M/s Valmark Foundations, Bangalore v. DIT(Exemptions), Bangalore

ITA 1022/BANG/2009 | 2009-2010
Pronouncement Date: 05-03-2010 | Result: Allowed

Appeal Details

RSA Number 102221114 RSA 2009
Bench Bangalore
Appeal Number ITA 1022/BANG/2009
Duration Of Justice 4 month(s)
Appellant M/s Valmark Foundations, Bangalore
Respondent DIT(Exemptions), Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 05-03-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 05-03-2010
Assessment Year 2009-2010
Appeal Filed On 05-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.1022/BANG/2009 ASSESSMENT YEAR : 2009-10 M/S. VALMARK FOUNDATIONS NO.12/5 2 ND FLOOR DICKENSON ROAD BANGALORE 560 042. : APPELLANT VS. THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) BANGALORE. : RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN C.A. RESPONDENT BY : SMT. SWATI S. PATIL CIT-II(DR) O R D E R PER A. MOHAN ALANKAMONY ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE DIT(E)S ORDER DATED 1.9.09 REFUSING TO GRANT RENEW AL U/S. 80G(5) OF THE I.T. ACT. 2. BRIEFLY STATED THE FACTS ARE AS FOLLOWS. THE A SSESSEE TRUST IS A PUBLIC CHARITABLE TRUST CONSTITUTED BY TRUST DEED D ATED 26.4.04. THE MAIN ITA NO.1022/BANG/09 PAGE 2 OF 5 OBJECTS OF THE TRUST WAS TO CARRY ON CHARITABLE ACT IVITIES IN THE FIELD OF EDUCATION MEDICAL RELIEF RELIEF TO THE POOR AND O THER OBJECTS OF GENERAL PUBLIC UTILITY. 3. THE ASSESSEE TRUST HAD APPLIED FOR REGISTRATION U/S. 12A OF THE ACT AND SAME WAS GRANTED BY THE LD. DIT(E) WHICH IS STI LL IN FORCE. THE ASSESSEE TRUST HAD APPLIED FOR RECOGNITION U/S. 80G OF THE ACT AND DIT(E) WAS PLEASED TO GRANT RECOGNITION BY HIS ORDER DATED 31.1.08 FOR THE PERIOD FROM 31.1.08 TO 31.3.09. THEREAFTER AN APPLICATION FOR RENEWAL OF EXEMPTION U/S. 80G WAS FILED ON 17.3.09. 4. AFTER THE APPLICATION WAS MADE BY THE ASSESSEE T RUST THE LD. DIT(E) CALLED FOR DETAILS AND PARTICULARS AND THE ASSESSEE TRUST VIDE ITS LETTER DATED 24.6.09 FURNISHED THE DETAILS CALLED FOR BY THE DIT (E). AFTER CONSIDERING THE DETAILS FURNISHED BY THE TRUST DIT(E) HELD THE ASS ESSEE TRUST HAD NOT CARRIED OUT ANY ACTIVITY DURING THE PREVIOUS YEAR E NDING 31.3.08 AND THE TRUST HAD NOT FILED FORM NO.10 FOR ACCUMULATION OF ITS INCOME AS IT HAD NOT SPENT MORE THAN 85% OF THE GROSS RECEIPTS FOR THE Y EAR ENDING 31.3.09. IN THIS VIEW OF THE MATER THE LD. DIT(E) HELD THAT TH E ASSESSEE TRUST HAD VIOLATED ONE OF THE CONDITIONS MENTIONED U/S. 80G(5 ) OF THE ACT I.E. THE INCOME OF THE ASSESSEE TRUST WOULD NOT BE LIABLE TO BE EXEMPTED AND HAD TO BE INCLUDED IN THE TOTAL INCOME. THEREFORE HE REJECTED THE APPLICATION FILED BY THE ASSESSEE TRUST FOR RENEWAL OF RECOGNIT ION U/S. 80G OF THE ACT. 5. BEING AGGRIEVED BY THE ORDER OF THE LD. DIT(E) D ATED 1.9.09 THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWI NG EFFECTIVE GROUNDS : ITA NO.1022/BANG/09 PAGE 3 OF 5 1. THE ORDER OF THE LEARNED DIT(E) IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW EQUITY WEIGHT OF EVIDENCE PROBABILITIES FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. DIT(E) IS NOT JUSTIFIED IN REFUSING TO GRAN T RECOGNITION U/S. 80G OF THE INCOME-TAX ACT 1961 UN DER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT S CASE. 6. THE LD. AR SUBMITTED THAT THE LD. DIT(E) IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE TRUST IS NOT ELIGIBLE FOR RENEWAL OF G RANT OF RECOGNITION U/S. 80G OF THE ACT ON THE GROUND THAT THE ASSESSEE TRUST HA D VIOLATED THE CONDITION MENTIONED U/S. 80G(5) OF THE ACT. THE LD. DIT(E) O UGHT TO HAVE APPRECIATED THAT THE YEAR ENDED 31.3.2008 WAS THE FIRST YEAR OF THE ASSESSEE TRUST AND THERE WAS NO MUCH ACTIVITY AT ALL. SECONDLY FOR TH E YEAR ENDED 31.3.2009 THE ASSESSEE TRUST HAD ONLY RECEIVED A DONATION OF RS.35 000/- AND HAD INCURRED VARIOUS EXPENSES AND THE EXCESS OF INCOME OVER EXPENSE FOR THE SAID YEAR WAS ONLY RS.17 153. IT IS SUBMITTED THAT THE ASSESSEE TRUST HAD SUFFERED A DEFICIT OF RS.19 084 FOR THE YEAR ENDED 31.3.2008 AND THE SAME WAS NOT MET OUT OF THE DONATION RECEIVED DURING THE SUBSEQUENT YEAR. BE THAT AS IT MAY THERE IS NO DISPUTE THAT THE ASSESS EE TRUST EXISTS FOR CARRYING ON CHARITABLE ACTIVITIES LIKE FREE EDUCATION MEDIC AL RELIEF AND OTHER ACTIVITIES TO THE POOR AND THAT RECOGNITION U/S. 80G OF THE AC T WAS ALREADY GRANTED UPTO 31.3.2009. THEREFORE IT WAS PRAYED THAT THE LD. DIT(E) MAY KINDLY BE DIRECTED TO RENEW THE GRANT OF RECOGNITION U/S. 80G OF THE ACT. 7. THE LD. DR ON THE OTHER HAND RELIED ON THE FINDI NGS OF THE LD. DIT(E). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. DIT(E) HAD CALLED FOR CERTAIN DETA ILS AND PARTICULARS AND THE ITA NO.1022/BANG/09 PAGE 4 OF 5 ASSESSEE TRUST VIDE ITS LETTER DATED 24.6.09 FURNIS HED THE DETAILS CALLED FOR BY THE LD. DIT(E). AFTER CONSIDERING THE DETAILS F URNISHED BY THE ASSESSEE THE LD. DIT(E) DENIED THE BENEFIT OF RENEWAL OF GRA NT OF RECOGNITION U/S. 80G OF THE ACT PRIMARILY FOR TWO REASONS VIZ. (I) THAT ASSESSEE TRUST DID NOT CARRY ON ANY ACTIVITY DURING THE PREVIOUS YEAR ENDING 31. 3.08 AND (II) THAT THE ASSESSEE TRUST HAD NOT FILED FORM NO.10 FOR ACCUMUL ATION OF ITS INCOME AS IT HAD NOT SPENT MORE THAN 85% OF THE GROSS RECEIPTS F OR THE YEAR ENDING 31.3.09. WE FIND THE LD. DIT(E) HAD NOT CALLED FOR EXPLANATION OF THE ASSESSEE TRUST WITH REFERENCE TO THE TWO REASONS HE HAD IN HIS MIND FOR DENYING THE BENEFIT OF RENEWAL OF RECOGNITION U/S. 80G OF THE ACT. THE ASSESSEE HAD RAISED VARIOUS CONTENTIONS BEFORE US WHICH DO NOT FIND PLACE IN THE ORDER OF DIT(E). THE REASON WHICH WEIGHED W ITH THE LD. DIT(E) FOR DENYING THE BENEFIT OF EXEMPTION U/S. 80G WAS NOT C ONVEYED TO THE ASSESSEE TRUST PRIOR TO PASSING OF THE IMPUGNED ORD ER DATED 1.9.09. IN THE INTEREST OF JUSTICE AND FAIRPLAY WE ARE OF THE FIR M OPINION THAT THE ASSESSEE TRUST OUGHT TO HAVE PROVIDED ADEQUATE OPPORTUNITY T O EXPLAIN ITS CASE WITH REFERENCE TO THE TWO REASONS WHICH THE LD. DIT(E) H AD IN HIS MIND FOR REFUSING TO GRANT RECOGNITION U/S. 80G OF THE I.T. ACT. THEREFORE THIS ISSUE IS RESTORED TO THE FILE OF THE LD. DIT(E) FOR FRESH CONSIDERATION OF THE MATTER. THE LD. DIT(E) SHALL PASS FRESH ORDERS AFTER AFFORD ING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1022/BANG/09 PAGE 5 OF 5 PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF MARCH 2010. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED THE 5 TH MARCH 2010. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.