Sree Narayana Seva Sangham, Ernakulam V. CIT, Cochin

ITA 499/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73813 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-01-2014
• Assessment Year: 2011-2012
• Appeal Filed On: 16-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR; LATHA V KUMAR
• Assessee Lawyers: R KRISHNA IYER
• Keywords: Charitable institution
• Section: 12AA; 154

Judgement Text

1 ITA NO.218/COCH/2012 ITA NO.499/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 218/COCH/2012 & I.T.A NO.499/COCH/2013 (ASSESSMENT YEAR 2011-12) SREE NARAYANAN SEVA SANGAM VS C.I.T,-II, KOCHI MULLASSERY CANAL ROAD ERNAKULAM PAN : AAFAS9989Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R KRISHNA IYER RESPONDENT BY : SHRI M ANIL KUMAR, C.I.T.& SMT. LATHA V KUMAR DATE OF HEARING : 02-01-2014 DATE OF PRONOUNCEMENT : 10-01-2014 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE RESPECTIVE ORDERS OF THE ADMINISTRATIVE COMMISSIONER PASSED U/ S 154 OF THE ACT AND U/S 12AA OF THE ACT REJECTING THE REGISTRATION, RES PECTIVELY. 2. SHRI R KRISHNA IYER, THE LD.REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE SOCIETY WAS FORMED WITH AN OBJECT OF SETTING UP 2 ITA NO.218/COCH/2012 ITA NO.499/COCH/2013 EDUCATIONAL INSTITUTIONS, WELFARE MEASURES TO THE P OOR PEOPLE, ESTABLISHMENT OF ORPHANAGE, CLINIC CENTRE. ETC AND TO TEACH AND PROPAGATE SREE NARAYANA DHARMA PROPAGATED BY NARAYANA GURU. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE SANGHAM IS A NON PR OFIT MAKING RELIGIOUS CHARITABLE INSTITUTION. THE ASSESSEE ENGAGED ITSEL F IN THE CHARITABLE ACTIVITY FOR THE LAST SEVEN DECADES. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT ON 28-12-2009 SHRI M.K. RAGHAVAN AWARD WAS AWARDED TO PROF M.K. SANOO MASTER, A PROMINENT WRITER IN MALAYALAM. ON 28-12- 2010 SIXTEENTH ANNIVERSARY OF SHRI M.K. RAGHAVAN WAS OBSERVED. ON 06 TH MARCH, 2011 THE FORTY THIRD DEATH ANNIVERSARY OF SAHODARAN AYYA PPAN WAS OBSERVED. APART FROM THIS, THE SANGHAM USED TO CELEBRATE BIRT HDAY OF SREE NARAYANA GURU BY CONDUCTING DISCOURSES ON HIS TEACHINGS. TH E SANGHAM ALSO USED TO OBSERVE THE DEATH ANNIVERSARY OF SAHODARAN AYYAP PAN ON 06 TH DAY OF MARCH EVERY YEAR. 3. THE LD.REPRESENTATIVE FOR THE ASSESSEE FURTHER S UBMITTED THAT THE OBJECT OF SREE NARAYANA SEVA SANGHAM IS TO PREACH A ND TEACH SREE NARAYANA GURU PHILOSOPHY AND WORKS FOR UNIVERSAL BR OTHERHOOD WITHOUT DIFFERENCES IN CASTE OR RELIGION. ACCORDING TO THE LD.REPRESENTATIVE, PROPAGATING AND TEACHING OF SREE NARAYANA GURU PHIL OSOPHY FOR UNIVERSAL BROTHERHOOD IS A CHARITABLE ACT, THEREFORE, THE ASS ESSEE IS ENTITLED FOR 3 ITA NO.218/COCH/2012 ITA NO.499/COCH/2013 REGISTRATION U/S 12AA OF THE ACT. IN FURTHERANCE O F ITS OBJECT, THE ASSESSEE SANGHAM CONSTRUCTED SANGHA MANDIRAM. 