SUDHIR THACKERSEY CHARITABLE TRUST, MUMBAI V. DIT (E), MUMBAI

ITA 5031/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54960 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: misc
• Appeal Filed On: 17-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: A H DALAL
• Keywords: Charitable institution; Wrong claim
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H,MUMBAI BEFORE SHRI PRAMOD KUMAR (AM) & SHRI R.S. PADVEKAR (JM) I.T.A.NO.5031/MUM/2010 SUDHIR THACKERSEY CHARITABLE TRUST, SIR VITHALDAS CHAMBERS, 16, MUMBAI SAMACHAR MARG, MUMBAI-400 001. PAN: AAGTS1971E VS. DIRECTOR OF INCOME-TAX (EXEMPTION), ROOM NO.616, PIRAMAL CHAMBER, LAL BAUG, PAREL, MUMBAI-400012. APPELLANT RESPONDENT APPELLANT BY SHRI A.H. DALAL. RESPONDENT BY SHRI V .V. SHASTRI. DATE OF HEARING 16-08-2011 DATE OF PRONOUNCEMENT 26-08-2011 O R D E R PER PRAMOD KUMAR, AM: BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CALLED INTO QUESTION CORRECTNESS OF DIRECTOR OF INCOME-TAX (EXEMPTION)S ORDER DATED 26 TH APRIL 2010, DECLINING REGISTRATION, TO THE ASSESSEE APPELLANT, U/S.12AA(1)(B)(II) R.W.S. 12A OF THE INCOME-TAX ACT, 1961. 2. THE ISSUE IN APPEAL LIES IN A VERY NARROW COMPAS S OF UNDISPUTED MATERIAL FACTS. THE ASSESSEE TRUST CAME INTO EXISTENCE VIDE TRUST DEED DATED 24 TH AUGUST 2006, AND EVEN THOUGH ASSESSEE TRUST WAS CARRYING O UT ITS ACTIVITIES AND DULY FILING ITS INCOME-TAX RETURNS, WITH CLAIM OF EXEMPT ION U/S.11, ALL THESE YEARS, THE ASSESSEE TRUST DID NOT APPLY FOR REGISTRATION TILL 30-10-2009. IT WAS ONLY ON 30 TH ITA NO.5031/MUM/2010 SUDHIR THACKERSEY CH. TRUST. 2 OCTOBER 2009 THAT THE ASSESSEE FILED AN APPLICATION , IN FORM NO.10A, SEEKING REGISTRATION U/S.12A. 3. ON THESE FACTS, LEARNED DIT DECLINED THE REGISTR ATION, INTER ALIA, ON THE FOLLOWING GROUNDS :- 3. THE SUBMISSION OF THE ASSESSEE IS CONSIDERED CAREFULLY. FROM THE DETAILS FILED BY THE APPLICATIO N IT HAS BEEN FOUND THAT FOR THE A.Y. 2008-09 THERE WERE INC OME FROM INTEREST ON F.D. AT RS.10.66 LACS AND INTEREST ON BANK SAVING A/C. AT RS.2,628/-. THE APPLICANT HAS CLAIME D EXEMPTION U/S.11 TO THE EXTENT OF RS.68,709/- AND ACCUMULATION OF INCOME OF REST OF THE AMOUNT. SIMIL ARLY FOR THE A.Y. 2009-10S THE INCOME HAS BEEN SHOWN AT RS.1 0.70 LACS FROM INTEREST ON F.D. AND INTEREST ON BANK SAV ING A/C. AT RS.4,854/-. THE APPLICANT HAS CLAIMED EXEMPTION U/S.11 AND ALSO CLAIM FOR ACCUMULATION OF INCOME U/S.11(1) OF THE I.T. ACT. IN FACT THE APPLICANT HAS NOT YET BEEN RE GISTERED U/S.12AA OF THE I.T. ACT, 1961, IT CANNOT CLAIM EXE MPTION U/S.11 OF THE I.T. ACT, 1961. SECTION 12A(1) OF THE I.T. ACT, 1961 SPECIFICALLY PROVIDES THAT PROVISIONS OF SEC. 11 AND 12 SHALL NOT APPLY IN RELATION TO THE INCOME OF ANY TR UST OR INSTITUTION UNLESS THE FOLLOWING CONDITIONS ARE FUL FILLED. THE MAIN CONDITION IS THAT IT HAS TO BE REGISTERED U/S. 12AA OF THE I.T. ACT, 1961. 4. IT CLEARLY SHOWN THAT THE APPLICANT HAS CLAIMED EXEMPTION WHICH CANNOT BE GRANTED. THE BASIC PRINCI PLE IN THIS RESPECT IS THAT, CLAIMING EXCESSIVE DEDUCTIONS ALSO AMOUNTS TO CONCEALMENT OF INCOME. FALSEHOOD IN ACCO UNTS CAN TAKE EITHER OF THE TWOS FORMS : EITHER AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY, OR, AN ITEM OF EXPE NDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIME D. BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME. BOTH TY PES AMOUNT TO CONCEALMENT OF THE PARTICULARS OF ONES I NCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INC OME. PENALTY MAY BE IMPOSED FOR EITHER OR BOTH SUCH ATTE MPTS. 5. THE APPLICANT HAS STARTED CLAIMING EXEMPTION EVE N WHEN IT HAS NOT BEEN REGISTERED U/S.12AA OF THE I.T . ACT, 1961. IT IS A MANDATORY PROVISION THAT THE INSTITU TION HAS TO BE REGISTERED U/S.12AA OF THE I.T. ACT, 1961, FOR C LAIMING EXEMPTION U/S.11 OF THE I.T. ACT, 1961. AS PER THE PROVISIONS OF SEC. 12AA OF THE I.T. ACT, 1961, THE COMMISSIONER OF INCOME-TAX HAS BEEN GRANTED POWER T O LOOK INTO THE ACCOUNTS OF THE INSTITUTION AND COME TO THE CONCLUSION THAT IT IS GENUINE. ITA NO.5031/MUM/2010 SUDHIR THACKERSEY CH. TRUST. 3 6. CONSIDERING THE FACT THAT, THE INCOME ON WHICH T HE APPLICANT WAS SUPPOSED TO PAY TAX BUT IT HAS NOT BE EN PAID AND WRONG CLAIM OF DEDUCTION HAS BEEN MADE. 7. AS PER THE PROVISIONS OF SECTION 12AA(1)(B), A T RUST IS TO BE REGISTERED IF THE COMMISSIONER IS SATISFIE D ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF ITS ACT IVITIES. THE APPLICANT HAS NOT COMPLIED PROPERLY WITH THE REQUIREMENTS NECESSARY FOR REGISTRATION U/S.12A OF THE ACT. THERE IS, THUS, NO MATERIAL BEFORE ME TO SATISFY MY SELF ABOUT THE GENUINENESS OF ITS ACTIVITIES, THE CONDIT IONS PRECEDENT TO GRANT REGISTRATION IN THIS CASE IS NOT SATISFIED. IN VIEW OF THE ABOVE, REGISTRATION CANNOT BE GRANTE D TO THE APPLICANT TRUST. 4. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE U S. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED T HE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS A LSO THE APPLICABLE LEGAL POSITION. 6. WE FIND THAT THE ONLY REASON BECAUSE OF WHICH L EARNED DIT HAS DECLINED THE EXEMPTION IS THAT THE ASSESSEE HAD NOT EVEN AP PLIED FOR REGISTRATION OF TRUST U/S.12A, AND YET THE ASSESSEE HAS, IN ITS INC OME-TAX RETURNS, CLAIMED EXEMPTION U/S.11 OF THE ACT. IN OUR CONSIDERED VIEW , THIS OBJECTION, WHATEVER BE ITS MERITS, IS NOT RELEVANT TO THE CONSIDERATION ON WHICH AN APPLICATION FOR REGISTRATION OF A TRUST OR CHARITABLE INSTITUTION I S TO BE EXAMINED. WE HAVE ALSO NOTED THAT AS CLARIFIED BY THE ASSESSEE TO THE DIT VIDE LETTER DATED 18-4-2010, NON-FILING OF REGISTRATION APPLICATION WAS AN INADV ERTENT LAPSE ON THE PART OF THE PERSON LOOKING AFTER AFFAIRS OF THE TRUST, AND THAT, IN ANY CASE, THE ASSESSEE TRUST HAD NOT ACCEPTED ANY DONATION, OTHER THAN CORPUS DONATION AT THE TIME OF FORMATION OF TRUST, DURING THIS PERIOD, EVEN AS FUNDS WERE SPENT FOR OBJECTIVES OF THE TRUST. THE ASSESSEE IS STATED TO HAVE COMMITTED THIS LAPSE OF ITA NO.5031/MUM/2010 SUDHIR THACKERSEY CH. TRUST. 4 NOT HAVING SOUGHT REQUISITE REGISTRATION U/S.12A IN GOOD TIME, BUT THIS LAPSE CANNOT BE VISITED WITH THE CONSEQUENCE OF ITS BEIN G DECLINED REGISTRATION LATER ALSO. SUCH AN APPROACH OF THE LEARNED DIT IS NEITHE R SUPPORTED BY ANY SPECIFIC LEGAL PROVISIONS NOR EVEN BY PLAIN LOGIC OR RATIONA LE. ALL THAT THE DIT WAS TO SEE WAS WHETHER OBJECTS OF THE TRUST ARE CHARITABLE AND WHETHER ACTIVITIES OF THE TRUST ARE BONA FIDE. WE HAVE NOTED THAT THE ASS ESSEE HAD PLACED ENOUGH RELEVANT DETAILS AND SUPPORTIVE EVIDENCES IN SUPPO RT OF THE TRUST OBJECTS BEING CHARITABLE AND TRUST ACTIVITIES BEING BONA FIDE A COPY OF WHICH MATERIAL WAS ALSO PLACED BEFORE US IN THE PAPER BOOK, AND THAT L EARNED DIT DID NOT FIND ANY INFIRMITIES IN THE MATERIAL SO FILED. IN OUR CONSID ERED VIEW, IN THESE CIRCUMSTANCES AND BEARING IN MIND ENTIRETY OF THE C ASE, THERE WERE NO GOOD REASONS TO DECLINE THE REGISTRATION SOUGHT BY THE A SSESSEE. THE DIT HAS NOT FOUND ANYTHING OBJECTIONABLE IN THE OBJECTS OF THE TRUST, AND THE OBJECTION HE HAS RAISED REGARDING ACTIVITIES OF THE TRUST, AS WE HAVE NOTICED ABOVE, IS NOT GERMANE TO THE CONTEXT OF GRANTING REGISTRATION. WE , THEREFORE, DIRECT THE DIT TO GRANT THE REGISTRATION U/S. 12A IN ACCORDANCE W ITH THE LAW. 7. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERMS I NDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E. ON T HE 26TH DAY OF AUGUST, 2011. SD/- SD/- (R.S. PADVEKAR) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 26TH AUGUST, 2011. NG: ITA NO.5031/MUM/2010 SUDHIR THACKERSEY CH. TRUST. 5 COPY TO : 1.ASSESSEE. 2.DEPARTMENT.. 3 DIT(E), MUMBAI. 4 DR,H BENCH, MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NO.5031/MUM/2010 SUDHIR THACKERSEY CH. TRUST. 6 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 16-08-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 16-08-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER