Palmoor Reddy Seva Samithi, Hyderabad V. Director of Income Tax (Exemptions), Hyderabad

ITA 1513/HYD/2013

• Counselvise Citation: 151322514 RSA 2013
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 18-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: ABHAY KUMAR JAIN
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1513/HYD/2013 ASSESSMENT YEAR : N.A. M/S. PALMOOR REDDY SEVA SAMITHI, MAHABUBNAGAR PAN: AAATP7711P VS. THE DIRECTOR OF INCOME - TAX (EXEMPTIONS) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: S RI ABHAY KUMAR JAIN RESPONDENT BY: SRI P. SOMASEKHAR REDDY DATE OF HEARING: 13 .0 8 .2014 DATE OF PRONOUNCEMENT: 27 .0 8 .2014 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) [D IT(E)], HYDERABAD DATED 6.9.2013 FOR REJECTION OF APPLICATI ON FILED IN FORM NO. 10G FOR APPROVAL U/S. 80G(5)(VI) OF THE INCOME-TAX ACT, 1961. 2. FACTS OF THE CASE ARE THAT THE ASSESSEE SOCIETY FIL ED AN APPLICATION IN FORM NO. 10G ON 13.3.2013 FOR GRA NT OF APPROVAL U/S. 80G(5)(VI) OF THE ACT. A QUESTIONNAI RE WAS ISSUED VIDE LETTER DATED 26.6.2013 REQUESTING THE A SSESSEE SOCIETY TO PRODUCE THE ORIGINAL MEMORANDUM OF ASSOCIATION, RULES AND REGULATIONS AND BYE-LAWS. IN RESPONSE TO THE SAME, THE AR OF THE ASSESSEE FURNIS HED REPLY AND OTHER INFORMATION. THE DIT(E) AFTER PERU SING THE DOCUMENTS PRODUCED, OBSERVED THAT THE ASSESSEE 2 ITA NO. 1513/HYD/2013 M/S. PALMOOR REDDY SEVA SAMITHI =========================== SOCIETY IS MAINLY MEANT FOR BENEFIT OF PERSONS BELO NGING TO 'REDDY COMMUNITY'. THE DIT(E) HELD AS FOLLOWS: '2. ... A PERSON BELONGING TO SUCH COMMUNITY CAN BE A MEMBER IN THAT SOCIETY. IN VIEW OF SUCH RESTRICTION IN MEMBERSHIP TO THAT SOCIETY AND ALSO THE SAID SOCIETY BEING MEANT FOR THE BENEFIT AND WELFARE OF PERSONS BELONGING TO THAT PARTICULAR COMMUNITY, AS IT DOES NOT SATISFY THE CONDITIONS STIPULATED IN CLAUSE (III) TO SUB-SECTION (5) TO SECTION 80G OF THE IT ACT, 1961, THE ABOVE SOCIETY, IN MY VIEW, WOULD NOT BE ELIGIBLE FOR APPROVAL U/S. 80G(5)(VI) OF THE ACT.' 3. THEREFORE, THE ASSESSEE SOCIETY WAS NOT GRANTED THE APPROVAL U/S. 80G(5)(VI) OF THE ACT. AGGRIEVED, TH E ASSESSEE HAS PREFERRED THIS APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE PAGES 20 AND 21 OF THE PAPER BOOK WHEREIN APPROVAL U/S. 80G(5)(VI) OF THE ACT HAS BEEN GRANTE D TO THE ASSESSEE SOCIETY ON 23.6.2005 AND 27.4.2007. THE ASSESSEE'S COUNSEL ALSO PRODUCED COPY OF THE SECTIO N 12A REGISTRATION CERTIFICATE AT PAGE 19 OF THE PAPER BO OK. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ONL Y THE MEMBERSHIP TO THE SOCIETY IS RESTRICTED INASMUCH AS TO ALLOW ONLY REDDYS AS MEMBERS OF THE SOCIETY BUT THE RE IS NO RESTRICTION WITH RESPECT TO THE BENEFICIARIES OF THE SOCIETY. HE POINTED OUT TO PAGE 9 OF THE PAPER BOO K WHERE SOME OF THE OBJECTS HAD BEEN ENUMERATED AND PARTICU LARLY TO CLAUSE (16) WHICH STATES AS FOLLOWS: '16. TO ALLOW 15% OF THE OPPORTUNITIES AND BENEFITS TO THE MEMBERS OF THE OTHER CASTES AND CREEDS.' 3 ITA NO. 1513/HYD/2013 M/S. PALMOOR REDDY SEVA SAMITHI =========================== 5. HE HAS ALSO SUBMITTED THAT THE ACTIVITIES OF THE SOCIETY ARE CHARITABLE IN NATURE. 6. THE LEARNED DR, ON THE OTHER HAND, EXPRESSED THE VIEW THAT THE ASSESSEE SOCIETY IS MAINLY MEANT FOR THE BENEFIT OF PERSONS BELONGING TO REDDY COMMUNITY AND IT IS HIT BY CLAUSE (III) OF SECTION 80(5) WHEREIN IT IS SPECIFIED THAT THE INSTITUTION SHALL NOT BE FOR THE BENEFIT O F ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE. 7. WE HAVE HEARD BOTH THE PARTIES. IN THE CASE OF THE ASSESSEE SOCIETY IT IS NOT ONLY REGISTERED U/S. 12A BUT WAS ALSO ACCORDED APPROVAL U/S. 80G(5) EARLIER ON THE S AME IDENTICAL FACTS AND CIRCUMSTANCES. FURTHER, THE LE ARNED DIT(E) HAS NOT POINTED OUT THAT THE BENEFITS ARE NO T GIVEN TO THE POOR, NEEDY AND DESERVING PERSONS AND ONLY POINTED OUT THE DEFECTS IN NON-COMPLIANCE OF THE OB JECTS OF THE ASSESSEE SOCIETY AND THAT THE OTHER COMMUNIT IES HAVE ALSO BEEN BENEFITED FROM THE SOCIETY. 8. IN KARANDHAI TAMIL SANGHAM VS. CIT (2012 147 TTJ (CHENNAI B) (UO) 68, IT WAS HELD THAT TAMILIANS AS A GROUP AMOUNTS TO PUBLIC AND THEREFORE, LAWFUL ACTIV ITIES UNDERTAKEN BY AN INSTITUTION FOR OVERALL PROSPERITY OF TAMILIANS SHOULD BE TREATED AS CHARITABLE ACTIVITIE S AND HENCE ASSESSEE SOCIETY IS ELIGIBLE FOR RECOGNITION U/S. 12AA. 9. IN MANOCKJEE COWASJEE PETIT VS. DIRECTOR OF IT (EXEMPTIONS) (2012) 148 TTJ (MUMBAI H) (TM) 181, IT WAS HELD THAT WHERE PREFERENTIAL TREATMENT TO PARTICULA R CATEGORY GIVEN WHO ARE NOT THE SOLE BENEFICIARIES, REGISTRATION U/S. 12AA CANNOT BE REFUSED. HOWEVER, IN THE 4 ITA NO. 1513/HYD/2013 M/S. PALMOOR REDDY SEVA SAMITHI =========================== PRESENT CASE BEFORE US REGISTRATION HAS BEEN GRANTE D U/S. 12AA OF THE ACT. 10. FURTHER IN SONEPAT HINDU EDUCATION AND CHARITABLE SOCIETY VS. CIT AND ANOTHER (196 CTR P&H 623) IT WAS HELD THAT REGISTRATION OF INSTITUTION U /S. 12A BY ITSELF IS SUFFICIENT PROOF THAT THE INSTITUTION IS CREATED OR ESTABLISHED FOR CHARITABLE/RELIGIOUS PURPOSES AN D HENCE ENTITLED FOR REGISTRATION U/S. 80G(5) OF THE ACT. 11. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO. 1343/HYD/2011 IN THE CASE OF HEAL A CHILD FOUNDATIO N DATED 3 RD FEBRUARY, 2012 HELD THAT WHEN THE ASSESSEE TRUST WAS GRANTED REGISTRATION U/S. 12A IT IS A TES TIMONY TO THE FACT THAT THE TRUST IS ESTABLISHED FOR CHARI TABLE PURPOSES. 12. HENCE, WE SET ASIDE THE ORDER OF THE DIT(E) AND REMIT THE ISSUE BACK TO THE FILE OF DIT(E) WITH A D IRECTION TO GRANT EXEMPTION U/S. 80G(5)(VI) OF THE ACT FOLLO WING THE RATIO OF THE AFOREMENTIONED DECISIONS. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 27 TH AUGUST, 2014 SD/ - (P.M. JAGTAP) ACCOUNTANT MEMBER SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED THE 27 TH AUGUST, 2014 TPRAO 5 ITA NO. 1513/HYD/2013 M/S. PALMOOR REDDY SEVA SAMITHI =========================== COPY TO: 1. M/S. PALMOOR REDDY SEVA SAMITHI, C/O. M/S. SANJAY KUMAR KOTHARI & CO., 211, SHAKTI SAI COMPLEX, CHAPEL ROAD, ABIDS, HYDERABAD-500 001. 2. THE DIRECTOR OF INCOME - TAX (EXEMPTIONS), AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 3. THE DEPUTY DIRECTOR OF INCOME - TAX (EXEMPTIONS) - I, HYDERABAD. 4 . THE DR, A - BENCH, ITAT, HYDERABAD.