Tapas Foundation for care of Seniors, Pune V. Commissioner of Income-Tax -Exemption, Pune

ITA 72/PUN/2023

AI Insights

The case involves Tapas Foundation for Care of Seniors, a Section 8 company, which appealed against the decision of the CIT (Exemption), Pune, rejecting its application for registration under Section 12A of the Income Tax Act. The CIT (Exemption) had rejected the application on grounds of insufficient documentation to prove the genuineness of the assessee's charitable activities. The Tribunal noted that the assessee had not submitted the required documents during the initial proceedings and thus did not provide an opportunity for the CIT (Exemption) to examine these documents. The Tribunal referenced a Supreme Court decision emphasizing that activities resembling trade, business, or commerce disqualify an entity from being considered a GPU charity. Consequently, the Tribunal allowed the appeal for statistical purposes and remanded the case for a fresh examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134336 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-04-2023
• Assessment Year: 2022-2023
• Appeal Filed On: 19-01-2023
• Other Referred Cases: ACIT(exemption) Vs. Ahmedabad Urban Development Authority in Civil Appeal No.21762 of 2017
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIKRANT RAJOPADHYE
• Keywords: Liquidation
• Section: 12A

Judgement Text

आयकर अपीलीय अिधकरण “बी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B” :: PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.72/PUN/2023 TAPAS FOUNDATION FOR CARE OF SENIORS, Plot No.1, Queens Court, Aashiyana Park, Maharashtra – 411007. PAN: AAICT 5122 D Vs The CIT Exemption, Pune. Appellant/ Assessee Respondent /Revenue Assessee by Shri Vikrant Rajopadhye – AR Revenue by Shri Sardar Singh Meena – DR Date of hearing 17/04/2023 Date of pronouncement 26/04/2023 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Exemption), Pune dated 26.10.2022. The Assessee has raised the following grounds of appeal: “1. The Ld. CIT (Exemption), Pune has grossly erred both in law and on facts in rejecting the application for registration of the appellant company u/s 12A of the Act. 2. The learned CIT(E), Pune has also erred by refusing registration U/s 12A on irrelevant grounds & without any material ITA No.72/PUN/2023 Tapas Foundation For Care of Seniors [A] 2 on record in respect of genuineness of its activities of appellant company. 3. That while arbitrarily rejecting the application for seeking registration U/S 12A(l)(ac)(iii) of the Act filed by the applicant, the learned CIT(E), Pune has completely brushed aside and disregarded that in the light of material evidences placed on records it is beyond doubt that the appellant company is genuinely conducting the charitable activities strictly in accordance with its objects. 4. That in any view of the facts and circumstances of the case of the appellant Company it is entitled for grant of registration U/S 12A of the Act, which be kindly granted. 5. The aforesaid grounds of appeal are without prejudice to one another. 6. The appellant craves leave to add, alter, amend, modify or delete any or all the aforesaid grounds of appeal.” Revised Grounds : “1. The Ld. CIT (Exemption), Pune has grossly erred both in law and on facts in rejecting the application for registration of the appellant company u/s 12A of the Act. 2. That on the facts and in the circumstances of the appellant’s case and in law, learned CIT(E) has erred in confirming that the appellant’s business activity has not commenced. 3. The learned CIT(E), Pune has also erred by refusing registration U/s 12A on irrelevant grounds & without any material on record in respect of genuineness of its activities of appellant company. 4. That while arbitrarily rejecting the application for seeking registration U/S 12A(l)(ac)(iii) of the Act filed by r the applicant, the learned CIT(E), Pune has completely brushed aside and disregarded that in the light of material evidences placed on records it is beyond doubt that the appellant company is genuinely ITA No.72/PUN/2023 Tapas Foundation For Care of Seniors [A] 3 conducting the charitable activities strictly in accordance with its objects. 5. That in any view of the facts and circumstances of the case of the appellant Company it is entitled for grant of registration U/S 12A of the Act, which be kindly granted. 6. The aforesaid grounds of appeal are without prejudice to one another.” Brief facts of the case : 3. In this case, the ld.CIT(Exemption) rejected the assessee’s application filed under section 12A(1) dated 20.04.2022 on the ground that assessee has not filed details of activity, proof of identity of main Directors, copy of Annual Reports, note on activities, date of expiry of original registration etc, even after providing three opportunities. Therefore, the ld.CIT(E) concluded that assessee’s activities are not genuine and not charitable. Aggrieved by the order of the ld.CIT(E), Pune, assessee filed an appeal before this Tribunal. Submission of Ld.AR of the Assessee : 4. The Ld.AR of the Assessee filed a paper book. The Ld.AR submitted an affidavit for condonation of delay in filling appeal before this tribunal. Ld.AR submitted that the assessee could not file details before the ld.CIT(E), therefore, he requested that one more opportunity may be given to file details before the ld.CIT(E). The ld.AR took us through the paper book containing 65 pages. ITA No.72/PUN/2023 Tapas Foundation For Care of Seniors [A] 4 Submission of ld.DR : 5. The ld.DR for the Revenue submitted that assessee failed to submit the details after giving sufficient opportunity and therefore, ld.CIT(E) has rightly rejected the application. The ld.DR submitted that assessee failed to prove genuineness of his activities. Findings and Analysis : 6. We have heard both the parties and perused the records. As per the paper book filed by the ld.AR of the assessee, Assessee i.e.Tapas Foundation for Care of Seniors is a Section 8 Company incorporated under the Companies Act on 25.08.2020. The companies issued and paid-up share capital is Rs.1,00,000/- as on 31.03.2022. Following are the shareholders: 1) Isha Tushar Wadhavkar - Shareholding 33% Address: D/o.Tushar Ashok Wadhavkar, B-76, Wallfort City, Ring Road No.1, Bhatagaon, Raipur, Chattisgarh – 492013. 2) Tushar Ashok Wadhavkar - Shareholding 33% Address: S/o.Ashok Prabhakar Wadhavkar, B-76, Wallfort City, Ring Road NO.1, Bhatagaon, Raipur, Chattisgarh – 492013. 3) Tapas Geriatic Care Pvt. Ltd., - Shareholding 34% Through Nominee i.e.Prajakta Tushar Wadhavkar, Address : B-76, Wallfort City, Ring Road No.1, Bhatagaon, Raipur, Chhattisgarh – 492013. ITA No.72/PUN/2023 Tapas Foundation For Care of Seniors [A] 5 6.1 In the Balance Sheet, following is the remark : “b) Terms/rights attached to equity shares The Company has only one class of equity shares having shares having a par value of Re. per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.” 7. On perusal of the Balance Sheet as on 31.03.2022, it is observed that assessee has purchased agricultural land. It is observed that assessee has purchased agricultural land for Rs.7,50,000/- at District Sehore, Madhya Pradesh on 30.07.2021(Page No.35 to 41 of the paper book).The document is signed on behalf of the assessee by Tushar Ashok Wadhavkar. It is not clear whether the Memorandum of Association (MoA) of the company permits assessee company to invest in agricultural land. 8. From the Profit and Loss Account of the Assessee, following emerges : Particulars 2021-22 Receipt Rs.453000/- Expenses Rs.46000/- Profit for the year Rs.407000/- Thus, assessee had earned 89% profit in F.Y.2021-22. ITA No.72/PUN/2023 Tapas Foundation For Care of Seniors [A] 6 9. Certain clauses mentioned in MoA are reproduced here as under: “34. To acquire by lease or purchase, immovable property either land or building or both and develop, construct houses and buildings for attainment, facilitating the attainment of the objects of the Company. 35. To establish branches and offices in different parts of India and abroad for the promotion of its objects. 36. To raise necessary funds and collect appropriate subscriptions, fees, grants, corpus funds, donations, commissions, royalties, cess in respect of services rendered as specified in clauses 1 to 7 above in the main objects, clauses 1 to 55 in the incidental or ancillary objects above or any other objects for the promotions of its objects. 4 th The objects of the company extend to overall India and abroad.” 10. Even before us, assessee has not filed any document to prove the activities carried out by the assessee. Before us, in the paper book, assessee has filed following documents : Sr.No. Particulars of Document (Copies) Page Nos. 1. Appeal Documents filed in Form 36, Fees receipt, Statement of Facts, Grounds of Appeals dated 20/01/2023. 1-12 2. Rejection Order for registration under Section 12A(1)(ac)(iii) in Form No. 10AD Passed by the CIT Exemption, Pune 13-16 3. Bank Statement for the AY 2022-23 17-19 4. Acknowledgement of Income Tax Return filed for AY 2021-22 and AY 2022-23 20-21 5. Computation of Income Tax for AY 2021-22 and AY 2022-23 22-26 ITA No.72/PUN/2023 Tapas Foundation For Care of Seniors [A] 7 6. Financials with schedules and notes to accounts for AY 2022-23 27-34 7. Index II and sales deed dt 30.07.2021 for the purchase of land. 35-41 8. MOA and AOA of the company 42- 65 11. It is observed that Directors of the Tapas Geriatric Care Private Limited are Smita Ashok Wadhavkar and Isha Tushar Wadhavkar and its Registered Office is at Arvind Enclave, Flat No.03, S.No.24, Plot No.42, 43, 44, Near Moze College, Balewadi, Pune - 411045. 12. However, these documents were not filed by the assessee before the ld.CIT(E). The assessee in the paper book has not mentioned that the documents in the paper book were filed before ld.CIT(E). It means the ld.CIT(E) had no opportunity to examine the documents. We do not agree with the assessee’s revised ground number 3,4 as the assessee has not produced any documents to prove the genuineness of the activities of the assessee and to prove that assessee’s activities are charitable in nature as defined under section 2(15) of the Act. Before us, the assessee has not filed any document to prove that assessee had filed all the necessary documents before the ld.CIT(E). However, since assessee failed to file the documents before the ld.CIT(E), we set-aside the order of ld.CIT(Exemption) to ld.CIT(E) for denovo adjudication. The ld.CIT(E) shall provide opportunity to the assessee. The assessee shall file all the documents ITA No.72/PUN/2023 Tapas Foundation For Care of Seniors [A] 8 as called for by the ld.CIT(E). The Ld.CIT(E) shall keep in mind the law laid down by the Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority. The Hon’ble Supreme Court has observed in the case of ACIT(exemption) Vs. Ahmedabad Urban Development Authority in Civil Appeal No.21762 of 2017 as under : Quote, “ 150. Therefore, what Parliament intended – through the amendments in question was to proscribe, involvement or engagement of GPU charities, from any form (“in the nature of”) of activities that were trade, business or commerce, or engage or involve in providing services in relation to trade, business or commerce- for a fee, cess or other consideration. The inclusion of the term “in the nature of” was by design, to clarify beyond doubt, that not only business, trade or commerce, but all activities in the nature of, or resembling them, were proscribed. Likewise, service in relation to such activities, i.e., services relating, or pertaining to, such proscribed activities, too were forbidden. 151. The reference to fee or cess, is in the opinion of the court, only to emphasize that even a statutory consideration, for a service to business, trade or commerce, would take the activity outside the definition of a GPU charity. The sense in which the expressions “cess, fee or other consideration” are used, is that if any amount, is received for trading, or business or commercial activity, or any services to such activity, then, notwithstanding their nomenclature (as fee or cess, i.e. that they are fixed under a law) the GPU charity cannot claim tax exempt status. To bring home this even more pointedly- and underline a break from the past, the application of such amounts (received in the course of trade, commerce, or ITA No.72/PUN/2023 Tapas Foundation For Care of Seniors [A] 9 business, or towards services in relation thereto) would be irrelevant, as evidenced by the term “irrespective”, in the fourth limb of reading Section 2(15).”Unquote. 12.1 Thus, Hon’ble Supreme Court has categorically observed that GPU are proscribed from any activities in the nature of trade, commerce, business. Accordingly, Revised Grounds of Appeal of the assessee are allowed for statistical purpose. 13. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 26 th April, 2023. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 26 th April, 2023/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकरअपीलीयअिधकरण, “बी” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.