M/s Vizianagaram Rotary Eye Trust, Vizianagaram V. The CIT-1, Visakhapatnam, Visakhapatnam

ITA 677/VIZ/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94089 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 18-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G GURUSAMY
• Keywords: Charitable institution
• Section: 12A; 12AA; 11

Judgement Text

ITA NO.677/VIZAG/2013 M/S. VIZIANAGARAM ROTARY EYE TRUST, VIZIANAGARAM IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B.R. BASKARAN , ACCOUNTANT MEMBER ITA NO.677/VIZAG/2013 ASSESSMENT YEAR : N.A. M/S. VIZIANAGARAM ROTARY EYE TRUST VIZIANAGARAM VS. CIT-1 VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AABTV 6746R ASSESSEE BY: SHRI G.V.N. HARI, ADVOCATE REVENUE BY: SHRI G. GURUSAMY, CIT(DR) DATE OF HEARING : 23.7.2015 DATE OF PRONOUNCEMENT : 23.7.2015 ORDER PER D. MANMOHAN, VICE PRESIDENT:- THIS APPEAL BY THE ASSESSEE TRUST IS DIRECTED AGAI NST THE ORDER PASSED BY CIT-1, VISAKHAPATNAM, WHEREIN LD. COMMISSIONER O BSERVED THAT THE GRANT OF REGISTRATION U/S 12AA OF THE INCOME-TAX ACT AT T HIS JUNCTURE IS PREMATURE AND ACCORDINGLY REJECTED. FACTS NECESSARY FOR THE DISPOSAL OF APPEAL ARE STATED IN BRIEF. 2. THE ASSESSEE TRUST HAS COME INTO EXISTENCE VIDE A TRUST DEED DATED 17.3.2013. THE MAIN OBJECTS OF THE TRUST ARE A) TO CREATE INFRASTRUCTURE FACILITIES TO HARVEST THE DONOR EYES, PRESERVE AND CONDUCT THE GRAFTING OPERATION TO THE RECIPIENT B) TO PROPAGATE THE NEED TO DONATE THE EYES AFTER DEATH FOR TRANSPLANTATION TO PERSONS SUFFERING FROM CORNEAL BLINDNESS (C) TO CREATE INFRASTRUCTURE TO CONDUCT EYE SCREENING CAMP S AND PROVIDE FREE IOL AND OTHER EYE CONNECTED OPERATIONS DIRECTED BY THE OPHTHALMOLOGISTS, FREE TO THE POOR AND AGED PEOPLE. THERE ARE MANY SIMILAR O BJECTS LISTED OUT IN THE OBJECTS CLAUSE. ITA NO.677/VIZAG/2013 M/S. VIZIANAGARAM ROTARY EYE TRUST, VIZIANAGARAM 2 3. IT HAS FILED AN APPLICATION FOR REGISTRATION OF T HE TRUST U/S 12A OF THE ACT ALONG WITH FORM NO.10A. THE LD. COMMISSIONER O BSERVED THAT THE ASSESSEE DID NOT APPEAR IN PERSON AND COULD NOT FUR NISH ANY MATERIAL TO SHOW THAT THE TRUST JUSTIFIES THE CLAIM FOR GRANT OF REG ISTRATION. HE ALSO NOTICED THAT AS ON 3 RD WEEK OF JUNE, 2013, THE TRUST HAD INCURRED AN EXPE NDITURE OF RS.54,860/- TOWARDS PRINTING OF PAMPHLETS AND MISCE LLANEOUS EXPENDITURE FOR RUNNING THE OFFICE AS AGAINST THE TOTAL RECEIPTS OF RS.60,000/- WHICH SHOWS THAT NO TANGIBLE ACTIVITY IN THE AREA OF VISION RE LATED HEALTH PROBLEMS WERE CARRIED OUT. HE THEREFORE REJECTED THE APPLICATION AS BEING PREMATURE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE TRIBUNAL WHERE IN IT WAS CONTENDED THAT THE APPLICATION WAS REJECTED IN AN ARBITRARY MANNER BY GIVING ONLY ONE OPPORTUNITY TO THE ASSESSEE. IT WAS ALSO CONTENDED THAT THE ASSESSEE TRUST IS ASSOCIATED WITH ROTARY INTERNATION AL WHICH IS AN INTERNATIONALLY RENOWNED ORGANIZATION MEANT FOR SER VICE TO HUMANITY. IT WAS FURTHER SUBMITTED THAT THE PRESIDENT WAS PRE-OCCUPI ED IN HIS MEDICAL PROFESSION ON THE DATE FIXED FOR HEARING AND HENCE HE COULD NOT APPEAR ON THAT DATE BUT THE LD. CIT, WITHOUT PROVIDING ONE MO RE OPPORTUNITY, PROCEEDED TO DISPOSE OF THE APPLICATION IN HURRY. LD. COUNSE L ADVERTED OUR ATTENTION TO PAGE 24 OF THE PAPER BOOK TO SUBMIT THAT THE ASSESS ING OFFICER WAS BRIEFED ABOUT THE OBJECTS OF THE TRUST BUT THE TRUST HAS NO T YET RECEIVED ANY CONTRIBUTIONS OR DONATIONS APART FROM INITIAL CONTR IBUTION OF RS.60,000/-, WHICH IS PROVIDED BY THE ROTARY CLUB, VIZIANAGARAM AND THUS IT COULD NOT COMMENCE ITS ACTIVITY BECAUSE ORDINARILY THE CONTRI BUTIONS FROM VARIOUS MEMBERS WOULD LEND SUPPORT TO CHARITABLE ORGANIZATI ONS IN CARRYING OUT CHARITABLE ACTIVITIES WHICH IS POSSIBLE ONLY WHEN I T IS REGISTERED AS CHARITABLE TRUST AND IN MOST OF THE CASES WHEN SUCH TRUST IS E LIGIBLE FOR DEDUCTION UNDER THE INCOME-TAX ACT U/S 80G. LD. COUNSEL ALSO SUBMI TTED THAT AT THE INITIAL STAGE, ASSESSEE CANNOT BE EXPECTED TO CARRY ON ACTI VITY UNLESS PUBLIC FUNDS ARE RECEIVED AND HENCE MERE NOT CARRYING OUT ANY AC TIVITY CANNOT BE A REASON FOR REJECTING THE REGISTRATION U/S 12AA OF THE ACT UNLESS THE OBJECTS OF THE TRUST IS FOUND TO BE CONTRARY TO THE PROVISIONS OF THE ACT, WHEREAS IN THE INSTANT CASE THERE IS NO SUCH OBSERVATION MADE BY T HE LD. COMMISSIONER. HE ALSO RELIED UPON THE FOLLOWING DECISIONS OF THE ITA T VISAKHAPATNAM BENCH. ITA NO.677/VIZAG/2013 M/S. VIZIANAGARAM ROTARY EYE TRUST, VIZIANAGARAM 3 IN SUPPORT OF THE ASSESSEES CONTENTION THAT MERELY BECAUSE THE ASSESSEE HAS NOT COMMENCED ITS ACTIVITIES REGISTRATION CANNOT BE REJECTED; THE ASSESSING OFFICER IS ALWAYS EMPOWERED UNDER THE ACT TO LOOK I NTO THE GENUINENESS OF THE ACTIVITIES IN THE CASE OF VIOLATION OF PROVISIO NS CONTAINED U/S 11 TO 13 OF THE ACT AND THUS REFUSING TO GRANT REGISTRATION U/S 12AA OF THE ACT IS NOT JUSTIFIED SOLELY ON THE GROUND THAT THE ASSESSEE HA S NOT COMMENCED ITS ACTIVITIES. 1) ITA NO.186/VIZAG/2012 SRI MAATA SEVA TRUST, KOVVUR 2) ITA NOS.649&650/VIZAG/2013 SIVANANDA SUPATHA FOUNDA TION, TADEPALLIGUDEM 5. ON THE OTHER HAND, THE LD. D.R. SUBMITTED THAT T HE APPLICATION FILED BY THE ASSESSEE U/S 12AA OF THE ACT IS PREMATURE AND H ENCE THE LD. COMMISSIONER WAS JUSTIFIED IN REJECTING THE REGISTR ATION U/S 12AA OF THE ACT. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE RECORD. IT IS NOT THE CASE OF REVENUE THAT THE OBJE CTS OF THE TRUST ARE NON CHARITABLE IN NATURE. IT HAS ALSO NOT BEEN SHOWN TH AT THE ASSESSEE HAD CARRIED OUT ANY ACTIVITY WHICH IS NOT MEANT FOR CHA RITABLE ACTIVITY. THIS BEING THE FIRST YEAR AND ASSESSEE HAVING NOT RECEIVED ANY DONATIONS OR FUNDS FROM OUTSIDERS, EXCEPT THE INITIAL CONTRIBUTION, IT CANN OT COMMENCE ITS ACTIVITIES SINCE IT NEEDS SUFFICIENT FUNDS TO COMMENCE ACTIVIT IES. THE LD. COMMISSIONER APPEARS TO HAVE DENIED THE REGISTRATION ONLY ON THE GROUND THAT THE ASSESSEE HAS NOT CARRIED ANY ACTIVITY, WHICH, IN OUR CONSIDE RED OPINION, CANNOT BE A REASON FOR DENYING REGISTRATION IN THE LIGHT OF THE DECISIONS CITED SUPRA. HAVING REGARD TO CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE ORDER OF THE COMMISSIONER AND DIRECT HIM TO GRANT REGISTRATION U /S 12AA OF THE ACT TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE T RUST IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 23 RD JULY, 2015 SD/- SD/- (B.R. BASKARAN) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT VISAKHAPATNAM, DATED 23.7.2015 VG/SPS ITA NO.677/VIZAG/2013 M/S. VIZIANAGARAM ROTARY EYE TRUST, VIZIANAGARAM 4 COPY TO 1 M/S. VIZIANAGARAM ROTARY EYE TRUST, D.NO.15-1-45, VENKATAPADMA HOSPITAL, VIZIANAGARAM 2 THE CIT-1, VISAKHAPATNAM, 3 THE CIT(A), VISAKHAPATNAM 4 THE DR, ITAT, VISAKHAPATNAM. 5 GUARD FILE. BY ORDER ASST. REGISTRAR INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM