Ita/115/2014 Of Commissioner Of Income Tax, Faridabad v. R.k.m. Educational & Charitable Trust Etc

IN THE HIGH COURT OF PUNJAB AND HARYANA AT|CHANDIGARH ITA No.115 of 2014 (O&M)Date of decision:&8./7.2014 Commissioner of Income Tax, Faridabad. ....-- Appe Vs, RKM Educational and Charitable Trust, 1288, Prerna Dham, Sector 15,Faridabad ..... Respond CORAM: HON’BLE MR. JUSTICEK AJAY KUMAR MITTAHON’ BLE MR. JUSTICE JASPAL SINGH Present:Mr. Tejinder K.Joshi, Advocate for the appellant. Ajay Kumar Mittal,J, 1.This appeal has been preferred by the revenue under section260A of the Income Tax Act, 1961 (in short, “‘the Act’) against the ordedated 28.6.2013, Annexure A.II passed by the Income Tax AppellateTribunal, Delhi Bench ‘F’ New Delhi in ITA No.783/DEL/2010 and CONo.108/DEL/2010 UTA No.783/DEL/2010), claiming following substantialquestions of law:- 1)Whether on the facts and in the circumstances of thecase, the Tribunal was correct in law in allowing theclaim of the society under section 80G of the Income TaxAct, 1961 whereas the society was never grantedregistration under section 12AA by the Commissioner ofIncome Tax‘ 11)Whether on the facts and in the circumstances of thecase, the Tribunal was correct in law in allowing theclaim of the society under section 80G of the Income TaxAct, 1961 whereas memorandum of association and rulesand regulations of the society registered on 23.10.1981are entirely different from the trust deed executed on14.4.1976?’ ? A few facts relevant for the decision of the controversyinvolved as narrated in the appeal may be noticed. The applicant trust wasfounded/established vide trust deed dated 14.4.1976 and was registered withthe Sub Registrar, Ballabgarh. Registration of the trust under section 12ZAAof the Act was granted firstly by the Commissioner of Income Tax, Rohtak{CIT] vide order dated 6.3.1978. Lastly, exemption under section 80G(5) ofthe Act was granted upto 31.3.2009 vide order dated 29.1.2004. Applicationfor renewal of exemption under Section 80G of the Act was filed by theapplicant on 22.6.2009. Perusal of the documents filed by the applicant trustrevealed that the trust deed was made on 14.4.1976 in favour of Smt.RattanKaur Memorial Educational and Charitable Trust. This deed was gotregistered under section 12A as charitable trust with CIT, Rohtak vide orderdated 6.3.1978. Later, a society was formed with Memorandum ofAssociation, Rules and regulations. The applicant trust got it registered withthe Registrar of societies vide certificate of registration dated 23.10.1981 infavour of Rattan Kaur Memorial Education and Charitable Trust, Faridabadwith the same name as that of the old trust. The assessee was asked videorder dated 4.12.2009 to explain whether the organisation was a trust orsociety. It submitted its reply on 23.12.2009. The claim of the society wasrejected by the CIT vide order dated 22.1.2010, Annexure A.1 under section ITA No.115 of 2014 (O&M) 80G of the Act read with Rule 11AA(5) of the Income Tax Rules, 1962 (inshort, “the Rules”). Aggrieved by the order, the assessee filed appeal beforethe Tribunal. Vide order dated 28.6.2013, Annexure A.II, the Tribunalallowed the appeal of the assessee and dismissed the cross objections filedby the department. Hence the instant appeal by the revenue. 3)We have heard learned counsel for the revenue and perused therecord. 4Learned counsel for the revenue submitted that the assessee-trust was converted from trust into society and, therefore, the CIT wasJustified in refusing to grant exemption under section 80G of the Act.According to the learned counsel, the Tribunal had erred in reversing theorder of the CIT. 4S.After hearing learned counsel for the revenue, we do not findany merit in the arguments of the learned counsel for the revenue. 6]It was not disputed that the exemption under section 80G ofthe Act was granted to the trust for the first time on 19.10.1978 from1.4.1977 to 31.3.1978 which was subsequently renewed on 29.1.2004 upto31.3.2009. The objects of the trust and the society were similar. TheTribunal while deciding the issue in favour of the assessee had noticed asunder: 4Learned counsel for the revenue submitted that the assessee-trust was converted from trust into society and, therefore, the CIT wasJustified in refusing to grant exemption under section 80G of the Act.According to the learned counsel, the Tribunal had erred in reversing theorder of the CIT. 4S.After hearing learned counsel for the revenue, we do not findany merit in the arguments of the learned counsel for the revenue. 6]It was not disputed that the exemption under section 80G ofthe Act was granted to the trust for the first time on 19.10.1978 from1.4.1977 to 31.3.1978 which was subsequently renewed on 29.1.2004 upto31.3.2009. The objects of the trust and the society were similar. TheTribunal while deciding the issue in favour of the assessee had noticed asunder: 14. It has also nowhere been disputed by the learned CIT thatthe objects of the trust and those of the society are similar. No,be it a trust or a society, the legal status of either 1s that of abody of individuals and the benefit 1n either case inures to thesame indeterminate public. Neither the trust nor the society, byitself,is a “person’ under section 2(31) of the Act. 15. Moreover, there is nothing on record to show that themanagement of the trust has been taken over by the society, orthat the property of the trust, post registration as society,belongs to the society. Undisputedly, the board of Trustees arethe same. The property, as earlier, continues to be held undertrust for pro bono publico or for the benefit of the public. Assuch, there 1s no transfer of ownership of property and theassessee continues to be the indeterminate beneficiary and notthe trust. And due to this reason, the learned CIT has fallen intoerror in holding that the approval under Section 12A of the Actwas granted to the trust and not to the society, the society is noteligible for grant of certificate under section 80G (5) of the Act,Undeniably, the trust 1s an irrevocable trust. Change over to thestatus of society makes no difference in this position andimplementation of the objects of the trust is still a legalobligation to be discharged. 16. Still further, ever since the date of its coming intoexistence, the society has remained a mere paper entity. As perthe sequence of events (AP B II, page 131), no return of thesociety has ever been filed, no PAN was applied for, nor wasany ever allotted to the assessee. The exemption under section 80G of the Act was granted to thetrust, for the first time, for the period from 1.4.1977 to31.3.1978 on 19.10.1978. A copy of the certificate dated19.10.1978 in this regard is at APB 1, page 63. Thenonwards,the exemption under section 80G was regularlygranted to the trust. The latest order granting such exemptionwas that passed on 29.1.2004 for the period from 1.4.2004 to31.3.2009 (copy at APB |, page 56). This position has not beendenied by the learned CIT. Rather, his case is that grant offurther exemption would amount to perpetuating mistake.17. In view of the preceding discussion, we do not find anymistake likely to occur on grant of further exemption underSection 80G to the applicant trust. As seen, there has come about no change in facts or circumstances. Merely registrationas a society does not disentitle the applicant from theexemption claimed, has deliberated upon hereinbefore, 18. Therefore, the grievance sought to be raised by the assesseeis found to be justified and 1s accepted as such. The assessee infact in this case, are the indeterminate beneficiaries.Accordingly, the order passed by the learned CIT is cancelled,The application filed by the assessee trust is allowed. Thelearned CIT is directed to grant exemption under section 80Gof the Act to the assessee In accordance with law. TiThe findings recorded by the Tribunal have not been shown tobe illegal or perverse in any manner. Consequently, no substantial questionof law arises and thus the appeal stands dismissed. (Ajay Kumar Mittal)Judge July 038, 2014<;%7 (Jaspal Singh)Judge|