P.R.Chellaram Charitable Trust, Secunderabad V. Dy.Commissioner of Income Tax (Exemp), Hyderabad

ITA 565/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66137 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 17-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M DAYAKAR
• Assessee Lawyers: LAXMINIWAS SHAR MA
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 565/HYD/2012 P.R. CHELLARAM CHARITABLE TRUST, APPELLAN T SECUNDERABAD VS. DIRECT OF INCOME-TAX(EXEMPTION), RESPONDE NT HYDERABAD APPELLANT BY : SHRI LAXMINIWAS SHARMA RESPONDENT BY : SHRI M. DAYAKAR DATE OF HEARING : 18/07/2012 DATE OF PRONOUNCEMENT : 10/08/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL IS DIRECTED AGAINST THE ORDER OF DIT(E ), HYDERABAD DATED 03/02/2012. 2. THE ASSESSEE TRUST, WHICH WAS REGISTERED UNDER SECTION 12A FILED AN APPLICATION IN FORM 10G ON 10. 08.2011 SEEKING APPROVAL UNDER SECTION 80G(5)(VI). THE ASS ESSEE WAS ISSUED A QUESTIONNAIRE ON 27.102.011 FOR WHICH ONE OF THE TRUSTEE APPEARED AND FILED INFORMATION AND OTHE R DETAILS. THE DIT (EXEMPTION) OBSERVED THAT THE ASSESSEE WAS GRANTED APPROVAL FOR THE PERIOD 22.08.2002 TO 31.03 .2005 AND AS THERE WAS NO APPLICATION FOR RENEWAL OF THE APPROVAL UNDER SECTION 80G(5)(VI), THE ASSESSEE IS NOT ENTIT LED FOR REGISTRATION /APPROVAL. ITA NO. 565/HYD/12 P.R. CHELLARAM CHARITABLE TRUST 2 3. THE DIT (EXEMPTION) HAD FURTHER ANALYZED VARIOUS RETURNS, BALANCE SHEET AND OTHER FINANCIAL STATEMEN TS OF THE ASSESSEE AND CAME TO THE CONCLUSION THAT FIVE CONDI TIONS WHICH ARE TO BE FULFILLED UNDER SECTION 80G(5)(VI) ARE NOT SATISFIED AND HENCE REFUSED TO GRANT APPROVAL U/S 80G(5)(VI). 4. AGGRIEVED THE ASSESSEE IS ON APPEAL BEFORE US U/ S 253 (1)(C).THE ASSESSEE SUBMITTED THAT DIT (EXEMPTION) HAD FIRST HEARING ON 1 ST DECEMBER, 2011 AND LAST HEARING ON 27 TH JANUARY, 2012, CONCLUSION IS BASED ON ASSUMPTION AN D PRESUMPTION AND SUFFICIENT OPPORTUNITY WAS NOT GRAN TED TO THE ASSESSEE TO EXPLAIN THEIR CASE. THEY HAVE ALSO FILED A PAPER BOOK GIVING DETAILED EXPLANATIONS FOR THE QUE RIES RAISED BY LOWER AUTHORITIES. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI LAXMIN IVAS SHARMA RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF HEAL A CHILD FOUNDATION VS. DIT(E)-II IN IT APPEAL NO. 1343 (HYD.) OF 2011 DATED FEBRUARY 2, 2102 WHEREIN THE TRIBUNAL HELD AS UNDER:- THE COMMISSIONER IS EMPOWERED TO CALL FOR SUCH FURTHER DOCUMENTS OR INFORMATION OR CALLS SUCH ENQUIRIES IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE INSTITUTION. I F THE COMMISSIONER IS SATISFIED THAT THE CONDITION LAID D OWN IN CLAUSES (I) TO (V) OF SUB-SECTION (5) OF SECTION 80G ARE FULFILLED, HE SHALL RECORD SUCH SATISFACTION AN D GRANT APPROVAL. IF HE IS NOT SO SATISFIED, HE SHALL REJEC T THE APPLICATION AFTER RECORDING THE REASONS. THUS AS PE R THE PROVISION OF SECTION 80G(5) READ WITH RULE 11AA FOR GRANTING REGISTRATION, THE COMMISSIONER NEEDS TO BE SATISFIED THAT THE CONDITION LAID DOWN IN CLAUSES ( I) TO (V) OF SUB-SECTION (5) OF SECTION 80G ARE FULFILLED . IN THE PRESENT CASE, THERE IS NO DISPUTE THAT THE APPLICATION FOR APPROVAL HAS BEEN FILED IN FORM NO. 10G ITA NO. 565/HYD/12 P.R. CHELLARAM CHARITABLE TRUST 3 ALONG WITH THE DOCUMENTS REQUIRED TO BE ACCOMPANIED THERETO. SUB-CLAUSE (I) OF SUB-SECTION (5) OF SECTION 80G REQUIRES THAT WHERE THE INSTITUTION OR FUND DERIVES ANY INCOME, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSIO N IN ITS TOTAL INCOME UNDER THE PROVISIONS OF SECTIONS 1 1 AND 12 OF THE ACT. THE ASSESSEE IS REGISTERED UNDER SEC TION 12AA OF THE ACT. THUS SUB-CLAUSE (I) IS SATISFIED. 6. AS PER SUB-CLAUSE (II) OF SUB-SECTION (5) OF SE CTION 80G, THE INSTRUMENT UNDER WHICH THE INSTITUTION OR FUND IS CONSTITUTED DOES NOT, OR THE RULES GOVERNING THE INSTITUTION OR FUND DO NOT, CONTAIN ANY PROVISION F OR THE TRANSFER OR APPLICATION AT ANY TIME OF THE WHOLE OR ANY PART OF ITS INCOME OR ASSETS FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOSE. ADMITTEDLY THERE IS NO CLAUSE OR RULE GOVERNING THE INSTITUTION WHICH CONTAINS ANY PROVISION FOR THE TRANSFER OR APPLICATION OF ITS IN COME OR ASSETS FOR ANY PURPOSE OTHER THAN A CHARITABLE PURP OSE. AS ACCORDING TO THE CLAUSE 7, IN CASE OF DISSOLUT ION THE TRUST MAY AMALGAMATE A PART OR OWN OF THE TRUST PROPERTIES WITH ANY OTHER TRUST, ORGANIZATION OR INSTITUTION HAVING ALLIED OR KINDRED OBJECTS AND WH ICH IS ALSO REGISTERED UNDER SECTION 12A OF THE INCOME-TAX ACT, 1961. THE ONLY OBJECT OF THE ASSESSEE TRUST I S FOR CARRYING OUT SUCH OBJECT OF CHARITABLE NATURE WITHI N THE DEFINITION OF 'CHARITABLE PURPOSE' AS SPECIFIED IN SECTION 2(15) OF THE ACT. 7. THE CONDITION PRESCRIBED IN SUB-CLAUSE (IV) OF SECTION (5) OF SECTION 80G IS THAT THE INSTITUTION OR FUND MAINTAINS REGULAR ACCOUNTS OF ITS EXPENDITURE IS AL SO COMPLIED WITH AS ENUMERATED IN CLAUSE 12 OF THE DE ED OF TRUST. 8. THE CONDITION IN SUB-CLAUSE (V) OF SUB-SECTION (5) OF SECTION 80G IS THAT THE INSTITUTION OR FUND IS E ITHER CONSTITUTED AS A PUBLIC CHARITABLE TRUST OR IS REGI STERED UNDER THE SOCIETIES REGISTRATION ACT, 1960. IN THIS CASE IT IS A PUBLIC CHARITABLE TRUST. 9. FROM THE ABOVE IT IS CLEAR THAT ALL THE CONDITI ONS LAID DOWN IN RULE 11AA I.E. CONDITION LAID DOWN IN SUB- CLAUSES (I) TO (V) OF SUB-SECTION (5) OF SECTION 80 G ARE FULFILLED. WHEN THE ASSESSEE TRUST WAS GRANTED REGISTRATION UNDER SECTION 12AA, IT IS A TESTIMONY TO ITA NO. 565/HYD/12 P.R. CHELLARAM CHARITABLE TRUST 4 THE FACT THAT THE TRUST IS ESTABLISHED FOR CHARITAB LE PURPOSES. HON'BLE PUNJAB & HARYANA HIGH COURT WHICH IS THE JURISDICTION IN THIS CASE IN THE CASE OF SON EPAT HINDU EDUCATIONAL & CHARITABLE SOCIETY V. CIT [2005 ] 278 ITR 262 /147 TAXMAN 1 HELD AS UNDER:- 'IN CONSTRUING THE PURPOSE OF A TRUST, FOR THE PURP OSES OF APPROVAL UNDER SECTION 80G OF THE INCOME-TAX ACT , 1961, IT IS IMPORTANT TO FIND OUT THE REAL PURPOSE OF ESTABLISHING THE TRUST RATHER THAN JUST RELYING ON THE OBJECTS, MEMORANDUM AND ARTICLES OR THE TRUST DEED OF THE TRUST. IF THE COMMISSIONER IS SATISFIED THAT TH E OBJECTS OF THE TRUST ARE CHARITABLE, APPROVAL SHOUL D NOT BE DENIED ON MERE TECHNICALITIES. REGISTRATION OF AN INSTITUTION UNDER SECTION 12A OF THE ACT IS SUFFICIENT PROOF OF IT BEING ESTABLISHED FOR CHARITABLE PURPOSES. IT IS NOT POSSIBLE TO DETERMINE, ON THE DATE ON WHI CH THE DONATION IS MADE UNDER SECTION 80G, IF THE TRUS T, WHICH HAS SOUGHT APPROVAL UNDER THE SAID SECTION, H AS FULFILLED ITS CONDITIONS AT THE CLOSE OF THE RELEVA NT PREVIOUS YEAR. RES JUDICATA CAN BE APPLIED IN INCOME-TAX PROCEEDIN GS WHEN A FUNDAMENTAL ASPECT HAS PREVAILED THROUGH DIFFERENT ASSESSMENT YEARS WITHOUT BEING CHALLENGED ONE WAY OR THE OTHER. IN SUCH CASES IT IS NOT APPROPRIATE TO CHANGE THE POSITION IN A SUBSEQUENT YEAR.' 10. THERE IS NO DENIAL OF FACT THAT THE ASSESSEE INSTITUTION, IN THE PRESENT CASE, IS REGISTERED UND ER SECTION 12AA OF THE INCOME-TAX ACT. HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.N. DESAI CHARITABLE TRU ST V. CIT [2000] 246 ITR 452 / 123 TAXMAN 866 HELD THAT I N RESPECT OF REGISTRATION UNDER SECTION 80G, THE SCOP E OF ENQUIRY WILL BE CONFINED TO FINDING OUT IF THE INST ITUTION SATISFIES PRESCRIBED CONDITION STATED IN SUB-CLAUSE S (I) TO (V) OF SECTION 80G. IT DOES NOT EXTEND TO ACTUAL ASSESSMENT OF INSTITUTION. THE PHRASE USED IN SUB- CLAUSE (I) OF SUB-SECTION (5) OF SECTION 80G IS THA T 'WHERE THE INSTITUTION OR FUND DERIVES ANY INCOME, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTA L INCOME'. THUS WHAT IS TO BE SEEN IS WHETHER ANY INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTA L ITA NO. 565/HYD/12 P.R. CHELLARAM CHARITABLE TRUST 5 INCOME AND NOT WHETHER BECAUSE OF CERTAIN DEFAULTS PRESCRIBED IN SECTION 11 OR 13, THE TRUST IS NOT AC TUALLY HELD ELIGIBLE FOR EXEMPTION UNDER SECTIONS 11 & 12 OF THE ACT. ONCE THE CONDITION LAID DOWN IN RULE 11AA AS ALSO IN SUB-CLAUSES (I) TO (V) OF SUB-SECTION (5) O F SECTION 80G ARE COMPLIED WITH, THE TRUST IS, ELIGIB LE FOR REGISTRATION UNDER SECTION 80G(5)(VI) OF THE ACT. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD. IN THIS CASE, THE APPROVAL UNDE R SECTION 80G OF THE ACT WAS DENIED BY THE DIT(E) ONLY ON THE REASON THAT INSTITUTION IS PROCURING THE GOODS FROM MANUFA CTURERS AND GIVING THIS TO THE STUDENTS FOR SALE. THE ASSE SSEE HAS CONTENDED THAT NO SUCH ACTIVITIES CAN BE ESTABLISHE D FROM FINANCIAL STATEMENTS OR RECORDS. WE SET ASIDE THE I SSUE WITH RESPECT TO APPROVAL UNDER 80G OF THE ACT TO THE DIT (E), WHO SHALL EXAMINE WHETHER OR NOT THE CONDITIONS SET OUT IN SECTION 80G(5) (I) TO (V) ARE SATISFIED. IF THE ASS ESSEE HAS SATISFIED THE ABOVE CONDITIONS, THERE IS NO REASON TO DENY THE APPROVAL UNDER SECTION 80G OF THE ACT BY THE DI T(E). 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 10 TH AUGUST, 2012. KV ITA NO. 565/HYD/12 P.R. CHELLARAM CHARITABLE TRUST 6 COPY TO:- 1) P.R. CHELLARAM CHARITABLE TRUST, D.NO. 1-1-109, OPPORTUNITY. TELEPHONE EXCHANGE, R.P. ROAD, SECUNDERABAD 500 003. 2) DIT(E) HYDERBAD 3) ADIT(E)-III, HYDERBAD 4) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.