Shri Hari Education & Charitable Trust, JUNAGADH V. The Commissioner of Income Tax, Rajkot-III, RAJKOT-GUJARAT

ITA 93/RJT/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4375 (ITAT-RAJKOT)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 12-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: DR ADHIA
• Keywords: Charitable institution
• Section: 12A; 12AA; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL , SMC BENCH, RAJKOT BEFORE SHRI D K SRIVASTAVA, AM ITA NO. 93 /RJT/2013 ( ASSESSMENT YEAR: 2006 - 07 ) SHRI HARI EDUCATION & CHARITABLE TRUST V. CIT - III, RAJKOT 119 INDRALOK ARCADE, 1 ST FLOOR, TALAV GATE, JA YSHREE ROAD, JUNAGADH DATE OF HEARING : 23 - 0 5 - 201 3 DATE OF PRONOUNCEMENT : 19 - 0 6 - 201 3 ASSESSEE BY : SHRI D R ADHIA, AR REVENUE BY : SHRI K C MATHEWS, DR ORDER THE APPEAL FILED BY THE ASSESSEE - T RUST IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME - TAX, RAJKOT - III U/S 12AA OF THE INCOME - TAX ACT ON 28 .0 3 .2013 BY WHICH HE HAS DECLINED TO REGISTER THE ASSESSEE - TRUST. THE ASSESSEE - TRUST HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL : - 1. THE LD. C.I.T. HAS ERRED IN LAW AND FACTS IN REJECTING APPLICATION FOR REGISTRATION U/S. 12A FILED BY THE APPELLANT. THE APPELLANT DESERVES REGISTRATION. 2. THE LD. C.I.T. HAS ERRED IN LAW AND FACTS IN REJECTING THE APPLICATION MADE FOR REGISTRATION U/S. 12A ON THE IRRELEVANT GROUNDS. THE APPELLANT DESERVES REGISTRATION. 3. THE LD. C.I.T. HAS E RRED IN LAW AND FACTS IN REJECTING THE APPLICATION MADE FOR REGISTRATION U/S. 12A ON THE IRRELEVANT CONSIDERATIONS. THE APPELLANT DESERVES REGISTRATION. 4. T HE LD. C.I.T. HAS ERRED IN LAW IN NOT APPRECIATING THAT AS PER LEGAL AND STATUTORY POSITION, THE APPELLANT WAS DESERVING REGISTRATION. THE APPELLANT DESERVES REGISTRATION. 5.1 WITHOUT PREJUDICE, THE LD. C.I.T. HAS ERRED IN NOT GRANTING REGISTRATION WITHOU T APPRECIATING THE FACTUAL AND LEGAL POSITION THAT THE APPELLANT DESERVES REGISTRATION EVEN FROM THE DAY OF F.Y. FROM WHICH DATE THE TRUST CAME IN TO 2 ITA 93 /RJT/2013 EXISTENCE / STARTED ITS ACTIVITIES. THE APPELLANT DESERVES REGISTRATION FROM EARLIER DATE ALSO. 5.2 WITH OUT PREJUDICE, LD. C.I.T. HAS ERRED IN NOT GRANTING REGISTRATION WITHOUT APPRECIATING THE FACTUAL AND LEGAL POSITION THAT THE APPELLANT DESERVES REGISTRATION FORM THE FIRST DAY OF F.Y. IN WITH APPLICATION IS MADE, I.E. 01.04.2012. THE APPELLANT DESERVES RE GISTRATION FROM EARLIER DATE ALSO. 6. WITHOUT PREJUDICE, THE LD. C.I.T. HAS ERRED IN NOT PROVIDING ADEQUATE AND REASONABLE OPPORTUNITY. THE ORDER PASSED BY HIM DESERVES TO BE SET ASIDE WITH DIRECTION TO CONSIDER A FRESH MATTER GIVING REASONABLE TIME. 7. THE APPELLANT CRAVES LEAVE TO ADD / ALTER / AMEND AND / OR ANY OR ALL THE GROUNDS OF APPEAL BEFORE THE ACTUAL HEARING TAKE PLACE. 2. THE ASSESSEE - TRUST FILED AN APPLICATION FOR REGISTRATION U/S 12AA OF THE INCOME - TAX ACT IN THE OFFICE OF THE COMMISSIONER OF INCOME - TAX, RAJKOT - III ON 24.09.2012 WHICH WAS ACCOMPANIED BY FORM NO.10A, COPY OF TRUST DEED, COPY OF REGISTRATION CERTIFICATE WITH CHARITY COMMISSIONER, COPY OF PAN CARD, LIST OF NAME S AND ADDRESS ES OF THE T RUSTEES, COPY OF ACTIVITIES REPORT, DETAILS OF INCOME - TAX RETURNS FOR THE ASSESSMENT YEARS 2011 - 12 & 2012 - 13 AND COPY OF AUDITED ACCOUNTS FOR ASSESSMENT YEARS 2011 - 12 & 2012 - 13. THE LD COMMISSIONER OF INCOME - TAX PERUSED THE AFORESAID DOCUMENTS AND ALSO HEARD THE ASSESSEE - TRUST. HE HOWEVER REFUSED T O REGISTER THE ASSESSEE - TRUST U/S 12AA OF THE INCOME - TAX ACT FOR THE FOLLOWING REASONS: - 3. ON VERIFICATION OF THE DETAILS AND DOCUMENTS ATTACHED WITH THE APPLICATION MADE ON 24.09.2012 FOR THE REGISTRATION OF THE TRUST U/S 12AA OF THE I.T. ACT, THE FOLL OWING FACTS HAVE EMERGED: A ) THE TRUST IS CREATED ON 29/7/2010. THE TRUST IS REGISTERED UNDER THE BPT ACT 1950 ON 17/8/2010. B ) THE TRUST HAS CLAIMED TO BE ENGAGED IN RUNNING EDUCATIONAL INSTITUTE UNDER THE NAME OF ATMIYA INSTITUTE JUNAGADH. 3 ITA 93 /RJT/2013 C ) AS PER THE TRUS T DEED (COPY ENCLOSED WITH THE APPLICATION), THERE ARE TOTAL 29 CHARITABLE OBJECTS INCLUDING EDUCATIONAL ACTIVITIES. D ) ON VERIFICATION OF THE AUDITED ACCOUNTS OF THE TRUST FOR F.Y. 2010 - 11 & F.Y. 2011 - 12, IT IS OBSERVED THAT AMOUNT OF RS.1,05,50,000/ - & RS. 1,08,90,900/ - ACCORDINGLY IS SHOWN AS OTHER CORPUS FUND UNDER THE HEAD OTHER EARMARKED FUNDS ON THE LIABILITY SIDE OF THE BALANCE SHEET. E ) FURTHER ON VERIFICATION OF THE DETAILS AND DOCUMENTS FILED, IT IS OBSERVED THAT THE TRUST HAS CARRIED OUT ONLY EDU CATIONAL ACTIVITIES BY RUNNING THE ATMIYA INSTITUTE JUNAGADH OUT OF THE TOTAL 29 CHARITABLE OBJECTS AS PER THE TRUST DEED. F ) FURTHERMORE IT IS OBSERVED THAT THE TRUST HAS NOT CARRIED OUT ANY OTHER CHARITABLE ACTIVITIES TOWARDS THE REMAINING OBJECTS OF TH E TRUST DEED AND EVEN IN RESPECT OF PROVIDING EDUCATIONS TO POOR AND NEEDY STUDENTS, SCHOLARSHIPS WERE GIVEN TO A FEW STUDENTS AS PER DICTATE OF THE STATE GOVERNMENT. NO SCHOLARSHIP HAS BEEN GIVEN ON THE INITIATIVE OF THE TRUST ITSELF. THUS THE TRUST HAS N OT CARRIED OUT ANY CHARITABLE ACTIVITIES EVEN IN THE AREA OF EDUCATION BY ITS OWN INITIATIVE. G ) FURTHER ON VERIFICATION OF THE DOCUMENTS IN RESPECT OF THE INCOME TAX ASSESS A BILITY OF THE TRUSTEES SUBMITTED DURING THE PROCEEDINGS IT IS OBSERVED THAT THE SIGN ATURES OF THE TRUSTEES AS EXECUTED ON THE RETURN OF INCOME ARE NOT MATCHING WITH THAT OF IN THE RESPECTIVE PAN CARDS AS WELL AS IN THAT OF TRUST DEED EXECUTED FOR INSTANCE THE SIGNATURE OF ONE OF THE TRUSTEES SHRI NAVNEET M. TILVA DOES NOT MATCH IN THE TRU ST DEED WITH THAT OF IN THE RETURN OF INCOME FILED BY HIM FOR A.Y. 2010 - 11. 4. IN VIEW OF THE ABOVE IT IS CONCLUDED THAT THE ASSESSEE TRUST HAS NOT CARRIED OUT ANY ACTIVITY WHICH CAN BE TERMED AS CHARITABLE. FURTHER APART FROM THE FUNNING AN ENGINEERING COLLEGE THE ASSESSEE HAS NOT CARRIED ANY ACTIVITIES TOWARDS THE OBJECTS OF THE TRUST AS PER THE TRUST DEED. 4 ITA 93 /RJT/2013 5. ACCORDINGLY, ASSESSEES APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT IS HEREBY REJECTED. 3. AGGRIEVED BY THE ORDER PASSED BY THE LD COMMI SSIONER OF INCOME - TAX, THE ASSESSEE - TRUST IS NOW IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF APPEAL, THE LD AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS, WHICH READS AS UNDER: - 1. THE LD CIT HAS REJECTED REGISTRATION U/S. 1 2A IN SPITE OF SETTLED LAW THAT WHILE GRANTING REGISTRATION U/S. 12A THAT WHILE GRANTING REGISTRATION. 1 . 185 ITR 634 (ALL.) 5 TH GENERATION EDUCATION SOCIETY THAT QUESTION OF APPLICATION OF INCOME NEED NOT BE CONSIDERED 2 . 206 LAWSUIT (KAR.) 204 SANJEEVAMA H. GOWDA CH. TRUST THAT 12A CANNOT BE REJECTED WHEN GENUINE EDUCATION INSTITUTE IS THERE 3 . 1956 (29) ITR 781 (ALL.) 0 SARDAR BAHADUR SARDAR INDRA SINGH TRUST THAT AT THE TRUST DOES NOT BECOME INVALID, IF THE CHOICE OF SPECIFIC CHARITABLE OBJECTS TO BE BENE FITED IS LEFT TO THE TRUST (PARA 12 PAGE 14 & 15) 2.1 THUS THE LD. A.O. ADMITS AT PARA 3E AS UNDER: E. FURTHER ON VERIFICATION OF THE DETAILS AND DOCUMENTS FILED, IT IS OBSERVED THAT THE TRUST HAS CARRIED OUT ONLY EDUCATIONAL ACTIVITIES BY RUNNING THE ATMIYA INSTITUTE JUNAGADH OUT OF THE TOTAL 29 CHARITABLE OBJECTS AS PER THE TRUST DEED. 2.2 THUS THE LD A.O. HAS ADMITTED THAT TRUST IS BONAFIDE AND HAS CARRIED OUT AT LEAST 1 ACTIVITY OF THE OBJECT. IN VIEW OF SUCH ADMISSION THAT TRUST HAS CARRIED OUT A T LEAST 1 ACTIVITY AS PER OBJECT 12A CANNOT BE REJECTED. 3.1 A REGARD THE LD A.O. OBSERVATION AT PARA 3F WHICH RUNS AS UNDER: - 5 ITA 93 /RJT/2013 F. FURTHERMORE IT IS OBSERVED THAT THE TRUST HAS NOT CARRIED OUT ANY OTHER CHARITABLE ACTIVITIES TOWARDS THE REMAINING OBJECTS OF THE TRUST DEED AND EVEN IN RESPECT OF PROVIDING EDUCATIONS TO POOR AND NEEDY STUDENTS, SCHOLARSHIPS WERE GIVEN TO A FEW STUDENTS AS PER DICTATE OF THE STATE GOVERNMENT. NO SCHOLARSHIP HAS BEEN GIVEN ON THE INITIATIVE OF THE TRUST ITSELF. THUS THE TRUST HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITIES EVEN IN THE AREA OF EDUCATION BY ITS OWN INITIATIVE. 3.2 THE ASSESSEE HAS ALREADY FURNISHED VARIOUS EVIDENCES AND HAS CLARIFIED THAT BESIDE GRANTING SCHOLARSHIP EVEN THE COMPLETE EDUCATION IS PROVIDED FREE TO THE STUDENTS AND NO FEES A T AL L ARE CHARGED (PARA 1C ON PAGE NO. 1 & 2) OF ASSESSEE LETTER DATED 21 - 3 - 2013. THUS WHEN FEE ITSELF IS NOT CHARGED THIS IS THE BEST EXAMPLE OF PROVIDING NECESSARY EVIDENCES THAT TRUST HELP THE NEEDY STUDENTS ALSO. 4 . 1 A REGARD THE LD. A.O. OBSERVATION AT PARA 3G WHICH RUNS AS UNDER: G. FURTHER ON VERIFICATION OF THE DOCUMENTS IN RESPECT OF THE INCOME TAX ASSESSIBILITY OF THE TRUSTEES SUBMITTED DURING THE PROCEEDINGS IT IS OBSERVED THAT THE SIGNATURES OF THE TRUSTEES AS EXECUTED ON THE RETURN OF INCOME ARE NOT MATCHING WITH THAT OF IN THE RESPECTIVE PAN CARDS AS WELL AS IN THAT OF TRUST DEED EXECUTED FOR INSTANCE THE SIGNATURE OF ONE OF THE TRUSTEES SHRI NAVNEET M. TILVA DOES NOT MATCH IN THE TRUST DEED WITH THAT OF IN THE RETURN OF INCOME FILED BY HIM FOR A.Y. 2010 - 11. 4.2 THUS THE LD. A.O. ADMITS THAT THE SIGNATURE OF TRUST DEED IS NEITHER INCORRECT NOR BOGUS. ONLY THIS DOES NOT TALLY WITH PAN CARD. FOR SUCH A SMALL DIFFERENCE BETWEEN THE PAN CARD SIGNATURE AND TRUST DEED SIGNATUR E, 12A REGISTRATION CAN NOT BE REJECTED. 6 ITA 93 /RJT/2013 5. IN VIEW OF THE ABOVE AND ALSO RELYING ON (2005) 3 SOT 229 SARDARI LAL OBERAI MEMO TRUST THE REGISTRATION U/S. 12A MAY KINDLY BE DIRECTED TO BE GIVEN. 4. IN REPLY, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE LD COMMISSIONER OF INCOM E - TAX. HE ALSO RELIED UPON THE JUDGMENTS IN CIT V. QUEENS EDUCATIONAL SOCIETY , (2009) 223 CTR (UTTARAKHAND); AMAN SHIV MANDIR TRUST (REGD.) V. CIT , (2008) 296 ITR 415 (P&H) AND CIT V. NATIONAL INSTITUTE OF A ERONAUTICAL ENGINEERING EDUCATIONAL SOCIETY , (2009) 315 ITR 148 (UTTARAKHAND). 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS. THE LD AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IS RIGHT IN HIS SUBMISSION THAT THE MERE FACT TH AT THE ASSESSEE HAS CARRIED OUT ONLY ONE OBJECT , NAMELY , IMPARTING EDUCATION OUT OF SEVERAL OBJECTS MENTIONED IN THE TRUST DEED IS NOT SUFFICIENT TO REFUSE REGISTRATION U/S 12AA OF THE INCOME - TAX ACT. IT IS ACKNOWLEDGED BY THE LD COMMISSIONER OF INCOME - TAX HIMSELF THAT THE ASSESSEE HAS CARRIED OUT AT LEAST ONE OF THE OBJECTIVES OF THE TRUST, I.E. , EDUCATIONAL ACTIVITIES THROUGH ATMIYA INSTITUTE JUNAGADH . THEREFORE THE MERE FACT THAT ASSESSEE HAS CARRIED OUT ONLY ONE OBJECT OUT OF SEVERAL OBJECTS IS NOT SU FFICIENT TO REFUSE THE REGISTRATION U/S 12AA OF THE I - T ACT. 6. IT IS STATED IN THE IMPUGNED ORDER THAT THE SIGNATURES OF THE TRUSTEES ON THE TRUST DEED D O NOT TALLY WITH THOSE ON THEIR PAN CARD S . IN OTHER WORDS, THE LD COMMISSIONER OF INCOME - TAX HAS DOU BTED THE GENUINENESS OF THE SIGNATURES OF THE TRUSTEES ON THE TRUST DEED. IT IS WELL ESTABLISHED THAT THE DOCUMENTS WHICH ARE NOT SIGNED BY THE AUTHORIZED PERSONS ARE NULLITY IN LAW. THIS IS NOT A TECHNICAL MATTER AS CONTEN D ED BY THE ASSESSEE. THE MATTER N EEDS TO BE PROPERLY VERIFIED. IT IS FOR THE ASSESSEE - TRUST TO ESTABLISH THAT THE SIGNATURES ON THE TRUST DEED ARE GENUINE SIGNATURES OF THE TRUSTEES AND THEREAFTER FOR THE COMMISSIONER TO VERIFY THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. IN THE ABSENCE OF RELEVANT ENQUIRES IN THIS BEHALF, IT IS NOT POSSIBLE FOR US TO RECORD ANY FINDING IN TH E MATTER. IT IS THEREFORE CONSIDERED APPROPRIATE TO SET ASIDE THE ORDER PASSED BY THE LD COMMISSIONER OF INCOME - TAX AND RESTORE THE MATTER TO HIS FILE FOR EXAMINING A S TO WHETHER THE SIGNATURES ON THE TRUST DEED ARE ACTUALLY THE SIGNATURES OF THE TRUSTEES. 7 ITA 93 /RJT/2013 7. ANOTHER POINT THAT NEEDS CONSIDERATION IS AS TO WHETHER THE ASSESSEE IS ENGAGED IN ANY CHARITABLE ACTIVITY AT AL L . SUB - SECTION ( 15 ) OF SECTION 2 DEFINES CHARIT ABLE PURPOSE A S INCLUDING, INTER - ALIA, EDUCATION. THE DEFINITION OF CHARITABLE PURPOSE IS THUS INCLUSIVE. THOUGH EDUCATION IS INCLUDED IN THE DEFINITION OF CHARITABLE PURPOSE, IT DOES NOT AUTOMATICALLY FOLLOW THAT MERE IMPARTING OF EDUCATION IS IN THE N ATURE OF A CHARITABLE ACTIVITY IN ALL CASES. EDUCATION IS GUIDED NOT ONLY BY CHARITABLE PURPOSE BUT ALSO BY COMMERCIAL PURPOSE . THEREFORE WHAT HAS TO BE SEEN IS WHETHER THE EDUCATION BEING IMPARTED BY THE ASSESSEE - TRUST HAS ANY ELEMENT OF CHARITABLE PURPOS E. IF IT IS GUIDED BY CHARITABLE PURPOSE, THE ASSESSEE - TRUST WOULD BE ELIGIBLE FOR REGISTRATION IF ALL OTHER CONDITIONS IN THIS BEHALF ARE ALSO SATISFIED. SINCE THE MATTER IS BEING RESTORED TO THE FILE OF THE L D . COMMISSIONER OF INCOME - TAX, IT WOULD BE APP ROPRIATE FOR HIM TO EXAMINE AS TO WHETHER THE ACTIVITY BEING CARRIED OUT BY THE ASSESSEE IS REALLY CHARITABLE IN NATURE OR NOT. IT MAY HOWEVER BE CLARIFIED THAT I NCIDENTAL GENERATION OF SURPLUS WOULD NOT BY ITSELF CONVERT A CHARITABLE ACTIVITY INTO A NON - C HARITABLE ACTIVITY. 8. IN VIEW OF THE FOREGOING, THE ORDER PASSED BY THE LD COMMISSIONER OF INCOME - TAX IS SET ASIDE AND THE MATTER IS RESTORED TO HIS FILE FOR A FRESH DECISION IN CONFORMITY WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE A SSESSEE - TRUST. APPEAL FILED BY THE ASSESSEE - TRUST IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 19 .0 6 . 201 3 SD/ - ( D. K. SRIVASTAVA) ACCOUNTANT MEMBER RAJKOT: 19 .0 6 .2013 BT COPY OF ORDER FORWARDED TO: - 1. APPELLANT - SHRI HARI EDUCATION & CHARITABLE TRUST, 119 INDRALOK ARCADE, 1 ST FLOOR, TALAV GATE, JAYSHREE ROAD, JUNAGADH 2 . RESPONDENT - CIT - III, RAJKOT 3 . CONCERNED CIT 4 . DR, ITAT, RAJKOT 5 . GUARD FILE. BY ORDER TR UE COPY PRIVATE SECRETARY, ITAT, RAJKOT