New Moradabad Charitable Trust, Moradabad V. CIT (Exemptions), Lucknow

ITA 5616/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3107 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: misc
• Appeal Filed On: 31-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Keywords: Charitable institution
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E NEW DELHI BEFORE SHRI R.K.PANDA , ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 5616 /DEL/2015 A.Y.: ------ NEW MORADABAD CHARITABLE TRUST B 95, GANDHI NAGAR MORADABAD 244 001 PAN: AACTN0280D VS . CIT(E), VIBHUTI KHAND GOMTI NAGAR LUCKNOW 226 010 (APPELLANT) (RESPONDENT) APPELLANT BY SH. PIYUSH KAUSHIK, ADV. RESPONDENT BY MS. SHEFALI SWAROOP, CIT, DR DATE OF HEARING 24.01. 2018 DATE OF PRONOUNCEMENT 15.03.2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER T HE PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 01/07/16 PASSED BY LD. CIT ( E XEMPTION), LUCKNOW ON THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD.CIT(E) HAS ERRED IN LAW AND ON FACTS IN REJECTING APPLICATION U/S 12AA(1)(B)(II) OF INCOME TAX ACT, 1961 (THE ACT). 2. THAT THE ASSESSEE DISPATCHED THE REPLY BY SPEED POST ON 15.6.2016 AND ALL REQUIREMENTS OF NOTICE WELL COMPILED WITH IN THE SAID REPLY. THEREFORE RE JECTION U/S 12AA(1)(B)(II) OF THE ACT IS ARBITRARY, UNJUSTIFIED, ILLEGAL AND AGAINST THE FACT AND THE CIRCUMSTANCES OF THE CASE. 3. THAT THE LD.CIT(E) HAS GENERALLY ERRED IN LAW IN NOT GIVING THE REASONABLE OPPORTUNITY WHICH IS MANDATORY FOR CONSIDERING T HE REGISTRATION U/S 12AA OF THE ACT. ITA 5616/DEL/2015 NEW MORADABAD CHARITABLE TRUST 2 IT IS THEREFORE PRAYED TO KINDLY ALLOW DUE RELIEF TO THE APPELLANT. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : A SSESSEE FILED APPLICATION FOR REGISTRATION UNDER SECTION 12 A (A) OF THE A CT ON 01/02/16 BEFORE COMMISSIONER OF I NCOME T AX ( E XEMPTIONS) {LD.CIT(E) FOR SHORT} , LUCKNOW. LD. CIT ( E ) ACCORDINGLY ISSUED NOTICE ON 06/05/16 ASKING DETAILS REGARDING APPLICATION FOR REGISTRATION UNDER SECTION 12A OF THE A CT. IN RESPONSE TO THE SAME ASSE SSEE SUBMITTED T RUST D EED . LD.CIT(E) AFTER PERUSING THE RECORDS FILED BY ASSESSEE OBSERVED THAT U NDER PROVISIONS OF SECTION 12AA(1)(A) THE ASSESSEE FAILED TO PROVE GENUINENESS OF ACTIVITIES BEFORE OBTAINING REGISTRATION UNDER SECTION 12A(1)(A) OF THE A CT. LD. CIT(E) PLACED RELIANCE UPON VARIOUS CASE LAWS AS MENTIONED IN PARAGRAPH 6 AND 7 OF HIS ORDER. 2.1. AGGRIEVED BY THE ORDER PASSED BY LD.CIT(E) , ASSESSEE IS IN APPEAL BEFORE US NOW. 2.2. LD. AR FILED PAPER BOOK CONTAINING LETTER DATED 14/06/16, APPLICATION IN FORM 10 A FILED WITH LD. CIT (E) , BALANCE SHEET AS ON 31/03/15 AND 31/03/16 AND COPY OF REGISTERED T RUST D EED. LD. AR SUBMITTED THAT V IDE LETTER DATED 14/06/16 ASSESSEE HAD SUBMITTED ALL RELEVANT DETAILS AS REQUIRED IN ORDER TO CONSIDER THE APPLICATION FILED BY ASSESSEE FOR THE PURPOSES OF OBTAINING REGISTRATION UNDER SECTION 12A(A) OF THE A CT. HE SUBMITTED THAT THE PRIMARY OBJECT OF THE TRUST WAS TO PROMOTE EDUCATIONAL AND MEDICAL ACTIVITIES IN THE AREA, AND TO ESTABLISH A SERIES OF EDUCATIO NAL, TECHNICAL, SCIENTIFIC, MANAGERIAL, MEDICAL ITA 5616/DEL/2015 NEW MORADABAD CHARITABLE TRUST 3 INSTITUTIONS, SPORTS ACTIVITIES, SAVE THE GIRL CHILD, SANITATION, RESEARCH CENTRES AND MEDICAL TREATMENT FOR POOR WHERE BOYS AND GIRLS OF ALL SECTIONS OF THE SOCIETY GET GOOD MEDICAL FACILITIES AND EDUCATION OF HIGH ORDER TO ENABLE THEM TO BECOME BETTER CITIZENS OF THE COUNTRY AND CONSTRUCTION OF ONE OR MORE BUILDINGS FOR SOCIAL CAUSE AS DEFINED AND RECOGNISED BY THE PROVISIONS OF I NCOME T AX AND INDIAN T RUST ACT. 2.3. LD. AR SUBMITTED THAT THERE HAS BEEN N O FINDING BY LD.CIT(E) REGARDING THE OBJECTS OF THE TRUST BEING NOT CHARITABLE IN NATURE. IT WAS ARGUED BY HIM THAT FOR THE PURPOSES OF REGISTRATION OF A TRUST UNDER SECTION 12A OF THE A CT THE AUTHORITY IS NOT REQUIRED TO EXAMINE THE QUESTION WHETHER THE T RUST HAS ACTUALLY COMMENCED OR HAS IN FACT CARRIED ON ANY CHARITABLE ACTIVITIES. 2. 4 . LD. AR ALSO SUBMITTED PAPER BOOK WHEREIN THE LIST OF JUDGEMENTS HAS BEEN RELIED UPON BY HIM HAS BEEN PLACED. 2. 5 . ON THE CONTRARY LD.DR PLACED RELIANCE UPON THE ORDER OF LD.CIT(E). IT WAS SUBMITTED BY HIM THAT THE REGISTRATION CANNOT BE GRANTED WITHOUT LOOKING INTO THE GENUINENESS OF ITS ACTIVITIES OR OBJECTS. 3. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. AT PAGE 12 OF PAPER BOOK, OBJECTS OF THE TRUST HAS BEEN MENTIONED FORMING PART OF THE REGISTERED T RUST D EED WHICH ARE AS UNDER: ITA 5616/DEL/2015 NEW MORADABAD CHARITABLE TRUST 4 OBJECTS OF THE TRUST: 1. TO PROMOTE EDUCATIONAL AND MEDICAL ACTIVITIES IN THE AREA AND TO ESTABLISH A SERIES OF EDUCATIONAL, TECHNICAL, SCIENTIFIC, MANAGERIAL, MEDICAL INSTITUTIONS, SPORTS ACTIVITIES, SAVE THE GIRL CHILD, SANITATION, RESEARCH CENTRES AND MEDICAL TREATMENT FOR POOR WHERE BOYS AND GIRLS OF ALL SECTIONS OF THE SOCIETY GET GOOD MEDICAL FACILITIES AND EDUCATION OF HIGH ORDER, TO ENABLE THEM TO BECOME BETTER CITIZENS OF THE COUNTRY AND CONSTRUCTION OF ONE OR MORE BUILDINGS FOR SOCIAL CAUSE AS DEFINED AND RECOGNIZED BY THE PROVISION OF INCOME TAX ACT. 1961 AND THE INDIAN TRUST ACT, 1982. 2. TO OPEN AND PROMOTE SCHOOLS, COLLEGES, MEDICAL HOSPITALS AND TRAINING CENTRES WITH UP - TO - DATE ULTRA MODEM FACILITIES TO IMPART EDUCATION AND MEDICAL TO BOYS AND GIRLS AND VARIOUS VOCATIONAL AND PROFESSIONA L COLLEGES FOR HIGHER EDUCATION AND FOR THOSE WHO WISH TO SEEK PROFICIENCY IN A PARTICULAR FIELD OF EDUCATION IN A HEALTHY ATMOSPHERE . 3. TO SECURE TO FUTURE CITIZENS GOOD EDUCATION AND MEDICAL FACILITIES FROM THE LOWEST TO THE HIGHEST STAGE FOR THEIR PH YSICAL, MENTAL, INTELLECTUAL , SPIRITUAL AND SOCIAL DEVELOPMENT. 4. TO SECURE TO THE COMMON PEOPLE APPROPRIATE VOCATIONAL INDUSTRIAL AND TECHNICAL EDUCATION AT VARIOUS LEVELS IN ORDER TO MAKE THEM ECONOMICALLY SELF SUPPORTING. 5. TO SEEK COLLABORATION FR OM RENOWNED BRANDS FOR SCHOOLS, COLLEGES, HOSPITALS AND OTHER PROFESSIONAL VOCATIONS FOR QUALITY EDUCATION, HEALTH FACILITIES AND INSTANT RECOGNITION. ITA 5616/DEL/2015 NEW MORADABAD CHARITABLE TRUST 5 6. TO EXPLORE THE CAPABILITIES AND APTITUDE OF THE STUDENTS AND IMPART EDUCATION AND TRAINING IN THE FIELD OF THEIR INTEREST AND TO PREPARE THEM FOR ADMINISTRATIVE, BUSINESS MANAGEMENT, DEFENCE OR OTHER COMPETITIONS FOR HIGHER STUDIES AND SERVICES. 7. TO DEVELOP SENSE OF REGARD FOR DISCIPLINE, BETTER MORALS, PUNCTUALITY ,TRUTHFULNESS, HYGIENE, HARD WOR K , SIMPLICITY, ACADEMIC AND PRACTICAL KNOWLEDGE ETC. 8. TO TAKE ANY OTHER ACTIVITY OF GENERAL PUBLIC UTILITY AND WELFARE AND IN GENERAL TO UNDERTAKE AL L SUCH ACTIVITIES AS MAY BE CONDUCIVE TO BUILDING BETTER FUTURE CITIZENS OF INDIA. 9. TO ACHIEVE THE ABOVE TO DO ALL SUCH ACT AND DEEDS NECESSARY TO ACHIEVE THE ABOVE OBJECTS. 10. TO PROVIDE RELIEF TO THE POOR AND NEEDY AND TO DO AND ESTABLISH ALL SUCH THINGS THOSE IS IN NATURE CHARITABLE AND IN PUBLIC INTEREST AND ARE RECOGNISED BY THE PR OVISIONS OF THE INCOME TAX ACT, 1961. 11. TRUSTEES ARE HIGHLY INSPIRED BY THE IDEAS OF ROTARY INTERNATIONAL AND THEY WILL TRY TO FOLLOW CHARITABLE ACTIVITIES CONDUCTED BY ROTARY INTERNATIONAL FROM TIME TO TIME. 3.1. IT IS PERTINENT TO NOTE THAT WORDING IN SECTION 12 A, 12 AA OF THE A CT , DOES NOT MAKE ANY REFERENCE TO CHARITY OR CHARITABLE PURPOSE . IN FACT SECTION 2 (15) OF THE A CT DEFINES THE TERM CHARITABLE PURPOSE AS UNDER: ITA 5616/DEL/2015 NEW MORADABAD CHARITABLE TRUST 6 SECTION 2(15): CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUC ATION, MEDICAL RELIEF AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. IT HAS BEEN HELD IN VARIOUS DECISIONS THAT WHERE THE PURPOSE OF THE T RUST IS ONE OF THE 3 DECLARED CHARITIES AS PER SECTION 2 (15) OF THE A CT, NO QUESTION OF EXAMINATION OF PROFIT MOTIVE IS REQUIRED. FURTHER WHAT IS INTENDED ON A PLAIN READING OF SECTION 12 AA AND S ECTION 12 A OF THE A CT IS THE ELIGIBILITY FOR REGISTRATION OF THE TRUST BEING GENUINE . TH E STAGE FOR CONSIDERATION OF RELEVANT OBJECT OF THE TRUST AND APPLICATION OF ITS FUNDS ARISES AT THE TIME OF ASSESSMENT WHERE BENEFITS ARE CLAIMED BY ASSESSEE UNDER SECTION 11 AND 12 OF THE A CT . I N THE PRESENT CASE ASSESSEE HAS IMPLICIT LY MADE APPLICATION FOR REGISTRATION OF THE TRUST AND G OING BY VARIOUS JUDGEMENTS OF HON BLE SUPREME COURT, MORE PARTICULARLY IN THE CASE OF ADITANAR EDUCATIONAL I NSTITUTION VS . CIT (1997) 2 2 4 ITR 310 AND CIT VS . SUDHAR A RT S ILK CLOTH M ANUFACTURERS ASSOCIATION (1980) 121 ITR 1 , WHAT IS TO BE LOOKED INTO IS , WHETHER THE TRUST IS GENUINE ONE AND WHETHER IT IS A SHAM INSTITUTION FLOATED ONLY TO AVAIL THE BENEFITS OF EXEMPTION UNDER THE A CT. LD.A.R. HAS ALSO PLACED RELIANCE ON A RECENT DECISION OF CO - ORDINATE BENCH IN CASE OF VIDYADAYANI SHIKSHA SAMITI VS. CIT (E) - 5, LUCKNOW REPORTED IN 2017 - TIOL - 1729 - ITAT - DEL, WHEREIN A SIMILAR VIEW HAS BEEN TAKEN WHICH IS AS UNDER. 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED ORDER OF LD.CIT AND PAPER BOOK FILED ITA 5616/DEL/2015 NEW MORADABAD CHARITABLE TRUST 7 ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE IN THE INSTANT CASE IS A SOCIETY RUNNING CERTAIN SCHOOLS AND COLLEGES. IT APPLIED F OR REGISTRATION U/S L2A OF THE I T ACT IN FORM NO . 10A . A PERUSAL OF THE OBJECTIVES OF THE SOCIETY AS PER MEMORANDUM OF ASSOCIATION, COPY OF WHICH IS PLACED AT PAGE 30 OF THE PAPER BOOK SHOWS THE F OLLOWING OBJECTS OF THE SOCIETY: - ( I ) TO IMPART EDUCATION OF INDIAN CULTURE, LANGUAGES, ART, SCIENCE AND TECHNOLOGY AND IN OTHER AREAS IRRESPECTIVE OF CASTE AND CREED. ( II ) TO DEVELOP AND ENCOURAGE AND INDIGENOUS SYSTEM OF EDUCATION BASED ON LATEST SCIENTIFIC RESEARCHES. ( III ) TO CREATE AND PROVIDE FACILITIES FOR ALL ROUND DEVELOPMENT OF THE CHILD. ( IV ) TO ORGANIZE CULTURAL ACTIVI TIES FOR PROMOTION OF VARIOUS ASPECTS OF INDIA CULTURE. ( V ) TO PROVIDE FACILITIES FOR SOCIAL AND ECONOMIC DEVELOPMENT FOR THE POOR AND NEED Y WHO D ESERVE. ( VI ) TO ESTABLISH LIBRARIES WITH BOOKS ON RELIGIOUS, LIFE HISTORIES AND TEACHINGS OF GREAT PERSONALITIES . ( VII ) TO EVOLVE AND ENCOURAGE INTEREST IN PHYSICAL AND MENTAL UPLIFT M ENT THROUGH GAME, YOGA, ASANS AND PHYSICAL EXERCISES. ( VIII ) TO ENCOURAGE STUDIES AND LECTURES ON RELIGIONS, CULTURE, ETHICS AND SPIRITUALITY. ( IX ) TO START, ESTABLISH AND MAINTAIN SCHOOLS OR COLLEGES OR TECHNICAL INSTITUTIONS ETC. ITA 5616/DEL/2015 NEW MORADABAD CHARITABLE TRUST 8 (X) TO ESTABLISH AND MAINTAIN CHARITABLE HOSPITALS, PUBLIC HEALTH CENTRE, AND SOCIAL UP - LIFT CENTRES. 12. SINCE THE ASSESSEE TRUST DID NOT PRODUCE THE BOOKS AND VOUCHER S IN RESPECT OF EXPENSES CLAIMED BY THE SOCIETY FOR VERIFIC ATION OF THE ACTIVITIES OF THE TRUST, THE LD. CIT HELD T H AT THE ASSESSEE TRUST IS NOT CARRYING OUT ANY CHARITABLE ACTIVITIES AND THEREFORE THE G ENUINENESS OF THE ACTIVITIES COULD NOT BE V ERI F IED. RE L YING ON VARIOUS DECISIONS, THE L D. CIT REJECTED THE CLAIM OF REGISTRATION SOUG H T BY THE SOCIETY U/S 12A (1) OF THE I.T. ACT. IT IS THE SUBMISSION OF THE L D. COUNSEL FOR THE ASSESSEE THAT AT THE TIME OF GRANTING OF REGISTRATION THE L D. CIT IS REQUIRED ONLY TO EXAMINE THE OBJECTS OF THE TRUST AND IS NOT REQUIRED TO EXAMINE THE BOOKS OF ACCOUNT OF THE TRUST AND IT IS ONLY DURING THE CLAIM OF EXEMPTION U/S 11 THE ASSESS ING OFFICER W ILL EXAMINE THE SAME AND ALLOW OR DISALLOW THE SAME AS THE CASE MAY BE. IT IS ALSO HIS SUBMISSION THAT SINCE THE ASSESSEE TRUST IS IMPAR TING EDUCATION BY RUNNING VARIOUS S CH OOLS AND COLLEGES, THEREFORE, I T IS D O ING CHARITABLE ACT IVI TIES AS ACCORD IN G TO HIM 'EDUCATION' PER SE - IS CHARITABLE ACTIVITY. WE DO NOT FIND ANY SUC H FINDING BY LD. CIT ( E ) IN HIS ORDER. 3.2. VARIOUS OTHER DECISIONS RELIED UPON BY LD.A.R. ALSO SUPPORT THIS CASE. THUS IN THE LIGHT OF THE ABOVE FINDINGS , THE IMPUGNED ORDER PASSED BY LD.CIT( E ) IS SET ASIDE. THE LD. CIT ( E ) IS DIRECTED TO GRANT REG ISTRATION IN TERMS OF SECTION 12 A OF THE A CT. IT IS ALSO MADE CLEAR THAT ITA 5616/DEL/2015 NEW MORADABAD CHARITABLE TRUST 9 DEPARTMENT IS AT LIBERTY TO PASS APPROPRIATE ORDERS IN ACCORDANCE WITH LAW IN THE ASSESSMENT ON THE RETURNS TO BE FILED BY THE TRUST OR PERSONS MAKING CONTRIBUTIONS TO IT IN TERMS OF SECTION 10, 11 AND 12 OF THE A CT. 4. IN THE RESULT APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.03.2018 . SD/ - SD/ - ( R.K.PANDA ) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH MARCH, 2018. *MV COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. R ESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASST. REGISTRAR ITAT, DELHI BENCHES, NEW DELHI ITA 5616/DEL/2015 NEW MORADABAD CHARITABLE TRUST 10 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E NEW DELHI BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 5616/DEL/2015 A.Y.: ------ NEW MORADABAD CHARITABLE TRUST B 95, GANDHI NAGAR MORADABAD 244 001 PAN: AACTN0280D VS . CIT(E), VIBHUTI KHAND GOMTI NAGAR LUCKNOW 226 010 (APPELLANT) (RESPONDENT) APPELLANT BY SH. PIYUSH KAUSHIK, ADV. RESPONDENT BY MS. SHEFALI SWAROOP, CIT, DR DATE OF HEARING 24.01. 2018 DATE OF PRONOUNCEMENT 15.03.2018 CORRIGENDUM THE ABOVE ORDER WAS PRONOUNCED ON 15 TH MARCH, 2018. IT IS OBSERVED THAT THERE IS A TYPOGRAPHICAL ERROR IN THE CAUSE TITLE OF THE ORDER. THE CAUSE TITLE SHALL NOW BE READ AS UNDER: ITA NO. 5616/DEL/2016 A.Y.: ------ NEW MORADABAD CHARITABLE TRUST B 95, GANDHI NAGAR MORADABAD 244 001 PAN: AACTN0280D VS. CIT(E), VIBHUTI KHAND GOMTI NAGAR LUCKNOW 226 010 (APPELLANT) (RESPONDENT) APPELLANT BY SH. PIYUSH KAUSHIK, ADV . RESPONDENT BY MS. SHEFALI SWAROOP, CIT, DR DATE OF HEARING 26.02. 2018 DATE OF PRONOUNCEMENT 15.03.2018 ITA 5616/DEL/2015 NEW MORADABAD CHARITABLE TRUST 11 THIS C ORRIGENDUM SHALL BE READ IN CONSONANCE WITH THE ORDER DATED 15.03.2018 PASSED IN THE CAPTIONED APPEAL . THE REST OF THE CONTENT OF AFORESAID ORDER DATED 15.03.2018 WILL REMAIN UNCHANGED. DATE OF CORRIGENDUM : 20 TH MARCH, 2018. SD/ - SD/ - (R.K.PANDA) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20 TH MARCH, 2018. *MV COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASST. REGISTRAR ITAT, DELHI BENCHES, NEW DELHI