Commissioner Of Income Tax-Exemption, Jaipur v. Shri Narsinghji Ka Mandir, Gandhiyon Ki Gali, City Police,Jodhpur

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR. .. D.B. Income Tax Appeal No. 171/2018. Commissioner of Income Tax-Exemption, Jaipur ----Appellant Versus Shri Narsinghji Ka Mandir, Gandhiyon Ki Gali, City Police,Jodhpur. ----Respondent Connected With D.B. Income Tax Appeal No. 2/2016. Commissioner of Income Tax (Exemptions), Jaipur ----Appellant Versus Shri Agarwal Panchayat, Shree Agresen Bhawan, VenketeshMarg, Pali Marwar, Pali. ----Respondent For Appellant(s) For Respondent(s) : Mr. K.K.Bissa. Mr. G.S.Chouhan. : Mr. Falgun Buch. Mr. Prateek Gattani. HON'BLE THE CHIEF JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE ASHOK KUMAR GAUROrder 05/09/2019 Income Tax Appeal No. 171/2018: The question of law framed in this appeal by the Revenue isas follows:- “Whether the Income Tax Appellate Tribunal under theorder dated 07.09.2015 is justified in accepting theassessee’s claim for registration as per provisions ofSection 12AA of the Income Tax Act, 1961 irrespectiveof the fact that the Constitution/Bye-laws of the Trust is not having any provision in relation to disbursementof balance funds in the eventuality of the dissolution ofTrust ?” Brief facts of the case are that the establishment of theNarsinghji Ka Mandir, Gandhiyon Ki Gali, Jalori Gate, Jodhpurapplied for registration under Section 12-A of the Income Tax Actand sought exemption. The Commissioner of Income Tax soughtfor certain details and information and the applicant produced thecopy of the Trust Deed and other relevant materials. The CIT(Exemption) denied the benefit of registration and consequently,exemption under Section 12-A on the sole ground that in thecontingency of the dissolution (of the Trust), the devolution andthe division of the property have not been provided for. TheCommissioner was of the opinion that use of the property as Trusthad to be protected, and in the event of its dissolution too,without adequate provision for that purpose, assets could bedissipated. The applicant Trust urged that it was an old establishmentand Temple was a historical one. The Trust was duly registeredwith the Devasthan Department in 1975 and had duly compliedwith all other provisions and stipulations spelt out in Section 12-A.It was emphasized that dissolution of the Trust was an uncertainfuture event and absence of any condition to care for it, could notbe a valid ground for rejection of the application. By the impugned order, the ITAT allows the assessee’s appealholding as follows:- “4.We have considered the facts of the case andrival submissions. Section 11 provides exertion to alltrust and other institutions carrying on charitable orreligious activities. The appellant is a trust carrying The applicant Trust urged that it was an old establishmentand Temple was a historical one. The Trust was duly registeredwith the Devasthan Department in 1975 and had duly compliedwith all other provisions and stipulations spelt out in Section 12-A.It was emphasized that dissolution of the Trust was an uncertainfuture event and absence of any condition to care for it, could notbe a valid ground for rejection of the application. By the impugned order, the ITAT allows the assessee’s appealholding as follows:- “4.We have considered the facts of the case andrival submissions. Section 11 provides exertion to alltrust and other institutions carrying on charitable orreligious activities. The appellant is a trust carrying out religious activities. The precondition for grant ofregistration under s.12AA is that objects arecharitable or religious in nature and activities aregenuine. The society is maintaining a temple, which isa genuine activity. The learned CIT has also notreferred to any material to show that the activitiesare not genuine. For a future uncertain even whichmay occur or may not, and for the purposes ofdissolution the benefit of registration cannot bedenied. This is also no clause that in the event ofdissolution the property of the trust would be given toany particular person or interested specified persons.The assessee applied for its registration, to which itwas entitled. We are of the view that under thecircumstances, it has to be registered. The learnedCIT is directed to grant registration to the society.The relevant determinative factor for conferringregistration is the object of the society. In view ofthe above we reverse the order of the CIT and directit to grant registration under s.12A of the Act. Thecertificate of registration is only an enabling provisionto claim exemption. Even if the registration isgranted, the exemptions from the provisions of the ITAct in particular sections 11 and 12 is not automatic.It is only when the assessee satisfies the requirementof s.13, he would be eligible for exemption. In viewof above we direct to grant the registration u/s 12A ofthe Act.” The Revenue reiterates its grounds in support of the appeal.It contends that the Trust Deed does not contained any dissolutionclause. It is highlighted that in the event of a provision fordissolution, the manner in which, the residue of the property andbalance of funds are to be utilized, is a matter of public interest.In the absence of any such clause, there would be no check on thepotential mis-utilization of the funds. This Court is of the opinion that the absence of dissolutionclause or condition – as rightly contended by the assessee, is anuncertain future event. Further-more, given that the property isvested in a public charitable trust, it is always open to theconcerned party – including the Revenue, to approach the Civil Court for a remedy under Section 91-92 of the Code of CivilProcedure. In these circumstances, the question of law, asframed, is answered in favour of the assessee and against theRevenue. The appeal is accordingly dismissed. D.B. Income Tax Appeal No. 2/2016: The question of law in this case is the same as one framed inD.B. Income Tax Appeal No. 171/2018 : CIT (Exemption) Vs.Narsinghji Ka Mandir. In the course of judgment in the saidappeal, the question has been answered in favour of the assesseeand against the Revenue. Further-more, the Court noticed thesituation contemplated by the Commissioner of Income Tax(Exemption), has now taken care of in any way under Section115(TD)(c) brought into force w.e.f. 1[st] June, 2016 and the samereads as follows:- “Section 115(TD)(c): (1)Notwithstanding anything contained in this Act,where in any previous year, a trust or institutionregistered under Section 12AA has- (a)……….………..………….(b)……….……………………. D.B. Income Tax Appeal No. 2/2016: The question of law in this case is the same as one framed inD.B. Income Tax Appeal No. 171/2018 : CIT (Exemption) Vs.Narsinghji Ka Mandir. In the course of judgment in the saidappeal, the question has been answered in favour of the assesseeand against the Revenue. Further-more, the Court noticed thesituation contemplated by the Commissioner of Income Tax(Exemption), has now taken care of in any way under Section115(TD)(c) brought into force w.e.f. 1[st] June, 2016 and the samereads as follows:- “Section 115(TD)(c): (1)Notwithstanding anything contained in this Act,where in any previous year, a trust or institutionregistered under Section 12AA has- (a)……….………..………….(b)……….……………………. (c)failed to transfer upon dissolution all its assets toany other trust or institution registered under section12AA or to any fund or institution or trust or anyuniversity or other educational institution or anyhospital or other medical institution referred to in sub-clause(iv) or sub-clause(v) or sub-clause(vi) or sub-clause (via) of clause (23C) of section 10, within aperiod of twelve months from the end of the month inwhich the dissolution takes place,” For the reasons spelt out in the judgment in Narsinghji KaMandir(supra) and having regard to Section 115 (TD)(c), thisappeal too has no force. The question of law, as framed, isanswered in favour of the assessee and against the Revenue . The appeal is dismissed. (ASHOK KUMAR GAUR),J 23-24-Mohan/- (S. RAVINDRA BHAT),CJ