IME Trust, Ghaziabad V. CIT, Ghaziabad

ITA 6201/DEL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2730 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-11-2015
• Assessment Year: misc
• Appeal Filed On: 20-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VARKEY JUDIC IA L M EMBER
• Keywords: Gift; Share purchase agreement; Avoidance of tax
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SH. ABY T. VARKEY, JUDICIAL M EMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER ITA NO S . 6201 & 6202 /DEL/ 2013 ASSESSMENT YEAR: NIL IME TRUST, C/O - SH. AKHILESH KUMAR, ADVOCATE, CHAMBER NO. 206 - 207, ANSAL SATYAM , RDC RAJ. NAGAR, GHAZIABAD (PAN: AAATI9053P ) VS. COMMISSIONER OF INCOME TAX, HAPUR, CHUNGI, GHAZIABAD (APPELLANT) (RESPONDENT) ASSESSEE BY SH. AKHILESH KUMAR, ADV. DEPARTMENT BY SH. A.K. SAROHA, CIT(DR) DATE OF HEARING 26.11.2015 DATE OF PRONOUNCEMENT 13.01.2016 ORDER PER O.P. KANT , A. M. : THESE APPEALS OF THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX , GHAZIABAD, DATED 19.09.2013 REJECTING REGISTRATION GRANTED UNDER SECTION 12AA AND REGISTRATION UNDER SECTION 80 G OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) RESPECTIVELY. 2. GROUNDS OF APPEAL RAISED IN ITA NO. 620 1/DEL/2013 ARE AS UNDER: 1. THAT LEARNED COMM ISSIONER OF INCOME TAX GROSSLY ERRED IN LAW AS WELL AS ON FACTS IN REFUSING TO GRANT REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 IGNORING THE FACT THAT ASSESSEE HAS COMPLIED WITH ALL THE REQUIREMENT PROVIDED UNDER THE CIRCUMSTANCES OF THE CASE. 2 ITA NOS. 6201& 6202/DEL/2013 IME TRUST 2. T HAT LEARNED COMMISSIONER OF INCOME TAX FAILED TO APPRECIATE THE FACT ON THE RECORD THAT ASSESSEE IN AN EDUCATIONAL TRUST WHOSE ACTIVITIES ARE CHARITABLE AND REFUSED REGN. U/S 12AA EVEN WITHOUT FINDING OBJECTS OF THE TRUST AS NOT GENUINE AND HENCE ORDER I S INHERENTLY ILLEGAL. 3. THAT LEARNED COMMISSIONER OF INCOME TAX HAS GONE BEYOND THE SCOPE OF PROVISION OF SECTION 12AA AND ERRED IN RECORDING FINDINGS LIKE ..TRUST HAS NOT MAINTAINED ITS AFFAIRS IN A TRANSPARENT AND LOGICAL MANNER .. WITHOUT ANY EVIDE NCE OR MATERIAL AGAINST THE ASSESSEE AND HENCE ORDER IS PERVERSE. 3 . THE GROUND OF APPEAL RAISED IN ITA NO. 6202/DEL/2013, ARE AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX GROSSLY ERRED IN LAW AS WELL AS ON FACTS IN REFUSING TO GRANT REGISTRATION U/S 80G OF THE INCOME TAX ACT, 1961 IGNORING THE FACT THAT ASSESSEE HAS COMPLIED WITH ALL THE REQUIREMENT PROVIDED UNDER THE CIRCUMSTANCES OF THE CASE. 2. THAT, LEARNED COMMISSIONER OF INCOME TAX IGNORED THE FACT THAT THE ASSESSEE HAS COMPLIED WITH ALL THE CONDITIONS LAID DOWN IN CLAUSES (I) TO (V) OF SUB - SEC. (5) OF SECTION 80G OF THE INCOME TAX ACT, 1961 AND AS SUCH TRUST IS ENTITLED FOR APPROVA L U/S 80G(5). 3. BECAUSE, LEARNED COMMISSIONER OF INCOME TAX HAS GONE BEYOND THE SCOPE OF RELEVANT PROVISIONS AND ERRED IN RECORDING LIKE TRUST HAS NOT MAINTAINED ITS AFFAIRS IN A TRANSPARENT AND LOGICAL MANNER . WITHOUT ANY EVIDENCE OR MATERIAL AGAINST T HE ASSESSEE AND HENCE ORDER IS PERVERSE. IT IS, THEREFORE, PRAYED THAT THE LEARNED COMMISSIONER OF INCOME TAX MAY KINDLY BE DIRECTED TO GRANTED THE REGISTRATION U/S 80G OF THE INCOME TAX ACT, 1961. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE TRUST WAS INCORPORATED ON 02.09.2011 AND APPLIED FOR REGISTRATION UNDER SECTION 12AA OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) BEFOR E THE COMMISSIONER OF INCOME TAX, GHAZIABAD, ON 22.03.2013. THE COMMISSIONER OF INCOME TAX CALLED FOR A REPORT FROM HIS SUBORD INATES AUTHORITIES IN RESPECT OF THE TRUST. THE LEARNED COMMISSIONER OF INCOME TAX HIMSELF ALSO EXAMINED THE ACT IVITIES OF THE TRUST. HE NOTED THAT THE MANAGING TRUSTEE OF THE TRUST WAS ALSO SETTLER OF THE TRUST AND 3 ITA NOS. 6201& 6202/DEL/2013 IME TRUST IN FINANCIAL YEARS 2012 - 13, THE TRUST H AD PURCHASED A LAND HAVING AREA APPROXIMATELY FOUR HECTARES FOR CONSIDERATION OF RS. 16.54 CRORES. HE FURTHER OBSERVED THAT THE TRUST WAS NOT HAVING OWN SOURCE TO FINANCE THE ABOVE PURCHASE OF LAND. THE COMMISSIONER OF INCOME TAX FURTHER OBSERVED THAT THE ASSESSEE TRUST COULD NOT PAY A MAJOR PART OF THE LOAN LIABILITY EVEN UPTO THE DATE OF LAST HEARING BEFORE HIM . 5. THE ASSESSEE SUBMITTED BEFORE THE COMMISSIONER OF INCOME TAX THAT THE TRUST COULD NOT CLEAR THE CHEQUES TENDERED AGAINST PURCHASE OF LAND DUE TO NON - AVAILABILITY OF THE FUNDS . I N VIEW OF THE FACTS OBSERVED, THE LEARNED COMMISSIONER OF INCOME TAX HELD THAT THE AFFAIRS OF THE TRUST WERE NOT MAINTAINED IN THE TRANSPARENT AND LOGICAL MANNER AND HE WAS NOT SATISFIED WITH THE AFFAIRS AND ACTIVITI ES OF THE TRUSTS AND ACCORDINGLY HE REJECTED THE APPLICATION OF THE ASSESSEE SEEKING REGISTRATION UNDER SECTION 12AA OF THE ACT. AGGRIEVED, THE ASSESSEE IS BEFORE US 6. THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT WHILE GRANTING T HE REGISTRATION COMMISSIONER OF INCOME TAX IS REQUIRED TO EXAMINE WHETHER THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE AND ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. HE FURTHER SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME TAX HAS NOT G IVEN ANY ADVERSE FINDINGS IN RESPECT OF EITHER THE CHARITABLE OBJECTS OF THE TRUST OR ABOUT THE GENUINENESS OF THE ACTIVITIES AND THE COMMISSIONER OF INCOME TAX HAS ONLY CONCLUDED THAT THE AFFAIRS OF THE TRUST WAS NOT MAINTAINED IN A TRANSPARENT AND LOGICA L MANNER. FURTHER, THE 4 ITA NOS. 6201& 6202/DEL/2013 IME TRUST LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THERE WAS NOTHING WRONG IN EXTENDING LOAN TO THE TRUST BY MANAGING TRUSTEE OR TRANSFERRING LAND BY ONE OF THE TRUSTEES TO THE TRUST THROUGH REGISTERED SALE DEED AND HAVING SALE CONSIDE RATION AT ARM S LENGTH PRICE. LEARNED AUTHORIZED REPRESENTATIVE ALSO DRAWN OUR ATTENTION TO THE OBJECT CLAUSES OF THE TRUST DEED PLACED AT PAGE NO. 3 OF THE ASSESSEE S PAPER BOOK AND THE APPLICATION OF THE FUNDS AT PAGE 7 TO 9 OF THE ASSESSEE S PAPER BOOK. THE LEARNED AUTHORIZED REPRESENTATIVE ALSO SUBMITTED THAT THE SUBORDINATE OFFICER IN HIS REPORT HAS NOT FOUND ANYTHING ADVERSE IN THE ACTIVITIES OF THE TRUST AND HE RECOMMENDED FOR GRANT OF REGISTRATION. IN SUPPORT OF HIS PROPOSITION THAT AT THE TIME OF R EGISTRATION OF TRUST ONLY GENUINENESS OF OBJECTS ARE TO BE EXAMINED, H E RELIED ON THE JUDGEMENT IN THE CASE OF CIT VS RS BAJAJ SOCIETY (2014) 4 2 TAXMANN.COM 573 ( ALLAHABAD) AND OTHER CASES SUBMITTED IN THE FORM OF PAPER BOOK. 7. ON THE OTHER HAND, LD. C OMMISSIONER OF INCOME - TAX ( DR) SUBMITTED THAT THE SELLER OF THE LAND WAS ONE OF THE RELATIVES OF THE TRUSTEES AND THE TRUST WAS NOT HAVING ANY FUNDS TO FINANCE THE PROPERTY, AND FOR THAT PURPOSE THE TRUST HAS OBTAINED LOAN FROM THE MANAGING TRUSTEE. ACCORD ING TO HIM , IN OTHER WAY, TRANSFER OF PROPERTY TO THE TRUST WAS A COLORABLE TRANSACTION. THE LEARNED CIT (DR) ALSO FILED SUBMISSION BEFORE US. IN THE WRITTEN SUBMISSION HAS SUBMITTED THAT THE ASSESSEE TRUST WAS HAVING MEAGER FINANCIAL CAPACITY AND PURCHASED LAND WORTH RS. 16.54 CRORES WITHOUT ANY PLAN ARRANGEMENT OF FUNDS AND THUS THE DEAL OF PURCHASE APPEARED COLOUR ABLE TO THE COMMISSIONER OF INCOME TAX . FURTHER, 5 ITA NOS. 6201& 6202/DEL/2013 IME TRUST HE SUBMITTED THAT SELLER SH. RAHUL VENKATESH PRASAD WAS CLOSE RELATIVE TO MANAG ING TRUSTEE AND FUNDS OF RS. 15 LAKHS PAID TO THE SELLER AND RS. 1.1 CRORE FOR STAMP DUTY AT THE TIME OF REGISTRATION WERE PROVIDED BY THE MANAGING TRUSTEE AS UNSECURED LOAN. HE FURTHER SUBMITTED THAT THE MANAGING TRUSTEE PROVIDED FURTHER LOAN OF RS. 3.25 CRORES UNDER COLOUR OF UNSECURED LOAN AND THE BALANCE AMOUNT OF RS. 11.55 CRORES WAS OUTSTANDING TILL 12.09.2013. HE FURTHER SUBMITTED THAT IN VIEW OF THE TRANSACTIONS, THE TRUST WAS SEPARATED FROM THE FAMILY ONLY ON THE PAPER AND NOT IN C ONDUCT OF ITS AFFAIRS. IN HIS SUBMISSION, HE FURTHER NOTICED THAT THE SETTLER OF THE TRUST WAS THE CHAIRMAN - CUM - MANAGING TRUSTEE OF THE TRUST. HE THUS SUBMITTED THAT SETTLER BY PRINCIPLE OF PROPRIETARY SHOULD NOT BE THE TRUSTEE OF THE TRUST SETTLED BY HIM. IN HIS SUBMISSION, HE FURTHER SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) WAS OBLIGED TO SATISFY HIMSELF ABOUT THE OBJECT OF THE TRUST AS WELL AS THE GENUINENESS OF ITS ACTIVITIES. IN THE WRITTEN SUBMISSION FILED, THE LEARNED COMMISSIONER OF I NCOME TAX HAS DISTINGUISHED THE CASES RELIED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE IN SUPPORT. IN REJOINDER, THE LD AR SUBMITTED THAT THE CIT HAS NO WHERE STATED THE TRANSACTION A COLORABLE TRANSACTION AND INTERPRETATION BY THE LD CIT DR WAS WITHOU T PROPER UNDERSTANDING OF THE FACTS AND CIRCUMSTANCES OD THE CASE. HE STATED THAT THE TRANSACTION OF SALE AND PURCHASE OF LAND IS REGISTERED SALE TRANSACTION AND TRANSACTION WAS AT THE VALUE PRESCRIBED AS PER THE STAMP DUTY PURPOSE. FURTHER, HE STATED THAT IT WAS IN CORRECT ON THE PART OF THE LD CIT DR 6 ITA NOS. 6201& 6202/DEL/2013 IME TRUST THAT SETTLER CANNOT BECOME MANAGING TRUSTEE. ACCORDING TO HIM, THERE IS NO SUCH PROVISION IN TRUST PROHIBITING THE SETTLER IN BECOMING THE TRUSTEE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. IT IS SETTLED LAW THAT FOR GRANT OF REGIS TRATIO N UNDER SECTION 12AA OF THE ACT, T HE COMMISSIONER OF INCOME TAX IS REQUIRED TO SATISFY THE TWIN CONDITIONS OF CHA RITABLE NATURE OF THE OBJECTS OF THE TRUST AND GENUINENESS OF THE ACTIVITIES CA RRIED OUT, BUT WHERE THE TRUST IS NEW, T HE COMMISSIONER OF INCOME TAX CANNOT REJECT REGISTRATION MERELY ON THE GROUND THAT NO ACTIVITY HAVE BEEN CARRIED OUT. THE ASSESSEE TRUST WAS CONSTITUTED ON 02.11.2011 AND THEREAFTER THE ASSESSEE HAS COMMENCED THE ACT IVITY OF PURCHASE OF LAND FOR THE PURPOSE OF ACHIEVING ONE OF ITS OBJECTS OF EDUCATION. IN THE PRESENT CASE THE FIRST CONDITION OF CHARITABLE NATURE OF OBJECT HAS NOT BEEN DISPUTED BY THE REVENUE. IN RESPECT OF THE SECOND CONDITION, THE LEARNED COMMISSIONE R OF INCOME - TAX GIVEN FINDING THAT THE TRUST HAS NOT MAINTAINED ITS AFFAIRS IN TRANSPARENT AND LOGICAL MANNER AND TRANSACTION MADE BY THE TRUST FOR PURCHASE OF LAND WERE HIGHLY DISPROPORTIONATE TO THE KNOWN FUNDS AVAILABLE WITH THE TRUST. THE L EARNED CIT(D R) HAS INTERPRETED THE SAID TRANSACTION OF PURCHASE OF LAND FROM ONE OF THE RELATIVES OF THE TRUSTEE AS A COLORABLE TRANSACTION. THE LEARNED AUTHORIZED REPRESENTATIVE HAS DENIED SUCH ALLEGATIONS OF CIT(DR) . WE ARE ALSO IN AGREEMENT WITH THE ARGUMENT OF THE LD AR . IT WAS APPARENT THAT THE ASSESSEE TRUST HAS PURCHASED LAND FOR COMMENCING OF ITS ACTIVITY OF EDUCATION. WE DON T FIND ANYTHING WRONG IN BUYIN G LAND BY THE TRUST FROM ONE OF THE RELATIVE OF THE TRUSTEE UNLESS SOME UNDUE ADVANTAGE HAS 7 ITA NOS. 6201& 6202/DEL/2013 IME TRUST BEEN PASSED ON TO THE SELLER OR THE TRUST IS ADVERSELY AFFECTED BY THE TRANSACTION. FURTHER, WE FIND NOTHING WRONG IN EXTENDING LOAN TO THE TRUST BY THE TRUSTEES. IN THE CASE IN HAND, THE TRUSTEES OR THEIR RELATIVES HAVE EXTENDED LOAN AND TRANSFERRED LAND AT ARM S LE NGTH PRICE AS TRUSTEES AND THEIR FAMILIES TO FULFILL THE DESIRE OF CHARITABLE ACTIVITY HAVE EXTENDED LOANS OR TRANSFER RED THE PROPER TY TO THE TRUST. BY THESE ACTIONS OF THE TRUSTEES OR THEIR RELATIVES , THE TRUST IS NOT AT DISADVANTAGE OR THE TRANSACTIONS A RE NOT PREJUDICIAL TO THE INTERESTS OF THE TRUST. THUS , WE FIND THAT THE FINDING OF THE LD CIT THAT TRUST HAS NOT MAINTAINED ITS AFFAIRS IN TRANSPARENT AND LOGICAL MANNER AND TRANSACTION MADE BY THE TRUST FOR PURCHASE OF LAND WERE HIGHLY DISPROPORTIONATE T O THE KNOWN FUNDS AVAILABLE WITH THE TRUST ARE COMPLETELY DEVOID OF MERIT AND DESERVE TO BE REJECTED. FURTHER, INTERPRETATION OF THE FACT AND CIRCUMSTANCES OF THE ASSESSEE AS A COLORABLE TRANSACTION BY THE LD CIT DR, IS ALSO WITHOUT CORRECT APPRECIATION OF FACTS AND CIRCUMSTANCES. THE LD CIT DR CONTENDED THAT IN VIEW OF THE PURCHASE OF LAND AND EXTENDING LOAN BY TRUSTEE SHOWS THAT THE TRUST AND FAMILY MEMBERS OF THE TRUST ARE ACTING AS ONE ENTITY IS NOT CONVINCING. IN INDIA, GENERALLY, THE FAMILIES KEEP THE AFFAIRS OF THE TRUST WITH THEM SO THAT THEY CAN ADVANCE THE PURPOSE OF CHARITABLE NATURE FOR WHICH THE TRUST IS ESTABLISHED . BUT, IF THE FAMILY OR ANY TRUSTEE ABUSE HIS POWER AND AUTHORITY AND TAKE UNDUE AND UNLAWFUL ADVANTAGE FROM THE TRUST, IN THAT CIRC UMSTANCES, IT MAY BE CALLED AS A COLOURABLE DEVICE, BUT IN THE FACTS OF THE CASE TILL THE STAGE THERE IS NOTHING , WHICH COULD CONSTITUTE A COLORABLE TRANSACTION. A COLOURAB LE TRANSACTION IS A TRANSACTION , WHICH IS 8 ITA NOS. 6201& 6202/DEL/2013 IME TRUST APPARENTLY A VALID TRANSACTION BUT REALLY UNLAWFUL AND ILLUSORY. WE DON T FIND ANY SUCH CIRCUMSTANCES IN THE PRESENT CASE. IN THE CASE OF ACIT VS . BIRAJ INVESTMENT PVT . LTD REPORTED IN (2012) 210 TAXMAN 0418 , THE HON BLE HIGH COURT OF GUJARAT HAS HELD THAT SALE OF SHARES AT LOSS BY THE ASSESSEE, WAS NOT A COLOURABLE TRANSACTION. THE RELEVANT PART OF THE JUDGMENT IS REPRODUCED AS UNDER: 17. WE ARE NOT INCLINED TO ACCEPT THE REVENUE'S CONTENTION THAT THIS WAS A COLOURABLE DEVICE AND THAT THE ENTIRE ARRANGEMENT WAS A PAPER ARRANGEMENT. FIRSTLY, THERE IS NO PROVISION IN THE ACT WHICH WOULD PREVENT THE ASSESSEE FROM SELLING LOSS MAKING SHARES. SIMPLY BECAUSE SUCH SHARES WERE SOLD DURING THE PREVIOUS YEAR WHEN THE ASSESSEE HAD ALSO SOLD SOME SHARES AT PROFIT BY ITS ELF WOULD NOT MEAN THAT THIS IS A CASE OF COLOURABLE DEVICE OR THAT THERE IS A CASE OF TAX AVOIDANCE. FURTHER, THERE IS NO RESTRICTION THAT SUCH SALE OR TRANSACTION CANNOT BE EFFECTED WITH A GROUP COMPANY. AS LONG AS THE REVENUE COULD NOT DOUBT THE SALE PR ICE OF THE SHARES, IT WOULD NOT BE OPEN FOR THE REVENUE TO CONTEND THAT THE ASSESSEE HAD SHOWN LOSS WHICH IT DID NOT REALLY SUFFER. IN THE PRESENT CASE, IT IS NOT EVEN THE CASE OF THE REVENUE THAT SHARES WERE SOLD AT A PRICE LOWER THAN THE MARKET RATE. IF THAT BE SO, THE QUESTION OF INFLATING THE LOSS BY TRANSFERRING THE SHARES TO GROUP COMPANY WOULD NOT ARISE. UNDER ORDINARY CIRCUMSTANCES, IT IS ALWAYS OPEN TO THE ASSESSEE IN HIS OWN WISDOM TO EITHER HOLD ON TO CERTAIN BUNCH OF SHARES OR TO SELL THE SAME T O AVOID FURTHER LOSS, IF HE FINDS THAT MARKET VALUE OF THE SHARES IS FAST DIMINISHING. IT IS EQUALLY OPEN FOR THE ASSESSEE TO EFFECT SUCH SALE DURING THE SAME YEAR WHEN HE ALSO CHOOSES TO DISPOSE OF CERTAIN PROFIT MAKING SHARES. IN THE PRESENT CASE, OF COU RSE, THERE IS A FURTHER ANGLE OF THE SHARES IN QUESTION BEING PLEDGED TO IDBI AND THEREFORE IT WOULD NOT BE POSSIBLE FOR THE ASSESSEE TO DELIVER THE ORIGINAL SHARE CERTIFICATES TO ITS PURCHASER ALONG WITH THE DULY SIGNED TRANSFER FORMS. AS ALREADY NOTED, S UCH SPECIAL ANGLE MAY HAVE REPERCUSSION INSOFAR AS THE LEGAL RELATION BETWEEN THE ASSESSEE AND THE IDBI IS CONCERNED AND INSOFAR AS THE PURCHASER'S RIGHT TO HAVE SHARES TRANSFERRED IN ITS NAME IS CONCERNED. THIS, HOWEVER, BY ITSELF WOULD NOT ESTABLISH THAT THE SALE OF SHARES WAS ONLY A PAPER TRANSACTION AND A DEVICE CONTRIVED BY THE ASSESSEE TO CLAIM LOSS WHICH IT DID NOT SUFFER AND THEREBY SEEK SET OFF AGAINST THE CAPITAL GAIN RECEIVED BY IT DURING THE YEAR UNDER CONSIDERATION. 18. IN THE CASE OF COMMISSIO NER OF INCOME TAX V. SAKARLAL BALABHAI, 69 ITR 186, A DIVISION BENCH OF THIS COURT OBSERVED THAT AVOIDANCE OF TAX CANNOT INCLUDE EVERY CASE OF REDUCTION OF TAX LIABILITY OF AN ASSESSEE. THE 9 ITA NOS. 6201& 6202/DEL/2013 IME TRUST ASSESSEE MAY ENTER INTO A TRANSACTION WHICH HAS THE EFFECT OF DIMI NISHING HIS INCOME AND CONSEQUENTLY REDUCING HIS TAX LIABILITY. IN SUCH A CASE, THERE WOULD BE NO AVOIDANCE OF TAX, FOR EXAMPLE, A CASE WHERE THE ASSESSEE MAKES A GIFT OF SHARES TO HIS SON. BY REASON OF GIFT INCOME FROM THE SHARES WOULD NOT ACCRUE TO THE A SSESSEE BUT WOULD ACCRUE TO THE SON AND TO THAT EXTENT THE INCOME OF THE ASSESSEE WOULD BE DIMINISHED AND HIS TAX LIABILITY REDUCED. THIS CANNOT BE REGARDED AS A CASE OF TAX AVOIDANCE EVEN IF THE MOTIVE OF THE ASSESSEE IN MAKING THE GIFT WAS TO SAVE TAX ON THE INCOME FROM SHARES AT A HIGHER RATE APPLICABLE TO HIM. 19. UNDER THE CIRCUMSTANCES, EVEN WITHOUT REFERRING TO THE DECISION OF THE APEX COURT IN THE CASE OF AZADI BACHAO ANDOLAN (SUPRA) AND THE OBSERVATIONS MADE IN THE LATER DECISION IN THE CASE OF VOD AFONE (SUPRA), WE DO NOT FIND THAT THIS A CASE WHICH WOULD FALL WITHIN THE PARAMETERS OF THE DECISION IN THE CASE OF MCDOWELL & COMPANY LTD (SUPRA). THUS, I N OUR OPINION, THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE ARE NOT COLOURABLE TRANSACTIONS AND THE ACTIVITIES OF THE TRUST ARE GENUINE TILL THE RELEVANT PERIOD OF TIME. FURTHER , THE LEARNED COMMISSIONER OF INCOME TAX HAS NOT GIVEN ANY FINDING AS REGARD TO THE FACT THAT THE OBJECTS OF THE ASSESSEE WERE NOT CHARITABLE IN NATURE. 9 . IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT AND ACCORDINGLY WE DIRECT COMMISSIONER OF INCOME TAX TO GRANT REGISTRATION TO THE ASSESSEE UNDER SECTION 12AA OF THE ACT. ACCORDINGLY, THE APPEAL IS ALLOWED. ITA NO.6202/DEL/2013 10 . THE FACTS IN THIS APPEAL ARE IDENTICAL TO THE FACTS THE APPEAL BEARING ITA NO. 6201/DEL/2013. GROUNDS OF APPEAL ARE ALSO IDENTICAL, THEREFORE, WE HOLD THAT THE ASSESSEE IS ELIGIBLE FOR REGISTRATION UNDER SECTION 80G OF THE ACT. IN FACT , THE LEARNED COMMISSIONER OF INCOME T AX (DEPARTMENTAL REPRESENTATIVE ) IN HIS WRITTEN SUBMISSION IN APPEAL IN ITA NO. 6201/DEL/2013 HAS SUBMITTED AS UNDER: 10 ITA NOS. 6201& 6202/DEL/2013 IME TRUST 10. THE GROUND OF REJECTING THE CLAIM OF EXEMPTION U/S 80 G IS BASICALLY CONSEQUENTIAL. THE AB OVE STATED ARGUMENTS HO LD GOOD EVEN FOR THE CASE U/S 80 G. THEREFORE, THE CIT HAS EXTENDED THE SAME REASON FOR REJECTING THE CLAIM UNDER THIS SECTION . 11. THUS, FOLLOWING OUR DECISION IN ITA NO. 6201/DEL/2013, WE DIRECT THE COMMISSIONER OF INCOME TAX T O GRANT REGISTRATION UNDER SECTION 80G OF THE ACT. HENCE , THE APPEAL IS ALLOWED. 1 2 . IN THE RESULT , BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 1 3 T H J A N U A R Y , 201 6 . S D / - S D / - ( ABY T. VARKEY ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 3 T H J A N U A R Y , 2 0 1 6 . RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI