The Commissioner Of Income Tax (Exemptions), Chandigarh v. M/S. Swami Dayanand Educational Trust, Plot

ITA No. 257-2016 POT IN THE HIGH COURT OF PUNJAB AND HARYANA|AT CHANDIGARH. ITA No. 257 of 2016Decided on : 04.07.2018 The Commissioner of Income Tax (Exemptions), Chandigarh ... Appellant Versus M/s. Swami Dayanand Educational Trust, Plot No. 166, Sector 51, NearArtimis Hospital Red Light, Gurgaon (PAN: ) ... Respondent eook CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTALHON'BLE MR. JUSTICE AVNEESH JHINGAN Present ;Mr. Denesh Goyal, Sr. Standing Counselfor the appellant-revenue. Mr. Deepak Aggarwal, Advocatefor the respondent. TT AE AVNEESH JHINGAN, J. 1,The Revenue (hereinafter referred to as the 'appellant') has filedthe present appeal against the order dated 30.11.2015 of Income TaxAppellate Tribunal, New Delhi (in short, ‘the Tribunal’) allowing the appealof the assessee and directing the CIT to grant registration under section12AA of the Income Tax Act, 1961 (for short ‘the Act’). |According to the appellant following substantial questions oflaw arise in this appeal :- (i) Whether the ITAT was right in law while insisting that thCommissioner at the time of granting exemptions, shouldonly look at the objects of the trust, thereby in effect precluding the other statutory requirement built in Section12 AA 1.e. satisfaction about genuineness ofactivities.12 AA 1.e. satisfaction about genuineness ofactivities. (ii) Whether the ITAT was right in law in allowing the appeal othe assessee inspite of the fact that the composition of thetrust and several other objects/ by-laws of the trust deedimparted the character of a private trust to the applciantthat does not ensure to the benefit ofgeneral public.the assessee inspite of the fact that the composition of thetrust and several other objects/ by-laws of the trust deedimparted the character of a private trust to the applciantthat does not ensure to the benefit ofgeneral public. (ii1) Whether on the facts and circumstances of the case and ilaw, the Hon'ble ITAT 1s right in allowing appeal of theassessee by ignoring the fact that the applicant hadconfessed to the mistakes in the trust deed and also the factthat the onus for proving, in case of beneficial clauses, thatit qualifies for exigibility from taxation lies on the applicantTYUST.-law, the Hon'ble ITAT 1s right in allowing appeal of theassessee by ignoring the fact that the applicant hadconfessed to the mistakes in the trust deed and also the factthat the onus for proving, in case of beneficial clauses, thatit qualifies for exigibility from taxation lies on the applicantTYUST.- (iv)Whether on the facts and circumstances of the case and inlaw, the Hon'ble ITAT is right in placing reliance on thejudgment of Hon'ble Karnataka High Court in the case ofSanjeevamma Hanumath Gowda Charitable Trust Vs. DIT(E) 285 ITR 327 (Karnataka) when the Commissioner hadnot even delved into the issue of application of incomederivedfrom trust propertyfor charitable purposes.law, the Hon'ble ITAT is right in placing reliance on thejudgment of Hon'ble Karnataka High Court in the case ofSanjeevamma Hanumath Gowda Charitable Trust Vs. DIT(E) 285 ITR 327 (Karnataka) when the Commissioner hadnot even delved into the issue of application of incomederivedfrom trust propertyfor charitable purposes. 6$Whether in the facts and circumstances of the case and inlaw the Hon'ble ITAT is right in granting registration to theSociety and setting aside the order of Commissioner, hencethe impugnedjudgment is perverse.law the Hon'ble ITAT is right in granting registration to theSociety and setting aside the order of Commissioner, hencethe impugnedjudgment is perverse. 3)The assessee is a trust created on 02.08.2011 and dulyregistered by the name of Swami Dayanand Educational Trust, Gurgaon.The trust is running a school in the name of Elite International School atVillage Gawalison, District Jhajjar. An application was filed on 19.03.2014in Form 10-A for registration under Section 12A(1)(aa) of the Act. TheCommissioner of Income Tax (CIT) asked for certain information and ITA No. 257-2016 6$Whether in the facts and circumstances of the case and inlaw the Hon'ble ITAT is right in granting registration to theSociety and setting aside the order of Commissioner, hencethe impugnedjudgment is perverse.law the Hon'ble ITAT is right in granting registration to theSociety and setting aside the order of Commissioner, hencethe impugnedjudgment is perverse. 3)The assessee is a trust created on 02.08.2011 and dulyregistered by the name of Swami Dayanand Educational Trust, Gurgaon.The trust is running a school in the name of Elite International School atVillage Gawalison, District Jhajjar. An application was filed on 19.03.2014in Form 10-A for registration under Section 12A(1)(aa) of the Act. TheCommissioner of Income Tax (CIT) asked for certain information and ITA No. 257-2016 copies of documents. The required information was furnished. The CITvide order dated 26.09.2014 rejected the application mainly on the groundthat applicant trust failed to substantiate its claim and that trust had 21objects whereas the trust has done activities in respect of only one objectthat is opening of school. 4 Aggrieved of the order, the assessee filed an appeal. TheTribunal vide order dated 30.11.2015 allowed the appeal holding that thereare no allegations that objects of the applicant trust are not charitable orthat the fees or the donations are being used for activities beyond theobjects of the trust. Hence the present appeal by the appellant-revenue. 5We have heard learned counsel for the parties.|6.Learned counsel for the revenue contended that the assessee 1spursuing only one object out of 21 objects for which the trust was created.He further argued that assessee was not maintaining the record of themeetings of the trust as only loose papers were produced in place of theProceedings Register. vaThe contentions raised are not well founded. Section 12A laysdown the conditions for applicability of Sections 11 and 12. Section 12AAprovides the procedure for registration. The statute casts no obligation onthe trust that for availing the benefit of Section 12A of the Act, it shouldpursue all the objects tor which the trust came into existence. It is not thecase of the department that the school is not being run by the trust and theactivity being undertaken by the trust is not charitable in nature. 8 The application of the assessee was rejected on the ground that apart from running the school, the remaining 20 objects are not beingpursued. This cannot be a basis in law for rejecting the application. ITA No. 257-2016 OQThe submission that no proper proceedings of the meetings arebeing maintained as only loose papers were given to the CIT to show theminutes of the meeting, deserves rejection. Before the Tribunal, it wasspecifically pleaded by the assessee that all resolutions passed by the Boardof Trustees and minutes books were being maintained in the form ofcomputer print outs which are duly sanctioned by the Board of Trustees.The copies of print outs were produced before the CIT. In suchcircumstances the objection raised by the CIT cannot be sustained. 10)There is another important aspect of the matter. TheTribunal has given a categorical finding that the assessee trust is running alschool with a charitable object and there is no allegation that the donationsreceived or fees quoted are being used for purpose other than the aims andobjectives of the trust. There is no challenge to the said findings. 11.The relevant portion of the Tribunal order is quoted below:- 10)There is another important aspect of the matter. TheTribunal has given a categorical finding that the assessee trust is running alschool with a charitable object and there is no allegation that the donationsreceived or fees quoted are being used for purpose other than the aims andobjectives of the trust. There is no challenge to the said findings. 11.The relevant portion of the Tribunal order is quoted below:- 1T?In the present case, on careful persual of impugnedorder , we note that the CIT has considered irrelevant factorsin rejecting the application of the appellant trust. The objectsofthe applicant trust as mentioned in Trust deed are charitablein nature and the application for registration cannot berejected merely because applicant trust undertook only oneactivity out of 21 objects and activities proposed in the trustdeed. So far as the allegation of the CIT that the incomederived by the trust either by way ofdonation or by way offeesfrom the students is concerned, there is no allegation that thereceipts from fees were applied or used by the assessee trustfor the purpose other than the aims and objects of the trust.From the impugned order, we further note that it is not theallegation off the CIT that the fees charged from theinstitutions or donations received have been used for the ITA No. 257-2016 purposes Other than running the institution managed by theassessee trust. Admittedly and undisputedly, thisfact has beennoted by the CIT that the appellant trust is running a schoolas per its charitable objects and it is not the allegation of theCIT that the activities carried on by the assessee trust are notin consonance with its objects as per trust deed. BB BBBB 1T6On the basis offoregoing discussion, we are of the viewthat the CIT rejected an application for registration u/s I2ZAof the Income Tax Act, 1961 without any Justified reason andbasis despite the fact that the objects of the applicant trustare charitable and no allegation has been brought out onrecord by the CIT that the assessee_ 1s conducting activitiesbeyond its objects as per trust deed orfees and donations arebeing used for the activities which are not charitable andbeyond the ambit of the objects ofthe assessee applicant trust,hence, we direct the CIT that the applicant trust should begranted registration u/s 12AA of the Act and accordingly wedirect the ld. CIT to grant registration to the applicant trust asper relevantprovisions ofthe Act. xX BB BB 12.The objects of the assessee trust have been found charitable.Even the photographs annexed with the appeal clearly shows running of aischool. The denial of registration by the CIT on mere suspicion andconjectures cannot be upheld. No fault can be found in the order of theITAT directing the grant of registration to the assessee trust. However, wemay hasten to add that in case, subsequently, the revenue is satisfied thatthe activities of the assessee trust are not for charitable purposes,department can always initiate action for cancellation of registration underPANKAJ BAWEJA2018.08.28 15:25I attest to the accuracy andintegrity of this documentHigh court, Chandigarh ITA No. 257-2016 Sub Section (3) of Section 12AA of the Act. 13.We do not find any reason to differ with the view taken by theTribunal. No error has been pointed out in the findings recorded by theTribunal. No substantial question of law arises.14)The appeal is dismissed. | AJAY KUMAR MITTAL]JUDGE 04.07.2018pankaj bawejaWhether speaking/reasoned ?Whether reportable ? | AVNEESH JHINGAN |JUDGEYes /NoYes /No