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TMI Blog2022 (3) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... eard. This order of the Tribunal was passed on 20.04.2018 in ITA No. 1448/Chd/2017. Pursuant to the direction of this Tribunal, the assessee was issued a questionnaire by the office of the Ld. CIT(E) and the assessee filed detailed response before the Ld. CIT(A). However, it was the opinion of the Ld. CIT(E) that since the assessee trust had been established in order to meet Corporate Social Responsibility (CSR) of the parent company KDDL Ltd. and further since the assessee had routed the funds received from the parent company to the corpus funds without any specific direction, the assessee had violated the provisions of section 11(1)(d) of the Income Tax Act, 1961. The Ld. CIT(E) also noted that the assessee trust had merely donated funds received from the parent company in order to discharge obligation of the parent company, although, giving donations was not one of the objects defined in the trust deed. It was further held that the assessee trust was merely a vehicle for discharging the legal obligation of the parent company and that it had not undertaken any project implementation. The Ld. CIT(E) proceeded to reject the application for registration once again. 2.1. Now, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the objects of the assessee were not charitable in nature and further that it was an incorrect observation of the Ld. CIT(E) that the assessee trust was in-house captive trust of its parent company as the assessee trust had also carried activities beyond the CSR objectives of its parent company. The Ld. AR vehemently argued that the Ld. CIT(E) has not at all considered the activities of the assessee trust and the evidences which have been filed by the assessee in this regard and that he had only made some observations and drawn erroneous conclusions from the bank accounts of the assessee trust. The Ld. AR also placed reliance on the following judicial precedents:- 1. Roundglass Foundation Vs. CIT(E) reported in [2020] 77 ITR (Trib) 228 (Chandigarh). 2. Nanak Chand Jain Charitable Trust v. CIT(E), Chandigarh [2018] 169 ITAD 534 (Delhi-Trib) 3. CIT Vs. J.K. Charitable Trust [1991] 196 ITR 31 (Allahabad) 4. Director of Income-tax (Exemptions) v. Bagri Foundation [2010] 192 Taxman 309 (Delhi) 3.1. The Ld. AR while relying on the above mentioned judicial precedents vehemently argued that there is no finding by the Ld. CIT(E) that the assessee trust was not acting in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irl Child across various locations in India by sponsoring Five Learning Centers @ 95,000/- per learning center per year (Educating 30 Girls per Learning Centre) Thus educating 150 girl child in a year. The IIMPACT is located at M-2/3, Ground Floor, DLF Phase-2, Gurgaon 122002 and Its Website is www.iimpact.net for further details. (Section 2(15)-Education Promotion) Than the Trust Contributed Rs. 2,50,000/- to Youth Technical Training Society (YTTS) a Society registered with Mission to help the underprivileged for promoting education, including special education and employment enhancing vocation training skills specially among children, women elderly and disabled persons on long term basis by executing a Agreement for the above purpose. The donation was given vide cheque No. 292572 dated 11.07.2016 drawn on IDBI Bank with payees account endorsement only (Section 2(15)-Education Promotion) Then the Trust contributed Rs. 1,00,000/- (Cheque No. 292573 dated 11.08.2016) to Heart to Heart Service Society of Inner wheel Club of Chandigarh for the poor and needy patients in the PGI/General Hospitals Sector-16/Other Govt. Hospitals through the distributions of costly medicines required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otion and development of traditional arts and handicrafts. 6. Measures for the benefit of armed forces veteran, war widows and their dependents; 7. Training to promote rural sports nationally recognized sports and olympic sports; 8. Contribution to the Prime Minister's National Relief Fund or any other fund set up by the central Government for socio-economic development and relief and welfare of the scheduled castes, the Scheduled Tribes, other backward Classes, minorities and women; 9. Contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government; 10. Rural development projects; 11. Slum area development. 5.2. A perusal of the activities which have been carried out by the assessee trust since its inception as well as the objectives of the trust which have been reproduced above have not been doubted by the Ld. CIT(E) and the only objection of the Ld. CIT(E) for refusing the registration u/s. 12AA of the Act to this trust is, apparently, that the assessee trust is in-house captive trust of its parent company M/s. KDDL Ltd. and further the assessee has not spent money in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under:- "6. A perusal of the impugned order of the Ld. CIT(E) reveals that the Ld. CIT(E) nowhere in the impugned order has pointed out that the appellant company has not been acting as per its objectives or that the activity of the appellant company was not genuine vis-a-vis its objects. The main plea taken by the Ld. CIT(E) is that the said company is an arm of another company namely M/s. Round Glass Wellbing Private Limited for the purpose of carrying out their CSR liability. That otherwise the main control over the appellant company is of M/s. Round Glass Wellbing Private Limited. However, there is no allegation or observation by the Ld. CIT(E) about the charitable nature of its objects and activities thereof. So far as the grant of registration to a company who is deemed to be under the control of another company and who has formed such company for complying their CSR required under the company's Act, the issue has been settled by the Coordinate Delhi Bench of the Tribunal in the 'Nanak Chand Charitable Trust vs. CIT (Ex.)' (2018) 91 traxmann.com 197 dated 9.2.2018, wherein, it has been held that merely because the assessee trust/company has been formed by anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n) that the activities so far further show that the trust is relinquished its function as the primary implementation agency and undertaking its own programs to impact direct beneficiary by the transferring its funds to other society. Even the funds given to another charitable society for the purpose of charity are considered as application of income for the purpose of exemption under Section 11 of the Income Tax Act, 1961. At the time of granting the registration under Section 12AA of the Income Tax Act, 1961, the CIT (exemption) need not go beyond two parameters that the object being charitable in nature and activities being genuine. All other activities are the matters to be taken care of by the Assessing Officer at the time of assessment for granted exemption under section 11 of the Act. Reasons (vi) given by the CIT (exemption) that it also militates against the legal principal that social enterprises cannot be a direct recipients of money from corporate as it is a profit making Company. This reasons by the CIT (exemption) is not in conformity with any of the provisions of the Income Tax Act. A profit making Company can grant certain donation to the charitable trust, how can th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e which is contrary to the above stated judicial pronouncements. He has only relied on an order of ITAT, Amritsar Bench in the case of Goenka Charitable Trust Vs. CIT(E) Chandigarh (supra). However, with due respect, it is our considered opinion that the view taken by the ITAT Amritsar Beach in the case of Goenka Charitable Trust Vs. CIT(E) Chandigarh (supra) does not have the binding force for us as it was rendered in an earlier date i.e. 2018, whereas, the order of the ITAT Chandigarh Bench in the case of Roundglass Foundation Vs. CIT(E) was pronounced in 2020 i.e. at a later date. Further, we also note that the ITAT Chandigarh Bench is the jurisdictional Bench of the ITAT for the assessee and, therefore, for that reason also, the order rendered in that case will have to be applied in the case of the assessee. Therefore, in overall view of the facts of the case and considering the very important fact that the Ld. CIT(E) has neither disputed the charitable nature of the objects of the assessee trust, nor has doubted the genuineness of the activities carried out by the assessee trust, the assessee trust deserves to be granted registration u/s. 12AA of the Act. Accordingly, we set a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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