M/s.Alleppey District Gold Merchants Association, Alappuzha V. The CIT (Exemptions), Cochin

ITA 511/COCH/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8443 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 19-07-2016
• Assessment Year: misc
• Appeal Filed On: 29-10-2015
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

ITA NO.511/COCH/2015 1 , , , , IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN . . , ., !' !' !' !' BEFORE S/SHRI B. P. JAIN, AM & GEORGE GEORGE K., JM # # # # ./ I.TA NO.511/COCH/2015 ( $% & /ASSESSMENT YEAR : -) M/S. ALLEPPEY DISTRICT GOLD MERCHANTS ASSOCIATION, AMC XVIII/1285, CULLEN ROAD, MULLAKKAL, ALAPPUZHA-688 001. VS THE CIT(EXEMPTIONS), KOCHI. ( '( '( '( '( /ASSESSEE APPELLANT) ( ) )) ) * * * * '( '('( '( /REVENUE -RESPONDENT) ' . . # ./PAN NO. '( + , /ASSESSEE BY SHRI R. SREENIVASAN, CA ) * '( + , /REVENUE BY SHRI SHANTAM BOSE, CIT(DR) -. + /0 / DATE OF HEARING 19/07/2016 1 & + /0 /DATE OF PRONOUNCEMENT 20/07/2016 2 2 2 2 /ORDER PER B.P. JAIN, AM: THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F THE LD. CIT(EXEMPTIONS), KOCHI VIDE ORDER DATED 30/09/2015 PASSED U/S. 12AA OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT(EXEMPTIONS),KOCHI IS NOT JUSTIFIED IN RE JECTING THE APPLICATION U/S. 12AA FILED BY THE APPELLANT. ITA NO.511/COCH/2015 2 2. THE COMMISSIONER OF INCOME TAX(EXEMPTION) HAS N OT GIVEN A SPEAKING ORDER AND SUMMARILY REJECTED THE APPLICATION. 3. IT IS NOT CORRECT ON THE PART OF THE COMMISSION ER OF INCOME TAX(EXEMPTION) TO HOLD THAT CHARITABLE ACTIVITIES ARE VERY LESS. 4. IT WAS NOT CORRECT ON THE PART OF THE COMMISSIO NER TO HOLD THAT THE TRUST IS A TRADING ORGANIZATION ESTABLISHED FOR THE COMMON C AUSE OF THE MEMBERS OF THE SOCIETY AND BENEFIT RESTRICTED TO THE MEMBERS O F THEIR FAMIIY. 5. FOR THE ABOVE REASONS AND OTHER REASON AS MAY B E ADDUCED AT THE TIME OF HEARING, YOUR APPELLANT PRAYS THAT REGISTRATION U/S. 12AA MAY BE DIRECTED TO BE GRANTED. 3. THE LD. CIT(EXEMPTIONS), KOCHI HAS PASSED THE ORDER U/S. 12AA OF THE ACT DATED 30-09-2015, REJECTING THE APPLICATION FILED F OR REGISTRATION OF THE ASSOCIATION UNDER SECTION 12AA OF THE ACT. THE RE LEVANT FINDINGS OF THE LD. CIT(EXEMPTIONS) FOR REJECTING THE APPLICATION ARE R EPRODUCED HEREINBELOW FOR THE SAKE OF CONVENIENCE: 2. ENQUIRIES REVEALED THAT THE TRUST STARTED FUNCT IONING ON 28-10-1981. THIS IS A TRUST CREATED FOR THE BENEFIT OF THE TRADERS ENGAGE D IN GOLD JEWELLERY BUSINESS FOR THEIR COMMON CAUSE. THE MAIN OBJECTS ARE THE O VERALL DEVELOPMENT OF THE TRADERS ENGAGED IN GOLD JEWELLERY BUSINESS. CHA RITY IS AN ANCILLIARY ACTIVITY. FROM ITS INCEPTION, THE TRUST WAS IN OPERATION. CHA RITABLE ACTIVITIES ARE VERY LESS. FROM THE INCOME AND EXPENDITURE ACCOUNTS FILE D FOR THE ASSESSMENT YEARS 2012-13 TO 2014-15, IT IS SEEN THAT EVERY YEA R THE TRUST SPENT SOME AMOUNT FOR MEDICAL AID BUT NO OTHER CHARITABLE EXPE NDITURE HAS BEEN INCURRED. THE OBJECTS OF THE TRUST ARE NOT SEEN TO BE CHARITABLE. THE TRUST IS A TRADING ORGANIZATION ESTABLISHED FOR THE COMMON CAU SE OF THE MEMBERS OF SOCIETY AND BENEFIT IS OPEN TO THE MEMBERS AND THEI R FAMILY ONLY. IN VIEW OF THE ABOVE I AM SATISFIED THAT NO GENUINE TRUST WHIC H CAME INTO EXISTENCE. ACCORDINGLY, THE APPLICATION FOR REGISTRATION U/S. 12AA OF THE INCOME TAX ACT FILED ON 13-03-2015 IS REJECTED. ITA NO.511/COCH/2015 3 4. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT TH E LD. CIT(EXEMPTIONS) CANNOT EXAMINE THE UTILIZATION OF FUNDS BUT CAN EXA MINE ONLY THE GENUINENESS OF THE OBJECTS OF THE TRUST. HE RELIED UPON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF SREE ANJAN EYA MEDICAL TRUST VS. CIT (2010) 382 ITR 399 IN THIS REGARD. 5. THE LD. DR ON THE OTHER HAND RELIED UPON THE ORD ER OF THE LD. CIT(EXEMPTIONS). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AT THE OUTSET, IT IS NECESSARY TO READ THE PROVISIO NS CONTAINED IN SECTION 12AA OF THE INCOME TAX ACT. 12AA (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONE R, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUT ION MADE UNDER CLAUSE (A) (OR CLAUSE (AA) OF SUB-SECTION (1) OF SECTION 12A, SHAL L (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRU ST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF; (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE T RUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUS T OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED PASS AN ORDER IN W RITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLI CANT; ITA NO.511/COCH/2015 4 FROM THE READING OF THE PROVISIONS CONTAINED IN SEC TION 12AA OF THE ACT, THE CIT HAS TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRU ST ON THE ONE HAND AND THE GENUINENESS OF ITS ACTIVITIES ON THE OTHER HAND. T HEREFORE, THE ARGUMENT MADE BY THE LD. AR, SHRI R. SREENIVASAN, CA THAT THE LD. CIT(EXEMPTIONS) HAS TO LOOK INTO THE ACTIVITIES OF THE TRUST AND NOT THE GENUIN ENESS OF THE TRUST DOES NOT HOLD GOOD IN VIEW OF THE PROVISIONS CONTAINED IN SECTION 12AA OF THE ACT REPRODUCED HEREINABOVE. 7. AS REGARDS THE RELIANCE UPON THE DECISION OF T HE HONBLE HIGH COURT OF KERALA IN THE CASE OF SREE ANJANEYA MEDICAL TRUST V S. CIT (SUPRA), IT WAS HELD BY THE HONBLE COURT WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED HEREINBELOW:- HELD, ALLOWING THE APPEAL, THAT THE GROUNDS STATED BY THE REGISTERING AUTHORITY AND UPHELD BY THE APPELLATE AUTHORITY FOR REJECTION OF REGISTRATION TO THE ASSESSEE COULD NOT BE SUSTAINED . THE AUTHORITIES COULD HAVE EXAMINED ONLY THE GENUINENESS OF THE TRUST AND ITS ACTIVITIES. THERE WAS NO MATERIAL TO SHOW THAT THE TRUST WAS NOT GENU INE OR THAT ITS ACTIVITIES WERE NOT AS PROFESSED IN THE DEED OF TRUST. THERE WAS NO FINDING THAT THE TRUST WAS SHAM. (DIRECTION TO COMMISSIONER TO GRANT REGISTRATION TO ASSESSEE). THE HONBLE HIGH COURT OF KERALA HAS CLEARLY HELD T HAT THE AUTHORITIES COULD HAVE EXAMINED ONLY THE GENUINENESS OF THE TRUST AND ITS ACTIVITIES. IT IS NOWHERE MENTIONED THAT THE ACTIVITIES SHOULD NOT BE EXAMINE D BY THE COMMISSIONER. ITA NO.511/COCH/2015 5 THEREFORE, THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE, SHRI R. SREENIVASAN CANNOT HELP THE ASSESSEE. 8. THEREFORE, ESSENTIALLY IF THE ACTIVITIES HAVE BEEN CARRIED OUT BY THE TRUST, THEN ALONGWITH THE GENUINENESS OF THE TRUST, THE ACTIVIT IES OF THE TRUST HAVE ALSO TO BE EXAMINED FOR GRANTING REGISTRATION. ACCORDINGLY, I N THE PRESENT CASE, THE LD. CIT(EXEMPTIONS) CONDUCTED ENQUIRIES WHEREIN IT WAS FOUND THAT THE TRUST HAS BEEN CREATED FOR THE BENEFIT OF THE TRADERS ENGAGED IN GOLD JEWELLERY BUSINESS FOR THEIR COMMON CAUSE AND THE OBJECT ARE MAINLY O VERALL DEVELOPMENT OF THE TRADERS ENGAGED IN THE GOLD JEWELLERY BUSINESS. FR OM THE ACCOUNTS FOR THE ASSESSMENT YEARS 2012-13 TO 2014-15, IT IS SEEN THA T THE TRUST HAS SPENT SOME AMOUNT FOR MEDICAL AID BUT NO OTHER CHARITABLE EXPE NDITURE HAS BEEN INCURRED. THE TRUST IS A TRADING ORGANIZATION ESTABLISHED FOR THE COMMON CAUSE OF THE MEMBERS OF THE SOCIETY AND BENEFIT IS OPEN TO THE M EMBERS AND THEIR FAMILY ONLY. FROM THE FINDINGS OF THE LD. CIT(EXEMPTIONS) , IT IS EVIDENT THAT THE SAID TRUST/ASSOCIATION DOES NOT CARRY OUT ANY CHARITABLE ACTIVITY OR ANY OTHER ACTIVITY OF CHARITABLE PURPOSE U/S. 2(15) OF THE ACT. IN SU CH CIRCUMSTANCES AND FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(EXEMPTIONS) WHO HAS RIGHTLY REJECTED THE APPLICATION FOR GRANTING REGIS TRATION U/S. 12AA OF THE ACT AND ALSO THE CASE LAW RELIED UPON BY THE ASSESSEE IN TH E CASE OF SREE ANJANEYA MEDICAL TRUST VS. CIT (SUPRA) IS NOT APPLICABLE AS MENTIONED HEREINABOVE. ACCORDINGLY, ALL THE GROUNDS OF THE ASSESSEE ARE DI SMISSED. ITA NO.511/COCH/2015 6 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I. T.A. NO.511/COCH/2015 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN CO URT ON 20-07-2016 SD/- SD/- . ) (GEORGE GEORGE K.) ( . . ) ( B.P. JAIN) /JUDICIAL MEMBER /ACCOUNTANT MEMBER ' /PLACE: /COCHIN 4 /DATED: 20 TH JULY, 2016 GJ/ 2 + )/5 65&/ /COPY TO: 1. '( /M/S. ALLEPPEY DISTRICT GOLD MERCHANTS ASSOCIATION, AMC XVIII/1285, CULLEN ROAD, MULLAKKAL, ALAPPUZHA-688 001. 2 . -8 / ( )/THE COMMISSIONER OF INCOME-TAX(EXEMPTIONS), KOCHI . 3. -8 / /THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 4. 59: )/ , /THE DR/ITAT, COCHIN BENCH. 5. :; <. /GUARD FILE. 2- /BY ORDER = /ASSISTANT REGISTRAR . . >0 . ? . >0 ., /I.T.A.T., COCHIN