M/s Bhima Foundation , Bangalore V. The Commissioner of Income TAx (Exemptions) , Bangalore

ITA 946/BANG/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8917 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 27-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V SRINIVASAN
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 250; 201; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND SHRI VIKRAM SINGH YADAV , ACCOUNTANT MEMBER ITA NO. 946 /BANG/201 8 ASSESSMENT YEAR : 201 7 - 1 8 M/S. BHIMA FOUNDATION, NO.122C, B MAIN, 3 RD BLOCK, JAYANAGAR, BENGALURU 560 011. PAN : AA D T B 0553 A VS. THE COMMISSIONER OF INCOME-TAX (EXEMPTION), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. V. SRINIVASAN , ADVOCATE REVENUE BY : SHRI. SUNIL KUMAR AGARWAL, ADDL. CIT DATE OF HEARING : 18 . 0 9 .201 9 DATE OF PRONOUNCEMENT : 20 . 0 9 .201 9 O R D E R PER VIKRAM SINGH YADAV, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LEARNED CIT(E) DATED 20.02.2018, DENYING THE GRANT OF REGISTRATION UNDER SECTION 80G(5)(VI) OF THE ACT. 2. AS PER THE ORDER OF THE LEARNED CIT(E), ASSESSEE WAS GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 20.02.2018. HOWEVER, AS FAR AS THE APPLICATION OF THE ASSESSEE SEEKING RECOGNITION UNDER SECTION 80G WAS CONCERNED, A LETTER WAS ISSUED TO THE ASSESSEE CALLING FOR THE DETAILS VIDE LETTER DATED 16.10.2017 AND ON VERIFICATION OF THE DETAILS FILED, THE GENUINENESS OF THE ITA NO.946/BANG/2018 PAGE 2 OF 6 ACTIVITIES FOR GRANT OF APPROVAL UNDER SECTION 80G(5)(VI) OF THE ACT CANNOT BE VERIFIED. THE LEARNED CIT(E) HAS FURTHER REFERRED TO THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYED INSTITUTION VS CIT 247 ITR 18. 3. AGAINST THE SAID ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. IN THIS REGARD, THE LEARNED AR SUBMITTED THAT THE ASSESSEE IS A NEWLY SET UP PUBLIC CHARITABLE TRUST CONSTITUTED UNDER THE TRUST DEED DATED 16.03.2017 AND IT HAS THE FOLLOWING OBJECTS: 4. IT WAS SUBMITTED THAT THE ASSESSEE HAS APPLIED FOR REGISTRATION UNDER SECTION 12AA AS WELL AS 80G OF THE ACT ON 8.08.2017. THEREAFTER, INFORMATION ITA NO.946/BANG/2018 PAGE 3 OF 6 WAS CALLED FOR BY THE ITO(E) VIDE LETTER DATED 16.10.2017 AND NECESSARY DETAILS SO CALLED FOR WERE SUBMITTED VIDE LETTER DATED 30.10.2017. THEREAFTER, THE APPELLANT WAS GRANTED REGISTRATION UNDER SECTION 12AA VIDE ORDER DATED 20.02.2018, HOWEVER, ON THE SAME DATE, THE APPLICATION SEEKING GRANT OF REGISTRATION UNDER SECTION 80G WAS REJECTED. IT WAS SUBMITTED THAT THE ASSESSEE TRUST HAS BEEN NEWLY SET UP AND HAS FILED ALL THE DETAILS CALLED FOR BY THE CIT(E) AND THERE IS NO GROUND FOR THE LEARNED CIT(E) TO STATE THAT THE GENUINENESS OF THE ACTIVITIES FOR THE GRANT OF RECOGNITION UNDER SECTION 80G(5)(VI) CANNOT BE VERIFIED AND NO SPECIFIC FINDING HAS BEEN RECORDED BY THE LD CIT(E) REGARDING NON-FULFILLMENT OF CONDITIONS SO SPECIFIED UNDER SECTION 80G OF THE ACT. IT WAS ACCORDINGLY SUBMITTED THAT THE LEARNED CIT(E) BE DIRECTED TO GRANT THE RECOGNITION UNDER SECTION 80G OF THE ACT. 5. THE LEARNED DR IS HEARD, WHO HAS RELIED ON THE ORDER OF THE LEARNED CIT(E). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT THE APPELLANT IS A PUBLIC CHARITABLE TRUST WHICH HAS BEEN NEWLY CONSTITUTED VIDE TRUST DEED DATED 16.03.2017 AND IT IS THEREFORE NOT A CASE OF EXISTING CHARITABLE TRUST WHICH HAS BEEN IN EXISTENCE FOR PAST MANY YEARS. FURTHER, AS FAR AS THE OBJECTS OF THE APPELLANT TRUST ARE CONCERNED, GIVEN THE FACT THAT THE APPELLANT HAS BEEN GRANTED REGISTRATION UNDER SECTION 12AA, THE OBJECTS BEING ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY IN NATURE HAVE BEEN VERIFIED BY THE LEARNED CIT(E) WHILE GRANTING THE REGISTRATION UNDER SECTION 12AA OF THE ACT AND ARE THUS NOT IN DISPUTE. AS FAR AS THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST IS CONCERNED, IN OUR VIEW, THE SAID REQUIREMENT HAS TO BE SEEN IN THE CONTEXT OF THE ESTABLISHMENT OF THE TRUST. WHERE THE TRUST HAS BEEN SET UP IN THE PAST AND HAS BEEN CARRYING OUT ITS ACTIVITIES AT THE TIME OF MOVING THE APPLICATION, THEN IT IS NO DOUBT TRUE THAT ITA NO.946/BANG/2018 PAGE 4 OF 6 WHILE GRANTING THE REGISTRATION UNDER SECTION 80G, THE LEARNED CIT(E) IS WITHIN HIS POWERS AND JURISDICTION TO EXAMINE THE GENUINENESS OF THE ACTIVITIES AND HOW SUCH ACTIVITIES ARE CONNECTED WITH THE ACHIEVEMENTS OF THE OBJECTS FOR WHICH THE ASSESSEE TRUST HAS BEEN SET UP. HOWEVER, IN A SCENARIO WHERE THE ASSESSEE TRUST HAS BEEN NEWLY SET UP, AS IN THE INSTANT CASE, AND WITHIN A PERIOD OF FIVE MONTHS OF ITS SETTING UP, IT HAS APPLIED FOR APPROVAL UNDER SECTION 80G, PRACTICALLY, IT WOULD TAKE SOME TIME TO MOBILIZE THE RESOURCES AND THERE MAY NOT BE AN OCCASION FOR THE ASSESSEE TRUST TO DEMONSTRATE THE ACTUAL CARRYING ON OF ITS ACTIVITIES AT THE TIME OF MOVING THE APPLICATION. THEREFORE, THE QUESTION OF GENUINENESS OF SUCH ACTIVITIES AND EXAMINATION THEREOF BY THE LEARNED CIT(E) IS PREMATURE TO OUR MIND AT THE TIME OF GRANT OF APPROVAL. IN OUR VIEW, THE OBJECT OF GRANT OF RECOGNITION UNDER SECTION 80G OF THE ACT IS TO PROMOTE CHARITABLE ACTIVITIES AND TO MOBILIZE RESOURCES WHICH CAN BE GENERATED BY THE ASSESSEE TRUST FROM THE POTENTIAL DONORS AS WELL AS PUBLIC AT LARGE. THEREFORE, DENIAL OF RECOGNITION UNDER SECTION 80G MERELY FOR THE FACT THAT THE ACTIVITIES HAVE NOT BEEN CARRIED OUT BY THE ASSESSEE TRUST AND THUS CANNOT BE VERIFIED IS NOT APPROPRIATE. FURTHER, THE LD CIT(E) HAS NOT SPELT OUT NON-FULFILLMENT OF ANY OF THE CONDITIONS SPECIFIED UNDER SECTION 80G(5) OF THE ACT, THEREFORE, IT IS NOT A CASE WHERE ANY OF THE CONDITIONS SPECIFIED FOR GRANT OF APPROVAL HAVE NOT BEEN FULFILLED BY THE ASSESSEE TRUST. A SIMILAR VIEW HAS BEEN TAKEN BY THE CO-ORDINATE BENCH IN THE CASE OF OLA FOUNDATION VS CIT(E) (ITA NO.215/BANG/2018 DATED 26.10.2018) WHEREIN IT WAS HELD AS UNDER: 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT THE CIT(E) HIMSELF HAS GRANTED REGISTRATION TO THE ASSESSEE U/S 12 A OF THE ACT AND THEREFORE, THE CIT(E) WAS SATISFIED THAT THE OBJECTS OF THE TRUST WERE CHARITABLE AND THAT ITS ACTIVITIES WERE GENUINE AS THIS IS A CONDITION FOR GRANT OF REGISTRATION U/S.12 A OF THE ACT . AS PER THE REQUIREMENTS OF RULE 11AA(5) OF THE RULES, IT IS INCUMBENT ON THE PART OF ITA NO.946/BANG/2018 PAGE 5 OF 6 THE CIT(E) TO SPELL OUT THE CONDITIONS MENTIONED IN SEC. 80G(5) WHICH HAS NOT BEEN FULFILLED BY THE ASSESSEE. THEREFORE IT CAN BE SAFELY CONCLUDED THAT THE ONLY REASON ASSIGNED BY THE CIT(E) FOR NOT GRANTING APPROVAL U/S.80G OF THE ACT IS THE ABSENCE OF ACTIVITIES OF THE TRUST FROM THE DATE OF COMING INTO EXISTENCE OF THE TRUST. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF DIT(E) VS. MEENAKSHI AMMA ENDOWMENT TRUST, 354 ITR 219 (KAR), WHEREIN THE HON'BLE KARNATAKA HIGH COURT IN THE CONTEXT OF GRANT OF APPROVAL U/S 12 A OF THE ACT MADE AN OBSERVATION THAT WHERE TRUST HAS APPROACHED THE AUTHORITY FOR REGISTRATION U/S 12A WITHIN SPAN OF 8 MONTH AFTER ITS FORMATION, OBJECTS OF THE TRUST HAVE TO BE EXAMINED AND THE AUTHORITIES CANNOT INSIST ON PROOF OF ACTIVITIES OF THE TRUST AS TRUST WAS YET TO COMMENCE ITS ACTIVITIES. ITAT, BANGALORE BENCH IN THE CASE OF ALL PEOPLE CHARITABLE TRUST VS. CIT(E) IN ITA NOS. 1216 AND 1217/BANG/2015 ORDER DATED 30/12/2015 HAS APPLIED THE PRINCIPLES LAID DOWN IN THE CASE OF MEENAKSHI AMMA ENDOWMENT TRUST TRUST (SUPRA) IN THE CONTEXT OF GRANT OF REGISTRATION U/S 80G OF THE ACT. IN THE PRESENT CASE THE TRUST WAS FORMED ON 14/12/2016 AND APPLICATION FOR GRANT OF REGISTRATION AND APPROVAL U/S 12A AND 80G RESPECTIVELY WAS MADE ON 16/5/2017. THEREFORE THE CIT(E) WAS NOT JUSTIFIED IN BASING HIS CONCLUSION FOR REJECTING APPROVAL U/S.80G OF THE ACT ON THE GROUND OF ABSENCE OF ACTIVITIES OF THE TRUST. ITAT, JAIPUR IN THE CASE OF ANAND INCUBATION CENTRE VS. CIT(E), JAIPUR 86 TAXMANN.COM 250 (JAIPUR - TRIB), ON IDENTICAL FACTS AS THE CASE OF THE ASSESSEE, THE TRIBUNAL HELD THAT REJECTION OF GRANT OF APPROVAL U/S 80G WAS NOT JUSTIFIED. KEEPING IN MIND THE AFORESAID DECISIONS AND THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE CIT(E) OUGHT TO HAVE GRANTED THE APPROVAL U/S.80G(5) OF THE ACT. WE ACCORDINGLY DIRECT THAT THE APPROVAL U/S.80G OF THE ACT BE GRANTED TO THE ASSESSEE. ITA NO.946/BANG/2018 PAGE 6 OF 6 7. IN LIGHT OF ABOVE DISCUSSION AND RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE COORDINATE BENCH WHICH HAS FOLLOWED THE LEGAL PROPOSITION LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT, WE HEREBY DIRECT THE LEARNED CIT(E) TO GRANT THE REGISTRATION TO THE ASSESSEE TRUST UNDER SECTION 80G OF THE ACT. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN LIGHT OF ABOVE DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF SEPTEMBER, 2019. SD/ - SD/ - (N. V. VASUDEVAN) VICE PRESIDENT (VIKRAM SINGH YADAV) ACCOUNTANT MEMBER BANGALORE. DATED: 20 TH SEPTEMBER, 2019. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.