Institute of Road Safety & Fleet Managemet Society, Delhi V. DIT (Exemption), New Delhi

ITA 596/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7200 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-08-2016
• Assessment Year: misc
• Appeal Filed On: 03-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI C.M. GARG : JUDICIAL MEMBER ITA NO. 596/DEL/2014 U/S 12AA(1)(6) INSTITUTE OF ROAD SAFETY & FLEET VS. DIRECTOR OF I NCOME-TAX MANAGEMENT SOCIETY (EXEMPTION), 26 TH FLOOR, M.R. COMPLEX ADJ, RADISSION E2, PRATYAKSH KAR BHA WAN, HOTEL, NH-8, RANGPURI, CIVIC CENTRE, NEW DELHI- 2. MAHIPALPUR, DELHI-110037. PAN: AAAAI 4476 P (APPELLANT) ( RESPONDENT) APPELLANT BY : SHRI ASHOK KHURANA CA RESPONDENT : SHRI A.K. SAROHA CIT (DR) DATE OF HEARING : 01/08/2016. DATE OF ORDER : 02/09/2016. O R D E R PER S.V. MEHROTRA, A.M: THIS IS ASSESSEES APPEAL AGAINST THE ORDER DATED 2 8.11.2013 PASSED BY THE DIRECTOR OF INCOME TAX (E), U/S 12AA(1)(B) R.W.S. 1 2A OF THE INCOME TAX ACT, 1961. 2 2. THE ASSESSEE HAS RAISED AS MANY AS 9 GROUNDS OF APPEAL TO ASSAIL THE ORDER OF LD. DIT(E) IN DENYING REGISTRATION U/S 12AA AND EX EMPTION U/S 80G OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SO CIETY HAD APPLIED FOR REGISTRATION U/S 12A AND U/S 80G DATED 16.5.2015. L D. DIT(E) REQUIRED THE ASSESSEE TO SUBMIT DETAILS AND DOCUMENTS IN SUPPORT OF ITS C LAIM FOR REGISTRATION U/S 12A AND EXEMPTION U/S 80G. LD. DIT(E) NOTED THAT THE ASSESS EE SOCIETY WAS FOUNDED ON 23.3.2011 WITH THE FOLLOWING OBJECTS: A) INSTITUTE OF ROAD SAFETY AND FLEET MANAGEMENT S OCIETY PROMOTE SAFETY AND THE PREVENTION OF ACCIDENTS IN ALL AREAS OF LIFE AT WORK AT LEISURE ON THE ROAD, IN THE HOME AN D THROUGH SAFETY EDUCATION IN SCHOOLS, INSTITUTIONS WORK PLAC ES AND ALL OTHER LOCATIONS. B) INSTITUTE OF ROAD SAFETY AND FLEET MANAGEMENT SO CIETY AIM IS TO SENSITIZE MASSES BY RAISING AWARENESS ABO UT ROAD TRAFFIC DEATHS, CRIPPLES AND GRIEVOUS INJURIES THEI R GRAVE CONSEQUENCES AND THUS BUILDING COMMUNITY INVOLVEMEN T AROUND THE ISSUE OF ROAD SAFETY. C) INSTITUTE OF ROAD SAFETY AND FLEET MANAGEMENT SO CIETY CAMPAIGNS TO BRING IN CHANGE IN ATTITUDES AND BEHAV IORS AND INCULCATE SENSE OF COURTESY AND CONCERN AMONG ROAD USERS. 2.1. LD. DIT(E) EXAMINED THE NOTE ON ACTIVITY FILED BY THE ASSESSEE DURING THE COURSE OF PROCEEDINGS AND AFTER CONSIDERING THE SAM E, EXAMINED THE ACCOUNTS SUBMITTED BY THE ASSESSEE FROM WHICH SHE NOTICED TH AT ASSESSEE HAD RECEIVED IN AY 3 2013-14 SERVICE CHARGES AGGREGATING TO RS. 27,09,27 5/- AND MISC. RECEIPTS AT RS. 8,57,713/-. IN SUPPORT OF THESE RECEIPTS THE ASSESS EE FILED BANK STATEMENT FOR THE ENTIRE ONE YEAR SHOWING DEPOSITS MOSTLY EXCEEDING R S. 20,000/- IN THE ACCOUNT. THE ASSESSEES AR WAS REQUIRED TO STATE THE NATURE OF DEPOSITS OR CREDITS IN THE BANK ACCOUNT. THE ASSESSEES AR FILED LETTER DATED 15.10.2013, SIGNED BY THE PRESIDENT OF THE SOCIETY, STATING THEREIN THAT WE HEREBY CERTIFY THAT AMOUNT ABOVE RS. 20,000/- RECEIPTS/ CREDITS INTO OUR BANK ACCOUN T ARE AGAINST ROAD SAFETY EDUCATION-TRAINING SERVICES RENDERED BY US . LD. DIT(E) ALSO NOTICED THAT ASSESSEE, INTER ALIA, SUBMITTED THAT IT WAS PROVID ING KNOWLEDGE OF SAFE DRIVING ON THE ROADS TO THE PROFESSIONAL DRIVERS THROUGH VARIO US MODES. LD. DIT(E) AFTER GOING THROUGH THESE DETAILS CONCLUDED THAT ASSESSEE WAS INVOLVED IN RENDERING ITS PROFESSIONAL/ TECHNICAL SERVICES TO THE PEOPLE/ DES IROUS PERSONS IN LIEU OF MONEY. SHE REQUIRED THE ASSESSEE TO ELABORATE ON THE TRAIN ING PROGRAMME CONDUCTED BY IT OR THE TRAINING COURSES BEING RUN BY IT. IN RESPONS E, IT WAS STATED THAT IT DID NOT RENDER ANY REGULAR/ STRUCTURED TRAINING PROGRAMME O R COURSES. IT STRUCTURES THE TRAINING PROGRAMME AS PER THE NEEDS OF THE ORGANIZA TION FOR WHICH THE TRAINING PROGRAMME IS BEING CONDUCTED. LD. DIT(E), HOWEVER, HAS OBSERVED THAT ASSESSEE WAS UNABLE TO FILE ANY FURTHER DETAILS ABOUT CONTEN TS/ NAME/ TARGET GROUP ETC. OF THE TRAINING PROGRAMME CONDUCTED BY IT FOR VARIOUS ORGA NIZATION FROM WHOM IT CLAIMED TO HAVE RECEIVED RS. 27.09 LACS. LD. DIT(E) OBSERVE D IN PARA 6 OF HER ORDER THAT THE 4 APPLICANTS ACTIVITIES FELL WITHIN THE AMBIT OF ADV ANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THE APPLICANT WAS CHARGI NG FEES FOR ITS PROFESSIONAL AND TECHNICAL SERVICES. SHE OBSERVED THAT SINCE THE NAT URE OF THE ACTIVITIES CARRIED OUT BY THE ASSESSEE WERE FOUND TO BE IN THE NATURE OF B USINESS, THE ASSESSEE WAS AFFORDED AN OPPORTUNITY TO EXPLAIN AS TO WHY ITS AP PLICATION BE NOT REJECTED IN VIEW OF THE PROVISO TO SECTION 2(15) OF THE INCOME-TAX A CT. 2.2. THE ASSESSEE SUBMITTED THAT THE ACTIVITIES BEI NG CARRIED OUT BY THE ORGANIZATIONS WERE NOT IN NATURE OF BUSINESS BUT A GENUINE CHARITABLE ACTIVITY AND PROVISO TO SECTION 2(15) WAS NOT ATTRACTED. IT WAS FURTHER CONTENDED THAT THE ACTIVITIES FELL WITHIN THE AMBIT OF EDUCATION AS I T WAS RUNNING A TRAINING INSTITUTE TO CATER TO THE NEEDS OF PROFESSIONAL DRIVERS. 2.3. LD. DIT(E) REJECTED THE ASSESSEES CLAIM OF RE GISTRATION U/S 12A OBSERVING IN PARA 8 OF HER ORDER AS UNDER: 8. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E BY THE APPLICANT AND GONE THROUGH THE DETAILS FILED BY IT. IT IS CLEAR THAT THE INSTITUTE PRIMARILY CLAIMS TO BE CONDUCTING TRA INING FOR ROAD SAFETY BY HOLDING TRAINING PROGRAMMES WHICH ARE STR UCTURED AS PER THE NEEDS OF THE RECIPIENT ORGANIZATION. FIRST OF ALL IT IS MENTIONED THAT DURING THE COURSE OF PROCEEDINGS AR OF THE APPLICANT WAS SPECIFICALLY ASKED VIDE. ORDER SHEET ENTRY DATED 16/7/2013 TO GIVE DETAILS OF SERVICES CHARGES AND M ISC. RECEIPT AS, PER ACCOUNT FILED FOR A.Y. 2013-14 AMOUNTING TO RS. 35,66,988/- HOWEVER, IT DID NOT FURNISH PARTY-WISE DETAILS OF SERVICES CHARGES AND MISC. RECEIPT. FROM THE DETAIL S FILED, IT COULD NOT BE ASCERTAINED AS TO HOW APPLICANT IS PRO VIDING TRAINING TO THE COMMERCIAL ENTITIES FROM WHOM SERVI CE CHARGES/MISC. RECEIPT HAVE BEEN SHOWN. NO, EVIDENCE HAS BEEN 5 FILED IN RESPECT OF NATURE/CONTENT OF TRAINING AND THE TARGET GROUP DRIVERS, COMMUTERS, MANAGEMENT STAFF ETC. TO WHOM IT IS IMPARTED. IN ITS REPLY DATED 28/11/2013 APPLICANT H AS FILED ONLY NAMES OF ORGANIZATIONS FOR AY. 2011-12 AND 2012-13 WHEREIN, IT CLAIMS TO HAVE TRAINED THE STAFF OF THESE ORGANI ZATIONS. ALL ORGANIZATIONS ARE EITHER PVT. LTD COMPANIES OR LTD COMPANIES AND NO GENERAL PUBLIC OR PEOPLE ARE THE BENEFICIARI ES OF ITS ACTIVITIES. IN THE ABSENCE OF NATURE OF TRAINING TO THE PEOPLE/PERSON AND PARTY-WISE DETAILS OF SERVICE REN DERED OR MONEY CHARGED FROM THE COMMERCIAL ORGANIZATIONS FOR IMPARTING TRAINING TO THEIR EMPLOYEES, THE APPLICAN T HAS FAILED TO JUSTIFY ITS CLAIM OF CHARITABLE ORGANIZATION. TH EREFORE, ASSESSEE'S CLAIM OF REGISTRATION U/S 12A FAILS ON T HIS ACCOUNT ALONE . 2.4. RELYING ON THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF SOLE TRUSTEE LOK SHIKSHANA TRUST VS. CIT (1975) 10 ITR 2 34 (SC), LD. DIT(E) DID NOT ACCEPT THE ASSESSEES CONTENTION THAT IT WA S PROVIDING EDUCATION. SHE ALSO RELIED ON THE DECISION OF HONBLE GUJARAT HIG H COURT IN THE CASE OF SORABJI NUSSERWANJI PAREKH 66 TAXMANH 411 FOR REJE CTING THE ASSESSEES CLAIM THAT IT WAS IMPARTING EDUCATION. HOWEVER, SHE ACCEPTED THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE FELL WITHIN THE LAST LIMB, ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY OF D EFINITION OF CHARITABLE PURPOSE AS GIVEN IN SECTION 2(15) OF THE I.T. ACT. HOWEVER, THIS CLAIM WAS ALSO REJECTED AS SHE CONCLUDED THAT PROVISIO TO SEC TION 2(15) WAS ATTRACTED. SHE, ACCORDINGLY, REJECTED THE ASSESSEES APPLICATI ON FOR GRANT OF REGISTRATION U/S 12A AND ALSO APPLICATION IN FORM NO. 10G SEEKIN G EXEMPTION U/S 80G. 6 3. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AT T HE TIME OF GRANTING REGISTRATION LD. DIT(E) WAS REQUIRED TO EXAMINE THE GENUINENESS OF THE ACTIVITIES WHICH HAS NOT BEEN DOUBTED BY LD. DIT(E ). HE REFERRED TO PAGE 8 OF PB WHEREIN MEMORANDUM OF ASSOCIATION OF ASSESSEE SOCIETY IS CONTAINED AND REFERRED TO AIMS AND OBJECTS OF SOCIETY AND POI NTED OUT THAT THE ACTIVITIES CARRIED OUT BY ASSESSEE WERE CHARITABLE IN NATURE. HE SUBMITTED THAT ALL THESE ACTIVITIES WERE CARRIED OUT FOR THE BENEFIT OF PUBL IC AT LARGE BY SENSITIZING MASSES BY RAISING AWARENESS ABOUT ACCIDENTS WHICH R ESULTS INTO ENORMOUS LOSSES TO HUMAN LIVES. 3.1. LD. COUNSEL FURTHER SUBMITTED THAT EDUCATION C ANNOT BE ASCRIBED NARROW MEANING. HE RELIED ON THE DECISION OF HONBL E BOMBAY HIGH COURT IN THE CASE OF DIT(E) VS. M/S KHAR GYMKHANA RENDERE D IN ITA NO. 2349/2013 VIDE ORDER DATED 6.6.2010, A COPY OF WHIC H WAS FILED AT THE TIME OF HEARING. 4. LD. CIT(DR) SUBMITTED THAT THE PRECONDITION FOR IMPARTING EDUCATION IS THAT KNOWLEDGE CAN BE USED BY PERSON EDUCATED. A SSESSEE WAS ONLY BRINGING AWARENESS AMONGST PEOPLE AND, THUS, THERE WAS UTILIZATION OF KNOWLEDGE BY PUBLIC AT LARGE. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD OF THE CASE. SECTION 12AA OF THE INCOME-TAX ACT 7 PRESCRIBED THE PROCEDURE FOR REGISTRATION. THIS SEC TION MANDATES LD. COMMISSIONER TO - (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRU ST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABO UT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY A LSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE T RUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE (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 SUCH ORDER SHALL BE SENT TO THE APPLICA NT. 5.1. THUS, FROM A BARE PERUSAL OF SECTION IT IS EVI DENT THAT LD. DIT(E) HAS TO SATISFY HIMSELF ABOUT THE OBJECT OF THE TRUST AND T HE GENUINENESS OF ITS ACTIVITIES. FROM THE ORDER PASSED BY LD. DIT(E) IT IS EVIDENT THAT SHE IS NOT DISPUTING THAT OBJECTS OF THE SOCIETY ARE CHARITABL E IN NATURE AS SHE HERSELF HAS SAID THAT THE ACTIVITIES CARRIED OUT BY ASSESSEE WE RE COVERED UNDER FOURTH LIMB OF SECTION 2(15) VIZ. ADVANCEMENT OF ANY OTHE R OBJECT OF GENERAL PUBLIC UTILITY. AT THIS JUNCTURE WE MAY OBSERVE THAT WE AR E NOT RECORDING ANY FINDINGS AS TO UNDER WHICH LIMB OF SECTION 2(15) TH E ASSESSEES ACTIVITIES FELL, BECAUSE AT THIS JUNCTURE WE HAVE ONLY TO EXAMINE WH ETHER THE ACTIVITIES 8 CARRIED ON BY ASSESSEE ARE CHARITABLE IN NATURE OR NOT. THIS IS NOT DISPUTED BY LD. DIT(EXEMPTION). 5.2. WE MAY ALSO CLARIFY THAT AS FAR AS LD. DIT(E) S FINDING REGARDING APPLICABILITY OF PROVISO TO SECTION 2(15) IS CONCER NED, WE ARE NOT INCLINED TO ACCEPT THE SAME FOR THE SIMPLE REASON THAT ASSESSEE HAD RECEIVED SERVICE CHARGES FROM VARIOUS ORGANIZATIONS FOR CONDUCTING T HE PROGRAMME AND THIS CANNOT PAR TAKE THE CHARACTER OF BUSINESS BY ANY ST RETCH OF REASONING. BE THAT AS IT MAY, THIS CANNOT BE BASIS FOR DENYING REGISTR ATION AS IT IS NOWHERE SO CONTEMPLATED IN THE ACT. 5.3. NOW THE SECOND ASPECT, WHICH IS TO BE CONSIDER ED AT THE TIME OF GRANT OF REGISTRATION, IS REGARDING THE GENUINENESS OF IT S ACTIVITIES. IN THIS REGARD LD. DIT(E) HAS OBSERVED, AS NOTED IN PARA 8 OF HER ORDE R, REPRODUCED EARLIER, THAT ASSESSEE HAD FILED ONLY NAMES OF ORGANIZATIONS FOR AYS 2011-12 AND 2012- 13, WHEREIN IT CLAIMED TO HAVE TRAINED THE STAFF OF THESE ORGANIZATIONS AND SHE POINTED OUT THAT ALL ORGANIZATIONS WERE EITHER PVT. LTD. COMPANIES OR LD. COMPANIES AND NOT GENERAL PUBLIC OR PUBLIC WERE THE BENEFICIARIES OF THESE ACTIVITIES. SHE FURTHER OBSERVED THAT IN THE ABSENC E OF NATURE OF TRAINING TO THE PEOPLE AND PARTY-WISE DETAILS OF SERVICES RENDE RED OR MONEY CHARGED FROM THE COMMERCIAL ORGANIZATIONS FOR IMPARTING TRA INING TO THEIR EMPLOYEES 9 THE ASSESSEE FAILED TO JUSTIFY ITS CLAIM FOR CHARIT ABLE ORGANIZATION. IN THIS REGARD WE FIND THAT AT PAGES 94-95 OF PAPER BOOK TH E ASSESSEE HAS FILED COPY OF LEDGER ACCOUNT OF SERVICE CHARGES RECEIVED. THES E SERVICE CHARGES WERE MAINLY FROM FOLLOWING COMPANIES: - ACC LIMITED. - E.I. DUPONT INDIA PVT. LTD. - HINDUSTAN COCA-COLA BEVERAGES PVT. LTD. - DIVERSEY INDIA PVT. LTD. - CAIRN ENERGY INDIA PVT. LTD. 5.4. ALL THESE ARE BIG COMPANIES AND, THEREFORE, WH EN THESE COMPANIES HAVE CONTRIBUTED TOWARDS THE PROGRAMME CARRIED OUT BY ASSESSEE, IT CANNOT BE SAID THAT ACTIVITIES OF ASSESSEE-SOCIETY WERE NO T GENUINE. THESE COMPANIES MUST HAVE SPONSORED ONLY AFTER CONSIDERING THEIR SO CIAL RESPONSIBILITIES TOWARDS PUBLIC AT LARGE. FURTHER, WE FIND THAT IN P APER BOOK, ASSESSEE HAS ALSO ANNEXED VARIOUS REPORTS ON ITS ACTIVITIES, WHI CH HAVE NOT ADVERSELY BEEN COMMENTED BY LD. DIT(E). PHOTOGRAPHS ANNEXED IN PAP ER BOOK SHOW THAT VARIOUS PROGRAMMES WERE BEING CONDUCTED AND PEOPLE WERE LISTENING TO VARIOUS SPEAKERS. THEREFORE, THE ASSESSEE-SOCIETY W AS CARRYING OUT THE ACTIVITIES FOR WHICH IT WAS INCORPORATED. HENCE, GE NUINENESS OF ACTIVITIES STANDS ESTABLISHED. THUS, TWIN INGREDIENTS OF SECTI ON 12AA BEING SATISFIED, WE DO NOT FIND ANY BASIS FOR DENYING REGISTRATION T O THE SOCIETY AND, 10 THEREFORE, WE DIRECT LD. DIT(E) TO GRANT REGISTRATI ON AS THE ASSESSEE FULFILLS THE BASIC REQUIREMENTS FOR GRANT OF REGISTRATION U/ S 12AA OF THE ACT. 5.5. AS WE HAVE DIRECTED FOR GRANT OF EXEMPTION U/S 12AA, WE ALSO DIRECT FOR GRANT OF REGISTRATION U/S 80G AS THE SOLE BASIS FOR DENYING THE EXEMPTION U/S 80G WAS NOT GRANTING OF REGISTRATION U/S 12AA. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCEMENT IN OPEN COURT ON 02/09/2016. SD/- SD/- ( C.M. GARG ) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 02/09/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.