Coomunity development Medicinal Unit, Bhubaneswar V. CIT, Bhubaneswar

ITA 120/CTK/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0814 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 07-04-2010
• Court: TRIBUNAL
• Department Lawyers: C K DASH
• Assessee Lawyers: AMIYA KUMAR MISHRA
• Keywords: Set aside

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK () BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 120/CTK/2010 COMMUNITY DEVELOPMENT MEDICINAL UNIT, 97, FOREST PART, BHUBANESWAR 751 009. PAN : AAATC 2228 A - - - VERSUS - COMMISSIONER OF INCOME - TAX, BHUBANESWAR. ( /APPELLA NT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI AMIYA KUMAR MISHRA, AR / FOR THE RESPONDENT: / SHRI C.K.DASH, DR / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS A PPEAL IS PREFERRED BY THE ASSESSEE AGAINST REJECTION OF THE APPLICATION FOR RENEWAL OF APPROVAL U/S.80G(5)(VI) OF THE INCOME - TAX ACT,1961. 2. THE BRIEF FACTS ARE THAT THE ASSESSEE IS A REGISTERED SOCIETY CAME INTO EXISTENCE ON 7.11.1987.IT APPLIED FOR RENE WAL OF APPROVAL U/S.80G(5)(VI). FROM THE FINANCIAL STATEMENTS FOR THE LAST THREE AYS THE LEARNED CIT OBSERVED THAT THE CORE ACTIVITIES OF THE ASSESSEE - SOCIETY CONSISTS OF PURCHASE AND SALE OF GENERIC MEDICINES AND WHATEVER OTHER ACTIVITIES THE ASSESSEE HA D CLAIMED TO HAVE UNDERTAKEN APART FROM ITS CORE ACTIVITIES ARE ALMOST NEGLIGIBLE AS THE MAJOR PORTION OF THE INCOME WERE FOUND TO HAVE BEEN UTILISED FOR THE PURCHASE AND SALE OF MEDICINES. THE LEARNED CIT HELD THAT THE SOCIETY IS NOT A CHARITABLE ONE. TH EREFORE, HE REJECTED THE APPLICATION FOR RENEWAL OF APPROVAL U/S.80G(5)(VI). / I.T.A.NO. 120/CTK/2010 2 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSEE - APPELLANT, A COMMUNITY DEVELOPMENT MEDICINAL UNIT IS A NON - GOVERNMENT VOLUNTARY ORGANIZATION REGISTE RED UNDER THE SOCIETY REGISTRATION ACT,1860 DT.7.11.1987. IT CARRIES ON ITS ACTIVITIES FOR THE PROMOTION OF RATIONAL USE OF MEDICINE THROUGH SELECTED PARTNER ORGANIZATIONS INCLUDING HOSPITALS, DISPENSARIES, HEALTH CENTERS, VILLAGE MEDICINE UNITS BY ENSURIN G ACCESS TO ESSENTIAL LIFE - SAVING MEDICINES TO THE PUBLIC AT LARGE AT AFFORDABLE PRICE, WHICH IS INCIDENTAL TO THE PRIMARY ACTIVITY OF THE SOCIETY. HE FURTHER ARGUED THAT THE ASSESSEE - SOCIETY APPLIED FOR RENEWAL OF REGISTRATION/S.80G ON2.6.2009 AND THE IMP UGNED ORDER HAS BEEN PASSED BY THE LEARNED CIT ON 1.2.2010 WHICH IS BEYOND THE TIME LIMIT PRESCRIBED IN RULE 11AA(6). HE PLACED RELIANCE ON THE DECISION IN THE CASE OF KARANATAKA GOLF ASSOCIATION V. DIT (EXEMPTION) [(2005 272 ITR 123]. THE LEARNED DR, ON T HE OTHER HAND, SUPPORTED THE IMPUGNED ORDER OF THE LEARNED CIT AND CONTENDED THAT THE PRIME ACTIVITY OF THE SOCIETY BEING PURCHASE AND SALES OF MEDICINES AND NOT OF CHARITABLE NATURE, THE LEARNED CIT IS JUSTIFIED IN REJECTING THE APPLICATION FOR RENEWAL OF APPROVAL U/S.80G(5)(VI). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE SEE NO MATERIAL AS CONSIDERED BY THE LEARNED CIT U/S.80G IS FOR REJECTING THE APPROVAL TO BE GRANTED WHICH RATHER LEAN IN FAVOUR OF THE ASSES SEE AS WITHOUT BRINGING ON RECORD AS TO HOW THE INCOME GENERATED ON ACCOUNT OF THE PURPORTED BUSINESS TRANSACTIONS BEING DISBURSAL OF THE MEDICINES COULD BE HELD INDULGE D FOR OBTAINING DONATIONS UNDER THE PROVISIONS OF SECTION 80G. THE ASSESSEE HAS REPEATE DLY CLAIMED THAT THE MEDICINES ARE GIVEN WITHOUT PROFIT MARGIN WHICH THE LEARNED CIT HAS ASSUMED A BUSINESS TRANSACTION FOR ESTABLISHING BEYOND DOUBT THAT THE ASSESSEE IS NOT ENTITLED FOR GRANTING APPROVAL U/S.80G WITH A REASONABLE COMPLIANCE TO THE / I.T.A.NO. 120/CTK/2010 3 CONDI TIONS FOR GRANTING REGISTRATION U/S.12A. MOREOVER, THE IMPUGNED ORDER HAVING BEEN PASSED BEYOND THE TIME LIMIT OF SIX MONTHS AS PRESCRIBED IN RULE 11AA(6) IS NOT IN ORDER. THEREFORE, WE SET ASIDE THE IMPUGNED ORDER OF THE CIT AND DIRECT HIM TO GRANT RENEWA L OF APPROVAL U/S.80G(5)(VI) AS CLAIMED BY THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 25.01.2011 SD/ - SD/ - ( . . . ), ( K.S.S.PRASAD RAO), JUDICIAL MEMBER (. . ), , (K.K.GUPTA), ACCOUNTANT MEMBER. () DATE: 25.01.2011 - COPY OF THE ORDER FORWARDED TO: 1. / THE APPELLANT : COMMUNITY DEVELOPMENT MEDICINAL UNIT, 97, FOREST PART, BHUBANESWAR 751 009. 2 / THE RESPONDENT: COMMISSIONER OF INCOME - TAX, BHUBAN ESWAR. 3. / THE CIT, 4. ()/ THE CIT(A), 5. / DR, CUTTACK BENCH 6. GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.