Adhyatam Chetana Charitable Trust, Surat V. The Income Tax Officer, (HQ) (Exemptions), Ahmedabad

ITA 663/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1508 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-04-2016
• Assessment Year: misc
• Appeal Filed On: 23-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Keywords: Charitable institution
• Section: 12A; 12AA; 12; 11

Judgement Text

I.T.A. NO . 663 /AHD/ 20 1 5 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD B BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND S.S. GODARA JM ] I.T.A. NO. 663 /AHD/ 20 1 5 ADHYATAM CHETANA CHARITABLE TRUST .... .......... .APPELLANT 223, AJNTA SHOPPING CENTER, RING ROAD, S URAT 395 002. [ PAN: A ACTA 5419 R ] VS. IN COME TAX OFFICER (HQ) (EXEMPTIONS), AHMEDABAD . ............. . RESPONDENT APPEARANCES BY: MANOJ JAIN , FOR THE APPELLANT JAGDISH , FOR THE RESPONDENT D ATE OF CONCLUDING THE HEARING : APRIL 8 TH , 2 01 6 DATE OF PRONOUNCING THE ORDER : MAY 31 ST , 201 6 O R D E R PER PRAMOD KUMAR AM : BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 22.01.2015 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX ( EXEMPTION S ), AHMEDABAD, DECLINING REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) TO THE ASSESSEE APPELLANT. 2. GRIEVANCE OF THE ASSESSEE APPELLANT IS AS FOLLOWS : - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT APPEAL (EXEMPTIONS) AHMEDABAD, HAS ERRED IN REJECTION OF TRUST REGISTRATION U/S.12AA OF THE I.T. ACT, 1961 WITHOUT CONSIDERING THE NATURE OF TRUST ACTIVITIES AND OBJECTS. 2. IT IS PRAYED THAT TH E ABOVE REJECTION SHALL BE REVIEWED AND SENT FOR APPROVAL BACK TO CIT (EXEMPTIONS), AHMEDABAD. I.T.A. NO . 663 /AHD/ 20 1 5 PAGE 2 OF 4 3. AS A PERUSAL OF THE IMPUGNED ORDER CLEARLY SHOWS THE SHORT REASON FOR WHICH THE ASSESSEE APPELLANT HAS BEEN DECLINED REGISTRATION UNDER SECTION 12AA IS THAT THE DISSOLUTION CLAUSE OF THE TRUST, ACCORDING TO THE COMMISSIONER, IS NOT PROPER. THE RELEVANT OBSERVATION OF THE LD. COMMISSIONER IS REPRODUCED AS UNDER : - 4. ON VERIFICATION OF RECORDS AND REPLY OF THE ASSESSEE, T HE DISSOLUTION CLAUSE IN THE TRUST DEED READS AS UNDER . IN CASE IN ANY CONDITION IF THE TRUST WAS TO BE CLOSED THEN THE PROPERTY OF THE TRUST WILL BE HAND ED OVER TO THE TRUST HAVING SIMILAR OBJECT. 5. IT IS CLEAR FROM THE ABOVE , THAT DISSOLUTION CLAUSE IS NOT PROPER IN DEED. FURTHER IT IS ALSO NOTICED THAT T RUST DOES NOT HAVE ANY CLAUSE THAT THE TRUST WILL NOT BE DISSOLVED AND IT IS PERPETUAL. AS PER THE BOMBAY PUBLIC TRUST ACT AND SETTLED POS ITION OF LAW, A TRUST IS A PERPETUAL TRUST. IN CASE THE ACTIVITIES OF THE TRUST CANNOT BE CARRIED OUT, THE SAME, WITH TH E SANCTION OF CHARITY COMMISSIONER AND AS PER THE PROCEDURES OF THE BOMBAY PUBLIC TRUST ACT, THE ASSETS ETC. HAVE TO BE TRANSFERRED TO ANOTHER TRUST CARRYING ON SIMILAR ACTIVITIES. NO SUCH CLAUSE IS THERE, HENCE APPROVAL CANNOT BE GIVEN. 6. IT WAS ALSO PO INTED OUT TO THE APPLICANT TRUST THAT THERE SHOULD BE A DISSOLUTION CLAUSE IN THE TRUST DEED SHOULD WHEREBY IT SHOULD BE STATED THAT TRUST CANNOT BE DISSOLVED NORMALLY. AS PER THE BOMBAY PUBLIC TRUST ACT AND SETTLED POSITION OF LAW, A TRUST IS A PERPETUAL TRUST. IN CASE THE ACTIVITIES OF THE TRUST CANNOT BE CARRIED OUT, THE SAME, WITH THE S ANCTION OF CHARITY COMMISSIONER AND AS PER THE PROCEDURES OF THE BOMBAY PUBLIC TRUST ACT , THE ASSE T S ETC. HAVE TO BE TRANSFERRED TO ANOTHER TRUST CARRYING ON SIMILAR AC TIVITIES. NO SUCH CLAUSE IS THERE IN THE DEED. 4. HOWEVER, AS THE LEARNED REPRESENTATIVES VERY FAIRLY AGREE EVEN THOUGH LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY RELIES UPON THE STAND OF THE LD. COMMISSIONER, THAT THE ISSUE AS TO WHETHER REGISTRATION O F THE TRUST UNDER SECTION 12AA CAN BE DECLINED ON ACCOUNT OF SUCH AN INFIRMITY, EVEN IF THERE BY ANY, NOW STANDS COVERED IN FAVOUR OF THE ASSESSEE, AND BY A DECISION OF THE CO - ORDINATE BENCH IN THE CASE OF TARA EDUCATION AL AND CHARITABLE TRUST VS. DIT (EXE MPTIONS) (ITA NO.1247/MUM/2013) - ORDER DATED 1 8 .0 7 .2014, WHEREIN THE CO - ORDINATE BENCH HAS, INTER ALIA, OBSERVED AS FOLLOWS : - I.T.A. NO . 663 /AHD/ 20 1 5 PAGE 3 OF 4 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED TH AT THE APPLICATION FILED BY THE ASSESSEE U/S 12A OF THE ACT HAS BEEN REJECTED BY THE ID. DIT (EXEMPTIONS) MAINLY ON THE GROUND THAT THE RELEVANT TRUST DEED DOES NOT CONTAIN THE SO - CALLED 'DISSOLUTION CLAUSE'. AS PER THE PROVISIONS OF SECTION 11 & 12 OF THE ACT, INCOME DERIVED FROM PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES AND INCOME OF TRUSTS OR INSTITUTIONS FROM CONTRIBUTIONS ARE EXEMPT FROM TAX PROVIDED SUCH TRUSTS OR INSTITUTIONS ARE REGISTERED U/S 12A OF THE ACT. THE PROCEDURE FOR REGISTRATION U/S 12A IS PRESCRIBED IN SECTION 12AA OF THE ACT WHICH PROVIDES THAT THE COMMISSIONER, ON THE RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE U/S 12A, SHALL CALL FOR SUCH INFORMATION FROM THE TRUST/INSTITUTION AS HE THINKS NECESSA RY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST/INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS DEEMED NECESSARY ON THIS BEHALF. IT FURTHER PROVIDES THAT AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST/INSTITUTION AN D THE GENUINENESS OF ITS ACTIVITIES, THE COMMISSIONER SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST/INSTITUTION U/S 12A AND IF HE IS NOT SO SATISFIED, HE SHALL PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST/INSTITUTION. THE SCOPE OF ENQUIRY CONTEMPLATED U/S 12AA OF THE ACT THUS IS LIMITED TO THE EXTENT OF COMMISSIONER GETTING HIMSELF SATISFIED ABOUT OBJECT OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES SO AS TO GRANT OR REFUSE THE REGISTRATION U/S 12A OF THE ACT. A PERUSAL OF THE IMPUGNE D ORDER OF THE ID. DIT (EXEMPTIONS), HOWEVER, SHOWS THAT HE HAS NOT RECORDED ANY ADVERSE COMMENT OR DIS - SATISFACTION ABOUT THE OBJECT OF THE TRUST OR GENUINENESS OF THE TRUST ACTIVITIES. HE HAS REFUSED TO GRANT THE REGISTRATION U/S 12A OF THE ACT ON THE GR OUND THAT ITS TRUST DEED DOES NOT CONTAIN 'DISSOLUTION CLAUSE'. IN OUR OPINION, THE ID. DIT (EXEMPTIONS) THUS HAS CLEARLY GONE BEYOND THE SCOPE OF ENQUIRY CONTEMPLATED U/S 12A OF THE ACT AND HAS REFUSED TO GRANT THE REGISTRATION U/S 12A OF THE ACT TO THE A SSESSEE TRUST ON A TOTALLY IRRELEVANT GROUND WITHOUT POINTING OUT AS TO HOW HE WAS NOT SATISFIED EITHER ABOUT THE OBJECT OF THE TRUST OR THE GENUINENESS OF ITS ACTIVITIES. WE THEREFORE SET ASIDE THE IMPUGNED ORDER OF THE ID. DIT (EXEMPTIONS) AND DIRECT THAT THE REGISTRATION U/S 12A OF THE ACT AS APPLIED BY THE ASSESSEE TRUST BE GRANTED. 5. WE SEE NO REASONS TO TAKE ANY OTHER VIEW O F THE MATTER THAN THE VIEW SO TAKEN BY THE CO - ORDINATE BENCH. RESPECTFULLY FOLLOWING THE ORDER OF THE CO - ORDINATE BENCH, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AND DIRECT THE LEARNED COMMISSIONER TO GRANT REGISTRATION UNDER SECTION 12AA OF THE ACT. 6. IN THE RESULT, APPEAL IS ALLOWED. P RONOUNCED IN THE OPEN COUR T TODAY ON THE 31 ST DAY OF MAY , 2016 . SD/ - SD/ - S.S. GODARA PRAM OD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 31 ST DAY OF MAY , 2016. I.T.A. NO . 663 /AHD/ 20 1 5 PAGE 4 OF 4 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGI STRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD