Income Tax Appellate Tribunal - Delhi
Billion Heart Beating Foundation, New ... vs Assessee on 27 July, 2011
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ITA 3963/Del/2011
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `A' NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER
I.T.A.No.3963/Del/2011
Assessment Year : N.A.
Billion Heart Beating Foundation, Vs DIT(Exemptions),
D-1105, New Friends Colony, Aayakar Bhawan,
New Delhi-110065 Distt. Laxminagar,
New Delhi-110092
(PAN AABTB7512K)
(Appellant) (Respondent)
Appellant by: Shri Ajay Vohra & Gaurav Jain
Respondent by : Shri Alok Singh, DR
ORDER
PER CHANDRA MOHAN GARG, JUDICIAL MEMBER
This appeal has been preferred by the assessee against the order of ld. DIT(E), New Delhi dated 27.7.2011, rejecting the applications of the assessee seeking registration under Section 12AA and for the approval under Section 80G of the Income Tax Act, 1961 (hereinafter the Act).
2. The grounds of appeal are reproduced below:-
"1. That the Director of Income Tax (Exemption) ["DIT(E)"] erred on facts and in law in denying registration/approval to the appellant society under section 12A and 80G of the Income Tax Act, 1961 ("the Act") vide order dated 27.7.2011.2
ITA 3963/Del/2011
2. That the DIT(E) erred on facts and in law in rejecting the application for registration/approval under section 12A/80G of the Act on the ground that no charitable activity was carried out by the appellant during the year."
3. Briefly stated, the facts of the case that admittedly, the assessee trust was created on 30.9.2010 through a registered trust deed. It moved two applications on 27.1.2011 on Form nos. 10A and 10G for seeking registration u/s 12A and exemption u/s 80G of the Act respectively. Ld. DIT(E) asked the assessee to submit some documents and explanations and these were submitted by the representative of the assessee.
4. Relying on the decision of the Hon'ble Kerala High Court in the case of Self Employers Service Society vs CIT reported in (2001) 247 ITR 18 (Ker), the ld. DIT(E) rejected both the applications with this finding that the trust has not started any activities for general public so far and if society was not able to do any of the charitable activities, it would not qualify for granting registration u/s 12A of the Act. Accordingly, both the applications were rejected by the impugned order. Hence this appeal.
5. We have carefully considered rival arguments of both the parties and perused all citations placed before us. In the case of Self Employers Service Society vs CIT (Ker.) (supra), the Hon'ble Kerala High Court observed that:-
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ITA 3963/Del/2011 "On the enquiry made by the Commissioner it was found that the members of the society are mainly merchants. Its activity is accepting recurring deposits from its members and fixed deposits from the public. Loans are being given to its members at 21 per cent interest. The officer found that in spite of the reference to a large number of charitable objects in its bye-laws, the activity carried on by the society is confined to its members numbering about 150. The activities, as mentioned above, cannot be treated as charitable in nature. It was on this basis, the Commissioner came to the conclusion that it is not entitled to registration under section 12A." Therefore, the conclusion of the Hon'ble Kerala High Court in the peculiar facts and circumstances of the said case was that the activities of the society were only for the purpose of generating income for its members and activities were not found charitable in nature. Hence, it was held that rejection of applications u/s 12A and 80G of the Act was justified. But in the case in hand, admittedly, the assessee trust was created on 30.9.2010 and applied for registration on 27.1.2011 i.e., at the end of fourth month of creation. The ld. DIT(E) did not find any activity of the trust generating income for its members or not charitable in nature. Therefore, we respectfully hold that the facts and circumstances of the present case are different and distinguishable from the case of Self Employers Service Society (supra) relied upon by the ld. DIT(E). 4
ITA 3963/Del/2011
6. We found that the ld. DIT(E) has made an observation in para 3 of the impugned order that the assessee trust has not started any charitable activity for the general public so far, it seems to be a main ground for rejection of registration and exemption applications.
7. The assessee placed reliance on the following decisions:-
1. Punjab & Haryana High Court in the case of O.P. Jindal Global University vs CCIT: CWP no. 6171/2010
2. Allahabad High Court in the case of Fifth Generation Education Society vs CIT: 1990 185 ITR 634
3. Karnatak High Court in the case of DIT(E) vs Meenakshi Amma Endowment Trust: 50 DTR 243
4. Delhi Bench of the Tribunal in the case of Dharma Sansthapak Sangh (Niyas) vs CIT (2008) 118 TTJ 823
5. Delhi Bench of the Tribunal in the case of Sardari Lal Oberoi Memorable Charitable Trust vs ITO (2007) 106 TTJ 468
6. Delhi Bench of the Tribunal in the case of Acharya Sewa Niyas vs CIT (2006) 105 TTJ 761
7. Delhi Bench of the Tribunal in the case of Ashutosh Dawar Trust vs DIT(E) (2002) 77 TTJ 976 5 ITA 3963/Del/2011
8. Jaipur Bench of the Tribunal in the case of Jasoda Devi Charitable Trust vs CIT 48 SOT 162
8. In recent judgment passed by the Hon'ble Punjab & Haryana Court in the case of O.P. Jindal Global University vs CCIT, Panchkula in CWP no. 6171/2010 dated 11.11.2011, the Hon'ble High Court was pleased to observe that while deciding the application of registration u/s 12AA of the Act, objectives of the trust is to be seen.
9. Further, it was held by the Hon'ble Allahabad High Court in the case of Fifth Generation Education Society vs CIT reported as (1990) 185 ITR 634 that at the time of registration under Section 12A of the Act, pre- condition for availing of benefit of Sections 11 and 12 of the Act is not required to examine application of income of the Trust. Registration authority has to see only whether the objects of the society or trust are charitable for general public or not.
10. The Hon'ble Karnataka High Court in a recent judgement passed in the case of DIT(E) vs Meenakshi Amma Endowment Trust in ITA No. 152/2010 dated 10.11.2010 observed in para 6 of the judgment that a trust could be formed today and within a week registration u/s 12A of the Act could be sought, as there is no prohibition under the Act seeking such registration immediately after creation of the trust. Activities of the trust 6 ITA 3963/Del/2011 have to be considered if such registration is sought much later than the formation of the trust or after expiry of the earlier registration granted in favour of the trust.
11. In the present case, where the trust has approached for registration to the authorities within four months of its creation/or formation, the above mentioned criteria, namely, the objects of the trust, for which it was formed, will have to be examined to be satisfied about its genuineness, and the commencement of the activities of the trust cannot be the criterion, since it is yet to commence its activities.
12. The same view has to be taken by the Delhi Bench of the Tribunal in the cases of Acharya Sewa Nyas vs CIT reported in (2006) 105 TTJ 761, Sardarilal Oberoi Memorable Charitable Trust vs ITO (2007) 106 TTJ 468 and Ashutosh Dawar Trust vs DIT(E) (2002) 77 TTJ 976 that at the initial stage of registration, objects are to be seen. Registration cannot be denied merely on the ground that no activity has been commenced. The same view was also taken by the Jaipur Bench of the Tribunal in the case of Jasoda Devi Charitable Trust vs CIT 48 SOT 162.
13. Accordingly, on the basis of the above discussions, we are of the opinion that the DIT(E) was not justified in rejecting the application on the basis that the assessee had not carried out any charitable activities without 7 ITA 3963/Del/2011 appreciating that it was created on 30.9.2010 only and this is not the precondition that the appellant trust is required to show charitable activities for getting registration u/s 12AA of the Act. No doubt has been expressed on the charitable nature of the activities of the appellant trust.
14. We, thus, setting aside the impugned order, direct the ld. DIT(E) to grant registration under Section 12AA of the Act, as sought for by the assessee by allowing its application dated 27.1.2011 made in this regard. The ld. DIT(E) is further directed to verify the application of the appellant- trust, seeking approval u/s 80G(5)(vi) of the Act and, if he is satisfied that the conditions laid down therein are fulfilled by the appellant, allow the approval.
15. In the result, the appeal is allowed with aforementioned directions to the ld. DIT(E).
Order pronounced in the open court on 16th March, 2012.
Sd/- Sd/-
(G.D. AGRAWAL) (CHANDRA MOHAN GARG)
VICE PRESIDENT JUDICIAL MEMBER
DT.16th MARCH, 2012
'GS'
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ITA 3963/Del/2011
Copy forwarded to:-
1. Appellant
2. Respondent
3. CIT(A)
4. CIT 5. DR By order
Asstt. Registrar