M/S ALL PEOPLE CHARITABLE TRUST,BANGALORE vs. CIT, BANGALORE

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE

BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER and SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER

ITA Nos.1216 & 1217/Bang/2015

M/s.All People Charitable Trust, No.2,Muddappa Garden, Jeevanahalli Krishnappa Lane, Bangalore-560005. … Appellant Vs. Commissioner of Income-tax (Exemption), Bangalore. … Respondent

Appellant by: Shri Suresh Krishnan, CA. Respondent by: Shri Muzaffar Hussain, CIT(DR).

Date of hearing : 09/12/2015. Date of pronouncement: 30/12/2015.

O R D E R Per VIJAY PAL RAO, JM :

These two appeals by the assessee are directed against two separate orders, both dated 13/7/2015 of CIT(Exemption) [‘CIT(E) ’ for short], passed u/s 12AA and sec.80G(5) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] respectively.

ITA Nos.1216 &b1217/Bang/2015 M/s.All People Charitable Trust. Page 2 of 10 3. First we take up the appeal against rejection of application for registration u/s 12A.

3.1 We have heard learned AR of the assessee as well as learned DR and considered relevant material on record. Learned AR of the assessee has submitted that the CIT(E) asked assessee to furnish various details and clarifications which are give in para.1 of the impugned order. In response to said requirement/show cause notice issued by the CIT(E) dated 12/6/2015, assessee filed its reply vide letter dated 29/6/2015 and furnished the requisite details. He has pointed out that the assessee furnished details regarding list of fixed deposits as on date as nil, receipt issued to donors, shown as no donation was received by the assessee till date. Further no investment was made by the assessee in movable and immovable as on the date. As regards inconsistency pointed out by the CIT(E) in respect of clause 4(f), assessee filed the amended trust deed. Bank statement of the assessee was also submitted along with proof of charitable work done by the assessee. Despite explaining and furnishing the details as required by the CIT(E), application of the assessee was rejected by the CIT(E) on the ground that the assessee is not interested in prosecuting the case by not submitting the details called for. He has further submitted that as far as proof of charitable work done by assessee is concerned, that is not a mandatory requirement at the time of granting registration u/s 12AA, when the assessee has not received any

ITA Nos.1216 &b1217/Bang/2015 M/s.All People Charitable Trust. Page 3 of 10 donation. In support of his contention, he has relied upon the decision of the Hon'ble jurisdictional High Court in the case of DIT(E) vs. Meenakshi Amma Endowment Trust (354 ITR 219) and submitted that the co-ordinate bench of this Tribunal has considered an identical issue in the case of M/s.Manipal Alumni of Nephrology Trust vs. CIT in ITA No.548 & 549/Bang/201 vide order dated 21/2/2014. Thus, learned AR of the assessee has submitted that in view of the said decision of the co-ordinate bench, the impugned order of the CIT(E) may be set aside and the assessee may be granted registration u/s 12A as well as u/s 80G of the Act.

3.2 On the other hand, learned Departmental Representative has submitted that the documents referred by the assessee are not finding place in the impugned order of the CIT(E) wherein the application of the assessee has been rejected for want of details and prosecution. He further submitted that even in documents filed by the assessee, there are several defects and therefore, it cannot be said that the assessee has complied with the requirement of CIT(E) for satisfying itself before granting registration. Learned Departmental Representative has supported the impugned orders of the CIT(E) and submitted that at the time of granting registration u/s 12 A as well as recognition u/s 80G, the authority has to satisfy himself about objects of the trust and genuineness of the activity. The assessee failed to produce

ITA Nos.1216 &b1217/Bang/2015 M/s.All People Charitable Trust. Page 4 of 10 necessary details and documents to satisfy the authority about these requirements.

3.3 We have considered the rival submissions as well as relevant material on record. The assessee trust was created vide trust deed dated 15/10/2014. The objects of the trust are narrated in clause 4 as under:

a) “To Providing relief to the poor and advancing any other object of general public utility. b) The Trust will no carry out any activities with the intention of earning profit for the personnel but only for trust fund raising and will perform with services motive only. c) To establish, run, support and grant aid / rural assistance to schools, medical colleges. nursing institutions, training centres, libraries, reading rooms, universities, hospital, laboratories, research, diffusion of knowledeamongst blind students and other institutions for moral and value based education, coaching, guidance, counseling vocational and on-job trainings for the welfare of the public in general and specially for school dropouts. d) To implement appropriate technology in rural areas in the field of..... To establish, maintain and run studentships, scholarships and render other kind of aid to deserving and needy students including supply of books, stipends, medals and other incentives to promote education and on job training in the field of agriculture, arts, science & technology and information technology. e) To promote, establish, support, maintain or grant aid to institutions for the promotion of science, literature, music, drama and fine arts, for the preservation of historical monuments and for the research and other institutions, in India, having similar object for the benefit of the public in general. f) To establish, maintain or grant aid for the

ITA Nos.1216 &b1217/Bang/2015 M/s.All People Charitable Trust. Page 5 of 10 establishment and/or maintenance of parks, gardens, gymnasium, sports, clubs, dharmashalas and rest houses for use by public and general. g) To establish, maintain or grant aid to homes for the aged, orphanages or other establishments for the relief and help to the poor, needy and destitute people, orphans, widows and aged persons. h) To establish and develop institutions for the physically handicapped and disabled or mentally retarded persons and to provide them education, food, clothing or other help. i) To grant relief and assistance- to the needy victims during natural calamities such as famine, earth quake, flood, fire, pestilence, etc. and to give donations and other assistance to institutions, establishments or persons engaged in such relief work. ” 3.4 The assessee filed an application for registration u/s 12A as well as for recognition u/s 80G on 16/01/2015. The CIT(E) has asked the assessee to furnish details/clarifications as under:

In response to said requisition, assessee has filed details vide its letter dated 29/6/2015 and explained that the assessee has not made any fixed deposit, there was no receipt issued to the donor as till date, no donation was received by the assessee. Further, there was no investment made by the assessee in the movable or immovable as on date. As regards inconsistency in clause 4(f), assessee filed amended deed in compliance of the

ITA Nos.1216 &b1217/Bang/2015 M/s.All People Charitable Trust. Page 6 of 10 objection/inconsistencies pointed by the CIT(E). Assessee filed proof vide letter dated 26/01/2015 regarding charitable work done by the assessee in respect of providing lunch to the children of Navajeevana Society as well as free books and stationery to 10 children of DSM Memorial English School. Apart from this, assessee has also filed up-to-date bank statement showing all the transactions till date. As it is clear from the reply of the assessee and details as well as documents furnished that the assessee has complied with queries raised by the CIT(E). However, CIT(E) has rejected the application of the assessee by observing that the assessee is not interested in prosecuting its application and therefore, deserves to be dismissed on this account. Once assessee has brought on record all requisite details as well as amended trust deed, then the observations of CIT(E) in the impugned order is inconsistent with the material and record filed by the assessee. In this case, assessee has filed application for registration on 16/01/2015 which is just after the creation of the assessee-trust. Therefore, at the time of granting registration to the assessee, proof of charitable work done by assessee was not a mandatory condition as held by the Hon'ble jurisdictional High Court in number of judgments including judgment in the case of Meenakshi Amma Endowment Trust (supra). The co-ordinate bench of this Tribunal in case of M/s.Manipal Alumni of Nephrology Trust (supra) has dealt with an identical issue in paras.10 & 11 as under:

ITA Nos.1216 &b1217/Bang/2015 M/s.All People Charitable Trust. Page 7 of 10 “10. We have considered the rival submissions. It is clear from the impugned orders that the revenue is satisfied that the objects for which the trust was formed was charitable. The only reason assigned for not granting registration u/s. 12A of the Act is that there were no activities carried out by the trust and it was not possible to verify the genuineness of the activities of the trust. According to the revenue, registration can be granted only after satisfaction regarding genuineness of the activities of the trust. In our view, this cannot be the basis to reject the grant of registration to the assessee u/s. 12A of the Act. In this regard, we find that on identical facts and circumstances, the Hon’ble High Court of Karnataka in the case of Meenakshi Amma Endowment Trust (supra) has held as follows:- “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

ITA Nos.1216 &b1217/Bang/2015 M/s.All People Charitable Trust. Page 8 of 10 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 l2A 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.” 11. In the present case, as we have already seen, the trust came into existence by Deed of Trust dated 13.11.2012 and the application for registration was made by the assessee on 19.11.2012. The objects of the trust having been, admittedly, for providing medical relief and therefore charitable within the meaning of section 2(15) of the Act. In such circumstances, registration cannot be refused to the assessee as that would be preventing the assessee from carrying out a charitable activity at the threshold. The other decisions relied upon by the ld. counsel for the assessee also have also taken the same view, as has been taken by the Hon’ble High Court of Meenakshi Amma Karnataka in the case of Endowment Trust (supra). We are therefore of the view that the assessee is entitled to registration u/s. 12A of the Act and consequently, recognition u/s. 80G of the Act as well. We therefore allow the appeals by the assessee. ”

3.5 Thus, it is clear that the activities of the trust have to be considered if such registration is sought much after the formation of trust or after expiry of the earlier registration granted in favour

ITA Nos.1216 &b1217/Bang/2015 M/s.All People Charitable Trust. Page 9 of 10 of the trust. The Hon’ble High Court in case of Meenakshi Amma Endowment Trust (supra) has observed that if the assessee is seeking immediately after formation then, there is no provision under the Act for seeking such registration. Following the judgment of the Hon'ble jurisdictional High Court as well as the co-ordinate bench of this Tribunal in M/s.Manipal Alumni of Nephrology Trust (supra), we are of the view that the assessee satisfies the condition as required for registration u/s 12A. Further, the CIT(E) has not pointed out anything against objects of the assessee being not charitable in nature. Therefore, we direct the CIT(E) to grant registration u/s 12A to the assessee.

Pronounced in the open court on 30th December, 2015.

sd/- sd/- (Inturi Rama Rao) (Vijay Pal Rao) ACCOUNTANT MEMBER JUDICIAL MEMBER eksrinivasulu,sps

ITA Nos.1216 &b1217/Bang/2015 M/s.All People Charitable Trust. Page 10 of 10 Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file By order

Assistant Registrar Income-tax Appellate Tribunal Bangalore