Sri Vasavi Ganga Godavari Nityanna Seva Sangh, Rajahmundry V. The CIT, Rajahmundry, Rajahmundry

ITA 55/VIZ/2012

• Counselvise Citation: 5525314 RSA 2012
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-02-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 29-02-2012

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI J.SUDHAKAR REDDY, AM AND SHRI SAKTIJIT DEY, JM ITA NO.55/VIZAG/2012 : ASST.YEAR 2010-2011 SRI VASAVI GANGA GODAVARI NITYANNA SEVA SANGH, 26-14-14, R.V.NAGAR KOURKONDA ROAD, RAJAHMUNDRY. PAN : AAJTS6204R. VS. THE COMMISSIONER OF INCOME TAX RAJAHMUNDRY RANGE RAJAHMUNDRY. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.V.N.HARI RESPONDENT BY : SHRI K.V.N.CHARYA, CIT DATE OF HEARING : 27 .02.2014 DATE OF PRONOUNCEMENT : 03 .0 3 .2014 O R D E R PER J.SUDHAKAR REDDY (AM) : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), RAJAHMUNDRY, DATED 31.01.2012 REJECTING THE APPLICATION FOR REGISTRATION U/S 12AA OF THE AC T. 2. THE FACTS OF THE CASE ARE BROUGHT OUT AT PARA 3 OF THE ORDER OF THE LEARNED CIT(A), WHICH ARE EXTRACTED FOR READY REFERENCE :- THE FACTS OF THE CASE ARE THAT THE APPLICANT NAMEL Y SRI VASAVI GANGA GODAVARI NITYANNA SEVA SANGH, RAJAHMUNDRY HA S EXECUTED A DEED DATED 24.07.2010 WITH 18 FOUNDER TR USTEES. THE DEED WAS REGISTERED BEFORE THE REGISTRAR, RAJAHMUND RY. THE RECITALS OF THE TRUST DEED MADE IT CLEAR THAT THE F OUNDER TRUSTEES ARE HAVING HEREDITARY RIGHTS. THE MAIN AIMS AND OBJECTS OF THE TRUST ARE THAT IT INTENDS TO ACQUIRE / CONSTRUCT A CHOUTRY OR DHARMASHALA AT VARANASI, UTTAR PRADESH, FOR PROVIDING FREE SHELTER TO THE PILGRIMS AND TRAVELERS BESIDES PROVIDING FREE MEALS TO THEM. IMPARTING TRAINING IN YOGA, MEDITATION, ENCOURAGEMENT OF EDUC ATION AMONG POOR PEOPLE, PROVIDING MERIT SCHOLARSHIPS TO THE PO OR STUDENTS, RUNNING SCHOOLS, COLLEGES ETC., AND TO EXTEND HELP TO THE POOR AND NEEDY AS PART OF THE POVERTY ALLEVIATION PROGRAMME. AT PAGE-6, CLAUSE-(9), THE DEED CONTAINED A SPECIFICATION TO T HE EFFECT THAT THE TRUST BOARD IS EMPOWERED TO AMEND AND ALTER THE DEE D WITH 2/3 ITA NO.55/VIZAG/2012. SRI VASAVI GANGA GODAVARI NITYANNA SEVA SANGH. 2 MAJORITY OR VOTING. SUCH AMENDMENTS WOULD BE REDUCE D IN WRITING BY DULY NOTING THE VOTING PERCENTAGE AND WITH THE P RIOR APPROVAL OF THE COMMISSIONER OF INCOME TAX, RAJAHMUNDRY. 2.1 THE ASSESSEE-TRUST FILED AN APPLICATION ORIGINA LLY ON 11.10.2010 IN FORM NO.10A, BEFORE THE CIT, RAJAHMUNDRY, SEEKING REGIST RATION U/S 12AA OF THE ACT, WHICH STOOD REJECTED BY THE CIT ON THE GROUND THAT THE ASSESSEE-TRUST, AS PER CLAUSE 13 OF THE DEED, INTENDED TO PROVIDE FREE ACC OMMODATION IN THE DHARMASHALA FOR THE DONORS TO THE TRUST FROM VYSYA COMMUNITY, A ND THAT A RESTRICTION WAS MARKED UPON UTILIZATION OF ACCOMMODATION FOR PERSONS OTHER THAN FROM VYSYA COMMUNITY. THEREFORE, THE ASSESSEE FILED ANOTHER APPLICATION I N FORM NO.10A ON 14 TH JULY, 2011 SEEKING REGISTRATION U/S 12AA BEFORE THE CIT, RAJAH MUNDRY AND ALONG WITH THE REVISED APPLICATION, THE ASSESSEE-TRUST HAS ALSO FI LED A RECTIFIED DEED DATED 10.06.2011. 3. THE LEARNED CIT REJECTED THE APPLICATION OF THE ASSESSEE ON THE FOLLOWING GROUNDS. 3.1 NO REGISTER IS PRODUCED TO EVIDENCE THAT THE AM ENDMENTS TO THE DEED MADE BY THE ASSESSEE, HAD IN FACT BEEN PASSED BY 2/3 RD MAJORITY BY THE TRUST. 3.2 THE ASSESSEE DID NOT CONDUCT ANY NOTABLE CHARIT ABLE ACTIVITY EXCEPT FOR ACQUIRING A LAND FOR CONSTRUCTION OF A DHARMASHALA / CHOULTRY AND FIXING THE AUSPICIOUS DAY FOR `BHOOMI POOJA. THE OBJECTS APP EAR TO BE CONFINED TO THE TRUST DEED ONLY. 3.3 THE TRUSTEES POSSESS HEREDITARY RIGHTS AND SUCH DISCRETION WAS VESTED SOLELY WITH THEIR FAMILY MEMBERS. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL. THE LEARNE D COUNSEL FOR THE ASSESSEE SHRI G.V.N.HARI, SUBMITTED THAT (A) THE CIT NEVER ASKED THE ASSESSEE FOR PRODUCTION OF REGISTER TO DEMONSTRATE THAT THE AMEN DMENT TO THE TRUST DEED HAD IN FACT BEEN PASSED BY 2/3 RD OF THE MEMBERS OF THE TRUSTEE. HE SUBMITTED THAT S UCH ITA NO.55/VIZAG/2012. SRI VASAVI GANGA GODAVARI NITYANNA SEVA SANGH. 3 EVIDENCE IS VERY MUCH AVAILABLE WITH THE ASSESSEE. (B) THAT THE ASSESSEE-TRUST HAVE ACQUIRED LAND IN VARANASI FOR CONSTRUCTION OF DHARMASHALA / CHOULTRY AND THAT WORK WAS GOING ON AND IT IS WRONG TO SAY THAT THE C HARITABLE OBJECTS OF THE TRUST ARE CONFINED TO THE TRUST DEED ONLY. (C) THAT REGISTRA TION U/S 12AA CANNOT BE REJECTED ON THE GROUND THAT THE ASSESSEE HAS NOT COMMENCED C HARITABLE ACTIVITIES. HE RELIED ON CERTAIN CASE LAWS. (D) THAT MODE OF MANAGEMENT O F THE TRUST OR NOMINATION OF TRUSTEES OR GRANT OF HEREDITARY RIGHTS, DOES NOT IN ANY WAY INFRINGE UPON THE PROVISIONS OF THE INCOME-TAX ACT FOR GRANT OF REGIS TRATION U/S 12AA. THUS IT IS PRAYED THAT REGISTRATION BE GRANTED. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE, SHRI K. V.N.CHARYA, CIT, ON THE OTHER HAND SUBMITTED THAT (A) THE ASSESSEE HAS NO T STARTED ANY CHARITABLE ACTIVITIES AND IT IS INCUMBENT UPON THE CIT TO EXAM INE THE GENUINENESS OF AN ORGANIZATION WHEN IT APPLIES FOR REGISTRATION U/S 1 2AA. (B) THAT MANDATORY GRANT OF HEREDITARY RIGHTS FOR MANAGEMENT DOES INFRINGE ON T HE GRANT OF REGISTRATION U/S 12AA. HE RELIED ON THE ORDER OF THE CIT. 6. AFTER HEARING THE RIVAL CONTENTIONS, WE HOLD AS FOLLOWS. 6.1 NON-PRODUCTION OF REGISTER TO DEMONSTRATE THAT 2/3 RD MEMBERS OF THE TRUST HAVE IN FACT APPROVED THE AMENDMENT TO THE TRUST DE ED CANNOT BE AGROUND FOR REJECTION OF REGISTRATION U/S 12AA, ESPECIALLY WHEN THE CIT HAS NOT ASKED THE ASSESSEE TO PRODUCE THE SAME. 6.2 THE ASSESSEE HAD ACQUIRED LAND FOR CONSTRUCTION FOR DHARMASHALA / CHOULTRY IN VARANASI AND HAS ALSO FIXED THE DATE FOR BHOOMI POOJA. THE MAIN AIMS AND OBJECTS OF THE TRUST ARE THAT IT INTENDS TO ACQUIRE / CONSTRUCT DHARMASHALA / CHOULTRY IN VARANASI, UTTAR PRADESH, FOR PROVIDING FREE SHEL TER TO THE PILGRIMS AND TRAVELERS BESIDES PROVIDING FREE MEALS TO THEM. IMPARTING TRA INING IN YOGA, MEDITATION, ENCOURAGEMENT OF EDUCATION AMONG POOR PEOPLE, PROVI DING MERIT SCHOLARSHIPS TO THE POOR STUDENTS, RUNNING SCHOOLS, COLLEGES ETC. A ND TO EXTEND HELP TO THE POOR AND ITA NO.55/VIZAG/2012. SRI VASAVI GANGA GODAVARI NITYANNA SEVA SANGH. 4 NEEDY AS PART OF THE POVERTY ALLEVIATION PROGRAMME. THEREFORE, THESE OBJECTS ENTITLE THE ASSESSEE FOR GRANT REGISTRATION U/S 12AA OF THE ACT. THE CONCLUSION OF THE CIT THAT THE ASSESSEE HAS NOT PERSUADED ITS OBJECT IS A GAINST THE FACTS OF THE CASE. PURCHASE OF LAND IS A POINTER TO THIS FACT. 6.3 GRANT OF HEREDITARY RIGHTS TO THE TRUSTEES IN N O WAY VIOLATES THE PROVISIONS OF THE INCOME-TAX ACT. IT IS FOR THE REVENUE AUTHORITI ES TO LOOK INTO AS TO WHO WOULD BE THE TRUSTEES AND WHO WOULD CONTROL THE BOARD. IT IS FOR THE MEMBERS OF THE TRUST TO DECIDE THE STRUCTURE AND THE PERSONS WHO WOULD MANA GE THE TRUST. THERE IS NO ALLEGATION OF MISUSE OF THE TRUST FUNDS. THUS, ON T HIS GROUND ALSO REJECTION OF REGISTRATION U/S 12AA, IN OUR OPINION, IS BAD IN LA W. 6.4 AS THE ASSESSEE HAS OFFERED TO PRODUCE THE REQU IRED REGISTER BEFORE THE CIT. WE WERE INITIALLY OF THE VIEW THAT WE SHOULD SET AS IDE THIS APPEAL TO THE FILE OF CIT WITH A DIRECTION TO GRANT REGISTRATION U/S 12AA AFT ER VERIFICATION OF THE REGISTER IN QUESTION. BUT WE THINK THAT NO USEFUL PURPOSE WOULD BE SERVED BY SUCH A DIRECTION. HENCE, WE ALLOW THE APPEAL OF THE ASSESSEE AND DIRE CT THE LD.CIT TO TO GRANT REGISTRATION U/S 12AA. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 3 RD DAY OF MARCH, 2014. SD/- SD/- ( SAKTIJIT DEY ) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM; DATED : 3 RD MARCH, 2014. DEVDAS* ITA NO.55/VIZAG/2012. SRI VASAVI GANGA GODAVARI NITYANNA SEVA SANGH. 5 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, RAJAHMUNDRY . 4. CIT(A) RAJAHMUNDRY . 5. DR, ITAT, VISAKHAPATNAM. 6. GUARD FILE. BY ORDER, //TRUE COPY// (SENIOR PRIVATE SECRETARY) ITAT, VISAKHAPATNAM