ITAT MUMBAI BENCH ‘H’ (Third member)
Manockjee Cowasjee Petit Charities
Director of Income-tax (Exemp.)
IT Appeal no. 4881 (Mum.) of 2009
February 22, 2012
Vijay Pal Rao, Judicial Member – This appeal is directed against the order dated 29.6.2009 passed by the DIT(Exemption) u/s 12AA(1)(b)(ii) r.w.s 12A of the IT Act whereby the application of the assessee for registration was rejected.
2. Aggrieved by the order of the DIT(Exemption), the assessee filed an appeal before the Tribunal. There was a difference of opinion between the Members of the Division Bench of this Tribunal. The ld Accountant Member was of the view that the Commissioner was not justified in rejecting the application for registration and accordingly directed to register the assessee’s society u/s 12A. Whereas the Judicial Member was of the view that DIT(Exemption) has taken a correct and proper view in rejecting the application of the assessee for registration u/s 12A.
3. As there was difference of opinion between the Members of the Division Bench, they requested the Hon’ble President u/s 254(4) of the I.T Act to constitute a Third Member for resolving the points of difference. Accordingly, the Hon’ble President referred the points of difference to the ld Third Member. We quote the points of difference as under:
“Whether in the facts and circumstances of the case, Director of Income Tax (Exemption) Mumbai had erred in not registering the assessee’s institution u/s 12AA of the Income-tax Act, inter alia, on the ground that indenture of the assessee Trust is not charitable.”
4. The ld. Third Member has concurred with the view expressed by the ld. Accountant Member vide order dated 14.12.2011 as under:
“22 Coming back to the facts of the instant case it is seen that the trust deed adequately provides that, after the death of the settlor, the income from the trust property is to be used for charitable purposes, which are covered under section 2(15) of the Act. This shows that the objects of the trust, after the death of settlor, are fully charitable. The assessee produced copies of its final accounts for last three years ending on 31st March, 2006 and 2007 and 2008 before the learned CIT. It was specifically claimed that not even a single paisa was applied for the benefit of any lineal descendants of the father of the settlor. The learned CIT, despite the availability of audited accounts before him for the last three years, failed to point out any single instance in which the income of the trust was not utilization for the charitable purposes set out in the trust deed or the money was applied for the lineal descendants of the father of the settlor. Even if any amount is actually spent on the relatives of the settlors, then there is section 13(3) enabling the AO to refuse exemption u/s 11 read with section 13 to that extent and that too in the year in which such amount is spent. It cannot be a reason to refuse registration u/s 12AA. As such it is noticed that both the conditions u/s 12AA warranting the registration of the trust, are fully satisfied in the present case. In my considered opinion the ld. CIT was not justified in refusing the registration from the assessment year immediately following the financial year in which such application was made. I, therefore, answer the question in affirmative by holding that the Director of Income Tax (Exemption) (Mumbai) erred in not registering the assessee’s institution u/s 12AA of the Income-tax Act.
23. For the foregoing reasons I agree with the view expressed by the learned Accountant Member. The registry of the Tribunal is directed to list this matter before the Division Bench for passing of order in accordance with majority view.”
5. Now, this appeal is placed before us for passing for consequential/conformity order. Accordingly, the appeal of the assessee stands allowed as per the majority view.
6. In the result, the appeal filed by the assessee is allowed.