Vaanam Foundation, CHENNAI V. ITO, Coimbatore

ITA 777/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7724 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 01-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN C BHARATH
• Assessee Lawyers: S SRIDHAR
• Section: 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO. 777/MDS/2014 ( )( / ASSESSMENT YEAR : N.A. M/S VAANAM FOUNDATION, NO.1/460, RANGASAMY NAIDU STREET, N.G.G.O. COLONY, COIMBATORE 641 022. PAN : AABTV 7326 H V. THE INCOME TAX OFFICER, COMPANY WARD I, COIMBATORE. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI ARUN C. BHARATH, CIT 1 / 2% / DATE OF HEARING : 04.02.2016 3') / 2% / DATE OF PRONOUNCEMENT : 18.03.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-I, COIMBATORE, DATED 26.02.2014, REJECTING THE APPLICATION OF THE ASSESSEE FOR REGIS TRATION UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2 I.T.A. NO.777/MDS/14 2. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSEE FILED APPLICATION FOR REGISTRATIO N BEFORE THE ADMINISTRATIVE COMMISSIONER ON 22.08.2013. IN FACT , THE TRUST WAS ESTABLISHED BY A DEED DATED 13.05.2013. WITHIN A P ERIOD OF SIX MONTHS, THE ASSESSEE FILED THE APPLICATION BEFORE T HE COMMISSIONER FOR REGISTRATION. THE COMMISSIONER, HOWEVER, FOUND THAT THE ASSESSEE HAS SPENT A MEAGRE AMOUNT TOWARDS THE STAT ED OBJECTS OF THE TRUST. THEREFORE, THE COMMISSIONER REJECTED TH E CLAIM OF THE ASSESSEE ON THE GROUND THAT REGISTRATION IS A PREMA TURE ONE. ACCORDING TO THE LD. COUNSEL, WITHIN SIX MONTHS OF ITS ESTABLISHMENT, THE ASSESSEE CANNOT BE EXPECTED TO CARRY OUT ANY CH ARITABLE ACTIVITY. WHAT IS TO BE SEEN IS WHETHER THE OBJECT S OF THE TRUST ARE GENUINE OR NOT. ONCE THE OBJECT IS FOUND TO BE GEN UINE, THE REGISTRATION HAS TO BE GRANTED. THE LD.COUNSEL PLA CED HIS RELIANCE ON THE UNREPORTED JUDGMENT OF MADRAS HIGH COURT IN CIT V. R.K. DEIVENDRA NADAR TRUST IN T.C.A. NO.975 OF 2013 DATE D 05.08.2014. THE LD.COUNSEL HAS ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN DIRECTOR OF INCOME TAX V. SEE RVI SAMAJ TAMBARAM TRUST (2014) 362 ITR 199. REFERRING TO TH E OBJECTS OF THE ASSESSEE-TRUST FROM THE COPY OF THE TRUST DEED, LD.COUNSEL SUBMITTED THAT THE OBJECTS OF THE TRUST ARE GENUINE AND CHARITABLE 3 I.T.A. NO.777/MDS/14 NATURE, THEREFORE, THE COMMISSIONER HAS ERRED IN RE JECTING THE APPLICATION OF THE ASSESSEE. 3. ON THE CONTRARY, SH. A.B. KOLI, THE LD. DEPARTME NTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED ANY MATERIAL BEFORE THE COMMISSIONER FOR GRANT OF REGIS TRATION. IN THE PROFIT & LOSS ACCOUNT, THE ASSESSEE HAS SPENT ONLY A MEAGRE AMOUNT TOWARDS THE OBJECTS OF THE TRUST. THE TRUST IS YET TO CARRY OUT ITS ACTIVITIES. THEREFORE, ACCORDING TO THE LD . D.R., THE COMMISSIONER HAS RIGHTLY FOUND THAT GRANTING OF REG ISTRATION AT THIS JUNCTURE IS A PREMATURE ONE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT, WHAT IS TO BE EXAMINED IS THE OBJECTS OF THE TRUST AND GENUINENESS OF ITS ACTIVITIES. ONCE THE COMMISSIONER IS SATISFIED HIMSELF ABOUT THE OBJ ECTS OF THE TRUST AND GENUINENESS OF THE ACTIVITIES, HE HAS TO PASS A N ORDER FOR GRANT OF REGISTRATION. IN CASE THE COMMISSIONER IS NOT S O SATISFIED, THEN HE IS EXPECTED TO REJECT THE APPLICATION. EXPECTIN G THE ASSESSEE TO CARRY OUT CHARITABLE ACTIVITIES WITHIN SIX MONTHS O F ITS ESTABLISHMENT IS SOMETHING BEYOND THE CONTROL OF THE ASSESSEE. T HE INSTITUTION 4 I.T.A. NO.777/MDS/14 ITSELF IS CREATED BY MEANS OF A TRUST DEED. THE AS SESSEE HAS TO SET UP ITS MACHINERY TO CARRY OUT THE CHARITABLE ACTIVI TIES IN FURTHERANCE OF ITS OBJECTS. BEFORE SETTING UP OF THE MACHINERY TO CARRY OUT CHARITABLE ACTIVITIES, THE ASSESSEE SHOULD NECESSAR ILY GET REGISTRATION UNDER SECTION 12AA OF THE ACT SO AS TO CLAIM EXEMPTION UNDER THE SCHEME OF THE INCOME-TAX ACT. THEREFORE, MERELY BECAUSE THE ASSESSEE HAS SPENT ONLY A MEAGRE AMOUNT FOR CHARITABLE ACTIVITIES THAT ALONE CANNOT BE A REASON FOR REJECTING THE CLAIM OF THE ASSESSEE. THE CIT HAS NOT EXAMINED TH E OBJECTS OF THE TRUST AND ITS GENUINENESS. THEREFORE, THE ORDER OF THE CIT IS SET ASIDE AND THE ISSUE OF REGISTRATION UNDER SECTION 1 2AA OF THE ACT IS REMITTED BACK TO HIS FILE. THE COMMISSIONER SHALL RE-EXAMINE THE ISSUE AFRESH IN THE LIGHT OF THE PROVISIONS OF SECT ION 12AA OF THE ACT AND THEREAFTER DECIDE THE MATTER IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. 5 I.T.A. NO.777/MDS/14 ORDER PRONOUNCED ON 18 TH MARCH, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 18 TH MARCH, 2016. KRI / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 /CIT-I, COIMBATORE. 5. 7: -2 /DR 6. ( ; /GF.