Holy Innocents Society, Nilgiris V. CIT, Coimbatore

ITA 898/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52186 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-11-2011
• Assessment Year: misc
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R B NAIK
• Assessee Lawyers: JAMES JOSEPH
• Keywords: Gift; Period of limitation; Reasonable cause
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A. NO. 898/MDS/2011 M/S HOLY INNOCENTS SOCIETY, C/O HOLY INNOCENT CONVENT, MOUNTAIN VIEW, BARRACKS POST, WELLINGTON, NILGIRIS 643 231. PAN : AAATH5634D (APPELLANT) V. THE INCOME TAX OFFICER, WARD I(2), OOTY. (RESPONDENT) APPELLANT BY : SHRI JAMES JOSEPH, FCA RESPONDENT BY : SHRI R.B . NAIK, CIT-DR DATE OF HEARING : 28.11.2011 DATE OF PRONOUNCEMENT : 16.12.2011 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, ITS GRIEVAN CE IS THAT IT WAS DENIED REGISTRATION UNDER SECTION 12AA OF THE INCOM E-TAX ACT, 1961 (IN SHORT THE ACT) BY THE COMMISSIONER OF INCOME TAX-II, COIMBATORE, VIDE HIS ORDER DATED 16.3.2011. GROUND S RAISED BY THE ASSESSEE ARE REPRODUCED HEREUNDER:- I.T.A. NO. 898/MDS/11 2 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCO ME TAX II, COIMBATORE REFUSING THE REGISTRATION FOR TH E APPELLANT SOCIETY UNDER SECTION 12AA OF THE INCOME-T AX ACT, 1961 IS BAD IN LAW AND ON FACTS OF THE CASE. THE ORDER PASSED IS WITHOUT FULLY APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE SETTLED LEGAL POS ITION IN THIS REGARD. THE ORDER PASSED, THEREFORE, IS LIABL E TO BE QUASHED AND IT IS REQUESTED THAT REGISTRATION UNDER SECTION 12A OF THE INCOME-TAX ACT, 1961 BE GRANTED TO THE APPELLANT SOCIETY. 2. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCO ME TAX II, COIMBATORE IS BAD IN LAW AS IT HAS BEEN PAS SED BEYOND THE PERIOD OF LIMITATION AS SPECIFIED IN SUB- SECTION (2) OF SECTION 12AA OF THE INCOME-TAX ACT, 1961. T HE ORDER PASSED BEYOND THE PERIOD LAID DOWN IN SECTION 12AA(2) OF THE INCOME-TAX ACT, 1961 IS A NULLITY AN D THEREFORE TO BE QUASHED. AS A RESULT REGISTRATION IS DEEMED TO HAVE BEEN AUTOMATICALLY GRANTED UNDER SECT ION 12AA OF THE INCOME-TAX ACT TO THE APPELLANT SOCIETY ON EXPIRY OF THE PERIOD SPECIFIED IN THE SAID SECTION. 3. WITHOUT PREJUDICE TO GROUND URGED UNDER 2 ABOVE, TH E LEARNED COMMISSIONER OF INCOME TAX II, COIMBATORE H AS ERRED IN NOT APPRECIATING THE WELL SETTLED LAW THAT FOR THE PURPOSE OF GRANTING REGISTRATION U/S 12AA OF THE IN COME- TAX HE HAS TO SATISFY ONLY ABOUT THE CHARITABLE OBJEC TIVES AND GENUINENESS OF ACTIVITIES OF THE APPELLANT SOCI ETY AND HAS GROSSLY ERRED IN REFUSING REGISTRATION FOR THE S OCIETY WHEN HE HAS NOT DOUBTED OR CHALLENGED THE FACT THAT THE OBJECTIVES OF THE SOCIETY ARE CHARITABLE AND ITS ACT IVITIES ARE GENUINE. 4. WITHOUT PREJUDICE TO THE GROUND URGEDUNDER 1 ABOVE, THE LEARNED COMMISSIONER OF INCOME TAX II, COIMBATORE, HAS I.T.A. NO. 898/MDS/11 3 TOTALLY ERRED IN REFUSING REGISTRATION UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961 ON IRRELEVANT CRITERIA. 5. WITHOUT PREJUDICE TO GROUNDS URGED UNDER 2, 3 AND 4 ABOVE, THE LEARNED COMMISSIONER OF INCOME TAX II, COIMBATORE HAS GROSSLY ERRED IN HOLDING THAT APPELLA NT SOCIETY HAS NO INDEPENDENT EXISTENCE BY CONCLUDING TH AT: A. THE SOCIETY NEITHER HAD REGISTERED THE RECTIFIED DEED NOR, ACCORDINGLY MODIFIED THE CERTIFICATION OF REGISTRATION; AND B. ITS PRINCIPLE OFFICE AS STATED IN THE ORIGINAL DE ED IS SITUATED IN MADRAS (PRESENT CHENNAI), WHICH ARE WHOLLY DIVORCED FROM FACTS AND LAW. 6. WITHOUT PREJUDICE TO THE AFORESAID GROUNDS, THE LEA RNED COMMISSIONER OF INCOME TAX II, COIMBATORE HAS GROSS LY ERRED IN REFUSING REGISTRATION FOR THE APPELLANT U/ S 12AA OF THE INCOME-TAX ACT, 1961 ON THE GROUND THAT THE APPELLANT HAS DELAYED IN APPLYING FOR REGISTRATION U/ S 12AA OF THE INCOME-TAX ACT, 1961 BEYOND REASONABLE PERIOD WITHOUT REASONABLE CAUSE. THE REASON STATED FOR RE FUSING REGISTRATION TO THE SOCIETY HAS NO BEARING ON THE CA SE OF THE APPELLANTS APPLICATION FOR GRANT OF REGISTRATI ON SINCE NO RETROSPECTIVE REGISTRATION IS PERMISSIBLE AFTER THE AMENDMENT TO SECTION 12A(2) OF THE INCOME-TAX ACT, 1961 W.E.F. 1.6.2007 AND THE REGISTRATION OUGHT TO HAVE BEEN GRANTED ONLY FROM THE FINANCIAL YEAR IN WHICH THE APPLICATION IS MADE BY THE APPELLANT UNDER THAT SECT ION. 7. FOR THESE AND OTHER REASON THAT MAY BE URGED AT THE TIME OF THE HEARING IT IS REQUESTED THAT ITS CLAIM FOR G RANT OF REGISTRATION UNDER SECTION 12A OF THE ACT BE ALLOWE D W.E.F. 01.04.2009 BEING BEGINNING OF THE FINANCIAL YEAR IN WHICH THE APPLICATION IS MADE AS PROVIDED UNDER SECTION 1 2A(2) OF THE ACT. I.T.A. NO. 898/MDS/11 4 THE GROUNDS ABOVE CLEARLY SHOW THAT THE ASSESSEE IS ALSO ATTACKING THE ORDER OF CIT FOR A REASON THAT IT WAS PASSED BE YOND THE PERIOD LAID DOWN UNDER SECTION 12AA(2) OF THE ACT. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD APPLIE D FOR REGISTRATION UNDER SECTION 12A OF THE ACT IN FORM N O.10A ON 4.3.2009. VIDE HIS ORDER DATED 16.3.2011, THE CIT- II, COIMBATORE DENIED REGISTRATION FOR THE REASONS GIVEN BY HIM AT PARAS 4 AND 5 OF HIS ORDER WHICH ARE REPRODUCED HEREUNDER:- 4.0. THEREAFTER, SISTER VOLGA FERNANDES, AGAIN APPE ARED ALONG WITH MR. A.R. RANGANATHAN, FCA, AND SISTER THERAS A UGUSTINE, ON 23.02.11 AND PRESENTED THE CASE. THEY FILED A CERTI FIED COPY OF CERTIFICATE OF REGISTRATION [REGISTERED UNDER ACT XXI OF 1860 VIDE SL.NOS: 116 OF 1972]. SO FILED CERTIFICATE IS FOUND TO HAVE HAD BEEN ISSUED WITH REFERENCE TO THE REGISTRATION OF THE SOCIETY AS ON 13.10.1972, WHEN IT WAS ORIGINALLY CO NSTITUTED & REGISTERED. THE SOCIETY NEITHER, HAD REGISTERED THE RECTIFIED DEED NOR, ACCORDINGLY MODIFIED THE CERTIFICATE OF R EGISTRATION. MOREOVER, THE SOCIETY DOES NOT HAVE INDEPENDENCE EXI STENCE; FOR, ITS PRINCIPAL OFFICE AS STATED IN THE ORIGINAL DEED IS SITUATED IN MADRAS (PRESENT CHENNAI). AND, THE DEED RECTIFI ED ON 18.8.2006, AS MENTIONED EARLIER, WAS NOT REGISTERED . ABOVE ALL, THE APPLICATION DATED 04.3.09 BY THE SOCIETY SEEKIN G REGISTRATION U/S 12A OF THE ACT, IS FOUND INORDINAT ELY DELAYED, WHEN RECKONED EVEN WITH THE DATE OF RECTIFICATION I .E.ON 18.8.06 OF THE DEED, WHICH OF COURSE WAS NOT REGISTERED DEE D. THE REASONS ADDUCED DO NOT JUSTIFY SUCH A LONG DELAY. TH EREFORE, THE I.T.A. NO. 898/MDS/11 5 APPLICANTS REQUEST FOR CONDONING OF THE LONG DELAY, IN A ROUTINE MANNER, CANNOT BE CONSIDERED FAVOURABLY. IN VIEW OF SUCH, THE LONG DELAY OF THE SOCIETY IN SEEKING REGISTRATION IS, HEREBY, REJECTED. 5.0. ON THE BASIS OF THE DISCUSSIONS, VIDE PARA-4.0 ABOVE, I AM OF THE VIEW THAT, THE SOCIETY IS NOT ELIGIBLE FOR REGISTRATION IN VIEW OF ITS INDEPENDENT EXISTENCE BEING IN DOUBT; A ND ITS REQUEST FOR CONDONING THE INORDINATE DELAY IN FILING OF THE APPLICATION FOR REGISTRATION U/S 12A OF THE ACT WITHOUT REFERENCE TO ITS INDEPENDENT EXISTENCE- IS REJECTED, HEREIN. IN THE CIRCUMSTANCES, THE REGISTRATION U/S 12A IS, HEREBY, REFUSED TO THE SOCIETY. [IN DOING SO, THE PERIOD IS RECKONED FROM 04.02.11, THE DATE ON WHICH NON-SUBMISSION OF CERTIFICATE OF REGISTRATION BY THE APPLICANT WAS ASCERTAINED]. 3. NOW BEFORE US, THE LEARNED A.R., ASSAILING THE O RDER OF CIT, SUBMITTED THAT THE SOCIETY HAD AN INDEPENDENT EXIST ENCE AND IT HAD FILED CERTIFICATE OF REGISTRATION ISSUED BY THE REG ISTRAR OF SOCIETIES, MEMORANDUM OF ASSOCIATION, BYE-LAWS AND AUDITED ACC OUNTS FOR YEARS ENDING 31.3.2006, 31.3.2007 AND 31.3.2008. A S PER LEARNED A.R., THE ASSESSEE WAS A RECOGNIZED INSTITUTION HAV ING OBTAINED CERTIFICATE FROM NATIONAL COMMISSION FOR MINORITY E DUCATIONAL INSTITUTIONS, GOVERNMENT OF INDIA (PAPER-BOOK PAGE 97) AND COUNCIL FOR THE INDIAN SCHOOL CERTIFICATE EXAMINATIONS (PAP ER-BOOK PAGE 98). LEARNED A.R. ALSO POINTED OUT THAT SECRETARY TO GOV ERNMENT OF TAMIL NADU HAD, VIDE HIS ORDER DATED 5.1.2009, EXEMPTED T HE ASSESSEE I.T.A. NO. 898/MDS/11 6 FROM PROVISIONS OF RULE 17(2), 22 AND 26 OF THE TAM IL NADU SOCIETIES REGISTRATION RULES, 1978 AND ACCEPTED THE DOCUMENTS BELATEDLY FILED BY IT, INCLUDING AMENDMENTS TO THE BYE-LAWS ON 25.6 .2007. COPY OF THE SAID ORDER OF GOVERNMENT OF TAMIL NADU WAS PLAC ED AT PAPER- BOOK PAGES 93 TO 94. LEARNED A.R. FURTHER SUBMITTE D THAT THIRD MEMBER DECISION OF A CO-ORDINATE BENCH OF THIS TRIB UNAL IN THE CASE OF PEOPLE EDUCATION & ECONOMIC DEVELOPMENT SOCIETY (PEEDS) V. ITO (100 ITD 87) HELD THAT IF CIT HAD NOT DECIDED O N AN APPLICATION WITHIN SIX MONTHS, BY VIRTUE OF SECTION 12AA(2) OF THE ACT, SUCH APPLICATION HAD TO BE DEEMED AS ALLOWED. FURTHER, ACCORDING TO HIM, ASSESSEE WAS AN EDUCATIONAL INSTITUTION RUNNING SIN CE LONG AND THE CIT HAD MISUNDERSTOOD CERTAIN CLAUSES IN ITS BYE-LA WS AND DENIED REGISTRATION UNJUSTIFIABLY. AS PER LEARNED A.R., A SSESSEES PRINCIPAL OFFICE STATED IN THE ORIGINAL DEED WAS IN THE STAT E OF MADRAS. IT WAS ERRONEOUSLY CONSTRUED BY THE CIT AS CHENNAI ONLY. AS PER THE LEARNED A.R., STATE OF MADRAS IMPLIED THE STATE OF TAMIL NADU AND JUST FOR THE REASON THAT THE REGISTERED OFFICE WAS SITUATED AT MOUNTAIN VIEW, WELLINGTON, NILGIRIS, THE REGISTRATI ON SOUGHT OUGHT NOT I.T.A. NO. 898/MDS/11 7 HAVE BEEN DENIED. LEARNED A.R. STRONGLY REFUTED TH E FINDING OF THE LD. CIT THAT ASSESSEE WAS NOT HAVING INDEPENDENT EXISTE NCE. 4. PER CONTRA, LEARNED D.R., SUPPORTING THE ORDER O F CIT, SUBMITTED THAT ASSESSEE HAD FAILED TO SHOW ITS INDEPENDENT EX ISTENCE AND FILING OF AN AMENDED BYE-LAW BEFORE THE REGISTRAR OF SOCIE TIES OF TAMIL NADU, WOULD NOT BE A REASON SUFFICIENT FOR CONDONIN G THE DELAY AND GIVING IT THE REGISTRATION SOUGHT UNDER SECTION 12A A OF THE ACT. 5. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. IT IS CLEAR FROM THE ORDER OF CIT THAT HE HAD DENIED R EGISTRATION FOR A PRIMARY REASON THAT ASSESSEE DID NOT HAVE ANY INDEP ENDENT EXISTENCE. AS PER LD. CIT, THE ASSESSEES PRINCIPA L OFFICE, AS PER ITS BYE-LAW, HAD TO BE IN CHENNAI, WHEREAS, ITS PRINCIP AL OFFICE WAS ACTUALLY SITUATED IN NILGIRIS. THE ORIGINAL DEED O F MEMORANDUM DATED 13 TH OCTOBER, 1972 CLEARLY MENTIONS THAT THE PRINCIPAL OFFICE OF THE SOCIETY WOULD BE SITUATED IN THE STATE OF MADRAS (P APER-BOOK PAGES 29 TO 31). LD. CIT, IN OUR OPINION, CAME TO AN ERR ONEOUS CONCLUSION THAT STATE OF MADRAS WILL MEAN THE CITY OF CHENNAI ONLY. TAMIL NADU STATE EARLIER WAS KNOWN AS MADRAS STATE AND THEREFO RE, THIS I.T.A. NO. 898/MDS/11 8 PRESUMPTION TAKEN BY THE CIT IS WITHOUT ANY BASIS. ADMITTEDLY ASSESSEE WAS HAVING ITS REGISTERED OFFICE AT NILGIR IS, AND THIS WAS VERY WELL WITHIN THE STATE OF TAMIL NADU. COMING T O THE SECOND REASON CITED BY LD. CIT THAT THE RECTIFIED DEED DAT ED 18.8.2006 WAS NOT REGISTERED, IN THE FIRST PLACE, LD. CIT WAS UNA BLE TO PLACE ON RECORD WHY WAS A RECTIFICATION FOUND NECESSARY. MAIN OBJE CTS OF THE ASSESSEE, AS PER ITS ORIGINAL DEED OF MEMORANDUM OF ASSOCIATION DATED 13 TH OCTOBER, 1972, WERE AS UNDER:- A) TO ESTABLISH, CONSTRUCT, ORGANIZE, CONSOLIDATE, SUP PORT, DEVELOP, ACQUIRE, TAKE OVER, CONDUCT, EQUIP, ENDOW, IMPROVE, ALTER, EXTEND, MAINTAIN AND ADMINISTER INSTITUTIONS AND HOUSES FOR SECULAR EDUCATION AND MEDICAL RELIEF INC LUDING MEDICAL INSTRUCTIONS, HOSPITALS FOR PROVIDING MEDIC AL AND SURGICAL TREATMENT AND MEDICAL RESEARCH INSTITUTION S IN ALL ITS BRANCHES IN MADRAS FOR THE BENEFIT OF ALL PERSO N IRRESPECTIVE OF CASTE, CREED, RACE OR RELIGION. B) TO PRINT, PUBLISH AND EXHIBIT FILMS, JOURNALS, PERI ODICALS, BOOKS, LECTURES AND OTHER READING AND PICTORIAL MAT TER FOR THE DIFFUSION OF USEFUL KNOWLEDGE AND IN KEEPING WI TH THE EDUCATIONAL, MEDICAL, AND MORAL IDEALS OF THE SOCIE TY. C) TO HOLD AND CONDUCT CLASSES, LECTURES, CONFERENCES, SEMINARS AND COMPETITIONS, AND TO GIVE SCHOLARSHIPS , FREESHIPS, DIPLOMAS, CERTIFICATES AND AWARDS AS AND WHEN THOUGHT FIT. D) TO PROVIDE RESIDENTIAL ACCOMMODATION, EITHER FREE O F COST OR FOR CONSIDERATION, AND TO EDUCATE, TRAIN AND ASS IST FINANCIALLY OR OTHERWISE IN THE EDUCATION AND TRAINI NG OF I.T.A. NO. 898/MDS/11 9 TEACHERS, STAFF, STUDENTS, AND OTHER PERSONNEL FOR THE PURPOSE OF THE SOCIETY. E) TO RAISE FUNDS AND TO RECEIVE AND USE ANY GIFT, DONA TION OR FOUNDATION IN CASH OR OTHER MOVABLE PROPERTY OF ALL DESCRIPTIONS, AND TO UNDERTAKE AND CARRY OUT THE OFF ICES, DUTIES AND FUNCTIONS OF JOINTLY WITH OTHERS, IN RESP ECT OF ANY SUCH GIFTS, DONATIONS AND FOUNDATIONS WHETHER VE STED IN THE SOCIETY OR OTHERWISE. F) TO SUBSCRIBE OR GIVE DONATIONS TO AND FINANCIALLY OR OTHERWISE TO AID ANY OTHER INSTITUTIONS WITH SIMILAR OBJECTS. G) TO DO ALL SUCH OTHER LAWFUL ACTS AND DEEDS AS ARE E SSENTIAL OR CONDUCTIVE TO THE ATTAINMENT OF THE OBJECTS OF T HE SOCIETY. NONE OF THE ABOVE OBJECTS CAN BE STATED TO BE NOT C HARITABLE. ASSESSEE NO DOUBT HAD NOT APPLIED FOR A REGISTRATIO N UNDER SECTION 12A OF THE ACT EARLIER BUT THIS WOULD NOT BE A REAS ON TO DENY REGISTRATION WHEN IT FINALLY SOUGHT FOR IT. NO DOU BT, AS PER THE LAW AS IT STANDS NOW, LD. CIT COULD NOT GIVE RETROSPECTIVE EF FECT TO A REGISTRATION. NEVERTHELESS, LEAST FROM THE YEAR OF SEEKING SUCH REGISTRATION IT COULD NOT BE DENIED THE BENEFIT, SI NCE OBJECTS OF THE ASSESSEE WERE UNDISPUTABLY CHARITABLE. AT PAPER-BO OK PAGE 100 ONWARDS, IT HAS PLACED COPIES OF ITS AUDITED ACCOUN TS FOR VARIOUS YEARS VIZ. 2005-06, 2006-07 AND 2007-08. THESE CLE ARLY SHOW THAT PREDOMINANT ACTIVITY OF THE ASSESSEE WAS ONLY EDUCA TION. IN ANY CASE, IF WE LOOK AT THE ORDER OF CIT, IT IS DATED 1 6.3.2011, WHEREAS, I.T.A. NO. 898/MDS/11 10 ASSESSEE HAD FILED ITS APPLICATION IN FORM NO.10A O N 4.3.2009. THE CIT HAD DISPOSED OF THE APPLICATION MUCH AFTER THE TIME LIMIT SPECIFIED UNDER SECTION 12AA(2) OF THE ACT. THE THIRD MEMBER DECISION IN THE CASE OF PEOPLE EDUCATION & ECONOMIC DEVELOPMENT SOC IETY (PEEDS) (SUPRA), RELIED ON BY LEARNED A.R., CLEARLY LAYS DOWN THAT ONCE THE SIX-MONTHS PERIOD HAS ELAPSED, THE APPLICA TION HAS TO BE DEEMED AS ALLOWED. WE ARE, THEREFORE, OF THE OPINI ON THAT THERE WAS NO REASONABLE CAUSE FOR DENYING THE REGISTRATION SO UGHT UNDER SECTION 12AA OF THE ACT. CITS ORDER IS QUASHED. HE IS DIRECTED TO GIVE THE SOCIETY REGISTRATION UNDER SECTION 12AA OF THE ACT WITH EFFECT FROM ASSESSMENT YEAR 2009-10. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 16 TH DECEMBER, 2011. SD/- SD/- (HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 16 TH DECEMBER, 2011. KRI. COPY TO: APPELLANT/RESPONDENT/CIT-II, COIMBATORE/ D.R./ GUARD FILE