Kovai City Baithulmal Welfare Foundation, CHENNAI V. Commissioner of Income Tax -I, Coimbatore

ITA 491/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61119 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 07-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: R KUMAR
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 491/MDS/2012 M/S KOVAI CITY BAITHULMAL WELFARE FOUNDATION, C/O SHRI T.N. SEETHARAMAN, ADVOCATE, 384 (OLD NO.196), LLOYDS ROAD, CHENNAI - 600 086. PAN : AABTK6740L (APPELLANT) V. THE COMMISSIONER OF INCOME TAX-I, COIMBATORE. (RESPONDENT) APPELLANT BY : SHRI R. KUMAR, ADVOCATE RESPONDENT BY : DR. S. MOHARANA, CIT-DR DATE OF HEARING : 09.05.2012 DATE OF PRONOUNCEMENT : 09.05.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, ITS GRIEVAN CE IS THAT THE COMMISSIONER OF INCOME TAX-I, COIMBATORE, DENIED IT THE REGISTRATION SOUGHT UNDER SECTION 12AA OF INCOME-TAX ACT, 1961 ( IN SHORT 'THE ACT'). ACCORDING TO ASSESSEE, ITS APPLICATION FOR REGISTRA TION WAS REJECTED IMPROPERLY AND WITHOUT APPRECIATING THAT IT HAD DON E PLENTY OF CHARITY WORK. 2 I.T.A. NO. 491/MDS/12 2. SHORT FACTS APROPOS ARE THAT ASSESSEE FILED AN A PPLICATION IN FORM NO.10A ON 20.12.2010 WITH CIT-I, COIMBATORE, SEEKIN G REGISTRATION UNDER SECTION 12AA OF THE ACT. THE APPLICATION WAS INITIALLY REJECTED. ASSESSEE MOVED IN APPEAL BEFORE THIS TRIBUNAL. THI S TRIBUNAL, VIDE ITS ORDER DATED 13.10.2011 IN I.T.A. NO. 1334/MDS/2011, REMITTED THE ISSUE BACK TO THE CIT FOR CONSIDERATION AFRESH. ACCORDIN GLY, THE CIT CALLED UPON THE ASSESSEE TO FILE DETAILS REGARDING THE CHA RITABLE ACTIVITIES CARRIED OUT BY IT WITH EVIDENCE. ASSESSEE FILED SU CH DETAILS OF ACCOUNTS FOR FINANCIAL YEARS 2009-10 AND 2010-11BEFORE THE C IT AND APPEARED BEFORE HIM. A NOTE ON ACTIVITY OF THE ASSESSEE WAS ALSO GIVEN. THE CIT, HOWEVER, WAS OF THE OPINION THAT THE ASSESSEE COULD NOT BE GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT. HE REF USED TO GRANT SUCH A REGISTRATION CITING THE FOLLOWING REASON:- 5.0. THE ABOVE DETAILS FILED BY THE TRUST WERE SUBJECTED TO VERIFICATION . THE TRUST IS IN THE PRACTICE OF LENDING MONEY , THOUGH CLAIMED AS INTEREST-FREE. THIS REVEALS TH E REAL INTENTIONS OF THE TRUST TO CARRY OUT MONEY LENDING BUSINESS ON THE PRETEXT OF CHARITY . AMOUNTS GIVEN TO MARRIAGE EXPENSES AND MEDICAL EXPENSES REPRESENTS ONL Y SPORADIC ACTIVITIES OF THE TRUST TO IMPRESS UPON IT THE FAADE OF CHARITABLE ACTIVITIES. 3. NOW BEFORE US, A.R., STRONGLY ASSAILING THE ORDE R OF CIT, SUBMITTED THAT ASSESSEE HAD, DURING THE FINANCIAL YEAR ENDED 31.3.2010, PAID ` 26,000/- FOR MEDICAL RELIEF AND ` 35,000/- AS INTEREST-FREE LOAN TO POOR. AS PER THE A.R., AUDITED ACCOUNTS PLACED AT PAPER-B OOK PAGE 8 WOULD 3 I.T.A. NO. 491/MDS/12 CLEARLY SHOW THAT ASSESSEE HAD ALSO ADVANCED ` 5 LAKHS FOR MARRIAGE OF POOR GIRLS. REFERRING TO PAPER-BOOK PAGE 11, A.R. POINTED OUT THAT ASSESSEE HAD INCURRED AN EXPENDITURE OF ` 24,88,500/- FOR MARRIAGE OF POOR AND ORPHANED GIRLS IN THE YEAR ENDED 31 ST MARCH, 2011 AND THE INTEREST-FREE LOAN WAS ONLY ` 1,43,600/-. A.R. FURTHER SUBMITTED THAT CONCLUSION OF THE CIT THAT BY WAY OF GIVING LOAN AS SESSEE WAS ENGAGED IN THE BUSINESS OF FINANCE, WAS ENTIRELY FALSE AND INCORRECT WHEN ASSESSEE WAS PURELY ENGAGED IN THE CHARITABLE ACTIV ITIES. THEREFORE, ACCORDING TO A.R. REGISTRATION SOUGHT FOR WAS DENIE D ON FLIMSY REASONS. 4. PER CONTRA, LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF CIT. 5. WE HAVE PERUSED THE ORDER OF CIT AND HEARD THE RIVAL SUBMISSIONS. A LOOK AT THE ACCOUNTS OF THE ASSESSE E-TRUST FOR THE PERIOD 1.12.2009 TO 31.3.2010 PLACED AT PAPER-BOOK PAGE 8 SHOWS THAT ASSESSEE HAD EXPENDED 26,000/- FOR MEDICAL RELIEF, ` 5 LAKHS FOR MARRIAGE OF POOR GIRLS, WHEREAS, THE AMOUNT OF INTE REST-FREE LOAN GIVEN TO WEAKER SECTIONS OF SOCIETY WAS ` 35,000/- ONLY. PAPER-BOOK PAGE 11, WHICH IS THE RECEIPTS & PAYMENTS ACCOUNTS FOR THE Y EAR ENDING 31 ST MARCH, 2011, SHOWS AGAINST INTEREST-FREE LOAN, WAS ` 1,43,600/-, WHEREAS, THE AMOUNT GIVEN FOR MARRIAGE OF POOR AND ORPHANED GIRLS ` 24,88,500/-. IN THE FACE OF THESE FIGURES, WE ARE UNABLE TO FATHOM HOW THE CIT COULD CONCLUDE THAT ASSESSEE WAS ENGAGED IN MONEY LENDING 4 I.T.A. NO. 491/MDS/12 BUSINESS. EVEN IF ASSESSEE HAD ADVANCED THE AMOUNT S, IT WAS ON INTEREST-FREE BASIS AND IN THE BALANCE-SHEET OF THE ASSESSEE-TRUST AS ON 31.3.2010, IT IS CLEARLY MENTIONED THAT SUCH INTERE ST-FREE ADVANCES WERE GIVEN TO POOR AND WEAKER SECTION OF THE SOCIETY. I N OUR OPINION, THERE IS NOTHING ON RECORD TO SHOW THAT ASSESSEE WAS NOT DOI NG CHARITY WORK. ON THE OTHER HAND, IT HAS BEEN CLEARLY DEMONSTRATED TH AT CHARITY WORK WAS DONE BY IT. PAPER-BOOK PAGE 7, WHERE THE ACTIVITIE S OF THE ASSESSEE- TRUST ARE LISTED, CLEARLY STATES THAT IT WAS INVOLV ED IN AIDING POOR AND ECONOMICALLY BACKWARD PERSONS, MEETING MARRIAGE EXP ENSES OF POOR AND ORPHANED GIRLS, GIVING MEDICAL DONATIONS TO POO R AND NEEDY WHO SUFFERED FROM DISEASES. WE ARE OF THE OPINION THAT IN THE GIVEN CIRCUMSTANCES, THE REGISTRATION SOUGHT BY THE ASSES SEE UNDER SECTION 12AA OF THE ACT WAS UNJUSTLY DENIED. THE ORDER OF CIT IS QUASHED AND HE IS DIRECTED TO GRANT THE REGISTRATION SOUGHT BY THE ASSESSEE. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE STAN DS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON WEDNESDAY, THE 9 TH OF MAY, 2012, AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 9 TH MAY, 2012. KRI. 5 I.T.A. NO. 491/MDS/12 COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT-I, COIMBATORE (4) D.R. (5) GUARD FILE