International Bhaktivedanta Institute, Secunderabad V. DIT(Exemptions), Hyderabad

ITA 895/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66287 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 04-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: A V RAGHURAM
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 12; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 895/HYD/2012 A.Y. : NA I.T.A. NO. 896/HYD/2012 A.Y. : NA M/S. INTERNATIONAL BHAKTIVEDANTA INSTITUTE, HYDERABAD PAN: AAATI8315E V S. THE DIRECTOR OF INCOME - TAX (EXEMPTIONS), HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI A.V. RAGHURAM RESPONDENT BY: SMT. NIVEDITA BISWAS DATE OF HEARING: 27 .0 9 .2012 DATE OF PRONOUNCEMENT: 27 .0 9 .2012 O R D E R PER CHANDRA POOJARI, AM: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST THE ORDER OF THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) [DIT(E)] , HYDERABAD DATED 29.3.2012 WHEREIN THE DIT(E) REFUSED TO GRANT REGIS TRATION U/S. 12AA AND APPROVAL U/S. 80G(5)(VI) OF THE INCOME-TAX ACT, 1961. 2. IN THIS CASE REGISTRATION U/S. 12AA AND APPROVAL U/ S. 80G(5)(VI) OF THE INCOME-TAX ACT, 1961 WAS REFUSED ON THE REAS ON THAT THE ASSESSEE HAS NOT CARRIED ON ANY TANGIBLE CHARITABLE ACTIVITI ES. FURTHER, THE ASSESSEE'S MAIN OBJECT IS TO CONDUCT RESEARCH IN DI FFERENT FIELDS AND THE AREA OF OPERATION IS WORLDWIDE. MOREOVER, THE ASS ESSEE DID NOT MAINTAIN BOOKS OF ACCOUNT. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. IN OUR OPINION, AT THE TIME O F REGISTRATION U/S. 12AA, THE DIT(E) HAS TO SATISFY HIMSELF ABOUT THE G ENUINENESS OF THE ACTIVITIES OF THE TRUST AND HAS TO SEE WHETHER IT F ALLS UNDER THE PURVIEW OF PROVISIONS OF SECTION 2(15) OF THE ACT. FOR THI S PURPOSE HE CAN CAUSE NECESSARY ENQUIRY. BEFORE US THE LEARNED AR SUBMIT TED THAT THE TRUST IS I.T.A. NOS. 895 & 896/HYD/2012 M/S. INTERNATIONAL BHAKTIVEDANTA INSTITUTE ============================== 2 SATISFYING ALL THE INGREDIENTS FOR THE PURPOSE OF G RANTING REGISTRATION AND FOR THIS PURPOSE HE RELIED ON THE FOLLOWING JUD GEMENTS: A) FIFTH GENERATION EDUCATION SOCIETY V. CIT, 185 ITR 634 (ALL) B) M.K. NAMBYAR SAARC LAW CHARITABLE TRUST V. UNION OF INDIA & ORS., 269 ITR 556 (DEL) C) MEDICAL ACCIDENT PREVENTION SOCIETY V. CIT, 278 ITR 165 (KER.) D) KASYAPA VEDA RESEARCH FOUNDATION V. CIT, 131 ITD 37 0 (COCHIN) 4. WE HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS, AR GUMENTS ADVANCED AND THE CASE LAWS CITED. WE DIRECT THE DIT (E) TO CONSIDER THE APPLICATION FOR REGISTRATION/S. 12AA IN THE LIGHT O F ABOVE DECISIONS. THE ASSESSEE IS ALSO SEEKING REGISTRATION UNDER SECTION 80G(5) OF THE ACT. SECTION 80G(5) IS EXTRACTED HEREUNDER:- '(5) THIS SECTION APPLIES TO DONATIONS TO ANY INSTI TUTION OR FUND REFERRED TO IN SUB-CLAUSE (IV) OF CLAUSE (A ) OF SUB- SECTION (2), ONLY IF IT IS ESTABLISHED IN INDIA FOR A CHARITABLE PURPOSE AND IF IT FULFILS THE FOLLOWING CONDITIONS, NAMELY :-- [(I) WHERE THE INSTITUTION OR FUND DERIVES ANY INCO ME, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME UNDER THE PROVISIONS OF SECTIONS 11 AND 12 O R CLAUSE (23AA)] [OR CLAUSE (23C)] OF SECTION 10 : PROVIDED THAT WHERE AN INSTITUTION OR FUND DERIVES A NY INCOME, BEING PROFITS AND GAINS OF BUSINESS, THE CO NDITION THAT SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION I N ITS TOTAL INCOME UNDER THE PROVISIONS OF SECTION 11 SHA LL NOT APPLY IN RELATION TO SUCH INCOME, IF-- (A) THE INSTITUTION OR FUND MAINTAINS SEPARATE BOOK S OF ACCOUNT IN RESPECT OF SUCH BUSINESS; (B) THE DONATIONS MADE TO THE INSTITUTION OR FUND A RE NOT USED BY IT, DIRECTLY OR INDIRECTLY, FOR THE PURPOSE S OF SUCH BUSINESS; AND (C) THE INSTITUTION OR FUND ISSUES TO A PERSON MAKI NG THE DONATION A CERTIFICATE TO THE EFFECT THAT IT MAINTA INS SEPARATE BOOKS OF ACCOUNT IN RESPECT OF SUCH BUSINE SS AND THAT THE DONATIONS RECEIVED BY IT WILL NOT BE USED, DIRECTLY OR INDIRECTLY, FOR THE PURPOSES OF SUCH BUSINESS; (II) THE INSTRUMENT UNDER WHICH THE INSTITUTION OR FUND IS CONSTITUTED DOES NOT, OR THE RULES GOVERNING THE INSTITUTION OR FUND DO NOT, CONTAIN ANY PROVISION F OR THE I.T.A. NOS. 895 & 896/HYD/2012 M/S. INTERNATIONAL BHAKTIVEDANTA INSTITUTE ============================== 3 TRANSFER OR APPLICATION AT ANY TIME OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS OF THE INSTITUTION OR FUND FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOSE; (III) THE INSTITUTION OR FUND IS NOT EXPRESSED TO B E FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CA STE; (IV) THE INSTITUTION OR FUND MAINTAINS REGULAR ACCO UNTS OF ITS RECEIPTS AND EXPENDITURE; (V) THE INSTITUTION O R FUND IS EITHER CONSTITUTED AS A PUBLIC CHARITABLE TRUST OR IS REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 18 60 (21 OF 1860), OR UNDER ANY LAW CORRESPONDING TO THAT AC T IN FORCE IN ANY PART OF INDIA OR UNDER SECTION 25 OF T HE COMPANIES ACT, 1956 (1 OF 1956), OR IS A UNIVERSITY ESTABLISHED BY LAW, OR IS ANY OTHER EDUCATIONAL INSTITUTION RECOGNISED BY THE GOVERNMENT OR BY A UNIVERSITY ESTABLISHED BY LAW, OR AFFILIATED TO ANY UNIVERSITY ESTABLISHED BY LAW, OR IS AN INSTITUTION FINANCED WHOLLY OR IN PART BY THE GOVERNMENT OR A L OCAL AUTHORITY; [(VI) IN RELATION TO DONATIONS MADE AFTER THE 31ST DAY OF MARCH, 1992, THE INSTITUTION OR FUND IS FOR THE TIM E BEING APPROVED BY THE COMMISSIONER IN ACCORDANCE WITH THE RULES 15 MADE IN THIS BEHALF AND (VII) WHERE ANY INSTITUTION OR FUND HAD BEEN APPROV ED UNDER CLAUSE (VI) FOR THE PREVIOUS YEAR BEGINNING O N THE 1ST DAY OF APRIL, 2007 AND ENDING ON THE 31ST DAY O F MARCH, 2008, SUCH INSTITUTION OR FUND SHALL, FOR TH E PURPOSES OF THIS SECTION AND NOTWITHSTANDING ANYTHI NG CONTAINED IN THE 7 PROVISO TO CLAUSE (15) OF SECTIO N 2, BE DEEMED TO HAVE BEEN,-- (A) ESTABLISHED FOR CHARITABLE PURPOSES FOR THE PRE VIOUS YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2008 AND EN DING ON THE 31ST DAY OF MARCH, 2009; AND (B) APPROVED UNDER THE SAID CLAUSE (VI) FOR THE PRE VIOUS YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2008 AND EN DING ON THE 31ST DAY OF MARCH, 2009. AS PER SUB-CLAUSE (VI) OF SUB-SECTION (5) OF SECTIO N 80G, FOR RECOGNITION, THE TRUST IS REQUIRED TO BE APPROV ED BY THE COMMISSIONER IN ACCORDANCE WITH THE RULES MADE IN THIS BEHALF. THE RULES ARE RULE 11AA PRESCRIBED IN THIS REGARD. AS PER RULE 11AA, THE ASSESSEE IS REQUIRED TO MAKE AN APPLICATION IN FORM NO.10G. THE APPLICATION SHALL BE ACCOMPANIED BY THE FOLLOWING DOCUMENTS:- I.T.A. NOS. 895 & 896/HYD/2012 M/S. INTERNATIONAL BHAKTIVEDANTA INSTITUTE ============================== 4 (1) COPY OF REGISTRATION GRANTED UNDER SECTION 12A OR COPY OF NOTIFICATION ISSUED UNDER SECTION 10(23) OR 10(23C) OF THE ACT; (2) NOTES ON ACTIVITIES OF INSTITUTION SINCE ITS IN CEPTION OR DURING THE LAST 3 YEARS WHICHEVER IS LESS. (3) COPIES OF ACCOUNTS OF THE INSTITUTION SINCE ITS INCEPTION OR DURING THE LAST 3 YEARS WHICHEVER IS L ESS. 5. THE COMMISSIONER IS EMPOWERED TO CALL FOR SUCH FURT HER DOCUMENTS OR INFORMATION OR CALLS SUCH ENQUIRIES IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE INSTITUTION. IF THE COMMISSIONER IS SATISFIED THAT THE CONDITION LAID D OWN IN CLAUSES (I) TO (V) OF SUB-SECTION (5) OF SECTION 80G ARE FULFILLED , HE SHALL RECORD SUCH SATISFACTION AND GRANT APPROVAL. IF HE IS NOT SO SA TISFIED, HE SHALL REJECT THE APPLICATION AFTER RECORDING THE REASONS. THUS A S PER THE PROVISION OF SECTION 80G(5) READ WITH RULE 11AA FOR GRANTING REG ISTRATION, THE COMMISSIONER NEEDS TO BE SATISFIED THAT THE CONDITI ON LAID DOWN IN CLAUSES (I) TO (V) OF SUB-SECTION (5) OF SECTION 80 G ARE FULFILLED. IN THE PRESENT CASE THERE IS NO DISPUTE THAT THE APPLICATI ON FOR APPROVAL HAS BEEN FILED IN FORM NO.10G ALONG WITH THE DOCUMENTS REQUIRED TO BE ACCOMPANIED THERETO. SUB- CLAUSE (I) OF SUB-SECTION (5) OF SECTION 80G REQUIRES THAT WHERE THE INSTITUTION OR FUND DERIVES ANY INCOME, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTA L INCOME UNDER THE PROVISIONS OF SECTIONS 11 AND 12 OF THE ACT. THE AS SESSEE IS REGISTERED UNDER SECTION 12AA OF THE ACT. THUS SUB-CLAUSE (I) IS SATISFIED. 6. AS PER SUB-CLAUSE (II) OF SUB-SECTION (5) OF SECTI ON 80G, THE INSTRUMENT UNDER WHICH THE INSTITUTION OR FUND IS C ONSTITUTED DOES NOT, OR THE RULES GOVERNING THE INSTITUTION OR FUND DO N OT, CONTAIN ANY PROVISION FOR THE TRANSFER OR APPLICATION AT ANY TI ME OF THE WHOLE OR ANY PART OF ITS INCOME OR ASSETS FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOSE. ADMITTEDLY THERE IS NO CLAUSE OR RULE GOVE RNING THE INSTITUTION WHICH CONTAINS ANY PROVISION FOR THE TRANSFER OR AP PLICATION OF ITS INCOME OR ASSETS FOR ANY PURPOSE OTHER THAN A CHARI TABLE PURPOSE. THE ONLY OBJECT OF THE ASSESSEE TRUST IS FOR CARRYING O UT SUCH OBJECT OF I.T.A. NOS. 895 & 896/HYD/2012 M/S. INTERNATIONAL BHAKTIVEDANTA INSTITUTE ============================== 5 CHARITABLE NATURE WITHIN THE DEFINITION OF 'CHARITA BLE PURPOSE' AS SPECIFIED IN SECTION 2(15) OF THE ACT. THE CONDITI ON PRESCRIBED IN SUB- CLAUSE (IV) OF SECTION (5) OF SECTION 80G IS THAT T HE INSTITUTION OR FUND MAINTAINS REGULAR ACCOUNTS OF ITS EXPENDITURE IS AL SO COMPLIED WITH. THE CONDITION IN SUB-CLAUSE (V) OF SUB-SECTION (5) OF SECTION 80G IS THAT THE INSTITUTION OR FUND IS EITHER CONSTITUTED AS A PUBLIC CHARITABLE TRUST OR IS REGISTERED UNDER THE SOCIETIES REGISTRATION A CT, 1960. 7. FROM THE ABOVE IT IS CLEAR THAT ALL THE CONDITIONS LAID DOWN IN RULE 11AA I.E. CONDITION LAID DOWN IN SUB-CLAUSES ( I) TO (V) OF SUB- SECTION (5) OF SECTION 80G ARE FULFILLED. 8. IN RESPECT OF REGISTRATION UNDER SECTION 80G, THE S COPE OF ENQUIRY WILL BE CONFINED TO FINDING OUT IF THE INST ITUTION SATISFIES PRESCRIBED CONDITION STATED IN SUB- CLAUSES (I) TO (V) OF SECTION 80G. IT DOES NOT EXTEND TO ACTUAL ASSESSMENT OF INSTITUTION . THE PHRASE USED IN SUB- CLAUSE (I) OF SUB-SECTION (5) OF SECTION 80G I S THAT 'WHERE THE INSTITUTION OR FUND DERIVES ANY INCOME, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME'. THUS WHAT IS TO BE SEEN IS WHETHER ANY INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTA L INCOME AND NOT WHETHER BECAUSE OF CERTAIN DEFAULTS PRESCRIBED IN S ECTION 11 OR 13, THE TRUST IS NOT ACTUALLY HELD ELIGIBLE FOR EXEMPTION U NDER SECTIONS 11 & 12 OF THE ACT. ONCE THE CONDITION LAID DOWN IN RULE 11AA AS ALSO IN SUB- CLAUSES (I) TO (V) OF SUB- SECTION (5) OF SECTION 8 0G ARE COMPLIED WITH, THE TRUST IS, ELIGIBLE FOR REGISTRATION UNDER SECTI ON 80G(5)(VI) OF THE ACT. 9. IN THIS CASE, THE APPROVAL UNDER SECTION 80G OF THE ACT WAS DENIED BY THE DIT (E) ONLY ON THE REASON THAT THE O BJECT CLAUSE CONTAINS THE CLAUSE THAT THE ACTIVITIES OF THE TRUST AND ITS OBJECTS WILL NOT BE CONFINED TO INDIA. TO GRANT APPROVAL UNDER SECTION 80G OF THE ACT, THE DIT (E) CAN EXAMINE WHETHER OR NOT THE CONDITIONS S ET OUT IN SECTION 80G(5) (I) TO (V) ARE SATISFIED. IF THE ASSESSEE HA S SATISFIED THE ABOVE CONDITIONS, THERE IS NO REASON TO DENY THE APPROVAL UNDER SECTION 80G OF THE ACT BY THE DIT (E). I.T.A. NOS. 895 & 896/HYD/2012 M/S. INTERNATIONAL BHAKTIVEDANTA INSTITUTE ============================== 6 10. IN THE CIRCUMSTANCES, WE DIRECT THE DIT (E) TO CONS IDER THE AMENDMENT AND DECIDE THE ISSUE IN ACCORDANCE WITH L AW. 11. THE REASON FOR DENIAL OF REGISTRATION U/S. 12AA AND APPROVAL U/S. 80G(5)(VI) BY DIT(E) IS NOT JUSTIFIED. WE, THEREFO RE, REMIT THE ENTIRE ISSUE BACK TO THE FILE OF THE DIT(E) WHO SHALL RECO NSIDER THE ASSESSEE'S APPLICATION FOR REGISTRATION U/S. 12AA AND APPROVAL U/S. 80G(5)(VI) OF THE ACT AND DECIDE THE ISSUE AFRESH. 12. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2012. SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 27 TH SEPTEMBER, 2012 TPRAO COPY FORWARDED TO: 1. M/S. INTERNATIONAL BHAKTIVEDANTA INSTITUTE, 90, SHA KTINAGAR, RAMAKRISHNAPURAM, SECUNDERABAD-500 056. 2. THE DIRECTOR OF INCOME - TAX (EXEMPTIONS), HYDERABAD. 3 . THE ADIT(E), HYDERABAD. 4 . THE DR A BENCH, ITAT, HYDERABAD