Income Tax Appellate Tribunal - Mumbai
Jan Kalyan Charitable Trust, Mumbai vs Assessee on 9 July, 2014
आयकर अपील य अ धकरण "जे" यायपीठ मुंबई म।
IN THE INCOME TAX APPELLATE TRIBUNAL "J" BENCH, MUMBAI ी डी. म मोहन, उपा य एवं ी संजय अरोड़ा, लेखा सद य के सम ।
BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM आयकर अपील सं./I.T.A. No. 7441//Mum/2012 ( नधारण वष / Assessment Year: 2011-12) Jan Kalyan Charitable Trust DIT(E), 6th Floor, Shop No.2, Rishi Tower II CHS, Piramal Chambers, Parel, 81, Mirabi Road, Behind Rajnagar CHS, बनाम/ Mumbai-400 012 Near Western Express Highway Road, Vs. Dahisar (E), Mumbai-400 068 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. (अपीलाथ /Appellant) : ( यथ / Respondent) अपीलाथ क ओर से / Appellant by : Shri Vijay Mehta यथ क ओर से/Respondent by : Mrs. Abha Kala Chanda सनु वाई क तार ख / : 06.05.2014 Date of Hearing घोषणा क तार ख / : 09.07.2014 Date of Pronouncement आदे श / O R D E R Per Sanjay Arora, A. M.:
This is an Appeal by the assessee disputing the denial of registration u/s.12A of the Income Tax Act, 1961 ('the Act' hereinafter) by the Director of Income Tax (Exemption), Mumbai ('DIT(E)' for short) vide his order u/s.12AA(1)(b)(ii) of the Act dated 29.11.2012.2 ITA No. 7441/Mum/2012 (A.Y. 2011-12)
Jan Kalyan Charitable Trust vs. DIT(E)
2. The issue, therefore, arising before us is with regard to the maintainability in law of the impugned order refusing to grant registration to the appellant-trust, constituted vide Trust Deed dated 06.07.2009, duly registered with the Charity Commissioner, Mumbai as a charitable trust.
3.1 Before us, the assessee's case was projected with reference to its ground no. 2, reading as under:
'2. The learned DIT(E), Mumbai has erred in law and on facts in passing the impugned order without giving proper opportunity of being heard and without following the principles of natural justice.' The assessee, it was claimed, was represented before the competent authority by a trustee, a non-legal person. As such, additional evidences, which would enable the assessee to substantiate its' case before the said authority, be admitted, making reference to a compilation containing the said additional evidences sought to be placed on record, adverting to the salary account for financial years 2011-12 and 2012-13, at pages 83 to 89 thereof.
3.2 The ld. Departmental Representative (DR) would, on the other hand, place reliance on the impugned order, stating that there is nothing on record to exhibit that proper opportunity of being heard had not been allowed to the assessee.
4. We have heard the parties, and perused the material on record.
4.1 Our first observation in the matter is that there is nothing on record which would show or even indicate that the assessee was not allowed proper opportunity of hearing by the ld. DIT(E). Mere raising a bald plea, without any substance or material, would be to no avail or effect. It is only upon the Tribunal issuing a finding of fact, based on material/s or evidence/s, that proper opportunity of representation had not been allowed, so that there has been a violation of the principle of natural justice, that the legal consequence of the set aside of the impugned order, restoring the matter back to the file of the competent authority for fresh adjudication, as prayed, shall follow. On the 3 ITA No. 7441/Mum/2012 (A.Y. 2011-12) Jan Kalyan Charitable Trust vs. DIT(E) contrary, we find reference to attendance by the trustee in the proceedings on 04.09.2012, and then again its representation vide letter dated 09.11.2012, in the impugned order itself. The assessee's ground no. 2 is, therefore, rejected as without basis.
4.2 We may, therefore, proceed to decide the appeal on merits, based on the material on record, i.e., decide the assessee's appeal with reference to its grounds 1 & 3. The following reasons inform the decision of the ld. DIT(E) in refusing to grant registration u/s.12A. It is the maintainability in law of those reasons, that would, therefore, form the basis of our decision as to the validity or otherwise in law of the impugned order:
a) that the assessee-trust has both charitable and non-charitable objects.
It is not necessary that there should be an actual conduct of those non- charitable or commercial objects, but the very fact of the Trust being allowed or authorized by its charter to carry out the activities in pursuance to these objects, that is relevant and sufficient to regard it as is being constituted for, among others, non-charitable objects/purposes, disentitling it for being regarded as a charitable entity under the Act [refer para 3 of the impugned order (IO)];
b) in-as-much as the income of the trust could be deployed for both charitable and non-charitable objects and, thus, purposes, there is no legally binding obligation on it to apply its income only for charitable purposes [refer para 3 of the IO];
c) the activities of the assessee-trust cannot be regarded as a genuine in-as-much as:
(i) immediate relatives, being the son and daughter-in-law, of two trustees, stand paid remuneration for services rendered, which, despite a claim to that effect, have not been substantiated by the assessee to be lower than the market rate therefor, so that there has been, in the facts and circumstances of the case, violation of section 13(2)(c) of the Act. There has been in fact no reporting of the said payments by the Auditor in Form 10B [refer para 4 of the IO];
(ii) the assessee has allowed rebate/discount in some cases [refer para 5 of the IO]; and
(iii) a perusal of the assessee's income and expenditure account for the year ended 31.03.2012 reveals claim of 'Dental Lab 4 ITA No. 7441/Mum/2012 (A.Y. 2011-12) Jan Kalyan Charitable Trust vs. DIT(E) Expenses' at Rs.2,87,093/-, for which no details have been placed by it on record [refer para 5 of the IO].
4.3 We shall take up each of the three objections raised by the ld. DIT(E), noted above, in seriatim. The legal objection/s to the grant of registration that prevails with the Revenue would thus be considered first, which is even otherwise in order in-as-much as it is only if the assessee's case survives the same that it stands to be considered qua the factual aspects of the matter, toward which the assessee seeks admission of additional evidence/s. No argument, though, was raised by the ld. AR qua these grounds, delineated at para 4.2 (a) & (b) (supra). The legal issues raised by the ld. DIT(E) could in fact be contested at any stage, while the facts would only be known to the Trust, and which we find to have been conveyed to the competent authority. The legal inference arising out of these facts is again a question of law, which could, where disputed, be argued by the ld. counsel.
As regards the merit of the objection/s, it shall be readily seen that the relevant grounds in fact represent a single ground as the second (at para 4.2 (b) above) is only consequential to the first (at 4.2 (a)). The objection is valid in principle, and toward which we may refer to the decisions by the apex court in Delhi Stock Exchange Association Ltd. vs. CIT [1997] 225 ITR 235 (SC) and CIT vs. Palghat Shadi Mahal Trust [2002] 254 ITR 212 (SC). So, however, the question is if the assessee's object/s is not charitable, or commercial, in nature. The ld. DIT(E) has not specified the impugned objects, listed at clause 5 of the Trust Deed (PB pgs.3-22). A reference to its 23 sub- clauses, however, reveal the following objects to have been considered by him as imbued with non-charitable character in-as-much as his objection bears reference to, howsoever briefly, their contents:
'5) OBJECTS OF THE TRUST:
1. .............
6. Establishment, acquisition and maintenance and support to Hospitals, dispensaries, maternity homes, sanatoriums, research centers, 5 ITA No. 7441/Mum/2012 (A.Y. 2011-12) Jan Kalyan Charitable Trust vs. DIT(E) laboratories, museums, study centers, medical colleges and schools or institutions imparting medical knowledge or affording medical relief.
9. The Trust shall establish, found, construct, open, promote, takeover, equip, conduct, maintain, support, subsides, grant aid and make donations to hospitals, dispensaries, colleges, ashramshalas, schools, pathshalas, boarding houses, libraries, reading rooms and art and music libraries and societies.
18. Establishment, maintenance and support of libraries, museum and reading rooms for the advancement of education and knowledge to the trust.' We are unable to see as to how the said objects can be considered as non-charitable in nature. They are in fact in alignment with and, rather, provide the channel through which it intends to prosecute or implement its other objects, viz, as under:
'5) OBJECTS OF THE TRUST:
1. ...............
2. To conduct and maintain a Research Center for research work in diseases, medicines and medical relief.
4. To create Social, Cultural, Educational awakening amongst the General Public.
8. The Trust shall render medical relief and aid to any person or persons of public in general and distribute medicines, appliances and other requisites for that purpose.
10. First Aid in medical and surgical emergencies.
11. To promote, give, impart, spread and advance education in all its branches including academic, technical, vocational and professional, amongst poor, needy, destitute and orphan children.' Again, we find no basis for the inference of the assessee's objects as being commercial in nature. The objections raised in this respect are without basis and, therefore, rejected.
4.4 We next come to the three objections raised by the ld. DIT(E), noted at para 4.2
(c) above, qua the genuineness of the assessee's activities. Toward this, we first take up 6 ITA No. 7441/Mum/2012 (A.Y. 2011-12) Jan Kalyan Charitable Trust vs. DIT(E) the assessee's plea for admission of additional evidence/s. The same could only be in terms of rule 29 of the Appellate Tribunal Rules, 1963, which reads as under:
'Production of additional evidence before the Tribunal.
29. The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced.' We have already found that there is nothing to show that sufficient opportunity had not been extended to the assessee by the ld. DIT(E), or, rather, that the assessee indeed wish to adduce some evidences subsequent to its letter dated 09.11.2012. There is no merit in the plea for being allowed the said admission on account of the trustee having represented the assessee's case before the competent authority. Reference in this context may be made to our observations at para 4.2 above. In fact, apart from the ledger account of 'Dental Lab Expenses', placed at pgs.107-108 of the compilation containing additional evidences, bearing page nos. 66-108, we find no correlation between the documents sought to be admitted as additional evidences and the objections raised by the ld. DIT(E) to the assessee's application for grant of registration. As such, if and to the extent the relevant objection, being at para 4.2 (c)(iii), is found valid, we shall admit the same.
We shall take up the objection listed at para 4.2 (c)(i) first. The same, in-as-much as it purports to violate section 12A, may impact its applicability, operating to preclude the benefit of sections 11 & 12 of the Act to a Trust, which presumes it being registered as a charitable or religious trust u/s.12A. Section 12AA is an independent provision, non- satisfaction of which shall, through section 12A(1)(aa), operate to exclude the conferment of benefit of ss. 11 & 12 to an entity seeking so. As such, alluding to the provision of section 13, shall, in our view, be of no relevance. All that is relevant for the purpose of 7 ITA No. 7441/Mum/2012 (A.Y. 2011-12) Jan Kalyan Charitable Trust vs. DIT(E) granting (or refusing to grant) registration u/s.12AA is the terms of the said provision. If and to the extent section 13 is attracted in a particular case, the assessing authority is required, in considering the application of income for charitable (or religious) purposes, give effect thereto as per the applicable provisions in assessment. We may also incidentally mention that the application for registration u/s.12A is to be in Form 10A and not Form 10B, so that reference to the latter is to no consequence.
Coming to the objection/s stated at para 4.2 (c) (ii), the ld. DIT(E) has not even as much as stated the amount allowed by the assessee by way of rebate/discount - so much for the same being considered by him as the basis for the assessee's activities being not genuine or charitable. The same, rather, would show that the assessee allows discount even on its extant rates in deserving cases. There is no finding of the assessee's rates, for various medical and clinical facilities/services offered to the general public, being at par with the market rates in their respect, only whereupon can it be said to be operating on a commercial basis, as alleged. True, if valid, the activities could not be regarded as charitable in-as-much as 'profit motive' and charity' are antithesis to each other. However, we observe no basis for the ld. DIT(E) to consider the assessee's activities as commercial and, thus, not genuine, barring registration as a charitable institution.
Similarly, qua his reference to 'Dental Lab Expenses', incurred at Rs.2.87 lacs (refer para 4.2 (c)(iii)), it may well be that the details in its respect are not on his records. That, by itself, however, would not imply anything. There is nothing on record to show that the said details were called for and not furnished, or that any information/explanation in its respect was requisitioned, and which stood not rendered. The same is just as bald a statement as made by the assessee before us when it states that proper opportunity stood not allowed to it by the competent authority. The charge of non-genuineness, it may be appreciated, can only come about through and on the basis of hard facts. We are under the circumstances unable to consider it as a valid objection by the ld. DIT(E) and, consequently, find no necessity to admit the additional evidence/s in its respect, as prayed for by the assessee.
8 ITA No. 7441/Mum/2012 (A.Y. 2011-12)Jan Kalyan Charitable Trust vs. DIT(E)
5. In our view of the foregoing, we find no valid basis for the ld. DIT(E) refusing to grant registration u/s.12A to the assessee. We, accordingly, vacating his findings per the impugned order as not valid in law, direct him to grant registration to the assessee forthwith, i.e., in pursuance to its instant application. We decide accordingly.
6. In the result, the assessee's appeal is allowed.
प रणामतः नधा रती क अपील वीकृत क जाती है ।
Order pronounced in the open court on July 09, 2014
Sd/- Sd/-
(D. Manmohan) (Sanjay Arora)
उपा य / Vice President लेखा सद य / Accountant Member
मुंबई Mumbai; दनांक Dated : 09.07.2014
व. न.स./Roshani, Sr. PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु त(अपील) / The CIT(A)
4. आयकर आयु त / CIT - concerned
5. वभागीय त न ध, आयकर अपील य अ धकरण, मुंबई / DR, ITAT, Mumbai
6. गाड फाईल / Guard File
आदे शानस
ु ार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt. Registrar)
आयकर अपील य अ धकरण, मंब
ु ई / ITAT, Mumbai