M/s Storage Networking Industry Association of India, New Delhi V. DIT (Exemptions), New Delhi

ITA 1050/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4203 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 26-04-2011
• Assessment Year: misc
• Appeal Filed On: 25-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI
• Assessee Lawyers: MANISH MEHTA; M M BHASIN
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA

Judgement Text

ITA NOS. 1049-1050/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NOS. 1049 & 1050/DEL/2011 A.Y. : - M/S STORAGE NETWORKING INDUSTRY ASSOCIATION OF INDIA, 28/20, LOWER GROUND FLOOR, EAST PATEL NAGAR, NEW DELHI 110 008 (PAN/GIR: AAOCS1363F) VS. DIT (EXEMPTIONS), PLOT NO. 15, 3 RD FLOOR, AAYAKAR BHAVAN, LAXMI NAGAR, DISTRICT CENTRE, NEW DELHI 110 092 (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. M.M. BHASIN, CA & SH. MANISH MEHTA, CA DEPARTMENT BY : MS. BANITA DEVI, (D.R.) ORDER ORDER ORDER ORDER PER PER PER PER SHAMIM YAHYA : AM SHAMIM YAHYA : AM SHAMIM YAHYA : AM SHAMIM YAHYA : AM THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF THE DIT(EXEMPTIONS), DELHI DATED 15.12.2010 R EJECTING THE APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATI ON U/S 12AA AND EXEMPTION U/S 80G RESPECTIVELY. 2. IN THIS CASE ASSESSEE FILED APPLICATION ON 18.6. 2010 IN FORM NO. 10A FOR SEEKING REGISTRATION U/S 12A OF THE IT ACT. DIT(E) REFERRED TO THE ANCILLARY OBJECTS OF THE COMPANY AND PROCEEDED TO HOLD THAT ITA NOS. 1049-1050/DEL/2011 2 OBJECTS OF THE ASSESSEE WERE NOT CHARITABLE IN NATUR E. DIT(E) HELD AS UNDER:- ON PERUSAL OF THE DETAILS FILED, IN THE MOA OF THE COMPANY UNDER THE HEAD OBJECTS INCIDENTAL OR ANCILLIARY TO THE ATT AINMENT OF THE MAIN OBJECTS THE FOLLOWING CLAUSES ARE FOUND WHICH R EAD AS UNDER: B(10) TO DRAW, MAKE ACCEPT, ENDORSE, DISCOUNT, EXECU TE AND ISSUE BILL OF EXCHANGE PROMISSORY NOTES, BILLS OF LA DING, WARRANTS, AND OTHER NEGOTIABLE OR TRANSFERABLE INST RUMENTS OR SECURITIES. THIS HAS ELEMENTS OF COMMERCIAL ACTIV ITY WHICH IS PROHIBITED SECTION 2(15) OF THE I.T ACT B(13) TO ACCEPT SUBSCRIPTIONS, DONATIONS AND CONTRI BUTIONS WHETHER BY WAY OF CAPITAL OR INCOME, AND WHETHER OCCASIONAL OR RECURRING, FROM ANY PERSON BODY OR GOVERNMENT AND FOR THAT PURPOSE TO ENTER INTO ANY SU CH CONVENANT OR AGREEMENT WITH SUCH COVENANT OR AGREEME NT WITH SUCH PERSON, BODY OR GOVERNMENT AND ON SUCH TE RMS AS MAY BE AGREED UPON AS THE COMPANY MAY THINK IT DONATIONS HAS TO BE VOLUNTARY AND CANNOT BE CONDITI ONAL. THE CONDITIONAL DONATION AND AGREEMENTS RELATED TO THAT CANNOT BE CALLED CHARITY. B(18) TO ENTER INTO ANY ARRANGEMENTS WITH ANY GOVER NMENTS OR AUTHORITIES (SUPREME, MUNICIPAL, LOCAL OR OTHERWISE) OR ANY COMPANIES FIRMS OR PERSONS THAT MAY SEEM CONDUCIVE TO THE ATTAINMENT OF THE COMPANY'S OBJECTS OR ANY OF TH EM AND ITA NOS. 1049-1050/DEL/2011 3 TO OBTAIN FROM ANY SUCH CHARTERS, CONTRACTS, DECREAS E RIGHTS, PRIVILEGES AND CONCESSIONS. BESIDES IT HAS NOT BEEN BROUGHT OUT WITH THE DESCRI PTION OF THE NATURE OF ACTIVITIES THE TARGET PEOPLE (BENEFIC IARIES) AND THE MANNER IN WHICH THE ACTIVITIES WOULD FALL UNDER THE CATEGORY OF CHARITABLE PURPOSE AS DEFINED IN SEC. 2 (15) OF THE ACT. FURTHER IT IS STATED THAT THE DONOR FOR R S 151,000 SNAI INDIA FUNCTIONING FROM THE SAME ADDRESS OF THE APPLICANT IS NOTHING BUT THE OLD NAME OF STORAGE NE TWORKING INDUSTRY OF INDIA. MERE CHANGE OF NAME DOES NOT SHOW THAT A NEW TRUST /SOCIETY/ COMPANY HAS BEEN FORMED WARRANT ING FRESH REGISTRATION U/S 12A. THEREFORE IN VIEW OF THE ABOVE FACTS THE CREATION O F A NEW GENUINE ORGANISATION FOR 'CHARITABLE PURPOSE' AS DE FINED IN SEC 2(15) OF THE ACT IS NOT ESTABLISHED. THE PROVISIONS OF SECTION 12AA STIPULATE THE FOLLOW ING CONDITIONS FOR REGISTRATION U/S 12A OF THE I.T. ACT, 1961:- (I) THE OBJECTS OF THE SOCIETY SHOULD BE OF CHARITABLE I N NATURE; (II) THE ACTIVITIES OF THE SOCIETY SHOULD BE GENUINE. THEREFORE, ONE OF THE CONDITIONS FOR GRANTING REGIS TRATION U/S 12AA IS ALSO NOT SATISFIED. THEREFORE, THE GENUINENESS OF THE CLAIM OF THE TRUST TO BE A CHARITABLE TRUST IS NOT ESTABLISHED. ACCORDINGLY, THE APPLICATION ITA NOS. 1049-1050/DEL/2011 4 FILED BY THE APPLICANT FOR GRANT OF REGISTRATION U/ S 12AA IS HEREBY REJECTED. SINCE THE APPLICANT IS NOT REGISTERED U/S 12A(A) OF THE INCOME TAX ACT, 1961, ITS APPLICATION IN FORM NO. 10G SEE KING EXEMPTION U/S 80G IS ALSO REJECTED. 3. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT RECORDS. WE FIND THAT THE ASSESSEE IS DULY REGISTE RED COMPANY U/S 25 COMPANIES ACT, 1956 INCORPORATED AS NOT FOR PROFIT. THE FACT THAT THE ASSESSEE IS REGISTERED U/S 25 OF THE COMPANIES ACT P RIMA-FACIE SHOWS THAT THE ASSESSEE IS SET UP TO PROMOTE CHARITABLE O R OTHER USEFUL OBJECTS AND INTENDS TO APPLY ITS PROFIT IN PROMOTING ITS OBJECTS. THE ASSESSEE IS PROHIBITED FROM MAKING PAYMENT OF ANY DIVI DEND TO ITS MEMBERS. THE MAIN OBJECTS OF THE ASSESSEE COMPANY READ AS UNDER:- (A) THE MAIN OBJECTS TO BE PURSUED BY THE COMPANY ON I TS INCORPORATION ARE:- 1. TO PROMOTE, EDUCATE AND TRAIN PROFESSIONALS AS W ELL AS IT AND END USERS IN PUBLIC AND PRIVATE SECTORS WORKING I N THE FIELD OF INFORMATION TECHNOLOGY, ADVANCEMENT IN TH E ADOPTION OF STORAGE NETWORKING AS COMPLETE AND TRUST ED ITA NOS. 1049-1050/DEL/2011 5 SOLUTIONS, TO LEAD THE STORAGE INDUSTRY IN DEVELOPI NG AND PROMOTING STANDARDS, TECHNOLOGIES AND EDUCATIONAL SE RVICES TO EMPOWER ORGANIZATION IN THE MANAGEMENT OF INFORMATION, NOT WITH MOTIVE OF PROFIT. 2. NO OBJECTS OF THE COMPANY WILL BE CARRIED OUT WITH OUT OBTAINING PRIOR APPROVAL/ NO OBJECTION CERTIFICATE FROM THE CONCERNED AUTHORITY WHERE EVER REQUIRED. 3. NONE OF THE OBJECTS OF THE COMPANY WILL BE CARRIED OUT ON COMMERCIAL BASIS. 4.1 A READING OF THE ABOVE MAIN OBJECTS OF THE COMPAN Y CLEARLY INDICATE THAT ASSESSEE IS NOT FOR PROFIT AND ITS OB JECTS ARE NOT FOR MAKING PROFIT. THE DIT(E) HAS ERRED IN CONSIDERING THE OBJECTS INCIDENTAL OR ANCILLARY TO THE ATTAINMENT OF THE MAI N OBJECTS AS THE MAIN OBJECTS OF THE COMPANY. THE ANCILLARY AND INC IDENTAL OBJECTS ARE MEANT ONLY TO FACILITATE THE PURSUING OF MAIN OB JECTS. THE MAIN OBJECTS AS STATED ABOVE ARE CLEARLY NOT FOR PROFIT M OTIVE AND AS SUCH THE OBJECTS INCIDENTAL OR ANCILLARY TO THE ATTAINME NT OF THE MAIN OBJECTS CANNOT BE MADE THE SUBJECT MATTER FOR REJECTION OF APPLICATION FOR REGISTRATION U/S 12AA OF THE IT ACT. THEREFORE , IN OUR CONSIDERED ITA NOS. 1049-1050/DEL/2011 6 OPINION, THE ASSESSEE IS ELIGIBLE FOR REGISTRATION U/S 12AA AND EXEMPTION U/S 80G. WE DIRECT ACCORDINGLY. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/4/2011, UP ON CONCLUSION OF HEARING. SD/- SD/- [ [[ [A.D. JAIN A.D. JAIN A.D. JAIN A.D. JAIN] ]] ] [SHAMIM [SHAMIM [SHAMIM [SHAMIM YAHYA] YAHYA] YAHYA] YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 27/4/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES