Shree Siddhivinayak Trust, RAJKOT-GUJARAT V. The Commissioner of Income Tax, Rajkot-1, RAJKOT-GUJARAT

ITA 59/RJT/2014

• Counselvise Citation: 5924914 RSA 2014
• Duration Of Justice: 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 20-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L MEENA
• Assessee Lawyers: KALPESH DOSHI
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 59/RJT/2014 SHREE SIDDHIVINAYAK TRUST, BHUJ-KUTCH PAN : AAKTS 5807 M ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX RAJKOT-1, RAJKOT / RESPONDENT / ASSESSEE BY SHRI KALPESH DOSHI, CA / REVENUE BY SHRI M L MEENA, DR / DATE OF HEARING 27.01.2014 !'# / DATE OF PRONOUNCEMENT 30.01.2014 / ORDER THIS APPEAL BY THE ASSESSEE-TRUST IS AGAINST THE OR DER DATED 27.09.2012 OF COMMISSIONER OF INCOME-TAX, RAJKOT-I, RAJKOT REJECT ING THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT VIDE IMPUGNED ORDE R DATED 27.09.2012 THE LD. COMMISSIONER OF INCOME-TAX, RAJKOT-I REJECTED THE A PPLICATION OF THE ASSESSEE-TRUST FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT FOR THE DETAILED REASON GIVEN IN PARAGRAPHS 4 TO 6 OF THE IMPUGNED ORDER, WHICH ARE REPRODUCED HEREUNDER:- 4. AS PER THE TRUST DEED OF THE TRUST, THE OBJECTS OF THE TRUST ARE EDUCATIONAL, MEDICAL, SOCIAL DEVELOPMENT, LITERATUR E & ART, RELIEF OF POOR AND OTHER SUCH CHARITABLE OBJECTS. FROM THE ASSESSEES SUBMISSION IT IS SEEN THAT THE TRUST HAS NOT DONE ANY ACTIVITIES TOWARDS ITS O BJECTS TILL DATE. THE PURPOSE OF A TRUST IS NOT TO COLLECT DONATIONS. SECTION 12A IS NOT MEANT FOR COLLECTING DONATIONS BUT TO ENABLE THOSE ENGAGED IN CHARITABLE ACTIVITY TO CLAIM EXEMPTION FROM TAXATION. SINCE THE TRUST HAS NOT CA RRIED OUT ANY SUCH ACTIVITIES IN THE PAST, I AM NOT SATISFIED AS TO WHETHER ACTIV ITIES MENTIONED IN THE DEED WILL BE CARRIED OUT OR ARE GENUINE. 5. AS PER THE PROVISIONS OF THE I.T. ACT, 1961, THE COMMISSIONER SHALL SATISFY HIMSELF WITH REGARD TO : I) OBJECTS OF THE TRUST / INSTITUTION AND II) GENUINENESS OF ITS ACTIVITIES THERE ARE NO MATERIALS FURNISHED BEFORE ME OR BEFOR E THE AO TO SATISFY ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. THU S, THE TRUST IS NOT FULFILLING THE CONDITIONS LAID DOWN FOR REGISTRATION AS LAID DOWN U/S 12AA OF THE I.T. ACT, 1961 AND RULE 17A OF THE I.T. RULES, 1962. TILL DAT E THE TRUST HAS NOT SUBMITTED ANY DOCUMENTARY EVIDENCE REGARDING ITS ACTIVITIES. 2 59-RJT-2014 SHREE SIDDHIVINAYAK TRUST (SMC) 6. AS A RESULT OF THIS, THE DEPARTMENT IS TOTALLY I N DARK AS TO THE ACTUAL ACTIVITIES CARRIED OUT BY THE TRUST SINCE INCEPTION . SINCE, THERE IS NOTHING ON RECORD FROM WHICH THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST COULD BE ESTABLISHED. I THEREFORE, REJECT THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12A OF THE IT ACT. AGGRIEVED WITH THE ORDER OF LD. CIT, THE ASSESSEE- TRUST IS IN APPEAL BEFORE THIS TRIBUNAL. 3. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E, SHRI KALPESH DOSHI, CA, APPEARED AND POINTED OUT THAT IN THE IMPUGNED ORDER THE LD. CIT REJECTED THE APPLICATION OF THE ASSESSEE-TRUST FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT MAINLY ON THE GROUND THAT THE TRUST HAS NOT COMMENCED ITS CHARITABLE ACTIVITIES. HE POINTED OUT THAT THE TRUST IN QUESTION WAS CREATED ON 18.04 .2011 AND THEREAFTER APPLIED FOR REGISTRATION U/S 12A. AS PER SECTION 12AA OF THE AC T, AT THE TIME OF GRANTING THE REGISTRATION, THE COMMISSIONER HAS TO SATISFY HIMSE LF ABOUT THE OBJECTIVES OF THE TRUST AND GENUINENESS OF ITS ACTIVITIES. IF ACTIVITIES OF THE TRUST HAVE NOT COMMENCED, THE COMMISSIONER OF INCOME-TAX CANNOT REJECT THE APPLIC ATION FOR REGISTRATION U/S 12A, AS HELD BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST, REPORTED IN (2013) 89 DTR (GU J) 293. HE ACCORDINGLY POINTED OUT THAT THE LD. CIT, RAJKOT-1, RAJKOT BE D IRECTED TO GRANT THE REGISTRATION U/S 12A OF THE INCOME-TAX ACT. 4. ON THE OTHER HAND, SHRI M.L. MEENA, DR, APPEARED FOR THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT. THE LD. DR POINTED OUT THAT THE ASSESSEE- TRUST HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITIES ; THEREFORE, THE APPLICATION FOR REGISTRATION U/S 12A RIGHTLY REJECTED BY THE LD. CI T, RAJKOT-1. IN SUPPORT OF THIS, LD. DR RELIED UPON THE JUDGMENT OF ITAT CHANDIGARH BENCH A IN THE CASE OF SUCHINTA EDUCATIONAL SOCIETY V. CIT, REPORTED IN [2013] 35 T AXMANN.COM 178. FROM THE AFORESAID JUDGMENT, THE LD. DR TOOK US THROUGH THE FOLLOWING FINDINGS:- SECTION 12AA, READ WITH SECTION 2(15) OF THE INCOM E TAX ACT, 1961 CHARITABLE OR RELIGIOUS TRUST REGISTRATION PROCED URE ASSESSEE-SOCIETY HAD FILED AN APPLICATION UNDER SECTION 12AA COMMISSIO NER MADE CERTAIN INQUIRIES IN ORDER TO VERIFY GENUINENESS OF OBJECTS AND ACTIVITIES OF ASSESSEE- SOCIETY CASE OF ASSESSEE-SOCIETY WAS THAT SOME OF ITS TRUSTEE WERE ALREADY RUNNING SCHOOLS AND IT PROPOSED TO TAKE OVER ONE OF SUCH SCHOOL FOR BETTER 3 59-RJT-2014 SHREE SIDDHIVINAYAK TRUST (SMC) ADMINISTRATION COMMISSIONER OBSERVED THAT ACTIVIT IES PROPOSED TO BE UNDERTAKEN WERE NOT CHARITABLE IN NATURE AND NO ACT IVITIES WERE YET BEING CARRIED OUT BY ASSESSEE SOCIETY WHETHER ON PERUSA L, OBJECTS OF ASSESSEE- SOCIETY WERE FOUND TO BE VARIED AND WERE NOT IN ANY PARTICULAR DIRECTION OF IMPARTING EDUCATION OR FOR RELIEF OF POOR HELD, Y ES WHETHER SINCE ASSESSEE- SOCIETY HAD NOT INITIATED ANY ACTIVITY, THERE WAS N O MATERIAL TO VERIFY GENUINENESS OF ITS OBJECT AND ACTIVITIES AND THUS O RDER OF COMMISSIONER REFUSING TO GRANT REGISTRATION WAS TO BE UPHELD H ELD, YES (PARAS 20 & 24) (IN FAVOUR OF REVENUE). CONTINUING HIS ARGUMENTS, LD. DR POINTED OUT THAT JUDGMENT OF HONBLE GUJARAT HIGH COURT DATED 10.12.2012 ITSELF CLARIFIED THAT T HE COMMISSIONER HAS TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENU INENESS OF ITS ACTIVITIES. WITH THE INTRODUCTION OF NEW CLAUSE 12A(1)(AA) WITH SUB-SECT ION 12A(2), AFTER 01.06.2007 IT IS NOT COMPULSORY FOR THE TRUST TO APPLY FOR REGISTRAT ION IMMEDIATELY AFTER ITS CREATION. A TRUST CAN APPLY FOR REGISTRATION AT ANY TIME AFTER ITS CREATION WITH OBJECTIVE AS CHARITABLE AND AFTER CARRYING OUT ACTIVITIES AS PER THE OBJECT OF THE TRUST TO SUPPORT ITS CLAIM OF GENUINENESS OF ACTIVITIES. NOW AS PER NEW PROVISIONS, IT IS OPEN TO THE TRUST TO MAKE APPLICATION FOR REGISTRATION FOR CHARITABLE TRUST AS AND WHEN SITUATION WARRANTS. THE QUESTION OF INCOME AND CLAIM OF EXEM PTION OF SUCH INCOME CANNOT ARISE IN ABSENCE OF ANY ACTIVITIES; THEREFORE, THE APPLICATION U/S 12AA SHOULD BE MADE ONLY AFTER CARRIED SOME ACTIVITIES OF THE TRUST HAV E BEEN TAKEN PLACE AFTER ITS CREATION. HE ACCORDINGLY POINTED OUT THAT SINCE THE TRUST IN QUESTION HAS NOT COMMENCED ITS CHARITABLE ACTIVITIES, IT IS NOT GENUINE AND THEREF ORE THE LD. CIT IS CORRECT IN REJECTING THE APPLICATION FOR REGISTRATION U/S 12A OF THE INC OME-TAX, 1961. 5. IN REJOINDER, THE LD. COUNSEL OF THE ASSESSEE-TR UST POINTED OUT THAT THE ASSESSEE-TRUST HAS NOW COMMENCED ITS CHARITABLE ACT IVITIES AND USUALLY IT TAKES SOME TIME FOR A NEWLY ESTABLISHED CHARITABLE TRUST TO CO MMENCE THE CHARITABLE ACTIVITIES; THEREFORE, FOLLOWING THE JUDGMENT OF HONBLE GUJARA T HIGH COURT IN THE CASE OF CIT V. KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST, (2013) 89 DTR (GUJ) 293, THE LD. CIT BE DIRECTED TO GRANT THE REGISTRATION U/S 12A O F THE INCOME-TAX ACT, 1961. 6. HAVING HEARD BOTH THE SIDES, I HAVE CAREFULLY GO NE THROUGH THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX, RAJKOT-1, RAJKOT AS WEL L AS THE JUDGMENT OF HONBLE 4 59-RJT-2014 SHREE SIDDHIVINAYAK TRUST (SMC) GUJARAT HIGH COURT IN THE CASE OF CIT V. KUTCHI DAS A OSWAL MOTO PARIWAR AMBAMA TRUST (SUPRA) RELIED UPON BY THE LD. COUNSEL OF THE ASSESSEE-TRUST. PARAGRAPHS 5 AND 6 OF THE AFORESAID JUDGMENT OF THE HONBLE GUJARAT HIGH COURT ARE REPRODUCED HEREUNDER:- 5. IT CAN THUS BE SEEN THAT UNDER SECTION 12AA OF THE ACT, THE COMMISSIONER HAS TO SATISFY HIMSELF ABOUT THE OBJEC TIVES OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES. FOR SUCH PURPOSE, HE HAS THE POWER TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST AS HE THINK ARE NECESSARY. HOWEVER, THIS DOES NOT MEAN THAT IF THE ACTIVITIES OF THE TRUST HAVE NOT COMMENCED, THE COMMISSIONER HAS AUTHORITY TO REJECT ITS APPLICATION FOR REGISTRATION ON THE GROUND THAT THE TRUST FAILED TO CONVINCE HIM ABOUT THE GENUINENESS OF THE ACTIVITIES. THAT IS WHAT UNFORTU NATELY THE COMMISSIONER DID IN THE PRESENT CASE. IN THAT VIEW OF THE MATTER, WE SEE NO ERROR IN THE TRIBUNAL'S IMPUGNED ORDER REVERSING THE ORDER OF THE COMMISSIO NER. IT IS OF COURSE TRUE THAT EVEN IF THE ACTIVITIES OF THE TRUST HAVE NOT C OMMENCED, IF THE COMMISSIONER HAS SUFFICIENT MATERIAL IN HIS COMMAND, HE MAY STIL L COME TO THE CONCLUSION THAT HE IS NOT SATISFIED ABOUT THE OBJECTIVES OF THE TRU ST OR THE GENUINENESS OF ITS ACTIVITIES. WE UNDERSTAND THE DECISION OF THE TRIBU NAL ACCORDINGLY. 6. IN THE PRESENT CASE, HOWEVER, MERELY ON THE GROU ND THAT THE ACTIVITIES OF THE TRUST HAD NOT COMMENCED, THE COMMISSIONER WAS P ERSUADED TO REJECT ITS APPLICATION FOR REGISTRATION, WHICH IN OUR OPINION, WAS NOT APPROPRIATE AND THEREFORE, RIGHTLY INTERFERED BY THE TRIBUNAL. IN THE IMPUGNED ORDER, THE LD. COMMISSIONER OF INCO ME-TAX HAS REFUSED THE REGISTRATION U/S 12A OF THE INCOME-TAX ACT MERELY O N THE GROUND THAT THE ASSESSEE- TRUST HAD NOT COMMENCED ITS CHARITABLE ACTIVITIES. IT IS PERTINENT TO NOTE THAT THE HONBLE GUJARAT HIGH COURT DELIVERED THE AFORESAID JUDGMENT IN THE CASE OF CIT V. KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST (SUPRA) ON 10.12.2012. ADMITTEDLY, THIS JUDGMENT WAS NOT AVAILABLE WHEN LD. CIT, RAJKO T-1 PASSED THE IMPUGNED ORDER REJECTING THE APPLICATION OF THE ASSESSEE-TRUST U/S 12AA ON 27.09.2012. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE-TRUST CLAIMED THAT NOW THE ASSESSEE-TRUST HAS STARTED ITS CHARITABLE ACTIVITIES. KEEPING IN VIEW OF ALL THESE CONSPICUOUS FACTS, I SET ASIDE THE IMPUGNED ORDER OF LD. COMMISSIONER OF INCOME-TAX, R AJKOT-1, RAJKOT AND DIRECT HIM TO RECONSIDER THE APPLICATION OF THE ASSESSEE-TRUST FO R REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961, KEEPING IN VIEW THE RATIO OF JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST (SUPRA). THE ASSESSEE-TRUST IS ALSO DIRECTED TO FURNISH THE DETAILS OF CHARITABLE ACTIVITIES CARRIED OUT BY THEM BEFORE THE LD. CIT, RAJKOT-1 WH O WOULD IN TURN EXAMINE THE SAME 5 59-RJT-2014 SHREE SIDDHIVINAYAK TRUST (SMC) AND PASS THE APPROPRIATE ORDER FOR REGISTRATION U/S 12AA OF THE INCOME-TAX ACT IN ACCORDANCE WITH LAW. 7. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL OF THE ASSESSEE-TRUST IS TREATED AS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 30.01.2014 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- SHREE SIDDHIVINAYAK TRUST, BHUJ-KUTCH 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX, RAJK OT-1, RAJKOT 3. ,0,1 * * 2 / CONCERNED CIT, GANDHIDHAM 5 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 6 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT