AAkanksha Utprerak Samajik Sanstha, Dhanbad V. CIT EXEMPTION, Patna

ITA 6/RAN/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0484 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 11-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDERJI T SINGH
• Keywords: Charitable institution
• Section: 12AA; 12; 10

Judgement Text

1 ITA NO. 06 /RAN/20 1 7 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S.SAINI , ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO. 06 / RAN/20 1 7 ASSESSMENT YEAR : NA AAKANKSHA UTPRERAK SAMAJIK SANSTHA, NAWAGARH MORE, PO - KHARKHAREE, DHA NBAD - 828125 V S CIT(E), PATNA PAN NO. : AA CA A 2234 K (APPELLANT ) .. RESPONDENT ASSESSEE BY : SHRI DEVESH PODDAR, AR REVENUE BY : SHRI INDERJIT SINGH , CIT( S R. DR) DATE OF HEARING : 2 6 . 11 .201 8 DATE O F PRONOUNCEMENT : 2 7 . 11 .201 8 O R D E R PER PAVAN KUMAR GADALE, JM : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDER OF CIT(E), PATNA, DATED 27.10.2016 IN REJECTING THE GRANT OF R EGISTRATION U/S.12AA OF THE ACT . 2. THE SOLE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS AGAINST THE REJECTION OF GRANT OF REGISTRATION U/S.12AA OF THE ACT BY THE CIT(E). 3 . THE ASSESSEE FILED AN APPLICATION IN FORM NO.10A FOR REGISTRATION U/S.12AA OF THE ACT ON 104.05 .2016 AND IT WAS REJECTED BY THE CIT(E), PATNA ON THE GROUND THAT THE ACTIVITIES OF THE SOCIETY IS NOT GENUINE. AGAINST THE ORDER OF CIT(E), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 4 . LD. AR OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(E) IN RESPECT OF THE APPLICATION FOR REGI STRATION U/S.12AA OF THE ACT. LD. 2 ITA NO. 06 /RAN/20 1 7 AR EXPLAINED THAT THE APPLICATION WAS FILED ON 04.05.2016 WITH THE DIT(E) AND THE CASE WAS POSTED FOR HEARING ON 29.09.2016 AND CALLED FOR THE VARIOUS INFORMATION AND THE LD. AR OF THE ASSESSEE APPEARED AND FILED THE DETAI LS AS CALLED FOR. THE CIT(E) HAS MADE AN OBSERVATION THAT ON PERUSAL OF THE INFORMATION FILED AND THE BYE - LAWS THE SOCIETY WAS CREATED ON 29.07.2011 AND ALSO VARIOUS ACTIVITIES REPORT AND INCOME & EXPENDITURE ACCOUN T AS REFERRED IN RESPECT OF ENVIRONMENT A WARENESS, IMPORTANT DAY CELEBRATION, HEALTH CAMPS, HEALTH AWARENESS, WOMEN EMPOWERMENT, WOMEN SHG AWARENESS & FORMATION, VOCATIONAL TRAINING AND WORKSHOP OF EDUCATION, RESPECTIVELY AND THE CIT(E) HAS DEALT ONLY ON THE PRIMA FACIE EVIDENCE NOT AVAILABLE AN D THEREFORE, CAME TO THE SOLE CONCLUSION THAT THE ACTIVITIES ARE NOT GENUINE AND THEREFORE, REJECTED THE APPLICATION. LD. AR SUBMITTED THAT ASSESSEE HAS COOPERATED IN SUBMITTING THE INFORMATION AND ALSO THE CIT(E) HAVING PERUSED THE AUDITED ACCOUNT AND BYE - LAWS AND THE PHOTOGRAPHS OF THE ACTIVITIES AND ALSO REFLECTED IN THE PROFIT AND LOSS ACCOUNT THOUGH ACCEPTS THE CLAIM OF EXPENDITURE BUT DISMI SSED THE APPLICATION OF REGIST RATION U/S.12AA OF THE ACT ON THE GROUND THAT NO EVIDENCE WAS FILED AND ALSO SUPPORTED BY JUDICIAL DECISIONS. 5. CONTRA, LD. DR SUBMITTED THAT THE CIT(E) WAS NOT SATISFIED WITH THE SUBMISSIONS AND, THEREFORE, REJECTED THE APPLICATION AND SUPPORTED THE FINDINGS OF THE APPELLATE AUTHORITY. 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL ON RECORD. THE SOLE CRUX OF THE ISSUE IS WITH RESPECT TO GRANTING OF REGISTRATION 3 ITA NO. 06 /RAN/20 1 7 U/S.12AA OF THE ACT. LD. AR EMPHASIZED THAT THE ASSESSEE SOCIETY WAS REGISTERED ON 29.07.2011 AND WAS UNDERTAKING THE ACTIVITIES AND MADE APPLICATION U/S.12AA OF THE ACT ON 04.05.2016 AND IN COMPLIANCE TO THE INFORMATION CALLED FOR, THE ASSESSEE HAS FILED THE AUDITED ACCOUNTS ALONG WITH EVIDENCES. WE FOUND ON PERUSAL OF THE CIT(E) ORDER THAT THE ASSESSEE HAS DULY COMPLIED THE DIRECTIONS AND FILED THE DETAILS AND T HEREFORE WE ARE OF THE OPINION THAT THE ASSESSEE SOCIETY WAS REGISTERED IN 2011 AND AS PER THE SUBMISSIONS OF LD. AR AND THE EXPLANATIONS , THE SOCIETY WAS PERFORMING ITS ACTIVITIES AND THE EXPENDITURE WAS ALSO DEBITED TO THE PROFIT AND LOSS ACCOUNT, AT THE TIME OF REGISTRATION THE CIT(E) SHOULD LOOK INTO THE GENUINENESS AND OBJECTIVES OF THE SOCIETY AND IN THE PRESENT CASE THE CIT(E) THOUGH PERUSED THE ACTIVITIES BUT REJECTED THE APPLICATION AS THERE IS NO PROPER EVIDENCE. THEREFORE, WE FOUND THE ACTI ON OF CIT(E) IS NOT TENABLE AND W E SUPPORT OUR VIEW WITH THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT, ( VARANASI ) VS VARANASI WELFARE TRUST IN ITA NO.22 OF 2014 ORDER DATED 2.11.2014 WHEREIN THE HONBLE HIGH COURT HAS HELD THAT THE PRE PONDERANCE OF THE JUDICIAL OPINION OF ALL THE HIGH COURTS INCLUDING THIS COURT IS THAT AT THE TIME OF REGISTRATION U/S.12AA OF THE ACT, WHICH IS NECESSARY FOR CLAIMING EXEMPTION U/S.11 & 12 OF THE ACT THAT THE CIT IS NOT REQUIRED TO LO OK INTO THE ACTIVITI ES , WHERE SUCH ACTIVITIES HAVE NOT OR ARE IN THE PROCESS OF IN ITS INITIATION. WHERE A TRUST , SET UP TO ACHIEVE ITS OBJECTIVES OF ENABLING EDUCATIONAL INSTITUTION, IS IN THE PROCESS OF ESTABLISHING SUCH INSTITUTION AND RECEIVES DONATIONS, THE REGISTRAT ION 4 ITA NO. 06 /RAN/20 1 7 U/S.12A CANNOT BE REFUSED ON THE GROUND THAT THE TRUST HAS NOT YET COMMENCED, THE CHARITABLE OR RELIGIOUS ACTIVITIES. ANY ENQUIRY OF THE NATURE WOULD AMOUNT TO PUTTING THE CART BEFORE THE HORSE. AT THIS STAGE, ONLY THE GENUINENESS OF THE OBJECTS HAS TO BE TESTED AND NOT THE ACTIVITIES WHICH HAVE NOT YET CO MMENCED. THE ENQUIRY OF THE CIT AT SUCH PRELIMINARY STAGE SHOULD BE RESTRICTED TO GENUINENESS OF THE OBJECTS AND NOT OF THE ACTIVITIES UNLESS SUCH ACTIVITIES HAVE COMMENCED. THE RUST OR SOCIETY CAN NOT CLAIM EXEMPTION, UNLESS IT IS REGISTERED U/S.12AA OF THE ACT AND AT THAT SUCH INITIAL STAGE, THE TEST OF GENUINENESS OF THE ACTIVITIES CANNOT BE A GROUND ON WHICH THE REGISTRATION MAY BE REFUSED. 7 . FURTHER, THE DELHI BENCHES OF THE TRIBUNAL IN THE CAS E OF SAI ASHISH CHARITABLE TRUST VS DIT (E) IN ITA NO.5591/DEL/012 HELD THAT THE DIT (E) HAS NOT POINTED OUT ANY DEFECT OR DOUBT ABOUT THE CHARITABLE OBJECTS OF THE ASSESSEE TRUST. FROM THE IMPUGNED ORDER, WE CLEARLY OBSERVE THAT THE DIT(E) HAS REJECTED T HE APPLICATION OF THE ASSESSEE TRUST FOR GRANT OF REGISTRATION U/S.12A OF THE ACT BY HOLDING THAT IN ABSENCE OF ANY CHARITABLE ACTIVITY, THE GENUINENESS OF THE ACTIVITIES CANNOT BE HELD TO BE ESTABLISHED. AT THE SAME TIME, WE OBSERVE THAT AS PER RATIO OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT(E) VS FOUNDATION OF OPHTHALMIC AND OPTOMETRY RESEARCH EDUCATION CENTRE, REGISTRATION U/S.12A IS NOT DEPENDENT ON COMMENCEMENT OF CHARITABLE ACTIVITY. THE REGISTRATION GRANTING AUTHORITY IS NOT REQUIRED TO EXAMINE THE QUESTION WHETHER THE TRUST HAS ACTUALLY COMMENCED AND CARRIED ON ITS CHARITABLE ACTIVITIES. WE ALSO 5 ITA NO. 06 /RAN/20 1 7 TAKE COGNIZANCE OF DECISION OF HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE OF R.S.BAJAJ SOCIETY, AS RELIED BY THE ASSESSEE, WHEREIN, THEIR LORDSHIPS HELD THAT AT THE TIME OF REGISTRATION, ONLY GENUINENESS OF THE OBJECTS WAS TO BE TESTED AND NOT THE ACTIVITIES WHICH WERE NOT COMMENCED AT THAT TIME. 8. THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. SURYA EDUCAT IONAL & CHARITABLE TRUST, [2011] 15 TAXMANN.COM 123 (PUNJAB & HARYANA) HAS HELD AS UNDER : - 8. WE HAVE HEARD LEARNED COUNSEL FOR THE APPELLANT, BUT FIND NO MERIT IN THE PRESENT APPEALS. AS PER SECTION 12AA OF THE ACT, AN APPLICATION FOR REGISTRATION OF TH E TRUST AND INSTITUTION IS REQUIRED TO BE MADE WITHIN ONE YEAR FROM THE DATE OF CREATION OF THE TRUST OR THE ESTABLISHMENT OF SUCH INSTITUTION. THE PROCEDURE FOR REGISTRATION OF THE TRUST OR INSTITUTION IS PRESCRIBED UNDER SECTION 12AA OF THE ACT. IN TERMS OF CLAUSE (A) OF SECTION 12AA OF THE ACT, THE COMMISSIONER IS TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST ON SUCH INQUIRIES AS HE MAY DEEM NECESSARY. SUB - SECTION (1A) AND (2) OF SECTION 12AA OF THE ACT, ARE PROCEDURAL IN NATURE , WHEREAS SUB - SECTION (3) OF SECTION 12AA OF THE ACT, EMPOWERS THE COMMISSIONER TO CANCEL THE REGISTRATION OF THE TRUST OR INSTITUTION, IF HE IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. 9. SECTION 11 OF THE ACT CONTEMPLATES THAT THE INCOME AS SPECIFIED THEREIN SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOME DERIVED FROM THE PROPERTY HELD U NDER THE TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, WHEREAS SECTION 12 OF THE ACT, DEALS WITH THE CONTRIBUTIONS RECEIVED BY THE TRUST OR AN INSTITUTION, ESTABLISHED FOR CHARITABLE AND RELIGIOUS PURPOSES, RECEIVING CONTRIBUTION, SHALL NOT BE AN INCO ME IN TERMS OF SECTION 11 OF THE ACT. THE BENEFIT OF SECTIONS 11 AND 12 OF THE ACT, ARE AVAILABLE ONLY IF SUCH TRUST OR INSTITUTION IS REGISTERED UNDER SECTION 12AA OF THE ACT. 10. ON THE OTHER HAND, SECTION 10(23C) OF THE ACT ARE THE PROVISIONS OF THE ACT IN SUBSTITUTION OF THE EARLIER PROVISIONS 6 ITA NO. 06 /RAN/20 1 7 OF SECTION 10(22) OF THE ACT AS TO WHICH INCOME SHALL NOT BE INCLUDED IN COMPUTING THE TOTAL INCOME OF ANY PERSON. THEREFORE, THE PROVISIONS OF SECTIONS 11, 12 OR SECTION 10(23C) OF THE ACT, DEAL WITH THE INCOME O F A TRUST OR OF THE INSTITUTION AND THE CIRCUMSTANCES AS TO WHEN SUCH INCOME IS TO BE EXCLUDED FOR COMPUTING THE TOTAL INCOME, BUT THE BASIS OF SUCH BENEFIT IS THE REGISTRATION UNDER SECTION 12AA OF THE ACT. UNLESS A TRUST OR INSTITUTION IS REGISTERED UNDE R SECTION 12AA OF THE ACT, SUCH TRUST OR INSTITUTION SHALL NOT BE ENTITLED TO EXCLUDE FROM ITS TOTAL INCOME, DEDUCTIONS OR CONTRIBUTIONS OR FROM OTHER SOURCES. THEREFORE, THE PRINCIPLES LAID DOWN FOR EXCLUDING THE INCOME FROM CONSIDERATION UNDER SECTION 10 (22) NOW 10(23)(C) OR SECTIONS 11 AND 12 ARE NOT APPLICABLE WHILE CONSIDERING THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. THE APPLICATION FOR REGISTRATION IS REQUIRED TO BE MADE WITHIN ONE YEAR OF THE CREATION OF THE TRUST. SECTION 12AA OF THE ACT, REQUIRES SATISFACTION IN RESPECT OF THE GENUINENESS OF THE ACTIVITIES OF THE TRUST, WHICH INCLUDES THE ACTIVITIES WHICH THE TRUST IS UNDERTAKING AT PRESENT AND ALSO WHICH IT MAY CONTEMPLATE TO UNDERTAKE. THE INSERTION OF SUB - SECTION (3) TO SEC TION 12AA OF THE ACT, CLARIFIES THE SAID FACT, WHEN IT EMPOWERS THE COMMISSIONER TO CANCEL THE REGISTRATION IF THE ACTIVITIES OF THE TRUST ARE NOT CARRIED OUT IN ACCORDANCE WITH SUCH OBJECTS. 11. THEREFORE, THE OBJECT OF SECTION 12AA OF THE ACT, IS TO EXAM INE THE GENUINENESS OF THE OBJECTS OF THE TRUST, BUT NOT THE INCOME OF THE TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES. THE STAGE FOR APPLICATION OF INCOME IS YET TO ARRIVE I.E. WHEN SUCH TRUST OR INSTITUTION FILES ITS RETURN. THEREFORE, WE FIND THAT THE JU DGMENTS REFERRED TO BY THE LEARNED COUNSEL FOR THE APPELLANT ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE ARISING OUT OF THE QUESTION OF REGISTRATION OF THE TRUST AND NOT OF ASSESSMENT. 12. IN VIEW OF THE ABOVE, WE DO NOT FIND THAT ANY SUBSTANTIAL Q UESTION OF LAW ARISES FOR CONSIDERATION IN THE PRESENT APPEALS. HENCE, THE SAME ARE DISMISSED. 9. THE HONBLE MADRAS HIGH COURT IN THE CASE OF DIT(E) VS. SEERVI SAMAJ TAMBARAM TRUST, [2014] 43 TAXMANN.COM 142 (MADRAS) HAS HELD AS UNDER: - 7 ITA NO. 06 /RAN/20 1 7 IT IS NOT DENIED BY THE ASSESSEE THAT ON THE DATE OF THE APPLICATION UNDER SECTION 12AA, IT WAS YET TO COMMENCE ITS OPERATION. BUT NEVERTHELESS THE GENUINENESS OF THE OBJECTS OF THE TRUST WERE NOT QUESTIONED BY THE COMMISSIONER. CONSIDERING THE FACT THAT THE CONTINUANCE O F REGISTRATION IS FURTHER A SUBJECT MATTER OF SCRUTINY BY THE COMMISSIONER AS CONTEMPLATED UNDER SECTION 12AA(3), THE REVENUE WOULD NOT BE JUSTIFIED IN REFUSING THE REGISTRATION AT THE THRESHOLD. [PARA 9] 10 . IN THE INSTANT CASE, WE FIND TH AT THE CIT(E) HAS REFUSED REGISTRATION ON THE GROUND THAT THE ASSESSEE FAILED TO ESTABLISH THAT ACTIVITIES OF THE ASSESSEE ARE GENUINE , WHEREAS THE CIT(E) HAS NOT RAISED ANY DOUBT OR OBJECTION ABOUT THE CHARITABLE OBJECTS OF THE ASSESSEE SOCIETY, THEREFORE , REGISTRATION U/S. 12AA OF THE ACT CANNOT BE DENIED ON THE GROUND THAT THE GENUINENESS OF THE CHARITABLE ACTIVITIES CANNOT BE HELD TO BE ESTABLISHED IN ABSENCE OF ANY GENUINE CHARITABLE ACTIVITY . ACCORDINGLY CONSIDERIN G THE ABOVE JUDICIAL DECISIONS AND AP PLYING THE SAME TO THE PRESENT CASE, WE DIRECT THE CIT(E) TO GRANT REGISTRATION TO THE ASSESSEE SOCIETY U/S.12AA OF THE ACT. ACCORDINGLY, GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 11 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED I N THE OPEN COURT ON 2 7 / 11 /201 8 SD/ - SD/ - (N.S.SAINI) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER RANCHI , DATED 2 7 / 11 /2018 PRAKASH KUMAR MISHRA , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT AAKANKSHA UTPRERAK SAMAJIK SANSTHA, NAWAGARH MORE, PO - KHARKHAREE, DHANBAD - 828125 2. THE RESPONDENT CIT(E), PATNA 3. THE CIT(A) CONCERNED 4. CIT , CONCERNED 8 ITA NO. 06 /RAN/20 1 7 BY ORDER, //TRUE COPY// SR.PS, ITAT, RANCHI 5. DR, ITAT, RANCHI 6. GUARD FILE.