Sri Rajarajeswari Charitable Trust, V. The CIT, Rajahmundry, Rajahmundry

ITA 699/VIZ/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6858 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 03-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Keywords: Charitable institution
• Section: 12A; 12AA; 11

Judgement Text

ITA NO.699/VIZAG/2013 SRI RAJARAJESWARI CHARITABLE TRUST, CHINTALAPUDI, W .G. DIST. IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.699/VIZAG/2013 ASSESSMENT YEAR : NA SRI RAJARAJESWARI CHARITABLE TRUST CHINTALAPUDI, W.G. DIST. VS. CIT RAJAHMUNDRY (APPELLANT) (RESPONDENT) PAN NO.AAMTS 3518D ASSESSEE BY: SHRI C. SUBRAHMANYAM, CA REVENUE BY: SHRI K.V.N. CHARYA, CIT(DR) DATE OF HEARING : 02.07.2014 DATE OF PRONOUNCEMENT : 02.07.2014 ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER:- THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 3.10.2013 PASSED BY THE CIT RAJAHMUNDRY REJECTING A SSESSEES APPLICATION FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT. 2. BRIEFLY THE FACTS ARE, THE ASSESSEE TRUST WAS CR EATED VIDE REGISTERED TRUST DEED DATED 5.10.2012. CLAIMING ITSELF TO BE A CHARITABLE TRUST, ASSESSEE FILED AN APPLICATION IN FORM NO.10A BEFORE THE COMM ISSIONER OF INCOME-TAX, RAJAHMUNDRY ON 25.4.2013 FOR GRANT OF REGISTRATION U/S 12A OF THE ACT. THE CIT IN COURSE OF PROCEEDING BEFORE HIM CALLED UPON THE ASSESSEE TO PRODUCE THE TRUST DEED AND OTHER DETAILS. AFTER CONSIDERIN G THE OBJECTS OF THE ASSESSEE AND OTHER MATERIALS ON RECORD, THE CIT REJ ECTED ASSESSEES APPLICATION FOR GRANT OF REGISTRATION BASICALLY FOR THE REASON THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS FROM THE D ATE OF INCEPTION OF TRUST TILL 31.3.2013. HE FURTHER NOTED THAT THE TRUST VI DE LETTER DATED 12.9.2013 HAS ADMITTED THAT IT IS NOT HAVING FUNDS TO CONDUCT ALL THE ACTIVITIES MENTIONED IN THE TRUST DEED. THE CIT WAS THEREFORE OF THE VIEW THAT AS THE ASSESSEE HAS ITA NO.699/VIZAG/2013 SRI RAJARAJESWARI CHARITABLE TRUST, CHINTALAPUDI, W .G. DIST. 2 NOT CONDUCTED ANY ACTIVITIES AS PER THE OBJECTS OF THE TRUST DEED, THE GENUINENESS OF THE ACTIVITIES CANNOT BE EXAMINED. ACCORDINGLY, HE REJECTED ASSESSEES APPLICATION FOR GRANT OF REGISTRATION. 3. THE LD. A.R. SUBMITTED BEFORE US THAT THE TRUST WAS CREATED ONLY ON 5.10.2012 AND IT APPLIED FOR REGISTRATION ON 25.4.2 013. THEREFORE, WITHIN SUCH A SHORT PERIOD, IT CANNOT BE EXPECTED THAT THE ASSESSEE WOULD HAVE STARTED ACTIVITIES IN CONNECTION WITH THE OBJECTS M ENTIONED IN THE TRUST DEED. IT WAS SUBMITTED THAT SO FAR AS OBJECTS OF THE ASSES SEE AS MENTIONED IN THE TRUST DEED ARE CONCERNED, THEY ARE COMING WITHIN TH E MEANING OF CHARITABLE PURPOSE AS DEFINED U/S 2(15) OF THE ACT. IT WAS SU BMITTED THAT AS THE ASSESSEE HAS NOT RECEIVED ANY DONATIONS, IT COULD N OT COMMENCE ANY ACTIVITIES IN A HIGHER SCALE BUT THAT DOES NOT MEAN THAT THE ACTIVITIES ARE NOT GENUINE. IN SUPPORT OF SUCH CONTENTION, THE LD. A.R . RELIED UPON A NUMBER OF JUDICIAL PRECEDENTS INCLUDING THE DECISION OF ITAT, VISAKHAPATNAM BENCH IN CASE OF SIVANANDA SUPATHA FOUNDATION VS. CIT IN ITA T NO.649 & 650/VIZAG/2013 DATED 7.3.14, COPIES OF WHICH HAVE B EEN SUBMITTED IN THE PAPER BOOK. 4. THE LD. D.R. ON THE OTHER HAND SUBMITTED THAT AS THE ASSESSEE HAS NEITHER MAINTAINED ANY BOOKS OF ACCOUNTS NOR CONDUC TED ANY ACTIVITIES IN FURTHERANCE OF THE OBJECTS MENTIONED IN THE TRUST D EED, THE GENUINENESS OF THE ACTIVITIES CANNOT BE DETERMINED. THEREFORE, TH E CIT WAS JUSTIFIED IN REJECTING ASSESSEES APPLICATION FOR GRANT OF REGIS TRATION. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI ALS ON RECORD AS WELL AS IMPUGNED ORDER OF THE CIT. UNDISPUTEDLY, THE AS SESSEE WAS CREATED BY REGISTERED TRUST DEED DATED 5.10.2012 AND IT APPLIE D FOR REGISTRATION ON 25.4.2013. THEREFORE, IT IS NOT UNUSUAL THAT IT CO ULD NOT COMMENCE ANY ACTIVITIES WITHIN SUCH A SHORT PERIOD. FURTHER, AD MITTEDLY WHEN IT HAS NOT RECEIVED ANY FUNDS NOR COMMENCED ITS ACTIVITIES, TH ERE IS NO NEED TO MAINTAIN BOOKS OF ACCOUNTS. IN THE AFORESAID CIRCUMSTANCES, IT CANNOT BE HELD THAT AS THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS O R COMMENCED ITS ITA NO.699/VIZAG/2013 SRI RAJARAJESWARI CHARITABLE TRUST, CHINTALAPUDI, W .G. DIST. 3 ACTIVITIES, THE ACTIVITIES ARE NOT GENUINE, HENCE, REGISTRATION CANNOT BE GRANTED U/S 12A OF THE ACT. SO FAR AS OBJECTS OF T HE ASSESSEE AS MENTIONED IN THE TRUST DEED ARE CONCERNED, A PERUSAL OF THE SAME WOULD CLEARLY SHOW THAT THEY COME WITHIN THE MEANING OF CHARITABLE PURPOSE ' AS DEFINED U/S 2(15) OF THE ACT. IT IS WELL SETTLED PRINCIPLE OF LAW THAT A T THE TIME OF GRANT OF REGISTRATION, THE CIT IS ONLY REQUIRED TO LOOK INTO THE OBJECT OF THE TRUST AND GENUINENESS OF ITS ACTIVITIES. SO FAR AS THE OBJEC T OF THE TRUST IS CONCERNED, THERE IS NO ADVERSE COMMENT BY THE CIT THAT THEY AR E NOT CHARITABLE IN NATURE. THAT BEING THE CASE, ONLY BECAUSE IT HAS N OT COMMENCED ITS ACTIVITIES WITHIN SUCH A SHORT PERIOD OF TIME, THERE IS NO JUS TIFICATION IN REJECTING THE APPLICATION FOR GRANT OF REGISTRATION U/S 12A OF TH E ACT. COMMENCEMENT OF ACTIVITY CANNOT BE THE SOLE CRITERIA FOR NOT GRANTI NG REGISTRATION U/S 12A OF THE ACT. THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF SIVANANDA SUPATHA FOUNDATION, TADEPALLIGUDEM VS. CIT RAJAHMUNDRY IN I TA NOS.649 & 650/VIZAG/2013 DATED 7.3.2014 HELD AS UNDER: THEREFORE, IT WAS NOT PROPER ON THE PART OF THE CIT TO REJECT THE APPLICATION SOLELY ON THE GROUND THAT THE ASSESSEE HAS NOT COMMENCED CHARITABLE ACTIVITIES AS PER ITS OBJECTS. WHEN HE HAS NOT EXPRESSED ANY DOUBT WITH REGARD TO THE CHARITABLE OBJECT OF THE ASSESSE E AND WHEN THERE IS NO OTHER MATERIAL BEFORE HIM TO CONCLUDE THAT ASSESSEE S ACTIVITIES ARE NOT GENUINE, THERE IS NO REASON TO REFUSE REGISTRATION U/S 12AA OF THE ACT. THE GRANT OF REGISTRATION U/S 12AA OF THE ACT DOES NOT AUTOMATICALLY ENTITLE THE ASSESSEE FOR EXEMPTION U/S 11 OF THE ACT. THE ASSE SSING OFFICER IS EMPOWERED UNDER THE ACT TO LOOK INTO BOTH THE GENUI NENESS OF THE ACTIVITIES AND APPLICATION OF FUND AND IN CASE OF ANY VIOLATIO N OF THE PROVISIONS CONTAINED UNDER SECTION 11 TO 13 OF THE ACT, THE AS SESSEE WOULD NOT BE ENTITLED FOR EXEMPTION U/S 11 AND WOULD BE SUBJECTE D TO TAX. THAT BEING THE CASE, IN OUR VIEW, REFUSAL OF GRANT OF REGISTRATION U/S 12AA OF THE ACT IS NOT JUSTIFIED SOLELY ON THE GROUND THAT THE ASSESSEE HA S NOT COMMENCED ITS ACTIVITIES. WE ARE SUPPORTED IN OUR VIEW BY THE DE CISIONS RELIED UPON BY THE ASSESSEE. IN THAT VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF THE CIT AND DIRECT HIM TO GRANT REGISTRATION U/S 12AA OF THE AC T TO THE ASSESSEE. OTHER DECISIONS RELIED UPON BY THE LD. A.R. ALSO EX PRESS SIMILAR VIEW. 6. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE COORDINATE BENCH, WE DIRECT THE CIT TO GRANT REGIST RATION TO THE ASSESSEE U/S 12A OF THE ACT. HOWEVER, WE MAKE IT CLEAR THAT THE CIT IS EMPOWERED U/S 12AA(3) OF THE ACT TO CANCEL THE REGISTRATION GRANT ED, IF SUBSEQUENTLY HE IS ITA NO.699/VIZAG/2013 SRI RAJARAJESWARI CHARITABLE TRUST, CHINTALAPUDI, W .G. DIST. 4 SATISFIED THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE T RUST. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 2 ND JULY14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 2 ND JULY, 2014 COPY TO 1 SRI RAJARAJESWARI CHARITABLE TRUST, D.NO.1/1, T. NARASAPURAM, T. NARASAPURAM MANDAL, NEAR CHINTALAPUDI, WEST GODA VARI DIST. 2 THE CIT, RAJAHMUNDRY 3 THE CIT(A), RAJAHMUNDRY 4 THE DR, ITAT, VISAKHAPATNAM. 5 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM