Income Tax Appellate Tribunal - Cochin
Nithyananda Educational And ... vs Assessee on 14 November, 2014
1
ITA No.38/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. 38/Coch/2014
(Assessment year 2014-15)
Nithyananda Educational and vs CIT, Kozhikode
Charitable Trust, Chirakkal
Kannur District
PAN : AABTN8790K
(Appellant) (Respondent)
Appellant by : Shri Arun Raj S
Respondent by : Shri M Anil Kumar, CIT
Date of hearing : 12-11-2014
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, Kozhikode dated 23-12-2013 rejecting the application of the assessee for registration u/s 12AA of the Act. In fact, this appeal was disposed of earlier by an order dated 19-06-2014. However, on the miscellaneous application filed by the assessee in M.A. No.88/Coch/2014, this Tribunal by an order dated 10-10-2014 restored the appeal on file. Accordingly, the appeal was posted for hearing for final disposal.
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2. Shri Arun Raj S, the ld.counsel for the assessee submitted that the Administrative Commissioner rejected the claim of registration u/s 12AA on the ground that the assessee has not started any charitable activity. Referring to the impugned order, the ld.counsel submitted that the Commissioner himself admits that the assessee intends to start the school. The ld.counsel further submitted that it is not be necessary to start the charitable activity for the purpose of registration u/s 12AA of the Act. The ld.counsel placed his reliance on various judgments of High Courts including the one in DIT vs Founation of Opthalmic and Optometry Research Education Centre (2013) 355 ITR 361 (Del). The ld.counsel submitted that the Delhi High Court specifically referring to the judgment of the Kerala High Court in Self Employees Service Society vs CIT (2001) 247 ITR 18 (Ker) found that the assessee carrying on its activity for more than three years and after some discrepancies found by the revenue filed application for registration. In those circumstances, the Court found that substantial amounts were collected and kept in bank in the fixed deposit and there was no charitable activity. In view of the observations made by the Delhi High Court in Foundation of Opthalmic and Optometry Research Education Centre (supra), the judgment of the Kerala High Court in Self Employees Service Society (supra) may not be applicable to the facts of the case.
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3. We heard Shri M Anil Kumar, the ld.DR also.
4. It is an admitted fact that the assessee trust has not carried out any activity of charity so far. The Administrative Commissioner found that though the intention of the trust was to start a school no application was made to the state government / central government authorities to start the school. The question arises for consideration is whether, in the absence of any charitable activity carried on, the assessee is entitled for registration u/s 12AA of the Act. This issue was considered by the Kerala High Court in Self Employees Service Society (supra). The Division Bench of the Kerala High Court found that the society has not done any charitable work at the relevant period; on the other hand, the activity they carried on during the period was only for the purpose of generating income for its members. No material is available before the Administrative Commissioner to satisfy the genuineness of the activity of the trust or institution. In fact, 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 4 ITA No.38/Coch/2014 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 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. The Division Bench has also confirmed the order of the ld.Single Judge in which a liberty was given to the society to file a fresh application when they actually start doing charitable work. Therefore, this Tribunal is of the considered opinion that the assessee in the present case may also make a fresh application before the Administrative Commissioner once 5 ITA No.38/Coch/2014 they actually start doing the charitable activity. If such an application is filed, the Administrative Commissioner shall consider the same in accordance with law on merit.
6. With the above observations, the order of the Administrative Commissioner is confirmed.
7. In the result, the appeal of the assessee stands dismissed.
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/- copy to:
1. Nithyananda Educational & Charitable Trust, Chirakkal PO, Kannur Dist
2. The CIT, Kozhikode
3. The DR (True copy) By order Asstt. Registrar, Income-tax Appellate Tribunal, Cochin Bench