M/S PRAGATHI SOCIAL WELFARE TRUST,MANGALORE vs. CIT, MANGALORE

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ITA 818/BANG/2014Status: DisposedITAT Bangalore04 September 20153 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT had not properly considered the assessee's arguments regarding the trust deed clauses and the commencement of activities. The matter was remitted back to the CIT for fresh consideration.

What were the facts?

The assessee, M/s. Pragathi Social Welfare Trust, sought registration under Section 12AA of the Income-tax Act. The CIT denied registration, citing issues with trust deed clauses and lack of commencement of activities.

What were the issues?

Whether the clauses in the trust deed were functional powers for charitable objects and whether the trust had commenced its activities.

Which sections of the Income-tax Act were involved?

Section 12AA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCH A, BANGALORE

Before: SMT. ASHA VIJAYARAGHAVAN & SHRI. ABRAHAM P. GEORGE

For Appellant: Shri. Gurunathan, Advocate

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER (Assessment Year : NA) M/s. Pragathi Social Welfare Trust, Holy Angel’s Convent, Belvedere, Angelore Church Road, Nagori, Mangalore .. Appellant PAN : AACTP4151F v. Commissioner of Income-tax, Mangalore .. Respondent Assessee by : Shri. Gurunathan, Advocate Revenue by : Shri. G. R. Reddy, CIT, DR-1 Heard on : 27.08.2015 Pronounced on : 04.09.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :

In this appeal filed by assessee, grievance of the assessee is that CIT, Mangalore, denied the registration sought u/s.12AA of the Income-tax Act, 1961 (‘the Act’ in short). 02. Ld. Counsel for the Assessee submitted that CIT had refused to follow the judgment of Hon’ble jurisdictional High Court in the case of DIT (E) v. Meenakshi Amma Endowment Trust [(2011) 50 DTR 243]. As per the Ld. AR, clauses mentioned by the CIT as not charitable were in fact functional powers ITA.818/Bang/2014 Page - 2 given to the trustees for pursuing its main objects. CIT had misunderstood it. Further as per the Ld. AR, finding of the CIT that assessee had not commenced its activities was by itself incorrect. Placing before us a copy of the audit report in Form No.10B for the year ending 31.03.2014, Ld. AR submitted that it had contributions of Rs.5,000/- and some expenditure was indeed incurred for the objects of the trust. According to him, for the year ending 31.03.2015 also assessee was having receipts and payments which clearly proved that it had started its activities.

3.

Per contra, Ld. DR submitted that CIT was obliged to verify the genuineness of the trust before granting registration u/s.12AA of the Act. According to him assessee had never brought before the CIT that it had started its activities in the right earnest.

4.

We have perused the orders and considered the rival contentions. Contention of the assessee is that the clauses of the trust deed referred by the CIT in his order were only to aid and help achieve the charitable objects mentioned in the trust deed. This argument appears to have not been considered by the CIT. Further assessee has also produced the receipts and payments for the year ending 31.03.2014 and 2015 which could indicate that it had started its activities. Thus in our opinion, the defects pointed out by the CIT appear to have beenaddressed by the assessee. We are therefore of the opinion that the issue requires a fresh look by the CIT. We set aside the order and remit the question back to the CIT for consideration in accordance with law. We may ITA.818/Bang/2014 Page - 3 hasten to add that the CIT is obliged to follow the judgment of Hon’ble jurisdictional High Court in the case of Meenakshi Amma Endowment Trust (supra) and cannot take a ground that SLP has been filed by the Department against the said judgment before the Hon’ble Apex Court.

5.

In the result, appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open court on 4th day of September, 2015.

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