INGA FOUNDATION, MUMBAI V. DIT (E), MUMBAI

ITA 1864/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100984 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: I
• Next Hearing Date: 27-08-2015
• Assessment Year: 2012-2013
• Appeal Filed On: 19-03-2012
• Court: TRIBUNAL
• Department Lawyers: SUBACHAM RAM
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL I , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI PAWAN SINGH , J M ./ ITA NO . 1864 / MUM/20 1 2 ( / ASSESSMENT YEAR : ) INGA FOUNDATION, 3/3, SEEMA SOCIETY, N.DUTTA MARG, ANDHERI (WEST), MUMBAI - 400053 VS. THE DIT(EXEMPTION), PIRAMAL CHAMBERS, PAREL, MUMBAI - 400012 ./ ./ PAN/GIR NO. : A A CC I 5674 D ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI VIJAY KOTHARI /REVENUE BY : SHRI SUBACHAM RAM / DATE OF HEARING : 27 /0 8 / 2015 / DATE OF PRONOUN CEMENT 09/09 /2015 / O R D E R PER PAWAN SINGH (J .M) : TH E PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 30 - 01 - 2012, PASSED BY THE D IT( E ) , MUMBAI ON THE FOLLOWING GROUNDS : - 1. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION ) HAS ERRED IN PASSING THE ORDER U/S. 12AA(1)(B)(II) R..W.S 12A OF THE INCOME TAX ACT, 1961 REJECTING THE APPLICATION FOR REGISTRATION U/S 12AA OF THE LNCORNE - TAX ACT AND WHILE DOING SO HE AMONGST OTHERS FAILED TO APPRECIATE THAT THE: A. ACTIVITIES OF TH E APPELLANT FOUNDATION ARE GENUINE AND ITS OBJECTS ARE CHARITABLE IN NATURE AND, THEREFORE, REGISTRATION U/S 12A HAS TO BE GRANTED TO THE APPELLANT. B. APPLICATION WAS REJECTED IN CONTRAVENTION OF PROVISIONS OF PROVISO TO SECTION 12AA( 1) OF THE ACT. C. ACTIVITIES OF THE APPELLANT WAS AS PER THE OBJECTS OF THE FOUNDATION, WHICH WERE CHARITABLE IN NATURE. 2. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION) HAS ERRED IN OBSERVING THAT THE CONDITIONS FOR GRANTING REGISTRATION U/S 12A HAVE NOT BEEN SATISFIE D. ITA NO. 1864 /1 2 2 2. THE CASE OF THE ASSESSEE IS THAT THE ASSESSEE COMPANY GOT ITS REGISTRATION U/S.25 OF THE COMPANIES ACT, 1956 AND ISSUED CERTIFICATE OF INCORPORATION DATED 17 - 3 - 2011 AND APPLIED FOR REGISTRATION U/S.12A OF THE I.T. ACT BEFORE THE DIT(EXEMPTION), MUMB AI. HOWEVER, THE DIT(E) DECLINED THE REGISTRATION VIDE IMPUGNED ORDER DATED 30 - 01 - 2012, AGAINST WHICH THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AR OF THE ASSESSEE AND LD. DR OF THE REVENUE AND PERUSED THE MATERIAL AVAILA BLE ON RECORD. WE HAVE ALSO PERUSED THE MEMORANDUM OF ASSOCIATION OF ASSESSEE AND ACCORDIN G TO THE SAME, THE ASSESSEE HAS TO PROMOTE MEDICAL FACILITIES FOR UNDERPRIVILEGED CHILDREN WITH CONGENIAL FACIAL DEFORMITIES AND OTHER MEDICAL EMERGENCIES AND TO PRO VIDE SUPPORT TO OTHER NGOS AND HOSPITALS. AR DREW OUR ATTENTION TO THE REASONING GIVEN BY THE DIT(E) THAT, ON VERIFICATION IT IS FOUND THAT THE APPLICANT INSTITUTION HAS NOT CARRIED OUT ANY SUCH ACTIVITIES. LD. AR FURTHER ARGUED THAT THE ASSESSEE GOT IT S CERTIFICATE OF INCORPORATION ONLY ON 17 - 3 - 2011 AND APPLIED FOR REGISTRATION U/S.12A ON 22 - 7 - 2011. WE HAVE SEEN THE MEMORANDUM OF ASSOCIATION OF ASSESSEE , WHICH IS A COMPANY REGISTERED UNDER SECTION 25 OF THE COMPANIES ACT, 1956 AND THE MAIN OBJECT OF THE ASSESSEE AS PER CLAUSE - A IS TO PROMOTE MEDICAL FACILITIES FOR UNDERPRIVILEGED CHILDREN WITH CONGENIAL FACIAL DEFORMITIES AND OTHER MEDICAL EMERGENCIES AND TO PROVIDE SUPPORT TO OTHER NGOS AND HOSPITALS , WHO ARE ENGAGED IN THESE ACTIVITIES FOR UPLIFTMENT AND TRANSFORMATION OF LIVES OF THESE CHILDREN. THE MEMORANDUM OF ASSOCIATION OF ASSESSEE FURTHER CONTAINS OTHER INCIDENTAL ITA NO. 1864 /1 2 3 OR ANCILLARY TO FULFILL THE MAIN OBJECT OF THE ASSESSEE. THE DIT(E) IN PARA 4 OF THE IMPUGNED ORDER HAS OBSERVED THAT THE APPLICATION OF THE ASSESSEE WAS CONSIDERED CAREFULLY BUT THE SAME COULD NOT BE ACCEPTED AS ACTIVIT Y OF ORGANIZING A CLASSICAL AND CULTURAL PROGRAMME CANNOT BE TAKEN TO BE IN PURSUANCE OF OBJECTS SOUGHT TO BE ACHIEVED AND THAT THESE ACTIVITIES ARE CLEARLY IN THE COMME RCIAL FIELD AND ALSO DIRECTLY HIT BY THE PROVISO TO SECTION 2(15) OF THE IT.ACT. 4. LD. AR OF THE ASSESSEE RELIED UPON THE FOLLOWING JUDGMENTS : - I) CIT(A) VS. SURYA EDUCATIONAL & CHARITABLE TRUST, 203 TAXMAN 53 (P&H); II) GEORGE INSTITUTE FOR GLOBAL HEAL TH, HYDERABAD VS. DIT(E), ITA NO.1773/HYD/2012, ORDER DATED 23 - 7 - 2014; III) ADCIT VS. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION, [1980] 121 ITR 1 (SC); IV) INDIA INTERNATIONAL CENTRE VS. ADIT(E), ITA NO.3124/DEL/2014, ORDER DATED 11 - 5 - 2015; AND V) DIT VS. FOUNDATION OF OPHTHALMIC & OPTOMETRY RESEARCH EDUCATION CENTRE, [2012] 210 TAXMAN 36. 5. IN THE CASE OF SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (SUPRA), THE HONBLE APEX COURT HELD THAT, IF THE PRIMARY OR DOMINANT PURPOSE OF A TRUST OR INSTIT UTION IS CHARITABLE, ANOTHER OBJECT WHICH BY ITSELF MAY NOT BE CHARITABLE BUT WHICH IS MERELY ANCILLARY OR INCIDENTAL TO THE PRIMARY OR DOMINANT PURPOSE WOULD NOT PREVENT THE TRUST OR INSTITUTION FROM BEING A VALID CHARITY . 6. IN THE CASE OF SURYA EDUCATI ONAL & CHARITABLE TRUST (SUPRA), THE HONBLE PUNJAB AND HARYANA HIGH COURT HELD AS UNDER : - R EGISTRATION PROCEDURE - WHETHER OBJECT OF SECTION 12AA IS TO EXAMINE GENUINENESS OF OBJECTS OF TRUST BUT NOT APPLICATION OF INCOME OF TRUST FOR CHARITABLE OR RELI GIOUS PURPOSES; STAGE FOR APPLICATION OF INCOME IS ARRIVED WHEN SUCH TRUST OR INSTITUTION FILES ITS RETURN - HELD, YES - WHETHER QUANTUM OF ACTIVITIES UNDERTAKEN BY TRUST AFTER ITS CREATION CAN BE BASIS FOR EXAMINING REGISTRATION APPLICATION UNDER SECTION 12AA - HELD, NO [IN FAVOUR OF ASSESSEE] ITA NO. 1864 /1 2 4 7. IT IS WELL SETTLED THAT FOR ACHIEVING THE MAIN CHARITABLE OBJECT IF AN INSTITUTION CARRIES ON SOME COMMERCIAL ACTIVITY AND GENERATE PROFIT THEREFROM, SUCH ACTIVITIES CANNOT BE CONSIDERED TO BE THE BUSINESS ACTIVI TY WITH PROFIT MOTIVE SO LONG AS THE PROFIT EARNED IS UTILIZED FOR THE PURPOSE OF ACHIEVING THE CHARITABLE OBJECT. 8. THE DIT(E) WHILE PASSING THE ORDER HAS IGNORED THE B ASIC PRINCIPLE AND THE SCHEME OF THE ACT WHILE DECLINING REGISTRATION TO THE ASSESSEE AND S U CH ORDER IS PERVERSE IN NATURE AND NOT SUSTAINABLE IN THE SCRUTINY OF LAW . THEREFORE, CONSIDERING THE FACT OF THE PRESENT CASE IN THE LIGHT OF THE JUDICIAL PRECEDENTS AND ALSO RELEVANT STATUTORY PROVISIONS, ONLY CONCLUSION ONE CAN REACH IS, THE DIT(E ) WAS NOT CORRECT IN REJECTING ASSESSEES APPLICATION U /S.12A OF THE ACT. IN THE ABOVE SAID CIRCUMSTANCES, WE DIRECT THE DIT(E) TO GRANT REGISTRATION U/S.12A OF THE ACT TO ASSESSEE INSTITUTION WITHIN A PERIOD OF FOUR WEEKS FROM THE RECEIPT OF COPY OF THIS O RDER. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 09/09 / 201 5 . SD/ - SD/ - ( . . ) ( R.C.SHARMA ) ( ) ( PAWAN SINGH ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED 09/09 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//