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Gujarat High Court

Commissioner Of Income Tax I vs Niranjanbapu Education And Charitable ... on 30 June, 2014

Author: M.R. Shah

Bench: M.R. Shah, K.J.Thaker

         O/TAXAP/566/2014                                    ORDER




         IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                        TAX APPEAL NO. 566 of 2014

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          COMMISSIONER OF INCOME TAX I....Appellant(s)
                          Versus
  NIRANJANBAPU EDUCATION AND CHARITABLE TRUST....Opponent(s)
================================================================
Appearance:
MR PRANAV G DESAI, ADVOCATE for the Appellant(s) No. 1
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         CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
                and
                HONOURABLE MR.JUSTICE K.J.THAKER

                             Date : 30/06/2014


                              ORAL ORDER

(PER : HONOURABLE MR.JUSTICE M.R. SHAH)

1. Feeling aggrieved by and dissatisfied with the impugned judgment and order dated 31.1.2014 passed by the learned Income-tax Appellate Tribunal, Rajkot (hereinafter referred to as "the Tribunal") in ITA No. 653/Rjt/2012, by which, the learned Tribunal has allowed the appeal preferred by the original applicant-Trust, Rajkot and has set aside the order passed by the Commissioner of Income-tax, Rajkot-1 under section 12AA(1)(b)(ii) of the Income-tax Act, the present appellant has preferred this Tax Appeal to consider the proposed substantial question of law:

O/TAXAP/566/2014 ORDER [A] Whether in the circumstances and the facts of the case and in law, the ITAT is justified in granting registration to assessee trust under section 12A ?

2. We have heard Mr. Pranav G. Desai learned advocate appearing on behalf of the appellant- Revenue. We have also gone through the order passed by the Commissioner of Income-tax dated 28.9.2012 as well as impugned judgment and order dated 31.1.2014 passed by the learned Tribunal.

3. At the out-set, it is required to be noted that, on appreciation of the evidence and considering the documents available on record, including the paper-book filed by the assessee- Trust, the learned Tribunal has specifically observed and held that the objective of the Trust is charitable. It appears that the main contention of the learned Commissioner was that the assessee trust has not engaged in any other activities apart from carrying out activities of distribution of free note Books and given scholarship to a student, and therefore, denied the registration under section 12A of the Act. On another ground, on which, the learned Commissioner denied the registration was that the assessee trust made donation to another trust to the tune of Rs. 50,000/-. Relying upon the decision of this Court in the case of Kutchi Dasa Oswal Moto Pariwar Ambama Trust, reported in Page 2 of 5 O/TAXAP/566/2014 ORDER [2013] 29 taxmann.com 228, which took the view that "absence of any activity of a trust at the time of registration is not a ground to question genuineness of objectives and activities; registration for trust cannot be denied on the sole ground of non-commencement of activity and such absence of activity does not empower Commissioner to infer absence of genuineness", the learned Tribunal has quashed and set aside the decision of the Commissioner denying the registration and directed the Commissioner to grant registration to the assessee trust under section 12A of the Act.

4. Now, so far as another ground, on which, the registration was denied by the ld. Commissioner was that the assessee trust made donations to another trust; namely Laxman Ray Kelvani Fund, Mandavi to the tune of Rs. 50,000/- is concerned, it is noted that even the said donation was also given to a charitable trust and the amount was used for charity purpose. In para-7, the learned Tribunal has observed as under:

"7. I have heard both sides and carefully gone through the impugned order of ld. Commissioner of Income-tax, Rajkot-I, the decisions cited and the documents available on records including paper-book filed by the assessee-trust. The main contention of ld. CIT is that the assessee-trust has not engaged in any other activities apart from carrying out activities of distribution of free Page 3 of 5 O/TAXAP/566/2014 ORDER note books and given scholarship to a student. It is observed by the Hon'ble Jurisdictional High Court in the case of Kutchi Dasa Oswal Moto Pariwar Ambama Trust (supra), as relied by the ld. Counsel of the assessee-trust, that "absence of any activity of a trust at the time of registration is not a ground to question genuineness of objectives and activities; registration for trust cannot be denied on the sole ground of non-commencement of activity and such absence of activity does not empower Commissioner to infer absence of genuineness." The other main contention of the ld. CIT for rejecting the application of the assessee-trust for registration u/s 12A is that the assessee-trust has only made donations to some other trust namely Laxman Ray Kelvani Fund, Mandvi to the tune of Rs. 50,000/-. The decision of Karnataka High Court in the case Karunya Rural Health- care Society v. Director of Income-tax (Exemptions), [2012]24 taxmann.com 344, as relied upon by the assessee-trust, is very much relevant in this behalf; wherein, it has been held by the Hon'ble High Court that "once evidence produced disclosed that funds of trust are applied for carrying on charitable activities, purpose of establishing trust is fully satisfied and it does not matter that assessee is carrying on charitable activity through another trust." Therefore, in view of the foregoing, I see aside the impugned order dated 28.9.2012 passed by the ld. Commissioner of Income-tax, Rajkot-1 u/s. 12AA(1)(b)(ii) and direct him to grant registration to the assessee-trust under section 12A of the Act."

O/TAXAP/566/2014 ORDER

5. We are in complete agreement with the view taken by the learned Tribunal. The decision of the Division Bench of this court in the case of Kutchi Dasa Oswal Pariwar Ambama Trust (supra), would be squarely applicable to the facts of the case on hand. Under the circumstances, as such no error has been committed by the learned Tribunal in directing the ld. Commissioner to grant registration to the assessee-trust under section 12A of the Act. Under the circumstances, the proposed question is also held against the appellant-Revenue. Consequently, the present appeal deserves to be dismissed and it is dismissed.

(M.R.SHAH, J.) (K.J.THAKER, J) mandora Page 5 of 5