Gautam Budh Vidya Sagar Charitable Trust, Bangalore v. DIT, Bangalore

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.863/BANG/2009 ASSESSMENT YEAR : N.A. GAUTAM BUDH VIDYA SAGAR CHARITABLE TRUST NO.30 CAUVERY NAGAR NEAR SWAYAM PRABHA KALYANA MANTAP KAMAKSHI PALYA BANGALORE 560 079. : APPELLANT VS. THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) BANGALORE. : RESPONDENT APPELLANT BY : SHRI MURALIDHARAN RESPONDENT BY : SMT. SWATI S. PATIL O R D E R PER A. MOHAN ALANKAMONY ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE DIRECTED AGA INST THE ORDER OF THE DIT(EXEMPTIONS) BANGALORE DATED 29.06.2009 REJECTI NG THE APPLICATION FOR REGISTRATION U/S. 12AA OF THE INCOME-TAX ACT 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE LEARNED DIRECTOR OF INCOME TA X (EXEMPTIONS) IS OPPOSED TO LAW AND FACTS OF THE CAS E. ITA NO.863/BANG/ 09 PAGE 2 OF 6 2. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) HAS ERRED IN NOT CONSIDERING THE FACTS SUBMITTED BEFORE HIM. 3. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) HAS ERRED IN REJECTING THE APPLICATION ON THE GROUND TH AT NO RECORDS HAVE BEEN MAINTAINED FOR THE COURSES UNDERT AKEN BY BENEFICIARIES WHERE AS THERE IS NO REQUIREMENT U /S 11 12 AND 13 OF THE INCOME TAX ACT 1961 TO MAINTAIN AN Y SUCH RECORDS IN THIS RESPECT. 4. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) HAS ERRED IN PRESUMING THAT THE TRUST MANAGEMENT UNDER THE SOLE TRUSTEE WILL NOT BE DEMOCRATIC WHERE AS NEITHE R THE PROVISIONS OF SECTIONS 11 12 13 OF THE INCOME TAX ACT 1961 NOR THE INDIAN TRUST ACT MENTION THAT THE TRUS T CANNOT CARRY ON ITS OBJECTIVES WITH A SINGLE TRUSTEE. WHE RE AS THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) HAS NOT LOOKED INTO THE CLAUSE (5) OF THE TRUST DEED WHERE THE POWERS HAVE BEEN GIVEN TO THE FOUNDER TRUSTEE TO CO -OPT UP TO 5 TRUSTEES. 5. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) HAS ERRED IN NOT LOOKING INTO THE FACTS OF THE TRUST TH AT ALL THE CONDITIONS MENTIONED IN SEC 12A FOR GRANTING REGIST RATION HAVE BEEN COMPLIED WITH. 6. WITH THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING THE APPELLANT PRAYS FOR THE GRA NT OF REGISTRATION SOUGHT FOR. 3. THE ASSESSEE IS A CHARITABLE TRUST WHOSE MAIN OB JECT IS TO PROVIDE HELP TO THE NEEDY PEOPLE IN THE FIELD OF EDUCATION RURAL UPLIFTMENT AND ENVIRONMENTAL PROTECTION AND OTHER OBJECTS AS MENTI ONED IN THE TRUST DEED. THE ASSESSEE SUBMITTED AN APPLICATION IN FORM NO.10 A FOR GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT 1961 ON 18.12.2008. CERTAIN DETAILS WERE CALLED FOR AND THE ASSESSEE FILED THE SAME ON 23.03.2009. THE LD. DIT(EXEMPTIONS) REJECTED THE APPLICATION FO R REGISTRATION U/S. 12AA OF THE ACT BY HOLDING AS UNDER: ITA NO.863/BANG/ 09 PAGE 3 OF 6 THE TRUST IS REGISTERED SINCE 01.03.2008. NO SUB STANTIAL ACTIVITY HAS BEEN REPORTED. THE TRUST HAS BEEN FLO ATED BY SRI VINOD KUMAR DINGRA WHO IS A BUSINESSMEN AND SOLE TR USTEE OF THE TRUST. THERE HAS BEEN TWO INSTANCES OF SCHOLAR SHIPS AWARDED WHICH WOULD NOT SUFFICE TO FORM A SATISFACTORY OPIN ION ABOUT A CHARITABLE ACTIVITY OF THE TRUST. NO EVIDENCE HAS BEEN PROVIDED ABOUT HOW THE BENEFICIARIES ARE SELECTED SO AS TO A DHERE TO THE CRITERIA OF BENEFITS OF THE CHARITY ENURING FOR TH E GENERAL PUBLIC. NO RECORDS HAVE BEEN MAINTAINED FOR COURSE UNDERTAK EN BY BENEFICIARIES REASON FOR SCHOLARSHIP ETC. THE MAN AGEMENT OF THE TRUST IS NOT DEMOCRACTIC AND HAS LIES THE HANDS OF THE SOLE TRUSTEE WHO IS A BUSINESSMAN. HENCE IN THE ABOVE SAID CIRCUMSTANCES IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THE TRUST AS ALSO OF ITS OBJECTS AND ACTIVITIES. ACCORDINGLY THE APPLICATION FOR REGIST RATION U/S 12A OF THE INCOME-TAX ACT 1961 HAS TO BE REJECTED. ACCORDINGLY THE APPLICATION FOR REGISTRATION U/S 1 2A IS HEREBY REJECTED. AGGRIEVED BY THE ORDER OF THE LD. DIT(EXEMPTIONS) THE ASSESSEE TRUST IS IN APPEAL BEFORE THE TRIBUNAL. 4. THE LD. AR SUBMITTED THAT THE APPELLANT TRUSTS MAIN OBJECT IS TO PROVIDE HELP TO THE NEEDY PEOPLE IN THE FIELD OF ED UCATION RURAL UPLIFTMENT ENVIRONMENTAL PROTECTION ETC. THE TRUST IS IN THE BUDDING STAGE AND HAVE COMMENCED ITS ACTIVITIES WITH ITS LIMITED RESOURCES . THE ASSESSEE TRUST HAD PROVIDED THE DETAILS OF THE DONATION MADE DURING TH E PERIOD AND SUBMITTED EXPLANATIONS CALLED FOR. HOWEVER WITHOUT CONSIDER ING ALL THESE FACTS AND WITHOUT PROVIDING OPPORTUNITY TO CLARIFY THE INHIBI TIONS CONSTRUED BY THE LD. DIT(E) THE APPLICATION WAS REJECTED. LD. AR PLEAD ED THAT THE ASSESSEE TRUST DESERVES TO OBTAIN REGISTRATION U/S. 12AA(1)( B)(II) OF THE ACT OR AT THE MOST THE CASE MAY BE REMITTED BACK TO THE LD. DIT( E) FOR CONSIDERATION AND THE ASSESSEE SHALL CO-OPERATE AND PROVIDE ANY CLARI FICATION SOUGHT FOR. ITA NO.863/BANG/ 09 PAGE 4 OF 6 5. LD. DR SUPPORTED THE FINDINGS OF THE LD. DIT(E) AND OPPOSED TO THE PLEA OF THE LD. AR FOR REMITTING BACK THE CASE TO T HE LD. DIT(E) AS THE LD. DIT(E) HAD DELIBERATED THE ISSUE IN DETAIL AND HAD PASSED A JUST ORDER AS PER LAW AND FACTS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE RECORDS PRESENTED BEFORE US. WE HAVE ALSO EXAMINED THE PAPERBOOK SUBMITTED BY THE LD. AR WHICH CONTAIN THE FOLLOWING DETAILS: (1) LETTER FROM OFFICE OF DIT(E) DATED 9.3.09. (2) LETTER FROM THE ASSESSEES AR PROVIDING INFORM ATION CALLED FOR. (3) INCOME & EXPENDITURE ACCOUNT FOR YEAR ENDING 31.3.0 9. (4) DISBURSEMENT DETAILS OF SCHOLARSHIPS FOR THE F.Y. 2 008-09. (5) TRUST DEED. 7. AFTER EXAMINING THE TRUST DEED SUBMITTED BY THE LD. AR WE ARE OF THE FIRM OPINION THAT ALL THE OBJECTS OF THE TRUST FALL S WITHIN THE AMBIT OF CHARITY AS DEFINED IN SECTION 2(15) OF THE ACT. THE OBJECT S OF THE TRUST ARE EXTRACTED HEREINBELOW FOR REFERENCE: (A) TO START RUN ADOPT AND SUPPORT INDUSTRIAL TRA INING INSTITUTE SCHOOLS EDUCATIONAL INSTITUTIONS AND RESEARCH CENT ERS ETC. AND TAKE ALL STEPS NECESSARY FOR FURTHER THE CAUSE OF EDUCATION. (B) TO START RUN AND ADOPT SUPPORT PROJECT IN SEMI URBAN/RURAL AREAS OR SLUMS FOR THE GENERAL UPLIFT OF SOCIETY LI KE WATER CONSERVATION/RECIRCULATION WASTE MANAGEMENT RAIN WATER HARVESTING SOLID WASTE MANAGEMENT CARBON FOOD PRI NT REDUCTIONS TREE PLANTATIONS ETC. TO TAKE ALL NEC ESSARY STEPS FOR FURTHERING THE CAUSE IN THESE FIELDS AND THEIR AWARENESS. ITA NO.863/BANG/ 09 PAGE 5 OF 6 (C) TO RENDER FINANCIAL HELP TO ANY EDUCATIONAL ME DICAL OR CHARITABLE ORGANIZATIONS WHICH THE TRUSTEE IN HIS OPINION THINK ARE IN NEED OF HELP: (D) TO RENDER FINANCIAL HELP TO INSTITUTION FOR PO OR AND DISABLE PERSONS WHO IN HIS OPINION REQUIRE AND DESERVE SUC H HELP. (E) TO PROVIDE FOR PAYMENT OF SCHOLARSHIPS TO STUD ENTS. (F) TO PROVIDE FOR PAYMENT OF SCHOOL OR COLLEGE FEE S BOARDING AND/OR LODGING CHARGES AND PURCHASES OF EDUCATIONAL BOOKS OR STATIONARY FOR STUDENTS. (G) TO PROVIDE GENERAL MEDICAL RELIEF BY SUBSCRIBI NG TO OR ESTABLISHING IF FUNDS SO PERMIT CHARITABLE DISPEN SARIES HOSPITALS CLINICS OR TO GIVE MEDICAL RELIEF TO POO R. (H) TO GIVE MONETARY AID OR OTHERWISE PROVIDE RELI EF FOR FLOOD OR FAMINE OR ANY OTHER NATURAL CALAMITIES LIKE EART HQUAKE AND CYCLONES. (I) TO PROVIDE FOR EDUCATIONAL AND MAINTENANCES OF POOR WIDOWS. (J) TO OPEN ORPHANAGE HOMES OR ASSISTS IN THE COND UCT OF ANY INSTITUTIONS FOR PROTECTION OF ORPHANS. (K) TO PROVIDE FOR THE CONSTRUCTIONS OF BUILDINGS FOR THE ACCOMMODATION OF AND CONDUCT SCHOOLS COLLEGES RESEARCH INSTITUTIONS MEDICAL CLINICS AND DISPENSA RIES. (L) TO FEED POOR AND DISABLED PERSONS OR FOR MAINTE NANCE OF BEGGAR HOMES OR INSTITUTIONS FOR BEGGARS AND DISAB LED PERSONS. (M) TO DO SUCH ACT OF PUBLIC CHARITY NOT INVOLVING THE CARRYING ON OF AN ACTIVITY FOR PROFIT AS MAY BE DEEMED FIT AND NECESSARY BY THE TRUSTEE. FURTHER FROM THE CONDUCT OF THE ASSESSEE AS EVIDENT FROM THE PAPERBOOK SUBMITTED THE ASSESSEE TRUST HAD MADE AN ATTEMPT T O PURSUE SOME CHARITABLE ACTIVITIES TO ACHIEVE THE OBJECTS OF THE TRUSTS WITH ITS LIMITED RESOURCES. MOREOVER THE TRUST HAS NOT UNDERTAKEN AN Y BUSINESS/COMMERCIAL ACTIVITY. THIS IS APPARENT FROM THE STATEMENT OF A CCOUNT FURNISHED BY THE ASSESSEE TRUST FORMING PART OF THE PAPERBOOK. 8. THE ACT DOES NOT ENVISAGE ANY CONDITION THAT THE CHARITABLE TRUST SHOULD HAVE MORE THAN ONE TRUSTEE. THEREFORE THIS GROUND RAISED BY THE ITA NO.863/BANG/ 09 PAGE 6 OF 6 REVENUE IS NOT GOOD IN LAW FOR REJECTION OF THE APP LICATION OF THE ASSESSEE. THE LD. DIT(E) HAD ISSUED A LETTER DATED 9.3.09 SEE KING FOR A LIST OF DOCUMENTS AND INFORMATION FOR WHICH THE ASSESSEE H AS SUBMITTED A DETAILED REPLY FURNISHING THE REQUIRED INFORMATION. HOWEVER THE LD. DIT(E) HAS PROCEEDED TO REJECT THE APPLICATION OF THE ASSE SSEE WITHOUT GRANTING PROPER OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. ON PERUSING THE OBJECTS AND AFFAIRS OF THE TRUST WE ARE OF THE FIR M OPINION THAT THIS IS A FIT CASE FOR GRANT OF REGISTRATION UNDER SECTION 12AA(1 )(B)(II) OF THE ACT AND WE HOLD ACCORDINGLY. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JANUARY 2010. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED THE 22 ND JANUARY 2010. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. C IT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.