Shri Mahaveer Swetamber Jain sthanakwasi Nyas, V. The CIT,

ITA 791/IND/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1504 (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 5 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI V.K. GUPTA, AM ITA NO.791/IND/2007 UNDER SECTION 12A/12AA OF THE IT ACT SHREE MAHAVEER SHWETAMBER JAIN STHANAKVASI NYAS (PA N AAGTS 6745 L) 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 29.10.2007 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 FOR 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 ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE FAC TS OF THE PRESENT APPEAL ARE IDENTICAL TO ITA NO.790/IND/2007, THEREFORE, TH E ARGUMENTS ADVANCED IN PAGE 2 OF 5 THE CASE OF SHREE RISHBHDEV CHHAGANIRAM PEDI DHARMI K EVAM PARMARTHIK TRUST MAY BE CONSIDERED IN THE PRESENT APPEAL ALSO. THIS ASSERTION OF THE ASSESSEE WAS NOT CONTROVERTED BY THE REVENUE AND TH E LD. CIT, DR CONTENDED THAT HIS ARGUMENT IS ALSO IN IDENTICAL LINE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON THE FILE. KEEPING IN VIEW THE ASSERTIO N OF THE LD. RESPECTIVE COUNSEL, WE ARE REPRODUCING HEREWITH THE ORDER OF T HE TRIBUNAL IN THE CASE OF (ITA NO.790/IND/2007): THE IMPUGNED APPEAL IS BY THE ASSESSEE AGAINST THE ORD ER OF LD. CIT-UJJAIN, DATED 20.11.2007 ON THE GROUND THAT THE LD . CIT ERRED IN LAW AS WELL AS ON FACTS IN DENYING REGISTRATION U/S 12A/12AA OF THE ACT BY HOLDING THAT PROVISIONS OF SEC. 13(1)(B) OF THE ACT ARE APPLICABLE AND FURTHER ERRED IN HOLDING THAT THE OB JECTS OF THE ASSESSEE TRUST ARE FOR THE BENEFIT OF A PARTICULA R COMMUNITY. 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD LD. REPRESENTATIVES OF BOTH SIDES AND CONSIDERED THE ARGU MENTS ADVANCED BY THEM. THE CRUX OF ARGUMENTS ON BEHALF OF T HE ASSESSEE IS THAT ASSESSEE IS A PUBLIC RELIGIOUS TRUS T WAS WRONGLY DENIED REGISTRATION MERELY ON THE PLEA THAT IT BELON GS TO A PARTICULAR COMMUNITY WHEREAS THE JAINS ARE PART OF IN DIAN SOCIETY. RELIANCE WAS PLACED UPON THE DECISIONS IN CI T VS. CHANDRA CHARITABLE TRUST (2006) (206 CTR (GUJ) 418); 2 94 ITR 86 (GUJ). THE RELIANCE UPON THE DECISION IN CIT VS. P ALGHAR SHADI MAHAL TRUST (2002) (254 ITR 212) (SC) AND AHMEDABAD RAN A CASTE ASSOCIATED CASE (140 ITR 1) WERE ARGUED TO BE NOT CORRECTLY INTERPRETED BY THE LD. COMMISSIONER. ON THE OTHER HAND, THE LD. CIT, DR STRONGLY DEFENDED THE IMPUGNED ORDER B Y CONTENDING THAT FIRSTLY THE TRUST HAS BEEN CREATED FOR A PARTICULAR COMMUNITY AND SECONDLY SEC. 13(1)(B) WAS RIGHTLY IN VOKED. OUR ATTENTION WAS INVITED TO REPLY OF THE ASSESSEE DATE D 13.11.2007 AND SPECIFICALLY PARA 4 TO THE EFFECT THAT THE TRAVELL ERS OF OTHER COMMUNITIES CAN ONLY BE CONSIDERED WHEN THERE IS VACA NCY. THE DENIAL OF REGISTRATION WAS EMPHATICALLY SUPPORTED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERI AL AVAILABLE ON THE FILE. BRIEF FACTS ARE THAT THE ASSESSEE TRUST APPLIED FOR PAGE 3 OF 5 REGISTRATION U/S 12A/12AA OF THE ACT ON 31.5.2007. O N PERUSAL OF THE TRUST DEED, IT WAS NOTED BY THE LD. CIT THAT THE TR UST PROPERTY CAN ONLY BE USED BY MEMBERS OF JAIN SHWETAMBER MURTI PUJAK COMMUNITY AND THE OBJECTS CONTAINED IN THE TRUST DEED ARE ALSO ONLY FOR A PARTICULAR RELIGIOUS COMMUNITY. THE LD. C IT ASKED THE ASSESSEE TO EXPLAIN THE POSITION AND SPECIFICALLY THE OBJECTS. VIDE ORDER SHEET DATED 29.7.2000, THE ASSESSEE WAS ASKED A S TO WHY THE REGISTRATION MAY NOT BE REFUSED AS PER PROVISION S OF SEC. 13(1)(B) OF THE ACT. THE ASSESSEE WAS ALSO ASKED TO P ROVIDE RULES AND REGULATIONS OF VARIOUS DHARAMSHALAS/PROPERTIES OW NED BY THE ASSESSEE TRUST. THE ASSESSEE VIDE REPLY DATED 13. 11.2007 CLAIMED THAT IT IS A OLD TRUST BY MENTIONING THE DOCU MENT DATED 6.5.38, MENTIONING THE HISTORICAL BACKGROUND. IN 1963 , THE ASSESSEE TRUST MADE AN APPLICATION TO THE COLLECTOR AND THE TRUST WAS REGISTERED AS PUBLIC TRUST ON 31.10.1963. AS PE R THE ASSESSEE, THERE IS A PROVISION (AS PER OBJECTS) FOR RUNNING A PRIMARY SCHOOL, DHARAMSHALA AND ALL OTHER WELFARE ACTIVITIES JAIN SHWET AMBER RELIGION. THE ASSESSEE ALSO FURNISHED RULES AND REGUL ATION OF DHARAMSHALA WHEREIN IT WAS MENTIONED THAT THE TRAVELLERS/PERSONS OF OTHER COMMUNITIES CAN ALSO STA Y IN CASE THERE IS VACANCY. IT WAS ALSO CLAIMED THAT PROVISION S OF SEC. 13(1)(B) ARE NOT APPLICABLE. THE ASSESSEE IN ITS AFO RESAID LETTER ALSO PLACED RELIANCE UPON 206 CTR 418, 106 ITD 531, 293 ITR 259 AND 140 ITR 1. HOWEVER, THE LD. CIT PLACED RELIA NCE UPON THE DECISION IN PALAGHAT SHADI MAHAL TRUST (SC) (SUPRA) AN D DENIED REGISTRATION U/S 12A/12AA AS SEC. 13(1)(B) WAS HELD TO BE APPLICABLE TO THE FACTS OF THE CASE. THE ASSESSEE HAS C HALLENGED THE DENIAL OF REGISTRATION BEFORE THIS TRIBUNAL. 4. UNDER THE AFOREMENTIONED FACTS, ADMITTEDLY, A PAR TICULAR RELIGIOUS COMMUNITY HAS BEEN PREFERRED IN PROVIDING STAY FACILITIES THAT DOES NOT MEAN THAT THE PERSONS FROM O THER COMMUNITIES/RELIGION ARE NOT PERMITTED TO STAY OR T O ENJOY THE BENEFITS OF THE OBJECTS ENSHRINED IN THE 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 OTHER WELFARE ACTIVITIES OF JAIN SHWETAMBER RELIGION. JAIN ISM IS A VERY LIBERAL RELIGION WHERE ALL SORTS OF PEOPLE EV EN DALITS ARE GETTING EQUAL STATUS AS PER THEIR CHARACTERS. ADMITTEDLY, THERE IS A MENTION THAT IN CASE OF VACANC Y, THE TRAVELLERS OF OTHER COMMUNITIES CAN ALSO STAY IN THE DHARAMSHALA. IN VIEW OF THESE FACTS, FIRSTLY WE ARE OF THE VIEW THAT THERE IS NO DENIAL THAT THERE IS A EMPHASIS TO PRO PAGATE 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 OBJECTS OF THE TRUST ARE FOR THE MAINTENANCE OF TEMPLE, SADHUS , SADHVIS, PAGE 4 OF 5 SEVAKS ALONG WITH OTHER GOALS. WE ARE OF THE VIEW THAT UNDER THE AFOREMENTIONED FACTS, SEC. 13(1)(B) IS NOT APPLICAB LE FIRSTLY BECAUSE ONE OF THE OBJECTS IS ALSO TO RUN EDUCATIONA L INSTITUTION AND SECONDLY THE DHARAMSHALA/PROPERTIES ARE FOR THE US E OF OTHER COMMUNITIES/RELIGION ALSO. SEC. 13(1)(B) IS AT TRACTED ONLY IF THE TRUST IS CREATED ONLY FOR THE BENEFIT OF A PARTIC ULAR RELIGIOUS COMMUNITY OR CASTE. IT HAS NO APPLICATION IF THE OBJ ECTS OF THE TRUST ARE PROMOTING INTEREST OF PUBLIC AT LARGE. AS FAR AS THE RELIANCE IN THE CASE OF PALGHAT SHADI MAHAL TRUST (SUP RA), IN OUR HUMBLE OPINION IS NOT APPLICABLE BECAUSE THAT TRUST W AS SPECIFICALLY CREATED FOR THE BENEFIT OF A PARTICULAR COMMUNITY ONLY. OUR VIEW FINDS SUPPORT FROM THE DECISION IN C IT VS. SHRI GUJRATI MANDAL (101 TAXMAN 647) (MAD) AND CIT VS. C HANDRA CHARITABLE TRUST (2007) (294 ITR 86) (GUJ); 206 CTR (G UJ) 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 CHARI TABLE AS WELL AS A RELIGIOUS TRUST, THEREFORE, SEC. 13(1)(B) WOULD N OT BE APPLICABLE. WHILE COMING TO THIS CONCLUSION, THE HONBLE COURT ALS O CONSIDERED THE CASES IN BAL PATIL & OTHERS VS. UNION OF INDIA & OTHERS, AIR 2005 SC 3172, SHANTA GAURI RAMNIKLAL & OTHER S VS. CIT (239 ITR 538) (GUJ). FROM THE DIFFERENT PHRASEOLA OGY USED BY THE LEGISLATURE ENCLOSES (A), (B) AND (C) IN SEC. 13(1), IT CAN BE INFERRED THAT THE LEGISLATURE INTENDED TO COVER ONLY TRUST FOR CHARITABLE PURPOSES UNDER CLAUSE (B). THAT MEANS, IF INTEREST IS A COMPOSITE ONE FOR BOTH RELIGIOUS AND CHARITABLE PURPO SES, THEN IT WOULD NOT BE COVERED BY CLAUSE (B). IT IS ALSO APPA RENT THAT IF THE TRUST IS ONLY FOR RELIGIOUS PURPOSES, CLAUSE (B) WO ULD NOT BE APPLICABLE. CLAUSE (B) DEALS WITH A TRUST FOR CHARITA BLE PURPOSES OR CHARITABLE INSTITUTIONS WHICH ARE ESTABLISHED FOR GI VING RELIEF TO THE POOR OR MEDICAL RELIEF OR EDUCATION OF ANY PA RTICULAR 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, MAINTENANCE OF TEMPLE, SADHUS AND SADHVIES AND ALOS RUNNING EDUCATIONAL INSTITUTIONS, THEREFORE, IN OUR HUMBLE OPINION, IT IS A FIT CASE FOR GRANT OF RE GISTRATION U/S 12A/12AA OF THE ACT, SUBJECT TO THE CONDITION THAT THE ASSESSEE TRUST WILL FURTHER LIBERALISE ITS TRUST DEED/OBJECT S AND SHALL MAKE PROVISION FOR THE BENEFIT OF ALL OTHER COMMUNITIES/RE LIGION. 5. AS FAR AS THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE THAT REGISTRATION BE GRANTED WITH RETROSPECTIVE EFF ECT IS NOT TENABLE BECAUSE NO SATISFACTORY EXPLANATION WAS ADV ANCED BY THE ASSESSEE FOR MAKING ITS CASE FOR GRANT OF REGIS TRATION FROM THE DATE OF ITS INCEPTION. THE LD. CIT IS, THEREFOR E, 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 PAGE 5 OF 5 PROVISO TO SECTION 12A(1)(A) OF THE ACT. THIS APPEA L OF THE ASSESSEE IS, THEREFORE, ALLOWED TO THE AFORESAID EX TENT ONLY. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. 4. SINCE THE FACTS WERE CLAIMED TO BE IDENTICAL IN THE PRESENT APPEAL ALSO, THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE, THE AF ORESAID ORDER WILL BE APPLICABLE TO THE PRESENT APPEAL ALSO. THE LD. CI T IS DIRECTED TO GRANT REGISTRATION TO THE ASSESSEE U/S 12A/12AA OF THE IT ACT. AS FAR AS THE CONTENTION THAT THE REGISTRATION MAY BE GRANTED WIT H RETROSPECTIVE EFFECT, WE ARE OF THE VIEW THAT SINCE THE DELAY HAS NOT BEEN S ATISFACTORILY EXPLAINED BY THE ASSESSEE, THEREFORE, IT WILL BE GRANTED FROM TH E FIRST DAY OF THE FINANCIAL YEAR IN WHICH APPLICATION WAS MADE AS PER THE PROVI SIONS OF 1 ST PROVISO TO SECTION 12A(1)(A) OF THE ACT. 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