M/S SIDHA STHAN SHRI KAPALESHWAR MAHADEV SANYAS ASHRAM TRUST, AJMER V. COMMISSIONER OF INCOME TAX (EXEMPTIONS), JAIPUR

ITA 655/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2024 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 16-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VRINDRA MEHTA
• Keywords: Charitable institution
• Section: 80G; 12AA; 12; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 655/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : SIDHA STHAN SHRI KAPALESHWAR MAHADEV SANYAS ASHRAM TRUST, MELA GROUND, PUSHKAR, AJMER. CUKE VS. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AARTS9375F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 656/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : SIDHA STHAN SHRI KAPALESHWAR MAHADEV SANYAS ASHRAM TRUST, MELA GROUND, PUSHKAR, AJMER. CUKE VS. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AARTS9375F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VRINDRA MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 27/09/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 28/09/2017 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. ITA NO. 655 & 656/JP/2017 M/S SIDHA STHAN SHRI KAPALESHWAR MAHDEV SANYAS ASHRAM TRUST VS. CIT(E) 2 THESE TWO APPEALS FILED BY THE ASSESSEE ARE AGAINS T THE ORDER OF LD. CIT (EXEMPTIONS), JAIPUR DATED 28.06.2017, REFU SING TO GRANT U/S 12AA OF THE ACT AND EXEMPTION U/S 80G OF THE ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A CHARITABLE TRUST CONSTITUTED UNDER DEED OF TRUST DATED 11.02.1 998. IT FILED AN APPLICATION WITH THE LD. CIT(E) FOR REGISTRATION U/ S 12AA OF THE ACT. IN ITS ORDER, THE LD. CIT(E) STATES THAT WHILE CONSIDERING THE CASE FOR REGISTRATION U/S 12AA, THE OBJECT OF THE TRUST/SOCI ETY AND THE GENUINENESS OF ITS ACTIVITIES ARE TO BE EXAMINED AN D AS PER THE RULES, THE CERTIFIED COPY OF INSTRUMENT ESTABLISHING THE SOCIETY/TRUST NEEDS TO BE VERIFIED. THE APPLICANT WAS ASKED TO FILE CERTAI N INFORMATION/DOCUMENTS WHICH WERE DULY FILED AND CON SIDERED BY THE LD. CIT(E). SUBSEQUENTLY, VIDE SHOW CAUSE DATED 30.05.2 017, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY ITS APPLICATION F OR REGISTRATION SHOULD NOT BE REJECTED AS NO SPECIFIC DISSOLUTION C LAUSE IS PROVIDED IN THE DEED OF TRUST. IN RESPONSE, THE ASSESSEE FILED ITS SUBMISSION WHICH WAS NOT FOUND ACCEPTABLE BY THE LD. CIT(E) AND HIS RELEVANT FINDING ARE AS UNDER:- THE APPLICANT IN ITS REPLIES MAINLY HAS STRESSED UP ON THAT ABSENCE OF DISSOLUTION CLAUSE IN THE DEED CANNOT BE MADE A GROUND FOR REFUSAL OF REGISTRATION U/S 12AA. REPLY OF THE APPLICANT IS NOT FOUND ACCEPTABLE BECAUSE THE CONSTITUTION OF THE TRUST HAS NO DISSOLUTION CLAUSE. THE DISSOLUTION CLAUSE ENSUR ES THAT IN THE EVENT OF DISSOLUTION OF THE TRUST, THE BALANCE FUND S ARE NOT MIS- UTILIZED. IN ABSENCE OF DISSOLUTION CLAUSE IT IS NO T KNOWN THAT IN THE EVENT OF DISSOLUTION OF THE TRUST HOW THESE FUN DS WILL BE UTILIZED. THERE HAS TO BE CHECK THAT BALANCE FUND O N DISSOLUTION ITA NO. 655 & 656/JP/2017 M/S SIDHA STHAN SHRI KAPALESHWAR MAHDEV SANYAS ASHRAM TRUST VS. CIT(E) 3 DO NOT GO TO THE OFFICE BEARERS OF THE TRUST. AS TH IS CLAUSE IS NOT THERE IN THE TRUST DEED, THERE IS NO SECURITY OF PR OPER UTILIZATION OF THE FUNDS. 3. THE LD. CIT(E) ACCORDINGLY REJECTED THE APPLICA TION OF THE ASSESSEE SEEKING REGISTRATION U/S 12AA OF THE ACT A ND CONSEQUENTLY, THE APPLICATION FOR EXEMPTION UNDER SECTION 80G WAS ALS O REJECTED FOR WANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 4. DURING THE COURSE OF HEARING, THE LD. AR DRAWN O UR REFERENCE TO THE TRUST DEED DATED 10.02.1998 WHEREIN IT IS STATE D AS UNDER:- ;G LKJH LEIFR HKXOKU DIKYSOJ EGKNSO EFUNJ DH GS BL DKS EGUR] LUR] VLV DS DKSBZ HKH LNL; CSP UGHA LDRS GSA E.MY DJUS DK LHKK DKS VF/KDKJ GS] [KK.MU DJUS DK FDLH DKS DKSBZ VF/KDKJ UGHA GS VXJ DJSXK FU ;EKSA DS FO:} RKS OG JKT; NJCKJ >QBK JGSXKA DRAWING OUR ATTENTION TO THE SAID CLAUSE IN THE TRU ST DEED, THE LD AR SUBMITTED THAT NEITHER THE TRUST NOR ANY MEMBER OF THE TRUST IS EMPOWERED TO SALE ANY PART OF THE PROPERTY OF THE T RUST. FURTHER, THE LD AR SUBMITTED THAT IT IS A PUBLIC CHARITABLE TRUST R EGISTERED WITH DEVSTHAN VIBHAG AND IN THE EVENT OF DISSOLUTION OF THE TRUST , ALL THE ASSETS AND PROPERTIES OF THE TRUST SHALL VEST WITH THE CHARITA BLE COMMISSIONER DEVSTHAN VIBHAG, GOVERNMENT OF RAJASTHAN IN ACCORDA NCE WITH THE RELEVANT PROVISIONS OF THE RAJASTHAN PUBLIC TRUST A CT, 1959. ITA NO. 655 & 656/JP/2017 M/S SIDHA STHAN SHRI KAPALESHWAR MAHDEV SANYAS ASHRAM TRUST VS. CIT(E) 4 5. THE LD. AR FURTHER SUBMITTED THAT LOOKING TO TH E OBJECTS OF THE TRUST, THERE IS NO DISPUTE AT ALL RAISED EVEN BY TH E LD CIT THAT SUCH OBJECTS FALL VERY WELL WITHIN THE DEFINITION OF A CHARITABLE PURPOSE AS DEFINED U/S 2(15) OF THE ACT NOR THERE IS ANY ADVER SE REMARK ON THE GENUINENESS OF THE ACTIVITIES OF THE TRUST AFTER HE DETAILED EXAMINATION CARRIED OUT BY HIM AS EVIDENT FROM THE DETAILED QUE RY LETTERS AND DETAILED REPLIES THERETO. THUS, SO FAR AS THE OBJE CTS OF THE TRUST BEING CHARITABLE IN NATURE ARE CONCERNED, THERE IS NO DIS PUTE BETWEEN THE PARTIES. IT IS A PUBLIC CHARITABLE TRUST REGISTERED WITH DEVSTHAN VIBHAG. 6. IT WAS FURTHER SUBMITTED THAT THE SOLE BASIS FO R REFUSAL TO GRANT REGISTRATION WAS THE ABSENCE OF THE DISSOLUTION CLA USE IN THE TRUST DEED WHICH FIRSTLY, IS NOT AT ALL A VALID GROUND AND IN ANY CASE IS NOT AT ALL REQUIRED BY THE LIMITED SCOPE OF SEC. 12AA(1) AND B Y CONSIDERING SUCH A GROUND, THE LD. CIT HAS RATHER EXCEEDED HIS JURISDI CTION/ENHANCED THE SCOPE OF ENQUIRY THAN WHAT IS CONFERRED BY THE STAT UTE UPON HIM. 7. IT WAS FURTHER SUBMITTED THAT EVEN OTHERWISE, S UCH A CLAUSE IS ALREADY THERE I.E. CLAUSE AT PAGE 15 OF THE DEED OF TRUST ACCORDING TO WHICH THE POSSIBILITY OF THE DISSOLUTION OF THE APP ELLANT TRUST HAS BEEN RULED OUT. IN SUCH A SITUATION, THE PROPERTY SHALL VEST IN THE CHARITY COMMISSIONER - DEVSTHAN VIBHAG OF GOVERNMENT OF RAJ ASTHAN IN ACCORDANCE WITH THE RELEVANT PROVISIONS OF THE RAJA STHAN PUBLIC TRUST ACT, 1959. ITA NO. 655 & 656/JP/2017 M/S SIDHA STHAN SHRI KAPALESHWAR MAHDEV SANYAS ASHRAM TRUST VS. CIT(E) 5 8. IN SUPPORT, RELIANCE WAS PLACED ON THE DECISION OF UMIYA CHARITABLE TRUST V/S CIT (2014) 40 CCH 0437 (RAJKOT ) WHEREIN IT WAS HELD THAT:- 5.2 THE LAST GROUND OF REJECTION POINTED OUT BY THE LD. CIT IS THAT THE TRUST DEED OF THE TRUST DOES NOT CONTAIN THE DISSOL UTION CLAUSE IN THE EVENT OF ITS DISSOLUTION. THIS ISSUE HAS ALREADY BE EN COVERED IN FAVOUR OF ASSESSEE-INSTITUTION/ASSOCIATION BY THE DECISION OF ITAT AHMEDABAD C BENCH IN THE CASE OF SITARAM KUTIR CHARITABLE TRUST V. CIT IN ITA NO. 71/AHD/2013, DECIDED ON 17.05.2013; WHEREIN IT WAS HELD THAT IN CASE THE TRUST REGISTERED WITH THE SUB-REGISTRAR AS A C HARITABLE TRUST AND THE TRUST BEING AN IRREVOCABLE TRUST, THE OBVIOUS POSIT ION SHALL BE THAT THE CHARITY COMMISSIONER SHOULD TAKE OVER THE ASSETS ON DISSOLUTION; HENCE REJECTION OF REGISTRATION BY THE LD. COMMISSIONER O N THE GROUND THAT THERE WAS NO SPECIFIC CLAUSE IN THE INSTRUMENT IN R EGARD TO THE TREATMENT TO BE GIVEN IN THE VENT OF DISSOLUTION WA S NOT ON A SOUND FOOTING. IN VIEW OF THE FOREGOING, I AM OF THE VIEW THAT THE REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961, AS SOUGHT BY THE ASSES SEE- INSTITUTION/ASSOCIATION, CANNOT BE REFUSED AND I, T HEREFORE, DIRECT THE LD. CIT, RAJKOT-III, RAJKOT TO GRANT THE REGISTRATION U /S 12AA TO THE ASSESSEE-INSTITUTION/ASSOCIATION. THE LD AR ALSO RELIED ON THE FOLLOWING DECISIONS:- SHRI AGARWAL PANCHAYAT VS ITO (2015) 173 TTJ 61 (JD ) CIT VS TAPAGACHHA SANGH MOTA (2015) 232 TAXMAN 715 (GUJ) ITA NO. 655 & 656/JP/2017 M/S SIDHA STHAN SHRI KAPALESHWAR MAHDEV SANYAS ASHRAM TRUST VS. CIT(E) 6 DHARMA SANSTHAPAK SANGH (NIYAS) VS CIT (2008)118 TT J 0823/13 DTR 589 (DEL) DIT(EXEMPTIONS) VS VANCHHARA TIRTHADHIPATI-CHINTAMA NI PARASWAPRWABHU (2015) 233 TAXMAN 1 (GUJ) 9. IT WAS FURTHER SUBMITTED THAT THERE SEVERAL CAS ES ON THE SCOPE OF EXAMINATION BY THE LD. CIT IN THE CONTEXT OF SEC. 1 2AA AND IT HAS BEEN REPEATEDLY HELD THAT THE ALLEGATIONS OF THE MIS-UTI LIZATION OF THE FUNDS OR THE UNREASONABLENESS OF THE EXPENDITURE INCURRED O R THE MISAPPLICATION OF INCOME, UTILIZATION OF THE FUNDS, ARE ALL REQUIR ED TO BE EXAMINED AT THE TIME OF ASSESSMENT ONLY WITH RESPECT TO THE BEN EFIT PROVIDED U/S 11 &12 AND IT IS NOT AT ALL THE STAGE WHERE THE CIT IS EXPECTED TO LOOK INTO THIS ASPECT. 10. THERE APART, THE COURTS HAVE GONE TO THE EXTEN T THAT EVEN WHERE THERE WAS NO COMMENCEMENT OF ACTIVITIES, REGISTRATI ON COULD NOT HAVE BEEN DENIED. THEREFORE, IT IS TOO REMOTE AND OUT OF SCOPE TO EXAMINE THE EXISTENCE OR OTHERWISE OF THE DISSOLUTION CLAUS E AND THE SUSPECTED ILL CONSEQUENCES OF ABSENCE THEREOF. KINDLY REFER CIT V S VIJAY VARGIYA VANI CHARITABLE TRUST (2014) 271 CTR 0698/110 DTR 0207/3 69 ITR 0360 (RAJ HC) HELD THAT: REGISTRATION MUST BE GRANTED U/S 12AA TO ASSESSEE WHEN IT IS MEANT FOR CHARITABLE PURPOSE ON BASIS OF GENUINENESS OF O BJECTS OF TRUST AND NOT INCOME OF TRUST. ITA NO. 655 & 656/JP/2017 M/S SIDHA STHAN SHRI KAPALESHWAR MAHDEV SANYAS ASHRAM TRUST VS. CIT(E) 7 11. REGARDING REFUSAL TO GRANT EXEMPTION U/S 80G OF THE ACT, THE LD. CIT(E) HELD THAT SINCE THE ASSESSEE TRUST HAS BEEN DENIED REGISTRATION U/S 12AA OF THE ACT. PER CONTRA, THE LD. AR SUBMITT ED THAT THE CIT HAS REFUSED SIMPLY AS A CONSEQUENCE TO THE REJECTION OF 12AA REGISTRATION HENCE, IT IS CONSEQUENTIAL. HOWEVER, ASSUMING, THE REJECTION OF 12AA REGISTRATION IS UPHELD DOES NOT BY ITSELF MEANS THA T THE ASSESSEE DOES NOT DESERVES GRANT OF APPROVAL U/S 80G MORE PARTICU LARLY, WHEN THE LD. CIT HAS NOT ADVERSELY COMMENTED UPON ANY OF THE CON DITIONS MENTIONED IN SEC. 80G(5). 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, THE TESTS WHICH ARE G ERMANE AND ARE TO BE SATISFIED BEFORE THE GRANT OF REGISTRATION U/S 12AA OF THE ACT ARE THE OBJECTS OF THE TRUST WHETHER CHARITABLE OR NOT AND SECONDLY, THE GENUINENESS OF ACTIVITIES OF THE ASSEESSEE TRUST. THE LD CIT(E) HAS NOT RECORDED ANY ADVERSE FINDING OR DISSATISFACTION ABO UT THE OBJECTS AND THE GENUINENESS OF ACTIVITIES OF THE ASSEESSEE TRUS T. HENCE, THERE IS NO DISPUTE REGARDING THE OBJECTS AND THE GENUINENESS O F ACTIVITIES OF THE ASSEESSEE TRUST. 13. THE LIMIT ISSUE RAISED BY THE LD. CIT(E) RELAT ES TO ABSENCE OF THE DISSOLUTION CLAUSE IN THE TRUST DEED DATED 11.02.19 98. IN THIS REGARD, THE LD. AR HAS DRAWN OUR REFERENCE TO THE RELEVANT CLAUSE AT PAGE 15 OF THE TRUST DEED (REFERRED ABOVE) AND SUBMITTED THAT NEITHER THE TRUST NOR ANY MEMBER OF THE TRUST IS EMPOWERED TO SELL ANY PA RT OF THE PROPERTY OF THE TRUST. TO OUR MIND, THE EVENT OF SALE OF THE ASSETS OR THE PROPERTY ITA NO. 655 & 656/JP/2017 M/S SIDHA STHAN SHRI KAPALESHWAR MAHDEV SANYAS ASHRAM TRUST VS. CIT(E) 8 OF THE TRUST COULD BE DURING THE CONTINUATION OF TH E TRUST OR AT THE TIME OF ITS DISSOLUTION. THIS CLAUSE THEREFORE EFFECTIVE LY RESTRICTS THE SALE OF THE PROPERTY OF THE TRUST AT ALL TIMES. BUT CAN IT BE SAID THAT THE TRUST WHICH HOLDS SUCH PROPERTY CANNOT BE DISSOLVED AT AL L TIMES TO COME AND WHAT ARE THE CONSEQUENCES THERETO. IN OUR VIEW, THE MATTER RELATING TO THE DISSOLUTION AND THE CONSEQUENCES THEREOF HAS NO T BEEN SPELT OUT IN THE TRUST DEED. 14. NOW COMING TO THE ANOTHER CONTENTION OF THE LD AR THAT IT IS A PUBLIC CHARITABLE TRUST REGISTERED WITH DEVSTHAN VI BHAG AND IN THE EVENT OF DISSOLUTION OF THE TRUST, ALL THE ASSETS AND PRO PERTIES OF THE TRUST SHALL VEST WITH THE CHARITABLE COMMISSIONER DEVSTHAN VIBH AG, GOVERNMENT OF RAJASTHAN IN ACCORDANCE WITH THE RELEVANT PROVISION S OF THE RAJASTHAN PUBLIC TRUST ACT, 1959. HERE, WE REFER TO THE DECIS ION OF THE COORDINATE BENCH IN CASE OF SITARAM KUTIR CHARITABLE TRUST V. CIT (SUPRA) WHEREIN IT WAS HELD THAT IN CASE THE TRUST REGISTERED WITH THE SUB-REGISTRAR AS A CHARITABLE TRUST AND THE TRUST BEING AN IRREVOCABLE TRUST, THE OBVIOUS POSITION SHALL BE THAT THE CHARITY COMMISSIONER SHO ULD TAKE OVER THE ASSETS ON DISSOLUTION; HENCE REJECTION OF REGISTRAT ION BY THE LD. COMMISSIONER ON THE GROUND THAT THERE WAS NO SPECIF IC CLAUSE IN THE INSTRUMENT IN REGARD TO THE TREATMENT TO BE GIVEN I N THE VENT OF DISSOLUTION WAS NOT ON A SOUND FOOTING. WE HAVE NO HESITATION BUT TO CONCUR WITH THE VIEW TAKEN BY THE COORDINATE BENCH AND WE ACCORDINGLY, FIND FORCE IN THE ABOVE-SAID CONTENTIO N OF THE LD AR. AT THE SAME TIME, WE FIND THAT THERE IS NO SPECIFIC FINDIN GS OF THE LD CIT(E) REGARDING WHETHER THE TRUST IS A IRREVOCABLE TRUST OR NOT, AND WHETHER ITA NO. 655 & 656/JP/2017 M/S SIDHA STHAN SHRI KAPALESHWAR MAHDEV SANYAS ASHRAM TRUST VS. CIT(E) 9 THE ASSESSEE TRUST IS REGISTERED WITH THE DEVSTHAN VIBHAG AND THE CONSEQUENCES ON ITS DISSOLUTION AS CONTENTED BY THE LD AR. WE ARE ACCORDINGLY SETTING ASIDE THE MATTER TO FILE OF THE LD. CIT(E) TO EXAMINE THE ABOVE SAID CONTENTIONS OF THE LD AR AND WHERE T HE SAME IS FOUND TO BE CORRECT, GRANT THE NECESSARY REGISTRATION U/S 12 AA OF THE ACT. 15. FURTHER, THE GRANT OF APPROVAL U/S 80G HAS BEE N DENIED FOR WANT OF REGISTRATION U/S 12AA. SINCE WE HAVE SET ASIDE T HE MATTER RELATING TO GRANT OF REGISTRATION U/S 12AA, THE MATTER RELATING TO APPROVAL U/S 80G IS ALSO SET ASIDE TO FILE TO THE LD. CIT(E). IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AR E ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28/09/2017 SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 28/09/2017. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S SIDHA STHAN SHRI KAPALESHWAR MAHADEV SANYAS ASHRAM TRUST, MELA GROUND, PUSHKAR, AJMER. 2. IZR;FKHZ@ THE RESPONDENT- COMMISSIONER OF INCOME TAX (EXEMPTIONS), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) ITA NO. 655 & 656/JP/2017 M/S SIDHA STHAN SHRI KAPALESHWAR MAHDEV SANYAS ASHRAM TRUST VS. CIT(E) 10 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 655 & 656/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR