Bharat Ratna Sri M Vishweshwarayya Educational Society , Koppal V. The Commissioner of Income TAx (Exemptions) , Bangalore

ITA 732/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8383 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 08-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T CHANDRASEKHAR
• Assessee Lawyers: R E BALASUBRAMANIAN
• Keywords: Charitable institution; Opportunity of being heard; Set aside
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER IT A NO. 732 /BANG/201 8 ASSESSMENT YEAR : 20 1 3 - 1 4 M/S. BHARAT RATNA SIR M VISHWESHWARAYYA EDUCATIONAL SOCIETY, LITTLE HEARTS SCHOOL, DOOR NO.4-1-148, VIJAYANAGAR COLONY, HOSALLI ROAD, GANGAVATHI DISTRICT, KOPPAL 58227. PAN : AA D AB 6661 L VS. THE COMMISSIONER OF INCOME TAX (EXEMPTION), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI. R. E. BALASUBRAMANIAN, CA REVENUE BY : SHRI. T. CHANDRASEKHAR , ADDL. CIT DATE OF HEARING : 27 . 0 3 .201 9 DATE OF PRONOUNCEMENT : 12 . 0 4 .201 9 O R D E R PER JASON P. BOAZ, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(EXEMPTION), BANGALORE, DATED 29.01.2018 REJECTING THE ASSESSEES APPLICATION FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE FACTS RELEVANT FOR DISPOSAL OF THIS APPEAL ARE AS UNDER:- ITA NO.732/BANG/2018 PAGE 2 OF 7 2.1 THE ASSESSEE TRUST, ESTABLISHED BY TRUST DEED DATED 24.01.2003, FILED APPLICATIONS FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT AND FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT SIMULTANEOUSLY ON 13.07.2017. LETTERS WERE ISSUED BY THE CIT(E) TO THE ASSESSEE CALLING FOR DETAILS / CLARIFICATIONS THEREON. IN THIS REGARD, THE ASSESSEE SUBMITTED REPLIES. THE CIT(E), AFTER CONSIDERING THE DETAILS FILED, REJECTED THE ASSESSEES APPLICATION SEEKING GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT VIDE THE IMPUGNED ORDER DATED 29.01.2018 ON THE GROUNDS THAT THE TRUST HAS NOT PROVIDED DETAILS REGARDING FUTURE PROJECTS OF RENOVATION / IMPROVEMENT OF THE CAMPUS OR ANY OTHER RELATED OBJECT OF THE TRUST THAT ARE INTENDED TO BE UNDERTAKEN. HENCE THE NECESSITY FOR DONATION DOES NOT ARISE. 2.2 HOWEVER, AS FAR AS THE ASSESSEES APPLICATION FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT, FILED ON 13.07.2017 (I.E., THE SAME DAY AS THE ASSESSEE FILED APPLICATION FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT), THE CIT(E) BY ORDER ON THE NEXT DAY I.E., 30.01.2018 HAS GRANTED THE ASSESSEE REGISTRATION; COPY OF WHICH HAS BEEN PLACED AT PAGES 9 AND 10 OF PAPER BOOK FILED BY THE ASSESSEE. 3.0 AGGRIEVED BY THE ORDER OF CIT(E), BENGALURU, DATED 29.01.2018 REJECTING THE ASSESSEES APPLICATION FOR RECOGNITION UNDER SECTION 80G, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL; WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS:- 1. THE IMPUGNED ORDER IS OPPOSED TO FACTS AND LAW IN SO FAR AS IT IS PRE- JUDICIAL TO THE INTERESTS OF THE APPELLANT. ITA NO.732/BANG/2018 PAGE 3 OF 7 2. THE LD. CIT(EXEMPTIONS) ERRED IN REJECTING THE APPLICATION UNDER SECTION 80G(5)(VI) FOR THE REASONS WHICH ARE ARBITRARY, IMPERMISSIBLE AND BEYOND WHAT IS PROVIDED UNDER LAW AND IN DOING SO: - A) HE FAILED TO APPRECIATE THE FACT THAT AN APPLICATION UNDER SECTION 80G CAN BE DENIED ONLY UNDER THE CIRCUMSTANCES GIVEN IN RULE 11AA (5) OF INCOME TAX RULES, 1962. B) HE MISDIRECTED HIMSELF IN DENYING THE APPLICATION UNDER SECTION 80G(5)(VI) ON THE GROUNDS WHICH ARE NOT MENTIONED IN RULE 11AA (5) OF INCOME TAX RULES,1962. 3. THE LD. CIT(EXEMPTIONS) FAILED TO APPRECIATE THAT THE OBJECTS OF THE APPELLANT ARE IN CONFORMITY WITH THE PROVISIONS OF SECTION 80G MAKING IT ELIGIBLE FOR RECOGNITION SINCE THEY INCLUDE EDUCATION, MEDICAL ASSISTANCE AND OTHER OBJECTS OF GENERAL PUBLIC UTILITY. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE ADDUCED FROM TIME TO TIME, IT IS REQUESTED THAT THE HONOURABLE ITAT MAY BE PLEASED TO SET ASIDE THE ORDER OF CIT AND DIRECT THAT RECOGNITION UNDER SECTION 80G MAY BE GRANTED. 4.1 BEFORE US, THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT ITS APPLICATIONS FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT AND FOR RECOGNITION UNDER SECTION 80G OF THE ACT WERE BOTH FILED BEFORE THE CIT(E) ON 13.07.2017. DETAILS AND CLARIFICATIONS THEREON WERE CALLED FOR JOINTLY BY LETTERS OF THE CIT(E) AND THE ASSESSEE ALSO FILED ITS REPLY IN THIS REGARD. IT IS SUBMITTED THAT WHILE THE CIT(E) DISMISSED THE ASSESSEES APPLICATION FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT VIDE THE IMPUGNED ORDER DATED 29.01.2018, THE CIT(E) HOWEVER WENT ON TO GRANT THE ASSESSEE RECOGNITION UNDER SECTION 12AA OF THE ACT ON THE VERY NEXT DAY VIDE ORDER DATED 30.01.2018. IT WAS SUBMITTED THAT ITA NO.732/BANG/2018 PAGE 4 OF 7 THE CIT HAS REJECTED THE ASSESSSEES APPLICATION FOR REGISTRATION PRIMARILY ON THE GROUND THAT THE TRUST HAS NOT PROVIDED DETAILS REGARDING FUTURE PROJECTS OF RENOVATION / IMPROVEMENT OF CAMPUS OR ANY OTHER RELATED OBJECT OF THE TRUST THAT ARE INTENDED TO BE UNDERTAKEN. HENCE, THE NECESSITY FOR DONATION DOES NOT ARISE. ACCORDING TO THE LEARNED AR, THERE IS NO REQUIREMENT IN LAW THAT THE ASSESSEE MUST EITHER PROVIDE DETAILS OF FUTURE PROJECTS OF RENOVATION / IMPROVEMENT OF THE CAMPUS OR OTHER RELATED OBJECT OF THE TRUST BEFORE APPLYING FOR GRANT OF REGISTRATION UNDER SECTION 80G OF THE ACT. IT WAS CONTENDED THAT SINCE THE CIT(E) HAS GRANTED THE ASSESSEE TRUST REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 30.01.2018, IT SHOWS THAT THE CIT(E) HAS VERIFIED THE ASSESSEES OBJECTS AND THE FACT OF ITS ESTABLISHMENT FOR CHARITABLE PURPOSES WHILE GRANTING REGISTRATION AND THEREFORE THE CIT(E) BE DIRECTED TO GRANT THE ASSESSEE RECOGNITION UNDER SECTION 80G OF THE ACT. IN SUPPORT OF THIS PROPOSITION, THE LEARNED AR, INTER ALIA, PLACED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF INDIC SCIENCE RESEARCH TRUST VS. CIT (EXEMPTION), BENGALURU, IN ITA NO.1077/BANG/2018 DATED 20.07.2018. ITA NO.732/BANG/2018 PAGE 5 OF 7 4.2 PER CONTRA, THE LEARNED DR FOR REVENUE SUPPORTED THE ORDER OF THE CIT(E) REJECTING THE ASSESSEES APPLICATION FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT. 4.3.1 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED / RELIED UPON. THE UNDISPUTED FACTS, AS EMERGE FROM A PERUSAL OF THE RECORD BEFORE US, IS THAT THE ASSESSEE TRUST ESTABLISHED VIDE TRUST DEED DATED 24.01.2013, SIMULTANEOUSLY FILED APPLICATIONS FOR GRANT OF REGISTRATION UNDER SECTION 12AA AND GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT ON 13.07.2018. CLARIFICATIONS / DETAILS WERE CALLED FOR THEREON JOINTLY VIDE CIT(E)S LETTERS AND THE ASSESSEES REPLY FOR BOTH GRANT OF REGISTRATION UNDER SECTION 12AA AND RECOGNITION UNDER SECTION 80G OF THE ACT WAS FILED. FROM THE IMPUGNED ORDER, WE FIND THAT THE MAIN OBJECTION BY THE CIT(E) TO GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT WAS THAT THE TRUST HAS NOT PROVIDED DETAILS REGARDING FUTURE PROJECTS OF RENOVATION / IMPROVEMENT OF THE CAMPUS OR ANY OTHER RELATED OBJECTS OF THE TRUST THAT ARE INTENDED TO BE UNDERTAKEN AND THEREFORE, IT WAS NOT A FIT CASE FOR GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT AS THE NECESSITY FOR DONATIONS DOES NOT ARISE. IN OUR VIEW, THE ABOVE REASONS ITA NO.732/BANG/2018 PAGE 6 OF 7 CITED BY THE CIT(E) (SUPRA); NOT BEING THE REQUIREMENTS MANDATED BY THE PROVISIONS OF THE ACT, CANNOT BE THE BASIS FOR REJECTION OF THE ASSESSEES APPLICATION. IT IS FOR THE ASSESSEE TO DETERMINE WHEN WHICH OF ITS ACTIVITIES IN FURTHERANCE OF ITS OBJECTS ARE TO BE TAKEN UP AND WHEN THERE IS A REQUIREMENT FOR DONATIONS IN THIS REGARD. GRANT OF APPROVAL / RECOGNITION UNDER SECTION 80G OF THE ACT CAN ACT AS A CATALYST TO ENCOURAGE PROSPECTIVE DONORS TO LOOK AT THE INTENDED ACTIVITIES / OBJECTS AND POSSIBLY PROVIDE FINANCIAL SUPPORT THROUGH DONATIONS / CONTRIBUTIONS. STRANGELY, IN THE CASE ON HAND, ON THE VERY NEXT DAY I.E., 30.01.2018, THE CIT(E) HAS GRANTED THE ASSESSEE-TRUST REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 30.01.2018; OSTENSIBLY, AFTER EXAMINATION OF THE ASSESSEES OBJECTS, ETC., WHICH THE CIT HAS CATEGORIZED AS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. 4.3.2 IN THIS FACTUAL MATRIX OF THE CASE, AS DISCUSSED ABOVE AND FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF INDIC SCIENCE RESEARCH TRUST (SUPRA), WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER OF THE CIT(E) DATED 29.01.2018 PASSED UNDER SECTION 80G(5)(IV) OF THE ACT AND RESTORE THE MATTER TO THE FILE OF THE CIT(E) TO EXAMINE THE MATTER AFRESH IN THE LIGHT OF HIS ORDER DATED 30.01.2018 GRANTING THE ITA NO.732/BANG/2018 PAGE 7 OF 7 ASSESSEE REGISTRATION UNDER SECTION 12AA OF THE ACT AND OUR OBSERVATIONS HEREINABOVE. NEEDLESS TO ADD, THE CIT(E) IS DIRECTED TO AFFORD THE ASSESSEE REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER AND TO FILE DETAILS / SUBMISSIONS REQUIRED THAT SHALL BE CONSIDERED BEFORE DECIDING THE ISSUE. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 12 TH APRIL, 2019. SD/- SD/- ( N. V. VASUDEAN ) (JASON P. BOAZ) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE. DATED: 12 TH APRIL, 2019. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.