SHRI DHARANSHALA,ANAND vs. THE CIT-II, BARODA

PER SHRI KUL BHARAT, JUDICIAL MEMBER :

1. On the facts and in the circumstances of the case, the learned C.I.T is not justified in law in holding that the assessee is not eligible for registration in the light of the fact that the assessee trust does fulfill the requirement of being a charitable institution and deserves to be registered u/s.12A(a) of the I.T. Act, 1961.

2. On the facts and in the circumstances of the case the learned C.I.T. is not justified in law in not taking into consideration the submission, explanation and documents made by the Appellant during the course of hearing and consequently erred on law as well as on facts in refusing your appellant to grant the registration.

3. Your appellant requests for leave to add, to amend, to substitute all or any of the grounds of appeal at or before the final hearing of the appeal.

- 2 - Shri Dharmshala vs. CIT Asst.Year – N.A.

5. On the fact and in the circumstances of the case, the learned CIT has also wrongly concluded that the "Aims" and "Objects" of the trust are not of charitable nature. 6. On the fact and in the circumstances of the case, the learned C.I.T. erred on law as well as on facts that the ld. CIT has also wrongly concluded that the aims & objects of the trust cannot be put to the test of geniuses. 7. On the fact and in the circumstances of the case, the learned C.I.T. erred in ignoring the fact that the appellant trust does not exists solely for charitable purpose and exists for the purpose of profit. 8. On the facts and in the circumstances of the case, the learned CIT has passed the order in haste without appreciating in proper perspective the facts and circumstances of the case and explanation offered against the facts, law and provisions of the Income Tax 1961 and Rules made there under. 9. The appellant trust craves to add, modify, delete, and withdraw any further ground on or before the date of hearing.”

4. The Learned Counsel for the assessee Shri M. K. Patel vehemently argued that Learned CIT was not justified in rejecting the application on the basis that one of the objective is for giving property on rent and the Learned CIT was not justified in observing that the assessee is carrying out its activity on commercial line if it is letting out halls for marriage and for other purposes. As per Learned CIT the only activity carried out by the assessee as per accounts was letting out all the property. The Learned Counsel submitted that there can be irregularity in the objects and irregularity would not render if so facto rejection of the application. The Learned Counsel placed reliance on the judgment of the Jurisdictional High Court rendered in Tax Appeal No.1035 of 2018 in the case of CIT vs. Paramount Charity Trust per contra the Learned DR opposed the submissions and submitted that the application of the assessee has been rightly rejected by the Learned CIT. He has submitted that the Learned CIT has rightly arrived at the conclusion that the assessee’s activity is commercial. He thus, supported the impugned order.

- 4 - Shri Dharmshala vs. CIT Asst.Year – N.A. “In appeal, the Tribunal reversed the contention of the Commissioner. By the impugned judgment, Tribunal was of the opinion that non communication of the amendment in the trust deed was a mere irregularity and would not be a ground for cancellation of registration already granted. The Tribunal did not agree with the Commissioner that running of a diagnostic center was a commercial venture. The Tribunal also held that the existing objects sufficiently cover the purpose also.

We are in broad agreement with the view of the Tribunal. We have noted existing objects as well as those which were added by an amendment in the trust deed. The objects in the original trust deed were sufficiently wide and cover range of charitable activities relateable to education, medical aid and help to poor in times of calamities. The existing objects would have enabled the Trust to support the diagnostic center as long as it was done for charitable purpose. The amended objects clarify that such center would be run on no charge, or at any rate on no profit basis. It is difficult to see how the Commissioner thought such center would be a commercial venture.”

Respectfully, following the same we set aside the order of the Learned CIT and restore application for registration u/s 12A of the Act to him. Learned CIT would decide the issue of registration u/s 12A of the Act afresh. Needless to say after providing reasonable opportunity to the Assessee.