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2015 (6) TMI 422 - ITAT DELHI

2015 (6) TMI 422 - ITAT DELHI - [2015] 41 ITR (Trib) 77 (ITAT [Del]) - Exemption under S. 80G(5)(vi) refused - as per CIT(A) there is no correlation between the objects of the assessee trust and its working except construction of Gaushala, the other objects remained on paper - Held that:- There is no legal provision that the assessee shall undertake all its objects, as mentioned in the trust deed, simultaneously. The first object of the assessee trust as detailed in clause (5) of the trust deed .....

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at:- There is no legal requirement of passing of resolution by all the trustees for every occasion. The working of the trust may be undertaken by the office bearers of the trust. We are of the view that so far as the activities of the trust were in accordance with the objects of the trust and were genuinely charitable in nature, the assessee is entitled to the benefit of Section 80G of the Act.

Books of account and vouchers maintained and produced were not reliable and did not disclos .....

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aw that any discrepancy in the accounts or in the vouchers maintained by the assessee or in the application of funds of the trust could be examined by the Assessing Officer at the time of framing of the assessment.

Trustees appointed because they belonged to a particular organization - Held that:- We are of the view that it is the prerogative of the assessee trust to choose its trustees and the CIT could not interfere with the same and should not have exceeded his jurisdiction in com .....

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the objects of the assessee trust. It is not the case of the CIT that the assessee has undertaken some activity, which could be called not charitable in nature. Regarding the siphoning off the money, the same is a mere imagination on the part of the officer. We find that the assessee has filed a comparative chart of rates charged by M/s Jindal Mectec Private Limited for the work of constructing sheds in the assessee’s Gaushala, comparing the same with the rates charged by them from others. We f .....

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rejected.

The Department could not show that any one of the conditions for grant of benefit under Section 80G of the Act as detailed in the provision of Section 80G(5) read with Rule 11AA of the Income-tax Rules was not complied with or that the activities of the assessee were not genuinely charitable in nature. The CIT(Exemptions), Chandigarh (with whom jurisdiction is stated to lie) is directed to grant the benefit of Section 80G to the assessee trust and pass necessary order within .....

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n 80G of the Income-tax Act, 1961 to the assessee. 2. The grounds of appeal of the assessee are as under:- 1. That on the facts and in the circumstances of the case and in law the action of Learned Commissioner of Income Tax in refusing approval of exemption under S. 80G(5)(vi) of Income Tax Act, 1961 is arbitrary, erroneous, unwarranted and illegal and must be quashed with directions for relief. 2. That on the facts and in the circumstances of the case and under law Learned Commissioner of Inco .....

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tions for approval of exemption as laid down in Section 80G(5)(i), (ii), (iii), (iv) and (v) of Income Tax Act, 1961. The application has been rejected only on surmises and conjectures, on whimsical grounds and irrelevant considerations. 4. That on the facts and in the circumstances of the case Learned Commissioner of Income Tax has erred in law in not affording opportunity in producing Valuation Report dated 18-05-2013 which substantiates the factum of construction of infrastructure of Gaushala .....

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its reply dated 26th August, 2013 and the matter is still pending with the CIT, Hisar and the registration under Section 12AA of the Act subsists till date and that the registration granted under Section 12AA had not been cancelled by the Department so far. The learned counsel for the assessee, at the outset, submitted that the assessee is not pressing its application filed under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963. 4. The learned counsel for the assessee referred to the p .....

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therein that there will be no discrimination on account of religion, caste, language etc. Clause (6) of the trust deed provides that the trust has been established only for charitable purposes for the benefit of the public at large without any discrimination with regard to religion, caste, language etc. and there is no intention of earning profit whatsoever. Clause (7) & (8) of the trust deed provide that all income, savings of the trust could be spent only for the objects of the trust and .....

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He referred to the relevant portion of the order passed by the CIT, Hisar rejecting the claim of the assessee under Section 80G of the Act. He submitted that in paragraph 4 of his order rejecting the claim of the assessee under Section 80G of the Act, the CIT has concluded five reasons for rejecting the claim of the assessee and none of them is sustainable as per law. 5. The first reason given by the learned CIT for rejecting the claim was that there is no correlation between the objects of the .....

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umerated in the trust deed nor record has accordingly been kept, the learned counsel for the assessee submitted that there is no necessity of passing a resolution by all the trustees for every action and the day to day working has to be undertaken by the office bearers of the trust with the help of the employees employed by the assessee trust. 6. Regarding the third objection of the CIT for rejecting the claim of the assessee under Section 80G of the Act that the books of account and vouchers ma .....

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vities of the assessee trust and the various so-called discrepancies in the vouchers maintained by the assessee and the application of funds can be examined by the Assessing Officer at the time of framing of the assessment. He submitted that this issue is covered in favour of the assessee with the decision of Jurisdictional Punjab & Haryana High Court in the case of CIT, Rohtak Vs. O.P. Jindal Global University - [2013] 219 Taxman 70 (P&H) dated 2nd May, 2013 wherein it is held that at t .....

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me-tax Act. He submitted that in N.N. Desai Charitable Trust Vs. CIT - [2000] 246 ITR 452 (Guj), Hon ble Gujarat High Court held that the enquiry should be confined to the prescribed conditions and authority examining question under Section 80G should not act as Assessing Officer. In CIT, Rohtak Vs. Gaur Brahmin Vidya Pracharini Sabha - [2011] 203 Taxman 226 (P&H), Hon ble Punjab & Haryana High Court held where all conditions laid down under Rule 11AA of the Income-tax Rules have been co .....

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IT(E), Trust Circle - [2012] 209 Taxman 230 and of ITAT, Bangalore Bench in the case of M.J. Education Trust Vs. DIT(E), Bangalore, order dated 30th April, 2010 in ITA No.890/Bang/2009 in support of the case of the assessee. 7. Regarding the fourth objection of the CIT that the trustees were appointed because they belonged to a particular organization, the learned counsel for the assessee submitted that it is the prerogative of the assessee trust to choose its trustees and the CIT should not int .....

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h is less than the market rate and lesser than the rates charged from others. 8. The learned CIT-DR has opposed the submissions of the learned counsel for the assessee. She submitted that the case law cited by the assessee is not applicable for the reason that in the case of the assessee, the conditions for grant of benefit under Section 80G(5) have not been complied with by the assessee. She emphasized on the nonfulfillment of the condition of genuineness of the activities of the assessee as th .....

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rer cheques and, in some payments, no supporting vouchers were there and there was a violation of the provisions of Section 13(1)(c) as payments were made to the trustees for erection of cow sheds in the Gaushala, without inviting proper competitive rates from other parties. Regarding the request of the assessee to cross-examine M/s Bhim Sain Suresh Kumar, she submitted that no statement of M/s Bhim Sain Suresh Kumar was recorded and, therefore, there was no occasion to grant the assessee opport .....

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that one Shri Ram Niwas Jain has signed the vouchers, who is an unauthorized person and therefore, could not have signed the various vouchers of the assessee trust. She referred to the various cash vouchers made by the assessee as detailed in the impugned order of the CIT. She referred to the cash voucher of 28,000/- for which there was no supporting bill. She referred to the order of the CIT wherein it is recorded that the proceedings register was not kept by the assessee since its inception. .....

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accordance with the objects of the trust or not. The learned CIT-DR submitted that the CIT in this case has passed a detailed and speaking order and has recorded reasons for coming to the conclusion that the trust is not eligible for benefit under Section 80G of the Act. She relied on the order of the CIT. 9. The learned counsel for the assessee, in his rejoinder, submitted that merely because no statement of M/s Bhim Sain Suresh Kumar was recorded by the Revenue authorities, is no ground to say .....

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rivate Limited which shows that M/s Jindal Mectec Private Limited has charged the assessee at lesser rates as compared to the rates charged from other parties and the assessee has also filed a chart showing various invoice numbers and the discount allowed to the assessee. 10. We have considered the rival submissions carefully and have perused the order of the learned CIT refusing registration under Section 80G of the Act and also the various copies of papers filed in the compilation before us. T .....

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2013, to which the assessee trust had given detailed reply dated 26th August, 2013 and the matter is still pending with the CIT, Hisar. It is undisputed that the registration granted under Section 12AA of the Act subsists till date and that the registration granted under Section 12AA has not been cancelled by the Department so far. We find that after the detailed reply dated 26th August, 2013 filed by the assessee in response to notice issued by the CIT regarding registration under Section 12AA .....

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e perused the various objects of the assessee trust as mentioned in clause (5) of the registered trust deed of the assessee, a copy thereof filed in the compilation before the Tribunal and we find that they were clearly charitable in nature and it has been specifically provided therein that there would be no discrimination on account of religion, caste, language etc. It is not the case of the Department that the objects of the assessee trust were not charitable in nature. We find that with the s .....

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m necessary should be satisfied about the genuineness of the activities of such institution or fund. We find that in this case, the CIT has decided this issue against the assessee on account of five reasons summarized in paragraph 4 of the impugned order. 11. The first reason given by the CIT for rejecting the claim under Section 80G was that there was no correlation with the objects of the assessee trust and its working except construction of Gaushala and that the other objects remained on pape .....

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bjects as may be mentioned in the trust deed together, we are of the view that this reasoning of the learned CIT is liable to be rejected. 12. The second objection of the CIT that the working of the trust was neither in accordance with the rules enumerated in the trust deed nor record has been kept, we find that there is no legal requirement of passing of resolution by all the trustees for every occasion. The working of the trust may be undertaken by the office bearers of the trust. We are of th .....

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at the final account submitted to the Department for the past many years did not disclose the correct state of affairs of the assessee. We find force in the submission of the learned counsel for the assessee that the CIT could not point out a single entry or asset found outside the books of account of the assessee trust. We find that the CIT has pointed out some discrepancies in the accounts and the vouchers maintained and produced by the assessee. It is settled law that any discrepancy in the a .....

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ion under Section 80G, the object of the trust was required to be examined and application of funds can be examined by the Assessing Officer at the time of framing of the assessment. In Sonepat Hindu Education and Charitable Society (supra), Hon'ble Punjab & Haryana High Court held that while dealing with the application under Section 80G(5)(vi), the CIT should not compute income under the Income-tax Act. In N.N. Desai Charitable Trust (supra), Hon ble Gujarat High Court held that the en .....

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hat during the subsistence of registration under Section 12AA, recognition under Section 80G(5) could not be denied. The other decisions in Karunya Rural Health Care Society (supra) of Hon ble Karnataka High Court and in M.J. Education Trust (supra) of Bangalore Tribunal support the case of the assessee. In Guru Gobind Singh Educational Society Vs. CIT, Bhatinda - [2009] 118 ITD 207 (ASR.), the Amritsar Tribunal in a case where registration under Section 12AA was granted and subsequently the Com .....

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e CIT that the trustees were appointed because they belonged to a particular organization, we are of the view that it is the prerogative of the assessee trust to choose its trustees and the CIT could not interfere with the same and should not have exceeded his jurisdiction in commenting upon the desirability or otherwise in the appointment of the trustees. 15. Regarding the fifth and the last objection of the CIT that the funds were not properly utilized and all recorded purchases and expenses i .....

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. Regarding the siphoning off the money, the same is a mere imagination on the part of the officer. We find that the assessee has filed a comparative chart of rates charged by M/s Jindal Mectec Private Limited for the work of constructing sheds in the assessee s Gaushala, comparing the same with the rates charged by them from others. We find that M/s Jindal Mectec Private Limited is a concern of Shri Pawan Kumar Jindal, a trustee of the assessee trust and the assessee has been able to provide th .....

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dal Mectec Private Limited has supplied similar material of sheds to six other parties at different places in Haryana, Himachal Pradesh and Uttar Pradesh, and the rates charged from the assessee trust for the material were even less than the rates charged from the outside other parties. The assessee has filed details of amount of concession received by the assessee trust from M/s Jindal Mectec Private Limited which shows that it was benefitted by the discount ranging from 10% to 56%. Merely beca .....

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benefit of any particular trustee or a group of trustees and, therefore, this reasoning of the learned CIT is devoid of any merit and, is accordingly rejected. 16. Regarding the objection of the learned CIT-DR that in case of dissolution of the trust, the provision of handing over the same to Rashtriya Swayam Sewak Sangh - Haryana State was not in accordance with law, we find that this objection is not sustainable for the reason that with the same clauses of the trust deed, the CIT, Hisar has g .....

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of the trust were genuine and that being so, the assessee trust was entitled to the grant of registration under Section 12AA of the Act. In the case before us, the Department could not show that any one of the conditions for grant of benefit under Section 80G of the Act as detailed in the provision of Section 80G(5) read with Rule 11AA of the Income-tax Rules was not complied with or that the activities of the assessee were not genuinely charitable in nature. Regarding the vouchers pertaining to .....

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hat the assessee trust has not made payment to the aforesaid concern, then M/s Bhim Sain Suresh Kumar should be summoned and opportunity to crossexamine be provided to the assessee. We find that no opportunity to cross-examine M/s Bhim Sain Suresh Kumar was provided to the assessee. The plea of the learned CIT-DR that no statement of M/s Bhim Sain Suresh Kumar was recorded and therefore there was no occasion to grant the assessee opportunity to cross-examining them, is not sustainable in law. Th .....

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CIT wherein it was mentioned that one Shri Ram Niwas Jain has signed the vouchers, who is an unauthorized person and, therefore, should not have signed the various vouchers. We find that the assessee has explained that Shri Ram Niwas Jain has volunteered himself to the cause of charity by serving the Gaushala and, in our view, it is not uncommon that a person, other than the trustee of the trust, may volunteer himself for the charitable work of a trust/society, without being even a trustee or me .....

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