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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 ..... 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 Income Tax Act, 1961 as the Appellant Trust fulfils all the necessary conditions for approval of exemption as laid down in Section 80G(5)(i), (ii), (iii), (iv) and (v) of Income Tax Act, 1961. The application has been rejected only on surmises and conjectures, on whimsical grounds and irrelevant considerations. 4. That on the facts and in the circumstances of the case Learned Commissioner of Income Tax has erred in law in not affording opportunity in producing Valuation Report dated 18-05-2013 which substantiates the factum of construction of infrastructure of Gaushala and investment made therein stands recorded in books of account." 3. The learned counsel for the assessee submitted that the assessee trust was granted registration under Section 12AA of the Income-tax Act, 1961 by the learned CIT, Hisar vide his order dated 3rd September, 2012. La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 trust and its working except construction of Gaushala, the other objects remained on paper. The learned counsel for the assessee submitted that the main and paramount object of the assessee is to serve cows and to protect them by constructing the Gaushala and providing all facilities. It is not necessary that the assessee should undertake all of its objects simultaneously. Regarding the second reasoning of the CIT that the working of the trust was neither in accordance with the rules enumerated in the trust deed nor record has accordingly been kept, the learned counsel for the assessee submitted that there is no necessity of passing a resolution by all the trustees for every action and the day to day working has to be undertaken by the office bearers of the trust with the help of the employees employed by the assessee trust. 6. Regarding the third objection of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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, order dated 30th April, 2010 in ITA No.890/Bang/2009 in support of the case of the assessee. 7. Regarding the fourth objection of the CIT that the trustees were appointed because they belonged to a particular organization, the learned counsel for the assessee submitted that it is the prerogative of the assessee trust to choose its trustees and the CIT should not interfere with the same. Regarding the fifth 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 been siphoned off, the learned counsel for the assessee submitted that it has no merit as the assessee has given a comparative chart before the CIT to show that M/s Jindal Mectec Private Limited has completed the work of constructing sheds in the Gaushala at a rate, which is l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 has summarized five reasons for rejecting the claim of the assessee under Section 80G of the Act. She submitted that the CIT is well within his powers to make enquiries as he deems fit so as to come to a conclusion that whether the assessee is carrying out its activities in accordance with the objects of the trust or not. The learned CIT-DR submitted that the CIT in this case has passed a detailed and speaking order and has recorded reasons for coming to the conclusion that the trust is not eligible for benefit under Section 80G of the Act. She relied on the order of the CIT. 9. The learned counsel for the assessee, in his rejoinder, submitted that merely because no statement of M/s Bhim Sain Suresh Kumar was recorded by the Revenue authorities, is no ground to say that the assessee should not be given opportunity to cross-examine them. He submitted that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 discrimination on account of religion, caste, language etc. It is not the case of the Department that the objects of the assessee trust were not charitable in nature. We find that with the same objects of the assessee trust as mentioned in clause (5) of the registered trust deed, the CIT, Hisar has granted the assessee registration under Section 12AA of the Act and, therefore, it could be safely inferred that the charitable nature of the objects of the assessee trust were never in doubt by the Department. The other condition for grant of benefit under Section 80G as provided in Rule 11AA of the Income-tax Rules, 1962 is that the Commissioner after causing such enquiry as he may deem necessary should be satisfied about the genuineness of the activities of such institution or fund. We find that in this case, the CIT has decided this issue against the assessee on account of five rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould 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 pertains to Haryana State), it was held that at the time of granting approval for exemption under Section 80G, the object of the trust was required to be examined and application of funds can be examined by the Assessing Officer at the time of framing of the assessment. In Sonepat Hindu Education and Charitable Society (supra), Hon'ble Punjab & Haryana High Court held that while dealing with the application under Section 80G(5)(vi), the CIT should not compute income under the Income-tax Act. In N.N. Desai Charitable Trust (supra), Hon'ble Gujarat High Court held that the enquiry should be confined to the prescribed conditions and the authority examining question under Section 80G should not act as Assessing Officer. IN Gaur Brahmin Vidya Pracharini Sabha (supra), Hon'ble Punjab & Haryana High Court held that where all conditions laid down under Rule 11AA of the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 along with truck numbers which have transported the material to the site of the assessee's Gaushala. These items were meant for use in covering roofs of cowsheds and these were made of a specific material that makes the cowsheds cool in summers and normal in winters. The assessee has filed the copies of invoices of few days before and after the relevant date of 15th March, 2012 when the said material was supplied to the assessee's Gaushala. A perusal of the same shows that M/s Jindal Mectec Private Limited has supplied similar material of sheds to six other parties at different places in Haryana, Himachal Pradesh and Uttar Pradesh, and the rates charged from the assessee trust for the material were even less than the rates charged from the outside other parties. The assessee has filed details of amount of concession received by the assessee trust from M/s Jindal Mectec Private Limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn 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 be summoned and opportunity to crossexamine be provided to the assessee. We find that no opportunity to cross-examine M/s Bhim Sain Suresh Kumar was provided to the assessee. The plea of the learned CIT-DR that no statement of M/s Bhim Sain Suresh Kumar was recorded and therefore there was no occasion to grant the assessee opportunity to cross-examining them, is not sustainable in law. The CIT has tried to use the vouchers pertaining to M/s Bhim Sain Suresh Kumar against the assessee and accordingly, in accordance with the accepted principles of natural justice, the assessee should have been confronted with the same and opportunity to cross-examine M/s Bhim Sain Suresh Kumar should have been provided to the assessee, particularly when a written request to cross-examine the said party was made by the assessee trust. 17. The learned CIT-DR has referred to the order of the learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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