M/s Smurna Holy Church Trust, Bangalore V. DIT, Bangalore

ITA 662/BANG/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 8662 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-10-2010
• Assessment Year: misc
• Appeal Filed On: 14-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWATHI S PATEL CITIIDR
• Assessee Lawyers: M P M MOHAMMED I T P
• Keywords: Gift; Charitable institution
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.662/BANG/2010 ASSESSMENT YEAR : N.A. M/S. SMURNA HOLY CHURCH TRUST, NO.29, JYOTHI NAGAR, HORAMAVU AGARA, HORAMAVU POST, BANGALORE 560 043. : APPELLANT VS. THE DIRECTOR OF INCOME TAX (EXEMPTIONS), BANGALORE 560 001. : RESPONDENT APPELLANT BY : SHRI M.P.M. MOHAMMED, I.T.P. RESPONDENT BY : SMT. SWATHI S. PATEL, CIT-II(DR) O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THE APPELLANT TRUST HAS PREFERRED THIS APPEAL AGA INST THE ORDER OF LD.DIT(EXEMPTIONS) NO. DIT(E)BLR/12A/353/AAFTS70 89G/ ITO(E)- 3/VOL. 2009-10 DATED 31.3.2010, FOR THE DENIAL OF R EGISTRATION U/S. 12A OF THE INCOME-TAX ACT, 1961. 2. THE APPELLANT TRUST HAS RAISED SEVERAL GROUNDS I N THE APPEAL; HOWEVER, THE CRUX OF THE ISSUE IS WITH RESPECT TO D ENIAL OF EXEMPTION U/S. 12A OF THE ACT. ITA NO.662/BANG/10 PAGE 2 OF 9 3. THE APPELLANT TRUST WAS REGISTERED ON 28-07-2004 . AFTER A LAPSE OF ABOUT FIVE YEARS IT FILED AN APPLICATION ON 09/09/2 009 IN FORM 10A SEEKING REGISTRATION U/S12A OF THE ACT. HOWEVER LD. DIT(EXE MPTIONS) DENIED REGISTRATION ON THE FOLLOWING GROUNDS:- (1) FOR NOT HAVING FURNISHED THE DETAILS OF THE B ANK ACCOUNTS FOR THE PAST THREE YEARS. (2) FOR NOT HAVING FURNISHED THE DETAILS OF DONATIONS/CONTRIBUTION RECEIVED FROM MEMBERS AND OT HERS ALONG WITH THE ADDRESS AND PAN NUMBER OF THE DONORS FOR THE PAST THREE YEARS. (3) FOR NOT HAVING PRODUCED THE BOOKS OF ACCOUNTS FOR VERIFICATION. (4) FOR NOT FURNISHING THE AUDITED STATEMENT OF AC COUNTS. (5) FOR HAVING FAILED TO SUBSTANTIATE THE ACTIVITI ES OF THE TRUST. (6) FOR NOT HAVING FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 TO 2009-10. 4. BEFORE US THE LD. AR STOUTLY ARGUED BY STATING T HAT THE TRUST WAS ESTABLISHED ON 28.7.2004, WHEREIN THE PRIMARY OBJEC TS WERE TO PREACH THE MESSAGE OF JESUS CHRIST, WHICH IS OF RELIGIOUS IN N ATURE AND ALSO WITH VARIOUS OTHER CHARITABLE ACTIVITIES. IN ORDER TO F URTHER EXPAND ITS CHARITABLE ACTIVITIES TO BENEFIT THE GENERAL PUBLIC, A SUPPLEM ENTARY TRUST DEED WAS EXECUTED ON 18.9.2007. THE TRUST HAD ALSO OBTAINE D PERMISSION FROM THE STATE GOVT. OF KARNATAKA TO RUN A KANNADA MEDIUM SC HOOL IN THE NAME OF SMURNA HOLY ENJELS PUBLIC SCHOOL (PERMANENTLY UNA IDED) UNDER KARNATAKA EDUCATION ACT VIDE LETTER NO.C-7/E.T.RASH A/011/AL 05/20 10-11 DATED 26.4.2010. LD. AR ALSO FILED COPIES OF THE B ALANCE SHEETS, RECEIPTS ITA NO.662/BANG/10 PAGE 3 OF 9 AND PAYMENT ACCOUNTS, INCOME AND EXPENDITURE ACCOUN TS DULY CERTIFIED BY THE TRUSTS CHARTERED ACCOUNTANT FOR THE FINANCIAL YEAR 2006-07, 2007-08 & 2008-09 FOR THE BENCHS PERUSAL. LD. AR VEHEMENTLY ARGUED THAT THE TRUST WAS REGISTERED TO CONDUCT RELIGIOUS AND CHARITABLE ACTIVITIES TO BENEFIT THE GENERAL PUBLIC. LD. AR PRAYED THAT SINCE THE TRUS T HAD COMPLIED WITH ALL ITS STATUTORY OBLIGATIONS, REGISTRATION U/S. 12A MAY BE GRANTED. 5. LD. DR STRONGLY OPPOSED TO THE CONTENTIONS OF LD . AR AND STATED THAT THE TRUST IS NOT ELIGIBLE FOR REGISTRATION U/S. 12A OF THE ACT SINCE IT HAD NOT BEEN MAINTAINING PROPER BOOKS OF ACCOUNTS AND FOR N ON COMPLIANCE OF VARIOUS OTHER STATUTORY OBLIGATIONS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD PRODUCED BEFORE US MINUTELY. ON A CLOSE PER USAL OF THE TRUST DEED DATED 28.7.2004 AND SUPPLEMENTARY TRUST DEED DATED 18.9.2007, IT IS WELL ESTABLISHED THAT THE TRUST IS FORMED FOR RELIGIOUS AND CHARITABLE PURPOSE. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO FURNISHED BEFORE US THE RECEIPTS AND PAYMENTS ACCOUNTS, INCOME AND EXPENDITURE ACCOU NTS AND BALANCE SHEETS DULY CERTIFIED BY THE TRUSTS CHARTERED ACCO UNTANT AND DULY SIGNED BY THE PRESIDENT OF THE TRUST FOR THE FINANCIAL YEA R 2006-07, 2007-08 & 2008-09 ALONG WITH CERTIFIED COPIES OF FORM NO.10B- AUDIT REPORT U/S. 12A(B) OF THE INCOME-TAX ACT, 1961 FOR ALL THE THRE E YEARS. ON PERUSING THE RECEIPTS AND PAYMENTS ACCOUNT, WE OBSERVED THAT THE TRUST HAD RECEIVED CONTRIBUTIONS FROM ITS MEMBERS AND OTHERS AND THE T RUST HAD SPENT SUCH CONTRIBUTIONS AS FOLLOWS:- ITA NO.662/BANG/10 PAGE 4 OF 9 --------------------------------------------------- ---------------------------------------- SL. F.Y. CONTRIBUTIONS APPLICATION % OF OF FUND FUNDS APPLIED --------------------------------------------------- --------------------------------- 1. 1.4.2006 TO 31.3.2007 2,45,000 2,36,000 96% 2. 1.4.2007 TO 2,30,000 2,14,000 93% 31.3.2008 3. 1.4.2008 TO 31.3.2009 2,98,000 2,17,500 73% --------------------------------------------------- ---------------------------------- 7. IT IS APPARENT FROM THE RECEIPTS AND PAYMENT ACC OUNTS THAT BY AND LARGE THE NATURE OF EXPENDITURE INCURRED BY THE APP ELLANT TRUST IS PREDOMINANTLY FOR THE ESTABLISHMENT OF THE TRUST OF FICE; LIKE RENT/RENT ADVANCE FOR PREMISE, CHURCH MAINTENANCE, REPAIRS, C ONSTRUCTION OF BUILDING, PURCHASE OF:- CARPETS, PUBLIC ADDRESS SY STEMS, FURNITURE, FITTINGS AND FIXTURES, BOOKS, STATIONERY, AND EXPENSES FOR G ENERAL MAINTENANCE ETC. ONLY FOR THE PREVIOUS YEAR 2008-09 THE ASSESSEE TRU ST HAD SPEND LESS THAN 85% OF ITS INCOME PERHAPS TO ACCUMULATE FUNDS FOR THE CONSTRUCTION OF THE BUILDING. FURTHER ON PERUSING THE TRUST DEEDS WE H AVE OBSERVED THAT THE OBJECTS OF THE TRUST ARE AS FOLLOWS : TRUST DEED DATED 28.7.2004 A) TO PREACH MESSAGE OF JESUS CHRIST, TO HOLD MEETI NGS, CRUSADES AND CAMPAIGNS, TO PIONEER AND SUPPORT GOSP EL WORK IN VIRGIN AREAS, TO PRINT AND PUBLISH RELIGIOUS LITERA TURE, B) TO TRAIN WORKERS FOR GOSPEL OUTREACH, TO SUPPORT CHRISTIAN WORKERS FOR THE PROPOGATION OF THE GOSPEL. ITA NO.662/BANG/10 PAGE 5 OF 9 C) TO CO-OPERATE WITH CHRISTIAN ORGANIZATION OR AS SOCIATIONS IN INDIA AND ABROAD, TO WORK WITHIN THE SCOPE OF IN DIAN EVNAGELISTIC CRUSADE. D) TO HELP LOCAL CHURCHES IN THE CONSTRUCTION OF C HURCH, ADMINISTER, ESTABLISH COMMUNITY HALLS AND SUPPORT S OCIAL WORK, TO PROVIDE STIPENDS, SCHOLARSHIPS, LIBRARY, ETC AND ME DICAL RELIEF AND MONETARY HELP AND SHELTER TO POOR E) TO RECEIVE GIFTS OR DONATIONS IN CASH OR KIND . AND TO SPEND IN FULFILLMENT OF FULFILLMENT OF ALL OR AN Y OF THE OBJECTS OF THE CRUSADE. F) TO PURCHASE OR TO ACQUIRE ON LEASE . IN MOVA BLE PROPERTY OR ANY RIGHT OR PRIVILEGE FOR THE PRO MOTION AND ADVANCEMENT OF THE OBJECTS OF THE CRUSADE .. G) TO BORROW OR RAISE MONEY .. TO MEET THE OBLIGATIONS AS MAY BE DETERMINED BY THE CRUSADE FRO M TIME TO TOME. H) TO DO ALL SUCH LAWFUL THINGS AS ARE INCIDENTAL O R CONDUCIVE TO THE ATTAINMENT OF THE ABOVE OBJECTS OR ANY OF TH EM. I) TO CONSTRUCT AND RUN SPIRITUAL COMPLEX, AUDITORI UM, COMMUNITY HALL, PRAYER HALLS, DISPENSARIES, SCHOOLS , OLDAGE HOMES, ORPHANAGES ETC. FOR THE USE OF THE PEOPLE AT LARGE. J) TO CONDUCT MARRIAGES, MASS MARRIAGES TO RECOGNIZ E THE SAME. SUPPLEMENTARY DEED DATED 18.9.2007. 1. TO SPONSOR NEEDY AND UNFORTUNATE CHILDREN IN THEIR EDUCATIONAL PURSUITS BY MEANS OF SPONSORSHIP. 2. TO IMPART MORAL INSTRUCTIONS TO ENABLE THE CHILDREN TO STRUCTURE AND DEVELOP THEIR CHARACTER. 3. TO PROVIDE OPPORTUNITIES FOR POOR AND MARGINALIZED WOMEN . AND ADDRESS COMMON PROBLEMS FACED BY WOMEN THROUGH AWARENESS BUILDING AND TRAINING PROGR AMS. 4. TO LITERATE THE PARENTS AND PEOPLE IN THE COMMUNITY FROM THEIR IGNORANCE, ILLITERACY AND POVERTY BY ORGANIZI NG SUITABLE TRAINING, LITERACY PROGRAMME, SELF EMPLOYM ENT, REARING FRUIT TREES AND PLANTING TREES. ITA NO.662/BANG/10 PAGE 6 OF 9 5. ESTABLISH COUNSELING CENTRES AND TEMPORARY SHELTERS FOR WOMEN, YOUNG GIRLS AND CHILDREN. 6. TO PROVIDE OPPORTUNITIES FOR THE OLD PEOPLE TO LIVE COMFORTABLE IN THEIR OLD AGE WITH ADEQUATE CARE AND MEDICAL FACILITIES. 7. TO ENGAGE IN SUCH ACTIVITY OR ACTIVITIES, SOCIAL MO RAL, CULTURAL, EDUCATIONAL OR ANY OTHER CONTRIBUTE TO TH E TOTAL DEVELOPMENT OF THE HUMAN PERSONALITY. 8. TO SET UP, ESTABLISH, MAINTAIN AND MANAGE CENTERS F OR THE STUDY OF AGRICULTURE, ARTS, SCIENCE, VOCATIONAL TRA INING, APPLIED TECHNOLOGY, RURAL MEDICAL CARE, HANDICRAFTS , .. AND ALSO RUN COTTAGE INDUSTRIES FOR THE BENEF IT OF PHYSICALLY, MENTALLY, SOCIALLY OR OTHERWISE HANDICA PPED INDIVIDUALS. 9. TO PROMOTE, SUBSCRIBE, ASSIST OR AMALGAMATE WITH OR CARRY ON THE ACTIVITIES OF ANY OTHER TRUST, SOCIETY, ASSO CIATION, AND ORGANIZATION WHETHER INCORPORATED OR NOT HAVING OBJECTS SIMILAR TO THE OBJECTS OF THE TRUST. 10. TO ESTABLISH AND EXTEND AND ALSO RUN SCHOOLS, INSTI TUTIONS, COLLEGES, SEMINARIES, ORPHANAGES, WIDOWS HOMES, HOM E FOR THE AGED, HANDICAPPED, MENTALLY RETARDED AND OT HER CHARITABLE INSTITUTIONS. 11. ENABLING COMMUNITY PEOPLE TO REALIZE THE IMPORTANCE OF CHILD CARE AND ORGANIZE PROGRAMMES FOR OVERALL DEVELOPMENT OF CHILDREN IN NEED. ASSISTING CHILDRE N TO COMPLETE THEIR ACADEMIC COURSES AND TO PURSUE HIGHE R EDUCATION. 12. TO PROVIDE, ORGANIZE, PROMOTE, MAINTAIN, MANAGE AND RENDER CHARITABLE AND BENEVOLENT SERVICE AND ALL OT HER ANCILLARY SERVICES TO THE POOR, NEEDY, SICK, DISTRE SSED, DESTITUTE, MENTALLY RETARDED, . AND OTHER NATURAL CALAMITIES. 13. TO ORGANIZE AND CONDUCT TRAINING COURSES, WORKSHOPS SEMINARS, STUDY GROUPS, HEALTH CAMPS AND THE LIKE. 14. AWARENESS OF CAUSES, PREVENTIVE METHODS OF VARIOUS DISABILITIES, NEED FOR IMMUNIZATION, HEALTH EDUCATI ON, ENVIRONMENTAL SANITATION, TO AVOID ENVIRONMENTAL PO LLUTION AND CONTAMINATION AND SPECIAL NEEDS OF THE HANDICAP PED. ITA NO.662/BANG/10 PAGE 7 OF 9 15. TO ORGANIZE TODAYS YOUTH TO DEVELOP THEIR FULL POT ENTIALITY BY CONDUCTING APTITUDE TESTS, TALENT IDENTIFICATION EXERCISE, AND PERSONALITY DEVELOPMENT PROGRAMS. 16. TO ASSIST IN BUILDING UP BROKEN COMMUNITIES, DISTRI BUTE CARE PACKAGES TO THOSE WHO ARE SUFFERING AND IN NEE D OF FOOD, CLOTHINGS, SHOES, SHELTER ETC. 17. TO INITIATE PROGRAMS THAT WILL PROVIDE FINANCIAL SU PPORT REGARDING EDUCATIONAL TOOLS RECREATION, LIBRARIES A ND BASIC COMPUTER CLASSES IN ORDER TO GIVE INDIVIDUALS OPPOR TUNITIES TO REACH THEIR HIGHEST POTENTION. 18. TO INITIATE INTER-GENERATIONAL PROGRAMS AND PROJECT S BETWEEN YOUTH AND PARENTS BY PROMOTING ACTIVITIES S UCH AS SPORTS AND OTHER ENTERTAINMENTS AND ACTIVITIES. 19. TO FOCUS ON NETWORKING WITH AGENCIES THROUGH NEWSLETTERS, BROCHURES AND OTHER MATERIALS AND INFO RMATION WHICH WILL GIVE PUBLIC ASSISTANCE AND AWARENESS TO THE COMMUNITY. 20. TO FOCUS ON THE NETWORKING WITH THE MEDIA IN AREAS OF TV, RADIO, FILMS, LITERATURES, NEWSLETTERS AND OTHER AV ENUES OF MEDIA EVENTS. 21. TO PROVIDE LOVE, CARING AND ASSURANCE TO INDIVIDUAL S THUS GIVING THEM AN INCENTIVE TO REACH CONSTRUCTIVE DEVELOPMENT AND GROWTH. 22. TO START ALL TYPES OF TRAINING AND EDUCATIONAL AND TECHNICAL INSTITUTIONS, LOWER AND HIGHER, AND CARRYING THE RE SEARCH ON THE ECONOMICAL, AGRICULTURAL, SOCIOLOGICAL, POLITIC AL, HISTORICAL AND SMALL SCALE INDUSTRIES ETC. .. 25. TO HELP WEAKER SECTION OF THE SOCIETY IRRESPECTIVE OF CASTE, CREED AND RELIGION, FOR THEIR SOCIO-ECONOMIC UPLIFT MENT BY ALL LEGITIMATE AND CONSTITUTIONAL MEANS. 26. TO CONDUCT A SEMINAR AND CONFERENCES WITH RELATED T O THE MEDITATION AND SPIRITUALIZATION. 27. TO CONSTRUCT MEDITATION CENTRES IN DIFFERENT PARTS OF INDIA. 28. GENERALLY TO DO SUCH ACTS, DEEDS AND OTHER THINGS W HICH ARE INCIDENTAL AND CONDUCIVE TO THE ATTAINMENT OF A LL OR ANY OTHER OF THE ABOVE OBJECTS. ITA NO.662/BANG/10 PAGE 8 OF 9 8. ON A CLOSE EXAMINATION OF THE TRUST DEEDS PRODUC ED BEFORE US, IT IS VERY CLEAR THAT THE TRUSTS MAIN OBJECTS ARE RELIGI OUS AND CHARITABLE IN NATURE. EVEN THOUGH THE TRUST HAD BEEN NOT VERY PRO MPT TO COMPLY WITH ALL THE STATUTORY OBLIGATIONS INITIALLY IT HAS MADE ALL EFFORTS NOW TO COMPLY WITH THE LEGAL FORMALITIES. HAVING CONSIDERED THE FACTS OF THE CASE WE ARE OF THE CONSIDERED VIEW THAT PRIMA FACIE THE TRUST DESERVES TO BE GRANTED REGISTRATION UNDER THE PROVISIONS OF THE ACT. HOWEV ER, SINCE ALL THE DOCUMENTS PRODUCED BEFORE US WERE NOT BEFORE THE LD . DITE(E), IN THE INTEREST OF JUSTICE, WE REMAND THE MATTER BACK TO THE FILE OF THE LD.DITE(E) TO EXAMINE ALL THE RELEVANT DOCUMENTS AN D JUDICIOUSLY PASS APPROPRIATE ORDER AS PER LAW. THE ASSESSEE TRU ST IS ADVISED TO PRODUCE ALL THE RELEVANT DOCUMENTS REQUIRED BY THE REVENUE AND CO- OPERATE WITH THE PROCEEDINGS. REVENUE IS ALSO DIREC TED TO EXPEDITIOUSLY COMPLETE THE PROCEEDINGS. IT IS ORDER ED ACCORDINGLY. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF NOVEMBER, 2010. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 19 TH NOVEMBER, 2010. DS/- ITA NO.662/BANG/10 PAGE 9 OF 9 COPY TO: BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE. 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE