Nashik Halai Ghoghari Lohana Mahajan Trust, Nashik V. Commissioner of Income-Tax, Exemption, Pune

ITA 614/PUN/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9798 (ITAT-PUNE)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 17-11-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Set aside
• Section: 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO, AM AND SHRI S. S. VISWANETHRA RAVI, JM . / ITA NOS.613 & 614/PUN/2020 NASHIK HALAI GHOGHARI LOHANA MAHAJAN TRUST, C/O M/S. BABUBHAI CLOTH STORES, MAIN ROAD, NASHIK-422001. PAN : AAATN8669E ....... / APPELLANT / V/S. CIT (EXEMPTION), PUNE. / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI DEEPAK GARG / DATE OF HEARING : 09.04.2021 / DATE OF PRONOUNCEMENT : 20.04.2021 / ORDER PER S. S. VISWANETHRA RAVI, JM: BOTH THE APPEALS FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDER OF LD. COMMISSIONER OF INCOME TAX (EXEMPTION), PUNE DATED 21.09.2020 AND 24.09.2020 RESPECTIVELY. 2. WE FIND NO REPRESENTATION ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION FILED SEEKING ADJOURNMENT. THUS, THE ASSESSEE CALLED ABSENT AND SET EX-PARTE . THEREFORE, WE PROCEED TO HEAR THE LD. DR AND DISPOSE OF THE APPEAL BY PERUSING THE MATERIAL EVIDENCED ON RECORD. 2 ITA NOS.613 & 614/PUN/2020 ITA NO.613/PUN/2020 3. THE ASSESSEE RAISED FOUR GROUNDS OF APPEAL AMONGST WHICH THE ONLY ISSUE RAISES FOR OUR CONSIDERATION IS AS TO WHETHER THE LD. CIT (EXEMPTION) IS JUSTIFIED IN REJECTING THE APPLICATION FILED SEEKING REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 (THE ACT). 4. HEARD LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE IS REGISTERED UNDER BOMBAY PUBLIC TRUST ACT, 1950 VIDE REGISTRATION DATED 03.02.1999. THE ASSESSEE FILED FORM NO.10A SEEKING REGISTRATION U/S 12AA OF THE ACT UNDER THE CATEGORY OF CHARITABLE TRUST/INSTITUTION. THE LD. CIT (EXEMPTION) ISSUED LETTER REQUESTING THE ASSESSEE TO UPLOAD CERTAIN INFORMATION/CLARIFICATION IN ORDER TO PROCESS THE APPLICATION AND IN RESPONSE TO WHICH THE ASSESSEE SUBMITTED THE INFORMATION AS SOUGHT BY THE LD. CIT (EXEMPTION). THE LD. CIT (EXEMPTION) EXAMINED THE FINANCIAL STATEMENTS AND FOUND THAT THE ASSESSEE SHOWN OF RS.5,70,482/- UNDER THE HEAD TRUST FUND AND CORPUS FUND FOR F.Y. 2017-18 RELATING TO A.Y. 2018-19 AND ACCORDING TO HIM, THE SAID TRUST FUND AND CORPUS FUND WAS DIRECTLY CREDITED TO THE RESERVE FUND WITHOUT ROUTING IT THROUGH THE INCOME AND EXPENDITURE ACCOUNT, FURTHER, HE OBSERVED THAT ANY FUND RECEIVED UNDER THE HEAD TRUST FUND AND CORPUS FUND EARLIER TO CLAIMING REGISTRATION IS TAXABLE INCOME. HE HELD THE TRUST FUND AND CORPUS FUND AS ESCAPED TAXATION AND FOR NON-PAYMENT OF TAXES, THE LD. CIT (EXEMPTION) REJECTED THE APPLICATION SEEKING REGISTRATION U/S 12AA OF THE ACT. 5. THE LD. DR REFERRED TO PAGE NO.1 OF THE IMPUGNED ORDER AND ARGUED THAT THE ASSESSEE CLAIMED EXEMPTION U/S 11(1)(D) OF THE ACT RELATING TO AN AMOUNT OF RS.5,70,482/- WITHOUT ROUTING THE SAME AS THE INCOME AND EXPENDITURE 3 ITA NOS.613 & 614/PUN/2020 ACCOUNT. THE SAID AMOUNT WAS CREDITED DURING THE YEAR 2017-18 AND ARGUED ANY VOLUNTARY CONTRIBUTION FORMING PART OF THE CORPUS IS AN INCOME AND THE LD. CIT (EXEMPTION) RIGHTLY HELD THE SAME IS TAXABLE INCOME AND PRAYED TO DISMISS THE GROUNDS RAISED BY THE ASSESSEE. 6. WE NOTE THAT THE REGISTRATION U/S 12AA OF THE ACT AND EXEMPTION U/S 11 OF THE ACT ARE SEPARATE AND DISTINCT. THE DUTY CAST UPON THE LD. CIT (EXEMPTION) IS THAT DURING THE COURSE OF EXAMINATION OF THE APPLICATION FILED UNDER FORM NO.10A IS THAT HE HAS TO EXAMINE WHETHER THE OBJECTS AND TRUST IS CHARITABLE IN NATURE OR NOT, BUT NOT THE EXEMPTION SEEKING U/S 11 OF THE ACT. THE EXAMINATION OF THE FINANCIAL STATEMENTS AND ACTIVITIES THEREON IS TO BE EXAMINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS BUT NOT UNDER THE PROCEEDINGS U/S 12AA OF THE ACT. FURTHER, WE PLACE RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE GUJRATHI SHIKSHAN SANSTHA VS. CIT (EXEMPTIONS) VIDE ITA NO.10/PUN/2021 ORDER DATED 18.03.2021 AND OPERATIONAL PARA OF THE SAID DECISION IS REPRODUCED AS UNDER :- 6. HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE FROM THE IMPUGNED ORDER AS RIGHTLY POINTED BY THE LD. AR THAT THE CIT(EXEMPTION) DID NOT POINT OUT THE ACTIVITIES OF THE ASSESSEE ARE NONGENUINE AND HE REJECTED ONLY ON THE GROUND THAT THE ASSESSEE ACCUMULATED FUNDS AND KEPT THE SAME IN FDS NOT UTILIZING THE SAME FOR THE OBJECTS OF THE TRUST. THIS TRIBUNAL IN THE CASE OF SANT ZOLEBABA SANSTHAN CHIKHALI HELD THE ISSUE OF GRANT OF REGISTRATION AND THE ASSESSMENT OF INCOME OF TRUST ARE DISTINCT AND SEPARATE, BY PLACING RELIANCE IN THE CASE OF ANANDA SOCIAL AND EDUCATIONAL TRUST VS. CIT REPORTED IN 272 TAXMAN 7 OF HON BLE SUPREME COURT HELD THE MANDATE OF THE PROVISIONS U/S. 12AA OF THE ACT IS TO EXAMINE WHETHER OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE ARE NOT AND THE ACTIVITIES OF THE TRUST ARE GENUINE, BUT HOWEVER, IN THE PRESENT CASE AS DISCUSSED ABOVE THE CIT(EXEMPTION) DID NOT POINT OUT ANYTHING AGAINST THE OBJECTS AND GENUINENESS OF THE ACTIVITIES OF THE TRUST BUT HOWEVER REJECTED THE REGISTRATION ON EXAMINATION OF FINANCIAL STATEMENTS OF THE ASSESSEE FOR THE LAST FOUR YEARS BY HOLDING THE ASSESSEE HAS MADE SURPLUS AND NO TAXES PAID THEREON ON SUCH SURPLUS FUNDS. WE FIND THAT IT IS A SETTLED PRINCIPLE THAT THE GRANT OF REGISTRATION AND THE ISSUE OF ASSESSMENT OR EXEMPTION U/S. 11 OF THE ACT ARE SEPARATE AND DISTINCT. THE PROCESS OF REGISTRATION IS NOT ON OCCASION FOR DECIDING THE ISSUE OF EXEMPTION OF DONATION U/S. 11 OF THE ACT. THE ISSUE OF EXEMPTION CANNOT BE EXAMINED DURING THE PROCESS OF REGISTRATION. THEREFORE, IN OUR OPINION, THE ORDER OF CIT(EXEMPTION) IN 4 ITA NOS.613 & 614/PUN/2020 DENYING THE REGISTRATION U/S. 12AA OF THE ACT CANNOT BE SUSTAINED AND THE IMPUGNED ORDER IS SET ASIDE. 7. IN ORDER TO COME TO ABOVE CONCLUSION, THE TRIBUNAL PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ANANDA SOCIAL AND EDUCATIONAL TRUST (SUPRA), WHEREIN IT WAS HELD BY THE HONBLE SUPREME COURT THAT THE MANDATE OF THE PROVISIONS U/S 12AA OF THE ACT IS TO EXAMINE WHETHER THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE OR NOT AND THE ACTIVITIES OF THE TRUST ARE GENUINE OR NOT. BUT IN THE PRESENT CASE, AS IT IS EVIDENT FROM PARA 3.1 TO 3.4 OF IMPUGNED ORDER, THE CIT (EXEMPTION) REJECTED THE APPLICATION SEEKING REGISTRATION U/S 12AA ONLY ON THE GROUND THAT AN AMOUNT OF RS.5,70,482/- INVOLVING TRUST FUND AND CORPUS FUND ESCAPED TAXATION, IN OUR OPINION, THE ORDER OF THE CIT (EXEMPTION) IN DENYING THE REGISTRATION U/S 12AA OF THE ACT IS LIABLE TO BE SET AND, ACCORDINGLY, IT IS SET ASIDE. THUS, IN OUR OPINION, THE ASSESSEE IS ENTITLED TO HAVE REGISTRATION U/S 12AA OF THE ACT IN TERMS OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF ANANDA SOCIAL AND EDUCATIONAL TRUST (SUPRA) AS RELIED ON BY THIS TRIBUNAL IN THE CASE OF SANT ZOLEBABA SANSTHAN CHIKHALI. ACCORDINGLY, WE DIRECT THE LD. CIT (EXEMPTION) TO GRANT REGISTRATION U/S. 12AA OF THE ACT TO THE ASSESSEE FROM THE DATE OF APPLICATION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.613/PUN/2020 IS ALLOWED. ITA NO.614/PUN/2020 9. WE FIND THE ASSESSEE RAISED A GROUND CHALLENGING THE ACTION OF THE LD. CIT (EXEMPTION) IN REJECTING THE APPROVAL U/S 80G(5)(VI) OF THE ACT. WE FIND THE APPROVAL U/S 80G(5)(VI) OF THE ACT IS CONSEQUENTIAL BENEFIT RELATING TO 5 ITA NOS.613 & 614/PUN/2020 REGISTRATION U/S 12AA OF THE ACT. WE DECIDED IN THE AFOREMENTIONED PARAGRAPHS RELATING TO APPEAL IN ITA NO.613/PUN/2020 WHEREIN BY PLACING RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ANANDA SOCIAL AND EDUCATIONAL TRUST (SUPRA) DIRECTED THE LD. CIT (EXEMPTION) TO GRANT REGISTRATION U/S 12AA OF THE ACT. AS DISCUSSED ABOVE, APPROVAL U/S 80G(5)(VI) OF THE ACT IS CONSEQUENTIAL BENEFIT AND WE DIRECT THE LD. CIT (EXEMPTION) TO GRANT APPROVAL U/S 80G(5)(VI) OF THE ACT. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.614/PUN/2020 IS ALLOWED. 11. RESULTANTLY, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED AS ABOVE. ORDER PRONOUNCED ON THIS 20 TH DAY OF APRIL, 2021. SD/- SD/- (INTURI RAMA RAO) (S. S. VISWANETHRA RAVI) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 20 TH APRIL, 2021. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (EXEMPTION), PUNE. 4 . , , , / DR, ITAT, B BENCH, PUNE. 5. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.