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TMI Blog2015 (6) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... the office bearers of the trust. We are of the view that so far as the activities of the trust were in accordance with the objects of the trust and were genuinely charitable in nature, the assessee is entitled to the benefit of Section 80G of the Act. Books of account and vouchers maintained and produced were not reliable and did not disclose correct state of affairs - Held that:- The assessee claim that it is factually incorrect that the final account submitted to the Department for the past many years did not disclose the correct state of affairs of the assessee is acceptable as the CIT could not point out a single entry or asset found outside the books of account of the assessee trust. We find that the CIT has pointed out some discrepancies in the accounts and the vouchers maintained and produced by the assessee. It is settled law that any discrepancy in the accounts or in the vouchers maintained by the assessee or in the application of funds of the trust could be examined by the Assessing Officer at the time of framing of the assessment. Trustees appointed because they belonged to a particular organization - Held that:- We are of the view that it is the prerogative of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent: Ms. Sulekha Verma, CIT-DR. ORDER PER G.C. GUPTA, VP : This appeal by the assessee is directed against the order of learned Commissioner of Income Tax, Hisar rejecting the application of the assessee for grant of benefit of Section 80G of the Income-tax Act, 1961 to the assessee. 2. The grounds of appeal of the assessee are as under:- 1. That on the facts and in the circumstances of the case and in law the action of Learned Commissioner of Income Tax in refusing approval of exemption under S. 80G(5)(vi) of Income Tax Act, 1961 is arbitrary, erroneous, unwarranted and illegal and must be quashed with directions for relief. 2. That on the facts and in the circumstances of the case and under law Learned Commissioner of Income Tax fell in error in rejecting claim of approval under S. 80G(5)(vi) of the Income Tax Act, 1961 on invalid footings and erroneous considerations as reasons pointed out for rejection are not valid and as such legally the impugned order deserves to be set aside. 3. That Learned Commissioner of Income Tax is not justified in rejecting the application of Appellant for granting approval of exemption under S. 80G(5)(vi) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no intention of earning profit whatsoever. Clause (7) (8) of the trust deed provide that all income, savings of the trust could be spent only for the objects of the trust and the profit or part thereof could not be distributed between the trustees or any other person directly or indirectly and that all trustees shall be honorary only. It further provides that in some exceptional circumstances, if it becomes necessary to dissolve the trust, then, with the 2/3rd majority of the trustees present in the meeting, it would be handed over to Rashtriya Swayam Sewak Sangh Haryana State and shall under no circumstances would be distributed amongst the trustees of the trust. He referred to the relevant portion of the order passed by the CIT, Hisar rejecting the claim of the assessee under Section 80G of the Act. He submitted that in paragraph 4 of his order rejecting the claim of the assessee under Section 80G of the Act, the CIT has concluded five reasons for rejecting the claim of the assessee and none of them is sustainable as per law. 5. The first reason given by the learned CIT for rejecting the claim was that there is no correlation between the objects of the assessee tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under Section 80G(5)(vi), the CIT should not compute income under the Income-tax Act. He submitted that in N.N. Desai Charitable Trust Vs. CIT [2000] 246 ITR 452 (Guj), Hon ble Gujarat High Court held that the enquiry should be confined to the prescribed conditions and authority examining question under Section 80G should not act as Assessing Officer. In CIT, Rohtak Vs. Gaur Brahmin Vidya Pracharini Sabha [2011] 203 Taxman 226 (P H), Hon ble Punjab Haryana High Court held where all conditions laid down under Rule 11AA of the Income-tax Rules have been complied with, the trust is eligible for exemption under Section 80G(5)(vi) of the Act. He relied on the decision of Delhi Tribunal in the case of Mayo College Old Boys Association Vs. DIT(E), order dated 19th November, 2010 in ITA No.2010/Del/2010, wherein it is held that during the subsistence of registration under Section 12AA, recognition under Section 80G(5) could not be denied. He relied on the decision of Hon ble High Court of Karnataka in the case of Karunya Rural Health Care Society Vs. DIT(E), Trust Circle [2012] 209 Taxman 230 and of ITAT, Bangalore Bench in the case of M.J. Education Trust Vs. DIT(E), Bangalore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. She referred to Rule 11AA of the Income-tax Rules, 1962 wherein various conditions for grant of benefit under Section 80G have been detailed and which, as per learned CIT, the assessee could not fulfill. The CIT-DR submitted that clause (8) of the trust deed says that in case of dissolution, the trust should be handed over to Rashtriya Swayam Sewak Sangh Haryana State, which is not in accordance with law. She referred to the order of the CIT wherein it is mentioned that one Shri Ram Niwas Jain has signed the vouchers, who is an unauthorized person and therefore, could not have signed the various vouchers of the assessee trust. She referred to the various cash vouchers made by the assessee as detailed in the impugned order of the CIT. She referred to the cash voucher of `28,000/- for which there was no supporting bill. She referred to the order of the CIT wherein it is recorded that the proceedings register was not kept by the assessee since its inception. She referred to the order of the CIT wherein he has given a finding that such persons were inducted as trustees who have no time for the activities of the trust. She referred to paragraph 4 of the order of the CIT wherein he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the CIT, Hisar. It is undisputed that the registration granted under Section 12AA of the Act subsists till date and that the registration granted under Section 12AA has not been cancelled by the Department so far. We find that after the detailed reply dated 26th August, 2013 filed by the assessee in response to notice issued by the CIT regarding registration under Section 12AA, considerable time has passed with no adverse action taken by the Department and, therefore, the fate of the application of the assessee for grant of benefit under Section 80G could not be withheld for this reason. We find that a reading of the provision of Section 80G(5) of the Act read with Rule 11AA of the Income-tax Rules, 1962 makes it clear that the benefit of Section 80G has to be allowed to the assessee provided all the conditions mentioned therein were fulfilled by the assessee. We have perused the various objects of the assessee trust as mentioned in clause (5) of the registered trust deed of the assessee, a copy thereof filed in the compilation before the Tribunal and we find that they were clearly charitable in nature and it has been specifically provided therein that there would be no discrimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The third objection of the CIT for rejecting the claim of the assessee under Section 80G was that the books of account and vouchers maintained and produced were not reliable and did not disclose correct state of affairs. The assessee has claimed before us that it is factually incorrect that the final account submitted to the Department for the past many years did not disclose the correct state of affairs of the assessee. We find force in the submission of the learned counsel for the assessee that the CIT could not point out a single entry or asset found outside the books of account of the assessee trust. We find that the CIT has pointed out some discrepancies in the accounts and the vouchers maintained and produced by the assessee. It is settled law that any discrepancy in the accounts or in the vouchers maintained by the assessee or in the application of funds of the trust could be examined by the Assessing Officer at the time of framing of the assessment. The decisions of various Hon ble Courts cited by the learned counsel for the assessee clinch the issue in favour of the assessee. In O.P. Jindal Global University (supra), the Jurisdictional Punjab Haryana High Court (case pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise in the appointment of the trustees. 15. Regarding the fifth and the last objection of the CIT that the funds were not properly utilized and all recorded purchases and expenses in the absence of vouchers seem to be incorrect and, therefore, money seems to have siphoned off, we find that there is no merit in this observation of the CIT and merely because some of the vouchers were not found complete, it could not be said that the activities of the assessee were not genuine or were not carried out in accordance with the objects of the assessee trust. It is not the case of the CIT that the assessee has undertaken some activity, which could be called not charitable in nature. Regarding the siphoning off the money, the same is a mere imagination on the part of the officer. We find that the assessee has filed a comparative chart of rates charged by M/s Jindal Mectec Private Limited for the work of constructing sheds in the assessee s Gaushala, comparing the same with the rates charged by them from others. We find that M/s Jindal Mectec Private Limited is a concern of Shri Pawan Kumar Jindal, a trustee of the assessee trust and the assessee has been able to provide the G.R. numbers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the trust deed along with various documents, it clearly showed that the activities of the trust were genuine and that being so, the assessee trust was entitled to the grant of registration under Section 12AA of the Act. In the case before us, the Department could not show that any one of the conditions for grant of benefit under Section 80G of the Act as detailed in the provision of Section 80G(5) read with Rule 11AA of the Income-tax Rules was not complied with or that the activities of the assessee were not genuinely charitable in nature. Regarding the vouchers pertaining to M/s Bhim Sain Suresh Kumar totaling to ` 1,35,000/- on different dates, we find that the assessee has claimed that the goods were purchased from M/s Bhim Sain Suresh Kumar, Old Anaj Mandi, Hisar for use in the construction of Gaushala and that all the estimates were on their letter head pads and in their own handwriting and the payment of ` 1,35,000/- was made on 23rd April, 2012, 24th April, 2012 and 25th April, 2012. The assessee has further filed a written request that in case it is considered that the assessee trust has not made payment to the aforesaid concern, then M/s Bhim Sain Suresh Kumar should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 80G, has any merit and were clearly unsustainable in law. We find that the assessee trust has complied with all the conditions for grant of benefit under Section 80G as detailed in the provision of Section 80G(5) of the Act read with Rule 11AA of the Income-tax Rules, 1962. In this view of the matter, we are of the view that the assessee trust is entitled to the benefit of grant of exemption under Section 80G of the Act. However, we make it clear that in case there is any discrepancy in the maintenance of supporting documentary evidence for expenses in the form of vouchers etc. to prove the genuineness of the expenses claimed by the assessee, the Assessing Officer shall be at liberty to make suitable disallowance, wherever so required as per law, while framing the assessment in the case of the assessee trust. The CIT(Exemptions), Chandigarh (with whom jurisdiction is stated to lie) is directed to grant the benefit of Section 80G to the assessee trust and pass necessary order within fifteen days of receipt of the order of the Tribunal. We direct accordingly. 19. In the result, the appeal of the assessee is allowed. Decision pronounced in the open Court on 2nd June, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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