Plant Lovers Association, Bhubaneswar V. CIT(Exemptions), Hyderabad

ITA 419/CTK/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4772 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Appeal Filed On: 10-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P R MOHANTY AR SHRI M K GAUTAM
• Keywords: Charitable institution; Bonafide belief; Set aside
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE S/ SHRI AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER PLANT LOVERS ASSOCIATION, KALINGA HOUSE, PLALASUNI, POST, GGP COLONY, BHUBANESWAR. PAN/GIR NO. AAAAP 3752 F (APPELLANT PER BENCH THIS IS AN APPEAL FILED BY THE ASSESSEE A CIT(E), HYDERABAD DATED 24.9.2018 U/S.12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2. THE MAIN GRIEVANCE OF THE ASSESSEE IN THE GROUNDS OF APPEAL IS THAT THE LD CIT(E) IS NOT JUSTIFIED IN REJECTING THE APPLICATION FOR REGISTRATION U/S.12AA OF THE ACT. IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK SHRI CHANDRA MOHAN GARG, JUDICIAL AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.419/CTK/2018 ASSESSMENT YEAR : 2018-19 PLANT LOVERS ASSOCIATION, KALINGA HOUSE, PLALASUNI, POST, GGP COLONY, BHUBANESWAR. VS. CIT (EXEMPTIONS), HYDERABAD AAAAP 3752 F (APPELLANT ) .. ( RESPONDENT ASSESSEE BY : SHRI P.R. MOHANTY , AR REVENUE BY : SHRI M.K.GAUTAM, CIT DR DATE OF HEARING : 12 /3/ 2021 DATE OF PRONOUNCEMENT : 10/5 /20 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE A GAINST THE ORDER OF THE CIT(E), HYDERABAD DATED 24.9.2018 U/S.12AA(1)(B)(II) OF THE INCOME TAX FOR THE ASSESSMENT YEAR 2018-19. THE MAIN GRIEVANCE OF THE ASSESSEE IN THE GROUNDS OF APPEAL IS THAT THE LD CIT(E) IS NOT JUSTIFIED IN REJECTING THE APPLICATION FOR REGISTRATION U/S.12AA OF THE ACT. P A G E 1 | 5 IN THE INCOME TAX APPELLATE TRIBUNAL, JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER CIT (EXEMPTIONS), RESPONDENT ) , AR DR /20 21 GAINST THE ORDER OF THE CIT(E), HYDERABAD DATED 24.9.2018 U/S.12AA(1)(B)(II) OF THE INCOME TAX THE MAIN GRIEVANCE OF THE ASSESSEE IN THE GROUNDS OF APPEAL IS THAT THE LD CIT(E) IS NOT JUSTIFIED IN REJECTING THE APPLICATION FOR REGISTRATION ITA NO.419/CTK/2018 ASSESSMENT YEAR : 2018-10 P A G E 2 | 5 3. FACTS OF THE CASE ARE THAT THE ASSESSEE FILED APPLICATION IN FORM NO,.10A SEEKING REGISTRATION U/S.12AA OF THE INCOME TAX ACT, 1961 ON 31.3.2018. THE LD CIT(E) NOTICED THAT THE FOLLOWING OBJECTS OF THE ASSESSEE SOCIETY ARE BUSINESS ORIENTED AND PROFITABLE IN NATURE: I) THE ASSOCIATION SHALL MAKE AVAILABLE TO ITS MEMBERS AND NON- MEMBERS ALL KINDS OF GARDENING INPUTS LIKE SEEDS, SEEDLINGS, PLANTS, PESTICIDES, FERTILIZERS, IMPLEMENTS, CONTAINERS, ETC BY TRADING IN THESE ITEMS. II) THE ASSOCIATION SHALL UNDERTAKE CONTRACTUAL JOBS FOR LANDSCAPING WHEREVER REQUIRED. 4. FURTHER, LD CIT(E) OBSERVED THAT THE BYE-LAWS OF THE SOCIETY DOES NOT CONTAIN THE BASIS CLAUSES LIKE BENEFICIARY, AMENDMENT DISSOLUTION, IRREVOCABILITY ETC. HE OBSERVED THAT AS PER THE PROVISIONS OF SECTION 2(15) OF THE ACT, ANY OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES CARRYING ON OF ANY ACTIVITIES IN THE NATURE OF TRADE, COMMERCE AND BUSINESS OF ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE COMMERCE OR BUSINESS. FURTHER, FOR THE ASSESSMENT YEARS 2015-16, 2016- 17 AND 2017-18, THE ASSESSEE CLAIMED EXEMPTION U/S.11 OF THE ACT IN ABSENCE OF REGISTRATION U/S.12A OF THE ACT, THEREFORE, THE ASSESSEE HAS CONSCIOUSLY MADE FRAUDULENT CLAIM OF EXEMPTION U/S.11 TO DEFRAUD THE REVENUE. IT WAS IN THIS BACKDROP THAT THE LD CIT (E) REJECTED THE APPLICATION FILED IN FORM NO,.10A AND DENIED TO GRANT REGISTRATION U/S.12AA OF THE ACT. ITA NO.419/CTK/2018 ASSESSMENT YEAR : 2018-10 P A G E 3 | 5 5. LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD CIT (E) IS NOT JUSTIFIED IN REJECTING THE APPLICATION FOR GRANT OF REGISTRATION U/S.12AA OF THE ACT. HE SUBMITTED THAT THE ASSESSEE IS A CHARITABLE ORGANIZATION HAVING A NON-PROFIT MOTIVE AND THE AREA OF OPERATION OF THE SOCIETY IS LIMITED TO WHOLE STATE OF ODISHA. HE SUBMITTED THAT THE MAIN OBJECTS OF THE ASSESSEE SOCIETY IS TO FACILITATE FOR RAISING GOOD GARDENS AND THEIR MAINTENANCE TO THE PUBLIC AT LARGE. LD COUNSEL SUBMITTED THAT THE LD CIT(E) REJECTED THE REGISTRATION MAINLY ON THE GROUND THAT THE ASSESSEE IS A BUSINESS ORIENTED AND MAKING PROFIT OUT OF THE FUNCTION CONDUCTED BY IT AND IN THE ABSENCE OF BASIC CLAUSE IN THE BYE-LAWS. HE ALSO PRODUCED CONSTITUTION OF BYE-LAWS INCORPORATING THE PROPOSED AMENDMENT IN THE BYE LAWS, WHICH CONTAINS INVESTMENT CLAUSE, AMENDMENT CLAUSE , ACCOUNTS CLAUSE DISSOLUTION CLAUSE IRREVOCABILITY CLAUSE BENEFICIARY CLAUSE AND UTILIZATION CLAUSE. HE SUBMITTED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE LD CIT (E) TO CONSIDER THE REGISTRATION OF THE ASSESSEE SOCIETY AFTER CONSIDERING THE PROPOSED AMENDMENT TO THE BYE LAWS. HE ALSO SUBMITTED THAT THE CLAIM OF DEDUCTION U/S.11 OF THE ACT WAS MADE UNDER INADVERTENT MISTAKE OF PROFESSIONAL, WHO UNDER BONAFIDE BELIEF THAT APPELLANT IS ENJOYING REGISTRATION U/S.12A OF THE ACT MADE SUCH CLAIM WITHOUT ANY CONSULTATION WITH THE OFFICE BEARERS OF THE ASSESSEE. 6. REPLYING TO ABOVE, LD CIT DR SUPPORTED THE ORDER OF THE LD CIT (E) AND SUBMITTED THAT WHEN THE BASIS CLAUSES ARE ABSENT IN THE BYE-LAWS, ITA NO.419/CTK/2018 ASSESSMENT YEAR : 2018-10 P A G E 4 | 5 WHICH NECESSITATES TO CONSIDER FOR GRANTING REGISTRATION, THE LD CIT (E) HAS NO OPTION BUT TO REJECT THE APPLICATION. THE LD CIT DR ALSO SUBMITTED THAT IF IT IS FOUND JUST & PROPER TO ALLOW THE APPELLANT TO AMEND HIS TRUST DEED AND FILE THE SAME AS PER PROVISIONS OF THE ACT, THE DEPARTMENT HAS NO OBJECTION IF THE MATTER IS REMITTED TO THE FILE OF THE LD CIT (E) FOR FRESH CONSIDERATION AND ADJUDICATION. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, APPLICATION FOR REGISTRATION UNDER SECTION 12A OF THE ACT WAS REJECTED BY THE CIT( EXEMPTIONS) ON THE GROUND THAT THE BASIS CLAUSES IN THE BYE LAWS ARE ABSENT. THE ASSESSEE WAS ALSO NOT PROVIDED PROPER OPPORTUNITY TO PUTFORTH ITS CASE BEFORE THE LD CIT(E). NOW, THE ASSESSEE TRUST HAS FILED BEFORE US THE PROPOSED AMENDMENTS TO THE BYE LAWS AND REQUESTED TO REMIT THE MATTER BACK TO THE LD CIT(E) FOR FRESH CONSIDERATION AND LD CIT DR HAS PLACED HIS NO OBJECTION TO THIS PRAYER OF THE APPELLANT.. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, IT SHALL BE IN THE INTEREST OF JUSTICE TO SET ASIDE THE IMPUGNED ORDER OF THE CIT(E) AND RESTORE THE MATTER BACK TO HIS FILE FOR ADJUDICATION AFRESH AFTER TAKING INTO CONSIDERATION THE MODIFIED TRUST DEED TO BE FILED BY THE ASSESSEE TRUST BEFORE HIM. NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE ALLOWED REASONABLE OPPORTUNITY OF HEARING BEFORE ADJUDICATING THE ISSUE AFRESH. ITA NO.419/CTK/2018 ASSESSMENT YEAR : 2018-10 P A G E 5 | 5 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 10/5/2021. SD/- SD/- (LAXMI PRASAD SAHU) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER CUTTACK; DATED 10/5/2021 B.K.PARIDA, SPS (OS) COPY OF THE ORDER FORWARDED TO : BY ORDER SR.PVT.SECRETARY ITAT, CUTTACK 1. THE APPELLANT : PLANT LOVERS ASSOCIATION, KALINGA HOUSE, PLALASUNI, POST, GGP COLONY, BHUBANESWAR. 2. THE RESPONDENT. CIT (EXEMPTIONS), HYDERABAD. 3. THE CIT(A)-, BHUBANESWAR 4. PR.CIT-, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//