M/s. YOUTH 4 JOBS FOUNDATION, Secunderabad V. Director of Income Tax (Exemptions), Hyderabad

ITA 1662/HYD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2826 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 07-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Assessee Lawyers: C SURESH
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, J UDICIAL MEMBER ITA NO. 1662/HYD/2012 YOUTH 4 JOBS FOUNDATION, SECUNDERABAD. PAN:AAACY 5258R V/S. DIT (E), HYDERABAD. . (APPELLANT) (RESPONDENT) APPELLANT BY : SRI C. SURESH DEPARTMENT BY : SMT. AMISHA S. GUPT DATE OF HEARING 29 - 4 - 2013 DATE OF PRONOUNCEMENT 29-4-2013 . O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST OR DER DATED 27-9-2012 OF DIT (EXEMPTIONS), HYDERABAD PASSED IN F.NO . DIT (E)/HYD/12A &80G/15(3)/11-12 REJECTING THE APPLICATION FILED FOR GRANT OF REGISTRATION U/S 12AA OF THE ACT. 2. BRIEFLY THE FACTS ARE, THE APPELLANT A COMPANY INCO RPORATED UNDER THE INDIAN COMPANIES ACT IS REGISTERED WITH THE REGIST RAR OF THE COMPANIES. THE APPELLANT COMPANY CLAIMING ITSELF TO BE A CHARITABLE INSTITUTION APPLIED IN THE PRESCRIBED MANNER FOR GRANT OF REGISTRATION U/S 12AA OF THE ACT BY FILING AN APPLICATION IN FORM NO.1 0A ON 5-3-2012 BEFORE THE DIT (E). AFTER RECEIVING THE APPLICATION O F THE APPELLANT FOR GRANT OF REGISTRATION, THE DIT (E) APART FROM ASKING THE APPELLANT TO ITA NO.1662 OF 2012 YOUTH 4 JOBS FOUNDATION, HYD. 2 PRODUCE BOOKS OF ACCOUNT, ORIGINAL DOCUMENTS ETC., FOR VE RIFICATION ALSO ISSUED A QUESTIONNAIRE VIDE LETTER DATED 2-7-2012 CALL ING FOR DETAILS ON SPECIFIC POINTS RAISED THEREIN. IN COMPLIANCE TO THE LET TER ISSUED BY THE DIT (E), THE APPELLANT APPEARED BEFORE HIM AND PROD UCED THE DETAILS AS WERE CALLED FOR. THE DIT (E) PASSED AN ORDER ON 27-9 -2012 REJECTING THE APPELLANTS APPLICATION FOR GRANT OF REGISTRATION U/S 12AA SHOWING THE FOLLOWING REASONS:- I) AS PER CERTAIN OBJECT CLAUSES, THE APPELLANT INTEND S TO CARRY ON ACTIVITIES OUTSIDE INDIA WHICH DO NOT PERMIT GRANT OF REGISTRATION U/S 12AA OF THE ACT. II) THE MEMORANDUM OF UNDERSTANDING BETWEEN THE APP ELLANT AND THE SOCIETY FOR ELIMINATION OF RURAL POVERTY (SERP ), DEPARTMENT OF RURAL DEVELOPMENT, GOVERNMENT OF ANDH RA PRADESH FOR PROVIDING MARKET LINKED SOLUTIONS TO T HE VULNERABLE AND NEGLECTED PERSONS WITH DISABILITY IS EFFECTIVE FROM 1-3-2012 TO 28-2-2014. HOWEVER, THE LETTER WRITTEN BY MCDON ALDS RESTAURANTS PVT. LIMITED, HYDERABAD TO THE EXECUT IVE DIRECTOR, CPDL, HYDERABAD INFORMING ABOUT SELECTION OF SEVEN CANDIDATES TRAINED IN CPDL FOR APPOINTMENT IN THEIR ORGANIZAT ION. THE DIT (E) AFTER VERIFYING THE DATE OF ISSUANCE OF SUCH LE TTER, WAS OF THE VIEW THAT SINCE THE MOU BETWEEN THE APPELLANT AND S ERP WAS EFFECTIVE FROM 1-3-2012, IT COULD NOT HAVE BEEN POS SIBLE FOR THE INSTITUTION TO TRAIN THE SEVEN CANDIDATES FOR SELEC TION BY MCDONALDS RESTAURANTS PVT. LIMITED, HYDERABAD ON 2-3-2012 