Shri Shirdi Sai Darbar Charitable Trust (Dharamshala), Barnala V. CIT (Exemptions), Chandigarh

ITA 692/CHANDI/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9878 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 21-03-2016
• Assessment Year: misc
• Appeal Filed On: 21-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.692/CHD/2015 (UNDER SECTION 12AA OF THE ACT) SHRI SHIRDI SAI DARBAR CHARITABLE VS. THE C.I.T.(EXEMPTIONS), TRUST (DHARAMSHALA), CHANDIGARH. BARNALA. PAN: AALAS3713Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI SUSHIL KUMAR, DR DATE OF HEARING : 03.05.2016 DATE OF PRONOUNCEMENT : 08.06.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH DATED 26.6.2015, REJECTING THE REGISTRATION TO THE ASSESSEE UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), 2. BRIEFLY, THE FACTS ARE THAT AN APPLICATION UNDE R SECTION 12A OF THE ACT WAS FILED BY THE ASSESSEE AS ON 9.12.2014 BEFORE THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH. AFTER GIVING AN OPPORTUN ITY OF BEING HEARD THE COMMISSIONER OF INCOME TAX (EXEMPTI ONS) 2 DENIED THE ASSESSEE THE REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE HIS ORDER DATED 26.6.2015. 3. AGAINST THIS, THE ASSESSEE HAS COME UP IN APPEA L BEFORE US, RAISING THE FOLLOWING GROUNDS : 1. THAT THE LD. COMMISSIONER OF INCOME TAX HAS ERRED IN LAW AS WELL AS ON FACTS IN REJECTING REGISTRATION UND ER SECTION 12AA OF THE ACT WHICH IS ARBITRARY & UNJUSTIF IED. 2. THAT THE REGISTRATION HAS BEEN REFUSED ONLY ON T HE BASIS OF SUSPICION, CONJECTURES AND SURMISES WHICH IS NOT PERMITTED UNDER THE LAW AND AS SUCH THE ORDER REFUSING REGISTRATION IS ILLEGAL, ARBITRARY AND UNJUSTIFI ED. 3. THAT THE LD. COMMISSIONER OF INCOME TAX HAS FURT HER ERRED IN HOLDING THAT CLAUSE 12 OF THE MEMORANDUM GI VES ABSOLUTE POWERS TO THE TRUSTEES TO MANAGE THE PROPERT Y OF THE TRUST WHICH IS UNFOUNDED, WITHOUT ANY BASIS AND AS SUCH THE ORDER IS ARBITRARY AND UNJUSTIFIED. 4. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF TH E CASE AND IS, THUS, UNTENABLE. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) IN HIS ORDER HAS GIVEN TWO REASONS FOR DECLINING THE REGISTRATION UNDER SECTION 12A OF TH E ACT. THE FIRST IS THAT THE ASSESSEE TRUST HAS NOT FILED ANY RETURN OF INCOME FOR THE EARLIER YEARS. THEREFORE, THE ACCOUNTS OF THE TRUST ARE NOT RELIABLE AND, THEREFO RE, NOT GENUINE. ANOTHER REASON GIVEN BY THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) IS THAT AS PER CLAUSE-12 OF THE 3 MEMORANDUM OF THE TRUST, ABSOLUTE POWERS WERE GIVEN TO THE TRUSTEES TO MANAGE THE PROPERTY OF THE TRUST WH ICH MAY ATTRACT THE PROVISIONS OF SECTION 13(1)(C) OF T HE ACT. WITH REGARDS TO THE FIST CONTENTION OF THE COMMISSI ONER OF INCOME TAX (EXEMPTIONS) THAT THE ASSESSEE HAS NOT F ILED RETURN OF INCOME OF EARLIER YEARS, THE LEARNED COUN SEL FOR THE ASSESSEE STATED THAT IT IS NOT THE GOOD REASON TO REJECT THE APPLICATION FOR REGISTRATION UNDER SECTION 12A OF THE ACT. FOR THIS, RELIANCE WAS PLACED ON THE JUDGMEN T OF THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. SHRI A DVAIT ASHRAM SOCIETY (2013) 50(I) ITCL 209 (ALL-HC) AND T HAT OF CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF SHINE EDUCATIONAL & SOCIAL WELFARE TRUST VS. COMMISSIONER OF INCOME-TAX, 60 TAXMANN.COM 183 (CHENNAI TRIB.). 5. WITH REGARD TO SECOND CONTENTION OF COMMISSIONER OF INCOME TAX (EXEMPTIONS), AS FAR WAS THE APPLICABILITY OF PROVISIONS OF SECTION 13(1(C) OF T HE ACT, RELIANCE WAS PLACED ON THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF SRI GURU HAR RAJ J I RELIGIOUS AND CHARITABLE TRUST VS. CIT(EXEMPTIONS) IN ITA NO.323/CHD/2015 DATED 27.4.2016 AND ANOTHER ORDER O F I.T.A.T., CHANDIGARH BENCH IN THE CASE OF BHAI MAN SA SINGH JI WELFARE SOCIETY (REGD.) VS. CIT (2015) 62 TAXMANN. 299 (CHANDIGARH TRIB.). IT WAS STATED THA T FOR THE PURPOSE OF GRANTING REGISTRATION UNDER SECTION 12A OF THE ACT, THE COMMISSIONER OF INCOME TAX (EXEMPTIONS ) HAS TO LOOK ONLY INTO THE CHARITABLE NATURE OF THE OBJE CTS OF THE ASSESSEE TRUST AND GENUINENESS OF ITS ACTIVITIE S AND 4 THE OBJECTIONS RAISED BY THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) IN THE PRESENT CASE ARE NOT RELATED TO ANY OF THESE TWO CONDITIONS, THEREFORE, THE ASSESSEE MAY B E GRANTED REGISTERATION UNDER SECTION 12A OF THE ACT. 6. THE LEARNED D.R. RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (EXEMPTIONS). 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE FIRST REASON ON THE BASIS OF WHICH THE COMMISSI ONER OF INCOME TAX (EXEMPTIONS) HAS REFUSED TO GRANT REGISTRATION TO THE ASSESSEE IS THAT THE ASSESSEE H AS NOT BEEN FILING ITS INCOME-TAX RETURNS IN THE EARLIER Y EARS. WE DO NOT FIND THAT IT IS A GOOD REASON TO REJECT THE APPLICATION FOR REGISTRATION SINCE THE TWO CONDITIO NS WHICH THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) HAS TO SATISFY WHILE GRANTING THE REGISTRATION UNDER SECTI ON 12A OF THE ACT, ARE THAT THE OBJECTS OF THE ASSESSEE AR E CHARITABLE IN NATURE AND THE ACTIVITIES ARE GENUINE . JUST BECAUSE THE ASSESSEE HAS NOT FILED ITS INCOME TAX R ETURNS IN EARLIER YEARS, IT CAN NOT BE SAID THAT THE ACTIV ITIES OF THE ASSESSEE ARE NOT GENUINE. RELIANCE PLACED BY T HE LEARNED COUNSEL FOR THE ASSESSEE ON THE JUDGMENT OF THE ALLAHABAD HIGH COURT AS WELL AS THE ORDER OF THE CH ENNAI BENCH OF THE TRIBUNAL ARE NOT OUT OF PLACE, WHEREBY IT HAS BEEN HELD THAT NON-FILING OF RETURN CANNOT BE ONE O F THE REASONS FOR DENYING REGISTRATION UNDER SECTION 12A OF THE 5 ACT. WITH REGARD TO THE SECOND OBJECTION RAISED BY THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) THAT AS PER CLAUSE-12 OF THE MEMORANDUM OF TRUST, THE TRUSTEES HAVE BEEN GIVEN ABSOLUTE POWERS TO MANAGE THE PROPERTY. WE HAVE PERUSED THE CLAUSE-12 OF THE MEMORANDUM OF THE TRUST, WHEREBY THE TRUSTEES ARE AUTHORIZED TO DEMIS E THE IMMOVABLE PROPERTY OR PROPERTIES OF THE TRUST EITHE R FROM YEAR TO YEAR OR FOR ANY FIXED TERM OR FOR ANY TERM OF YEARS OR NO MONTHLY BASIS AT SUCH RENT AND SUBJECT TO SUC H CONDITIONS AS THEY DEEM FIT AND PROPER AND ALSO ACC EPT SURRENDER OF LEASE AND MAY MANAGE THE PROPERTY AS T HEY THINK PROPER. FROM THE PERUSAL OF THIS CLAUSE, WE OBSERVE THAT THE TRUSTEES HAVE BEEN GIVEN POWERS TO GIVE PR OPERTY OF THE TRUST ON LEASE OR ON RENT. WE DO NOT FIND A NYTHING WRONG IN THIS CLAUSE SO AS TO DENY THE ASSESSEE THE REGISTRATION UNDER SECTION 12A OF THE ACT. AS REGA RDS THE APPREHENSION OF THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) THAT HIS CLAUSE MAY ATTRACT THE PROVIS IONS OF SECTION 13(1)(C) OF THE ACT, WE ARE OF THE VIEW THA T THE CONDITIONS AS PROVIDED IN SECTION 13 OR ELSEWHERE A RE TO BE SEEN BY THE ASSESSING OFFICER AT THE TIME OF ASS ESSMENT PROCEEDINGS ON YEARLY BASIS AND NOT BY THE CIT (APP EALS) WHILE GRANTING REGISTRATION UNDER SECTION 12A OF TH E ACT. 8. SECTION 13 COMES INTO PLAY AT THE TIME OF GRANTING EXEMPTION UNDER SECTION 11 OF THE ACT AND NOT AT THE TIME OF GRANTING REGISTRATION UNDER SECTION 12A OF THE ACT. THE ONLY TWO REQUIREMENTS AS STATED HEREINABO VE WHILE GRANTING REGISTRATION UNDER SECTION 12A OF TH E ACT, 6 ARE WITH RESPECT TO THE CHARITABLE NATURE OF THE OB JECTS OF THE ASSESSEE AND GENUINENESS OF THE ACTIVITIES. S INCE WE OBSERVE THAT NO ADVERSE REMARKS HAVE BEEN MADE BY T HE COMMISSIONER OF INCOME TAX (EXEMPTIONS) WITH REGARD TO THE OBJECTS CONTAINED IN MEMORANDUM AND AS STATED HEREINABOVE THAT THE OBSERVATIONS OF THE COMMISSION ER OF INCOME TAX (EXEMPTIONS) DO NOT LEAD TO THE CONCLUSI ON THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE , WE HERE BY DIRECT THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) TO GRANT REGISTRATION UNDER SECTION 12 A OF THE ACT TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF JUNE, 2016. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 8 TH JUNE, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE D R. ASSISTANT REGISTRAR, ITAT, CHANDIGARH