Citizen Force Foundation For Citizens, Rajahmundry V. THE CIT, Rajahmundry

ITA 486/VIZ/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0131 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 18-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA

Judgement Text

ITA NO485&486/VIZAG/2014 CITIZEN FORCE FOUNDATION FOR CITIZENS, RAJAHMUNDRY 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , . . . . , $ $ $ $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.485&486/VIZAG/2014 ( / ASSESSMENT YEAR : N.A.) CITIZEN FORCE FOUNDATION FOR CITIZENS RAJAHMUNDRY VS. CIT RAJAHMUNDRY [ PAN: AAFCC3350H ] ( & & & & / APPELLANT) ( '(& '(& '(& '(& / RESPONDENT ) & ) / APPELLANT BY : SHRI P. RAMESH BABU (PARTY IN PERSON) '(& ) / RESPONDENT BY : SHRI G. GURUSWAMY, DR ) - / DATE OF HEARING : 15.12.2015 ) - / DATE OF PRONOUNCEMENT : 18.12.2015 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT, RAJAHMUNDRY. 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS A COMPAN Y NAMELY CITIZEN FORCE FOUNDATION FOR CITIZENS INCORPORATED UNDER TH E COMPANIES ACT BY ITA NO485&486/VIZAG/2014 CITIZEN FORCE FOUNDATION FOR CITIZENS, RAJAHMUNDRY 2 ORDER DATED 21.6.2013. THE ASSESSEE COMPANY FILED AN APPLICATION IN FORM NO.10G DATED 16.1.2004 ON 20.1.2014 FOR GRANT OF REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLE D AS THE ACT). THE OBJECTS OF THE ASSESSEE TRUST ARE AS FOLLOWS: 1. TO THE ADVANCEMENT OF THE OBJECTS OF GENERAL PUBLIC UTILITY WHICH INCLUDES, TO PROMOTE CULTURE OF PEASE AND LAWFULNES S, TO MAKE THE CITIZENS AWARE OF THEIR FUNDAMENTAL DUTIES AND OTHER LEGAL OBLIGATIONS VIZ., TO UPHOLD AND PROTECT THE S OVEREIGNTY, UNITY AND INTEGRITY OF INDIA, TO RENOUNCE PRACTICES DEROG ATORY TO THE DIGNITY OF WOMEN. 2. TO INCULCATE THE HABIT AMONG THE CITIZENS OF INDIA TO BE TRUTHFUL AND PROMPT IN MEETING LEGAL OBLIGATIONS TO PAY INCO ME AND OTHER TAXES TO THE GOVERNMENT IN TIMELY MANNER WHICH WILL ENABLE THE GOVERNMENT TO INCREASE THE WELFARE MEASURES TO THE CITIZENS VIZ., PROVIDING FREE MEDICAL AID, EDUCATION AND OTHER ESS ENTIAL AND BASIC SERVICES TO ALL CITIZENS, TO PROMOTE HARMONY AND TH E SPIRIT OF COMMON BROTHERHOOD AMONGST ALL PEOPLE OF INDIA AND O THER NATIONS TRANSCENDING RELIGIOUS, LINGUISTIC AND REGIONAL OR SECTIONAL DIVERSITIES, TO DEFEND THE COUNTRY AND RENDER NATIO NAL SERVICE WHEN 3. TO SAFEGUARD PUBLIC PROPERTY AND TO ABJURE VIOLENCE , TO STRIVE CALLED UPON TO DO SO. TOWARDS EXCELLENCE IN ALL SPHERES OF INDIVIDUAL AND COLLECTIVE ACTIVITY, SO THAT THE NATION CONSTANTLY RISES TO HI GHER LEVELS OF ENDEAVOR AND ACHIEVEMENT, TO ABIDE BY THE CONSTITUT ION AND RESPECT THE NATIONAL FLAG AND THE NATIONAL ANTHEM, TO ARRAN GE TO ENFORCE FUNDAMENTAL AND HUMAN RIGHTS AND TO PROMOTE DEMOCRA TIC VALUES SO AS TO COUNTER TERRORISM ACTIVITIES BY COORDINATION AND COOPERATION WITH LOCAL, NATIONAL AND INTERNATIONAL GOVERNMENT AND NO N- GOVERNMENTAL ORGANIZATIONS. 4. TO ARRANGE TO PROTECT THE CITIZENS FROM ALL POSSIBL E THREATS WHO COMPLY WITH THE LEGAL OBLIGATIONS UNDER SECTION 39 OF CODE OF CRIMINAL PROCEDURE, 1973 OR IN ANY OTHER STATUTES T O PREVENT CRIMES, ANTISOCIAL ACTIVITIES INCLUDING TERRORISM ACTS, TO PROMOTE VOLUNTARY ORGANIZATIONS / DIVISIONS TO PROVIDE 24/7 HELPLINE TO ARRANGE TO ATTEND ANY EMERGENCY NEEDS OF CITIZENS IN COORDINAT ION WITH ITA NO485&486/VIZAG/2014 CITIZEN FORCE FOUNDATION FOR CITIZENS, RAJAHMUNDRY 3 GOVERNMENTAL AND OTHER AGENCIES, TO ARRANGE TO PROT ECT THE ACADEMIC, TECHNICAL & PROFESSIONAL EDUCATION AND PR ODUCTIVE ENVIRONMENT BY SUITABLE MEASURES / SAFEGUARDING THE PERSONS, TRADE AND INDUSTRY INCLUDING DUTY BOUNDED PUBLIC SERVANTS FROM VARIOUS PERILS AND OTHER DISTURBING FEATS WHICH MAY LIKELY TO CAUSE PUBLIC DISORDER & VIOLENCE, INJURE PERSONS SAND PROPERTY. 5. TO CARRY OUT EDUCATION, MEDICAL RELIEF, RELIEF OF P OOR AND TO PROTECT AND IMPROVE THE NATURAL ENVIRONMENT INCLUDING FORESTS, LAKES, RIVERS AND WILD LIFE AND TO HAVE COMPASSION FOR LIVING CREATUR ES EITHER DIRECTLY, OR BY SUPPORTING FINANCIALLY AND / OR OTHERWISE THE OR GANIZATIONS CARRYING OUT THE AFORESAID ACTIVITIES FOR CHARITABL E PURPOSES AND NOT FOR PROFIT, AND THE PROFITS OF THE COMPANY WHOSOEVE R DERIVED FROM ITS OPERATIONS SHALL BE APPLIED SOLELY FOR THE PROMOTION OF THE OBJECTS OF THIS COMPANY AS SET FORTH IN THIS MEMORA NDUM. 3. THE LD. COMMISSIONER AFTER CONSIDERING THE ABOVE OBJECTS CAME TO A CONCLUSION THAT NO RETURN OF INCOME WAS FILED AND THE ASSESSEE COMPANY HAS VAST OBJECTS WHICH ARE INCIDENTAL AND A NCILLARY TO THE ATTAINMENT OF THE MAIN OBJECTS AND THOUGH THE OBJEC TS ARE CHARITABLE IN NATURE BUT IT IS YET TO CONDUCT ITS ACTIVITIES AND HE DENIED THE REGISTRATION U/S 12AA OF THE ACT, MAINLY ON THE GROUND THAT THE APPLICATION MADE BY THE ASSESSEE IS PREMATURE. ON BEING AGGRIEVED, ASS ESSEE FILED AN APPEAL BEFORE THE ITAT. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT THE OBJECTS OF THE ASSESSEE COMPANY COMMITTED FOR CHARITABLE ACTIV ITIES. ACCORDINGLY TO CARRY OUT EDUCATION, MEDICAL RELIEF, RELIEF TO P OOR AND TO PROTECT AND IMPROVE THE NATURAL ENVIRONMENT INCLUDING VARIOUS L AKES AND RIVERS AND WILD LIFE, ETC. SUBMITTED THAT ASSESSEE HAS NOT FIL ED ANY RETURN OF INCOME ITA NO485&486/VIZAG/2014 CITIZEN FORCE FOUNDATION FOR CITIZENS, RAJAHMUNDRY 4 BECAUSE NO TAXABLE INCOME IS AVAILABLE WITH THE ASS ESSEE. THE PARTY IN PERSON FURTHER SUBMITTED THAT THE LD. COMMISSIONER WITHOUT CONSIDERING THE OBJECTS OF THE TRUST DENIED THE CLAIM OF THE AS SESSEE U/S 12AA OF THE ACT IS NOT JUSTIFIED AND PRAYED FOR REGISTRATIO N U/S 12AA OF THE ACT. 5. ON THE OTHER HAND, LD. D.R. STRONGLY SUPPORTED T HE ORDER OF LD. COMMISSIONER. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECOR DS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE A SSESSEE COMPANY NAMELY CITIZEN FORCE FOUNDATION FOR CITIZENS EXIS TED FOR THE PURPOSE TO CARRY OUT THE CHARITABLE ACTIVITIES. WE HAVE GO NE THROUGH THE OBJECTS OF THE ASSESSEE TRUST AND WE FIND THAT ASSESSEE IS EXISTED FOR THE CHARITABLE AND OTHER ANCILLARY RELATED ACTIVITIES. THE LD. COMMISSIONER DENIED THE REGISTRATION U/S 12AA OF THE ACT TO THE ASSESSEE ON THE GROUND THAT ASSESSEE HAS NOT STARTED ANY ACTIVITIES . WE FIND THAT THE ASSESSEE IS IN INITIAL STAGE OF BEGINNING ITS OPERA TIONS AND THEREFORE THE LD. COMMISSIONER WITHOUT CONSIDERING THE SAME DENYI NG THE REGISTRATION U/S 12AA OF THE ACT ON THE GROUND THAT IT IS A PREM ATURE IS NOT CORRECT. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E CASE, WE ARE OF THE OPINION THAT THE ASSESSEE DESERVES REGISTRATION U/S 12AA OF THE ACT. IN SIMILAR CIRCUMSTANCES, THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE ITA NO485&486/VIZAG/2014 CITIZEN FORCE FOUNDATION FOR CITIZENS, RAJAHMUNDRY 5 OF M/S. G.K. EDUCATION AND CHARITABLE TRUST, VISAKH APATNAM VS. CIT IN ITA NO.631/VIZAG/2013 DATED 24.9.2015, THE COORDINA TE BENCH OF THE TRIBUNAL HAS CONSIDERED THE ISSUE AND HAS OBSERVED AS FOLLOWS: 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECO RDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE A SSESSEE IS A CHARITABLE TRUST APPLIED FOR REGISTRATION U/S 12AA OF THE ACT. WE HAVE GONE THROUGH THE OBJECTS OF THE TRUST AND WE FIND THAT THE MAIN OBJECT OF THE TRUST IS COMMITTED TO CONDUCT VARIOUS PROGRAMMES AND BY ORGA NIZING OTHER ACTIVITIES TO AID CHARITY TO THE PEOPLE. THE ASSES SEE TRUST IS ALSO COMMITTED TO IMPART PRIMARY AND HIGHER EDUCATION TO THE DESERVED PEOPLE. THIS FACT WAS NOT DISPUTED BY THE COMMISSI ONER. THE COMMISSIONER REJECTED THE REGISTRATION U/S 12AA OF THE ACT TO THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT CA RRIED ANY ACTIVITY IN CONSONANCE WITH THE OBJECTS OF THE TRUST EXCEPT DON ATING BOOKS WORTH RS.9,000/-. WE FIND THAT WHEN THE ASSESSEE TRUST I S IN ITS INITIAL STAGE, UNLESS AND UNTIL THE ASSESSEE IS ABLE TO COLLECT TH E DONATIONS, IT IS DIFFICULT FOR THE TRUST TO CARRY OUT THE OBJECTS. OVER A PER IOD OF TIME, ASSESSEE COULD GATHER SUFFICIENT FUNDS AND IT MAY ACHIEVE IT S OBJECTS BASED ON THE AVAILABILITY OF THE FUNDS. WHEN THE ASSESSEE IS IN INITIAL STAGE, IT IS DIFFICULT TO THE ASSESSEE TRUST TO ACHIEVE THE OBJECTS FOR WH ICH IT WAS ESTABLISHED. THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF VIZIANAGARAM ROTARY EYE TRUST (SUPRA) HAS CONSIDERED THIS ASPECT AND IT HAS BEEN HELD THAT THE ASSESSEE TRUST BEING IN THE FIRST YEAR, ASSESSEE HA VING NOT RECEIVED ANY DONATIONS OR FUNDS FROM THE OUTSIDERS EXCEPT THE IN ITIAL CONTRIBUTION, IT CANNOT COMMENCE ITS ACTIVITIES SINCE IT NEEDS SUFFI CIENT FUNDS TO COMMENCE ITS ACTIVITIES. THE LD. COMMISSIONER APPE ARS TO HAVE BEEN DENIED THE REGISTRATION ONLY ON THE GROUND THAT ASS ESSEE HAS NOT CARRIED ANY ACTIVITY, WHICH IN OUR CONSIDERED OPINION CANNO T BE A REASON FOR DENYING THE REGISTRATION IN THE LIGHT OF THE DECISI ON CITED (SUPRA). 7. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES O F THE CASE AND ALSO THE DECISION OF THE COORDINATE BENCH, WE ARE OF THE OPINION THAT THE COMMISSIONER IS NOT JUSTIFIED IN REJECTING THE REGI STRATION U/S 12A OF THE ACT TO THE ASSESSEE. WE THEREFORE, QUASH THE ORDER PASSED BY THE COMMISSIONER AND DIRECTED TO GRANT THE REGISTRATION U/S 12A OF THE ACT TO THE ASSESSEE TRUST. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. ITA NO485&486/VIZAG/2014 CITIZEN FORCE FOUNDATION FOR CITIZENS, RAJAHMUNDRY 6 7. THE VERY SAME COORDINATE BENCH IN THE CASE OF M/ S. DASARI BULLI VENKATA RAJU & SMT. DASARI VENKATA RAMANAMMA CHARIT ABLE TRUST VS. CIT-1, VISAKHAPATNAM IN ITA NO.147/VIZAG/2013 BY OR DER DATED 27.11.2015 HAS CONSIDERED THE SIMILAR ISSUE BY FOLL OWING THE JUDGEMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS. DIRECTOR INCO ME TAX (EXEMPTION) 285 ITR 327 ALLOWED THE CLAIM OF THE AS SESSEE U/S 12AA OF THE ACT. THE RELEVANT PORTION OF THE ORDER IS EXTR ACTED HEREUNDER: 7. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FI ND THAT AS PER THE OBJECTIVES OF THE ASSESSEE TRUST, IT IS EXISTED SOL ELY FOR THE PURPOSE OF CARRYING CHARITABLE ACTIVITIES. IN FACT THE LD. COM MISSIONER HIMSELF HAS SAID THAT ASSESSEE HAS CARRIED OUT ITS ACTIVITIES R ELATING TO EXTENDING EDUCATIONAL FACILITIES TO THE POOR STUDENTS. THE O NLY OBJECTION RAISED BY THE LD. COMMISSIONER IS THAT 85% OF ITS INCOME N OT SPENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND SUBSEQUENT ASSESSMENT YEAR. THIS CANNOT BE A GROUND FOR REJECTION OF REG ISTRATION U/S 12AA OF THE ACT. WHEN THE ASSESSEE FILED AN APPLICATION IN FORM NO.10A SEEKING REGISTRATION, THE LD. COMMISSIONER HAS TO S EE THE OBJECTIVES OF THE SOCIETY AND GENUINENESS IN RESPECT OF CARRYING OUT THE OBJECTIVES. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SAN JEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS. DIRECTOR OF IN COME TAX (EXEMPTION) 285 ITR 327 HAS CONSIDERED THE REGISTRA TION U/S 12A OF THE ACT TO THE CHARITABLE TRUST AND SCOPE OF ENQUIR Y AND OBSERVED THAT FOR THE PURPOSE OF REGISTRATION U/S 12A OF THE ACT WHAT THE AUTHORITIES HAVE TO SATISFY IS THE GENUINENESS OF THE ACTIVITIE S OF THE TRUST OR INSTITUTION AND HOW THE INCOME DERIVED FROM THE TRU ST PROPERTY IS APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES AND NOT THE NATURE OF ACTIVITY BY WHICH THE INCOME IS DERIVED BY THE TRUS T. THERE ARE SUFFICIENT SAFEGUARDS UNDER THE ACT FOR CANCELLATIO N OF THE REGISTRATION IF THE PROVISIONS ARE MISUSED. IN THE PRESENT CASE ALL THE OBJECTIVES OF THE TRUST ARE CHARITABLE IN NATURE AND ASSESSEE ALR EADY CARRIED OUT SUCH CHARITABLE ACTIVITIES AND THE GENUINENESS OF THE AC TIVITIES CARRIED OUT BY THE ASSESSEES TRUST IS DOUBTED BY THE COMMISSIONER . HENCE, THE LD. COMMISSIONER IS NOT JUSTIFIED IN REJECTING THE REGI STRATION U/S 12AA OF THE ACT. THEREFORE, WE QUASH THE ORDER PASSED BY T HE LD. ITA NO485&486/VIZAG/2014 CITIZEN FORCE FOUNDATION FOR CITIZENS, RAJAHMUNDRY 7 COMMISSIONER AND DIRECT HIM TO GRANT REGISTRATION T O THE ASSESSEE TRUST U/S 12AA OF THE ACT. WE ORDER ACCORDINGLY. 7. IN VIEW OF THE ABOVE, WE QUASH THE ORDER PASSED BY LD. COMMISSIONER AND DIRECT HIM TO GRANT REGISTRATION T O THE ASSESSEE SOCIETY U/S 12AA OF THE ACT. WE ORDER ACCORDINGLY. 8. SO FAR AS APPEAL IN ITA NO.486/VIZAG/2014 REGAR DING APPROVAL U/S 80G OF THE ACT IS CONCERNED, THE LD. COMMISSIONER H AS DENIED THE APPROVAL ON THE GROUND THAT IT IS PREMATURE. WE FI ND NO INFIRMITY IN THE ORDER PASSED BY THE LD. COMMISSIONER. HOWEVER, ONC E THE ASSESSEE HAS OBTAINED THE REGISTRATION U/S 12AA OF THE ACT, IT I S OPEN TO THE ASSESSEE TO FILE ANOTHER APPLICATION ALONG WITH ALL THE DETA ILS FOR APPROVAL U/S 80G OF THE ACT. THEREAFTER, THE LD. COMMISSIONER IS DI RECTED TO CONSIDER THE APPLICATION OF THE ASSESSEE FOR APPROVAL U/S 80G OF THE ACT IN ACCORDANCE WITH LAW. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE BY ITA NO.485/VIZAG/2014 SEEKING APPROVAL U/S 12AA OF THE ACT IS ALLOWED AND ITA NO485&486/VIZAG/2014 CITIZEN FORCE FOUNDATION FOR CITIZENS, RAJAHMUNDRY 8 APPEAL OF THE ASSESSEE BY ITA NO.486/VIZAG/2014 SEE KING APPROVAL U/S 80G OF THE ACT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DEC15. SD/- SD/- ( . . . . ) ( . ) ( G. MANJUNATHA) ( (( ( V. DURGA RAO ) )) ) / // / ACCOUNTANT MEMBER / // / JUDICIAL MEMBER /VISAKHAPATNAM: 3 / DATED : 18.12.2015 VG/SPS ) ' 4 / COPY OF THE ORDER FORWARDED TO :- 1. & / THE APPELLANT CITIZEN FORCE FOUNDATION FOR CITIZENS, 78-2-16/2, S AI SIKHARA APARTMENTS, OLD SYAMALAMBA TEMPLE STREET, R AJAHMUNDRY-533 103, EAST GODAVARI DISTRICT, A.P. 2. '(& / THE RESPONDENT THE CIT, RAJAHMUNDRY . 3. 5 () / THE CIT(A), RAJAHMUNDRY 4. ' , , / // / DR, ITAT, VISAKHAPATNAM 5 . . . . / GUARD FILE / BY ORDER // TRUE COPY // 9: ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM