Income Tax Appellate Tribunal - Delhi
Shree Nitai Gaura Hari Sankirtan Mandal ... vs Cit (E), Lucknow on 30 August, 2017
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I.T. Appeal No. 5325/Del/2016
Assessment Year : - - -
IN THE INCOME TAX APPELLATE TRIBUNAL
[ DELHI BENCHES : "G" NEW DELHI ]
BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER
AND SHRI O. P. KANT, ACCOUNTANT MEMBER
I.T. Appeal No. 5325/Del/2016
Assessment Year : - - -
Shree Nitai Gaura Hari Commissioner of Income Tax,
Sankirtan Mandal Trust, Vs. [ Exemption ];
C/o. L.M. Agarwal & Co., C.As.; Lucknow.
KA-32, Kavi Nagar,
Ghaziabad - 201 001.
PAN : AAKTS 5376 D
(Appellant) (Respondent)
Assessee by : Shri P. C. Yadav, Adv.;
Department by : Shri S. S. Rana, CIT [DR];
Date of Hearing : 08.08.2017
Date of Pronouncement : 30.08.2017
O R D E R.
PER I. C. SUDHIR, J. M. :
The assessee has impugned first appellate order on the
following grounds :-
" 1. That the learned Commissioner of I Tax Exemption wrongly
and illegally reject the trust application for registration under
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I.T. Appeal No. 5325/Del/2016
Assessment Year : - - -
section 80G of I. T. Act even after verifying the books of
accounts and vouchers of all three years;
2. The Learned CIT erred in holding that the activities of
the trust falls under religious nature and hence not charitable
while the appellant trust submitted evidence of charitable
activities carried on by it and on the similar ground the
learned CIT Ghaziabad reject the assessee application u/s.
12AA of I. Tax Act and Honourable ITAT vide appeal order
No. ITA 5238/DEL/2014 AY 2014-15 order dt. 24.09.2015
accept the trust appeal.
3. That the Trust doing the activities as per object of the
trust deed, daily distribution of fruits biscuits to poor balika
Vidhyala under the head of "Shri Krishna Nitya Sewa at
Vrindavan" which comes under the Category of Charitable
activity and not in the category of religious as held by
the learned CIT.
4. That the learned commissioner of Income Tax Exemption
has grossly erred ift holding membership fee contribution
received by the trust from his member as income while there
was no Income on Account of donation so membership
contributions cannot be considered as donation for the purpose
of limitation u/s. 80G(5B).
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I.T. Appeal No. 5325/Del/2016
Assessment Year : - - -
5. That the finding of learned CIT is wrong that the trust
diverting the funds into banks and generating profit by way
of Interest on bank deposit and trust involved in activities
which apparently are for profit making on commercial lines
and are far away from the definition of the term of "Charitable
purpose" while the trust does have not have any Bank FDR
and not earned any Bank interest on Bank Deposits in last
all previous years.
6. That in any case rejection of trust registration application
u/s. 80G on the grounds as mentioned in the order is illegal
and unjustified and registration u/s. 80G ought to be allowed
to the trust.
7. That the appellant craves leave to add, amend, alter, delete
or modify any ground of appeal at the time of hearing. "
2. Heard and considered the arguments advanced by the parties
in view of orders of the authorities below, material available on record
and the decisions relied upon.
3. The issue involved in the grounds is as to whether the ld. CIT
(Exemption) was justified in refusing approval sought by the assessee
under section 80G of the Act.
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I.T. Appeal No. 5325/Del/2016
Assessment Year : - - -
4. In support of the grounds, the ld. AR made following
submissions :-
" 1. The present appeal is arising from the order of Ld CIT
Exemption dated 15.09.2016.
2. The assessee is a trust engaged in the dissemination of
its charitable objects. Assessee has got registration under
section 12A vide order dated 13.01.2016. Certain dates
which goes to the root of the matter are as under : -
Date Event Remarks
ITAT restored the matter to be Order of ITAT at Page
filed of CIT for considering the No 117-120 of the
24.09.2015
application 12 A of the assessee Paper Book
afresh.
The Ld. CIT Lucknow has granted Registration
13.01.2016 the certificate of 12 A to the Certificate at Page
assessee. NO- 27-29 of the PB.
Assessee filed application before
04.07.16 the Ld CIT Lucknow for the grant of
80 G (5) (VI) certificate.
CIT Exemption dismissed the
15.09.2016 application of the assessee and
present appeal is arising from its
order.
3. It is submitted that while rejecting the application of the
assessee the Ld. CIT has alleged that assessee has utilized
more than 5% of its total income for religious activities. Ld.
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I.T. Appeal No. 5325/Del/2016
Assessment Year : - - -
CIT further alleged that assessee has diverted funds towards
non charitable purposes by putting them into Bank and
earned huge interest on these funds. At last CIT has
dismissed the application of the assessee.
Submissions of the assessee are as under :-
4. It is submitted that both the above allegation of the CIT
are baseless and contrary to the records in as much as in
last three years there is no income to assessee in-fact records
and return of income filed by the assessee would show that
there is deficit in accounts of the assessee since expenditure
incurred are higher from the receipts. The position of last
three years is as under :-
Asst Year Members Total Deficit shown
Subscription Expenses
in ROI
2013-14 2,65,414 313913 48505
2014-15 203207 268595.85 65388.85
2015-16 283409 288387.70 4978
..
.
5. The above chart would show that there is absolutely
no income to assessee in last three years therefore the averment
of the CIT that assessee has violated the provisions of section
80(G)(5B). It is submitted that expression used in this
subsection is total income and perusal of the above chart
would show that assessee has deficit in last three years and
there is no income to assessee. Therefore the observation
made by the CIT is factually incorrect.
6. It is next submitted that assessee has distributed fruits
among the poor and needy people irrespective of their cast and
religion. Assessee has termed this activity as "Shri Krishna
Nitya sewa at Vrindavan". The Ld CIT has wrongly interpreted
this expression. It is submitted that factual position is that
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I.T. Appeal No. 5325/Del/2016
Assessment Year : - - -
the expression Shri Krishna has been used to denote the
name of the trust and the rest of the expression is daily sewa
at Vrindavan therefore the observation of the CIT that use
of expression Shri Krishna denotes religious expenses is
wrong.
7. It is next submitted that last observation of the CIT
that expenses are in round figure is premature since it is
the duty of the Assessing Officer to examine the veracity
of the vouchers during the course of assessment
proceedings.
8. It is next submitted that regarding the observation of
the CIT that the objects of the trust are not charitable and
activities are profit making is also contrary to the records
because the assessee has been granted 12A on the same
objects and activities therefore this allegation is also
baseless.
9. It is submitted that assessee further seeks to rely on
the following judgments wherein it has been held that "Authority
examining the question whether a fund or institution is eligible
to be certified for the purposes of s. 80G is not to act as an
Assessing Officer; once the applicant trust was registered under
section 12A.
a. DIT Vs Neel Gagan Charitable Trust
b. 57 ITR 86(Del)
c. N.N.Desai Vs CIT 452(Guj)
d. Sonepat Hindu Educational and Charitable Society 278 ITR
262(P&H)
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I.T. Appeal No. 5325/Del/2016
Assessment Year : - - -
It is submitted that recently Jodhpur Bench of the ITAT in
the case of Hemdha Medi Resources Pvt Ltd Vs CIT reported in
159 ITD 627 (Jodh) has observed as under : -
" On perusal of section 80G(5) as well as Rule 11AA, what is
required to be seen is whether the institution/fund has been
established in India for a charitable purpose or not. Secondly, it
lays down certain additional conditions under clause (i) to
clause (v) which are required to be fulfilled. Rule 11AA provides
that where the CIT is satisfied that one or more of the
conditions specified in clause (i) to clause (v) of section 80G(5)
are not fulfilled, he shall reject the application for approval after
recording his reasons for such rejection. In the instant case, the
appellant has been duly registered under section 12AA which
shows beyond any doubt that Id CIT has already verified the
genuineness of the objects and its activities are not doubted by
the CIT. Hence, having granted registration u/s 12AA, the first
condition regarding establishment of institution for charitable
purposes is fulfilled. Regarding satisfaction of additional
conditions specified in clause (i) to clause (v) of section 80G(5),
there is no dispute as apparent from the order of the Id CIT. As
can be seen from Revenue's stand of rejection of earlier
applications filed by the appellant, the approval under section
80G is closely linked to approval under section 12AA. Now once,
the registration under section 12AA has been granted, the
approval under section 80G should not be denied unless the
case of the appellant falls under non-fulfillment of one or
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I.T. Appeal No. 5325/Del/2016
Assessment Year : - - -
more of the conditions specified in section 80G(5) which is
not the case before us. "
6. The ld. CIT [DR], on the other hand, placed reliance on the order
impugned, with this submission that placing photographs and banner on
record by the assessee are not sufficient evidence to establish that the
assessee is actually indulging in charitable activities. The assessee had
exceeded 5% of total income for both financial years 2013-14 and 2014-
15 in spending on religious purposes and there was also deviation of
funds as the amount of Rs.26,90,524/- was kept and he referred page
No. 72 i.e. receipt and payment for the period from 1.04.2012 to
31.03.2013. He also placed reliance on the decision of Hon'ble High
Court of Delhi in the case of Kirti Chand Tarawati Chand Trust Vs.
Director of Income Tax (1998) 232 ITR 11 (Del.).
6.1 In rejoinder the ld. AR submitted that the above amount was
kept for utilizing it in the objects of the society and it is not the case of
the Revenue that amount was spent for any other purposes than the
objects of the society. He also referred page No. 118 of the paper book
i.e. part of the order dated 24.09.2015 of the Tribunal in the case of the
assessee itself for the assessment year 2014-15 wherein the activities of
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I.T. Appeal No. 5325/Del/2016
Assessment Year : - - -
the appellant society have been noted. He submitted further that the
decision relied upon by the ld. CIT [DR] in the case of Kirti Chand
Tarawati Chand Vs. DIT (supra) having distinguishable facts is not
applicable in the case of present assessee.
6.2 Considering above submissions and material available on
record, we find that the ld. CIT has denied the benefit of approval under
section 80-G of the Act mainly on the basis that expenses of religious
nature under the name "Sri Krishna Nit Sewa at Vrindaban" exceeded
5% of the total income for both financial years 2013-14 and 2014-15. In
reply, the assessee had submitted vouchers showing expenditure
incurred on fruits, biscuits etc. distributed at poor girl students of Guru
Gangeshwar Raj Kanya Vidyala, Gandhi Marg, Vrindaban, amounting to
around Rs.4,200/- per month with this submission that such
expenditure cannot be treated to be spent on religious purpose. The ld.
CIT did not accept the same as he disbelieved the vouchers on the basis
that it was self drawn. We do not approve such approach of the ld. CIT
because it is not his case that in the vouchers details were not given and
in such a situation the appropriate approach of the ld. CIT should have
been to examine the veracity of the details given in the said self-drawn
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I.T. Appeal No. 5325/Del/2016
Assessment Year : - - -
vouchers instead he preferred to reject these out-rightly. The ld. CIT has
also alleged that the appellant has failed to corroborate its claim of
charitable activities, which in our view, is in contradiction to the
observation made by the Tribunal vide its order dated 24.09.2015 in the
case of assessee itself for the assessment year 2014-15 on the issue of
validity of rejection of application moved under section 12AA by the
assessee for registration and registration granted by the ld. CIT
(Exemption) under section 12AA of the Act on 13.01.2016, whereas the
order impugned has been passed on 15.09.2016. We thus find that it is
not a case of assessee falling under non-fulfillment of the conditions
specified in section 80G(5) of the Act as alleged by the ld. CIT to refuse
the approval sought under section 80G of the Act by the assessee. The
decision of Hon'ble Delhi High Court in the case of Kirti Chand Tarawati
Chand Trust Vs. DIT (supra) relied upon by the ld. CIT [DR] having
distinguishable facts is not helpful to the Revenue as in that case the
purpose of the trust was other than charitable. The trust therein was
engaged mainly in construction of religious temple wherein no charitable
activity was being carried out and thus there was denial of renewal of
recognition under section 80G(5) of the Act. We thus direct the ld. CIT to
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I.T. Appeal No. 5325/Del/2016
Assessment Year : - - -
grant approval under section 80G(5) of the Act as prayed for by
the appellant. The grounds are accordingly allowed.
7. In result, appeal is allowed.
8. The order is pronounced in the Open Court on: 30th August, 2017.
Sd/- Sd/-
( O. P. KANT ) ( I. C. SUDHIR )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : the 30th August, 2017.
*MEHTA*
Copy of the Order forwarded to :-
1. Appellant;
2. Respondent;
3. CIT;
4. CIT (Appeals);
5. DR, ITAT, ND.
BY ORDER
ASSISTANT REGISTRAR 12 I.T. Appeal No. 5325/Del/2016 Assessment Year : - - -