Film Lovers Cultural Association, Trivandrum V. CIT, Trivandrum

ITA 44/COCH/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7466 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 15-11-2011
• Assessment Year: misc
• Appeal Filed On: 25-01-2010
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: R SRIDHAR
• Keywords: Competent authority
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A NO. 44/COCH/2010 ASSESSMENT YEAR: NOT APPLICABLE FILM LOVERS CULTURAL ASSOCIATION, SIVAM NIRAMANKARA, PAPPANAMCODE P.O., TRIVANDRUM-695 018 [PAN: AAATF 2488D] VS. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. (ASSESSEE-APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI R.SRIDHAR, CA REVENUE BY SHRI S.R.SENAPATI, SR. DR DATE OF HEARING 15/11/2011 DATE OF PRONOUNCEMENT 25/12/2012 O R D E R PER SANJAY ARORA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER BY THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM (CIT FOR SHORT) DATED 26-1 1-2009 U/S. 12AA OF THE INCOME-TAX ACT, 1961 ('THE ACT' HEREINAFTER). 2. THE ASSESSEE IS A SOCIETY, FORMED AND REGISTERED UNDER THE TRAVANCORE-COCHIN LITERARY, SCIENTIFIC AND CHARITABLE SOCIETIES ACT X II OF 1955, IN OCTOBER, 1999. NOTED FILM MAKERS, WRITERS, DOCTORS OF MEDICINE, AND PERS ONS FROM OTHER WALKS OF LIFE, SHARING A COMMON INTEREST IN CINEMA CONSTITUTE ITS FOUNDING M EMBERS. THE SOCIETY IS RUN DEMOCRATICALLY, WITH ITS LIFE MEMBERS CONSTITUTING THE FRANCHISEE. ITS OBJECTS ARE SET OUT IN THE MEMORANDUM OF ASSOCIATION. I.T.A. NO. 44/COCH/2010 FILM LOVERS CULTURAL ASSOCIATION VS. CIT, TRIVANDRU M 2 3. THE ASSESSEE-SOCIETY APPLIED FOR REGISTRATION U/ S. 12AA OF THE ACT ON 06-05-2009. THE SAME WAS, HOWEVER, AFTER HEARING THE ASSESSEE I N THE MATTER, DENIED BY THE COMPETENT AUTHORITY PER THE IMPUGNED ORDER. IN HIS VIEW, FIRS TLY, THE OBJECTS WERE NOT CHARITABLE IN NATURE AND, SECONDLY, INVOLVED A COMPONENT OF COMME RCIAL ACTIVITY IN-AS-MUCH AS THE RECEIPTS FOR THE LAST THREE YEARS SHOWED SALE OF DE LEGATE PASSES, SO THAT THE PROSCRIPTION OF THE AMENDED SECTION 2(15), I.E., BY FINANCE ACT, 20 08 W.E.F. 1.4.2009, WOULD APPLY. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. 4.1 WE SHALL, FOR ADJUDICATING THIS APPEAL, EXAMINE BOTH THE CITED ASPECTS. WITH REGARD TO THE OBJECTS BEING NON-CHARITABLE IN NATURE, THE SAME ARE REPRODUCED AS UNDER:- 5. OBJECTIVES 5.1 TO ORGANIZE REGULAR SCREENING OF CLASSICS OF WORLD CINEMA AND FILMS OF ARTISTIC MERITS FROM ALL OVER THE WORLD AND TO ORGANISE DISC USSIONS ON FILMS AND RELATED TOPICS. 5.2 TO CONDUCT COURSES, LECTURES, WORKSHOPS AND O THER TEACHING PROGRAMMES ON CINEMA AND OTHER ARTS. 5.3 TO CREATE TASTE FOR GOOD CINEMA. 5.4 TO INCULCATE BETTER AESTHETIC VALUES AMONG STUDENTS OF ALL AGE GROUPS THROUGH THE MEDIUM OF CINEMA AND OTHER VISUAL ARTS. 5.5 TO ENCOURAGE SETTING UP OF FILM CLUB S IN EDUCATIONAL INSTITUTIONS INVOLVING THE STUDENTS AND TEACHERS, AND ORGANISE PROGRAMMES IN COLLABORATION WITH THEM. 5.6 TO PROMOTE THE IDEAL OF PROGRESSIVE CINEMA, TV, ART AND CULTURE, INCLUDING FOLK ARTS. 5.7 TO PROMOTE THE STUDY OF FILMS AND VI DEOS AS AN ART AND SOCIAL FORCE. 5.8 TO PROMOTE PUBLICATIONS ON FILMS AND VIDEOS OF ARTISTIC VALUES. 5.9 TO PROMOTE RESEARCH ON CINEMA. 5.10 TO ENCOURAGE THE PRODUCTION OF FIL MS AND VIDEOS OF ARTISTIC VALUES. I.T.A. NO. 44/COCH/2010 FILM LOVERS CULTURAL ASSOCIATION VS. CIT, TRIVANDRU M 3 5.11 TO PROMOTE THE FILM SOCIETY MOVEME NT IN COLLABORATION WITH OTHER FILM SOCIETIES/ORGANISATIONS HAVING SIMILAR OBJECTS. 5.12 TO PROMOTE AND MAINTAIN FRIENDSHI P WITH THE PEOPLE OF INDIA AND OF FOREIGN COUNTRIES THROUGH SCREENING, EXCHANGE OF FILMS, SE MINARS AND PUBLICATIONS ON CINEMA, ART AND CULTURE. 5.13 TO CO-OPERATE WITH NATIONAL AND INTERNATIONAL ORGANISATIONS HAVING SIMILAR OBJECTS. THE LD. CIT FOUND THE SAME AS NOT CHARITABLE, AS SC REENING OF CLASSIC FILMS AND FILMS OF ARTISTIC MERIT ARE VAGUE, AND A FAR CRY FROM THE OBJECT TO DEVELOP AND ENCOURAGE THE FILM INDUSTRY, WHICH WAS CONSIDERED AS CHARITABLE IN THE CASE OF CIT VS. SOUTH INDIAN FILM CHAMBER OF COMMERCE (1981) 129 ITR 22 (MAD.), SO THAT RELIANCE THEREON WOULD NOT BE OF ASSISTANCE TO THE ASSESSEE. 4.2 WE, HOWEVER, ARE WHOLLY IN DISAGREEMENT. T HIS IS AS A BARE READING OF THE OBJECT CLAUSES WOULD SHOW THAT THE ASSESSEE IS A FILM SOCI ETY, COMMITTED TO PROMOTE CINEMA IN ALL ITS DIFFERENT MODES, VIZ. REGULAR FEATURE FILMS , VIDEO, TV, AS AN ART FORM AND AS A MEDIUM FOR PROMOTING CULTURE, AS WELL AS A SOCIAL F ORCE, I.E., WHICH WOULD RAISE THE PUBLIC CONSCIOUSNESS IN AREAS OF COMMON INTEREST, AS A SOC IETY OR AS A PEOPLE. IN OUR VIEW, THEREFORE, IT WOULD BE WHOLLY INAPPROPRIATE TO LIMI T ITS OBJECT TO ONLY SCREENING OF FILMS, FURTHER QUALIFIED BY ALLEGEDLY `VAGUE ATTRIBUTES A S CLASSIC AND OF ARTISTIC MERIT. NO DOUBT, THERE CAN BE NO PRECISE MEASUREMENT OF THESE ATTRIBUTES, BUT THEN THE TERMS ARE JUST AS VAGUE AND, BY IMPLICATION (IF WE UNDERSTAND THE PURPORT OF THE REVENUES OBJECTION CORRECTLY) BEING INCAPABLE OF BEING GIVEN EFFECT TO , AT LEAST IN A DEFINED, DISCERNABLE MANNER, AS WHEN SOMEBODY IS CONSIDERED AS A `GOOD/E XCELLENT WRITER OR PAINTER OR MUSICIAN, ETC., RATHER, IN ALMOST ANY FIELD OF HUMA N ACTIVITY. HOWEVER, ABSENCE OF A PRECISE MEASUREMENT TOOL DOES NOT IMPLY ABSENCE OF OBJECTIVITY, EVEN THOUGH CERTAIN LEVEL OF SUBJECTIVITY IS INHERENT IN ALL EVALUATION S. THIS IS AS AESTHETICS BY ITS VERY NATURE IS MORE AMENABLE TO PERCEPTION RATHER THAN MEASUREM ENT. WHILE THE TECHNICAL ASPECTS (OF AN ACTIVITY OR WORK) ARE TAKEN CARE OF BY THE OBJEC TIVITY, THE SUBJECTIVE ASSESSMENT I.T.A. NO. 44/COCH/2010 FILM LOVERS CULTURAL ASSOCIATION VS. CIT, TRIVANDRU M 4 EVALUATES THE AESTHETICS. WOULD IT IMPLY THAT WHEN A PERSON IS SAID TO BE OF INTEGRITY OR BEARING A GOOD CHARACTER OR PERSONALITY OR AS CONFI DENT, ETC., THE SAME IS TO BE DISREGARDED AS A VAGUE STATEMENT, NOT CAPABLE OF ANY DEFINITE O R PRECISE MEANING. TO EXEMPLIFY FURTHER, WHEN IT IS SAID THAT THE PERSON IS (SAY) ` A GOOD TEACHER, IT NOT ONLY IMPLIES THAT HE HAS A GOOD COMMAND ON HIS SUBJECT, BUT ALSO THAT HE IS ABLE TO INTERACT WELL, ABLE TO EFFECTIVELY TRANSFER HIS THOUGHTS AND IDEAS TO STUD ENTS, ANTICIPATE AND RESOLVE THEIR QUERIES/PROBLEMS. THAT IS, IS ONE WHO, APART FROM A SOUND KNOWLEDGE OF HIS SUBJECT, POSSESSES GOOD COMMUNICATION SKILLS, IS INNOVATIVE, BESIDES HAVING QUALITIES OF PATIENCE, AFFABILITY, FAIRNESS, ETC. HOW CAN THESE SKILLS/QUA LITIES, WHICH ARE VITAL TO HIS PROFESSION, ONE MAY ASK, BE MEASURED, EVEN AS KNOWLEDGE OF THE SUBJECT COULD BE SO BY SUBJECTING THE PERSON TO SOME TEST THEREIN? THESE ATTRIBUTES, HOWSOEVER INTANGIBLE, ARE JUST AS REAL AND, AS AFORE-NOTED, NECESSARY FOR THE PROPER DISCH ARGE OF HIS DUTIES AND, FURTHER, CAN ONLY BE ACQUIRED THROUGH PATIENT, DAILY PRACTICE, WHICH MAY INCLUDE IMBIBING THROUGH PERSONAL EXPERIENCE. ABSENCE OF PRECISE DEFINITION/S, THE AT TRIBUTES BEING INHERENTLY QUALITATIVE IN NATURE, IS THUS OF NO MOMENT; THE HUMAN MIND BEING ADEQUATELY EQUIPPED TO EVALUATE AND APPRECIATE THE SAME. THE EXAMPLE OF TEACHING COULD BE EXTENDED TO ANY FIELD OF HUMAN ENDEAVOUR. 4.3 EVERY WORK IS A COMPLEX OR AN AMALGAM OF BOTH `SCIENCE, I.E., ITS TECHNICAL ASPECT, SIGNIFYING THE WORKING OF THE NATURAL LAW/S WHICH GOVERNS THE SAME, AND THE `ART, WHICH DENOTES ITS `HOW PART, I.E., THE MANNER IN W HICH A PARTICULAR THING IS TO BE PROPERLY EXECUTED OR DONE. THE COMPOSITION OR THE WEIGHT OF THESE TWO WOULD OF COURSE VARY WITH EACH FIELD OF WORK. CINEMA IS A COMPLEX ART FORM, DRAWING INPUTS FROM VARIOUS OTHER ART FORMS (VIZ. ACTING, MUSIC, DANCE, WRITING, POETRY, ET. AL) AS WELL AS, IN THE RECENT PAST INCREASINGLY, TECHNICAL ASPECTS (VIZ. PRODUCTION, C INEMATOGRAPHY, EDITING, ETC.) THE VISUAL IMPRESSION A FILM CARRIES GIVES IT A TOUCH OR FEEL OF REALITY, AND MAKES IT A POWERFUL TOOL OR MEDIUM FOR STORY TELLING, COMMUNICATION, CONVEYING IDEAS, WHICH COULD BE OF SOCIAL RELEVANCE OR ANY AREA OF INTEREST WHICH THE COMMUNI CATOR, I.E., THE FILM MAKER, CHOOSES TO PUT ACROSS TO HIS TARGET AUDIENCE. TV IS UBIQUITOUS TODAY, AND ONLY REPRESENTS A CHANNEL THROUGH WHICH FILMS INFLUENCE, NAY, OCCUPY A CENTRE STAGE IN OUR LIVES. I.T.A. NO. 44/COCH/2010 FILM LOVERS CULTURAL ASSOCIATION VS. CIT, TRIVANDRU M 5 4.4 THE APPELLANT-SOCIETY IS FORMED BY PEOPLE RELAT ED TO FILM INDUSTRY AS WELL AS OTHERS FROM DIFFERENT FIELDS, INTERESTED IN PROMOTING CINE MA, SO THAT THERE IS NO DOUBT AS TO THE INTEGRITY OF THE INSTITUTION, AND ITS HONESTY OF TH E PURPOSE IN CARRYING OUT THE STATED OBJECTS. WE, THEREFORE, FIND NO BASIS IN THE REFRAI N EXPRESSED BY THE LD. CIT IN THE MATTER. SCREENING OF FILMS REPRESENTS AN IMPORTANT, NAY, ES SENTIAL METHOD FOR EXPOSURE TO THE MEDIUM; THE WORK, AS WELL AS APPRECIATING IT IN ITS VARIOUS ASPECTS. THE SAME WOULD BE AKIN TO A LIBRARY WHERE BOOKS RECOGNIZED AS CLASSIC S, SAY IN LITERATURE, OR AUTHENTICATED TEXTS IN OTHER DISCIPLINES ARE MAINTAINED FOR GENER AL DISSEMINATION TO THE PUBLIC OR PEOPLE INTERESTED IN THE PARTICULAR DISCIPLINE. IN THE CAS E OF CIT V. GANGABAI CHARITIES , 142 ITR 718 (MAD.), THE NEED FOR PARTICULARISING THE CHARIT ABLE OBJECTS WAS EMPHASIZED, AS THE OBJECTS COULD NOT BE CONSTRUED IN AN ABSTRACT SENSE , BUT ONLY WITH REFERENCE TO THE CAPABILITY AND AMENABILITY OF THEIR BEING PUT INTO OPERATION, I.E., BEING ACTUALIZED OR REALIZED. THE SAID DECISION, RELIED UPON BY THE LD. CIT, IS THUS NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE; THE OBJECTS DEFINITELY FALLING U/S. 2(15) AS OBJECTS FOR ADVANCEMENT OF ANY OBJECT OF GENERAL PUBLIC UTI LITY. 4.5 AS REGARDS THE SECOND OBJECTION BY THE REVENUE, THE SAME ALSO NEEDS TO BE STATED TO BE REJECTED. THE OPERATING STATEMENT FOR TWO OF THE PRECEDING THREE YEARS EXHIBITS AN EXCESS OF EXPENDITURE OVER INCOME, WHILE FOR ONE (I .E., THE YEAR ENDING 31-03-2007), A MEAGRE SURPLUS OF ` 1328/-. THE SALE OF DELEGATE PASSES, WHICH WE SEE A S ONLY A MANNER OF RECOUPING A PART OF THE COST, IS AT A NOMINAL ` 20,000-23,000/- FOR EACH OF THE THREE YEARS, COMPRISING, AGAIN, A VERY NOMINAL RATIO OF THE TOTA L EXPENDITURE. CAN IT BE SAID THAT THE SCREENING OF FILMS, TOWARD WHICH WE UNDERSTAND THE SAME TO BE, INVOLVES NO COST? THE SAME, THEREFORE, CANNOT BE CONSIDERED AS AN ACTIVI TY FOR PROFIT, BUT ONLY TOWARD CONTRIBUTING, IN FACT INSIGNIFICANTLY, TOWARD MEETI NG THE REGULAR AND BONA FIDE COSTS INCURRED FOR CARRYING OUT THE OBJECTS. 5. IN VIEW OF THE FOREGOING, WE FIND NO MERIT IN TH E REVENUES CASE AS MADE OUT AND, ACCORDINGLY, DIRECT FOR THE ACCEPTANCE OF THE ASSES SEES APPLICATION FOR REGISTRATION U/S. 12A OF THE ACT. WE DECIDE ACCORDINGLY. I.T.A. NO. 44/COCH/2010 FILM LOVERS CULTURAL ASSOCIATION VS. CIT, TRIVANDRU M 6 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 25TH JANUARY, 2012 GJ COPY TO: 1. FILM LOVERS CULTURAL ASSOCIATION, SIVAM NIRAMA NKARA, PAPPANAMCODE P.O., TRIVANDRUM-695 018. 2. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 3. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 4. GUARD FILE . BY ORDER (ASISTANT REGISTRAR) ITAT, COCHIN BENCH