Income Tax Appellate Tribunal - Bangalore
M/S Indic Science Research Trust , ... vs The Commissioner Of Income Tax ... on 20 July, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH, BENGALURU
BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER
and
SHRI A.K. GARODIA, ACCOUNTANT MEMBER
ITA No.1077/Bang/2018
(Assessment year: 2018-19)
M/s.Indic Science Research Trust,
No.117, 'Vatsavya', 3rd Main, 3rd Cross,
NHCS Layout, Basaveshwara Nagar,
Bengaluru-560079.' ... Appellant
PAN: AABTI 4365H
Vs.
The Commissioner of Income-tax(Exemptions),
Bengaluru. ... Respondent
Appellant by : Shri Suresh Muthukrishnan, Advocate.
Respondent by : Shri C.H.Sundar Rao, CIT(DR)
Date of hearing : 09/07/2018
Date of pronouncement : 20/07/2018
O R D E R
Per N.V.VASUDEVAN, JM:
This is an appeal by the assessee against the order dated 2/3/2018 of the Commissioner of Income-tax(Exemptions), [CIT(E)], Bengaluru, refusing approval to the assessee u/s 80G(5)(vi) of the Income-tax Act,1961 [hereinafter referred to as 'the Act']of the Income-tax Act,1961 ['the Act'].
2. The assessee is a charitable trust which came into existence pursuant to a deed of declaration of Trust dated 3/4/2017. The object for which the trust was formed was to propagate values of ancient Indian culture through education. The assessee applied for grant of registration u/s 12A of the Act in Form 10A on 25/09/2017. The assessee also made an application in Form 10G for grant of approval to the institution u/s 80G(5)(vi) of the Act on 25/09/2017.
ITA No.1077/Bang/2018 Page 2 of 53. As far as the application for grant of registration u/s 12A(a) of the Act is concerned, the CIT(E), Bengaluru, by order dated 02/03/2018, granted the approval. Copy of the said order is at page 9 of the appeal papers. As far as application for grant of approval u/s 80G(5)(vi) of the Act is concerned, the CIT(E),Bengaluru refused to accord approval for the following reasons:
4. Aggrieved by the aforesaid order of the CIT(E), Bengaluru, the assessee has filed the present appeal before the Tribunal.
4.1 The learned counsel for the assessee brought to our notice that the conditions for granting registration u/s 12A is laid down in section 12AA of the Act. One of the conditions laid down therein is that the CIT must be satisfied about genuineness of the activities of the institution applying for grant of registration. The CIT(E), Bengaluru was satisfied about existence of this condition and therefore, he granted registration u/s 12A of the Act. One of the conditions for grant of approval u/s 80G(5)(vi) of the Act is that the income of the institution should be exempt u/s 11 and 12 of the Act. Therefore by implication genuineness of the activities of the trust applying for approval is also a requirement for grant of approval u/s 80G(5)(vi). The CIT(E), Bengaluru, by granting approval u/s 12A of the Act was satisfied about genuineness of the activities of the trust. He could not take a contrary stand while examining the assessee's application u/s 80G(5)(vi) of the Act. Learned counsel for the assessee also placed reliance on the decision of the ITAT, Bengaluru Bench in the case of M/s.Manipal Alumni of Nephrology Trust vs. CIT in ITA Nos.548 & 549/Bang/2013 wherein this Tribunal, following the decision of the Hon'ble Karnataka High Court in the case of ITA No.1077/Bang/2018 Page 3 of 5 DIT(E) vs. Meenakshi Amma Endowment Trust (354 ITR 219) held that at the time of grant of registration u/s 12A of the Act as well as approval u/s 80G(5)(vi) of the Act, absence of activities of the Trust cannot be the basis to refuse approval u/s 80G(5)(vi). The following were the relevant observations of the Tribunal:
"10. We have considered the rival submissions. It is clear from the impugned orders that the revenue is satisfied that the objects for which the trust was formed was charitable. The only reason assigned for not granting registration u/s. 12A of the Act is that there were no activities carried out by the trust and it was not possible to verify the genuineness of the activities of the trust. According to the revenue, registration can be granted only after satisfaction regarding genuineness of the activities of the trust. In our view, this cannot be the basis to reject the grant of registration to the assessee u/s. 12A of the Act. In this regard, we find that on identical facts and circumstances, the Hon'ble High Court of Karnataka in the case of Meenakshi Amma Endowment Trust (supra) has held as follows:-
5. On a perusal of the records we note that the trust was formed on January 23, 2008, and within a period of nine months they had filed an application under section 12A for issuance of the registration claiming exemption. The fact that the corpus of the trust is nothing but the contribution of Rs. 1,000 by each of the trustees as corpus fund goes to show that the trustees were contributing the funds by themselves in a humble way and were intending to commence charitable activities. It is not even the case of the Revenue that by the time the application of the assessee came to be considered by them, the assessee had collected lots of donations for the activities of the trust. On the other hand, the grievance of the concerned authorities seems to be that there was no activity which could be termed as charitable as per the details furnished by the assessee, therefore, such registration could not be granted. When the trust itself was formed in January, 2008, with the money available with the trust, one cannot expect them to do activity of charity immediately and because of that situation the authority cannot come to a conclusion that the trust was not intending to do any activity of charity. In such a situation the objects of the trust have to be taken into ITA No.1077/Bang/2018 Page 4 of 5 consideration by the authority and the objects of the trust could be read from the trust deed itself. In the subsequent returns filed by the trust, if the Revenue comes across that factually the trust has not conducted any charitable activities, it is always open to the authorities concerned to withdraw the registration already granted or cancel the said registration under section 12AA(3) of the Act.
6. A trust could be formed today and within a week registration under section 12A could be sought as there is no prohibition under the Act seeking such registration. The activities of the trust have to be considered if such registration is sought much later than the formation of the trust or after expiry of the earlier registration granted in favour of the trust. Therefore, in a case of this nature where the trust has approached the authority for registration under section 12A within a span of eight months of its formation, the abovementioned criteria, namely, the objects of the trust for which it was formed will have to be examined to be satisfied about its genuineness and the activities of the trust cannot be the criterion, since it is yet to commence its activities.
11. In the present case, as we have already seen, the trust came into existence Deed of trust dated 13.11.2012 and the application for registration was made by the assessee on 19.11.2012. The objects of the trust having been, admittedly, for providing medical relief and therefore charitable within the meaning of section 2(15) of the Act. In such circumstances, registration cannot be refused to the assessee as that would be preventing the assessee from carrying out a charitable activity at the threshold. The other decisions relied upon by the Id. counsel for the assessee also have also taken the same view, as has been taken by the Hon'ble High Court of Karnataka in the case of Meenakshi AmmaEndowment Trust (supra). We are therefore of the view that the assessee is entitled to registration u/s. 12A of the Act and consequently, recognition u/s. 80G of the Act as well. We therefore allow the appeals by the assessee.
4.2 The learned departmental representative relied on the order of the CIT(E).
ITA No.1077/Bang/2018 Page 5 of 55. We have given careful consideration to the rival submissions. We are of the view that the contentions put forth by the learned counsel for the assessee are acceptable. The reasons assigned for not granting approval u/s 80G(5)(vi) is directly contradictory to the action of the CIT(E) in granting registration u/s 12A of the Act. In other words, the genuineness of the activities of the trust have, by implication, been accepted by the CIT(A) by his action in granting approval u/s 12A of the Act. We, therefore, set aside the order of the CIT(E) and remand the question of grant of approval u/s 80G(5)(vi) of the Act to the CIT(E) for fresh consideration in the light of the decisions referred to by the learned counsel for the assessee before us. The CIT(E) will afford opportunity of being heard to the assessee.
5. In the result, the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 20th July 2018 Sd/- sd/-
(A.K. GARODIA) (N.V.VASUDEVAN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Place : Bengaluru.
D a t e d : 20/07/2018
srinivasulu, sps
Copy to :
1 Appellant
2 Respondent
3 CIT(A)
4 CIT
5 DR, ITAT, Bangalore.
6 Guard file
By order
Senior Private Secretary
Income-tax Appellate Tribunal
Bangalore