Sukhmani Society for Citizen, Gurdaspur V. The Commissioner of Income tax II, Amritsar.

ITA 589/ASR/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6990 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 24-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Charitable institution; Opportunity of being heard; Competent authority
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.589.(ASR)/2013 ASSESSMENT YEAR: PAN :AADAS1851R SUKHMANI SOCIETY FOR CITIZEN VS. COMMISSIONER OF INCOME TAX-II, SERVICES, GURDASPUR. AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.SAJEEV SUD, CA RESPONDENT BY:SH.SAAD KIDWAI, DR DATE OF HEARING: 28/08/2014 DATE OF PRONOUNCEMENT:02/09/2014 ORDER PER B.P.JAIN, AM ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT-II, AMRITSAR, DATED 19 TH JULY, 2013 PASSED UNDER SECTION 12AA OF THE INCOM E TAX ACT, 1961. THE ASSESSEE HAS RAISED FOLLOWING GR OUNDS OF APPEAL: 1. THE ORDER OF LD. CIT-II, AMRITSAR IS BAD IN LAW AND WRONG ON FACTS. 2. THE LD. CIT HAS ERRED IN NOT GRANTING THE REGISTRAT ION U/S 12AA AND REJECTING THE APPLICATION OF THE ASSESSEE. 3. THE LD. CIT HAS ERRED IN HOLDING THAT THE ACTIVITIE S OF THE SOCIETY ARE COMMERCIAL IN NATURE. 4. THE LD. CIT HAS WRONGLY APPLIED THE PROVISIONS OF S ECTION 2(15) OF THE INCOME TAX ACT, 1961 AND HOLDING THAT THE SOCIETYS ADVANCEMENT OF ANY OTHER OBJECT OF GENERA L PUBLIC ITA NO.589(ASR)/2013 2 UTILITY IS IN RELATION TO TRADE, COMMERCE, OR BUSIN ESS AND THUS NOT CARRYING ANY CHARITABLE ACTIVITY AS DEFINED U/S 2(1 5) OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT AN APPLICAT ION U/S 12A(A) IN FORM NO.10 FOR GRANT OF REGISTRATION U/S 12AA OF THE ACT WAS FILED BY THE APPLICANT SOCIETY ON 31.01.2013. THE APPLICATION WA S ACCOMPANIED WITH PHOTOCOPY OF THE MEMORANDUM OF ASSOCIATION CONTAINI NG THE OBJECTIVES AND FUNCTIONS OF THE SOCIETY. THE SOCIETY HAS BEEN REGI STERED ON 16.04.2004 UNDER SOCIETIES REGISTRATION ACT (XXI OF 1860). A R EPORT ON THE GENUINENESS OF THE OBJECTS AND ACTIVITIES OF THE APPLICANT TRUS T WAS OBTAINED FROM THE DCIT, CIRCLE VI, PATHANKOT, THE JURISDICTIONAL OFFI CER. THE DCIT, CIR.VI PATHANKOT VIDE HIS OFFICE LETTER NO.664 DATED 17.0 5.2013 SUBMITTED HIS REPORT ON THE ACTIVITIES OF THE SOCIETY. THE SAID R EPORT WAS ENDORSED BY THE ADDITION CIT,RANGE VI VIDE HER OFFICE LETTER DATED 21.05.2013. BOTH THE AO AND THE ADDL. CIT HAVE BROUGHT OUT THAT THE SOCI ETY IS EARNING HUGE PROFIT FOR PROVIDING CERTAIN SERVICES TO CITIZENS A FTER CHARGING FEES ( FACILITATION CHARGES ). IT HAS ALSO BEEN BROUGHT OU T THAT THE SOCIETY HAS NOT INCURRED ANY EXPENDITURE ON CHARITABLE WORK RATHER ALMOST ALL THE EXPENDITURE HAS BEEN INCURRED ON PRINTING AND STATI ONARY, SALARY TO ITS EMPLOYEES, BANK EXPENDITURE, COMPUTER REPAIR, AUDIT FEE, ELECTRICITY BILL, TELEPHONE BILLS AND OTHER SUCH EXPENDITURES. ITA NO.589(ASR)/2013 3 3. THE LD. CITII, AMRITSAR AFTER PERUSAL OF THE REL EVANT DOCUMENTS FURNISHED AS WELL AS REPORT OF THE DCIT, CIRCLE VI, PATHANKOT AND COMMENTS OF THE RANGE SIDE OBSERVED THAT THE PRIMARY OBJECT IVE OF THE SOCIETY, WHICH LISTED AT PAGES 1, 2, 3, 4 & 5 OF CIT(A)S ORDER. A FTER PERUSAL OF THE SAID OBJECTS AND REPORT OF THE DCIT, PACHINKO AND RANGE SIDE, THE LD. CIT REJECTED THE APPLICATION FILED BY THE ASSESSED UNDE R SECTION 12AA OF THE INCOME TAX ACT, 1961. THE RELEVANT OBSERVATIONS OF THE LD. CIT IN PARA 4 TO 5 OF THE ORDER FOR THE SAKE OF CONVENIENCE ARE REPR ODUCED AS UNDER: 4. A PLAIN READING OF THE AIMS AND OBJECTIVES OF TH E SOCIETY, CONTAINED IN THE MEMORANDUM OF ASSOCIATION SHOWS TH AT THE OBJECTS OF THE SOCIETY ARE FOR THE ADVANCEMENT OF AND OT HER OBJECT OF GENERAL PUBLIC UTILITY AS PER DEFINITION OF CHAR ITABLE PURPOSES AS CONTAINED IN SECTION 2(15) OF THE INCOME TAX ACT, 1 961. FURTHER IST PROVISO TO SECTION 2(15) STATES, PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NO T BE A CHARITABLE PURPOSE. IF IT INVOLVES CARRYING ON OF ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE, OR BUSI NESS, FOR A CESS OF FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF THE INCOME FROM SUCH AC TIVITY. THE LEGISLATURE VIDE AMENDMENT BROUGHT BY THE FINAN CE ACT, 1961, 2010 INSERTED 2 ND PROVISO TO SECTION 2(15) OF THE I.T.ACT, 1961, AS PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS (TWENTY FIVE LAKH RUPEES) OR LESS IN THE PREVIOU S YEAR. 4.1. A PERUSAL OF VARIOUS DOCUMENTS AND COPIES OF A CCOUNT SHOWS THAT THE SOCIETY HAS FIXED FEES FOR ALMOST EVERY FA CILITATION SERVICE PROVIDED BY IT. DURING THE PROCEEDINGS, THE ASSESS EE SOCIETY HAS FURNISHED A COPY OF CIRCULAR NO.12/03/2010/AM(EG)/1 920 DATED 26.04.2013 ISSUED BY GOVERNMENT OF INDIA, PUNJAB ST ATE E- GOVERNANCE SOCIETY O/O DIRECTORATE OF GOVERNANCE RE FORMS SCO 193-195 SECTOR 34A, CHANDIGARH VIDE WHICH RECOMMEND ATION OF ITA NO.589(ASR)/2013 4 CHARGING OF FEES FOR VARIOUS FACILITATION SERVICES HAS BEEN PROVIDED. THE CHARGEABLE FEE, AS PER THE SAID CIRCULAR FOR SO ME OF THE SERVICES IS AS UNDER: S.NO. NAME OF SERVICE(S) FACILITATION CHARGES (INCLUDING SERVICE TAX (RS) 1. ARM LICENCES RELATED NEW LIC ISSUANCE SERVICES 7 00 2. ARM LICENCES RELATED RENEWAL & OTHER SERVICES 30 0 3. PENSION TO OLD AGE, WIDOWS, DESTITUTE CHILDREN A ND DISABLE PERSONS 0 4. COUNTER SIGNING OF DOCUMENTS 150 5. CHARACTER VERIFICATION 20 6. ISSUANCE OF BUS PASSES 0 7. ISSUANCE OF DEPARTMENT CERTIFICATE 50 8. ISSUANCE AND RENEWAL OF LINCENCES FOR (ARM DEALERS CINEMA, VEDIO PARLOUR 700 9. ENDORSEMENT OF SPA/GPA 150 10 ISSUANCE OF NATIONALITY CERTIFICATE 30 THUS THERE IS NO AMBIGUITY TO THE FACT THAT THE SOC IETY IS CHARGING HUGE FEES FOR ALMOST ALL THE SERVICES BEING PROVIDED TO THE CITIZENS. APART FROM CHARGING FACILITATION CHARGES, THE SOCIETY IS ALSO EARNING INCOME FROM SALE OF FORMS. IT IS ALSO WORTH MENTIONING HER E THAT THE FEES/FACILITATION CHARGES BEING CHARGED BY THE SOCI ETY ARE OVER AND ABOVE THE PRESCRIBED BILL AMOUNT/FEE/STATUTORY FEE FOR PROVIDING THE SERVICES THROUGH THE SOCIETY (MENTIONED AT E IN T HE AIMS AND OBJECTIVES OF THE SOCIETY). THUS, THE ACTIVITIES OF THE SOCIETY ARE COMMERCIAL IN NATURE. FURTHER, THE FEES/CHARGES EAR NED BY THE SOCIETY DURING THE LAST THREE YEARS ARE ABOVE RS.25 LACS FO R EACH YEAR, AS SUCH, BY VIRTUE OF PROVISIONS OF SECTION 2(15) OF T HE ACT, THE SOCIETY IN QUESTION IS NOT CARRYING ON ANY CHARITABLE ACTIVITY . 4.2. THE DCIT CIRCLE VI, PATHANKOT, IN HIS REPORT D ATED 17.05.2013 HAS ALSO BROUGHT OUT THAT THE HONBLE ITAT IN THE S IMILAR CASE OF M/S. SUKHMANI SOCIETY FOR CITIZEN SERVICES, MANSA VS CI T ( ITA NO. 551(ASR)/2011 HAS UPHELD THE ACTION OF THE CIT, BAT HINDA IN REJECTING ITA NO.589(ASR)/2013 5 THE APPLICATION OF THE SOCIETY FOR REGISTRATION U/ S 12AA OF THE I.T.ACT, 1961. ON GOING THROUGH THE JUDGMENT OF THE ITAT IT IS SEEN THAT THE FACTS OF THE SUKHMANI SOCIETY FOR CITIZEN SERVICES, GURDASPUR ARE ALSO SIMILAR TO THE FACTS ADJUDICATED UPON BY THE ITAT. 4.3. THUS KEEPING IN VIEW THE ABOVE FACTS ON RECORD , I AM OF THE CONSIDERED OPINION THAT THE APPLICANT TRUST IS NOT ENTITLED FOR REGISTRATION U/S 12AA AND THE APPLICATION FILED BY THE SOCIETY ON 31.01.2013, IS HEREBY REJECTED. 4. THE LD. COUNSEL FOR THE ASSESSEE, MR. SAJEEV SUD , CA AT THE OUTSET, CONCEDED THAT ON THE IDENTICAL ISSUE, THE CASE IS D ECIDED AGAINST THE ASSESSEE IN THE CASE OF SUKHMANI SOCIETY FOR CITIZEN SERVICE S, MANSA VS. DCIT BATHINDA IN ITA NO.551(ASR)/2011, DATED 26.09.2012 . HE ALSO CONCEDED THAT ALL THE OBJECTS IN THE PRESENT APPEAL ARE IDEN TICAL TO THE OBJECTS IN THE CASE OF SUKHMANI SOCIETY FOR CITIZEN SERVICES, MAN SA VS. DCIT BATHINDA (SUPRA). HOWEVER, HE TRIED TO DISTINGUISH THE ORDER OF THE LD. CIT-II, AMRITSAR, IN THE IMPUGNED YEAR IN PARA 4 WHERE THE LD. CIT-II, AMRITSAR HAS OBSERVED THAT OBJECTS OF THE SOCIETY ARE FOR THE A DVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND ARGUED THAT TH E LD. CIT HAS HIMSELF OBSERVED THAT THE ASSESSEE SOCIETY IS HAVING OBJECT S OF GENERAL PUBLIC UTILITY. 5. THE LD. DR, MR. SADD KIDWAI, ON THE OTHER HAND S TRONGLY RELIED UPON THE ORDER OF THE LD. CIT-II, AMRITSAR. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE ARGUMENTS MADE BY THE LD. COUNSEL FO R THE ASSESSEE, WHO ITA NO.589(ASR)/2013 6 READ TWO LINES IN PARA 4 OF THE ORDER OF THE LD. CI T-II, AMRITSAR, IN FACT, WHEN THE SAME IS READ IN TOTO GOES AGAINST THE ASS ESSEE . THEREFORE, THE SAID PARA 4 OF THE LD. CIT-II, AMRITSAR CAN NOT HELP TH E ASSESSEE. IN FACT, THE OBJECTS OF THE SOCIETY IN THE PRESENT CASE ARE IDEN TICAL TO THE OBJECTS IN THE CASE OF SUKHMANI SOCIETY FOR CITIZEN SERVICES, MANS A VS. DCIT BATHINDA (SUPRA). THE REPORT OF THE GENUINENESS OF THE OBJEC TS AND ACTIVITIES OF THE ASSESSEE-FIRM WAS OBTAINED FROM DCIT, PATHANKOT AN D THE SAID REPORT WAS ENDORSED BY THE ADDL. CIT, RANGE-VI, PATHANKOT VIDE LETTER DATED 21.05.2013 AND THERE IS NO DISPUTE TO THIS EXTENT. ON PERUSAL OF THE FACTS IN THE PRESENT CASE, WE FIND THAT THE ISSUE IN THE PRE SENT APPEAL IS IDENTICAL TO THE FACTS IN THE CASE OF SUKHMANI SOCIETY FOR CITIZ EN SERVICES, MANSA VS. DCIT BATHINDA (SUPRA) AND THEREFORE, OUR ORDER IN T HE CASE OF SUKHMANI SOCIETY FOR CITIZEN SERVICES, MANSA VS. DCIT BATHIN DA (SUPRA) SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE, WHICH F OR THE SAKE OF CONVENIENCE IS REPRODUCED HEREINBELOW: 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US. THE LD. COUNSEL FOR THE ASSESSEE FILED A CHART OF SERVICES AND CHARGES AGAINST THE SERVICES RENDERED BY THE SOCIETY THAT ARE ABOUT 36 IN NUMBER. FOR THE SAKE O F CONVENIENCE, WE REPRODUCE THE 17 SERVICES RENDERED BY THE SOCIETY A ND THE CHARGES TAKEN BY THE SOCIETY, WHICH ARE AS UNDER: SUKHMANI SOCIETY FOR CITIZEN SERVICES VS. CIT. BAT HINDA I.T.A. NO. 551/ASR- 2011 ITA NO.589(ASR)/2013 7 SERVICE FACILI. CHARGES TIME FRAME FINANCIAL YEAR 2008-09 FINANCIAL YEAR 2009-10 FINANCIAL YEAR 2010-11 (RS.) DAYS NO. OF CASES %AGE OF TOTAL NO. OF CASES %AGE OF TOTAL NO. OF CASES %AGE OF TOTAL 1 ISSUANCE OF NATIONALITY CERTIFICATE 20 15 0 0 0 0.00% 11856 24.70% 2 ISSUANCE OF BIRTH CERTIFICATE 20 7 5001 32.46% 5419 11.62% 7462 15.55% 3 DRIVING LICENCES RELATED SERVICES 20 7 0 0.00% 20041 42.96% 7326 15.26% 4 ARM LICENCES RELATED SERVESS 500 45 4282 27.79% 5 855 12.55% 5173 10.78% 5 ISSUANCE OF AFFIDAVITS 20 SAME DAY 1036 6.72% 4258 9.13% 5011 10.44% 6 REGISTRATION OF VEHICLE SERVICES 100 5 0 0.00% 6096 13.07% 4675 9.74% 7 ISSUANCE OF COPY OF A DOCUMENT 30 7 1473 9.56% 12 57 2.69% 1904 3.97% 8 ISSUANCE OF DEATH CERTIFICATE 20 7 975 6.33% 951 2.04% 1577 3.29% 9 SUBMISSION OF PASSPORT APPLICATIONS 100 20 2101 13.63% 1654 3.55% 1282 2.67% 10 AGRICULTURE RELATED 100 30 274 1.78% 779 1.67% 614 1.28% 11 NON-ENCUMBERENCE CERTIFICATE 20 0 0 0.00% 0 0.00% 374 0.78% 12 FORM SEELING 0 0 0 0.00% 0 0.00% 160 0.33% 13 ISSUANCE OF SURETY BONDS 50 SAME DAY 5 0.03% 29 0.06% 151 0.31% 14 REGISTRATION OF MARRIAGE 500 SAME DAY 60 0.39% 88 0.19% 63 0.13% 15 OTHERS 0 0 202 1.31% 218 0.47% 373 0.78% 16 NOC OF PETROL PUMP 1000 40 0 0.00% 0 0.00% 0 0.00% 17 NOC FOR BUILDING PLAN 500 30 0 0.00% 0 0.00% 0 0.00% TOTAL 15409 46645 48001 (COUNSEL FOR THE ASSESSEE (APPELLANT) 7.1. THE LD. CIT, BATHINDA HAS ALSO MENTIONED IN PA RA 3.3 AT PAGE 3 & 4 IN THE IMPUGNED ORDER THAT THE APPLICANT HAS FURNIS HED A CHART SHOWING FEE CHARGEABLE FOR PROVIDING VARIOUS SERVICES TO THE CI TIZENS. A PERUSAL OF THE CHART SHOWS THAT THE APPLICANT CHARGES AS MUCH AS R S.1000/- FOR ISSUING NOC FOR PETROL PUMP, RS.500 FOR REGISTRATION OF MAR RIAGE, RS.500 FOR NOC ON BUILDING PLAN AND SO ON. IT IS PERTINENT TO MENT ION HERE THAT THESE CHARGES ARE IN ADDITION TO THE STATUTORY FEES CHARGED BY TH E STATE GOVT. DEPARTMENTS. THESE CHARGES/FEES ARE CHARGED BY THE APPLICANT FOR PROVIDING THE ALLEGED CITIZENS SERVICES. 7.2. THE LD. COUNSEL FOR THE ASSESSEE HAS FILED BAL ANCE SHEET AS ON 31.03.2009 IN WHICH THE SOCIETY HAS SHOWN LIABILITI ES AND ASSETS AS WELL AS INCOME & EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31. 3.2009. FOR THE SAKE OF CONVENIENCE, THE BALANCE SHEET AS ON 31.03.2009 AS WELL AS INCOME & ITA NO.589(ASR)/2013 8 EXPENDITURE FOR THE PERIOD ENDED 31.03.2009 OF THE SOCIETY ARE REPRODUCED AS UNDER: SUKHMANI SOCIETY FOR CITIZEN SERVICES (D.C. OFFICE) , MANSA BALANCE SHEET AS ON 31.03.2009 LIABILITIES AMOUNT (RS) ASSETS AMOAUNT GENERAL FUNDS FIXED ASSETS 1452088.00 O. BALANCE- 3389932.99 (DETAILS ATTACHED) LESS: OLD DEP 1028849.00 ADD : TFD FROM 1344307.50 TELEPHONE SECURITY 500.00 I & E A/C _____________3705391.49 LOAN TO DISTT.NA ZAR 143150.00 STATE GOVT. 500000.00 RECEIVABLE FROM EX. 77860.00 CLERK CUM ACCOUNTANT SH. ASHOK KUMAR. SECURITY FROM COMPUTER 10000.00 BANK BALANCES: S.B.O.P., MANSA 1573840.99 AMOUNT MORE DEPOSITED IN 270.0 SBOP, MANSA ( I/A) 371818.00 BANK ACCOUNT PNB, BUDHLADA 334408.50 SBOP, SARDULGARH 257726.00 CASH IN HEAD 4270.00 --------------- ---------------- 4215661.49 4215661.49 ---------------- ---------------- REPORT :- SUBJECT TO OUR SEPARATE AUDITED FOR REPORT OF EVEN DATE FOR SANJEEV AMAR & ASSOCIATES CHARTERED ACCONTANTS PLACE : MANSA (SANJEEV KUMAR) DATED : 18.08.2009 M. NO. 500277 SUKHMANI SOCIETY FOR CITIZEN SERVICES (D.C. OFFICE) , MANSA INCOME & EXPENDITUE ACCOUNT FOR THE PERIOD ENDING 31.03.2009 EXPENDITURE AMOUNT (RS) INCOME AMOUNT AMOUNT(RS) TO PB. STATE E-GOVERANCE 381533.50 BY RECEIPTS 25 92150.00 ITA NO.589(ASR)/2013 9 SOCIETY, CHD BY BANK INTEREST48843.00 TO PRINTING & STATIONERY 29907.00 TO SALARY 539204.00 TO BANK EXP. 490.00 TO COMPUTER REPAIR 27735.00 TO AUDIT FEE 11000.00 TO ELECTRICITY BILL 34028.00 TO TELEPHONE 5727.00 TO SMS EXP. 945.00 TO PHOTOSTATE 1035.00 TO ELECTRIC REPAIR 225.00 TO TRAVELLING 5150.00 TO DEPRECIATION 259706.00 TO INCOME OVER EXP. 1344307.50 --------------- --------------- 2640933.00 2640933.00 ---------------- --------------- - REPORT :- SUBJECT TO OUR SEPARATE FOR REPORT OF EVEN DATE FOR SANJEEV AMAR & ASSOCIATES CHARTERED ACCUONTANTS PLACE : MANSA (SANJEEV KUMAR) DATED : 18.08.2009 M. NO. 500277 7.3. SIMILARLY, THE BALANCE SHEET AS ON 31.03.2010 AS WELL AS THE INCOME & EXPENDITURE ACCOUNT FOR THE PERIOD ENDING 31.03.201 0 ARE ALSO REPRODUCED AS UNDER: SUKHMANI SOCIETY FOR CITIZEN SERVICES (D.C. OFFICE) , MANSA BALANCE SHEET AS ON 31.03.2010 LIABILITIES AMOUNT (RS) ASSETS AMOAUNT GENERAL FUNDS FIXED ASSETS 1431952.00 O. BALANCE- 3705391.49 (DETAILS ATTACHED) ADD : TFD FROM 1487573.50 TELEPHONE SECURITY 500.00 I & E A/C _____________5192964.99 LOAN TO DISTT.NA ZAR 15000.00 ITA NO.589(ASR)/2013 10 SECURITY FROM COMPUTER 10000.00. SDM BUDHLA DA. 3000.00 SUPPLIER CH. ISSUED NOT PRESENTED 16356.00 S.B.O.P.(S WEEP IN) 2784690.00 BANK BALANCE : S.B.O.P, MANSA 50281.00 SBOP, MANSA ( I/A) 377866.00 PNB, BUDHLADA 9349.00 SBOP, BUDHLALDA 296960.00 SBOP, SARDULGARH 429722.00 --------------- ---------------- 5219320.99 5219320. ---------------- ---------------- REPORT :- SUBJECT TO OUR SEPARATE AUDITED FOR REPORT OF EVEN DATE FOR SANJEEV AMAR & ASSOCIATES CHARTERED ACCOUNTANT S PLACE : MANSA (SANJEEV KUMAR) DATED : 22.06.2010 M. NO. 500277 INCOME & EXPENDITURE ACCOUNT FORTHE PERIOLD ENDING ON 31.3.2010 EXPENDITURE AMOUNT INCOME AMOUNT TO PB. STATE E-GOVERNANCE 486084.50 BY RECEIPTS 3 420275.00 SOCEITY CHD. TO PRINTING & STATIONERY 146145.00 BY BANK INTERES T 86517.00 TO SALARY 917004.00 BY EXCESS DEPOSIT 250. 00 TO BANK EXP. 911.00 BY EXCESS CREDIT BANK 10.00 TO COMPUTER REPAIR 64880.00 TO AUDIT FEE 7000.00 TO ELECTRICITY BILL 49702.00 TO TELEPHONE [phone] TO SMS EXP. 1122.00 TO ADVERTISEMENT 13113.00 TO ELECTRIC REPAIR 4969.00 TO TRAVELLING 2346.00 TO MISC. EXP. 670.00 TO POSTAGE 500.00 TO DEPRECIATION 314442.00 TO INCOME OVER EXP. 1487573.00 ---------------------------- 3507052.00 3507052.00 REPORT :- SUBJECT TO OUR SEPARATE FOR REPORT OF EVEN DATE ITA NO.589(ASR)/2013 11 FOR SANJEEV AMAR & ASSOCIATES CHARTERED ACCOUNTANT S PLACE : MANSA (SANJEEV KUMAR) DATED : 22.06.2010 M. NO. 500277 7.4. LASTLY, THE BALANCE SHEET AS ON 31.03.2011 AS WELL AS INCOME & EXPENDITURE ACCOUNT FOR THE PERIOD ENDING 31.03.20 11 ARE REPRODUCED AS UNDER: BALANCE SHEET AS ON 31.03.2011 LIABILITIES AMOUNT (RS) ASSETS AMOAUNT GENERAL FUNDS FIXED ASSETS 1285660.00 O. BALANCE- 5192964.99 (DETAILS ATTACHED) ADD : TFD FROM 901085.93 TELEPHONE SECURITY 500.00 I & E A/C _____________6094050.92 LOAN TO DISTT.NA ZAR 15000.00 SECURITY FROM COMPUTER 10000.00. SDM BUDHLA DA. 3000.00 SUPPLIER SALARY PAYABLE 114120.00 STAMP PAPER AND STA MPS 40147.00 PSEGS PAYABLE 63697.00 TDS 45253.00 CH. ISSUED NOT PRESENTED 358996.00 NICI, DELHI 352000.00 S.B.O.P(SWEEP IN) 4807579.58 BANK BALANCES : SBOP, MANSA 3088.00 SBOP, BUDHLADA 8547.50 SBOP, SARDULGARH 3590.00 SBOP, (NCC) MANSA 75589.84 CASH IN HAND 909.00 --------------- ---- ------- 6640863.92 6640863.92 ---------------- ------------ - REPORT :- SUBJECT TO OUR SEPARATE AUDITED FOR REPORT OF EVEN DATE FOR SANJEEV AMAR & ASSOCIATES CHARTERED ACCOUNTANTS PLACE : MANSA (SANJEEV KUMAR) DATED : 05.09.2011 M. NO. 500277 ITA NO.589(ASR)/2013 12 INCOME & EXPENDITURE ACCOUNT FORTHE PERIOLD ENDING ON 31.3.2011 EXPENDITURE AMOUNT INCOME AMOUNT TO PB. STATE E-GOVERNANCE 478259.50 BY RECEIPTS 3 132591.00 SOCIETY CHD. TO PRINTING 154873.00 BY BANK INTEREST 327855. 43 TO SALARY 1413932.00 BY EXCESS DEPOSIT 1969.00 TO BANK EXP. 350.00 BY EXCESS CREDIT BANK 10.00 TO STATIONERY 74842.00 TO COMPUTER REPAIR 67450.00 TO AUDIT FEE 7000.00 TO ELECTRICITY BILL 62279.00 TO TELEPHONE [phone] TO SMS EXP. 279.00 TO ADVERTISEMENT 13084.00 TO ELECTRIC REPAIR 8806.00 TO TRAVELLING 12760.00 TO MISC. EXP. 3135.00 TO DEPRECIATION 223130.00 TO INCOME OVER EXP. 901085.93 --------------------------- 3462515.43. 3462515.43 REPORT :- SUBJECT TO OUR SEPARATE REPORT OF EVEN DATE FOR SANJEEV AMAR & ASSOCIATES CHARTERED ACCOUNTANTS PLACE : MANSA (SANJEEV KUMAR) DATED : 05.09.2011 M. NO. 500277 7.5. AFTER GOING THROUGH THE AFORESAID BALANCE SHEE TS AS WELL AS INCOME & EXPENDITURE ACCOUNTS OF THE ASSESSEE FOR T HE LAST THREE YEAS, WE HAVE NOT FOUND ANY EXPENDITURE INCURRED BY THE S OCIETY ON CHARITABLE AS WELL AS PUBLIC UTILITY WORK. ALMOST A LL THE EXPENDITURE HAS BEEN INCURRED BY THE SOCIETY ON PRINTING AND ST ATIONERY, SALARY TO THEIR EMPLOYEES, BANK EXPENDITURE, COMPUTER REPAIR, AUDIT FEE, ELECTRICITY BILL, TELEPHONE, ELECTRIC REPAIR, TRAVE LING, MISC. EXPENDITURE, POSTAGE ETC. ITA NO.589(ASR)/2013 13 7.6. THE PRESENT SOCIETY HAS FILED AN APPLICATION T O THE LD. CIT, BATHINDA FOR REGISTRATION. AS PER SECTION 12AA OF T HE ACT, THE LD. CIT, BATHINDA ON RECEIPT OF AN APPLICATION FOR REGI STRATION CAN CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE PRESENT SOCI ETY AS HE THINKS NECESSARY IN ORDER SATISFY HIMSELF ABOUT THE GENUIN ENESS OF THE ACTIVITIES OF THE SOCIETY AND MAY ALSO MAKE SUCH IN QUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF. IF THE LD. CIT, BAT HINDA IS SATISFIED HIMSELF OF THE OBJECTS OF THE TRUST OF THIS SOCIETY AND GENUINENESS OF ITS ACTIVITIES, HE SHALL PASS AN ORDER IN WRITING R EGISTERING THE PRESENT SOCIETY AND IF HE IS NOT SATISFIED THEN HE SHALL P ASS ORDER IN WRITING REFUSING TO REGISTER THE SOCIETY AFTER GIVING REASO NABLE OPPORTUNITY OF BEING HEARD. IN THE PRESENT CASE ALSO, THE LD. CIT , BATHNDA REFERRED THE APPLICATION OF THE SOCIETY TO THE ITO WARD 1(4) , MANSA TO VERIFY THE GENUINENESS OF ACTIVITIES OF THE PRESENT SOCIET Y AND IN COMPLIANCE OF THE SAME, THE AO VIDE HIS REPORT DATED 05.09.201 1 HAS STATED THAT THE ASSESSEE HAS FAILED TO PRODUCE BOOKS OF ACCOUNT BEFORE HIM AND IN THE ABSENCE OF WHICH, IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THE ACTIVITIES OF THE PRESENT SOCIETY AND LASTLY THE AO HAS NOT RECOMMENDED THE CASE OF THE ASSESSEE FOR REGISTRATI ON U/S 12AA OF THE ACT, THROUGH THE JT. CIT, BATHINDA. AFTER RECEIVING THE SAID REPORT DATED 05.09.2011 FROM THE AO, THE LD. CIT, BATHINDA FIXED THE CASE FOR HEARING ON 27.03.2011. AFTER HEARING THE AUTHOR IZED REPRESENTATIVE OF THE ASSESSEE, THE LD. CIT EXAMINED THE DOCUMENTA RY EVIDENCE AVAILABLE WITH HIM AND STATED THAT THE ACTIVITIES O F THE SOCIETY ARE COMMERCIAL IN NATURE. HE HAS ALSO REPRODUCED THE SA ME OBJECTS OF THE PRESENT SOCIETY AT PAGES 2 & 3 IN PARA 3.1(I) TO P ARA 3(III). FOR THE SAKE OF CONVENIENCE, THE OBJECTS OF THE SOCIETY ARE REPRODUCED HEREUNDER: 3.1. THE APPLICANT SOCIETY IS REGISTERED WITH THE ADDL. REGISTRAR OF SOCIETIES, MANSA VIDE NO. 44 OF 22.03.2004.THE AIMS AND OBJECTIVES OF THE SOCIETIES ARE CONTAINED IN MEMORANDUM OF ASS OCIATION OF THE SOCIETY, A COPY OF WHICH HAS BEEN OBTAINED AND IS P LACED ON FILE. AS MANY AS 29 OBJECTIVES HAVE BEEN MENTIONED IN THE LI ST IN PARA 4 UNDER THE TITLE OBJECTIVES AND FUNCTIONS OF THE SOCIETY. SOME OF THE OBJECTIVES ARE SUCH THAT ACTIVITIES OF THE SOCIETY SEEM TO BE OF COMMERCIAL NATURE RATHER THAN OF CHARITABLE NATURE. THE OBJECTIVES OF SUCH NATURE ARE AS UNDER: ITA NO.589(ASR)/2013 14 (I) TO WORKOUT AND RECOMMEND THE SERVICE FEE OR USER CHARGE THAT COULD BE CHARGED FROM THE END CUSTOMERS FOR THE APPROVAL OF THE COMPETENT AUTHORITY AND CONCERN ED DEPARTMENTS/ORGANIZATIONS OVER THE ABOVE AND THE PRESCRIBED BILL AMOUNT/FEE/STATUTORY FEE FOR PROVI DING THE SERVICES THROUGH SUKHMANI CENTRES/FINANCIAL INSTITU TIONS OR FRANCHISEES. (II) TO BUY, SELL, LET ON HIRE, LEASE, TRADE, IMPORT, RE PAIR OR OTHERWISE DEAL WITH IT RESOURCES, SERVICES & SUPPOR T ON TURKEY BASIS LIKE HARDWARE, SOFTWARE, CONNECTIVITY, NETWORKING, TRAINING, STATIONERY, CONSUMABLES ETC. INCLUDING OPERATIONAL & MANAGERIAL MANPOWER, HIRING OF PROFESSIONALS, CONSULTANCY SERVICES BY FOLLOWING TH E PROCEDURE PRESCRIBED. TO ENSURE THE OTHER INFRASTRU CTURE REQUIREMENTS INCLUDING SITE PREPARATION AND TIMELY AVAILABILITY OF THE NECESSARY RESOURCES FOR THE VAR IOUS ACTIVITIES UNDER THE PROJECT. (III) TO ESTABLISH AND MAINTAIN ANY AGENCIES AND FRANCHIS ES IN THE DISTRICT FOR THE CONDUCT OF THE BUSINESS OF THE SOCIETY. THE LD. CIT ALSO PERUSED THE INCOME AND EXPENDITURE ACCOUNTS, WHICH WE HAVE REPRODUCED HEREINABOVE AND FINALLY C ONCLUDED THAT THE ABOVE FACTS CLEARLY REVEALS THAT THE ACTIVITIES OF THE SOCIETY ARE OF COMMERCIAL IN NATURE AIMED AT DERIVING PROFIT AND NOT FOR CHARITY. 7.7. WE HAVE ALSO PERUSED THE INCOME & EXPENDITURE ACCOUNTS, WHICH WE HAVE REPRODUCED HEREINABOVE AS WELL AS THE IMPUGNED ORDER ALONGWITH RELEVANT PROVISIONS OF SECTION 12AA OF TH E ACT AND SECTION 2(15) OF THE ACT. FOR THE SAKE OF CONVENIENCE, PROV ISIONS OF SECTION 12AA AND SECTION 2(15) OF THE ACT ARE REPRODUCED A S UNDER: SECTION 12AA.(1) THE COMMISSIONER, ON RECEIPT OF A N APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER C LAUSE (A) [ OR CLAUSE (AA) OF SUB SECTION(1) OF SECTION 12A, SHALL A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRU ST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SAT ISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEMED NECES SARY IN THIS BEHALF; AND B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE T RUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE ITA NO.589(ASR)/2013 15 I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUS T OR INSTITUTION; II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND COPY OF THE SUCH ORDER SHALL BE SENT TO THE APP LICANT. SECTION 2(15): CHARITABLE PURPOSE INCLUDES RELIE F OF THE POOR, EDUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRON MENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST, ] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. 7.8. KEEPING IN VIEW THE AFORESAID DISCUSSIONS AS P ER RECORDS AS WELL AS PER DOCUMENTARY EVIDENCE GIVEN BY THE ASSESSEE, WE FIND THAT THE MAIN PROJECT WAS INITIATED BY THE GOVT. OF PUNJAB I N THE MONTH OF AUGUST, 2002 AT FATEHGARH SAHIB. IT WAS INAUGURATED BY THE CHIEF MINISTER OF PUNJAB ON 31.10.2002. THE PROJECT WAS FOUNDED BY THE GOVT. OF INDIA, DEPARTMENT OF COMMUNICATION & INFOR MATION TECHNOLOGY. THE GOVT. OF PUNJAB HAS DECIDED TO IMP LEMENT THIS PROJECT IN ALL DISTRICTS OF PUNJAB ALONGWITH SUWI DHA BACK-END SERVICES (SUBS) OF THE DEPUTY COMMISSIONER BRANCHES IN DECEMBER, 2004. THE PROJECT REPLICATION STARTED IN ALL DISTRI CTS WITH TECHNICAL SUPPORT OF NIC-DISTRICT CENTRES. AS OF NOW, THE PRO JECT IS BEING EXECUTED IN ALL DEPUTY COMMISSIONERS OFFICES. THE APPELLANT SOCIETY IS REGISTERED WITH THE ADDITIONAL REGISTRAR OF SOCI ETIES, MANSA VIDE NO.44 OF 22.03.2004 AND ITS AIMS AND OBJECTS ARE C ONTAINED IN MEMORANDUM OF ASSOCIATION OF THE SOCIETY WHICH WE H AVE ALREADY MENTIONED IN THE FORE-GOING PARAGRAPHS. AFTER PERU SING THE OBJECTS OF THE SOCIETY, WE FIND THAT THE LD. CIT, BATHINDA, HA S REPRODUCED SOME IMPORTANT OBJECTS OF THE SOCIETY IN PARA 3.1 (PAGES 2 & 3) OF THE IMPUGNED ORDER WHICH SHOWS THAT THIS SOCIETY HAS BE EN ESTABLISHED FOR MAINTAINING THE AGENCIES AND FRANCHISES IN THE DIST RICT FOR THE CONDUCT OF THE BUSINESS OF THE SOCIETY, WHICH CLEARLY ESTAB LISHES THAT THE PRESENT SOCIETY IS DOING BUSINESS WITH OTHER AGENCI ES AND FRANCHISES IN THE DISTRICT FOR THE CONDUCT OF THE BUSINESS. WE HA VE NOT SEEN ANY OBJECT OF THE SOCIETY WHICH SHOWS THAT THE PRESENT SOCIETY IS DOING ANY CHARITABLE ACTIVITIES FOR THE GENERAL PUBLIC UTILIT Y. THE LD. CIT, BATHINDA HAS ALSO REFERRED THE MATTER TO THE ITO WA RD 1(4), MANSA TO VERIFY THE GENUINENESS OF THE ACTIVITIES OF THE PR ESENT SOCIETY WHO VIDE HIS REPORTED DATED 05.09.2011 HAS STATED THAT THE ASSESSEE HAS ITA NO.589(ASR)/2013 16 FAILED TO PRODUCE BOOKS OF ACCOUNT IN THE ABSENCE O F WHICH IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THE ACTIVITIE S OF THE SOCIETY AND THE AO HAS NOT RECOMMENDED THE CASE OF THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT. EVEN OTHERWISE, THE ASSESSEE HAS FAILED TO ESTABLISH BEFORE THE LD. CIT(A) THAT THE SOCIETY I S DOING ANY CHARITABLE WORK KEEPING IN VIEW ITS OBJECTS. MERELY, MENTIONI NG ABOUT VARIOUS OBJECTS IN THE NATURE OF CHARITABLE ACTIVITIES IN T HE MEMORANDUM OF ASSOCIATION, DOES NOT MEAN THAT THE SOCIETY IS DOI NG ANY CHARITABLE ACTIVITIES FOR THE GENERAL PUBLIC UTILITY AND IS ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. ACCORDING TO SECTION 12AA OF THE ACT, THE COMMISSIONER ON RECEIPT OF APPLICATION FOR REGI STRATION OF A TRUST OR INSTITUTION HAS TO SATISFY HIMSELF ABOUT THE GE NUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION. IN THE PRESENT CASE, T HE LD. CIT, BATHINDA HAS MADE THE INQUIRY FROM THE CONCERNED ITO, WHO HA S NOT RECOMMENDED THE CASE OF THE SOCIETY FOR REGISTRATIO N . EVEN OTHERWISE, THE ASSESSEE HAS ALSO FAILED TO ESTABLISH THAT THE OBJECTS OF THE SOCIETY ARE CHARITABLE IN NATURE. 7.9. KEEPING IN VIEW THE AFORESAID DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT THE ACTIVITIES OF THE ASSESSEE -SOCIETY ARE NOT CHARITABLE IN NATURE WITHIN THE MEANING OF PROVISIO NS OF SECTION 2(15) OF THE ACT AND IT DOES NOT QUALIFY TO TREAT AS CHAR ITABLE INSTITUTION. SINCE THE ASSESSEE HAS NOT ESTABLISHED THAT ITS SO CIETY IS FORMED WITH OBJECTS OF ANY CHARITABLE PURPOSE, THEN THE QUESTIO N OF DISCUSSION OF CITATIONS RELIED UPON BY THE SOCIETY DOES NOT ARISE , EVEN OTHERWISE THESE JUDGMENTS ARE DIFFERENT FROM THE FACTS OF PRE SENT CASE AND ARE NOT HELPFUL THE SOCIETY. THE PRESENT SOCIETY IS DOI NG ITS BUSINESS AND CHARGING HUGE FEES FROM THE PUBLIC WHICH IS IN ADDI TION TO THE PRESCRIBED FEE OF THE PUNJAB GOVT. EVEN OTHERWISE, THE FEES CHARGED BY THE PRESENT SOCIETY IS IN ADDITION TO THE BURDEN FORCED UPON THE COMMON-MAN. BECAUSE OF THIS SERVICE HAS TO BE REND ERED BY THE PUNJAB GOVT. FREE OF COST TO THE PUBLIC AGAINST THE FEE PRESCRIBED IN THE CHART AS REPRODUCED IN THE FORE-GOING PARAGRAP HS. WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED F OR IN THE WELL REASONED ORDER PASSED BY THE LD. CIT, BATHINDA.. TH EREFORE, WE UPHOLD THE IMPUGNED ORDER DATED 26.09.2011 BY DIS MISSING THE PRESENT APPEAL FILED BY THE ASSESSEE-SOCIETY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE -SOCIETY IS DISMISSED. ITA NO.589(ASR)/2013 17 7. IN THE FACTS AND CIRCUMSTANCES AND AS PER FINDIN GS HEREINABOVE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), R EJECTING THE APPLICATION OF THE ASSESSEE-TRUST FILED UNDER SECTION 12AA OF THE ACT AND THE GROUNDS OF THE ASSESSEE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.589(ASR)/2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2ND SEPTEMBER, 2014. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2ND SEPTEMBER, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. SUKHMANI SOCIETY FOR CITIZEN SERV ICES, GURDASPUR 2. THE CIT-II, AMRITSAR. 3. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR