Federation of Trade Association of Pune, Pune V. Commissioner of Income-tax, Exemption, Pune

ITA 2776/PUN/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7861 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-09-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 28-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: IS DIRECTED AGAINS T PASSED
• Keywords: Charitable institution

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, B PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER . / ITA NO.2776/PUN/2017 / ASSESSMENT YEAR : 2011-12 FEDERATION OF TRADE ASSOCIATION OF PUNE, VYAPAR BHAVAN, MARKET YARD, GULTEKDI, PUNE 411 037 PAN : AAATF3470D VS. CIT (EXEMPTIONS), PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PA SSED BY THE LD. CIT(EXEMPTIONS), PUNE ON 29-09-2017 DENYING THE REGISTRATION U/S.12AA OF THE INCOME-TAX ACT, 1961 (HEREINAFTE R ALSO CALLED THE ACT). 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E MOVED AN APPLICATION FOR GRANT OF REGISTRATION U/S.12A OF THE ACT. THE LD. CIT(E) CALLED UPON THE ASSESSEE TO EXPLAIN AS TO HOW IT WA S COVERED WITHIN THE DEFINITION OF CHARITABLE PURPOSE AS PER SECTION 2( 15) OF THE ACT WHEN IT WAS CHARGING MEMBERSHIP FEE. THE ASSES SEE SUBMITTED A NOTE EXPLAINING THE PURPOSE AND OBJECTS OF ITS FORM ATION. THE LD. CIT(E), AFTER CONSIDERING THE AIMS AND OBJECTS OF THE TRUST, AS ASSESSEE BY SHRI RAJIV THAKKAR REVENUE BY SHRI T. VIJAYA BHASKAR REDDY DATE OF HEARING 02-09-2021 DATE OF PRONOUNCEMENT 02-09-2021 ITA NO.2776/PUN/2017 FEDERATION OF TRADE ASSOCIATION OF PUNE 2 PER CLAUSE 4 OF THE TRUST DEED, CAME TO HOLD THAT THE TRUS T WAS A MEMBERS ASSOCIATION AND ALL THE ACTIVITIES WERE LIMITED TO ITS MEMBERS AND NOT TO GENERAL PUBLIC AT LARGE SO AS TO FALL WITHIN THE CLAUSE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY . HE, THEREFORE, REFUSED THE REGISTRATION AGAINST WHICH THE ASS ESSEE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD BOTH THE SIDES THROUGH VIRTUAL COURT AND S CANNED THE RELEVANT MATERIAL ON RECORD. A COPY OF THE TRUST DEED OF THE ASSESSEE IS AVAILABLE AT PAGE 5 ONWARDS OF THE PAPER BOOK . AIMS AND OBJECTS HAVE BEEN ENSHRINED IN ANNEXURE-B, READING AS UN DER: 1) TO ENCOURAGE GET-TOGETHER AND BRING ABOUT FEELING OF UNITY AND CO-OPERATION AMONG THE PERSONS ENGAGED IN TRADE & COMMERCE, IN ALL MATTERS CONNECTED WITH AND INVOLVING THEIR COMMON GOOD AND ISSUES. 2) TO PROMOTE, DEVELOP, STIMULATE, ADVANCE & PROTECT THE INTEREST OF TRADE & COMMERCE. 3) TO INSTITUTE, ENCOURAGE, FINANCE PROMOTE, SPONSOR AND DEVELOP ALL KINDS OF STATISTICAL, SCIENTIFIC, ECONOMIC & TECHNICAL RESEARCH RELATING TO TRADE & COMMERCE. 4) TO FOSTER CULTURAL LINKS WITH THE PERSONS ENGAGED IN TRA DE, PROFESSION AND VOCATION. 5) TO CONSIDER AND FORMULATE OPINIONS, PROPOSALS AND ACTION S ON ALL MATTERS CONNECTED WITH TRADE AND COMMERCE. 6) TO COLLECT, ANALYSE, CLASSIFY AND CIRCULATE THE STATISTICAL DATE IN FURTHERANCE OF INTEREST OF TRADE & COMMERCE. ITA NO.2776/PUN/2017 FEDERATION OF TRADE ASSOCIATION OF PUNE 3 7) TO CREATE JUST & EQUITABLE PRINCIPLES & CUSTOMS IN TRADE & COMMERCE. 8) TO MAKE EFFORTS TO SPREAD AND DIFFUSE THE COMMERCIA L, ECONOMIC LEGAL KNOWLEDGE AND USEFUL INFORMATIONS TO THE TRADERS. 9) TO PUBLISH ARTICLES, BULLETIN, MAGAZINE, NEWSPAPER CONNECTED WITH TRADE. 10) TO CARRY ON PUBLICITY AND PROPAGANDA, TO EDUCATE THE PUBLIC AND MOULD PUBLIC OPINION IN FAVOUR OF ACTIONS & OPINIONS OF TRADE, BY ADVERTISEMENTS, PRESS NOTES, MEETINGS SEMINARS & CONFERENCES ETC. 11) TO PROVIDE A COMMON FORUM FOR EXCHANGE OF VIEWS A ND EXPERIENCES BY THE TRADE AND ALSO TO ORGANIZE CONSULTANCY WINGS OR PANELS IN THE FIELDS CONNECTED WITH TRADE, FINANCE, TAXATION , LABOUR ETC. 12) TO GUIDE, PROMOTE AND STRENGTHEN THE PRESENT AND FUTUR E INDIVIDUAL TRADE ASSOCIATIONS. 13) TO ARRANGE AND TO HOLD SEMINARS/SHORT TERM COURSES & REFRESHER COURSES FOR THE SALESMAN AND OTHER EMPLOYEES TO APPRISE THEM ABOUT UP-TO-DATE TECHNICAL KNOWLEDGE AND INFORMATION, FOR FURTHER DEVELOPMENT, PROMOTION OF DISTRIBUTION HOUSE OF BUSINESS. SUCH COURSES & SEMINARS BE ARRANGED IN CONSULTATION WITH SIMILAR OTHER INSTITUTIONS AND TO FIX FEES/REMUNERATION OF COURSES AND LECTURERS/COMPANIES INVITED FOR CONDUCTING THE SEMINARS AND COURSES. 14) TO PROMOTE LIBRARY AND IMPART TRADE KNOWLEDGE BY WAY OF ARRANGING LECTURES, EXHIBITIONS ETC. 4. ON GOING THROUGH THE ABOVE OBJECTS OF THE ASSESSEE TRUS T, IT IS CLEAR THAT IT HAS BEEN SET UP TO PROMOTE, DEVELOP AND PROTEC T THE INTERESTS OF TRADE AND COMMERCE AND ALSO TO FOSTER THE FEELIN G OF UNITY ITA NO.2776/PUN/2017 FEDERATION OF TRADE ASSOCIATION OF PUNE 4 AND CO-OPERATION AMONG THE PERSONS ENGAGED IN TRADE AND COMMERCE OF ALL THE MATTERS CONCERNING WITH THEIR COMMON GOOD. SECTION 2(15) DEFINES CHARITABLE PURPOSE, INTER ALIA , INCLUDING THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY . PROVISO TO THIS SECTION PROVIDES THAT THE ADVANCEMENT OF `ANY OTHER GENERAL PUBLIC U TILITY SHALL NOT BE CHARITABLE PURPOSE IF IT INVOLVES CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE AND COMMERCE OR BUSINESS ETC. SUBJECT TO CERTAIN CONDITIONS. ON GOING THROUGH THE MANDATE OF SECTIO N 2(15), INSOFAR AS IT IS RELEVANT FOR OUR PURPOSE, IT EMERG ES THAT FIRSTLY, THE OBJECTS OF THE TRUST SHOULD BE OF ADVANCEMENT OF ANY OTHER GENERAL PUBLIC UTILITY AND SECONDLY, NO ACTIVITY IN THE NATURE OF TRADE AN D COMMERCE OR BUSINESS ETC., SHOULD BE CARRIED ON BY IT. 5. INSOFAR AS THE FIRST CONDITION IS CONCERNED, IT CAN BE S EEN FROM THE OBJECTS OF THE TRUST ITSELF THAT IT HAS BEEN SET UP TO PROMOTE AND PROTECT THE INTERESTS OF TRADE AND COMMERCE. `FUNCTIONS PR OVIDED IN THE ANNEXURE-C TO THE TRUST DEED ALSO STATE ALMOST TO THE SA ME EFFECT BY, INTER ALIA, PROVIDING TO TAKE ALL NECESSARY STEPS FOR PROMOTING, SUPPORTING, OPPOSING OR AMENDING THE LEGISLATIONS, ACTS, RULES , GUIDELINES, CIRCULARS, CUSTOMS, TRADE NOTICE, PRACTICES FOLLOWED BY CENTRAL GOVT. STATE GOVT., ANY DEPARTMENTS THEREOF, LOCAL AUTHO RITY, PUBLIC & PRIVATE SECTOR FOR PROTECTION AND FURTHERANCE OF INTERE STS OF ITA NO.2776/PUN/2017 FEDERATION OF TRADE ASSOCIATION OF PUNE 5 TRADE AND COMMERCE. ON GOING THROUGH THE ABOVE CLAUSES OF THE TRUST DEED COVERING ITS AIMS AND OBJECTIVES AND ALSO FUNCTIONS , THERE REMAINS NO DOUBT WHATSOEVER THAT IT HAS BEEN SET UP TO PROMO TE AND PROTECT THE INTERESTS OF TRADE AND COMMERCE. UNDER SUCH CIRCUMSTANCES, A QUESTION ARISES AS TO WHETHER SUCH OBJECTS CAN BE BROUGHT WITHIN THE PURVIEW OF OBJECT OF GENERAL PUBLIC UTILITY. THE HONBLE SUPREME COURT IN CIT VS. ANDHRA CHAMBER OF COMMERCE (1965) 55 ITR 722 (SC) CONSIDERED A CASE IN WHICH THE ASSESSEE THEREIN, A CHAMBER OF COMMERCE, HAD PRINCIPAL OBJECTS TO P ROMOTE AND PROTECT TRADE, COMMERCE AND INDUSTRIES AND TO STIMULA TE AND PROMOTE THE DEVELOPMENT OF TRADE, COMMERCE AND INDUSTRIES IN INDIA OR ANY PART THEREOF. IN THE LIGHT OF SUCH OBJECTIVES, THE HO NBLE SUPREME COURT HELD THAT PUBLIC IS VITALLY INTERESTED IN THE PROMO TION OF TRADE, COMMERCE AND INDUSTRIES AND HENCE, THE SAME FA LLS WITHIN THE SCOPE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY . THUS, IT IS APPARENT THAT THE ASSESSEE SATISFIES THE FIRS T CONDITION OF BEING IN ADVANCEMENT OF ANY OTHER OBJECT OF G ENERAL PUBLIC UTILITY. 6. NOW COMES THE SECOND CONDITION AS TO WHETHER THE ASSESS EE WAS CARRYING ON ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THE LD. CIT(E) HAS REPRODUCED THE INCOME AND EXPENDITUR E SIDES OF ITA NO.2776/PUN/2017 FEDERATION OF TRADE ASSOCIATION OF PUNE 6 THE ASSESSEES INCOME AND EXPENDITURE STATEMENTS FOR THE FINANCIAL YEARS FROM 2012-13 TO 2015-16. ON THE REVENUE SIDE, TH ERE ARE SIX HEADS, NAMELY, LBT ANDOLAN, SHOP ACT ANDOLAN, ADVERTISEME NT RECEIPTS, INTEREST, CRICKET TOURNAMENT AND MEMBERSHIP FEE. ON THE EXPENDITURE SIDE, THERE ARE LBT HATAV EXPENSES, SHOP ACT A NDOLAN EXPENSES, ADVERTISEMENT EXPENSE AND CRICKET TOURNAMENT. O N A SPECIFIC QUERY, IT WAS SUBMITTED THAT LBT ANDOLAN MEANT THE PROTEST TAKEN BY THE ASSOCIATION AGAINST THE LEVY OF LOCAL BODY TAX, WHICH WAS DETRIMENTAL TO THE INTEREST OF TRADE AND COMMERCE. FOR LA UNCHING SUCH A PROTEST, THE ASSOCIATION COLLECTED CERTAIN AMOUNTS AND SHOWED THEM UNDER THE HEAD LBT ANDOLAN REVENUE AND INCURRED EX PENSES UNDER THE HEAD LBT HATAB EXPENSES. SIMILAR IS THE POSITION REGARDING SHOP ACT ANDOLAN. THE ASSESSEE-ASSOCIATION CARR IED OUT PROTESTS AGAINST CERTAIN CLAUSES OF THE SHOP ACT FOR WHICH IT COLLECTED CERTAIN SUMS FROM ITS MEMBERS AND THEN SPENT IT. THE SAME IS TRUE FOR ADVERTISEMENT RECEIPTS AND EXPENSES. THE ASSESSEE ORGAN IZED CERTAIN CAMPAIGN FOR THE PROMOTION OF TRADE AND COMMERCE. THE A MOUNT COLLECTED FROM THE MEMBERS WAS DESCRIBED AS ADVERTISEMENT R ECEIPTS AND THE AMOUNT SPENT ON ORGANIZING SUCH AN EVENT WAS DESC RIBED AS ADVERTISEMENT COST. THE SAME STANDS FOR CRICKET TOURNAME NT REVENUE AND EXPENSES. APART FROM THAT, THERE IS MINOR IN TEREST ITA NO.2776/PUN/2017 FEDERATION OF TRADE ASSOCIATION OF PUNE 7 INCOME AND SOME AMOUNT OF MEMBERSHIP FEE. ON GOING THRO UGH THE BIFURCATION OF THE REVENUE AND THE EXPENSES SIDES FOR ALL TH E FOUR YEARS THAT HAVE BEEN TAKE NOTE OF BY THE LD. CIT(E) IN THE IMPUGNED ORDER, IT BECOMES APPARENT THAT NONE OF THE ACTIVITY IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THUS, THE ASSESSEE SATISFIE S THIS CONDITION AS WELL. 7. TO SUM UP, THE ASSESSEE FULFILS THE REQUISITE CONDITION S FOR FALLING UNDER THE HEAD CHARITABLE PURPOSE AS DEFINED U/S. 2(15) OF THE ACT. APART FROM THAT, THE LD. CIT(E) HAS NOT REFERRED TO ANY O THER DISQUALIFICATION DISENTITLING THE ASSESSEE TO REGISTRATION. OVERTURNIN G THE IMPUGNED ORDER, WE GRANT THE REGISTRATION. 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND SEPTEMBER, 2021. SD/- SD/- ( S.S. VISWANETHRA RAVI ) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 02 ND SEPTEMBER, 2021 ITA NO.2776/PUN/2017 FEDERATION OF TRADE ASSOCIATION OF PUNE 8 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE CIT(EXEMPTIONS) 3. DR, ITAT, B BENCH, PUNE 4. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 02-09-2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 02-09-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *