S.V. FOUNDATION PUBLIC CHARITABLE TRUST, MUMBAI V. DIT (E), MUMBAI

ITA 7420/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2963 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 10-09-2014
• Assessment Year: 2012-2013
• Appeal Filed On: 14-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , , ! '#, $ , % BEFORE SHRI B.R.BASKARAN, AM AND SHRI AMARJIT SINGH , JM / I.T.A. NO.7420/MUM/2012 ( $ & '& / ASSESSMENT YEAR: 2012-13) S. V. FOUNDATION PUBLIC CHARITABLE TRUST M/S. MEHTA KOTHARI & CO. CHARTERED ACCOUNTANTS 17, SWASTIK SOCIETY, ROAD NO.2, JVPD SCHEME, VILE PARLE (WEST), MUMBAI - 400056 / VS. DIRECTOR OF INCOME TAX (EXEMPTION) 6 TH FLOOR, PIRAMAL CHAMBERS, LOWER PAREL MUMBAI - 400013 ./ ./ PAN/GIR NO. : AAKTS3045H ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 04.04.2016 !' /DATE OF PRONOUNCEMENT: 29.06.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 28.09.2012 PASSED BY THE DIRECTOR OF INCOME TAX (EX EMPTION), MUMBAI [HEREINAFTER REFERRED TO AS THE DIT(E)] R ELEVANT TO THE ASSESSEE BY: SHRI V. P. KOTHARI DEPARTMENT BY: SHRI MANJUNATHA SWAMI ITA NO.7420/MUM/12 A.Y.2012-13 2 A.Y.2012-13 WHEREIN THE APPLICATION OF THE APPELLAN T U/S.12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) HAS BEEN REJECTED. 2. THE APPELLANT MOVED AN APPLICATION FOR REGISTRAT ION U/S.12A OF THE ACT IN THE PRESCRIBED FORM NO.10A ON 01.03.2012 . THE TRUST HAS BEEN CONSTITUTED BY A TRUST DEED DATED 11.01.2011. THE TRUST HAS BEEN REGISTERED WITH THE CHARITY COMMISSIONER, MUMB AI ON 16.11.2011. THE DIT(E) WAS NOT SATISFIED ABOUT THE OBJECT OF THE TRUST AND GENUINENESS OF ITS ACTIVITIES, THEREFORE THE AP PLICATION U/S.12A OF THE ACT WAS REJECTED. FEELING AGGRIEVED THE ASSESS EE HAS FILED THE PRESENT APPEAL BEFORE US. THE REPRESENTATIVE OF TH E APPELLANT HAS ARGUED THAT THE TRUST HAS BEEN CREATED FOR CHARITAB LE PURPOSE AS DEFINED U/S.2(15) OF THE ACT AND ITS OBJECT SUCH AS ESTABLI SHMENT OF COMPUTER TRAINING INSTITUTIONS, SOCIAL WELFARE CENTRE, MARRI AGE HALL, ESTABLISHMENT / MAINTENANCE OF GYMNASIUM AND OTHER MEANS OF PUBLIC RECREATION, ESTABLISHMENT OF MUSEUMS, STUDY CENTRES ETC. ARE ONLY TO FULFILL THE PURPOSE U/S.2(15) OF THE ACT. BUT THE LEARNED DIT(E) HAS TREATED THE SAME AS FOR BUSINESS PURPOSE WHICH IS W RONG AGAINST LAW AND FACTS. IT IS ALSO ARGUED THAT THE DIT(E) HAS W RONGLY ASSUMED THAT IN VIEW OF THE CLAUSE 9(A) OF THE TRUST DEED THAT T HE TRUSTEES ARE PERMITTED TO HOLD THE INVESTMENTS AT THEIR DESIRE I N THE NAME OF ANY TWO OR MORE TRUSTEES JOINTLY OR IN THE NAME OF ANY SCHEDULED BANK AND TO PROVE WHICH TRUSTEES SHALL IN CASE OF JOINT INVESTMENT BE NAMED ITA NO.7420/MUM/12 A.Y.2012-13 3 AS THE FINAL, WHICH IS NOT IN CONSONANCE WITH THE P UBLIC CHARITABLE CHARACTER OF THE TRUST BUT IT IS WRONG APPRECIATION OF THE FACTS HENCE THE REGISTRATION HAS WRONGLY BEEN REJECTED. 3. IT IS ALSO ARGUED THAT THE TRUST HAS WRONGLY BE CONSIDERED FOR THE RELIGIOUS PURPOSE WHICH IS NOT FOR RELIGIOUS PURPOS E. THEREFORE, THE LEARNED DIT(E) HAS PASSED THE ORDER IN QUESTION WRO NGLY AND ILLEGALLY WHICH IS LIABLE TO BE SET ASIDE IN THE INTEREST OF JUSTICE. IN SUPPORT OF THESE CONTENTION THE LEARNED REPRESENTATIVE OF THE APPELLANT HAS PLACED RELIANCE ON THE CASE LAW DECIDED BY THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH IN ITA NO.7101/MUM/2012 IN C ASE OF SMIRA CHARITABLE TRUST, MUMBAI VS. DIT(E) AND THE JUDGMEN T PASSED BY THE HONBLE HIGH COURT OF ALLAHABAD IN CASE OF HARDAYAL CHARITABLE & EDUCATIONAL TRUST VS. CIT-II [ITA NO.107/2012] AND THE JUDGEMENT PASSED BY THE HONBLE HIGH COURT OF PUNJAB & HARYAN A IN CASE OF CIT VS. SURYA EDUCATIONAL & CHARITABLE TRUST [ITA N O.701/2010] AND THE JUDGEMENT PASSED BY THE INCOME TAX APPELLAT E TRIBUNAL IN CASE OF SHREE VILE PARLE VARDHMAN STHANAKVASI JAIN FOUNDATION, MUMBAI VS. DIT(E) IN ITA NO.7094/MUM/2012 FOR A.Y.2 013-14. 4. ON THE OTHER HAND THE LEARNED REPRESENTATIVE OF THE DEPARTMENT HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE DI T(E), MUMBAI. ON APPRAISAL OF THE ORDER IN QUESTION DATED 28.09.2012 , IT CAME INTO NOTICE THAT THE DIT(E) EXAMINED THE OBJECT OF THE TRUST AN D RAISED THE QUESTION WITH REGARD TO THE GENUINENESS OF THE ITS ACTIVITIES. THE ITA NO.7420/MUM/12 A.Y.2012-13 4 DIT(E) IS OF THE VIEW THAT THE TRUST DEED IS CHARIT ABLE AS WELL AS NON- CHARITABLE / BUSINESS OBJECTS SUCH AS ESTABLISHMENT OF COMPUTER TRAINING INSTITUTIONS, SOCIAL WELFARE CENTRE, MARRI AGE HALL, ESTABLISHMENT / MAINTENANCE OF GYMNASIUM AND OTHER MEANS OF PUBLIC RECREATION, ESTABLISHMENT OF MUSEUMS, STUDY CENTRES ETC. DIT(E) IS ALSO OF THE VIEW THAT THE TRUSTEES HAVE BEEN VESTED WITH THE DISCRETION IN THE MATTER OF APPLICATION OF TRUST FUNDS AND THE RE IS NO BINDING LEGAL OBLIGATION ON THEM TO UTILIZE SUCH FUNDS SOLELY AND EXCLUSIVELY FOR CHARITABLE PURPOSE. 5. ON APPRAISAL OF THE ABOVE SAID OBSERVATIONS HOW IT CAN BE ASSUMED THAT THE PURPOSE OF THE ABOVE SAID OBJECTS ARE FOR THE BUSINESS PURPOSE AND SPECIFICALLY IN THE CIRCUMSTANCES WHEN NO PRIMA FACIE OBJECTS SEEMS TO BE COMMERCIAL, TRADE AND BUSINESS PURPOSE. HOWEVER ON ASKING, THE ASSESSEE FILED THE WRITTEN S UBMISSION STATING THEREIN THAT ALL THE OBJECTS MENTIONED ABOVE ARE IN CONNECTION WITH THE OBJECT OF THE TRUST AND NOT FOR THE PURPOSE OF BUS INESS ACTIVITIES. MOREOVER, THESE ACTIVITIES ARE YET TO COMMENCE, HOW IT CAN BE ASSUMED THAT THE SAME IS FOR THE BUSINESS PURPOSE WHILE NO ACTIVITY WAS DONE BY THE TRUST IN THIS REGARD. IT SHOULD BE CLEAR ON RECORD THAT THE OBJECT OF THE TRUST IS OF THE TRADE, BUSINESS A ND COMMERCE. MOREOVER, THE AMENDED PROVISION OF THE SECOND PROVI SO TO SECTION 2(15) OF THE ACT ACCOMMODATED COMMERCIAL TRANSACTIO N AGGREGATE VALUE IS LESS THAN 25 LAKHS. THE TRUST IS AT THE INITIAL STAGE AND YET THE ITA NO.7420/MUM/12 A.Y.2012-13 5 WORK IN FUTURE IN ACCORDANCE WITH ITS OBJECTS. MOR EOVER, THE POWER GIVEN TO THE TRUSTEES ON THE POINT OF INVESTMENT C ANNOT BE TREATED AS NON-CHARITABLE WHEREAS THE SAME IS IN CONNECTION WI TH THE MANAGEMENT OF FUNDS. ACTIVITY OF TRADE, BUSINESS AN D COMMERCE SHOULD BE APPARENT ON RECORD I.E. IN OBJECT OF TRUS T AND PROVISION CONTAINED IN SECTION 2(15) IS ALSO REQUIRED TO KEPT IN MIND WHILE CONSIDERING THE APPLICATION. THE LAST GROUND WHICH HAS BEEN CONSIDERED TO REJECT THE APPLICATION IS IN CONNECTI ON WITH THE ADVANCE OF LOANS TO THE STUDENTS MOHIT R. MEHTA AND SUNIL P . VORA TO THE TUNE OF RS.25,000/- AND RS.1,00,000/- RESPECTIVELY. DUR ING THE INITIAL ACTIVITIES OF THE TRUST THE TRUST PROVIDED LOAN ONL Y TO THE TWO STUDENTS MENTIONED ABOVE AND RECEIVED THE DONATION FROM PRAB HAT AND PANKAJ VORA. THE ASSESSING OFFICER WAS OF THE VIEW THAT T HE DONORS AS WELL AS THE BENEFICIAL ARE OF THE SAME COMMUNITY (JAIN C OMMUNITY). THEREFORE, THE TRUST IS BEING RUNNING FOR RELIGIOUS PURPOSE. IT IS NOT A GOOD GROUND TO REJECT THE APPLICATION. OBJECT OF T RUST IS LIABLE IS LIABLE TO BE CONSIDERED AND ACTIVITY IS ONLY LIABLE TO BE CONSIDERED WHEN THE TRUST IS FUNCTIONING AFTER THE REGISTRATION OF THE TRUST. ACTIVITIES ARE YET TO BE COMMENCE. THE DIT(E) IS REQUIRED TO CONSIDE RED SUCH ACTIVITIES WHEN THE TRUST HAS BEEN GOT REGISTERED I N ACCORDANCE WITH LAW. IN VIEW OF THE ABOVE SAID DISCUSSION AND IN VIEW OF LAW DECIDED BY THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH IN ITA NO.7101/MUM/2012 IN CASE OF SMIRA CHARITABLE TRUST, MUMBAI VS. DIT(E) AND THE JUDGMENT PASSED BY THE HONBLE HIGH COURT OF ITA NO.7420/MUM/12 A.Y.2012-13 6 ALLAHABAD IN CASE OF HARDAYAL CHARITABLE & EDUCATIO NAL TRUST VS. CIT-II [ITA NO.107/2012] AND THE JUDGEMENT PASSED B Y THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN CASE OF CIT VS. S URYA EDUCATIONAL & CHARITABLE TRUST [ITA NO.701/2010] AN D THE JUDGEMENT PASSED BY THE INCOME TAX APPELLATE TRIBUN AL IN CASE OF SHREE VILE PARLE VARDHMAN STHANAKVASI JAIN FOUNDATI ON, MUMBAI VS. DIT(E) IN ITA NO.7094/MUM/2012 FOR A.Y.2013-14.WE A RE OF VIEW THAT THE DIT(E) HAS REJECTED THE APPLICATION OF THE TRUST U/S.12AA OF THE ACT WRONGLY AND ILLEGALLY, THEREFORE, WE SET AS IDE THE ORDER IN QUESTION AND DIRECT THE DIT(E) TO RECONSIDER THE MA TTER AFRESH IN ACCORDANCE WITH LAW. 4. IN RESULT THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE , 2016. SD/- SD/- (B.R.BASKARAN) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED :29 TH JUNE, 2016 MP MP MP MP ITA NO.7420/MUM/12 A.Y.2012-13 7 ) * +$!', -,'! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ) / BY ORDER, - & //TRUE COPY// ./# /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI