Sankalpa Foundation, Visakhapatnam V. THE CIT - 1, Visakhapatnam

ITA 636/VIZ/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1248 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 22-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K SETHI
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

ITA NO.636/VIZAG/2013 SANKALPA FOUNDATION, VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.636/VIZAG/2013 ( / ASSESSMENT YEAR: NA) SANKALPA FOUNDATION VISAKHAPATNAM VS. CIT - 1 VISAKHAPATNAM [PAN: AAKTS8043B ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI C. SUBRAHMANYAM, AR / RESPONDENT BY : SHRI M.K. SETHI, DR / DATE OF HEARING : 19.02.2016 / DATE OF PRONOUNCEMENT : 07.04.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT-1, VISAKHAPATNAM DATED 19.9.2013. 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS A REGIST ERED SOCIETY CAME INTO EXISTENCE VIDE REGISTERED TRUST DEED DATED 26. 8.2011 REGISTERED ITA NO.636/VIZAG/2013 SANKALPA FOUNDATION, VISAKHAPATNAM 2 UNDER THE SOCIETIES REGISTRATION ACT. THE ASSESSEE TRUST HAD FILED AN APPLICATION IN FORM NO.10A ON 25.3.2013 SEEKING GRA NT OF REGISTRATION UNDER 12AA OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) AS A CHARITABLE TRUST WITH THE FOLLOWING OBJECTIVES : 1. TO PROVIDE MEDICAL AID TO THE NEEDY PEOPLE. TO ESTABLISH MEDICAL CENTRES FOR TRAINING AND IMPARTING MEDICAL EDUCATIO N AND GOOD HEALTH. TO RUN SHELTERS FOR HIV+, TB AFFLICTED PATIENTS AND FO R OTHER COMMUNICABLE DISEASES. TO TRAIN VOLUNTEERS AND TO SPREAD AWAREN ESS AND TO EDUCATE PUBLIC IN PREVENTION OF SUCH DISEASES. TO WORK WIT H OTHER GOVERNMENTAL AGENCIES AND NGOS IN PREVENTION AND TO STOP THE SPR EAD OF HIV AND TB AS AND WHEN REQUIRED. 2. TO PROVIDE NECESSARY FINANCIAL AID TO POOR MERIT STUDENTS FOR HIGHER EDUCATION AND ALSO ESTABLISH MERITORIOUS AWARDS TO ENCOURAGE COMPETITIVE SPIRIT AMONG THE STUDENTS. 3. TO PROVIDE NECESSARY AID TO THE WIDOWS, AGED AND ORPHANS BY ESTABLISHING HOMES FOR THE AGED, ORPHANS AND WIDOWS AND ALSO GRANTING PENSIONS TO THE NEEDY AGED PEOPLE. 4. TO SET UP A BODY OF LEGAL, FINANCIAL AND ADMINIS TRATIVE DISCIPLINES TO RENDER ADVISORY SERVICES TO THE GENERAL PUBLIC I RRESPECTIVE OF CASTE, CREED, COMMUNITY AND RELIGION AND TO EFFECTIVELY HE LP IN PURSUING AND PROMOTING THE OBJECTIVES OF THE TRUST. 5. TO RENDER ASSISTANCE AND GUIDANCE TO SUCH SIMILA R TRUSTS AND ACCORD RECOGNITION TO THE SAME. 6. TO ACQUIRE PROPERTY FOR THE SOLE USE FOR PUBLIC GOOD BY MAKING IT AVAILABLE FOR PUBLIC PURPOSES AS FOR EXAMPLE, HOUSI NG A SCHOOL, COLLEGE, LIBRARY, HOSPITAL, CLINIC, CRCHE AND OR AS A COMMU NITY HALL TO BE AVAILABLE FOR PUBLIC USE AS TRAINING CLASSES, SEMINARS, DISCO URSES AND OTHER PUBLIC FUNCTIONS FOR THE BENEFIT OF THE COMMUNITY IN GENER AL. 7. TO UNDERTAKE ANY OTHER ACTIVITY INCIDENTAL TO TH E ABOVE ACTIVITIES. 8. TO SELL, LET OR HIRE, IMPROVE, MANAGE, DEVELOP, CONSTRUCT, BUILD UPON, MAKE ALTERATIONS TO OR IMPROVEMENTS TO PROPER TIES ACQUIRED AND TO EXCHANGE, LEASE, MORTGAGE, DISPOSE OFF OR OTHERWISE DEAL WITH ALL OR ANY PART OF THE PROPERTY AND RIGHTS OF THE TRUST, WITH THE APPROVAL OF THE TRUSTEES. ITA NO.636/VIZAG/2013 SANKALPA FOUNDATION, VISAKHAPATNAM 3 3. THE CIT AFTER CALLING THE ENQUIRY REPORT FROM TH E ASSESSING OFFICER, HE HAS NOTED THAT THE ASSESSEE TRUST HAS CONSTRUCTE D AN OLD AGE HOME BY NAME ASHRAM ON ONE ACRE LAND SITUATED IN KAPUS OMPURAM, S.KOTA, VIZIANAGARAM DISTRICT, IN SUPPORT OF WHICH IT FURNI SHED A NEWS PAPER PUBLICATION EXTRACTS, A PERUSAL OF WHICH IT REVEALS THAT A SUM OF ` . 1 CRORE WAS INVESTED IN THE CONSTRUCTION OF THE ASHRA M, BUT AS PER THE AUDITED ACCOUNTS OF THE ASSESSEE, IT HAS RECEIVED O NLY A SUM OF ` . 8,65,000/- TOWARDS BUILDING CONSTRUCTION FOR SETTIN G UP ASHRAM. THUS, THE SOURCES OF A DIFFERENTIAL SUM OF ` 91,35,000/- ALREADY INVESTED IN THE CONSTRUCTION OF THE BUILDING AS PER THE NEWS PAPER REPORTS REMAINS UNEXPLAINED AND ON THAT GROUND ALONE, THE COMMISSIO NER HAS REJECTED THE REGISTRATION U/S 12AA OF THE ACT SOUGHT BY THE ASSESSEE. 4. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE TRUST EXIST SOLELY FOR THE PURPOSE OF CHAR ITY AND CONSTRUCTED AN OLD AGE HOME AND THE CONSTRUCTION WAS STARTED IN 20 11 AND COMPLETED ON 31 ST MARCH, 2015 AND SPENT AN AMOUNT OF ` 35,75,000/- AND ALSO SUBMITTED THAT PRESENTLY THERE ARE 15 INMATES LIVIN G IN THE PREMISES OF THE TRUST AND IT IS TAKING CARE OF THEIR FOOD, LODG ING BESIDES TAKING MEDICAL CARE OF PEOPLE. ITA NO.636/VIZAG/2013 SANKALPA FOUNDATION, VISAKHAPATNAM 4 5. HE FURTHER SUBMITTED THAT THE COMMISSIONER REJEC TED THE REGISTRATION U/S 12AA OF THE ACT TO THE ASSESSEE TR UST ON THE GROUND THAT ON THE BASIS OF THE NEWS PAPER REPORT, WHICH CANNOT BE A VALID GROUND. THE COMMISSIONER WHILE GRANTING OR REFUSING REGISTR ATION U/S 12AA OF THE ACT SHOULD CONSIDER WHETHER THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE OR NOT AND PRAYED THAT THE ASSESSEE TRUST MAY BE GRANTED REGISTRATION U/S 12AA OF THE ACT. 6. ON THE OTHER HAND, THE D.R. HAS RELIED ON THE OR DERS OF THE COMMISSIONER OF INCOME TAX. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD. WE HAVE GONE THROUGH THE OBJECTIVES OF TH E ASSESSEE TRUST AND WE FIND THAT ALMOST ALL THE OBJECTIVES ARE CHAR ITABLE IN NATURE. THE ASSESSEE TRUST MAINLY EXISTS TO PROVIDE MEDICAL AID TO THE POOR PEOPLE. IT IS A FACT THAT THE ASSESSEE TRUST HAS ALREADY CO NSTRUCTED ASHRAM BY SPENDING NEAR ABOUT ` 35 LAKHS. WHEN THE ASSESSEE MADE AN APPLICATION FOR REGISTRATION ON 25.3.2013, THE EXPE NDITURE INCURRED FOR THE CONSTRUCTED ASHRAM WAS ONLY ` 8,05,000/-. THE CIT CALLED THE REPORT FROM THE A.O. THE A.O. HAS SUBMITTED ITS RE PORT BASED ON THE NEWS PAPER THAT THE COST OF CONSTRUCTION IS ` 1 CRORE. THE COMMISSIONER HAS REJECTED THE REGISTRATION U/S 12AA OF THE ACT T O THE ASSESSEE BASED ITA NO.636/VIZAG/2013 SANKALPA FOUNDATION, VISAKHAPATNAM 5 ON THE A.O.S REPORT, WHICH IS IN TURN BASED ON THE NEWS PAPER REPORT. THE REPORT NOT SPECIFIES THE DATE AND NAME OF THE N EWS PAPER. IN OUR OPINION, NEWS PAPER REPORT CANNOT BE BASIS FOR REJE CTING REGISTRATION U/S 12AA OF THE ACT. WE FIND THAT THE ORDER PASSED BY THE COMMISSIONER IS ARBITRARY, UNJUSTIFIED AND UNFAIR. IT DESERVES TO BE CANCELLED, PARTICULARLY WHEN ASSESSEE TRUST IS EXISTED FOR A CHARITABLE PUR POSE AND ALMOST ALL THE OBJECTIVES ARE CHARITABLE IN NATURE, WHICH IS N OT DISPUTED BY THE COMMISSIONER. THE HONBLE KARNATAKA HIGH COURT HAS CONSIDERED THE ISSUE IN SIMILAR CIRCUMSTANCES IN THE CASE OF SANJ EEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS. DIT 285 ITR 327 AND HAS HELD THAT FOR THE PURPOSE OF REGISTRATION U/S 12AA OF THE ACT, WHAT T HE AUTHORITIES HAVE TO SATISFY IS THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION, HOW THE INCOME DERIVED FROM THE TRUST PROPERTY IS APPLI ED TO CHARITABLE OR RELIGIOUS PURPOSE AND NOT THE NATURE OF THE ACTIVIT Y BY WHICH THE INCOME IS DERIVED BY THE TRUST. 8. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES O F THE CASE AND ALSO BY FOLLOWING THE DECISION OF THE KARNATAKA HIG H COURT, WE CANCEL THE ORDER PASSED BY THE COMMISSIONER AND GRANT REGI STRATION U/S 12AA OF THE ACT TO THE ASSESSEE TRUST. ORDERED ACCORDIN GLY. ITA NO.636/VIZAG/2013 SANKALPA FOUNDATION, VISAKHAPATNAM 6 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 7 TH APR16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 7.4.16 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SANKALPA FOUNDATION, F.NO.301, P ULIGEDDA TOWERS, KGH UPROAD, MAHARANIPETA, VISAKHAPATNAM-530 002. 2. / THE RESPONDENT THE CIT-1, VISAKHAPATNAM 3. ) ( ) / THE CIT(A), VISAKHAPATNAM 4. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM