Commissioner Of Income Tax-I, Ludhiana v. Ved Niketan Dham, Public Charitable Trust, Ludhiana

Income Tax Appeal No.70 of 2013 1 IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. Income Tax Appeal No.70 of 2013Date of Decision: 21.08.2013 Commissioner of Income Tax-I, Ludhianaversus ..Appellant Ved Niketan Dham, Public Charitable Trust, Ludhiana ..Respondent CORAM:HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present:Mr. Rajesh Katoch, Advocate, for the appellant. RAJIVE BHALLA, J. -CM No. 9341CII of 2013Allowed as prayed.Income Tax Appeal No.70 of 2013 The revenue challenges order dated 22.6.2012 passed bythe Income Tax Appellate Tribunal, Chandigarh Bench `B' Chandigarhon the following substantial questions of law:- “ i)Whether on the facts and law, the Hon'ble IncomeTax Appellate Tribunal was justified in holding that thesatisfaction of condition of section 11 to 13 of the Act isnot to be gone into by the Commissioner of Income-taxwhile granting registration u/s 12AA of the Act, whereassuch examination would allow Commissioner of IncomeTax to satisfy himself about the genuineness of the aimsand objects of the Trust/Society and genuineness of its Income Tax Appeal No.70 of 2013 2 activities as enumerated in Sub-clause (b) of clause (1) ofSection 12AA?Section 12AA? (ii)Whether on the facts and in law, the Hon'ble IncomeTax Appellate Tribunal was justified in directing theCommissioner of Income Tax to grant Registration to theTrust u/s 12AA of the Act, where the funds of the trust areutilized for the benefit of the trustee while the funds wassupposed to be invested in the modes specified in Section 11(5)?” (iii)Whether on the facts and in law, the Hon'ble IncomeTax Appellate Tribunal was justified in holding that theactivities of the Trust are genuine even the trustee andtheir successor were long life members while being apublic Trust, it can not opt for life long status for onesingle trustee or his heir?”Tax Appellate Tribunal was justified in holding that theactivities of the Trust are genuine even the trustee andtheir successor were long life members while being apublic Trust, it can not opt for life long status for onesingle trustee or his heir?” (iv)Whether on the facts and in law, the Hon'ble IncomeTax Appellate Tribunal was justified in accepting that theassessee is a Trust and also a Society and is governed bydifferent laws whereas the Commissioner of Income-taxhas concluded that the status of the assessee is veryambiguous as it is a Trust and it is also a society.” The facts that have given rise to this appeal are thatthe assessee-trust was granted registration under Section 12AA ofthe Income Tax Act, 1961 (hereinafter referred to as the “Act”) on17.10.2003. The assessee, thereafter, filed an application in Form Income Tax Appeal No.70 of 2013 3 19.02.2009. The Commissioner of Income Tax, Ludhiana, directed theAssessing Officer to submit a report with respect to the activities ofthe trust. The Assessing Officer submitted a report that expensesincurred by the assessee are primarily religious in nature. TheCommissioner of Income Tax issued a show cause notice to theassessee for cancellation of registration. After considering the reply,the Commissioner cancelled the registration by holding that as theassessee publishes a monthly magazines to propagate the ideologyof Vedas etc. for advancement of Hindu religion, it does not fall withinthe expression “general public utility”. Aggrieved by this order, theassessee filed an appeal. The Income Tax Appellate Tribunal allowedthe appeal, set aside order passed by the Commissioner by holdingthat as no finding has been recorded that activities of the trust are notgenuine, the Commissioner was not empowered to cancelregistration. We have heard counsel for the appellant and are of thefirm opinion that questions of law framed by the revenue do not arisefor adjudication. We have heard counsel for the appellant and are of thefirm opinion that questions of law framed by the revenue do not arisefor adjudication. A trust is registered under Section 12AA of the Act afterdue consideration of its activities. Section 12AA(3) of the Actempowers the Commissioner to cancel registration if the activities ofthe trust or institution are not genuine or are not being carried out, inaccordance with the objects of the trust or the institution. Section12AA(3) of the Act reads as follows:- “ Procedure for registration. Income Tax Appeal No.70 of 2013 4 (3)Where a trust or an institution has been grantedregistration under clause (b) of sub-section (1) [or hasobtained registration at any time under section 12A [as itstood before its amendment by the Finance (No.2) Act,1996 (33 of 1996)] and subsequently the Commissioner issatisfied that the activities of such trust or institution arenot genuine or are not being carried out in accordancewith the objects of the trust or institution, as the case maybe, he shall pass an order in writing cancelling theregistration of such trust or institution: Provided that no order under this sub-section shall bepassed unless such trust or institution has been given areasonable opportunity of being heard.” A perusal of Section 12AA(3) of the Act, reveals that a precondition to cancellation of registration are findings thatactivities of the trust are not genuine or are not being carried out, inaccordance with objects of the trust. Thus, before cancellingregistration, a Commissioner is required to record a finding thatactivities of the trust are not genuine or are not being carried out, inaccordance with objects of the trust. A perusal of the order passed by the Commissioner reveals that he did not record any finding asrequired by Section 12AA(3) of the Act. The Income Tax Appellate Income Tax Appeal No.70 of 2013 5 Commissioner. We find no reason arising whether from argumentsadvanced or from the order passed by the Commissioner to take adifferent view. In view of what has been stated hereinabove, we find nomerit in the appeal and dismiss the same. ( RAJIVE BHALLA ) JUDGE 21.08.2013VK ( DR. BHARAT BHUSHAN PARSOON ) JUDGE