SHREE JAIN SAMITI,JAIPUR vs. CIT(EXEMPTIONS), JAIPUR

PER SHRI KUL BHARAT, JM.

This is an appeal filed by the assessee arises against the order dated

15/09/2016 passed by the Ld. (Exemptions), Jaipur, wherein the assessee has raised

only one ground of appeal, which is as under:

“1. The ld. CIT has erred on facts and in law in rejecting the application of assesee for grant of registration U/S 12AA of Income Tax Act, 1961 by holding that the activities o the Samiti are not charitable in nature as it is predominantly carrying out business on commercial basis.”

in Form No. 10A for seeking registration U/s 12AA of the Income Tax Act, 1961

(hereinafter referred as the Act) on 09/03/2016. The said application was rejected

by the ld. CIT(E), Jaipur on the ground that the assessee earning income from hiring

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of the community hall. Its activities are not charitable in nature as it is

predominantly carrying out business on commercial basis. Therefore, its act does

not come under the proviso to Section 2(15) of the Act.

reiterated the submission as made in the written submissions and vehemently

argued that the action of the ld. CIT(E) was not justified. He took us through the

objects of the assessee Trust and submitted that the activity, ex facie falls within the

category of general public utility. Apart from this activity, the assessee has other

objects i.e. to provide scholarship to the poor students and helped them in their

study, to provide medical help to the general public, to provide medicines to the

patients etc., which falls within the category of charitable activities. He placed

reliance on the decision of Hon’bl Jurisdiction High Court in the case of CIT Vs

Paramhans Ashram Trust (2009) 315 ITR 0220 and the decision of the Hon’ble ITAT,

Jaipur Bench, Jaipur in the case of ACIT Vs M/s Shri Panchayati Dhramshala ITA No.

809/JP/2013 and he prayed to grant registration U/s 12AA of the Act.

Counsel of the assessee and submitted that the only activity, which has been carried

out by the assessee samiti is letting out of the community hall, which is a

commercial activity, therefore, provisions of Section 2(15) of Act would not apply in

the case of the assessee.

available on the record and gone through the orders of the authorities below. The

ld. CIT (E) rejected the application on the basis that the only activity which the

assessee had carried out was letting out community hall. The claim of the applicant

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that the funds generated from the community hall used for

construction/development work is not relevant after the amendment made U/s 2

(15) W.e.f. 01/04/2009 and subsequent amendment w.e.f. 01/4/2016.

5.1. It is a settled position of law, that at the time of considering application for

Registration Under Section 12AA of the Act. The Ld. CIT is required to enquire about

the genuineness of the activity of the assessee. We find that Ld. CIT has given a

finding that one of the object of the assessee is that to give community hall to the

people, for conducting meeting and other ceremony function. This object was only

carried out by the assessee. Despite, having other objects, the Ld. Counsel

submitted that the issue is covered by the decision of the co-ordinate bench

rendered in the case of Assistant Commissioner of Income Tax Vs. M/s. Shri

Panchyati Dharamshala ITA No. 809/JP/2013. The co-ordinate bench after consider

the objective of giving facility of the Dharmshala to the public at the nominal

subsidized rate, held that there was no profit motive in that case. That the

dominant motive in that case was not earning profit but to do charity, in the form of

public service by providing accommodation to the common man at affordable rates.

Further, reliance is placed upon the judgment of the Hon. Gujarat High Court

rendered in the case of CIT Vs. Paramhans Ashram Trust wherein the hon’ble Court

has held as under:

“4.The Similar reference was made by the Revenue for opinion of the Court pertaining to the asst. yrs 1970-71, 1971-72, 1976-77 and 1977- 78 between the same parties. The reference has been answered by this court in case title CIT vs. Paramhans Ashram Trust (1993) 113 CTR (Raj) 433 : (1993) 203 ITR 711 (Raj). Dealing with the same issue, the Division Bench of this court held as under :

“ In order to appreciate the arguments of learned counsel for the Revenue, it has to be seen as to whether the trust is a private trust or

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a public charitable trust. Normally, in a private trust, the beneficial interest is vested in one or more individuals whereas a public or charitable trust, on the other hand, has objects by which the public at large is benefited. The beneficiaries are capable of being ascertained in the private trust while the charitable purpose has been defined to include relief of the poor, education, medical relief and advancement of any other object of general public utility not involving the carrying on of any activity for profit. According to the main objects, the maintenance of the existing Dharmashalas, help of Agarwals and other widows and children, feeding of medicamts and construction of new Dharmashalas and school, and help of the destitute cannot be said to be restricted in respect of a particular individual or groups of them. The use of the words object of general public utility can be interpreted to cover such trust where the intention is to give the benefit to sizeable numbers of the public in contrast to an individual or group of individuals. The expenses in constructing new Dharamashalas were considered as advancement of the charitable object of the trust which was held entitled to exemption under s. 11 of the said Act in the case of Satya Vijay Patel Hindu Dharamshala Trust vs. CIT (1972) 86 ITR 683 (Guj) and this court in Ragunath Das Parihar Dharmshala Vs. CIT (1986) 158 ITR 432 (Raj), has held that the sole purpose of the trust was to run a Dharamshala which is an object of general public utility and so when this was the sole object, the income derived therefrom in the shape o the rent from the Dharamshala is exempt under s.11 r/w s. 2(15) of the Act. Similarly, the other objects of help of Agarwal’s, widows and children, feeding of mendicants and help of destitutes are of general public utility and the Tribunal has rightly come to the conclusion that the assessee is a public charitable and religious trust and its income in entitled to exemption under s. 11 of the IT Act, 1961’’.

Further, the Ld. Counsel has furnished a comparative statement of tariff of marriage

hall at Page 33 of paper book to support the contention that the assessee is provide

the facility of the community hall at the subsidized rate which become within the

reach of the common men. There is not dispute with regard to the fact that the

activity of community hall is essentially of nature of public utility. The assessee is

having other objects, which are charitable in nature is not disputed by the Ld. CIT.

Under these facts we are unable to affirm the view of the ld. CIT, therefore, the

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impugned order is set aside and the application seeking registration under section

12AA of the Act is restored to ld. CIT for decision afresh in the light of judgement of

Hon’ble Jurisdictional High Court. This ground raised in the appeal is allowed for

statistical purpose.

In the result, appeal of the assesse is allowed for statistical purposes.

Order pronounced in the open court on 10/02/2017.

Sd/- Sd/- ( dqy Hkkjr) ¼foØe flag ;kno½ (VIKRAM SINGH YADAV) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 10/02/2017. Pooja/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

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