M/s. Fitness One Foundation, CHENNAI V. ITO (H.Qrs), CHENNAI

ITA 9/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51711 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 04-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Keywords: Charitable institution
• Section: 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE U.B.S.BEDI, JUDICIAL MEMBER AND SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER .. ITA NO.8/MDS./11 M/S.F ONE TRUST, 31/A,MANDAPAM ROAD, KILPAUK GARDEN, CHENNAI 600 010. VS. THE INCOME TAX OFFICER (H.QRS),(EXEMPTIONS), CHENNAI. PAN AAACW 0315 K (APPELLANT) (RESPONDENT) ITA NO.9/MDS./11 M/S.FITNESS ONE FOUNDATION, 31/A,MANDAPAM ROAD, KILPAUK GARDEN, CHENNAI 600 010. VS. THE INCOME TAX OFFICER (H.QRS),(EXEMPTIONS), CHENNAI. PAN AAATF 2888 F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIKRAM VIJAYARAGHAVAN DEPARTMENT BY : SHRI P.B.SEKARAN O R D E R PER ABRAHAM P.GEORGE, ACCOUNTANT MEMBER : BOTH THE APPEALS OF THE ASSESSES ARE DIRECTED AG AINST THE ORDERS DATED 29.09.10 OF THE DIRECTOR OFF INCOM E TAX PAGE OF 16 ITA.8 & 9 /MDS/11 2 (EXEMPTIONS), CHENNAI DENYING THEM REGISTRATION U/S .12AA OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ). SI NCE BOTH THE ASSESSES ARE TRUSTS, SETTLORS OF WHICH ARE SAME, T HE APPEALS ARE DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. AP PEAL NO.ITA NO.9/11 OF FITNESS ONE FOUNDATION IS TAKEN UP FIRST FOR DISPOSAL. 2. ASSESSEE HAD FILED APPLICATION FOR REGISTRATION U/S.12AA OF THE ACT ON 30.03.2010. ASSESSEE WAS REQUIRED TO GIVE DETAILS AND EXPLANATION OF ITS CHARITABLE ACTIVITIE S. AFTER GOING THROUGH THE INFORMATION FURNISHED BY THE ASSESSEE, LD. DIT (EXEMPTIONS) HELD AS FOLLOWS:- SHRI N.CHIDAMBARAM, AUTHORIZED REPRESENTATIVE APPEARED AND FILED REPLY. THE SETTLER IN RESPECT O F THE APPLICANT TRUST IS M/S.FITNESS ONE GROUP INDIA LIM ITED. THE SETTLER ALSO IS IN THE FIELD OF RUNNING GYMS AN D CONDUCTING HEALTH FITNESS PROGRAMMES AND THE OBJECT S AND ACTIVITIES OF THE TRUSTS ESTABLISHED ALSO ARE S IMILAR TO THE ACTIVITIES OF THE SETTLER COMPANY. THERE IS AL WAYS A POSSIBILITY OF THE ACTIVITIES OF THE SETTLER COMPAN Y GETTING MIXED UP WITH THAT OF THE TRUST AND VICE-VERSA. FOR EXAMPLE, A COPY OF LETTER FROM AVVAI KKAPPAGAM WH ERE TRUST HAS DONE SOME ACTIVITY HAS BEEN FILED BY THE APPLICANT BUT THE LETTER HAS BEEN ADDRESSED TO THE SETTLOR COMPANY I HAVE PERUSED THE ADDRESSES OF TH E SETTLER AND THE APPLICANT TRUST. THE SETTLER M/S.FI TNESS ONE GROUP INDIA LIMITED IS SHOWING THE REGISTERED OFFICE ADDRESS AT NO.31/A,MANDAPAM ROAD,KILPAUK PAGE OF 16 ITA.8 & 9 /MDS/11 3 GARDEN, CHENNAI-10 WHICH IS SAME AS THE ADDRESS OF THE APPLICANT TRUST. THEREFORE, THE TRUST CAN BE U SED BY THE SETTLER AS OFFSHOOT FOR DIVERTING ITS BUSINESS. HENCE, IT WILL BE DIFFICULT TO REGISTER THIS TRUST AS A CH ARITABLE INSTITUTION U/S.12AA. 3. NOW BEFORE US LD. AR STRONGLY ASSAILING THE ORD ER OF THE DIT(E) SUBMITTED THAT THE THRESHOLD CONDITIONS OF R EGISTRATION U/S.12AA WERE SATISFIED BY THE ASSESSEE. ACCORDING TO HIM, DIT(E) NEED TO LOOK ONLY INTO THE OBJECTS OF THE TR UST AND GENUINENESS OF ITS ACTIVITIES. LD. AR SUBMITTED TH AT THE OBJECTS OF THE TRUSTS WERE PURELY CHARITABLE FALLIN G WITHIN THE DEFINITION OF CHARITY U/S.2(15) OF THE ACT. FURTHE R ACCORDING TO HIM, ASSESSEE HAD FILED DETAILED ACTIVITY REPORT FO R THE PERIOD DECEMBER, 2008 TO APRIL, 2010 BEFORE DIT. RELYING ON PAPER BOOK PAGE NOS.21 TO 34, LD. AR SUBMITTED THAT PROG RAMMES WERE CONDUCTED BY THE ASSESSEE AT VARIOUS SCHOOLS F OR PHYSIOTHERAPY, YOGA AND GENERAL FITNESS OF THE STUD ENTS THEREIN AND IT HAD ALSO DONE FREE FITNESS EXERCISE TRAINING IN SUCH SCHOOLS, ALL OF WHICH CLEARLY SHOWED THE CHARI TABLE NATURE OF ACTIVITIES CARRIED ON BY THE ASSESSEE. LD COUNS EL POINTED OUT THAT ASSESSEE HAD ALSO CONDUCTED ESSAY WRITING COMPETITION FOR SCHOOL CHILDREN AND CONDUCTED HEALT H AND FITNESS SESSIONS. AS PER THE LD. COUNSEL, THE ASSES SEE HAD ORGANIZED MEETINGS TO HELP DESTITUTE/ORPHANS AND A LSO DONE VARIOUS CHARITABLE ACTIVITIES WITH INSTITUTIONS LI KE ROTARY CLUB, SHRIRAM FOUNDATION, MADRAS COUNCIL OF SOCIAL SERVIC E SOCIETY ETC. NATURE OF WORK DONE BY THE ASSESSEE, AS PER LD. AR WAS CLEAR FROM PAPER BOOK PAGES 38 TO 46 AND ITS IN TENTION PAGE OF 16 ITA.8 & 9 /MDS/11 4 WAS TO HELP HOUSEWIVES KEEP IN SHAPE, OPTIMIZE PER FORMANCE OF GENERAL PUBLIC AND REDUCING THE MENACE OF OBESIT Y AMONG PUBLIC. LD. COUNSEL THEN FURTHER BROUGHT TO OUR AT TENTION THE LETTERS OF APPRECIATION RECEIVED FROM SHRIRAM FOUN DATION (PAGE NO.47), NETHRODAYA (PAGE NO.48), DISTRICT ROT RACT COUNCIL (PAGE NO.49), CHENNAI CORPORATION AIDS PREV ENTION AND CONTROL SOCIETY (PAGE NO.50 & 51), DR.R.SUBALAK SHMI (PAGE NO.52),HELP CENTRE FOR THE HANDICAPPED (PAGE 53 & 54) AND AVVVAI KAPPAGAM (PAGE NO.55), ACKNOWLEDGING THE SERVICES DONE BY THE ASSESSEE. REFERRING TO THE TR UST DEED OF FITNESS ONE FOUNDATION PLACED AT PAGE 1 TO 11 OF PAPER BOOK, LD. COUNSEL SUBMITTED THAT THE OBJECTS OF THE TRUST WERE CLEARLY CHARITABLE IN NATURE, TO PROMOTE FITNESS AN D WELLNESS AWARENESS IN THE COMMUNITY AND CONDUCTING FITNESS PROGRAMMES FOR MEETING SPECIAL NEEDS FOR PEOPLE. A CCORDING TO HIM, DENIAL OF REGISTRATION UNDER SECTION 12AA W AS UNCALLED FOR, SINCE THE REASONS CITED BY THE DIT(E) THAT ACT IVITIES OF THE ASSESSEE WOULD GET MIXED UP WITH THAT OF SETTLOR WA S UNFOUNDED. 4. PER CONTRA LD. DR STRONGLY SUPPORTING THE ORDER OF THE DIT(E), SUBMITTED THAT FITNESS ONE FOUNDATION WAS A COMMERCIAL ENTITY DOING PHYSICAL TRAINING AND PROMO TING PHYSICAL FITNESS FOR FEES. ACCORDING TO HIM, THE W EB SITE OF FITNESS ONE FOUNDATION, WHICH IS AVAILABLE IN PUBLI C DOMAIN, CLEARLY SHOWED THAT FOR MEMBERSHIP THEY WERE CHARGI NG RS.16,986.20. LD. DR PLACED ON RECORD A COPY OF PR INT OUT OF THE WEB SITE OF THE ASSESSEE AND STRESSED THAT ASS ESSEE WAS GIVING TRAINING ON BELLY DANCING,CARDIO PAGE OF 16 ITA.8 & 9 /MDS/11 5 KICKBOXING,AEROBICS,STEAM ROOM SERVICES, MASSAGE FA CILITY, AERO BOXING ETC. , AND THESE ACCORDING TO HIM, WOUL D NOT IN ANY WAY BE CHARITABLE ACTIVITIES. ACCORDING TO HIM , FITNESS ONE FOUNDATION WAS SETTLED AS A TRUST BY A COMPANY , WHICH WAS PURELY DOING COMMERCIAL BUSINESS OF GYM RELATED ACTIVITIES AND IT WAS ONLY A PLOY ADOPTED BY SUCH COMPANY FOR GETTING EXEMPTION FROM TAXATION. ACCORDING TO HIM, AN OBJECT OF GENERAL PUBLIC UTILITY COULD NOT BE SO EXTENDED THAT ANY ACTIVITY OF COMMERCIAL NATURE JUST BECAUSE IT CREAT ED OR HELPED BETTER SHAPING OF THE SOCIETY, WOULD BECOME CHARITY . 5. IN REPLY, LD. AR RELYING ON THE DECISION OF DEL HI BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI KRISHNA EDUCATION & WELFARE TRUST VS. COMMISSIONER OF INCOME TAX (2009) 27 SOT 331 ARGUED THAT THE SCOPE OF POWERS OF COMMISSIONER OF INCOME TAX, WHEN DEALING WITH AN APPLICATION FOR REGISTRAT ION, WAS VERY LIMITED. ACCORDING TO HIM, THE COMMISSIONER O F INCOME TAX COULD ONLY MAKE ENQUIRIES TO SATISFY HIMSELF AB OUT THE GENUINENESS OF THE ACTIVITIES AND THE CHARITABLE NA TURE OF OBJECTS OF THE TRUST. APPLICATION OF INCOME NEED NOT BE LOOKED INTO AT THE TIME OF REGISTRATION U/S.12AA OF THE AC T. THEREFORE, ACCORDING TO HIM, THE TRUST DESERVED REGISTRATION U /S.12AA OF THE ACT AND THIS WAS DENIED TO IT UNJUSTLY. 6. WE HAVE PERUSED THE ORDER OF THE DIT(E) AND HEA RD RIVAL CONTENTIONS CAREFULLY. IT IS NOT DISPUTED THAT THE SETTLOR OF THE ASSESSEE TRUST WAS ONE M/S.FITNESS ONE INDIA LTD A ND THE SAID COMPANY WAS A COMMERCIAL VENTURE. LD. AR ON A QUERY FROM THE BENCH DID ACCEPT THAT SAID COMPANY WAS NOT PAGE OF 16 ITA.8 & 9 /MDS/11 6 ENJOYING ANY SEC.11 & 12 EXEMPTIONS. THE OBJECTS OF THE ASSESSEE TRUST AS GIVEN AT PAGE 2-3 OF ITS TRUST D EED RUN AS UNDER:- 1. FITNESS & WELLNESS AWARENESS IN THE COMMUNITY. 2. OUT REACH PROGRAMME ON NUTRIENTS AND WELLNESS. 3. BUILDING COMMUNITY INFRASTRUCTURE. 4. FITNESS PROGRAM ON SCHOOL CHILDRENS AND SENIOR CITIZENS 5. FITNESS PROGRAM FOR SPECIAL NEEDS POPULATION. 6. VOCATIONAL TRAINING AND PLACEMENT FOR UNDER PRIVILEGED IN FITNESS DOMAIN. 7. WOMEN IMPROVEMENT THROUGH SPORTS AND FITNESS. 8. FOR ADVANCEMENT OF ANY OTHER /OR OBJECTS THAT AR E LEGALLY CHARITABLE AND OF GENERAL PUBLIC UTILITY. AS PER THE PROCEDURE FOR REGISTRATION PRESCRIBED U/ S.12AA OF THE ACT, THE DIT(E)/COMMISSIONER OF INCOME TAX CAN LOOK INTO TWO ASPECTS AT THE TIME OF SUCH REGISTRATION, WHICH ARE SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST A ND SATISFYING HIMSELF ABOUT THE GENUINENESS OF ITS ACTIVITIES. T HE QUESTION HERE PRIMARILY IS WHETHER THE OBJECTS AS ABOVE STA TED COULD MAKE OUT A CASE THAT THE PURPOSE OF THE TRUST FELL WITHIN LAST LIMB OF THE DEFINITION OF CHARITABLE PURPOSE GIVEN U/S.2(15) OF THE ACT, I.E. ADVANCEMENT OF ANY OTHER OBJECT OF G ENERAL PUBLIC UTILITY. WITHOUT DOUBT, ASSESSEES OBJECT WAS NO T RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, OR PRESERVATION OF ENVIRONMENT OR PRESERVATION OF MONUMENTS. EVERY ACTIVITY WHERE SOME BENEFIT IS RECEIVED BY A SECTION OF THE PUBLIC OR T HE PUBLIC AS A PAGE OF 16 ITA.8 & 9 /MDS/11 7 WHOLE CAN NOT BE TREATED AS ADVANCEMENT OF A OBJEC T OF GENERAL PUBLIC UTILITY. IT IS FOR THIS REASON THA T FINANCE ACT, 2008 SUBSTITUTED SUB SECTION (15) OF SECTION 2 WHE REBY A PROVISO WAS ADDED THERETO FOR EXCLUDING FROM PURVIE W OF GENERAL PUBLIC UTILITY, ACTIVITIES INVOLVING TRADE, COMMERCE OR BUSINESS FOR A FEE OR ANY OTHER CONSIDERATION. HER E IT IS CLEARLY ESTABLISHED FROM THE PRINT OUT OF THE WEB SITE OF T HE ASSESSEE TRUST, PRODUCED BY THE LD. DR, THAT IT WAS CHARGING A SUBSTANTIAL MEMBERSHIP FEE OF RS.19,200/-FOR ENROLM ENT TO ITS SERVICES. ASSESSEE IN THE COURSE OF ITS ACTIVITIES , WHEREBY IT DERIVES FEES FROM ITS SERVICES, MIGHT HAVE BEEN REN DERING SOME PUBLIC WORK IN THE NATURE OF FREE TRAINING TO STUDENTS OF VARIOUS SCHOOLS, BUT SUCH A RENDERING OF CHARITY WO ULD NOT BY ITSELF MAKE THE ASSESSEE A CHARITABLE TRUST. ALMOST EVERY GOD FEARING PERSON, BE IT A BUSINESS-MAN OR A PROFESSIO NAL OR A SALARY EARNING EMPLOYEE WILL BE DOING SOME CHARITY AS A PART OF THEIR RELIGIOUS BELIEF OR OBLIGATION TO THE SOCIET Y. THIS WOULD NOT BY ITSELF MAKE THE WHOLE OF THEIR INCOME EARNIN G ACTIVITY A CHARITABLE ONE. OBJECTS OF THE ASSESSEE AS MENTIO NED AT PARA -6 ABOVE, ARE NOT ONES WHICH WOULD EXCLUSIVELY RESULT IN CHARITABLE ACTIVITIES OR IN OTHER WORDS, EACH ONE O F THEM COULD BE MORE USED FOR GENERATING REVENUE ON COMMERCIAL B ASIS. AS ALREADY MENTIONED BY US, ASSESSEE WAS CHARGING H EFTY FEES FOR ITS SERVICES. THE SETTLOR COMPANY WAS ENGAGED I N SIMILAR PHYSICAL TRAINING OF VARIOUS TYPES ON COMMERCIAL BA SIS. ASSESSEE HAS INDEED GIVEN A BRIEF OF ITS SO CALLED CHARITABLE ACTIVITIES RUNNING TO 25 PAGES. BUT SUCH LISTED ACT IVITIES ARE NOT IN ANYWAY IN CONSONANCE WITH THE ACCOUNTS FILED BY IT FOR FINANCIAL YEARS 2008-09 & 2009-10. FOR FINANCIAL Y EAR 2008- PAGE OF 16 ITA.8 & 9 /MDS/11 8 09, THE ONLY INCOME WERE DONATIONS OF RS.6,000/- AG AINST WHICH THE TOTAL EXPENDITURE WAS RS.13,414.75 AND F OR FINANCIAL YEAR 2009-10 THERE WAS NO INCOME BUT EXPENDITURE OF RS.11,583.95. THE EXCESS EXPENDITURE MIGHT HAVE BE EN MET OUT OF THE CAPITAL FUND OF RS.1 LAKH WITH IT. WE A RE THUS AT A LOSS TO UNDERSTAND HOW THE ASSESSEE WOULD CARRY ON ALL THE ACTIVITIES MENTIONED BY IT IN ITS PAPER BOOK NOS. 2 1 TO 37, EXPENDING SUCH NEGLIGIBLE AMOUNTS. THUS THE REPORT OF ACTIVITIES WAS ITSELF NOT SUBSTANTIATED. CIRCUMSTAN CES ARE SUCH THAT NEITHER OF THE TWO CONDITIONS REQUIRED FOR GIV ING REGISTRATION U/S.12AA WERE NOT SATISFIED. THE OBJECTS OF THE TRU ST WERE NOT PURELY CHARITABLE AND GENUINENESS OF ITS ACTIVITIES WAS NOT SUBSTANTIATED, RATHER IT WAS PROVED BY ITS OWN ACC OUNTS, TO BE FAR OFF FROM REALITY. AS FOR THE RELIANCE PLACED BY THE LD. COUNSEL OF THE ASSESSEE ON THE DECISION OF DELHI B ENCH OF THE TRIBUNAL IN SHRI KRISHNA EDUCATION & WELFARE TRUST VS. COMMISSIONER OF INCOME TAX (SUPRA), THERE THE OBJEC TS OF THE TRUST WERE IN CONSONANCE WITH PUBLIC POLICY AND CI T HAD DENIED REGISTRATION FOR A REASON THAT SOURCE OF CON TRIBUTION OF THE SETTLOR WAS NOT VERIFIABLE. COMMISSIONER OF IN COME TAX HAD ALSO NOTED THERE THAT ASSESSEE DID NOT HAVE AN Y INFRASTRUCTURE FACILITIES FOR CARRYING ON ITS EDUCA TIONAL ACTIVITIES. IT WAS HELD BY THE DELHI BENCH THAT THESE ASPECTS W ERE NOT RELEVANT WHILE DECIDING UPON THE REGISTRATION U/S. 12AA OF THE ACT, AND POWERS OF THE COMMISSIONER OF INCOME TAX W AS ONLY TO LOOK INTO THE OBJECTS AND GENUINENESS OF THE ACT IVITIES. IN OUR OPINION, THIS CASE WOULD NOT HAVE ANY RELEVANCE , SINCE ASSESSEE COULD NOT SATISFACTORILY DEMONSTRATE ITS C HARITABLE ACTIVITIES OR OBJECTS. OTHER DECISIONS CITED BY TH E LD. AR, HAS PAGE OF 16 ITA.8 & 9 /MDS/11 9 LAID DOWN THE PARAMETERS BEYOND WHICH COMMISSIONER OF INCOME TAX SHOULD NOT TRAVEL WHILE ADJUDICATING ON THE GRANT OF REGISTRATION U/S.12A OF THE ACT, BUT IN NONE OF THE CASES, IT HAS BEEN STATED THAT EVEN WHEN THE ACTIVITIES ARE NOT G ENUINE AND OBJECTS ARE NOT GENUINELY CHARITABLE, REGISTRATION HAD TO BE GRANTED. AS FOR THE RELIANCE PLACED BY THE LD. AR O N THE DECISION OF COMMISSIONER OF INCOME TAX VS. R.M.S. T RUST 326 ITR 310 (MAD.) HONBLE JURISDICTIONAL HIGH COURT W AS DEALING WITH REGISTRATION PROCEDURE AS EXISTED PRIOR TO INS ERTION OF SECTION 12AA OF THE ACT BY FINANCE ACT, 1996 WITH E FFECT FROM 01.04.97. THEREFORE, THE SAID CASE ALSO WOULD NOT HAVE RELEVANCE, SINCE BY THE INSERTION OF SEC.12AA, A S PECIFIC PROCEDURE HAS BEEN LAID DOWN AS TO HOW AN APPLICATI ON FOR THE REGISTRATION U/S.12A OF THE ACT WAS TO BE DEALT WIT H BY THE COMMISSIONER OF INCOME TAX. FOR THESE REASONS, WE ARE OF THE OPINION THAT LD. DIT(E) WAS JUSTIFIED IN DENYIN G ASSESSEE REGISTRATION U/S.12AA OF THE ACT. 7. APPEAL OF THE ASSESSEE IS DISMISSED. 8. NOW, WE TAKE UP THE APPEAL OF ASSESSEE, F ONE T RUST IN ITA NO.8/MDS/11. HERE THE DENIAL OF REGISTRATION U /S.12AA WAS DONE BY THE DIT(E) CITING THE FOLLOWING REAONS:- SHRI N. CHIDAMBARA, AUTHORIZED REPRESENTATIVE APPEARED AND FILED REPLY. THE APPLICANT TRUST HAS FILED A COMPARATIVE STATEMENT SHOWING THE DETAILS OF CHARGES RECEIVED BY THE TRUST FOR VARIOUS COURSES CONDUCTED. COMPARING THE CHARGES COLLECTED BY OTH ER PAGE OF 16 ITA.8 & 9 /MDS/11 10 FITNESS CENTRES, THE TRUST CLAIMS THAT CHARGES RECE IVED BY IT IS LESS. THE FACT REMAINS THAT THE APPELLANT TRUST IS WORKING ON COMMERCIAL PRINCIPLES. JUST BECAUSE THE CHARGES IS LITTLE LESS WHEN COMPARED TO OTHER FITNE SS CENTRES DOES NOT MAKE THE ACTIVITIES OF THE INSTITU TION CHARITABLE. GIVING SOME DISCOUNT ON CHARGING OF FE ES AT CONCESSIONAL RATE COMPARED TO OTHER INSTITUTIONS DOES NOT MAKE THE INSTITUTION NON BUSINESS. IN FACT , IT IS A WELL KNOWN FACT THAT DURING THE STARTING PERIOD T HE BUSINESS CONCERNS CHARGES LESS FEE TO PROMOTE ITS BUSINESS. THEREFORE, IT PRIMA FACIE APPEARS TO BE THAT THE ACTIVITY OF THE TRUST IS AIMING TOWARDS CONDUCT OF BUSINESS AND NOT CHARITABLE. AS THE OBJECTS AND ACTIVITIES ARE HELD NOT IN CONFORMITY WITH DEFINITION OF CHARITABLE OBJECTS U/S.2(15), THE APPLICATION FILED FOR REGISTRATION U /S.12AA IS HEREBY REJECTED AND THE REGISTRATION IS NOT GRAN TED. APPROVAL U/S.80G IS ALSO NOT GRANTED AND THE APPLICATION FILED IS HEREBY REJECTED. 9. BEFORE US, THE LD. AR ASSAILING THE ORDER OF DI T(E) SUBMITTED THAT THE OBJECTS OF THE ASSESSEES TRUST WERE CLEARLY CHARITABLE, SINCE IT WAS FOR GENERAL PUBLIC UTILITY . ACCORDING TO HIM, DIT(E) TRAVELED BEYOND THE POWERS VESTED U/S.1 2AA OF THE ACT WHILE DISPOSING OF THE APPLICATION FOR REGI STRATION. ASSESSEE WAS NOT WORKING WITH ANY COMMERCIAL INTENT ION BUT ON THE OTHER HAND, HAD CHARGED SUBSTANTIALLY LOWER FEES WHEN COMPARED TO OTHER FITNESS CENTRES. REFERRING TO PA GE -59 OF THE PAPER BOOK FILED, LD. AR SUBMITTED THAT FEES CHARGED BY PAGE OF 16 ITA.8 & 9 /MDS/11 11 ASSESSEE TRUST BARELY MET ITS EXPENDITURE AND THE A CTIVITIES WERE PRIMARILY OF CHARITABLE NATURE. ACCORDING TO H IM, GENUINENESS OF THE OBJECTS AND GENUINENESS OF THE A CTIVITIES COULD NOT HAVE BEEN DOUBTED AND LD. DIT(E) WAS IN E RROR IN NOT GRANTING REGISTRATION SOUGHT FOR. RELIANCE WA S PLACED ON THE SAME DECISIONS AS RELIED ON IN THE CASE OF FIT NESS ONE FOUNDATION(SUPRA). 10. PER CONTRA, LD. DR STRONGLY SUPPORTING THE ORD ER OF DIT(E) SUBMITTED THAT THE ACCOUNTS FURNISHED BY THE ASSESSEE TRUST BEFORE THE DIT(E) CLEARLY SHOWED HUGE INVESTM ENT IN FIXED ASSETS RUNNING TO 1.5 CRORES. PLACING A COPY OF SUCH AUDITED ACCOUNTS FILED BY THE ASSESSEE BEFORE DIT (E), LD. DR SUBMITTED THAT FOR RAISING FUNDS FOR ACQUIRING S UCH ASSETS , ASSESSEE HAD SHOWN HUGE AMOUNTS AS DUE TO FITNESS ONE INDIA LTD, WHICH WAS THE SETTLOR TRUST. THEREFORE, ACCORDING TO HIM, THE SETTLOR COMPANY WAS ONLY DOING BUSINESS TH ROUGH THE ASSESSEE TRUST AND THIS WAS A PLOY TO ENJOY EXEMPTI ON FOR THE COMMERCIAL ACTIVITIES OF THE SETTLOR COMPANY. ACCO RDING TO HIM DEFINITION OF CHARITABLE PURPOSE AS IT STOOD NOW, C LEARLY TOOK THE ASSESSEE OUT OF THE AMBIT OF CHARITABLE TRUST AND ASSESSEE COULD NOT CLAIM REGISTRATION U/S.12AA NOR CLAIM EXEMPTION U/S.11 & 12 OF THE ACT. 11. WE HAVE PERUSED THE ORDER OF DIT(E) AND HEARD THE RIVAL CONTENTIONS. IT IS CLEARLY NOTED AND NOT DISPUTED THAT ASSESSEE WAS CHARGING FEES FOR VARIOUS SERVICES RENDERED BY IT. ONLY CLAIM OF THE ASSESSEE WAS THAT IT WAS CHARGING LESS ER FEES PAGE OF 16 ITA.8 & 9 /MDS/11 12 THAN CHARGED BY OTHERS FOR SIMILAR ACTIVITIES. PA GE-59 OF PAPER BOOK OF ASSESSEE IS REPRODUCED HEREUNDER FOR BREVITY:- NAME OF THE COURSE DURATION FEES OF FONE TRUSTS ACADEMY CHARGES QUOTED BY OTHERS FOR SIMILAR PROGRAMS AND IN THE ABSENCE COST INVOLVED CHARGED BY OTHERS/NOTIONAL COST INVOLVED PERSONAL TRAINING SPECIALITY CERTIFICATE 6 DAYS 11,530/- BFY ACADEMY CHENNAI 18,000/- GYM INSTRUCTOR COURSE 6 DAYS 9324/- BFY ACADEMY CHENNAI 28,000/- CERTIFICATE IN FITNESS MANAGEMENT 10 DAYS 17,045/- BFY ACADEMY CHENNAI 28,000/- COMPREHENSIVE FASTRAC COURSE FOR TTAINERS 8 DAYS 3000/- NOTIONAL COST INVOLVED 15,000/- FASTRAC COURSE FOR FRONT OFFICE EXECUTIVES 2 DAYS 1000/- NOTIONAL COST INVOLVED 2000/- LIVELIHOOD SUPPORT PROGRAM FOR TSUNAMI AFFECTED YOUTH UNDER THE AUSPICES OF TNSCB 10 DAYS 4500/- NOTIONAL COST INVOLVED 28,000/- WORKSHOPS FOR GENERAL PUBLIC DAY/2 DAYS 100 TO 300/- NOTIONAL COST INVOLVED 500/- ADDITIONAL DETAILS: 1. COURSE FEE INCLUDES COURSE STUDY MATERIAL AND R EFRESHMENTS. 2. IT IS SUBMITTED FROM ABOVE THAT FONE TRUST IS C OLLECTING FEES THAT IS LOWER THAN THAT QUOTED BY OTHERS FOR SIMILAR COURSES AND/OR LOWER T HAN THE COSTS INVOLVED. HENCE SUBSIDIZED TO A SIGNIFICANT EXTENT. 3. IT IS ALSO STATED THAT A NOMINAL FEE IS COLLECT ED AS IT OUR EXPERIENCE THAT INVOLVEMENT AND RESPONSIBILITY OF PARTICIPANTS IS MORE WHERE A FINANCIAL COMMITMENT (PAYMENT/FEE) IS INVOLVED. 4. HOWEVER THE FEES COLLECTED DO NOT MEET OUT THE COSTS. FONE TRUST HOPES TO FUNCTION WITH THE SUPPORT OF THE AUTHOR OF THE TRUST. FITNE SS ONE GROUP LTD. AS WELL AS SUPPORT OF LIKE MINDED INDIVIDUALS AND ORGANIZATIONS. 5. THE OBJECTIVE IS TO CREATE AWARENESS AND SPREAD THE MESSAGE THAT FITNESS MANAGEMENT IS IMPORTANT FOR A HEALTHY LIFE. NOW IF WE LOOK AT THE DEFINITION OF THE CHARITABLE PURPOSE IT READS AS UNDER WITH EFFECT FROM 01.04.2009. SEC.2(15): CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF,[ PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILD LIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF PAGE OF 16 ITA.8 & 9 /MDS/11 13 ARTISTIC OR HISTORIC INTEREST] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: [PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PU RPOSE, IT IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR AY ACTIVITY OF REND ERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERAT ION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF THE INCOME FROM SUCH ACTIVITY.] [PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVI TIES REFERRED TO THEREIN IS [TEN LAKH RUPEES] OR LESS IN THE PREVIOUS YEAR;] WHAT WAS RECEIVED BY THE ASSESSEE FROM ITS SETTLOR COMPANY AND SHOWN UNDER CURRENT LIABILITIES CAME TO ABOUT 1 .86 CRORES. THESE IN ALL PROBABILITY WERE NOTHING BUT FEES RECE IVED ON ACCOUNT OF UTILIZATION OF THE FIXED ASSETS OF THE A SSESSEE TRUST, WORTH ABOUT 1.5 CRORES. WE CANNOT SAY THAT IN SUCH CIRCUMSTANCES, ASSESSEE WAS INVOLVED IN AN ACTIVITY , WHICH EVEN IF CONSIDERED PARTLY FOR ADVANCING AN OBJECT OF GENERAL PUBLIC UTILITY WAS CHARITABLE IN NATURE. ASSESSEE IS ALSO CAUGHT BY THE PROVISO TO SEC.2(15) OF THE ACT. EVEN OTHERWISE, WE CAN NOT SAY THAT THE OBJECTS OF THE ASSESSEE GI VEN AT PAPER BOOK PAGE 15-16 ARE PURELY OF A CHARITABLE N ATURE AND PURELY INVOLVING ADVANCEMENT OF AN OBJECT OF GENERA L PUBLIC UTILITY. THE SAID OBJECTS ARE REPRODUCED HEREUNDER: - PAGE OF 16 ITA.8 & 9 /MDS/11 14 (A) TO PROMOTE THE ACTIVITY OF IMPARTING TRAINING IN VARIOUS DISCIPLINES OF FITNESS MANAGEMENT AND ALLIE D ACTIVITIES IN ANY WAY POSSIBLE AND TO DO ALL SUCH A CTS, DEEDS OR THINGS AS MAY BE NECESSARY, DESIRABLE, EXPEDIENT FOR THE PROMOTION OF THE SAID ACTIVITY, I NCLUDING SETTING UP OF ACADEMIC INSTITUTIONS, ETC., WITHOUT DISCRIMINATION AS TO RELIGION, RACE, CASTE, COLOUR OR CREED. NO PART OF THE CORPUS OR INCOME OF THE TRUST PROPER TY SHALL UNDER ANY CIRCUMSTANCES BE GIVEN TO ANY COMMUNAL OR SECTARIAN OBJECT OR ASSOCIATION OR ON A NY COMMUNAL OR SECTARIAN BASIS. (B) TO ENABLE THE TRUSTEES, TO FULFILL THE ABOVE OB JECTS THEY WILL BE ENTITLED TO FOUND SCHOLARSHIPS OR GIVE PRIZES OR DONATIONS OR MAKE GRANTS IN ANY FORM FOR CHARITA BLE PURPOSES. 12. LD. AR HAS FILED BEFORE US A BALANCE SHEET OF F ONE TRUST OF 2009 WHEREIN IT IS CERTIFIED THAT THE SAID BALANCE SHEET WAS GIVEN BY THE ASSESSEE TO ITS AUTHORIZED REPRESENTATIVE. THE SAID BALANCE SHEET PLACED AT PA GE-12 SHOW NO FIXED ASSETS WHATEVER AS ON 31.03.09 AND E XCEPT FOR CURRENT ASSET OF RS.2,17,562.60, THERE IS NOTHING IN THE ASSET SIDE OF THE BALANCE SHEET. AGAINST THIS THE BALANCE SHEET FILED BEFORE US BY THE LD. DR, WHICH HAS BEEN CERTIFIED T O HAVE BEEN PRODUCED BEFORE LD. DIT(E), THE ASSETS COME TO ABO UT 1.49 CRORES. THIS BY ITSELF SHOW THAT THE ASSESSEE IS NO T COMING WITH CLEAN HANDS. TO EXPECT SUCH AN ASSESSEE TO DO CHARITY OR TO BELIEVE ITS ASSERTIONS, WE FIND IT DIFFICULT. ASSESSEE COULD NOT SHOW THAT ITS OBJECTS WERE NOT COMMERCIAL NOR COULD IT PAGE OF 16 ITA.8 & 9 /MDS/11 15 SHOW ITS ACTIVITIES AS CHARITABLE. WE ARE OF THE OP INION THAT NONE OF THE CASES CITED BY THE LD. AR WOULD HELP TH E ASSESSEE. FOR THESE AND OTHER REASONS WHICH WE HA VE MENTIONED AT PARA-6 ABOVE IN THE CASE OF FITNESS ON E FOUNDATION, WE ARE OF THE OPINION THE LD. DIT(E) WA S JUSTIFIED IN DENYING THE REGISTRATION. APPEAL OF THE ASSESSE E IS DISMISSED. 13. TO SUMMARISE THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED ON 12 TH AUGUST, 2011. SD/- SD/ - ( U.B.S.BEDI ) ( ABRAHAM P. GEORGE ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 12 TH AUGUST, 2011. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE PAGE OF 16 ITA.8 & 9 /MDS/11 16 DATE INITIALS 1. DRAFT DICTATED ON 2. DRAFT PLACED BEFORE AUTHORITY 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S. 6. KEEP FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE 9. DATE OF DISPATCH OF ORDER