CHITPAVAN FOUNDATIN, MUMBAI V. DIT (E), MUMBAI

ITA 8164/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9557 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-11-2012
• Assessment Year: misc
• Appeal Filed On: 25-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A V KAMAT
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 8164/MUM/2010 M/S CHITPAVAN FOUNDATION. 205, AGARAWAL SHYAMKAML A, VILE PARLE (E) MUMBAI -400 057 PAN AADCC 8069 M VS DIRECTOR OF INCOME TAX MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.V. KAMAT RESPONDENT BY : SHRI RAJARSHI DWIVEDY DATE OF HEARING: 22.11.2012 DATE OF PRONOUNCEMENT: 22.11.2012 O R D E R PER VIVEK VARMA, JM: THE INSTANT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF DIT(EXEMPTION), MUMBAI, DATED 22.09.2010. 2. THE FACTS ARE THAT THE ASSESSEE IS A COMPANY UNDER SECTION 25 OF THE COMPANIES ACT, 1956 AND WAS INSTITUTED ON 06.10.2009. THE ASSESSEE MADE AN APPLICATION UNDER SECTION 12A OF THE IN COME TAX ACT, 1961 FOR THE GRANT OF REGISTRATION, WHICH WAS DENIED B Y THE DIT AS THE OBJECTS OF THE FOUNDATION WERE, (III)(1) TO PROMOTE, UNDERTAKE, AID, FOSTER AND EN GAGE IN PROMOTION OF AND UPBRINGING OF PERSONS TO CHITPAVAN COMMUNITY IN INDIA AND OVERSEAS, IN THE FIELDS OF ARTS, SCIENCE, COMMERCE, EDUCATION, SOCIAL CULTURAL. 3. THE DIT (EXEMPTION) IN THE IMPUGNED ORDER, OBSERVED, THE FOUNDATION IS A CHARITABLE ORGANIZATION HAVING VARIOUS OBJECTS, THE MAIN OBJECT IS MEANT FOR THE BENEFIT OF A PARTICULA R COMMUNITY, FROM THE ABOVE, IT WOULD BE ESTABLISHED THAT THE TRUST HAS B EEN FORMED FOR THE ITA NO. 8164/MUM/2010 M/S CHITPAVAN FOUNDATION. 2 BENEFIT OF A PARTICULAR COMMUNITY/CAST CHITPAVAN CO MMUNITY IN PARTICULAR. ONCE THE TRUST IS HELD TO BE ESTABLISHE D FOR THE BENEFIT OF A PARTICULAR COMMUNITY, THEN THE EXEMPTION U/S 11 WOU LD NOT BE ELIGIBLE TO SUCH A TRUST AND PROVISIONS OF SEC 13(1)(B) WOUL D BE CLEARLY ATTRACTED IN SUCH A SCENARIO. ON A PLAIN READING OF THE SAID PROVISION, IT IS CLE ARLY ENUMERATED THAT BENEFIT FOR A PARTICULAR COMMUNITY CANNOT BE PROVID ED BY A TRUST AND IF IT IS BEING DONE, THEN THE TRUST WOULD LOSE EXEMPTI ON U/S 11 OF THE I.T. ACT, 1961. THE TRUST IN QUESTION WOULD NOT BE THERE FORE ELIGIBLE FOR GRANT OF REGISTRATION U/S 12AA OF THE I.T. ACT, 1961, AS THE PRIMARY CONDITION FOR SATISFACTION OF THE PROVISIONS OF SEC 11 % 12 A RE MANDATORY FOR GRANT OF ANY SUCH REGISTRATION. IN THE INSTANT CASE UNDER CONSIDERATION, BOTH THE PROVISIONS ARE VIOLATED AS SUCH, REGISTRATION U /S 12AA CANNOT BE GRANTED TO THE TRUST. AS REGARDS THE POINT THAT WHETHER THIS ISSUE CAN BE TAKEN UP AT THE, STAGE OF REGISTRATION PROCEEDINGS IT IS POINTED OUT THAT WITH THE INTRODUCTION OF SECTION 12AA W.E.F. 01.04.1997 THE REQUIREMENTS FOR REGISTRATION HAVE CHANGED, SECTION 12AA(1)(A) PROVI DES THAT THE COMMISSIONER AFTER SATISFYING HIMSELF ABOUT THE OB JECT OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, SHALL PASS ORDER FOR REGISTRATION. IT CLEARLY SHOWS THAT THE COMMISSIONE R SHOULD EXAMINE THE OBJECT OF THE TRUST. WHAT IS TO BE EXAMINED HAS NOT BEEN MENTIONED. FURTHER, SECTION 12A HAS THE CAPTION CONDITION FOR APPLICATION OF SEC.11 AND 12. THE CAPTION HAS ALSO BEEN INSERTED BY THE FINANCE ACT, 2007, W.E.F. 01.06.2007. SECTION 12A PROVIDES THAT THE PR OVISIONS OF SEC.11 AND SEC.12 SHALL NOT APPLY IN RELATION TO THE INCOM E OF ANY TRUST OR INSTITUTION UNLESS THE CONDITION OR REGISTRATION IS FULFILLED. A COMBINED READING OF SECTION 12A AND 12AA SHOWS THAT THE COMM ISSIONER HAD TO EXAMINE ABOUT THE OBJECTS OF THE TRUST OR INSTITUTI ON AND THE GENUINENESS OF ITS ACTIVITIES IN RESPECT OF SEC 12A ALSO I.E. A S TO THE CONDITIONS FOR APPLICABILITY OF SEC.11 AND SEC 12. IT IS IMPORTANT TO POINT OUT THAT HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF SH RI DHAKAD SAMAJ DHARAMSHALA BHAWAN TRUST VS. CIT REPORTED AT 302 IT R 321 HAS HELD, SINCE SECTION 11 OF THE INCOME-TAX ACT,1961, PROVID ES FOR EXEMPTION TO THE TRUST REGISTERED UNDER THE ACT, IT IS PRIMARILY THE PURPOSE OF SECTION 11 THAT WILL DOMINATE OR PREVAIL OVER OTHER CONSIDE RATION. IT CLEARLY SHOWS THAT IN THE REGISTRATION PROCEEDING U/S 12AA OF THE ACT, WHAT IS TO BE ANALYSED IN RESPECT OF THE OBJECTS OF THE TRU ST IS THAT IT SHOULD BE SUCH THAT SECTION 11 IS ALLOWABLE. 4. THE DIT (EXEMPTION), IN CONSEQUENCE OF THE ABOVE OB SERVATIONS, REJECTED THE REGISTRATION AS CLAIMED BY THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE IS NOW BEFORE THE ITAT. 6. BEFORE, US, THE AR POINTED OUT THAT THE ASSESSEE HAD AMENDED ITS OBJECTS LATER ON AND NOW THE OBJECTS READ AS, TO PROMOTE, UNDERTAKE, AID FOSTER AND ENGAGE IN PR OMOTION OF AND UPBRINGING, OF PERSONS BELONGING TO ALL CASTE AND C OMMUNITIES IN INDIA, INCLUDING PEOPLE BELONGING TO CHITPAVAN COMMUNITY I N INDIA AND ITA NO. 8164/MUM/2010 M/S CHITPAVAN FOUNDATION. 3 OVERSEAS, IN THE FIELDS OF ART, SCIENCE, COMMERCE, EDUCATION, SOCIAL, CULTURAL. NO OBJECTS OF THE COMPANY SHALL BE CARRIED OUT WITH OUT THE PERMISSION OF COMPETENT AUTHORITIES WHOMSOEVER AND NO OBJECTS OF THE COMPANY SHALL BE CARRIED OUT ON COMMERCIAL BASIS A ND IN VIEW OF THIS CHANGE, THE REGISTRATION SHOULD BE ALLOWED. 7. THE DR ON THE OTHER HAND POINTED OUT THAT THE AMEN DMENTS IN THE OBJECTS WERE MADE EFFECTIVE FROM 25.11.2011, MUCH AFTER THE INSTANT APPEAL WAS FILED. HE, THEREFORE, SUBMITTED THAT THE R EASONS RECORDED BY THE DIT (EXEMPTION) REJECTING THE APPLICATION HAS NO INFIRMITY. 8. WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED THE PAPERS SUBMITTED BEFORE US, AND WE FIND THAT AT THE TIME WHEN TH E ASSESSEE APPLIED FOR THE REGISTRATION THE OBJECT WAS RESTRICTIVE TO WARDS ONE COMMUNITY ONLY, WHICH IS AGAINST THE VERY BASIS OF THE GR ANT OF REGISTRATION AND CONSEQUENTLY THE EXEMPTION FROM TAX. SIN CE THE VERY BASIS HAS BEEN VIOLATED, IN OUR CONSIDERED OPINION, THE DIT (EXEMPTION) WAS CORRECT IN LAW TO REJECT THE REGISTRATION. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 22/11/2012. SD/- ( RAJENDRA SINGH ) ACCOUTANT MEMBER SD/- ( VIVEK VARMA ) JUDICIAL MEMBER MUMBAI, DATE: 22/11/2012 COPY TO : 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)- 22 , MUMBAI. 4) THE CIT 10, MUMBAI, 5) THE D.R. C BENCH, MUMBAI. 6) COPY TO GUARD FILE. BY ORDER ITA NO. 8164/MUM/2010 M/S CHITPAVAN FOUNDATION. 4 ASSTT. REGISTRAR I.T.A.T., MUMBAI RASIKA