SHREE VAGAD VISHA OSWAL SOCIAL GROUP ( BORIVALI ), MUMBAI V. DIT (E), MUMBAI

ITA 4312/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84487 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 03-12-2014
• Assessment Year: 2013-2014
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHAN VYAS
• Assessee Lawyers: KADAMBARI DAVE
• Keywords: Charitable institution

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI VIVEK VARMA, JM ./ I.T.A. NO. 4312/MUM/2013 ( / ASSESSMENT YEAR: 2013-14) SHREE VAGAD VISHA OSWAL SOCIAL GROUP (BORIVALI) C/O. M/S. VICTOR PLY N LAMINATES, SHOP NO.5/6, GIRIRAJ BLDG., S.V.P. ROAD, BORIVALI (W), MUMBAI-400 103 / VS. DIT (EXEMPTIONS), 6 TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI-400 012 ! ./' ./PAN/GIR NO. ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) !# & ' / APPELLANT BY : SHRI GIRISH DAVE & MS. KADAMBARI DAVE $%!# & ' / RESPONDENT BY : SHRI KISHAN VYAS ( ) & * + / DATE OF HEARING : 03.12.2014 DATE OF ORDER : 05.12.2014 , / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE CONTESTING THE OR DER U/S.12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961, (THE ACT HEREINAFTER) DATED 26.04.2013 PASSED BY THE DIRECTOR OF INCOME TAX (EXEMPTIONS), MUMBAI (DIT(E)), REJECTI NG ASSESSEES APPLICATION FOR GRANT FOR REGISTRATION U/S.12A OF THE ACT. 2. OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE A SSESSEE, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, THAT THE IMPUGNED ORDER SUFFERS ON BOTH, I.E., QUA THE PROCEDURAL ASPECT AS WELL AS THE MERITS OF THE CASE, AND THAT HE WOULD ADDRESS BOTH THE ASPECTS, IN SERIATIM. AS REGARDS PROCEDURE, THE ASSESSEE HAS NOT 2 ITA NO. 4312/MUM/2013 (A.Y. 2013-14) SHREE VAGAD VISHA OSWAL VS. DIT (EXEMPTIONS) BEEN AFFORDED PROPER OPPORTUNITY TO EXPLAIN ITS CA SE BY THE LD. DIT(E), BY SHOW CAUSING IT IN THE MATTER. THE ASSESSEE, WHERE SO, COULD HAV E EITHER EXPLAINED AS TO WHY AND HOW ITS OBJECTS ARE WHOLLY CHARITABLE OR COULD EVEN AL TER/MODIFY THE SAME SO AS TO SATISFY THE LD. DIT(E) IN THE MATTER. THE ASSESSEE HAD, HE WOUL D CONTINUE, RESPONDED TO EACH OF THE QUERIES RAISED BY THE OFFICE OF THE LD. DIT(E) IN T HE COURSE OF THE PROCESSING OF THE ASSESSEES APPLICATION FOR REGISTRATION AS A CHARIT ABLE INSTITUTION, AND TOWARD WHICH HE WOULD TAKE US THROUGH ITS LETTERS DATED 06.02.2013 , 13.03.2013 AND 06.04.2013, AND THE ANNEXURES ACCOMPANYING THE SAME, AS WELL AS THE COM MUNICATIONS BY THE OFFICE OF THE LD. DIT(E) DATED 11.01.2013 AND 28.03.2013 (FORMING PAR T OF THE ASSESSEE-APPELLANTS PAPER- BOOK). ON MERITS, HE WOULD SUBMIT THAT THE ASSESSEE S PRIMARY OBJECTS ARE TO CARRY OUT EDUCATIONAL AND MEDICAL ACTIVITIES, WITH ITS ORGANI ZATION BEING ALSO GEARED TOWARD THE SAME. THESE REPRESENT THE PRIMARY OBJECTS, EVEN AS SEVERAL OTHERS HAVE ALSO BEEN INCLUDED IN THE MEMORANDUM OF ASSOCIATION. IT IS CUSTOMARY T O, WHILE PREPARING THE MEMORANDUM OF ASSOCIATION OF A SOCIETY/TRUST, TO INCLUDE AS MA NY OBJECTS AS POSSIBLE AT THE TIME OF ITS INCORPORATION, SO THAT THE TRUST IS NOT CONSTRAINED TO EXECUTE ANY PROJECT OR ACTIVITY, CHARITABLE IN NATURE, THE RANGE OF WHICH IS LIMITED ONLY BY ONES IMAGINATION, FOR WANT OF THE RELEVANT OBJECT. THE CHARGE OF NON-CHARITABLE A ND COMMERCIAL NATURE OF THE OBJECTS BY THE LD. DIT(E), EVEN IF REGARDED AS VALID, IS ONLY WITH REGARD TO SUCH OBJECTS, WHICH ARE IN ANY CASE ANCILLARY AND INCIDENTAL OBJECTS, NONE OF WHICH HAVE ACTUALLY BEEN OR INTENDED TO BE PURSUED BY THE ASSESSEE-TRUST. THAT BY ITSELF SH OULD NOT OUST THE ASSESSEES CASE. THE LD. DR WOULD, ON THE OTHER HAND, RELY ON THE I MPUGNED ORDER, STATING THAT THE LD. DIT(E) HAD RAISED PERTINENT ISSUES, WHICH HAVE NOT BEEN MET BY THE ASSESSEE OR OTHERWISE SHOWN TO BE INFIRM, ADVERTING OUR ATTENTI ON TO HIS FINDINGS AND DECISION. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE ARE INCOMPLETE AGREEMENT WITH THE REASONS STATE D BY THE LD. DIT(E) IN NOT ACCEPTING THE ASSESSEES APPLICATION, I.E., VIDE PA RA 7 OF HIS ORDER. EVEN AS OBSERVED DURING THE HEARING, EXISTENCE OF EVEN ONE OBJECT WH ICH IS NON-CHARITABLE OR COMMERCIAL IN NATURE, WOULD SUFFICE TO OUST THE ASSESSEES CLAIM FOR BEING ELIGIBLE TO BE REGISTERED AS A CHARITABLE TRUST/INSTITUTION, AND WHICH, I.E., MIXE D OBJECTS, FORMS THE SUBSTANCE OR THE 3 ITA NO. 4312/MUM/2013 (A.Y. 2013-14) SHREE VAGAD VISHA OSWAL VS. DIT (EXEMPTIONS) PRINCIPAL REASON OF THE LD. DIT(E) IN REJECTING THE ASSESSEES APPLICATION. IN FACT, EVEN THE CLASSIFICATION OF SOME OBJECTS AS OTHER OR SUBSI DIARY OR ANCILLARY, ETC. WOULD, IN OUR VIEW, BE IRRELEVANT OR IMMATERIAL FOR THE PURPOSE, AN ASPECT WHICH, WHERE SO, MAY PERHAPS HAVE FOUND FAVOUR WITH THE LD. DIT(E) INASMUCH AS H E STATES (AT PARA 7) THAT THERE IS NOTHING TO INDICATE THAT THE APPLICANT HAS SOME PRI MARY OR PREDOMINANT OBJECTS, AS STATED, WHILE OTHERS ARE ANCILLARY OR INCIDENTAL. THIS IS A S WHAT IS RELEVANT IS NOT WHETHER ANY ACTIVITY HAS ACTUALLY BEEN UNDERTAKEN IN PURSUANCE THEREOF, BUT THAT IT COULD BE; THE APPLICANT-TRUST HAVING THE NECESSARY POWER OR AUTHO RIZATION UNDER ITS MEMORANDUM TO DO SO. THE PLEA WITH REGARD TO THE CUSTOMARY MANNER IN WHICH THE MEMORANDUM IS PREPARED, IS NOT A LEGALLY VALID ARGUMENT AND, RATH ER, IS, GIVEN THE POSITION OF LAW, SELF- DEFEATING OF THE ASSESSEES CASE. THE MATTER IS WEL L-SETTLED, AND FOR WHICH ONE MAY REFER TO THE DECISIONS BY THE APEX COURT, AS IN THE CASE OF CIT VS. PALGHAT SHADI MAHAL TRUST [2002] 254 ITR 212 (SC); UPPER GANGES SUGAR MILLS LTD. VS. CIT [1997] 227 ITR 578 (SC); AND CIT VS. DELHI STOCK EXCHANGE ASSOCIATION LTD. [1997] 225 ITR 235 (SC), EVEN AS OBSERVED BY THE BENCH DURING THE COURSE OF HEARI NG ITSELF. AGAIN, ON MERITS, WE CANNOT FIND FAULT WITH THE IMP UGNED ORDER I.E., IN CONSTRUING SOME OBJECTS AS BEING LIABLE TO BE REGARDED AS COMM ERCIAL IN NATURE, OR BEING CARRIED OUT IN A COMMERCIAL MANNER. AS AN EXAMPLE, WE TAKE THE FIRST OBJECT READ OUT BY THE LD. AR DURING HEARING: I.(K) TO CARRY ON ALL OR ANY OF THE ACTIVITIES OF MAKERS OF AND DEALERS IN SURGICAL INSTRUMENT AND APPLIANCES AND ARTIFICIAL LIMBS, DEN TAL AND OPTICAL EQUIPMENT AND GOODS ANATOMICAL, ORTHOPEDIC AND SURGICAL APPLIANCE S OF ALL KINDS AND PROVIDES OF ALL REQUISITES FOR HOSPITAL, PATIENTS AND INVALIDS. CLEARLY, MAKING OF OR DEALING IN SURGICAL INSTR UMENTS, APPLIANCES, ETC., DEFINITELY HAS COMMERCIAL RAMIFICATIONS. WHY, AS IN DICATED DURING HEARING, THIS WOULD PRECISELY BE AN OBJECT A COMMERCIAL ORGANIZATION AS A MANUFACTURER OR DEALER OF SUCH INSTRUMENTS OR EQUIPMENT, WOULD ADOPT AND PURSUE. W E ARE CONSCIOUS THAT THE ASSESSEE HAS FURNISHED AN EXPLANATION ABOUT VARIOUS CLAUSES OF THE TRUST DEED VIDE ITS LETTER DATED 13.03.2013, AND WHICH CLEARLY STATES THE RELEVANT O BJECT/S TO BE PURSUED ON A NON- COMMERCIAL/NO PROFIT-NO LOSS BASIS. AN EXPLANATION, IT MAY BE APPRECIATED, CANNOT 4 ITA NO. 4312/MUM/2013 (A.Y. 2013-14) SHREE VAGAD VISHA OSWAL VS. DIT (EXEMPTIONS) SUBSTITUTE THE GENERALITY OF THE OBJECT/S, SO THAT IT WOULD HAVE TO BE AMENDED ACCORDINGLY OR OTHERWISE RESTRICTED BY INSERTING A SUPERVENING CLAUSE, IMPOSING THE SAID RESTRICTION OR OTHERWISE MEETING THE OBJECTION. SO HOWEVER, WE FIND SOME MERIT IN THE ASSESSEES CO NTENTION THAT THERE IS ACTUALLY NO INTENT FOR ADOPTING SUCH A COURSE, AND THAT IT B E ALLOWED AN OPPORTUNITY TO AMEND ITS OBJECT/S SUITABLY. THIS IS MORE SO AS THE ASSESSEE HAS COMPLIED WITH ALL THE NOTICES, FURNISHING ALL THE RELEVANT INFORMATION/DETAILS AS CALLED FOR BY THE OFFICE OF THE LD. DIT(E) AND, MORE IMPORTANTLY, NO SHOW CAUSE NOTICE, STATIN G THE PRECISE OBJECTION TO THE ASSESSEES APPLICATION, HAD BEEN ISSUED THERETO. AS SUCH, WHILE IN AGREEMENT WITH AND, CONSEQUENTLY, UPHOLDING THE IMPUGNED ORDER ON MERIT S, WE ARE INCLINED TO CONSIDER IT AS PROCEDURALLY DEFICIENT. PROCEDURAL LAW, IT IS TRITE , IS A HAND-MAIDEN OF JUSTICE. UNDER THE CIRCUMSTANCES, WE ONLY CONSIDER IT FIT AN D PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE LD. DIT(E), TO ENABLE THE A SSESSEE TO MEET AND ADDRESS HIS OBJECTIONS, FOUND VALID, ON MERITS. IN THIS REGARD WE MAY FURTHER CLARIFY THAT THE AMENDMENT, IF ANY, TO ITS OBJECTS BY THE APPLICANT -TRUST, WOULD HAVE TO BE CARRIED OUT BY FOLLOWING THE PROCEDURE MANDATED BY LAW IN THIS REG ARD, AND FOR WHICH WE MAY AGAIN REFER TO THE DECISIONS CITED SUPRA BY THE HONBLE A PEX COURT. THE ASSESSEE, EVEN AS ASSURED BY THE LD. AR, SHALL EXTEND FULL COOPERATION IN THE SAID PROCEEDINGS, FAILING WHICH THE LD. DIT(E) SHALL BE AT LIBERTY TO DISPOSE THE MATTER ON THE BASIS OF THE MATERIAL ON RECORD IN ACCORDANCE WITH LAW. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. - .*/ )0- * & 1& 234 56 7 * & * 89 ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 03, 2014 AT THE CONCLUSION OF THE HEARING. SD/- SD/- (VIVEK VARMA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ( : MUMBAI; ;) DATED : 05.12.2014 AKHILESH, PS 5 ITA NO. 4312/MUM/2013 (A.Y. 2013-14) SHREE VAGAD VISHA OSWAL VS. DIT (EXEMPTIONS) ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( <* ( ) / THE CIT(A) 4. ( <* / CIT - CONCERNED 5. ?@ $*)A0 , + A0 . , ( : / DR, ITAT, MUMBAI 6. @B C / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , ( : / ITAT, MUMBAI