TaxTMI 
TaxTMI 
2015 (1) TMI 237
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....erred in not appreciating the submissions made with reference to the applicability of provisions u/s 13(1)(c) r.w.s. 13(2)(b) of the I.T. Act, 1961. 5. Appellant craves leave to add / amend / alter any grounds of appeal before or at the time of hearing. 3. The assessee in ITA No.1294/PN/2009, has raised the following grounds of appeal:- 1. The learned CIT-I, Nashik erred in canceling the Certificate issued u/s 12AA(1), without any specific Show Cause Notice for cancellation u/s 12AA(3) and without reference to the trust's reply dt. 15.07.2009. Therefore, it is prayed to annul the proceedings for cancellation u/s 12AA(3). 2.1 The learned CIT-I, Nashik, fails to appreciate that on the appointed date of hearing assessee's representative C.A. Shri Praveen Rathi went to CIT's office but the learned CIT was out of Nashik and Shri Praveen Rathi was informed that he would be given next date of hearing but without such hearing the leaned CIT erred in passing the Order u/s 12AA(3) of the Income Tax Act,1961. (To substantiate the claim C.A. Shri Praveen Rathi is ready to submit an affidavit during the hearing before ITAT, Pune.) 2.2 The Order u/s 12AA(3) is null & void and be....
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....the conditions laid down in clauses (i) to (vi) of section 80G(5) is to be seen by the CIT in order to decide the issue of grant of exemption to the assessee trust. On enquiries, the CIT found that the assessee foundation had given its land situated at Gangapur Road, Nashik to M/s. Ashoka Buildcon Ltd. (in short 'ABL'), a leading contractor and infrastructure developer. The CIT also noted as per the report of the Assessing Officer that six trustees / members of the assessee foundation held positions of Directors in M/s. ABL. During the course of enquiry, it was further noticed that M/s. ABL was awarded contract work order from Nashik Municipal Corporation on 22.02.2007 for Rs. 5.67 crores for construction of college road in Nashik. Thereafter, a Ready Mix Concrete (in short 'RMC) Plant was set up on 6000 sq. mtrs. of land belonging to the assessee. The RMC Plant started supplying material for the construction of college road which was to be completed within time schedule. The Assessing Officer further reported that the RMC Plant was still operational even after the expiry of two years from the date of installation. The RMC Plant established on the trust land, was found to be supply....
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....er section 11 r.w.s. 80G(5) of the Act. The assessee was show caused in this regard and also report of Assessing Officer obtained. The CIT held that the case of the assessee was directly hit by section 13(1)(c) of the Act and hence, the conditions prescribed under section 80G(5) of the Act were not satisfied, because of the following reasons:- (a) The Trust Deed (MO) does not permit the Trustees to deal with the Trust land in the above manner and that too, without Charity Commissioner's Permission, (b) The agreement since not registered under state law, is neither valid nor reliable, (c) The dominant purpose in allowing M/s ABL to set up RMC was not educational but for facilitating M/s. ABL's contract work awarded by NMC as would be apparent from the hurried conduct of the Trustees to jump all proceedings of obtaining charity Commissioner's approval, what to speak of NMC and environmental clearance, (d) Construction of school building had started in phases long before February 2007. Installation of RMC plant m February / March, 2007 on school land coincides with the award of contract to M/s. ABL, the company in which the Trustees are interested. The very timing of a....
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....ould be Rs. 750/-. He drew our attention to the copies of the bills placed at pages 131 to 133 of the Paper Book in which, M/s. ABL had sold the RMC at a price varying between Rs. 2842.44 per cu mtr. to Rs. 3,111.11 per cu mtr. The case of the assessee before us was that by giving part of its land to M/s. ABL for establishing RMC Plant, it was receiving the Ready Mix Concrete at a lower rate and the notional working of the savings made on conversion and transportation cost of Ready Mix Concrete was Rs. 40,35,826/-, as per the details filed at page 115 of the Paper Book. In case the said land had been rented out, then at best, the assessee was entitled to rental of Rs. 4,62,000/- for a period of five years and for a period of two years worked out to Rs. 1,84,800/-. On the other hand, the compensation of concession received by the assessee was more than Rs. 40,00,000/-. The learned Authorized Representative for the assessee referred to the order of CIT and stated that the renewal of exemption under section 80G(5) of the Act was not allowed to the assessee since the permission of the charity commissioner was not taken. It was pointed out by him that the understanding between the asses....
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....rning section 80G(5) of the Act were subordinate legislation. The learned Departmental Representative for the Revenue further pointed out that the decision in Bhagwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust Vs. CIT (supra) has been reversed by the Hon'ble Allahabad High Court and the matter has been referred to larger Bench, which also approved that the non-grant of registration within period of six months would not result in any deemed grant of registration. Reliance was placed upon the decision in CIT Vs. Muzafar Nagar Development Authority (2013) 38 taxmann.com 21 (Allahabad). The learned Departmental Representative for the Revenue pointed out that in case of registration under section 12A of the Act, the period of 12 months was directory and not mandatory. Further with regard to the grant of exemption under section 80G(5) of the Act, the learned Departmental Representative for the Revenue pointed out that investigation was conducted in the case of assessee and there were many hearings, in which the assessee had sought adjournments and eventually, an order was passed on 15.04.2009. With regard to the merits of the case, the learned Departmental Repre....
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.... 3 to Rule 11AA of the Rules, is empowered to call for such further documents or information from the institution or make such enquiries as he may deem necessary in order to satisfy himself about the genuineness of the activities of the trust of the institution or the fund. Where the commissioner is satisfied that all the conditions laid down in clauses (i) to (vi) of section 80G(5) are fulfilled by the institution or the fund, he shall record the satisfaction and grant approval to the institution or fund, satisfying the assessment year(s), for which the approval is valid, as per Rule 11AA(4) of the Rules. In any case, where the commissioner is satisfied that one or more of the conditions laid down in clauses (i) to (vi) to section 80G(5) are not fulfilled, then he shall reject the application for approval after recording reasons for such rejection in writing. The said power is enshrined in CIT vide Rule 11AA(5) of the Rules. Further, it is provided that no order of rejection of the application shall be passed without giving reasonable opportunity of hearing to the institution or the fund. Under sub-rule (6) to Rule 11AA of the Rules, the time limit within which the commissioner ha....
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.... and expenditure; (v) the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India or under section 25 of the Companies Act, 1956 (1 of 1956), or is a University established by law, or is any other educational institution recognised by the Government or by a University established by law, or affiliated to any University established by law, or is an institution financed wholly or in part by the Government or a local authority; (vi) in relation to donations made after the 31st day of March, 1992, the institution or fund is for the time being approved by the Commissioner in accordance with the rules made in this behalf. 18. In the facts of the present case before us, the assessee was running schools, vocational courses, colleges, etc. and as per the list annexed at page 3 of the Paper Book, which read as under:- Name Activity Ashoka Universal School Pre-primary, Primary & Secondary Schools (ICSE & Govt of Maharashtra recognized) Ashoka International Centre for Educational Studies & Research B. Ed College (SNDT, NCTE &....
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....tion of Resolution No.4 of the said meeting of trust is placed at pages 100 and 101 of the Paper Book. The assessee thereafter, had applied for renewal of exemption under section 80G(5) of the Act. However, the same was denied by the CIT on the premise that the assessee had handed over portion of its land to M/s. ABL without taking any permission from the charity commissioner and / or in allowing M/s. ABL to set up plant in its land i.e. the trust property was used for the benefit of M/s. ABL, who were selling the RMC not only to the assessee but to outside parties also. The CIT was of the view that such arrangements were hit by the provisions of section 13(1)(c) of the Act and consequently, the conditions prescribed under section 80G(5) of the Act were not satisfied. In view thereof, the renewal of registration under section 80G(5) of the Act was denied to the assessee trust. 21. While granting the exemption or renewal of exemption under section 80G(5) of the Act, the role of CIT is limited to look into the nature of activities being carried on by the institution or fund and the violation if any, of the provisions of section 13 of the Act and its various subsections are to be loo....
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.... because it had incurred certain expenditure, which fell within the category of benefit to a person under section 13(3) of the Act and hence, the assessee society was held to be hit by the provisions of section 13(1)(c) of the Act, does not entitle the CIT to deny the exemption of income claimed under section 11 of the Act. 24. The Delhi Bench of the Tribunal in Aggarwal Mitra Mandal Trust Vs. DIT (Exemption) (supra) held that while granting registration under section 12A of the Act, the CIT is to satisfy himself about the genuineness of activities and objects of the trust and as such, the scope of his powers was limited in this regard to make such enquiries as he deemed to, in respect of these two aspects. It was further held that if the Commissioner had not doubted the genuineness of the activities of the trust, he could not refuse the grant of registration under section 12A of the Act. The provisions of section 13(1) of the Act would be applied or invoked only at the time of computation of total income of the previous year of the person who was claiming deduction under section 11 or 12 of the Act, by the Assessing Officer and not by the CIT, while considering the application fo....