BLANK NOISE, C/O SRISHTI INSTITUTE OF ART DESIGN AND TECHNOLOGY,,BANGALORE vs. COMMISSIONER OF INCOME TAX, BANGALORE

Per Shri Vijay Pal Rao, J.M. : These two appeals by the assessee are directed against the two

separate orders of Commissioner of Income Tax (Exemptions), Bangalore

both dt.24.08.2016 passed under Section 12AA and 80G(5)(vi) of the

2 ITA Nos.1878 & 1879/Bang/2016 Income Tax Act, 1961 (in short 'the Act') respectively. There is a delay of

12 days in filing these appeals by the assessee. The assessee has filed

petition for condonation of delay supported by an Affidavit.

learned Departmental Representative on condonation of delay. We have

also gone through the contents of the petition filed by the assessee

explaining cause of delay. The assessee has explained cause of delay that

the Managing Trustee of the assessee was out of India from 30.09.2016

and was expected to return to India in-time to sign and file the appeals.

However she was not able to do so because she fell ill while at abroad.

As soon as the Managing Trustee recovered from his illness he returned

to India, the assessee filed these appeals without any further delay. Thus

the assessee has explained the cause of delay of 12 days and pleaded

that the delay was neither intentional nor deliberate but due to the

unavoidable circumstances. The assessee has also filed the copy of the

Passport and Visa of the Managing Trustee in support of the explanation.

The learned Departmental Representative has vehemently objected to

the condonation of delay.

3 ITA Nos.1878 & 1879/Bang/2016 3. Having considered the rival submissions as well as the contents of

the Affidavit, we find that the Managing Trustee of the assessee Mrs.

Jasmine Kaur Patheja was abroad during the month of Sept. and Oct. of

2016 and she returned to India only on 2.11.2016 as per the Immigration

Clearance dt.2.11.2016 at Bangalore Airport. Cause of delay as explained

by the assessee in the Affidavit is duly supported with the documents

and hence we are satisfied that the assessee was having a reasonable

cause for delay of 12 days in filing these appeals. Accordingly, we

condone the delay of 12 days in filing the appeals.

12AA of the Act wherein the assessee has raised the following grounds :

4 ITA Nos.1878 & 1879/Bang/2016

on 24.2.2016. The CIT (Exemptions) vide its letter dt.24.2.2016 asked the

assessee to file certain details and clarifications. Thereafter the CIT

(Exemptions) noted that the details filed by the assessee were not

complete and again vide letter dt.3.8.2016 called for details and

clarification for filing the provisional accounts for the quarter ended

31.12.2015. Thereafter the CIT (Exemptions) rejected the application for

5 ITA Nos.1878 & 1879/Bang/2016 Registration under Section 12A on the ground that the assessee is not

interested in prosecuting the application.

the assessee filed all the requisite details as called for by the ld. CIT

(Exemptions). He has referred to the documents and details in the

paper book and submitted that all the relevant documents and details

were filed by the assessee however, the CIT (Exemptions) has rejected

the application without examining the details and documents filed by the

assessee. Thus the learned Counsel for the assessee has submitted that

the reasons given by the CIT (Exemptions) for rejecting the application on

contrary to the facts when the assessee complied with the directions for

filing the documents and details. He has further contended that the

assessee filed the Trust Deed dt.23.11.2015 and amended Trust Deed

dt.23.5.2016. The CIT (Exemptions) has not disputed the objects of the

assessee being charitable. He has referred to the letter dt.4.5.2016 and

submitted that the assessee duly replied and complied with all the

requirements as sought by the CIT (Exemptions). Thus the learned

Authorised Representative of the assessee has submitted that when no

6 ITA Nos.1878 & 1879/Bang/2016 infirmity was found in the record filed by the assessee and further the

objects of the assessee were found as charitable in nature then the CIT

(Exemptions) was required to grant Registration under Section 12A of the

Act. In support of his contention he has relied upon the decision of

Hon'ble jurisdictional High Court in the case of DIT (Exemptions) Vs.

Meenakshi Amma Endowment Trust 354 ITR 219 and submitted that

the Hon'ble High Court after taking note of the fact that after forming a

Trust within a period of 9 months thereafter filed an application under

Section 12A of the Act for Registration then one cannot expect to do

activity of charity immediately after the formation. In such a situation

the authority cannot come to a conclusion that the Trust was not

intending to do any charity. Thus the learned Counsel for the assessee

has pleaded that the assessee may be granted Registration under Section

12A of the Act.

submitted that the CIT (Exemptions) has pointed out that the assessee

has not furnished the complete details so that it could have been verified

and satisfied itself with the existence of the assessee is genuine and the

7 ITA Nos.1878 & 1879/Bang/2016 activities of the assessee are in accordance with the objects. He has

relied upon the order of the CIT (Appeals).

material on record. There is no dispute that the assessee-trust was

formed on 23.11.2015 and thereafter within a period of four months the

assessee applied for Registration under Section 12A of the Act on

24.2.2016. In the meantime the assessee amended the Trust Deed on

23.5.2016 and filed a copy of the same before the CIT (Exemptions).

Thus in the short period of four months the assessee cannot be expected

to do much on account of its activity and charity. Even the CIT

(Exemptions) has admitted the fact that the assessee filed the details in

response to his query however in his view the details were not complete

as the provisional accounts for the quarter ending 31.12.2015 were not

furnished. It is pertinent to note that the assessee-trust was formed on

23.11.2015 then there is hardly any transaction or activity upto

31.12.2015 as required by the CIT (Exemptions). Even otherwise the CIT

(Exemptions) has recorded in para 4 that the assessee-trust filed details /

clarifications. This statement of the CIT (Exemptions) is subsequent to

8 ITA Nos.1878 & 1879/Bang/2016 the shortcomings found by it for not filing the provisional accounts for

the quarter ending 31.12.2015. Thereafter the CIT (Exemptions) has

rejected the application for Registration on the ground that the assessee

did not file the details called for. For ready reference, we reproduce the

paras 4 & 5 as under :

“4. The applicant trust filed details/clarifications.

As it is manifest from these two paras that in para No.4, the CIT

(Exemptions) stated that the assessee filed the details whereas in para 5

the CIT (Exemptions) has sated that the assessee-trust did not file the

details called for. As we have already discussed that the only

shortcoming found by the CIT (Exemptions) is the provision accounts for

the quarter ending 31.12.2015. We find that the assessee has furnished

the bank account details and all other details upto date and explaining

the activity of the assessee carried out till the date of filing the

application and subsequent date on which the assessee filed the details.

9 ITA Nos.1878 & 1879/Bang/2016 We further note that the assessee filed the provisional accounts for the

period ending 31.3.2016. All these details negate the grounds on which

the application for Registration under Section 12A was rejected by the

CIT (Exemptions). Hon'ble jurisdictional High Court in the case DIT

(Exemptions) Vs. Meenakshi Amma Endowment Trust(supra) has

observed in paras 5 & 6 are as under :

“ 5. On a perusal of the records we note that the trust was formed on January 23, 2008, and within a period of nine months they had filed an application under section 12A for issuance of the registration claiming exemption. The fact that the corpus of the trust is nothing but the contribution of Rs. 1,000 by each of the trustees as corpus fund goes to show that the trustees were contributing the funds by themselves in a humble way and were intending to commence charitable activities. It is not even the case of the Revenue that by the time the application of the assessee came to be considered by them, the assessee had collected lots of donations for the activities of the trust. On the other hand, the grievance of the concerned authorities seems to be that there was no activity which could be termed as charitable as per the details furnished by the assessee, therefore, such registration could not be granted. When the trust itself was formed in January, 2008, with the money available with the trust, one cannot expect them to do activity of charity immediately and because of that situation the authority cannot come to a conclusion that the trust was not intending to do any activity of charity. In such a situation the objects of the trust have to be taken into consideration by the authority and the objects of the trust could be read from the trust deed itself. In the subsequent returns filed by the trust, if the Revenue comes across that factually the trust has not conducted any charitable activities, it is always open to the authorities concerned to withdraw the registration already granted or cancel the said registration under section 12AA(3) of the Act. 6. A trust could be formed today and within a week registration under section 12A could be sought as there is no prohibition under the Act seeking such registration. The activities of the trust have to be considered if such registration is sought much later than the formation of the trust or after expiry of the earlier registration granted in favour of the trust. Therefore, in a case of this nature where the trust has approached the authority for registration under section 12A within a span of eight months of its formation, the abovementioned criteria, namely, the objects of the trust for which it was formed will have to be examined to be satisfied about its genuineness and the activities of the trust cannot be the criterion, since it is yet to commence its activities.”

10 ITA Nos.1878 & 1879/Bang/2016

Thus when the assessee filed all the relevant details upto 31.03.2016

then rejecting the application for registration by the CIT (Exemptions)

on the ground that the assessee is not interested in prosecuting the

application is not in consistent with the facts and record filed by the

assessee. Accordingly, we set aside the impugned order and direct the

CIT (Exemptions) to grant the Registration under Section 12A of the Act

specifically on the facts and circumstances where the CIT (Exemptions)

did not find any infirmity in the objects of the assessee-trust being

charitable in nature and the relevant record was also produced by the

assessee.

80G(5) of the Act, the CIT (Exemptions) has simply rejected the

application due to the reason that the application for Registration under

Section 12A was rejected. Therefore it was only consequential to grant

approval under Section 80G(5) of the Act. In view of our finding on the

issue of grant of Registration under Section 12A, the impugned order

passed by the CIT (Exemptions) under Section 80G(5) is set aside. The

11 ITA Nos.1878 & 1879/Bang/2016 CIT (Exemptions) is directed to grant recognition under Section 80G(5) of

the Act.

Sd/- Sd/- (INTURI RAMA RAO) (VIJAY PAL RAO) Accountant Member Judicial Member Bangalore, Dt.15.09.2017.

*Reddy gp

Copy to : 1 Appellant 4 CIT(A) 2 Respondent 5 DR. ITAT, Bangalore 3 CIT 6 Guard File

Senior Private Secretary Income Tax Appellate Tribunal Bangalore.