Income Tax Appellate Tribunal - Delhi
Ram Swarup Goela Memorial Charitable ... vs Assessee on 29 August, 2008
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'F' : NEW DELHI
BEFORE SHRI A.D.JAIN, JM AND SHRI R.C.SHARMA, AM
ITA No.3056/Del/2008
Assessment Year : Not Applicable
Ram Sarup Goela Memorial Vs. Director of Income Tax (Exemption),
Charitable Trust, Delhi.
R.Kumar Singal & Co.,
602, Nilgiri Apartments,
9, Barakhamba Road,
New Delhi.
(Appellant) (Respondent)
Appellant by : Shri C.S.Aggarwal, Sr.Advocate with
Shri Ravi Pratap Mall, Advocate.
Respondent by : Smt.Renu Amitab, Sr.DR.
ORDER
PER R.C.SHARMA, AM :
This is an appeal filed by the assessee directed against the order of the Director of Income-tax (Exemption), Delhi dated 29.8.2008, in the matter of order passed u/s 12AA(1)(b) read with Section 12A of the IT Act, 1961.
2. Rival contentions have been heard and record perused. From the record, we found that the assessee is a charitable institution. It filed application alongwith necessary annexures before the Director of Income-tax (Exemption) seeking registration u/s 12A of the Act and asking for grant of certificate u/s 80-G of the IT Act. The DIT(E) issued notice to the assessee trust to furnish certain details. The assessee filed the details in response to the notice vide its letter dated 22.5.2008. Further detail was filed by the assessee on 13.8.2008, as desired by the Director of Income-tax wherein it was submitted that the assessee is a trust which has commenced charitable activity by donating medicines to the needy, as one of the objects of the trust was to render medical aid/relief and, for this purpose, to open, establish, maintain, manage, control hospitals, nursing home, etc. The DIT 2 passed order u/s 12AA(1)(b) of the Act on 29.8.2008, declining grant of registration by observing that the assessee did not file a copy of approval to set up a charitable hospital and contract given to build a hospital and thus held that no charitable activity had been commenced by the assessee. Thereafter, the assessee filed another application dated 25.9.2008 and vide order dated 31.3.2009 the DIT(E) granted exemption u/s 12A read with Rule 12AA for the AY 2009-10 onwards. The assessee trust was also granted certificate of exemption u/s 80G(5)(vi) of the Act for the AY 2009-10 and 2010-11.
3. Now the assessee is in appeal against the order of DIT(E) dated 29.8.2008 for denial of exemption u/s 12A, wherein following two grounds have been taken by the assessee :-
"1. That on the facts and in the circumstance of the case, the learned Director of Income Tax (Exemption) has erred in matter of fact and law holding that the appellant trust has not commenced any charitable activity.
2. That on facts and in the circumstance of the case, the learned Director of Income Tax (Exemption) has erred in matter of fact by stating that the appellant has not furnished sufficient evidence on record to prove that it has commenced charitable activities as per section 2(15) of the Income Tax Act, 1961."
4. We have considered the rival contentions, carefully gone through the orders of the authorities below and found from the record that the assessee trust has come into existence by trust deed executed on 23.1.2008. It filed application for registration u/s 12A(a) on 19.3.2008. Certain details were required by the DIT vide its letter dated 5.5.2008 and the same were filed by the assessee vide letter dated 22.5.2008. All these documents are placed on record. The main reason for denying registration u/s 12A was that assessee did not file copy of approval to set up a charitable hospital and the contract given to build a hospital. From the record, we found that assessee trust has already commenced charitable activities 3 by giving donations to the needy. The main object of the trust was to render medical relief and for this purpose to establish and maintain dispensaries, hospitals, nursing homes, first aid centers etc. At the time of grant of registration u/s 12AA, the jurisdiction of DIT(E) is confined to examination of the objects of the assessee trust and the genuineness of its activities. Registration cannot be denied merely on the ground that no activity was carried out. In case of a new trust, if the activities of the trust are found to be charitable, merely because it has not yet started its activities, the exemption cannot be declined. We found that on 25.9.2008, the assessee trust has filed another application for registration u/s 12A and also application u/s 80G(5)(vi) and the DIT(E) has granted registration u/s 12A read with Section 12AA on 29.8.2008 for the AY 2009-10 onwards. We also found that assessee trust was also granted certificate for exemption u/s 80G(5)(vi) for the AY 2009-10 and 2010-11. From the order of DIT(E) dated 31.3.2009, it is clear that assessee trust was carrying on charitable activities and therefore, registration was granted alongwith exemption u/s 80G(5) from AY 2009-10 onwards. From the record, we also found that even the construction of hospital for carrying on charitable activities had also commenced in the immediately succeeding year, there was no justification for decline of registration in pursuance to application filed on 19.3.2008.
5. In the case of Sardari Lal Oberoi Memorial Charitable Trust 108 TTJ 761, it was observed by ITAT, Delhi Bench that provision with regard to grant of registration takes care of situation where activities have been carried out by the trust, whereas it does not lay down anything negative in case where no activities have been carried out. Under such circumstances, the sole criterion for grant/non- grant of registration would be for the Commissioner to see the objects of the trust. If the objects of the trust are charitable, which is because no activities have been carried out by the trust, this does not entitle the Commissioner to hold that the trust was not entitled to registration, even though its objects were charitable. In the instant case before us, in terms of material placed on record, there is no dispute either about the existence of trust or objects for which the assessee trust has been 4 set up. It is a matter of record that the assessee trust had been established for setting up of charitable hospital and as such when genuineness of activities of trust are to be examined, the Director of Income Tax (Exemption) could not have assumed that, such of those activities since were absent in the sense, no actual and, physical activities were carried, the activities of the trust were not genuine. The activities undertaken by the assessee trust in the process of setting up the hospital were to entrust the job to the consultant, which has already been under taken during the year. Thus, the mere fact that, there existed no physical activity, cannot be made basis to hold that, activities of trust, were non-genuine activities.
6. In view of the above, we do not find any merit in the order of the D.I.T.(Exemption). He is directed to grant registration to the assessee trust as applied vide its application dated 29.8.2008. We direct accordingly.
7. In the result, appeal by the assessee is allowed in terms indicated hereinabove.
Decision pronounced in the open Court on 13th April, 2010.
Sd/- Sd/-
(A.D.JAIN) (R.C.SHARMA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 26.05.2010.
VK.
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
Asstt./Deputy Registrar, ITAT, Delhi