTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES T HE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY A CTIVITY OF RENDERING ANY 3 461-RJT-2013 VIVEKANAND RURAL DEVELOPMENT INSTITUTE (SMC) SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY:] [PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREI N IS [TWENTY-FIVE LAKH RUPEES] OR LESS IN THE PREVIOUS YEAR;] 6. THE LD. COUNSEL OF THE ASSESSEE RELIED UPON THE DECISION OF DELHI HIGH COURT IN THE CASE OF INSTITUTE OF CHARTERED ACCOUNTANTS O F INDIA VS. DGIT (E), [2013] 35 TAXMANN.COM 140, WHEREIN IT WAS HELD THAT WHERE DOM INANT OBJECTIVE OF ICAI WAS TO REGULATE PROFESSION OF CHARTERED ACCOUNTANCY IN IND IA, IT WAS A CHARITABLE INSTITUTION AND CONDUCTING COACHING CLASSES AND CAMPUS PLACEMEN TS FOR A FREE COULD NOT BE HELD AS BUSINESS AS PER SECTION 2(15). THE LD. COU NSEL OF THE ASSESSEE ALSO RELIED UPON THE DECISION OF ITAT CHENNAI BENCH IN THE CASE OF A.V.S. EDUCATIONAL TRUST V. ITO, [2013] 30 TAXMANN.COM 168, WHEREIN IT WAS OBSE RVED BY THE TRIBUNAL THAT FOR REGISTRATION OF NEWLY REGISTERED TRUST, UNDER SECTI ON 12AA, OBJECTS FOR WHICH IT WAS FORMED SHOULD BE EXAMINED AND NOT ITS ACTIVITIES. 7. ON THE BASIS OF AFORESAID SUBMISSIONS, LD. COUNS EL OF THE ASSESSEE SUBMITTED THAT IN THE IMPUGNED ORDER LD. CIT NEITHER BROUGHT ON RECORD THAT ACTIVITIES OF THE ASSESSEE ARE NON-GENUINE NOR OBJECTS OF THE ASSESSE E ARE NOT CHARITABLE, WITHIN THE MEANING OF SECTION 2(15) OF THE ACT; THEREFORE, HE MAY BE DIRECTED TO GRANT THE REGISTRATION TO THE ASSESSEE-TRUST U/S 12A OF THE INCOME-TAX ACT, 1961. 8. ON THE OTHER HAND, SHRI M.L. MEENA, DR, APPEARED FOR THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF LD. COMMISSIONER OF INCOME-TAX, RAJKOT-I, RAJKOT. HE POINTED OUT THAT, BASED ON THE DETAILS SUBMITTED ; IN THE IMPUGNED ORDER LD. CIT HAD GIVEN FINDINGS IN PARAGRAPH 3 OF HIS ORDER THAT THE MAIN ACTIVITY OF THE TRUST IS RUNNING A TRAINING INSTITUTE FOR STITCHING AND EMBR OIDERY FOR WOMEN. GIVING TRAINING OF STITCHING ETC. IS AN OCCUPATIONAL TRAINING, WHICH C ANNOT BE TERMED AS EDUCATIONAL TRAINING; THEREFORE, AS PER SECTION 2(15) OF THE AC T, THE ACTIVITIES BEING CARRIED OUT BY THE TRUST ARE COMMERCIAL ACTIVITIES; THEREFORE, THE SAME IS OF NOT CHARITABLE NATURE WITHIN THE MEANING OF SECTION 2(15) OF THE INCOME-T AX ACT, 1961. 4 461-RJT-2013 VIVEKANAND RURAL DEVELOPMENT INSTITUTE (SMC) 9. HAVING HEARD BOTH THE SIDES, I HAVE CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT TH E ASSESSEE-TRUST IS GIVING SEWING TRAINING CLASS AT RAMANIA, TAL. MUNDRA-KUTCH FOR WO MEN STAYING IN RURAL AREAS TO GIVE THEM FULL TRAINING OF PREPARING VARIOUS CLOTHES/GAR MENTS SO THAT THEY THEMSELVES CAN EARN THEIR OWN. THE TRUST HAD PROVIDED RAW MATERIAL S LIKE CLOTH, THREADS AND OTHER ITEMS FREE OF CHARGE TO ALL THE 80 MAHILAS WHO HAD PARTICIPATED IN THE PROJECT. BY GIVING TRAINING IN STITCHING AND EMBROIDERY TO RURA L WOMEN, THE SOLE PURPOSE OF THE ASSESSEE-TRUST IS TO UPLIFT THEM SO THAT THEY CAN B ECOME INDEPENDENT. THOUGH THE ASSESSEE-TRUST IS ALSO CHARGING MEAGER FEE, THE INC OME & EXPENDITURE ACCOUNTS IT SHOWS THE STITCHING TRAINING INCOME OF RS.192668/- WHEREAS EXPENSES INCURRED FOR SUCH ACTIVITIES AMOUNTING TO RS.231756, THUS RESULT ED TO DEFICIT OF RS.39088/-. THE HONBLE DELHI HIGH COURT IN THE CASE OF INSTITUTE O F CHARTERED ACCOUNTANTS OF INDIA VS. DGIT(E) (SUPRA), HELD THAT WHERE DOMINANT OBJECTIVE OF ICAI WAS TO REGULATE PROFESSION OF CHARTERED ACCOUNTANCY IN INDIA, IT WA S A CHARITABLE INSTITUTION AND CONDUCTING COACHING CLASSES AND CAMPUS PLACEMENTS F OR A FEE COULD NOT BE HELD AS BUSINESS AS PER SECTION 2(15) OF THE INCOME-TAX ACT . IN VIEW OF THE RATIO OF DECISION OF HONBLE DELHI HIGH COURT, JUST BY CHARGING NOMIN AL FEE FOR PROVIDING TRAINING IN STITCHING AND EMBROIDERY FOR RURAL WOMEN, THE DOMIN ANT PURPOSE OF THE ASSESSEE- TRUST IS TO UPLIFT THE STATUS OF RURAL WOMEN WHICH IN MY OPINION IS CHARITABLE ACTIVITY WITHIN THE MEANING OF SECTION 2(15) OF THE INCOME-T AX ACT. I, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF LD. COMMISSIONER OF INCOME-TAX, R AJKOT-I, RAJKOT AND DIRECT HIM TO GRANT THE REGISTRATION U/S 12A OF THE INCOME-TAX AC T, 1961. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 11.04.2014 !$ /RAJKOT *BT 5 461-RJT-2013 VIVEKANAND RURAL DEVELOPMENT INSTITUTE (SMC) / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- VIVEKANAND RURAL DEVELOPMENT INSTITUT E, MANDVI-KUTCH 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX, RAJK OT-I, RAJKOT 3. ,0,1 * * 2 / CONCERNED CIT, GANDHIDHAM 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT