Neesu Human Resource & Welfare Society, Mathura V. C.I.T.-I, Agra

ITA 333/AGR/2013

• Counselvise Citation: 33320314 RSA 2013
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-06-2014
• Assessment Year: misc
• Appeal Filed On: 14-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDERJI T SINGH
• Section: 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO. 333/AGRA/ 2013 NEESU HUMAN RESOURCE & VS. COMMISSIONER OF INCOME TAX-1, WELFARE SOCIETY, AAYKAR BHAWAN, 43, CHANAKYA BHAVAN, LAXMI NAGAR AGRA. KRISHNA NAGAR, MATHURA (PAN AABAN 6281 E) (APPELLANT) (RESPONDENT) APPELLANT BY : SRI ANURAG S INHA, ADVOCATE RESPONDENT BY : SRI INDER JI T SINGH, CIT.D.R. DATE OF HEARING : 04.06.2014 DATE OF PRONOUNCEMENT : 04.06.2014 ORDER PER JOGINDER SINGH, JUDICIAL MEMBER: 1. BY WAY OF THIS APPEAL, ASSESSEE APPELLANT HAS CH ALLENGED CORRECTNESS OF THE ORDER DATED 12.08.2013 PASSED BY THE LEARNED COMMIS SIONER OF INCOME TAX-1, AGRA, REJECTING THE REGISTRATION AS A CHARITABLE IN STITUTION UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961. 2. THE GRIEVANCES RAISED BY THE ASSESSEE ARE AS UND ER:- ITA NO.333/AGRA/2013 2 1. BECAUSE, THE LEARNED CIT HAS ERRED IN LAW AS WEL L AS IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN REJECTING THE APPL ICATION FILED BY THE APPELLANT SEEKING REGISTRATION UNDER SECTION 12 AA OF THE ACT. 2. BECAUSE, THE REGISTRATION HAS BEEN DENIED ON IRR ELEVANT CONSIDERATIONS WHICH ARE NOT MATERIAL AT THE TIME O F GRANT OF REGISTRATION. 3. BECAUSE, THE LEARNED CIT HAS ERRED IN LAW IN DRA WING ADVERSE CONCLUSION IN THE CASE OF THE APPELLANT SOLELY ON T HE BASIS OF DOUBT THAT NO ONE MAKE CHARITY BY TAKING LOANS. 4. BECAUSE, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE OBSERVATIONS MADE AND CONCLUSIONS DRAWN IN THE IMPU GNED ORDER ARE EITHER PRESERVE OR AGAINST THE FACTS OF THE CAS E. 5. BECAUSE, IN ANY VIEW OF THE MATTER ORDER DATED 1 2.08.2013 IS BAD ON FACTS AND IN LAW AND THEREFORE, DESERVES TO BE Q UASHED. 3. BRIEFLY STATED, MATERIAL FACTS OF THE CASE ARE L IKE THIS. THE ASSESSEE MOVED AN APPLICATION ON 28.01.2013 IN FORM NO. 10A FOR GR ANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. 4. DURING THE COURSE OF HEARING, ON THIS APPLICATIO N, IT WAS NOTICED BY THE LEARNED COMMISSIONER THAT THE ASSESSEE HAS TAKEN LO ANS FROM DIFFERENT PERSONS AND IT IS WITH THE HELP OF THESE BORROWED FUNDS, TH E ASSESSEE IS INTENDING TO CARRYOUT THE ACTIVITIES OF THE ASSESSEE INSTITUTION . LEARNED COMMISSIONER WAS OF THE VIEW THAT NO ONE MAKES CHARITY BY TAKING LOANS AND THAT SUCH ACTIVITIES CREATES DOUBT WITH REGARD TO MOTIVE OF THE SOCIETY . ACCORDINGLY, LEARNED COMMISSIONER REJECTED THE APPLICATION FOR REGISTRAT ION AND BY DOING SO HE OBSERVED AS FOLLOWS:- ITA NO.333/AGRA/2013 3 3. FROM PERUSAL OF COPIES OF AUDITED BALANCE SHEET AS ON 31.03.2013, IT IS NOTICED THAT THE ASSESSEE SOCIETY HAS TAKEN UNSECURED LOANS TO THE TUNE OF RS.82,80,873/- FROM 9 PERSONS/ENTITIES INCLUDING SH. DHEERAJ GUPTA, M/S DHEERAJ GUPTA & SO NS (HUF), SH. NEERAJ SHARMA M/S NERAJ SHARMA & SONS (HUF) SH. KULBIR SINGH. IT IS ALSO WORTH MENTIONING THAT SH. DHEERAJ GUPTA, SH. NEERAJ SHARMA AND SH. KULBIR SINGH ARE ALSO OFFICE BEARERS OF THE ASSESSEE SOCIETY. THE ASSESSEE SOCIEITY HAS ALSO TA KEN UNSECURED LOANS OF RS.25,57,091/- FROM A SISTER CONCERN OF TH E GROUP NAMED NEESU CONSTRUCTION PVT. LTD. ITS BEING A SISTER CO NCERN OF THE GROUP IS EVIDENT FROM THE SIGNATUIRES ON LOAN CONFIRMATIO N LETTERS OF SH. KULDEEP SINGH AND NEESU CONSTRUCTION PVT. LTD. FILE D BY THE ASSESSEE SOCIETY. THE ASSESSEE SOCIETY HAS ALSO SHO WN SUNDRY CREDITORS TO THE TUNE OF RS.49,62,162/-. THE INCOME & EXPENDITURE ACCOUNT OF THE ASSESSEE SOCIETY SHOWN TRANSACTION O NLY TO THE TUNE OF RS.65,589/- WHEREAS THE BALANCE SHEET TALLIES AT RS .1,39,02,583/-. NO ONE MAKES CHARITY BY TAKING LOANS. IT CREATES DO UBT WITH REGARD TO MOTIVE OF THE SOCIETY. THE STATEMENT OF AFFAIRS/ ACCOUNTS PARTAKE THE NATURE OF BUSINESS. FURTHER, THE ASSESSEE SOCIE TY HAS CLAIMED EXPENSES OF RS.36,500/- INCURRED ON CHARITABLE ACTI VITIES BUT NO PROOF OF CARRYING OUT ANY CHARITABLE ACTIVITY WAS P RODUCED BEFORE THE UNDERSIGNED. 4. IN VIEW OF ABOVE AND AFTER CONSIDERING ALL THE F ACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, THE A PPLICATION DATED 28.01.2013 IN FORM NO.10A FOR GRANT OF REGISTRATION U/S 12AA OF I.T. ACT, 1961 IS HEREBY REJECTED. 4.1 THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEF ORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF T HE APPLICABLE LEGAL POSITION. WE FIND THAT LEARNED COMMISSIONER HAS REJECTED THE APP LICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT ON THE BASIS OF SWEEPING GE NERALIZATION HAVING DOUBTS ON THE ACTIVITIES OF THE ASSESSEE APPLICANT. IN OUR CONSIDERED VIEW AT THE STAGE OF GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT ALL THAT IS REQUIRED TO BE SEEN ITA NO.333/AGRA/2013 4 IS WHETHER THE OBJECTS OF THE APPLICANT ARE INDEED CHARITABLE IN NATURE OR NOT, AS ALSO THE FACT THAT ACTIVITIES OF THE APPLICANT ARE GENUINE. THERE ARE NO SPECIFIC ADVERSE FINDINGS ON ANY OF THESE TWO ASPECTS OF THE MATTER. WHILE LEARNED COMMISSIONER HAS OBSERVED THAT THERE ARE DOUBTS WIT H REGARD TO THE NOTICE OF THE SOCIETY HE HAS NOT ELABORATED ON SAME. AS PER HIS O BSERVATION THAT NO ONE CAN DO CHARITY BY TAKING LOANS, WE ARE UNABLE TO SEE ANY RELIANCE OF SWEEPING GENERALIZATION IN THE PRESENT CONTEXT BECAUSE IT IS NOT THE CHARITY, WHICH IS BEING DONE OUT OF THE BORROWED FUNDS, BUT IT IS A CHARITA BLE ACTIVITY, WHICH IS BEING DONE WITH THE HELP OF BORROWING AS MAY BE NECESSARY TO C ONDUCT THE ACTIVITIES OF THE ASSESSEE APPLICANT. IT COULD PERHAPS MAKE SENSE PEO PLE DO NOT BORROW MONEY TO GIVE THE SAME IN CHARITY, BUT IN ORDER TO CARRYOUT A SYSTEMATIC ACTIVITY, WITH CHARITABLE OBJECTS, IT MAY BE POSSIBLE TO RESORT TO BORROWING. IN VIEW OF THE MATTER, MERELY BECAUSE AND INSTITUTION HAS BORROWED FUNDS, ONE CANNOT CONCLUDE THAT THE OBJECTS OF SUCH INSTITUTION CANNOT BE CHAR ITABLE. THE ASSESSEE MAY BORROW FUNDS FOR FULFILLMENT OF ITS OBJECTS, THEREFORE, WE HAVE STATED IN FRAMING WORDS, THE MERE FACTS OF BORROWING CANNOT BE AGAINST THE A SSESSEE AT THE STAGE OF GRANT OF REGISTRATION. IN VIEW OF ALL THIS DISCUSSION, AS AL SO BEARING IN MIND ENTIRETY OF THE CASE, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE LEARNED COMMISSIONER FOR FRESH ADJUDICATION. WHILE DOING SO , THE ASSESSEE BE ITA NO.333/AGRA/2013 5 GIVEN REASONABLE OPPORTUNITY OF HEARING AND DISPOSE OF SUCH PLEA BY WAY OF A SPEAKING ORDER IN ACCORDANCE WITH LAW. WE DIRECT SO. 6. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT, IN TH E PRESENCE OF LEARNED REPRESENTATIVES FROM BOTH SIDES, AT THE CONCLUSION OF HEARING ON 04.06.2014. SD/- SD/- (PRAMOD KUMAR) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 04 JUNE, 2014 AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY