Delhi Police Welfare and Recreational Club Fund , New Delhi V. CIT (Exemption), New Delhi

ITA 7653/DEL/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2484 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 03-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Charitable institution; Set aside
• Section: 12A; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DLEHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 7653/DEL/2018 DELHI POLICE WELFARE AND RECREATIONAL VS. CIT (EXEMPTION), CLUB FUND, C/O KAPIL GOEL, ADVOCATE NEW DELHI F-26/124, SECTOR-7, ROHINI, NEW DELHI. PAN : AACAD8779Q (APPELLANT) (RESPONDENT) APPELLANT BY : SH. KAPIL GOEL, ADVOCATE RESPONDENT BY: MS. NIDHI SRIVASTAVA, CIT/DR DATE OF HEARING: 28.06.2021 DATE OF ORDER : 28.06.2021 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE ORDER DATED 28/9/2018 PASSED BY TH E COMMISSIONER OF INCOME TAX (EXEMPTIONS), NEW DELHI (LD. CIT(E)) IN THE CASE OF THE DELHI WELFARE AND RECREATIONAL CLUB FUND, DELHI (THE APPELLANT) REJECTING THE APPLICATION FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT), THE APPELLANT FILED THIS APPEAL. 2. BRIEF FACTS OF THE CASE, RELEVANT FOR THE DISPOS AL OF THIS APPEAL, ARE THAT THE APPELLANT IS ENGAGED IN THE ACTIVITY TO PR OMOTE WELFARE AND RECREATIONAL ACTIVITIES OF THE PERSONNEL (GAZETTE, SUBORDINATE POLICE 2 OFFICERS, CIVILIANS AND CLASS IV EMPLOYEES OF DELHI POLICE) AND THE EXPENDITURE WAS TO BE INCURRED ON ARTICLES OF SPORT S-INDOOR AND OUTDOOR GAMES, COST OF UNIFORMS ETC SUPPLIED TO TEAMS, MAGA ZINES AND PERIODICALS, ENTRY FEE FOR TOURNAMENTS, HIRING OF G ROUNDS, HIRING, REPAIR AND PURCHASE OF FURNITURE FOR THE CLUB, CONVEYANCE EXPENSES INCURRED LOCALLY, ENTERTAINMENT (EXCLUSIVE EXCURSION TRIPS), FILM SHOWS, HIRING OF ACCOMMODATION FOR THE CLUBS FUNCTIONS, CULTURAL AN D SPORTS PROGRAMS AND INTERDEPARTMENTAL MEETS. ACCORDING TO THE APPEL LANT, SPORTS ACTIVITIES ARE COVERED UNDER THE DEFINITION OF CHA RITABLE PURPOSE AS PER SECTION 2 (15) OF THE ACT; THAT THE FUND IS NOT ENG AGED IN ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY A CTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR B USINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY; AND THAT THE FUND NOT EARNED ANY INCOME FROM ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. 3. THE ASSESSEE FILED AN APPLICATION ON 28/3/2018 I N FORM NO. 10 AA SEEKING REGISTRATION UNDER SECTION 12 AA OF THE ACT . LD. CIT(E), HOWEVER, REJECTED THE SAID APPLICATION ON THE GROUND THAT TH E OBJECTS OF THE CLUB AS MENTIONED IN AIMS AND OBJECTS OF STANDING ORDER NO. 270 OF COMMISSIONER OF POLICE, DELHI CLEARLY ESTABLISHES T HAT THE PRIMARY OBJECTIVE OF THE APPELLANT CLUB IS TO RESCUE THE BE NEFIT TO ITS MEMBERS OF DELHI POLICE PERSONNEL ONLY AND ARE NOT TO PUBLIC A T LARGE OR GENERAL PUBLIC; THAT THE INCOME AND EXPENDITURE ACCOUNTS AL SO ESTABLISH THE FACT THAT THE EXPENDITURE INCURRED FOR DELHI POLICE PERS ONNEL AND NOT TO PUBLIC AT LARGE OR GENERAL PUBLIC; AND THAT IT IS THE SETT LED PRINCIPLE OF LAW THAT 3 PROVIDING BENEFITS TO INDIVIDUAL OR GROUP OF INDIVI DUALS WOULD NOT BE A CHARITABLE PURPOSE, BUT PROVIDING BENEFIT TO GENERA L PUBLIC OR SECTION OF PUBLIC WOULD BE TERMED AS CHARITABLE PURPOSE. ON TH IS PREMISE, LD. CIT(E) HELD THAT PROVISION OF BENEFIT ONLY TO ITS MEMBERS OF DELHI POLICE VIOLATES THE PROVISIONS OF SECTION 2(15) OF THE ACT, THE COM PLIANCE OF WHICH IS MANDATORY FOR REGISTRATION UNDER SECTION 12A OF THE ACT. APPLICATION OF THE APPELLANT WAS, ACCORDINGLY, REJECTED. 4. ASSESSEE THEREFORE FILED THIS APPEAL STATING THA T THE APPELLANT IS INCORPORATED FOR PROMOTION OF WELFARE AND RECREATIO NAL ACTIVITIES AMONGST THE PERSONNEL OF DELHI POLICE WHICH OBJECT FULFILS THE TEST OF SECTION 2(15) AND THE REASONING OF THE LD. CIT(E) T HAT THE APPELLANT DOES NOT CATER TO BENEFIT OF GENERAL PUBLIC OR SECTION O F PUBLIC IS CLEARLY MISCONCEIVED AS WELFARE OF POLICE PERSONNEL ONLY. L D. AR PLACED RELIANCE ON THE DECISION OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. ANDHRA PRADESH POLICE WELFARE SOCIETY (1984 ) 148 ITR 287 AP (AP POLICE WELFARE CASE) AND ALSO THE VIEW TAKEN BY TH E MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF BANK OF INDIA RETIRED EMPLOYEES MEDICAL ASSISTANCE SCHEME VS. DIT (EXEMPTION) IN ITA NO. 68 44/MUM/2013 FOR THE ASSESSMENT YEAR 2011-12 BY ORDER DATED 3/10/201 8 (BANK OF INDIA CASE). 5. PER CONTRA, IT IS ARGUED BY THE LD. DR THAT AS R IGHTLY FOUND OUT BY THE LD. CIT(E) THE APPELLANT IS ENGAGED IN THE ACTI VITIES WHICH BENEFITS ONLY THE POLICE PERSONNEL OF DELHI AND NONE ELSE, AND, T HEREFORE, IT CANNOT BE SAID THAT THE APPELLANT IS PROVIDING BENEFITS TO GE NERAL PUBLIC OR SECTION OF PUBLIC. ON THIS PREMISE, SHE SUBMITTED THAT THE LD. CIT(E) IS JUSTIFIED IN 4 REJECTING THE APPLICATION AND NO INTERFERENCE WITH SUCH FINDING IS WARRANTED. 6. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. INSOFAR AS THE NATURE OF ACTIV ITY OF PROMOTION OF WELFARE AND RECREATIONAL ACTIVITIES OF THE POLICE P ERSONNEL, BY ITS NATURE, IS CONCERNED, LD. CIT(E) DOES NOT DISPUTE WHETHER I T FALLS IN THE PURPOSES OF SECTION 2(15) OF THE ACT. ONLY OBJECTION IS THAT THE AIMS & OBJECTS OF STANDING ORDER NO. 270 OF COMMISSIONER OF POLICE, D ELHI CLEARLY ESTABLISH THAT THE PRIMARY OBJECTIVE OF THE APPELLANT CLUB IS TO PROVIDE BENEFIT TO ITS MEMBERS OF DELHI POLICE PERSONNEL ONLY AND NOT TO P UBLIC AT LARGE OR GENERAL PUBLIC AND, THEREFORE, IT VIOLATES THE PROV ISIONS OF SECTION 2 (15) OF THE ACT. THIS IS THE SOLE BASIS FOR REJECTION OF THE REQUEST OF THE ASSESSEE FOR REGISTRATION SECTION 12A OF THE ACT. P RECISELY THIS IS THE ARGUMENT OF THE LD. DR ALSO. 7. IN AP POLICE WELFARE CASE (SUPRA), HONBLE ANDHR A PRADESH HIGH COURT CONSIDERED A SIMILAR QUESTION IN THE LIGHT OF THE DECISION REPORTED IN OPPENHEIM VS. TOBACCO SECURITIES TRUST CO LTD (1 951) 1 ALL ER 16, IRC V. CITY OF GLASGOW POLICE ATHLETIC ASSOCIATION (1953) 1 ALL ER 747 (HL), AND AHMEDABAD RANA CASTE ASSOCIATION VS. CIT (1971) 82 ITR 704 (SC) AND HELD THAT INSOFAR AS PUBLIC EMPLOYMENT IS CONCERNED AND IN PARTICULAR THE GOVERNMENT FORMED BY, FOR AND OF THE PEOPLE IS THE EMPLOYER, EVEN IT IS TO BE TAKEN IN A RESTRICTIVE SENSE, AND THE EMPLOYE R IS THE REPRESENTATIVE OF THE PUBLIC OR THE PEOPLE -IN THE ULTIMATE ANALYS IS, IT IS THE PUBLIC THAT IS THE EMPLOYER; QUI FACIT PER ALIUM FACIT PER SE, AND SO, TO THE SERVICE RENDERED BY THE EMPLOYEES IN THE PUBLIC EMPLOYMENT, THE BENEFICIARIES ARE THE PUBLIC. ON THIS TEST THE COURT REACHED A CO NCLUSION THAT AP POLICE 5 WELFARE ASSOCIATION WHICH IS A CHARITABLE IN ITS OB JECTS, AS IS QUITE APPARENT FROM THE VERY OBJECTIVES LAID DOWN UNDER T HE RULES FRAMED THEREUNDER, IS A BODY THAT WOULD CONSTITUTE A SECT ION OF THE PUBLIC AND SO, THE FUND FOUNDED FOR THE BENEFIT OF SUCH SECTIO N SHOULD BE TREATED AS CHARITABLE IN ITS OBJECT, ATTRACTING THEREBY THE EX EMPTION FROM THE EXIGIBILITY TO TAX. 8. IN BANK OF INDIA CASE (SUPRA), THE BOMBAY BENCH OF TRIBUNAL AFTER NOTICING A CATENA OF DECISIONS AND WHILE FOLLOWING THE DECISION OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF AN DHRA PRADESH POLICE WELFARE SOCIETY REACHED A SIMILAR CONCLUSION. 9. FROM THE ABOVE, IT IS CLEAR THAT THE ISSUE INVOL VED IN THIS MATTER IS NO LONGER RES INTEGRA AND IS SQUARELY COVERED BY TH E JUDICIAL DECISIONS FOR A LONG TIME. IN THE ABSENCE OF ANY CHANGE IN THE FA CTS OR LAW HOLDING THE FIELD, WE FIND IT DIFFICULT TO TAKE A DIFFERENT VIE W OR NOT TO FOLLOW THE BINDING PRECEDENT OF THE HIGHER JUDICIAL FORA. WE A CCORDINGLY, FOLLOWING THE SAME, HOLD THAT THE APPELLANT, THE DELHI POLICE WELFARE AND RECREATIONAL CLUB FUND IS CHARITABLE IN ITS OBJECTS AND IS A BODY THAT CONSTITUTES A SECTION OF THE PUBLIC, AND SO, THE FU ND FOUNDED FOR THE BENEFIT OF SUCH SECTION SHOULD BE TREATED AS CHARIT ABLE IN ITS OBJECTS, ATTRACTING THEREBY THE EXEMPTION FROM THE EXIGIBILI TY TO TAX. WITH THIS VIEW OF THE MATTER, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(E) AND HOLD THAT THE APPELLANT IS ELIGIBLE FOR REGISTRATION UNDER SECTION 12 A OF THE ACT AND DIRECT ITS REGISTRATION THEREUN DER ACCORDINGLY. 6 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF JUNE, 2021. SD/- SD/- ( PRASHANT MAHARISHI) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28/06/2021 AKS