RUGBY ASSOCIATION OF MAHARASHTRA, MUMBAI V. DIT (E), MUMBAI

ITA 2511/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3802 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-08-2015
• Assessment Year: 2013-2014
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI . . , , !' #$, % , & BEFORE SHRI B.R.BASKARAN, AM AND SHRI AMARJIT SINGH , JM / I.T.A. NO.2511/M/13 ( % ' (' / ASSESSMENT YEAR: 2013-14) M/S. RUGBY ASSOCIATION OF MAHARASHTRA 214/18, RAHEJA CENTER, FREE PRESS JOURNAL MARG, NARIMAN POINT, MUMBAI, MAHARASHTRA - 400021 / VS. DIRECTOR OF INCOME TAX (EXEMPTION) 5 TH FLOOR, PIRAMAL CHAMBERS, LALBAUGH, MUMBAI ./ ./ PAN/GIR NO. : AAECR6771J ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 08.09.2015 !' /DATE OF PRONOUNCEMENT: 24.02.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL AGAINST THE ORDER DATED 30.01.20 13 PASSED BY THE DIRECTOR OF INCOME TAX (EXEMPTIONS), MUMBAI [HE REINAFTER REFERRED TO AS THE DIT(E)] U/S. 12AA(1)(B)(II) R. W.S. 12A OF THE ASSESSEE BY: SHRI AJAY R. SINGH DEPARTMENT BY: SHRI K. B. SHUKLA ITA NO.2511/M/13 A.Y. 2013-14 2 INCOME TAX ACT, 1961( IN SHORT THE ACT) RELEVANT TO THE ASSESSMENT YEAR 2013-14 WHEREIN THE APPLICATION MOVED BY THE A PPELLANT HAS BEEN ORDERED TO BE DISMISSED. 2. THE APPELLANT COMPANY HAS FILED AN APPLICATION F OR REGISTRATION U/S.12A OF THE ACT IN A PRESCRIBED FORM NO.10A ON 2 3.07.2012. THE APPELLANT COMPANY WAS CONSTITUTED U/S. 25 OF THE CO MPANIES ACT, 1956 VIDE CERTIFICATE OF INCORPORATION DATED 03.03. 2010. AFTER RECEIPT OF AN APPLICATION, NOTICE DATED 19.10.2012 WAS SENT TO THE APPLICANT TO APPEAR BEFORE THE AUTHORITY FOR PRODUCTION OF NECES SARY DOCUMENTS. IN RESPONSE TO THE NOTICE SHRI RAJNIKANT MISTRY, AR AN D FAIZAL SIDDIQUI, DIRECTOR THE PROCEEDING ATTENDED AND SUBMITTED THE NECESSARY DOCUMENTS FOR VERIFICATION. THE APPELLANT APPLICAT ION TO REGISTER UNDER THE PROVISION OF SECTION 12AA(1)(B) READ WITH SECTION 12A OF THE ACT HAS BEEN ORDERED TO BE DISMISSED. THE APPL ICATION OF THE APPLICANT HAS BEEN REJECTED MAINLY ON THE TWO GROUN DS WHICH HAVE BEEN MENTIONED AT SERIAL NO. B(12) AND B(16) WHICH ARE REPRODUCED AS UNDER FOR READY REFERENCE:- B(12) TO ESTABLISH AND SUPPORT, OR AID IN THE ESTABLISHMENT AND SUPPORT OF THE ASSOCIATIONS, INSTITUTIONS, FUNDS CALCULATED TO BENEFIT AND EMPLOYEES OR EX-EMPLOYEES OF THE COMPANY, OR THE DEPENDENTS OR CONNECTIONS OF SUCH PERSONS, AND TO GRANT PENSIONS AND ALLOWANCES TO MAKE ITA NO.2511/M/13 A.Y. 2013-14 3 PAYMENTS TOWARDS INSURANCE, AND TO SUBSCRIBE, DONATE OR GUARANTEE MONEY FOR ANY CHARITABLE, PATRIOTIC OR BENEVOLENT PURPOSES FOR ANY EXHIBITION OR FOR ANY PUBLIC, GENERAL OR USEFUL OBJECTS. B(16) TO ARRANGE, VISITS OF AN INDIAN RUGBY TEAM (T HAT IS TO SAY A NATIONAL TEAM) AND ANY OTHER TEAM, WHATSOEVER TO COUNTRIES THAT ARE MEMBERS OF THE INTERNATIONAL RUGBY BOARD OR ELSEWHERE IN CONJUNCTION WITH THE BODIES GOVERNING RUGBY IN THE COUNTRIES TO BE VISITED. 3. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECOR D CAREFULLY. IN THE INSTANT CASE THE APPELLANT HAS CHALLENGED THE REJEC TION OF APPLICATION U/S.12A OF THE ACT. ACCORDING TO THE MEMORANDUM OF ASSOCIATION THE AUTHORITY REJECTED THE APPLICATION OF THE APPEL LANT ON THE GROUND DISCLOSED IN THE CLAUSE B(12) AND B(16) WHICH HAS B EEN MENTIONED ABOVE. HOWEVER FURTHER REPRODUCED BELOW FOR READY REFERENCE:- B(12) TO ESTABLISH AND SUPPORT, OR AID IN THE ESTABLISHMENT AND SUPPORT OF THE ASSOCIATIONS, INSTITUTIONS, FUNDS CALCULATED TO BENEFIT AND EMPLOYEES OR EX-EMPLOYEES OF THE COMPANY, OR THE DEPENDENTS OR CONNECTIONS OF SUCH PERSONS, AND ITA NO.2511/M/13 A.Y. 2013-14 4 TO GRANT PENSIONS AND ALLOWANCES TO MAKE PAYMENTS TOWARDS INSURANCE, AND TO SUBSCRIBE, DONATE OR GUARANTEE MONEY FOR ANY CHARITABLE, PATRIOTIC OR BENEVOLENT PURPOSES FOR ANY EXHIBITION OR FOR ANY PUBLIC, GENERAL OR USEFUL OBJECTS. B(16) TO ARRANGE, VISITS OF AN INDIAN RUGBY TEAM (T HAT IS TO SAY A NATIONAL TEAM) AND ANY OTHER TEAM, WHATSOEVER TO COUNTRIES THAT ARE MEMBERS OF THE INTERNATIONAL RUGBY BOARD OR ELSEWHERE IN CONJUNCTION WITH THE BODIES GOVERNING RUGBY IN THE COUNTRIES TO BE VISITED. 3.1 THE LEARNED REPRESENTATIVE OF THE APPELLANT HAS ARGUED THAT THE CLAUSE B(12) DEALS WITH THE SUPPORT OF THE ASSOCIAT IONS, INSTITUTIONS, FUNDS CALCULATED TO BENEFIT AND EMPLOYEES OR EX-EMP LOYEES OF THE COMPANY, OR THE DEPENDENTS OR CONNECTIONS OF SUCH P ERSONS, AND TO GRANT PENSIONS AND ALLOWANCES TO MAKE PAYMENTS TOWA RDS INSURANCE, AND TO SUBSCRIBE, DONATE OR GUARANTEE MONEY FOR ANY CHARITABLE, PATRIOTIC OR BENEVOLENT PURPOSES FOR ANY EXHIBITION OR FOR ANY PUBLIC, GENERAL OR USEFUL OBJECTS WHICH CANNOT BE SAID AGAI NST THE CHARITABLE PURPOSES OBJECTIVE OF WHICH HAS BEEN MENTIONED IN S ECTION 2(15) OF THE ACT. IN SUPPORT OF THIS CONTENTION THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE ON THE LAW SETTLED IN COMMISSIONER OF INCOME TAX VS. AGRICULTURAL PRODUCE AND MARKET COMM ITTEE [2007] ITA NO.2511/M/13 A.Y. 2013-14 5 163 TAXMAN 359 (BOM.) HIGH COURT OF BOMBAY. IT IS ALSO ARGUED THAT THE SUBSIDIARY OBJECTIVE TO THE MAIN OBJECT CANNOT BE CONSIDERED AS PROFIT MAKING SPECIFICALLY IN VIEW OF THE MEMORANDU M OF ASSOCIATION OF THE APPELLANT ON RECORD, THEREFORE, IN THE SAID CIRCUMSTANCES LEARNED DIT(E) HAS WRONGLY REJECTED THE APPLICATION OF THE APPELLANT HENCE THE ORDER DATED 30.01.2013 IS WRONG AGAINST LAW AND FAC TS AND IS LIABLE TO BE SET ASIDE. IT IS ALSO ARGUED THAT IN VIEW OF T HE CLAUSE B-16 ALSO THERE IS NOTHING CONTRARY TO THE PROVISION OF SECTI ON 12, 12AA & 2(15). IT IS ALSO ARGUED THAT VISITING OF AN INDIA N RUGBY TEAM TO THE FOREIGN COUNTRIES NOWHERE MAKE THE CIRCUMSTANCE CO NTRARY TO THE OBJECT OF MEMORANDUM OF ASSOCIATION IN VIEW OF THE LAW SETTLED IN [2012] 21 TAXMANN.COM 213 (DELHI) HIGH COURT OF DEL HI, IN DIRECTOR OF INCOME TAX (EXEMPTION) VS. NATIONAL ASSOCIATION OF SOFTWARE AND SERVICES COMPANIES AND [2012] 25 TAXMANN.COM 217 (M UM.) INCOME TAX APPELLATE TRIBUNAL BENCH IN CEO CLUB INDIA VS. DIRECTOR OF INCOME TAX (EXEMPTION). IT IS ALSO ARGUED THAT THE PROMOTION OF SPORTS AND GAMES IS REQUIRED TO BE CONSIDERED AS C HARITABLE PURPOSE IN VIEW OF THE LAW SETTLED IN [2013] 34 TAXMANN.COM 16 8 (CHANDIGARH TRIB) IN THE CASE TITLED AS PROFESSIONAL GOLF TOUR OF INDIA VS. COMMISSIONER OF INCOME TAX II. 3.2. ON THE OTHER HAND LEARNED REPRESENTATIVE OF T HE DEPARTMENT STRONGLY RELIED UPON THE ORDER DATED 30.01.2013 AND REQUESTED TO DISMISS THE APPEAL. ITA NO.2511/M/13 A.Y. 2013-14 6 3.3 BY GIVING CAREFUL THOUGHTS TO THE ARGUMENTS ADV ANCED BY THE LEARNED REPRESENTATIVE OF THE PARTIES AND PERUSING THE RECORD, IT CAME INTO THE NOTICE THAT THE RUGBY ASSOCIATION OF MAHAR ASHTRA HAS NO DOUBT MOVED AN APPLICATION 12AA(1)(B)(II) R.W.S. 12 A OF THE ACT FOR THE REGISTRATION. THE SAID APPLICATION HAS BEEN RE JECTED BY THE DIT(E), MUMBAI BY VIRTUE OF ORDER DATED 30.01.2013 UNDER CH ALLENGE. THE APPLICATION HAS BEEN DISMISSED ON THE BASIS OF TWO GROUND WHICH HAVE BEEN MENTIONED IN CLAUSE B(12) AND B(16) OF THE MEM ORANDUM OF ASSOCIATION AND HAS BEEN PRODUCED ABOVE. SO FAR A S THE CLAUSE B(12) IS CONCERN THE APPELLANT IS GOING TO ESTABLISH AND SUPPORT, OR AID IN THE ESTABLISHMENT AND SUPPORT OF THE ASSOCIATIONS, INST ITUTIONS, FUNDS CALCULATED TO BENEFIT AND EMPLOYEES OR EX-EMPLOYEES OF THE COMPANY, OR THE DEPENDENTS OR CONNECTIONS OF SUCH PERSONS, A ND TO GRANT PENSIONS AND ALLOWANCES TO MAKE PAYMENTS TOWARDS IN SURANCE, AND TO SUBSCRIBE, DONATE OR GUARANTEE MONEY FOR ANY CHARIT ABLE, PATRIOTIC OR BENEVOLENT PURPOSES FOR ANY EXHIBITION OR FOR ANY P UBLIC, GENERAL OR USEFUL OBJECTS. THE CHARITABLE PURPOSE HAS BEEN DE FINED IN SECTION 2(15): 1. RELIEF OF THE POOR 2. EDUCATION 3. MEDICAL RELIEF 4. PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHE DS, FOREST AND WILDLIFE) 5. PRESERVATION OF MONUMENTS OF PLACES OR OBJECTS O F ARTISTIC OR HISTORICAL IMPORTANCE AND 6. THE ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL UTILITY. ITA NO.2511/M/13 A.Y. 2013-14 7 3.4 NO DOUBT THE ABOVE MENTIONED PARAMETERS HAVE BE EN PRESCRIBED FOR THE ACTIVITY OF CHARITABLE PURPOSE BUT THERE IS TEST ALSO TO CONSIDER THE ACTIVITIES OF CHARITABLE PURPOSE WHICH HAS BEEN PRESCRIBED IN CASE OF INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA VS. DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS) [2011] 202 TAXMAN 1/13 TAXM ANN.COM 175. THE SAID LAW SPEAKS ABOUT THE TEST OF BUSINESS, TRA DE OR COMMERCE FOR CONSIDERATION THE PURPOSE OF THE TRUST. IT IS SPEC IFICALLY HELD THAT IF THE OBJECT OF THE TRUST COMES WITHIN THE PURVIEW OF BUSINESS, TRADE AND COMMERCE THEN IN THE SAID CIRCUMSTANCES ALSO THE PU RPOSE OF THE TRUST WOULD NOT BE CONSIDER AS CHARITABLE. IN THE INSTAN T CASE, NOTHING CAME INTO THE NOTICE THAT THE OBJECT OF THE APPLICANT IS OF THE NATURE OF TRADE, BUSINESS AND COMMERCE. NO DOUBT IN THE SAID CIRCUM STANCES AND IN NOW OF THE ABOVE MENTIONED LAW THE APPLICATION OF T HE ASSESSEE HAS WRONGLY REJECTED ON THE GROUND. NOW CONSIDERING T HE PARA B (12) OF THE MEMORANDUM OF ASSOCIATION, WE ALSO NOWHERE FOUN D THAT THIS CLAUSE IS ALSO AGREED THE OBJECT OF CHARITABLE PURP OSE. IN THIS REGARD WE FIND SUPPORT OF THE ORDER PASSED BY THE CO-ORDIN ATE BENCH OF CHANDIGARH IN [2013] 34 TAXMANN.COM 168 (CHANDIGARH TRIB) IN THE CASE TITLED AS PROFESSIONAL GOLF TOUR OF INDIA VS. COMMISSIONER OF INCOME TAX II. 3.5 NOW IN THE SAID CIRCUMSTANCES THE APPLICATION OF APPELLANT IS NOT LIABLE TO BE REJECT ED ON THIS GROUND SPECIFICALLY IN VIEW OF THE LAW SETTLED IN COMMISSI ONER OF INCOME TAX ITA NO.2511/M/13 A.Y. 2013-14 8 VS. AGRICULTURAL PRODUCE AND MARKET COMMITTEE [2007 ] 163 TAXMAN 359 (BOM.) HIGH COURT OF BOMBAY AND [2012] 25 TAXMA NN.COM 217 (MUM.) INCOME TAX APPELLATE TRIBUNAL BENCH IN CEO C LUB INDIA VS. DIRECTOR OF INCOME TAX (EXEMPTION). THE OTHER POIN T OF REJECTION OF THE APPLICATION IS THAT THE CLAUSE B (16) MENTIONED IN THE MEMORANDUM OF ASSOCIATION IS AGREED THE OBJECT OF C HARITABLE PURPOSE. THE CLAUSE B (16) IS HEREBY REPRODUCED AS UNDER:- B(16) TO ARRANGE, VISITS OF AN INDIAN RUGBY TEAM ( THAT IS TO SAY A NATIONAL TEAM) AND ANY OTHER TEAM, WHATSOEVER TO COUNTRIES THAT ARE MEMBERS OF THE INTERNATIONAL RUGBY BOARD OR ELSEWHERE IN CONJUNCTION WITH THE BODIES GOVERNING RUGBY IN THE COUNTRIES TO BE VISITED. 3.5 THE SAID CLAUSE IS REQUIRED TO BE SEEN ON THE P OINT OF THAT IT IS SUFFICIENT TO REJECT THE APPLICATION OF THE APPELLA NT OR NOT. HERE THERE IS NO NEED TO REPEAT THE PROVISION CONTAIN IN SECTI ON 2(15) AS WELL AS TO CONSIDER THE APPLICATION OF THE APPELLANT ON THE PO INT OF TRADE, BUSINESS AND COMMERCE. IT IS ONLY TO BE SEEN WHETHER THE AR RANGEMENT BY THE APPELLANT FOR THE VISIT OF INDIAN RUGBY TEAM OR ANY OTHER TEAM TO THE FOREIGN COUNTRIES IS HURDLE FOR REGISTRATION OF THE APPELLANT U/S. 12AA(1)(B) OR NOT. IN THIS REGARD THERE ARE NUMBE R OF JUDICIAL PRONOUNCEMENTS ON RECORD WHICH SPEAKS THAT SAID PUR POSE DOES NOT COME WITHIN THE PURVIEW OF TRADE, BUSINESS AND COMM ERCE AND CANNOT ITA NO.2511/M/13 A.Y. 2013-14 9 BE CONSIDERED A POINT OF REJECTION OF APPLICATION. TO ARRIVE AT THIS CONCLUSION WE FIND SUPPORT OF LAW SETTLED IN [2012] 21 TAXMANN.COM 213 (DELHI) HIGH COURT OF DELHI, IN DIRECTOR OF INC OME TAX (EXEMPTION) VS. NATIONAL ASSOCIATION OF SOFTWARE AN D SERVICES COMPANIES AND [2012] 25 TAXMANN.COM 217 (MUM.) INCO ME TAX APPELLATE TRIBUNAL BENCH IN CEO CLUB INDIA VS. DIRE CTOR OF INCOME TAX (EXEMPTION). IN VIEW OF THE SAID CIRCUMSTANCE WE ARE OF THE VIEW THAT THE LEARNED DIT(E) HAS WRONGLY REJECTED THE AP PLICATION OF THE APPELLANT U/S. 12AA(1)(B)(II) R.W.S. 12A OF THE ACT ON THE GROUND OF PARA B (12) AND B (16) SPECIFIED IN THE MEMORANDUM OF ASSOCIATION. THEREFORE WE HEREBY ORDERED TO BE SET ASIDE THE SAM E AND DIRECT THE DIT(E) TO RECONSIDER THE MATTER AND PASS THE ORDER IN ACCORDANCE WITH LAW. 4. ACCORDINGLY, APPEAL OF THE ASSESSEE IS HEREBY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH FEBRUARY, 2016 SD/- SD/- (B.R.BASKARAN) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 24 TH FEBRUARY, 2016 MP MP MP MP ITA NO.2511/M/13 A.Y. 2013-14 10 * + ,%'#- .-(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE.