Appeal details
Counselvise Citation
[2018] 125 COUNSELVISE.COM (IT) 7507 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
11 month(s) 9 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
11-07-2018
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
26-04-2018
Assessment Year
2017-2018
Appeal Filed On
01-08-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1185/CHD/2017 (ASSESSMENT YEAR : 2017-18) GAUSHALA TRUST SOCIETY, VS. THE CIT(EXEMPTIONS), SPATU ROAD, CENTRAL REVENUE BUILDING, AMBALA CITY. 5 TH FLOOR, SECTOR-17E, CHANDIGARH. PAN: AABAG6754D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ROHIT GOYAL, CA RESPONDENT BY : SHRI GULSHAN RAJ, CIT DR DATE OF HEARING : 26.04.2018 DATE OF PRONOUNCEMENT : 11.07.2018 ORDER PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH (HEREINAFTER REFERRED TO A S CIT(APPEALS)) DATED 31.5.2017 RELATING TO ASSESSMEN T YEAR 2017-18, REFUSING GRANT OF REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEFLY STATED, THE ASSESSEE HAD FILED AN APPLIC ATION IN FORM NO.10A SEEKING REGISTRATION AS A CHARITABLE TR UST FOR CLAIMING EXEMPTION OF ITS INCOME U/S 11 AND 12 OF T HE ACT. THE LD.CIT(E) NOTED FROM THE APPLICATION THAT THE A SSESSEE SOCIETY WAS AN ONGOING ENTITY SINCE 1913 WITH THE F OLLOWING AIMS AND OBJECTS AS OUTLINED IN PARA 2 OF THE ORDER AS UNDER: 2 2. THE STATED OSTENSIBLE AIMS AND OBJECTS OF THE SOCIETY ARE TO MAKE GENERAL IMPROVEMENT OF COWS AND ITS OF F SPRINGS AND THUS TO INCREASE MILK YIELD; TO DEVELOP SUCH CA TTLE INTO COWS, OXEN AND BULLS OF GOOD PEDIGREE; TO TAKE CARE OF OL D, TAME AND LAME AND FAMINE- STRICKEN COWS, OXEN, BULLS, CALVES AND T HEIR PEDIGREE AND TO GIVE MAXIMUM HELP/PROTECTION TO AFOR ESAID; TO SUPPLY PURE MILK IN THE ILLAQA AT REASONABLE RATES; TO FEED UP AND DEVELOP THE CALVES AND SELECTED VARIOUS PEDIGREE S INTO STUD-BULLS AND TO PROVIDE SUCH BULLS TO VILLAGES FOR IMPROVEMENT OF COWS BREAD AT REASONABLE RATES. 3. WITH THIS BACKGROUND THE LD.CIT(E) PROCEEDED TO EXAMINE WHETHER THE ASSESSEE WAS ENTITLED FOR REGIS TRATION AS PER THE PROVISIONS OF SECTION 12A OF THE ACT AND , THEREFORE, ISSUED A QUESTIONNAIRE SEEKING TO EXAMI NE THE FULFILLMENT OF THE CONDITIONS FOR GRANT OF REGISTRA TION U/S 12AA, BEING THE GENUINENESS OF THE OBJECTS AND THE GENUINENESS OF THE ACTIVITIES CARRIED OUT BY THE AS SESSEE. DUE REPLIES WERE FILED BY THE ASSESSEE, AFTER CONSI DERING WHICH, THE LD.CIT(E) HELD THAT THE ASSESSEE HAD FAI LED TO FULFILL THE BASIC CONDITIONS FOR BEING ELIGIBLE FOR GRANT OF REGISTRATION, SINCE ITS MAJOR EMPHASIS WAS ON CREAT ING INCOME FROM SALE OF MILK, ENHANCING FDRS AND EARNI NG INTEREST ON THE SAME AND THAT THERE WAS NO INCOME F ROM PROPERTY OF THE ASSESSEE SOCIETY, AS THE TITLE OF L AND IN THE NAME OF THE SOCIETY, WAS UNDER LITIGATION FOR THE P AST MANY YEARS. THE LD.CIT(E) DENIED THE REGISTRATION ALSO F OR THE REASON THAT THERE WAS NO CORPUS FUND RECEIVED BY TH E ASSESSEE SOCIETY AND THE SAME WAS CREATED ONLY BY W AY OF ACCRETION IN THE SHAPE OF PROFITS, WHICH THE LD.CIT (E) HELD, DID NOT PARTAKE THE CHARACTER OF CORPUS DONATIONS A S ENVISAGED U/S 11(1)(D) OF THE ACT AND FURTHER THAT THERE WERE NO VOLUNTARY DONATIONS RECEIVED BY THE ASSESSE E AND 3 THUS NO INCOME THAT COULD BE COVERED BY THE PROVISI ONS OF SECTIONS 11 AND 12 OF THE ACT. THE LD.CIT(E) ALSO FOUND THE CLAIM OF THE SOCIETY OF TREATING MORE THAN 500 COWS AS NOT GENUINE FOR THE REASON THAT THE ASSESSEE GAUSHALA WAS RUNNING A GOVERNMENT VETERINARY HOSPITAL IN ITS PRE MISES SINCE IT HAD EMPLOYED A DOCTOR FROM THE GOVERNMENT FOR TREATING INJURED AND SICK COWS AND ONLY MEAGRE AMOU NT HAD BEEN SPENT BY IT ON MEDICINE AND, THEREFORE, IT WAS NOT THE ASSESSEE WHO WAS TREATING THE SICK AND INJURED COWS BUT THE GOVERNMENT WHICH WAS DOING SO, WHICH BELIED TH E CLAIM OF THE ASSESSEE THAT IT WAS CARRYING OUT CHARITABLE ACTIVITIES OF TREATING SICK AND INJURED COWS. FOR THE ABOVE R EASONS, THE LD.CIT(E) REFUSED THE GRANT OF REGISTRATION U/S 12A OF THE ACT. THE RELEVANT FINDINGS OF THE LD.CIT(APPEA LS) IN PARAS 7 TO 10 OF THE ORDER ARE AS UNDER: 7. ON 18.05.2017, SH. KARAN JAIN, C.A., COUNSEL FOR THE APPLICANT ATTENDED AND FILED, WRITTEN SUBMISSIONS IN RESPONSE TO ABOVE NOTED QUERIES, WHILE EXAMINING THE INCOME & EXPENDITURE STATEMENTS FOR THE F.Y 2016-17 IT TRANS PIRED THAT MAJOR EMPHASIS OF THE SOCIETY IS ON CREATING I NCOME FROM, SALE OF MILK AND ENHANCING FDRS AND EARNING INTERES T ON THE SAME. THIS ISSUE ALSO EXACERBATED BY THE FACT THAT THE INCOME FROM SALE MILK IN F.Y. 2015-16 WAS 56.31 LACS AND. THE SAME HAS READIED TO 63.51 LACS IN F.Y. 2016-17. THIS ARR ANGEMENT CLEARLY LEADS TO CONCLUDE THAT SOCIETY HAS BEEN DIVE RTED FROM ITS OBJECT OF SERVING THE OLD, TAME AND LAME COWS AND G OT INVOLVED IN COMMERCIAL ACTIVITY OF SELLING OF MILK. MOREOVER THE CLAIMS OF THE APPLICANT THAT IT IS TAKING CARE OF MORE THAN 50 0 OLD AND LAME COWS LOSES ITS VERACITY AS HOW OLD AND LAME COWS CO ULD PRODUCE THAT HUGE QUANTITY OF MILK THAT WOULD INCRE ASE INCOME ON ACCOUNT OF MILK SALE FROM 56 LACS TO 63 LACS. 8. IT HAS ALSO BEEN OBSERVED THAT TITLE OF LAND IN THE NAME OF THE SOCIETY IS UNDER LITIGATION FROM LAST MANY YEAR TIN DER THIS SCENARIO IT CLEARLY LEADS TO CONCLUSION THAT THERE IS N O INCOME FROM PROPERTY AND IT MIGHT POSSIBLY BE THE CASE OF ENCROACHMENT ON GOVERNMENT LAND, BY THE APPLICANT. FURTHER PERUSAL OF FINANCIAL STATEMENTS REVEALS THAT NO EVI DENCE OF CORPUS FUNDS BEING SHOWN, IN. THE BALANCE SHEET BEING R ECEIVED AS SUCH HAS BEEN PROVIDED BY THE APPLICANT RATHER T HE 4 ACCRETIONS IN. THE SHAPE OF PROFITS ARE BEING TAKEN TO CORPUS EVERY YEAR BY THE APPLICANT. THIS DOESN'T TAKE PARTA KE THE CHARACTER OF CORPUS DONATIONS AS ENVISAGED IN SECTI ON 11(1 )(D). MOREOVER, PERUSAL OF INCOME & EXPENDITURE REVEALS NO VOLUNTARY DONATIONS AS ENVISAGED IN SECTION 12 OF L.T . ACT HAS BEEN, RECEIVED AND THERE IS NO INCOME THAT COULD BE COVERED, BY THE PROVISION OF SECTION 11 & 1.2 OF IT. ACT. 9. IT HAS ALSO BEEN, REVEALED FROM THE SUBMISSIONS THA T A VETERINARY HOSPITAL IS RUNNING IN. THE PREMISES OF GA USHALA AND GOVERNMENT HAS EMPLOYED A DOCTOR WHICH, CLEARLY ESTABLISHES THAT IT IS A GOVERNMENT HOSPITAL BEING MANAGED BY THE GOVERNMENT AND. SOCIETY HAS NOTHING TO DO WI TH IT. THE ISSUE GETS EXACERBATED BY THE FACT, THAT SOCIETY HAS CLAIMED EXEMPTION U/S L0(23C)(V) IN THE PREVIOUS YEAR ON ACCOUNT OF CHARITABLE ACTIVITIES OF SERVING OF INJURED, OR SIC K COWS WHICH IN ACTUALITY IS BEING DONE BY THE GOVT. VETERINARY HOS PITAL. THE SAME CLAIM WAS EVEN REJECTED BY THE ASSESSING OFFICE IN LAST ASSESSMENT, : THIS ISSUE ALSO GETS IMPINGED BY THE FACT THAT OUT OF THE TOTAL INCOME OF 90 LCS AS ON 31.03.2017 ONLY A SUM OF 92,.982/- HAS BEEN SPENT ON MEDICINES WHICH IS MERE LY 1.02%. THIS ARRANGEMENT CLEARLY LEADS TO THE CONCLUSION TH AT CLAIM OF SOCIETY THAT IT IS TREATING MORE THAN 500 COWS IS N OT GENUINE RATHER IT IS OPERATING ON COMMERCIAL PRINCIPAL AND. FOCUSING ON GENERATING INCOME ON ACCOUNT OF MILK SALE AND CREAT ION OF FIXED ASSETS. MOREOVER, NO JUSTIFICATION FOR THE CLAIM OF EXEMPTION, AFTER 113 YEARS OF INCORPORATION OF THE SOCIETY HAS BEEN P ROVIDED BY THE APPLICANT 10. IN THE INSTANT CASE, GIVEN ALL OF THE ABOVE. THE APPLICATION, UNDER SECTION 12.A FOR GRANT OF REGISTRA TION IS REJECTED. 