Samast Sindhi Samaj Suraksha Foundation, RAJKOT-GUJARAT V. The Commr. of Income Tax-III, Rajkot, RAJKOT-GUJARAT

ITA 588/RJT/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2397 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-10-2015
• Assessment Year: misc
• Appeal Filed On: 16-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIMAL I MEHTA RESPONDEN
• Assessee Lawyers: DR ADHIA
• Keywords: Charitable institution
• Section: 12A; 12AA; 11

Judgement Text

I.T.A. NO.: 588/RJT PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT . [CORAM: PRAMOD KUMAR , AM AND RAJPAL YADAV, JM ] I.T.A. NO. 588 /RJT/ 2014 SAMAST SINDHI SAMAJ SURAKSHA FOUNDATION, C/O MAHASAGAR TRAVELS LTD., KALWA CHOWK, JUNAGADH . ......... ...... .... APP ELLANT VS. COMMISSIONER OF INCOME - TAX - III, RAJKOT. . . RESPONDENT APPEARANCES BY: D. R. ADHIA ........... FOR THE APPELLANT VIMAL I MEHTA .......... F OR THE RESPONDENT D ATE OF CONCLUDING THE HEARING : 7 TH OCTOBER, 2015 DATE OF PRONOUNCING THE ORDER : 4 TH JANUARY, 2016 O R D E R PER PRAMOD KUMAR , AM : BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 23 RD SEPTEMBER, 2014 PASSED BY THE LD. CIT - III, RAJKOT, REJECTI NG REGISTRATION UNDER SECTION 12AA F THE INCOME - TAX ACT, 1961. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOWS : - 1. THE LD. CIT HAS ERRED IN LAW AND FACTS IN REJECTING APPLICATION FOR REGISTRATION U/S 12A FILED BY THE APPELLANT. THE APPELLANT DESERVES REGISTRATION. I.T.A. NO.: 588/RJT PAGE 2 OF 5 2. THE LD. CIT HAS ERRED IN LAW AND FACTS IN REJECTING APPLICATION MADE FOR REGISTRATION U/S 12A ON THE IRRELEVANT GROUNDS. THE APPELLANT DESERVES REGISTRATION. 3. THE LD. CIT HAS ERRED IN LAW AND FACTS IN REJECTING APPLICATION MADE FOR REGISTRA TION U/S 12A ON THE IRRELEVANT CONSIDERATIONS. THE APPELLANT DESERVES REGISTRATION. 4. THE LD. CIT HAS ERRED IN LAW AND FACTS IN NOT APPRECIATING THAT AS PER LEGAL AND STATUTORY POSITION, THE APPELLANT WAS DESERVING REGISTRATION. THE APPELLANT DESERVES REGIS TRATION. 5.1 WITHOUT PREJUDICE THE LD. CIT HAS ERRED IN NOT GRANTING REGISTRATION WITHOUT APPRECIATING THE FACTUAL AND LEGAL POSITION THAT THE APPELLANT DESERVES REGISTRATION EVEN FROM THE DAY OF FY FROM WHICH DATE THE TRUST CAME INTO EXISTENCE/STARTED I TS ACTIVITIES. THE APPELLANT DESERVES REGISTRATION FROM EARLIER DATE ALSO. 5.2 WITHOUT PREJUDICE THE LD. CIT HAS ERRED IN NOT GRANTING REGISTRATION WITHOUT APPRECIATING THE FACTUAL AND LEGAL POSITION THAT THE APPELLANT DESERVES REGISTRATION FROM THE FIRST DAY OF FY IN WITH APPLICATION IS MADE, I.E. 1.4.2013. THE APPELLANT DESERVES REGISTRATION FROM EARLIER DATE ALSO. 6. WITHOUT PREJUDICE THE LD. CIT HAS ERRED IN NOT PROVIDING ADEQUATE AND REASONABLE OPPORTUNITY. THE ORDER PASSED BY HIM DESERVES TO BE SET ASIDE WITH DIRECTION TO CONSIDER A FRESH MATTER GIVING REASONABLE TIME. 7. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND AND/OR ANY OR ALL THE GROUNDS OF APPEAL BEFORE THE ACTUAL HEARING TAKEN PLACE. 3. THE ASSESSEE APPELLANT IS A CHARITABLE TRUST AND IT S MAIN OBJECT IS STATED TO BE SOCIAL WELFARE AND PROMOTION OF EDUCATIONAL ACTIVITIES. AN APPLICATION WAS FILED BY THE ASSESSEE TRUST, SEEKING REGISTRATION UNDER SECTION 12AA OF THE ACT, ON 20 TH MARCH, 2014. HOWEVER, LEARNED COMMISSIONER REJECTED THIS APPL ICATION BY STATING INTER ALIA, AS FOLLOWS : - 3. AS PER THE MEMORANDUM OF ASSOCIATION, THE MAIN OBJECT OF THE TRUST IS SOCIAL WELFARE AND PROMOTION OF EDUCATIONAL ACTIVITIES. A REPORT FROM THE FIELD OFFICE IN THE MATTER WAS CALLED FOR VIDE THIS OFFICE LET TER DATED 25/03/2014. IN COMPLIANCE THERETO, THE JT. CIT, RANGE - 1, JUNAGADH AND THE AO HAVE NOT RECOMMENDED THE REGISTRATION U/S 12AA OF THE ACT ON THE GROUND THAT THE ACTIVITIES OF THE TRUST ARE MAINLY FOR THE BENEFIT OF THE SINDHI COMMUNITY. I.T.A. NO.: 588/RJT PAGE 3 OF 5 4. ON VERIF ICATION OF THE MEMORANDUM AND ARTICLE OF ASSOCIATION AND AS PER THE RULE NO.1 ANNEXED WITH THE SAME, IT IS SEEN THAT THE TRUST/ASSOCIATION IS CREATED FOR THE BENEFIT OF SINDHI COMMUNITY. ALL THE CHARITABLE OBJECTS MENTIONED IN THE MEMORANDUM ARE FOR THE BENEFIT OF THE ABOVE COMMUNITY. THUS IT IS APPARENT THAT THE ASSOCIATION /TRUST IS NOT CREATED FOR THE BENEFIT OF GENERAL PUBLIC. 5. AS PER SECTION 13(1)(B) IN THE CASE OF A TRUST OR AN INSTITUTION CREATED OR ESTABLISHED FOR CHARITABLE PURPOSES AFTER THE COMMENCEMENT OF THIS ACT, ANY INCOME THEREOF, IF THE TRUST OR INSTITUTION IS CREATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE, THEN THE PROVISIONS OF SECTION 11 WILL NOT APPLY. 6. FROM THE ABOVE, IT IS SEEN THAT THE OB JECT OF THE TRUST IS COVERED BY THE PROVISIONS OF SECTION 13(1)(B) OF THE ACT, I.E. THE TRUST IS CREATED FOR THE BENEFIT OF A PARTICULAR COMMUNITY/CASTE. THEREFORE, THE TRUST IS NOT ELIGIBLE FOR BENEFIT OF SECTION 11/12/ OF THE I.T. ACT. THE TRUST WAS ISSU ED A LETTER DATED 5/9/2014 CALLING FOR THE DETAILS MENTIONED THEREIN FIXING THE HEARING ON 11/9/2014. THE AR OF THE ASSESSEE TRUST ATTENDED ON 16/9/2014 AND SUBMITTED THE DETAILS. FURTHER DETAILS WERE SUBMITTED ON 19/9/2014, WHICH WERE PERUSED. 7. AS PER THE MEMORANDUM OF ASSOCIATION, IT IS CRYSTAL CLEAR THAT THE TRUST/INSTITUTION IS CREATED FOR THE BENEFIT OF SINDHI COMMUNITY ONLY. FURTHER, FROM COPY OF STUDENT FELICITATION FUNCTION 2012 ATTACHED WITH THE AO S REPORT, IT IS NOTICED THAT THE OBJECT AND ACT IVITIES OF THE TRUST ARE LIMITED TO THE SINDHI COMMUNITY ONLY. THUS THE OBJECT OF THE TRUST/ASSOCIATION IS HIT BY THE PROVISIONS OF SECTION 13(1)(B) OF THE ACT. THEREFORE, THE SECTION 11 OF THE IT ACT IS NOT APPLICABLE TO THE ASSESSEE. 8. CONSIDERING THE ABOVE FACTS, IT IS HELD THAT AS THE TRUST/ASSOCIATION IS NOT CREATED FOR THE BENEFIT OF GENERAL PUBLIC BUT IT IS CREATED FOR THE BENEFIT OF A PARTICULAR CASTS I.E. SINDHI COMMUNITY AND AS THE CASE OF THE ASSESSEE TRUST IS COVERED UNDER THE PROVISIONS OF SE CTION 13(1)(B) OF THE ACT, THEREFORE, THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT IS REQUIRED TO BE REJECTED. 4. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE US. 5. LD. COUNSEL S CORE CONTENTION IS THAT WHEN THE COMMISSION ER HIMSELF NOTES THAT MAIN OBJECT OF THE TRUST IS SOCIAL WELFARE AND PROMOTION OF EDUCATION ACTIVITIES , HIS FINDING THAT THE TRUST IS CREATED FOR THE BENEFIT OF SINDHI COMMUNITY ONLY IS SELF CONTRADICTORY. IN ANY CASE, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE I.T.A. NO.: 588/RJT PAGE 4 OF 5 WAS NEVER PUT INTO NOTICE ON THIS PROPOSITION. IT IS ALSO POINTED OUT THAT SINDHI COMMUNITY IS NOT A RELIGIOUS COMMUNITY AND, THEREFORE, THE PROVISIONS OF SECTION 13(1) ( B) ARE NOT ATTRACTED ON THE FACTS OF THIS CASE. OUR ATTENTION IS ALSO INVITED TO A CO - ORDINATE BENCH DECISION IN THE CASE OF LEUVA PATEL NUTAN KEL VANI MANDAL VS. ITO [(1984) 12 ITD 276 (AHD)] WHEREIN IT IS HELD THAT LEUVA PATEL COMMUNITY CANNOT BE DUBBED AS A RELIGIOUS COMMUNITY. LD. COUNSEL THEN POINTS OUT THAT SINDHIS ARE NOT REC OGNIZE4D AS A RELIGIOUS COMMUNITY, AND THAT PRECISELY IS THE REASON WHY IT IS NOT EVEN TREATED UNDER THE CONSTITUTION OF INDIA, AS A RELIGIOUS MINORITY. HE THEN POINTS OUT THAT IT IS NOT EVEN A CASTE INASMUCH AS AMONGST SINDHIS ALSO, THERE ARE SUB CASTES L IKE BRAHMIN, KSHATRIYA, VAISHYA, LADI, UTRADI, S AHITYA, KACHCHI, BANSARI, LOHAN ETC. ON THE STRENGTH OF THESE ARGUMENTS, IT IS SUBMITTED THAT THE CIT WAS IN ERROR IN REJECTING THE REGISTRATION. 6. LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, VEHEMENTLY R ELIES UPON THE STAND TAKEN BY THE LEARNED COMMISSIONER. HE SUBMITS THAT WHEN ASSESSEE TRUST IS DOING CHARITABLE ACTIVITIES IN SUCH A PAROCHIAL MANNER THAT THE FRUITS OF HIS GENEROSITY ARE AVAILABLE ONLY TO HIS OWN COMMUNITY, THE ASSESSEE SHOULD NOT DO SO A T THE COST OF THE EXCHEQUER. HE SUBMITS THAT MANDATE OF LAW IS VERY CLEAR AND THAT A CHARITABLE TRUST, WHICH IS CREATED FOR THE GOOD OF A PARTICULAR RELIGIOUS OR RELIGIOUS COMMUNITY, IT CANNOT BE GRANTED REGISTRATION, UNDER SECTION 12AA. WE ARE URGED TO CO NFIRM THE ORDER OF THE CIT AND DECLINE TO INTERFERE IN THE MATTER. 7. THE PLEA OF THE LD. COUNSEL IS INDEED WELL TAKEN . THE RESTRICTION PLACED UNDER SECTION 13(1)(B) IS RESTRICTED TO A SITUATION IN WHICH A TRUST IS SET UP OR CREATED FOR THE BENEFIT OF A PARTICULAR COMMUNITY OR CASTE . IT IS, THEREFORE, NECESSARY THAT, IN ORDER TO BE HIT BY THE DISABLING PROVISION UNDER SECTION 13(1)(B), SINDHI COMMUNITY SHOULD BE FOUND TO BE A RELIGIOUS COMMUNITY . THAT IS NOT THE CASE HERE. AS LEARNED COUNSEL RIGHTLY P OINTS OUT THERE IS A SUBTLE DISTINCTION BETWEEN A COMMUNITY AND A RELIGIOUS COMMUNITY . NO DOUBT, SINDHI COMMUNITY IS A COMMUNITY BUT THEN IT IS NOT A RELIGIOUS COMMUNITY INASMUCH AS IT FOLLOWS HINDU RELIGION AND IS AN INTEGRAL PART OF THE SAME. IT IS N OT A CAST E EITHER. AS A MATTER OF I.T.A. NO.: 588/RJT PAGE 5 OF 5 FACT, SINDHIS ARE A SOCIO ECONOMIC GROUP OF PEOPLE ORIGINATING FROM SINDH, A PROVINCE OF MODERN DAY PAKISTAN, AND AFTER 1947 PARTITION OF INDIA AND PAKISTAN, MANY SINDHI HINDUS MIGRATED TO INDIA AND THAT EXPLAINS SINDHI CO MMUNITY IN INDIA. BY NO STRETCH OF LOGIC, SUCH A SOCIO ECONOMIC GROUP, BELONGING TO A PARTICULAR GEOGRAPHIC LOCATION, CAN BE SAID TO BE A RELIGIOUS COMMUNITY. LD. COMMISSIONER WAS THUS INDEED IN ERROR IN REJECTING THE REGISTRATION APPLICATION OF THE ASSESS EE. 8. FOR THE REASONS, SET OUT ABOVE, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE. WE HAVE ALSO NOTED THAT NO OTHER REASONS HAVE BEEN ASSIGNED FOR THE REJECTION OF REGISTRATION EXCEPT FOR THE REASON SET OUT ABOVE AND WHICH IS FOUND TO BE UNSUSTAINABLE IN LA W. WE, THEREFORE, DIRECT THE COMMISSIONER TO GRANT THE REGISTRATION U/S 12AA. 9. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED TODAY ON 4 TH DAY OF JANUARY, 2016 SD/ - SD/ - ( RAJPAL YADAV ) ( PRAMOD KUMAR ) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 4 TH DAY OF JANUARY, 2016 CO PIES 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 RAJKOT