Little Flower Women Charitable Society, Pedavegi, West Godavari Dist., Hyderabad V. CIT (Exemptions), Hyderabad, Hyderabad

ITA 1678/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6022 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 13-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G. APARNA RAO
• Keywords: Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 12AA

Judgement Text

1 ITA.NO.1678/HYD/2016 LITTLE FLOWER WOMEN CHARITABLE SOCIETY IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.1678/HYD/2016 LITTLE FLOWER WOMEN CHARITABLE SOCIETY, MUTNAVEEDU (V), VIJAYAPURI (P) PEDAVEGI, WEST GODAVARI DISTRICT. PAN AAAAL8969Q VS. COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI E.S. RANGANATH FOR REVENUE : SMT. G. APARNA RAO DATE OF HEARING : 23.03.2017 DATE OF PRONOUNCEMENT : 23.03.2017 ORDER PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE-SOCIETY IS DIRECTED AG AINST THE ORDER PASSED BY CIT (EXEMPTIONS). 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE-SOCIETY W AS REGISTERED AS A CHARITABLE SOCIETY ON 18.10.2014. AS PER THE MEMORANDUM OF ASSOCIATION THE AIMS OF THE SOCIETY WA S TO STRIVE FOR UPLIFTMENT OF WOMEN IN ALL LEVELS. TOWARDS THAT GOAL THE SOCIETY IS ENTITLED TO ESTABLISH/MANAGE SMALL SCALE INDUSTRIES, GI VE VOCATIONAL TRAINING, PROVIDE AND ENCOURAGE MEDICAL ASSISTANCE, U NDERTAKE SOCIAL AND ECONOMIC RELIEF ACTIVITIES FOR THE WELFARE OF THE PEOPLE ETC., VIDE APPLICATION DATED 18.02.2016, ASSESSEE-SOCIETY FILED FORM 10A SEEKING REGISTRATION UNDER SECTION 12AA OF THE I.T. ACT. LATER A STANDARD FORM WAS SENT TO THE ASSESSEE-TRUST CALLING-UPON IT TO FURNIS H THE 2 ITA.NO.1678/HYD/2016 LITTLE FLOWER WOMEN CHARITABLE SOCIETY MEMORANDUM OF REGISTRATION AND OTHER DETAILS. THE LETTE R FROM THE O/O. CIT (EXEMPTIONS) (LETTER DATED 02.06.2016) DOES NOT IN DICATE THAT IT WAS SENT AFTER APPLICATION OF MIND BEFORE SEEKING CLARIFI CATIONS INASMUCH AS THE LETTER SEEKS PRECISE ACTIVITIES UNDERTAKEN DURING T HE LAST THREE YEARS OVERLOOKING TO THE FACT THAT THE INSTITUTION COME INTO EXIS TENCE IN 2014. SIMILARLY, ITEM-9 SPEAKS OF FURNISHING OF PROOF OF F ILING RETURNS FOR THE A.YS. 2013-14, 2014-15 AND 2015-16 DESPITE THE FACT TH AT THE SOCIETY WAS NOT IN EXISTENCE DURING THE PERIOD RELEVANT TO THE A. YS. 2013-14 AND 2014-15. THOUGH THE ASSESSEE HAS FURNISHED DETAIL ED REPLY (PAGE 16 TO 18 OF THE PAPER BOOK) INDICATING ITS AIMS AND OBJ ECTS AND ALSO THE PRESENT ACTIVITY BEING CARRIED OUT, THE LD. CIT WAS OF THE OPINION THAT REGISTRATION CANNOT BE GRANTED IF MAJORITY OF THE EXPE NDITURE IS TOWARDS COMMERCIAL ACTIVITY OF MANUFACTURE/ASSEMBLING OF STAB ILIZERS. IN OTHERWORDS, IT IS NOT THE CASE OF THE COMMISSIONER THAT TH E ACTIVITIES MENTIONED IN THE MEMORANDUM OF ASSOCIATION ARE NOT CH ARITABLE IN NATURE; RATHER THE CASE OF THE COMMISSIONER IS THAT THE E XPENDITURE TOWARDS VOCATIONAL TRAINING ACTIVITY IS MINIMAL IN VOL UME IN THIS YEAR, OVERLOOKING THE FACT THAT THIS IS THE FIRST YEAR WHERE THE ACTIVITY IS COMMENCED. 3. AGGRIEVED BY THE ORDER OF COMMISSIONER, ASSESSEE IS IN APPEAL BEFORE US. LEARNED COUNSEL FOR THE ASSESSEE S UBMITS THAT WHILE GRANTING REGISTRATION THE COMMISSIONER IS DUTY BOUND TO GIVE A FINDING AS TO WHETHER THE OBJECTS MENTIONED IN THE MEMORANDUM OF ASSOCIATION WOULD FALL WITHIN THE NATURE OF ACTIVITIES ON WHICH REG ISTRATION CAN BE GRANTED UNDER SECTION 12AA OF THE ACT AND IT SHOULD NOT GO BY THE VOLUME OF ACTIVITY IN THE FIRST YEAR. IN THE INSTANT CAS E, THE LD. COMMISSIONER HAS GONE BY THE VOLUME OF THE ACTIVITIES R ATHER THAN BY THE CHARITABLE NATURE OF THE ACTIVITIES AS ENSHRINED IN THE MEMORANDUM OF ASSOCIATION TO DENY THE REGISTRATION, WHICH IS NOT PER MISSIBLE IN LAW. 3 ITA.NO.1678/HYD/2016 LITTLE FLOWER WOMEN CHARITABLE SOCIETY 4. ON THE OTHER HAND, LD. D.R. STRONGLY RELIED UPON THE ORDER PASSED BY CIT (EXEMPTIONS). 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE RECORD. IT IS WELL SETTLED THAT AT THE TIME OF EXAMINING THE APPLICATION, SEEKING REGISTRATION UNDER SECTION 12AA OF THE ACT, THE MANNER OF APPLICATION OF FUNDS OF TRUST SHOULD NOT BE THE CRITERIA AND IF THERE IS ANY MISUSE OF FUNDS, THE REGISTRATION GRANTED C AN ALWAYS BE WITHDRAWN/CANCELLED. THE POWER TO GRANT REGISTRATION IS VESTED IN THE COMMISSIONER WHO HAS TO SATISFY ABOUT THE GENUINENESS O F THE ACTIVITIES OF THE TRUST AND SHOULD NOT GO BEYOND THAT. IN OTHERWORD S, MERELY BECAUSE THERE IS SOME APPREHENSION THAT THE INCOME WOU LD NOT BE USED IN PROPER MANNER, THE CIT SHOULD NOT RESORT TO REJECTIO N OF THE CLAIM OF REGISTRATION. IN THE INSTANT CASE, THERE IS NO FINDINGS B Y THE COMMISSIONER THAT THE ACTIVITIES OF THE TRUST MENTIONED IN THE MEMORANDUM ARE NON-CHARITABLE IN NATURE. IN FACT, THE C OMMISSIONER IS ALWAYS ENTITLED TO DISCONTINUE THE REGISTRATION GRANTE D IF THE ACTIVITIES OF THE TRUST ARE NON-CHARITABLE IN NATURE, AT A LATER P OINT OF TIME. SINCE THE LD. CIT HAS RESORTED TO REJECTION OF THE CLAIM OF EX EMPTION ON MERE SURMISES, WE DEEM IT FAIR AND REASONABLE TO SET ASIDE THE MATTER TO THE FILE OF THE CIT (EXEMPTIONS) WITH A DIRECTION TO HIM TO GRANT REGISTRATION IF THE ACTIVITIES OF THE TRUST, AS ENSHRINED IN THE MEMO RANDUM OF ASSOCIATION, ARE CHARITABLE IN NATURE WITH A RIDER THAT IF THERE IS CONTRAVENTION OF WHAT IS STATED IN THE ACTIVITIES, THE COMM ISSIONER IS ALWAYS ENTITLED TO WITHDRAW THE REGISTRATION EARLIER GRAN TED. LD. D.R. HAS NOT RAISED ANY SERIOUS OBJECTIONS ON THE MATTER BEING S ET ASIDE TO THE FILE OF THE COMMISSIONER. ACCORDINGLY, WE SET ASIDE TH E MATTER TO THE FILE OF THE COMMISSIONER FOR GRANT OF REGISTRATION IN ACCORD ANCE WITH LAW. 4 ITA.NO.1678/HYD/2016 LITTLE FLOWER WOMEN CHARITABLE SOCIETY 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23.03.2 017. SD/- SD/- (S. RIFAUR RAHMAN) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED 23 RD MARCH, 2017 VBP/- COPY TO 1. LITTLE FLOWER WOMEN CHARITABLE SOCIETY C/O. NATARAJA IYER & CO., CHARTERED ACCOUNTANTS, 1-10-126, ASHOKNAGAR, HYDERABA D-020. 2. COMMISSIONER OF INCOME TAX (EXEMPTIONS), 2 ND FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500 004. 3. INCOME TAX OFFICER (EXEMPTIONS), WARD-2, HYDERABAD. 4. D.R. ITAT B BENCH, HYDERABAD. 5. GUARD FILE