In Support Of His Case He Relies On Thejudgment Of This Court In The Case Of Director Of.income-Tax v. D.r. Ranka Charitable Trust

IN THE HIGH COURT OF KARNATAKA AT BENGALURUON THE 20 DAY OF NOVEMBER, 201383 BEFORE. THE HON'BLE MR. JUSTICE RAVI MALIMATH AND THE HON'BLE MR.JUSTICE K.NATARAJAN | INCOME TAX APPEAL NO.44 OF 2014 BETWEEN: DIRECTOR OF INCOME TAX.(EXEMPTION), 3 FLOOR, |C.R.BUILDINGS, BENGALURU. ... APPELLANT| (BY SRI E.I.SANMATHI, ADVOCATE) AND= D.R.RANKA CHARITABLE TRUST.NO.532, 2 FLOOR,BRINDAVAN BUILDING,DUDI MARKET, AVENUE ROAD,BENGALURU. ... RESPONDENT| (BY SRI K.K.CHAYTHANYA,ADVOCATE) | THIS|INCOMETAXAPPEAL|[S|FILEDUNDER|SECTION 260-A OF THE INCOME-TAX ACT 1961, ARISING|OUT OF ORDER DATED 11.10.7013 PASSED IN ITA.NO.6/78/BANG/2012 PRAYING TO DECIDE THE FOREGOINGQUESTION OF LAW AND OR SUCH OTHER QUESTIONS OF| LAW AS MAY BE FORMULATED BY THE COURT AS DEEMED|FIT:SETASIDE|THE|APPELLATEORDER.DATED11.10.2013 PASSED IN ITA NO.678/BANG/2012 BY THE.INCOME|TAXAPPELLAIETRIBUNAL,‘CcBENCH,BENGALURU AS SOUGHT FOR, IN THE ABOVE CASE. AK AK THIS INCOME JAK APPEAL COMING ON FOR|ADMISSION THIS DAY, RAVI MALIMATH J., DELIVERED|THE FOLLOWING: JUDGMENT Tne assessee is a charitable Trust. It was grantedregistration under Section 12-A of tne Income Tax)Act,1961 on 21-7-1986. It was also granted registration|under Section 80-G of tne Act up-to 31-3-2008. On ansapplication for renewal, the Director of Income Tax foundthat tne Trust nad not carried out charitable activities.during the financial years 2005-2006, 2006-2007, 200/72008 except for a negligible amount of donations made toother persons. Therefore, the application for renewal of)recognition under Section 80-G was rejected. Tne same.was challenged before the Tribunal by the assessee. The)Tribunal by its order dated 18-2-2010 expressed a doubt) as to whether the assessee is entitled even for the benefit|under Section 11. Therefore, the matter was remanded.Consequently, the Commissioner having re-considered the|matter cancelled the registration under section 12-A of the)Act. Aggrieved by the same, the assessee approached the.Tribunal with effect from assessment year 2009-10. The.Tribunal by the impugned order, set aside the order of DIT.(Exemption) nolding that the DIT (Exemption) was not)right in withdrawing the registration granted under Section 17-A of the Act. It also came to the conclusion that§whetner the assessee is involved in a charitable activity or)not can be considered in an assessment proceeding.Aggrieved by tne said order, the present appeal is filed. 2.By the order dated 22-9-2014 the appeal wasadmitted to consider the following 4 substantial questionsof law':- 1)Whether on the facts and in the.circumstances of the case, the Honourable|Tribunal was right in law in nolding that the| Appellate Trust is not eligible for renewal ofapproval under Section 80G? il)Whether on the facts and in thecircumstances of the case, the Tribunal was|right in law failing to hold that the Appellant|Trust is eligidle for automatic renewal of|approval under section 80G? ih)Whnetner on tne facts and in thecircumstances of the case, the Tribunal was)right.inperverselyholdingthattheAppellant.TrustWaSnotengaged.In.charitable activity? iv)Whether on the facts and in the.circumstances of the case, the Tribunal was|right in law in directing the lower authority|to relook at the registration granted under|section 12A and thereby exceeding the)jurisdiction of section 254(1)?2” Learned counsels submitted that tne questions of lawrequire to be reframed. Hence, they have addressedarguments on the same. ‘3.On hearing learned counsels, we are of theview the following substantial question of law arise for)consideration in this appeal:- dD)Whnetner on tne facts and itn tncircumstances of the case, the Tribunal was)right in holding that the withdrawal of)registration granted under Section 12-A of|the Act is not correct? iv)Whether on the facts and in the.circumstances of the case, the Tribunal was|right in law in directing the lower authority|to relook at the registration granted under|section 12A and thereby exceeding the)jurisdiction of section 254(1)?2” Learned counsels submitted that tne questions of lawrequire to be reframed. Hence, they have addressedarguments on the same. ‘3.On hearing learned counsels, we are of theview the following substantial question of law arise for)consideration in this appeal:- dD)Whnetner on tne facts and itn tncircumstances of the case, the Tribunal was)right in holding that the withdrawal of)registration granted under Section 12-A of|the Act is not correct? The learned counsel for the revenue contends that the|Tribunal committed an error in firstly coming to theconclusionthatwhethertheaSSeSSECCindulgedincharitable activity and whether the income therefrom is)eligible for exemption can be considered only during theassessment proceedings is incorrect. The finding of the)Tribunal that the Director of Income-Tax (Exemption) was.not right in withdrawing the registration granted under|Section 12-A of the Income Tax Act, is also erroneous. He)submitted that the substantial question of law be answered in his favour. The same is disputed by the counsel for theassessee. He pleads that all the questions with regard to. the activity of the assessee could only be gone into duringthe assessment proceedings. Tnat this is not the stage to.consider whether the application is to De renewed or not. 4In support of his case he relies on theJudgment of this Court in the case of DIRECTOR OF.INCOME-TAX vs. GARDEN CITY EDUCATIONAL TRUST.reported in |2010] 191 TAXMAN 238(KAR) and the.subsequent authority in the case of DIRECTOR OF INCOME|TAX vs. M/s. VENKATESHA EDUCATION SOCIETY reportedin 2012-TIOL-561-HC-KAR-IT, wherein it was held that the|two relevant considerations are that the authority snould|firstly satisfy itself that the objects of the Trust should be)in the nature of charitable purposes and secondly whetherthe activities of the Trust are genuine. So far as the object|of the Trust is concerned, so long as it fits into any one ofthe objects as enumerated under Section 2(15) of the Act, such a requirement stands fulfilled. So far as the secondrequirement with regard to the genuineness of the.activities is concerned, the same could be arrived at only) during|tneassessmentproceedings.Under|tnese|circumstances, we are of the view tnat the Tribunal was|justified in coming to the conclusion that so far as thefactum of the assessee being involved in any charitable|activities or not, whether the income so derived nas to be|apportioned towards any other purpose or not, could be)considered only during tne assessment proceedings.|Considering of the application is quite different from the)assessment of the income of the assssee. Therefore, at’this stage, it is suffice to hold that the conditions for grantof exemption have been satisfied py the assessee. The.Tribunal was justified on facts and in law to pass theimpugned order. Under tnese circumstances, we concur)with the view of Tribunal. ~— Consequently, following the aforesaid Judgment ofthis Court, we are of the considered view that the Tribunalwas justified in coming to the conclusion that the assesseeis entitled for registration under Section 12-A of tne Act. Hence, the substantial question of law is answered in favour of the assessee and against the revenue. Appeal is disposed off accordingly.| SD/- SD/- JUDGE JUDGE rsk/-