Sri C.R. Jain Charitable Trust, Bangalore V. DIT, Bangalore

ITA 981/BANG/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1467 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-03-2011
• Assessment Year: misc
• Appeal Filed On: 29-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARSHA PRAKASH CITII
• Keywords: Charitable institution; Condonation of delay
• Section: 12A; 12AA; 11

Judgement Text

PAGE 1 OF 6 ITA NO.981/BANG/2009 1 IN THE INOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE DR. O K NARAYANAN, VICE PRESIDENT AND SMT. P MADHAVI DEVI, J.M. ITA NO.981/BANG/2009 SRI C R JAIN CHARITABLE TRUST, NO.264, 4 TH BLOCK, 5 TH MAIN, JAYANAGAR, BANGALORE-1. -APPELLANT VS THE DIRECTOR OF INCOME-TAX (EXEMPTIONS), BANGALORE. - RESPONDENT APPELLANT BY : SHRI SUNIL SURANA, C.A. RESPONDENT BY : SHRI HARSHA PRAKASH, CIT-II O R D E R PER P MADHAVI DEVI : THIS IS AN APPEAL FILED BY THE ASSESSEE-TRUST AGA INST THE ORDER OF THE DIT (EXEMPTIONS), BANGALORE DATED 26.03.2009 IN REJECTING THE ASSESSEES APPLICATION SEEKING REGIST RATION U/S 12A OF THE I T ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A TRUST AND IT FILED ITS APPLICATION IN FORM NO.10A S EEKING REGISTRATION U/S 12A OF THE I T ACT. THE DIT(EXEMP TIONS) FOUND THAT THERE ARE CERTAIN DEFICIENCIES IN THE DOCUMENT S FILED ALONG WITH THE APPLICATION, THEREFORE, HE ISSUED A LETTER DATED 12/1/2009 CALLING FOR THE DETAILS. SINCE THE ASSESSEE TRUST DID NOT RESPOND, A PAGE 2 OF 6 ITA NO.981/BANG/2009 2 SHOW CAUSE NOTICE DATED 3.2.2009 WAS ISSUED TO SHOW CAUSE AS TO WHY ITS APPLICATION SHOULD NOT BE REJECTED FOR NON C OMPLIANCE. HOWEVER, IN RESPONSE TO THE SAME, THE ASSESSEE TRUS T FILED ITS EXPLANATION FROM TIME TO TIME AND ON VERIFICATION O F THE SAME, DIT(EXEMPTIONS) FOUND THAT THE ASSESSEE TRUST HAD R ECEIVED A DONATION TO THE EXTENT OF RS.17,92,100/- AND RS.26, 24,175/- DURING THE FINANCIAL YEARS 2006-07 AND 2007-08 RESPECTIVELY FROM INDIA FOUNDATION, 6415, WALWORTH ROAD, FAYETTEVILLE NC 283 11, USA AND THAT THE DONATION RECEIVED BY THE TRUST IS A FOREIGN CONTRIBUTION WITHIN THE MEANING OF FCRA, 1976. ON VERIFICATION FROM THE ASSESSEE, THE ASSESSEE ALSO FILED THE DETAILS FOR H AVING FILED APPLICATION BEFORE THE FCRA AUTHORITIES SEEKING EX- POST FACTO APPROVAL, BUT THE APPROVAL FROM THE FCRA IS STILL P ENDING. THE DIT(EXEMPTIONS) DID NOT ACCEPT THE EXPLANATION OFFE RED BY THE ASSESSEE AND HELD THAT THE ASSESSEE HAS NOT COMPLIE D WITH THE FCRA 1976 PROVISIONS WHICH INCLUDE THE FOLLOWING CO MPLIANCES:- APPLICATION U/S 6(1) OF THE SAID ACT, REGISTRATION THEREUNDER, AND INTIMATION OF SEPARATE BANK ACCOUNT, FILING OF RETURNS DULY CERTIFIED BY CHARTERED ACCOUNTANT TO BE FILED ALONG WITH BALANCE SHEET WITHIN FOUR MONTHS OF CLOSURE OF THE YEAR AND MAINTENANCE OF ACCOUNTS REQUIRING CASH BOOK, LEDGER AND JOURNAL TO BE MAINTAINED. HE THEREFORE HELD THAT THE DIVERSION OF FUNDS BY NGO S IS A SUBJECT MATTER OF INVESTIGATION AND THE ASSESSEE, HAVING VI OLATED THE PROVISIONS OF THE FCRA 1976, IS NOT ELIGIBLE FOR EX EMPTION U/S 11 OF PAGE 3 OF 6 ITA NO.981/BANG/2009 3 THE I T ACT. HE ALSO OBSERVED THAT THE ASSESSEE TR UST CLAIMS TO HAVE UNDERTAKEN THE ACTIVITIES OF FINANCIALLY SUPPO RTED THE SAMARTHANAM TRUST AND THE STUDENTS BY SUPPORTING THE M IN PAYING THEIR FEES. HE OBSERVED THAT APART FROM BUILDING T HE HOSPITALS, THERE IS NO EVIDENCE OF CHARITABLE ACTIVITY. HE ALS O CONSIDERED THE FACT THAT THE TRUST IS ENTIRELY FAMILY RUN, COMPRISIN G OF THE AUTHORS TWO BROTHERS AND HIS WIFE. IN THESE CIRCUMSTANCES, HE HELD THAT THE GRANT OF REGISTRATION U/S 12A HAS TO BE REJECTE D. ACCORDINGLY, HE REJECTED THE REGISTRATION. 3. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING, IT IS SEEN THAT THE ASS ESSEE HAS FILED AN APPLICATION AND ALSO AN AFFIDAVIT FOR CONDONATION OF DELAY IN FILING APPEAL BEFORE THE TRIBUNAL. THE REA SON GIVEN BY THE ASSESSEE FOR THE SAID DELAY IS THAT THE MANAGING TRU STEE DR. ASHOK KUMAR JAIN, WHO IS INCHARGE OF DAY-TO-DAY AFFAIR OF THE TRUST, HAD TO TRAVEL OUT OF INDIA MANY TIMES FOR PROFESSIONAL W ORK DURING THE LAST SIX MONTHS FROM APRIL TO SEPTEMBER, 2009. DUE TO WHICH HE COULD NOT CONCENTRATE AND SPARE TIME FOR THE AFFAIR S OF THE TRUST, WHICH LED TO DELAY IN FILING OF THE APPEAL. 4.1 HAVING CONSIDERED THE SAID APPLICATION, WE FEE L IT FIT AND PROPER TO CONDONE THE DELAY IN FILING THE APPEAL BEFORE THE TRIBUNAL. PAGE 4 OF 6 ITA NO.981/BANG/2009 4 5. COMING TO THE MERITS OF THE CASE, THE LEARNED A R SUBMITTED THAT THERE IS NO DOUBT THAT THE ASSESSEE TRUST HAS CONSTRUCTED THE HOSPITAL AND WAS ALSO RUNNING CHARI TABLE ACTIVITIES, SUCH AS, RENDERING FINANCIAL HELP TO ANOTHER TRUST AND ALSO PAYING FEES OF POOR STUDENTS. AS REGARDS THE DONATIONS RE CEIVED IN FOREIGN EXCHANGE FROM INDIA FOUNDATION, US IN VIOLA TION OF FCRA 1976, HE SUBMITTED THAT THE ASSESSEE HAS MADE AN AP PLICATION BEFORE THE FCRA SEEKING EX-POST FACTO APPROVAL AND THE SAID APPLICATION IS STILL PENDING. HE SUBMITTED THAT AT THE TIME OF SEEKING REGISTRATION U/S 12A OF THE ACT, THE DIT(EX EMPTIONS) IS REQUIRED TO SEE WHETHER THE TRUST HAS SATISFIED ALL THE CONDITIONS LAID DOWN THEREIN AND THERE IS NO SUCH CONDITION TH AT THE ASSESSEE SHOULD FULFILL CONDITIONS UNDER FRCA ACT. HE SUBMI TTED THAT THE ASSESSEE HAS MADE AN APPLICATION BEFORE FRCA FOR EX -POST FACTO APPROVAL, WHICH IS PENDING BEFORE THE AUTHORITIES A ND THEREFORE, THE REGISTRATION CANNOT BE DENIED TO HIM. 6. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED TH E ORDER OF THE DIT(EXEMPTIONS). 7. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS, WE FIND THAT THE DIT(EXEMPTI ONS), ON RECEIPT OF APPLICATION FOR REGISTRATION OF A TRUST OR INSTI TUTION U/S 12A, SHALL CALL FOR SUCH DOCUMENTS OR INFORMATION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS O F THE ACTIVITIES OF THE TRUST AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM PAGE 5 OF 6 ITA NO.981/BANG/2009 5 NECESSARY IN THIS BEHALF AND AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINE NESS OF ITS ACTIVITIES, SHALL ACCEPT OR REJECT SUCH AN APPLICAT ION. IN THE CASE BEFORE US, IT IS SEEN THAT THE ASSESSEE HAS BEEN CA RRYING ON THE CHARITABLE ACTIVITIES OF RUNNING A HOSPITAL AND ALS O HELPING ANOTHER TRUST AND POOR STUDENTS BY PAYING THEIR FEES. IF THE DIT(EXEMPTIONS) HAD ANY DOUBT WITH REGARD TO THE GEN UINENESS OF THE SAID ACTIVITIES, HE COULD HAVE MADE SPOT INSPEC TION HIMSELF OR COULD HAVE DEPUTED SOMEBODY TO MAKE NECESSARY INQUIRI ES AS TO WHETHER THE ASSESSEE IS CARRYING ON SUCH ACTIVITIES. WE FIND THAT NO SUCH EXERCISE HAS BEEN CARRIED OUT BY THE DIT(EXE MPTIONS). FURTHER, AS REGARDS TO VIOLATION OF THE PROVISIONS OF FCRA 1976, WE FIND THAT THE ASSESSEE CAN ALSO SEEK EX-POST FACTO APPROVAL ON RECEIPT OF CONTRIBUTIONS FROM A FOREIGN SOURCE. A S LONG AS THE ASSESSEE IS CARRYING ON THE ACTIVITIES OF CHARITABLE NATURE, THE DIT(EXEMPTIONS) CANNOT REJECT THE REGISTRATION U/S 12A OR 12AA OF THE I T ACT. IN VIEW OF THE SAME, WE DEEM IT FI T AND PROPER TO SET ASIDE THE ORDER OF THE DIT(EXEMPTIONS) DATED 26 .3.2009 AND DIRECT HIM TO RECONSIDER THE ISSUE AFTER CONSIDERIN G VARIOUS DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE. 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED ON MONDAY, THE 14 TH DAY OF MARCH, 2011 AT BANGALORE. SD/- SD/- (DR. O K NARAYANAN) (P MADHAVI DE VI) VICE PRESIDENT JUDICIAL MEMBER PAGE 6 OF 6 ITA NO.981/BANG/2009 6 COPY TO : 1) THE ASSESSEE (2) THE REVENUE (3) THE CIT(A) CONCERNED. (4) THE CIT CONCERNED. (5) THE DR (6) GUARD FILE. MSP/11.3. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.