DDIT(E), New Delhi V. M/s. Association of Unified telecom Service Providers of India, New Delhi

ITA 6495/DEL/2013

• Counselvise Citation: 649520114 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 24-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Keywords: Charitable institution; Benefit of exemption
• Section: 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. I .C.SUDHIR,JM. AND SH. PRASHANT MAHAR ISHI, AM ITA NO. 6495/DEL/2013 ASSESSMENT YEAR: 2009-10 DDIT (E) INV. CIR. -1, NEW DELHI VS ASSOCIATION OF UNIFIED TELECOM SERVICE PROVIDERS OF INDIA B -601 GAURI SADAN-5, HAILEY ROAD NEW DELHI (APPELLANT) (RESPONDENT) PAN AAAAA1951B REVENUE BY SHRI K K JAISWAL SR DR ASSESSEE BY SHRI K V S R KRISHNA CA DATE OF HEARING : 24.09.2015 DATE OF PRONOUNCEMENT : 07.10.2015 ORDER PER PRASHANT MAHARISHI, AM: 01. THIS APPEAL, BY THE REVENUE IS DIRECTED AGAINST TH E ORDER DATED 10/9/2013 PASSED BY THE COMMISSIONER OF INCOME TAX XXI , NEW DELHI RAISI NG FOLLOWING GROUNDS OF APPEAL ;- 1) ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AN D IN LAW, THELD. CIT (A) HAS ERRED IN TREATING THE ASSESSEE AS A CHARITABLE INST ITUTION EXEMPT U/S 11 OF THE INCOME TAX ACT, 1961. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS FAILED TO APPRECIATE THE FACTS THAT THE AO DENI ED THE CLAIM OF EXEMPTION TO THE ASSESSEE U/S 11 & 12 OF THE INCOME TAX ACT 1961 AS THE ASSESSEE ASSOCIATION IS CATERING TO THE BENEFITS OF ITS MEMBERS ONLY 02. BRIEF FACTS OF THE CASE IS THAT ASSESSEE IS AN ASSO CIATION OF THE TELECOM SERVICE PROVIDERS AND ITS MAIN OBJECT IS TO COLLEC T AND DIFFUSE USEFUL KNOWLEDGE AND INFORMATION FOR THE PROMOTION OF BA SIC TELEPHONE SERVICES, TO PROMOTESCIENTIFIC AN EDUCATION SERVICESIN BASIC TELEPHONE SERVICES AND TO FACILITATE BRIDGE BETWEEN THE SUBSCRIBERS AND BASIC TELEPHONE NETWORK OPERATOR ETC. THE ASSOCIATION IS REGISTERED U/S 12 A OF THE ACT . IT HAS ITA NO. 6495//DEL/2013 ASSOCIATION OF UNIFIED TELECOM SERVICE PROVIDERS OF INDIA A Y 2009-10 2 CLAIMED EXEMPTION U./S 11 & 12 OF THE INCOME TAX AC T SUBMITTING THAT ITS ACTIVITIES ARE FALLING WITHIN THE DEFINITION OF CHA RITABLE PURPOSES U/S 2 (15) OF THE INCOME TAX ACT 1961. REVENUE IS OF THE VIEW THAT ACTIVITIES OF THE TRUST ARE NOT FALLING WITHIN THE DEFINITION OF CHA RITABLE PURPOSES U/S 2 (15) OF THE INCOME TAX ACT AND THEREFORE THE EXEMPT ION PROVIDED U/S 11 & 12 OF THE ACT IS DENIED. FOR THIS YEAR ASSESSEE FIL ED ITS RETURN OF INCOME ON 30.9.2009 DECLARING NIL INCOME. ASSESSMENT U/S 143( 3) OF THE INCOME TAX ACT WAS PASSED ON 30.12.2011 WHERE IN AO HAS DENIED THE BENEFIT OF SECTION 11 & 12 TO THE ASSESSEE HOWEVER ACCEPTED TH E ALTERNATIVE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE IS A MUTUAL ASSOC IATION AND ON PRINCIPLES OF MUTUALITY DETERMINE THE TOTAL INCOME OF THE ASSE SSEE AT RS NIL. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED AN APPEAL BEFORE CIT (A) WHO ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT ASSESSEE TRUST IS CHARITABLE ASSOCIATION AND IS ELIGIBLE FOR EXEMPTIO N PROVIDED U/S 11 & 12 OF THE ACT. CIT (A) FOLLOWED THE ORDERS OF ITAT IN CASE OF ASSESSEE FOR AY 2002-03, 2003-04, 2005-06 AND 2008-09. NOW REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDER OF CIT (A). 03. BEFORE US LD. DR SUBMITTED THAT ASSESSE IS NOT CARR YING ON CHARITABLE ACTIVITIES BUT A MUTUAL ASSOCIATION THEREFORE THE BENEFIT OF SECTION 11 & 12 CANNOT BE GRANTED TO THE TRUST. THEREFORE HE SUB MITTED THAT ORDER OF AO MAY BE UPHELD. 04. IN RESPONSE TO THIS LD. AR SUBMITTED THAT ASSESSEE IS A TRUST CARRYING ON CHARITABLE ACTIVITIES AS DEFINED U/S 2 (15) OF THE ACT AND THEREFORE ELIGIBLE FOR EXEMPTION BENEFIT U/S 11 & 12 OF THE INCOME TAX ACT. HE FURTHER SUBMITTED THAT NOW THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE IN ITS OWN CASE BY THE ORDERS OF ITAT FROM AY 2002-03, 2003-04 , 2005-06 AND 2008- 09, 2010-11 AND 2011-12. HE SUBMITTED THAT THEREFOR E CIT (A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 11 & 12. 05.WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AS WELL AS THE DECISION IN THE CASE OF THE ASSESSEE RENDERED BY COORDINATES BENCHES FOR VARIOUS ITA NO. 6495//DEL/2013 ASSOCIATION OF UNIFIED TELECOM SERVICE PROVIDERS OF INDIA A Y 2009-10 3 PREVIOUS ASSESSMENT YEARS WHERE IT HAS BEEN HELD TH AT THE ASSESSEE IS CARRYING ON ACTIVITIES OF CHARITABLE PURPOSES AS DE FINED U/S 2(15) OF THE INCOME TAX ACT AND THEREFORE ELIGIBLE FOR EXEMPTION U/S 11 & 12 OF THE INCOME TAX ACT. THE ISSUE WAS FIRST DECIDED BY COOR DINATE FOR THE A. Y. 2002-03. FOR A READY REFERENCE PARA NO. 5 OF THE OR DER OF THE TRIBUNAL FOR THE A. Y. 2002-03 IS BEING REPRODUCED HEREUNDER: 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND RI VAL SUBMISSIONS. ON REVIEW OF THE RATIO OF VARIOUS CASE S CITED BY RIVAL PARTIES, NAMELY, ANDHRA CHAMBER OF COMMERCE, SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION, BAR COUNC IL OF MAHARASHTRA AND FEDERATION OF INDIAN CHAMBER OF COM MERCE & INDUSTRIES, WE FIND THAT PROMOTION OF TRADE, COMM ERCE OR INDUSTRY IS AN OBJECT OF GENERAL PUBLIC UTILITY AND , THEREFORE, IT CONSTITUTES A CHARITABLE PURPOSE. THE ONLY CONDI TION IS THAT THE ACTIVITY SHOULD NOT BE CARRIED ON WITH A PROFIT MOTIVE. IN OTHER WORDS, IF SUCH ACTIVITIES ARE UNDERTAKEN AND THEY RESULT IN A SURPLUS, THE SURPLUS SHOULD NOT BE PASSED ON D IRECTLY OR INDIRECTLY TO THE SETTLER, THE TRUSTEES, THE MEMBER S OR ANY ONE CLAIMING THROUGH THEM. SUCH SURPLUS SHOULD REMAIN F OR APPLICATION ITA NO. 2686/D/2014 M/S ASSOCIATION OF UNIFIED TELECOM PROVIDERS OF INDIA 3 TOWARDS THE OBJECTS OF GENERAL PUBLIC UTILITY. IN THE CASE OF INDIAN SUGAR MILLS A SSOCIATION, THE RULES CONTAINED PROVISION TO THE EFFECT THAT PR OFITS COULD BE DISTRIBUTED TO THE MEMBERS ON PASSING OF A RESOL UTION. THE HON'BLE SUPREME COURT POINTED OUT THAT THIS AMOUNTE D TO PRIVATE GAIN AND, THEREFORE, THE PURPOSE COULD NOT BE HELD TO BE CHARITABLE PURPOSE. IT IS ALSO CLEAR THAT THE AC TIVITIES, UNDERTAKEN FOR THE BENEFIT OF PUBLIC AT LARGE, WILL NOT CEASE TO BE CHARITABLE PURPOSE IF ANY BENEFIT INCIDENTALLY A RISES TO THE MEMBERS, SETTLER OR THE TRUSTEE, AS THE CASE MAY BE . THEREFORE, THE ARGUMENT THAT THE LITIGATION WAS PUR SUED FOR THE GAIN OF THE MEMBERS DOES NOT HOLD GOOD IN THE L IGHT OF THE FACT THAT THE OBJECTS WERE FOR PROMOTION OF BASIC T ELEPHONE SERVICES, WHOSE BENEFITS ENSURED TO PUBLIC AT LARGE BEING THE ITA NO. 6495//DEL/2013 ASSOCIATION OF UNIFIED TELECOM SERVICE PROVIDERS OF INDIA A Y 2009-10 4 INDUSTRIES AND THE USERS. THE BENEFITS TO THE MEMBE RS, IF ANY, WAS INCIDENTAL AND IT WAS NOT THE DOMINANT OBJECT O F THE ASSOCIATION. THEREFORE, WE AGREE WITH THE LD. CIT ( A) THAT THE OBJECTS OF THE ASSESSEE ARE CHARITABLE IN NATURE. T HIS CONCLUSION ALSO GETS SOME SUSTENANCE FROM THE FACT THAT EVEN AFTER PASSING OF THE ASSESSMENT ORDER, THE DIRECTOR OF INCOME TAX (E) DID NOT CANCEL THE REGISTRATION U/S 12 A OF THE ACT. IT MAY BE POINTED OUT THAT REGISTRATION BY THE DIRECTO R OF INCOME TAX (E) IS NOT AN EMPTY FORMALITY AND UNLESS REASONS EXIST ABOUT THE GENUINENESS OF THE ACTIVITIES OF TH E ASSOCIATION, THE EXEMPTION CANNOT BE DENIED U/S 11( 1) (A) IF A CHARITABLE INSTITUTION PURSUES ITS OBJECTS, WHICH W ERE CONSIDERED TO BE CHARITABLE IN NATURE BY THE DIRECT OR. THUS, WE ARE OF THE VIEW THAT THE ASSESSEE SOCIETY IS ENT ITLED TO EXEMPTION U/S 11(1) (A).' 06. SINCE THE CIT (A)S ORDER IS BASED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF ON IDENTICAL ISSUE FOR THE A.Y. 2002-03 AND SUBSEQUENT YEARS AND LATEST ONE BEING AY 2011-12, AND IN ABSENCE A OF ANY CHANGE POINTED OUT IN THE FACTS, LAW OR ACTIVITIES OF THE TRUST, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF CIT (A) IN THIS REGARD. THE SAME IS UPHELD. THEREFORE GROUND NO 1 & 2 OF THE APPEALS AR E DISMISSED. 07. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 07/10/ 2015) SD/- SD/- (I C SUDHIR) (PRASHANT MAHAR ISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07 /09/2015 *B. RUKHAIYAR* COPY FORWARDED TO: ITA NO. 6495//DEL/2013 ASSOCIATION OF UNIFIED TELECOM SERVICE PROVIDERS OF INDIA A Y 2009-10 5 1.APPELLANT A 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGISTRAR DATE INITIAL 1. DRAFT DICTATED ON 24/09/2015 2. DRAFT PLACED BEFORE AUTHOR 24/09/2015 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.