Income Tax Appellate Tribunal - Cochin
M/S.Progressive Educational & ... vs Assessee on 12 December, 2014
1
ITA No. 447/Coch/2014
IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN
Before Shri N.R.S. Ganesan (JM) and Shri Chandra Poojari (AM)
I.T.A No. 447/Coch/2014
Progressive Educational & Charitable vs The CIT, Kozhikode
Trust, Ward No.21, Mele Vattappara
Valanchery, Karipol P.O
Malappuram 676 552
PAN : AACTP6156A
(Appellant) (Respondent)
Appellant by : Shri M.V. Venugopal
Respondent by : Shri M Anil Kumar, CIT
Date of hearing : 04-12-2014
Date of pronouncement : 12-12-2014
ORDER
Per N.R.S. Ganesan (JM) This appeal of the assessee is directed against the order of the Administrative Commissioner dated 30-04-2014 rejecting the application of the assessee for registration u/s 12AA of the Act.
2. Shri M.V. Venugopal, the ld.representative for the assessee submitted that the assessee trust was formed by means of a registered deed executed on 24-04-2013. The object of the trust is to establish and administer educational institutions. According to the ld.representative, the 2 ITA No. 447/Coch/2014 application for registration u/s 12AA was filed immediately on establishment of the trust. On a query from the bench whether the charitable activity, viz. educational institution was started by the assessee as of now, the ld.representative clarified that the assessee could not start the education so far. The ld.representative has also clarified that the assessee is constructing building for educational institution. After completion of the construction only the assessee could apply to the concerned authorities for necessary permission / approval to commence the educational institution. The ld.representative clarified that as on today no activity was carried on.
3. On the contrary, Shri M. Anil Kumar, the ld.DR submitted that since the assessee has not commenced any of the charitable activities as enumerated in the trust deed, according to the ld.DR, the assessee is not entitled for registration as of now.
4. We have considered the rival submissions and also perused the material available on record. The assessee is at the preliminary stage for carrying out the charitable object. The assessee claims that buildings were under construction for starting the educational institution. However, no material is available on record to show that the assessee has started the construction of the building. The fact remains is that the assessee has 3 ITA No. 447/Coch/2014 not applied for permission / approval from the concerned authority for starting the educational institution. Therefore, as of now no charitable activity is carried on. The Kerala High Court in the case of Self Employers Service Society vs CIT (2001) 247 ITR 18 (Ker) 247 ITR 18 had an occasion to consider registration u/s 12AA on identical circumstances. The Kerala High Court found that the society has not done any charitable work during the relevant period. Therefore, it does not entitle for registration u/s 12AA of the Act. The Division Bench of the Kerala High Court confirmed the liberty given by the Ld.Single Judge for filing a fresh application immediately after starting the charitable work. In fact, the Kerala High Court observed as follows at page 21 of the ITR:
" 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 4 ITA No. 447/Coch/2014 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 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."
5. In view of the above judgment of the Kerala High Court in Self Employers Service Society (supra), this Tribunal is of the considered opinion that the assessee is not entitled for registration since no charitable activity was carried out. However, it is made clear that the assessee will be at liberty to file fresh application before the Commissioner as soon as the charitable activity, viz. the educational institution starts functioning. If such an application is filed, as observed by the Kerala High Court in the case of Self Employers Service Society (supra), the Commissioner shall consider the same on merit.
5ITA No. 447/Coch/2014
6. With the above observations, the appeal of the assessee stands dismissed.
Order pronounced in the open court on this 12th December, 2014.
Sd/- sd/- (Chandra Poojari) (N.R.S. Ganesan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin, Dt : 12th December, 2014 pk/- copy to:
1. Progressive Educational & Charitable Trust, Ward No.21, Mele Vattappara, Valanchery, Karipol PO, Malappuram 676 552
2. The CIT, Kozhikode
3. The DR (True copy) By order Asstt. Registrar, Income-tax Appellate Tribunal, Cochin Bench