M/s. Manki Charitable Trust, New Delhi V. DIT(E), New Delhi

ITA 6457/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5033 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: misc
• Appeal Filed On: 27-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SEFALI SAWROOP
• Assessee Lawyers: K P GARG
• Keywords: Sale consideration of property below Jantri Value; Business income; Charitable institution; Opportunity of being heard; Additional evidence; Cancellation of registration
• Section: 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E , NEW DELHI BEFORE SH. BHAVNESH SAINI , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 6457 /DE L/ 2014 ASSESSMENT YEAR : NA MANKI CHARITABLE TRUST, 8 - GUJRAT VIHAR, VIKAS MARG, NEW DELHI VS. DIT(E), NEW DELHI PAN : AADTM5550C (APPELLANT) (RESPONDENT) APPELLANT BY SH. K.P. GARG, C A RESPONDENT BY MS. SEFALI SAWROOP, CIT(DR) DATE OF HEARING 21.08.2017 DATE OF PRONOUNCEMENT 25.08.2017 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 25/09/2014 OF THE DIRECTOR OF INCOME T AX (E XEMPTION), NEW DELHI [IN SHORT THE DIT(E) ] REJECTING THE APPLICATION FOR REGISTRATION OF THE ASSESSEE TRUST. THE GROUNDS OF APPEAL ARE REPRODUCED AS UNDER: 1. THE LEARNED CIT HAS ERRED ON FACTS AND IN LAW IN REFUSING REGISTRATION U/S. 12AA. 2. THE LEARNED CIT HAS ERRED ON FACTS AND IN LAW, IN FAILING TO UNDERSTAND THE OBJECTS OF THE SOCIETY AND IN APPRECIATING THAT THE APPLICATION WAS FILED ON 26.03.2014 IMMEDIATELY AFTER REGISTRATION. ONLY OBJECTS HAD TO BE CONSIDERED FOR THE PURPOSE OF GRANTING REGISTRATION AND NOT THE CARRYING OUT OF PHYSICAL ACTIVITIES, AS SUCH. 2 ITA NO.6457/DEL/2014 3. THE APPELLANT CRAVES LEAVE TO AND PERMISSION OF THE HON'BLE ITAT TO ADD TO OR ALTER ANY OF THE GROUNDS OF APPEAL AT ANY TIME UP TO THE FINAL DECISION OF THE APPEAL. 4. THE APPELLANT CRAVES LEAVE AND SANCTION OF THE HON'BLE ITAT TO FILE ADDITIONAL EVIDENCE IF SO REQUIRED FOR PROPER PR OSECUTION OF THE EASE, BASED ON FACTS AND CIRCUMSTANCES, WHICH HAS NOT BEEN OR COULD NOT BE ADDUCED OR FILED BEFORE LOWER AUTHORITIES EITHER BECAUSE PROPER AND SUFFICIENT OPPORTUNITY WAS NOT PROVIDED OR BECAUSE IT WAS NOT SOLICITED OR ITS NEED WAS NOT APPR ECIATED. 2. THE FACTS IN BRIEF OF THE CASE ARE THAT THE ASSESSEE FILED APPLICATION ON 26/03/2014 IN FORM NO. 10A SEEKING REGISTRATION UNDER SECTION 12 AA OF THE INCOME T AX ACT, 1961 (IN SHORT THE ACT ). BEFORE THE LD. DIT(E), THE ASSESSEE FILED TWO SETS OF INCOME AND E XPENDITURE ACCOUNTS FOR THE PERIOD ENDING ON 31/03/2004 , ONE IN RESPECT OF PARKING SERVICES AND ANOTHER IN RESPECT OF THE TRUST ITSELF . IN THE INCOME AND E XPENDIT URE ACCOUNT OF PARKING SERVICES , THE ASSESSEE DECLARED THE PARKING SERVIC ES AS ONE OF THE UNIT OF THE TRUST AND SHOWN GROSS RECEIPTS OF RS. 81.16 LACS FROM PARKING SERVICE S AND DECLARED A SURPLUS OF RS.5,80, 642/ - IN THE UNIT. IN THE MAIN INCOME AND E XPENDITURE ACCOUNT OF THE TRUST , OUT OF THE SURPLUS OF RS.5,80, 642/ - , AN AMOUNT OF RS.3, 51,000/ - WAS SHOWN AS DONAT ED TO ANOTHER ENTITY GNAN SEVA CHARITABLE T RUST . BEFORE THE LD. DIT(E), THE ASSESSEE EXPLAINED THAT FOR GENERATION OF RESOURCES, IT HAD UNDERTAKEN THE ACTIVITY OF MANAGING THE PARKING FACILITIES OF THE VISITORS AT AK SHARDHAM C OMPLEX WHICH IS OWNED AND MANAGED BY BAPS. THE ASSESSEE FURTHER ACCEPTED THAT THE ACTIVITY OF RUNNING PARKING LOT IS A COMMERCIAL ACTIVITY INCIDENTAL TO THE ATTAINMENT OF MAIN OBJECT OF THE TRUST (EDUCATION AND RELIEF TO THE POOR), CARRIED OUT F OR GENERATION OF THE INCOME WITHIN THE MEANING OF SECTION 11(4) OF THE ACT AND FOR WHICH SEPARATE BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED. AFT ER GOING THROUGH THE DOCUMENTS/ CERTAIN EXPLANATIONS FILED BY THE ASSESSEE AND ALLOWING 3 ITA NO.6457/DEL/2014 OPPORTUNITY OF BEING HEARD, THE LD. DIT(E) REJECTED THE APPLICATION OF THE ASSESSEE TRUST WITH FOLLOWING OBSERVATIONS: 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE APPLICANT AND ALSO THE FACTS OF THE CASE. THE APPLICANT HAS ACCEPTED THAT IT IS CARRYING OUT ACTIVITY WHICH IS COMMERCIAL/BUSINESS IN NATURE - MANAGING PARKING AREA FOR AKSHARDHAM COMPLEX. BUT, IT IS JUSTIFYING ITS CLAIM OF REGISTRATION ON THE GROUND THAT THE BUSINESS IS INCIDENTAL TO ITS OBJECTS AND HAVING COMPLIED WITH THE CONDITION OF SECTION 11(4A), IT IS ELIGIBLE FOR EXEMPTION AND REGISTRATION. ACCORDING TO SUB - SECTION (4A) OF SECTION 11, SUB SECTION (1), (2)(, 3) AND 3A WILL NOT BE APPLICABLE IN RELATION TO ANY INCOME OF A TRUST OR AN INSTITUTION BEING PROFITS AND GAINS OF BUSINESS UNLESS THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST OR INSTITUTION AS THE CASE MA Y BE AND SEPARATE BOOKS OF ACCOUNTS ARE MAINTAINED BY SOME TRUST / INSTITUTION IN RESPECT OF THAT BUSINESS. SUB SECTION 4A PROHIBITS THE INSTITUTION TO CARRY OUT ANY BUSINESS WHICH IS NOT INCIDENTAL TO ATTAINMENT OF ITS OBJECTIVE. NOWHERE, IT HAS BEEN SHOW N AS A MATTER OF FACT THAT WHICH OF THE OBJECTS OF THE CHARITABLE PURPOSE AS MENTIONED IN MOA WERE PURSUED BY MANAGING THE PARKING AREA. A PERUSAL OF THE OBJECTIVE OF THE MOA, SOME OF WHICH HAVE BEEN REPRODUCED IN PRECEDING PARAS, WILL REVEAL THAT THESE CO VER EVERYTHING FROM RELIEF TO POOR, TO EDUCATE, TO MEDICAL RELIEF, ENVIRONMENT PROTECTION. THE ACTIVITY OF MANAGING PARKING AREA CANNOT BE EVEN REMOTELY CONNECTED TO ANY OF THESE OBJECTIVES. 5.1 FURTHER, A S OBSERVED BY THE HON'BLE ITAT, CHENNAI IN THE CAS E OF YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF MADRAS ( 41 TAXMAN, COM .142 ( CHENNAI.) ' INCIDENTAL MEANS OFFSHOOT OF MAIN ACTIVITIES INHERENT BY - PRODUCT OF PRINCIPAL ACTIVITIES. ACTIVITIES TO COMPLIMENT AND SUPPORT THE MAIN OBJECTIVES ARE NOT IN THE NATUR E OF INCIDENTAL TO THE BUSINESS. THEY ARE SUPPORTING ACTIVITIES AT THE MAXIMUM. THE GENESIS OF INCIDENTAL ACTIVITIES MUST BE FROM THE PRINCIPAL ACTIVITIES THEMSELVES. THERE CANNOT BE ONE SOURCE FOR THE PRINCIPAL ACTIVITIES AND ANOTHER SOURCE FOR INCIDENTAL ACTIVITIES.' IN THE PRESENT CASE, EVEN IF ACTIVITIES OF THE ASSESSEE WERE STATED TO BE RELIEF TO THE POOR, MEDICAL RELIEF AND EDUCATION, IT WAS NOT POSSIBLE TO CONCLUDE THAT RUNNING OF BUSINESS IN THE FORM OF MANAGING THE PARKING AREA IS BUSINESS INCID ENTAL TO THE CARRYING ON OF THE MAIN OBJECTIVE OF THE ASSESSEE TRUST. THUS, THE ASSESSEE IS NOT PROTECTED BY THE PROVISIONS OF SECTION 11(4A) . 5.2 THE APPLICANT DURING THE COURSE OF HEARING RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF TH ANTHI TRUST 247 ITR 785 TO STATE THAT ALL THAT SECTION 11(4A) REQUIRED FOR THE BUSINESS INCOME OF TRUST OR AN INSTITUTION TO BE EXEMPT IS THAT THE BUSINESS SHOULD BE INCIDENTAL TO THE ATTAINMENT OF OBJECTIVES OF THE TRUST OR INSTITUTION. A BUSINESS WHOSE I NCOME IS UTILISED BY THE TRUST OR THE INSTITUTION FOR THE PURPOSE OF ACHIEVING THE OBJECTIVES OF TRUST/INSTITUTION IS SURELY A BUSINESS INCIDENTAL TO ITS OBJECTIVES. IN THIS CONTEXT, A REFERENCE IS MADE TO THE OBSERVATION OF HON'BLE DELHI HIGH COURT IN THE CASE OF MEHTA CHARITABLE 4 ITA NO.6457/DEL/2014 PRAJNALAY TRUST, IN WHICH THE ASSESSEE HAD TAKEN A SIMILAR ARGUMENT. THE HON'BLE HIGH COURT OBSERVED AS UNDER: - AS IT STANDS ALL THAT IT REQUIRES FOR THE BUSINESS INCOME OF A TRUST OF INSTITUTION TO BE EXEMPT IS THAT THE BUSINESS SOUFD BE INCIDENTAL TO THE ATTAINMENT OF OBJECTIVES OF THE TRUST OR INSTITUTION. A BUSINESS WHOSE INCOME IS UTILISED BY THE TRUST OR THE I NSTITUTION FOR THE PURPOSES OF ACHIEVING THE OBJECTIVES OF THE TRUST. IN ANY EVENT, IF THERE BY ANY AMBIGUITY IN THE LANGUAGE EMPLOYED, THE PROVISION MUST BE CONSTRUED IN A MANNER THAT BENEFITS THE ASSESSEE. PRIME FACIE THE ABOVE OBSERVATIONS WOULD APPEAR TO SUPPORT THE ASSESSESS CASE IN THE SENSE THAT EVEN IF THE KATHA BUSINESS IS HELD NOT TO CONSTITUTE A BUSINESS HELD UNDER TRUST, BUT ONLY AS A BUSINESS EARNED ON BY OR ON BEHALF OF THE TRUST, SO LONG AS THE PROFITS GENERATED BY IT ARE APPLIED FOR THE CHA RITABLE OBJECTS OF THE TRUST, THE CONDITION IMPOSED UNDER SECTION 11(4A) OF THE ACT SHOULD BE HELD TO BE SATISFIED \ ENTITLING THE TRUST TO THE TAX EXEMPTION. IN OUR OPINION, THESE OBSERVATIONS HAVE TO BE UNDERSTOOD IN THE LIGHT OF THE FACTS BEFORE THE SUP REME COURT. THANTHI TRUST CARRIED ON THE BUSINESS OF A NEWSPAPER AND THAT BUSINESS ITSELF WAS HELD UNDER TRUST. THE CHARITABLE OBJECT OF THE TRUST WAS THE IMPARTING OF EDUCATION WHICH FALLS UNDER SECTION 2(15) OF THE ACT. THE NEWSPAPER BUSINESS WAS CERTAIN LY INCIDENTAL TO THE ATTAINMENT OF THE OBJECT OF THE TRUST, NAMELY THAT OF IMPARTING EDUCATION. THE OBSERVATIONS WERE THUS MADE HAVING REGARD TO THE FACT THAT THE PROFITS OF THE NEWSPAPER BUSINESS WERE UTILISED BY THE TRUST FOR ACHIEVING THE OBJECT, NAMELY EDUCATION. THE TYPE OF NEXUS OR CONNECTION WHICH EXISTED BETWEEN THE IMPARTING OF EDUCATION AND THE CARRYING ON OF THE BUSINESS OF A NEWSPAPER DOES NOT EXIST IN THE PRESENT CASE. THERE IS NO SUCH NEXUS BETWEEN THE KATHA BUSINESS AND THE OBJECTS OF THE ASS ESSEE - TRUST THAT CAN CONSTITUTE THE CARRYING ON OF THE KATHA BUSINESS AN ACTIVITY INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS, NAMELY ADVANCING OF EDUCATION, PATRIOTISM INDIAN CULTURE RUNNING OF HOSPITALS AND DISPENSARIES, ETC. 5.3 IN VIEW OF THE ABOV E FINDING OF THE HON BLE DELHI HIGH COURT, THIS CONTENTION OF THE ASSESSEE IS REJECTED AND IT IS HELD THAT THE ASSESSEE'S BUSINESS CANNOT BE HELD TO BE INCIDENTAL TO ITS OBJECTIVES. THE ASSESSEE IS CARRYING OUT COMMERCIAL ACTIVITIES AS HAS BEEN ACCEPTED BY THE ASSESSEE ITSELF. THEREFORE, THE ASSESSEE'S REQUEST FOR GRANT OF REGISTRATION IS REJECTED ON THIS ACCOUNT. 6 . FURTHER, IT IS NOTED THAT OUT OF TOTAL RECEIPTS OF RS,81,16,256/ - , IT HAS SPENT RS. 75,35,614/ - ON ADMINISTRATIVE EXPENSES. THUS, ASSESSEE H AS NOT DONE ANY CHARITABLE WORK AS CONTEMPLATED IN ITS OBJECTIVES EXCEPT GIVING DONATION TO ANOTHER CHARITABLE TRUST. WHAT PREVENTED THE ASSES SEE IN CARRYING OUT ANY CHARITABLE WORK DIRECTLY. IT HAS PUT ALL ITS EFFORTS IN MANAGING THE PARKING AREA. GIVING DONATION AND WILL NOT FALL IN ANY OF THE LIMBS ' RELIEF TO POOR' 1 EDUCATION' OR MEDICAL RELIEF. IT IS NOT ONLY THE OBJECTIVES, BUT ALSO ACTUAL APPLICATION OF INCOME, WHICH NEEDS TO BE KEPT IN VIEW. EVEN IF, ASSESSEE CLAIMED THAT IT 5 ITA NO.6457/DEL/2014 MANAGED PARKING AREA A ND IT CARRIED ACTIVITY FOR ATTAINMENT OF ITS OBJECTIVES, EVEN THEN IT WAS NECESSARY TO SHOW THAT IN ADVANCEMENT OF ITS OBJECTIVE, IT HAD INCURRED CERTAIN EXPENDITURE ON OBJECTS AS STATED IN MOA. THE ONLY ACTIVITY IT CARRIED OUT WAS FOR GENERATING OF INCOME AND GIVING DONATION TO ANOTHER TRUST, WHICH CANNOT BE HELD TO BE CARRYING OUT ITS OBJECTIVES. THE ASSESSEE FAILS ON THIS ACCOUNT TOO. 6.1 SINCE THE ASSESSEE HAS NOT APPLIED ANY PANT OF ITS INCOME ON OBJECTIVES STATED IN MOA, WHICH WERE CLAIMED TO BE OF A CHARITABLE NATURE, ASSESSEE DOES NOT FULFILL THE CRITERIA LAID DOWN IN SECTION 12AA AND 12 READ WITH SECTION 11 AND IT IS PRE MATURE TO GRANT REGISTRATION AT THIS STAGE. 7 . FURTHER, REFERENCE IS MADE TO THE DECISION OF HON ITAT, CHENNAI BENCH, IN THE CAS E OF YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF MADRES, IN WHICH IT WAS OBSERVED AS UNDER 'ACTIVITIES CARRIED ON BY THE ASSESSEE SUCH AS RUNNING OF ORPHANAGES, OLD AGE HOMES, REHABILITEES CENTRES, DAY CARE CENTRES FOR ELDERLY, VOCATIONAL TRAINING TO GIRLS FRO M SLUMS, ETC. CANNOT BE CONSIDERED AS ACTIVITIES OF MEDICAL RELIEF OR EDUCATION OR RELIEF OR THE POOR. IT IS TRUE THAT THAT ACTIVITIES CARRIED ON BY THE ASSESSEE TAKE CARE OF THE POOR PEOPLE ALSO. BUT THOSE ACTIVITIES CANNOT BE CLASSIFIED UNDER ANY OF THE SPECIFIC ACTIVITIES OF RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF. THE CORRECT WAY TO EXPRESS THE NATURE OF THE ACTIVITIES CARRIED ON BY THE ASSESSEE IS TO SAY THAT THE ASSESSEE IS CARRYING ON 'ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILI TY'. WHEN THAT IS THE CASE, THE ASSESSEE IS HIT BY THE PROVISO GIVEN UNDER SECTION 2(15). THE PROVISO READS THAT ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR CONSIDERATION, IRRESPECTIVE OF THE APPLICATION OF THE MONEY. ' 8 . THE ASSESSEE CAN AT THE MOST BE HELD TO BE CARRYING OUT AN OBJECT OF GENERAL PUBLIC UTILITY FOR WHICH IT IS CHARGING FEE. ITS GROSS RECEIPTS DURING THE YEAR IS RS. 81,16,256/ - AND IS THUS CLEARLY COVERED UNDER PROVISO I AND II TO SECTION 2(15) AND IS THUS NOT CHARITABLE AND NOT ELIGIBLE FOR REGISTRATION U/S 12AA. THE ASSESSEE HAS CONTENDED THAT APPLICABILITY OF PROVISO TO SECTION 2(15) CANNOT BE CONSIDERED AT THE TIME OF GRANT OF REGISTRATION. HOWEVER, THE SAME IS NOT CORRECT AND IS NOT ACCEPTABLE. REGISTR ATION U/S 12AA IS PRE REQUISITE FOR CLAIM OF EXEMPTION U/S 11 AND 12 OF THE INCOME TAX ACT, 1961. IF A TRUST / INSTITUTION IS NOT COV ERED WITHIN THE DEFINITION OF ' CHARITABLE PURPOSE' AB INITIO, THEN ITS CASE CANNOT BE CONSIDERED FOR REGISTRATION. 6 ITA NO.6457/DEL/2014 8.1 FU RTHER, AS SECTION 11 OF THE IT ACT PROVIDES FOR EXEMPTIONS TO THE TRUST REGISTERED UNDER THE ACT, THE PURPOSE OF SECTION 11 WILL DOMINATE OR PREVAIL OTHER CONSIDERATION. IT IS ONLY WHEN CHARITABLE OR RELIGIOUS PURPOSE IS SHOWN BY THE TRUST OR INSTITUTION, THE REGISTRATION CAN BE GRANTED. THE COMMISSIONER IS BOUND TO EXAMINE AT THE PRIMARY STAGE BEFORE GOING TO THE PROCEDURE OF REGISTRATION WHETHER THE TRUST OR INSTITUTION WHICH HAS APPLIED FOR REGISTRATION ARE CREATED/ESTABLISHED FOR CHARITABLE PURPOSE OR N OT. IN CASE HE FEELS THAT THE TRUST/INSTITUTION IS NOT CREATED FOR CHARITABLE PURPOSE HE CAN REFUSE THE REGISTRATION AT THE THRESHOLD. ONCE THE BASIC INGREDIENT OR FOUNDATION OF CHARITY IS REMOVED DUE TO INSERTION OF PROVISO TO SECTION 2(15), THE ASSESSEE NO LONGER REMAINS CHARITABLE AND THERE IS AN INHERENT POWER WITH THE GRANTING AUTHORITY TO CANCEL THE REGISTRATION U/S 12A/12AA. 8.2 RELIANCE, IS PLACED ON THE DECISION OF THE ITAT IN THE CASE OF M.P. ROAD DEVELOPMENT CORPORATION LTD. V. CIT (IN ITA NO. 1 32/IND./2010) WHERE DENIAL OF REGISTRATION STOOD UPHELD BY IT ON THE PREMISE OF NON - SATISFACTION OF SEC. 2(15). WITH REGARD TO THE ASSESSEE'S CONTENTION OF THE INSTITUTION QUALIFYING FOR EXEMPTION U/S. 11 FOR A PREVIOUS YEAR/S IN VIEW OF THE SECOND PROVISO TO SECTION 2(15), AND YET BEING DENIED EXEMPTION U/S. 11 IN THE ABSENCE OF REGISTRATION COULD YET BE RETRIEVED. AS EXPLAINED BY THE TRIBUNAL IN THE CASE OF MUMBAI CRICKET ASSOCIATION VS. DIT(E) (ITA NO. 1700/MUM/2011 DATED 8.8.2012) THE COMMISSIONER IS NO T RENDERED FUNCTUS OFFICIO AFTER THE GRANT OF REGISTRATION, AND THAT THE SAME COULD BE REVIEWED IN FUTURE. AS SUCH, IF THE CIRCUMSTANCES WARRANTING DENIAL OF REGISTRATION NO LONGER OBTAIN, IT WOULD BE OPEN FOR THE ASSESSEE TO SEEK A REVIEW OF THE MATTER. 8.3 IT IS HOWEVER, FURTHER STATED THAT REGISTRATION U/S. 12AA IS NOT BEING GRANTED IN SUCH CASES WHERE PROVISO TO SECTION 2(15) GETS ATTRACTED AT THE TIME OF APPLICATION/GRANT OF REGISTRATION U/S, 12AA I.E. WHEN THE ACTIVITIES OF THE TRUST/INSTITUTIONS ARE HELD TO BE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND ITS GROSS RECEIPTS ARE MORE THAN THE THRESHOLD LIMIT LAID DOWN IN THE ACT. DENIAL OF REGISTRATION DUE TO APPLICABILITY OF PROVISO TO SECTION 2(15) HAS BEEN UPHELD BY VARIOUS JUDICIAL AUTHORITIES. ITAT (IND) BENCH IN THE CASE OF MP ROAD DEVELOPMENT VS. CIT ITA NO. 132/INDORE/2010 HAS UPHELD THE REFUSAL OF REGISTRATION ON THE PREMISE OF NON SATISFACTION OF SECTION 2(15). THE ITAT, PANAJI BENCH ITA NO. 214 PNJ 2011 HAS UPHELD THE ACTION OF THE CIT(E) REJEC TING THE APPLICATION FOR REGISTRATION U/S 12AA DUE TO APPLICABILITY OF PROVISION OF SECTION 2(15). IT HAS BEEN OBSERVED BY THE HON'BIE ITAT AS UNDER: - 'WE HOLD THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT, BELGAUM REFUSING THE REGISTRATION T O THE ASSESSEE INSTITUTION AS IN VIEW OF THE AMENDED SECTION 2(15), THE ASSESSEE CANNOT BE REGARDED TO HAVE BEEN ESTABLISHED FOR CHARITABLE PURPOSE. HENCE, IT IS NOT ELIGIBLE TO FILE AN APPLICATION FOR REGISTRATION U/S 12AA AND THE REGISTRATION APPLICABLE HAS TO BE REJECTED AT THIS STAGE ITSELF. WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT, BELGAUM REJECTING THE APPLICATION FILED FOR REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT. 7 ITA NO.6457/DEL/2014 8 . 4 IT MAY ALSO BE NOTED THAT AFTER INSERTION OF SECTION 2(15) EFFECT IVE FROM A.Y. 2009 - 10, THE FOLLOWING JUDICIAL PRONOUNCEMENTS HAVE UPHELD THE VIEW OF THE DEPARTMENT IN REJECTING THE APPLICATION FOR REGISTRATION U/S 12AA. - PUNJAB URBAN PLANNING AND DEVELOPMENT AUTHORITY 103 TTJ 988 (ITAT, CHANDIGARH B - BENCH) - INDORE DEVEL OPMENT AUTHORITY - ITAT INDORE BENCH IN ITA NO. 366/INDI2008 (2010). - THE BELGAUM URBAN DEVELOPMENT AUTHORITY - ITAT PANAJI BENCH PANAJI IN ITO 214/PUJ/2011 DATED 15/06/2012. - JAMMU DEVELOPMENT AUTHORITY - ITAT AMRITSAR BENCH AMRITSAR IN ITAT NO. 30/ASR/2011 1 4/6/2012. - IT NEEDS TO BE NOTED THAT ITAT MUMBAI WHILE SETTING ASIDE THE ORDER OF CANCELLATION OF REGISTRATION DUE TO APPLICABILITY OF SECTION 2(15) REFERRED TO THE ORDER OF THE ITAT MP ROAD DEVELOPMENT CORPORATION (SUPRA) AND IMPLICITLY APPROVED THE SAME B Y OBSERVING AS UNDER: - 'THE DECISION OF THE TRIBUNAL IN THE CASE OF MP ROAD DEVELOPMENT CORPN. LTD (SUPRA) IS DISTINGUISHABLE AS THE SAME DOES NOT INVOLVE INVOCATION OF S. 12AA(3) OF THE ACT BUT OF S. 12AA(L).' 8.5 FURTHER, THE HON. ITAT CHANDIGARH. BENCH IN THE CASE OF HOUSING BOARD HARYANA VS. CIT ITA NO, 1200/CHD/2004 DATED 30/5/2014 HAS UPHELD DENIAL OF REGISTRATION U/S 12AA IN VIEW OF APPLICABILITY OF PROVISO TO SECTION 2(15). THE HON'BLE BENCH HAS RELIED ON THE DECISION OF CHANDIGARH BENCH IN THE CASE OF PUNJAB URBAN PLANNING AND DEVELOPMENT VS, CIT, 103TTJ C HD 988, DECISION OF HON'BLE ITAT AMRITSAR IN THE CASE JAMMU DEVELOPMENT AUTHORITY (52 SOT 153 ) DULY AFFIRMED BY HON'BLE HIGH COURT JAMMU AND KASHMIR V IDE ORDER DATED 2/11/2013 NO. 164/2012. 9 FURTHER, A REFERENCE IS MADE TO THE OBSERVATION OF HON. ITAT, CHANDIGARH BENCH, IN THE CASE OF PUNJAB URBAN DEVELOPMENT AUTHORITY WHEREIN IT IS STATED THAT IT IS WELL KNOWN FACT THAT IN SOME OF THE SITUATIONS, THE PROVISIONS OF LAW ARE MIS - UTILISED IN THE NAME OF ' CHARITY IF EXPANDED / BROADER LATITUDE IS EXTENDED TO THE WORD 'CHARITY' THEN THERE ARE SO MANY INSTANCES, WHERE ONE WILL TRY TO COME UNDER THE UMBRELLA OF THESE PROVISIONS TO MISUSE IT. THEREFORE, FOR THE BROAD DEVELOPMENT OF THE NATION / SOCIETY, A STRICT AND THE POSITIVE VIGIL IS REQUIRED SO THAT THESE PROVISIONS CAN BE SAVED FROM ITS MISUSE IN ANY MANNER. 2.1 AGGRIEVED WITH THE REJECTION OF THE REGISTRATION OF THE TRUST, THE ASSESSEE IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 3. THE LEARNED COUNSEL SUBMITTED THAT THE ACTIVITY OF MANAGING PARKING AREA WAS INCIDENTAL TO THE MAIN OBJECT OF THE ASSESSEE TRUST OF 8 ITA NO.6457/DEL/2014 PROVIDING EDUCATION, MEDICAL RELIEF ETC . AND THEREFORE , THE LD. DIT(E) WAS NOT CORRECT IN REJECTING THE REGISTRATION UNDER SECTION 12AA OF THE ACT. IN SUPPOR T OF THE CONTENTION, THE LEARNED COUNSEL RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF INCOME TAX O FFICER (E) VS. SUVASINI CHARITABLE T RUST HAVING ITA NO. 4330/DEL/2012 FOR ASSESSMENT YEAR 2009 - 10. 4. THE LEARNED CIT (DR) , ON THE OTHER HAND, RELIED ON THE ORDER OF THE LD. DIT(E). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT BEFORE THE LEARNED DIT(E) THE ASSESSEE HAS ACCEPTED THAT IT WAS CARRYING OUT ACTIVITY OF MANAGING PAR KING AREA AT AKSHARDHAM COMPLEX , WHICH IS COMMERCIAL/BUSINESS IN NATURE. THE LD. COUNSEL CONTESTED BEFORE US THAT THIS BUSINESS ACTIVITY WAS INCIDENTAL TO THE OBJECTS OF THE ASSESSEE TR UST AND THE ASSESSEE HAVING COMPLIED WITH THE CONDITION OF SECTION 11(4A) OF THE ACT , IT IS ELIGIBLE FOR EXEMPTION AND REGISTRATION. THE LD. DIT(E) HELD THAT THE ACTIVITY OF MANAGING THE PARKING AREA WAS NOT EVEN REMOTELY CONNECTED WITH THE OBJECTS OF THE ASSESSEE OF EDUCATION, RELIEF TO POOR, MEDICAL RELIEF, ENVIRONMENT PROTECTION ETC. BEFORE US , THE LD. COUNSEL FAILED TO DEMONSTRATE AS HOW THE ACTIVITY OF MANAGING PARKING AREA WAS CONNECTED WITH THE OBJECT OF THE ASSESSEE TRUST AND INCIDENTAL TO THE OBJEC TS OF THE TRUST. FURTHER , WE NOTE THAT THE ASSESSEE HAS NOT CARRIED OUT ANY CHARITABLE A CTIVITY AS CONTEMPLATED IN ITS OBJECT EXCEPT GIVING DONATION TO ANOTHER CHARITABLE TRUST. GIVING DONATION TO ANOTHER CHARITABLE TRUST CAN AMOUNT TO AN ACTIVITY OF GENE RAL PUBLIC UTILITY ONLY. THE DECISION OF THE TRIBUNAL RELIED UPON BY THE LEARNED COUNSEL IN THE CASE OF SUVASINI CHARITABLE T RUST (SUPRA) IS DISTINGUISHABLE ON THE FACTS. IN T HE SAID CASE , DISPUTE BEFORE THE TRIBUNAL WAS IN RESPECT OF ADDITION MADE BY THE ASSESSING OFFICER AND NOT IN RESPECT OF REJECTION OF REGISTRATI ON UNDER SECTION 12 AA OF THE ACT . FURTHER IN THAT CASE THE ACTIVITY OF RUNNING CAFETERIA WAS FOR PROMOTION OF 9 ITA NO.6457/DEL/2014 VEGETARIANISM AND WAS CLAIMED AS INCIDENTAL TO THE MAIN OBJECT OF PROVIDING MEDICA L RELIEF TO THE POOR. IN THE PRESENT CASE , THE ASSESSEE HAS FAILED TO ESTABLISH THE ACTIVITY OF MANAGING PARKING AREA AS INCIDENTAL TO THE MAIN OBJECT OF EDUCATION OR MEDICAL RELIEF. THE LD. DIT(E) HAS RELIED ON THE VARIOUS DECISION OF THE TRIBUNAL IN SUPP ORT OF HER FINDING OF REJECTING THE REGISTRATION UNDER SECTION 12 AA OF THE ACT. IN OUR OPINION, THE ORDER OF THE LD. DIT(E) REJECTING TH E REGISTRATION UNDER SECTION 12 AA OF THE ACT IS WELL REASONED AND WE DO NOT FIND ANY INFIRMITY IN THE FINDING OF THE LD. DIT(E), ACCORDINGLY , WE DISMISS THE GROUND OF THE APPEAL. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 2 5 T H AUGUST , 201 7 . S D / - S D / - ( BHAVNESH SAINI ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 5 T H AUGUST , 201 7 . RK / - (D.T.D) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI