RAJASTHAN AVASAN MANDAL KARAMACHARI VIKAS SAMITI, JAIPUR V. COMMISSIONER OF INCOME TAX (EXEMPTION), JAIPUR

ITA 1294/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6040 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 19-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VARINDAR MEHTA
• Section: 12AA

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 1294/JP/2018 RAJASTHAN AVASAN MANDAL KARAMACHARI VIKASH SAMITI, ARAWALI MARG SECTOR 8, SWARN PATH, MANSAROVAR, JAIPUR CUKE VS. CIT (E), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAATR9142G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : NONE JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDAR MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 18/07/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 01/08/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(E), JAIPUR DATED 27.08.2018 AGAINST THE REJECTI ON OF THE APPLICATION FILED BY THE ASSESSEE SEEKING REGISTRATION 12AA OF THE ACT. 2. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED. IN THE PAST AS W ELL, THE MATTER WAS LISTED FOR HEARING ON COUPLE OF OCCASIONS. IT WAS ACCORDINGLY DECIDED THAT NO USEFUL PURPOSE WOULD BE SERVED IN ADJOURNIN G THE MATTER ANY ITA NO. 1294/JP/2018 RAJASTHAN AVASHAN MANDAL KARAMACHARI VIKASH SAMIT VS. CIT(E), JAIPUR 2 FURTHER. THE MATTER IS ACCORDINGLY DECIDED AFTER H EARING THE LD DR AND AFTER PURSUING THE MATERIAL AVAILABLE ON RECORD. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE MOVED AN APPLICATION SEEKING REGISTRATION U/S 12AA OF THE ACT. A LETTER WAS ISSUED TO THE ASSESSEE TO SUBMIT CERTAIN DOCUMENTS/ EXPLANATION ALONG WITH ORIGINAL MEMORANDUM OF ASSOCIATION FOR VERIFIC ATION. IN RESPONSE, THE ASSESSEE SOCIETY SUBMITTED WRITTEN REPLY WHICH WAS CONSIDERED BY THE LD. CIT(E). REFERRING TO THE OBJECT CLAUSE OF THE MOA, THE LD. CIT(E) STATED THAT THE APPLICANT SOCIETY IS PRIMARILY CREA TED FOR THE BENEFIT AND CONVENIENCE OF RAJASTHAN AVASHAN MANDAL KARAMACHARI AND THEREFORE, THE OBJECTS ARE LIMITED TO PROVIDING BENEFIT AND CO NVENIENCE TO SMALL AND LIMITED GROUP OF PEOPLE AND NOT THE PUBLIC AT L ARGE. THE LD. CIT(E) HELD THAT IN SECTION 2(15), THE LEGISLATURE HAS USE D LANGUAGE OF GREAT AMPLITUDE WHICH INCLUDES ADVANCEMENT OF THE OBJECTS OF GENERAL PUBLIC UTILITY AND THE SAID CLAUSE IS INTENDED TO SERVE PU BLIC AT LARGE AND NOT SMALL AND LIMITED GROUP OF PEOPLE AS IN THE CASE OF ASSESSEE SOCIETY. FURTHER, THE LD. CIT(E) RELIED ON THE CO-ORDINATE B ENCH DECISION IN CASE OF MADHAVRAO SCINDIA ENCLAVE RESIDENT WELFARE SOCIE TY 23 TAXMANN.COM 33 (AGRA)/[2012] 52 SOT 125 (AGRA) (URO ) WHEREIN IT WAS HELD AS UNDER:- ITA NO. 1294/JP/2018 RAJASTHAN AVASHAN MANDAL KARAMACHARI VIKASH SAMIT VS. CIT(E), JAIPUR 3 6. CHARITY IS NECESSARILY ALTRUISTIC, AND INVOLVES THE IDEA AND AID OR BENEFIT TO OTHERS. MUTUAL BENEFIT SOCIETIES AND CHARTABLE SOCIETIES BOTH ARE DIFFERENT TYPE OF SOCIETIES. MUT UAL SOCIETY IS NOT CHARITABLE FOR TWO REASONS FIRSTLY, ALTHOUGH A MEMB ER, ACCORDING TO HIS POVERTY OR MISFORTUNE, MIGHT SHARE IN THE FU NDS HELD BY THE SOCIETY FOR THE MUTUAL BENEFIT OF THE SUBSCRIBING M EMBERS, IT CANNOT BE SAID THAT HE HAD SUBSCRIBED FOR A CHARITA BLE PURPOSE WHERE IN TRUTH HE HAD SUBSCRIBED FOR THE PRIMARY PU RPOSE OF PROTECTING HIMSELF OR HIS FAMILY OR COLONY. SECONDL Y, WHEREAS THE POSSIBLE BENEFICIARIES OF A CHARITY HAVE NO RIGHT T O DEMAND ANYTHING FROM THE PARTY WHO ADMINISTERS THE CHARITY , IN A MUTUAL SOCIETY A MEMBER CAN CLAIM BENEFITS AS OF RIGHT IN RETURN FOR HIS OWN AND HIS CO-MEMBERS' SUBSCRIPTIONS. CHARITY MUST BE BY WAY OF BOUNTY, IT CANNOT BE BY WAY OF BARGAIN. THEREFOR E, THE MUTUAL SOCIETY WOULD BE NON-CHARITABLE ON THE FURTHER GROU ND THAT THE BENEFIT OF THE SUBSCRIBING MEMBERS IS NOT PUBLIC BE NEFIT, WHEREAS THE DEFINITION IN SECTION 2(15) REQUIRES CHARITY TO BE OF A PUBLIC CHARACTER. FURTHER A PERSON INCURRING EXPENDITURE O N HIM BY OUT OF HIS OWN INCOME DOES NOT AMOUNT TO EXPENDITURE OF CHARITY. IN THE CASE UNDER CONSIDERATION, THE SOCIETY IS FORMED FOR WELFARE OF A COLONY BY THE MEMBERS FOR THE BENEFIT OF THE MEMB ERS. SUCH ITA NO. 1294/JP/2018 RAJASTHAN AVASHAN MANDAL KARAMACHARI VIKASH SAMIT VS. CIT(E), JAIPUR 4 SOCIETY CANNOT BE SAID TO BE FOR THE PURPOSE OF CHA RITY. BEFORE A SOCIETY CAN BE HELD TO BE 'CHARITABLE' THERE MUST B E AN ELEMENT OF CHARITY TO PUBLIC AT LARGE. THE SOCIETY UNDER CO NSIDERATION IS A MUTUAL CONCERN OF THE MEMBERS WHO FORM THE SOCIETY AND THE WHOLE IDEA OF THIS MUTUAL SOCIETY IS THAT THE PARTI CULAR MEMBERS COMPRISING IT SHOULD BE BENEFITED OUT OF THEIR OWN CONTRIBUTION. 4. FURTHER, THE LD. CIT(E) RELIED ON VARIOUS OTHER DECISIONS PASSED BY THE CO-ORDINATE BENCHES AND THE DECISION OF BOMBAY HIGH COURT IN CASE OF CIT VS. WESTERN INDIA CHAMBER OF COMMERCE LTD. ( 1982) 136 ITR 67 (BOM) AND DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN CASE OF TRUCK OPERATORS ASSOCIATION (P&H) 328 ITR 636, 1 98 TAXMAN (MAG) 196. FURTHER, THE LD. CIT(E) HELD THAT THE ASSESSEE DID NOT SUBMIT THE ORIGINAL DOCUMENTS REGARDING ESTABLISHMENT OF THE T RUST FOR VERIFICATION AND ACCORDINGLY HELD THAT THE APPLICANT SOCIETY CAN NOT BE HELD AS CHARITABLE WITHIN THE MEANING OF SECTION 2(15) OF T HE ACT AND THE APPLICATION SO FILED BY THE ASSESSEE SOCIETY WAS RE JECTED. 5. WE HAVE GONE THROUGH THE ORDER OF THE LD CIT(E) AND DO NOT SEE ANY INFIRMITY IN THE SAID ORDER SO PASSED BY THE LD . CIT(E) WHO HAS RIGHTLY HELD THAT THE ASSESSEE SOCIETY IS PRIMARILY CREATED FOR THE BENEFIT AND CONVENIENCE OF RAJASTHAN AVASHAN MANDAL KARAMAC HARIS AND ITA NO. 1294/JP/2018 RAJASTHAN AVASHAN MANDAL KARAMACHARI VIKASH SAMIT VS. CIT(E), JAIPUR 5 THEREFORE, THE OBJECTS ARE LIMITED TO PROVIDING BEN EFIT AND CONVENIENCE TO SMALL AND LIMITED GROUP OF PEOPLE AND NOT THE PU BLIC AT LARGE. GOING BY THE OBJECTS SO STATED IN THE TRUST DEED, WE FIND THAT THE SOCIETY IS AKIN TO A MUTUAL BENEFIT SOCIETY FOR THE LIMITED PU RPOSES AND BENEFIT OF MEMBERS OF RAJASTHAN AVASHAN MANDAL KARAMACHARIS AN D THEREFORE, CANNOT BE HELD AS ESTABLISHED AND ENGAGED IN ANY CH ARITABLE ACTIVITIES SO DEFINED IN SECTION 2(15) AND THUS NOT ELIGIBLE F OR REGISTRATION UNDER SECTION 12AA OF THE ACT. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/08/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 01/08/2019. GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- RAJASTHAN AVASAN MANDAL KARAMACHARI VIKASH SAMITI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- CIT (E), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 1294/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR