ITA No. 339 of 2018 [1] IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 339 of 2018 Date of decision: 20.1.2020 Commissioner of Income Tax (Exemptions), Chandigarh Appellant v. M/s Mandir Shree Mahakali Sabha Mandir Complex Respondent CORAM: HON'BLE MR. JUSTICE AJAY TEWARI HON'BLE MR. JUSTICE AVNEESH JHINGAN Present: Mr. Denesh Goyal, Senior Standing Counsel for appellant. AVNEESH JHINGAN, J. revenue is in appeal against order dated 11.10.2017 passed by Income Tax Appellate Tribunal, Chandigarh (for short, 'the Tribunal') allowing appeal of respondent-society (hereinafter referred to as 'the society') and directing Commissioner of Income Tax (Exemptions) (for short, 'the CIT') to grant registration under Section 12AA of Income Tax Act, 1961 (for short, 'the Act'). Following substantial questions of law have been claimed: 1. Whether on facts and circumstances of case Hon'ble ITAT has erred in directing to grant registration instead of reverting it back for re-examination in light MANOJ KUMAR of judgment of Hon'ble Allahabad High Court in 2020.01.24 11:25 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 339 of 2018 [2] appeal No. 112 of 2013 in case of CIT, Meerut Vs. M/s A.R. Trust, Meerut, wherein it was held that Tribunal could have ordered for setting aside order of Registering Authority refusing registration but it could not have directed for registration straight away in as much as there has to be satisfaction recorded by Registering Authority which was lacking? II. Whether on facts and circumstances of case Hon'ble ITAT has erred in ignoring fact that assessee did not produce evidence that Government had bestowed rights for use of aland and complex upon assessee society, that had claimed carrying out development and maintenance for public at large? III. Whether on facts and circumstances of case, Hon'ble ITAT, even when according to ffinding that property (land and buildings) is not owned by trust, has erred by holding same as property held by trust? IV. Whether on facts and circumstances of case Hon'ble ITAT has ignored facts that applicant society had not produced any evidence with regard to activities having actually been carried out? V. Whether on facts and circumstances of case Hon'ble ITAT has erred in directing to grant of registration u/s 12AA ignoring fact that MANOJ KUMAR 2020.01.24 11:25 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 339 of 2018 [3] memorandum of society was designed in manner that was devoid of dissolution clause, beneficiary clause, and utilization clause and to that extent capable of giving undue advantage to members of society and that in event of dissolution of society possibility of funds being mis-utilized was high? VI. Whether on facts and circumstances of case, order of Appellate Tribunal is contrary to evidence and material on record of case and therefore, perverse? Facts in brief are that respondent-society came into operation since 10.5.1995 with following aims and objects: (a) to maintain, manage, improve, furnish, reshape, restructure, reconstruct amend alter or add in existing Buildings, facilities and area so that these could be used in better way by Mahakali Devi devotees, worshipers, saints and visitors to Mahakali Devi Mandir for religious, charitable and social purposes; (b) to construct more building in Mahakali Devi complex and develop entire complex for better use by devotees, worshipers, saints and public in general for religious, charitable, educational and socital purposes; (c) to propagate Hindu Religion, teaching of Sanatam Dharam and brotherhood amongst public in general and Sangrur citizens in particular; (d) to arrange and celebrate Hindu festivals, religious MANOJ KUMAR 2020.01.24 11:25 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 339 of 2018 [4] occasions, and to propagate and inculcate religious feelings brother-hood and nationalism amongst public in general and Hindus in particular; (e) to develop and inculcate sound, moral, religious and national character in younger generation; (f) to help needy and poor children for their education; (g) to open and run charitable dispensaries and hospitals for public in general and propagate and inculcate habit of keeping good health; (h) to open library and reading room for public in general and provide books particular relating to religion, history and culture; (i) to arrange religious discourses, teachings, satsang lecture to propagate Hindu religion, brotherhood, nationalism, general uplift of mankind, to build moral fibre and develop healthy society and harmony amongst public in general; (j) to create atmosphere and impart teachings to help younger general to develop and become successful citizens of sound health, character, nationality and following of Hindu religion in its tradition and culture; (k) to arrange to provide help in cash and kind to public in general in event of natural calamities; (l) to run free Bhandaras, to help poor widows, orphans ages persons and sufferers of natural and national calamities; MANOJ KUMAR 2020.01.24 11:25 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 339 of 2018 [5] (m) to establish and run educational and vocational instructions, children recreations art and senior citizens home; (n) any other work of charitable nature for public in general. application was filed by society claiming registration under Section 12AA of Act. CIT rejected application vide order dated 29.4.2016, considering that land and complex whose maintenance was one of aim and object of society belonged to government; further that for constructing building hall, focus was on religion and not on charity. CIT considered that liability of `12,99,527/- shown on 31.3.2013 was not shown in succeeding years and no payment was shown to be made. Aggrieved of rejection, appeal was preferred, Tribunal vide order dated 11.10.2017 allowed same. Tribunal concluded that there was no pre-requisite in provisions of Act that assets should be owned by society. Tribunal considered averment of society that though land belonged to Government but property developed was held under trust. It was noted that Mandir complex was visited by public at large and by work done by society, devotees were benefitted. No dispute was raised by department that society had constructed community hall etc. and property though not owned by society but income was applied for religious and charitable purposes. hall constructed was not for particular section of society and same was opened to all for utilisation. MANOJ KUMAR 2020.01.24 11:25 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 339 of 2018 [6] Tribunal concluded that in case there was any discrepancy in accounts, same is not to be considered at time of granting registration under Section 12AA of Act but same could be taken care of while framing assessment and allowing exemption under Section 11 of Act, hence present appeal. Learned counsel for revenue argued that ownership of land and temple was not of society and there was no right for society to use said property. contention raised is beyond provisions of Act. Under Section 12AA of Act, CIT has to satisfy himself with regard to genuineness of activities of trust and compliance of requirements of other laws for time being in force. Section 12A of Act lays down conditions of applicability of Sections 11 and 12 of Act. Title of Section 11 of Act is as under: Income' from property held for charitable or religious purposes Section states that subject to provisions of sections 60 to 63 of Act, income mentioned in it shall not be included in total income of previous year. section nowhere provides that property should be owned by trust. requirement is held for charitable purpose . In present case, land though belonged to government but construction made on it was held under trust and it is for income from such property that application for registration under Section 12AA of Act was moved. Section 12 of Act gives deeming fiction that voluntary MANOJ KUMAR 2020.01.24 11:25 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 339 of 2018 [7] contribution received by trust created for charitable or religious purposes shall be deemed for purpose of Section 11 of Act to be income derived from property held by trust for charitable and religious purposes. In view of above discussion, objection that property was not owned by society cannot be sustained. In present case, there is no dispute raised that work of society was for general public and work done by it, including raising of construction on land that belonged to Government was for community at large, for charitable and religious purposes. Further that from record it is established that various functions were being organised by social organisations for blood donation, 'Akandh Path', conference, function for welfare of differently-abled persons and that use of community hall in temple complex was not limited to any particular limb of society but was utilised for social, charitable and religious organisations. explanation of society to effect that liability shown as on 31.3.2013 was discharged in subsequent year was accepted. Needless to add at this stage that said aspect can be looked into by Assessing Officer at time of framing of assessment and allowing exemption under Section 11 of Act. No interference is warranted in order of Tribunal. No substantial question of law arises in present appeal. appeal is dismissed. However, it would be needless to state that in case revenue subsequently comes to conclusion that activities of society are not for charitable purposes, it would always be at liberty to initiate action in MANOJ KUMAR 2020.01.24 11:25 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 339 of 2018 [8] accordance with law including invoking of sub-section (3) of Section 12AA of Act. (AVNEESH JHINGAN) (AJAY TEWARI) JUDGE JUDGE 20.1.2020 mk Whether speaking/reasoned: Yes/No Whether reportable: Yes/No MANOJ KUMAR 2020.01.24 11:25 I attest to accuracy and authenticity of this document High Court,Chandigarh Commissioner of Income-tax (Exemptions), Chandigarh v. Mandir Shree Mahakali Sabha Mandir Complex