Village Foundation for Social Services, Kolkata V. CIT, (Exemption), Kolkata, Kolkata

ITA 780/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1390 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 19-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA

Judgement Text

1 ITA NOS.780 & 781/KOL/2017 VILLAGE FOUNDATION FOR SOCIAL SERVICES AYS ---- , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE .., /AND , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI WASEEM AHMED, AM] I.T.A. NOS. 780 & 781/KOL/2017 ASSESSMENT YEARS: ----- VILLAGE FOUNDATION FOR SOCIAL SERVICES (PAN: AAFCV5824K) VS. COMMISSIONER OF INCOME-TAX (EXEMPTION), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 01.08.2017 DATE OF PRONOUNCEMENT 20.09.2017 FOR THE APPELLANT SHRI SUNIL SURANA, FCA FOR THE ASSESSEE/CROSS OBJECTOR SHRI G. HANGSHING, CIT, DR ORDER PER SHRI A.T.VARKEY, JM BOTH THESE APPEALS PREFERRED BY THE ASSESSEE ARE AG AINST THE SEPARATE ORDERS OF LD. CIT(E), KOLKATA DATED 08.02.2017 AND SINCE BOTH THE SE APPEALS HAVE BEEN HEARD TOGETHER, THEY ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST FORMED WITH THE OBJECTS TO CARRY OUT, UNDERTAKE, PROMOTE, ENCOURAGE, SUPPORT, ASSIST AND AID FOR PROMOTING EDUCATION, ENHANCING VOCATIONAL SKILLS AND LIVELIHOOD PROJECTS , PREVENTIVE HEALTHCARE AND SANITATION, REDUCING INEQUALITIES FACED BY SOCIALLY AND ECONOMI CALLY BACKWARD GROUPS, SUSTAINABLE DEVELOPMENT, RELIEF AND REHABILITATION, CLEAN INDIA , SPORTS ETC. IT CAME INTO EXISTENCE THROUGH A CERTIFICATE OF INCORPORATION PURSUANT TO SUB-SECT ION (2) OF SECTION 7 OF THE COMPANIES ACT, 2013 AND RULE 8 OF COMPANIES (INCORPORATION) RULES, 2014 DATED 23.08.2016. THE TRUST FILED AN APPLICATION IN FORM 10A FOR REGISTRATION U /S. 12A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AND FORM 10G FOR GRANTING APPROVAL U/S. 80G OF THE ACT ON 02.12.2016 BEFORE THE LD. CIT (EXEMPTIONS), KOLKATA. HOWEVER, LD. CIT(E) REJECTED THE APPLICATION FOR REGISTRATION VIDE ORDER DATED 0 8-02-2017 ON THE REASON THAT SINCE NO ACTIVITIES OF THE TRUST WERE STARTED ACCORDING TO H IM, THERE IS NO MEANS TO VERIFY THE 2 ITA NOS.780 & 781/KOL/2017 VILLAGE FOUNDATION FOR SOCIAL SERVICES AYS ---- GENUINENESS OF THE ACTIVITIES OF THE TRUST, SO HE D ECLINED TO GRANT REGISTRATION U/S 12A OF THE ACT. AGGRIEVED BY THE SAID REJECTION OF REGISTRATIO N, THE ASSESSEE FILED APPEALS BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUNDS:- 1.FOR THAT THE ORDER OF THE LD. CIT(E) ERRED IN RE FUSING TO GRANT REGISTRATION U/S. 12AA ON THE GROUND THAT THE APPELLANT HAS NOT CARRIED OUT ANY C HARITABLE ACTIVITIES IN SPITE OF THE FACT THAT THE APPELLANT IS A NEW TRUST. 2. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT(E) MAY BE DIRECTED TO GRANT REGISTRATION U/S. 12AA OF THE I. T. ACT, 1961. SIMILARLY, APPROVAL UNDER SECTION 80G(5)(VI) WAS AL SO DENIED ON THE SAME DAY AS A CONSEQUENCE OF REJECTION OF THE APPLICATION IN FOR M NO. 10A. AGGRIEVED BY THE REJECTION OF THE APPROVAL SOUGHT UNDER SECTION 80G, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE US ON THE FOLLOWING EFFECTIVE GROUNDS:- 1.FOR THAT THE ORDER OF THE LD. CIT(E) ERRED IN R EFUSING TO GRANT REGISTRATION U/S. 50G(5)(VI) ON THE GROUND THAT THE APPELLANT HAS NOT CARRIED OU T ANY CHARITABLE ACTIVITIES IN SPITE OF THE FACT THAT THE APPELLANT IS A NEW TRUST. 2. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT(E) MAY BE DIRECTED TO GRANT REGISTRATION U/S. 80G(5)(VI) OF THE I. T. ACT, 1961 . 3. BEFORE US, LD. COUNSEL FOR THE ASSESSEE STATED THAT WHILE GRANTING THE REGISTRATION TO THE ASSESSEE, WHICH IS AT THE COMME NCEMENT STAGE, THE POWERS OF LD. CIT(E) WITH WHOM THE APPLICATION IS FILED, A RE LIMITED TO THE ASPECT OF EXAMINING AS TO WHETHER OR NOT THE OBJECTS OF TRUST ARE CHARITABLE IN NATURE AND SINCE THE TRUST WAS FORMED ON 23.08.2016 AND TH E APPLICATION FOR REGISTRATION WAS MADE ON 02.12.2016, THOUGH THE ACT IVITIES COMMENCED TO SOME EXTENT, WHICH WAS LESS NEVERTHELESS ACCORDING TO LD AR IT IS NOT OPEN FOR THE LD. CIT(E) TO GO INTO THE QUANTITATIVE ASPE CT OF THE ACTIVITIES OF THE TRUST WHILE CONSIDERING THE APPLICATION FOR REGISTR ATION U/S 12A. 4. THE LD. AR URGED BEFORE US THAT THE CHARITABLE O BJECTS OF THE TRUST WERE NOT DISPUTED BY THE LEARNED CIT(E) IN THE IMPU GNED ORDER. FURTHER, IT WAS SUBMITTED BY THE LD. AR THAT SO LONG AS THERE I S NO DISPUTE AS TO THE OBJECTS OF THE TRUST, WHAT IS TO BE SEEN AT THE TIM E OF GRANTING REGISTRATION BY THE LEARNED CIT(E) IS ONLY WHETHER THE OBJECTS OF T HE TRUST ARE CHARITABLE AND 3 ITA NOS.780 & 781/KOL/2017 VILLAGE FOUNDATION FOR SOCIAL SERVICES AYS ---- ACTIVITIES CARRIED OUT ARE GENUINE IN NATURE. RELI ANCE WAS PLACED ON THE DECISIONS IN ASANSOL DURGAPUR DEVELOPMENT AUTHORITY VS CIT ITA 756/KOL/2010, DATED 24.6.2016 AND M/S BROADWAY CHAR ITABLE TRUST VS CIT ITA NO 647/KOL/2013 DATED 29.4.2016. IN A DECISION RENDERED BY A COORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF D HARMA SANSTHAPAK SANGH (NIVAS) VS.- CIT (2008) 118 TTJ (DEL.) 823, IT WAS HELD AS FOLLOWS: 10. THE LAW IS NOW WELL-SETTLED THAT WHILE GRANTIN G THE REGISTRATION TO THE CHARITABLE INSTITUTION OR TRUST, IF IT IS AT THE COMMENCEMENT STAGE, THE POWERS OF CIT, WITH WHOM THE APPLICATION IS FILED BY SUCH TRUST/INSTITUTION, ARE LIMITED TO THE ASPECT OF EXAMINING THAT WHETHER OR NOT THE OBJECTS OF TRUST ARE CHARITABLE IN NATURE AND THIS WELL ESTABLISHED LAW IS SUPPORTED BY THE DECISIONS RELIED UPON THE LEARNED AUTHORISED REPRESENTATIVE AND REFERRED TO IN THE EARLIER PART OF THE ORDER. IT HAS ALREADY BEEN OBSERVED THAT OBJECTS OF TRUST, WHICH ARE RELIGIOUS, ARE CHARITABLE IN NATURE. THUS, ASSE SSEE ALSO FULFILS SUCH CONDITION. THE CARRYING OF CHARITABLE ACTIVITY AT THE STAGE OF COM MENCEMENT OF INSTITUTION IS NOT RELEVANT TO DECIDE THAT WHETHER SUCH TRUST/ INSTITUTION IS ENTI TLED FOR REGISTRATION. SO LONG THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE, REGISTRATION CA NNOT BE REFUSED, IF THE TRUST IS GENUINE. THEREFORE, WE FIND NO MATERIAL ON RECORD TO JUSTIFY THE ACTION OF THE CIT VIDE WHICH THE ASSESSEE TRUST HAS BEEN REFUSED FOR GRANT OF REGIST RATION. WE DIRECT CIT TO GRANT REGISTRATION TO THE CIT (SIC-ASSESSEE-TRUST). THE APPEAL FILED B Y THE ASSESSEE IS ALLOWED.'[EMPHASIS SUPPLIED] WHILE DECIDING THE APPEAL IN THE ABOVE CA SE, THE TRIBUNAL TOOK INTO CONSIDERATION THE DECISIONS OF TRIBUNAL IN THE CASES OF ACHARYA SEWA NIYAS UTTARANCHAL VS. CIT [(2006) 105 TTJ (DEL) 761] AND MODERN DEFENCE SHIKSHAN SANSTHAN VS. C.I.T . [(2007) 108 TTJ (JD) 732]. LD. ARFOR THE ASSESSEE ALSO SUBMITTED THAT THE ISSU E IS COVERED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH DECISION IN TH E CASE OF BADU RURAL WELFARE SOCIETY VS. CIT IN ITA NOS. 95 & 95/KOL/201 6 DATED 30.09.2016, WHEREIN THE TRIBUNAL VIDE PARA 6 HAS HELD AS UNDER: 6. IN THE DECISIONS RENDERED BY COORDINATE BENCHES IN THE CASE OF VIVEKANANDA WELFARE TRUST VS.- DIT(E) IN ITA NOS. 2095/KOL/2008 AND 27/KOL/2009, ORDER DATED 23.01.2009, M/S GINIA DEVI TODI CHARITABLE TRUST, KOLKATA VS DIRECTOR OF INCOME TAX ITA 738/KO L/2010, DATED 1.6.2011, BANI MITTRA CHARITABLE TRUST, KOLKATA VS. DIRECTOR OF INCOME TAX ITA 1154&1155/KOL/2009, DATED 25.8.2009 THE SAM E CONCLUSION WAS REACHED BY FOLLOWING THE EARLIER DECISION OF ITAT, DELHI IN THE CASE OF DHARMA SANSTHAPAK SANGH (NIVAS) (SUPRA). THE FACTS OF THIS CASE ARE SQUARELY COVERED BY THE DECISION CITED ABOVE. RESPE CTFULLY FOLLOWING THE JUDICIAL REASONING, WE DIRECT THE LD. CIT(E) TO GRA NT REGISTRATION TO THE ASSESSEE-TRUST UNDER SECTION 12AA OF THE ACT AND AL SO TO GRANT EXEMPTION CERTIFIED UNDER SECTION 80G OF THE ACT. ON THE OTHER HAND, THE LD. DR VEHEMENTLY RELIED ON THE ORDER OF THE LD. CIT(E) AND DOES NOT WANT US TO INTERFERE WITH THE I MPUGNED ORDER. 4 ITA NOS.780 & 781/KOL/2017 VILLAGE FOUNDATION FOR SOCIAL SERVICES AYS ---- 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE LAW IS NOW WELL-SETT LED THAT WHILE GRANTING THE REGISTRATION TO THE CHARITABLE INSTITUTION OR TRUST , IF IT IS AT THE COMMENCEMENT STAGE, THE POWERS OF CIT, WITH WHOM THE APPLICATION IS FILED B Y SUCH TRUST/INSTITUTION, ARE LIMITED TO THE ASPECT OF EXAMINING THAT WHETHER OR NOT THE OBJECTS OF TRUST ARE CHARITABLE IN NATURE. A PERUSAL OF THE OBJECTIVES SOUGHT TO BE ACHIEVED BY THE ASSESSEE TRUST IS UNDISPUTEDLY CARRYING OF CHARITABLE ACTIVITY. IT SH OULD BE KEPT IN MIND THAT AT THE STAGE OF COMMENCEMENT OF INSTITUTION/ ASSESSEE TRUST, IT IS NOT RELEVANT TO DECIDE WHETHER THE TRUST HAS ACTUALLY CARRIED OUT THE CHARITABLE ACTIVITIES BECAUSE IN THIS CASE IT IS IN THE NASCENT STATE ONLY IE, WITHIN FOUR MONTHS OF ITS INCORPORATION TH E RELEVANT APPLICATIONS WERE MOVED BY THE APPELLANT. SO LONG THE OBJECTS OF THE TRUST ARE CHA RITABLE IN NATURE; REGISTRATION CANNOT BE REFUSED, IF THE TRUST IS GENUINE. THEREFORE, PER-SE WE FIND NO MATERIAL ON RECORD TO JUSTIFY THE ACTION OF THE CIT VIDE WHICH THE ASSESSEE TRUST HAS BEEN REFUSED GRANT OF REGISTRATION . WE FIND THAT THE FACTS OF THIS CASE ARE SQUARELY COVER ED BY THE DECISION CITED SUPRA AND THE ASSESSEES CASE NEEDS TO BE GRANTED R EGISTRATION AS PRAYED FOR. HOWEVER, WE ARE NOT INCLINED TO DIRECT LD. CIT(E) T O GRANT REGISTRATION WHICH POWER HE ENJOYS, SO WE DIRECT LD. CIT(E) TO CONSIDE R AFRESH GRANTING REGISTRATION TO THE ASSESSEE TRUST U/S. 12AA OF THE ACT AND ALSO TO CONSIDER GRANTING EXEMPTION CERTIFICATE U/S. 80G OF THE ACT TAKING INTO CONSIDERATION THE AFORESAID BINDING DECISIONS OF THE TRIBUNAL AND PASS A SPEAKING ORDER WITHIN THREE MONTHS OF RECEIPT OF THIS ORDER. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20.09.201 7 SD/- SD/- (WASEEM AHMED) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20TH SEPTEMBER, 2017 JD.(SR.P.S.) 5 ITA NOS.780 & 781/KOL/2017 VILLAGE FOUNDATION FOR SOCIAL SERVICES AYS ---- COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT VILLAGE FOUNDATION FOR SOCIAL SERVICES, VILLAGE TOWER, F-15, GEETANJALI PARK, ARIADAHA, 18A, KUMUD GHOSAL ROAD, KOLKATA-700 057 2 RESPONDENT CIT(E), KOLKATA 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY