Prestige Foundation, Bangalore v. DIT(Exemptions), Bangalore

ITA 716/BANG/2009 | misc
Pronouncement Date: 22-01-2010 | Result: Allowed

Appeal Details

RSA Number 71621114 RSA 2009
Bench Bangalore
Appeal Number ITA 716/BANG/2009
Duration Of Justice 6 month(s) 5 day(s)
Appellant Prestige Foundation, Bangalore
Respondent DIT(Exemptions), 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
Assessment Year misc
Appeal Filed On 17-07-2009
Judgment Text
ITA.716/BANG/2009 PAG E - 1 IN THE INCOME-TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A' BEFORE SHRI. K. P. T. THANGAL VICE PRESIDENT AND SHRI. N. L. KALRA ACCOUNTANT MEMBER I.T.A.NO.716/BANG/2009 (ASSESSMENT YEAR : NA) M/S. PRESTIGE FOUNDATION THE FALCON HOUSE NO.1 MAIN GUARD CROSS ROAD BANGALORE 560 001 .. APPELLANT V. DIRECTOR OF INCOME TAX (EXEMPTIONS) BANGALORE .. RESPONDENT APPELLANT BY : SHRI. H. N. KHINCHA RESPONDENT BY : SHRI. JASON P. BOAZ O R D E R PER K. P. T. THANGAL VICE PRESIDENT : IN THIS APPEAL BY THE ASSESSEE ALTHOUGH AS MANY A S FIVE GROUNDS HAVE BEEN URGED IN EFFECT THE ASSESSEE IS HAVING TWO MAIN OBJECTIONS. THE FIRST OBJECTION IS THE ORDER WAS P ASSED WITHOUT PROPER HEARING AND THE SECOND OBJECTION IS ON MERITS. THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) [DIT(E)] WENT WRONG IN REJE CTING THE ASSESSEE'S APPLICATION U/S.12A OF THE INCOME TAX AC T 1961 AND THEREFORE THE ORDER PASSED ON IMPROPER AND ERRONEO US APPLICATION AND UNDERSTANDING OF LAW IS LIABLE TO BE SET ASIDE. ITA.716/BANG/2009 PAG E - 2 2. THE FACTS LEADING TO THE DISPUTE BRIEFLY IS AS U NDER. THE ASSESSEE TRUST WAS CONSTITUTED BY A DEED DT.17.5.20 06. APPLICATION FOR REGISTRATION U/S.12AA(1)(B)(I) WAS FILED ON 21.3.20 07. MAINLY ON ACCOUNT OF THE OBJECT CLAUSES (D) AND (F) OF THE TR UST DEED AND ALSO CONSIDERING THAT THE ASSESSEE HAD NOT COMMENCED ITS ACTIVITIES APPLICATION U/S.12A WAS REJECTED BY THE DIT(E) VIDE ORDER NO.DIT(E)/12A/REJ-301/W-2/2007-08. DT/28.9.2007. T HE CLAUSES (D) AND (F) READ AS UNDER : (D) TO BUILD ERECT AND CONSTRUCT AND TO AID AND A SSIST IN THE BUILDING ERECTIONS AND CONSTRUCTION OF HOUS ES TENEMENTS AND PLACES OF RESIDENCE FOR THE POOR NEE DY AND DEFECTIVE WITHOUT ANY DISTINCTION FOR ANY CASTE CR EED OR RELIGION AND TO AFFORD THEM ALL COMFORTS AND AMENIT IES. (F) TO ASSIST AND CONTRIBUTE AND HELP IN WHATSOEVER MANNER THE RECONSTRUCTION REHABILITATION RENOVAT ION JEERNODDAR OF ANY ANCIENT RELIGIONS AND HOLY PLACE S SUCH AS MOSQUES TEMPLES SHRINES PRAYER HALLS UPASHRAYA ETC'. 3. AGGRIEVED BY THE ORDER OF THE DIT(E) DT.28.9.20 07 THE ASSESSEE APPROACHED THE TRIBUNAL. AFTER CONSIDERIN G THE ISSUE THE TRIBUNAL VIDE ORDER DT.14.8.2008 IN ITA NO.5/BANG/2 008 DIRECTED THE DIT(E) TO CONSIDER AND GRANT REGISTRATION U/S.1 2AA BY OBSERVING AS UNDER : 'IN SHORT WE ARE OF THE CONCLUSIVE VIEW THAT THE O BJECT CLAUSE (D) AND (F) OF THE TRUST DEED ARE VERY WELL IN THE ITA.716/BANG/2009 PAG E - 3 MEANING OF CHARITABLE FOR THE PURPOSE OF THE ACT S O AS TO GRANT REGISTRATION UNDER SEC.12AA(1)(B)(I) OF THE A CT. AS THE ASSESSEE HAS FULFILLED THE OBJECT OF THE TRUST AND GENUINENESS OF ITS ACTIVITY THE MATTER IS RESTORED BACK TO THE FILE OF THE DIRECTORATE OF INCOME-TAX (EXEMPTIO N) TO CONSIDER AND GRANT REGISTRATION UNDER SEC.12AA(1)(B )(I) OF THE INCOME-TAX ACT'. 4. ACCORDING TO THE DIT(E) ASSESSEE REITERATED THE EARLIER SUBMISSIONS MADE DURING THE SECOND INNINGS AS WELL AND FURTHER THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO SHOW THA T THE ASSESSEE HAS UNDERTAKEN THE ACTIVITIES. THUS HE CONCLUDED THAT THE ASSESSEE HAS NOT UNDERTAKEN ANY ACTIVITY SO FAR. IN THESE CIRCU MSTANCES THE DIT(E) CONCLUDED THAT THE OBJECTS OF THE ASSESSEE ARE COMM ERCIAL AS WELL AS RELIGIOUS IN NATURE. SO FAR THE ASSESSEE HAS NOT U NDERTAKEN ANY ACTIVITIES IN FURTHERANCE OF THE ACTIVITIES AND WIT HOUT UNDERTAKING THE OBJECTIVES FOR WHICH THE TRUST WAS FORMED IF THE R EGISTRATION IS GRANTED IT WILL BE DIFFICULT TO REVOKE THE REGISTR ATION EVEN IF THE ASSESSEE VIOLATES THE PROVISIONS OF THE SECTION. I N THE PREMISES OF THE ABOVE FACTS RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF DBA FOUNDATION IN ITA.667/BNG/08 DT.27.1.2009 APPLICA TION U/S.12A WAS REJECTED. WHILE SO REJECTING THE APPLICATION THE DIT(E) TOOK CLUE FROM THE ORDER OF THE TRIBUNAL IN DBA FOUNDATION (S UPRA) WHEREIN IT WAS OBSERVED AS UNDER : ITA.716/BANG/2009 PAG E - 4 '.WE ARE INCLINED TO HOLD THAT THE LEARNED DIT(EXE MPTIONS) WAS WITHIN HIS JURISDICTION TO CONSIDER THE APPLICA TION OF THE ASSESSEE-TRUST FOR GRANT OF REGISTRATION UNDER SECT ION 12A COULD NOT SUBSTANTIATE ITS CLAIM BY BRINGING OUT TH E CARRYING ON CHARITABLE ACTIVITY FROM THE SOLE MANAGING TRUST EE BEING A RETIRED ADMINISTRATOR OF GOVERNMENT OF INDIA. THIS TRUSTEE WAS IN SERVICE FOR MORE THAN THREE DECADES IN INDIA AND ABROAD. THE LD. DIT(EXEMPTIONS) THEREFORE WAS WI THIN HIS RIGHT TO CONSIDER THE CASE OF THE APPELLANT BEFORE HIM FOR GRANTING REGISTRATION TO ESTABLISH FROM OTHER THEN THE MANAGING TRUSTEE REMAINING ALOOF FROM THE INCOME OF THE TRUST TO BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF INCOME TAX ACT AND CONFINED HIMSELF TO THE REQUIREMENT OF THE APPELLANT TURNING THE COMMERCIAL ACTIVITIES TO THE PURPOSE OF CHARITABLE ONLY WAS TO BE ESTABLISHED FOR GRANT OF REGISTRATION UNDER SECTION 12A BY SUPPORT OF MEANS AND EVIDENCES WHICH THE ASSESSEE WAS NOT ABLE TO FURNISH.' AGGRIEVED BY THE ABOVE ORDER OF THE DIT(E) ASSESSE E IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE ASSESSEE'S REPRESENTATIVE SUBMITTED MERE FAC T THAT THE ASSESSEE HAD NOT UNDERTAKEN ANY ACTIVITY IN FURTHER ANCE OF THE OBJECTIVES ALONE IS NOT SUFFICIENT TO REJECT THE AS SESSEE'S APPLICATION AND THE OFFICER SHOULD HAVE CONSIDERED THE TRIBUNAL 'S OBSERVATION IN ITA.5/BANG/08 QUOTED SUPRA. ITA.716/BANG/2009 PAG E - 5 6. WE HEARD THE LEARNED DR. 7. CONSIDERING THE RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT AS RIGHTLY CONTENDED BY THE ASSESSEE'S REPRESENTATIVE MERELY BECAUSE THE ASSESSEE HAD NOT UNDERTAKEN ACTIVITY IN FURTHERANCE OF THE OBJECTIVES ALONE IS NOT SUFFICIENT TO REJECT THE APPLICATION. THE TRIBUNAL HAS ALREADY HELD THAT THE OBJECTS OF THE ASSESSEE PARTI CULARLY THAT WAS OBJECTED BY THE DIT(E) EARLIER I.E. CLAUSES (D) AN D (F) ARE CLEARLY CHARITABLE ACTIVITIES. 8. THE ASSESSEE'S REPRESENTATIVE ALSO PRODUCED A CO PY OF THE OFFICE NOTE DT.27.4.09 WHEREIN IT HAS BEEN MENTIONED THAT THE CASE HAS BEEN ADJOURNED TO BE CALLED LATER. ASSESSEE'S REPRESEN TATIVE SUBMITTED THAT NO EFFECTIVE HEARING WAS GIVEN THEREAFTER BUT ONLY ASSESSEE RECEIVED THE ORDER SUBSEQUENTLY AND THEREFORE THERE IS A C LEAR VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE WITH REGARD TO FAIR H EARING. THE LEARNED REPRESENTATIVE BROUGHT OUR ATTENTION TO THE DECISIO N OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF SANJEEVAMMA HAN UMANTHE GOWDA CHARITABLE TRUST (2006) 285 ITR 327. IN THIS CASE THE HON'BLE HIGH COURT HELD THE AUTHORITIES ARE TO SATISFY THEM SELVES ABOUT THE ACTIVITIES OF THE TRUST AND HOW THE INCOME DERIVED FROM THE TRUST PROPERTY IS APPLIED TO CHARITABLE OR RELIGIOUS PURP OSE AND NOT THE NATURE OF ACTIVITY BY WHICH INCOME IS DERIVED BY TH E TRUST. THE ITA.716/BANG/2009 PAG E - 6 HON'BLE HIGH COURT FURTHER HELD ' SUFFICIENT SAFEGUARD IS PROVIDED UNDER THE ACT FOR CANCELLATION OF REGISTRATION OBTA INED BY THE ASSESSEE IN THE EVENT OF ITS MISUSING THE PROVISIONS. ' IN THE LIGHT OF THE ABOVE OBSERVATION OF THE HON'BLE HIGH COURT WE FIND THER E IS NO MERIT IN THE FINDING OF THE COMMISSIONER OF INCOME-TAX(E) TH AT IT WILL BE DIFFICULT TO CANCEL THE REGISTRATION ONCE IT IS GRA NTED AND THEREFORE UNLESS THE ACTIVITIES ARE IN FURTHERANCE OF THE OBJ ECTS IS UNDERTAKEN REGISTRATION CANNOT BE GRANTED IS INCORRECT. THES E ARE THE THINGS THAT ARE TO BE SEEN AT THE TIME OF ASSESSMENT AND THE AS SESSING OFFICER HAS AMPLE POWER TO DEAL WITH THE MISUSE OF THE TRUST FU NDS IN VIOLATION OF THE PROVISIONS OF THE INCOME TAX ACT 1961 UNDER WH ICH THE REGISTRATION IS GRANTED. 9. IN THE LIGHT OF THE ABOVE WE ARE OF THE VIEW TH AT THE MATTER HAS TO GO BACK TO THE DIT(E) TO DEAL WITH THE ISSUE IN THE LIGHT OF THE OUR OBSERVATIONS. IN THE RESULT APPEAL BY THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COU RT ON 22ND DAY OF JANUARY 2010. SD/- SD/- (N. L. KALRA) (K. P. T. THANGAL) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE DATED : 22ND JANUARY 2010 ITA.716/BANG/2009 PAG E - 7 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF ITAT NEW DELHI 7. GF ITAT BANGALORE