ACIT, Gwalior V. Sh. Padam Chand Jain(HUF), Shivpuri

ITA 609/AGR/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6926 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-04-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 23-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K MISHRA
• Keywords: Charitable institution; Cancellation of registration
• Section: 80G; 12A; 12AA

Judgement Text

1 ITA 636-08 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH : AGRA. ( BEFORE SHRI R.K. GUPTA AND SHRI P.K. BANSAL ) ITA NO. 636/AG./2008 SARIN PUBLIC CHARITABLE TRUST, VS. COMMISSIONER O F INCOME-TAX-II, 619, VILLAGE ARTONI, AGRA. AGRA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAHIB P. SATSANGEE, CA RESPONDENT BY : SHRI S.K. MISHRA, SR. D/R ORDER PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R OF LD. CIT-II, AGRA, RELATING TO CANCELLATION OF REGISTRATION UNDER SECTION 80G OF T HE IT ACT. 2. THE BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A TRUST WHICH WAS CREATED ON 10.7.2001. REGISTRATION UNDER SECTION 12AA WAS GRA NTED FROM 1.4.2002 VIDE CITS LETTER DATED 30.06.2003. EXEMPTION CERTIFICATE UNDER SECTI ON 80G WAS GRANTED FROM 1.4.2002 TO 31.3.2004 VIDE ORDER DATED 30.6.2003. THEREAFTER R ENEWAL FOR A.Y. 2005-06 TO 08-09 WAS ALSO GRANTED. THE LD. CIT CANCELLED THE REGISTRATI ON UNDER SECTION 80G FOR A.Y. 2009-10 ONWARDS BY OBSERVING THAT THE TRUST HAS CARRIED ON THE ONLY ACTIVITIES OF PROVIDING MEDICAL AID OF RS. 76,000/- IN FINANCIAL YEAR 2004- 05 AND RS. 55,000/- EACH IN FINANCIAL YEAR 2005-06 AND 2006-07 AND RS. 50,000/- IN FINANC IAL YEAR 2007-08. THUS IT WAS SEEN THAT IN THE LONG PERIOD OF ABOVE 8 YEARS, THE TRUST HAS ONLY MADE DONATION OF RS. 2 2,36,000/-. THEREAFTER THE LD. CIT BY OBSERVING TH AT AS COMPARED TO THE NUMEROUS EXALTED OBJECTIVES MENTIONED IN THE TRUST DEED IT IS CLEAR THAT THE TRUST HAS REMAINED NEARLY DORMANT AND THE HUGE CORPUS AMOUNT OF RS. 22,62,000 /- CONSISTING LARGELY OF DONATIONS RECEIVED FROM PUBLIC HAVE REMAINED IDLE FOR A LONG TIME IN THE SHAPE OF FIXED DEPOSITS WITH THE BANK. THUS IT IS EVIDENT THAT THERE IS NO PROPER UTILIZATION OF THE TRUST FUNDS, THE MAJORITY OF WHICH IS DONATIONS RECEIVED FROM THE PU BLIC. THE PURPOSE OF GRANTING REGISTRATION UNDER SECTION 80G OF THE ACT IS NOT TO HELP THE TRUST IN COLLECTING DONATIONS IN THE NAME OF CHARITY AND TO KEEP THE DONATIONS IDLE FOR A LONG TIME AND NOT USING THEM FOR ANY SUBSTANTIAL/CHARITY WORK. BY OBSERVING THESE O BSERVATIONS, THE LD. CIT REFUSED TO RENEW THE REGISTRATION UNDER SECTION 80G FROM THE Y EARS 2009-10 ONWARDS. NOW THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 3. THE LD. COUNSEL OF THE ASSESSEE FILED BRIEF NOTE IN SUPPORT OF THE ASSESSEES CONTENTION. 4. AFTER CONSIDERING THE BRIEF NOTE AND THE MATERIA L PLACED ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN ITS APPEAL. THE LD . CIT HAS REFUSED TO RENEW THE EXEMPTION UNDER SECTION 80G ONLY ON THE REASON THAT HUGE DONATION HAS BEEN COLLECTED BY THE ASSESSEE BUT THE SAME HAS NOT BEEN PROPERLY UTI LIZED. IT HAS BEEN FURTHER OBSERVED THAT REGISTRATION UNDER SECTION 80G OF THE ACT IS NOT T O HELP THE TRUST IN COLLECTING DONATIONS IN THE NAME OF CHARITY AND TO KEEP THE DONATIONS IDLE FOR A LONG TIME. IN OUR CONSIDERED VIEW, THESE REASONS GIVEN BY LD. CIT FOR NOT GRANTI NG REGISTRATION ARE NOT JUSTIFIED. IF BY ANY REASON FUNDS ARE NOT UTILIZED FOR THE PURPOSE O F CHARITY, IT DOES NOT BAR ANY CHARITABLE INSTITUTION TO COLLECT THE FUNDS FOR CHARITABLE PUR POSES. THERE IS NO ALLEGATION THAT FUNDS OF THE TRUST HAS BEEN MIS-UTILIZED BY THE TRUSTEES OR ANY OTHER MEMBER OF THE TRUST. THE LD. 3 CIT HIMSELF ADMITTED THE FACT THAT ALL THE DONATION S COLLECTED BY THE TRUST HAVE BEEN KEPT IN THE SHAPE OF DEPOSIT IN THE BANK. THEREFORE, IN OUR CONSIDERED VIEW, IF FOR ANY REASON CHARITY FUNDS COULD NOT BE UTILIZED, THEN IT DOES N OT BAR THE TRUST TO COLLECT THE FUNDS FOR CHARITABLE PURPOSE. VARIOUS DECISIONS RELIED UPON B Y LD. A/R I.E. IN THE CASES OF N.N. DESAI CHARITABLE TRUST VS. CIT, 246 ITR 452 (GUJ.), SHIKSHAN PRASARAK MANDALI VS. CIT, 10 DTR 470, KALYANAM KAROTI VS. CIT, 29 DTR 316 AND ENVISIONS VS. DDIT (EXEMPTIONS), 26 ITR 505, COPIES OF WHICH ARE PLACE D ON RECORD, HELPS THE CASE OF THE ASSESSEE. IN THE CASE OF N.N. DESAI CHARITABLE TRU ST VS. CIT, THE HONBLE GUJARAT HIGH COURT HAS HELD THAT THE LD. CIT WAS NOT JUSTIFIED I N REFUSING THE RENEWAL OF REGISTRATION UNDER SECTION 80G ON THE REASON THAT THE ASSESSEE D ID NOT CARRY ON CHARITABLE ACTIVITIES. IT HAS BEEN OBSERVED THAT ONCE THE TRUST WAS REGISTERE D UNDER SECTION 12A AND WAS GRANTED APPROVAL UNDER SECTION 80G (5), THEN RENEWAL SHOULD HAVE BEEN GRANTED BY THE LD. CIT. ACCORDINGLY IN THIS CASE APPEAL WAS DECIDED IN FAVO UR OF THE ASSESSEE. SIMILAR VIEW HAS BEEN EXPRESSED IN OTHER CASES MENTIONED ABOVE. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT LD. CIT WAS NOT JUSTIFI ED IN REFUSING REGISTRATION UNDER SECTION 80G. ACCORDINGLY, WE DIRECT THE LD. CIT TO ALLOW THE RENEWAL OF REGISTRATION UNDER SECTION 80G BY PASSING NECESSARY ORDER. WE ORDER AC CORDINGLY. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 6. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON ( P.K. BANSAL ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AGRA, DATED : _____/04/2010. D/- 4 COPY FORWARDED TO :- THE APPELLANT THE RESPONDENT THE CIT THE CIT (A) CONCERNED. THE D/R, ITAT AGRA. GUARD FILE (ITA 636/AG/2008) BY ORDER, AR ITAT AGRA.