M/s Yanam Agnikulakshatriya Welfare & Service Organisation, Yanam V. The CIT Rajahmundry, Rajahmundry

ITA 265/VIZ/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67368 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-04-2013
• Assessment Year: misc
• Appeal Filed On: 24-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Assessee Lawyers: D BALAJI
• Section: 12A; 12AA; 11

Judgement Text

ITA NO.265/VIZ/2011 YANAM AGNIKULA KSHATRIYA WELFAR E SERVICE ORGANISATION, YANAM IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.265/VIZAG/2011 ASSESSMENT YEAR : N.A. YANAM AGNIKULAKSHATRIYA WELFARE AND SERVICE ORGANISATION YANAM CIT RAJAHMUNDRY (APPELLANT) VS. (RESPONDENT) PAN NO.AAAAY1063C APPELLANT BY: SHRI D. BALAJI, CA RESPONDENT BY: SHRI K.V.N. CHARYA, CIT(DR) DATE OF HEARING : 30.04.2013 DATE OF PRONOUNCEMENT : 03.05.2013 ORDER PER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER:- THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 8.6.2011 PASSED BY LD. CIT RAJAHMUNDRY REJECTING TH E APPLICATION FILED BY THE ASSESSEE SEEKING REGISTRATION U/S 12AA OF THE I NCOME-TAX ACT. 2. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE IS A SOCIETY EVIDENCED BY CERTIFICATE OF REGISTRATION OF SOCIETIES ISSUED BY REGISTRAR OF COMPANIES, PUDUCHERRY AND IT WAS INCORPORATED ON 05.11.2007. THE ASSESSEE HOWEVER, FILED AN APPLICATION IN THE PRESC RIBED FORMAT SEEKING REGISTRATION U/S 12AA OF THE ACT BEFORE THE LD. CIT ON 24.12.2010. THE LD. CIT NOTICED THAT THE ASSESSEE SOCIETY WAS INITIALLY INCORPORATED WITH THE AIMS AND OBJECTIVES OF WORKING FOR THE WELFARE OF PEOPLE BELONGING TO AGNIKULAKSHATRIYA COMMUNITY IN YANAM AND OTHER COMM UNITY PEOPLE. HOWEVER, SUBSEQUENTLY, THE OBJECTIVES WERE MODIFIED BY FILING A LETTER DATED 23.8.2010 WITH REGISTRAR OF COMPANIES, PUDUCHERRY. THE AMENDED CLAUSES ITA NO.265/VIZ/2011 YANAM AGNIKULA KSHATRIYA WELFAR E SERVICE ORGANISATION, YANAM 2 OF AIMS AND OBJECTS, HOWEVER, DID NOT REFER TO AN Y PARTICULAR COMMUNITY. THE LD. CIT NOTICED THAT THE ASSESSEE, DURING THE F INANCIAL YEAR 2007-08 TO 2009-10, HAS MAINLY DISBURSED THE COMPENSATION RECE IVED BY IT FOR ONWARD PAYMENT TO FISHERMEN. THE LEARNED CIT NOTICED THA T THE ASSESSEE DID NOT CARRY OUT ANY CHARITABLE ACTIVITY DURING THE FINANC IAL YEAR 2007-08. DURING THE FINANCIAL YEAR 2008-09, IT HAS SPENT A SUM OF ` .41,441/- TOWARDS CELEBRATION OF UGADI FESTIVAL AND FURTHER IT HAS ALSO PURCHASED A VACANT SITE. IN THE FINANCIAL YEAR 2009-10, IT HAS DONATED ` .50,000/- TO C.M. RELIEF FUND AND FURTHER AN AMOUNT OF ` .50,000/- WAS USED TO PURCHASE MATERIAL FOR CONSTRUCTION OF KALYANA MANDAPAM. 3. THE LD. CIT DID NOT FIND IT FIT TO GRANT REG ISTRATION TO THE ASSESSEE SOCIETY AND ACCORDINGLY REJECTED THE APPLICATION FI LED BY THE ASSESSEE WITH THE FOLLOWING OBSERVATION: AS CAN BE NOTICED FROM THE ABOVE, THE SOCIETY WAS C REATED FOR THE BENEFIT OF ONE PARTICULAR COMMUNITY AND ONE OF THE OBJECTS IS ALSO RELIGIOUS IN NATURE. FROM THE AUDITED ACCOUNTS, IT IS SEEN THAT THE SOCIETY HAS NOT CONDUCTED ANY CHARITABLE ACTIVITY D URING THE PAST THREE FINANCIAL YEARS. THE SOCIETY IS ONLY ROUTING MONEY RECEIVED AS COMPENSATION TO THE FISHERMEN. IT IS SEEN THAT THE OBJECTS OF THE SOCIETY ARE IN VIOLATION OF SECTION 2(15) AND 13(1) (B) OF THE I.T. ACT. EVEN IN THE AIMS AND OBJECTS, THE CONSTRUCTION OF K ALYANAMANDAPAM, DOES NOT FIGURE. THUS, THE SOCIETY IS NEITHER COND UCTING ACTIVITIES AS PER THE OLD MEMORANDUM OF ASSOCIATION OR THE AMENDE D MEMORANDUM OF ASSOCIATION. SINCE THE ACTIVITIES ARE NOT GENUI NE, THE SOCIETY IS NOT ELIGIBLE FOR REGISTRATION U/S 12AA OF THE I.T. ACT. ACCORDINGLY, THE APPLICATION IN FORM NO.10A FILED BY THE SOCIETY SEE KING REGISTRATION U/S 12AA IS, HEREBY, REJECTED. AGGRIEVED BY THE ORDER OF LD. CIT, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE EXPLAINED I N BRIEF, THE CIRCUMSTANCES WHICH LED TO THE FORMATION OF THE ASSESSEE SOCIETY. HE SUBMITTED THAT THE YANAM AREA, WHERE THE ASSESSEE IS LOCATED, IS PREDO MINANTLY POPULATED BY FISHERMEN. WHEN OIL RESOURCES WERE DISCOVERED IN K .G. BASIN, THE LIVELIHOOD ITA NO.265/VIZ/2011 YANAM AGNIKULA KSHATRIYA WELFAR E SERVICE ORGANISATION, YANAM 3 OF THE FISHERMEN RESIDING THERE WAS BADLY AFFECTED. IN ORDER TO PROTECT THEIR INTEREST, THE ASSESSEE SOCIETY WAS FORMED. THEREAF TER, THE ASSESSEE SOCIETY NEGOTIATED WITH THE CONCERNED CORPORATE COMPANY AND OBTAINED COMPENSATION WHICH WAS DISBURSED TO THE AFFECTED FI SHERMEN. SINCE THE FISHERMEN PREDOMINANTLY BELONG TO AGNIKULAKSHATRIYA COMMUNITY, WHICH IS A MOST BACKWARD COMMUNITY, THE SOCIETY WAS INITIALLY FORMED FOR THE WELFARE OF THAT COMMUNITY. SINCE THE FORMATION OF SOCIETY HAS RESULTED IN POSITIVE BENEFITS, IT WAS DECIDED TO CHANGE THE AIMS AND OBJ ECTIVES OF THE SOCIETY IN ORDER TO ENABLE IT TO WORK FOR DOWNTRODDEN AND WEAK ER SECTIONS OF THE SOCIETY IRRESPECTIVE OF CASTE, COLOUR, CREED, RELIG ION AND SEX. THEREAFTER, THE ASSESSEE HAS MOVED AN APPLICATION BEFORE LD. CIT SE EKING REGISTRATION U/S 12A OF THE INCOME-TAX ACT. THE LD. COUNSEL SUBMITT ED THAT THE LD. CIT HAS GIVEN UNDUE IMPORTANCE TO THE PRE-AMENDED AIMS AND OBJECTIVES. HE FURTHER SUBMITTED THAT THE AMOUNT SPENT BY THE ASSESSEE SOC IETY ON CELEBRATION OF UGADI FESTIVAL HAS ACTUALLY PROMOTED HARMONY, TOGET HERNESS AMONGST VARIOUS COMMUNITIES. FURTHER, DONATION TO C.M. RELIEF FUND CONSTITUTES A CHARITABLE ACTIVITY. THE LD. COUNSEL FURTHER SUBMITTED THAT T HE SOCIETY IS SEEKING REGISTRATION PROSPECTIVELY ON THE STRENGTH OF AMEND ED AIMS AND OBJECTIVES. HE FURTHER SUBMITTED THAT THE SOCIETY HAS PURCHASED A LAND FOR THE CONSTRUCTION OF A KALYANA MANDAPAM FOR THE BENEFIT OF DOWNTRODDEN AND WEAKER SECTIONS OF THE SOCIETY, WHICH SHALL ALSO CO NSTITUTE A CHARITABLE ACTIVITY. ACCORDINGLY, LD. A.R. SUBMITTED THAT THE LD. CIT(A) HAS NOT PROPERLY APPRECIATED ALL THE ABOVE FACTS AND ACCORDINGLY PRA YED THAT THE CASE MAY BE REMITTED TO THE FILE OF THE LD. CIT WITH APPROPRIAT E DIRECTION. 5. ON THE CONTRARY, THE LD. D.R. STRONGLY PLACED RE LIANCE ON THE ORDER PASSED BY LD. CIT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. AS CONTENDED BY LD. A.R., WE NOTICE THAT THE LD. CI T(A) HAS GIVEN UNDUE IMPORTANCE TO THE PRE-AMENDED AIMS AND OBJECTIVES O F THE SOCIETY. WE ITA NO.265/VIZ/2011 YANAM AGNIKULA KSHATRIYA WELFAR E SERVICE ORGANISATION, YANAM 4 NOTICE THAT THE LD. CIT HAS ALSO EXTRACTED THE AMEN DED AIMS AND OBJECTIVES IN PARAGRAPH 2 OF HIS ORDER, BUT HE HAS NOT GIVEN A NY FINDING WITH REGARD TO THOSE AMENDED OBJECTS. ON A CAREFUL READING OF PRO VISIONS OF SECTION 11 OF THE ACT, WE NOTICE THAT THE SAID PROVISION DOES NOT PROHIBIT APPLICATION OF MONEY FOR RELIGIOUS PURPOSES AND HENCE IN OUR VIEW, THE OBSERVATION OF LD. CIT(A) THAT ONE OF THE OBJECTIVES IS RELIGIOUS IN NATURE WILL NOT COME IN THE WAY OF GRANTING REGISTRATION U/S 12A OF THE ACT. T HOUGH THE LEARNED CIT HAS NARRATED THE VARIOUS ACTIVITIES CARRIED ON BY THE A SSESSEE, YET HE HAS TAKEN THE VIEW THAT THEY ARE NOT GENUINE. WE NOTICE THAT THE LEARNED CIT HAS NOT DEMONSTRATED AS TO HOW THE PURCHASE OF VACANT SITE, CONTRIBUTION TO CM RELIEF FUND, DISBURSEMENT OF COMPENSATION AMOUNT ARE NOT GENUINE, WHEN THEY ARE SUPPORTED BY ADEQUATE DOCUMENTS. UNDER THESE C IRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS NOT PROPERLY AP PRECIATED THE FACTS SURROUNDING THE CASE AND IT HAS LED TO REJECTION OF THE APPLICATION FILED BY THE ASSESSEE. ACCORDINGLY, IN OUR VIEW, THIS ISSUE REQ UIRES FRESH EXAMINATION AT THE END OF THE LD. CIT(A) AND ACCORDINGLY WE SET AS IDE THE ORDER OF LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE WITH A DI RECTION TO CONSIDER THE APPLICATION FILED BY THE ASSESSEE AFRESH VIS--VIS AMENDED AIMS AND OBJECTIVES OF THE ASSESSEE SOCIETY AND TAKE APPROPR IATE DECISION IN ACCORDANCE WITH LAW AFTER AFFORDING NECESSARY OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN CO URT ON 03.05.2013 SD/- SD/- (D. MANMOHAN) (B.R. BASKARAN) VICE PRESIDENT ACCOUNTANT MEMBER VISAKHAPATNAM, DATED 3 RD MAY, 2013 VG/SPS ITA NO.265/VIZ/2011 YANAM AGNIKULA KSHATRIYA WELFAR E SERVICE ORGANISATION, YANAM 5 COPY TO 1 YANAM AGNIKULAKSHATRIYA WELFARE & SERVICE ORGANIS ATION, DR.NO.8-8-032, KOTHAPETA, YANAM-533 464. 2 THE CIT, RAJAHMUNDRY 3 THE CIT(A), RAJAHMUNDRY 4 THE DR, ITAT, VISAKHAPATNAM. 5 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM