M/s Aphaj Gaue Sewa Ashram, Barnala V. CIT(E), Chandigarh

ITA 1159/CHANDI/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9951 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-06-2018
• Assessment Year: misc
• Appeal Filed On: 20-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR GULSHAN RAJ
• Keywords: Charitable institution; Source of fund; Additional evidence
• Section: 12A; 12AA; 10B; 12

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH !, ' # , . %.. . & , '( # BEFORE: SMT. DIVA SINGH, JM & DR. B.R.R. KUMAR , A M ./ ITA NO. 1159/CHD/2017 UNDER SECTION 12AA M/S APHAJ GAUE SEWA ASHRAM RAM BAGH ROAD BARNALA PUNJAB THE CIT(EXEMPTION) CHANDIGARH ./ PAN NO: AACTA0753E / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI. TEJ MOHAN SINGH ! / REVENUE BY : DR. GULSHAN RAJ ' !# $/ DATE OF HEARING : 28/08/2018 %&'()* $/ DATE OF PRONOUNCEMENT : 25/09/2018 ')/ ORDER PER DR. B.R.R. KUMAR: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(E), CHANDIGARH DT. 29/06/2017. 2. IN THE PRESENT APPEAL ASSESSEE HAS RAISED THE FO LLOWING GROUNDS: 1. THAT THE LD. CIT HAS ERRED IN LAW AS WELL AS ON FAC TS IN REJECTING REGISTRATION UNDER SECTION 12AA OF THE ACT WHICH IS ARBITRARY & UNJUSTIFIED. 2. THAT THE LD. CIT HAS REJECTED THE CLAIM ONLY FOR TH E REASON THAT REGISTRATION IS BEING SOUGHT AFTER A LAPSE OF 17 YEARS SINCE ITS CREATION AND FU RTHER THERE IS NO DISSOLUTION CLAUSE IN THE MOA WHICH IS NOT THE REQUIREMENT FOR CLAIMING REGIS TRATION UNDER SECTION 12AA AND AS SUCH THE ORDER IS ARBITRARY AND UNJUSTIFIED. 3. THAT THE REGISTRATION HAS BEEN REFUSED ONLY ON THE BASIS OF SUSPICION, CONJECTURES AND SURMISES AS IS EVIDENT FROM THE VARIOUS UNFOUNDED F INDINGS AS ENUMERATED IN THE BODY OF THE ORDER WHICH IS NOT PERMITTED UNDER THE LAW AND AS SUCH THE ORDER REFUSING REGISTRATION IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 3. AS PER THE ORDER OF THE LD. CIT(E), AN APPLICATI ON IN FORM NO. 10A WAS RECEIVED IN THIS OFFICE ON 23.12.2016 SEEKING REGIS TRATION U/S 12A OF THE INCOME TAX ACT, 1961. THE APPLICATION REVEALS THAT THE SOC IETY IS AN ONGOING ENTITY THAT HAS BEEN IN OPERATION SINCE 20.09.2000. 2 4. THE STATED AIMS AND OBJECTS OF THE SOCIETY ARE T O CONSTRUCT, MAINTAIN AND RUN THE APHAJ GAUE ASHRAM AT BAMALA OR ANY OTHER PL ACE IN INDIA; TO TAKE CARE OF DISABLED, AGED, ILL AND HANDICAPPED COWS AND THE ALIKE; TO CONSTRUCT, OPEN/RUN HOSPITAL, DISPENSARY, EYE BANK, BLOOD BANK , EDUCATIONAL INSTITUTION, INSTITUTIONS, INCLUDING DEPARTMENT OF SCIENTIFIC RE SEARCH FOR THE RECEPTION AND THE TREATMENT OF PERSONS SUFFERING FROM ILLNESS OR OTHE RWISE NEEDING MEDICAL AID OR TO HIRE ON RENT BUILDING OR HOSPITAL FOR RECEPTION AND TREATMENT OR PERSONS SUFFERING FROM ILLNESS OR OTHERWISE IN NEED OF MEDICAL AID FO R RECEPTION, REHABILITATION OR TO RENDER FINANCIAL ASSISTANCE TO THE INSTITUTIONS EST ABLISHED FOR THE ACHIEVEMENT OF THE ABOVE OBJECTS IN INDIA; TO BUILD IMMOVEABLE PRO PERTIES FOR CARRYING ON ABOVE MENTIONED ACTIVITIES AND OTHER PROMOTIONAL PU RSUITS, ALSO FOR CREATING REGULAR SOURCES OF INCOME AND SET UP SPECIAL FUNDS AND TRUSTS TO MANAGE SUCH PROPERTIES AND FUNDS; TO CONSTRUCT BUILDING FOR REN TAL PURPOSE FOR THE MAINTENANCE OF THE TRUST; TO SEEK AND RECEIVE DONAT IONS, STATE GRANTS, FUNDS AND OTHER FINANCIAL ASSISTANCE FOR FULFILLING THE ABOVE OBJECTS; TO PROVIDE FINANCIAL AID TO THE NEEDY, POOR FAMILIES FOR THE FULFILMENT OF T HEIR SOCIAL OBLIGATIONS LIKE MARRIAGE OF DAUGHTER ETC. 5. THE PROVISIONS NECESSITATED EXAMINATION OF TWO B ASIC CONDITIONS FOR GRANT OF REGISTRATION U/S 12AA. THE SAME INCLUDE, APART F ROM THE EXAMINATION OF OBJECTS OF THE SOCIETY, SATISFACTION OF THE COMPETE NT AUTHORITY IN RESPECT OF GENUINENESS OF ACTIVITIES AS WELL PARTICULARLY WHEN THE APPLICANT IS AN ONGOING ENTITY. 6. THE FINANCIAL STATEMENTS SUBMITTED BY THE APPLIC ANT REFLECT THE FOLLOWING:- F.Y. GROSS RECEIPT NET SURPLUS (%) FIXED ASSETS C A SH & BANK ADDITIONS 2013-14 RS. 29,39,275/- RS. 4,28,626/- (14.6%) RS. 35,44,332/- FS 9,75,475/- RS. 34,925/- 2014-15 2015-16 RS. 28,06,553/- RS. 2,92,160/- (10.4%) RS. 52,44,10 9/- RS. 15,89,257/- RS. 20,61,947/- RS. 30,19,567/- (-) 1,31,122 RS. 57,45,866/- RS. 9, 10,961/- RS. 8,23340/- 2016-17 RS. 35,69,216/- (-) 4,45,425 RS, 55,30,226/ - RS. 9,99,677/- RS. 74,305/- 3 7. LD. CIT(E) HELD THAT MAJOR SOURCE OF THE RECEIPT IS THROUGH SALE OF MILK AND MANURE WHILE MAJOR EXPENDITURE IS ON FODDER & FEED. FINANCIAL STATEMENTS OF THE F.Y. 2016-17 REVEALS THAT THE SOCIETY HAS INCURRED EXPENDITURE OF RS. 9,54,619/- TOWARDS PURCHASE OF MILK WHICH DO NOT CORROBORATE W ITH THAT OF THE AIMS & OBJECT OF THE SOCIETY. THE MAJOR SOURCE OF RECEIPTS HAS BEEN SHOWN FROM SALE OF MILK WHICH CLEARLY POINT OUT THAT THE ACTIVITIES AR E OF COMMERCIAL NATURE AND NOT OF CHARITY AS CLAIMED. THE ISSUE OF BOTH PURCHASE A ND SALE OF MILK CLEARLY ESTABLISHES THAT THIS IS AN ENTERPRISE THAT PREDOMI NANTLY AIMS AT SALE/COMMERCE OF/IN MILK. THE ACTIVITIES DO NOT PARTAKE THE CHARA CTER OF 'CHARITABLE PURPOSE' AS ENVISAGED IN SECTION 2(15) OF THE ACT. IT IS ALSO C LEAR FROM THE DOCUMENTS ON RECORD THAT THE MAIN OBJECTS OF THE SOCIETY I.E. TA KING CARE OF DISABLED, AGED, ILL AND HAND CAPPED COWS HAVE NOT BEEN PURSUED. MOREOVE R, THERE IS NO EVIDENCE OF ACTIVITIES CARRIED OUT TOWARDS FULFILME NT OF OTHER OBJECTS OF THE SOCIETY MENTIONED IN THE MOA. 8. HE FURTHER HELD THAT, IN THE ABSENCE OF THE DISS OLUTION CLAUSE, THE PRESUMPTION OF THE LAW IS THAT THE ASSETS AND LIABI LITIES OF THE SOCIETY WILL BE DISTRIBUTED AMONGST THE MEMBERS OF THE SOCIETY IN C ASE THE SOCIETY CLOSES ITS OPERATIONS OR IS DISBANDED. THE PROVISION} OF SECTI ON 13(L)(C) OF THE ACT ARE CLEARLY ATTRACTED WITHOUT THIS DISSOLUTION CLAUSE. LACK OF DISSOLUTION CLAUSE IS ALSO IN CONTRAVENTION TO THE NECESSARY CONDITIONS LAID D OWN BY THE SOCIETY'S REGISTRATION ACT, 1360. 9. GIVING THE ABOVE RATIONALE, LD. CIT(E) HELD THAT SOCIETY CANNOT BE TERMED TO FALL UNDER THE CATEGORY OF 'CHARITABLE PURPOSE' AND THE APPLICATION FOR GRANT OF REGISTRATION U/S 12 AA WAS REJECTED. 4 10. BEFORE US, LD. DR SUBMITTED AIMS AND OBJECTS OF THE TRUST ALONGWITH DETAILS OF THE TRUSTEES AND OFFICE BEARERS. COPIES OF THE A UDIT REPORT UNDER SECTION 12A (B) IN FORM 10B ALONGWITH BALANCE SHEET AND INCOME AND EXPENDITURE ACCOUNT HAVE BEEN FILED. DURING THE COURSE OF HEARING IN RE SPONSE TO THE COURT QUERY AS TO NUMBER OF COWS FARMING PART OF GAUSHALA, AREA , RECORD OF VACCINATION AND THE MEDICINES, THE ASSESSEE HAS SUBMITTED THE DETAI LS FROM PAGE NO. 1 TO 99 OF THE PAPER BOOK. THESE ADDITIONAL EVIDENCES SINCE RE QUIRED FOR ADJUDICATION OF THE CASE HAVE BEEN ACCEPTED UNDER RULE 29 OF ITAT R ULES. 11. LD. AR HAS ALSO ARGUED THAT ALL THE COWS IN THE ASHRAM ARE HANDICAPPED COWS AND NOT ABLE TO PRODUCE MILK ON A COMMERCIAL B ASIS. THE ASSESSEE HAS ALSO SUBMITTED AN AFFIDAVIT FROM SHRI. BALJINDER SI NGH CLAIMING THAT THE MILK SOLD BY THE TRUST IS FROM THE COWS MAINTAINED BY HIM AND THE SOCIETY HAS ONLY HELPED HIM IN SELLING THE MILK. HOWEVER NO EVIDENCE OF REC EIPT OF THE MONEY BY SHRI BALJINDER SINGH HAS BEEN SUBMITTED. 12. HE RELIED ON THE ORDERS IN THE CASE OF DIT(E) V S. SABARMATI ASHRAM GAUSHALA TRUST IN ITA NO. 1162 OF 2013, DIT(E) VS. SHREE NASHIK PANCHVATI PANJRAPOLE 397 ITR 501 (BOMBAY), CIT(E) VS. TARA ED UCATIONAL & CHARITABLE TRUST IN ITA NO. 247 OF 2015 AND CIT-II VS. SURYA EDUCATI ONAL & CHARITABLE TRUST 355 ITR 280 (P&H). BASED ON THE ABOVE EVIDENCES IT WAS ARGU ED THAT THE EXEMPTION NEEDS TO BE CONSIDERED BY THE AUTHORITIES. 13. LD. DR ON THE OTHER HAND ARGUED THAT IT WAS NOT VERY CLEAR ON THE RECORDS AND CENSUS AS TO HOW MANY ANIMALS ARE CRIPPLED AND HOW MANY WERE MILCH YIELDY AND ARGUED THAT PHYSICAL VERIFICATION IS REQ UIRED TO DETERMINE THE ELIGIBILITY UNDER SECTION 12AA. 5 14. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND WE FIND THAT INTER EST OF JUSTICE WOULD BE MET BY SENDING THE FILE BACK TO THE FILE OF THE DIT(E) TO EXAMINE THE ISSUE AFRESH REGARDING THE DISSOLUTION CLAUSE, EXISTENCE OF ANIM ALS, PHYSICAL VERIFICATION OF HEALTH STATUS AND TO VERIFY THE EVIDENCES REGARDING THE PURCHASE AND SALE OF MILK BY CONDUCTING ENQUIRIES AS DEEM FIT AND TO TAK E A DECISION IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX ACT,1961, AND KEEPING IN VIEW THE ESTABLISHED JUDGMENTS QUOTED ABOVE. 15. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ! . %.. . & , (DIVA SINGH) (DR. B.R.R. KUMAR) ' #/ JUDICIAL MEMBER '( #/ ACCOUNTANT MEMBER AG DATE: 25/09/2018 &+ ,- .-)/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' // CIT 4. ' / ()/ THE CIT(A) 5. -!23 4, $ 4*, 67839/ DR, ITAT, CHANDIGARH 6. 38 :#/ GUARD FILE &+ ' / BY ORDER, ; / ASSISTANT REGISTRAR