Sri Jagannath Trust For Education & Social Welfare, Sambalpur V. CIT, Sambalpur

ITA 482/CTK/2012

• Counselvise Citation: 48222114 RSA 2012
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 05-10-2012
• Court: TRIBUNAL
• Department Lawyers: R K SINGHANIAS DISRI ARS FOR
• Assessee Lawyers: EDUCATION
• Keywords: Charitable institution
• Section: 12A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 482/CTK/2012 SRI JAGANNATH TRUST FOR EDUCATION & SOCIAL WELFARE, BARSIKIAKHOL,RAIRAKHOL, SAMBALPUR, ODISHA 768 106 PAN: AAATE 3543 J - - - VERSUS - COMMISSIONER OF INCOME - TAX, SAMBALPUR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI R.K.SINGHANIA/S.DISRI, ARS / FOR THE RESPONDENT: / SHRI N.K.NEB, DR / DATE OF HEARING: 07.11.2012 / DATE OF PRONOUNCEMENT: 30.11.2012 / ORDER . . . , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DT.24.7.2012 OF THE COMMISSIONER OF INCOME - TAX, SAMBALPUR REJECTING THE APPLICATION OF THE ASSESSEE SEEKING REGISTRATION U/S.12A OF THE I.T.ACT,1961. 2. THE ASSESSEE RAISES THE FOLLOWING ISSUES : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX ERRED IN REJECTING APPLICATI ON FILED U/S 12A OF THE INCOME TAX ACT, 1961. 2. THAT THE TRUST EXISTS SOLELY FOR CHARITABLE PURPOSES AS DEFINED U/S 2(15) OF THE INCOME TAX ACT, 1961 AND THE LD. COMMISSIONER OF INCOME TAX ERRED IN NOT GRANTING REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961. 3. THAT THE LD. COMMISSIONER OF INCOME TAX HAS NOT APPRECIATED THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS ARBITRARILYREFUSED REGISTRATION. 4. THAT THE LD. COMMISSIONER OF INCOME TAX HAS PASSED THE ORDER IN A HASTE AND IN A BIASED MINDSET. I.T.A.NO. 482/CTK/2012 2 5. T HE APPELLANT PRAYS THAT REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 BE GRANTED TO THE ASSESSEE TRUST BASED UPON THE TRUE FACTS OF THE CASE. 2. HEARD BOTH THE PARTIES AND PERUSED THE IMPUGNED ORDER OF THE LEARNED CIT AND THE DECISION RELIED ON BY THE LEARNED CIT AND THE DECISIONS RELIED AT BAR. 3. THE ASSESSEE, A TRUST ESTABLISHED ON DT. 4.1.2008 FILED APPLICATION DT.16.2.2012 BEFORE THE COMMISSIONER OF INCOME - TAX, SAMBALPUR SEEKING REGISTRATION U/S.12 OF THE I.T.ACT,1961. THE LEARNED CIT REJECTED THE SAID APPLICATION BY THE IMPUGNED ORDER DT.24.7.2012 HOLDING INTER ALIA THAT THE ASSESSEE IS AN INSTITUTION EXISTING SOLELY FOR THE PURPOSE OF EDUCATION AND NOT FOR THE PURPOSE OF MAKING SYSTEMATIC PROFITS, BY RELYING THE DECISION DT.24.9.2007 OF HONBLE U TTARAKHAND HIGH COURT IN THE CASE OF CIT V. M/S.QUEENS EDUCATION SOCIETY. 3. ON CAREFUL ANALYSIS OF THE ORDER PASSED BY THE LEARNED CIT, IT IS FOUND THAT ADMITTEDLY THE ASSESSEE IS A TRUST ESTABLISHED ON DT.4.1.2008 FOR THE PURPOSE OF CHARITABLE OBJECTS AN D IT APPLIED FOR REGISTRATI ON U/S.12A OF THE I.T.ACT,1961 ON 1L6.2.2012.THE LEARNED CIT(A) ISSUED NOTICE TO THE ASSESSEE FOR APPEARANCE FOR NECESSARY ADJUDICATION. THE ASSESSEE HAS COMPLIED THIS. LATER ON NOTICE WAS ISSUED TO THE ASSESSEE FOR HEARING OF TH E CASE BEFORE THE LEARNED CIT. IT WAS ALSO COMPLIED BY THE ASSESSEE. THERE AFTERWARDS THE ASSESSEE HAS RECEIVED ORDER PASSED BY THE LEARNED CIT U/S.12 OF THE I.T.ACT ON 7.8.2012 REJECTING THE APPLICATION FILED BY IT FOR REGISTRATION WHEREIN IT IS OBSERVED BY THE LEARNED CIT THAT IT CANNOT BE SAID THAT THE INSTITUTION RUN BY THE ASSESSEE IS SOLELY FOR THE PURPOSE OF EDUCATION AND NOT FOR THE PURPOSE OF PROFIT. IT IS FURTHER NOTED IN THE IMPUGNED ORDER THAT THE ASSESSEE IS MAKING SYSTEMATIC PROFITS BUT THE AC TUAL FACT IS THAT THE ASSESSEE HAS BEEN ACTUALLY MAKING LOSSES IN THE FYS 2010 - 11 AND 2011 - 12. 4. IT IS AN UNDISPUTED FACT THAT WHILE CONSIDERING THE REGISTRATION OF A CHARITABLE TRUST IT IS INCUMBENT UPON THE CIT TO LOOK INTO THE GENUINENESS OF THE OBJECT S APART FROM THE OBJECTS BEING CHARITABLE OR NOT. IN THE IMPUGNED I.T.A.NO. 482/CTK/2012 3 ORDER THE LEARNED CIT HAS OBSERVED THAT THE OBJECTS OF THE TRUST AS REPRODUCED IN THE IMPUGNED ORDER ARE PRIMA FACIE APPEAR TO BE CHARITABLE IN NATURE BUT HOWEVER, HE RESORTED TO EXAMINE THE ACTIVITIES OF THE TRUST IN ORDER TO COME TO A CONCLUSION WHETHER ACTUAL ACTIVITIES CARRIED OUT BY THE TRUST IS CHARITABLE OR NOT. FOR THAT PURPOSE, THE LEARNED CIT HAS SEEN THE FINANCIAL STATEMENTS FOR THE IMMEDIATELY PRECEDING THREE YEARS TO THE DATE OF FILING OF APPLICATION I.E., 2008 - 09, 2009 - 10 AND 2010 - 11 AND FOUND THAT THE ASSESSEE HAS EARNED INCOME OVER EXPENDITURE OF RS.13,70,422 IN THE FINANCIAL YEAR 2008 - 09, RS.33,595 IN THE FY 2009 - 10 AND EXCESS OF EXPENDITURE OVER INCOME FOR THE ASSESSMENT YEAR 2010 - 11 AMOUNTING TO RS.2,35,235. AFTER FINDING THESE THREE YEARS ACCOUNT STATEMENTS, THE LEARNED CIT HAS COME TO THE CONCLUSION THAT THE ASSESSEE IS MAKING SYSTEMATIC PROFITS AND HENCE, HE DENIED REGISTRATION TO THE ASSESSEE. WHILE DOING SO, THE LEARNED CIT HAS RELIED O N THE DECISION OF HONBLE UTTARAKHAND HIGH COURT IN THE CASE OF CIT V. M/S.QUEENS EDUCATIONAL SOCIETY DT.24.9.2007. THIS DECISION OF HONBLE UTTARAKHAND HIGH COURT HAS OBSERVED IN THE SAID JUDGMENT THAT THE HONBLE APEX COURT IN THEIR DECI SION REPORTED IN (1992) 3SCC 390, HAS HELD THAT WERE A SOCIETY OR BODY IS MAKING SYSTEMATIC PROFIT, EVEN THOUGH THAT PROFIT IS UTILIZED ONLY FOR CHARITABLE PURPOSE., YET IT CANNOT BE SAID THAT IT COULD CLAIM EXEMPTION. IF, MERELY QUALITATIVE TEST IS APPLIE D TO SOCIETIES, EVEN SCHOOLS WHICH ARE RUN ON COMMERCIAL BASIS MAKING PROFIT WOULD GO OUT OF THE PURVIEW OF THE TAXATION AND WOULD DEMAND EXEMPTION. HONBLE DELHI HIGH COURT IN THE CASE OF DIT V. FOUNDATION OF OPHTHALMIC & OPTOMETRY RE SEARCH EDUCATION CENT RE IN I.T.A PPEAL NO.1687 OF 2010 DT.16.08.2012 HAS HELD THAT THE STATUTE DOES NOT PROHIBIT OR ENJOIN THE COMMISSIONER FROM REGISTERING TRUST SOLELY BASED ON ITS OBJECTS, WITHOUT ANY ACTICVITY, IN THE CASE OF A NEWLY REGISTERED TRUST. THE STATUTE DOES NOT I.T.A.NO. 482/CTK/2012 4 PRESCRIBE A WAITING PERIOD, FOR A TRUST TO QUALIFY ITSELF FOR REGISTRATION. AND FOLLOWING THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF MEENAKSHI AMMA ENDOWMENT TRUST HAS APPROVED THE DECISION OF THE TRIBUNAL WHERE THE TRUST HAS ACTUALLY COMM ENCED ITS ACTIVITIES OR NOT. WHILE RENDERING THIS JUDGMENT, HONBLE DELHI HIGH COURT HAS CONSIDERED THE CASE OF KERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY V. CIT (247 ITR 18 AND DECISION OF DELHI BENCH OF ITAT IN THE CASE OF DHARMA SAN STHAPAK SANGH (NIYAS) VL CIT (28 SOT 1 (DELHI)(URO) AND THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF DIT V. MEENAKSHI AMMA ENDOWMENT TRUST (50 DTR 243) AND THE DECISION OF DIVISION BENCH OF KARNATAKA HIGH COURT RENDERED IN THE CASE OF SANJEEVAMMA HA NUMANTHE GOWDA CHARITABLE TRUST V. DIT (285 ITR 327). 5. ON GOING THROUGH THE JUDGMENT IN THE CASE OF CIT V. M/S.QUEENS EDUCATIONAL SOCIETY DT.24.9.2007 (SUPRA), WHICH WAS RELIED ON BY THE LEARNED CIT IN HIS IMPUGNED ORDER , IT IS FOUND THAT THE HONBLE HI GH COURTS INTERPRETATION WAS DISTINGUISHED BY VARIOUS HIGH COURT S IN SUBSEQUENT JUDGMENTS BY HONBLE BOMBAY HIGH COURT IN THE CASE OF VANITA VISHRAM TRUST V. CCIT (327 ITR 121), HIMACHAL PRADESH HIGH COURT IN THE CASE OF MAA SARASWATI TRUST V. UNION OF IN DIA (2010) 194 TAXMAN 84 (HP), HARYANA HIGH COURT IN PINEGROVE INTERNATIONAL CHARITABLE TRUST V. UOI (327 ITR 73 (P & H) AND DELHI HIGH COURT IN ST.LAWRENCE EDUCATIONAL SOCIETY V. CIT , WP NO.1254 & 2463/2010. SO ON CONSOLIDATED APPRECIATION OF THE JUDICIA L PRONOUNCEMENTS STATED SUPRA, IT IS SEEN THAT THE VIEW EXPRESSED BY THE HONBLE UTTARAKHAND HIGH COURT IS NOT ACCEPTED BY THE OTHER HIGH COURTS. THEREFORE, IT IS ONLY A MINORITY DECISION WHEREAS THE MAJORITY OF THE HIGH COURTS ARE HOLDING OTHERWISE. THERE FORE, RELYING ON SUCH DECISION OF MAJORITY HIGH COURTS STATED SUPRA, IT MUST BE HELD THAT THE IMPUGNED ORDER OF THE I.T.A.NO. 482/CTK/2012 5 LEARNED CIT IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE CITS IMPUGNED ORDER REJECTING THE REGI STRATION TO THE ASSESSEE IS NOT IN ACCORDANCE WITH THE MAJORITY VIEW OF THE HIGH COURTS STATED SUPRA. SINCE THE LEARNED CIT HAS NOT STRICTLY EXAMINED THE INGREDIENTS ABOUT THE REGISTRATION PRAYED BY THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT THIS IS A FIT CASE TO RESTORE THE CASE TO THE FILE OF THE LEARNED CIT FOR RECONSIDERATION OF THE SAME WITHIN THE SCOPE OF THE PROVISIONS OF SECTION 12A OF THE I.T.ACT AND PASS NECESSARY ORDER AS PER LAW OF COURSE STRICTLY FOLLOWING THE PRINCIPLES OF NATURAL JUSTIC E. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. S D/ - S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( ) DATE: 30.11.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : SRI JAGANNATH TRUST FOR EDUCATION & SOCIAL WELFARE, BARSIKIAKHOL,RAIRAKHOL, SAMBALPUR, ODISHA 768 106 2 / THE RESPONDENT: COMMISSIONER OF INCOME - TAX, SAMBALPUR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 482/CTK/2012 6 APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 26.11.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27.11.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.11.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..