BOMBAY PAINT DEALERS ASSOCIATION, MUMBAI V. COMMISSIONER OF INCOME TAX (EXEMPTIONS), MUMBAI

ITA 983/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8442 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 13-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH DAMER
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 983/MUM/2017 BOMBAY PAINT DEALERS ASSOCIATION, C/O.MANSUKHLAL & CO. SHRI BUILDING, RANADE ROAD, DADAR(WEST), MUMBAI 400 028 PAN: AADCB 8723H ...... APPELLANT VS. THE COMMISSIONER OF INCOMETAX (EXEMPTIONS), 6 TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI -400 012. .... RESPONDENT APPELLANT BY : SHRI SANJAY R. PARIKH RESPONDENT BY : SHRI RAJESH DAMER DATE OF HEARING : 23/08/2017 DATE OF PRONOUNCEMENT : 10/11/2017 ORDER PER G.S.PANNU,A.M: THE CAPTIONED APPEAL FILED BY THE ASSESSEE IS DI RECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(EXEMPTIONS) (IN SHORT THE CIT) DATED 13/12/2016, WHEREBY THE ASSESSEES APPL ICATION SEEKING REGISTRATION UNDER SECTION 12A OF THE INCOME TAX AC T, 1961( IN SHORT THE ACT) HAS BEEN REJECTED. 2 ITA NO. 983/MUM/2017 2. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE APP ELLANT IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 , WHICH IS NOTIFIED UNDER SECTION 25 OF THE COMPANIES ACT,1956 AS A COMPANY EXISTING NOT FOR PROFIT. THE MAIN OBJECTS OF THE A SSESSEE COMPANY ARE FOR THE BENEFITS OF ITS MEMBERS, WHO ARE PAINT DEAL ERS, ASSOCIATING FOR SHARING OF KNOWLEDGE REGARDING TAXATION, TRADING, E NHANCEMENT, SHOWING WAYS TO DIGITIZATION IN TRADING PRACTICES, USE OF TECHNOLOGY IN BUSINESS, PROTECTING RIGHTS OF THE PAINT DEALERS AG AINST THE GOVERNMENT POLICIES AND PAINT MAKING COMPANIES, RESOLVING THE COMMON PROBLEMS OF THE MEMBERS BY COLLECTIVE ENDEAVOUR, AND TO STR ENGTHEN THE UNITY AMONG THE MEMBERS. NOTICING THE ABOVE, THE CIT CON CLUDED THAT THE ACTIVITIES OF THE ASSESSEE AND ITS PREDOMINANT OBJ ECTS DO NOT FALL WITHIN THE PURVIEW OF EXPRESSION CHARITABLE PURPOSES CON TAINED IN SECTION 2(15) OF THE ACT FOR THE REASON THAT THE OBJECTS ON LY CATER TO THE ORGANIZATION OF PAINT DEALERS AND NOT FOR THE GENER AL PUBLIC AT LARGE. FOR THE SAID REASON, HE DID NOT FIND THE ASSESSEE INSTI TUTION TO BE ELIGIBLE FOR REGISTRATION UNDER SECTION 12A OF THE ACT. 3. AGAINST THE AFORESAID DECISION OF THE CIT, ASSES SEE IS IN APPEAL BEFORE THE TRIBUNAL. AT THE TIME OF HEARING, THE L D. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE OBJECTION RAISED BY THE CIT WAS NOT JUSTIFIED, INASMUCH AS, IN ORDER TO BE ELIGIBLE FOR REGISTRATION IT WAS NOT NECESSARY THAT THE OBJECTS SHOULD BE FOR THE BENEFI T OF WHOLE OF THE PUBLIC AND THAT IT WOULD BE SUFFICIENT IF THE OBJEC TS ARE FOR THE BENEFIT OF A SECTION OF THE PUBLIC. THE LD. REPRESENTATIVE FO R THE ASSESSEE POINTED OUT THAT THE AFORESAID PROPOSITION IS SUPPORTED BY THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF BANGAL ORE URBAN AND RURAL 3 ITA NO. 983/MUM/2017 DISTRICT CO-OPERATIVE MILK PRODUCERS SOCIETIES MEMB ERS AND EMPLOYEES WELFARE TRUST BANGALORE MILK UNION LTD. VS. DIRECTO R OF INCOME-TAX (EXEMPTIONS),382 ITR 528 (KARN). 4. ON THIS ASPECT, THE LD. DEPARTMENTAL REPRESENTAT IVE HAS NOT REFERRED TO ANY CONTRARY DECISION, BUT CONTENDED THAT EVEN IF THE OBJECTION RAISED BY THE CIT IS SET-ASIDE, YET THE O THER REQUIREMENTS PRESCRIBED IN SECTION 12AA(1) OF THE ACT WILL HAVE TO BE EXAMINED FOR THE PURPOSES OF GRANT OF REGISTRATION. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND FIND THAT THE POINT RAISED BY THE CIT TO DISENTITLE THE ASSES SEE FOR REGISTRATION UNDER SECTION 12A IS DIRECTLY IN CONFLICT WITH THE RATIO LAID DOWN BY THE HON'BLE KARNATAKA HIGH COURT (SUPRA). THE HON'BLE KARNATAKA HIGH COURT WHILE DEALING WITH THE MEANING OF THE EXPRESS ION CHARITABLE PURPOSE DEFINED IN SECTION 2(15) OF THE ACT, OPIN ED THAT THE PHRASE ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY FOUND IN SECTION 2(15) OF THE ACT DOES NOT IMPLY THAT THE OBJECTS OF AN INSTITUT ION SHOULD BE FOR THE BENEFIT OF THE WHOLE MANKIND OR OF PERSONS IN A CO UNTRY OR STATE; AND, THAT EVEN IF THE OBJECTS ARE FOR THE BENEFIT OF A SECTION OF THE PUBLIC, THE SAME CAN BE CONSTRUED AS FOR CHARITABLE PUR POSE. IN COMING TO SUCH A DECISION, THE HONBLE HIGH COURT RELIED UPON THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF A HMADABAD RANA CATSE ASSOCIATION V. CIT, 82 ITR 704(SC). IN OUR CONSIDERED OPINION, THE JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT, WHIC H IS BASED ON THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT I N THE CASE OF AHMADABAD RANA CATSE ASSOCIATION (SUPRA) IS DIRECTL Y ON THE POINT BEFORE US AND, THEREFORE, WE DO NOT FIND SUBSTANCE IN THE OBJECTION OF 4 ITA NO. 983/MUM/2017 THE CIT THAT THE ASSESSEE IS DISENTITLED FROM REGIS TRATION UNDER SECTION 12A OF THE ACT MERELY BECAUSE THE OBJECTS ARE FOR T HE BENEFIT OF A SECTION OF THE PUBLIC NAMELY, PAINT DEALERS. THUS, ON THIS ASPECT THE ORDER OF THE CIT IS SET-ASIDE. 6. EVEN OTHERWISE, WE FIND THAT ASSESSEE HAD SUBMIT TED BEFORE THE CIT THAT THE OBJECTS OF THE ASSESSEE COMPANY BE VIE WED IN A BROADER WAY, INASMUCH AS, IT RESULTS IN ULTIMATE GAIN TO T HE END USERS I.E. THE GENERAL PUBLIC. THE WRITTEN SUBMISSIONS OF THE ASS ESSEE IN THIS REGARD HAVE BEEN REPRODUCED BY THE CIT IN PARA-5 OF HIS OR DER, AND IN SUCH WRITTEN SUBMISSION, AVERMENTS HAVE ALSO BEEN MADE T HAT ASSESSEE ALSO SEEKS TO RESOLVE THE GRIEVANCE OF THE GENERAL PUBLI C BY PROTECTING THEM AGAINST MAL PRACTICES BY ANY PAINT DEALER, AND ALSO INTENDING TO DO CHARITY WORK BY PROVIDING EDUCATION, HOSPITALIZATIO N EXPENSES TO POOR AND NEEDY PEOPLE OF THE SOCIETY. BE THAT AS IT MAY , IN OUR VIEW, IT WOULD BE IN THE FITNESS OF THINGS THAT THE ORDER OF THE C IT IS SET-ASIDE AND THE MATTER IS RESTORED BACK TO HIS FILE TO ENABLE HIM T O ADDRESS THE APPLICATION OF THE ASSESSEE AFRESH IN THE LIGHT OF THE REQUIREMENTS OF SECTION 12AA(1) OF THE ACT AS PER LAW. WE HOLD SO. NEEDLESS TO MENTION, THE CIT SHALL PROVIDE A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE AFRESH, AS PER L AW. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED , AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 10/11/2017. SD/- SD/- (PAWAN SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 10/11/2017 VM , SR. PS 5 ITA NO. 983/MUM/2017 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI