KAILASH RESEARCH & SWASTHYA VIKAS SAMITI, Jaipur V. CIT, Alwar

ITA 869/JPR/2011

• Counselvise Citation: 86923114 RSA 2011
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 07-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Cancellation of registration
• Section: 80G; 12A; 12AA; 10B; 12; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.869/ JP/2011 UNDER SECTION 12AA PAN: AAAJK 1207 F M/S. KAILASH RESEARCH & SWASTHYA VIKAS SAMITI VS. THE CIT WARD NO.16, NH-8, VILLAGE MANETHI ALWAR TEHSIL-MUNDKAR, ALWAR (APPELLANT ) (RESPONDENT) ITA NO.870/ JP/2011 UNDER SECTION 80G PAN: AAAJK 1207 F M/S. KAILASH RESEARCH & SWASTHYA VIKAS SAMITI VS. THE CIT WARD NO.16, NH-8, VILLAGE MANETHI ALWAR TEHSIL-MUNDKAR, ALWAR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI P.C. PARWAL DEPARTMENT BY : SHRI SUNIL MATHUR DATE OF HEARING: 30-01-2012 DATE OF PRONOUNCEMENT: 02-02-2012 ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED THE APPEALS AGAINST ORDER S U/S 12AA AND 80G(5) OF THE LD. CIT DATED 28-07-2011. 2.1 FIRST WE WILL TAKE UP THE APPEAL AGAINST ORDER U/S 12AA OF THE ACT DATED 28-07- 2011. 2 2.2 THE LD. CIT IN HIS ORDER HAS REFERRED TO THE RE PORT OF THE AO. BEFORE THE AO, THE ASSESSEE HAS FILED THE PROVISIONAL BALANCE SHEET. AS PER PROVISIONAL BALANCE SHEET, THE ASSESSEE RECEIVED DONATION OF RS. 11,19,473/-. THE AMOUNT OF RS. 10.00 LACS WAS SET ASIDE IN FDR WITH THE BANK. ACCORDING TO THE LD. CIT, ONE HAS TO VERIFY AS TO WHETHER THE ASSESSEE HAS UTILIZED THE FUND FOR THE CHARITABLE P URPOSES OF THE TRUST FOR WHICH IT HAS BEEN CREATED. IN THE ORDER, U/S 12AA OF THE ACT, THE LD. CIT HAS REFERRED THAT THE ASSESSEE HAS NEITHER FILED THE ORIGINAL COPY OF THE TRUST DEED N OR COPIES OF THE ACCOUNTS OF THE TRUST . THE LD. CIT THEREFORE, REJECTED THE APPLICATION FOR REGISTRATION AFTER OBSERVING AS UNDER:- HAVING REGARD TO THE FACTS OF THE CASE, IT IS APP ARENT THAT THE TRUST HAS NOT BEEN ABLE TO BRING ANY EVIDENCE ON RECORD T O ESTABLISH THAT ITS ACTIVITIES TILL NOW WERE GENUINELY TAKEN FOR ANY CH ARITABLE PURPOSE. IN THE ABSENCE OF THE AUDIT REPORT IN FORM NO. 10B, BALANC E SHEET AND INCOME & EXPENDITURE ACCOUNT, THE ACTIVITIES OF THE TRUST CA NNOT BE SAID TO BE OF AS CHARITABLE PURPOSE AS IT IS NOT OPEN TO PHYSICAL VERIFICATION. THE TRUST STATED TO HAVE ORGANIZED THE MEDICAL CAMPS. HOWEVE R, NO EXPENDITURE IS DEPOSITED TO THE ACCOUNTS; HENCE THE SAID ACTIVITIE S ARE NOT VERIFIABLE. IN FACT THE GROUP IS ENGAGED IN THE RUNNING OF PRIVATE HOSPITAL IN BEHROR IN THE NAME OF SOME PRIVATE COMPANY AND NOW IT PLANS TO EX TEND THE ACTIVITIES AND INTENDS TO OPEN A NURSING COLLEGE. MAY BE THAT TRUST HAS PUT THE MEDICAL CAMPS IN THE PREMISES OF EXISTED PRIVATE HO SPITAL, BUT SAME ACTIVITIES ARE NOT VERIFIABLE. THE TRUST ON THE BAS IS OF PRESENT FORMAT OF APPLICATION IS NOT ELIGIBLE FOR REGISTRATION U/S 12 A(A) AND HENCE ITS APPLICATION FOR REGISTRATION IS HEREBY REJECTED. 2.3 DURING THE COURSE OF HEARING BEFORE US, THE LD. AR HAS FILED THE WRITTEN SUBMISSIONS WHICH ARE REPRODUCED AS UNDER:- 1. FOR GRANT OF REGISTRATION U/S 12A, CIT IS TO SATISF Y HIMSELF ABOUT THE OBJECTIVES OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES. THERE IS NO DISPUTE AS TO THE FACT THAT ALL THE OBJECTS OF THE TRUST AR E FOR 3 CHARITABLE PURPOSE WITHOUT ANY PROFIT MOTIVE . SO F AR AS GENUINENESS OF THE ACTIVITIES IS CONCERNED, T HE TRUST HAS ORGANIZED VARIOUS MEDICAL CAMPS AT FOLLOW ING PLACES:- - KAILASH HOSPITAL, BEHROR HOSPITAL ON 09.01.2011 HAV ELLS INDIA PVT. LTD., RICCO INDUSTRIAL AREA, NEEMRANA, BEHROR ON 24.02.2011 - BHITERA, BEHROR, DISTRICT - ALWAR ON 25.04.2011 - MAJRI BEHROR, DISTRICT - ALWAR ON 30.06.2011 ) THE ABOVE ACTIVITIES CLEARLY DEPICTS THAT THE INSTI TUTION HAS GENUINELY CARRIED OUT CHARITABLE ACTIVIT IES IN PURSUANCE OF ITS OBJECT. IN SUPPORT OF SAME, IT HAS FURNISHED COMPLETE DETAILS BEFORE AO ON 10.07.2011 . THEREAFTER, BEFORE CIT, ASSESSEE VIDE ITS REPLY D T. 15.07.2011 IN RESPONSE TO QUERY LETTER DT. 07.07.2011 ALSO EXPLAINED ALL THESE FACTS. THUS, THE TRUST SATISFIES THE CONDITION LAID DOWN U /S 12AA. IN THESE CIRCUMSTANCES, THE OBSERVATION OF CIT REGARDING FAILURE OF TRUST TO BRING ANY EVIDENC E ON RECORD FOR ESTABLISHING THAT THE ACTIVITIES WE RE GENUINELY TAKEN FOR ANY CHARITABLE PURPOSE IS WITHO UT BASIS & THE CANCELLATION OF REGISTRATION ON THAT GROUND IS MISCONCEIVED. 2. SO FAR AS OBSERVATION OF CIT THAT ACTIVITIES OF THE TRUST CANNOT BE SAID TO BE OF AS CHARITABLE PURPOS E IN THE ABSENCE OF AUDIT REPORT IN FORM NO. 10B, BALANC E SHEET & INCOME & EXPENDITURE ACCOUNT, IT IS TO BE NOTED THAT ASSESSEE VIDE ITS REPLY DT. 10.07.2011 B EFORE AO & REPLY DT. 15.07.2011 BEFORE CIT FURNISHED PROVISIONAL FINANCIAL STATEMENTS SINCE THE DUE DATE OF FILING OF RETURN HAS NOT EXPI RED BY THAT DATE. THE AUDIT REPORT IN FORM NO. 10B IS OBTAINED FROM THE AUDITOR ON 29.07.2011 . THESE AUDITED ACCOUNTS ARE SAME AS THE PROVISIONAL ACCOUNTS SUBMI TTED WITH THE APPLICATION. THE CERTIFIED COPY OF TH E TRUST DEED WAS FILED ALONG WITH THE PROVISIONAL ACC OUNTS ALONG WITH THE APPLICATION MADE IN FORM 10A. THIS COMPLIES WITH THE CONDITION OF RULE 17A & THER EFORE THE OBSERVATION OF CIT IN THIS REGARD IS INCORRECT. 3. SO FAR AS EXPENDITURE ON THE CAMPS IS CONCERNED, AS SESSEE TRUST HAS NOT INCURRED THE EXPENDITURE. IT H AS ARRANGED THE DOCTORS FROM KAILASH HOSPITAL, BEHROR. THEIR CONVEYANCE & OTHER EXPENDITURE WERE BORNE BY THE KAILASH HOSPITAL. HENCE, FOR THIS REASON THE ACTIVITIES OF THE ASSESSEE TRUST CAN NOT BE SAID T O BE NON GENUINE. 4. WITHOUT PREJUDICE TO ABOVE, IT CAN BE NOTED THAT IT IS THE FIRST YEAR OF THE TRUST. EVEN IF NO ACTIVIT IES ARE CARRIED OUT IN THE FIRST YEAR, THE REGISTRATION U/S 12A CAN NOT BE DENIED AS HELD IN THE FOLLOWING CAS ES:- DCIT (EXEMPTION) VS. MEENAKSHI AMMA ENDOWMENT TRUST 50 DTR 243 (KAR.) (HC) JASODA DEVI CHARITABLE TRUST VS. CIT (2010) 4 ITR ( TRIB.) 547 (JPR.) BAIJNATH CHARITABLE & EDUCATIONAL TRUST VS. CIT 125 TTJ 255/28 DTR 457 (LUCK.) (TRIB.) DHARMA SANSTHAPAK SANGH (NIYAS) VS. CIT 118 TTJ 823 /13 DTR 589 (DEL) (TRIB.) SARDARI LAL OBERAI MEMORIAL CHARITABLE TRUST VS. IT O 106 TTJ 468/ 3 SOT 229 (DEL) (TRIB.) FIFTH GENERATION EDUCATION SOCIETY VS. CIT 185 ITR 634 (ALL.) (HC) IN VIEW OF ABOVE, THE CIT BE DIRECTED TO GRANT REG ISTRATION TO THE INSTITUTION U/S 12A AND APPROVAL U /S 80G. 2.4 ON THE OTHER HAND, THE LD. DR REFERRED TO THE P APER BOOK FILED BY THE LD. AR . THE DOCUMENTS WHICH ARE NOT BEING PRODUCED BEFORE THE T RIBUNAL ESPECIALLY THE DOCUMENTS 4 AVAILABLE AT PAGES 49 TO 78 DO NOT APPEAR TO HAVE B EEN FILED BEFORE THE LD. CIT. THESE DOCUMENTS RELATE TO THE FREE-MEDICAL CAMPS ORGANIZE D BY THE SOCIETY AT DIFFERENT PLACES. 2.5 THE LD. DR DREW OUR ATTENTION TO SECTION 12AA(2 ) OF THE ACT. ACCORDING TO THE LD. DR , ONE HAS TO VERIFY THE GENUINENESS OF THE A CTIVITIES AT A TIME WHEN THE APPLICATION FOR REGISTRATION HAS BEEN MADE. IN CASE NO ACTIVITI ES HAVE BEEN MADE THEN REGISTRATION SHOULD NOT BE GRANTED. SUBSEQUENT ACTIVITIES SHOULD NOT BE CONSIDERED FOR THE PURPOSE OF DECIDING THE ISSUE OF REGISTRATION. THE LD. DR ALS O REFERRED TO THE OBSERVATION OF THE LD. CIT IN WHICH HE HAS MADE IT CLEAR THAT THE ASSESSEE CAN FILE THE FRESH APPLICATION FOR REGISTRATION. 2.6 WE HAVE HEARD BOTH THE PARTIES. THE APPLICATION FOR REGISTRATION IS TO BE MADE AND THE REGISTRATION TAKES EFFECT FROM THE DATE OF CREA TION OF TRUST OR FROM THE BEGINNING OF THE FINANCIAL YEAR IN WHICH APPLICATION IS MADE. HENCE, IF THE ASSESSEE WANTS TO CLAIM U/S 11 OF THE ACT THEN IT MUST HAVE REGISTRATION U/S 12AA OF THE ACT AND THAT REGISTRATION SHOULD BE RELEVANT FOR THE PREVIOUS YEAR IN WHICH APPLICAT ION IS MADE I.E. RELEVANT TO THE ASSESSMENT YEAR. IT IS AN ACCEPTED PROPOSITION OF L AW THAT FOR CLAIMING EXEMPTION U/S 11 OF THE ACT, THE TRUST SHOULD HAVE REGISTRATION U/S 12AA OF THE ACT. HOWEVER, THE CONVERSE IS NOT TRUE AND IT IS NOT NECESSARY THAT TRUST HAVI NG BEEN REGISTERED U/S 12AA AND WILL BE ENTITLED TO EXEMPTION U/S 11 BECAUSE THERE ARE CERT AIN CONDITIONS FOR GETTING THE EXEMPTION. WE THEREFORE, DO NOT AGREE WITH CONTENTI ONS OF THE LD. DR THAT REGISTRATION SHOULD NOT BE ALLOWED IN CASE NO ACTIVITY HAS BEEN DONE TILL THE DATE OF APPLICATION. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF SANJEE VAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS. DIRECTOR OF INCOME-TAX (EXEMPT ION), 285 ITR 327 HAS HELD THAT THE LD. CIT SHOULD ARRIVE AT THE SATISFACTION FOR REGIS TRATION PRIMARILY LOOKING INTO THE OBJECTS 5 OF THE TRUST. IF ON THE DATE OF THE APPLICATION, TH E TRUST HAS RECEIVED INCOME FROM ITS PROPERTY, THEN THE LD. CIT HAS TO FIND OUT HOW THE SAID INCOME HAS BEEN EXPANDED. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF DIRECT OR OF INCOME TAX (EXEMPTIONS) VS. MEENAKSHI AMMA ENDOWNMENT TRUST, 50 DTR 243 HAS CON SIDERED THE ABOVE REFERRED JUDGMENT AND HAS GIVEN ITS OPINION THAT IT IS NOT N ECESSARY THAT THE TRUST SHOULD COMMENCE ITS ACTIVITIES BEFORE FILING OF APPLICATION FOR REG ISTRATION. IT WILL BE USEFUL TO REPRODUCE PARA 6 OF THE ABOVE REFERRED JUDGEMENT. 6. A TRUST COULD BE FORMED TODAY AND WITHIN A WEE K REGISTRATION U/S 12A COULD BE SOUGHT AS THERE IS NO PROHIBITION UNDER THE ACT SEEKING SUCH REGISTRATION. THE ACTIVITIES OF TH E TRUST HAVE TO BE CONSIDERED IF SUCH REGISTRATION IS SOUGHT MUCH LATE R THAN THE FORMATION OF THE TRUST OR AFTER EXPIRY OF THE EARLIER REGISTRATI ON GRANTED IN FAVOUR OF THE TRUST. THEREFORE, IN A CASE OF THIS NATURE WHERE TH E TRUST HAS APPROACHED THE AUTHORITY FOR REGISTRATION U/S 12A WITHIN A SPAN OF EIGHT MONTHS OF ITS FORMATION, THE ABOVE MENTIONED CRITERIA NAMELY, THE OBJECTS OF THE TRUST FOR WHICH IT WAS FORMED WILL HAVE TO BE EXAMINED TO BE SATISFIED ABOUT THE GENUINENESS AND ACTIVITIES OF THE TRUST CANNOT BE T HE CRITERION, SINCE IT IS YET TO COMMENCE ITS ACTIVITIES. 2.7 WE HAVE ALSO GONE THROUGH THE OTHER DECISIONS C ITED BY THE LD. AR. WE HAVE ALSO GONE THROUGH THE PAPERS AVAILABLE AT PAGES 49 TO 78 OF THE PAPER BOOK. THESE DOCUMENTS DO SHOW THAT THE ASSESSEE HAS SPENT THE AMOUNT FOR THE OBJECTS FOR WHICH TRUST IS CREATED. WE THEREFORE, DIRECT THE LD. CIT TO VERIFY THE HOLD ING OF FREE-MEDICAL CAMPS AS PER DOCUMENTS FILED BEFORE US AND ALLOW REGISTRATION IN CASE THE ASSESSEE HAS ORGANIZED THE FREE-MEDICAL CAMPS. ACCORDINGLY THE APPEAL OF THE A SSESSEE ON THIS ISSUE IS DISPOSED OFF. 6 3.1 THE GRANTING OF EXEMPTION U/S 80G(5) WILL BE AL LOWED IN CASE THE LD. CIT FORMS HIS OPINION ON THE BASIS OF FREE MEDICAL CAMPS THAT REGISTRATION IS TO BE ALLOWED. THUS THE EXEMPTION U/S 80G(5) SHOULD BE ACCORDED IN CASE RE GISTRATION IS ALLOWED 4.. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED TO THE EXTENT AS INDICATED ABOVE. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 02-02 -2012. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 02 /02/2012 *MISHRA COPY FORWARDED TO :- 1. M/S. KAILASH RESEARCH & SWASTHYA VIKAS SAMITI, ALWA R 2. THE LD. CIT 3 THE LD. CIT BY ORDER 4 THE LD.DR 5 THE GUARD FILE (ITA NO. 869 & 870/JP /11) A.R, ITAT, JAIPUR