ROYAL WELFARE SOCIETY, MUMBAI V. DIT (E), MUMBAI

ITA 7338/MUM/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3315 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-02-2015
• Assessment Year: misc
• Appeal Filed On: 27-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SRIVASTAVA
• Assessee Lawyers: S M MAKHIJA
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12A; 12AA; 12; 11

Judgement Text

ITA NO. 7338 / MUM/ 201 0 1 , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , , BEFORE S/SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, J UDICIAL MEMBER ./ I.T.A. NO. 7338 / MUM/ 201 0 ( / ASSESSMENT YEAR : NA ) M/S ROYAL WELFARE SOCIETY, 156, ROYAL WELFARE SOCIETY, S V ROAD, KHAR (W), MUMBAI - 400052 / VS. DIRECTOR OF INCOME TAX (EXEMPTION), 6 TH FLOOR, PIRA MAL CHAMBERS, PAREL, MUMBAI - 400012 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AAATR8165K / APPELLANT BY : SHRI S M MAKHIJA / RESPONDENT BY : SHRI A K SRIV ASTAVA / DATE OF HEARING : 3 .12. 2015 / DATE OF PRONOUNCEMENT : 16.3 . 201 6 O R D E R PER SANDEEP GOSAIN, JM : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 23.8 .201 0 PASSED U/S 12AA(1)(B)(II) R.W.S 12A OF THE INCOME TAX ACT, 1961 B Y LD. DIRECTOR OF INCOME TAX (EXEMPTION) REFUSING TO GRANT REGISTRATION TO THE ASSESSEE U/S 12A OF THE INCOME TAX ACT, 1961. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSE E IS A CHARITABLE TRUST HAVING BEEN CONSTITUTED ON 14.7.2002 BY THE MEMORANDUM ITA NO. 7338 / MUM/ 201 0 2 OF ASSOCIATION AND REGISTERED WITH OFFICE OF THE CHARITY COMMISSIONER UNDER BOMBAY PUBLIC TRUST ACT, 1950. THE ASSESSEE TRUST BEARING REGISTRATION NO.F - 24578 AND UNDER THE SOCIETY REGISTRATION ACT, 1860 BEARING NO.GBBSD 1135/2002 DATED 19.8.2002. 3. THE ASSESSEE MADE AN APPLICATION FOR REGISTRATION U/S 12A TO THE DIRECTOR OF INCOME TAX (EXM) FOR GRANT OF EXEMPTION. THE LD. AR SUBMITTED THAT THE DIRECTOR OF INCOME TAX (EX EMPTION) (DIT(E)) HAS REJECTED THE APPLICATION FILED BY THE ASSESSEE SEEKING REGISTRATION U/S 12A OF THE ACT ON FOLLOWING GROUNDS : (A) THE OBJECTS MENTIONED IN THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE CONTAIN CERTAIN OBJECTS WHICH ARE NOT MADE FOR GENERAL PUBLIC AND THE BENEFIT OF THE TRUST ARE RESTRICTED TO THE MEMBERS OF THE COMMUNITY. (B) VIOLATION OF SECTION 13(1) (B) OF THE INCOME TAX ACT. (C) THE CHARACTER OF THE INSTITUTION/TRUST AS ENVISAGED BY THE LEGISLATURE, SHOULD BE FOR THE BE NEFIT OF GENERAL PUBLIC AT LARGE AND NOT FOR THE BENEFIT OF SPECIFIC MEMBERS. THE ASSESSEE TRUST RESTRICTED THE BENEFIT ONLY TO MEMBERS OF THE COMMUNITY THEREFORE, THE LD. DIRECTOR OF INCOME TAX (E) WAS OF THE VIEW THAT THE BENEFIT GRANTED UNDER SECTION 11 CANNOT BE EXTENDED TO THE ASSESSEE TRU S T AND HENCE, REJECTED T HE APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT FOR WANT OF VIOLATION OF PROVISIONS OF SECTION 12 TOO. WHILE DEALING WITH THE ISSUE OF REGISTRATION U/S 12AA OF THE ACT, THE LD.DIT(E) HA S LENT SUPPORT FROM THE DECISION OF THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF DHAKAD SAMAJ DHARAMSHALA BHAVAN TRUST V/S CIT (302 ITR 321) (MP) . ITA NO. 7338 / MUM/ 201 0 3 4 . WITH REGARD TO THE FIRST OBJECTION OF LD. DIT(E), THE LD. AR SUBMITTED ALL ACTIVITIES MENTION ED IN THE M EMORANDUM OF ASSOCIATION IS MEANT FOR LESS PRIVILEGED CLASS OF PEOPLE IRRESPECTIVE OF THEIR CASTES OR RELIGION. THE BENEFICIARIES HAIL FROM ALL THE COMMUNITIES AND NOT RESTRICTED TO ANY ONE PARTICULAR COMMUNITY. THE LOCAL AREA WHERE THE TRUS T IS FUNCTIONING BELONGS TO DIFFERENT CASTES AND CREEDS. THE ASSESSEE TRUST IS PROMOTING SPORTS ACTIVITIES AMONGST POOR CHILDREN GAMES AND ORGANIZATION OF SPORTS FOR VERY POOR CHILDREN. THE LD.AR FURTHER SUBMITTED THAT THE ASSESSEE TRUST PASSED RESO LUTION AMENDING THE OBJECTIONABLE WORD COMMUNITY APPEARING IN CLAUSE (B) AND ( C ) IN THE MEMORANDUM OF ASSOCIATION AND SUBMITTED THE AMENDMENT TO THE OFFICE OF CHARITY COMMISSIONER FOR ITS APPROVAL. THE LD. CHARITY COMMISSIONER VIDE ORDER DATED 2 1.11.2014 HAS ALLOWED THE APPLICATION AND PASSED THE ORDER AS UNDER : ORDER 1 ) CHANGE REPORT IS HEREBY ACCEPTED; 2 ) SCHEDULE - 1 BE AMENDED ACCORDINGLY. THEREFORE, THE LD.AR SUBMITTED THAT THE OBJECTIONS RAISED BY THE DIT (E) FOR NOT GRANTING REGISTRATION U/S 12AA HAVE BEEN REMOVED AND PRAYED THAT THE LD. DIT(E) BE DIRECTED TO GRANT REGISTRATION U/S 12AA OF THE ACT. HE ALSO PLACED ON RECORD THE COPY OF THE ORDER ISSUED BY THE CHARITY COMMISSIONER , WHICH IS FORMING PART OF THIS RECORD. 4. ON THE CONTRARY, THE LD. DR RELIED ON THE DECISION OF THE DIT(E) AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE HIS CASE ON MERIT. 5. HAVING HEARD THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE APPLICATION FILED BY THE ASSESSEE REQUIRES RECONSIDERATION AT THE END OF LD. DIT(E). THE OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION OF THE ASSESSEE ITA NO. 7338 / MUM/ 201 0 4 SINCE HA VE BEEN AMENDED BY THE ORDER OF THE CHARITY COMMISSIONER. WE ARE OF THE VIEW THAT RESTS OF THE OBJECTIONS ARE CONSEQUENTIAL IN NATURE. 6. IN VIEW OF THE ABOVE, WE A RE OF VIEW THAT THE ASSESSEE SHOULD BE PROVIDED O N E MORE OPPORTUNITY TO EXPLAIN ABOUT ALL THE DEFECTS POINTED OUT BY THE LD DIT. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. DIT(E) AND RESTORE ALL THE MATTER S TO HIS FILE WITH A DIRECTION TO CONSIDER THE APP LICATION OF THE ASSESSEE AFRESH , AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO FURNISH ALL THE DETAILS AND EXPLANATION THAT MAY BE CALLED FOR BY LD. DIT(E) FOR SPEEDY DISPOSAL OF THE APPLICATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 16 TH MARCH, 2016. SD SD ( . . / B.R.BASKARAN) ( / SANDEEP GOSAIN) /ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI ; DATED .. 16 TH MARCH , 2016 . . ./ SRL , SR. P S / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI