ITAT Bar Association, Surat V. CIT(EXEMPTION), Ahmedabad

ITA 78/SRT/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7782 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Appeal Filed On: 08-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Opportunity of being heard; Competent authority; Set aside
• Section: 12A; 12AA; 73; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A.L. SAINI, AM ./ ITA NO.78/SRT/2019 ( / ASSESSMENT YEAR: (2019-2020) (VIRTUAL COURT HEARING) ITAT BAR ASSOCIATION SURAT 208, TITAANIUM BUSINESS HUB OPP. BHIMRAD, POLICE CHOWKEY, BHIMRAD, SURAT 395017. VS. CIT(EXEMPTION), AHMEDABAD ROOM NO.15, AAYAKAR BHAWAN, ASHRAM ROAD, NAVRANGPURA, AHMEDABAD-380009 ./ ./PAN/GIR NO.: AABAI 4058 C (ASSESSEE) (RESPONDENT) ASSESSEE BY :SHRI RASESH SHAH, C.A RESPONDENT BY :SHRI SREENIVAS T. BIDARI, CIT-DR / DATE OF HEARING : 29/07/2021 / DATE OF PRONOUNCEMENT : 23/08/2021 / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINING TO THE ASSESSMENT YEAR 2019-20, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX(EXEMPTION)-AHMEDABAD, UNDER SECTION 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 28.12.2018. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE ( ITAT BAR ASSOCIATION-SURAT) IN THIS APPEAL IS THAT LD. COMMISSIONER OF INCOME TAX (EXEMPTION)-AHMEDABAD, HAS DENIED THE REGISTRATION UNDER SECTION 12AA(1)(B)(II) OF THE INCOME TAX ACT, DESPITE OF THE FACT THAT ASSESSEE HAS FULFILLED THE CONDITIONS FOR REGISTRATION UNDER SECTION 12AA(1)(B)(II) OF THE ACT. 3. SUCCINCT FACTS ARE THAT ITAT BAR ASSOCIATION-SURAT ( HEREINAFTER REFERRED TO AS ASSESSEE) HAS FIELD APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT BEFORE LD. CIT(EXEMPTION) ON 09.01.2018. THE LD. CIT(EXEMPTION) HAS GONE THROUGH THE APPLICATION, SO FILED BY THE ASSESSEE AND THEN ISSUED A SHOW CAUSE PAGE | 2 ITA NO.78/SRT/2019 FOR A.Y. 19-20 ITAT BAR ASSOCIATION SURAT LETTER DATED 02.11.2018 ASKING THE ASSESSEE TO FURNISH DETAILED NOTE ON THE ACTIVITIES CARRIED OUT BY IT AND COPY OF TRUST DEED, DONATION RECEIVED, DONATION PAID, AND OTHER DOCUMENTS. IN RESPONSE, THE ASSESSEE HAS FURNISHED DOCUMENTS AND ITS WRITTEN SUBMISSIONS ON 25.12.2018, THROUGH E-MAIL. THE ASSESSEE HAS STATED IN ITS REPLY THAT THE ASSOCIATION IS FORMED AS AN INSTITUTION UNDER ITS MEMORANDUM OF ASSOCIATION AND RULES AND REGULATION. AS THE ASSOCIATION IS NEITHER A TRUST NOR A SECTION 8 COMPANY, IT DOES NOT REQUIRE ANY REGISTRATION FROM ANY AUTHORITY. 4. HOWEVER, LD. CIT(EXEMPTION) HAS DENIED THE REGISTRATION U/S 12AA OF THE ACT, MAINLY FOR THE REASONS THAT ASSESSEE IS NEITHER REGISTERED WITH REGISTRAR OF PUBLIC TRUSTS, NOR IT IS REGISTERED WITH COMPANIES ACT, AS SECTION 8 COMPANY. THE LD. CIT(EXEMPTION) ALSO NOTED THAT ASSESSEE HAS FAILED TO FILE DOCUMENTARY EVIDENCES TO SATISFY ABOUT THE GENUINENESS OF ITS ACTIVITIES AND TO VERIFY THESE ACTIVITIES IN CONSONANCE WITH ITS OBJECTS. THEREFORE, LOOKING TO THE ABOVE FACTS, LD. CIT(EXEMPTION), HAS REJECTED THE APPLICATION FILED BY ASSESSEE IN FORM NO.10A FOR THE APPROVAL U/S 12AA OF THE INCOME-TAX ACT. 5. AGGRIEVED BY THE ORDER OF LD. CIT(EXEMPTION), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 6. SHRI RASESH SHAH, LD. COUNSEL FOR THE ASSESSEE, PLEADS THAT LD. CIT(EXEMPTION) HAS DENIED THE REGISTRATION WITHOUT ANY VALID REASONS. HE POINTED OUT THAT ASSESSEE (ITAT BAR ASSOCIATION- SURAT) NEED NOT TO BE REGISTERED WITH CHARITY COMMISSIONER, IT NEED NOT TO BE REGISTERED AS A SECTION 8 COMPANY, UNDER THE COMPANIES ACT. THE ASSESSEE HAS ITS OBJECTS, SUCH AS, TO PROMOTE THE EDUCATION AMONG THE MEMBERS BY HOLDING SEMINARS. THE ASSESSEE HAS CONSTRUCTED A LIBRARY, WHERE BAR MEMBERS CAN SIT AND READ BOOKS JOURNALS, AND NEWS- PAPERS ETC. THEREFORE, IT SATISFIES THE TEST OF GENERAL PUBLIC UTILITY, AS MENTIONED IN SECTION 2(15) OF THE ACT. THE LD. COUNSEL SUBMITS BEFORE THE BENCH, A STATEMENT SHOWING DEPOSITS AND PAYMENTS, VIDE PAPER BOOK PAGE NO.22, AND STATED THAT ASSESSEE HAS CONSTRUCTED A ROOM FOR OFFICE USE OF BAR MEMBERS AND FOR THAT ASSESSEE HAS PAGE | 3 ITA NO.78/SRT/2019 FOR A.Y. 19-20 ITAT BAR ASSOCIATION SURAT INCURRED EXPENSES. THE LD. COUNSEL SUBMITS THAT CHAMBER OF COMMERCE, THE CHAMBER OF TAX CONSULTANTS ETC., ARE NOT REGISTERED WITH THE CHARITY COMMISSIONER, ALTHOUGH THEY ARE ENJOYING THE STATUS OF THE REGISTRATION U/S 12AA OF THE ACT. THEREFORE, LD COUNSEL PRAYS THAT CONSIDERING THE OBJECTS OF THE ASSESSEE, WHICH IS MENTIONED IN THE MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION OF THE ASSESSEE, THE REGISTRATION U/S 12AA OF THE ACT MAY BE GRANTED TO THE ASSESSEE. 7. ON THE OTHER HAND, SHRI SREENIVAS T. BIDARI, LD. CIT-DR, FOR THE REVENUE SUBMITTED THAT ITAT BAR ASSOCIATION- SURAT (ASSESSEE) IS NEITHER REGISTERED WITH CHARITY COMMISSIONER NOR IT IS A SECTION 8 COMPANY, UNDER THE COMPANIES ACT, THEREFORE, THE BAR DOES NOT SATISFY THE BASIC CRITERIA AND HENCE NOT ELIGIBLE FOR REGISTRATION U/S 12AA OF THE ACT. THIS WAY, SHRI SREENIVAS T. BIDARI, LD. CIT-DR, HAS PRIMARILY REITERATED THE STAND TAKEN BY THE LD CIT (EXEMPTION), WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 8. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTION. WE HAVE PERUSED CASE FILE AS WELL AS PAPER BOOKS FURNISHED BY ASSESSEE WITH THE ABLE ASSISTANCE OF SHRI RASESH SHAH, REPRESENTING THE ASSESSEE AND SHRI SREENIVAS T. BIDARI, LEARNED CIT(DR), REPRESENTING THE REVENUE. WE FIND THAT ONE KEY ISSUE ARISES FOR OUR APT ADJUDICATION IN THE INSTANT LIS, WHICH IS, WHETHER IT IS NECESSARY FOR ASSESSEE, FOR REGISTRATION UNDER SECTION 12AA OF THE ACT, THAT THE ASSESSEE SHOULD BE REGISTERED WITH CHARITY COMMISSIONER OR IT SHOULD BE A SECTION 8 COMPANY, UNDER THE COMPANIES ACT? WE NOTE THAT SAID ISSUE UNDER CONSIDERATION IS NO LONGER RES-INTEGRA . WE NOTE THAT COORDINATE BENCH OF ITAT AHMEDABAD IN THE CASE OF PANCHKUVA CLOTH MERCHANT ASSOCIATION (2021) 128 TAXMANN.COM 391 (AHMEDABAD TRIB.) HELD THAT FOR THE PURPOSE OF REGISTRATION UNDER SECTION 12AA OF THE ACT, IT IS NOT NECESSARY FOR THE ASSESSEE TO BE REGISTERED WITH CHARITY COMMISSIONER OR IT SHOULD BE A SECTION 8 PAGE | 4 ITA NO.78/SRT/2019 FOR A.Y. 19-20 ITAT BAR ASSOCIATION SURAT COMPANY, UNDER THE COMPANIES ACT. THE FINDINGS OF THE COORDINATE BENCH IS REPRODUCED BELOW: THE LD. CIT(EXEMPTION) HAS REJECTED THE APPLICATION OF THE ASSESSEE FOR APPROVAL U/S 12AA OF THE ACT HOLDING THAT THE ASSESSEE HAS FAILED TO FILE DOCUMENTARY EVIDENCES ABOUT THE GENUINENESS OF ITS CREATION AND ITS ACTIVITIES AND TO VERIFY THESE ACTIVITIES IN CONSONANCE WITH THE OBJECTS. THE RELEVANT PART OF THE DECISION OF THE LD. CIT(EXEMPTION) IS REPRODUCED AS UNDER:- 7. THE APPLICANT ASSOCIATION, VIDE ITS SUBMISSION FILED IN THE OFFICE ON 18.06.2018, STATED THAT THE ASSOCIATION IS NOT REGISTERED WITH ANY COMPETENT AUTHORITY. IT FURTHER CONTENDED THAT THE TRUST DEED NEED NOT BE REGISTERED WITH ANY OF THE AUTHORITIES. 8. THE ABOVE CONTENTION OF THE APPLICANT ASSOCIATION IS CAREFULLY CONSIDERED AND FOUND UNSATISFACTORY AND UNTENABLE IN THE EYES OF LAW IN VIEW OF FOLLOWING FACTS. I) BEFORE GOING INTO CONTENTION OF THE APPLICANT MADE ABOVE, IT IS RELEVANT TO GO THROUGH THE RELEVANT PROVISIONS OF THE ACT I.E. SECTION 12A READ WITH RULE 17A WHICH ARE REPRODUCED HEREUNDER. '12AA (I) THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER CLAUSE (A) [OR CLAUSE (AA) [OR CLAUSE (AB)] OF SUBSECTION (II) OF SECTION 12A, SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE- (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT: PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD,' RULE 17A (1). AN APPLICATION UNDER CLAUSE (AA) OF SUB-SECTION (I) OF SECTION 12A FOR REGISTRATION OF A CHARITABLE OR RELIGIOUS TRUST OR INSTITUTION SHALL BE MADE IN FORM NO. 10A AND ACCOMPANIED BY THE FOLLOWING DOCUMENTS, NAMELY; (A) WHERE THE TRUST IS CREATED, OR THE INSTITUTION IS ESTABLISHED, UNDER AN INSTRUMENT, THE INSTRUMENT IN ORIGINAL, TOGETHER WITH ONE COPY THEREOF, AND WHERE THE TRUST IS CREATED, OR THE INSTITUTION IS ESTABLISHED .OTHERWISE THAN UNDER AN INSTRUMENT, THE DOCUMENT EVIDENCING THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION TOGETHER WITH ONE COPY THEREOF: PAGE | 5 ITA NO.78/SRT/2019 FOR A.Y. 19-20 ITAT BAR ASSOCIATION SURAT PROVIDED THAT IF THE INSTRUMENT OR DOCUMENT IN ORIGINAL CANNOT CONVENIENTLY BE PRODUCED, IT SHALL BE OPEN TO THE COMMISSIONER TO ACCEPT A CERTIFIED COPY IN LIEU OF THE ORIGINAL......... ' AN ANALYSIS OF SECTION 12A(A) AND RULE 17A(A) SHOWS THAT THE FACT TO BE ESTABLISHED IS THE CREATION OF TRUST AND THIS FACT IS REQUIRED TO BE ESTABLISHED BY PRODUCING CONSTRUCTIVE AND EVIDENTIAL DOCUMENTS. WHEN THE TRUST IS CREATED UNDER AN INSTRUMENT, THE RULE REQUIRES THE PRODUCTION OF THE EVIDENTIAL DOCUMENTS, I.E., THE DOCUMENTS EVIDENCING THE CREATION OF THE TRUST. THE EVIDENTIAL DOCUMENTS CANNOT BE LIMITED TO DOCUMENTS WHICH DIRECTLY PROVE THE CREATION OF THE TRUST; THEY WILL EMBRACE ALL DOCUMENTS WHICH AFFORD A LOGICAL BASIS OF INFERRING CREATION OF THE TRUST AND ALL SUCH DOCUMENTS CAN BE DESCRIBED TO BE 'DOCUMENT EVIDENCING THE CREATION OF THE TRUST WITHIN THE MEANING OF RULE 17A(A). IN OTHER WORDS, DOCUMENT EVIDENCING THE CREATION OF THE TRUST AND EXISTENCE LEGALLY WOULD BE THE REGISTRATION CERTIFICATE ISSUED BY THE COMPETENT AUTHORITIES I.E. CHARITY COMMISSIONER, REGISTRAR OF SOCIETIES OR REGISTRAR OF COMPANY. HERE, THE APPLICANT ASSOCIATION FAILED TO SATISFY THE REQUIREMENT OF RULE 17A OF THE IT RULE, 1962. II) WITHOUT GETTING REGISTERED WITH ANY COMPETENT AUTHORITY, THERE IS NO LEGAL OBLIGATION IS CAST ON THE PART OF SUCH TRUST OR INSTITUTION LIKE FILING ANNUAL AUDITED ACCOUNTS, MINUTES OF THE MEETINGS HELD DURING THE YEAR, DETAILS OF THE TRUSTEES/MANAGING COMMITTEE TO BE FURNISHED WITH SUCH AUTHORITY ETC. IN ABSENCE OF SUCH REGISTRATION WITH ANY GOVERNMENT AUTHORITY, NO VERIFICATION OF THE EXISTENCE, NO CONTROL/SUPERVISION OF GOVERNMENT OVER SUCH UNREGISTERED ENTITY WOULD BE; THERE TO SEE WHETHER THEIR ACTIVITIES ARE GOING ON ACCORDING TO THEIR RULES AND REGULATION OR TOWARDS FULFILMENT OF THEIR OBJECTS. THIS MAY BE NOT THE INTENTION OF THE STATUTE WHILE MAKING PROVISIONS OF SECTION 12AA RW R I7A. III) THE DOCUMENTS SUBMITTED BY THE APPLICANT LIKE COPY OF RULES AND REGULATION? ATM CARD, ANNUAL AUDIT REPORT FOR F.YRS 2014-15,2015-16 AND 2016-17 ETC. THOUGH EVIDENCING THE EXISTENCE OF THE TRUST BUT ARE NOT DOCUMENTS EVIDENCING THE CREATION OF THE TRUST AND, THEREFORE, REQUIREMENT OF RULE 17A IS NOT SATISFIED. IN VIEW OF ABOVE FACTS, THE CONTENTION OF THE APPLICANT IS NOT FOUND CONVINCING AND THEREFORE REJECTED. 9. IN VIEW OF ABOVE, IN THE ABSENCE OF COMPLETE DETAILS/DOCUMENTS, IT IS NOT POSSIBLE TO VERIFY THE EXISTENCE AND GENUINENESS OF THE CREATION OF THE ABOVE TRUST. SECTION 12AA MAKES IT VERY CLEAR THAT BEFORE GRANTING REGISTRATION UNDER THIS SECTION, THE COMMISSIONER HAS TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND ALSO HE HAS TO VERIFY THAT THESE ACTIVITIES ARE IN CONSONANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. RELIANCE IN THIS REGARD IS PLACED ON JUDGMENT DELIVERED BY THE HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX, UJJAIN VS DAWOODI BOHARAJAMAL CIVIL APPEAL NO. 2492 OF 2014. THE FACTS CONSIDERED IN PARA 14 OF THE JUDGEMENT BY THE HON'BLE APEX COURT ARE REPRODUCED FOR SAKE OF CONVENIENCE: SECTION 12AA LAYS DOWN THE PROCEDURE TO BE FOLLOWED BY THE COMMISSIONER FOR GRANT OR REFUSAL OF APPLICATION FOR REGISTRATION MADE UNDER SECTION 12A. ACCORDING TO PROCEDURE SO LAID DOWN, THE COMMISSIONER SHALL CALL FOR DOCUMENTS AND INFORMATION AND CONDUCT AN ENQUIRY TO SATISFY HIMSELF OF THE GENUINENESS OF THE TRUST AND UPON REACHING SATISFACTION OF THE CHARITABLE OR RELIGIOUS NATURE OF THE OBJECTS AND THE AUTHENTICITY OF THE ACTIVITIES OF THE TRUST, HE WOULD GRANT REGISTRATION. IF HE IS NOT SATISFIED OF THE AFORESAID, THE REQUEST MADE IN THE APPLICATION MAY BE DECLINED.' PAGE | 6 ITA NO.78/SRT/2019 FOR A.Y. 19-20 ITAT BAR ASSOCIATION SURAT AS DISCUSSED ABOVE, THE APPLICANT HAS FAILED TO FILE DOCUMENTARY EVIDENCES TO ENABLE ME TO SATISFY ABOUT THE GENUINENESS OF ITS CREATION, ITS ACTIVITIES AND TO VERIFY THESE ACTIVITIES ARE IN CONSONANCE WITH ITS OBJECTS. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS FILED PAPER BOOK COMPRISING COPIES OF DETAIL AND DOCUMENT FILED BEFORE THE LD. CIT(EXEMPTION). HE CONTENDED THAT LD. CIT(EXEMPTION) HAS ERRED IN REJECTING APPLICATION IN A GENERAL MANNER FOR APPROVAL U/S 12AA OF THE ACT WITHOUT CONSIDERING THE SPECIFIC NATURE OF OBJECT AND ACTIVITIES OF THE ASSESSEE AS CLOTH MERCHANT ASSOCIATION WITH OBJECT TO ENCOURAGE CLOTH BUSINESS AND TO ENCOURAGE CO-OPERATION AND FRIENDSHIP AMONGST MEMBERS OF THE ASSOCIATION. THE LD. COUNSEL HAS PLACED RELIANCE ON THE DECISION OF JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF GUJARAT STATE PLASTIC MANUFACTURERS ASSOCIATION VS. CIT SPECIAL CIVIL APPLICATION NO. 6059 OF 1996 DATED JULY, 10, 1998. THE LD. COUNSEL HAS FURTHER SUBMITTED THAT IN THE ABOVE STATED CASE THE ASSOCIATION WAS ESTABLISHED WITH A VIEW TO PROTECT GENERAL INTEREST OF PLASTIC MANUFACTURERS AND THE EXACT DATE OF CREATION OF ASSOCIATION WAS NOT KNOWN. IT IS FURTHER CONTENDED AFTER REFERRING THE AFORESAID DECISION OF HONBLE JURISDICTIONAL HIGH COURT THAT IT IS NOT NECESSARY THAT THE APPLICANT APPLYING FOR REGISTRATION U/S 12A OF THE ACT MUST NECESSARILY BE A TRUST. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LD. CIT (EXEMPTION). 5. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. AFTER PERUSAL OF THE DETAILED FILED BY THE ASSESSEE, THE LD. CIT (EXEMPTION) HAS REJECTED APPLICATION FILED BY THE ASSESSEE IN FORM NO. 10A FOR THE APPROVAL U/S 12AA OF THE ACT ON THE GROUND THAT ASSESSEE HAS FAILED TO FILE DOCUMENTARY EVIDENCES TO ENABLE HIM TO SATISFY TO THE GENUINENESS OF ITS CREATION, ITS ACTIVITIES AND TO VERIFY THESE ACTIVITIES IN CONSONANCE WITH ITS OBJECTS. AFTER PERUSAL OF THE MATERIAL ON RECORD, IT IS NOTICED THAT ASSESSEE HAS PLACED DOCUMENTS AT PAGES A TO T ALONG WITH DOCUMENTS FROM 01 TO 73 IN THE PAPER BOOK PERTAINING TO THE SPECIFIC NATURE AND ACTIVITIES OF THE ASSESSEE AS CLOTH MERCHANT ASSOCIATION WHICH WERE FILED BEFORE CIT(EXEMPTION). IT IS ALSO OBSERVED THAT THE LD. CIT(EXEMPTION) HAS NOT GIVEN ANY SPECIFIC REASONS FOR DISPROVING THESE DOCUMENTS IN THE ORDER PASSED U/S 12AA OF THE ACT. WE HAVE GONE THROUGH THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF GUJARAT STATE PLASTIC MANUFACTURERS ASSOCIATION VS. CIT SUPRA WHEREIN THE ISSUE OF GRANTING APPROVAL U/S 12A WAS DECIDED IN FAVOUR OF THE ASSESSEE AFTER TAKING INTO CONSIDERATION THE SPECIFIC NATURE OF THE ACTIVITIES OF THE TRUST. THE RELEVANT PART OF THE PARA FROM THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IS REPRODUCED AS UNDER:- RULE 3 STATES THAT THE ASSOCIATION WAS ESTABLISHED WITH A VIEW TO PROTECT GENERAL INTEREST OF PLASTIC MANUFACTURERS AND TO ENCOURAGE ALLIED INTEREST AND FORM CO-OPERATION AMONGST THEM THAT IT WAS TO WORK DIRECTLY OR INDIRECTLY FOR THE WELFARE OF THE INTEREST OF PLASTIC MANUFACTURERS CLASS; TO MAKE RESEARCH FOR THE DEVELOPMENT OF PLASTIC INDUSTRY; TO RESOLVE ANY DISPUTE BETWEEN THE MEMBERS OF THE ASSOCIATION OR THE MEMBERS OF THE ASSOCIATION AND OTHER PERSONS; AND TO DO ALL SUCH WORK DIRECTLY OR INDIRECTLY FOR FULFILLING THE ABOVE OBJECT OF THE ASSOCIATION. IT WAS ALSO STATED THAT THE ASSOCIATION WILL NOT DO ANY ACT FOR ITS PROFIT, WILL FULFIL THE OBJECT OF THE ASSOCIATION AND THAT ITS FUNDS, RESERVE FUND ETC, WILL BE USED FOR THE GENERAL AND EXTRAORDINARY OBJECT OF THE ASSOCIATION. THE LD. CIT (EXEMPTION) STATED THAT THE ASSESSEE ASSOCIATION WAS NOT REGISTERED WITH ANY COMPETENT AUTHORITIES I.E. CHARITY COMMISSIONER/REGISTERED REGISTRAR OF SOCIETIES/REGISTRAR OF COMPANIES ETC.. IN THIS REGARD, WE HAVE PERUSED THE PROVISION OF SECTION 12A OF THE ACT R.W.S. RULE 17A OF THE I.T. RULE, 1962. THE CLAUSE (A) OF RULE PAGE | 7 ITA NO.78/SRT/2019 FOR A.Y. 19-20 ITAT BAR ASSOCIATION SURAT 17A OF INCOME TAX RULES REQUIRES THAT THE APPLICATION OF REGISTRATION UNDER SECTION 12A OF A CHARITABLE OR RELIGIOUS TRUST OR INSTITUTION WOULD BE ACCOMPANIED BY THE FOLLOWING DOCUMENTS NAMELY, WHERE THE TRUST IS CREATED OR THE INSTITUTION IS ESTABLISHED, UNDER AN INSTRUMENT, THE INSTRUMENT IN ORIGINAL AND WHERE THE TRUST IS CREATED OR THE INSTITUTION IS ESTABLISHED, OTHERWISE THAN UNDER AN INSTRUMENT, THE DOCUMENT EVIDENCING THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION. THUS, RULE 17A NOWHERE ENVISAGES THE EXISTENCE OF A TRUST DEED OR ITS REGISTRATION. THE FACTUM OF EXISTENCE OF TRUST CAN ALSO BE ESTABLISHED BY PRODUCING DOCUMENTS EVIDENCING THE CREATION OF THE TRUST. SECTION 12AA LAYS DOWN THE PROCEDURE FOR GRANTING REGISTRATION. RULE 17(A)(A) SHOW THAT WHEN THE TRUST IS NOT CREATED UNDER AN INSTRUMENT IT IS IMPOSSIBLE TO PRODUCE ANY CONSTITUTIVE DOCUMENT HENCE THE RULE REQUIRES PRODUCTION OF EVIDENTIAL DOCUMENTS I.E. THE DOCUMENT EVIDENCING THE CREATION OF TRUST. WE OBSERVE THAT SPECIFIC EVIDENTIAL DOCUMENTS FURNISHED BY THE ASSESSEE IN THE PAPER BOOK AS REFERRED ABOVE IN THIS ORDER HAS NOT BEEN VERIFIED AND EXAMINED BY THE LD. CIT(EXEMPTION) IN THE CONTEXT OF EVIDENTIAL DOCUMENTS. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE WOULD DEEM IT PROPER TO SET ASIDE THE IMPUGNED ORDER TO THE FILE OF THE LD CIT(EXEMPTION) FOR DECIDING AFRESH AFTER CONSIDERING THE SPECIFIC DOCUMENTS PLACED IN THE PAPER BOOKS AS REFERRED ABOVE. THEREFORE, WE RESTORE THE ISSUE TO THE FILE OF THE LD CIT (EXEMPTION) FOR ADJUDICATING AFRESH AFTER TAKING INTO CONSIDERATION THE OBSERVATION OF THE HONBLE HIGH COURT OF GUJARAT AND CLAUSE (A) IN RULE 17A OF THE I.T. RULE, 1962. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. THUS, IT IS ABUNDANTLY CLEAR FROM THE JUDGMENT OF COORDINATE BENCH OF ITAT AHMEDABAD IN THE CASE OF PANCHKUVA CLOTH MERCHANT ASSOCIATION (SUPRA), THAT AS PER PROVISIONS OF SECTION 12A OF THE ACT R.W.S. RULE 17A OF THE INCOME TAX RULES, 1962, IT IS NOT NECESSARY THAT ASSOCIATION SHOULD BE REGISTERED WITH CHARITY COMMISSIONER OR IT SHOULD BE REGISTERED AS A SECTION 8 COMPANY, UNDER THE COMPANIES ACT. THE RULE 17A NOWHERE ENVISAGES THE EXISTENCE OF A TRUST DEED OR ITS REGISTRATION. WE HAVE GONE THROUGH THE OBJECTIVES OF ASSESSEE AND OBSERVED THAT ASSESSEE IS ENGAGED IN THE ACTIVITIES OF HOLDING SEMINARS, CONSTRUCTION OF LIBRARY, TO CONDUCT STUDY MEETINGS TO ENHANCE EDUCATION AMONG THE MEMBERS, ALL THESE ACTIVITIES FALL IN THE DEFINITION OF GENERAL PUBLIC UTILITY , AS MENTIONED IN SECTION 2(15) OF THE ACT, THEREFORE THE ASSESSEE IS ELIGIBLE FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. 10. WE NOTE THAT LD CIT (EXEMPTION), ALSO STATED THAT ASSESSEE HAS NOT RECEIVED DONATION AND HAS NOT PAID DONATION AND ASSESSEE HAS NOT STARTED CHARITABLE ACTIVITIES ETC. PAGE | 8 ITA NO.78/SRT/2019 FOR A.Y. 19-20 ITAT BAR ASSOCIATION SURAT WE DO NOT SUBSCRIBE TO THE ABOVE-SAID ACTION OF THE LD. CIT(EXEMPTION). IT IS NOT NECESSARY FOR SUCH KIND OF ASSOCIATION TO RECEIVE DONATION AND PAID DONATION. THE OBJECTS OF THE ASSESSEE ARE HOLDING SEMINARS, CONSTRUCTION OF LIBRARY, TO CONDUCT STUDY MEETINGS, TO ENHANCE EDUCATION, AND TO PUBLISH ARTICLES OF MEMBERS IN MONTHLY JOURNAL ETC, AND WE NOTE THAT THESE ACTIVITIES FALL UNDER THE AMBIT OF GENERAL PUBLIC UTILITY. WE ARE OF THE OPINION THAT SO FAR AS GRANT OF REGISTRATION U/S 12AA OF THE ACT IS CONCERNED, THE LD. CITS JURISDICTION IS ONLY TO VERIFY THE OBJECTS OF THE INSTITUTION AND GENUINENESS OF THE ACTIVITIES, MEANING THEREBY THAT HE HAS TO SATISFY HIMSELF THAT OBJECTS ARE CHARITABLE IN NATURE AND ACTIVITIES BEING CARRIED ON OR TO BE CARRIED ON ARE GENUINE, MEANING THEREBY THAT THEY ARE IN CONSONANCE FOR ACHIEVING OF CHARITABLE OBJECTS AND NOTHING ELSE. FROM A READING OF SECTION 12A AND 12AA OF THE ACT WHAT IS INTENDED THEREBY IS ONLY A REGISTRATION SIMPLICITOR OF THE ENTITY/TRUST. THE REGISTRATION U/S 12AA OF THE TRUST HAS BEEN MADE A CONDITION PRECEDENT FOR CLAIMING THE BENEFITS OF THE EXEMPTION U/S 11 AND 12 OF THE ACT. WHILE PROCESSING THE APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT, NO EXAMINATION OF THE MODUS OF THE APPLICATION OF THE FUNDS OF THE ASSESSEE IS CALLED FOR. THE STAGE FOR CONSIDERATION OF THE APPLICATION OF THE FUNDS VIS-A-VIS OBJECTIVES OF THE TRUST ARISES AT THE TIME OF ASSESSMENT BY THE A.O. WHERE BENEFITS ARE CLAIMED BY THE ASSESSEE IN TERMS OF SECTION 11 AND 12 OF THE ACT AND AO CAN EXAMINE THE QUESTION AS TO THE NATURE OF THE CONTRIBUTIONS ETC. AT THE TIME OF ASSESSMENT. AT THE TIME OF REGISTRATION OF THE ASSESSEE U/S 12AA IS CONCERNED WHAT IS TO BE LOOKED INTO IS WHETHER THE ASSESSEE TRUST IS A GENUINE ONE OR WHETHER IT IS A SHAM INSTITUTION FLOATED ONLY TO AVAIL THE BENEFITS OF EXEMPTION UNDER THE ACT (REFER SREE ANJANAYA MEDICAL TRUST VS. CIT 382 ITR 399 KER ). 11. IN THE LIGHT OF THE AFORESAID CASE LAW IN THE CASE OF SREE ANJANAYA MEDICAL TRUST (SUPRA) THE IMPUGNED ORDER OF REJECTION FOR REGISTRATION UNDER 12AA BY THE LD. CIT(E) CANNOT BE SUSTAINED. THE LD. CIT(E) COULD HAVE EXAMINED ONLY THE GENUINENESS OF THE ASSOCIATION AND ITS ACTIVITIES POSTULATED, ARE TO ACHIEVE THE OBJECTS FOR WHICH IT IS CREATED. THERE WAS NO MATERIAL TO SHOW THAT ASSESSEE (ITAT PAGE | 9 ITA NO.78/SRT/2019 FOR A.Y. 19-20 ITAT BAR ASSOCIATION SURAT BAR ASSOCIATION) WAS NOT GENUINE OR THAT ITS ACTIVITIES WERE NOT AS PROFESSED IN THE MOA AND AOA. THERE WAS NO FINDING THAT ASSESSEE (ITAT BAR ASSOCIATION) WAS A SHAM ENTITY AND THEREFORE, WE ARE INCLINED TO SET ASIDE THE ORDER OF THE LD. CIT(E) WITH THE DIRECTION TO HIM TO CONSIDER THE APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT, DE NOVO , BY PASSING A SPEAKING ORDER IN ACCORDANCE TO LAW AND AFTER GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE IN ACCORDANCE TO LAW. STATISTICAL PURPOSES, THE APPEAL OF THE ASSESSEE IS TREATED TO BE ALLOWED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE (IN ITA NO.78/SRT/2019) IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 23/08/2021 BY PLACING THE RESULT ON THE NOTICE BOARD AS PER RULE 34(5) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULE 1963. SD/- SD/- (PAWAN SINGH) (DR. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT/ / DATE: 23/08/2021 /DKP OUTSOURCING PS COPY OF THE ORDER FORWARDED TO 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A) 4. PR.CIT 5. DR/AR, ITAT, SURAT 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR/SR. PS/PS ITAT, SURAT