Safe Blood Organisation, New Delhi V. ITO (HQRS) (E), New Delhi

ITA 3111/DEL/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7074 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 19-10-2011
• Assessment Year: misc
• Appeal Filed On: 22-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHANTY
• Assessee Lawyers: UPENDRA BHAT
• Keywords: Opportunity of being heard; Additional evidence
• Section: 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I NEW DELHI) BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SHRI B.K. HALDAR, ACCOUNTANT MEMBER I.T.A. NO.3111/DEL/2010 SAFE BLOOD ORGANIZATION, ITO, 617-HEMKUNT CHAMBERS, PLOT NO.15, 3 RD FLOOR, 89-NEHRU PLACE, NEW DELHI. V. LAXMI NAGAR, DISTT. C ENTRE, NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AABTS AABTS AABTS AABTS- -- -4538 4538 4538 4538- -- -C CC C APPELLANT BY : SHRI UPENDRA BHAT, C.A. RESPONDENT BY : SHRI S. MOHANTY, SR. DR ORDER PER B.K. HALDAR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD DIT (EXEMPTION), DELHI DATED 26.5.2010 REFUSING REGISTRAT ION U/S 80G(5)(VI) OF THE ACT. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND S OF APPEALS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD DIT WAS NOT JUSTIFIED IN REFUSING TO RENEW THE REGISTRATION GRANTE D TO SAFE BLOOD ORGANIZATION, A CHARITABLE ORGANIZATION. 2. THAT THE ORGANIZATION IS EXISTING ON CHARITABLE ACTIV ITIES AND THERE IS NO CONTRAVENTION OF CONDITIONS FOR APPROVAL U/S 80G(5) OF THE ACT. 3. THAT WITH THE AMENDMENT OF THE ACT W.E.F. 1.4.2009 THERE IS NO NEED FOR RENEWAL OF 90G EXEMPTION ONCE GRANTED., ITA NO3111/DEL/10 2 4. THERE IS NO APPLICATION OF INCOME OUTSIDE INDIA AS CON SIDERED BY THE LD DIT. 5. THAT THE INSTITUTION IS BEING UNDER BONA FIDE BELIEF AND HAS NOT DONE ANY DEFAULT. 6. THAT IS PRAYED ORDER OF CANCELLATION MAY BE SET ASIDE AND ON SUCH OTHER RELIEF GRANTED. 7. THAT THE APPELLANT RESERVES THE RIGHT TO ADD, AMEND O R DELETE ANY OF THE GROUNDS. 2. THE ASSESSEE WAS FORMED IN APRIL, 1998 UNDER THE SOC IETIES REGISTRATION ACT. THE OBJECTIVE WAS TO CREATE AWARENE SS AND KNOWLEDGE AMONGST THE MASSES FOR VOLUNTARY BLOOD DONAT ION. THE SOCIETY WAS GRANTED REGISTRATION U/S 80G(5)(VI) OF THE ACT BY THE DIT (E), NEW DELHI FOR THE PERIOD 1.4.2003 TO 31.3.2006 ON 4.11.2003 AND FOR THE PERIOD 1.4.2006 TO 31.3.2009 VIDE ORDER DAT ED 25.6.2007. THE ASSESSEE FILED AN APPLICATION FOR RENEWAL OF REGISTRATI ON U/S 80G(5)(VI) OF THE ACT ON 23.12.2009. THE LD DIT (E) REQUIRED T HE ASSESSEE TO FURNISH FOLLOWING DETAILS. I) JUSTIFY WITH THE BILLS/VOUCHERS OF THE INCOME APPLI ED FOR CHARITABLE ACTIVITIES ALONG WITH PROOF OF BENEFICIAR IES. II) PLEASE FILE THE UNDERTAKING THAT THERE SHALL BE N ON INFRINGEMENT TO THE PROVISO TO SECTION 2(15) OF THE I T ACT. III) A NOTE ON ACTIVITIES OF THE TRUST/SOCIETY SINCE I TS INCEPTION/DURING LAST THREE YEARS ALONG WITH SUPPORTIN G DOCUMENTARY EVIDENCE. IV) AUDITED ACCOUNTS FOR THE PERIOD ENDING 31.10.200 9 SINCE THE INCEPTION OF THE SOCIETY/TRUST OR LAST THREE YEARS WHI CHEVER IS APPLICABLE. ITA NO3111/DEL/10 3 V) A CERTIFICATE FROM THE MANAGING TRUSTEES THAT THER E IS NO CHANGE IN THE OBJECTIVES ACTIVITIES OF THE TRUST. IN C ASE THERE HAS BEEN ANY CHANGE IN OBJECTIVES/ACTIVITIES THAT MAY BE POINTED OUT. VI) DETAILS OF EXPENDITURE INCURRED ON RELIGIOUS ACTI VITIES. VII) AN AFFIDAVIT FROM THE MANAGING TRUSTEE THAT THE RE HAS BEEN NO INFRINGEMENT OF PROVISIONS OF SECTION 13 OF THE IT ACT SINCE THE INCEPTION OF THE SOCIETY DURING THE LAST THREE YEARS TRUST, WHATEVER IS APPLICABLE. VIII) DETAILS OF DONATIONS RECEIVED AND MADE DURING THE LAST THREE YEARS OR SINCE THE INCEPTION OF THE TRUST/SOCIETY INCL UDING CORPUS DONATIONS WITH COMPLETE NAME ADDRESS & PAN. IX) PROOF OF FILING RETURNS OR INCOME FOR LAST TWO YE ARS. X) PLEASE JUSTIFY YOUR CLAIM FOR EXEMPTION U/S 80G. XI) PLEASE FURNISH CONTACT NO. & E-MAIL ADDRESS OF THE APPLICANT & ITS MEMBERS. XII) A CERTIFICATE FROM THE AUDITOR THAT THE TRUST/ SOCIETY IS MAINTAINING SEPARATE BOOKS OF ACCOUNTS IN RESPECT OF P ROFIT FROM BUSINESS AND THE DONATIONS RECEIVED BY IT HAVE NOT BEEN USED DIRECTLY OR INDIRECTLY FOR THAT BUSINESS. XIII) PLEASE EXPLAIN THE CHANGE IN FACT & CIRCUMSTANC ES OF THE CASE SINCE THE LAST REJECTION ORDER. THE ASSESSEE COMPLIED WITH THE SAME. 3. THE LD DIT (E) NOTED THAT THE APPLICANT HAD WRIT TEN OFF AN AMOUNT OF `.5.92 LAKHS AS APPLICATION OF INCOME. THE APPLICA NT FAILED TO EXPLAIN HOW THE SAME WAS PERMISSIBLE. HE ALSO NOTED THAT FOREIGN STUDENTS WERE SPONSORED FOR EDUCATION AND SUBSTANTIAL EXPENSES WER E INCURRED ON THIS ACCOUNT. THE LD DIT(E) OPINED THAT THE SPON SORING OF FOREIGN STUDENTS WHO WERE NOT CITIZENS OF INDIA WOULD AMOUNT T O APPLICATION OF ITA NO3111/DEL/10 4 INCOME OUTSIDE INDIA. ACCORDING TO HIM, THE SAME WAS N OT PERMISSIBLE. IT WAS ALSO NOTED BY HIM THAT THE SOCIETY COLLECTED A N AMOUNT OF `.7.41 LAKHS UNDER STUDENTS SUPPORT PROGRAM. THE NATURE OF TH ESE RECEIPTS WERE ALSO NOT EXPLAINED. AS THE APPLICANT SOCIETY FAIL ED TO PROVIDE PROPER EXPLANATION WITH REGARD TO THE ABOVE ISSUES, TH E LD DIT (E) REFUSED TO GRANT EXEMPTION U/S 80G(5)(VI) OF THE ACT. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL. 4. THE ASSESSEE HAS FILED PAPER BOOK IN TWO PARTS, PART-I I OF THE PAPER BOOK CONTAINING PAGES 1-39 WERE NOT PRODUCED O R FILED BEFORE THE LD DIT(E). THE SAME WAS FURNISHED FOR THE FIRST T IME BEFORE THE TRIBUNAL. THE ASSESSEE HAS NOT MADE ANY APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE. IT HAS ALSO NOT BEEN SHOWN AS TO WHY THE DETAILS WERE NOT FURNISHED BEFORE THE DIT(E). THE RELEVANCE OF THE DOCUMENTS FOR DECIDING THE ISSUE AT HAND HAS ALSO NOT BEEN EXPLAI NED. WE, THEREFORE, DO NOT CONSIDER PART-II OF THE PAPER BOOK AS PART OF THE TRIBUNALS RECORD. 5. BEFORE US, THE LD AR FOR THE ASSESSEE HAS MADE THE FOL LOWING SUBMISSIONS:- THE SOCIETY HAD IMPORTED KITS REQUIRED FOR BLOOD TR ANSFUSION UNDER EMERGENCY CIRCUMSTANCES AND WERE IN SHORT SUPPLY IN INDIA DUE TO DISTRIBUTION PROBLEMS ETC. THE SUPPLIER C OMPANY HAD RAISED INVOICES OF HIGHER VALUES & THE SAME WAS CONFRONT ED BY THE SOCIETY. KIND ATTENTION OF THE BENCH IS DRAWN TO PAGE NO.18 & 23 OF THE PAPER BOOK-I. ON PAGE NO.18, THE AMOUNT R ECOVERABLE IS SHOWN AT `.7,95,437.79. THE BASIS ARE EXPLAINED ON P AGE 23 O THE PAPER BOOK I UNDER NOTES ON ACCOUNTS, ALSO REFER PAGE NO.44 OF THE PAPER BOOK. ITA NO3111/DEL/10 5 KIND ATTENTION OF THE BENCH IS ALSO INVITED TO PAGE N O.9 & 12 OF THE PAPER BOOK PART-II, GIVING THE DETAILS/FIGURES OF AMOUNTS RECEIVABLE, INCOME & EXPENDITURE ACCOUNT E4XCLUSIVE FOR KITS AS ON 31.3.2005 & NOTES ON ACCOUNTS EXPLAINING THE SAME. ACCORDINGLY, IT IS CLEAR THAT PURCHASES/SALES AMOUNTS RE COVERABLE & CREDITORS WERE DULY REFLECTED IN PREVIOUS YEARS FINA NCIAL STATEMENTS ALONG WITH PROPER EXPLANATIONS IN NOTES ON A CCOUNTS & THE AMOUNT OF `.5.92 LAKHS WRITTEN OFF WAS AS FINAL ADJUSTMENT OUT OF THESE TRANSACTIONS. KIND ATTENTION OF THE BENCH IS ALSO INVITED TO PAGE N O.44 OF PAPER BOOK PART-I GIVING THE FULL DETAILS OF THIS AMOUNT IN NOTICE TO ACCOUNTS. THE ABOVE REFERRED DOCUMENTS WERE AVAILABLE BEFORE W ORTHY DIRECTOR & WAS DULY EXPLAINED TO HIM. HOWEVER, HE DI D NOT TAKE COGNIZANCE OF THE SAME. REGARDING THE SPONSORING OF THE FOREIGN STUDENTS: SAFE BLOOD ORGANIZATION IN COLLABORATION WITH CHFI UNDERTAKES TO EDUCATE/AWARE/TRAIN VOLUNTEERS AND STUDENTS IN THE FI ELD OF HEALTH CARE IN INDIA. SPECIAL EMPHASIS IS BEING LAID O N THE AWARENESS AND TRAINING RELATED HIV/AIDS AND VOLUNTARY BLOOD DONATION TO FULFILL ITS OBJECTIVES. IN THIS CONNECTION, CFHI SPONSORS STUDENTS MOSTLY FROM USA & CONTRIBUTES FULLY TOWARDS THE EXPENSES OF THESE STUDENTS A ND VOLUNTEERS WHICH UNDERGO THE AWARENESS AND TRAINING PR OGRAMS IN INDIA. IT IS IMPORTANT TO NOTE THAT WHILE IMPARTING TO THOSE FOREIGN STUDENTS AND VOLUNTEERS, WE ALSO TRAIN OUR OWN VOLUNTEE RS ALONG WITH THEM THUS MOST OF THE TIMES WITHOUT INCURRING ANY ADDITIONAL COST. MAJOR PART OF THE TRAINING BEING IN THE FIELD THE ITA NO3111/DEL/10 6 INDIAN SOCIETY AS A WHOLE IS ENLIGHTENED AND BENEFIT ED & INFORMED HIV/AIDS AND ARE MOTIVATED TOWARDS VOLUNTA RY BLOOD DONATION. IT IS CLEAR THAT NEITHER ANY FOREIGN STUDENT IS SPONSOR ED BY THE SOCIETY NEITHER ANY AMOUNT IS SPENT OUTSIDE INDIA. IN FACT NO AMOUNT IS SPENT ON THIS ACTIVITY BY THE SOCIETY AND A LL EXPENSES ARE BORN BY CHFI. (KINDLY REFER TO PAGE 70 OF THE P APER BOOK REGARDING THE REPORT OF CHFI. IT IS ACCORDINGLY CLEAR THAT THE LD DIRECTOR ERRED O N THE ISSUE WHOLE DISCUSSING THE ISSUE. WE CONFIRM THAT NO EXPENSES ARE BEING SPENT OUT OF IND IA & AMOUNT SPENT IN INDIA ON FOREIGN STUDENTS IS FULLY CON TRIBUTED BY CHFI. REGARDING THE STUDENTS SUPPORT PROGRAMME `.7,41,226/- WERE RECEIVED BY THE SOCIETY FROM CFHI REGARDING THE ABOVE REFERRED PURPOSE I.E. TO MEET THE EXPENSES O F STUDENTS SPONSORED AS EXPLAINED ABOVE. OUT OF THIS THE SOCIETY SP ENT `.4,94,338/- ON THE PROJECT AND SAVES `.2,50,000/- (K IND ATTENTION OF THE BENCH IS ALSO INVITED TO PAGE NO.44 POINT 4 OF PAPER BOOK PART-I GIVING THE FULL DETAILS OF THIS AMOUNT IN NOTI CE TO ACCOUNTS). KINDLY REFER PAGE 38-40 PAPER BOOK PART-II. IN VIEW OF THE ABOVE SUBMISSIONS IT IS PRAYED THAT THE ORDER OF THE WORTHY DIRECTOR INCOME TAX EXEMPTION OBE SET ASID E AND WORTHY DIRECTOR BE DIRECTED TO GRANT EXEMPTION U/S 8 0G OF THE IT ACT.. 6. IT WAS THEREFORE, CONTENDED BY HIM THAT THE LD D IT (E) WAS NOT JUSTIFIED IN REFUSING TO REGISTER THE SOCIETY U/S 80G(5 )(VI) OF THE ACT. ON ITA NO3111/DEL/10 7 BEING ASKED BY THE BENCH AS TO WHETHER THE SOCIETYS R EGISTRATION U/S 12A OF THE ACT SUBJECT THE LD AR FOR THE ASSESSEE HAS STAT ED THAT SUCH REGISTRATION IS AVAILABLE TO THE APPLICANT. 7. THE LD DR IN ADDITION TO RELYING ON THE ORDER OF LD DIT(E) CONTENDED THAT THE ASSESSEE DID NOT FURNISH ANY EXPLANAT ION WITH REFERENCE TO QUERIES RAISED BY THE LD DIT (E) AS IS EVI DENCED FROM THE IMPUGNED ORDER OF THE LD DIT(E). IT WAS, THEREFORE, CONTENDED BY HER THAT THE EXPLANATION FURNISHED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL MAY NOT BE ACCEPTED AND THE ORDER OF T HE LD DIT (E) BE CONFIRMED. 8. IN THE REJOINDER, THE LD AR FOR THE ASSESSEE SUBMITT ED THAT THE AMOUNT OF `.7.41 LAKHS WAS RECEIVED TOWARDS STUDENTS SUPP ORT PROGRAM OUT OF WHICH THE APPELLANT SPENT AN AMOUNT O F `.4,94,338/- ON SPONSORED STUDENTS (FOREIGN). 9. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. FROM THE AUDITED ACCOUNT FOR THE PERIOD 1.4.2007 TO 31.3.200 8 WHICH IS AVAILABLE IN THE ASSESSEES PAPER BOOK PAGES 36-44, WE HAVE NOTED T HAT THE FACTS MENTIONED BY THE LD DIT(E) ARE TRUE. WE ALSO FIND THAT IN THAT YEAR, THE ASSESSEE HAD WRITTEN OFF THE WHOLE AMOUNT OF `.19,48,656/- RELATING TO THE OPENING STOCK OF KITS WITH THE REMAR KS GOODS EXPIRED W/O. HOWEVER, IN THE AUDITED ACCOUNT FOR THE FINA NCIAL YEAR 2008-09 THE ASSESSEE HAS NOT SHOWN ANY RECEIPT OR EXPENDITURE ON ACCOUNT OF STUDENTS SUPPORT PROGRAM CFHI. IT HAS ALSO NOT SHOWN ANY EXPENDITURE ON ACCOUNT OF SPONSORED STUDENTS (FOREIGN). FOR THE PE RIOD UP TO 31.3.2009, THE ASSESSEE ALREADY HELD A VALID CERTIFICAT E U/S 80G OF THE ACT. THE LD DIT(E) WAS TO CONSIDER RENEWAL OF THE SA ME FOR THE SUBSEQUENT PERIOD. AS THE LD AR FOR THE ASSESSEE HAS CONTE NDED THAT ITA NO3111/DEL/10 8 THE APPLICANT HOLDS A VALID CERTIFICATE U/S 12A OF TH E ACT AND IN THE FACTS AND CIRCUMSTANCES MENTIONED ABOVE, WE DEEM IT FI T TO SET ASIDE THE IMPUGNED ORDER OF THE LD DIT(E) AND REMIT THE MATTE R BACK TO HIS FILE WITH THE DIRECTION THAT THE CONTENTION OF THE APPEL LANT THAT IT HOLDS A VALID REGISTRATION CERTIFICATE U/S 12A OF THE ACT SHOU LD BE VERIFIED AND THEREAFTER A SPEAKING ORDER BE PASSED IN ACCORDANCE W ITH LAW AFTER GIVING THE APPELLANT ADEQUATE OPPORTUNITY OF BEING HEARD. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. 11. ORDER PRONOUNCED IN THE OPEN COURT ON THE 28TH DAY OF OCTOBER, 2011. SD/- SD/- (DIVA SINGH) (B.K. HALD AR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 28.10.2011. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO3111/DEL/10 9 DATE OF HEARING 19.10.2011 DATE OF DICTATION 20.10.2011 DATE OF ORDER SIGNED BY THE HON'BLE MEMBER. 28.10.2011 DATE OF ORDER SENT TO THE CONCERNED BENCH 28.10.2011