Navnirman Kelvani Mandal Trust, v. The CIT.,,, Valsad

ITA 112/AHD/2009 | misc
Pronouncement Date: 11-03-2010 | Result: Allowed

Appeal Details

RSA Number 11220514 RSA 2009
Assessee PAN AAATN2836K
Bench Ahmedabad
Appeal Number ITA 112/AHD/2009
Duration Of Justice 1 year(s) 2 month(s) 1 day(s)
Appellant Navnirman Kelvani Mandal Trust,
Respondent The CIT.,,, Valsad
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 11-03-2010
Date Of Final Hearing 11-03-2010
Next Hearing Date 11-03-2010
Assessment Year misc
Appeal Filed On 09-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER DATE OF HEARING:11/03/2010 DRAFTED ON: 11/03/20 10 ITA NO.112/AHD/2009 ASSESSMENT YEAR : NAVNIRMAN KELVANI MANDAL TRUST SANKALP UMBERGAON ROAD POST: SOLSUMBA VS. COMMISSIONER OF INCOME TAX SURYAPRAKASH CHAMBER DHARAMPUR ROAD VALSAD. PAN/GIR NO. : AAATN2836K (APPELLANT) .. (RESPONDENT) APPELLANT BY : S.N.L.AGARWAL A.R. RESPONDENT BY: C.K.MISHRA SR. D.R. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX VALSAD DATED 2 6.11.2008. 2. THE GROUND NOS.1 AND 2 OF THE APPEAL READS AS UN DER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT ERRED IN REJECTING THE APPLICATION OF THE TRUST FOR APPROVAL U/S.80G(5) OF THE INCOME TAX ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT ERRED IN REJECTING THE APPLICATION OF THE TRUST FOR APPROVAL U/S.80G(5) OF THE INCOME TAX ACT ON THE GR OUND THAT THERE IS NO ACTIVITY DONE IN THE LAST THREE YE ARS BY THE TRUST. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CHARITABLE TRUST REGISTERED UNDER SECTION 12A OF INCOME TAX AC T 1961 ON 19.01.1980. IT WAS GRANTED APPROVAL UNDER SECTION 8 0(5) FOR THE PERIOD 1.04.2005 TO 31.03.2008 BY ORDER OF COMMISSI ONER VALSAD DATED 31.08.2005. THE SAID TRUST FILED APPLICATION IN FORM NO.10G ON ITA 112/A/2009 - 2 - 24.03.2008 BEFORE THE CIT VALSAD FOR CONTINUATION OF APPROVAL OF THE TRUST UNDER SECTION 80G(5) WHICH WAS REJECTED BY TH E CIT VALSAD ON THE GROUND THAT THERE WAS NO ACTIVITY DONE IN THE P AST THREE YEARS BY THE ASSESSEE. 4. AT THE TIME OF HEARING BOTH THE PARTIES AGREED T HAT THE ISSUE IS COVERED BY THE DECISION OF AHMEDABAD BENCH OF THE T RIBUNAL IN THE CASE OF VAPI BENGALI CHARITABLE TRUST VS. CIT IN IT A NO.824/AHD/2009 ORDER DATED 5.06.2007. WE FIND THAT THE TRIBUNAL IN THAT CASE HELD AS UNDER:- THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT BY TAKING THE FOLLOWING EFFECTIVE GROUND OF APPEAL:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CI T HAS ERRED IN REJECTING THE APPLICATION OF THE TRUST FOR APPROVAL U/S 80G(5) WITHOUT APPLICATION OF MIND TO THE FACTS AND MERITS OF THE CASE. 2 AT THE OUTSET THE LEARNED AR POINTED OUT THAT THE CIT HAS REJECTED THE APPLICATION FOR RECOGNITIO N U/S 80G ONLY BY OBSERVING THAT THE ASSESSEE HAS VIOLATE D THE PROVISIONS OF SECTION 11 BY NOT EXPANDING 85% OF IT S INCOME ON THE OBJECTS OF THE TRUST. IT WAS POINTED OUT THAT THIS ISSUE IS DULY COVERED BY THE DECISION OF THE H ONBLE GUJARAT HIGH COURT IN THE CASE OF N N DESAI CHARITA BLE TRUST V CIT [2000] 246 ITR 0452 (GUJ) IN WHICH IT WAS HELD THAT THE SCOPE OF ENQUIRY U/S 80G FOR GRANTING AN APPROVAL RELATES ONLY TO WHETHER THE INSTITUTION SA TISFIES THE PRESCRIBED CONDITIONS U/S 80G OR NOT. THE AUTHO RITY GRANTING APPROVAL CANNOT ACT AS AN ASSESSING AUTHOR ITY. WHETHER THE TRUST HAS VIOLATED THE PROVISIONS OF SE CTION 11 OR NOT HAS TO BE LOOKED INTO ONLY AT THE TIME WHEN THE ASSESSMENT IS FRAMED. RELIANCE WAS ALSO PLACED ON T HE DECISION OF THE ITAT PUNE BENCH IN THE CASE OF SHIK SHAN PRASARAK MANDALI V CIT [2009] 28 SOT 50 (PUNE) (URO ). THE LEARNED DR ON THE OTHER HAND RELIED ON THE OR DER OF THE CIT. 3 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE DECISION OF THE HONBLE GUJAR AT HIGH COURT IN THE CASE OF N N DESAI CHARITABLE TRUST V C IT ITA 112/A/2009 - 2 - [2000] 246 ITR 0452 (GUJ) AS WELL AS THAT OF THE TR IBUNAL IN THE CASE OF SHIKSHAN PRASARAK MANDALI V CIT [200 9] 28 SOT 50 (PUNE) (URO). THE ASSESSEE IS A CHARITABLE T RUST. IT WAS GRANTED APPROVAL U/S 80G(5)(VI) FOR THE PERI OD FROM 1/4/2005 TO 31/3/2008. AN APPLICATION FOR THE RENEW AL OF THE APPROVAL U/S 80G(5)(VI) FROM THE PERIOD 1/4/200 8 WAS FILED ON 10-09-2008 ALONG WITH THE COPY OF THE REGI STRATION U/S 12A AND COPY OF THE CERTIFICATE DATED 26/10/200 5. THE CIT ASKED FOR CERTAIN DETAILS WHICH WERE DULY GIVEN BY THE ASSESSEE. THE CIT SIMPLY REJECTED THE APPLICATION O F THE ASSESSEE U/S 80G(1)(VI) ON THE GROUND THAT THE ASSE SSEE HAS VIOLATED THE PROVISIONS OF SECTION 11 BY NOT EX PANDING 85% OF ITS INCOME ON THE OBJECTS OF THE TRUST. THE GENUINENESS OF THE OBJECTS AND ACTIVITIES OF THE TR UST WERE NOT DOUBTED BY THE CIT. THE ASSESSEE HAS BEEN FILIN G THE INCOME-TAX RETURN REGULARLY AND WAS NOT DENIED EXEM PTION U/S 11 OF THE ACT. IN THE CASE OF N N DESAI CHARITA BLE TRUST (SUPRA) WHILE DEALING WITH THE SIMILAR ISSUE THE HONBLE GUJARAT HIGH COURT HAS HELD AS UNDER:- THE ELIGIBILITY OF THE DONATION FOR DEDUCTION HAS TO BE CONSIDERED WITH REFERENCE TO THE POINT OF TIME A T WHICH DONATION IS MADE AND NOT WITH RESPECT TO THE TIME IN FUTURE DEPENDING ON ASSESSMENTS OF THE DONEE. THAT IS WHERE THE USE OF THE VERB IN FUTURE TENSE WOULD HAS BEEN USED AND NOT IN PRESENT OR PAST PERFECT TENSE SO AS TO TAKE INTO CONSIDERATION THE ACTUAL INCLUSION OR EXCLUSION OR THE EXTENT OF INCLUSION OR EXCLUSION. THE DIRECT NEXUS OF CLAUSE (I) OF SUB-SECTION (5) OF SECTION 80G AS APPEARS TO US IS TO THE ELIGIBILITY OF THE INSTITUTION OR THE FUN D TO CLAIM THAT ITS INCOME IS NOT LIABLE TO BE INCLUDED IN THE COMPUTATION OF THE TOTAL INCOME. THE TWO ARE DIFFERENT CONCEPTS. FIRST WHETHER AN INSTITUTION O R FUND IS SUCH WHOSE INCOME IS NOT LIABLE TO BE INCLUDED IN THE COMPUTATION OF THE TOTAL INCOME DEPENDS ON ITS STATUS OR CHARACTER. THE SECOND IS T HE ACTUAL ASSESSMENT OF INCOME WHICH NECESSARILY TAKES PLACE IN FUTURE AFTER DONATION IS RECEIVED BY THE DONEE ON FULFILLMENT OF OTHER CONDITIONS ABOUT APPLICATION OF INCOME BY THE ELIGIBLE TRUSTS WHICH IN THE VERY NATURE OF THINGS CAN OPERATE ONLY AFTER RECEIPT OF INCOME. THE ACTUAL EXTENT OF EXCLUSION FROM OR INCLUSION IN THE COMPUTATION OF THE TOTAL INCOME THE RECEIPTS OF SUCH INSTITUTION OR FUND DEPENDS ON FULFILLMENT OF OTHER CONDITIONS WHICH MA Y OR MAY NOT EXIST AT THE CLOSE OF THE YEAR AND HAS N O DIRECT RELATION TO THE PURPOSE WITH WHICH THE ITA 112/A/2009 - 2 - PROVISION IS MADE. THE LATTE FALLS IN THE REALM OF THE ASSESSMENT OF THE TRUST INSTITUTION OR FUND WHICH DERIVES INCOME WHICH IS NOT ORDINARILY INCLUDIBLE I N ITS TOTAL INCOME. THE LIABILITY TO ASSESSMENT IS NOT AFFECTED BY ISSUANCE OF RECOGNITION CERTIFICATE OR APPROVAL CERTIFICATE ISSUED UNDER CLAUSE (VI) OF SU B- SECTION (5) OF SECTION 80G NOR IT DEPENDS UPON THE FACT WHETHER THE DONOR ULTIMATELY GETS DEDUCTION IN RESPECT OF SUCH DONATION. IT MAY BE RELEVANT TO TAK E COGNIZANCE THAT ALL DONATIONS ARE NOT IN THEIR ENTI RETY ELIGIBLE FOR DEDUCTION. THERE EXISTS A MAXIMUM LIMI T ALSO FOR SUCH ELIGIBILITY AND DONATIONS BEYOND SUCH LIMIT BY A PERSON MAY NOT GET DEDUCTION EVEN IF IT IS TO AN APPROVED INSTITUTION UNDER SECTION 80G. LIKEWISE ACTUAL INCLUSION OF ANY INCOME IN THE ASSESSMENT OF THE DONEE IS TAXABLE INCOME DOES NOT AFFECT THE ENTITLEMENT OF THE DONOR TO CLAIM DEDUCTION UNDER SECTION 80G IF ON THE DATE WHEN HE MADE THE DONATION THE CONDITIONS WERE FULFILLED. TH AT WAS THE LAW BEFORE THE INSERTION OF CLAUSE (VI) AND APART FROM THE FACT THAT BY INTRODUCING CLAUSE (VI) WITH RULE 11AA A METHOD OF PROVING THE ELIGIBILITY TO CLAIM DEDUCTION HAS BEEN PROVIDED BY THE STATUTE THERE HAS BEEN NO ALTERATION IN THE SUBSTANTIVE PROVISION THAT IS TO SAY ENTITLEMENT OF THE DONOR TO CLAIM DEDUCTION DEPENDS ON THE ELIGIBILITY OF THE DONEE TO CLAIM EXEMPTION OF ITS INCOME ON THE DATE WHEN DONATION IS MADE. EXAMINING FROM THIS ANGLE WE FIND THAT FOR APPLICABILITY OF SECTIONS 11 AND 1 2 WHAT IS REQUIRED IS THAT SUCH TRUST MUST HAVE MOVED AN APPLICATION FOR REGISTRATION UNDER SECTION 12A A ND REGISTERED FOR THAT PURPOSE. ONCE A TRUST IS REGISTERED UNDER SECTION 12A ITS INCOME FROM PROPERTY WHICH INCLUDES DONATIONS WHETHER COVERED UNDER SECTION 11(1)(D) OR UNDER SECTION 12 SUCH DONATIONS ARE DEEMED TO BE INCOME FROM PROPERTY IS NOT TO BE INCLUDED IN ITS TOTAL INCOME UNDER SECTIO N 11 OR SECTION 12. THE ENQUIRY UNDER SECTION 80G(5) CANNOT GO BEYOND THAT. 4 RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE HONBLE GUJARAT HIGH COURT WE DIRECT THE CIT T O GRANT RENEWAL OF THE APPROVAL TO THE ASSESSEE TRUST U/S 80G(5(VI) OF THE ACT WITH EFFECT FROM 01-04-2008. 5 IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA 112/A/2009 - 2 - 5. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL WE DIRECT THE CIT TO GRANT RENEWAL OF THE APPROVAL TO THE ASSESSEE TRUST UNDER SECTION 80G(5) OF THE ACT WITH EFFECT FROM 1. 04.2008. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING IN THE PRESENCE OF THE PARTIES ON 11/03/2010. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCO UNTANT MEMBER AHMEDABAD; DATED 11/03/2010 PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS) 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD