Yakult India Microbiota and Probiotic Science Foundation, New Delhi V. DIT (E), New Delhi

ITA 5031/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7485 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 01-12-2014
• Assessment Year: misc
• Appeal Filed On: 30-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GUNJAN P RASAD
• Assessee Lawyers: HEENA KHURANA
• Keywords: Opportunity of being heard
• Section: 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H , NEW DELHI BEFORE SH. N. K. SAINI, A M AND SH. C. M. GARG , J M ITA NO. 5031/DEL/2013 : ASSTT. YEAR : ITA NO. 5032/DEL/2013 : ASSTT. YEAR: YAKULT INDI A MICROBIOTA AND PROBIOTIC SCIENCE FOUNDATION, 52, OKHLA INDUSTRIAL ESTATE, PHASE - III, NEW DELHI - 110020 VS DIT(EXEMPTION) NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAAAY2127R A SSESSEE BY : MS. HEENA KHURANA, C A REVENUE BY : SH. GUNJAN PRASAD , CIT DR DATE OF HEARIN G : 16 .1 2 . 2014 DATE O F PRONOUNCEMENT : 19 . 1 2 .2014 ORDER P ER N. K. SAINI , AM: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER DATED 31.07.2013 O F LD. DIT(EXEMPTION), DELHI. 2 . FIRSTLY WE WILL DEAL WITH ITA NO. 5031 /DEL/ 2013 . IN THIS APPEAL THE GRIEVANCE OF THE ASSESSEE RELATES TO THE REJECTION OF APPLICATION MOVED BY THE ASSESSEE FOR REGISTRATION U/S 12A OF THE I.T. ACT, 1961 (HEREINAFTER REFERR ED TO AS ACT IN SHORT). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE SOCIETY FILED AN APPLICATION ON 29.01.2013 IN FORM NO. 10A FOR SEEKING REGISTRATION U/S 12A OF THE ACT. THE LD. DIT (EXEMPTION) AFTER PERUSING THE DETAILS FILED BY THE ASSESSEE HAD NOTED THE FOLLOWING POINTS: ITA NO. 5031 & 5032/DEL/2013 YAKULT INDIA MICROBIOTA AND PROBIOTIC SCIENCE 2 I) YAKULT INDIA MICROBIOTA AND PROBIOTIC SCIENCE FOUNDATION HAS BEEN FORMED ON 09.11.2011, PRIMARILY FOR PROVIDING A THRUST TO THE FIELD OF PROBIOTICS IN THE COUNTRY. IT IS STATED THAT THE FOUNDATION WILL CHANNELIZE INTERNAT IONAL KNOWLEDGE AND EXPERTISE IN THE FIELD OF PROBIOTICS AND WILL PROMOTE COLLABORATIVE RESEARCH IN THE DEVELOPMENT OF PROBIOTICS AS WELL AS FOSTER AND MAINTAIN RESEARCH LINKS WITH SCIENTISTS OF SIMILAR INTEREST. THE FOUNDATION AIMS TO PROVIDE A COMMON SC IENTIFIC PLATFORM FOR BASIC SCIENTISTS AND CLINICIANS TO SHARE AND EXCHANGE KNOWLEDGE AND VIEWS AND DELVE INTO NEWER AREAS OF PROBIOTIC RESEARCH. II) THE FOUNDATION HAS ORGANIZED TWO SYMPOSIUMS SINCE THE DATE OF ITS FORMATION; FIRST IN DECEMBER, 2011 IN MUMBAI; AND THE SECOND IN DECEMBER, 2012 IN BENGALURU III) AS PER THE INCOME & EXPENDITURE ACCOUNT AS ON 31.03.2013 FILED BY THE SOCIETY IT DOES NOT HAVE ANY SOURCE OF INCOME EXCEPT THE MEMBERSHIP FEE RECEIVED AT RS. 25000/ - (NIL DURING THE YEAR 31 / 0 3/2013) AND INTEREST INCOME OF RS. 43,420/ - (RS. 41,291/ - DURING THE YEAR ENDING 