ACL FOUNDATION, Jaipur V. CIT, Jaipur

ITA 674/JPR/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2346 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 22-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: VEDANTA AGARWAL
• Section: 12A; 12AA

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 674 /JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : ACL FOUNDATION, E-97, RIA AVENUE, SUBHASH MARG, C-SCHEME, JAIPUR. CUKE VS. THE CIT (EXEMPTIONS), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAETA 9669 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RES PONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI VEDANTA AGARWAL (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 05/03/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 08/03/2019 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 16.05.2016 OF THE LD. CIT(E), JAIPUR PASSED U/S 12A A OF THE INCOME TAX ACT. THE ASSESSEE HAS RAISED FOLLOWING GROUND:- 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE & IN L AW ALSO LD. CIT(EXEMPTION), JAIPUR GROSSLY ERRED IN REJECTING T HE APPLICATION U/S 12AA OF THE INCOME TAX ACT, 1961. ITA NO. 674/JP/2016 ACL FOUNDATION VS. CIT(E) 2 2. THE ASSESSEE TRUST WAS CREATED BY TRUST DEED DAT ED 21.11.2014 WHICH WAS REGISTERED WITH THE DEVASTHAN DEPARTMENT, JAIPUR VIDE CERTIFICATE DATED 06.10.2015. THE ASSESSEE TRUST AP PLIED FOR REGISTRATION U/S 12AA OF THE I.T. ACT VIDE APPLICATION IN FORM N O. 10A DATED 27.11.2015. THE LD. CIT(E) HAS DENIED THE REGISTRAT ION ON 3 GROUNDS MAINLY ON THE OBJECTS OF THE ASSESSEE TRUST ARE NOT CHARITABLE IN NATURE. IT WAS POINTED OUT THAT THE CLAUSE E OF THE OBJEC T CLAUSE DOES NOT CONFINE ONLY TO IMPARTING FORMAL EDUCATION BUT IT I S FOR TUITION CENTRE, COACHING CENTRE AND OTHER VOCATIONAL/SKILL TRAINING ACTIVITIES. SECONDLY THE ASSESSEE TRUST HAS NOT PRODUCE ANY RECORD TO SH OW APPLICATION OF ITS INCOME TOWARDS ANY OF THE OBJECTS. THE ACTIVITY FO R CARRIED OUT BY THE ASSESSEE IN THE OPINION OF THE LD. CIT(E) INCLUDES COMMERCIAL OBJECTS AND CONSEQUENTLY IT WAS HELD THAT IT IS NOT CHARITA BLE TRUST. THE THIRD OBJECTION OF THE LD. CIT(E) WAS REGARDING RUNNING O F GUEST HOUSE, CLUB HOUSE, RESORT ETC. WHICH ARE COMMERCIAL IN NATURE A ND NOT CHARITABLE THEREFORE, APPLICATION OF THE ASSESSEE WAS REJECTED . 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMI TTED THAT THOUGH THE OBJECT CLAUSE OF THE ASSESSEE TRUST CONTAINS VA RIOUS ACTIVITIES WHICH INCLUDES FORMAL EDUCATION AS WELL AS TUITION, COACH ING CENTRE. THE CLAUSE (G) ALSO INCLUDE THE OBJECTS OF PUBLIC UTILITY LIKE DHARMSHALA, RESTROOM, ITA NO. 674/JP/2016 ACL FOUNDATION VS. CIT(E) 3 GUEST HOUSE, CLUB HOUSE, RESORT ETC. HOWEVER, THE A SSESSEE HAS SUBSEQUENTLY AMENDED ITS OBJECTS IN THE TRUST DEED VIDE AMENDMENT DATED 07.12.2017. HE HAS FILED AN AMENDED TRUST DEE D AND OBJECT CLAUSE OF THE TRUST AND SUBMITTED THAT THE ASSESSEE HAS NOW REMOVED THE OBJECTS OTHER THAN IMPARTING FORMAL EDUCATION. THE LD. AR HAS FURTHER SUBMITTED THAT THE ENTIRE RECEIPTS DURING T HE YEAR ARE FROM THE ACTIVITY OF IMPARTING THE FORMAL EDUCATION AND NOT FROM ANY OTHER ACTIVITY. THEREFORE, THE PRIMARY AND PREDOMINANT OB JECT OF THE ASSESSEE IS TO IMPART THE EDUCATION THEN THE SECONDARY ACTIV ITIES/OBJECTS CANNOT CHANGE NATURE OF THE ASSESSEE TRUST FROM CHARITABLE TO NON CHARITABLE. THUS, THE LD. AR HAS SUBMITTED THAT THE REGISTRATIO N OF THE ASSESSEE TRUST MAY BE CONSIDERED IN LIGHT OF THE AMENDED TRU ST DEED. 4. ON THE OTHER HAND, LD. DR HAS SUBMITTED THAT THE LD. CIT(E) HAS DULY CONSIDERED THE NATURE OF OBJECTS OF THE ASSESS EE AND IT WAS FOUND THAT THE OBJECTS OF THE ASSESSEE TRUST ARE NOT CHAR ITABLE IN NATURE BUT THE SAME ARE COMMERCIAL THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR REGISTRATION U/S 12AA OF THE I. T. ACT. HE HAS RELI ED UPON THE IMPUGNED ORDERS OF THE LD. CIT(E). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE LD. CIT(E) HAS CONSIDERED T HE OBJECTS OF THE ITA NO. 674/JP/2016 ACL FOUNDATION VS. CIT(E) 4 ASSESSEE TRUST IN CLAUSES E, G, H, I & T AS REPROD UCED IN PARA 4 AS UNDER:- 4. APART FROM THE ABOVE THE OBJECTS WHICH NEED SPE CIAL DISCUSSION ARE AS UNDER:- S.NO. S.NO. OF OBJECT AS PER TRUST DEED DESCRIPTION OF OBJECTS 1 (E) FO|KY;] EGKFO|KY;] O;OLKF;D EGKFO|KY;] IYS LDWY] V;W'KU LSUVJ] DKSFPAX LSUVJ LHKH IZDKJ DS RDUHDH O XSJ RDUHDH LALFKK VUQLA/KKU LALFKK] RDUHDH ,OA VU; IZF'K{K.K MIYC/K DJKUK BR;KFN DH VPNS 'KS{KF.KD FODKL GSRQ FO'KSKR;K XJHC O F'K{KK O;; OGU UK DJ LDUS OKYS O;FDR VKSJ EFGYK F'K{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}S';KSA DKS IZNF'KZR DJUS OKYH IF=DK] IKF{KD] LKFGFR;D VKFN LKEXZH DK IZDK'KU DJOKUK ,OA MUDK TU LK/KKJ.K DKS L'KQYD VFKOK FU%'KQYD FORJ.K DJUKA ITA NO. 674/JP/2016 ACL FOUNDATION VS. CIT(E) 5 FURTHER IT IS ALSO WORTHWHILE TO REPRODUCE THE RULE NO.9 (PAGE NO.5) MENTIONED IN TRUST DEED UNDER THE HEAD U;KL DS FU;E O DK;NS IS AS UNDER:- U;KL }KJK MIYC/K DJKBZ TKUS OKYH LQFO/KKVKSA O ;KST UVKSA DS FY, 'KQYD IZKIR FD;S TK LDRS GS] TKS FD OG LE;&LE; IJ FU/KKZFJR DJSXKA AFTER CONSIDERING THESE OBJECTS THE LD. CIT(E) HAS OBSERVED THAT THE ASSESSEE IS CONDUCTING THE ACTIVITY OF PROVIDING VO CATIONAL/ SKILL TRAINING BY CHARGING FEES. THE OBJECTS WHICH ARE THE BASIS F OR DECIDING THE APPLICATION U/S 12AA OF THE ACT CONTAIN VARIOUS ACT IVITIES WHICH INCLUDES GUEST HOUSE, CLUB HOUSE, RESORT, OLD AGE HOME ETC. WE FIND THAT THOUGH THE ASSESSEE OBJECT CLAUSE CONTAINS VARIOUS ACTIVIT IES TO BE CARRIED OUT BY THE ASSESSEE HOWEVER, SUBSEQUENTLY THE ASSESSEE HAS AMENDED THE TRUST DEED AND REMOVED THE OBJECT CLAUSES AGAINST W HICH THE LD. CIT(E) HAS RAISED THE OBJECTION IN THE IMPUGNED ORDER. THE AMENDED TRUST DEED DATED 07.12.2017 HAS BEEN FILED BY THE ASSESSE E BEFORE US. WE FIND THAT SINCE THE OBJECTIONABLE OBJECT CLAUSE ARE NOW AMENDED BY THE ASSESSEE AS PER THE AMENDED TRUST DEED THEREFORE, T HE CASE OF THE ASSESSEE HAS TO BE CONSIDERED BASED ON AMENDED TRUS T DEED. FURTHER, THOUGH THE LD. CIT(E) HAS NOTED THAT THE RECEIPT HA S BEEN SHOWN FROM THE EDUCATION AND TRAINING FREES BUT IT WAS CONSIDE RED THAT THE PRIMARY ACTIVITY OF THE ASSESSEE TRUST IS CONDUCTING COACHI NG CLASSES AND IMPARTING VOCATIONAL TRAINING. THE LD. AR HAS SUBMI TTED THAT THE ENTIRE ITA NO. 674/JP/2016 ACL FOUNDATION VS. CIT(E) 6 RECEIPT IS FROM THE ACTIVITY OF IMPARTING FORMAL ED UCATION BUT THE LD. CIT(E) HAS NOT EXAMINED THIS FACT THAT THE ACTUAL A CTIVITY CARRIED OUT BY THE ASSESSEE WHICH HAS YIELDED THE RECEIPT OF RS. 1 7,43,955/-. IF THE ENTIRE RECEIPT IS FROM THE ACTIVITY OF IMPARTING ED UCATION AS CLAIMED BY THE ASSESSEE THEN, THE REGISTRATION U/S 12AA OF THE ACT HAS TO BE CONSIDERED FROM THE DATE OF APPLICATION. OTHERWISE THE REGISTRATION U/S 12AA HAS TO BE CONSIDERED FROM THE DATE OF THE AMEN DMENT IN THE TRUST DEED AND PARTICULARLY THE AMENDED OBJECTS OF THE AS SESSEE TRUST. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE PR ESENT CASE, WE SET ASIDE THE MATTER BACK TO THE RECORD OF THE LD. CIT( E) FOR RECONSIDERATION OF THE MATTER IN LIGHT OF THE AMENDED TRUST DEED AN D OBJECTS OF THE ASSESSEE TRUST AS WELL AS IN VIEW OF THE ABOVE OBSE RVATION. NEEDLESS TO SAY THE ASSESSEE BE GIVEN AN APPROPRIATE OPPORTUNIT Y OF HEARING BEFORE PASSING THE FRESH ORDER ON THIS ISSUE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08/03/2019. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER ITA NO. 674/JP/2016 ACL FOUNDATION VS. CIT(E) 7 TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08/03/2019. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ACL FOUNDATION, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- CIT(E), , JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 674/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR