Rajasthan High Court - Jodhpur
C.I.T., Exemptions, Jaipur vs Shri Agarwal Panchayat on 5 September, 2019
Bench: S. Ravindra Bhat, Ashok Kumar Gaur
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR.
..
D.B. Income Tax Appeal No. 171/2018.
Commissioner of Income Tax-Exemption, Jaipur
----Appellant Versus Shri Narsinghji Ka Mandir, Gandhiyon Ki Gali, City Police, Jodhpur.
----Respondent Connected With D.B. Income Tax Appeal No. 2/2016.
Commissioner of Income Tax (Exemptions), Jaipur
----Appellant Versus Shri Agarwal Panchayat, Shree Agresen Bhawan, Venketesh Marg, Pali Marwar, Pali.
----Respondent
For Appellant(s) : Mr. K.K.Bissa.
Mr. G.S.Chouhan.
For Respondent(s) : Mr. Falgun Buch.
Mr. Prateek Gattani.
HON'BLE THE CHIEF JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE ASHOK KUMAR GAUR Order 05/09/2019 Income Tax Appeal No. 171/2018:
The question of law framed in this appeal by the Revenue is as follows:-
"Whether the Income Tax Appellate Tribunal under the order dated 07.09.2015 is justified in accepting the assessee's claim for registration as per provisions of Section 12AA of the Income Tax Act, 1961 irrespective of the fact that the Constitution/Bye-laws of the Trust (Downloaded on 06/09/2019 at 08:48:59 PM) (2 of 5) [ITA-171/2018] is not having any provision in relation to disbursement of balance funds in the eventuality of the dissolution of Trust ?"
Brief facts of the case are that the establishment of the Narsinghji Ka Mandir, Gandhiyon Ki Gali, Jalori Gate, Jodhpur applied for registration under Section 12-A of the Income Tax Act and sought exemption. The Commissioner of Income Tax sought for certain details and information and the applicant produced the copy of the Trust Deed and other relevant materials. The CIT (Exemption) denied the benefit of registration and consequently, exemption under Section 12-A on the sole ground that in the contingency of the dissolution (of the Trust), the devolution and the division of the property have not been provided for. The Commissioner was of the opinion that use of the property as Trust had to be protected, and in the event of its dissolution too, without adequate provision for that purpose, assets could be dissipated.
The applicant Trust urged that it was an old establishment and Temple was a historical one. The Trust was duly registered with the Devasthan Department in 1975 and had duly complied with all other provisions and stipulations spelt out in Section 12-A. It was emphasized that dissolution of the Trust was an uncertain future event and absence of any condition to care for it, could not be a valid ground for rejection of the application.
By the impugned order, the ITAT allows the assessee's appeal holding as follows:-
"4. We have considered the facts of the case and rival submissions. Section 11 provides exertion to all trust and other institutions carrying on charitable or religious activities. The appellant is a trust carrying (Downloaded on 06/09/2019 at 08:48:59 PM) (3 of 5) [ITA-171/2018] out religious activities. The precondition for grant of registration under s.12AA is that objects are charitable or religious in nature and activities are genuine. The society is maintaining a temple, which is a genuine activity. The learned CIT has also not referred to any material to show that the activities are not genuine. For a future uncertain even which may occur or may not, and for the purposes of dissolution the benefit of registration cannot be denied. This is also no clause that in the event of dissolution the property of the trust would be given to any particular person or interested specified persons. The assessee applied for its registration, to which it was entitled. We are of the view that under the circumstances, it has to be registered. The learned CIT is directed to grant registration to the society. The relevant determinative factor for conferring registration is the object of the society. In view of the above we reverse the order of the CIT and direct it to grant registration under s.12A of the Act. The certificate of registration is only an enabling provision to claim exemption. Even if the registration is granted, the exemptions from the provisions of the IT Act in particular sections 11 and 12 is not automatic. It is only when the assessee satisfies the requirement of s.13, he would be eligible for exemption. In view of above we direct to grant the registration u/s 12A of the Act."
The Revenue reiterates its grounds in support of the appeal. It contends that the Trust Deed does not contained any dissolution clause. It is highlighted that in the event of a provision for dissolution, the manner in which, the residue of the property and balance of funds are to be utilized, is a matter of public interest. In the absence of any such clause, there would be no check on the potential mis-utilization of the funds.
This Court is of the opinion that the absence of dissolution clause or condition - as rightly contended by the assessee, is an uncertain future event. Further-more, given that the property is vested in a public charitable trust, it is always open to the concerned party - including the Revenue, to approach the Civil (Downloaded on 06/09/2019 at 08:48:59 PM) (4 of 5) [ITA-171/2018] Court for a remedy under Section 91-92 of the Code of Civil Procedure. In these circumstances, the question of law, as framed, is answered in favour of the assessee and against the Revenue.
The appeal is accordingly dismissed. D.B. Income Tax Appeal No. 2/2016:
The question of law in this case is the same as one framed in D.B. Income Tax Appeal No. 171/2018 : CIT (Exemption) Vs. Narsinghji Ka Mandir. In the course of judgment in the said appeal, the question has been answered in favour of the assessee and against the Revenue. Further-more, the Court noticed the situation contemplated by the Commissioner of Income Tax (Exemption), has now taken care of in any way under Section 115(TD)(c) brought into force w.e.f. 1 st June, 2016 and the same reads as follows:-
"Section 115(TD)(c):
(1) Notwithstanding anything contained in this Act, where in any previous year, a trust or institution registered under Section 12AA has-
(a) .......... ........... .............
(b) .......... ............ .............
(c) failed to transfer upon dissolution all its assets to any other trust or institution registered under section 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-
clause(iv) or sub-clause(v) or sub-clause(vi) or sub- clause (via) of clause (23C) of section 10, within a period of twelve months from the end of the month in which the dissolution takes place,"
(Downloaded on 06/09/2019 at 08:48:59 PM)
(5 of 5) [ITA-171/2018] For the reasons spelt out in the judgment in Narsinghji Ka Mandir (supra) and having regard to Section 115 (TD)(c), this appeal too has no force. The question of law, as framed, is answered in favour of the assessee and against the Revenue .
The appeal is dismissed.
(ASHOK KUMAR GAUR),J (S. RAVINDRA BHAT),CJ 23-24-Mohan/-
(Downloaded on 06/09/2019 at 08:48:59 PM) Powered by TCPDF (www.tcpdf.org)