Vision Institute (India), Hyderabad V. Director of Income Tax (Exemptions), Hyderabad

ITA 574/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66258 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 19-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M DAYAKAR
• Assessee Lawyers: K C DEVADAS
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 12

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 NOS. 573 & 574/HYD/2012 VISION INSTITUTE (INDIA), APPELLANT HYDERABAD (PAN AABTV4329R) VS. DIRECTOR OF INCOME TAX(EXEMPTIONS), RESPONDENT HYDERABAD APPELLANT BY : SHRI K.C. DEVADAS RESPONDENT BY : SHRI M. DAYAKAR DATE OF HEARING : 18/07/2012 DATE OF PRONOUNCEMENT : 07/09/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST THE ORDERS OF DIT(E), HYDERABAD, DATED 29/0 2/2012. 2. THE FIRST APPEAL BEING ITA NO. 573/H/12 FILED B Y THE ASSESSEE TRUST IS AGAINST THE REJECTION OF THE DIT( E) (EXEMPTION) UNDER SECTION 12AA(1)(B) OF THE INCOME TAX ACT, THE APPLICATION FILED BY THE ASSESSEE SEEKING REGIS TRATION U/S.12A OF THE ACT, 1961 AS CHARITABLE INSTITUTION AND THE SECOND APPEAL BEING ITA NO. 574/H/2012 IS AGAINST R EFUSAL GRANT APPROVAL U/S 80G. ITA NOS. 573 & 574/HYD/12 VISION INSTITUTE (INDIA) 2 ITA NO. 573/HYD/2012 3. THE ASSESSEE FILED AN APPLICATION IN FORM NO.10A ON 04.08.2011 AND WAS ISSUED DETAILED QUESTIONNAIRE DA TED 27.10.2011. DIT(E)(EXEMPTION) WAS OF THE OPINION TH AT NO VALID TRUST WAS CREATED AND THE ASSESSEE WAS ONLY M ERE EXTENSION OF L.V.PRASAD EYE INSTITUTE, OPERATED BY THE TRUST HYDERABAD EYE INSTITUTE AND NOT A SEPARATE INSTITUT ION. 4. THE FIRST OBJECTION OF THE DIT(E) WAS THAT NO AM OUNT WAS TRANSFERRED TOWARDS CORPUS OF THE TRUST BY THE SETT LER AT THE TIME THE TRUST WAS FORMED, EVEN THOUGH A SUM OF RS.1,00,000/- HAS BEEN MENTIONED IN THE TRUST DEED AS CONTRIBUTION BY THE SETTLER TOWARDS CORPUS FUND OF THE TRUST. THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS RECEIV ED A CHEQUE FROM THE SETTLER ON 08.06.2011 BUT DID NOT P RESENT IT TO THE BANK DUE TO OVER SIGHT. BUT THIS EXPLANATION W AS REJECTED BY THE DIT(E)(E) ON THE GROUND THAT THE CHEQUE WAS DEPOSITED ONLY ON 08.12.2011 AND THEREFORE THE TRUST WAS NOT VALIDLY CREATED. 5. THE NEXT OBJECTION WAS THAT THE ASSESSEE WAS FOR MED AT THE INITIATIVE OF L.V.PRASAD EYE INSTITUTE (INDIA) AND BRIEN HOLDEN VISION INSTITUTE (AUSTRALIA). THE ASSESSEE WAS TO ACT AS A PLATFORM FOR THE DEVELOPMENT OF THE INDIAN MEGA HUMANITARIAN INDUSTRY FOR MAKING CONTRIBUTION FOR A DVANCING VISION CORRECTION AND COMPREHENSIVE EYE DISORDERS. THE HYDERABAD EYE INSTITUTE IN HAD PASSED A RESOLUTION HAD RESOLVED TO CONTRIBUTE AN AMOUNT NOT EXCEEDING RS.2 5 LAKHS ITA NOS. 573 & 574/HYD/12 VISION INSTITUTE (INDIA) 3 PER ANNUM TO THE ASSESSEE. THE DIT(E)(E) THEREFORE CAME TO THE CONCLUSION THAT THE ASSESSEE IS A MERE EXTENSIO N OF L.V.PRASAD EYE INSTITUTE AND NOT AN INDEPENDENT INS TITUTION. 6. THE DIT(E) HAD COME ACROSS INSTANCES WHEREBY THE PURCHASE OF ASSETS WAS AUTHORIZED BY VARIOUS PERSON S. SOME OF THE BILLS AND INVOICES WERE ISSUED IN THE NAME O F HYDERABAD EYE INSTITUTE. FURTHER, THE DIT(E) HAD ASKED THE A SSESSEE TO PRODUCE BOOKS OF ACCOUNT DURING THE COURSE OF HEARI NG ON 23.02.2012. THE ASSESSEE DID NOT PRODUCE THE SAME W ITHIN 1 DAY. FOR THESE REASONS, THE DIT(E) HAD REJECTED AN APPLICATION FILED BY THE ASSESSEE IN FORM 10A SEEKING REGISTRAT ION UNDER SECTION 12A. 7. AGGRIEVED THE ASSESSEE IS ON APPEAL. 8. THE APPLICATION U/S.10A AND REGISTRATION UNDER S ECTION 12A IS TO SEE WHETHER THE TRUST OR INSTITUTION FORM ED IS HAVING THE OBJECTS OF CHARITABLE NATURE AND THE TERMS OF T HE TRUST DID NOT INDICATE THAT THE TRUST IS FORMED WITH THE PROF IT MOTIVE, APPROVAL UNDER SECTION 12A IS AT THE INCEPTION OF T HE TRUST AND VERIFICATION OF THE TRUST DEED WOULD BE TO ENSURE T HE CHARITABLE NATURE OF THE OBJECT OF THE TRUST. EVEN THOUGH SEC 12AA PROVIDES FOR THE DIT(E) TO VERIFY AND SATISFY HIMSE LF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST, WHEN TH E APPLICATION FOR REGISTRATION IS MADE AT THE VERY INCEPTION OF T HE TRUST, THERE IS NOT LIKELY TO BE VERY MANY ACTIVITIES FROM WHICH MAY NOT POSSIBLE TO DETERMINE THE GENUINENESS OR OTHERW ISE OF THE TRUST. THEREFORE THE DIT(E) CANNOT REJECT THE APPLI CATION ON THE ITA NOS. 573 & 574/HYD/12 VISION INSTITUTE (INDIA) 4 GROUND THAT THERE ARE NOT VERY MANY ACTIVITIES AND HENCE HE IS NOT ABLE TO DETERMINE THE GENUINENESS OF THE ACTIVI TIES OF THE TRUST. IN OUR OPINION THE PRIMARY EXAMINATION TO BE CONDUCTED BY THE DIT(E) AT THE TIME FOR GRANTING REGISTRATION IS TO ENSURE THAT THE OBJECTS OF THE TRUST ARE CHARITABLE IN NAT URE AS PER SEC 2(15) OF THE IT ACT AND IT IS NOT FORMED WITH A VIE W TO MAKING PROFIT. 9. WHETHER THE TRUST SATISFIES THE CONDITIONS REQUI RED UNDER SECTION 11, 12 AND 13 OR WHETHER IT ACTS AS AN EXTE NSION OF ANOTHER INSTITUTE WILL HAVE TO BE ELIGIBLE FOR EXEM PTION AT THE TIME OF REGULAR ASSESSMENT OF THE TRUST, WHEN THE T RUST IS ACTIVE AND FUNCTIONING. 10. IN THESE CIRCUMSTANCES, THE DIT(E) WHO HAS RECE IVED AN APPLICATION UNDER SECTION 10A WOULD HAVE TO EXAMINE DOCUMENTS, AND TRUST DEED AND TO SEE WHETHER IT IS CHARITABLE IN NATURE AND TRUST DEED PRIMA FACIE, DOES NOT LEAD TO THE CONCLUSION THAT IT HAS BEEN FORMED WITH THE PROFIT MOTIVE. 11. THE OBJECTIONS BY THE DIT(E) THAT THE I) INITIA L CONTRIBUTION OF RS.1 LAKHS BEING RECEIVED BELATEDLY , II) ON THE BASIS OF THE RESOLUTION OF HYDERABAD EYE INSTITUTE THE ASSESSEE APPEARS TO BE MERELY AN EXTENSION OF ANOTHER INSTIT UTE L.V.PRASAD EYE INSTITUTE, III) PURCHASE INVOICE WER E MADE IN THE NAME OF HYDERABAD EYE INSTITUTE, CANNOT BE THE REASONS FOR REJECTING THE APPLICATION FOR REGISTRATION U/S. 12AA. ITA NOS. 573 & 574/HYD/12 VISION INSTITUTE (INDIA) 5 12. HERE BELATED PAYMENT OF THE INITIAL CONTRIBUTIO N IS AT BEST A TECHNICAL ERROR AND A DONOR AGREEING TO CONTRIBUT E REGULARLY CANNOT TAKE AWAY THE GENUINENESS OF THE TRUST OR TH AT THE TRUST IS FOR CHARITABLE PURPOSES. AS REGARDS THE PURCHASE ORDER OR INVOICE BEING RAISED IN THE NAME OF HYDERABAD EYE I NSTITUTE CANNOT BE THE BASIS FOR REJECTING THE REGISTRATION WHEN IT IS A FACT THAT THE DONOR THEMSELVES PURCHASE INSTRUMENTS AND GIVE THE SAME TO THE CHARITABLE INSTITUTION. AS REGARDS THE PRODUCTION OF BOOKS, THE ASSESSEE WAS NOT GRANTED E NOUGH TIME TO PRODUCE BOOKS AS NO ACTIVITIES HAD BEEN CAR RIED ON IN FULL SWING AND, THEREFORE, THIS CANNOT BE THE BASI S FOR REJECTING THE APPLICATION. 13. IN THE CIRCUMSTANCES, WE ARE NOT ABLE TO AGREE WITH THE DIT(E) REJECTING THE APPLICATION FOR REGISTRATION M ADE BY THE ASSESSEE FOR THE REASONS ADDUCED BY THE DIT(E) IN H IS ORDER. HE HAS NOT DEALT WITH THE OBJECTS OF THE TRUST AND WHETHER IT SATISFIES THE REQUIREMENT OF SEC 2(15). IN THESE CI RCUMSTANCES WE REMIT THE MATTER TO THE DIT(E) TO RECONSIDER THE APPLICATION OF THE ASSESSEE AND DECIDE WHETHER TERMS AND CONDIT IONS OF THE TRUST IS OF THE CHARITABLE NATURE AND WOULD FAL L WITHIN THE DEFINITION OF CHARITABLE PURPOSES UNDER SECTION 2(1 5) AND IN ACCORDANCE WITH SEC 12AA. ITA NO 574/H/2012 14. THIS APPEAL IS FILED BY THE ASSESSEE FOR REJECT ION OF THEIR APPLICATION TO GRANT APPROVAL UNDER SECTION 80G(5)( VI). AS APPROVAL U/S 80G IS CONSEQUENTIAL TO THE TRUST BEIN G GRANTED ITA NOS. 573 & 574/HYD/12 VISION INSTITUTE (INDIA) 6 REGISTRATION U/S 12AA AND IN LINE WITH OUR DECISION IN THE APPEAL IN ITA NO 573/H/12 REGARDING REJECTION OF RE GISTRATION OF THE TRUST UNDER SECTION 12AA, WE REMIT THIS ISSU E TO THE FILE OF DIT(E) FOR CONSIDERING THE MATTER AFRESH ON THE BASIS OF HIS DECISION FOR GRANTING OF REGISTRATION UNDER SECTION 12AA TO THE ASSESSEE. 15. IN THE RESULT, BOTH THE APPEALS ITA NO 573/HYD /12 AND 574/H/2012 FILED BY THE ASSESSEE ARE ALLOWED FOR ST ATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 07/09/2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED: 7 TH SEPTEMBER, 2012. KV COPY TO:- 1) VISION INSTITUTE(INDIA), PLOT NO. 737, ROAD NO. 37, JUBILEE HILLS, HYDERABAD 500 033. 2) DIT(E), HYDERABAD 3) ADIT(E)-II, HYDERABAD 4) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD.