Shree Andheri Vagad Visha Oswal Chovisi ... vs Assessee

The present appeal is directed against the order of Director of

Income-Tax (Exemptions), Mumbai [for short 'the DIT(E)'], dated

31.07.2013 u/s. 12AA(1)(b)(ii) of the Income-Tax Act, on the following

grounds:

1) The learned DIT(E) has erred in law & in facts to reject application U/S 12AA for registration of public trust.

2) The learned DIT(E) has erred in law & in facts in not following the jurisdiction High Court judgment of CIT VS. Agriculture Produce 2911TR 419 followed in Grameen Initiative for Women VS. DIT(E) which held that 2 ITA No. 5499/Mum/2013

it is not necessary to have registration with charity commissioner as a trust and following above ratio compliance with Bombay Public Trust Act may not be ground for rejection of application u/s 12AA.

3) The learned DIT(E) has erred in law & in facts in not following judgment of Dy.DIT VS. GKR Charities of Hon. Mumbai ITAT(ITA NO.8210/Mum/2010.)

4) The learned DIT(E) has erred in law & in facts in not considering judgment of Dreamland Education Trust Vs. Society Amritsar ITAT 109 TTJ 850 which held not to consider extraneous factors for rejection of application u/s 12AA.

5) The learned DIT(E) has erred in law & in facts to held that not obtaining permission of charity commissioner amounts to doubtful of genuineness of objects & activity of trust and also erred on that basis for rejection of registration.

6) The learned DIT(E) has erred by not allowing reasonable opportunity of hearing for rejection of application.

7) Your applicant prays that DIT(E) may be directed to grant registration u/s 12AA.

8) The Appellant leaves the right to amend, add, or alter the grounds at the time-of regular hearing.

2. The facts of the case of the assessee are that an application for

registration u/s. 12AA of Income-Tax Act was filed, as the Trust was

constituted and registered with the Charity Commissioner vide Registration

No. E-29350(Mumbai), dated 16.01.2013. A notice dated 10.04.2013 was

issued to the assessee requiring the applicant/appellant to furnish certain

details/documents like PAN Card, Details of the Trustee, Bank Account,

NOC in respect of office premises, certificate of registration issued by the

Charity Commissioner and audited account and the activities undertaken

by the Trust with documentary evidence. The representative of the 3 ITA No. 5499/Mum/2013

assessee attended the office of the DIT(E) and submitted the details vide

their letters dated 12.06.2013 and 24.06.2013. However, the DIT(E), while

rejecting the application of assessee, has taken the ground at the assessee

trust has not complied with section 36(A)(3) of the Bombay Public Trust

Act and that the compliance is necessary for registration of the Trust by

Charity Commissioner and for the purpose of registration of Trust u/s.

12AA of Income-Tax Act and non-compliance with the local Act governing

the Trust is in violation of public policy and the genuineness of the object

and the activities of the Trust itself were doubtful.

3. The provisions of section 12AA of the Act are reproduced below:

12AA. (1) The Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) [for clause (aa) of sub-section (1)] of section 12A, shall -

(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also made such inquiries as he may deem necessary in this behalf; and

(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he -

(i) shall pass an order in writing registering the trust or institution;

(ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant.

4. We have heard the parties and have perused the material available

on record. The ld. counsel for the assessee relied on the following

judgments:

(1) DDI vs. M/s GKR charities (2) M/s Organisation for Autistic Individuals vs. DIT(E) (3) Dream land Educational Trust vs. CIT( 109 TTJ ASR 850) (4) Shanta Education 4 ITA No. 5499/Mum/2013

Academy vs. CIT-I, 47 taxmann.com 231. (5) Saint Kabir Educational Trust vs. CIT (41 DTR 267) (6) Shri Gain Ganga Vocational vs. Assessee ITA Nos. 5706 & 5707/Del/2012 (7) CIT vs. Red Rose School 163 taxman 19(All.) (8) APMC vs. CIT 100 ITD 1 Nagpur (9) CIT vs. Agricultural Produce and Market 210 CTR Bom 386 (10) Kul Foundation vs. CIT-1, Pune [2015] 54 taxmann.com 143 (11) Soham For Kids Education vs. DIT(E) 49 taxman.com 493 Delhi ITAT (12) Gramin Initiative for Women vs. DIT(E) (ITA No. 1937/M/2009) (13) Premium Investment vs. DCIT 3(2) 4879/M/2012 (14) Manockjee Cowasjee vs. DIT(E) & (15) CIT vs. Varanasi Welfare Trust.

5. The ld. DR relied on the impugned order.

6. We have considered the judgments cited by the ld. Representative.

The recourse taken by the ld. CIT is not correct, as the language of section

12AA of the Act nowhere provides that while granting registration, the

DIT(E) is required to go into the compliance or otherwise of the provisions

of the Bombay Public Trust Act, 1950. Hence the order of DIT(E) is

patently illegal U/s. 12AA, the CIT(A) is only empowered to satisfy himself

about the objects of the Trust and the genuineness of its activities. Once

The CIT(A) has not doubted either the genuineness of the activities of the

assessee or its objects, his power u/s. 12AA ends. In 'Acharya Sewa Niwas

Uttaranchal v. CIT', (2006) 105 TTJ (Del) 761, it was held that under

Section 12AA, the jurisdiction of the CIT is confined to satisfying himself

about the objects of the trust and the genuineness of its activities; that

where the CIT had not taken any objection to the charitable nature of the

trust, the reasons given by the CIT for refusal to grant registration were

extraneous to Section 12AA; and that therefore, the registration was to be 5 ITA No. 5499/Mum/2013

allowed to the assessee trust. No decision to the contrary has been

brought to our notice.

7. In. view of the above, we hold that there was no justification for

refusing registration u/s. 12AA of the Act to the assessee, which is

accordingly allowed to the assessee and the order of the DIT(Exemptions)

is reversed and the grievance of the assessee is accepted.

8. As a result, appeal filed by the assessee is allowed.

Order pronounced in the open court on this 3rd day of July, 2015.

Sd/- Sd/- (RAJENDRA) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 03.07.2015 Sharwan P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT(A) Concerned, Mumbai The DR "E" Bench //True Copy// By Order

Dy/Asstt. Registrar, ITAT, Mumbai.