M/s. The Vellore Distt. Bus Owner's Association, CHENNAI V. Director of Income Tax (Exemptions), CHENNAI

ITA 1883/CHNY/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7710 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-01-2016
• Assessment Year: misc
• Appeal Filed On: 24-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SENTHIL KUMAR MR PATHLAVA
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1883/MDS/2013 M/S. THE VELLORE DISTRICT BUS OWNERS ASSOCIATION, 141/3, NEW BYE PASS ROAD, (NEXT SUSEE MOTORS) VELLORE-632 012. VS THE DIRECTOR OF INCOME TAX (EXEMPTIONS), ANNEXE BUILDING, 3 RD FLOOR, CHENNAI-34. PAN:AAATT3890R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SENTHIL KUMAR, ADVOCATE /RESPONDENT BY : MR. PATHLAVATH PEERYA, CIT /DATE OF HEARING : 4 TH JANUARY, 2016 /DATE OF PRONOUNCEMENT : 18 TH MARCH, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED DIRECTOR OF INCOME TAX, (EXEMP TIONS), CHENNAI DATED 31.07.2013 IN F.NO.DIT(E) NO.2(753)/1 2-13 DENYING REGISTRATION UNDER SECTION 12AA OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL ELABORATE GROUND S; HOWEVER THE CRUX OF THE ISSUE IS THAT THE LEARNED D IRECTOR OF INCOME TAX (EXEMPTIONS) HAS ERRED IN DENYING REGIST RATION UNDER SECTION 12AA OF THE ACT BY REJECTING ITS APPL ICATION IN FORM 10A. 2 ITA NO.1883 /MDS/2013 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SO CIETY CONSTITUTED BY A MEMORANDUM OF ASSOCIATION DATED 09.10.1986 HAS FILED ITS APPLICATION IN FORM 10A ON 18.01.2013 SEEKING REGISTRATION UNDER SECTION 12AA OF THE ACT. THE MAIN OBJECTS OF THE ASSESSEE ASSOCIATION ARE AS FOLLOWS:- 1. TO TAKE CARE OF WELFARE OF PASSENGERS & TO TAKE CARE OF SMALL BUS OPERATORS WELFARE. 2. TO INVOLVE ALL MEMBERS, TO GIVE THEM KNOWLEDGE ABOUT NEW TECHNIQUES AND HELP THEM TO APPLY THE USES OF NEW PARTS. 3. TO HELP THE PASSENGERS USING THE BUS TRANSPORT AND TO SOLVE THE PROBLEMS FACED BY SMALL BUS OPERATORS. 4. TO HELP MEMBERS BY IMPARTING KNOW/EDGE ON RULES AND LAWS WITH THE HELP OF BOOKS ABOUT TRANSPORTATION. 5. TO ORGANIZE CULTURAL ACTIVITIES AND TO CONDUCT EDUCATION TOURS FOR THE WELFARE OF PASSENGERS AND FOR THE BENEFIT OF MEMBERS. 6. TO APPROACH OFFICIALS, MINISTERS AND TO APPRAISE THEM THE PROBLEMS FACED BY BUS PASSENGERS, MEMBERS IN CONNECTION WITH THEIR WELFARE. R 7. TO RESOLVE ANY PROBLEM THAT ARISES AMONG THE MEMBERS BY REFERRING THE SAME TO THE PRESIDENT, SECRETARY, TREASURER AND PROVIDES SOLUTIONS. 3 ITA NO.1883 /MDS/2013 8. TO COMMUNICATE TO ALL MEMBERS AND PASSENGERS ABOUT THE NOTIFICATION, CIRCULARS ISSUED BY THE CENTRAL AND STATE GOVERNMENTS. 9. TO TAKE NECESSARY STEPS TO ACHIEVE THE ABOVE OBJECTS TO SAFEGUARD THE INTEREST OF MEMBERS AND PASSENGERS. 10. TO HELP THE MEMBERS TO RUN THE BUS TRANSPORT EFFECTIVELY. 4. AFTER GOING THROUGH THE MEMORANDUM OF ASSOCIATIO N AND THE EXPLANATION OFFERED BY THE ASSESSEE, THE LE ARNED DIT(EXEMPTIONS) OPINED AS FOLLOWS:- I) THE PRIMARY OBJECT OF THE ASSESSEE IS TO PROTECT THE INTERESTS OF ITS MEMBERS WHO ARE ENGAGED IN THE BUSINESS AS BUS OPERATORS. II) THE ASSESSEE SOCIETY RIGHT FROM ITS INCEPTION SINCE 1986 HAS BEEN FUNCTIONING ONLY FOR THE BENEFIT OF B US OPERATORS AND NOT FOR THE PUBLIC AT LARGE. III) THE PROVISIONS OF SECTION 28(III) OF THE I.T. ACT WOULD BE APPLICABLE IN THE CASE OF THE ASSESSEE SOCIETY BECAUSE THE ASSESSEE IS FUNCTIONING AS TRADE, PROFESSIONAL OR SIMILAR ASSOCIATION. 4 ITA NO.1883 /MDS/2013 IV) FROM THE FINANCIAL STATEMENT SUBMITTED BY THE A SSESSEE, IT IS APPARENT THAT THE ASSESSEE DOES NOT CARRY OUT AN Y CHARITABLE ACTIVITY. WITH THE ABOVE OBSERVATIONS, THE LEARNED DIT(EXEMPT IONS) REFUSED TO GRANT REGISTRATION UNDER SECTION 12AA OF THE ACT TO THE ASSESSEE. 5. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY ARGUED STATING THAT THE ACTIVITIES OF TH E MEMBERS OF THE ASSESSEE RESULTS IN THE BENEFIT OF THE PUBLI C AT LARGE AND THEREFORE IT AMOUNTS TO ADVANCEMENT OF ANY OTHE R OBJECT OF GENERAL PUBLIC UTILITY AS DEFINED IN SECTION 2(1 5) OF THE ACT AND HENCE, THE ASSESSEE WOULD BE ENTITLED TO BE HEL D AS CHARITABLE ORGANIZATION. IT WAS THEREFORE SUBMITTED THAT THE ORDER PASSED BY THE LEARNED DIT IS ERRONEOUS. THE LEARNED AUTHORIZED REPRESENTATIVE FURTHER PLEADED THAT THE LEARNED DIT MAY BE DIRECTED TO GRANT REGISTRATION UNDER SEC TION 12AA OF THE ACT TO THE ASSESSEE. 5 ITA NO.1883 /MDS/2013 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND, RELIED ON THE ORDERS OF THE LEARNED DIT. 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS O F THE CASE, IT IS APPARENT THAT THE ASSESSEE SOCIETY IS SOLELY CONSTITUTED FOR THE BENEFIT OF THE MEMBERS OF THE SOCIETY WHOSE ACTIVITIES ARE CARRYING ON THE BUSINESS AS BUS OPERATORS. FUR THER, AS POINTED OUT BY THE LEARNED DIT, FROM THE INCOME & EXPENDITURE STATEMENT OF THE ASSESSEE IT IS APPAREN T THAT THE ASSESSEE IS NOT ENGAGED IN ANY CHARITABLE ACTIVITY. THE LEARNED DIT HAS RIGHTLY RELIED IN THE DECISION OF THE HONBLE HIGH COURT OF KERALA IN THE CASE INVESTORS CLUB, TH IRUSSUR VS. CIT., COCHIN REPORTED IN 318 ITR 427, WHEREIN IT WA S HELD THAT A MUTUAL ASSOCIATION IS CONCEPTUALLY DIFFERENT FROM A CHARITABLE INSTITUTION AND THEREFORE THEY WOULD NOT BE ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. IT IS ALSO APPARENT THAT THE ASSESSEE SOCIETY IS SOLELY FORMED FOR THE BENEFIT OF ITS MEMBERS AND THEREFORE FALLS UNDER TH E CONCEPT OF MUTUALITY. IN THESE CIRCUMSTANCE, WE DO NOT FIND IT 6 ITA NO.1883 /MDS/2013 NECESSARY TO INTERFERE WITH THE ORDER OF THE LEARNE D DIT (EXEMPTIONS) AND ACCORDINGLY CONFIRM THE SAME. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 18 TH MARCH, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S. GANESAN) ( A.MOHAN ALANKAMONY ) ! # / JUDICIAL MEMBER # / ACCOUNTANT MEMBER /CHENNAI, & /DATED 18 TH MARCH, 2016 SOMU !() *) /COPY TO: APPELLANT 2. RESPONDENT 3. + () /CIT(A) 4. + /CIT 5. ) !!/ /DR 6. 2 /GF