The Madras Pinto and Rotary Oil Mills Owners Association, CHENNAI V. CIT, CHENNAI

ITA 951/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7719 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 27-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: ANAND DEVKUMAR
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.951/MDS/2015 M/S. THE MADRAS PINTO AND ROTARY OIL MILLS OWNERS ASSOCIATION, 191/39, 1 ST FLOOR, KARNEESWARAR PAGODA STREET, MYLAPORE, CHENNAI-600 004. VS THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), ANNEXE BUILDING, 3 RD FLOOR, CHENNAI-34. PAN:AAECT2234N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.ANAND DEVKUMAR , C.A. /RESPONDENT BY : MR. PATHLAVATH PEERYA, CIT /DATE OF HEARING : 7 TH JANUARY, 2016 /DATE OF PRONOUNCEMENT : 18 TH MARCH, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX, (EXEMPTIONS), CHENNAI DATED 20.02.2015 IN F.NO.DIT( E) NO.2(135)/14-15 DENYING REGISTRATION UNDER SECTION 12AA OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL ELABORATE GROUND S; HOWEVER THE CRUX OF THE ISSUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED IN DENYING REGISTRATION UNDER SECTION 12AA OF THE ACT BY REJEC TING ITS APPLICATION IN FORM 10A. 2 ITA NO.951 /MDS/2015 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SECTION 25 COMPANY INCORPORATED UNDER THE COMPANIES ACT, 19 57 ON 16.09.1957 VIDE COMPANY REGISTRATION NO.3582 HAS FI LED APPLICATION IN FORM 10A ON 15.05.2014 SEEKING REGIS TRATION UNDER SECTION 12AA OF THE ACT. THE OBJECTS OF THE ASSESSEE COMPANY ARE MAINLY TO PROMOTE AND PROTECT THE INTER ESTS OF THE OIL MILL OWNERS / OPERATORS AS EVIDENT FROM CLA USE 3 OF THE MEMORANDUM OF ASSOCIATION, WHICH IS REPRODUCED HERE IN BELOW FOR REFERENCE:- ' 3. THE OBJECTS FOR WHICH THE ASSOCIATION IS ESTABLISHED ARE:- (A) TO PROMOTE AND PROTECT THE INDUSTRY OF CRUSHING OILS OF AL/ KINDS IN PINTO OR ROTARY MILLS DRIVEN BY POWER AND THE TRADE AND COMMERCE IN THE OILS SO MANUFACTURED AND IN THE SUBSIDIARY PRODUCTS. (B) TO CREATE AND ENCOURAGE A SPIRIT OF UNITY AND HARMONY AMONG THE MERCHANTS ENGAGED IN SUCH INDUSTRY, TRADE AND COMMERCE. (C) TO ENDEAVOUR BY ALL/ CONSTITUTIONAL MEANS TO REMOVE OR MITIGATE THE DIFFICULTIES AND GRIEVANCES NOW EXPERIENCED OR WHICH MAY HEREAFTER BE EXPERIENCED BY MERCHANTS ENGAGED IN SUCH INDUSTRY, TRADE AND COMMERCE. (D) TO ADVISE THE GOVERNMENT, CENTRAL OR STATE, AND LOCAL BODIES IN RESPECT OF AL/ LEGISLATION NOW IN OPERATION OR WHICH MAY HEREAFTER BE ENACTED RELATING TO THE CONTROL AND PROMOTION OF SUCH 3 ITA NO.951 /MDS/2015 INDUSTRY AND TRADE. (E) TO TAKE STEPS BY LAWFUL MEANS TO REDUCE THE RATES, TAXES AND FEES NOW BEING LEVIED ON AL/ LICENSES OF MILLS AND MERCHANTS ENGAGED IN OIL MIL/INDUSTRY, TRADE AND COMMERCE BY THE MUNICIPAL OR OTHER AUTHORITIES, CENTRAL OR STATE. (F) TO MAKE REPRESENTATIONS TO LOCAL OR CENTRAL AUTHORITIES OR BODIES, EXECUTIVE OR LEGISLATIVE, ON ALL MATTERS AFFECTING SUCH INDUSTRY, TRADE AND COMMERCE. (G) TO ARBITRATE IN THE SETTLEMENT OF DISPUTES AND DIFFERENCES ARISING IN RESPECT OF SALE OR PURCHASE OF OIL SEEDS, OIL AND ALLIED PRODUCTS BETWEEN THE MEMBERS OF THE ASSOCIATION OR BETWEEN A MEMBER OF THE ASSOCIATION. (H) TO FRAME RULES AND REGULATIONS RELATING TO THE USAGES OF SUCH TRADE AND COMMERCE AND THE CONDUCT OF THE MERCHANTS ENGAGED IN SUCH INDUSTRY, TRADE AND COMMERCE IN THEIR MUTUAL DEALINGS. ' 4. FROM THE ABOVE MENTIONED OBJECTS OF THE ASSESSEE COMPANY, THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) OPINED AS FOLLOWS:- I) ACCORDING TO THE OBJECTS OF THE COMPANY, IT IS E VIDENT THAT THE PURPOSE OF THE COMPANY IS PRIMARILY TO PRO TECT THE INTEREST OF ITS MEMBERS. 4 ITA NO.951 /MDS/2015 II) THE COMPANY IS IN EXISTENCE FROM 1957 AND IN AL L THESE YEARS IT HAS BEEN WORKING TOWARDS PROTECTING ONLY THE INTEREST OF ITS MEMBERS AND PROVIDING SPECIFIC SERVICE TO THEM. III) THE COMPANY IS FUNCTIONING AS A TRADE, PROFESS IONAL OR SIMILAR ASSOCIATION FOR PERFORMING SPECIFIC SERV ICES TO ITS MEMBERS WHICH IS TAXABLE AS PER SECTION 28(III) OF THE ACT. IV) THE PERUSAL OF THE INCOME & EXPENDITURE STATEM ENT OF THE COMPANY SHOWS THAT IT HAS NOT BEEN INDULGING IN ANY CHARITABLE ACTIVITY. ALSO NO CHARITABLE ACTIVIT Y HAS BEEN CARRIED OUT TILL DATE FROM INCEPTION. V) THE DECISIONS CITED BY THE ASSESSEE WERE NOT REL ATED TO THE FACTS IN THE CASE OF THE ASSESSEE AND THEREF ORE NOT APPLICABLE AS ENUMERATED HEREIN BELOW:- A) ANDHRA CHAMBER OF COMMERCE REPORTED IN 55 ITR 722 (SC) IN THIS CASE, THE ISSUES ARE RELATED TO THE ASSESS MENT YEARS RELATING TO 1948-49 TO 1954-55 PERTAINING TO INCOME TAX ACT, 1922 AND THAT TOO WITH RESPECT TO 5 ITA NO.951 /MDS/2015 OBJECTS OF PROMOTION AND DEVELOPMENT OF TRADE COMMERCE AND INDUSTRIES FOR THE WHOLE OF INDIA BEIN G IN THE NATURE OF GENERAL PUBLIC UTILITY. HOWEVER, IN T HE CASE OF THE ASSESSEE THE OBJECT WAS RESTRICTED TO FEW OI L MILL OWNERS / OPERATORS WHO ARE MEMBERS OF THE COMPANY. THEREFORE, THE FACTS ARE DISTINGUISHABLE. B) ADDITIONAL CIT VS. SURAT ART SILK CLOTH MANUFACT URERS ASSOCIATION REPORTED IN 121 ITR 1 (SC) - THE DECISION IN THIS CASE WILL ALSO NOT APPLICABLE TO THE ASSESSEE BECAUSE THE MAIN OBJECTS OF THE ASSESSEE ARE ONLY TO PROTECT AND PROMOTE THE INTERESTS OF IT S MEMBERS WHO ARE ENGAGED IN THE BUSINESS OF EDIBLE O IL MANUFACTURERS AND TO MITIGATE THEIR DIFFICULTIES AN D THEIR GRIEVANCES. C) THE HONBLE APEX COURT IN THE CASE OF MOHD. OBRAHIM VS. CIT REPORTED IN 57 IA 260 AND EAST INDI A INDUSTRIES (MADRAS) P. LTD. VS. CIT REPORTED IN 65 ITR 611, IT HAS BEEN CATEGORICALLY HELD THAT EACH AND E VERY ONE OF THE OBJECTS MUST BE CHARITABLE IN ORDER TO H OLD THAT THE ASSESSEE IS A CHARITABLE INSTITUTION. 6 ITA NO.951 /MDS/2015 D) FURTHER IN THE CASE INVESTORS CLUB, THRISSUR VS. CIT REPORTED IN 318 ITR 427 (KER) IT HAS BEEN HELD THA T A MUTUAL ASSOCIATION IS CONCEPTUALLY DIFFERENT FROM A CHARITABLE INSTITUTION AND SUCH INSTITUTION CANNOT BE GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT. 5. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN CHARITABL E ACTIVITIES FOR THE PUBLIC AT LARGE BECAUSE THE BENE FIT OF THE ORGANIZATION GOES TO THE ENTIRE PUBLIC AND NOT REST RICTED TO ANY SECT OF PUBLIC. HENCE, IT WAS ARGUED THAT REGIS TRATION MAY BE GRANTED TO THE ASSESSEE. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND, ARGUED IN SUPPORT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX AND PRAYED THAT HIS ORDE RS MAY BE UPHELD. 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIALS AVAILABLE ON RECORD. ON EXAMINING THE OBJECTS 7 ITA NO.951 /MDS/2015 OF THE ASSOCIATION, IT IS EVIDENT THAT THE ASSESSEE COMPANYS PRIMARY ACTIVITIES ARE SOLELY AIMED TO PROMOTE ITS MEMBERS AND THEIR ACTIVITIES OF SPECIFIC BUSINESS. THERE I S ALSO MENTION ABOUT PROMOTIONAL ACTIVITY OF THE INDUSTRY IN ITS OBJECTS, HOWEVER FROM THE INCOME & EXPENDITURE STAT EMENT OF THE ASSESSEE IT IS APPARENT THAT THE ASSESSEE IS NO T ENGAGED IN ANY ACTIVITY TO BENEFIT THE PUBLIC AT LARGE. THE REVENUE GENERATED BY THE ASSESSEE COMPANY DURING THE RELEVA NT ASSESSMENT YEAR IS RS.8,87,438/- AND NOT A PENNY IS SPENT FOR CHARITY. THE LEARNED COMMISSIONER OF INCOME TAX ALSO HAS TAKEN NOTE OF THE SAME WHILE DECIDING THE ISSUE AGAINST THE ASSESSEE. FURTHER IT EVIDENT FROM THE ACTIVITIE S OF THE COMPANY AND ITS OBJECTS THAT THE ASSESSEE COMPANY E XISTS ON THE PRINCIPLES OF MUTUALITY. THEREFORE, FROM THE FACTS AND CIRCUMSTANCES OF THE CASE AND FROM THE DECISIONS RE LIED UPON BY THE LEARNED COMMISSIONER OF INCOME TAX SUPRA, W E ARE OF THE CONSIDERED VIEW THAT THE DECISION RENDERED B Y THE LEARNED COMMISSIONER OF INCOME TAX HAS MERITS AND ACCORDINGLY WE DO NOT FIND IT NECESSARY TO INTERFER E WITH HIS ORDER. 8 ITA NO.951 /MDS/2015 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 18 TH MARCH, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S. GANESAN) ( A.MOHAN ALANKAMONY ) ! # / JUDICIAL MEMBER # / ACCOUNTANT MEMBER /CHENNAI, & /DATED 18 TH MARCH, 2016 SOMU !() *) /COPY TO: APPELLANT 2. RESPONDENT 3. + () /CIT(A) 4. + /CIT 5. ) !!/ /DR 6. 2 /GF