Vachharadada Gau Shala Trust, At : Vadodara Dodiya, Dist : Junagadh, RAJKOT-GUJARAT V. The Commissioner of Income Tax-III, RAJKOT-GUJARAT

ITA 86/RJT/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6752 (ITAT-RAJKOT)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-04-2014
• Assessment Year: misc
• Appeal Filed On: 29-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M L MEENA
• Assessee Lawyers: DR ADHIA
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO.86/RJT/2014 VACHHRADADA GAU SHALA TRUST, AT. VADODARA DODIYA, DIST. JUNAGADH ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX, RAJKOT-III RAJKOT / RESPONDENT / ASSESSEE BY SHRI D.R. ADHIA, AR / REVENUE BY DR M L MEENA, D.R. / DATE OF HEARING 07.04.2014 !'# / DATE OF PRONOUNCEMENT 11.04.2014 / ORDER THIS APPEAL BY THE ASSESSEE-TRUST IS AGAINST THE OR DER DATED 27.09.2013 OF COMMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT REJE CTING THE APPLICATION OF THE ASSESSEE-TRUST FOR REGISTRATION U/S 12AA OF THE INC OME-TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-INSTI TUTION/ASSOCIATION CAME INTO EXISTENCE BY A TRUST DEED ON 25.01.2011 AND THE SAM E HAS BEEN REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT WITH THE ASST. CHARITY COMM ISSIONER VIDE CERTIFICATE DATED 29.03.2011. THE ASSESSEE-TRUST HAS MADE AN APPLICAT ION FOR REGISTRATION U/S 12AA OF THE INCOME-TAX ACT ON 25.03.2013 ALONGWITH (I) FORM NO.10A, (II) CERTIFIED COPY OF THE TRUST REGISTRATION CERTIFICATE ISSUED BY THE ASSTT. CHARITY COMMISSIONER, JUNAGADH, (III) CERTIFIED COPY OF TRUST DEED, (IV) LIST OF NA ME AND ADDRESS OF TRUSTEES AND (V) APPLICATION FOR PAN. ON VERIFICATION OF THE TRUST DEED, THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT OBSERVED THAT THE MA IN OBJECT OF THE TRUST IS TO DO ANIMAL WELFARE. THE TRUST IS RUNNING A GAUSHALA AND TAKING CARE OF COWS, ARRANGE CATTLE FOOD, WATER AND PROVIDE SHELTER TO THEM. TH E LD. COMMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT CALLED FOR REPORT FROM THE FIELD OFFICE AND IN COMPLIANCE THERETO, THE AO AND THE JT. CIT, RANGE-1, JUNAGADH HAVE RECOMMEN DED THE REGISTRATION U/S 12AA OF THE ACT. 3. HOWEVER, ON VERIFICATION OF THE COPY OF TRUST DE ED, THE LD. CIT, RAJKOT-III, RAJKOT OBSERVED THAT DISSOLUTION/WINDING UP CLAUSE IN TH E TRUST DEED IS INCOMPLETE. IN THE TRUST DEED THERE IS NO CLAUSE REGARDING ITS ASSETS AFTER MEETING ALL LIABILITIES, IN CASE OF 2 86-RJT-2014 - VACHHRADADA GAU SHALA TRUST (SMC) DISSOLUTION, AND ACCORDING TO HIM, IN THE ABSENCE O F ADEQUATE WINDING-UP CLAUSE IN CASE OF DISSOLUTION OF TRUST, THE ARRANGEMENT OF DI SPOSAL OF NET ASSETS AFTER MEETING ITS ALL LIABILITIES ARE NOT SPECIFIED IN TRUST DEED . HE, THEREFORE, REFUSED TO GRANT THE REGISTRATION U/S 12AA OF THE INCOME-TAX ACT FOR THE DETAILED REASON GIVEN IN PARAGRAPH NOS. 5 AND 6 OF THE IMPUGNED ORDER, WHICH READ AS U NDER:- 5. HOWEVER, NEITHER THE ASSESSEE ATTENDED ON THE A PPOINTED DATE NOR FILED THE DETAILS AS CALLED FOR OR ANY ADJOURNMENT WAS SO UGHT. THUS, THE TRUST FAILED TO COMPLY WITH THE OPPORTUNITY OF BEING HEARD GRANT ED TO IT. IT IS, THEREFORE, PRESUMED THAT THE TRUST IS NOT INTERESTED IN PURSUI NG THE MATTER FURTHER. IN ABSENCE OF THE REQUISITE DETAILS THE GENUINENESS OF THE INSTITUTION AND THE ACTIVITIES CARRIED OUT BY THE TRUST IS ALSO NOT VER IFIED. IN ABSENCE OF COMPLETE DETAILS OF INCOME AND EXPENDITURE, THE GENUINENESS OF INCOME RECEIVED BY IT AND ITS UTILIZATION FOR CHARITABLE PURPOSES CANNOT BE VERIFIABLE. FURTHER, THE INSTITUTION HAS BEEN ALLOWED AN OPPORTUNITY TO PROD UCE ALL THE RELEVANT DETAILS RELATING TO INCOME AS WELL AS THE EXPENSES INCURRED FOR CHARITABLE ACTIVITIES FOR VERIFICATION. HOWEVER, THIS OPPORTUNITY ALLOWED TO IT WAS NOT AVAILED BY THE TRUST. ALSO, THERE IS NO DISSOLUTION/WINDING UP CL AUSE IN THE TRUST DEED AND THEREBY HAS NOT MADE ANY ARRANGEMENT OF CESSATION O F LIABILITY AND ASSETS AT THE TIME OF DISSOLUTION OF THE TRUST. THE TRUST DEE D IS DEFECTIVE TO THAT EXTENT. 6. IN VIEW OF THE ABOVE FACTS, THE ASSESSEE TRUST D OES NOT QUALIFY FOR REGISTRATION U/S 12AA OF THE ACT. ACCORDINGLY, ASSE SSEES APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT IS HEREBY REJECTED . AGGRIEVED WITH THE ORDER OF LD. COMMISSIONER OF IN COME-TAX, RAJKOT-III, RAJKOT THE ASSESSEE-TRUST IS NOW IN APPEAL BEFORE THIS TRI BUNAL, ON THE FOLLOWING GROUNDS:- 1. THE LD. C.I.T. HAS ERRED IN LAW AND FACTS IN RE JECTING APPLICATION FOR REGISTRATION U/S 12A FILED BY THE APPELLANT. THE AP PELLANT DESERVES REGISTRATION. 2. THE LD. C.I.T. HAS ERRED IN LAW AND FACTS IN REJ ECTING THE APPLICATION MADE FOR REGISTRATION U/S 12A ON THE IRRELEVANT GRO UNDS. THE APPELLANT DESERVES REGISTRATION. 3. THE LD. C.I.T. HAS ERRED IN LAW AND FACTS IN REJ ECTING THE APPLICATION MADE FOR REGISTRATION U/S 12A ON THE IRRELEVANT CON SIDERATIONS. THE APPELLANT DESERVES REGISTRATION. 4. THE LD. C.I.T. HAS ERRED IN LAW IN NOT APPRECIAT ING THAT AS PER LEGAL AND STATUTORY POSITION, THE APPELLANT WAS DESERVING REG ISTRATION. THE APPELLANT DESERVES REGISTRATION. 5. THE LD. C.I.T. HAS ERRED IN NOT GRANTING REGISTR ATION WITHOUT APPRECIATING THE FACTUAL AND LEGAL POSITION THAT THE APPELLANT D ESERVES REGISTRATION FORM THE FIRST DAY OF F.Y. IN WITH APPLICATION IS MADE, I.E. 01.04.2012. THE APPELLANT DESERVES REGISTRATION. 6. WITHOUT PREJUDICE THE LD. C.I.T. HAS ERRED IN NO T PROVIDING REASONABLE TIME AND ADEQUATE OPPORTUNITY. THE TRUST DESERVES R EGISTRATION. 3 86-RJT-2014 - VACHHRADADA GAU SHALA TRUST (SMC) 7. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND AN D / OR ANY OR ALL THE GROUNDS OF APPEAL BEFORE THE ACTUAL HEARING TAKE PL ACE. 4. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E-TRUST, SHRI D.R. ADHIA, AR, APPEARED AND RELIED UPON THE ORDER OF THE CO-ORDINA TE BENCH (ITAT B AHMEDABAD) IN THE CASE OF SHREE CHARGAM DASHA PORWAD MAHAMANDA L V. DIT (EXEMPTION) BEARING I.T.A. NOS. 337 & 338/AHD/2013, DATED 08.05 .2013, WHEREIN THE TRIBUNAL HAS ALLOWED THE APPEALS OF THE ASSESSEE BY OBSERVING AS UNDER:- 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREF ULLY AND PERUSED THE ORDERS OF THE DIT (EXEMPTIONS) AS WELL AS THE DECIS ION OF THE ITAT DELHI IN THE CASE OF SHRI SAI SAMARPAN TRUST CO. (SUPRA). WE FIN D THAT THE ONLY REASON ADVANCED FOR REFUSING THE REGISTRATION U/S 12AA AND 80G(5) OF THE ACT BY THE DIT (EXEMPTIONS) IS THAT THERE IS NO DISSOLUTION CL AUSE IN THE TRUST-DEED AND TRUST DOES NOT HAVE ANY CLAUSE THAT THE TRUST WILL NOT BE DISSOLVED AND IT IS A PERPETUAL TRUST. THIS ISSUE OF REFUSING REGISTRATIO N IN THE ABSENCE OF DISSOLUTION CLAUSE IN THE TRUST-DEED IS COVERED IN FAVOUR OF TH E ASSESSEE WITH THE DECISION OF CO-ORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF SHRI SAI SAMARPAN TRUST CO. (SUPRA), WHEREIN IN PARAGRAPH NO.8 HELD THAT WH EN THE ASSESSEE-TRUST IS REGISTERED WITH THE SUB-REGISTRAR AS A CHARITABLE T RUST, IN THE EVENT OF FAILURE OF THE TRUST THE NET ASSETS/INCOME WOULD OBVIOUSLY BE TAKEN OVER BY THE CHARITY COMMISSIONER AND THE REJECTION OF REGISTRATION ON T HIS GROUND WAS HELD NOT ON A SOUND FOOTING AND THE ORDERS OF THE DIT (EXEMPTIO NS) WERE REVERSED. WE FIND THAT THE CASE OF THE ASSESSEE IS ON MORE SOUND FOOTING SINCE IT HAS ALREADY APPLIED TO THE CHARITY COMMISSIONER FOR AME NDMENT OF THE TRUST-DEED VIDE APPLICATION SUBMITTED ON 26.02.2013, WHEREBY I NSERTING THE DISSOLUTION CLAUSE PROVIDING THAT THE TRUST SHALL BE IRREVOCABL E AND IN THE MOST UNLIKELY SITUATION, IF TRUST PRACTICALLY STOPS FUNCTIONING, IT CAN ONLY BE MERGED / AMALGAMATED WITH OTHER ONE OR MORE PUBLIC CHARITABL E TRUSTS OR BODIES HAVING SIMILAR OBJECTS SUBJECT TO THE APPROVAL OF THE OFFI CE OF THE PUBLIC CHARITY COMMISSIONER, ETC. NO OTHER MATERIAL HAS BEEN PRODU CED ON BEHALF OF THE REVENUE BEFORE US TO SUGGEST THAT THE AIMS AND OBJE CTS OF THE TRUST ARE NOT CHARITABLE IN NATURE. IN THESE FACTS OF THE CASE, W E HOLD THAT THERE IS NO JUSTIFICATION FOR REFUSING THE REGISTRATION U/S 12A A AND 80G(5) OF THE ACT TO THE ASSESSEE, WHICH IS ACCORDINGLY ALLOWED TO THE ASSES SEE AND THE ORDERS OF THE DIT (EXEMPTIONS) IN BOTH THE CASES ARE REVERSED AND WE DIRECT THE DIT(EXEMPTIONS) TO GRANT THE REGISTRATION U/S 12AA & 80G(5) OF THE ACT TO THE ASSESSEE IN BOTH THE CASES AND THE GROUND(S) RAISED IN BOTH THE APPEALS ARE HEREBY ALLOWED. 5. LD. AR OF THE ASSESSEE ALSO RELIED UPON THE DECI SION OF ITAT RAJKOT SMC BENCH IN THE CASE OF CHORWADI MATAJI MANDIR TRUST V . CIT IN ITA NO. 458/RJT/2013, WHEREIN ALSO THE LD. CIT WAS DIRECTED TO GRANT THE REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961 TO THE ASSESSEE, FOLLOWING DEC ISION OF THE CO-ORDINATE BENCH (ITAT B BENCH, AHMEDABAD) IN THE CASE OF SHREE CH ARGAM DASHA PORWAD MAHAMANDAL V. DIT (EXEMPTION) (SUPRA). 4 86-RJT-2014 - VACHHRADADA GAU SHALA TRUST (SMC) 6. DR. M.L. MEENA, LD. DEPARTMENTAL REPRESENTATIVE , APPEARED FOR THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT. HE HAS N OT CONTROVERTED THE SUBMISSIONS MADE BY THE LD. AR. 7. HAVING HEARD BOTH THE SIDES, I HAVE CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECISION OF ITAT R AJKOT SMC BENCH IN THE CASE OF CHORWADI MATAJI MANDIR TRUST V. CIT IN ITA NO. 458/ RJT/2013 AND DECISION OF THE CO- ORDINATE BENCH (ITAT B BENCH, AHMEDABAD) IN THE C ASE OF SHREE CHARGAM DASHA PORWAD MAHAMANDAL V. DIT (EXEMPTION) BEARING I.T.A. NOS. 337 & 338/AHD/2013, DATED 08.05.2013; WHEREIN IT WAS HELD THAT WHEN THE ASSESSEE-TRUST IS REGISTERED WITH THE SUB-REGISTRAR AS A CHARITABLE TRUST, IN THE EVE NT OF FAILURE OF THE TRUST THE NET ASSETS/INCOME WOULD OBVIOUSLY BE TAKEN OVER BY THE CHARITY COMMISSIONER AND THE REJECTION OF REGISTRATION ON THIS GROUND WAS HELD N OT ON A SOUND FOOTING. I, THEREFORE, FOLLOWING THE DECISION OF CO-ORDINATE BENCH (ITAT B BENCH, AHMEDABAD) IN THE CASE OF SHREE CHARGAM DASHA PORWAD MAHAMANDAL V. DI T (EXEMPTION) (SUPRA), ALLOW THE APPEAL OF THE ASSESSEE AND DIRECT THE LD. COMMISSIONER OF INCOME-TAX, RAJKOT-III, RAJKOT TO GRANT THE REGISTRATION U/S 12 AA OF THE INCOME-TAX ACT, 1961. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 11.04.2014 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- VACHHRADADA GAU SHALA TRUST, AT. VADO DARA DODIYA, JUNAGADH 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX, RAJK OT-III, RAJKOT 3. ,0,1 * * 2 / CONCERNED JT. CIT, RANGE-1, JUNAGADH 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT