Vyasa Educational and Cultural Trust, Bangalore v. DIT(Exemptions), Bangalore

ITA 721/BANG/2009 | misc
Pronouncement Date: 22-01-2010 | Result: Allowed

Appeal Details

RSA Number 72121114 RSA 2009
Bench Bangalore
Appeal Number ITA 721/BANG/2009
Duration Of Justice 6 month(s) 2 day(s)
Appellant Vyasa Educational and Cultural Trust, 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 20-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI K.P.T. THANGAL VICE PRESIDENT AND SHRI N.L. KALRA ACCOUNTANT MEMBER ITA NOS. 721 & 722/BANG/2009 ASSESSMENT YEAR : N.A. VYASA EDUCATIONAL & CULTURAL TRUST NO.480 IST FLOOR 6 TH MAIN HMT COLONY OPP. BUS DEPOT R.T. NAGAR BANGALORE 560 032. : APPELLANT VS. THE DIRECTOR OF INCOME TAX (EXEMPTIONS) 3 RD FLOOR C.R. BUILDINGS QUEENS ROAD BANGALORE 1. : RESPONDENT APPELLANT BY : SHRI CHYTHANYA RESPONDENT BY : SHRI JASON P. BOAZ O R D E R PER K.P.T. THANGAL VICE PRESIDENT ITA NO.722/BANG/09 THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F THE CIT(APPEALS) IN REJECTING THE ASSESSEES APPLICATION FOR REGISTR ATION U/S. 12A HOLDING THAT CLAUSE 17 AND 19 OF THE OBJECTS ARE COMMERCIAL IN N ATURE. ITA NO.721 & 722/BANG/09 PAGE 2 OF 4 2. THE ASSESSEE TRUST FORMED ON 19.12.2007 FILED A PPLICATION U/S. 12A FOR REGISTRATION ON 27.11.08. CLAUSE 17 AND 19 OF THE TRUST DEED READS AS UNDER: 17. TO CONSTRUCT BUILDINGS COMPLEXES STADIUMS H OSTELS ORPHANAGE OR ACQUIRE BY SALE PURCHASE GIFT EXC HANGE LEASE SUBLEASE TRANSFER SURRENDER RELEASE MORT GAGE OR IN ANY OTHER LAWFUL MANNER ANY IMMOVABLE PROPERTY BUILDINGS VACANT LAND SHED HOUSES OFFICES SHOP S UNDER SUCH TERMS AS MAY BE NECESSARY AND TO HOLD THE SAME IN THE NAME OF THE TRUST AND TO SELL LEASE TRANSFER MORTGAGE (EQUITABLE OR OTHERWISE) PLEDGE AS SECURITY CREAT E A CHARGE LIEN ENCUMBRANCE ON ANY OR ALL OF SUCH PRO PERTY BUILDING VACANT LAND SHED HOUSES OFFICES SHOPS BELONGING TO THE TRUST ON SUCH TERMS AS MAY APPEAR NECESSARY PURELY FOR AND IN FURTHERANCE OF THE OBJ ECTS OF THE TRUST WITHOUT RESULTING IN OR CREATING ANY PER SONAL LIABILITY AGAINST THE BOARD JOINTLY OR SINGLY. 19. TO ESTABLISH CONSTRUCT MAINTAIN OR ASSIST IN ESTABLISHING CONSTRUCTING MAINTAINING AND RUNNING OF DHARMA SHA LAS CHOULTRIES AND SUPPORTING PILGRIMS SANYASIS SAINT S NUNS MYSTICS AND MEN WHO HAVE RENOUNCED THE WORLD AND AR E LEADING A LIFE OF SECLUSION IN PURSUIT OF ETERNAL T RUTH. 3. THE DIT(E) HELD THE ABOVE CLAUSES ARE COMMERCIAL IN NATURE. WHILE COMING TO THE CONCLUSION THE DIT(E) FURTHER NOTED THAT ASSESSEE HAS SO FAR NOT TAKEN ANY ACTIVITIES IN FURTHERANCE OF THE OBJE CTIVES AND THEREFORE IF THE REGISTRATION IS ALLOWED AND THE APPLICANT UNDERTAKE S COMMERCIAL ACTIVITY AS PER THE OBJECTS OF THE TRUST THEN THE REVOCATION W ILL BE DIFFICULT SINCE THE COMMERCIAL ACTIVITY WOULD HAVE THE SANCTION OF THE OBJECT CLAUSE. HE FURTHER NOTED THAT THE TRUST HAS APPLIED FOR CBSE A PPROVAL FOR STARTING A SCHOOL AND IDENTIFIED THE LAND FOR CONSTRUCTION OF SCHOOL AND MERELY STARTED A PRE-NURSERY SCHOOL ENROLLING 8 STUDENTS. ON THIS GROUND THE DIT(E) HELD IT IS DIFFICULT TO ACCEPT THE ASSESSEES CONTENTION TH AT ASSESSEE HAS STARTED ITS TRUST ACTIVITIES UNDER THE CATEGORY OF EDUCATION. WITH THE ABOVE ITA NO.721 & 722/BANG/09 PAGE 3 OF 4 OBSERVATIONS THE DIT(E) REJECTED THE ASSESSEES AP PLICATION. THE ASSESSEE IS IN APPEAL. 4. EXACTLY IDENTICAL ISSUE WAS DECIDED BY THE TRIBU NAL IN THE CASE OF PRESTIGE FOUNDATION IN ITA NO.716/BANG/09 VIDE ORDE R DATED 22.01.2010 WHEREIN IT WAS HELD AS UNDER: 8. THE LEARNED REPRESENTATIVE BROUGHT OUR ATTENTION TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST (2006) 285 ITR 327. IN THIS CASE THE HONBLE HIGH COURT HELD THE AUTHORITIES ARE TO SATISFY THEMSELVES ABOUT THE ACTIVITIES OF THE TRUST AND HOW THE INCOME DERIVED FROM THE TRUST PRO PERTY IS APPLIED TO CHARITABLE OR RELIGIOUS PURPOSE AND NOT THE NATURE OF ACTIVITY BY WHICH INCOME IS DERIVED BY THE TRUST. THE HONBLE HIGH COURT FURTHER HELD SUFFICIENT SAFEGUARD IS PROVIDED UNDER THE ACT FOR CANCELLATION OF REGISTRATION OBTAINED B Y THE ASSESSEE IN THE EVENT OF ITS MISUSING THE PROVISIONS . IN THE LIGHT OF THE ABOVE OBSERVATION OF THE HONBLE HIGH COURT WE FIN D THERE IS NO MERIT IN THE FINDING OF THE COMMISSIONER OF INCOME- TAX (E) THAT IT WILL BE DIFFICULT TO CANCEL THE REGISTRATION ONCE I T IS GRANTED AND THEREFORE UNLESS THE ACTIVITIES ARE IN FURTHERANCE OF THE OBJECTS IS UNDERTAKEN REGISTRATION CANNOT BE GRANTED IS INCO RRECT. THESE ARE THE THINGS THAT ARE TO BE SEEN AT THE TIME OF A SSESSMENT AND THE ASSESSING OFFICER HAS AMPLE POWER TO DEAL WITH THE MISUSE OF THE TRUST FUNDS IN VIOLATION OF THE PROVISIONS OF THE I NCOME TAX ACT 1961 UNDER WHICH THE REGISTRATION IS GRANTED. 5. FOLLOWING THE DECISION OF THE TRIBUNAL (SUPRA) WE REMAND THE MATTER BACK TO THE FILE OF THE DIT(E) TO THE DECIDE THE IS SUE AFRESH IN LIGHT OF THE KARNATAKA HIGH COURT DECISION AS EXPLAINED BY THE T RIBUNAL. 6. IN THE RESULT THE APPEAL BY THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ITA 721/BANG/09 ITA NO.721 & 722/BANG/09 PAGE 4 OF 4 7. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE DIT(E) REJECTING THE APPLICATION FOR GRANT OF APPROVAL U/S . 80G ON THE GROUND THAT REGISTRATION U/S. 12A HAS BEEN REJECTED. SINCE TH E ISSUE OF GRANTING REGISTRATION U/S. 12A HAS BEEN REMANDED BACK TO THE FILE OF DIT(E) HEREINABOVE THE MATTER OF GRANT OF APPROVAL U/S. 80G IS ALSO RESTORED TO THE FILE OF DIT(E) FOR FRESH CONSIDERATION. 8. IN THE RESULT THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JANUARY 2010. SD/- SD/- (N.L. KALRA ) (K.P.T. THANGA L) ACCOUNTANT MEMBER VICE PRESIDE NT BANGALORE DATED THE 22 ND JANUARY 2010. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.