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Income Tax Appellate Tribunal - Bangalore

Msr Vignan Educational Trust, ... vs Assessee

Page 1 of 4                         1               ITA No.1043/B/09


        IN THE INCOME TAX APPELLATE TRIBUNAL,
                  BANGALORE BENCH 'A'

 BEFORE GEORGE GEORGE K, JUDICIAL MEMBER AND
SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER

                       ITA No.1043/Bang/2009

MSR Vignan Educational Trust,
No.726, 3rd Main, 3rd Cross,
'D' Block, Rajajinagar 3nd Stage,
Bangalore-10.                                 - Appellant
Vs,
The Dy. Commissioner of Income-tax (Exemption),
Bangalore.                                    - Respondent

                    Appellant by : Shri M Sridhar Reddy
                    Respondent by : Shri Jason P Boaz

                                 ORDER

PER GEORGE GEORGE K :

This appeal preferred by the assessee is directed against the order of learned Director of Income Tax (Exemptions), Bangalore dated 1.9.2009, refusing to grant registration u/s 12AA of the I T Act.

2. The grounds raised in the appeal are as follows:

i) The learned Hon'ble Commissioner is not justified in rejecting the application for registration u/s 12A of the I T Act, 1961.

ii) The learned Hon'ble Commissioner has erred in stating that in the absence of activities, it was not possible to verify the genuineness of the objects of the trust and its activities.

iii) It is prayed that the appellant be granted registration u/s 12A of the I T Act, 1961.

3. Brief facts in regard to the above grounds are as follows.

The assessee trust was formed on 9.5.2008. It filed an application for registration u/s 12A on 16.3.2009. A call-memo dated 15.5.2009 was issued calling for the details. In response, the assessee trust filed the details vide its letter dated 9.6.2009, wherein the trust submitted its intent to start an educational institution. The DIT(Exemptions) passed order u/s 12AA rejecting the application filed by assessee by holding thus :-

In the absence of activities, it is not possible to verify the genuineness of the objects of the trust and its activities as is required u/s 12AA(1)(b) of the Act, 1961. Further, in the absence of any activities, it is not possible to verify the genuineness of the objects of the trust and its activities as held by the Hon'ble Kerala High Court in the case of Self Employers Service Society v CIT (247 ITR 18).

4. 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 DIT(Exemptions) and the assessee filed reply vide letter dated 9.6.2009. The impugned order was passed without calling for any explanation on the details filed. It was further contended by the Page 3 of 4 3 ITA No.1043/B/09 learned AR, if the activity had not commenced, necessarily DIT(Exemptions) 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, the DIT(Exemptions) 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 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 and 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(Exemptions) need to examine the aims and objects of the trust when its activities had not commenced.

5. The learned DR, on the other hand, supported the findings of the DIT(Exemptions) 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).

6. We have heard the rival submissions and perused the material on record. In this case, we are of the view that the DIT(Exemptions) has not granted the assessee an opportunity of being heard. The trust was formed on 9.5.2008. The DIT(Exemptions) Page 4 of 4 4 ITA No.1043/B/09 had issued a call-memo requiring certain details. To this, assessee had filed details and on receipt of these details from the assessee, the DIT(Exemptions) passed an order refusing to grant registration u/s 12A 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(Exemptions) afresh after granting assessee proper opportunity of being heard. The DIT(Exemptions) while passing fresh order shall keep in mind the dictum laid down by the jurisdictional High Court in the case of Sanjeevamma Hanumanthe Gowda Charitable Trust v Director of Income Tax (Exemptions) 285 ITR 327.

7. In the result, appeal filed by the assessee is allowed for statistical purpose.

The order is pronounced on ..12th......April, 2010.

        Sd/-                                     Sd/-
(A. MOHAN ALANKAMONY)                       (GEORGE GEORGE K)
  ACCOUNTANT MEMBER                          JUDICIAL MEMBER


Copy to :
              1.   The Assessee
              2.   The Revenue
              3.   The CIT concerned.
              4.   The CIT(A) concerned.
              5.   DR
              6.   GF
              7.   GF, ITAT, New Delhi.
                                                       By order

MSP/6/4/                        Asst. Registrar, ITAT, Bangalore.