TMI Blog2018 (2) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporate Social Responsibility project and in addition to that except giving donation to the tune of ₹ 40,000 and 30,000/- to the Govt. Schools out of ₹ 11,00,000/-, the applicant trust has not carried out any activities till passing of the impugned order even otherwise till disposal of this appeal. We are in agreement with the CIT(E) that activity so far clearly shows that the trust has relinquished its function as the primary implementation of the agencies and undertaking its own programmes to impact targeted beneficiaries by transferring its funds to other societies and it is also militates against the legal principal that the social enterprises cannot be a direct recipient of money from a corporate as it is a profit making company and it is also clear that the composition of the trust is restrictive in nature and to that extent not amenable to the public charity. Thus the Ld. CIT(A) has gone into the genuineness of the activities of the society and made necessary enquiries and after non-satisfying about the genuineness of the activities rightly passed an order refusing the registration to the applicant society. - Decided in favour of revenue - I.T.A No.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and equity. The following grounds of appeal raised in ITA No.511(Asr)/2016. 1. That the learned CIT has erred in not granting approval u/s 80G of the Income Tax Act, 1961 to the appellant Trust vide order dated 28-9- 2016 as the registration under section 12AA by the Id. CIT has been rejected simultaneously on the said date. 2. That the order of cancellation of registration u/s 12AA has been challenged by the applicant trust before the Hon'ble ITAT and the appeal is yet to be decided. The Appellant prays that on acceptance of the assessee's appeal filed against order u/s 12AA by the Id. ITAT, the worthy CIT be directed to grant approval u/s 80G as the Trust satisfies all the conditions prescribed for grant of approval. 3. That the appellant seeks leave to add, amend, delete or alter any ground or grounds of appeal petition at the time of hearing, if deemed necessary, in the interest of justice and equity. 3. The brief facts of ITA No.510(Asr)/2016 are as under: In the instant case, an application for registration u/s 12AA of the Act was filed before the Ld. CIT(E) on 29.03.2016 and it was revealed in the application that the society is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT (Exemptions), Chandigarh has rejected the application of the applicant made under section 12A of the Income Tax Act, 1961 for registration as a charitable trust. The application dated 25- 3-2016 in Form No. 10A complete in all respects was received in the office of CIT (Exemptions), Chandigarh on 28-3-2016 (stated as 29-3- 2016 in the order). The Trust was established on 8-3-2016 under the Trust Deed which was registered with the Sub-Registrar, Amritsar on this date, and the application sought registration from the financial year 2015-16 relevant to the assessment year 2016-17. Also consequent to the rejection of registration under section 12A, appellant's application for approval under 80G has also been rejected simultaneously. 2. Since the Trust was newly established, it commenced its charitable activities by contributing to other registered and recognized/reputed charitable organizations and Government Schools. The application for registration gave a detailed account of such charitable contributions/expenditure for the period from 8 March 2016 to 23 March 2016, along with evidence thereof. Subsequently vide letter 3 August 2016, the appellant filed inter-alia au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue and go to the root of the matter. 8. The courts have held that from the perusal of provisions of section 255 and the ITAT Rules, that the Tribunal has full powers of admission of additional evidence as it thinks fit and in the interest of justice, if the Tribunal feels appropriate it has to call for the evidence or examine the witness as is necessary for deciding the appeal before them. In addition to the written statement, it was further submitted by the Ld. AR that in view of the judgment passed by the Hon ble Allahabad High Court in the case of CIT vs. Red Rose School (2007) 212 CTR 394 (ALL) submitted that scope for enquiry by the CIT u/s 12A of the I.T. Act is very limited and the enquiry regarding genuineness of the activities cannot be stretched beyond the genuineness of the activities. Further the Ld. AR relied upon the order passed by the ITAT, Lucknow Bench in the case of St. Don Bosco Educational Society vs. CIT (2004) 90 ITD 477 and submitted that provisions of Sec.12AA of the Act, restrict the power of the CIT to examine as to whether assessee who has moved an application for registration u/s 12A of the Act is actually carrying on the activities which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction of the competent authority in respect of genuineness of activities as well, particularly when the applicant is on going entity and it would also be necessary to examine the real purpose that is inherently built creation of captive trusts by companies in order to redeem their CSR obligations. In the order, it was observed by the Ld. CIT(E) that Ludhiana Beverage Pvt. Ltd. is a company which is closely linked to the applicant trust. Apart from the fact that Ludhiana Beverage Pvt. Ltd is the settler of the trust in contention the major contributions are also witnessed to have been provided by the company to this trust. Further, it is evidenced that the Managing Director of Ludhiana Beverage Pvt. Ltd Sh. Kailash Kumar Goenka is also among the trustees in addition to three other close relatives who presumably are also intricately linked to the private limited company mentioned above. The contents of the trust deed particularly point 6 revealed that any donations and contributions received from Ludhiana Beverages Pvt. Ltd., or from any other company in pursuance of their corporate social responsibility policy shall be spent/applied by the trust as per directions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and works of art; setting up public libraries; promotion and development of traditional art and handicrafts; ( vi). measures for the benefit of armed forces veterans, war widows and their dependents; ( vii) training to promote rural sports, nationally recognized sports, Paralympics sports and Olympic sports ( viii) contribution to the prime minister's national relief fund or any other fund set up by the central govt., for socio economic development and relief and welfare of the schedule caste, tribes, other backward classes, minorities and women; ( ix) contributions or funds provided to technology incubators located within academic institutions which are approved by the central govt. ( x) rural development projects] ( xi) slum area development. Explanation.- For the purposes of this item, the term slum area' shall mean any area declared as such by the Central Government or any State Government or any other competent authority under any law for the time being in force.] The Finance Act, 2014 provides that any expenditure incurred by an assessee on the activities relating to Corporate Social Responsibility referred to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he society or institution and genuineness of its activities. In the instant case, there is clause No.(v) in the trust deed which specifying that any donation received shall be spent/applied by the trust as per the objects of the trust, donation trust corpus of the trust shall be applied in accordance with specific directions from the donor. Further in clause (vi) specifies that any donation or contribution received from Ludhiana Beverage Pvt. Ltd or from any other company in pursuance of their Corporate Social Responsibility shall be spent/applied by the trust as per directions of the donor. These clauses in the trust deed are clearly seems to keep the trust by the settler etc. Ludhiana Beverage Pvt. Ltd. in its own domain. The directions shall however fall within the purview of the objects of the trust. Further from the trust deed it reflects that settler and the trustees are almost family members having no participation of the public which also not sync with the Corporate Social Responsibility project and in addition to that except giving donation to the tune of ₹ 40,000 and 30,000/- to the Govt. Schools out of ₹ 11,00,000/-, the applicant trust has not car ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