4. AGGRIEVED BY THE SAME, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US, RAISING THE FOLLOWING GROUND OF A PPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) HAS ERRED IN LAWS AND FACTS AND LAW IN NOT REGISTERING THE APPLICANT TRUST U/S 12AA. 5. DURING THE COURSE OF HEARING BEFORE US, THE LD. COUNSEL FOR ASSESSEE FIRST STATED THE FACTS RELATING TO THE ASSESSEE SOCIETY POINTING OUT THAT THE ASSESSEE SOCIETY WAS MORE THAN 100 YEARS OLD AND HAD BEEN ESTABLISHED WITH TH E OBJECT TO TAKE CARE AND TO GIVE SHELTER TO OLD AND LAME CO WS, WHOM THE PUBLIC DO NOT KEEP WITH THEM. THAT IT WAS TAKIN G CARE OF MORE THAN 500 VOWS AND WAS RUNNING A COW HOSPITAL B Y 5 EMPLOYING THE GOVERNMENT DOCTOR TO SERVE THE OLD AN D HELPLESS COWS. THE LD. COUNSEL FOR ASSESSEE STATED THAT IT WAS PROVIDING FREE MEDICAL FACILITIES FOR THE TREAT MENT OF ANY COW BROUGHT BY GENERAL PUBLIC. THE LD. COUNSEL FOR ASSESSEE FURTHER STATED THAT THE COST OF MAINTENANCE OF COW WAS BEING MET OUT OF SELLING MILK OF THESE VERY COWS. THE LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO THE SUBM ISSIONS MADE IN THIS REGARD BEFORE THE LD.CIT(E) PLACED AT PAPER BOOK PAGE NO.29 AS UNDER: 1. ASSESSEE IS ENGAGED IN THE ACTIVITIES TO TAKE C ARE AND TO GIVE SHELTER TO OLD AND LAME COWS, WHOM THE PUBLIC DO NOT, KEEP WITH THEM AND ARE OF STATUS OF WITHOUT OWNER. PRESENTLY THE GAUSHALA IS TAKING CARE OF MORE THAN 500 COWS. TO MEET THE PURPOSE OF SERVING ILL & HELPLESS CO WS, GAUSHALA IS MAINTAINING A COW HOSPITAL IN WHICH GOVER NMENT EMPLOYED A DOCTOR. A VETERINARY HOSPITAL IS RUNNING I N THE PREMISES OF GAUSHALA AND A REGULAR VETERINARIAN IS EN GAGED THERE WHOSE MAIN RESPONSIBILITY IS TO TREAT THE COWS OF GAUSHALA AND THE GAUSHALA HOSPITAL IS PROVIDING FREE MEDICAL FACILITY FOR THE TREATMENT OF ANY COW BROUGHT FOR TR EATMENT BY GENERAL PUBLIC. GAUSHALA IS ALSO PROVIDING MEDICINES F OR COWS FREE OF COST. AS THE GAUSHALA IS ENGAGED IN TAKING CARE OF OLD A ND LAME COWS AND RUNNING A GOVERNMENT VETERINARY HOSPI TAL IN THE PREMISES ITSELF 'WHICH IS AN EVIDENTIAL PROOF OF ITS CHARITABLE ACTIVITIES. THUS, EXEMPTION UNDER SECTION 10(2 3C) IS CLAIMED. PHOTOCOPY OF ASSESSMENT ORDER FOR THE A.Y. 20 14-15 IS ENCLOSED HEREWITH. 2. FINANCIAL STATEMENT AS ON 31.03.2017 I.E. RECEIPT & PAYMENT ACCOUNT, BALANCE SHEETAND INCOME & EXPENDITU RE ACCOUNT ARE ATTACHED HEREWITH. THE GAUSHALA TRUST SOCIETY WAS ESTABLISHED IN FEBRUAR Y 1913 WITH THE OBJECT TO TAKE CARE AND TO GIVE SHELTER TO O LD AND LAME COWS, WHOM THE PUBLIC DO NOT KEEP WITH THEM AND THE GAUSHALA IS SERVING ITS OBJECT FROM MORE THAN LAST 1 00 YEARS. THE MOTTO OF GAUSHALA IS 'GAU SEWA - ISHWAR SEWA'. PRESENTLY THE GAUSHALA IS TAKING CARE OF MORE THAN 500 COWS. FOR MEETING OUT THE COST OF MAINTENANCE OF COWS, THE SOCIETY SELLS THE MILK OF COWS WHICH IS AN ALLIED WORK AS AFTER PROV IDING MEDICAL AID, GOOD AND NUTRITIOUS FEED, IT PRODUCES MILK. FOR FEEDING THE COWS, THE SOCIETY HAS ITS OWN AGRICULTU RE LAND ON WHICH THE FEED FOR COWS ARE SOWN. AS THE NUMBER OF COWS ARE MORE THAN 500 THEREFORE MILK SALE IS OF CONSIDERABLE A MOUNT BUT 6 THE FACT IS THAT MAIN SOURCE OF FUNDS FOR MEETING O UT DAY TO DAY MAINTENANCE EXPENSES LIKE FEED, CONSUMABLES, LABOUR E TC IS THE MILK SALE. DURING THE YEAR 2015-16 THE TOTAL EXPENSES OF THE GAUSHALA EXCLUDING DEPRECIATION WAS APPROX. 78 LACS A S AGAINST THE MILK SALE OF RS. 63 LACS. FROM THE ABOV E IT IS CLEAR THAT THE. PRESUMPTION OF ENGAGEMENT OF GAUSHALA IN COMMERCIAL ACTIVITIES OF SALE OF MILK IS NOT CORRECT. 6. THE LD. COUNSEL FOR ASSESSEE THEREAFTER STATED T HAT THE BASIS ON WHICH THE LD.CIT(E) HELD THAT THE ASSESSEE WAS NOT ENTITLED TO GRANT OF REGISTRATION U/S 12A OF THE AC T WERE EITHER ON MISAPPRECIATION OF FACTS OR WERE IRRELEVA NT TO THE ISSUE OF GRANT OF REGISTRATION. DRAWING OUR ATTENT ION TO THE CONTENTION OF THE LD.CIT(E) THAT THE ASSESSEE WAS I NDULGING PRIMARILY IN THE COMMERCIAL ACTIVITY OF SELLING MIL K, THE LD. COUNSEL FOR ASSESSEE STATED THAT THE GENERATION OF MILK AND SELLING OF THE SAME WAS AN ALLIED ACTIVITY AND INCI DENTAL ACTIVITY OF THE ASSESSEE SOCIETY ARISING FROM ITS M AIN ACTIVITY OF LOOKING AFTER COWS. LD.COUNSEL FOR THE ASSESSEE, IN THIS REGARD STATED THAT OUT OF 500 COWS WHICH IT WAS LOOKING AFTER, ONLY 80 COWS WERE PRODUCING MILK WHI LE THE BALANCE WERE EITHER NON MILK PRODUCING COWS OR THOS E NOT USED FOR BREEDING OR THEY WERE BULLS USED FOR BREED ING OR WERE COWS WHICH WERE BREEDABLE AND WERE NOT GIVING MILK AT THAT TIME. IN THIS REGARD, THE LD. COUNSEL FOR ASSE SSEE DREW OUR ATTENTION TO A CERTIFICATE OF THE VETERINARY SU RGEON CERTIFYING MONTHLY PROGRESS REPORT OF THE GAUSHALA FOR THE MONTH OF MARCH, 2017, TO THE OFFICE OF THE DEPUTY D IRECTOR, ICD PROJECT AMBALA CITY. THE LD. COUNSEL FOR ASSES SEE STATED THAT THIS PROGRESS REPORT SHOWED THE NUMBER ANIMAL/COWS WHICH WERE THERE WITH GAUSHALA AND THEI R BREAK-UP ON THE BASIS OF WHETHER THEY WERE MILK COW S, 7 BREEDABLE COWS, BUFFALOES, HEIFERS ETC. AND ALSO THEIR DAILY MILK PRODUCTION, ANNUAL MILK PRODUCTION, MONTHLY AN D YEARLY EXPENSES ON THE COWS. THE LD. COUNSEL FOR A SSESSEE DREW OUR ATTENTION TO THE ANALYSIS OF THE DATA IN T HE SAID MONTHLY REPORT BY WAY OF A CHART SUBMITTED BEFORE U S AS UNDER: COWS (IN MILK/BREEDABLE) COWS/BULLOCKS(NON MILK PRODUCI NG/ BULLS USED FOR BREEDING NOT USED FOR BREEDING) DESCRIPTION NOS. DESCRIPTION NOS. DESCRIPTION NOS. CURRENT MILK BEARING COWS 80 DISABLED COWS NON MILK PRODUCING 103 GOOD BULLS USED FOR BREEDING 5 BREEDABLE BUT NOT MILK BEARING CURRENTLY 105 CALVES MALE 48 FEMALE HEIFERS 43 STERLISED BULLOCKS 73 CALVES FEMALE 52 BULLS NOT USED FOR BREEDING 31 TOTAL 280 TOTAL 255 TOTAL 5 7. POINTING OUT TO THE ABOVE THE LD. COUNSEL FOR AS SESSEE STATED THAT IT WAS EVIDENT FROM THE ABOVE THAT OUT OF THE 540 COWS OWNED BY IT, ONLY 80 COWS WERE CURRENTLY B EARING MILK AND ONLY 280 IN ALL WERE CAPABLE TO GIVE MILK, WHILE THE REST WERE EITHER DISABLED, STERILIZED OR MALE COWS OR WERE BULLS. THE LD. COUNSEL FOR ASSESSEE, THEREFORE, STA TED THAT THE ABOVE STATISTICS CLEARLY REVEALED THAT MAJOR OB JECTIVE OF THE ASSESSEE SOCIETY WAS NOT TO INDULGE IN MILK GEN ERATION AND SALE OF THE SAME. THE LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO AN ANALYSIS OF THE MILK REALIZATION BY ASSESSEE SOCIETY FOR THE YEAR ENDING 31-03-2017 AND POINTED OUT THERE FROM THAT EVEN AS PER THE SAID DATA OF THE AN NUAL MILK PRODUCTION OF THE ASSESSEE SOCIETY , WHICH WAS CORR ELATED WITH THE DATA AS CERTIFIED BY THE VETERINARY DOCTOR AND REVENUE GENERATION ON ACCOUNT OF THE SAME WHICH TA LLIED WITH THE REVENUE GENERATED FROM THE SALE OF MILK AS 8 REFLECTED IN THE INCOME AND EXPENDITURE ACCOUNT OF THE ASSESSEE , THE TOTAL MILK YIELDING COWS AVAILABLE W ITH THE ASSESSEE SOCIETY WERE APPROXIMATELY 75. THE LD. CO UNSEL FOR ASSESSEE FURTHER POINTED OUT THAT THE SELLING P RICE OF THE MILK WAS RS.38/- TO RS.40/- PER LITRE WHICH WAS FAR LESS THAN THE MARKET PRICE AND WHICH PROVED THAT THE IN TENTION OF THE ASSESSEE SOCIETY WAS NOT TO INDULGE IN ANY COMMERCIAL ACTIVITY AND GENERATION OF HUGE PROFITS BY SALE OF MILK. THE LD. COUNSEL FOR ASSESSEE FURTHER POIN TED OUT THAT IN ANY CASE, THE ASSESSEE SOCIETY WAS NOT EARN ING ANY SURPLUS FROM THE SALE OF MILK AND TO SUBSTANTIATE T HE SAME. THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT AGAIN ST THE REVENUE GENERATED FROM THE SALE OF MILK DURING THE YEAR 2015-16 OF RS.63,51,321/-, THE EXPENSES INCURRED I N THE GAUSHALA AMOUNTED TO RS.75 LACS APPROXIMATELY, THUS RESULTING IN LOSS FROM THIS ACTIVITY CARRIED OUT BY THE ASSESSEE SOCIETY. THE LD.COUNSEL FOR THE ASSESSEE STATED THAT IT WAS AMPLY CLEAR FROM THE ABOVE THAT THE ACT IVITY OF SELLING MILK BY THE ASSESSEE SOCIETY WAS IN NO WAY THE PRIMARY OBJECT OF THE ASSESSEE SOCIETY AND WAS ALSO NOT CARRIED OUT WITH THE OBJECT TO EARN PROFITS, AND, T HEREFORE, THE FINDINGS OF THE LD.CIT(APPEALS) IN THIS REGARD WERE INCORRECT AND HENCE DENIAL OF REGISTRATION FOR THE ABOVE REASON. 8. DRAWING OUR ATTENTION TO THE NEXT CONTENTION OF THE LD. CIT(E), WHICH WAS NOT ACTUALLY TAKING CARE OF OLD A ND LAME COWS BUT ONLY GETTING IT DONE AT NO EXPENSES TO TH E 9 ASSESSEE SOCIETY THROUGH A GOVERNMENT VETERINARY DO CTOR AND SPENDING VERY MEAGRE AMOUNT FOR TREATING THE S AID ANIMALS BY WAY OF PURCHASE OF MEDICINES ETC, LD.COU NSEL FOR THE ASSESSEE STATED THAT THE LD.CIT(E) HAD AGAIN MISAPPRECIATED THE FACTS AND CONTENTION ON THIS ISS UE. THE LD. COUNSEL FOR ASSESSEE STATED THAT IT WAS THE GOV ERNMENT OF HARYANA WHICH HAD EXTENDED THE FACILITIES AND DO CTORS FOR THE HOSPITAL AND, THEREFORE, IT CANNOT BE STATED TH AT FOR THIS REASON, THE ASSESSEE WAS DIVERTED FROM ITS OBJECT O F SERVING OLD AND LAME COWS. AS FAR THE MEAGRE AMOUNT SPENT ON TAKING CARE OF THESE COWS, THE LD. COUNSEL FOR ASSE SSEE STATED THAT THE OBJECTIVE OF THE ASSESSEE SOCIETY W AS TO GIVE SHELTER AND TAKE CARE OF OLD AND LAME COWS AND FOR THIS PURPOSE IT PROVIDED FEED AND OTHER CONSUMABLES INCL UDING MEDICINES TO THE COWS. FURTHER THE LD. COUNSEL FOR ASSESSEE STATED THAT THE GOVERNMENT OF HARYANA HAD EXTENDED THE FACILITIES AND DOCTORS AND ALSO PROVIDED MEDICINES AVAILABLE WITH THEM FOR TREATING THE COWS AT THE GAUSHALA AND BESIDES, THE ASSESSEE SOCIETY HAD ALSO SPENT AN AMO UNT OF RS.1,44,842/- TOWARDS MEDICINES PURCHASED FOR TAKIN G CARE OF THE COWS. THE LD. COUNSEL FOR ASSESSEE STATED T HAT IT IS CLEARLY EVIDENT THAT THE ASSESSEE WAS INDULGING IN ITS STATED OBJECTIVE OF TAKING CARE OF OLD AND LAME COWS AND F INDING OF THE OF THE LD.CIT(E) THAT THE EXPENDITURE ON MEDICI NE WAS VERY LOW AND THUS THE ASSESSEE WAS NOT CARRYING OUT ITS STATED OBJECT, HAD NO BASIS AT ALL AND WAS IRRELEVA NT. THE LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO ITS 10 CONTENTION BEFORE THE LD.CIT(E) IN THIS REGARD REPR ODUCED AT PAPER BOOK PAGE NO.30 AS UNDER: 5. DURING THE YEAR 2015-16 THE OFFICE HAS RAISED A QUERY THAT OUT OF TOTAL RECEIPTS, ONLY 1.06% AMOUNT IS S PENT FOR MEDICINE PURCHASED. THE ABOVE CORRELATION HAS NO RE LEVANCE TO FORM A PRESUMPTION THAT GAUSHALA IS NOT FOLLOWING TH E BASIC PRINCIPLES OF GAUSHALA. THE MAIN OBJECT OF GAUSHALA I S TO-GIVE SHELTER AND TAKE CARE OF OLD AND LAME COW. TO FULFILL ING ITS OBJECTS GAUSHALA PROVIDES FEED AND OTHER CONSUMABLE S INCLUDING MEDICINES ETC TO COWS AND PROVIDE PROPER MEDICAL CHECKUP TO COWS, TIME TO TIME SO THAT THE COWS MAIN TAINED BY GAUSHALA MAY REMAIN HEALTHY. FURTHER A REGULAR VETERIN ARIAN IS ENGAGED THERE WHOSE MAIN RESPONSIBILITY IS TO TREAT THE COWS OF GAUSHALA AND THE GAUSHALA HOSPITAL IS PROVING FRE E MEDICAL FACILITY FOR THE TREATMENT OF ANY COW BROUGHT FOR TREATMENT BY GENERAL PUBLIC. THE EXPENSES INCURRED F OR MEDICINE PURCHASE OF RS. 144842.00 ONLY DOES NOT ME AN THAT SOCIETY IS NOT FOLLOWING THE BASIC PURPOSE OF ITS E STABLISHMENT. AS THE COWS MAINTAINED AT GAUSHALA ARE HEALTHY AND TH E OUTSIDERS WHO BROUGHT THEIR COWS FOR MEDICAL TREATME NT AND CONSULTANCY ARE DULY SATISFIED. IT IS WORTHWHILE TO S TATE HERE THAT GOVT OF HARYANA WHO HAS EXTENDED THE FACILITIES & DOCTORS IN THE HOSPITAL ALSO PROVIDE MEDICINES AVAILABLE WIT H THEM AND REST OF THE MEDICINES ARE PURCHASED BY US. 9. TAKING UP THE CONTENTION OF THE LD.CIT(E) THAT T HE ASSESSEE WAS INDULGING ONLY IN THE ACTIVITY OF ENHA NCING ITS FDRS AND EARNING INTEREST ON THE SAME, THE LD. COUN SEL FOR ASSESSEE STATED THAT IT HAD BEEN CLEARLY POINTED OU T TO THE LD.CIT(E) THAT FDRS HAD BEEN MADE FROM THE FUND REC EIVED FROM THE GOVERNMENT OUT OF COMPULSORY ACQUISITION O F LAND OF THE ASSESSEE SOCIETY IN THE YEAR AND THE ASSESSE E GAUSHALA WAS HOLDING ON TO THE FDRS DUE TO THE UNCERTAINTY REGARDING PREMISES ON WHICH IT WAS RUNN ING GAUSHALA WHICH WAS TAKEN ON LEASE, AS IT WAS UNDER LITIGATION FOR THE PAST MANY YEARS. THE LD. COUNSE L FOR ASSESSEE STATED THAT FDRS WERE BEING KEPT TO BE UTI LIZED IF THE ASSESSEE HAD TO VACATE ITS PRESENT PREMISES AND SHIFT TO A NEW PLACE. THE LD. COUNSEL FOR ASSESSEE DREW OUR 11 ATTENTION TO ITS SUBMISSIONS MADE IN THIS REGARD BE FORE THE LD.CIT(E) REPRODUCED AT PAGE 30 OF THE PAPER BOOK A S UNDER: 6. THE FDR'S APPEARING IN THE BALANCE SHEET ARE MADE OF THE FUND RECEIVED FROM GOVERNMENT OUT OF COMPULSORY ACQUISITION OF LAND OF GAUSHALA IN THE YEAR. THE PR ESENT PREMISES OF GAUSHALA IS TAKEN BY IT ON LEASE WHICH I S UNDER LITIGATION FROM LAST MANY YEARS. THE GAUSHALA IS HOL DING FDR'S DUE TO THE FUTURE UNCERTAINTY REGARDING ITS PREMISE S, IN CASE GAUSHALA HAS TO VACANT THE PREMISES IT HAS TO BUY TH E PREMISES SO THAT THE COWS CAN BE SHIFTED THERE. THE REFORE HOLDING OF FDR IS NOT UNDER THE DISCRETION OF GAUSH ALA BUT IT IS BOUND TO HOLD THE FDR DUE TO THE UNCERTAINTY OF LIT IGATION OUTCOME . A COPY OF LEASE DEED IS ENCLOSED HEREWITH . 10. THE LD. COUNSEL FOR ASSESSEE STATED THAT IT IS CLEARLY EVIDENT FROM THE ABOVE THAT IT WAS NOT THE OBJECTIV E OF THE ASSESSEE SOCIETY TO ENHANCE ITS FDRS AND THE FINDIN G OF THE LD.CIT(E) IN THIS REGARD WAS, THEREFORE, INCORRECT ON FACTS. 11. THEREAFTER THE LD. COUNSEL FOR ASSESSEE DREW OU R ATTENTION TO THE FINDINGS OF LD.CIT(E) THAT SINCE T HE TITLE OF LAND IN THE NAME OF SOCIETY WAS UNDER LITIGATION IT HAD NO INCOME FROM PROPERTY AND IT WAS PROBABLY A CASE OF ENCROACHMENT ON GOVERNMENT LAND BY THE ASSESSEE. O UR ATTENTION WAS ALSO DRAWN TO THE FINDING OF LD.CIT(E ) AT PARA 8 OF ITS ORDER THAT THE ASSESSEE DID NOT HAVE ANY C ORPUS FUND AND WAS CREATING THE SAME OUT OF THE PROFIT GE NERATED YEAR TO YEAR, WHICH AS PER THE LD.CIT(E) DID NOT P ARTAKE THE CHARACTER OF CORPUS DONATION. THE LD. COUNSEL F OR ASSESSEE FURTHER POINTED OUT THE FINDINGS OF THE L D.CIT(E) THAT NO VOLUNTARY DONATION HAD BEEN RECEIVED BY THE ASSESSEE AND IT HAD NO INCOME WHICH COULD BE COVERE D BY THE PROVISIONS OF SECTION 11 AND 12 OF THE ACT. TH E LD. 12 COUNSEL FOR ASSESSEE STATED THAT THE ABOVE FINDINGS OF THE LD.CIT(E) WERE WHOLLY IRRELEVANT FOR THE PURPOSE O F GRANT OF REGISTRATION U/S 12A OF THE ACT SINCE THEY DID NOT IMPINGE ON THE GENUINENESS OF EITHER ITS OBJECTS OF THE ACT IVITIES CARRIED OUT BY IT. 12. THE LD. COUNSEL FOR ASSESSEE STATED THAT IT WAS CLEARLY EVIDENT THAT THE ASSESSEE SOCIETY WAS ENTITLED TO G RANT OF REGISTRATION U/S 12A OF THE ACT AND THE LD.CIT(E) H AD ON THE BASIS OF IRRELEVANT CONSIDERATION AND BY MIS-APPREC IATION OF FACTS BEFORE IT DENIED THE SAME. RELIANCE WAS PLAC ED BY THE LD. COUNSEL FOR ASSESSEE ON THE FOLLOWING JUDGMENTS OF THE HON'BLE HIGH COURT IN SUPPORT OF ITS CONTENTION: 1) CIT VS. DELHI KANNADA EDUCATION SOCIETY 246 ITR 731 (DELHI HC) 2) SECONDARY BOARD OF EDUCATION ORISSA VS. ITO (1972) 86 ITR 408 (ORISSA HC) 3) DIT(EXEMPTIONS), MUMBAI VS. SHREE NASHIK PANCHVATI PANJRAPOLE (2017) 397 ITR 501 4) DIT(EXEMPTIONS VS. SABARMATI ASHRAM GAUSHALA TRUST (2014) 362 ITR 539 13. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD.CIT(E). 14. WE HAVE HEARD THE RIVAL CONTENTIONS, AND ALSO C AREFULLY GONE THROUGH THE DOCUMENTS AND CASE LAWS REFERRED T O BEFORE US. THE ISSUE BEFORE US PERTAINS TO REFUSAL OF GRANT OF REGISTRATION U/S 12A OF THE ACT. THAT THE ASSESSEE SOCIETY WAS ESTABLISHED WITH THE OBJECT OF MAKING GENERAL IMPROVEMENT OF COWS AND TO TAKE CARE OF OLD AND LAM E COWS, OXEN, BULLS, ETC. IS NOT DISPUTED. FURTHER, WE FIND THAT IT IS 13 NOT THE CASE OF REVENUE THAT THE SAID STATED OBJECT S WERE NOT CHARITABLE IN CHARACTER. THE CONTENTION OF THE REVENUE, WE FIND, IS THAT THE ASSESSEE WAS NOT GENUINELY CAR RYING OUT ITS STATED OBJECTS AND THE REASON AND BASIS FOR ARR IVING AT THIS CONCLUSION WAS THE FOLLOWING: 1) THAT THE ASSESSEE WAS PRIMARILY INDULGING IN THE ACTIVITY OF SELLING MILK, YIELDED BY THE COWS, ON COMMERCIAL LINES. 2. THAT IT WAS ENHANCING ITS FDRS FROM SUCH INCOME DERIVED FROM SALE OF MILK FOR THE PURPOSE OF EARNI NG INTEREST THEREON. 3) THAT IT WAS SPENDING MEAGRE AMOUNT ON MEDICINES THUS BELYING ITS CLAIM THAT IT WAS LOOKIN G AFTER OLD AND LAME COWS. THE REVENUE HAS ALSO CONTENDED THAT THE ASSESSEE IS NOT ENTITLED TO REGISTRATION U/S 12A FOR THE REASON THAT IT HAS NEITHER ANY INCOME FROM PROPERTY, NOR HAS IT ANY INCOME EITHER IN THE NATURE OF CORPUS DONATION OR VOLUNTARY DONATION WHICH ARE COVERED BY THE PROVISI ONS OF SECTIONS 11 AND 12 OF THE ACT. 15. ON CAREFUL CONSIDERATION OF THE CONTENTIONS OF BOTH THE PARTIES, WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE. THE FACTS AND FIGURES, AS POINTED OUT TO US AND WHICH HAVE NOT BEEN CONTROVERTED BY THE REVENUE, SUBSTANTIATE THE CONTENTION OF THE LD.COUNSEL FOR T HE ASSESSEE, THAT IT WAS PRIMARILY INDULGING IN ITS ST ATED 14 OBJECTS OF LOOKING AFTER COWS AND ACTIVITY OF THE S ALE OF MILK WAS ONLY AN INCIDENTAL ACTIVITY. WE FIND THAT THE ASSESSEE HAD CONTENDED THAT IT HAD 500-540 COWS AND THAT OUT OF THE ABOVE, ONLY 80 COWS WERE MILK PRODUCING. THE LD.COU NSEL, ON THIS BASIS, HAS ASSERTED THAT MAJORITY OF THE CO WS WITH THE ASSESSEE SOCIETY WERE SOLELY FOR BEING TAKEN CA RE OF, WHICH WAS THE STATED OBJECT OF THE SOCIETY ALSO. TH IS FACT WAS EVIDENCED BY THE MONTHLY PROGRESS REPORT OF THE ASSESSEE SOCIETY, ISSUED BY THE DY.DIRECTOR, ICD PR OJECT, AMBALA. THE ASSESSEE HAD ALSO CORROBORATED THE SAME BY SUBMITTING AN ANALYSIS OF MILK REALIZATION BY THE G AUSHALA FOR THE YEAR ENDED 31-03-2017 ,REFLECTING THEREIN T HAT THE REVENUE GENERATED FROM THE SALE OF MILK ,AT BELOW M ARKET PRICE, WAS POSSIBLE FROM MILK PRODUCED BY 75 COWS O NLY ,ON THE BASIS OF AVERAGE DAILY MILK PRODUCED BY THE COW S IN THE GAUSHALA AS CERTIFIED BY THE DEPUTY DIRECTOR ICD, A MBALA. THE MONTHLY PROGRESS REPORT OF THE ASSESSEE SOCIETY WAS PLACED BEFORE THE LD.CIT(E) ALSO AND FACTS STATED T HEREIN HAVE NOT BEEN CONTROVERTED BY THE REVENUE. THE SAME HAVE NOT BEEN CONTROVERTED EVEN BEFORE US, NOR HAS THE L D. DR POINTED OUT ANY INFIRMITY IN THE ANALYSIS OF THE SA ID MONTHLY PROGRESS REPORT OF THE ASSESSEE SOCIETY PLA CED BY THE ASSESSEE BEFORE US DURING THE COURSE OF HEARING . THE REVENUE ALSO HAS NOT POINTED OUT ANY INFIRMITY IN T HE ANALYSIS OF THE MILK REALIZATION BY THE ASSESSEE SO CIETY IN THE YEAR ENDING 31.3.2017. THUS, THE FACT THAT OUT OF 500- 540 COWS BEING LOOKED AFTER BY THE ASSESSEE SOCIETY , ONLY 80 COWS WERE MILK YIELDING, REMAINS AN UNCONTROVERTED FACT. 15 WE ALSO FIND THAT THE ASSESSEE HAD DEMONSTRATED FRO M ITS FINANCIAL STATEMENTS THAT THE ENTIRE REVENUE EARNED FROM THE SALE OF MILK WAS UTILIZED IN ITS ACTIVITY OF LO OKING AFTER ALL THE COWS. IT IS CLEARLY EVIDENT FROM THE AFORES AID FACT THAT ONLY A SMALL PROPORTION OF COWS WITH THE ASSES SEE YIELDED MILK WHICH WAS SOLD BY THE ASSESSEE AND THE REVENUE GENERATED THEREOF WAS UTILIZED IN MAINTAINI NG ALL THE COWS, WHICH MAJORLY WERE NOT PRODUCING MILK.THE REFORE CLEARLY THE ACTIVITY OF SELLING MILK WAS ONLY AN AN CILLARY ACTIVITY OF THE ASSESSEE, THE SURPLUS GENERATED FRO M WHICH WERE UTILIZED FOR ACHIEVING ITS MAIN OBJECT OF MAIN TAINING AND LOOKING AFTER LAME AND DISOWNED COWS, ETC. THER EFORE, WE HOLD THAT THE DENIAL OF GRANT OF REGISTRATION TO THE ASSESSEE U/S 12A FOR THE REASON THAT IT WAS PRIMARI LY INDULGING IN THE COMMERCIAL ACTIVITY OF SELLING MIL K IS AGAINST THE FACTS OF THE CASE AND IS TOTALLY UNWARR ANTED. 16. FURTHER WE FIND NO MERIT IN THE CONTENTION OF T HE REVENUE THAT THE FACT THAT THE ASSESSEE WAS SPENDIN G ONLY MEAGRE AMOUNT ON MEDICINE, PROVED THAT IT WAS NOT INDULGING IN ITS STATED OBJECT OF LOOKING AFTER LAM E AND SICK COWS. AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR ASSESSEE, ITS STATED OBJECT WAS NOT MERELY TREATING SICK COWS BUT LOOKING AFTER AND MAINTAINING DISOWNED COW S AND THE FINANCIAL STATEMENTS OF THE ASSESSEE SOCIETY FO R THE YEAR ENDING 31.3.2017, 31.3.2016 AND 31.3.2015, CLEARLY SHOWED THAT IT WAS CARRYING OUT ITS STATED OBJECT, HAVIN G SPENT SUBSTANTIAL AMOUNT ON PROCURING FEED FOR THE COWS 16 ALONGWITH MEDICINES. BESIDES, WE FIND THAT THE ASSE SSEE SOCIETY HAD EXPLAINED THAT THE COWS WERE BEING LOO KED AFTER BY THE DOCTOR WHICH WAS PROVIDED BY THE VETERINARY HOSPITAL OF THE GOVERNMENT. THEREFORE WE FIND NO MERIT IN TH E REASONING OF THE REVENUE THAT THE LOW SPEND ON MEDI CINES IS A POINTER TO THE FACT THAT THE ASSESSEE WAS NOT CAR RYING OUT ITS STATED OBJECT. 17. FURTHER, WE FIND NO MERIT IN THE CONTENTION OF THE REVENUE THAT THE ASSESSEE WAS ONLY INDULGING IN CRE ATING FDRS AND EARNING INTEREST THEREFROM, SINCE WE FIND THAT THE ASSESSEE HAD STATED THAT FDRS HAD BEEN MADE FROM FU NDS RECEIVED ON ACQUISITION OF LAND OWNED BY IT AND THA T IT WAS HOLDING ON TO THE SAID FDRS TO MEET ANY EVENTUALITY OF BEING DISPLACED FROM ITS PRESENT PREMISES WHICH WAS BEING DISPUTED. THE REVENUE HAS NOT CONTROVERTED THE ABOV E STATEMENT OF THE ASSESSEE. THEREFORE, THE ASSESSEE HAVING EXPLAINED THAT THE FDRS HAD NOT BEEN CREATED FROM THE INCOME GENERATED FROM SALE OF MILK, THE DENIAL OF REGISTRATION FOR THIS REASON ALSO IS REJECTED. 18. WE FURTHER AGREE WITH THE LD. COUNSEL FOR ASSES SEE THAT THE DENIAL OF REGISTRATION FOR THE REASON THAT IT H AD NO CORPUS DONATION OR VOLUNTARY DONATION OR ANY INCOME FROM PROPERTY, ARE IRRELEVANT CONSIDERATION OF GRANT OF REGISTRATION SINCE THE ONLY SATISFACTION WHICH THE LD.CIT(E) HAS TO ARRIVE AT WHEN GRANTING REGISTRATION IS VIS- -VIS THE GENUINENESS OF THE OBJECTS AND THE ACTIVITIES OF TH E ASSESSEE 17 SOCIETY AND THE FACT THAT IT IS GETTING CORPUS DONA TION OR VOLUNTARY DONATION IS IRRELEVANT TO THE SAID CONSID ERATION. 19. FOR THE ABOVE REASON, WE SET ASIDE THE ORDER OF THE LD.CIT(E) IN REFUSING GRANT OF REGISTRATION OF THE ASSESSEE SOCIETY AND DIRECT THAT THE SAME BE GRANTED TO THE ASSESSEE SOCIETY. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE, THER EFORE, STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11 TH JULY, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH
