Advocaye Welfare Fund Trustee Committee, New Delhi V. CIT(E), New Delhi

ITA 9334/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9570 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 04-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY GOEL
• Keywords: Charitable institution; Set aside
• Section: 80G; 12A; 12AA; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) (THROUGH VIDEO CONFERENE) SHRI R.K. PANDA, ACCOUNTANT MEMBER AND BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.9334/DEL./2019 ADVOCATE WELFARE FUND TRUSTEE COMMITTEE, VS. CIT (E XEMPTION), 1 F, LAWYERS CHAMBERS, NEW DELHI. DELHI HIGH COURT, NEW DELHI 110 003. (PAN : AAGTA7153C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C.S. AGARWAL, SENIOR ADVOCATE MRS. PREM LATA BANSAL, SENIOR ADVOCATE SHRI R.P. MALL, ADVOCATE SHRI MADHUR AGARWAL, ADVOCATE SHRI DIVYANSHU AGARWAL, ADVOCATE REVENUE BY : SHRI SANJAY GOEL, CIT DR DATE OF HEARING : 24.06.2020 DATE OF ORDER : 08.07.2020 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ADVOCATE WELFARE FUND TRUSTEE COMMITTEE (HEREINAFTER REFERRED TO AS THE APPELLANT) BY FIL ING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 30.09.2019 PASSED BY THE COMMISSIONER OF INCOME - TAX (EXEMPT ION), NEW DELHI ON THE GROUNDS INTER ALIA THAT :- ITA NO.9334/DEL./2019 2 1. THAT THE LD. CIT HAS ERRED IN REJECTING THE AP PLICATION FILED BY THE WELFARE FUND U/S 12A (A) OF THE INCOME TAX A CT. 2. THAT THE LD. CIT HAS ERRED IN HOLDING THAT THE A PPLICANT HAS NOT ESTABLISHED GENUINENESS OF THE ACTIVITIES OF TH E FUND WHEN THE MEMORANDUM AND OTHER DOCUMENTS CLEARLY ESTABLISHED THE SAME. 3. THAT THE LD. CIT HAS ERRED IN DENYING THE APPROV AL U/S 80G OF THE ACT HOLDING THAT THE CHARITABLE ACTIVITIES O F THE FUND COULD NOT BE SUBSTANTIATED WHEN THE ACTIVITIES OF THE FUN D WERE APPARENT FORM THE MEMORANDUM. 2. ASSESSEE BY FILING SEPARATE APPLICATION SOUGHT T O CONDONE THE DELAY OF 1 DAY IN FILING THE APPEAL BEFORE THE TRIBUNAL. KEEPING IN VIEW THE FACT THAT DUE TO SUDDEN SICKNESS OF SHR I RAM AVTAR BANSAL, ADVOCATE, ENGAGED AS COUNSEL IN THIS CASE, WHO REMAINED ADMITTED IN THE HOSPITAL, WHICH IS A REASONABLE CAU SE, THE DELAY OF 1 DAY IN FILING THE PRESENT APPEAL IS HEREBY CONDONED . 3. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUE AT HAND ARE : APPELLANT, BEING AN ADVOCATE WE LFARE FUND TRUSTEE COMMITTEE, CONSTITUTED UNDER SECTION 4 OF T HE ADVOCATES WELFARE ACT, 2001, BY THE CENTRAL GOVERNMENT OF IND IA AS PROVIDED IN CHAPTER-III OF ADVOCATES WELFARE FUND A CT, 2001, FILED APPLICATIONS ON 30.03.2019 IN FORM NO.10A AND 10G SEEKING REGISTRATION UNDER SECTION 12AA OF THE INCOME-TAX A CT, 1961 (FOR SHORT THE ACT) AND EXEMPTION U/S 80G OF THE ACT W HICH WERE REJECTED BY THE LD. CIT (E) VIDE IMPUGNED ORDER ON THE GROUND THAT SINCE THE APPELLANT HAS FAILED TO FURNISH BALANCE S HEET AND INCOME & EXPENDITURE ACCOUNT FOR THE FY 2018-19 DESPITE CA LLED FOR, THE ITA NO.9334/DEL./2019 3 CONDITIONS LAID DOWN U/S 12AA ARE NOT SATISFIED AS THE GENUINENESS OF THE ACTIVITIES OF THE APPELLANT COULD NOT BE EST ABLISHED. 4. FEELING AGGRIEVED, THE APPELLANT HAS COME UP BEF ORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. UNDISPUTEDLY, SECTION 23 OF THE ADVOCATES WELFAR E FUND ACT, 2001 PROVIDES THAT NOTWITHSTANDING ANYTHING CO NTAINED IN THE INCOME TAX ACT, 1961 (43 OF 1961) OR ANY OTHER ENAC TMENT FOR THE TIME BEING IN FORCE RELATING TO TAX ON INCOME, PROF ITS AND GAINS, THE INCOME ACCRUED TO THE FUND CONSTITUTED UNDER SUB-SE CTION (1) OF SECTION 3 SHALL BE EXEMPT FROM INCOME-TAX. 7. THE LD. AR FOR THE APPELLANT CONTENDED INTER ALI A THAT THE APPELLANT, BEING A CHARITABLE INSTITUTION, IS ENTIT LED FOR REGISTRATION U/S 12AA AS WELL AS EXEMPTION U/S 80G OF THE ACT BU T THE LD. CIT(E) HAS ERRED IN REJECTING THE APPLICATION ILLEG ALLY ON THE GROUND THAT BALANCE SHEET AND INCOME & EXPENDITURE ACCOUNT FOR AY 2018-19 WERE NOT FURNISHED; THAT THE LD. CIT (E) IS ONLY TO SATISFY THE OBJECTS OF THE TRUST/INSTITUTION AND GENUINENES S OF ITS ACTIVITIES; THAT THE APPELLANT IS A TRUSTEE COMMITTEE CALLED AS THE ADVOCATES ITA NO.9334/DEL./2019 4 WELFARE FUND TRUSTEE COMMITTEE ESTABLISHED UNDER BA R COUNCIL OF DELHI VIDE NOTIFICATION IN THE OFFICIAL GAZETTE DAT ED 25.10.2011 BY THE GOVERNMENT OF INDIA AND SUCH IS A CHARITABLE IN STITUTION; AND RELIED UPON THE DECISIONS RENDERED BY HONBLE SUPREME COURT IN THE CASES OF CIT VS. BAR COUNCIL OF MAHARASHTRA CIT ED AS 130 ITR 28 & AMERICAN HOTEL AND LODGING ASSOCIATION EDU CATIONAL INSTITUTE VS. CBDT & ORS. 301 ITR 86, HONBLE BOMBA Y HIGH COURT IN BAR COUNCIL OF MAHARASHTRA VS. CIT REPORTE D IN 126 ITR 27, HONBLE KERALA HIGH COURT IN SREE ANJANEYA MEDI CAL TRUST VS. CIT 382 ITR 399 AND HONBLE PUNJAB & HARYANA HI GH COURT IN CIT VS. BABA KARTAR SINGH DUKKI EDUCATIONAL TRUS T (2014) 221 TAXMAN 493 (P&H) . 8. LD. DR FOR THE REVENUE SUPPORTED THE ORDER PASSE D BY THE LD. CIT (E) BY CONTENDING INTER ALIA THAT IN ORDER TO FIND OUT REAL PURPOSE OF THE TRUST/INSTITUTION, THE BASIC FINANCI AL STATEMENTS OF FY 2018-19 WAS REQUIRED WHICH THE APPELLANT HAS NOT FU RNISHED; THAT ONE MORE OPPORTUNITY BE GIVEN TO THE APPELLANT TO F URNISH ALL THE NECESSARY DOCUMENTS TO BE EXAMINED BY LD. CIT (E) A ND RELIED UPON THE JUDGMENTS RENDERED BY HONBLE APEX COURT A S WELL AS VARIOUS HIGH COURTS VIZ. CIT VS. WILSONIA COLLEGE SOCIETY (2017- TIOL-1051-HC-ALL-IT), JAMMU DEVELOPMENT AUTHORITY V S. UOI (2014-TIOL-115-SC-IT), CIT VS. NATIONAL INSTITU TE OF ITA NO.9334/DEL./2019 5 AERONAUTICAL ENGINEERING EDUCATIONAL SOCIETY 315 IT R 428 (UTTARANCHAL), CIT VS. A.R. TRUST 402 ITR 161 (ALLA HABAD), SHRI NATHJI EDUCATION FOUNDATION VS. CIT ITA NO.809/LKW/ 2014, SELF EMPLOYERS SERVICE SOCIETY VS. CIT 247 ITR 18 ( KERALA) AND KIRTI CHAND TARAWATI CH. TRUST VS. DIT 232 ITR 11 ( DELHI) . 9. LD. CIT (E) VIDE IMPUGNED ORDER HAS REJECTED THE REGISTRATION SOUGHT FOR BY THE APPELLANT U/S 12AA A ND SECTION 80G OF THE ACT ON THE SOLE GROUND THAT FINANCIALS FOR F Y 2018-19 HAVE NOT BEEN FURNISHED DESPITE CALLED FOR. IT IS THE C ASE OF THE LD. AR FOR THE APPELLANT THAT IT IS NOT A VALID GROUND TO REJECT THE APPLICATION MOVED BY THE APPELLANT. SO, NOW THE QU ESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER APPELLANT, ADVOCATE WELFARE FUND TRU STEE COMMITTEE, A STATUTORY BODY, ESTABLISHED UNDER THE BAR COUNCIL OF DELHI VIDE NOTIFICATION DATED 25.10.2001 HAS FAILED TO ESTABLISH THE GENUINENESS OF ITS ACTIVITIES FOR WANT OF FINANCIAL S OF FY 2018-19 AS HAS BEEN HELD BY THE LD. CIT (E)? 10. APPELLANT HAS COME UP WITH SPECIFIC CONTENTION THAT ALL THE DOCUMENTS CALLED FOR BY THE LD. CIT (E) WERE DULY F URNISHED EXCEPT FINANCIALS OF FY 2018-19 WHICH WERE UNDER PREPARATI ON AND AS SUCH COULD NOT BE FURNISHED. WHEN UNDISPUTEDLY APP ELLANT TRUSTEE COMMITTEE IS ESTABLISHED UNDER BAR COUNCIL OF DELHI WHICH IS PROVED TO HAVE BEEN HELD AS A CHARITABLE INSTITUTIO N ELIGIBLE FOR REGISTRATION U/S 12AA OF THE ACT VIDE ORDER DATED 02.07.2020 ITA NO.9334/DEL./2019 6 PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN I TA NO.9333/DEL/2019 TILTED AS BAR COUNCIL OF DELHI VS. CIT (E) , IT CANNOT BE DENIED REGISTRATION MERELY ON THE GROUND THAT FINANCIALS OF FY 2018-19 HAVE NOT BEEN FURNISHED. OPERATIVE P ART OF THE ORDER DATED 02.07.2020 (SUPRA) ARE EXTRACTED FOR R EADY PERUSAL AS UNDER :- 11. HONBLE APEX COURT IN CASE OF CIT VS. BAR COUN CIL OF MAHARASHTRA CITED AS 130 ITR 28, AFFIRMING THE JUDG MENT OF HONBLE BOMBAY HIGH COURT IN CASE OF BAR COUNCIL OF MAHARASHTRA VS. CIT REPORTED IN 126 ITR 27, HELD TH AT PRIMARY AND DOMINANT PURPOSE OF AN INSTITUTION LIKE THE APPELLA NT IS THE ADVANCEMENT OF THE OBJECT OF GENERAL PUBLIC UTILITY WITHIN THE MEANING OF SECTION 2(15) OF THE ACT AND AS SUCH, TH E INCOME FROM SECURITIES HELD BY THE APPELLANT WOULD BE EXEMPT FR OM ANY TAX LIABILITY U/S 11 OF THE ACT. OPERATIVE PART OF THE JUDGMENT (SUPRA) IS EXTRACTED FOR READY PERUSAL AS UNDER :- IN OTHER WORDS, THE DOMINANT PURPOSE OF A STATE B AR COUNCIL AS REFLECTED BY THE VARIOUS OBLIGATORY FUNC TIONS IS TO ENSURE QUALITY SERVICE OF COMPETENT LAWYERS TO THE LITIGATING PUBLIC, TO SPREAD LEGAL LITERACY, PROMOTE LAW REFOR MS AND PROVIDE LEGAL ASSISTANCE TO THE POOR WHILE THE BENE FIT ACCRUING TO THE LAWYER MEMBERS IS INCIDENTAL. IT IS TRUE THAT SUB S. (2) PROVIDES THAT A STATE BAR COUNCIL MAY CO NSTITUTE ONE OR MORE FUNDS FOR THE PURPOSE OF GIVING FINANCI AL ASSISTANCE TO ORGANISE WELFARE SCHEMES FOR THE INDI GENT, DISABLED OR OTHER ADVOCATES ; BUT IT IS AN OPTIONAL OR DISCRETIONARY FUNCTION TO BE UNDERTAKEN BY THE COUN CIL. APART FROM THAT, ADMITTEDLY, THE ASSESSEE COUNCIL H AS NOT SO FAR CONSTITUTED ANY SUCH FUND FOR THE PURPOSE SPECI FIED IN THE INSTANT CASE. AS AND WHEN SUCH A FUND IS CONSTI TUTED, A QUESTION MAY ARISE FOR CONSIDERATION AND THE COURT MAY HAVE TO DECIDE WHETHER THE FUNCTION SO UNDERTAKEN BY A S TATE BAR COUNCIL HAS BECOME THE DOMINANT PURPOSE FOR WHICH T HAT COUNCIL IS OPERATING. HAVING REGARD TO THE PREAMBLE OF THE ACT AND THE NATURE OF THE VARIOUS OBLIGATORY FUNCTI ONS INCLUDING THE ONE UNDER CL. (D) ENJOINED UPON EVERY STATE BAR COUNCIL UNDER S. 6(1) OF THE ACT, IT IS CLEAR T HAT THE PRIMARY OR DOMINANT PURPOSE OF AN INSTITUTION LIKE THE ASSESSEE COUNCIL IS THE ADVANCEMENT OF THE OBJECT O F GENERAL PUBLIC UTILITY WITHIN THE MEANING OF S. 2(15) OF TH E ACT, AND AS SUCH THE INCOME FROM SECURITIES HELD BY THE ASSE SSEE COUNCIL WOULD BE EXEMPT FROM ANY TAX LIABILITY UNDE R S. 11 OF THE ACT. ITA NO.9334/DEL./2019 7 12. NOW, THE NEXT QUESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER THE LD. CIT (E) IS EMPOWERED TO REJE CT THE REGISTRATION AND CONSEQUENT EXEMPTION U/S 12AA AND 80G OF THE ACT DUE TO NON-FURNISHING OF FINANCIALS OF FY 2 018-19? 13. IT IS SETTLED PROPOSITION OF LAW THAT FOR THE P URPOSE OF REGISTRATION U/S 12AA OF THE ACT, THE THRESHOLD CON DITION I.E. GENUINENESS OF THE ACTIVITIES IS TO BE DECIDED WITH THE OBJECT CLAUSE OF INSTITUTION. IN OTHER WORDS, WHEN THE OBJECT OF THE INSTITUTION, THE APPELLANT IN THIS CASE, IS PROVED TO BE CHARITABLE WITHIN THE MEANING OF SECTION 2(15) OF THE ACT AS HAS BEEN HELD BY HON BLE APEX COURT IN THE IDENTICAL FACTS AND CIRCUMSTANCES IN A CASE OF BAR COUNCIL OF MAHARASHTRA (SUPRA), FURTHER SCRUTINY OF THE FINANC IALS OF THE APPELLANT ARE NOT REQUIRED BECAUSE IT IS OTHERWISE WITHIN THE PURVIEW OF AO TO EXAMINE AT THE TIME OF ASSESSMENT IF THE A PPELLANT IS ENTITLED TO EXEMPTION U/S 11 OF THE ACT. 14. HONBLE KERALA HIGH COURT IN SREE ANJANEYA MEDI CAL TRUST VS. CIT 382 ITR 399 HELD THAT, NO EXAMINATION OF M ODUS OF THE APPLICATION OF THE FUNDS OF THE TRUSTEE COMMITTEE O R AN EXAMINATION OF THE ETHICAL BACKGROUND OF ITS SETTLER IS CALLED FOR WHILE CONSIDERING AN APPLICATION FOR REGISTRATION. THE S TAGE FOR CONSIDERATION OF THE RELEVANCE OF THE OBJECT OF THE ASSESSEE AND THE APPLICATION OF ITS FUNDS ARISES AT THE TIME OF ASSE SSMENT. 15. HONBLE APEX COURT IN CASE OF CIT VS. ANDHRA CH AMBER OF COMMERCE (1965) 55 ITR 722 (SC) HELD THAT AN OBJE CT BENEFICIAL TO A SECTION OF THE PUBLIC WAS AN OBJECT OF GENERAL PUBLIC UTILITY, AS IN THE CASE OF APPELLANT, WHICH IS WORKING TO CONTR OL, SUPERVISE AND REGULATE A PROFESSION FOR THE BENEFIT OF LAWYERS CO MMUNITY AT LARGE. OPERATIVE PART OF THE JUDGMENT IS AS UNDER :- THAT THE EXPRESSION 'OBJECT OF GENERAL PUBLIC UTIL ITY' WAS NOT RESTRICTED TO OBJECTS BENEFICIAL TO THE WHOLE O F MANKIND. AN OBJECT BENEFICIAL TO A SECTION OF THE PUBLIC WAS AN OBJECT OF GENERAL PUBLIC UTILITY. TO SERVE A CHARITABLE PU RPOSE, IT WAS NOT NECESSARY THAT THE OBJECT SHOULD BE TO BENE FIT THE WHOLE OF MANKIND OR EVEN ALL PERSONS LIVING IN A PA RTICULAR COUNTRY OR PROVINCE. IT WAS SUFFICIENT IF THE INTEN TION WAS TO BENEFIT A SECTION OF THE PUBLIC AS DISTINGUISHED FR OM SPECIFIED INDIVIDUALS. THE SECTION OF THE COMMUNITY SOUGHT TO BE BENEFITED MUST UNDOUBTEDLY BE SUFFICIENTLY DE FINED AND IDENTIFIABLE BY SOME COMMON QUALITY OF A PUBLIC OR IMPERSONAL NATURE: WHERE THERE IS NO COMMON QUALITY UNITING THE POTENTIAL BENEFICIARIES INTO A CLASS, I T MIGHT NOT BE REGARDED AS VALID. 16. HONBLE DELHI HIGH COURT IN CASE OF DIT VS. FOU NDATION OF OPHTHALMIC & OPTOMETRY RESEARCH EDUCATION CENTRE 35 5 ITR 361 ITA NO.9334/DEL./2019 8 (DEL.) HAS HELD TO THE EXTENT THAT EVEN IF THERE IS NO COMMENCEMENT OF CHARITABLE ACTIVITIES, REGISTRATION U/S 12AA OF THE ACT CANNOT BE DENIED BECAUSE THE STATUTE DOES NOT PROHIBIT OR ENJ OIN THE COMMISSIONER FROM REGISTERING A TRUST SOLELY BASED UPON ITS OBJECTS WITHOUT ANY ACTIVITY IN CASE OF A NEWLY REGISTERED TRUST. 17. IN VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(E) HAS ERRED IN DECLINING THE REGISTRATION U/S 12AA OF THE ACT ON THE GROUND THAT FINANCIALS OF FY 2018-19 HAV E NOT BEEN FURNISHED BY THE APPELLANT. 11. FURTHERMORE, THE APPELLANT HAD FURNISHED FINANC IALS OF FYS 2016-17 & 2017-18 BUT THE LD. CIT (E), WITHOUT MAKI NG ANY ADVERSE FINDINGS ON THE SAME, PROCEEDED TO REJECT T HE REGISTRATION ON THE GROUND THAT FINANCIALS OF FY 2018-19 HAVE NO T BEEN FURNISHED. THOUGH IT IS NOT A REQUIREMENT OF LAW T O FURNISH THE FINANCIALS AS REQUIRED BY THE LD. CIT (E) THE APPEL LANT HAS COME UP WITH THE ARGUMENT THAT NOW THE FINANCIALS OF FY 201 8-19 ARE AVAILABLE AND THEY ARE READY TO FURNISH THE SAME. 12. IN VIEW OF WHAT HAS BEEN DISCUSSED IN THE PRECE DING PARAS AND FOLLOWING THE ORDER PASSED BY THE COORDINATE BE NCH OF THE TRIBUNAL IN THE CASE OF BAR COUNCIL OF DELHI VS. CIT (E) (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE APPELLANT TR USTEE COMMITTEE BEING ESTABLISHED UNDER THE BAR COUNCIL OF DELHI BE ING ENGAGED IN SAFEGUARDING THE RIGHTS, PRIVILEGES AND INTEREST OF THE ADVOCATES, ITS DOMINANT PURPOSE IS THE ADVANCEMENT OF GENERAL PUBL IC UTILITY WITHIN THE MEANING OF SECTION 2(15) OF THE ACT, AS SUCH, GENUINENESS OF ITS ACTIVITIES AND OBJECT OF CHARITA BLE PURPOSE IS ITA NO.9334/DEL./2019 9 PROVED, THUS ENTITLED FOR REGISTRATION U/S 12AA AND CONSEQUENT EXEMPTION U/S 80G, SHALL BE EXEMPT FROM THE INCOME- TAX AS PROVIDED U/S 23 OF THE ADVOCATES WELFARE FUND ACT, 2001, HENCE ENTITLED FOR REGISTRATION U/S 12AA OF THE ACT AND S UBSEQUENT EXEMPTION U/S 80G OF THE ACT. THE LD. CIT (E) IS T O PROVIDE THE REGISTRATION / EXEMPTION TO THE APPELLANT ACCORDING LY. CONSEQUENTLY, APPEAL FILED BY THE APPELLANT IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON THIS 10 TH DAY OF JULY , 2020. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 10 TH DAY OF JULY, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(E), NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.