31.03.3013). THUS, THE SOCIETY HAD GROSS RECEIPTS OF RS. 68,420/ - IN 2011 - 12 AND RS. 41,291/ - IN 2012 - 13. AGAINST THIS INCOME THE SOCIETY HAS INCURRED TOTAL EXPENSES OF RS. 70 ,24,707/ - AS ON 31.03.2012 AND RS. 1,07,08,978/ - AS ON 31.03.2013. ON A QUERY AS TO FROM WHERE THESE EXPENSES HAVE BEEN MET, IT WAS INFORMED THAT THE EXPENSES HAVE BEEN INCURRED BY TAKING A CC LIMIT FROM ICICI BANK. IT WAS FURTHER STATED THAT THE LOAN TAK EN BY THE SOCIETY TO ARRANGE THE IMPARTING OF EDUCATION AND ADVANCEMENT OF THE INFORMATION REGARDING THE OBJECT BY WAY OF CONDUCTING SEMINARS ETC. HAS BEEN ADVANCED BY THE ICICI BANK ON THE BASIS OF FDRS OF THE COMPANY M/S YAKULT DANONE INDIA (P) LTD. WHEN EVER THE REGISTRATION AND EXEMPTION ARE GIVEN, THE SOCIETY WILL RAISE THE FUNDS AND CLEAR THE LOANS. THE FDR OF THE MOTHER COMPANY HAS BEEN GIVEN BY THE COMPANY TO THE SOCIETY ITA NO. 5031 & 5032/DEL/2013 YAKULT INDIA MICROBIOTA AND PROBIOTIC SCIENCE 3 WHICH IS FOREIGN BASED AND HAS SET UP THEIR BUSINESS IN INDIA. THESE FDRS HAVE B EEN GIVEN AS SECURITY FOR THE TIME BEING. IV) A PERUSAL OF THE DETAILS OF EXPENDITURE FURTHER REVEALS THAT THE APPLICANT HAS INCURRED THESE EXPENDITURE MAINLY TO ORGANIZE THE SEMINARS AND TO PAY HONORARIUM, PERDIEM EXPENSES TO THE PARTICIPANTS AND TRAVELL ING, BOARDING AND LODGING EXPENSES TO THE FACULTY SPACE/SPEAKERS. IT IS ALSO NOTED THAT THE FOUNDER MEMBERS AND GOVERNING COUNCIL MEMBERS ALSO HAVE BEEN PAID HONORARIUM AND TRAVELLING EXPENSES FOR ATTENDING THE GOVERNING BODY MEETING AND PARTICIPATING IN T HESE SEMINARS. V) IT IS ALSO NOTED THAT DR. NEERAJ HAJELA, WHO IS THE SECRETARY AND TREASURER OF THE SOCIETY IS IN FACT THE EMPLOYEE HEAD SCIENCE OF YAKULT DANONE INDIA (P) LTD. FURTHER, THE FOUNDATION HAS PAID RS. 1,00,000/ - ON A/C OF REIMBURSEMENT OF MANPOWER (DR. NEERAJ HAJELA AND MR. SATISH) AND RS. 1.5 LACS FOR ENDING THE OFFICE SPACE FROM APRIL 12 TO JANUARY, 2013 TO YAKULT DANONE INDIA (P) LTD. VI) IT IS SEEN THAT THE REGISTERED OFFICE OF THE FOUNDATION IS RESIDENTIAL ADDRESS OF DR. NEERAJ HAJELA WHO IS HEAD - SCIENCE OF YAKULT DANONE INDIA (P) LTD. VII) IT IS ALSO NOTED THAT THE REPRESENTATIVE FROM YAKULT DANONE ATTENDED BOTH THE SEMINARS. DR. KOJI NOMOTO, ASSOCIATE DIRECTOR OF YAKULT CENTRAL INSTITUTE FOR MICROBIOLOGICAL RESEARCH, TOKYO AND DR. M ASANOBU NANNO, ASSOCIATE DIRECTOR OF YAKULT CENTRAL INSTITUTE FOR MICROBIOLOGICAL RESEARCH, TOKYO ATTENDED THE SEMINAR HELD AT MUMBAI IN DECEMBER, 2011 AND MR. JEAN MICHEL ANTOINE, DIRECTOR NUTRITION, DANONE RESEARCH, FRANCE, ATTENDED THE SEMINAR HELD AT B ENGALURU IN DECEMBER, 2012. 4 . THE LD. DIT(EXEMPTION) ALSO POINTED OUT THAT THE ASSESSEE FOUNDATION IS NAMED AFTER YAKUL T AND IT IS CONDUCTING ITS AFFAIRS OUT OF FUNDING DRAWN FROM CC LIMIT GRANTED BY YAKUL T D ANONE INDIA (P) LTD. BY WAY OF PLEDGING ITS F DRS. SHE POINTED OUT THAT AS PER WIKIPEDIA - YAKUL T IS A PROB IOTIC ITA NO. 5031 & 5032/DEL/2013 YAKULT INDIA MICROBIOTA AND PROBIOTIC SCIENCE 4 MILK - LIKE PRODUCT MADE BY FERMENTING A MIXTURE WITH SPECIAL STRAIN OF THE BACTERIUM. 5. THE LD. DIT(EXEMPTION) ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE FOUNDATION BE NOT T REATED AS CAR RYING OUT RESEARCH FOR YAKUL T DA NONE INDIA (P) LTD. AND ITS ACTIVITIES SHOULD NOT BE TREATED AS NOT CHARITABLE WITHIN THE MEANING OF SECTION 2(15) OF THE I.T ACT. IN RESPONSE THE ASSESSEE EXPLAINED AS UNDER: 1. THAT UNDER THE HEAD HONORARIUM PAID TO MEM BERS OF THE GOVERNING BODY/FOUNDER MEMBERS THE AMOUNT REFLECTED IN THE INCOME AND EXPENDITURE ACCOUNT IS NOTHING BUT THE REIMBURSEMENT OF THE EXPENSES INCURRED BY THOSE MEMBERS FOR ATTENDING THE MEETING/SYMPOSIUMS ORGANIZED BY THE SOCIETY. NO HONORARIUM HAS BEEN PAID ON REGULAR BASIS AS FIXED HONORARIUM, THEREFORE, THERE IS NO VIOLATION OF UTILIZATION OF FUNDS FOR MEMBERS OF THE GOVERNING BODY OR FOUNDER MEMBERS. 2. THE CLARIFICATION OF MONEY RECEIVED FROM THE BANK AGAINST THE GUARANTEE GIVEN BY YAKULT D ANONE INDIA PVT. LTD. IS CLARIFIED THAT THE SOCIETY WILL REPAY THE MONEY TAKEN AS LOAN FROM THE BANK FROM THE MONEY THAT WILL BE RECEIVED BY THE SOCIETY AT A LATER DATE. 3. IN RESPONSE TO YOUR QUERY THAT THE FOUNDATION MAY NOT BE TREATED AS PAID RESEARCH ORGANIZATION OF THE COMPANY WHO HAS ADVANCED AND STOOD SURETY BY WAY OF THEIR FDR IT IS CLARIFIED THAT THE RESEARCH ON PROBIOTICS IS NOT DONE ONLY IN INDIA BUT RESEARCH IS BEING WORLD OVER AND DISSEMINATED AT VARIOUS CONFERENCES AND SYMPOSIA WHERE THIS SOC IETY HAS TAKEN A LEAD ROLE TO IMPART EDUCATION AND ADVANCEMENT OF THIS SUBJECT TO VARIOUS HEALTH CARE PROFESSION ALS/STUDENTS. THE PRESENTATIONS OF THE SYMPOSIUMS ARE PUB LISHED AS BOOKS AND DISTRIBUTED TO HEALTH CARE PROFESSIONALS AND LIBRARIES FOR FURTHER EDUCATION. THEREFORE, THIS SOCIETY IS NOT A PAID RESEARCH ORGANIZATION OF YAKULT DANONE INDIA PVT. LTD. ITA NO. 5031 & 5032/DEL/2013 YAKULT INDIA MICROBIOTA AND PROBIOTIC SCIENCE 5 6 . THE LD. DIT(EXEMPTION), HOWEVER, DID NOT FIND MERIT IN THE ABOVE EXPLANATION OF THE ASSESSEE AND WAS OF THE VIEW THAT THE ACTIVITIES OF THE ASSES SEE DID NOT FALL WITHIN THE AMBIT OF CHARITABLE ORGANIZATION IN TERMS OF SECTION 2(15) OF THE ACT. SHE FURTHER OBSERVED THAT THE OBJECTS AND ACTIVITIES OF THE ASSESSEE SOCIETY WERE IN FACT IN THE NATURE OF SPONSORED RESEARCH BY AN INTERESTED GROUP I.E. YAK ULT D ANONE INDIA (P) LTD. , WHICH IS COMMERCIAL ORGANIZATION. SHE ALSO OBSERVED THAT THERE IS A LOT OF RESEARCH WHICH IS BEING FUNDED BY THE INTERESTED CORPORATE SECTOR AND SUCH RESEARCH CANNOT BE TERMED AS AN ACTIVITY OF CHARITABLE NATURE IN VIEW OF SECTIO N 2(15) OF THE ACT , AS TARGETED BENEFICIARY IS THE ORGANIZATION WHICH IS FUNDING THE RESEARCH. THE LD. DIT (EXEMPTION), ULTIMATELY WITHOUT GOING INTO QUESTION WHETHER THE ASSESSEE FOUNDATION IS DOING ANY RESEARCH WORK AT ALL , CONCLUDED THAT THE ACTIVITY BEI NG CARRIED OUT BY THE ASSESSEE SOCIETY IS IN THE VESTED INTEREST OF THE COMMERCIAL BODY/ COMPANY YAKULT DANONE INDIA (P) LTD. SHE, THEREFORE, REJECTED THE APPLICATION FOR REGISTRATION U/S 12A OF THE ACT. 7 . NOW THE ASSESSEE I S IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. DIT(EXEMPTION) AND FURTHER SUBMITTED THAT THE ASSESSEE SOCIETY IS ENGAGED IN THE RESEARCH ACTIVITY FOR THE BENEFIT OF PUBLIC AT LARGE AND PUBLISHED MANY RESEARCH PAPERS LIKE PROBIOTICS IN PREV ENTION OF LIFESTYLE DISORDERS ( COPY OF THE SAME WAS FURNISHED ) . IT WAS FURTHER STATED THAT THE REGISTRATION HAS BEEN GRANTED TO MANY OTHER SIMILAR FOUNDATIONS DOING THE SAME ACTIVITY LIKE RANBAXY ITA NO. 5031 & 5032/DEL/2013 YAKULT INDIA MICROBIOTA AND PROBIOTIC SCIENCE 6 SCIENCE FOUNDATION ETC. IT WAS FURTHER STATED THAT THE PROBI OTIC S LITERALLY MEANS FOR LIFE , THE ASSESSEE IS ENGAGED IN RESEARCH RELATING TO THE PROBIOTICS, THEREFORE, THE ACTIVITIES OF THE ASSESSEE ARE CHARITABLE IN NATURE. IT WAS STATED THAT THE ASSESSEE ORGANIZED SEMINARS & SYMPOSIA ETC. AND DISTRIBUTED THE B OO KS IN THE LIBRARIES, PUBLISH ING THE LITERATURE & NEWSLETTERS FOR THE BENEFIT OF THE PUBLIC - IN - LARGE , THEREFORE, THE PURPOSE OF THE ASSESSEE IS TO GIVE RELIEF TO THE POOR, MEDICAL RELIEF ETC. WHICH IS CHARITABLE IN NATURE AS PER THE PROVISIONS CONTAINED IN SECTION 2(15) OF THE ACT. IT WAS FURTHER STATED THAT THE LD. DIT WHILE CONSIDERING THE APPLICATION OF THE ASSESSEE FOR THE REGISTRATION U/S 12A OF THE ACT WAS REQUIRED TO SEE THE OBJECTS OF THE ASSESSEE BUT WITHOUT CONSIDERING THE SAID OBJECTS WHICH ARE CH ARITABLE IN NATURE, T HE LD. DIT REJECTED THE APPLICATION MOVED BY THE ASSESSEE , IN AN ARBITRARY MANNER. THE RELIANCE WAS PLACED ON THE FOLLOWING CASES WAS : PIMS MEDICAL & EDUCATION CHARITABLE SOCIETY VS CIT - II, CHANDIGARH KASYAPA VEDA RESEARCH FOUNDATION VS CIT, CALICUT SOCIAL PEDIA KNOWLEDGE FOUNDATION VS DIT(EXEMPTIONS) CIT VS JODHPUR CHARTERED ACCOUNTANTS SOCIETY ITO(E), TRUST WARD - II, DELHI VS SOCIETY FOR ESSENTIAL HEALTH ACTION & TRAINING SMT. VIDYAWANTI LABURAM FOUNDATION FOR SCIENCE RESEARCH & SOCIA L WELFARE VS ITO, WARD - 2, SRIGANGANAGAR HEART CARE MANAGEMENT VS DIT(EXEMPTION), NEW DELHI SIKKIM MANIPAL UNIVERSITY OF HEALTH, MEDICAL & TECHNOLOGICAL SCIENCES VS CIT, SILIGURI ITA NO. 5031 & 5032/DEL/2013 YAKULT INDIA MICROBIOTA AND PROBIOTIC SCIENCE 7 DIT VS FOUNDATION OF OPHTHALMIC & OPTOMETRY RESEARCH EDUCATION CENTRE SHREE VI LE PARLE VARDHMAN STHANAKVASI JAIN FOUNDATION VS DIT(EXEMPTION) ITO, WARD - 1, NEW DELHI VS SCIENCE OLYMPAID FOUNDATION 8 . IN HIS RIVAL SUBMISSIONS THE CIT DR STRONGLY SUPPORTED THE ORDER OF THE LD. DIT(EXEMPTION) AND FURTHER STATED THAT THE DOCUMENTS IN TH E FORM OF BOOK ON PROBIOTICS PREVENTION OF LIFESTYLE DISORDERS AND THE NEWSLETTERS \ & LITERATURES ETC. WHICH IS CLAIMED TO HAVE BEEN DISTRIBUTED WERE NOT PRODUCED BEFORE THE LD. DIT , THEREFORE, THESE ARE THE NEW DOCUMENTS FURNISHED FIRST TIME BEFORE THE IT AT SO THESE SHOULD NOT BE CONSIDERED. IT WAS SUBMITTED THAT THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE SOCIETY WERE FUNDED BY A COMMERCIAL ORGANIZATION AND THE RESEARCH UNDERTAKEN , IF ANY , BY THE ASSESSEE SOCIETY WAS SPONSORED R ESEARCH BY AN INTERESTED GROU P, THEREFORE, THE LD. DIT(EXEMPTION) RIGHTLY REJECTED THE APPLICATION FOR REGISTRATION U/S 12A OF THE ACT. HE ALSO STATED THAT THE CASES RELIED BY THE LD. COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE ON FACTS. 9 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE IT APPEARS THAT THE DETAILS OF THE SEMINARS AND SYMPOSIUM ETC. ORGANIZED BY THE ASSESSEE SOCIETY AND THE LITERATURE, NEWSLETTERS AND BOOKS ON PROBIOTICS ETC. WERE NOT FURNISHED EARLIER SO THESE WERE NOT AVAILABLE TO THE DIT(EXEMPTION) FOR HER EXAMINATION AND CONSIDERATION . THE CLAIM OF THE ASSESSEE SOCIETY FOR GETTING THE REGISTRATION U/S 12A OF THE ACT IS BASED ON ITA NO. 5031 & 5032/DEL/2013 YAKULT INDIA MICROBIOTA AND PROBIOTIC SCIENCE 8 THESE DOCUMENTS. WE, THEREFORE, TO MEET THE END S OF JUSTICE DEEM IT APPROPRIATE TO REMAND THIS ISSUE BACK TO THE FILE OF THE LD. DIT(EXEMPTION) TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE SOCIETY AND BY CONSIDERING ALL THE DO CUMENTS WHICH ARE FURNISHED FIRST TIME BEFORE THE ITAT. THE LD. DIT(EXEMPTION) SHALL DECIDE THE ISSUE EXPEDITIOUSLY. 10 . AS REGARDS TO THE APPEAL IN ITA NO. 5032/DEL/2013 RELATING TO THE REJECTION OF APPLICATION FOR APPROVAL U/S 80G OF THE ACT IS CONCERN ED. IT WAS THE COMMON CONTENTION OF BOTH THE PARTIES THAT IT IS CO - RELATED WITH THE APPEAL IN ITA NO. 5031/DEL/2013 RELATING TO THE REGISTRATION U/S 12A OF THE ACT. SINCE WE HAVE REMANDED BACK THE ISSUE RELATING TO THE REGISTRATION U/S 12A OF THE ACT, THER EFORE, THIS ISSUE RELATING TO THE APPROVAL OF REGISTRATION US/ 80G OF THE ACT IS ALSO REMANDED BACK TO THE LD. DIT(EXEMPTION) TO BE DECIDED ALONGWITH THE ISSUE RELATING TO THE REGISTRATION U/S 12A OF THE ACT. 11 . IN THE RESULT, BOTH THE APPEALS ARE ALL OWED FOR STATISTICAL PURPOSES . ( ORDER PRONOU N CED IN T HE OPEN COURT ON 19 / 12 / 2014 ) . SD/ - SD/ - ( C. M. GARG ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19 / 1 2 / 2014 *SUBODH* COPY FORWARDED TO: 1. APPEL LANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT