Commissioner of Income Tax vs Krishna Chandra Gandhi Jan Shiksha Nyas

Heard learned counsel for the Revenue as well as learned counsel for the respondent. The instant appeal is preferred against the order dt. 11th July, 2011 passed by Tribunal, Circuit Bench, Ranchi, in the case of the respondent being ITA No. 125/Ran/2010, whereunder the Tribunal has allowed the appeal of respondent and set aside the order passed by CIT in F. No. 12A-72/10-11/1005 under s. 12A/12AA of the IT Act, 1961 and further directed the CIT to renew the registration under s. 80G and also grant of registration under s. 12A/12AA of the IT Act, 1961.

The respondent was granted registration under s. 12A/12AA on 28th July, 2006. The respondent filed an application for approval of renewal of exemption under s. 80G on 19th Dec., 2009 in Form No. 10G. After hearing the parties, the CIT cancelled the order for registration already granted to the respondent under s. 12AA(1)(b) vide its order dt. 19th May, 2010.

As per cl. 5.10 of the trust deed furnished along with the Form No. 10G, the Board of Trustees have the discretion to do all such works as deemed fit by them which means that such work may be or may not be in accordance with the object of the trust. Further, held that as per s. 12(1) of the IT Act, 1961 "as any voluntary contribution received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contribution made with a specific direction that they shall form part of the purpose of the trust or institution) shall for the purpose of s. 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and s. 13 shall apply accordingly".

Observing that the object mentioned at para 5.10 of the trust deed of the applicant that the Board of Trustee can do all such works, as deemed fit by them and they have a discretion to do all such works which may or may not be in accordance with the object of the trust, the CIT exercising the powers under s. 12AA(3) of the IT Act, held that the cl. 5.10 of the trust deed are not considered to be genuine in terms of all of its objects are concerned. On those findings CIT cancelled the registration already granted on 28th July, 2006.

Being aggrieved the respondent assessee preferred an appeal before Tribunal being ITA No. 125/Ran/2010. The Tribunal took up ITA No. 125/Ran/2010 along with seven other tax appeals and passed common order stating that the assessee society(s) was/were given registration under s. 12AA and renewal was granted under s. 80G for earlier years and therefore, it cannot be said that the material filed by the assessee(s) is incorrect. On those findings, the Tribunal directed renewal of registration of the trust and set aside the order passed by CIT.

Being aggrieved the Revenue has preferred this appeal for considering following substantial questions of law:

(i) Whether on the facts and in the circumstances of the case the learned Tribunal was correct in law in quashing the order under s. 80G(5)(vi) of the IT Act, 1961 passed by the CIT without going in depth the basis of rejection taken by CIT?

(ii) Whether on the facts and in the circumstances of the case the learned Tribunal was correct in not appreciating the issues raised by CIT that a trust must be constituted for charitable or religious purposes?

(iii) Whether on the facts and in the circumstances of the case the learned Tribunal is correct in passing a common order involving other assessees having different issues?

Learned counsel for the Revenue, Mr. Deepak Roshan submitted that in the light of the findings recorded by CIT, the Tribunal ought to have considered the income tax appeals filed by the assessee individually. Considering the facts of each case, it appears that the Tribunal committed serious error by clubbing all appeals together by passing a common order.

Learned counsel submitted that clubbing of all the income tax appeals amounts to non-application of mind by the Tribunal and the Tribunal passed common order involving the number of assessees having different issues.

On perusal of the order passed by Tribunal, it is seen that Tribunal has clubbed many income tax appeals and passed common order. We are of the view that the Tribunal ought to have considered each one of the appeals considering the factual aspects of one of the matters and also the findings recorded by CIT. We are of the view that clubbing of income tax appeals by the Tribunal would not be a ground in warranting interference of the impugned order of the Tribunal. On perusal of the order of the CIT, we find that the CIT has decided the appeal referring to cl. 5.10 of the trust deed stating that the trustee can do all other works, as deemed fit by them and they have a discretion to do all such works which may or may not be in accordance with the object of the trust.

The observation of the CIT is only a general observation and is not substantiated by any facts. It is pertinent to note that CIT has not pointed out that any part of the income was spent other than the objects of the trust. In the absence of any such factual findings recorded by CIT, it cannot be said that the Tribunal committed an error in setting aside the order of CIT and directing the CIT to renew the registration under s. 80G and also grant registration under s. 12AA of the IT Act. Since there is no substantial question of law in this appeal, this appeal is dismissed answering the question in favour of the assessee. However, if any materials are found by the CIT in future, the CIT is at liberty to proceed with in accordance with law.