ANAND INCUBATION CENTRE, Jaipur V. CIT(EXEMPTIONS), Jaipur

ITA 479/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2058 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 07-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Assessee Lawyers: SUNIL GOYAL
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice
• Section: 80G; 12AA

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 479/JP/17 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : ANAND INCUBATION CENTRE, D-40, SHANTI PATH, JAWAHAR NAGAR, JAIPUR. CUKE VS. THE CIT(EXEMPTIONS), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: AAFTA4825J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRHDH VKSJ LS@ ASSESSEE BY : SHRI SUNIL GOYAL (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14/09/2017 ?KKS'K .KK DH R KJH[K @ DATE OF PRONOUNCEMENT: 15/09/2017. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(E), JAIPUR DATED 18.05.2017 REJECTING ITS APPLICATION F OR GRANT OF REGISTRATION U/S 80G(5)(VI) OF THE ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED AN APPLICATION BEFORE THE LD. CIT(E) SEEKING APPROVAL U/S 80G(5)(VI) OF T HE ACT ON 18.11.2016. THE DETAILS OF THE ACTIVITIES OF THE ASSESSEE WERE CALL ED FOR BY THE LD. CIT(E) AND AFTER RECEIVING THE ASSESSEES SUBMISSIONS, IT WAS HELD THAT THE ASSESSEE TRUST CAME TO EXISTENCE ON 13.10.2016 AND IN PERIOD OF MO RE THAN 7 MONTHS, NO SIGNIFICANT CHARITABLE ACTIVITY HAS BEEN STARTED BY THE ASSESSEE TRUST AS PER ITS ITA NO. 479/JP/17 ANAND INCUBATION CENTRE VS. CIT(E), JAIPUR 2 OBJECTS. ACCORDINGLY, IT WAS HELD THAT THE MATTER D OES NOT SEEM FIT FOR GRANTING EXEMPTION U/S 80G AT THIS STAGE AND THE APPLICATION FILED BY THE ASSESSEE WAS REJECTED. 3. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE ASSESSEE SUBMITTED ITS APPLICATION FOR GRANT OF REGISTRATION U/S 12AA AS WELL AS U/S 80G BEFORE THE LD. CIT(E) ON 18.11.2016. THE LD. CIT(E) GRANTED REGISTRATION U/S 12AA ON 18.05.2017 HOWEVER, APPROVAL U/S 80G WAS NO T GRANTED BY ORDER OF EVEN DATE. 4. IT WAS FURTHER SUBMITTED BY THE LD AR THAT AS PE R PROVISIONS OF RULE 11AA(5), LD CIT IS EMPOWERED TO REFUSE REGISTRATION ONLY IN THOSE CASES WHERE CONDITIONS LAID DOWN IN CLAUSE (I) TO (V) OF SECTIO N 80G(5) ARE NOT FULFILLED. IN THE CASE OF THE ASSESSEE, IT IS SUBMITTED THAT ALL THE CONDITIONS MENTIONED IN CLAUSE (I) TO (V) OF 80G WERE FULFILLED BY THE ASSE SSEE. THEREFORE THERE WAS NO REASON FOR REJECTING THE APPLICATION OF THE ASSESSE E. THE LEARNED CIT HAS ALSO NOT POINTED OUT AS TO WHICH CONDITION THE ASSESSEE FAILED TO FULFIL. THEREFORE THE ORDER PASSED BY THE LEARNED CIT IS ARBITRARY AN D UNLAWFUL. 5. IT WAS FURTHER SUBMITTED THAT THE LEARNED CIT HA S REJECTED APPLICATION FOR REGISTRATION FOR THE REASON THAT NO SIGNIFICANT ACTIVITY WAS STARTED BY THE ASSESSEE TRUST. IN THIS REGARD IT IS SUBMITTED THAT THE ASSESSEE HAD FILED LETTER DATED 03.01.2017 IN WHICH THE ASSESSEE HAD GIVEN DE TAILS OF SCHOLARSHIP GIVEN BY THE ASSESSEE TRUST. 6. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE FIL ED ONE MORE LETTER DATED 15.05.2017 AND IN THIS LETTER IT WAS EXPLAINED THAT THE ASSESSEE NEEDED REGISTRATION UNDER SECTION 80G(5) TO START ACTIVITI ES OF THE TRUST IN A BIG WAY. WITH THIS LETTER ALSO THE ASSESSEE FILED DETAILS OF SCHOLARSHIP GIVEN BY THE ITA NO. 479/JP/17 ANAND INCUBATION CENTRE VS. CIT(E), JAIPUR 3 ASSESSEE. BUT PAST TRACK RECORD OF THE ASSESSEE IND ULGING IN CHARITABLE ACTIVITIES HAS BEEN COMPLETELY OVERLOOKED BY THE LE ARNED CIT WHILE REFUSING REGISTRATION OF THE ASSESSEE. THERE IS NO REQUIREME NT IN THE LAW THAT THE ASSESSEE MUST START DOING CHARITABLE ACTIVITIES IN A BIG WAY BEFORE APPLYING FOR REGISTRATION UNDER SECTION 80G(5) OF INCOME TAX ACT. 7. IT WAS FURTHER SUBMITTED THAT THE HONBLE JAIPUR BENCH HAS ALSO TAKEN THIS VIEW THAT CIT CANNOT REFUSE REGISTRATION FOR T HE REASON THAT THE ASSESSEE HAD NOT CARRIED OUT ANY CHARITABLE ACTIVITIES. REL IANCE IS PLACE ON THE FOLLOWING DECISION OF THE JAIPUR BENCH OF ITAT IN THE CASE OF JASODA DEVI CHARITABLE TRUST V/S CIT 43 TAX WORLD 175 WHEREIN IT WAS HELD HELD THAT REGISTRATION UNDER SECTION 12AA AND AS WELL AS UNDER SECTION 80G SHOULD BE ALLOWED TO THE NEWLY CREATED TRUST IF CONDITIONS ARE FULFILLED. TH E HEAD NOTES OF THE CASE ARE AS UNDER:- BEFORE TRIBUNAL IT HAS BEEN SUBMITTED BY THE ASSES SEE THAT CIT HAS PASSED ORDER WITHOUT GIVING ANY OPPORTUNITY OF HEARING AND IS THUS VIOLATIVE OF THE PRINCIPLES OF NATURAL JUSTICE. ASSESSEE FURTHER SUB MITTED THAT CHARITABLE ACTIVITIES CANNOT BEGIN IMMEDIATELY AFTER FORMATION OF TRUST AND THAT THERE IS NO REQUIREMENT OF FILING OF INCOME AND EXPENDITURE ACCOUNT UNLESS THE TRUST IS IN EXISTENCE FOR A YEAR OR MORE- ASSESSEE ALSO EXPL AINED THAT UNLESS REGISTRATION IS GRANTED AND EXEMPTION IS ALLOWED U/ S 80G, HOW IT WILL OBTAIN DONATIONS FROM THE PEOPLE- CONSIDERING THESE SUBMI SSIONS AS WELL AS FACT OF THIS CASE, TRIBUNAL HAVE HELD THAT CIT WAS NOT JUST IFIED IN REJECTING THE APPLICATIONS FOR REGISTRATION SINCE IT HAD NOT CARR IED OUT ANY CHARITABLE ACTIVITY WITHOUT APPRECIATING THAT IT WAS CREATED DURING THI S YEAR ITSELF ON 06.05.2009 BESIDES NOT ALLOWING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD- ACCORDINGLY TRIBUNAL HAVE DIRECTED THE CIT TO GRANT REGISTRATIO N TO THE ASSESSEE TRUST U/S 12AA OF THE ACT AND ALSO TO GRANT APPROVAL FOR EXEM PTION U/S 80G OF THE ACT IN CASE THE CONDITIONS FOR THE SAME ARE FULFILLED. ITA NO. 479/JP/17 ANAND INCUBATION CENTRE VS. CIT(E), JAIPUR 4 IT WAS, ACCORDINGLY REQUESTED THAT THE ASSESSEE TRU ST MAY KINDLY BE GRANTED REGISTRATION UNDER SECTION 80G(5) OF INCOME TAX ACT . 8. THE LD DR IS HEARD WHO HAS SUPPORTED THE ORDER O F THE LD CIT(E). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LIMITED OBJECTION RAISED BY THE LD C IT(E) IS THAT THE ASSESSEE HAS NOT STARTED SIGNIFICANT ACTIVITY AND ACCORDINGL Y, THE APPLICATION IS NOT FIT FOR GRANT OF APPROVAL UNDER SECTION 80G OF THE ACT. IN OTHER WORDS, THE LD CIT(E) HAS ACCEPTED THE FACT THAT THE ASSESSEE HAS STARTED CERTAIN ACTIVITIES AS PER ITS OBJECTS. THE OBJECTS WHICH HAVE BEEN DULY VERIFIED AND APPROVED AS CHARITABLE OBJECTIVES WHILE GRANTING APPROVAL UNDER SECTION 12AA OF THE ACT. EVEN DURING THE COURSE OF HEARING, THE LD AR SUBMIT TED THAT CERTAIN SCHOLARSHIP AMOUNT HAS BEEN DISBURSED DURING THE YE AR AS PER ITS OBJECTS AND THE SAID FACT IS ON RECORD AND SUBMITTED BEFORE THE LD CIT(E) WHICH HE HAS FAILED TO CONSIDER. IN OUR VIEW, WHAT IS A SIGNIFIC ANT ACTIVITY IS A VERY SUBJECTIVE TERM AND CANNOT BE A SOLE BASIS FOR REJECTION OF AP PLICATION. WHERE THE ASSESSEE HAS VARIOUS OBJECTIVES, IT IS NOT NECESSAR Y THAT THE ACTIVITIES IN FURTHERANCE OF EACH OF THE OBJECTIVES SHOULD BE STA RTED SIMULTANEOUSLY AND AT THE SAME PACE AND LEVEL. IT IS UP TO THE ASSESSEE TO DETERMINE WHICH ALL ACTIVITIES CAN BE STARTED INITIALLY AND HOW THE SAM E CAN BE EXPANDED SUBSEQUENTLY. AND FOR THAT PURPOSES, GRANT OF APPR OVAL UNDER SECTION 80G ACT AS AN ENABLER AND A CATALYST TO ENCOURAGE THE PROSP ECTIVE DONORS TO LOOK AT THE INTENDED ACTIVITIES OF THE ASSESSEE AND WHERE T HEY FIND THE SAME TO BE ACCEPTABLE, TO PROVIDE FINANCIAL SUPPORT THROUGH DO NATIONS/CONTRIBUTIONS. IN OUR VIEW, WHAT IS OF RELEVANCE FOR THE PURPOSES OF GRANT OF APPROVAL UNDER SECTION 80G IS WHETHER THE OBJECTIVES ARE CHARITABL E OR NOT AND THE ACTIVITIES, SO STARTED, HOWSOEVER INSIGNIFICANT IT MAY BE, ARE GENUINE ACTIVITIES OR NOT AND ITA NO. 479/JP/17 ANAND INCUBATION CENTRE VS. CIT(E), JAIPUR 5 WHETHER THE SAME ARE IN CONSONANCE WITH AND IN FURT HERANCE OF THE OBJECTIVES OF THE ASSESSEE SOCIETY. 10. FURTHER, ON PERUSAL OF SECTION 80G(5) AS WELL AS RULE 11AA, WHAT IS REQUIRED TO BE SEEN IS WHETHER THE INSTITUTION/FUND HAS BEEN ESTABLISHED IN INDIA FOR A CHARITABLE PURPOSE OR NOT. SECONDLY, I T LAYS DOWN CERTAIN ADDITIONAL CONDITIONS UNDER CLAUSE (I) TO CLAUSE (V) WHICH ARE REQUIRED TO BE FULFILLED. RULE 11AA PROVIDES THAT WHERE THE CIT IS SATISFIED THAT THE CONDITIONS LAID DOWN IN CLAUSES (I) TO (V) OF SUB-SECTION 5 ARE FUL FILLED, THE CIT IS REQUIRED TO RECORD HIS SATISFACTION BEFORE GRANT OF APPROVAL UN DER SECTION 80G(VI). WHERE HOWEVER, THE CIT IS SATISFIED THAT ONE OR MORE OF T HE CONDITIONS ARE NOT FULFILLED, HE IS EMPOWERED TO REJECT THE APPLICATIO N FOR APPROVAL AFTER RECORDING THE REASONS FOR SUCH REJECTION. IN THE INSTANT CASE , THE APPELLANT HAS BEEN DULY REGISTERED UNDER SECTION 12AA WHICH SHOWS THAT LD CIT HAS ALREADY VERIFIED ITS OBJECTIVES AND ITS ESTABLISHMENT FOR C HARITABLE PURPOSES. REGARDING FULFILMENT OF ADDITIONAL CONDITIONS SPECI FIED IN CLAUSE (I) TO CLAUSE (V) OF SECTION 80G(5), WE FIND THAT THERE IS NO REC ORDING OF SATISFACTION REGARDING NON-FULFILMENT OF ANY OF THE CONDITIONS S O SPECIFIED AND THE LD CIT(E) HAS SUMMARILY REJECTED THE ASSESSEES APPLIC ATION. 11. WE ARE ACCORDINGLY SETTING ASIDE THE MATTER TO THE FILE OF THE LD CIT(E) TO EXAMINE THE MATTER AFRESH IN LIGHT OF ABOVE DIR ECTIONS. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15/09/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER ITA NO. 479/JP/17 ANAND INCUBATION CENTRE VS. CIT(E), JAIPUR 6 JAIPUR DATED:- 15/09/2017 *SANTOSH VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT - ANAND INCUBATION CENTRE, D-40, SHANTI PATH, JAWAHAR NAGAR, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- CIT(E), JAIPUR . 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 479/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.