SHREE JAIN SAMITI, Jaipur V. CIT(EXEMPTIONS), Jaipur

ITA 904/JPR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5602 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 14-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H P GURJAR CIT DHK
• Keywords: Charitable institution
• Section: 12AA; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 904/JP/2016 APPLICATION UNDER SECTION : 12AA SHREE JAIN SAMITI, PLOT NO. 2, BEHIND MAHESHWARI BHAWAN, JHALAWAR ROAD, KOTA CUKE VS. CIT (EXEMPTIONS) JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN /GIR NO.: AALTS 3417 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI P.C. PARWAL (CA) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI H.P. GURJAR (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/01/2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT 10/02/2017 VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISES AGA INST THE ORDER DATED 15/09/2016 PASSED BY THE LD. (EXEMPTIONS), JAIPUR, WHEREIN THE ASSESSEE HAS RAISED ONLY ONE GROUND OF APPEAL, WHICH IS AS UNDER: 1. THE LD. CIT HAS ERRED ON FACTS AND IN LAW IN RE JECTING THE APPLICATION OF ASSESEE FOR GRANT OF REGISTRATION U/ S 12AA OF INCOME TAX ACT, 1961 BY HOLDING THAT THE ACTIVITIES O THE SAMI TI ARE NOT CHARITABLE IN NATURE AS IT IS PREDOMINANTLY CARRYING OUT BUSIN ESS ON COMMERCIAL BASIS. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE WAS FILED AN APPLICATION IN FORM NO. 10A FOR SEEKING REGISTRATION U/S 12AA O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) ON 09/03/2016. TH E SAID APPLICATION WAS REJECTED BY THE LD. CIT(E), JAIPUR ON THE GROUND THAT THE AS SESSEE EARNING INCOME FROM HIRING 2 ITA NO. 904/JP/2016 SHREE JAIN SAMITI OF THE COMMUNITY HALL. ITS ACTIVITIES ARE NOT CHAR ITABLE IN NATURE AS IT IS PREDOMINANTLY CARRYING OUT BUSINESS ON COMMERCIAL B ASIS. THEREFORE, ITS ACT DOES NOT COME UNDER THE PROVISO TO SECTION 2(15) OF THE ACT. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS REITERATED THE SUBMISSION AS MADE IN THE WRITTEN SU BMISSIONS AND VEHEMENTLY ARGUED THAT THE ACTION OF THE LD. CIT(E) WAS NOT JU STIFIED. HE TOOK US THROUGH THE OBJECTS OF THE ASSESSEE TRUST AND SUBMITTED THAT TH E ACTIVITY, EX FACIE FALLS WITHIN THE CATEGORY OF GENERAL PUBLIC UTILITY. APART FROM THIS ACTIVITY, THE ASSESSEE HAS OTHER OBJECTS I.E. TO PROVIDE SCHOLARSHIP TO THE POOR STU DENTS AND HELPED THEM IN THEIR STUDY, TO PROVIDE MEDICAL HELP TO THE GENERAL PUBLI C, TO PROVIDE MEDICINES TO THE PATIENTS ETC., WHICH FALLS WITHIN THE CATEGORY OF C HARITABLE ACTIVITIES. HE PLACED RELIANCE ON THE DECISION OF HONBL JURISDICTION HIG H COURT IN THE CASE OF CIT VS PARAMHANS ASHRAM TRUST (2009) 315 ITR 0220 AND THE DECISION OF THE HONBLE ITAT, JAIPUR BENCH, JAIPUR IN THE CASE OF ACIT VS M/S SH RI PANCHAYATI DHRAMSHALA ITA NO. 809/JP/2013 AND HE PRAYED TO GRANT REGISTRATION U/S 12AA OF THE ACT. 4. ON THE CONTRARY, THE LD CIT (DR) HAS OPPOSED THE SUBMISSION OF THE LD. COUNSEL OF THE ASSESSEE AND SUBMITTED THAT THE ONLY ACTIVITY, WHICH HAS BEEN CARRIED OUT BY THE ASSESSEE SAMITI IS LETTING OUT OF THE CO MMUNITY HALL, WHICH IS A COMMERCIAL ACTIVITY, THEREFORE, PROVISIONS OF SECTI ON 2(15) OF ACT WOULD NOT APPLY IN THE CASE OF THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LD. CIT (E) REJECTED THE APPLICATION ON THE BASIS T HAT THE ONLY ACTIVITY WHICH THE ASSESSEE HAD CARRIED OUT WAS LETTING OUT COMMUNITY HALL. THE CLAIM OF THE APPLICANT 3 ITA NO. 904/JP/2016 SHREE JAIN SAMITI THAT THE FUNDS GENERATED FROM THE COMMUNITY HALL US ED FOR CONSTRUCTION/DEVELOPMENT WORK IS NOT RELEVANT AFTER THE AMENDMENT MADE U/S 2 (15) W.E.F. 01/04/2009 AND SUBSEQUENT AMENDMENT W.E .F. 01/4/2016. 5.1. IT IS A SETTLED POSITION OF LAW, THAT AT THE T IME OF CONSIDERING APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. THE LD. CIT IS REQUIRED TO ENQUIRE ABOUT THE GENUINENESS OF THE ACTIVITY OF THE ASSESSEE. W E FIND THAT LD. CIT HAS GIVEN A FINDING THAT ONE OF THE OBJECT OF THE ASSESSEE IS T HAT TO GIVE COMMUNITY HALL TO THE PEOPLE, FOR CONDUCTING MEETING AND OTHER CEREMONY FUNCTION. THIS OBJECT WAS ONLY CARRIED OUT BY THE ASSESSEE. DESPITE, HAVING OTHER OBJECTS, THE LD. COUNSEL SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE CO-ORDINATE BENCH RENDERED IN THE CASE OF ASSISTANT COMMISSIONER OF I NCOME TAX VS. M/S. SHRI PANCHYATI DHARAMSHALA ITA NO. 809/JP/2013. THE CO-O RDINATE BENCH AFTER CONSIDER THE OBJECTIVE OF GIVING FACILITY OF THE DHARMSHALA TO THE PUBLIC AT THE NOMINAL SUBSIDIZED RATE, HELD THAT THERE WAS NO PROFIT MOTI VE IN THAT CASE. THAT THE DOMINANT MOTIVE IN THAT CASE WAS NOT EARNING PROFIT BUT TO DO CHARITY, IN THE FORM OF PUBLIC SERVICE BY PROVIDING ACCOMMODATION TO THE CO MMON MAN AT AFFORDABLE RATES. FURTHER, RELIANCE IS PLACED UPON THE JUDGMENT OF TH E HON. GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. PARAMHANS ASHRAM TR UST WHEREIN THE HONBLE COURT HAS HELD AS UNDER: 4.THE SIMILAR REFERENCE WAS MADE BY THE REVENUE FO R OPINION OF THE COURT PERTAINING TO THE ASST. YRS 1970-71, 1971-72, 1976-77 AND 1977- 78 BETWEEN THE SAME PARTIES. THE REFERENCE HAS BEEN ANSWERED BY THIS COURT IN CASE TITLE CIT VS. PARAMHANS ASHRAM T RUST (1993) 113 CTR (RAJ) 433 : (1993) 203 ITR 711 (RAJ). DEALING W ITH THE SAME ISSUE, THE DIVISION BENCH OF THIS COURT HELD AS UND ER : IN ORDER TO APPRECIATE THE ARGUMENTS OF LEARNED C OUNSEL FOR THE REVENUE, IT HAS TO BE SEEN AS TO WHETHER THE TRUST IS A PRIVATE TRUST OR 4 ITA NO. 904/JP/2016 SHREE JAIN SAMITI A PUBLIC CHARITABLE TRUST. NORMALLY, IN A PRIVATE TRUST, THE BENEFICIAL INTEREST IS VESTED IN ONE OR MORE INDIVIDUALS WHERE AS A PUBLIC OR CHARITABLE TRUST, ON THE OTHER HAND, HAS OBJECTS BY WHICH THE PUBLIC AT LARGE IS BENEFITED. THE BENEFICIARIES ARE CAPABLE OF BEING ASCERTAINED IN THE PRIVATE TRUST WHILE THE CHARITABLE PURPOSE H AS BEEN DEFINED TO INCLUDE RELIEF OF THE POOR, EDUCATION, MEDICAL RELI EF AND ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY NOT INVO LVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT. ACCORDING TO THE MAIN OBJECTS, THE MAINTENANCE OF THE EXISTING DHARMASHALAS, HELP OF A GARWALS AND OTHER WIDOWS AND CHILDREN, FEEDING OF MEDICAMTS AND CONST RUCTION OF NEW DHARMASHALAS AND SCHOOL, AND HELP OF THE DESTITUTE CANNOT BE SAID TO BE RESTRICTED IN RESPECT OF A PARTICULAR INDIVIDUAL OR GROUPS OF THEM. THE USE OF THE WORDS OBJECT OF GENERAL PUBLIC UTILI TY CAN BE INTERPRETED TO COVER SUCH TRUST WHERE THE INTENTION IS TO GIVE THE BENEFIT TO SIZEABLE NUMBERS OF THE PUBLIC IN CONTRAST TO AN INDIVIDUAL OR GROUP OF INDIVIDUALS. THE EXPENSES IN CONSTRUCTING NEW DHAR AMASHALAS WERE CONSIDERED AS ADVANCEMENT OF THE CHARITABLE OBJECT OF THE TRUST WHICH WAS HELD ENTITLED TO EXEMPTION UNDER S. 11 OF THE S AID ACT IN THE CASE OF SATYA VIJAY PATEL HINDU DHARAMSHALA TRUST VS. CI T (1972) 86 ITR 683 (GUJ) AND THIS COURT IN RAGUNATH DAS PARIHAR DH ARMSHALA VS. CIT (1986) 158 ITR 432 (RAJ), HAS HELD THAT THE SOLE PU RPOSE OF THE TRUST WAS TO RUN A DHARAMSHALA WHICH IS AN OBJECT OF GENE RAL PUBLIC UTILITY AND SO WHEN THIS WAS THE SOLE OBJECT, THE INCOME DE RIVED THEREFROM IN THE SHAPE O THE RENT FROM THE DHARAMSHALA IS EXEMPT UNDER S.11 R/W S. 2(15) OF THE ACT. SIMILARLY, THE OTHER OBJECTS OF HELP OF AGARWALS, WIDOWS AND CHILDREN, FEEDING OF MENDICANTS AND HELP OF DESTITUTES ARE OF GENERAL PUBLIC UTILITY AND THE TRIBUNAL HAS RIGH TLY COME TO THE CONCLUSION THAT THE ASSESSEE IS A PUBLIC CHARITABLE AND RELIGIOUS TRUST AND ITS INCOME IN ENTITLED TO EXEMPTION UNDER S. 11 OF THE IT ACT, 1961. 5. WE ALSO SUBSCRIBE TO THE VIEW O THE DIVISION BEN CH (SUPRA) AND ANSWER THE REFERENCE ACCORDINGLY AGAINST THE REVENU E. FURTHER, THE LD. COUNSEL HAS FURNISHED A COMPARATI VE STATEMENT OF TARIFF OF MARRIAGE HALL AT PAGE 33 OF PAPER BOOK TO SUPPORT THE CONTE NTION THAT THE ASSESSEE IS PROVIDE THE FACILITY OF THE COMMUNITY HALL AT THE SUBSIDIZE D RATE WHICH BECOME WITHIN THE REACH OF THE COMMON MEN. THERE IS NOT DISPUTE WITH REGARD TO THE FACT THAT THE ACTIVITY OF COMMUNITY HALL IS ESSENTIALLY OF NATURE OF PUBLIC UTILITY. THE ASSESSEE IS HAVING OTHER OBJECTS, WHICH ARE CHARITABLE IN NATUR E IS NOT DISPUTED BY THE LD. CIT. UNDER THESE FACTS WE ARE UNABLE TO AFFIRM THE VIEW OF THE LD. CIT, THEREFORE, THE 5 ITA NO. 904/JP/2016 SHREE JAIN SAMITI IMPUGNED ORDER IS SET ASIDE AND THE APPLICATION SEE KING REGISTRATION UNDER SECTION 12AA OF THE ACT IS RESTORED TO LD. CIT FOR DECISIO N AFRESH IN THE LIGHT OF JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT. THIS GROUND RAI SED IN THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. IN THE RESULT, APPEAL OF THE ASSESSE IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10/02/2 017. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 10/02/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHREE JAIN SAMITI, KOTA. 2. THE RESPONDENT- THE CIT (EXEMPTIONS), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 904/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR