Yanam Agnikula Kshatrya Welfare & Service Organisation, Yanam V. TJE CIT , Rajahmundry

ITA 35/VIZ/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6789 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-07-2016
• Assessment Year: misc
• Appeal Filed On: 03-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K DEVARATHNA KUMAR
• Assessee Lawyers: D BALAJI
• Section: 12AA; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 3 5 / VIZ /201 4 YANAM AGNIKULAKSHATRIYA WELFARE & SERVICE ORGANIZATION, D.NO. 8 - 8 - 032, KOTHAPETA, YANAM . V S . CIT, RAJAHMUNDRY . PAN NO. AAAAY 1063 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D. BALAJI C A . DEPARTMENT BY : SHRI K. DEVA RATHNA KUMAR CIT DR DATE OF HEARING : 30 / 0 6 /201 7 . DATE OF PRONOUNCEMENT : 11 / 0 8 /201 7 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX, RAJAHMUNDRY , DATED 2 8 / 11 /201 3 , WHEREBY REGISTRATION UNDER SECTION 12AA HAS BEEN REJECTED. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT ASSESSEE SOCIETY NAMELY , YANAM AGNIKULAKSHATRIYA WELFARE & SERVICE ORGANIZATION FILED AN APPLICATION IN FORM NO. 10 - A DATED 24/12/2010 FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. THE LD. COMMISSIONER HAS REJECTED THE APPLICATION FILED BY THE ASSESSEE DATED 08/06/2011 ON THE GROUND T H A T ASSESSEE - SOCIETY IS CREATED FOR THE BENEFIT OF ONE PARTICULAR COMMUNITY 2 ITA NO.35/VIZ/2014 (YANAM AGNIKULA KSHATRYA WELFARE & SERVICE) AND ONE OF THE OBJECTS IS A L S O RELIGIOUS IN NATURE. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE ITAT, WHERE VIDE ORDER DATED 03/05/2013 DIRECTED THE LD. COMMISSIONER TO RECONSIDER THE APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. THE MAIN OBJECTS OF THE SOCIETY ARE AS UNDER: - (I) TO AMELIORATE THE LIVING CONDITIONS OF THE DOWNTRODDEN AND WEAKER SECTIONS OF THE SOCIETY, IRRESPECTIVE OF CASTE, COLOUR, CREED, RELIGION AND SEX. (II) TO PROVIDE AID AND ASSISTANCE TO THE DISPLACED PEOPLE WHO LOST THEIR L I VEL I HOOD DUE TO THE INCREASED COMMERCIAL/ INDUSTRIAL ACTIVITIES ON THE SHORES YANAM AND OTHER PLACES. (III) TO PROVIDE HELP AND ASSISTANCE TO THE VICTIMS OF FIRE, FAMINE, FLOODS ETC. NATURAL CALAMITIES AN D OTHER DISTRESS CONDITIONS. (IV) TO PROVIDE HELP TO THE POOR STUDENTS (V) TO UNDERTAKE OTHER ACTIVITIES OF PUBLIC UTILITY AND OF CHARITABLE NATURE. (VI) TO RECEIVE DONATIONS FOR SITE FUND, BUILDING FUND AND DONATIONS TO ANY/OR OTHER FUNDS LEGACIES, GRANTS, AID AND ASSISTANCE FROM THE CENTRAL AND STATE GOVERNMENTS, PUBLIC/LOCAL BODIES, INDIVIDUALS FOR THE ATTAINMENT OF THE OBJECTS OF THE SOCIETY. (VII) TO DO ALL OTHER ACTS, DEEDS AND THINGS AS ARE NECESSARY AND CONDUCTIVE FOR THE ATTAINMENT OF THE OBJ ECTIVE OF THE SOCIETY. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE SOCIETY IS CREATED WITH A MAIN OBJECT TO HELP THE POOR AND UNEDUCATED STUDENTS AND TO PROVIDE AID AND ASSISTANCE TO THE DISPLACED PEOPLE AND HELPLESS PEOPLE. FROM THE ABOVE, PRIMA - FACIE IT APPEARS THAT THE ASSESSEE SOCIETY IS EXISTED TO DO CHARITY FOR THE POOR STUDENTS AND HELPLESS POOR AND NEGLECTED PEOPLE. FROM THE STATEMENT OF ACCOUNTS, THE ASSESSEE HAS INCURRED FINANCIAL ASSISTANCE FOR EDUCATION FOR THE FINANCIAL YEAR 201 0 - 11 18,000/ - ; FINANCIAL YEAR 2011 - 12 32,000/ - AND FINANCIAL YEAR 3 ITA NO.35/VIZ/2014 (YANAM AGNIKULA KSHATRYA WELFARE & SERVICE) 2012 - 13 33,000/ - ; FINANCIAL ASSISTANCE FOR MEDICAL 15,000/ - , 28,000/ - AND 83,000/ - RESPECTIVELY ; FIN A N C IAL ASSISTANCE FOR FLOOD VICTIMS 10,000/ - FOR FINANCIAL YEAR 2010 - 11 , FINANCIAL ASSISTANCE TO FIRE VICTIMS 42,000/ - FOR FINANCIAL YEAR 2011 - 12 , PURCHASE OF SITE 8,52,404/ - FOR FINANCIAL YEAR 2011 - 12 , 42,187/ - FOR FINANCIAL YEAR 2012 - 13 ; CONSTRUCTION OF KALYANA MANDAPAM 33,05,507/ - IN THE FINANCIAL YEAR 2010 - 1 1; 1,21,95,681/ - IN THE FINANCIAL YEAR 2011 - 12 AND 20,52, 790/ - IN THE FINANCIAL YEAR 2012 - 13 . 3 . FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS CARRIED OUT CERTAIN ACTIVITIES , WHICH CAN BE SAID THAT ASSISTANCE FOR EDUCATION, ASSISTANCE FOR MEDICAL, ASSISTANCE FOR FLOOD VICTIMS, ASSISTANCE TO FIRE VICTIMS , HA VE TO BE CONSIDERED AS CHARITY TOWARDS STUDENTS AND HELPLESS PEOPLE . HOWEVER, THE LD. COMMISSIONER IS OF THE OPINION THAT THE ASSESSEE HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITY , EXCEPT CONSTRUCTION OF KALYANA MANDAPAM. WE FIND THAT LD. COMMISSIONER WITHOUT UNDERSTANDING THE FINANCIAL STATUS OF THE ASSESSEE CAME TO A CONCLUSION THAT ASSESSEE IS NOT CARRIED OUT WORTHWHILE CHARITABLE ACTIVITIES. WHEN ASSESSEE IS IN THE BEGINNING S TAGE, WHATEVER DONATIONS ARE RECEIVED, WERE SPENT TOWARDS VARIOUS ACTIVITIES WITHIN THEIR LIMITS . THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT CARRIED OUT AN Y CHARITABLE ACTIVITIES. 4 ITA NO.35/VIZ/2014 (YANAM AGNIKULA KSHATRYA WELFARE & SERVICE) 4 . SO FAR AS CONSTRUCTION OF KALYANA MANDAPAM IS CONCERNED , ACCORDING TO LD. COMMISSIONER, IT IS A COMMERCIAL ACTIVITY AND ALSO OBSERVED THAT THE RELIANCE INDUSTRIES IS ALSO EXTENDED FINANCIAL ASSISTANCE TO THE ASSESSEE , HENCE, HE IS OF THE OPINION THAT IT COMES UNDER THE ADVANCEMENT OF ANY OTHER OBJECT S OF GENERAL PUBLIC ACTIVITY . THE ASSESSEE PURCHASED SITE AND STARTED CONSTRUCTION OF KALYANA MANDAPAM AND IT IS NOT YET COMPLETED. WHEN THE ASSESSEE SOCIETY IS CREATED FOR THE BENEFIT OF BACKWARD CLASS PEOPLE AND THE SOCIETY IS CONSTRUCTING A KALYANA MANDAP AM FOR THE PEOPLE WITHOUT CASTE, CREED, COLOUR, RELIGION , IT IS DIFFICULT TO ACCEPT THE OBSERVATION S OF THE LD.COMMISSIONER THAT IT ATTRACTS SECTION 2 ( 15 ) OF THE ACT W.E.F. 01/04/2009 . THE OBJECTS OF THE ASSESSEE IS VERY CLEAR THAT THE ASSESSEE - SOCIETY IS CREATED FOR THE BENEFIT OF NEGLECTED AND HELPLESS PEOPLE TO PROVIDE ASSISTANCE AND TO CHANGE THE LIVING CONDITIONS OF THE DOWNTRODDEN AND WEAKER SECTIONS OF THE SOCIETY , IRRESPECTIVE OF CASTE, COLOUR, CREED, RELIGION AND SEX. BY CONSIDERING THE OBJECT S OF THE ASSESSEE, WE ARE OF THE OPINION THAT ASSESSEE IS NOT CARRYING OUT ANY COMMERCIAL ACTIVITIES . W HETHER ASSESSEE IS CARRYING COMMERCIAL ACTIVITIES OR NOT , IT WILL COME TO KNOW ONLY WHEN KALYANA MANDAPAM START ED FUNCTIONING . IT IS A PREMATURE TO COME TO A CONCLUSION THAT THE ACTIVITY OF THE ASSESSEE FOR CONSTRUCTION OF KALYANA MANDAPAM IS A COMMERCIAL ACTIVITY. THE LD.COMMISSIONER HAS ALSO OBSERVED THAT ASSESSEE IS EXISTED FOR THE BENEFIT OF A PARTICULAR COMMUNITY AND 5 ITA NO.35/VIZ/2014 (YANAM AGNIKULA KSHATRYA WELFARE & SERVICE) THEREFORE, THE ASSESSEE I S NOT ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. 5. SO FAR AS ABOVE OBSERVATIONS ARE CONCERNED, THE INCOME TAX ACT IS VERY CLEAR, PARTICULARLY , EXPLANATION (2) TO SECTION 13 WHERE IT IS CLEARLY PROVIDED THAT A TRUST OR INSTITUTION CREATED OR ESTABLISHED FOR THE BENEFIT OF SCHEDULED CASTES, BACKWARD CLASSES, SCHEDULED TRIBES OR WOMEN AND CHILDREN SHALL NOT BE DEEMED TO BE A TRUST OR INSTITUTION CREATED OR ESTABLISHED FOR THE BENEFIT OF A RELIGIOUS COMMUNITY OR CASTE WITHIN THE MEANING OF CLAUS E (B) OF SUB - SECTION (1). IN THE PRESENT CASE, THE TRUST IS CREATED MAINLY FOR THE BENEFIT OF UPLIFTMENT OF THE BACKWARD CLASS AND ALSO OTHERS. THEREFORE, THE SOCIETY IS CREATED IN THE NAME OF YANAM AGNIKULAKSHATRIYA WELFARE & SERVICE ORGANIZATION ITSEL F REFLECTS THAT IT IS CREATED FOR BACKWARD CLASSES, THEREFORE, IT CANNOT BE SAID THAT IT IS A RELIGIOUS TRUST TO A PARTICULAR COMMUNITY. THOUGH, THE NAME SUGGESTS THAT IT IS CREATED FOR THE BENEFIT OF A PARTICULAR COMMUNITY, BUT THE OBJECTS ARE GENERAL IN NATURE. EVEN IF IT IS CREATED FOR THE BENEFIT OF A PARTICULAR COMMUNITY , IN THE LIGHT OF EXPLANATION (2) TO SECTION 13, THE REGISTRATION UNDER SECTION 12AA CANNOT BE DENIED. 6 . IN VIEW OF THE ABOVE OBSERVATION AND BY CONSIDERING THE FACTS AND CIRCUMSTANC ES OF THE CASE, THE ASSESSEE SOCIETY IS ENTITLED TO GET BENEFIT FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LD. COMMISSIONER AND WE GRANT REGISTRATION TO THE ASSESSEE SOCIETY . ORDERED ACCORDINGLY. 6 ITA NO.35/VIZ/2014 (YANAM AGNIKULA KSHATRYA WELFARE & SERVICE) 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 11 TH DAY OF AUGUST , 201 7 . SD/ - SD/ - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11 TH AUGUST , 201 7 . VR/ - COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R . 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.