Income Tax Appellate Tribunal - Amritsar
M/S Sh. Ram Lal Bhasin Charitable Trust, ... vs The Commissioner Of Income Tax ... on 7 March, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH: (CIRCUIT BENCH AT JALANDHAR)
BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER, AND
SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
I.T.A No.442/ASR/2016
(ASSESSMENT YEAR N/A)
M/s sh. Ram Lal Bhasin Charitable Vs.. CIT (Exemptions)
Trust, C-128, Focal Point, Chandigarh.
Ludhiana.
PAN No.AADAT0585B
(Revenue)
(Assessee)
Assessee by Shri . Ashwani Kumar, CA.
Revenue by Shri Bhawani Shankar,DR.
Date of Hearing 18.01.2017
Date of Pronouncement 07.03.2017
ORDER
PER, A. D. JAIN, JUDICIAL MEMBER:
This is assessee's appeal against the order dated 30.06.2016 passed by the ld. CIT(Exemptions), denying approval u/s 80G(5)(vi) of the I.T.Act to the assessee.
2. The assessee filed application dated 16.12.2015 u/s 80G(5)(vi) of the Act before the ld. CIT(E). The same was rejected by the ld. CIT(E) by virtue of the impugned order. The ld. CIT(E) observed that registration u/s 12AA of the Act was granted to the assessee on 08.05.2006; that approval u/s 80G (5) was granted to the assessee for the period from 01.04.2006 to 31.03.2008, vide order dated I.T.A No.442/ASR/2016 2 29.06.2006; that thereafter, the assessee did not have approval u/s 80G; that there was no explanation as to why the assessee did not try for such approval subsequent to 31.03.2008; that the reply filed by the assessee showed that there were no activity run by the assessee trust; that the assessee was queried as to how in the absence of activities, how the claim u/s 80G was genuine and necessary; that show cause notice was issued to the assessee on 06.06.2016; that the assessee filed reply dated 16.06.2016, as per which, the assessee stated that the trust had been constituted for the cause of charitable activities, having family members as trustees; that the assessee had stated that in the trust deed, it stood clearly mentioned that the trust funds would be used for charitable activities and, therefore, it could not be classified as being for restrictive use; that the assessee had stated that the trust was involved in doing charitable help at small level and funds was accumulated for better cause; that the assessee had stated that in the matter, the trust was planning to spend help to needy patient and students; that this reply was being treated as insufficient rationale for not having the clauses in the trust deed that are essential for imparting a character to the trust attuned to the interest of the general public; that for approval as per the provision of section 80G(5) (vi), it was required to be satisfied if the trust was established in India for a charitable purpose; that the conditions contemplated by section 80G(5)(i) to section 80G(5)(vi) are conditions which must be additionally fulfilled to be entitled to the approval; that the inquiry as to whether the trust is established for a I.T.A No.442/ASR/2016 3 charitable purpose is not confined only to the contains of the instrument constituting the trust and only the objects of the trust has set out in the deed of declaration only need not be confined to, for construing the purpose of a trust; that the real purpose of the establishment of the trust has to be found out, as distinguished from the ostensible purpose; that if it found that the purpose of the trust was other than charitable, then the authority would not be debarred from denying the approval claimed; that the authority cannot merely look at the instrument creating the trust and shut their eyes trust the activities actually carried out; that the assessee trust, as available from financial statements for three years, operated on a financial corpus that got invested on FDRs, on which, the trust earned interest, which got re-employed in the corpus adding to it; that the assessee received income by interest from FDRs, i.e., in F.Y. 2012-13, of Rs.60,521/-, in F.Y. 2013-14, of Rs.59,292/- and in F.Y. 2014-15, of Rs.72,539/-; that the assessee added this income to the corpus funds entirely in the first year, and then part amounts in the latter years; that part of these amounts had been shown to have been utilized for donations to other, salary and help to the needy and poor people, though, no evidence other than entries in the income and expenditure account, had been furnished regarding these claims; that the specific question to be to the assessee in this regard remained unanswered; that despite the fact that the trust had been inexistence for a long time, there was no evidence whatsoever of any donation received hitherto; that all these facts fail to inspire confidence in the I.T.A No.442/ASR/2016 4 actual intent and capacity of the trust with regard to collection of donations and their used for charitable purposes; that also, the trust deed did not contain any dissolution, beneficiary or utilization clauses; and that the assessee had not rebutted the presumption that the trust did not enure for the benefit of the general public.
3. It was in this manner, that approval u/s 80G(5)(vi) of the Act was refused to the assessee by the ld. CIT(E). Aggrieved, the assessee is before us by way of the present appeal.
4. The ld. Counsel for the assessee has contended that the ld. CIT(E) has erred in arbitrarily denying approval u/s 80G(5)(vi) of the Act to the assessee; that as stated before the ld. CIT(E), the assessee trust has been constituted for the cause of charitable activities; that the trust did finds clear mentioned to the effect that the trust fund will be used for charitable activities; that as such, it cannot be classified as being for restrictive use; that as available from the balance sheets of the assessee for the years ending 31.03.2015 and 31.03.2016 and the income and expenditure account, the assessee, has been spending money on charitable activities such as help to poor students and needy people; that it is not a case where approval u/s 80G(5) is to be granted for the first time; and that, the ld. CIT(E) has met out any case that the assessee trust is itself engaged in activities which are not charitable in nature.
I.T.A No.442/ASR/20165
5. On the other hand, the ld. DR has placed strong reliance on the impugned order.
6. Having heard the parties, we find that it has nowhere been denied that registration u/s 12A(a) of the Act was granted to the assessee. Meaning thereby, that neither the objects, nor the genuine of the activity of the assessee stands called in question. As per the balance sheets and income and expenditure account, the assessee has been spending money on charitable activities such as help to poor students and needy people. In the trust deed, it has been mentioned that the trust funds will be used for charitable activities. Thus, it cannot be said that the assessee is not involved in carrying out charitable activities. The objections that there is absence of dissolution, beneficiary and utilization clauses in the trust deed, is of no consequence. Obviously, the trust is hitherto in existence. Recourse, if any required, may be had, at the relevant time, to the provisions of section 115TD of the I.T. Act, inserted by the Finance Act, 2016 w.e.f. 01.06.2016. The objection that the interest earned by the assessee on FDRs, which interest is re-employed in the corpus, adding to it, does not render the assessee trust to be a trust not created for charitable purposes. The position that these amounts earned have been shown to have been utilized for donation to others, salary and help to needy and poor people, furthers rather than undermines the case of the assessee. Such depiction does not stand rebutted. The fact that there is no evidence of any donation received despite the length of time of existent of the assessee, again, does not take away I.T.A No.442/ASR/2016 6 from the charitable nature of the objects of the trust. Moreover, the ld. CIT(E) has himself observed that it is a presumption that the assessee trust does not enure for the benefit of the general public. The CIT(E) has stated that this presumption has not been rebutted by the trust. However, as observed, the part of the amounts earned by way of interest on FDRs, have been shown to have been utilized, inter alia, for help to needy and poor people. Despite having noted it himself, the ld. CIT(E) has failed to consider this aspect of the matter.
7. In view of the above, finding merit therein, the grievance of the assessee is accepted. The order under appeal is reversed. The ld. CIT(E) is directed to grant approval u/s 80G(5) to the assessee forthwith.
8. In the result, the appeal is allowed.
Order pronounced in the open court on 07/03/2017.
Sd/- Sd/-
(T. S. KAPOOR) (A.D. JAIN)
ACCOUTANT MEMBER JUDICIAL MEMBER
Dated 07/03/2017
*AKV*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
By Order AR/Sr.P.S./P.S.