Maharishi Dayanand Gosamvardhan Kendra, New Delhi V. DIT (Exemption), New Delhi

ITA 3924/DEL/2011

• Counselvise Citation: 392420114 RSA 2011
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 26-11-2013
• Assessment Year: misc
• Appeal Filed On: 25-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GUNJAN P RASAD
• Keywords: Charitable institution
• Section: 80G; 12A; 11

Judgement Text

ITA NO.3924/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E : NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.3924/DEL/2011 ASSESSMENT YEAR : NA MAHARISHI DAYANAND GOSAMARDHAN KENDRA, GAZIPUR, NEAR CENTRAL WARE HOUSE, NEW DELHI. PAN : AABTM8680K VS. DIT (EXEMPTION S ), NEW DELHI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : S MT. SWEETY KOTHARI, CA DEPARTMENT BY : S HRI GUNJAN PRASAD, CI T, DR ORDER PER A.D. JAIN, JUDICIAL MEMBER: THIS IS ASSESSEES APPEAL AGAINST THE ORDER DATED 23.06.20 11, PASSED BY THE LD. DIT (EXEMPTIONS), DELHI, PASSED U/S 80G(5) ( VI) OF THE IT ACT READ WITH RULE 11AA OF THE IT RULES, 1962, REJECTING THE ASSESSEES APPLICATION FOR RENEWAL OF REGISTRATION U/S 80G OF THE IT ACT. THE L D. DIT (E) HAS OBSERVED IN THE IMPUGNED ORDER AS FOLLOWS:- 4. FROM THE PERUSAL OF INCOME AND EXPENDITURE ACCOUN T SUBMITTED FOR THE PERIOD ENDING 31.3.2010, IT IS NOTED THAT ASSES SEE HAS DECLARED INCOME MAINLY FROM SALE OF MILK OF RS.71,87,511/- A ND SALE OF ORGANIC FERTILIZER OF RS.6,28,454/- IN ADDITION TO DONATION R ECEIPT. SIMILARLY, IN THE YEAR ENDING 31.3.2009, THE ASSESSEE HAS DECLARED SALE OF MILK OF RS.70,12,289/- AND ORGANIC FERTILIZER OF RS.5,58,432 /- ALTHOUGH TO THE MEMBERS ONLY. ITA NO.3924/DEL/2011 2 4.1 IT IS ALSO NOTED THAT THE ASSESSEE HAS ALSO DEBITED RELEVANT EXPENDITURE IN ACCOUNT ENDING 31.3.2009 AND 31.3.2010 BY WAY OF MILK PACKING EXPENSES OF RS.1,40,334/- AND RS.2,06,508 R ESPECTIVELY. FURTHER, ASSESSEE HAS ALSO DEBITED ORGANIC FERTILIZER EXPENSES OF AND RS.1,98,238/- AND RS.172,654/- RESPECTIVELY FOR THE Y EAR ENDING 31.3.2009 AND 31.3.2010. 4.2 FROM THE ABOVE IT IS CLEAR THAT ASSESSEE IS SELLING MILK IN ORGANIZED BY WAY OF PACKING TO DIFFERENT PARTIES CLAIM ING TO BE MEMBERS, WHICH IS A CLEAR VIOLATION OF THE PROVISION S OF SECTION 2 (15) OF THE INCOME TAX ACT, 1961 IS AGAINST THE SPIRIT OF PR OVISIONS OF SECTION 2 (15). THE ACTIVITIES OF THE ASSESSEE, AT THE MOST MAY BE COVERED BY ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AS MENTIONED IN SECTION 2 (15). A PROVISO BELOW SECTI ON 2 (15) HAS BEEN INTRODUCED WITH EFFECT FROM A.Y. 2009-10 WHICH PROVIDES THAT WHERE A CHARITABLE INSTITUTION IS ENGAGED IN CHARITABLE ACTIVITY BEING ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTI LITY, IF SUCH A CHARITABLE INSTITUTION ENGAGES IN ANY ACTIVITY OF TRADE, COMMERCE OR BUSINESS OR PROVIDES SERVICES IN RELATION TO ANY TRADE COMMERCE OR BUSINESS FOR ANY FEE, CESS OR ANY OTHER CONSIDERATIO N, ITS ACTIVITIES SHALL NOT BE TAKEN AS CHARITABLE ACTIVITY. EXAMINATION OF THE ACTIVITIES OF THE APPLICANT REVEALS THA T IT IS ENGAGED IN SALE OF MILK AND FERTILIZER, WHICH IS A SYSTEMATI C BUSINESS ACTIVITY AND THE SAME CANNOT BE SAID TO BE CHARITABLE ACTIVITIES AS PE R SECTION 2 (15). THUS, ITS INCOME WOULD NOT BE ENTITLED FOR EXEMP TION U/S 11 & 12. IN VIEW OF THIS, CONDITIONS MENTIONED IN SECTION 80G ( 5)(I) ARE NOT SATISFIED. THUS, APPLICANT IS NOT ENTITLED TO EXEMPTION U/S 80G (5). ACCORDINGLY, REQUEST FOR APPLICANT IS REJECTED. 2. CHALLENGING THE IMPUGNED ORDER, THE LD. COUNSEL F OR THE ASSESSEE HAS CONTENDED THAT THE LD. DIT (E) HAS ERRED IN REJECTIN G THE ASSESSEES APPLICATION FOR RENEWAL OF REGISTRATION U/S 80G OF TH E ACT, WRONGLY IGNORING THE SUBMISSIONS MADE BY THE ASSESSEE AND NOT CONSIDERING TH AT THE REGISTRATION GRANTED TO THE ASSESSEE IS CONTINUING. 3. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN SUBMITTED THAT FROM THE F ACTS NOTED BY THE LD. DIT (E), IT IS EVIDENT THAT THE ASSESSEE IS SELLING MILK T O ITS MEMBERS IN AN ORGANIZED MANNER BY WAY OF PACKING, IN VIOLATION OF THE PROVISIONS OF SECTION ITA NO.3924/DEL/2011 3 2 (15) OF THE ACT AND THAT THE ASSESSEE IS ENGAGED IN TH E SALE OF MILK AND FERTILIZER, WHICH IS A SYSTEMATIC BUSINESS ACTIVITY AND CANNOT BE TERMED AS A CHARITABLE ACTIVITY. 4. THE ASSESSEE FILED AN APPLICATION FOR RENEWAL OF CER TIFICATE U/S 80G ON 28.01.2011 IN FORM 10G. THE DIT (E) ASKED THE ASSESSEE T O FURNISH CERTAIN DOCUMENTARY EXPLANATION VIDE LETTER DATED 09.02.201 1. DISSATISFIED WITH THE EXPLANATION FILED BY THE ASSESSEE, THE DIT (E) REJECTED THE ASSESSEES APPLICATION, AS ABOVE. 5. UNDISPUTEDLY, THE ASSESSEE HAS BEEN GRANTED REGISTRATIO N U/S 12A OF THE ACT AND THE SAME HAS NOT BEEN HITHERTO WITHDRAWN. NOW, AS HELD IN SIMILAR CIRCUMSTANCES IN SETH AMARNATH CHARITABLE TRU ST VS. DIT (E), PASSED BY THE DELHI BENCH OF THE TRIBUNAL IN ITA NO.4840/D EL/2010, VIDE ORDER DATED 20.04.2012, THE DEPARTMENT CANNOT AGITATE THE ISSUE O F RENEWAL OF THE CERTIFICATE U/S 80G OF THE ACT BY HOLDING THAT THE A SSESSEE IS NOT ENGAGED IN CHARITABLE ACTIVITIES, PARTICULARLY WHEN THE REGISTRA TION U/S 12A OF THE ACT HAS NOT BEEN WITHDRAWN AND THE ASSESSEE CONTINUE TO ENJOY T HE SAME. 6. ACCORDINGLY, FINDING MERIT IN THE GRIEVANCE SOUGH T TO BE RAISED BY THE ASSESSEE, THE SAME IS ACCEPTED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 05.12.201 3. SD/- SD/- [ G.D. AGRAWAL ] [A.D. JAIN] VICE PRESIDENT JUDICIAL MEMBER DATED, 05 TH DECEMBER, 2013. DK ITA NO.3924/DEL/2011 4 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.