JALARAM SEVA MANDAL SANTACRUZ, MUMBAI V. CIT (EXEMPTION ), MUMBAI

ITA 5050/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6083 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2018-2019
• Appeal Filed On: 31-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KASHYAP S VEPARI
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

1 ITA 5050 /MUM/2018 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI PAWAN SINGH (JM) & SHRI S.RIFAUR RAHMAN (A.M.) ITA NO. 5050/MUM/2018 (ASSESSMENT YEAR :2018-19) SHREE JALARAM SEVA MANDAL SANTACRUZ, C/O SHRI NIKHIL D MANIAR, AMAR KUNJ BLDG, GROUND FLOOR, BESANT ROAD SANTACRUZ WEST, MUMBAI- 400 054 PAN : AAUTS2243P VS CIT(E), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SMT. AARTI VISSANJI & SHRI KASHYAP S VEPARI RESPONDENT BY SMT. SMITI SAMANT, CIT-DR DATE OF HEARING 22-01-2020 DATE OF PRONOUNCEMENT 31-01-2020 O R D E R PER PAWAN SINGH, JM : 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF COMMISSIONER OF INCOME-TAX (EXEMPTION) DATED 30-07-2018 PASSED U/S 12AA IN REJECTING / DECLINING REGISTRATION U/S 12A. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE COMMISSIONER OF INCOME TAX (EXEMPTIO N) ERRED IN DENYING THE APPELLANT REGISTRATION UNDER SECTION 12AA OF TH E INCOME TAX ACT, 1961. 2. THE CIT (E) ERRED IN HOLDING THAT: A) THE OBJECTS OF APPELLANT TRUST ARE NOT EN TIRELY CHARITABLE. B) SOME OF THE OBJECTS OF THE APPELLANT TRUS T HAVE COMMERCIAL SHADES. C) IN THE ABSENCE OF ACTIVITIES THE GENUINEN ESS OF THE OBJECTS COULD NOT BE ASCERTAINED. 2 ITA 5050 /MUM/2018 3. THE COMMISSIONER OF INCOME TAX (EXEMPTION ) FAILED TO APPRECIATE THAT: A) THE APPELLANT IS RECOGNIZED AS A CHARITAB LE SOCIETY AS PER THE CHARITY COMMISSIONER MUMBAI AND REGISTER UNDER THE MAHARASHTRA PUBLIC TRUST ACT, 1950. B) THE OBJECTS OF THE TRUST ARE FOR CONDUCTI NG SOCIAL WELFARE ACTIVITIES WITHOUT PROFIT MOTIVE. 4. EXCEPT CONJECTURE, THERE WAS NO BASIS FOR THE CI T ( E) TO HOLD THAT THE OBJECTS OF THE APPELLANT ARE NOT CHARITABLE. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A TRUST. THE ASSESSEE WAS SET UP VIDE TRUST DEED DATED 18.07.2017. THE ASSESS EE IS ALSO REGISTERED WITH CHARITY COMMISSIONER, MUMBAI VIDE REGISTRATION DATED 11.01.2018. THE ASSESSEE FILED AN APPLICATION IN FORM 10A ON 18-01- 2018 BEFORE LEARNED COMMISSIONER OF INCOME TAX (EXE MPTION) CIT (E) FOR REGISTRATION U/S 12A. THE LD.CIT(E), WHILE MA KING ENQUIRY, ASKED FOR CERTAIN DETAILS FROM THE ASSESSEE, LIKE P AN CARD OF TRUST AND SETTLER, BANK ACCOUNTS, NOC IN RESPECT OF OFFICE PR EMISES, CERTIFICATE OF REGISTRATION ISSUED BY CHARITY COMMISSIONER, AUDITE D ACCOUNTS AND NOTE ON ACTIVITIES UNDERTAKEN BY ASSESSEE WITH DOCUMENTA RY EVIDENCES. THE LD. CIT(E) NOTED THAT AFTER SEEKING TWO WEEKS TIME FOR FURNISHING NECESSARY DETAILS, NEITHER THE REPRESENTATIVE OF TH E ASSESSEE APPEARED, NOR FURNISHED NECESSARY DETAILS. ACCORDINGLY, A NO TICE GRANTING FINAL OPPORTUNITY WAS SENT TO THE ASSESSEE TO FILE / FURN ISH EVIDENCE ON 17-05- 2018. IN RESPONSE TO SAID FINAL SHOW CAUSE NOTICE, THE REPRESENTATIVE OF ASSESSEE FURNISHED PART DETAILS / DOCUMENTS AS RECO RDED BY LD. CIT(E). 3 ITA 5050 /MUM/2018 ON THE BASIS OF DETAILS / EVIDENCE FURNISHED, THE L D.CIT(E) TOOK HIS VIEW THAT THERE WAS NO ACTIVITY CONDUCTED BY ASSESSEE IN PURSUANCE OF THE OBJECT. THE ASSESSEE WAS AGAIN ASKED TO SUBSTANTIA TE WITH DOCUMENTARY EVIDENCE ABOUT THE ACTIVITIES. LD.CIT(E) FURTHER N OTED THAT PART DETAILS / DOCUMENTS WERE FURNISHED ON 24-05-2018. AFTER CONS IDERING THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(E) NOTED THAT OBJECTS OF THE ASSESSEE CONTAINED A NUMBER OF ACTIVITIES AND IF TH OSE ACTIVITIES WERE DONE ALONG WITH RUNNING OF A SCHOOL FOR EDUCATION, THEN IT IS POSSIBLE THAT THESE ACTIVITIES WERE ON COMMERCIAL BASIS AND SUCH ACTIVITIES IF DONE INDEPENDENTLY, MAY NOT QUALIFY FOR EXEMPTION, IF AN Y, IN THE DEFINITION OF CHARITABLE ACTIVITY . THE LD. CIT(E) CONCLUDED THAT TRUSTEES ARE HAVING POWER TO PURSUE ANY OR MORE OBJECTS OF THE T RUST AS THE TRUSTEES IN THEIR DISCRETION MAY DEEM FIT FROM TIME TO TIME AND MANY OBJECTS COULD BE USED BY THE TRUSTEES WHICH IS NOT CHARITABLE AND CONCLUDED THAT OBJECT OF THE ASSESSEE WHICH HAVE COMMERCIAL SHADES; MOREO VER, THERE ARE NO ACTIVITIES IN RESPECT OF OBJECT FROM WHERE ONE CAN GET INSIGHT INTO GENUINENESS OF THE OBJECTS AND REJECTED THE APPLICA TION. AGGRIEVED BY THE ORDER OF LD.CIT(E), ASSESSEE HAS FILED THE PRES ENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSION OF LEARNED AUTHORISED REPRESENTATIVE ( LD. AR) OF THE ASSESSEE AND THE DEPARTMENTAL REPRESENTA TIVE (LD. DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON R ECORD. THE LD.AR OF 4 ITA 5050 /MUM/2018 THE ASSESSEE SUBMITS THAT WHEN THE TRUST HAS NOT YE T COMMENCED ITS ACTIVITY, THE LD. CIT(E) WOULD HAVE NO AUTHORITY IPSO FACTO TO REJECT APPLICATION OF REGISTRATION U/ 12AA BY TAKING VIEW THAT NO ACTIVITY IS UNDERTAKEN BY THE ASSESSEE. THE LD.AR FURTHER SUBMI TS THAT THE TRUST WAS IN INITIAL STAGE AND WAS SET UP BY TRUST DEED D ATED 18-10-2017 AND WAS REGISTERED WITH CHARITY COMMISSIONER ON 11-01-2 018 THE LD.AR FURTHER SUBMITS THAT AT THE TIME OF REGISTRATION, T HE QUESTION OF APPLICATION OF INCOME OF TRUST IS PREMATURE. ALL T HESE QUESTIONS MAY BE RAISED WHEN THE ASSESSMENT IS MADE. THE LD.AR SUBM ITS THAT WHERE THE PRIMARY AND PREDOMINANT OBJECT OF THE TRUST WAS TO MAKE CHARITY THOUGH IT MAY BE IN A DIVERGENT AREA, THE PRIMA FACIE OBJE CT OF THE ASSESSEE WOULD REMAIN IN THE NATURE OF CHARITY. IN SUPPORT OF HER SUBMISSION, THE LD.AR OF THE ASSESSEE RELIED UPON THE FOLLOWING DEC ISIONS:- CIT(EXEMPTION) VS MANEKJI MOTA CHARITABLE TRUST (2019) 109 TAXMANN.COM 258 (BOMBAY) DIRECTOR OF INCOME-TAX (EXEMPTION) VS PANNA LLBHAI FOUNDATION (2013) 35 TAXMANN.COM 104 (GUJARAT) SAKHI-SAHELI MICROFINANCE FORUM VS CIT(E) (2019) 108 TAXMANN.COM 435 (JAIPUR-TRIB) 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LD. CIT(E). THE LD. DR SUBMITS THAT ASSESSEE FAILE D TO SUBSTANTIATE ITS GENUINENESS OF ACTIVITIES BY ANY EVIDENCE AND THE L D. CIT(E) CLEARLY 5 ITA 5050 /MUM/2018 HELD THAT THERE IS NO ACTIVITIES IN RESPECT OF OBJE CT WHEREFROM HE MAY EXAMINE THE GENUINENESS OF THE OBJECT IS SHOWN BY T HE ASSESSEE BY WAY OF ANY DOCUMENTARY EVIDENCES. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE N OTED THAT THE ASSESSEE, DESPITE PROVIDING VARIOUS OPPORTUNITIES F AILED TO SUBSTANTIATE ITS ACTIVITIES. THE LD.AR SUBMITS THAT THE TRUST W AS IN INITIAL STAGE AND WAS SET UP BY TRUST DEED DATED 18-10-2017 AND WAS R EGISTERED WITH CHARITY COMMISSIONER ON 11-01-2018. THE LD.AR VEHE MENTLY SUBMITTED THAT TRUST HAS NOT COMMENCED ITS ACTIVITI ES. IN OUR VIEW, WHILE GRANTING REGISTRATION, THE LD. CIT(E) IS EMPOWERED TO EXAMINE THE OBJECT OF THE TRUST AND GENUINENESS OF ITS ACTIVITI ES. PERUSAL OF TRUST DEED REVEALS THAT THE ASSESSEE HAS DIVERGENT OBJECTS AS MENTIONED AT PARAS 3 & 4 OF THE TRUST DEED. WE HAVE FURTHER NOTED THAT TH E TRUST WAS REGISTERED WITH CHARITY COMMISSIONER ON 11-01-2018 AND THE TRU ST HAS JUST STARTED ITS ACTIVITY. THEREFORE, NO MUCH ACTIVITY WAS UNDE RTAKEN BY THE TRUST, AS IT WAS IN THE PRELIMINARY STAGE OF SET UP. MOREOVE R, THE LD.CIT(E) HAS NOTED THAT ASSESSEE HAS NOT FURNISHED ANY DOCUMENTA RY EVIDENCE TO PROVE ITS GENUINENESS OF ACTIVITIES. THEREFORE, WE DEEM IT APPROPRIATE TO RESTORE THE MATTER BACK TO THE FILE OF LD.CIT(E) TO CONSIDER THE MATTER AFRESH. THE ASSESSEE IS ALSO DIRECTED TO FURNISH AL L THE NECESSARY EVIDENCE 6 ITA 5050 /MUM/2018 AND DETAILS INCLUDING THE ACTIVITIES UNDERTAKEN BY ASSESSEE IN ACCIDENCE WITH THE OBJECT OF THE TRUST. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 31-01-2020. SD/- SD/- (S. RIFAUR RAHMAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 31 ST JANUARY, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI