Naveen Park Residents Association, Hubli V. CIT, Hubli

ITA 1035/BANG/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0646 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-02-2013
• Assessment Year: misc
• Appeal Filed On: 09-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA CIT DR I
• Assessee Lawyers: J M GANGHADHAR
• Keywords: Charitable institution
• Section: 12A; 12AA; 11

Judgement Text

PAGE 1 OF 7 ITA NO.1035/B ANG/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI N BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.1035/BANG/2011 NAVEEN PARK RESIDENTS ASSOCIATION, KUSUGAL ROAD, KESHWAPUR, HUBLI-580023. VS THE COMMISSIONER OF INCOME TAX, HUBLI. (APPELLANT) (RESPONDENT) DATE OF HEARING : 11.02.2013 DATE OF PRONOUNCEMENT : 22.02.2013 APPELLANT BY : SHRI J M GANGHADHAR , ADVOCATE RESPONDENT BY : SHRI S K AMBASTHA, CIT (DR-I), ITAT ORD ER PER GEORGE GEORGE K : THIS APPEAL INSTITUTED, AT THE INSTANCE OF THE AS SESSEE- ASSOCIATION, IS DIRECTED AGAINST THE ORDER OF THE L EARNED CIT, HUBLI, DATED 29.9.2011, IN REJECTING ITS APPLICATION FOR REGISTR ATION U/S 12AA OF THE ACT. 2. THE ASSESSEE - ASSOCIATION HAS RAISED, IN ITS G ROUNDS OF APPEAL, AS MANY AS NINE GROUNDS. HOWEVER, THE CRUX OF THE ISSUE IS THAT THE CIT WAS NOT JUSTIFIED IN REJECTING THE ASSESSEES APPLI CATION FOR REGISTRATION U/S 12AA OF THE ACT. PAGE 2 OF 7 ITA NO.1035/B ANG/2011 2 3. BRIEFLY STATED, THE FACTS OF THE ISSUE ARE AS UN DER: THE ASSESSEE ASSOCIATION [THE ASSESSEE HENCE FORTH] HAD FURNISHED AN APPLICATION IN FORM NO.10A ALONG WITH NECESSARY SUPPORTING DOCUMENTS BEFORE THE JURISDICTIONAL CIT FOR REGISTR ATION U/S 12AA OF THE ACT. ON A PERUSAL OF THE ASSESSEES APPLICATION, T HE LEARNED CIT HAD NOTICED THAT THE ASSOCIATION WAS CREATED BY THE RESIDENT M EMBERS OF NAVEEN PARK FOR THE PURPOSE OF PROVIDING FACILITIES FOR R ECREATION, PUBLIC UTILITIES OR SIMILAR OTHER FACILITIES SUCH AS CIVIC AMENITIES ET C. FOR THE USE AND BENEFIT OF ITS RESIDENTS. THE RESIDENTS OWNING A PLOT OR A BU ILDING OR RESIDING IN A RENTED HOUSE SHALL BE ELIGIBLE TO BECOME MEMBERS OF THE ASSOCIATION. IT WAS, FURTHER, STATED THAT THE ASSOCIATION HAS BEEN CREAT ED EXCLUSIVELY FOR THE BENEFIT OF ITS RESIDENTS AND NOT FOR THE PUBLIC AT LARGE. ACCORDINGLY, THE JURISDICTIONAL ASSESSING OFFICER [DCIT, C 3(1), HUB LI] WAS REQUIRED BY THE CIT TO FURNISH A FACTUAL REPORT ON THE ISSUE. THE AO, AFTER CONDUCTING NECESSARY INQUIRIES, SUBMITTED A REPORT TO THE EFFEC T THAT THE OBJECTS OF THE ASSOCIATION WERE NOT FOR THE BENEFITS OF THE PU BLIC AT LARGE, BUT, PURELY FOR THE BENEFIT OF THE RESIDENT MEMBERS OF NAVEEN P ARK AND, THUS, THERE WAS NO ELEMENT OF CHARITABLE ACTIVITIES INVOLVED IN THE ASSOCIATION. 3.1. REJECTING THE ASSESSEES CONTENTIONS THAT SOM E ACTIVITIES SUCH AS AWARENESS PROGRAMMES ON PRESERVATION OF SAFE ENV IRONMENT, AWARENESS PROGRAMME FOR GOVERNMENT SCHOOL CHILDREN ON SAFE DR INKING WATER, IDENTIFICATION OF POOR STUDENTS IN ORDER TO PROMOTE THEIR EDUCATION, HEALTH CHECK-UP CAMPS WERE CONDUCTED ETC., THE CIT TOOK A STAND THAT THE ASSESSEE COULD NOT PRODUCE THE DETAILS AND ALSO FAI LED TO SUBSTANTIATE WITH PROOF OF THE SO CALLED ACTIVITIES WERE CONDUCTED SI NCE NO EXPENSES WERE PAGE 3 OF 7 ITA NO.1035/B ANG/2011 3 DEBITED IN THIS REGARD IN THE P&L ACCOUNT. HE HAD, FURTHER, RECORDED THAT THE ASSOCIATION FORMED WAS EXCLUSIVELY FOR THE BENEF IT OF PARTICULAR RESIDENTS OF COLONY AND NOT PUBLIC AT LARGE AND, THE REFORE, THE ACTIVITIES CANNOT BE CONSTRUED AS CHARITABLE ACTIVITIES. ACCO RDINGLY, THE CIT REJECTED THE APPLICATION FOR REGISTRATION U/S 12AA OF THE AC T ON THE GROUND THAT THE ASSESSEE ASSOCIATION CANNOT BE SAID TO HAVE SATIS FIED THE CONDITION STIPULATED UNDER THE ACT. 4. AGGRIEVED, THE ASSESSEE HAS COME UP WITH THE PR ESENT APPEAL BEFORE US. DURING THE COURSE OF HEARING, THE LEARN ED AR SUBMITTED THAT THE CIT WAS NOT JUSTIFIED IN TAKING INTO CONSIDERATION THE EXTRANEOUS MATTERS WHILE DECIDING THE GRANT OF REGISTRATION. IT WAS STATED THAT HE OUGHT TO HAVE VERIFIED THE COMPLIANCE OF CONDITIONS STIPULAT ED U/S 11 AND 12AA OF THE ACT. IT WAS, FURTHER, ARGUED THAT THE INTERPRETATI ON OF WORD PUBLIC FOR THE PURPOSE OF REGISTRATION U/S 12AA OF THE ACT BY THE C IT WAS NOT STRICTLY IN CONSONANCE WITH THE PROVISIONS OF THE ACT. THE CIT, IT WAS CONTENDED, REQUIRED TO VERIFY THE GENUINENESS OF THE ACTIVITIES OF THE TRUST ALONG WITH ITS OBJECTS TO GRANT OR TO REJECT REGISTRATION U/S 12AA OF THE ACT WHICH HE HAS FAILED TO DO SO. INSTEAD, THE CIT, IT WAS AR GUED, HELD THAT THE ACTIVITIES INCLUDING THE PROPOSED OBJECTS OF THE TR UST DO NOT FALL IN THE DEFINITION OF CHARITABLE PURPOSE AND REJECTED THE A SSESSEES APPLICATION FOR REGISTRATION. TO DRIVE HOME HIS POINT, THE LEARNED AR HAD PLACED A STRONG RELIANCE ON THE FINDINGS OF THE HONBLE TRIBUNAL, D ELHI BENCH IN THE CASE OF GREATER KAILASH II WELFARE COLONY V. DIT DATED 31. 10.2007. PAGE 4 OF 7 ITA NO.1035/B ANG/2011 4 4.1. ON THE OTHER HAND, THE LEARNED D R HAD PLACED RELIANCE ON THE STAND OF THE LEARNED CIT. HE HAD, THEREFORE, PLEAD ED THAT THE CITS ACTION REQUIRES NO INTERFERENCE OF THIS BENCH. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS, PERUSED THE MATERIALS ON RECORD AND ALSO THE CASE LAW ON WHICH THE LEARNED A R PLACED STRONG RELIANCE. 5.1. IT IS AN UNDISPUTED FACT THAT THE RESIDENTS O F NAVEEN PARK HAVE FORMED AN ASSOCIATION WITH THE FOLLOWING MAIN OBJEC TS, AMONG OTHERS: (I) TO PROVIDE FACILITIES FOR RECREATION AND PUBLIC UTI LITIES OR SIMILAR OTHER FACILITIES FOR THE USE OF BENEFIT OF THE MEMBERS IN THE FIRST INSTANCE AND TO RECEIVE MONEY F ROM THE MEMBERS AND TO APPROPRIATE THE SAME TOWARDS THE BENEFIT OF THE RESIDENTS OF THE LAYOUT AND TO HOLD T HE SAME IN TRUST; (II) TO PROVIDE ALL BASIC AMENITIES TO THE RESIDENTS OF THE LAYOUT BY APPROACHING VARIOUS GOVERNMENT DEPARTMENTS AND LOCAL BODIES; (III) TO MAINTAIN THE RESIDENTIAL COLONY, STREETS, ROADS, DRAINAGES HYGIENIC, CLEAN AND NEAT SUCH THAT THE RESIDENTS OF THE SAID LAYOUT WILL HAVE A HEALTHY ENVIRONMENT; (IV) TO MAINTAIN SPORTS AREA, SWIMMING POOL, JOGGING TRA CK, GARDEN ETC., BUILT IN THE LAYOUT; (V) TO ESTABLISH SCHOOLS, COLLEGES, LIBRARIES, INSTITUT ES AND PROGRAMS OF STUDY WITH AN OBJECT TO PROVIDE SOUND PR E- PRIMARY, PRIMARY, MIDDLE, SECONDARY, SENIOR SECONDARY A ND HIGHER EDUCATION TO CHILDREN; ETC., PAGE 5 OF 7 ITA NO.1035/B ANG/2011 5 5.2. HOWEVER, ON A CRITICAL PERUSAL OF THE OBJECTI ONS OF THE ASSESSEE (SUPRA), IT IS OBSERVED THAT THE ASSOCIATION HAS SI NCE BEEN CREATED / FORMED WITH A SOLE PURPOSE TO SERVE THE RESIDENTS OF NAVEE N PARK, BUT, NOT FOR THE PUBLIC AT LARGE, AS HAS BEEN PROJECTED ON BEHALF OF THE ASSESSEE, BEFORE THE CIT AND DURING THE COURSE OF HEARING BEFORE THIS BE NCH. AS RIGHTLY HIGHLIGHTED BY THE CIT IN HIS FINDINGS, THE ASSOCIAT ION HAD, INDEED, CREATED EXCLUSIVELY FOR THE BENEFIT OF THE RESIDENTS OF NAVE EN PARK AND NOT FOR THE PUBLIC AT LARGE. THIS IS OBVIOUS FROM THE VERY FACT OF THE OBJECTS OF THE ASSESSEE EXTRACTED SUPRA. IT WAS CONTENDED BEFORE THE CIT THAT SOME ACTIVITIES SUCH AS AWARENESS PROGRAMMES ON PRESERVA TION OF SAFE ENVIRONMENT, AWARENESS PROGRAMME FOR GOVERNMENT SCH OOL CHILDREN ON SAFE DRINKING WATER, IDENTIFICATION OF POOR STUDENTS IN ORDER TO PROMOTE THEIR EDUCATION, HEALTH CHECK UP CAMPS ETC., WERE CONDUCT ED. HOWEVER, AS POINTED OUT BY THE CIT, THERE WAS NO ELEMENT OF EXPENSES INC URRED (FOR CONDUCTING SUCH ALLEGED PROGRAMMES) FOUND A PLACE IN ITS INCOM E AND EXPENDITURE ACCOUNT. ADMITTEDLY, THE VERY PURPOSE OF CREATING SU CH AN ASSOCIATION WAS TO SERVE ONLY THE RESIDENTS OF NAVEEN PARK AND NONE ELSE. MOREOVER, NO SCHOOLS, COLLEGES, LIBRARIES, INSTITUTES AND PROGR AMS OF STUDY WITH AN OBJECT TO PROVIDE SOUND PRE-PRIMARY, PRIMARY, MIDDLE, SECOND ARY, SENIOR SECONDARY AND HIGHER EDUCATION TO CHILDREN; ETC., (AS ONE OF THE OBJECTS OF THE ASSOCIATION) APPEAR TO HAVE BEEN ESTABLISHED. 5.3. WE SHALL NOW ANALYZE THE CASE LAW ON WHICH THE ASSESSEE HAD PLACED ITS RELIANCE. PAGE 6 OF 7 ITA NO.1035/B ANG/2011 6 GREATER KAILASH II WELFARE COLONY V. DIRECTOR OF IN COME-TAX: THE MAIN OBJECTS OF THAT ASSOCIATION WERE AS FOLLOW S: (I) TO PROMOTE SOCIAL AND RECREATIONAL ACTIVITIES AMONG RESIDENTS OF GREATER KAILASH-II IN PARTICULAR AND CITIZENS OF DELHI IN GENERAL; (II) TO FOSTER AND PROMOTE UNITY AND CO-OPERATION AMONG THE WELFARE ASSOCIATION OF DELHI AND ORGANIZE ACTIVITIES BENEFICIAL TO THE PUBLIC IN GENERAL; (III) TO ARRANGE SCIENTIFIC, LITERARY AND CULTURAL FUNCTIONS, GAMES AND SPORTS, MELAS, LECTURES, EXHIBITION, FESTIVALS AND FILM SHOWS FOR THE BENEFI T OF THE GENERAL PUBLIC; (IV) TO ORGANIZE CAMPS FOR THE RELIEF OF THE POOR AND TO EXTEND ASSISTANCE FOR NATIONAL AND PUBLIC CAUSES; (V) TO OPEN DISPENSARIES TO PROVIDE MEDICAL RELIEF TO T HE NEEDY PUBLIC; (VI) TO PROMOTE THE DEVELOPMENT AND ACHIEVEMENT OF CIVIL AMENITIES AND WELFARE OF THE RESIDENTS OF THE LOCALITY; (VII) TO CARRY ON SUCH OTHER ACTIVITIES AS MAY ENSURE BENEFITS OF THE RESIDENTS OF GREATER KAILASH-II AND CITIZENS OF DELHI; ETC. 5.3.1. WHEN THE DIT HAD TURNED DOWN THE ABOV E ASSESSEES REQUEST FOR REGISTRATION, THE MATTER HAD TAKEN TO THE TRIBUNAL FOR CONSIDERATION. WHEN THERE WERE CONFLICTING VIEWS AMONG THE MEMBERS OF T HE TRIBUNAL, THE ISSUE WAS REFERRED TO THE THIRD MEMBER, VIZ., THE HONBLE VICE PRESIDENT. THE THIRD MEMBER, AFTER ANALYZING THE ISSUE IN DEPTH, CA ME TO THE CONCLUSION THAT THE ASSOCIATION HAD EXTENDED ITS BENEFITS, AMO NG OTHERS, TO THE CITIZENS OF DELHI IN GENERAL AND DID NOT RESTRICT I T TO THE RESIDENTS OF GREATER KAILASH-II ALONE AND, THUS, THE ASSOCIATION WAS ELIGIBLE FOR REGISTRATION U/S 12A OF THE ACT; PAGE 7 OF 7 ITA NO.1035/B ANG/2011 7 5.4. WE HAVE, WITH DUE REGARDS, PERUSED THE FINDIN GS OF THE DELHI TRIBUNAL (SUPRA) AND OF THE CONSIDERED VIEW THAT TH E SAID FINDING IS ON THE DIFFERENT FOOTING AND CLEARLY DISTINGUISHABLE TO THA T OF THE PRESENT ISSUE UNDER CONSIDERATION IN THE SENSE THAT THE OBJECTS O F THE PRESENT ASSESSEE WERE EARMARKED ONLY FOR THE BENEFITS OF THE RESIDENT S OF NAVEEN PARK AND IT HAD NOT BEEN EXTENDED OUTSIDE ITS BOUNDARIES, I.E., TO THE PUBLIC AT LARGE. WE ARE, THEREFORE, OF THE FIRM VIEW THAT THE ASSESS EE CANNOT TAKE REFUGE IN THE FINDINGS OF THE DELHI TRIBUNAL (SUPRA) TO JUSTI FY ITS ARGUMENT THAT ITS ACTIVITIES TOO WERE TO PUBLIC AT LARGE. IN SUBSTAN CE, THE LEARNED CIT WAS JUSTIFIED IN COMING TO A CONCLUSION THAT THE ASSESS EE ASSOCIATION CANNOT BE SAID TO HAVE SATISFIED THE CONDITIONS REQUIRED T O BE ELIGIBLE FOR REGISTRATION U/S 12AA OF THE ACT. AS THERE IS NO I NFIRMITY IN THE CONCLUSION OF THE CIT, WE DECLINE TO ENTERTAIN THE ASSESSEES REQUEST TO REVERSE THE STAND OF THE CIT IN THE MATTER. 6. IN THE RESULT , THE ASSESSEES APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED ON THE 22 ND DAY OF FEBRUARY, 2013 AT BANGALORE. SD/- SD/- (N BARATHVAJA SANKAR) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE C IT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER SENIOR PRIVATE SECRETARY, ITAT, BAN GALORE.