M/s. Risabhdev Chagniram Pedi Dharmik and Parmarthik Trust, V. The CIT,

ITA 790/IND/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1509 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-10-2009
• Assessment Year: misc
• Appeal Filed On: 31-12-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Assessee Lawyers: A L JAIN; SSH M MANI
• Keywords: Charitable institution; Retrospective amendment

Judgement Text

PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI V.K. GUPTA, AM ITA NO.790/IND/2007 UNDER SECTION 12A/12AA OF THE IT ACT SHREE RISHABHDEV CHHAGANIRAM PEDI DHARMIK EVAM PARM ARTHIK TRUST, SHRIPAL MARG UJJAN (PAN AAGTS 7728 H) C/O A.H. JAIN & CO., 2/1, DHANWANTARI MARG, INDIRA PRIYADARSHINI SQUARE, FREEGANJ, UJJAIN 456 010 ..APPELLANT V/S. CIT, UJJAIN ..RESPONDENT ASSESSEE BY : S/SH. M.MANI & A.L. JAIN DEPARTMENT BY : SHRI K.K. SINGH, CIT, DR ORDER PER JOGINDER SINGH, JM THE IMPUGNED APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT-UJJAIN, DATED 20.11.2007 ON THE GROUND THAT THE LD. CIT ERR ED IN LAW AS WELL AS ON FACTS IN DENYING REGISTRATION U/S 12A/12AA OF THE A CT BY HOLDING THAT PROVISIONS OF SEC. 13(1)(B) OF THE ACT ARE APPLICAB LE AND FURTHER ERRED IN HOLDING THAT THE OBJECTS OF THE ASSESSEE TRUST ARE FOR THE BENEFIT OF A PARTICULAR COMMUNITY. 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD LD. REPRESENTATIVES OF BOTH SIDES AND CONSIDERED THE ARGUMENTS ADVANCED BY THEM . THE CRUX OF PAGE 2 OF 6 ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT ASSESSE E IS A PUBLIC RELIGIOUS TRUST WAS WRONGLY DENIED REGISTRATION MERELY ON THE PLEA THAT IT BELONGS TO A PARTICULAR COMMUNITY WHEREAS THE JAINS ARE PART OF INDIAN SOCIETY. RELIANCE WAS PLACED UPON THE DECISIONS IN CIT VS. CHANDRA CH ARITABLE TRUST (2006) (206 CTR (GUJ) 418); 294 ITR 86 (GUJ). THE RELIANCE UPON THE DECISION IN CIT VS. PALGHAR SHADI MAHAL TRUST (2002) (254 ITR 212) (SC) AND AHMEDABAD RANA CASTE ASSOCIATED CASE (140 ITR 1) WERE ARGUED TO BE NOT CORRECTLY INTERPRETED BY THE LD. COMMISSIONER. ON THE OTHER H AND, THE LD. CIT, DR STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT FIRSTLY THE TRUST HAS BEEN CREATED FOR A PARTICULAR COMMUNITY AND SECONDL Y SEC. 13(1)(B) WAS RIGHTLY INVOKED. OUR ATTENTION WAS INVITED TO REPLY OF THE ASSESSEE DATED 13.11.2007 AND SPECIFICALLY PARA 4 TO THE EFFECT TH AT THE TRAVELLERS OF OTHER COMMUNITIES CAN ONLY BE CONSIDERED WHEN THERE IS VA CANCY. THE DENIAL OF REGISTRATION WAS EMPHATICALLY SUPPORTED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON THE FIL E. BRIEF FACTS ARE THAT THE ASSESSEE TRUST APPLIED FOR REGISTRATION U/S 12A/12A A OF THE ACT ON 31.5.2007. ON PERUSAL OF THE TRUST DEED, IT WAS NOTED BY THE L D. CIT THAT THE TRUST PROPERTY CAN ONLY BE USED BY MEMBERS OF JAIN SHWETA MBER MURTIPUJAK COMMUNITY AND THE OBJECTS CONTAINED IN THE TRUST DE ED ARE ALSO ONLY FOR A PARTICULAR RELIGIOUS COMMUNITY. THE LD. CIT ASKED T HE ASSESSEE TO EXPLAIN THE POSITION AND SPECIFICALLY THE OBJECTS. VIDE ORDER S HEET DATED 29.7.2000, THE PAGE 3 OF 6 ASSESSEE WAS ASKED AS TO WHY THE REGISTRATION MAY N OT BE REFUSED AS PER PROVISIONS OF SEC. 13(1)(B) OF THE ACT. THE ASSESSE E WAS ALSO ASKED TO PROVIDE RULES AND REGULATIONS OF VARIOUS DHARAMSHALAS/PROPE RTIES OWNED BY THE ASSESSEE TRUST. THE ASSESSEE VIDE REPLY DATED 13.11 .2007 CLAIMED THAT IT IS A OLD TRUST BY MENTIONING THE DOCUMENT DATED 6.5.38, MENTIONING THE HISTORICAL BACKGROUND. IN 1963, THE ASSESSEE TRUST MADE AN APP LICATION TO THE COLLECTOR AND THE TRUST WAS REGISTERED AS PUBLIC TRUST ON 31. 10.1963. AS PER THE ASSESSEE, THERE IS A PROVISION (AS PER OBJECTS) FOR RUNNING A PRIMARY SCHOOL, DHARAMSHALA AND ALL OTHER WELFARE ACTIVITIES JAIN S HWETAMBER RELIGION. THE ASSESSEE ALSO FURNISHED RULES AND REGULATION OF DHA RAMSHALA WHEREIN IT WAS MENTIONED THAT THE TRAVELLERS/PERSONS OF OTHER COMM UNITIES CAN ALSO STAY IN CASE THERE IS VACANCY. IT WAS ALSO CLAIMED THAT PRO VISIONS OF SEC. 13(1)(B) ARE NOT APPLICABLE. THE ASSESSEE IN ITS AFORESAID LETTE R ALSO PLACED RELIANCE UPON 206 CTR 418, 106 ITD 531, 293 ITR 259 AND 140 ITR 1 . HOWEVER, THE LD. CIT PLACED RELIANCE UPON THE DECISION IN PALAGHAT SHADI MAHAL TRUST (SC) (SUPRA) AND DENIED REGISTRATION U/S 12A/12AA AS SEC. 13(1)( B) WAS HELD TO BE APPLICABLE TO THE FACTS OF THE CASE. THE ASSESSEE H AS CHALLENGED THE DENIAL OF REGISTRATION BEFORE THIS TRIBUNAL. 4. UNDER THE AFOREMENTIONED FACTS, ADMITTEDLY, A PA RTICULAR RELIGIOUS COMMUNITY HAS BEEN PREFERRED IN PROVIDING STAY FACI LITIES THAT DOES NOT MEAN THAT THE PERSONS FROM OTHER COMMUNITIES/RELIGION AR E NOT PERMITTED TO STAY OR PAGE 4 OF 6 TO ENJOY THE BENEFITS OF THE OBJECTS ENSHRINED IN T HE TRUST DEED. IN REPLY DATED 13.11.2007, THE ASSESSEE HAS MENTIONED AS UNDER: AS PER THE OBJECTS OF THE TRUST, THE PROVISIONS ARE THERE FOR RUNNING A PRIMARY SCHOOL, DHARAMSHAL AND ALL OT HER WELFARE ACTIVITIES OF JAIN SHWETAMBER RELIGION. JAI NISM IS A VERY LIBERAL RELIGION WHERE ALL SORTS OF PEOPLE E VEN DALITS ARE GETTING EQUAL STATUS AS PER THEIR CHARAC TERS. ADMITTEDLY, THERE IS A MENTION THAT IN CASE OF VACA NCY, THE TRAVELLERS OF OTHER COMMUNITIES CAN ALSO STAY IN THE DHARAMSHALA. IN VI EW OF THESE FACTS, FIRSTLY WE ARE OF THE VIEW THAT THERE IS NO DENIAL THAT THE RE IS A EMPHASIS TO PROPAGATE JAINISM DOES NOT MEAN THE OBJECTS OF THE ASSESSEE ARE NOT OF CHARITABLE NATURE. THE DHARAMSHALA/OTHER PROPERTIES ARE VERY WELL CAN BE USED BY THE PUBLIC AT LARGE AND SECONDLY THE OBJECT S OF THE TRUST ARE FOR THE MAINTENANCE OF TEMPLE, SADHUS, SADHVIS, SEVAKS ALON G WITH OTHER GOALS. WE ARE OF THE VIEW THAT UNDER THE AFOREMENTIONED FACTS , SEC. 13(1)(B) IS NOT APPLICABLE FIRSTLY BECAUSE ONE OF THE OBJECTS IS AL SO TO RUN EDUCATIONAL INSTITUTION AND SECONDLY THE DHARAMSHALA/PROPERTIES ARE FOR THE USE OF OTHER COMMUNITIES/RELIGION ALSO. SEC. 13(1)(B) IS ATTRACT ED ONLY IF THE TRUST IS CREATED ONLY FOR THE BENEFIT OF A PARTICULAR RELIGIOUS COMM UNITY OR CASTE. IT HAS NO APPLICATION IF THE OBJECTS OF THE TRUST ARE PROMOTI NG INTEREST OF PUBLIC AT LARGE. AS FAR AS THE RELIANCE IN THE CASE OF PALGHAT SHADI MAHAL TRUST (SUPRA), IN OUR HUMBLE OPINION IS NOT APPLICABLE BECAUSE THAT TRUST WAS SPECIFICALLY CREATED FOR THE BENEFIT OF A PARTICULAR COMMUNITY ONLY. OUR VIE W FINDS SUPPORT FROM THE DECISION IN CIT VS. SHRI GUJRATI MANDAL (101 TAXMAN 647) (MAD) AND CIT VS. PAGE 5 OF 6 CHANDRA CHARITABLE TRUST (2007) (294 ITR 86) (GUJ); 206 CTR (GUJ) 418. THE HONBLE GUJARAT HIGH COURT HELD THAT IF THE OBJECTS OF THE TRUST ARE NOT ONLY TO PROPAGATE JAINISM OR HELP AND ASSIST MAINTENANCE OF TEMPLE, SADHUS, SADHVIS ETC. AND OTHER GOALS ARE ALSO SET OUT IN THE TRUST DEED, SUCH TRUST IS A CHARITABLE AS WELL AS A RELIGIOUS TRUST, THEREFORE, SEC. 13(1)(B) WOULD NOT BE APPLICABLE. WHILE COMING TO THIS CONCLUSION, THE HO NBLE COURT ALSO CONSIDERED THE CASES IN BAL PATIL & OTHERS VS. UNION OF INDIA & OTHERS, AIR 2005 SC 3172, SHANTA GAURI RAMNIKLAL & OTHERS VS. CIT (239 ITR 53 8) (GUJ). FROM THE DIFFERENT PHRASEOLAOGY USED BY THE LEGISLATURE ENCL OSES (A), (B) AND (C) IN SEC. 13(1), IT CAN BE INFERRED THAT THE LEGISLATURE INTE NDED TO COVER ONLY TRUST FOR CHARITABLE PURPOSES UNDER CLAUSE (B). THAT MEANS, I F INTEREST IS A COMPOSITE ONE FOR BOTH RELIGIOUS AND CHARITABLE PURPOSES, THE N IT WOULD NOT BE COVERED BY CLAUSE (B). IT IS ALSO APPARENT THAT IF THE TRUS T IS ONLY FOR RELIGIOUS PURPOSES, CLAUSE (B) WOULD NOT BE APPLICABLE. CLAUSE (B) DEAL S WITH A TRUST FOR CHARITABLE PURPOSES OR CHARITABLE INSTITUTIONS WHICH ARE ESTAB LISHED FOR GIVING RELIEF TO THE POOR OR MEDICAL RELIEF OR EDUCATION OF ANY PARTICUL AR RELIGIOUR COMMUNITY OR CASTE. OUR VIEW IS SUPPORTED BY THE DECISION IN CIT VS. BARKATE SAIFIYAH SOCIETY (1995) (213 ITR 492) (GUJ). IN THE PRESENT APPEAL, SINCE THE OBJECTS OF THE ASSESSEE ARE TO PROPAGATE JAINISM, MAINTENAN CE OF TEMPLE, SADHUS AND SADHVIES AND ALOS RUNNING EDUCATIONAL INSTITUTIONS, THEREFORE, IN OUR HUMBLE OPINION, IT IS A FIT CASE FOR GRANT OF REGISTRATION U/S 12A/12AA OF THE ACT, SUBJECT TO THE CONDITION THAT THE ASSESSEE TRUST WI LL FURTHER LIBERALISE ITS TRUST PAGE 6 OF 6 DEED/OBJECTS AND SHALL MAKE PROVISION FOR THE BENEF IT OF ALL OTHER COMMUNITIES/RELIGION. 5. AS FAR AS THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE THAT REGISTRATION BE GRANTED WITH RETROSPECTIVE EFFECT IS NOT TENABLE BECAUSE NO SATISFACTORY EXPLANATION WAS ADVANCED BY THE ASSESSEE FOR MAKING ITS CASE FOR GRANT OF REGISTRATION FROM THE DATE OF ITS INCEPTION. THE LD . CIT IS, THEREFORE, DIRECTED TO GRANT REGISTRATION FROM THE FIRST DAY OF THE FINANC IAL YEAR IN WHICH APPLICATION WAS MADE AS PER THE PROVISIONS OF 1 ST PROVISO TO SECTION 12A(1)(A) OF THE ACT. THIS APPEAL OF THE ASSESSEE IS, THEREFORE, ALLOWED TO THE AFORESAID EXTENT ONLY. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4.11.2009. SD/- SD/- (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 4.11.2009 !VYAS! COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR