Case Law Details
Hari Om Sewa Dal Vs. CIT(Exemptions)-ITAT Delhi- We find from the order of the Commissioner of Income Tax (Exemptions) that the registration under Section 12AA of the Act was denied to the appellant society solely on the ground that the appellant society had been claiming depreciation on the land which is not permissible under the Income Tax Act. In our considered opinion, this is not relevant consideration at the time of grant of registration. It is the issue to be examined during the course of assessment proceedings after grant of registration under Section 12AA of the Act. In this connection, it is relevant to mention that one of us (Hon’ble Accountant Member) is author of the order in the case of Paramount Public School Education Society Vs. CIT, in ITA No. 5712/Del/2013, dated 28.10.2015, wherein it was held that the registration cannot be denied by examining the issues which are relevant for the assessments.
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: ‘B’: NEW DELHI
BEFORE SH. INTURI RAMA RAO, ACCOUNTANT MEMBER
AND
MS. SUCHITRA KAMBLE, JUDICIA MEMBER
ITA Nos. 2285 & 2286/Del/2015
Assessment Year: NA
Hari Om Sewa Dal Vs. CIT(Exemptions)
Appellant by : Sh. Naveen Gupta, Adv.
Respondent by : Sh. H.K. Choudhary, CIT(DR)
Date of hearing: 02.11.2015
Date of pronouncement: 04.11.2015
ORDE
PER INTURI RAMA RAO, A.M.:
ITA No. 2285/Del/2015
The present appeal filed by the assessee society is directed against the order of Commissioner of Income Tax (Exemptions), dated 30.03.2015 passed under Section 12AA of the Income-tax Act, 1961 (for short “the Act”) denying the registration of the assessee society under Section 12AA of the Act. The appellant society raised the following grounds of appeals:
i. That the order of Ld. CIT is against the law and facts.
ii. That the ld. CIT erred in rejecting the application of the assessee for registration u/s 12AA although Society fulfills all the conditions for registration and all the objects and activities of the Society are eligible for grant of registration u/s 12AA of the Act.
iii. That the appellant craves leave to add or alter any of the Ground of Appeal.
2. The brief facts of the case are that the appellant society was registered under the Societies and Registration Act on 8th September, 1999 with the following objects:
1. To promote and foster social, cultural and moral behaviour.
2. To adopt ways and means to promote social welfare & happiness and alleviate human suffering and misery irrespective of caste, creed, colour and ideology.
3. To improve the living conditions of helpless people by welfare schemes.
4. To maintain libraries, reading rooms and dispensaries for general use among the members. .
5. To promote secular democratic behaviour in members and in the society.
6. To arrange and organise seminars, conferences, exhibitions and similar acts likely to promote, social, moral, spiritual, cultural and physical developments and national means and stamina.
7. To arrange, hold and establish social gatherings and to celebrate festivals of national recognition likely to bring about social and mental harmony, peace and fellowship.
8. To arise the consciousnss among the members and others against the social evils and to promote the sense of responsibility and discipline to be good inhabitants of the nation.
9. To arrange games, competitions in paintings essay writings etc. for children and to develop their physical fitness and to broaden their mental horizon.
10.To print and publish and to sell or distribute journals, periodicals books or leaflets the society may think desirable for the promotion of its objects.
11.To seek grant from the Government and from non-official bodies engaged in the services of mankind for purpose of execution of the aims and objects of the society.
12.To acquire properties in the shape of Community Centre’, Reading Rooms’ etc. raised by membership fees, donations, charities, collations, gate money and other similar methods.
13.To offer co-operation to the Government or other similar institutions in propagating the cause of various types of social reforms. Registered Office of Society:
14.To do other acts of general public utility as the ‘Executive Body’ may from time to time, decide,
15.To do all other acts or subjects as are incidental or conducive to the attainment of above objects and to dedicate for the fulfillment of duties towards nation.
16.Promotion of national unity and international peace and amity. 17.16, Promotion of communal and social harmony and brotherhood.
18.To create awareness and addressing some of the social evils, such as, female foeticide, dowry, extravagant expenditure on social functions like marriages empowerment of women in decision making etc. 19.18 To take up programmes for accelerating the pace of rural development with application of science and technology (techniques and technologies for cost reduction, improving productivity, etc.) especially in the field of water conservation, sanitation, low-cost housing, agriculture and animal husbandry and engineering sources.
20.To take up programmes for ensuring protection of environment and for regeneration of natural resources degraded due to past neglects.
21.Promotion and extension of appropriate technology including systems having renewable sources of energy.
22.To take up programmes in which science and technology may have major role in improving life, working conditions and opportunities for gainful employment of women.
23.To undertake impact evaluation of economic and social projects.
24.To work for promotion of health care activities.
25.To raise or acquire funds or property from Central Government, State Government, Non-government agencies, charitable trusts by way of donations or grants or contribution or by taking loan from public and private financial institutions. The funds, properties, assets and all other resources, present and future, of the Society shall be utilized for any or all the purposes or objects of the Society as stated above and also for all other similar activities in furtherance of ideals of truth and non-violence. financial institutions. The funds, properties, assets and all other resources, present and future, of the Society shall be utilized for any or all the purposes or objects of the Society as stated above and also for all other similar activities in furtherance of ideals of truth and non-violence.
2.1 The appellant society made the application in Form No. 10A for registration of the society under Section 12AA of the Act before the Commissioner of Income Tax (Exemptions), Chandigarh on 07.10.2014. The said application was rejected by the learned Commissioner of Income Tax (Exemptions), Chandigarh, by stating that the appellant society had been claiming depreciation on land which is not permissible under the provisions of the Income Tax Act. Being aggrieved by this order of the Commissioner of Income Tax (Exemptions), Chandigarh, the appellant society is before us with the present appeal.
3. Ld. counsel for the appellant society argued that the objects of the appellant society are purely charitable in nature and exists solely for charitable purposes. All the conditions which are required for grant of registration under Section 12AA of the Act were complied with and the Commissioner of Income Tax (Exemptions), Chandigarh, was not justified in refusing the registration of society under Section 12AA of the Act. The Commissioner of Income Tax (Exemptions), Chandigarh ought not have made inquiry which are germane to the assessment proceedings at the time of grant of registration.
4. On the other hand, the ld. CIT(DR) relied on the order of Commissioner of Income Tax (Exemptions), Chandigarh.
5. We heard the rival submissions and perused the material on record. We find from the order of the Commissioner of Income Tax (Exemptions) that the registration under Section 12AA of the Act was denied to the appellant society solely on the ground that the appellant society had been claiming depreciation on the land which is not permissible under the Income Tax Act. In our considered opinion, this is not relevant consideration at the time of grant of registration. It is the issue to be examined during the course of assessment proceedings after grant of registration under Section 12AA of the Act. In this connection, it is relevant to mention that one of us (Hon’ble Accountant Member) is author of the order in the case of Paramount Public School Education Society Vs. CIT, in ITA No. 5712/Del/2013, dated 28.10.2015, wherein it was held that the registration cannot be denied by examining the issues which are relevant for the assessments. The relevant paragraphs of the aforesaid order are reproduced as under:
“5. We heard the rival submission and perused the material on record. In the present appeal, we are required to adjudicate whether the Commissioner of Income Tax, Rohtak was justified in rejecting the application for registration under Section 12AA of the Act or not. The Commissioner of Income Tax had rejected the application primarily on two grounds. The first ground relates to the jurisdiction of the case, according to ld. CIT, jurisdiction of the case did not lie with him. First of all, we shall deal with the first objection raised by the CIT. In our considered opinion, it is undisputed fact that the appellant society filed the returns of income with the Income Tax Officer (Exemption), Rohtak. We also find from the paper book that the Deputy Commissioner of Income Tax, Rohtak, Circle – Rohtak, had issued scrutiny notice under Section 143(2) of the Act dated 22nd September, 2014 for the assessment year 2013-14. Therefore, it is the Commissioner of the Income Tax, Rohtak, who had valid jurisdiction for the appellant society. The jurisdiction of Commissioner of Income Tax is always determined with reference to the situs of the Assessing Officer. In the circumstances, the first objection raised by the CIT is rejected and it is worthwhile to mention here that the learned CIT(DR) fairly conceded before us that this objection does not hold water.
6. Now, coming to the second objection raised by the CIT that the proviso to Section 2(15) is applicable to the appellant society and the appellant society had failed to comply with the direction of the Commissioner of Income Tax to file the details of the donors of the corpus funds. The scope of the power of Commissioner of Income Tax while granting the registration under Section 12A of the Act was examined by the Hon’ble Allahabad High Court in the case of Fifth Generation Education Society Vs. CIT, 185 ITR 634, wherein it is held that at the stage of grant of registration under Section 12A of the Act, the Commissioner may examine, whether the application is made in accordance with the requirement of Section 12A , whether the form has been properly filled up or not and the objects of the society are charitable or not. The relevant para of aforesaid case is reproduced below:
“2. A reading of the section shows that the registration under section 12A is a precondition for availing the benefit under sections 11 and 12 of the Act. Section 11 provides for exemption of income which is applied for charitable purposes. Section 12 is in the nature of an Explanation to section 11. Before a person can claim the benefits of section 11 or section 12, as the case may be, he must obtain registration under section 12A. The application for registration under section 12A has to be made in Form No. 10A prescribed by rule 17A before expiry of one year from the date of the creation of the trust or the establishment of the institution, whichever is later. It has to be made by the person in receipt of the income of the trust.
3. It is evident that at this stage, the Commissioner is not to examine the application of income. All that he may examine is whether the application is made in accordance with the requirements of section 12A read with rule 17A and whether Form 10A has been properly filled up. He may also see whether the objects of the trust are charitable or not At this stage, it is not proper to examine the application of income.
4. The order impugned does not say that the objects of the society are not charitable in nature; it merely says that they are general in nature. Just because they are general, they do not cease to be charitable. The Commissioner has also observed that no activity has been carried out by the society. It is also not the requirement of section 12A nor section 80G has any relevance at this stage. The impugned order cannot, therefore, be sustained and is quashed.”
Similarly, the Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Surya Education and Charitable Trust, (2013) 355 ITR 280 (P&H) held that the objects of the provisions of Section 12AA of the Act is to examine the genuineness of the objects of the institutions, but not the application of income of the trust for charitable. The stage for application of income is yet to arrive when such trust/institution files the return. The relevant para of this case is reproduced as under:
“……………..Therefore, the provisions of Sections 11, 12 or Section 10(23C) of the Act, deal with the income of a Trust or of the Institution and the circumstances as to when such income is to be excluded for computing the total income, but the basis of such benefit is the registration under Section 12AA of the Act. Unless a Trust or Institution is registered under Section 12AA of the Act, such Trust or Institution shall not be entitled to exclude from its total income, deductions or contributions or from other sources. Therefore, the principles laid down for excluding the income from consideration under Section 10(22) now 10(23)(C) or Sections 11 and 12 are not applicable while considering the application for registration under Section 12AA of the Act. The application for registration is required to be made within one year of the creation of the Trust. Section 12AA of the Act, requires satisfaction in respect of the genuineness of the activities of the Trust, which includes the activities which the Trust is undertaking at present and also which it may contemplate to undertake. The insertion of sub-section (3) to Section 12AA of the Act, clarifies the said fact, when it empowers the Commissioner to cancel the registration if the activities of the Trust are not carried out in accordance with such objects.
11. Therefore, the object of Section 12AA of the Act, is to examine the genuineness of the objects of the Trust, but not the income of the Trust for charitable or religious purposes. The stage for application of income is yet to arrive i.e. when such Trust or Institution files its return. Therefore, we find that the judgments referred to by the learned counsel for the appellant are not applicable to the facts of the present case arising out of the question of registration of the Trust and not of assessment.”
The Hon’ble Karnataka High Court in the case of Sanjeevamma Hanumanthe Gowda Charitable Trust Vs. Director of Income Tax (Exemption), (2006) 285 ITR 327 (Karn.) held that the registration of institution relates to the objects so that the activities be charitable, which should be considered as genuine trust. If the activities of the institution are taxable for any reason the matter to be considered at the time of assessment. The source of income cannot be questioned at the time of granting the registration under Section 12AA of the Act.
7. The ratio that can be culled out from the above decisions is that the Commissioner is only entitled to examine whether the objects of the institutions are charitable or not. Once the objects of the institutions are found to be charitable, the Commissioner has no option, but to grant registration. In the present case the Commissioner has not found that any objects of the trust are not charitable in nature. The objections raised by the CIT that the appellant had failed to comply with the direction of the Commissioner of Income, Rohtak to file the details of donors of corpus funds and the institution was collecting the fees from the students are not relevant considerations at the time of grant of registration under Section 12AA of the Act. These are the issues to be examined during the assessment proceedings after grant of the registration under section 12AA of the Act. Therefore, we direct the Commissioner of Income Tax, Rohtak, to grant registration to the appellant society within a period of 30 days from the date of receipt of this order. Accordingly, the grounds of appeal filed by the appellant society are allowed in full.
8. In the result, the appeal filed by the assessee is allowed.”
7. Respectfully following the ratio laid down in the above order, we direct the Commissioner of Income Tax (Exemptions), Chandigarh, to grant registration to the appellant society under Section 12AA of the Act.
Accordingly, the grounds of appeal filed by the assessee society are allowed.
ITA No. 2286/Del/2015:
8. The present appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Exemptions), Chandigarh, denying the approval under the provisions of Section 80G of the Act. The approval was denied on the same grounds on which the grant of registration under Section 12AA of the Act was denied. In the appeal i.e. ITA No. 2285/Del/2015, we have already directed the Commissioner of Income Tax (Exemptions), Chandigarh, to grant registration in the circumstances mentioned therein. Accordingly, we direct the ld. Commissioner of Income Tax (Exemptions), Chandigarh, to grant approval under Section 80G of the Act. Hence, the grounds of appeal filed by the assessee are allowed in full.
9. In the result, both the appeals filed by the assessee are allowed.
The decision is pronounced in the open court on 4 th November, 2015.
