Surajben Harakhchand Mehta Public Charitable Trust,, RAJKOT-GUJARAT v. The Commissioner of Income Tax, Rajkot-II,, RAJKOT-GUJARAT

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH SMC RAJKOT BEFORE SHRI A.L. GEHLOT (AM) I.T.A. NO. 1333/RJT/2010 SURAJBEN HARAKHCHAND MEHTA : CIT RAJKOT-II PUBLIC CHARITABLE TRUST RAJKOT SANGHAVI & CO CAS 1212 ADITYA CENTRE PHULCHAAB CHOWK RAJKOT PAN : AAJTS3107R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DM RINDANI RESPONDENT BY: SHRI L MEENA O R D E R A.L. GEHLOT : THIS APPEAL BY ASSESSEE IS DIRECTED A GAINST THE ORDER OF CIT-II RAJKOT DATED 30-11-2010. 2. THE ASSESSEE CHALLENGES THE REJECTION OF THE APP LICATION FOR REGISTRATION MADE BY THE TRUST U/S 12A(1)(A) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT M/S SURAJBE N HARAKHCHAND MEHTA CHARITABLE TRUST RAJKOT CAME INTO EXISTENCE ON 01- 11-2009 BY EXECUTING A TRUST DEED. THE TRUST DEED WAS REGISTERED WITH THE CHARI TY COMMISSIONER ON 15-04- 2010. THE TRUST FILED AN APPLICATION IN FROM NO.10 A FOR REGISTRATION 12A OF THE ACT ON 18 TH MAY 2010. THE COMMISSIONER DID NOT GRANT REGISTR ATION U/S 12A ON THE GROUND THAT HE DID NOT CONVINCE WITH THE GENUINENES S OF THE ACTIVITIES OF THE TRUST. MERE ASSERTIONS PROPOSING CHARITABLE ACTIVITIES IN THE FORM OF VARIOUS CLAUSES IN THE TRUST DEED WOULD NOT HELP ANY TRUST UNLESS THEY ARE CORROBORATED WITH DOCUMENTARY EVIDENCES OF ANY NATURE AT LEAST BASI C SIMPLE ACCOUNTS. THE COMMISSIONER DEPUTED HIS INSPECTOR WHO VISITED THE TRUST OFFICE ON 15-11-2010 AND HE DID NOT FIND SIGN BOARD OF THE TRUST. THE A SSESSEE DID NOT FURNISH CLARIFICATION REGARDING TWO CHEQUES ISSUED BY THE S ETTLER MS. MANORAMBEN IN THE ITA NO.1333//RJT/2010 2 NAME OF THE TRUST I.E. SURAJBEN HARAKHCHAND MEHTA P CHARITABLE TRUST. THE ASSESSEE DID NOT FILE COPY OF ACCOUNT I.E. MANDATOR Y FOR GRANTING REGISTRATION U/S 12AA. THE CIT FOUND THAT THE APPLICATION FOR REGIS TRATION IS PREMATURE AS THE TRUST DID NOT START ACTIVITIES. 4. I HAVE HEARD THE LEARNED REPRESENTATIVE OF THE P ARTIES RECORD PERUSED. SECTION 12A LAID DOWN CERTAIN CONDITIONS FOR APPLIC ABILITY 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. INA THE CASE UNDER CONSIDERATION THE COMMISSIONER THOUGH ADMITTED THAT THE TRUST DEED MENTIONED ABOUT THE CHARITABLE ACTIVITIE S IN THE FORM OF VARIOUS CLAUSES THE ASSESSEE FAILED TO CORROBORATE WITH DO CUMENTARY EVIDENCE. I FAIL TO UNDERSTAND THAT WHEN THE TRUST DEED STATED VARIOUS CHARITABLE OBJECTS THEN WHICH CORROBORATIVE DOCUMENTARY EVIDENCE THE COMMISSIONER REQUIRED FOR HIS SATISFACTION. SIMPLY THE INSPECTOR DEPUTED FOR INV ESTIGATION FOUND THAT THERE WAS NO SIGN BOARD OF THE TRUST AND MERELY ON THAT BASIS IT CANNOT BE SAID THAT THE ACTIVITY OF THE TRUST WAS NON-GENUINE. ANOTHER REA SON FOR NON GRANTING OF THE REGISTRATION BY THE COMMISSIONER IS THAT THE ASSESS EE DID NOT PRODUCE THE ACCOUNT FOR THE PERIOD 01-11-2009 TO 31-03-2010 WHE REAS THE SUBMISSIONS ON ITA NO.1333//RJT/2010 3 BEHALF OF THE TRUST IS THAT THE TRUST HAS RECEIVED ONLY DONATION WHICH WAS FULLY EXPLAINED BY THE TRUST TO THE COMMISSIONER VIDE LET TERS DATED 29-11-2010 AND 24- 11-2010. THE ASSESSEE HAS FILED DETAILS OF THE DON ATION RECEIVED OF WHICH COPY HAS BEEN PLACED AT PAGES 4 AND 10 OF THE ASSESSEES PAPER BOOK. THE OBJECTS OF THE TRUST ARE MENTIONED AT CLAUSE 4 OF THE TRUST DEED WHICH IS ORIGINALLY IN GUJARAT HOWEVER A FREE TRANSLATION FILED BY THE A SSESSEE IN ENGLISH ARE AS UNDER: 4. MAIN OBJECTS OF THE TRUST: THE TRUSTEE CAN UTILIZE ITS ASSETS OR INCOME EARNED FROM IT TO ANY PERSON IRRESPECTIVE OF ANY CASTE RELIGION OR ANY A GE PERSON FOR THE BELOW MENTIONED OBJECTS OR THEY DEEMED FIT. A EDUCATIONAL ASSISTANCE: I) THE TRUSTEES MAY FROM TIME TO TIME OPEN ESTABLI SH OPERATE AND MAINTAIN AS ALSO PROVIDE MONETARY ASSISTANCE TO ANY SCHOOL COLLEGE VOCATIONAL TRAINING AND / OR RESEA RCH CENTRE VIDYAPITH OR INSTITUTIONS IMPARTING MORAL EDUCATION OR INSTITUTIONS IMPARTING HEALTH EDUCATION IN ANY CITY OR PLACE. II) THE TRUST SHALL GRANT FELLOWSHIP AND LECTURESHI P AND ALSO APPOINT PROFESSORS IN ANY SCHOOL R COLLEGE FUNCTION ING IN ITS NAME OR IN ANY OTHER EDUCATIONAL OR TECHNICAL INSTI TUTION AND SHALL ALSO CONSTITUTE AWARDS TO SUPPORT THE SAME AS ALSO CARRY OUT ACTIVITIES TO SUPPORT THE SAME. III) TO OPEN ESTABLISH OPERATE AND PROVIDE MONETA RY ASSISTANCE TO ANY EXISTING HOSTEL R BOARDING HOUSE AS ALSO PROVIDE FREE LODGING AND BOARDING OR AT A TOKEN RAT E TO POOR STUDENTS STUDYING IN ANY EDUCATIONAL INSTITUTION WI THOUT DRAWING ANY DISTINCTION BETWEEN CASTE CREED OR REL IGION. IV) TO PROVIDE SCHOLARSHIP GRANT LOAN OR ANY FINA NCIAL ASSISTANCE TO POOR NEEDY AND / OR DESERVING STUDEN TS STUDYING IN ANY SCHOOL COLLEGE VIDYAPITH OR OTHER EDUCATIONAL INSTITUTION IN ORDER THAT SUCH STUDENTS MAY BE ENABLED TO OBTAIN SUCH EDUCATION OR TRAINING IN IND IA AS MAY BE DESIRED. V) TO PROVIDE BOOKS FOOD CLOTHING AND / OR OTHER ITEMS OF DAILY NECESSITIES TUITION FEES AND / OR ANY OTHER ASSIST ANCE TO POOR NEEDY AND / OR DESERVING STUDENTS. VI) TO ESTABLISH OPERATE OR PROVIDE MONETARY ASSIS TANCE TO ANY INSTITUTION ENGAGED IN PROPAGATING RESEARCH AND KNO WLEDGE ITA NO.1333//RJT/2010 4 IN ANY LANGUAGE OR ENGAGED IN THE PUBLICATION OF BO OKS AND ALSO RENDER MONETARY ASSISTANCE TO EXISTING INSTITU TIONS ENGAGED IN THESE OBJECTIVES. VII) TO ESTABLISH OPERATE MAINTAIN ANY INSTITUTIO N ENGAGED IN ART SCIENCE R LITERATURE AND TO ENCOURAGE THESE AC TIVITIES IN ANY INSTITUTION ENGAGED IN THESE ACTIVITIES AS ALSO TO PROVIDE MONETARY ASSISTANCE. VIII) TO ENCOURAGE EDUCATIONAL ACTIVITIES OF ALL KI NDS AND TO ENGAGED IN ACTIVITIES TOWARDS THIS END AND TO RENDE R MONETARY ASSISTANCE FOR THE SAME. B. MEDICAL ASSISTANCE: IX) TO ESTABLISH MEDICAL SCHOOL NURSING WITH DISPE NSARY AS ALSO PROVIDE MONETARY ASSISTANCE TO ANY EXISTING INSTITU TION RENDERING NURSING AND MEDICAL CARE TO PATIENTS SUFF ERING FROM ANY DISEASE OR ACCIDENTS. X) TO ESTABLISH OPERATE AND OR PROVIDE MONETARY AS SISTANCE TO ANY HOSPITAL AMBULATORY HOSPITAL DISPENSARY RURA L CLINICS ASYLUMS MEDICAL SCHOOL OR COLLEGE SANITORIUM NUR SING HOMES ORPHANAGE AS ALSO TO PROVIDE ANY OTHER MEDIC AL ASSISTANCE AND AMBULANCE AND OPERATE MORTUARY VAN F OR POOR PATIENTS AS THE TRUSTEES MAY SO DEEM FIT. C. GENERAL PUBLIC RELIEF: XI) TO PROVIDE MONETARY AND / OR OTHER ASSISTANCE T O POOR NEEDY AND DESERVING PATIENTS IN TIME OF DROUGHT FL OOD EARTHQUAKE EPIDEMICS OR ANY SUCH NATURAL CALAMITIE S AS THEY MAY OCCUR IN INDIA. XII) TO PROVIDE FOOD AND CLOTHING TO POOR AND DESER VING PERSONS AT ANY PLACES OF SPIRITUAL R MORAL SIGNIFICANCE. XIII) TO PROVIDE BUTTERMILK FREE OR AT CONCESSIONAL RATES TO POOR AND NEEDY PEOPLE AS ALSO TO ESTABLISH CENTERS FOR D ISTRIBUTION OF BUTTERMILK TO POOR AND DESERVING PEOPLE AT ANY P LACE AS THE TRUSTEE MAY SO DECIDE. XIV) TO PROVIDE MONETARY ASSISTANCE TO THE FEEBLE WEAK ORPHANED OR POOR PEOPLE IN ANY FORM. XV) TO PROVIDE FOR SUPPORT FOR THE DEAF DUMB BLIN D OR PEOPLE WITH ANY PHYSICAL OR MENTAL DEFICIENCIES. XVI) TO CONSTRUCT TENEMENTS AND OR HOUSES OR OPERAT E AND MAINTAIN EXISTING TENEMENTS OR HOUSES TO PROVIDE HO USING AT CONCESSIONAL RENT TO POOR AND ECONOMICALLY BACKWARD PEOPLE IN ANY PART OF INDIA WITHOUT DRAWING ANY DIS TINCTION BETWEEN CASTE AND RELIGION. ITA NO.1333//RJT/2010 5 XVII) TO PROVIDE LOANS OR FINANCIAL ASSISTANCE OR A SSISTANCE IN ANY OTHER MANNER TO POOR AND DESERVING PEOPLE AS THE TR USTEES MAY SO DEEM FIT AND TO CARRY OUT ACTIVITIES OF GENE RAL PUBLIC RELIEF OR TO SUPPORT ANY OTHER INSTITUTION ENGAGED IN SUCH ACTIVITIES. D. ACTIVITIES OF MORAL AND PUBLIC WELFARE: XVIII) TO ESTABLISH OPERATE MAINTAIN OR ENCOURAGE ANY INSTITUTION OR SCHOOL ENGAGED IN ART SCIENCE OR LITERATURE. XIX) TO ESTABLISH CONSTRUCT OPERATE AND RENDER AS SISTANCE TO ANY LIBRARY MUSEUM GARDENS PUBLIC HALLS COMMUNI TY HALL FOR THE BENEFIT OF THE PUBLIC AT LARGE. XX) TO ESTABLISH GAUSHALAS AS ALSO TO PROVIDE MONET ARY ASSISTANCE TO GAUHALAS ENGAGED IN LOOKING AFTER SIC K AND ABANDONED COWS OR SUCH OTHER DOMESTIC ANIMALS. E. OTHER WELFARE OBJECTS: I) IN ADDITION TO THE OBJECTS STATED ABOVE THE TRUS T SHALL UNDERTAKE ANY OTHER OBJECTS RELATED TO PUBLIC RELIE F EDUCATION MEDICAL ASSISTANCE AND / OR PUBLIC WELFARE. ON PERUSAL OF THE ABOVE OBJECT CLAUSE I FIND THAT T HE OBJECTS OF THE TRUST RELATING TO EDUCATION AND MEDICAL RELIEF ARE PRIMA FACIE CHARIT ABLE ACTIVITIES. THE COMMISSIONER COULD NOT POINT OUT ANY MATERIAL IN HI S ORDER NR THE SAME IS AVAILABLE ON RECORD BASED ON WHICH IT CAN BE SAID T HAT THE OBJECT OF THE TRUST WAS NOT CHARITABLE. SECTION 12AA DOES NOT SPEAK ANYWHE RE THAT THE COMMISSIONER WHILE CONSIDERING THE APPLICATION FOR REGISTRATION SHALL SEE THAT THE INCOME DERIVED BY THE TRUST HAS NOT BEEN SPENT FOR CHARITABLE PURP OSE OR SUCH INSTITUTION IS EARNING PROFIT OR MISUSING THE INCOME DERIVED BY SU CH CHARITABLE INSTITUTION FROM ITS CHARITABLE ACTIVITIES THOUGH MAY BE A GROUND FO R REFUSING EXEMPTION ONLY WITH RESPECT TO THAT PART OF THE INCOME BUT IN MY VIEW IT CANNOT BE CONSIDERED TO BE SYNONYM TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. ON PERUSAL OF THE ORDER OF THE COMMISSIONER I FIND THAT THE COMMISSIONER WA S OF THE VIEW THAT SINCE THERE WERE NO ACTIVITIES THE ASSESSEE DID NOT SATI SFY THE CONDITION ABOUT THE GENUINENESS OF THE ACTIVITIES WHICH IN MY VIEW I S NOT CORRECT. WHEN THERE ARE NO ACTIVITIES AT ALL THEN THERE IS NO QUESTION OF HOLDING THAT THE ACTIVITIES WERE ITA NO.1333//RJT/2010 6 NON GENUINE. THE GENUINENESS OF THE ACTIVITIES ONL Y CAN BE VERIFIED WHEN THERE IS SOME ACTIVITY. THIS VIEW OF MINE IS FORTIFIED B Y VARIOUS DECISIONS CITED BY THE LD.AR WHICH ARE AS UNDER: 212 CTR (ALL) 394 CIT VS RED ROSE SCHOOL 118 TTJ (DEL) 823 DHARMA SANSTHAPAK SANGH (NIYAS) VS CIT 3 SOT 229 (DEL) SARDARI LAL OBERAI MEMORIAL CHARIT ABLE TRUST VS ITO 104 TTJ (CHEN)(TM) 467 PEOPLE EDUCATION & ECONOMIC DEVELOPMENT SOCIETY (PEEDS) VS ITO IN THE LIGHT OF ABOVE DISCUSSION I FIND THAT THE T RUST HAS SATISFIED THE CONDITIONS AS REGARDS THE OBJECTS AND GENUINENESS OF THE ACTIVITI ES. THEREFORE THE ASSESSEE TRUST IS ENTITLED FOR REGISTRATION U/S 12A OF THE A CT. I DIRECT THE COMMISSIONER TO ALLOW THE REGISTRATION TO THE TRUST U/S 12A OF THE ACT. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11-02-2011. SD/- (A.L. GEHLOT) ACCOUNTANT MEMBER RAJKOT DT : 11 TH FEBRUARY 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