TAMILNADU LEATHER TANNERS EXPORTERS AND IMPORTERS ASSOCIATION, CHENNAI V. ITO (EXEMPTIONS) WARD 2, CHENNAI

ITA 841/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0455 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 09-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: N ARUN RAJ
• Section: 143(3); 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, CHENNAI . . . , . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.841/CHNY/2018 ( / ASSESSMENT YEAR: 2012-13) M/S. TAMILNADU LEATHER TANNERS, EXPORTERS AND IMPORTERS ASSOCIATION, 69/66, SYDENHAMS ROAD, PERIAMET, CHENNAI 600 003. VS THE INCOME TAX OFFICER (EXEMPTIONS), WARD 2, CHENNAI PAN : AAATT4312Q ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI N. ARUN RAJ, C.A /RESPONDENT BY : SMT. S. VIJAYAPRABHA, JCIT /DATE OF HEARING : 24.09.2018 /DATE OF PRONOUNCEMENT : 28.11.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-17, CHENNAI DATED 22.01.2018, VIDE ITA NO.116/2015-16 FOR THE ASSESSMENT YEAR 2012-13 PASSED U/S.250(6) R.W.S 143(3) OF THE ACT. 2 ITA NO. 841/CHNY/2018 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD.AO WHO HAD DENIED THE BENIFIT U/S.11 OF THE ACT BY HOLDING THAT THE ACTIVITIES OF THE ASSESSEE IS NOT CHARITABLE IN NATURE BUT PURELY COMMERCIAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 28.09.2012 ADMITTING NIL INCOME BY CLAIMING IT TO BE PUBLIC CHARITABLE SOCIETY REGISTERED U/S.12AA OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) & 142(1) OF THE ACT WAS ISSUED ON 23.09.2013 & 18.06.2014 RESPECTIVELY. FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 27.03.2015 WHEREIN THE LD.AO HELD THAT THE ACTIVITY OF THE ASSESSEES TRUST IS NOT CHARITABLE IN NATURE BY VIRTUE OF THE PROVISO TO SECTION 2(15) OF THE ACT AND THEREBY BROUGHT THE ENTIRE INCOME OF THE ASSESSEE UNDER THE AMBIT OF TAX. 4. AT THE OUTSET, THE LD.DR SUBMITTED BEFORE US THAT IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 TO 2011-12, THE ISSUE WAS DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE BY THE CHENNAI BENCH OF THE TRIBUNAL IN ITA NOS.2006 TO 3 ITA NO. 841/CHNY/2018 2008/MDS/2014 VIDE ORDER DATED 03.08.2016. THE LD.DR FURTHER PRODUCED BEFORE US THE ORDER OF THE TRIBUNAL. THE LD.AR COULD NOT CONTROVERT TO THE SUBMISSION OF THE LD.DR. 5. AFTER HEARING BOTH PARTIES, WE FIND MERIT IN THE SUBMISSION MADE BY THE LD.DR. THIS BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE CITED BY THE LD.DR HEREIN ABOVE FOR THE ASSESSMENT YEARS 2009-10 TO 2011-12 HAD HELD THE ISSUE IN FAVOUR OF THE REVENUE BY OBSERVING AS FOLLOWS:- 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO PERUSED THE DECISIONS RELIED BY THE LEARNED CIT(A) AND WE DO NOT FIND IT TO BE APPLICABLE TO THE FACTS OF THE PRESENT CASE BEFORE US. ON EXAMINING THE FACTS OF THE CASE, IT IS EVIDENT THAT THE ASSESSEE IS PROCURING RAW MATERIAL FROM AFRICAN COUNTRIES AND DISTRIBUTING THE SAME TO ITS MEMBERS AS WELL AS OTHER CONCERNS WHICH HAS SIMILAR NATURE OF BUSINESS AS THOSE OF THE MEMBERS OF THE ASSESSEE SOCIETY. FURTHER FROM THE OBJECTS OF THE ASSESSEE SOCIETY, IT IS EVIDENT THAT SUCH TRADING ACTIVITY INDULGED BY THE ASSESSEE SOCIETY IS NOT MENTIONED IN THE OBJECTS OF THE ASSESSEE SOCIETY. MOREOVER, THE ACTIVITY OF THE ASSESSEE SOCIETY VIZ., PROCURING RAW MATERIALS FROM ABROAD AND DISTRIBUTING THE SAME WILL AMOUNT TO PURE COMMERCIAL TRANSACTION BECAUSE IT IS PURELY A TRADING ACTIVITY GENERATING SUBSTANTIAL PROFITS. THERE IS NO ELEMENT OF CHARITY IN THIS KIND OF ACTIVITY INDULGED BY THE ASSESSEE SOCIETY. IT IS NOT A CASE WHERE THE ASSESSEE HAD IMPORTED RAW MATERIALS AND DISTRIBUTED THE SAME AMONGST ITS MEMBERS AND OTHER COMMERCIAL ENTITIES HAVING SAME KIND OF BUSINESS ON COST TO COST BASIS. THE ACTIVITY CARRIED OUT BY THE ASSESSEE AT THE MOST BENEFIT THE MEMBERS OF THE ASSESSEE SOCIETY AND CERTAIN COMMERCIAL ENTITIES HAVING SAME KIND OF BUSINESS AS THAT OF THE MEMBERS OF THE ASSESSEE SOCIETY AND THE PUBLIC WHO PURCHASES THE PRODUCE OF THESE ENTITIES. HENCE THIS VENTURE OF THE ASSESSEE SOCIETY CANNOT BE INFERRED BEYOND THE SCOPE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THEREFORE, RELYING IN THE DECISION CITED BY THE LEARNED ASSESSING OFFICER WE ARE OF THE CONSIDERED VIEW THAT THE PROVISO TO SECTION 2(15) OF THE ACT WOULD BE APPLICABLE IN THE CASE OF THE ASSESSEE AND 4 ITA NO. 841/CHNY/2018 ACCORDINGLY, THE SURPLUS EARNED BY THE ASSESSEE DESERVES TO BE BROUGHT UNDER THE AMBIT OF TAX. IT IS ORDERED ACCORDINGLY. FOR THE RELEVANT ASSESSMENT YEAR THE LD.CIT(A) FOLLOWING THE DECISION OF THE TRIBUNAL CITED SUPRA CONFIRMED THE ORDER OF THE LD.AO SINCE THE FACTS IN THE RELEVANT ASSESSMENT YEAR WERE IDENTICAL TO THE FACTS OF THE CASE FOR THE ASSESSMENT YEARS 2009-10 TO 2011-12. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A). HENCE THE APPEAL OF THE ASSESSEE IS DEVOID OF MERITS. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 28 TH NOVEMBER, 2018 AT CHENNAI. SD/- SD/- /CHENNAI, /DATED 28 TH NOVEMBER, 2018 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( ) /CIT(A) 4. /CIT 5. /DR 6. /GF ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER