Ita/322/2013 Of The Commissioner Of Income Tax-I, Chandigarh v. Vishvas

ITA No.322 of 2013 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.322 of 2013 (O&M)Date of decision: 13.05.2014 The Commissioner of Income Tax I, Chandigarh -----Appellant Vs] Vishvas,H.No.1006, Sector 19B, Chandigarh ----Respondent CORAM:-HON’BLE MR. JUSTICK AJAY KUMAR MITTALHON'BLE MR. JUSTICEK JASPAL SING Present:-Ms. Urvashi Dhugga, Advocate for the appellant. Ajay Kumar Mittal,J inLearned counsel for the appellant-revenue during the course of hearing produced the following documents:- (1)Annexures ‘A’ and ‘B’' — reports of AssistantCommissioner of Income Tax (ACIT) and _ JointCommissioner of Income Tax (JCIT) dated 19.4.2012and 26.4.2012 respectively whereby initially they hadnot recommended for registration of the respondentsociety,Commissioner of Income Tax (ACIT) and _ JointCommissioner of Income Tax (JCIT) dated 19.4.2012and 26.4.2012 respectively whereby initially they hadnot recommended for registration of the respondentsociety, (11)Annexures 'C' and 'D' — report ofACIT and commentsof JCIT dated 25.6.2012 and 28.6.2012 respectivelywhereby subsequently they had recommended forregistration under Section 12AA and approval underof JCIT dated 25.6.2012 and 28.6.2012 respectivelywhereby subsequently they had recommended forregistration under Section 12AA and approval under Section 80G(5) (v1) of the Income Tax Act, 1961 (inShort, “the Act’). The above documents Annexures 'A' to 'D' are allowed to be taken onlrecord subject to all just exceptions. ? This appeal has been preferred by the revenue underSection 260A of the Act against the order dated 17.4.2013, AnnexureA.2, passed by the Income Tax Appellate Tribunal, Chandigarh Bench'B' (in short, “the Tribunal”) in ITA No.856/Chd/2012, proposing toraise following substantial questions of law:- 1) Whether in the facts and circumstances of the case, theTribunal was legally correct in allowing the appeal ofthe assessee by granting the registration under Section12AA oft the Income Tax Act even when the trust wanot involved in carrying on any ‘charitable activity’within the meaning of section 2(15) of the Act readwith the decision of the Hon'ble Supreme Court 1n thecase of MCD vy, Children Book Trus‘[1992) 3 SC 390in which it was inter alia held that education per sewas not a charitable purpose?Tribunal was legally correct in allowing the appeal ofthe assessee by granting the registration under Section12AA oft the Income Tax Act even when the trust wanot involved in carrying on any ‘charitable activity’within the meaning of section 2(15) of the Act readwith the decision of the Hon'ble Supreme Court 1n thecase of MCD vy, Children Book Trus‘[1992) 3 SC 390in which it was inter alia held that education per sewas not a charitable purpose? 11) Whether in the facts and circumstances of the case, thTribunal was legally correct in holding that genuinityof its financial activities 1s not to be considered at thetime of granting registration under Section 12A”Tribunal was legally correct in holding that genuinityof its financial activities 1s not to be considered at thetime of granting registration under Section 12A” 111)Whether in the facts and circumstances of the case,the Tribunal was legally correct in stating that carryingon of charitable activities at the time of registrationand the utilization of funds are not relevant?the Tribunal was legally correct in stating that carryingon of charitable activities at the time of registrationand the utilization of funds are not relevant? 3 | A few facts relevant for the decision of the controversy involved, as available on the record, may be noticed. The applicant-society - Vishvas filed an application for grant of registration under 111)Whether in the facts and circumstances of the case,the Tribunal was legally correct in stating that carryingon of charitable activities at the time of registrationand the utilization of funds are not relevant?the Tribunal was legally correct in stating that carryingon of charitable activities at the time of registrationand the utilization of funds are not relevant? 3 | A few facts relevant for the decision of the controversy involved, as available on the record, may be noticed. The applicant-society - Vishvas filed an application for grant of registration under Section 12A of the Act on 14.12.2011 in Form No.10A. The assesseesubmitted the requisite relevant documents including the objects ofthe institution. The Commissioner of Income Tax (CIT) madeenquiries through the Assessing Officer and finally concluded videorder dated 29.6.2012, Annexure A.1 that the assessee had not beencarrying on its charitable activities and therefore rejected theapplication. Aggrieved by the order, the assessee filed appeal beforethe Tribunal. Vide order dated 17.4.2013, Annexure A.2, the Tribunalallowed the appeal of the assessee holding that carrying on ofcharitable activities at the time of registration and utilization of thefunds etc. were not relevant and once the objects of the institutionwere found to be charitable in nature, registration under Section12AA of the Act had to be granted. Hence the instant appeal by theTEVENUC. 4 We have heard learned counsel for the appellant andperused the record. 4 Learned counsel for the appellant revenue submitted thatthe assessee was not a genuine charitable institution which couldclaim benefit under Section 12AA of the Act. 6]After hearing learned counsel for the appellant, we donot find any merit in her contention. ‘|.The Tribunal while setting aside the order of the CIT hadnoticed that the objects which were filed by the assessee werecharitable in nature and none of the objects were otherwise thancharitable. Referring to the report of the Assessing Officer dated ITA No.322 of 2013 (O&M) 25.6.2012 (Annexure 'C’), it was noticed that even the AssessingOfficer had recommended that the appellant should be grantedregistration. It was concluded by the Tribunal that the genuinity of thesociety was not in doubt and carrying on of charitable activities at thetime of registration and utilization of funds etc. was not relevantconsiderations to be scanned at the time of grant of registration. Therelevant observations read thus:- "5S. We have heard rival submissions and have carefullperused the entire record. From the objects filed andenclosed in the Paper Book, it 1s noticed that all theobjects of the appellant institution are charitable innature and none of the objects is otherwise thancharitable in nature. Even the AO, vide his report dated25.6.2012 has recommended that the appellant should begranted registration under Section 112A. In ouconsidered opinion, the carrying on of charitableactivities at the time of registration and the utilization ofthe funds etc. are not relevant and once the objects of theinstitution are found to be charitable in nature,registration under Section 12AA has to be granted. Wehave found that there is no merit in the reasoning givenby learned Commissioner to reject registration. Theapplicant society 1s not required to prove its case that theproject 1s to be run under its name in a charitable manner.The genuinity of the society is not, at all, in doubt. Thegenuinity of its financial activities 1s not to be consideredat this stage. Therefore, the reasons given by learnedCommissioner for refusing registration under Section12A are not legally valid. Therefore, we direct thelearned Commissioner to grant registration to theapplicant society under Section I2A of the Act, as per application filed in Form No.10.” § In view of the above findings which have not beenshown to be illegal, perverse or erroneous in any manner, no questionof law much less substantial question of law arises. Consequently, the appeal stands dismissed, (Ajay Kumar Mittal)Judge| application filed in Form No.10.” § In view of the above findings which have not beenshown to be illegal, perverse or erroneous in any manner, no questionof law much less substantial question of law arises. Consequently, the appeal stands dismissed, (Ajay Kumar Mittal)Judge| May 13, 20146*"6 (Jaspal Singh)Judge