Lala Chet Ram Memorial Trust, Faridabad v. CIT, Faridabad

ITA 3404/DEL/2010 | misc
Pronouncement Date: 23-09-2011 | Result: Dismissed

Appeal Details

RSA Number 340420114 RSA 2010
Bench Delhi
Appeal Number ITA 3404/DEL/2010
Duration Of Justice 1 year(s) 2 month(s) 11 day(s)
Appellant Lala Chet Ram Memorial Trust, Faridabad
Respondent CIT, Faridabad
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 23-09-2011
Date Of Final Hearing 13-09-2011
Next Hearing Date 13-09-2011
Assessment Year misc
Appeal Filed On 12-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I NEW DELHI) BEFORE SHRI U.B.S. BEDI JUDICIAL MEMBER AND SHRI B.K. HALDAR ACCOUNTANT MEMBER I.T.A. NO.3404 & 3405/DEL/2010 LALA CHET RAM MEMORIAL CIT TRUST HOUSE NO.1265 NEW CGO BLDG. SECTOR-19 FARIDABAD. V. NH-IV FARIDABAD. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAATL AAATL AAATL AAATL- -- -6808 6808 6808 6808- -- -M MM M APPELLANT BY : SHRI G.D. MITTAL ADVOCATE. RESPONDENT BY : SHRI ROHIT GARG SR. DR. ORDER PER B.K. HALDAR AM: THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINST THE RESPECTIVE ORDERS OF THE LD CIT FARIDABAD REFUSING RE GISTRATION U/S 12AA(1)(B)(II) OF THE ACT AND REFUSING APPROVAL U/S 8 0G (5) OF THE ACT RESPECTIVELY. FOR THE SAKE OF CONVENIENCE BOTH THESE APPEALS ARE BEING DISPOSED OFF BY THIS COMMON ORDER. I.T.A. NO. 3404/DEL/2010: I.T.A. NO. 3404/DEL/2010: I.T.A. NO. 3404/DEL/2010: I.T.A. NO. 3404/DEL/2010: 2. IN THIS APPEAL THE ASSESSEE HAS TAKEN FOLLOWING GROUN DS OF APPEALS:- ITA NO3404 & 3405/DEL/10 2 1. THAT THE LD CIT ERRED IN PASSING U/S 12AA(1)(B)(II) OF THE INCOME TAX ACT 1961 WITHOUT AFFORDING REASONABLE OPPORTUNI TY OF BEING HEARD IN SPITE OF SPECIFIC REQUEST MADE TO THE CIT. 2. THAT THE CIT IN FACTS AND LAW ERRED IN REFUSING REGIST RATION U/S 12AA(1)(B)(II) OF THE INCOME TAX ACT 1961. 3. THAT THE APPELLANT CRAVE TO LEASE ADD ALTER AMEND OR SUBSTITUTE ANY GROUND OF APPEAL EITHER BEFORE OR AT THE TIME O F HEARING OF APPEAL. 3. AT THE TIME OF HEARING THE LD AR FOR THE ASSESSEE HA S WITHDRAWN GROUND NO.1 OF GROUNDS OF APPEAL. THUS THIS GROUND IS REJECTED AS WITHDRAWN. THE ASSESSEE THEREFORE IS CONTESTING REFUSAL OF REGISTRATION U/S 12AA(1)(B)(II) OF THE ACT BY THE LD CIT ON MERIT. 4. THE ASSESSEE FILED AN APPLICATION U/S 12A(A) OF THE A CT ON 29.11.2009. IN THE SAID APPLICATION IN FORM NO.10A IT WAS STATED THAT THE DATE OF CREATION OF THE TRUST WAS 6.11.2008. THE LD. CIT MADE CERTAIN ENQUIRIES AND THEREAFTER GIVING OPPORTUNITY TO THE ASSESSEE REFUSED THE REGISTRATION ON FOLLOWING GROUNDS:- 1) CLAUSE 6(A) OF THE TRUST DEED WHICH STIPULATES IMPARTIN G OF TRAINING FOR ANY ENTRANCE/COMPETITIVE TESTS ALL INDI A OR STATE SERVICES EXAMINATIONS OR FOR ADMISSION TO PROFESSIONAL OR OTHER EDUCATIONAL INSTITUTES WOULD NOT FALL WITHIN THE MEAN ING OF THE WORD EDUCATION AS EXPLAINED BY THE HON'BLE SUPREME COURT IN THE CASE OF SOLE TRUSTEE LOKA SHIKSHAANA TRUST V. CIT REPORTED IN 101 ITR 234 (SC). THUS THIS OBJECT WOULD NOT FAL L WITHIN THE MEANING OF CHARITABLE PURPOSE AS DEFINED IN SECTION 2(15) OF THE ACT. ITA NO3404 & 3405/DEL/10 3 2) CLAUSE 6(B) OF THE TRUST DEED STIPULATES SUPPLYING OF M EDICAL EQUIPMENTS MEDICINES SURGICAL EQUIPMENTS ETC. THIS OBJ ECT IS LIKE THAT OF THE OBJECT OF ANY COMMERCIAL BUSINESS CON CERN. CARRYING ON SUCH ACTIVITY WOULD NOT FALL WITHIN THE MEANING OF MEDICAL RELIEF AS MENTIONED IN SECTION 2(15) OF THE ACT. 3) CLAUSE 6(D) OF THE TRUST DEED STIPULATES MANY AIMS UNDE R THE HEAD OTHER OBJECTS OF GENERAL PUBLIC UTILITY. HO WEVER AS PER SECTION 2(15) OF THE ACT THERE CAN BE ONLY ONE SUCH OBJECT. MULTIPLICITY OF OBJECT IS NOT PERMITTED. THE ACTIVIT Y PERMITTED AS PER CLAUSE 6(D)(III) CLEARLY AUTHORIZES BUSINESS ACTIVIT Y WHICH IS REPUGNANT TO PROVISO TO SECTION 2(15) OF THE ACT. 4) CLAUSE 8(10) OF THE TRUST DEED AUTHORIZES INVESTMENT OF TRUST FUNDS IN ANY SECURITIES AUTHORIZES BY THE INDIAN AND TR USTS ACT 1882. THE SAID ACT GOVERNS ONLY PRIVATE TRUST. AS A PU BLIC CHARITABLE TRUST THE ASSESSEE IS NOT ENTITLED TO INVEST T RUST FUNDS IN SUCH SECURITIES. AGGRIEVED THE ASSESSEE HAS FILED APP EAL BEFORE THE TRIBUNAL. 5. BEFORE US LD AR FOR THE ASSESSEE HAS REITERATED THE SU BMISSIONS MADE BEFORE THE LD CIT. REFERRING TO VARIOUS ARTICLE S AND CLAUSES OF THE TRUST DEED IT WAS CONTENDED BY HIM THAT THE TRUST WA S NOT FORMED FOR PROFIT AND ALL THE OBJECTS OF THE TRUSTS ARE CHARITABL E IN NATURE. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: 1. CITY MONTENSSARI SCHOOL (REGD.) V. UNION OF INDIA 315 ITR 48 (ALLD.). 2. ADITNAR EDUCATIONAL INSTITUTION ETC. V. ADDL. CIT 224 ITR 310 (SC). ITA NO3404 & 3405/DEL/10 4 6. THE LD DR ON THE OTHER HAND RELIED ON THE ORDE R OF LD CIT. IT WAS SUBMITTED BY HIM THAT THE OBJECTS OF THE TRUST WERE NO T CHARITABLE IN NATURE. IT WAS FURTHER SUBMITTED BY HIM THAT THE CASE LAWS RELIED ON BY THE LD AR FOR THE ASSESSEE WERE NOT APPLICABLE ON THE FACTS OF THE CASE AS IN THOSE CASES THE ASSESSEES WERE ALREADY RUNNING SOME EDUCATIONAL INSTITUTION WHEREAS THE ASSESSEE HAS NOT EVEN TAKEN ANY STEP TO SET UP ANY INSTITUTION. IT WAS THEREFORE CON TENDED BY HIM THAT THE ORDER OF LD CIT BE CONFIRMED.. 7. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. WE HAVE ALSO GONE THROUGH THE CASE LAWS RELIED ON BY BOTH THE PART IES. WE FIND THAT THERE IS NO SPECIFIC ACT APPLICABLE TO THE STATE OF H ARYANA WITH RESPECT TO PUBLIC CHARITABLE TRUST. THE INDIAN TRUST ACT 18 82 IS THE LAW RELATING TO PRIVATE TRUST AND TRUSTEES ONLY. HOWEVER THE PUBL IC CHARITABLE TRUSTS ARE FORMED UNDER GENERAL LAW WITH GUIDANCE DR AWN FROM THE INDIAN TRUST ACT 1882. . IN THE PRESENT CASE THE TRUST DEED HAS BEEN DRAWN UP ON 6.11.2008. THUS THE APPLICATION FOR RE GISTRATION IN FORM NO.10A SHOULD HAVE BEEN MADE U/S 12A(AA) OF THE ACT. HOWEVER WE FIND THAT SUCH APPLICATION WAS MADE BY THE ASSESSEE U/S 12 A(A) WHICH SECTION CEASED TO OPERATE W.E.F. 1.6.2007. THE ASSESSEE H AS ALSO SHOWN THAT IT HAD SPENT AN AGGREGATE AMOUNT OF `.33 0 00/- TILL 31.3.2009 ON DONATION GIVEN TO THE FOLLOWING PARTIE S:- 1. SHRI SHYAM JI TRADER. `.11 000/- 2. STUDIO 90. `.11 000/- 3. SHRI KUNJ BEHARI ASHRAM. `.11 000/- 8. AS PER THE EVIDENCE ON RECORD NONE OF THE ABOVE PARTIES HAVE REGISTRATION U/S 12AA OF THE ACT. THE ASSESSEE HAS ALSO SHO WN EXPENSES FOR THE FINANCIAL YEAR 2009-2010 TOWARDS DONA TION AS UNDER:- ITA NO3404 & 3405/DEL/10 5 1. ROTARY CLUB OF FARIDABAD MID-TOWN. `.11 000/- 2. SHIRDI SAI BABA TEMPLE SOCIETY `.11 000/- 3. SHRI GOPAL GAUSHALA REGD. `.15 000/- 9. THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE AB OVE CONCERNS WERE REGISTERED U/S 12AA OF THE ACT. OTHER THAN THE ABOVE ACTIVITIES THE ASSESSEE DID NOT UNDERTAKE ANY CHARITABLE ACTIVITY. IT HAS ALSO NOT SHOWN THAT IT WAS LIKELY TO TAKE STEPS TO START SOME CHAR ITABLE ACTIVITIES. 10. THE OBJECTS OF THE TRUST ARE REFLECTED IN ARTICLE 6 OF THE TRUST DEED. THERE IS AN OMNIBUS CLAUSE WITH REFERENCE TO THE OBJECTS OF THE TRUST WHICH READS AS UNDER:- SO HOWEVER THE OBJECTS SET OUT ABOVE WILL BE SUBJEC T TO THE FOLLOWING RESTRICTIONS. (I) THERE WILL BE NO PROFIT MOTIVE WHATSOEVER AND ALL ITS ACTIVITIES WOULD BE PROMPTED SOLELY BY SERVICE MOTIVE. FOR PUBLI C AND CHARITABLE PURPOSES. (II) THE BENEFIT IS INTENDED FOR THE PUBLIC AT LARGE WITHOUT ANY DISCRIMINATION OF ANY CASTE CREED COLOR PLACE OR R ELIGION. (III) THE TRUST WILL NOT EMBARK ON ANY BUSINESS NOR ACT IVITY UNRELATED TO ITS OBJECTS. (IV) IF ANY OF THE OBJECTS ABOVE IS FOUND TO BE INCON SISTENT WITH THE OBJECT OF PUBLIC CHARITABLE INSTITUTIONS EXEMPT F ORMERLY U/S ITA NO3404 & 3405/DEL/10 6 10(22) (22A) AND NOW U/S 10(23C) OR 11 OR THE INCOM E TAX ACT 1961 OR ANY OTHER LAW APPLICABLE TO PUBLIC TRUST AS NOW ENACTED OR AS MAY BE AMENDED FROM TIME TO TIME OR ANY NEW E NACTMENT RELATING TO PUBLIC TRUSTS THEY WILL BE TREATED AS MOD IFIED TO ACCORD WITH SUCH LAW SO THAT ANY CONCESSIONS PRIVILEGE S CONDITIONS OR REGULATIONS AVAILABLE TO AND APPLICABLE TO SUCH PUBLIC CHARITABLE INSTITUTIONS WILL BE AVAILABLE OR APPLICABLE TO THIS TRUST AS WELL SO THAT THIS TRUST WILL CONTINUE TO RETAIN ITS CHARACTER AS A PUBLIC CHARITABLE INSTITUTION WITHOUT PROFIT MOT IVE WITH PUBLIC CHARACTER WITHIN THE MEANING OF ALL SUCH LAWS. 11. IT IS THE CONTENTION OF THE ASSESSEE THAT IN VIEW OF THE ABOVE THE OBJECTS OF THE TRUST SHOULD BE CONSIDERED AS CHARITABLE. 12. THE CASE LAWS WHICH HAVE BEEN SPECIFICALLY RELIED ON BY THE ASSESSEE ARE CITY MONTESSARI SCHOOL AND ADITNAR EDUCATION AL INSTITUTION (SUPRA). BOTH THESE CASES RELATE TO EXEMPTION U/S 10(22) /10(23C) OF THE ACT. THE ASSESSMENT YEAR INVOLVED IN THE CITY MONT ESSARI SSCHOOLS CASE WAS ASSESSMENT YEAR 1999-00 TO 2001-02. IN THE CASE OF ADITNAR EDUCATIONAL INSTITUTION THE ASSESSMENT YEARS INVOLVED WER E 1963-64 TO 1967-68 1971-72 TO 1974-75 AND 197-78 TO 1980-81. THE MAIN CRITERIA ON WHICH EXEMPTION UNDER THE SAID SECTION DEPENDED WA S AS TO WHETHER THE EDUCATIONAL INSTITUTION EXISTED SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. THE CONDI TIONS WHICH WERE REQUIRED TO BE SATISFIED FOR THE PURPOSE OF EXEMPTIO N U/S 10(22) OF THE ACT ARE NOT THE SAME AS THE CONDITIONS WHICH ARE REQU IRED TO BE FULFILLED BY A PUBLIC CHARITABLE TRUST FOR GETTING R EGISTRATION U/S 12AA OF THE ACT. ITA NO3404 & 3405/DEL/10 7 13. THE DEFINITION OF CHARITABLE PURPOSE AS PER SECTI ON 2(15) OF THE ACT AS APPLICABLE DURING THE RELEVANT PREVIOUS YEAR I S REPRODUCED HEREUNDER:- SECTION 2(15) SECTION 2(15) SECTION 2(15) SECTION 2(15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR EDU CATION MEDICAL RELIEF PRESERVATION OF ENVIRONMENT (INCLUDI NG WATER SHEDS FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMEN TS OR PLACES OR OBJECTS OR ARTISTIC OR HISTORIC INTEREST AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY. PROVIDED: THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSES IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RE LATION TO ANY TRADE COMMERCE OR BUSINESS FOR A CESS OR FEE OR AN Y OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE OR AP PLICATION OR RETENTION OF THE INCOME FROM SUCH ACTIVITY. PROVIDED FURTHER: THAT THE FIRST PROVISO SHALL NOT APP LY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES R EFERRED TO THEREIN IS TEN LAKH RUPEES OR LESS IN THE PREVIOUS YEAR. 14. THE LD CIT HAS RELIED ON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF SOLE TRUSTEE LOKA SIKHSANA TRUST (SUPRA) FOR TH E MEANING OF THE EXPRESSION EDUCATION USED IN SECTION 2(15) OF THE ACT. ON THIS BASIS IT WAS OPINED BY HIM THAT IMPARTING TRAINING TO PERSONS FOR APPEARING IN COMPETITIVE EXAMINATIONS CANNOT BE SAID TO BE IMPARTING EDUCATION. THUS IT WAS HELD BY HIM THAT PROVISION OF SUCH OBJECT IN THE ITA NO3404 & 3405/DEL/10 8 TRUST DEED WOULD MAKE THE TRUST INELIGIBLE FOR REGISTR ATION U/S 12AA OF THE ACT. THE ABOVE CHARGE OF THE LD CIT HAS NOT BEEN DISLODGED BY THE ASSESSEE. THE CASE LAWS RELIED UPON BY THE LD AR FOR THE ASSESSEE HAS NOT MODIFIED THE MEANING OF THE WORD EDUCATION USE D IN CLAUSE (15) OF THE SECTION 2 OF THE ACT AS EXPLAINED BY THE HON' BLE APEX COURT IN THE CASE OF SOLE TRUSTEE LOKA SIKHSANA TRUST (SUPRA). TH IS OBJECT IS ALSO NOT SUBSERVIENT TO THE OBJECT OF IMPARTING NORMAL EDUCATION. THE ASSESSEE HAS ALSO NOT MODIFIED THE TRUST DEED AS PER THE OB JECTION RAISED BY THE LD CIT. WE THEREFORE HOLD THAT THE L D CIT WAS JUSTIFIED IN HOLDING THAT THE SAID OBJECT OF THE TRUST WAS NOT CHA RITABLE AS PER THE PROVISIONS OF THE ACT. 15. AS REGARDS THE OBJECT OF THE CLAUSE 6 (B) OF THE T RUST DEED WE FIND THAT THE OBJECTS MENTIONED THEREIN ARE NOT INTE R DEPENDENT. IF THE OBJECTS MENTIONED THEREIN WERE SUBSERVIENT TO THE MAIN OBJECT OF PROVIDING MEDICAL RELIEF TO THE PUBLIC AT LARGE IT COULD BE SAID THAT THE OBJECT OF THE TRUST WAS CHARITABLE IN NATURE. HOWEVE R AS IT IS NOT SO WE ARE OF THE CONSIDERED OPINION THAT THE OBJECTION RAISED BY THE LD CIT IS QUITE JUSTIFIED. 16. AS REGARDS THE OTHER TWO OBJECTIONS RAISED BY THE L D CIT WE FIND THAT CLAUSE 8(10) IS ONLY WITH REFERENCE TO POWER OF BOARD OF TRUSTEES. THE SAME DOES NOT RELATE TO THE OBJECTS OF THE TRUST A ND THEREFORE WOULD NOT BE RELEVANT FOR GRATING REGISTRATION U/S 12 AAA OF THE ACT. WE ALSO DO NOT FIND ANY MERIT IN THE OBJECTION RAISED BY THE LD CIT WITH REFERENCE TO OTHER OBJECTS OF GENERAL PUBLIC UTILITY . 17. LOOKING AT THE FACTUAL POSITION NARRATED BY US I N THE EARLIER PART OF THIS ORDER AND OUR FINDING WITH REFERENCE TO THE FIRST TWO OBJECTIONS ITA NO3404 & 3405/DEL/10 9 RAISED BY THE LD CIT WE ARE OF THE CONSIDERED OPINI ON THAT REGISTRATION U/S 12AA OF THE ACT WAS RIGHTLY REJECTED BY THE LD C IT. 18. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMISSED. I.T.A. NO.3405/DEL/2010: I.T.A. NO.3405/DEL/2010: I.T.A. NO.3405/DEL/2010: I.T.A. NO.3405/DEL/2010: 19. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEA LS:- 1. THAT THE LD CIT ERRED IN LAW AND FACTS OF THE CASE IN REFUSING EXEMPTION U/S 80G(5) OF THE INCOME TAX ACT 1961 TO THE ASSESSEE TRUST. 2. THAT THE ASSESSEE CRAVE TO LEAVE ALTER AMEND OR SUBSTI TUTE OF ANY GROUND OF APPEAL EITHER BEFORE OR AT THE TIME O F HEARING. 20. AS WE HAVE ALREADY UPHELD THE REJECTION OF REGIST RATION U/S 12A(A) OF THE ACT BY LD CIT WE DISMISS THIS APPEAL FIL ED BY THE ASSESSEE. 21. IN THE RESULT THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. 22. ORDER PRONOUNCED IN THE OPEN COURT ON THE 23RD DAY OF SEPTEMBER 21 2011 SD/- SD/- (U.B.S. BEDI) (B.K. HAL DAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 23.9.2011. HMS COPY FORWARDED TO:- 1. THE APPELLANT ITA NO3404 & 3405/DEL/10 10 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DEL HI. TRUE COPY. BY ORDER (ITAT NEW DELHI). DATE OF HEARING DATE OF DICTATION DATE OF ORDER SIGNED BY THE HON'BLE MEMBER. DATE OF ORDER SENT TO THE CONCERNED BENCH ITA NO3404 & 3405/DEL/10 11