KANDOI CHARITABLE TRUST, Jaipur V. CIT-EXEMPTION, Jaipur

ITA 509/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1992 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 09-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDAR MEHTA CIT DHK
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 509/JP/2016 U/S 80G (5)(VI) KANDOI CHARITABLE TRUST, C-171, 9J VKI AREA, JAIPUR CUKE VS. CIT (EXEMPTIONS), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACTK6594M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI (C.A) JKTLO DH VKSJ LS@ REVENUE BY: SHRI VARINDAR MEHTA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14/07/2017 MN?KKS'K.KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 24/07/2017 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THE ASSESSEE HAS MOVED PRESENT APPEAL AGAINST THE ORDER DATED 04.04.2016 PASSED BY LD. CIT(EXEMPTIONS) WHEREIN TH E ASSESSEE HAS CHALLENGED THE DENIAL OF APPROVAL U/S 80G(5)(VI) OF THE ACT. 2. THE LD. CIT(EXEMPTIONS) IN HIS ORDER BASICALLY N OTED THAT SINCE NO CHARITABLE HAS BEEN STARTED BY THE ASSESSEE AS PER ITS OBJECTS, THE CASE DOES NOT SEEM FIT FOR GRANTING EXEMPTION U/S 80G(5) (VI) OF THE ACT. ACCORDINGLY, ASSESSEES APPLICATION WAS REJECTED. ITA NO. 56 0/JP/2014 M/S KHAITAN C HEMICAL LTD. VS. THE ACIT 2 3. THE LD. AR SUBMITTED THAT THE APPELLANT TRUST CA ME INTO EXISTENCE VIDE TRUST DEED DATED 04.08.2015. THE TRUST WAS GRA NTED APPROVAL U/S 12AA VIDE ORDER DATED 24.02.2016. THE TRUST MADE AN APPLICATION WITHIN ABOUT 2 MONTH OF ITS COMING INTO EXISTENCE SEEKING APPROVAL UNDER SECTION 80G(5)(VI) OF THE ACT. HOWEVER ITS APPLICAT ION FOR APPROVAL U/S 80G(5)(VI) WAS REJECTED VIDE ORDER DATED 04.04.201 6. THERE IS NO REQUIREMENT UNDER THE LAW FOR MINIMUM LEVEL OF CHAR ITABLE ACTIVITY FOR BEING ELIGIBLE FOR APPROVAL U/S 80G. THE INQUIRY FO R GRANT OF APPROVAL U/S 80G ARE PARA MATERIA SAME AS THAT OF FOR APPROVAL U /S 12AA. THERE ARE ENOUGH JUDICIAL PRECEDENCE WHICH HAVE HELD THAT FOR GRANT OF APPROVAL U/S 12AA THERE IS NO NECESSITY OF CHARITABLE ACTIVI TIES HAVING COMMENCED. SAME JUDICIAL PRONOUNCEMENTS ARE APPLICA BLE, WITH EQUAL FORCE, ON THE ISSUE OF GRANT OF APPROVAL U/S 80G. T HE LD. CIT(E) HAVING GRANTED APPROVAL U/S 12AA WHOLLY UNJUSTIFIED IN REJ ECTING THE APPROVAL U/S 80G. THE INFERENCE DRAWN BY REFERENCE TO THE PR OVISION OF SECTION 80G(5)(IV) & RULE 11AA(2)(II) IS ERRONEOUS. THE REQ UIREMENT FOR MAINTAINING REGULAR ACCOUNTS OF ITS RECEIPTS AND EX PENDITURE AS WELL AS NOTES ON ACTIVITIES IS APPLICABLE AND IS TO BE SEEN IF THE APPLICATION FOR APPROVAL IS MOVED AFTER A LONG GAP OF THE TRUST COM ING INTO EXISTENCE. THERE IS NO MANDATORY REQUIREMENT OF COMMENCING ACT IVITIES TO BE ELIGIBLE FOR 80G APPROVAL. ANY INDIRECT INFERENCE T O THIS EFFECT IS UNJUSTIFIED AND AMOUNTS TO PUTTING CONDITION WHICH EVEN LEGISLATURE HAVE NOT PRESCRIBED. 4. IN SUPPORT, THE LD AR PLACED RELIANCE ON FOLLOW ING JUDICIAL PRONOUNCEMENTS: ITA NO. 56 0/JP/2014 M/S KHAITAN C HEMICAL LTD. VS. THE ACIT 3 DIT(E) VS. MEENAKSHI AMMA ENDOWMENT TRUST (2013) 35 4 ITR 0219 WHEREIN THE HONBLE KARNATAKA HIGH COURT HAS H ELD AS UNDER: 5 ..WHEN THE TRUST ITSELF WAS FORMED IN JANUARY 2008 WITH THE MONEY AVAILABLE WITH THE TRUST, ONE CANNOT EXPECT THEM TO DO ACTIVITY OF CHARITY IMMEDIATELY AND BECAUSE O F THAT SITUATION THE AUTHORITY CANNOT COME TO A CONCLUSION THAT TRUS T WAS NOT INTENDING TO DO ANY ACTIVITY OF CHARITY. 6 A TRUST COULD BE FORMED TODAY AND WITHIN A WEEK REGISTRATION UNDER S. 12A COULD BE SOUGHT AS THERE IS NO PROHIBITION UNDER THE ACT SEEKING SUCH REGISTRATION. THE ACTIVI TIES OF THE TRUST HAVE TO BE CONSIDERED IF SUCH REGISTRATION IS SOUGH T MUCH LATER THAN THE FORMATION OF THE TRUST OR AFTER EXPIRY OF THE EARLIER REGISTRATION GRANTED IN FAVOUR OF THE TRUST. THEREF ORE IN A CASE OF THIS NATURE WHERE THE TRUST HAS APPROACHED THE AUTH ORITY FOR REGISTRATION UNDER S. 12A WITHIN A SPAN OF EIGHT MO NTHS OF ITS FORMATION, THE ABOVE-MENTIONED CRITERIA NAMELY, THE OBJECTS OF THE TRUST FOR WHICH IT WAS FORMED WILL HAVE TO BE EXAMI NED TO BE SATISFIED ABOUT ITS GENUINENESS AND ACTIVITIES OF T HE TRUST CANNOT BE THE CRITERION, SINCE IT IS YET TO COMMENCE ITS ACTI VITIES. HEMDHA MEDI RESOURCES (P.) LTD. VS. CIT(E), JAIPUR (2016) 71 TAXMANN. COM 205 WHEREIN IT WAS HELD AS UNDER: 2.9 ..THE APPROVAL UNDER SECTION 80G IS CLOSEL Y LINKED TO APPROVAL UNDER SECTION 12AA. NOW ONCE, THE REGISTRA TION UNDER SECTION 12AA HAS BEEN GRANTED, THE APPROVAL UNDER S ECTION 80G SHOULD NOT BE DENIED UNLESS THE CASE OF THE APPELLA NT FALLS UNDER ITA NO. 56 0/JP/2014 M/S KHAITAN C HEMICAL LTD. VS. THE ACIT 4 NON-FULFILLMENT OF ONE OR MORE OF THE CONDITIONS SP ECIFIED IN SECTION 80G(5) WHICH IS NOT THE CASE BEFORE US. SARASWATHI SWETHA EDUCATIONAL TRUST VS. DIT(E) [ITA NO. 495/MDS/2011] 6 ..THERE IS NOTHING IN THE ACT WHICH PREVENT S AN ASSESSEE FROM MAKING APPLICATIONS FOR REGISTRATION UNDER SECTION 12AA AND FOR APPROVAL UNDER SECTION 80G OF THE ACT IMMEDIATELY ON ITS FOUNDATION. IN THE CASE OF MEENAKSHI AMMA ENDOW MENT TRUST (SUPRA), HONBLE KARNATAKA HIGH COURT CLEARLY HELD THAT ACTIVITIES OF THE TRUST HAD TO BE CONSIDERED ONLY IF REGISTRATION WAS SOUGHT LONG AFTER THE FORMATION OF TRUST. .IN THE LIGHT OF THE DECISION OF HONBLE KARNATA KA HIGH COURT IN THE CASE MEENAKSHI AMMA ENDOWMENT TRUST (SUPRA), WE ARE OF THE OPINION THAT THE ASSESSEE WAS ELIGIBLE FOR REGISTRA TION UNDER SECTION 12AA AS WELL AS FOR APPROVAL UNDER SECTION 80G OF T HE ACT. 5. IT WAS FURTHER SUBMITTED THAT WITHOUT PREJUDICE TO ABOVE, ATTENTION IS DRAWN TOWARDS THE PROVISION OF SECTION 293C WHICH E MPOWERS THE LD. CIT(E) TO WITHDRAW EXEMPTION IF HE IS NOT SATISFIED WITH THE EXTENT OF ACTIVITIES CARRIED OUT BY CHARITABLE TRUST. THUS, T HE REMEDY BEING MADE AVAILABLE UNDER THE LAW, THERE IS NO JUSTIFICATION TO REJECT THE APPLICATION AT THE THRESHOLD LEVEL FOR THE REASON OF NON-COMMEN CEMENT OF ACTIVITIES. 6. IT WAS FURTHER SUBMITTED BY THE LD AR THAT THE A SSESSEE TRUST HAS MADE CONTRIBUTION BY WAY OF REIMBURSEMENT OF FOOD E XPENSES IN A SPORTS COMPETITION ORGANIZED BY GOVERNMENT SCHOOL A T MALPURA ON 16.9.2016 AMOUNTING TO RS 35,000 WHICH IS IN CONSON ANCE WITH OBJECTS ITA NO. 56 0/JP/2014 M/S KHAITAN C HEMICAL LTD. VS. THE ACIT 5 OF THE TRUST. IT WAS ALSO BROUGHT TO THE NOTICE OF THE BENCH THAT ASSESSEE TRUST HAS PROVIDED BOOKS TO NEEDY STUDENTS AMOUNTING TO RS 6,469 WHICH IS AGAIN IN CONSONANCE WITH THE OBJE CTS OF THE TRUST. 7. THE LD CIT(DR) IS HEARD AND HE HAS SUPPORTED THE ORDER OF THE LD CIT(E). REGARDING ASSESSEES CONTENTION THAT IT HA S ACTUALLY STARTED CARRYING OUT ACTIVITIES IN CONSONANCE WITH ITS OBJE CTIVES, THE LD CIT(DR) SUBMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS REMANDED BACK TO THE LD CIT(E) TO EXAMINE THE CLAIM OF THE ASSESSEE. 8. HAVING HEARD BOTH THE PARTIES AND PURSUING THE M ATERIAL ON RECORD, GIVEN THE FACT THAT THE ASSESSEE TRUST HAS STARTED CARRYING OUT ACTIVITIES IN TERMS OF CONTRIBUTION TO SPORTS ACTIVITIES AND B OOKS DISTRIBUTION WHICH IS CLAIMED TO BE IN CONSONANCE WITH ITS OBJECTIVES, WHICH IS A PRINCIPLE CONTENTION RAISED BY THE REVENUE WHILE DENYING THE APPROVAL U/S 80G, WE ARE SETTING ASIDE THE MATTER TO THE FILE OF THE LD CIT(E) TO EXAMINE THE SAME AFRESH IN ACCORDANCE WITH LAW. IN THE RES ULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24/07/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24/07/2017. *GANESH*. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- KANDOI CHARITABLE TRUST, JAIPUR ITA NO. 56 0/JP/2014 M/S KHAITAN C HEMICAL LTD. VS. THE ACIT 6 2. IZR;FKHZ@ THE RESPONDENT- CIT(EXMPTIONS), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 509/JP/2016}. VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR