Seth Vinod Kumar Somani Charitable Trust, Bathinda V. Commissioner of Income Tax (Exemption), Chandigarh

ITA 570/ASR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7867 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-08-2017
• Assessment Year: misc
• Appeal Filed On: 12-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Set aside
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A. NO.570(ASR)/2016 ASSESSMENT YEAR:2016-17 SETH VINOD KUMAR SOMANI CHARITABLE TRUST, 14, NEW SHAKTI NAGAR, BATHINDA. PAN:AAOTS-5900M VS. C CIT (EXEMPTION), CHANDIGARH. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. J. K. GUPTA, (LD. CA) RESPONDENT BY: SH. RAHUL DHAWAN, (LD. DR) DATE OF HEARING: 02.08.2017 DATE OF PRONOU NCEMENT: 11.08.2017 ORDER PER N. K. CHOUDHRY: THE INSTANT APPEAL HAS BEEN FILED BY THE ASSESSEE/TRUST O N FEELING AGGRIEVED AGAINST THE ORDER DATED 29 TH SEP. 2016, PASSED BY THE LD. CIT(E), CHANDIGARH, WHEREBY REJECTING THE RE QUEST FOR GRANT OF APPROVAL U/S 80G OF THE ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL. 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(EXEMPTION) HAS ERRED IN REJECTING THE A PPLICATION FOR 80G OF THE INCOME TAX ACT, 1961 PARTICULARLY WH EN THE ASSESSEE IS REGISTERED U/S 12A OF THE ACT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(EXEMPTION) HAS TAKEN INTO IRRE LEVANT CONSIDERATION FOR REJECTING THE CASE OF THE ASSESSE E U/S 80G OF THE INCOME TAX ACT, 1961. ITA NO.570(ASR)/2016 ASST. YEAR: 2016-17 2 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT(EXEMPTION) HAS ERRED IN GIVING A FINDING THAT THE TRUSTEES OR OTHER PERSONS HAVE CLAIMED DEDUCTION U/ S 80G OF THE ACT WITHOUT VERIFYING THE SAME FROM THE RETURNS OF THE TRUSTEES AND OTHER PERSONS. 4. THAT IN ANY CASE, THE ASSESSEE IS ENTITLED TO A PPROVAL U/S 80G OF THE ACT. 5. THAT ANY OTHER RELIEF MAY KINDLY BE GRANTED TO T HE ASSESSEE TO WHOM IT IS FOUND ENTITLED AT THE TIME OF HEARING OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THAT AN APPLICATION U/S 80G(5)(VI) WAS FILED BY THE APPLICANT ON 30.03.2016 AND THE CIT(E) WAS PLEASED TO DECLINE THE APPROVAL U/S 80G OF THE ACT BY HOLDING AS UNDER: (6) THE RESPONSE FILED BY THE APPLICANT WERE EXAMI NED. FROM THE SAME WHAT TRANSPIRES ARE FOLLOWING: (I) IT IS SEEN THAT APPROX 50% OF DONATIONS ARE FR OM THE TRUSTEES THEMSELVES AND THE CONTENTION OF APPLICATION THAT T HE SAME WAS CORPUS, DONATION FOR LAND BUILDING COULD NOT BE ACC EPTED IN THE ABSENCE OF THE DOCUMENTARY EVIDENCE AS REGARDS TO S UCH DIRECTIONS WHICH WERE BEING SPECIFICALLY CALLED FOR. IT IS ALS O PERTINENT TO MENTION THAT MOST OF THE BENEFICIARIES IN THE CASE OF GRANT OF 80G WOULD BE THE TRUSTEES AND THEIR ASSOCIATES. (II) ON PERUSAL OF INCOME & EXPENDITURE FOR THE F.Y. 2015-16 IT IS REVEALED THAT MAIN EXPENDITURE IS ON ACCOUNT OF STU DENT FEES AMOUNTING TO RS.103275/- OUT OF WHICH A SUM OF RS.3 7,000/- IS SPENT ON SINGLE CHILD I.E TANIA D/O INDERPAL ON DIF FERENT OCCASION SUCH AS PAYMENT FOR TUITION TO SOME ARORA CLASSES, PAYMENT AT SSD GIRLS COLLEGE, BATHINDA. SUCH ONE OFF ACTS DO N OT QUALIFY FOR CHARITABLE ACTS DONE ON A SYSTEMATIC REGULAR BASIS. MOREOVER NO EVIDENCE IS BEING PROVIDED AS REGARDS TO THE IDENTI TY OF THE STUDENTS TO WHOM HELP IS BEING PROVIDED. (III) ON PERUSAL OF BALANCE SHEET IT IS ALSO R EVEALED THAT MAIN FOCUS OF THE SOCIETY IS ONLY ON CREATION OF LAND AN D BUILDING. THIS ISSUE ALSO GETS EXACERBATED BY THE FACT AT THE MOME NT U/S 12AA WAS RECEIVED BY THE SOCIETY THERE WAS HOST OF DONAT IONS. NO DONATIONS HAVE COME FORTH IN THE PRECEDING YEARS DU RING WHICH THE TRUST WAS IN EXISTENCE. MOREOVER, TAKING OF LOAN FR OM M/S V.K. COGIN MILLS, ESPECIALLY FOR THE PURPOSE OF CREATION OF BU ILDING MAKES DEAR THE MAIN INTENT OF THE SOCIETY AND THAT BEING ASSET CREATION AND NOT PURSUING ANY OF THE STATE OBJECTS THAT HAVE BEEN PR OFESSED. ITA NO.570(ASR)/2016 ASST. YEAR: 2016-17 3 7. KEEPING INTO VIEW ALL, I AM OF THE CONSIDER ED VIEW THAT THE APPLICANT HASN'T BEEN ABLE TO JUSTIFY ITS QUEST FOR APPROVAL SEEKING EXEMPTIONS ON DONATIONS MADE TO THE ENTITY. THE REA L PURPOSE AT PRESENT SEEMS TO AIM AT MAKING AVAILABLE TAX EXEMPT IONS TO THE TRUSTEES AND THEIR ASSOCIATES. THE REQUEST FOR GRAN T OF APPROVAL U/S 80G IS ACCORDINGLY DECLINED. 4. THE ASSESSEE FEELING AGGRIEVED AGAINST THE ORDER PA SSED BY THE LD. CIT(E) PREFERRED THE INSTANT APPEAL WHICH IS UNDER CONSIDERATION AND SUBMITTED THAT THE SCOPE OF ENQUIRY BY THE LD. CIT IS VERY LIMITED FOR GRANT OF APPROVAL U/S 80G OF THE ACT AND ONCE THE REGISTRATION OF AN INSTITUTION U/S 12A OF THE ACT HAS BEEN GRANTED THE N IT IS PRESUMED THAT TRUST OF INSTITUTIONS CONCERNED IS CREATED OR ESTABLISH ED FOR CHARITABLE AND RELIGIOUS PURPOSES. HOWEVER, THE LD. CIT( E) HAS DONE THE WRONG ENQUIRY, THEREFORE, THE SAME IS LIABLE TO BE SET ASIDE AND IN THE RESULT, THE ASSESSEE IS ENTITLED TO GET THE APPROVAL U/S 80G OF THE ACT. 5. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE OR DER PASSED BY THE LD. CIT(E) AND SUBMITTED THAT THE SAME IS BASED UPO N WELL REASONING, LOGICAL AND APPROPRIATE, THEREFORE, DOES NO T DESERVE TO BE INTERFERED WITH. 6. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTA NCES OF THE CASE AS IN THE INSTANT CASE THE REGISTRATION U/S 12AA WAS GR ANTED ON SATISFYING THE CONDITIONS LAID DOWN U/S 12AA(1) OF THE I .T. ACT W.E.F 1 ST APRIL, 2014 BY THE CIT(E) AND THE INSTANT ORDER UND ER CHALLENGE HAS BEEN PASSED ON 29 TH SEP. 2014. IT IS AN UNDISPUTED FACT THAT TILL DATE, ITA NO.570(ASR)/2016 ASST. YEAR: 2016-17 4 REGISTRATION U/S 12A OF THE ACT HAS NOT BEEN WITHDRAW N, MEANING THEREBY THE ASSESSEE IS ENGAGED IN THE CHARITABLE ACTIVITI ES UNTIL AND UNLESS, THE ASSESSEE FALLS UNDER NON-FULFILLMENTS OF ONE O R MORE CONDITIONS SATISFIED IN SECTION 80G(V) OF THE ACT AND ONCE THE REGISTRATION U/S 12A OF THE ACT HAS BEEN GRANTED THE AP PROVAL U/S 80G SHOULD NOT BE DENIED. FINALLY, IN OUR CONSIDERED OPINI ON, ONCE THE REGISTRATION U/S 12AA OF THE ACT IS AN EXISTENCE THEN T HE APPROVAL U/S 80G OF THE ACT CANNOT BE DENIED ON FLIMSY GROUND UNTIL AND UNLESS THE VIOLATION OF THE RULES SPECIFIED IN SECTION 80G OF THE ACT OCCURRED, THEREFORE, WE ARE INCLINED TO GRANT REGISTRATION U/S 8 0G OF THE ACT TO THE ASSESSEE. HENCE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.0 8.2017. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11.08.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER