Madanapalle Mahila Kalanjiya Samakhya, Madanapalle V. Commissioner of Income Tax, Tirupathi

ITA 1286/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74535 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 24-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: SAI PRASAD BURRA
• Section: 80G; 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.1286/HYD/2013 MADANAPALLE MAHILA KALANJIYA SAMAKHYA, MADANAPALLE. PAN AACTM7382B VS. COMMISSIONER OF INCOME TAX, TIRUPATI (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. SAI PRASAD BURRA FOR REVENUE : MR. D. SUDHAKAR RAO DATE OF HEARING : 01.10.2014 DATE OF PRONOUNCEMENT : 01.10.2014 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS APPEAL BY ASSESSEE IS AGAINST THE ORDER OF CIT/DIT (EXEMPTIONS), TIRUPATI DATED 31.05.2013 REJ ECTING ASSESSEES APPLICATION FOR REGISTRATION UNDER SECTI ON 12AA OF THE I.T. ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE-SOCIE TY WAS FORMED ON 14.06.2010 UNDER REGISTRATION OF SOCI ETIES ACT. IT FILED AN APPLICATION FOR REGISTRATION UNDER SECT ION 12A OF THE I.T. ACT AND ALSO RECOGNITION FOR EXEMPTION UNDER S ECTION 80G OF THE I.T. ACT ON 08.11.2012. THE DIT(E) CALLED FO R THE DETAILS RELATING TO ASSESSEE SOCIETY AND ITS OBJECTIVES. AS SESSEE FILED REQUISITE DETAILS AND ALSO PRODUCED THE BOOKS OF AC COUNTS ALONG WITH RELEVANT BILLS AND VOUCHERS. ON PERUSAL OF THE SAME, THE DIT(E) NOTICED THAT THE CHARITABLE ACTIVITIES O F ASSESSEE INCLUDES PROCURING DEPOSITS FROM VARIOUS CLUSTERS/G ROUPS OF 2 ITA.NO.1286/HYD/2013 MADANAPALLE MAHILA KALANJIYA SAMAKHYA, MADANAPALLE PEOPLE AND ALSO EXTENDING INSURANCE FACILITIES TO I TS MEMBERS OR SPOUSES OF THE MEMBERS. ON THE BASIS OF THESE FA CTS, THE DIT(E) CAME TO THE CONCLUSION THAT THIS ACT OF EXTE NDING INSURANCE FACILITIES ONLY TO ITS MEMBERS AND NOT TO GENERAL PUBLIC IS IN VIOLATION OF THE CHARITABLE ACTIVITIES OF A SOCIETY OR TRUST. HE ALSO OBSERVED THAT THE FOUNDER OF ASSESSE E SOCIETY IS DHAN FOUNDATION (DEVELOPMENT OF HUMAN ACTION) WHICH PROMOTED SELF-HELP GROUPS LIKE ASSESSEE I.E., MADA NAPALLI MAHILA KALANJIA SAMAKHYA AND THAT ONE OF THE MAIN OBJECTIVES OF THE DHAN FOUNDATION IS TO REDUCE POVERTY BY SERV ING POOR COMMUNITY AND THAT THE ASSESSEE SOCIETY ALSO FOLLOW S THE OBJECTS AND THE RULES FRAMED BY DHAN FOUNDATION. HE , THEREFORE, CAME TO THE CONCLUSION THAT ASSESSEE SOC IETY IS MORE OR LESS A FINANCIAL INSTITUTION AS IT FOLLOWS OBJEC TIVES/RULES FRAMED BY DHAN FOUNDATION AND HENCE, THE ACTIVITIES OF ASSESSEE SOCIETY CANNOT COME UNDER THE PURVIEW OF C HARITABLE ACTIVITIES. THE DIT(E), THUS HELD THAT THE ACTIVITI ES OF THE ASSESSEE SOCIETY CANNOT BE TREATED AS FOR CHARITAB LE PURPOSE AND DECLINED TO GRANT REGISTRATION UNDER SECTION 12 A OF THE I.T. ACT AS WELL AS REGISTRATION UNDER SECTION 80G OF TH E ACT. 3. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. LD. COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE TRUST DEED OF ASSESSEE PLACED AT PAGES NO. 1 TO 36 OF THE PAPER BOOK. ACCORDING TO HIM, THE MEMBERS OF THE TRUST ARE ALL WOMEN FROM VARIOUS WEAKER SECTIONS OF THE SOCIETY. HE HAS ALSO DRAWN OUR ATTENTION TO THE AIMS AND OBJECTIVES OF THE TRU ST WHEREIN IT IS STATED THAT THE OBJECTIVE IS TO ACTIVELY ENGAGE IN POVERTY REDUCTION, LIVELIHOOD, HEALTH AND EDUCATION INITIAT IVES THROUGH MEMBER ORGANISATIONS TO IMPROVE THE STATUS AND LIVI NG CONDITIONS OF POOR PEOPLE IRRESPECTIVE OF CASTE AND CREED IN A 3 ITA.NO.1286/HYD/2013 MADANAPALLE MAHILA KALANJIYA SAMAKHYA, MADANAPALLE SECULAR WAY AND THEREFORE, NOT RESTRICTED TO ANY PA RTICULAR GROUP OF PEOPLE. HE ALSO SUBMITTED THAT THE OTHER O BJECTIVES OF THE TRUST ARE ALL FOR THE UPLIFTMENT OF THE POOR PE OPLE AND THEREFORE, CHARITABLE IN NATURE AND CANNOT BE HELD TO BE ACTIVITIES OF DOING BUSINESS OR FINANCIAL ACTIVITY. LD. COUNSEL FOR THE ASSESSEE ALSO PLACED RELIANCE UPON A DECISION O F THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT (EXEMPTIONS) VS. BHARATHA SWAMUKHI SAMSTHE REPORTED IN (2009) 28 DTR (BANG.) (TRIBU.) 113. 4. LD. D.R. HOWEVER, SUPPORTED THE ORDERS OF DIT(E ). 5. HAVING REGARD THE CONTENTIONS OF BOTH THE PARTI ES AS WELL AS THE MATERIAL ON RECORD, WE FIND THAT IN THE CASE OF BHARATHA SWAMUKHI SAMSTHE CITED (SUPRA), THE BANGAL ORE BENCH OF THE TRIBUNAL, WHILE DEALING WITH THE CASE OF THE ASSESSEE THEREIN WHICH WAS LENDING MONEY TO POOR WO MEN FOR INCOME GENERATING ACTIVITIES AND THE LOANS GIVEN TO WOMEN WERE BORROWED FROM BANK, HELD THAT THE ACTIVITY IS A CHARITABLE ACTIVITY QUALIFYING FOR EXEMPTION UNDER SECTION 11 OF THE I.T. ACT. FOR COMING TO THIS CONCLUSION, THE TRIBUNAL HA S CONSIDERED THE FACT THAT BENEFICIARIES ARE FROM POO R FAMILIES AND ASSESSEE TRUST THEREIN INCURS FINANCIAL COSTS F OR OBTAINING LOANS FROM BANKS AND ADVANCES THE SAME TO THE MEMBE RS TO PROTECT THEM FROM THE PRIVATE MONEY LENDERS WHO ARE CHARGING EXORBITANT RATES OF INTEREST. IT WAS HELD THAT THE MICRO CREDIT TO POOR WOMEN FOR THEIR ALLEVIATION AND FOR THE BENEFI T OF SOCIALLY ECONOMIC WEAKER SECTIONS OF THE SOCIETY IS A CHARIT ABLE ACTIVITY AND THEREFORE, IS ELIGIBLE FOR EXEMPTION UNDER SECT ION 11 OF THE I.T. ACT. IN THE CASE BEFORE US ALSO, WE FIND THAT THE MEMBERS OF THE ASSESSEE TRUST ARE ALL POOR WOMEN FROM WEAKER S ECTIONS OF 4 ITA.NO.1286/HYD/2013 MADANAPALLE MAHILA KALANJIYA SAMAKHYA, MADANAPALLE THE SOCIETY AND THE OBJECTIVES OF THE TRUST ARE ALS O FOR ALLEVIATION OF POVERTY. THEREFORE, RESPECTFULLY FOL LOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN SIMILAR SET OF FACTS, WE HOLD THAT ASSESSEE IS ELIGIBLE FOR REG ISTRATION UNDER SECTION 12A OF THE I.T. ACT AND UNDER SECTION 80G O F THE ACT AND THE DIT(E) IS DIRECTED TO GRANT THE SAME TO ASS ESSEE. ACCORDINGLY, GROUNDS OF ASSESSEE ARE ALLOWED. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.10.2014. SD/- SD/- (B. RAMAKOTAIAH) (SMT. P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 01 ST OCTOBER, 2014. VBP/- COPY TO 1. MADANAPALLE MAHILA KALANJIYA SAMAKHYA, 14-408, PRAKASHAM STREET, EAST KOTHAPETA, MADANAPALLY 517 325. 2. COMMISSIONER OF INCOME TAX, TIRUPATI 3. JCIT, RANGE-1, TIRUPATI 4. D.R. ITAT B BENCH, HYDERABAD