Vastushodh Foundation, Pune V. Commissioner of Income-tax : 1,

ITA 562/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5515 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-08-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 30-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDITA KANCHAN
• Assessee Lawyers: AVHAY AVCHAT
• Keywords: Charitable institution; Condonation of delay
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO. 562/PUN/2016 / ASSESSMENT YEAR : 2014-15 VASTUSHODH FOUNDATION, UNIT NO.101, 102, FIRST FLOOR, LOTUS PLAZA, S. NO. 15/1-B/1, OPP. KARISHMA SOCIETY, KOTHRUD, PUNE-411 038 PAN : AABTV7736P .... / APPELLANT / V/S. THE COMMISSIONER OF INCOME TAX-1, PUNE. / RESPONDENT ASSESSEE BY : SHRI AVHAY AVCHAT REVENUE BY : MS. NANDITA KANCHAN, CIT-DR / DATE OF HEARING : 28.01.2019 / DATE OF PRONOUNCEMENT : 29.01.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF LD. CIT-1, PUNE DATED 22.09.2014 DENYING REGISTRATION U/S.12AA OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) TO THE ASSESSE E. 2. THIS APPEAL WAS FILED WITH THE DELAY OF 483 DAYS. THE LD. AR HAS FILED SWORN IN AFFIDAVIT WHEREIN THE REASONS FOR DELAY IS EXPLAINED AND SUBMITTED 2 ITA NO. 562/PUN/2016 A.Y.2014-15 THAT THE DELAY IS NOT INTENTIONAL AND THEREFORE, PRAYED TH AT THE DELAY OF 483 DAYS BE CONDONED. LD. DR DID NOT SERIOUSLY OBJECT TO TH E PRAYER OF CONDONATION. ON THE ISSUE OF CONDONATION OF DELAY OF APPEAL, WE HAVE GONE THROUGH THE SWORN IN AFFIDAVIT FILED BY ASSESSEE AND HEARD THE LD. DR. AFTER CONSIDERING THE REASONS STATED IN THE AFFIDAVIT WE ARE OF T HE VIEW THAT THE DELAY IN FILING THE APPEAL HAS BEEN SATISFACTORILY EXPLAINED. I N VIEW OF THESE FACTS, DELAY IN FILING THE APPEAL IS CONDONED AND APPEAL IS ADM ITTED FOR HEARING. 3. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE IS A CHARITABLE TRUST FORMED WITH OBJECTIVE ASSISTING AND CONTRIBUTING FOR THE OB JECTS OF RELIEF TO THE POOR, EDUCATION, MEDICAL RELIEF, PREVENTION OF ENVIRONMENT, POLLU TION ETC. THE ASSESSEE HAS BEEN REGISTERED AS A CHARITABLE TRUST ON 31 ST AUGUST, 2013 WITH THE CHARITY COMMISSIONER, PUNE UNDER REGISTRATION NO.E-669 1 ON NOVEMBER 25, 2013. 4. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE S UBMITTED THAT THE LD. CIT REFUSED TO GRANT REGISTRATION U/S.12AA OF THE ACT TO THE ASSESSEE-TRUST ON PERUSAL OF THE OBJECTS OF THE TRUST AS INCORPORATED IN THE TRUST DEED. THAT ACCORDING TO THE LD. CIT, SOME OF THE OBJECTS IN THE OB JECTS CLAUSE IN THE TRUST DEED ARE NOT CHARITABLE IN NATURE AND THEREFORE, R EGISTRATION U/S.12AA OF THE ACT WAS NOT GRANTED TO THE ASSESSEE. THE LD.CIT FURTHER HAS BASED HIS DECISION ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF DAULAT RAM PUBLIC TRUST VS. CIT, 112 TAXMAN 128 (DELHI)/244 ITR 51 4. THE LD. AR OF THE ASSESSEE FURTHER CONTENDED THAT THE DECISION OF T HE DELHI HIGH COURT (SUPRA.) ON WHICH LD. CIT HAS PLACED HIS RELIANCE, DEALS WITH T HE ALLOWABILITY OF EXEMPTION U/S.11 OF THE ACT AND NOT WITH REGARD TO TH E ISSUE OF GRANTING REGISTRATION U/S.12AA OF THE ACT AND THEREFORE, THIS CASE LAW IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE. 3 ITA NO. 562/PUN/2016 A.Y.2014-15 5. PER CONTRA, LD.AR OF THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL, CHANDIGARH IN THE CASE OF BHAI GURUDAS EDUCATIONAL TRUST VS. COMMISSIONER OF INCOME TAX, PATIALA [20 17] 82 TAXMANN.COM 236 ( CHANDIGARH-TRIB.). IN THIS CASE, IT WAS OB SERVED BY THE TRIBUNAL THAT LD. CIT HAS PICKED UP ONE OBJECT OUT OF TH E TOTAL TEN OBJECTS WHICH WERE LISTED FOR THE PURPOSE FOR WHICH THE TRUST WA S CREATED AND TREATING THAT ONE OBJECT AS NOT CHARITABLE, HAS REJECT ED THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S.12AA OF THE ACT. IN THIS BAC KDROP, IT WAS HELD BY THE CHANDIGARH BENCH OF THE TRIBUNAL THAT MERELY BECAUSE ONE OF THE OBJECTS OF THE TRUST APPEARS TO BE NOT CHARITABLE, IT CANNOT BE A GROUND FOR HOLDING THE OBJECTS OF THE TRUST AS BEING NOT IN THE NATURE OF CHARITY AND REFUSING TO GRANT REGISTRATION U/S.12AA. 5.1. IN THE CASE OF YOGIRAJ CHARITY TRUST VS. CIT [1976] 1 03 ITR 777 (SC), IT WAS HELD THAT IF THE PRIMARY OR DOMINANT PURPOSE OF A TR UST IS CHARITABLE, ANOTHER OBJECT WHICH BY ITSELF MAY NOT BE CHARITABLE BUT WHICH IS MERELY ANCILLARY OR INCIDENTAL TO THE PRIMARY OR DOMINANT PURPOSE WOULD NOT PREVENT THE TRUST FROM BEING A VALID CHARITY. 6. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RE LIANCE ON THE ORDER OF THE LD. CIT AND STATED THAT IF SOME OF THE OBJECTS IN THE OBJECTS CLAUSE OF THE TRUST DEED ARE NOT CHARITABLE IN NATURE, IT WAS OPEN TO THE ASSESSEE TO AMEND THE OBJECTS CLAUSE OF THE TRUST DEED AND RE-A PPLY FOR REGISTRATION U/S.12AA OF THE ACT. 7. WE HAVE PERUSED THE CASE RECORD AND HEARD THE RIV AL CONTENTIONS AND CONSIDERED THE JUDICIAL PRONOUNCEMENT PLACED BEFORE US. T HE SETTLED POSITION OF LAW HAS OPINED THAT ISSUE OF GRANTING OF REGISTRATION U/ S.12AA OF THE ACT IS ONE THING AND DETERMINING THE CLAIM OF EXEMPTION U/S.11 OF T HE ACT IS ABSOLUTELY ANOTHER THING. WHEN ANY TRUST OR SOCIETY APP LIES FOR REGISTRATION 4 ITA NO. 562/PUN/2016 A.Y.2014-15 U/S.12AA OF THE ACT BEFORE THE REVENUE AUTHORITY, IT IS A STEPPING STONE THAT THEY WILL BE DOING CHARITABLE ACTIVITIES AND THEREBY GET EXE MPTION U/S.11 OF THE ACT AS DETERMINED AT THE TIME OF ASSESSMENT. BUT IF THE REGISTRATION U/S.12AA OF THE ACT IS DENIED AT THE THRESHOLD ITSELF THEN EVEN FOR CHARITABLE ACTIVITIES ALSO, ASSESSEE LOSES OPPORTUNITY TO GET EXEMPTIO N U/S.11 OF THE ACT. THEREFORE, TO MAINTAIN SCALE OF JUSTICE, THE COURTS HAVE HE LD THAT IF THE PROCEDURE LAID DOWN IN THE ACT FOR REGISTRATION U/S.12AA O F THE ACT, IS COMPLIED WITH BY THE ASSESSEE THEN REGISTRATION SHOULD BE PROVIDED TO THE ASSESSEE. IT IS, HOWEVER, AT THE ASSESSMENT STAGE ONLY THAT THE ASSESSING OFFICER SHALL LOOK IN TO THE MATTER WHETHER THE ACTIVITIES DO NE BY THE SAID TRUST OR SOCIETY IS CHARITABLE IN NATURE OR NOT. IF IT IS CH ARITABLE THEN AS PER LAW, EXEMPTION WILL BE GRANTED SO FAR AS SECTION 11 OF THE ACT IS CONCERNE D. 8. IN THIS CASE, BEFORE US, IT IS ONLY THE ISSUE OF GRANTIN G REGISTRATION U/S.12AA OF THE ACT. THE LD. DR DID NOT DISPUTE THAT TH E PROCEDURE LAID DOWN IN THE ACT HAS BEEN COMPLIED WITH BY THE ASSESSEE FOR FILING APPLICATION FOR REGISTRATION U/S.12AA OF THE ACT. HENCE, IN OUR CONSIDERE D VIEW, IN TOTALITY OF FACTS AND CIRCUMSTANCES AND JUDICIAL PRINCIPLES LAID DOWN BY THE COURTS AND ALSO FOR THE FACT THAT IT IS REGISTERED WITH THE COMMISSIONE R OF CHARITY AT PUNE, REGISTRATION U/S.12AA OF THE ACT SHOULD BE GRANTED. 9. FURTHER, IT IS ALSO OPEN TO THE REVENUE AUTHORITY AT THE TIME OF ASSESSMENT TO VERIFY THE ACTIVITIES OF THE TRUST TO EXAM INE WHETHER THEY WILL GET EXEMPTION U/S.11 OF THE ACT OR NOT AND DO THE NEEDFUL AS PER LAW. WE HAVE ALSO OBSERVED THAT THE HON'BLE DELHI HIGH COURT DECISION (SUPRA.) TO WHICH THE LD. CIT HAS PLACED HIS RELIANCE DEALS W ITH THE ISSUE OF EXEMPTION AND NOT WITH THE ISSUE OF GRANTING REGISTRATION U/S.12AA OF THE ACT AND ARE SUBSTANTIALLY DISTINGUISHABLE IN FACTS WITH THAT OF THE CASE OF THE ASSESSEE HEREIN. WE RATHER TAKE GUIDANCE FROM THE DECIS ION OF THE HON'BLE 5 ITA NO. 562/PUN/2016 A.Y.2014-15 SUPREME COURT IN THE CASE OF YOGIRAJ CHARITY TRUST (SUPR A.) THAT IF THE PREDOMINANT OBJECTS OF A TRUST IS CHARITABLE IN NATURE TH EN OTHER OBJECTS CANNOT BE JUDGED INDIVIDUALLY WHETHER THEY ARE CHARITAB LE OR NOT MEANING THEREBY IF THE TOTALITY OF OBJECTS IS CHARITABLE THE REQUIRE MENTS OF THE LAW ARE COMPLIED WITH. IN VIEW OF THE DISCUSSION HEREIN ABOVE, WE SET ASIDE THE O RDER OF LD. CIT AND DIRECT TO GRANT REGISTRATION U/S.12AA OF THE ACT TO THE ASSESSE E TRUST. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 29 TH DAY OF JANUARY, 2019. SD/- SD/- R.S.SYAL PART HA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 29 TH JANUARY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT-1, PUNE. 4 . !'# $$%& , ' %& , ()* , / DR, ITAT, B BENCH, PUNE. 5. #+, -. / GUARD FILE. // TRUE COPY // '/ / BY ORDER, $0 %* / PRIVATE SECRETARY ' %& , / ITAT, PUNE. 6 ITA NO. 562/PUN/2016 A.Y.2014-15 DATE 1 DRAFT DICTATED ON 28 .01.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 29 .01 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER