GRAMEEN INITIATIVE FOR WOMEN, MUMBAI V. DIT (E), MUMBAI

ITA 1937/MUM/2009

• Counselvise Citation: 193719914 RSA 2009
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 02-05-2011
• Assessment Year: misc
• Appeal Filed On: 30-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, G BENCH, MUMBAI. BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A NO.1937/ MUM/2009 GRAMEEN INITIATIVE FOR WOMEN .. APPELLANT GAUTAM SHAH & ASSOCIATES, 104, MIDAS CHAMBERS, OFF, 6 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, LINK ROAD, FUN REPUBLIC THEATRE LANE, ANDHERI(W), MUMBAI 400 053 PA NO.AADCG 0458 N VS DIT (E) ,. RESPONDEN T 6 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 020 APPEARANCES: VAIBHAV PANDYA, FOR THE APPELLANT S.K.SINGH, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. THE SHORT ISSUE THAT WE ARE REQUIRED TO ADJUDICATE IN THIS APPEAL IS WHETHER OR NOT THE DIRECTOR OF INCOME TAX (EXEMPTION) WAS JU STIFIED IN DECLINING THE REGISTRATION UNDER SECTION 12A OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE-APPELLANT. THE IMPUGNED ORDER SO DECLINING THE REGISTRATION WAS P ASSED ON 27.1.2009. 2. BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE LIK E THIS. THE ASSESSEE MOVED AN APPLICATION, SEEKING REGISTRATION UNDER SECTION 12A OF THE ACT ON 2.7.2008. IN THE PROCEEDINGS WHICH FOLLOWED, ONE MS VINITA BHIMBHAT, M ANAGING TRUSTEE & MS I .T.A NO.1937/ MUM/2009 GRAMEEN INITIATIVE FOR WOMEN 2 SUCHETA SHAH, ATTENDED THE PROCEEDINGS BEFORE THE DI T(E) AND MADE SUBMISSIONS IN SUPPORTS OF ELIGIBILITY FOR REGISTRATION, BUT, AS NOTE D BY THE DIRECTOR OF INCOME TAX (EXEMPTION), FAILED TO PRODUCE THE CERTIFICATE OF CHARITY COMMISSIONER. THIS OBSERVATION WAS MADE BY THE DIRECTOR OF INCOME TAX (E ) IN THE BACKGROUND THAT THE ASSESSEE IS A COMPANY REGISTERED UNDER SECTION 25 OF THE C OMPANIES ACT AND THE LEARNED DIRECTOR WAS OF THE VIEW THAT THE CHARITY CO MMISSIONERS CERTIFICATE WAS A CONDITION PRECEDENT FOR THE ASSESSEE BEING GRANTED REGI STRATION UNDER SECTION 12A AS A CHARITABLE INSTITUTION. IT WAS IN THIS BACKDROP AND HAVING NOTED THAT THE ASSESSEE- APPELLANT HAS FAILED TO FILE CERTIFICATE OF REGISTRA TION OF THE CHARITY COMMISSIONER WHICH, ACCORDING TO THE DIRECTOR, WAS A CONDITION P RECEDENT FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT, THE REGISTRATION WAS DEC LINED TO THE ASSESSEE. IN SUPPORT OF THIS ACTION, RELIANCE WAS ALSO PLACED ON TH E JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BHRAMAN MADHAV MURT HI MANDAL VS JOINT CHARITY COMMISSIONER MAHARASTHRA (1973) 43 COMP. CASE 361(BOM). THE DIRECTOR THUS CONCLUDED AS FOLLOWS: IT IS AMPLY CLEAR IN THE LIGHT OF ABOVE DISCUSSION THE INSTITUTION UNDER DISCUSSION IS LIABLE FOR REGISTRATION WITH CHARITY COMMISSIONE R, MAHARASHTRA IN ORDER TO BE ELIGIBLE FOR CERTIFICATION UNDER SECTION 12A OF I.T .ACT AND IN ABSENCE OF CHARITY COMMISSIONERS CERTIFICATE, THE INSTITUTION IS NOT A GENUINE PUBLIC TRUST TO BE ELIGIBLE FOR REGISTRATION 12A OF THE INCOME TAX ACT PARTICULARLY IN THE LIGHT OF THE HONBLE HIGH COURT DECISION THAT IT WOULD RESULT IN LARGE SCALE EVASION OF THE PROVISIONS OF PUBLIC TRUST ACT. AS PER THE PROVISIONS OF SECTION 12AA(1)(B), A TRUS T IS TO BE REGISTERED IF THE COMMISSIONER IS SATISFIED ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES. THE APPELLANT HAS NOT COMPLIED PRO PERLY WITH THE REQUIREMENTS NECESSARY FOR REGISTRATION UNDER SECTION 12A OF THE ACT. THERE IS, THUS, NO MATERIAL BEFORE ME TO SATISFY MYSELF ABOUT THE GENU INENESS OF ITS ACTIVITIES THE CONDITION PRECEDENT TO GRANT REGISTRATION IN THIS C ASE IS NOT SATISFIED. IN VIEW OF THE ABOVE, I REFUSE TO REGISTER THE APPLICANT TRUST . 3. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLI CABLE LEGAL POSITION. I .T.A NO.1937/ MUM/2009 GRAMEEN INITIATIVE FOR WOMEN 3 5. THE GRIEVANCE OF THE ASSESSE INDEED DESERVES TO BE UP HELD. WE FIND THAT SO FAR AS LEARNED DIRECTORS RELIANCE IN THE CASE OF BHRAMA N MADHAV MURTHI MANDAL VS JOINT CHARITY COMMISSIONER MAHARASTHRA(SUPRA) IS CONCERN ED, THIS JUDICIAL PRECEDENT ONLY DEALS WITH THE QUESTION AS TO WHETHER A COMPANY, EVEN IF IT OWNS PROPERTY AS A TRUSTEE IN TRUST FOR A CLASS OF BENEFICIARIES FOR PUBLI C RELIGIOUS AND CHARITABLE PURPOSES, IS REQUIRED TO BE REGISTERED UNDER PUBLIC TR UST ACT OR NOT. THAT QUESTION OBVIOUSLY HAS NO RELEVANCE TO THE INFERENCE DRAWN BY THE DIRECTOR TO THE EFFECT THAT THE REGISTRATION AS A PUBLIC TRUST IS A CONDITION PREC EDENT FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT. THE JUDICIAL PRECEDEN T RELIED UPON BY THE DIRECTOR IS, THEREFORE, WHOLLY IRRELEVANT IN THE PRESENT CONTEXT. QUITE TO THE CONTRARY TO THE PROPOSITION SO CANVASSED BY THE LEARNED DIRECTOR, HON BLE BOMBAY HIGH COURT HAS, IN THE CASE OF CIT VS. AGRICULTURE PRODUCE AND MARKE T COMMITTEE AND ORS V CIT(2007) 291 ITR 419, HAVING NOTED THAT THE ASSESSES B EFORE THEIR LORDSHIPS WERE COMPANIES INCORPORATED UNDER SECTION 25 OF THE COMPA NIES ACT, OBSERVED THAT THE CONTENTION OF THE REVENUE THAT THE ASSESSES ARE NOT RE QUIRED REGISTRATION AS A TRUST AND HENCE, NOT ENTITLED FOR REGISTRATION IS ALSO WITHO UT ANY MERIT, BECAUSE, THERE IS NO REQUIREMENT UNDER THE ACT THAT THE INSTITUTION CONSTI TUTED FOR ADVANCEMENT OF CHARITY, MUST BE REGISTERED AS A TRUST. THE LAW, AS EXPLAINED BY THEIR LORDSHIPS, THUS IS THAT INCORPORATION UNDER SECTION 25 OF THE COMPANIES ACT D OES NOT BAR AN ASSESSE BEING GRANTED REGISTRATION AS A CHARTIABLE INSTITUTION. RELY ING UPON THESE OBSERVATIONS OF HONBLE JURISDICTIONAL HIGH COURT, A CO-ORDINATE BEN CH OF THIS TRIBUNAL IN THE CASE OF DISHA INDIA MICRO CREDIT VS CIT, (2011) TOIL 199 (DEL ) HAS OBSERVED AS FOLLOWS: 24. THE LEARNED CIT HAS ALSO GIVEN ONE MORE REASON TH AT IT IS NOT COMPREHENSIBLE AS TO WHY NOT THE ASSESSEE GOT ITSELF REGIST ERED AS A SOCIETY, IF THE MOTIVE OF THE ASSESSEE WAS TO DO ACTIVITIES OF UBLIC CHARITY. THIS REASON GIVEN BY THE CIT IS FOUND, IN OUR CONSIDERED VIEW, TO BE IMPROPER. IT IS NOT NECESSARY THAT IN ORDER TO DO PUBLIC CHARITY, ANY ONE ASSOCIATION IS TO BE REGISTERED AS A SOCIETY OR A TRUST. IN THE CASE OF CIT V S. AGRICULTURAL PRODUCE AND MARKET COMMITTEE (SUPRA), THE HONBLE BOMBAY HIG H COURT NAGPUR BENCH HAS HELD THAT THERE IS NO REQUIREMENT UNDER THE ACT THAT AN INSTITUTION CONSTITUTED FOR ADVANCEMENT OF ANY OBJECT OF GENERAL PUBLIC UTILITY MUST BE REGISTERED AS A TRUST. THEREFORE, IN THE PRESENT CASE BE FORE US, MERE BECAUSE THE ASSESSEE ASSOCIATION IS REGISTERED AS COMPANY UNDER SEC. 25 OF THE COMPANIES ACT, THAT BY ITSELF CANNOT BE A GROUND TO R EFUSE REGISTRATION UNDER SEC. 12A/12AA OF THE ACT. THUS, THIS GROUND OF REJECT ION OF REGISTRATION BY THE COMMISSIONER OF INCOME-TAX, IS ALSO REJECTED. I .T.A NO.1937/ MUM/2009 GRAMEEN INITIATIVE FOR WOMEN 4 6. IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEAR THAT T HE OBJECTIONS OF THE DIRECTOR ARE DEVOID OF ANY LEGALLY SUSTAINABLE MERITS. WE, AC CORDINGLY, REJECT THE SAME AND HOLD THAT THE ORDER OF THE DIT IS DEVOID OF ANY LEGALLY SU STAINABLE MERITS AND, THEREFORE, MUST BE VACATED.. WE MAY ALSO MENTION THAT IN TERMS OF REQUIREMENTS OF FORM NO.10-A, FILED BY THE ASSESSEE UNDER RULE 17A OF THE IN COME TAX RULES READ WITH SECTION 12A OF THE INCOME TAX ACT, THE ASSESSEE HAS AL READY FILED INSTRUMENT UNDER WHICH THE INSTITUTION WAS ESTABLISHED I.E. MEMORANDUM O F ASSOCIATION AND ARTICLES OF ASSOCIATION UNDER WHICH THE ASSESSEE COMPANY WAS FORMED . LEARNED DIRECTOR HAS NOT POINTED OUT ANY REASONS TO DOUBT THAT THE OBJECTI VE OF THE ASSESSEE COMPANY SET UP AS A NON-PROFIT MAKING COMPANY UNDER SECTION 25, A RE NOT CHARITABLE IN NATURE, NOT BONAFIDE, OR NOT GENUINE. THE ONLY REASON FOR W HICH THE REGISTRATION WAS DECLINED WAS ON THE GROUND THAT THE ASSESSEE COULD NOT P RODUCE THE CERTIFICATE FROM THE CHARITY COMMISSIONER AND THAT REASON, AS WE HAVE N OTED ABOVE, IS NOT LEGALLY SUSTAINABLE. IN VIEW OF THESE DISCUSSIONS, AND BEARING IN MIND ENTIRETY OF THE CASE, WE DIRECT THE LEARNED DIRECTOR TO GRANT REGISTRATION TO THE ASSESSE APPELLANT. THE ASSESSE SUCCEEDS IN THE APPEAL. 7. IN THE RESULT, APPEAL IS ALLOWED IN THE TERMS INDIC ATED ABOVE. PRONOUNCED IN THE OPEN COURT ON 3 RD MAY 2011. SD/- (D.MANMOHAN) VICE PRESIDENT SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI, DATED 3 RD MAY, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. DIT(EXEMPTION), MUMBAI 3. DEPARTMENTAL REPRESENTATIVE, BENCH G, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI