Shri Gram Swaraj Sarvajanik Education & Charitable Trust, RAJKOT-GUJARAT V. The Commissioner of Income Tax, Rajkot-II, RAJKOT-GUJARAT

ITA 92/RJT/2011

• Counselvise Citation: 9224914 RSA 2011
• Duration Of Justice: 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 10-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L MEENA
• Keywords: Charitable institution
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH SMC, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) I.T.A. NO. 92/RJT/2011 SHRI RAM SWARAJ SARVAJANIC VS CIT, RAJKOT-II EDUCATION &N CHARITABLE TRUST SHIVRAJPUR, TAL JASDAN DIST : RAJKOT C/0 KALPESH S DOSHI & CO, CAS 411, COSMO COMPLEX MAHILA COLLEGE CIRCLE, RAJKOT 360 001 PAN : AAITS5597A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KALPESH DOSHI RESPONDENT BY: SHRI SL MEENA O R D E R A.L. GEHLOT : THIS APPEAL BY ASSESSEE IS DIRECTED A GAINST THE ORDER OF CIT-II, RAJKOT DATED 28-12-2011. 2. THE ASSESSEE CHALLENGES THE REJECTION OF THE APP LICATION 12A(1)(AA) OF THE ACT FOR REGISTRATION U/S 12AA OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E TRUST CAME INTO EXISTENCE ON 25- 12-2006 BY EXECUTING A TRUST DEED. THE TRUST DEED WAS REGISTERED WITH THE CHARITY COMMISSIONER ON 08-02-2007. THE TRUST FILED AN APP LICATION IN FROM NO.10A FOR REGISTRATION 12A(1)(AA) OF THE ACT ON 24-06-2010. THE COMMISSIONER OBSERVED THAT THE TRUST RUNS SCHOOLS AND THE INCOME OF THE TRUST CONS TITUTES THE FEES RECEIVED FROM THE STUDENTS AND BANK INTEREST. NO DONATIONS WERE REC EIVED BY THE TRUST SINCE ITS INCEPTION. IT WAS FURTHER OBSERVED THAT THE TRUST EXPENDED ITS FEES COLLECTIONS ONLY TOWARDS ADMINISTERING AND RUNNING THE SCHOOLS, THE TRUST HA S NOT SUBMITTED ANY DETAILS AND EVIDENCES THEREOF IN SUPPORT OF ITS CONTENTION OF C ARRYING OUT ANY CHARITABLE ACTIVITIES. FOR THESE REASONS, THE COMMISSIONER OF INCOME-TAX H ELD THAT THE ASSESSEE TRUST IS ENGAGED IN COMMERCIAL VENTURE WITH A MOTIVE OF EARN ING PROFIT AND THEREFORE, THE APPLICATION FOR REGISTRATION WAS REJECTED. ITA NO.92//RJT/2011 2 4. I HAVE HEARD THE LEARNED REPRESENTATIVE OF THE P ARTIES, RECORD PERUSED. SECTION 12A LAID DOWN CERTAIN CONDITIONS FOR APPLICABILITY OF SECTIONS 11 & 12. SECTION 12A(1)(A) PRESCRIBED THAT THE PERSON IN RECEIPT OF THE INCOME HAS MADE AN APPLICATION FOR REGISTRATION OF THE TRUST OR INSTITUTION IN THE PRE SCRIBED FORM AND IN THE PRESCRIBED MANNER TO THE COMMISSIONER BEFORE THE PRESCRIBED PERIOD. SECTION 12AA PROVIDES THE PROCEDURE FOR REGISTRATION. THE SAID SECTION PROVI DES THAT THE COMMISSIONER ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF TRUST SHALL C ALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST AND MAY ALSO MAKE SUCH ENQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF AND AFTER SATISFYING HIMSE LF ABOUT THE OBJECT OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES H E SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR REFUSING TO REGISTER THE T RUST. ON PLAIN READING OF THE SAID SECTION 12AA. I FIND THAT AT THE TIME OF GRANTING REGISTRA TION, THE COMMISSIONER HAS LIMITED POWER ONLY TO EXAMINE THE OBJECTS OF THE TRUST AND GENUIN ENESS OF ACTIVITIES OF THE TRUST AND FOR THAT PURPOSE HE MAY CALL SUCH DOCUMENT OR INFORMATI ON FROM THE TRUST. THE APPLICATION OF INCOME WHETHER FOR THE PURPOSE OF OBJECT OF TRUST I S TO BE EXAMINED AT THE TIME OF ASSESSMENT PROCEEDINGS AND NOT AT THE TIME OF GRANT ING REGISTRATION. 5. THE SOLE REASON FOR REFUSAL OF REGISTRATION TO T HE ASSESSEE TRUST IS THAT THE ASSESSEE TRUST COLLECTS FEES FROM THE STUDENTS AND PROVIDE HOSTEL ACCOMMODATION OTHERWISE THERE IS NO DISPUTE ABOUT THE CHARITABLE ACTIVITIES CARRIED OUT BY THE ASSESSEE IN THE FIELD OF RUNNING SCHOOL, CARRYING OUT LITERA CY CAMPAIGN, ETC. HERE, THE CONTENTION OF THE ASSESSEE IS THAT IF THE PURPOSE OR OBJECT OF A TRUST IS CHARITABLE, THE CIRCUMSTANCES THAT IT IS PAID FOR DOES NOT ALTER ITS CHARACTER NO R IS IT NECESSARY IN ORDER TO CONSTITUTE A CHARITY AND IT SHOULD PROVIDE SOMETHING FOR NOTHING OR LESS THAN IT COSTS OR FOR LESS THAN ITS ORDINARY VALUE AND THAT THE PURPOSE OF ADVANCEM ENT OF EDUCATION DOES NOT CEASE TO BE CHARITABLE MERELY BECAUSE EDUCATION IS NOT CONFI NED TO THE POOR AND IT EXTENDS TO PROFESSIONAL OR COMMERCIAL EDUCATION, AS WELL A TO HIGHER EDUCATION. THERE IS NOTHING WHICH IS NECESSARILY INCONSISTENT WITH A PURELY CHA RITABLE OBJECT, IN THE INCLUSION IN THE ORGANIZATION OF A CHARITABLE ASSOCIATION OF SOME DE PARTMENT INTENDED TO BE RUN AT A PROFIT, AND SO TO CONTRIBUTE TO THE ACCOMPLISHMENT OF THE ASSOCIATIONS CHARITABLE PURPOSES. FOR THIS PROPOSITION, THE LD.AR RELIED U PON THE JUDGMENT IN THE CASE OF CIT VS PULIKKAL MEDICAL FOUNDATION PVT LTD 210 ITR 299 (KE R). I FIND MERIT IN THE CONTENTION OF THE LD.AR OF THE ASSESSEE. THE COMMISSIONER COULD NOT POINT OUT ANY MATERIAL IN HIS ITA NO.92//RJT/2011 3 ORDER NOR THE SAME IS AVAILABLE ON RECORD BASED ON WHICH IT CAN BE SAID THAT THE OBJECT OF THE TRUST WAS NOT CHARITABLE. CONTRARY, I FIND THA T THE OBJECTS OF THE TRUST ARE FOR CHARITY. FOR THE PURPOSE OF READY REFERENCE, THE FREE ENGLIS H TRANSLATION OF RELEVANT OBJECTS AND OTHER CLAUSES OF THE TRUST FILED BY ASSESSEE ARE RE PRODUCED AS UNDER (THE ORIGINAL TRUST DEED IS IN GUJARATI): OBJECTIVES OF TRUST:- THE TRUST WILL WORK FOR THE FOLLOWING OBJECTIVES WITHOUT ANY BIAS TO CASTE, CREED OR RELIGION. 1. EDUCATIONAL RELATED:- TO WORK FOR THE DEVELOPMENT OF SOCIETY KEEPING IN VIEW THE NATIONAL OBJECTIVES WITHOUT ANY BIAS TO ANY TYPE OF CASTE, CREED & RELIGION. TO ESTABLISH, RUN, & MANAGE EDUCATIONAL INSTITUTIO N SUCH AS PRE- PRIMARY, SECONDARY, HOSTELS SCHOOLS & COLLEGES. AL SO TO GIVE FINANCIAL OR ANY OTHER HELP TO SUCH INSTITUTIONS. TO INCUR EXPENSES FOR ESTABLISHING, MAINTAINING & REPAIRING OFFICE BU ILDING OF INSTITUTION, TENEMENT OF STAFFS, ETC. TO ESTABLISH, RUN & MAINTAIN SCHOOLS FOR THE STUDE NTS. ALSO TO GIVE FINANCIAL OR ANY OTHER HELP TO SUCH SCHOOLS. TO ES TABLISH LIBRARY FOR STUDENTS. TO MAKE NECESSARY ARRANGEMENTS FOR CAREE R ORIENTED GUIDANCE TO STUDENTS. TO GIVE SCHOLARSHIPS, BOOKS, ETC. FOR THE TECHNICA L AND FINANCIAL ADVANCEMENT OF STUDENTS. TO GIVE FINANCIAL AND SUCH OTHER HELPS TO THE STUD ENTS. TO RUN CLASSES FOR OLD-AGED PEOPLE. TO RUN & MANA GE CLASSES OF INTERNET, COMPUTER, SINGING, DANCE-DRAMA, DRAWINGS, SPORTS ACTIVITIES. TO DO ACTIVITIES FOR THE EDUCATION & DEVELOPMENT O F PLAYHOUSE, AAGANVADI, PRIMARY & SECONDARY EDUCATION, HIGH SCHO OLS, AND HOSTEL SCHOOLS, COLLEGES, COMPUTER-INTERNET KNOWLED GE. TO GIVE & TAKE THE DONATION FROM COLLEGE AND OTHER INSTITUTIO N ALSO PROVIDE & MANAGE FOOD (MADHYAHAN BHOJAN) IN THE SCHOOLS OF RA JKOT JURISDICTION. TO HELP SCHOOL STUDENTS IN ALL KINDS FOR THEIR EDUCATION. TO DO WORK RELATING TO DEVELOPMENT OF ANY KIND & T O HELP STUDENTS IN ALL WAYS. ALSO ANY TYPE OF FINANCIAL OR OTHER H ELP WILL BE PROVIDED TO ANY INSTITUTIONS FOR DEVELOPMENTAL PURP OSE. TO GIVE THE KNOWLEDGE ON THE SUBJECTS LIKE ASTROLO GY, PALMIST, VASTUSHASHTRA, JAIN ASTROLOGY, ASTRONOMY, ETC. WITH A VIEW TO MAINTAIN THE TRADITION OF THE INDIAN CULTURE BY PUB LISHING IN BOOKS, MAGAZINES & NEWSPAPERS INHERITED FROM OUR ANCIENT S AGES. 2. MEDICAL RELIEF:- 3. OBJECT OF SERVICING IN CREMATION PROCESS:- 4. GAUSHALA:- 5. TREE PLANTATION:- ITA NO.92//RJT/2011 4 DUTIES AND POWERS OF TRUSTEES:- THE TRUSTEES OF THI S TRUST WILL ACCEPT THE DONA5TIONS OR MAKE ARRANGEMENTS FOR THE SAME. TO U SE & MANAGE THE INCOME RECEIVED FROM THE ABOVE MENTIONED SOURCES (A FTER DEDUCTING THE NECESSARY PETTY EXPENSES) TO ACHIEVE THE OBJECTS OF THE TRUST. DISSOLUTION:- IN CASE THE TRUST IS TO BE DISSOLVED DUE TO ANY CIRCUMSTANCES, THEN IT IS TO BE CARRIED ON IN ACCOR DANCE WITH THE RULES AND REGULATIONS UNDER BOMBAY PUBLIC TRUST ACT. 6. I MAY MENTION THAT SECTION 12AA DOES NOT SPEAK A NYWHERE THAT THE COMMISSIONER, WHILE CONSIDERING THE APPLICATION FOR REGISTRATION SHALL SEE THAT THE INCOME DERIVED BY THE TRUST HAS NOT BEEN SPENT FOR CHARITABLE PURPOSE OR SUCH INSTITUTION IS EARNING PROFIT OR MISUSING THE INCOME DERIVED BY SUCH CHARITABLE INSTITUTION FROM ITS CHARITABLE ACTIVITIES THOUGH MAY BE A GROUND FOR RE FUSING EXEMPTION ONLY WITH RESPECT TO THAT PART OF THE INCOME AT THE TIME OF ASSESSMENT B UT IN MY VIEW, IT CANNOT BE CONSIDERED TO BE SYNONYM TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. IN THE LIGHT OF ABOVE DISCUSSION, I FIND THAT THE TRUST HAS SATISFIED THE CONDITIONS AS REGARDS THE OBJECTS AND GENUINENESS OF THE ACTIVITIES. THEREFORE, THE ASSE SSEE TRUST IS ENTITLED FOR REGISTRATION U/S 12AA OF THE ACT. I DIRECT THE COMMISSIONER TO ALLO W THE REGISTRATION TO THE TRUST U/S 12AA OF THE ACT. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08-04-2011. SD/- (A.L. GEHLOT) ACCOUNTANT MEMBER RAJKOT, DT : 08 TH APRIL, 2011 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-II, RAJKOT 4. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT