ITO, Salem v. M/s. India Gospel Fellowship Trust, Salem

ITA 1214/CHNY/2010 | 2007-2008
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 121421714 RSA 2010
Assessee PAN AAATI5485K
Bench Chennai
Appeal Number ITA 1214/CHNY/2010
Duration Of Justice 1 year(s) 8 month(s) 4 day(s)
Appellant ITO, Salem
Respondent M/s. India Gospel Fellowship Trust, Salem
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 30-03-2012
Date Of Final Hearing 13-03-2012
Next Hearing Date 13-03-2012
Assessment Year 2007-2008
Appeal Filed On 26-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHENNAI BEFORE SHRI ABRAHAM P.GEORGE ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY JUDICIAL MEMBER ITA NO.1214/MDS/2010 (ASSESSMENT YEAR : 2007-08) THE INCOME TAX OFFICER WARD-I(4) SALEM. VS. M/S. INDIA GOSPEL FELLOWSHIP TRUST 48 CHAIRMAN CHINNAIAH ROAD NORTH MARAVANERI EXTENSION SALEM-636 007. PAN:AAATI5485K (APPELLANT) (RESPONDENT) APPELLANT BY : MR. M.N.MURTHY NAIK DR RESPONDENT BY : MR. S.SR IDHAR ADVOCATE DATE OF HEARING : 13 TH MARCH 2012 DATE OF PRONOUNCEMENT : 30 TH MARCH 2012 O R D E R PER VIKAS AWASTHY JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE REVENUE AGAINS T THE ORDER DATED 19.05.2010 PASSED BY THE CIT(A) SALEM RELEVANT TO THE ASSESSMENT YEAR 2007-08. 2. THE FACTS IN BRIEF OF THE CASE ARE THAT ASSESSE E TRUST FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007 -08 ON 17.07.2007 DECLARING NIL INCOME. THE RETURN OF INCO ME WAS TAKEN UP FOR SCRUTINY VIDE NOTICE UNDER SECTION 143 (2) DATED 6.12.2007. DURING THE RELEVANT FINANCIAL YEAR THE ASSESSEE ITA NO.1214/MDS /2010 2 HAD RECEIVED FOREIGN DONATIONS TO THE TUNE OF ` 2 30 75 946/- AND BANK INTEREST OF ` 1 10 753/-. THE ASSESSEE HAD FILED AN APPLICATION UNDER SECTION 12A OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) WHICH WAS G RANTED WITH EFFECT FROM 1.4.2007. THE ASSESSEE HAD FILED AN APP LICATION FOR CONDONATION OF DELAY IN FILING OF APPLICATION UNDER SECTION 12A OF THE ACT. HOWEVER THIS APPLICATION FOR CONDON ATION OF DELAY WAS REJECTED. THE ASSESSEE PREFERRED AN APPE AL BEFORE THE TRIBUNAL AGAINST THE ORDER REFUSING TO CONDONE THE DELAY. THE TRIBUNAL VIDE ITS ORDER DATED 12 TH MAY 2009 DIRECTED THE CIT TO RECONSIDER THE ISSUE REGARDING CONDONATION O F DELAY. 3. THE CIT VIDE ORDER DATED 20 TH AUGUST 2009 REFUSED TO CONDONE THE DELAY IN FILING THE APPLICATION UNDER S ECTION 12A. DURING THE PENDENCY OF THE APPEAL THE ASSESSMENT W AS KEPT PENDING. AFTER THE ORDER OF THE CIT DATED 20.08.20 09 THE ASSESSING OFFICER PASSED THE ORDER OF ASSESSMENT FO R THE ASSESSMENT YEAR 2007-08 ON 10.09.2009 DETERMINING T HE INCOME OF THE ASSESSEE AS ` 2 31 86 699/-. WHILE PASSING THE AFORESAID ORDER THE ASSESSING OFFICER REJECTED THE CLAIM ITA NO.1214/MDS /2010 3 OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 11A OF THE ACT ON THE GROUND :- I) THAT THE ASSESSEE TRUST IS NOT REGISTERED UNDER SECTION 12A OF THE INCOME TAX ACT FOR THE ASSESSMENT YEAR 2007-08 & ; II) FOREIGN DONATIONS RECEIVED BY THE TRUST WOULD B E TREATED AS INCOME AND THE CORPUS DONATIONS ARE ALS O TREATED AS INCOME AS THE TRUST WAS NOT REGISTERED UNDER SECTION 12A OF THE ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) A FTER GOING THROUGH THE FACTS OF THE CASE AND DOCUMENTS ON RECO RD ALLOWED THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 19.05.2010. THE CIT(A) WHILE ALLOWING THE APPEAL O F THE ASSESSEE HELD THAT THE APPELLANT IS RELIGIOUS AND CHARITABLE TRUST AND EVEN IF THE DONATIONS RECEIVED BY THE APP ELLANT ARE INCOME SECTION 11(1)(A) SQUARELY APPLIES WHICH EXEM PTS INCOME SINCE THE SAME ARE APPLIED BY THE APPELLANT TRUST TOWARDS THE OBJECT OF THE TRUST. THE CLAIM OF THE A UTHORIZED REPRESENTATIVE IS THEREFORE ACCEPTED AND ACCORDINGL Y THE ITA NO.1214/MDS /2010 4 ADDITION OF ` 2 31 86 699/- MADE BY THE ASSESSING OFFICER IS DELETED. 5. THE REVENUE CHALLENGED THE ORDER OF THE CIT(A) B EFORE THE TRIBUNAL ON FOLLOWING GROUNDS:- THE CIT(A) HAS FILED TO APPRECIATE THAT ASSESSING OFFICER DID NOT ALLOW BENEFIT OF SECTIONS 11 & 12 A S THE TRUST WAS NOT GRANTED REGISTRATIONS U/S.12AA OF THE ACT. THE ASSESSING OFFICER FOLLOWED THE RATIO O F DECISION OF CIT VS. UP FOREST CORPORATION 230 ITR 945(SC). THOUGH AT THE TIME OF THE ADJUDICATION OF CIT(A) HAD THE BENEFIT OF THE DECISION OF THE TRIBUNAL YET THE DECISION OF THE TRIBUNAL HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. THE HIGH COURT HAS GRANTED STAY OF THE DECISION GIVEN BY THE TRIBUNAL AS ON DATE. THE APPEAL OF THE REVENUE AGAINST THE DECISION OF ITAT U/S.260A IS PENDING BEFORE THE HIGH COURT. 2. THE CIT(A) HAS FAILED TO CONSIDER THAT RATIO OF DECISION OF GULAM MOHIDIN TRUST VS. CIT. 248 ITR 587(J & K) ; STATE OF KERALA VS. M.P. SHANTI VERMA JAIN (1998) 231 ITR 787 (SC) WHICH WERE APPLICABLE TO THE FACTS OF THE CASE. THE CIT(A) OUG HT TO HAVE DENIED BENEFIT OF EXEMPTION U/S.11 TO THE ASSESSEE TRUST AS BOTH 13(1)(A) & 13(1)(B) WERE VIOLATED. THE CIT(A) OUGHT TO HAVE RESORTED TO SECTION 292 B TO UPHOLD THE ASSESSMENT ORDER. 3. THE CIT(A) FAILED TO APPRECIATE THAT ISSUE OF GRANTING OF THE BENEFIT OF EXEMPTION UNDER SECTIONS 11 & 12 IS TO BE DECIDED ON THE FACTS OF EACH CASE ON YEAR TO YEAR BASIS. IN THE IMPUGNED YEAR EXPENDITURE INCURRED ON THE CHARITABLE PURPOSE WAS MORE THAN RELIGIOUS TRUST. THE EXEMPTION UNDER SECTIONS 11 & 12 HAS TO BE WORKED OUT ACCORDINGLY. THE CIT(A)S CONTENTION THAT SECTION 13(1)(B) APPEALS ONLY WHEN TRUST IS A PUBLIC CHARITABLE TRUS T ITA NO.1214/MDS /2010 5 SINCE THE ASSESSEE TRUST IS RELIGIOUS TRUST/RELIGIO US AND CHARITABLE TRUST SO SECTION 13(1)(B) WAS NOT APPLICABLE TO THE FACTS OF THE CASE. THE CIT(A) ER RED IN NOT OBSERVING THAT DURING THE IMPUGNED FINANCIAL YEAR CHARITABLE ACTIVITIES WERE MORE THAN RELIGIOUS ACTIVITIES. MOREOVER CASE LAW RELIED UPON BY THE CIT(A) HAVE NOT BEEN ACCEPTED AND APPEALS OF THE DEPARTMENT ARE PENDING AGAINST THESE DECISIONS BEFORE VARIOUS APPELLATE FORUMS. 6. THE LEARNED D.R. APPEARING ON BEHALF OF THE REVE NUE SUBMITTED THAT THE ASSESSEE TRUST HAS BEEN FORMED F OR RELIGIOUS PURPOSES ONLY. IT HAS BEEN CLAIMING EXEMP TION IN VIOLATION OF THE PROVISIONS OF SECTION 13(1)(B). TH E LEARNED D.R. REFERRED TO THE OBJECTS OF THE TRUST TO SHOW T HAT THE ASSESSEE TRUST WAS FORMED PRIMARILY FOR RELIGIOUS P URPOSE ONLY. THE OBJECTS OF THE TRUST REPRODUCED ON PAGES 6 & 7 OF THE ASSESSMENT ORDER FOR THE SAKE OF CONVENIENCE ARE EXTRACTED HEREIN BELOW:- A) PROVISION & PROMOTION OF MOBILE EVANGELISTIC TE AM AND MISSIONERS. B) ESTABLISHMENT RUNNING AND MAINTENANCE OF CHURCHES; C) ESTABLISHMENT RUNNING AND MAINTENANCE OF EDUCATIONAL INSTITUTIONS. ITA NO.1214/MDS /2010 6 D) ESTABLISHMENT RUNNING AND MAINTENANCE AND DEVELOPMENT OF INDUSTRIAL SCHOOLS VOCATIONAL SCHOO LS AND BIBLE SCHOOLS. E) SUPPLY AND MAINTENANCE OF PASTORS EVANGELISTS B IBLE WOMEN THE LEARNED D.R. RELIED ON THE JUDGEMENT OF HONBLE JAMMU & KASHMIR HIGH COUR IN THE CASE OF GHULAM MOHIDI N TRUST VS. CIT(J & K) REPORTED AS 248 ITR 587. 7. ON THE OTHER HAND SHRI S.SRIDHAR LEARNED COUNS EL FOR THE ASSESSEE SUBMITTED THAT THE HONBLE MADRAS HIGH COURT VIDE JUDGEMENT DATED 17.08.2010 HAS GRANTED REGIS TRATION TO THE ASSESSEE TRUST FROM THE DATE OF ITS INCEPTION REPORTED AS 331 ITR 283. THE HONBLE HIGH COURT DURING THE P ENDENCY OF THE PRESENT APPEAL BEFORE THE TRIBUNAL IN SEPARA TE PROCEEDINGS HAS CONDONED THE DELAY IN FILING OF APP LICATION FOR EXEMPTION AND HAS GRANTED REGISTRATION WITH EFFECT FROM 14.2.2000 I.E. FROM THE DATE OF CREATION OF TRUST. THE ASSESSING OFFICER DISALLOWED THE BENEFITS WHICH OUG HT TO HAVE BEEN GRANTED TO THE ASSESSE FOR THE REASON THAT THE APPLICATION FOR CONDONATION OF DELAY WAS REJECTED B Y THE CIT. HE SUBMITTED THAT ALTHOUGH THERE IS NO BAR UNDER TH E ITA NO.1214/MDS /2010 7 PROVISIONS OF SECTION 12AA FOR GRANTING REGISTRATIO N TO THE RELIGIOUS TRUST HOWEVER A PERUSAL OF INCOME & EXP ENDITURE STATEMENT WOULD SHOW THAT SUBSTANTIAL AMOUNT HAS BE EN SPENT BY THE ASSESSEE TURST ON CONSTRUCTION OF ORPHANAGE/CHILDREN HOME BUILDING [ ` 99 63 420/-) AND WELFARE OF THE ORPHANS /CHILD CARE ( ` 17 81 080/-) APART FROM THE EXPENDITURE ON RURAL DEVELOPMENT AMOUNTING TO ` 2 33 931/- AWARENESS CAMPS ` 13 07 645/- AND CONSIDERABLY VERY LESS AMOUNT WAS SPENT ON CONSTRUCTION OF PLAC ES OF WORSHIP I.E ` 35 37 679/- AND MAINTENANCE OF PRIESTS/PREACHERS ` 27 38 320/-. REFERENCE TO THE ABOVE EXPENDITURE HAS ALSO BEEN MADE BY THE ASSESSING OFF ICER AT PAGE 5 OF THE ASSESSMENT ORDER. DESPITE THE FACT TH AT THE ASSESSEE TRUST IS TAKING UP CHARITABLE OBJECTS THE BENEFIT OF SECTION 12A WAS NOT GRANTED BY THE ASSESSING OFFICE R. NOW THE HONBLE MADRAS HIGH COURT HAS CONDONED THE DEL AY AND THE ASSESSEE HAS BEEN GRANTED REGISTRATION FROM ITS INCEPTION IN THE YEAR 2000 THE ORDER OF THE LEARNED CIT IS V ALID. ITA NO.1214/MDS /2010 8 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GO NE THROUGH THE ORDERS PASSED BY THE REVENUE AUTHORITIE S. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSE SSEE HAS NOT TAKEN INTO CONSIDERATION THE EXPENDITURE INCURR ED BY THE ASSESSEE TOWARDS THE WELFARE OF THE CHILDREN AND OR PHANS. AS PER THE REGISTERED TRUST DEED DATED 14.02.2000 THE ASSESSEE HAS MULTIFARIOUS OBJECTS LIKE RUNNING HOME S AND WELFARE CENTRES INDUSTRIAL SCHOOLS HOSPITAL PRIN TING OPERATIONS CONSTRUCTION OF CHURCH BUILDINGS ETC. THE INCOME AND EXPENDITURE STATEMENT OF THE ASSESSEE TRUST SHO WS THAT SUBSTANTIAL AMOUNT HAS BEEN SPENT BY THE TRUST TOWA RDS UPLIFTMENT OF ORPHANS AND CHILDREN. THE TRUST MAY H AVE BEEN CARRYING OUT SOME RELIGIOUS ACTIVITIES ALSO BUT IT CANNOT BE DENIED THAT THE NOBLE CAUSE UNDERTAKEN BY THE ASSES SEE TRUST FOR CONSTRUCTION OF ORPHANAGE AND CHILDREN HOME IS IN ANY WAY NOT A CHARITABLE. IT IS NOT THE CASE OF THE RE VENUE THAT THE ORPHANAGE AND THE CHILDREN HOME BUILDINGS HAVE BEEN CONSTRUCTED BY THE ASSESSEE FOR ANY PARTICULAR COMM UNITY OR RELIGION OR CASTE. THE LEARNED D.R. HAS RELIED UPON THE CASE OF GHULAM MOHIDIN TRUST (SUPRA). THE RATIO OF THE S AID CASE IS ITA NO.1214/MDS /2010 9 NOT APPLICABLE TO THE INSTANT CASE AS REGISTRATION HAS ALREADY BEEN GRANTED TO THE ASSESSEE BY THE DEPARTMENT. BE THAT AS IT MAY THE HONBLE MADRAS HIGH COURT HAS ALREADY COND ONED THE DELAY IN MAKING APPLICATION FOR REGISTRATION UN DER SECTION 12A TO THE ASSESSEE AND AS SUCH THE REGISTRATION GR ANTED TO THE ASSESSEE WITH EFFECT FROM 1.4.2007 SHALL BE EFF ECTIVE FROM THE DATE OF ITS INCEPTION. 9. IN VIEW OF THE ABOVE WE FIND THERE IS NO INFIRM ITY IN THE ORDER OF THE CIT(A) IN DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER. THUS THE ORDER OF THE CIT(A) IS CONFIRMED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH 2012. SD/- S D/- (ABRAHAM P.GEORGE) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI DATED THE 30 TH MARCH 2012. SOMU COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F .