Tapovana Charitable Trust, Bangalore v. DIT, Bangalore

ITA 377/BANG/2009 | misc
Pronouncement Date: 22-01-2010 | Result: Allowed

Appeal Details

RSA Number 37721114 RSA 2009
Bench Bangalore
Appeal Number ITA 377/BANG/2009
Duration Of Justice 8 month(s) 28 day(s)
Appellant Tapovana Charitable Trust, Bangalore
Respondent DIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 22-01-2010
Date Of Final Hearing 18-01-2010
Next Hearing Date 18-01-2010
Assessment Year misc
Appeal Filed On 24-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH BANGALORE BEFORE SHRI K.P.T.THANGAL VICE PRESIDENT AND SHRI N.L.KALRA AM ITA NOS.377 & 378(BANG.)/2009 (ASSESSMENT YEARS : N.A) M/S TAPOVANA CHARITABLE TRUST NO.5 1 ST CROSS NAGAPPA REDDY LAYOUT B.NARAYANAPURA BANGALORE-560 016 APPELLANT VS THE DIRECTOR OF INCOME-TAX(E) 3 RD FLOOR R. BUILDINGS QUEENS ROAD BANGALORE-560 001. R ESPONDENT APPELLANT BY : SHRI H.GURUSWAMY REVENUE BY : SHRI JASON P BOAZ O R D E R PER SHRI N.L.KALRA AM: THE ASSESSEE HAS FILED BOTH THESE APPEALS AGAINST THE ORDER OF THE LEARNED DIT(E) BANGALORE DATED 25-03-2009 DEN YING REGISTRATION U/S 12AA OF THE IT ACT AND AGAINST THE ORDER OF LEA RNED DIT(E) IN NOT GRANTING APPROVAL U/S 80G OF THE IT ACT. 2. FIRST WE WILL TAKE UP THE APPEAL AGAINST THE OR DER OF DIT(E) VIDE WHICH THE LEARNED DIT(E) HAS REJECTED THE APP LICATION OF THE ASSESSEE U/S 12AA OF THE IT ACT. BEFORE THE LEARNED DIT(E) THE ITA NOS.377 & 378(B)/09 2 ASSESSEE HAS FILED THE DETAILS IN WHICH IT WAS SUBM ITTED THAT THE ASSESSEE WAS ENGAGED IN THE ACTIVITY OF CONDUCTING FREE SANSKRIT AND ASTROLOGY EDUCATION TO A NUMBER OF STUDENTS. THE AS SESSEE ALSO ENCLOSED THE RELEVANT LIST OF THE SAID STUDENTS WHO ARE BEING PROVIDED FREE EDUCATION. IN ORDER TO VERIFY THE VERACITY OF THE CLAIM OF THE ACTIVITY CONDUCTED BY THE ASSESSEE THE INSPECTOR O F THE DEPARTMENT WAS DEPUTED BY THE DIT(E) TO MAKE ENQUIRY. AS PER THE REPORT THERE WERE NO EVIDENCE OF ANY ACTIVITY BEING CONDUCTED IN THE PREMISES AS CLAIMED BY THE ASSESSEE. THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO EXPLAIN VIDE LETTER DATED 11-03-2009. THE ASSESSE E FAILED TO OFFER ANY EXPLANATION WITH REGARD TO THE ABSENCE OF ANY A CTIVITIES. THEREFORE LEARNED DIT(E) DID NOT ALLOW REGISTRATIO N TO THE ASSESSEE. 3. AGAINST THE FINDING OF LEARNED DIT(E) IN NOT GRANTING THE REGISTRATION TO THE ASSESSEE THE ASSESSEE HAS FILE D AN APPEAL BEFORE US. THE LEARNED AR HAS FILED WRITTEN SUBMISSION. I N THE WRITTEN SUBMISSION IT IS MENTIONED THAT THE ASSESSEE WAS N OT MADE KNOWN OF THE ENQUIRY CONDUCTED BY THE INSPECTOR OF THE DE PARTMENT. THE ENQUIRY WAS CONDUCTED AT THE BACK OF THE ASSESSEE. SUCH ENQUIRY CANNOT BE RELIED AGAINST THE ASSESSEE WITHOUT GIVIN G OPPORTUNITY AND FOR SUCH PROPOSITION. THE LEARNED AR HAS RELIED ON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF ADARSH A VIDYANIDHI TRUST VS CIT(2007) 292 ITR 465. THE LEARNED AR FUR THER RELIED ON ITA NOS.377 & 378(B)/09 3 THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF FIFTH GENERATION EDUCATION SOCIETY VS CIT(1990) 185 ITR 634 VIDE WHICH IT HAS BEEN HELD THAT IT IS NOT THE REQUIREMENT OF SEC.12A OF THE IT ACT TO VERIFY THAT ACTIVITY CARRIED ON BY THE CHARITABL E SOCIETY SHOULD BE ASCERTAINED. ON THE OTHER HAND LEARNED DR HAS SUP PORTED THE ORDER OF THE LEARNED DIT(E). 4. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF FIFTH GENERATION EDUCATION SOCIETY VS CIT VIDE DECISION DATED MAY 10 1990 HELD THAT IT IS NOT THE REQUIREMENT OF SEC.12A OF THE ACT THAT ANY ACTIVITY SHOULD BE CARRIED ON BY THE CHARITABLE SOCIETY FOR OBTAINING REGISTRATION. IT IS NOW MENTIONED IN THE SEC.12AA THAT THE AUTHORITY GRANTING REGISTRATION CAN CALL FOR SUCH D OCUMENT OR INFORMATION TO SATISFY HIMSELF ABOUT THE GENUINENES S OF THE TRUST OR INSTITUTION. SUCH AUTHORITY MAY MAKE ENQUIRY AS HE MAY DEEM NECESSARY IN THIS BEHALF. IN VIEW OF THE AMENDED P ROVISIONS OF SEC.12AA INTRODUCED BY THE FINANCE ACT 1996 IT IS CLEAR THAT THE AUTHORITY GRANTING REGISTRATION CAN VERIFY THE GENU INENESS OF ACTIVITY OF TRUST. THE DECISION OF THE HONBLE ALLAHABAD HIG H COURT IS NOT APPLICABLE IN VIEW OF INSERTION OF SEC.12AA WHICH C AME IN THE STATUTE BOOK AFTER THE DECISION OF ALLAHABAD HIGH COURT. 5. THE JURISDICTIONAL HIGH COURT IN THE CASE OF SA NJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS DIRECTOR OF INCOME-TAX(E) ITA NOS.377 & 378(B)/09 4 HAD AN OCCASION TO DECIDE AS TO WHAT IS REQUIRED TO BE DONE BY THE COMMISSIONER FOR DECIDING THE ISSUE OF REGISTRATIO N OF THE TRUST OR INSTITUTION. THE HONBLE JURISDICTIONAL HIGH COURT OBSERVED AS UNDER; WHAT HE IS EXPECTED TO DO ON RECEIPT OF SUCH AN APPLICATION IS HE SHALL CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST IN ORDER TO SATISFY HIMS ELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUS T OR INSTITUTION. IN ADDITION TO SECURING INFORMATION IN THE AFORESAID MANNER IT IS OPEN TO THE COMMISSIONER TO MAKE SUCH ENQUIRIES AS HE DEEMS NECESSARY IN HIS BEHALF. HAVING REGARD TO THE SCHEME OF SECTIONS 11 12 AND 13 ULTIMATELY WHAT THE COMMISSIONER HAS TO LOOK INTO IS NOT THE SOURCE OF INCOME TO THE TRUST BUT WHETHER SUCH INCOME IS APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES. THE SATISFACTION OF THE COMMISSIONER SHOULD BE REGARDING THE APPLICATION OF THE INCOME OF THE TRUST FOR THE AFORESAID PURPOSES WHICH ONLY ENTITLES THE ASSESSEE TO CLAIM EXEMPTION . FOR ARRIVING AT SUCH SATISFACTION PRIMARILY HE HAS TO LOOK AT THE OBJECT OF THE TRUST WHEN THE SAME IS REDUCED INTO WRITING IN THE FORM OF TRUST DEED. IF ON THE DATE OF THE APPLICATION THE TRUST HAS RECEIVED INCOME FROM ITS PROPERTY THEN FIND OUT HOW THE SAID INCOME HAS BEEN EXPENDED AND WHETHER IT CAN BE SAID THT THE INCOME IS UTILIZED TOWARDS CHARITABLE AND RELIGIOUS PURPOSES I.E TOWARDS THE OBJECT OF THE TR UST. THEREFORE FOR THE PURPOSES OF REGISTRATION U/S 12A A OF THE ACT WHAT THE AUTHORITIES HAVE TO SATISFY IS TH E ITA NOS.377 & 378(B)/09 5 GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTI TUTION AND HOW THE INCOME DERIVED FROM THE TRUST PROPERTY IS APPLIED TO CHARITABLE OR RELIGIOUS PURPOSE AND NOT THE NATURE OF THE ACTIVITY BY WHICH THE INCOME WAS DERI VED BY THE TRUST. SUB-SECTION(3) OF SECTION 12AA OF THE ACT PROVIDES THAT WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANT ED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION(1) AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GEN UINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION AS THE CASE MA Y BE HE SHALL PASS AN ORDER IN WRITING CANCELING THE REGISTRATION OF SUCH TRUST OR INSTITUTION. THEREFOR E SUFFICIENT SAFEGUARD IS PROVIDED UNDER THE ACT FOR CANCELLATION OF REGISTRATION OBTAINED BY THE ASSESS EE IN THE EVENT OF ITS MISUSING THOSE PROVISIONS. 6. HENCE FOR ASCERTAINING THE GENUINENESS OF THE ACTIVITIES OF THE TRUST FOR THE PURPOSE OF REGISTRATION U/S 12AA THE AUTHORITIES HAVE TO SEE HOW THE INCOME DERIVED FROM THE PROPERT Y IS APPLIED TO CHARITABLE OR RELIGIOUS PURPOSE. IT IS ALSO NOTICE D THAT THE LEARNED DIT(E) HAS NOT GIVEN COPY OF THE REPORT OF THE INSP ECTOR TO THE ASSESSEE TO EXPLAIN AS TO HOW THE REPORT OF THE INS PECTOR IS FACTUALLY CORRECT OR OTHERWISE. THEREFORE WE FEEL THAT THE ISSUE OF REGISTRATION U/S 12AA IS REQUIRED TO BE RECONSIDERED BY THE LEAR NED DIT(E) BY ITA NOS.377 & 378(B)/09 6 APPLYING THE PROPOSITION AS LAID DOWN BY THE HONBL E JURISDICTIONAL HIGH COURT. 7. IN THE RESULT THE ORDER OF DIT(E) IS SET ASIDE TO BE MADE AGAIN. 8. SINCE LEARNED DIT(E) HAS NOT GRANTED APPROVAL U /S 80G ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN GIVEN REG ISTRATION U/S 12AA AND SINCE WE HAD ALREADY SET ASIDE THE ORDER O F DIT(E) U/S 12AA AND THEREFORE LEARNED DIT(E) WILL PASS AN ORD ER FOR DECIDING TO ALLOW APPROVAL U/S 80G AFTER TAKING A DECISION ON T HE ISSUE OF REGISTRATION OF THE TRUST. 9. IN THE RESULT BOTH THE APPEALS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 22-01-20 10. (K.P.T.THANGAL (N.L.KALRA) VICE PRESIDENT ACCOUNTANT MEMBER PLACE: BANGALORE DATED: 22-01-2010 AM* COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR 6. GF(BLORE) 7. GF(DELHI) BY ORDER AR ITAT BANGALORE