TMI Blog2017 (9) TMI 1621X X X X Extracts X X X X X X X X Extracts X X X X ..... B. Income Tax Appeal No. 163 / 2012 - - - Dated:- 11-9-2017 - HON'BLE MR. JUSTICE K.S. JHAVERI AND HON'BLE MR. JUSTICE INDERJEET SINGH For the Appellant: Mr. K.D. Mathur for Mr. R.B. Mathur For the Respondent : Mr. Siddharth Ranka ORDER 1. By way of this appeal, the appellant has assailed the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal of the assessee. 2. This Court while admitting the matter framed the following substantial question of law:- Whether in the facts and circumstances of the case the ITAT was justified in law in directing to grant registration to the respondent assessee u/s 12AA despite of the facts that there was violation of section 13(1)(b) of the Act.? 3. The facts of the case are that the respondent-assessee is a charitable trust registered for the community and the exemption was sought under 12AA. The CIT (A) has rejected the same. However, the Tribunal has allowed the appeal. 4. Counsel for the appellant contended that the view taken by the Tribunal is contrary to law and while rejecting the registration, the CIT(A) has given reasons which reads as under:- All these students bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities. Asking about charitable activities at the nascent stage would amount' to putting a cart before the horse. 6.1. He has also relied upon the decision in case of Commissioner of Income Tax (Exemptions) vs. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust reported in [2016] 74 taxmann. Com 199 (Gujarat) wherein it has been held as under:- 7. It can thus be seen that the Commissioner focused his attention to clause 4.2 of the objects of the trust to come to the conclusion that the same were for the benefit of a certain religious communities only, in the process ignoring various other objects, for e.g. as per clause 4.1, the trust would engage itself in activities relating to education by maintaining and running education centers, infant schools, primary secondary and high schools, colleges etc., to run hostels, training centers for creating awareness in the common people and to make the education available for the public. It would also engage in imparting training in computers. As per clause 4.3, the trust would engage in doing all activities for medical help and to establish and administer dispensaries, hospitals and laboratories etc. It would also help the patien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 12AA of the Act, the Commissioner is to satisfy himself about the genuineness of the activities of the Trust on such inquiries as he may deem necessary. Sub-section (1A) and (2) of Section 12AA of the Act, are procedural in nature, whereas Sub-section (3) of Section 12AA of the Act, empowers the Commissioner to cancel the registration of the Trust or Institution, if he is satisfied that the activities of such Trust or Institution are not genuine or are not carried out in accordance with the objects of the Trust or Institution. 11. Therefore, the object of Section 12AA of the Act, is to examine the genuineness of the objects of the Trust, but not the income of the Trust for charitable or religious purposes. The stage for application of income is yet to arrive i.e. when such Trust or Institution files its return. Therefore, we find that the judgments referred to by the learned counsel for the appellant are not applicable to the facts of the present case arising out of the question of registration of the Trust and not of assessment. 6.4. He has relied upon the decision of Madras High Court in case of Commissioner of Income Tax, Copimbatore vs. R.K. Deivendra Nadar Trust rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f he was to form regarding escapement of income, is missing, such material was stated to be not sufficient for forming belief, and same view was taken in Ganga Saran's case (supra). Then, applying these judgments, it has been found by the learned Tribunal that one of the conditions necessary for issuance of notice under Section 148, being under statement of income of the assessee, is not fulfilled. It has been held, that in order to bring an item within the purview of Section 147, it is of utmost importance, that the AO should have reason to believe, based on relevant and cogent material, that such income has escaped assessment. It has been found, that there was no material direct or indirect, available with the AO, which could show that the receipt of donations, amounting to ₹ 30,16,598, was without any specific direction of corpus fund. The assessee has shown the receipts, as having been received in the corpus fund, coupled with the report of the auditor. The AO had not inquired into the nature of the receipts, before issuing notice under Section 148, and in earlier years also, the amount was held to be received in the corpus fund. 12. In our view, the learned Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit of any particular religious community. 7. Similar issue came up before various judicial authorities. The findings are summarized below: Agrawal Sabha (2014) 45 taxman.com 273 (Allahabad)/(2014)223 Taxman 353 (Allahabad)-Section2(15) read with section 12AA of the Income-tax Act, 1961 Charitable/religious purpose (Registration application) Assessment year 2010-11 Assessee had filed an application for registration under section 12AA Dominant object underlying constitution of trust was for benefit of only Agrawal community No documentary evidence had been produced to support that trust had carried out any activity of general public utility such as establishment of hospitals, dharamshalas, libraries and schools Whether, its application under section 12AA should be dismissed held, yes (Para 9) (in favour of revenue) IT. Where dominant object underlying constitution of trust was for benefit of only Agrawal community, application for registration under section 12AA should be dismissed. Gowri Ashram (2013) 36 taxman.com (Madras)/2013) 217 taxman 97 (Madras)/ (2013) 356 ITR 328 (Madras) Section 2(15) read with section 12AA of the Income Tax Act, 1961 Charitable p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eds, forests and wildlife) and reservation of monuments or places or objects or artistic or historic interest) and the advancement of any other object of General Public Utility. During the course of hearing, the id. Counsel for the assessee submitted that Jainism is the philosophy and preservation of symbol of such philosophy would definitely come into the embrace of the word Charitable . During the course of hearing, the Id. D/R could not refute the fact that clauses 16 of the objects which provides that without any descrimination of the caste or creed to help economically poor, old, ailing, handicap, poor students and clause 17 provides for hel0p for hospitalization of ailing persons, medicines, cold water, night shelter and Dharamshala etc. In our considered view, both these objects definitely fall under the category of Charitable purpose and cannot be construed as solely for the benefit of a particular religious community. Keeping these objects in view and respectfully following the judgment of the Hon ble Supreme Court in the case of CIT vs. Dawoodi Bohara Jamat, 364 ITR 31 (SC), the order of id. CIT (Exemption) is set aside and we hereby direct the Id. CIT (Exemption) to g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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