Income Tax Appellate Tribunal - Chandigarh
Bhai Mansa Singh Ji Welfare Society ... vs Assessee on 20 August, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI H.L.KARWA, VICE PRESIDENT
AND MS. RANO JAIN, ACCOUNTANT MEMBER
ITA No.1040/Chd/2014
(Under Section 12AA of the Act)
Bhai Mansa Singh Ji Vs. The C.I.T.,
Welfare Society(Regd.), Panchkula.
Burja Gate, Jagadhri.
PAN: AABTB8920F
(Appellant) (Respondent)
Appellant by : Shri Tej Mohan Singh
Respondent by : Shri Sunil Verma, DR
Date of hearing : 18.08.2015
Date of Pronouncement : 20.08.2015
O R D E R
PER RANO JAIN, A.M. :
This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax, Panchkula dated 27.10.2014 passed under section 12AA of the Income Tax Act, 1961 (in short 'the Act')
2. The facts of the case are that Bhai Mansa Singh Ji Welfare Society, Buria Gate, Jagadhri was created on 4.5.2011. The assessee society made an application for registration under section 12AA of the Act in Form No.10A on 2 25.4.2013. The registration under section 12AA of the Act was rejected by the learned Commissioner of Income Tax vide order No.327 dated 19.8.2013 in view of the violation of provisions of section 13(1)(b) of the Act and insufficient activities with regard to objects of the society. Aggrieved by the said order, the assessee preferred an appeal before the I.T.A.T., Chandigarh. The I.T.A.T., Chandigarh Bench 'A' vide its order dated 23.1.2014 held as under :
" I n t h e i n t e r e s t o f j u s t i c e , we are of the vie w that the matter needs to be restored back to the C o m m i s s i o n e r o f I n c o me T a x t o d e c i d e t h e s a me d e - n o v o af t e r t a k i n g i n t o c o n s i d e r a t i o n t h e f a c t s a n d c i r c u ms t a n c e s i n t o t a l i t y b o t h i n r e s p e c t o f t h e a i m s and objects of the assessee society and also the a c t i v i t i e s wh i c h h a v e b e e n c a r r i e d o n b y t h e a s s e s s e e society and af t e r considering the s a me necessary o r d e r m a y b e p a s s e d b y t h e C o m m i s s i o n e r o f I n c o me T a x i n a c c o r d a n c e wi t h l a w. A t t h i s j u n c t u r e , we a r e not commenting upon the f act that wh e t h e r the assessee society is engaged in charitable activities or not. The said aspect wi l l be verif ied by the Commissioner of I n c o me T ax in line wi t h the provisions of section 12A of the Act and then the issue be decided in accordance wi t h l a w. The grounds of appeal raised by the assessee are a l l o we d f o r s t a t i s t i c a l p u r p o s e d " .
3. In order to comply with the order of the I.T.A.T., the case was again taken up by the learned Commissioner of Income Tax, Panchkula. After various correspondences between the assessee and the learned Commissioner of Income Tax, the application for registration under section 12AA of the 3 Act was again rejected by the learned Commissioner of Income Tax. He was not satisfied about the genuineness of the activities carried out in furtherance of the objects of the society in view of the following reasons :
i) No substantial charitable activities were carried out by the assessee society. No satisfactory documentary evidence regarding activities carried out in furtherance of the objects of the society was furnished.
ii) No funds applied by the society towards the objects of the society which are charitable in nature.
iii) The building in question, on which the society is functioning/running, has no lien with the society.
iv) As per Memorandum of Article of the
society, most of the member/office bearers are
from Chadha family and are relatives of each other and descendants of the same saint.
v) No documentary evidence produced regarding receipt of donation whether the same is received towards corpus fund or voluntary contribution.
vi) One of the amended objects of the society shows that the object of the society is the furtherance of the cause of a particular/specific sect or biradari of Bhai Mansa Singh Ji as per point (iv) of aims and objects Supra which reads as under:-
"To run the society for benefit of poor & general public at large to provide Medical Aid, Education Institutions, scholarships, sports, blood Donation Camps, Other facilities & Activities on the teachings of Bhai Mansa Singh Ji".4
4. The learned Commissioner of Income Tax was of the view that the above said reasons were against the spirit of section 13(1)(b) of the Act and hence, the application for registration was rejected.
5. Now the assessee has come up in appeal before us against the above said order of the learned Commissioner of Income Tax raising following grounds of appeal :
"1. That the Ld. Commissioner of Income Tax has erred in law as well as on facts in rejecting registration under section 12AA of the Act which is arbitrary & unjustified.
2. That the Ld. Commissioner of Income Tax has erred in observing that the assessee society has not carried out any activity as per the objects which is unfounded, without any basis and as such the order is arbitrary and unjustified.
3. That the registration has been refused only on the basis of suspicion, conjectures and surmises which is not permitted under the Law and as such the order refusing registration is illegal, arbitrary and unjustified.
4. That the Ld. Commissioner of Income Tax has further erred in holding that the object of the trust is against the spirit of Section 13(l)(b) of the Act which is unfounded, without any basis and as such the order is arbitrary and unjustified.
5. That the order of the Ld. Commissioner of Income Tax is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable."
6. The learned counsel for the assessee while arguing before us submitted that the order of the learned Commissioner of Income Tax rejecting the application for registration under section 12AA of the Act is not as per law. 5 He tried to resolve all the reasons for said rejection made by the learned Commissioner of Income Tax as reproduced hereinabove. Regarding Point Nos.(i) and (ii) i.e. no charitable activities were being carried out by the assessee and no funds were applied towards the objects of the society. Our attention was drawn to page 26 of the Paper Book whereby the assessee had filed a detailed note on the activities undertaken by the society and also its proposed activities. He also relied upon the judgment of the Hon'ble Punjab & Haryana High Court in the case of Suchinta Educational Society Vs. CIT. Regarding the point No.(iii) that the building in question has no lien with the society. It was submitted that the society is being run in a historical Gurudwara built in the memory of Bhai Mansa Singh Ji located at Buria Gate, Jagadhri. The management of the Gurudwara had provided a small place to house the office of the society free of cost, besides providing its other premises to hold various social and charitable activities. As such, the society does not need a place by way of land and building. This submission was also made before the learned Commissioner of Income Tax. As regards point No.(iv) that most of the members and office bearers are from Chadha family and are related to each other, it was submitted that founder members of the society are descendants of Bhai Mansa Singh Ji. Though they all have their surnames as Chadha but they are not related to each other closely. Regarding point No.(v) that no documentary evidence for donation was produced. Our attention was invited to the 6 reply filed before the learned Commissioner of Income Tax, which was quoted at page 6 of the order of the learned Commissioner of Income Tax, whereby it has specifically been mentioned that the documentary evidences of the same were filed before the learned Commissioner of Income Tax. The last reason given by the learned Commissioner of Income Tax for rejection of the application was that the one of the amended objects of the society shows that the object of the society is the furtherance of the cause of a particular sect or biradari of Bhai Mansa Singh Ji. Our attention was invited to page 9 of the Paper Book whereby said amended object was quoted, which read as under :
"To run the society f or benef it of poor & general public at large to provide Medical Aid, Education Institutions, scholarships, sports, blood Donation C a m p s , O t h e r f ac i l i t i e s & A c t i v i t i e s o n t h e t e a c h i n g s of Bhai Mansa Singh Ji".
It was submitted that on perusal of the above objects, it cannot be said that the objects of the society are for furtherance of charity to any specific sect or biradari. In view of these submissions, it was prayed that the order of the learned Commissioner of Income Tax may be set aside.
7. The learned D.R. relied upon the order of the learned Commissioner of Income Tax. He distinguished the case of Suchinta Educational Society (supra) relied upon by the learned counsel for the assessee as in that case, it was only the first year of the working of the society, which is not 7 the case of the present assessee. Further, he stated that nowhere the assessee had been able to bring on record the teachings of Bhai Mansa Singh Ji on the basis of which the society was created. He also relied upon the judgment of Hon'ble Madhya Pradesh High Court in the case of Shri Dhakad Samaj Dharamshala Bhawan Trust Vs. CIT (2008) 302 ITR 321 (MP).
8. We have heard the rival submissions and perused the material available on record. From the perusal of the order of the learned Commissioner of Income Tax running into eight pages, it is quite clear that the learned Commissioner of Income Tax had rejected the application for registration under section 12A of the Act on the basis of six objections raised by him as reproduced earlier in this order. As regards the activities of the society, it is trite law that while granting the registration under section 12AA of the Act, the Commissioner of Income Tax has to see the objects of the society being charitable and also the genuineness of the activities. However, if the assessee has not been able to do any activity that does not stop the Commissioner of Income Tax to give registration if the objects of the society are charitable. Reliance placed by the learned counsel for the assessee in the case of Suchinta Educational Society (supra) is not out of place in which it has been held that the g e n u i n e n e s s o f t h e a c t i v i t i e s o f t h e t r u s t a s a p r e - c o n d i t i o n for registration under section 12AA deals with the existing activities or the activities, which are to be taken in future. If the assessee 8 does not satisfy the test of genuineness of activities at any subsequent stage, the registration itself can be cancelled in terms of sub-section (3) of section 12AA of the Act. Therefore, the genuineness of the activities of the assessee cannot be pre-judged only for the reason the activities having not been undertaken. This view also gets strengthen by the judgment of the Hon'ble Delhi High Court in the case of Director Of Income Tax Vs. Foundation Of Opthalmic and Optometry Research Education Centre (2012) 254 CTR 133 (Del) whereby it has been held that while examining the application under section 12AA of the Act, the concerned Commissioner is not required to examine the question whether the trust has actually commenced and carried on its charitable activities. Similar proposition was held by the Hon'ble Karnataka High Court in the case of DIT (Exemption) Vs. Meenakshi Amma Endowment Trust (2011) 50 DTR 243 (Kar.)
9. As regards the question of building and members/office bearers being from same family, the issues were clarified to the Commissioner of Income Tax and were also reiterated before us. Further, these issues are also not relevant at this stage. The evidences receiving donation were filed before the learned Commissioner of Income Tax.
10. The main contention of the learned Commissioner of Income Tax while rejecting the application seems to be the point No.(vi) raised by him. As per the learned Commissioner of Income Tax, the amended object, as reproduced hereinabove, was against the spirit of section 13(1)(b) of the 9 Act. However, while going through the said amended objects we do not find that the objects were confined towards any particular sect or biradari. It has been clearly mentioned that the society had to work for the benefit of poor and general public at large and these activities are to be based in consonance with the teachings of Bhai Mansa Singh Ji. It is not a case that the charity has to be done for the followers of Bhai Mansa Singh Ji only. Further in our opinion, the provisions of section 13(1)(b) of the Act can be invoked only at the time of making assessment of the entity registered under section 12AA of the Act. At the stage of granting registration under section 12AA of the Act, the learned Commissioner of Income Tax should not get carried away by the provisions of this section.
11. At the time of granting registration, the learned Commissioner of Income Tax has to confine himself to the twin conditions for registration i.e. the objects of the trust being charitable and the activities being genuine. It is not the stage in which the learned Commissioner of Income Tax should be commenting on the taxability of the assessee. That stage comes later while making the assessment. In the present case, nowhere in the whole order the learned Commissioner of Income Tax has been able to comment on the objects of the society being not charitable. On perusal of the memorandum of the society even, we do not find any of its objects being not charitable. None of the activities taken by the assessee was held to be not genuine also. In the absence of any such finding, the learned Commissioner of Income Tax 10 cannot reject the application of the assessee. Our view gets strengthened by the judgment of the Hon'ble Jurisdictional Punjab & Haryana High Court in the case of CIT Vs. Surya Educational & Charitable Trust (2011) 203 Taxman 53, whereby the Hon'ble Court observes as under :
As per s. 12AA, an application for registration of the trust and institution is required to be made within one year f rom the date of creation of the trust or the e s t a b l i s h me n t o f s u c h i n s t i t u t i o n . T h e p r o c e d u r e f o r registr ation of the trust or institu tion is prescribed u n d e r s . 1 2 A A . I n t e r ms o f c l . ( a ) o f s . 1 2 A A , t h e C I T is to satisf y himself about the genuineness of the activities of the Trust on suct inquiries as he may deem necessary. Sub-ss. (1A) and (2) of s. 12AA, are p r o c e d u r a l i n n a t u r e , wh e r e a s S u b - s . ( 3 ) o f s . 1 2 A A , e m p o we r s t h e C I T t o c a n c e l t h e r e g i s t r a t i o n o f t h e Trust or Institution, if he is satisf ied that the activities of such Trust or Institution are not genuine o r a r e n o t c a r r i e d o u t i n a c c o r d a n c e wi t h t h e o b j e c t s of the trust or institution. T herefore, the object of s. 12AA, is to examine the genuineness of the objects of the trust, but not the income of the trust for charitable or religious purposes, The stage for a p p l i c a t i o n o f i n c o me i s y e t t o a r r i v e i . e . wh e n s u c t trust or institution f iles its return."
In another later judgment of the Hon'ble Punjab & Haryana High Court, relying on the above stated judgment, in the case of CIT Vs. B.K.K. Memorial Trust (2013) 256 CTR 424, the Hon'ble Court observes as under :
"The Trust was created on 23.6.2010 and application under Section 12A(1) (aa) of the Act was moved on 19.7.2010 and the same was rejected on 26.11.2010. The application for registration is required to be made within one year of the creation 11 of the Trust and there is no requirement that the Trust or the institution should have started all its envisaged activities in the first year itself. Under Section 12AA of the Act satisfaction regarding the genuineness of the activities of the Trust is to be seen and the stage for application of income is yet to arrive i.e. when such Trust or Institution files its return. Thus the contention that Trust was not set up for charitable purpose and it was utilizing its income not for the said purpose cannot be examined at this stage as only objects of the Trust had to be considered by the Commissioner. The Trust was in nascent stage and was yet to work towards its objects."
In the present case, we see that the learned Commissioner of Income Tax has nowhere questioned the charitable character of the objects of the society, nor he has been able to bring on record any material to prove that the activities of the assessee are not genuine.
12. In view of the above, the order of the learned Commissioner of Income Tax rejecting the application for registration under section 12AA of the Act is hereby set aside and the learned Commissioner of Income Tax is directed to allow the registration to the assessee.
13. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on this 20th day of August, 2015.
Sd/- Sd/-
(H.L.KARWA) (RANO JAIN)
VICE PRESIDENT ACOUNTANT MEMBER
Dated : 20 t h August, 2015
*Rati*
Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.
Assistant Registrar,
ITAT, Chandigarh
FIT FOR PUBLICATION
Sd/- Sd/-
(H.L.KARWA) (RANO JAIN)
VICE PRESIDENT ACOUNTANT MEMBER
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