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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 655/JP/2017
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh dqy Hkkjr] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 655/JP/2017 fu/kZkj.k o"kZ@Assessment Year : cuke Sidha Sthan Shri Kapaleshwar The Commissioner of Vs. Mahadev Sanyas Ashram Trust, Income Tax (Exemptions) Mela Ground, Pushkar, Ajmer. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AARTS9375F vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA No. 656/JP/2017 fu/kZkj.k o"kZ@Assessment Year : cuke Sidha Sthan Shri Kapaleshwar The Commissioner of Vs. Mahadev Sanyas Ashram Trust, Income Tax (Exemptions) Mela Ground, Pushkar, Ajmer. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AARTS9375F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Mahendra Gargieya (Adv.) jktLo dh vksj ls@ Revenue by : Shri Vrindra Mehta (CIT) lquokbZ dh rkjh[k@ Date of Hearing : 27/09/2017 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 28/09/2017 vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M.
ITA No. 655 & 656/JP/2017 M/s Sidha Sthan Shri Kapaleshwar Mahdev Sanyas Ashram Trust Vs. CIT(E) These two appeals filed by the assessee are against the order of ld. CIT (Exemptions), Jaipur dated 28.06.2017, refusing to grant u/s 12AA of the Act and exemption u/s 80G of the Act.
Briefly the facts of the case are that the assessee is a charitable trust constituted under deed of trust dated 11.02.1998. It filed an application with the ld. CIT(E) for registration u/s 12AA of the Act. In its order, the ld. CIT(E) states that while considering the case for registration u/s 12AA, the object of the Trust/Society and the genuineness of its activities are to be examined and as per the rules, the certified copy of instrument establishing the Society/Trust needs to be verified. The applicant was asked to file certain information/documents which were duly filed and considered by the ld. CIT(E). Subsequently, vide show cause dated 30.05.2017, the assessee was asked to show cause as to why its application for registration should not be rejected as no specific dissolution clause is provided in the deed of trust. In response, the assessee filed its submission which was not found acceptable by the ld. CIT(E) and his relevant finding are as under:- “The applicant in its replies mainly has stressed upon that absence of dissolution clause in the deed cannot be made a ground for refusal of registration u/s 12AA. Reply of the applicant is not found acceptable because the constitution of the trust has no dissolution clause. The dissolution clause ensures that in the event of dissolution of the trust, the balance funds are not mis- utilized. In absence of dissolution clause it is not known that in the event of dissolution of the trust how these funds will be utilized. There has to be check that balance fund on dissolution
ITA No. 655 & 656/JP/2017 M/s Sidha Sthan Shri Kapaleshwar Mahdev Sanyas Ashram Trust Vs. CIT(E) do not go to the office bearers of the trust. As this clause is not there in the trust deed, there is no security of proper utilization of the funds.”
The ld. CIT(E) accordingly rejected the application of the assessee seeking registration u/s 12AA of the Act and consequently, the application for exemption under section 80G was also rejected for want of registration under section 12AA of the Act. Now, the assessee is in appeal before us.
During the course of hearing, the ld. AR drawn our reference to the trust deed dated 10.02.1998 wherein it is stated as under:-
;g lkjh lEifr Hkxoku dikys’oj egknso efUnj dh gS bldks egUr] lUr] VªLV ds dksbZ Hkh lnL; csp ugha ldrs gSA e.My djus dk lHkk dks vf/kdkj gS] [kk.Mu djus dk fdlh dks dksbZ vf/kdkj ugha gS vxj djsxk fu;eksa ds fo:} rks og jkT; njckj >qBk jgsxkA
Drawing our attention to the said clause in the trust deed, the ld AR submitted that neither the trust nor any member of the trust is empowered to sale any part of the property of the trust. Further, the ld AR submitted that it is a public charitable trust registered with Devsthan Vibhag and in the event of dissolution of the trust, all the assets and properties of the trust shall vest with the Charitable Commissioner Devsthan Vibhag, Government of Rajasthan in accordance with the relevant provisions of the Rajasthan Public Trust Act, 1959.
ITA No. 655 & 656/JP/2017 M/s Sidha Sthan Shri Kapaleshwar Mahdev Sanyas Ashram Trust Vs. CIT(E) 5. The ld. AR further submitted that looking to the objects of the trust, there is no dispute at all raised even by the ld CIT that such objects fall very well within the definition of a “charitable purpose” as defined u/s 2(15) of the Act nor there is any adverse remark on the genuineness of the activities of the trust after he detailed examination carried out by him as evident from the detailed query letters and detailed replies thereto. Thus, so far as the objects of the trust being charitable in nature are concerned, there is no dispute between the parties. It is a public charitable trust registered with Devsthan Vibhag.
It was further submitted that the sole basis for refusal to grant registration was the absence of the dissolution clause in the trust deed which firstly, is not at all a valid ground and in any case is not at all required by the limited scope of sec. 12AA(1) and by considering such a ground, the ld. CIT has rather exceeded his jurisdiction/enhanced the scope of enquiry than what is conferred by the statute upon him.
It was further submitted that even otherwise, such a clause is already there i.e. clause at page 15 of the deed of trust according to which the possibility of the dissolution of the appellant Trust has been ruled out. In such a situation, the property shall vest in the Charity Commissioner - Devsthan Vibhag of Government of Rajasthan in accordance with the relevant provisions of the Rajasthan Public Trust Act, 1959.
ITA No. 655 & 656/JP/2017 M/s Sidha Sthan Shri Kapaleshwar Mahdev Sanyas Ashram Trust Vs. CIT(E) 8. In support, reliance was placed on the decision of Umiya Charitable Trust v/s CIT (2014) 40 CCH 0437 (Rajkot) wherein it was held that:-
“ 5.2 The last ground of rejection pointed out by the ld. CIT is that the trust deed of the trust does not contain the dissolution clause in the event of its dissolution. This issue has already been covered in favour of assessee-institution/association by the decision of ITAT Ahmedabad ‘C’ Bench in the case of Sitaram Kutir Charitable Trust v. CIT in ITA No. 71/Ahd/2013, decided on 17.05.2013; wherein it was held that in case the trust registered with the Sub-registrar as a charitable trust and the trust being an irrevocable trust, the obvious position shall be that the Charity Commissioner should take over the assets on dissolution; hence rejection of registration by the ld. Commissioner on the ground that there was no specific clause in the instrument in regard to the treatment to be given in the vent of dissolution was not on a sound footing. In view of the foregoing, I am of the view that the registration u/s 12AA of the Income-tax Act, 1961, as sought by the assessee- institution/association, cannot be refused and I, therefore, direct the ld. CIT, Rajkot-III, Rajkot to grant the registration u/s 12AA to the assessee-institution/association.”
The ld AR also relied on the following decisions:- • Shri Agarwal Panchayat vs ITO (2015) 173 TTJ 61 (Jd) • CIT vs Tapagachha Sangh Mota (2015) 232 Taxman 715 (Guj)
ITA No. 655 & 656/JP/2017 M/s Sidha Sthan Shri Kapaleshwar Mahdev Sanyas Ashram Trust Vs. CIT(E) • Dharma Sansthapak Sangh (Niyas) vs CIT (2008)118 TTJ 0823/13 DTR 589 (Del) • DIT(Exemptions) vs Vanchhara Tirthadhipati-Chintamani Paraswaprwabhu (2015) 233 Taxman 1 (Guj)
It was further submitted that there several cases on the scope of examination by the ld. CIT in the context of Sec. 12AA and it has been repeatedly held that the allegations of the mis-utilization of the funds or the unreasonableness of the expenditure incurred or the misapplication of income, utilization of the funds, are all required to be examined at the time of assessment only with respect to the benefit provided u/s 11 &12 and it is not at all the stage where the CIT is expected to look into this aspect.
There apart, the Courts have gone to the extent that even where there was no commencement of activities, registration could not have been denied. Therefore, it is too remote and out of scope to examine the existence or otherwise of the dissolution clause and the suspected ill consequences of absence thereof. Kindly refer CIT vs Vijay Vargiya Vani Charitable Trust (2014) 271 CTR 0698/110 DTR 0207/369 ITR 0360 (Raj HC) held that: “Registration must be granted u/s 12AA to Assessee when it is meant for charitable purpose on basis of genuineness of objects of trust and not income of trust.”
ITA No. 655 & 656/JP/2017 M/s Sidha Sthan Shri Kapaleshwar Mahdev Sanyas Ashram Trust Vs. CIT(E) 11. Regarding refusal to grant exemption u/s 80G of the Act, the ld. CIT(E) held that since the assessee trust has been denied registration u/s 12AA of the Act. Per contra, the ld. AR submitted that the CIT has refused simply as a consequence to the rejection of 12AA registration hence, it is consequential. However, assuming, the rejection of 12AA registration is upheld does not by itself means that the assessee does not deserves grant of approval u/s 80G more particularly, when the ld. CIT has not adversely commented upon any of the conditions mentioned in Sec. 80G(5).
We have heard the rival contentions and perused the material available on record. Firstly, the tests which are germane and are to be satisfied before the grant of registration u/s 12AA of the Act are the objects of the trust whether charitable or not and secondly, the genuineness of activities of the asseessee trust. The ld CIT(E) has not recorded any adverse finding or dissatisfaction about the objects and the genuineness of activities of the asseessee trust. Hence, there is no dispute regarding the objects and the genuineness of activities of the asseessee trust.
The limit issue raised by the ld. CIT(E) relates to absence of the dissolution clause in the trust deed dated 11.02.1998. In this regard, the ld. AR has drawn our reference to the relevant clause at page 15 of the trust deed (referred above) and submitted that neither the trust nor any member of the trust is empowered to sell any part of the property of the trust. To our mind, the event of sale of the assets or the property
ITA No. 655 & 656/JP/2017 M/s Sidha Sthan Shri Kapaleshwar Mahdev Sanyas Ashram Trust Vs. CIT(E) of the trust could be during the continuation of the trust or at the time of its dissolution. This clause therefore effectively restricts the sale of the property of the trust at all times. But can it be said that the trust which holds such property cannot be dissolved at all times to come and what are the consequences thereto. In our view, the matter relating to the dissolution and the consequences thereof has not been spelt out in the trust deed.
Now coming to the another contention of the ld AR that it is a public charitable trust registered with Devsthan Vibhag and in the event of dissolution of the trust, all the assets and properties of the trust shall vest with the Charitable Commissioner Devsthan Vibhag, Government of Rajasthan in accordance with the relevant provisions of the Rajasthan Public Trust Act, 1959. Here, we refer to the decision of the Coordinate Bench in case of Sitaram Kutir Charitable Trust v. CIT (supra) wherein it was held that “in case the trust registered with the Sub-registrar as a charitable trust and the trust being an irrevocable trust, the obvious position shall be that the Charity Commissioner should take over the assets on dissolution; hence rejection of registration by the ld. Commissioner on the ground that there was no specific clause in the instrument in regard to the treatment to be given in the vent of dissolution was not on a sound footing.” We have no hesitation but to concur with the view taken by the Coordinate Bench and we accordingly, find force in the above-said contention of the ld AR. At the same time, we find that there is no specific findings of the ld CIT(E) regarding whether the trust is a irrevocable trust or not, and whether
ITA No. 655 & 656/JP/2017 M/s Sidha Sthan Shri Kapaleshwar Mahdev Sanyas Ashram Trust Vs. CIT(E) the assessee trust is registered with the Devsthan Vibhag and the consequences on its dissolution as contented by the ld AR. We are accordingly setting aside the matter to file of the ld. CIT(E) to examine the above said contentions of the ld AR and where the same is found to be correct, grant the necessary registration u/s 12AA of the Act.
Further, the grant of approval u/s 80G has been denied for want of registration u/s 12AA. Since we have set aside the matter relating to grant of registration u/s 12AA, the matter relating to approval u/s 80G is also set aside to file to the ld. CIT(E).
In the result, both the appeals of the assessee are allowed for statistical purposes. Order pronounced in the open court on 28/09/2017 Sd/- Sd/- ¼dqy Hkkjr ½ ¼foØe flag ;kno½ (Kul Bharat) (Vikram Singh Yadav) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 28/09/2017. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- M/s Sidha Sthan Shri Kapaleshwar Mahadev Sanyas Ashram Trust, Mela Ground, Pushkar, Ajmer. 2. izR;FkhZ@ The Respondent- Commissioner of Income Tax (Exemptions), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A)
ITA No. 655 & 656/JP/2017 M/s Sidha Sthan Shri Kapaleshwar Mahdev Sanyas Ashram Trust Vs. CIT(E) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 655 & 656/JP/2017}
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सहायक पंजीकार@Aेेज. त्महपेजतंत