Income Tax Appellate Tribunal - Cochin
Sathyam Service Trust, Thiruvalla vs Assessee on 30 October, 2014
1
ITA No. 807/Coch/2013
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. 807/Coch/2013
Sathyam Service Trust vs CIT, Kottayam
Manackachira, Thiruvalla
PAN : AAGTS0562H
(Appellant) (Respondent)
Appellant by : Shri Shanmughan D Jayan
Respondent by : Shri M Anil Kumar, CIT
Date of hearing : 24-09-2014
Date of pronouncement : 30-10-2014
ORDER
Per N.R.S. Ganesan (JM) This appeal of the assessee is directed against the order of the Administrative Commissioner rejecting the application of the assessee for registration u/s 12AA of the Act.
2. Shri Shanmugham D Jayan, the ld.counsel for the assessee submitted that the assessee trust was established for the purpose of relief to the poor, education, medical relief and other philanthropic activities. The assessee has also intended to promote and spread Christian and other literary and cultural activities. The application of the assessee for 2 ITA No. 807/Coch/2013 registration was earlier rejected by the Commissioner of Income-tax. However, on appeal by the assessee before this Tribunal, the matter was remitted back to the file of the Commissioner of Income-tax with a direction to process the application in terms of section 12AA of the Act. Consequent to the order passed by this Tribunal, the Commissioner of Income-tax examined the matter and found that the genuineness of the activity of the trust was not satisfied. According to the ld.counsel, the assessee has established a school for mentally challenged students. The Government of Kerala sanctioned funds to the assessee society for providing vocational training to the mentally challenged students. According to the ld.counsel, the copy of the order is available at page 50 of the paper book. The ld.counsel further submitted that the assessee is maintaining 38 mentally and physically retarded students. Apart from that 14 handicapped students are trained for umbrella making and computer operation. The assessee trust is running Sathyam Vocational Training Centre for training the women in tailoring. The assessee has also provided wheel chairs, love buckets (kits containing essential commodities) to several thousands people. The assessee is also helping 50 orphan students. The assessee is providing free education to 100 students in Gandhism. The assessee has established a school at Vijayanagaram and providing education to 250 students. The assessee donated Rs.4 lakhs for the people, who were affected by tsunami. When Amala Wind destroyed the infrastructure of the 3 ITA No. 807/Coch/2013 state, the assessee has donated Rs.2,50,000. Similarly when the Gujarati people suffered due to earthquake, the assessee has donated Rs.4 lakhs. Referring to the paper book, the ld.counsel submitted that the assessee has received several contributions from foreign countries. The assessee has informed about the receipt of gift to the respective authorities under the Foreign Exchange Management Act (FEMA). The source of receipt of the money from foreign countries and purpose of the receipt of money and the utilization thereof was intimated to the respective authorities. The copies of the same are available at pages 51 to 84 of the paper book. According to the ld.counsel, several contributions were made for a specific purpose. Therefore, the same cannot be diverted by the assessee. When the donation was received for a specific purpose from foreigners the same has to be used only for the purpose for which it was donated. The assessee has also received wheel chair from foreign countries and the same was distributed to the intended people. These aspects even though available before the Commissioner of Income-tax was not considered. The Commissioner of Income-tax simply says that for the financial year 2008- 09 the assessee has received Rs.1,23,00,775. Similarly for the financial year 2009-10 the Commissioner of Income-tax says that the trust Rs.64,46,607. During the financial year 2010-11, according to the Commissioner of Income-tax, the assessee received donation of Rs. 1,15,55,748. The assessee has filed all the details with regard to 4 ITA No. 807/Coch/2013 utilization of the funds received by the assessee before the Commissioner of Income-tax. However, the Commissioner of Income-tax, without considering the material filed by the assessee simply says that the assessee could not explain how funds were utilized. According to the ld.counsel, the Commissioner has to examine the materials available on record including the activities carried on by the assessee and thereafter he has to record his satisfaction whether the activity of the trust is genuine or not? Without examining the activities of the assessee, according to the ld.counsel, the Commissioner of Income-tax cannot say that the object of the trust is not genuine.
3. On the contrary, Shri M Anil Kumar, the ld.DR submitted that the assessee has received huge donation from foreign countries year after year. This was unearthed during the course of survey operation. In spite of specific query, the assessee could not explain the source of receipt of the funds and the utilization of the amount to the satisfaction of the Commissioner of Income-tax. The assessee trust simply shown in the balance-sheet that the money was spent as per the direction of the Contributor. However, it is for the assessee to explain how the contribution received from foreign country was utilized in India. In the absence of any material with regard to utilization of funds for charitable activity, Commissioner of Income-tax found that the assessee has not used the 5 ITA No. 807/Coch/2013 funds for charitable activity and the genuineness of the activity is not established. Therefore, the Commissioner of Income-tax has rightly rejected the application of the assessee.
4. We have considered the rival submissions on either side and also perused the material available on record. At page 50 of the paper book the assessee filed a copy of the order passed by the Educational Director, Government of Kerala. From this year it appears that the assessee has applied for financial assistance to start vocational training centre in the school run by the assessee for mentally challenged students. The Government of Kerala allotted a sum of Rs.1 lakhs for four different units with a condition that the amount should be used to start the unit as per the order of sanction. From this letter of the state government it is obvious that the assessee is conducting vocational courses for mentally challenged children. The Government of Kerala has also extended its assistance by sanctioning Rs.1 lakh.
5. The material available on record shows that the assessee has received other contribution from foreign countries. The assessee appears to have informed the concerned authority under the FEMA with regard to receipt of the contribution. For the year ended 31-03-2007 the assessee has disclosed the receipt of Rs.1,10,95,951. For the year ended 31-03- 6 ITA No. 807/Coch/2013 2008 the assessee has disclosed foreign contribution of Rs.1,91,01,741.28. The assessee has also mentioned the purpose for which the money was received and the amount utilised as also the balance available for utilization. The assessee has also disclosed the bank account number to which the money was deposited or credited. The contention of the assessee before this Tribunal is that even though the foreign contribution was disclosed to the department, many contributions were received in kind by way of wheel chair, etc. According to the ld.counsel, the wheel chairs received were simply distributed to the beneficiaries. The assessee has produced the entire details of the foreign contribution received, the purpose for which it is received and its utilization. The Commissioner of Income-tax apparently has not examined the details furnished by the assessee including the information furnished by the assessee to the concerned authority under FEMA. We are conscious that this is the second round of litigation. Under normal circumstances we would have decided the matter on merit by examining the material available on record. However, in this case, the Commissioner of Income- tax has not examined the details of information furnished by the assessee to the concerned authority under FEMA and the sanction of Government of Kerala providing financial assistance to the school run by the assessee for mentally challenged students and other activities with regard to free education helping the orphans, donation made by the assessee during 7 ITA No. 807/Coch/2013 tsunami, Amala Wind and Gujarat Earthquake. These are all material which are to be considered by the Commissioner of Income-tax at the time of registration. These factors have to be taken into consideration to find out the genuineness of the activity of the assessee. The Commissioner of Income-tax's order is silent about these activities which are said to be carried out by the assessee. Therefore, this Tribunal is of the considered opinion that the Commissioner of Income-tax shall re-examine the matter afresh after considering all the activities said to be carried out by the assessee, the source of foreign contribution, the purpose of contribution and the utilization of funds by the assessee and thereafter decide whether the object and the activity of the assessee trust is genuine or not? Accordingly, the order of the Commissioner of Income-tax is set aside and the issue of registration is remitted back to the file of Commissioner of Income-tax. The Commissioner of Income-tax shall re-examine the matter afresh in the light of the material available on record. The Commissioner of Income-tax shall bring on record whether the assessee has actually carried on the activities as claimed and thereafter decide the issue in accordance with law after giving reasonable opportunity to the assessee.
6. In the result, appeal of the assessee is allowed for statistical purpose.
8ITA No. 807/Coch/2013
Order pronounced in the open court on this 30th October, 2014.
Sd/- sd/- (Chandra Poojari) (N.R.S. Ganesan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin, Dt : 30th October, 2014 pk/- copy to:
1. Satyam Service Trusty, Manackchira, Thottabhagam PO, thiruvalla 689 541
2. The CIT, Public Library Building, Sastri Road, Kottayam
3. The DR (True copy) By order Asstt. Registrar, Income-tax Appellate Tribunal, Cochin Bench