4. PLACING RELIANCE ON THE JUDGMENT OF THE BOMBAY H IGH COURT IN BHAI HIRBAI RAHIM ALOO PAROO & KESARBAI DHARAMSEY KAKOO CHARITABLE & RELIGIOUS TRUST VS CIT (1968) 68 ITR 821 (BOM), THE LD.REPRESENTATIVE SUBMITTED THAT CELEBRATION OF LIVES OF GREAT LEADER S AND PROVIDING A PLATFORM FOR SPREAD OF THEIR TEACHINGS ARE CHARITABLE PURPOS E. THE LD.REPRESENTATIVE HAS ALSO PLACED HIS RELIANCE ON THE DECISION OF THE AHMEDABAD BENCH OF THIS TRIBUNAL IN BARODA CRICKET ASSOCIATION VS ITO (2006) 8 SOT 735 (AHD). THE LD.REPRESENTATIVE FURTHER SUBMITTED THA T DURING THE DEATH ANNIVERSARIES POOR PEOPLE WERE FED WITHOUT ANY DISC RIMINATION. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE COMMISSIONE R OF INCOME-TAX IS NOT JUSTIFIED IN REJECTING THE APPLICATION OF THE ASSES SEE. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE FILED AN APPLIC ATION U/S 154 OF THE I.T. ACT BEFORE THE COMMISSIONER OF INCOME-TAX. HOWEVER , THE COMMISSIONER OF INCOME-TAX HAS ALSO REJECTED THE APPLICATION ONL Y ON THE GROUND THAT THE ASSESSEE COULD NOT FURNISH ANY DOCUMENT OR SATISFAC TORY EVIDENCE. THEREFORE, THE ASSESSEE FILED TWO SEPARATE APPEALS, ONE AGAINST REGISTRATION U/S 12AA OF THE ACT AND THE OTHER AGAI NST REJECTION OF APPLICATION U/S 154 OF THE ACT. 4 ITA NO.218/COCH/2012 ITA NO.499/COCH/2013 5. ON THE CONTRARY, SHRI M ANIL KUMAR, THE LD.DR SU BMITTED THAT THE MAIN OBJECT OF THE TRUST AS FOUND BY THE COMMISSION ER OF INCOME-TAX WAS TO BUILD TEMPLES, TO RUN EDUCATIONAL INSTITUTION, T O GIVE FINANCIAL ASSISTANCE TO THE ELIGIBLE STUDENTS, TO MAKE ARRANGEMENT FOR T ECHNICAL AND SCIENTIFIC RESEARCH. THE COMMISSIONER FURTHER FOUND THAT THE ACTIVITIES CARRIED OUT BY THE SANGHAM MAINLY CONFINED TO OBSERVANCE OF DEATH ANNIVERSARY OF SOME PERSONALITIES, LIKE SAHODARAN AYYAPPAN AND SHRI M.K . RAGHAVAN. SOME AWARDS WERE ALSO OFFERED DURING THAT OCCASION. THE COMMISSIONER FURTHER FOUND THAT SANGHAM WAS INCORPORATED IN THE OFFICE O F THE ASSISTANT REGISTRAR OF JOINT STOCK COMPANIES, THEREFORE, IT D OES NOT FALL WITHIN THE CATEGORY OF ANY OTHER LEGAL OBLIGATIONS. IN THE AB SENCE OF ANY MATERIAL TO SUBSTANTIATE THE CREATION OF THE ASSESSEE SANGHAM, THE COMMISSIONER REJECTED THE APPLICATION. THE ASSESSEE ALSO FILED AN APPLICATION TO RECTIFY THE ORIGINAL ORDER OF REJECTION ON THE GROUND THAT THERE IS AN ERROR U/S 154 OF THE ACT. THE COMMISSIONER FOUND THAT THE ORIGINAL REGISTRATION CERTIFICATE WITH JOINT STOCK COMPANIES WAS NOT FILED AT THE TIM E OF CONSIDERING THE ORIGINAL APPLICATION. THEREFORE, HE FOUND THAT THE RE IS NO ERROR IN HIS ORDER. ACCORDING TO THE LD.REPRESENTATIVE IN THE ABSENCE O F ANY MATERIAL, THE COMMISSIONER HAS RIGHTLY REJECTED THE APPLICATION F ILED BY THE ASSESSEE U/S 12AA OF THE ACT FOR REGISTRATION AND ALSO THE APPLI CATION FILED BY THE ASSESSEE FOR RECTIFICATION U/S 154 OF THE ACT. 5 ITA NO.218/COCH/2012 ITA NO.499/COCH/2013 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT APPEA RS THAT THE ASSESSEE IS CELEBRATING THE DEATH ANNIVERSARY OF SOME OF THE PE RSONALITIES. THE ASSESSEE ALSO CONTENDS THAT THEY ARE TEACHING THE P HILOSOPHY OF SREE NARAYANA GURU. THE LD.REPRESENTATIVE PLACED RELIAN CE ON THE JUDGMENT OF THE BOMBAY HIGH COURT IN BAI HIRBAI RAHIM ALOO PARO O & KESARBAI DHARMAMSEY KAKOO CHARITABLE & RELIGIOUS TRUST (SUPR A). 7. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF T HE BOMBAY HIGH COURT IN BAI HIRBAI RAHIM ALOO PAROO & KESARBAI DHA RMAMSEY KAKOO CHARITABLE & RELIGIOUS TRUST (SUPRA). IN THE CASE BEFORE THE BOMBAY HIGH COURT TWO TRUSTS WERE CREATED BY TWO LADIES, WHO WE RE SISTERS OF SHRI BAI HIRBAI RAHIM ALOO PAROO AND SHRI KESARBAI DHARMAMSE Y KAKOO. SUBSEQUENTLY, THE TRUSTEES APPLIED FOR PERMISSION T O AMALGAMATE THE TWO TRUSTS AND ADMINISTERED THEM AS A SINGLE TRUST. AC CORDINGLY, THE TRUSTS WERE ALLOWED TO AMALGAMATE AND A SCHEME WAS FRAMED BY THE CIVIL COURT. THE DEATH ANNIVERSARY OF IMAM HUSSAIN WAS OBSERVED BY THE TRUSTEES AND IT WAS CLAIMED TO BE A RELIGIOUS AND CHARITABLE PUR POSE. THE ASSESSEE CLAIMED EXEMPTION IN RESPECT OF THE INCOME OF THE T RUST. THE TRIBUNAL, HOWEVER, DISALLOWED THE CLAIM OF THE ASSESSEE ON TH E GROUND THAT THE PURPOSE MAY BE RELIGIOUS; HOWEVER, IN VIEW OF THE P ERSONAL LAW OF THE 6 ITA NO.218/COCH/2012 ITA NO.499/COCH/2013 SETTLER OF THE TRUST IT IS NOT ENTITLED FOR EXEMPTI ON UNDER THE INCOME-TAX ACT. THE BOMBAY HIGH COURT, AFTER CONSIDERING THE PROVIS IONS OF 1922 ACT FOUND THAT THERE IS NO BASIS FOR DISTINCTION DRAWN BY THE TRIBUNAL BETWEEN A RELIGIOUS PURPOSE SO FAR AS PERSONAL LAW OF THE SET TLER IS CONCERNED AND A RELIGIOUS PURPOSE WITHIN THE MEANING OF INCOME-TAX ACT. THE HIGH COURT FOUND THAT INCOME OF THE TRUST ARISING FROM THE SCH EME OF THE MANAGEMENT WAS EXEMPT U/S 4(3)(I) OF THE ACT. 8. IN THIS CASE ALSO, THE ASSESSEE MAINLY CONTENDS THAT DEATH ANNIVERSARY OF SOME OF THE PERSONALITIES WERE OBSER VED AND THE PHILOSOPHY OF SREE NARAYANAN GURU WAS PROPAGATED AMONG THE GEN ERAL PUBLIC. HOWEVER, THIS CONTENTION OF THE ASSESSEE WAS NOT EX AMINED BY THE COMMISSIONER. THE COMMISSIONER PROCEEDED ON THE FO OTING THAT THE CREATION OF THE SANGHAM ITSELF WAS NOT ESTABLISHED BY PRODUCING NECESSARY EVIDENCE. EVEN THOUGH THE ASSESSEE CLAIMS THAT THE SANGHAM WAS REGISTERED WITH REGISTRAR OF JOINT STOCK COMPANIES, THE COPY OF THE REGISTRATION CERTIFICATE WAS NOT PRODUCED BEFORE TH E COMMISSIONER OF INCOME-TAX. THEREFORE, THE COMMISSIONER OF INCOME- TAX DOUBTED THE VERY EXISTENCE OF THE TRUST. THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT UNLESS AND UNTIL THE ASSESSEE ESTABLISHES THE CREAT ION OF THE TRUST BY PRODUCING NECESSARY MATERIAL IT CANNOT CLAIM ANY RE GISTRATION U/S 12AA OF 7 ITA NO.218/COCH/2012 ITA NO.499/COCH/2013 THE ACT. IT IS OBLIGATORY ON THE PART OF THE ASSES SEE TO PRODUCE NECESSARY MATERIAL FOR ITS EXISTENCE IN LAW. THE ASSESSEE NO W CONTENDS BEFORE THIS TRIBUNAL THAT THE TRUST WAS ESTABLISHED AND CARRIES ON RELIGIOUS AND CHARITABLE ACTIVITY. THE ASSESSEE HAS ALSO NARRATE D CERTAIN EVENTS WHICH WAS CARRIED OUT BY THE ASSESSEE TRUST. ALL THESE E VENTS COULD BE CONSIDERED IF THE TRUST WAS ESTABLISHED AS PER THE EXISTING LAW OF THE LAND. THE COMMISSIONER, WHILE CONSIDERING THE APPLICATION OF THE ASSESSEE U/S 12AA IS ENTITLED TO CONSIDER THE ACTIVITY OF THE AS SESSEE AND ITS GENUINENESS. THEREFORE, GENUINENESS OF ESTABLISHME NT OF THE TRUST IS ONE OF THE MATTER WHICH NEEDS TO BE ESTABLISHED BEFORE THE COMMISSIONER. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHE N THE ASSESSEE CLAIMS THAT THE TRUST WAS REGISTERED WITH REGISTRAR OF JOI NT STOCK COMPANIES, THERE MAY NOT BE ANY DIFFICULTY IN PRODUCING THE COPIES O F THE CERTIFICATE BEFORE THE COMMISSIONER OF INCOME-TAX FOR EXAMINING ITS GE NUINENESS. THEREFORE, GIVING ONE MORE OPPORTUNITY TO THE ASSES SEE TO PRODUCE NECESSARY MATERIAL TO ESTABLISH THE CREATION OF THE TRUST MAY NOT PREJUDICE THE INTEREST OF THE REVENUE IN ANY WAY. THIS TRIBU NAL IS OF THE CONSIDERED OPINION THAT GIVING SUCH AN OPPORTUNITY TO THE ASSE SSEE TO PRODUCE NECESSARY MATERIAL WITH REGARD TO CREATION OF THE T RUST WOULD PROMOTE THE CAUSE OF JUSTICE. ACCORDINGLY, THE ORDERS OF LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE C OMMISSIONER OF INCOME- 8 ITA NO.218/COCH/2012 ITA NO.499/COCH/2013 TAX. THE COMMISSIONER OF INCOME-TAX SHALL EXAMINE THE ISSUE AFRESH IN THE LIGHT OF MATERIAL THAT MAY BE FILED BY THE ASSE SSEE AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THE ASSES SEE IS AT LIBERTY TO FILE ALL THE DOCUMENTS INCLUDING CERTIFICATE ISSUED BY T HE REGISTRAR OF JOINT STOCK COMPANIES BEFORE THE COMMISSIONER OF INCOME-T AX. WE MAKE IT CLEAR THAT WE ARE NOT EXPRESSING ANY OPINION ABOUT THE CREATION OF THE TRUST OR ITS ACTIVITIES. WE ARE JUST REPRODUCING THE ACT IVITIES OF THE TRUST AS CONTENDED BY THE ASSESSEE. THE COMMISSIONER OF INC OME-TAX SHALL EXAMINE THE SAME ON MERIT AFTER CONSIDERING THE CON TENTIONS OF THE ASSESSEE WITHOUT BEING INFLUENCED BY ANY OF THE OBS ERVATIONS MADE IN THIS ORDER. 9. WITH THE ABOVE OBSERVATIONS, THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH JANUARY, 2014. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 10 TH JANUARY, 2014 PK/- 9 ITA NO.218/COCH/2012 ITA NO.499/COCH/2013 COPY TO: 1. SREE NARAYANAN SEVA SANGAM, MULLASSERY CANAL ROA D, ERNAKULAM 2. C.I.T.-II, KOCHI 3. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH