TMI Blog2017 (12) TMI 1546X X X X Extracts X X X X X X X X Extracts X X X X ..... houdhry, Judicial Member Appellant by: Sh. P.N. Arora (Adv.) Respondent by: Sh. Rahul Dhawan (DR.) ORDER T. S. Kapoor (AM): This is an appeal filed by assessee against the order of Ld. CIT(Exemption), Chandigarh, dated 30.07.2016 refusing registration u/s 12AA of the Act. 2. The assessee has taken various grounds of appeal, however, the crux of grievances is the refusal of Ld. CIT(E) for registration u/s 12AA of the Act. 3. The brief facts of the case as noted in the order passed by Ld. CIT(E) is that assessee is a society which was created on 21.04.1997 and is registered by the Registrar of Societies, J K Government. The aims and objects of the society inter-alia includes: (i) To promote universal prosperity and develop social, physical, mental and spiritual condition of all human beings of all classes, creeds, religious races, colours and castes by imparting learning based on yoga and vidc, vedantik and ancient Indian culture and philosophy. (ii) To establishe a Vishwa Gurukul University by opening instruction centers all over India, J K and abroad for imparting instructins in all languages in theory and practice of Yoga Sciences which in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25,855 Total- ₹ 11,46,401 The gross receipt total expenditure claimed (a few major expenses nave been reflected in tire table). There are no expenses attributable to propagation of yoga in the financial statement attached with the application or subsequent submissions, No effort has been made to explain how the charitable purpose in yoga has been achieved either. The expenses claimed for salary, bhandara and gaushala also remain uncorroborated in the absence of any bank statement filed despite being specifically asked for. The applicant failed to furnish receipts and payments accounts for three years that were asked for vide tire final show cause. 7. It has been noticed further that the applicant society has filed its return of income for tire A.Y. 2014-15 and A.Y. 2015-16 at 'Nil without showing any evidence for claiming exemption under any relevant section of fire Act. Papers for A.Y. 2013-14 have also been appended. No evidence of filing return for A.Y. 2013- 14 however, has been attached. Even for A.Ys.2014-15 and 2015-16 it is evidenced that returns have been filed only on 30.11.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our attention was invited to copy of show cause notice as placed at (PB-36) and replies filed by assessee as placed in (PB 37 to 39). It was submitted that while rejecting the application of assessee the Ld. CIT(E) had raised the following objections. (i) There are no expenses attributable to propagation of Yoga in Financial Statements. (ii) No return relating to Asst. Year 2013- 14 has been filed. (iii) Details regarding ownership of land not provided. (iv) The said property was not reflected by appellant in the balance sheet. The Ld. AR in this respect invited our attention to page No.40 to 62 87 to 89 wherein the details of Bhandara Expenses and Salary Expenses was placed. The Ld. AR submitted that the Kitchen Expenses were incurred on account of free food milk provided to Yoga Teachers, Students, Supervisors, Assistant Yoga Gurus, Cook, who were providing services for achievement of the objects of the society. The Ld. AR further submitted that Yoga Teachers are Brahmcharies and they do not charge any remuneration for imparting Yoga training. It was submitted that these expenses clearly related to Propogation of Yoga and Assessing Officer during Assessment Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mann.Com 123. (iii) Decision of ITAT, Amritsar Bench in the case of Divine Health Services vs. CIT-II, Amritsar in ITA No. 417(ASR)/2010, order dated 07/06/2012 relating to AY 2010-11. (iv) Decision of ITAT, Amritsar Bench in the case of D.N. Memorial Trust vs. CIT in ITA No. 617(ASR)/2011, order dated 11/07/2012. (v) Decision of ITAT, Amritsar Bench in the case of Dream Land Educational Trust vs. CIT reported in 109 TTJ 850. 7. The Ld. AR submitted that assessee was carrying out Yoga activities which was apparent from the order of Hon ble J K High Court itself wherein the Hon ble Court had noted that Assessee was engaged in carrying out Yoga activities and in this respect our attention was invited to Page 123 of Paper Book where copy of such order was placed. Our attention was also invited to PB 125 where the Hon ble Court had noted that activities of Ashram were being done without any profit or margin. The Ld. AR also took us to Paper Book pages 27 to 33 where copies of letters written by various institutions requesting the assessee to hold Yoga Classes was placed. The Ld. AR also filed certain photographs showing certain army men undergoing Yoga Training at the campu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le copies of Income Tax Returns for the last three years. The Ld. DR submitted that vide letter dated 23rd Feb. 2016, the Ld. CIT(E) vide para 4 had also required the assessee to file copies of last three years income tax returns and therefore, the argument of Ld. AR that no such query was raised by Ld. CIT(E) is not correct. As regards the details regarding ownership of land not provided to Ld. CIT(E), the Ld. DR submitted that the balance sheet placed at (PB - 22) do not match with the balance sheet filed durings the proceedings before the Ld. CIT(E) and our specific attention was invited to (PB-20) where under the heading fixed assets Asahram land and building was mentioned and whereas in the balance sheet filed during proceedings there was no mention of land. The Ld. DR further submitted despite a lapse of period of sixteen years from the date of judgment of Hon ble J K High Court, the assessee did not file any other document to prove the ownership of entire land. The Ld. DR, filed certain copies of photos obtained from the record of Ld. CIT(E) and submitted that these photos do not indicate any activity of imparting Yoga and rather these photos indicate that assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (iv) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;] The procedure laid down for registration of Societies u/s 12AA is contained in provisions of Sec.12AA which for the sake of completeness are reproduced below. The procedure for registration of a trust or institution, is as follows:- (1) On receipt of an application for registration of a trust or institution; the Commissioner shall - (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such enquiries as he may deem necessary in this behalf and (b) after satisfying himself about the objects of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust were not genuine and even if we assume that expenses incurred on kitchen expenses in the form of Bhandara expenses were for Public at large even that cannot amount to holding that activities of the Society were not genuine. The explanation of the Ld. AR that these expenses were incurred for all students or teachers of the society and some times for public is a plausible explanation and which cannot be brushed aside to held the activities of the institution were not genuine. The holding of Bhandara can not be ground to reject the registration unless it was proved that it was for any particulars community or groups of persons. This view has been held by Hon ble Allahabad High Court in the case of CIT, Agra vs. Sri Radha Raman Niwas Trust. The findings of the Hon ble Court are placed in (PB-76) For the sake of completeness the findings of the Court are reproduced below. We find that at the time of granting the registration under Section 12AA. the Commissioner has limited power only to examine objects of the Trust and genuineness of the activities. The law requires that he should pass a speaking order. In the case under consideration, we notice that the assessee has furnishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile the return for the Asst. Year 2013-14 being loss that itself is not sufficient to indicate that activities of the assessee were not genuine. The Hon ble Punjab Haryana High Court in the case of CIT(E) vs. Shri Shirdi Sai Darbar Charitable Trust in such circumstances has held as under: 3. We have heard learned counsel for the appellant-revenue. 4. The matter has been examined by the Tribunal after perusing the relevant statutory provisions. It has been categorically recorded by the Tribunal that the CIT(E) has to satisfy tow conditions while granting registration under Section 12AA of the Act. Firstly, whether the objects of the assessee are charitable in nature and thus, the activities are genuine. It cannot be concluded on the basis that the assessee has not filed its income tax returns in earlier years that the activities of the assessee are not genuine. It has been further recorded that Section 13 of the Act comes into play at the time of granting exemption under Section 11 of the Act and not at the time of granting registration under Section 12AA of the Act. No adverse remarks have been recorded by the CIT (E) with regard to the objects contained in the memorandum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ages the publication of the said agreement in the Govt. Gazette Section 42-A makes the provisions of Sections 39 to 42 applicable to the acquisition of the land by the Government for the purpose of transferring it on lease to any Corporation or local authority . The respondents have not controverter this plea of learned counsel for the petitioner or shown from the record that there mandatory provisions have been complied with. The learned counsel for the petitioner has next submitted that provisions of Section 5-A of the Act have riot been complied with by affording an opportunity to the petitioners objector, despite objections filed Objecting the acquisition of the property as the land and the structures standing thereon are being utilized by the petitioner for public purpose. The relevant portion of section 5-A(2) is reproduced which reads below Every objection under sub-section (1) shall be made to the Collector in writing and the Collector shall give the objector an opportunity of being heard either in person ( or by pleader or by a person authorized by him) and shall, after hearing all such objections and after making such further inquiry, if any, as he thinks necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot complied with. The respondents after receiving the objections have not provided either in person or through agent which amounts a breach of the mandatory provision of Section 5-A (2) of the Act. Therefore, the Notificationsdated 17.11.1995 Issued under Section 6 and notifications Issued subsequent thereto cannot be maintained. For the aforesaid reasons, the writ petition is al lowed. The impugned Notifications are quashed. No order as to costs. From the above order it also becomes amply clear that Assessee is the owner of land. The Ld. CIT(E) has himself held that Assessee was owner of land measuring 51 canals and the rest of land is in the name of other persons. The Ld. CIT(E) has held that ownership of land from which income is sought to be exempt u/s 11 remains doubtful. However, in our opinion the order of Hon ble J K High Court is sufficient to prove that Assessee was owner of land. Even if some part of land was not in the name of Assessee even then that can not used as a tool to deny the exemption as the activities of imparting Yoga can be carried out even on a rented land or on land belonging to others. Moreover 51 kanals of land which the Ld. CIT(E) has held to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;] The above definition clearly shows that government has given much importance to yoga and the word yoga has been entered even before medical relief in the definition of charitable purpose. Today with the efforts of our Hon ble Prime Minister, Yoga has been recognized the world over this shows the intention of the government regarding promotion of yoga. Since the assessee society in engaged in teachi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities the Trust can be considered to be new trust as before 01.04.2016 the Yoga was not a charitable activity. Moreover, in our opinion, the ratio of these decisions is that at the time of registration the Ld. CIT(E) is to examine the objects of the society and genuineness of activities of the trust only. The objections raised by Ld. CIT(E) do not in any way suggest that the activities of Trust were not genuine. The Assessee had filed sufficient evidences to prove genuineness of activities relating to imparting of Yoga and which we have also observed that Assessee was providing Yoga training free of cost and it was started by Swami Dhirender Brahmchari who was a well known figure in imparting education in Yogic Sciences. The Hon ble J K High Court has also observed this in its order. The relevant findings are reproduced herein. It is further averred that in the year 1952 Sh. Dhiru Bhai Choudhary came to learn Yoga from the petitioner No.1. Who was taught and made perfect coach by coaching and training. He was given the name as Swami Dhirender Brahamchari by the petitioner. Petitioner No.1 is absolute owner of the land subject matter of dispute donated by the people and som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of income. The relevant findings of the Hon ble Court are reproduced below. 8. We have heard learned counsel for the appellant, but find no merit in the present appeals. As per Section 12AA of the Act, an application for registration of the Trust and Institution is required to be made within one year from the date of creation of the Trust or the Establishment of such Institution. The procedure for registration of the Trust or Institution is prescribed under Section 12AA of the Act. In terms of Clause (a) of Section 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. 9. Section 11 of the Act contemplates that the income as specified therein shall not be included in the total income of the previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred 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. 12. In view of the above, we do not find that any substantial question of law arises for consideration in the present appeals. Hence, the same are dismissed. The above case law has been applied by the Hon ble Punjab Haryana High Court in the following cases. (i) CIT-I, Ludhiana Vs. Baba Kartar Singh Dukki Educational Trust 42 Taxman. 17 (P H) (ii) CIT, Rohtak Vs. B.K.K. Memorial Trust 29 Taxman 286 (P H) (iii) CIT, Bathinda Vs. Baba Deep Singh Educational Society, 21 Taxman 38 (P H) Above all, the latest judgment of Hon ble Punjab Haryana High Court in the case of Commissioner of Income Tax (Exemptions) vs. Shri Shirdi Sai Darbar Charitable Trust vide its decision dated 27.03.2017 with respect to granting of registration u/s 12AA has held as under: 3. We have heard learned counsel for the appellant-revenue. 4. The matter has been examined by the Tribunal after perusing the relevant statutory provisions. It has been categorically recorded by the Tribunal that the CIT(E) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trustees are authorized to demise the immovable property or properties of the trust either from year to year or for any fixed term or for any term of years or on monthly basis at such rent and subject to such conditions as they deem fit and proper and also accept surrender of lease and may manage the property as they think proper. From the perusal of this clause, we observe that the trustees have been given powers to give property of the trust on lease or on rent. We do not find anything wrong in this clause so as to deny the assessee the registration under Section 12A of the Act. As regards the apprehension of the Commissioner of Income Tax (Exemptions) that his clause may attract the provisions of Section 13 (l)(c) of the Act, we are of the view that the conditions as provided in Section 13 or elsewhere are to be seen by the Assessing Officer at the time of assessment proceedings on yearly basis and not by the CIT (Appeals) while granting registration under Section 12A of the Act. 8. Sections 13 comes into play at the time of granting exemption under Section 11 of the Act and not at the time of granting registration under Section 12A of the Act. The only two requirements as s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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