I.E., JUST A DAY AFTER SIGNING OF MOU. III) THE MOU ENTERED INTO BETWEEN THE ASSESSEE AND SERP PROVIDES FOR SERP MAKING AVAILABLE BUDGET FOR THE TRAINING PROGRAMME OF RURAL PWD YOUTH. THE MOU REVEALS THAT THE ACTUAL BUDGET I.E., FINANCIAL SUPPORT FOR SUCH TRAINING IS THE RESPON SIBILITY OF THE SERP. THE DIT (E) AFTER EXAMINING THE RECEIPTS AND PAYMENTS ACCOUNTS NOTICED THAT THERE IS NO FRESH RECEIPT DUR ING THE PERIOD 1-4-2012 TO 31-8-2012 EXCEPTING THE PREVIOUS BANK BALANCE OF RS.6LAKHS AND CASH BALANCE OF RS.32,514/- WHICH HAV E BEEN BROUGHT FORWARD. THE DIT (E) INFERRED THAT WHEN S ERP HAS TO ITA NO.1662 OF 2012 YOUTH 4 JOBS FOUNDATION, HYD. 3 PROVIDE BUDGET FOR THE TRAINING PROGRAMME UNDERTAK EN BY THE ASSESSEE FOR DIFFERENT PERSONS AT THEIR INSTANCE, IT IS OBVIOUS THAT THE ASSESSEES INSTITUTION MUST HAVE RECEIVED REVENUE/FINANCIAL HELP ON THAT ACCOUNT FROM SERP. HOWEVER, THE ASSESSEE HAD NOT DISCLOSED THE AMOUNT RECEIVED/ RECEIVABLE FROM SERP ON THAT ACCOUNT IN THE RECEIPTS AND PAYME NT ACCOUNT AND INCOME AND EXPENDITURE A/C FOR THE SAID PERIOD. THE DIT (E) THEREFORE CAME TO A CONCLUSION THAT THE ASSESSE E HAS NOT FURNISHED TRUE AND FULL PARTICULARS RELATING TO IT S ACTIVITIES AND THE FINANCIAL AFFAIRS PERTAINING TO THE SAID PERIOD DURING THE PROCEEDINGS. ON THE BASIS OF AFORESAID CONCLUSION, THE DIT (E) REJECTED THE ASSESSEES APPLICATION FOR GRANT OF RE GISTRATION U/S 12AA OF THE ACT. 3. THE LEARNED AR STRONGLY OPPOSING THE REASONS SHOWN B Y THE DIT (E) IN REJECTING THE APPLICATION FOR GRANT OF REG ISTRATION SUBMITTED THAT THE OBJECTS OF THE APPELLANT AS SET OUT IN THE MEMORANDUM OF ASSOCIATION HAVE BEEN TOTALLY MISINTERP RETED BY THE DIT (E) WHILE OBSERVING THAT THE APPELLANT INTEN DS TO CARRY OUT ITS ACTIVITIES OUTSIDE INDIA. IT WAS SUBMITTED THA T CLAUSE (IV) OF THE MEMORANDUM OF ASSOCIATION MAKES IT CLEAR THAT THE OBJECTS OF THE ASSESSEE EXTEND TO WHOLE OF INDIA ONLY. HE FURTH ER SUBMITTED THAT THE DOUBTS EXPRESSED BY THE DIT (E) WI TH REGARD TO TRAINING IMPARTED TO THE SEVEN PERSONS APPOINTED BY MCDONALDS IS ALSO TOTALLY UNFOUNDED. THE SAID SEVEN PER SONS UNDERWENT TRAINING WITH THE APPELLANT AFTER THEIR I NITIAL ENROLMENT WITH M/S MCDONALDS. SO FAR AS THE ALLEGATION WITH R EGARD TO NON DISCLOSURE OF FINANCIAL SUPPORT RECEIVED FROM SERP IS CON CERNED, THE LEARNED AR SUBMITTED THAT NO BUDGET ALLOCATION O R FINANCIAL SUPPORT FROM SERP IS TO BE RECEIVED BY THE APPELLANT COMPANY. IT WAS SUBMITTED THAT THE DIT (E) HAS COMPLETELY MISCONCE IVED THE FACTS AND BY MISINTERPRETING THE TERMS OF THE MOU H AS ITA NO.1662 OF 2012 YOUTH 4 JOBS FOUNDATION, HYD. 4 ARBITRARILY COME TO A CONCLUSION THAT THE SERP HAS PROV IDED FINANCIAL SUPPORT FOR THE TRAINING PROGRAMME WHICH HA S NOT BEEN DISCLOSED BY THE ASSESSEE. THE LEARNED AR SUBMITTED THAT THE DIT (E) HAS NOT GRANTED A REASONABLE OPPORTUNITY TO T HE ASSESSEE TO EXPLAIN THE OBJECTS AND THE ACTIVITIES OF THE SOCIETY AND HAS UNILATERALLY COME TO A CONCLUSION ON THE BASIS OF PRESUMP TION AND SURMISES. IT WAS SUBMITTED THAT HAD THE DIT (E) GIVEN A REASONABLE OPPORTUNITY TO THE APPELLANT TO EXPLAIN T HE DOUBTS ENTERTAINED BY HIM, THE SAME COULD HAVE BEEN EXPLAINE D IN A PROPER MANNER. IT WAS FURTHER SUBMITTED THAT THE OR DER PASSED BY THE DIT (E) IS IN GROSS VIOLATION OF RULES OF NATUR AL JUSTICE. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE O THER HAND, SUPPORTED THE ORDER OF THE DIT (E). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. THE GRIEVANCE OF THE APPELLANT IS, THE DIT (E) HAS REJECTED THE APPLICATION FOR GRANT OF REGISTRATION U/S 12AA WITHOUT AFFORDING A PROPER OPPORTUNITY OF B EING HEARD TO THE APPELLANT. ON PERUSAL OF THE REASONS SHOWN BY THE DIT (E) FOR REJECTING THE APPELLANTS APPLICATION FOR REGISTRAT ION, IT IS SEEN THAT NEITHER HE HAS PROPERLY CONSIDERED THE DOCUMENTS SUBMITTED BEFORE HIM NOR HE HAS GIVEN A REASONABLE OPP ORTUNITY TO THE ASSESSEE TO EXPLAIN THE TRUE NATURE OF THE OBJECT S AND ACTIVITIES CARRIED ON BY THE ASSESSEE. A READING OF TH E ORDER PASSED BY THE DIT (E) MAKES IT CLEAR THAT THE CONCLUSION ARRIVED AT BY HIM WITH REGARD TO THE TRAINING IMPARTED TO T HE SEVEN INDIVIDUALS ENROLLED WITH M/S MCDONALDS AND THE ALLEGE D RECEIPT OF BUDGET ALLOCATION/FINANCIAL SUPPORT FROM SERP IS INFLUE NCED MORE ITA NO.1662 OF 2012 YOUTH 4 JOBS FOUNDATION, HYD. 5 BY PRESUMPTION AND SURMISES RATHER THAN ANY COGENT AND CORROBORATIVE MATERIAL AND EVIDENCE BROUGHT ON RECORD. SO FAR AS DIT (E)S ALLEGATION WITH REGARD TO CARRYING ON OF OBJECTS OUTSIDE INDIA IS CONCERNED, THOUGH THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE INTENDS TO CARRY ON OR CARRYING O N ITS ACTIVITIES OUTSIDE INDIA. HOWEVER, CARRYING OUT SUCH OBJE CTS IN ANY PLACE OUTSIDE INDIA WOULD NEITHER CHANGE THE NATUR E AND CHARACTER OF THE ACTIVITY NOR WOULD MAKE IT LESS CHARITAB LE. CONSIDERING THE FACT THAT THE DIT (E) HAS NOT AFFORDED A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, W E ARE INCLINED TO SET ASIDE THE ORDER DATED 27-9-2012 PASSED B Y THE DIT (E) REJECTING THE APPELLANTS APPLICATION FOR GRAN T OF REGISTRATION U/S 12AA OF THE ACT AND REMIT THE MATTER BACK TO HIM FOR CONSIDERATION AFRESH. THE DIT (E) SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND TAKE A D ECISION IN THE MATTER AFTER CONSIDERING ALL THE MATERIALS AND EVI DENCES ON RECORD AND ALSO THE SUBMISSIONS MADE BY THE APPELLANT. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29TH APR IL, 2013 . SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER SD /- (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 29 TH APRIL, 2013 JMR* COPY FORWARDED TO: 1. 2. C/O M/S SEKAR AND SURESH, CAS, 133/4, RP ROAD, SECUNDERABAD-500003. DIRECTOR OF INCOME-TAX (EXEMPTIONS), HYDERABAD. 3. THE DR B BENCH ITAT, HYDERABAD. ITA NO.1662 OF 2012 YOUTH 4 JOBS FOUNDATION, HYD. 6