M/s. Poona Hoteliers Association, Pune V. Commissioner of Income-tax - II,

ITA 1451/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1688 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 17-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARSHVARDHINI BUTY
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Charitable institution

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1451/PN/2014 M/S. POONA HOTELIERS ASSOCIATION, 13, WILSON GARDEN, MOTILAL TALERA MARG,. PUNE 411001 PAN NO.AADCP3369H . / APPELLANT V/S CIT - II , PUNE . / RESPONDENT / ASSESSEE BY : SHRI SUNIL PATHAK / RESPONDENT BY : SMT. HARSHVARDHINI BUTY / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX-II, PUNE DATED 23-05-2014 RE JECTING THE APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATION U/S.12 A(A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RECO RDS ARE : THE ASSESSEE IS A COMPANY REGISTERED U/S.25 OF THE COMPANIES ACT, 1956. THE ASSESSEE COMPANY HAS BEEN INCORPORATED WITH THE MAIN O BJECT TO ENCOURAGE, PROTECT AND PROMOTE THE INTEREST OF PROPRIE TORS, COMPANIES AND OTHER PERSONS INTERESTED OR CONNECTED WITH HOTELS AND TRADES. THE CIT REJECTED THE APPLICATION OF THE ASSESSEE FOR GRANT OF RE GISTRATION ON THE / DATE OF HEARING :20.04.2016 / DATE OF PRONOUNCEMENT:28.06.2016 2 ITA NO.1451/PN/2014 GROUND THAT THE ASSESSEE IS NOT ADVANCING ANY OBJECT BENEFICIAL TO THE PUBLIC OR SECTION OF THE PUBLIC. THE ASSOCIATION HAS BEEN FO RMED FOR THE BENEFIT OF ONLY A GROUP OF INDIVIDUALS BEING ITS MEMBERS. TH E ASSESSEE MERELY REGULATES OR ENHANCES THE BUSINESS OF ITS MEMBER S, THEREFORE, IT CANNOT BE TERMED AS A CHARITABLE INSTITUTION. 3. AGGRIEVED BY THE IMPUGNED ORDER THE ASSESSEE HAS C OME IN APPEAL BEFORE THE TRIBUNAL. 4. SHRI SUNIL PATHAK, APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE CIT HAS ERRED IN HOLDING THAT THE ASSESSEE IS NOT A CHARITABLE INSTITUTION. THE ASSESSEE IS CARRYING ON CHARITABLE ACTIVITI ES WHICH ARE INCLUDED IN FOURTH LIMB OF THE DEFINITION OF CHARITABLE PURPOSE AS DEFINED IN SECTION 2(15) OF THE ACT. THE LD. AUTHORISED REPRESENT ATIVE SUBMITTED THAT A PERUSAL OF THE OBJECT CLAUSE OF THE MEMORANDUM O F ASSOCIATION WOULD SHOW THAT THE ACTIVITIES CARRIED ON BY THE ASSESSE E ARE FOR THE BENEFIT OF THE PERSONS ASSOCIATED AND/OR CONNECTED WITH THE HOTEL INDUSTRY. THE ASSESSEE CONDUCTS SEMINARS AND VARIOUS O THER PROGRAMMES FOR THE PEOPLE WHO ARE INTERESTED OR CONNECTED WITH THE HOSPITALITY INDUSTRY. THE LD. AUTHORISED REPRESENTATIVE CONTENDED T HAT THE CIT HAS ERRED IN HOLDING THAT THE BENEFIT OF REGISTRATION U/S.12A OF THE ACT CANNOT BE GRANTED TO THE ASSESSEE ON THE GROUND THAT ITS AC TIVITIES ARE RESTRICTED TO ONLY SMALL SECTION OF THE SOCIETY. IN ORDER TO CONTROVER T THE OBSERVATIONS MADE BY THE CIT, THE LD. AUTHORISED REPRESENTATIVE PLACE D RELIANCE ON THE FOLLOWING DECISIONS : 1. CIT VS. FILM FEDERATION OF INDIA REPORTED AS 178 ITR 425 (BOM.) 2. CIT VS. SOUTH INDIAN PHOTOGRAPHIC AND ALLIED TRADES A SSOCIATION REPORTED AS 166 ITR 166 (MAD.) 3. THE HOSIERY INDUSTRY FEDERATION VS. CIT REPORTED AS 140 ITR 983 (PUNJAB) 4. INDIAN POULTRY EQUIPMENTS MANUFACTURERS ASSOCIATION VS. CIT IN ITA NO.460/PN/2009 DECIDED ON 30-08-2011. 3 ITA NO.1451/PN/2014 5. ON THE OTHER HAND SMT. HARSHVARDHINI BUTY REPRESENT ING THE DEPARTMENT VEHEMENTLY SUPPORTED THE ORDER OF THE CI T. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT A PERUSAL OF THE OBJECTS OF THE ASSESSEE WOULD SHOW THAT THE ASSESSEE WOULD BE RENDER ING SERVICES ONLY TO THE HANDFUL OF PEOPLE ENGAGED IN THE HOTEL INDUSTRY. THE ACTIVITIES OF THE ASSESSEE WOULD BE BENEFICIAL FOR THE MEMBERS, EX-MEMBERS, E MPLOYEES OR EX-EMPLOYEES OF THE PEOPLE CONNECTED WITH THE HOTEL INDU STRY. THE OBJECTS AS DEFINED IN THE OBJECT CLAUSE OF THE MEMORANDUM DO NOT FALL WITHIN THE AMBIT OF GENERAL PUBLIC UTILITY. THEY ARE ONLY FOR THE BENEFIT OF SMALL GROUP OF PEOPLE. THE LD. DEPARTMENTAL REPRESENTATIVE STRO NGLY OPPOSED THE APPEAL OF THE ASSESSEE AND PRAYED FOR SUSTAINING THE IMPUGNED O RDER. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE IMPUGNED ORDER. THE CIT HA S REJECTED THE APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATION U/S.1 2A(A) OF THE ACT PRIMARILY ON THE GROUND THAT THE OBJECTS OF THE ASSESS EE AND ACTIVITIES DEFINED THEREIN ARE ONLY FOR THE BENEFIT OF SMALL SECTION OF SOCIETY AND THUS THE ACTIVITIES OF THE ASSESSEE DO NOT QUALIFY TO BE OF GENERAL PUBLIC UTILITY WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. 7. A PERUSAL OF THE OBJECT CLAUSES OF MEMORANDUM OF ASSO CIATION OF THE ASSESSEE SHOWS THAT THE MAIN OBJECT OF THE ASSESSEE IS : TO ENCOURAGE, PROTECT AND PROMOTE THE INTEREST OF P ROPRIETORS, PVT. LTD. COMPANY AND OTHER PERSONS INTERESTED OR CONNECTED WITH HOTELS AND TRADES. SOME OF THE OTHER OBJECTS INCIDENTAL OR ANCILLARY OR SOLELY TO THE ATTAINMENT OF THE MAIN OBJECTS AS PER OBJECT CLAUSE OF M EMORANDUM OF ASSOCIATION OF THE ASSESSEE ARE : 1. TO COLLECT AND DISSEMINATE STATISTICAL AND OTHER IN FORMATION RELATING TO HOTEL AND KINDRED INTERESTED AND TO DIFFUSE AMONG ITS MEMBERS INFORMATION ON ALL MATTERS AFFECTING HOTELS, AND TO PRINT, PUBLISH ISSUE AND CIRCULATE SUCH PAPERS, PERIODICALS, BOOKS, CIRCULARS, PAMPHLETS AND OTH ER LITERATURE AS MAY 4 ITA NO.1451/PN/2014 SEEM CONDUCIVE TO ANY OF THESE OBJECTS OR CALCULATED T O ADVANCE THOSE INTERESTS. 2. TO CONSIDER ALL QUESTIONS AFFECTING THE INTEREST OF HOTELS AND RESTAURANTS AND ANY LEGISLATION, BYE-LAWS OR REGULATION AFFECTING THE SAME, AND TO INITIATE, SUPPORT OR OPPOSE SUCH LEGISLATION OR REGULATION EITHER BY PETITION, PUBLIC MEETING OR OTHERWISE. 3. TO ESTABLISH, SUBSCRIBE, PROMOTE, CO-OPERATE OR AMAL GAMATE WITH, AFFILIATE OR BECOME AFFILIATED TO, TO FEDERATE OR J OIN A FEDERATION OF ANY SIMILAR ASSOCIATION OR COMPANY WITH OBJECTS ALTOGETHER OR IN P ART SIMILAR TO THOSE OF THE COMPANY, ACT AS TRUSTEES OR AGENTS FORM OR MANAGE, CONTROL, SUPERINTEND, MONETARY ASSISTANCE TO OR OTHERWISE ASSIST ANY ASSOCIATIONS A ND INSTITUTIONS INCORPORATED OR NOT INCORPORATIONS WITH OBJECTS ALTOG ETHER OR IN PART SIMILAR TO THOSE OF THE COMPANY AND WHICH MAY PROHIBIT THE P AYMENT OF ANY DIVIDEND OR SUCH PROFIT TO ITS MEMBERS AS WOULD BE CONT RARY TO THE INTENTIONS OF SECTION 25 OF THE COMPANIES ACT, 1956 AND NOT BEIN G A TRADE UNION. X X X X X X X X X X X X X X X X X X X X X X 12. TO ESTABLISH, UNDERTAKE, SUPERANNUATED, ADMINISTER AND CONTRIBUTE ANY CHARITABLE OR BENEVOLENT FUND FROM WHICH MAY BE DON ATIONS OR ADVANCES TO DESERVING PERSONS WHO MAY BE OR HAVE BEEN ENGAGED IN H OTELS, RESTAURANTS, BOARDING HOUSES AND ALL ALLIED TRADES OR CONNECTED WIT H ANY PERSON ENGAGED THEREIN AND TO CONTRIBUTE TO OR OTHERWISE ASSIST ANY CH ARITABLE OR BENEVOLENT INSTITUTIONS OR UNDERTAKINGS. 13. TO ESTABLISH AND SUPPORT OR AID IN THE ESTABLISHMENT AND SUPPORT OF ASSOCIATIONS, INSTITUTIONS FUND, TRUSTS AND CONVENIENCES CA LCULATED TO BENEFIT EMPLOYEE OR EX-EMPLOYEE OF THE COMPANY OR THE DEPEN DENTS OR CONNECTION OF SUCH PERSONS AND TO GRANT PENSIONS AND ALLOWANCES, AND TO MAKE PAYMENTS TOWARDS INSURANCE AND TO SUBSCRIBE OR GUARANTEE MONEY F OR CHARITABLE OR BENEVOLENT OBJECTS OR FOR ANY EXHIBITION, OR FOR AN Y PUBLIC GENERAL OR USEFUL OBJECTS. X X X X X X X X X X X X X X X X X X X X X X 8. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SOUTH INDIAN PHOTOGRAPHIC AND ALLIED TRADES ASSOCIATION (SUPRA) HELD THA T THE ASSESSEE WAS ENTITLED TO EXEMPTION U/S.11 R.W.S. 2(15) OF THE ACT. IN THE SAID CASE THE ASSESSEE COMPANY WAS INCORPORATED WITH THE OBJECT TO PROMOTE COMMERCE, ART, SCIENCE OR ANY OTHER USEFUL OBJECT CONNEC TED THE PHOTOGRAPHY AND ALLIED TRADE AND TO PROMOTE AND PROTE CT THE INTERESTS OF PHOTOGRAPHY AND ALLIED TRADERS. THE MEMORANDUM OF ASSOC IATION OF THE SAID ASSESSEE COMPANY DID NOT CONTAIN ANY PROVISION FOR T HE DIVISION OF PROFITS OR PROPERTY AMONGST ITS MEMBERS. IT WAS SPECIFICA LLY STATED THAT 5 ITA NO.1451/PN/2014 INCOME OR PROPERTY OF THE COMPANY WHATSOEVER DERIVED W OULD BE APPLIED SOLELY FOR THE PROMOTION OF ITS OBJECTS. THE INCOME OF TH E ASSESSEE WAS MAINLY FROM DONATIONS, RENTS, SECRETARIAL CHARGES, SERVICE C HARGES, RECEIPTS FROM SOUVENIRS ETC. THE TRIBUNAL HELD THAT THE ASSESSEE WAS ENTITLED TO EXEMPTION U/S.11 OF THE ACT. ON A REFERENCE TO THE HON BLE HIGH COURT, THE HONBLE HIGH COURT AFTER DISCUSSING CATENA OF JUDGMEN TS RENDERED BY THE HONBLE SUPREME COURT OF INDIA HELD THAT THE ASSES SEE IS ENTITLED TO EXEMPTION U/S.11 R.W.S. 2(15) OF THE ACT. 9. THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF I NDIAN POULTRY EQUIPMENTS MANUFACTURERS ASSOCIATION VS. CIT (SUPRA) GRANT ED REGISTRATION U/S.12A OF THE ACT TO THE ASSESSEE UNDER S IMILAR FACTS. THE CIT REJECTED THE APPLICATION OF THE ASSESSEE FOR GRANT O F REGISTRATION ON THE GROUND THAT VARIOUS CLAUSES OF THE TRUST DEED SHOW THA T THEY ARE BASICALLY MEANT FOR THE GROWTH OF POULTRY INDUSTRY AND FOR THE BE NEFIT OF THEIR MEMBERS. THE COORDINATE BENCH OF THE TRIBUNAL AFTER ANAL YZING THE EXPENDITURE INCURRED AND ACTIVITIES CARRIED OUT BY THE AS SESSEE HELD, THAT THE GENERAL PUBLIC/FARMERS ARE BENEFITTED FROM THE CHARITA BLE ACTIVITIES OF THE ASSESSEE. THE TRIBUNAL DIRECTED THE CIT TO GRANT RE GISTRATION U/S.12A TO THE ASSESSEE. 10. IN THE PRESENT CASE, AFTER PERUSAL OF THE OBJECT CLAU SE OF THE ASSESSEE COMPANY, WE FIND THAT THERE IS NO SUCH CONDITION THAT THE PROFITS OF THE ASSESSEE WOULD BE DISTRIBUTED AMONGST SHAREHOLDERS OR THE MEMBERS. THE MAIN OBJECT OF THE ASSESSEE COMPANY IS TO PROMOTE THE INTEREST OF PEOPLE CONNECTED OR INTERESTED WITH THE HOTEL TRADE. A PERUSA L OF THE INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDING 31-03-2010 AN D 31-03-2011 SHOW THAT THE MAIN SOURCE OF INCOME OF THE ASSESSEE IS FROM ROYALTY, ANNUAL DAY FEES, SUBSCRIPTION FEES, SEMINAR FEES AND INTEREST INCOME. THE ASSESSEE HAS INCURRED EXPENDITURE PRIMARILY TOWARDS CON DUCTING OF 6 ITA NO.1451/PN/2014 SEMINARS AND HOLDING ANNUAL DAY. THUS, A PERUSAL OF DOCUME NTS ON RECORD SHOW THAT THE ASSESSEE HAS NOT INDULGED IN ANY COMMERCIAL AC TIVITY. THE ASSESSEE COMPANY HAS BEEN INCORPORATED WITH THE S OLE OBJECT OF EDUCATING, CREATING AWARENESS AMONG THE PEOPLE WHO ARE CONNECTED IN HOTEL AND HOSPITALITY BUSINESS AND TO FINANCIALLY SUPPORT T HE EMPLOYEES, EX-EMPLOYEES AND THE DEPENDANTS CONNECTED WITH THE HO TEL BUSINESS. THERE ARE LARGE NUMBER OF PEOPLE WHO ARE CONNECTED, IN TERESTED AND ASSOCIATED WITH THE HOTEL AND HOSPITALITY BUSINESS. THUS, IN VIEW OF THE DECISIONS DISCUSSED ABOVE AND THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE DESERVES TO BE GRAN TED REGISTRATION U/S.12A(A) OF THE ACT. ACCORDINGLY, THE IMPUGNED ORDER IS S ET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON TUESDAY, THE 28 TH DAY OF JUNE, 2016. SD/- SD/- ( R.K.PANDA ) ( VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER IQ.KS PUNE ; # DATED : 28 TH JUNE, 2016. LRH'K % &'( ) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. CIT-II, PUNE ' *, *, IQ.KS / DR, ITAT, B PUNE; / GUARD FILE. / BY ORDER , ' //TRUE COPY// / * / SR. PRIVATE SECRETARY *, IQ.KS / ITAT, PUNE