JAMAIT ULAMA HALAL FOUNDATION, MUMBAI V. CIT (EXEMPTIONS), MUMBAI

ITA 4738/MUM/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2416 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2018-2019
• Appeal Filed On: 05-08-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12A; 12AA; 10(23C)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH MUMBAI Before Shri Sanjay Garg, Judicial Member & Shri Om Prakash Kant, Accountant Member I.T.A. No.4738/Mum/2018 Assessment Year: 2018-19 Jamait Ulama Halal Foundation.....................................................Appellant Opp. BIT Chawl No.01, Imam Wada Compound, Imam Wada Road, Mumbai-400009. [PAN: AABTJ5351Q] vs. CIT(Exemptions), Mumbai...........................................................Respondent Appearances by: None appeared on behalf of the appellant. Shri V. K. Chaturvedi appeared on behalf of the Respondent. Date of concluding the hearing : May 12, 2022 Date of pronouncing the order : May 12, 2022 ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 31.05.2018 of the Commissioner of Income Tax (Exemptions), Mumbai [hereinafter referred to as ‘CIT(Exemption)’]. The assessee is aggrieved by the action of the ld. CIT(Exemptions) in refusing to grant registration as a charitable institution to the assessee u/s 12A of the of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. No one has put in appearance on behalf of the assessee despite notice. We find that even on earlier dates of hearing, no one has put in appearance on behalf of the assessee. We, therefore, are left with no alternative other than to proceed to decide the appeal after hearing the ld. DR and after going through the records. 3. A perusal of the impugned order reveals that the ld. CIT(Exemptions) has rejected the application of the assessee for registration as a charitable institution on the following grounds: “9. From the above table and other details on record the following observations are made; I.T.A. No.4738/Mum/2018 Assessment Year: 2018-19 Jamait Ulama Halal Foundation 2 a) It can be seen that in 3 of the 4 financial years, 100% receipts of the assessee is from Halal certification while for Fin. Year 2015-16, it is approximately 92.89% of the gross receipts. So, over a period of 4 years, the total receipt from Halal certificates is 99.17% out of the total receipts. It clearly signifies that almost the entire resources of assessee are being used for issuing Halal Certificates and it is the dominant rather almost the only singular activity of the assessee. b) On the basis of above financials, there is no doubt that halal is almost the only activity from which income is generated. It is done in an organized manner and importantly generating substantial profit from the same. c) Importantly, as mentioned above, the books of account and supporting documents were not produced despite specifically asked for, from where even the genuineness of expenses towards halal activity or donation could be verified. d) The major activity of the assessee is issue of halal certificate which is not even being mentioned in its Object. A Trust is expected and required to act only in accordance with its objects. In this case, the Trust has existed since for almost 7 years but in all those years, the major activity it is indulging in is not in accordance with its object. Therefore, it is not a fit case for registration u/s. 12A. e) Realizing the seriousness of the issue the assessee has made change in the object and included in its object that the organization will issue Halal Certificate to product, system and organization based on finding and use the outcome charitable purpose. This proposal for the Change in the object has been filed before the office of the Charity Commissioner office Mumbai on 21/05/2018 which is yet to be accepted by the office of the Charity Commissioner. Importantly, the copy of the Minutes of Meeting and copy of resolution passed and the Memorandum of Association Amendment copy has also not been produced even though specifically asked for. f) Without prejudice to above, otherwise also, the activity of Halal certification which is professionally run in an organized manner and is generating huge surplus, has all the characteristics of a business. Further, the shelter taken by the assessee under the provision to section 2(15) of the Act also do not come to its rescue as the assessee entire receipt approximately comes from the activity of the issue of Halal certificate. g) The assessee has not submitted the Break-up of Schedule -A for the F.Y. 2013-14 as furnished for the other F.Y's and as mentioned in the income and Expenditure Account. In his submission made vide letter dated 23.05.2018 he has just tried to arrive at certain figure by his own permutation and combination. h) The assessee’s submission that the objectives of the Trust is for benefit of poor, their education and medical relief, etc. on which proviso to section 2(15) does not apply, 1S not acceptable. A plain reading of provisions of section 11(4A), the seventh proviso to section 10(23C) of the I.T. Act and other relevant provisions relied upon by the assessee show that what is permitted to a charitable organization which alongwith charitable activity is also indulging in a subsidiary activity in the nature of business, that too only if it is incidental to the main objects. Incidental does not imply any substantial and independent business activity, just because the proceeds of it will be used for the above objects. It has to be interlinked with actual charitable objects of the assessee. In any I.T.A. No.4738/Mum/2018 Assessment Year: 2018-19 Jamait Ulama Halal Foundation 3 case, as discussed above, in the present case, the only substantial activity of the assessee is issue of Halal certificate, which under no circumstances, can be accepted to be incidental to any other objects of the assessee trust. The assessee has also not produced the books of account for the last three financial years when specifically asked for vide order sheet noting dated 24/05/2018. However, from the accounts available on records it is seen that the assessee is not maintaining separate books of account for its Halal certification business. Hence, the alternative plea taken by the assessee under the conditions stipulated under section 11(4A) or the seventh proviso to section 10(23C) otherwise also do not comes to its rescue. i) The facts of the case relied upon by the assessee [Indian Trade Promotion Organization Vs. DIT(E), reported in 371 ITR 333(Del.)] is distinguishable on the facts of this case. However, in the referred case the point of examination of business activity 1s given as "dominant activity" of the institution. The dominant activity of the trust in this case is issue of Halal certificate and it is not incidental or ancillary activity of the assessee trust. j) Even out of donation made towards the object, a substantial amount of expense given to Jamai Ulema-E- Relief Foundation, which is not even registered under section 12A of the Act, which it had applied for registration on 11.03.2013 and the application of the assessee was rejected by the CIT(E) on 30.09.2013. 10. As per the provisions of Section 12AA (1)(b), a trust is to be granted registration if the Commissioner is satisfied about the objects of the Trust and the genuineness of its activities. Both these requirements are cumulative and not alternative. There can be no doubt that the onus is on the applicant to produce all relevant documents/information etc so as to enable the registering authority to arrive at the requisite satisfaction about the objects the trust and the genuineness of its activities. The satisfaction of the registering authority cannot be a subjective satisfaction based on whim or caprice. It has to be a bona fide and objective satisfaction, based on due application of mind to a certain set of facts or materials before him. The satisfaction of the registering authority is not a pretence or an empty formality but is the foundation of grant or refusal of registration. In other words, such satisfaction is the crux or essence of the registration proceedings. Where the applicant fails to furnish the relevant documents and materials before the registering authority so as to facilitate the process of its arriving at a positive satisfaction, the authority has no option but to refuse the grant of registration. In this case not only the assessee failed to produce some of the important documents including Minutes Book, Book of account, supporting documents which were required for satisfaction of genuineness of the activities but his major activity is not in accordance with object. Moreover, this activity is clearly a business activity resulting into substantial profit. The other expenses on charitable objects are also not verifiable and substantial chunk of donation has gone to a trust which was not even registered under section 12A of the I.T. Act. In view of the same, the application filed by the assessee in Form 10A for getting itself registered under section 12A is rejected.” 4. A perusal of the above reproduced observations made by the ld. CIT(Exemptions) reveals that the ld. CIT(Exemptions) has duly noted that the main object of the assessee I.T.A. No.4738/Mum/2018 Assessment Year: 2018-19 Jamait Ulama Halal Foundation 4 was to grant Halal certificate which was out of the objects of the assessee. Further, the assessee-applicant failed to furnish necessary and relevant documents including minutes books, books of account and other documents in support and depicting that the assessee was carrying out any charitable activity. 5. After filing of the appeal, no one has put in appearance on behalf of the assessee, neither any such documents furnished to show that the observations made by the ld. CIT(Exemptions) were wrong or were not in accordance with the facts of the case. In view of this, we do not find any reason to interfere with the order of the ld. CIT(Exemptions) and the same is upheld. The appeal of the assessee is hereby dismissed. 6. In the result, the appeal of the assessee stands dismissed. Mumbai, the 12 th May, 2022. Sd/- Sd/- [Om Prakash Kant] [Sanjay Garg] Accountant Member Judicial Member Dated: 12.05.2022. RS Copy of the order forwarded to: 1. Jamait Ulama Halal Foundation 2. CIT(Exemptions), Mumbai 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Mumbai Benches