Australian Indian Rural Development Foundation, New Delhi V. DIT (Exemption), New Delhi

ITA 2026/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52812 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-10-2011
• Assessment Year: misc
• Appeal Filed On: 25-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Assessee Lawyers: VENKATESH MOHAN CAS
• Keywords: Charitable institution; Benefit of exemption
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER ITA NOS.2026 & 2027/DEL/2011 ASSESSMENT YEAR : NA AUSTRALIAN INDIAN RURAL DEVELOPMENT FOUNDATION, 507, BHIKAJI CAMA BHAWAN, BHIKAJI CAMA PLACE, NEW DELHI 110 066. PAN : AAHCA4426A VS. DIT (EXEMPTION), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN & SHRI VENKATESH MOHAN, CAS REVENUE BY : MRS. ANUSHA KHURANA, SR.DR ORDER PER BENCH: BOTH THESE APPEALS ARE FILED BY THE ASSESSEE. THEY ARE DIRECTED AGAINST THE ORDER PASSED BY THE DIRECTOR OF INCOME-TAX (EXEMPTIONS), DELHI DATED 9 TH DECEMBER, 2010 VIDE WHICH THE REQUEST OF THE ASSESSEE FOR REGISTRATION U/S 12AA AND ALSO EXEMPTION U/S 80G HA S BEEN REJECTED. IN ITA NO.2026/DEL/2011, THE ASSESSEE IS AGGR IEVED BY THE REJECTION OF REGISTRATION U/S 12AA AND VIDE APPEAL NO .2027/DEL/2011 THE ASSESSEE IS AGGRIEVED BY REJECTION OF EXEMPTION U/S 8 0G. 2. THE ASSESSEE HAS BEEN REGISTERED AS A COMPANY VIDE CERT IFICATE OF INCORPORATION DATED 24 TH NOVEMBER, 2008 ISSUED BY THE ASSISTANT REGISTRAR OF COMPANIES, NATIONAL CAPITAL TERRITORY OF DELHI AND HARYANA UNDER THE PROVISIONS OF SECTION 25 OF THE COMPANIES AC T, 1956 AND ITA NOS.2026 & 2027/DEL/2011 2 COPY OF THE CERTIFICATE IS FILED WITH MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE ASSESSEE COMPANY WHICH IS PLACED AT PAG E 4 OF THE PAPER BOOK. THE MAIN OBJECTS OF THE ASSESSEE COMPANY IN TER ALIA INCLUDE PROMOTION OF CHARITY BY IMPROVING THE LIVIN G CONDITIONS IN VILLAGES ATTACHED TO THE MINING ACTIVITIES AND TO BUI LD TOILETS AND THE LOCAL SCHOOLS AND IMPROVE SUPPLY OF CLEAN DRINKING WAT ER IN THOSE VILLAGES AND TO PROMOTE PLANT NURSERIES FOR TREES AND W IDE RANGE OF MEDICINAL PLANTS AND TO WORK FOR PROGRESSIVE IMPROVEME NT AND MODERNIZATION THROUGHOUT THE COUNTRY OF POLICIES GOV ERNING THE HEALTH, WELFARE, REHABILITATION, EMPLOYMENT, ENTERTAINMENT AND RECREATION NOT WITH THE MOTIVE OF PROFIT. IT IS ALSO MENTIONED IN T HE OBJECTS THAT NO OBJECT OF THE ASSESSEE COMPANY WILL BE CARRIED OUT WITH OUT OBTAINING THE PRIOR APPROVAL/NO OBJECTION FROM THE CONCERNED AUTHORITIES WHEREVER NECESSARY, IF ANY, AND NONE OF THE OBJECTS OF THE COMPANY WILL BE CARRIED OUT ON COMMERCIAL BASIS. APART FROM THESE MAIN OBJECTS, THERE ARE OBJECTS INCIDENTAL OR ANCILLARY TO THE ATTAINMENT OF MAIN OBJECTS. THE PROMOTERS OF THE ASSESSEE COMPANY ARE CHARLES EDWARD ENGLISH DEVENISH OF BANGALORE, VASUDEVA NARAYAN ASWAMY VENKATRAMIAH OF MUMBAI AND TUSHAR ARUN GANDHI OF MUM BAI. ACCORDING TO THE CLAUSE (II) OF MEMORANDUM OF ASSOCIAT ION, THE REGISTERED OFFICE OF THE COMPANY IS STATED TO BE SITUAT ED IN THE NATIONAL CAPITAL TERRITORY OF DELHI. 3. DURING THE COURSE OF PROCEEDINGS CARRIED OUT BY DI T (EXEMPTIONS) FOR REGISTRATION OF THE ASSESSEE U/S 12AA AND SECTION 80G OF THE INCOME-TAX ACT, 1961, LD. DIT (EXEMPTIONS) RE QUIRED THE ASSESSEE TO SUBMIT VARIOUS DOCUMENTS ENLISTING IN THE ORDER ITSELF WHICH INTER ALIA INCLUDES: (I) JUSTIFY WITH THE BILLS/VOUCHERS OF THE INCOME APPL IED FOR CHARITABLE ACTIVITIES ALONG WITH PROOF OF BENEFICIAR IES. ITA NOS.2026 & 2027/DEL/2011 3 (II) UNDERTAKING THAT THERE SHALL BE NO INFRINGEMEN T TO THE PROVISO TO SECTION 2(15) OF THE ACT. (III) NO OBJECTION CERTIFICATE FROM LANDLORD ALONG WITH THE PROOF OF OWNERSHIP/OCCUPANCY. (IV) COPY OF ACCOUNTS FOR THE PERIOD SINCE EXCEPTION FOR FIVE YEARS. (V) A NOTE ON ACTIVITIES CARRIED OUT SINCE INCEPTION/ LAST 1-4 YEARS WITH SUPPORTING DOCUMENTARY EVIDENCE. (VI) THE DETAILS OF DONATIONS INCLUDING CORPUS DONATIO NS RECEIVED AND MADE GIVING THE NAME, ADDRESS AND PAN OF DONORS (VII) GIVING THE DETAILS REGARDING THE CONTACT NUMBE RS AND E- MAIL ADDRESS OF THE ASSESSEE AND ITS MEMBERS (VIII) COPY OF INCOME-TAX RETURNS FOR THE LAST ASSESSMENT YEARS (IX) ORIGINAL MOA AND REGISTRATION CERTIFICATE FROM THE REGISTRAR/TRUST DEED FOR VERIFICATION. 4. THE ASSESSEE SUBMITTED SUCH INFORMATION WHICH WAS ASKED FOR BY THE LD. DIT (EXEMPTIONS). ON PERUSAL OF THESE DETAILS, LD. DIT (EXEMPTIONS) HAS OBSERVED THAT THE MAIN FOCUS AREA OF T HE ASSESSEE COMPANY IS IN KARNATAKA WHERE THE ASSESSEE HAS WORKED TO CONSTRUCT WALLS IN TWO SCHOOLS SO FAR IN JONNAGIRI & PAGADRARI; T HE BILLS OF CONSTRUCTION MATERIAL BOUGHT ISSUED THROUGH A COMPANY IN BANGALORE AND TRADERS OF KURNOOL; THE MAIN BENEFICIARIES ARE I N KARNATAKA AS WELL AS THE SOCIETY OF THE SAID PLACE; THERE IS NO EVIDENCE TO SUPPORT THE CHARITABLE ACTIVITY BEING CONDUCTED IN DELHI; IN TH E ABSENCE OF CHARITABLE ACTIVITIES IN DELHI, IT IS NOT POSSIBLE TO V ERIFY THE GENUINENESS OF THE ACTIVITY; THE JURISDICTION DOES NOT FALL UNDER THE OFFICE OF DIT (EXEMPTIONS), DELHI; AND NONE OF THE CONDITIONS IS SAT ISFIED FOR GRANT OF REGISTRATION U/S 12A OF THE ACT. THEREFORE, THE APPL ICATION FILED BY THE ASSESSEE FOR GRANT OF REGISTRATION U/S 12A IS REJECTED. S INCE THE ITA NOS.2026 & 2027/DEL/2011 4 APPLICATION FOR REGISTRATION U/S 12A IS REJECTED, THE APPLICATION REGARDING GRANT OF EXEMPTION U/S 80G IS ALSO REJECTED. 5. AFTER NARRATING THE FACTS, IT WAS PLEADED BY THE L EARNED AR THAT THE ASSESSEE COMPANY HAS VERY CLEARLY INDICATED IN THE M EMORANDUM ITSELF THAT THIS COMPANY IS NOT FOR THE PURPOSE OF MAKI NG PROFIT. IT HAS TO PROMOTE CHARITY BY IMPROVING THE LIVING CONDITIONS I N THE VILLAGES ATTACHED TO THE MINING ACTIVITIES AND TO BUILD TOILE TS IN LOCAL SCHOOLS AND TO IMPROVE THE SUPPLY OF CLEAN DRINKING WATER IN THOSE VILLAGES. HE, THEREFORE, SUBMITTED THAT THE ASSESSEE CERTAINLY EXI ST FOR THE CHARITABLE PURPOSES. HE ALSO INVITED OUR ATTENTION TOW ARDS THE APPROVAL GIVEN BY THE MINISTRY OF COMPANY AFFAIRS FOR REGISTRAT ION OF THE ASSESSEE COMPANY UNDER THE PROVISIONS OF SECTION 25 OF TH E COMPANIES ACT, COPY OF WHICH IS FILED AT PAGES 5-6 OF THE PAPER BOOK. HE SUBMITTED THAT AS A CONDITION PRECEDENT THE ASSESSEE H AS TO WORK ONLY IN ACCORDANCE WITH THE PROMOTION OF THE OBJECT S SET FORTH IN THE MEMORANDUM OF ASSOCIATION AND IN THE LICENCE GRANTED U/S 25OF THE COMPANIES ACT BY THE REGIONAL DIRECTOR OF MINISTRY OF CORPORATE AFFAIRS IT HAS BEEN SPECIFICALLY MENTIONED THAT NO PORTION OF INCOME AND PROPERTY OF THE ASSESSEE COMPANY SHALL BE PAID OR TRANSFE RRED DIRECTLY OR INDIRECTLY BY WAY OF DIVIDEND, BONUS OR OTHERWISE BY WAY OF PROFIT TO PERSONS WHO AT ANY TIME ARE OR HAVE BEEN MEMBERS OF TH E SAID COMPANY OR TO ANY OF THEM OR TO ANY PERSON CLAIMING THROUGH ANY ONE OR MORE OF THEM. FOR THIS PURPOSE HE DREW OUR ATTENT ION TOWARDS COPY OF LETTER ISSUED BY REGIONAL DIRECTOR, MINISTRY OF COR PORATE AFFAIRS DATED 16 TH OCTOBER, 2008 PLACED AT PAGES 7-8 OF THE PAPER BOOK . HE SUBMITTED THAT ON THESE FACTS OF THE CASE, THE APPLICAT ION OF THE ASSESSEE FOR REGISTRATION AS WELL AS FOR EXEMPTION U/S 80G HAS BEEN INCORRECTLY DENIED BY THE LD. DIT (E) ON THE GROUND S THAT THE ACTIVITY BY THE ASSESSEE DID NOT BELONG TO DELHI AND IT BELONGED TO KARNATAKA. HE SUBMITTED THAT THIS CANNOT BE A GROUND FOR DENYING TH E REGISTRATION TO ITA NOS.2026 & 2027/DEL/2011 5 THE ASSESSEE. HE SUBMITTED THAT IT IS NOT EVEN THE CASE OF THE DIT (E) THAT ASSESSEES OBJECTS ARE NOT CHARITABLE IN NATURE. HE SUBMITTED THAT THE ASSESSEE HAD ALSO SUBMITTED NOTE ON THE ACTIVITIES PER FORMED BY THE ASSESSEE AND LD. DIT(E) HAS TAKEN NOTE OF THOSE ACTIV ITIES ALSO. THE REGISTRATION SOUGHT BY THE ASSESSEE HAS BEEN DENIED ON THE GROUND THAT GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE CARRIED OUT IN KARNATAKA COULD NOT BE VERIFIED. HE SUBMITTED THAT E VIDENCE WAS SUBMITTED BEFORE DIT (E) REGARDING THE ACTIVITIES CAR RIED OUT BY THE ASSESSEE ALONG WITH ALL BILLS AND VOUCHERS COPIES OF WHICH ARE ENCLOSED IN THE PAPER BOOK. HE SUBMITTED THAT AFFIDAVITS WERE ALSO FILED FROM THE DIRECTORS AS REQUIRED BY THE LD. DIT(E) IN WHICH IT WAS CLEARLY STATED THAT THERE WAS NO INFRINGEMENT OF PROVISO TO SECTION 2(15) AND ALSO THERE IS NO VIOLATION OF SECTION 13 (3). IN VIEW OF THESE EVIDENCES THE LD. DIT (E) COULD NOT REJECT THE APPLICATION OF THE ASSESSEE. HE COULD GET IT VERIFIED FROM THE CONCERNED ASSESSING OFFICER AND EX EMPTION COULD NOT BE DENIED TO THE ASSESSEE SIMPLY ON THE GROUND THAT ACTIVITIES OF THE ASSESSEE WERE NOT CARRIED OUT IN DELHI. HE ALSO REF ERRED TO THE FOLLOWING DECISIONS COPIES OF WHICH ARE PLACED ON OUR RECORD:- I) DHARMA SANSTHAPAK SANGH (NIYAS) VS. CIT (2008) 118 TTJ (DEL) 823 WHEREIN IT WAS HELD THAT SCOPE OF INQUIRY U /S 12AA IS LIMITED TO THE EXAMINATION AS TO WHETHER OR NOT THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE. II) FOUNDATION OF OPHTHALMIC & OPTOMETRY RESEARCH ED UCATION CENTRE, VS. DIT (E), ORDER OF ITAT DATED 13 TH DECEMBER, 2009 IN ITA NO.202/DEL/2009 WHEREIN A SIMILAR PROPOSITION WAS LAID DOWN. III) FIFTH GENERATION EDUCATION SOCIETY VS. CIT 185 ITR 634 (ALL) WHEREIN IT WAS HELD THAT NON-CARRYING OUT OF CHARITA BLE ACTIVITY AT THE INITIAL STAGE CANNOT BE A GROUND FOR REJECTIO N OF REGISTRATION U/S 12A AND EXEMPTION U/S 80G. ITA NOS.2026 & 2027/DEL/2011 6 6. THUS, IT WAS PLEADED BY THE LEARNED AR THAT THE ASSE SSEE HAS BEEN WRONGLY DENIED THE BENEFIT OF REGISTRATION AND ALSO THE EXEMPTION U/S 80G AND THE BENEFIT SHOULD BE GRANTED TO THE ASSESSEE . 7. ON THE OTHER HAND, RELYING UPON THE OBSERVATIONS M ADE BY DIT (E), IT WAS PLEADED BY THE LEARNED DR THAT THE ASSESSEE HAS RIGHTLY BEEN DENIED THE BENEFIT OF REGISTRATION U/S 12A AND A LSO THE BENEFIT OF EXEMPTION U/S 80G. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE ASSESSEE COMPANY HAS BEEN CONSTITUTED WITH THE PERMISSION OF GOVERNMENT OF INDIA , MINISTRY OF CORPORATE AFFAIRS AND, ACCORDING TO THE TERMS OF PERM ISSION, IT WAS CLEARLY STATED THAT THE ASSESSEE COULD NOT GO BEYOND THE OBJECTS STATED IN THE MEMORANDUM AND IF IT WILL DO SO, THEN, THE BE NEFIT OF REGISTRATION CAN BE WITHDRAWN BY THE GOVERNMENT OF INDIA. THE SC OPE OF THE WORK OF THE ASSESSEE SOCIETY IS NOT LIMITED TO DELHI ONLY AND IT IS ON ALL INDIA BASIS AND PARTICULARLY IS AT THE PLACES NEAR TO THE MIN ING ACTIVITIES WHERE THE ASSESSEE COMPANY IS TO BUILD TOILETS IN THE LOC AL SCHOOLS AND TO IMPROVE SUPPLY OF CLEAN DRINKING WATER IN THOSE VI LLAGES. THE ASSESSEE COMPANY HAD SUBMITTED THE NOTES ON ACTIVITIES AND ALSO THE ACCOUNTS ACCORDING TO WHICH THE EXPENDITURES WERE MAD E BY THE ASSESSEE AND THE ACTIVITY OF THE ASSESSEE HAS ALSO BEEN MENTI ONED IN THE ORDER OF THE LD. DIT (E) ITSELF WHEREIN IT HAS BE EN MENTIONED THAT THE ASSESSEE COMPANY WORKED TO CONSTRUCT WALLS IN TWO SCHO OLS AND THEY ARE SITUATED IN THE STATE OF KARNATAKA. THE RE GISTRATION HAS BEEN DENIED TO THE ASSESSEE ONLY ON THE GROUND THAT THERE IS ABSENCE OF CHARITABLE ACTIVITIES IN DELHI AND IT IS NOT POSSIBLE T O VERIFY THE GENUINENESS OF THE ACTIVITY. IN OUR OPINION, THIS CAN NOT BE THE GROUND FOR REJECTION OF THE REGISTRATION U/S 12A. IN VIEW OF THE FACT THAT THE ASSESSEE COMPANY HAS BEEN REGISTERED BY THE PERMISSION OF GOVERNMENT OF INDIA TO CARRY OUT CHARITABLE ACTIVIT IES WITHOUT ANY PROFIT ITA NOS.2026 & 2027/DEL/2011 7 MOTIVE, AND IN CASE THERE IS ANY CONTRAVENTION, THE G OVERNMENT HAS STIPULATED THAT THE PERMISSION GIVEN TO IT CAN BE WITH DRAWN. KEEPING IN VIEW ALL THESE FACTS, WE ARE OF THE OPINION THAT REGI STRATION U/S 12A HAS WRONGLY BEEN DENIED TO THE ASSESSEE. THE BENEFIT OF EX EMPTION U/S 80G HAS BEEN DENIED SIMPLY ON THE GROUND THAT THE ASSESSE ES REQUEST FOR REGISTRATION U/S 12A HAS BEEN REJECTED, THEREFORE, THE SAID REJECTION IS ALSO NOT CORRECT. 8. IN VIEW OF THE ABOVE DISCUSSION, WE DIRECT LD. DIT (EXEMPTIONS) TO GRANT REGISTRATION TO THE ASSESSEE AS WELL AS GRANT EXEMPT ION U/S 80G. 9. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE A LLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 14.10.20 11. SD/- SD/- [A.N. PAHUJA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 14.10.2011. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES