TMI Blog2013 (9) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of transferring of the assets of the proprietorship concern which as per the trust deed has been given free of cost to the trust as part of the charity by the trustees themselves. A corpus therefore was formed on the basis of the assets rendered to the trust by the sole proprietorship which has to be assessed in accordance with the provisions of the Income-tax Act by the Assessing Officer and in no way interfered with the granting of registration to the assessee-trust by the learned Commissioner of Income-tax. Even the learned Departmental representative has not been able to establish that a violation of section 11, which was not the issue for consideration by the learned Commissioner of Income-tax for granting registration under section 12AA has been made. - registration u/s 12AA to be allowed - decided in favor of assessee. - - - - - Dated:- 2-11-2012 - Order The order of the Bench was delivered by K. K. Gupta (Accountant Member).-At the outset it is observed that this is the second round of appeal before the Tribunal when on the restoration of the issue by the Tribunal to the learned Commissioner of Incometax in I. T. A. No. 144/CTK/2011, dated Septem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. 3. That the hon'ble Tribunal after considering the facts and circumstances of the case have given their considered opinion that the assessee-appellant ought to have been granted registration under section 12A of the Income-tax Act, 1961 but the Commissioner of Income-tax has travelled beyond his jurisdiction and not following the decision of the Tribunal, therefore his order is not a speaking order and vitiated in the eye of law. 4. That since the trust has satisfied all the conditions laid down under the law, the learned Commissioner is not justified in refusing to allow registration under section 12A of the Income-tax Act, 1961. 5. That the books of account have been maintained and duly audited by qualified chartered accountant and no adverse comments have been given by the auditor. Without giving sufficient opportunity to the appellant the learned Commissioner of Income-tax is not justified in observing that no proper books of account were produced. That the learned Commissioner of Income-tax himself admits that audited accounts have been submitted. That merely because the proprietor was earlier carrying on business as a proprietor that will be no legal bar to conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified in observing that the trust has not done any charitable work during the relevant period and the activities of the trust were only for the purpose of generating income, which has already been held by the Tribunal as charitable activity. Learned counsel for the assessee submitted that the learned Commissioner of Income-tax is not justified in denying registration under section 12A by referring section 2(15) and holding that "livestock" does not come under the definition of charitable purpose. He submitted that the definition of "goshala" has been clearly defined under "The Orissa Goshala Act, 1961" (An Act to provide for better management and control of Goshalas in the State of Orissa) which reads as under : "Section 2. Definitions.-In this Act, unless the context otherwise requires-. . . (d) 'Goshala' means a charitable institution established for the purpose of keeping, breeding, rearing and maintaining cattle or for the purpose of reception, protection and treatment of infirm, aged or diseased cattle and includes a 'Pinjrapole', where such cattle are kept." From the above, it is amply clear that maintenance of a goshala itself is a charitable activity and the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goshala Act, 1961" itself as stated earlier. In support of his above submissions learned counsel for the assessee relied on the decision of the hon'ble Gujarat High Court in the case of CIT v. Swastik Textile Trading Co. P. Ltd. [1978] 113 ITR 852 (Guj), wherein it is held that when the trust was created along with its objects of helping, inter alia, poor, blind, deaf, dump, disabled, aged and distressed human beings for setting up "pinjrapoles" and Goshala, the same are highly charitable purposes within the meaning of section 2(15) and in keeping with the Directive Principles of State Policy. Learned counsel for the assessee further relied on the decision in the case of Shri Haridevji Gaushala Trust v. CIT [2008] 119 TTJ (Agra) 981, wherein it was held by the Income-tax Appellate Tribunal, Agra Bench that the activities of selling milk, manure, etc., for expanding the number of cows and supporting them are a part of charitable activities. He also relied on the decision of the hon'ble Allahabad High Court in the case of CIT v. Red Rose School [2007] 163 Taxman 19 (All), wherein it is observed : "The Commissioner is entitled to see only the genuineness of objects and activities : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the trustees themselves was suitably considered by the learned Commissioner of Income-tax when the issue was restored to the learned Commissioner of Income-tax for reconsideration on the request of learned counsel for the assessee before the Tribunal. The situation remains unchanged, therefore, was considered appropriately by the learned Commissioner of Income-tax against which the assessee has preferred this appeal may be considered on these technicalities in so far as the charitable activities could not be carried out unless the trustees have given on their interest in the business activities. We have heard the rival submissions and perused the material on record. Before deciding the present appeal, it is felt necessary to quote here the relevant extract of order dated September 12, 2011 in I. T. A. No. 144/ CTK/2011 when the assessee was in appeal in the first round, when for the reasons mentioned therein in detail, this Bench of the Tribunal had directed the learned Commissioner of Income-tax to grant registration under section 12A to the assessee-trust. The relevant portion of the order contained in paragraph 3 is extracted below : "3. We have heard the rival content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivities of selling milk, manure, etc., for expanding the number of cows and supporting them are a part of charitable activities. The facts and circumstances of the above case are similar to this case where it was held that income from milk and other by-products for the objective of the trust was permissible. The learned authorised representative for the assessee further contended that sale of milk, gobar, khattu and male calf are activities arise in the course of the normal activities of a goshala therefore, cannot be considered as business activity. Therefore, considering the facts and circumstances of the present case as submitted before us that the activities carried out by the assessee on the land proposed to be transferred in the name of the trust by the managing trustees was the basis for holding the intention for carrying out the main object of the trust for the purpose of general public utility therefore could not be on the basis of holding that the sale of milk, gobar, khattu and male calf etc., is not relating to the carrying out the activities of general public utility. These are incidental to carrying out the main object of trust, i.e., maintaining a 'goshala'. Law is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the provisions of the Income-tax Act by the Assessing Officer and in no way interfered with the granting of registration to the assessee-trust by the learned Commissioner of Income-tax. The Tribunal in the first innings of the appeal by the assessee had satisfied itself on the basis of legal pronouncement as well as on the basis of the charitable activities having been carried out which again has been considered by the learned Commissioner of Income-tax being bent of business activities remains undisputed in so far as maintenance of plant and machineries is allowed to a business entity in the form of depreciation which is a charge on the profit and loss account and not for the purpose of computing excess of income over expenditure. In that view of the matter, we are of the considered view that even the learned Departmental representative has not been able to establish that a violation of section 11, which was not the issue for consideration by the learned Commissioner of Income-tax for granting registration under section 12AA has been made. We therefore set aside the impugned order of the learned Commissioner of Income-tax by allowing the appeal of the assessee and dir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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