Addl. CIT, Meerut V. M/s Subharti K.K.B Charitable Trust, Meerut

ITA 5607/DEL/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6433 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 11-02-2016
• Assessment Year: 1999-2000
• Appeal Filed On: 10-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MUNESH KUMAR
• Keywords: Charitable institution
• Section: 143(3); 80G; 12A; 12AA; 12; 154; 11

Judgement Text

ITA NO. 5607 &5608 /DEL/2010 SUBHARTI KKB CHARITABLE TRUST, MEERUT 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: '[G]' NEW DELHI BEFORE SH. CM GARG , JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER ITA NO. 5607AND 5608 /DEL/2010 ASSESSMENT YEAR: 1999-00 AND 2004-05 ADDITIONAL CIT, RANGE-2, MEERUT (APPELLANT) VS SUBHARTI K K B CHARITABLE TRUST MEERUT (RESPONDENT) APPELLANT BY SH MUNESH KUMAR CIT DR RESPONDENT BY SH. K. SAMPATH SR ADVOCATE DATE OF HEARING 11-02-2016 DATE OF PRONOUNCEMENT 18.03.2016 ORDER PER O.P. KANT, A.M.: THESE APPEALS OF THE REVENUE ARE DIRECTED AGAINST COMMON ORDER DATED 27/09/2010 OF THE LD. COMMISSIONER OF INCOME - TAX (APPEALS), MEERUT . THE GROUNDS OF APPEAL RAISED IN BOTH THE Y EARS ARE IDENTICAL. THEREFORE BOTH THE APPEALS ARE HEARD TOGETHER AND D ISPOSED OF BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE GRO UNDS OF APPEAL OF THE ASSESSMENT YEAR 2004-05 ARE REPRODUCED AS UNDER: 1.WHETHER THE LD. COMMISSIONER OF INCOME-TAX (APPEA LS) HAS ERRED IN LAW AND FACTS IN GIVING CREDENCE TO THE OR DERS OF HONBLE CIVIL JUDGE SENIOR DIVISION, MEERUT DATED 08/05/2007 OVER THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT WHO HAD UPHELD THE STAND OF THE REVENUE THAT TRUST OF 1995 WAS DIFFERENT TRUST FROM ONE THAT OF 1991. ITA NO. 5607 &5608 /DEL/2010 SUBHARTI KKB CHARITABLE TRUST, MEERUT 2 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN L AW IN HOLDING THAT THE JUDGEMENT OF THE HONBLE HIGH COURT OF ALL AHABAD DATED 11/05/2006 HAS NO BEARING ON THE ISSUE WHILE THE HO NBLE HIGH COURT CATEGORICALLY HELD THAT THE TRUST OF 1995 WAS A DIF FERENT TRUST. 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN LA W IN HOLDING THAT THE REJECTION OF RECTIFICATION PETITION WAS UNJUSTI FIED WHEN THE ISSUE OF ALLOWANCE OF REGISTRATION UNDER SECTION 12 A OF THE INCOME TAX ACT, 1961 IS SUBJUDICE, BEING PENDING BEFORE THE HONBLE HIGH COURT OF ALLAHABAD. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE COMMISSIONER OF INCOME TAX APPEALS MAY BE SET-ASIDE AND THAT OF AO RESTORED. ITA NO. 5608/DEL/2010 2.1 THE FACTS IN BRIEF ARE THAT ONE SMT. RAJWATI BHATNA GAR (I.E. THE SETTLER OF THE TRUST) CONTRIBUTED A SUM OF RS. 1101 AS SETTLER MONEY AND EXECUTED A TRUST DEED ON 15 TH OF MARCH 1991 CREATING A PUBLIC CHARITABLE TRUST IN THE NAME AND STYLE OF SUBHARTI KRISHNAKUMAR BHATNAGAR CHARITABLE TRUST (IN SHORT SKKBCT). THIS TRUST WAS GOT REGISTERED UNDER SECTION 12A OF THE INCOME-TAX ACT (FOR SHORT THE ACT) VIDE REGISTRATION CERTIFICATE DATED 15 TH NOVEMBER, 1991. THE TRUST WAS ALSO GRANTED A CERTIFICATE FOR EXEMPTION UNDER SECTION 80 G OF THE INCOME-TAX ACT ON 25 TH OF AUGUST 1994, WHICH WAS RENEWED FROM TIME TO TIME AND THE LAST TWO RENEWALS WERE DA TED 2 ND JANUARY,2002, FOR THE PERIOD FROM 01/04/2001 TO 31/ 03/2004 AND DATED 4 TH JUNE 2004 FOR THE PERIOD FROM 01/04/2004 TO 31/03 /2007. THESE LAST 2 RENEWALS I.E. DATED 2 ND JANUARY 2002 AND 4 TH JUNE 2004 WERE CANCELLED BY THE COMMISSIONER OF INCOME-TAX, M EERUT VIDE ORDER DATED 17 TH MARCH,2006 ON THE GROUND THAT THE EXEMPTION ALLOWED VIDE LAST 2 RENEWALS WAS BEING UTILISED BY ANOTHER TRUST HAVING SAME NAME BUT CREATED VIDE TRUST DEED DATED 17/08/1995. ITA NO. 5607 &5608 /DEL/2010 SUBHARTI KKB CHARITABLE TRUST, MEERUT 3 THE COMMISSIONER OF INCOME-TAX WAS OF VIEW THAT BY THE 2 ND TRUST DEED, WHICH DOES NOT REFER AT ALL TO THE EARLIER TR UST CREATED VIDE TRUST DEED DATED 15TH MARCH 1991, A NEW INDEPENDENT TRUS T UNDER THE SAME NAME AND OF A SIMILAR SETTLER AMOUNT OF RS. 11 01 WAS CREATED . HE FURTHER OBSERVED THAT IN THE 2 ND TRUST ,FEW TRUSTEES ARE DIFFERENT FROM THE EARLIER TRUST AND TWO NEW OBJECTS WERE INC LUDED, WHICH WERE NOT THERE IN THE OBJECTS OF THE EARLIER TRUST. THE ORDER OF THE COMMISSIONER OF INCOME TAX, MEERUT DATED 17 TH MARCH, 2006, WAS CHALLENGED BY THE ASSESSEE BEFORE THE HONBLE ALLAH ABAD HIGH COURT THROUGH THE WRIT PETITION NO. 817 OF 2006. THE HON BLE HIGH COURT DID NOT INTERFERE WITH THE FINDINGS OF COMMISSIONERS OF INCOME-TAX AND DIRECTED THAT IF THE PETITIONER APPLIES UNDER SECTI ON 12AA OF THE ACT FOR REGISTRATION OF THE 2 ND TRUST CREATED BY THE 1995 TRUST DEED, THE COMMISSIONER OF INCOME TAX, MEERUT WOULD TAKE A REA SONED DECISION IN GRANTING OR REFUSING SUCH REGISTRATION WITHIN ON E MONTH OF THE DATE ON WHICH SUCH APPLICATION WAS MADE. SIMILARLY, THE HONBLE HIGH COURT DIRECTED TO GRANT OR REFUSE EXEMPTION UNDER S ECTION 80 G OF THE ACT. THE ACCORDINGLY, THE ASSESSEE FILED AN APPLICA TION ON 22/12/2006 FOR GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT W.E.F. 17/08/1995 ALONGWITH REQUEST FOR THE CONDONING THE DELAY IN FILING THE APPLICATION. THE LD. COMMISSIONER OF INCOME TAX ON CONSIDERATION OF OVERALL ACTIVITIES OF THE TRUST BEING CHARITABLE GR ANTED REGISTRATION PROSPECTIVELY W.E.F. 01/04/2006. AGAINST THE SAID O RDER OF THE COMMISSIONER OF INCOME-TAX, THE ASSESSEE FILED APPE AL BEFORE THE TRIBUNAL. THE TRIBUNAL IN ITA NO. 1368/DEL/2007 DIR ECTED THE COMMISSIONER OF INCOME TAX TO GRANT REGISTRATION W. E.F. 17/08/1995. 2.2 THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDE RATION WAS FILED DECLARING NIL INCOME ON 31/10/2004. THE SCRUTINY AS SESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 29/12/20 06, WHEREIN THE ASSESSING OFFICER ( IN SHORT AO) HELD THAT IN VIE W OF THE JUDGEMENT OF THE HONBLE ALLAHABAD HIGH COURT, A NEW TRUST WAS C REATED BY THE TRUST DEED DATED 17/08/1995 AND THE NEW TRUST WAS N OT REGISTERED UNDER SECTION 12AA OF THE ACT, AND THEREFORE THE TR UST WAS NOT ALLOWED TO CLAIM EXEMPTION UNDER SECTION 11 OF THE ACT. ACCORDINGLY, ITA NO. 5607 &5608 /DEL/2010 SUBHARTI KKB CHARITABLE TRUST, MEERUT 4 THE ASSESSING OFFICER ASSESSED THE INCOME OF THE TR UST AT RS. 3,30,53,573/-UNDER SECTION 143 (3) OF THE ACT. SUBS EQUENT TO THE SAID ASSESSMENT ORDER, THE ASSESSEE FILED AN APPLICATION FOR RECTIFICATION UNDER SECTION 154 OF THE ACT ON 31 ST DECEMBER, 2007, ON THE GROUND THAT HONBLE COURT OF CIVIL JUDGE, SENIOR DIVISION , MEERUT IN A DISPUTE VIS-A-VIS THE TRUSTEES, HELD THAT THE DEED OF 1995 WAS SUPPLEMENTARY TO THE ORIGINALLY CREATED TRUST OF 1991. HOWEVER TH E ASSESSING OFFICER REJECTED THE REQUEST OF THE ASSESSEE TRUST FOR RECT IFICATION UNDER SECTION 154 OF THE ACT , HOLDING THAT THE FINDING G IVEN IN THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT TH AT THE TRUST REGISTERED IN 1995 WAS LEGALLY DIFFERENT FROM THE O RIGINAL TRUST CREATED IN 1991, WAS BASED UPON THE JUDGEMENT OF THE HONB LE HIGH COURT OF ALLAHABAD AND A SUBSEQUENT DECISION OF A LOWER COUR T CANNOT ALTER THE LEGAL POSITION CREATED BY AN ORDER OF THE HIGH COURT. AGAINST THE REJECTION OF THE RECTIFICATION APPLICATION UNDER SE CTION 154 OF THE ACT, THE ASSESSEE TRUST FILED APPEAL BEFORE THE LD. COMM ISSIONER OF INCOME TAX (APPEALS), MEERUT, WHO VIDE THIS IMPUGNE D ORDER ACCEPTED THE CLAIM OF THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO CARRY OUT THE RECTIFICATION. AGGRIEVED W ITH THE DIRECTION OF THE COMMISSIONER OF INCOME-TAX (APPEALS), THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL. 3. IN THE GROUNDS RAISED BY THE REVENUE, THE EFFECT IVE GROUND IS IN RESPECT OF ALLOWING RECTIFICATION BY THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) HOLDING THAT THE TRUST DEED OF 1995 W AS SUPPLEMENTARY TO THE ORIGINALLY CREATED TRUST OF 1991 IN VIEW OF THE ORDER OF THE HONBLE CIVIL JUDGE AND THE JUDGEMENT OF THE HONBL E HIGH COURT OF ALLAHABAD HAD NO BEARING ON THE ISSUE. 4. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE RELYING ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) SUBMITTED THAT THE ISSUE IN DISPUTE WAS ALREADY SET TLED BY THE ORDER OF HONBLE CIVIL JUDGE AND THEREFORE THE IMPUGNED ORDE R MIGHT BE UPHELD. THE LD. AUTHORISED REPRESENTATIVE ALSO SUBM ITTED AN ENGLISH TRANSLATION OF THE ORDER OF THE HONBLE C IVIL JUDGE. WHEREAS ON THE OTHER HAND, THE COMMISSIONER OF INCOME TAX ( DEPARTMENTAL ITA NO. 5607 &5608 /DEL/2010 SUBHARTI KKB CHARITABLE TRUST, MEERUT 5 REPRESENTATIVE) VEHEMENTLY ARGUED THAT THE ISSUE WA S ALREADY DECIDED BY THE HONBLE HIGH COURT IN WRIT PETITION , WHERE BOTH THE ASSESSEE AND THE INCOME TAX DEPARTMENT WERE PARTIES . HE FURTHER SUBMITTED THAT IN THE DISPUTE BEFORE THE HONBLE CI VIL JUDGE THE INCOME TAX DEPARTMENT WAS NOT A PARTY AND THE JUDGEMENT OF THE HONBLE HIGH COURT WAS ALSO NOT BROUGHT TO THE NOTICE OF TH E HONBLE CIVIL JUDGE. HE FURTHER SUBMITTED THAT DESPITE BEING INHE RENT DEFECTS IN THE ORDER OF THE HONBLE CIVIL JUDGE, THE HONBLE HIGH COURT BEING HIGHER COURT THEN THE COURT OF CIVIL JUDGE, THE LD. COMMIS SIONER OF INCOME TAX (APPEALS), SHOULD HAVE TAKEN INTO CONSIDERATION , THE JUDGEMENT OF THE HONBLE HIGH COURT OF THE ALLAHABAD. FURTHER HE SUBMITTED THAT APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT FOR THE TRUST CREATED VIDE TRUST DEED OF 1995 WAS PENDING BEFORE THE COMMISSIONER OF INCOME TAX, MEERUT AND THUS ALLOWIN G THE REGISTRATION BY THE LD. COMMISSIONER OF INCOME TAX APPEALS THROUGH RECTIFICATION WAS NOT IN ACCORDANCE WITH LAW. 5.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND FROM THE JUDGEMENT OF THE HONBLE A LLAHABAD HIGH COURT IN THE WRIT PETITION (SUPRA) THAT THE HONBLE HIGH COURT DECLINED TO INTERFERE IN THE ORDER OF THE COMMISSIONER OF IN COME-TAX, MEERUT WITHDRAWING THE REGISTRATION UNDER SECTION 12A AND EXEMPTION UNDER SECTION 80 G TO THE TRUST CREATED VIDE DEED OF 1995 AND DIRECTED THE COMMISSIONER OF INCOME TAX, MEERUT TO GRANT OR REFU SE THE REGISTRATION UNDER SECTION 12 AA OF THE ACT AND EXE MPTION U/S 80G OF THE ACT, IF THAT TRUST SO APPLIES. THE RELEVANT FIN DINGS OF THE HONBLE HIGH COURT ARE AS UNDER: WE HAVE HEARD LD. COUNSEL FOR THE PETITIONER AT LE NGTH AND WE ARE OF THE OPINION THAT ON THE FACTS AND CIRCUMSTANCES DETAILED IN THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME-TAX AND BRIEFLY SUMMARISED ABOVE BY US , THIS IS NOT A FIT CASE FOR INTERFERIN G WITH THE COMMISSIONERS ORDER IN OUR DISCRETIONARY JURISDICT ION UNDER ARTICLE 226 OF THE CONSTITUTION OF THE INDIA. THE ITA NO. 5607 &5608 /DEL/2010 SUBHARTI KKB CHARITABLE TRUST, MEERUT 6 DISCRETIONARY JURISDICTION SHOULD NOT BE UTILISED T O PERPETUATE ILLEGALITY, ERROR OR FRAUD. AN ATTEMPT WAS MADE FROM THE PETITIONER SIDE TO SHOW WITH REFERENCE TO SECTION 2(15) OF THE INCOME- TAX ACT THAT EDUCATION CAN ALSO BE CHARITABLE PURPOSE . WE DO NOT PROPOSE TO ENTER INTO THIS QUESTION AS THE R ELEVANT FACTS AS TO WHETHER THE KIND OF EDUCATION AND THE T ERMS ON WHICH IT IS BEING IMPARTED AND THE USE TO WHICH PRO CEEDS FROM SUCH IMPARTING OF EDUCATION ARE TO BE PUT BY T HE TRUST NEED TO BE EXAMINED WHICH ACCORDING TO US SHOULD BE LEFT TO THE AUTHORITIES ENTITLED TO DEAL WITH FACTS AND TO ARRIVE AT CONCLUSIONS OF FACT. WE, THEREFORE, DIRECT THAT IS THE PETITIONER APPLI ES UNDER SECTION 12 AA FOR REGISTRATION OF THE 2 ND TRUST CREATED BY THE 1995 TRUST DEED, THE CONCERNED AUTHO RITY WILL TAKE A REASONED DECISION GRANTING OR REFUSING SUCH THE REGISTRATION WITHIN ONE MONTH OF THE DATE ON WH ICH SUCH APPLICATION IS MADE ALONGWITH CERTIFIED COPY O F THIS ORDER. WE, FURTHER DIRECT THAT IF REGISTRATION UNDER SECTI ON 12 A IS GRANTED TO THE 1995 TRUST, IT WILL BE OPEN TO THAT 2 ND TRUST TO APPLY FOR EXEMPTION UNDER SECTION 80 G AND IF SUCH A EXEMPTION IS SOUGHT ALONG WITH A CERTIFIED C OPY OF THIS ORDER AND AFTER COMPLETING NECESSARY FORMALITI ES, THE CONCERNED AUTHORITY WILL CONSIDER BY A REASONED ORD ER WITHIN 2 MONTHS OF THE DATE WHEN THE PETITIONER HAS APPLIED AFTER COMPLETING THE FORMALITIES WHETHER TO GRANT OR REFUSE THE EXEMPTION 5.2 THUS, THE HONBLE HIGH COURT HAS ACCEPTED THE E XISTENCE OF A SEPARATE TRUST CREATED VIDE DEED OF 1995. THE HONB LE CIVIL COURT JUDGE HAS DECIDED A DISPUTE AMONG THE TRUSTEES AND IT IS CLEAR FROM THE ORDER OF THE HONBLE CIVIL JUDGE THAT THE FINDI NG OF THE HONBLE ITA NO. 5607 &5608 /DEL/2010 SUBHARTI KKB CHARITABLE TRUST, MEERUT 7 ALLAHABAD HIGH COURT WERE NOT BROUGHT BEFORE THE HO NBLE CIVIL JUDGE. IT IS ALSO CLEAR FROM THE ORDER OF THE HONB LE CIVIL JUDGE THAT THE INCOME-TAX DEPARTMENT OR THE COMMISSIONER OF IN COME-TAX, MEERUT WAS NOT A PARTY TO THE ISSUE IN DISPUTE. THE HONBLE CIVIL JUDGE HAS RELIED ON THE SUBMISSION THAT ONLY ONE RETURN O F INCOME TAX WAS FILED IN RESPECT OF THE TRUST, WHEREAS THE INCOME-T AX DEPARTMENT HAS HELD EXISTENCE OF NEW TRUST VIDE TRUST DEED OF 1995 AND THE RETURN FILED HAS BEEN HELD AS PERTAINING TO THE NEW TRUST. FURTHER, THE TRIBUNAL IN ITA NO. 1368/DEL/2007 HAS ACCEPTED THE EXISTENCE OF THE NEW TRUST CREATED VIDE TRUST DEED OF 1995 AND DIREC TED THE COMMISSIONER OF INCOME-TAX TO GRANT REGISTRATION FR OM 17 TH AUGUST 1995. THUS IN OUR CONSIDERED VIEW, THE CIT(APPEAL ) WAS NOT CORRECT IN DIRECTING THE ASSESSING OFFICER TO CARRY OUT THE RECTIFICATION FOLLOWING THE DECISION OF THE HONBLE CIVIL JUDGE AND IGNORIN G THE FINDING OF THE HONBLE ALLAHABAD HIGH COURT THAT THE NEW TRUST CAM E INTO EXISTENCE VIDE THE TRUST DEED OF 1995. THE GROUNDS NO. 1 TO 4 OF THE APPEAL OF THE REVENUE ARE ALLOWED ACCORDINGLY. ITA NO. 5607/DEL/2010 6. AS THE GROUNDS OF APPEAL IN ITA NUMBER 5607/DEL/ 2010 ARE IDENTICAL TO THE GROUNDS RAISED IN ITA NO. 5608/DEL/2010, GRO UNDS OF THE APPEAL IN ITA NUMBER 5607/DEL/2010 ARE DECIDED ACCORDINGLY TO THE GROUNDS DECIDED IN ITA NO. 5608/DEL/2010. 7. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE AR E ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 18/03/201 6). SD/- SD/- (C.M.GARG) (O.P.KANT ) JUDICIAL MEMEBR ACCOUNTA NT MEMBER DATED: 18 / 03/2016 ITA NO. 5607 &5608 /DEL/2010 SUBHARTI KKB CHARITABLE TRUST, MEERUT 8 LAPTOP COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO. 5607 &5608 /DEL/2010 SUBHARTI KKB CHARITABLE TRUST, MEERUT 9 DATE INITIAL 1. DRAFT DICTATED ON 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.