2009 (11) TMI 52 - HC - Income Tax

Court orders re-evaluation of Trust's tax exemption claim based on new evidence

The Court directed the Commissioner of Income Tax, Jalandhar-II, to re-evaluate the case considering the new evidence provided by the Trust regarding the ... Deduction u/s 80G - registration and exemption - Section 80-G(5)(vi) of the Income Tax Act – petition, are that the petitioner-Trust was duly registered under the Societies Registration Act, 1860. The certificate of registration dated 28.01.2003 has been added with the petition (Annexure P-1). The petitioner-Trust applied for exemption under Section 80-G of the Income Tax Act and the application was rejected vide impugned order dated 30.09.2003 - The petitioner-Trust has claimed that in pursuance of creation and acting in tandem with the objectives of the petitioner-Trust, a Day School with the name of “Bawa Lalvani Public School”, an institute known as Lalvani Institute of Technology at Kapurthala, were duly established.- held that - learned counsel for the revenue made an attempt to furnish legal justification of the impugned order. - However, he has not been able to propose the primary submission made by learned counsel for the petitioner-Trust which is to the effect that the matter requires re-look as the various documents produced by the petitioner-Trust collectively after passing of the impugned order have not been considered by the Commissioner – matter referred back to CIT – decided in favor of assessee Issues Involved:1. Rejection of exemption under Section 80-G of the Income Tax Act.2. Alleged violation of Section 13 of the Income Tax Act.3. Genuineness of funds contributed by NRI trustees.Issue-wise Detailed Analysis:1. Rejection of exemption under Section 80-G of the Income Tax Act:The petitioner-Trust, registered under the Societies Registration Act, 1860, applied for exemption under Section 80-G of the Income Tax Act, which was denied by the Commissioner of Income Tax, Jalandhar-II, on 30.09.2003. The Trust was established with the sole objective of running educational institutions and not for profit. The Trust had already been granted registration under Section 12-AA of the Income Tax Act, recognizing its charitable purpose. Despite this, the exemption under Section 80-G was rejected on the grounds that the Trust's objectives included activities that could be construed as non-charitable, and the Trust had incurred non-charitable expenses.2. Alleged violation of Section 13 of the Income Tax Act:The Commissioner cited that the Trust violated Section 13 of the Income Tax Act by incurring expenses for the stay of its trustees in a luxurious hotel, Radisson Hotel, Jalandhar. The respondent argued that funds meant for charitable purposes were diverted towards luxurious accommodations for trustees, which is against the principles of charity. The Trust, however, contended that such expenses were necessary for facilitating the trustees' visits to India to attend meetings and were not for personal luxury.3. Genuineness of funds contributed by NRI trustees:The Commissioner questioned the genuineness of the funds contributed by NRI trustees, stating that no sufficient evidence was provided to prove that the funds were genuinely from the trustees' NRE accounts. The Trust provided additional documents from the Bank of America and BNP Paribas, which were not considered by the Commissioner in the initial order. These documents detailed the source of funds, including cheque numbers, account numbers, and the names of the contributing trustees.Judgment:The Court found that the matter required reconsideration due to the additional documents provided by the Trust, which were not considered in the initial decision. The Court directed the Commissioner of Income Tax, Jalandhar-II, to re-evaluate the case, taking into account the new evidence. The impugned order dated 30.09.2003 was set aside, and the Commissioner was instructed to pass a fresh speaking order after considering all relevant documents. The Court emphasized that no observations made in this judgment should influence the Commissioner's fresh decision, which should be based solely on the merits of the case.Conclusion:The judgment remitted the case back to the Commissioner for a fresh decision, ensuring that all new evidence provided by the Trust is duly considered. This approach aims to ensure a fair and comprehensive evaluation of the Trust's eligibility for exemption under Section 80-G of the Income Tax Act.