The Trust for Uma Vanshiya, RAJKOT-GUJARAT V. The Commissioner of Income Tax, Rajkot-II, RAJKOT-GUJARAT

ITA 97/RJT/2011

• Counselvise Citation: 9724914 RSA 2011
• Duration Of Justice: 22 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: 17-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) I.T.A. NO.97/RJT/2011 THE TRUST FOR UMA VANSHIYA VS CIT-II, RAJKOT U/6, UMESH COMM.COMPLEX NR. CHAUDHARI HIGH SCHOOL RAJKOT PAN : AABTT6837H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JC RANPURA RESPONDENT BY : SHRI JAI RAJ KUMAR O R D E R PER AL GEHLOT, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 24- 02-2011 PASSED BY THE COMMISSIONER OF INCOME-TAX-II , RAJKOT REFUSING REGISTRATION U/S 12AA OF THE ACT. 2. THE ASSESSEE TRUST CAME INTO EXISTENCE ON 15-07- 2009. THE TRUST WAS REGISTERED WITH THE CHARITY COMMISSIONER ON 05-09-2 009. THE TRUST FILED APPLICATION IN FORM 10A BEFORE COMMISSIONER OF INCO ME-TAX-II, RAJKOT SEEKING REGISTRATION U/S 12AA ON 30-08-2010. THE COMMISSIO NER CALLED FOR REPORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER VIDE HIS REPORT DATED 12-01-2011 STATED THAT THE ASSESSEE TRUST IS NOT ENTITLED FOR THE REGISTRATION AS THE ASSESSEE TRUST HAS FAILED TO COMPLY WITH THE REQUIREMENTS AS PER HIS LETTER DATED 23-12- 2010. THEREAFTER, ON 18-02-2011 THE COMMISSIONER P ROVIDED OPPORTUNITY TO THE ASSESSEE TRUST. THE ASSESSEE TRUST MADE ITS SUBMIS SION ON 21-02-2011 ALONGWITH CERTAIN DETAILS. THE SAID DETAILS WERE A LSO GIVEN TO THE ASSESSING OFFICER FOR HIS COMMENTS. THE ASSESSING OFFICER GA VE HIS COMMENTS WHICH HAS HAVE BEEN REPRODUCED BY THE COMMISSIONER IN HIS ORD ER. FOR THE SAKE OF CLARITY WE REPRODUCE THE SAME BELOW: ITA NO.97/RJT/2011 2 VIDE THIS OFFICE LETTER NO.2(4)/12(A)/TFUV/2010-11 DATED 23.12.2010, THE ASSESSEE WAS SPECIFICALLY ASKED TO FURNISH / EXPLAIN THE FOLLOWING DETAILS: I) DETAILS OF DISTRIBUTION OF SCHOOL BAGS, STATIONA RY & NOTE BOOKS TO THE STUDENTS ALONGWITH PURCHASE BILLS. II) DETAILS OF SUMMER TRAINING CAMP ORGANIZED BY TH E TRUST FOR WOMEN ALONGWITH EVIDENCE AND DETAILS OF EXPENSES IN CURRED. III) DETAILS OF NAVRATRI MAHOTSAV ORGANIZED BY THE TRUST SUCH AS PLACE OF NAVRATRI MAHOTSAV EXPENSES INCURRED, DETAI LS OF CONTRACT GIVEN FOR LIGHTING, DECORATIONS, ETC. AND DETAILS OF PAYMENTS MADE. 4. IN COMPLIANCE, THE REPRESENTATIVE OF THE ASSESSE E VIDE HIS LETTER DATED 18.01.2011 HAS SIMPLY STATED THAT THE DETAILS WERE PRODUCED BEFORE THE AUDITOR AND SOME OF THE EXPENSE S WERE INCURRED WITHOUT ANY CHARGES. NO PROOF WAS SUBMITT ED BEFORE THE AO FOR VERIFICATION. 3. THE ASSESSING OFFICER ALSO POINTED OUT TO THE CO MMISSIONER THAT THE ASSESSEE BEFORE HIM HAD CLAIMED TO HAVE INCURRED E XPENSES TOWARDS NAVRATRI MAHOTSAV CELEBRATIONS WHEREAS BEFORE THE COMMISSION ER THE ASSESSEE TRUST CLAIMED THAT THE CELEBRATIONS EXPENSES WERE MET THR OUGH VARIOUS SPONSORS. THE ASSESSING OFFICER ACCORDINGLY REFUSED TO RECOMMEND GRANT OF REGISTRATION TO THE ASSESSEE TRUST. 4. THE COMMISSIONER OF INCOME-TAX-II, RAJKOT REJECT ED THE APPLICATION FILED BY THE ASSESSEE FOR THE FOLLOWING REASONS: A. ON VERIFICATION OF THE BILLS FURNISHED IN SUPPO RT OF PURCHASE OF SCHOOL BAGS, STATIONERY ITEMS AND NOTE BOOKS, IT IS SEEN THAT THERE IS NO PROOF REGARDING THE DETAILS OF THE DISTRIBUTI ON OF THE SAME SUCH AS NAME OF THE SCHOOL (THE BENEFICIARY), THE DATE O F DISTRIBUTION ETC. IN VIEW OF THIS AND WITHOUT ANY AUTHENTIC DOCUMENTA RY EVIDENCES, THE GENUINENESS OF THE ACTIVITIES CANNOT BE ESTABLI SHED. B. MOREOVER, THE TRUST HAS NOT OPENED ANY BANK ACCO UNT. THERE IS NO CHECK OVER INCOME AND EXPENSES OF THE T RUST. THEREFORE, THE GENUINENESS OF THE ACTIVITIES AND PR OPER UTILIZATION OF THE FUNDS OF THE TRUST ARE NOT VERIFIABLE. ITA NO.97/RJT/2011 3 C. REGARDING OTHER CHARITABLE ACTIVITIES LIKE SUMME R CAMP FOR WOMEN, NAVRATRY MAHOTSAV ETC. CLAIMED TO HAVE BEEN ARRANGED BY THE TRUST, NO DETAILS ARE FURNISHED NOR ANY EXPENSE S TOWARDS THESE ACTIVITIES ARE DEBITED IN THE A/CS. AS SUCH, THESE ACTIVITIES ARE NOT VERIFIABLE. IT SEEMS THE TRUST HAS SIMPLY SUBMITTE D PHOTOGRAPHS OF THE EVENTS WHERE IT HUNG ITS BANNERS. 4. I HAVE HEARD THE LEARNED REPRESENTATIVE OF THE P ARTIES, RECORD PERUSED. SECTION 12A(1) LAID DOWN CERTAIN CONDITIONS FOR APP LICABILITY OF SECTIONS 11 & 12. SECTION 12A(1)(A) PRESCRIBED THAT THE PERSON IN REC EIPT OF THE INCOME HAS MADE AN APPLICATION FOR REGISTRATION OF THE TRUST OR INS TITUTION IN THE PRESCRIBED FORM AND IN THE PRESCRIBED MANNER TO THE COMMISSIONER BEFORE THE PRESCRIBED PERIOD. SECTION 12AA PROVIDES THE PROCEDURE FOR REGISTRATIO N. THE SAID SECTION PROVIDES THAT THE COMMISSIONER ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF TRUST SHALL CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRU ST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GEN UINENESS OF ACTIVITIES OF THE TRUST AND MAY ALSO MAKE SUCH ENQUIRIES AS HE MAY DE EM NECESSARY IN THIS BEHALF AND AFTER SATISFYING HIMSELF ABOUT THE OBJEC T OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES HE SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR REFUSING TO REGISTER THE TRUST. ON PLAIN READING OF THE SAID SECTION 12AA, I FIND THAT AT THE TIME OF GRANTING REGISTRATION, 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 I NFORMATION FROM THE TRUST. THE APPLICATION OF INCOME WHETHER FOR THE PURPOSE O F OBJECT OF TRUST IS TO BE EXAMINED AT THE TIME OF ASSESSMENT PROCEEDINGS AND NOT AT THE TIME OF GRANTING REGISTRATION. THIS DISTINGUISHMENT OF EXAMINATION WHILE GRATING REGISTRATION AND ASSESSMENT PROCEEDING IS CLEARLY LAID DOWN IN THE R ELEVANT PROVISIONS AND THAT IS THE REASON THE SECTION 12AA(3) PROVIDES THAT - WHER E A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB-S ECTION (1) AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES O F SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN O RDER IN WRITING CANCELING THE REGISTRATION OF SUCH TRUST OR INSTITUTION. ITA NO.97/RJT/2011 4 5. IN THE LIGHT OF ABOVE DISCUSSION IF I CONSIDER T HE FACTS OF THE CASE UNDER CONSIDERATION I FIND THAT THE CIT HAS DENIED THE RE GISTRATION BECAUSE ACCORDING TO HIM ASSESSEE FAILED TO PRODUCE THE PROOF REGARDING THE DISTRIBUTION OF SUM SPENT ON SCHOOL BAGS AND DELIVERY ITEMS AND ACCORDINGLY O N THESE BASIS, THE CIT WAS OF THE VIEW THAT THE ASSESSEE FAILED TO ESTABLISH T HE GENUINENESS OF ITS ACTIVITIES. THE SECOND REASON GIVEN BY CIT IS THAT THE ASSESSEE DID NOT OPEN BANK ACCOUNT AND THAT THE ACTIVITY OF THE ASSESSEE TRUST WAS NOT GENUINE ONLY ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE AND FILE DETA ILS REGARDING DISTRIBUTION OF SCHOOL BAGS, DETAILS OF AMOUNTS SPENT ON ACTIVITIES LIKE CAMP FOR WOMEN, NAVRATRI MAHOTSAV CELEBRATIONS, ETC. ON PERUSAL OF RECORDS INCLUDING PAPER BOOK I NOTICE THAT THE ASSESSEE FURNISHED AUDITORS REPO RT FOR THE YEAR ENDED 31-03- 2010 WHEREIN IT HAS BEEN REPORTED THAT NO PROPERTY OR FUNDS OF THE TRUSTS WERE APPLIED FOR ANY PURPOSE OTHER THAN THE OBJECTS OF T HE TRUST. THE OBJECTS OF THE TRUST AS PER THE FREE ENGLISH TRANSLATION OF THE TR UST DEED (THE ORIGINAL TRUST DEED IS IN GUJARATI) ARE REPRODUCED AS UNDER: (4) OBJECTS:- THIS ORGANIZATION WILL WORK FOR FOLL OWING OBJECTS. THIS ORGANIZATION WILL WORK FOR ALL OR ANY ONE OR M ORE OF FOLLOWING OBJECTS IRRESPECTIVE OF THE CASTE, SEX, RELIGION, R ACE ETC. (1) TO DEVELOP EDUCATIONALLY, FINANCIALLY, SOCIALLY TO THE CLASS OF SOCIETY AS WELL AS TO DEVELOP THE SOCIETY IN EACH A ND EVERY AREA. (2) TO ESTABLISH AND OPERATE HOSPITALS, CLINICS, MA TERNITY HOME, NURSING HOME FOR COMMON PEOPLE AND TO ORGANIZE BLOO D CAMP AS WELL AS TO HELP OTHER ORGANIZATIONS HAVING SUCH OBJECTS (3) TO REMOVE BAD HABIT / ADDITION, BAD CUSTOM, DIS BELIEF FROM THE CLASS OF SOCIETY AND TO WORK FOR SOCIAL DEVELOP MENT AS ALSO TO MAKE THE PEOPLE INDEPENDENT AND ECONOMICAL (4) TO ORGANIZE TRAVELING, LECTURE FOR KNOWLEDGE AN D ENTERTAINMENT AND TO CELEBRATE NATIONAL FESTIVALS A ND OTHER FESTIVALS. (5) TO ESTABLISH, OPERATE, MANAGE PRE-PRIMARY, PRIM ARY, SECONDARY, HIGHER SECONDARY SCHOOLS AND TO ESTABLIS H, OPERATE, MANAGE COLLEGES FOR HIGHER STUDIES IN THE FIELD OF ITA NO.97/RJT/2011 5 ARTS, COMMERCE, SCIENCE, MEDICAL, TECHNICAL, ENGINE ERING, COMPUTER ETC. (6) TO ESTABLISH, OPERATE, MANAGE HOSTELS / BOARDIN G FOR STUDENTS (7) TO SPREAD EDUCATION AND TO ORGANIZE EDUCATIONAL CLASSES, EDUCATIONAL TOURS, SEMINARS ETC. AS WELL AS TO WORK FOR ANY ACTIVITIES ALLIED TO EDUCATION (8) TO PROVIDE SCHOLARSHIP, FEES, PRIZES AND OTHER EDUCATIONAL EQUIPMENTS TO STUDENTS AND TO HELP THEM (9) TO OPERATE BOOK BANK FOR STUDENTS AND TO PROVID E THEM WITH EDUCATIONAL TEXT BOOKS, NOTEBOOKS ETC. (10) TO ESTABLISH, OPERATE, MANAGE LIBRARIES, READI NG ROOMS TO SPREAD EDUCATION AND KNOWLEDGE (11) TO ESTABLISH, OPERATE, MANAGE HOSPITALS, CLINI CS, MATERNITY HOME, MEDICAL HOME, LABORATORY AND MEDICAL STORE FO R NURSING THE PEOPLE AT CONCESSIONAL RATE (12) TO HELP DESIRABLE PATIENT WITH MEDICINES, FOOD S ETC. AND TO HELP FINANCIALLY FOR NURSING, OPERATION EXPENSES (13) TO ORGANIZE CAMPS, SEMINARS FOR MEDICAL RELIEF AND TO OPERATE MEDICAL STORE AT CONCESSIONAL RATE (14) TO HELP THE PEOPLE AFFECTED FROM NATURAL CALAM ITIES WITH CASH OR OTHER ASSISTANCE (15) TO ESTABLISH, OPERATE, MANAGE OLD AGE HOME, OR PHANAGE, WOMEN DEVELOPMENT HOUSE ETC. (16) TO WORK FOR GOOD OBJECTS OF SOCIETY (17) TO ORGANIZE SWIMMING POOLS, HEALTH CLUBS ETC. AND TO ORGANIZE SWIMMING COMPETITION, COACHING, SEMINARS E TC. (18) TO ORGANIZE YOGA AND MEDITATION ACTIVITIES (19) TO ORGANIZE SPORTS ACTIVITIES WHICH ADVENTURES THE YOUTH AND CHILDREN (20) TO ORGANIZE CULTURAL PROGRAMS FOR ENCOURAGEMEN T AND ENTERTAINMENT OF SPORTS PERSON (21) TO ESTABLISH SCHOOLS AND SPORTS GROUNDS FOR DE VELOPMENT OF EDUCATION, KNOWLEDGE AND SPORTS. (22) TO ORGANIZE COACHING FOR TEACHING OF DIFFERENT LANGUAGES (23) TO ORGANIZE NAVRATRI PROGRAM AND TO DO ANY WOR K CONNECTED WITH IT (24) TO ORGANIZE CAMPS TO PROTECT ENVIRONMENT (25) TO OPERATE EDUCATIONAL CENTERS TO PROMOTE DISA STER MANAGEMENT ACTIVITIES (26) TO ORGANIZE CAMPS AND TRAINING CENTERS TO EDUC ATE LIFE SAVING AGAINST NATURAL CALAMITIES (27) IN FULFILLING ANY OF THE ABOVE OBJECTS, ORGANI ZATION CAN WORK IN THE NAMED OF ANY SUB-ORGANIZATION, SUB-COMMITTEE, S UB-CLUB AND CLUB U.V. ITA NO.97/RJT/2011 6 IN RESPECT OF ANY OF THE ABOVE OBJECTS, IF ANY ACTI VITY IS REQUIRED TO BE STARTED, CONTINUED OR STOPPED THEN DECISION OF T RUSTEE / COMMITTEE WILL BE ABSOLUTE AND FINAL. AS HAS BEEN OBSERVED ABOVE, THE SO-CALLED EXAMINATI ON COULD BE DONE AT THE TIME OF ASSESSMENT PROCEEDINGS AND IT IS NOT A RELE VANT CRITERION TO BE EXAMINED WHILE GRANTING REGISTRATION U/S 12AA OF THE ACT. A S PER THIS SECTION, WHILE CONSIDERING THE APPLICATION FOR REGISTRATION THE CI T HAS TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES. ON A PERUSAL OF THE OBJECTS OF THE TRUST WHICH HAVE BEEN REPRODUCED ABO VE, I DO NOT FIND THAT ANY OBJECT CLAUSE IS FOR ANY PURPOSE OTHER THAN CHARITA BLE PURPOSE. NON VERIFICATION OF CERTAIN EXPENDITURE WOULD NOT AMOUNT TO INGENUIT Y. THERE IS NO MATERIAL AVAILABLE ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT THE ACTIVITIES OF THE TRUST WAS NOT GENUINE. WHEN THE TRUST HAS SATISFIED THESE TWO IMPORTANT CONDITIONS THAT THE OBJECT OF THE TRUST IS FOR CHAR ITABLE PURPOSE AND ITS ACTIVITIES ARE GENUINE, I AM OF THE CONSIDERED VIEW THAT THE A SSESSEE IS ENTITLED FOR REGISTRATION. ACCORDINGLY, I DIRECT THE COMMISSION ER OF INCOME-TAX II, RAJKOT TO GRANT REGISTRATION U/S 12AA OF THE ACT TO THE ASSES SEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 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