Thapar Hotels Mess Management Society, Patiala V. CIT, Patiala

ITA 537/CHANDI/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5364 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 18-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: RISHABH KAPOOR
• Keywords: Charitable institution
• Section: 12AA; 12; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: B BENCH: CH ANDIGARH BEFORE SHRI D K SRIVASTAVA, AM AND MS. SUSHMA CHOWL A, JM ITA NO. 537/CHANDI/2011 ASSESSMENT YEAR: 2010-11 THAPAR HOSTEL MESS MANAGEMENT SOCIETY V C.I.T. PA TIALA THAPAR UNIVERSITY, PATIALA APPELLANT BY: SHRI RISHABH KAPOOR RESPONDENT BY: SHRI S.K. MITTAL ORDER D K SRIVASTAVA : THE APPEAL FILED BY THE ASSESSEE-SOCIETY IS DIREC TED AGAINST THE ORDER PASSED BY THE LD. CIT ON 15.4.2011 U/S 12 AA OF INCOME-TAX ACT DECLINING TO GRANT REGISTRATION TO THE ASSESSEE-SOCIETY. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE-SOCIETY WAS ESTABLISHED AS SOCIETY UNDER THE SOCIETIES REGISTRA TION ACT TO MANAGE THE MESS(ES) OF THE HOSTELS OF THAPAR UNIVERSITY LOCATED IN THAPAR COLLEGE CAMPUS, PATIALA. THE ASSESSEE-SOCIETY APPLIED FOR REGISTRATION U/S 12A/1 2AA AS CHARITABLE INSTITUTION. THE LD. CIT HOWEVER DECLINED TO REGISTER THE ASSESSEE-SOCIE TY AS CHARITABLE INSTITUTION WITH THE FOLLOWING OBSERVATIONS: THE OBJECTIVES OF THE SOCIETY INDEED APPEARS TO TH E MEANT FOR WELFARE OF THE HOSTELLERS BUT IT WAS ALSO NOT DENIED THAT THE BENE FIT IS INTENDED ONLY FOR A LIMITED SECTION OF PEOPLE I.E. HOSTELLERS. INFACT THE VERY MEMBERSHIP OF THE SOCIETY IS RESTRICTED THE MEMBERS OF THE FACULTY/OF FICERS OF THE UNIVERSITY AS PER PARA 6.1 OF THE MEMBERSHIP CLAUSE OF THE MEMORANDUM OF ASSOCIATION (MOA). FOR A GENUINE TRUST TO HAVE A CHARITABLE PURPOSE, I T IS NOT NECESSARY THAT THE OBJECT SHOULD BE TO BENEFIT THE WHOLE OF MANKIND OR EVEN ALL PERSONS LIVING IN A PARTICULAR COUNTRY OR PROVINCE. IT IS SUFFICIENT I F THE INTENTION IS TO BENEFIT A SECTION OF THE PUBLIC AS DISTINGUISHED FROM SPECIFI ED INDIVIDUALS. IN THIS PARTICULAR CASE THE INSTITUTION IS INTENDED TO BENE FIT ONLY A SMALL GROUP OF INDIVIDUALS NAMELY THE HOSTEL OR UNIVERSITY. THESE CANNOT BE SAID TO BE BOUND TOGETHER BY A LINK OF PUBLIC OR IN PERSONAL NATURE. IT HAS BEEN JUDICIALLY HELD THAT THOUGH THE GENERAL PURPOSE MAY BE A BENEFICIAL ONE, THAT WILL NOT VALIDATE CHARITY WHERE THE BENEFIT IS CONFINED TO THE MEMBER S OF CLUB (SCOTTISH FLYING CLUB LTD V. IRC 20 TC 1: MAHARAJ BAGH CLUB LTD V. C IT (1931) 5ITC 201 )NAG) OR EMPLOYEES OF A PARTICULAR COMPANY OR FIRM (SAKTH I CHARITIES V. CIT (1984) 149 ITR 624 (MAD) OR THEIR CHILDREN OR DEPENDANTS ( OPPENHEIM V. TOBACCO 2 SECURITIES TRUST CO LTD (1951) 1 ALL ER 31 (HL); 19 51 AC 297 (HL), HOWEVER LARGE THE NUMBER OF SUCH BENEFICIARIES MAY BE (CIT V. AHEMDABAD RANA CASTE ASSOCIATION (1968) 70 ITR 503 (GUJ) REVERSED IN (19 71) 82 ITR 704 (S.C). IN VIEW OF THE ABOVE IT CANNOT BE SAID THAT A GENUI NE INSTITUTION EXISTS, ENGAGED IN CHARITABLE ACTIVITIES WHICH CAN BE COVER ED UNDER THE RESTRICTIVE DEFINITION OF THE WORDS CHARITABLE PURPOSE AND T HE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AS MENTIONE D IN THE INCOME-TAX ACT. ACCORDINGLY, REGISTRATION CANNOT BE ALLOWED TO THE INSTITUTION U/S 12AA OF THE INCOME-TAX ACT. 3. IN SUPPORT OF APPEAL, THE LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT ALMOST 90% OF THE STUDENTS IN THAPAR UNIVERSITY WERE NON-L OCALS AND THEREFORE IT WAS NECESSARY FOR THE UNIVERSITY TO MAKE ARRANGEMENT NO T ONLY FOR THEIR STAY IN THE HOSTELS BUT ALSO FOR PROVIDING THEM MESS FACILITIES. ACCORD ING TO HIM, THE MESS WAS OPEN TO ALL THE STUDENTS STAYING IN THE HOSTEL REGARDLESS OF TH EIR CASTE, CREED OR RELIGION. HE SUBMITTED THAT THE ACTIVITIES CARRIED OUT BY THE AS SESSEE-SOCIETY WERE PART OF EDUCATIONAL ACTIVITIES AND IN ANY CASE OBJECTS OF G ENERAL PUBLIC UTILITY. IN FAVOUR OF OUR ATTENTION TO THE AUTHORISED LAPS IN MEMO OF ASSOCIA TION, HE SUBMITTED THAT THE ASSESSEE-SOCIETY WAS MANAGED ONLY BY THE UNIVERSITY AND NOT BY ANY PRIVATE PARTY. HE CONTENDED THAT THE PROFITS ARISING FROM THE ASSE SSEE-SOCIETY WERE MEANT ONLY FOR BENEFIT OF THE SOCIETY AND NOT FOR BENEFIT OF ANY PRIVATE INDIVIDUAL. HE URGED THAT THE ORDER OF LD. CIT(A) SHOULD BE VACATED AND REGISTRAT ION U/S 12AA SHOULD BE ALLOWED TO THE ASSESSEE-SOCIETY. 4. IN REPLY THE DR SUPPORTED THE ORODER PASSED BY T HE LD. CIT. HE SUBMITTED THAT RUNNING OF MESS WAS NEITHER PART OF EDUCATIONAL ACT IVITY NOR PART OF OBJECT OF GENERAL PUBLIC UTILITY AND THEREFORE, THEREFORE THE ASSESSE E-SOCIETY WAS REFUSED TO REGISTER U/S 12AA BY THE LD. CIT. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. PROVIDING PLAY GROUNDS, SUPPORTIVE ACTIVITIES, BOAR D FACILITIES AND FOOD IS INTERNATIONAL PART OF ANY INSTITUTE. IT WOULD BE OUT FOR THE UNI VERSITY TO CARRY ITS ACTIVITIES WITHOUT PROVIDING THESE FACILITIES. THE ASSESSEE-SOCIETY H AS BEEN ESTABLISHED BY THE UNIVERSITY ITSELF AND NOT BY ANY PRIVATE INDIVIDUAL. CHAIRMAN OF THE ASSESSEE-SOCIETY IS DEAN OF STUDENTS WELFARE, THAPAR UNIVERSITY WHILE ITS MEMBE RS ARE HOSTEL WARDENS. THE SURPLUS BY THE ASSESSEE-SOCIETY DOES NOT GO TO ANY PRIVATE INDIVIDUAL BUT IS RETAINED BY THE UNIVERSITY. ON THE FACTS OF THE CASE, WE HOL D THAT THE ACTIVITIES CARRIED BY THE ASSESSEE ARE NOT INDEED PART OF EDUCATIONAL ACTIVIT IES BUT ALSO PART OF THE OBJECT OF 3 GENERAL PUBLIC UTILITY. IN THIS VIEW OF THE MATTER , THE ORDER PASSED BY THE LD. CIT IS VACATED. HE IS DIRECTED TO ALLOW REGISTRATION TO TH E ASSESSEE-SOCIETY U/S 12A/12AA OF THE ACT. 6. APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON JUNE 2011 (SUSHMA CHOWLA) (D K SRIVA STAVA) JUDICIAL MEMBER ACCOUNTANT MEM BER CHANDIGARH: THE JUNE 2011 SURESH COPY TO: 1. THE APPELLANT, THAPAR HOSTEL MESS MANAGEMENT, PA TIALA 2. THE RESPONDENT, LD. CIT , PATIALA 3. THE CIT(A), LD. CIT(A), PATIALA 4. THE D.R, INCOME-TAX DEPARTMENT, CHANDIGARH BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH