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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘A’
Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED
सुनवाई क� तार�ख/Date of Hearing : 08/01/2020 घोषणा क� तार�ख /Date of Pronouncement : 16/01/2020 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : Assessee is in appeal before the Tribunal against order of the ld.CIT(Exemption), Ahmedabad dated 26.2.2018 passed under section 12AA of the Income Tax Act, 1961.
Sole grievance of the assessee is that the ld.CIT(Exemption) has erred in not granting registration to the Trust under section 12AA of the Act.
Brief facts of the case are that the assessee has filed an application on 4.8.2017 in form no.10A under Rule 11A of the Act for grant of registration to the Trust under section 12AA of the Act. It was pleaded by the assessee that its Trust came into existence on 8.5.1953 when it was registered with Charity Commissioner under Bombay Charitable Trust Act, 1950. The ld.CIT after examination of the details submitted by the assessee rejected the application of the assessee by observing as under: “2. A letter dated 22.09.2017 was issued to the applicant to furnish detailed note on the activities actually carried out by the Trust as well as the documents / details. The above-mentioned inquiry about the actual activities of the Trust is necessary in view of the mandatory provisions of the procedure for registration u/s.12AA according to which the CIT (Exemption) 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 inquiries as he way deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, (c) he shall pass an order in writing registering the trust or institution;
(c) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant:
Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard."
3. However, on given date, neither applicant attended the office nor furnished any details/ documents nor sought any adjournment.
Following the principles of natural justice, final opportunity was given to the assessee and notice was issued to the applicant on 01.01.2018 fixing hearing for 22.01.2018. In this letter, it was made amply dear to the applicant that in case of non-compliance, their application for registration is liable to be rejected for want of the details as asked for in the above-said letter. Part compliance was filed on 29.01.2018. Since the applicant has not furnished the required details, accordingly I am constrained to dispose of the registration application on the basis of material available on record.
5. Perusal of part compliance filed by the assessee trust reveals that the audited accounts and for 1 .Y. 2012-13, 2013-14 and 2015-16 have been filed wherein income-expenditure accounts do not reflect ;my charitable activities
carried out by the trust. Further, the accounts for F.Y. 2016-17 and copy of trust deed duly certified by the trustee is not furnished. In the absence of the details, the genuineness of the activities does not get established. This clearly indicates that the applicant does not have intention even to start charitable/ religious activities. Section 12AA 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 objects of the trust or institution. Reliance in this regard is placed on judgment delivered by the lion. Supreme Court in the case of Commissioner of Income-tax, Ujjain Vs Dawoodi Bohara Jamat Civil Appeal No. 2492 of 2014. The facts considered in para 14 of the judgement by the Hon'ble Apex Court are reproduced for sake of convenience:
" Section 12AA lays down the procedure to be followed by the Commissioner for grant or refusal of application for registration made under Section 12A. According to procedure so laid down, the Commissioner shall call for documents and information and conduct an enquiry to satisfy himself of the genuineness of the trust and upon i caching satisfaction of the charitable or religious nature of the objects and the authenticity of the activities of the trust, lie. would grant registration. If he is not satisfied of the aforesaid, the request made in the application may be declined.”
As discussed above, the applicant has failed to file documentary evidences to enable me to satisfy about the genuineness of its activities and to verify these activities are in consonance with its objects.
7. Looking to the above facts, I am unable to arrive at the satisfaction of the genuineness of the activities. Hence, the application filed in Form No.10A for the approval u/s. 12AA of the Income-tax Act, is rejected.”
4. The ld.counsel for the assessee while impugning order of the ld.CIT(Exemption) has contended that for verification of activities of the assessee, it is not necessary that Trust should act in pursuance of the objects before grant of registration under section 12AA of the Act. The ld.CIT ought to have examined objects of the trust. With regard to non- submissions of the trust deed is concerned, he pointed out that basically there is no formal trust deed available with the assessee. It came into existence long back in 1953 when even the Income Tax Act 1961 was not in existence. The objects of the trust were reflected in the registration, details of certificate issued under Bombay Public Trust Act, 1950. He pointed out that such objects are as under: “Objects:- Shree Visha Shrimali Khambati Gyanti Trust will do following works. The said objects will be fulfilled keeping in view the prevailing Provisions of Act and with the prior approval of Government wherever necessary. 1. To help members. 2. For the study of Jain Religion to maintain Path Shala, Library etc. 3. To arrange fund for seven Shetras prevalent in the Jain religion. 4. To arrange and maintain Bhojan Shala for Jains.
To help co-members for their welfare etc. 6. To arrange facility for Jain Tapsvis undertaking fast called Aaiyamble etc. 7. To celebrate Paryushan Parav. 8. To work for Jiv Daya- Animal welfare etc. 9. To provide educational and health services. 10. To do all works for the benefit of Jain Society in conformity with Jain Tatva- gyan and to do works for the encouragement of Jain religion.
5. The ld.counsel for the assessee thereafter took us through section 19 of Bombay Public Trust Act, 1950 and pointed out that before grant of registration under the said Act, similar exercise was required to be undertaken. The assessee has fulfilled all these conditions, and therefore it deserves to be granted registration under section 12AA of the Act. He relied upon the judgment of Hon’ble Gujarat High Court in the case of CIT Vs. Kutchi Dasa Oswal Moto Pariwar, 362 ITR 194 (Guj). On the strength of this judgment, it was submitted by the ld.counsel for the assessee that Hon’ble Court has laid down that commencement of activities of the trust is not an essential condition for grant of registration under section 12AA of the Act. Competent authority ought to have assessed genuineness of the objects, whether they are charitable or not. Similarly, he made reference to the decision of Hon’ble Gujarat High Court in the case of Pr.Commissioner of Income Tax (Exemption) Vs. Dawoodi Bohra Masjid, reported in 90 taxmnan.com 312 (Guj). In this case also existence of trust deed was not proved, but factum of the objects were demonstrated. He submitted that in this case also trust deed was not there, but objects were ascertained by the Tribunal from details available with Wakf Board as well as on the basis of other records. The Tribunal was satisfied with the objects of the assessee that they are charitable in nature and granted registration. This order of the Tribunal has been upheld by the Hon’ble Gujarat High Court.
6. On the other hand, the ld.DR relied upon orders of the ld.CIT. He submitted that assessee did not furnish complete details, and therefore, there was no choice for the ld.Commissioner except to reject the application of the assessee.
We have duly considered rival submissions and gone through the record carefully. Ld.CIT (Exemption) has reproduced the relevant clause of section 12AA in the impugned order extracted (supra). A perusal of the above would indicate that the ld.Commissioner was required to call for documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of the activities of the trust or institution, and also make such inquiries as he may deem necessary in this behalf. The ld.Commissioner has carried out this exercise and observed that the assessee failed to submit complete details i.e. trust deed, and also from perusal of the accounts would indicate that it has not incurred expenditure on the activities of the trust. Qua first reason assigned by the ld.Commissioner that in the absence of trust deed it is difficult to ascertain objects of the assessee and genuineness of the trust, in this behalf, we would like to take note of section 19 of the Bombay Public Trust Act, 1950 which reads as under: 19. Inquiry for registration:
On the receipt of an application under section 18, or, upon an application made by any person having interest in a public trust or on his own motion, the Deputy or Assistant Charity Commissioner shall make an inquiry in the prescribed manner for the purpose of ascertaining: [(i) whether a trust exists and whether such trust is a public trust. ii) whether any property is the property of such trust, iii) whether the whole or any substantial portion of the subject-matter of the trust is situate within his jurisdiction, iv) the names and addresses of the trustees and manager of such trust, v) -the mode of succession to the office of the trustees of such trust, (vi) the origin, nature and object of such trust, (vii) the amount of gross average annual income and expenditure of such trust, and (viii) any other particulars as may be prescribed under subsection (5) of section 18.
A perusal of the conditions enumerated in this section would indicate that before registering any trust under Bombay Public Trust Act, Deputy or Assistant Charity Commissioner is required to make inquiry in the prescribed manner for the purpose of ascertaining different aspects of the Trust. In the case of the assessee this inquiry was done, and thereafter it was registered under the Bombay Public Trust Act, 1950 vide registration no.A/832/Vadodara dated 8.5.1953. In the list of movable property certain vessels were mentioned whose approximate value was determined at Rs.416.01. The objects of the trust have been noticed by us; extracted (supra). A perusal of the objects would indicate that they are charitable in nature. One of the objects is to provide education and health services, which is per se charitable in the definition of expression “charitable purpose” provided in section 2(15)
of the Income Tax Act. In the judgment of Kutchi Dasa Oswal Moto Pariwar (supra), Hon’ble High Court has held that commencement of activities of the Trust is not necessary for grant of registration under section 12AA though in the present case, trust has been fulfilling its activity, but for the purpose of income-tax, it was not maintaining such details, and details would be maintained once the registration is being granted to it. According to the decision of Hon’ble Gujarat High Court it is not essential condition for examining the genuineness of the Trust for the purpose of grant of registration. The objects of the trust are required to be looked into which to our mind fulfilled the criterion. Therefore, we set aside order of the ld.Commissioner and allow the application of the assessee. We direct the Revenue to issue a registration certificate under section 12AA of the Act to the assessee, which should be subject to other future conditions i.e. in case it is found that the assessee is not performing in accordance with its objects, then Revenue will be at liberty to follow the procedure under section 12AA(3) of cancellation of registration etc. At present, the assessee deserves to be granted registration under section 12AA. Accordingly, the appeal of the assessee is allowed
In the result, appeal of the assessee is allowed.
Pronounced in the Open Court on 16th January, 2020