Income Tax Appellate Tribunal - Bangalore
Gorontla Ramalingaiah ... vs Assessee on 10 October, 2011
Page 1 of 5 1 ITA No.1225/Bang/2010
INCOME TAX APPELLATE TRIBUNAL
BANGALORE BENCHES 'A'
BEFORE SHRI N K SAINI, ACCOUNANT MEMBER AND
SHRI GEORGE GEORGE K, JUDICIAL MEMBER
ITA No.1225/Bang/2010
M/s Gorontla Ramalingaiah
Lakshmikanthamma Charitable Trust,
#512, 10th B Main Road,
1st Block, Jayanagar, Bangalore-11. - Appellant
PAN : AABTG3642B
Vs
The Director of Income Tax (Exemptions),
3rd Floor, C R Bldgs., Queens Road,
Bangalore-1. - Respondent
Date of hearing : 10/10/2011
Date of pronouncement : 14/10/2011
Appellant by : Shri H V Gowthama, C.A.
Respondent by : Shri Etwa Munda, CIT-III
ORDER
PER GEORGE GEORGE K :
This appeal instituted by the assessee is directed against the order of the Director of Income-tax (Exemptions) [DIT(E) in short], Bangalore dated 21/09/2010, refusing to grant registration u/s 12AA of the Income-tax Act, 1961.
2. The grounds raised in this appeal reads as follows:- Page 2 of 5 2 ITA No.1225/Bang/2010
i) The learned DIT(E) erred in rejecting granting of Registration u/s 12A of the Income Tax Act on the ground that the Appellant Trust has not carried out any activity to prove the genuineness of the object of the Trust.
ii) The learned DIT(E) erred in stating that the evidence furnished by the Managing Trustee in respect of activities carried on relates to personal expenses of the Managing Trustee and not towards activities of the Trust.
iii) The Appellant submits that both the case laws i.e. Self Employers Society v CIT reported in 247 ITR 18 (Kerala) and Ganjam Nagappa & Sons Trust v DIT(E) reported in 269 ITR 59 (Karnataka) are distinguishable and cannot be made applicable for supporting denial of Registration u/s 12A of Income Tax Act, by the DIT(E).
iv) Further, the appellant submits that since the Registration of the Trust was done only on 23.10.2009, which was followed by Registration of Supplementary Deed dt.6.4.2010, therefore there was not much of time for undertaking different activities of the Trust as per the object of the trust detailed in the Trust deed. However, the evidence furnished by the appellant is a part of the activities within the ambit of objects of the trust, for which the Managing Trustee of the trust represented the trust for undertaking note book project, in which note books were donated to rural area schools and also contribution of building materials to Vishranti Nilayam, a home for mentally challenged people.
3. Briefly stated the facts are as follows:-
The assessee is a registered charitable trust. The trust deed was executed on 23.10.2009. The assessee filed an application for registration u/s 12A of the Act on 23.4.2010. A copy of the trust deed was enclosed to the application. The ITO (Exemptions)-1 issued a letter dated Page 3 of 5 3 ITA No.1225/Bang/2010 1/9/2010 on behalf of the DIT(E) calling for various details from the assessee. The assessee filed reply vide letter dated 13/9/2010. The DIT(E), relying on the judgement of the Hon'ble Kerala High Court in the case of Self Employers Society v CIT 247 ITR 18, passed an order u/s 12AA rejecting the application filed by the assessee. The relevant finding of the DIT(E) reads as follows:-
"As the trust has not commenced its activities, the genuineness of the trust, as also of its objects cannot be verified. Therefore, the application filed for Registration u/s 12A of the Income-tax Act, 1961 is hereby rejected".
4. Aggrieved by the order of the DIT(A), the assessee is in appeal before us.
5. The learned AR submitted that no opportunity of being heard was given by the DIT(E) before denying the benefit of registration. He stated that certain details were called for by the ITO on behalf of the DIT(E) and the assessee filed reply vide letter dated 13.9.2010. The impugned order was passed without calling for any explanation on the details filed. It was further contended by the learned AR, if the activity had not commenced, necessarily DIT(E) ought to have perused the aims and objects of the trust to come to conclusion whether the trust is genuine or not. It was submitted that the DIT(E) is not to look into source of income but only to see as to how the income is applied. If the same is applied for charitable or religious purpose, then the trust is to be allowed registration. It was submitted, many of the religious and charitable trusts commence their Page 4 of 5 4 ITA No.1225/Bang/2010 activity on receipt of donations. For receiving donations, 80G approval is required and 12AA registration is a condition precedent for 80G approval. He relied on the decision of the jurisdictional High Court in the case of Sanjeevamma Hanumanthe Gowda Charitable Trust v Director of Income-tax (Exemptions) (2006) (285 ITR 327) (Kar) and Punjab & Haryana High Court in the case of Sonepat Hindu Educational & Charitable Society v CIT & another (2005) (278 ITR 262) for the proposition that at the time of registration, DIT(E) need to examine the aims and objects of the trust when its activities had not commenced.
6. The learned DR, on the other hand, supported the findings of the DIT(E) and also relied on the decision of the Kerala High Court in the case of Self Employers Service Society v CIT (2001) (247 ITR 18).
7. We have heard the rival submissions and perused the material on record. In this case, we are of the view that the DIT(E) has not granted the assessee an opportunity of being heard. The trust was formed on 23.10.2009. The ITO (Exemptions) attached to the office of the DIT(E) had issued a letter requiring certain details. To this, the assessee had filed details and on receipt of these details from the assessee, the DIT(E) passed an order refusing to grant registration u/s 12AA without giving the assessee an opportunity of being heard. Therefore, in the interest of justice, we are of the view that the matter has to be re-examined by the DIT(E) afresh after granting assessee proper opportunity of being heard. The DIT(E) while passing fresh order shall keep in mind the dictum laid down by the Page 5 of 5 5 ITA No.1225/Bang/2010 jurisdictional High Court in the case of Sanjeevamma Hamunanthe Gowde Charitable Trust (Supra).
8. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 14th day of October, 2011 Sd/- Sd/-
(N K SAINI) (GEORGE GEORGE K)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Copy to:-
1.The Revenue 2. The Assessee 3. The CIT concerned 4. The CIT(A)
concerned 5. The DR 6. GF
MSP/- By Order
Asst. Registrar, ITAT, Bangalore.