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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.S.SYAL, VP & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM:
This appeal preferred by the assessee emanates from the order of the Ld. CIT(Exemption), Pune dated 31.12.2019 passed u/s.12AA(1)(b)(ii) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) as per the following grounds of appeal on record.
“1.On the facts and circumstances of the case the Ld. CIT(E) has erred in exceeding the jurisdiction bestowed upon the Ld. CIT(E) in as much as the Ld. CIT(E) has sought details of sources of income of the Trust whereas the Ld. CIT(E) is to merely look into the application of such income.
2. On the facts and in the circumstances of the case the Ld. CIT(E) has erred in holding that the activities business oriented in nature and thereby refusing to grant registration u/s.12AA .
3. On the facts and in the circumstances of the case the Ld. CIT(E) has failed to appreciate that the Trust is providing platform to the Indian artists and indigenous artists and reviving Indian Art and Culture and is charitable within the meaning of 'charitable purposes' as defined in sec. 2(15) of the Income Tax Act, 1961.
4. The appellant craves leave to add, alter, amend, delete and/or vary the above grounds of appeal/relief claimed at any time before the decision of the appeal.”
Though the assessee has raised multiple grounds of appeal, the crux of the grievance of the assessee in this appeal before us is rejection of application for granting registration u/s.12AA of the Act.
The brief facts of the case are that the assessee has made an online application in Form No.10A for approval of the Trust/Institution u/s.12AA of the Act on 29.06.2019 under the category of Charitable Trust/Institution. The assessee is registered under Bombay Public Trust Act, 1950 with registration No.E-4733/THANE dated 10.07.2008. The application was carefully perused and considered along with its annexures. Thereafter, a letter was issued through ITBA portal to the applicant on 06.08.2019 requesting to upload certain other information/clarification by 23.08.2019 in order to process the application. The assessee submitted its compliance on ITBA portal in response to the said notice. The assessee contended to have been granted registration u/s.12AA of the Act vide order dated 27.02.2019 under the category of Religious Trust and now, it claimed to have changed its objects and hence, applied for fresh registration under the category of charitable trust.
During the First Appellate Proceedings, the Ld. CIT(Exemption) vide order dated 31.12.2019 had rejected the application for registration u/s.12AA of the Act of the assessee Trust/ Institution as per reasons appearing in his order.
The contentions of the Ld. AR of the assessee before us is that at the time of granting registration u/s.12AA of the Act, the jurisdiction of the Ld. CIT(Exemption) demands to examine the charitable nature of the objects of the assessee Trust/Institution and also to examine the genuineness of the activities conducted by the assessee Trust/Institution. In this case, the Ld. CIT(Exemption) had taken role of a Assessing Officer while rejecting the application for registration u/s.12AA of the Act.
Per contra, the Ld. DR placing reliance on the order of the Ld. CIT(Exemption) submitted that the assessee Trust has not provided any details of the activities carried out, details of income and expenses and other relevant documents were not furnished as called for by the Ld. CIT(Exemption). Therefore, the Ld. CIT(Exemption) was unable to examine the genuineness of the activities performed by the assessee Trust/Institution and also was unable to examine the charitable nature of the objects of the assessee Trust/Institution.
We have perused the case records and heard the rival contentions. When we peruse the order of the Ld. CIT(Exemption) at Para 3.2, it is stated that “ the applicant has not furnished the donors list for the F.Y.s 2015-16 and 2016-17 although it was specifically requested for vide point No.9 of the notice dated 06.08.2019 and subsequent notice dated 25.11.2019 and 16.12.2019. the applicant has submitted a ledger account in respect of donation of Rs.42.10 lacs during F.Y.2017-18 but has not given any address of the donors. From the names of donors, it seems that they were reality sector donors and hence, these receipts are also seems to be in the nature of sponsorship receipts. Further, in absence of any list of donors submitted for F.Y.2015-16 and 2016- 17, the exact nature and source of such donations was not satisfactorily explained and they may also be in the nature of sponsorship income only.”
At Para 3.3 of the Ld. CIT(Exemption)‟s order, it is observed that “ the applicant has claimed huge expenditure on account of activities i.e. organizing of Art Festival. The expenditures were on account of advertisement expenses, catering expenses, mandap decoration and lighting expenses, performance fees, artist fees, inauguration expenses, generator rent expenses etc. There found to be huge fluctuation in these expenses viz. the expenditure on generator rent during F.Y.2018-19 was at Rs.25,000/- as against Rs.11,74,244/- during F.Y.2016-17 and similarly, the performance fees during F.Y.2016-17 was at Rs.1.08 crores whereas the same was at Rs.45.80 lacs during F.Y.2017-18. Further, the applicant has not furnished any reason for such a fluctuation. However, the overall nature of the entire activity carried out by the applicant was thus, found to be in the nature of a business of event management. The applicant was getting huge income from stall rent and sponsorship and making expenditure on account of performance fees, artist fees, generator and mandap expenses and the applicant has not demonstrated any charitable activity at all. Therefore, the activity is found to be in the nature of a business model and not charitable.”
The Ld. CIT(Exemption) in his entire order has not dealt with the examination of the objects of the assessee Trust/Institution and has also not given specific findings on the genuineness of the activities carried on by the Trust vis-à-vis facts as well as documents on records. This is more so, because the assessee Trust/Institution has not furnished the requisite details as called for by the Ld. CIT(Exemption) and therefore, we are of considered view, in the interest of justice, the Ld. CIT(Exemption) should re-adjudicate the matter on examining facts viz. (i) charitable nature of the objects of the assessee Trust/Institution (ii) genuineness of the activities carried on by the assessee Trust/Institution.
Therefore, considering the totality of facts and circumstances, we set aside the order of the Ld. CIT(Exemption) and remit the matter back to his file for adjudicating the same as per directions mentioned aforesaid following the principles of natural justice. At the same time, the assessee Trust/Institution is directed to furnish requisite details as called for by the Ld. CIT(Exemption) for determining the case on merits. The Ld. CIT(Exemption) should come out with a speaking order. The matter is therefore, restored to the file of the Ld. CIT(Exemption).
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on 25th day of August, 2020.