Purva Kutch Gandhidham Traffic Education Trust, GANDHIDHAM V. The Commissioner of Income Tax, Rajkot-1, RAJKOT-GUJARAT

ITA 631/RJT/2012

• Counselvise Citation: 63124914 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-11-2013
• Assessment Year: misc
• Appeal Filed On: 07-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M L MEENA
• Assessee Lawyers: VIMAL DESAI
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 631/RJT/2012 PURVA KUTCH GANDHIDHAM TRAFFIC EDUCATION TRUST, GANDHIDHAM CHAMBER OF COMMERCE, PLOT NO.71, SECTOR-8, GANDHIDHAM-KUTCH PAN : AABTP 9514 F ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX-I RAJKOT / RESPONDENT / ASSESSEE BY SHRI VIMAL DESAI, CA / REVENUE BY DR M L MEENA, DR / DATE OF HEARING 28.11.2013 !'# / DATE OF PRONOUNCEMENT 31.01.2014 / ORDER THIS APPEAL BY THE ASSESSEE-TRUST IS AGAINST THE OR DER DATED 27.09.2012 OF COMMISSIONER OF INCOME-TAX, RAJKOT-I, RAJKOT U/S 12 AA(1)(B)(II) OF THE INCOME-TAX ACT REJECTING THE APPLICATION FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-TRUST NAMELY PURVA KUTCH GANDHIDHAM TRAFFIC EDUCATION TRUST MADE AN APPLICAT ION FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961 IN FORM NO.10A, WHICH WAS RECEIVED BY THE LD. CIT, RAJKOT- I ON 19.03.2012. THIS APPLICATION WAS ACCOMPANIED WITH THE XEROX COPY OF THE TRUST DEED AND REGISTRATION CERTIFICATE. THE AFORESAID AP PLICATION WAS REJECTED BY THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I VIDE HIS ORDER DATED 27.09.2012 PASSED U/S 12AA(1)(B)(II) OF THE INCOME-TAX ACT. THE DETAILED REASON IS GIVEN BY HIM IN PARAGRAPH NOS. 2 AND 3 OF THE IMPUGNED ORDER, WHICH READ AS UNDER:- 2. AS PER THE TRUST DEED OF THE TRUST, THE OBJECT S OF THE TRUST ARE TO BRING AWARENESS AMONG THE RESIDENTS OF GANDHIDHAM ABOUT T RAFFIC RULES, RELIEF OF POOR DURING NATURAL CALAMITY, SOCIAL WORK AND OTHER SUCH CHARITABLE OBJECTS. THE TRUST HAS NOT SPENT ANYTHING IN RESPECT OF THE OBJECTS. FURTHER THE TRUST HAS BEEN ACCUMULATING THE FUNDS. CREATING AWARENESS AMO NG THE RESIDENTS CANNOT BE CONSTRUED TO BE CHARITY OR RELIGIOUS ACTI VITY TO WARRANT REGISTRATION. I AM THEREFORE NOT SATISFIED WITH THE GENUINENESS OF THE TRUST OR ITS OBJECT. 3. 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 2 631-RJT-2012 - PURVA KUTCH GANDHIDHAM TRAFFIC EDUCATION TRUST (SMC) THERE ARE NO MATERIALS FURNISHED ALONGWITH THE APPL ICATION BEFORE ME OR BEFORE THE AO TO SATISFY ABOUT THE GENUINENESS OF THE ACTI VITIES OF THE TRUST. THUS, THE TRUST IS NOT FULFILLING THE CONDITIONS LAID DOWN FO R REGISTRATION AS LAID DOWN U/S 12AA OF THE I.T. ACT, 1961 AND RULE 17A OF THE I.T. RULES, 1962. I THEREFORE, REJECT THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12A OF THE IT ACT. AGGRIEVED WITH THE ORDER OF LD COMMISSIONER OF INC OME-TAX, RAJKOT-I, THE ASSESSEE-TRUST IS NOW IN APPEAL BEFORE THIS TRIBUNA L ON THE FOLLOWING GROUNDS:- 1. THE ORDER U/S 12AA(1)(B)(II) IS BAD IN LAW. 2. THE LD. COMMISSIONER OF INCOME TAX HAS ERRED IN LAW AS ON FACTS IN REJECTING THE APPLICATION FOR REGISTRATION OF THE A PPELLANT TRUST U/S 12A 3. THE LD. COMMISSIONER OF INCOME TAX HAS ERRED IN LAW AS WELL AS ON FACTS IN NOT PROVIDING ADEQUATE OPPORTUNITIES TO TH E APPELLANT TRUST TO JUSTIFY ITS ACTIVITIES. 4. THE LD. COMMISSIONER OF INCOME TAX HAS ERRED IN LAW AS WELL AS ON FACTS IN NOT APPRECIATING THE CHARITABLE OBJECTS OF THE TRUST AND IN HOLDING THAT THE ACTIVITIES OF THE TRUST WERE NOT GENUINE. 3. BEFORE THE TRIBUNAL, ON BEHALF OF THE ASSESSEE-T RUST, SHRI VIMAL DESAI, CA, APPEARED AND FILED A PAPER-BOOK CONTAINING 60 PAGES , WHICH INCLUDES THE FOLLOWING DOCUMENTS:- SR. NO. PARTICULARS PAGE NOS. 1 WRITTEN SUBMISSIONS 2 COPY OF APPLICATION FOR REGISTRATION U/S 12A(A) D ATED 16.03.2012 ALONGWITH FORM 10A 1-2 3 COPY OF TRUST DEED ALONGWITH LIST OF TRUSTEES 3-1 5 4 COPY OF PHOTOGRAPHS OF THE TRAFFIC AWARENESS SEMINARS/PROGRAMME 16-20 5 COPY OF PAN CARD AND COPY OF BANK STATEMENT 21-24 6 COPY OF FIXED DEPOSITS WITH RAJKOT NAGRIK SAHKARI BANK AND BANK STATEMENT 25-27 7 COPY OF STATEMENT OF INCOME FOR AY 2012-13 28-29 8 COPY OF AUDITORS REPORT FOR THE YEAR ENDING ON 3 1 ST MARCH 2012 30-34 9 COPY OF I.T.O.S LETTER DATED 10.04.2012 35 10 COPY OF ASSESSEES REPLY DATED 27.06.2012 36 11 COPY OF LEDGER ACCOUNT OF CORPUS FUND AND MEMBER SHIP FEES 37-39 11 COPY OF GUJARAT HIGH COURT DECISION IN CASE OF K UTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST TAX APPEAL NO.918/ 2011 40-47 12 COPY OF DECISION OF COCHIN TRIBUNAL IN CASE OF M AHATMA GANDHI CHARITABLE SOCIETY V. CIT (2013) 33 TAXMANN .COM 142 48-52 13 COPY OF DECISION OF ALLAHABAD HIGH COURT IN CASE OF HARDAYAL CHARITABLE & EDUCATION TRUST, 32 TAXMANN.COM 341 53-60 THE LD COUNSEL OF THE ASSESSEE SUBMITTED THAT THE O BJECTS OF THE ASSESSEE TRUST ARE TO CARRYING OUT ACTIVITIES OF BRINGING AW ARENESS AMONG THE RESIDENTS OF GANDHIDHAM ABOUT TRAFFIC RULES, CREATING TRAFFIC BR IGADES, CONDUCTING EFFORTS TO REDUCE 3 631-RJT-2012 - PURVA KUTCH GANDHIDHAM TRAFFIC EDUCATION TRUST (SMC) ACCIDENTS, RELIEF OF POOR DURING NATURAL CALAMITIES AND SUCH OTHER SOCIAL ACTIVITIES, FOR WHICH ASSESSEE-TRUST HAS CONDUCTED VARIOUS SEMINARS /PROGRAMS. FOR PROVING THE GENUINENESS OF ACTIVITIES, THE ASSESSEE-TRUST HAS F URNISHED THE COPIES OF PHOTOGRAPHS OF TRAFFIC AWARENESS, SEMINARS ETC IN THE PAPER-BOO K PLACED BEFORE THE TRIBUNAL AT PAGE NOS. 16-20. IN THIS REGARD, THE LD. COUNSEL O F THE ASSESSEE RELIED UPON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE O F KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST, [2013] 29 TAXMANN.COM 228, WHEREIN IT IS OBSERVED BY THE HONBLE HIGH COURT THAT THE ABSENCE OF ANY ACTIVITY OF A TR UST AT THE TIME OF REGISTRATION IS NOT A GROUND TO QUESTION GENUINENESS OF OBJECTIVES AND AC TIVITIES; REGISTRATION FOR TRUST CANNOT BE DENIED ON THE SOLE GROUND OF NON-COMMENCE MENT OF ACTIVITY AND SUCH ABSENCE OF ACTIVITY DOES NOT EMPOWER COMMISSIONER T O INFER ABSENCE OF GENUINENESS AND A COPY OF AFORESAID JUDGMENT IS PLA CED ON RECORD. 4. WITH REGARD TO THE CONTENTION RAISED BY THE LD. CIT THAT THE TRUST HAS NOT SPENT ANYTHING IN RESPECT OF THE OBJECTS AND INSTEAD TRUS TS WAS ACCUMULATING THE FUNDS, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IT HAS SPENT RS.41,890/- FOR CONSTITUTING THE TRAFFIC BRIGADE WHICH WAS EVIDENT FROM THE INCO ME AND EXPENDITURE ACCOUNT FORMING PART OF THE AUDIT REPORT SUBMITTED BEFORE T HE LD. CIT. HE ALSO SUBMITTED THAT THE ASSESSEE-TRUST IS A NEWLY REGISTERED TRUST WHIC H WAS CREATED ON 15.04.2011, THEREFORE IT IS JUST THE BEGINNING STAGE WHERE IT H AS JUST STARTED ITS CHARITABLE ACTIVITIES AND IS ACCUMULATING FUNDS FOR FURTHER SOCIAL WELFAR E ACTIVITIES. 5. CONTINUING HIS ARGUMENTS, LD. COUNSEL OF THE ASS ESSEE SUBMITTED THAT REGISTRATION UNDER SECTION 12AA IS ONLY TO IDENTIFY A CHARITABLE TRUST AND WILL NOT QUALIFY TO CLAIM EXEMPTION U/S 11, 12 AND 13. IN THIS CONNE CTION, THE LD. COUNSEL OF THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS:- A) COCHIN TRIBUNAL IN THE CASE OF MAHATMA GANDHI CH ARITABLE SOCIETY V. CIT (2013) 33 TAXMANN.COM 142. B) ALLAHABAD HIGH COURT IN CASE OF HARDAYAL CHARITA BLE & EDUCATION TRUST, 32 TAXMANN.COM 341 FINALLY, THE LD. COUNSEL OF THE ASSESSEE RELIED UPO N THE DECISION OF DELHI HIGH COURT IN THE CASE OF DIT VS. FOUNDATION OF OPHTHALM IC & OPTOMETRY RESERCH 4 631-RJT-2012 - PURVA KUTCH GANDHIDHAM TRAFFIC EDUCATION TRUST (SMC) EDUCATION CENTRE (79 DTR 178), WHEREIN IT HAS BEEN HELD THAT STATUTE DOES NOT PROHIBIT OR ENJOIN THE CIT FROM REGISTERING TRUST S OLELY BASED ON ITS OBJECTS, WITHOUT ANY ACTIVITY, IN THE CASE OF A NEWLY REGISTERED TRU ST WHILE EXAMINING THE APPLICATION U/S 12AA(1)(B) R.WS. 12A , THE CIT IS NOT REQUIRED TO E XAMINE THE QUESTION WHETHER THE TRUST HAS ACTUALLY COMMENCED AND HAS, IN FACT, CARR IED ON CHARITABLE ACTIVITIES. THEREFORE, THE LD. COUNSEL OF THE ASSESSEE SUBMITTE D THAT IMPUGNED ORDER OF LD. COMMISSIONER OF INCOME-TAX BE SET ASIDE AND HE MAY BE DIRECTED TO PASS A FRESH ORDER U/S 12AA OF THE INCOME-TAX ACT, 196. 6. AS AGAINST THE SUBMISSION OF LD. COUNSEL OF THE ASSESSEE, DR. M.L. MEENA, DR APPEARED ON BEHALF OF THE REVENUE VEHEMENTLY SUPPOR TED THE ORDER OF LD. CIT. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE-TRUST HAS NOT SPENT ANYTHING IN RESPECT OF THE OBJECTS AND HAS BEEN ACC UMULATING THE FUNDS. HE POINTED OUT THAT CREATING TRAFFIC AWARENESS AMONG THE RESID ENTS OF GANDHIDHAM CANNOT BE CONSTRUED TO BE CHARITY OR RELIGIOUS ACTIVITY TO WA RRANT REGISTRATION U/S 12A OF THE INCOME-TAX ACT; THEREFORE, VIEW TAKEN BY THE LD. CI T IN REJECTING THE ASSESSEE-TRUSTS APPLICATION FOR REGISTRATION U/S 12A OF THE INCOME- TAX ACT BE UPHELD. 7. AFTER HEARING BOTH SIDES, I HAVE CAREFULLY GONE THROUGH THE IMPUGNED ORDER OF LD COMMISSIONER OF INCOME-TAX, RAJKOT-I AND DOCUMEN TS AVAILABLE ON RECORDS, INCLUDING PAPER-BOOK FILED BY THE ASSESSEE-TRUST. I T IS PERTINENT TO NOTE THAT ASSESSEE IS A NEWLY REGISTERED TRUST WHICH WAS CREATED ON 15 .04.2011 HAVING OBJECTS TO CARRYING OUT ACTIVITIES OF BRINGING AWARENESS AMONG THE RESIDENTS OF GANDHIDHAM ABOUT TRAFFIC RULES, RELIEF TO POOR DURING NATURAL CALAMITY, SOCIAL WORK AND OTHER SUCH CHARITABLE OBJECTS. SUBSTANTIAL EVIDENCES HAVE BEE N PRODUCED BY THE ASSESSEE-TRUST IN THIS REGARD BY WAY OF PHOTOGRAPHS OF TRAFFIC AWA RENESS, SEMINARS ETC..IN THE PAPER- BOOK SUBMITTED BEFORE THE TRIBUNAL. THE ASSESSEE-TR UST HAS ALSO SUCCEEDED IN ESTABLISHING ITS CASE THAT IT HAS SPENT RS.41,890/- FOR CONSTITUTING TRAFFIC BRIGADE WHICH WAS EVIDENT FROM THE INCOME & EXPENDITURE ACCOUNT F ORMING PART OF THE AUDIT REPORT SUBMITTED BEFORE THE LD. CIT. AS THE CASE IT MAY BE , THE LD. COMMISSIONER IS NOT REQUIRED TO LOOK INTO THE ACTIVITIES, WHERE SUCH AC TIVITIES HAVE NOT COMMENCED OR ARE IN THE PROCESS OF ITS INITIATION, AS OBSERVED BY TH E HONBLE ALLAHABAD HIGH COURT IN THE 5 631-RJT-2012 - PURVA KUTCH GANDHIDHAM TRAFFIC EDUCATION TRUST (SMC) CASE OF HARDAYAL CHARITABLE & EDUCATION TRUST (SUPR A), AS RELIED UPON BY THE ASSESSEE-TRUST. THE PROCEDURE FOR REGISTRATION AS C ONTAINED UNDER SECTION 12AA OF THE ACT WITH REGARD TO THE GENUINENESS OF THE ACTIV ITIES OF THE TRUST DOES NOT MEAN CARRYING OUT OF ACTUAL ACTIVITIES OF THE TRUST. THE SCOPE OF ENQUIRY WITH RESPECT TO ACTIVITIES IS LIMITED AS TO WHETHER THE OBJECTS ARE GENUINELY CHARITABLE OR NOT. THIS VIEW FIND SUPPORT FROM THE JUDGMENT RENDERED BY HON 'BLE DELHI HIGH COURT IN THE CASE OF DIT VS. FOUNDATION OF OPHTHALMIC AND OPTOME TRY RESEARCH EDUCATION CENTRE (2012) 79 DTR 178 (DEL.), AS RELIED UPON BY THE ASSESSEE-TRUST. I, THEREFORE, SET ASIDE THE IMPUGNED ORDER DATED 27.09.2012 PASSE D BY THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I U/S 12AA(1)(B)(II) AND DIRECT HIM TO DECIDE THE APPLICATION OF ASSESSEE-TRUST FOR REGISTRATION UNDER SECTION 12AA OF THE ACT AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 31.01.2014 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- PURVA KUTCH GANDHIDHAM TRAFFIC EDUCAT ION TRUST, GANDHIDHAM CHAMBER OF COMMERCE, PLOT NO.71, SECTOR-8, GANDHIDHAM-KUTCH 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX-I, RA JKOT 3. ,0,1 * * 2 / CONCERNED CIT, GANDHIGHAM 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT