Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, VARANASI CIRCUIT BENCH, VARANASI
Before: SHRI. B. R. BASKARAN & SHRI AMIT SHUKLA
PER AMIT SHUKLA, A.M.:
The aforesaid appeal has been filed by the assessee-trust against the order dated 30.3.2023, passed by ld. CIT (Exemption), Lucknow, rejecting the application of the assessee for registration under section 12AB of the Income Tax Act, 1961. The assessee has raised following grounds:
That on the facts and circumstances of the case and in the Law, the CIT (Exemptions) has grossly erred in denying/rejecting registration to the assessee u/s 12AB of the Income Tax Act, 1961 (of the Act) as claimed.
:-2-:
That the learned CIT has erred in law and on facts in not granting a reasonable opportunity of hearing and has thus violated the laws of natural justice.
That the Learned CIT erred in relying on the case laws which are distinguishable and not at all applicable to the facts of the case of the assessee while denying registration to the assessee.
That the observation of Learned CIT that the assessee has not incurred on charitable activities as per object mentioned in the Trust Deed is totally incorrect and improper.
That the Learned CIT also erred in holding that Gausewa activity is not a charitable activity.
6- That the Learned CIT erred in holding activities of the Trust are not genuine and the documentary evidence with regard to charitable activities of the Trust has not been furnished by assessee.
The brief facts of the case are that the assessee trust was engaged in providing asyluym/shelter to Cows and maintaining gaushalas and famine relief centres to provide proper treatment and fodder to needy stray cows. Looking into the charitable activities of the assessee-trust, the ld. CIT (Exemptions) had granted registration to the assessee under section 12A of the Act and consequently the assessee was getting benefit of the provisions of section 11 of the Act. Now, in accordance with the new provisions of the Act, the assessee was required to file an application for registration of the trust under section 12AB of the Act in form No.10AB in terms of Rule 17A of the Income Tax
:-3-:
Rules, 1961. The applicant-assessee-trust filed form No.10AB on 30.9.2022. Thereafter, a notice was issued by the ld. CIT (Exemptions) to the applicant-assessee, requiring the assessee to submit the details of note and activities of the trust during the last three years till 30.6.2022 and a note specifying the main area of charitable/religious activities, etc. In response, the assessee filed a detailed submission before the ld. CIT (Exemptions) along with various documents running into 254 pages. In sum and substance, the assessee submitted the activity report and details of what kind of charitable activities are being carried out in terms of object clause of the trust deed, such as providing shelter to disowned and homeless cow along with necessary medical facilities. The assessee had also filed certified copy of the original trust deed. The detailed reply along with documents submitted before the ld. CIT(Exemptions) has also been filed before us.
The ld. CIT(Exemptions) noted that no expenditure has been incurred on charitable activities as per the objects mentioned in the trust deed. From the Income and Expenditure account for the year ending on 30.6.2022, he noted that the assessee trust has incurred expenditure of Rs.5,65,508/- on account of bank commission, building repair, diary maintenance, diesel/petrol, etc., and also received donation of Rs.7,22,950/- along with sale of milk amounting to Rs.8,77,740/- and expenditure incurred in purchase of feed for the animals, amounting to Rs.8,46,426/-. He further noted that the assessee trust carrying out the activity in the name of “Gau Sewa” as charitable activity, but from the Income and Expenditure account, it is not evident that the assessee trust was carrying out
:-4-:
charitable activities. The relevant observations of the ld. CIT (Exemptions) for rejecting the application read as under:
“As per Memorandum of Association above are the object, but no expenditure has been incurred on charitable activities as per object mentioned in the trust deed. As per Income & Expenditure account filed for year ending 30.06.2022, following expenses have been shown to have incurred, but not related to charitable object of the trust.
A perusal of income and expenditure account of the assessee for 30.06.2022, shows that expense of Rs.5,65,508/- have been incurred on account of bank commission, building repair, diary maintenance, diesel/petrol, etc. Further, it is also seen that the assessee society claims to in engaged in the activities of “GauSewa”. A close look of the Income & Expenditure Account shows that during the F.Y. 30.06.2022, the assessee trust has received donation of Rs.7,22,950/- alongwith sale of milk of amounting to Rs. 8,77,740/-. The expenditure incurred in purchase of feed for the animals amounting to Rs.8,46,426/-. The assessee trust carrying out the activity in the name of "GauSewa” claims charitable activities but as per documents i.e. Income & Expenditure Account no charitable activities have been carried out.
Further, for carrying out "GauSewa” a registration no. is required from the UP Government. This society is not registered with O/o GaushalaNibandhan, UP Gaushala Act, 1964.
:-5-:
Accordingly, it is being found that the activities of the trust are not genuine.
Thus it becomes imperative on the part of the applicant trust to provide corroborating evidences that form the satisfaction regarding the genuineness of the activities of the applicant which is mandated by law.
Hence, assessee failed to file supporting documentary evidences with regard to charitable activities as per object of the trust. Therefore no verification of the object as per the trust deed with the activities carried out if any could be made. Thus the genuineness of the activities does not get established. Section 12AB makes it very clear that before granting registration under this section, the Commissioner has to satisfy himself about the genuineness of the activities of the trust or institution and also he has to verify that these activities are in consonance with the object of the trust or institution. Reliance in this regard is also placed on the judgment delivered by the Humble Supreme court in the case of commissioner of Income Tax, Ujjain Vs Dawoodi Bohara Jamat Civil appeal no 2492 of 2014.
As discussed above, the applicant has failed to file documentary evidences to enable me to satisfy about the genuineness of its charitable activities and to verify these activities are in consonance with its objects and also.
Considering to the above facts, I am unable to arrive at the satisfaction about the charitable nature of activities. Hence, the application filed in Form No. 10AB for the
:-6-:
registration u/s. 12AB of the I.T, Act, 1961, is hereby rejected.”
The observation and finding of the ld. CIT (Exemptions) in the present case is exactly the same as in the case of Math Gadwaghat Trust, Varanasi vs. CIT (Exemptions), Varanasi, vide his order dated 30.3.2023.
Before us, the ld. Counsel for the Assessee has relied upon the same submissions as made in the case of Math Gadwaghat Trust, Varanasi vs. CIT (Exemptions), Varanasi in ITA No.33/VNS/2023.
We have heard the rival submissions, perused the relevant material placed on record and also the observations of the ld. CIT(Exemptions) for denying registration under section 12AB of the Act. The assessee-trust was engaged in providing asylum/shelter to cows and maintaining gaushalas and famine relief centres to provide proper treatment and fodder to needy stray cows. In the past, looking into its charitable activities, the ld. CIT (Exemptions) granted registration under section 12A of the Act to the assessee and consequently the assessee was getting benefit of the provisions of section 11 of the Act. In accordance with new provisions, the assessee had applied for registration under section 12AB of the Act in form No.10AB and registration had been denied by the ld. CIT (Exemptions) on the ground that certain expenditures have been incurred which are not related to the activities of Gau Sewa. The ld. CIT (Exemptions) has also observed that registration from the office of the Gaushala Nibandhan has not been sought for carrying out Gau Sewa, which is a specific requirement to be complied with
:-7-:
from the UP Government under the U.P. Gaushala Act, 1964. First of all, there is no change in the activities carried out by the assessee, for which it was granted registration on the earlier occasion. In response to show cause notice, the assessee has filed detailed submissions along with voluminous documents, to prove the activities carried out by it and evidences for Income and Expenditure, which has neither been examined nor appreciated by the ld. Ld. CIT (Exemptions) while denying registration. Once the assessee-trust was formed for maintenance of Gaushala and providing fodder to the cattle and all its expenses are purely for such activity, then without specifying which activities are not for charity, registration cannot be denied. From the perusal of Income and Expenditure account for the financial years 2019-20, 2020-21 and 2021-22, it is seen that the assessee is having major receipts from sale of milk and has been incurring expenditure for cattle feed and medical expenses for the cattle. The ld. CIT (Exemptions) has picked up few items of expenses, like bank commission, building repair, diary maintenance, diesel/petrol, etc., all amounting to Rs.5,65,508/-, which are minor expenses under the head administrative expenses and diesel & petrol, and are purely for the generator used in the Gaushala and office. The ld. CIT (Exemptions) has not pointed out any activity of the assessee, which are not in accordance with the objects of the trust, albeit few expenditures has been pointed out that it was not for charitable activities. First of all, these expenditures are purely part of the entire charitable activities carried out by the assessee and he cannot pick up some items, like bank commission and diesel/petrol expenses, which are part of administrative
:-8-:
expenditure, to hold that it is not incurred for charitable activity. Thus, such an observation cannot lead to denial of grant of registration under section 12AB of the Act. Further, once in earlier years, the assessee’s activities, as per the objects, have been held to be charitable, and the expenditures incurred were found to be for the purpose of charitable activities and in none of the years, it was found that the activities are not genuine, then the ld. CIT (Exemptions) is not justified in denying registration under section 12AB of the Act. Accordingly, we direct the ld. CIT (Exemptions) to grant registration to the assessee-trust under section 12AB of the Act.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 29.9.2023.
Sd/- Sd/- [B. R. BASKARAN] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER
DATED: 29th SEP, 2023 JJ: