Income Tax Appellate Tribunal - Rajkot
Shri Modh Vanik Vidhyarthi Mandal,, ... vs The Commissioner Of Income Tax, ... on 30 July, 2020
आयकर अपील य अ धकरण, राजकोट यायपीठ, राजकोट ।
IN THE INCOME TAX APPELLATE TRIBUNAL
RAJKOT BENCH, RAJKOT
BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER
AND MS. MADHUMITA ROY, JUDICIAL MEMBER
आयकर अपील सं./ ITA No. 68/Rjt/2019
नधा रण वष /Assessment Year: N.A.
Shri Modh Vanik Vidhyarthi The Commissioner of
Mandal C/o Modh Vanik Vs Income Tax (Exemption)
Mahajan, DR Takhta Sinhji Ahmedabad
Road, Gandhi Chowk,
Morbi-363641
PAN No. AAO TS2 809 K
अपीलाथ / (Appellant) यथ / (Respondent)
Assessee by : Shri Darshak Thakkar, CA
Revenue by : Shri M. N. Maurya, CIT(DR)
सन
ु वाई क तार ख/Date of Hearing : 27/02/2020
घोषणा क तार ख /Date of Pronouncement : 30/07/2020
PER MADHUMITA ROY, JM:
The instant appeal filed by the assessee is directed against the order dated 22.03.2019 passed by the Commissioner of Income Tax (Exemption), Ahmedabad under section 12AA(1)(b)(ii) of the Income Tax Act, 1961 (hereinafter referred as to "the Act") whereby and whereunder the approval sought for by the assessee under section 12AA of the Act has been rejected.
2. The assessee made an application for registration of the Trust under Section 12AA of the Act which was received by the authorities on 28.09.2018 whereupon a letter dated 19.11.2018 was issued to the assessee with a request to furnish certain documents mentioned therein. Upon perusal of the details submitted on 27.02.2019 by the assessee the Ld. CIT came to a finding that the ITA No. 68/Rjt/2019 AY N.A. -2- object of the Trust was restricted to a particular community namely 'Modh Vanik', to this effect that the Trust is to promote and develop for the local Morbi Modh Vanik families/guardians activities and by giving school books is helping to community persons. According to the Ld. CIT the Trustee created for the benefit for a particular community which does not endure for the benefit of the public and, therefore, provisions of under section 13(1)(b) of the Act are applicable. It was further pointed out by the Ld. CIT that the object of trust are educational and providing assistance to modh vanik children. The case of the assessee is this that the Trust came into existence on 07.09.1961 and registered under the Bombay Public Trust Act, 1961 on 03.03.1962. Since the Trust has come into existence before the commencement of the Income Tax Act, 1961 it will not be covered under section 13(1)(b) of the Act. Therefore, the finding of the Ld. CIT(A) that the trust was registered only on 29.11.2019 on the basis of registration certificate submitted by the appellant showing registration as on 24.11.2014 is not correct. The Ld. CIT was not satisfied on the intention of the assessee having charitable activities as claimed. Finally the Commissioner was not satisfied towards the genuineness of the Trust so as to reaching satisfaction of the charitable or religious nature of the object of the Trust or the authenticity of the activity of the Trust. The approval under section 12AA has been rejected.
3. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee vehemently argued in support of the case particular this issue that the Trust was originally created on 07.09.1961 and was registered under Bombay Public Trust Act, 1961 on 03.03.1962. In support of his contention he has taken us to Page 107 of the Paper Book filed before us being the registration certificate issued by the Assistant Commissioner of Rajkot Region, Rajkot Morbi District dated 24.11.2014 wherein the original date of registration of the Trust being on 03.03.1962 is appearing at the top of the left ITA No. 68/Rjt/2019 AY N.A. -3- hand side of the said certificate. The said certificate further clarified that as per the Circular No. G.K./18/2014/B.P.T./1096/25/E of Gujarat Government Officer Order dated 11.06.2014 new registration certificate issued from Rajkot District to Morbi District. The second contention regarding the activities of the Trust is restricted to a particular community namely 'Modh Vanik' has also controverted by the Ld. Counsel appearing for the assessee. He argued that even if the object is restricted to a mere class or a community the object of the Trust are for educational benefit and for providing assistance to 'Modh Vanik' children which is supported by the notes on activities as appearing at Page 10 of the Paper Book before us which was duly submitted before the ITO(E), Ahmedabad by the assessee. Hence, the case is not covered under section 13(1)(b) of the Income Tax Act and, therefore, the assessee is highly eligible to credit that grant under section 12AA of the Act as the crux of the argument.
4. On the other hand, the Ld. DR relied upon the order passed by the Ld. CIT(A).
We have heard the parties, and perused the relevant materials available on records.
5. So far as the first issue on date of registration of the Trust is concerned it appears at Page 107 of the Paper Book that the Trust was originally registered on 03.03.1962 and not on 24.11.2014. In fact, on 24.11.2014 the certificate given by the Assistant Commissioner Rajkot Region, Rajkot Morbi District as per Circular No. G.K./18/2014/B.P.T./1096/25/E as it is evident from the translated copy of the said letter annexed at Page 5 of the note given by the assessee on 26.02.2020. Thus, the contention of the Ld. CIT that the Trust since was registered not on 03.03.1962 as claimed by the assessee but on 24.11.2014 is not correct. In fact, the Income Tax Act, 1961 came into force ITA No. 68/Rjt/2019 AY N.A. -4- with effect from 01.04.1962 i.e. after the registration of the Act and hence the trust was already in existence before the Act came into force. Even assuming it can be denied under section 12AA of the Act for the failing to satisfy the conditions not having the object restricted to a particular community, the Explanation 2 of Sec. 13 gives a free hand to the assessee to claim the benefit as sought for. In this regard, we would like to reproduce the Explanation 2 of Sec. 13 of the Act:-
"Explanation 2.- A trust or institution created or established for the benefit of Scheduled Castes, backward classes, Scheduled Tribes or women and children shall not be deemed to be a trust or institution created or established for the benefit of a religious community or caste within the meaning of clause (b) of sub-section (1)."
The word Schedule Cast, backward classes, Schedule Tribe and women and children means if the Trust is established for the benefit of the women and children then it is eligible to get such grant of relief under section 12AA of the Act. Thus, we must note that the Ld. Advocate appearing for the AR argued this particular aspect of the matter which we found is having real substance on merit. Hence, taking into consideration the entire aspect of the matter we find there cannot be any doubt relating to the claim of the assessee either on the count of date of registration or the object of the Trust which specifically provides benefit to the children though of a particular community is certainly entitled to get the relief under section 12AA of the Act. Hence, we direct the Ld. CIT to grant the registration under section 12AA of the Act as sought for on the basis of the observation made hereinabove.
6. In the result, appeal filed by the assessee is allowed.
7. Before parting we would like to make certain observation relating to the issue cropped up under present scenario of Covid-19 pandemic as to whether when the hearing of the matter was concluded on 27.02.2020 the order can be pronounced today i.e. on 30.07.2020. The issue has already been discussed by ITA No. 68/Rjt/2019 AY N.A. -5- the Co-ordinate Bench in the case of DCIT vs. JSW Ltd. (ITA Nos. 6264 & 6103/Mum/2018) pronounced on 14.05.2020 in the light of which it is well within the time limit permitted under Rule 34(5) of the Appellate Tribunal Rules, 1963 in view of the following observations made therein:
"7. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 8th January 2020, this order thereon is being pronounced today on the day of 14th May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows:
(5) The pronouncement may be in any of the following manners :--
(a) The Bench may pronounce the order immediately upon the conclusion of the hearing.
(b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement.
(c) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily (emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board.
8. Quite clearly, "ordinarily" the order on an appeal should be pronounced by the bench within no more than 90 days from the date of concluding the hearing. It is, however, important to note that the expression "ordinarily" has been used in the said rule itself. This rule was inserted as a result of directions of Hon'ble jurisdictional High Court in the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein Their Lordships had, inter alia, directed that "We, therefore, direct the President of ITA No. 68/Rjt/2019 AY N.A. -6- the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the Benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile(emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment". In the ruled so framed, as a result of these directions, the expression "ordinarily" has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any "extraordinary" circumstances.
9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 ITA No. 68/Rjt/2019 AY N.A. -7- read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that "In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15days after the lifting of lockdown". Hon'ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, "It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly", and also observed that "arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020". It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the corona virus "should be considered a case of natural calamity and FMC (i.e. force majeure clause) may be invoked, wherever considered appropriate, following the due procedure...". The term 'force majeure' has been defined in Black's Law Dictionary, as 'an event or effect that can be neither anticipated nor controlled' When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an "ordinary" period.
10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country ITA No. 68/Rjt/2019 AY N.A. -8- was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed "while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly". The extraordinary steps taken suo motu by Hon'ble jurisdictional High Court and Hon'ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words "ordinarily", in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to re-fix the matters for clarifications because of considerable time lag between the point of time when the hearing ITA No. 68/Rjt/2019 AY N.A. -9- is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case."
8. On the basis of the observation made in the aforesaid judgment we exclude the period of lockdown while computing the limitation provided under Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. Order is, thus, pronounced in the open court.
9. In the result, appeal filed by the assessee is allowed.
Order pronounced in the Court on 30th July, 2020 at Rajkot.
Sd/- Sd/-
(WASEEM AHMED) (MADHUMITA ROY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Rajkot; Dated, 30/07/2020 TRUE COPY
Tanmay Datta, 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. संबं धत आयकर आय%
ु त / Concerned CIT
4. आयकर आयु%त(अपील) / The CIT(A)
5. (वभागीय !+त+न ध, आयकर अपील य अ धकरण, / DR, ITAT, Rajkot
6. गाड- फाईल / Guard file.
आदे शानस ु ार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील'य अ(धकरण, / ITAT, Rajkot
1. Date of dictation- 28/02/2020
2. Date on which the typed draft is placed before the Dictating Member 28/02/2020 Other Member ......
3. Date on which the approved draft comes to the Sr.P.S./P.S.- 30/07/2020
4. Date on which the fair order is placed before the Dictating Member for Pronouncement 30/07/2020
5. Date on which the file goes to the Bench Clerk 30/07/2020
6. Date on which the file goes to the Head Clerk..................................
7. The date on which the file goes to the Assistant Registrar for signature on the order..........................
8. Date of Despatch of the Order..................