Jan Shakti Charitable Trust, Rohtak V. CIT, Rohtak

ITA 5713/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97919 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 27-02-2015
• Assessment Year: misc
• Appeal Filed On: 23-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Assessee Lawyers: NAVEEN GUPTA
• Keywords: Charitable institution
• Section: 143(3); 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH D NEW DELHI BEFORE : SHRI C.M. GARG , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 5713/DEL./2013 JAN SHAKTI CHARITABLE TRUST, VS. COMMISSIONER OF 275, SUBHASH NAGAR, ROHTAK. INCOME - TAX, ROHTAK. [PAN: AABTJ4635M] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVEEN GUPTA, ADVOCATE RESPONDENT BY : MS SULEKHA VERMA, CIT/DR DATE OF HEARING : 26.10.2015 DATE OF PRON OUNCEMENT : 23 .11.2015 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25.09.2013 PASSED BY THE COMMISSIONER OF INCOME - TAX, ROHTAK, REJECTING THE APPLICATION OF ASSESSEE FOR REGISTRATION U/ S. 12AA OF THE INCOME - TAX ACT. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IS THAT THE LD. CIT ERRED IN REJECTING THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S. 12AA ALTHOUGH SOCIETY FULFILLS ALL THE CONDITIONS FOR REGISTRATION AND ALL THE OBJE CTS AND ACTIVITIES OF THE SOCIETY ARE ELIGIBLE FOR GRANT OF REGISTRATION U/S. 12AA OF THE ACT. ITA NO. 5713/DEL./2013 2 2. THE RELEVANT FACTS, IN BRIEF, LEADING TO THE PRESENT CASE ARE THAT THE APPELLANT IS A TRUST CREATED ON 21.01.2011 AND REGISTERED WITH JOINT REGISTRAR UNDER THE PUBLIC TRUST ACT IN THE NAME AND STYLE OF JANSHAKTI CHARITABLE TRUST. THE APPELLANT TRUST FILED AN APPLICATION FOR REGISTRATION U/S. 12AA OF THE IT ACT, 1961 ON 28.03.2013 ACCOMPANIED BY COPY OF TRUST DEED DATED 21.01.2011, INCOME & EXPENDITURE ACCOUNT AND BALANCE SHEET FOR A.Y. 2012 - 13. IN ORDER TO VERIFY THE NATURE OF APPELLANT S ACTIVITIES AND OBJECTS, THE COMMISSIONER OF INCOME - TAX CALLED FOR A REPORT FROM THE ASSESSING OFFICER THROUGH JOINT COMMISSIONER OF INCOME TAX, ROHTAK, WHO VIDE HIS LETTER D ATED 05.08.2013 FURNISHED THEIR REPORT, STATING THAT THE CASE OF REGISTRATION U/S. 12AA BE DECIDED ON MERITS. THE ENQUIRING AUTHORITIES DID NOT CLEARLY RECOMMEND FOR EITHER GRANT OF REGISTRATION OR REFUSAL OF REGISTRATION U/S. 12AA. THE LEARNED COMMISSIONE R OF INCOME - TAX, HOWEVER, HELD THAT THE AIMS AND OBJECTS OF THE ASSESSEE ARE NOT CHARITABLE IN NATURE AND REJECTED THE APPLICATION FOR REGISTRATION ON THE FOLLOWING OBJECTIONS : (I). THAT THE APPELLANT TRUST HAS CHARGED FEES FROM THE STUDENTS, WHICH ARE OU TSIDE THE SCOPE OF SEC 11 AND 12. (II). THAT THE SOURCE OF DONATIONS GIVEN BY SH. BHUPINDER MALIK, CHAIRMAN OF THE TRUST OF RS.53,10,000/ - AND BY SMT. JAIPATI DEVI OF RS.29,00,000/ - WAS NOT EXPLAINED AND; ITA NO. 5713/DEL./2013 3 (III). NO DOCUMENTARY EVIDENCES SUPPORTING THE LAB OUR PAYMENTS MADE BY APPELLANT TRUST WERE FURNISHED. 3. THESE THREE OBJECTIONS OF THE COMMISSIONER LED HIM TO REJECT THE APPLICATION OF ASSESSEE FOR REGISTRATION VIDE THE IMPUGNED ORDER, AGGRIEVED BY WHICH THE ASSESSEE - TRUST HAS COME UP IN APPEAL BEFORE U S. 4. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE ENQUIRY OF THE COMMISSIONER OF INCOME - TAX FOR GRANTING REGISTRATION SHOULD BE CONFINED TO THE FACT WHETHER THE TRUST CREATED IS GENUINE OR NOT AND WHETHER THE AIMS AND OBJECTS OF THE TRUST ARE CHARITA BLE IN NATURE. FOR THIS PROPOSITION, R ELIANCE IS PLACED ON THE FOLLOWING DECISIONS : - (I). FIFTH GENERATION EDUCATION SOCIETY V. CIT, 185 ITR 634 (ALL.) (II). MORMUGAO PORT TRUST V. CIT, 109 ITD 303 (PANJI), (III). MALIRAM CHARITABLE TRUST VS. CIT, 260 ITR (AT) 118 (AMR.) (IV) ST. DON BOSCO EDUCATIONAL SOCIETY V. CIT 90 ITD 477 (LUCK) AND (V). AGGARWAL MITRA MANDAL TRUST V. DIT, 106 ITD 531 (DEL.) IT WAS FURTHER SUBMITTED THAT THERE IS NO STATUTORY CONDITION THAT THE TRUST COULD NOT CHARGE FEES TO MEET ITS EDUCATIONAL EXPENSES FROM THE STUDENTS. THERE IS NO ALLEGATION BY THE LD. CIT THAT THE ASSESSEE - TRUST HAS CHARGED ANY FEE AGAINST THE ITA NO. 5713/DEL./2013 4 UNIVERSITY NORMS. HE THEREFORE, SUBMITTED SUCH AN OBJECTION CANNOT BE MADE A BASIS FOR REJECTION OF APPELLANT S REGISTRATION. IN SUPPORT, R ELIANCE IS PLACED ON THE FOLLOWING DECISIONS : (I). INDO AMERICAN SOCIETY V. ADIT, 96 ITD 61 (MUM); (II). GAUR BRAHMIN VIDYA P RACHARINI SABHA, 34 SOT 371 (DEL.), (III). KAUSHALYA MEDICAL FOUNDATION 31 SOT 119 (MUMBAI); (IV). ARYAN EDUCATIONAL SOCIETY, 93 ITD 546 (DEL.) (V). O.P. JINDAL GLOBAL UNIVERSITY, 127 ITD 164 (DEL.) AND (VI). SHRI GIAN GANGA COVATIONAL & EDUCATIONAL SO CIETY 143 ITD 297. IT WAS FURTHER SUBMITTED THAT THE DONATIONS OF RS.82,10,000/ - RECEIVED BY APPELLANT TRUST TOWARDS CORPUS IN A.Y. 2012 - 13 HAVE BEEN SHOWN IN THE BALANCE SHEET. THE CASE OF ASSESSEE - TRUST WAS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICE R HAS ACCEPTED THE INCOME RETURNED BY APPELLANT FOR THE A.Y. 2012 - 13 VIDE ORDER U/S. 143(3) DATED 15.09.2014. MOREOVER, THE LD. CIT CANNOT EXAMINE THE SOURCE OF DONATIONS AND DETAILS OF LABOUR PAYMENTS IN REGISTRATION PROCEEDINGS. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS : (I). SONIPAT HINDU EDUCATIONAL AND CHARITABLE SOCIETY VS. CIT 278 ITR 262 (P&H), (II). N.N. DESAI CHARITABLE TRUST VS. CIT, 246 ITR 452 (GUJ) AND (III). KALYANAM KAROTI VS. CIT, 123 ITD 317 (LUCK.). ITA NO. 5713/DEL./2013 5 ON THE STRENGTH OF THESE SUBMIS SIONS, THE LD. COUNSEL FOR THE ASSESSEE - TRUST URGED FOR ALLOWING THE APPEAL. 5. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX, REJECTING THE APPLICATION FOR REGISTRATION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION S AND HAVE PERUSED THE MATERIAL AVAILABLE BEFORE US. THE PROVISIONS OF SECTION 12AA PR OVIDE FOR A PROCEDURE TO BE FOLLOWED BY THE COMMISSIONER FOR THE GRANT OF REGISTRATION TO A TRUST OR AN INSTITUTION. ACCORDING TO THIS PROCEDURE, THE COMMISSIONER SHALL CALL FOR DOCUMENTS AND INFORMATION AND CONDUCT ENQUIRIES TO SATISFY ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION. AFTER THE COMMISSIONER IS SATISFIED ABOUT THE CHARITABLE OR RELIGIOUS NATURE OF THE OBJECTS AND GENUINENESS OF THE ACTI VITIES OF THE TRUST OR INSTITUTION, HE WILL PASS AN ORDER GRANTING REGISTRATION. IF HE IS NOT SO SATISFIED, THE PROVISIONS OF SECTION 12AA REQUIRE HIM TO PASS AN ORDER REFUSING SUCH REGISTRATION. WE THUS NO TE THAT SECTION 12AA OF THE ACT PRESCRIBES THE SCOPE AND AMBIT OF THE ENQUIRY THAT THE COMMISSIONER IS AUTHORIZED TO CARRY OUT AT THE TIME OF GRANT OF REGISTRATION TO A TRUST OR INSTITUTION. THE SCOPE AND A MBIT OF THE ENQUIRY REVOLVES AROUND THE NATURE OF THE OBJECTS BEING CHARITABLE OR RELIGIOUS, AND THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION. IN THIS CONTEXT, HON'BLE KARNATAKA HIGH COURT IN THE CASE OF ITA NO. 5713/DEL./2013 6 SANJEEVAMMA HANUMANTHE GOWDA CHARIT ABLE TRUST VS. DIRECTOR OF INCOME TAX (EXEMPTION) [285 ITR 327] HAS SET OUT THE GUIDELINES THAT FO R THE PURPOSES OF REGISTRATION UNDER SECTION 12A THE AUTHORITIES HAVE TO BE SATISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND HOW THE INCOME DERIVED FROM THE TRUST PROPERTY IS APPLIED TO CHARITABLE PURPOSE AND NOT THE NATURE OF THE ACTIVITY BY WHICH THE INCOME IS BEING DERIVED BY THE TRUST. THE ASSESSING OFFICER WHILE PASSING TH E SCRUTINY ASSESSMENT U/S. 143(3) HAS CATEGORICALLY OBSERVED THAT VARIOUS EXPENSES DEBITED IN THE INCOME & EXPENDITURE ACCOUNT HAS BEEN VERIFIED. ALL EXPENSES AS DEBITED IN INCOME & EXPENDITURE ACCOUNT ARE INCURRED FOR THE PURPOSE OF RUNNING THE ACTIVITY OF THE TRUST . IN VIEW OF THESE FINDINGS OF THE ASSESSING OFFICER OF ASSESSEE - TRUST, IT CAN HARDLY BE SAID THAT THE INCOME DERIVED BY THE TRUST EITHER BY WAY OF DONATIONS OR BY WAY OF FEES FROM THE STUDENTS WERE APPLIED BY THE ASSESSEE - TRUST FOR THE PURPO SE OTHER THAN THE AIMS AND OBJECTS OF THE TRUST. IT IS ALSO NOT THE CASE OF THE COMMISSIONER THAT THE FEES CHARGED FROM THE STUDENTS OR DONATIONS RECEIVED HAVE BEEN USED FOR THE PURPOSES OTHER THAN RUNNING THE INSTITUTION MANAGED BY THE ASSESSEE TRUST. IT IS NOT IN DISPUTE THAT THE APPELLANT - TRUST IS RUNNING AN EDUCATIONAL INSTITUTION. IT IS ALSO NOT THE CASE OF THE COMMISSIONER THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE ARE NOT IN CONSONANCE WITH ITS OBJECTS. THE ENQUIRY REPORT SENT BY THE DEPARTMENTA L AUTHORITIES ALSO DOES SAY THAT THE CASE OF ASSESSEE - TRUST IS NOT ITA NO. 5713/DEL./2013 7 RECOMMENDABLE FOR REGISTRATION, AS IS MENTIONED IN THE IMPUGNED ORDER ITSELF. THE DECISION RELIED UPON BY THE COMMISSIONER IN THE CASE OF KALE KHAN MOHAMMAD HANIF V. CIT MAY BE RELEVANT FOR ASSESSMENT PROCEEDINGS, BUT NOT FOR REGISTRATION U/S. 12AA AND HENCE, DISTINGUISHABLE ON FACTS. THEREFORE, IN VIEW OF DECISION OF HON BLE KARNATAKA HIGH COURT REFERRED TO ABOVE AND VARIOUS OTHER DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE - TR UST, WE ARE OF THE CONSIDERED OPINION, THAT THE LD. CIT WAS NOT JUSTIFIED IN REJECTING THE APPLICATION OF ASSESSEE FOR GRANT OF REGISTRATION. ACCORDINGLY, WE HOLD THAT THE APPELLANT - TRUST IS ELIGIBLE FOR REGISTRATION AND ACCORDINGLY DIRECT THE LD. CIT TO G RANT REGISTRATION TO THE ASSESSEE TRUST AS PER LAW. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE - TRUST IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.11.2015 . SD/ - SD/ - ( C.M. GARG ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23.11.2015 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL