TMI Blog2014 (1) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act Entitlement for Deduction u/s 80G of the Act - Held that:- Neither the Assessing Officer nor the CIT(A) has either noted or observed any fact that the receipts of the assessee trust were misappropriated, misused or used contrary to the charitable objects of the assessee trust as stipulated in the trust deed - the authorities below have not made any allegation that the assessee trust had carried out any activities contrary to its object and misusing the funds of the assessee trust - The status of the assessee trust cannot be changed from charitable trust to AOP until and unless the registration granted to the assessee is cancelled by following the due procedure as mentioned in Section 12AA(3) of the Act - thus, the Assessing Officer was not justified in completing the assessment of the assessee in the status of AOP instead of charitable trust. As per provisions of the Act this is not a pre-condition for conducting a charitable activity that the persons or institutions towards which the assessee charitable trust is providing donation and conducting charitable activity should be registered under Section 12A of the Act coupled with entitlement to enjoy benefits of Section 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Commissioner of Income Tax (A) has grossly erred in confirming the change in status made by the Learned Assessing Officer from that a Charitable Trust instead to that of an AOP. 4. That the Learned Commissioner of Income Tax (A) has grossly erred is not appreciating that the appellant is a registered under Section 12 of the Income Tax Act effective 25 November 1994 as a charitable trust and continues to be a charitable trust till date. 5. That the Learned Commissioner of Income Tax (A) has grossly erred in confirming that the appellant had not undertaken any Charitable Activity notwithstanding the facts and circumstances of the appellant. The Learned Commissioner of Income Tax (A) has totally ignored the fact and the documents produced relating to charitable activities undertaken by the appellant during the year under consideration. 6. That the Learned Commissioner of Income Tax (A) has grossly erred in confirming that the appellant had not undertaken any Charitable Activity notwithstanding the fact that the sole purpose of the appellant is to undertake Chartable Activities and the appellant had in-fact undertaken only Charitable Activities during the year under consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Learned Commissioner of Income Tax (A) has grossly erred by ignoring the object clause of the Trust Deed. This was exhibited by the Appellant by filling a copy of the same during appellant proceedings. 14. That the Learned Commissioner of Income Tax (A) has grossly erred in not appreciating and ignoring, the fact that the appellant had filed various resolutions along with FORM No-10, before Assessing Officer, enabling it to carry forward the utilized amount of its income to be utilized for specified purposes as provisions of the Income Tax Act, 1961, during the year under consideration. 15. That the Learned Commissioner of Income Tax (A) has grossly erred in confirming the charge of interest under Section 234 (B) which also has been incorrectly computed. 16. That the appellant craves leave to modify, add, alter, and delete any of the above grounds. 3. Grounds in ITA No- 1795/Del/2010 of the Revenue:- 1. On the facts in the circumstances of the case, the Ld. CIT (A) has erred in ignoring the facts that Registration u/s 12A of the Act is granted by DIT (E)on certain terms and conditions which have to be met by the Assessees. Registration u/s 12A does not automatica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal at any time before or during the hearing of this appeal. 4. Briefly stated the facts giving rise to these appeals are that the assessee filed a return accompanied with audit report Form No-10 B, Income Expenditure Accounts, and Balance sheet etc. on 31/10/2006 declaring Nil income. 5. Subsequently, the case was selected for scrutiny as per CBDT Guidelines and a notice under Section 143(2) of the Income Tax Act 1961 (for brevity the Act) was served on the assessee. The Assessing Officer noted that despite of several opportunities to the assessee none-attended the proceedings nor any adjournment letter was filed on behalf of the assessee. The Assessing Officer finalized the assessment under Section 144 of the Act. The Assessing Officer held that the assessee received corpus donation of Rs.50, 00,000/- as shown in the balance-sheet but no evidence was filed during the assessment proceedings to prove that the amount so received was a corpus donation and the Assessing Officer treated the same donation as general receipt. The Assessing Officer also observed that the assessee has claimed charitable expenses amounting to Rs.2,59,763/- but no evidence has been filed regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of school at Nasik by itself would not qualify as charitable activity as there are no evidence to show that whether the school is for a charitable purpose or a commercial enterprise. Contribution of Rs. 10,000/- to Khushii appears to have been made for a musical entertainment programme and this by itself cannot be considered as charitable activity. There is nothing to show that Kalyanam Karoti, Meerut, to whom a donation of Rs. 50,000/- was made is registered u/s. 12 A of the IT Act or has 80G certificate to clearly establish the donation as application of fund for charitable purposes. The appellant has not brought anything on record to show whether the Appellant Trust/Fund s objects permit such kind of donation, or whether the donations have been made for activities, which are as per the vowed objects activities of the Appellant Trust. Therefore, I am inclined to agree with the AO that the Appellant trust did not carry out any charitable activities during the previous year and hence, the benefit of exemption u/s. 11 12 are not allowable. Therefore, the action of the AO in taxing the income of the appellant trust as AOP is upheld. 7. Being aggrieved by the above findings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration under clause (b) of sub-section (1) [ or has obtained registration at any time under section 12 A [as it stood before its amendment by the Finance (No.2) Act, 1996 (33 of 1996]]and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: 12. As per above Provisions Section 12AA(3) of the Act, if a trust or institution has been granted a registration under Clause(b) of sub Section(1) of Section 12AA of the Act or has obtained registration at any time under Section 12A of the Act ( as it stood before its amendment by Finance (No.2) Act, 1996) and subsequently, if the registration granting authority i.e. the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of trust or institution, then the Commissioner shall pass an order in writing cancelling the registration of such trust or institution after affording a reasonable opportun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity during the year under consideration. 14. Replying to the above, the departmental representative submitted that the assessee did not appear and submitted the required material and evidence before the Assessing Officer despite the fact that the Assessing Officer provided the assessee a due and reasonable opportunity of hearing. Due to this hostile attitude and conduct of the assessee the Assessing Officer had to finalize the assessment under Section 144 of the Act on the principal of the best judgment. The Ld. DR further submitted that on appeal the assessee did not submit any evidence to indicate that the said beneficiary societies and organizations were registered under Section 12A of the Act and were also enjoying benefit of Section 80G of the Act. The Ld. DR also submitted that the contribution towards construction of school at Nasik, by itself would not qualify as charitable activity as there was no evidence to show that whether the school was for a charitable purpose or a commercial enterprises and the contribution made for a musical entertainment programme by itself cannot be considered a charitable activity. The Ld. DR vehemently contended that the assessee has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the AO completed the assessment under Section 144 of the Act. From the impugned order, we observe that the CIT (A) in Para 8 and 8.1 upheld the action of the AO with an observation that there was no evidence to indicate that the above beneficiary institution who received donation from the assessee were registered under Section 12 A of the Act and enjoying the benefits of Section 80G of the Act. The counsel of the assessee submitted that it is not a pre-condition as per act that the charitable trust or institution should have extended donations or conduct charitable activities only for the persons or institutions which are registered under Section 12A of the Act and enjoying benefits of Section 80G of the Act. 17. In view of the above factual matrix we are inclined to hold that as per provisions of the Act this is not a pre-condition for conducting a charitable activity that the persons or institutions towards which the assessee charitable trust is providing donation and conducting charitable activity should be registered under Section 12A of the Act coupled with entitlement to enjoy benefits of Section 80G of the Act. The Assessing Officer and CIT (A) should have examine the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in accordance with objects of the trust and the assessee is complying with all the conditions of the Act. The Ld. DR also submitted that the registration granted under Section 12A of the Act casts onus on the assessee to prove that the Provisions of Section 2(15) and Section 11 of the Act have been satisfied and there is no contravention of Provisions of Section 13 of the Act by the assessee. The Ld. DR vehemently contended that once it is discovered that the assessee trust has not undertaken any charitable activities then the conditions prescribed in registration certificate are violated and Assessing Officer is entitled to hold that the exemption under Section 11 of the Act is not allowable to the assessee. The DR concluded his submissions with a contention that the assessee is bound to prove that it provided donations to the charitable entities which have similar to the objectives assessee trust and in absence of the same it cannot be said that the assessee trust applied its funds, donations and receipts for charitable purpose as per objects of the assessee trust. 20. Replying to the above the Learned Counsel of the assessee submitted that the authorities below have misinter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AO. The Ld. DR further submitted that the CIT (A) wrongly admitted the additional evidence against the spirit of the statutory provisions. The Learned Counsel of the assessee vehemently contended above submissions and submitted that the CIT (A) followed due procedure of Rule 46(A) of the Rules for admission of additional evidence and the assessee was prevented by sufficient cause to furnish the additional evidence before the Assessing Officer because the date of hearing before the Assessing Officer was 09/12/2008 which was indeed declared a public holiday due to the festival of Eid-Ul-Zuha. 23. After careful consideration of the above submissions of both the parties, from the impugned order we observe that the CIT (A) allowed the application of assessee under Rule 46(A) of the Rules and admitted the additional evidence with following observations:- 5. The Assessing Officer vide his remand report dated 29/09/2009 objected to the additional evidence being taken on record. The Assessing Officer mentioned in Para 2.3 of the remand Report that the case was adjourned for 09/12/2008 and none attended on the date, and the order was passed on 12/12/2008 after allowing sufficient oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of Rs.50,00,000/- to the corpus of the assessee has been approved. The counsel further submitted that the assessment proceedings were completed in absence of assessee and the CIT (A) admitted the additional evidence pertaining to the issue of corpus donation and rightly held that the purpose of donation was confirmed by the donor in the minutes of its meeting and the same could not be treated as general receipt instead of a corpus donation. 27. After careful consideration of above rival submission of both the parties and from perusal of impugned order we observed that the Ld. CIT (A) decided the issue in favour of the assessee with following observations:- I have considered the assessment order, submission of the Appellant, Remand Report Rejoinder thereto. Ground No 1 2 are general in nature and require no adjudication. Ground No.3 has already been dealt with in the preceding paragraph (Paragraph 5.1). In respect of ground no.4, upon examining the additional evidence furnished by the appellant along with the application under Rule 46A of the Income Tax Rules, the appellant s contention is found to be correct, that the minutes of the meting of Seagram India Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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