Evangelical Missionary Society in Mayurbhanj, Mayurbhanj V. CIT, Cuttack, Cuttack

ITA 533/CTK/2013

• Counselvise Citation: 53322114 RSA 2013
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 25-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K AJAY KUMAR
• Assessee Lawyers: SANTOSH KUMAR BAL
• Keywords: Gift; Charitable institution
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 533/CTK/2013 EVANGELICAL MISSIONARY SOCIETY IN MAYURBHANJ, KACHERY ROAD, MISSION COMPOUND, BARIPADA, P.O BOX - 23, DT - MBJ (APPELLANT) PAN : AAATE3316M VS. COMMISSIONER OF INCOME TAX CUTTACK (RESPONDENT) ASSESSEE BY : SANTOSH KUMAR BAL REVENUE BY : K. AJAY KUMAR , DR DATE OF HEARING : 3 0/0 4 /2014 DATE OF PRONOUNCEMENT : 13 /06/2014 O R D E R PER P.K. BANSAL : 1. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT DT. 27.9.2013 BY WHICH THE CIT HAS REJECTED THE APPLICATION OF THE ASSESSEE FOR REGISTRATION UNDER SEC. 12AA OF THE INCOME TAX ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT AN APPLICATION FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT WAS FILED WITH CIT BY THE ASSESSEE ON 20.3.2013 ALONGWITH THE DOCUMENTS PRESCRIBED UNDER RULE 17 OF THE INCOME TAX RULES, 1962. THE ASSESSEE IS INCORPORATED IN THE STATE OF QUEENSLAND, AUSTRALIA AND REGISTERED WITH THE AUSTRALIAN CHARITIES AND NOT - FOR - PROFIT COMMISSION. THE CIT NOTED THAT AS PER THE DOCUMENT FILED BY THE ASSESSEE, THE ASSESSEE IS STATE D TO HAVE BEEN ESTABLISHED ON 21.1.1926. THE CONSTITUTION, AS AMENDED ON 30.4.2012, CONTAINS THE OBJECTIVES IN THE NATURE OF RELIGIOUS AS WELL AS CHARITABLE 2 ITA NO. 533/CTK/2013 PURPOSES. CIT NOTED THAT THE OBJECTIVES MENTIONED IN THE CONSTITUTION OF THE TRUST AMENDED ON 30. 4.2012 STATES AS UNDER : OBJECTS TO PREACH AND PRACTICE, TEACH AND EDUCATE THE TENETS OF CHRISTIANITY IN THE DISTRICT OF MAYURBHANJ, NEIGHBOURING DISTRICTS AND STATES. TO REHABILITATE PERSONS AFFECTED BY LEPROSY AND DOWNTRODDEN IN A CHARITABLE AND HOLI STIC MANNER. ADHERENTS : CHRISTIANS OF ALL DENOMINATIONS WHO CONTRIBUTE TOWARDS THE SUPPORT OF THE MISSION ARE LOOKED UPON SUCH AS . FINANCE : THE MISSION IS SUPPORTED BY THE FREEWILL OFFERINGS AND GIFTS OF THE LORDS PEOPLE AND NO PERSONAL SOLICITATIONS OR COLLECTIONS ARE AUTHORISED. CIT NOTED THAT AS PER THE OBJECTIVES STATED IN THE AMENDED CONSTITUTION, THE PRIME OBJECT OF THE ASSESSEE IS T O PREACH AND PRACTICE, TEACH AND EDUCATE THE TENETS OF CHRISTIANITY IN THE DISTRICT OF MAYURBHANJ, NEIGHBOURING DISTRICTS AND STATES. THEREFORE, THE TRUST IS BASICALLY A RELIGIOUS TRUST CONFINED TO THE DEVELOPMENT, NOURISHMENT AND EXTENDED CHRISTIANISM IN AND AROUND THE DISTRICT OF MAYURBHANJ AS WELL AS THE STATE OF ODISHA. TO REHABILITATE LEPROSY SUFFERERS WAS THE SECONDARY OBJECT. HE ALSO NOTED THAT ACCORDING TO THE STATEMENT OF FAITH ANNEXED TO THE CONSTITUTION DT. 30.4.2012 CLEARLY ESTABLISHES THE MA NNER IN WHICH THE GIST OF ESSENCE OF HOLY BOOK BIBLE ARE BEING SPREAD AND EXTENDED AMONG THE COMMON MAN. CIT, THEREFORE, TOOK THE VIEW THAT THE TRUST IS NOT GENUINE AND NOT CREATED FOR CHARITABLE PURPOSES. IT IS AN INSTITUTION CREATED FOR THE BENEFIT OF PARTICULAR RELIGIOUS COMMUNITY OR CASTE AND IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF PALGHAT SHADI MAHAL TRUST, 254 ITR 212 WHERE THE BENEFIT UNDER THE TRUST WERE AVAILABLE ONLY TO MUSLIM FROM ALL OVER THE WORLD, NONE OF WHOM, EX CEPT THOSE IN KERALA ARE OF BACKWARD CLASSES, THE HON'BLE SUPREME COURT TOOK THE VIEW THAT THIS TRUST IS NOT ENTITLED FOR EXEMPTION U/S 11. 3 ITA NO. 533/CTK/2013 2.1 THE LD. AR BEFORE US FILED THE BYE - LAWS SIGNED BY THE SECRETARY WITH THE NOMENCLATURE R ECENT R EVISED . THES E BYE - LAWS DISCLOSE THE NAME OF THE SOCIETY AND MENTIONS THAT IT IS REGISTERED WITH THE AUSTRALIAN CHARITIES AND NOT - FOR - PROFIT COMMISSION AND IS INCORPORATED IN THE STATE OF QUEENSLAND, AUSTRALIA AND ON THE BASIS OF THESE BYE - LAWS, IT WAS CONTENDED THAT T HE SOCIETY IS CREATED FOR CARE AND REHABILITATION OF THE PERSONS AFFECTED BY LEPROSY AND DOWNTRODDEN IN A CHARITABLE AND HOLISTIC MANNER IN MAYURBHANJ AND NEIGHBOURING DISTRICTS IN INDIA. THE ASSESSEE IS THUS ESTABLISHED FOR CHARITABLE PURPOSES. THE AUDIT ED REPORT AS WELL AS AUDITED INCOME AND EXPENDITURE ACCOUNT WAS ALSO FILED AND IT WAS CONTENDED THAT THE ASSESSEE IS A GENUINE CHARITABLE TRUST. CIT WAS NOT CORRECT IN LAW IN REJECTING THE REGISTRATION. 2.2 THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER OF CIT AND VEHEMENTLY CONTENDED THAT BEFORE CIT THE SOCIETY HAS SUBMITTED DIFFERENT CONSTITUTION WHICH TALKS THAT THE ASSESSEE CAME INTO EXISTENCE IN THE YEAR 1926 BY THE RELIGIOUS EDUCATIONAL AND CHARITABLE ACT, 1 861 OF STATE OF QUEENSLAND, AUSTRALIA. THE OBJECTS STATED IN THE CONSTITUTION BEFORE THE CIT ARE DIFFERENT FROM THE OBJECTS IN THE CONSTITUTION FILED BEFORE THE BENCH. THIS CONSTITUTION DOES NOT TALK OF DATE OF REGISTRATION AND REFERRED TO THE COMPLIANCE OF SEC. 23 OF THE INCOME TAX ASSESSMENT ACT, 1936 AND THE ASSESSEE IS GOVERNED BY THE PROVISIONS OF INCOME TAX ASSESSMENT ACT, 1936 WHICH ACT IS NOT APPLICABLE IN INDIA. FOR THE PURPOSE OF REGISTRATION U/S 12A, THE SOCIETY/TRUST HAS TO BE REGISTERED UNDE R THE INDIAN ACT. A TRUST/SOCIETY WHICH IS REGISTERED OUTSIDE INDIA CANNOT BE REGARDED TO BE A GENUINE ONE. OUR ATTENTION WAS DRAWN TOWARDS THE INCOME AND EXPENDITURE ACCOUNT DT. 17.6.2009 AND IT WAS STATED THAT IT IS APPARENT THAT PROVISO TO SEC. 2(15) IS CLEARLY APPLICABLE IN THE CASE OF THE ASSESSEE AND, THEREFORE, THE ASSESSEE CANNOT BE REGARDED TO HAVE BEEN ENGAGED FOR CHARITABLE PURPOSES. 4 ITA NO. 533/CTK/2013 2.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONGWITH THE ORDER OF THE TAX AUTHOR ITIES BELOW. SEC. 12A OF THE INCOME TAX ACT LAYS DOWN THAT THE PROVIS I O NS OF SEC. 11 & 12 SHALL NOT APPLY IN RELATION TO THE INCOME OF ANY TRUST OR INSTITUTION UNLESS THE CONDITION STATED THEREIN ARE FULFILLED. THE FIRST CONDITION FOR ALLOWING THE EXEMPT ION U/S 11 IS THAT THE PERSON WHO IS IN RECEIPT OF THE INCOME MUST HAVE MADE APPLICATION FOR REGISTRATION OF THE TRUST/INSTITUTION IN THE PRESCRIBED FORM AS WELL AS IN THE PRESCRIBED MANNER TO THE COMMISSIONER AND SUCH TRUST/INSTITUTION IS REGISTERED U/S 1 2AA. THE PROCEDURE FOR REGISTRATION IS GIVEN U/S 12AA. SEC. 12AA EMPOWERS THE CIT TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST/INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST /INSTITUTION AND FOR THAT HE HA S TO MAKE SUCH INQUIRIES AS HE MAY THINK NECESSARY. WE NOTED THAT THE ASSESSEE, BEFORE THE CIT, AS IS APPARENT FROM THE ORDER PASSED U/S 12AA, SUBMITTED THE DOCUMENT THAT THE TRUST/INSTITUTION WAS ESTABLISHED ON 21.1.1926 AN D THE APPLICATION FOR REGISTRATION U/S 12AA WAS MADE ON 20.3.2013. BEFORE CIT THE ASSESSEE SUBMITTED CONSTITUTION AS AMENDED ON 30.4.2012. THE ASSESSEE SUBMITTED BEFORE US THE CONSTITUTION MARKED AS RECENT REVISED. THE CONSTITUTION BEFORE US NOWHERE M ENTIONS WHEN IT HAS BEEN REVISED, WHETHER IT IS THE SAME WHICH HAS BEEN FILED BEFORE THE CIT. OBJECTS IN THE CONSTITUTION FILED BEFORE US APPEAR TO BE DIFFERENT FROM THE OBJECTS AS HAS BEEN INCORPORATED BY CIT IN HIS ORDER. IN THE CONSTITUTION SUBMITTED BEFORE US , WE NOTED THAT THE CONSTITUTION DOES NOT TALK OF INDIAN INCOME TAX ACT BUT ONLY RECOGNIZES THE AUSTRALIAN INCOME TAX ACT, 1936. IN RESPECT OF WINDING UP AND AMALGAMATION ALSO, THE ASSESSEE SOCIETY IS GOVERNED BY THOSE PROVISIONS. THE FOREMOST Q UESTION BEFORE US IS WHETHER A SOCIETY OR TRUST REGISTERED OUTSIDE INDIA CAN BE GRANTED REGISTRATION U/S 12AA IF THE TRUST/INSTITUTION IS NOT REGISTERED IN INDIA AND IS NOT GOVERNED BY THE INDIAN LAW. IN OUR OPINION, THE REVENUE WILL NOT BE ABLE TO SATISF Y ITSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST/INSTITUTION AS IN THAT CASE IT WILL 5 ITA NO. 533/CTK/2013 ALWAYS TAKE SHELTER OF THE ACT AND RULES BY WHICH IT IS GOVERNED. THEREFORE, FOR GETTING REGISTRATION U/S 12AA THE TRUST HAS TO BE GOVERNED BY THE INDIAN INC OME TAX ACT AND THE NECESSARY PROVISIONS MUST BE IN THE BYE - LAWS. THE CONSTITUTION, AS SUBMITTED BEFORE US, EVEN DOES NOT CONTAIN ANY CERTIFICATE OF REGISTRATION. EVEN THE NAME AND ADDRESS OF THE OFFICE BEARERS ARE NOT IN EXISTENCE. IF THE IDENTITY OF T HE TRUST/INSTITUTION CANNOT BE ESTABLISHED, THE GENUINENESS OF THE ACTIVITIES OF SUCH TRUST/INSTITUTION, IN OUR OPINION, CANNOT BE ESTABLISHED. THE ASSESSEE CLAIMS THAT IT IS CREATED FOR CHARITABLE PURPOSES I.E. ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY. WE NOTED THAT IN VIEW OF THE PROVISO TO SEC. 2(15), WHICH WAS INSERTED W.E.F. 1.4.2009, THE ASSESSEE CANNOT BE SAID TO HAVE BEEN ENGAGED IN CHARITABLE PURPOSES IF THE ASSESSEE IS INVOLVED IN CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE , COMMERCE OR BUSINESS OR ANY ACTIVITY OF RUNNING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS. FROM THE INCOME AND EXPENDITURE ACCOUNT, A COPY OF WHICH WAS FILED BEFORE US, WE NOTED THAT THE ASSESSEE HAS INCOME FROM SALE OF LITERATURE AS WE LL AS SALE OF AGRICULTURAL PRODUCT. THESE INCOMES CLEARLY SHOW THAT THE ACTIVITIES OF THE ASSESSEE ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THE WORDS USED IN PROVISO TO SEC. 2(15) ARE ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS . THIS DENOTES THAT THE ASSESSEE NEED NOT ACTUALLY BE ENGAGED IN TRADE, COMMERCE OR BUSINESS BUT THE ACTIVITIES ARE SUCH WHICH CAN BE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THE WORDS ACTIVITY IN THE NATURE , IN OUR OPINION, HAS BEEN USED BY THE LEGISLATURE AS THE LEGISLATURE IS FULLY AWARE THAT FOR CARRYING OUT TRADE, COMMERCE OR BUSINESS THERE SHOULD BE A PROFIT MOTIVE. A TRUST OR SOCIETY WHICH IS CREATED FOR CHARITABLE PURPOSES DOES NOT HAVE PROFIT MOTIVE IN CARRYING OUT ITS ACTIVITIES. THEREFORE, WHEREVER THE ACTIVITIES ARE OF THE NATURE OF TRADE, COMMERCE OR BUSINESS, IT CANNOT BE SAID THAT THE TRUST/INSTITUTION IS ENGAGED IN CHARITABLE PURPOSES. AS THE ASSESSEE HAS INCOME FROM SALE OF LITERATURE AS WE LL AS SALE OF AGRICULTURAL PRODUCT, THE AFORESAID DISCUSSION PROVES THAT THE ACTIVITIES OF THE TRUST/INSTITUTION 6 ITA NO. 533/CTK/2013 ARE NOT GENUINE. EVEN THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE TRUST/INSTITUTION. WE, THEREFORE, DO NOT FIND ANY ILLEGALITY OR INF IRMITY IN THE ORDER OF CIT AS, IN OUR OPINION, ANY TRUST/INSTITUTION SEEKING REGISTRATION U/S 12AA HAS TO BE GOVERNED BY THE INDIAN INCOME TAX ACT. WE, ACCORDINGLY, DISMISS THE APPEAL FILED BY THE ASSESSEE. 3. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE STANDS DISMISSED. 4. ORDER PRONOUNCED IN PURSUANCE OF RULE 34(4) OF ITAT RULES, 1963 BY PUTTING ON NOTICE BOARD OF THE BENCH AT CUTTACK ON 1 3 /06/ 201 4 . S D / - (D.T.GARASIA) JUDICIAL MEMBER S D / - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI DATED : 1 3 / 06 /201 4 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) D.R (5) GUARD FILE TRUE COPY, BY ORDER