Income Tax Appellate Tribunal - Mumbai
Pragat Pratishthan, Mumbai vs Assessee on 24 January, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH: MUMBAI
BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER
AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER
ITA.6445/Mum/2010
Pragati Pratishthan,
17, Chanchal Smruti,
G.D. Ambedkar Marg, Wadla,
Mumbai -400 031 ......... Appellant
Vs
The Director of Income-tax (Exemption),
Room No.616, 6th Floor,
Piramal Chamber,
Parel,
Mumbai -400 012 ........ Respondent
PAN: AAATP 3595 P
Appellant by: Shri Arun Sathe & Ms. Aarti Sathe
Respondent by: Shri A.K. Nayak
Date of Hearing: 24.01.2012
Date of Pronouncement: 21.03.2012
ORDER
PER R.S. PADVEKAR, JM:
In this appeal the assessee has challenged the impugned order of the Ld. Director of Income-tax (Exemption), Mumbai dated 01.07.2010 passed u/s.80J of the Income-tax Act declined to grant the approval under said section. The assessee has taken the multiple grounds, which reads as under:
"1. On the facts and in the circumstances of the case and in law, the Director of the Income-tax (Exemption) (hereinafter referred to "D.I.T.(E)") erred in refusing to grant, for continuation of recognition to the Appellant-trust under section 80G of the Income-tax Act, 1961 (hereinafter said "the Act") on the ground that the object of the trust came to be amended vide schedule-III submitted to the Charity Commissioner on 6th June, 2006. It is submitted that this 2 ITA 6445/M/2010 Pragati Pratishthan amendment was allowed by the Deputy Charity Commissioner, Greater Mumbai Region, Mumbai on 16th October, 2007.
"2. On the facts and in the circumstances of the case the order passed by the learned D.I.T.(E), Mumbai, under section 80G of the Act and also the order cancelling the registration under section 80G of the Act and also the order cancelling the registration under section 12A of the Act and refusing to grant a certificate of exemption under section 80G of the Act is bad-in-law and without any jurisdiction and contrary to the provisions of sections 12A, 12AA and section 80G of the Act.
"3. The learned D.I.T.(E) failed to appreciate that by the said amendment to the objects clause, there was no deletion in the original objects clause and the same was not detrimental to the objects of the Appellant-trust. The amendment was purely made for the smooth working of the Appellant-trust, and it is in the nature of a supplementary object for the smooth working of the Appellant-trust.
"4. The learned D.I.T.(E) failed to appreciate that there is no substantial change in the objects clause of the Appellant- trust and it continues to be a charitable trust and further failed to appreciate that the addition / amendment was allowed by the Deputy Charity Commissioner, Greater Mumbai Region, Mumbai, which is purely technical in nature.
"5. The learned D.I.T.(E) erred in placing reliance on the judgments in case of Sakthi Charities versus CIT reported in 149 ITR Page no.624 and in Sakthi Charities versus CIT in 182 ITR page no.483 to decide the issue in the present 3 ITA 6445/M/2010 Pragati Pratishthan case, and failed to appreciate that the facts of the present case in fact he ought to have appreciate that the facts of the present case in fact he ought to have appreciated that the observation of the Hon'ble Madras High court on page No.632 in judgment of Sakthi Charities versus CIT reported in 149 ITR Page no.624 are supporting Appellant's case."
2. Facts: The assessee, which is a trust, filed an application for getting the approval u/s.80G of the Income-tax Act on 11.01.2010. While processing the application Ld. DIT (Exemption) noticed that the assessee-trust has amended the objects clause in Memorandum of Trust. The Ld. DIT (Exemption) asked the assessee to furnish the details of the said amendments as well as insertion of the new object clause which is intimated to the Charity Commissioner. The assessee- trust has been granted registration u/s.12A of the Income-tax Act. The Ld. DIT (Exemption) has observed that the registration u/s.12A of the Income-tax Act was granted on specific objects of the trust and as the assessee has changed the objects of the trust, the registration granted u/s.12A does not survive and deemed to have been cancelled from the dare of change made in the objects. The Ld. DIT (Exemption) relied on the decision in the case of Allahabad High Court in the case of Allahabad Agricultural Institute and Another vs. Union of India 291 ITR 116. The Ld. DIT (Exemption) also observed that one of the conditions for granting the certificate of exemption u/s.80G is that the assessee should be having a valid registration u/s.12A of the Act. As observed by the Ld. DIT (Exemption) the assessee trust admitted that unfortunately they overlook the matter in respect of the changes made in the object clause of the assessee trust. The Ld. DIT (Exemption) framed following issues:
(i) the effect of changes in the object of the trust after registration granted u/s.12A;
(ii) the validity of the trust-deed as a result of addition or deletion in the object clause of the trust-deed;
4 ITA 6445/M/2010 Pragati Pratishthan
(iii) can certificate issued u/s.80G be granted even though the assessee trust has no registration u/s.12A?
3. The assessee-trust resisted the action of the Ld. DIT (Exemption) by taking the stand that cancellation of the registration u/s.12A can only be done u/s.12AA(3) of the Act if the activities of the trust are not genuine or not being carried out in accordance with the objects of the trust. The Ld. DIT (Exemption) placed heavy reliance in the case of Allahabad Agricultural Institute & Anr. (supra) and finally held that the assessee suo moto altered the object of the trust-deed, and hence, the registration granted u/s.12A does not survive as very foundation of the registration granted u/s.12A has gone. The Ld. DIT (Exemption) rejected the application of the assessee filed u/s.80G of the Income-tax Act. Now, the assessee has challenged the impugned order of the Ld. DIT (Exemption).
4. We have heard the rival submissions of the parties and perused the records. We find that the original objects of the trust-deed were as under:
"The aims of the Pratishthan shall be to inform and educate the masses of the country in all aspects of their life through all conventional, modern and novel media, in order to make the people conscious of their rights and duties and to promote activities and movements to enable them to achieve the same. The subjects of information and education will be all pervading, of academic, cultural, social, scientific or linguistic and literary pursuits of oriental as well as occidental nature.
To improve the economic conditions of the masses in general and weaker sections of the society in particular, such as, schedule castes & scheduled tribes, i.e. Adivasis & Harijans and such other backward communities ..."
5. The Annual General Body of the assessee-trust amended the object clause of the Memorandum of Association (M.A.) and reported 5 ITA 6445/M/2010 Pragati Pratishthan the change u/s.22 of the Bombay Public Trust Act, 1950 to the Dy. Charity Commissioner, Greater Mumbai, Mumbai. As per the original object of the trust, their aim was to educate masses of the country in all aspects of their life through all conventional, modern & novel ways in order to make people conscious of their rights & duties and also improve economic conditions of the masses in general and weaker sections of the society in particular, such as schedule castes & scheduled tribes i.e. Adivasis & Harijans and such other backward communities.
6. After the amendment, the object clause read as under:
"The aims of the Pratishthan shall be to inform and educate the masses of the country in all aspects of their life through all conventional, modern and novel media, in order to make the people conscious of their rights and duties and to promote activities and movements to enable them to achieve the same. The subjects of information and education will be all pervading of academic, cultural social, scientific or linguistic and literary pursuits of oriental as well as occidental nature. To alleviate poverty and bring about better living conditions mutual co-operation and unity among villagers and in general rural development by implementing Khadi and Village Industries Programmes."
7. It is clear from the above amended object that one of the basic object has been totally altered i.e. 'to improve the economic conditions of the weaker sections of the society such as scheduled castes & scheduled tribes i.e. Adivasis & Harijans etc.' and by deleting the same the assessee trust has changed its aims by diverting to the rural development by implementing the 'Khadi and Village Industries Programmes'. Once the objects of the trust are changed then what consequences will follow has been considered by the Hon'ble High Court of Allahabad in the case of Allahabad Agricultural Institute and Anr. (supra) and it is held as under:
6 ITA 6445/M/2010 Pragati Pratishthan " The argument is misconceived. The registration is granted by the CIT. It can be cancelled by the CIT under s.12AA(3). However, the words of that statutory provision show that it applies where the objects of the trust or institution remain the same on paper, but the actual activities of such trust or institution are contrary to the said objects or are fictitious or fraudulent or not genuine or not within the scope of those objects. However, where the objects of the trust or institution, which were the basis of grant of registration, are altered after such grant of registration, the very foundation of the registration having been removed by a voluntary act of the assessee, the registration would not survive.
The immediate intimation required to be given by the assessee to the CIT is perhaps merely to enable him to keep his (CIT's) records updated. If, for the sake of argument, it is assumed that the intimation is required to be given to enable the CIT to exercise the power of cancellation, even then where the petitioners had failed to give such intimation, they cannot be permitted, in the discretionary jurisdiction under Art. 226 of the Constitution of India, to plead the defence that the CIT has not cancelled the registration. Further, in a situation where the objects of the trust or institution have been altered wholesale after the grant of registration and intimation of the alteration has not been given to the CIT, the order of the assessing authority on the assumption that the registration, which was granted on the basis of a particular representation, held out by the assessee no longer survives or holds good, would not call for interference by this Court in exercise of its equitable and discretionary jurisdiction. To sum up, we are unable to exercise our discretion to enable the assessee to continue to utilize and enjoy the registration despite the wholesale change in the objects without giving its immediate intimation to the CIT."
8. Admittedly, in the present case, the assessee was granted registration u/s.12A of the Act. The Ld. Counsel argued that the 7 ITA 6445/M/2010 Pragati Pratishthan amendment made to the objects of the trust is not effective as the same has not approved by the Charity Commissioner. We find no force in the argument of Ld. Counsel. As per the amended-deed filed before Ld. DIT (Exemption) as well as before us, we find that the assessee has amended object clause of the trust-deed which has been approved in the General Body. We further find that the registration was granted to the assessee u/s.12A on the basis of the object of the assessee-trust at the time of application and if the said objects are changed then automatically the registration granted u/s.12A does not survive. The argument of Ld. Counsel that cancellation procedure is prescribed u/s.12AA(3) of the Act and hence, it cannot be presumed once there is an amendment to the objects of the Trust-deed the registration granted u/s.12A is automatically cancelled. Said argument has also been considered in case of 'Allahabad Agriculture Institute & Anr (supra). One of the conditions for grant of certificate u/s.80G is the valid registration u/s.12A/12AA. In the case of Allahabad Agricultural Institute and Another (supra) the Hon'ble Allahabad High Court has held that once the objects of the trust- deeds are changed which was the foundation for granting registration u/s.12A the registration does not survive and it is deemed to have been cancelled on the date of amendment to the object of the trust.
9. After giving our anxious consideration to the reasons given by the Ld. DIT (Exemption) we find no reason to interfere with the order rejecting the application of the assessee u/s.80G.
10. In the result, assessee's appeal stands dismissed.
Order pronounced in the open court on 21st day of March, 2012.
Sd/- Sd/-
(R.S. SYAL) (R.S. PADVEKAR)
ACCOUTANT MEMBER JUDICIAL MEMBER
Mumbai, Date: 21st March, 2012
8 ITA 6445/M/2010
Pragati Pratishthan
Copy to:-
1) The Appellant.
2) The Respondent.
3) The DIT (E),Mumbai.
4) The CIT- ___/ DIT ____concerned , Mumbai.
5) The D.R. "C" Bench, Mumbai.
By Order
/ / True Copy / /
Asstt. Registrar
I.T.A.T., Mumbai
*Chavan