Hyderabad Battery Association, Hyderabad, Hyderabad V. CIT (Exemptions), Hyderabad, Hyderabad

ITA 1515/HYD/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4978 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 28-10-2019
• Assessment Year: misc
• Appeal Filed On: 10-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: S RAMA RAO
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

ITA NO 1515 OF 2016. PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1515/HYD/2016 ASSESSMENT YEAR: NA HYDERABAD BATTERY ASSOCIATION, HYDERABAD PAN:AABAH1235N VS. COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI S. RAMA RAO REVENUE BY : SRI Y.V.S.T. SAI, CIT-DR DATE OF HEARING: 28/10 /2019 DATE OF PRONOUNCEMENT: 07/11/2019 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL AGAINST THE REJECTION OF ASSESSEES APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT VIDE ORDERS DATED 31.08.2016 OF THE CIT (EXEMPTION), HYD ERABAD. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WA S REGISTERED AS A SOCIETY UNDER THE ANDHRA PRADESH SO CIETIES REGISTRATION ACT OF 2001 DATED 13.10.2015. THE OBJE CTIVES OF THE SOCIETY ARE AS UNDER: * PROMOTE AND PROTECT MEMBERS INTEREST & IMPROVE T HE REGULATORY/BUSINESS ENVIRONMENT FOR ITS INDUSTRY * ENCOURAGE & ASSIST THE PROSPERITY OF THE INDUSTR Y * PROVIDE INTERFACES BETWEEN THE INDUSTRY & OTHER ORGANIZATIONS. * PROMOTE AND MAINTAIN A HIGH STANDARD OF PRODUCTS MANUFACTURED. * PROVIDE GUIDANCE ON TRAINING AND CERTIFICATION OF PERSONNEL INVOLVED. ITA NO 1515 OF 2016. PAGE 2 OF 5 * PRODUCE PUBLICATIONS AND GUIDANCE ON GOOD WORKING PRACTICE, TRAINING AND OTHER RELATED TOPICS. * REPRESENTATION BEFORE VARIOUS STATUTORY AND NON-S TATUTORY GOVT. BODIES. * PREPARE SUBMISSIONS AND PROVIDE INFORMED OPINION AND ADVICE TO GOVT. DEPARTMENTS AND OTHERS ON MATTERS C ONCERNING WORK-AT-HEIGHT HEALTH, SAFETY AND TRAINING. * ENSURE SAFE MANUFACTURING, TRAINING AND WORK PROC EDURES ARE WHERE THESE METHODS ARE INTRODUCED AND DEVELOPE D. * PROVIDE A FORUM FOR THE FREE AND INFORMAL EXCHANG E OF EXPERIENCE AND OPINION . 3. THE ASSESSEE, THEREFORE, FILED AN APPLICATION IN FORM 10A ON 10.02.2016 FOR REGISTRATION U/S 12AA OF THE ACT. THE CIT (EXEMPTION) CALLED FOR THE DETAILS AND ON VERIFICAT ION FOUND THAT THE ASSESSEES SOCIETY EXISTS ONLY FOR A PARTICULAR GROUP OF PERSONS I.E. MEMBERSHIP IS RESTRICTED TO TRADERS IN BATTERI ES AND ALLIED BUSINESS. HE OBSERVED THAT THE ASSOCIATION IS ONLY TO SERVE THE INTEREST IN THE TRADE OF BATTERY BUSINESS AND THAT IS IT IN THE NATURE OF MUTUALITY CONCEPT AND THERE IS NO OBLIGAT ION FOR SPENDING THE INCOME FOR CHARITABLE PURPOSES ONLY. H E THEREFORE, HELD THAT THE OBJECTIVE OF THE ASSESSEES SOCIETY D ID NOT FALL UNDER THE AMBIT OF SECTION 2(15) OF THE I.T. ACT. ACCORDI NGLY, HE HELD THAT THE SOCIETY IS NOT FIT FOR GRANT OF REGISTRATION U/ S 12AA OF THE ACT AND REJECTED THE ASSESSEES APPLICATION IN FORM 10A . AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE REITE RATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW H AS PLACED RELIANCE UPON THE FOLLOWING CASE LAW IN SUPPORT OF HIS CONTENTIONS: I) HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ANDHRA CHAMBER OF COMMERCE (1965) 55 ITR 722 (S.C.) II) CIT VS. ANDHRA PRADESH POLICE WELFARE SOCIETY ( 1984) 148 ITR 287 III) CIT VS. RIDING CLUB (1987) 168 ITR 393 IV) BENGAL HOSIERY MANUFACTURERS ASSOCIATION VS. DI T (E) (2012) 18 ITR 0205 V) DDIT VS. PHD CHAMBER OF COMMERCE & INDUSTRY (201 1) 46 SOT 235 VI) PHD CHAMBER OF COMMERCE & INDUSTRY (2013) 357 I TR 296. ITA NO 1515 OF 2016. PAGE 3 OF 5 VII) DIT (E) VS. CHEMBUR GYMKHANA (2012) 346 ITR 86 VIII) ITAT AHMEDABAD BENCH IN THE CASE OF AHMEDABAD FOUND & ENGG. CLUSTER VS. DIT (E) IN ITA NO.186/AHD/2014 IX) CIT (E) VS. WATER & LAND MANAGEMENT TRAINING & RESEARCH INSTITUTE (2017) 83 TAXMANN.COM 234 5. THUS, HE SUBMITTED THAT THOUGH THE MEMBERSHIP IS TO THE TRADERS IN BATTERY BUSINESS, IT IS NOT RESTRICT ED TO ANY SPECIFIC PERSONS AND AS HELD BY THE HON'BLE APEX COURT, THE ACTIVITY OF THE SOCIETY NEED NOT BE OPEN TO THE WHOLE OF THE MANKIN D. THEREFORE, HE PRAYED FOR A DIRECTION TO THE CIT (EXEMPTION) TO GRANT REGISTRATION U/S 12A OF THE ACT. 6. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE DECISION OF THE HON'BLE KERALA HIGH COURT IN THE CA SE OF CIT VS. ERNAKULAM DISTT. CEMENT DEALERS ASSOCIATION (2002) 253 ITR 198 (KER.). 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE OBJECT OF GENERAL PUBL IC UTILITY IS ONE OF THE FACTS OF CHARITABLE PURPOSES AS DEFINED I N THE INCOME TAX ACT AND THE HON'BLE SUPREME COURT IN THE CASE OF CI T VS. ANDHRA CHAMBER OF COMMERCE (1965) 55 ITR 722 (S.C) HAS EXP LAINED THE OBJECT OF GENERAL PUBLIC UTILITY AS CONTAINED IN SE CTION 2(15) OF THE I.T. ACT AS UNDER: IN THE PROMOTION OF TRADE, COMMERCE AND INDUSTRIES OF INDIA THE PUBLIC IS VITALLY INTERESTED AND IF BY THE ACTIVITIES OF THE ASSESSEE THAT OBJECT IS ACHIEVED, IT WOULD BE WITHIN THE MEANING OF SECTION 4(3)( I ) OF THE 1922 ACT AN ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY. IN ENACTING THE LAST PARAGR APH OF SECTION 4(3) OF THE 1922 ACT THE LEGISLATURE HAS USED LANGUAGE OF GREAT AMPLITUD E. CHARITABLE PURPOSE INCLUDES NOT ONLY RELIEF OF THE POOR, EDUCATION AND MEDICAL RELIEF ALONE, BUT ADVANCEMENT OF OTHER OBJECTS OF GENERAL PUBLIC UTILITY AS WELL. TH E CLAUSE IS INTENDED TO SERVE AS A SPECIAL DEFINITION OF THE EXPRESSION CHARITABLE PU RPOSE FOR THE ACT; IT IS AGAIN INCLUSIVE AND NOT EXHAUSTIVE OR EXCLUSIVE. EVEN IF THE OBJECT OR PURPOSE MAY NOT BE REGARDED AS CHARITABLE IN ITS POPULAR SIGNIFICATION AS NOT TENDING TO GIVE RELIEF TO THE POOR OR FOR ADVANCEMENT OF EDUCATION OR MEDICAL REL IEF, IT WOULD STILL BE INCLUDED IN THE EXPRESSION CHARITABLE PURPOSE IF IT ADVANCES AN OBJECT OF GENERAL PUBLIC UTILITY. THE EXPRESSION OBJECT OF GENERAL PUBLIC UTILITY, HOWEVER, IS NOT RESTRICTED TO OBJECTS BENEFICIAL TO THE WHOLE OF MANKIND. AN OBJECT BENEF ICIAL TO A SECTION OF THE PUBLIC IS AN ITA NO 1515 OF 2016. PAGE 4 OF 5 OBJECT OF GENERAL PUBLIC UTILITY. TO SERVE A CHARIT ABLE PURPOSE, IT IS NOT NECESSARY THAT THE OBJECT SHOULD BE TO BENEFIT THE WHOLE OR MANKIN D OR EVEN ALL PERSONS LIVING IN A PARTICULAR COUNTRY OR PROVINCE. IT IS SUFFICIENT IF THE INTENTION TO BENEFIT A SECTION OF THE PUBLIC AS DISTINGUISHED FROM SPECIFIED INDIVIDU ALS. IT WAS TRUE THAT IN THE INSTANT CASE THERE WAS IN F ACT NO TRUST IN RESPECT OF THE INCOME DERIVED FROM THE BUILDING OWNED BY THE ASSESSEE. BU T THE PROPERTY AND THE INCOME THERE FROM WAS HELD UNDER A LEGAL OBLIGATION FOR, B Y THE TERMS OF THE PERMISSION GRANTED BY THE GOVERNMENT TO THE ASSESSEE TO EXCLUDE FROM ITS NAME THE USE OF THE WORD LIMITED, AND BY THE EXPRESS TERMS OF CLAUSE 4 OF THE MEMORANDUM OF ASSOCIATION, THE PROPERTY AND ITS INCOME WERE LIABL E TO BE UTILIZED SOLELY FOR THE PURPOSES SET OUT IN THE MEMORANDUM OF ASSOCIATION. THE PRIMARY OBJECTS OF THE ASSESSEE WERE TO PROMOTE AND PROTECT TRADE, COMMERCE AND INDUSTRIES AND TO AID, STIMULATE AND PROMOTE TH E DEVELOPMENT OF TRADE, COMMERCE AND INDUSTRIES AND TO WATCH OVER AND PROTE CT THE GENERAL COMMERCIAL INTERESTS OF INDIA OR ANY PART THEREOF. THESE OBJEC TS WERE NOT VAGUE OR INDEFINITE AS OBJECTS OF GENERAL PUBLIC UTILITY. AN OBJECT OF GEN ERAL PUBLIC UTILITY SUCH AS PROMOTION, PROTECTION, AIDING AND STIMULATION OF TRADE, COMMER CE AND INDUSTRIES NEED NOT, TO BE VALID, SPECIFY THE MODUS OR THE STEPS BY WHICH THE OBJECTS MAY BE ACHIEVED OR SECURE. IT COULD NOT BE SAID THAT IF CALLED UPON TO ADMINIS TER AN INSTITUTION OF WHICH THE OBJECTS ARE OF THE NATURES SET OUT, THE COURT WOULD DECLINE TO DO SO MERELY ON THE GROUND THAT THE METHOD BY WHICH TRADE, COMMERCE OR INDUSTRY IS TO BE PROMOTED OR PROTECTED, AIDED OR STIMULATED OR THE GENERAL COMME RCIAL INTERESTS OF INDIA ARE TO BE WATCHED OVER OR PROTECTED ARE NOT SPECIFIED. IN THE INSTANT CASE THE PRIMARY PURPOSE OF THE ASSE SSEE WAS NOT TO URGE OR OPPOSE LEGISLATIVE AND OTHER MEASURES AFFECTING TRADE, COM MERCE OR MANUFACTURES. THE PRIMARY PURPOSE OF THE ASSESSEE WAS, TO PROMOTE AND PROTECT TRADE, COMMERCE AND INDUSTRIES, TO AID, STIMULATE AND PROMOTE THE DEVEL OPMENT OF TRADE, COMMERCE AND INDUSTRIES AND TO WATCH OVER AND PROTECT THE GENERA L COMMERCIAL INTERESTS OF INDIA OR ANY PART THEREOF. IT WAS ONLY FOR THE PURPOSE OF SE CURING THESE PRIMARY AIMS THAT IT WAS ONE OF THE OBJECTS MENTIONED IN THE MEMORANDUM OF ASSOCIATION THAT THE ASSESSEE MAY TAKE STEPS TO URGE OR OPPOSE LEGISLATI VE OR OTHER MEASURES AFFECTING TRADE, COMMERCE OR MANUFACTURES. SUCH AN OBJECT MUS T BE REGARDED AS PURELY ANCILLARY OR SUBSIDIARY AND NOT THE PRIMARY OBJECT . 8. THIS PRINCIPLE HAS BEEN APPLIED IN ALL THE OTHER CASES RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE . THE DECISION OF THE HON'BLE KERALA HIGH COURT RELIED UPON BY THE LEARNED DR HAS NOT CONSIDERED THE DECISION OF THE HON'BLE SUPR EME COURT IN THE ABOVE CASE. THEREFORE, THE SAID DECISION IS NOT STRICTLY APPLICABLE TO THE CASE ON HAND. AS REGARDS THE OBJE CTIVES OF THE ASSESSEE, WE FIND THAT THEY FALL UNDER THE CATEGORY OF OBJECT OF GENERAL PUBLIC UTILITY AND ARE NOT RESTRICTED TO S PECIFIED INDIVIDUAL/PERSONS. THEREFORE, FOLLOWING THE DECISI ON OF THE HON'BLE SUPREME COURT (CITED SUPRA), THE OBJECTIVES OF THE ASSESSEE SOCIETY ARE TO BE CONSIDERED AS CHARITABLE IN NATURE AND REGISTRATION U/S 12A IS TO BE GRANTED. ITA NO 1515 OF 2016. PAGE 5 OF 5 9. ANOTHER REASON FOR DENIAL OF REGISTRATION IS THA T THE OBJECTS DO NOT RESTRICT THE SPENDING OF THE FUNDS O NLY FOR CHARITABLE PURPOSES. U/S 11, ONLY SUCH EXPENDITURE WHICH IS FOR CHARITABLE PURPOSES, IS ALLOWABLE AND THE AO, DURIN G THE ASSESSMENT PROCEEDINGS, CAN EXAMINE IF THE FUNDS WE RE UTILIZED FOR THE PURPOSES FOR WHICH THE SOCIETY HAS BEEN FOR MED. SINCE THE CIT (E) HAS NOT POINTED OUT ANY PARTICULAR OBJECTIV E WHICH IS NOT FOR CHARITABLE PURPOSES, AND SINCE THE OBJECTIVES A RE NOT RESTRICTED TO ANY SINGLE OR SPECIFIED PERSON/OR PERSONS, WE AR E OF THE OPINION THAT THE ASSESSEE IS ELIGIBLE FOR REGISTRATION U/S 12AA OF THE ACT. IN VIEW OF THE SAME, WE REMAND THE ISSUE TO THE FILE O F THE CIT (E) WITH A DIRECTION TO GRANT REGISTRATION U/S 12A OF T HE ACT. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH NOVEMBER, 2019. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 7 TH NOVEMBER, 2019. VINODAN/SPS COPY TO: 1 HYDERABAD BATTERY ASSOCIATION, C/O R. JASRAJ & CO . ADVOCATES, 15-1-91/4/A/1, 2 ND FLOOR, PAPALA PLAZA, OLD FEELKHANA, HYDERABAD 500012 2 CIT (EXEMPTION) AAYAKAR BHAVAN, BASHEERBAGH, HYDE RABAD 3 ITO WARD-1(EXEMPTION), HYDERABAD 4 THE DR, ITAT HYDERABAD 5 GUARD FILE BY ORDER