Kasargod District Health & Family Welfare Society, Kasargode V. The CIT, Calicut

ITA 133/COCH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81316 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-07-2014
• Assessment Year: 2014-2015
• Appeal Filed On: 26-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: M C JACOB
• Section: 12A; 12AA; 12; 11

Judgement Text

1 ITA NO. 133/COCH/2014 SIN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO. 133/COCH/2014 (ASSESSMENT YEAR 2014-15) KASARGOD DISTRICT HEATLH & VS CIT, KOZHIKODE FAMILY WELFARE SOCIETY KANHANGAD, KASARGOD PAN : AACAK0285A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.C. JACOB RESPONDENT BY : SHRI M ANIL KUMAR, CIT DR DATE OF HEARING : 16-07-2014 DATE OF PRONOUNCEMENT : 14-08-2014 O R D E R PER N.R.S. GANESAN (JM) BEING AGGRIEVED BY THE ORDER OF THE ADMINISTRATIVE COMMISSIONER REJECTING THE APPLICATION OF THE ASSESSEE FOR REGIS TRATION U/S 12AA OF THE ACT, THE ASSESSEE FILED THE APPEAL BEFORE THIS TRIB UNAL. 2. SHRI M.C. JACOB, THE LD.REPRESENTATIVE FOR THE A SSESSEE SUBMITTED THAT THE ASSESSEE SOCIETY WAS ESTABLISHED WITH AN O BJECT OF ASSISTING THE DISTRICT HEALTH ADMINISTRATION FOR IMPLEMENTING VAR IOUS HEALTH PROGRAMMES AND PROJECTS IN THE DISTRICT OF KASARGOD WITH SPECI AL EMPHASIS ON PRIORITY 2 ITA NO. 133/COCH/2014 SECTORS LIKE REPRODUCTIVE AND CHILD HEALTH, POPULAT ION CONTROL, CONTROL OF MALARIA, TB AND LEPROSY AND PREVENTION OF BLINDNESS AND MALNUTRITION, ETC. ACCORDING TO THE LD.REPRESENTATIVE, THE SOURCE OF I NCOME FOR THE SOCIETY IS THE AID GRANTED BY GOVERNMENT OF INDIA AND GOVERNME NT OF KERALA. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE CHAIRM AN OF THE TRUST IS THE DISTRICT PANCHAYAT CHAIRMAN AND THE DISTRICT COLLEC TOR IS THE CO-CHAIRMAN. THE OTHER OFFICE BEARERS ARE ALL GOVERNMENT EMPLOYE ES LIKE DISTRICT HEALTH OFFICER, PROJECT OFFICER, DISTRICT PROGRAMME OFFICE R, EDUCATION & SOCIAL WELFARE OFFICERS, MEMBERS OF PARLIAMENT AND STATE L EGISLATORS AND OTHER REPRESENTATIVES OF THE LOCAL BODIES. THE LD.REPRES ENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE REQUESTED THE MEDICAL PROFESSIONA LS, WHO ARE EMPLOYED BY GOVERNMENT OF KERALA TO SERVE IN THE RURAL AREA AND PAY A SALARY OF RS.25,000 IN ADDITION TO MONTHLY SALARY PAID BY GOV ERNMENT OF KERALA. ON A QUERY FROM THE BENCH AS TO WHEN THE SOCIETY WAS F ORMED BY THE DISTRICT PANCHAYAT CHAIRMAN AND DISTRICT COLLECTOR AS CHAIRM AN AND CO- CHAIRMAN, RESPECTIVELY AND THE DISTRICT MEDICAL OFF ICER AS CONVENOR AND THE GOVERNMENT OFFICERS ARE TRUSTEES OF THE SOCIETY , HOW THEY ARE GOING TO SERVE THE SOCIETY BY FORMING A SEPARATE REGISTERED SOCIETY, ESPECIALLY WHEN THE CHAIRMAN AND CO-CHAIRMAN AND OTHER MEMBERS OF T HE SOCIETY ARE EVEN OTHERWISE EXPECTED TO SERVE THE PEOPLE OF KASA RGOD, THE LD.REPRESENTATIVE COULD NOT CLARIFY THE PURPOSE FOR WHICH THE SOCIETY WAS FORMED BY GOVERNMENT OFFICIALS EXCEPT SAYING THAT T HE SOCIETY WAS FORMED 3 ITA NO. 133/COCH/2014 AS PER THE POLICY OF GOVERNMENT OF INDIA. HOWEVER, THE ASSESSEE COULD NOT PRODUCE ANY POLICY FRAMED BY EITHER GOVERNMENT OF INDIA OR GOVERNMENT OF KERALA BEFORE THIS TRIBUNAL FOR FORMA TION OF THE SOCIETY TO EXTEND THE HEALTH SUPPORT TO PEOPLE OF KERALA. 3. REFERRING TO THE IMPUGNED ORDER OF THE ADMINISTR ATIVE COMMISSIONER, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED TH AT THE ADMINISTRATIVE COMMISSIONER REJECTED THE CLAIM OF THE ASSESSEE ONL Y ON THE GROUND THAT THE DEED DOES NOT CONTAIN THE MANDATORY CLAUSES FOR AUDIT AS REQUIRED U/S 12A(B) OF THE INCOME-TAX ACT. REFERRING TO THE ACT , MORE PARTICULARLY SECTION 12A, THE LD.REPRESENTATIVE SUBMITTED THAT I NCOME-TAX ACT DOES NOT REQUIRE ANY MANDATORY CLAUSE EITHER IN THE TRUST DE ED OR IN THE BYE LAWS OF THE SOCIETY. ACCORDING TO THE LD.REPRESENTATIVE, S ECTION 12AA REQUIRES THE ASSESSEE TO FILE AN APPLICATION FOR REGISTRATION AL ONG WITH A COPY OF THE DOCUMENT BY WHICH THE SOCIETY / TRUST WAS ESTABLISH ED. THE ASSESSEE IS ALSO REQUIRED TO FILE THE ACCOUNTS OF THE SOCIETY F OR THREE IMMEDIATELY PRECEDING FINANCIAL YEAR. THE SECTION DOES NOT SAY THAT THE FINANCIAL STATEMENT FILED BEFORE THE ADMINISTRATIVE COMMISSIO NER NEEDS TO BE AUDITED. REFERRING TO SECTION 12A(B) OF THE ACT, T HE LD.REPRESENTATIVE SUBMITTED THAT ONCE THE SOCIETY IS REGISTERED U/S 1 2AA OF THE ACT, IN ORDER TO AVAIL BENEFITS U/SS 11 & 12 OF THE ACT, THE ASSE SSEE MANDATORILY REQUIRE TO FILE AUDITED STATEMENT ALONG WITH THE RETURN OF INCOME. THEREFORE, 4 ITA NO. 133/COCH/2014 ACCORDING TO THE LD.REPRESENTATIVE, FILING OF AUDIT REPORT ALONG WITH THE RETURN OF INCOME IS NOT A PRE-CONDITION FOR REGISTRATION. ACCORDING TO THE LD.REPRESENTATIVE, THE ACCOUNTS OF THE ASSESSEE ARE REGULARLY AUDITED AS PROVIDED IN THE BYE LAW. THEREFORE, THE ADMINISTRA TIVE COMMISSIONER HAS NO JUSTIFICATION IN REJECTING THE APPLICATION OF TH E ASSESSEE. 4. WE HEARD SHRI M. ANIL KUMAR, THE LD.DR ALSO. 5. THE OBJECT OF THE ASSESSEE SOCIETY AS PER ITS BY E LAW IN APPENDIX I READS AS FOLLOWS: THE SOCIETY SHALL ASSIST DISTRICT HEALTH ADMINISTR ATION IN IMPLEMENTATION OF VARIOUS HEALTH PROGRAMMES AND PRO JECTS IN THE DISTRICT, WITH SPECIAL EMPHASIS ON PRIORITY SEC TOR LIKE REPRODUCTIVE AND CHILD HEALTH, POPULATION CONTROL, CONTROL OF MALARIA, TB & LEPROSY AND PREVENTION OF BLINDNESS A ND MALNUTRITION, ETC. THE CHAIRMAN OF THE SOCIETY IS THE DISTRICT PANCHAY AT PRESIDENT, THE CO- CHAIRMAN IS THE DISTRICT COLLECTOR. THE MEMBERS OF THE SOCIETY ARE DISTRICT MEDICAL OFFICER, PROJECT DIRECTOR, PROGRAMME OFFICE R, ETC. SO THE SOCIETY IS ADMITTEDLY FORMED BY THE GOVERNMENT EMPLOYEES AND R EPRESENTATIVES OF 5 ITA NO. 133/COCH/2014 THE PEOPLE INCLUDING THE MEMBER OF PARLIAMENT AND S TATE LEGISLATORS. THE DISTRICT MEDICAL OFFICER BEING IN-CHARGE OF HEALTH CARE OF THE PEOPLE IN THE DISTRICT AND THE DISTRICT COLLECTOR BEING THE HEAD OF THE DISTRICT ADMINISTRATION IS EXPECTED TO TAKE CARE OF THE HEAL TH RELATED ISSUE OF THE PEOPLE OF KASARGOD. THE REPRESENTATIVES OF THE PEO PLE, VIZ. THE MEMBERS OF PARLIAMENT AND THE MEMBERS OF THE STATE LEGISLAT IVE ASSEMBLY AND PANCHAYAT ARE EXPECTED TO ASSIST AND ADVICE THE GOV ERNMENT EMPLOYEES IN IMPLEMENTATION OF THE POLICY FRAMED BY GOVERNMEN T OF INDIA AND STATE GOVERNMENT. THEREFORE, IT IS NOT KNOWN WHY A SEPAR ATE SOCIETY WAS FORMED TO IMPLEMENT THE HEALTHCARE PROJECT IN THE D ISTRICT BY THE GOVERNMENT OFFICIALS, WHO ARE OTHERWISE SUPPOSED TO IMPLEMENT THE POLICY OF THE GOVERNMENT. THE SOURCE OF INCOME OF THE SOC IETY APPEARS TO BE ONLY AID FROM GOVERNMENT OF INDIA AND THE STATE GOVERNME NT. THE LD.REPRESENTATIVE FOR THE ASSESSEE CLARIFIES THAT T HE SOCIETY WILL PAY RS.25,000 TO THE DOCTORS / MEDICAL PRACTITIONERS, W HO ARE EMPLOYED BY STATE GOVERNMENT OVER AND ABOVE THE SALARY PAID BY THE STATE GOVERNMENT. WHEN THE MEDICAL PRACTITIONERS ARE EMPLOYED BY GOVE RNMENT OF KERALA, THEY ARE EXPECTED TO IMPLEMENT THE POLICY OF THE GO VERNMENT AS A GOVERNMENT EMPLOYEE. IT IS NOT KNOWN WHY THE SOCIE TY IS PAYING RS.25,000 IN ADDITION TO SALARY PAID BY THE STATE G OVERNMENT. 6 ITA NO. 133/COCH/2014 6. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTIONS 12A AND 12AA OF THE ACT. SECTION 12A(B) PROVIDES FOR FILIN G OF AUDITED STATEMENT ALONG WITH THE RETURN OF INCOME IN CASE THE TOTAL I NCOME OF THE SOCIETY / INSTITUTION EXCEEDS THE MINIMUM AMOUNT CHARGEABLE T O TAX WITHOUT GIVING EFFECT TO THE PROVISIONS OF SECTIONS 11 AND 12 OF T HE ACT. THEREFORE, THE AUDITED STATEMENT IS REQUIRED TO BE FILED FOR CLAIM OF EXEMPTION ALONG WITH THE RETURN OF INCOME. SECTION 12AA(1) READS AS FOL LOWS: 12AA.(1) THE COMMISSIONER, ON RECEIPT OF AN APPLIC ATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER C LAUSE (A) OR CLAUSE (AA) OF SUB-SECTION (1) OF SECTION 12A, SHAL L (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES S HE MAY DEEMED NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF T HE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDE R IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLI CANT: 7 ITA NO. 133/COCH/2014 PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSE D UNLESS THE APPLICANT HAS GIVEN A REASONABLE OPPORTU NITY OF BEING HEARD. 7. IN ORDER TO SATISFY THE GENUINENESS OF THE ACTIV ITY OF THE TRUST OR INSTITUTION, THE ADMINISTRATIVE COMMISSIONER MAY CA LL FOR SUCH DOCUMENT OR INFORMATION FROM THE APPLICANT / SOCIETY. THEREFOR E, IF THE ADMINISTRATIVE COMMISSIONER CALLS FOR THE AUDITED STATEMENT TO SAT ISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITY OF THE TRUST, IT IS THE OBLIGATION OF THE ASSESSEE SOCIETY TO FILE THE SAME BEFORE THE ADMINISTRATIVE COMMISSIONER TO PROVE ITS GENUINENESS. THOUGH SECTION 12A(B) REQUIRES TH E ASSESSEE TO FILE AUDITED STATEMENT ALONGWITH THE RETURN OF INCOME FO R CLAIMING EXEMPTIONS U/S 11 & 12, THERE IS NO PROHIBITION U/S 12AA OF TH E ACT TO CALL FOR THE AUDITED STATEMENT AT THE TIME OF REGISTRATION BY TH E ADMINISTRATIVE COMMISSIONER IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITY OF THE ASSESSEE SOCIETY. THE ASSESSEE CLA IMS THAT THE COPIES OF THE AUDITED STATEMENTS WERE FILED BEFORE THIS TRIBU NAL. 8. WE HAVE CAREFULLY GONE THROUGH THE IMPUGNED ORDE R OF THE ADMINISTRATIVE COMMISSIONER. THE ADMINISTRATIVE CO MMISSIONER REJECTED THE APPLICATION OF THE ASSESSEE ONLY ON THE GROUND THAT THE MANDATORY CLAUSE WAS NOT INCORPORATED IN THE BYE LAWS. SECTI ON 12AA DOES NOT SAY THAT ANY MANDATORY CLAUSE HAS TO BE INCORPORATED IN THE BYE LAWS. THE 8 ITA NO. 133/COCH/2014 ADMINISTRATIVE COMMISSIONER HAS TO EXAMINE THE GENU INENESS OF THE ACTIVITY OF THE TRUST WITHIN THE MEANING OF SECTION 2(15) OF THE INCOME-TAX ACT. IN THIS CASE, THE ADMINISTRATIVE COMMISSIONER HAS NOT EXAMINED THE GENUINENESS OF THE ACTIVITY OF THE TRUST. THIS TRI BUNAL IS OF THE CONSIDERED OPINION THAT THE ADMINISTRATIVE COMMISSIONER HAS TO EXAMINE THE APPLICATION OF THE ASSESSEE AS PROVIDED IN SECTION 12AA(1) R.W.S. 2(15) OF THE ACT AND SATISFY HIMSELF ABOUT THE GENUINENESS O F THE ACTIVITY OF THE OBJECT OF THE TRUST. SINCE THE SAME WAS NOT EXAMIN ED BY THE ADMINISTRATIVE COMMISSIONER, THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ADMI NISTRATIVE COMMISSIONER. ACCORDINGLY, THE ORDER OF THE ADMIN ISTRATIVE COMMISSIONER IS SET ASIDE AND THE ISSUE IS REMANDED BACK TO THE FILE OF THE ADMINISTRATIVE COMMISSIONER. THE ADMINISTRATIVE CO MMISSIONER SHALL RE- EXAMINE THE MATTER AFRESH REGARDING THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. THE ADMINISTRATIVE COMMISSIONER SHALL E XAMINE SPECIFICALLY WHY THE SOCIETY WAS FORMED BY THE GOVERNMENT OFFICIALS TO IMPLEMENT HEALTH CARE PROGRAMME WHEN THEY ARE OTHERWISE SUPPOSED TO IMPLEMENT THE POLICY OF GOVERNMENT OF INDIA AND GOVERNMENT OF KER ALA AS WELL. THE ADMINISTRATIVE COMMISSIONER SHALL BRING ON RECORD T HE GENUINENESS OF THE ACTIVITY OF THE TRUST AND ITS OBJECT AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY TO THE ASSESSEE. 9 ITA NO. 133/COCH/2014 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH AUGUST, 2014. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 14 TH AUGUST, 2014 PK/- COPY TO: 1. KASARGOD DISTRICT HEALTH & FAMILY WELFARE SOCIET Y (NRHM) OFFICE OF THE DMO(H), BALLA P.O., KANHANGAD, KASARGOD DIST. 2. THE COMMISSIONER OF INCOME-TAX, AAYAKR BHAVAN, N ORTH BLOCK, KOZHIKODE 3. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH