M/s. Sir Chottu Ram Memorial Society, Rohtak V. CIT, Rohtak

ITA 3377/DEL/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1004 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 12-11-2009
• Assessment Year: misc
• Appeal Filed On: 12-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHORE B
• Assessee Lawyers: RAJEEV CHAWLA
• Keywords: Set aside
• Section: 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : G NEW DELHI) BEFORE SHRI K.D. RANJAN, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, J UDICIAL MEMBER I.T.A. NO.3377/DEL./2008 (ASSESSMENT YEAR : NIL) SIR CHOTTU RAM MEMORIAL SOCIETY, VS. CIT, ROHTAK. CHOTTU RAM CHOWK, ROHTAK. ROHTAK. (PAN/GIR NO.AAAAS9726A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJEEV CHAWLA, ADV. REVENUE BY : SHRI KISHORE B.,SR.DR ORDER PER K.D. RANJAN, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER U/S 80G(5)(VI) OF THE INCOME-TAX ACT, 1961, PASSED BY THE COMMISSIONER OF INCOME-TAX, ROHTAK. 2. THE ONLY ISSUE FOR CONSIDERATION RELATE TO REJE CTING THE RENEWAL OF APPROVAL U/S 80G(5)(VI) OF THE INCOME-TAX ACT, 1961. ON 16.4.200 8, THE ASSESSEE FILED APPLICATION IN FORM NO.10G, ACCOMPANIED WITH A COPY OF MEMORANDUM OF ASSOCIATION, COPY OF NOTES ON ACTIVITIES, COPY OF INCOME AND EXPENDITURE ACCOUNT, RECEIPT AND PAYMENT ACCOUNT, BALANCE SHEET AND AUDIT REPORT IN FORM NO.10B ALONG WITH AN NEXURES. THE CIT CALLED FOR REPORT FROM ASSESSING OFFICER AS TO IF THE ASSESSEE FULFIL LED THE CONDITIONS REQUISITE FOR GRANT OF REGISTRATION APPLIED FOR. DURING THE COURSE OF THE HEARING, IT WAS SUBMITTED THAT TRUST WAS GRANTED REGISTRATION IN EARLIER YEARS. THE CIT E XAMINED THE OBJECTS OF THE SOCIETY AND ALSO THE ACTIVITIES OF THE TRUST DURING THE LAST TH REE YEARS. THE ASSESSEE WAS FOUND TO HAVE AWARDED THE SCHOLARSHIP, DISTRIBUTED SEWING MACHINE S AND SHAWLS AND FELICITATED THE SPORTSMEN/SPORTSWOMEN. ON THE BASIS OF ACTIVITIES, THE CIT WAS OF THE VIEW THAT SOCIETYS ACTIVITIES WERE NOT IN ACCORDANCE WITH AI MS AND OBJECTS AS ENSHRINED IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION AS REGISTERE D WITH REGISTRAR OF FIRMS & SOCIETIES. THE GRANT OF SCHOLARSHIP TO POOR, NEEDY AND MERITORIOUS STUDENTS, DISTRIBUTION I.T.A. NO.3377/DEL./2008 (A.Y. : NIL) 2 OF SEWING MACHINES TO POOR WIDOWS ETC. WERE NOT AUT HORIZED BY THE AIMS AND ARTICLES OF ASSOCIATION AND, THEREFORE, EXPENSES INCURRED IN CO NNECTION WITH THE UNAUTHORIZED ACTIVITIES WERE TO BE INCLUDED TO THE TOTAL INCOME OF THE SOCIETY AND THE INCLUSION ITSELF WILL DISQUALIFY THE SOCIETY AS PER THE PROVISIONS O F SECTION 80G(5)(I) FROM RENEWAL OF APPROVAL U/S 80G(5)(VI) OF THE ACT. THE CIT ALSO N OTED THAT SOCIETY WAS COLLECTING ROOM RENT, ACCOMMODATION RENT AND SHOP RENT FROM VARIOUS PARTIES. HE WAS OF THE OPINION THAT SOCIETY WAS ENGAGED IN LETTING OUT BUSINESS WHICH W AS NOT AUTHORIZED BY THE MEMORANDUM AND ARTICLES OF ASSOCIATION. SEPARATE B OOKS OF ACCOUNT WERE NOT MAINTAINED FOR THIS PURPOSE. THE CIT FURTHER NOTED THAT BY PU BLICATION OF NEWSPAPERS, MAGAZINES, BOOKS/PAMPHLETS AND THEIR SALES, THE ASSESSEE WAS E NGAGED IN BUSINESS ACTIVITIES. HE WAS OF THE OPINION THAT THE INCOME AND EXPENDITURE HAD NOT BEEN DEBITED IN COLUMN 11(I) OF THE FORM 10G NOR IN COLUMN 11(II) THEREOF AND THE C ONDITION OF MAINTAINING BOOKS SEPARATE FROM BOOKS OF DONATION HAVE NOT BEEN COMPL IED WITH. THEREFORE, THE SOCIETY WAS NOT ENTITLED FOR APPROVAL U/S 80G(5)(VI). THE CIT ALSO NOTED THAT SOCIETY WAS NOT AUTHORIZED TO MAKE EXPENSES ON ACCOUNT OF JAYANLTI CELEBRATION OR ON DONATIONS TO OTHERS IN ANY SHAPE. THE CIT, THEREFORE, CAME TO CONCLUSI ON THAT THE ASSESSEE WAS NOT ENTITLED FOR APPROVAL U/S 80G(50(VI) AND ACCORDINGLY APPLICA TION FOR RENEWAL OF REGISTRATION U/S 80G WAS REJECTED. 2. BEFORE US, LD.AR OF THE ASSESSEE SUBMITTED THAT ON IDENTICAL FACTS, REGISTRATION WAS GRANTED IN EARLIER YEARS. HE ALSO SUBMITTED TH AT IN CLAUSE (A) OF ARTICLE 3 OF MEMORANDUM OF ASSOCIATION, THE ASSESSEE HAS BEEN AU THORIZED TO APPLY THE INCOME FOR ANY OTHER OBJECT OF PUBLIC UTILITY FOR BENEFIT OF A LL SECTIONS OF SOCIETY IRRESPECTIVE OF THEIR CAST, COLOUR, CREED OR RELIGION. HE ALSO SUBMITTE D THAT GIVING THE PROPERTIES ON RENT IS INCOME DERIVED FROM THE PROPERTY AND, THEREFORE, I T CANNOT BE SAID THAT ASSESSEE WAS ENGAGED IN BUSINESS FOR WHICH SEPARATE BOOKS OF ACC OUNT WERE REQUIRED. AS REGARDS PUBLICATION OF SALES OF BOOKS, NEWSPAPERS, PAMPHLET S ETC., IT HAS BEEN SUBMITTED THAT THE NOMINAL AMOUNT WAS RECEIVED AGAINST THE EXPENDITURE INCURRED AND, THEREFORE, ASSESSEE WAS NOT ENGAGED IN THE BUSINESS OF PUBLICATION AS C ONTENDED BY CIT. HE ALSO SUBMITTED THAT THE EXPENDITURE INCURRED ON JAYANTI CELEBRATIO N, AND THE DONATIONS FOR WIDOW WAS I.T.A. NO.3377/DEL./2008 (A.Y. : NIL) 3 WITHIN THE CHARITABLE ACTIVITIES OF THE SOCIETY. T HEREFORE, THE ASSESSEE IS ENTITLED FOR REGISTRATION U/S 80G OF THE ACT. ON THE OTHER HAND , LD.SR.DR SUPPORTED THE ORDER OF CIT. 3. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. LD.CIT HAS DENIED THE EXTENSION OF REGISTRATION U/S 80G ON THE GROUND THAT THE ASSESSEE WAS CARRYING ON BUSINESS OF LETTING OUT PROPERTIES, PUBLICATION AND ALSO DONATING THE AMOUNT TO WIDOWS, GRANTING SCHOLARSHIPS ETC. UNDER SECTION 11(1)(A) OF THE INCOME-TAX ACT, 1961, INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT TO WHICH SUCH INCO ME IS APPLIED FOR THE PURPOSE OF TRUST SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE AS SESSEE. THE ASSESSEE OWNS PROPERTIES WHICH HAVE BEEN LET OUT ON RENT. LETTING OUT PROPE RTY ON RENT CANNOT BE SAID THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF LETTING OUT. LETTING OUT OF THE ROOMS AND SHOP RENT IS INCOME DERIVED FROM THE PROPERTY AND, THEREFORE, THE INCOME EARNED FROM THE PROPERTY TO THE EXTENT IT IS APPLIED FOR THE OBJECTS OF THE TRUST WILL NOT FORM PART OF THE TOTAL INCOME. LIKEWISE, ASSESSEE IS ENGAGED IN PUBLICATION OF BOO KS, NEWSPAPERS, ETC. THE AMOUNT REALISED IS A NOMINAL AS COMPARED TO EXPENDITURE I NCURRED. FOR EXAMPLE IN F.Y. 2004- 05, THE ASSESSEE INCURRED RS.1,00,966/- AS AGAINST THE SALE FROM BOOKS ETC. WAS RS.11,840/-. LIKEWISE IN F.Y.2005-06, THE EXPENDIT URE INCURRED WAS RS.38,000/- AS AGAINST INCOME OF RS.9,741/-. SIMILARLY IN F.Y. 200 6-07, THE EXPENDITURE WAS RS.71,062/- AS AGAINST INCOME OF RS.8,940/-. THUS, FROM THESE DETAILS, IT IS CLEAR THAT THE ASSESSEE HAS REALIZED A NOMINAL AMOUNT AS AGAINST THE EXPENDITUR E. THEREFORE, IT CANNOT BE SAID THAT ASSESSEE IS ENGAGED IN THE BUSINESS FOR WHICH SEPAR ATE BOOKS OF ACCOUNT SHOULD BE MAINTAINED. 4. NOW, COMING TO THE ACTIVITIES RELATING TO DONATI ONS MADE TO WIDOWS, SCHOLARSHIPS GRANTED, JAYANTI CELEBRATION ETC. THESE ARE EXPENDI TURE INCURRED FOR THE OBJECTS OF THE TRUST. THE ASSESSEE WAS GRANTED REGISTRATION ON IDENTICAL FACTS IN EARLIER YEARS. THEREFORE, WE DO NOT FIND NAY REASON WHY THE ASSESSEE SHOULD BE DENI ED THE BENEFIT OF SECTION 80G. IT IS NOT THE CASE OF THE REVENUE THAT ASSESSEE WAS FOUND TO HAVE VIOLATED THE PROVISIONS OF SECTIONS 13 OR 11. AT THE TIME OF GRANT OF REGIST RATION, WHAT IS TO BE SEEN IS WHETHER THE OBJECTS ARE CHARITABLE OR NOT. SINCE, THE ASSESSEE HAS BEEN GRANTED ON IDENTICAL FACTS, THE REGISTRATION IN EARLIER YEARS, WE DO NOT FIND ANY R EASON AS TO WHY THE BENEFIT OF I.T.A. NO.3377/DEL./2008 (A.Y. : NIL) 4 REGISTRATION SHOULD BE DISALLOWED TO THE ASSESSEE. WE ACCORDINGLY SET ASIDE THE ORDER OF CIT AND DIRECT HIM TO GRANT REGISTRATION U/S 80G. 5. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. 6. ORDER PRONOUNCED IN OPEN COURT ON 20.11.2009. (GEORGE MATHAN) (K.D. RANJAN) JUDICIAL MEMBER. ACCOUNTANT MEMBER DATED, NOV. 20, 2009. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT, ROHTAK. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. BY ORDER (ITAT, NEW DELHI). I.T.A. NO.3377/DEL./2008 (A.Y. : NIL) 5