Sant Shri Niranjanbapu Education & Charitable Trust, V. The Commissioner of Income Tax-I, RAJKOT-GUJARAT

ITA 653/RJT/2012

• Counselvise Citation: 65324914 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 5 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: 26-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M L MEENA
• Assessee Lawyers: VIMAL DESAI
• Keywords: Charitable institution
• Section: 12; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 653/RJT/2012 SANT SHRI NIRANJANBAPU EDUCATION & CHARITABLE TRUST DESHALPUR (KANTHI), TAL. MUNDRA-KUTCH PAN : AAHTS 9909 D ( / 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 28.09.2012 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 SANT SHRI NIRANJANBAPU EDUCATION & CHARITABLE TRUST MADE AN APPLICATION FO R REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961 ON 27.03.2012 IN FORM NO.10A. THIS APPLICATION WAS ACCOMPANIED WITH THE XEROX COPY OF THE TRUST DEED A ND REGISTRATION CERTIFICATE UNDER THE BPT ACT DATED 23.10.2008. THE AFORESAID APPLICA TION WAS REJECTED BY THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I VIDE HIS ORDER DATED 28.09.2012 PASSED U/S 12AA(1)(B)(II) OF THE INCOME-TAX ACT. THE DETAILED REASON GIVEN BY LD. CIT FOR REJECTING THE APPLICATION OF ASSESSEE-TRUST FOR REG ISTRATION U/S 12A OF THE INCOME-TAX ACT IS CONTAINED IN PARAGRAPH NOS. 3 AND 4 OF THE I MPUGNED ORDER, WHICH READ AS UNDER:- 3. IT HAS BEEN SUBMITTED THAT TRUST HAS CARRIED OU T ACTIVITIES OF DISTRIBUTION OF FREE NOTE BOOKS AND GIVEN A SCHOLARSHIP TO A STU DENT. BESIDES THIS THE TRUST IS NOT ENGAGED IN ANY ACTIVITIES IT HAS ONLY MADE D ONATIONS TO SOME OTHER TRUSTS. THE ASSESSEE HAS NOT FILED ANY ACCOUNTS, SH OWING THE AGGREGATE RECEIPTS, PAYMENTS & SURPLUS/DEFICIT. THE TRUST IS MAINLY MAKING DONATIONS TO OTHER TRUSTS, WHOSE ACTIVITIES AND OBJECTS ARE NOT CLEARLY KNOWN. THERE IS NO EXPLANATION AS TO THE SELECTION OF THE STUDENTS FOR SCHOLARSHIP OR FOR PURCHASE OF TEXT BOOKS. THE ASSESSEE HAS RELIED ON A CASE LA W TO SAY THAT IT CAN CARRY OUT ACTIVITIES THROUGH SOME ONE ELSE ALSO, UNLESS T HE MONEY IS SIPHONED OFF. THE CASE LAW QUOTED IS NOT OF MUCH HELP SINCE IN AB SENCE OF BOOKS & ACCOUNTS IT IS NOT POSSIBLE TO KNOW IF THE MONEY CO LLECTED HAVE BEEN SIPHONED 2 653-RJT-2012 - SANT SHRI NIRANJANBAPU EDUCATION & CHARITABLE TRUST (SMC) OFF OR NOT. I AM THEREFORE NOT SATISFIED WITH THE G ENUINENESS OF THE TRUST OR ITS OBJECT. 4. 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 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 55 PAGES , WHICH INCLUDES FOLLOWING DOCUMENTS:- SR. NO. PARTICULARS PAGE NOS. 1 WRITTEN SUBMISSIONS 2 COPY OF APPLICATION FOR REGISTRATION U/S 12A(A) D ATED 23.03.2012 ALONGWITH FORM 10A 1-2 3 COPY OF TRUST DEED ALONGWITH LIST OF TRUSTEES 3-1 5 4 COPY OF I.T.O.S LETTER DATED 16.04.2012 16 5 COPY OF ASSESSEES REPLY DATED 16.07.2012 17-18 6 COPY OF SUBMISSIONS TO ITO DATED 13.09.2012 ALONG WITH NECESSARY EVIDENCES AND PHOTOGRAPHS IN ITS SUPPORT 19-27 7 COPY OF SHOW-CAUSE NOTICE DATED 24.09.2012 FROM COMMISSIONER OF INCOME-TAX, RAJKOT-I 28 8 COPY OF REPLY TO SHOW-CAUSE NOTICE DATED 25.09.20 12 29-31 9 COPY OF GUJARAT HIGH COURT DECISION IN CASE OF KU TCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST TAX APPEAL NO.918/ 2011 32-39 10 COPY OF KARNATAKA HIGH COURT IN CASE OF KARUNYA RURAL HEALTH CARE SOCIETY, [2012] 24 TAXMANN.COM 344 40-43 11 COPY OF DECISION OF COCHIN TRIBUNAL IN CASE OF M AHATMA GANDHI CHARITABLE SOCIETY V. CIT (2013) 33 TAXMANN .COM 142 44-48 12 COPY OF DECISION OF ALLAHABAD HIGH COURT IN CASE OF HARDAYAL CHARITABLE & EDUCATION TRUST, 32 TAXMANN.COM 341 49-55 3 653-RJT-2012 - SANT SHRI NIRANJANBAPU EDUCATION & CHARITABLE TRUST (SMC) THE LD COUNSEL OF THE ASSESSEE, SUBMITTED THAT THE OBJECTS OF THE TRUST ARE TO PROVIDE EDUCATION, MEDICAL HELP TO NECESSITATED STU DENTS AND PEOPLES. FOR ESTABLISHING ITS GENUINENESS, THE ASSESSEE-TRUST HA S FURNISHED PHOTOGRAPHS, VOUCHERS OF SCHOLARSHIP EXPENSES AND PRESS NOTE FOR ACTIVITIES ETC.. IN THE PAPER-BOOK FILED BEFORE THE TRIBUNAL. IN THIS REGARD, THE LD. COUNSEL OF THE ASSESSEE RELIED UPON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CA SE OF KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST, [2013] 29 TAXMANN.COM 228, WHEREIN IT IS OBSERVED BY THE HONBLE HIGH COURT THAT ABSENCE OF ANY ACTIVITY OF A TRUST AT THE TIME OF REGISTRATION IS NOT A GROUND TO QUESTION GENUINENESS OF OBJECTIVES AND ACTIVITIES; REGISTRATION FOR TRUST CANNOT BE DINED ON THE SOLE GROUND OF NON-COM MENCEMENT OF ACTIVITY AND SUCH ABSENCE OF ACTIVITY DOES NOT EMPOWER COMMISSIONER T O INFER ABSENCE OF GENUINENESS. A COPY OF THE SAID JUDGMENT IS PLACED ON RECORD. THE LD. COUNSEL OF THE ASSESSEE ALSO SUBMITTED THAT THOUGH THE ASSESSE E-TRUST HAD BEEN ESTABLISHED IN 2008, NO ACTIVITIES WERE CARRIED OUT TILL 2011, THE REFORE NO ACCOUNTS WERE SUBMITTED EITHER BEFORE THE ASSESSING OFFICER OR LD. CIT; HOW EVER, FOR PROVING THE GENUINENESS, THE DETAILS OF ACTIVITIES CARRIED OUT BY THE ASSESS EE-TRUST ALONGWITH DETAILS OF BANK ACCOUNT OPENED WERE SUBMITTED. 4. REGARDING THE OBJECTION TAKEN BY THE LD. CIT FOR GIVING DONATION OF RS.50,000/- TO LAXMAN RAY KELVANI FUND, MANDVI WHICH IS REGISTE RED UNDER THE BPT ACT 1950, THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT IT WAS NOT THE MAJOR ACTIVITIES OF THE TRUST TO GIVE DONATION TO OTHER TRUST BUT A PART OF THE ACTIVITIES OF THE ASSESSEE-TRUST. HE ALSO SUBMITTED THAT DONATION GIVEN TO OTHER TRUS T IS FOR SPECIFIC PURPOSES SUCH AS PROVIDING SCHOLARSHIP AND FOOD TO STUDENTS WHICH IS EXTENSIVELY CONNECTED TO THE OBJECTS OF THE TRUST. HE FURTHER POINTED OUT THAT W HAT A DONOR TRUST WHICH IS ITSELF A CHARITABLE AND RELIGIOUS TRUST DONATES ITS INCOME T O ANOTHER TRUST, THE DONOR TRUST CAN BE SAID TO HAVE APPLIED ITS INCOME FOR THE RELIGIOU S AND CHARITABLE PURPOSES. IN THIS REGARD, THE ASSESSEE-TRUST RELIED UPON THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF KARUNYA RURAL HEALTH-CARE SOCIETY V. DIRECT OR OF INCOME-TAX (EXEMPTIONS), [2012] 24 TAXMANN.COM 344, WHEREIN IT WAS HELD THAT ONCE EVIDENCE PRODUCED DISCLOSED THAT FUNDS OF TRUST ARE APPLIED FOR CARRY ING ON CHARITABLE ACTIVITIES, PURPOSE 4 653-RJT-2012 - SANT SHRI NIRANJANBAPU EDUCATION & CHARITABLE TRUST (SMC) OF ESTABLISHING TRUST IS FULLY SATISFIED AND IT DOE S NOT MATTER THAT ASSESSEE IS CARRYING ON CHARITABLE ACTIVITY THROUGH ANOTHER TRUST. 5. FINALLY, THE LD. COUNSEL OF THE ASSESSEE SUBMITT ED THAT THE ASSESSEE-TRUSTS ACTIVITIES FALL UNDER THE DEFINITION OF CHARITABLE PURPOSE GIVEN IN SECTION 2(15) OF THE INCOME-TAX ACT BEING WELFARE ACTIVITIES OF EDUCATIO NAL, MEDICAL AND SOCIAL; THEREFORE, 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 INCO ME-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 FILED ANY ACCOUNTS SHOWING THE AGGREGATE RECEIPTS, PAYMENT, S URPLUS/DEFICIT ETC.. HE ALSO POINTED OUT THAT THE ASSESSEE-TRUST WAS MAINLY MAKI NG DONATIONS TO OTHER TRUSTS WHOSE ACTIVITIES AND OBJECTS ARE NOT CLEARLY KNOWN; THEREFORE, VIEW TAKEN BY THE LD. CIT IN REJECTING THE ASSESSEE-TRUSTS APPLICATION F OR REGISTRATION U/S 12A OF THE INCOME-TAX ACT BE UPHELD. 7. I HAVE HEARD BOTH SIDES AND CAREFULLY GONE THROU GH THE IMPUGNED ORDER OF LD COMMISSIONER OF INCOME-TAX, RAJKOT-I, THE DECISIONS CITED AND THE DOCUMENTS AVAILABLE ON RECORDS INCLUDING PAPER-BOOK FILED BY THE ASSESSEE-TRUST. THE MAIN CONTENTION OF LD. CIT IS THAT THE ASSESSEE-TRUST HA S NOT ENGAGED IN ANY OTHER ACTIVITIES APART FROM CARRYING OUT ACTIVITIES OF DISTRIBUTION OF FREE NOTE BOOKS AND GIVEN SCHOLARSHIP TO A STUDENT. IT IS OBSERVED BY THE H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA T RUST (SUPRA), AS RELIED BY THE LD. COUNSEL OF THE ASSESSEE-TRUST, THAT ABSENCE OF ANY ACTIVITY OF A TRUST AT THE TIME OF REGISTRATION IS NOT A GROUND TO QUESTION GENUINENES S OF OBJECTIVES AND ACTIVITIES; REGISTRATION FOR TRUST CANNOT BE DENIED ON THE SOLE GROUND OF NON-COMMENCEMENT OF ACTIVITY AND SUCH ABSENCE OF ACTIVITY DOES NOT EMPO WER COMMISSIONER TO INFER ABSENCE OF GENUINENESS. THE OTHER MAIN CONTENTIO N OF THE LD. CIT FOR REJECTING THE APPLICATION OF THE ASSESSEE-TRUST FOR REGISTRATION U/S 12A IS THAT THE ASSESSEE-TRUST HAS ONLY MADE DONATIONS TO SOME OTHER TRUSTS NAMELY LAXMAN RAY KELVANI FUND, MANDVI TO THE TUNE OF RS.50,000/-. THE DECISION OF KARNATAKA HIGH COURT IN THE CASE 5 653-RJT-2012 - SANT SHRI NIRANJANBAPU EDUCATION & CHARITABLE TRUST (SMC) OF KARUNYA RURAL HEALTH-CARE SOCIETY V. DIRECTOR OF INCOME-TAX (EXEMPTIONS), [2012] 24 TAXMANN.COM 344, AS RELIED UPON BY THE ASSESSEE- TRUST, IS VERY MUCH RELEVANT IN THIS BEHALF; WHEREIN IT HAS BEEN HELD BY THE HONBL E HIGH COURT THAT ONCE EVIDENCE PRODUCED DISCLOSED THAT FUNDS OF TRUST ARE APPLIED FOR CARRYING ON CHARITABLE ACTIVITIES, PURPOSE OF ESTABLISHING TRUST IS FULLY SATISFIED AN D IT DOES NOT MATTER THAT ASSESSEE IS CARRYING ON CHARITABLE ACTIVITY THROUGH ANOTHER TRU ST. THEREFORE, IN VIEW OF THE FOREGOING, I SET ASIDE THE IMPUGNED ORDER DATED 28. 09.2012 PASSED BY THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I U/S 12AA(1)(B) (II) AND DIRECT HIM TO GRANT REGISTRATION TO THE ASSESSEE-TRUST UNDER SECTION 12 A OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 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- SANT SHRI NIRANJANBAPU EDUCATION & CH ARITABLE TRUST DESHALPUR (KANTHI), TAL. MUNDRA-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