Income Tax Appellate Tribunal - Cochin
Christian Women'S Association, ... vs Assessee on 14 November, 2014
1
ITA No.389/Coch/2014
aIN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN
Before Shri N.R.S. Ganesan (JM) and Shri Chandra Poojari (AM)
I.T.A No. 389/Coch/2014
Christian Women's Association vs CIT, Kottayam
Chirayil House, Muthoor PO
Thiruvalla
PAN : AABTC5274D
(Appellant) (Respondent)
Appellant by : Shri K.I. Abraham
Respondent by : Shri M Anil Kumar, CIT
Date of hearing : 28-10-2014
Date of pronouncement : 14-11-2014
ORDER
Per N.R.S. Ganesan (JM) This appeal of the assessee is directed against the order of the Administrative Commissioner dated 31-07-2014 rejecting the application of the assessee for registration u/s 12AA of the Act.
2. Shri K.I. Abraham, the ld.representative for the assessee submitted that the assessee trust was formed by means of a registered trust deed dated 06-07-2013. The trust filed application before the Commissioner of Income-tax for registration as charitable trust u/s 12AA of the Act. 2 ITA No.389/Coch/2014 According to the ld.representative, the object of the trust is to serve the people irrespective of caste, creed and community. The trust also intended to organize, facilitate, conduct and assist in organizing, facilitating and conducting lectures, seminars, symposium, conventions, conferences, consultations, workshops, literacy programmes and retreats for training so as to empower the women. The other object of the trust is to provide training, institute studentships, scholarships, stipends, medals, prizes etc and to help and encourage deserving students and to provide monetary aid to students for pursuing higher education. Another object of the assessee trust is to extend help to the victims of natural calamities, communal riots, religious outbursts, terrorist activities, sectarian in-fights and unforeseen circumstances. However, the Commissioner of Income- tax rejected the application of the assessee for registration u/s 12AA on the ground that charitable activity carried on by the assessee trust is very limited and funds available is seemingly less. According to the ld.representative, the trust itself was formed on 06-07-2013. The assessee trust has spent around Rs.1,16,977 during the first seven months of its service.
3. Placing reliance on the decision of the Delhi Bench of this Tribunal in Soham For Kids Education Society Centre vs DIT (Exemptions) reported in (2014) 31 ITR (Trib) 170, the ld.representative submitted that the intention 3 ITA No.389/Coch/2014 and activity of the trust was not germane at the time of grant of registration u/s 12AA of the Act. Merely because the assessee trust has not carried out the charitable activity vigorously that cannot be a reason per se for refusing the registration u/s 12AA of the Act. In this case, according to the ld.representative, the assessee carried out the charitable activity in a limited way within a short span of 7 months of its existence. The ld.representative has also placed reliance on the judgment of the Karnataka High Court in DIT (Exemptions) vs Meenakshi Amma Endowment Trust 354 ITR 219 (Kar) and submitted that no one could expect to do activity of charity immediately after the establishment of the trust. Therefore, the object of the trust has to be taken into consideration by the authority and the object of the trust could be read from the trust deed itself. The ld.representative has also placed his reliance on the judgment of the Delhi High Court in DIT vs Foundation of Opthalmic and Optometry Research Education Centre reported in 355 ITR 361 (Del) and the decision of the Hyderabad Bench of this Tribunal reported in (2014) 35 ITR (Trib) 267 and the judgment of the Madras High Court in DIT vs Seervi Samaj Tambaram Trust 362 ITR 199 (Mad) and submitted that for grant of registration of the trust commencement of activity of the trust is not necessary. Therefore, according to the ld.representative, the assessee is entitled for registration.
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4. On the contrary, Shri M Anil Kumar, the ld.DR submitted that the assessee trust was established on 06-07-2013. On examination of the activity report said to be filed by the assessee, the Commissioner found that the assessee has undertaken very limited activities and funds available with the assessee is also very less. The assessee has no idea with regard to charitable activity to be undertaken in future. In the absence of any clear-cut activity undertaken by the assessee, according to the ld.DR, the Commissioner has rightly rejected the registration u/s 12AA of the Act.
5. We have carefully gone through the order of the lower authorities in the light of submissions made by both, the representatives for the assessee and the revenue. It is not in dispute that the assessee trust was established by means of registered sale deed dated 06-07-2013. The Commissioner of Income-tax rejected the application of the assessee for registration u/s 12AA on the ground that the assessee has undertaken very limited charitable activities and the funds available with the assessee was also very less. The contention of the assessee before this Tribunal is that it may not be necessary to do any activity for the purpose of registration u/s 12AA of the Act and that what is required to be examined is the object of the trust.
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6. We have carefully gone through the provisions of section 12AA of the Act. Section 12AA of the Act provides for procedure for registration of the trust. The Commissioner on receipt of the application for registration u/s 12AA shall call for documents and information from the trust in order to satisfy himself about the genuineness of the activities of the trust or institution and may also make such enquiry as he deem necessary before granting registration. After completing the enquiry he has to pass an order in writing registering the trust or institution or refusing to register the trust or institution. Therefore, the question arises for consideration is whether the assessee trust has to commence its activity at the time of registration u/s 12AA of the Act or not? The ld.representative placed his reliance on various judgment of the High Courts and Tribunals including the judgment of Karnataka High Court in Meenakshi Amma Endowment Trust (supra); Madras High Court in Seervi Samaj Tambaram Trust (supra). The judgment cited by the ld.representative for the assessee clearly says that the activity of the trust is not a criterion for grant of registration. What is to be examined is the object of the trust for which it was formed. However, we find that the Kerala High Court in Self Employees Service Society vs CIT (2001) 247 ITR 18 (Ker) had an occasion to consider the provisions of section 12AA of the Act. A similar contention was raised before the Kerala High Court that in order to grant registration u/s 12AA the department cannot insist that the society has done charitable work during the first year 6 ITA No.389/Coch/2014 of its operation. After examining the provisions of section 12AA of the Act, the Division Bench of the Kerala High Court speaking through Justice K.K. Usha has observed as follows:
" A reference to the bye-laws of the society, a copy of which is produced as exhibit P1, would show that several charitable activities are included in the objects of the society, but even according to the petitioner society it has not been able to do any of such charitable activities during the first year of its functioning. The proposal to start a technical educational institution itself was taken only on June 14, 1999, that is much after exhibit P5 order. When the Commissioner exercises his jurisdiction under section 12AA while considering an application for registration under section 12A he has to be satisfied of the charitable and religious nature of the objects and genuineness of the activities of the trust or institution. In the present case, admittedly, the society has not done any charitable work during the relevant period, on the other hand, the activities which they have carried on during the period were only for the purpose of generating income for its members. There were no materials before the Commissioner to be satisfied of the genuineness of the activities of the trust or institution. Under these circumstances, rejection of the application under exhibit P5 cannot be termed as illegal or arbitrary. But the learned single judge has given an opportunity to the society to file a fresh application when they actually start doing charitable work and the Commissioner has 7 ITA No.389/Coch/2014 been directed to consider such application on the merits untrammeled by the view taken in exhibit P5. According to us, no better relief could be granted to the society in this case."
7. In view of the judgment of the jurisdictional High Court, this Tribunal is of the considered opinion that the judgment of the Karnataka High Court in the case of Meenakshi Amma Endowment Trust (supra) and Seervi Samaj Tambaram Trust (supra) may not be relevant for the purpose of this case. This Tribunal is of the considered opinion that the judgment of the Kerala High Court being a jurisdictional High Court is binding on this Tribunal.
8. In the case on our hand, it is not the case of the department that no activity was undertaken. The Commissioner claims that the assessee trust has undertaken very limited activity. Therefore, it may not be proper to say that no activity was undertaken by the assessee trust. The activity report said to be filed before the Commissioner is not available on the file of this Tribunal. Therefore, this Tribunal is unable to appreciate the activity said to be carried on by the assessee. Since the assessee claims that they have done little activity about the charity in the first year of its establishment, this Tribunal is of the considered opinion that it is not a case that no charitable activity was carried on. However, as observed earlier, in the absence of the activity report, this Tribunal is unable to 8 ITA No.389/Coch/2014 appreciate the activities carried on by the assessee. In view of the above, this Tribunal is of the considered opinion that the matter needs to be re- examined by the Commissioner in the light of the judgment of the Kerala High Court in the case of Self Employees Service Society (supra). Accordingly, the order of the lower authority is set aside and the issue of registration is remitted back to the file of the Commissioner. The Commissioner shall re-examine the matter in the light of the object of the assessee trust and its activity and thereafter decide the same in accordance with law after giving reasonable opportunity of hearing to the assessee. It is made clear that the trust cannot be used as a vehicle / instrument for collecting any money compulsorily from public. Though the assessee could receive voluntary donation, the Commissioner shall ensure that no money is collected compulsorily in the name of the trust.
9. With the above observations, the appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on this 14th November, 2014.
Sd/- sd/- (Chandra Poojari) (N.R.S. Ganesan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin, Dt : 14th November, 2014 pk/- 9 ITA No.389/Coch/2014 copy to:
1. Christian Women's Association, Chirayil House, Muthoor P.O., Thiruvalla 689 107
2. The CIT, Kottayam
3. The DR (True copy) By order Asstt. Registrar, Income-tax Appellate Tribunal, Cochin Bench