Income Tax Appellate Tribunal - Bangalore
Sanjeevamma Hanumanthe Gowda ... vs Director Of Income-Tax (Exemptions) on 2 August, 2005
ORDER
Deepak R. Shah, A.M.
1. This appeal by assessee is directed against the order of learned Director of Income Tax (Exemptions); dated 24-6-2002 against order under Section 12AA(1)(b)(ii) of the Income Tax Act (hereinafter referred to as the Act).
2. The appellant-trust was established under a Trust Deed dated 1-3-1997. The objects stated in the said Trust Deed inter alia includes conducting mass marriages, poor feeding, yoga classes, providing food and hostel accommodation, vocational training to handicapped persons, relief to poor sick destitutes and promoting physical, psychological and spiritual health etc. The appellant-trust started constructing building during March, 2000 and the same was completed in 2001. The appellant-trust applied for registration under Section 12A of the Act on 29-11-2001. The learned Director of Income Tax (Exemptions), on the basis of enquiry conducted and from the accounts filed, concluded that the trust is carrying on activity in a commercial way by letting out a marriage hall on hire. The trust is not wholly for charitable objects. In paras 6 and 7 of his order, he concluded as under:-
"Meanwhile, the Income Tax Inspector of this office was sent to the trust office at the address mentioned in the application in Form No. 10A to report on the activities of the trust and whether they are in consonance with the activities report given by the assessee-trust. The ITI has reported that the above address is a palatial marriage chowltry situated on nearly 2 acres of lush landscaped gardens. The marriage half is a 3 storeyed posh building with marble floors and posh interiors. On enquiries, it was revealed that the charges of hiring the hall were Rs. 30,000 for 2 day marriages and for other functions Rs. 15,000 per day. As regards the claims of the assessee in writing and orally through the authorized representative regarding conduct of mass marriages, it was revealed during enquiries that on the inauguration of the marriage chowltry, mass marriage was performed and the trust provided for free mangalsutra, clothes, etc. on that day which was also opening ceremony of the marriage hall. After the opening ceremony, no other mass marriages were conducted. However, the hall was being let out on marriages and other functions. When enquiry was made specifically as regards conducting of yoga classes, it was revealed that apart from letting out of the hall for marriages and other functions, not other activity is being carried on.
As seen from the statement of accounts, the assessee is reflecting very meagre amounts as income from community hall hire charges, which is not reflective of the actual hall hire charges being received as verified during the course of enquiry. However, the assessee is showing huge amounts received under the head'Donation'. The activities of the assessee trust are purely commercial in nature as is evident from the fact that except on the inaugural day, no other charitable activities have been carried on. Though the assessee has given a list of people who have donated for the construction of the Kalyana Mantapa and even later After the construction, the very motive of the trustees in collecting these supposed'donations'for a purportedly charitable activity such as conduct of mass marriages and then indulge in a purely commercial activity such as letting out of the Kalyana Mantapa on hire is suspect. The assessee's representatives have during the course of hearings and in the note on activities filed, stated that only charitable activities such as mass marriages and running of yoga classes have been conducted and no commercial activity is going on, when the enquiries made by this office reveal otherwise."
The assessee is in appeal against refusal of registration under Section 12A of the Act.
2.1 learned counsel for assessee Shri G.B. Patil invited our attention to the objects of the trust. He submitted that the objects are of general public utility and hence, charitable in nature. He submitted that the mass marriage was conducted under the auspicious of the trust when the building was inaugurated. Thereafter no mass marriages have been conducted as no suitable match is found. Some activities on conducting yoga classes are also conducted. The assessee has also spent on feeding poor people. The DIT (Exemptions) is not justified in refusing registration as the inquiry for registration under Section 12A is limited to find out whether the activities of assessee-trust are genuine and satisfaction about the objects of the trust. So long as the objects are charitable in nature, registration cannot be refused under Section 12A of the Act. For this proposition, he relied upon the following decisions:
Malliram Charitable Trust v. CIT Jindal Udyog v. Income Tax Officer (2003) 260 ITR 123 (Chd.) (AT) St. Don Bosco Educationa lSociely v. CIT (2004) 90 ITD 477 (Lucknow) Treasure Island Re-Sorts (P.) Ltd. v. Dy. CIT(2004) 90 ITD 814 (Hyd.).
He accordingly submitted that the trust is entitled to registration under Section 12A of the Act.
2.2 learned DR on the other hand strongly relied upon the order of learned DIT (Exemptions). He submitted that though various objects are stated in the trust deed, the assessee in fact is not carrying on such objects. The assessee has merely constructed a choultry, which is let on hire at hefty fees. Though the trust was established in the year 1997, till date the assessee has not conducted any mass marriages except at the time of inauguration. For conducting mass marriage, it is not necessary that assessee should have building of its own. The activity can the independently carried out. The activity of letting out the choultry on commercial basis does not entitle the assessee, registration under Section 12A of the Act. This activity is not in furtherance of other objects but is carried on as the main activity and hence, registration under Section 12A is rightly refused by learned DIT (Exemptions).
3. We have carefully considered the relevant facts and the agreements advanced. Though various objects are stated in the trust deed, yet the assessee has not done. anything in furtherance of such objects. All the activities so far have been only towards construction of a choultry. As per the finding of learned DIT (Exemptions), the choultry is let out on hire on commercial basis. The hiring of choultry is not for attainment of other objects, but seems to be the main object so far pursued by the appellant. The mere spending of Rs. 2,000 on yoga classes and Rs. 5,000 on feeding poor people out of the total receipt of over Rs. 62 lakhs, do not establish that the assessee is pursuing wholly charitable activities. The decision relied by learned Counsel for assessee will not apply to the present set of facts, as in the said case, it was found that the assessee were established wholly for charitable purpose and were also pursuing such activities. We accordingly do not find any merit in this appeal.
In the result, the appeal is dismissed.