Shree Nitai Gaura Hari Sankirtan Mandal Trust, Ghaziabad V. CIT (E), Lucknow

ITA 5325/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4893 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 06-06-2017
• Assessment Year: misc
• Appeal Filed On: 10-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA

Judgement Text

1 I.T. APPEAL NO. 5325/DEL/2016 ASSESSMENT YEAR : IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCHES : G NEW DELHI ] BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI O. P. KANT, ACCOUNTANT MEMBER I.T. APPEAL NO. 5325/DEL/2016 ASSESSMENT YEAR : SHREE NITAI GAURA HARI COMMISSIONER OF INCOME TAX, SANKIRTAN MANDAL TRUST, VS. [ EXEMPTION ]; C/O. L.M. AGARWAL & CO., C.AS.; LUCKNOW. KA32, KAVI NAGAR, GHAZIABAD 201 001. PAN : AAKTS 5376 D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. C. YADAV, ADV.; DEPARTMENT BY : SHRI S. S. RANA, CIT [DR]; DATE OF HEARING : 08.08.2017 DATE OF PRONOUNCEMENT : 30.08.2017 O R D E R . PER I. C. SUDHIR, J. M. : THE ASSESSEE HAS IMPUGNED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS :- 1. THAT THE LEARNED COMMISSIONER OF I TAX EXEMP TION WRONGLY AND ILLEGALLY REJECT THE TRUST APPLICATION FOR REGI STRATION UNDER 2 I.T. APPEAL NO. 5325/DEL/2016 ASSESSMENT YEAR : SECTION 80G OF I. T. ACT EVEN AFTER VERIFYING THE B OOKS OF ACCOUNTS AND VOUCHERS OF ALL THREE YEARS; 2. THE LEARNED CIT ERRED IN HOLDING THAT THE AC TIVITIES OF THE TRUST FALLS UNDER RELIGIOUS NATURE AND HENCE NO T CHARITABLE WHILE THE APPELLANT TRUST SUBMITTED EVIDENCE OF CHA RITABLE ACTIVITIES CARRIED ON BY IT AND ON THE SIMILAR GROU ND THE LEARNED CIT GHAZIABAD REJECT THE ASSESSEE APPLICATI ON U/S. 12AA OF I. TAX ACT AND HONOURABLE ITAT VIDE APPEAL ORDER NO. ITA 5238/DEL/2014 AY 2014-15 ORDER DT. 24.09.201 5 ACCEPT THE TRUST APPEAL. 3. THAT THE TRUST DOING THE ACTIVITIES AS PER O BJECT OF THE TRUST DEED, DAILY DISTRIBUTION OF FRUITS BISCUITS T O POOR BALIKA VIDHYALA UNDER THE HEAD OF 'SHRI KRISHNA NITYA SEWA AT VRINDAVAN' WHICH COMES UNDER THE CATEGORY OF CHARIT ABLE ACTIVITY AND NOT IN THE CATEGORY OF RELIGIOUS AS HE LD BY THE LEARNED CIT. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX E XEMPTION HAS GROSSLY ERRED IFT HOLDING MEMBERSHIP FEE CONTRI BUTION RECEIVED BY THE TRUST FROM HIS MEMBER AS INCOME WHI LE THERE WAS NO INCOME ON ACCOUNT OF DONATION SO MEMBERSHIP CONTRIBUTIONS CANNOT BE CONSIDERED AS DONATION FOR THE PURPOSE OF LIMITATION U/S. 80G(5B). 3 I.T. APPEAL NO. 5325/DEL/2016 ASSESSMENT YEAR : 5. THAT THE FINDING OF LEARNED CIT IS WRONG THAT THE TRUST DIVERTING THE FUNDS INTO BANKS AND GENERATING PROFI T BY WAY OF INTEREST ON BANK DEPOSIT AND TRUST INVOLVED IN A CTIVITIES WHICH APPARENTLY ARE FOR PROFIT MAKING ON COMMERCIA L LINES AND ARE FAR AWAY FROM THE DEFINITION OF THE TERM OF 'CHARITABLE PURPOSE' WHILE THE TRUST DOES HAVE NOT HAVE ANY BAN K FDR AND NOT EARNED ANY BANK INTEREST ON BANK DEPOSITS I N LAST ALL PREVIOUS YEARS. 6. THAT IN ANY CASE REJECTION OF TRUST REGISTRATI ON APPLICATION U/S. 80G ON THE GROUNDS AS MENTIONED IN THE ORDER I S ILLEGAL AND UNJUSTIFIED AND REGISTRATION U/S. 80G OUGHT TO BE ALLOWED TO THE TRUST. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND , ALTER, DELETE OR MODIFY ANY GROUND OF APPEAL AT THE TIME OF HEARING. 2. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIA L AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE ISSUE INVOLVED IN THE GROUNDS IS AS TO WHET HER THE LD. CIT (EXEMPTION) WAS JUSTIFIED IN REFUSING APPROVAL SOUG HT BY THE ASSESSEE UNDER SECTION 80G OF THE ACT. 4 I.T. APPEAL NO. 5325/DEL/2016 ASSESSMENT YEAR : 4. IN SUPPORT OF THE GROUNDS, THE LD. AR MAD E FOLLOWING SUBMISSIONS :- 1. THE PRESENT APPEAL IS ARISING FROM THE ORDER OF LD CIT EXEMPTION DATED 15.09.2016. 2. THE ASSESSEE IS A TRUST ENGAGED IN THE DISSEM INATION OF ITS CHARITABLE OBJECTS. ASSESSEE HAS GOT REGISTRATI ON UNDER SECTION 12A VIDE ORDER DATED 13.01.2016. CERTAIN DA TES WHICH GOES TO THE ROOT OF THE MATTER ARE AS UNDER : - DATE EVENT REMARKS 24.09.2015 ITAT RESTORED THE MATTER TO BE FILED OF CIT FOR CONSIDERING THE APPLICATION 12 A OF THE ASSESSEE AFRESH. ORDER OF ITAT AT PAGE NO 117-120 OF THE PAPER BOOK 13.01.2016 THE LD. CIT LUCKNOW HAS GRANTED THE CERTIFICATE OF 12 A TO THE ASSESSEE. REGISTRATION CERTIFICATE AT PAGE NO- 27-29 OF THE PB. 04.07.16 ASSESSEE FILED APPLICATION BEFORE THE LD CIT LUCKNOW FOR THE GRANT OF 80 G (5) (VI) CERTIFICATE. 15.09.2016 CIT EXEMPTION DISMISSED THE APPLICATION OF THE ASSESSEE AND PRESENT APPEAL IS ARISING FROM ITS ORDER. 3. IT IS SUBMITTED THAT WHILE REJECTING THE APPLI CATION OF THE ASSESSEE THE LD. CIT HAS ALLEGED THAT ASSESSEE HAS UTILIZED MORE THAN 5% OF ITS TOTAL INCOME FOR RELIGIOUS ACTIV ITIES. LD. 5 I.T. APPEAL NO. 5325/DEL/2016 ASSESSMENT YEAR : CIT FURTHER ALLEGED THAT ASSESSEE HAS DIVERTED FUND S TOWARDS NON CHARITABLE PURPOSES BY PUTTING THEM INTO BANK A ND EARNED HUGE INTEREST ON THESE FUNDS. AT LAST CIT HA S DISMISSED THE APPLICATION OF THE ASSESSEE. SUBMISSIONS OF THE ASSESSEE ARE AS UNDER :- 4. IT IS SUBMITTED THAT BOTH THE ABOVE ALLEGATIO N OF THE CIT ARE BASELESS AND CONTRARY TO THE RECORDS IN AS MUCH AS IN LAST THREE YEARS THERE IS NO INCOME TO ASSESSEE IN- FACT RECORDS AND RETURN OF INCOME FILED BY THE ASSESSEE WOULD SH OW THAT THERE IS DEFICIT IN ACCOUNTS OF THE ASSESSEE SINCE EXPENDITURE INCURRED ARE HIGHER FROM THE RECEIPTS. THE POSITION OF LAST THREE YEARS IS AS UNDER :- ASST YEAR MEMBERS SUBSCRIPTION TOTAL EXPENSES DEFICIT SHOWN IN ROI 2013 - 14 2,65,414 313913 48505 2014 - 15 203207 268595.85 65388.85 2015 - 16 . . . 283409 288387.70 4978 5. THE ABOVE CHART WOULD SHOW THAT THERE IS ABSO LUTELY NO INCOME TO ASSESSEE IN LAST THREE YEARS THEREFORE THE AVERMENT OF THE CIT THAT ASSESSEE HAS VIOLATED THE PROVISION S OF SECTION 80(G)(5B). IT IS SUBMITTED THAT EXPRESSION USED IN THIS SUBSECTION IS TOTAL INCOME AND PERUSAL OF THE ABOVE CHART WOULD SHOW THAT ASSESSEE HAS DEFICIT IN LAST THREE YEARS AND THERE IS NO INCOME TO ASSESSEE. THEREFORE THE OBSER VATION MADE BY THE CIT IS FACTUALLY INCORRECT. 6. IT IS NEXT SUBMITTED THAT ASSESSEE HAS DISTRI BUTED FRUITS AMONG THE POOR AND NEEDY PEOPLE IRRESPECTIVE OF THE IR CAST AND RELIGION. ASSESSEE HAS TERMED THIS ACTIVITY AS SHR I KRISHNA NITYA SEWA AT VRINDAVAN. THE LD CIT HAS WRONGLY IN TERPRETED THIS EXPRESSION. IT IS SUBMITTED THAT FACTUAL POSIT ION IS THAT 6 I.T. APPEAL NO. 5325/DEL/2016 ASSESSMENT YEAR : THE EXPRESSION SHRI KRISHNA HAS BEEN USED TO DENOTE THE NAME OF THE TRUST AND THE REST OF THE EXPRESSION IS DAILY SEWA AT VRINDAVAN THEREFORE THE OBSERVATION OF THE CIT T HAT USE OF EXPRESSION SHRI KRISHNA DENOTES RELIGIOUS EXPENS ES IS WRONG. 7. IT IS NEXT SUBMITTED THAT LAST OBSERVATION OF THE CIT THAT EXPENSES ARE IN ROUND FIGURE IS PREMATURE SINC E IT IS THE DUTY OF THE ASSESSING OFFICER TO EXAMINE THE VE RACITY OF THE VOUCHERS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 8. IT IS NEXT SUBMITTED THAT REGARDING THE OBSER VATION OF THE CIT THAT THE OBJECTS OF THE TRUST ARE NOT CHARI TABLE AND ACTIVITIES ARE PROFIT MAKING IS ALSO CONTRARY TO TH E RECORDS BECAUSE THE ASSESSEE HAS BEEN GRANTED 12A ON THE SA ME OBJECTS AND ACTIVITIES THEREFORE THIS ALLEGATION IS ALSO BASELESS. 9. IT IS SUBMITTED THAT ASSESSEE FURTHER SEEKS T O RELY ON THE FOLLOWING JUDGMENTS WHEREIN IT HAS BEEN HELD TH AT AUTHORITY EXAMINING THE QUESTION WHETHER A FUND OR INSTITUTION IS ELIGIBLE TO BE CERTIFIED FOR THE PURPOSES OF S. 80G IS NOT TO ACT AS AN ASSESSING OFFICER; ONCE THE APPLICANT TRUST WAS REG ISTERED UNDER SECTION 12A. A. DIT VS NEEL GAGAN CHARITABLE TRUST B. 57 ITR 86(DEL) C. N.N.DESAI VS CIT 452(GUJ) D. SONEPAT HINDU EDUCATIONAL AND CHARITABLE SOCIETY 27 8 ITR 262(P&H) 7 I.T. APPEAL NO. 5325/DEL/2016 ASSESSMENT YEAR : IT IS SUBMITTED THAT RECENTLY JODHPUR BENCH OF THE ITAT IN THE CASE OF HEMDHA MEDI RESOURCES PVT LTD VS CIT RE PORTED IN 159 ITD 627 (JODH) HAS OBSERVED AS UNDER : - ON PERUSAL OF SECTION 80G(5) AS WELL AS RULE 11AA , WHAT IS REQUIRED TO BE SEEN IS WHETHER THE INSTITUTION/FUND HAS BEEN ESTABLISHED IN INDIA FOR A CHARITABLE PURPOSE OR NO T. SECONDLY, IT LAYS DOWN CERTAIN ADDITIONAL CONDITIONS UNDER CLAUS E (I) TO CLAUSE (V) WHICH ARE REQUIRED TO BE FULFILLED. RULE 11AA PROVIDES THAT WHERE THE CIT IS SATISFIED THAT ONE OR MORE OF THE CONDITIONS SPECIFIED IN CLAUSE (I) TO CLAUSE (V) OF SECTION 80G(5) ARE NOT FULFILLED, HE SHALL REJECT THE APPLICATION FOR APPROVAL AFTER RECORDING HIS REASONS FOR SUCH REJECTION. IN THE IN STANT CASE, THE APPELLANT HAS BEEN DULY REGISTERED UNDER SECTION 12 AA WHICH SHOWS BEYOND ANY DOUBT THAT ID CIT HAS ALREADY VERI FIED THE GENUINENESS OF THE OBJECTS AND ITS ACTIVITIES ARE N OT DOUBTED BY THE CIT. HENCE, HAVING GRANTED REGISTRATION U/S 12A A, THE FIRST CONDITION REGARDING ESTABLISHMENT OF INSTITUTION FO R CHARITABLE PURPOSES IS FULFILLED. REGARDING SATISFACTION OF AD DITIONAL CONDITIONS SPECIFIED IN CLAUSE (I) TO CLAUSE (V) OF SECTION 80G(5), THERE IS NO DISPUTE AS APPARENT FROM THE ORDER OF T HE ID CIT. AS CAN BE SEEN FROM REVENUE'S STAND OF REJECTION OF EA RLIER APPLICATIONS FILED BY THE APPELLANT, THE APPROVAL U NDER SECTION 80G IS CLOSELY LINKED TO APPROVAL UNDER SECTION 12A A. NOW ONCE, THE REGISTRATION UNDER SECTION 12AA HAS BEEN GRANTE D, THE APPROVAL UNDER SECTION 80G SHOULD NOT BE DENIED UNL ESS THE CASE OF THE APPELLANT FALLS UNDER NON-FULFILLMENT O F ONE OR 8 I.T. APPEAL NO. 5325/DEL/2016 ASSESSMENT YEAR : MORE OF THE CONDITIONS SPECIFIED IN SECTION 80G(5) WHICH IS NOT THE CASE BEFORE US. 6. THE LD. CIT [DR], ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER IMPUGNED, WITH THIS SUBMISSION THAT PLACING PHOTOGR APHS AND BANNER ON RECORD BY THE ASSESSEE ARE NOT SUFFICIENT EVIDENCE TO ESTABLISH THAT THE ASSESSEE IS ACTUALLY INDULGING IN CHARITABLE ACTIVI TIES. THE ASSESSEE HAD EXCEEDED 5% OF TOTAL INCOME FOR BOTH FINANCIAL YEARS 2013-14 AND 2014- 15 IN SPENDING ON RELIGIOUS PURPOSES AND THERE WAS ALSO DEVIATION OF FUNDS AS THE AMOUNT OF RS.26,90,524/- WAS KEPT AND HE REFERRED PAGE NO. 72 I.E. RECEIPT AND PAYMENT FOR THE PERIOD FROM 1.04.2012 TO 31.03.2013. HE ALSO PLACED RELIANCE ON THE DECISIO N OF HONBLE HIGH COURT OF DELHI IN THE CASE OF KIRTI CHAND TARAWATI CHAND TRUST VS. DIRECTOR OF INCOME TAX (1998) 232 ITR 11 (DEL.). 6.1 IN REJOINDER THE LD. AR SUBMITTED THAT THE ABOVE AMOUNT WAS KEPT FOR UTILIZING IT IN THE OBJECTS OF THE SOCIETY AND IT IS NOT THE CASE OF THE REVENUE THAT AMOUNT WAS SPENT FOR ANY OTHER PUR POSES THAN THE OBJECTS OF THE SOCIETY. HE ALSO REFERRED PAGE NO. 118 OF THE PAPER BOOK I.E. PART OF THE ORDER DATED 24.09.2015 OF THE TRIB UNAL IN THE CASE OF THE ASSESSEE ITSELF FOR THE ASSESSMENT YEAR 2014-15 WHE REIN THE ACTIVITIES OF 9 I.T. APPEAL NO. 5325/DEL/2016 ASSESSMENT YEAR : THE APPELLANT SOCIETY HAVE BEEN NOTED. HE SUBMITTE D FURTHER THAT THE DECISION RELIED UPON BY THE LD. CIT [DR] IN THE CAS E OF KIRTI CHAND TARAWATI CHAND VS. DIT (SUPRA) HAVING DISTINGUISHAB LE FACTS IS NOT APPLICABLE IN THE CASE OF PRESENT ASSESSEE. 6.2 CONSIDERING ABOVE SUBMISSIONS AND MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE LD. CIT HAS DENIED THE BEN EFIT OF APPROVAL UNDER SECTION 80-G OF THE ACT MAINLY ON THE BASIS THAT EX PENSES OF RELIGIOUS NATURE UNDER THE NAME SRI KRISHNA NIT SEWA AT VRIN DABAN EXCEEDED 5% OF THE TOTAL INCOME FOR BOTH FINANCIAL YEARS 2013 -14 AND 2014-15. IN REPLY, THE ASSESSEE HAD SUBMITTED VOUCHERS SHOWING EXPENDITURE INCURRED ON FRUITS, BISCUITS ETC. DISTRIBUTED AT PO OR GIRL STUDENTS OF GURU GANGESHWAR RAJ KANYA VIDYALA, GANDHI MARG, VRINDABA N, AMOUNTING TO AROUND RS.4,200/- PER MONTH WITH THIS SUBMISSION TH AT SUCH EXPENDITURE CANNOT BE TREATED TO BE SPENT ON RELIGI OUS PURPOSE. THE LD. CIT DID NOT ACCEPT THE SAME AS HE DISBELIEVED THE V OUCHERS ON THE BASIS THAT IT WAS SELF DRAWN. WE DO NOT APPROVE SUCH APP ROACH OF THE LD. CIT BECAUSE IT IS NOT HIS CASE THAT IN THE VOUCHERS DET AILS WERE NOT GIVEN AND IN SUCH A SITUATION THE APPROPRIATE APPROACH OF THE LD. CIT SHOULD HAVE BEEN TO EXAMINE THE VERACITY OF THE DETAILS GIVEN I N THE SAID SELF-DRAWN 10 I.T. APPEAL NO. 5325/DEL/2016 ASSESSMENT YEAR : VOUCHERS INSTEAD HE PREFERRED TO REJECT THESE OUT-R IGHTLY. THE LD. CIT HAS ALSO ALLEGED THAT THE APPELLANT HAS FAILED TO CORRO BORATE ITS CLAIM OF CHARITABLE ACTIVITIES, WHICH IN OUR VIEW, IS IN CON TRADICTION TO THE OBSERVATION MADE BY THE TRIBUNAL VIDE ITS ORDER DAT ED 24.09.2015 IN THE CASE OF ASSESSEE ITSELF FOR THE ASSESSMENT YEAR 201 4-15 ON THE ISSUE OF VALIDITY OF REJECTION OF APPLICATION MOVED UNDER SE CTION 12AA BY THE ASSESSEE FOR REGISTRATION AND REGISTRATION GRANTED BY THE LD. CIT (EXEMPTION) UNDER SECTION 12AA OF THE ACT ON 13.01. 2016, WHEREAS THE ORDER IMPUGNED HAS BEEN PASSED ON 15.09.2016. WE THUS FIND THAT IT IS NOT A CASE OF ASSESSEE FALLING UNDER NON-FULFILLMEN T OF THE CONDITIONS SPECIFIED IN SECTION 80G(5) OF THE ACT AS ALLEGED B Y THE LD. CIT TO REFUSE THE APPROVAL SOUGHT UNDER SECTION 80G OF THE ACT BY THE ASSESSEE. THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF KIRTI CHAND TARAWATI CHAND TRUST VS. DIT (SUPRA) RELIED UPON BY THE LD. CIT [DR] HAVING DISTINGUISHABLE FACTS IS NOT HELPFUL TO THE REVENUE AS IN THAT CASE THE PURPOSE OF THE TRUST WAS OTHER THAN CHARITABLE. TH E TRUST THEREIN WAS ENGAGED MAINLY IN CONSTRUCTION OF RELIGIOUS TEMPLE WHEREIN NO CHARITABLE ACTIVITY WAS BEING CARRIED OUT AND THUS THERE WAS D ENIAL OF RENEWAL OF RECOGNITION UNDER SECTION 80G(5) OF THE ACT. WE TH US DIRECT THE LD. CIT TO 11 I.T. APPEAL NO. 5325/DEL/2016 ASSESSMENT YEAR : GRANT APPROVAL UNDER SECTION 80G(5) OF THE ACT AS P RAYED FOR BY THE APPELLANT. THE GROUNDS ARE ACCORDINGLY A LLOWED. 7. IN RESULT, APPEAL IS ALLOWED. 8. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON: 3 0 TH AUGUST, 2017 . SD/- SD/- ( O. P. KANT ) ( I. C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : THE 30 TH AUGUST, 2017 . *MEHTA* COPY OF THE ORDER FORWARDED TO :- 1. APPELLANT; 2. RESPONDENT; 3. CIT; 4. CIT (APPEALS); 5. DR, ITAT, ND. BY ORDER ASSISTANT REGISTR AR 12 I.T. APPEAL NO. 5325/DEL/2016 ASSESSMENT YEAR :