Roundglass Foundation, Mohali V. CIT(E), , Chandigarh

ITA 181/CHANDI/2019

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9675 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 18-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure
• Section: 12AA

Judgement Text

ITA NO. 181-CHD-2019 ROUNDGLASS FOUNDATION, CHANDIGARH 4 SOCIAL CAUSE WHERE A PART OF THE FUNDS SO RAISED GO ES TO CHARITY AND (III) INDIVIDUALS FOR THEIR PERSONAL EMERGENCIES, INCLUDI NG BUT NOT LIMITED TO HEALTHCARE AND EDUCATION RELATED EMERGENCIES. 4. THE LD. CIT (E) TO VERIFY THE GENUINENESS OF THE ACTIVITIES OF THE COMPANY CALLED FOR VARIOUS INFORMATION AND RECORD. THE LD. CIT (E) AFTER APPRAISAL OF THE RECORDS SUBMITTED BY THE ASS ESSEE COMPANY OBSERVED THAT THE ASSESSEE COMPANY NAMELY M/S ROUND GLASS FOUNDATION WAS, IN FACT, IS A CORPORATE SOCIAL RESPONSIBILITY (CSR) ARM OF ANOTHER COMPANY M/S ROUND GLASS WELLBING PRIVATE LIMITED. H E FURTHER OBSERVED THAT M/S ROUND GLASS WELLBING PRIVATE LIMI TED WAS ONE OF THE MAIN MEMBER OF THE APPELLANT COMPANY AND FURTHER TH AT THE MAIN CONTRIBUTIONS HAVE BEEN PROVIDED BY THE SAID M/S RO UND GLASS WELLBING PRIVATE LIMITED TO THE APPELLANT COMPANY. THAT THE SHARE CAPITAL IN TOTALITY HAD BEEN CONTRIBUTED BY PRE-DOMINANT STAKE HOLDER. THE LD. CIT (E), THEREFORE, OBSERVED THAT THE APPLICANT INS TITUTION WAS WORKING SOLELY ON THE FUNDS PROVIDED BY ITS MAIN CONTRIBUTO R M/S ROUND GLASS WELLBING PRIVATE LIMITED AS PART OF FULFILLMENT OF THEIR CSR OBLIGATION. THE LD. CIT(E) FURTHER OBSERVED THAT THE CORPORATE SOCIAL RESPONSIBILITY (CSR) HAS BEEN INCORPORATED THROUGH SECTION 135(1) OF THE COMPANIES ACT, 2013 AND THAT THERE WAS NO SPECI FIC TAX EXEMPTION AVAILABLE ON ITS CSR. THE AMOUNT SPENT BY COMPANY O N ITS CSR LIABILITY CANNOT BE CLAIMED AS BUSINESS EXPENDITURE UNDER THE INCOME TAX ACT. ITA NO. 181-CHD-2019 ROUNDGLASS FOUNDATION, CHANDIGARH 6 5. BEING AGGRIEVED BY THE SAID ORDER OF THE CIT (E) , THE APPELLANT COMPANY HAS PREFERRED APPEAL BEFORE US. 6. A PERUSAL OF THE IMPUGNED ORDER OF THE LD. CIT ( E) REVEALS THAT THE LD. CIT (E) NOWHERE IN THE IMPUGNED ORDER HAS P OINTED OUT THAT THE APPELLANT COMPANY HAS NOT BEEN ACTING AS PER ITS OB JECTIVES OR THAT THE ACTIVITY OF THE APPELLANT COMPANY WAS NOT GENUINE VIS A VIS ITS OBJECTS. THE MAIN PLEA TAKEN BY THE LD. CIT (E) IS THAT THE SAID COMPANY IS AN ARM OF ANOTHER COMPANY NAMELY M/S ROUND GLASS WELLB ING PRIVATE LIMITED FOR THE PURPOSE OF CARRYING OUT THEIR CSR L IABILITY. THAT OTHERWISE THE MAIN CONTROL OVER THE APPELLANT COMPA NY IS OF M/S ROUND GLASS WELLBING PRIVATE LIMITED. HOWEVER, THERE IS N O ALLEGATION OR OBSERVATION BY THE LD. CIT(E) ABOUT THE CHARITABL E NATURE OF ITS OBJECTS AND ACTIVITIES THEREOF. SO FAR AS THE GRANT OF REGI STRATION TO A COMPANY WHO IS DEEMED TO BE UNDER THE CONTROL OF ANOTHER CO MPANY AND WHO HAS FORMED SUCH COMPANY FOR COMPLYING THEIR CSR REQUIRE D UNDER THE COMPANYS ACT, THE ISSUE HAS BEEN SETTLED BY THE CO ORDINATE DELHI BENCH OF THE TRIBUNAL IN THE NANAK CHAND CHARITAB LE TRUST VS CIT (EX.) (2018) 91 TRAXMANN.COM 197 DATED 9.2.2018, WHEREIN, IT HAS BEEN HELD THAT MERELY BECAUSE THE ASSESSEE TRUST /COMPAN Y HAS BEEN FORMED BY ANOTHER COMPANY FOR COMPLYING THE CSR REQUIREMEN TS, IT CAN NOT BE DENIED REGISTRATION U/S 12AA UNLESS THE GENUINENESS OF THE ACTIVITIES OF ASSESSEE TRUST OR ITS CHARITABLE OBJECTS IS DOUBTFU L. THE RELEVANT PART