CULTURAL ALLIANCE OF CAMBAY, MUMBAI V. ITO (HQ) (E), MUMBAI

ITA 3851/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3771 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-03-2015
• Assessment Year: misc
• Appeal Filed On: 15-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M DAYASAGAR
• Assessee Lawyers: MEHUL PARANJAPE
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE HONBLE S/SHRI SANJAY GARG, JM AND SHRI RAJESH KUMA R , AM ./ I.T.A. NO . 3851 / MUM/ 201 3 ( / ASSESSMENT YEA R : NA) CULTURAL ALLIANCE OF CAMBAY 295/A OLD POST OFFICE LANE, MANGALDAS MARKET, MUMBAI - 400014 / VS. INCOME TAX OFFICER, (HQ), (EXEMPTION), MUMBAI . ( / APPELLAN T ) .. ( / RESPONDENT ) ./ ./PAN. : AABTC3833G / APPELLANT BY SHRI K GOPAL AND MS.MEHUL PARANJAPE / RESPONDENT BY SHRI M DAYASAGAR / DATE OF HEARING : 23.3. 201 6 / DATE OF PRONOUNCEMENT: 11.5 .2016 / O R D E R P ER RAJESH KUMAR , AM : TH E PRESENT APPEAL HAS BEEN FILED BEFORE US AGAINST THE ORDER OF DIRECTOR OF INCOME TAX (EXEMPTION) DATED 28.3.201 3 (HEREINAFTER REFERRED TO AS DIT(E) PASSED UNDER SECTION 12A A(1)(B)(II) R.W.S.12A OF THE INCOME TAX ACT, 1961 DENYING THE REGISTRATION U/S 12A TO THE APPLICANT . 2 . FACTS IN BRIEF ARE THAT THE APPLICANT APPLIED FOR THE REGISTRATION U/S 12A OF THE ACT ON 5.9.2012 ACCOMPANYING THE THEREWITH VARIOUS DOCUMENTS SUCH AS COPY OF TRUST DEED, AUDITED ACCOUNTS, REGISTRATION CERRITFICATE OF CHARITY COMMISSIONER AND NOTE ON ACTIVITIES UNDERTAKEN ETC I.T.A. NO. 3851 /MUM/ 2013 2 THE DIT(E) OBSERVED THAT THE OBJECTS OF THE APPLICANT WERE FO R THE MUTUAL BENEFIT OG THE MEMBERS AND SO WERE THE ACTIVITIES UNDERTAKEN AND THEREFORE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE WHICH WAS RELIED VIDE LETTER DATED 21.03.2013.THE VARIOUS REASONS CITED BY THE DIT(E) FOR REJECTION OF REGISTRATION TO THE TRUST INTER ALIA THE FACT THAT THE TRUST WAS FORMED FOR THE BENEFIT OF PARTICULAR COMMUNITY. IT WAS ALSO OBSERVED FROM THE RULES AND REGULATION FOR MEMBERSHIP OF THE APPLICANT TRUST THAT IT WAS ONLY AVAILABLE TO THE PERSON WHOSE FATHER OR FOREFATHER CAMBA Y CASTE RESIDING WITHIN THE MUMBAI MUNICIPAL JURISDICTION AND ALSO ANY FEMALE MARRIED TO NON CAMBAY PERSON WOULD BE ELIGIBLE TO BECAME MEMBER AND PEOPLE BELONGING TO J AIN COMMUNITY COULD ALSO BECAME MEMBER. THUS THE DIT(E) CAME TO THE CONCLUSION THAT THE TRUST WAS FORMED FOR THE BENEFIT OF PARTICULAR COMMUNITY. AS REGARDS THE ACTIVITIES CARRIED ON BY THE TRUST IT WAS FOUND THAT THEY WERE FOR THE BENEFIT OF MEMBERS OF THE TRUST AND NOT FOR PUBLIC AT LARGE. THE DIT(E) REJECTED THE REGISTRATION TO THE TRUST B Y OBSERVING AS UNDER: - 6. AS REGARDS THE ACTIVITIES UNDERTAKEN BY THE APPLICANT TRUST, IT IS OBSERVED THAT IT HAS CARRIED OUT SPORTS AND CULTURAL ACTIVITIES FOR THE BENEFIT OF ITS MEMBERS RATHER THAN THE PUBLIC AT LARGE. IT WOULD BE PERTINENT TO REFER TO THE FOLLOWING EXTRACT FROM THE FAQ'S ( FREQUENTLY ASKED QUESTIONS) SECTION OF THE WEBSITE OF THE APPLICANT TRUST: - '10. WHAT WILL BE THE CAC'S (APPLICANT 'S) ACTIVITIES? ON THE SPORTS SIDE, CAC (APPLICANT) INTENDS TO ARRANGE FOR 1 CRICKET TOURNAMENT WHERE ONLY MEMBERS CAN PARTICIPATE. ON THE CULTURAL ACTIVIT IES SIDE, CAC (APPLICANT) INTENDS TO GIVE MINIMUM TWO I.T.A. NO. 3851 /MUM/ 2013 3 PROGRAMMES. THIS CAN BE GARBA DANDIYA MUSICAL NIGHT, DRAMA. CINEMA ETC. FOLLOWED BY DINNER' FURTHER, IT IS SEEN FROM PERUSAL OF THE HO ME PAG E OF THE WEBSITE THAT THE APPLICANT TRUST HAS CARRIED OUT FOLLOWING EVENTS / ACTIVITIES: - (I) PRACTICE MATCH AT HINDU GYMKHANA (II) PRACTICE MATCH AT MATUNGA GYMKHANA (III) CAC INA UGU RAL PROGRAMME ON 23.04.2011 (IV) 'MAA B AAP NE BHULSO NAHIN AND DIKRI VAHAL NO DARIYO ON 17.06.2012 (V) DAN D IYA RAAS ON 24.10.2012 (VI) YATRA PRAVAS TO SAHAPUR ON 3RD & 4TH NOVEMBER, 2012 (VII) PLAYER'S AUCTION (VIII) 'YASH MANGAL CUP' 2013 CRICKET TOURNAMENT ON 05.01.2013, 06.0L.2013 AND 13.0 .2013. IT IS OBVIOUS THAT THE ABOVE MENTIONED ACTIVITIES UNDERTAKEN BY THE APPLICANT FOR BENEFIT OF I T S MEMBERS CAN BY NO MEANS BE SAID TO BE CHARITABLE IN NATURE. 7. THUS, IT IS FOUND THAT WHILE THE APPLICANT HAS BEEN CONSTITUTED AS A PUBLIC TRUST, IT IS ACTUALLY OPERATING AS A MUTUAL ASSOCIATION ENGAGED IN PROMOTION OF SPORTS AND CULTURAL ACTIVITIES FOR THE BENEFIT OF ITS MEMBERS RATHER THE PUBLIC AT LARGE. IN OTHER WORDS, THE ACTIVITIES UNDERTAKEN BY THE APPLICANT ARE AT VARIANCE WITH THE OBJECTS OF THE APPLICANT TRUST. THE APPLICANT IS UNDERTAKING ACTIVITIES WHICH ARE NOT AUTHORIZED OR PERMITTED BY ITS OWN OBJECTS STATED IN THE TRUST DEED. THEREFORE, IT IS SEEN THAT THE ACTIVITIES CARRIED OUT BY T HE APPLICANT ARE NOT IN ACCORDANCE WITH THE OBJECT OF THE APPLICANT TRUST . WHILE CONSIDERING GRANT OF REGISTRATION, THE REGISTERING AUTHORITY IS NOT OBLIGED MERELY TO LOOK AT THE INSTRUMENTS CREATING THE TRUST AND SHUT ITS EYES TOWARDS THE ACTIVITIES ACTUALLY CARRIED OUT BY IT. IT IS WELL SETTLED THAT THE ACTIVITY MUST CONFORM TO THE PURPOSE OF THE TRUST AND THAT NAY DIVERSION FROM THE OBJECTS IS NOT LEGALLY PERMISSIBLE AT ALL. IN FACT, A DIGRESSION FROM THE STATED OBJECTS IS FATAL TO REGISTRATION. UNDER THE CIRCUMSTANCES, I AM UNABLE TO SATISFY MYSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE APPLICANT TRUST WHICH IS A PRECONDITION FOR GRANT OF REGISTRATION. AS THE APPLICANT TRUST HAS FAILED TO COMPLY WITH THE MANDATORY REQUIREMENTS PRESCRIBED U/S 12AA READ WITH RULE 17A , ITS APPLICATION FOR GRANT OF REGISTRATION IS REJECTED . I.T.A. NO. 3851 /MUM/ 2013 4 3. THE LD.COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO COPY OF TRUST DEED PLACED AT PAGE 27 TO 29 OF THE PAPER BOOK AND SUBMITTED THAT THE TRUST WAS CONSTITUTED FOR VARIOUS CHARITABLE ACTIVITIES CARRIED ON BY THE ASSESSEE - TRUST AS STATED IN PAR A 5 OF THE TRUST DEED AND STRONGLY OBJECTED TO THE OBSERVATIONS OF THE DIT(E) AS CONTENDED IN PARA 6 OF THE ORDER OF DIT(E) RAISING THE OBJECTIONS TO THE ACTIVITIES UNDERTAKEN BY THE APPLICANT TRUST SUCH AS (I) PRACTICE MATCH AT HINDU GYMKHANA, (II) P RACTICE MATCH AT MATUNGA GYMKHANA, (III) CAC INAUGURAL PROGRAMME, (IV) 'MAA BAAP NE BHULSO NAHIN AND DIKRI VAHAL NO DARIYO (V) DANDIYA RAAS, (VI) YATRA PRAVAS TO SAHAPUR, (VII) PLAYER'S AUCTION AND (VIII) 'YASH MANGAL CUP' 2013 CRICKET TOURNAMENTS. TH E LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE - TRUST HAD CARRIED OUT THESE ACTIVITIES TO RAISE THE FUNDS TO MEET ITS DAY TO DAY EXPENDITURES AND TO CARRYOUT ITS ACTIVITIES AS CONTAINED THE IN THE OBJECT CLAUSE OF THE TRUST DEED. THE LD.COUNSEL FURTHER SUBMITTED THAT TO COMMENT ON THE NATURE OF THE ACTIVITY OF THE APPLICANT TRUST WAS PREMATURE AT THE TIME OF REGISTRATION. THE LD. COUNSEL THEREFORE SUBMITTED THAT THE OBJECTION OF THE DIT(E) WERE WRONG AND THE DENIAL OF REGISTRATION AT THE INITIAL STA GE WAS TOTALLY BAD IN LAW . 4. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDER OF DIT(E) AND SUBMITTED THAT THE REGISTRATION WAS RIGHTLY DENIED TO THE APPLICANT AS THE ASSESSEE DID NOT CARRY ANY ACTIVITY AS CONTAINED IN THE TRUST DEED OR ANY OTHER CH ARITABLE ACTIVITY AND ALSO THAT THE TRUST WAS CONSTITUTED FOR THE I.T.A. NO. 3851 /MUM/ 2013 5 BENEFIT OF PARTICULAR COMMUNITY . THE NATURE OF ACTIVITY CARRIED ON WAS PURELY FOR THE BENEFIT OF THE MEMBERS OF THE APPLICANT TRUST AND THUS PRAYED THAT THE ORDER OF DIT(E) BE UPHELD. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED MATERIAL PLACED BEFORE US. HAVING PERUSED THE ORDER OF DIT(E) WE FIND FROM THE DIT(E) CAME TO THE CONCLUSION THAT THE ACTIVITY OF THE ASSESSEE TRUST WERE BEING C ONSTITUTED FOR THE MUTUA L BENEFIT OF THE MEMBERS WHO BELONGED TO PARTICULAR COMMUNITY AND NOT FOR THE CHARITABLE PURPOSES FOR THE PUBLIC AT LARGE. THE LD. CO UNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ACTIVITY OF THE ORGANIZING PRACTICE MATCHE S AND OTHER AS STA T ED BY THE DIT(E) IN PARA 6 OF THE ORDER WERE ORGANIZED FOR THE PURPOSE OF PUBLIC AT LARGE BY THE MEMBERS AND THE DIT(E) WAS WRONG IN HOLDING THAT THESE ACTIVITIES WERE CARRIED OUT FOR THE BENEFIT OF THE MEMBERS OF THE TRUST ONLY. FURTHER, WE FIND FROM THE TRU ST DEED THAT VARIOUS OBJECTS AS CONTAINED IN CLAUSE 5 OF THE TRUST DEED ARE CHARITABLE IN NATURE WHICH ARE REPRODUCED AS UNDER : 5. OBJECT OF THE TRUST: THE TRUSTEES SHALL HOLD THE SAID TRUST PROPERTY AND THE TRUST FUNDS FOR THE FOLLOWING OBJECTS: - A ) TO PROMOTE SPORTS AND CULTURAL ACTIVITIES AMONG THE PEOPLE ; (B) TO PREVENT RECKLESS USE OF ALL NATURAL RESOURCES AND DAMAGE TO THE ENVIRONMENT THEREBY PROTECT ANIMALS, BIRDS AND OTHER DUMB CREATURES, NATURAL WATER RESERVOIRS, FORESTS, NATURAL WEALTH, I.T.A. NO. 3851 /MUM/ 2013 6 ECOL OGY, FERTILITY OF SOIL, PURITY OF AIR AND SUCH OTHER MATTERS WHICH CAN BE INCLUDED IN THE AMBIT OF ENVIRONMENT. (C) TO PROTECT AND PRESERVE PRICELESS HERITAGE CULTURE OF THIS COUNTRY INCLUDING PROTECTING AND PRESERVING ITS VARIOUS ORGANS. (D) TO PROTE CT PUBLIC PROPERTY. (E) TO WORK FOR SPIRITUAL UP - LIFTMENT OF PEOPLE & SOCIETY. (A) TO PROMOTE SPORTS AND CULTURAL ACTIVITIES AMONG THE PEOPLE. (F) TO ENDEAVOR TO PROTECT, PRESERVE AND NOURISH THE TRUE INTEREST OF ALL BEINGS OF ENTIRE WORLD IRRESPECT IVE OF RACE, RELIGION AND NATIONALITY AND THE ENTIRE DUMB CREATURES OF THE WORLD WHICH NATURALLY INCLUDE HUMAN BEINGS AND LIVING WORLD OF THIS COUNTRY. (G) TO ENDEAVOR TO PREVENT VIOLENCE OF ALL NATURE . (H) TO PROTECT AND PRESERVE PRINCIPLES OF NON - VI OLENCE AND TO CREATE SYSTEMS FACILITATING IMPLEMENTATION OF THE SAME. (I) TO ENCOURAGE ALL THOSE WHO GROW POLLUTION FREE FOOD GRAIN AND PRODUCE. PEOPLE FIT FOE PERFORMING THEIR SOCIAL DUTIES. J) TO PROVIDE HELP, ASSISTANCE ETC. FOR EDUCATION. (K) TO DONATE AND WORK FOR POOR SECTION OF THE SOCIETY . L) TO PROVIDE MEDICAL HELP, MEDICAL INSURANCE TO THE DESERVING PEOPLE. TO ACHIEVE THE ABOVE OBJECTS THE TRUST WILL; I) . INTERACT WITH NATIONAL! INTERNATIONAL GOVERNMENTS AN D NON - GOVERNMENT AGENCIES . II) SPREAD AWARENESS AMONGST PEOPLE IN OUR COUNTRY AND ABROAD THROUGH MEDIA III. TAKE. RECOURSE TO LAW AND JUSTICE FOR SECURING THEIR AID FOR UNHINDERED PERFORMANCE OF VARIOUS OBJECTS OF THIS TRUST. IV. FRAME AND IMPLEMENT PROGRAMMES OF PROTECTING AND PRESERVING GENETIC QUALITIES AND UNIQUENESS OF CATTLE, VEGETARIAN, FOOD I.T.A. NO. 3851 /MUM/ 2013 7 GRAINS AND EVEN HUMAN BEINGS AND TO PREVENT ANY TAMPERING WITH GENETIC QUALITIES OF THE SAME. V. UNDERTAKE ALL SUCH THINGS OR ACTIVITIES ORGANIZE EVENTS, PROGRAMMES, TOURS EITHE R ALONE OR IN CONJUNCTION WITH OTHERS AS ARE INCIDENTAL OR CONDUCIVE TO THE ATTAINMENT OF THE ABOVE OBJECTS OR ANY OF THEM. VI. DONATE FUNDS TO OTHER INSTITUTIONS! TRUSTS/ ASSOCIATIONS/ GROUP OF INDIVIDUALS! INDIVIDUALS UNDERTAKING ACTIVITIES SIMILA R TO THE ACTIVITIES OF THIS TRUST INCLUDING DONATION TOWARDS THE CORPUS FUN D . THE OBJECT CLAUSE OF THE APPLICANT TRUST REVEALS THAT THE TRUST WAS CONSTITUTED FOR THE CHARITABLE PURPOSES AND NOT FOR THE PURPOSE OF BENEFIT OF THE MEMBERS. THUS FROM THE FACT S DISCUSSED ABOVE, THE ORDER OF DIT(E) DENYING THE REGISTRATION TO THE TRUST U/S 12A OF THE ACT APPEARS TO BE WRONG AS T HE OBJECTS OF THE TRUST AS CONTAINED IN CLAUSE 5 OF THE TRUST DEED ALSO INCLUDE PROMOTION OF SPORTS AND CULTURAL ACTIVITIES FOR THE PUBL IC AT LARGE . SO FAR AS THE ISSUE OF MEMBERSHIP TO A PARTICULAR COMMUNITY IS CONCERNED THERE A RE PLETHORA OF JUDGMENTS IN FAVOUR OF THE APPLICANT PROVIDED THE OBJECTS OF THE TRUST ARE CHARITABLE BENEVOLENT I N NATURE AND FOR THE BENEFIT OF PUBLIC AT LARG E. IN VIEW OF THE FACTS DISCUSSED ABOVE , WE SET ASIDE THE ORDER OF THE DIT(E) WITH THE DIRECTION TO CHECK AND VERIFY WHETHER THE ACTIVITIES AS CARRIED ON BY T HE TRUST TILL DATE ARE CHARITABLE IN NATURE AND FOR THE BENEFIT OF THE PUBLIC AT LARGE IN ACC ORDANCE WITH THE OBJECTS OF THE TRUST APPLICANT AND NOT FOR A PARTICULAR COMMUNITY AND DECIDE T HE ISSUE OF REGISTRATION AFRESH ACCORDINGLY AFTER GIVING REASONABLE I.T.A. NO. 3851 /MUM/ 2013 8 OPPORTUNITY OF BEING HEARD TO THE APP LICANT. WE ALSO DIRECT THE APP LICANT TO CO - OPERATE WIT H THE AO FOR DISPOSAL OF THE ISSUE O F REGISTRATION. 6 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 11 TH MAY , 2016 . 11 TH MAY ,2016 SD SD ( / SANJAY GARG) ( / RAJESH KUMAR ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 11 TH MAY , 2016 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT . REGISTRAR) , /ITAT, MUMBAI