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TMI Blog2015 (2) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee in the present facts and circumstances of the case, had in its objects recognized the field of education as the activity to be carried on. Merely because that the said activity has not started, does not dis-entitle the assessee from the claim of registration under section 12A of the Act. No merit in the order of CIT in refusing to grant registration under section 12A of the Act, as the assessee had not started its activities. Following the above said ratio laid down by Hon'ble High Court of Gujarat in Director of Income Tax (Exemption) v. Panna Lalbhai Foundation [2013 (8) TMI 110 - GUJARAT HIGH COURT] , we direct the CIT to grant registration under section 12A of the Act and issue the necessary Certificate under section 12AA of the Act. - Decided in favour of assessee. - IT APPEAL NO. 1692 (PUNE) OF 2013 - - - Dated:- 30-1-2015 - G.S. PANNU AND MS. SUSHMA CHOWLA, JJ. For The Appellant : V.L. Jain For the Respondent : Smt. M.S. Verma, CIT ORDER Ms. Sushma Chowla, Judicial Member - This appeal filed by the assessee is against the order of CIT-I, Pune dated 29.07.2013 passed under section 12AA(1)(b)(ii) of the Income-tax Act, 1961 read wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. In respect of the second object clause i.e. serial No.23, the assessee explained that the object was not for the promotion of any one religion, but was for the promotion of educational and social standards of the Jain community. Reliance was placed on the ratio laid down by Hon'ble Madras High Court in CIT v. Shri Gujrathi Mandal (1999) 240 ITR 293 (Mad) and the Hon'ble Supreme Court in State of Kerala v. M.P. Shanti Verma Jain (1981) 231 ITR 787 (SC) wherein, it was laid down that section 13(1)(b) of the Act is applicable only when the dominant object of the Trust was propagation of a particular religion and serving its followers. The assessee, without prejudice to the above contention, submitted that if it was desirable, the clauses could be modified subject to the powers conferred in the Trust Deed. With regard to the activities not having been commenced, the contention of the assessee was that an application for registration under section 12A of the Act could not be rejected merely on this ground. Reliance was placed on the ratio laid down by the Hon'ble Gujarat High Court in CIT v. Kutchi Dasa Oswal Moto Parivar Ambama Trust (2013) 29 taxmann.com (Guj.). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance in this regard, was placed upon the ratio laid down by the Hon'ble Supreme Court in CIT v. Dawoodi Bohara Jamat 222 taxman 228 (SC). It was further pointed out by the learned Authorized Representative for the assessee that at the time of grant of registration under section 12A of the Act, the applicability of the provisions of section 13(1)(b) of the Act is not to be looked into. In this regard, the assessee placed reliance on the ratio laid down by Pune Bench of the Tribunal in Sadguru Narendra Maharaj Sansthan v. CIT-II, in ITA No.994/PN/2012, vide order dated 16.09.2014. Further, reliance was placed on the ratios laid down by the Hon'ble High Court of Allahabad in Hardayal Charitable Educational Trust v. CIT-II, (2013) 355 ITR 534 (All) and Hon'ble High Court of Gujarat in Director of Income Tax (Exemption) v. Panna Lalbhai Foundation, (2013) 216 Taxman 148 (Guj.). 10. The learned Departmental Representative for the Revenue placing reliance on the order of CIT, pointed out that the provisions of section 13(1)(b) of the Act could be considered while allowing registration under section 12A of the Act. Reliance in this regard, was placed on the ratios laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of passing the order denying registration under section 12AA of the Act, the assessee had not carried out any activities in any of the fields. The first objection raised by the CIT was that since the assessee was not carrying on any activity, it was not entitled to the claim of registration under section 12A of the Act. Another objection raised by the CIT was that as the object clauses vide serial Nos.22 and 23 were for the benefit of Jain community and hence why the registration under section 12A of the Act should not be refused to the assessee Trust as the said clauses were in violation of section 13(1)(b) of the Act. The plea of the assessee in reply was that, the objects were not for the promotion of any religion but were for the promotion of educational and social standards of Jain community and on the basis of same, the registration under section 12A of the Act could not be denied to the assessee. The assessee also raised a plea before the CIT that the said clauses could be modified in case it was so desired by the CIT. The CIT however, was of the view that, though other objects in the Trust Deed were general in nature, but the objects vide serial Nos.22 and 23 were for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by a Trust or Institution is empowered to call for documents in order to satisfy himself about the objects of the Trust and also the genuineness of its activities. Under section 2(15) of the Act, charitable purpose includes relief of the poor, education, medical relief, preservation of environment, preservation of monuments or places of artistic or historic interest and the advancement of any other object of general public utility. The provision of education is one of the objects recognized by the Act to be charitable object. 15. The assessee before us, as per the objects of the Trust Deed, had been created in order to establish and start educational institutions and also to provide incidental activities relating to education. Where the principal object of any Trust or Institution is in the field of education, the said Trust or Institution can be said to have been engaged in carrying out charitable activities. However, in the case of the assessee as per object vide serial Nos. 22 and 23 of the Trust Deed, the assessee enlisted certain objects for the promotion of educational and social standards of Jain community. The CIT in view of the serial Nos. 22 and 23 of the object cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of registration, the CIT was only empowered to look into the nature of activities carried on by the assessee and whether the same were charitable in nature and not to look into the applicability of the provisions of section 13(1) of the Act. The Assessing Officer while granting the deduction under section 11 and 12 of the Act is to look into the violation of the provisions of section 13(1) of the Act, if any. The Commissioner at the time of grant of registration under section 12A of the Act was not empowered in considering the violation, if any, under section 13(1) of the Act. Further, in the paras hereinabove, we have already given a finding that the agreement entered into by the assessee with M/s. ABL was for the benefit of the society and the same cannot be the ground for denial of registration to the assessee trust under section 12A of the Act. The CIT is thus, directed to allow the registration under section 12AA of the Act. 18. Further, in Sadguru Narendra Maharaj Sansthan v. CIT-II (supra), the Tribunal had considered the aspect of Trust being established for the benefit of people belonging to a particular community and had referred to the ratio laid down by the Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at trust created for giving medical aid, social welfare and upliftment of poor members of Vaish community is, therefore, for religious and charitable purposes. To the similar effect is another decision of Hon'ble Allahabad High Court in the case of CIT v. Pt. Ram Shanker Misra Trust (1996) 222 ITR 252 (All) wherein it was held that expenditure incurred by a trust for the benefit of one community is an expenditure incurred on a public charitable object. The proposition propounded by Hon'ble Supreme Court as well as by Hon'ble Allahabad High Court in the aforesaid judgments clearly shows that the objects of the assessee trust as indicated in object cls. 3(1) and 3(2) of its trust deed were of charitable nature and since the powers of the CIT/Director of IT (Exemption) conferred under s. 12AA were confined to satisfy himself about the genuineness of the activities of the trust as well as nature of its object being charitable, we are of the view that he was not justified in refusing to grant registration to the assessee trust under s. 12A merely on the ground that the said objects were violative of the provisions of s. 13(1)(b). As held by Lucknow Bench of Tribunal in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s can be applied or invoked only at the time of computation of total income of the previous year of the person who is claiming exemption under s. 11 or s. 12. Both these situations contemplated in s. 13 can arise only and only if registration under s. 12A is granted to the said person. If the same is not granted and the person is refused the registration under s. 12A, he would not be entitled to claim any benefit available under s. 11 or 12 and there will be no occasion to the AO to invoke or apply s. 13 in his case. This position would not only be contrary to the scheme of the Act as laid down in ss. 11, 12, 12A, 12AA and 13 but the same may also cause prejudice/hardship to the persons in certain cases. For instance, the objects, for which the assessee trust in the present case is established, as indicated in object cls. 3(1) and 3(2), no doubt are for the benefits of a particular community, viz., Vaish. Nevertheless, as per object cl. 3(4), it was also established to run schools, colleges, hospitals, etc. for the benefit of public at large. In this situation, if the registration applied for under s. 12A is not granted to it for violation of provisions of s. 13(1)(b) and it is ult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra), wherein it was held as under:- Under section 260A(1), the appeal lies to the High Court on a substantial question of law. The scope of appeal under section 260A is same as that of a second appeal under section 100 of the Code of Civil Procedure. The Supreme Court in a catena of decisions has ruled that finding of fact recorded by the final fact finding Tribunal/Court is binding on the High Court exercising second appellate jurisdiction and unless such finding is perverse in nature, it is binding on the second appellate Court. [Para 11] A finding recorded by the Tribunal on the nature of activities and objects of the trust was essentially a finding of fact. [Para 12] In the instant case, the Tribunal, on the basis of the evidence led by both the parties, had recorded a finding that the assessee was a public religious trust. The revenue had neither assailed the aforesaid finding recorded by the Tribunal as perverse nor it had been able to point out any perversity in the said finding. Therefore, said finding was binding on the Court. Therefore, there was no good reason to interfere in such finding of fact. [Para 13] A perusal of the order of the Tribunal also indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court in CIT v. Dawoodi Bohara Jamat (supra) had also laid down similar proposition. Accordingly, the view favourable to the assessee is adopted for deciding the issue. In the totality of the above said facts and circumstances and the legal propositions, we find no merit in the order of CIT in this regard and accordingly, we direct the CIT to grant registration to the assessee Trust under section 12A of the Act and pass the order under section 12AA of the Act registering the said Trust. 22. The second aspect of the issue raised by the CIT was that where the assessee had not started its activities, then it was not entitled to the claim of registration under section 12A of the Act. The assessee in the present facts and circumstances of the case, had in its objects recognized the field of education as the activity to be carried on. Merely because that the said activity has not started, does not dis-entitle the assessee from the claim of registration under section 12A of the Act. We find that similar issue arose before the Hon'ble High Court of Gujarat in Director of Income Tax (Exemption) v. Panna Lalbhai Foundation (supra) and it was held as under:- 5. It can t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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