M/s. St.Johns Rajakumar Education and Research Trust, CHENNAI v. DIT, CHENNAI

ITA 1891/CHNY/2010 | misc
Pronouncement Date: 03-01-2011 | Result: Allowed

Appeal Details

RSA Number 189121714 RSA 2010
Assessee PAN AAJTS3068B
Bench Chennai
Appeal Number ITA 1891/CHNY/2010
Duration Of Justice 1 month(s) 23 day(s)
Appellant M/s. St.Johns Rajakumar Education and Research Trust, CHENNAI
Respondent DIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 03-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 03-01-2011
Assessment Year misc
Appeal Filed On 10-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN JUDICIAL MEMBER .. I.T.A. NO. 1891/MDS/2010 ASSESSMENT YEAR :-- M/S. ST. JOHNS RAJAKUMAR EDUCATION AND RESEARCH TRUST ARCADIA. 4 TH FLOOR KAMARAJ AVENUE FIRST STREET KASTHURIBA NAGAR ADYAR CHENNAI-60020. V. THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) CHENNAI. (PAN: AAJTS3068B) (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. PUSHYA SITARAMAN SR. COUNSEL ALONG WITH MS. SREE VIDYA & MS. G. VARDINI ADVOCATES RESPONDENT BY : SHRI P.B. SEKARAN CIT-DR O R D E R PER GEORGE MATHAN JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTIONS) CHENNAI IN DIT( E) NO.2(1360)/09-10 DATED 29-09-2010. I.T.A. NO.1891/MDS/2010 2 2. MRS. PUSHYA SITRARAMAN SR. COUNSEL ALONG WITH M S. SREE VIDYA AND MS. G. VARDINI ADVOCATES REPRESENTED ON BEHALF OF THE ASS ESSEE AND SHRI P.B.SEKARAN LEARNED CIT-DR REPRESENTED ON BEHALF OF THE REVENUE . 3. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT THE ASSESSEE IS A TRUST WHICH WAS CREATED BY A TRUST DE ED DATED 04-02-2010. IT HAD FILED AN APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT 1961 IN THE REQUISITE FORM NO. 10A ON 29-03-2010. THE LEARNED DIT HAD CALLED FOR CLARIFICATIONS VIDE LETTER DATED 17-08-2010 AND THE CLARIFICATIONS WERE ALSO SUBMITTED BY THE ASSESSEE. IT WAS THE SUBMISSION T HAT THE LEARNED DIT AFTER CONSIDERING THE SUBMISSIONS HAD HELD THAT THOUGH TH E OBJECTS OF THE ASSESSEE TRUST WERE PURELY CHARITABLE STILL THE ACTIVITIES OF THE TRUST HAD NOT YET STARTED AND CONSEQUENTLY HE REFUSED TO GRANT THE ASSESSEE R EGISTRATION U/S 12AA ON THE GROUND THAT THE SATISFACTION OF THE GENUINENESS OF THE ACTIVITIES FOR FULFILLING THE OBJECTS COULD NOT BE EXAMINED. IT WAS THE SUBMISS ION THAT THE LEARNED DIT HAD FAIRLY HELD THAT THE TRUST WAS FREE TO APPLY AGAIN WHEN IT STARTS ITS ACTIVITIES SIGNIFICANTLY. IT WAS THE SUBMISSION THAT THOUGH T HE LEARNED DIT HAD GRANTED THE ASSESSEE THE LIBERTY TO APPLY FRESH FOR REGISTRATIO N STILL AS PER THE PROVISIONS OF SECTION 12A(1)(A) THE ASSESSEE WAS DUTY-BOUND TO MA KE THE APPLICATION BEFORE THE EXPIRY OF THE PERIOD OF ONE YEAR FROM THE DATE OF CREATION OF THE TRUST AS THE TRUST WAS CREATED IN FEBRUARY 2010 AND THE FIRST YE AR ENDING WAS 31-03-2010 I.T.A. NO.1891/MDS/2010 3 AND IF THE ASSESSEE MADE THE APPLICATION SUBSEQUENT TO 31-03-2010 THEN IT WOULD NOT HAVE THE BENEFIT OF THE PROVISIONS OF SEC TIONS 11 AND 12 FOR THE PERIOD ENDING 31-03-2010. IT WAS THE FURTHER SUBMISSION T HAT AS PER THE PROVISIONS OF SECTION 12A(2) IF AN APPLICATION HAS BEEN MADE ON O R AFTER THE FIRST DAY OF JUNE 2007 THE PROVISIONS OF SECTIONS 11 AND 12 WOULD AP PLY IN RELATION TO THE INCOME OF THE TRUST FROM THE ASSESSMENT YEAR IMMEDIATELY F OLLOWING THE FINANCIAL YEAR IN WHICH THE APPLICATION WAS MADE. IT WAS SUBMISSION THAT IT WAS ALSO BROUGHT TO THE ATTENTION OF THE LEARNED DIT VIDE A LETTER DATE D 27-08-2010 THAT THE TRUST PROPOSED TO PURCHASE PROPERTY FOR THE CONSTRUCTION OF A SCHOOL BEFORE DECEMBER 2010 AND COMMENCE CONSTRUCTION OF THE SAME BY JANUA RY 2011. IT WAS ALSO THE SUBMISSION THAT IT WAS ALSO BROUGHT TO THE ATTENTIO N OF THE LEARNED DIT THAT THE REGISTRATION U/S. 12AA WOULD ASSIST THE TRUST IN GE TTING 50% EXEMPTION FROM THE STAMP DUTY FOR THE PURPOSE OF REGISTRATION ON THE P URCHASE OF THE LAND. IT WAS THE FURTHER SUBMISSION THAT IT WAS ALSO BROUGHT TO THE ATTENTION OF THE LEARNED DIT THAT THE MANAGING TRUSTEE WAS A WELL-EXPERIENCE D ACADEMICIAN WITH RICH EXPERIENCE IN THE FIELD OF EDUCATION AND HE WAS WOR KING AS THE DEAN OF ST.JOHNS RESIDENTIAL SCHOOL SRIPERUMBUDUR. IT WAS THE SUBM ISSION THAT IT WAS ALSO BROUGHT TO THE ATTENTION OF THE LEARNED DIT THAT TH E SUBSTANTIAL CONTRIBUTION WAS BEING MADE OUT OF THE OWN SOURCES OF THE TRUSTEES A ND ALSO BY OBTAINING FROM FINANCIAL INSTITUTIONS AND THAT THE HDFC BANK HAD G IVEN CONCURRENCE FOR THE TERM LOAN FOR THE PURCHASE AND CONSTRUCTION OF THE SCHOO L. IT WAS THE SUBMISSION THAT I.T.A. NO.1891/MDS/2010 4 OBVIOUSLY WITHIN ONE MONTH OF THE FORMATION OF THE TRUST AN EDUCATIONAL INSTITUTION CANNOT BE BROUGHT INTO EXISTENCE. THE VERIFICATION OF THE DOCUMENTS THE PURCHASE OF THE LAND ETC. WERE TIME-CONSUMING. IT WAS THE SUBMISSION THAT THE FACT THAT THE BANK HAD ALSO GRANTED PROVISIONAL SANCTION FOR THE TERM LOAN ITSELF SHOWED THAT THE ACTIVITIES OF THE TRUST WERE AS PER THE PROVISIONS OF THE TRUST DEED AND THE LEARNED DIT HIMSELF HAD HELD THA T THE OBJECTS OF THE TRUST WERE PURELY CHARITABLE. THE ACTIVITIES DONE BY THE ASSESSEE FOR ATTAINING THE SAID PURELY CHARITABLE ACTIVITIES SHOULD HAVE BEEN LOOKE D INTO INSTEAD OF LOOKING FOR A RUNNING SCHOOL. IT WAS THE SUBMISSION THAT THE ASS ESSEE MAY BE GRANTED THE REGISTRATION UNDER SECTION 12AA OF THE ACT. 4. IN REPLY THE LEARNED DR SUBMITTED THAT THE ASSE SSEE WAS UNABLE TO PROVE ITS CHARITABLE ACTIVITIES AND CONSEQUENTLY THE LEAR NED DIT WAS RIGHT IN DENYING THE ASSESSEE THE REGISTRATION UNDER SECTION 12AA. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED DIT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE HA VE ALSO PERUSED THE ORDER OF THE LEARNED DIT AS ALSO THE QUESTIONNAIRE ISSUED BY THE LEARNED DIT AND THE REPLIES GIVEN BY THE ASSESSEE. AT THE OUTSET W E MAY MENTION HERE THAT IN THE ORDER OF THE LEARNED DIT THE LEARNED DIT HAS SP ECIFICALLY RECORDED THAT THE ASSESSEE HAS FILED AN APPLICATION IN FORM NO. 10A F OR REGISTRATION U/S 12AA AND I.T.A. NO.1891/MDS/2010 5 FORM NO.10G FOR APPROVAL U/S 80G OF THE ACT. WE MA Y MENTION HERE THAT THE ASSESSEE HAS FILED ONLY ONE APPEAL AGAINST THE ORDE R REFUSING TO GRANT THE REGISTRATION UNDER SECTION 12AA. CONSEQUENTLY WE ARE ADJUDICATING ONLY UPON THE DECISION OF THE LEARNED DIT IN REFUSING TO GRAN T REGISTRATION U/S. 12AA. A PERUSAL OF THE ORDER OF THE LEARNED DIT IN PAGE 2 S HOWS THAT THE LEARNED DIT HAS RECOGNIZED THAT UNDER THE PROVISIONS OF SECTION 12A A THE CIT/DIT IS TO BE SATISFIED BOTH ON THE OBJECTS AND GENUINENESS OF TH E ACTIVITIES SIMULTANEOUSLY UNDER CLAUSE (B) OF SECTION 12AA. HE THEN PROCEEDS TO HOLD THAT THE OBJECTS OF THE ASSESSEE TRUST MAY BE PURELY CHARITABLE BUT THE ACTIVITIES HAVE NOT YET STARTED. THE LEARNED DIT HAS CONSEQUENTLY DENIED T HE REGISTRATION U/S 12AA ON THE GROUND THAT THE ASSESSEE TRUST HAS NOT STARTED ANY SIGNIFICANT ACTIVITY. THIS LEADS US TO THE PRESUMPTION THAT THE LEARNED DIT IS OF THE VIEW THAT THE OBJECTS OF THE ASSESSEE TRUST ARE PURELY CHARITABLE. FURTH ER A PERUSAL OF THE ORDER OF THE LEARNED DIT AT PAGE 1 PARA 4 SHOWS THAT THE LEARNED DIT WAS AWARE OF THE FACT THAT THE ASSESSEE TRUST IS LOOKING OUT FOR A SUITAB LE LAND TO ESTABLISH A SCHOOL. A PERUSAL OF THE REPLY GIVEN BY THE ASSESSEE ALONG WI TH THE ENCLOSURES DATED 27- 08-2010 SHOWS THAT IT WAS BROUGHT TO THE ATTENTION OF THE LEARNED DIT THAT THE INTENTION IS TO RUN A SCHOOL AND THAT THE TRUSTEE I S A COMPETENT PERSON TO RUN SUCH A SCHOOL AND THE TIME FRAME FOR THE ACTIVITIES HAD ALSO BEEN LAID DOWN AND PROVISIONAL SANCTION FOR THE TERM LOAN HAD ALSO BE OBTAINED FROM THE BANKS FOR STARTING THE SCHOOL. A PERUSAL OF THE TRUST DEED A LSO CLEARLY SHOWS THAT THE I.T.A. NO.1891/MDS/2010 6 OBJECTS OF THE TRUST ARE TO START OPEN FOUND EST ABLISH ASSIST AND MAINTAIN SCHOOLS COLLEGES BOARDING SCHOOLS AND OTHER EDUCA TIONAL INSTITUTIONS FOR IMPARTING KNOWLEDGE. THE ACTIVITIES WHICH HAVE BEE N DONE BY THE TRUSTEES IN THE FORM OF LOOKING FOR THE LAND IDENTIFYING THE LAND SENDING THE PAPERS FOR LEGAL VERIFICATION OBTAINING THE PROVISIONAL SANCTION FO R THE PURCHASE OF THE LAND ARE ALL FOR THE PURPOSE OF ATTAINING THE OBJECT BEING RUNNI NG AN EDUCATIONAL INSTITUTION. IN THESE CIRCUMSTANCES IT CANNOT BE SAID THAT THE A SSESSEE HAS DONE NO ACTIVITY WHICH CAN BE EXAMINED AS HAS BEEN MENTIONED BY THE LEARNED DIT. IN FACT THE ACTIVITIES THAT HAVE BEEN DONE ARE ACTUALLY THE ACT IVITIES FOR ATTAINING THE OBJECTS SPECIFIED IN THE TRUST DEED. THE LEARNED DIT AS W E HAVE MENTIONED EARLIER HAS NOT RAISED ANY OBJECTION AGAINST THE OBJECTS OF THE TRUST. IN FACT IT IS OTHERWISE. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE ASSESSEE TRUST IS ENTITLED TO THE REGISTRATION U/S 12AA INSOFAR AS ITS OBJECTS AR E PURELY CHARITABLE AND THE ACTIVITIES CONDUCTED BY IT CLEARLY SHOW THAT THEY A RE FOR THE PURPOSE OF ATTAINING THE OBJECTS OF THE TRUST AND THE GENUINENESS OF THE SAME HAVE NOT BEEN SHOWN TO BE OTHERWISE. WE MAY MAKE A MENTION HERE THAT THE FACT THAT THE ASSESSEE HAS BROUGHT OUT THE REASON FOR MAKING ITS APPLICATI ON THAT IT WOULD GET THE BENEFIT OF 50% EXEMPTION FROM THE STAMP DUTY ITSELF SHOWS THE BONA FIDES OF THE ASSESSEE TRUST. IN ANY CASE AS PER THE PROVISIONS OF SECTION 12AA(3) THE LIBERTY IS AVAILABLE TO THE LEARNED DIT TO WITHDRAW THE EXEMPT ION IF IT IS FOUND THAT THE ASSESSEE TRUST IS NOT DOING GENUINE CHARITABLE ACTI VITY. IN THE CIRCUMSTANCES THE I.T.A. NO.1891/MDS/2010 7 LEARNED DIT IS DIRECTED TO GRANT THE ASSESSEE THE R EGISTRATION U/S. 12AA OF THE ACT AS CLAIMED BY THE ASSESSEE. IN THE CIRCUMSTANCE S THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. THE ORDER WAS PRONOUNCED IN THE COURT ON 03-01-2 011. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI DATED THE 03 RD JANUARY 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE